Whats next for irvine
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http://www.talkirvine.com/index.php?topic=1288.0
They are trying to get annexed by the Parkside HOA:
http://www.lyonvistaverde.com
I think 5% is too conservative since we're already seeing "near" that in pricing per square foot YOY at the median. Considering the fact that since about July/August 2010, one month after the official closing end of the FedTaxCredit, we've seen a sharp decline in prices, it sort of proves that Irvine hasn't been fundamentally priced for a very long time, and that fundamentals are beginning to take over despite what the $850,000 "backing to Culver" Turtle Rock bourgeoisie might have you believe.
For 2011, I'd say 7-10% would be realistic, assuming no more gov't cheese, or other economic shocks occur like a spike in inflation. There are three scenarios a market can be in fundamentally; inflationary, deflationary, or stagflation. Out of the three, there is only ONE scenario where prices can rise.
Personally, I believe our economy is in "stagflation", which would indicate to me that prices will continue to go down until we reach market equilibrium, or the economy improves sufficiently enough to support current pricing. The reason I stay stagflation is because of the following basic factors:
- In an "inflationary" economy, we'd have excess cash/liquidity chasing "few" opportunities, the "bull market". For most of the history of tracking housing prices, this has been the case, which is why housing has always been an excellent hedge against inflation, it tracks very well with it. However, what we saw in 1998-2006 was abnormal. Right now, we have liquidity, we gave it to the banks. We can easily see this from input prices of commodities; energy, steel, oil, lumber, etc. These commodities are rising in price. Usually when this happens, this would be an indicator of inflation. However, we don't see rising wages, or bullish activity in the housing market. Why? Because the liquidity was absorbed back into the banking system through the purchase of "bad assets". So we don't have true inflation here.
- In a "deflationary" economy, we have the opposite, no liquidity, too many opportunities.
In "stagflation" we have high input prices from inflation (check, commodities are rising), stagnant asset prices(check, houses aren't rising in price), and deflationary economic activity(check, lack of liquidity because the banks stole it), this is the worst of both worlds, and obviously the worst of the three scenarios, and the one I personally believe we're in. Without getting too technical, that's the short of why I believe prices will continue to fall even in "Unicorn land" aka Irvine.
Of course, you can listen to the cheerleaders who think prices can't go down further because of their "fundamental" reasoning:
- Irvine is different.
- Quail Hill, Woodbury East, and Turtle Rock in Irvine is different.
- Foreign Cash Chindians will buy all the homes up.
- They can't go down further because someone's cousin told them an anecdotal story about their boss buying a home for 2x the market price.
I guess we'll see who is right by the end of the year.
Of course "the medium home price" will go up. Woodbury East was a great buy. Smart money! Irvine is different.
If he said that, he may have been underestimating the stickiness of prices.
$200/sqft in Irvine by the end of 2011 would be hard to imagine. I'm not saying that it's not a fundamental valuation, but I feel prices will be stickier than IrvineRenter believes. That would put Irvine in Corona price ranges. I think IrvineRenter understands fundamentals, I've talked to the guy face to face, he's not a shill or an uneducated permabear, he understands markets to some degree.
I don't think anyone really knows what the bottom dollar prices will fall to in Irvine, but when we reach it, it'll be easy to see. I know we're not there yet.
I think places in the IE, and Vegas (where IR does a lot of his business) will just empty out, drop further, and housing activity will slow way down.
Take Riverside for instance. From 1990 - 2000, the city experienced a 12.7% growth in population during a less erratic time period for housing. During the bubble decade (2000-2010), Riverside's population grew at almost three times that rate (28.8%). No doubt at least part of that increased growth was from people moving inland after being priced out of more desirable LA County, and OC. Now that the funny money is gone, and more importantly, the jobs are going away, people naturally will have to move back towards the economic hubs to make a living, even if as renters. I'm not saying Riverside, or IE cities will become like Detroit where you can buy $1,000 homes in emptied out neighborhoods, but I could see discounts across the board if the economic weakness continues. Just remember, no matter how bad you think it is, if the market dictates, it can get a lot worse (look at Detroit, and parts of Florida for the extreme case).
usctrojancpa
Well-known member
Great Park area, area just south of Woodbury, rest of Stonegate, the area to the east of Northwood & Northwood Pointe to the west of Jeffery, and Ochard Hills.chromatin said:
irvinehomeowner
Well-known member
And don't forget the Lyon homes in Alderwood/Woodbridge and Vista Verde/University Park.
irvinehomeowner
Well-known member
The area just south of Woodbury is called Cypress Village.
Isn't there also a Planning Area where Wild Rivers and the Verizon Amphitheater is?
Isn't there also a Planning Area where Wild Rivers and the Verizon Amphitheater is?
usctrojancpa
Well-known member
Yeah, I think I heard or read somewhere that the area will be called Northwood Pointe II (don't quote me on that).ps99472 said:
usctrojancpa
Well-known member
Where are they gonna be putting up homes in Vista Verde/University Park?irvinehomeowner said:
irvinehomeowner
Well-known member
On the site of the Vista Verde Elementary school:USCTrojanCPA said:
http://www.talkirvine.com/index.php?topic=1288.0
They are trying to get annexed by the Parkside HOA:
http://www.lyonvistaverde.com
irvinehomeowner
Well-known member
Indie:
How much lower do you see Irvine prices dropping? Less than 3 years ago, there were claims of 40-50% but that hasn't happened.
IrvineRenter thinks there will be only 5% this year... which I feel is too conservative (and surprising coming from him but he might be over-correcting).
How much lower do you see Irvine prices dropping? Less than 3 years ago, there were claims of 40-50% but that hasn't happened.
IrvineRenter thinks there will be only 5% this year... which I feel is too conservative (and surprising coming from him but he might be over-correcting).
IndieDev
New member
irvinehomeowner said:
I think 5% is too conservative since we're already seeing "near" that in pricing per square foot YOY at the median. Considering the fact that since about July/August 2010, one month after the official closing end of the FedTaxCredit, we've seen a sharp decline in prices, it sort of proves that Irvine hasn't been fundamentally priced for a very long time, and that fundamentals are beginning to take over despite what the $850,000 "backing to Culver" Turtle Rock bourgeoisie might have you believe.
For 2011, I'd say 7-10% would be realistic, assuming no more gov't cheese, or other economic shocks occur like a spike in inflation. There are three scenarios a market can be in fundamentally; inflationary, deflationary, or stagflation. Out of the three, there is only ONE scenario where prices can rise.
Personally, I believe our economy is in "stagflation", which would indicate to me that prices will continue to go down until we reach market equilibrium, or the economy improves sufficiently enough to support current pricing. The reason I stay stagflation is because of the following basic factors:
- In an "inflationary" economy, we'd have excess cash/liquidity chasing "few" opportunities, the "bull market". For most of the history of tracking housing prices, this has been the case, which is why housing has always been an excellent hedge against inflation, it tracks very well with it. However, what we saw in 1998-2006 was abnormal. Right now, we have liquidity, we gave it to the banks. We can easily see this from input prices of commodities; energy, steel, oil, lumber, etc. These commodities are rising in price. Usually when this happens, this would be an indicator of inflation. However, we don't see rising wages, or bullish activity in the housing market. Why? Because the liquidity was absorbed back into the banking system through the purchase of "bad assets". So we don't have true inflation here.
- In a "deflationary" economy, we have the opposite, no liquidity, too many opportunities.
In "stagflation" we have high input prices from inflation (check, commodities are rising), stagnant asset prices(check, houses aren't rising in price), and deflationary economic activity(check, lack of liquidity because the banks stole it), this is the worst of both worlds, and obviously the worst of the three scenarios, and the one I personally believe we're in. Without getting too technical, that's the short of why I believe prices will continue to fall even in "Unicorn land" aka Irvine.
Of course, you can listen to the cheerleaders who think prices can't go down further because of their "fundamental" reasoning:
- Irvine is different.
- Quail Hill, Woodbury East, and Turtle Rock in Irvine is different.
- Foreign Cash Chindians will buy all the homes up.
- They can't go down further because someone's cousin told them an anecdotal story about their boss buying a home for 2x the market price.
I guess we'll see who is right by the end of the year.
irvinehomeowner
Well-known member
Do the median sales price and $/sft take into account new homes?
Last year, the 2010 NHC SFR prices (not sure about the condos) rose almost every phase, did those numbers get figured into any of the figures from last year? I don't think they are in Redfin's because most of those homes did not hit the MLS. I think that part of the equation gets overlooked.
Like you, I think 5% in resale is probably too little... but at the same time, I take into account new home sales and after seeing what happened last year, which surprised everyone including TIC, while we won't see huge price jumps in new homes, I'm not sure we'll see 20% drops in new home prices either.
This is something that I mentioned before in that one of Irvine's differences is they have larger new home projects that have a buoyancy effect on homes in general. While I've been told in the past that The Irvine Company has no control over home prices in Irvine, I do think there is some spillover effect on what they benchmark new homes at. This creates a psychological (read: non-fundamental) factor that affects seller/buyer perception.
Maybe Bren will make his own cheese and give everyone who buys an iPac home in the 2011 Collection a $5k credit.
Looking at Redfin, currently at $320/sft, another 7-10% down would take us to the sub $300/sft level. That would be interesting... but still far off from the $200/sft predictions on the IHB (which I think have been amended by IR to $275/sft).
Last year, the 2010 NHC SFR prices (not sure about the condos) rose almost every phase, did those numbers get figured into any of the figures from last year? I don't think they are in Redfin's because most of those homes did not hit the MLS. I think that part of the equation gets overlooked.
Like you, I think 5% in resale is probably too little... but at the same time, I take into account new home sales and after seeing what happened last year, which surprised everyone including TIC, while we won't see huge price jumps in new homes, I'm not sure we'll see 20% drops in new home prices either.
This is something that I mentioned before in that one of Irvine's differences is they have larger new home projects that have a buoyancy effect on homes in general. While I've been told in the past that The Irvine Company has no control over home prices in Irvine, I do think there is some spillover effect on what they benchmark new homes at. This creates a psychological (read: non-fundamental) factor that affects seller/buyer perception.
Maybe Bren will make his own cheese and give everyone who buys an iPac home in the 2011 Collection a $5k credit.
Looking at Redfin, currently at $320/sft, another 7-10% down would take us to the sub $300/sft level. That would be interesting... but still far off from the $200/sft predictions on the IHB (which I think have been amended by IR to $275/sft).
IndieDev
New member
Starlight East said:IndieDev said:I guess we'll see who is right by the end of the year.
I'm sure you will be right at the end of the year. Even when the medium home price and $/sq would go up ...
Of course "the medium home price" will go up. Woodbury East was a great buy. Smart money! Irvine is different.
IndieDev
New member
irvinehomeowner said:
If he said that, he may have been underestimating the stickiness of prices.
$200/sqft in Irvine by the end of 2011 would be hard to imagine. I'm not saying that it's not a fundamental valuation, but I feel prices will be stickier than IrvineRenter believes. That would put Irvine in Corona price ranges. I think IrvineRenter understands fundamentals, I've talked to the guy face to face, he's not a shill or an uneducated permabear, he understands markets to some degree.
I don't think anyone really knows what the bottom dollar prices will fall to in Irvine, but when we reach it, it'll be easy to see. I know we're not there yet.
irvinehomeowner
Well-known member
To clarify, the $200/sft were prior predictions (which mirror the whole 40-50% price drops also predicted at that time).
I've always asked that if Irvine still has a way to drop, and if places like the IE are so low now, what will the IE finally bottom out at?
I've always asked that if Irvine still has a way to drop, and if places like the IE are so low now, what will the IE finally bottom out at?
IndieDev
New member
irvinehomeowner said:
I think places in the IE, and Vegas (where IR does a lot of his business) will just empty out, drop further, and housing activity will slow way down.
Take Riverside for instance. From 1990 - 2000, the city experienced a 12.7% growth in population during a less erratic time period for housing. During the bubble decade (2000-2010), Riverside's population grew at almost three times that rate (28.8%). No doubt at least part of that increased growth was from people moving inland after being priced out of more desirable LA County, and OC. Now that the funny money is gone, and more importantly, the jobs are going away, people naturally will have to move back towards the economic hubs to make a living, even if as renters. I'm not saying Riverside, or IE cities will become like Detroit where you can buy $1,000 homes in emptied out neighborhoods, but I could see discounts across the board if the economic weakness continues. Just remember, no matter how bad you think it is, if the market dictates, it can get a lot worse (look at Detroit, and parts of Florida for the extreme case).