What the bubble?!?

[nosuchreality]

That doesn't mean that a fixer upper that was built in the 1970s should expect to get that pricing - that's ridiculous.  But a properly maintained home built 2000 or later seem to get that pricing.

Turtle Rock is ridiculous then. Many closings over $500/sft, even over $600/sft... and most built in the 70s with tons of work needed to be done.

Maybe I'm just closer to this because I'm shopping in these places with over inflated prices.

Whether or not the $500/sf is sustainable is dependent on several factors.

Irvine's continued explosive population growth.
Continued constrained supply.
Continued low cost of money.
and
Continued growth in household income, particularly at the high end.    Think about, there are currently 234 homes for sale for more than $800K.  That's only 4X the income of 11,395 households.    Or basically, 2%.

Or think about it from a growth stand point, Irvine grew by 6000 households last year.  At 13.7%, that's 800 new households with incomes over $200K, 4X the amount current for sale over $800K.

 

[zubs]

All my flipper friends including the one who sold his restaurant to start flipping have begun doing remodeling jobs.  There are no cheap houses to flip anymore.  Every flipper wants a cheap fixer upper.

If you want to remodel, now is a good time since the flippers have no work.

 

[ak]

That means the sellers pricing is geared toward people who believe it to be equal to or better than other offerings at lower price points (per sq. ft).


For homes that need work (e.g., knock down and re-builds), that is ridiculous pricing.  Personally, i don't see the justification, as those homes are not as nice as Turtle Ridge, yet cost either the same or marginally less (based on your valuation).  Again, if someone says that the HoA is $495 / mo at TR, and that stops them, then they shouldn't be shopping at that price point.  That's like buying a Lexus and then complaining that the oil changes cost >$100.


Yet, someone will pay a premium for Turtle Rock for an aging building in non gated neighborhood.  Good luck to those buyers trying to re-sell it - the market for them is going to be limited to folks who have a hard on for turtle rock.  As you are seeing, the market at that price point is shifting toward larger floor plans with modern amenities (LR, La Cresta and soon OH and HC). 

What does HC stand for?

 

[Irvinecommuter]

So 5-8 years ago $400-$500/sft was not okay... but today it is?

But only for Irvine... because that's not what it is in Santa Ana.

Stupid Unicorn.

Yep - but until folks desire one at the same level as the other- it will continue to be that way.

Just like the same size homes in Brentwood and Pacific Palisades cost more per sq. ft than Riverside and Fontana.

Exactly...it depends on if you view Irvine as a desirable place to be.  A lot of people do.

 

[irvinehomeowner]

What does HC stand for?

HeroClix.

Just kidding... Hidden Canyon - Tyler's future home.

 

[ak]

What does HC stand for?

HeroClix.

Just kidding... Hidden Canyon - Tyler's future home.

Thanks.  But where is Hidden Canyon?  Is this another TIC village in Irvine?

 

[irvinehomeowner]

It's Hidden.

South of Laguna Altura... south of Lake Forest... you can see them grading it as you go up/down the 133.

PM NYT for photos.

 

[nosuchreality]

So 5-8 years ago $400-$500/sft was not okay... but today it is?

But only for Irvine... because that's not what it is in Santa Ana.

Stupid Unicorn.

Yep - but until folks desire one at the same level as the other- it will continue to be that way.

Just like the same size homes in Brentwood and Pacific Palisades cost more per sq. ft than Riverside and Fontana.

Exactly...it depends on if you view Irvine as a desirable place to be.  A lot of people do.

I really think supply is the bigger issue.  I think Irvine has a large number of households with high incomes that feel like they should be able to have a nice 4 bedroom SFR.  There are less than 100 for sale for under $1.5 Million.

More importantly, there are twelve (12) for sale for $800K or less.

The key to Irvine's market is slaking the thirst for the homes the 11,000+ households with $200K+ incomes feel they should have. 

Once they get choice through new supply, dying supply or some other method so that they quit raising the bar on everything, then the market will turn.  Not before. 

The key is that chart, and like the bubble downfall, inventory needs to give buyers a breather and key to that breather is the number of large SFRs for sale.  Right now, there are only 46 for sale under a million, a psychological level, of those 1/3rd have been for sale more than 60 days,  in a market were days to offer has been almost measured in hours.

There are an additional 49 homes between $1M & $1.5M.  Of those, 11 have been for sale more than 100 days, that's 22% of the listings.  Another 10 are more than 60 days, that's another 20%

I chose $1.5M because household incomes thins quickly going north of $200K.

 

[irvinehomeowner]

I think i'm done with Irvine in a few years...sinc[font=verdana, arial, helvetica, sans-serif]e i cannot justify that price for a home without an ocean view.[/font]

Yes... non-fundamentals at work.

 

[jamboreedude]

What does HC stand for?

HeroClix.

Just kidding... Hidden Canyon - Tyler's future home.

At the rate prices are going in Irvine (HC and OH will likely start at $2M and then go up to $2.5M when you add in lot premiums, upgrades and landscaping), I'll either move further south and closer to the water (in Dana Point or San Clemente) with a smaller mtg or decide i want to keep working forever, and sell so i can move to Laguna or Newport. 



I think i'm done with Irvine in a few years...sinc[font=verdana, arial, helvetica, sans-serif]e i cannot justify that price for a home without an ocean view.[/font]

You seem to have a lot of time here on TI, are you semi or fully retired now? 

 

[irvinehomeowner]

I also think you guys are missing something... WHY is the demand so high in Irvine? No water, no real elevation.

These were the things being argued before about why Irvine's prices were so high and that they would not fall (overall) as far as everywhere else.

 

[nosuchreality]

I also think you guys are missing something... WHY is the demand so high in Irvine? No water, no real elevation.

These were the things being argued before about why Irvine's prices were so high and that they would not fall (overall) as far as everywhere else.

Depends on your time horizon.  Why is demand high? It's actually low.  Irvine has close to 100k households and a 60% owner occupancy rate.  At the Aept sales volume that means each current owner occupied household gets to move once every twelve years

The other issues are jobs.  Irvine is a working community.  Irvine is land locked and choked off much like NYC has its bridge commuter choke points. Irvine has the crush, seal beach curve and 405 through HB and the 5 Through the  Y.  Commuting to irvine from beyond its immediate neighbors turns suck really fast. 

The other major reason is the rest of OC is significant suck too. There are pockets of very nice  But pocket is the operative word.  Irvine is a nice fairly uniform level of nice from te new homes to the new food schools to te new retail shopping.  The rest of oc, pockets

In ten years, $500/sf will be like $250-$300/sf today.

 

[irvinehomeowner]

I agree with you NSR, but here is another comment about Irvine from way back:

Irvine is not special.

 

[nosuchreality]

I agree with you NSR, but here is another comment about Irvine from way back:

Irvine is not special.

Who is the investor that said the market can be irrational longer than you can be liquid?  That's the irvine housing market

There's a bunch if things that could crush that $500 back to reality. But I don't see them happening soon

Many bears were wrong from way back including me. Even when we were right.  But until rates of return get realistic, housing will be hot

 

[jamboreedude]

why spend $2M to live in irvine, when you could live here:


http://www.redfin.com/CA/Laguna-Beach/338-Lewis-Ln-92651/home/4886994


If i could convince the wife to sell, i'd move in a heartbeat

You want to live your life like Ted Kaczynski?  ;D

 

[zubs]

Can you imagine trying to get groceries when the 133 is backed up to Laguna Altura?

 

[abcd1234]

Or taking elementary school-aged kids to Top of the World Elementary.

 

[abcd1234]

It's a long drive up.  It doesn't seem like you have kids as you don't mention them in posts, but when you work and have to get the kids to school on time and get to work on time, having an easy way to get there makes all the difference in the world.

 

[nosuchreality]

It's a long drive up.  It doesn't seem like you have kids as you don't mention them in posts, but when you work and have to get the kids to school on time and get to work on time, having an easy way to get there makes all the difference in the world.

If you have to work, you don't live in Laguna Beach.  It's not a money issue, it's a it takes forever to get anywhere issue.

 

[abcd1234]

That's nonsense.  There's plenty of friends I know that live in Laguna Beach and work.  That house isn't even that great- it's just cheap.  That's a family house.