Is $250 Per Sq. Ft. a Fair Price for a SFR in Irvine?

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[quote author="blackacre-seeker" date=1222675314]Dig this folks: I went to see this property in Oak Creek, here is the linky:http://www.redfin.com/CA/Irvine/Undisclosed-address-92618/home/12465078

The seller's agent told me that it is a short sale and there is already a <strong>800K cash offer </strong>on this property in addition to 6 others from 750K up...(do you think he is bluffing?) I guess the bottom is nowhere near yet where people are willing to pay 800K cash for this house. It is not a bad house, has potential and in fairly good condition, but needs lots of work like flooring, hardscaping, and so on. So I would be willing to pay 550K-600K for this because I'd have to spend another 100K fixing it.

Well, I'll just keep looking, I guess I don't stand a chance to win this bidding war with what I can afford to spend...</blockquote>


Property records for APN 466-331-10:



45 Commonwealth, Irvine, CA.



3/15/2006: Current owner buys for $960k, $750k first mortgage, so $210k down.



3/29/2006: Refi for $87k, no details. Guessing a standalone second.



So, total debt as of March 2006: $837k.



Side note: this is the third owner since the house was built in 2000. The original owner made a killing when she sold in 2004, making about 275k. Not bad for holding a piece of dirt for 4 years. The second owner, who bought for 750k, did some equity extraction, followed by default/foreclosure. Sold to the current owner/GF in 2006.



Are we presuming that the seller admits defeat, is sacrificing the fat down payment, and just wants to get out for the value of the first mortgage and preserve her good credit?



Blackacre: you'll see the price you want for Oak Creek homes such as this one within the next two years.
 
[quote author="blackacre-seeker" date=1222675314]Dig this folks: I went to see this property in Oak Creek, here is the linky:http://www.redfin.com/CA/Irvine/Undisclosed-address-92618/home/12465078

The seller's agent told me that it is a short sale and there is already a <strong>800K cash offer </strong>on this property in addition to 6 others from 750K up...(do you think he is bluffing?) I guess the bottom is nowhere near yet where people are willing to pay 800K cash for this house. It is not a bad house, has potential and in fairly good condition, but needs lots of work like flooring, hardscaping, and so on. So I would be willing to pay 550K-600K for this because I'd have to spend another 100K fixing it.

Well, I'll just keep looking, I guess I don't stand a chance to win this bidding war with what I can afford to spend...</blockquote>


$750-800K is the right number for the current market. Overall average Irvine decline percentage applied to 2006 purchase price on this house suggests value of $751K. Add on a slight premium for Oak Creek and $775K seems about right for today...
 
[quote author="ipoplaya" date=1222748747][quote author="blackacre-seeker" date=1222675314]Dig this folks: I went to see this property in Oak Creek, here is the linky:http://www.redfin.com/CA/Irvine/Undisclosed-address-92618/home/12465078

The seller's agent told me that it is a short sale and there is already a <strong>800K cash offer </strong>on this property in addition to 6 others from 750K up...(do you think he is bluffing?) I guess the bottom is nowhere near yet where people are willing to pay 800K cash for this house. It is not a bad house, has potential and in fairly good condition, but needs lots of work like flooring, hardscaping, and so on. So I would be willing to pay 550K-600K for this because I'd have to spend another 100K fixing it.

Well, I'll just keep looking, I guess I don't stand a chance to win this bidding war with what I can afford to spend...</blockquote>


$750-800K is the right number for the current market. Overall average Irvine decline percentage applied to 2006 purchase price on this house suggests value of $751K. Add on a slight premium for Oak Creek and $775K seems about right for today...</blockquote>


I see.
 
[quote author="blackvault" date=1222755855][quote author="ipoplaya" date=1222748747][quote author="blackacre-seeker" date=1222675314]Dig this folks: I went to see this property in Oak Creek, here is the linky:http://www.redfin.com/CA/Irvine/Undisclosed-address-92618/home/12465078

The seller's agent told me that it is a short sale and there is already a <strong>800K cash offer </strong>on this property in addition to 6 others from 750K up...(do you think he is bluffing?) I guess the bottom is nowhere near yet where people are willing to pay 800K cash for this house. It is not a bad house, has potential and in fairly good condition, but needs lots of work like flooring, hardscaping, and so on. So I would be willing to pay 550K-600K for this because I'd have to spend another 100K fixing it.

Well, I'll just keep looking, I guess I don't stand a chance to win this bidding war with what I can afford to spend...</blockquote>


$750-800K is the right number for the current market. Overall average Irvine decline percentage applied to 2006 purchase price on this house suggests value of $751K. Add on a slight premium for Oak Creek and $775K seems about right for today...</blockquote>


I would not pay more than 165-175 per sq in irvine. If renting is profiting me more than owning a home then I won't stop doing so. If I come to a point where I have saved 300K and prices STILL haven't come down. I will simply take that money to maybe chicago or indianapolis and buy a home and a benz outright and chill.</blockquote>


I suspect you won't be buying in Irvine then bv... It is unlikely that prices here would fall that far, and if they did, given the current interest rate environment and steady rents, you would be burning money to rent vs. own in Irvine.



Some us love it enough here and/or have considerable enough roots such that a move to the cold Midwest would be much worse than paying than $250/sf.
 
[quote author="blackvault" date=1222757369][quote author="ipoplaya" date=1222756484][quote author="blackvault" date=1222755855][quote author="ipoplaya" date=1222748747][quote author="blackacre-seeker" date=1222675314]Dig this folks: I went to see this property in Oak Creek, here is the linky:http://www.redfin.com/CA/Irvine/Undisclosed-address-92618/home/12465078

The seller's agent told me that it is a short sale and there is already a <strong>800K cash offer </strong>on this property in addition to 6 others from 750K up...(do you think he is bluffing?) I guess the bottom is nowhere near yet where people are willing to pay 800K cash for this house. It is not a bad house, has potential and in fairly good condition, but needs lots of work like flooring, hardscaping, and so on. So I would be willing to pay 550K-600K for this because I'd have to spend another 100K fixing it.

Well, I'll just keep looking, I guess I don't stand a chance to win this bidding war with what I can afford to spend...</blockquote>


$750-800K is the right number for the current market. Overall average Irvine decline percentage applied to 2006 purchase price on this house suggests value of $751K. Add on a slight premium for Oak Creek and $775K seems about right for today...</blockquote>


I would not pay more than 165-175 per sq in irvine. If renting is profiting me more than owning a home then I won't stop doing so. If I come to a point where I have saved 300K and prices STILL haven't come down. I will simply take that money to maybe chicago or indianapolis and buy a home and a benz outright and chill.</blockquote>


I suspect you won't be buying in Irvine then bv... It is unlikely that prices here would fall that far, and if they did, given the current interest rate environment and steady rents, you would be burning money to rent vs. own in Irvine.



Some us love it enough here and/or have considerable enough roots such that a move to the cold Midwest would be much worse than paying than $250/sf.</blockquote>


I guess not. I shouldn't say price per sf is a good way of determining whether or not I will buy because price per sf is only valid at this point in time in this current market. I will determine things based on income to home price ratio.



To calculate the true cost of home you have to take the home price + interest less your rent cost, then take the difference saved X 11% interest. If you actually sat down and calculated that...you wouldn't be saying renting is burning money. You're the one burning. Only way you would be saving is if rent is somewhat equivelant to mortgage payments and its far from it...income to home ratio? last I checked 87K is irvines median home income vs 700K homes? *chuckle*



So you can be right...homes will be 700K 3 years from now, but the guy flipping burgers at McDonaldns will also be making 75K a year vs 25K.



Something has to give IPO.</blockquote>


I don't really understand your post bv.



Maybe you can tell me what is wrong with my calc, that would seem to be easier...



I used the home I rent now for the example:



<img src="http://www.ipoplaya.com/rentburn.jpg" alt="" />



How would renting not be burning money if the home fell to $175/sf?
 
[quote author="ipoplaya" date=1222760159][quote author="blackvault" date=1222757369][quote author="ipoplaya" date=1222756484][quote author="blackvault" date=1222755855][quote author="ipoplaya" date=1222748747][quote author="blackacre-seeker" date=1222675314]Dig this folks: I went to see this property in Oak Creek, here is the linky:http://www.redfin.com/CA/Irvine/Undisclosed-address-92618/home/12465078

The seller's agent told me that it is a short sale and there is already a <strong>800K cash offer </strong>on this property in addition to 6 others from 750K up...(do you think he is bluffing?) I guess the bottom is nowhere near yet where people are willing to pay 800K cash for this house. It is not a bad house, has potential and in fairly good condition, but needs lots of work like flooring, hardscaping, and so on. So I would be willing to pay 550K-600K for this because I'd have to spend another 100K fixing it.

Well, I'll just keep looking, I guess I don't stand a chance to win this bidding war with what I can afford to spend...</blockquote>


$750-800K is the right number for the current market. Overall average Irvine decline percentage applied to 2006 purchase price on this house suggests value of $751K. Add on a slight premium for Oak Creek and $775K seems about right for today...</blockquote>


I would not pay more than 165-175 per sq in irvine. If renting is profiting me more than owning a home then I won't stop doing so. If I come to a point where I have saved 300K and prices STILL haven't come down. I will simply take that money to maybe chicago or indianapolis and buy a home and a benz outright and chill.</blockquote>


I suspect you won't be buying in Irvine then bv... It is unlikely that prices here would fall that far, and if they did, given the current interest rate environment and steady rents, you would be burning money to rent vs. own in Irvine.



Some us love it enough here and/or have considerable enough roots such that a move to the cold Midwest would be much worse than paying than $250/sf.</blockquote>


I guess not. I shouldn't say price per sf is a good way of determining whether or not I will buy because price per sf is only valid at this point in time in this current market. I will determine things based on income to home price ratio.



To calculate the true cost of home you have to take the home price + interest less your rent cost, then take the difference saved X 11% interest. If you actually sat down and calculated that...you wouldn't be saying renting is burning money. You're the one burning. Only way you would be saving is if rent is somewhat equivelant to mortgage payments and its far from it...income to home ratio? last I checked 87K is irvines median home income vs 700K homes? *chuckle*



So you can be right...homes will be 700K 3 years from now, but the guy flipping burgers at McDonaldns will also be making 75K a year vs 25K.



Something has to give IPO.</blockquote>


I don't really understand your post bv.



Maybe you can tell me what is wrong with my calc, that would seem to be easier...



I used the home I rent now for the example:



<img src="http://www.ipoplaya.com/rentburn.jpg" alt="" />



How would renting not be burning money if the home fell to $175/sf?</blockquote>


Wouldn't rent go down to? I notice rent on some houses have been down.
 
Wow....I mean seriously I would engage in this debate. But since I notice that your math calculations are further off then peopls reality of the economical situation we are in...I'm just going to give up. Oh btw...I dont pay 3k for rent. Actually, I might do the math for you...just to point out how far your logic is. Also I pay 1700 for rent.
 
[quote author="ipoplaya" date=1222760159][quote author="blackvault" date=1222757369][quote author="ipoplaya" date=1222756484][quote author="blackvault" date=1222755855][quote author="ipoplaya" date=1222748747][quote author="blackacre-seeker" date=1222675314]Dig this folks: I went to see this property in Oak Creek, here is the linky:http://www.redfin.com/CA/Irvine/Undisclosed-address-92618/home/12465078

The seller's agent told me that it is a short sale and there is already a <strong>800K cash offer </strong>on this property in addition to 6 others from 750K up...(do you think he is bluffing?) I guess the bottom is nowhere near yet where people are willing to pay 800K cash for this house. It is not a bad house, has potential and in fairly good condition, but needs lots of work like flooring, hardscaping, and so on. So I would be willing to pay 550K-600K for this because I'd have to spend another 100K fixing it.

Well, I'll just keep looking, I guess I don't stand a chance to win this bidding war with what I can afford to spend...</blockquote>


$750-800K is the right number for the current market. Overall average Irvine decline percentage applied to 2006 purchase price on this house suggests value of $751K. Add on a slight premium for Oak Creek and $775K seems about right for today...</blockquote>


I would not pay more than 165-175 per sq in irvine. If renting is profiting me more than owning a home then I won't stop doing so. If I come to a point where I have saved 300K and prices STILL haven't come down. I will simply take that money to maybe chicago or indianapolis and buy a home and a benz outright and chill.</blockquote>


I suspect you won't be buying in Irvine then bv... It is unlikely that prices here would fall that far, and if they did, given the current interest rate environment and steady rents, you would be burning money to rent vs. own in Irvine.



Some us love it enough here and/or have considerable enough roots such that a move to the cold Midwest would be much worse than paying than $250/sf.</blockquote>


I guess not. I shouldn't say price per sf is a good way of determining whether or not I will buy because price per sf is only valid at this point in time in this current market. I will determine things based on income to home price ratio.



To calculate the true cost of home you have to take the home price + interest less your rent cost, then take the difference saved X 11% interest. If you actually sat down and calculated that...you wouldn't be saying renting is burning money. You're the one burning. Only way you would be saving is if rent is somewhat equivelant to mortgage payments and its far from it...income to home ratio? last I checked 87K is irvines median home income vs 700K homes? *chuckle*



So you can be right...homes will be 700K 3 years from now, but the guy flipping burgers at McDonaldns will also be making 75K a year vs 25K.



Something has to give IPO.</blockquote>


I don't really understand your post bv.



Maybe you can tell me what is wrong with my calc, that would seem to be easier...



I used the home I rent now for the example:



<img src="http://www.ipoplaya.com/rentburn.jpg" alt="" />



How would renting not be burning money if the home fell to $175/sf?</blockquote>


Where is the breakeven on that property? About $225/SF?
 
Before all you knuckleheads get into the same gawdamn debate own vs. rent post that has been gone over about 1587 times here, you first need to cut down the size of the quotes. I don't need to see all 25 messages from this thread in every single post. Thanks, I have a headache now, and I still blame Ipo for it.
 
[quote author="graphrix" date=1222772740]Before all you knuckleheads get into the same gawdamn debate own vs. rent post that has been gone over about 1587 times here, you first need to cut down the size of the quotes. I don't need to see all 25 messages from this thread in every single post. Thanks, I have a headache now, and I still blame Ipo for it.</blockquote>


Sorry. Cleaned mine up.
 
[quote author="blackvault" date=1222772593][quote author="IrvineRenter" date=1222771940]



Where is the breakeven on that property? About $225/SF?</blockquote>


I asked you to calculate the potential gains you would have had instead of owning. You failed to do so. Just taking a simple number of 87,500 (which is your 20%) will net you a compounded rate of 1.8 Million. Take that plus the difference in rent vs. mortgage and reinvest that as well and you have an amount so high that you will piss your pants and wish you never bought a home. Buying a home is simply a luxury. It is something you want, it is not a wise investment unless fundamental calculations and ratios make sense. So nless the price of home is equal to rent or maybe slightly higher...you can never ever in your life justify that buying a home is better than renting. Plus be rational...If you decided to pay 3.2K rent on a 750K home and you drop your value to 450 you better adjust your rent rate in calcs too.



To truly calculate the price of a home is to take your differences plus your 20% down and reinvest it over 30 years. Once you do that come back to me and tell me its cheaper.



Oh and one more thing. Stock market returns 10.8% over past 30 years not 5%.

Interest is also 6.55% not 6.125, atleast not what I can find.</blockquote>


Dude, you did not ask me anything. I was asking Ipo what he calculated as the breakeven cost per square foot on the house he currently rents. I assume the calculations he presented were for the house he currently rents, so it is a market-rate transaction. I think the aggregate resale price in Irvine will drop to $225/SF, so I would like to see where his particular property comes in at rental parity to see how close my estimate is.
 
NoThereThere: thanks a lot for the info you posted. It does seem strange that the seller would sacrifice their downpayment or even more if the property sells for 800K to that cash buyer, the bank eats up 37K, which is nothing on this market, and sellers lose what remains of their downpayment, 113K. Maybe they lost their jobs and can't the payments anymore, who knows.

Since the lender's approved price ranges from 750 to 930K and the house has been on the market for about 5 months, they are still hoping to find some knucklehead knife catcher who buys it for 930K...

Just for fun, I'll probably make a 550K offer on that property and see what happens. There is still a chance that all other 7 potential buyers drop out, right? :)
 
[quote author="IrvineRenter" date=1222773062]



Dude, you did not ask me anything. I was asking Ipo what he calculated as the breakeven cost per square foot on the house he currently rents. I assume the calculations he presented were for the house he currently rents, so it is a market-rate transaction. I think the aggregate resale price in Irvine will drop to $225/SF, so I would like to see where his particular property comes in at rental parity to see how close my estimate is.</blockquote>


For some reason bv takes umbrage to me asking questions... Not sure why. Reminds me of me and awgee around this time last year. Guess he's not quite the helpful contributor we thought he may be when he showed up on the board. Oh well...



Given the current rate and rent environment, B/E rent vs. own is around $250/sf on the place I rent now. It's a low mello roo and low association tract relatively speaking though. Hard to find a gated community with association less than $100 around here.
 
[quote author="blackvault" date=1222772593]Interest is also 6.55% not 6.125, atleast not what I can find.</blockquote>


You must not be researching very hard bv:



<a href="https://www.penfed.org/productsAndRates/mortgages/mortgageRatesListing.asp">Penfed</a> at 6.125% with zero points



<a href="https://www.penfed.org/productsAndRates/mortgages/mortgageRatesListing.asp">Aimloan.com</a> is quoting 6% with zero points



You should try the search function. You could learn easily who the best low-rate lenders are if wanted...
 
[quote author="blackvault" date=1222757369]

So you can be right...homes will be 700K 3 years from now, but the guy flipping burgers at McDonaldns will also be making 75K a year vs 25K.



Something has to give IPO.</blockquote>


who says the guy flipping burgers needs to afford living in irvine? that's what got us into this mess in the first place.



the national median household income is $48k and median home value is $185k. i don't necessarily think the 3-4x income rule of thumb necessarily applies in irvine because the city's large commercial, industrial, and retail sectors (i.e. large renter population.)



in irvine, only 56% of housing units are owner-occupied vs 67% national avg. with median household income at $85k, a median SFR at $500k (2000 sq ft SFR at $250/sq ft) isn't too much of a stretch.



<a href="http://factfinder.census.gov/servlet/ACSSAFFFacts?_event=Search&geo_id=16000US0651182&_geoContext=01000US|04000US06|16000US0651182&_street=&_county=irvine&_cityTown=irvine&_state=04000US06&_zip=&_lang=en&_sse=on&ActiveGeoDiv=geoSelect&_useEV=&pctxt=fph&pgsl=160&_submenuId=factsheet_1&ds_name=ACS_2006_SAFF&_ci_nbr=null&qr_name=null&reg=null:null&_keyword=&_industry=">Census data comparison for Irvine vs National</a>
 
[quote author="blackvault" date=1222771522]Wow....I mean seriously I would engage in this debate. But since I notice that your math calculations are further off then peopls reality of the economical situation we are in...I'm just going to give up. Oh btw...I dont pay 3k for rent. Actually, I might do the math for you...just to point out how far your logic is. Also I pay 1700 for rent.</blockquote>


What does how much rent you pay have to do with anything? I did a calc based of what I pay to rent and a presumed price based on the $175/sf you quoted for the house I rent? How or why would that compare or relate to what you rent an apartment for?
 
[quote author="WestparkRenter" date=1222769054]



Wouldn't rent go down to? I notice rent on some houses have been down.</blockquote>


I assume so, but I made an assumption of steady rents. It all depends on why home prices are going down I guess. If home prices were falling as the result of higher unemployment, lower wages, etc. then I'd expect rents would have to go down.



If home prices were falling for other reasons, e.g. tightening of credit diminishing or prohibiting buyers from creating demand, what would be the catalyst for rent decreases? Surely rents have not fallen in any material fashion of late but home prices sure have... That would suggest there doesn't have to be a direct correlation between the two. I don't remember rents falling during the last housing recession when I was a renting either... Maybe they did and I just didn't notice it.
 
[quote author="blackvault" date=1222771522]Wow....I mean seriously I would engage in this debate. But since I notice that your math calculations are further off then peopls reality of the economical situation we are in...I'm just going to give up. Oh btw...I dont pay 3k for rent. Actually, I might do the math for you...just to point out how far your logic is. Also I pay 1700 for rent.</blockquote>


Yes, I wanted you to show some math originally, in the hopes maybe I could learn something. As you appear to have a piss-poor attitude and don't seem to able to explain what you are getting at with any coherence or patience, I really don't give a rip what your thoughts on the topic are any longer...
 
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