Poll: Irvine Housing Prediction June 2022

[potsticker]

Definitely not a lot of activity in the $2m+ market in Irvine. Also have actually seen a few listings get canceled as well - likely as the sellers prefer to just take the home off the market rather than doing a price reduction.

 

[irvinehomeowner]

Based on the poll.. if prices only drop 5-10% in a year.. isn't that seasonal?

 

[Liar Loan]

Based on the poll.. if prices only drop 5-10% in a year.. isn't that seasonal?

Uh...no.  That's why the two year Irvine decline in 2018 was so painful.

 

[irvinehomeowner]

Based on the poll.. if prices only drop 5-10% in a year.. isn't that seasonal?

Uh...no.  That's why the two year Irvine decline in 2018 was so painful.

So hilarious! What was the percentage of that decline again?

 

[Liar Loan]

Based on the poll.. if prices only drop 5-10% in a year.. isn't that seasonal?

Uh...no.  That's why the two year Irvine decline in 2018 was so painful.

So hilarious! What was the percentage of that decline again?

I'm sure your home only went up in value, but the rest of Irvine didn't fare so well.  According to realtor expert USC, prices declined 8% based on his own measurements.

Now I know a six-figure loss is no big deal in the IHO household, but to a first time buyer, that tends to have a brutal impact on the pocket book as well as the mental health.  The proof is in the pudding.  Home values are taking a hit and domestic violence crimes in Irvine are now on the rise.

 

[The Motor Court Company]

assuming 20% downpayment, 8% price decline means the equity is pretty much gone after including the 8% transaction cost; in a bull real estate market, cash on cash return of the down payment is amazing but in a bear market it can wipe it out fairly quickly. It is the ultimate leverage.

Based on the poll.. if prices only drop 5-10% in a year.. isn't that seasonal?

Uh...no.  That's why the two year Irvine decline in 2018 was so painful.

So hilarious! What was the percentage of that decline again?

I'm sure your home only went up in value, but the rest of Irvine didn't fare so well.  According to realtor expert USC, prices declined 8% based on his own measurements.

Now I know a six-figure loss is no big deal in the IHO household, but to a first time buyer, that tends to have a brutal impact on the pocket book as well as the mental health.  The proof is in the pudding.  Home values are taking a hit and domestic violence crimes in Irvine are now on the rise.

 

[CalBears96]

I have one very simple question:

If you bought the house in 2018 to live in it for 5, 10, or 20 years, what does the decline have to do with "brutal impact on the pocket book as well as the mental health"? And what does ultimate leverage mean?

Does the decline in housing price affect your mortgage payment? NO. So how does that impact the pocket book?

On the other hand, does increase in housing price give you any leverage if you don't sell the house? No. So what ultimate leverage does it give you?

The point is, short term increase/drop has NO EFFECT whatsoever if you plan to live in the house for some period of time.

 

[irvinehomeowner]

Based on the poll.. if prices only drop 5-10% in a year.. isn't that seasonal?

Uh...no.  That's why the two year Irvine decline in 2018 was so painful.

So hilarious! What was the percentage of that decline again?

I'm sure your home only went up in value, but the rest of Irvine didn't fare so well.  According to realtor expert USC, prices declined 8% based on his own measurements.

Now I know a six-figure loss is no big deal in the IHO household, but to a first time buyer, that tends to have a brutal impact on the pocket book as well as the mental health.  The proof is in the pudding.  Home values are taking a hit and domestic violence crimes in Irvine are now on the rise.

It's not a loss if you stayed longer which is one of my main caveats... just like CalBears said above.

And here is something you keep failing to mention:

If you bought in 2018, how long did that loss last? Because by 2020, prices were back up again... and if you sold within the last year or so... that 8% loss turned into what?

Keep trying.

 

[TestingIrvine]

Based on the poll.. if prices only drop 5-10% in a year.. isn't that seasonal?

Uh...no.  That's why the two year Irvine decline in 2018 was so painful.

LL: why?d you buy in 2018 and sell so fast?

 

[usctrojancpa]

Based on the poll.. if prices only drop 5-10% in a year.. isn't that seasonal?

Uh...no.  That's why the two year Irvine decline in 2018 was so painful.

So hilarious! What was the percentage of that decline again?

I'm sure your home only went up in value, but the rest of Irvine didn't fare so well.  According to realtor expert USC, prices declined 8% based on his own measurements.

Now I know a six-figure loss is no big deal in the IHO household, but to a first time buyer, that tends to have a brutal impact on the pocket book as well as the mental health.  The proof is in the pudding.  Home values are taking a hit and domestic violence crimes in Irvine are now on the rise.

Yeah, you would have had an 8% if you bought at the absolute peak and sold at the absolute bottom but as you know people are bad at timing things even if they try.  I doubt that someone who bought near the top of the market in the Spring of 2018 would have or was forced to sell if the price of their home on paper went down 5-8% because a home is not a margined stock position. 

The key is to buy what you can comfortably afford and enjoy the home for many years.  A commodity first and an investment second because people choose to buy a home for more than a financial reason.  I'm sure I bought near the peak but I could care less because I can comfortable afford the home and plan on living there 10+ years.  Besides, it look me 2+ years for find the home so if I wouldn't have bought it who knows how long it might have taken me to find something just as nice that checked as many boxes.  In my head, some things are more important than money and one of them is TIME.

 

[Liar Loan]

Let's see a first time home buyer could have saved:

-$100,000 in cost
-1.85% in mortgage rate ($15,000-20,000 per year)
-$1,000-2,000 in yearly property tax
-gotten a bigger house for the same or less money
-less psychological turmoil

All by waiting to buy at the right moment.

Holding for the long term does not suddenly transform a bad financial decision into a good one.  The optimal move is to time your purchase right and then hold for the long term.  Buying at the peak in Lake Elsinore required holding for 16 years to regain prior peak value.  How did holding for the long term make that a good purchase?  It didn't.  Which is why CalBears can't wait to get rid of it.

 

[sleepy5136]

Let's see a first time home buyer could have saved:

-$100,000 in cost
-1.85% in mortgage rate ($15,000-20,000 per year)
-$1,000-2,000 in yearly property tax
-gotten a bigger house for the same or less money
-less psychological turmoil

All by waiting to buy at the right moment.

Holding for the long term does not suddenly transform a bad financial decision into a good one.  The optimal move is to time your purchase right and then hold for the long term.  Buying at the peak in Lake Elsinore required holding for 16 years to regain prior peak value.  How did holding for the long term make that a good purchase?  It didn't.  Which is why CalBears can't wait to get rid of it.

yeah but all of what you're saying is all hindsight. no one knows what will happen to the market in the future.

 

[CalBears96]

Let's see a first time home buyer could have saved:

-$100,000 in cost
-1.85% in mortgage rate ($15,000-20,000 per year)
-$1,000-2,000 in yearly property tax
-gotten a bigger house for the same or less money
-less psychological turmoil

All by waiting to buy at the right moment.

Holding for the long term does not suddenly transform a bad financial decision into a good one.  The optimal move is to time your purchase right and then hold for the long term.  Buying at the peak in Lake Elsinore required holding for 16 years to regain prior peak value.  How did holding for the long term make that a good purchase?  It didn't.  Which is why CalBears can't wait to get rid of it.

yeah but all of what you're saying is all hindsight. no one knows what will happen to the market in the future.

LL doesn't understand that you CAN'T time the market right. He keeps using hindsight data to back his view.

The reason I couldn't wait to get rid of my Lake Elsinore house is that I hate dealing with HOA and I'm not much of a landlord. And I prefer liquid asset. I'm actually having a pretty good cash flow on that house as a rental. My mortgage is less than $1000 a month. Property tax is about $900 a month. HOA is $78 and home insurance is $70. Property management fee is $99. Rent is $2900 a month. So basically, someone is paying for my mortgage AND I still have $700 cash flow.

 

[OCtoSV]

Let's see a first time home buyer could have saved:

-$100,000 in cost
-1.85% in mortgage rate ($15,000-20,000 per year)
-$1,000-2,000 in yearly property tax
-gotten a bigger house for the same or less money
-less psychological turmoil

All by waiting to buy at the right moment.

Holding for the long term does not suddenly transform a bad financial decision into a good one.  The optimal move is to time your purchase right and then hold for the long term.  Buying at the peak in Lake Elsinore required holding for 16 years to regain prior peak value.  How did holding for the long term make that a good purchase?  It didn't.  Which is why CalBears can't wait to get rid of it.

yeah but all of what you're saying is all hindsight. no one knows what will happen to the market in the future.

when mortage rates go to 10% (QT hasn't even started) the timing of purchases from 2017-2022 is going to look much more important in the rear view. The $4M house at 2-3% mort rate will deflate massively all the way to 10%. We've seen this movie before in the early 90s. My parents Northwood house took 10 years to come back above water from their 89 purchase but the $ weren't that big, though knowing your big asset wasn't appreciating was no fun for them. I'm more concerned about the equity markets tanking given how expensive they still are in light of no earnings growth but I'd still rather put my wealth in the market than in RE right now which is why I decided against levering up when rates were at their bottom to get our unicorn house. I'm going to ride our inflation hedges of a 15 yr 1.99% mortgage and subsidized solar/batteries through this multi-year patch of inflation while sharpening the focus on companies with solid balance sheets.

 

[CalBears96]

Let's see a first time home buyer could have saved:

-$100,000 in cost
-1.85% in mortgage rate ($15,000-20,000 per year)
-$1,000-2,000 in yearly property tax
-gotten a bigger house for the same or less money
-less psychological turmoil

All by waiting to buy at the right moment.

Holding for the long term does not suddenly transform a bad financial decision into a good one.  The optimal move is to time your purchase right and then hold for the long term.  Buying at the peak in Lake Elsinore required holding for 16 years to regain prior peak value.  How did holding for the long term make that a good purchase?  It didn't.  Which is why CalBears can't wait to get rid of it.

yeah but all of what you're saying is all hindsight. no one knows what will happen to the market in the future.

when mortage rates go to 10% (QT hasn't even started) the timing of purchases from 2017-2022 is going to look much more important in the rear view. The $4M house at 2-3% mort rate will deflate massively all the way to 10%. We've seen this movie before in the early 90s. My parents Northwood house took 10 years to come back above water from their 89 purchase but the $ weren't that big, though knowing your big asset wasn't appreciating was no fun for them. I'm more concerned about the equity markets tanking given how expensive they still are in light of no earnings growth but I'd still rather put my wealth in the market than in RE right now which is why I decided against levering up when rates were at their bottom to get our unicorn house. I'm going to ride our inflation hedges of a 15 yr 1.99% mortgage and subsidized solar/batteries through this multi-year patch of inflation while sharpening the focus on companies with solid balance sheets.

Well, you're wrong about mortgage rates going to 10%. That's NOT going to happen. Just like oil price is NOT going to $300. Both are just your wishful thinking.

 

[Liar Loan]

Let's see a first time home buyer could have saved:

-$100,000 in cost
-1.85% in mortgage rate ($15,000-20,000 per year)
-$1,000-2,000 in yearly property tax
-gotten a bigger house for the same or less money
-less psychological turmoil

All by waiting to buy at the right moment.

Holding for the long term does not suddenly transform a bad financial decision into a good one.  The optimal move is to time your purchase right and then hold for the long term.  Buying at the peak in Lake Elsinore required holding for 16 years to regain prior peak value.  How did holding for the long term make that a good purchase?  It didn't.  Which is why CalBears can't wait to get rid of it.

yeah but all of what you're saying is all hindsight. no one knows what will happen to the market in the future.

LL doesn't understand that you CAN'T time the market right. He keeps using hindsight data to back his view.

That's not true at all.  I've made the calls for everyone to see.

 

[CalBears96]

Let's see a first time home buyer could have saved:

-$100,000 in cost
-1.85% in mortgage rate ($15,000-20,000 per year)
-$1,000-2,000 in yearly property tax
-gotten a bigger house for the same or less money
-less psychological turmoil

All by waiting to buy at the right moment.

Holding for the long term does not suddenly transform a bad financial decision into a good one.  The optimal move is to time your purchase right and then hold for the long term.  Buying at the peak in Lake Elsinore required holding for 16 years to regain prior peak value.  How did holding for the long term make that a good purchase?  It didn't.  Which is why CalBears can't wait to get rid of it.

yeah but all of what you're saying is all hindsight. no one knows what will happen to the market in the future.

LL doesn't understand that you CAN'T time the market right. He keeps using hindsight data to back his view.

That's not true at all.  I've made the calls for everyone to see.

Wrong calls, yes. Like telling people not to buy since 2020.

 

[zubs]

 

[irvinehomeowner]

Let's see a first time home buyer could have saved:

-$100,000 in cost
-1.85% in mortgage rate ($15,000-20,000 per year)
-$1,000-2,000 in yearly property tax
-gotten a bigger house for the same or less money
-less psychological turmoil

All by waiting to buy at the right moment.

Holding for the long term does not suddenly transform a bad financial decision into a good one.  The optimal move is to time your purchase right and then hold for the long term.  Buying at the peak in Lake Elsinore required holding for 16 years to regain prior peak value.  How did holding for the long term make that a good purchase?  It didn't.  Which is why CalBears can't wait to get rid of it.

yeah but all of what you're saying is all hindsight. no one knows what will happen to the market in the future.

LL doesn't understand that you CAN'T time the market right. He keeps using hindsight data to back his view.

That's not true at all.  I've made the calls for everyone to see.

Wrong calls, yes. Like telling people not to buy since 2020.

Since forever actually... LL has always said any time is a bad time to buy in Irvine... challenge him to quote a post where he said you should buy in 2010. He can't, just like he can't find a post where I said ALL homes in Irvine only dropped 15% during that previous bubble.

Just remember his first name when you see him post.

 

[OCtoSV]

Let's see a first time home buyer could have saved:

-$100,000 in cost
-1.85% in mortgage rate ($15,000-20,000 per year)
-$1,000-2,000 in yearly property tax
-gotten a bigger house for the same or less money
-less psychological turmoil

All by waiting to buy at the right moment.

Holding for the long term does not suddenly transform a bad financial decision into a good one.  The optimal move is to time your purchase right and then hold for the long term.  Buying at the peak in Lake Elsinore required holding for 16 years to regain prior peak value.  How did holding for the long term make that a good purchase?  It didn't.  Which is why CalBears can't wait to get rid of it.

yeah but all of what you're saying is all hindsight. no one knows what will happen to the market in the future.

when mortage rates go to 10% (QT hasn't even started) the timing of purchases from 2017-2022 is going to look much more important in the rear view. The $4M house at 2-3% mort rate will deflate massively all the way to 10%. We've seen this movie before in the early 90s. My parents Northwood house took 10 years to come back above water from their 89 purchase but the $ weren't that big, though knowing your big asset wasn't appreciating was no fun for them. I'm more concerned about the equity markets tanking given how expensive they still are in light of no earnings growth but I'd still rather put my wealth in the market than in RE right now which is why I decided against levering up when rates were at their bottom to get our unicorn house. I'm going to ride our inflation hedges of a 15 yr 1.99% mortgage and subsidized solar/batteries through this multi-year patch of inflation while sharpening the focus on companies with solid balance sheets.

Well, you're wrong about mortgage rates going to 10%. That's NOT going to happen. Just like oil price is NOT going to $300. Both are just your wishful thinking.

It's not wishful thinking, just using my brain. QE brought rates to 2%, and you don't think QT will have the opposite effect? What is the mortgage securitization market going to look like when the Fed is conducting open market sales of their $4T MBS portfolio? This has NEVER been tried before. It is much more intellectually reasonable to see rates hitting 10% than just staying flat becuase of the dilution of the MBS market, or should i say re-shaping as today the Fed IS the MBS market.

This recent Barron's article is a good primer:
https://www.barrons.com/articles/fed-balance-sheet-quantitative-tightening-2022-51659731026