Irvine is not rich

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One thing I find interesting about the chart is that only 10% of households can afford a house over $800K, and that is with a $160K downpayment. It will need to be those people with very, very high incomes or mountains of cash pushing houses well over $1,000,000.

How many homes do you think are priced over $1,000,000 on the market now, and what percentage of the market is that?
 
While TIC likes to fancy Irvine as an modern, well-to-do locale, based on the income its residents generate that picture is an illusion. Irvine might be a safe place to live and have great public schools, well-maintained infrastructure, lots of parks and recreation, and good jobs, but it would never be a feature on the old TV show, "Lifestyles of the Rich and Famous." It ain't Greenwich, Beverly Hills, or Palm Beach and never will be. Unofrtunately, many Irvine residents have been caught in in the fever of trying to raise their lifestyle to match their appreciating homes by assuming ever large amounts of debt to pay for luxury cars, designer clothes, and the newest gadgets. This will end badly, but more than a few will justify it as their one opportunity in their lifetime to live like a king or queen.

Gar - You know you had some very good points in your first paragraph - objective and data driven. Your second paragraph (where you get on your soap box) is borderline comedy. You seriously need to read up on the geography of Orange County. Like others have previously said, Irvine does not purport to be some over-the-top rich and famous area. You said it yourself - Irvine is a safe place to live with good schools, parks, and infrastructure! That's what TIC positions Irvine as. If you lived in the SoCal, you would notice that it's a place people consider to raise a family (suburbia). For those seeking the flash lifestyle - that is Newport Beach/Coast and Laguna Beach! You can't simply make some blanket argument that all OC cities share the same characteristics...

I wish some of you had taken some basic Philosphy classes on college. Might have helped you with understanding the structure of logic, arguments, thesis, and supporting statements.

Also, why do people equate income with being rich? Income is only one component of wealth and the ability to afford a home!

Janet - What I find amusing about this board is the fact that the "frequent" members self-perpetuate their observations, thoughts, and opinions. It's as if they come here to post as a therapeutic method of reinforcing their decisions or thoughts. Whatever floats their boat. No worries - I got some love for ya.
 
Zillow shows 419/2389, or 17.54%.

Other sites were a little different.
 
CK and ocorbust,

I think you are confused by my original point. I am not arguing that Irvine isn't upper-middle class, rather I am pointing out that TIC is the illogical party here in assuming that Irvine homeowners are rich enough to afford its homes priced at $600K and up. Now, that the bubble period is over; going forward Irvine residents don't have the means and ability to purchase Bren's homes unless they are rich. I'll illustrate with this comparison:

In 1998, Worth magazine put out a list of the 250 richest towns in America, sorted by median home price. Greenwich, Beverly Hills, and Palm Beach are places we associate with the famous and wealthy. However, according to Worth they were not in the top 10, nor top 20. In fact, Beverly Hills was listed at 24, Palm Beach at 35, and Greenwich, CT at 40. You'll also be startled at how much the median homes in those three "rich" towns went for in a pre-bubble era. A median home in Beverly Hills in 1998 cost $750K. A median home in Palm Beach in 1998 cost $675K. A median home in Greenwich, CT in 1998 cost $651K. Those prices, albeit in 1998 dollars, are not too far off for what TIC got for its developments during the bubble and still would like to get today.

So, yes Irvine is an upper-middle class neighborhood in all respects except home costs; there it is the provenance of the "rich."
 
"To me, any American rich people is new money. The entire country is less than 300 years old. Some of the families in BH have been rich in other countries for a thousand years. No kidding, one of my friend's family owns a business of importing olive oil, and the company was established way back in the 700s. Another one of my Asian friends had their company established back in the 1500s."

That's interesting. Tenth generation guys playing polo in Connecticut and rappers in Escalade with no money in the bank? Same thing! Lady Astor and Lindsay Lohan? Identical spending habits.

From Wiki: "

Nouveau riche (French for "new rich"), or new money refers to persons who acquire wealth within their generation. It is generally used to emphasize that the persons were previously part of a lower economic or social class, and that the acquisition of wealth has provided the ability to do or to have things that were previously out of their reach.

The term can also be used in a derogatory fashion, for the purposes of social class distinction, to describe persons with newfound wealth and who are viewed as lacking the experience, finesse, or taste to use wealth in the same manner as old money - persons from families who have been wealthy for multiple generations. The implication is that, despite their wealth, they are still of lower- or middle-class origin, and therefore culturally inferior. A stereotypical example would be persons with new wealth who spend money conspicuously, aspire to the tastes of their betters, or fail to disguise lower class preference."

Okay, so new money then, is acquiring the wealth within their generation. Older than that, old money.

So, Tour, was your distinction between new/old money based on anything else but the United States being a relatively younger country? I hope that the gaudy tastes of the oil gluttons in BH doesn't pass for old money good taste. Tens of generations in a country for hundreds of years is plenty of time for old money to develop.
 
garfangle -- I'm not confused, I just could care less what the blue bloods in Palm Beach were paying for their houses during Lewinski-gate. It's not a meaningful comparison. IR's calculation of rental rates as fundamental value -- now that is meaningful to me. While comparisons to any other place and doing the "look how cheap it is there" thing might be fun for some, it is pointless if you need to live in SoCal for family or career reasons. If you must compare Irvine to somewhere cheap, then use Corona -- at least I could still drive to my job from there. Maybe I am way too simple, but beyond the rent fundametals, most other comparisons are paralysis by analysis for me. When I can buy IN IRVINE for a payment simliar to what I can rent it for....I'll buy. And I probably will not bother to check what the psf is in Austin or Greenwich before doing so.
 
And one more thing -- I think I disagree that TIC set prices out of reach of their populace -- the folks bid the prices up there. Sure, TIC certainly enjoyed their fat margins in the last 5 years -- but they will come back down as the market changes. My favorite comparison is Northpark -- because it is my favorite neighborhood. Just yesterday my wife and were parked out in front of 1 Upland drooling. This place is listed for 1.1M. I have not spent time researching it, but I will bet that TIC originally sold that place in 2000 in the 6's. And I am sure that in 2010 both TIC and 1 Upland will be selling for a price once again consistent with what people can and will pay.
 
According to BK, in 2010 TIC may still be thinking 2007 pricing. It appears they're targeting a different audience than the typical IHB reader. Maybe they think they have way too many starter and mid-sized homes and want to offer additional homes at high price tags for the upper end market. I have no problems with this, although I think OH's location, while nice, is not quite the TR location and views. They will need to make up for it in amenities, landscaping, and overall "feel". As much as I like to think they'd flop and were wrong in their pricing analysis, my gut is telling me that they'd sell even at 1.2M+ because they will be different from the current Irvine communities. There are people out there with cash and finances to buy 1.2M homes. Question will be how far North of 1.2M for 3600 sq ft home on a decent lot? At some point their pricing will line up with TR, Newport Coast when those areas drop.

TIC may feel that they will cannibalize existing SFR pricing and resale if they price new detached homes in the 1600-2300 sq ft range starting at 400's or, why not go upscale to help skew the meidan price of homes in Irvine.
 
"There are people out there with cash and finances to buy 1.2M homes."

This is an item of debate on the main blog today.

I don't question whether or not there are people out there who can buy these homes, but I very much question whether there are enough of these people to sell all the houses there. You can do a high-end subdivision if you have very few units or if you can wait 20 years to sell them all. IMO, the will have to lower the prices in Orchard Hills to build out the community.
 
Yes, that is the question, how many are out there and what competition will there be for 1.2M homes in better areas. I also know a lot of families with foreign money, they will state their income as being X, while in reality their income is 5x or 10x because much of the wealth is generated overseas. There's also buyers who are not in Irvine, where a taste of good infrastructure, schools, and communities are appealing.

Sometimes I just wish the market would crash just like the stock market. Just get it over with in one swoop, like an earthquake, it's over in a matter of minutes. Instead we're talking years of recovery and speculation.
 
I predict that the TIC higher price homes will be targeting the top 1% income earners of Southern CA and mostly outside of Irvine while the density effective homes will be designed for the general population of Irvine. Previously the higher end homes were sold to move up equity rich buyers from Irvine.

Custom home activities are up because contractors are running out of work in the production home building business. Cost of construction for custom has come down a bit. This market may compete with the semi custom production homes like Laing Luxury.
 
"Previously the higher end homes were sold to move up equity rich buyers from Irvine"

This is exactly the problem. When the entry level market dies, move ups can't get out of their current home. As all home values eventually decline, the equity rich will not be quite so equity rich by the time they actually sell their homes.
 
That is exactly right the expensive purchases have to be from sources outside of Irvine and lots of cash for down payment.
 
Well, if Nirvinerealtor is correct, the rich Asians will come over in large numbers and buy up all these houses. It seems like the only way they will sell.
 
So we have the rich Asians moving into the 1m plus houses in irvine.

What about Laguna, Newport, Mission Viejo, HB etc. Are the rich Asians buying them too.

Here is what strikes me as intresting.

$60,000 to $74,999 —— 6,169 — 9.7% — 43.7% — $300,000 — $60,000

$75,000 to $99,999 —— 8,666 — 13.6% — 57.3% — $400,000 — $80,000

$100,000 to $124,999 — 7,924 — 12.5% — 69.8% — $500,000 — $100,000

Where are these income brackets going to live?

There isn't a decent neighborhood in OC that these income brackets can move into.

Last check these people can't afford to even buy in So Cal. With 3 bedrooms going for 500+ in lovely neighborhoods like, Compton, Inglewood, Santa Ana and La Mirada.

The problem then is how do firms find the 60k-74k employee.

My company has lost 4 employees in the last 2 months all making probably in that salary range and they sighted gas prices and round trip commute. They can make less but take home more by not commuting into the OC.

I know lots of people working at the Irvine company some in IAC and none of them could even think to stay in the OC.

Except for those who bought before 2000.
 
I can say with confidence Greenwich house prices are overvalued. Last I checked 70% of listings in Greenwich were for above $3M. Tell me how many Greenwich residents can afford a $3M house? Certainly not 70% of prospective home buyers. If you do the same comparison as Irvine Renter did to Greenwich you will probably find it is substantially more overvalued than Irvine. That does not diminish the point that Irvine is overvalued and will lose substantial jobs due to being the center of credit intermediation for the country.
 
Bishie,

Greenwich is a little different. That is very old money in most cases. Then Greenwich is a commuter area.

My wife has 5 family members that live there and Darien CT. I haven't really looked there but from what I remember the houses have always been very expensive because that is where the elite from the city live. It is a small town that attracts the NY executives.

Don't forget they have very good public transportation in and around NY. You can live 100 miles away from the city and get there by train. Then have a car take you to your office.

Do you know if the housing prices in Greenwich have double since 2001? I know on Long Island they are being hit hard by over valuation right now So I wonder if Greenwich is.

Either way I think Greenwich isn't a work and live type environment. More like work and commute.
 
Rich Asians buy in place where their friends recommend. Newport, MV, and Laguna are not the places of endorsement. Schools and low crime are the 2 top priorities. Higher end homes will target lifestyle of Asians like the second kitchen for dirty greasy wok cooking. The second master down is another popular feature for multigenerational families.

The detached condo like Sienna will be a big hit at Woodbury East. There really have not been any new refreshing floor plans for the detached condos for several years. In fact some are 7 years old plans like Decada and Cortile. I think Sienna will debut in October.
 
With all due respect bkshopr, I believe that rich asians buy on reputation and school districts. Most asians don't care about views or size of the yard. They care about what schools their kids go to and how impressive it sounds when they mention where they live. I agree with you about MV and Laguna but definitely not Newport. Go check out Crystal Cove and see how many asians you find (usually MDs or business people). The others live in Monterey Park hills, Arcadia, and Diamond Bar Hills. It's about the exclusivity.

Interesting though, most asians don't care for BH or Malibu. . .
 
The schools for Crystal Cove are under the Laguna School DIstrict. It is not good like Irvine. Most families living in CCove send their kids to private school. The statistic of Asians in CCove is low compares to Irvine. It may be exclusive and prestigeous but Asians prefer Shady Canyon for its Irvine School District.

I would not consider Monterey Park an exclusive community. The Country behind the gates in Diamond Bar and Arcadia of SGV are indeed rated highly among Asians. Gated communities are important in the mind of Asians. Several neighborhoods in West Covina and Rowland Heights are gated and extremely sought after by Asians even the rest of the city is just ok.

The professional crowds such as doctors and top engineers are well adapted to the American culture but do not like to be mixed in to the high Asian populated neighborhoods so they seek places like La Canada Flindridge for its tranquility and yet not too far away from Chinese markets and restaurants.
 
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