Housing Analysis

[CalBears96]

I chose to become a homeowner too because I see many pros in owning. But I'm not blinded by the cons and the potential opportunity costs.

What? You don't listen to your own mentoring advice?

I hope you realize by now that my "Any time can be a good time to buy" applies to people who have done their research and understand fully the pros and cons.

My mentoring advice is derived partly from my personal experience. I was financially ready to buy in 2009, but waited until 2016. That decision benefited us financially and really forced me to learn how to invest.

I talk about opportunity cost / job lock because it's personal experience too. My wife passed up on a big career move to DC mainly because we'd just bought a new home. She picked out every upgrade and just put down money into building the pool. She was so emotional invested in the house, she just couldn't walk away.

IHO, I hope you know I've always agreed with your caveat. My contention was always that your intended audience is small. (and increasingly smaller since the home price surge)

I agree that you would get more emotionally invested in the house if you put a lot of upgrades into it and it would be more difficult to walk away from. That is why when we bought the previous 3 homes, we only put some upgrades into them. But this one, Bluffs 2, we're planning it to be our retirement home and we went all out on the upgrades. And this one fits right into IHO's "anytime is a good time to buy" because in the long run, it doesn't matter. The most important thing about this home is that my wife loves PS and Bluffs 2 floorplan. That's all that matters.

 

[usctrojancpa]

MM: You make too much sense for LL to ever comprehend.

Honestly, I prefer a more balanced market so I've been waiting for that to happen for over a year.  In this market a monkey can sell a home so a good listing can't shine as bright and there's no ability for a buyer agent to use their negotiation skills.

 

[irvinehomeowner]

In this market a monkey can sell a home...

Time to get my real estate license.

 

[irvinehomeowner]

I chose to become a homeowner too because I see many pros in owning. But I'm not blinded by the cons and the potential opportunity costs.

What? You don't listen to your own mentoring advice?

I hope you realize by now that my "Any time can be a good time to buy" applies to people who have done their research and understand fully the pros and cons.

My mentoring advice is derived partly from my personal experience. I was financially ready to buy in 2009, but waited until 2016. That decision benefited us financially and really forced me to learn how to invest.

I talk about opportunity cost / job lock because it's personal experience too. My wife passed up on a big career move to DC mainly because we'd just bought a new home. She picked out every upgrade and just put down money into building the pool. She was so emotional invested in the house, she just couldn't walk away.

IHO, I hope you know I've always agreed with your caveat. My contention was always that your intended audience is small. (and increasingly smaller since the home price surge)

LL would have told you 2016 was a horrible time to buy... because he thinks any time you buy in Irvine is bad.

Personally, I think you would have been better off financially buying in 2009... I regret not picking up some homes during that time period but I was really picky and the supply of 3CWG homes in the areas I wanted was not very high. There were a few I could have pulled the trigger on but I would have probably had to move again and even though I may have made more equity, it would not have been worth the headache.

That's one thing that people miss... it's NOT just about money.

That also illustrates the problem with timing... when it's "rental parity favorable" is usually when the selection is bleh.

 

[Kenkoko]

Personally, I think you would have been better off financially buying in 2009... I regret not picking up some homes during that time period but I was really picky and the supply of 3CWG homes in the areas I wanted was not very high. There were a few I could have pulled the trigger on but I would have probably had to move again and even though I may have made more equity, it would not have been worth the headache.

That's one thing that people miss... it's NOT just about money.

That also illustrates the problem with timing... when it's "rental parity favorable" is usually when the selection is bleh.

My timing was great or more accurately I was lucky.

I invested most of my down payment into stocks and got in at almost the bottom. I think by the end of 2013, my initial investment already grew big enough that I could buy the house I wanted in 2009 with cash outright.

We thought about buying then, but decided to use some of the gains to open my private practice instead. That turned out to be a great financial decision too.

By 2016 when we finally did buy, we were able to skip the starter home all together. That's one way to beat the "bleh" selection.

Agree that it's NOT just about money, but money is often at the center of it.

 

[irvinehomeowner]

That just proves that timing is totally subjective.

2009-2010 in Irvine was supposed to be the bottom? 2013 was the big jump so by 2016, prices we?re already high (which is why you had didn?t have a bleh selection).

Then 2018 was supposed to lead to the big drop? and we know how that turned out.

People trying to buy now would have preferred the prices just 4 years ago.

No one wants to admit that waiting in 2018 probably wasn?t the best choice.

 

[sgip]

Need to also take into account the late 2016 change in capital outflow restrictions in China. Look back at the posts of that era and notice the number of mentions of FCB's... In today's market it's the rise of Non-QM financing that's added buyers who normally couldn't get financing. The last few years have seen a practical return of "stated income-lite" lending that did not substantially exist until around late 2018.

My last company swore up and down they wouldn't enter the Non-QM lending sphere because of fraud concerns... Until this week when they began offering Non-QM lending.

2006-2007 saw massive inflows to World Savings and WAMU for their "Alt-doc Neg AM" lending. Today is no different, so IMHO -hedge accordingly.

 

[irvinebullhousing]

In a scenarios of a crash and burn scenarios, you will have the following sequence occur prior to the event:

1-Credit market tighten.
2-Interest rate dramatically increase.
3-Ability to obtain credit decrease.
4-Decline in growth rate.
5-Inventory dramatically increase
6-Days on market duration lengthen.
7-Price remain stagnate.
8-Job lost and default begins to build. Income reduction.
9-Price mark to market reduction.
10-Personal saving drain and capital scarce.
11-Give up on holding property and liquidate.

At point 11 is when the bust occur and fire sale taken place.

I welcome any correction as you see how the sequence play out and how long will this take to play out. Will we get the repeat of the last 10 years after bullet point 11 play out? And finally, with realestate, its a two front, one is Irvine and the other is SOCAL market and beyond that it will be everything else in the United State is how I see as macro real estate market. If demand is high in SOCAL, it doesn't mean that Irvine would follow the same pattern. I am bias to Irvine but I am not blind to cycles. For now we have bullet point 1 and 2 accross the board - live and maintaining. Irvine shot up so as everywhere else.

 

[Liar Loan]

LL would have told you 2016 was a horrible time to buy... because he thinks any time you buy in Irvine is bad.

Trump was elected in 2016 so I was actually quite bullish on the economy, which included stocks and housing.  Also, my multi-units were purchased in 2014-15 which is not the typical behavior of somebody who thinks housing is going to crash.  You could say I actually put my money where my mouth was at that time.

 

[Liar Loan]

This was published before rates hit 5.12% today.

Mortgage Payment to Income Ratio Getting Into Pre-Meltdown Territoryhttps://www.mortgagenewsdaily.com/news/04042022-black-knight-mortgage-monitor-affordability-d

Monthly P&I is 24% higher than it was at the housing bubble peak in 2006.

Of course incomes have gone up over that time, but today's housing affordability matches the bubble year 2005 even when higher incomes are factored in.

 

[AccidentalAnalytics]

Since people want to lie with statistics: Based on historical rents below, rents have gone up 53% 2006-2021.  I?d say the P&I increase is healthy given this comparison.
https://ipropertymanagement.com/research/average-rent-by-year

 

[irvinehomeowner]

LL would have told you 2016 was a horrible time to buy... because he thinks any time you buy in Irvine is bad.

Trump was elected in 2016 so I was actually quite bullish on the economy, which included stocks and housing.  Also, my multi-units were purchased in 2014-15 which is not the typical behavior of somebody who thinks housing is going to crash.  You could say I actually put my money where my mouth was at that time.

Show me the post here where you recommended buying in Irvine in during that time period or else you're putting words in your own mouth.

 

[The Motor Court Company]

Canada to ban foreign purchase for 2 years? will some of the money come to the US?https://www.bloomberg.com/news/arti...e-foreigners-from-buying-homes-as-prices-soar

 

[Liar Loan]

Since people want to lie with statistics: Based on historical rents below, rents have gone up 53% 2006-2021.  I?d say the P&I increase is healthy given this comparison.
https://ipropertymanagement.com/research/average-rent-by-year

You are using the monster of all housing bubbles (2006) as a baseline in order to convince others that the current market looks healthy.  Most of us have been around long enough to see right through that.

 

[Liar Loan]

LL would have told you 2016 was a horrible time to buy... because he thinks any time you buy in Irvine is bad.

Trump was elected in 2016 so I was actually quite bullish on the economy, which included stocks and housing.  Also, my multi-units were purchased in 2014-15 which is not the typical behavior of somebody who thinks housing is going to crash.  You could say I actually put my money where my mouth was at that time.

Show me the post here where you recommended buying in Irvine in during that time period or else you're putting words in your own mouth.

I've never recommended buying in Irvine specifically because it's not a town that I think presents good opportunities as a landlord.  If you prefer it for your primary, go for it. 

Just don't listen to IHO when he says timing doesn't matter.  Irvine Housing Blog has documented thousands of poor fools that bought & borrowed in Irvine at the wrong time and lost everything.

 

[Liar Loan]

So much for the theory that rapidly rising rates will prevent people from selling their homes.

WSJ: As Mortgage Rates Rise, Home Sellers Fear Time Is Running Out to Cash In

Blood pressure is now rising along with home prices and mortgage rates as homeowners fear missing out on the right moment to stake the ?For Sale? sign in the front yard.

The mood among sellers seems to have shifted in recent weeks from apathy about the slow boil of higher rates to urgency, financial advisers and real-estate agents said. Sellers are seeking advice on how best to time the market and tame their anxiety.

?The thought of rising interest rates has lit a bit of fire to our timeline,? said Meri Schroeder, a retiree in Frederick, Md.

She and her husband Dave Schroeder plan to put their 3,400-square-foot home on the market in the next few weeks to take advantage of the spring selling season and find a buyer before rates rise again in May. They hope to buy a smaller home with cash in Ohio.

Jeff Fishman, a financial adviser in Los Angeles, said there is a mood of urgency to sell among some of his local clients hoping to downsize and relocate to less-expensive places such as Nashville, Tenn.

Amy Schinco, a real-estate agent in Omaha, Neb., said more sellers are rushing to get their homes on the market and are requesting rent-backs, where they stay in their home for a designated time after the sale. They are doing so to lock in what they believe will be ?top dollar? for their home before rates rise further and buy themselves time to find their next home when more inventory comes on to the market, she said.

Other sellers are taking a more cautious approach.

Barbara Fay, 80, initially planned to list her roughly 700-square-foot vacation cottage in Wells, Maine, this spring as she is fearful rising rates will hurt buyer demand. Her daughter Cheryl Costa, 57, a financial planner in Framingham, Mass., persuaded her to wait as many recent buyers in the community have been paying in cash.

Ms. Fay is still concerned she may miss the chance to get the most for her home and is keeping a close eye on how fast other cottages sell and what price they sell for. She?s regularly keeping tabs on mortgage rates.

?If mortgage rates hit 7%, I plan to list,? she said.
https://www.wsj.com/articles/as-mor...ar-time-is-running-out-to-cash-in-11649275058

 

[zubs]

Cash in?...Why do I need to cash in when I can just rent it out for cash flow?
Especially if you are in CA. Prop 13.

Take the money from your CA rent and rent somewhere cheaper.

 

[irvinehomeowner]

Just don't listen to IHO when he says timing doesn't matter.  Irvine Housing Blog has documented thousands of poor fools that bought & borrowed in Irvine at the wrong time and lost everything.

Thousands? What about the thousands who held (which In Irvine there were many because they were FCBs) and it worked out just fine.

There was more losers in other cities than Irvine... the data bears that out but you won't see it.

 

[The Motor Court Company]

what is this. these examples are people who most likely have their homes paid for, retired and are waiting to cash out.

rising rate will kill the move up and move down market. if people don?tmove up, the starter homes are not going to become available for FTHBs so it is still bad.

So much for the theory that rapidly rising rates will prevent people from selling their homes.

WSJ: As Mortgage Rates Rise, Home Sellers Fear Time Is Running Out to Cash In

Blood pressure is now rising along with home prices and mortgage rates as homeowners fear missing out on the right moment to stake the ?For Sale? sign in the front yard.

The mood among sellers seems to have shifted in recent weeks from apathy about the slow boil of higher rates to urgency, financial advisers and real-estate agents said. Sellers are seeking advice on how best to time the market and tame their anxiety.

?The thought of rising interest rates has lit a bit of fire to our timeline,? said Meri Schroeder, a retiree in Frederick, Md.

She and her husband Dave Schroeder plan to put their 3,400-square-foot home on the market in the next few weeks to take advantage of the spring selling season and find a buyer before rates rise again in May. They hope to buy a smaller home with cash in Ohio.

Jeff Fishman, a financial adviser in Los Angeles, said there is a mood of urgency to sell among some of his local clients hoping to downsize and relocate to less-expensive places such as Nashville, Tenn.

Amy Schinco, a real-estate agent in Omaha, Neb., said more sellers are rushing to get their homes on the market and are requesting rent-backs, where they stay in their home for a designated time after the sale. They are doing so to lock in what they believe will be ?top dollar? for their home before rates rise further and buy themselves time to find their next home when more inventory comes on to the market, she said.

Other sellers are taking a more cautious approach.

Barbara Fay, 80, initially planned to list her roughly 700-square-foot vacation cottage in Wells, Maine, this spring as she is fearful rising rates will hurt buyer demand. Her daughter Cheryl Costa, 57, a financial planner in Framingham, Mass., persuaded her to wait as many recent buyers in the community have been paying in cash.

Ms. Fay is still concerned she may miss the chance to get the most for her home and is keeping a close eye on how fast other cottages sell and what price they sell for. She?s regularly keeping tabs on mortgage rates.

?If mortgage rates hit 7%, I plan to list,? she said.
https://www.wsj.com/articles/as-mor...ar-time-is-running-out-to-cash-in-11649275058

 

[CalBears96]

what is this. these examples are people who most likely have their homes paid for, retired and are waiting to cash out.

rising rate will kill the move up and move down market. if people don?tmove up, the starter homes are not going to become available for FTHBs so it is still bad.

Yeah, it's typical LL not understanding the situation and just cherry picks data to support his argument.