5% interest rate

[irvinehomeowner]

@iacrenter:

TMI!!! (and I didn't ask for a screen cap)

 

[irvinehomeowner]

TIC isn't going to stop building homes. 

Here's an article that says they have more than once:
http://www.ocregister.com/articles/homes-108455-ocprint-projects-irvine.html

Mountain Park. About 2,500 homes on 3,001 acres in Anaheim Hills near the 91 freeway and the 241 toll road. Work was to begin in 2006.

East Orange. About 3,900 homes on about 6,900 acres surrounding Irvine Lake off the 241 in Orange. Work was originally expected to be completed by 2013.

Orchard Hills. About 4,300 homes located north of the Stonegate and Woodbury developments in Irvine. Work was to begin in 2008.

This doesn't include Stonegate, Laguna Altura and the east side of Portola Springs which were "stopped" at least 2 or 3 years.

 

[IndieDev]

TIC isn't going to stop building homes. 

Here's an article that says they have more than once:
http://www.ocregister.com/articles/homes-108455-ocprint-projects-irvine.html

Mountain Park. About 2,500 homes on 3,001 acres in Anaheim Hills near the 91 freeway and the 241 toll road. Work was to begin in 2006.

East Orange. About 3,900 homes on about 6,900 acres surrounding Irvine Lake off the 241 in Orange. Work was originally expected to be completed by 2013.

Orchard Hills. About 4,300 homes located north of the Stonegate and Woodbury developments in Irvine. Work was to begin in 2008.

This doesn't include Stonegate, Laguna Altura and the east side of Portola Springs which were "stopped" at least 2 or 3 years.

First off, there's a big difference between starting a major community, and not building homes. TIC built MANY homes in 2006-2007, in fact, many of them are for sale far below their originally listing price today.http://www.redfin.com/CA/Irvine/102-Mission-92620/home/12252960

Only one of those projects was supposedly stopped during the slump, Orchard Hills. There wasn't any weakness in the market until May or June in 2006, which was followed by a 6 month surge at the beginning of 2007. Most people didn't know there was a slump until the END of 2007. So their behavior isn't consistent if they're trying to "constrict" supply during down years.

The fact they are planning to release "11,000" homes when Irvine prices have hit the $330-$335 a square foot median mark (historical post-bubble low) just puts a finer point on it, their behavior doesn't really fit your theory.

As a side note, 11,000, and the Stonegate and Laguna Altura price points... I think TIC must see something I don't. I see a lot of homes that have never been lived in from 2010 and 2011 that are still languishing on the market, some for nearly 3 months.
http://www.redfin.com/CA/Irvine/63-Pathway-92618/home/39527777http://www.redfin.com/CA/Irvine/227-Mantle-92618/home/39544371http://www.redfin.com/CA/Irvine/31-Hallmark-92620/home/39544485http://www.redfin.com/CA/Irvine/51-DONOVAN-92620/home/35653538http://www.redfin.com/CA/Irvine/44-Donovan-92620/home/39538857http://www.redfin.com/CA/Irvine/60-Donovan-92620/home/39538248http://www.redfin.com/CA/Irvine/12-Upperbend-92618/home/28930379http://www.redfin.com/CA/Irvine/58-Full-Moon-92618/unit-26/home/39501136

 

[irvinehomeowner]

Only one of those projects was supposedly stopped during the slump, Orchard Hills.

Not necessarily true. Woodbury was supposed be built out prior to 2010 (there were models near Sonoma that CalPac never turned into a tract) and Portola Springs still has quite a ways to go... Prado never got built (the models went up in 2008 and then sold off as 3 homes) and was taken over by Las Colinas which still hasn't finished.

In addition, grading had already started on Stonegate and Laguna Crossings and then stopped.

There wasn't any weakness in the market until May or June in 2006, which was followed by a 6 month surge at the beginning of 2007. Most people didn't know there was a slump until the END of 2007. So their behavior isn't consistent if they're trying to "constrict" supply during down years.

The fact they are planning to release "11,000" homes when Irvine prices have hit the $330-$335 a square foot median mark (historical post-bubble low) just puts a finer point on it, their behavior doesn't really fit your theory.

I feel you are mixing topics a bit here. I was merely commenting that TIC has "stopped" building before. Whether or not they did so to "constrict supply" is not certain, but the timing seems more evident than you think it is. Just because "most people didn't know there was a slump until the END of 2007" doesn't necessarily mean that TIC didn't know one was coming... not starting Mountain Park and not finishing East Orange seems indicative that they had some clue.

And even if you only admit that Orchard Hills was "stopped"... that still more than none and speaks more to my point, that TIC can "stop" building if they wanted to.

 

[IndieDev]

But that's the debate isn't it? You say TIC stops building homes, but they don't. You can say they planned to do this or that, but none of the articles you've posted says why the projects were stopped. Did the builders decide it wasn't going to be profitable enough? Did TIC tell the builders to not build the homes? Could the builders even get funding to start Phase I of their projects making it a financing problem? It doesn't say. You're the one making the connection that it has something to do with TIC's behavior alone, all I'm asking if for you to prove it.

For example, why are they planning to release 11,000 homes now? That point alone sinks your entire theory.

I'm not flame baiting you, but you're presenting a theory to me that "TIC constrict supply of homes according to market conditions." Then you posted an article that TIC is planning to release 11,000 homes at a time when Irvine is hitting historical lows in price per square foot. 

You seem to want to convince me that your theory is sound but the reality seems to differ. All I'm asking for is a sound narrative that supports your theory.

 

[irvinehomeowner]

Since you've edited your post, let me address the edits:

First off, there's a big difference between starting a major community, and not building homes. TIC built MANY homes in 2006-2007, in fact, many of them are for sale far below their originally listing price today.http://www.redfin.com/CA/Irvine/102-Mission-92620/home/12252960

First off... for the developments back then... TIC only controlled new 'hoods or tracts... once a builder already purchased the land, the builder was the one building, not TIC. So, the homes being built in 06-07 were already planned by the builder and being finished out. For the projects where the builder  never started (past building the models), I am under the assumption that they went back to TIC and pulled out (aka The Lennar Maneuver).

As a side note, 11,000, and the Stonegate and Laguna Altura price points... I think TIC must see something I don't. I see a lot of homes that have never been lived in from 2010 and 2011 that are still languishing on the market, some for nearly 3 months.
http://www.redfin.com/CA/Irvine/63-Pathway-92618/home/39527777http://www.redfin.com/CA/Irvine/227-Mantle-92618/home/39544371http://www.redfin.com/CA/Irvine/31-Hallmark-92620/home/39544485http://www.redfin.com/CA/Irvine/51-DONOVAN-92620/home/35653538http://www.redfin.com/CA/Irvine/44-Donovan-92620/home/39538857http://www.redfin.com/CA/Irvine/60-Donovan-92620/home/39538248http://www.redfin.com/CA/Irvine/12-Upperbend-92618/home/28930379http://www.redfin.com/CA/Irvine/58-Full-Moon-92618/unit-26/home/39501136

I agree. But that was also the case when they started the 2010 Collection. Villa Rosa was not finished (I think they were in their 3rd year) and Portola projects were not done either... but they still went ahead with it... which interestingly enough... seemed to help close out those existing projects (I've posted somewhere else about the Obsolescence Phenomenon where people will buy other products because the new products don't have the features they want).

They haven't even started San Marino in Woodbury yet but are already opening these two new 'hoods... AND are planning on Cypress Village in June (which I think might be hedge depending on what happens with SG and LA). They must have some data that says it's okay to sell these projects (probably their "Interest" and "Priority Registration" lists) and like I've said before, the upcoming Great Park project may have something to do with it.

But again... if the economy stalls hard enough, I feel they have ability to mothball Cypress Village and cut back on both Laguna Altura and Stonegate.

But that's the debate isn't it? You say TIC stops building homes, but they don't. You can say they planned to do this or that, but none of the articles you've posted says why the projects were stopped. Did the builders decide it wasn't going to be profitable enough? Did TIC tell the builders to not build the homes? Could the builders even get funding to start Phase I of their projects making it a financing problem? It doesn't say. You're the one making the connection that it has something to do with TIC's behavior alone, all I'm asking if for you to prove it.

Hold. The point is they STOPPED the projects... which you said they haven't. You're the one who want to see a solid line between point A and point B... I'm just saying that there could be one because the ability to draw it exists. I've never said that it's TIC's behavior alone (look at previous posts where other builders did their own pull outs)... what I did say is that because on these upcoming projects, TIC is the sole developer/builder... they have the sole authority to do so... and based on what they've done in the past on stopping new projects, evidence exists (in my opinion) that they will if needed.

For example, why are they planning to release 11,000 homes now? That point alone sinks your entire theory.

That article doesn't say they are planning to release 11,000 homes now:

Start times for those developments will be determined by market demand, a company spokesman said.

In your zeal to disprove my theory, your reading skills lost a wheel. Maybe you meant to say 1100... since Stonegate will have 650 in Phase 1 and Altura will have 596 (but then that puts your math skills at risk ).

I'm not flame baiting you, but you're presenting a theory to me that "TIC constrict supply of homes according to market conditions." Then you posted an article that TIC is planning to release 11,000 homes at a time when Irvine is hitting historical lows in price per square foot. 

You seem to want to convince me that your theory is sound but the reality seems to differ. All I'm asking for is a sound narrative that supports your theory.

You're asking for solid proof and yet seem to miss all the different things I've been citing regarding TIC projects in the past. It doesn't jive with what you want to believe so you choose not to accept the data I'm presenting. And while that's fair, you have the right to your opinion, more here agree with what I'm saying than what you are so it's not like I'm presenting some Icicle Gun Murder theory.

And again... you misread the article and my point.... it wasn't "TIC is planning to release 11,000 homes", it was "TIC put 11,000 homes on hold"... which speaks back to why I originally posted it... to show you that TIC can and has "stopped building".

 

[IndieDev]

I agree. But that was also the case when they started the 2010 Collection. Villa Rosa was not finished (I think they were in their 3rd year) and Portola projects were not done either... but they still went ahead with it... which interestingly enough... seemed to help close out those existing projects (I've posted somewhere else about the Obsolescence Phenomenon where people will buy other products because the new products don't have the features they want).

They haven't even started San Marino in Woodbury yet but are already opening these two new 'hoods... AND are planning on Cypress Village in June (which I think might be hedge depending on what happens with SG and LA). They must have some data that says it's okay to sell these projects (probably their "Interest" and "Priority Registration" lists) and like I've said before, the upcoming Great Park project may have something to do with it.

But again... if the economy stalls hard enough, I feel they have ability to mothball Cypress Village and cut back on both Laguna Altura and Stonegate.

Again, I say the economy is pretty stalled. Irvine is at the post-bubble low per square foot, and they are building out 4 neighborhoods? This alone blows your theory out of the water. If your theory was reality, TIC would mothball Laguna Altura wouldn't they?

In your zeal to disprove my theory,

I'm not trying to disprove your theory, I'm trying to get you to prove it. If what you're saying is true about the market, as an investor, I would want to find the truth which has been lacking in the real estate market for many years. You just haven't put up a convincing argument, so it's hard to believe what you say from a market perspective. I don't make financial decisions based on unsound theory.

I'm just saying that there could be one because the ability to draw it exists.

Except for the fact that TIC's current behavior is the reverse of what you're presenting.  ???

So you're not really saying anything at all. TIC could have stopped the projects due to market conditions, but then again, you don't fully throw all your eggs into that basket, it's just a possibility, like life on mars is a possibility. 

Why are we having this debate again?

In the end, if you think TIC is going to constrict supply to maintain prices, why are you still sitting on the fence? You won't be able to get a 3 car garage in your price range, it seems logical that you should be set to jump in now to buy a home since prices on Irvine homes won't drop because of TIC's control on supply according to your theory.

You can say that people subscribe to your theory, but when you're not even subscribing to it yourself, it's pretty damning evidence that it's probably just hot air.

 

[irvinehomeowner]

Again, I say the economy is pretty stalled. Irvine is at the post-bubble low per square foot, and they are building out 4 neighborhoods? This alone blows your theory out of the water. If your theory was reality, TIC would mothball Laguna Altura wouldn't they?

I agree with you about the economy... but the 2010 Collection has show that there is an interest (or demand) in Irvine that belies the fundamentals of economics (well... economics that I understand).

A "post bubble low per square foot" could also be translated as a "pre bubble high per square foot" can it not? In other words... while prices may seem low compared to the height of the bubble... they are also much higher than they were during your self described "healthy" era of the 90s. And with TIC cutting out the middle man... does that not translate into more profit? Quite simply put... if the demand is there, and we can make money on it... why mothball when you can build?

I'm not trying to disprove your theory, I'm trying to get you to prove it. If what you're saying is true about the market, as an investor, I would want to find the truth which has been lacking in the real estate market for many years. You just haven't put up a convincing argument, so it's hard to believe what you say from a market perspective. I don't make financial decisions based on unsound theory.

Maybe you misunderstand my posts as expert advice in investing. They are not. I am not an expert, financial analyst, broker, real estate agent or otherwise... just someone who lives in Irvine and is talking about theories of how Irvine's prices seem to be more stubborn than other cities. I'm not asking you to invest in Irvine real estate... in fact, as I've said many times before... buy to live... not to invest.

I'm just saying that there could be one because the ability to draw it exists.

Except for the fact that TIC's current behavior is the reverse of what you're presenting.  ???

As I explained above, I don't really see TIC's behavior as the reverse as what I'm saying. They see a demand, can make more money, even if it's post-bubble low (which is still high to me), can ramp up quicker than competitors and can ramp down if things go south... seems like little risk to me. What would you do if you were in TIC's position? Prices in Irvine are still higher than surrounding cities... so why not take advantage of it now before some mortgage limit get lowered or rates go higher? And if they do.... then just scale back again... like BEFORE.

So you're not really saying anything at all. TIC could have stopped the projects due to market conditions, but then again, you don't fully throw all your eggs into that basket, it's just a possibility, like life on mars is a possibility. 

Ahh... maybe now you are getting it. Although I'm not understanding where you are seeing me not throw all my eggs into the basket. As with any theory, there is room for uncertainty (BTW: Current life on Mars is probably less possible than TIC slowing down projects if the demand goes drastically south).

Why are we having this debate again?

Boredom?

In the end, if you think TIC is going to constrict supply to maintain prices, why are you still sitting on the fence? You won't be able to get a 3 car garage in your price range, it seems logical that you should be set to jump in now to buy a home since prices on Irvine homes won't drop because of TIC's control on supply according to your theory.

Ahh... maybe this is also a point of your confusion. You are trying to equate my own decision to purchase with my theory of sticky prices in Irvine. Those two really aren't that related. My decision to buy is based on how much I want to spend, where I want to live and what kind of home. While price stickiness is nice... I'm more concerned about those other things. I am willing to buy now even if prices do drop further... I just don't want to spend above my limit.

You can say that people subscribe to your theory, but when you're not even subscribing to it yourself, it's pretty damning evidence that it's probably just hot air.

We've made offers on two homes that did not pan out. I think that's evidence enough that we are serious about buying.

And hot air or not... do you have any other explanation for TIC's actions?

 

[test]

In the end, if you think TIC is going to constrict supply to maintain prices, why are you still sitting on the fence? You won't be able to get a 3 car garage in your price range, it seems logical that you should be set to jump in now to buy a home since prices on Irvine homes won't drop because of TIC's control on supply according to your theory.

Ahh... maybe this is also a point of your confusion. You are trying to equate my own decision to purchase with my theory of sticky prices in Irvine. Those two really aren't that related. My decision to buy is based on how much I want to spend, where I want to live and what kind of home. While price stickiness is nice... I'm more concerned about those other things. I am willing to buy now even if prices do drop further... I just don't want to spend above my limit.

irvinehomeowner has decided to buy in Columbus Square.  The 3CWG is simply too irresistable.

 

[IndieDev]

I agree with you about the economy... but the 2010 Collection has show that there is an interest (or demand) in Irvine that belies the fundamentals of economics (well... economics that I understand).

It does, and it will be interesting to see if that can be sustained in 2011. I feel "pent up" demand and gov't cheese were big factors in 2009-2010 that you are missing from your equation.

A "post bubble low per square foot" could also be translated as a "pre bubble high per square foot" can it not?

No, because you brought up 2006-2008 as years where TIC drew back, and the market was HIGHER during those times with the exception of the early part of 2009 (where it was equal) compared to 2011. It kind of sinks your point either way. 

Maybe you misunderstand my posts as expert advice in investing. They are not. I am not an expert, financial analyst, broker, real estate agent or otherwise...

Not being sharp with you, but I never misunderstood your post as investment advice. I'm simply trying to get you into the frame of mind where you prove or back up your theories with reality. That's how people make good financial decisions.

You are trying to equate my own decision to purchase with my theory of sticky prices in Irvine.

No, completely off. I'm saying if you feel TIC's control of the market is that stacked in their favor, you shouldn't wait because you're not going to get a 3CG in your price range with current prices, so you might as well buy what you can afford.

We've made offers on two homes that did not pan out. I think that's evidence enough that we are serious about buying.

That's not what I am talking about.  You commented previously that you're waiting for prices in QH to drop. But if TIC really has control of the market like you claim, then they can manipulate it through supply, so prices won't drop. See, your left hand is saying something your right hand doesn't agree with.

And hot air or not... do you have any other explanation for TIC's actions?

TIC wants to make money. That's why they're building lots of homes right now in a down market despite your theory. TIC knows they can't control or effect overall inventory (including shadow) to any degree like you are trying to claim, so they are selling their product at the price they believe it will move.

 

[irvinehomeowner]

I agree with you about the economy... but the 2010 Collection has show that there is an interest (or demand) in Irvine that belies the fundamentals of economics (well... economics that I understand).

It does, and it will be interesting to see if that can be sustained in 2011. I feel "pent up" demand and gov't cheese were big factors in 2009-2010 that you are missing from your equation.

I feel those are factors too, but remember... for a large portion of the homes that sold last year (1/3 to 1/2) they did not qualify for the cheese.

A "post bubble low per square foot" could also be translated as a "pre bubble high per square foot" can it not?

No, because you brought up 2006-2008 as years where TIC drew back, and the market was HIGHER during those times with the exception of the early part of 2009 (where it was equal) compared to 2011. It kind of sinks your point either way. 

You're very good at skewing what I say to fit your viewpoint... but you are missing some things. While 06-08 $/sft may have been higher, you admitted yourself that people did not know the bubble popped until the END of 07, so those prices are going to stay high for a bit. In addition, I believe volume of sales dropped during those years, so even if prices were higher... builders weren't selling enough units which is part of why they stopped (and I see now that you do admit TIC did stop   ). They weren't selling 1200 homes per year back then and again... they were not the builder on the majority of the projects so their profit was not as high. Do you not recognize that difference?

Not being sharp with you, but I never misunderstood your post as investment advice. I'm simply trying to get you into the frame of mind where you prove or back up your theories with reality. That's how people make good financial decisions.

Still not seeing what you're getting at. I've provided historical data and current data that brings me to my theory... that is the reality.

And you are mixing up the financial decisions of TIC with the financial decisions of homebuyers... those can't be directly equated.

You are trying to equate my own decision to purchase with my theory of sticky prices in Irvine.

No, completely off. I'm saying if you feel TIC's control of the market is that stacked in their favor, you shouldn't wait because you're not going to get a 3CG in your price range with current prices, so you might as well buy what you can afford.

As I said above, what my view of how TIC can weather falls in demand/pricing and what I decide to buy are not in sync. The question at large that started this was how rising rates will cause downward pressure in pricing. I merely added that reducing supply can also affect pricing.

How that relates to what I want to buy doesn't really belong here (and you are the one who brought it in). Regardless of what TIC can do to stabilize their own business is not a reason why I would decide to buy now or later.

We've made offers on two homes that did not pan out. I think that's evidence enough that we are serious about buying.

That's not what I am talking about.  You commented previously that you're waiting for prices in QH to drop. But if TIC really has control of the market like you claim, then they can manipulate it through supply, so prices won't drop. See, your left hand is saying something your right hand doesn't agree with.

Again... I've never talked about absolutes. What I have said is they can possibly help reduce the downward pressure by limiting supply (as can resale owners), that may not STOP drops... but instead of a directly proportional drop to factors such as rising rates... they can reduce it to a percentage factor (ie instead of 20% drop... a 5% or 10% drop).

I still think you are mixing up my decision to buy with price stability. We are buying based on affordability... and if it's not affordable (which it is not) we either have to compromise or buy elsewhere. I am confident enough to buy in Irvine now, it's just not a price I want... that's not left hand vs. right hand. And if you say prices will not drop (which is NOT what I have said... I still expect 5-10%), that's what is keeping me from buying, not my theory.

And hot air or not... do you have any other explanation for TIC's actions?

TIC wants to make money. That's why they're building lots of homes right now in a down market despite your theory. TIC knows they can't control or effect overall inventory (including shadow) to any degree like you are trying to claim, so they are selling their product at the price they believe it will move.

If that's the case... why would they stop building? You claim they haven't, but I've shown you they have. Seems like you have more to prove than I do.

 

[IndieDev]

This is a waste of time. You're making claims that 50% of Irvine homes didn't qualify for gov't cheese in 2009-2010 (completely false), and claiming the volume of sales has dropped in this time period, and not this time period, without any actual numbers to back up those claims. This claim right here almost made me just close my browser:

Again... I've never talked about absolutes. What I have said is they can possibly help reduce the downward pressure by limiting supply (as can resale owners), that may not STOP drops... but instead of a directly proportional drop to factors such as rising rates... they can reduce it to a percentage factor (ie instead of 20% drop... a 5% or 10% drop).

Do you realize the type of market collusion you're describing here? It's simply impossible. Resale owners and TIC cannot collude to stop price drops in the face of market fundamentals. Your point above makes as much sense as a unicorn pooping cupcakes, and it shows painfully how bad your understanding of economic fundamentals is. Seriously, take a freshman course in Macro and Micro economics at IVC, and come back in 3 months and read your post again. You will be utterly shocked at how misinformed it is.

When I get into discussion like this in real life, it's called "water cooler discussion". The people usually engaging in it don't have much knowledge about markets or economics, and it's not productive or useful for me.

The simple fact is your theory is wrong.

You've tried to claim that TIC can stop building at will to stabilize prices. You've claimed that Orchard Hills, PS, and numerous other communities were stopped (11,000 homes) in 2006, 2007, 2008 since the market tanked.

Okay, if they did stop building 11,000 homes to stabilize prices, and TIC has the type of control you claim they have over supply and prices, then why did prices tank in Irvine by 20%-30% from 2006-2009?  ??? Why isn't Sevilla in PS selling at $400+ a square foot like Woodbury was 3 years ago? It seems if TIC was indeed following your strategy, they left a lot of cheese on the table in 2006-2009 by doing it, just to try and build those same homes in a weaker market, and whoever pushed that business strategy is probably looking for another job since it cost TIC hundreds of millions of dollars in revenue.

Why is TIC planning to build over 1,200 homes in a down market, almost double the existing inventory?  ???

You see this is why this discussion is pointless because you simply can't even (or choosing not to) address those damning points against the case you are presenting. It's why fundamentals (my case)  trump water cooler discussion (your theory).

 

[venkat]

hmm... :

 

[irvinehomeowner]

This is a waste of time. You're making claims that 50% of Irvine homes didn't qualify for gov't cheese in 2009-2010 (completely false), and claiming the volume of sales has dropped in this time period, and not this time period, without any actual numbers to back up those claims.

Is it completely false? I said 1/3 to 1/2 because while I can be certain 1/3 did not qualify based on sales price alone, there is a portion that did not qualify for various reasons such as income, timing and plain not applying for the credits. Wasn't June the expiration date? So for the second half of the year, how many of those homes qualified for the credits?

This claim right here almost made me just close my browser:

Again... I've never talked about absolutes. What I have said is they can possibly help reduce the downward pressure by limiting supply (as can resale owners), that may not STOP drops... but instead of a directly proportional drop to factors such as rising rates... they can reduce it to a percentage factor (ie instead of 20% drop... a 5% or 10% drop).

Do you realize the type of market collusion you're describing here? It's simply impossible. Resale owners and TIC cannot collude to stop price drops in the face of market fundamentals. Your point above makes as much sense as a unicorn pooping cupcakes, and it shows painfully how bad your understanding of economic fundamentals is. Seriously, take a freshman course in Macro and Micro economics at IVC, and come back in 3 months and read your post again. You will be utterly shocked at how misinformed it is.

Do you take everything you read on the Internet so seriously? Just like people who propose rising rates will affect affordability and thus create downward pressure on pricing, am I not allowed to throw in a theory about lower supply also affecting this equation?

Go back and read my posts and point out where I said there has to be collusion between resale sellers and TIC. I never claimed such an arrangement. All I said is that we should consider the possibility that resale owners will hold back product because they are less underwater than others and that they will try to match their pricing to be inline with new developments to maximize gains... again no absolutes.

And remember, you already agreed that there is something non-fundamental going on here as to explain Irvine stickiness. I'm just proposing things that could be a factor. No one is going to live and die by my words here.

When I get into discussion like this in real life, it's called "water cooler discussion". The people usually engaging in it don't have much knowledge about markets or economics, and it's not productive or useful for me.

The simple fact is your theory is wrong.

As much as you claim that I haven't proven it... you haven't proven it false either. Nor have you come up with your own explanation as to why prices are still bubbly in Irvine... so maybe your own theories are just as water cooler as mine.

You've tried to claim that TIC can stop building at will to stabilize prices.

Actually... the claim was that TIC can stop building more easily because they are both the land owner and builder. Then I also said that it's possible that a reduction in supply may help alleviate downward pressure on prices. It was other posters who actually made the above claim on this thread.

You've claimed that Orchard Hills, PS, and numerous other communities were stopped (11,000 homes) in 2006, 2007, 2008 since the market tanked.

I was not the only one to claim this. The OC Register printed an article about it. I did not even know about the one of those non-Irvine communities until today.

Okay, if they did stop building 11,000 homes to stabilize prices, and TIC has the type of control you claim they have over supply and prices, then why did prices tank in Irvine by 20%-30% from 2006-2009?  ??? Why isn't Sevilla in PS selling at $400+ a square foot like Woodbury was 3 years ago? It seems if TIC was indeed following your strategy, they left a lot of cheese on the table in 2006-2009 by doing it, just to try and build those same homes in a weaker market, and whoever pushed that business strategy is probably looking for another job since it cost TIC hundreds of millions of dollars in revenue.

Again... I don't think TIC stopped building to stabilize prices, they stopped developing new communities so that existing ones could finish out because the economy was tanking and sales were dropping. Did you not read where I spoke about number of units? Just because 10 units could sell at $400/sf, do you think 100 could? And, again... TIC wasn't the primary builder back then... now they are, so even though their $/sft is lower, most likely their profit is the same or higher (I believe cutting out the middle man helps in that regard). But again... you're the econ expert... not me.

Why is TIC planning to build over 1,200 homes in a down market, almost double the existing inventory?  ???

At least you've adjusted your figures here. And your guess is as good as mine but I've laid out some reasons:
- They must know there is still demand for new homes because they are still selling out at certain product levels
- They hope to repeat the success of 2010 by opening up more premium locations like Altura
- They must think that with rates rising and maybe new limits for jumbo loans will make people jump into the pool like the gov cheese did
- And... because they can stop building if they want to? 

You see this is why this discussion is pointless because you simply can't even (or choosing not to) address those damning points against the case you are presenting.

Are we reading the same threads? I think I've addressed every point you put forth... even quoting them.

On the other hand, you have yet to say:

1. "Yeah... okay... TIC did stop building... my bad."
2. "Ooops, I did misread that OCRegister article."

It's why fundamentals (my case)  trump water cooler discussion (your theory).

Yet... non-fundamentals still cause bubbles despite fundamentals.

Still waiting for your fundamental explanation of why Irvine's $/sft is still much higher than surrounding cities when you say it shouldn't be. As much as people like to point at low interest rates and gov intervention... it's not like that was only in Irvine.

Anyways... you seem frustrated and I apologize if I'm making you close your browser... but I do appreciate the discussion... contention is informative (at least to me).

 

[iheartdebt]

IndieDev, curious, how were you able to get the links for the 3 homes listed on Donovan?  I tried searching via the map on RedFin and those didn't appear for me.  Also, Donovan isn't showing on the online map sites (and in the links for the homes, they are showing up near city hall)!  Thanks.

As a side note, 11,000, and the Stonegate and Laguna Altura price points... I think TIC must see something I don't. I see a lot of homes that have never been lived in from 2010 and 2011 that are still languishing on the market, some for nearly 3 months.
http://www.redfin.com/CA/Irvine/63-Pathway-92618/home/39527777http://www.redfin.com/CA/Irvine/227-Mantle-92618/home/39544371http://www.redfin.com/CA/Irvine/31-Hallmark-92620/home/39544485http://www.redfin.com/CA/Irvine/51-DONOVAN-92620/home/35653538http://www.redfin.com/CA/Irvine/44-Donovan-92620/home/39538857http://www.redfin.com/CA/Irvine/60-Donovan-92620/home/39538248http://www.redfin.com/CA/Irvine/12-Upperbend-92618/home/28930379http://www.redfin.com/CA/Irvine/58-Full-Moon-92618/unit-26/home/39501136

 

[IndieDev]

IndieDev, curious, how were you able to get the links for the 3 homes listed on Donovan?  I tried searching via the map on RedFin and those didn't appear for me.  Also, Donovan isn't showing on the online map sites (and in the links for the homes, they are showing up near city hall)!  Thanks.

As a side note, 11,000, and the Stonegate and Laguna Altura price points... I think TIC must see something I don't. I see a lot of homes that have never been lived in from 2010 and 2011 that are still languishing on the market, some for nearly 3 months.
http://www.redfin.com/CA/Irvine/63-Pathway-92618/home/39527777http://www.redfin.com/CA/Irvine/227-Mantle-92618/home/39544371http://www.redfin.com/CA/Irvine/31-Hallmark-92620/home/39544485http://www.redfin.com/CA/Irvine/51-DONOVAN-92620/home/35653538http://www.redfin.com/CA/Irvine/44-Donovan-92620/home/39538857http://www.redfin.com/CA/Irvine/60-Donovan-92620/home/39538248http://www.redfin.com/CA/Irvine/12-Upperbend-92618/home/28930379http://www.redfin.com/CA/Irvine/58-Full-Moon-92618/unit-26/home/39501136

You won't find Donovan street listed on Redfin because Google Maps hasn't inputted the street into their map data. So the only way to get to Donovan is to look at the center of Irvine as determined by Google Maps, somewhere right around Irvine Civic Center.

 

[usctrojancpa]

Looks like we are back down to 4.875% from all the unrest in the Middle East.

 

[irvinehomeowner]

You say TIC stops building homes, but they don't.

Just to give you someone else's point of view since you don't agree with mine, even Larry from the IHB says this:
http://www.irvinehousingblog.com/bl...eak-down-18.6-last-year-down-11.1-last-month/

I reported last week that Irvine Company opens two new developments with 2,600 houses. Since they are the near monopolistic leader of the Orange County oligopoly on residential real estate, they operate differently than the opportunistic builders.

When prices started weakening in early 2007 and the volume dried up, the Irvine Company refused to lower its land sales price, so construction stopped. Very few homes were built in 2007 or 2008, and there were no regular production runs. So while homebuilders in the rest of the country continued to build, albeit fewer and fewer homes, the Irvine Company and its associated builders on the Ranch simply stopped.

So now while the builders are hitting bottom in sales volumes around the country, the Irvine Company has some unmet demand for new homes which it is now gearing up to meet. To continue to function as a price-leader, it must continue to maintain a scarcity of product. When there was little demand, no supply was offered. Now that there is a little demand, the Irvine Company will deliver enough product to meet some of this demand while trying to maintain their price points. Like every other builder, they are hoping lenders can resolve their shadow inventory problem without upsetting the supply shortage that keeps prices above a natural equilibrium.

You need to comment on the IHB and tell them how TIC doesn't stop building.

 

[IndieDev]

the Irvine Company refused to lower its land sales price, so construction stopped.

Thank you for proving my point. TIC didn't do what you claimed they did:

they will constrict supply to keep prices high

Someone on their business team royally f***** up and left a lot of cheese on the table in 2007-2009 because he/she didn't understand the market and soured the deal for builders, so construction stopped. Now the 2010 collection is selling for $100,000+ under those price points from 2007. TIC claimed they sold over 1,000 homes in 2010. You multiply that "pent up demand" by the difference in 2007 and 2010 price points and figure out much was left on the table.

Unwittingly you've just sunk your own premise. 

 

[irvinehomeowner]

the Irvine Company refused to lower its land sales price, so construction stopped.

Thank you for proving my point. TIC didn't do what you claimed they did:

they will constrict supply to keep prices high

Wow... you really only read what you want to read.

First, you are taking that snippet of my post out of context.

Here is the full post of what I wrote and it was to address what strategy TIC could be doing going forward (in my opinion):
http://www.talkirvine.com/index.php?topic=1455.msg17276;topicseen#msg17276

You also need to remember that it will not help TIC if they provide endless product at a price point that severely undercuts their recent products... instead... they will constrict supply to keep prices high or find a way to convince the buyers that they should pay a premium for their product (ie Gated Community).

And considering that IR said:

"When prices started weakening in early 2007 and the volume dried up, the Irvine Company refused to lower its land sales price, so construction stopped."

I don't know about you, but that sounds like TIC trying to keep prices high.

But more to the point, I posted that because this is ultimately what you said:

3) Your point is already based on a false premise, that TIC would completely stop building homes. I've looked back to 1998, and there isn't a single year from 1998-2011 where TIC wasn't building homes. It simply hasn't happened for over a decade on the incline, or the decline. So your point about "TIC can simply stop building" doesn't seem to pan out, it's a has been an integral part of their business for over a decade.

Do you still think TIC did not stop building homes? Regardless of the reason... it seems like they did.

Someone on their business team royally f***** up and left a lot of cheese on the table in 2007-2009 because he/she didn't understand the market and soured the deal for builders, so construction stopped. Now the 2010 collection is selling for $100,000+ under those price points from 2007. TIC claimed they sold over 1,000 homes in 2010. You multiply that "pent up demand" by the difference in 2007 and 2010 price points and figure out much was left on the table.

Unwittingly you've just sunk your own premise. 

I've already explained this... there was no cheese left on the table because there wasn't enough demand.

And while $/sft is less now... they are probably making more now than they have back then because they are both the land owner AND the builder.

Isn't there some econ theory about cutting out the middle man to increase profits?

Let's put it simpler:

Villa Rosa was selling for $1m+ from 2007-2010, how much did TIC make off that?
TIC sold more homes in 2010 (in just one tract) than Villa Rosa did those 3 years... how much did TIC make off that?

Even with 20/20 hindsight, would you use the HotTubTimeMachine and go back to 2007 and tell TIC to keep selling land and a smaller profit to builders who couldn't sell homes or tell them to wait until 2010 and sell them without the builders and make even more?

Again... maybe I just don't understand economics.