Observations from the front lines of the Irvine housing market?

NEW -> Contingent Buyer Assistance Program
sgip said:
There are appraisal issues out there, but some banks are getting realistic. Too bad equity sellers aren't. We had an out of Irvine area property appraise 30k off of the $630k selling price. Per the appraiser there were offers up to $635k. It's possible that some of them had larger down payments than our buyer. The bank holding the property gave up the ghost and lowered the price to the appraisal just to move the property along. This was done without a review appraisal by either party. Talk about a good move for all parties involved. On the other side of the spectrum I've had buyers over pay for properties simply because they feel the value is there, despite what an appraiser says.

All markets have hit an air pocket. If you are a Realtor and have not come to the Irvine Area Broker's Preview held each week at JT Schmidts (sp?) in the District, come on by. It's quite the eye opener. Agents will pitch their tired listings with commonplace phrases like "it's priced well to the market. I just don't understand why we don't have an offer yet" or "Yes, my seller is not in synch with market prices but we're still hoping to get an offer soon". Hope, as they say, is not a plan for success. I go to this event, and others like it for business purposes. Every so often I also wonder if I go because it's akin to driving past a multiple fatality accident on the 405. You don't want to look, but are compelled to do so.

My .02c

Soylent Green Is People.
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Ahh yes, the HOPE word....unfortunately HOPE doesn't help a property appraise, it's the closed comps that do.  I might have to drop by one of these days and be the voice of reason throwing some cold water on their HOPE plan.  haha
 
irvinehomeowner said:
So there is an SWTF level of prices? I always wondered what they called those.
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Well, what else would you call listings that are priced 10%-20% ABOVE comps?  It's the best thing I could come up with because they are just a complete wait of time for everyone.
 
What gets me about 101 Mosaic is it originally sold for $1.1m+ in 2004. It will probably close for $1.4m+ today.

Forget 1999 prices, we can't even get down to 2004... need to go dig up that thread on the IHB where people were saying QH was going to get not only back to their original 2004 prices but lower. Bleh.
 
I'm not understanding the dynamics of the Irvine market.  Are people "buying the dips"  hoping for a quick gain - or - is there really THAT much interest / demand / in Irvine ?
 
gaab said:
I'm not understanding the dynamics of the Irvine market.  Are people "buying the dips"  hoping for a quick gain - or - is there really THAT much interest / demand / in Irvine ?
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Well, my guess (based upon the Irvine buyers that I'm working with) is that most buyers are buying for the longer term and not to make a quick buck.  I'm pretty confident that there would be more Irvine buyers out there if price levels declined from today.  That is one of the reasons why I believe that the downside risk for price declines in Irvine is limited.
 
irvinehomeowner said:
What gets me about 101 Mosaic is it originally sold for $1.1m+ in 2004. It will probably close for $1.4m+ today.

Forget 1999 prices, we can't even get down to 2004... need to go dig up that thread on the IHB where people were saying QH was going to get not only back to their original 2004 prices but lower. Bleh.
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I miss the daily updates people posted from foreclosure radar with all of the blue and red dots and comments like this one:  http://www.irvinehousingblog.com/forums/viewthread/4876/P25/#103491.  It made me feel that Irvine had a chance of returning to normal.
 
locolocal said:
irvinehomeowner said:
What gets me about 101 Mosaic is it originally sold for $1.1m+ in 2004. It will probably close for $1.4m+ today.

Forget 1999 prices, we can't even get down to 2004... need to go dig up that thread on the IHB where people were saying QH was going to get not only back to their original 2004 prices but lower. Bleh.
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I miss the daily updates people posted from foreclosure radar with all of the blue and red dots and comments like this one:  http://www.irvinehousingblog.com/forums/viewthread/4876/P25/#103491.  It made me feel that Irvine had a chance of returning to normal.
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The problem is that even though the Green and Blue dots are growing in number and piling up, the banks are very slow in actually auctioning off the properties.  In the past 7 weeks, I've tracked about 40 properties that my partner and I were interested in buying and ALL 40 got postponed.
 
59 Bamboo.....a short sale listing with a decent price, but I got a kid out of reading the agent-to-agent comments:

"PLEASE READ: AS OF 1:00PM 8/19 I HAVE RECEIVED NUMEROUS OFFERS BELOW THE ASKING PRICE. SO IF YOU HAVE AN OFFER YOU WOULD LIKE US TO CONSIDER IT MUST BE ABOVE ASKING PRICE OR DON'T BOTHER. PLEASE MAKE YOUR OFFERS SUBJECT TO INTERIOR INSPECTION. I WILL HAVE AN OPEN HOUSE 8/29 SO YOU CAN PREVIEW THE HOME THEN. ----------------------------------------------- Seller is RE Licensed. This is a short sale subject to lender approval. Any comm discounted by Lender to be equally split by agents. No lockbox. No more showings. "
 
Looks like there is some softening in the Irvine market, but mostly on the condo and older home side.  Pricing is slightly down (2-3%) from the recent peak earlier this spring, but newer properties (1990 and later) that are priced at or near comps that show well still go into escrow within a week.  Irvine is holding up better than other cities like Laguna Niguel, Mission Viejo, Anaheim Hills, and Yorba Linda who have also seen a rise in inventory but have experienced a larger decline in the number of sales which has pushed prices down 5-10% from the spring.  The market is currently neutral with about 5 months worth of inventory on the market, we'll have to get above 7 months worth of inventory before enter into a buyer's market.  The level of inventory peaked out around 900 homes in late August and is now beginning to come down now that we are no longer in the "selling" season.  The decline in the number of sales has stabilized for now.  Now that TIC is done selling out homes in Woodbury and Woodbury East, they will begin to throw their marketing/PR muscle at Portola Springs. 
 

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Been kinda busy lately so please excuse the delay.  I have updated my schedule with the home sale data for October.  Homes sales in Oct. 2010 declined by about 37% from the same time last year (121 sales vs. 192 sales).  The sales for Nov. 2010 through the 22nd are at 119 so we'll have a month-over-month increase in sales volume but there will be a decline from the number of sales in Nov. of 2009.  Prices continue to decline slowly, especially for attached condos.  Even the momentum for new home sales is beginning to slow down.  For instance, current most all new home developments are offering a buyer's agent co-op commission (ranging from $10,000 up to 3%).  One of my buyers was even told by a builder that they are "somewhat negotiable" on their prices and would be willing to provide a credit for closing and/or a credit for some upgrades.  That being said, newer single family residences (1990+) that are priced at/near comps get multiple offers and go into escrow within about a week (examples are 29 Boulder Creek Way in West Irvine and 8 Napa in Northpark).  Inventory levels have declined since the beginning of November from the mid-800s to 755 as of 11/23/10.  This decline will continue until early-to-mid January when inventory levels typically begin to increase.  I would say that the single family home market is neutral while the condo is leaning towards being a buyers market.  Due to the expiration of the tax credits and possible increasing interest rates, I feel that the TIC 2011 Home Collection will not have the same success as their 2010 Collection had.  I think they'll begin to offer buyer agent co-op commissions across the board and other possible incentives like credits for design center upgrades to keep sales going.
 

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I have updated my schedule with the home sale data for November and December 2010.  Homes sales in Nov. 2010 declined by about 5% from the same time last year (162 sales vs. 171 sales).  The sales for Dec. 2010 declined by about 21% from the same time last year (148 sales vs. 187 sales).  Inventory levels have been declining since August but at a much slower pace than in 2009.  We'll begin to see inventory levels are to begin to increase in late Jan. to mid Feb.  It'll be interesting to see if we can cross over 900+ homes as we get into the Spring and Summer.  Prices seem to be flat to slightly down with room for negotiation.  Builder incentives has been to increase over the past month or so and they are willing to negotiate so don't settle for list price.  For example, Primrose used to only offer a $15k buyer agent commission and now it is up to 3% based upon their MLS listings and Santa Barbara who used to not have any buyer agent commission is now offering $15k.  As you can see the sales slowdown has hit the condo market a lot more than the SFR market.  Again, SFRs that are priced right and show well still go into escrow within a week or so.  As for interest rates, they popped up about 1/2% from late November/early December to around 4.75%.  If rates keep heading above 5% that may add to the downside press for homes.  2011 will definitely be an interesting year.
 

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Irvine2Irvine said:
I completely agree.

However, I also wonder about the flip side of the coin.  I wonder if the current housing craziness is created partially by the TIC.  Before the 2010 Woodbury collection, the market was still relatively on the down side.  The short sales were actually priced and sold like short sale.  There were no crazy bidding wars on resale homes.  It just seems that starting at beginning of 2010, things started getting crazy.  Maybe it's coincedence and TIC got lucky with the timing or maybe TIC put people into a buying mood with the 2010 Woodbury collection and drove market higher.
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I wonder this too. We are all focused on Irvine, but what is happening in the rest of Orange County? If this gravy train TIC sees is real, why aren't developers snatching up land all over OC and throwing up competitive developments, undercutting Irvine on sale prices and skimming off some gravy?

Those developments could skip the HOA and maybe one of the association fees, have lower taxes AND a lower sale price and really do some serious skimming of cash buyers. I KNOW Irvine is a nice place, yes yes...but still, seeing the exact same quality and size house on a wee bit more land for 25% less and lower carrying costs....surely...there would be takers.

So since that is NOT happening, that I am aware of...then it makes Irvine look like an anomaly and something else is in play here.
 
Summit Ridge in Lake Forest was a new development that undercut Irvine SFRs by quite a bit.

The location itself is fine, just the layout of the neighborhood was a bit of a negative. Yet... it did not sell as fast as any of the New Home Collection... I'm not even sure if they have sold through yet... and they only had less than 30 homes.

Glenwood in Aliso Viejo has been open for years... their prices are also lower than Irvine's yet do not move at the same pace.

Shappell has several projects in Laguna Niguel... also not moving as fast.

Even test's beloved Columbus Grove/Square couldn't match the sales pace (not even sure here... just from my own observation).

Irvine is like a unicorn... everyone wants one because they think they are magical but in reality it's just a horse with an antler dysfunction. Yet people will pay for one just because that's what they want ("Irvine is not for everyone").
 
irvinehomeowner said:
Summit CREST in Lake Forest was a new development that undercut Irvine SFRs by quite a bit.

The location itself is fine, just the layout of the neighborhood was a bit of a negative. Yet... it did not sell as fast as any of the New Home Collection... I'm not even sure if they have sold through yet... and they only had less than 30 homes.
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Looks like they were down to two homes as of 12/8/10.
http://www.vandaele.com/only-2-homes-remain-in-summit-crest/
 
irvinehomeowner said:
Irvine is like a unicorn... everyone wants one because they think they are magical but in reality it's just a horse with an antler dysfunction. Yet people will pay for one just because that's what they want ("Irvine is not for everyone").
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...had me crackin' up with that one.  :) But yeah, I get what you're sayin' (I read your other post on that yesterday).
 
Homes sales in Jan. 2011 actually increased by over 17% from the same time last year (110 sales vs. 94 sales).  Inventory levels have been essentially flat for the entire month of January, but you can bet they will be increasing once we move into the Spring.  Then we have all the new home developments that will be popping up from Portola to Stonegate to Laguna Crossing.  Prices still seem to be flat in January with home prices settling around what recent comps closed around.  The big wild card will be what happens if interest rates on the 30-year mortgage cross into the 5s from the 4s.  Currently we are on the edge of 4.875% and 5%.  It'll be interesting to see what happens if rates creep into the mid-5s as we move into the Spring and Summer.  Will builders start to throw incentives at perspective buyers to lure them in?  Will sellers of re-sale homes begin to lower their prices as inventory and interest rates increase?  It'll be very interesting to see what happens.
 

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