CDM market

[financeguy_IHB]

There's been a lot of analysis done on this blog showing that prices have to fall in Irvine, in order to justify income levels. I was wondering if the same can be said about Corona Del Mar though. I really like the area, especially the village, but it's out of my reach right now. Given that the area is already built to capacity and the demand of being close to the beach, do you guys really see prices falling there too?

 

[awgee_IHB]

There's been a lot of analysis done on this blog showing that prices have to fall in Irvine, in order to justify income levels. I was wondering if the same can be said about Corona Del Mar though. I really like the area, especially the village, but it's out of my reach right now. Given that the area is already built to capacity and the demand of being close to the beach, do you guys really see prices falling there too?

Yeah, prices will fall, but as in all the highest priced areas, they will never fall to income affordability levels. Many properties in the most expensive neighborhoods are purchased with large amounts of cash.

 

[cletus_IHB]

There's been a lot of analysis done on this blog showing that prices have to fall in Irvine, in order to justify income levels. I was wondering if the same can be said about Corona Del Mar though. I really like the area, especially the village, but it's out of my reach right now. Given that the area is already built to capacity and the demand of being close to the beach, do you guys really see prices falling there too?

Here's my rebuttal... I might like a certain area, but at some point the 'gap' between two areas makes me choose the lessor area because of cost.

Example... say I like Corona Del Mar. I also like Shady Canyon, but not as much. Prices are similar... therefore my preference is CDM. Prices in Shady drop 30%. Now I have to ask myself, do I like CDM 30% more than Shady Canyon? Now, maybe not all people will think this way, you'll have people who "must" move to CDM. But others will look elsewhere.

Now, the CDM people are probably typically in pretty strong financial standing, and can hold out in most cases... so their prices won't drop as much. This is why in some areas a single or very few number of foreclosures can drop prices dramatically... all organic seller might "wait and hold"... but a bank will sell at free market, they won't want to sit on a home for 2-3 years and wait. This will cause immediate downward pressure.

Delroy

 

[Strom_IHB]

There are plenty of "spec" houses down here that have yet to sell. There are also plenty of "landlords" who got into the market when things were good, and now are looking for an exit (and are complaining that "everyone's looking for a deal"). As long as I can rent for 1/3 to 1/2 of the ownership cost, I will continue to do so. I don't expect it to get to rental parity, but it's just crazy right now.