Long time bear ready to "flip"

<p>Bubblegum- Plans 3 and 4 probably have the lowest sqf cost (low $300). But we actually like Plan 2 the best because of the center courtyard and the master bedroom being on the first floor. </p>

<p>IR- I meant to say that over the lifetime of a mortgage (15-30 years), a 10-20% value decline will most likely be negligible in my opinion. I agree with most of your assessments regarding the local RE market. Hence, it is the opportunity cost of having to tie most of our saving to a house is one of my main concerns. Of course unless the market takes another surprise turn, again! </p>

<p>However, part of me still thinks that the Irvine RE market is in a better position (highly in demand for the reason BK stated, high percentage of renters who want to own, a relatively young and diverse demographic and market economy, etc.) compares to the sorrounding cities, therefore it will sustain better in a RE downturn. Case in point, my wife and I are currently living in Costa Mesa. Now that we have a kid, our highest priority is to move to a more family friedly eighborhoob and good school district. For many families like ours, Irvine is the most practical choice. </p>

<p>Awgee- No one can predict the exact percentage of the anticipated RE correction. In my opinion, a 10-20% value decline for new and in highly demand communities is a reasonable number. I might be way off, but it is within the range of acceptable risk of owning a home in my situation. History does not always repeat itself. In the end, we all need to make choices and take risks based on our financial knowledge and gut feeling whether it is in buying a home or anything in life. Only will time will tell!</p>

<p>Again thanks to IR and everyone at IHB for all the invaluable information! </p>
 
Entry Point, I think prices in the most whored out (overbought) areas have already fallen 10-15% from the euphoric highs of 2005. So taking that into consideration your assumption of another 10-20% for a total of around 40% from the top might be close. I think we have another 25% minimum to go before capitulation. So if you can sleep soundly at night knowing you are down 250K on your 1MM home purchase go ahead and pull the trigger. If you plan on holding on for 10 years you'll be fine, but it sure is a gut punch everytime you look at your loan balance verses the value of your home untill it comes back.
 
It's more complex than that. You will be substantially less able to move to take job offers elsewhere because your house is under water. You will have less disposable income since owning is so much more expensive than renting in SoCal (even including the tax benefits). You will not reap as low a Prop 13 assessment as your neighbors who bought at lower values than you so more of your money will go out the door on property taxes.
 
<p>Just in case anyone is still open to the "Irvine is different" argument.</p>

<p>Headline from the Irvine World News: (plus some quotes)</p>

<p><strong>Irvine Homes Linger</strong>: It could take nearly 14 months to sell all of the residences that are for sale in the city.</p>

<p>"If market conditions persist, it will take an estimate 13.7 months to sell all of the homes that are for sale in Irvine...The length of time is a 50 percent increase from last months, during which the estimate was about nine months...The figures are based on a RE/MAX Realty Service report that shows Irvine homeowners sold 87 out of the 1,189 homes on the market during the 30 days ending Sept. 6."</p>

<p>"Irvine's market time is slightly shorter than the average for Orange County, which is 14.7 months."</p>

<p>Ready for some realtor spin? Here goes:</p>

<p>"The biggest reason for the rise in the market time is the psychological impact on buyers from media reports about the market being weak and the potential that the prices could continue to drop in the future, said Greg Gotthardt, a managing director at Alvarzez & Marsal Real Estate Advisory Services in Los Angeles." (So the reason that houses are not selling is because the media to telling people that houses are not selling? WTF?)</p>

<p>"Irvine likely will recuperate faster than areas in north Orange County because of the city historical's job growth and its high quality of life, Gotthardt added." (So, Irvine is only better than north OC now.. . need to move to Ladera Ranch)</p>

<p>"Irvine realtor Diane Gross said she does not see a reason to panic about the long market time. 'August is a dead month for real estate,' Gross said. 'It's the last hurrah for the summer and people tend to be gone so the market always dies.' She chose to have surgery last month for that reason, she added...Gross said that she has many interested buyers and that the problem is it is more difficult to get loans now." (Wait, I thought the summer selling season is the best time for real estate . . I guess August is not in a summer month.)</p>

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<p><strong><em>Gross said that she has many interested buyers and that the problem is it is more difficult to get loans now."</em></strong></p>

<p>How can you be a buyer if you can't afford the product? </p>

<p>I am interested in buying a personal Lear Jet, but alas I can't get a loan. Therefore I am not really a buyer, I am a looker.</p>

<p>A good looker but that is for the other blogs I frequent.</p>
 
<p><a href="http://money.cnn.com/2007/09/19/real_estate/steep_home_price_drops_coming/index.htm?postversion=2007091915">http://money.cnn.com/2007/09/19/real_estate/steep_home_price_drops_coming/index.htm?postversion=2007091915</a></p>

<p>Good luck spinning this one. </p>
 
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