If the home you wanted could be bought today at 30% off the peak price, would you buy?...

NEW -> Contingent Buyer Assistance Program
And don't get me wrong. I am all for price correction. I would be the first to hope for a big percentage reduction. But in evaluating the price of houses. Please go beyond than just complaing about the square footage.
 
<p>One last thing, I have seen all the number crunching here pointing to the "decline". And I must say, I am impress. Although, I am too incompetent to dispute the "numbers". I like to say, there are things in life that are so simple. Yet through the complexity that we create. We might be blinded to see.</p>
 
"I have an idea, why not buy IE homes at 50% less of Irvine's now"



Because IE homes at 50% of Irvine’s prices are overpriced. The point isn’t that I would buy a home at an absolute price, it is that I would pay the right price for the right home in the right location. $1M for a standard 2000sf home in Irvine is too high. In the same context, $500K for a standard 2000sf home in Riverside is too high. See, that same home at half the price in half the location is still too high, and that’s the point. If I thought a 2000sf home in Irvine SHOULD be $500K, why would I pay that to live in IE?
 
reason,





I am like you in that I will not go to Corona or anywhere in the IE for a cheaper home; however, many have, do and will. There is a critical price differential where people make that choice. For instance, imagine you could buy a large SFD in Corona for $1. Would you still chose to live in Irvine? Of course not. For me the cost differential would have to be so great that realistically, it would never happen, but there is some amount of cost savings that would drive me or anyone else out there. If that wasn't true, the whole IE would be empty right now. People didn't move out there because coastal living was bad: they moved out there for cheap housing.





People complain about the cost per square foot because it is a convenient comparative measure of cost. Houses are more expensive in Irvine, and they always will be. It is a matter of degree. If houses fall to $120 / SF in Corona, they will drop to $200 / SF in Irvine. Irvine will always command a premium for all the reasons we who live here understand, but this premium is not infinite, and if it becomes too large, people leave Irvine (or don't enter Irvine) for cheaper housing elsewhere.
 
People are willing to pay a premium to live in Irvine for better weather, environment, shorter commute to work, etc.





You could buy a house in Lancaster for 1/3rd the price, but I wouldn't want to live there. Even if someone offered me $1 million USD cash to live in Lancaster for 10 years, I still wouldn't accept it. I'd gladly run the rat race to stay in South OC.








P.S. If I had to live somewhere as hot as Lancaster, I mind as well move to Boracay in Philippines and run an internet cafe or something. At least over there I can go for a soak on the nice beach every day.
 
<p>oc-conservative asked:</p>

<p><em>socalhousingbubble - if the answer is yes, why haven't you put the bids in at that price?</em></p>

<p>The buyers have their heads in the clouds. They think if they drop $30k it's the end of the world. I don't mind upsetting someone's reality, but putting in -30% bids won't be worth my time, even if might help the greater good of wearing them down. I've recognized the need to be patient let the corrections occur, and save plenty of aggravation. </p>

<p>SCHB</p>
 
<p>Guys and Gals sounds looks like there's many different types in here. </p>

<p>Here's my type: Have about $120k for a down payment, pay $100k a year in taxes, I'm sick of renting, sick of waiting for prices to fall (however they keep falling).</p>

<p>I know a house is a lifestyle, and i have the means to pay for a house. But I guess I'm a scrooge when i think about the potential of losing money on a house bought today. I know the tax benefits will definitely help, however if prices dropped 30% in the next couple years it will mean nothing. However I've come to the conclusion if I can find a house 15-20% under market I'm going for it... </p>

<p>Can't take waiting any longer, getting delusional need to purchase something this year... </p>
 
<p>OK,</p>

<p>momopi would not go to Lancaster for 1/3 price and $1M bonus.</p>

<p>reason and IR would not buy and live in IE for 1/2 price.</p>

<p>Both these areas do meet your 4X income mathematical model right?</p>

<p>The truth of the matter is prices do not necessarily have to drop to match income. If you have to buy in LA, you will only wish it has the same housing cost in Irvine. Think 2X for the same house. And income is about same for both area. </p>

<p>I will tell you, 20 years ago, I could afford an ocean view home in CDM but was busy balking at the price. Now owning in CDM is just a dream. </p>

<p>How am I doing with "puffing"?</p>
 
<p>I wouldn't buy. 30% off peak prices is still leaves you with a price/rent ratio that is way out of whack. Speculative bubbles don't halfway correct, they go all the way. So the way I see it the only way for nominal prices to "only" 30% is if we have some pretty massive rent inflation in the near future (which I know OC-C and others consider a very real possibility ).</p>

<p>With Riverside's median above $400K and SB at $380K, in most areas of the IE the monthly outlay for owning a home can easily cost the same or more<strong> </strong>than renting a comparable home in Irvine. Some people seem to derive a massive psychic benefit from pride of ownership. For the rest of us, renting in OC is a much better deal than buying in IE.</p>

<p>A rational seller would be a fool to sell me his or her home for what I would be willing to pay. The current market price that they can get now by marketing correctly is much higher.</p>

<p> </p>

<p> </p>

<p> </p>
 
liquid - Please consider, the tax factors are discounted into the price of a home and the price of renting. And if you pay 100k in taxes, chances are that only a portion of the total mortgage interest deduction will be deductible because of your high income. And none of the interest on that portion of the mortgage above $1 mil is deductible at all.
 
NIR - Twenty years ago I could not afford a home in CDM, but with the way prices are falling, I may be able to afford a home in CDM fairly soon.
 
<p>awgee-</p>

<p>I broken the numbers down, and it's basically paying $500 more a month for a $600k house today instead of renting.</p>

<p>But all this goes to nothing if the prices continue to drop, and this is what scares me. On a personal opinion, when do you think price drops will plateau. When will be a good time to get into this declining market? </p>

<p>After reading the well written article "<a title="Permanent Link to Houses Should Not Be a Commodity" rel="bookmark" href="http://www.irvinehousingblog.com/2007/06/25/houses-should-not-be-a-commodity/">Houses Should Not Be a Commodity</a>" by Irvine renter, I'm telling you anyone who read that article would simply run away from buying a house. However for me, living in a rented apartment can only go for a couple more months before I go mad...</p>

<p> </p>
 
liquid,





I'm guessing you pay about $2000/month for a somwhat uncomfortable apartment? Like many here would suggest, you could rent a nice condo or house for $3000 a month and lower the chance of going mad.
 
I wouldn't buy with 30% off peak mainly because it still seems overpriced--and still would not hit 2002 prices for the majority of properties. Also personally, if the homes were cheap enough, I would move to Corona. They would have to be about 50K for a nice SFR though.
 
<p>IR,</p>

<p><em>So you were "priced out forever" in CDM? We all better buy now or face the same fate...


</em></p>

<p>You are mocking me. I could not agree with your statement, with a straight face.</p>
 
liquid - Sorry, but I truly do not have an accurate opinion as to when price drops will plateau, but since the last top to bottom cycle was five years, 1990 to 1995, I have no reason to think this cycle will be of shorter duration. Generally speaking, I think past cycles will show that it is a good time to buy when the average income earner in a particular neighborhood can purchase a home in that neighborhood with 20% down, qualifying with 28% DTI, and a fixed rate 30 or 15 year mortgage. Example, if the average wage earner in a specific neighborhood earns $85,000 per year, the price of the average home in that neighborhood would be $364,000. Maybe IrvineRenter or another can direct you a location in this blog which explains this valuation more clearly.
 
nirvinerealtor,





Yes, I am teasing you about creating a sense of urgency by "puffing" the market when you can. Don't stop, I find it amusing at times. I do not want to censure your opinion or limit your right to express it. My teasing is just part of the package you get when you come here...
 
<p>Irvinerenter,</p>

<p>Thanks for the response, I do understand your view. Also, thank you to everyone for expressing your opinions without demeaning others. As hard as it may be, even with our differences in opinions, I do try to keep an open mind and learn. Again, thank you for sharing your thoughts and being civil =)</p>
 
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