[quote author="Roo" date=1213687308]
I am not sure you understand why prices are rapidly falling. Demand would still be high if all the bubble factors were still in place. However, speculation and easy financing are no longer there causing the big downswing we are witnessing. There is nothing that can keep all the homes falling a lot lower than they have ever been. You might think a lot of people would start buying homes if they were 25% cheaper tomorrow, but it couldn't happen because people can't qualify for homes. There are way too many homes on the market (and coming to the market) than the potential pool of credible buyers. Interest rate will only make things worst as they will increase foreclosure driving prices even lower.
The bigger the bubble, the more it will burst. Meaning that prices won't just come down where they should be, but much lower. The market is always overreacting and this time won't be any different.
</blockquote>
I understand what you are saying, but theres a big disparity with whats happening in the subprime market and the higher end Irvine. Believe me, I have no incentive to be a bull. I have a fat downpayment fund, a nice job, and no property to my name.
I've been watching the foreclosures and preforclusres in Irvine. They just <I>arn't</I> happening in the high end. The condos are getting killed, and the shacks in quail hill and turtle ridge are going to eat it hard. But the high end premium homes are going to slide down, not crash.
Look at the houses closing on IPO's site alone! The majority of people buying those houses are not going to be affected by tigther lending standards or a few increases on their ARM.
I'm hoping and praying that after the summer, we'll see widespread 'panic' and a lot more bargains. But 'panic' for me, means NP, quail hill, and turtle rock finally hitting 300 a sq.ft and older homes maybe around 280. So yes, thats probably about 40% off peak.
But 80% off? 100 dollars a sqft? That'd be nice. So would winning the lottery...
[quote author="newbie2008" date=1213690492]
A buying frenzy may come, but I doubt it.
Pricing by next rents with a 120 x monthly multiplier and the price must drop like a rock.
Prince by medium household income $85,000 * 0.30 / 12 for housing payment give $450k to 500k. plus $150k down payment 600 to $650k for the medium house.
The question comes up as to the average rents. I hear that it was increasing at the start of the year, but has gone down the last two months. I've seen one Turtle Rock house/condo go from $3400 asking to $3000 asking for 2000 sf with no takers. When you factor in the HOA est. 250 that's included in the rent 2500 x 120. A higher multiplier than is justified if housing prices are dramatically increasing to off set a negative cash flow.
Or am I missing something.
Newbie</blockquote>
Yeah, I think you are missing something. (no offense). The 120 multiplier has <I>never</I> been valid in Irvine. Irvine rents have always held up well. And the median household income is around 100,000 not 85,000.
