Did Irvine prices get "destroyed"?

[usctrojancpa]

Lower interest rates actually hurt attached condos that have high HOAs (which become even higher due to foreclosures/short sales). The HOA fees you save by going with SFRs at low interest rates means you have more buying power.

I have a theory why attached condos and even some detached condos have not held their values like detached SFRs.  I believe that the majority of the for-sale housing in Irvine is made up of condos, probably a higher percentage than most all other cities in OC.  My guess is that the foreclosure wave hit the attached products the hardest since the weakest hands bought them with funny money.  So it's a supply and demand issue which is driving the prices down.  If you were to go look on MLS or redfin in any random village in Irvine, you would see that there are about 3-5x more attached condos for sale very single family residences.  I think a lot of buyers are focusing on buying a detached SFR hence the low supply is limiting the price declines, especially with the more popular floor plans like Camelia Plan B in Northwood II.  The newer villages tend to have an even large percentage of condos versus detached SFRs because TIC is trying to squeeze out as much profit as it can by increasing the density.

That's a very good point, back when interest rates were 6% every $100k borrowed would equate to about $600 per month but with rates at 4% that payment is down to about $475k or about 20%.  When you capitalize a $300/mo HOA that equates to about $60k in value. 

 

[The Motor Court Company]

We will see more products like San Mateo from TIC in the future. Small detached condos, with open floor plan and backyard (tiny but better than patio), only one master HOA and motor-court setup that costs $600k or less. I know $600k is pocket change for you and indie, but for most of the first time home buyers, they cannot afford true SFRs in Irvine so they have to sacrifice something. In this case the drive way and lot size make the most sense.

I do agree Irvine is probably not worth the price for some. But to each of their own...

The motor court detached products have relatively bad perception due the the lack of front door identity and driveway. The poor absorption is the reason TIC not being able to raise the price ceiling of this product so that project like Santa Maria and Santa Clara directly below it kept its pricings around $300k-$450k for attached condos and flats. Now let's rewind back to 2004 and 2005 when similar products were sold in high $500k - mid $600k. These products indirectly were hurt big time in their resale. Buyers could get a detached home at that price. These products have not moved until the owners slashed their prices by $150-200k to meet the new comps set by TIC 's new condos. It is a huge risk to buy attached because price will depreciate when TIC decides to end This type of solution.

TIC does have attached and flat products in Santa Clara and Santa Maria, which sell even worse than Laguna Altura, so it is not about supply but rather about the very weak demand in these products. I think new home constructions actually hurt resales because it takes away some of the demand.

Are you sure we weren't separated at birth because you precisely explained my point. Irvine Company can't control home prices without building new homes. If TIC stopped building and not released the 2010 Collection home prices would have dropped much lower as the bears predicted.

The existing resale sufferd the most is the attached condo and flats because TIC did not build products currently that resemble that building type. Without new benchmark pricing the homeowners could not price their homes aggressively.

TIC can't save the plummeted prices for attached condos and flats as Trojan pointed out the sector that took the most hit. To prove my point TIC can't control prices.

Oh I see... when I say that the Irvine Company has influence on Irvine real estate prices, that's called water cooler logic... but when irvinehomeshopper says it... it's gospel.

You arguing that TIC can control the direction of prices by not building homes, and IHS claiming that Irvine home prices are buoyed by higher new home sale prices are two totally different points. So maybe it's not a lie per say, but you definitely missed the point of IHS post.

 

[IndieDev]

Indie, Pat Star and me of course are rubbing you all the wrong way and we just popped IHO's bubble of his Unicornland. Irvine is not special. There are way more better cities out there like Porter Ranch without the political corruptions and shady practices. Your narrow vision is limiting your broaden future. You just have to go outside of your comfort zone to see. Take this weekend drive to Porter Ranch and check out the mall out there where Louis Vuitton is next to Target or to Rancho Cucamonga's Victoria Garden and the Bass Pro shop.

The others may think we are pessimists and incorrect. We are not miserable home searchers like many. We all are happy homeowners that made smart choices. Indie with his private beach, PatStar with his infinity view and 3CWG and me ofcourse my 4 car garage and my retired wife.


We all have one thing in common and that is not under the hypnotized spell of the unicorn.

I know IHS and Indie have polarizing viewpoints to some here --- I know because I was right there with IHO in my Irvine-lovin a few years ago.  Graphrix and company would take the same shots at me regularly on Irvine Housing Blog ---- but you know what, I listened. Because I realized somewhere along the way they knew way more than I, and were just dispatching tough love in an internet way.  Thank god I realized this was going to be the one of the largest decisions of my life, and I better listen to the counterpoint.  So before anyone gets all butt-hurt, feel lucky that someone as qualified as IHS is willing to spend the time to educate all of us.  Every day I have a little grin on my face as I walk in my front door.  Every day I hear his feng shui lessons dancing in my head, and realize that is why I love my home so much.  He made me realize how important the *home* is.  And for that I am glad I endured the hazing back then.

I don't care that IHO or any of the Irvine die hards have different viewpoints, what I don't like is when IHO flat out lies or misrepresents what I've said. He claimed that I said TIC has no control over the prices in Irvine, when any novice economist knows that each player whether a buyer, or a seller, or a builder exhibits some fractional control over the movement of prices in a market. IHO simply doesn't understand the concept I was presenting, or the exact same concept IHS brushed over, so he makes assumptions based on his misunderstanding, then represents that as our platform.

If someone says something that I don't understand completely, then I ask for clarification. Instead he chooses to misrepresent and distort facts. That's my problem with IHO, not his opinion that "Irvine is different" than other cities.

 

[irvinehomeowner]

Let's get back to the influence of TIC on Irvine RE pricing...

I don't understand why it's so hard to think that in 2008, TIC "stopped building" new neighborhoods even though existing villages had not been built out to prevent further price erosion. At that time, Woodbury and Portola Springs were not completed and no futher models were opened.

Due to this lack of other new product, there was pent-up demand, so in 2010, along with tax incentives, Irvine was able to briskly sell their 2010 New Home Collection at a record pace... close to 700 homes in a year. By slowing down their new home production for those 2 years, didn't that help them with the benchmarks which influenced resale pricing?

I think IHS' theory and mine are related... and they are speaking to what I generally said prior to Indie's joining of TI that TIC does indeed have an influence on real estate valuation in Irvine.

So an influential master developer is one factor, ethnic non-fundamental desire is another (but why do they prefer Irvine over other cities?)... is that it?

 

[irvinehomeshopper]

May he he thought you were Graphrix  in disguise and got his facts mixed up or may be he drank your last bottle of wine.

 

[irvinehomeowner]

@Indie:

You need to go back and re-read what you posted... I think it is you who is misrepresenting things here... or maybe you didn't clearly state your position.

 

[irvinehomeowner]

And uh... btw... what is said wasn't just referencing you... my posts don't revolve around you like yours revolve around me.

 

[ps99472]

Can you guys stick to one thread?  I'm getting dizzy chasing you all around...

 

[irvinehomeshopper]

Do you how cool it is to tell your friends and relatives that you live in Irvine. Among Asians that meant you have achieved success.

Let's get back to the influence of TIC on Irvine RE pricing...

I don't understand why it's so hard to think that in 2008, TIC "stopped building" new neighborhoods even though existing villages had not been built out to prevent further price erosion. At that time, Woodbury and Portola Springs were not completed and no futher models were opened.

Due to this lack of other new product, there was pent-up demand, so in 2010, along with tax incentives, Irvine was able to briskly sell their 2010 New Home Collection at a record pace... close to 700 homes in a year. By slowing down their new home production for those 2 years, didn't that help them with the benchmarks which influenced resale pricing?

I think IHS' theory and mine are related... and they are speaking to what I generally said prior to Indie's joining of TI that TIC does indeed have an influence on real estate valuation in Irvine.

So an influential master developer is one factor, ethnic non-fundamental desire is another (but why do they prefer Irvine over other cities?)... is that it?

 

[IndieDev]

or maybe you didn't clearly state your position.

I've clearly stated my position numerous times that TIC cannot stop building product to stop price reductions in Irvine, it wouldn't work, not in this market. I'm not sure how many ways I can state it so that it's clear enough for you.

 

[irvinehomeshopper]

I get it. If you can't afford a regular size chocolate bar then you settle for a fun size at TIC or treat.

We will see more products like San Mateo from TIC in the future. Small detached condos, with open floor plan and backyard (tiny but better than patio), only one master HOA and motor-court setup that costs $600k or less. I know $600k is pocket change for you and indie, but for most of the first time home buyers, they cannot afford true SFRs in Irvine so they have to sacrifice something. In this case the drive way and lot size make the most sense.

I do agree Irvine is probably not worth the price for some. But to each of their own...

The motor court detached products have relatively bad perception due the the lack of front door identity and driveway. The poor absorption is the reason TIC not being able to raise the price ceiling of this product so that project like Santa Maria and Santa Clara directly below it kept its pricings around $300k-$450k for attached condos and flats. Now let's rewind back to 2004 and 2005 when similar products were sold in high $500k - mid $600k. These products indirectly were hurt big time in their resale. Buyers could get a detached home at that price. These products have not moved until the owners slashed their prices by $150-200k to meet the new comps set by TIC 's new condos. It is a huge risk to buy attached because price will depreciate when TIC decides to end This type of solution.

TIC does have attached and flat products in Santa Clara and Santa Maria, which sell even worse than Laguna Altura, so it is not about supply but rather about the very weak demand in these products. I think new home constructions actually hurt resales because it takes away some of the demand.

Are you sure we weren't separated at birth because you precisely explained my point. Irvine Company can't control home prices without building new homes. If TIC stopped building and not released the 2010 Collection home prices would have dropped much lower as the bears predicted.

The existing resale sufferd the most is the attached condo and flats because TIC did not build products currently that resemble that building type. Without new benchmark pricing the homeowners could not price their homes aggressively.

TIC can't save the plummeted prices for attached condos and flats as Trojan pointed out the sector that took the most hit. To prove my point TIC can't control prices.

Oh I see... when I say that the Irvine Company has influence on Irvine real estate prices, that's called water cooler logic... but when irvinehomeshopper says it... it's gospel.

You arguing that TIC can control the direction of prices by not building homes, and IHS claiming that Irvine home prices are buoyed by higher new home sale prices are two totally different points. So maybe it's not a lie per say, but you definitely missed the point of IHS post.

 

[irvinehomeowner]

or maybe you didn't clearly state your position.

I've clearly stated my position numerous times that TIC cannot stop building product to stop price reductions in Irvine, it wouldn't work, not in this market. I'm not sure how many ways I can state it so that it's clear enough for you.

Maybe you misunderstood my position... which actually was the position of several posters here.

And that's just one component TIC could influence prices with... and I was stating it as an event because TIC did indeed stop building. Even IrvineRenter posted a article which said the same thing (which you say is different but I don't think it is).

I think many people have said that the 2010 Collection sold well because of pent-up demand... where does pent-up demand come from... unless someone stops creating a supply?

 

[IndieDev]

I think many people have said that the 2010 Collection sold well because of pent-up demand... where does pent-up demand come from... unless someone stops creating a supply?

... or lower prices that bring more buyers into the affordable zone.
... or artificial incentives that do the same thing.
... or changing perceptions of where the market is trending, which is a big one for housing since it's an emotional purchase for many.

Your understanding of the issue is far too simple if you're going to make assumptions that TIC created artificial demand by simply not building homes. That's not a jab, or an insult, but simply the truth.

 

[irvinehomeowner]

I think many people have said that the 2010 Collection sold well because of pent-up demand... where does pent-up demand come from... unless someone stops creating a supply?

... or lower prices that bring more buyers into the affordable zone.
... or artificial incentives that do the same thing.
... or changing perceptions of where the market is trending, which is a big one for housing since it's an emotional purchase for many.

Your understanding of the issue is far too simple if you're going to make assumptions that TIC created artificial demand by simply not building homes. That's not a jab, or an insult, but simply the truth.

That's a fair reply... but I don't think I ever said that TIC was the ONLY factor... just one of them... which although simple, could be possible.

 

[irvinehomeshopper]

Indie nailed it again. Trending!

TIC during the 2010 collection had to wipe out the resale, foreclosure and short sale competition. The strategy of using trend and market research was very clever to let the public know that the old products are not only obsolete but also dated. The great room or one room house is that perfect entertaining house and let the party flows out to a resort like California Room. Not only did TIC accomplished the shrinking lots, elimination of driveways, rid of the living and dining room and front yard but convinced the consumers that that is the IPad of housing. 


This is the reason why consumers will always lose without an expert like Indie to point them out.

I think many people have said that the 2010 Collection sold well because of pent-up demand... where does pent-up demand come from... unless someone stops creating a supply?

... or lower prices that bring more buyers into the affordable zone.
... or artificial incentives that do the same thing.
... or changing perceptions of where the market is trending, which is a big one for housing since it's an emotional purchase for many.

 

[IndieDev]

Perception is what created the bubble. Perception is what is deflating it. That's why bubbles inflate quickly, it's also why bubbles overshoot on the way down.

 

[irvinehomeshopper]

Marketing is about pumping up an illusion and perception. Those who falls for are gullible. For those like us who could see through that is a gift.

 

[qwerty]

Marketing is about pumping up an illusion and perception. Those who falls for are gullible. For those like us who could see through that is a gift.

I love a good trash talker, but if you are going to talk the talk you need to walk the walk. Correct me if I'm wrong but you bought your home in 2006, where was your gift to tell your perception that you were buying at the top of the bubble?  Too bad indie dev wasn't your pal back then so he could have saved you from paying a Bentley price for your BMW.

 

[WoodburyDad]

I liked Irvine enough to stay there for nearly 6 years.  My wife even longer.  If we had bags of cash, we would have probably not left, most likely settling in Northpark --- always and still my favorite Irvine community (relatively close to my price range). Turtle Ridge is the real favorite, but, uh, yeah.  Not in my league. I come back to TI because it (and mostly IHO) still interests me.  I like to see what life would have been like "if". And I've met IHO, I like him.  I think I know what he is looking for.  I hope he can get what he wants in exactly the place he wants.  I would want that for anyone here.  But in lieu of that, I'm just saying to IHO (and anyone else) to not lock yourself in solely on Irvine --- there are viable alternatives.  Like Ladera I mentioned yesterday.  Yeah, I get it is not Irvine.  For my family, being in an Asian influenced place is important, too.  But not at all costs.  Because you know what?  We have a car.  Actually --- two of them! Ladera is just a skip down the freeway, really.  Heck, we still visit friends in Irvine regularly --- and its 60 miles away for us now.  And they come to visit us, too.  You are not going to lose friends over 15 minutes on the freeway, or even 90 minutes on the freeway.

Yes, IHO --- we had a unique situation. But if my entire extended family was not from Porter Ranch and I could not have transferred my job to LA office, you KNOW I would be living in Ladera Ranch or Laguna Niguel, or Aliso Viejo, or Mission Viejo right now --- and on this same board saying "c'mon IHO, come live the 3CWG good life with me --- we have b-ball courts, costco, and target, too!  And it is only 15 min on Saturday to stand in line at 85C!!"

We have friends that are in the exact same situation that you were in.
They are looking at some of the same cities as alternatives to Irvine,
When their lease ends, they?ll most likely move.
Everyone?s wants, needs and priorities are different.
I can see where moving away made sense for you and may for others.
Likewise, I can see why people would chose to live in Irvine.
Our story is different, we considered many other options but ultimately decided that we liked Irvine and went about looking for the right place to call home.

 

[waitin4ever]

Same here.

we thought there could 2 types buyers remorse that could take over.
1] we got lot smaller place for the price limit we set ourselves.
2] we don't live in Irvine.

We felt we could live with the 1st one easier than the 2nd.

either way even when looking at other south county alternatives I saw a consistent
15% delta (between those homes and irvine) for a similar home even during peak and then during
subsequent slow crawl down. which i think will maintain itself even when the eventual bottom
reaches. 

only way we could win financially was by waiting for the eventual absolute bottom.
But we couldn't as we found something we like for pretty much what we could rent it for.
(thanks to low interest rate) Also there was no surity of when the bottom would be reached
with all the bailouts etc.

I liked Irvine enough to stay there for nearly 6 years.  My wife even longer.  If we had bags of cash, we would have probably not left, most likely settling in Northpark --- always and still my favorite Irvine community (relatively close to my price range). Turtle Ridge is the real favorite, but, uh, yeah.  Not in my league. I come back to TI because it (and mostly IHO) still interests me.  I like to see what life would have been like "if". And I've met IHO, I like him.  I think I know what he is looking for.  I hope he can get what he wants in exactly the place he wants.  I would want that for anyone here.  But in lieu of that, I'm just saying to IHO (and anyone else) to not lock yourself in solely on Irvine --- there are viable alternatives.  Like Ladera I mentioned yesterday.  Yeah, I get it is not Irvine.  For my family, being in an Asian influenced place is important, too.  But not at all costs.  Because you know what?  We have a car.  Actually --- two of them! Ladera is just a skip down the freeway, really.  Heck, we still visit friends in Irvine regularly --- and its 60 miles away for us now.  And they come to visit us, too.  You are not going to lose friends over 15 minutes on the freeway, or even 90 minutes on the freeway.

Yes, IHO --- we had a unique situation. But if my entire extended family was not from Porter Ranch and I could not have transferred my job to LA office, you KNOW I would be living in Ladera Ranch or Laguna Niguel, or Aliso Viejo, or Mission Viejo right now --- and on this same board saying "c'mon IHO, come live the 3CWG good life with me --- we have b-ball courts, costco, and target, too!  And it is only 15 min on Saturday to stand in line at 85C!!"

We have friends that are in the exact same situation that you were in.
They are looking at some of the same cities as alternatives to Irvine,
When their lease ends, they?ll most likely move.
Everyone?s wants, needs and priorities are different.
I can see where moving away made sense for you and may for others.
Likewise, I can see why people would chose to live in Irvine.
Our story is different, we considered many other options but ultimately decided that we liked Irvine and went about looking for the right place to call home.