New Home Inventory: Demand or Price?

irvinehomeowner said:
I actually like Korean BBQ House (if that's the one fe9k is talking about). But we don't do the AYCE, we just order either Bulgolgi, Kalbi or Mulluk-something or other (it's boneless Kalbi).

We love KBBQ... does that mean our stomachs have "yellow fever"?*

*OCR reference
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I have only been to Korean BBQ House for lunch.  So when I asked for their AYCE deals and how they serve the pork belly, it's the same as Shik Do Rak Irvine, only thin cut bacon strips. 
 
The things that irks me is that the Irvine Company knows exactly who their clientele is if you signed up for their 2010 New Home collection.  They basically made you do a full qualification to get on their priority list.  They know how much money you make, how much you have in savings, and depending if you passed up on an offering...how much you are willing to pay. 

I am pretty sure they can deduce what products are more popular based on the number of applicants at each model.  Therefore, I believe these prices are for real.  I don't think they will come down if you want a new house in Irvine.  The Irvine Company is smarter and have more visability than we do as buyers. 
 
LAtoOC said:
Regarding pricing and demographics - one thing that is hurting us (late 20s couple, just had a kid) is the student loan situation.

We both work but my wife has a ton of loans from college/grad school. But because we both are working, we got 0 deductions on our taxes as we are those evil rich people. We looked into buying this summer but decided against it just for the simple fact that we can rent an extra year, save on our monthly expenses and pay down debt. If we had some money that we could use for a down payment from a relative that probably would have changed our situation somewhat, but right now Irvine is not in our plans.
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Yeah student loans probably set you back a few years in the begining, but you (well your wife) chose to take those on with the hope that those loans would lead to such significantly greater income that not only would the loans pay themselves off but you would regain the lost years due to that income.  It will help that you are dual income and you (apparently?) do not have loans yourself.

My bf still has some student loans but they are not hefty and they're locked at 2.5% 

And to Sonoma -- I wonder if it skews their view though? Because a lot of people probably DIDN'T sign up for the list, they already knew what the general products and prices on offering were and either totally ruled them out or weren't interested enough that they wanted to turn over a bunch of personal information and get nonstop sales calls.    I HATE when you go to an open house and they hover to make sure you put your  contact info there and then you start getting annoying calls from the realtor about this super great mobile home he has for sale (come on, I'm sure you knew I wasn't going to buy your 700k house but really?).  I can only imagine the new home sales people are even more aggressive.   

So I mean, if the irvine co is using the priority list signups to judge what the market is, then all they will see is hte market for the stuff they already built.  The people waiting in the wings for something different aren't going to put themselves on the priority list when they are pretty sure they DON'T want the properties available.
 
IrvinePilot said:
Nobody wants to live in a small house.  TIC is pushing small houses because that is the only way they can maintain high land prices (TIC is very rich, but their money is in land) while maintaing affordability.
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I'm not asking to make the houses larger... just make small houses that are affordable. You can use the BagOChips method to make a 3-story detached SFR where you own the land have the same space as an attached condo where you pay HOA fees to maintain the land you don't own.
TIC's policy of propping up land prices is surely disappointing to those buyers looking for a traditional SFR, but TIC's efforts are not entirely self serving as efforts to mainitian high land prices is very beneficial to existing owners in Irvine.  Remember, when you are asking to be able to buy a $600,000 SFR in Irvine, what you are also asking for is that someone who bought a SFR in Irvine over the last few years to lose $300,000 to $500,000 that he/she probably worked very hard and saved a long time for.
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There are resale SFRs in Irvine that average 2000sft well within the $600-700k range so it's not a stretch. For brand new, you will giving up lot size and maybe more horizontal space... but don't take away land ownership, a driveway and a proper street. While people make fun of how small new Irvine backyards are... the point is they OWN it... which is what many people want. I do think the people who are buying condos don't really know the difference and don't understand that the land is more valuable than the structure.
In answer to your question, TIC will continue to build small homes until there is no longer a demand for them.
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Again... I don't necessarily think it's demand. Some people are buying out of fear, affordability or settling. There are many who would demand an SFR but settle for attached because that's the price TIC set it at and they are afraid it will go higher. How easily people forget the original benchmarks TIC put the 2010 Collection at when it was first announced. Did their costs go up between last year and this year? No... but because people still pay it... that's what they get.

The problem is, people may pay for it in the long run... and that's more of an issue than anything.
 
the tradition SFR in Irvine are going to demand a premium in the future when all they keep building are these smaller products.

Did anyone else notice that in Stonegate East they got ride of the motorcourt term but all the houses are on streets with no driveways and no curbs.  Very limited parking for visitors.  These TIC people are getting sneaky. 
 
With detach condos, you do own the land that the house is built on.  Owning the land is very important.  But I am just throwing this out for discussion.  In this era of master planned community (within the microscope of Irvine of course) and HOA, what can you do with the land you own 30 years down the road?  Tear down and build something different?  Will HOA approve it, probably not right?  So what are you doing to do with the land you own, so from TIC's persective, why build more traditional SFR where they charge you an arm and a leg for it and yet sell less of them, longer cycle time of their products, etc...
 
This whole detached condos vs. attached and land ownership is blurry.

Someone who bought a detached condo needs to chime in here to tell us what their contract says.

From what I can garner (I've never owned a condo, townhouse or detached condo), you may own land but it's land in common, meaning you have equal ownership in the land and why you pay a share to maintain it. For true condos, you only own the airspace between the walls and may not even actually own the structure.

And the issue isn't what you can do with land you own (although for bigger and older lots, it's an option to destroy/build/destroy), it's the cost you pay for homes where you don't own the land. Price stability exists in the mid-range, the first to experience priced drops are the lower attached condo style homes and the ultra high end. So by pushing out all these attached products... you're creating whole neighborhoods with less immune values.

Does anyone remember what the detached condos in Woodbury initially went for (I forgot the plan names)? I think they were somewhere from $400-500k... and are now on resale for $300k. So the issue isn't just having affordable detached SFRs, but also making the attached or condo products more inline with value pricing or give it better features for the price (which is probably why Santa Cruz is one of the slower moving products... it's designed like a detached SFR so it's priced similarly yet does not have enough features or a good enough location to fully qualify it).
 
I do know that if you don't own the land, then you are probably leasing the land.  If you are leasing the land, then the term of the lease is probably for 99 years.  And when that 99 years is up, I think you need to negotiate with the county for another 99 year lease.  So this won't affect your generation but maybe future generations.  Someone correct me if I'm wrong.
 
Talyssa said:
LAtoOC said:
Regarding pricing and demographics - one thing that is hurting us (late 20s couple, just had a kid) is the student loan situation.

We both work but my wife has a ton of loans from college/grad school. But because we both are working, we got 0 deductions on our taxes as we are those evil rich people. We looked into buying this summer but decided against it just for the simple fact that we can rent an extra year, save on our monthly expenses and pay down debt. If we had some money that we could use for a down payment from a relative that probably would have changed our situation somewhat, but right now Irvine is not in our plans.
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Yeah student loans probably set you back a few years in the begining, but you (well your wife) chose to take those on with the hope that those loans would lead to such significantly greater income that not only would the loans pay themselves off but you would regain the lost years due to that income.  It will help that you are dual income and you (apparently?) do not have loans yourself.

My bf still has some student loans but they are not hefty and they're locked at 2.5% 

And to Sonoma -- I wonder if it skews their view though? Because a lot of people probably DIDN'T sign up for the list, they already knew what the general products and prices on offering were and either totally ruled them out or weren't interested enough that they wanted to turn over a bunch of personal information and get nonstop sales calls.    I HATE when you go to an open house and they hover to make sure you put your  contact info there and then you start getting annoying calls from the realtor about this super great mobile home he has for sale (come on, I'm sure you knew I wasn't going to buy your 700k house but really?).  I can only imagine the new home sales people are even more aggressive.   

So I mean, if the irvine co is using the priority list signups to judge what the market is, then all they will see is hte market for the stuff they already built.  The people waiting in the wings for something different aren't going to put themselves on the priority list when they are pretty sure they DON'T want the properties available.
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I think that it does skew their preception.  However,  I think everyone would agree that their 2010 Home Collection was a major success.  I think TIC has only gotten stronger w/ pricing power after this. 

The TIC runs a business similar to McDonalds.  If they have been selling Big Macs this whole time and people are still eating it up, why change the products?
 
sonoma said:
I do know that if you don't own the land, then you are probably leasing the land.  If you are leasing the land, then the term of the lease is probably for 99 years.  And when that 99 years is up, I think you need to negotiate with the county for another 99 year lease.  So this won't affect your generation but maybe future generations.  Someone correct me if I'm wrong.
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county does not own the land in lease situations (which iirc have been extinct in Irvine for 30 years), the developer does.  there are two condo devs in OC currently about to lose their land leases, one in tustin and one in hb.  the develper has them by the cajones, and so the value of these condos has dropped 80%.  the land fees may go from $25 to $1000 per unit per month.

irvine condos, the land is owned by the  condo association, of which each owner owns a share, as i understand it.

 
irvinehomeowner said:
This whole detached condos vs. attached and land ownership is blurry.

Someone who bought a detached condo needs to chime in here to tell us what their contract says.

From what I can garner (I've never owned a condo, townhouse or detached condo), you may own land but it's land in common, meaning you have equal ownership in the land and why you pay a share to maintain it. For true condos, you only own the airspace between the walls and may not even actually own the structure.

And the issue isn't what you can do with land you own (although for bigger and older lots, it's an option to destroy/build/destroy), it's the cost you pay for homes where you don't own the land. Price stability exists in the mid-range, the first to experience priced drops are the lower attached condo style homes and the ultra high end. So by pushing out all these attached products... you're creating whole neighborhoods with less immune values.

Does anyone remember what the detached condos in Woodbury initially went for (I forgot the plan names)? I think they were somewhere from $400-500k... and are now on resale for $300k. So the issue isn't just having affordable detached SFRs, but also making the attached or condo products more inline with value pricing or give it better features for the price (which is probably why Santa Cruz is one of the slower moving products... it's designed like a detached SFR so it's priced similarly yet does not have enough features or a good enough location to fully qualify it).
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We bought one before.  Mericort, we do own the land the house is sitting on.  Not the alley, or the walkway to get to the house in the back of the pack.  Just the land the home is on.
 
fe9000 said:
irvinehomeowner said:
This whole detached condos vs. attached and land ownership is blurry.

Someone who bought a detached condo needs to chime in here to tell us what their contract says.

From what I can garner (I've never owned a condo, townhouse or detached condo), you may own land but it's land in common, meaning you have equal ownership in the land and why you pay a share to maintain it. For true condos, you only own the airspace between the walls and may not even actually own the structure.

And the issue isn't what you can do with land you own (although for bigger and older lots, it's an option to destroy/build/destroy), it's the cost you pay for homes where you don't own the land. Price stability exists in the mid-range, the first to experience priced drops are the lower attached condo style homes and the ultra high end. So by pushing out all these attached products... you're creating whole neighborhoods with less immune values.

Does anyone remember what the detached condos in Woodbury initially went for (I forgot the plan names)? I think they were somewhere from $400-500k... and are now on resale for $300k. So the issue isn't just having affordable detached SFRs, but also making the attached or condo products more inline with value pricing or give it better features for the price (which is probably why Santa Cruz is one of the slower moving products... it's designed like a detached SFR so it's priced similarly yet does not have enough features or a good enough location to fully qualify it).
Click to expand...

We bought one before.  Mericort, we do own the land the house is sitting on.  Not the alley, or the walkway to get to the house in the back of the pack.  Just the land the home is on.
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you are lucky you sold when you did... a friend of mine is having a tough time selling now...
 
fe9k:

So did your contract/title give you a lot size? If you notice many of those detached condo listings on Redfin, the lot size is not specified because they do not own land or just own land in common.
 
irvinehomeowner said:
fe9k:

So did your contract/title give you a lot size? If you notice many of those detached condo listings on Redfin, the lot size is not specified because they do not own land or just own land in common.
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Good question.  The answer is probably no and I don't remember.

Yeah, back when we were selling our home, we didn't list lot size.
 
sonoma said:
I think that it does skew their preception.  However,  I think everyone would agree that their 2010 Home Collection was a major success.  I think TIC has only gotten stronger w/ pricing power after this. 

The TIC runs a business similar to McDonalds.  If they have been selling Big Macs this whole time and people are still eating it up, why change the products?
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the difference between big macs and new homes is that if you make 1000 big macs and no one wants them, you are out a few hundred bucks. Not quite the same as a house. 

If the Irvine company is only using this data for their metrics, they could get lucky and be fine or they could get unlucky and find out that the market only wanted 500 homes of such and such nature and 1000 homes of antoher nature, but because they only focused on their sure knowledge that there were people who wanted the first kind o fhome, they missed the second kind of market.  I don't doubt TIC knows that. I think they probably do a LOT of market research.  combined with a marketing department that knows how to sell you something you might not have known you were willing to accept.
 
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