What's going into escrow - Irvine and maybe some Tustin too

NEW -> Contingent Buyer Assistance Program
<p>Probably a few reasons. One, these are examples of homes actually selling. They are priced closer to the market. Whereas, the 500k range homes you are looking at haven't come as much off the bubble pricing. Otherwise, you'd probably be buying. Two, land is a fixed cost, while construction cost is on a per sq. ft. cost basis. Third, one might say at lower home price levels there is a great population of possible buyers, though I'm not sure I agree. I wonder if it is the opposite that there are so many homes on the market in that price range, that RE agents (and sellers) are more able find similar properties with WTF pricing that can justify their own listing prices.</p>
 
That's probably true, the houses that I'm looking at are overpriced and nobody's buying. I saw one being reduced from 600 to 450 and it went into escrow in 2 days. That made me wonder will all the nearby sellers follow suit and lead to a bidding war. :) but so far no one else has reduced.
 
<em>"I don't belive the comps of those homes will drop $250 sq ft. ( you might see seveal selling a very low price, but that won't define the trend unless you see a lot)."</em>





This is an interesting form of market denial. I spoke with someone who went through the 90s correction in Irvine, and he said the value of his home did not drop. When I asked him if he had to sell during this time would he have sold it for less than its "value," he said yes. It is just like the statement above as if there is a difference between a homes "value" and what it would sell for on the market. There isn't. A property is only worth what someone will pay for it in the open market. If comparable properties are selling for $200 / SF, that is the value of homes.





The mantra of knife catchers who survive the downturn is <em>their </em>home did not drop in value. It is more emotionally satisfying to believe this distortion of reality than it is for people to admit they overpaid and were a knife catcher.
 
IR,



After I typed the comment you quoted, I told myself that you will be making the comments above!



I completely agree with you that price of the property will only be determined by someone who is willing to pay. However, just because there is one house in the same track sold for a record low due to foreclosure , that doesn't mean all the houses will be sold at that record low: not many people "have to sell", and not everyone views the housing market as you view it. There are many people just want to a house to live in, and not wanting to wait for the bottom. the last time I checked, the volume are down, but not down to zero. You can call them all stupid / knife catcher/ etc - and I happen to know several of those "stupid knife catcher" who happen to be well educated top executives of fortune 200 companies.



For renters, I think it is also emotionally satisfying to believe that not buying 5 to 7 years ago is the greatest decision they ever made. For those who sold at the peak while waiting on the side line to get it, it is emotionally critical to believe the market will down deep. Otherwise, their intelligence will be questioned, their financial ability will be questioned. Everyone need to have some hope. For the owners, we hope the market won't drop too much. For the renters, they hope the market to go to a tail spin.



Good luck with your $200 sq ft hope in nice part of Irvine. When that happens, I will change Shandy Canyon to my private ranch.



My analysis doesn't show 1999 / 2000 price is in any forms of bubble. Considering modest appreciation, the right price for an average Irvine house in good location should be between $250 to $300. Only time will tell who is in denial here.
 
<p>waiting - Couple of thing to consider here. #1, there are a great many places going for sub $400/sf. My place has dropped to around $350-360/sf. It's 1622sf 3/2.5 in West Irvine. Peak pricing was around $450/sf. Per square foot prices are not a complete measure. They will tend to trend up as the unit size declines. For example, in West Irvine, you can get a 3000sf place right now for $300/sf. 2200sf places around $325/sf and 1600sf places for around $350-360/sf. Per sf prices are not linear so don't get dialed in to them too much...</p>

<p>When people talk about bottom in per sf terms, they necessarily indicate on what size house they are discussing. For example, I think bottom will be another 20% or so. That'll mean $500K should get you a 1600-1800sf place. That's just my opinion though and I am one of the least bearish you'll find on the board. </p>

<p> </p>
 
Who are these people who can afford houses for 900k??? I come from a family of physicians and none of them would ever buy a home for 900k to 1 million.
 
<p>CK - the flat screen in the garage is a given. I have a regular ole TV mounted up on the wall in the garage now on one of those swiveling deals so I can watch games and the kids playing at the same time. </p>

<p>In IPO's fantasy garage, there is a full-sized fridge (forget mini), HD flat panel, and a computer of course. I spent my teenage years in the garage, tinkering on my '69 Camaro and later my, and I know I am going catch some crap for this, my mini truck. There, I said it. I'm a flippin' ex mini trucker that spent his formative years in the IE. Truckers were the top of the food chain then and there. I miss my garage and driveway hoops days...</p>
 
20% down on 900k is 180k.





a 6.75% Interest only payment on 720k would be $4,050 a month.





Taxes on 900k purchase would be $937 a month. Insurance roughly $150 a month.





You are talking $5,137 a month without principal reduction AND with a massive down payment.
 
"Who are these people who can afford houses for 900k???"



Nice homes in KS sells for that price now...



Nice homes in West Plano ( very good school district) sells for that price now - many corp. executives lives there.



Nice homes in West U, Memorial, Galleria area of Houston sells for that price - again many corp. executive lives there



corp. sr. executives make a lot more than avg. physicians. Now days, only speciality doc. makes a lot of money. the days of family docs making avg. $200k plus is over...
 
You mean like these monstrosities with over 1/4 acre lot for only 850k?





<a id="L_1091210031_hlDirectLink">http://www.realtor.com/realestate/houston-tx-77096-1091210031








</a><a id="L_1065917781_hlDirectLink">http://www.realtor.com/realestate/houston-tx-77059-1065917781/





http://www.realtor.com/search/listingdetail.aspx?ctid=4&mnp=38&mxp=38&typ=1&sid=3e2ba90663474cfea7ca21de040134bd&pg=3&lid=1093378989&lsn=23&srcnt=150#Detail














</a><a id="L_1091210031_hlDirectLink">








</a>
 
check this one out:

http://www.realtor.com/search/listingdetail.aspx?zp=77005&ml=3&mnp=38&mxp=40&typ=7&sid=2ef5ab4f7bf64dc8912d4118672e7dbf&lid=1079071319&lsn=10&srcnt=66#Detail



small lot in h ouston...and you know what the weather like in houston...



Property tax is 3% there by the way though no income tax...
 
lendingmaestro,



zip 77096's public schools are rated as unacceptable.. demographic is similar to santa ana. so you should be comparing the house to Santa Ana not Irvine...



I know you probably don't know Houston well...but that is not my point...Expensive housing is not a OC issues, it is all over... And the fact is many people can afford it...
 
The fact is most people <u>cannot </u>afford it with traditional financing in a realistic world. This is the reason we had a bubble in the first place. I know there are rich executives here in Orange county. But the big baller type income isn't going to live in Irvine.





In the last 3 years of doing mortgages in Orange County I can count on two hands the number of people I've spoken to who make over 250k a year W2 stable income. One man owned his own global shipping company and paid himself 400k a year. Did you know that I couldn't qualify him on full-doc income? He wanted to refi his beach house in San Clemente. He owed 475k on 580k value. He also owned a 3 plex and 4 plex in HB which he owed 750k and 775k respectively. Both have massive negative cash flow. He also owed 885k on his 1.75 mil home in Nellie Gail Ranch.





Even the wealthy people in OC live above their means.
 
DTI- that is what will make it so hard for people in OC to borrow money for a house. the lease on the benz and credit card debt.... etc etc.
 
<p>Damn Cox, only lets you have 10mb of web space...</p>

<p><a href="http://members.cox.net/ipoplaya/">http://members.cox.net/ipoplaya/</a></p>
 
"In the last 3 years of doing mortgages in Orange County I can count on two fingers the number of people I've spoken to who make over 250k a year W2 stable income."



Strange, I don't have enough fingers (or toes) for the number of people I know personally who make over 250k/yr. Then again, I guess not all of them have "W2 stable income" as several of them are self-employed physicians and business owners. Its hard for me to believe that a mortgage processor has only seen two in three years.
 
1.) So you have physically seen their W2's and/or1099 Tax Returns?





2.) They also live in Irvine?





3.) I am not a loan processor. I can only assume your condescension comes from the fact that you possess a Medical degree?





4.) I did not say I only saw "two" in three years.





5.) All of the people I know who make over 250k a year, including family, live in Newport or CDM. Not Irvine.
 
Why do people think that Real Estate prices will even follow inflation ?





in one of the interviews with Shiller he makes this point..........for some reason during the 1990's Americans began to believe that real estate values would always beat inflation, that it was a great "investment". He pointed out that there was a false perception that buying real estate became a sure way to become rich. After this bubble is over, we could see Irvine real estate at $100 PSF. The value of homes depends only on the amount of down payments that can be saved and availability(cost) of credit.........that sets the value.





IMO Lending is correct, $900,000 is a lot of money for a home. Although I can not prove it, I suspect that less than 5% of irvine families have the level of income that it takes to afford a $900K home.
 
my guess is most of us are not the avg joe, and not even the avg irvine schmoe. not a stretch to believe most of us, and our peers, friends, and coworkers, are in higher brackets than the avg loan applicant LM has seen. the median <em>family</em> income in irvine still only around $105k. over 200k/yr is around the top 5%. 9.1% of the population, or 5% of families, are below the poverty line. <strong>so the distribution of irvine families living in poverty is about the same as those with the level of income being discussed! </strong> that was an eye-opener for me. that does tell you something about how prevalent the facade of wealth is in oc. i got this from wikipedia and google searches for what its worth.





given the truth about the demographics and what we all now know about the financial health of the avg loan applicant in recent yrs, what LM claims to have seen shouldn't be too surprising.





<sup id="_ref-4" class="reference"><a href="http://en.wikipedia.org/wiki/Irvine,_California#_note-4" title=""></a></sup>
 
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