How much does the Irvine Company hate this site?

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<p>Ericseven said: "It's not like they do that for the good of everyone. How about keeping prices reasonable when they were going up like crazy? " Irvine company is a business, they acted like any other businesss. </p>

<p>One can argue they could have acted more socially responsible, showed more concerned towards the homebuyers, etc. But that is a lot to ask. It is similar to asking you to pay higher than market price bc of the seller is in financial pain. Unless you can prove irvine company did someone illegal, there is no difference here. </p>

<p>What has happened happened, we have to deal with the aftermath. I am not putting them a pedestal for what they have done. However, many of us would if many years later it is shown that it is the irvine company who make the losses in irvine less painful. Probably this is just a wishful thinking, then maybe it is not. </p>

<p>I can use a history lesson here, Graph! What did the Irvine company do during the last downturn??</p>

<p> </p>
 
<em>"The reality is that the home value in irvine will continue to decrease, however if Irvine company stands on their landprice, at least it will help control the inventory. Just look at VOC: it is the builder who is leadiong the steap dive of prices, not the foreclosures."</em>





This is certainly the Irvine Company's plan for now. I am of the opinion they will capitulate, or they will be sitting on property for the next 15-20 years waiting to get peak bubble prices again. Realistically, they will need to start doing something in the next couple of years, or they will start to feel political pressure from various organizations, particularly those concerned with affordable housing. The risk the Irvine Company is taking is that much of their land may get designated for affordable housing because they are one of the few major landholders left in Orange County. If they do not build market housing while they still can, they may end up losing significant land value to politics. They are already challenging some of these initiatives in court (actually the City of Irvine is, but we all know who is behind it.) Time is not on their side.





The circumstances at VOC is what the Irvine Company is trying to avoid. Typically in a market correction, the builders and the foreclosures lead the market lower because they are forms of must-sell inventory. The resale market lags behind because sellers are unable or unwilling to lower prices. The new home sales market bottomed in 1992/1993 while the resale market did not bottom until 1996/1997. Realistically, the new home market should bottom in 2009/2010, and the resale market in 2012/2013.
 
IR,

Good analysis...



curious why you say in irvine the new home market should bottom in 2009 / 2010? Let's put VOC aside for a second, there is no new homes other than on Irvine ranch. So IF (big if) Irvine company is determined, do you think we have seen the lows or close to lows in irvine ranch for new homes? For example, several single family new track prices have not changed since they reduced it in mid 2006?
 
"The risk the Irvine Company is taking is that much of their land may get designated for affordable housing because they are one of the few major landholders left in Orange County."



All future development in Irvine is already required to provide a proportion of affordable housing on site or a very signifigant in-lieu fee. Also, per recent legislation, SB 1818, developers are granted certain incentives to provide a portion of affordable housing in the form of density bonus, height increases, fee reduction,etc. so they do have financial mitigation to provide inclusionary housing.



However, I think you are insinuating that government may require that the entire land use must be designated affordable but the only way I see that happening (which is essentially stripping all the rights of the property owner) is through eminent domain, and we all know how bad eminent domain is viewed in our republican county. Additionally, if the irvine co could only build affordable units and no market rate, they would simply stop building residential as the cost to build would greatly outweigh the return on cost.



The court case is a City issue as it is tied to municipal funding from the state. It's not an issue of providing affordable housing, which everyone should agree that we need and that we need a lot of it, rather it's an issue of timing. Unrealistic goals were set by SCAG and that's what the city is fighting, to extend the timeline to provide affordable units due to the fact that less units will come online when development slows. That's IMHO.



The Irvine Co isn't sitting on the property, they are dealing out phased lots per the option agreements they have with merchant builders who bought at set prices a few years ago. And if they need to lower prices on raw land, they still make money because their land basis is so low since Bren bought it outright many years ago. I think we all need to realize that this company isn't going to be effected by the downturn in for-sale residential due to it's diversification in commerical real estate. Whether it's buffered from an economic downturn, well, how the heck should i know.



blt, biscuit essentially said what i'm not directly saying. And to prove i'm not a schill, I think Donald Bren should give his illegitamate children the million bucks a month they deserve. i'm not a bear, but i'm just being realistic, which does mean that i completely agree with IR's timeline on home price decline and do think it's justified. I also hate the smug young real estate turks that bragged about owning two homes, and i take pleasure that they are now living back at home with a pile of debt.



Lawyerliz,....i feel sorry for anyone that has to see or smell your musings. Also, if you are trying to call me out by my name, that's a little too personal, a little too vindictive as it has significant repercussions for the user (i.e. IR's anonymity). These forums are great because they are anonymous and we don't have to worry about friends, neighbors, coworkers from being upset at knowing what our honest opinons are. It's kinda sad that you are trying to ruin that.
 
<em>"Again, I pose an honest question, why would the Irvine Company care about what's posted on this blog? This company no longer builds homes, and it's primary focus is to rent apartments, lease commercial space, and operates resorts. Yes, they develop lots to sell to merchant builders and yes it was profitable, but it is nowhere near a core business. Holding the land costs them nothing as they own it outright and paid for the improvements with their own cash. "</em>

<em></em>

<em></em>

<em></em>

<strong>jcaraway</strong>: are you not aware that TIC fired a significant number of employees and senior executives following land devaluation this past summer? Did you read the article in the OCBJ in early 2007 in which D.Bren <a href="http://marketing.irvinecompany.com/public_affairs/bren/ocbj-bus-person-of-year-bren-01-02-07.html">went on record</a> with a wildly bullish outlook on RE prices into 2008? Do you not know that TIC has a <10 year supply of land left and they are transforming themselves from a development to an operating company? Is it not obvious that land sales are funding this transition? Did you stop to consider that developers walked from their deposits after their residential land sales business fell off a cliff?







Like any good businessman, Mr. Bren doesn't want to lose a single dollar on his investments. There is more than enough reason for him to hate the IHB - it exposes, and therefore devalues, the #1 asset of TIC: the Irvine brand.






<em>"I think we all need to realize that this company isn't going to be effected by the downturn in for-sale residential due to it's diversification in commerical real estate."</em>

Sure they have cash in the bank. Plenty of it. But recognize that it caught them by surprise ( I know this for a fact ) and it was the primary driver for a substantial lay off a few months ago at the highest levels of the company.
 
<em>"However, I think you are insinuating that government may require that the entire land use must be designated affordable"</em>





Not their entire holding, but the proportion will likely continue to grow as pressure for affordable housing mounts.





<em>"It's not an issue of providing affordable housing"</em>





It is for the Irvine Company. I have analyzed deals with affordable housing components, and they rarely make sense. All redevelopment must have a certain percentage (usually 10%) of affordable units, and these requirements lower revenues dramatically. The transaction party who gets screwed in these deals are the landowners because their entire residual ends up going to the affordable housing subsidy. This is why the Irvine Company will do everything it can to limit or avoid providing affordable units.





The lawsuit from the City of Irvine is just a diversion. The Irvine Company does not want to provide affordable housing ever. They would like to get as many credits as they can for the apartments they build, and sell all their houses for maximum market value. Anything preventing that from occurring is going to generate lawsuits. If the City of Irvine was actually in control, they would just make the Irvine Company provide the affordable housing as SCAG has requested. It isn't just the timing, it is the amount. SCAG has put much of the burden for providing affordable housing on to Irvine, probably too much. I can't imagine the Irvine Company agreeing to the amount of affordable SCAG wants and is only quibbling about the timing.


<em>


"And if they need to lower prices on raw land, they still make money because their land basis is so low since Bren bought it outright many years ago."</em>





This is true enough, but as I described in <strong></strong><strong><a href="http://www.irvinehousingblog.com/2007/07/16/land-value-101/" set="yes" linkindex="6" rel="bookmark" title="Permanent Link to Land Value 101">Land Value 101</a></strong> the Irvine Company doesn't want to see house prices go down because it dramatically lowers their profits on the land.


<strong>





</strong>
 
Caraway, you seem knowledgeable, and you seem like you have an ax to grind. You sound like an older guy too, and maybe that accounts for your tone, no matter though, I appreciate your input.





I think the most damning thing to TIC would be if people knew that they're trying to find out who IR is. To even imply that a site like this could hurt their mammoth company is not a good sign. They're building their brand, this is free info, and they should be reading it and so happy that people care.





And if they are reading, I want an underground railroad and a Roscoe's Chicken and Waffles. Just sayin' guys.





<img src="http://lh4.google.com/Gregg.Mahlkov/RmNOC73thPI/AAAAAAAAA6U/GFdMeltb0GI/ugly-mug.jpg?imgmax=512" alt="" /> Here's IrivneRenter, so TIC, go ahead and say what you need to say to him.
 
IR, I agree, TIC will be under more pressure to provide affordable priced units and that will kill some deals. However, every TIC apt community in irvine, that i know of, has a percentage of affordable units set aside ranging from moderate to very low, which is the result of TIC voluntarily entering into an agreement with the city many years ago in order to promote growth and happiness and all the crap we pay a $1000 dollar per month premium for. Per the city website, there are 4000 affordable units in Irvine, the vast majority in TIC complexes.



My point is, because the land basis is so low, I beleive these were pro forma'd a zero, these deals with affordable housing work phenomenaly for TIC specifically, you're right that landowners are screwed but hey, they are screwed anyways in this downturn and an affordable component in my opinon is only going to bear additional presurer on them to lower their prices sooner.

I'd disagree that if the City was in control they'd take action on TIC,as this would be biting the hand that feeds war chests. A better target is Lennar, or the great park corp. But your guess is as good as mine with the unpredicatble jokers we have running the council.





Well,
 
<p>Jcaraway</p>

<p>I would like to see some proof of affordable housing and TIC. I say smoke and mirrors. 4000 affordable. NFW. </p>

<p>What happened to Lennar and those completion bonds you mentioned ? More smoke and mirrors ? You said Lennar could not walk away in the towering inferno post. Whats changed ???? Now your guessing when a couple weeks ago you were all knowing.......</p>

<p> </p>
 
<p><em> For the record, I am not IrvineRenter, but I met him once. Unfortunately for TIC, my memory is shot from a mis-spent youth and I can no longer remember what he looks like. I can, however, tell you what cayci's butt looks like. Odd that.</em></p>

<p></p>

<p>I suppose it's nice to know that my ass is aiding in IR's identity protection efforts.</p>
 
Welcome to Irvine, where the middle class need affordable housing.





So, how do we know IR isn't really working for TIC to help them generate public interest in the city?

 
I find it funny, that there are people who think that TIC doesn't want to shut us down, or even visit us. Um... seriously, google portola springs irvine, and look what you get...





<img src="http://img701.mytextgraphics.com/photolava/2008/02/19/googleportola-fcu9i3bv.jpeg" alt="" />





Yeah... if I were TIC, I would be interested in the site that has two results just below mine. Their initial reaction is probably to try to silence us, but they should come to their senses, and realize there is an abundance of potential buyers here. And, the comments are not just about the price, but about the design, feng shui, location, upgrades, and gawddamnit... the lot size. Hello, it is called a yard for a reason. IHB is the greatest thing to happen to TIC. They could never have created a site, where people could voice their true opinions. So, they should come here, learn from us, gain from us, listen to us, and make it happen. For gawd sakes, it will sell homes if you give the buyer demographic what they want.





Also, I find it funny, that TIC is perceived by many as not a home builder. Really? Um... ever hear of CalPac? Yeah... that company was, has, and will always be part of TIC. I mean, Donald's son has run the company for years, even in the last boom of the late 80s.





<em>Irvine Co. hires Bren firm</em>

<p class="MsoNormal"><em>Homebuilding company will sell directly to public </em></p>

<p class="MsoNormal"><em>May 6, 1992 </em></p>

<p class="MsoNormal"><em>Byline: Andre Mouchard </em></p>

<p class="MsoNormal"><em>The Orange County Register</em></p>

<p class="MsoNormal"><em>The Irvine Co. has taken the unusual step of hiring Chairman Donald Bren's homebuilding firm to build and sell houses directly to the public. </em></p>

<p class="MsoNormal"><em>Bren's Newport Beach-based building company, which last month changed its name from The Bren Co. to California Pacific Homes, has been signed to build two neigborhoods, a 176-unit project in Newport Ridge, near Newport Coast, and an as-yet unspecified project in Irvine's Westpark II, according to Irvine Co.</em></p>

Anyway, a history lesson was requested, and that is what I am here for. TIC is essentially doing the same thing as they did the last time. Holding firm on land prices, and price drops on homes. They will hold tight, and projects will be delayed. In the last bust, they took advantage of it, and as builders like Presley, LDM, Lusk, Pacesetter, and JM Peters went bust, they took over their positions on the cheap. They delayed Newport Coast, and waited until the demand was there.





<em>REAL ESTATE NOTES </em>

<p><em>September 10, 1993 </em></p>

<p><em>Byline: KELLY BARRON </em></p>

<p><em>The Orange County Register</em></p>

<p><em>Lotteries, camp-outs crop up even in this sleepy market </em></p>

<p><em>Camp-outs? Lotteries? In this housing market? As difficult as it is to believe, that's what's happening at Irvine Co.'s Newport Coast and Newport Ridge. </em></p>

<p><em>On Thursday sales agents at Taylor Woodrow Homes' Newport Coast project said they had five campers waiting to bid on town homes that go on sale Saturday. The homes, which have yet to be built, range in price from $184,990 to $264,990.</em></p>

<p><em>Home construction will build, slowly...</em></p>

<p>This project saw further delays, and the prices were hardly changed. However, factoring in inflation, they continued to get cheaper.</p>

They took over many builders during that time.





J.M. Peters Company, Inc. ("the Company") is one of the leading single-family homebuilders in Orange County, California and Las Vegas, Nevada,


<p>where it builds and sells homes targeted to entry level and move-up buyers.Since 1975, the Company has built and sold nearly 8,000 homes, principally in


Orange County, but also in the adjacent counties of Riverside, San Diego and LosAngeles. Since 1969, Durable Homes, Inc. ("Durable"), a wholly owned subsidiary that was acquired by the Company in 1993 (the "Durable Acquisition"), has built


and sold nearly 7,000 homes, principally in Las Vegas. According to The Meyers


Group, a real estate consulting firm, in 1993 the Company was the 10th largest


homebuilder in Orange County and Durable was the 8th largest homebuilder in Las


Vegas (in each case, based on unit sales). During the fiscal year ended February 28, 1994, the Company (including Durable's results on a pro forma basis for the full fiscal year) closed 644 home sales at an average sales price of $159,000


(including 205 homes closed in California at an average sales price of $293,000


and 439 homes closed in Nevada at an average sales price of $96,000). Recent market information indicates that the Orange County housing market


is improving and that the Las Vegas housing market remains quite strong. According to statistics compiled by The Meyers Group, the number of sales of newomes in Orange County was 15% higher during 1993 than during 1992, and the


overall inventory of unsold completed new homes in Orange County decreased from


a 40 week supply in September 1990 to a 13 week supply in December 1993. A


recent study by Kenneth Leventhal & Company determined that the percentage of households in the Orange County area that can afford a median priced home


increased from 14% in December 1989 to 47% in December 1993. According to The


Meyers Group, Las Vegas, with an expanding job base and relatively low median housing prices, was one of the fastest growing markets in the United States for


new home sales in 1993, with annual unit sales of 15,800, 40% greater than the


1992 level. The U.S. Census Bureau ranked Las Vegas as the number one


metropolitan area in percentage population growth between 1990 and 1992, with a


14% gain to 971,200 people. During the same period, Orange County gained 106,000


new residents, an increase of over 4%. In August 1992, Capital Pacific Homes, Inc., a Delaware corporation


("CPH"), acquired control of the Company in a $47.25 million purchase (the


"Acquisition") from the Resolution Trust Corporation ("RTC"). At the time of the


Acquisition, the Company had an experienced management team in place and almost 2,000 entitled lots in California (a majority of which were still held by the


Company as of February 28, 1994). The Acquisition (and the Company's results of


operations for the first six months of fiscal 1993) allowed the Company to improve significantly its balance sheet, as debt was reduced by $215 million


(from $263 million to $48 million), stockholders' equity increased by $76


million to $51 million and the book value of residential real estate inventories was written down 51% from $225 million to $111 million. Prior to the Acquisition, the Company had already taken significant writedowns to its land


inventory. Such write-downs aggregated approximately $140.3 million during fiscal years 1991 and 1992. The Company believes that one of its competitive advantages is that the carrying value of its land inventory is at or below


current market values.</p>
 
<p>Can't take a little twitting hunh? Since I'm 3000 miles away, I never have nor probably never will meet Irvine Renter.</p>

<p>Henceforth, you may skip over my name when you see it.</p>
 
<em>"do you think we have seen the lows or close to lows in irvine ranch for new homes? For example, several single family new track prices have not changed since they reduced it in mid 2006?"</em>





I would say no simply because the pricing is not affordable. Mid 2006 was the peak of the market, and it is 30%-40% higher than any realistic bottom for new home construction. That is why the prices have been dropping in VOC, the builder is trying to find the correct price point. The Irvine Company has simply put their heads in the sand hoping people will find a way to pay peak prices again. Since it isn't very likely the loose financing that created the bubble is going to come back any time soon, the Irvine Company is engaging in wishful thinking. This price drop will vaporize about 1/2 of Donald Bren's imagined net worth, so he will resist accepting the truth of the market until the bitter end.
 
I wonder how many referring hits TIC's sites have collectively received from IHB. I can imagine a guy in the TIC mkt dept reading a WebTrends, Urchin, or Google Analytics report going "what the hell <em>is</em> this irvinehousingblog thing, and where did all this traffic come from?"
 
<p>This is pure speculation:</p>

<p>But if for a minute I pretend I am Bren, I am thinking, "That IHB site really hasn't does us any harm. It was a bit threatening at first, but it does not have any real influence on macro factors. And it seems to keep folks talking about Irvine and the various developments. I wish it had a more positive spin, but you can't control or manage everything. Oh well, any press is good press and it's free advertising. I wish I could control it. And I wish I had a few minutes of free time to read it."</p>
 
I'd believe that if it was a normal business, but RE is so dependent upon perceived value that tightly controlled spin and BS are of paramount importance. Every educated consumer is like poison to them. I'm a renter and haven't purchased yet largely because of this site. I've got the down payment and the income and the credit score. I've got the desire to own and was shopping around. (Thanks for saving me about $250,000 so far by the way.) But, even with my lawyer-aided BS detector, I was having trouble seeing through their smokescreen since the agents (who don't work for TIC), and all of TIC and anyone else in the RE business in Irvine have their stories and rationale airtight. Now I just laugh and look at someplace like AV or Laguna Niguel as a real market indicator. This site has made a world of difference in my perception since it was the ONLY persistent, well-supported contrary view that I could find out there. I was starting to think I was crazy in my beliefs until finding the IHB. All those fence sitters being convinced to stay on the fence by this website. I know 5 or 6 of them in addition to myself. TIC must be having fits.
 
<p><em>"Also, if you are trying to call me out by my name that's a little too personal, a little too vindictive as it has significant repercussions for the user (ie: IR's anonymity)" </em><strong>Hmmm. Veiled threat ?</strong></p>

<p>Geez jcaraway. Do us all a favor and Google the phrase "Who is John Galt". </p>

<p>I'm with lawyerliz on her presumption about you. I've also been watching several other usernames here on IHB that I believe are also shills, possibly one person using several different names. The writing style and comments are too similar....I find this very easy to pick up on since it's my line of work. ;) </p>

<p> </p>
 
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