Trying to buy in Irvine is NO Fun

[irvinehomeowner]

I don't think betting on a single home is fair.

I also don't think betting over 7 years is fair.

How about about an average sample of 3/2s in Turtle Rock and what their value will be in 3, 6 or 12 months?

 

[venkat]

I don't think betting on a single home is fair.

I dont think betting is legal to start with...:

Its really funny to see all these posts, with edhne justifying the price of that "unrelated" home and IndieDev crossing each point mentioned and finally both trying to lure each other to bet on an totally-unrelated property...which brings up a point below:

Is edhne or IndieDev related to the turtle-rock-property in question?

 

[IndieDev]

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.

It's contingent on receiving the trophy mug.

 

[usctrojancpa]

I don't think betting on a single home is fair.

I dont think betting is legal to start with...:

Its really funny to see all these posts, with edhne justifying the price of that "unrelated" home and IndieDev crossing each point mentioned and finally both trying to lure each other to bet on an totally-unrelated property...which brings up a point below:

Is edhne or IndieDev related to the turtle-rock-property in question?

How about the winner donates the winning to the charity of their choice?  That way it's a win-win for everyone involved and the trophy mug will be the true spoils.  haha

 

[IndieDev]

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

What kind of bet is that? IndieDev says 600K, Edhne says 839K and then IndieDev thinks he can win the bet when it sells for less than 819K? LOL. Change that to 720K and there will be some takers.

I said the home is over priced by about $200,000 dollars, but I never said it would CLOSE at $600,000. It's almost impossible to determine what it will close at because people will simply overpay for things. If someone with $839,000 in the banks pays that much for a Tulip, does it mean that the Tulip was well priced or selling at the market price? Of course not. Additionally, the housing market is slowly correcting, this is a process that may take years after all the destruction caused by "funny financing", and there's no guarantee between now and market equilibrium that some homes won't transact, in fact it's a certainty that homes will transact above the market bottom equilibrium because that's inherent in "correction".

edhne on the otherhand chimed in saying that the home in question is a "great alternative" to buying one of the new TIC stucco boxes, and said at $839,000 it was a "good solid comp", and insinuated it was a good value because it was Turtle Rock. I pointed out that the home had been sitting for 8 months, backed up to Culver, and is 40+ years old, and based on the median income and comparable rents, it's over priced. Hence, the debate.  Do you see the difference between our two statements now?

If edhne believes his advice that the home in question at $839,000 is a good solid comp, and represents good value for Turtle Rock, then what's wrong with taking a bet where I in essence give him a $10,000 buffer and offer myself none?

You see there's a reason why edhne has been quiet on this particular challenge, it's because he knows the "advice" he offered is complete bullshit. Now he's trying to hide behind his title as an "MBA/CFA/PhD" to mask the fact that he willingly offered shitty advice to someone looking to buy a home in Irvine. I believe people, especially on a website that inherently caters to people looking for solid, good information about this city, should be called out on their bullshit if they present it as advice. That's how this community will continue to be useful for the visitors who come here asking questions.

 

[IndieDev]

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...

I'll be the first to admit that academia doesn't completely prepare you for conducting real life business transactions in the real world. That being said, between my early career as an investment banker, hedge fund manager, venture capitalist in West Africa, China, and South America, I have a multitude of experiences that have taught me that Adam Smith, David Hume, David Ricardo, and even more modern thinkers such as Thorstein Veblen and John Hicks, kind of knew what they were talking about.

There's a reason why modern day economist you see on TV still continue to base their analysis and theories on lines of thought that originated from a lot of these men. The Case-Shiller itself is based on some of the major theories developed during the era of Neoclassical Economics with beginnings in the Industrial Revolution, 200 years ago, that's how true and time tested these lines of thought are.

I base my opinions strongly on fundamentals, which weren't developed by me, but by the names above. I don't have a problem with people presenting a differing opinion, because as accurate as Adam Smith was in describing the behavior of markets, no one can account for what I call the "outliers", the people who don't base their purchases completely on logic, and instead on emotion, like USCTrojanCPA mentioned alluded to. Home buying can often be an emotional experience for certain people, and that's understandable.

Whether you believe it or not, I invite differing opinions, as long as the conversations are productive.

What admittedly irked me, and it should not have but I'm still young at heart, was the fact that edhne tried to paint his "appraisal" as a good value, and passed it off as good advice to someone. It's that kind of behavior that lead people to make bad purchasing decisions in the first place, which lead to a lot of destroyed lives in its wake. When I challenged him on it, he came back with reasons that weren't based on economic principals, but more on his anecdotal stories which may or may not be true, then when I presented him with the reality of the market, he started trolling the thread by making demands for  7-10 year bets, and claiming he was an MBA/CFA.

p.s - I'll stay at a value-motel if I'm not getting comped for it too. A bed is a bed, although it may have a bit more bugs and semen stains.

 

[edhne]

You see there's a reason why edhne has been quiet on this particular challenge, it's because he knows the "advice" he offered is complete bullshit. Now he's trying to hide behind his title as an "MBA/CFA/PhD" to mask the fact that he willingly offered shitty advice to someone looking to buy a home in Irvine. I believe people, especially on a website that inherently caters to people looking for solid, good information about this city, should be called out on their bullshit if they present it as advice. That's how this community will continue to be useful for the visitors who come here asking questions.
[/quote]

hahaha. You are protecting the integrity of the website. Great! Love that.

let's recap. (please correct anything that is not accurate)
LLucy said its frustrating to purchase in IR because of multiple bidders and cash bidders.
W/O knowing her requirements, I said one might be surprised how much one can negotiate with equity sellers if you make a written offer. I pointed out this particular house in question because I walk by it.
You stated that it isn't selling for because it is 200k over priced based on fundamental value.
I asked what fundamental value meant since the rentals, sold comps, replacement cost suggest it isn't 200k overpriced.
You pointed out based on BLS inflation rate from 1996 and based on patrick.net fundamental value model, this is worth 600k.
We went back and forth on assumptions used to come to the fundamental value model.

The conversation digressed to name calling, personal attacks, blah blah.
So...

edhne on the otherhand chimed in saying that the home in question is a "great alternative" to buying one of the new TIC stucco boxes, and said at $839,000 it was a "good solid comp", and insinuated it was a good value because it was Turtle Rock.
/quote

really? Where did I talk about new TIC stucco boxes. Please point to where I stated this house was a "great comp." I stated that if one were to use the patrick.net and input different assumptions (including zero appreciation, tax rates, insurance costs, rental inflation), then this home is at rental parity per that model. I also stated it has recent comps that suggest the value is considerably different from your fundamental value of 600k.

If edhne believes his advice that the home in question at $839,000 is a good solid comp, and represents good value for Turtle Rock, then what's wrong with taking a bet where I in essence give him a $10,000 buffer and offer myself none?
/quote

nothing if this is in fact what I advised. My only "advice" in this whole thread was that if you make a written offer to equity sellers, you will be surprised how much they will negotiate. Show me "advising" otherwise. In fact, I
stated I used an assumption of 800k in the patrick.net model multiple times. But that doesn't matter if you believe that fundamental value of it is 600k.


You see there's a reason why edhne has been quiet on this particular challenge, it's because he knows the "advice" he offered is complete bullshit.
/quote

You are mistaking my argument with you about your assumptions to derive a 600k as advice to others. I'm in no position to give advice to others on the purchase of a home at any price point. I am arguing with you about fundamental value belief for this particular home.

Hence the bet. If you really believe this home is worth 600k....then I proposed a wager. Since you are worried about the time it takes to get to your fundamental value, we can even include that factor.

We can reduce all the risk factors for you so we can get to your core beliefs.

Any year from 2011 to 2021, if the median selling price of 4/2 updated SFRs in TR is closer to 600k then 800k (the middle point being 700k obviously), you win the bet. If it doesn't, then I win. We can even use 2011 dollars since that also worries you. Or you can diverting the question to one of my lack of intelligence, bad housing choices, propensity to lie and my purported advice to the "good community of advice seekers" here in TI.

DISCLAIMER...This isn't advice to anyone about whether to purchase or not....if it is construed that way, sorry! This is my willingness to put my money where my mouth is in this discussion with Indie about whether the fundamental value of this home is 600k or not.

 

[edhne]

What admittedly irked me, and it should not have but I'm still young at heart, was the fact that edhne tried to paint his "appraisal" as a good value, and passed it off as good advice to someone. It's that kind of behavior that lead people to make bad purchasing decisions in the first place, which lead to a lot of destroyed lives in its wake. When I challenged him on it, he came back with reasons that weren't based on economic principals, but more on his anecdotal stories which may or may not be true, then when I presented him with the reality of the market, he started trolling the thread by making demands for  7-10 year bets, and claiming he was an MBA/CFA.

lmao...you did it for the children huh? your sense of morality and righteousness to protect the poor readers of TI from the evil advice of Edhne are to be commended! lol.

 

[qwerty]

it appears Edhne is not taking the bet :-(

what kind of CFA/MBA backs down from a bet?

 

[usctrojancpa]

it appears Edhne is not taking the bet :-(

what kind of CFA/MBA backs down from a bet?

And I even suggested that the money from the winnings be donated to charity.  Weak sauce!

 

[IndieDev]

Where did I talk about new TIC stucco boxes. Please point to where I stated this house was a "great comp."

You said "solid comp", and I called you on your BS. You want to play that game when your post are here for everyone to see?

[quote author=edhne]On price per sq/ft basis, it is expensive compared to newer villages but compared to TRock comps, a solid comp.[/quote]

Here you are offering this house as an ALTERNATIVE to the newer villages that the poster was asking about. Then you go on to say that the house is priced right, a "solid comp".

You want to weasel and argue your way out of this one by arguing the meaning of the word "solid"? It's kind of funny seeing you squirm after you got called on your BS.

Hence the bet. If you really believe this home is worth 600k....then I proposed a wager. Since you are worried about the time it takes to get to your fundamental value, we can even include that factor.

We can reduce all the risk factors for you so we can get to your core beliefs.

Any year from 2011 to 2021, if the median selling price of 4/2 updated SFRs in TR is closer to 600k then 800k (the middle point being 700k obviously), you win the bet. If it doesn't, then I win. We can even use 2011 dollars since that also worries you. Or you can diverting the question to one of my lack of intelligence, bad housing choices, propensity to lie and my purported advice to the "good community of advice seekers" here in TI.

Your bet is a complete cop out, and a way for you to divert attention, and you know it. You want to make a 7-10 year bet because you know, and I know there is a 99% chance you neither of us will remember or collect on it by then.

What happens if the house closes 6 months from now for $780,000, and then the next time it hits the market, it's 20 years from now? What then? Your stupid bet doesn't make any sense because it's not a real bet.

I've offered you a REAL bet, one that shows your claim of a "solid" comp/value is completely false and pulled out of your ass. The house is on the market now, and I'm betting you $839,000 isn't a great price, and we can find out which one of us is right very soon since the house is actually on the market ready to be sold.

The ONLY reason you wouldn't take this bet, even with my $10,000 buffer is because you know you're wrong and are too ignorantly proud to acknowledge it.

Here, I'll make it sweeter for you, let's give you a $15,000 buffer. The house has to be sold $25,000 less than your "solid comp" price for me to collect my $1,000. You want to find out who has their fundamentals in check? This is the way.

 

[edhne]

Where did I talk about new TIC stucco boxes. Please point to where I stated this house was a "great comp."

You said "solid comp", and I called you on your BS. You want to play that game when your post are here for everyone to see?

[quote author=edhne]On price per sq/ft basis, it is expensive compared to newer villages but compared to TRock comps, a solid comp.

Here you are offering this house as an ALTERNATIVE to the newer villages that the poster was asking about. Then you go on to say that the house is priced right, a "solid comp".

You want to weasel and argue your way out of this one by arguing the meaning of the word "solid"? It's kind of funny seeing you squirm after you got called on your BS.
[/quote]

I didn't know the crux of our argument has been that I "advised" this house is a better alternative to new stucco homes or the relative "comp-ness" of this house relative to other TR homes....indeed there is no weaseling out of that.

So if all the posts we have been making have been at its core about whether this house was a "solid" or "great" comp for other homes in TR, then you win! Clearly, if this house ends at 819k, you have proven the MOST IMPORTANT aspects of your argument of this thread...that this is a comparable priced to other TR homes that have sold when comps don't mean shit per you post. Indie for the win!

You have done a great service against the evils of edhne by advising the local TI readers of this very important distinction between 849 and 819 for this home. Point well proven!

And sorry I can't take your bet on 819k... I would lose because if I were buying this house, I would take USCs advise and put a 7 in front if and hope it gets done. You win this argument. Indie, the "people's champion" for the win! (Yes qwerty, my manhood has to suffered as I get schooled. I'm not really an MBA..didn't you see Indie proved that because I bought a house in the middle of the freeway...I'm clearly a retard.) LOL.

Still no word on the 600k bet? Since I can't take that "819k" bet which OBVIOUSLY was the CRUX of our argument but I still have this totally tangential and barely relevant argument with you about fundamental value being 600k. (Charity sounds fine to me. Great!)

 

[qwerty]

im almost tempted to take the bet just to satisfy my degenerate gambler side.

 

[qwerty]

Ehdne - no hard feelings, i never said you were a retard, your probably a very smart person, i was just instigating a bit. the more i can visit TI the less i have to work. But i will agree with you that your manhood has suffered.

 

[edhne]

Your bet is a complete cop out, and a way for you to divert attention, and you know it. You want to make a 7-10 year bet because you know, and I know there is a 99% chance you neither of us will remember or collect on it by then.

Hence a contract? Or we make it a sufficient amount for us to "remember" it if you like? We get a charity deduction too. Like I said, any year between 2011 and 2021.

What happens if the house closes 6 months from now for $780,000, and then the next time it hits the market, it's 20 years from now? What then? Your stupid bet doesn't make any sense because it's not a real bet.

Hence a median price of updated 4/2 SFR in TRock in any year from 2011 to 2021 in "2011 dollars?"

Any more questions?

 

[edhne]

Ehdne - no hard feelings, i never said you were a retard, your probably a very smart person, i was just instigating a bit. the more i can visit TI the less i have to work. But i will agree with you that your manhood has suffered.

lol qwerty. No hard feelings about people I don't know posting things on the internet. Thanks though, manhood comment aside!

Agree on work + time...plus it allows Indie to advise and defend the naive against financial ruin apparently.

 

[IndieDev]

I didn't know the crux of our argument has been that I "advised" this house is a better alternative to new stucco homes or the relative "comp-ness" of this house relative to other TR homes....indeed there is no weaseling out of that.

So if all the posts we have been making have been at its core about whether this house was a "solid" or "great" comp for other homes in TR, then you win! Clearly, if this house ends at 819k, you have proven the MOST IMPORTANT aspects of your argument of this thread...that this is a comparable priced to other TR homes that have sold when comps don't mean shit per you post. Indie for the win!

Point well proven!

Thank you for finally admitting, even hesitantly, that you pulled your information out of your ass. I wish it had cost you $1,000, but you probably need the money for sound insulation, or double pain windows. Also your credibility and reputation have suffered enough, that's good enough for me.

p.s - No, I don't want to take any of your funky 7-10 year bets. I never made any comments about the market in 7-10 years, that was entirely your own invention to take away focus from the fact that you don't know what a solid comp/good value in Turtle Rock actually is.

 

[edhne]

I didn't know the crux of our argument has been that I "advised" this house is a better alternative to new stucco homes or the relative "comp-ness" of this house relative to other TR homes....indeed there is no weaseling out of that.

So if all the posts we have been making have been at its core about whether this house was a "solid" or "great" comp for other homes in TR, then you win! Clearly, if this house ends at 819k, you have proven the MOST IMPORTANT aspects of your argument of this thread...that this is a comparable priced to other TR homes that have sold when comps don't mean shit per you post. Indie for the win!

Point well proven!

Thank you for finally admitting, even hesitantly, that you pulled your information out of your ass. I wish it had cost you $1,000, but you probably need the money for sound insulation, or double pain windows. Also your credibility and reputation have suffered enough, that's good enough for me.

p.s - No, I don't want to take any of your funky 7-10 year bets. I never made any comments about the market in 7-10 years, that was entirely your own invention to take away focus from the fact that you don't know what a solid comp/good value in Turtle Rock actually is.

7 years isn't from me. It is from the patrick.net model you profess to use are your model. Or maybe you didn't notice how that model works exactly? The rental parity model there is driven by an assumption of # of years.

It isn't a 7 to 10 year bet. Make it as long or as short as you want in regards to your fundamental value. Even the tulips you referenced came back down. So it is only a matter of time. I am giving you the variable of time...any variable of time you wish to state?

But since there is no way to make you take a bet even when you were basically given every variable you asked for you in your favor...

Lets go back to patrick.net and your 600k value...

Assumptions
Annual rent inflation 1%
Annual house price inflation 0% (since you state you don't know the future.)
Mortgage interest rate (factor in points) 4.5%
Term of mortgage years 30 years
Marginal income tax rate 35% (to qualify for this loan, you are in the 33% federal and 9% CA)
Downpayment 20%
Purchase costs (inspection, appraisal, closing costs) .5%
Selling costs (commissions, closing costs) 6%
Annual house structure insurance cost .1% (it costs about 800 bucks to insure 800k house)
Annual property taxes 1.05%
Annual maintenance costs (include HOA for condos) 1% (seems a little high but possible i guess)
Length of ownership (US median is 6 years) 7 years
After-tax return on investments .5% (CD rate)

This yields a 752k value > 600k?

 

[edhne]

Assumptions
Annual rent inflation 2.7% (per BLS inflation rate you quoted)
Annual house price inflation 0% (since you state you don't know the future.)
Mortgage interest rate (factor in points) 4.5%
Term of mortgage years 30 years
Marginal income tax rate 35% (to qualify for this loan, you are in the 33% federal and 9% CA)
Downpayment 20%
Purchase costs (inspection, appraisal, closing costs) .5%
Selling costs (commissions, closing costs) 6%
Annual house structure insurance cost .1% (it costs about 800 bucks to insure 800k house)
Annual property taxes 1.05%
Annual maintenance costs (include HOA for condos) 1% (seems a little high but possible i guess)
Length of ownership (US median is 6 years) 7 years
After-tax return on investments .5% (CD rate)

This yields a 855k value > 600k?

Wait, I must be using the tool wrong because of the brain damage from the freeway dust from trucks running through my yard.

 

[venkat]

From the looks of it, the vested reason that edhne is supporting this house and its value is...

edhne owns a similar house in the same community (he/she walks by it) OR edhne just bought it AND is testing waters since he/she may plan on selling it soon based on "solid" or "good" comps (whichever is better word ) in turtle rock area. When IndieDev questioned it, it is equivalent
to questioning your home and its value - hence the emotional quotient.

Does it make sense?