Bowing Out Gracefully from the Irvine Housing Market

NEW -> Contingent Buyer Assistance Program
test said:
USCTrojanCPA said:
I hate to say it, but quattroporte is in the minor of buyers in Irvine.  Irvine has 40%+ of transactions paid in all cash.  Then there are many buyers who put down 50%+ down.  Demand will decrease for sure, but it's all about supply and demand (use month's supply of homes on the market as a guide).
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I'm sure many in Irvine are breathing a sigh of relief now that the riff raff are "bowing out".  Maybe quattroporte can look into some of the affordable housing options - http://www.talkirvine.com/index.php/topic,2797.0.html
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test, I would love to respond to your comment, but I cant bring myself to stoop so "low". Reading your comment reminds me of a quote I once read.

?Never argue with an idiot. They will only bring you down to their level and beat you with experience. ? George Carlin"
 
quattroporte said:
Interest rates on non-conforming loans ~5%........ :'( 10 Year Yields touched 2.66 today.  :'(
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It sucks to see that the larger institutions and investors took most of the benefits/advantage of the lower rates and little ones always get screwed at the end.  First time buyers did not participate on this upside.  When the little lemmings start pouring into the market that's when it reaches the top, which seemed like it in the past 6 months.

I am actually little more concerned about the Chinese right now. Stock market crashed over 5% yesterday and reaching multi-year low.  If Chinese real estate market explode and illiquidity kicks in, then they might have sell real estate in the U.S. to meet creditor demand at home (just like the Japanese in the early 90s).  Hopefully, it will be a soft landing. 

I think/hopefully the rate will calm down in the summer.
 
Good read.
http://www.calculatedriskblog.com/2013/06/a-few-comments-on-house-prices-and-new.html

?Today?s Case-Shiller numbers may reflect where the housing market has been in some of the frothier metros, but they are not indicative of where it?s headed. The housing market worm has turned over the past few weeks ? inventory levels are beginning to show signs of easing, and mortgage interest rates are creeping up. Going forward, both of these factors will help mitigate extreme price spikes caused by very strong housing demand and very low housing supply,? said Zillow Chief Economist Dr. Stan Humphries. ?Runaway appreciation in many of the large, coastal metros that form the backbone of the Case-Shiller indices will begin to moderate. Home value appreciation in some of these areas will have to slow down, or potentially fall, as higher bottom-line prices are no longer masked by rock-bottom mortgage rates. In general, the national housing recovery is strong and sustainable, but pockets of volatility will emerge as local fundamentals shift. Buyers expecting home values to continue rising at this pace indefinitely may be in for a shock.?
 
@quattroporte.  I am in the same boat.  I have about 50% down payment, but since my wife does not have a job, I can't take a huge mortgage loan.  On top of that, the 1.5 property tax makes my head hurt.

However, I dont think the market will bust yet.  I know people are rushing to buy a house because they afraid that interest rate will go up higher. 

 
Quattro, you have a couple of options:

(1) get a cheaper house you can still afford in Irvine and still get 30-year fixed
(2) Get out of Irvine and buy in surrounding areas - e.g. RSM, Aliso Viejo, Mission Viejo, if you are looking for a house of a certain size, amenities etc.
(3) Get 7/1 ARM for the same value house in irvine - if you are buying to live in the house and not quickly resell it - why do you care if it drops in value down the road?
(4) Rent, if you are so risk-averse.  But you will be renting for a while...a long, long while. 

You need to make a decision what's more important to you: 30-year fixed or a house at a certain price point.  Clearly, you cannot have it both ways.  Another option is look outside Irvine, as I mentioned above. 

WHY buying IN Irvine is so important to you, anyway? 

...Waiting for the housing bust deja vu is really not a good plan, in my opinion.  However, it looks like you are prepared to be disappointed by your decision.
 
I just got this email from Redfin.

" Why The Market Is Looking Normal?

Howdy Redfinnians!

The Market's Cooling

The boom came on so fast and so strong this year that it was scary. Buyers this spring were like a bear that had hibernated for six years and finally woke up famished, eating everything in sight. Prices shot up at unsustainable rates.

That has begun to change. In the last 60 days, mortgage rates jumped from 3.4% to 4.5%. By the end of June, prices had risen 18.7% over last year, which really can't happen two years in a row. Rising prices and rising rates combined to increase the mortgage payment for a home by 33%.

And this has now given buyers a moment of pause. The market may keep rising but it will be at a more modest pace than we saw this spring; in some places prices will go up and down this winter.

The number of homes for sale has been increasing since April, which is also when bidding wars began to ease. Over the last seven days, the number of Redfin customers signing offers has declined by 25% from the average weekly rate in June. At the same time, 9% more people contacted us for the first time, so the changing market is still drawing buyers into the market, not just scaring them away.

Tales of Joy and Woe

How fast has the market shifted in buyers favor? Well here are a few examples:

In Washington DC, listing agents at other brokerages called last week to say our agents forgot to include an escalator clause in the offer, promising more money in a bidding war. We said no, we didn't forget: this is our final offer.

In LA, Redfin agent John Venti won three straight offers last weekend with no counter-offers or competition. "That hasn't happened," he said, "since December 2011."

But not everything has changed. Almost 70% of sales are still a bidding war.

In Boston, when Redfin agent Sandy Rosen lost out on a bidding war for a $600,000 Sudbury home, we stayed in touch with the listing agent. After negotiations over repairs stalled, the listing agent called us back and we snatched the deal away from the initial buyer.

In the Bay Area, where homes are selling for hundreds of thousands above the asking price, we've been winning deals not with the highest bid, but by promising the seller we've got enough cash to make up for any shortfall in the appraisal. Redfin's Jess Williams just beat out 28 other offers using this tactic on a $700,000 San Francisco listing.

The Return to Normalcy

Are we worried that the market is cooling? No. We were worried back in April, when we warned against a frothy market:

And there's one change that is about to come: rates will rise. In our survey of 1,100 home-buyers, 58% cited "low interest rates" as a primary reason for buying now, but mortgage bankers now expect rates to rise from 3.5% to 4.5% over the next year. When that happens, the frothiest markets could be in for a setback.

Buyers are still out in force, with inventory down 19% from last year, rates still 2 points below historical norms, and prices 26% south of their 2006 peak.

What has happened after six years of depression, and six months of manic bubbliness, is that we have returned at last to a normal market: you'll pay more now than you would have at the absolute bottom in late 2012, but there will be more -- and better -- homes to choose from, and a better chance of buying one.

That sounds like a good deal to us. What's your take on the market? Just leave a comment on our blog or on Facebook.

Best, Glenn

Glenn Kelman | CEO, Redfin"
 
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