Orchard Hills a good buy?

[Liar Loan]

As the real estate market recovered and became stable and boring, IR's comment section on OC Housing News became increasingly vitriolic right wing rage and idiotic rhetoric. As much as I enjoyed daily convos with him, the crowd was intolerable. I left, and so did IR shortly thereafter. I'm certain his days are much more pleasant now.

Perspective, first of all you were injecting Trump into every conversation for many months.  Most of us really didn't care about politics as much as you did.  I was content to talk strictly about housing and economics, but it seemed like Trump was all you wanted to talk about.

Secondly, it's a bit of hyperbole to describe his blog as "vitriolic right wing rage".  Yes, it leaned right wing among commenters, but part of the appeal of a blog is to debate the issues, meaning you could have presented arguments that attempted to sway them.  It seemed to really bother you that nobody was "on your side", but I didn't agree with Larry, el O, awgee, or many of the other commenters on several issues either.  You can't let it bother you that nobody agrees with you.

As for your comments about IR, it is 180 degrees the opposite of what you think.  He dearly misses the daily interaction of the blog.  We've been sporadically communicating about housing and politics via e-mail, and it took him a couple months to get over shutting it down.  He really didn't want to do it, but it was a condition of employment for his job.  We still disagree on many things, both housing and politics, but there's no vitriolic rage.  I believe one day he will start up another blog, but it just can't happen at present time.

Since he's back in the building industry, a lot of the views he has are colored by the increased access to data he has.  In a strange twist, I'm more bearish about housing than he is right now. 

 

[lnc]

Just like many of us here, IrvineRenter also got many housing prediction wrong. 

Currently the sales for $1.3M plus homes are indeed at a slow pace and that's due to too many products and barely enough buyers.

However, the under $1M home market still red hot and pushing the prices well into $500-$550/s.f.  These under $1M home prices act as a support level for those more expensive homes. 

When these under $1M products continue to increase asking price towards $550/s.f. , I just don't see how these larger mid $1M products go down below $500-$450/s.f.

There's a huge housing shortage in So. Cal, inventory remands very tight and the demands are strong.  Even with the new tax law and possibility of mortgage rate increases next year, most housing site still predict a modest price increase in 2018.

 

[Liar Loan]

The formula for lower home prices is:

Lack of affordability + major job losses = falling prices

Higher interest rates and loss of tax deductions will hurt the affordability side of things, but it's not clear when major job losses will occur.  This is one of the longest expansions in US history, but there doesn't seem to be anything pointing to a near term recession.

 

[usctrojancpa]

The formula for lower home prices is:

Lack of affordability + major job losses = falling prices

Higher interest rates and loss of tax deductions will hurt the affordability side of things, but it's not clear when major job losses will occur.  This is one of the longest expansions in US history, but there doesn't seem to be anything pointing to a near term recession.

Economies all over the world are also expanding which further will cushion any blow.  I think I'm mentioned it a few times before but I think the US will become Japan 2.0 in terms of a slow growing economy.  I think the lack of "overlending" is keeping things from really getting out of hand price wise.  What do I mean by that...it's still a total pain in the behind to get a mortgage.

 

[irvinehomeowner]

I wish IrvineRenter still blogged about real estate economics in Irvine..

Why? He wasn't exactly right as he chose to ignore FCB-onomics.

 

[Liar Loan]

I wish IrvineRenter still blogged about real estate economics in Irvine..

Why? He wasn't exactly right as he chose to ignore FCB-onomics.

This seems like a disingenuous comment. 

He was one of only a few people to publicly call the housing crash.  Prices didn't go as low as he predicted for Irvine, but even helping people avoid a 25% loss in value seems worthy of praise.  There's a reason the blog & forums had such a following back then.  Would Talk Irvine even exist without that prediction being made?

 

[Irvinecommuter]

I wish IrvineRenter still blogged about real estate economics in Irvine..

Why? He wasn't exactly right as he chose to ignore FCB-onomics.

This seems like a disingenuous comment. 

He was one of only a few people to publicly call the housing crash.  Prices didn't go as low as he predicted for Irvine, but even helping people avoid a 25% loss in value seems worthy of praise.  There's a reason the blog & forums had such a following back then.  Would Talk Irvine even exist without that prediction being made?

I definitely give IR props for calling the crash but like Peter Schiff...he kept calling bear basically everytime thereafter. 

 

[Liar Loan]

I wish IrvineRenter still blogged about real estate economics in Irvine..

Why? He wasn't exactly right as he chose to ignore FCB-onomics.

This seems like a disingenuous comment. 

He was one of only a few people to publicly call the housing crash.  Prices didn't go as low as he predicted for Irvine, but even helping people avoid a 25% loss in value seems worthy of praise.  There's a reason the blog & forums had such a following back then.  Would Talk Irvine even exist without that prediction being made?

I definitely give IR props for calling the crash but like Peter Schiff...he kept calling bear basically everytime thereafter.

I would agree.  At a certain point it became more about pleasing the audience.  Back then, bubble bear blogs were all the rage.  Once prices started increasing by double digits in 2012, he was forced to change his tune and that audience disappeared pretty quickly except for a few diehards.

 

[Hugo Township]

I wish IrvineRenter still blogged about real estate economics in Irvine..

Why? He wasn't exactly right as he chose to ignore FCB-onomics.

I enjoyed his educated writing style more than reading casual (and emotional) conjecture about economics.

 

[socal78]

I wish IrvineRenter still blogged about real estate economics in Irvine..

I don't think there's anything new that can be said. ?\_(?)_/?

 

[irvinehomeowner]

I wish IrvineRenter still blogged about real estate economics in Irvine..

Why? He wasn't exactly right as he chose to ignore FCB-onomics.

This seems like a disingenuous comment. 

Not really.

He dismissed it whenever it was brought up and wouldn't recognize that many of the reasons keeping Irvine prices from dropping as much as he predicted were not based on conventional wisdom, even in the end.

He focused on profiling properties that went into foreclosure as if that were the majority of transactions that were happening in Irvine when those were actually the lower percentage.

He was also very wrong on interest rates. The tsunami of foreclosures from Option ARMs resetting never happened.

He was one of only a few people to publicly call the housing crash.  Prices didn't go as low as he predicted for Irvine, but even helping people avoid a 25% loss in value seems worthy of praise.

I give Larry credit for many things, but there were things he would overlook or ignore for the benefit of his hits.

My one nitpick with him is he rarely (if ever) admitted he was wrong.

There's a reason the blog & forums had such a following back then.  Would Talk Irvine even exist without that prediction being made?

The IHB forums were always more fair when it came to both sides where Larry's blog was always just his perspective. That's why they closed down the forums, because they knew it outpaced the blog.

And that's why TalkIrvine, even as slow as it is now, still has more participation than OCHousingNews.

Or maybe I'm just not as enamored by Larry as everyone else is because his predictions didn't really save me anything.

 

[Liar Loan]

I don't think Larry ever said foreclosures were the majority of transactions, but you know as well as I do that foreclosures/short sales were a significant percentage of the market at that time.  They were the properties that set pricing for the market because banks were more aggressive about price cuts than equity owners.

Re: Interest Rates - Everybody was wrong.  We are coming up on 10 years of professional analysts calling for higher interest rates now.  The reason everybody was wrong is the unprecedented intervention in the market by the Federal Reserve (QE, QE2, QE3, Operation Twist).  All of these artificial interventions made it impossible to predict rates based on existing models.  So on that count, Larry did no worse than anybody else.

I agree with you that he was stubborn about his positions and slow to give credit to people who were right when he was wrong (like me in 2011/12).  Still it seems like this is personal for you, like he did something to disrespect you that taints your view of him and doesn't allow you to give credit where credit is due. 

I'm not enamored with Larry, maybe because I didn't participate on IHB and only later came along when he started OC Housing News.  But he does provide strong reasoning for his viewpoints and a lot of his ideas have influenced mine.  It makes you a better analyst when you let others challenge your viewpoints, so I value his contrarian take on things.

 

[Irvinecommuter]

I don't think Larry ever said foreclosures were the majority of transactions, but you know as well as I do that foreclosures/short sales were a significant percentage of the market at that time.  They were the properties that set pricing for the market because banks were more aggressive about price cuts than equity owners.

Re: Interest Rates - Everybody was wrong.  We are coming up on 10 years of professional analysts calling for higher interest rates now.  The reason everybody was wrong is the unprecedented intervention in the market by the Federal Reserve (QE, QE2, QE3, Operation Twist).  All of these artificial interventions made it impossible to predict rates based on existing models.  So on that count, Larry did no worse than anybody else.

I agree with you that he was stubborn about his positions and slow to give credit to people who were right when he was wrong (like me in 2011/12).  Still it seems like this is personal for you, like he did something to disrespect you that taints your view of him and doesn't allow you to give credit where credit is due. 

I'm not enamored with Larry, maybe because I didn't participate on IHB and only later came along when he started OC Housing News.  But he does provide strong reasoning for his viewpoints and a lot of his ideas have influenced mine.  It makes you a better analyst when you let others challenge your viewpoints, so I value his contrarian take on things.

I am going to disagree.  Larry definitely focused a lot of foreclosure and distressed properties.  I mean his overarching point was that Irvine was no different than any other market when in reality it is very different, especially to FCB and foreign buyers.

You may not be able to predict to the future re rates but you can certain adjust your outlook and views based upon existing one.  Experts have stated that rates may raise but definitely slowly, which the Fed has done.

I will bring up Peter Schiff again...Schiff was right on about the bubble but he was/is wrong just about everything else.

 

[Liar Loan]

The tsunami of foreclosures from Option ARMs resetting never happened.

This is one example where he did update his views. 

There was already an existing tsunami of foreclosures in 08/09 driven by subprime.  The wave of Option ARM resets would reach it's peak in 2011, but by then banks had put a hold on foreclosing, especially in high end communities.  Most servicers started doing a high volume of modifications in late '09 and this slowed the foreclosure process way down.  Those borrowers that couldn't be modified started going to short sales instead of foreclosure.  He talked all the time about the actions banks were taking and how it was "collusion" to stop foreclosures from driving prices down.  I didn't agree with the collusion part, but that was his view. 

So the famous Option ARM reset chart that Credit Suisse put out was based on what was known in 08/09, but when conditions changed, his views changed along with them.

 

[Irvinecommuter]

The tsunami of foreclosures from Option ARMs resetting never happened.

This is one example where he did update his views. 

There was already an existing tsunami of foreclosures in 08/09 driven by subprime.  The wave of Option ARM resets would reach it's peak in 2010, but by then banks had put a hold on foreclosing, especially in high end communities.  Most servicers started doing a high volume of modifications in late '09 and this slowed the foreclosure process way down.  Those borrowers that couldn't be modified started going to short sales instead of foreclosure.  He talked all the time about the actions banks were taking and how it was "collusion" to stop foreclosures from driving prices down.  I didn't agree with the collusion part, but that was his view. 

So the famous Option ARM reset chart that Credit Suisse put out was based on what was known in 08/09, but when conditions changed, his views changed along with them.

IR's biggest issue was that he basically focused on one side of the ledge...prices and foreclosure rate  He kept showing house prices but never admitted that 1) employment rate stablized and then took off in 2010, 2) banks were under tremendous pressure to reduce foreclosures and keep people in homes, and 3) FCBs could and did have substantial impact in a community like Irvine.

 

[Liar Loan]

IR's biggest issue was that he basically focused on one side of the ledge...prices and foreclosure rate

I agree with that.  There was a lot of pressure at that time for bear bloggers not to "sell out" by suddenly becoming bulls.  I think he recognized that and maintained the bearish viewpoint as long as possible to keep his core audience engaged.  For example, when Calculated Risk went bullish, Bill McBride caught a ton of flak and his audience declined rapidly as he was derided as a sellout on all the other bear blogs.  Ironically, he was probably the only one to accurately call both the top and the bottom of the market, but there was no love for being the most accurate.  Readers, especially bearish readers, wanted their agenda pushed, and if you didn't it was because you were "shilling" for the real estate industry.  Larry was already sensitive to that, I think, because of starting the brokerage and the Las Vegas investment fund.

 

[irvinehomeowner]

No, it's not personal.

IrvineCommuter explains my position better than I can (he's much more educated than me).

 

[freedomcm]

His big failure was the same as mine.  Basing predictions on past policy.  Based on being kinda old and old school, I could not imagine at that time that banks would be allowed to hold that much non-performing asset without foreclosing, and that the Fed would twist and shout.

The problem is that at some point you have to accept that the rules have changed, even if you don't like it, and adjust your assumptions/projections.

 

[Liar Loan]

His big failure was the same as mine.  Basing predictions on past policy.  Based on being kinda old and old school, I could not imagine at that time that banks would be allowed to hold that much non-performing asset without foreclosing, and that the Fed would twist and shout.

The problem is that at some point you have to accept that the rules have changed, even if you don't like it, and adjust your assumptions/projections.

This is spot on.

Really, the only way to navigate the past 10 years successfully was to follow the Fed's movements & signals closely, and to act accordingly.

 

[irvinehomeowner]

His big failure was the same as mine.  Basing predictions on past policy.  Based on being kinda old and old school, I could not imagine at that time that banks would be allowed to hold that much non-performing asset without foreclosing, and that the Fed would twist and shout.

The problem is that at some point you have to accept that the rules have changed, even if you don't like it, and adjust your assumptions/projections.

The irony in this is many of the properties he profiled were held in limbo for long time before foreclosure.

It was a running joke on how much money people saved by squatting, so having that evidence right in front of him should have signified how willing banks were to hold.

And yes, I realize hindsight is 20/20 but it's not like there weren't signs that all was not as predicted. Rumor was he actually bought sometime near his last days with IHB but I wasn't reading at that time and so not sure if he disclosed that.

I do hope his Vegas SuperFund is doing well, but there were doubts about that too which he also dismissed.