3000 The Plaza---Good Buy??

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OnTheFence_IHB

New member
Hello all,





I've been monitoring this blog for months and finally decided to sign up as a member. The information here is great and I really appreciate everyone's insight.





The reason I finally decided to sign up was because I'm seriously considering purchasing a unit at 3000 the Plaza on Jamboree and Campus. The building will be ready for move-in in about a year and half from now. The unit I'm considering is about $700k (w/ upgrades) for a one bedroom/2 bathroom. However, my points of concern are as follows:





1)the association fee is nearly $1k/ month-but it includes all utilities except electricity.


2) given the steady rise in interest rates over the past year or so, at this rate interest rates will rise sharply over the next 1.5 years, which will significantly impact my mortgage payment when I finally move in.


3) assuming the softening market continues, I'm not sure how much impact this will have on the value of the unit. This area of Irvine has so far been able to withstand the negative trends and has actually gone up 10% or so over the past year. Will the more expensive areas of Irvine continue to buck the downward pressure on prices?





Any thoughts on this building or the above points would be appreciated! Thanks in advance!
 
Uhh. I wouldn't buy at the current time. With regards to high rises, I don't have the numbers. But from reading the postings here. And they are somewhat reliable. It seems like some of these high rises aren't having many buyers.
 
Oh, I missed that. I thought you said 700k for 2 bedrooms and 2 baths. It's 1 bdrm and 2 b?!?! What the!!! Ok, may I politely ask you this? For 700k, you can probably get a nice SFR with 3 bdrm/ 2 bth with a nice yard for the dog and kids plus direct parking. Why would you prefer a high rise with 1 bd/2 b? Does the unit have a balcony so you can at least smell fresh air? And I don't mean to be mean here. Just curious as to your decision. Getting late. zzzzz
 
<p>OnTheFence - Congrats on joining the forums. If you search around I have posted several comments about the high rise condos in Irvine. Granted my comments may not shine a positive light on them but I do like them. Here are some facts about the high rise situation in Irvine.</p>

<p>Consider the fact that Marquee is 60% non-owner occupied and many of those are failed flippers who have are now renting them out. Last year I know of one that refi'd into an option arm so that the monthly payment was $3500 and it was rented out at $2300. Not only is that negative cashflow but it is negative equity as well. </p>

<p>Consider many of the people who bought at Marquee are mortgage people. I.E. Daniel Sadek and Ali Shah and both are hurting right now.</p>

<p>If you dig up some posts here you will read about how buyers at the Plaza wanted to bail but didn't want to walk away from the ridiculous deposits. I am sure many of those are on the market today and in fact I know they are if you dig up the posts.</p>

<p>Lennar is building Central Park West and well sales have been rather weak. They have a lot of units that need to be sold.</p>

<p>Consider in the airport area of Irvine there are 6000+ units that have already broken ground, have been approved or are in the approval process. Then there are the units in Costa Mesa that are in the works as well. Some of the builders have zero experience in building this type of product and I know of one that built this type of product in San Diego that regrets it. I doubt that half will ever make it a reality.</p>

<p>12 Units at the Plaza have been added to the inventory in the last 30 days.</p>

<p>This is a niche product in which the builders have not determined if that niche is here in OC.</p>

<p>I do think the product is very cool and could be very popular but not at the price they want. Reason makes a great point in that where is your money going? Do you have a SFR neighbor hood you like? Because if you do with the tax break you could get a lot more for your money. $1000 a month HOAs are not tax deductable.</p>
 
OnTheFence....welcome to the forum. I just recently toured these high rise condos and they are ridiculously over-priced in my opinion. I looked at two plans, a "C" and a "D", both between $1MM and $1.3MM and I have to admit they are quite small, b/w 1700 and 1900 sqft. The upgrades are great but you can also get those same upgrades, a bigger place, and all the same amenities at Columbus Grove in one of the Townhomes their for half the price.





I would save your money, wait two yrs, and see where the market goes....$700K for a glorified apartment is not where the wise money would go, but that is my two cents.
 
<p>Prior to moving to Irvine I lived in a high-rise condo in a large city with a growing market. I love the concept of high rise condo living, but the prices and HOA fees at this location are completely unsupportable. I've always held that condos should represent a value over single family homes, simply because you're only buying a share of common air space and not any land -- which makes up a significant, if not major, portion of the property cost. So, when you compare condo cost, to the cost of a SFR minus the value of its underlying land, it gives you an better sense of the outrageous premium the condo developers are asking. Of course, they say that the extra cost includes maintenance-free living and so forth; but that's charged additionally through your HOA fees anyway.</p>

<p>My thoughts -- Strongly consider the percentage that is owner occupied versus rented. High number of rentals will bring down your property price - it gives your building the appearance of a sinking ship. Responsible developers limit investor purchases to 10% of sales. When you start seeing 60-70% investors, its a really bad sign. Also consider the position in the building. Lower floors, or less than the best view, while less expensive, seem to be much less desireable in the resale market and will move more slowly when its time to sell. Also, HOA fees for a one-bedroom in that size of a property should not be more than $500. Ask for a copy of their proposed budget to get a sense of why their fees need to be so high and how those funds have been allocated. (i.e. long term maintenance, short term operations, etc.) It does not cost $100,000 a month to maintain a pool and gym. Finally, look at what's in the pipeline in the market. As mentioned above, there are thousands of these "faux-urban" units preparing to flood the market in this area that are already moving slowly. </p>
 
Forgot to add regarding your specific comments -- investigate long term rate locks. Wells Fargo had a one-year rate lock at one point, which you pay a small fee for, but in the face of rising rates, its good insurance. Just don't cut it to close to your estimated closing date. It's likely your closing will be at least 3-6 months later than they originally estimate. And, really look at the comparable market - my sense is that the area has not gone up 10%, but in fact, has fallen. Watermarke is down significantly; and Avenue One and Central Park West are both offering large incentives and upgrades (worth about 5-10%) to avoid lowering their prices.
 
<p>On The Fence,</p>

<p>Welcome to this forum. Many of the posters are really savvy in this Real Estates and Finance industry and their comments to you is correct. You will be making a big mistake if you choose to move forward with your purchase. This forum consists of both bulls and bears. The 2 opposing parties disagree on many subjects but both agree on bad karma regarding highrise residential in Irvine. </p>

<p>Some poster including me have lived in highrises in urban cities. Highrises in suburbia will fail. The community, transportation, and social structure do not support or enhance highrise lifestyle living. </p>

<p>People will only resort to highrise living only when single family detached properties are lacking.</p>

<p>Go to the previous topic "Who wants to live in Hi-Rise at the Plaza Irvine?" You will gain some additional insight. </p>
 
<p>On The Fence,</p>

<p>I am glad to see that you are thinking about the 3000 Plaza as someone who actually had experience with hi-rise living. Many of us do not have any experience with hi-rise living so what we say (good or bad) should not hold much water. I think we should be fair to people who had the courage to provide this type of product to our housing landscape. I am one of the listing agents at the Plaza, and I truly personally like the product.</p>

<p>I have not been back to visit the 3000 Plaza; however, I saw MLS listing at low $600K. Are you sure they are in the $700K? I do have 1 reservation, however constructive, about the 3000 Plaza as the pool on top of the building. For one - I think it will be very cold as it gets really windy up high. Secondly, being underneath water does not sound like good Feng Shui to me (a resale hindrance). Perhaps, 5000 or 8000 Plaza is a better choice as the association area is more spread and outdoory? Good luck with your decision.</p>
 
yikes! 1bedroom for 700k will make resale more than just a hindrance. it basically limits the resale market to single people that make a qtr-million dollars a yr. how many of those people are running around?


this ain't manhattan!
 
OnTheFence,





Welcome to our forum.





I think you know we are pretty bearish here, and I am particularly bearish on the pricing in these towers. Don't be alarmed about rising interest rates, it will make prices drop. Before you buy, I suggest you read this: <a title="Permanent Link to Your Buyer?s Loan Terms" rel="bookmark" href="http://www.irvinehousingblog.com/2007/05/07/your-buyers-loan-terms/" linkindex="6" set="yes">Your Buyer’s Loan Terms.</a>





The longer you wait, the cheaper prices will get, especially in these towers.
 
Something to consider. The Marquee towers down the street have a large percentage of units for re-sale or lease. If these 3 buildings are similar which I assume they are, your lender may require a larger down payment or have an appraisal review which may cut the appraisal value of the property.
 
<p>I don't know. Maybe it's just me. But the parking is just a big turn off for me. Imagine, early morning and I am trying to get out of the parking structure along with all my neighbors. </p>

<p>Ok, the <strong>only</strong> reason it would be a wise idea to buy high rise condos is if there's <strong>a scarcity</strong> of housing in Irvine. But from what I have heard, the builders are continuing to build more "traditional" homes. Look at Portola Springs, it hasn't sold out. Yet, the city of Irvine is anticipated to open the following villages: Orchard Hills, Woodbury East, Santiago Trails, Stonegate, Laguna Crossing, and Mountain Park. Each of these villages will have 4000 to 6000 homes. I forgot, Lennar is planning to build 9000+ homes in The Great Park. And this is just the city of Irvine. We haven't discussed about surrounding cities. </p>

<p>So apprarently, at the moment and near future. There doesn't seem to be a shortage of newly built homes. Not to mention older homes on the market. Hence, I don't see a reason to buy a high rise condo. This type of housing would best fit inner city like Los Angeles, New York City, etc. </p>
 
<p>Did you guys know that along with Irvine's high rises. The city of Costa Mesa is planning to have high rises and also Santa Ana also has in the work for 2 high rises near McArthur and Main. I think it's call "Skyline". :::::shaking my head::::: My gosh the amount of traffic and commuters coming out of one location. What is going on!</p>
 
Appreciate everyone's comments and insight. It puts everything in perspective. My thinking in purchasing a unit at 3000 is that the more affluent areas in LA/OC (and the one 3000 the Plaza is located in) will continue to rise or remain stagnant at worst. I figured that the more pricier neighborhoods in LA/OC area will not be impacted that much by a potential housing slump. It just seems that while prices in most other areas in LA/OC have fallen, prices in the more expensive areas have remained steady or in some cases have even gone up. Maybe certain areas of LA/OC are becoming more like the Manhattan's or London's of the world where prices go in only one direction, up!








But on the other hand, you guys are right, $1000 for HOA is excessive and perhaps the glut of new units in Irvine will negatively impact 3000 the Plaza prices. Only time will tell.





nIrvineRealtor---what's the price range of the units for sale at the Plaza that are for sale? Last time I checked they were around $30-$50k above the pre-construction prices for the 1325 sq. foot units.
 
Many of the cities are rushing to have the downtown status. Planning and zoning pretty much dictated the density of the chosen land parcels. Many builders and architects compete by designing and building the best products. Planners from different cities also compete to have the urban city status. City planners attend several Urban Land Institute conventions per years. This movement inspired many city planners from the suburb to set aggressive goal. The sibling rivalries between Irvine, Santa Ana, Costa Mesa, and Anaheim have been going on for many years.







Each claims to have the proper infrastructure to support the lifestyle of a downtown core living. Irvine currently has the Spectrum entertainment center mid rise office and airport core (technically the airport is really on Santa Ana land). Santa Ana has the governmental civic center and the historic downtown district similar to the scale of Old town Pasadena but light years away from having the success of the Pasadena retail and restaurant ambiance. Costa Mesa has the revenue of South Coast plaza and the Fairgrounds to send their planners to these city planning conventions. While Anaheim with the highest entertainment venues like Disneyland, Angel Edison Field, and the Old Arrowhead Pond now Honda Center. Each of the cities does not want to be left behind as a second class city. These suburbs are tired living in the shadow of Los Angeles.







This pattern of neighboring city rivalries also exists in the Bay area like San Jose, Santa Clara, Campbell, Fremont, Sunnyvale and Palos Altos. Likewise they are overshadowed by San Francisco.







The builders involved with these projects are public companies. Both Lennar and DR Horton are using much of the public share holder’s money for these risky endeavors. No private companies can afford these gambles. Even if these projects become a flop then chief of Lennar or DR Horton collect their hefty shares of the bonus and golden parachute out to another operation.







The economic just do not make sense. Unlike Manhattan or San Francisco where land prices is sky high everywhere a single family detached home or townhouse is priced several million dollars or 30 millions for a Park Avenue Townhouse while a high rise flat could be had for bargain of $800,000. The economic is reversed here in OC where a flat cost more than a SFD or a town home. Until we run out of SFD which we will not see within our lifetime high rise residential will not be successful here in OC. They are here only to satisfy the ego of the city SUB-urban planners. The high rise consumer demographic are DINK (double income no kid). Young trust fund bachelors, extinct twenty-something mortgage managers, and the aging late fifty year old baby boomers. Although these buyer segments do exist in OC but there are not enough of them to absorb the future inventory.







My marketing experience is valuable to predict the outcome. Prediction is often supported by history of similar projects that targeted the similar demographic. 15 years ago there was a project Metropolitan, an urban 4 story project over a podium garage by the airport. The target buyers were young urban professionals. Initial crowd who bought were indeed a good showing of these buyers. However, the maintenance free and resort lifestyle of this project attracted more aging seniors and widowers. They like the social companionship and the neighborhood watch program. The neighborhood watch was not for crime but for checking up on the safety of the elderly such as a heart attack or a fall in the bathtub. Pretty soon the fragrance of Ben gay lotion and sexy grandmas by the pool drove the younger and hip crowd away.







Living in a high rise with similar buyer demographics could result in the same fate as Metropolitan. As a marketing analyst, I stand behind my theory.










 
OntheFence - It might be prudent to reconsider the following statement, "I figured that the more pricier neighborhoods in LA/OC area will not be impacted that much by a potential housing slump. It just seems that while prices in most other areas in LA/OC have fallen, prices in the more expensive areas have remained steady or in some cases have even gone up. Maybe certain areas of LA/OC are becoming more like the Manhattan's or London's of the world where prices go in only one direction, up!"<p>

In particular see the blogs regarding the area known as Turtle Ridge, and check out the blog which includes the May sales data for zip 92603.<p>

Prices in the more affluent areas may be falling less quickly than the less affluent areas, but falling they are.
 
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