Stonegate...???

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irvinesinglemom_IHB

irvinesinglemom_IHB

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Why all the TIC silence about Stonegate? There has been lots of construction activity there recently, seeming to me at least to be comparable to Orchard Hills, and yet there have been no PR announcements about Stonegate (that I have seen, anyway). Driving down Sand Canyon after making the left off of Portola, it is apparent that Stonegate occupies a rather large area of land, smack dab in between Woodbury and Portola. So why isn't TIC talking about it??? Any insiders care to share?
 
Wish I knew. I was curious about it as well. Nothing on the TIC site. Although... I recall that I was coming down Portola one day about two years ago and there was a sign about Portola Springs. I was really curious and there was nothing on TIC's website. So I e-mailed them and asked. I don't recall if I received a reply, but that sign was gone the following weekend.





The only thing I know about Stonegate was what I was able to figure out from the public documents available on the City's website.





Here's the long-butt URL that will run the search for you:





http://search.yahoo.com/search?p=stonegate+site%3Awww.ci.irvine.ca.us%2F&adult_done=http%3A%2F%2Fsearch.yahoo.com%2Fsearch&adult_cancel=http%3A%2F%2Fsearch.yahoo.com%2Fweb%2Fadvanced&_adv_prop=web&ei=UTF-8&vf=all&vm=i&fl=0&n=10&fr=yfp-t-501&_bcrumb=ffdea32d3b84a196bd0e0d63a20cf316%2C1170622583


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TIC has demonstrated themselves to be at the forefront of urban planning, IMO. Because they have complete control over much of Irvine, they can restrict and release lots as they deem fit with absolutely no worries on carry cost since they pretty much own all of Irvine. I think that is the reason why Irvine has been able to withstand cycles a little better than the surrounding cities--because when demand/market goes down, TIC delays release of lots and requires their builders to uphold prices as much as possible (whereas Lennar and Lyon at the Marine Base need to get out fast b/c of carry cost) to prevent values from being significantly affected. If you study the past two cycles (80's and 90's) by city, you will notice that Irvine values were not as impacted--sure, prices went down, but they did not plummet. So if current senior mgmt is smart, which I am sure they are, they are not going to flood this market with another master plan until they get further along with Portola and Orchard.
 
<p>So basically, what I am trying to say is that although Irvine is not immune to the overall cyclical nature of the industry, it does have a better chance of surviving this downturn without significant deterioration in value. I've been reading alot of posts and comments on these blogs and saw many commenters stating things such as "beautiful condo, I would buy it in '09 for $150K" of "beautiful 2000 sf home, I would buy it in '08 for $300K." Well, I hate to be bursting these "bubbleheads'" bubbles, but there is very LITTLE likelihood of that happening. The majority of the people living in Irvine and Newport Beach are very affluent. There is new money AND old money--all kinds of money everywhere. I know multiple people that own multiple homes and have no intentions of selling any of them, even though they are losing equity as we speak. These people make intelligent investment decisions and have the financial power to withstand cycles and I can assure you that before prices dip down to $150K for a condo in Irvine, they will have been purchased by those that can afford to. You need only see what is happening with this 10% correction right now--people are lining up to buy the homes. </p>

<p>So when you are analyzing the Irvine housing market, this is something you should keep in mind. Is affordability an issue? Yes. Were there some that stretched themselves too thin and made asinine decisions? Yes. Do these people make up a majority of the Irvine population? I don't think so. Will there be foreclosures where you can get a steal? Probably. Will these foreclosures dictate the entire housing market prices for Irvine? I don't think so--those that don't need to sell will not, and I believe these people account for the primary population in Irvine. Remember, South OC is an affluent area. There are many people that have incomes far above the median. Most of those that had affordability issues to begin with moved to the Inland Empire over the last 5 years. So, is there a further correction? Possibly. Will that price correction be an additional 30% to 50%? I am willing to bet that it WILL NOT. </p>
 
<p>I think that the idea that Irvine Company's control over development will keep Irvine prices afloat is based on faulty economic reasoning. Irvine prices may fall less than the rest of OC, but if so it will be for other reasons such as demographic changes or an influx of newer, nicer homes.</p>

<p>Home prices, like all market prices, are set by the marginal buyer. In this case, the marginal buyer is someone who is making a decision about whether to purchase in Irvine as opposed to Tustin, Costa Mesa, Mission Viejo, etc. Are there some affluent people who insist on Irvine and will pay any price to get it? Yes. I am even willing to conceed that such people may be a decent-sized percentage of the market (though I kind of doubt it). But by definition they are not marginal buyers and have a very small impact on prices. There are plenty of people at the margins (including investors) who are just looking for good value. If Irvine prices seem high compared to surrounding communities, some of these people will choose not to buy in Irvine. This exerts downward pressure on Irvine prices, because now the "buy Irvine at any price" people have less competion they have to outbid.


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<p>Your argument works if home prices in Tustin/Mission Viejo/etc. are materially lower than Irvine. This is somewhat true if you are looking at homes over 3000 sf. You can buy one in Ladera Ranch in the low $1M's. In Irvine, it will run you closer to $1.5M. Large comparable homes in Tustin and Costa Mesa will be even closer to Irvine in price. But the smaller homes are very comparable in price in the surrounding cities and those that do not want to sit on the 5 freeway for 1 hour each way from Ladera to the financial district near the airport will pay an additional $50K to live in Irvine. They would probably not pay $200K to have the shorter commute so, but about $50K? I think so. I would advise any one deciding where to live to compare the prices in detail for entry/mid level homes in these areas--the spread is not as great as you think. </p>
 
<p>sapporo,</p>

<p>I think you misunderstood the point I was making. Yes, I agree with you completely that the difference in prices of comparable homes between Irvine and surrounding cities is not very high. Some people have been saying that this relationship will break down if home prices in OC overall decline, and that Irvine will hold up while other places don't. What I am arguing is that this relationship will continue.</p>
 
Sapporo, I think the big question is just how wide can the spread become before Irvine gets caught in the downdraft. Looking at the market for the last six months, it's apparent that the spread is growing. Personally, I'll pay a premium for Irvine's location but there's definitely a limit. If I can get a small SFR in Mission Viejo for the price of an Irvine Condo, I'll put up with the commute. If the spread keeps growing, Irvine is going to start looking silly to the first-time buyer.
 
In that case, then I do agree that Irvine will not be able to command a significant premium over MV, Tustin, etc and will fall somewhat pari passu with its neighbors. I still think though that when this happens, there will be a premium, albeit not significant, to live in Irvine. Definitely not 20 or 30% but maybe 10% at this time? But something else to keep in mind is (not sure if you all heard) that recently, Mission Viejo approved 14,000 new homes just south of Ladera (which has about 8,000 homes so you can put that number in perspective). You can be sure once those homes come online, the commute from Ladera/south MV to the John Wayne area will graduate from bearable to just plain obnoxious. Similar to what living in Corona and commuting to OC is currently like I imagine. Anyway, don't want you all to get the wrong idea--I am conservative and bearish by all means, but after following this market obsessively over the last few years, I am getting closer and closer to the conclusion that if I continue to live in OC, I will not want to be anywhere but Irvine/Newport.
 
I agreewith oc_fliptrack. While TIC has the monopoly in Irvine, at some point, the principle of substitution comes to play. Mission Viejo, Ladera Ranch, Aliso Viejo, Laguna Beach/ Hills/ Woods/ Niguel among many other OC cities have just as high quality education, family-oriented communities as Irvine.
 
FWIW, a former colleague of mine who had a household income over $200K moved into Laguna Niguel rather than Irvine simply because of home prices. She and her husband could get more for the money in LN than Irvine, and that's what they did. I know other couples with similar incomes that have moved into large homes in Corona for the same reason. (Not what I would do, but to each his/her own.) People know what they want, and whether they will pay the Irvine premium remains to be seen.





And Sapporo, "in pari passu?" Time to stop drafting the financing documents and pick up a novel. It'll do you good. :)
 
Finally, more information on Stonegate! <a href="http://www.ocregister.com/ocregister/news/local/irvine/article_1620338.php" target="_blank">http://www.ocregister.com/ocregister/news/local/irvine/article_1620338.php</a>
 
Don't know why the link didn't work. Here's the entire article (it's short):



Another village coming along

Stonegate will join northern Irvine's Woodbury, Portola Springs and Orchard Hills.

By SONYA SMITH

IRVINE WORLD NEWS



Cement trucks, cranes and hard hats are part of the city's everyday life and it's hard to keep track of all the development. Especially in north and east Irvine, with Woodbury, Portola Springs, the Spectrum and the Great Park.

But, tucked just north of Woodbury will be another village for the city ? called Stonegate. Estimates, based on the number of homes, show a population of about 7,488. Last week, the village's park plans were approved by the Community Services Commission. The village's overall plans were included in the city's approval of plans for the Northern Sphere ? that includes Portola Springs, Woodbury, Stonegate and Orchard Hills. The Irvine Co. is scarce on the village's theme and architectural ideas, but has entitlement for 3,090 residences. Of those: 2,100 are for sale opening in mid-2008, 857 are rental and 134 are "affordable housing." The village will have 21.3 acres of parkland ? include three parks with junior Olympic pools, five parks with resort-type pools and a 6-acre public park that includes softball and soccer fields, a sand volleyball court, baseball and tennis fields, picnic and barbecue areas and a tot lot.

The village is also slated to include an elementary school.
 
<p>in case anyone is interested...


<a href="http://www.ocregister.com/ocregister/news/local/article_1634847.php" target="_blank">


http://www.ocregister.com/ocregister/news/local/article_1634847.php</a></p>
 
I just drove by stonegate the other day and noticed some kind of structure going up. I could not tell exactly what that was but I thought TIC had stopped all new development.
 
<p>I agree with the aforementioned thoughts that some would prefer to live withing close Irvine/Newport vicinity like MV, LNiguel and Ladera since the homes are better valued than Irvine. Some may even feel the lost of time on the freeway is worth the saving in cheaper prices.</p>

<p>Demographic of these consumer exodus is mostly Caucasians. Proximity to Asian retails, restaurants and market will continue to magnetized the interest of Asian home owners and buyers to stay in Irvine. Mission Viejo Company if you are reading this post incorporate Asian Markets and authentic Asian eateries into your centers. Keep those panda and dragon logos out. </p>
 
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