[quote author="nefron" date=1223946867][quote author="WestparkRenter" date=1223941783][quote author="IrvineRenter" date=1223937364][quote author="nefron" date=1223936877][quote author="IrvineRenter" date=1223934135][quote author="nefron" date=1223930350][quote author="blackacre-seeker" date=1223902958]yup, as much as I want the prices to drop so I can finally buy a house I need, I don't see prices in Irvine dropping that much, the houses are superoverpriced, and short sales and REOs get snatched by cash buyers before I even make the offer.
Somebody said here recently (sorry, don't remember who that was to give the proper credit) that you need to wine and dine people from the banks to find some really good deals. I wish I knew somebody working for a bank, I think that's the way to go right now, there are no SFRs in Irvine below 250 per sq. ft., the price I can afford to pay right now...</blockquote>
But the thing is, while I know that $540,000 sounds outrageous for a starter home, think about the income required if people buy at roughly 4x their gross income, which I believe is historical for California. That's $135,000. This is for 3 bedroom 2.5 bath homes at about 1700 square feet. A piece of cake for many couples, and for many individuals. Someone correct me if I'm wrong or if I'm missing something. That's why I feel that maybe the high end has to come crashing down, but the low end is about as far down as it's going to go, at least in Irvine. According to the city's website, the median household income in Irvine is $90,000. Okay, there are plenty of condos and townhouses below $500,000, too. Don't get me wrong, I need these prices to drop more to truly afford one, but I'm getting increasingly pessimistic.</blockquote>
We are heading into a deep recession. Prices will continue to fall. I think we may see another leg down in starter condos. In the last correction, condos held their own near rental parity until the high end fell, they they crashed down to cashflow investor values.</blockquote>
Okay, small condos maybe, but IR, I don't see a compelling reason for SFR's to fall more based on what I said above. Look at the OCR's map of foreclosures in yesterday's paper. Time to sell foreclosures throughout Irvine - one month or less. Number of REO's on the market - zero to 14 homes throughout Irvine except for Northwood, which we know has been flip/fraud central. There is so little on the market here that prices are staying up. There is not some shadow inventory in most Irvine neighborhoods. In other neighborhoods, yes. The only thing I see that could possibly change this is for unemployment high enough to force a significant number of homeowners/potential homeowners to have to survive on one income. I'll believe it when I see it.</blockquote>
If the typical borrower in Irvine was financially solvent, then sellers might be able to hold to their prices, but the simple fact is that they aren't. Plus, it doesn't matter as much what the sellers ask as it does what the buyers bid. With tightening credit and rising unemployment buyers will not be able to up their bids to reach these sellers. Look at <a href="http://www.irvinehousingblog.com/blog/comments/raines-a-gonna-fall/">today's featured property</a>, a $1M+ REO going for $765K. This is only the beginning.</blockquote>
Lots of properties in NB are going lower. They don't lower if they think they can sell at higher prices.</blockquote>
Well, if what you observed in the last correction happens again, I hope that this spring we will see starter condos go lower for the second time in this correction, since the high end seems to be crashing now. Maybe SFRs will follow the condos in a second drop next spring. But IMHO there are only two things that will force starter SFRs lower; buyers' fear that prices will continue to go down (justifiable or not) and they'll be stuck with an overpriced property, and, strongly related to that, reluctance to put money into a home because they view it as an investment that will go sour on them. If that psychology holds, then yes, we'll see prices go lower.
But I maintain that from a strictly financial point of view, starter homes could stay at $500,000+ given the incomes of Irvine residents (or wanna-be's). Is there any way to research how much debt the typical Irvine family holds? Honestly, IR, I bet it's a lot lower, at least in Irvine's older neighborhoods, than what you think it is. While for your blog you look at sellers in hock whose homes that are on the market, that is just a small fraction of the number of homes in Irvine overall.</blockquote>
Condo prices have been going lower. Back in 2004, the lowest price for a condo was in the $300-400K, now you can even find 3BR condo in the $200K.
