Has the median home price in Irvine really fallen 17.7% Y-o-Y

[panda]

I am not sure how accurate Zillow is, but the median home price in Irvine now shows $519,700 for a Y-o-Y drop of 17.7%.
http://www.zillow.com/local-info/CA...&rt=8&r=52650%2C276119%2C276486%2C274371&el=0

I want to ask IR2 and Trojan if this data is somewhat accurate? Have prices really fallen 17.7% since a year ago?

If this is true we are only 19% away from Irvine Renter's orginial forecast of the bottom for $421,000 in Irvine. Wow... If this true... I am amazed that Irvine is now correcting like this.

 

[panda]

I just read this from IR2's Irvine Statistics thread. Wow.. the median price seems to be right around $519,700. This is nice correction from 2006 peak of $772,000, an 32.6% drop in median home prices. Wow... I mean Wow!    Get down to $421k, then I am going to sell my gold and moving to Irvine.

The Median Sales Price in April was $525,000, down -7.9% from $570,000 in April of 2010 and down -3.7% from $545,000 last month. The
Average Sales Price in April was $624,607, down -9.8% from $692,228 in April of 2010 and down -5.5% from $661,254 last month. April
2011 ASP was at the lowest level compared to April of 2010 and 2009.

 

[irvinehomeowner]

Only 19% away? After 5 years?

That's still quite a ways to go.

And I guess in the products I'm looking at, I don't see that 32.6% drop. Find me some WPII 3CWGs for $630k... even $750k. Or a $1mil QH home for $700k.

 

[waitin4ever]

What you are looking for is not median home in Irvine. There are very few of those and thus
the premium. I notice about 25% since the peak on most average size/ average feature home.
There might be another 10-15% eventually. I expect long period of no appreciation/slight depreciation
rather than some quick dramatic drop.

Only 19% away? After 5 years?

That's still quite a ways to go.

And I guess in the products I'm looking at, I don't see that 32.6% drop. Find me some WPII 3CWGs for $630k... even $750k. Or a $1mil QH home for $700k.

 

[edhne]

I just read this from IR2's Irvine Statistics thread. Wow.. the median price seems to be right around $519,700. This is nice correction from 2006 peak of $772,000, an 32.6% drop in median home prices. Wow... I mean Wow!    Get down to $421k, then I am going to sell my gold and moving to Irvine.

The Median Sales Price in April was $525,000, down -7.9% from $570,000 in April of 2010 and down -3.7% from $545,000 last month. The
Average Sales Price in April was $624,607, down -9.8% from $692,228 in April of 2010 and down -5.5% from $661,254 last month. April
2011 ASP was at the lowest level compared to April of 2010 and 2009.

In "real" terms, it is actually down even more. If you assume 3% annual inflation deflator, then there is another 16% down in 2005 "constant" dollars.

 

[irvinehomeowner]

What you are looking for is not median home in Irvine. There are very few of those and thus
the premium.

And that's why "median" isn't a very accurate number.

Divide this number into home types and I think you can get a better view of what is going on in Irvine. You're going to see large drops in the ultra high-end and probably in the lower attached/condos but in the SFR products... you'll find that drop lower.

 

[lcms2002]

I do not think that this is correct, if you check each of neighborhood, most of them is down 2-5%, but UCI is down 37%,so it drags down the average. I am not sure why UCI is down so much.  You may see Irvine Realtor's data for comparison, see the thread link below.
http://www.talkirvine.com/index.php?topic=80.0

Irvine housing is down in Jan and Feb, but it is up again in March and May of 2011, now stands at $560K.

 

[panda]

What ever the case may be... one thing i know for sure is that Irvine home prices has broken a critical support of $566k in March of 2009, and we are hitting new lows since the ultimate $766k peak in 2006. We are not at $519,700 with 30 years fixed mortgage rates at 4.25%. The government subsidizing our mortgage back securties will most likely come to end with Qe2 by end of this month. If rates rise to 6-7% in the future may 2013, 2014, etc?.... Irvine Renter's timing may be off, but his bottom prediction may come to pass. A long flat/decline. Soon, I believe that the truly undervalued real estate will decouple. Irvine still has ways to go to deflate.

Irvine home prices are still over valued will need to deflate all the air.

I will admit... I am very suprised that this is actually happening. IHO, you and I maybe completely wrong with our Irvine FCB theory... and Graphix and Irvine Renter may look like geniuses.

IF Irvine median drops to $421k... I will be buying in Irvine.

 

[irvinehomeowner]

Still not seeing significant drops in the range of products that I'm looking at and that's what really matters to me.

If those $500k condos drop to $100k and those $5mil homes drop to $3mil but the $900k homes don't drop to $700k... I'm still in a holding pattern. Just recently, a Westark I (not II mind you) 3CWG home hit the market for $999k... still feels like 05/06 to me.

 

[irvinehomeowner]

So I did a quick Redfin search for an ideal "median" SFR (not detached condo) for a young family in Irvine:

- 3 br, 2ba
- 2-car garage w/ driveway
- 1990 or newer
- No short sales

I came up with only 2 homes, both in West Irvine prices at $575k and $595k. TWO.

Sometimes you need to qualify the numbers with actual product to see what the real story is.

Irvine is still overpriced... you can do a RoundCorners and buy an older property in the El Camino area for less than $500k but I doubt Panda has the time to do the upkeep.

 

[irvinehomeowner]

As a comparison, for the same money, you can buy 3CWG homes in Aliso Viejo, Foothill Ranch, Mission Viejo... so it really does seem more like a location premium (because Tustin Ranch is still high too).

 

[panda]

IHO,

I think you are right that $519,700 may not be an accurate picture of a median home price in Irvine. If you want benchmark Irvine, I think that IPO's previous home is the perfect median home price in Irvine.

3/2 detached condo 1622 sq/ft. Z-estimate $571,500. After almost three IPO sold his home for $600,000 it appears that he made the right decision.

The interest rate is the wild factor here. I know many believe that Qe3 is coming for sure... but i think the chances of Qe2.5 or Qe3 is less than 10%. The FED may be hand cuffed this time. Bernanke should be thrown in jail for what he has done.  >
http://www.zillow.com/homedetails/6...9849_zpid/#{scid=hdp-site-map-bubble-address}

 

[edhne]

IHO,

I think you are right that $519,700 may not be an accurate picture of a median home price in Irvine. If you want benchmark Irvine, I think that IPO's previous home is the perfect median home price in Irvine.

3/2 detached condo 1622 sq/ft. Z-estimate $571,500. After almost three IPO sold his home for $600,000 it appears that he made the right decision.

The interest rate is the wild factor here. I know many believe that Qe3 is coming for sure... but i think the chances of Qe2.5 or Qe3 is less than 10%. The FED may be hand cuffed this time. Bernanke should be thrown in jail for what he has done.  >
http://www.zillow.com/homedetails/6...9849_zpid/#{scid=hdp-site-map-bubble-address}

It's interesting that alot of pundits think that Qe2 ending could rally treasuries (like they are now). The logic is that QE2 ending increases volatility and treasury safe haven will be attractive. Also that with QE2 ending, the economy is more in danger of a double dip and again lead to lower treasury rates as deflation again becomes a risk. The blackrock guys had some interesting views on the treasuries market.

 

[luckyguy]

IHO,

I think you are right that $519,700 may not be an accurate picture of a median home price in Irvine. If you want benchmark Irvine, I think that IPO's previous home is the perfect median home price in Irvine.

3/2 detached condo 1622 sq/ft. Z-estimate $571,500. After almost three IPO sold his home for $600,000 it appears that he made the right decision.

The interest rate is the wild factor here. I know many believe that Qe3 is coming for sure... but i think the chances of Qe2.5 or Qe3 is less than 10%. The FED may be hand cuffed this time. Bernanke should be thrown in jail for what he has done.  >
http://www.zillow.com/homedetails/6...9849_zpid/#{scid=hdp-site-map-bubble-address}

It's interesting that alot of pundits think that Qe2 ending could rally treasuries (like they are now). The logic is that QE2 ending increases volatility and treasury safe haven will be attractive. Also that with QE2 ending, the economy is more in danger of a double dip and again lead to lower treasury rates as deflation again becomes a risk. The blackrock guys had some interesting views on the treasuries market.

That's right. I am in the process of doing a cash out re-fi. I asked my loan broker whether I should lock the rate now as QE2 would end by the end of this month. He told me no rush to lock as QE2 ending was already priced in the rate.

 

[usctrojancpa]

IHO,

I think you are right that $519,700 may not be an accurate picture of a median home price in Irvine. If you want benchmark Irvine, I think that IPO's previous home is the perfect median home price in Irvine.

3/2 detached condo 1622 sq/ft. Z-estimate $571,500. After almost three IPO sold his home for $600,000 it appears that he made the right decision.

The interest rate is the wild factor here. I know many believe that Qe3 is coming for sure... but i think the chances of Qe2.5 or Qe3 is less than 10%. The FED may be hand cuffed this time. Bernanke should be thrown in jail for what he has done.  >
http://www.zillow.com/homedetails/6...9849_zpid/#{scid=hdp-site-map-bubble-address}

It's interesting that alot of pundits think that Qe2 ending could rally treasuries (like they are now). The logic is that QE2 ending increases volatility and treasury safe haven will be attractive. Also that with QE2 ending, the economy is more in danger of a double dip and again lead to lower treasury rates as deflation again becomes a risk. The blackrock guys had some interesting views on the treasuries market.

That's right. I am in the process of doing a cash out re-fi. I asked my loan broker whether I should lock the rate now as QE2 would end by the end of this month. He told me no rush to lock as QE2 ending was already priced in the rate.

I think the 30-year fixed rate is going to hit 4% sometime this year.

 

[panda]

Trojan.

If the FED stops subsidizing our mortgages how do you expect us to get down to 4%? You are assuming that Qe3 is going to happen, and I am going to tell you it is unlikely that it will happen. What we will see is a deflationary spiral second half the year and I have positioned my investments accordingly.

In our MBA finance classes we are taught that rates rise in an inflationary environment and rate drop in a deflationary environment. I predict that we will see an environment where rates will rise, and bonds will crash in a deflationary environment. Impossible you say? We shall see.

IHO,

I think you are right that $519,700 may not be an accurate picture of a median home price in Irvine. If you want benchmark Irvine, I think that IPO's previous home is the perfect median home price in Irvine.

3/2 detached condo 1622 sq/ft. Z-estimate $571,500. After almost three IPO sold his home for $600,000 it appears that he made the right decision.

The interest rate is the wild factor here. I know many believe that Qe3 is coming for sure... but i think the chances of Qe2.5 or Qe3 is less than 10%. The FED may be hand cuffed this time. Bernanke should be thrown in jail for what he has done.  >
http://www.zillow.com/homedetails/6...9849_zpid/#{scid=hdp-site-map-bubble-address}

It's interesting that alot of pundits think that Qe2 ending could rally treasuries (like they are now). The logic is that QE2 ending increases volatility and treasury safe haven will be attractive. Also that with QE2 ending, the economy is more in danger of a double dip and again lead to lower treasury rates as deflation again becomes a risk. The blackrock guys had some interesting views on the treasuries market.

That's right. I am in the process of doing a cash out re-fi. I asked my loan broker whether I should lock the rate now as QE2 would end by the end of this month. He told me no rush to lock as QE2 ending was already priced in the rate.

I think the 30-year fixed rate is going to hit 4% sometime this year.

 

[edhne]

Trojan.

If the FED stops subsidizing our mortgages how do you expect us to get down to 4%? You are assuming that Qe3 is going to happen, and I am going to tell you it is unlikely that it will happen. What we will see is a deflationary spiral second half the year and I have positioned my investments accordingly.

In our MBA finance classes we are taught that rates rise in an inflationary environment and rate drop in a deflationary environment. I predict that we will see an environment where rates will rise, and bonds will crash in a deflationary environment. Impossible you say? We shall see.

IHO,

I think you are right that $519,700 may not be an accurate picture of a median home price in Irvine. If you want benchmark Irvine, I think that IPO's previous home is the perfect median home price in Irvine.

3/2 detached condo 1622 sq/ft. Z-estimate $571,500. After almost three IPO sold his home for $600,000 it appears that he made the right decision.

The interest rate is the wild factor here. I know many believe that Qe3 is coming for sure... but i think the chances of Qe2.5 or Qe3 is less than 10%. The FED may be hand cuffed this time. Bernanke should be thrown in jail for what he has done.  >
http://www.zillow.com/homedetails/6...9849_zpid/#{scid=hdp-site-map-bubble-address}

It's interesting that alot of pundits think that Qe2 ending could rally treasuries (like they are now). The logic is that QE2 ending increases volatility and treasury safe haven will be attractive. Also that with QE2 ending, the economy is more in danger of a double dip and again lead to lower treasury rates as deflation again becomes a risk. The blackrock guys had some interesting views on the treasuries market.

That's right. I am in the process of doing a cash out re-fi. I asked my loan broker whether I should lock the rate now as QE2 would end by the end of this month. He told me no rush to lock as QE2 ending was already priced in the rate.

I think the 30-year fixed rate is going to hit 4% sometime this year.

Panda,
Rates = inflation expectation + required real rate of return (given credit risk) (very simplified.)

I think you are you are suggesting rates will rise in a deflationary environment because the credit risk of the US Government will require much higher real rates of return. I guess it is possible but it seems more likely they will inflate their way out of the debt problems.

As far as rates rising because fed stops buying treasuries implies that there is no other buyer for treasuries. While it might be true that the fed has crowded out some other buyers and forcing them into other financial instruments, as QE2 ends and we risk double dip, the crowded out buyers will probably return. Also, the inflation part of that rate calculation might be very low or even negative holding the overall rates flat or even down from here.

Look at the crushing national debt of Japan and where their interest rates are despite the debt because of their deflationary pressures.

 

[irvinehomeowner]

Where is IndieDev? I need him to explain what you guys are saying to me.

 

[usctrojancpa]

Trojan.

If the FED stops subsidizing our mortgages how do you expect us to get down to 4%? You are assuming that Qe3 is going to happen, and I am going to tell you it is unlikely that it will happen. What we will see is a deflationary spiral second half the year and I have positioned my investments accordingly.

In our MBA finance classes we are taught that rates rise in an inflationary environment and rate drop in a deflationary environment. I predict that we will see an environment where rates will rise, and bonds will crash in a deflationary environment. Impossible you say? We shall see.

IHO,

I think you are right that $519,700 may not be an accurate picture of a median home price in Irvine. If you want benchmark Irvine, I think that IPO's previous home is the perfect median home price in Irvine.

3/2 detached condo 1622 sq/ft. Z-estimate $571,500. After almost three IPO sold his home for $600,000 it appears that he made the right decision.

The interest rate is the wild factor here. I know many believe that Qe3 is coming for sure... but i think the chances of Qe2.5 or Qe3 is less than 10%. The FED may be hand cuffed this time. Bernanke should be thrown in jail for what he has done.  >
http://www.zillow.com/homedetails/6...9849_zpid/#{scid=hdp-site-map-bubble-address}

It's interesting that alot of pundits think that Qe2 ending could rally treasuries (like they are now). The logic is that QE2 ending increases volatility and treasury safe haven will be attractive. Also that with QE2 ending, the economy is more in danger of a double dip and again lead to lower treasury rates as deflation again becomes a risk. The blackrock guys had some interesting views on the treasuries market.

That's right. I am in the process of doing a cash out re-fi. I asked my loan broker whether I should lock the rate now as QE2 would end by the end of this month. He told me no rush to lock as QE2 ending was already priced in the rate.

I think the 30-year fixed rate is going to hit 4% sometime this year.

I don't think the FED will do a QE2.5 or QE3.  That being said, we might go through the same thing that Japan did....Lost Decade 2.0.  How long have interest rates in Japan stayed low after their crash?  A long, long time.  We lack wage growth, high capacity utilitization, and high velcoity of money to sustain any significant inflation.  All the QE stuff did was deflate the dollar which caused transitory inflation (temporary increases in hard assets). 

 

[IndieDev]

Where is IndieDev? I need him to explain what you guys are saying to me.

USCTrojanCPA's last post sort of encompasses what I believe in a nutshell, except I'll go one step further. Unless we create actual jobs, aka real 9-5'ers with benefits, not temporary, seasonal, or part-time work, we won't see real wage growth, let alone inflation.

edhne's post about "inflation" saving the U.S from its debt problems completely ignores the fact that without wage growth, you simply cannot have real sustained inflation. That comment alone should show you that you should never ever take financial advice from edhne, ever.