Who's buying?

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jumpinjacks

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I've been only on here a short time, but maybe you all have some insight. Who's buying all these new homes in Irvine for 800k, 1m+?!

Some of my background: Went to a UC, lived in Costa Mesa for awhile then we rented in Irvine (Portola Springs - only 1 apt community so you can guess). Ultimately ended up buying an older (late 70's home) in Lake Forest, 1500 sq ft single story with 8,300 or so sq ft lot. Other than the super cookie cutterness of the homes, really liked the area (I work in Irvine, he in Lake Forest), but we just couldn't swing the price, HOA, +mello-roos and the lack of land you get for the $$$.

I get we live in Southern California, but we come from modest backgrounds, we are pretty much 2nd generation asians (I born here, he came when he was 2) and both have bachelors degrees, saved up and able to put 20%+ down. From that recent mortgage+tax+ins+HOA vs gross pay post/poll we are at about 23% (and we're good with that). But by no means do we make a ton of money, mid 30's.

We would do post dinner walks at Lambert Ranch nearby and see these gorgeous 2M+? homes and then see Teslas, Beamers, Benz and think, geez what do these people do?! How much is it FBC money going around? Perhaps the appeal to many inflates pricing specifically in Irvine? Maybe this goes in the finance area, but help me understand :) Are people just leveraging themselves a bit much or do I need to get in whatever industry you all are in in Irvine? This is a honest question, I'd love to see any articles on the subject, but figure you guys could give me a straight to the point answer, TIA!
 
There are some articles and links that's on this board regarding the billions of dollars fcb's have contributed to the real estate market recently.  Obviously it's not all them, some have moved up, doctors lawyers engineers business folks IT folks.
The old days of over leveraged individuals are less due to the more stringent lending practices
 
jumpinjacks said:
Are people just leveraging themselves a bit much or do I need to get in whatever industry you all are in in Irvine?
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Well, mortgage interest rate is very low and quite a few people use ARM. :)

I understanding how you feel.  Financial strength of these new home buyers are pretty impressive.  Beside the 30 to 40% all cash buyers, majority of financed buyer do carried $600k+ mortgages from what I've seem.

But the low interest contribute to the recent housing boom.  One just need approx $125k of annual income to qualified for a $600k 30 year fixed mortgage.
 
i would risk to say 800k to 1M homes are not for first time home buyers who rooted in SoCal. there will always be some exceptions, but i believe most of the buyers who can afford homes like these would sell the homes that they have and use the proceeds as significant downpayment. depending on how much they are putting down, the difference of the monthly mortgage payment could be a lot. when thinking about how much buyers can afford, it means 1. how much they make as gross income, and 2. how much big of the downpayment they have.
 
The low rates recently will contribute to rising home prices.  With the recent drop in rates, people could afford $150-$200 more per month which is equivalent to around $25,000-$35,000 more in price.
 
FranchisePlr said:
The low rates recently will contribute to rising home prices.  With the recent drop in rates, people could afford $150-$200 more per month which is equivalent to around $25,000-$35,000 more in price.
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The possible low rate is nice. I would hold off on any big purchase right now.

This China crisis which might possibly lead to a global slow down. (Too early to tell right now)

 
Most of the couples in 1m+ in Irvine that I know both work. One or both being doctors or lawyers. Mostly doctors. If the wife is a SAHM, the husband usually has a business that does well. That seems to be the trend. They all seemed to have master degrees or higher (even the SAHMs). Not many just have a BA. Just an observation.
 
A lot of doctors and lawyers as stated above, but also don't discount small business owners in the tech business. I'm sure there are a lot of those in Irvine that work for software and gaming companies - Blizzard being the biggest, and most reputable one. You can make a good sum as a senior programmer too with only a bachelor's. I know bachelor's degrees that are making tons of money, & master's degree holders making less - just depends on the field, but the tech biz is where it's at for non FCB's!
 
Us: Mid 30's, 2nd gen (born here as well). Both went to UCs for undergrad.  I also got my MBA there as well.  I've rented in Irvine, Costa Mesa and Ladera Ranch for about 7 years before buying our first house in 2010.

I work in tech, wife works in education.  Company paid for half of my tuition, so that helped in terms of not having any student loans.  Never was into cars so saved a lot in terms of not having a car payment.

I honestly was super lucky to have worked for a company whose stock appreciated 3600% since I've been there. No way in hell I would be able to afford a 1M home with our current salaries if I didn't put 50% down and have the low interest rates.  I correctly predicted that a correction was going to happen soon and decided to take chips off the table to buy our 2nd home at the time (sold 1st home shortly after we moved). 

 
scubasteve said:
Us: Mid 30's, 2nd gen (born here as well). Both went to UCs for undergrad.  I also got my MBA there as well.  I've rented in Irvine, Costa Mesa and Ladera Ranch for about 7 years before buying our first house in 2010.

I work in tech, wife works in education.  Company paid for half of my tuition, so that helped in terms of not having any student loans.  Never was into cars so saved a lot in terms of not having a car payment.

I honestly was super lucky to have worked for a company whose stock appreciated 3600% since I've been there. No way in hell I would be able to afford a 1M home with our current salaries if I didn't put 50% down and have the low interest rates.  I correctly predicted that a correction was going to happen soon and decided to take chips off the table to buy our 2nd home at the time (sold 1st home shortly after we moved).
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Luck is a huge factor that far too often is discounted. You have to be lucky to not have any periods of prolonged job loss by either working spouse in order to save a big down payment. Luck plays a role in whether your employer pays you well, or whether your employer is doing well. The latter is especially lucky if you have stock bonuses/grants/options that appreciate dramatically.

Low mortgage rates aren't necessarily "lucky." If mortgage rates are higher when you buy, prices should be lower; but it sure feels good when the 30-year fixed is 3.625% when you're buying.
 
Perspective said:
scubasteve said:
Us: Mid 30's, 2nd gen (born here as well). Both went to UCs for undergrad.  I also got my MBA there as well.  I've rented in Irvine, Costa Mesa and Ladera Ranch for about 7 years before buying our first house in 2010.

I work in tech, wife works in education.  Company paid for half of my tuition, so that helped in terms of not having any student loans.  Never was into cars so saved a lot in terms of not having a car payment.

I honestly was super lucky to have worked for a company whose stock appreciated 3600% since I've been there. No way in hell I would be able to afford a 1M home with our current salaries if I didn't put 50% down and have the low interest rates.  I correctly predicted that a correction was going to happen soon and decided to take chips off the table to buy our 2nd home at the time (sold 1st home shortly after we moved).
Click to expand...

Luck is a huge factor that far too often is discounted. You have to be lucky to not have any periods of prolonged job loss by either working spouse in order to save a big down payment. Luck plays a role in whether your employer pays you well, or whether your employer is doing well. The latter is especially lucky if you have stock bonuses/grants/options that appreciate dramatically.

Low mortgage rates aren't necessarily "lucky." If mortgage rates are higher when you buy, prices should be lower; but it sure feels good when the 30-year fixed is 3.625% when you're buying.
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Theres also luck with being born to parents who can help you financially with school and/or house.
 
The biggest factor in being able to live in a 2 mil and up house is luck or getting a lucky person to marry you.  There is no way "making the right financial decisions" will get you there.  Most doctors and lawyers do not live in 2 mil houses.  90% of small businesses fail within 5 years.  I hate to break this news to you, but you're either lucky or you're not.
 
scubasteve said:
Us: Mid 30's, 2nd gen (born here as well). Both went to UCs for undergrad.  I also got my MBA there as well.  I've rented in Irvine, Costa Mesa and Ladera Ranch for about 7 years before buying our first house in 2010.

I work in tech, wife works in education.  Company paid for half of my tuition, so that helped in terms of not having any student loans.  Never was into cars so saved a lot in terms of not having a car payment.

I honestly was super lucky to have worked for a company whose stock appreciated 3600% since I've been there. No way in hell I would be able to afford a 1M home with our current salaries if I didn't put 50% down and have the low interest rates.  I correctly predicted that a correction was going to happen soon and decided to take chips off the table to buy our 2nd home at the time (sold 1st home shortly after we moved).
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How about a correction to housing?
 
I sympathize with the thread starter that you are 2nd generation Asian and you don't have deep pocketed parents. You are in the minority. The majorities of younger buyers in their late 20's-mid 30's comes with a large sum of cash to reduced their loan. Some buyers just turned 18 and just started college.
 
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