Burn That Belly
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2018 Housing Prices, what are the indications?
- Thread starter shahshah
- Start date
NEW -> Contingent Buyer Assistance Program
The sub $800k market is hot right now, not just in Irvine but elsewhere in OC. There is a lack of inventory that is partially driving this.
I tend to agree with you. Unlike in 2007-2009 where real estate/debt markets was the thing that began to take the stock market down, I think this time it'll be the stock market that will bring down real estate/debt markets. Right now there is a chase for yield, including in the high yield debt market. Watch the high yield debt market for cracks first.
A lot of people complain about prices and inventory levels in Irvine, check out Pasadena, San Marino, South Bay, and West LA...it's even more crazy there in terms of higher prices, multiple offers on just able every home up to $2m, etc. We actually have it pretty good in Irvine because buyers can fall back on getting a new home if they can't find the right resale home....not the case in the other cities I've mentioned, those buyers are stuck battling it out in the resale world. Irvine home prices will pop once we get near the end of construction of new homes....mark my words.
Very true that many buyers love that new home smell. The reasons why I think we might get a pop in prices once new home construction comes to an end is because of 2 main reasons...1) new homes are today's shadow inventory like short sales and REOs were 5-8 years ago and is keeping home prices from accelerating faster and 2) many buyers start with resale homes and once they keep getting outbid and/or don't find what they are looking for, they'll get buyer's fatigue and fall back to buying a new home as their Plan B. In my eyes, it'll be a pure supply/demand dynamic that will cause that pop in prices. When I say pop, I don't mine 10-20%....it could very well only be 3-5%.
This is my view as well. You can even say that the fast pace selling of Baker Ranch supports this theory.
Why do then Chinese love San Marino, Arcadia, Pasadena, SF/Bay RE, and San Gabriel? Aren't homes there pretty old and mostly re-sales? Not much new construction other then few tear downs and rebuilt mini-mansions here and there. Pricing is ridiculous in these areas like $700+ /sqft.
USC this seams like the direct opposite of a pop. 1. If shadow inventory is gone (no new homes) then the inventory goes down and price goes up. 2. If a new home is a fall back and there are not any then that same buyer will need to up the price to get the home.
Also why do you think people prefer resale vs new?
The 2 items that I mentioned are contributing factors to my theory of pricing popping up a bit once we get closer to new homes being all sold out. Obviously it'll depend on where we are in the market in terms of the economy, job market, inflation, etc. that will drive prices one way or another.
Why do some people prefer resale versus new? There are several reasons that my clients give me...1) better "bang for the buck" meaning that once you had in upgrades and landscaping costs along with higher mello roos resale properties seems to be a better deal. 2) not having to wait 4-6 months to have to lock in your interest rate (i.e. having to be at the mercy of the mortgage market while in contract on a new home). 3) Wanting to see in a specific location/school where there aren't any new homes. 4) They prefer the older floor plans, established villages, and want lower HOA/Mello Roos.
Every buyer is different with different "must haves", "would like to haves, and "deal breakers" so it's my job to give them as many options as possible so that they can make the most informed home purchase decision possible. I do have some buyers who tell me...new home or bust...so obviously I don't send any time showing those folks resale properties.
I found that Baker Ranch was a great Plan B option for some of my buyers who wanted a bit more for their money than Irvine had to offer along with not having any Mello Roos. Some of those folks wanted to be close to Irvine but actually preferred not to send their children to Irvine schools.
At the end of the day, I think it'll be a supply/demand equation...with less/no new homes and the number of buyers being fairly constant you'll have rough the same number of buyers going after less homes which will push prices higher.
zubs
Well-known member
The 500,000 ~ 700,000 market is really heated up.
I went to an open house in Brea on the weekend for a 1500 sqft house built in 1985. It was listed at 675. I overhead the realtor reject a guy who wanted to buy the place for cash at the list price. Realtor said it'll go into bidding war.
Today I looked and the listing is gone.
If you're curious: 123 Cinnamon Ridge Road, Brea
I went to an open house in Brea on the weekend for a 1500 sqft house built in 1985. It was listed at 675. I overhead the realtor reject a guy who wanted to buy the place for cash at the list price. Realtor said it'll go into bidding war.
Today I looked and the listing is gone.
If you're curious: 123 Cinnamon Ridge Road, Brea
usctrojancpa
Well-known member
zubs said:
The sub $800k market is hot right now, not just in Irvine but elsewhere in OC. There is a lack of inventory that is partially driving this.
Hugo Township
Active member
Uh it's much more a function of what a lot of people actually make and the lack of new supply (in terms of SFH) in that price range
Burn That Belly
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usctrojancpa
Well-known member
Liar Loan said:
I tend to agree with you. Unlike in 2007-2009 where real estate/debt markets was the thing that began to take the stock market down, I think this time it'll be the stock market that will bring down real estate/debt markets. Right now there is a chase for yield, including in the high yield debt market. Watch the high yield debt market for cracks first.
The excesses right now dont feel like 2006-7 at all. junk bond market feels like the culprit each time, but talking to experts who work in that area, the problems are nowhere near what they were in 2006 (CDOs etc).
My biggest worry would be we get too much inflation without any additional growth to compensate for it -- it will be then that stocks will have to take notice and start falling
but 2018 will be another bumper year for housing - housing in fact is still lagging stocks -- if you are concerned about froth in Irvine housing market, you should be much more concerned about the equity markets
and FCBs get some blame but they are not the marginal buyer -- marginal buyer still is the family with young kids looking for good schools. if they continue feeling good about their job prospects and income potential, (most of them) will continue to look to own versus rent.
After all the new construction is all done, you will miss these days when you had so much choice available ...
My biggest worry would be we get too much inflation without any additional growth to compensate for it -- it will be then that stocks will have to take notice and start falling
but 2018 will be another bumper year for housing - housing in fact is still lagging stocks -- if you are concerned about froth in Irvine housing market, you should be much more concerned about the equity markets
and FCBs get some blame but they are not the marginal buyer -- marginal buyer still is the family with young kids looking for good schools. if they continue feeling good about their job prospects and income potential, (most of them) will continue to look to own versus rent.
After all the new construction is all done, you will miss these days when you had so much choice available ...
usctrojancpa
Well-known member
fortune11 said:
A lot of people complain about prices and inventory levels in Irvine, check out Pasadena, San Marino, South Bay, and West LA...it's even more crazy there in terms of higher prices, multiple offers on just able every home up to $2m, etc. We actually have it pretty good in Irvine because buyers can fall back on getting a new home if they can't find the right resale home....not the case in the other cities I've mentioned, those buyers are stuck battling it out in the resale world. Irvine home prices will pop once we get near the end of construction of new homes....mark my words.
qwerty
Well-known member
USC - while I generally agree with you on most things, not sure I agree with you on the pop in Irvine resale when new construction sells out. You may end up being right but I think part of the allure of irvine is the new construction home. People love new. When the new runs out I think irvine will lose a part of what draws people to it. The Chinese buyer has supported the new construction market in Irvine. And while people will always want to live in irvine, I wonder if buyers, the Chinese buyer in particular, will support the resale market the same way.
usctrojancpa
Well-known member
qwerty said:
Very true that many buyers love that new home smell. The reasons why I think we might get a pop in prices once new home construction comes to an end is because of 2 main reasons...1) new homes are today's shadow inventory like short sales and REOs were 5-8 years ago and is keeping home prices from accelerating faster and 2) many buyers start with resale homes and once they keep getting outbid and/or don't find what they are looking for, they'll get buyer's fatigue and fall back to buying a new home as their Plan B. In my eyes, it'll be a pure supply/demand dynamic that will cause that pop in prices. When I say pop, I don't mine 10-20%....it could very well only be 3-5%.
irvinehomeowner
Well-known member
3-5% is not a "pop". 
Irvine will always be in demand even when the new homes are done (which will be a while).
For those of us who have been in Irvine for the last few decades, even when there were very few new homes for sale, prices and demand were still high.
Irvine will always be in demand even when the new homes are done (which will be a while).
For those of us who have been in Irvine for the last few decades, even when there were very few new homes for sale, prices and demand were still high.
woodburyowner
Well-known member
qwerty said:
This is my view as well. You can even say that the fast pace selling of Baker Ranch supports this theory.
woodburyowner said:
Why do then Chinese love San Marino, Arcadia, Pasadena, SF/Bay RE, and San Gabriel? Aren't homes there pretty old and mostly re-sales? Not much new construction other then few tear downs and rebuilt mini-mansions here and there. Pricing is ridiculous in these areas like $700+ /sqft.
IrvineBug22
New member
USCTrojanCPA said:
USC this seams like the direct opposite of a pop. 1. If shadow inventory is gone (no new homes) then the inventory goes down and price goes up. 2. If a new home is a fall back and there are not any then that same buyer will need to up the price to get the home.
Also why do you think people prefer resale vs new?
usctrojancpa
Well-known member
IrvineBug22 said:
The 2 items that I mentioned are contributing factors to my theory of pricing popping up a bit once we get closer to new homes being all sold out. Obviously it'll depend on where we are in the market in terms of the economy, job market, inflation, etc. that will drive prices one way or another.
Why do some people prefer resale versus new? There are several reasons that my clients give me...1) better "bang for the buck" meaning that once you had in upgrades and landscaping costs along with higher mello roos resale properties seems to be a better deal. 2) not having to wait 4-6 months to have to lock in your interest rate (i.e. having to be at the mercy of the mortgage market while in contract on a new home). 3) Wanting to see in a specific location/school where there aren't any new homes. 4) They prefer the older floor plans, established villages, and want lower HOA/Mello Roos.
Every buyer is different with different "must haves", "would like to haves, and "deal breakers" so it's my job to give them as many options as possible so that they can make the most informed home purchase decision possible. I do have some buyers who tell me...new home or bust...so obviously I don't send any time showing those folks resale properties.
usctrojancpa
Well-known member
woodburyowner said:
I found that Baker Ranch was a great Plan B option for some of my buyers who wanted a bit more for their money than Irvine had to offer along with not having any Mello Roos. Some of those folks wanted to be close to Irvine but actually preferred not to send their children to Irvine schools.
At the end of the day, I think it'll be a supply/demand equation...with less/no new homes and the number of buyers being fairly constant you'll have rough the same number of buyers going after less homes which will push prices higher.
qwerty
Well-known member
That?s where we diverge. That the buyer pool will stay constant. Let?s assume new homes sellout tomorrow in Irvine. You have nearby baker ranch, tustin legacy has a decent amount of land left to go for new homes. Both of those alternatives are very close to irvine.
Resale?s are a hassle for the reasons you mentioned. Bidding wars, renovations, etc. I think irvine will lose some of those buyers to tustin legacy and baker ranch. Not sure what the actual alternatives would be when irvine actually stops building.
Watch when the next tustin legacy developement opens up. It?s going to sell fast because it will be new, cheaper than irvine and you get all of the benefits of living in Irvine (steam schools, district, marketplace, central location, safe, south coast plaza, spectrum)
Resale?s are a hassle for the reasons you mentioned. Bidding wars, renovations, etc. I think irvine will lose some of those buyers to tustin legacy and baker ranch. Not sure what the actual alternatives would be when irvine actually stops building.
Watch when the next tustin legacy developement opens up. It?s going to sell fast because it will be new, cheaper than irvine and you get all of the benefits of living in Irvine (steam schools, district, marketplace, central location, safe, south coast plaza, spectrum)