Expectation & Predictions going forward

You can already buy new homes that sold a few at 1 million at about 700K. Example Serissa (largest plan) in northwood II went for 1 million in 2006. La casella is selling it for 720K. Paloma in PS
sold at about 1mil + in 2006. Today the largest paloma is 720K new. that is about a 30% reduction from peak. another 20% from here would put it at 575K.

How many people would like paloma plan 4, if it were around low 600's to high 500's. that would be almost 45% drop from peak.

But again if interest rates stay like this or 0.25-0.5% higher for next year or so it may take 2 years to get there. In the meantime one might have spent 50K on renting a equivalent place as well.

Like i said in previous posts after following areas like mission/aliso/laguna niguel/irvine and looking around the areas and schools we would like to live by, I notice a premium of 10-15% for irvine homes at the peak and even now.

Same inventory issue exists in all those areas as well.



[quote author="irvinehomeowner"]
[quote author="IACRenter"]
IHO,

I have to agree with Qwerty. As much as I love Irvine, I don't think it is so special to be immune from larger market forces. It may always carry a premium to surrounding OC cities (i.e. TIC branding), but in the long run fundamentals of the market will affect Irvine prices.

Due to the larger % of cash buyers, low inventory, and new TIC price floor, Irvine RE has stabilized temporarily. But just like those stubborn/special beach communities, Irvine may trail the overall SoCal RE market for price reductions.
[/quote]
I don't think Irvine is TOTALLY immune... just more immune than the perma-bears thought at the IHB. Even now, just for all of OC generally, there is a bit of backtracking on how much of an effect OARMs and foreclosures are really going to have.

How much of a reduction and over what period of time are the interesting questions.
Click to expand...
And that is my point.

Granted bubbles are symmetrical, but at this point in time I'm not seeing much of a symmetry at certain prices points. Like the last bubble, there was a slight run-up midway through, but this looks more like a plateau that may not dip any lower. Even if it were to drop 10 percent from here... that's still higher than everyone (including myself) were predicting.

It's easy to say that 2013 will be where it bottoms out at... I say that all the time... but the hard part is what exactly will it bottom out at? If an across the board 40% correction should occur, than that would mean a $1mil house in 2006 should settle at $600k in 2013 (adjusting for inflation over 7 years puts that at about $720k).

How many of us think that we'll be buying houses that sold *new* in 2006 for $1mil for $720k in 3 years? I'm all for that... but that math just doesn't seem to work. I do hope my math is wrong.

EDIT: Typos.[/quote]
 
You're cherry picking on data points a bit... I don't ever remember Paloma going for $1mil... that must have been fully loaded with sun roof and 20" wheels. I know that Los Colinas was the $1m straddle product and while the bigger plan has dropped to about $1mil (previously at around $1.2+)... they don't sell Plans 1/2 anymore because those would probably have to go for less than the current trading threshold of $900k (which is only 10% off).

I'm going to have to confirm those Northwood II prices because Camelia is still trying to trade at $830k+ right now.
 
[quote author=irvinehomeowner board=irvinere thread=628 post=7262 time=1267675306
I'm going to have to confirm those Northwood II prices because Camelia is still trying to trade at $830k+ right now.[/quote]

Yes, and Serissa is trading even lower I believe.
 
@waitin4ever:

So I did some Redfin-ing and I don't see any Serissas sold in 2006 for $1mil... there were only a few over $900k with the closest at $962k. In addition, these didn't sell brand new for $1mil in 2006, they sold for mid $700k up to $800k in 2004.

Considering closed sales are at about the 2004 prices... I'm not seeing that as a 40% drop. And even if I take that anomaly at $962k, there is a current listing at $739k and that's only a 23% drop.

And let's step back here... if $750k is your buy price... do you think those Serissas are going to satisfy what you want for that coin? How those went for above $900k in 2006 is beyond me because around that same time, you could get detached SFRs with 3-car garages for the same price.

And remember... I'm focusing on detached SFR, attached housing will naturally trade lower as there are more factors to consider (HOA, layout, amenities etc etc).

Let's mark this... brand new 4/3 detached SFRs in 2010 are selling for $820k (Sonoma Plan 2). What will they be selling for in 2010?
 
I think you misunderstood my comment. I was trying to say that the the current reduction from peak is at 25%+/- (2-3) on specific units.

If things drop from here about 20% that would be the 40% mark everyone has been predicting. I didn't say it is already 40% below peak.

The question i was asking is how long do you wait for that 20% drop. IF it is slow over 4 years that inflation adjusted it may not be excatly 20% from today in dollar terms but lesser.







[quote author="irvinehomeowner"]@waitin4ever:

So I did some Redfin-ing and I don't see any Serissas sold in 2006 for $1mil... there were only a few over $900k with the closest at $962k. In addition, these didn't sell brand new for $1mil in 2006, they sold for mid $700k up to $800k in 2004.

Considering closed sales are at about the 2004 prices... I'm not seeing that as a 40% drop. And even if I take that anomaly at $962k, there is a current listing at $739k and that's only a 23% drop.

And let's step back here... if $750k is your buy price... do you think those Serissas are going to satisfy what you want for that coin? How those went for above $900k in 2006 is beyond me because around that same time, you could get detached SFRs with 3-car garages for the same price.

And remember... I'm focusing on detached SFR, attached housing will naturally trade lower as there are more factors to consider (HOA, layout, amenities etc etc).

Let's mark this... brand new 4/3 detached SFRs in 2010 are selling for $820k (Sonoma Plan 2). What will they be selling for in 2010?[/quote]
 
Many Asians were very aggressive in Real Estate before and after the Housing Bubble so they made tons of equity/$$$.
 
[quote author="ocguy"]Many Asians were very aggressive in Real Estate before and after the Housing Bubble so they made tons of equity/$$$.[/quote]
. . . and some lost a ton of equity depending on when they purchased their house.
 
That is very true. What I'm seeing is that 2003 and before still has lot of equity. 2004 depending on newer or very old homes (my judgement is based on condo/ townhome market)
either even or slight positive. Almost all 2005 are below. Ofcourse there are people listing at WTF prices. But I'm sure those are not real.

IHO,
maybe the homes you are looking at 4/3 w 3 car garage etc are probably the most popular type of homes. thats why you are not finding any reductions below 2006 levels.
But that really is very amazing. I'm really surprised that those are holding so well like you have mentioned many times.


[quote author="pebbles"]
[quote author="ocguy"]Many Asians were very aggressive in Real Estate before and after the Housing Bubble so they made tons of equity/$$$.[/quote]
. . . and some lost a ton of equity depending on when they purchased their house.[/quote]
 
[quote author="pebbles"]
[quote author="ocguy"]Many Asians were very aggressive in Real Estate before and after the Housing Bubble so they made tons of equity/$$$.[/quote]
. . . and some lost a ton of equity depending on when they purchased their house.[/quote]

Sure, there's always two sides of the coin, but at least mine would explain why there are some buyers who can afford such homes (referring to older money).
 
[quote author="ocguy"]
[quote author="pebbles"]
. . . and some lost a ton of equity depending on when they purchased their house.[/quote]

Sure, there's always two sides of the coin, but at least mine would explain why there are some buyers who can afford such homes (referring to older money).[/quote]
Although I'm not asian and my wife is only half, we sold our home in LA in 2005 with a good amount of equity (more luck than good timing). When we were looking for a home in Irvine we thought the prices were even more nuts than our home in LA so we decided to wait.
 
no matter what everyone argues, you can't fight current evidence. Demand is very very strong in irvine. Go on redfin and do a search for newer SFR in Irvine under $800K . That's right, it doesn't exist. Move up to $900K... still barely any inventory. Fact of the matter is it's pure supply and demand. So long as demand for SFR's in Irvine stays this strong, plan on continued upward pricing pressure. I've been fooling myself thinking that demand was going to weaken. It's only gotten stronger and stronger since I've been looking (last Oct). You think there's tons of shadow inventory out there? It doesn't matter. The lender's aren't stupid. Even short sales are getting a huge amount of offers and interest. Look at 28 Grape Arbor (Camelia in NWII) short sale. It garnered much attention and is already under contract. 23 Grape Arbor (std sale) was listed at $875K and is also under contract (I dont know what final price was.. but prob ~$840-850??)... I spoke to Mike @ Sonoma... let me tell you... expect prices for the New Home Collection to continue to increase... Plan 1 started at $771K and they will be at $850K in no time representing a +10% increase.
 
[quote author="akim997"]no matter what everyone argues, you can't fight current evidence. Demand is very very strong in irvine. Go on redfin and do a search for newer SFR in Irvine under $800K . That's right, it doesn't exist. Move up to $900K... still barely any inventory. Fact of the matter is it's pure supply and demand. So long as demand for SFR's in Irvine stays this strong, plan on continued upward pricing pressure. I've been fooling myself thinking that demand was going to weaken. It's only gotten stronger and stronger since I've been looking (last Oct). You think there's tons of shadow inventory out there? It doesn't matter. The lender's aren't stupid. Even short sales are getting a huge amount of offers and interest. Look at 28 Grape Arbor (Camelia in NWII) short sale. It garnered much attention and is already under contract. 23 Grape Arbor (std sale) was listed at $875K and is also under contract (I dont know what final price was.. but prob ~$840-850??)... I spoke to Mike @ Sonoma... let me tell you... expect prices for the New Home Collection to continue to increase... Plan 1 started at $771K and they will be at $850K in no time representing a +10% increase. [/quote]

I agree there is a lack of supply in Irvine right now and until that is corrected there is no chance for significant price declines.

Based on the supply statistic alone, I would hold on purchasing in Irvine. Why try to buy in a temporary sellers market?

If you have the option to wait it out (?6-12 months), I suspect you will be rewarded. There are larger market forces at play that need time to unwind.
 
I think the problem is that TIC set a benchmark with the 2010 Collection pricing... so it might take longer than 6-12 months to see any significant price drops... if any at all.

And even if sales move slower, they can throw in incentives or hold off inventory (even more so since they own the land, not the builders).

The hope is distressed properties will hit the market but with the investors in Irvine, we are not seeing a lot of that. Remember all those bubbles we used to see in Quail Hill from ForeclosureRadar on the IHB? Not so many any more.

In the sub $1mil market, does anyone remember new homes in Irvine getting reduced by 20% by the builders?
 
IHO, do you happen to remember what the maps used to look like (I don't)

looks like there about 40 properties in Quail Hill in some stage of foreclosure. Is this a lot less than a couple years ago?

21bm33o.jpg
 
I don't know if the total is less but the mid-upper range on the east side was more dinged up. And there were more Ps and Bs. Notice there is only one B in the area that is the $1m-$1.5m range.

It was those maps that had me hopeful that those QH SFRs were going to drop more... and they have, from about $1.4m to $1.1m... but not to the original 800+k they originally sold for in 2003.

I think one of the few places that sold new and have dropped back to or below their original sales prices are Columbus Grove (these were built new in 2006, the peak). They are trading at about 10% below their 2006 prices.
 
I'm more tired of seeing those A's stay A's forever and ever. I have a place on my street where the original auction date was August 2009....so its been postponed about 8 times by now. I have no idea why, house is empty with an occasional weekend stay and it is not listed as a short sale. Just got postponed again from yesterday to April 11th.
 
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