MLS Irvine Closed Sales since 1/1/2006

[quote author="awgee" date=1210115996][quote author="IrvineRenter" date=1210111341]This thread is amusing. The bulls have come out.



I suppose if you completely ignore the macroeconomic picture, the conditions in the mortgage markets, the flood of REOs entering the market, and the collapse of prices in all surrounding markets, you could interpret the activity in Irvine as bullish. There does seem to be a concentration of knife catchers looking for quality in Irvine. Are there going to be enough of them to prop up the market? Anything is possible. I suspect you will see a decline in volume as the surrounding neighborhoods continue to decline as the substitution effect takes over. If a 2000 SF home is going for $250,000 in Rancho Santa Margarita, people will not be willing to pay $750,000 in Irvine. The collapse of surrounding markets is going to entice buyers away from Irvine ultimately depress volumes and prices. I don't know if any of you have been going to South OC Tracker, but prices in South County are already approaching rental parity, and the flood of REOs is going to continue to push prices lower there.</blockquote><p>

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IR - You are so wrong. All those macro factors are unimportant. They have little effect on the price of homes in Irvine. The YOY inventory is most important for price predictive purposes.</blockquote>


Get that tongue out of your cheek! You may scoff now, but if we somehow get to 4-5 months inventory in Irvine and price declines disappear in the short-term I expect a hardy "IPO, you are my hero!"...
 
[quote author="IrvineRenter" date=1210111341]This thread is amusing. The bulls have come out.



I suppose if you completely ignore the macroeconomic picture, the conditions in the mortgage markets, the flood of REOs entering the market, and the collapse of prices in all surrounding markets, you could interpret the activity in Irvine as bullish. There does seem to be a concentration of knife catchers looking for quality in Irvine. Are there going to be enough of them to prop up the market? Anything is possible. I suspect you will see a decline in volume as the surrounding neighborhoods continue to decline as the substitution effect takes over. If a 2000 SF home is going for $250,000 in Rancho Santa Margarita, people will not be willing to pay $750,000 in Irvine. The collapse of surrounding markets is going to entice buyers away from Irvine ultimately depress volumes and prices. I don't know if any of you have been going to South OC Tracker, but prices in South County are already approaching rental parity, and the flood of REOs is going to continue to push prices lower there.</blockquote>


What? In South OC you can get a place for almost rental parity? Someone should alert the guy who just closed at $725K for his 1800sf Quail Hill condo. Maybe we should text the family that recently forked out $935K for 2400sf in Northwood II. They obviously all didn't know that South OC existed!
 
[quote author="awgee" date=1210122533]OK, and I will start practicing now.</blockquote>


If you want to get me a trophy, or medal, or maybe a blue ribbon that would be nice too. I haven't had any of those since I was a tike... :)
 
I have noticed something in the last 6 to 8 months: about 90% of the new home buyers are asians in VOC and Woodbury vs. that of 40% to 50% asians 12 to 24 months ago. Some of the new streets are 100% asians.



By the way, majority of the purchases are NOT foreign money as far as I can tell. They are just regular working people in Irvine either own a business, or professionals (doctors, etc). Larger homes are mostly if not all move up buyers.



Someone mentioned the "substitute" effect when surround area prices goes down faster. I believe this effect is very limited. Given the demographics of the new buyers, RSM will seldom be among the choices on the table for them.
 
[quote author="ipoplaya" date=1210122752][quote author="awgee" date=1210122533]OK, and I will start practicing now.</blockquote>


If you want to get me a trophy, or medal, or maybe a blue ribbon that would be nice too. I haven't had any of those since I was a tike... :)</blockquote>


I was thinking more along the lines of getting you a bronzed MLS fob and a deputy Realtor badge.



:smirk: :smirk: :smirk:
 
[quote author="irvine123" date=1210122986]I have noticed something in the last 6 to 8 months: about 90% of the new home buyers are asians in VOC and Woodbury vs. that of 40% to 50% asians 12 to 24 months ago. Some of the new streets are 100% asians.



By the way, majority of the purchases are NOT foreign money as far as I can tell. They are just regular working people in Irvine either own a business, or professionals (doctors, etc). Larger homes are mostly if not all move up buyers.



Someone mentioned the "substitute" effect when surround area prices goes down faster. I believe this effect is very limited. Given the demographics of the new buyers, RSM will seldom be among the choices on the table for them.</blockquote>


IR thinks that the chinese and korean populations will jump on Aliso and RSM homes when they get cheap. I think while there may be some of that, it won't happen in any great magnitude. Asian families are all about education and they will pay a big premium to have IUSD schools. They will also pay to stay in Irvine and have asian neighbors, asian shopping, etc. AV and RSM will get whiter and whiter as the caucasian buyers substitute more readily and Irvine will get more and more asian.
 
I agree with you 100%, IPO. Over the past few years I have spammed my Asian wife with probably hundreds of links to homes in AV, MV, LN, etc. --- usually with subject line like "look at the phat pad we could get down there". Her reply to my messages is usually something like "don't forget to call or write us, because your daughter and I are staying in Irvine". It seems there is no substitute to Irvine.



At least I've talked her into renting being a good substitute for buying until at least next year.
 
"I don?t know if any of you have been going to South OC Tracker, but prices in South County are already approaching rental parity, and the flood of REOs is going to continue to push prices lower there. "



I thought that you guys were arguing that until prices reached rental parity, prices would continue to decline. It seems that you are actually saying that they will continue to decline even when rental parity is reached. Doesn't rental parity increase the demand? Even if supply increased, the increased demand offsets the price equilibrium. Sometimes I think you guys underestimate the supply of pent up buyers that have been waiting for years for prices to be affordable, particularly compared to renting.
 
On the "surface" Irvine does seem "clam" right now. However, with economy continuing to be badly and LIBRO continung to climb ( at least as of last week), there is probably an undercurrent that will drag a material number of homeowners into financial disstress who are doing just ok right now.



Separately, I worry about the resale value of Irvine Villages in the long run as Irvine is moving from the desirable demographic "diversification" to "concentration". Any opinion on this IR, BK, Graphix, IPO?
 
stepping up, look at IR's post about behavioral finance.



http://www.irvinehousingblog.com/blog/comments/efficient-markets-vs-behavioral-finance/



in particular the chart called "Psychological Stages of Bubble Market"



its very likely the declines will overshoot rental parity, just like prices went far higher than anyone could have predicted during the bubble. a number of factors could keep potential buyers on the sidelines even if homes are fairly priced. job losses, stagnant income, lack of credit, losses in other retirement accts, and FEAR could cause people to think twice regardless of price.
 
I think lack of credit is probably the largest issue right now. I just refinanced with a major bank who is probably in the best shape right now. I have been dealing with the same loan officer for the last 5 years. Evenwith full doc, good credit, good ratios, refi their own loan etc, they still picked my docs apart, and reduced my emergency HELOC and took nearly the full 30 days to complete the refi.
 
<blockquote>Evenwith full doc, good credit, good ratios, refi their own loan etc, they still picked my docs apart, and reduced my emergency HELOC and took nearly the full 30 days to complete the refi. </blockquote>


It's good to see that banks are doing this again. We wouldn't be in this mortgage mess if the banks did this in the first place.
 
[quote author="irvine123" date=1210131262]On the "surface" Irvine does seem "clam" right now. However, with economy continuing to be badly and LIBRO continung to climb ( at least as of last week), there is probably an undercurrent that will drag a material number of homeowners into financial disstress who are doing just ok right now.



Separately, I worry about the resale value of Irvine Villages in the long run as Irvine is moving from the desirable demographic "diversification" to "concentration". Any opinion on this IR, BK, Graphix, IPO?</blockquote>


The concentration issue is one that I have been noodling on some recently. The increasing amounts of stress/pressure put on their kids by the asian cultures with regards to education seems like it is a significant driving force in IUSD. I expect that only to keep getting stronger and I'm not sure I want my kids to be schooled in that kind of environment. We were so hot for Northwood Pointe for so long but have heard a number stories recently re: stress levels, massive amounts of homework, etc. about Canyonview.



Being half-chinese myself, with an uber education focused mother pushing me hard for so many years (my high school GPA was 4.2), I am leaning more toward a balance school environment and more time for our kids to be kids. I don't want my 3rd grader doing 3-4 hours of homework per night just to keep up... I want them in sports, arts, spending time doing creative play, etc. I think is one of the reasons we have been looking much harder at Tustin Ranch. Peters Canyon is still very highly rated, but only 30% asian. Pioneer is more heavily asian, likely as a result of the West Irvine and Northpark residents, but not dominated as such like many IUSD schools.
 
[quote author="CalGal" date=1210132754]<blockquote>Evenwith full doc, good credit, good ratios, refi their own loan etc, they still picked my docs apart, and reduced my emergency HELOC and took nearly the full 30 days to complete the refi. </blockquote>


It's good to see that banks are doing this again. We wouldn't be in this mortgage mess if the banks did this in the first place.</blockquote>


Countrywide wasn't nearly so thorough on my recent refi. The verified my employment with a phone call, but not my wife's. From the day I emailed over pay stubs, W2's, etc., it only took 10 calendar days to clear underwriting, fund, and close escrow...
 
[quote author="caliguy2699" date=1210115218][quote author="IrvineRenter" date=1210111341]prices in South County are already approaching rental parity, and the flood of REOs is going to continue to push prices lower there.</blockquote>


This is true. I found another foreclosure today (<a href="http://www.redfin.com/CA/ALISO-VIEJO/7-EL-CASERIO-92656/home/5594298">a 3/3 SFR in Aliso</a>) that is very close to rental parity - but not quite there yet. I am also noticing more properties come on to the market at lower prices - the expected REOs as well as short sales, but I'm not ready to decide yet whether these are legitimate prices or if they are banks and underwater borrowers who are trying to get bidding wars started and don't intend to sell for those prices.



Some of the small condo complexes in less desirable neighborhoods are already at or very near rental parity, but there are too many in foreclosure to not expect prices to deteriorate further, whether they are picked up by investors in the hopes of renting them out, and they flood the rental market, or as the foreclosures there continue. <a href="http://www.southoctracker.com/2008/04/via-lomas-street-in-despair.html">This one street alone</a> had 16 foreclosures on it a couple weeks ago.</blockquote>


I just pulled up the area in AV I check periodically (near Wingspan Park and just on the other side of the 73 from there) and it appears a larger number of homes have gone into escrow there over the past few weeks...



Unless they all took uber big discounts to list, which is highly doubtful, they will sell for considerably above rental parity.



Couple of examples:



<a href="http://www.redfin.com/CA/Aliso-Viejo/63-Rockrose-92656/home/4869357">Rockrose</a>



<a href="http://www.redfin.com/CA/Aliso-Viejo/4-Grandbriar-92656/home/4857297">Grand Briar</a>



<a href="http://www.redfin.com/CA/Aliso-Viejo/1-Goldenfield-92656/home/4856579">Goldenfield</a>
 
"its very likely the declines will overshoot rental parity, just like prices went far higher than anyone could have predicted during the bubble. a number of factors could keep potential buyers on the sidelines even if homes are fairly priced. job losses, stagnant income, lack of credit, losses in other retirement accts, and FEAR could cause people to think twice regardless of price. "



That makes sense. I always thought the rational argument was totally irrational. The average Joe doesn't run complicated models to form his expectations and information is assymetrical, making markets imperfect. So, I'm looking at the bubble graph and wondering about the time lines. What month and year are saying that the perceived value based on the expectation of rising prices began? Also, is the graph to scale? I'm trying to figure how much time elapses between the period where prices drop below rental parity and then cross above it again the first time and how much time between the first dip below it and the seccond rise above it where the curve starts to head back to appreciation again.
 
"in the last week 4 went off the market, yet none are pending sale or accepting backup offers."



I've seen this too on houses I've been watching in Costa Mesa. All of the ones that came off the market without pending sale I really suspected were short sales due to the last sales price and the listing price. I was wondering if they were able to get their loans modified or if they just ended up in foreclosure and we'll see them back on the MLS shortly.
 
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