I just might buy

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GrewUpInIrvine_IHB

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Ok, I post this at my peril, but if you can't stand the heat, you have no business blogging.



I am considering buying a home in Woodbury. Specifically a Model 2 at Villa Rosa. From my research, I've been able to identify the original prices for Villa Rosa Model 2. Back in June of 2006, it was selling for 1,210,000 to 1,220,000. Today, the same exact house sells for about a 130-140K discount, or roughly, 1,080,000.



I have also been able to secure an approval for financing for a 30 year fixed mortgage at 6% (no points, 6.03apy)... which is subject to change depending on when if I really decided to go through with this (locks, etc.).. and I have considered a 5.5% 10 year arm. Of course, 20% down.



In reviewing the Villa Rosa activity, Lennar has shifted to a "half-size" release business model. Instead of releasing 10 homes, they are releasing 5 at a time... as a way to reduce inventiry and create the appearance of demand. However, the plan appears to be working. They appear to be selling homes in existing phases well before releasing subsequent phases... and they have been adamant about giving no incentives. Annoying... but if the homes are selling, why would they.



I have been considering (1) the overall housing market, (2) the Irvine Co., land-cost-control dynamic, (3) and the total number of remaining homes for Villa Rosa that have yet to be built or sold - 30.



Assuming that I am "set" on buying a Villa Rosa property, and I know that only 30 homes remain, and I know that there are sufficient buyers (thus far) to prevent further price reductions than the original 11% drop from June of 2006, then I basically am playing a hedge game of (1) the reduction of price in the remaining 30 houses - 5 of which were released last week at the exact same prices... vs (2) the chance of getting a short sale property at a greater discount than 11% from peak... or waiting 2-3 years and hoping for a short-sale property on the Villa ROsa homes currently being sold... thus perhaps benefiting from a 20+% discount from peak... but in all reality, the volume of the short-sale homes should be small, especially considering that Villa Rosa only encompassed 80-90 homes to begin with.



Any thoughts?
 
The "half-size" releases are becoming necessary because if they must lower prices, they have fewer angry homeowners.



The product being built in Villa Rosa will likely be built again somewhere else. Are you that attached to buying new in that particular neighborhood?



You can buy one of these from a belly-up current buyer in a few years.



Prices will decline further, and you will lose whatever equity you bring to the deal. Of course, if you live there long enough, you will get back to breakeven. Are you committed to living there for 10+ years?
 
I find it kind of interesting that people are still asking for opinions on whether to buy or not to buy. We have heard all of the answers before (i think).



Cons: lose down payment, may be upside down on loan, could be disastrous if you have to relocate/get divorced/laid off at bottom of market



Then there are those of us that will tell you that if you can afford it, dont mind losing your down payment, are not looking at the house as an investment, plan on living there for five to ten years then buy.



When you ask for input on whether to buy or not to buy i think most people have made up their mind on buying, so just buy. Your already know it doesnt make sense to buy right now.



Just my opinion.



Good luck though if you decide to buy there. I live in woodbury and walk my dogs through villa rosa everyday, they look like nice large homes. The framing is already up for the home you are looking to buy.
 
Thanks Irvine Renter



Yes, I've arranged my professional & personal circumstances so that I can live in the same home for 10+ years. In fact, I have such a disdain for the 6% real estate commissions deal, that I am unlikely to move at all. My wife and I each have secure jobs that will not require any future move. I really like Woodbury as whole community... and it places me in closer proximity to my parents (which helps with childcare issues) but not too close...



I am specifically buying as much house as I can... specifically because I don't want to have to move into a larger home in 5 years as family grows. I'd rather get a big home and "grow into it."



As for buying new... I've never owned a "new" home... but from the 1 & 1/2 years worth of windown shopping that i've been doing.. I'm not too enamored with most existing homes... but you are correct, I might feel different about the short sale of one of these Villa ROsa homes... but the sheer volume of those "short sales" over the next 1-3 years is speculative. Even if I assume that 20% of all Villa Rose homes become "short sales" we're talking about a total of 18 homes.. of which 6-10 might be Model 2... I'm not sure that expecting anything over a 20% short-sale volume is anything but wishful thinking...so with a potential of 6-10 homes... I am subject to (1) timing of the listing (2) location of the listing (3) and other unknowns...
 
Qwerty -



You mentioned that you live in Woodbury. Is there anything about the development that you dislike or that you were suprised by? Or that you especially like? Any insights you may have would be appreciated. THere is no better source of info than someone that is already there.
 
Tough Crowd! LOL. I think that the reason people post these kinds of questions are obvious (and perhaps your comment rhetorical). (1) Seeking validation due to unreasonable insecurity. (2) Seeking commentary due to reasonable insecurity. (3) seeking responses to make sure you haven't gotten yourself to far "inside" a situation that you might not be able to see it in objective terms. I'd like to think that I'm a combo of #2 and #3. Ah, rationalization. Lets face it, buying a million dollar home is stressful and worrisome even under the best circumstances - especially if you actually work for a living... and don't otherwise come from $$$. Furthermore, while I "grew up in irvine" I don't live there now... or even nearby... and getting reactions from locals is a great way to see what is going on... and on rare occassion, an insider posts information that tells us all what might be going on in the sales office of this builder or that...
 
[quote author="GrewUpInIrvine" date=1208392121]Ok, I post this at my peril, but if you can't stand the heat, you have no business blogging.



I am considering buying a home in Woodbury. Specifically a Model 2 at Villa Rosa. From my research, I've been able to identify the original prices for Villa Rosa Model 2. Back in June of 2006, it was selling for 1,210,000 to 1,220,000. Today, the same exact house sells for about a 130-140K discount, or roughly, 1,080,000.



I have also been able to secure an approval for financing for a 30 year fixed mortgage at 6% (no points, 6.03apy)... which is subject to change depending on when if I really decided to go through with this (locks, etc.).. and I have considered a 5.5% 10 year arm. Of course, 20% down.



In reviewing the Villa Rosa activity, Lennar has shifted to a "half-size" release business model. Instead of releasing 10 homes, they are releasing 5 at a time... as a way to reduce inventiry and create the appearance of demand. However, the plan appears to be working. They appear to be selling homes in existing phases well before releasing subsequent phases... and they have been adamant about giving no incentives. Annoying... but if the homes are selling, why would they.



I have been considering (1) the overall housing market, (2) the Irvine Co., land-cost-control dynamic, (3) and the total number of remaining homes for Villa Rosa that have yet to be built or sold - 30.



Assuming that I am "set" on buying a Villa Rosa property, and I know that only 30 homes remain, and I know that there are sufficient buyers (thus far) to prevent further price reductions than the original 11% drop from June of 2006, then I basically am playing a hedge game of (1) the reduction of price in the remaining 30 houses - 5 of which were released last week at the exact same prices... vs (2) the chance of getting a short sale property at a greater discount than 11% from peak... or waiting 2-3 years and hoping for a short-sale property on the Villa ROsa homes currently being sold... thus perhaps benefiting from a 20+% discount from peak... but in all reality, the volume of the short-sale homes should be small, especially considering that Villa Rosa only encompassed 80-90 homes to begin with.



Any thoughts?</blockquote>


Once VR is built out and not being actively marketed any longer, the decline will "catch-up" to VR. I think it's a little crazy to buy anything 10% off peak when it is obvious most places have fallen 20% in value. You are paying a 10% premium that absolutely will not last... That VR plan 2 is probably worth $1MK today, maybe a little less, no matter how many people are swayed by the marketing, model homes, new home chi, whatever. In a few years, the VRs will be "used" homes just like the rest of Woodbury and when the shine wears off, the inflated price you paid will create additional depreciation.



All you need to do is look at 33 Triple Leaf as an example or even 41 Stowe. When those sell in the $1.2M range, and they are much more home than a VR plan 2, you'll be all in for perhaps only $50-100K less. The house you are buying will fall into the low $800K range within a few years. When the Rosemoor equivalent, with landscaping and such already, is selling in the $900s very soon, your homes value path will be set...



I'm a dying-to-buy type too, and will pull the trigger far sooner than most, but I wouldn't think of buying in VR right now unless prices were lower or incentives were greater. There have been so few sales on larger places in WB, that because people there in Mille, Rosemoor, Juliets, etc. are sitting on wishing prices. Once they stop doing that, values will head south there pretty quickly. There will be a great many REOs ripping through WB and that will just accelerate the price equalizing process.



I'm not faulting the buy decision, just the decision to pay an inflated price that won't hold up for very long...
 
[quote author="GrewUpInIrvine" date=1208395479]Tough Crowd! LOL. I think that the reason people post these kinds of questions are obvious (and perhaps your comment rhetorical). (1) Seeking validation due to unreasonable insecurity. (2) Seeking commentary due to reasonable insecurity. (3) seeking responses to make sure you haven't gotten yourself to far "inside" a situation that you might not be able to see it in objective terms. I'd like to think that I'm a combo of #2 and #3. Ah, rationalization. Lets face it, buying a million dollar home is stressful and worrisome even under the best circumstances - especially if you actually work for a living... and don't otherwise come from $$$. Furthermore, while I "grew up in irvine" I don't live there now... or even nearby... and getting reactions from locals is a great way to see what is going on... and on rare occassion, an insider posts information that tells us all what might be going on in the sales office of this builder or that...</blockquote>


I don't live in Woodbury, but frequent the area all the time. Our friends live in VR, my kids takes Karate there, go to little leage games there, I like that Home Depot the best, etc.



It is nice, but not lasting premium kind of nice. Once the builders are gone, it will just be another boring mostly grid pattern development with lots of small parks that no one uses, tiny lot sizes, narrow streets, etc. It'll be like mostly the rest of Irvine. At least QH has elevation change and Northpark is up against the foothills. People will be paying the premium to buy in Orchard Hills, not Woodbury, and the extra 10% you paid will be gone.
 
As always, if you don't mind being under water by 300K to 400K by all means purchase the home. There is the addional problem of your neighbors foreclosing on their homes. (It can get pretty depressing).



Remember, what is going to kill prices in the OC market are people that purchased homes before 1998 and want to get out. If they purchased a home of this size for 350K in 1992 and they want to move on with their lives. They will sell for 650K and think they are making a lot of money. I know that you are buying new, but the prices of used homes in Irvine will factor into the comps.
 
Good luck with your purchase GUIV....seems like you know what you're getting yourself into.



Personally for me I'm just watching and waiting w/the rest of the gang. Especially after reading or being reminded of the huge ARM reset coming up in 2010-11 involving prime borrowers.



I just look at it this way, I can't reset/refi my entry price once I buy. :smirk:



So I rather wait and start looking in summer/fall of 2009. Hopefully the market will have pulled back another 15-30% by then.
 
Nano -



Within Woodbury, most homes sold appear to have sold after 2005... at least that is what I gather from a brief scan of Redfin. Of the homes selling within Woodbury, many of the 2005 "resales" are selling at either (1) wish prices of 5-10% above purchase - which is insane, OR (2) same price as bought prices. There are also, as mentioned by IPO, a few homes that are selling at remarkable discounts... but in almost all cases, the cost per square foot is staying at or above $360... which is the present Villa Rosa cost.



Now I agree that earlier homes, 1998 purchases, etc., may go for sale with much more room to reduce than in Woodbury... eg, the northwood homes that are still part of 92620... but what I don't appreciate is how the comps in Northwood will impact the home prices in a neighboring community such as Woodbury.
 
Grew up.....



Its a tough call, in 5 years I believe that the older homes will be selling for $200 PSF and new homes will be $225 PSF. This will put people that are trying to sell homes above $300 PSF in a very tough place.



This happened to me in 1990 when I had to sell a home that was bank appraised(BofA) for $750,000: the house sold $480,000 after 18 months on the market. The value of the home did not get back to the 1990 appraised price until 2001. The home was in one of the best areas of Glendale.



My suggestion to anyone that is thinking of purchasing a home is to wait at least 6 months and see what is happening. That being said, when I was 28 years old I wanted to purchase a home so badly nothing could stop me.............I think that it is a post puberty nesting instinct.
 
Grew up -



I rent a townhouse in woodbury and we could definitely see ourselves buying there when in one to three years, we dont have kids so we can hold out longer, but like you, will buy a large house right from the get go to grow into it, instead of having to sell and buy again.



PROS:

- Woodbury Town center right next door.

- Good overall location, close to spectrum, marketplace, etc.

- Flat topography - i dont care to much for hills,

- Landscaping - havent been in many irvine villages, so cant really compare to the others, but the landscaping here seems very nice, which is good since im always outside walking the dogs and jogging.

- Newer community - its easy on the eyes.



CONS:

- To many rental complexes, more than i would like if i was a home owner there, but they are all located on the perimeter along Irvine Blvd and Sand Canyon.

- Cops - too many at stop signs, maybe this is a good thing though. Havent gotten a ticket, but seen many folks get one, dont roll stop signs anymore so i guess them being there is working.



Overall I really like woodbury and would recommend it to anyone
 
GUIV,



what do you think of mille fleurs or juliets balcony? i think those are really the only two developments in woodbury worthy of being called million dollar homes (and even that might be debatable to some.) why accept only a 10% discount from peak when you know comparable, if not better, products in the same mkt are going for much steeper discounts. why not try throwing in a lowball offer on one of the many juliet balconys on the mkt?



JB is mainly built around the park on vintage. MF built around the park and pool on townsend and vintage. also they're adjacent to the jeffrey open space trail which could be good or bad depending on your preference. but overall i feel like those areas of woodbury are the most open and least dense. bkshopr wrote a very interesting piece about the open space -- if you havent read this, theres considerations there also worth thinking about. distance to the town center and main park is about the same.
 
[quote author="GrewUpInIrvine" date=1208398719]

... but what I don't appreciate is how the comps in Northwood will impact the home prices in a neighboring community such as Woodbury.</blockquote>


Because when homes in Northwood are noticable cheaper than homes in Woodbury, buyers will buy in Northwood and not in Woodbury. That will cause sellers in Woodbury to have to lower prices. Taken to an extreme to make the point, if homes in Northwood were free, would <strong>you </strong>buy in Woodbury?
 
Grew, do not forget about 3 to 5 developments that are scheduled to start in Irvine in the next 2-3 years. Off the top of my head, I can think of Orchard Hills, Stonegate, Laguna Crossing, and Woodbury East. There will a lot of floor plans for you to see in those communities as well as old but popular floor plans from previous developments.



Also, another factor to consider is that you will be able to afford a "better" house in 2 to 3 years since prices will come down and you will have had a bigger down payment to put down.
 
I also would be careful to not dismiss the drop in value that will come over the next few years as <em>purely acedemic</em>. Granted, it isn't completely real unless one is forced to sell, but I hear folks who think they are close to purchasing offer the acknowledgement that they realize the value will drop, I'm in it for the long haul, etc. Frankly, unless you have an income or big cash reserves (ie, signficantly greater than your 20% downpayment), the psychological burden of paying on a asset that is significantly underwater is more than most realize. Before it has actually happened, it is easy to dismiss this as "theoretical," "only a paper loss," etc, but I don't personally know anyone for whom several hundred thousand dollars is actually meaningless. And I believe the only way for a loss of that magnitude to really not effect you is for the amount of the loss to be "in the noise" given your financial situation, <strong>not</strong> that you knew it was coming.



SCHB
 
[quote author="skek" date=1208405876][quote author="IrvineCommuter" date=1208405354]Also, another factor to consider is that you will be able to afford a "better" house in 2 to 3 years since prices will come down and you will have had a bigger down payment to put down.</blockquote>


That is the factor that causes me the most angst. If I knew I would buy the same house, but maybe save 10% by waiting 18 months, I doubt it would be worth it to wait. I need to move now. In fact, I needed to move a year ago. The problem is, by waiting the last year, I have saved enough money and seen prices fall such that I am in a whole different tier of house -- I'm now looking at houses that were unattainable when we started looking. If I wait another year, will I be looking at houses that today seem unattainable? If so, that's a powerful incentive to wait.



The fact that prices have fallen faster and farther than anyone anticipated thus far, is what's keeping me on the fence. If the decline was slower, I'd have probably leaped by now. Anyway, GrewUp, something for you to consider and a good observation by IrvineCommuter.</blockquote>


Exactly the same for me skek. If the summer credit crisis wouldn't have happened, with rates jumping and sales grinding to a halt, I'd have probably have purchased too. The % declines over 3% per month have been astonishingly large. For as long as Case-Shiller has been tracking the LA/OC MSA, there have only been four months when prices moved over 3% per month, and they occurred March 2004 - June 2004. I think the November 2007 - February 2008 declines will rival that fourth-month period in 2004 in terms of magnitude.



In a market moving that fast and to the downside, I can't imagine why anyone would want to buy. I'll feel much safer making an early jump when % declines have settled down significantly. Based on April closing prices for Irvine so far this month, it doesn't appear prices have stabilized that much. Unfortunately the sample is still relatively small so its hard to say for sure.
 
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