Housing Analysis

[irvinehomeowner]

The other thing that we need to think about when it comes to Irvine is the non fundamental factors that keep it from dropping as fast and as far as surrounding cities.

Back in 08, there weren?t many believers in my FCB theory and now, because Irvine prices did not drop as far and recovered more quickly, people see iirvine as a more stable location to invest (FCB rep!). That creates a good number of well financed buyers who have bought in Irvine. Let?s call them the WFBs.

So if a slowdown were to occur, you will see less panic in Irvine because of the large number of WFBs even if the FCBs are not holding. But I am pretty sure that there is a larger percentage of FCB owned homes in Irvine today than 10 years ago.

And one other thing that someone mentioned about recency bias. New hoods tend to have less price drops than resale hoods. That?s because everyone bought at around the same time and at the same price so there is smaller leeway to discount.

You will see price drops more often in resale because those are equity owners and have more margin to take a cut on. Since there have been a ton of new builds in Irvine in the last 8 years, that?s another price stability factor.

 

[Loco_local]

I think there are a lot more investor owned homes than in 2008. If they sense a bloodbath or even a 10-20% drop, they have no incentive to hold on for another decade especially if they can't get high enough rent to justify the carrying cost.

 

[Mety]

Yes. The one and only purpose for FCBs to invest in Irvine is to get MAXROI. When they feel the peak of the market and looks like a time to get da heck out, they'll list hundreds of homes they own and escape ASAP. Of course some newbie FCB or 50%-down-payers might not catch the train on time and linger around a little more, but the real ones will be out by then.

BTW, how come no one is talking about the market going UP? Everyone is talking about the drop how much it will drop and so on. Are we all feeling Delano, I mean RE market has been too expensive awhile now?

 

[akkord]

Yes. The one and only purpose for FCBs to invest in Irvine is to get MAXROI. When they feel the peak of the market and looks like a time to get da heck out, they'll list hundreds of homes they own and escape ASAP.

The only reason is MAXROI?  Don't think that's true. What if they want to avoid getting jacked by the Chinese government and want a safe haven for their cash or for their kids to go to school?  I know of a Chinese guy who bought his kids all homes in BP since they were living out here/school.  Let me know when they list their 100s of homes so we can buy for cheap.

Isn't half of Eastwood FCBs...let me know when the neighborhood goes on sale. Wait Delano is there, is that a bad buy now since FCBs want out?

 

[fortune11]

Yes. The one and only purpose for FCBs to invest in Irvine is to get MAXROI. When they feel the peak of the market and looks like a time to get da heck out, they'll list hundreds of homes they own and escape ASAP.

The only reason is MAXROI?  Don't think that's true. What if they want to avoid getting jacked by the Chinese government and want a safe haven for their cash or for their kids to go to school?  I know of a Chinese guy who bought his kids all homes in BP since they were living out here/school.  Let me know when they list their 100s of homes so we can buy for cheap.

Isn't half of Eastwood FCBs...let me know when the neighborhood goes on sale. Wait Delano is there, is that a bad buy now since FCBs want out?

Yes this is correct

If one thing anyone has learned from the past 3 -4 years --- the top 1% from emerging economies  want safer haven assets outside their local domains. 

when liquidity bites they would rather sell their local assets first and then keep the Irvine / US asset for last . 

If anyone is hoping for an FCB selling wave -- if it does materialize - will be against the backdrop of a global recession in which there is nowhere to hide anyways .  In that sense , I think housing sector moved first , and now this "rolling selloff" is hitting other markets one by one .  Kudos again to eyephone for catching the housing  "turn" earlier in the year . 

 

[Mety]

Yes. The one and only purpose for FCBs to invest in Irvine is to get MAXROI. When they feel the peak of the market and looks like a time to get da heck out, they'll list hundreds of homes they own and escape ASAP.

The only reason is MAXROI?  Don't think that's true. What if they want to avoid getting jacked by the Chinese government and want a safe haven for their cash or for their kids to go to school?  I know of a Chinese guy who bought his kids all homes in BP since they were living out here/school.  Let me know when they list their 100s of homes so we can buy for cheap.

Isn't half of Eastwood FCBs...let me know when the neighborhood goes on sale. Wait Delano is there, is that a bad buy now since FCBs want out?

What is MAXROI? Is it only money? Should I be careful when I say investors also invest in their kids?  Are they trying to avoid paying Chinese government their due taxes? They feeling like getting robbed so they look for a better place to invest, aren't they? I have no problem of FCBs keep pouring money here in U.S. Just expect those money will get out at some point.

Do you want me to let you know when they list their homes? What did I say? Didn't I say they will list when its the peak? Are you saying right now is the peak?

I think buying Delano now is a bad investment unless you're going to hold on to it 15+ years.

Thanks for your opinions, but please note I did not say right now is the peak. I keep saying I do not know that timing and how much it will drop. I also said why is everyone talking about it will drop instead of up.

 

[Kenkoko]

when liquidity bites they would rather sell their local assets first and then keep the Irvine / US asset for last . 

That's definitely false when it comes to Chinese FCBs.

Chinese investors sold 1.29 billion US RE in the 2nd quarter and only bought 126 million US RE.
This is the first time since 2008 that Chinese investors sold more US real estate than bought.
Perspective buyers should heed this trend reversal.

This is also evident locally if you bother to check on the Chinese newspaper.
Most Chinese RE agents in Irvine all tout the liquidity in their ads.
Some even offer a 45 days guarantee to sell the listed homes or they will buy it.

 

[akkord]

Yes. The one and only purpose for FCBs to invest in Irvine is to get MAXROI. When they feel the peak of the market and looks like a time to get da heck out, they'll list hundreds of homes they own and escape ASAP.

The only reason is MAXROI?  Don't think that's true. What if they want to avoid getting jacked by the Chinese government and want a safe haven for their cash or for their kids to go to school?  I know of a Chinese guy who bought his kids all homes in BP since they were living out here/school.  Let me know when they list their 100s of homes so we can buy for cheap.

Isn't half of Eastwood FCBs...let me know when the neighborhood goes on sale. Wait Delano is there, is that a bad buy now since FCBs want out?

What is MAXROI? Is it only money? Should I be careful when I say investors also invest in their kids?  Are they trying to avoid paying Chinese government their due taxes? They feeling like getting robbed so they look for a better place to invest, aren't they? I have no problem of FCBs keep pouring money here in U.S. Just expect those money will get out at some point.

Do you want me to let you know when they list their homes? What did I say? Didn't I say they will list when its the peak? Are you saying right now is the peak?

I think buying Delano now is a bad investment unless you're going to hold on to it 15+ years.

Thanks for your opinions, but please note I did not say right now is the peak. I keep saying I do not know that timing and how much it will drop. I also said why is everyone talking about it will drop instead of up.

You must be reading something different.  Did I say you said it was the peak?  I said let me know when they list their 100s of homes so we can buy on the cheap, that in no way references now, but if the peak happens and in your words "hundreds of homes" it should be noticeable so I would like you to let us know on this forum as you keep up with the market more than I do. If that many homes flood the market it?s a buying opportunity. A lot of people have called peak and now a softening in the market so did the FCBs miss their best chance to sell if they are getting squeezed in their local markets?

 

[meccos12]

Translation: Owners have money and if they have to sell at a loss, they gonna hold the property.

Prices follow volume.  Volume drops, then prices drop.  Question is when and how much.

 

[meccos12]

Yes. The one and only purpose for FCBs to invest in Irvine is to get MAXROI. When they feel the peak of the market and looks like a time to get da heck out, they'll list hundreds of homes they own and escape ASAP. Of course some newbie FCB or 50%-down-payers might not catch the train on time and linger around a little more, but the real ones will be out by then.

I agree.  Other thing to consider is that FCB may be the ones to crash the housing market here.  Chinese markets are crumbling.  Lotsa Chinese purchase homes and stocks on margin.  This may stress many to sell.

 

[zubs]

Last time Irvine dropped in 2007-2009, the drop was between 10% - 25%.  This was when liar loans was at its peak.
Do you think Irvine will drop 10-25% again like last time?

It is doubtful.  5-10% will be the limit of the damage in the coming years.  Even now prices are up 5%.

 

[Mety]

Yes. The one and only purpose for FCBs to invest in Irvine is to get MAXROI. When they feel the peak of the market and looks like a time to get da heck out, they'll list hundreds of homes they own and escape ASAP.

The only reason is MAXROI?  Don't think that's true. What if they want to avoid getting jacked by the Chinese government and want a safe haven for their cash or for their kids to go to school?  I know of a Chinese guy who bought his kids all homes in BP since they were living out here/school.  Let me know when they list their 100s of homes so we can buy for cheap.

Isn't half of Eastwood FCBs...let me know when the neighborhood goes on sale. Wait Delano is there, is that a bad buy now since FCBs want out?

What is MAXROI? Is it only money? Should I be careful when I say investors also invest in their kids?  Are they trying to avoid paying Chinese government their due taxes? They feeling like getting robbed so they look for a better place to invest, aren't they? I have no problem of FCBs keep pouring money here in U.S. Just expect those money will get out at some point.

Do you want me to let you know when they list their homes? What did I say? Didn't I say they will list when its the peak? Are you saying right now is the peak?

I think buying Delano now is a bad investment unless you're going to hold on to it 15+ years.

Thanks for your opinions, but please note I did not say right now is the peak. I keep saying I do not know that timing and how much it will drop. I also said why is everyone talking about it will drop instead of up.

You must be reading something different.  Did I say you said it was the peak?  I said let me know when they list their 100s of homes so we can buy on the cheap, that in no way references now, but if the peak happens and in your words "hundreds of homes" it should be noticeable so I would like you to let us know on this forum as you keep up with the market more than I do.

Gotcha. I wish I can buy those homes cheap too when they sell  ;D, but at the same time I'm concerned about how the economy might get bad overall.

I do keep an eye on the market quite a bit. It's like a hobby. I will let you guys know when it seems like it's crashing.

 

[meccos12]

Last time Irvine dropped in 2007-2009, the drop was between 10% - 25%.  This was when liar loans was at its peak.
Do you think Irvine will drop 10-25% again like last time?

It is doubtful.  5-10% will be the limit of the damage in the coming years.  Even now prices are up 5%.

Has anyone on this thread claimed a 25% drop?  No one, so I am not sure why people keep insinuating claims of a housing meltdown such as a 25% drop.  There is a reason why people claim a "slowdown" and are not claiming a CRASH.  However I agree with the 5-10% drop as that seems reasonable. 

Also, price may be up 5% YoY, but we didnt see a slowdown until recently.  Thus a 5% YoY in Oct increase means nothing in context to the recent slowdown, but rather is a reflection of the events from the past year.  Lets see what YoY prices are next year as that will reflect the recent slowdowns we are seeing now.     

 

[the.irvine]

Lets not mix other locations with Irvine. Housing in Irvine is very stable, and will stay like this. I work in Tech industry, more and more companies are moving to SOCAL, because costing of living in NOCAL is very high. There are tons of new commercial properties coming up as well. Most importantly, many non-Asians are moving to Irvine from neighboring cities for middle and high schools. Again, no one can predict the future, but it doesn't hurt to be optimistic and wrong rather be pessimistic and right. 

 

[fortune11]

when liquidity bites they would rather sell their local assets first and then keep the Irvine / US asset for last . 

That's definitely false when it comes to Chinese FCBs.

Chinese investors sold 1.29 billion US RE in the 2nd quarter and only bought 126 million US RE.
This is the first time since 2008 that Chinese investors sold more US real estate than bought.
Perspective buyers should heed this trend reversal.

This is also evident locally if you bother to check on the Chinese newspaper.
Most Chinese RE agents in Irvine all tout the liquidity in their ads.
Some even offer a 45 days guarantee to sell the listed homes or they will buy it.

Do you have  data on what happened in 2015

That is the single best comp we have

No one is saying FCBs are that dumb that they will keep buying en masse . Isn?t this partly why we have the market weakness .

 

[meccos12]

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[meccos12]

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[meccos12]

Lets not mix other locations with Irvine. Housing in Irvine is very stable, and will stay like this. I work in Tech industry, more and more companies are moving to SOCAL, because costing of living in NOCAL is very high. There are tons of new commercial properties coming up as well. Most importantly, many non-Asians are moving to Irvine from neighboring cities for middle and high schools. Again, no one can predict the future, but it doesn't hurt to be optimistic and wrong rather be pessimistic and right.

Why not mix Irvine with other locations?  Is Irvine immune while other areas are not?  Is Newport immune?  Is SF immune?  is Arcadia immune?  Why is Irvine very stable?  I think you need to explain your case a bit better than just state opinions because this claim can be made about any city. 

1.  You state Tech is coming to Socal.  Sure there are a lot of tech in Irvine, but also in many other Socal areas.  Are all these areas more stable as a result?  What if tech takes a hit as it is currently doing now?

2.  Assuming you are correct with there being tons more commercial coming up, how does that help Irvine?

3.  Does more non Asians moving to Irvine make Irvine more stable?  how so?

4.  Yes no one can predict the future.  However we are seeing trends (evidence) to suggest a slowdown. 

5.  Finally I would disagree with you in that there can actually be great harm in being too optimistic.  Isnt being too optimistic the reason people buy high or buy into bubbles?  Just ask people who bought bitcoin at 20K and see if being too optimistic didnt hurt.  I would argue in these specific times, it probably is generally safer to be on the pessimistic side, especially with housing.

 

[bones]

Lets not mix other locations with Irvine. Housing in Irvine is very stable, and will stay like this. I work in Tech industry, more and more companies are moving to SOCAL, because costing of living in NOCAL is very high. There are tons of new commercial properties coming up as well. Most importantly, many non-Asians are moving to Irvine from neighboring cities for middle and high schools. Again, no one can predict the future, but it doesn't hurt to be optimistic and wrong rather be pessimistic and right. 

Do the non-Asians coming in for middle and high school negate the ones that are leaving?  Or is there a net positive?  And how many are we talking?  Enough to stabilize the market?

 

[irvinehomeowner]

@meccos12:

Someone claimed that prices could drop to 2016 level.

I asked what that difference is, 5-10%? Then that may not be significant enough to wait.

Then Mety said:

The difference between now and 2016 prices is not 5-10%. It's more like 15-20%. The last year was the crazy year that truly held the slogan, "Buy now or be priced out forever."

Even though Zillow says the difference is more like 10%, Mety is sticking to his assertion.

That's where the 20% number comes from. And in my opinion, if the price drop is not that much, then waiting for 1-2 years for a 5-10% drop doesn't seem to be worth it.