Touring Irvine. Are these builders out of their mind? JUNK for $ 1 mil???

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Gemini_IHB

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Started touring some Irvine builders, Woodbury, Portola ...etc.

Basically no price declines in the last 3 month (sincew we last toured).



Are these guys selling or what? Or maybe just wishful thinking?

Any one out their mind buying at these prices?



Total JUNK getting sold for >1 mil dollar... Are you kiddning me?

Villa Rosa, > 1mil.. WHAT?

It is just a fancy apartment in the middle of the irvine desert.



Honestly, I am speachless.

I would not touth ANY of this stuff till another 30% decline. Even then, it would be a hard sell for me.



I would continue retning in the breazy newport beach for now, keeping my money for future stuff.

Very likely I will drop off Irvine from my list completely. Newport Beach, Newport Coast, Maybe Turtle Ridge at best.



Is anyone here as surprised as me?

How are these buyers holding these prices?

How come morons are still getting financed?



Gemini
 
It's even more ridiculous if you have the perspective of a former resident from the 80's. For those kinds of prices, I expect ocean views and boat docks.
 
This last weekend I went to some open houses in West Irvine. One realtor was shameless enough to say "You should try and buy the home now because lending standards are loose and you can still get a home with lower income". There is so much kool aid out there amongst realtors that it is unbelievable. Untill the greater fools stop buying, the realtards are going to keep hoping to capture the next greater fool.
 
<p>$1 million homes are not what they used to be. </p>

<p>I remember when I was growing up that million dollar homes were mansion custom made for the super rich not what is being sold today (At least it seemed that way)</p>
 
Either lower prices are coming, or no new homes will sell in Irvine...





<a href="http://calculatedrisk.blogspot.com/2008/03/nahb-on-housing-deepest-most-rapid.html">NAHB on Housing: "Deepest, most rapid downswing since the Great Depression"</a>

<p>From MarketWatch: <a href="http://www.marketwatch.com/news/story/housing-deepest-most-rapid-decline/story.aspx?guid=%7BA811AA1E%2DD0D3%2D4AA8%2D917C%2D95F7F154AA08%7D">Rapid deterioration</a> </p>

Housing is in its "deepest, most rapid downswing since the Great Depression," the chief economist for the National Association of Home Builders said Wednesday, and the downward momentum on housing prices appears to be accelerating.





The NAHB's latest forecast calls for new-home sales to drop 22% this year, bringing sales 55% under the peak reached in late 2005. Housing starts are predicted to tumble 31% in 2008, putting starts 60% off their high of three years ago.





"More and more of the country is now involved in the contraction, where six months ago it was not as widespread," said David Seiders, the NAHB's chief economist, on a conference call with reporters. "Housing is in a major contraction mode and will be another major, heavy weight on the economy in the first quarter."


...


Vacant homes for sale in the U.S. now number about 2 million, Seiders said, an increase of 800,000 from 2005. There were 774 thousand new homes sold in 2007, so a 22% decline would be about 600 thousand in 2008. Last month there were 588 thousand new homes sold SAAR (seasonally adjusted annual rate). So Seiders thinks sales are near the bottom.





There were 1.35 million starts in 2007 (including apartment, condos, and owner built units), and a 31% decline would be about 934 thousand in 2008. Last month there were 1,012 thousand starts SAAR - so Seiders sees a further decline in starts.
 
"Maybe a million dollar is not worth as much anymore? "



Well, if I am making 1/4 of this, and still cannot afford it (unless I become house poor), then who is buying these fancy apartments?



Maybe I have the wrong career (to live in Irvine)?



So what I need to be then to live in Newport Beach? A CEO?

Or maybe I need to be Bil Gross of some kind?
 
<p>It's a free market. We are free to choose. No one is forcing us to buy in any particular locale. If one makes 250k annually and feel that the local market is overprice. Then what is one to do? One can sit it out until prices drop to one's liking or affordability. Maybe if everyone wait and not buy, inventory will skyrocket. Consequently, forcing the price downward. The basic theory of supply and demand. </p>

<p>If waiting is not an option then there are other routes to take. Maybe commute to Riverside and buy a huge home for less. Get a bigger bang for your dollar. And there's always other less desirable nearby cities to choose from where prices are more affordable. Why not consider that? </p>

<p>If one can't afford a Porsche then there's always a Huyndai, right? </p>
 
Porsche is Newport Beach, Huyndai is Irivne.

That is the problem.



Anyway, I agree with you, it is a free market, and I will choose to buy the Porsche (Newport Beach) as compared to Huyndai. It is much better bang for the buck (at these Huyndai prices).
 
It is a matter of bang for the buck. I prefer to down size my invetments and other expenses and buy in Newport Beach, or find something affordable in Irvine. Since Irvine is the expensive Huyndai it is, I would (no brainer) opt for Newport Beach.



And I agree, Newport Beach is Bill Gross expensive, but that is a Porsche. It is worth the pinch.
 
The problem is the Irvine company has the final say on what the builders can sell thier homes for. As a result the Irvine company has renegotiated the contracts so the builders can sell for less but how many times can they do this, and if you want to build in Irvine you just have to grin and bear it. So yes prices are out of wack and they are not selling many homes if at all right now.
 
I'm confused about what homes builders are actually trying to sell. There are models built and available to tour but there appears to be no construction going on at all. So are they trying to sell homes that are already built or are they trying to sell homes that will be built 3 years from now?
 
"I wouldn't worry much...the $1mm won't last much longer since non-confirming 30yr is around 8%-8.5%"



I have a question about your comment: I understand that "conforming" loan must have

1- 20% downpayment

2- Good FICO score

3- 3x income



But what I feel is that, many lenders (specially in OC) can still lend you without these three requirements with almost conforming interest rate (5.8%)

Is this true? Are you saying that all buyers now are paying 8% interest if they are not conforming?

Are all buyers actually putting 20% down, otherwise pay 8% interest?



Gemini
 
Gemini, I made that comment because most if not all Irvine purchased SFR will be the non-conforming type ($417k+)





In this current environment...banks don't want to lend period!





If you find a lender for 6%...awesome, lock it up...if you can...I don't know how they'll be able to resell the loan on the open market.
 
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