When would be next housing Bottom?

[eyephone]

You guys need make the distinction that this is for investment properties only.
Family homes are priceless, so grading a purchase only on its investment quality is appropriate.

While a family home is a big investment, we should only focus on the investment side, because there's no way to price priceless.

In this case, Irvine dropped 30%, and IHO's experience of an only 10-15% drop in his search for a family home should not be considered.

Generally, areas that have high prices and good resilience are bad as investments.  You want areas that have big ranges so that you can pick up super cheap and resale fast.  You can't really do that in places like Irvine.

I can?t tell you how many posts I?ve seen on TI asking if (fill in the blank) would be a good an investment.

 

[Irvinecommuter]

You guys need make the distinction that this is for investment properties only.
Family homes are priceless, so grading a purchase only on its investment quality is appropriate.

While a family home is a big investment, we should only focus on the investment side, because there's no way to price priceless.

In this case, Irvine dropped 30%, and IHO's experience of an only 10-15% drop in his search for a family home should not be considered.

Generally, areas that have high prices and good resilience are bad as investments.  You want areas that have big ranges so that you can pick up super cheap and resale fast.  You can't really do that in places like Irvine.

I can?t tell you how many posts I?ve seen on TI asking if (fill in the blank) would be a good an investment.

Going to say that a random real estate blog is probably not the best place to go for investment advice.

 

[eyephone]

You guys need make the distinction that this is for investment properties only.
Family homes are priceless, so grading a purchase only on its investment quality is appropriate.

While a family home is a big investment, we should only focus on the investment side, because there's no way to price priceless.

In this case, Irvine dropped 30%, and IHO's experience of an only 10-15% drop in his search for a family home should not be considered.

Generally, areas that have high prices and good resilience are bad as investments.  You want areas that have big ranges so that you can pick up super cheap and resale fast.  You can't really do that in places like Irvine.

I can?t tell you how many posts I?ve seen on TI asking if (fill in the blank) would be a good an investment.

Going to say that a random real estate blog is probably not the best place to go for investment advice.

But there were many people that responded to the question. Which might indicate they were drinking the same koolaide and believe the same thing. 

 

[Liar Loan]

Although I'm confused because you are saying that "Irvine fared better in 2008" but originally you said it was "revisionist history".

Irvine did fare better than other areas in OC. What I was saying was revisionist was this idea that it only fell by 10-15%, when the raw numbers dispute that.

This is what you wrote:

It's revisionist history to say that Irvine was safer, and is really a form of cognitive dissonance for those that want to convince themselves that prices can't go down.  If you really want safety, there are other places that will protect your "investment" much better.  Try CDM, NB, LB, etc.  Areas with long time owners and old money will weather the storm best. 

I posted the Trulia data that shows that CDM, NB, LB, etc actually had larger drops using your high/low method and even using a rolling average they still dropped more so I don't think it's revisionist... raw numbers seem to side with Irvine.

It's been repeated so many times that I have seen new/infrequent posters repeat it as if it were fact.  They don't have the analysis skills or data to know any differently, so they take what is consensus here as the truth about Irvine.

Really? I know that in my own posts I state that it was in the specific housing I was looking at. For others, I think they've tempered it with their own experience. I don't feel anyone has said Irvine housing as a whole only dropped 10 or 15%. You and meccos have to start posting links to back up these assertions.

The fact is a first time buyer would still have been much better off waiting until 2010-11 to buy than suffering that massive 30% drop in 2008.

This is just like saying prices only dropped 10-15% as a whole. You can't know this as a fact. There are many people who bought in 2008 and actually better off because they couldn't find the same houses in 2010-11. Cheaper houses aren't always the good ones.

As I've said many times before, the numbers of homes you could buy for a 30% discount was few and far between. Your measurement of drop is extreme, you're taking the highest high and the lowest low, but you are not accounting for how much of that inventory was purchasable by the average buyer. If you have the data that shows the volume of homes you could buy at a 30%, I think it will show a different story. That's why I said that you have to use a reasonable time frame to calculate what a true drop was. Using your method, can I really say Newport Beach homes dropped almost 50%? No, because I know that would be a very small percentage of what actually was bought at a discount.

I know if I respond to each of these points it's going to devolve into a nitpicky argument. 

If safety is what you want, I stand by my statement that the "old money" areas of NB, CDM, LB will outperform Irvine.  If you want to compare Irvine to other upper middle class areas, it performed similarly.  If you want to compare it to working class / entry level areas, it performed much better.  My main point is to dispel the belief that Irvine is "safer" than everywhere else.  A 30% drop is not safe by any sane standard of prudent risk management.

Remember, 30% was the median drop which means half of houses did worse!!!

 

[paperboyNC]

Remember, 30% was the median drop which means half of houses did worse!!!

That's not how a median works. For example:

2006 sales:
Home A $3.5m
Home B $900k
Home C $750k
Home D $500k
Home E $300k

Median = $750k

2011 sales:
Home A: no sale
Home B: $800k
Home C: $720k
Home D: $480k
Home E: $330k
Home F: $300k

2011 Median: $480k

OMG!! The Median price fell 36% that means half the homeowners lost more than 36%!!

Oh wait - no one lost anything close to 36%, just fewer high price homes changed hands.

 

[Irvinecommuter]

I know if I respond to each of these points it's going to devolve into a nitpicky argument. 

If safety is what you want, I stand by my statement that the "old money" areas of NB, CDM, LB will outperform Irvine.  If you want to compare Irvine to other upper middle class areas, it performed similarly.  If you want to compare it to working class / entry level areas, it performed much better.  My main point is to dispel the belief that Irvine is "safer" than everywhere else.  A 30% drop is not safe by any sane standard of prudent risk management.

Remember, 30% was the median drop which means half of houses did worse!!!

Except NB, CDM, and LB didn't perform better than Irvine in the last downturn.  They did worse...that's not to say that they will do worse in the future but they did worse in 2008.

NB:  About $800K in 2003...top at $1.6 million in 2007...bottom at $925K in 2009.  That's about 43% from the top...up 15.6% from 2003.  (now at $1.92 mil)
LB:  About $800K in 2003...top at $1.6 in 2007...bottom at $900K in 2009.  That's about 45% and 12.5% from 2003.  (now at $1.825 mil)
Irvine:  About $425K in 2003...top at $700K in 2007...bottom at $550K in 2009.  That's about 21% from the top...up 29% from 2003.  ($840K now)
https://www.trulia.com/real_estate/Newport_Beach-California/market-trends/https://www.trulia.com/real_estate/Laguna_Beach-California/market-trends/https://www.trulia.com/real_estate/Irvine-California/market-trends/

If you take the same money and invested in Irvine...it's pretty comparable to LB and NB.

NB:  240% return from 2003
LB:  228% return
Irvine:  198% return (but you could have 1.77 houses in Irvine for the same amount of investment in NB and LB)

Also...it's weird that you are comparing NB and CDM with Irvine...that's like saying Ferraris are better buys than Porsches.  That may be true but there is a thing about entry points and investment costs.  I mean Berkshire Hathaway is a great stock to own but the entry point is a little high for most people.

Also...30% drop is really deceiving because you are talking 30% from the top...that top was close to 200% from the starting point.  As noted above, you are still like 30% up from the price before the boom.

 

[Irvinecommuter]

Just to compare:

Tustin:  About 350K in 2003...high of about 660K in 2006...and about $420K in 2009.  That's a drop of 36% from the top...up 20% from 2003. 
Aliso:  About 350 K in 2003...high of about 550K in 2006...and about $370K in 2012.  Drop of 37% from the top...up 5% from 2003.
Mission:  About 400K in 2003...high of about 700K in 2006...and about $420K in 2011.  Drop of 40% from the top...up 5% from 2003
Lake Forest:  About 330K in 2003...high of about 600K in 2006...and about $350 in 2009/2012. Drop of about 41% from the top and 6% from 2003.
        https://www.trulia.com/real_estate/Tustin-California/market-trends/https://www.trulia.com/real_estate/Aliso_Viejo-California/market-trends/https://www.trulia.com/real_estate/Mission_Viejo-California/market-trends/https://www.trulia.com/real_estate/Lake_Forest-California/market-trends/

 

[Irvinecommuter]

For further away comparisons:

Brea:  About $385K in 2003...topped at about $690K in 2006...bottom at about $460K in 2012.  33% drop from top about 19% from 2003.
Fullerton:  About 300K in 2003...topped at about $590K in 2007...bottom at about $360K in 2012.  39% from top...20% gain from 2003.
Diamond Bar:  About $350K in 2003...topped at about $575K in 2008...bottom at about $410 in 2012.  Drop of 29% from the top..up about 14% from 2003.
Chino Hills:  About $330K in 2003...topped at about $600K in 2008...bottom at about $400K in 2012.  Drop of 33% from the top...up 21% from 2003.
Eastvale:  About $300K in 2003...topped at about $630K in 2006...bottom at about $330 in 2012.  Drop of 46% from the top...up 10% from 2003.

Out of state:

Scottsdale:  About $280K in 2003...topped at about $450K in 2008...bottom at $280K in 2012.  Drop of 37% from the top...no gain from 2003.
Las Vegas:  About $170K in 2003...topped at $300K in 2007...low of $110K in 2011/2012.  Drop of 63% from the top...loss of 42% from 2003. 
Alpharetta:  About $250K in 2003....ranged between $250K to $300K between 2009 to 2014...from no gain to 20%
https://www.trulia.com/real_estate/Fullerton-California/market-trends/https://www.trulia.com/real_estate/Brea-California/market-trends/https://www.trulia.com/real_estate/Diamond_Bar-California/market-trends/https://www.trulia.com/real_estate/Chino_Hills-California/market-trends/https://www.trulia.com/real_estate/Eastvale-California/market-trends/
https://www.trulia.com/real_estate/Scottsdale-Arizona/market-trends/https://www.trulia.com/real_estate/Las_Vegas-Nevada/market-trends/https://www.trulia.com/real_estate/Alpharetta-Georgia/market-trends/

 

[Irvinecommuter]

Investment wise...you are better off with places like:

Moreno Valley:  About $180K in 2003...topped at about $380K in 2007 (bottomed at about $140K in 2009)
Riverside: About $220K in 2003...topped at $430K in 2007 (but then $180K in 2009). 
Bakersfield:  ABout $140K in 2003...topped at $300K in 2007 (but then to about $130K in 2010-2011)
Stockton:  About $185K in 2002/2003..topped at about $380K in 2007 (then $120K in 2010-2011)
https://www.trulia.com/real_estate/Riverside-California/market-trends/https://www.trulia.com/real_estate/Bakersfield-California/market-trends/https://www.trulia.com/real_estate/Stockton-California/market-trends/

 

[Kenkoko]

What's the point of comparing Irvine to Las Vegas / Scottsdale ?

Should be looking at bay area cities. If Irvine is going to be significantly higher in the future, the best bet would be Irvine becoming silicon valley south. Not Vegas or Scottsdale.

 

[Kenkoko]

I've always found it funny when previous post said Irvine should not be compared to Newport or Laguna. But turns around and compare Irvine to Tustin/Lake Forest. Has there ever been a time that Irvine was worse than Tustin/LF ? If not what does Irvine being better than Tustin and LF prove now?

 

[Irvinecommuter]

What's the point of comparing Irvine to Las Vegas / Scottsdale ?

Should be looking at bay area cities. If Irvine is going to be significantly higher in the future, the best bet would be Irvine becoming silicon valley south. Not Vegas or Scottsdale.

Vegas and Scottsdale were the two major areas where people went to because California/OC got too expensive.  It's not comparison per se but rather to show what true up and down looks like in a market.  California housing market has very few equivalents...even Panda's favorite area is hard to compare. 

BA cities are also hard to compare with because those cities have been around a lot longer than Irvine.  The boom time for them was the 1980s/1990s.  I would expect Irvine to look like BA in about 10 years when all the new homes have built out.  Even newer cities had matured by 2003. 

Most of the Silicon Valley cities did not suffer an appreciable drop even during the 2008 downturn.  But they didn't really gain during the boom either. 

Sunnyvale:  About $550K in 2003...topped at about $750K...bottom at about $550K in 2012.  Down about 27% from the top..about even with 2003.
Mountain View:  About $500K in 2003...topped at about $800K...bottom at about $650K in 2011.  Down about 18% from top...up about 30% from 2003.
Palo Alto:  About $800K in 2003...topped at about $1.15 mil...bottom at about $850K in 2010.  Down about 30% from the top and up about 8% from 2003
https://www.trulia.com/real_estate/Milpitas-California/market-trends/https://www.trulia.com/real_estate/Mountain_View-California/market-trends/https://www.trulia.com/real_estate/Palo_Alto-California/market-trends/

Areas outside of SV had similar trends as Southern California

Pleasanton:  $550K in 2003...top at about $800K in 2008...bottomed at about $650K in 2012.  Down 19% from top..up 18% from 2003.
Danville:  About $700K in 2003...top at about $1 million in 2008...bottom at about $750K in 2012.  Down 25% from the top...up about 8% from 2003
San Ramon:  About $550K in 2003..top at about $900K in 2006..bottom at about $600K in 2012.  Down about 33% from top..up about 10% from 2003.
Milpitas:  About $450K in 2003...top at about $650K in 2007..bottom at about $425K in 2011.  Down about 35% from the top...about 5% loss from 2003.
https://www.trulia.com/real_estate/Pleasanton-California/market-trends/https://www.trulia.com/real_estate/San_Ramon-California/market-trends/https://www.trulia.com/real_estate/Danville-California/market-trends/https://www.trulia.com/real_estate/Milpitas-California/market-trends/

 

[Irvinecommuter]

I've always found it funny when previous post said Irvine should not be compared to Newport or Laguna. But turns around and compare Irvine to Tustin/Lake Forest. Has there ever been a time that Irvine was worse than Tustin/LF ? If not what does Irvine being better than Tustin and LF prove now?

You can't really compare Newport or LB with Irvine because of a number of reasons.  House size and proximity to ocean/beach are the two biggest differences.  You also can't compare them because NB and LB are basically mature markets with next to no new builds while Irvine boomed in the last 10-15 years. 

Irvine, Tustin, LF, Mission, and AV were pretty similar up until about 2003-2004.  Again, LF, Mission, and AV boomed mostly in the 1980s and 1990s.  Irvine and Tustin just boomed...in about 10-15 years Irvine will be way ahead of LF, Mission, and AV.

Go look at the pricing in 2003.  Mission and Irvine were pretty comparable at low $400K.  LF, Aliso, and Tustin were pretty comparable at about mid-$300K. 

Median sales price now:

Irvine:  $840K
Mission:  $730K
Lake Forest:  $675
Tustin:  $670K
Aliso:  $600K

Adding

Laguna Hills:  About $350K in 2003...about $700K now.  (bottomed at about 350K in 2009)
Laguna Niguel:  About $480K in 2003...about $800K now (bottomed at about 500K in 2012)
https://www.trulia.com/real_estate/Laguna_Niguel-California/market-trends/

 

[meccos12]

And if you have to know, I probably looked at close to over 700 homes on Redfin, of that, over 100 of those I went to via open house or our realtor Scott Gunther. That's not counting all the new homes we looked at either.

Its truly amazing that data suggest homes dropped 30% but ALL the 700 homes you looked at only dropped 10-15%.
Do you play the lotto?  If not, you should because I think the chances of this happening is likely similar to you winning the lotto.

 

[meccos12]

Remember, 30% was the median drop which means half of houses did worse!!!

That's not how a median works. For example:

2006 sales:
Home A $3.5m
Home B $900k
Home C $750k
Home D $500k
Home E $300k

Median = $750k

2011 sales:
Home A: no sale
Home B: $800k
Home C: $720k
Home D: $480k
Home E: $330k
Home F: $300k

2011 Median: $480k

OMG!! The Median price fell 36% that means half the homeowners lost more than 36%!!

Oh wait - no one lost anything close to 36%, just fewer high price homes changed hands.

Your example only works when the sample size is small.  As the sample size becomes large, your argument falls apart as the median becomes the mean and the variability of sales in prices ranges decreases, in which case LiarLoan statement becomes completely true. 

 

[Irvinecommuter]

And if you have to know, I probably looked at close to over 700 homes on Redfin, of that, over 100 of those I went to via open house or our realtor Scott Gunther. That's not counting all the new homes we looked at either.

Its truly amazing that data suggest homes dropped 30% but ALL the 700 homes you looked at only dropped 10-15%.
Do you play the lotto?  If not, you should because I think the chances of this happening is likely similar to you winning the lotto.

Actually...data says the drop was about 20%

And i would guess that the 3 and 4 bedrooms houses fell less than the median.

 

[meccos12]

Actually...data says the drop was about 20%

And i would guess that the 3 and 4 bedrooms houses fell less than the median.

Please show us data you are referring to.  Atleast you are not claiming 10-15% drop anymore.  BTW, Trulia says 3 beds drop about 26% and 4 beds drop more than 30%. 

 

[irvinehomeowner]

And if you have to know, I probably looked at close to over 700 homes on Redfin, of that, over 100 of those I went to via open house or our realtor Scott Gunther. That's not counting all the new homes we looked at either.

Its truly amazing that data suggest homes dropped 30% but ALL the 700 homes you looked at only dropped 10-15%.
Do you play the lotto?  If not, you should because I think the chances of this happening is likely similar to you winning the lotto.

You?re reading both the data and my posts wrong.

Those 700 homes were on Redfin and either they didn?t fit my criteria, were too expensive, etc.

Of the 100+ I did look at, the ones I really had interest in were only 10-15% off peak. Some were more but when seen in person were not a good location or not in very good condition. I remember a QH home where they had ripped out the entire kitchen and still wanted quite a bit for it.

As for a 30% ?drop?, I already explained the time frame and inventory type flaw in that but you like to stick with that data point because it make you look like you are backed by data. If LiarLoan is going to contend that you can?t stick to a previous crash to demonstrate Irvine?s resiliency, how can you use one data point in 2012 as the end all be all of the drop? You have to average all those lows to get a realistic market condition because most people don?t complete a purchase from search to close of escrow in a month.
https://en.m.wikipedia.org/wiki/Moving_average

 

[Liar Loan]

If LiarLoan is going to contend that you can?t stick to a previous crash to demonstrate Irvine?s resiliency, how can you use one data point in 2012 as the end all be all of the drop?

This is how crashes are measured across all asset classes.  You start at the peak price and measure to the trough. Moving averages are for the purpose of smoothing trends, not for measuring peak to trough price declines.

Your push for novel new ways of measuring the crash in Irvine, to make it look better than it actually was, is a sure sign of cognitive dissonance.

 

[Irvinecommuter]

Actually...data says the drop was about 20%

And i would guess that the 3 and 4 bedrooms houses fell less than the median.

Please show us data you are referring to.  Atleast you are not claiming 10-15% drop anymore.  BTW, Trulia says 3 beds drop about 26% and 4 beds drop more than 30%.

I just showed you the data and calculations.  Peak at abt $700k and bottom at abt $550k.  That is about 21%. 3 bed and 4 bd followed pretty similar trends as the median

I have never claim 10 o 15% but again...why are are so stuck on 30%.  I just showed you that LB and Newport were down way more than 30% and Irvine still had like 25% appreciation from preboom prices.

What exactly is your point?