Could Irvine turn into the Beverly Hills of Orange County?

NEW -> Contingent Buyer Assistance Program
[quote author="CK" date=1242914649][quote author="tmare" date=1242904542]Please stop........this thread is making me crazy.</blockquote>


Seriously tmare and madonna....if it is driving you so crazy then don't read it. These are valid questions being asked here, by people who are actually wanting to buy a home in Irvine. Nobody is arguing with you that we think prices SHOULD fall, and we WANT them to fall. The problem is, many of us really want to live in Irvine, and have been waiting for a very long time for this big event to happen which is going to drop prices in Irvine to 3.5 times income fundamentals. Four years I have been waiting for this event to happen --- and in four years prices are down, what, 10-15%? BFD. Hell, my sister has a townhouse in the dull suburbs of Minneapolis that is down 10%. You want to see the money --- we want to see it too. We are sitting here watching places like Santa Ana, the IE, Ladera (I could go on and on) drop 30%, 50%, even 75% ---- but where are the drops in Irvine?? Can you blame people who actually want to buy in this city for asking the question, and trying to figure out an explanation (logical or not) for why Irvine is holding so well?



You say "show me the income". Maybe it can't be explained. We know people who own two homes in Irvine. The first one currently zillow's at $6 --- they paid $330k new, and now owe $415k on it. They took out $80k or so in equity. They bought a bigger house for $900k last year, and rent the first. They have one income, and 3(!) kids at home. They have a full time live in nanny. He has a good job as an engineer, but that's $200k/yr max. So I know you are smugly thinking "well, they must owe at least $820k with a neg am loan on the 2nd home, and are just about to get a NOD". Nope. Their mortgage on the 2nd home is only $350k. So tell me please where in the hell did they get that extra $470k down on their new house? Seriously, where? Oh, and I've verified these mortgage amounts through our helpful IHB RE agents.



How many more like them are out there? So please forgive us for trying to figure out where these great drops are.</blockquote>


Hey, I want to know just as much as you do and that is why I keep pushing the issue. Many on this blog & forums have a presented a strong argument for why prices are what they are and why they will continue to decline. I'll I want is a good counter with some figures to support that there is a large enough pool of people to stabilize Irvine prices.
 
[quote author="tmare" date=1242904542]Please stop........this thread is making me crazy.</blockquote>


WARNING:Kool-aid is know to cause severe case of being priced-out-forever. Signs of Kool-aid include a disregard to math. Mr. Kool-aid's arguments have been know to drive math teachers crazy. Medicine available <a href="http://www.irvinehousingblog.com/">here</a>



<img src="http://tbn.google.com/images?q=tbn:sfZLkS8S2VkNLM:http://www.globalclimatescam.com/wp-content/uploads/2008/09/green-kool-aidman.jpg" alt="" />
 
[quote author="CK" date=1242916294]That's real pretty, Graph ---- but (stomping my foot) WHERE IS MY 40% DROP???!! I WANT THE 40% DROP I WAS PROMISED!!!! ;)</blockquote>


It's in Riverside. Actually, I think we got our 40% drop, and half of your 40% drop. And we ain't giving it back. Sorry.
 
[quote author="Geotpf" date=1242946465][quote author="CK" date=1242916294]That's real pretty, Graph ---- but (stomping my foot) WHERE IS MY 40% DROP???!! I WANT THE 40% DROP I WAS PROMISED!!!! ;)</blockquote>


It's in Riverside. Actually, I think we got our 40% drop, and half of your 40% drop. And we ain't giving it back. Sorry.</blockquote>
Riverside to Irvine:

"All your drops are belong to us."
 
This recession/RE bust is different from the last one in the 90s in a very important respect. Within three years into the last real estate bust, prices in So Cal dropped across the board, places like Beverly Hills dropped almost as much (40%) as less desirable places such as the IE. This RE bust, already in its third year, is different. Places like Beverly Hills, Malibu, etc. haven't budged much at all and non-ghetto areas of Irvine are only down at most 10 to 15 percent from the peak. In other words, this RE bust appears to be highly selective. Clearly, there are far fewer buyers today than during the bubble, but there are apparently enough of them to moderate dramatic price declines.
 
[quote author="High Gravity" date=1242949962]This recession/RE bust is different from the last one in the 90s in a very important respect. Within three years into the last real estate bust, prices in So Cal dropped across the board, places like Beverly Hills dropped almost as much (40%) as less desirable places such as the IE. This RE bust, already in its third year, is different. Places like Beverly Hills, Malibu, etc. haven't budged much at all and non-ghetto areas of Irvine are only down at most 10 to 15 percent from the peak. In other words, this RE bust appears to be highly selective. Clearly, there are far fewer buyers today than during the bubble, but there are apparently enough of them to moderate dramatic price declines.</blockquote>


The difference between now and then is the types of financing and how it came due. There were no neg-am-pick-a-pay notes back then. The reason Irvine/BH hasn't caught up with the rest of the area is the resets haven't got here yet.
 
[quote author="Mcdonna1980" date=1242941214][quote author="tmare" date=1242904542]Please stop........this thread is making me crazy.</blockquote>


WARNING:Kool-aid is know to cause severe case of being priced-out-forever. Signs of Kool-aid include a disregard to math. Mr. Kool-aid's arguments have been know to drive math teachers crazy. Medicine available <a href="http://www.irvinehousingblog.com/">here</a>



<img src="http://tbn.google.com/images?q=tbn:sfZLkS8S2VkNLM:http://www.globalclimatescam.com/wp-content/uploads/2008/09/green-kool-aidman.jpg" alt="" /></blockquote>


The cute little Kool-Aid man and a link to IR's main blog and his projections for the future is great and all, but it still does nothing to explain why Orange County is 41% off peak now, and Irvine is still stuck at 10-15% or so. I'm in the financial analysis business, so I know all too well the good intentions and effort which go into creating a Plan or Forecast. But at the end of the day, its the ACTUAL results which count. And no cute green Kool-Aid man explains the actual results to me.



So I'll ask again, if you don't like the theory that has been thrown around here, what is your theory about why on a relational basis to the rest of the county, Irvine is actually MORE expensive now than it was at the peak?



<a href="http://www.ocbj.com/enews_article.asp?aID=25953827.3998682.1784562.184837.4221547.371&aID2=137265&lid=46&sid;=&cID=Z">OCBJ Orange County Prices</a>
 
[quote author="Geotpf" date=1242876263][quote author="gypsyuma" date=1242860161][quote author="Mcdonna1980" date=1242813346][quote author="CK" date=1242797578]Geez, I go away for a couple of days and you go and start a thread like this. Since everyone seems to be numbering their thoughts in this thread, I'll join the party:



1) In appears in this (and most threads on IHB) the people calling for future carange of Irvine are also those most likely to A) not live in Irvine, and B) have no desire to ever live in Irvine. They see no value in the place, and therefore why should it hold any premium to them over whichever place it is they value. Naturually us Irvine residents (even those who don't own) tend to think Irvine is a little more special, and worth a little more than surrounding communities. I'm not making a judgement on which faction is likely right or wrong, I'm just sayin that's the general trend on IHB.



2) I think BKShopr and Graph are the smartest guys in the room. But they seem to have a differing opinion on what the future prices of Irvine holds. Who's right? It's almost like saying which child do you love more. But since I only have one child and don't have to make that call, I'll pick BK and his $375 sq ft theory. And I'll tell you why...



3) Irvine has nailed its brand identity in certain circles, much like LV or BMW has. A white dude like myself does not entirely get it --- while I really like Irivne, I could easily subsitute it for Aliso Viejo or Ladera Ranch, etc if I thought I was getting more bang for my buck there. But my 1.5 generation Taiwanese wife...no way. It's Irvine or bust for her, and for her LV-lovin' friends. I'm telling you folks, we go to a parties up in SGV, they gush about Irvine like its the promised land. "Oh, you guys live in IRVINE, its so nice there"; "Oh your daughter is so lucky to grow up in IRVINE"; "Oh you should buy down there now, prices will never drop that much in IRVINE". I'm not lying. If they have young kids or are planning kids, this is the place to be, hands down. And for the most part, these folks are the same ones we see putting 50% - 100% down payments in IPO and IR2's tracking sheets.



So as much as I would love to see $250 sq ft in the more desireable parts of Irvine, I fear its not going to happen. Something has changed with the branding of Irvine in the last decade, increasing its desireabilty with the school and safety crowd. I dunno, maybe its not Irvine that changed, but the rest of So Cal that has gotten crappier over time. I asked my wife about the Irvine of 1990-94 when she went to UCI: "It was ok, but nothing special and kind of in the boonies, and no good food". Hmm. But how about her feelings on 21st century Irvine? "It's got everything NOW, and so much more diverse --- it's like its not the same place". Sounds like Mr. Bren has done a good job of rebranding this place, at least for the smartest girl I know.



And oh, for those who say that Irvine can't compete with NB....I call BS on that. Irvine is not trying to compete with NB. It's going for another affluent group with a different set of values. Many people targeting Irvine probably would not even consider NB, even if they could afford it. That's another market there.</blockquote>


How many times does Irvine Renter have to point out that desire does not equal demand. This is the fatal flaw in all these Asians-are-going-to-prop-up-Irvine-home-prices theories. We are just coming off a decade long credit binge. Funny, I don't remember Asians ,or anyone for that matter, being LV/status obsessed in the OC prior to the credit bubble(with the exception of people that were truly wealthy). Judging from the high percentage of Irvine homes in some stage of foreclosure, Asians certainly are not immune from the credit squeeze. What I want to see is some evidence that there is large enough pool of Asians with $200k plus incomes to keep up Irvine sales over a extended period. Until then I'm calling further declines in Irvine home prices.</blockquote>


When I was in Irvine last month, I toured a short sale owned by a Korean. The listing agent (also Korean) was 30 minutes late for our appointment. He made us take off our shoes outside the door, which quickly became laughable once we got inside and saw how despicably filthy the place was. Our disgust quickly became horror when we got upstairs and found the carpet littered with landmines of dogshit, which one of my kids stepped in, of course. Which made me feel like taking the shit off the bottom of her foot, and slapping it in the face of the listing agent. [Why the hell make us take our shoes off?]



So yes, the asians are not immune. As for the poopy details - I just felt the need to get it off my chest.</blockquote>


That's a Korean thing-no shoes in the house. Period.</blockquote>


SHOES = NO GOOD

POOPY = GOOD



THANKS.... GOT IT
 
[quote author="Sunshine" date=1242916545][quote author="reason" date=1242913335][quote author="Look4house" date=1242912078][quote author="thedude" date=1242903716]Desire will never equal affordability. If the average household income for Irvine really is 90-100K then what you see MUST be over priced. My wife and I are fresh out of college for 1 year and we make a middle 6 figure income with no debt. School, cars, and Coach handbags are paid for. I feel poor renting a one bedroom apartment in Irvine around the QH / TR area. Where are people getting the money to afford the the homes, let alone the LV and a Lambo? If you can point to something that is real, tangible, and factual I'll believe it. Show me the money! I'm not going to believe in the mythology of rich Asians, wealthy ancestors, law degrees, and a Ben Franklin printing press powered by unicorn farts! I do believe in insane financial products inflating a bubble designed and engineered to maximize the profits and benefits for the people at the top in a short sighted dash for personal wealth and self gratification.</blockquote>


1 year out of college with a household income in the 6 figures, no debt and you feel poor? Please sell your Ferrari, go back to school and take Finance 101. No offense, I wish I made that much money when I fresh came out of college.</blockquote>


Lets see. "Thedude" has no debts. "School, cars, and Coach handbags are paid for." <strong>They make "middle 6 figure income". I guess that would be $150k annually</strong> minus income taxes = approx. $70k annually = $5600/mo. He and his wife rent a 1 bdrm in QH/TR which comes out to be $2000/mo. with utilities. The only other expenses I can think for them would be gasoline, groceries, auto insur. and going out on the weekends. That's another $1000/mo. (splurging here).



Take home is $5600/mo. - $2000 rent/utilities - $1000 miscellaneous = $2600 left over.



Huh?! I keep thinking maybe he has car payments. But that's paid for. And there's no student loans. No debts. Could it be too much money spent on alcohol?....alimony?...child support?</blockquote>


"Middle 6 figure income" is not $150k.</blockquote>




Middle 6 figure is (999,999-100,000)/2
 
First, to see the kind of drop like 40% in the IE many homeowners just walked away and abandoned their homes prematurely to result in this type catastrophic decline. We are not seeing this type activities in Irvine where homes are being abandoned along with their pets and belongings. Irvine in this game of gamble homeowners feel they have a better odd of recovery so they are still addicted and betting in the game. The bonus point is still stacked to the owners favor: safety, school and employment.
 
[quote author="bkshopr" date=1242952008][quote author="Sunshine" date=1242916545][quote author="reason" date=1242913335][quote author="Look4house" date=1242912078][quote author="thedude" date=1242903716]Desire will never equal affordability. If the average household income for Irvine really is 90-100K then what you see MUST be over priced. My wife and I are fresh out of college for 1 year and we make a middle 6 figure income with no debt. School, cars, and Coach handbags are paid for. I feel poor renting a one bedroom apartment in Irvine around the QH / TR area. Where are people getting the money to afford the the homes, let alone the LV and a Lambo? If you can point to something that is real, tangible, and factual I'll believe it. Show me the money! I'm not going to believe in the mythology of rich Asians, wealthy ancestors, law degrees, and a Ben Franklin printing press powered by unicorn farts! I do believe in insane financial products inflating a bubble designed and engineered to maximize the profits and benefits for the people at the top in a short sighted dash for personal wealth and self gratification.</blockquote>


1 year out of college with a household income in the 6 figures, no debt and you feel poor? Please sell your Ferrari, go back to school and take Finance 101. No offense, I wish I made that much money when I fresh came out of college.</blockquote>


Lets see. "Thedude" has no debts. "School, cars, and Coach handbags are paid for." <strong>They make "middle 6 figure income". I guess that would be $150k annually</strong> minus income taxes = approx. $70k annually = $5600/mo. He and his wife rent a 1 bdrm in QH/TR which comes out to be $2000/mo. with utilities. The only other expenses I can think for them would be gasoline, groceries, auto insur. and going out on the weekends. That's another $1000/mo. (splurging here).



Take home is $5600/mo. - $2000 rent/utilities - $1000 miscellaneous = $2600 left over.



Huh?! I keep thinking maybe he has car payments. But that's paid for. And there's no student loans. No debts. Could it be too much money spent on alcohol?....alimony?...child support?</blockquote>


"Middle 6 figure income" is not $150k.</blockquote>




Middle 6 figure is (999,999-100,000)/2</blockquote>


999,999-100,000/2 = about $450K, BUT, the starting point of 6 figures is 100K, and so 100K+ 450K=$550K
 
[quote author="Sunshine" date=1242953551][quote author="bkshopr" date=1242952008][quote author="Sunshine" date=1242916545][quote author="reason" date=1242913335][quote author="Look4house" date=1242912078][quote author="thedude" date=1242903716]Desire will never equal affordability. If the average household income for Irvine really is 90-100K then what you see MUST be over priced. My wife and I are fresh out of college for 1 year and we make a middle 6 figure income with no debt. School, cars, and Coach handbags are paid for. I feel poor renting a one bedroom apartment in Irvine around the QH / TR area. Where are people getting the money to afford the the homes, let alone the LV and a Lambo? If you can point to something that is real, tangible, and factual I'll believe it. Show me the money! I'm not going to believe in the mythology of rich Asians, wealthy ancestors, law degrees, and a Ben Franklin printing press powered by unicorn farts! I do believe in insane financial products inflating a bubble designed and engineered to maximize the profits and benefits for the people at the top in a short sighted dash for personal wealth and self gratification.</blockquote>


1 year out of college with a household income in the 6 figures, no debt and you feel poor? Please sell your Ferrari, go back to school and take Finance 101. No offense, I wish I made that much money when I fresh came out of college.</blockquote>


Lets see. "Thedude" has no debts. "School, cars, and Coach handbags are paid for." <strong>They make "middle 6 figure income". I guess that would be $150k annually</strong> minus income taxes = approx. $70k annually = $5600/mo. He and his wife rent a 1 bdrm in QH/TR which comes out to be $2000/mo. with utilities. The only other expenses I can think for them would be gasoline, groceries, auto insur. and going out on the weekends. That's another $1000/mo. (splurging here).



Take home is $5600/mo. - $2000 rent/utilities - $1000 miscellaneous = $2600 left over.



Huh?! I keep thinking maybe he has car payments. But that's paid for. And there's no student loans. No debts. Could it be too much money spent on alcohol?....alimony?...child support?</blockquote>


"Middle 6 figure income" is not $150k.</blockquote>




Middle 6 figure is (999,999-100,000)/2</blockquote>


999,999-100,000/2 = about $450K, BUT, the starting point of 6 figures is 100K, and so 100K+ 450K=$550K</blockquote>


Thank you for the addentum.
 
[quote author="bkshopr" date=1242953718][quote author="Sunshine" date=1242953551][quote author="bkshopr" date=1242952008][quote author="Sunshine" date=1242916545][quote author="reason" date=1242913335][quote author="Look4house" date=1242912078][quote author="thedude" date=1242903716]Desire will never equal affordability. If the average household income for Irvine really is 90-100K then what you see MUST be over priced. My wife and I are fresh out of college for 1 year and we make a middle 6 figure income with no debt. School, cars, and Coach handbags are paid for. I feel poor renting a one bedroom apartment in Irvine around the QH / TR area. Where are people getting the money to afford the the homes, let alone the LV and a Lambo? If you can point to something that is real, tangible, and factual I'll believe it. Show me the money! I'm not going to believe in the mythology of rich Asians, wealthy ancestors, law degrees, and a Ben Franklin printing press powered by unicorn farts! I do believe in insane financial products inflating a bubble designed and engineered to maximize the profits and benefits for the people at the top in a short sighted dash for personal wealth and self gratification.</blockquote>


1 year out of college with a household income in the 6 figures, no debt and you feel poor? Please sell your Ferrari, go back to school and take Finance 101. No offense, I wish I made that much money when I fresh came out of college.</blockquote>


Lets see. "Thedude" has no debts. "School, cars, and Coach handbags are paid for." <strong>They make "middle 6 figure income". I guess that would be $150k annually</strong> minus income taxes = approx. $70k annually = $5600/mo. He and his wife rent a 1 bdrm in QH/TR which comes out to be $2000/mo. with utilities. The only other expenses I can think for them would be gasoline, groceries, auto insur. and going out on the weekends. That's another $1000/mo. (splurging here).



Take home is $5600/mo. - $2000 rent/utilities - $1000 miscellaneous = $2600 left over.



Huh?! I keep thinking maybe he has car payments. But that's paid for. And there's no student loans. No debts. Could it be too much money spent on alcohol?....alimony?...child support?</blockquote>


"Middle 6 figure income" is not $150k.</blockquote>




Middle 6 figure is (999,999-100,000)/2</blockquote>


999,999-100,000/2 = about $450K, BUT, the starting point of 6 figures is 100K, and so 100K+ 450K=$550K</blockquote>


Thank you for the addentum.</blockquote>


Haha! Are we still at it? Honestly, I have never heard of someone saying "I make in the 'middle 6 figure income'". Cause 6 figure is 100k.....so in the middle could be 100k/2 = $50k....Hahaha!
 
Even if he made a middle 5 figure income just after graduating college with no debt, I don't understand how he could feel poor. Maybe compared to a 55-year-old CEO or neurosurgeon, but not in relation to his peers. His post sounded like he is expecting to afford a house in Shady Canyon or Crystal cove after being in the work force for one year.
 
[quote author="bkshopr" date=1242952996]First, to see the kind of drop like 40% in the IE many homeowners just walked away and abandoned their homes prematurely to result in this type catastrophic decline. We are not seeing this type activities in Irvine where homes are being abandoned along with their pets and belongings. Irvine in this game of gamble homeowners feel they have a better odd of recovery so they are still addicted and betting in the game. The bonus point is still stacked to the owners favor: safety, school and employment.</blockquote>
That third factor is gonna keep putting more and more stress on that folks wanting to stay in the game. The other wild card factor is going to be whether those Option ARMs and Alt-A that were used by many home buyers in 2003-2006 to inflate Irvine prices won't pull the rug from underneath their feet. I do agree that the home will be the last thing these folks will give up, but there is a pain threshold (especially when they see they can rent a similar property for 20-40% less a month).
 
[quote author="usctrojanman29" date=1242954283][quote author="bkshopr" date=1242952996]First, to see the kind of drop like 40% in the IE many homeowners just walked away and abandoned their homes prematurely to result in this type catastrophic decline. We are not seeing this type activities in Irvine where homes are being abandoned along with their pets and belongings. Irvine in this game of gamble homeowners feel they have a better odd of recovery so they are still addicted and betting in the game. The bonus point is still stacked to the owners favor: safety, school and employment.</blockquote>
That third factor is gonna keep putting more and more stress on that folks wanting to stay in the game. The other wild card factor is going to be whether those Option ARMs and Alt-A that were used by many home buyers in 2003-2006 to inflate Irvine prices won't pull the rug from underneath their feet. I do agree that the home will be the last thing these folks will give up, but there is a pain threshold (especially when they see they can rent a similar property for 20-40% less a month).</blockquote>


What is shoring up sellers WTF prices is TIC's benchmark pricing. My estimated Benchmark is purely for new homes. Used home could take a negative premium as much as -35% due to bad shape and outdated style. Fairly newer homes should be around -15%to -10% of benchmark pricings. Extra chips stacked into same bag would lower the benchmark pricing to appeal to the new home buyers.



I do not see the detached condos work with the BagOChips formula unless TIC is willing to give up its aesthetic standard and allowing 3 stories on tiny footprints. I have solutions for detached condos at 14 units per acre that yield 2,200 sf per home and that translates to 30,800 sf per acre.



Take $8.0 mil/30,800sf=$260/sf (added $1/2 million to $7-1/2 mil to compensate for the added construction cost)
 
[quote author="bkshopr" date=1242957596]I have solutions for detached condos at 14 units per acre that yield 2,200 sf per home and that translates to 30,800 sf per acre.

</blockquote>
You should give it an appropriate Irvine neighborhood name like "Pringleton" or "Pringelaria" or "Pringlebury" (hehe... I said "Pringlebury").
 
[quote author="reason" date=1242953962][quote author="bkshopr" date=1242953718][quote author="Sunshine" date=1242953551][quote author="bkshopr" date=1242952008][quote author="Sunshine" date=1242916545][quote author="reason" date=1242913335][quote author="Look4house" date=1242912078][quote author="thedude" date=1242903716]Desire will never equal affordability. If the average household income for Irvine really is 90-100K then what you see MUST be over priced. My wife and I are fresh out of college for 1 year and we make a middle 6 figure income with no debt. School, cars, and Coach handbags are paid for. I feel poor renting a one bedroom apartment in Irvine around the QH / TR area. Where are people getting the money to afford the the homes, let alone the LV and a Lambo? If you can point to something that is real, tangible, and factual I'll believe it. Show me the money! I'm not going to believe in the mythology of rich Asians, wealthy ancestors, law degrees, and a Ben Franklin printing press powered by unicorn farts! I do believe in insane financial products inflating a bubble designed and engineered to maximize the profits and benefits for the people at the top in a short sighted dash for personal wealth and self gratification.</blockquote>


1 year out of college with a household income in the 6 figures, no debt and you feel poor? Please sell your Ferrari, go back to school and take Finance 101. No offense, I wish I made that much money when I fresh came out of college.</blockquote>


Lets see. "Thedude" has no debts. "School, cars, and Coach handbags are paid for." <strong>They make "middle 6 figure income". I guess that would be $150k annually</strong> minus income taxes = approx. $70k annually = $5600/mo. He and his wife rent a 1 bdrm in QH/TR which comes out to be $2000/mo. with utilities. The only other expenses I can think for them would be gasoline, groceries, auto insur. and going out on the weekends. That's another $1000/mo. (splurging here).



Take home is $5600/mo. - $2000 rent/utilities - $1000 miscellaneous = $2600 left over.



Huh?! I keep thinking maybe he has car payments. But that's paid for. And there's no student loans. No debts. Could it be too much money spent on alcohol?....alimony?...child support?</blockquote>


"Middle 6 figure income" is not $150k.</blockquote>




Middle 6 figure is (999,999-100,000)/2</blockquote>


999,999-100,000/2 = about $450K, BUT, the starting point of 6 figures is 100K, and so 100K+ 450K=$550K</blockquote>


Thank you for the addentum.</blockquote>


Haha! Are we still at it? Honestly, I have never heard of someone saying "I make in the 'middle 6 figure income'". Cause 6 figure is 100k.....so in the middle could be 100k/2 = $50k....Hahaha!</blockquote>


They could be two lawyers fresh out of USC law or something. They could easily be making $175K at some of the more prestigious law firms in downtown LA. That would be about $350K combined. The enormous student loans would be a killer though.



I can't imagine anyone with a recent undergraduate degree making anywhere near that.
 
[quote author="irvinehapa" date=1242958019]



They could be two lawyers fresh out of USC law or something. They could easily be making $175K at some of the more prestigious law firms in downtown LA. That would be about $350K combined. The enormous student loans would be a killer though.



I can't imagine anyone with a recent undergraduate degree making anywhere near that.</blockquote>


That was exactly my thought. You don't know how often I hear inexperienced young lawyers making over $200k whining about how they are being underpaid and abused by their employers and how poor they are.
 
[quote author="bkshopr" date=1242957596][quote author="usctrojanman29" date=1242954283][quote author="bkshopr" date=1242952996]First, to see the kind of drop like 40% in the IE many homeowners just walked away and abandoned their homes prematurely to result in this type catastrophic decline. We are not seeing this type activities in Irvine where homes are being abandoned along with their pets and belongings. Irvine in this game of gamble homeowners feel they have a better odd of recovery so they are still addicted and betting in the game. The bonus point is still stacked to the owners favor: safety, school and employment.</blockquote>
That third factor is gonna keep putting more and more stress on that folks wanting to stay in the game. The other wild card factor is going to be whether those Option ARMs and Alt-A that were used by many home buyers in 2003-2006 to inflate Irvine prices won't pull the rug from underneath their feet. I do agree that the home will be the last thing these folks will give up, but there is a pain threshold (especially when they see they can rent a similar property for 20-40% less a month).</blockquote>


What is shoring up sellers WTF prices is TIC's benchmark pricing. My estimated Benchmark is purely for new homes. Used home could take a negative premium as much as -35% due to bad shape and outdated style. Fairly newer homes should be around -15%to -10% of benchmark pricings. Extra chips stacked into same bag would lower the benchmark pricing to appeal to the new home buyers.



I do not see the detached condos work with the BagOChips formula unless TIC is willing to give up its aesthetic standard and allowing 3 stories on tiny footprints. I have solutions for detached condos at 14 units per acre that yield 2,200 sf per home and that translates to 30,800 sf per acre.



Take $8.0 mil/30,800sf=$260/sf (added $1/2 million to $7-1/2 mil to compensate for the added construction cost)</blockquote>
I hear what you are saying, but I would fall back on the fact that these newer homes would not enjoy a 25-40% rent premiums so TIC is gonna be fighting a fundamental headwind. Again, I just don't understand how they were more than happy with $2-$4M per acre at the beginning of the bubble and now they must have $7M+ per acre. Too bad NPV valuation models (on whether to build now at $275-$300/sf or wait years and years to get their $375/sf mark) won't work because they'll just use some overly optimistic assumptions. You do know that larger SFR in Quail Hill were selling for slightly below $300/sf back in 2003, right?
 
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