Irvine is not rich

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garfangle_IHB

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<p>If you <a href="http://money.cnn.com/magazines/moneymag/bplive/2007/snapshots/PL0636770.html">check out</a> how Irvine compares to the average top 100 community in 2007 according to Money magazine you will see how similar the two compare except in the cost of housing. The median home price in Irvine is $720,134 while in the average top 100 community it is $359,352. When you measure by purchasing power, families in both places are similar, that of an upper-middle class lifestyle. However, to be a homeowner in Irvine you must put up double to money compared with a top 100 homeowner. Whereas a top 100 family has a median home price to purchasing power ratio of 4.34, an Irvine family has a median home price to purchasing power ratio of 8.64. This imbalance against Irvine is clearly unsustainable because its residents are not rich enough to support the carrying costs of such home prices (you could say the same thing for most of California).</p>

<p>While TIC likes to fancy Irvine as an modern, well-to-do locale, based on the income its residents generate that picture is an illusion. Irvine might be a safe place to live and have great public schools, well-maintained infrastructure, lots of parks and recreation, and good jobs, but it would never be a feature on the old TV show, "Lifestyles of the Rich and Famous." It ain't Greenwich, Beverly Hills, or Palm Beach and never will be. Unofrtunately, many Irvine residents have been caught in in the fever of trying to raise their lifestyle to match their appreciating homes by assuming ever large amounts of debt to pay for luxury cars, designer clothes, and the newest gadgets. This will end badly, but more than a few will justify it as their one opportunity in their lifetime to live like a king or queen.</p>
 
<p class="MsoNormal">I really don’t get the hatred piled-on for Irvine (and California generally).</p>

<p class="MsoNormal">It’s really over-the-top, in my opinion.</p>

<p class="MsoNormal">The best places list takes many factors into account, it is not about income. The top 10 places to live have a <strong style="mso-bidi-font-weight: normal">combined</strong> population of 186,300. Irvine alone has a population of 156,300 (according to the Money article).</p>

<p class="MsoNormal">I am certain that there are many great small towns across America where one can live a fantastic life.</p>

<p class="MsoNormal"> Yes, we’re no Beverly Hills, Greenwich or Palm Beach, but take a look at their stats:</p>

<p class="MsoNormal"> Beverly Hills: $1,822,293 median home / $121,985 median income /14.94 price multiple</p>

<p class="MsoNormal"> Greenwich: $1,931,189 median home / $150,623 median income / 12.82 price multiple</p>

<p class="MsoNormal"> Palm Beach: $2,026,683 median home / $177,963 median income / 11.39 price multiple</p>

<p class="MsoNormal">Going with median numbers means that all those people are faking it too.</p>

<p class="MsoNormal"> </p>
 
"Unofrtunately, many Irvine residents have been caught in in the fever of trying to raise their lifestyle to match their appreciating homes by assuming ever large amounts of debt to pay for luxury cars, designer clothes, and the newest gadgets."





I think this is largely a (Southern?) California thing, I see the same sort of behavior up in Thousand Oaks etc. People have it in their head that if they have luxury cars, designer cloths etc etc they are "wealthy". It doesn't matter if there net worth is hundreds of thousands of dollars in the red.
 
You know, maybe I just live in a different part of Irvine, but I really don't see a large amount of "excess" around where I live. Sure, they have some nice cars, but I don't see H2's in driveways or MBZ SL's, Seadoos, or people flaunting their cash around. In fact, it's almost the opposite, lots of families with kids, taking them to the parks, pools, minivans, etc...

<p>

I know the "OC" lifestyle as you walk around Fashion Island or SCP, but I see more of that lifestyle when I venture outside of Irvine and into HB, NB, Aliso, Ladera, etc. Maybe it's because I don't live in QH, TR, TRock, but in north/west/central Irvine it feels much more family oriented.

<p>

Irvine has high home prices, no one's questioning that, however IMO we seem to be no worse in the WTF pricing compared to surround cities in Aliso, Mission, Ladera, RSM, etc. Just looking through Redfin you see a lot of wishful asking prices in communities that don't offer anything near what irvine can.
 
Some people are obsessed with the "how the hell does everyone afford xyz?" issue. The truth is, the majority of people in Southern California bought their homes prior to the recent housing boom and didn't need to use any kind of exotic loan. They can afford their mortgage payment and also the payment on their Mercedes SUV or whatever. A small minority of people, however, either through financial naivety or shortsightedness, overextended themselves and purchased a home at the wrong time using the wrong kind of loan product. An even smaller minority of people were either duped by their loan broker or were just plain speculators and bought thinking prices would continue to rise. Some of these latter groups will lose their home and/or go bankrupt. So while the total number of foreclosures will be high, compared with the entire population of Southern California, it will only be a small fraction. So while prices will fall in Irvine as it will throughout California, I doubt that a large chunk of Irvine's population will be forced to give up their houses and rent.
 
<p>Janet</p>

<p>A lot of money in Beverly Hills are truly foreign old money, (oil money from Iran), and a lot of people there are rich but with no US income (they may have a huge bank account in Switzerland though). Majority of the foreign people in Irvine are W2 H1B, they may be fairly well paid, but they are by no means rich. Also, if you check out Beverly Hills RE, you will find housing in Beverly Hills is actually cheaper than Irvine if you look at the size of the lot. (At least from my research). </p>
 
<p>Janet,</p>

<p>Greenwich, Beverly Hills, and Palm Beach have outsized price ratios because the townfolk can afford it. In each place there is a major divergence between the wealthy and ordinary folk and immigrant servants. Those trio of homeowners are truly rich because they have a base of wealth flowing from Wall Street, Hollywood, and a tax-sheltering haven (unlimited homestead exemption from creditors and zero income tax in Florida), respectively. Non-homeowners in those towns commute from elsewhere to work there. Most residents of Irvine live and work in Irvine. Therefore, when I made those comparisons, I did it for the purpose of illustrating the fact that Irvine is not has wealthy as the cost of housing would indicate, it is comparable to the average 100 top community, but those towns have housing costs half that of Irvine.</p>

<p>BTW, I don't hate Irvine, I admire the place. I just think that TIC and the now-suffering homebuilders, lenders and RE brokers, got way ahead of themselves in presenting Irvine as a place that can readily support $600K to $1+ million homes.</p>
 
<p>Tourbillon,</p>

<p>I don't doubt that.</p>

<p>However, Palm Beach and Greenwich are the very <strong>definition</strong> of old money.</p>

<p>I, too, bet they have money stashed away in Switzerland, but their incomes, for the most part, are earned here.</p>

<p>I am simply presenting the statistics - they are what they are.</p>

<p> </p>
 
<p>Garfangle,</p>

<p>I could pull 100 other examples where the median price is much higher than the top 100 average.</p>

<p>I am sure they are not all explained away by the "servants" argument.</p>
 
<p>Janet</p>

<p>To me, any American rich people is new money. The entire country is less than 300 years old. Some of the families in BH have been rich in other countries for a thousand years. No kidding, one of my friend's family owns a business of importing olive oil, and the company was established way back in the 700s. Another one of my Asian friends had their company established back in the 1500s. Foreign money by definition does not show up in US income number. </p>

<p>For palm beach and greenwich, I have no idea, I don't know them personally. (I know Beverly Hills well because my faimly live there).</p>
 
<p>Sorry, don't follow.</p>

<p>It's OK that we see things differently (at least it is to me).</p>

<p>It's exhausting defending anything here.</p>

<p> </p>
 
<p>Let us forget for a minute who is rich and who is not. One thing that puzzles me is that Irvine housing price is begining to exceed Beverly Hills price. Or do you guys think that is normal?</p>
 
<p>All of So Cal is overpriced. I saw 3 bedroom houses in South Gate, Inglewood and Compton for over 600k one was a brutal 700 sft hole with a BIG yard. The yard had broken down cars in it.</p>

<p>Moving You can go to beutiful Santa Ana or the Part of Tustin that is known as 92780. And those go for 500-600k.</p>

<p>Now move up to Irvine where granted the Schools are better and the houses are much nicer BUT it does not mean they are affordable.</p>

<p>So since the lower end of the market is way over priced as you move into nicer areas of course the housing should go up.</p>

<p>Once the bottom falls out of the low end the people that bought a house in Santa Ana hoping to have 300k worth of equity in 3 years so they could afford to move to Irvine will be gone. Instant equity is gone. </p>

<p>Janet I know some people that bought over the last 2 years, they cannot afford the homes they are in. </p>

<p>The other thing is that So Cal was not the only place in the country this housing bubble insanity took place. Let see what happens in Palm Beach over then next few years.</p>

<p>The newer the neighborhood the newer the loans. Not to mention inflated property values.</p>

<p>I think what is telling to me is someone I work with owns a home in Irvine. He doesn't make a whole lot of money and He jokes that if he didn't buy years ago he would be living in Barstow. </p>

<p>What has occured in Irvine that makes houses worth 200-250% of what they were 6 years ago????</p>

<p>I agree completely Irvine is a nice place but what makes the homes there worth that much more the years ago????</p>

<p>Oh by the way I don't know of many people but the RE agents and Mortgage Brokers who are now unemployed who doubled and tripled their incomes in that time.</p>

<p>For some reason you just don't beleive people extended themselves to buy something with no intention of staying. The idea was to cash out. Now that their is no cash out these people are running.</p>

<p>Drive through Tustin Fields. Two years ago people lined up for a chance to move in now they are trying to get out.</p>

<p>Finally Janet I would wonder why someone who didn't need to would sell thier home now unless they HAVE to. Explain the inventory. Irvine's inventory by the way is higher then most of the surronding towns. Except for Santa Ana.</p>

<p>I wouldn't sell if I could afford my payments now. I would ride out the storm.</p>

<p>HMMMMM.</p>

<p> </p>
 
Irvine is rich. Not Hollywood rich, but rich enough. As for home prices though, I think Irvine homes appreciated just like any other city in LA, OC, or the IE. I think Irvine is a great place to live. It's not as luxurious as living on the coast or up in the hills, but it's much better than average. Of the 5 largest cities in the OC - Santa Ana, Anaheim, Irvine (population of 200K by the way), Huntington Beach, and Garden Grove - Irvine is a lot nicer than Santa Ana, Anaheim, or Garden Grove. So it's a great place to live for a great deal of people. Due to its size, it's definitely not elitist at all. As for the bubble, like Dr. Allergy said, it might only affect 5% of the homeowners in Irvine. I'm just waiting for a condo to be 350K and a house to be 500k.
 
<p>I would like it if people would not presume they know what I am thinking.</p>

<p>I am not an idiot.</p>

<p>I am capable of acknowledging a good argument for a downturn (and have).</p>

<p>I don't swallow every argument I hear.</p>

<p>Some of what I hear is intellectually dishonest, in my opinion.</p>
 
<p>The best argument for homes being overpriced I have ever heard came from IrvineRenter.</p>

<p>It is his gross rent multiplier argument.</p>

<p class="MsoNormal">I have said so, at least a half a dozen times.</p>

<p class="MsoNormal">In a nutshell: a home is worth what you can rent it for.</p>

<p class="MsoNormal">I, personally, would assign a premium to owning – anywhere from 10% to 100%. That is each person’s choice, depending on their own finances, economic projections and values.</p>

<p class="MsoNormal">So, to me, comparing Irvine to a village of 7,000 people in Wisconsin - or to Greenwich, Connecticut - are not meaningful.</p>

<p class="MsoNormal">(No disrespect to Garfangle, as I think the comparison is interesting.)</p>
 
<p>Janet's last point is completely right. It's the PE ratio stupid. It will always be the PE ratio stupid.</p>

<p>Incomes don't really matter much in terms of predicting where prices "should" be. Sure, incomes matter at the top of a bubble, because eventually people just run out of enough income to keep the bubble going. But in our market economy, prices aren't set by how much people can afford to pay. Prices can easily fall below the level that most families could afford, if supply and demand conditions warrant.</p>
 
<p>I would agree if all the apartment homes in the weren't owned by IAC.</p>

<p>If tighter lending standards are enacted then the days of income not mattering may end.</p>

<p>So income may matter, if the lenders decide to only lend money to people who can pay it back with proven income.</p>

<p>If the income in the area is x and the max multiplier is 4 the lenders may dictate housing price.</p>

<p>Sorry MR. Irvine wanna be buyer but you only make 100k a year so we will only lend you 400k. Sorry MR. Irvine seller evidently the pool of people making 250k a year is drying up so we can't sell your 1m dollar home.</p>

<p>The government is going to react now they have talked bail out. Don't think that they aren't going to tighten up on the conditions that created this.</p>

<p>IE income not mattering when it comes to housing price.</p>

<p> </p>
 
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