graphrix said:
irvine_home_owner said:
I agree with IRs assessment, but Irvine does seem to attract cash heavy buyers (oh no.... here's that Asian theory again!).
Just looking at IR2's spreadsheet, the average down for 2008 up to September was 37%. I don't know if that qualifies as a large downpayment but there were quite a few that were 100% cash buyers.
I really think the foreign investor/buyer (who may have little bubble knowledge) is a factor to think about here.
I'm looking at a spreadsheet I have of the buyers in 92602 from 6/06-6/07 and I see plenty of Asian names, with a high average down payment/cash buyers. So then could you please explain to me how if sales in 92602 are half of what they were during that time, that these mythical Asian cash rich buyers could possibly effect the sales in Irvine? Seriously, I really would like to know. Because my econ 101 knowledge I have would make me believe that less sales mean less sales period. The percentage of Asian buyers has not changed, the percentage of high down payments/cash buyers hasn't changed, but sales are still lower.
I know this is going to come off as cranky. But, one minute I feel like the Kool-Aid detox process is working for you, then I see this common sense and numerously debunked myth, and I wonder if you are sneaking off to the bathroom to snort a few lines of the Kool-Aid.
No no... crank away... I really feel this needs to be discussed more because I wasn't around for the foreign buyer debunking you speak of.
I've never stated that the number of Asian buyers in Irvine has increased from '06 to now... what I have said is that the number of Asian (nee foreign because I've seen quite a bit of activity from India and the Middle East) buyers in Irvine is higher than other cities so these high down buyers are more prevalent than somewhere like Santa Ana.
And unlike most of you here who still feel the bottom is far away... they probably think the bargains are in Irvine NOW (like most of the population everywhere). 20-30% price drops may be enough for them to jump in because they don't think it's going to go down any further. IPO's data for the last few months has shown a flatter drop than the previous months which can lead them to believe Irvine is bottoming out.
Do I personally believe that? No. If I did... I wouldn't be trying to sell my home (more on that when it happens).
For the last time, Irvine will always have a high percentage of Asian buyers, Irvine will always have a high percentage of large down payments/cash buyers, but when sales are below historical levels, that means there are less buyers period. Whether they are Asians with cash or not, there are just less of them as there are crackercakes like me.
If the high down payment Asians stop buying homes in Irvine, then so will Caucasians. The best thing about this will mean that people will want to buy in Santa Ana because the Hispanics will always want to buy there and the prices there will be higher and going up compared to Irvine. See just how dumb this theory sounds when I put it like that?
That's the thing... Asians won't stop buying homes in Irvine. Your theory is not comparable unless you know of a demographic that buys in Santa Ana that possesess cash reserves like the demographic in Irvine.
Let's go straight numbers:
Let's say the demographic of Irvine has 75% foreign cash-heavy buyers... and that hasn't changed in the last 5 years.
Let's say the demographic of Santa Ana has 10% foreign cash-heavy buyers... and that hasn't changed in the last 5 years.
So going forward... which city is going to drop more slowly in pricing?
I know that IR's (and everyone else's) analysis is based on fundamentals but you still have to take the emotional/psychological/cultural factors into account. Aren't those the factors that helped cause the bubble in the first place? If Kool-Aid is what got is here... don't you think that Kool-Aid will still affect things... especially in areas where Kool-Aid distribution was very prevalent?
To add to that... I think the loans that were made on $500k Santa Ana homes are probably way more riskier than those on $1mil Irvine homes. When I look at those foreclosure maps in the OC Register... the pretty colors seem to indicate that. So the prices will drop... just not as fast due to these "unfundamental" factors.
And although we all like the funny pictures of the Asian ballers... I don't think I'm the only one who thinks this has some merit.
