Main Blog Discussion: China Grove 8/7/2009 (20 Honey Locust, Columbus Grove)

irvine_home_owner_IHB

irvine_home_owner_IHB

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Link to article:



<a href="http://www.irvinehousingblog.com/blog/comments/honey-locust-columbus-grove-irvine">http://www.irvinehousingblog.com/blog/comments/honey-locust-columbus-grove-irvine</a>



I'm bringing this discussion over here because:



1. I hate trying to have a conversation in the comment section, it's so segmented.

2. This is about no_vas' favorite place to live.

3. geotpf called bottom in Irvine in the comments section... TWICE!

4. I slightly disagree with IR when he says that Columbus Grove will reach equilibrium with Westpark I/II



First off, I think geo is mistaken... prices didn't stop dropping in Irvine in September of '08. I sold my home in December of '08 and the two similar houses that closed after me in the first quarter of '09, sold for less. Maybe that's a microcosm but there are still quite a few prices in Irvine where prices are still going down. It just doesn't look like it because the inventory is not very high but prices do seem lower than they were in September of last year.



Secondly, there are a few reasons why CG will not have the same value as surrounding neighborhoods:



- While it is still in the IUSD, they are very inconveniently chosen schools. Instead of schools that are closer to CG like Plaza Vista, they are districted for schools in Woodbridge

- Their lot sizes compared to Westpark are smaller

- Very few cul-de-sacs

- Close to the Jamboree/241 corrider

- Close to the concrete factory and waste facility

- No 3-car wide garages (while this is my own personal preference, even the older Wespark homes have models with 3CWG)

- Higher Mello Roos (much higher I believe)

- Higher HOAs (I believe the WP HOAs are only ~$50... a bargain in Irvine)

- Purchased at peak



Now I'm not really sure if IR meant by "equilibrium" that they would be the same pricing as WP homes (ie square footage to square footage) or the same comparative values as when they were originally priced (original sales price vs. current sales price). Granted, they may be the lowest price newer homes in Irvine, but comparative value/amenities are not on par with surrounding neighborhoods... at least IMO. Don't get me wrong, I really liked CG and wanted to buy those homes south of Warner, but when you add up the last 3 items on my list... it really makes it much more expensive than surrounding areas with less benefits.



Plus... no_vas would never visit.
 
I'm basing my "prices have been stable since Sept. 08" from this sold chart on Redfin <a href="http://www.redfin.com/city/9361/CA/Irvine">here</a> (change from "Both" to "House"-condos fell for longer and my price bottom call only applies to SFRs).



If you look closely, prices fell from when Redfin started tracking (Aug 07) until March 08, then were stable until July 08 (summer buying season), fell from then until the end of Sept. 08, were basically stable until Feb 09 when they fell a bit and then actually recovered a bit until May 08 (summer buying season again), and then have been stable since then. But prices have been between $320/sq ft and $343/sq ft since Sept. 2008, even though they bounced around a bit within that narrow range.



Is there anything wrong with this graph? Seems pretty damned straight forward to me.



Now, some other cities have NOT bottomed out, or bottomed later. Riverside, for one, seemed to be falling until very recently: <a href="http://www.redfin.com/city/15935/CA/Riverside">Here</a> (Again, sold houses only.)



Note that prices were clearly falling until June 09 in Riverside, after which they flattened out and may have bottomed, but it's too soon to make a call, IMHO. (There is less noise than on the Irvine chart; maybe more sales?) But in Irvine, almost a year of basically flat prices seems to be long enough to make a bottom call.
 
[quote author="Geotpf" date=1249969345]But in Irvine, almost a year of basically flat prices seems to be long enough to make a bottom call.</blockquote>
1. I don't think you can just look at SFRs to make this distinction.

2. Have you ever heard of "the calm before the storm"?



Fundamentals just don't agree with your assessment. While I will be the first to push the FCB theory around here... there is only so far the lucky number 8 can hold back the power of gravity.
 
[quote author="irvine_home_owner" date=1249969666][quote author="Geotpf" date=1249969345]But in Irvine, almost a year of basically flat prices seems to be long enough to make a bottom call.</blockquote>
1. I don't think you can just look at SFRs to make this distinction.

2. Have you ever heard of "the calm before the storm"?



Fundamentals just don't agree with your assessment. While I will be the first to push the FCB theory around here... there is only so far the lucky number 8 can hold back the power of gravity.</blockquote>


I think a main part of this is a "flight to quality". Irvine is perceived as a "high quality" area with low crime and good schools. But condos are a "low quality" product, so that negates the "flight to quality".



That is, "high quality" areas (Irvine) and categories (houses) fell less and bottomed much sooner than "low quality" areas (Riverside) and categories (condos).



Now, this is slightly different from extremely high priced areas. Once you are talking about multi-million dollar properties, things get a little weird even in a normal market.



If this was the calm before the storm, I think there would have been more of a drop in prices during winter 08/09. There really wasn't one in Irvine.
 
If the stock market tanks sometime in the next year, do you still think Irvine housing prices have bottomed? Or is your bottom call contingent on the stock market bubble not popping?
 
The timing of TIC's IVY release and increased price of phase 2 may help the resale WTF prices from tanking. The frenzy may give a sense of confidence for homeowners a sign of hope to hold their properties. TIC is milking every drop of Ivy's frenzy sold out by 10am.
 
[quote author="Geotpf" date=1249970629][quote author="irvine_home_owner" date=1249969666][quote author="Geotpf" date=1249969345]But in Irvine, almost a year of basically flat prices seems to be long enough to make a bottom call.</blockquote>
1. I don't think you can just look at SFRs to make this distinction.

2. Have you ever heard of "the calm before the storm"?



Fundamentals just don't agree with your assessment. While I will be the first to push the FCB theory around here... there is only so far the lucky number 8 can hold back the power of gravity.</blockquote>


I think a main part of this is a "flight to quality". Irvine is perceived as a "high quality" area with low crime and good schools. But condos are a "low quality" product, so that negates the "flight to quality".



That is, "high quality" areas (Irvine) and categories (houses) fell less and bottomed much sooner than "low quality" areas (Riverside) and categories (condos).



Now, this is slightly different from extremely high priced areas. Once you are talking about multi-million dollar properties, things get a little weird even in a normal market.



If this was the calm before the storm, I think there would have been more of a drop in prices during winter 08/09. There really wasn't one in Irvine.</blockquote>


I'm sorry, but just looking at SFRs in Irvine is not an accurate way to look at prices. Irvine is unique (no, not special), in that it has many, many detached condos. Since the data (DataQuick's included when looking at PPSF) excludes a highly desirable and quality product, the detached condo, then you are only seeing too small of sample of the much bigger picture (data set). It works well for Riverside, seeing as how it is roughly 63% SFR vs. 35% for Irvine. You HAVE to look at condo prices in Irvine, because condos account for nearly 2/3rds of the housing units.
 
Just to draw a similarity between the stock market and the housing market, although a bit inappropriate but gives one an idea about the economy. Glance back to the depression 1929-1933, people thought the recovery in 1929 spring was the recovery from the depression (does it sound similar to the March 2009 to current period??). Check the attachment for the chart.



Based on numbers for unemployment / underemployment, mortgage / home value projections, mortgage resets waiting to occur, the bottom is no where near.
<fieldset class="gc-fieldset">
<legend> Attached files </legend> <a href="http://www.talkirvine.com/converted_files/images/forum_attachments/391_SWlYENuy03gL7hmXCnYb.png"><img src="http://www.talkirvine.com/converted_files/images/forum_attachments/391_SWlYENuy03gL7hmXCnYb.png" class="gc-images" title="1929-stock-market-crash-dow-chart-image005.png" style="max-width:300px" /></a> </fieldset>
 
[quote author="irvine_home_owner" date=1249967570]Link to article:



<a href="http://www.irvinehousingblog.com/blog/comments/honey-locust-columbus-grove-irvine">http://www.irvinehousingblog.com/blog/comments/honey-locust-columbus-grove-irvine</a>



Secondly, there are a few reasons why CG will not have the same value as surrounding neighborhoods:



- While it is still in the IUSD, they are very inconveniently chosen schools. Instead of schools that are closer to CG like Plaza Vista, they are districted for schools in Woodbridge

- Their lot sizes compared to Westpark are smaller

- Very few cul-de-sacs

- Close to the Jamboree/241 corrider

- Close to the concrete factory and waste facility

- No 3-car wide garages (while this is my own personal preference, even the older Wespark homes have models with 3CWG)

- Higher Mello Roos (much higher I believe)

- Higher HOAs (I believe the WP HOAs are only ~$50... a bargain in Irvine)

- Purchased at peak



</blockquote>


If there is one factor on this list that I agree will make a substantial difference it would be the Mello Roos. When the Westpark Mello Roos are paid off, and the Columbus Grove Mello Roos is about 3% of the sales price, the tax differential alone could be worth $50,000 on comparable units.



To be a bit more precise with what I believe will happen between these communities: Columbus Grove and Westpark will come to a price equilibruim were comparable units in Westpark will have the same monthly rent and cost of ownership as Columbus Grove.



The other factors you mentioned are valid, but it can be difficult to assign value to many of those items.



There are also advantages to Columbus Grove you did not mention:

* Some people prefer that style of architecture to 3-car garages.

* Columbus Grove is newer than Westpark.

* Columbus Grove has convenient access from Jamboree (241) to the 5 or 405.
 
[quote author="graphrix" date=1249973969][quote author="Geotpf" date=1249970629][quote author="irvine_home_owner" date=1249969666][quote author="Geotpf" date=1249969345]But in Irvine, almost a year of basically flat prices seems to be long enough to make a bottom call.</blockquote>
1. I don't think you can just look at SFRs to make this distinction.

2. Have you ever heard of "the calm before the storm"?



Fundamentals just don't agree with your assessment. While I will be the first to push the FCB theory around here... there is only so far the lucky number 8 can hold back the power of gravity.</blockquote>


I think a main part of this is a "flight to quality". Irvine is perceived as a "high quality" area with low crime and good schools. But condos are a "low quality" product, so that negates the "flight to quality".



That is, "high quality" areas (Irvine) and categories (houses) fell less and bottomed much sooner than "low quality" areas (Riverside) and categories (condos).



Now, this is slightly different from extremely high priced areas. Once you are talking about multi-million dollar properties, things get a little weird even in a normal market.



If this was the calm before the storm, I think there would have been more of a drop in prices during winter 08/09. There really wasn't one in Irvine.</blockquote>


I'm sorry, but just looking at SFRs in Irvine is not an accurate way to look at prices. Irvine is unique (no, not special), in that it has many, many detached condos. Since the data (DataQuick's included when looking at PPSF) excludes a highly desirable and quality product, the detached condo, then you are only seeing too small of sample of the much bigger picture (data set). It works well for Riverside, seeing as how it is roughly 63% SFR vs. 35% for Irvine. You HAVE to look at condo prices in Irvine, because condos account for nearly 2/3rds of the housing units.</blockquote>


Condo prices in Irvine have bottomed as well, just later (in March). However, that's a little too short of a data set for me to be confident to call a bottom for Irvine condos, especially since that doesn't cover a winter (that is, could just be seasonal), unlike the time period that Irvine houses have been stable, which did cover a winter.
 
[quote author="lowlyrenter" date=1249975483]Just to draw a similarity between the stock market and the housing market, although a bit inappropriate but gives one an idea about the economy. Glance back to the depression 1929-1933, people thought the recovery in 1929 spring was the recovery from the depression (does it sound similar to the March 2009 to current period??). Check the attachment for the chart.



Based on numbers for unemployment / underemployment, mortgage / home value projections, mortgage resets waiting to occur, the bottom is no where near.</blockquote>


However, during the Great Depression, the government lowered government spending and tightened credit (the wrong thing). Right now, the government is increasing government spending and keeping credit loose (the right thing).



I personally believe that things like the TARP and the stimulus helped solve the problem, reducing both the depth and length of the recession. I know many disagree.
 
[quote author="Geotpf" date=1250036726][quote author="lowlyrenter" date=1249975483]Just to draw a similarity between the stock market and the housing market, although a bit inappropriate but gives one an idea about the economy. Glance back to the depression 1929-1933, people thought the recovery in 1929 spring was the recovery from the depression (does it sound similar to the March 2009 to current period??). Check the attachment for the chart.



Based on numbers for unemployment / underemployment, mortgage / home value projections, mortgage resets waiting to occur, the bottom is no where near.</blockquote>


However, during the Great Depression, the government lowered government spending and tightened credit (the wrong thing). Right now, the government is increasing government spending and keeping credit loose (the right thing).



I personally believe that things like the TARP and the stimulus helped solve the problem, reducing both the depth and length of the recession. I know many disagree.</blockquote>


I don't agree with you, but I like that you can make a coherent argument. Back in the day, people who where bullish were simply crazy.
 
[quote author="Geotpf" date=1250036726][quote author="lowlyrenter" date=1249975483]Just to draw a similarity between the stock market and the housing market, although a bit inappropriate but gives one an idea about the economy. Glance back to the depression 1929-1933, people thought the recovery in 1929 spring was the recovery from the depression (does it sound similar to the March 2009 to current period??). Check the attachment for the chart.



Based on numbers for unemployment / underemployment, mortgage / home value projections, mortgage resets waiting to occur, the bottom is no where near.</blockquote>


However, during the Great Depression, the government lowered government spending and tightened credit (the wrong thing). Right now, the government is increasing government spending and keeping credit loose (the right thing).



I personally believe that things like the TARP and the stimulus helped solve the problem, reducing both the depth and length of the recession. I know many disagree.</blockquote>


I think this will lengthen the problem because they will have to pull back on all this at some point.
 
[quote author="Roo" date=1250039059][quote author="Geotpf" date=1250036726][quote author="lowlyrenter" date=1249975483]Just to draw a similarity between the stock market and the housing market, although a bit inappropriate but gives one an idea about the economy. Glance back to the depression 1929-1933, people thought the recovery in 1929 spring was the recovery from the depression (does it sound similar to the March 2009 to current period??). Check the attachment for the chart.



Based on numbers for unemployment / underemployment, mortgage / home value projections, mortgage resets waiting to occur, the bottom is no where near.</blockquote>


However, during the Great Depression, the government lowered government spending and tightened credit (the wrong thing). Right now, the government is increasing government spending and keeping credit loose (the right thing).



I personally believe that things like the TARP and the stimulus helped solve the problem, reducing both the depth and length of the recession. I know many disagree.</blockquote>


I think this will lengthen the problem because they will have to pull back on all this at some point.</blockquote>


If the timing is right, the only thing that will occur is that another bubble won't reinflate quickly. That is, wait to turn off the government money spicket until after things are humming along fine, then shut it down slowly, to prevent a second bubble and collapse.



That is, part of the government's job is to encourage slow and steady growth, as opposed to huge growth bubbles followed by huge recessions. A free market, left to it's own devices, will swing wildly from insane growth to insane collapse. The previous administration should have raised interest rates to tamp down the bubble. If they did so, it would have prevented the crash, or at least reduced the size and scope of it.



Slow and steady wins the race.
 
The stock market is already in a bubble situation. Some brokers are describing it as "panic buying".



And the government's plan to fix the real estate market basically comes down to inflating another bubble and hoping that rising prices fixes everything.
 
[quote author="lowlyrenter" date=1249975483]Just to draw a similarity between the stock market and the housing market, although a bit inappropriate but gives one an idea about the economy. Glance back to the depression 1929-1933, people thought the recovery in 1929 spring was the recovery from the depression (does it sound similar to the March 2009 to current period??). Check the attachment for the chart.



Based on numbers for unemployment / underemployment, mortgage / home value projections, mortgage resets waiting to occur, the bottom is no where near.</blockquote>




Yes- But, I heard that the stock market did not get back up to the 1929 level until 1952. Perhaps someone with more knowledge can confirm. A 23 year recovery.
 
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