What the bubble?!?

[Irvinecommuter]

We got in at the back end...the price jump in the past 4-5 months has been pretty mind boggling for new homes.

That's more to what I'm talking about.

Seems like it was a big jump rather than a gradual one.

I recall it this way because home prices were still relatively low during the latter part of 2012.

So to those who are discussing, it does seem like a price jump to match the last bubble, but not really a bubble because these prices are supported by fundamental/economical reasons?

So based on all the fact finding, what is the outcome of this discussion?  Are you going to buy a home now or wait for prices to continue rising due to low interest rates?

It's a really tough dilemma...I'm glad I'm not in the market anymore.  Prices will likely stay stable or maybe even drop a little but with increasing interest rates, it won't really matter for affordability sake.

Also, new guideline in 2014 are going to make getting loans even more difficult.

 

[irvinehomeowner]

So based on all the fact finding, what is the outcome of this discussion?  Are you going to buy a home now or wait for prices to continue rising due to low interest rates?

This thread wasn't about whether I should buy a home now or later... just what has everyone observed about prices recently.

I posted this in April and the majority of the respondents felt it was a mini-bubble that would pop in several months... and 7 months laters, prices are still high (at least to me in the segment I am looking). It does seem like it's flattening out but not sure if it's deflating.

I thought rates were higher than they used to be... which is why things leveled off a bit.

Also, new guideline in 2014 are going to make getting loans even more difficult.

What are you referring to? I'm not in the mortgage business so this is news to me.

 

[Irvinecommuter]

So based on all the fact finding, what is the outcome of this discussion?  Are you going to buy a home now or wait for prices to continue rising due to low interest rates?

This thread wasn't about whether I should buy a home now or later... just what has everyone observed about prices recently.

I posted this in April and the majority of the respondents felt it was a mini-bubble that would pop in several months... and 7 months laters, prices are still high (at least to me in the segment I am looking). It does seem like it's flattening out but not sure if it's deflating.

I thought rates were higher than they used to be... which is why things leveled off a bit.

Also, new guideline in 2014 are going to make getting loans even more difficult.

What are you referring to? I'm not in the mortgage business so this is news to me.

Most lenders will be using CFPB standards to help cut off liability

The new lending rules will limit people from taking out a mortgage or refinancing an existing one that puts their overall household borrowing at more than 43 percent of their income. That new debt cap also includes a wide swath of common forms of debt that count toward the total, including student loans, most fees and points related a home purchase, and property taxes. It also tightens rules on documentation, and lenders who improvise to give customers easier terms will be open to consumer lawsuits if the loans go bad.

"It will tighten things further. The largest constraint is the 43 percent threshold," says Sam Khater, senior economist at housing data provider CoreLogic. "It will hit more refinances than purchases because a lot of them use a high debt-to-income ratio. It will also hurt home borrowers in distressed environments."

http://homes.yahoo.com/news/tighter...squeeze-these-groups-even-more-005538769.html

 

[irvinehomeowner]

Most lenders will be using CFPB standards to help cut off liability

The new lending rules will limit people from taking out a mortgage or refinancing an existing one that puts their overall household borrowing at more than 43 percent of their income. That new debt cap also includes a wide swath of common forms of debt that count toward the total, including student loans, most fees and points related a home purchase, and property taxes. It also tightens rules on documentation, and lenders who improvise to give customers easier terms will be open to consumer lawsuits if the loans go bad.

"It will tighten things further. The largest constraint is the 43 percent threshold," says Sam Khater, senior economist at housing data provider CoreLogic. "It will hit more refinances than purchases because a lot of them use a high debt-to-income ratio. It will also hurt home borrowers in distressed environments."

http://homes.yahoo.com/news/tighter...squeeze-these-groups-even-more-005538769.html

Heh... that won't affect the FCBs in Irvine.

And I think the people who can finance today, don't use a 43% back end (isn't 36% the standard?).

 

[Ready2Downsize]

So based on all the fact finding, what is the outcome of this discussion?  Are you going to buy a home now or wait for prices to continue rising due to low interest rates?

This thread wasn't about whether I should buy a home now or later... just what has everyone observed about prices recently.

I posted this in April and the majority of the respondents felt it was a mini-bubble that would pop in several months... and 7 months laters, prices are still high (at least to me in the segment I am looking). It does seem like it's flattening out but not sure if it's deflating.

I thought rates were higher than they used to be... which is why things leveled off a bit.

Also, new guideline in 2014 are going to make getting loans even more difficult.

What are you referring to? I'm not in the mortgage business so this is news to me.

Most lenders will be using CFPB standards to help cut off liability

The new lending rules will limit people from taking out a mortgage or refinancing an existing one that puts their overall household borrowing at more than 43 percent of their income. That new debt cap also includes a wide swath of common forms of debt that count toward the total, including student loans, most fees and points related a home purchase, and property taxes. It also tightens rules on documentation, and lenders who improvise to give customers easier terms will be open to consumer lawsuits if the loans go bad.

"It will tighten things further. The largest constraint is the 43 percent threshold," says Sam Khater, senior economist at housing data provider CoreLogic. "It will hit more refinances than purchases because a lot of them use a high debt-to-income ratio. It will also hurt home borrowers in distressed environments."

http://homes.yahoo.com/news/tighter...squeeze-these-groups-even-more-005538769.html

Not everyone pays cash and this might have the effect of reducing demand if it significantly reduces buyers ability to buy higher priced homes........ limiting builders and sellers ability to raise prices.

 

[nosuchreality]

What exactly is the segment for which you're looking?

I sense, newer build (post 2000, hopefully not post 2005?) , true SFR (including real driveway), larger (2000+ sf or maybe 2500+ sf?), 4+ bedroom, 2.5+ bath not on a postage stamp lot (so 6500+ sf lot)  under $2 Million?  If you're open to the plus $2M tag, that's a very different market.

At post 2000 build, 4 Bd SFR, on 6500sf lot under two bills or larger is the cherry.  It represents maybe 5% or less of the housing stock in Irvine.  There have been 54 sales in the last year out of 3230.  That's mighty close to 1% of the sold house stock.

If you're willing to go down to a 4500 sf lot, you get a bigger grouping, 167 sold units over the last year.  That's 5% of the housing stock. Really that's barely 15 a month.

Or greater concern, there's only 22 for sale. If you want the bigger lot (6500 sf+), there's six for sale.  6.

That's important for one major reason.  IMHO, roughly 40,000 of the households in Irvine consider the above a desirable home.  Of those 40,000 households, 10,000 of them currently have the financial means to buy it if it's under a million.  Pushing two million, and 5 of the 6 are north of $1.5M, that thins considerably. 

But really 6 homes to buy from, you can double it if you can go up to 3 bills.

That's the nutshell, 6 homes for sale, probably 3000 households considering a desirable property and with the financial means to buy it.

 

[socal78]

Iho, I'm just curious if you have zeroed in your search to a particular tract or even village which by now you know for certain you will buy in. Or is the answer as unsure today as it was five years ago??

 

[bones]

[.

 

[nosuchreality]

This is depressing for homebuyers looking in this segment.

Yes it is, it's one of the primary drivers that had me looking outside of Irvine.  With 13.9% of the households having incomes north of $200K, and those households are predominately families of 4 or more people (and 5, 6,or 7) is common, that while you may have an income in the top 2% nationally, you barely break the top ten percent in Irvine.

Due to the building patterns, the types of home you want, represent around 2% of the build.  We realized we simply couldn't compete for the homes we wanted.  A nice place in Turtle Rock in the Summits, IMHO, you need a income north of $500K if not north of $750K to compete for the few that will come for sale.

Look at the map for Orchard Hills, the big lots sections O&P, from a rough eyeball count represent  about 2-3% of the plan build units for OH. 

Simple demographics, where's the 2% income level start in Irvine?  Well, nationally, 2% of households have incomes around $250K, by $1 million, that's 0.5%.  In Irvine  you need to scale that to Irvine's 13.9% making more than $200K.  I'm fairly comfortable hazarding a guess that somewhere around 2% of the households in Irvine are pulling a $1 Million a year.

The next 2% down is area N on the chart.  The next 2% down from an income standpoint are probably north of $500K, comfortably.

Now you've got that solid mass of 4-5% making between $250K and $500K, to fight over the more desirable units in areas B-M.  With another 4-5% breathing down their necks from the $200K-$250K range.

Then the tsunami hits, with 11.5% more coming in the $150-$200K range.

It's an unfortunately reality of Irvine, if you're not making north of $500K, give up your dreams of buying a large lot.  Sadly, that number is moving up quickly towards a million.

 

[irvinehomeowner]

Iho, I'm just curious if you have zeroed in your search to a particular tract or even village which by now you know for certain you will buy in. Or is the answer as unsure today as it was five years ago??

I prefer the older hoods because of the multiple first floor living spaces (living/dining/nook/family/br/den down) but have been looking at certain new ones (some of the floorplans have a flex space or additional dining room).

I would still prefer to be in the southern part of Irvine but homes there are about $100-200k more than the same homes in northern Irvine (3CWGs for example).

 

[irvinehomeowner]

@nsr:

Where did you get that 13.9% figure? Back during the IHB days, no one would believe me when I said that Irvine income is under-reported.

 

[nosuchreality]

@nsr:

Where did you get that 13.9% figure? Back during the IHB days, no one would believe me when I said that Irvine income is under-reported.

Same place I always pull my income numbers, the census.  Census Link  Sorry, can't make that link work right.

I posted that back a few pages, you can watch the income distribution skew north from the census numbers.

And don't freak yourself out when you look at it and see there are 47,000 families in Irvine and 17.9% make more than $200K.

 

[bones]

.

 

[Irvinecommuter]

@nsr:

Where did you get that 13.9% figure? Back during the IHB days, no one would believe me when I said that Irvine income is under-reported.

Same place I always pull my income numbers, the census.  Census Link  Sorry, can't make that link work right.

I posted that back a few pages, you can watch the income distribution skew north from the census numbers.

And don't freak yourself out when you look at it and see there are 47,000 families in Irvine and 17.9% make more than $200K.

Here are the official numbers: 
http://factfinder2.census.gov/faces/tableservices/jsf/pages/productview.xhtml?src=bkmk

17.9% of families make over $200K
14.6% make between $150,000 to $199,999

Mean family income is:  $134,346

 

[FranchisePlr]

What's the general rule of thumb?  If your annual household income is $200,000, you should be able to afford a $600,000 home, right?

I know it's very general and DTI and stuff like that come into play, but isn't it something like 3x your annual income?

 

[irvinehomeowner]

I would say the mean (and average) is higher only because of a large student, foreign and elderly population that skews the numbers lower.

If students are living in a house, what it the reported income for that house? Or a family of a foreign businessman who stays abroad?

So nsr, I'm not sure but are you saying that the current prices in Irvine are fundamentally/economically supported?

 

[irvinehomeowner]

What's the general rule of thumb?  If your annual household income is $200,000, you should be able to afford a $600,000 home, right?

I know it's very general and DTI and stuff like that come into play, but isn't it something like 3x your annual income?

I think that formula gets wonky depending on type of financing, rate etc.

If you base it on 3x... then Irvine is REALLY overpriced.

 

[Ready2Downsize]

What's the general rule of thumb?  If your annual household income is $200,000, you should be able to afford a $600,000 home, right?

I know it's very general and DTI and stuff like that come into play, but isn't it something like 3x your annual income?

I think that formula gets wonky depending on type of financing, rate etc.

If you base it on 3x... then Irvine is REALLY overpriced.

If you base it on that then most of us couldn't afford anything decent in the OC.

To get to $200K is not THAT difficult.

An RN can make $80K or more. Add in an engineer and maybe stock options and voila........ $200K easy.

But those making $200K are paying for child care, after school programs, college, school loans etc and pay a good chuck of change in taxes.

I doubt people just wake up and say oh gee........ I think I'll buy a $1.5-$2 million home in Irvine now that I saved up the down payment. Non cash buyers are likely move up buyers.

 

[irvinehomeowner]

3x rule for $200k households can buy you stuff in OC.

You can get a 3CWG in Foothill Ranch:
http://www.redfin.com/CA/Foothill-Ranch/34-Montecilo-92610/home/4800072

 

[FranchisePlr]

House with vaulted ceilings and Street Fighter II Champion Edition.  Where do I sign?