Irvine or Laguna Niguel?

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cherry14_IHB

cherry14_IHB

New member
First-time stressed-out psycho potential buyer needs help deciding where to buy! We are basically deciding between Irvine, Laguna Niguel, or possibly Aliso Viejo. Most of the stuff we looked at in Irvine seems so expensive, and we can't get much with our budget of about $650-$700k. There is one nice Irvine house we saw for about $700k, but it's not exactly what we want, and it was built in the 70s so it requires some updating. (This particular house is the only one we've seen in Irvine that doesn't feel overpriced to me.) Even though it's not exactly what we want, it's the closest we've seen in Irvine and the only one we'd seriously consider purchasing.



We don't know a lot of people in the area so we need some advice. Is it worth it to buy in Irvine when it seems like we could get more elsewhere? We do have a child so schools are important. Any help...ANYTHING...would be great! Thank you!
 
Not the time to buy, why?



We are currently renting in Irvine and need more room. We want to buy and don't want to rent anymore!
 
Irvine pricing is much more insulated than LN. While prices are dropping everywhere Irvine is still very stubborn. Sellers in Irvine believe in their asking price. They would rather have no buyers than to give their home away.
 
[quote author="cherry14" date=1233800809]Not the time to buy, why?



We are currently renting in Irvine and need more room. We want to buy and don't want to rent anymore!</blockquote>
Can you rent a bigger home?



The question you should ask yourself (and I wish I had asked myself in 2005) is:



Does it cost more to rent or buy a similar home?



What would your monthly cost be on a $650k home vs. renting a $650k home? There's a calculator on this site to help you figure this out:



<a href="http://www.irvinehousingblog.com/calculator/">http://www.irvinehousingblog.com/calculator/</a>



Until prices get down to a point where the cost to purchase is equal or less than it is to rent... I would rethink buying at this time.



As for Irvine vs. Laguna Niguel/Aliso Viejo... well... this is IHB so I'm a little biased towards Irvine.



But much of that hinges on where you work, where your family/friends live, etc etc.
 
What about Schools ? Got Kids ?



My son is grown now but HATED the Capistrano Schools. He grew up in AV.

I got as involved as I could to help. But I must agree. That Capo School

District is a mess. Its all about the teachers and the administrators

getting the cash. The kids are treated like prisoners. Beware.

Overcrowded and poorly maintained. They had plenty of cops on campus at

Aliso Niguel High at least. Too many incidents for my tastes.



I too would stay in Irvine and Rent till the next 25-30% shoe drops

in home resales. Why play knife catcher ? Wait another year at minimum.
 
[quote author="irvine_home_owner" date=1233803035][quote author="cherry14" date=1233800809]Not the time to buy, why?



We are currently renting in Irvine and need more room. We want to buy and don't want to rent anymore!</blockquote>
Can you rent a bigger home?



The question you should ask yourself (and I wish I had asked myself in 2005) is:



Does it cost more to rent or buy a similar home?



What would your monthly cost be on a $650k home vs. renting a $650k home? There's a calculator on this site to help you figure this out:



<a href="http://www.irvinehousingblog.com/calculator/">http://www.irvinehousingblog.com/calculator/</a>



Until prices get down to a point where the cost to purchase is equal or less than it is to rent... I would rethink buying at this time.



As for Irvine vs. Laguna Niguel/Aliso Viejo... well... this is IHB so I'm a little biased towards Irvine.



But much of that hinges on where you work, where your family/friends live, etc etc.</blockquote>


Cherry -- Just to give you a real world example, I rent a house Irvine that Zillow's at $649k today. With 20% down, that pencils out to something north of $3,500/mo to own. We rent it for $2,600. And it's no junk rental -- built in 2001 and in mint condition. Of course I also would love to own --- Heck, I'd buy this one if it falls another $100k. But I just can't reconcile the premium to own right now.



With regards to the neighborhood, my simple rule will always be to purchase the worst house in the best neighborhood --- not the other way around. Google the Capo Unified School District, and read up some of their recent history. That might help make your decision.
 
cherry - There is no quick and painless answer here. I would encourage you to read IR's book <a href="http://www.amazon.com/gp/product/0615226930?ie=UTF8&tag=thegrehoubub-20&linkCode=as2&camp=1789&creative=9325&creativeASIN=0615226930">"The Great Housing Bubble" </a>and then all of his posts in the main blog. If you still feel that you want to buy after that then do it but I have a feeling you might change your mind. Being a first-time buyer is hard enough... don't be a "stressed-out, psycho" one as you say. No major purchase should be made in that frame of mind.
 
I'd recommend reading the arguments against buying a house right now at www.patrick.net as well.



Having been on this board a while it seems every week or two someone posts a question just like yours. Some heed most of the advice urging patience, others don't. Some that buy anyway later admit to regretting their decision. Others don't - maybe because they feel it was the right decision for their family, because its a done deal, etc. Whatever the reason I think most people on IHB are good people who wish everyone who seeks advice here well.



Reading your post I seem to recognize a bit of myself a couple years back. Two years ago we relocated out here from the East Coast with decent jobs and considerable savings and equity from our home sales back East. We wanted to buy and buy quickly to take advantage of relocation benefits offered by one of our jobs. We were home-owner types and not renters. Why throw away your money right? Then we took a cold hard look at the current financials and they didn't make sense. Since then we've seen houses that we looked at in Orange County drop at least 25% and much more in certain instances. We have friends that owe 100k+ more on their homes than the homes are worth despite hefty down payments. We are very thankful not to be in that situation.



Ultimately its your decision to make but do your due diligence.
 
Thanks for the advice, everyone. Seems like most people are saying don't buy at all. That's a surprise! What about the tax write-off you get from owning...isn't that part of the reason to buy? Or is it just not significant enough to justify buying in this market? I'm curious what you all think.
 
[quote author="cherry14" date=1233818048]Thanks for the advice, everyone. Seems like most people are saying don't buy at all. That's a surprise! What about the tax write-off you get from owning...isn't that part of the reason to buy? Or is it just not significant enough to justify buying in this market? I'm curious what you all think.</blockquote>
If you check out the RentVsOwnulator... it takes that into account when doing the comparison.



I don't know how much you have to put down, but even at 20%, you will probably be paying more than rent of a comparable home even with the tax writeoff savings. And with the economy how it is... keeping that down payment fluid seems to be a safer way to go then putting it into a depreciating asset.
 
Just some comments...



I agree with most people that now may not be a good time to buy. However, I think that way because the lending environment could get much better in the future, not because of the price drop.



I mean, yes I want to see 25 to 30% off of the current price level but no one really knows what will happen. Banking on that forecast may not be a good thing to do just like people thought the value would go up forever in 2005/2006. We may eventually see 25% drop but if that takes 5 years instead of 2 years then, it may not be a bad idea to go for something you want and can afford.



Even if the price drops 25% within a year or two, competition among buyers could be heated up. Some people have to sell but most people don't and are making payments current just fine.



I'm hoping to buy Irvine house in 2 years but it looks like I may have to look elsewhere if the price remain sticky. I think ultimately it has to be unemployment driven price decrease would be the only sure thing that can make the price level somewhat close to "fundamental" value. Savers may have to use their savings to live when layoff hits. Then buying house is the last thing that people would entertain...
 
[quote author="cherry14" date=1233818048]Thanks for the advice, everyone. Seems like most people are saying don't buy at all. That's a surprise! What about the tax write-off you get from owning...isn't that part of the reason to buy? Or is it just not significant enough to justify buying in this market? I'm curious what you all think.</blockquote>
Look at it this way.: If you spend an extra $2,000 per month for buying vs renting a similar home, but are saving $1,000 in tax write-off, you are still throwing the other $1,000 down the toilet.
 
[quote author="cherry14" date=1233818048]Thanks for the advice, everyone. Seems like most people are saying don't buy at all. That's a surprise! What about the tax write-off you get from owning...isn't that part of the reason to buy? Or is it just not significant enough to justify buying in this market? I'm curious what you all think.</blockquote>


Take the <a href="http://www.irvinehousingblog.com/blog/comments/are-you-smarter-than-a-real-estate-agent/#more">"Are You Smarter Than A Real Estate Agent" Quiz</a> and pay particular attention to #4 - the mortgage interest deduction question & answer.
 
[quote author="Roo" date=1233818875][quote author="cherry14" date=1233818048]Thanks for the advice, everyone. Seems like most people are saying don't buy at all. That's a surprise! What about the tax write-off you get from owning...isn't that part of the reason to buy? Or is it just not significant enough to justify buying in this market? I'm curious what you all think.</blockquote>
Look at it this way.: If you spend an extra $2,000 per month for buying vs renting a similar home, but are saving $1,000 in tax write-off, you are still throwing the other $1,000 down the toilet.</blockquote>


Down the toilet huh? But you own the house and all the headaches that come with it! =)
 
Cherry,



It is cheaper to rent than to own. I do own and my mortgage is high. Home repair never seem to stop, I can't afford to lose my job because my reserve just plummeted on the stock market. My expense of home ownership even with deduction is 5 times the amount of an IAC rental.



It is really not worth it right now if you are buying a house and there are other 500 clones some where else in Irvine or Lag Niguel. The clones are your worse nightmare because they will drag down your comp.



Unless you saw a house so special and it is one of a kind that the opportunity for this house to come on the market is extremely rare then you should consider it. I will guarantee you that most houses that you like now in Irvine or LN other houses with the exact floor plan and elevation will be on the resale market next hour, day, week, month, season, year, and decade.



Trust me buying a house in Irvine or LN is like buying an Ipod or Iphone. There will always be an improved version in the future.



There are some extinct old technology that some buyers are interested in.





If you are interested in an old 8-track player (a house with a 3 car garage at the front) then for sure you should consider it because this obsolete equipment do represent an early pioneering spirit of our very clunky and un-refined technology.



My house is like this technology:

<img src="http://a.abcnews.com/images/Technology/pd_phonograph_061017_ssv.jpg" alt="" />
 
[quote author="CK" date=1233803937]



Cherry -- Just to give you a real world example, I rent a house Irvine that Zillow's at $649k today. With 20% down, that pencils out to something north of $3,500/mo to own. We rent it for $2,600. And it's no junk rental -- built in 2001 and in mint condition. Of course I also would love to own --- Heck, I'd buy this one if it falls another $100k. But I just can't reconcile the premium to own right now.



With regards to the neighborhood, my simple rule will always be to purchase the worst house in the best neighborhood --- not the other way around. Google the Capo Unified School District, and read up some of their recent history. That might help make your decision.</blockquote>


That doesn't pencil out to $3500/month to own CK unless you are including prinicpal repayment in your calc. With a $400/mo maintenance reserve and 30% rate for the deduction of interest and taxes, I get a an after-tax cost of right at $3K for your scenario. Still cheaper to rent, but not quite by as large a degree.



A house just like the one I rent just closed around the corner from me for $740K. If we would have bought that place, our after-tax cost to own would be around $3250/month based on mortgage rates today. Our rent is $3200 so the sale price is quite close to rental parity just like others in our area have been recently... We're not saving anything today by renting, just working toward potential future savings as a result of continued depreciation.
 
I used to live in Laguna Niguel, it is a horrible place, here are some misconceptions I had about this place before actually moving there (most of them were gone in a few months after moving there):

<strong>1. Oh, it is so close to the beach, just a couple of miles, it is almost as good as Laguna Beach. </strong>

No, it is not. A couple of mile is a couple of miles, you still have to drive to the beach.

<strong>2. I don't need a home with an air conditioner b/c I'm so close to the ocean. </strong>

You do, because all these high hills are completely blocking the air flow, very rarely you would feel an ocean breeze. Granted, it is cooler than other areas like Irvine, but not enough to make it a factor in your decision.

<strong>3. If I work in Irvine, it is so close, my commute is going to be fine. </strong>

LN-Irvine commute is a nightmare, 45 min to get to work if you go between 7 and 9 a.m. Did I mention that Crown Valley, one of the major street has so much traffic you have to wait for 2 lights to move through the intersection? On a Saturday?

<strong>4. Laguna Niguel has word "Laguna" in it, seems like a nice place where I would be surrounded by wealthy successful people. </strong>

Not really, unless you can shed off over 1.5 million for a better neighborhood, any neighborhood under 1.5 mil is just not worth it, there is a lot of "affordable housing" in there and cheap apartments. Guess what their inhabitants are doing in their free time (and they have lots of it)? They are walking to your neighborhood and hang out there using the amenities, just chillin', and of course, my personal favorite, playing soccer using your garage door.

The only plus side of Laguna Niguel that I still think was a good one is a lot of old mature trees.

Sorry for the long rant, but I absolutely hate this place now and regret not buying in Irvine from the get-go. I'm sure I'm going to get a lot of hate mail for this as usual, but if you buy there, you will regret it sooner or later.
 
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