Observations of Irvine RE market

NEW -> Contingent Buyer Assistance Program
[quote author="USCTrojanCPA"]... Many of those other cities have homes that are within 0-10% of rental parity while Irvine is not even close to rental parity. ...[/quote]

While this is correct, it is dependent on a feature that will have a surprise as much fun as having had one two many drinks and missing the large hands and adams apple of the hot chick you brought home.

The rental parity is based on interest rates at 4.75%. So you better make sure when you buy it that you're keeping it because when interest rates go up, you might be able to rent it, but you won't sell it without a lot of skin.
 
[quote author="IrvineRealtor"]
[quote author="qwerty"]In general, asking a realtor if someone should buy right now is like asking them if they want a pay check or not.[/quote]

If we ever meet - I owe you $5. I'm using that exact wording next time someone asks the question. For now, all I can do is bump your karma.[/quote]

I just recorded a receivable from you for $5.
 
Just anecdotally, I sure felt like it was a seller's market when I was looking for a house earlier this year. When I first started looking (back in December of 08), I thought it would be a buyer's market, because that's what everyone told me. My friends and family all said it was a great time to buy, but that was probably because they were coming from a homeowner's perspective, knowing their properties had dropped in value. I would learn as I searched that because prices had dropped, fewer sellers were selling, and the competition for a house would be crazy.

Just to show you how naive I was: we found a house we liked in March of this year. The asking price was pretty low for its comps, but even so, we put in a really lowball offer, thinking it would be accepted since it was such a "buyer's market." Our offer wasn't accepted, but we weren't willing to go any higher, even though our budget would have allowed us to pay more. Our realtor at the time thought we were doing the right thing. And honestly I was annoyed that the seller had the nerve to turn down our offer. As it turns out, somebody got a really good deal on that house. Plus it ended up selling for less than the house we ended up buying! I still sometimes regret not making a higher offer on that house.

I still hear people saying it's such a great time to buy a house, and I just shake my head. I don't know if it's just Irvine or if it's like this all over, but there are so few houses and so much competition. Definitely not the walk in the park I thought it would be!
 
The reality is that the amount of buyers is probably down from the bubble years, but the reality is that the amount of homes on the market is down even more in most cities in Orange County. For example, we are down from about 1,300 homes on the market back in July of 2007 in Irvine to about 465 homes today or about a 2/3 decrease from the peak. Couple that with sales volume that is near 2006 levels and you have a strong seller's market with less than 3 months worth of inventory. I will say that today is a great time to be a seller if you don't plan on owning your property for at least the next 7+ years in Irvine.

There are a few things that have worked very well for me with me my buyers. First, I hate pushy people so I'm never pushy with anyone. My job is to provide my buyers with all the information available to me and give them as many options as possible. Then I tell them that it is their call on what they would like to do. We have a "pull-push" relationship where they pull me in when they are ready to go after a property and I push to get it for them at the most advantageous terms. If I get asked what I think a property is worth I typically use comps to say that a fair price today based upon comps is $x. I do share with all of my buyers the possible risks of buying today and owning in the next few years because I think the real estate market will be volatile but if they have a longer term perspective then they should be fine, especially if a property is selling near rental parity. In my eyes, the closer a property sells towards its rental parity the lower the possible risk of loss in equity there will be in owning it over the next 3-5 years.
 
[quote author="nosuchreality"]
[quote author="USCTrojanCPA"]... Many of those other cities have homes that are within 0-10% of rental parity while Irvine is not even close to rental parity. ...[/quote]

While this is correct, it is dependent on a feature that will have a surprise as much fun as having had one two many drinks and missing the large hands and adams apple of the hot chick you brought home.

The rental parity is based on interest rates at 4.75%. So you better make sure when you buy it that you're keeping it because when interest rates go up, you might be able to rent it, but you won't sell it without a lot of skin.[/quote]
Haha...I like that analogy. <!-- s:P -->:P<!-- s:P --> But what will happen if rates stay around 5% or go lower like they did in Japan. If my memory serves me right, Japan has had mortgage interest rates of 2-4% for the past 15+ years. What's to say the same thing can't happen in the US??? Sure, we are all preparing for a big uptick in inflation but long term bonds sure aren't acting like a big inflation spike is right around the corner. I'm in the camp that's leaning towards higher than normal inflation BUT I can see a scenario where inflation stays around 0% for a long while and mortgage rates stay between 4-5%. Just food for thought.
 
[quote author="qwerty"]
[quote author="IrvineRealtor"]

If we ever meet - I owe you $5. I'm using that exact wording next time someone asks the question. For now, all I can do is bump your karma.[/quote]

I just recorded a receivable from you for $5.[/quote]
Is that in accordance with GAAP? <!-- s:P -->:P<!-- s:P -->
 
[quote author="USCTrojanCPA"]
[quote author="nosuchreality"]

While this is correct, it is dependent on a feature that will have a surprise as much fun as having had one two many drinks and missing the large hands and adams apple of the hot chick you brought home.

The rental parity is based on interest rates at 4.75%. So you better make sure when you buy it that you're keeping it because when interest rates go up, you might be able to rent it, but you won't sell it without a lot of skin.[/quote]
Haha...I like that analogy. <!-- s:P -->:P<!-- s:P --> But what will happen if rates stay around 5% or go lower like they did in Japan. If my memory serves me right, Japan has had mortgage interest rates of 2-4% for the past 15+ years. What's to say the same thing can't happen in the US??? Sure, we are all preparing for a big uptick in inflation but long term bonds sure aren't acting like a big inflation spike is right around the corner. I'm in the camp that's leaning towards higher than normal inflation BUT I can see a scenario where inflation stays around 0% for a long while and mortgage rates stay between 4-5%. Just food for thought.[/quote]

Hence we're looking but looking very closely for rental parity and something we'll be comfortable in and be comfortable using as a rental if the market turns and our ability to buy better comes in the next two-three years or 7-10 years.
 
[quote author="irvinehomeowner"]
[quote author="qwerty"]
I agree, but it also means your gain will be reduced by the amount that you overpaid. if one's goal is maximum financial gain (and i know for most of you its not) then it probably does not make sense to buy in irvine for at least a year, probably longer.[/quote]
For people who actually just want to buy a home to live in (not to "invest") and especially in these uncertain times, I think any financial gain from their home isn't the primary concern.

Many will be glad to be able to move-up with at least a break-even.

And I really don't know what to expect from Irvine in year or more. The shadow inventory seems to indicate that downward pressure will result in lower prices but why haven't we seen it across the board? For all I know, prices will stay here for the next 5 years.

Gah.[/quote]

I tend to agree that there are a lot of people that aren't looking at it from a purely financial gain perspective. Their primary concern is to find a home or move up home to live in and break-even far down the road should they need/want to sell. It's a balance of financial responsibility and happiness with their respective personal situation.
 
[quote author="novaseline"]
[quote author="octrends"]

don't worry, if the interst rates go up, price will come down accordingly to keep the payment same. no need to have more down payment.[/quote]

If that is true, your down payment will go DOWN in real dollars while remaining constant as a %. Think about that for a minute...[/quote]

Does anyone know how to calculate the devaluation of the Dollar since the last 3 years as it applies to the current housing prices?

In other words, a gallon of unleaded gasoline currently is above $3.00. But 2-3 yrs. ago, the same gallon was around $1.90. Yes, partly it's due to oil prices. But there's the other part, the "devaluation" of the US Dollar.

So lets say the Irvine Co. prices the new homes at lets say $700k. Is it truly $700k? I mean if you factor in the devaluation of the US Dollar. Would that $700k really is $600k ....3 yrs ago. Is it that prices have gone up? Or that the value of the US currency have lost it's value.

I sure wish there's someone on the forum with knowledge of the effect of the declining US $.

Here's another analogy, lets say you have been saving for the last 3 years. And you finally saved up $100k. Would you be able to buy more stuffs currently with your 100k vs. 3 yrs. ago? Pondering.
 
I am looking out and seeing these new homes being built. Due to the decline in the $US. Do you think that it's costing the Irvine Co. more to pay for the cement, wood, pipes, labor, etc? Or do you think it cost less?

And if it cost the Irvine Co. more to build these new homes. Wouldn't they pass that on to the pricing? Of course, there's a perceived 'special premium' added on. But lets look at where the value of the US$ is currently.

One last analogy. If you compare your grocery cost of the last 3 yrs. Is a gallon of milk the same price currently? How about a lb. of beef? Or what about your favorite veggies? The answer is it takes more dollars to buy these things as compare to 3 yrs ago. Why? Is there a conspiracy amongst farmers to prop up the prices? Or is it costing them more dollars to produce and transport? And why is it costing them more dollars now to operate? Could it be partly due to ....? So a new house is a product just like your groceries. Should the price of new homes go down while your groceries cost goes up?
 
[quote author="reason"]
[quote author="novaseline"]

If that is true, your down payment will go DOWN in real dollars while remaining constant as a %. Think about that for a minute...[/quote]

Does anyone know how to calculate the devaluation of the Dollar since the last 3 years as it applies to the current housing prices?

In other words, a gallon of unleaded gasoline currently is above $3.00. But 2-3 yrs. ago, the same gallon was around $1.90. [/quote]

No it wasn't.

http://www.californiagasprices.com/retail_price_chart.aspx

12/08 - $1.99
12/7 - $3.15
12/06 - $3.43
12/05 - $2.35

I understand the point you're trying to make, but your data points don't work out so good with said point.
 
[quote author="novaseline"]
[quote author="reason"]

Does anyone know how to calculate the devaluation of the Dollar since the last 3 years as it applies to the current housing prices?

In other words, a gallon of unleaded gasoline currently is above $3.00. But 2-3 yrs. ago, the same gallon was around $1.90. [/quote]

No it wasn't.

http://www.californiagasprices.com/retail_price_chart.aspx

12/08 - $1.99
12/7 - $3.15
12/06 - $3.43
12/05 - $2.35

I understand the point you're trying to make, but your data points don't work out so good with said point.[/quote]

I knew the data was not accurate (too lazy to type in approx.) But as long as you know the point that I am getting at <!-- s:D -->:D<!-- s:D -->

I was going to use the value of an oz. of gold of 2 yrs ago vs. current. It was "roughly" $400/oz. and currently it's "roughly" $1000/oz. Now, it's still an oz. of gold. So why is it costing more now? But somehow, I get this feeling Awgee would come in to correct the dollar amount.

I hope someone would provide the data of the US Dollar at the beginning of the RE crash vs. its current value. Then compare that to the current prices of homes. I find it interesting that as we saw the housing market crash. The value of the dollar also went down.

Since the buying power of the Dollar is not what it was 2 - 3 yrs prior. What effect does that have on the current housing price. Lets say a house price now is $500k. Is it really $500k? or is it really $400k if you factor in the declining value of the Dollar. Gosh, I hope someone is understanding my jibberish. Nevermind.
 
Decling price of the dollar is irrelevant.

It's growth in income that matters.

Unless you have enough money that your country of living is a realistic choice.

$500,000 yesterday and $500,000 today, still take $500,000.

Now if the incomes in the area have changed from $83,000 to $106,000. Then $500,000 is correspondingly cheaper.

But, choose your poison. If the house is an investment, compare the price then compared to other investments: Gold, diamonds, spiders, oil, pork belly futures...

If it's a necessity, compare to necessities: a cart of groceries.

If it's a discretion, compare to discretinary items: trips to Europe, price of movie tickets, cost of cable, flights to hawaii and a week a Hulalai etc...
 
[quote author="nosuchreality"]Decling price of the dollar is irrelevant.

It's growth in income that matters.

Unless you have enough money that your country of living is a realistic choice.

$500,000 yesterday and $500,000 today, still take $500,000.

Now if the incomes in the area have changed from $83,000 to $106,000. Then $500,000 is correspondingly cheaper.

But, choose your poison. If the house is an investment, compare the price then compared to other investments: Gold, diamonds, spiders, oil, pork belly futures...

If it's a necessity, compare to necessities: a cart of groceries.

If it's a discretion, compare to discretinary items: trips to Europe, price of movie tickets, cost of cable, flights to hawaii and a week a Hulalai etc...

[/quote]

Oh, no. I have to disagree. $500k yesterday is not the same as $500k today. Lets say a candy bar cost 10 cents back in the 70's and that same candy bar is now $1.25. It takes $1.25 to buy that candy bar. Not 10 cents of 3 decades ago. So no, the current value of the dollar is not the same as years past.

And although income might increase. It's not the same dollar value. A person can make $40k, 5 years ago. And is now making $50k, the current $50k is not going to buy the same amount of goods as 5 years ago.

Furthermore, I understand the mention of "growth in income" makes the declining dollar irrevelant. But how many average American workers' income increased to outpace the rapid declining value of the dollar?

In the last 3 years, the job market have deteriorated. Where most workers are lucky to have a job. Most are afraid to ask for a raise. Some companies won't give raises due to market competitiveness. Many workers had their hours reduced. This, of course, lower their income.

Hence, to speak of "growth in income" in the current market condition is irrelevant. If we were in a perfect economy, maybe.
 
You must log in or register to reply here.
Back
Top