Irvine recession proof, but Newport at risk?

[Anonymous_IHB]

http://lansner.freedomblogging.com/2008/10/16/irvine-recession-proof-but-newport-at-risk/4909/

 

[PeterUK_IHB]

I wonder what percentage of People who live in Irvine actually live in Irvine..the numbers must have shrunk by a huge amount over the last couple of years...

I ride through the industrial part of Irvine late at night and all I see is what were once thriving Businesses that are now Churches, for sale and to let signs outside Business Buildings..sure, we have the new Diamond shopping center but they don't offer any meaningfull employment, by that I mean low paying Jobs...not to mention the Irvine Business center on Jamboree/Main...they will soon be see-through Buildings...

The cost of doing any kind of Manufacturing Business is now prohibitive....

I would be willing to bet the industrial center of Irvine will be a Ghost Town by the end of next year...

 

[graphrix_IHB]

I wonder what percentage of People who live in Irvine actually live in Irvine..the numbers must have shrunk by a huge amount over the last couple of years...

I ride through the industrial part of Irvine late at night and all I see is what were once thriving Businesses that are now Churches, for sale and to let signs outside Business Buildings..sure, we have the new Diamond shopping center but they don't offer any meaningfull employment, by that I mean low paying Jobs...not to mention the Irvine Business center on Jamboree/Main...they will soon be see-through Buildings...

The cost of doing any kind of Manufacturing Business is now prohibitive....

I would be willing to bet the industrial center of Irvine will be a Ghost Town by the end of next year...

You very well could be right. Here is the stats from the Q3 CBRE report on industrial space in OC...

Net absorption for the third quarter of 2008 reached a county-wide

total of negative 1,644,692 square feet, with largest number occurring

in the Airport Area at negative 1,012,837 square feet. M&W product

was almost exclusively responsible for the negativity as R&D posted

negative 31,095 square feet. Increased vacancy can be attributed to a

number of new properties coming onto market coupled with a weakening

economy and decreased business expansions; available sublease space

also continues to increase.

And on office space...

The Orange County office market experienced a negative 392,319 square feet of net

absorption in the third quarter, bringing the year-to-date total to negative 1.6 million

square feet. The majority of the occupancy change took place in Central Orange County

and Greater Airport area which reported a combined total of 642,589 square feet of

negative net absorption. Both of these areas contain the majority of mortgage-related

companies, such as Ameriquest and GE Capital, and continue to be impacted by the

fallout of this industry. Washington Mutual, who was recently acquired by JP Morgan

Chase, vacated approximately 100,000 square feet this quarter in Irvine prior to the

acquisition.

The YTD absorption rate for -970,425 sqft. and add in the -278,819 from the year before, you end up with a lot of vacant space. Remember some of those commercial RE bulls from about a year ago who thought I was just some dumb blogger who doesn't know what he is talking about? Its no wonder they don't show up any more. I'd be a little embarrassed too.

 

[biscuitninja_IHB]

Yea, ya dumb blogger.... who just happens to be right... alot of the time.

I've know for quite a while that doing business in Irvine is INSANELY expensive. During the bubble alot of complex owners upped the rates 20-40-100% thinking that they were doing the right thing. When they drove everybody out of the business park, they were kinda scratching their heads.... hummm... Well fine sirs, it doesn't take a genius to figure out you weren't thinking correctly and were drinking the kool-aid swill they were politely handing you.

If anybody can figure out how to bring jobs back to CA cheaply.... they will one hell of a rich business man.

good luck

-bix

 

[bkshopr_IHB]

For the most part this theory may be valid. 40% of all new home buyers in the last 10 years were Asians. Asian borrowers were a small fraction of the subprime mortgages. Yes, they bought high and regretted their decisions. Fewer Asians were in the mortgage, home builder or construction related businesses so no jobs lost there. Several business casualties in the Chinese restaurants catering to the office towers like China West but not enough to forced Asians out of their homes.

Asians are incredibly frugal so making the upside down mortgage should be no problem. Confidence of Irvine home ownership remains high among Asians because they must keep their dream alive: kids attending Irvine Schools have a better chance at Harvard or Stanford. Losing their home in their culture is ultimate failure viewed as disgrace to families and friends. Most will fight to hold on to their homes.

 

[usctrojanman29_IHB]

For the most part this theory may be valid. 40% of all new home buyers in the last 10 years were Asians. Asian borrowers were a small fraction of the subprime mortgages. Yes, they bought high and regretted their decisions. Fewer Asians were in the mortgage, home builder or construction related businesses so no jobs lost there. Several business casualties in the Chinese restaurants catering to the office towers like China West but not enough to forced Asians out of their homes.

Asians are incredibly frugal so making the upside down mortgage should be no problem. Confidence of Irvine home ownership remains high among Asians because they must keep their dream alive: kids attending Irvine Schools have a better chance at Harvard or Stanford. Losing their home in their culture is ultimate failure viewed as disgrace to families and friends. Most will fight to hold on to their homes.

Kinda like going down with the ship, eh? But the reality is if they got 30-year fixed mortgages and didn't HELOC their homes to death they should be OK if they are willing to ride it out for 10-15 years.

 

[irvine_home_owner_IHB]

For the most part this theory may be valid. 40% of all new home buyers in the last 10 years were Asians. Asian borrowers were a small fraction of the subprime mortgages. Yes, they bought high and regretted their decisions. Fewer Asians were in the mortgage, home builder or construction related businesses so no jobs lost there. Several business casualties in the Chinese restaurants catering to the office towers like China West but not enough to forced Asians out of their homes.

Asians are incredibly frugal so making the upside down mortgage should be no problem. Confidence of Irvine home ownership remains high among Asians because they must keep their dream alive: kids attending Irvine Schools have a better chance at Harvard or Stanford. Losing their home in their culture is ultimate failure viewed as disgrace to families and friends. Most will fight to hold on to their homes.

Great post.

I think this is one of the hidden factors when it comes to price stability in Irvine. Most Asians don't like to move their kids in and out of schools either... regardless of RE downturn. So they will stay long enough for their children to finish elementary/middle/high school which usually means they've ridden out the cycle.

It would be interesting to see a profile by ethnicity to determine who sells/forecloses during a down cycle. I guess that wouldn't be very PC... but interesting none the less.

 

[bkshopr_IHB]

most homeowners have WTF price confidence and no new homes to bench mark prices. It is like the warlords in countries without government.

 

[High Gravity_IHB]

For the most part this theory may be valid. 40% of all new home buyers in the last 10 years were Asians. Asian borrowers were a small fraction of the subprime mortgages. Yes, they bought high and regretted their decisions. Fewer Asians were in the mortgage, home builder or construction related businesses so no jobs lost there. Several business casualties in the Chinese restaurants catering to the office towers like China West but not enough to forced Asians out of their homes.

Asians are incredibly frugal so making the upside down mortgage should be no problem. Confidence of Irvine home ownership remains high among Asians because they must keep their dream alive: kids attending Irvine Schools have a better chance at Harvard or Stanford. Losing their home in their culture is ultimate failure viewed as disgrace to families and friends. Most will fight to hold on to their homes.

Also, Asian house buying power power is far disporportionate to their income. I have many white coworkers pulling down 6 digit and up salaries who do not have a downpayment for a moderate home. I know many Asians with relatively modest incomes who put 50% down on a $1+ mil house. Also, owing real esate is part of Asian culture so concepts like rental parity does not mean much to many Asians. Notice that IAC complexes are mostly white compared to the overall Irvine demographic.

 

[hs_teacher_IHB]

Huh? Wow, you guys sure seem to know more about Asians than they know about themselves. I think Whites are more financially stable because they have intergenerational wealth.

Asians, on the other hand, are at best nouveau riche. So I don't know how well they can handle such an economic storm.

 

[irvine_home_owner_IHB]

Huh? Wow, you guys sure seem to know more about Asians than they know about themselves. I think Whites are more financially stable because they have intergenerational wealth.

Asians, on the other hand, are at best nouveau riche. So I don't know how well they can handle such an economic storm.

What makes you think Asians don't have intergenerational wealth?

I actually think that money passes down better in Asian families... but that's purely speculative on my part.

 

[ABC123_IHB]

bkshopr, how can you say that one hand Asians are incredibly frugal, but on the other hand Asians are the ones who are keeping the Nordstrom's end of South Coast Plaza afloat?

 

[acpme_IHB]

it's not just wealth but also what people do with their money. so most americans don't buy chanel bags... but walking around the neighborhood i see garages filled with other kinds of luxuries -- surfboards, ATVs, motorcycles, etc.

 

[bkshopr_IHB]

I agree with Acpme. Caucasian spent money on Sport toys. Asians who own homes in Irvine are not the Asian demographic shopping at SC Plaza. They are younger Asian shoppers who do not pay rents to their parents. Some are tourist from oversea and many are from Monterey Park, Rowland Height, San Marino, Rosemead, Temple City, Arcadia, San Gabriel, Walnuts, North Fullerton, Brea, Diamond Bar, Chino Hills, and the Westside Korean communities. Most of the Asians who shop at Nordstrom do not own homes.

2 zipcodes appeared most frequent on charge card transactions are Long Beach (Belmont Shore and Ht) and San Gabriel Valley.

Asian homeowners are frugal.

 

[cl12_IHB]

All the open houses in Irvine that I go to most everyone else are also Asian, is that your experience too?

I looked at API scores breakdown by school by student races, the number of Asians are all over 50% and increasing every year, consistent with house buying trend.

There maybe an equilibrium, but could be 70-80% Asian in Irvine eventually.

 

[bkshopr_IHB]

All the open houses in Irvine that I go to most everyone else are also Asian, is that your experience too?

I looked at API scores breakdown by school by student races, the number of Asians are all over 50% and increasing every year, consistent with house buying trend.

There maybe an equilibrium, but could be 70-80% Asian in Irvine eventually.

No, large Asian population is sustained by critical mass of Asian retail, markets, restaurants and bilingual services. So. County zoning and regulatory agencies are very difficult so fewer Asians have the expertise to overcome the developmental process. Mom and pop businesses are the success to a thriving Asian population as well as reasonable home prices for the poor Asian workers. Irvine needs an El Monte adjacency and better public transportation inorder for Asian population to flourish. There is not enough of poor Asians to service the upper middle class Asians in Irvine so population growth is controlled.

 

[xsocal land merchant_IHB]

I represent the Caucasion group by the fact that I spend 90% of my money on fast cars, women, and booze.

I waste the other 10%!

Just kidding..

enjoy

 

[ABC123_IHB]

All the open houses in Irvine that I go to most everyone else are also Asian, is that your experience too?

I see a lot of Persians/Middle Easterners and Indians (but I guess they are considered Asian) at open houses in Irvine and an occasional elderly Caucasian couple who lives in the neighborhood who can be heard mumbling under their breath saying, "I can't believe there are people are foolish enough to be spending nearly a million dollars for this rundown place".

 

[hs_teacher_IHB]

I think that Huntington and Irvine are similar in terms of wealth. However, Irvine has higher incomes. So from my deductions, Huntington has many more older White people who have accumulated wealth through time. Irvine has younger Asians people who are accumulating wealth through work. When I think of a wealthy White person, I visualize someone in their 70's with their beachfront home and million dollar retirement account. As for a wealthy Asian, I see someone in their 50's running a business or a practice to generate income. And I'm assuming seasoned wealth can handle economic turmoil over growth-oriented entrepreneurs.

 

[25w100k+_IHB]

I agree with Acpme. Caucasian spent money on Sport toys. Asians who own homes in Irvine are not the Asian demographic shopping at SC Plaza. They are younger Asian shoppers who do not pay rents to their parents. Some are tourist from oversea and many are from Monterey Park, Rowland Height, San Marino, Rosemead, Temple City, Arcadia, San Gabriel, Walnuts, North Fullerton, Brea, Diamond Bar, Chino Hills, and the Westside Korean communities. Most of the Asians who shop at Nordstrom do not own homes.

2 zipcodes appeared most frequent on charge card transactions are Long Beach (Belmont Shore and Ht) and San Gabriel Valley.

Asian homeowners are frugal.

Do you do any research before you spout bullshit like this? Lets see some studies backing what you say up. Because I think you are pulling this out of your ass.