[quote author="bkshopr" date=1189111021]Sorry all. I got sidetracked by Chapman University. Those of you planning to send your kids to a small liberal art college please consider the Claremont Colleges: Scripps, Pomona College, Pitzer, Harvey Mudd, and Claremont McKenna. They teach students to contribute to society.
We all love Irvine because it is a place with the least housing depreciation. Everywhere else builders are bailing out quick by slashing selling price. San Diego and the Inland Empire are 2 very good examples. The aftermath is devastating for recovery. Those who bought there are walking away at greater pace than Irvine. At these locations there is no one there to control the pricings. It was left to the individual builders to make the call.
In Irvine it is completely different. TIC controls the price of every new home. Homeowners price their resale relatively to new prices set by TIC. The fact that resale WTF prices are everywhere is TIC has not introduced new products to dictate the final words. We are all waiting for this opportunity to make a purchase of this “bargain” new house. TIC is an incredibly sophisticated company working with top economists and researchers to protect its asset. At the same time all existing Irvine homeowners benefit from TIC’s stubbornness to give in to what the housing bears want.
Once the bears made a purchase of a home then they pray that TIC would never lower price again so their RE asset will continue to escalate upward. This is the assurance why so many financially unsophisticated individual bought in Irvine. Those who are not savvy with finance like myself would love to own property in Irvine because there is an Irvine Company out there looking out for its asset and (ours) hard earned purchase.
We all can say “forget the Irvine Ranch” and go somewhere else like Ladera and VoC. for some bargains. We all know at the end of the day TIC villages are superior designs and branded well. We then ask ourselves “Why are we so addicted to Irvine Ranch?” It is because we like Bren’s vision: to be able to experience learn, live, work, play and shop all within the Irvine Ranch. He donated tons of money to improve the university, Irvine and some Tustin schools way before you and I noticed the Ranch. Top financial, golf, and residential packages are offered to top renowned researchers to UCI.
We love TIC villages because of the theme landscape approach and buffers, the sense of arrival, the distinction between, private neighborhoods and public play spaces. These nice things required set aside land to create. The cost of the land and construction for the public amenities and landscape zones are all factored in to the 4-1/2 million land equation and ultimately evenly distributed among the for sale homes. The open recreational space in a TIC village is 40% while at VoC is 26%.
Who can afford all these nice developments? NIR speculate the Chinese would be the majority of the home shoppers. To some extent I think it is valid. Judging by history will repeat itself I draw my conclusion from the last recession. Over 60% of new sale transactions were Asian home shoppers and Chinese was the majority. The products were density and efficiency driven products. This time around 15 years later the ABC (American born Chinese) shoppers are completely different from the earlier 1.5 generation. They are the Americanized off springs with very different view in education, social circle, and finance. I believe the 1.5 generation (parents of ABC) along with ABC’s grand parents will chip in a big chunk of cash down payment so ABC will only be borrowing $417k. They believe in paying less interest and the cash bargaining power will yield a better deal.
The homes that they will be looking will most likely be a relatively new home in a resale market where they will have a bigger bargaining power than buying a brand new home. The only drawback that I see is the perception. A good house with good feng shui should not end up a resale. The detached condo is probably my biggest prediction because it is relatively maintenance free. ABC Chinese are not handyman like American. Kids learned power tool and shop skills from their “Tim Allen” dad in the garage. Chinese is very afraid of danger and would not expose their kids to these (blue collar) skills being afraid that they may like them too much and choose them as profession.
ABC generation does not fall into $300k income bracket. They are not the entrepreneurs of new products and companies. It is the 1.5 generation who is making the 300k. The 1.5 generation was during the infancy of computer and software technology. They are the one who started companies and made a lot of income. ABC may have attended a very nice college but their opportunities are very limited due to the maturity of the technology market. ABC will still have parents and grandparents down payment support but don’t count on it being a high end expensive home unless the expensive home is for the multi-generational living. ABC would rather have a tiny cottage than living with their parents.
Highest end homes would strike big with the 1.5 generation. They are the baby boomers at the peak of their success. Retirement is less than a decade around the corner. Their parents who sacrificed so much are still alive deserve to have the very best near the end of their lifelong journey. The 1.5 generation will live and take care of their parent until their death. This high end home purchase will be the testimony to honor the grand parents who gave up everything for the future generations. The proximity must be close to the ABC cottage because ABC’s do not how to boil those wonderful soup made from secret recipe. ABCs have to join their parents for Chinese homemade meals from time to time.
My prediction will be all density efficiency products and higher end products appealing the Chinese and other Asian buyers. During the hot market they represented 38% of all home shoppers at this time the number will be close to 55%.
For NIR start learning some Chinese custom and culture because it will put you ahead of your peers. It certainly helped me.
Cash down payment is the key right now. The lenders are not taking any risks more than $417k. This places the Chinese ahead of the pack due to cash power. TIC got to be very aware of its buyer demographic and secretly planning its product array for the Chinese shoppers.
The grading activities could not stop even though construction of homes is postponed to 2009-2010. The erosion and rainy season with potential mud over flow and its danger and interference with altering drainage pattern must be completed to provide public safety. So the activities you all see out there do not mean home will be constructed soon.
Bridge housing the affordable homes imposed by the City of Irvine TIC is extremely clever knowing that low income housing will affect its branding of villages near by and the aesthetic of low income housing is done poorly. IAC is currently responsible for managing the design and execution of these low income housings so TIC can control and minimize its negative impact to Irvine. This is a very smart move for TIC.
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BK... i can't seem to find the LC and OH post i read last night. I will post if i can find it again. What posted back then is very interesting though.
