Trying to buy in Irvine is NO Fun

[sonoma]

Rumor has it, those "special" houses are reserved for USC alumni.

 

[usctrojancpa]

Rumor has it, those "special" houses are reserved for USC alumni.

Never got that memo in the mail.  haha

 

[Irvine2Irvine]

Usually, the employees of the builder, sub contractor, and the lender have the first dibs on the house.  The first person who signs up will still be behind the employee even if the employee decide to buy later.
This is common practice and they will have a disclaimer on the buying process.

 

[edhne]

LLucy,

what are you looking for exactly? I see plenty of resale SFR in Irvine that have been on the market for months that are "reasonably" priced to comps.

I tried all the short sales/REO bidding and got so frustrated. You might be surprised how much equity sellers might be willing to negotiate once you submit a written offer. That is how we bought.

Been there done that!!!!!!!!!

:'(

Reasons:

1. Being outbid by an all cash buyer.
2. Interesting properties are sold before we can even view them.
3. Inventory seems so limited.
4. Everyone says wait but we have been waiting for years. And even when we try we are unsuccessful.

Frustrating and sad.

Living in Irvine seems like a dream. And looking for a house is a nightmare.

Sorry had to vent.  :'(

 

[irvinehomeowner]

I see plenty of resale SFR in Irvine that have been on the market for months that are "reasonably" priced to comps.

Are those newer homes that don't need much updating and are in a good location? Those are the ones that are hard to find for good prices.

 

[LookieLucy]

LLucy,

what are you looking for exactly? I see plenty of resale SFR in Irvine that have been on the market for months that are "reasonably" priced to comps.

I tried all the short sales/REO bidding and got so frustrated. You might be surprised how much equity sellers might be willing to negotiate once you submit a written offer. That is how we bought.

Been there done that!!!!!!!!!

:'(

Reasons:

1. Being outbid by an all cash buyer.
2. Interesting properties are sold before we can even view them.
3. Inventory seems so limited.
4. Everyone says wait but we have been waiting for years. And even when we try we are unsuccessful.

Frustrating and sad.

Living in Irvine seems like a dream. And looking for a house is a nightmare.

Sorry had to vent.  :'(

We are looking for homes that are at least built in 1980's and under 600, single families with nice lot sizes and backyards, low association. We bid on short sale in WoodBridge and got outbid by an all cash buyer. Another home we were interested in was a Turtle Rock home. Found out it got 3 offers within 4 days. People bid on it blindly just by looking through windows since the home had lock/key issues. I thought that was funny.

Perhaps it's the price range and I want everything (a good distance from freeway, a backyard, good price, low assoc, no mello roos)! But now considering Stonegate and condos. So we have more options now.

 

[edhne]

I see plenty of resale SFR in Irvine that have been on the market for months that are "reasonably" priced to comps.

Are those newer homes that don't need much updating and are in a good location? Those are the ones that are hard to find for good prices.

In Turtle Rock so by definition, not a newer home. But this some has been on the market a while and has nice updated interior and decent lot size. a decent location.

Very low tax base and no MR and low HOA.
http://www.redfin.com/CA/Irvine/19181-Biddle-Dr-92603/home/4739523

equity sellers. 10-15 mins walk from elementary. Feeds into Uni. Gets ocean breeze.

On price per sq/ft basis, it is expensive compared to newer villages but compared to TRock comps, a solid comp.

 

[usctrojancpa]

I see plenty of resale SFR in Irvine that have been on the market for months that are "reasonably" priced to comps.

Are those newer homes that don't need much updating and are in a good location? Those are the ones that are hard to find for good prices.

In Turtle Rock so by definition, not a newer home. But this some has been on the market a while and has nice updated interior and decent lot size. a decent location.

Very low tax base and no MR and low HOA.
http://www.redfin.com/CA/Irvine/19181-Biddle-Dr-92603/home/4739523

equity sellers. 10-15 mins walk from elementary. Feeds into Uni. Gets ocean breeze.

On price per sq/ft basis, it is expensive compared to newer villages but compared to TRock comps, a solid comp.

One LITTLE problem that most buyers will have with this home is that bit backs up to Culver.

 

[IndieDev]

Also it's over priced based on fundamentals by about $200,000 dollars, which is why it's unsold in 8 months. This home will end up being a classic case of "chasing the market down" unless the seller finds a big foreign cash sucker.

 

[edhne]

I actually back onto that part of Culver as well. I have my windows open all the time and never notice anything...but that is personal preference of course.

http://www.redfin.com/homes-for-sale#!lat=33.63941995960323&long=-117.81648699835559&market=socal&region_id=2783&region_type=1&sold_within_days=365&uipt=3,2,1&v=6&zoomLevel=16

this one is not nearly as nicely done but no culver. It has been on the market a long time as well. They have lowered the price quite a bit and it went into then fell out of escrow. I'm sure they are motivated if one were so interested.

I just notice these because I walk by them regularly walking the dogs...

Main point is that these can probably be bought at or below recent comps but have been sitting on the market a while...

 

[irvinehomeowner]

40-year old 3/2s for $800k may be below comps in Turtle Rock but that's not exactly in the affordability range for many people.

Again, you're not demonstrating the availability of *newer* SFRs in good locations... which I believe what the OP is looking for.

 

[edhne]

Also it's over priced based on fundamentals by about $200,000 dollars, which is why it's unsold in 8 months. This home will end up being a classic case of "chasing the market down" unless the seller finds a big foreign cash sucker.

Hmm..how to define fundamentals.
Comps? Recent comps...across the street..sold for 820. a little more sqft but much much older...nothing updated.

Rental parity? Then they rented out the place across the street for 3700~3800 a month as is.

Replacement value?
Usually homes in TRock are +80% land value because of age of homes. Try building a 2000 SQFT home there for under $200 sq/ft. So 400k in building costs. I doubt you can buy this lot for 400k.

200k over fundamentals? That would put this house at 2003 prices based on zillow estimates. So in 8 years, if prices appreciated at exactly 3.5% per year from your 2003, this house would be ..drum roll...840k.

I guess if you believe that all homes should be back 2003 prices...that's a whole different argument but not one based on "fundamentals."

 

[edhne]

40-year old 3/2s for $800k may be below comps in Turtle Rock but that's not exactly in the affordability range for many people.

Again, you're not demonstrating the availability of *newer* SFRs in good locations... which I believe what the OP is looking for.

Reasons:

1. Being outbid by an all cash buyer.
2. Interesting properties are sold before we can even view them.
3. Inventory seems so limited.
4. Everyone says wait but we have been waiting for years. And even when we try we are unsuccessful.

Frustrating and sad.

Living in Irvine seems like a dream. And looking for a house is a nightmare.

Sorry had to vent.  :'(
---
@IHO, sorry, where did LLucy say newer SFR in her original post? I was responding to her post. She obviously clarified she wants a SFR for 600k later but that isn't want i responded to.

You must be projecting your house requirements onto others.

 

[irvinehomeowner]

@IHO, sorry, where did LLucy say newer SFR in her original post? I was responding to her post. She obviously clarified she wants a SFR for 600k later but that isn't want i responded to.

You must be projecting your house requirements onto others.

You are correct... which is why I said "I believe".

But that still goes to the point that the more desired homes in Irvine aren't readily available at a reasonable price (reasonable of course being defined in a general sense).

Since her clarification was $600k... do you see a large volume in resale that falls into that category without being a short sale or any of her 4 items?

 

[IndieDev]

Hmm..how to define fundamentals.
Comps? Recent comps...across the street..sold for 820. a little more sqft but much much older...nothing updated.

Only if you want to throw money away. Buying an asset at an inflated price for a "little less" inflated price only means you are still buying outside of fundamentals.

Rental parity? Then they rented out the place across the street for 3700~3800 a month as is.

Rental parity is a good one, but sometimes difficult to collect reliable data upon. No offense to you and your "anecdotal" data, but your one point of unconfirmed data doesn't define what rental parity for an area is.  That's what Patrick.net is attempting to do, and they are building the data sets for numerous areas. Based on Riddle Drive's location, and the data points collected by Patrick.net, buying at $839,000 for that house is a HUGE loser.

Replacement value?
Usually homes in TRock are +80% land value because of age of homes. Try building a 2000 SQFT home there for under $200 sq/ft. So 400k in building costs. I doubt you can buy this lot for 400k.

No, replacement value is never used, at least by serious investors/appraisers to determine value. It does have a small effect on cost, but it's a small part of the picture, and most smart construction companies build homes that end up out pace their construction cost, even in places like Santa Ana, doesn't have to be a "prime area".

200k over fundamentals? That would put this house at 2003 prices based on zillow estimates. So in 8 years, if prices appreciated at exactly 3.5% per year from your 2003, this house would be ..drum roll...840k.

Using Zillow estimates is a horrible way to do valuations and a sure fire way you'll end up losing money. Their heuristic is based on a computer's interpretation of curve and a few data points of "sold" homes. Not exactly a great way to judge fundamentals.

Regardless, your assumption fails instantly because you used 2003 as your starting point,  a year solidly in a bubble due to the financing fiasco created by banks.

What we do know is that the home sold for $285,000 pre-bubble (1996), and using ACTUAL inflation increases since 1996 based on BLS statistics, not some guesstimate of 3.5%, the actual inflation adjusted value of the house is around $402,000. Now accounting for a full remodel (which it looks like it was done within the past 5 years or so), you can throw in another $100,000 - $150,000 based on personal preference of the "updates". So I'm actually being a bit friendly with the $600,000+ valuation, but that's only because Turtle Rock is a somewhat coveted area.

But the main thing you should be looking at is this; did median incomes triple since 1996? Did rents triple since 1996? A solid no on both counts. So what changed? Easy access to crazy financing, which is exactly why that home in the 800s has been chasing the market down for 8 months. You have to have... umm... real money now to buy stuff.

That's fundamentals. 

 

[irvinehomeowner]

That's fundamentals. 

But Irvine operates on FCB-mentals.

 

[IndieDev]

That's fundamentals. 

But Irvine operates on FCB-mentals.

You should trademark that.

"Irvine, we turn stucco into Gold with the help of FCB-mentals."

 

[edhne]

Hmm..how to define fundamentals.
Comps? Recent comps...across the street..sold for 820. a little more sqft but much much older...nothing updated.

Only if you want to throw money away. Buying an asset at an inflated price for a "little less" inflated price only means you are still buying outside of fundamentals.

Rental parity? Then they rented out the place across the street for 3700~3800 a month as is.

Rental parity is a good one, but sometimes difficult to collect reliable data upon. No offense to you and your "anecdotal" data, but your one point of unconfirmed data doesn't define what rental parity for an area is.  That's what Patrick.net is attempting to do, and they are building the data sets for numerous areas. Based on Riddle Drive's location, and the data points collected by Patrick.net, buying at $839,000 for that house is a HUGE loser.

Replacement value?
Usually homes in TRock are +80% land value because of age of homes. Try building a 2000 SQFT home there for under $200 sq/ft. So 400k in building costs. I doubt you can buy this lot for 400k.

No, replacement value is never used, at least by serious investors/appraisers to determine value. It does have a small effect on cost, but it's a small part of the picture, and most smart construction companies build homes that end up out pace their construction cost, even in places like Santa Ana, doesn't have to be a "prime area".

200k over fundamentals? That would put this house at 2003 prices based on zillow estimates. So in 8 years, if prices appreciated at exactly 3.5% per year from your 2003, this house would be ..drum roll...840k.

Using Zillow estimates is a horrible way to do valuations and a sure fire way you'll end up losing money. Their heuristic is based on a computer's interpretation of curve and a few data points of "sold" homes. Not exactly a great way to judge fundamentals.

Regardless, your assumption fails instantly because you used 2003 as your starting point,  a year solidly in a bubble due to the financing fiasco created by banks.

What we do know is that the home sold for $285,000 pre-bubble (1996), and using ACTUAL inflation increases since 1996 based on BLS statistics, not some guesstimate of 3.5%, the actual inflation adjusted value of the house is around $402,000. Now accounting for a full remodel (which it looks like it was done within the past 5 years or so), you can throw in another $100,000 - $150,000 based on personal preference of the "updates". So I'm actually being a bit friendly with the $600,000+ valuation, but that's only because Turtle Rock is a somewhat coveted area.

But the main thing you should be looking at is this; did median incomes triple since 1996? Did rents triple since 1996? A solid no on both counts. So what changed? Easy access to crazy financing, which is exactly why that home in the 800s has been chasing the market down for 8 months. You have to have... umm... real money now to buy stuff.

That's fundamentals. 

So let me get this straight. Your definition of fundamental value is to pick a arbitrary point in time and then use the BLS inflation rate to come up with fundamental value basis....perfect.
As for my anecdotal evidence of rents, go look up rents for TRock 4/2 SFRs that are nicely done...or ask the numerous realtors on this site what rents are for that area.

 

[usctrojancpa]

Hmm..how to define fundamentals.
Comps? Recent comps...across the street..sold for 820. a little more sqft but much much older...nothing updated.

Only if you want to throw money away. Buying an asset at an inflated price for a "little less" inflated price only means you are still buying outside of fundamentals.

Rental parity? Then they rented out the place across the street for 3700~3800 a month as is.

Rental parity is a good one, but sometimes difficult to collect reliable data upon. No offense to you and your "anecdotal" data, but your one point of unconfirmed data doesn't define what rental parity for an area is.  That's what Patrick.net is attempting to do, and they are building the data sets for numerous areas. Based on Riddle Drive's location, and the data points collected by Patrick.net, buying at $839,000 for that house is a HUGE loser.

Replacement value?
Usually homes in TRock are +80% land value because of age of homes. Try building a 2000 SQFT home there for under $200 sq/ft. So 400k in building costs. I doubt you can buy this lot for 400k.

No, replacement value is never used, at least by serious investors/appraisers to determine value. It does have a small effect on cost, but it's a small part of the picture, and most smart construction companies build homes that end up out pace their construction cost, even in places like Santa Ana, doesn't have to be a "prime area".

200k over fundamentals? That would put this house at 2003 prices based on zillow estimates. So in 8 years, if prices appreciated at exactly 3.5% per year from your 2003, this house would be ..drum roll...840k.

Using Zillow estimates is a horrible way to do valuations and a sure fire way you'll end up losing money. Their heuristic is based on a computer's interpretation of curve and a few data points of "sold" homes. Not exactly a great way to judge fundamentals.

Regardless, your assumption fails instantly because you used 2003 as your starting point,  a year solidly in a bubble due to the financing fiasco created by banks.

What we do know is that the home sold for $285,000 pre-bubble (1996), and using ACTUAL inflation increases since 1996 based on BLS statistics, not some guesstimate of 3.5%, the actual inflation adjusted value of the house is around $402,000. Now accounting for a full remodel (which it looks like it was done within the past 5 years or so), you can throw in another $100,000 - $150,000 based on personal preference of the "updates". So I'm actually being a bit friendly with the $600,000+ valuation, but that's only because Turtle Rock is a somewhat coveted area.

But the main thing you should be looking at is this; did median incomes triple since 1996? Did rents triple since 1996? A solid no on both counts. So what changed? Easy access to crazy financing, which is exactly why that home in the 800s has been chasing the market down for 8 months. You have to have... umm... real money now to buy stuff.

That's fundamentals. 

I agree with all of your points, but the one additional thing that you do have to account for is the substantial drop in interest rates from 1996 to 2011.  In my eyes, a drop in rates or an increase in income is the same thing....higher affordability.  But yeah, even if you factor in the lower interest rates the home is still price too high.

 

[edhne]

@IHO, sorry, where did LLucy say newer SFR in her original post? I was responding to her post. She obviously clarified she wants a SFR for 600k later but that isn't want i responded to.

You must be projecting your house requirements onto others.

You are correct... which is why I said "I believe".

But that still goes to the point that the more desired homes in Irvine aren't readily available at a reasonable price (reasonable of course being defined in a general sense).

Since her clarification was $600k... do you see a large volume in resale that falls into that category without being a short sale or any of her 4 items?

A "newer" SFR with nice lot size in nice location with access to everything for under 600k. I actually don't think what she wants is possible in Irvine currently. (not a statement of fundamental values, just a statement of where market is! ) Hence the frustration.