The information presented in this post are provided by the Orange County Register and Dataquick.
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code
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from ’06
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from ’06
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92602
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$753,000
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2.4%
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167
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-29.5%
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92603
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$888,500
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-5.6%
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185
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-31.2%
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92604
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$630,000
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-2.9%
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137
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-23.0%
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92606
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$650,000
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-5.4%
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108
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24.1%
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92612
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$627,750
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-0.7%
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215
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40.5%
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92614
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$550,000
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-8.3%
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131
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-28.0%
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92618
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$568,250
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7.2%
|
114
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-9.5%
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92620
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$697,000
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-14.8
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268
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-33.7%
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Previous commenters have noted the “noise” from week to week makes it difficult to determine where the market is really going. Here is the data from the first half of 2007 smoothing out the noise from individual weeks.
| Slice | Price | Vs. ’06 | Sales | Vs. ’06 |
|---|---|---|---|---|
| House | $725,000 | +3.6% | 1,733 | -24.0% |
| Condo | $458,750 | +0.2% | 663 | -30.6% |
| New* | $650,000 | -23.2% | 307 | -27.1% |
Above is different look at the market. Instead of breaking it down by zip code, this data looks for trends in various housing types, and it is for all of Orange County not just Irvine. Notice the dramatic decline in sales volume, and notice the huge drop in the median sales prices of new homes.
It is difficult to put a bullish interpretation on this data. New home prices are down, and we know the prices of new product is not reflective of the true price because the incentives being offered to buyers. So one could argue the new home sales price numbers are far worse than what is shown. It is true that many of the new home sales have been condos on Jamboree, so perhaps there is smaller product dragging down the median, but then again, this also means new higher-end homes are not selling at all (Portola Springs).
The numbers appear to be holding up for resales, but ask yourself how is this possible. If new homes are selling for 20% or more under last years prices, how could resale prices not be lower? Wouldn’t a reasonable buyer go buy a new house for a significant discount over an old one? Of course they would.
The reason resale prices are not showing the decline in the median is twofold:
- There are few if any sales at the low end of the market. The sales that would be occurring in a healthy market that would cause the median to record a lower value are not occurring now.
- The people who bought new homes in 2005 and 2006 are going underwater and unwilling and unable to sell. They are being killed by the pricing of the homebuilders, but there is nothing they can do about it, so they all sit in their overpriced homes waiting for their exotic mortgages to explode.
The resale buying which is occurring right now is the last of the move-up buyers who are taking advantage of what they perceive to be a bargain in the market. The loose lending standards are still being offered to prime borrowers (for now.) These buyers are few in number because they are having difficulty finding someone to purchase their home. There are many properties falling out of escrow for this reason. It is the “plankton theory” on display.
Perhaps some of the bulls can offer another interpretation in the comments. I would like to read them.
“It is difficult to put a bullish interpretation on this data.”
Really? Aren’t prices for both houses and condos UP?
“New home prices are down, and we know the prices of new product is not reflective of the true price because the incentives being offered to buyers.”
Have any hard data to back that up? (No.)
“It is true that many of the new home sales have been condos on Jamboree…”
Ya think, Sherlock? Notice the dramatic INCREASE in sales volume in 92612?
“Once people have taken a position in a financial market, they lose the capacity to objectively view what the market is telling them. Every data point which confirms their position is accepted, and any data point which fails to confirm their market bias is ignored. These people literally do not perceive the conflicting market data.”
I’d say so.
—–
Oooh, let me guess. You are a homedebtor facing an exploding ARM, or you are a Realtor maxing out your credit cards to keep your MB gas tank full, or a flipper sitting on some properties that are hopelessly underwater.
Nice name, by the way. Very mature.
Thank you so much for posting here. When the regular readers of this blog see what you have written they will probably wonder if I didn’t send in a shill to go on a rant just to prove my point.
You are obviously suffering from the “bitter homeowner” syndrome. First, your moniker speaks volumes about the vitriol you carry inside based on what you are seeing in the market.
You ask if prices on houses and condos are up. If you have been reading this blog, you can see the answer for individual properties is no. We have documented property after property with either asking prices or sales prices below purchase prices of 2004, 2005 and 2006. No, prices are not up for houses and condos.
Also, you ask for hard data on the incentives. What would you like to see? We have members of forum posting the price reductions and incentive offerings from all the major builders. I suppose you missed the article from Bob Toll, the CEO of Toll Brothers, who described the policy in the homebuilding industry of offering incentives in a declining market. That is a perfect example of ignoring conflicting data points. You proved my last quote which you mentioned far better than I could.
By the way, I am responding to the Comment #1 with the stupid name, not to IR’s fantastic (as always) analytical post.
I figure we’ll see a “landed poor” syndrome popping up a lot in the future in a similar vein to poster #1
IR: While Haywood’s tone could be less, er, obnoxious, I do see his point. Now please do not flame me…..I am just trying to understand the current market conditions…I have no expertise in this area, but here is my question:
If we are really in a significant downturn, then I would expect housing prices to have decreased as compared to 2006. Simply put, they have not (resales). As evidence for the downturn, you refer to individual sales posted on IHB documenting losses; however, is it not possible to post individual sales posting gains? They must be out there since culmulative prices have increased, per your chart.
I guess I do not understand what is keeping the resale prices aloft in view of the negative comments about the current market.
Since we’re down to 20 -30 sales per month per zip, how hard would it be to compare price/square foot for a zip like 92603 by type (SFR/Condo) this year to last?
I’m renting in the Watermarke and know why the sales of condos are up in 92612. The last year has seen the buildout of high rise and other condo buildings where buyers would have lost their downpayment if they didn’t close.
Essentially, they’re pre-2007 purchases. I can tell you, though, that most of those are flippers since I see a light on in only about 1 condo per floor in these buildings, night after night.
The high rise condo flippers will be the ones in the worst shape, IMHO when this is all over. Those places were purchased north of $600 per square foot.
Ecmo – You are absolutely correct, except for the the assumption that there must be individual price increases out there. Try to find some. Try to find some homes that sold in 05 or 06 and have sold for more in 07. Once you do that, I think you will see that when looking at individual sales, the overwhelming majority of homes are selling for less than they sold for in 05 and 06. Folks come on here all the time with the same point, but they never seem to document the supposed homes that are selling for more. I think we are all open to seeing some individual price increases. IR and others consistently provide examples of decreasing individual prices and the media even seems to back up thier reasons for median prices increasing. Can anyone out there please provide some examples of individual prices increasing? I have tried and have not found any where I live.
The sales prices of individual properties can be declining while an aggregate market measure such as the median can be holding steady. When you don’t average in the low end of the market because there are no sales occurring at these price levels, the activity is restricted to the higher price points in the market.
If the market were holding steady, the elimination of the low end sales would cause the median to increase (which is what it did in early 2006). Since the median is merely holding steady in the face of the loss of the low end of the market, this signifies a move-up condition in the mid to high end of the market. Basically, individual house prices are declining and the buyers who are active are getting more for their money.
This condition will persist as long as prime borrowers are able to obtain exotic financing albeit at lower and lower transaction volumes. Eventually the weight of the inventory will overwhelm the few buyers still in the market, and prices will drop across all price points.
Remember, volume precedes price in a real estate market decline. It is only a matter of time.
Ecmo,
I think you will find we are not rude to those who are rational and wish to explore and debate. We may or may not convince you of anything, but we all can benefit from a civil exchange based on data and objective analysis.
IR:
Your analysis makes perfect sense as to why the aggregate is holding steady. Would you expect, then, that higher end homes (> 1 million) should start to reflect the reality of the market this summer?
The highest priced properties will show the stress last. These are often the owners with the least financial pressures to sell (although banks were giving out 100% financing on multi-million dollar properties during this bubble.) Those with the most holding power will hold out the longest, but when the “bid” collapses and there are simply no buyers willing to pay the asking prices, prices will eventually decline.
At some point, someone will have to sell. When they do, the highest bid will determine the market. As credit tightens, bids will get lower and lower. This will cause prices to decline as sellers exit the market.
You can look at the housing crash as the inland version of a tsunami. The wave started in Riverside County, and it is working its way toward the coast. It will get there in time and level everything in its path, but it must work its way through the inland empire and eastern suburbs first.
Haywierd,
Did you really wake up before 6 AM on a Sunday to post such vitriol?
Had trouble sleeping last night? What’s on your mind? Or do you just get up early on Sundays for your second job required because of a mortgage reset?
Seriously though, this blog has a national audience. It was recently featured on Slate. Please be more civil. Your post is rather embarrassing!
“You can look at the housing crash as the inland version of a tsunami. The wave started in Riverside County, and it is working its way toward the coast.”
Great description. Very poetic and true.
I see where the first post is coming from. Objectively, IrvineRenter’s analysis can’t be disputed (nutshell – that the median price must return to near historical norms of median incomes for a given area). And I appreciate the daily updates of properties purchased at the peak; but these properties are anecdotal evidence to prove the analysis. The market takes time to turn. IrvineRenter’s always warned (correctly) that this regression to the mean will take time – years.
The numbers appear to be holding up for resales, but ask yourself how is this possible. If new homes are selling for 20% or more under last years prices, how could resale prices not be lower? Wouldn’t a reasonable buyer go buy a new house for a significant discount over an old one? Of course they would.
On most new houses, the HOA and Mello Roos fees are so high, that you could effectively buy $100,000 more house in an area with no (or low) HOA and Mello Roos, and have the same monthly out-of-pocket. That may be a reason why resale houses are still attractive, in addition to the larger lot sizes and parking availability.
What an amazing return in just a year:
50 BURLINGAME, Irvine, CA 92602
List Price: $639,900
Bedrooms: 3
Full Baths: 3
Partial Baths: 0
Square Feet: 1,821
Lot Size: N/A
Year Built: 2001
Listing Date: 07/25/07
On Market: 4 days
Type: CONDO/TH
Status: ACTIVE
MLS #: P591474
Sale History
06/06/2006: $745,000
From ziprealty:
“***bank owned*** beautiful three story condo in irvine features 3 bedrooms, 3 full bathrooms, master bedroom w/walk-in closet, light & bright kitchen w/breakfast bar, dining area, spacious living room w/fireplace, inside laundry room, 2 car direct access garage, association pool, spa, bbq, club house/rec facility, and sport court “
OFHEO Housing price index – this is cool, it tracks the actual resale value of homes, rather than the median
http://www.ofheo.gov/HPI.asp
Click on “Metropolitan Statistical Area (MSA)”, then look “Santa Ana-Anaheim-Irvine, CA ” in the dropdown box
If heywood believes that IR is wrong — the thing to do is, buy homes and real estate. Don’t argue with IR — be thankful for people who pump doom, and that the CV is so wrong.
One of the signs of a market bottom is blogs like irvinehousing — when everyone says things are awful — it is time to buy.
I don’t think it’s time to buy — I only recommend a constructive approach.
IR, I love your “tip jar” link! Would you take it amiss if I imitate you and do the same on my own blog? I want to buy as soon as I find something substantially similar to my beautiful rental where the price is at parity with my rent, and I want a bigger down payment so I don’t have to pay PMI. That PMI is going to be a headbreaker what with the foreclosure rate increasing daily.
And, a personal question-has anyone contributed so far?
I derive a great deal of pleasure and instruction from your elegantly written blog, and have linked it to mine. Trouble is, Chicago bubble-heads don’t grasp the universality of your take on the housing market -how they apply to the entire overinflated U.S. housing market, especially in “hot” metro areas like Chicago.
People don’t seem to get that the law of gravity and the rules of arithmetic apply across the board, in Cleveland or Boise or Detroit or Chicago, as well as in Irvine or Los Angeles. 2 + 2 = 4 absolutely everywhere, and the laws of gravity have never been altered and never will be, least of all for American condo-flippers.
Thanks for helping to bring people back to Planet Earth. You, Dr. Housing Bubble, and Chicago Housing Bubble are voices of sanity in the wilderness of financial lunacy and irresponsibility that is the modern USA.
IrvineRenter,
5 points:
#1 This is a great blog. My only regular daily reading now is Piggington, Yours, and Calculated Risk in that order.
#2 This is a great blog. Your posts are smart, insightful, and very helpful.
# 3 This is a great blog. You go out of your way to maintain a professional and calm and analytic and balanced demeanor that enhances the credibility of your arguments.
#4 I second nsr’s comment about how useful it would be to see prices per square foor for the zips. I fully realize how much work that can be because I was doing that myself for a few months (for all of the zips in Southern California). I’m not in the business at all, and I couldn’t justify or sustain the time commitment. If you too see enough value, that’s great. Otherwise, I completely understand not doing it.
#5 The first poster was a bit sharp, but was making a good point. Try not to take it personally. If you always stick to your usual above-the-fray responses, I think it makes you a credible source for people who don’t have an agenda and are looking for unbiased information, just like you have been.
Thanks again!
Exactly, everyone should put their money where their mouth is.
I do: I rent.
The funny part is when everyone is finally saying it is an awful time to be a homeowner, we will be telling people the skies have cleared and it is time to buy…
Laura Louzader,
They say imitation is the sincerest form of flattery. Copy anything you wish from what we do. We will be flattered. Yes, the tip jar has worked very well. I have been overwhelmed by the generosity of the readers of this blog.
I wonder if the bubble isn’t as apparent in areas like Chicago because the disconnect between incomes, rents and house prices is not quite so extreme as it is here. I mean, anybody who does not live here and has not come to accept these house prices as a fixture of the local landscape must be truly astonished at these price levels.
“The first poster was a bit sharp, but was making a good point.”
Perhaps, but generally when you see people that pointed in their comments, they are not trying to make a point, they simply want to be obnoxious and get everyone upset. Often I simply will not respond, but since there was a legitimate point raised about an interpretation of the data, I felt compelled to acknowledge the post.
When you boil away all the irrelevancies of the various arguments you get down to a simple decision about money: do you buy or sell now or wait and do nothing.
I believe it is prudent to be out of residential housing as an asset class because the values will decline; therefore, I rent. People who believe differently may chose to buy or continue to own. Each of us will answer to the markets for our decisions. I am completely at peace with the decisions I have made and continue to affirm.
“One of the signs of a market bottom is blogs like irvinehousing — when everyone says things are awful — it is time to buy.”
You are right that when everyone says things are awful, it is a sign that things will change, but to think that IHB is somehow representative of everyone is absurd. The posters to IHB represent a small fraction of those of home provision age.
IR, I will copy you further, if only to show that the Chicago housing bubble is just as inflated as California’s.
You have your “WTF houses” and Dr. Housing Bubble has his “Homes of Genius”..
… and I will have my “Houses of Mirth”, the most laughably overpriced housing in Chicagoland.
Again, your blog is wonderful, one of the most enjoyable and edifying reads out there, and you have also helped me realize that buying may not be the best decision right now no matter how tempting the deal.
Thank you very much by showing how overpriced property in my burg is by highlighting overpriced crapola in Irvine. If it isn’t worth $300/sq ft in Irvine, is it worth $400 sq ft in Chicago?
I don’t think so. Thank you for restoring my perspective.
Just another comment from someone who has stage 2 syndrome. I’m sure we will be seeing more like this in the coming months.
laura, what is your blog link for the chicago bubble?
Hi all,
Don’t know if you remember my comment a bit ago, about being in Pasadena and trying to find a nice home under 1.2 million (safe, with a nice yard and 4 bedrooms and 2 baths).
Just wanted to check back in and say that hubby and I have chosen to wait it out a bit longer. we’re putting off trying to have another kid for another year at least while we see what’s going on in the housing market. We would have to take some risks I would never have considered taking on just 4 years ago, and I’ve decided to listen to my formerly sane self.
In any case, I know for a fact that in the Old Town area (highly desireable), prices have decreased at least 8% in the last 6 mos. As for long term forecasting, I am still unsure.. I think our neighbors are a pretty good example of the market. 50% purchased before the boom. 25% purchased before 2005, and 25% purchased post 2005. No one has any need to move, and the ones who bought astronomically high have high incomes. The flippers around are all getting out of the market right now, so the recent price dip is more attributable to lack of speculation than mortgages (prices here are too high for the subprime lot).
On a side note, everyone is right about the mortgage companies and the big borrowers. They were practically begging me to lie about my income, and I called 5 different major banks. I have a 780 credit score, and it is like I’m a piece of prime beef. They call me back daily, sometimes three times a day. It is crystal clear that there is major pressure to keep up their numbers, and they’re looking for anyway to do it.
“They were practically begging me to lie about my income, and I called 5 different major banks. I have a 780 credit score, and it is like I’m a piece of prime beef. They call me back daily, sometimes three times a day. It is crystal clear that there is major pressure to keep up their numbers, and they’re looking for anyway to do it.
jefa – Please keep us informed of the status of the mortgage broker sales pressure. There was a bit of a dislocation in the credit markets on Thurday and Friday and it will be interesting to see how it affects retail credit. Thanks in advance.
Deutsche Bank Payday Burgeons on Subprime Mortgage Trading Bets
http://www.bloomberg.com/apps/news?pid=20601087&sid=aRhYrqGOok0M&refer=home
I think that the screen name for the first poster says everything that we need to know. “haywould jablowme”?? are you serious? what is this, seventh grade?? Why not something a little more irreverant?
Most of the people on this blog manage to act like adults, whether or not they agree with the posts…
Click on her screen name, and you will go right to it.
There is a nother web site that tracks the median of listed homes in Irvine…..
http://www.housingtracker.net/askingprices/metro/California/LosAngeles-LongBeach-SantaAna/SantaAna-Anaheim-Irvine
This site, if correct, says that the median asking price for homes in Irvine went down about 7.4 %. So here is another para ducks…..asking price goint down, but the purchase price going up.
What is the historical norm in the irvine area?
It will get down to 4 times median income at the bottom.
Just for fun, what $75,000,000 buys you around here
http://redfin.com/stingray/do/printable-listing?listing-id=461002
“On a side note, everyone is right about the mortgage companies and the big borrowers. They were practically begging me to lie about my income, and I called 5 different major banks. I have a 780 credit score, and it is like I’m a piece of prime beef. They call me back daily, sometimes three times a day. It is crystal clear that there is major pressure to keep up their numbers, and they’re looking for anyway to do it.”
I will second that. I recently applied for a loan as well, and with 20% down and excellent credit, all I did was stated income since I’m self employed and supply a website printed 1-month statement of my bank accounts.
Anyways, point is I couldn’t believe I was approved with so little problem.
Subprime and 0% down may be gone. But prime and 20% down is still like putting a piece of prime beef in front of a bunch of starving rottweilers.
First, let me say that I read this blog nearly every day, and enjoy it very much. I will have to make a trip to the “tip jar” to put my money where my mouth is!
What I really wanted to comment on was the psychology of which side of the fence you are on, and how that affects your interpretation of data points. Nearly one year ago my wide and I bought in Irvine, despite the fact that we knew there was still risk in the market. At the time, I felt like prices had already peaked and that they may have already declined a bit so we felt like we weren’t buying at the tippy top. We did not buy with intentions to flip, rather because we are starting a family and simply wanted a house and a yard for our children to grow up in. Before we bought, I was obsessed with signs of the market cooling, and now I find myself more obsessed with signs of hope that the market is not bottoming out! It is true; two people can take the same data and interpret it completely differently. Take the comments by Heywood as an example, as moronic as this poster may be, it illustrates the point very nicely. I once had a very wise teacher who told me, “There are lies, there are damn lies, and then there are statistics.” IR – I gather from your posts that you work in an analytical capacity for a developer, I’m certain you see this every day.
Yet, despite my hope that prices will not fall too much, I am a pragmatist and fully expect there will be some declines. I also know that as long as we can continue to make the payment on our 30 yr FIXED mortgage (thank goodness!) that eventually we will be fine, even though it may be kind of scary for a while.
The day does not belong to aye sayers or nay sayers. In the end what matters is who can make the most accurate assessment of how severe the price declines will be, how long these will last and how uniform sales PRICES will be. Based on the trends in the last few months, with rising foreclosures and rising inventory build up, there is no denying that prices took a hit and inventories piled up. The problem, is that none of these factors is leading to a uniform decline in prices. There is no deluge of foreclosures. What I am seeing in the market is maybe 2-3 percent decline on some of the properties that are not WTF priced. While this range of decline will impact the next sale of a comparable, I am tending to believe that in the end the decline in prices will not be greater than 10-15 percent over a period of time for non-WTF properties, unless there is a crazy flood of foreclosures. I don’t see it happen anytime in the near future. Right now the rate of foreclosures is high but not crazy high, which is required for a panic to set in. Right now the stubbornness of some realtors and customers is paying off as some properties are selling though at a small 1-4 percent decline in price. To me that is peanuts.
Bottom line unless there is a radical willingness among sellers, new home builders and banks to get rid of inventories, the decline should not be more than 10 percent in a year from now.
I don’t think move up buyers necessarily need “exotic financing”.
In the case where a move up buyer has been in their house for quite a long time, then can be a ton of equity even in a severely declining market.
If you make the assumption that prices will decline by 50%, a long term homeowner with excellent credit and plenty of equity should be able to take out enough equity of his current home to make the payment on the larger one.
Given that the payment would still be low enough, such buyers could rent out the current home and still be close to breaking even.
Interest rates are still low enough and 30 year fixed with 20% (or more) down payments are very reasonable and low risk.
Lastly, the market has appreciated quite a bit, and long term homeowners with plenty of equity and excellent credit might be the ones that have big investment reserves too.
As I’ve noted before, the problem before us is the people who bought homes with exotic mortgages that simply would not have been qualified during more responsible lending times.
Nonetheless…. we agree that the move up market is hurting because only the more responsible homeowners have the opportunity to move up, which is a smaller buyer pool. AND, such homeowners might be the least likely to want to “upgrade”.
After all, there are lots of wealthy people driving Hondas and lots of poor people driving Benzes.
I meant the “STOCK” market appreciating… NOT the RE market.
Youzaw! That could be a huge GOOF.
Long term owners will be fine. And long term, isn’t really long term, basically a 50% drop from peak will put us back to 2001/2002 prices depending on area. Add 8 years of inflation and a 50% “real” drop, will leave us at 2003 prices.
Yes… that’s the trick.
If you look at your home not as an investment but as the place they’ll take feet first (if you get my meaning)… as if you have a fixed payment that you can live with, then the whole idea of this crisis is not a big deal.
Except, of course, for the HOA impact. If you live in an old HOA with long term owners then you won’t see much of a hit, but on a new HOA you may run into financial problems.
Laura, we do have a bubble but it is not nearly as wacky as SoCal where everything, and I mean EVERYTHING went to crazy prices. Like 800sq ft stucco boxes in COMPTON listed for $450,000 where the median houshold income is around $38,000.
Imagine a house is say, Harvey, being listed for $450K? Has not happened there. The bubbles here seem so be contained to very desirable areas as opposed to the armpit towns.
Not stomping on your analysis, but check out some of the other SoCal bubble blogs for some more really insane sale histories. Makes our lowly midwestern cornfield look super cheap. You’ll see what I mean…
Have you noticed an increase in CALIFORNIA license plates around here lately? Not like it is an easy road trip so I doubt everyone is here for vacation…
Dude, like NIMBY. Huh?
Yeah, ignore your own glass house while you throw rocks around.
Do you even know where Compton is? Ever been to Compton even? For your information, there are nice people living in there trying to raise their kids in a good way. And Compton is closer to the ocean than Riverside. If you worked in Torrance, the drive from Compton ain’t so bad. I think you owe those people in Compton a big apology.
In a way I wish it go further down because I’m sitting on a 20 year old Prop 13 exemption.
I want a bigger house yet, but I can’t stomach paying four to five times the real estate tax. So, I figure we’ll do more construction…. over the garage this time.
Tonye, if you’ve had the home 20 years, I’m guessing you and wife are pushing 55+, in which case, Prop 60 and Prop 90 apply. You can forward your tax basis to an equal or lessor home. http://www.wwlaw.com/prop60.htm
Nice try, tonye. LMAO.
I am sure Compton has some fine Cosmopolitan attractions and also a wonderful Philharmonic orchestra.
BTW, I have been through Compton. I know what it is like. I am sure there are many fine citizens, but the numbers do not lie.
Compare LA numbers to Chicago numbers for median income to median housing cost and you will see the median income in LA is slightly higher, but the median home cost is near double.
Explain that, genius.
You guys both need to lighten up. Somewhere along the line this discussion got personal for the two of you. I have been following the back and forth across multiple threads, and I surprised at how long you guys have been going at it. Stop, it has gone on long enough.
The two good Chicago bubble blogs are:
http://chicagobubbleblog.blogspot.com
http://secondcitybubble.blogspot.com
Neither of these two blogs come anywhere near being as detailed and altogether well-written as this blog and Dr. Housing Bubble, but they highlight the overinflated Chicago market , which, in certain zip codes and some suburbs, is as outlandish as California’s.
My own blog is http://thenorthcoast.blogspot.com, but it is extremely local and focuses mostly on the north lakefront nabes, and on issues that pertain mostly to that area. Most of it is non-real estate related, but I will shortly be featuring properties I think are obscenely overpriced, like 700 sq ft Bucktown 125-year-old worker’s cottages with old asphalt siding for $650,000.
OK, I’ll lighten up if he lightens up on picking on us Californians.
We don’t pick on Midwesterners, they can do as they please, so why should he pick on us?
I’m kind of tired of all of that “you deserve hell and financial ruin because you’re all fruits and nuts” stuff. Jeez.
Besides.. he started it. ;-P
Not yet… we were young and foolish when we bought… and I was working two jobs.
Back then you couldn’t buy a house with 100% financing.
Besides, I would like to move to a more expensive home with a view.
I would think the multiple would depend on interest rates, eh?
Back in the mid to late 80s, the multiple was more like 3 times the median income but the interest rate was much higher.
I know, I know.
You both were starting to get a bit out of control. It was amusing at first, but then you both started getting a bit edgy.
I like you both, as you both post thoughtful comments. I would not want to lose either of you as you are both valued members of this community.
Yes, you are correct. They breakeven rental calculation is dependent on interest rates. We are so far above 4 times income now, that it represents a good ballpark guess as to where we might start to bottom.
I found some in my neighborhood in Ventura county. http://crashingoaks.wordpress.com/2007/07/10/june-sales/
Admittedly, a high-end home, this one increased $200k in 2 years: http://www.zillow.com/HomeDetails.htm?zprop=16427966
This one flipped for a $70k profit DURING 2007!! http://www.zillow.com/HomeDetails.htm?zprop=16476086
This one was flipped for a $45k profit this year, but took a $155k loss the previous year: http://www.zillow.com/HomeDetails.htm?zprop=16481591
Here’s two more winners:
http://www.zillow.com/HomeDetails.htm?zprop=16481381
http://www.zillow.com/HomeDetails.htm?zprop=16431510
They still exist…
>> to think that IHB is somehow representative of everyone is absurd
Agreed — no one thinks IHB is representative of everyone. If I implied that, I apologize.
There is no reason to be bitter. If you think IHB is too pessimistic — go long! at prices made too low by the pessimism. If you’re optimistic — the doom works to your advantage!
Personally, I think, y’all are closer to a market top ($500 a square foot for a 1050 sq foot house!) than to a market bottom.
patience – I am on a Mac using Safari, so can not check zillow myself, but are these sales in 2007, or are they “zestimates” for 2007?
patience – I used Firefox and found out they are indeed sales. When you were looking for these appreciative sales, were there more appreciatve or depreciative sales, and about how many more of one or the other?
No apology needed. There was nothing offensive in your statement. It was just absurd, and it wasn’t implied. It was stated.
“One of the signs of a market bottom is blogs like irvinehousing — when everyone says things are awful — it is time to buy.”
They are actual sales figures from Zillow, not ZEstimates. I searched for all “recently sold” in the area during the month of June and had previous sales history since 1/1/2003. I found 11 meeting this criteria and 7 of them had appreciated.
2 of the houses that appreciated had previous sales in 2003 or 2004. All of the depreciators were from 2005-2007.
So….counting houses that sold during June 2007 with previous sales between 2005 and 2007, there were 9 units. 5 appreciated and 4 depreciated.
You hit it dead on. $750 of mello roos + HOA per month is almost enough for me to pay into an extra $100,000 mortgage.
[Waving white flag]
I love California. I was about phone call away from renting the U-HAUL (which, BTW is incredibly cheap into CA…) to move to Pasadena.
Until I realized that buying a condo would be near impossible for a long time.
I just pick on how insane and “frothy” that market became.
There are a few midwesterners on this board. The mentalities are different. I just find CA fascinating.
While this blog is entertaining, I have a hard time taking seriously anyone that is an Irvine renter. If this person truly does rent then this is simply his/her way of venting at the rest of us owners because Irvine Renter made some poor life choices in the past and cannot afford to live in the area he/she pokes fun at. My guess is Irvine Renter has a job that requires a nametag.
You don’t see any value to his analyses, such as:
– Land Value 101
– Houses Should Not Be a Commodity
– Appreciation Is Dead
And others? They seem pretty well backed up with facts and evidence. I’ve been waiting a long time to read some legitimate rebuttals to these theories, but have yet to see one.
I did an appraisal on a home in Mission Viejo the other day. there were model matches that were selling for $40,000 less than what the owner’s valuation of his own home. There were no great differences between the subejct property and the comps I found. So I asked the owner why his home was worth $40,000 more than the REALLY good comps. His response was (better sit down for this one): “Because I own it”. There was a pause in the conversation because I was waiting for another reason, he didn’t have one. I thought he was joking, he wasn’t. WOW! With this kind of thinking this is going to be a very intersting time over the next few years!
Also, I been reading all your posts, great stuff. Do you think that the 40% devaulation will occur in “bullet proof” areas like Shady Canyon?
If this all plays out like predicted then sellers are actually going to be selling properties that are cash flowing. What makes an owner sell a cash flowing property at a time when they should actually be keeping it or buying more?
“If this all plays out like predicted then sellers are actually going to be selling properties that are cash flowing. What makes an owner sell a cash flowing property at a time when they should actually be keeping it or buying more?”
It won’t be cashflowing for them. It will be cashflowing for the guy that buys it from them at a 40% discount.
You can never get positive cashflow if you overpay. If you buy when terms are bad, you can refinance when terms improve. If you buy when prices are bad, you are screwed.
As regards Shady Canyon; we look at open houses in Shady Canyon once every few months and what I notice about this “bullet proof” area is that there are many, many lots which have nothing on them except for weeds, and there are many empty $5 mil spec homes. I can only calculate what the monthly vig must be on an empty $4 mil or $5 mil spec home.
OUCH!!
LOL!
Bitter homedebtor humor, I love it. You help empty my The Reservoir of Schadenfreude. Thank you.
Another renter. So you can safely ignore him too :).
Still Renting by Mark Kiesel
http://www.pimco.com/LeftNav/Global+Markets/Global+Credit+Perspectives/2007/U.S.+Credit+Perspectives-+5-2007.htm
Honest, but not too perceptive.
Many of us sold our homes at the top of the market and are now leasing a home at least as nice as the home we sold and in an area as nice or nicer than the one in which we owned. The choice to sell and now lease is most likely anything but a poor life choice. It is more likely an astute and brave financial and lifestyle choice, of which only a few have the cajones to participate in. You may want to open your mind a bit and ask a few questions of those you are so quick to judge with your preconceived stereotypes. You may learn something instead stewing in ignorance.
You’re all looking at homes as investments.
WRONG!
I look at my home as Chateau TonyE.
We drove up to Portola today… looked at the big homes… Status homes with a screwed up design. Terrible kitchens, no networking, not enough outlets, not enough HVAC zones. Small bedrooms, no living room!
The developers are really anxious to sell and not much work on the houses.
I’m not moving.
Bottom line?
I could make a move to a much bigger home for a not much bigger mortgage. 30 year fixed that is.
I could bust the comps, sell now and walk out flush with cash, and still move back into the market in three years.
BUT…. my RE would jump from 3500 to like 30K a year!
Those of you who keep buying and selling will never reap the benefits of Prop 13. Those of us who stay put, build up instead of moving and hold onto 30 year fixed mortgages will eventually be in a position to retire with a paid off home and a minuscule tax burden.
And that folks, is the true freedom. RE will go up AND down, but I just don’t really care I guess so long as I can get my home paid off before I retire and have zilch in taxes.
Also, by looking at the homes today, I realize that I have much better taste and ideas than the builders. My home reflects my wants and needs because we went through the 3 year pain of rebuilding. Further space needs were though of when we redesign the infrastructure of the home, so that future costs will be much cheaper per sq foot.
I guess I’m just waiting for the market to crash so the custom builders will be begging for work and I can tap into my equity to build out. And yep. the market can drop 50% and I will still have lots of equity to tap into. 😉
Of course, I’m worried about the credit crunch effects on the economy, because that’s where our money really is. Not in residential RE.
Honest,
Why do you have to be a homeowner (homedebtor), in order to offer thoughtful opinion and analysis? I’m sure that most of the people here who are renters are successful individuals. Many of them could stop renting and purchase something, but they choose not to because they believe that the market is overvalued.
By blindly making assumptions that IR and the rest of us have made “poor life choices” or we have jobs that require a nametag (does having an ID badge to get into my building count?), shows that you have no basis for your arguments. And besides, there are plenty of people out there who wear nametags and make plenty of cash.