Homeowners in Irvine's Beacon Park face up to $14,400 in extra taxes
http://www.ocregister.com/articles/park-724359-great-property.html
http://www.ocregister.com/articles/park-724359-great-property.html
Homeowners in Irvine's Beacon Park face up to $14,400 in extra taxes
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I'll say this for the millionth time... this relationship is not proportional, housing prices do not drop enough to match the cost of the rise in interest rate.
For example, 30-yr fixed interest rates in 2006 were 6.5, now they are 3.5 (or less). A 2750-3000sft SFR in Irvine was probably around $1m in '06, now they are about $1.3m. Assuming 20% down, if interest rates were to go back up to 6.5, that $1.3m house would have come down to $900k.
Does anyone think that's going to happen?
And when rates went down from 2006 to 2012, prices didn't go up. In 2012-2013, when rates took a small upturn, prices still went up.
Maybe it's just me, but the correlation between rates and pricing isn't that simple.
Whether or not I think it will happen, I know it will place serious downward pressure on pricing. Maybe prices don't fall much, but sales volume will crater.
I'm with IHO on this.
Also it is very possible that with the mortgage rate increase, the housing price will still continue to go up. One of reason for the rate to increase is that there's significant inflation. And with high inflation where wage also increase significantly, housing price will just keep going up. I've seem this in the late 70's where 30 year mortgage rate were over 15% and housing price was still going up 20% a year.
Like IHO said, it's complicated and interest rate is just one of many factors that affect housing prices.
It can be very complicated and I agree that rising rates are not always a knee jerk reaction to lower housing prices. However, in todays climate, home prices will be very sensitive to rate adjustments because homes are priced at the fringe of affordability. You already see the slow down in sales even with record low rates. Rising rates will just amplify that and cause downward pressures in prices following shortly.
1% change in rates will cause about 10% change in purchasing power. Although I cannot say every 1% increase in rates will cause a 10% drop in price, I have no doubts you will see some significant decreases in home prices if you ever see even just a 1% change in rates, which by the way only gets us up to about 4.5% rates (historically very low still). Kinda scary if you ever think rates will go up....
Simple as this: $144 mil that developers raised, how did they spend that money? Is it too much? Or too little?
If I understand it right, the cost of putting up a school building is borne out of MR funds. I?d imagine that new BP school would take up significant chunk out of that $144 mil. Rest would be spent on other common area developments.
irvineshadow
New member
~Long time no post!~
How "recently" was this tax approved and when would it have been disclosed? How does this affect you if you are close to closing in Beacon Park?
How "recently" was this tax approved and when would it have been disclosed? How does this affect you if you are close to closing in Beacon Park?
Mmm I think it's the same MR for Beacon Park. I think the "$4,455" minimum quote roughly matches a Brio 1465 sq ft attached product.
TNONL just posted about this on his site. So BP-MR will be higher than Pavilion Park... and Parasol Park / Altair / District 4 will be higher than BP. I would not be surprised if the latter is a 2.0% effective tax rate...
http://bit.ly/2akfBnE
TNONL just posted about this on his site. So BP-MR will be higher than Pavilion Park... and Parasol Park / Altair / District 4 will be higher than BP. I would not be surprised if the latter is a 2.0% effective tax rate...
http://bit.ly/2akfBnE
dethman
New member
I thought we knew this already, i don't think it's additional MR just the original. Thats why i could never consider beacon park. I checked out legend and the MR was 15 or 16k with poss 2% increase each year. Thats like 40k in prop taxes. Ridiculous. not sure how they could get an additional bond approved after they already sold so many homes.
Cornflakes
Active member
Nothing new here. Very first statement in the article makes it clear that this additional tax is MR, on top of regular prop taxes.
"IRVINE ? Residents will pay between $4,455 and $14,387 each year on top of standard property taxes to live in the planned Beacon Park community."
$144 mill paid by 1029 homeowners by 2049. Average per home is $139941 paid over 32 some years with bond interest. It comes down to $7760 per year at 4% borrowing rate. Smaller homes pay less and larger homes pay more.
Builders in some other villages just build some of these costs into the price of the home, in which case one pays more interest to bank and higher taxes to county. There is no free lunch.
The only silver lining is that BP residents are borrowing 144 mill at the lowest interest rates in recent history. Few years down the road as the interest rates rise and the development costs go up, newer communities will have only higher MR, or higher home prices with relatively low MR.
"IRVINE ? Residents will pay between $4,455 and $14,387 each year on top of standard property taxes to live in the planned Beacon Park community."
$144 mill paid by 1029 homeowners by 2049. Average per home is $139941 paid over 32 some years with bond interest. It comes down to $7760 per year at 4% borrowing rate. Smaller homes pay less and larger homes pay more.
Builders in some other villages just build some of these costs into the price of the home, in which case one pays more interest to bank and higher taxes to county. There is no free lunch.
The only silver lining is that BP residents are borrowing 144 mill at the lowest interest rates in recent history. Few years down the road as the interest rates rise and the development costs go up, newer communities will have only higher MR, or higher home prices with relatively low MR.
Perspective
Well-known member
"Few years down the road as the interest rates rise and the development costs go up, newer communities will have only higher MR, or higher home prices with relatively low MR."
Although, this begs the question once again, new non-BP neighborhoods being built today are doing so with half the mello roos costs and the mello roos costs do not compound annually at 2%. So why are BP's mello roos so damn high?
Although, this begs the question once again, new non-BP neighborhoods being built today are doing so with half the mello roos costs and the mello roos costs do not compound annually at 2%. So why are BP's mello roos so damn high?
irvinehomeowner
Well-known member
Seriously, MRs are taxes without any oversight.
This is getting around Prop 13 and new home buyers are just paying it blindly.
#BobaMilkTeaParty
This is getting around Prop 13 and new home buyers are just paying it blindly.
#BobaMilkTeaParty
irvinehomeowner
Well-known member
renter1 said:
I'll say this for the millionth time... this relationship is not proportional, housing prices do not drop enough to match the cost of the rise in interest rate.
For example, 30-yr fixed interest rates in 2006 were 6.5, now they are 3.5 (or less). A 2750-3000sft SFR in Irvine was probably around $1m in '06, now they are about $1.3m. Assuming 20% down, if interest rates were to go back up to 6.5, that $1.3m house would have come down to $900k.
Does anyone think that's going to happen?
And when rates went down from 2006 to 2012, prices didn't go up. In 2012-2013, when rates took a small upturn, prices still went up.
Maybe it's just me, but the correlation between rates and pricing isn't that simple.
Perspective
Well-known member
irvinehomeowner said:
Whether or not I think it will happen, I know it will place serious downward pressure on pricing. Maybe prices don't fall much, but sales volume will crater.
irvinehomeowner said:
I'm with IHO on this.
Also it is very possible that with the mortgage rate increase, the housing price will still continue to go up. One of reason for the rate to increase is that there's significant inflation. And with high inflation where wage also increase significantly, housing price will just keep going up. I've seem this in the late 70's where 30 year mortgage rate were over 15% and housing price was still going up 20% a year.
Like IHO said, it's complicated and interest rate is just one of many factors that affect housing prices.
lnc said:
It can be very complicated and I agree that rising rates are not always a knee jerk reaction to lower housing prices. However, in todays climate, home prices will be very sensitive to rate adjustments because homes are priced at the fringe of affordability. You already see the slow down in sales even with record low rates. Rising rates will just amplify that and cause downward pressures in prices following shortly.
1% change in rates will cause about 10% change in purchasing power. Although I cannot say every 1% increase in rates will cause a 10% drop in price, I have no doubts you will see some significant decreases in home prices if you ever see even just a 1% change in rates, which by the way only gets us up to about 4.5% rates (historically very low still). Kinda scary if you ever think rates will go up....
Perspective
Well-known member
Agreed, but let's tighten our language. You mean a "one point" increase in rates, not a "one percent" increase. There's a massive difference.
Cornflakes
Active member
Perspective said:
Simple as this: $144 mil that developers raised, how did they spend that money? Is it too much? Or too little?
If I understand it right, the cost of putting up a school building is borne out of MR funds. I?d imagine that new BP school would take up significant chunk out of that $144 mil. Rest would be spent on other common area developments.