PANDA_IHB
New member
Yesterday, I was reading the debate back and forth between Ipo and Zoiks and it really made me think about the inventory levels in Irvine. At first it was kind of funny seeing Zoiks calling IPO "Ipoop" and IPO shouting back to Zoiks if he took remedial math, but in a more serious note, both guys' stand points are very valid. We can see that inventory level of homes on the MLS dropped from 1280 down to 873 from a year ago. However, I feel that there is about atleast 500 inventories out there what i call "invisible inventories". What I mean by "invisible inventory" is that there is no "NOD" therefore the banks don't know, nobody knows except for the home owners themselves, that when the rates resets, they are going to be in trouble. It is sort of going to be a pop corn effect where there is 873 inventories and that number will jump to over 1500 within a 6 month period.
The reason I am feeling this is because I was seriously very close of buying a townhome in QH in 2003. Within couple of months, I purchased the Chicago home I live in right now and closed in June 2004 at a rate of 4.25% 5 year ARM. This puts me in the time frame when most people were buying in QH. About 9 months ago, I spend 2 - 3 days with my agent looking at MANY, MANY homes in the market in QH, Woodbury, and Northwood II, and I was quite suprised to see that I did not see any mortgages under $600,000. Most of homes I say had two mortgages. As my mortage is going to reset in June 2009, many many homes in Quail Hills with 5 year ARMS will reset around the same time. Many are predicting that mortgage rates are going to be 8-9% by then. Going from 4.25% ARM to 8-9% rates in 2009, without having much cash reserves will put you out of your house. IPO, what I am trying to say is that many homes are invisible inventories that are going to pop up all at once. Let's put ourselves in the shoes of Northwood II, PS, WB, and QH home owners. If I was one of these homeowners and had enough cash reserves, there is no way in hell I would put my home on the market in 2009 or 2010. Until i run out of every penny I have, I would do everything I can to keep that house and not sell. I would probably be in denial of what is happening to me, hoping that either God, government, or some magical friend who will give me money so that I don't lost my home.
I really feel for the guy who bought PS Manzanita plan 1 that went on short sale for $699,900 while the owner bought the home for $980,000 in 2006. That guy could of easily been me as I bought in 2006, but in another non-bubble area of the country. I was extremely lucky and I count my blessings everyday. This guy lost $280,000, and if this guy put this much down, this is real money that this individual lost. It can possibly take a middle class Irvine resident 10 - 15 years to save up this kind of money. It is NO joke.
There is another thing that concerns and I don't have the real answer to this. I've followed Irvine Renter's chart for a while now to see if these median home prices actualizes or not. I also remember Graph or Zovall posting a poll (asking the audience) of where the roll back bottom of the Irvine home prices would be. There was good distribution of 2001, 2002, and 2003 prices. IR's theory is that when rent = buy, it should be there for short period of time and the market will rebound by 2011 - 2013. How can we be so sure about this? Obviously there was a precedence when Irvine home prices went down from 1990 - 1995 and rebounded in 1996-1997. We can then generalize that Irvine home prices will go down from 2006-2011 and rebound in 2012, but this is only theory.
A good example is the 15 year real estate recession in Japan. I am sure that every Japanese home owners thought that the home prices would rebound within 5 years, but they had a decade more to go in this recession hell. Is the frame work of the Japanese real estate recession similar to what we are going through right now?
Again, I am uncertain to the answers to my questions, but interested to hear what others are thinking. Sorry for such a long winded post.
Panda
The reason I am feeling this is because I was seriously very close of buying a townhome in QH in 2003. Within couple of months, I purchased the Chicago home I live in right now and closed in June 2004 at a rate of 4.25% 5 year ARM. This puts me in the time frame when most people were buying in QH. About 9 months ago, I spend 2 - 3 days with my agent looking at MANY, MANY homes in the market in QH, Woodbury, and Northwood II, and I was quite suprised to see that I did not see any mortgages under $600,000. Most of homes I say had two mortgages. As my mortage is going to reset in June 2009, many many homes in Quail Hills with 5 year ARMS will reset around the same time. Many are predicting that mortgage rates are going to be 8-9% by then. Going from 4.25% ARM to 8-9% rates in 2009, without having much cash reserves will put you out of your house. IPO, what I am trying to say is that many homes are invisible inventories that are going to pop up all at once. Let's put ourselves in the shoes of Northwood II, PS, WB, and QH home owners. If I was one of these homeowners and had enough cash reserves, there is no way in hell I would put my home on the market in 2009 or 2010. Until i run out of every penny I have, I would do everything I can to keep that house and not sell. I would probably be in denial of what is happening to me, hoping that either God, government, or some magical friend who will give me money so that I don't lost my home.
I really feel for the guy who bought PS Manzanita plan 1 that went on short sale for $699,900 while the owner bought the home for $980,000 in 2006. That guy could of easily been me as I bought in 2006, but in another non-bubble area of the country. I was extremely lucky and I count my blessings everyday. This guy lost $280,000, and if this guy put this much down, this is real money that this individual lost. It can possibly take a middle class Irvine resident 10 - 15 years to save up this kind of money. It is NO joke.
There is another thing that concerns and I don't have the real answer to this. I've followed Irvine Renter's chart for a while now to see if these median home prices actualizes or not. I also remember Graph or Zovall posting a poll (asking the audience) of where the roll back bottom of the Irvine home prices would be. There was good distribution of 2001, 2002, and 2003 prices. IR's theory is that when rent = buy, it should be there for short period of time and the market will rebound by 2011 - 2013. How can we be so sure about this? Obviously there was a precedence when Irvine home prices went down from 1990 - 1995 and rebounded in 1996-1997. We can then generalize that Irvine home prices will go down from 2006-2011 and rebound in 2012, but this is only theory.
A good example is the 15 year real estate recession in Japan. I am sure that every Japanese home owners thought that the home prices would rebound within 5 years, but they had a decade more to go in this recession hell. Is the frame work of the Japanese real estate recession similar to what we are going through right now?
Again, I am uncertain to the answers to my questions, but interested to hear what others are thinking. Sorry for such a long winded post.
Panda
