When would be next housing Bottom?

[usctrojancpa]

I agree with you for the most part. Which is why I've said here before if the US economy stays strong and we just have a Chinese sell-off, we would barely feel it.

I would have to disagree here.  If there is a Chinese sell-off, places like Irvine are exactly where we will feel it.  Where have and where do all the Chinese own homes?  Irvine, Arcardia, Walnut, etc.  Because of the high percentage of Chinese ownership in these cities, your argument does not hold up well.

What do you think is the percentage of Chinese ownership in Irvine?

While it may be high comparatively, especially in the newer homes, there are more than just Chinese owners in the entirety of Irvine.

If FCB's rescued Irvine during the Great Recession, the reverse could be true this time.  They may not be there to help with home prices, and they could represent a new class of motivated seller if things get bad enough.

So the question is this...if these FCB Chinese sell their Irvine homes, where do they take that money?  Back to China?  I hardly doubt that.  One of the reasons many buy is to get their money out of China and away from the reach of the Chinese gov't.  Like I've been told by some of my clients who travel to China for business, the FCB Chinese buyers use Irvine homes sorta like a bank account.

 

[irvinebullhousing]

I agree with you for the most part. Which is why I've said here before if the US economy stays strong and we just have a Chinese sell-off, we would barely feel it.

I would have to disagree here.  If there is a Chinese sell-off, places like Irvine are exactly where we will feel it.  Where have and where do all the Chinese own homes?  Irvine, Arcardia, Walnut, etc.  Because of the high percentage of Chinese ownership in these cities, your argument does not hold up well.

What do you think is the percentage of Chinese ownership in Irvine?

While it may be high comparatively, especially in the newer homes, there are more than just Chinese owners in the entirety of Irvine.

If FCB's rescued Irvine during the Great Recession, the reverse could be true this time.  They may not be there to help with home prices, and they could represent a new class of motivated seller if things get bad enough.

So the question is this...if these FCB Chinese sell their Irvine homes, where do they take that money?  Back to China?  I hardly doubt that.  One of the reasons many buy is to get their money out of China and away from the reach of the Chinese gov't.  Like I've been told by some of my clients who travel to China for business, the FCB Chinese buyers use Irvine homes sorta like a bank account.

Booyeah!!! ?Jim Crammer? Mad Money

 

[eyephone]

Many people have been saying the music has been like slowing down.

I can?t worry what they are going to do. It?s everybody for themselves or shall I say every man for himself.

All I know is some of them think it as an investment. (There are like so many posts on TI asking people if the house would be a good investment?)

 

[usctrojancpa]

Chinese money still flows in Irvine, but just in a much slower pace. Rich people always have their ways to get around the regulation. I went to a couple of open houses in the past two weekends, and I met a bunch of visitors from China.

Oh it's definitely still flowing over but I have noticed that FBC Chinese buyers are using ABL loans (asset based loans) where they put 50% or more down and no credit or income is needed.  Banks like East West, Sterling, Cathay, HSBC, etc are ones that I've personally seen used by buyers on my listings.

 

[eyephone]

The music is slowing down and the money is drying up.

 

[Kenkoko]

So the question is this...if these FCB Chinese sell their Irvine homes, where do they take that money?  Back to China?  I hardly doubt that.  One of the reasons many buy is to get their money out of China and away from the reach of the Chinese gov't.  Like I've been told by some of my clients who travel to China for business, the FCB Chinese buyers use Irvine homes sorta like a bank account.

This is a false dichotomy.

Cashing out of Irvine Real estate does not mean cash leaving USA. Also Chinese money has been flowing to Australia, Singapore, Canada (with Vancouver being the top destination). USA is no longer the #1 destination for capital flight.

The argument about using Irvine homes as a bank account made a lot more sense when the market was trending upwards. Not when it's flat and burning 2% property taxes every year.

 

[zubs]

In 2008, IHB, IHO, Larry, did not expect the fed to increase their balance sheet from 0.8 trillion to 4.4 trillion, and then keep it there until 2017-2018.  This kept our economy up and our house prices rocketed from 2013 to 2018, when the money printing stopped here we are...getting wobbly.  Now that the FED is indicating more money printing, what do you think is going to happen?

Will they print to a $6 trillion excess?....Remember, we did not think this would happen in 2008.  We thought shit was gonna go down.  We were bears, but the FED and 0% interest rates proved us wrong.  I remember back then when the money was getting printed fast and furious, cash was not king...in fact it was worth less than stocks, property, bonds....plus interest was at all time lows, so CD's and savings accounts gave you 0.2%..yay!


BUT if you put $1,000,000 in our bank account we'll give you 0.4%!!!!

 

[Kenkoko]

I would have to disagree here.  If there is a Chinese sell-off, places like Irvine are exactly where we will feel it.  Where have and where do all the Chinese own homes?  Irvine, Arcardia, Walnut, etc.  Because of the high percentage of Chinese ownership in these cities, your argument does not hold up well.

Chinese ownership for Irvine is different from Arcadia, Walnut, and most other FCB areas because of large amount of newly built homes. Irvine is a convenient place to drop off cash because new homes holds value and buying new homes with builders is quick and easy.

You also do not see Chinese buyers buying and leaving multiple homes and leaving them empty the way they do in Irvine. This is especially prevalent in newer great park villages. My parents personally know of a Chinese family that has 10-15 empty homes in GP.

This is why I agree with IHO that pre-woodbury, you probably won't see much Chinese selling. Those homes have appreciated and also have lower burn rate.

 

[Kenkoko]

The music is slowing down and the money is drying up.

80% in my FCB circle (mostly Chinese/Taiwanese) would agree with eyephone's statement.

 

[bones]

My parents personally know of a Chinese family that has 10-15 empty homes in GP.

So potentially a 6 figure MR bill every year with nothing to show for it but a zipline.  Quite the burn.

 

[zubs]

Back in 2014, I asked a Chinese factory owner why he put all his excess cash into Chinese real state.  Wasn't he afraid of a collapse in price?  He said he trusted the CCP to keep his investments protected.  I wonder if the people here have as much confidence in the FED to keep the economy going.  What I learned from the past 12 years on this forum and IHB is that the FED will go to extraordinary lengths to keep my real estate from dropping.

 

[Liar Loan]

My parents personally know of a Chinese family that has 10-15 empty homes in GP.

So potentially a 6 figure MR bill every year with nothing to show for it but a zipline.  Quite the burn.

Now wait a second, that's not true.  They can show their relatives back home a picture of the big orange balloon.

 

[irvinebullhousing]

Oh yes and the big brawling open fields with ghost coming in.

 

[irvinebullhousing]

Back in 2014, I asked a Chinese factory owner why he put all his excess cash into Chinese real state.  Wasn't he afraid of a collapse in price?  He said he trusted the CCP to keep his investments protected.  I wonder if the people here have as much confidence in the FED to keep the economy going.  What I learned from the past 12 years on this forum and IHB is that the FED will go to extraordinary lengths to keep my real estate from dropping.

In the grand scheme of things the FED has no limit to their printing press. It can go on and on, sure it would inflate assets and makes it more expensive. The FED and banking cartel rather collects interest and taxes rather let shits drop off the cliffs.


The bears will keep sayin it?s too expensive, I hear this in 2012 and all the way til now. Except now, a bit more bitters and angers.

 

[momopi]

The bears will keep sayin it?s too expensive, I hear this in 2012 and all the way til now. Except now, a bit more bitters and angers.

In 2012, SFR's in LA County dropped to about 50% level from peak.  So if the house was $480,000 peak, it was selling for $240,000.  With 20% down and borrowing $192,000, the monthly mortgage payment is about $1,000 P+I vs monthly rent of $2,500 to $3,000.

I'm looking at the rental income today which is not entirely reflective of rent price in 2012, but you guys get the idea.

 

[misme]

I would have to disagree here.  If there is a Chinese sell-off, places like Irvine are exactly where we will feel it.  Where have and where do all the Chinese own homes?  Irvine, Arcardia, Walnut, etc.  Because of the high percentage of Chinese ownership in these cities, your argument does not hold up well.

Chinese ownership for Irvine is different from Arcadia, Walnut, and most other FCB areas because of large amount of newly built homes. Irvine is a convenient place to drop off cash because new homes holds value and buying new homes with builders is quick and easy.

You also do not see Chinese buyers buying and leaving multiple homes and leaving them empty the way they do in Irvine. This is especially prevalent in newer great park villages. My parents personally know of a Chinese family that has 10-15 empty homes in GP.

This is why I agree with IHO that pre-woodbury, you probably won't see much Chinese selling. Those homes have appreciated and also have lower burn rate.

So are you saying you think the owners of all these empty homes in GP, etc, are MORE likely to dump these properties if it looks like the music is stopping, or LESS likely?

 

[Kenkoko]

So are you saying you think the owners of all these empty homes in GP, etc, are MORE likely to dump these properties if it looks like the music is stopping, or LESS likely?

More likely for GP Chinese investors to sell.

GP villages have higher % of Chinese Investor compared to older villages. Many of them bought just to get money out of China.

Also many of these GP Chinese investor aren't living/settling here, leaving them empty.

It made more sense to use these GP new homes as bank accounts / safety deposit box when the market was trending up.

Not so much in a flat or declining market.

 

[usctrojancpa]

So are you saying you think the owners of all these empty homes in GP, etc, are MORE likely to dump these properties if it looks like the music is stopping, or LESS likely?

More likely for GP Chinese investors to sell.

GP villages have higher % of Chinese Investor compared to older villages. Many of them bought just to get money out of China.

Also many of these GP Chinese investor aren't living/settling here, leaving them empty.

It made more sense to use these GP new homes as bank accounts / safety deposit box when the market was trending up.

Not so much in a flat or declining market.

And most of them own the homes outright so not sure they'd get scared by a 5-10% price correction.  If they sell, the money has to go somewhere.  Like I said, I still see Chinese FCB buyers on my listings.  There may not be as many of them out there but there's still active in the market.  In my opinion, to get more significant price drops in Irvine you'll need forced selling...REOs, short sales, distressed sales from job losses, etc. 

 

[usctrojancpa]

So are you saying you think the owners of all these empty homes in GP, etc, are MORE likely to dump these properties if it looks like the music is stopping, or LESS likely?

More likely for GP Chinese investors to sell.

GP villages have higher % of Chinese Investor compared to older villages. Many of them bought just to get money out of China.

Also many of these GP Chinese investor aren't living/settling here, leaving them empty.

It made more sense to use these GP new homes as bank accounts / safety deposit box when the market was trending up.

Not so much in a flat or declining market.

Same deal in Eastwood, Orchard Hills, Stonegate, and Cypress Village.  FCB love buying new homes because like you said it's super easy.

 

[usctrojancpa]

Back in 2014, I asked a Chinese factory owner why he put all his excess cash into Chinese real state.  Wasn't he afraid of a collapse in price?  He said he trusted the CCP to keep his investments protected.  I wonder if the people here have as much confidence in the FED to keep the economy going.  What I learned from the past 12 years on this forum and IHB is that the FED will go to extraordinary lengths to keep my real estate from dropping.

What's the old saying....the market can stay irrational longer than you can stay liquid betting against it.  The FED is going back to 0% in the next 12-18 months and we'll properly see more QE after that which will cause the 10-year bond to trade below 1%.  I wonder if we will ever get to negative interest rates like other developed parts of the world.