Help - new to Irvine!

M

movingaround_IHB

New member
<p>Greetings! I am new to Irvine and have been reading your blog since we found out we were moving here. We are currently in the process of starting to look for a home and very concerned. We are in a situation where numerous factors make renting difficult - young kids, lots and lots of belongings that need to be unpacked, relocation benefits that are disappearing (not only closing costs but also storage time for out stuff, etc) so we really cannot wait for a long time to make a decision. The most likely scenario is that we will be here between 4 and 7 years before we move. We do not want to commute to work so we want to live in Irvine.</p>

<p>So, my question is - is anyone seeing prices out there that seem to be bottoming out? I read someone's post that suggested support at $300/sq foot. That would set a 2000 sq ft home (what I want) at 600,000. </p>

<p>Any ideas or help is so greatly appreciated!</p>
 
I have not seen any reasonable evidence to suggest prices are bottoming and available evidence would indicate that prices have just started to move downward and will continue in that direction.
 
movingaround,





You probably know you have stumbled into a bear's den. Read some of the links in the newbies post, and you will understand why many here believe prices are going to continue to fall. Try to remain objective as you look at the market. It is easy to find confirming data points for something you <em>want </em>to believe. There will not be support at $300 / SF. There may be support at about $200 / SF when rents align with the cost of ownership, but not before.





If you buy now, you will probably be underwater in 4 to 7 years when you want to move again.
 
<p>Is there a thread or post that gives an idea of what people are expecting the drop to end up at? I have read numbers like 30% drop below 2004 prices - things like that - but when I read something like that I don't know what 2004 prices were so I have a hard time figuring out what numbers we are talking about. Perhaps there is a graph somewhere that summarizes the prices over the past 10 years in Irvine? I know that this stuff is probably already posted so please forgive - I am just having a hard time finding it!</p>
 
<p>thanks! we must have been typing at the same time becuase I didn't get your last post until I had posted! So you think 200/sq foot - it helps to hear the actual numbers that people are looking for so I can figure out what I *want/need/hope* to believe! ha ha :)</p>
 
This is the post you may want to read:





<a title="Permanent Link to Predictions for the Irvine Housing Market" href="http://www.irvinehousingblog.com/2007/03/11/predictions-for-irvine-housing-market/" linkindex="31" set="yes">Predictions for the Irvine Housing Market</a>.



 
Movingaround:



First thing you need to know about this BLOG is that this is a bear’s blog. From time to time, I will consider this is an extreme bear’s blog. Some of the strongest voice on the blog believes this: ( in my own words): we will see 40% drop from peak in Irvine…and we are at half time.



Given the data out there, they can potentially be right, although I don’t believe so. I am bearish on the market, but just don’t see another 20% drop ‘across the board”. I believe the general market has drop between 10% to 15% from the very peak, and probably has another 10% to go for the undesirable properties.



Also, I am not a believer for using $/sq ft as an absolute yard stick for measuring what a certain home should worth. It is the location will make a difference when it comes down to resale.



When you see a listing, you can’t just say that one day I might be able to get it for x% less. It all depends on how they priced. It can be 50% less if they are priced way high, or can be 5% less if they priced at or below the market.



Now with your situation, here is something to consider:



<ol style="MARGIN-TOP: 0in" type="a">

Since you have corp relo benefits, you can cushion some of the potential loses due to continued market correction. I don’t know how many points your company will pay. Lets say you buy a $800K home with 20% down, you can cushion about $22,400 (interest saving for seven years for 2% buy down), and another $8000 (closing costs). So that is a total $30,000.

Now the questions become how likely your house will lose more than $30,000 of value in seven years? This is a very difficult question. No one knows the answer. But if you can stick out for 10 years, not only your total interest savings will be about $40,000 ( extra three years of interest savings), you will have a better chance of not losing money at all.

</ol>

This above analysis only helps if your goal is not to lose equity and want to get in a house. I am not considering any opportunity costs. At the current market consideration, if your only concern is to have the lowest overall costs, your choice will be rent.



If you do decide to buy, make sure you do a lot of homework – don’t trust your real estate agent’s advice. Also, waiting for year end or quarter end “clearance” from builders is a not a bad idea.



Lastly, whatever you decide to do, think very very hard before you buy at the Village of Columbus unless you get a screaming deal. The $/ sq ft is lower there for a reason.
 
<p>movingaround - My take is that nobody can predict how much or what percentage prices will fall. It is not difficult to observe the trend, but making predictions when there are so many variables to consider is like trying to predict the weather. It is obvious it is fall going into winter, but the exact low temperature or how many inches or rain we will have is dependent upon way too many factors to be able to predict accurately.</p>

<p>If you look at past re cycles in California, what you will observe is that prices revert to affordability for the average income earner in each neighborhood. And if you think about it, reversion to affordability makes sense. RE prices may stay exactly the same, while other prices go up and incomes rise. Or, re prices may fall, as the trend presently shows, and incomes may only rise moderately. But, inevitably, prices will reach affordability again, just like they have done since folks started buying re in So Cal.</p>
 
<p>Honestly, I'd possibly look into an older home around 500-600k. I'd put as much down as I can possibly squeeze into the house as well as find owners in extreme distress willing to make a tremendous deal. </p>

<p>Time is NOT running out. As Irvine123 mentioned the corporate relocation benefits (Est. ~30k), this cushion is relatively small compared to the projected devaluation of the <em>almost </em>any home in Irvine. Given your estimated 600k home that's only a 5% loss, well within the projected drop of home values for this year. With a 500ish k property that number only goes up to 6ish%, this gives you a bigger cushion and a better chance of outrunning the devaluation.</p>

<p> BUT if you REALLY need/want a home then don't let us stop you. Just realize the risks that you are taking and in all likelyhood the real possibility that you will be underwater for a long while. </p>

<p>What specifics are you looking for?</p>

<p>-bix</p>
 
Not sure if anyone will second me, if ones horizon is 10 years, does that give him/her a very good probability of not losing equity (provided one is not stupid enough to overpay at at the current state of market condition)?
 
<p>You all are great!! We don't get any points from our company - just the legal closing costs so we won't really have a cushion. We have about 130,000 to put down - I have run some numbers on calculators and if we got a home for 750 - financing 620 or so and assuming a 4% increase in the house we still barely end up in the black on the house in 4 years. If there is a decrease or even flat real estate market we lose out. PLUS - financing 600,000 or more is going to stretch us pretty thin on a monthly basis - just not sure that the huge risk is worth it - and no money left to maintain much less improve the house. The only benefit is that we probably get more space (e.g., sq foot, storage) than if we rent (I am not too interested in renting a house - would rather rent a apt townhouse style - can't really justify my reasoning for that though). We do have 9 more months to take advantage of the closing cost benefit so my gut is - based on all you have said plus numbers we have run - is that we should rent now and see what happens over next 6 months - bad part about that is moving all our stuff in and out and around again! But, maybe that is the price we pay for a little less risk with our hard earned money! </p>

<p>This blog is great - I hope I will learn enough to help add knowledge to it eventually! </p>
 
<p>movingaround</p>

<p>I have a good suggestion for you: go rent a townhome that has "attached" garages..this way, you have some storage spaces. GO check out Quail Meadows or Quail Ridge apartment in Quail Hill or one of the complex in Woodbury ( I don't remember the name). They all have those town homes I am talking about. The bad news is that those with attached garages are hard to get espeically those with TWO attached garages. The size of the townhome is about 1100 sq ft. IF you have kids, you attached garages really really help. those townhome will be great compromise between a regular apartment and rental home. Good luck!</p>

<p> </p>

<p> </p>
 
<p>Moving, </p>

<p> This is what i'm doing. I have 99.9% of my stuff in storage and its not exactly fun but its doable. PLUS instead of a huge payment why not see what you can get and where you can get for the price you want. Say instead of 750, go 700 or 650. But then again, waiting a few months is appropriate. We are in about the same position (no children though), just waiting for the right time in the right house.</p>

<p>-bix</p>

<p>p.s. I also second 123's comment about waiting 10 years, I could see that the possibilities of not having negtative equity after that time. But who knows.</p>
 
movingaround:





May I ask why you think you'd be moving again in 4-7 years?





If you're already certain that you'd be leaving in 4-7 years, there's really no reason to buy in a depreciating market, unless if you're looking for a future income property.








p.s. for those who move around a lot and have way too much stuff in storage, please consider donating some of it! When my move grew from 30 boxes to 90+ boxes, I decided to adopt a more minimalist lifestyle and gave away a lot of stuff to charity. You get to save money and space from storage and your living room will look bigger!
 
<p>Biscuitninja - I feel like at this point I cannot get 2000 sq feet for under 700,000 - and even that would be pretty lucky! Thus, I would be buying a house the size of a townhouse I could rent (say 1500 sq feet or so) and then I woudl still be taking a risk of losing my equity and not getting the size of house that I really want. When I run the numbers on a calculator assuming 0% increase in the house I have to get down to something like a 500,000 place to break even in four years - and in Irvine that would be buying an apt basically plus I still have upkeep and maintanence. </p>

<p>Seems like I may be following in your footsteps. Can I ask about how much you spend per month on storage???</p>

<p>momopi - our experience so far suggests that in order to get good promotions fast we need to move - granted every company is different and we continually hope for the company that doesn't follow this trend and promotes from within - never know we might get lucky this move! :)</p>
 
<p>i've lived at 5 different addresses in the past 5 years, so i understand the hassle of moving. but i did learn one valuable lesson though - stop accumulating junk! although with the last move, we still have some boxed items in our garage that we'll likely never use, it's still not too bad. i think that had we stayed at one place all these years, we would be overcrowded with useless things. so although the moves were a burden, they did help us discard some junk each time.</p>

<p>as for your situation, i strongly suggest you rent a house for at least a year. come on now, who wants to live at a place for just six months? besides, waiting a year is likely better than 6 months anyhow. just pause for a moment, and enjoy where you live - regardless of whether you're renting or owning.</p>
 
I second what hs_teacher said. In fact, I have found as my income has increased, the number of possessions I keep has decreased. Why store something you can easily replace? Plus, as a spiritual thing, I don't keep objects to which I may become attached. Family photographs aside, I don't keep momentos.





Also, don't think renting means living in a crappy apartment. You can a rent nice house from private individual and live very comfortably.
 
<p>Moving, I have my storage just around the corner from me, so i pay almost $200 a month for it. BUT as mentioned earlier, I'm saving close to 1300 a month to donate to a house on top of other things going. Anyways good luck</p>

<p>-bix</p>
 
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