irvinehomeowner
Well-known member
LiarLoan always goes quiet when his umpteenth prediction of Irvine housing prices tanking fails to come to fruition.
Observations from the front lines of the Irvine housing market?
- Thread starter usctrojancpa
- Start date
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I think when looking at price of housing, one has to look at inflation adjusted costs since prices of all assets will always rise due to money getting cheaper. Thus if we see 3% rise in housing costs, I consider that break even. If prices stay flat then I consider that as prices having decreased, similar to how money in a saving account is losing value due to inflation.
Please correct me if I am wrong, but I dont ever recall him calling for prices to tank. He did, howeer, claim it was going to slow down a couple years ago. I dont think he was wrong. Early 2019 was a good time to buy.
I also wonder if he'll try to claim that he sold his rental at the peak when there is a serious lack of inventory just about everywhere.
In general your statement is true if the home is owned outright. However, inflation eats away at the nominal loan amount from a real dollar perspective and that's especially the case when your interest rate is lower than the rate of inflation. Real estate allows you to use cheap leverage to build wealth over the longer term.
I'm going through all the data and putting my thoughts together before I post the year-end update along with my prediction for real estate prices in 2021 in the coming few days. All I'll say is that it is nuts in the lower end of the market (I'll provide a few examples of homes in my post).
Many first time buyers are fed up with waiting for the price to reduce like 2008-2011. While waiting, they only wasted money on rent and got even slightly higher prices on homes they were hoping to see crash. With the historic super low interest rates, they?re not waiting anymore.
Yes, I surely thought the price would go down since it was going up too fast 2017-2018. It did go down and it did have a little bit of pause in the market from 2018-2019. But it picked up again with the surprising low interest rates pretty fast. Although I admit I was wrong, I still think buying in 2019 was a better buying time than 2018.
Completely wrong strategy in this environment - at least for any home worth making an offer for. For the lower end market for FTHB (between $700-900k depending on city), I am seeing severe lack of inventory. It isn't uncommon to get 5-10 offers over asking. No listing agent is going to realistically going to bother with a counter for offers below asking.
Yeah, you're more right than me on this. I'm just sharing what I think is worth trying and did work for myself whenever I purchased properties. But your opinion is a more popular one for sure. I personally don't choose popular ones for many other things as well.
Also one thing to note is that this is a season with less inventory overall anyways.
Compare buying in 2021 and buying in 2018. Which was better? There was way more inventory in 2018, so you could get your dream house for a more expensive price. This was IHO's main argument back in 2018. If you were to buy now at 2021, you are paying 2018 + prices and picking from reduced housing stock.
irvinehomeowner said:
I think when looking at price of housing, one has to look at inflation adjusted costs since prices of all assets will always rise due to money getting cheaper. Thus if we see 3% rise in housing costs, I consider that break even. If prices stay flat then I consider that as prices having decreased, similar to how money in a saving account is losing value due to inflation.
Please correct me if I am wrong, but I dont ever recall him calling for prices to tank. He did, howeer, claim it was going to slow down a couple years ago. I dont think he was wrong. Early 2019 was a good time to buy.
usctrojancpa
Well-known member
irvinehomeowner said:
I also wonder if he'll try to claim that he sold his rental at the peak when there is a serious lack of inventory just about everywhere.
usctrojancpa
Well-known member
kpatnps said:
In general your statement is true if the home is owned outright. However, inflation eats away at the nominal loan amount from a real dollar perspective and that's especially the case when your interest rate is lower than the rate of inflation. Real estate allows you to use cheap leverage to build wealth over the longer term.
I'm going through all the data and putting my thoughts together before I post the year-end update along with my prediction for real estate prices in 2021 in the coming few days. All I'll say is that it is nuts in the lower end of the market (I'll provide a few examples of homes in my post).
USCTrojanCPA said:
Many first time buyers are fed up with waiting for the price to reduce like 2008-2011. While waiting, they only wasted money on rent and got even slightly higher prices on homes they were hoping to see crash. With the historic super low interest rates, they?re not waiting anymore.
sgip
Well-known member
The buyers are fed up waiting for prices to moderate, but many FTHB are confused by demand, low rates, and payment shock. A day does not go by when I have this conversation:
Buyer: I want to move out of my rental now that rates are sooooper low!
Me: Great. Have you looked at any homes?
Buyer: Yes, I saw this 2 bedroom condo in Irvine listed at $600,000. I want to offer $600,000. Will that work?
Me: No. You have to offer $625,000 just to be considered. Talk with your Agent about this.
Buyer: Wut? :-\
Me: How much do you pay in rent?
Buyer: I pay $2,100 to the Irvine Company. I know that rates are low! If I offer $625,000 and I have 20 percent down, what will my payment be?
Me: The loan itself will be $1,975 per month at 2.50% rate.
Buyer: Sweeeeeeet! Let's buy this place!!!!
Me: But there are taxes, insurance, and HOA dues. The full payment is $3,000.
Buyer: Wut?? ???
Me: Still want to buy?
Buyer: I'm paying $25,000 over list. I'm increasing my payment by $900 per month. I guess I'd have to just to get in the game.
Me: Whoops... Redfin just flipped that home from Available to Under Contract. Do you have any other properties you want to buy?
Buyer:
Day in..... Day out....
That's the front line in the greater LA area housing market. Everything from Point Dume South to Rosarito Beach is selling so fast and at such a high price. Anything listed longer than 60 days is either in a garbage area or wish levelgrossly overpriced.
Buyer: I want to move out of my rental now that rates are sooooper low!
Me: Great. Have you looked at any homes?
Buyer: Yes, I saw this 2 bedroom condo in Irvine listed at $600,000. I want to offer $600,000. Will that work?
Me: No. You have to offer $625,000 just to be considered. Talk with your Agent about this.
Buyer: Wut? :-\
Me: How much do you pay in rent?
Buyer: I pay $2,100 to the Irvine Company. I know that rates are low! If I offer $625,000 and I have 20 percent down, what will my payment be?
Me: The loan itself will be $1,975 per month at 2.50% rate.
Buyer: Sweeeeeeet! Let's buy this place!!!!
Me: But there are taxes, insurance, and HOA dues. The full payment is $3,000.
Buyer: Wut?? ???
Me: Still want to buy?
Buyer: I'm paying $25,000 over list. I'm increasing my payment by $900 per month. I guess I'd have to just to get in the game.
Me: Whoops... Redfin just flipped that home from Available to Under Contract. Do you have any other properties you want to buy?
Buyer:
Day in..... Day out....
That's the front line in the greater LA area housing market. Everything from Point Dume South to Rosarito Beach is selling so fast and at such a high price. Anything listed longer than 60 days is either in a garbage area or wish level
I know your offer above listing price will get you a better chance, but I always recommend not to offer above asking price. If possible, go even lower. Of course your agent (considering you have a good one) will know better, but I think it's worth a try. The seller will counter with the highest asking price they received anyways, although not all do.
zubs
Well-known member
I was wrong in 2018 when we were talking about the housing collapse coming in 2021. I predicted a flat to 10% max decline, but instead, we got a what? 10% increase from 2018 to 2021?
Anyway, mety, eyephone, kenkoko thought it would go lower. They were a little bit right for about 6 months @ the end of 2018.
If you had listened to IHO and bought your dream house in 2018 when people thought it may go lower, you would be in a better position today.
Anyway, mety, eyephone, kenkoko thought it would go lower. They were a little bit right for about 6 months @ the end of 2018.
If you had listened to IHO and bought your dream house in 2018 when people thought it may go lower, you would be in a better position today.
irvinehomeowner
Well-known member
Thanks for the props zubs... but I know from experience that timing the market is close to impossible.
What I do know, is that if affordability and stability are there for you... you can buy whenever you find a house you like. If it drops, you still can afford the payment for a house you wanted, if it rises... gravy.
I know ken will jump in with transaction costs, but that's what the stability argument is for. But then someone counters and says people move every 5-7 years... well, if that's the case... transaction costs are zero sum because people are doing it anyways right?
It's a choice, rent and invest, buy and have a home, or buy and do both... no one knows more about your finances and future than you... some people love to rent (like I love to lease cars) but if I never stretched and bought my first home, I would have regretted it now (although I do regret not putting more money into certain stocks).
What I do know, is that if affordability and stability are there for you... you can buy whenever you find a house you like. If it drops, you still can afford the payment for a house you wanted, if it rises... gravy.
I know ken will jump in with transaction costs, but that's what the stability argument is for. But then someone counters and says people move every 5-7 years... well, if that's the case... transaction costs are zero sum because people are doing it anyways right?
It's a choice, rent and invest, buy and have a home, or buy and do both... no one knows more about your finances and future than you... some people love to rent (like I love to lease cars) but if I never stretched and bought my first home, I would have regretted it now (although I do regret not putting more money into certain stocks).
zubs said:
Yes, I surely thought the price would go down since it was going up too fast 2017-2018. It did go down and it did have a little bit of pause in the market from 2018-2019. But it picked up again with the surprising low interest rates pretty fast. Although I admit I was wrong, I still think buying in 2019 was a better buying time than 2018.
Mety said:
Completely wrong strategy in this environment - at least for any home worth making an offer for. For the lower end market for FTHB (between $700-900k depending on city), I am seeing severe lack of inventory. It isn't uncommon to get 5-10 offers over asking. No listing agent is going to realistically going to bother with a counter for offers below asking.
Cares said:
Yeah, you're more right than me on this. I'm just sharing what I think is worth trying and did work for myself whenever I purchased properties. But your opinion is a more popular one for sure. I personally don't choose popular ones for many other things as well.
Also one thing to note is that this is a season with less inventory overall anyways.
zubs
Well-known member
Mety said:
Compare buying in 2021 and buying in 2018. Which was better? There was way more inventory in 2018, so you could get your dream house for a more expensive price. This was IHO's main argument back in 2018. If you were to buy now at 2021, you are paying 2018 + prices and picking from reduced housing stock.