2016 Drop

[Liar Loan]

So USC's data goes back to Jan 2008 which I think captures the peak (unless the peak was in 2007).

Here is the data from that time to recovery for Irvine median prices:

Does that look like a about 5-6 years from peak to peak (Feb 08 to Sep 13)? Seems like Irvine beat OC and California's recovery.

What about how much Irvine dropped during this crash?

I know some people will use the extreme high in Feb 08 and the extreme low in Feb 12 but that doesn't account for housing stock, *seasonal* changes, etc... instead I'll use a 6-month rolling median (since someone doesn't like averages).

I compared Feb-08 to Jul-08 since that captures the highest 6 months of the peak (at least within the data available) to the lowest 6 month trough, which is Nov-11 to Apr-12.

Median 6-month High: $602,850
Median 6-month Low: $505,000
Drop: 16%

That to me, was a reflection of my own experience of house hunting in Irvine. Is that more or less accurate than the reality of most people? I guess it depends on the data your are looking at.

I can concede that some homes could have been discounted for more, but I don't think that represents the majority stock of Irvine homes as a whole.

But I could be wrong.

For me, IHO presenting pure data here and coupled that with experiences. IHO is stress testing his strong beliefs in Irvine values and it?s abilities to hold values over a long period of time both in good and bad.

To me this is invaluable as a source of guide / suggestion for buy or not both in Irvine or outside of Irvine real estate . The individual have to decipher for himself.

From making past mistakes, ones will learn and make better decisions with the next. It takes a big person to say I could be wrong, because he will make better or best decisions when opportunities arise.

Except the methodology is still flawed.  A moving average is still an average.

You need to take a six-month median to do what IHO is trying to accomplish here (bury the bad numbers).

Secondly, notice how IHO only does this spreadsheet trickery when it concerns Irvine numbers.  He will never, ever, try to boost the numbers of a non-Irvine city, or OC as a whole, nor will he ever accept a methodology that makes Irvine look worse than he believes it should look based on his "experiences" (anecdotal evidence).

 

[irvinehomeowner]

It?s his anecdotal observation.
Again, it?s okay for business to ?strategize? to buy equipment or hire people. But it?s not okay for an individual to hold back because there is uncertainty in the RE market?

Actually, this was more of an analysis of the last drop. Obviously, during that time, it was a good strategy for people to wait or hold back because it was evident that there were going to be drops, I was just commenting on how large that drop actually was. People who didn't actually live in Irvine were predicting 50%+ drops for Irvine and to me that was impossible because that meant homes that were selling for $1m would be $500k. Even at 40% drops, that would mean a $1m 3CWG home would be selling for $600k. That just didn't make sense to me. And then while I was actually shopping for 3CWG homes, I couldn't find anything in the $500k-$600k range. There was one or two that were in the $750k range but they weren't $1m homes to start so their drop was maybe 15-20%... not 40-50%. I actually would have been okay with a 3CWG that dropped 28% if it was in a good location and in good condition (with real estate you'd be lucky to get 2 of the 3... price/location/condition).

For this current "drop"... my other post in the Housing Bottom thread, using the same data from USC, shows only a less than 0.5% price difference (using a 6-month rolling median), so that's where I don't know if waiting is that advantageous. We could say that because of lower interest rates, waiting would have been better but NO ONE knew interest rates were dropping. And, if that was the case, they could have just did what LL did and refi into the lower rates.

How about I tell you the story of my neighbor a while back when they said someone broke on and changed their locks. To make the story short, the place got foreclosed because they were several or shall I say many months behind in paying their mortgage. Same story throughout the US not just my ex-neighbor. (Maybe they should of rented or waited to buy a house. I mean I bought a foreclosed unit close next to them rehabbed by the bank with missing garage fixture. Lol)

I?m not saying to wait for a foreclosure. But like don?t knock a person if they are cautious.

Yes. Again, I don't think anyone's advice is for everyone. I can concede that some people should wait (if they are at the edge of affordability, may not have a stable job, etc) but I think you can also concede that there are scenarios where buyers don't have to wait.

 

[eyephone]

I agree with you as long as you agree with me.

 

[Liar Loan]

P.S.  USC's data shows a 36% drop (680k to 432k) peak-to-trough.  And that's accepting that Irvine peaked in '08.  We don't have the '07 data to see if the peak was even higher, meaning the peak-to-trough drop was even worse.

 

[irvinehomeowner]

Except the methodology is still flawed.  A moving average is still an average.

You need to take a six-month median to do what IHO is trying to accomplish here (bury the bad numbers).

I thought you were the statistical professor here. Using a average for time based data is normal, especially for for real estate due to the sales cycles and inconsistent stock. It's not burying the bad numbers, it's smoothing out the anomalies. But, maybe I'm doing the calculations wrong, someone else who does have a stats background can use the raw data here and compare if you don't trust my numbers.

Secondly, notice how IHO only does this spreadsheet trickery when it concerns Irvine numbers.  He will never, ever, try to boost the numbers of a non-Irvine city, or OC as a whole, nor will he ever accept a methodology that makes Irvine look worse than he believes it should look based on his "experiences" (anecdotal evidence).

That's not true. Give me the numbers for your safe havens of Newport Beach and Corona Del Mar... and I will apply the same methodology. I actually used your method of extreme high/low to compare the cities (using Trulia data) and Irvine came out on top. I am confident it will be the same case using the 6-month average/median.

P.S.  USC's data shows a 36% drop (680k to 432k) peak-to-trough.  And that's accepting that Irvine peaked in '08.  We don't have the '07 data to see if the peak was even higher, meaning the peak-to-trough drop was even worse.

I said that.

Do you actually think that a high at one point in time compared to a low in another single point in time tells the actual story? If that were the case, then you timed your 2010 purchase very poorly.

 

[Liar Loan]

I thought you were the statistical professor here. Using a average for time based data is normal, especially for for real estate due to the sales cycles and inconsistent stock.

It's not normal for real estate.  None of the data services uses a rolling average because it distorts the data.  An "average" and a "median" are statistical tools that are meant to do the same thing, which is to find the "middle" of the data.  When you start averaging a median, you are getting away from, not closer to, what the data is telling you.  If you really want to use a multi-month indicator, then the Redfin 3-month median is probably your best bet.

Give me the numbers for your safe havens of Newport Beach and Corona Del Mar... and I will apply the same methodology. I actually used your method of extreme high/low to compare the cities (using Trulia data) and Irvine came out on top.

Here are the numbers comparing Newport Beach and Irvine during the recovery (using Redfin's 3-month median):

Newport Beach bottomed sooner than Irvine in October 2011 and the median has gone from $1M to $2.260M for a 126% gain.

Irvine bottomed later than Newport Beach in February 2012 and the median has gone from $433k to $875k for a 102% gain.

Do you actually think that a high at one point in time compared to a low in another single point in time tells the actual story? If that were the case, then you timed your 2010 purchase very poorly.

A peak-to-trough decline has become a standard way to measure the severity of the drop in different areas.  For instance, I told you my condo lost 60% of its value.  Yes, that tells the story of what happened nicely.  You can argue that measuring the one person that overpaid the most at the top against the savvy buyer that scored the best deal at the bottom is measuring extremes, but I think it's useful to know just how badly a certain group of individuals got burned by buying at the wrong moment in time.

I'm not sure why you keep trying to disparage my 2010 purchase.  First of all, you don't have enough detail to do so.  Secondly, I already told you what my objective in purchasing at that time was, and pricing was only the half of it.  Just because I could have waited and theoretically done even better, does not mean that there was not a sizable benefit to waiting longer than anybody else that purchased in the prior seven years in our area.

After we bought, I still tracked the market and there was only one other property that sold in our zip code prior to the bottom that I maybe would have been interested in.  Since I didn't tour the place I don't know for sure, but it had a larger lot size, and larger sq footage than ours, and sold for less.  It was also an REO and needed new windows, new exterior paint, and new landscaping.  Since the interior photos were limited, I don't know for sure what else it would have needed, but it definitely needed more work than the house I bought, which was one of the few turnkey, non-distressed sales that occurred during that time.  So even though prices on paper continued to slide, there may not have been a better deal than the one I got, once you factor for repairs/upgrades that were needed to make it both desirable and livable.

 

[irvinehomeowner]

Give me the numbers for your safe havens of Newport Beach and Corona Del Mar... and I will apply the same methodology. I actually used your method of extreme high/low to compare the cities (using Trulia data) and Irvine came out on top.

Here are the numbers comparing Newport Beach and Irvine during the recovery (using Redfin's 3-month median):

Newport Beach bottomed sooner than Irvine in October 2011 and the median has gone from $1M to $2.260M for a 126% gain.

Irvine bottomed later than Newport Beach in February 2012 and the median has gone from $433k to $875k for a 102% gain.

Nice sidestep.

We were talking about the drop and now you are referring to the post crash gain? If Irvine dropped 28% or 36% using your extremes, what was Newport Beach's?

 

[irvinehomeowner]

I'm not sure why you keep trying to disparage my 2010 purchase.  First of all, you don't have enough detail to do so.  Secondly, I already told you what my objective in purchasing at that time was, and pricing was only the half of it.  Just because I could have waited and theoretically done even better, does not mean that there was not a sizable benefit to waiting longer than anybody else that purchased in the prior seven years in our area.

After we bought, I still tracked the market and there was only one other property that sold in our zip code prior to the bottom that I maybe would have been interested in.  Since I didn't tour the place I don't know for sure, but it had a larger lot size, and larger sq footage than ours, and sold for less.  It was also an REO and needed new windows, new exterior paint, and new landscaping.  Since the interior photos were limited, I don't know for sure what else it would have needed, but it definitely needed more work than the house I bought, which was one of the few turnkey, non-distressed sales that occurred during that time.  So even though prices on paper continued to slide, there may not have been a better deal than the one I got, once you factor for repairs/upgrades that were needed to make it both desirable and livable.

I'm not trying to disparage your 2010 purchase. I am actually using that to prove my point.

There are reasons why people buy when they do and it's not always at the optimum time. It all depends on their own scenario, what type of home they bought, etc etc.

In 2010, I'm sure there were people who were saying "wait"... data shows there was still more reduced prices to come (more than 5%) and history showed interest rates kept dropping. But... in your case... you did not and you had your reasons why. That's it.