Start of the next Irvine housing boom?

[irvinehomeowner]

So I was at an open house this past weekend... and the agent asked me what we were seeing out there during our home search and what we thought of the market.

I commented about the low inventory and low interest rates that are keeping prices from dropping where they should be but that prices are still going down somewhat depending on where the property is.

What surprised me is he said that the conditions now mirror the conditions prior to the last boom and that he thinks prices are going to explode again.

Is that the new twist on "Buy now or be priced out forever!"?

If the peak of the boom was 2006, and real estate moves in 7-year cycles... is 2013 the next uprising? I doubt it... but then again... no one thought interest rates were going to be 3.x right now... and many thought all Irvine real estate was going to take at least a 40% dump and be at 1999 prices and that a foreclosure and Option ARM tsunami was going to wipe out Irvine.

 

[usctrojancpa]

So I was at an open house this past weekend... and the agent asked me what we were seeing out there during our home search and what we thought of the market.

I commented about the low inventory and low interest rates that are keeping prices from dropping where they should be but that prices are still going down somewhat depending on where the property is.

What surprised me is he said that the conditions now mirror the conditions prior to the last boom and that he thinks prices are going to explode again.

Is that the new twist on "Buy now or be priced out forever!"?

If the peak of the boom was 2006, and real estate moves in 7-year cycles... is 2013 the next uprising? I doubt it... but then again... no one thought interest rates were going to be 3.x right now... and many thought all Irvine real estate was going to take at least a 40% dump and be at 1999 prices and that a foreclosure and Option ARM tsunami was going to wipe out Irvine.

Too many headwinds that will be prices from "BOOMING" that I can think of....1. stricter lending standards, 2. appraisal/comps values, 3. jobs growth stalling out, 4. stagnant income growth, and 5. continued foreclosure activity.  That being said, we do have a several factors that are a tailwind at the moment...lower interest rates and ultra low inventory levels.  Personally I think home prices will remain flattish for the near term, but hey I've been wrong before. 

 

[rkp]

this thread is very timely.  lately, it feels like everyone is talking about real estate again!  i have friends buying condos to rent, buying fixer uppers to flip, and all sorts of stuff.  RE definitely seems to be back on the dinner topic menu...one analytical and patient friend bought in laguna altara and fully believes that LA will go up by 50-80% in next 10 years! 

personally, with all the noise in the system, i would be happy with flat prices for next decade.  too many unknowns...

 

[jamboreedude]

this thread is very timely.  lately, it feels like everyone is talking about real estate again!  i have friends buying condos to rent, buying fixer uppers to flip, and all sorts of stuff.  RE definitely seems to be back on the dinner topic menu...one analytical and patient friend bought in laguna altara and fully believes that LA will go up by 50-80% in next 10 years! 

personally, with all the noise in the system, i would be happy with flat prices for next decade.  too many unknowns...

What are the factors that may allow Laguna Altura prices to rise "50-80% over the next 10 years" time? Is his prediction for LA only or all of Irvine in general?

If that ever happens, I will sell my LA home and buy a 5000+ Sq. feet mini-mansion in The Woodlands of TX!

 

[rkp]

this thread is very timely.  lately, it feels like everyone is talking about real estate again!  i have friends buying condos to rent, buying fixer uppers to flip, and all sorts of stuff.  RE definitely seems to be back on the dinner topic menu...one analytical and patient friend bought in laguna altara and fully believes that LA will go up by 50-80% in next 10 years! 

personally, with all the noise in the system, i would be happy with flat prices for next decade.  too many unknowns...

What are the factors that may allow Laguna Altura prices to rise "50-80% over the next 10 years" time? Is his prediction for LA only or all of Irvine in general?

If that ever happens, I will sell my LA home and buy a 5000+ Sq. feet mini-mansion in The Woodlands of TX!

irvine as a whole.  he thinks inflation is coming in a big way which will increase all prices.  irvine specifically has been holding strong and areas like QH never even saw a big drop so he thinks that trend will only continue

i think IR wrote a few posts on inflation and how he sees inflation happening but not for wages.  ie, we will all just be poorer.  somehow, i feel like thats more likely...

 

[irvinehomeowner]

So the prediction is an increase in inflation will cause an increase in prices... isn't that like the prediction of higher interest rates so that will cause prices to decrease?

With all due respect to IR, he has been wrong (as have others, including myself) on several counts (and I believe he's admitted it). Here are a few that I can think of (and not all were just from IrvineRenter):

1. Government will be unable to intervene to slow the drop
2. Interest rates will rise
3. Option ARM tsunami
4. Foreclosure tidal wave
5. Massive reduction in Irvine housing prices across the board
6. 2010 new homes sales pace
7. Dated Turtle Rock home will sell for closer to $600k

 

[Cklein]

I worry about the interest rates. It's so low. If the FED keep it this low for next 10 years, we will be all screwed. The house will boom, and people will be poorer (even you have a house, as you can't sell it.) The rich will be richer, and the poor will be poorer.

Eventually USA will becomes something like China. Super rich control most of the resources. Middle class disappears. There're only rich and poor. Everything is expensive (There're somebody can afford it).

 

[jamboreedude]

I worry about the interest rates. It's so low. If the FED keep it this low for next 10 years, we will be all screwed. The house will boom, and people will be poorer (even you have a house, as you can't sell it.) The rich will be richer, and the poor will be poorer.

Cklein, why can't you sell your inflated home under that scenerio?

 

[usctrojancpa]

I worry about the interest rates. It's so low. If the FED keep it this low for next 10 years, we will be all screwed. The house will boom, and people will be poorer (even you have a house, as you can't sell it.) The rich will be richer, and the poor will be poorer.

Eventually USA will becomes something like China. Super rich control most of the resources. Middle class disappears. There're only rich and poor. Everything is expensive (There're somebody can afford it).

I don't think rates are going anywhere, I think we'll see 1% on the 10-year bond before we see 3%.  If the 10-year bond goes to 1% and the FED buys MBS with QE3 then I think the 30-year fixed rates will be around 3% (I can't see them going much below that). 

 

[panda]

The bottom in irvine was back when the new 2010 woodbury collection was released. I don't think that rates will spike like had previously though but will gradually move higher with home prices as inflation comes into the picture. I ve always predicted that we will see deflation first than inflation. Gold and real estate is what you want to own to hedge against inflation. Unfortunately, if you are priced out to buy in irvine today, it is only going to get worse as mortgage rates will slowly rise with home prices.

In a deflationary environment, cash is king. In an inflationary environment, gold and real estate is king.

Just my .02 cents.

 

[Cklein]

You need a place to live. Unless you have two houses.

I worry about the interest rates. It's so low. If the FED keep it this low for next 10 years, we will be all screwed. The house will boom, and people will be poorer (even you have a house, as you can't sell it.) The rich will be richer, and the poor will be poorer.

Cklein, why can't you sell your inflated home under that scenerio?

 

[usctrojancpa]

The bottom in irvine was back when the new 2010 woodbury collection was released. I don't think that rates will spike like had previously though but will gradually move higher with home prices as inflation comes into the picture. I ve always predicted that we will see deflation first than inflation. Gold and real estate is what you want to own to hedge against inflation. Unfortunately, if you are priced out to buy in irvine today, it is only going to get worse as mortgage rates will slowly rise with home prices.

In a deflationary environment, cash is king. In an inflationary environment, gold and real estate is king.

Just my .02 cents.

We shall see, if you are right I'll be in good shape on the real estate part.  My stepdad mentioned the other day that he'll leave the gold bars that he owns to my mom and I so that covers me on the gold side.

 

[panda]

Trojan, remember when the dollar was at 72 last year april, I told u to short the euro. Now the dollar is at 83, and I am still heavily short the euro. Why? Because I saw deflation when Cnbc is screaming
Inflation.

If you diversify among gold, cash, and real estate.. You are crash proof in the years ahead.

 

[usctrojancpa]

Trojan, remember when the dollar was at 72 last year april, I told u to short the euro. Now the dollar is at 83, and I am still heavily short the euro. Why? Because I saw deflation when Cnbc is screaming
Inflation.

If you diversify among gold, cash, and real estate.. You are crash proof in the years ahead.

I'm working on building up the cash portion as I put a majority of my cash into buying and remodeling the home that I bought.  But I do tend to agree with you, we still need to work off the excesses so we will have more deflation than inflation in the near term.

 

[iphb]

So I was at an open house this past weekend... and the agent asked me what we were seeing out there during our home search and what we thought of the market.

I commented about the low inventory and low interest rates that are keeping prices from dropping where they should be but that prices are still going down somewhat depending on where the property is.

What surprised me is he said that the conditions now mirror the conditions prior to the last boom and that he thinks prices are going to explode again.

Is that the new twist on "Buy now or be priced out forever!"?

If the peak of the boom was 2006, and real estate moves in 7-year cycles... is 2013 the next uprising? I doubt it... but then again... no one thought interest rates were going to be 3.x right now... and many thought all Irvine real estate was going to take at least a 40% dump and be at 1999 prices and that a foreclosure and Option ARM tsunami was going to wipe out Irvine.

I can see prices going up, if and when new inventory adds to the market and demand stays strong. With this demand coming mostly from investors, once prices start going up it may not be long before things start getting speculative and investors start flipping like back in the last bubble. And that's when we could be seeing a whole new bubble.

I heard someone from the mortgage industry say that mortgage rates are likely not going to fall much further because they're already close to the point where banks don't find it feasible to service loans from a business standpoint. The Fed isn't being public about this but I'm sure they're worried about what could be diminishing returns from more monetary easing, despite the pressure they're getting to launch a new round of QE.

 

[usctrojancpa]

So I was at an open house this past weekend... and the agent asked me what we were seeing out there during our home search and what we thought of the market.

I commented about the low inventory and low interest rates that are keeping prices from dropping where they should be but that prices are still going down somewhat depending on where the property is.

What surprised me is he said that the conditions now mirror the conditions prior to the last boom and that he thinks prices are going to explode again.

Is that the new twist on "Buy now or be priced out forever!"?

If the peak of the boom was 2006, and real estate moves in 7-year cycles... is 2013 the next uprising? I doubt it... but then again... no one thought interest rates were going to be 3.x right now... and many thought all Irvine real estate was going to take at least a 40% dump and be at 1999 prices and that a foreclosure and Option ARM tsunami was going to wipe out Irvine.

I can see prices going up, if and when new inventory adds to the market and demand stays strong. With this demand coming mostly from investors, once prices start going up it may not be long before things start getting speculative and investors start flipping like back in the last bubble. And that's when we could be seeing a whole new bubble.

I heard someone from the mortgage industry say that mortgage rates are likely not going to fall much further because they're already close to the point where banks don't find it feasible to service loans from a business standpoint. The Fed isn't being public about this but I'm sure they're worried about what could be diminishing returns from more monetary easing, despite the pressure they're getting to launch a new round of QE.

Those mortgage folks were probably saying the same thing when rates were at 4% and we keep bleeding lower but yeah I think we are close to the floor in rates.  I agree with you about the FED that's why they won't do QE3 until there is some shock (like 10-20% drop in the stock market).  Btw, prices are going to need to price by at 10% for it make sense for flippers to start unloading their inventory which may not happen for a bit.

 

[jamboreedude]

You need a place to live. Unless you have two houses.

I worry about the interest rates. It's so low. If the FED keep it this low for next 10 years, we will be all screwed. The house will boom, and people will be poorer (even you have a house, as you can't sell it.) The rich will be richer, and the poor will be poorer.

Cklein, why can't you sell your inflated home under that scenerio?

Can always find a cheaper home in another part of the country though.