Observations from the front lines of the Irvine housing market?

[meccos12]

Stopped by Cadence Park today particularly Duet, and I can tell you that there is a lot of Chinese buyers tour the model and Cadence Park neighborhood today. I was there late in the afternoon and while I sat there within half an hour several families stopped into the models A few young couples with parents also stopped in. So as far as I can tell, it doesn't seem like any slow down happening at new development.

On the other hand of sellers price reductions, 2 of them that I know are in contract to buy a bigger home and selling and cutting prices to get going with their new build. The new builder in turn gave them some nice closing credits and upgrade.

This is rather a small sample and observation, but the ones that can buy, they're still buy. IHO message is heard loud and clear, J/K. Most of those probably don't even know TalkIrvine existence.

Maybe you saw me there.  Sometimes I stop by to pick up some cold water.

Were you the only dude in a group of several women and talking like he ready to buy up a couples of those homes?

Who said any of us where there ready to buy.  I was just there for free cold water.  It was a hot day.  Im pretty sure the others were just thirsty also. 

 

[meccos12]

Excuse the delay in posting up the August data but I've been swamped the past few weeks.  Aug 2018 sales were down 5.6% from Aug 2017 but rebounded 8.3% from July 2018.  From a trailing 12-month Aug 2018 perspective Irvine sales are down 2.3% or 65 transactions.  Inventory as of 8/31/18 increased slightly at 1.1% from 7/31/17 but increased 20.8% from the inventory level as of 8/31/17.  Based upon this data, we still remain just under 3 months of inventory using Aug 2018 sales and 2.87 months of inventory (up from 2.66 months of inventory through July 2018) using the past 3 months which remains a weak seller?s market.  Inventory levels should have peaked around Labor Day but inventory levels are up slightly today versus 8/31/18.  So inventory levels are flat to rising when they should be falling slightly.

What does this all mean?  The market has continued to slow from the end of July 2018 despite the uptick in Aug 2018 (mainly due to increasing inventory along with weaker sales in Sept 2018).  I'm seeing a lot of new home inventory hit the market, whether it's Eastwood, Orchard Hills, Portola Springs, and/or Cadence Park/Altair.  Homes that are priced above recent closed comps are sitting as are properties that aren't turnkey or have unicorn features (larger lot and/or view lot).  There are still plenty of buyers out there but they are being more patient as there are more homes to pick from along with seeing price drops.  The $1m+ is continuing to slow down more than the sub $1m market as inventory levels in that segment increase at a faster rate.  From the new home builder front, just about every builder has now increased their broker co-ops with CalPac being the latest one (they sell mostly sub $1m homes).  There are still a lot of "optimistic" sellers out there so it'll be interesting to see if they pull their homes off the market or decide to cut prices to actually sell their homes.

On the 30-year fixed interest rate loan front, rates have increased in mid Sept to about 4.625-4.75% compared to just under 4.50% at the end of Aug 2018.  Rates have crept up as the stock market continues to go up along with stronger economic data.  Rates on 7/1 ARM loans are up to around 3.75%  today from basically being around 3.50% in Aug.  I still think the near term cap on 30-year fixed rates will be 5% but I guess we shall see.

Now that Sept is officially over, do you have number from Sept or is it too early to have that data available?

 

[usctrojancpa]

Excuse the delay in posting up the August data but I've been swamped the past few weeks.  Aug 2018 sales were down 5.6% from Aug 2017 but rebounded 8.3% from July 2018.  From a trailing 12-month Aug 2018 perspective Irvine sales are down 2.3% or 65 transactions.  Inventory as of 8/31/18 increased slightly at 1.1% from 7/31/17 but increased 20.8% from the inventory level as of 8/31/17.  Based upon this data, we still remain just under 3 months of inventory using Aug 2018 sales and 2.87 months of inventory (up from 2.66 months of inventory through July 2018) using the past 3 months which remains a weak seller?s market.  Inventory levels should have peaked around Labor Day but inventory levels are up slightly today versus 8/31/18.  So inventory levels are flat to rising when they should be falling slightly.

What does this all mean?  The market has continued to slow from the end of July 2018 despite the uptick in Aug 2018 (mainly due to increasing inventory along with weaker sales in Sept 2018).  I'm seeing a lot of new home inventory hit the market, whether it's Eastwood, Orchard Hills, Portola Springs, and/or Cadence Park/Altair.  Homes that are priced above recent closed comps are sitting as are properties that aren't turnkey or have unicorn features (larger lot and/or view lot).  There are still plenty of buyers out there but they are being more patient as there are more homes to pick from along with seeing price drops.  The $1m+ is continuing to slow down more than the sub $1m market as inventory levels in that segment increase at a faster rate.  From the new home builder front, just about every builder has now increased their broker co-ops with CalPac being the latest one (they sell mostly sub $1m homes).  There are still a lot of "optimistic" sellers out there so it'll be interesting to see if they pull their homes off the market or decide to cut prices to actually sell their homes.

On the 30-year fixed interest rate loan front, rates have increased in mid Sept to about 4.625-4.75% compared to just under 4.50% at the end of Aug 2018.  Rates have crept up as the stock market continues to go up along with stronger economic data.  Rates on 7/1 ARM loans are up to around 3.75%  today from basically being around 3.50% in Aug.  I still think the near term cap on 30-year fixed rates will be 5% but I guess we shall see.

Now that Sept is officially over, do you have number from Sept or is it too early to have that data available?

I'm letting the dust settle and will post up the Sept numbers by the end of the this week.

 

[irvinebullhousing]

Stopped by Cadence Park today particularly Duet, and I can tell you that there is a lot of Chinese buyers tour the model and Cadence Park neighborhood today. I was there late in the afternoon and while I sat there within half an hour several families stopped into the models A few young couples with parents also stopped in. So as far as I can tell, it doesn't seem like any slow down happening at new development.

On the other hand of sellers price reductions, 2 of them that I know are in contract to buy a bigger home and selling and cutting prices to get going with their new build. The new builder in turn gave them some nice closing credits and upgrade.

This is rather a small sample and observation, but the ones that can buy, they're still buy. IHO message is heard loud and clear, J/K. Most of those probably don't even know TalkIrvine existence.

Maybe you saw me there.  Sometimes I stop by to pick up some cold water.

Were you the only dude in a group of several women and talking like he ready to buy up a couples of those homes?

Who said any of us where there ready to buy.  I was just there for free cold water.  It was a hot day.  Im pretty sure the others were just thirsty also. 

Nah, ballers like the ones I see, rolling up with their own drink bro. Water is cheap so builders gladly giving it away to free loaders. 

 

[meccos12]

Stopped by Cadence Park today particularly Duet, and I can tell you that there is a lot of Chinese buyers tour the model and Cadence Park neighborhood today. I was there late in the afternoon and while I sat there within half an hour several families stopped into the models A few young couples with parents also stopped in. So as far as I can tell, it doesn't seem like any slow down happening at new development.

On the other hand of sellers price reductions, 2 of them that I know are in contract to buy a bigger home and selling and cutting prices to get going with their new build. The new builder in turn gave them some nice closing credits and upgrade.

This is rather a small sample and observation, but the ones that can buy, they're still buy. IHO message is heard loud and clear, J/K. Most of those probably don't even know TalkIrvine existence.

Maybe you saw me there.  Sometimes I stop by to pick up some cold water.

Were you the only dude in a group of several women and talking like he ready to buy up a couples of those homes?

Who said any of us where there ready to buy.  I was just there for free cold water.  It was a hot day.  Im pretty sure the others were just thirsty also. 

Nah, ballers like the ones I see, rolling up with their own drink bro. Water is cheap so builders gladly giving it away to free loaders. 

You said they were Chinese right?  Whether they are ballers or not, they are getting their free $hit. 

 

[irvinebullhousing]

Stopped by Cadence Park today particularly Duet, and I can tell you that there is a lot of Chinese buyers tour the model and Cadence Park neighborhood today. I was there late in the afternoon and while I sat there within half an hour several families stopped into the models A few young couples with parents also stopped in. So as far as I can tell, it doesn't seem like any slow down happening at new development.

On the other hand of sellers price reductions, 2 of them that I know are in contract to buy a bigger home and selling and cutting prices to get going with their new build. The new builder in turn gave them some nice closing credits and upgrade.

This is rather a small sample and observation, but the ones that can buy, they're still buy. IHO message is heard loud and clear, J/K. Most of those probably don't even know TalkIrvine existence.

Maybe you saw me there.  Sometimes I stop by to pick up some cold water.

Were you the only dude in a group of several women and talking like he ready to buy up a couples of those homes?

Who said any of us where there ready to buy.  I was just there for free cold water.  It was a hot day.  Im pretty sure the others were just thirsty also. 

Nah, ballers like the ones I see, rolling up with their own drink bro. Water is cheap so builders gladly giving it away to free loaders. 

You said they were Chinese right?  Whether they are ballers or not, they are getting their free $hit. 

There were several families. Some are young couples middle eastern, 1 couple dude is white and wife/girl friend Asian. 2 Caucasians couples and a bunch of Asian. I think they are FCB. Surprisingly, none of those people ever reach for the refrigerators or have waters in their hands. So it safe to say I did not see you. 

 

[Mety]

Stopped by Cadence Park today particularly Duet, and I can tell you that there is a lot of Chinese buyers tour the model and Cadence Park neighborhood today. I was there late in the afternoon and while I sat there within half an hour several families stopped into the models A few young couples with parents also stopped in. So as far as I can tell, it doesn't seem like any slow down happening at new development.

On the other hand of sellers price reductions, 2 of them that I know are in contract to buy a bigger home and selling and cutting prices to get going with their new build. The new builder in turn gave them some nice closing credits and upgrade.

This is rather a small sample and observation, but the ones that can buy, they're still buy. IHO message is heard loud and clear, J/K. Most of those probably don't even know TalkIrvine existence.

Maybe you saw me there.  Sometimes I stop by to pick up some cold water.

Were you the only dude in a group of several women and talking like he ready to buy up a couples of those homes?

Who said any of us where there ready to buy.  I was just there for free cold water.  It was a hot day.  Im pretty sure the others were just thirsty also. 

Nah, ballers like the ones I see, rolling up with their own drink bro. Water is cheap so builders gladly giving it away to free loaders. 

You said they were Chinese right?  Whether they are ballers or not, they are getting their free $hit. 

There were several families. Some are young couples middle eastern, 1 couple dude is white and wife/girl friend Asian. 2 Caucasians couples and a bunch of Asian. I think they are FCB. Surprisingly, none of those people ever reach for the refrigerators or have waters in their hands. So it safe to say I did not see you.

Its' safe to say I did not see Trump. Oops Wrong thread.

 

[meccos12]

Stopped by Cadence Park today particularly Duet, and I can tell you that there is a lot of Chinese buyers tour the model and Cadence Park neighborhood today. I was there late in the afternoon and while I sat there within half an hour several families stopped into the models A few young couples with parents also stopped in. So as far as I can tell, it doesn't seem like any slow down happening at new development.

On the other hand of sellers price reductions, 2 of them that I know are in contract to buy a bigger home and selling and cutting prices to get going with their new build. The new builder in turn gave them some nice closing credits and upgrade.

This is rather a small sample and observation, but the ones that can buy, they're still buy. IHO message is heard loud and clear, J/K. Most of those probably don't even know TalkIrvine existence.

Maybe you saw me there.  Sometimes I stop by to pick up some cold water.

Were you the only dude in a group of several women and talking like he ready to buy up a couples of those homes?

Who said any of us where there ready to buy.  I was just there for free cold water.  It was a hot day.  Im pretty sure the others were just thirsty also. 

Nah, ballers like the ones I see, rolling up with their own drink bro. Water is cheap so builders gladly giving it away to free loaders. 

You said they were Chinese right?  Whether they are ballers or not, they are getting their free $hit. 

There were several families. Some are young couples middle eastern, 1 couple dude is white and wife/girl friend Asian. 2 Caucasians couples and a bunch of Asian. I think they are FCB. Surprisingly, none of those people ever reach for the refrigerators or have waters in their hands. So it safe to say I did not see you.

Damn are you like the water monitor or something?  How the hell you remember if all those people reached for the refrigerator or had water in their hands? 

You still might have seen me there, I probably drank the water before you got there.  8)

 

[irvinebullhousing]

Stopped by Cadence Park today particularly Duet, and I can tell you that there is a lot of Chinese buyers tour the model and Cadence Park neighborhood today. I was there late in the afternoon and while I sat there within half an hour several families stopped into the models A few young couples with parents also stopped in. So as far as I can tell, it doesn't seem like any slow down happening at new development.

On the other hand of sellers price reductions, 2 of them that I know are in contract to buy a bigger home and selling and cutting prices to get going with their new build. The new builder in turn gave them some nice closing credits and upgrade.

This is rather a small sample and observation, but the ones that can buy, they're still buy. IHO message is heard loud and clear, J/K. Most of those probably don't even know TalkIrvine existence.

Maybe you saw me there.  Sometimes I stop by to pick up some cold water.

Were you the only dude in a group of several women and talking like he ready to buy up a couples of those homes?

Who said any of us where there ready to buy.  I was just there for free cold water.  It was a hot day.  Im pretty sure the others were just thirsty also. 

Nah, ballers like the ones I see, rolling up with their own drink bro. Water is cheap so builders gladly giving it away to free loaders. 

You said they were Chinese right?  Whether they are ballers or not, they are getting their free $hit. 

There were several families. Some are young couples middle eastern, 1 couple dude is white and wife/girl friend Asian. 2 Caucasians couples and a bunch of Asian. I think they are FCB. Surprisingly, none of those people ever reach for the refrigerators or have waters in their hands. So it safe to say I did not see you.

Damn are you like the water monitor or something?  How the hell you remember if all those people reached for the refrigerator or had water in their hands? 

You still might have seen me there, I probably drank the water before you got there.  8)

So what do you think, is it worth what it asking for?

 

[Kenkoko]

Stopped by Cadence Park today particularly Duet, and I can tell you that there is a lot of Chinese buyers tour the model and Cadence Park neighborhood today. I was there late in the afternoon and while I sat there within half an hour several families stopped into the models A few young couples with parents also stopped in. So as far as I can tell, it doesn't seem like any slow down happening at new development.

On the other hand of sellers price reductions, 2 of them that I know are in contract to buy a bigger home and selling and cutting prices to get going with their new build. The new builder in turn gave them some nice closing credits and upgrade.

This is rather a small sample and observation, but the ones that can buy, they're still buy. IHO message is heard loud and clear, J/K. Most of those probably don't even know TalkIrvine existence.

Since you mentioned Chinese buyers, it?s probably a good time to mention that this is the first time since 2008 that Chinese investors sold more US real estate than bought.
Chinese investors sold 1.29 billion US RE in the 2nd quarter and only bought 126 million US RE.

I know many on this forum has been saying that they do not see Chinese selling their Irvine homes.
Even when many of these homes are unoccupied and bought for rainy day purposes.
But this extreme trend reversal should sound an alarm if you are looking to buy.

Meanwhile, Shanghai index continues to make lower lows, reaching the lowest point (down 49%) since 2015 just a few days ago.
https://www.worldjournal.com/5758909/article-美房市堅挺-中資撤難撼動/

 

[Kenkoko]

USC, a while back you had commented on a bit of softening in the rental market partly from a lot of supply from people who had been hanging on to their starter homes and also investors renting out brand new homes.

Any changes you?ve noticed in the rental market over the last 6 months or so? Thx.

I know many on this forum believes Irvine rent will keep on rising but there is a pause right now from what I'm seeing.

According to this report, Irvine rental market is flat year over year. With slight decline in the last 6 months.
http://usahousingnews.com/wp-content/uploads/2018/09/Irvine-October-2018-Market-Report.pdf

 

[irvinebullhousing]

USC, a while back you had commented on a bit of softening in the rental market partly from a lot of supply from people who had been hanging on to their starter homes and also investors renting out brand new homes.

Any changes you?ve noticed in the rental market over the last 6 months or so? Thx.

I know many on this forum believes Irvine rent will keep on rising but there is a pause right now from what I'm seeing.

According to this report, Irvine rental market is flat year over year. With slight decline in the last 6 months.
http://usahousingnews.com/wp-content/uploads/2018/09/Irvine-October-2018-Market-Report.pdf

It?s depends if the rental rate was low and if it hasn?t been raised in the past few years, then it would be good time to slowly increase the rental rate. Bring it closer to rental comps but shave a hundred or two off will help retain or attract renters fairly quickly. I am speaking from a small rentals operator. Now compare that with Irvine Company Apartment they are tight fisted. Sure they will get you in and make it easy on you on your initial lease sign up. Renewal, will increase from there each and every time vs. private operator. There, always that personal relationship and not business like IAC and sock it to you. Beside if you have a family of 4 most type A renters prefer single family homes than apartment.

 

[usctrojancpa]

USC, a while back you had commented on a bit of softening in the rental market partly from a lot of supply from people who had been hanging on to their starter homes and also investors renting out brand new homes.

Any changes you?ve noticed in the rental market over the last 6 months or so? Thx.

I know many on this forum believes Irvine rent will keep on rising but there is a pause right now from what I'm seeing.

According to this report, Irvine rental market is flat year over year. With slight decline in the last 6 months.
http://usahousingnews.com/wp-content/uploads/2018/09/Irvine-October-2018-Market-Report.pdf

The reason rents are down is because there is so much construction of apartment units, especially in Irvine.  The more units that come to market the more pricing pressure that will ensue.  Keep in mind that basically all of these apartment units are studios to 2-bedrooms.  So if you are a private landlord and have a 3-4 bedroom property you won't be competing against these additional apartment units coming to market.

 

[meccos12]

Stopped by Cadence Park today particularly Duet, and I can tell you that there is a lot of Chinese buyers tour the model and Cadence Park neighborhood today. I was there late in the afternoon and while I sat there within half an hour several families stopped into the models A few young couples with parents also stopped in. So as far as I can tell, it doesn't seem like any slow down happening at new development.

On the other hand of sellers price reductions, 2 of them that I know are in contract to buy a bigger home and selling and cutting prices to get going with their new build. The new builder in turn gave them some nice closing credits and upgrade.

This is rather a small sample and observation, but the ones that can buy, they're still buy. IHO message is heard loud and clear, J/K. Most of those probably don't even know TalkIrvine existence.

Maybe you saw me there.  Sometimes I stop by to pick up some cold water.

Were you the only dude in a group of several women and talking like he ready to buy up a couples of those homes?

Who said any of us where there ready to buy.  I was just there for free cold water.  It was a hot day.  Im pretty sure the others were just thirsty also. 

Nah, ballers like the ones I see, rolling up with their own drink bro. Water is cheap so builders gladly giving it away to free loaders. 

You said they were Chinese right?  Whether they are ballers or not, they are getting their free $hit. 

There were several families. Some are young couples middle eastern, 1 couple dude is white and wife/girl friend Asian. 2 Caucasians couples and a bunch of Asian. I think they are FCB. Surprisingly, none of those people ever reach for the refrigerators or have waters in their hands. So it safe to say I did not see you.

Damn are you like the water monitor or something?  How the hell you remember if all those people reached for the refrigerator or had water in their hands? 

You still might have seen me there, I probably drank the water before you got there.  8)

So what do you think, is it worth what it asking for?

My opinions dont matter much but since you keep asking me for my opinion, Ill tell you.  Nah I dont think its worth it.  Do you?  I see a quick move in for 1.2M so lets use that.  its 2900 Sq ft which is good.... but here are the negatives.  1.  its motorcourt.  really a 1.2M motorcourt?  2.  its three stories.  We all know 3 stories suck bad.  3.  its in the great park which means a few things.  a.  high mellos and HOA  2.  its built on a previous superfund site.  3.  its far from retail.  4.  Will always have concerns with future cemetary and homeless shelters nearby.  But honestly, just the extra taxes/HOA is enough. 

 

[meccos12]

USC, a while back you had commented on a bit of softening in the rental market partly from a lot of supply from people who had been hanging on to their starter homes and also investors renting out brand new homes.

Any changes you?ve noticed in the rental market over the last 6 months or so? Thx.

I know many on this forum believes Irvine rent will keep on rising but there is a pause right now from what I'm seeing.

According to this report, Irvine rental market is flat year over year. With slight decline in the last 6 months.
http://usahousingnews.com/wp-content/uploads/2018/09/Irvine-October-2018-Market-Report.pdf

The reason rents are down is because there is so much construction of apartment units, especially in Irvine.  The more units that come to market the more pricing pressure that will ensue.  Keep in mind that basically all of these apartment units are studios to 2-bedrooms.  So if you are a private landlord and have a 3-4 bedroom property you won't be competing against these additional apartment units coming to market.

Out of curiosity how many new apartment units came online in the last year?  Im sure there is a correlation to the # of new units to the rent decreases.  Also I would assume then the rents for 3-4 bed rentals have not dropped since these do not compete with new units coming online. 

 

[usctrojancpa]

USC, a while back you had commented on a bit of softening in the rental market partly from a lot of supply from people who had been hanging on to their starter homes and also investors renting out brand new homes.

Any changes you?ve noticed in the rental market over the last 6 months or so? Thx.

I know many on this forum believes Irvine rent will keep on rising but there is a pause right now from what I'm seeing.

According to this report, Irvine rental market is flat year over year. With slight decline in the last 6 months.
http://usahousingnews.com/wp-content/uploads/2018/09/Irvine-October-2018-Market-Report.pdf

The reason rents are down is because there is so much construction of apartment units, especially in Irvine.  The more units that come to market the more pricing pressure that will ensue.  Keep in mind that basically all of these apartment units are studios to 2-bedrooms.  So if you are a private landlord and have a 3-4 bedroom property you won't be competing against these additional apartment units coming to market.

Out of curiosity how many new apartment units came online in the last year?  Im sure there is a correlation to the # of new units to the rent decreases.  Also I would assume then the rents for 3-4 bed rentals have not dropped since these do not compete with new units coming online. 

I don't have the commercial data to see how many apartment rental units were added in Irvine over the past year but it's easy to see there's a lot of apartment construction around Jamboree/Main St/Von Karman and around the Spectrum. 

 

[irvinehomeowner]

Not just the units added by the big companies on the 405, near Spectrum and in Los Olivos... there are also tons of in-build apartments coming on line in the IBC (Von Karman/Jamboree/Alton/Main).

 

[meccos12]

I really wish they would stop building.  The congestion is getting really bad in my opinion.  I really think the 91 fwy traffic is better than the 5 and 405 in Irvine now. 

 

[eyephone]

I really wish they would stop building.  The congestion is getting really bad in my opinion.  I really think the 91 fwy traffic is better than the 5 and 405 in Irvine now.

Tell me about it. Maybe Elon Musk needs to step in to help out with the traffic.

Sorry folks private industry brings ideas and think out of the box.

 

[meccos12]

Well if they are bringing more apartment units to Irvine, that will definitely cause downward pressure on rents.  And if there are downward pressures on rents, then it will eventually make some impact on housing prices as it becomes more and more cheaper to rent than buy.