Fraychielle_IHB
New member
<p>OK, in the land of permabears and nirvinerealtors and others who chose to rent or buy, here's our story. Let what we've learned by our experience help others currently buying ... or to come.</p>
<p>I'm a resident finishing his training at some hospital in Los Angeles; my wife is a pharmacist. Once I start my new job in the OC we'll be pulling in a combined 24k before taxes / 401(k) / dependent care benefit plans. We have some 200k in our combined retirement plans. Those who have been reading the forums from the start know that we'd been planning to relocate to Irvine / at least have access to the IUSD for our kids, and despite the best efforts of the renters here, decided to buy for several reasons</p>
<p>1) dislike of moving twice - we are both inveterate packrats and the "one box per person" idea is just not going to fly</p>
<p>2) long term outlook - we want our kids to move as little as possible and intend on having this be the home for them to grow up in. I acknowledge that the market is insanity but believe that with a 10+ year outlook we can weather short to mid-term drop in market conditions.</p>
<p>3) backup plans - both of us have disability insurance such that if we lost our jobs due to illness, it would kick in. Life insurance is there (though I have to up the coverage). I can always find a job as a community physician if the job at this hospital doesn't pan out but (not to get a big head) folks in my specialty are tough to come by, I have skills I bring to the table, and the hospital and my division chief were recruiting me.</p>
<p><strong>The setup</strong></p>
<p>My wife and I currently reside in Los Angeles proper. We purchased a 2-story ~ 1700 sf townhome in 2002 during the 1st year of my residency because we were not sure if I would remain at the same hospital / local area upon completion of my residency. Since things had not gone utterly insane then, we had to go full-doc and put down 5%, with a 80% 1st and 15% second. Given the uncertainty of the situation, we went with a 5-year ARM figuring we could refi to a 30-year if the job situation solidified that I would stay in LA.</p>
<p>As the housing insanity escalated we rolled the 15% into the 1st. We watched as the comps in the area went up 25, 50, then 100%. Things probably hit their peak here in August-September of last year. Then we began to see listings languish on the market for 3, 4 months at a time. We planned to move in June, so decided to list our home in February or thereabouts.</p>
<p>We looked at sub-1M homes in the Irvine area and were happy to see successive phase releases drop in value. We'd heard about the "lotteries" in the past and were glad things were cooling down. Then, one winter vacation day, I surfed to seekingalpha.com, found the housing bubble / inventory tracker, and eventually found OCFliptrack.com as well as the Irvinehousing blog and piggington. You guys who run and post are great. I have learned so much about the macroeconomics of the housing market, and appreciate everyone's insight into the local Irvine housing micro-economy.</p>
<p>We considered WM Lyon's Lantana, Lennar's Cantara, and John Laing's Stonetree. (As an aside, you know the housing market is overinflated when a physician and a pharmacist making > 200k / year need a boost from capital gains earned from their townhome sale to afford a SF home. Without that, if we went 20% down, we'd be looking at a 2 story condo. Wrong.)</p>
<p><strong>The townhome sale</strong></p>
<p>Without too many specifics let me say that we purchased our townhome in the mid 350s and listed it for 720. Comps from the same building as well as the adjoining street suggested 725 or more, but given the state of the market we listed lower. It didn't hurt that another (wishful) seller in our bldg had listed for 750.</p>
<p>We interviewed 3 realtors encompassing the major companies in the area, and decided upon one based primarily upon commish and recommended list price. Commish was 4.75% - 2 to buyer's agent and 2.75 to seller's agent.</p>
<p>Our home was listed for 1 week and two offers came in. We let them battle it out and one emerged at a price only 1% less than our list price. We were ecstatic that we found a buyer so quickly and at such a great price.</p>
<p>We're due to close tomorrow. What I don't get is that the buyers are putting down 40% and got an ARM at 5.875%. To <strong>break even</strong> (it isn't even a primary residence for them) they are going to have to charge > 3500 a month in rent!</p>
<p><strong>The new home purchase</strong></p>
<p>After reading comments here and doing a few scout-visits we decided we didn't want the cement factory in the back and that we wanted a yard, so Lantana and Stonetree were out. We had been eyeing this corner lot at Cantara since we first visited the site, and eventually decided on that one (lot 249).</p>
<p>Given how prices had dropped in adjoining tracts as well as in general, we were optimistic that we could pare down more (the plan 2s started off at 990k and lot 249 was being offered for 939k plus 25k in flooring / closing fee incentives and 6k towards closing costs if we went with Lennar's lender UAMC). We got the phone call to come in mid-February.</p>
<p>I think the downside to being high up "on the list" is that folks can always go down the list if you're not interested. It's only the inventory that doesn't sell in the first go that gets discounted. The agents refused to budge on the price. I tried to invoke comps, but the reaction was that those comps dropped for a reason and we are fairly priced. Since we wanted the home, we relented and put down the deposit on the list price, 939k. They don't allow broker-coop. There was a plan 3 that was sandwiched between two homes going for something like 920k, which was tempting, but we wanted the corner so things wouldn't be so claustrophobic.</p>
<p>I'm a resident finishing his training at some hospital in Los Angeles; my wife is a pharmacist. Once I start my new job in the OC we'll be pulling in a combined 24k before taxes / 401(k) / dependent care benefit plans. We have some 200k in our combined retirement plans. Those who have been reading the forums from the start know that we'd been planning to relocate to Irvine / at least have access to the IUSD for our kids, and despite the best efforts of the renters here, decided to buy for several reasons</p>
<p>1) dislike of moving twice - we are both inveterate packrats and the "one box per person" idea is just not going to fly</p>
<p>2) long term outlook - we want our kids to move as little as possible and intend on having this be the home for them to grow up in. I acknowledge that the market is insanity but believe that with a 10+ year outlook we can weather short to mid-term drop in market conditions.</p>
<p>3) backup plans - both of us have disability insurance such that if we lost our jobs due to illness, it would kick in. Life insurance is there (though I have to up the coverage). I can always find a job as a community physician if the job at this hospital doesn't pan out but (not to get a big head) folks in my specialty are tough to come by, I have skills I bring to the table, and the hospital and my division chief were recruiting me.</p>
<p><strong>The setup</strong></p>
<p>My wife and I currently reside in Los Angeles proper. We purchased a 2-story ~ 1700 sf townhome in 2002 during the 1st year of my residency because we were not sure if I would remain at the same hospital / local area upon completion of my residency. Since things had not gone utterly insane then, we had to go full-doc and put down 5%, with a 80% 1st and 15% second. Given the uncertainty of the situation, we went with a 5-year ARM figuring we could refi to a 30-year if the job situation solidified that I would stay in LA.</p>
<p>As the housing insanity escalated we rolled the 15% into the 1st. We watched as the comps in the area went up 25, 50, then 100%. Things probably hit their peak here in August-September of last year. Then we began to see listings languish on the market for 3, 4 months at a time. We planned to move in June, so decided to list our home in February or thereabouts.</p>
<p>We looked at sub-1M homes in the Irvine area and were happy to see successive phase releases drop in value. We'd heard about the "lotteries" in the past and were glad things were cooling down. Then, one winter vacation day, I surfed to seekingalpha.com, found the housing bubble / inventory tracker, and eventually found OCFliptrack.com as well as the Irvinehousing blog and piggington. You guys who run and post are great. I have learned so much about the macroeconomics of the housing market, and appreciate everyone's insight into the local Irvine housing micro-economy.</p>
<p>We considered WM Lyon's Lantana, Lennar's Cantara, and John Laing's Stonetree. (As an aside, you know the housing market is overinflated when a physician and a pharmacist making > 200k / year need a boost from capital gains earned from their townhome sale to afford a SF home. Without that, if we went 20% down, we'd be looking at a 2 story condo. Wrong.)</p>
<p><strong>The townhome sale</strong></p>
<p>Without too many specifics let me say that we purchased our townhome in the mid 350s and listed it for 720. Comps from the same building as well as the adjoining street suggested 725 or more, but given the state of the market we listed lower. It didn't hurt that another (wishful) seller in our bldg had listed for 750.</p>
<p>We interviewed 3 realtors encompassing the major companies in the area, and decided upon one based primarily upon commish and recommended list price. Commish was 4.75% - 2 to buyer's agent and 2.75 to seller's agent.</p>
<p>Our home was listed for 1 week and two offers came in. We let them battle it out and one emerged at a price only 1% less than our list price. We were ecstatic that we found a buyer so quickly and at such a great price.</p>
<p>We're due to close tomorrow. What I don't get is that the buyers are putting down 40% and got an ARM at 5.875%. To <strong>break even</strong> (it isn't even a primary residence for them) they are going to have to charge > 3500 a month in rent!</p>
<p><strong>The new home purchase</strong></p>
<p>After reading comments here and doing a few scout-visits we decided we didn't want the cement factory in the back and that we wanted a yard, so Lantana and Stonetree were out. We had been eyeing this corner lot at Cantara since we first visited the site, and eventually decided on that one (lot 249).</p>
<p>Given how prices had dropped in adjoining tracts as well as in general, we were optimistic that we could pare down more (the plan 2s started off at 990k and lot 249 was being offered for 939k plus 25k in flooring / closing fee incentives and 6k towards closing costs if we went with Lennar's lender UAMC). We got the phone call to come in mid-February.</p>
<p>I think the downside to being high up "on the list" is that folks can always go down the list if you're not interested. It's only the inventory that doesn't sell in the first go that gets discounted. The agents refused to budge on the price. I tried to invoke comps, but the reaction was that those comps dropped for a reason and we are fairly priced. Since we wanted the home, we relented and put down the deposit on the list price, 939k. They don't allow broker-coop. There was a plan 3 that was sandwiched between two homes going for something like 920k, which was tempting, but we wanted the corner so things wouldn't be so claustrophobic.</p>
