irvinehomeowner
Well-known member
Liar Loan said:
Doesn't surprise me that interest waned quickly in your neighborhood... it's not Irvine.
Observations from the front lines of the Irvine housing market?
- Thread starter usctrojancpa
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NEW -> Contingent Buyer Assistance Program
Doesn't surprise me that interest waned quickly in your neighborhood... it's not Irvine.
I agree, but I don't think we'll see a buyer's market anytime soon. Prices will just stabilize for a while. There's multiple 50 bps interest rate hikes scheduled in the upcoming months.
https://www.ocregister.com/2022/05/23/orange-county-home-sales-tumble-28-as-loan-payments-soar-42/
Only one wrinkle, we are starting from a super low inventory level. Yes number of sales dropped from last year but that was less inventory as of 4/30/22 (2,375) versus 4/30/21 (2,701). Part of the drop is higher rates and the other part is the lack of inventory. It's not how much inventory there is, it's how many months of inventory there is on the market in helping to provide an idea of where prices might be going. We need 3+ months of inventory for us to prices begin to drop meaningfully and that would require over 5,000 Orange County active listings which we haven't seen since the summer of 2019.
Boom?roasted
Right! All the boats in the harbor rise and fall at the same volume. I am a bit surprise that long term rate drop. The high rate is needed to bring equilibrium back to the housing market in Irvine and abate the bidding war, where 50 now drop to 5 competing offer. High rate for other places will be kryptonite on moving inventory.
I could be wrong, but this inflation hitting the middle class and needy very badly. I am not saying that Irvine are full of rich people, just from my observation, Irvine seem to be more prepared for the worse of time.
Time will tell. I am sitting on 30 % cash, which I?ve never done before.
I actually completely agree with his statement. I've never disputed that Irvine has a strong fanbase. It's just not the place for me, and of course Irvine is not immune to higher interest rates, job losses, and price declines, which for some reason is a controversial thing to say around here despite the historical evidence.
Even you are in denial that Irvine is at risk of price declines and are trying to cover up your insecurities with insults.
The house two doors down just lowered asking by $75k. Chasing the market down, down, down.
I don't know where you got the "pulled back 10-20% from the highs" from? You realize that 20% of $1.6M, for example, is $320k less? That's not happening in Orange County, especially Irvine. We haven't reached high yet. At least for new construction.
Bluffs just released last phase a couple weeks ago and next phase will see $25k INCREASE.
LL: ?[Irvine] is just not the place for me?
You don?t live in Irvine and you don?t like Irvine yet you stalk TalkIrvine and post every day. Get a life.
$642 psf is a steal for a 5 bed, SFR even in Great Park.
Anything less than $700psf is a steal for a turnkey home built recently.
There's nothing outrageous about the pricing. What price it was sold at 14 months ago is irrelevant. What is relevant is that this is a SFR in GP at $642/sq ft. While the MR in GP is pretty outrageous, I would still prefer it over LF. Whether or not Irvine is overrated, people still prefer it over neighboring cities. That is why it's getting awfully crowded.
There are some "wishful" sellers who are looking to cash in big gains from their purchases in the past 12-24 months which won't happen. Those sellers will be disappointed and those listings will come off the board once the cold slap of reality kicks in. Real estate is slowing down everywhere and more so outside of Irvine.
Yeah, the free helicopter money had to stop because it was making things stupid not only on the real estate side but also on things like NFTs trading for stupid money. There will be a little pain that we'll have to deal with shedding the excessive but as they say....no pain, no gain....in the longer term we'll all be better off getting back to normal. I prefer a more balanced market and it's better for everyone involved including first time home buyers.
Doesn't surprise me that interest waned quickly in your neighborhood... it's not Irvine.
someguy
Well-known member
The slowdown is real, especially in non-coastal US areas. Irvine is affluent and coastal enough so that it will experience a meaningful slow down only after most of non-coastal US feel pain, but there are signs the slowdown is approaching Irvine if you're paying close attention. Perhaps at the moment Irvine's slow down is only relative to the hysteria of a few months ago, but the trend is towards a balanced market. The unknown is whether the trend will continue past balanced to buyer's market.
superbobbay
Member
someguy said:
I agree, but I don't think we'll see a buyer's market anytime soon. Prices will just stabilize for a while. There's multiple 50 bps interest rate hikes scheduled in the upcoming months.
https://www.ocregister.com/2022/05/23/orange-county-home-sales-tumble-28-as-loan-payments-soar-42/
usctrojancpa
Well-known member
superbobbay said:
Only one wrinkle, we are starting from a super low inventory level. Yes number of sales dropped from last year but that was less inventory as of 4/30/22 (2,375) versus 4/30/21 (2,701). Part of the drop is higher rates and the other part is the lack of inventory. It's not how much inventory there is, it's how many months of inventory there is on the market in helping to provide an idea of where prices might be going. We need 3+ months of inventory for us to prices begin to drop meaningfully and that would require over 5,000 Orange County active listings which we haven't seen since the summer of 2019.
TestingIrvine
Active member
irvinehomeowner said:Liar Loan said:
Doesn't surprise me that interest waned quickly in your neighborhood... it's not Irvine.
Boom?roasted
sgip
Well-known member
Redfin does have a nice feature with their "Price reduced" filter.
In Irvine, LF, and MV an average one half of one percent of listed homes saw a price reduction in the last 36 hours. If that percentage goes over 2 percent it will be a noticeable shift in seller awareness of the market.
No matter if it's Irvine, Huntington Beach, or Corona, buyer traffic is down. This isn't due to high rates (yet) but the immediate impact of $6.25 gas and 10-15% higher grocery bills.
In Irvine, LF, and MV an average one half of one percent of listed homes saw a price reduction in the last 36 hours. If that percentage goes over 2 percent it will be a noticeable shift in seller awareness of the market.
No matter if it's Irvine, Huntington Beach, or Corona, buyer traffic is down. This isn't due to high rates (yet) but the immediate impact of $6.25 gas and 10-15% higher grocery bills.
irvinebullhousing
Well-known member
Soylent Green Is People said:
Right! All the boats in the harbor rise and fall at the same volume. I am a bit surprise that long term rate drop. The high rate is needed to bring equilibrium back to the housing market in Irvine and abate the bidding war, where 50 now drop to 5 competing offer. High rate for other places will be kryptonite on moving inventory.
I could be wrong, but this inflation hitting the middle class and needy very badly. I am not saying that Irvine are full of rich people, just from my observation, Irvine seem to be more prepared for the worse of time.
Time will tell. I am sitting on 30 % cash, which I?ve never done before.
Liar Loan
Well-known member
TestingIrvine said:irvinehomeowner said:Liar Loan said:
Doesn't surprise me that interest waned quickly in your neighborhood... it's not Irvine.
Boom?roasted
I actually completely agree with his statement. I've never disputed that Irvine has a strong fanbase. It's just not the place for me, and of course Irvine is not immune to higher interest rates, job losses, and price declines, which for some reason is a controversial thing to say around here despite the historical evidence.
Even you are in denial that Irvine is at risk of price declines and are trying to cover up your insecurities with insults.
The house two doors down just lowered asking by $75k. Chasing the market down, down, down.
CalBears96
Well-known member
perite123 said:
I don't know where you got the "pulled back 10-20% from the highs" from? You realize that 20% of $1.6M, for example, is $320k less? That's not happening in Orange County, especially Irvine. We haven't reached high yet. At least for new construction.
Bluffs just released last phase a couple weeks ago and next phase will see $25k INCREASE.
TestingIrvine
Active member
Liar Loan said:TestingIrvine said:irvinehomeowner said:Liar Loan said:
Doesn't surprise me that interest waned quickly in your neighborhood... it's not Irvine.
Boom?roasted
I actually completely agree with his statement. I've never disputed that Irvine has a strong fanbase. It's just not the place for me, and of course Irvine is not immune to higher interest rates, job losses, and price declines, which for some reason is a controversial thing to say around here despite the historical evidence.
Even you are in denial that Irvine is at risk of price declines and are trying to cover up your insecurities with insults.
The house two doors down just lowered asking by $75k. Chasing the market down, down, down.
LL: ?[Irvine] is just not the place for me?
You don?t live in Irvine and you don?t like Irvine yet you stalk TalkIrvine and post every day. Get a life.
Portolaresident
New member
https://www.redfin.com/CA/Irvine/141-Draw-92618/home/172589200
Is this for real or just a prank? this house was sold in April 2021 (14 months ago) for $1,733,700.00 and now it is listed for $2,898,000.00 that's 67% increase in one year. didn't the whole housing market went up like 30%-40% since pandemic? what is the logic behind listings like this? would be interesting to see if someone will actually pay for it. Not to mention it is located in Great Park, I would buy in LF or Foothill Ranch over the (not) great Park if I had to. I'm just glad I bought a condo back in 2015 in Portola Springs and paid it off, it's almost doubled in value now, I can probably rent it to hedge against some of this madness should I decide to upgrade in couple years. If it comes down to it, I am gonna aim for some gated community in Laguna Niguel, better weather and layout and no special assessment, Irvine is overrated in my opinion, it is getting awfully crowded with traffic due to all these narrow, tall storage units they're building and selling them as townhomes. I have also been noticing some littering in Portola and great park, and people not picking up after their dogs.
Is this for real or just a prank? this house was sold in April 2021 (14 months ago) for $1,733,700.00 and now it is listed for $2,898,000.00 that's 67% increase in one year. didn't the whole housing market went up like 30%-40% since pandemic? what is the logic behind listings like this? would be interesting to see if someone will actually pay for it. Not to mention it is located in Great Park, I would buy in LF or Foothill Ranch over the (not) great Park if I had to. I'm just glad I bought a condo back in 2015 in Portola Springs and paid it off, it's almost doubled in value now, I can probably rent it to hedge against some of this madness should I decide to upgrade in couple years. If it comes down to it, I am gonna aim for some gated community in Laguna Niguel, better weather and layout and no special assessment, Irvine is overrated in my opinion, it is getting awfully crowded with traffic due to all these narrow, tall storage units they're building and selling them as townhomes. I have also been noticing some littering in Portola and great park, and people not picking up after their dogs.
TestingIrvine
Active member
Portolaresident said:
$642 psf is a steal for a 5 bed, SFR even in Great Park.
Anything less than $700psf is a steal for a turnkey home built recently.
CalBears96
Well-known member
Portolaresident said:
There's nothing outrageous about the pricing. What price it was sold at 14 months ago is irrelevant. What is relevant is that this is a SFR in GP at $642/sq ft. While the MR in GP is pretty outrageous, I would still prefer it over LF. Whether or not Irvine is overrated, people still prefer it over neighboring cities. That is why it's getting awfully crowded.
usctrojancpa
Well-known member
It?s been a while since I posted the monthly Irvine data but since I?ve been able to close most of my listings I?ve had some time to pull together the numbers and really take a close look at what the data is telling me. First off, we are slowing down in the market. How do I know this? Well my listing open house traffic and agent showing traffic is down from what it used to be in the Spring time but I see that listings are not going into escrow as fast as they were before. The homes that aren?t selling now are the ones that are overpriced or non-desirable ones (bad location, bad floor plan, near a busy street, etc) but the turnkey homes are still moving fairly quickly into escrow.
As of the end of May 2022, the median price per SF is now at $729 or up about 35% from the end of May 2021. The May 2022 data represents homes that mostly went into escrow in April 2022 so it doesn?t quite reflect what is currently happening. It?s also taking builders a little longer to sell all of their new phase releases even though they are only dribbling out 2-3 homes per phase release for the most part. As sales slowdown we?ll see builders offering design center credits to move homes followed by offering broker co-ops or increasing them. Now that the market is coming more into balance we?ll get to see who the good listing agents are and who the ones that had the strong market make them look like rockstars. I?m sensing that we?ll experience who happened in 2018 when we have a moderate pullback in pricing due to rates having gone from the low 3% to low 5% since we?ve seen a similar increase in rates in the past 4-5 months.
May 2022 sales volume is down about 31% from May 2021 and is primarily due to the low level of inventory as inventory levels have been down 20-50% YOY in the first 4 months of 2022. That being said, as the bid/ask spread between what sellers are looking to sell their homes for and what buyers are willing to offer we?ll see sales volume come down as we are approaching the same level of inventory from this time last year. We are currently at around 1.5 months of inventory which is still a seller?s market so it?ll be important to keep an eye on what inventory levels are doing as we have now entered the summer selling season. There are some headwinds for buyers currently besides today?s higher interest rates and those include lower stock option values from lower stock prices along with lower crypto prices along with gas prices that have doubled in the past year. As of today (June 5th), there are 242 properties in escrow so we are not dropping off a cliff in terms of sales volume and should see June 2022 sales volume close to May 2022 sales volume.
I?m sure I?m not alone but I?ve had several buyers who?ve gone to the sidelines because they have been priced out due to increasing prices and higher interest rates. My other buyers are more passive and waiting patiently until they see something pop up that they really like. The market is definitely feeling that it will be more balanced as we get into the summer so buyer agents should have a better opportunity to negotiate a better price for their buyers so I don?t think I?ll have to use my trusty escalation clause strategy like I had to for the past 18 months.
As everyone knows, interest rates have increased from the high 2% to the low-to-mid 5% for conforming loans and from the high 2% to the low-to-mid 4% for jumbo loans. Investment property rates are now around 6% so that?s taken a lot of investment property buyers out of the market but there?s still 1031 exchange cash buyer investors out there. The FED will continue to increase rates throughout 2022 and we?ll probably see the FED funds rates around 3% by the end of year. They also started quantitative tightening at the beginning of June so it?ll be interesting to see what happens with interest rates. If the FED gets too aggressive we?ll most likely get a recession next year and we?ll see the yield curve invert this year. That may cause longer term rates to fall as the market will believe that the FED will decline inflation back to their 2% mandate. I believe the more aggressive the FED gets the higher likelihood that mortgage rates will come down and not go up because ultimately the main driver of longer term interest rates is inflation expectations. Obviously if rates go materially higher we?ll see more pressure on real estate prices. Areas like the Inland Empire will see higher price declines than Orange County as we?ve seen before in other downturns.
Overall, the market is getting more into balance now which overall is a good thing for everyone. No longer will ?lazy? listing agents benefit from a hot market, they?ll have to earn their keep. Good buyer agents will be able to negotiate better prices for their buyers but special desirable properties will still see multiple offers. Like I mentioned below, this feels a lot like 2018 and not 2008 as all of the buyers in the past few years have been very strong and the ones that have financed their homes were fully underwritten. I can see us having a pull back on pricing similar to what we saw in late 2018 where prices declined in Irvine 3-5% assuming that rates don?t materially go up or down and the stock market doesn?t crash.
As of the end of May 2022, the median price per SF is now at $729 or up about 35% from the end of May 2021. The May 2022 data represents homes that mostly went into escrow in April 2022 so it doesn?t quite reflect what is currently happening. It?s also taking builders a little longer to sell all of their new phase releases even though they are only dribbling out 2-3 homes per phase release for the most part. As sales slowdown we?ll see builders offering design center credits to move homes followed by offering broker co-ops or increasing them. Now that the market is coming more into balance we?ll get to see who the good listing agents are and who the ones that had the strong market make them look like rockstars. I?m sensing that we?ll experience who happened in 2018 when we have a moderate pullback in pricing due to rates having gone from the low 3% to low 5% since we?ve seen a similar increase in rates in the past 4-5 months.
May 2022 sales volume is down about 31% from May 2021 and is primarily due to the low level of inventory as inventory levels have been down 20-50% YOY in the first 4 months of 2022. That being said, as the bid/ask spread between what sellers are looking to sell their homes for and what buyers are willing to offer we?ll see sales volume come down as we are approaching the same level of inventory from this time last year. We are currently at around 1.5 months of inventory which is still a seller?s market so it?ll be important to keep an eye on what inventory levels are doing as we have now entered the summer selling season. There are some headwinds for buyers currently besides today?s higher interest rates and those include lower stock option values from lower stock prices along with lower crypto prices along with gas prices that have doubled in the past year. As of today (June 5th), there are 242 properties in escrow so we are not dropping off a cliff in terms of sales volume and should see June 2022 sales volume close to May 2022 sales volume.
I?m sure I?m not alone but I?ve had several buyers who?ve gone to the sidelines because they have been priced out due to increasing prices and higher interest rates. My other buyers are more passive and waiting patiently until they see something pop up that they really like. The market is definitely feeling that it will be more balanced as we get into the summer so buyer agents should have a better opportunity to negotiate a better price for their buyers so I don?t think I?ll have to use my trusty escalation clause strategy like I had to for the past 18 months.
As everyone knows, interest rates have increased from the high 2% to the low-to-mid 5% for conforming loans and from the high 2% to the low-to-mid 4% for jumbo loans. Investment property rates are now around 6% so that?s taken a lot of investment property buyers out of the market but there?s still 1031 exchange cash buyer investors out there. The FED will continue to increase rates throughout 2022 and we?ll probably see the FED funds rates around 3% by the end of year. They also started quantitative tightening at the beginning of June so it?ll be interesting to see what happens with interest rates. If the FED gets too aggressive we?ll most likely get a recession next year and we?ll see the yield curve invert this year. That may cause longer term rates to fall as the market will believe that the FED will decline inflation back to their 2% mandate. I believe the more aggressive the FED gets the higher likelihood that mortgage rates will come down and not go up because ultimately the main driver of longer term interest rates is inflation expectations. Obviously if rates go materially higher we?ll see more pressure on real estate prices. Areas like the Inland Empire will see higher price declines than Orange County as we?ve seen before in other downturns.
Overall, the market is getting more into balance now which overall is a good thing for everyone. No longer will ?lazy? listing agents benefit from a hot market, they?ll have to earn their keep. Good buyer agents will be able to negotiate better prices for their buyers but special desirable properties will still see multiple offers. Like I mentioned below, this feels a lot like 2018 and not 2008 as all of the buyers in the past few years have been very strong and the ones that have financed their homes were fully underwritten. I can see us having a pull back on pricing similar to what we saw in late 2018 where prices declined in Irvine 3-5% assuming that rates don?t materially go up or down and the stock market doesn?t crash.
usctrojancpa
Well-known member
As always, thanks for the time you put into publishing and analyzing the data.
The rapid increase in Irvine inventory to 82 SFR listings <=$2M tells me sellers realize they missed the market and are very scared of rising rates. Irvine has a large contingent of boomers and that inventory will balloon in the next 24 months as they look to escape CA. Sure, the market for new construction will remain strong given certain buyer demographics only wanting new construction but resale SFRs will drop precipitously, especially now that the era of remote work is ending with a bang.
I just noticed several 6 figure price reductions in my neighborhood this morning, heavy with boomers, so SV is not immune.
I heard a bank economist this weekend talking about deposit risk applying additional upward pressure on mortgage rates, and without the Fed buying any and all paper I anticipate credit drying up as well for all but the most pristine W2 buyers.
I stand by my 2023 predictions.
The rapid increase in Irvine inventory to 82 SFR listings <=$2M tells me sellers realize they missed the market and are very scared of rising rates. Irvine has a large contingent of boomers and that inventory will balloon in the next 24 months as they look to escape CA. Sure, the market for new construction will remain strong given certain buyer demographics only wanting new construction but resale SFRs will drop precipitously, especially now that the era of remote work is ending with a bang.
I just noticed several 6 figure price reductions in my neighborhood this morning, heavy with boomers, so SV is not immune.
I heard a bank economist this weekend talking about deposit risk applying additional upward pressure on mortgage rates, and without the Fed buying any and all paper I anticipate credit drying up as well for all but the most pristine W2 buyers.
I stand by my 2023 predictions.
usctrojancpa
Well-known member
OCtoSV said:
There are some "wishful" sellers who are looking to cash in big gains from their purchases in the past 12-24 months which won't happen. Those sellers will be disappointed and those listings will come off the board once the cold slap of reality kicks in. Real estate is slowing down everywhere and more so outside of Irvine.
irvinebullhousing
Well-known member
Thanks for detail analysis USC. I like it best when there is a balance market. The way to get more balance is higher rate, I hope the FED going to continue to do the right thing.
Perhaps there are many other political factors that our FED and government HAVE to balance with internal to United State and dealing with other geopolitical abroad with our foes and friends alike that their decisions arrive to where they are in the past two years. That part I don't know. What I do know is if we continue to go down the easy money path, we will end up a third world country. Loosing competitiveness, loosing leadership roles. And have a huge inequalities exist that the two sides will be at each other throats. One demand more for free and one will do everything to keep everything. Not good.
Perhaps there are many other political factors that our FED and government HAVE to balance with internal to United State and dealing with other geopolitical abroad with our foes and friends alike that their decisions arrive to where they are in the past two years. That part I don't know. What I do know is if we continue to go down the easy money path, we will end up a third world country. Loosing competitiveness, loosing leadership roles. And have a huge inequalities exist that the two sides will be at each other throats. One demand more for free and one will do everything to keep everything. Not good.
usctrojancpa
Well-known member
Compressed-Village said:
Yeah, the free helicopter money had to stop because it was making things stupid not only on the real estate side but also on things like NFTs trading for stupid money. There will be a little pain that we'll have to deal with shedding the excessive but as they say....no pain, no gain....in the longer term we'll all be better off getting back to normal. I prefer a more balanced market and it's better for everyone involved including first time home buyers.