IR2's Prior Post : Stats show average of 36% down payment on irvine homes sold in 2008 : Several Million Dollar+ homes are 100% Cash Buys!

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PANDA DREAMING OF IRVINE_IHB

PANDA DREAMING OF IRVINE_IHB

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I was very suprised to see IR2's stats for all Irvine homes that were sold this year. Many million dollar + buyer were very conservative buys with $600,000 down with a mortgage of $417,000. Several were cash buys, where IR2 mentioned that many of these buyers have foreign asian names on the title. It seems that buyers in irvine these days are more conservative buyers who are putting down bigger down payments and borrowing less, therefore easily affording these homes.



Thanks.
 
IR,



I have another questions i am curious about.



What percentage of the 100% cash buys of these million plus homes are foriegn asians and middle easterners? chinese, koreans, etc? Would you say that most of these 100% cash buyers local residents of OC or foreigners buying abroad? IR, your stats were invaluable infomation to all of us. thank you.



HP
 
[quote author="HappyPanda" date=1211165640]IR,



I am curious to know if the average purchase of homes during the bubble (between 2004 - 2006) were also 36% down payments, like they are for the 2008 buyers. This information was quite a shock for me. I thought the average would be 20% max for all irvine home purchase. So i am wondering if this average is more of recent thing or if the average down payment was always like this in the past? Does this make sense?



My second question is: For the buyers who have a lot of cash ( $250,000 - $600,000 in cash) waiting on the side line to buy a home at the bottom. Is this a small minority population who are in this sweet position to take advantage of this buying opportunity?



HP</blockquote>


For question #1: I'm sorry, I don't have info on the 2004-2006 purchases already, and I'm not interested in volunteering time to quantify that data. Those boats have set sail.



I did pull this year's info because I thought it would be of value to potential buyers <strong>now </strong>in knowing what/who they are competing with. Coupled with tightened lending criteria, I would expect closer to a 20% minimum coming soon to a theater near you.



For question #2: That's the million dollar question. If the numbers of potential buyers are dwindling, then yes, buyers' power would be increasing (which is the heart of your question, I believe?). But this is an impossibility to know, unless you'd like to volunteer bank account numbers and balances. In that case, I would be available to "run with the numbers" so to speak.



:-P
 
[quote author="HappyPanda" date=1211165919]IR,



I have another questions i am curious about.



What percentage of the 100% cash buys of these million plus homes are foriegn asians and middle easterners? chinese, koreans, etc? Would you say that most of these 100% cash buyers local residents of OC or foreigners buying abroad? IR, your stats were invaluable infomation to all of us. thank you.



HP</blockquote>


This one is also a very difficult question to answer. A foreign surname, especially here in Orange County, rarely means that a person is a non-U.S. citizen. Short of knocking on each of their doors and asking, I don't know a method to get you this info. The bottom line is that regardless of where it is coming from, sizable $$$ is still buying the big homes here in Irvine.
 
[quote author="HappyPanda" date=1211163151]I was very suprised to see IR2's stats for all Irvine homes that were sold this year. Many million dollar + buyer were very conservative buys with $600,000 down with a mortgage of $417,000. Several were cash buys, where IR2 mentioned that many of these buyers have foreign asian names on the title. It seems that buyers in irvine these days are more conservative buyers who are putting down bigger down payments and borrowing less, therefore easily affording these homes.



What were $ 1million home buyers like buying during the peak of the bubble (2004 - 2006)? Was it truly rare to see buyers mortgaging less than $417,000 on a million dollar irvine homes? Did majority of the buyers put 10% down with a $900,000 mortgage. I am just curious to find out if the financing of $1 million homes was very different than how 2008 buyers are buying them now. My gut feeling would tell me that buyers during the bubble were no where near as conservative as the 2008 buyers.</blockquote>


It's not the buyers being more conservative, it's the lenders. The magic number of 2008 has been $417,000 and that was probably true for Q4 of 2007, because it's the limit between conforming and conforming jumbo. Buyers may have not wanted to put down such large down payments, but were advised / forced to due to the credit crunch.



I'm pretty confident that the buyers in 2004-2006 did not have such large down payments. It was not a lender requirement and sometimes not the best financial choice when you're paying 6% mortgage interest, but that down payment could be earning 15%+ in other investment securities.



I don't know what the fascination these past few weeks has been with $1M homes, seems like at the peak of the bubble, every other home in Irvine seemed like a million dollar home.
 
The bubble had people buying million dollar homes who had no business buying million dollar homes. The activity posted by IR2 is normal non-bubble activity.
 
IR2,



I personally don't think it is smart to keep your down payment cash saving in $ U.S. dollars. With the current state of the U.S. economy, the dollar will continue to lose its value. It is much smarter to hold onto strong foreign currencies to have the same buying power the foreigners have. I believe Yuan will be the strongest currency to appreciate than all asian currencies. I also love to keep my cash in EUROS.



Again, this is one man's opinion.



Panda
 
Sorry, but more Asian and or foreign buyers in Irvine is just a myth. Has the US issued more VISAs than last year, or the year before, or the year before that? And are there more coming to Irvine? You can find that stat, and when you do, it shows they are not coming to OC. Do Americans go on foreign property buying sprees with a strong dollar? Do the Asian investors have such a short term memory, that they have forgotten how a low dollar handed their a$$ to them in the last RE bust? A little common sense and basic econ 101 tells us otherwise.



I do happen to have a spreadsheet for all of 92602, between 3/2006 and through 3/2007. It has the same percentage of Asian and or foreign buyers, with the same type of down payments as IR2's current data. It's a myth, and this theory is starting to get old, just like what are mello roos.



Oh, and my best friend is Korean, and yes they want to buy a house just like all their knife catching friends, because they all think it is a great deal and have Korean Wons to spend. But, when I show them the foreclosure stats getting worse and worse every month, they say Gam-Sah, Ham-Nee-Da every time, because they realize their friends and parents are all drinking the Kool-Aid.



BTW, I am a homeowner, like many others here, or the many others who have owned a home in the past. The renter stereotype is kind of offensive, whether you are a homeowner or renter, there should be no stigma either way.
 
Many cash buyers in the past were Chinese. They have the cash because of frugality. Their cash reserve is high but they still hunt for bargains like a vulture waiting for their preys. They are not the knife catchers. They use their cash buying powers for price reduction in negotiation. They will never buy anything at full price unless it is Louis Vuitton. People often wonder how the cash reserve came about? Most Chinese own businesses where the transactions are often done in cash exchange. The customers are compensated with discount incentives. Cash is untraceable by Uncle Sam as long it is under the mattress and not deposited in to the bank. I was in Laguna Beach yesterday and even the ice cream store on PCH across the street from the strand has a cash only policy. 2 single scoops waffle cone were $12 ( I was robbed). No receipt was issued and the cash is untraceable. Very few Chinese buyers are foreign buyers and most have greencard status.







[quote author="graphrix" date=1211188092]Sorry, but more Asian and or foreign buyers in Irvine is just a myth. Has the US issued more VISAs than last year, or the year before, or the year before that? And are there more coming to Irvine? You can find that stat, and when you do, it shows they are not coming to OC. Do Americans go on foreign property buying sprees with a strong dollar? Do the Asian investors have such a short term memory, that they have forgotten how a low dollar handed their a$$ to them in the last RE bust? A little common sense and basic econ 101 tells us otherwise.



I do happen to have a spreadsheet for all of 92602, between 3/2006 and through 3/2007. It has the same percentage of Asian and or foreign buyers, with the same type of down payments as IR2's current data. It's a myth, and this theory is starting to get old, just like what are mello roos.



Oh, and my best friend is Korean, and yes they want to buy a house just like all their knife catching friends, because they all think it is a great deal and have Korean Wons to spend. But, when I show them the foreclosure stats getting worse and worse every month, they say Gam-Sah, Ham-Nee-Da every time, because they realize their friends and parents are all drinking the Kool-Aid.



BTW, I am a homeowner, like many others here, or the many others who have owned a home in the past. The renter stereotype is kind of offensive, whether you are a homeowner or renter, there should be no stigma either way.</blockquote>
 
[quote author="graphrix" date=1211188092]Sorry, but more Asian and or foreign buyers in Irvine is just a myth. Has the US issued more VISAs than last year, or the year before, or the year before that? And are there more coming to Irvine? You can find that stat, and when you do, it shows they are not coming to OC. Do Americans go on foreign property buying sprees with a strong dollar? Do the Asian investors have such a short term memory, that they have forgotten how a low dollar handed their a$$ to them in the last RE bust? A little common sense and basic econ 101 tells us otherwise.



I do happen to have a spreadsheet for all of 92602, between 3/2006 and through 3/2007. It has the same percentage of Asian and or foreign buyers, with the same type of down payments as IR2's current data. It's a myth, and this theory is starting to get old, just like what are mello roos.



Oh, and my best friend is Korean, and yes they want to buy a house just like all their knife catching friends, because they all think it is a great deal and have Korean Wons to spend. But, when I show them the foreclosure stats getting worse and worse every month, they say Gam-Sah, Ham-Nee-Da every time, because they realize their friends and parents are all drinking the Kool-Aid.



BTW, I am a homeowner, like many others here, or the many others who have owned a home in the past. The renter stereotype is kind of offensive, whether you are a homeowner or renter, there should be no stigma either way.</blockquote>


Graphrix- is right.... the asian people i know are definitely drinking the kool aid cause i know several of them buying houses in westminster and garden grove and some parts of HB. It is all good because somebody as to buy the house at the new lower price to start the lowing of comp prices thus leading to a more stable RE in OC.
 
We went to several (at least 5) open houses over the weekend. The only people I saw looking at houses were Asian (although they did not appear to be foreign). At each house they were asking the realtor lots of questions like they were interested in actually purchasing (and not just looking out of curiosity).
 
i find it odd that people point out the fact there's a lot of asian buyers. during the bubble years if you went to a phase release, the crowds were been predominantly asian. now when i see people at the model homes, they're still predominantly asian, indian, or middle eastern. what does that tell us? there will always be more asian buyers in irvine compared to the next town. but there's very FEW OF THEM and that's what matters.



the fallacy is that the fortunes of this asians is somehow completely uncorrelated with everyone else's. the credit crunch was global. the bear stock market in the first quarter hit harder in europe and asia than it did in america. a lot of the recession rhetoric is going away and people are less nervous than before, but if things go sour, a lot of europeans and asians will bear the brunt. for every american that has their credit card taken away, i wonder how many chinese factory workers starve. (exaggeration, but maybe not...)
 
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