Housing Analysis

[daedalus]

Latest from ReportsOnHousing from Steve Thomas.
3.  demand down 2% over last two weeks at 2350 compared to 2825 this time last year

Not sure how "2350 compared to 2825" correlates to "demand down 2%".

Here are my personal observations from the middle of the pacific, with over 40 years of perspective as a Hawaii native and now an annual (or more) visitor.  I even worked in Waikiki for 2 summers, at different jobs.  Japanese tourists have been flocking to Hawaii since the '80s.    It got really crazy in the late '80s and early '90s (remember when the Japanese were buying every single crown jewel property they could get their hands on?  Lockafella plaza, anyone?).  And then tourism dried up  for some years when their economy went Tango Uniform.  It then came back in the late '90s and 2000s, and seemed to level off to a point where, though not crazy, the Japanese were the dominant tourist ethnicity in many tourist traps. 
Several years ago I noticed Chinese tourists, by which I mean exactly that; they were here and I noticed them, whereas they never stood out as an actual tourist source.  But they were here, in groups, all over, and eventually their presence grew to outnumber the Japanese in many places I went.  I saw many Chinese tourists here as recently as February, my last trip here.  But I have been in Hawaii for 4 days now and it's shocking how I've only encountered 1 group of Chinese people so far (in a Telsla store, of all places!).  Maybe it's purely the roll of the dice.  Or maybe it's a seasonal thing (I seldom visit in September).  The others tourists are all here, no doubt.  But the Chinese have been conspicuously absent.  And if they're spending less money travelling, they're probably spending less money on everything else.

 

[usctrojancpa]

So since this is an Irvine-centric forum, are there a number of homes in Irvine that are cheaper today than last year?

Redfin links?

There aren't any homes (unless it's an REO or short sale or some other big negative like a death in the home) that traded for less this year than last year in Irvine.

 

[usctrojancpa]

Latest from ReportsOnHousing from Steve Thomas.
3.  demand down 2% over last two weeks at 2350 compared to 2825 this time last year

Not sure how "2350 compared to 2825" correlates to "demand down 2%".

Here are my personal observations from the middle of the pacific, with over 40 years of perspective as a Hawaii native and now an annual (or more) visitor.  I even worked in Waikiki for 2 summers, at different jobs.  Japanese tourists have been flocking to Hawaii since the '80s.    It got really crazy in the late '80s and early '90s (remember when the Japanese were buying every single crown jewel property they could get their hands on?  Lockafella plaza, anyone?).  And then tourism dried up  for some years when their economy went Tango Uniform.  It then came back in the late '90s and 2000s, and seemed to level off to a point where, though not crazy, the Japanese were the dominant tourist ethnicity in many tourist traps. 
Several years ago I noticed Chinese tourists, by which I mean exactly that; they were here and I noticed them, whereas they never stood out as an actual tourist source.  But they were here, in groups, all over, and eventually their presence grew to outnumber the Japanese in many places I went.  I saw many Chinese tourists here as recently as February, my last trip here.  But I have been in Hawaii for 4 days now and it's shocking how I've only encountered 1 group of Chinese people so far (in a Telsla store, of all places!).  Maybe it's purely the roll of the dice.  Or maybe it's a seasonal thing (I seldom visit in September).  The others tourists are all here, no doubt.  But the Chinese have been conspicuously absent.  And if they're spending less money travelling, they're probably spending less money on everything else.

I've had 2 Chinese cash buyers outbid my client on 2 resale Stonegate homes in the past month so I don't think they are absent. 

 

[irvinehomeowner]

So since this is an Irvine-centric forum, are there a number of homes in Irvine that are cheaper today than last year?

Redfin links?

There aren't any homes (unless it's an REO or short sale or some other big negative like a death in the home) that traded for less this year than last year in Irvine.

So what is fortune11 saying?

Or does the "slowdown" happen outside of Irvine and then leak in?

I understand that Irvine isn't immune but by the time prices have a significant drop, other markets are rebounding and then high value places like Irvine rebound before any downward momentum can pick up real speed.

Isn't this is what happened during the 06-12 cycle? Everywhere else drops over 50% but by the time it starts to really hit Irvine, prices elsewhere start going the other way and Irvine bounces back.

Last to drop, first to rise makes timing "bargains" difficult.

 

[sgip]

That's a fair analysis IrvineHomeowner.

The 06-11 RE crash and burn was first lit in Miami, Phoenix, Las Vegas, then the IE. Homes that were purchased with high hopes of rental ROI financed by look the other way loans that were predestined to crash. The cancer spread from there. A high number of OC foreclosures were from FIRE employees, refinance fraudsters, as well as genuine victims of the great recession impact on business employment. Conditions that lead up to this collapse still exist, but are not as deeply woven into todays Irvine market.

In 2006, FCB's  and "ACB's" ( All Cash Buyers - no matter the nationality) weren't a major factor. Today they are. The refinance boom of 2009-2014 drove many home owners in to very low rate 15 and 10 year loans. Those home owners will be housing debt free somewhere around 2021-2025 if they stuck to their goals. The FCB/ACB housing stock, and the "mortgage burners" will keep Irvine as well as other parts of the LA/OC market fairly stable since it's pretty hard to foreclose on a mortgage free property.

What we're seeing in this market is a combination of typical late Summer slowness, the impacts of higher rates on buyers purchase power, an overreach by many sellers guided by their clumsy realtors in realistically pricing a home, and builders saturating production in super high tax rate areas. If another Baker Ranch/Pavillion Park style community were to open in Irvine, the high tax areas in the GP would become a ghost town IMHO.

Balance is returning to the markets. Sellers and builders aren't all that thrilled when this happens, but as in any price / volume cycle, the pendulum still will swing no matter what.

My .02c

 

[eyephone]

?Article: Want to buy a home? You might want to wait

Economists predict that a buyer?s market will soon return
Home buyers who exercise patience over the next couple years may be handsomely rewarded.

In a survey of 100 real-estate economists and experts conducted by real-estate website Zillow ZG-1.25% and research firm Pulsenomics, a 43% plurality said that they believe the U.S. housing market will become a buyer?s market in 2020.

By then, the number of homes available for sale could finally outpace demand, allowing home buyers the chance to negotiate a lower and more affordable price on a property. The researchers didn?t give estimates on what kind of discounts buyers could expect.

They did, however, say that some markets will see the tide change sooner than others. The panel of experts predicted that the Midwest will be first to experience the shift into a buyer?s market as early as 2019, followed by the rest of the country in 2020.

Recent data have shown signs of trouble in the housing market. Although home prices are still rising at a faster pace in 2018 than the year before, the rate of price appreciation in some of the country?s hottest housing markets has slowed considerably.

Additionally, more home sellers are having to cut their listing prices. At the same time, mortgage rates have fallen in recent weeks as more buyers choose to stay on the sidelines because of the high cost of buying a home.?

Source:https://www.marketwatch.com/story/want-to-buy-a-home-you-might-want-to-wait-2018-08-28

My comment: Get ready for the max deals? 

 

[zubs]

Do you think prices will go back to 2012?  Doubtful.
I think @worse it will only pull back a few years.  Perhaps 2014?

 

[irvinehomeowner]

When was the last year you could buy a new proper 4-br SFR house for $800k? 2011? 2012?

I can't remember but I think there was Maricopa(?) selling in Stonegate for around that price in in 2011... and by "proper" I mean on a street (not a motorcourt) with a driveway and a sidewalk in front of the house.

That same house is probably over $1m now... so does anyone think that in the next 1-3 years, homes similar to that will sell for even $900k?

Just writing this post is making me wonder how expensive Irvine got in the last 5 years.

 

[bones]

When was the last year you could buy a new proper 4-br SFR house for $800k? 2011? 2012?

I can't remember but I think there was Maricopa(?) selling in Stonegate for around that price in in 2011... and by "proper" I mean on a street (not a motorcourt) with a driveway and a sidewalk in front of the house.

That same house is probably over $1m now... so does anyone think that in the next 1-3 years, homes similar to that will sell for even $900k?

Just writing this post is making me wonder how expensive Irvine got in the last 5 years.

2012?  Las Ventanas Plan 3 (4 bed) started around $710k.  Should have bought the whole street!

 

[irvinebullhousing]

When was the last year you could buy a new proper 4-br SFR house for $800k? 2011? 2012?

I can't remember but I think there was Maricopa(?) selling in Stonegate for around that price in in 2011... and by "proper" I mean on a street (not a motorcourt) with a driveway and a sidewalk in front of the house.

That same house is probably over $1m now... so does anyone think that in the next 1-3 years, homes similar to that will sell for even $900k?

Just writing this post is making me wonder how expensive Irvine got in the last 5 years.

Heck, attached apartment, ehhh I meantime town home in Eastwood without any of those features, fetching over a million. Let's not even think about a true SFH and drive way or a nice backyard with real side yard that goes for UNDER $1 mil.

 

[daedalus]

I've had 2 Chinese cash buyers outbid my client on 2 resale Stonegate homes in the past month so I don't think they are absent. 

As stated, they're my observations regarding tourism in Hawaii.  It's called an anecdote. 

 

[irvinehomeowner]

When was the last year you could buy a new proper 4-br SFR house for $800k? 2011? 2012?

I can't remember but I think there was Maricopa(?) selling in Stonegate for around that price in in 2011... and by "proper" I mean on a street (not a motorcourt) with a driveway and a sidewalk in front of the house.

That same house is probably over $1m now... so does anyone think that in the next 1-3 years, homes similar to that will sell for even $900k?

Just writing this post is making me wonder how expensive Irvine got in the last 5 years.

2012?  Las Ventanas Plan 3 (4 bed) started around $710k.  Should have bought the whole street!

How could I forget... we almost bought there, here's kinetic's image from a previous thread (Summer 2011):

 

[lnc]

Last to drop, first to rise makes timing "bargains" difficult.

This!!

And this time around, there are just not many sellers are force to sell like the last time.  And probably the only one that are pressure to sell during the down market here in Irvine are the new home  builders. 

 

[lnc]

Do you think prices will go back to 2012?  Doubtful.
I think @worse it will only pull back a few years.  Perhaps 2014?

I'm a little more optimistic for Irvine housing, I don't think it will even drop to 2016 price level.

 

[Bullsback]

Do you think prices will go back to 2012?  Doubtful.
I think @worse it will only pull back a few years.  Perhaps 2014?

My gut says maybe you get a 2 to 3 year roll back. You aren't going back to 2012 (at least I don't think so). I really would be surprised if we had anything like what happened in 08.  So many reasons that have been previously discussed which I won't get into, but I think in general, a combination of rates and a general slowdown of the economy, which will lead to higher unemployment, will ultimately lead to a slight drop and a window of more stagnant prices.  I don't see a "bubble" scenario out there since buyers are largely well qualified so it will take something pretty massive to cause the real estate in OC to just blow-up. 

 

[Bullsback]

When was the last year you could buy a new proper 4-br SFR house for $800k? 2011? 2012?

I can't remember but I think there was Maricopa(?) selling in Stonegate for around that price in in 2011... and by "proper" I mean on a street (not a motorcourt) with a driveway and a sidewalk in front of the house.

That same house is probably over $1m now... so does anyone think that in the next 1-3 years, homes similar to that will sell for even $900k?

Just writing this post is making me wonder how expensive Irvine got in the last 5 years.

The most I could see is a $1.2M house being on the market for $1M (so 20% decline) and I on my scale of inexact probabilities, I'd probably put that on the low-end. I definitely could envision a scenario where that home is at $1.1M, which if you bought a house expecting 2-3% appreciation a year and you go out 3 years and that same house is down $100K vs. up $100K, you could see an opportunity to wait.  I don't see any massive even that will drastically shift the supply and create a "panic" event. Plus, I think there are enough people who are capitalized who would jump in if the markets did soften a bit (which in and of itself would minimize a major price event). 

 

[qwerty]

In 2012 maricopas were in the mid to high 800s (plan 2 if I remember correctly). A friend of mine, who was represented by USC was looking at buying there and ultimately bought in Northpark square. I saw a maricopa plan 2 recently closed for about $1.4m I think?

 

[usctrojancpa]

In 2012 maricopas were in the mid to high 800s (plan 2 if I remember correctly). A friend of mine, who was represented by USC was looking at buying there and ultimately bought in Northpark square. I saw a maricopa plan 2 recently closed for about $1.4m I think?

There was a Maricopa Plan 2 that closed for $1.33m last month which my client got outbid on by a FCB.  He's now in escrow on a Plan 3 for $1.43m (3,119sf). 

 

[qwerty]

When was the last year you could buy a new proper 4-br SFR house for $800k? 2011? 2012?

I can't remember but I think there was Maricopa(?) selling in Stonegate for around that price in in 2011... and by "proper" I mean on a street (not a motorcourt) with a driveway and a sidewalk in front of the house.

That same house is probably over $1m now... so does anyone think that in the next 1-3 years, homes similar to that will sell for even $900k?

Just writing this post is making me wonder how expensive Irvine got in the last 5 years.

The most I could see is a $1.2M house being on the market for $1M (so 20% decline) and I on my scale of inexact probabilities, I'd probably put that on the low-end. I definitely could envision a scenario where that home is at $1.1M, which if you bought a house expecting 2-3% appreciation a year and you go out 3 years and that same house is down $100K vs. up $100K, you could see an opportunity to wait.  I don't see any massive even that will drastically shift the supply and create a "panic" event. Plus, I think there are enough people who are capitalized who would jump in if the markets did soften a bit (which in and of itself would minimize a major price event). 

I?m pretty sure a 200k decline from 1.2M to 1M is more like a 16.7% drop. You must not be a USC grad

 

[qwerty]

In 2012 maricopas were in the mid to high 800s (plan 2 if I remember correctly). A friend of mine, who was represented by USC was looking at buying there and ultimately bought in Northpark square. I saw a maricopa plan 2 recently closed for about $1.4m I think?

There was a Maricopa Plan 2 that closed for $1.33m last month which my client got outbid on by a FCB.  He's now in escrow on a Plan 3 for $1.43m (3,119sf). 

That must have been the one I was thinking of. I think the link was posted here on TI