Buying as investment

OCtoSV said:
I get it - you’re a speculator/short term trader instead of an investor when it comes to equity markets. And speculating on appreciation in Irvine RE has been a winning bet. Up here too as my house doubled since we bought it 6 yrs ago. Most RE investors look for positive cash flow from day 1. Banking on future appreciation making up for negative preset value cash flow Is perhaps least risky in Irvine but still risky and the risk reward compared to what is available with investment grade or even slightly below investment grade corporate bonds - some people just gravitate to RE because it’s worked in the past and they think those market dynamics are somehow permanent. But we’re in a new rate cycle and 6-7% mortgage rates are the new normal. Maybe there’s enough cash and desperate financed buyers to keep pushing prices up a few percentage points a year but the return will be much better on that bond especially if rates come down which will be only due to recession signals. An inflationary real estate market will be met with rising rates - the Fed has made that pretty clear. Up here rates have finally driven the San Francisco and San Mateo County medians lower (-3.6 and -1.7% respectively) while Santa Clara Co median is up 2.1%) and the more affordable Contra Cost Co is up 4.7%. Irvine is for sure the least risky OC market but no longer a safe investment due to rates and better yields available in fixed income.
Click to expand...

You are assuming that investors are only putting the minimum down of 25%, there are a LOT of investors in Irvine who are cash buyers and high down payment buyers (think 1031 exchange buyers who have to use all of their funds in the exchange). I know for a fact that Irvine will continue to out perform most all it's neighboring cities for many reasons in terms of appreciation. Over the longer term Irvine will appreciate at a rate that will outpace the inflation rate.
 
usctrojancpa said:
You are assuming that investors are only putting the minimum down of 25%, there are a LOT of investors in Irvine who are cash buyers and high down payment buyers (think 1031 exchange buyers who have to use all of their funds in the exchange). I know for a fact that Irvine will continue to out perform most all it's neighboring cities for many reasons in terms of appreciation. Over the longer term Irvine will appreciate at a rate that will outpace the inflation rate.
Click to expand...
I agree with usc about irvine long term appreciation. I bought my Woodbury home the same time and about the same price as my parents buying theirs in Brea which is considered a pretty good city. Theirs is a bigger home but when i sold mine last year, i got 200% return compared to theirs which appreciated about 80-90% at the time.
 
Irvine will continue to grow as long as it's ties with Asia are stable. It's starting to look unstable and ties are not getting better. It hasn't happened yet but if there is instability in the global scale with US/Asia, Irvine will be hurt significantly. Foreigners will not want assets in another country that they aren't familiar with or born into. The fact that Irvine has such a dependency on foreign money scares me if I was an investor.

The CA political aspect would also worry me being an investor in Irvine. It only takes a Bernie/Warren like candidate to be governor to rally the troops in CA to implement foreign home buying policies. With CA being so left and only getting more left, I would not be shocked if at some point foreign buyers will be banned or heavily taxed to the point where they need to cash out.
 
The wealthy Chinese I know have moved a lot of their assets out of China and have bought investment properties in USA as well as stocks/bonds/CDs....The wealthy ain't got no time for common prosperity.
They only go back because their business is still profitable. I get the feeling that when they do go back...they are anxious they may get stopped by the Gestapo.

Much like alibaba man in Tokyo.
When they ask dual citizens to pick a country...who picks China?

Moving assets out of China is very difficult and the Hong Kong shell company loophole is being intensely audited.
The best method to get money out of China is having a US customer pay for Chinese goods to an agent in USA.
Then the agent pays the Chinese plant in Yuan from an account in China.

I wonder if the CCP are already starting to crack down on this method...because they must know.

Perhaps Chinese buying will dry up due to all the capital controls, but nature (money) finds .......................a way.
 
Last edited:
sleepy5136 said:
I don't know the amount of FCB influence in SGV. I'm speaking specifically about Irvine. With that said, it's ok to disagree :) I'm simply pointing out points that people should be concerned about.
Click to expand...
You are relatively new to IHB/TI... and people have been questioning the stability of FCBs (Foreign... not just Chinese) in Irvine for the last decade and a half.

Instead of weakening... I think it's gotten stronger... and as you can see by USC's posts.... the cash buyers are the ones still keeping prices high in Irvine.

And there have been a number of posts here where new homes are bought but not even lived in by the owners or renters... so there is some just "park the money" mentality going on which is based on appreciation rather than cashflow. The buyers of our last house where foreign and claimed owner occupied... but it ended up being a rental (and that house has appreciated at least 50%).

FCBs gonna FCB.
 
irvinehomeowner said:
You are relatively new to IHB/TI... and people have been questioning the stability of FCBs (Foreign... not just Chinese) in Irvine for the last decade and a half.

Instead of weakening... I think it's gotten stronger... and as you can see by USC's posts.... the cash buyers are the ones still keeping prices high in Irvine.

And there have been a number of posts here where new homes are bought but not even lived in by the owners or renters... so there is some just "park the money" mentality going on which is based on appreciation rather than cashflow. The buyers of our last house where foreign and claimed owner occupied... but it ended up being a rental (and that house has appreciated at least 50%).

FCBs gonna FCB.
Click to expand...
You’re saying what has happened. I’m saying what could happen in the future. If CA decides to ban foreign buyers or even tax the hell out of homes owned by foreigners, you can see a liquidation event. That goes for not only Chinese but all foreign owned homes in CA.

Whether or not that happens is debatable. But with the left agenda right now, I wouldn’t be surprised if it does happen due to lack of housing. Quite frankly right folks wouldn’t mind this change as well.

Keep in mind, home price and mortgage is a one time cost. Tax is perpetual.
 
sleepy5136 said:
The CA political aspect would also worry me being an investor in Irvine. It only takes a Bernie/Warren like candidate to be governor to rally the troops in CA to implement foreign home buying policies. With CA being so left and only getting more left, I would not be shocked if at some point foreign buyers will be banned or heavily taxed to the point where they need to cash out.
Click to expand...
I’d be more concerned with the radical right taking over. DeSantis and Abbott are the ones talking about not letting Chinese nationals buy property.
 
sleepy5136 said:
You’re saying what has happened. I’m saying what could happen in the future.
Click to expand...

What I'm saying is what you are saying that "could happen" has been said many times for the last 15-20 years... and it has NOT happened.

The absorption rate has actually increased.

There were a small percentage of foreign businesses in TIC properties in the 80s/90s... now how many are there?
 
irvinehomeowner said:
What I'm saying is what you are saying that "could happen" has been said many times for the last 15-20 years... and it has NOT happened.

The absorption rate has actually increased.

There were a small percentage of foreign businesses in TIC properties in the 80s/90s... now how many are there?
Click to expand...
have tensions with China been as bad as it currently is in the past 15-20 years?

But regardless, I’m not here saying it will happen. I personally am saying the chances of it happening I would argue would be higher than 15-20 years before.

I personally wouldn’t want to buy RE as an investor where the market is dependent on foreign countries. But that’s me. Everyone else has their different way of managing risk and their investments.
 
But it's not just Chinese... another point you are missing.

Put it this way... of all the cities in OC that housing will fail, do you think it will be Irvine?

Odds and history show last to drop, first to recover.
 
irvinehomeowner said:
But it's not just Chinese... another point you are missing.

Put it this way... of all the cities in OC that housing will fail, do you think it will be Irvine?

Odds and history show last to drop, first to recover.
Click to expand...
I would like to put money that 50% of FCB are Chinese. I’ve looked at OH data and literally you have a street of Chinese last names.
 
sleepy5136 said:
I would like to put money that 50% of FCB are Chinese. I’ve looked at OH data and literally you have a street of Chinese last names.
Click to expand...
Sure, but what are the other 50%? And we know they prefer new homes, but resales have other FCB and even non-FCB buyers.

That diversity is what helps the stability of Irvine home values.
 
usctrojancpa said:
Over the longer term Irvine will appreciate at a rate that will outpace the inflation rate.
Click to expand...
By purchasing at the peak of the largest real estate bubble in world history, you will only outpace inflation if you are able to time your sale to the peak of the next RE bubble... and only if that bubble is sufficiently large enough to exceed the price you paid in inflation-adjusted terms.
 
Liar Loan said:
By purchasing at the peak of the largest real estate bubble in world history, you will only outpace inflation if you are able to time your sale to the peak of the next RE bubble... and only if that bubble is sufficiently large enough to exceed the price you paid in inflation-adjusted terms.
Click to expand...
some people like to roll the dice - too much risk for my tolerance
 
There is a level of stability and strong appreciation in the Irvine market that you don't see elsewhere. The drop in the stock market and other investments have gotten destroyed. Irvine keeps its value and has reason as well. That is the trend. If you have extra cash and can take a 2-3 years negative cash flow then why not. I know multiple people that have done this are very happy.
 
You must log in or register to reply here.
Back
Top