Irvine Homes and Real Estate

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You have to tracking the unemployment numbers very carefully as this will be the leading indicator of how much the home prices will start to correct in Irvine. If the S&P 500 starts to crashes 35% or more from the peak, we are going to see the ripple effect in the real estate prices. The housing markets with the higher median homes price to median income ratio will be at higher risk. As you can see from the chart, we are seeing the first uptick in the unemployment numbers from 2.4% in Dec 2019 to 2.9% in Jan 2020.

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Panda... isn't this like obvious stuff right now?

All of economy is going to tank... not just housing and not just because of unemployment.
 
I'll argue that Irvine real estate will decline LESS than other surrounding cities just like in the last downturn. Also, Irvine will rebound first and higher than the surrounding cities. 
 
USCTrojanCPA said:
I'll argue that Irvine real estate will decline LESS than other surrounding cities just like in the last downturn. Also, Irvine will rebound first and higher than the surrounding cities. 
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I say this all the time but the detractors argue with me instead of you. :)
 
We need a median $/sqft - Johns Creek 03.23.2020 vs. median $/sqft - Irvine 03.23.2020
Then check it again in 6 months!
 
zubs said:
We need a median $/sqft - Johns Creek 03.23.2020 vs. median $/sqft - Irvine 03.23.2020
Then check it again in 6 months!
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If we survive this. Either the covid or the riot.

Damn, we in a hard hard place. Trump is aging by the minutes.
 
Zubs, you know... perhaps your idea may be an interesting comparison. The real estate market in Johns Creek may get hit just as hard as Irvine. The difference is that the median household income in Johns Creek is similar to that of Irvine, but the median home price in Irvine is 2X that of Johns Creek. Perhaps I can track the "AAA" real estate assets of Johns Creek which are the Lambert HS Cluster and Northview HS for comparison with Irvine. The predominate Asian demographic of Irvine are the Chinese while for Johns Creek are Indians. Homes are here are also bit more spaced out from each other. 

Georgia Governor made a shelter mandate for only the high risk health today, but businesses here are still operational.
(GA Gov. Brian Kemp orders 'shelter-in-place' for those who have increased risk of catching COVID-19)https://www.wrdw.com/content/news/L...olding-news-conference-at-5-pm-569034911.html

zubs said:
We need a median $/sqft - Johns Creek 03.23.2020 vs. median $/sqft - Irvine 03.23.2020
Then check it again in 6 months!
Click to expand...
 
Irvine Real Estate Market Update - 04/23/2020. Interesting comparison to see how much impact the Corona Virus has with sales  volume in Irvine.

Current Listings
Single Family Homes Active - 239
Median : $1,509,596
Min: $629,000
Max: $19,000,000

Townhomes / Condos Active - 298
Median : $794,990
Min: $327,000
Max: $3,990,000

Irvine Single Family Homes sold between (04/01/2019 - 04/23/2019) - Units Sold 76
Irvine Townhome / Condos sold between (04/01/2019 - 04/23/2019) - Units Sold 100

Irvine Single Family Homes sold between (04/01/2020 - 04/23/2020) - Units Sold 40
Irvine Townhome / Condos sold between (04/01/2020 - 04/23/2020) -Units Sold 56

Year over year in the same time period the Irvine SFR sales is down 47.3% and the Irvine Townhome / Condo sales is down 44%

Irvine Real Estate Valuation Metrics

Median Home Price: $849,700
Median Household Income: $100,969
Median Home Price / Income Ratio: 8.4
 
It's true that sales are down over 40% YOY but the other interesting data point is that the number of resale homes on the market has gone down from 926 @ 4/30/19 to 537 @ 4/23/20 or 42%.  The number of properties in escrow is 148 so sales YOY figures will continue to fall.
 
New Construction Contracts to Closings is harder to gauge what with phases and differing builders delivering various products, but any thoughts if NC will follow the same ratios as resale?

My .02c
 
USCTrojanCPA said:
I'll argue that Irvine real estate will decline LESS than other surrounding cities just like in the last downturn. Also, Irvine will rebound first and higher than the surrounding cities.
Click to expand...

The way I see it, Irvine has a couple of things working against it that didn't exist last time:

1. The tightening in jumbo mortgages will create difficulty obtaining financing.  Obviously, this will be more of a problem for the neighborhoods priced above $950k, but that is a significant chunk of the market in Irvine now, and will create downward price pressure on lower tiers as well.

2. Will the FCB's show up to create an early bottom again?  Due to the global nature of this depression, I'm not so sure, but that will be an interesting thing to monitor.  If only there were a blog focused on Irvine real estate...
 
Bank Jumbo Financing still exists through all the major players. Non-Bank (less documentation, weird income, rental income variables) Jumbo loans have for all intents and purposes vanished.

Back to basic lending may not be a bad thing overall.

My .02c
 
Soylent Green Is People said:
Bank Jumbo Financing still exists through all the major players. Non-Bank (less documentation, weird income, rental income variables) Jumbo loans have for all intents and purposes vanished.

Back to basic lending may not be a bad thing overall.

My .02c
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It was big news that Wells, which was the largest originator, is no longer taking new jumbo loans and will only refinance its current customers that have $250k in deposits with them. The non-bank space I knew would be obliterated because they mostly sell into private securitizations.

It will be interesting to see if the other banks continue to originate without tightening standards, as I was also reading that the requests for forbearance on jumbos was almost as high as for GSE/.gov loans - 5.5% for jumbo vs. 6% for GSE/.gov - even though jumbos receive no government backing or bailouts and aren't mandated to provide forbearance.  Capital requirements might force the banks' hands eventually unless the Fed steps in further.
 
I did see WF cutting off 3PO's, but retail as well? YOW. Send link if possible.

My theory: Banks are going to shelve all the Agency stuff for a while and don't really care much about the portfolio jumbos in forbearance. They can hold forever as the Fed backstops them. As non-bank mortgage servicers begin to bust up I'm sure there will be plenty of (pre) arranged marriages between companies.

It's going to get ugly soon. Be sure to be out of the blast zone as you see the fuse shorten.

My .02c
 
Ah, you're correct:

Wells Fargo will only refinance only refinance jumbo mortgages for customers who have at least $250,000 in liquid assets with the bank, according to a Wall Street Journal report. With the new policy, customers who have jumbo mortgages with Wells Fargo won?t be able to refinance unless they have money with the bank. Wells Fargo hasn?t changed policies for purchase loans, according to the Wall Street Journal.
https://www.mpamag.com/news/wells-fargo-restricts-jumbo-loan-program-219085.aspx

The article I had originally read was more ambiguous in their wording and made it sound like Wells would only be doing refinances, and only if you had a $250k account with them.

It actually makes more sense.  They still see the value of attracting new HNW customers via their jumbo lending.
 
Liar Loan said:
USCTrojanCPA said:
I'll argue that Irvine real estate will decline LESS than other surrounding cities just like in the last downturn. Also, Irvine will rebound first and higher than the surrounding cities.
Click to expand...

The way I see it, Irvine has a couple of things working against it that didn't exist last time:

1. The tightening in jumbo mortgages will create difficulty obtaining financing.  Obviously, this will be more of a problem for the neighborhoods priced above $950k, but that is a significant chunk of the market in Irvine now, and will create downward price pressure on lower tiers as well.

2. Will the FCB's show up to create an early bottom again?  Due to the global nature of this depression, I'm not so sure, but that will be an interesting thing to monitor.  If only there were a blog focused on Irvine real estate...
Click to expand...

There is plenty of access to jumbo loans from direct lenders (banks) as I have a buyer in escrow on an Irvine home getting a loan of around $1m (they are only putting 20% down but could put down 40%+ and have great credit and stable jobs).  As SGIP stated, it's the non-direct lenders who no longer can fund jumbo loans but the big banks have plenty of capital. Do you need good income and credit?  You bet but that's the MO for most all Irvine buyers.
 
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