General observation from the front lines about the Irvine housing market...

NEW -> Contingent Buyer Assistance Program
[quote author="Look4house" date=1244211680][quote author="No_Such_Reality" date=1244204583]If you buy now and can comfortably afford the payment more power to you. That's why any decently priced home is blowing off the market.</blockquote>


Apparently quite a few buyers fit into this category and I do believe there are more that are waiting to pull the trigger.



Rising mortgage rates alone will not drastically decrease home prices, but the combination of mortgage rates and increase foreclosures/REO will. I am sticking to my words, there will be no significant change in this market till the end of this year. By that time, the reality will hit when people realize the economic recovery will be slow and jobless rates stay persistenly high.



Inventory will remain relatively low in the next few months as the majority of the houses priced between $300-350/sf will find buyers.</blockquote>
I agree, I don't think we will see major price declines in 2009...the fun will probably begin in 2010...higher rates + more REOs.
 
[quote author="No_Such_Reality" date=1244204583]No. Those P's & A's are short sales now. They are REOs six months from now.



Tomorrow more short sales show up from people that are tired of the fight.



If you buy now and can comfortably afford the payment more power to you. That's why any decently priced home is blowing off the market.</blockquote>


I see plenty of short sales in escrow. They won't be REOs six months from now.
 
[quote author="nefron" date=1244237689][quote author="No_Such_Reality" date=1244204583]No. Those P's & A's are short sales now. They are REOs six months from now.



Tomorrow more short sales show up from people that are tired of the fight.



If you buy now and can comfortably afford the payment more power to you. That's why any decently priced home is blowing off the market.</blockquote>


I see plenty of short sales in escrow. They won't be REOs six months from now.</blockquote>


I'll bet a large number of those fall out of escrow. Don't count your chickens before they've hatched, or your sales before they close escrow.
 
[quote author="Geotpf" date=1244241399][quote author="nefron" date=1244237689][quote author="No_Such_Reality" date=1244204583]No. Those P's & A's are short sales now. They are REOs six months from now.



Tomorrow more short sales show up from people that are tired of the fight.



If you buy now and can comfortably afford the payment more power to you. That's why any decently priced home is blowing off the market.</blockquote>


I see plenty of short sales in escrow. They won't be REOs six months from now.</blockquote>


I'll bet a large number of those fall out of escrow. Don't count your chickens before they've hatched, or your sales before they close escrow.</blockquote>
Exactly, I have seen a few short sales as "back-up" offers where the short sale was not yet approved (the listing agent had an accepted offer by the buyer and seller but not the bank/s).
 
[quote author="usctrojanman29" date=1244174731]I am currently working with a few buyers who are actively looking for a SFR in Irvine. I have the following general observations:



1) Short Sale listings tend to have the best pricing

2) 80%+ of the short sale listings are NOT approved by the lenders

3) Any decent priced home (majority of them are short sales) get multiple offers, including over list price (some even sight unseen)

4) There are almost 0 bank owned active MLS listings (REOs)

5) Most of the organic sellers who have equity list their homes for WTF prices, at times extreme WTF prices that are even higher than bubble peak prices (I wonder if they are serious sellers or are they fishing for suckers?)

6) Organic sellers are unwilling to lower their prices by very much or just straight up reject offers

7) Listing agents have serious attitudes and are somewhat unpleasant (maybe this is because of the lack of inventory and amount of bidders out there?)

8) A fair number of RE agents play little tricks with their short sale listings and few know what stage the short sale approval is in



Note that these are not entry level SFR homes that I'm looking at, but more for "move-up" buyers. The market really feels like it did during the bubble years but without the price hikes. If you guys have any questions, fire away...</blockquote>


We are seeing the same thing. This goes to show that inventory has much less to do with pricing than the availability of financing does. Pricing is determined mostly by what people can borrow. Low inventory and low allowable debt amounts makes for a market like we are seeing today.



As interest rates rise, the amounts financed will drop, so prices will fall along with financing amounts, regardless of what happens with inventory. When the inventories pick up, prices will push down further until volumes increase enough to absorb it. Right now it looks as if inventory is going to pick up just as the financing amounts are going to decline. Pricing this fall and winter should be very different than it is today.
 
[quote author="IrvineRenter" date=1244249160][quote author="usctrojanman29" date=1244174731]I am currently working with a few buyers who are actively looking for a SFR in Irvine. I have the following general observations:



1) Short Sale listings tend to have the best pricing

2) 80%+ of the short sale listings are NOT approved by the lenders

3) Any decent priced home (majority of them are short sales) get multiple offers, including over list price (some even sight unseen)

4) There are almost 0 bank owned active MLS listings (REOs)

5) Most of the organic sellers who have equity list their homes for WTF prices, at times extreme WTF prices that are even higher than bubble peak prices (I wonder if they are serious sellers or are they fishing for suckers?)

6) Organic sellers are unwilling to lower their prices by very much or just straight up reject offers

7) Listing agents have serious attitudes and are somewhat unpleasant (maybe this is because of the lack of inventory and amount of bidders out there?)

8) A fair number of RE agents play little tricks with their short sale listings and few know what stage the short sale approval is in



Note that these are not entry level SFR homes that I'm looking at, but more for "move-up" buyers. The market really feels like it did during the bubble years but without the price hikes. If you guys have any questions, fire away...</blockquote>


We are seeing the same thing. This goes to show that inventory has much less to do with pricing than the availability of financing does. Pricing is determined mostly by what people can borrow. Low inventory and low allowable debt amounts makes for a market like we are seeing today.



As interest rates rise, the amounts financed will drop, so prices will fall along with financing amounts, regardless of what happens with inventory. When the inventories pick up, prices will push down further until volumes increase enough to absorb it. Right now it looks as if inventory is going to pick up just as the financing amounts are going to decline. Pricing this fall and winter should be very different than it is today.</blockquote>
Are you seeing this in areas outside of Irvine?
 
[quote author="usctrojanman29" date=1244243947][quote author="Geotpf" date=1244241399][quote author="nefron" date=1244237689][quote author="No_Such_Reality" date=1244204583]No. Those P's & A's are short sales now. They are REOs six months from now.



Tomorrow more short sales show up from people that are tired of the fight.



If you buy now and can comfortably afford the payment more power to you. That's why any decently priced home is blowing off the market.</blockquote>


I see plenty of short sales in escrow. They won't be REOs six months from now.</blockquote>


I'll bet a large number of those fall out of escrow. Don't count your chickens before they've hatched, or your sales before they close escrow.</blockquote>
Exactly, I have seen a few short sales as "back-up" offers where the short sale was not yet approved (the listing agent had an accepted offer by the buyer and seller but not the bank/s).</blockquote>




<strong>Actually, I'm finding that short sales are closing these days.</strong>



In CM, SS and REO each individually have represented 25% of the closed sales, with apparent equity sellers representing the other 50%.
 
[quote author="usctrojanman29" date=1244250004][quote author="IrvineRenter" date=1244249160][quote author="usctrojanman29" date=1244174731]I am currently working with a few buyers who are actively looking for a SFR in Irvine. I have the following general observations:



1) Short Sale listings tend to have the best pricing

2) 80%+ of the short sale listings are NOT approved by the lenders

3) Any decent priced home (majority of them are short sales) get multiple offers, including over list price (some even sight unseen)

4) There are almost 0 bank owned active MLS listings (REOs)

5) Most of the organic sellers who have equity list their homes for WTF prices, at times extreme WTF prices that are even higher than bubble peak prices (I wonder if they are serious sellers or are they fishing for suckers?)

6) Organic sellers are unwilling to lower their prices by very much or just straight up reject offers

7) Listing agents have serious attitudes and are somewhat unpleasant (maybe this is because of the lack of inventory and amount of bidders out there?)

8) A fair number of RE agents play little tricks with their short sale listings and few know what stage the short sale approval is in



Note that these are not entry level SFR homes that I'm looking at, but more for "move-up" buyers. The market really feels like it did during the bubble years but without the price hikes. If you guys have any questions, fire away...</blockquote>


We are seeing the same thing. This goes to show that inventory has much less to do with pricing than the availability of financing does. Pricing is determined mostly by what people can borrow. Low inventory and low allowable debt amounts makes for a market like we are seeing today.



As interest rates rise, the amounts financed will drop, so prices will fall along with financing amounts, regardless of what happens with inventory. When the inventories pick up, prices will push down further until volumes increase enough to absorb it. Right now it looks as if inventory is going to pick up just as the financing amounts are going to decline. Pricing this fall and winter should be very different than it is today.</blockquote>
Are you seeing this in areas outside of Irvine?</blockquote>


It is the same over most of Orange County. Even the subprime war zones are finding buyers, albeit at much lower prices. Riverside County has shown a declining inventory, but there is still plenty available. I was at a BIA function in Riverside County recently, and a county official was commenting on the next wave of foreclosures and what they believe this will do to county property tax revenues. The people in-the-know in the government are bracing for the next wave.
 
I've also noticed in the OC Register and increased number of ads for new homes. I wonder if they think this little bump is a sign for them to lure in some Knife Catchers.
 
[quote author="furious sugar" date=1244257592]I'm curious if any contingent offers are being accepted? Are sellers taking offers that include the buyer having to sell their existing home?</blockquote>


Yes, some are. Depends upon the whole offer, and not just the price. Usually it will require offering a "risk premium" over a non-contingent offer, though.



Free advice alert:



1. If you have the intention of making offers contingent upon the sale of another home, your agent should provide a copy of your listing intentions, marketing plan, and comparable sales that support the likelihood of your home getting sold to those sellers.



2. If you receive an offer that is contingent upon the sale of the buyer's home, you should also investigate the buyer's agent (or whomever they will work with to sell their home) to protect yourself for the same reason.



3. Particularly for these cases, both sides should pay very careful attention to that pesky liquidated damages clause. Just sayin'.



Good luck,

-IR2
 
Uh oh, looks like higher rates may begin having a negative effect on real estate already. I put an offer in on a short sale this afternoon for one of my buyers and the listing agent indicated that he had 2 offers as of this morning until one of the offers was pulled because the buyer could no longer qualify for the mortgage with the increase in mortgage rates over the past 2 business days.
 
I attended the Building Industry Association of Orange County (BIA OC) event last night, and I spoke with many people. Several told me that new home sales, particularly new condo sales, were up dramatically in May. The combination of low prices, low interest rates and a $10,000 tax break from the State of California have had an impact.



Of course, these stimuli are temporary, but it was good news for an industry that has shrunk 90% over the last three years. (BTW, I am not exaggerating about the 90% decline in the homebuilding industry).



Nobody mentioned the sudden change in interest rates; if any are aware of it, it is something they would rather not think about. I cannot adequately convey to you the despair in the homebuilding industry; even the survivors are traumatized.
 
[quote author="IrvineRenter" date=1244581538]I attended the Building Industry Association of Orange County (BIA OC) event last night, and I spoke with many people. Several told me that new home sales, particularly new condo sales, were up dramatically in May. The combination of low prices, low interest rates and a $10,000 tax break from the State of California have had an impact.



Of course, these stimuli are temporary, but it was good news for an industry that has shrunk 90% over the last three years. (BTW, I am not exaggerating about the 90% decline in the homebuilding industry).



Nobody mentioned the sudden change in interest rates; if any are aware of it, it is something they would rather not think about. I cannot adequately convey to you the despair in the homebuilding industry; even the survivors are traumatized.</blockquote>
Oh, I believe it...the term "shell shock" comes to time. haha What are they thinking about continuing construction over at Woodbury? I guess it could be a good indicator that we might have reach the peak of this mini bear rally.
 
Inventory is still tight in Irvine with decently priced homes getting swarmed by buyers like locusts. However, I have been able to get two of my buyers into contract the past few weeks due to the listing agents being very good. I'm still waiting for IR2 to get me a good listing in Westpark so we can do a deal together.
 
[quote author="usctrojanman29" date=1247616012]Inventory is still tight in Irvine with decently priced homes getting swarmed by buyers like locusts. However, I have been able to get two of my buyers into contract the past few weeks due to the listing agents being very good. I'm still waiting for IR2 to get me a good listing in Westpark so we can do a deal together.</blockquote>
I've gotten a few PMs about how I was able to get those buyers into contract. Well, the key was being quick on your feet and acting quickly plus having a good and open line of communication with the listing agents. We all know that most realtors out there are worthless, but there good ones out there and when you find them they are a pleasure to work with. The one thing I would recommend to respective buyers in this crazy market is to do your research (leveraging your agents knowledge and information) and once you come upon something that hits the mark to be decisive.
 
[quote author="usctrojanman29" date=1247628083][quote author="usctrojanman29" date=1247616012]Inventory is still tight in Irvine with decently priced homes getting swarmed by buyers like locusts. However, I have been able to get two of my buyers into contract the past few weeks due to the listing agents being very good. I'm still waiting for IR2 to get me a good listing in Westpark so we can do a deal together.</blockquote>
I've gotten a few PMs about how I was able to get those buyers into contract. Well, the key was being quick on your feet and acting quickly plus having a good and open line of communication with the listing agents. We all know that most realtors out there are worthless, but there good ones out there and when you find them they are a pleasure to work with. The one thing I would recommend to respective buyers in this crazy market is to do your research (leveraging your agents knowledge and information) and once you come upon something that hits the mark to be decisive.</blockquote>


Are you telling these buyers that they are likely overpaying? or are you omitting that part?
 
What exactly is overpaying? What if you want to stay in the same house you bought until your kids finish high school - do you really care if the home price drops twenty percent? How do you know that in the next fifteen years that rent will not increase 30%?
 
[quote author="IrvineRenter" date=1247628967][quote author="usctrojanman29" date=1247628083][quote author="usctrojanman29" date=1247616012]Inventory is still tight in Irvine with decently priced homes getting swarmed by buyers like locusts. However, I have been able to get two of my buyers into contract the past few weeks due to the listing agents being very good. I'm still waiting for IR2 to get me a good listing in Westpark so we can do a deal together.</blockquote>
I've gotten a few PMs about how I was able to get those buyers into contract. Well, the key was being quick on your feet and acting quickly plus having a good and open line of communication with the listing agents. We all know that most realtors out there are worthless, but there good ones out there and when you find them they are a pleasure to work with. The one thing I would recommend to respective buyers in this crazy market is to do your research (leveraging your agents knowledge and information) and once you come upon something that hits the mark to be decisive.</blockquote>


Are you telling these buyers that they are likely overpaying? or are you omitting that part?</blockquote>
I did tell them that there is a risk that may lose a part of their downpayment over the next few years so they need to consider whether the homes they put offers one would be ones where they could see themselves living in for 7-10+ years. Their accepted offers were at or slightly under current comps. Both of them went "eyes wide open" into the transaction knowing that the real estate market will probably be bumpy for the next few years. I left it up to them to make the call, I just provided them the information at my disposal.
 
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