Average Down Payment in Irvine 38.68% $300,350

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PANDA_IHB

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I was reviewing IR2's latest excel spreadsheet and I am really suprised by how high and intimidating these down payment figures are. I thought if a person has saved up $300,000 for a down payment on house in Irvine, he is well prepared and ahead of the game. After looking at IR2's stats, the Irvine home buyer who saved $300k to purchase a home is only considered average. Perhaps many of you feel that this type of down payment is normal, but I was indeed pretty shocked.



It is sort of like applying to college. You need a certain GPA and SAT scores to get into Berkeley and UCLA. You need another set of scores to get into USC. To own a home with an Irvine address, these are the REAL numbers you are up against.



Panda's Questions:

If the average home price in Irvine only drop 3-6% by end of this year whereas OC average home prices fall another 22-25%, would you still buy in Irvine in 2010 or look outside of Irvine for a much better bargain per square footage?



OC home price drop in 2008 - 30%

Irvine home price drop in 2008 - 6.6%

The Power of the FCBs - 23.4%



I always thought that FCB meant foreign chinese buyers, Now i know. haha!
 
[quote author="PANDA" date=1231052198]I was reviewing IR2's latest excel spreadsheet and I am really suprised by how high and intimidating these down payment figures are. I thought if a person has saved up $300,000 for a down payment on house in Irvine, he is well prepared and ahead of the game. After looking at IR2's stats, the Irvine home buyer who saved $300k to purchase a home is only considered average. Perhaps many of you feel that this type of down payment is normal, but I was indeed pretty shocked.



It is sort of like applying to college. You need a certain GPA and SAT scores to get into Berkeley and UCLA. You need another set of scores to get into USC. To own a home with an Irvine address, these are the REAL numbers you are up against.



Does anybody else feel like this?



Panda</blockquote>


I looked at <a href="http://www.irvinerealtorsite.com/IrvineDowns.xls">IR2's spreadsheet</a> and the mean for an Irvine down payment is ~38% but the median is ~28%. Still high but not crazy given the larger number of FCBs being attracted to the area. So keep saving your pennies and be patient. As the market slides downward your dollars will buy more home. :-)
 
[quote author="PANDA" date=1231052198]



It is sort of like applying to college. You need a certain GPA and SAT scores to get into Berkeley and UCLA. You need another set of scores to get into USC. </blockquote>


Don't be intimidated Panda, tenmagnet can help if you need clarification on your USC app...



<img src="http://irvinerealtorsite.com/tenmagnetapplication.JPG" alt="" />
 
Actually IR2,



I need an application to become a home owner in Irvine in 2010. I hear the applicant pool is up and competition is fierce this year especially if you want to major in zip code: 92603. I am hearing that many of the wealthy international chinese and korean applicants are coming in with 4.0+ GPAs and perfect SAT scores. Please send me an application for Aliso Viejo too as my back up school.
 
[quote author="PANDA" date=1231052198]I was reviewing IR2's latest excel spreadsheet and I am really suprised by how high and intimidating these down payment figures are. I thought if a person has saved up $300,000 for a down payment on house in Irvine, he is well prepared and ahead of the game. After looking at IR2's stats, the Irvine home buyer who saved $300k to purchase a home is only considered average. Perhaps many of you feel that this type of down payment is normal, but I was indeed pretty shocked.



It is sort of like applying to college. You need a certain GPA and SAT scores to get into Berkeley and UCLA. You need another set of scores to get into USC. To own a home with an Irvine address, these are the REAL numbers you are up against.



Panda's Questions:

If the average home price in Irvine only drop 3-6% by end of this year whereas OC average home prices fall another 22-25%, would you still buy in Irvine in 2010 or look outside of Irvine for a much better bargain per square footage?



OC home price drop in 2008 - 30%

Irvine home price drop in 2008 - 6.6%

The Power of the FCBs - 23.4%



I always thought that FCB meant foreign chinese buyers, Now i know. haha!</blockquote>


Only Panda will ask these types of questions.



Do you lack confidence? What the heck, I don't get it...



Only you can answer your question. I hope you wouldn't base your decision on whatever others think. It might be worth it for you to pay extra for Irvine, but not for others or vice-versa.
 
[quote author="IrvineRealtor" date=1231056231]Don't be intimidated Panda, tenmagnet can help if you need clarification on your USC app...



<img src="http://irvinerealtorsite.com/tenmagnetapplication.JPG" alt="" /></blockquote>


You only posted page 1 of the app., and you forgot the most important part...

<em>

Is anyone in your immediate or somewhat immediate family USC alumni?



If so, how much money have they donated in the last three years? Please list donation amounts by year.



Is there a building on the USC campus with the name of your family? If so, check the yes box, fill out your name, and skip all other steps, as there is a scholarship we have created just for you. If you applied to UCLA or Berkeley or any other PAC 10 school, then the scholarship may be null and void. </em>
 
[quote author="Roo" date=1231081244][quote author="PANDA" date=1231052198]I was reviewing IR2's latest excel spreadsheet and I am really suprised by how high and intimidating these down payment figures are. I thought if a person has saved up $300,000 for a down payment on house in Irvine, he is well prepared and ahead of the game. After looking at IR2's stats, the Irvine home buyer who saved $300k to purchase a home is only considered average. Perhaps many of you feel that this type of down payment is normal, but I was indeed pretty shocked.



It is sort of like applying to college. You need a certain GPA and SAT scores to get into Berkeley and UCLA. You need another set of scores to get into USC. To own a home with an Irvine address, these are the REAL numbers you are up against.



Panda's Questions:

If the average home price in Irvine only drop 3-6% by end of this year whereas OC average home prices fall another 22-25%, would you still buy in Irvine in 2010 or look outside of Irvine for a much better bargain per square footage?



OC home price drop in 2008 - 30%

Irvine home price drop in 2008 - 6.6%

The Power of the FCBs - 23.4%



I always thought that FCB meant foreign chinese buyers, Now i know. haha!</blockquote>


Only Panda will ask these types of questions.



Do you lack confidence? What the heck, I don't get it...



Only you can answer your question. I hope you wouldn't base your decision on whatever others think. It might be worth it for you to pay extra for Irvine, but not for others or vice-versa.</blockquote>


Lacking Confidence? Not at all! Just someone who loves a bargain. In my opinion, Irvine is still overrated and overpriced and prices still need to correct by atleast 20% from current levels. We'll need to see how the rest of 2009 turns out. If OC drop another 25% and Irvine barely goes down 5% by dec 31 2009 and i am set to buy a home in 2010, I would seriously consider buying in the surrounding areas. Again, if i had kids who were going to attend the Irvine School district next year, my home buying decision would again change.



Roo, I am just trying to point out that the average Irvinite makes an average household income of $90,000. Assuming he is frugal and determined to buy a home in Irvine, it will probably take him a decade to save up the average $300,000 for downpayment, unless he has a Rich Asian Dad who will just give him this money.
 
Average doesn't mean much. There's a $7,000,000 downpayment that increases the average a whole lot.



Median is $180,000. Also, keep in mind that only those qualifying for a loan (20%+ down) can buy. Another point is that move-up buyers should have a bigger % down than first-time buyer.



A median of $180,000 or 28% of purchase price totally makes sense.



As far as the drop for next year, you should start to see a bigger decline for mid/high end vs low end. As you probably know, buying in 2010 will still be a little early.
 
[quote author="Roo" date=1231116229]Average doesn't mean much. There's a $7,000,000 downpayment that increases the average a whole lot.



Median is $180,000. Also, keep in mind that only those qualifying for a loan (20%+ down) can buy. Another point is that move-up buyers should have a bigger % down than first-time buyer.



A median of $180,000 or 28% of purchase price totally makes sense.



As far as the drop for next year, you should start to see a bigger decline for mid/high end vs low end. As you probably know, buying in 2010 will still be a little early.</blockquote>


What makes you think a bigger decline is coming anytime soon Roo? Closing prices for December are up over 1% over November and still relatively unchanged for Irvine for the past six months... A house just closed in my old neighborhood for $710K. The same model, with pretty much the same upgrades, on the same street a few houses down closed in March for $739K. That 5% drop is a great example of what RE has done in Irvine this year.



If December is a low/slow time of the year for RE and prices are going up in Irvine, what will cause them to drop when Spring shows up? Heck, it's possible they could actually bounce upward with the low mortgage rates out in the market right now... I think the nicer OC areas have been holding steady for much of the year. AV was falling fast and hard early in the year but has stabilized of late.
 
I hear ya loud and clear, Panda. I feel the same as you. Ipop's & Deuce's spreadsheets have opened my eyes regarding the types of downs the buyers in Irvine are coming up with. While Roo is right that our down-payment percentage will grow as prices decrease, well so will that of the loaded FCB or whoever it is with all this dough. I am concerned that whenever I buy, even though I will have a strong offer with good credit and at least 20% down... I could be in competition with another buyer who has twice as much cash-in-hand as I do and which one do you think is going to get the attention of the seller? That is a quite likely scenario and it has me worried. While I am glad to know that Irvine is relatively resilient from an investment stand-point, I also feel it's not the be-all, end-all. There are other fine places to buy that are worth taking a look at that do not carry the over-hyped Irvine premium. We all have to decide for ourselves what it is worth to us.
 
[quote author="ipoplaya" date=1231121853][quote author="Roo" date=1231116229]Average doesn't mean much. There's a $7,000,000 downpayment that increases the average a whole lot.



Median is $180,000. Also, keep in mind that only those qualifying for a loan (20%+ down) can buy. Another point is that move-up buyers should have a bigger % down than first-time buyer.



A median of $180,000 or 28% of purchase price totally makes sense.



As far as the drop for next year, you should start to see a bigger decline for mid/high end vs low end. As you probably know, buying in 2010 will still be a little early.</blockquote>


What makes you think a bigger decline is coming anytime soon Roo? Closing prices for December are up over 1% over November and still relatively unchanged for Irvine for the past six months... A house just closed in my old neighborhood for $710K. The same model, with pretty much the same upgrades, on the same street a few houses down closed in March for $739K. That 5% drop is a great example of what RE has done in Irvine this year.



If December is a low/slow time of the year for RE and prices are going up in Irvine, what will cause them to drop when Spring shows up? Heck, it's possible they could actually bounce upward with the low mortgage rates out in the market right now... I think the nicer OC areas have been holding steady for much of the year. AV was falling fast and hard early in the year but has stabilized of late.</blockquote>


I strongly believe in fundamentals.



For example: <a href="http://www.realtor.com/search/listingdetail.aspx?loc=irvine,+ca&mnp=5000&mxp=8000&bor=2&pgsz=3&sid=911da70ffc4046dabb2a24c13688c020&lid=1104683925&lsn=6&srcnt=22">29 Pairie, Irvine, CA: Rent = $6,500</a> and <a href="http://www.realtor.com/search/listingdetail.aspx?pgsz=3&srcnt=3&fhcnt=29&loc=29+pairie,+Irvine,CA&usrloc=29+pairie,+Irvine,CA&ml=8&bd=5&typ=1&sid=e488247130654e3783bab70302e3b50e&lid=1104684614&lsn=1">29 Pairie, Irvine, CA: For Sell: $1,599,000</a>.



The rent of $6,500 is worth $1,040,000 (using a factor of 160). That's 35% less than the asking price.



High end will drop with the coming ARMs. Irvine wasn't and isn't subprime, it is Alt-A and ARMs.
 
SoCal,



I hear your concerns. I can give you an example of FCBs that i know directly. I know that Koreans make up the second largest Asian population, next to the Chinese in Irvine. My good friend's aunt sold a small apartment in "Ap gu jong dong" a prime location in Seoul for around $2 million and bought a home in Northwood Pointe with 100% cash down. They both live off of the real estate income from their other real estate holdings in Korea, and both do not work in the U.S. My cousin's husband is one of the top plastic surgeon in Seoul who also owns several apartments and medical buildings in Kangnam, one of the most expensive real estate in Seoul. For example, The per square footage in Kangnam is more expensive than the prime real estate in Manhattan. She told me that two of her affluent friends have bought a house in Irvine (100% cash) to send their kids to University High. Recently, I read in the Korean newspaper that they are now marketing one week House Hunting Tours in Los Angeles and Orange County where affluent Korean buyers are bargain hunting. I have also read that getting a traveler's visa has become much looser than before, which should open up floodgates for more immigration into the U.S.



I don't really know much about the Foreign Chinese Cash Buyers in Irvine so i can't really make any comments about them.
 
Not to change the subject, but <a href="http://www.latimes.com/news/local/la-me-ocasian28-2008dec28,0,5233619.story">Koreans are also buying in Fullerton</a>
 
[quote author="MacInThebox" date=1231127750]Panda,



Just buy a place in Las Vegas, save 10% on personal income tax. Rent in Irvine, and you'll be set.</blockquote>


I hate Las Vegas. Especially those sick dudes passing out "Call Girl" cards on the street.
 
[quote author="ABC123" date=1231128228]Not to change the subject, but <a href="http://www.latimes.com/news/local/la-me-ocasian28-2008dec28,0,5233619.story">Koreans are also buying in Fullerton</a></blockquote>


Cool, thanks for the link! I don't remember where father-in-law took me out for dinner, but some of authentic Korean restaurants in Fullerton were absolutely amazing. Unfortunately, I can't say the same about Irvine.
 
[quote author="PANDA" date=1231128453][quote author="MacInThebox" date=1231127750]Panda,



Just buy a place in Las Vegas, save 10% on personal income tax. Rent in Irvine, and you'll be set.</blockquote>


I hate Las Vegas. Especially those sick dudes passing out "Call Girl" cards on the street.</blockquote>


I went to Las Vegas for Christmas and was surprised that I wasn't assaulted when I went out on the Strip by people with those fliers and cards. I didn't see a single one of them. I'm not sure if it is a reflection of the state of the economy, or if Las Vegas is trying to clean up it's image some. But they were notable by their absence.
 
Obviously Vegas is not where you would raise your family. However, if you own a profitable business that can be located anywhere, setting up shop in Vegas offers a huge advantage in terms of accumulating wealth. You probably don't need to wait long before you buy there. The tax savings alone may be enough to pay the mortgage. Imagine that. You can still rent a place in Cali and spend a significant amount of time there until the price of your desired area drops. If I have a choice, that is something I'd look into seriously.
 
[quote author="MacInThebox" date=1231147801]Obviously Vegas is not where you would raise your family. However, if you own a profitable business that can be located anywhere, setting up shop in Vegas offers a huge advantage in terms of accumulating wealth. You probably don't need to wait long before you buy there. The tax savings alone may be enough to pay the mortgage. Imagine that. You can still rent a place in Cali and spend a significant amount of time there until the price of your desired area drops. If I have a choice, that is something I'd look into seriously.</blockquote>


Is it as simple as buying a home in LV to avoid paying california state tax? Is there some "creative accounting" involved.
 
[quote author="MacInThebox" date=1231147801]Obviously Vegas is not where you would raise your family. However, if you own a profitable business that can be located anywhere, setting up shop in Vegas offers a huge advantage in terms of accumulating wealth. You probably don't need to wait long before you buy there. The tax savings alone may be enough to pay the mortgage. Imagine that. You can still rent a place in Cali and spend a significant amount of time there until the price of your desired area drops. If I have a choice, that is something I'd look into seriously.</blockquote>


Mac,



I know that the taxes to run a S-CORP in the state California is expensive compared to Illinois. I think their annual franchise tax is like $800 a year. I believe Joe Sugarman ("The guy who made the Blu Blocker commercials in the 80s") moved his entire operation from Northbrook, IL to Las Vegas for this same reason to save on taxes. I'm not really sure where the fine line is. I know couple of my vendors who run their business operations in Orange County, CA but consider themselves as a Nevada corporation, which I find to be very odd. I know that i am going to try to keep my IL S-Corp as long I possibly can as I am not looking forward to these high business taxes in California. My CPA told me that the state of California is extremely agressive in collecting their taxes, I hear if you are caught running your business in California pretending to be a Las Vegas corporation to evade taxes, the fines are steep. I'm sure Awgee would know a lot about this than me.
 
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