Housing Analysis

[meccos12]

Also, at the $1.5m range, no one is waiting if they can afford that price... 20% is negligible once you get into that high-end type pricing so you actually doubled up on the straw.

Here I conveniently placed the quote here so you can see for yourself exactly what you wrote.

also I decided to link you the wikipedia site for "strawman argument"
https://en.wikipedia.org/wiki/Straw_man

 

[irvinehomeowner]

It?s ok.

People who tend to bring strawman accusationss into a discussion aren?t really interested in hearing the other side.

It was you who put my 20% statement up as a strawman because you ignored everything else I said.

Or am I strawmanning you again?

 

[Kenkoko]

So how do you determine a winner?  Wait until that buyer sells and then compare it with what the seller bought next with the proceeds (real estate or otherwise)?  Seems like that would be an ongoing game and it would be hard to trace/track/keep score.
I?m with IHO on this one very specific issue. Not because I like him or bc he?s ?popular? in these parts though

By IHO?s definition, pretty much every buyer and seller who completed a transaction willingly is considered a winner. Seriously?

Determining a winner is impossible without time elapsed and hindsight, which is precisely my point. The only for sure winner, at close of escrow, is the agent(s)

 

[irvinebullhousing]

Buy new, hold forever, pass the property down to your children, heirs, charity. Problem solve......

 

[irvinehomeowner]

So how do you determine a winner?  Wait until that buyer sells and then compare it with what the seller bought next with the proceeds (real estate or otherwise)?  Seems like that would be an ongoing game and it would be hard to trace/track/keep score.
I?m with IHO on this one very specific issue. Not because I like him or bc he?s ?popular? in these parts though

By IHO?s definition, pretty much every buyer and seller who completed a transaction willingly is considered a winner. Seriously?

Determining a winner is impossible without time elapsed and hindsight, which is precisely my point. The only for sure winner, at close of escrow, is the agent(s)

So when does ?more often than not? equal ?pretty much every??

Using your definition seems too ambiguous and I think you?re getting caught up in what ?winning? is.

To me it?s simple, both parties got what they wanted at a certain point in time.

There are exceptions, even to who you think who won. What if the realtor made less on commission compared to the work/cost they put in?

 

[Kenkoko]

To me it?s simple, both parties got what they wanted at a certain point in time.

There are exceptions, even to who you think who won. What if the realtor made less on commission compared to the work/cost they put in?

That describes every seller and every buyer at the very moment that the agreement is struck.

How many people truly determine success/failure of a transaction based on that? Without time elapsed ?

Heck, there is a reason why there is a 72 hour clause when you make a major purchase like a house or a car. What seemed like a good decision at the time may seem like a bad idea in mere  72 hours or less.

You expect us to believe there are realtors knowingly putting in more of his/her money into a transaction than he/she gets out of it?

It?s fine that you labeled me anti-realtor. You are definitely pro-realtor.

 

[bones]

To me it?s simple, both parties got what they wanted at a certain point in time.

There are exceptions, even to who you think who won. What if the realtor made less on commission compared to the work/cost they put in?

That describes every seller and every buyer at the very moment that the agreement is struck.

How many people truly determine success/failure of a transaction based on that? Without time elapsed ?

Heck, there is a reason why there is a 72 hour clause when you make a major purchase like a house or a car. What seemed like a good decision at the time may seem like a bad idea in mere  72 hours or less.

You expect us to believe there are realtors knowingly putting in more of his/her money into a transaction than he/she gets out of it?

It?s fine that you labeled me anti-realtor. You are definitely pro-realtor.

So who?s the winner in your marriage?  Has enough time elapsed? Or did no one say congrats to the bride and groom when you got married? 

 

[Kenkoko]

So who?s the winner in your marriage?  Has enough time elapsed? Or did no one say congrats to the bride and groom when you got married?

Most of my friends would say I am the winner and I agree. I got lucky.

50% marriages ends in divorces. What seemed like a good idea at one point in time may seem like a disaster later on in time.

Did your wedding officiant receive 3-6% of your wedding funds after he said the congrats?

Are we seriously comparing RE transactions to marriages? seems rather pathetic

 

[irvinehomeowner]

@meccos12:

Let's put the strawman aside and get back to what you asked because I think you want to know and I'm not sure you understand my viewpoint (and again, this is just my opinion, not advice directed at everyone... but only those who find themselves in a similar situation).

This is where it started:

but if there is something today that you really like and you can afford, then why wait? Even if it costs up to 20% less in 2 years from now (which I doubt because as I've said, in Irvine, prices tend to drop slower than they rise)... because 5-10 years from now, you should make up that drop and have been enjoying the home you want for 2 extra years (presupposed on that you plan to stay in Irvine for the next 5-10 years).

With inventory shooting up, demand going down buyers have no reason to rush to buy unless they find their perfect home for a reasonable price.  Unfortunately inventory is still a bit low and prices are still high, thus buyers are letting the market correct hence the change in housing trends.  This "buy something because you can afford it and like it" and "why wait" sounds like realtor shills. 

BTW im surprised you wouldnt wait 2 years to save 20%.  In irvine 20% on a house could easily be 250-300K difference. 

So let me construct a better answer rather than using a hypothetical.

1. No one can guarantee a 20% drop in 2 years, so waiting is a gamble.
2. Even if someone could guarantee a 20% drop in 2 years... or even if it does happen, realistically, it will not be on the same product you are looking at today. It will either be a different floorplan, a different location or something else that is unfavorable because the houses that drop the most are not usually the best ones. I've explained this before and you actually said it yourself:

First its not all about prices.  People could be waiting for better floorplans, better location, better schools, better anything, including better prices.  All of us know that in determining which house to buy, its about price as well as a bunch of other things. 

Now if I'm taking that quote out of context, please let me know.

And yes, $250-300k is quite a bit of money to save but when you take in all the other factors, the uncertainty of waiting, having to rent for 2+ years (depending on your situation), in the end, it's just not worth it.

I can also say this because we experienced it. I don't think you were around the IHB but we were in the market at 2008. This was when the prices started dropping and while everyone was predicting a 50%+ drop, we would be happy with a 20% drop from a price we were willing to pay. So we waited, it helped in that we were able to rent in an area we were looking to buy and it freed up some capital for us to spend on things we felt were more important. For 2 years, we did not find anything that was in our 20% off price range or the location we wanted. 2010 came along and The New Home Collection in Woodbury opened. The homes were okay... but no 3CWG and Woodbury wasn't really where we wanted to live. For the next few years we probably found maybe 2 homes that were in the 20% off range, but one was a detached condo and the floorplan was meh and did not have a driveway, the other didn't have a downstairs BR. The detached condo was in a preferred location, the other was not. There was a 3rd that was only 10% discounted from what we were looking for. And then there were also brand new and resale homes in Tustin... but there were too many factors for us not to buy there (although a few members here have made tons of equity on those new homes). Then prices started rising and we realized that after looking at over 150 homes, there was no home that we would be able to find for our "20% off discount"... and we finally bought something that was actually 20% over the non-discounted price.

So yes... that difference from what we hoped to buy at a discount and what we actually bought was well over $300k.

And again, this may be a situation very unique to us because we are picky. But after settling for homes in locations that weren't ideal, for this one we did not want to compromise so we spent more.

If you can wait, and are not as picky as me, by all means, see where this "slowdown" goes. But if you have found the home that you want now, don't want to worry about where you are living in the next X years (because 2 years can turn into much longer), can stay long term... instead of hoping that same exact house is going to be discounted 20% in the future and you will be the only buyer... I think you shouldn't wait.

 

[irvinehomeowner]

To me it?s simple, both parties got what they wanted at a certain point in time.

There are exceptions, even to who you think who won. What if the realtor made less on commission compared to the work/cost they put in?

That describes every seller and every buyer at the very moment that the agreement is struck.

I said there are exceptions. Nothing is absolute. My original post said that I believe more real estate transactions are actually win/win than not. You claim I said "pretty much every" which was not the case.

And if there wasn't a larger amount of win/win scenarios, how are people still using realtors?

How many people truly determine success/failure of a transaction based on that? Without time elapsed ?

Again, this depends on your definition of "winning".

Heck, there is a reason why there is a 72 hour clause when you make a major purchase like a house or a car. What seemed like a good decision at the time may seem like a bad idea in mere  72 hours or less.

Isn't that what escrow is for? So both buyer and seller can take 30-90 days to research, inspect and do their due diligence to make sure it's something they want to go through with.

You expect us to believe there are realtors knowingly putting in more of his/her money into a transaction than he/she gets out of it?

Again, like I said, exceptions to the rule. And I didn't just say money, I said work/cost. There are clients who take up so much of the realtor's time, it doesn't remain profitable. Do you actually believe that "every" transaction, "every" realtor has profited?

It?s fine that you labeled me anti-realtor. You are definitely pro-realtor.

You used the term "realtor shill" in the post I responded to (and I did say "some of you *may* be anti-realtor"). Also, although you say you work with realtors, it does seem like you have quite a bit of negativity towards the industry:

I am anti empty blanket statements which are common practice in real estate. 

[..]

I am anti a lot of things the real estate profession has failed to correct or regulate.

I am anti the lack of required transparency. I am anti the ethical conflicts of dual agency. I am anti the extreme ease of acquiring a RE license.

One can be legally allowed to advise people, as a qualified professional, on making the biggest financial investment of their lives with no educational degree, no apprenticeship, no financial training. All one has to do is pass an extremely easy exam.

And don't get me wrong, I actually agree with a lot of your points above but I just don't agree when you say that the only person who wins in a real estate transaction is the realtor.

 

[eyephone]

?Rental Glut Sends Chill Through the Hottest U.S. Housing Markets

Seattle is known for its hip neighborhoods, soaring home prices, and being home to Amazon.com Inc., the world?s most valuable company. So why is its rental housing market experiencing the most severe slowdown in the U.S.?

Seattle-area median rents didn?t budge in July, after a 5 percent annual increase a year earlier and 10 percent the year before, according to Zillow data on apartments, houses and condos. While that?s the biggest decline among the top 50 largest metropolitan areas, it?s part of a national trend. Rents in Nashville and Portland, Oregon, have actually started falling. In the U.S., rents were up just 0.5 percent in July, the smallest gain for any month since 2012.

Reminiscent of the Bubble

Already, housing markets in strong economies are cooling, in part because incomes haven?t kept pace with rising prices and borrowing costs. Dallas and Denver have reached so far into favorable rental territory that they look like Miami right before it crashed in the last decade, Johnson said.?

Source:https://www.bloomberg.com/news/arti...chill-through-the-hottest-u-s-housing-markets

My comment: Now rentals are slowing down?

 

[Kenkoko]

And don't get me wrong, I actually agree with a lot of your points above but I just don't agree when you say that the only person who wins in a real estate transaction is the realtor.

IHO, I never said that. Go back and re-read my original post.

I said that it would take TIME to know if a transaction was a win/win. The only thing we know for sure AT THE CLOSE OF ESCROW is that the agent came away a winner.

I said realtor shills because I see this way too early congratulations given out by realtors as an empty blanket statement which are common practice in RE.

You can define winning however you like. I disagree with your take that a win/win can be determined at the close of escrow. Time can change everything. For me, determining a winner is impossible without time elapsed and hindsight.

 

[Kenkoko]

My comment: Now rentals are slowing down?

Rentals are slowing down in Irvine as well. You can easily rent a 1 mil home for $3500 or less in great park neighborhoods.
https://www.zillow.com/homedetails/134-Newall-Irvine-CA-92618/2095129211_zpid/

 

[Kenkoko]

Same in cypress village. Single detached 1mil+ home for $3500
https://www.zillow.com/homedetails/73-Gardenstone-Path-Irvine-CA-92620/2100072603_zpid/

Also in woodbury
https://www.zillow.com/homedetails/222-Mantle-Irvine-CA-92618/95728870_zpid/

 

[irvinehomeowner]

And don't get me wrong, I actually agree with a lot of your points above but I just don't agree when you say that the only person who wins in a real estate transaction is the realtor.

IHO, I never said that. Go back and re-read my original post.

I think we are splitting hairs but I went back and re-read and this is what you said:

The only person who should be congratulated at the end of escrow is the realtor who came out a for sure winner.
[...]
The only for sure winner, at close of escrow, is the agent(s)

And then you just said this:

I said that it would take TIME to know if a transaction was a win/win. The only thing we know for sure AT THE CLOSE OF ESCROW is that the agent came away a winner.

So maybe I need to clarify... at CLOSE OF ESCROW... I don't agree that the realtor is the only winner. And for what the buyer and seller were expecting at close of escrow, I still contend they are both winners.

You can define winning however you like. I disagree with your take that a win/win can be determined at the close of escrow. Time can change everything. For me, determining a winner is impossible without time elapsed and hindsight.

When you are bringing in things that take time to tell, I think that is an unfair measurement to apply. Please give me examples of what things would time and hindsight reveal that are not within the expectations for both buyer and seller for most real estate transactions?

 

[zubs]

The 2018 trump tax change may affect the 2019 housing prices.  However, this is all priced in, because it is known.  It is not a black swan event.  It is affecting housing now and in the future.

Your first sentence states the tax changes may affect prices in 2019, then the very next sentence say its already priced in.  Also
I am not sure how you can make a claim that the tax changes are already priced in.  How do you know such things?  What evidence would give you reasons to make such claims?

BTW I am not making an argument the the tax changes will or will not have an affect, just simply wishing you to clarify.  However if I were to make a guess, I would argue that tax changes WILL have an affect and it is yet to come as most people are not keen on tax changes as most of us on this forum.

I was thinking about SoylentGreens comments to me that in 2019, housing will have huge economic waves due to Trumps tax reforms.  This is a reasonable conclusion.  However, the price declines in housing has already started, and so in 2019, I don't think there will be an aggressive drop, but a gradual decline.

So I posit a 10% decline from here until 2020 as the maximum.  A house bought this year for 1,000,000 will be worth around 900,000 in 2020....but like what IHO says, that house won't be on the market because the owner won't sell.  However, if you are buying for investment, 2020 is a good time to buy.

 

[eyephone]

The 2018 trump tax change may affect the 2019 housing prices.  However, this is all priced in, because it is known.  It is not a black swan event.  It is affecting housing now and in the future.

Your first sentence states the tax changes may affect prices in 2019, then the very next sentence say its already priced in.  Also
I am not sure how you can make a claim that the tax changes are already priced in.  How do you know such things?  What evidence would give you reasons to make such claims?

BTW I am not making an argument the the tax changes will or will not have an affect, just simply wishing you to clarify.  However if I were to make a guess, I would argue that tax changes WILL have an affect and it is yet to come as most people are not keen on tax changes as most of us on this forum.

I was thinking about SoylentGreens comments to me that in 2019, housing will have huge economic waves due to Trumps tax reforms.  This is a reasonable conclusion.  However, the price declines in housing has already started, and so in 2019, I don't think there will be an aggressive drop, but a gradual decline.

Of course you get your advice from a Trump supporter. Economic wave that is supported by tax on the middle class. (Reducing the the salt tax)

 

[eyephone]

The 2018 trump tax change may affect the 2019 housing prices.  However, this is all priced in, because it is known.  It is not a black swan event.  It is affecting housing now and in the future.

Your first sentence states the tax changes may affect prices in 2019, then the very next sentence say its already priced in.  Also
I am not sure how you can make a claim that the tax changes are already priced in.  How do you know such things?  What evidence would give you reasons to make such claims?

BTW I am not making an argument the the tax changes will or will not have an affect, just simply wishing you to clarify.  However if I were to make a guess, I would argue that tax changes WILL have an affect and it is yet to come as most people are not keen on tax changes as most of us on this forum.

I was thinking about SoylentGreens comments to me that in 2019, housing will have huge economic waves due to Trumps tax reforms.  This is a reasonable conclusion.  However, the price declines in housing has already started, and so in 2019, I don't think there will be an aggressive drop, but a gradual decline.

So I posit a 10% decline from here until 2020 as the maximum.  A house bought this year for 1,000,000 will be worth around 900,000 in 2020....but like what IHO says, that house won't be on the market because the owner won't sell.  However, if you are buying for investment, 2020 is a good time to buy.

Change of heart when you saw my post regarding the slowdown in rents.

 

[Kenkoko]

When you are bringing in things that take time to tell, I think that is an unfair measurement to apply. Please give me examples of what things would time and hindsight reveal that are not within the expectations for both buyer and seller for most real estate transactions?

Sure, I can think of plenty. Some of which I (and my family) experienced.
- School rezoned. This happened to my parents? house in when Arcadia/Temple City re-draw school district line. Hugely affected property prices.

- Large HOA special assessment. This happened to my last investment property for re-piping. It went from a good deal to a barely break even.

- Big change in macro economy. Just think of all the buyers who bought right before the great recession. Should they be congratulated at the close of their escrow? They sure did fit your criteria.

- Unforeseen major home repairs. Not only it cost buyer major $$$ they affect quality of life. Should this buyer be congratulated at the close of escrow for catching a lemon?

 

[zubs]

The 2018 trump tax change may affect the 2019 housing prices.  However, this is all priced in, because it is known.  It is not a black swan event.  It is affecting housing now and in the future.

Your first sentence states the tax changes may affect prices in 2019, then the very next sentence say its already priced in.  Also
I am not sure how you can make a claim that the tax changes are already priced in.  How do you know such things?  What evidence would give you reasons to make such claims?

BTW I am not making an argument the the tax changes will or will not have an affect, just simply wishing you to clarify.  However if I were to make a guess, I would argue that tax changes WILL have an affect and it is yet to come as most people are not keen on tax changes as most of us on this forum.

I was thinking about SoylentGreens comments to me that in 2019, housing will have huge economic waves due to Trumps tax reforms.  This is a reasonable conclusion.  However, the price declines in housing has already started, and so in 2019, I don't think there will be an aggressive drop, but a gradual decline.

So I posit a 10% decline from here until 2020 as the maximum.  A house bought this year for 1,000,000 will be worth around 900,000 in 2020....but like what IHO says, that house won't be on the market because the owner won't sell.  However, if you are buying for investment, 2020 is a good time to buy.

Change of heart when you saw my post regarding the slowdown in rents.

Is that a question or a comment?
On page 11 I wrote "Wait until 2020 to buy for a probable 10% drop in housing"