What the bubble?!?

[qwerty]

There is no starter market in Irvine anymore.  That is and will be a problem going forward.  The lowest priced 3 bedroom that isn't a mobile home is $390K. There are only 4 others below $500K.

Two bedrooms really aren't much better and they are a far fall, IMHO, from the level of quality that the people are used to living in at the newer apartment complexes.  Basically all the hassles of apartment living with none of the benefits.  Oh, and you get the bill.

But technically, 2br or less is still a starter market.

Whether it's a 1br or 2br, if you are a young couple (or a bachelor) that will work for you.

Or is your definition of a "starter" married with kids?

Affluent "starters" can easily do $500k, or does "starter" also mean "low-income"?

wait are we talking about prime time starters or not ready for prime time starters?

 

[paperboyNC]

Doesn't matter, inventory and supply is so low that the barest bit of demand creates competition.

Demand is dropping, over the last three months, Redfin shows Irvine as 485 sales.

It also shows today that 485 properties are for sale.

Granted winter typically slows down, but that is just an anemic turnover for a city with a 100,000 housing units.

So while demand is dropping, there's even less desire to sell.

The reason is pretty simple, look around, you have to live somewhere and getting in and out of Irvine has steadily gotten worse.  The commute across Irvine west to east has turned into a 45 minute jaunt at rush hour.

Redfin doesn't show new home inventory / new home sales. I wouldn't be surprised if over 485 new homes sold in the last 3 months between Stonegate, Cypress Village, Pavilion Park, Portola Springs and even the last neighborhood in Woodbury.

The main reason why Irvine home prices will be relatively stable over the next ten years is the huge amount of new construction. Builders can build fast or build slow and match supply to demand which will keep home prices rising at a slow steady pace.

I do think it will be an interesting spring season. Will the spring bring out a rush of buyers or a rush of sellers?

As USCTrojan said, we are still in a weak seller's market. Attractive homes that are priced at a slight discount are flying into escrow while WTF priced homes or homes that are undesirable are not moving. Inventory isn't as high as it seems because it includes houses like this one that are not really for sale IMO:http://www.redfin.com/CA/Irvine/71-Sacred-Path-92618/home/51685202

 

[quattroporte]

Doesn't matter, inventory and supply is so low that the barest bit of demand creates competition.

Demand is dropping, over the last three months, Redfin shows Irvine as 485 sales.

It also shows today that 485 properties are for sale.

Granted winter typically slows down, but that is just an anemic turnover for a city with a 100,000 housing units.

So while demand is dropping, there's even less desire to sell.

The reason is pretty simple, look around, you have to live somewhere and getting in and out of Irvine has steadily gotten worse.  The commute across Irvine west to east has turned into a 45 minute jaunt at rush hour.

Redfin doesn't show new home inventory / new home sales. I wouldn't be surprised if over 485 new homes sold in the last 3 months between Stonegate, Cypress Village, Pavilion Park, Portola Springs and even the last neighborhood in Woodbury.

The main reason why Irvine home prices will be relatively stable over the next ten years is the huge amount of new construction. Builders can build fast or build slow and match supply to demand which will keep home prices rising at a slow steady pace.

I do think it will be an interesting spring season. Will the spring bring out a rush of buyers or a rush of sellers?

As USCTrojan said, we are still in a weak seller's market. Attractive homes that are priced at a slight discount are flying into escrow while WTF priced homes or homes that are undesirable are not moving. Inventory isn't as high as it seems because it includes houses like this one that are not really for sale IMO:http://www.redfin.com/CA/Irvine/71-Sacred-Path-92618/home/51685202

but, but, but its a "Executive 3-story upscale single family..."

 

[notTHEoc]

Redfin doesn't show new home inventory / new home sales. I wouldn't be surprised if over 485 new homes sold in the last 3 months between Stonegate, Cypress Village, Pavilion Park, Portola Springs and even the last neighborhood in Woodbury.

Good point on new construction sales > resale right now. I think you can get a better sense of the market right now just by following what is going on with pricing and the pace of phase releases in the various new home tracts. It also gives you a somewhat apples-to-apples comp going phase to phase.

By that measure, my sense from looking at some of the TIC and PP tracts, is that prices are pretty steady or increasing slightly (maybe mid single digit annual rate?).

Some tracts are struggling, some going great, but for the most part, phase releases sell out in ~4-6 weeks and prices go up modestly. Not a whole lot of quick move-ins or major incentives in most tracts. And no new home glut yet even with all the new construction

 

[OpenSky]

8)

 

[usctrojancpa]

What happened to that tsunami of foreclosures and shadow inventory?

I guess it never came.  I sure hope there aren't people that are waiting for it because it's not coming.  Guess it was just a mirage.

Pretty sure it has been said but some friends I have in the servicing and FC/REO side of the house said they bundled REO homes in groups of 20-40 properties at a time and sold them in bulk to investors who then would 'fix up/touch up' the homes and pepper them on the market to sell near market value.  One home in particular I was wanting to buy got put into a REO bulk sale and sold for 560K (I told them I would give them 675K but it was locked in) and the investor sold it three months later for one million.  I saw a few of their bulk sale sheets and it was interesting how quickly they got rid of all their REO backlog and the investors did not flood the market with lots of properties competing against each other. 

So it was not a mirage, they just handled it in a way that did not trickle down the price benefit to the individual buyer.  I don't know about all banks but the bank I know about has successfully unloaded all their shadow inventory a while ago.

When I say mirage, I was talking about to the general public like you and me.  Of course there were a lot of foreclosures but the majority of them got sold to big boy investors with deep pockets as bulk sales.

 

[usctrojancpa]

Doesn't matter, inventory and supply is so low that the barest bit of demand creates competition.

Demand is dropping, over the last three months, Redfin shows Irvine as 485 sales.

It also shows today that 485 properties are for sale.

Granted winter typically slows down, but that is just an anemic turnover for a city with a 100,000 housing units.

So while demand is dropping, there's even less desire to sell.

The reason is pretty simple, look around, you have to live somewhere and getting in and out of Irvine has steadily gotten worse.  The commute across Irvine west to east has turned into a 45 minute jaunt at rush hour.

Redfin doesn't show new home inventory / new home sales. I wouldn't be surprised if over 485 new homes sold in the last 3 months between Stonegate, Cypress Village, Pavilion Park, Portola Springs and even the last neighborhood in Woodbury.

The main reason why Irvine home prices will be relatively stable over the next ten years is the huge amount of new construction. Builders can build fast or build slow and match supply to demand which will keep home prices rising at a slow steady pace.

I do think it will be an interesting spring season. Will the spring bring out a rush of buyers or a rush of sellers?

As USCTrojan said, we are still in a weak seller's market. Attractive homes that are priced at a slight discount are flying into escrow while WTF priced homes or homes that are undesirable are not moving. Inventory isn't as high as it seems because it includes houses like this one that are not really for sale IMO:http://www.redfin.com/CA/Irvine/71-Sacred-Path-92618/home/51685202

Bingo, there's a reason why I was able to get my Las Ventanas listing into escrow within one week and that's because it was priced right.  Besides, it's difficult to pull data on new home sales but if you start adding in how many new homes have been sold in the past year you'll begin to realize that total sales (new and resale) have been flat to increasing.  Unless something chaotic happens, we will not get anywhere near a 5%+ price drop. 

 

[nosuchreality]

Bingo, there's a reason why I was able to get my Las Ventanas listing into escrow within one week and that's because it was priced right.  Besides, it's difficult to pull data on new home sales but if you start adding in how many new homes have been sold in the past year you'll begin to realize that total sales (new and resale) have been flat to increasing.  Unless something chaotic happens, we will not get anywhere near a 5%+ price drop. 

LOL, price drop.  Useless something freakish happens to the global order of things, aka, someone starts pulling triggers in the Crimea, I'll be surprised to not see double digit increases.  Again, there is no inventory.

I don't foresee any inventory coming online because everyone that owns the inventory can't see where they'd move to.  In many aspects, it's like the job market over last year.  It just fundamentally lacks fluidity.  You won't get sellers until sellers can see there's a place to go to.  Right now there's no place to go.

Price the home at market and it's sold in a week.  USC typo'd when he said 'weak' sellers market, it's not weak, it's week.  That's actually an incredible sellers strength position that you can sell the biggest purchase people will make in less time than most of them take to decide on the next cell phone.


That's what I meant by the fundamental problem of no starter market in Irvine. There's no place for new buyers to go, there's no move up market of small gain to carry forward, a purchase is quickly outstriped by price increases, but the curve is so steep that your gains on the low end are simply outpaced by the gains on the high end, that you actually fall further behind.  You bought a $400K place and gained 15%, the $600K you wanted to move up to gained 20% if not 25%.  So you can carry a $100K towards the down, but the house you want went up $120K or $150K and you're actually $50K further away.

 

[OpenSky]

8)

 

[nosuchreality]

so this argues for tepid demand... ? How does this benefit sellers when buyers have limited buying power and a restrictive financing environment?

Basic math.

Today, there are 4 buyers looking for a particular type of house.  luckily, one will come on market this month.
next month, one more will come on market.  In that same period, four more buyers will enter the market.
the next month, the cycle will repeat.


And demand isn't tepid, Irvine is growing by 3000-6000 households a year.  That's 250- 500 new households a month.

Where they going to live?

You can't buy what's not for sale.

 

[OpenSky]

 

[nosuchreality]

Irvine has increased by 15000 households since the bubble. Has anywhere near that many been built?

Orchard hills is a good example. It 4500 unit including all the apartment and LIH  That's not enough to cover one year of growth.  And it will take how long to build out the entire plan?  Pp and the other are same way

Most importantly. They aren't what the buyer want.  They are wht they settle for because they can't find or can't afford what they want

Once they settle they're priced in forever. Without massive income increases they'll never catch up to the higher priced place they want.  The low interet rates will just exacerbate that problem going forward.

In the short term. It supply and demand and supply is much less than demand even though demand really isn't that strong.  Kind of like twinkies when hostess bk'd. $50 a box

As every investor knows the market can sty any way it want far longer than you can hold a position.


Please excuse iPad typos

 

[lnc]

Sometimes looking at Irvine's housing price is kind of like looking at one of those high flying, high growth, tech stock.  The fundamental is meaningless. 

 

[irvinehomeowner]

Irvine has increased by 15000 households since the bubble. Has anywhere near that many been built?

If true, where did they all go?

Are you not factoring all the new apartments that have been built?

And you still haven't clarified what you think "starter" means. A starter home in Irvine is going to be different than a starter home in Santa Ana.

And are you saying that it's not a bubble now because so many people want to live in Irvine today compared to back in 2003-2006?

Supply may be lower now (although it seems there is more new home stock and available apartments now than back during the bubble), but I'm not sure how you are gauging higher demand than before.

 

[nosuchreality]

A starter home is a function of price not layout although glorified apartments aren't starter homes

And at $500k you need to bring a $100k to the table to get a Conforming loan.  The income to swing the payment isnt that hard to do. The capital is for a starter

 

[bones]

.

 

[OpenSky]

 

[irvinehomeowner]

A starter home is a function of price not layout although glorified apartments aren't starter homes.

And at $500k you need to bring a $100k to the table to get a Conforming loan.  The income to swing the payment isnt that hard to do. The capital is for a starter

So why did you frame your starter market post with a 3br?

A starter home is also a function of income and demographics.

There are many people buying their first home in Irvine... and some are not just $500k or 3brs. Whether that down comes from savings or FCB gifting, there is a starter market in Irvine, it's just priced higher than many other OC cities.

Using your logic, there would be no starter market in any expensive city, like Newport or cities in Northern California.

Just my opinion, but "No starter market" in Irvine sounds like "ARM tsunami" to me.

 

[nosuchreality]

Manhattan doesn't have a starter market either.  It's a very different kind of market compare to the article about new buyers not applying

Irvine is still suburban and a 3 bd represent a basic starter suburban home. A loft or one bd coop isn't a starter. Is a fulfillment for a different clientele than the original piece about loans

It's a different starter, and many cases not a starter but jut their home of choice for a very different buyer thn e one highlighted

Fundamentally I think this a problem long term, as in 15-20 years. I'm not sure how many people moving to irvine are looking for urban living

 

[quattroporte]

You can't buy what's not for sale.

Yes you can. 

"When Mark Zuckerberg bought his pied-?-terre in San Francisco?s Noe Valley in 2012, he had a representative knock on the door of the home he liked ? it wasn?t even for sale ? and then offered the owners all cash at double the value of the property."

http://bits.blogs.nytimes.com/2014/03/02/the-housing-market-with-nowhere-to-go-but-up/?_php=true&_type=blogs&_r=0
http://sfist.com/2012/10/16/mark_zuckerberg_buys_pied_a_terre_i.php