Culture, Class, Community and Race in Irvine and Beyond

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Although, many will disagree. My opinion is that the price will be more than $300 per sq. ft. The project is boasting that asides from Turtle Rock. This will be the only other community nestled in the "hills".
 
Yes, yes. In this market, there are those that will say homes are going for less than $300 per sq. ft. in Irvine. But just the same there are homes in Irvine that are going for more than $300 sq/ft.
 
Ok, I suppose I can use this as a guess. My in laws live across the street from OH. And even low balling it. The cost per sq. ft is $322. Keep in mind, this is on flat land.
 
Just in case you were looking for them, it turns out the shiny, happy people in Irvine are out walking at 6:30 in the morning. Everyone I passed this morning had a "good morning" or a smile and wave for me.
 
<p>We "borrowed" a dog for a few days. The 7AM dog-walkers were like "Ooo, fresh meat" and they all wanted to welcome us to their cult. Too bad the dog wanted a piece out of every other dog's hide. </p>
 
$110/ft for new construction is already the norm in Sacramento. $130/ft in the IE. So I would say somewhere in the $130-150 range for new construction in the OC is definitely within reason.
 
<p>Bishie,</p>

<p>I hope that you are refering to construction cost and not the value ratio. $300 per sf that I have been seen posted is completely unrealistic for a new home. The cost of land has to drop from 4-1/2 million down to 2-1/4 million dollars per acre to meet this value ratio. The value of land is currently at $300/sf without construction on it. (after factoring streets, sidewalks, and parkways)</p>
 
<p>Builder William Lyon in Tustin Columbus Square is selling between $260/sf and $300/sf for homes up to 3667 sq feet. Builders in Irvine at some point will have to follow suit.</p>
 
Land can drop hugely in value. The issue in SoCal is that just infrastructure costs are sometimes quite substantial and development takes a long time (I have actually seen some land parcels worth a negative value for development recently). Land values dropped 90% in the last cycle; this correction is likely going to be substantially greater than that.





I see in front of me $488,990 for a 3779 SF house in Moreno Valley from Pacific Communities. That is $129/SF. OC land prices will need to adjust to be competitive with these price points. There are owners that have no debt on their land that may desire to move land off their books. Builders tend to like having a skeleton staff and keep delivering product even at marginal cost i.e. at a loss rather than shutting down production completely. Some builders are already writing down infrastructure substantially. It may be more advantageous to sell the land even with sewers and roads for less than the cost of providing the sewer and roads alone rather than delivering product.





If land is 100k/finished lot and construction cost at $90/SF for a 3000 ft house is $270k then $370k cost for a 3000 ft house would be doable. I believe 100k is more than the infrastructure costs in the OC.
 
<em>"OC land prices will need to adjust to be competitive with these price points."</em> I disagree. OC land prices may need to adjust to become more affordable (which is largely dependent upon available financing), but to be competitive with the Moreno Valley? I would not live in the Moreno Valley even if I were given a <strong>free</strong> house there.
 
<p>Just like land is the same out in the Riverside. Where the houses are huge for less price. But while I finished my dinner already in OC. These poor souls are still stuck in traffic for the next 2 hours.</p>

<p>Yep, land is the same everywhere.</p>
 
Obviously there will be a price gradient in land prices between Orange County and the Inland Empire as commute distances are shorter and it is cooler. That said the current gradient in pricing is not sustainable. Prices of land will drop precipitously since builders are seeing more onerous terms on construction loans and having to secure their company wide lines. Builders margins are being heavily squeezed. I know builders in the IE were at 30-40% margin in the boom times...now as you can guess from the pricing I listed their marginal home today is pretty close to 0% margin if not negative. The smaller builders seem to be particularly voracious in their desire to build themselves into bankruptcy. As the comps in land drift downwards from reduced demand other land owners/their brokers will adjust their prices down. The last cycle had 4 years of sharp downward movement in land prices. I don't foresee this being any different.





As builders hand over the keys to finished subdivisions to their lenders and banks turn over the keys to their over leveraged balance sheets the the FDIC then grave dancers step in to relieve the FDIC of excess OC land. =3
 
My thoughts exactly. People might pay a 20% premium for Irvine. Would they pay 40%? Sooner or later, outlying areas are going to siphon-off buyers with their SFR's at Irvine condo prices.
 
I know for a fact that some builders are taking big losses out in the I.E. That is what happens when you price in 15% future price increases into the projections for buildout. Some builders are selling land at 50 cents on the dollar from the price they paid. Land prices will drop because the builders walked away from option deposits. The land seller can now lower the price since they have already made some money on the option deposit. Some that need to unload their land will at prices less than what the builder had asked for when they tried to renegotiate the option contract. Land prices in OC will drop especially for the infill and redevelopment land. The builders with cash which isn't that many will get some really good deals.
 
<p>And that is where we don't know for sure. What is the premium someone will pay to live near their work. Whether that be Irvine or OC in general.</p>

<p>I suppose it goes back to human nature. There are those that can put up with the 2 hours plus commute and sacrifice their health and quality of life. And vice versa, there are those who will sacrifice by living in a smaller space to forgo the stress of commuting.</p>

<p>As outlying areas syphon off buyers from the OC. I am certain there are those in the IE who will eventually give up their SFR and move to the OC. So who knows what the exact premium someone will pay for the OC? </p>
 
<p>Senator Dodd is speaking after talk with Bernanke. Sounds like he's asking for a rescue of homeowners. "3 millions to lose their home on bad mortgages."</p>

<p>Hmm, 100 millions in appropriations to help out with the situation. Hahaha. there's a 800# that you can call in. </p>

<p>"Hello? I have maxed out on my equity. Can you help me?"</p>
 
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