Housing Analysis

My realtor knows I am interested in OH4. She told me last week that she has a Chinese buyer who is really interested in my home because they are looking for corner lot one. This buyer is willing to pay north of $2.3 mill and let me do 2 year rent until OH4 is ready. The way it is going, i am afraid OH4 will be out of my budget then I’ll be screwed w/o a home if i decide to sell my current one now.
 
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My realtor knows I am interested in OH4. She told me last week that she has a Chinese buyer who is really interested my home because they are looking for corner lot one. This buyer is willing to pay north of $2.3 mill and let me do 2 year rent until OH4 is ready. The way it is going, i am afraid OH4 will be out of my budget then I’ll be screwed w/o a home.
All of us who want to upsize are in such a pickle, aren't we?

The problem is, we don't know which direction is housing market is going. Is it going to keep going up due to lack of inventory? Or will it flatten out for the next couple of years because mortgage rates are still high?

One dilemma we're facing is the upcoming Cielo lot 26 (Plan 1) in phase 4B. It's one of the smallest lots in the community, 4290 sq ft lot, and it will most likely be priced at $2.523M. If it becomes available when it gets to our turn, do we suck it up and take it? But the ones that we really want, 4770 sq ft and 5340 sq ft lots, won't be released until phase 8, which would be end of the year/early next year. What would be the pricing on those homes then?

On the other hand, most likely lot 26 won't be available for us since there are over 200 people in front of us, although most of them are interested in Plans 2 and 3, but sales did mention that there are several people in front of us interested in it.

I guess, at the end of the day, it's still out of our hands.
 
All of us who want to upsize are in such a pickle, aren't we?

The problem is, we don't know which direction is housing market is going. Is it going to keep going up due to lack of inventory? Or will it flatten out for the next couple of years because mortgage rates are still high?

One dilemma we're facing is the upcoming Cielo lot 26 (Plan 1) in phase 4B. It's one of the smallest lots in the community, 4290 sq ft lot, and it will most likely be priced at $2.523M. If it becomes available when it gets to our turn, do we suck it up and take it? But the ones that we really want, 4770 sq ft and 5340 sq ft lots, won't be released until phase 8, which would be end of the year/early next year. What would be the pricing on those homes then?

On the other hand, most likely lot 26 won't be available for us since there are over 200 people in front of us, although most of them are interested in Plans 2 and 3, but sales did mention that there are several people in front of us interested in it.

I guess, at the end of the day, it's still out of our hands.
If i were you, i’d wait for the lot you really like and just let the market do what it does. If it plays into your hand, that’s great. If not, there is nothing you can do.

For me, if i sold mine now, i’ll be hit with $300k capital gain and it is very hard to give up super low mortgage rate. I think i’ll just hold and see.
 
If i were you, i’d wait for the lot you really like and just let the market do what it does. If it plays into your hand, that’s great. If not, there is nothing you can do.

For me, if i sold mine now, i’ll be hit with $300k capital gain and it is very hard to give up super low mortgage rate. I think i’ll just hold and see.
Yeah, that's what we decided to do. We can live with not getting a Cielo home if the market doesn't let us, but I don't think we can live with getting a really small lot and then finding out we could have got one of the lots we wanted for roughly the same price.

And I completely agree with your situation. You would have to wait another year to avoid capital gain, right?
 
Yeah, that's what we decided to do. We can live with not getting a Cielo home if the market doesn't let us, but I don't think we can live with getting a really small lot and then finding out we could have got one of the lots we wanted for roughly the same price.

And I completely agree with your situation. You would have to wait another year to avoid capital gain, right?
I applaud you for so openly sharing your home buying journey here. I hope you and your wife get the home you guys want. That area of PS is my one of my favorites. It's just too bad it's so far from everything.... :) :) :)
 
I had not been to the portola area in a while. I went to portola high recently and it felt like i took a cross country road trip. I guess it’s near the spectrum but it does seem far from everything else.
 
My realtor knows I am interested in OH4. She told me last week that she has a Chinese buyer who is really interested in my home because they are looking for corner lot one. This buyer is willing to pay north of $2.3 mill and let me do 2 year rent until OH4 is ready. The way it is going, i am afraid OH4 will be out of my budget then I’ll be screwed w/o a home if i decide to sell my current one now.

If you believe that prices are going to go higher then it would be a bad idea to sell your home before you know that you can lock in a home over in OH4. If you have a good floor plan on a good lot, it'll sell quickly regardless of when you list it. IP is going to price those OH4 homes very high as they'll be one of the last non-Great Park developments in Irvine. The larger and/or view lot will command huge premiums.
 
All of us who want to upsize are in such a pickle, aren't we?

The problem is, we don't know which direction is housing market is going. Is it going to keep going up due to lack of inventory? Or will it flatten out for the next couple of years because mortgage rates are still high?

One dilemma we're facing is the upcoming Cielo lot 26 (Plan 1) in phase 4B. It's one of the smallest lots in the community, 4290 sq ft lot, and it will most likely be priced at $2.523M. If it becomes available when it gets to our turn, do we suck it up and take it? But the ones that we really want, 4770 sq ft and 5340 sq ft lots, won't be released until phase 8, which would be end of the year/early next year. What would be the pricing on those homes then?

On the other hand, most likely lot 26 won't be available for us since there are over 200 people in front of us, although most of them are interested in Plans 2 and 3, but sales did mention that there are several people in front of us interested in it.

I guess, at the end of the day, it's still out of our hands.

Inventory will remain low until interest rates fall. I have about a half dozen move-up clients who want to upgrade their home but they just can't mentally get there from going from a mortgage rate in the 2s to a mortgage rate in 5s. If inventory levels remain low prices will continue to head higher. As I've stated before many times, pay attention to inventory levels as they'll be your tell on where prices are heading. I'll be posting up market analysis through April in the next few days.
 
Yeah, that's what we decided to do. We can live with not getting a Cielo home if the market doesn't let us, but I don't think we can live with getting a really small lot and then finding out we could have got one of the lots we wanted for roughly the same price.

And I completely agree with your situation. You would have to wait another year to avoid capital gain, right?

It's 2 years from when you buy to when you sell to get the $500k gain tax exemption. Have you considered looking at resales or are you guys set on buying new again?
 
If i were you, i’d wait for the lot you really like and just let the market do what it does. If it plays into your hand, that’s great. If not, there is nothing you can do.

For me, if i sold mine now, i’ll be hit with $300k capital gain and it is very hard to give up super low mortgage rate. I think i’ll just hold and see.

Good advice there, let things play out. As I tell my clients....things happen for a reason and things don't happen for a reason.
 
It's 2 years from when you buy to when you sell to get the $500k gain tax exemption. Have you considered looking at resales or are you guys set on buying new again?
I know it's 2 years. Danimal and I closed escrow about the same time last year, May for me. That's why I said he would have to wait another year or so to avoid the capital gain tax.

We're only interested in moving up to Cielo. Not interested in resales and definitely not interested in moving out of PS, even though it's far from everything. 😂 Even though PS is quite inconvenient in terms of shopping, it's actually very convenient for work. It's a bit more than 10 minute drive for me (Irvine and Alton, that's it). As for my wife, she could just hop on 241, but she chooses to take Portola Pkwy and then Jamboree and get on 241 from Santiago. Saves $3 per trip on tolls.

Unless home prices suddenly go crazy, we should be able to get the lots we want. And the timing works out well too because by the time we close escrow and sell the Bluffs home, it would have been more than 2 years. If we were to buy resales, then we would have to wait until next May to buy.
 
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I know it's 2 years. Danimal and I closed escrow about the same time last year, May for me. That's why I said he would have to wait another year or so to avoid the capital gain tax.

We're only interested in moving up to Cielo. Not interested in resales and definitely not interested in moving out of PS, even though it's far from everything. 😂 Even though PS is quite inconvenient in terms of shopping, it's actually very convenient for work. It's a bit more than 10 minute drive for me (Irvine and Alton, that's it). As for my wife, she could just hop on 241, but she chooses to take Portola Pkwy and then Jamboree and get on 241 from Santiago. Saves $3 per trip on tolls.

Unless home prices suddenly go crazy, we should be able to get the lots we want. And the timing works out well too because by the time we close escrow and sell the Bluffs home, it would have been more than 2 years. If we were to buy resales, then we would have to wait until next May to buy.
yes, i need one more year for avoiding gain tax. Right now, too many unknown with OH4. I know it will be expensive. If IP sets the price out of my budget, I dont have to upgrade. My current home is more than enough for us.

Like Usctrojan said, it’s hard to let go sub 3% mortgage rate. I joke with my wife that we are like banker. Borrowing at low rate then lending at higher rate. We are earning more on Vanguard money market funds yield than paying interest rate for our mortgage.
 
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I know it's 2 years. Danimal and I closed escrow about the same time last year, May for me. That's why I said he would have to wait another year or so to avoid the capital gain tax.

We're only interested in moving up to Cielo. Not interested in resales and definitely not interested in moving out of PS, even though it's far from everything. 😂 Even though PS is quite inconvenient in terms of shopping, it's actually very convenient for work. It's a bit more than 10 minute drive for me (Irvine and Alton, that's it). As for my wife, she could just hop on 241, but she chooses to take Portola Pkwy and then Jamboree and get on 241 from Santiago. Saves $3 per trip on tolls.

Unless home prices suddenly go crazy, we should be able to get the lots we want. And the timing works out well too because by the time we close escrow and sell the Bluffs home, it would have been more than 2 years. If we were to buy resales, then we would have to wait until next May to buy.
Well another way to look at, if your company's stock price keeps going up (+160% over the past 5 years and near all time high now), the increased value of your RSUs will probably offset any price increase in Cielo and Fed may start cutting rate starting next year which will also help.
 
Well another way to look at, if your company's stock price keeps going up (+160% over the past 5 years and near all time high now), the increased value of your RSUs will probably offset any price increase in Cielo and Fed may start cutting rate starting next year which will also help.
I mean, the only reason I was able to buy Bluffs at all was thanks to the RSUs. Unfortunately, it's been stuck at that price for a while.

I just hope that it starts increasing again, with the AI hype, and can offset the Cielo price increase. And yes, if Fed starts cutting rates again next year, it would definitely help.
 
I know it's 2 years. Danimal and I closed escrow about the same time last year, May for me. That's why I said he would have to wait another year or so to avoid the capital gain tax.

We're only interested in moving up to Cielo. Not interested in resales and definitely not interested in moving out of PS, even though it's far from everything. 😂 Even though PS is quite inconvenient in terms of shopping, it's actually very convenient for work. It's a bit more than 10 minute drive for me (Irvine and Alton, that's it). As for my wife, she could just hop on 241, but she chooses to take Portola Pkwy and then Jamboree and get on 241 from Santiago. Saves $3 per trip on tolls.

Unless home prices suddenly go crazy, we should be able to get the lots we want. And the timing works out well too because by the time we close escrow and sell the Bluffs home, it would have been more than 2 years. If we were to buy resales, then we would have to wait until next May to buy.
I know housing is a local thing, but you've got over 3 million people in the OC and very limited land left. Tay Mo raised their prices here again for the fourth time since the downturn. They have sold houses in my development like hotcakes since December and have only four spec homes left, even raising prices and we have plenty of land and lots of developments. Tay Mo never slowed down here. Every week I got an email for another development coming (not just my little area but metro Phoenix) and this is a supposedly, if you read doom and gloom articles a horrid area for housing. The sales person told me flat out they cannot pull back because it will lead to a huge shortage and buyers will eventually step up or buy smaller/farther and she was absolutely right. Sure..... they did offer incentives but they have been pulled back and prices have been raised. Don't believe articles that say prices are down and going lower here and extrapolate. I watch the builders. Individual sales can skew things and the Uhauls are still coming.

IMO, having been thru cycles up and down, prices have bottomed (long ago), prices will rise and in two years will be higher than now because there is still a supply problem and rates will be peaked out or lower. Would I buy a house now to flip? No but I would buy a house to live in if I didn't have one.

Only one way for supply to rise significantly, imo is to lower mortgage rates to 4% or less (which is unlikely to happen). It would open up some move up buyer's homes but most likely demand skyrockets too which means prices rise as supply would quickly be eaten up. If rates don't drop, supply won't rise, there just is not enough building going on in the OC for the number of people living there. If a recession comes and jobs are lost, Irvine Co will just wait to build and prices will be higher.


Fed really messed things up.
 
I know housing is a local thing, but you've got over 3 million people in the OC and very limited land left. Tay Mo raised their prices here again for the fourth time since the downturn. They have sold houses in my development like hotcakes since December and have only four spec homes left, even raising prices and we have plenty of land and lots of developments. Tay Mo never slowed down here. Every week I got an email for another development coming (not just my little area but metro Phoenix) and this is a supposedly, if you read doom and gloom articles a horrid area for housing. The sales person told me flat out they cannot pull back because it will lead to a huge shortage and buyers will eventually step up or buy smaller/farther and she was absolutely right. Sure..... they did offer incentives but they have been pulled back and prices have been raised. Don't believe articles that say prices are down and going lower here and extrapolate. I watch the builders. Individual sales can skew things and the Uhauls are still coming.

IMO, having been thru cycles up and down, prices have bottomed (long ago), prices will rise and in two years will be higher than now because there is still a supply problem and rates will be peaked out or lower. Would I buy a house now to flip? No but I would buy a house to live in if I didn't have one.

Only one way for supply to rise significantly, imo is to lower mortgage rates to 4% or less (which is unlikely to happen). It would open up some move up buyer's homes but most likely demand skyrockets too which means prices rise as supply would quickly be eaten up. If rates don't drop, supply won't rise, there just is not enough building going on in the OC for the number of people living there. If a recession comes and jobs are lost, Irvine Co will just wait to build and prices will be higher.


Fed really messed things up.
Only way to improve supply is to build multi-unit until the rental market for multi-unit collapses.

Interest rates won't correct a 30 year building deficit and while the 'units' kept up with population growth, the mix of units has not.
 
All this analysis about rising interest rates "destroying" prices ignored the inventory side of the equation. And for those who don't use mortgages, they continue to eat up the inventory.

It's so crazy how much new homes are in Irvine... that is the real "pain".
 
All this analysis about rising interest rates "destroying" prices ignored the inventory side of the equation. And for those who don't use mortgages, they continue to eat up the inventory.

It's so crazy how much new homes are in Irvine... that is the real "pain".
I've stated before that rising interest rates don't affect current owners who refinanced at 2%. Or the ones who paid cash. But there's some idiot who kept talking about stress because equity is falling. Who cares about equity for the house that you live in that you don't plan to sell until 5-10 years later?

Because of these owners, there won't be many homes getting listed, and thus, lack of inventory that Martin described.
 
About the only way to "motivate" the low rate and cash owners into selling is to make the cost of owning rental property so difficult from a tax perspective that there will finally be a rush to the exits. If rental income were taxed at 50% for every $1.0 over PITI, eliminate both the depreciation deduction and 1031 exchange rules, and finally tax any property sales by non-US citizens at a "confiscatory level" will we see any meaningful boost of new inventory.

Of course the likelihood of anything listed above transpiring is slim to none, and slim already left town.
 
Like Usctrojan said, it’s hard to let go sub 3% mortgage rate. I joke with my wife that we are like banker. Borrowing at low rate then lending at higher rate. We are earning more on Vanguard money market funds yield than paying interest rate for our mortgage.

Isn't this why Silicone Valley Bank, Signature Bank, and First Republic died?
They lent out mortgage money 2 years ago @ 2% and today, Etrade savings account is 3.85%.
 
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