Bench Mark Pricing in Irvine

[Geotpf_IHB]

Those models are from a project called Andalucia that California Pacific Homes abandoned.

What will happen to them? Will they be sold at some point, or just sit vacant forever?

 

[usctrojanman29_IHB]

Those models are from a project called Andalucia that California Pacific Homes abandoned.

What will happen to them? Will they be sold at some point, or just sit vacant forever?

Maybe we can have some IHB gatherings over there.

 

[irvine_home_owner_IHB]

Those models are from a project called Andalucia that California Pacific Homes abandoned.

What will happen to them? Will they be sold at some point, or just sit vacant forever?

They will probably "Prado" them off.

(There were 3 models from Pardee Homes called Prado in Portola Springs and the neighborhood was never built. They were listed in the MLS and took offers in an auction type manner... I have no idea what they sold for eventually)

 

[villagepeople_IHB]

BK, do you know the irvine company [or any other master planned community] tried to set a "benchmark" $/sq ft. the last downturn [~91-96]? And if they did, how successful were they?

 

[no_vaseline_IHB]

Oops, I thought that was one home, and a guest house, horsie area out back, and polo field in front.

Funny. Not in Irvine, CA.

You have 12 posts. Awgee has 4000+. Here's the sign you missed.

 

[bruswain_IHB]

Actually IHO you are wrong. The FCB are not interested in Irvine. They are interested in the San Gabriel Valley.

One reason I moved to Irvine is to escape the FCBs. The FCBs in the San Gabriel Valley do not make good neighbors. Most don't even live in the houses full time and their houses are often occupied by their concubines or spoiled teenagers. Not exactly people you'd want to have neighborly relations with.

If you believe the Taiwan media, Irvine is a popular destination for cash laden Taiwanese fugitives. A few months ago the Taiwan media reported that a close confidant of the indicted ex-first lady of Taiwan fled Taiwan with a pile of tainted money and is now living in Marquee Place.

I'm confused. Irvine has lots of FCB or no? I always thought they did, but you mention that you moved to Irvine to avoid them. In fact, I am having second thoughts on Irvine (my wife really wants Irvine) because I don't want to live among so many asians. If I did, I would move to San Gabriel or Alhambra or Rowland Heights. Am I a reverse racist? I think so.

I grew up in Diamond Bar when it was around 30% asian. I don't know what it's at now, but last I checked, it was like 50%. I'd like somewhere with about 25~35%. Is that Irvine? (I think UCI is 60%+!!!???)

 

[drewkawa_IHB]

damnit.... what the hell is a FCB?

So far Dr. Google says,

1. FCB Bank (you guys bankers or sumthin?)

2. FCBarcelona (beats the hell outta me)

3. Florida Council for the Blind (ohhhh the irony)

Mahaloz,

Drew

 

[SoCal78_IHB]

damnit.... what the hell is a FCB?

Foreign Cash Buyer

 

[irvine_home_owner_IHB]

damnit.... what the hell is a FCB?

Foreign Cash Buyer

Hehe... it's reference I made up to explain the stubborness of home prices in certain areas of Irvine.

Foreign: Because most foreign buyers do not care about fundamentals or are more concerned about non-financial reasons to buy such as schools, south facing front door and closeness to 99 Ranch.

Cash: Because they are unaffected by the current credit crunch and can make large down payments.

Buyer: Because they are the only ones who are buying in this knife-catching* climate

It's not a real theory backed up by any expertise or years of housing industry experience so don't start bandying it around during your real estate conversation with friends.

*knife-catching: This can be googled but it's basically people who buy homes even though prices are still dropping significantly

There are few other IHB phrases you may want to look around for as a fun exercise:

icicle gun

cranky pants

doing a PANDA

Welcome to the IHB forums.

 

[nilam_IHB]

Those models are from a project called Andalucia that California Pacific Homes abandoned.

What will happen to them? Will they be sold at some point, or just sit vacant forever?

I like to think that the Bluths are living there. Anyone else miss Arrested Development?

 

[roundcorners_IHB]

Resales will be based on new benchmark pricing. Strategy will be a release of limited number of new homes and just enough to satisfy the cravings of desperate Chinese buyers for new homes. As soon the transactions take place that creates the benchmark validation full press release to OCR, LA Times, Irvine Worlds News, and etc to create excitement and frenzy. Spirit writer Adam Probolsky will be anxiously waiting to publish the juicy news. A full page front page news will also be in OC Metro.

Sounds like a good plan. Perhaps they can attract a few foreign knife catchers. It will be a difficult sell when resales are averaging $200/SF in a couple of years.

The strategy is to build new with all the bell and whistle like the Iphone so the resales are considered obselete like the Motorola brick phone. Create gadgets like California outdoor room and expansive glass have seemless transition to the outdoor as well some mid century Modernism to appeal to the Gen. X

Bk, I have a suggestion, can we skip the sliders & french doors; and go straight for the Glass Walls…

This is the same strategy as the Loft Ideas,

People are thinking of this; when the hear the word “Loft”

And getting this…

 

[cl12_IHB]

Actually IHO you are wrong. The FCB are not interested in Irvine. They are interested in the San Gabriel Valley.

One reason I moved to Irvine is to escape the FCBs. The FCBs in the San Gabriel Valley do not make good neighbors. Most don't even live in the houses full time and their houses are often occupied by their concubines or spoiled teenagers. Not exactly people you'd want to have neighborly relations with.

If you believe the Taiwan media, Irvine is a popular destination for cash laden Taiwanese fugitives. A few months ago the Taiwan media reported that a close confidant of the indicted ex-first lady of Taiwan fled Taiwan with a pile of tainted money and is now living in Marquee Place.

I'm confused. Irvine has lots of FCB or no? I always thought they did, but you mention that you moved to Irvine to avoid them. In fact, I am having second thoughts on Irvine (my wife really wants Irvine) because I don't want to live among so many asians. If I did, I would move to San Gabriel or Alhambra or Rowland Heights. Am I a reverse racist? I think so.

I grew up in Diamond Bar when it was around 30% asian. I don't know what it's at now, but last I checked, it was like 50%. I'd like somewhere with about 25~35%. Is that Irvine? (I think UCI is 60%+!!!???)

The % of asians seems like a moving target. If a buyer's prefered rate is 25-35%, what if in a fews years it rises above that? Will the buyer become unhappy about the house? one sure way to have a constant rate is to buy a house in Asia, where a buyer will always have approximately 100% asians forever. (Just a joke, I thought it's funny how people come up with an "ideal" racial mix - what formula do people use or do they rely on a "gut" feeling?)

 

[High Gravity_IHB]

Those models are from a project called Andalucia that California Pacific Homes abandoned.

What will happen to them? Will they be sold at some point, or just sit vacant forever?

They will probably "Prado" them off.

(There were 3 models from Pardee Homes called Prado in Portola Springs and the neighborhood was never built. They were listed in the MLS and took offers in an auction type manner... I have no idea what they sold for eventually)

Prado-ing them off worked in PS because Taylor Morrision took over Pardee's lots and the three Prado models are now nestled among Las Colinas. Unless someone takes over the Cal Pac lots, I don't think they can Prado these off because they are in the middle of an abandoned field. Also, from Sand Canyon, the Andalucia models look like Kelsy Lane from the late 1990s.

 

[bkshopr_IHB]

This $200/sf theory is not possible.

Construction for an essential efficient house is about $100-$130/sf. The remainder of $70/sf has to cover the cost of land, utility improvement such as gas, power, storm drain, streets, street lights and community features such as monument signs, towers, landscapes, sidewalks, community parks, pools, and recreational centers. Indirect soft costs such as the 250 staff that help to design, process, manage, and build communities. TIC is not a charity organization.

Land Residual must meet minimal standard.

There must be a minimum of 20,000 sf of homes for sale in an Irvine acre of land as incentive motivation for developer. This minimum standard equates to $375/sf. Another word one acre of land must yield $7.5 million of sale to pay for all of the items mentioned.

Density is paramount in the equation.

Builders would love to sell just one 20,000 sf. home for $7.5 million but that is not realistic in finding a buyer. The 20,000 sf is then divided into many homes to target the likely buyers. For simple math sake Let us divide the 20,000 sf into 10 homes (10 units per acre). Each home will average about 2,000 sf. at $750,000. Decada, a detached condo project, met this density but the footage is no way near 2,000 sf per home. The average for Decada was 1,700 sf. and 3,000 sf shy for one acre. The penalty was the detached nature of the project having too many side yards.

Use a bag of Tortilla chip to explain a possible strategy for the developer.

A one pound chip cost $3.75 but consumers wanted a better value during the recession so the company added 33% more to the same bag normally was filled with air. Extra graphic is added near the top of the bag that reads “33% more chips” The price is unchanged at still $3.75. Savvy consumer like Irvine Renter would immediately perform his math: $3.75/ 1.33 pound=$2.81 per pound. He is happy that the price has reached its fundamental.

This is an ideal scenario because there is no loss in density because the super market shelf holds 36 bags still holds the same number of bags. There is not change in the bag size except replacing air with 33% more chips. This made no difference in delivery and shipping either. The bags fit into the same card board box and stacked on the same wooden pallet.

Developers’ solutions

How would a builder deliver a product that does the same thing as the supermarket and consumer would get 33% more thus lower the price from $375 to $281/sf. First is to pump up cheap footage without changing density. In one acre of land the developer must increase footage by 33% to 26,600 sf for one acre in order to sell homes at $281/sf. Home with yards will be completely out of the picture as demonstrated by using Decada.

A triplex product “Treo” will likely offer the “Tortilla Chip” strategy. This product has tiny yards and fewer side yards which is ideal for high footage yield per acre. Its density is at 14 homes per acre thus each home would likely average 1,900 sf. This product is a complete 2 story box without any single story roofs. The garages are at the back via Alley thus allowing the frontal architecture to encroach into the front yard to save land usage.

A typical Triplex has one very bad unit trapped in the middle with 2 good end units. Treo offers all end units that make this product appealing. Downside is the “bad” unit is a carriage unit built over all garages but silent openers cure the noise issues. The next issue is living over garages where neighbors kept flammable items in the garages such as paint, thinners, cleaning products.

More third story would be built to increase 33% cheap footage.

To deliver an entry level home like the 2 story detached condos would be impossible without going vertical. The consumers will be forced to buy the extra 33% just to balance the equation.

We will continue to see future products lacking or no yards, McMansionalized with 3rd floor, triplexes and other attached solutions, Conventional detached products are artificially pumped up with cheap footage without decreasing density, value villages, and cost conscious builders like Pulte and KB homes on the ranch.

 

[irvine_home_owner_IHB]

Use a bag of Tortilla chip to explain a possible strategy for the developer.

A one pound chip cost $3.75 but consumers wanted a better value during the recession so the company added 33% more to the same bag normally was filled with air. Extra graphic is added near the top of the bag that reads “33% more chips” The price is unchanged at still $3.75. Savvy consumer like Irvine Renter would immediately perform his math: $3.75/ 1.33 pound=$2.81 per pound. He is happy that the price has reached its fundamental.

This is an ideal scenario because there is no loss in density because the super market shelf holds 36 bags still holds the same number of bags. There is not change in the bag size except replacing air with 33% more chips. This made no difference in delivery and shipping either. The bags fit into the same card board box and stacked on the same wooden pallet.

This is such an awesome analogy. Not sure if it works for homes but it really puts what you're saying into perspective... like adding a 3rd story which was once occupied by... air. Hehe.

 

[bkshopr_IHB]

Use a bag of Tortilla chip to explain a possible strategy for the developer.

A one pound chip cost $3.75 but consumers wanted a better value during the recession so the company added 33% more to the same bag normally was filled with air. Extra graphic is added near the top of the bag that reads “33% more chips” The price is unchanged at still $3.75. Savvy consumer like Irvine Renter would immediately perform his math: $3.75/ 1.33 pound=$2.81 per pound. He is happy that the price has reached its fundamental.

This is an ideal scenario because there is no loss in density because the super market shelf holds 36 bags still holds the same number of bags. There is not change in the bag size except replacing air with 33% more chips. This made no difference in delivery and shipping either. The bags fit into the same card board box and stacked on the same wooden pallet.

This is such an awesome analogy. Not sure if it works for homes but it really puts what you're saying into perspective... like adding a 3rd story which was once occupied by... air. Hehe.

We agree on the same thing!!

 

[25inIrvine_IHB]

This $200/sf theory is not possible.

Construction for an essential efficient house is about $100-$130/sf. The remainder of $70/sf has to cover the cost of land, utility improvement such as gas, power, storm drain, streets, street lights and community features such as monument signs, towers, landscapes, sidewalks, community parks, pools, and recreational centers. Indirect soft costs such as the 250 staff that help to design, process, manage, and build communities. TIC is not a charity organization.

I'm not nitpicking your numbers or arguing anything but I was just thinking about that stuff you included $70/sf area and was hoping for some clarification. With the exception of the cost of land, are all those other things now included in the additional mello roos bonds? Seems like including them with the value of the home would be double counting. Or is there like a percentage? For example, 50% tied to the cost of the, 50% tied to the MR bond?

 

[acpme_IHB]

one question: all these minimum costs and standards are based on the assumption that land values are what TIC says they are?

 

[IrvineRenter_IHB]

This $200/sf theory is not possible.

Construction for an essential efficient house is about $100-$130/sf. The remainder of $70/sf has to cover the cost of land, utility improvement such as gas, power, storm drain, streets, street lights and community features such as monument signs, towers, landscapes, sidewalks, community parks, pools, and recreational centers. Indirect soft costs such as the 250 staff that help to design, process, manage, and build communities. TIC is not a charity organization.

Unless the builders on the Ranch are plating things with gold, they are not paying that much for construction costs. They are selling new homes in Riverside for that price and making a profit. The builders I talk to tell me that construction prices are around $65/SF right now down from the $85/SF they were paying during the insanity. Some have even driven prices under $50/SF by stripping the units down to the cheapest possible finishes.

The costs of improvements and fees is recouped through the Community Financing District. Here were the Mello Roos are ridiculously high, and the improvement costs are relatively low (they are not flattening mountains here), the actual net cost to the developer for finished lots is quite low, probably closer to $10/SF than $70/SF. Since the Mello Roos are so high, their net cost may actually be zero.

Land Residual must meet minimal standard.

Only in the world of the Irvine Company. It must still be positive in order to develop, but it only has to be worth $4,000,000 an acre because the Irvine Company wants to be greedy and make $400,000 per unit sold. I bet most people do not realize how much of the price of a new house is pure profit to the Irvine Company. If they did, there would probably be a revolt...

There must be a minimum of 20,000 sf of homes for sale in an Irvine acre of land as incentive motivation for developer. This minimum standard equates to $375/sf. Another word one acre of land must yield $7.5 million of sale to pay for all of the items mentioned.

Density is paramount in the equation.

Yes, Irvine will never become less dense.

Builders would love to sell just one 20,000 sf. home for $7.5 million but that is not realistic in finding a buyer. The 20,000 sf is then divided into many homes to target the likely buyers. For simple math sake Let us divide the 20,000 sf into 10 homes (10 units per acre). Each home will average about 2,000 sf. at $750,000. Decada, a detached condo project, met this density but the footage is no way near 2,000 sf per home. The average for Decada was 1,700 sf. and 3,000 sf shy for one acre. The penalty was the detached nature of the project having too many side yards.

Use a bag of Tortilla chip to explain a possible strategy for the developer.

A one pound chip cost $3.75 but consumers wanted a better value during the recession so the company added 33% more to the same bag normally was filled with air. Extra graphic is added near the top of the bag that reads “33% more chips” The price is unchanged at still $3.75. Savvy consumer like Irvine Renter would immediately perform his math: $3.75/ 1.33 pound=$2.81 per pound. He is happy that the price has reached its fundamental.

This is an ideal scenario because there is no loss in density because the super market shelf holds 36 bags still holds the same number of bags. There is not change in the bag size except replacing air with 33% more chips. This made no difference in delivery and shipping either. The bags fit into the same card board box and stacked on the same wooden pallet.

This will work to a point, but the Irvine Company has already packed the bag pretty full. The detached clusters and three-story units are all about getting more salable square footage on an acre of land. The only way I see them getting more is to make even more attached product.

Developers’ solutions

How would a builder deliver a product that does the same thing as the supermarket and consumer would get 33% more thus lower the price from $375 to $281/sf. First is to pump up cheap footage without changing density. In one acre of land the developer must increase footage by 33% to 26,600 sf for one acre in order to sell homes at $281/sf. Home with yards will be completely out of the picture as demonstrated by using Decada.

A triplex product “Treo” will likely offer the “Tortilla Chip” strategy. This product has tiny yards and fewer side yards which is ideal for high footage yield per acre. Its density is at 14 homes per acre thus each home would likely average 1,900 sf. This product is a complete 2 story box without any single story roofs. The garages are at the back via Alley thus allowing the frontal architecture to encroach into the front yard to save land usage.

A typical Triplex has one very bad unit trapped in the middle with 2 good end units. Treo offers all end units that make this product appealing. Downside is the “bad” unit is a carriage unit built over all garages but silent openers cure the noise issues. The next issue is living over garages where neighbors kept flammable items in the garages such as paint, thinners, cleaning products.

More third story would be built to increase 33% cheap footage.

To deliver an entry level home like the 2 story detached condos would be impossible without going vertical. The consumers will be forced to buy the extra 33% just to balance the equation.

We will continue to see future products lacking or no yards, McMansionalized with 3rd floor, triplexes and other attached solutions, Conventional detached products are artificially pumped up with cheap footage without decreasing density, value villages, and cost conscious builders like Pulte and KB homes on the ranch.

 

[bkshopr_IHB]

one question: all these minimum costs and standards are based on the assumption that land values are what TIC says they are?

Land value must meet TIC's expectation or Bren would cease to build. With so many properties in so many cities under his portfolio the company could focus only on property management or build in Northern CA where consumers and renters are more price resilient.