Spring 2014 Pricing - Best Guess on the Resale Market?

[irvinehomeowner]

The rise from 3.5 to 4.5 did not affect my affordability... as I think it wouldn't for most people shopping in certain price ranges.

As I said, back when rates were in the mid 3s, prices were lower, now the rates are mid 4s, and unfortunately, prices are higher... so I am getting hit on both ends. But then like others said, instead of getting fixed, get an ARM to get the same rate you would have got last year.

There are some like yourself who will eat the extra payment but a lot of people won't. So now you get an arm to compensate for the higher rate and potentially increasing your cost over the long term increasing your risk. The builders will try to get as much as they can get and the combo of price increases and rate increases are now resulting in slower sales in irvine new construction

But that's the thing, we don't know what the numbers are, who finances, who pays all cash, who looks for different financing, who chooses not to buy or who chooses to eat the extra payment.

If everyone financed, then interest rates and prices would have a more direct correlation, but based one what I've seen the last 7 years in Irvine, there isn't much of a relationship between the two because I think the numbers favors those who don't finance or can afford the higher rates.

It's just like saying: "Lower demand will reduce prices". Most of us know that but what's the point? To wait until demand is lower and then buy? When is that going to happen? And is that guaranteed? For at least a year and a half, inventory in Irvine was at record lows (AND interest rates), which should translate to high demand, yet prices remained low.

That's the unicorn effect, you may not believe one exists... but that's the "reality".

 

[qwerty]

I agree, there are too many unknowns. That's why I said higher rates with everything else held constant prices would go down.

What is your explanation of the slow down in new construction home sales?

 

[zubs]

Perhaps 6 months isn't long enough to gauge whether the 1% increase in mortgage rates had an effect.  I see housing finally slowing down now.  If you look at the redfin $/sqft charts, we are cresting and starting to drop.

 

[irvinehomeowner]

What is your explanation of the slow down in new construction home sales?

I am going to channel a Redfin realtor (Bob?)... "seasonality".

I also think they raised prices too quickly. When I toured Cypress Village, I thought Mulberry was pushing it at $900k, now close to $1m... ridiculous.

The other is inventory... more product now with the Great Park online, why do you think Orchard Hills is getting fastracked? Because they know they won't be able to capture these higher prices with so much product out there. If 2014 stalls, you may see villages go back into mothballs (like Northwood Paseo).

Resale inventory is still really low, so that's going to keep prices up a bit.

I believe BK said this back in the day, it's also all about village mentality... if 500 people bought new homes at $1mil, the chances of newer phases of those homes dropping significantly below $1mil is going to be very low.

 

[qwerty]

So in summary sales have slowed due to seasonality, no more demand and higher rates. Anything else?

Sometimes the answer is the obvious answer, let's not try to outthink the room. The combo of really fast price increases by builders and higher rates have slowed new construction sales.

 

[irvinehomeowner]

@qwerter:

Heh... notice I didn't put rates in my list of reasons.

 

[qwerty]

@qwerter:

Heh... notice I didn't put rates in my list of reasons.

Trust me man, I noticed

 

[OpenSky]

 

[qwerty]

If you are the builder or home seller, you want to hold out for the FCB if your property is in the middle affected by interest rate increases.  Considering the FCB is hardly a rare beast in Irvine or in the big cities of CA, they are not out of their mind to hold out for a higher offer.  Why wouldn't they? Those folks are not interest rate sensitive, b/c they are paying cash.

agree with most of what you are saying. as the builders try to hold out, it appears the FCB is becoming a little more rare since Pavilion Park and Cypress Village are slowing down in the 800-1M range, which is the middle of the price points (for the most part). 

so what i cant figure out is whether FCB demand is drying up with slower sales in PP and CV? cause i agree FCBs dont care about rates, it even seems that they dont/didnt care about prices, or at least that used to be case. something is causing the slowdown at PP/CV and if the FCB pool is drying up the future is less bright for irvine.

 

[OpenSky]

 

[eyephone]

The Irvine market is flooded with new construction homes.

 

[irvinehomeowner]

FCBs are usually on vacation at this time of the year.

I imagine Jan/Feb will heat up again.

There is also a cyclical ebb/flow when new homes open. When the 2010 Collection in Woodbury opened up, it sold very quickly but then the homes that opened after that were slow for a while (like Laguna Altura and Stonegate). After about 6 months to a year, LA and SG sales took off... now LA is sold out and the other homes in the "2011" Irvine Pacific Collection are also sold through.

By summer of 2014, I think we'll see quick sales again but you never know because there will be even more inventory (Tustin Legacy, Orchard Hills, Great Park). I always think that supply will outstrip demand with all the building in Irvine, but there are always more buyers for Irvine it seems... that Unicorn aura. We are probably looking at almost 3000 new homes (or more) since 2010 that have been sold, what other city does that?

 

[OpenSky]

8)

 

[jyeh74]

Let's hope so.  I was looking at one at 37 Canyonwood but a cash buyer swooped it.  Let's hope some good 2800 sq ft + SFRs pop up in NP or NWP in 2014.

 

[irvinehomeowner]

I think Carmichael is an outlier... same agent for buyer and seller so there may have been concessions.

I don't see prices dipping all that much with the stock market doing so well.

 

[notTHEoc]

A

 

[ps99472]

Woke up to this New Year's gift:
http://www.redfin.com/CA/Irvine/1-Carmichael-92602/home/5813047

Yes, it's a McRib lot against Portola. But that's offset by its over 10,000 sf lot, cul-de-sac location, and it shows very well. Originally listed near the peak Sep 2005 sale price ($1.1M), it closed at $893k ($395/sf) in NorthPark, nearly 20% below the original WTF asking price.

Sales volume in 92602 over Q4 was abysmal, and if this is the comp, the peak is behind us -- and spring could portend lower prices after all.

Happy New Year!

I missed it, could've had a half court in my backyard while chomping on Mcribs

 

[OpenSky]

 

[freedomcm]

I think Carmichael is an outlier... same agent for buyer and seller so there may have been concessions.

i agree, same agent, plus a price that looks like a foreclosure price.

any of the resident pros have  more information?

 

[irvinerealtor]

I think Carmichael is an outlier... same agent for buyer and seller so there may have been concessions.

i agree, same agent, plus a price that looks like a foreclosure price.

any of the resident pros have  more information?

This home was a short sale sold via auction and buyers paid an additional 5% ($44,660) in auction fees, plus the costs of HOA compliance and taxes, title and escrow fees.

-IR2