Poll: Irvine Housing Prediction June 2022

Where will Irvine housing prices be in one year?

  • Down over 50%

    Votes: 0 0.0%

  • Down 20%

    Votes: 20 19.0%

  • Down 10%

    Votes: 40 38.1%

  • Down 5%

    Votes: 31 29.5%

  • Flat

    Votes: 37 35.2%

  • Up 5%

    Votes: 15 14.3%

  • Up 10%

    Votes: 5 4.8%

  • Up 20%

    Votes: 0 0.0%

  • Up over 50%

    Votes: 0 0.0%

  • Other (please specify in post)

    Votes: 0 0.0%
  • Total voters
    105
  • Poll closed .
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OCtoSV said:
To ponder how truly distorted markets were, The Fed was such an eager buyer of A paper MBS that Rocket refid me into a 1.99/15 yr (12 day closing - auto appraised!!) and they gave a 5 figure lender credit that returned $300 back at the closing table. In what world is that something anyone wants in their portfolio except me?
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That was the market rate at the time and your loan was purchased by Fannie or Freddie. Just like with stocks, the price of MBS bond where your mortgage sits has adjusted down and is trading with a yield that is closer to today's interest rates. Remember that as long as the investor holds the bond until maturity or payoff they do not lose a penny but missed out opportunity cost is a whole other story.
 
usctrojancpa said:
That was the market rate at the time and your loan was purchased by Fannie or Freddie. Just like with stocks, the price of MBS bond where your mortgage sits has adjusted down and is trading with a yield that is closer to today's interest rates. Remember that as long as the investor holds the bond until maturity or payoff they do not lose a penny but missed out opportunity cost is a whole other story.
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exactly - the "market" rate was a function of massively distorted pricing signals which i was quick to jump on.

I don't think we'll ever see sub-5% rates in our lifetimes. The Fed will not blow another housing bubble and with 10s of thousands of units coming online up here over the next few years (mostly dense condos/apt up and down Silicon Valley and downtown SJC with the Google Village) prices will nosedive. So glad I'm not in commercial RE or RE dev now.
 
Just a counter point for why the Fed might have pressure to ease (not immediately, they're not done with their inflation and job market battle) - they're making it very expensive for the world's biggest debtor who also happens to have the power to appoint Fed heads.

Total Public Debt

Government Expenditures on Interest Payments

Also, there are banks offering jumbo loans in the high 4s with no points right now.

No doubt in the near term the housing market is cooling and may be setting up for some meaningful price drops in even the most resilient regions.
Eventually we'll see unemployment rise and enough other economic destruction for the Fed to justify lowering rates again. Today's governments and economies are addicted to cheap debt. They're taking a tolerance break right now before their next hit.
 
someguy said:
Just a counter point for why the Fed might have pressure to ease (not immediately, they're not done with their inflation and job market battle) - they're making it very expensive for the world's biggest debtor who also happens to have the power to appoint Fed heads.

Total Public Debt

Government Expenditures on Interest Payments

Also, there are banks offering jumbo loans in the high 4s with no points right now.

No doubt in the near term the housing market is cooling and may be setting up for some meaningful price drops in even the most resilient regions.
Eventually we'll see unemployment rise and enough other economic destruction for the Fed to justify lowering rates again. Today's governments and economies are addicted to cheap debt. They're taking a tolerance break right now before their next hit.
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Exactly, once it's clear that inflation has been tamed the Fed will cut rates and that will result in mortgage rates going below 4% (if the recession gets bad then rates may get into the low 3% range but I don't think that'll happen).
 
usctrojancpa said:
Exactly, once it's clear that inflation has been tamed the Fed will cut rates and that will result in mortgage rates going below 4% (if the recession gets bad then rates may get into the low 3% range but I don't think that'll happen).
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I assume you guys saw many of the targets announced from the survey today show a 5% rate at the end of 2025. And again, unemployment will have to triple from current levels to get rates back to where people want them. Powell also seemed to hint at a higher inflation target but didn't quite let the genie out.

High interest rates will force Congress' hand on spending, meaning entitlements. This is a good thing and will eventually feed a supply side boom with lower taxation as a result of massive SS and Medicare restructuring, all without needing to resort to ZIRP. Get ready for means testing in a big way. Sock away that HSA and above all stay healthy to avoid needing to spend your fortune on healthcare in retirement because unless you're poor you won't have Medicare.
 
Sorry…. But all young people have been brainwashed to think means testing is everything that ends with ist and phobe. It won’t happen. We will likely just have lower growth for the next decade.
 
OCtoSV said:
I assume you guys saw many of the targets announced from the survey today show a 5% rate at the end of 2025. And again, unemployment will have to triple from current levels to get rates back to where people want them. Powell also seemed to hint at a higher inflation target but didn't quite let the genie out.

High interest rates will force Congress' hand on spending, meaning entitlements. This is a good thing and will eventually feed a supply side boom with lower taxation as a result of massive SS and Medicare restructuring, all without needing to resort to ZIRP. Get ready for means testing in a big way. Sock away that HSA and above all stay healthy to avoid needing to spend your fortune on healthcare in retirement because unless you're poor you won't have Medicare.
Click to expand...

I for one hope that the gov't free cheese spending ends as that has blunted the effects of the Fed raising rates to battle inflation. Yes, the Fed will go to 5% to 5.50% which means the yield curve will get more and more inverted signaling lower future inflation growth in the future which will lower longer term rates (including mortgage rates). The Fed will also keep rates higher for longer than most people think because JP wants to put his knee on the throat on inflation as he should and this will result in some kind of recession with higher employment and lower wage growth which is the biggest remaining component of inflation. I think that begins to happen when the unemployment rate gets above 5%. One they see inflation going towards 0% and then potentially negative they'll begin cutting rates and stop the runoff of the balance sheet which is when mortgage rates will be below 4%.
 
I haven't followed too close on the market trend, but I hear Irvine home prices haven't really dropped like other areas. Is that true?
 
15-20% reduction by next June is hard for me to see.

But I guess it depends on what type of inventory we are talking about. As had been discussed on TI (and IHB before that), reductions on new homes are going to be slower because of the hive value. All these people bought at a certain price point... for any of these homes to sell for below that threshold will be harder because it wasn't like an old hood where buy-in price could have been 15 years ago.
 
Mawesome Sauce said:
The excessive reliance on Mainland Chinese buyers does.
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But that's the point, though. FCBs are limiting the supply because they don't need to sell. You could argue that in a recession, some people who lost their job might need to sell because they can't afford the mortgage, but FCBs don't have this restriction. So that means, as bones said, supply level in Irvine will be low.
 
Martin has been telling us forever that people in Irvine underbuy. There's also a lot of people here who have parents they can tap into if need be. Wealth shift.
 
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