Trying to buy in Irvine is NO Fun

[IndieDev]

I will bet you that the home won't transact within $10,000 of the "Solid comp" price you claimed ($839,000). If it does, I'll pay you $100 for every thousand dollars within that $10,000 buffer up to $1,000. So if it transacts at $834,000, I'll pay you $500, if it sells at $839,000, you get the full $1,000. However, for every thousand it it sells below the $10,000 buffer, you give me $100 up to $1000. So if it sells at $819,000 and below, I get a full $1,000.

That's a much more realistic bet to observe on whose fundamentals are in check. You game?

(USCTrojan, or IrvineRealtor can handle the holding of the checks)

Just for giggles... have your "escrow man" (Scott or Martin) tell me how this pans out and I'll make sure a proper victory cup (TI mug) is waiting for ya, too.

He has to take the bet first, but I'm going to go ahead and predict that "edhne" will back off his claims that $839,000 is a good comp/value/buy for that Turtle Rock home, or he will weasel-talk his way out of it somehow. You see, I don't have to wait 7 years to save up $1,000 cash unlike edhne.

I'd like a new tea mug (quit coffee because my wife says it yellows my teeth).

 

[usctrojancpa]

I will bet you that the home won't transact within $10,000 of the "Solid comp" price you claimed ($839,000). If it does, I'll pay you $100 for every thousand dollars within that $10,000 buffer up to $1,000. So if it transacts at $834,000, I'll pay you $500, if it sells at $839,000, you get the full $1,000. However, for every thousand it it sells below the $10,000 buffer, you give me $100 up to $1000. So if it sells at $819,000 and below, I get a full $1,000.

That's a much more realistic bet to observe on whose fundamentals are in check. You game?

(USCTrojan, or IrvineRealtor can handle the holding of the checks)

Just for giggles... have your "escrow man" (Scott or Martin) tell me how this pans out and I'll make sure a proper victory cup (TI mug) is waiting for ya, too.

Can the "escrow man" also get a TI mug for their services? 

 

[edhne]

I will bet you that the home won't transact within $10,000 of the "Solid comp" price you claimed ($839,000). If it does, I'll pay you $100 for every thousand dollars within that $10,000 buffer up to $1,000. So if it transacts at $834,000, I'll pay you $500, if it sells at $839,000, you get the full $1,000. However, for every thousand it it sells below the $10,000 buffer, you give me $100 up to $1000. So if it sells at $819,000 and below, I get a full $1,000.

That's a much more realistic bet to observe on whose fundamentals are in check. You game?

(USCTrojan, or IrvineRealtor can handle the holding of the checks)

Just for giggles... have your "escrow man" (Scott or Martin) tell me how this pans out and I'll make sure a proper victory cup (TI mug) is waiting for ya, too.

He has to take the bet first, but I'm going to go ahead and predict that "edhne" will back off his claims that $839,000 is a good comp/value/buy for that Turtle Rock home, or he will weasel-talk his way out of it somehow. You see, I don't have to wait 7 years to save up $1,000 cash unlike edhne.

I'd like a new tea mug (quit coffee because my wife says it yellows my teeth).

Haha. Let's see. You claim it is worth 600k. I said you can negotiate with equity sellers and you will be surprised how much you negotiate with a written offer.

What does your bet have ANYTHING to do with your claim of it is worth 600k? So your claim is somehow validated if they buy it for 839k vs 819k...Yes that is SO CLOSE to 600k...What happened to your bold believe of fundamental value???

Put some money on it, and I guess your claims don't have so much conviction do they?

Why aren't you offering bet 1000 dollars on whether it will transact closer to 800k vs. your fundamental value of 600k today?

Whether today or 7 years from now in your "2011" dollar bet...when is your money going to support the claim of 600k value?

I will take either or both bets. Less money? More money?

 

[edhne]

Yup. We'll settle that one in 7 years.
[/quote]

Great. Let's get a contract signed today. Give me an email address and I can send it over for your approval and then where should we meet up to sign it?

 

[socal78]

I will bet you that the home won't transact within $10,000 of the "Solid comp" price you claimed ($839,000). If it does, I'll pay you $100 for every thousand dollars within that $10,000 buffer up to $1,000. So if it transacts at $834,000, I'll pay you $500, if it sells at $839,000, you get the full $1,000. However, for every thousand it it sells below the $10,000 buffer, you give me $100 up to $1000. So if it sells at $819,000 and below, I get a full $1,000.

That's a much more realistic bet to observe on whose fundamentals are in check. You game?

(USCTrojan, or IrvineRealtor can handle the holding of the checks)

Just for giggles... have your "escrow man" (Scott or Martin) tell me how this pans out and I'll make sure a proper victory cup (TI mug) is waiting for ya, too.

Can the "escrow man" also get a TI mug for their services? 

Can the house also get a tip from your sales for their services?

 

[IndieDev]

I will bet you that the home won't transact within $10,000 of the "Solid comp" price you claimed ($839,000). If it does, I'll pay you $100 for every thousand dollars within that $10,000 buffer up to $1,000. So if it transacts at $834,000, I'll pay you $500, if it sells at $839,000, you get the full $1,000. However, for every thousand it it sells below the $10,000 buffer, you give me $100 up to $1000. So if it sells at $819,000 and below, I get a full $1,000.

That's a much more realistic bet to observe on whose fundamentals are in check. You game?

(USCTrojan, or IrvineRealtor can handle the holding of the checks)

Just for giggles... have your "escrow man" (Scott or Martin) tell me how this pans out and I'll make sure a proper victory cup (TI mug) is waiting for ya, too.

He has to take the bet first, but I'm going to go ahead and predict that "edhne" will back off his claims that $839,000 is a good comp/value/buy for that Turtle Rock home, or he will weasel-talk his way out of it somehow. You see, I don't have to wait 7 years to save up $1,000 cash unlike edhne.

I'd like a new tea mug (quit coffee because my wife says it yellows my teeth).

Haha. Let's see. You claim it is worth 600k. I said you can negotiate with equity sellers and you will be surprised how much you negotiate with a written offer.

What does your bet have ANYTHING to do with your claim of it is worth 600k? So your claim is somehow validated if they buy it for 839k vs 819k...Yes that is SO CLOSE to 600k...What happened to your bold believe of fundamental value???

Put some money on it, and I guess your claims don't have so much conviction do they?

Why aren't you offering bet 1000 dollars on whether it will transact closer to 800k vs. your fundamental value of 600k today?

Whether today or 7 years from now in your "2011" dollar bet...when is your money going to support the claim of 600k value?

I will take either or both bets. Less money? More money?

Look, you're a clown, and you've proven as much just by posting the above. I don't believe you have an MBA, or a CFA, or whatever title you're claiming to have with every post. If you did you would know what the term "correcting" meant, and that it's a process that happens over time. You would also have realized that my bet was meant to illustrate that your claim of "good value" at $839,000 is a completely false one, and that if it was priced solidly as you claim, it should transact at close to that price. I was even giving you a $10,000 buffer, and I offered myself none, yet you still run away from the bet. You know why?

Because you're a guy trying to perpetuate a complete fantasy about a house very similar to the one he lives in; the fantasy being that a 40+ year old house right next to a major traffic artery in the city is worth anything close to $839,000, and a good deal.  If you are an MBA/CFA/PhD, you should be ashamed of yourself for trying to pan that kind of misinformation to people looking for a place to live. :

 

[IndieDev]

I will bet you that the home won't transact within $10,000 of the "Solid comp" price you claimed ($839,000). If it does, I'll pay you $100 for every thousand dollars within that $10,000 buffer up to $1,000. So if it transacts at $834,000, I'll pay you $500, if it sells at $839,000, you get the full $1,000. However, for every thousand it it sells below the $10,000 buffer, you give me $100 up to $1000. So if it sells at $819,000 and below, I get a full $1,000.

That's a much more realistic bet to observe on whose fundamentals are in check. You game?

(USCTrojan, or IrvineRealtor can handle the holding of the checks)

Just for giggles... have your "escrow man" (Scott or Martin) tell me how this pans out and I'll make sure a proper victory cup (TI mug) is waiting for ya, too.

Can the "escrow man" also get a TI mug for their services? 

I'd give you the entire $1,000 (or split between you and SoCal78) if edhne would take the bet, I don't need the money.

But he knows what he's saying is completely false, and that he's going to use a "7 year bet" as a crutch instead, and ignore the fact that he's afraid to bet $1,000 on anything that could actually happen in the here and now.

 

[davenlei]

IndieDev said "e-dick".  . LOL

 

[usctrojancpa]

I will bet you that the home won't transact within $10,000 of the "Solid comp" price you claimed ($839,000). If it does, I'll pay you $100 for every thousand dollars within that $10,000 buffer up to $1,000. So if it transacts at $834,000, I'll pay you $500, if it sells at $839,000, you get the full $1,000. However, for every thousand it it sells below the $10,000 buffer, you give me $100 up to $1000. So if it sells at $819,000 and below, I get a full $1,000.

That's a much more realistic bet to observe on whose fundamentals are in check. You game?

(USCTrojan, or IrvineRealtor can handle the holding of the checks)

Just for giggles... have your "escrow man" (Scott or Martin) tell me how this pans out and I'll make sure a proper victory cup (TI mug) is waiting for ya, too.

Can the "escrow man" also get a TI mug for their services? 

Can the house also get a tip from your sales for their services?

Of course, PM me the info (either paypal or physical address) I'm more than happy to provide a tip. 

 

[ucla bruin]

 

[qwerty]

Edhne - why dont you step your game up and take Indidev's bet to see where the house closes at? this way you will salvage your manhood. right now you are gettting schooled by Indiedev.  MBAs dont mean s#it.  Im just a regular ole CPA with a USC undgergrad education and make more money than most top 20 MBAs. I have a friend with a wharton MBA, i make almost as twice as much as him.

you had to resort to flashing your credentials, put your money where your mouth is and take the bet!!!

 

[socal78]

I'd give you the entire $1,000 (or split between you and SoCal78) if edhne would take the bet, I don't need the money.

That's a very nice gesture even if only in thought. Thank you.

 

[homer_simpson]

Glad to see a lot of educated folks on Talk Irvine 

 

[qwerty]

Paging Edhne, paging Edhne - your response awaits Indiedevs $1,000 bet. 

 

[akim997]

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. 

mmmm.....  i think you have decent things to say, but i have to disagree with you on this one...    fundamentals are great, and shouldn't be ingnored, but take a step back and read what you wrote...    big picture...    reality...    im not disagreeing that pricing will go down, i think prices may drop 5-10%.    But to think we will somehow revert to '96+inflation pricing doesn't seem reasonable, and actually absurd.  Sometimes, the wall street Ivy league b-schoolers, focus only on the quant valuations and strict financial models...  that's why we ignore wall street haha...    you go with what you know and what is real.  Your back of the napkin value of $402+150= 552 or ~$300/ft is just ridiculous.  You can't apply a generic model and apply it to all real estate everywhere.    I know a realtor (Lucy) who has worked in Turtle Rock for ages and my boss lives there...  she's seen all the transactions, knows all the houses/tracts, and she will tell you, prices WILL NOT drop to those price levels.  I will bet money on that (I actually will).  If that happens, then prices in Newport/ Eastbluff should drop as well according to your arguments, but I wont hold my breathe that I will be able to buy a nice SFR in Eastbluff for $800K anytime soon.    Just because the economy is down, doesn't mean that everyone is poor and noone can afford housing...    real estate markets are supply/demand driven vs. fundamentals.  sure we may see regression towards reasonable valuations, but not to your doomsday scenario...

I understand why you think it's a Doomsday scenario, a lot of people even now, with all the evidence presented in the current market think similarly to you, but wouldn't you say the run up to 2006 peaks was equally as unfathomable?

My $600,000 evaluation for the home in question is based on today's fundamentals. In 7 years, maybe incomes will increase, employment will become more stable, and rents will rise with salaries where the price for that home will be supported. But I can tell you today without doubt, based on median salaries, comparable rents, based on a typical 30 year mortgage, $600k would be a fair price for the home in question. Yes people will over pay, or stretch themselves to purchase something they really want, but suicidal lemmings don't define a market.

I remember late last year when I was having these same debates with people on various messageboards, Irvine cheerleaders I know in person, and even people on this board saying OC is different, then it became, Irvine itself is different. Now I'm hearing "Turtle Rock within Irvine is different." These were the same people who claimed that the most that Irvine could continue to drop would be 5-10% more and that's it.

Well guess what, 2011 isn't even over, and Irvine has already lost 8% since that time (4% YOY), and we've got over 7 more months in 2011:

I'm not here to make 7-10 year predictions, you can go to a fortune teller for that, but I know considering all the fundamental factors in the market today, that house is way over priced.

decent rebuttal...  ill accept that.   

regarding your "duel" its pretty funny...  i do believe the house will sell at less than current listing, but that being said, it will easily sell for more than $600K, even if you say "thats what its worth"...    listen, when the jordan iii's first came out way back when, fundamentally, they were a $15 pair of shoes...    but they sold for $100+ them, and even more now (for originals)...  and i don't think you'd ever see them at the fundamental price (based on respective inputs of rubber, cloth, plastic, etc)...    the "shifted" demand curve has equilibrium market clearing price at a higher point... 

i don't have a phd, but i did stay at a holiday in express!!!!

like i said before,  i blame the academics for some of the mess we got ourselves into...  in an mba class, i had a phd econ sit there and explain MBS and CDO construction, stripping of mortgage payments to create hybrid securities, etc...      what was hilarious was a friend of mine asked innocently, "i dont get it, how can you add up bunch of low grade securities into this security, mix it with some good stuff and call it a AAA type security, it doesn't make sense"  prof looked at him like he was crazy and got really annoyed...    fast forward, everyone else was asking the same question.    you need to mix in book smarts with some real smarts to get a knowledgeable, intuitive resource you can rely on...  school doesnt teach you that, life does...

 

[sonoma]

I agree. A lot of crap I buy ain't worth its price,  but I still buy it.

In the end, life is about experiences and spending your money to create those experiences.  You can always talk yourself into thinking something is overpriced.    I would venture to say that 100% of things you buy are overpriced because some company out there that sells you the goods want to make a profit.

 

[usctrojancpa]

It is emotions and a desire to have something that create a perception of demand and then that perception can become reality.  I would argue that it is emotions (and their irrational nature) lead to a departure from fundamentals.  Hence economics can only work in a perfect world. 

 

[usctrojancpa]

Edhne - why dont you step your game up and take Indidev's bet to see where the house closes at? this way you will salvage your manhood. right now you are gettting schooled by Indiedev.  MBAs dont mean s#it.  Im just a regular ole CPA with a USC undgergrad education and make more money than most top 20 MBAs. I have a friend with a wharton MBA, i make almost as twice as much as him.

you had to resort to flashing your credentials, put your money where your mouth is and take the bet!!!

Top 5 MBAs aren't worth sh!t if you're a fail.  A top 5-er won't guarantee you success but it sure does help if you know how to use it properly.
And since we're doing one-off examples - bill gates never graduated from college and he's a multi-billionaire so college degrees (especially private $100k plus ones) aren't worth sh!t. 

It's mainly about who you know, what you know, a little luck, being at the right place at the right time, and if you can sell yourself and your skills.

 

[usctrojancpa]

I'll take a $100 bet that the home doesn't close above $800,000.00. 

 

[davenlei]

Edhne - why dont you step your game up and take Indidev's bet to see where the house closes at? this way you will salvage your manhood. right now you are gettting schooled by Indiedev.  MBAs dont mean s#it.  Im just a regular ole CPA with a USC undgergrad education and make more money than most top 20 MBAs. I have a friend with a wharton MBA, i make almost as twice as much as him.

you had to resort to flashing your credentials, put your money where your mouth is and take the bet!!!

Top 5 MBAs aren't worth sh!t if you're a fail.  A top 5-er won't guarantee you success but it sure does help if you know how to use it properly.
And since we're doing one-off examples - bill gates never graduated from college and he's a multi-billionaire so college degrees (especially private $100k plus ones) aren't worth sh!t. 

It's mainly about who you know, what you know, a little luck, being at the right place at the right time, and if you can sell yourself and your skills.

That is absolutely true.  I have seen complete morons climb the ladder faster than truly intelligent people just because they had the gift of gab.