Welcome to the Irvine Housing Blog

Welcome to the Jungle — Guns n’ Roses

The Irvine Housing Blog is being featured in the print edition of the Irvine World News this weekend. For any new visitors that found us from this article, I like to say welcome.

The Irvine Housing Blog is a blog devoted to real estate in Irvine, California. As such, we analyze local and national issues that impact prices in our housing market. Since its inception in September of 2006, we have been bearish on real estate in Irvine. The reasons for our bearishness can be found in great detail in the analysis posts found both in the sidebar and on the analysis tab above. These posts are organized into the book, The Great Housing Bubble. We are not a bubble blog, and though we are often referred to as part of that community, we will only be bearish as long as prices are elevated above fundamental valuations and market conditions point to continued deterioration in prices. At some point, we will turn bullish.

In early 2007, we published a series of predictions for Irvine median house prices. The red line in the chart above is the original prediction, and the green line represents what happened through April of this year. As you can see, we have a reasonable record with respect to forecasting future median home prices.

We are a vibrant community of more than 3,000 daily visitors. Our forums have over 1,500 members and over 78,000 posts. Many Irvine residents come to our forums looking for information on Irvine housing, discussions about the economy, politics, or just to hang out and be part of the community. The forums are free to join, and everyone is welcome to participate.

In a typical post, we examine a property for sale in Irvine in our own irreverent, snarky style. There is usually a featured song for everyone’s entertainment, a preamble with discussion or analysis of market issues often with a tie-in to the featured song. After there is a presentation of the featured property with two pictures (if available,) and a breakdown of the asking price, the income requirement and downpayment requirement based on traditional financing, the monthly equity burn (the amount the buyer will lose each month assuming prices drop 10% a year for the next 2 years), the original purchase price, the date of purchase, and the address with a link to the listing on Redfin. Below the fold, there is more detailed property information from Redfin and the MLS including the property description. The quality of the writing on MLS listings is often horrendous, and we will ridicule this descriptions just for the fun of it. Then we go in to detail on the mortgage debt on the property showing how much each of the parties to the transaction is going to lose in the eventual sale. The stories the property records reveal are often quite illuminating and instructive — instructive on what not to do.

If you are new to the site, we encourage you to look around, and please join in the fun by adding your own “astute observation” to the post below. Welcome.

For those of you who are regulars to the site, go check out the article in the Irvine World News print edition. We will also be featured in the OC Register on Wednesday. As a reminder, out IHB get together and book signing will be this Wednesday, November 12, at 6:30 PM at JT Schmids at the District. Everyone is welcome to attend.

It has been almost 7 months since our last call for lurkers to come out of the shadows. For all you readers out there who have never posted before, please say
hello. We know you are out there. This is another chance to break the
ice…

{book}

Welcome to the jungle
We got fun ‘n’ games
We got everything you want
Honey we know the names
We are the people that can find
Whatever you may need
If you got the money honey
We got your disease


In the jungle
Welcome to the jungle
Watch it bring you to your shun knees, knees
I wanna watch you bleed

Welcome to the jungle
We take it day by day
If you want it you’re gonna bleed
But it’s the price you pay
And you’re a very sexy girl
That’s very hard to please
You can taste the bright lights
But you won’t get them for free
In the jungle
Welcome to the jungle
Feel my, my, my serpentine
I, I wanna hear you scream

Welcome to the jungle
It gets worse here everyday
Ya learn ta live like an animal
In the jungle where we play
If you got a hunger for what you see
You’ll take it eventually
You can have anything you want
But you better not take it from me

Welcome to the Jungle — Guns n’ Rose

50 thoughts on “Welcome to the Irvine Housing Blog”

  1. John

    Hi all. Long-time reader, first time poster. IR’s call for lurkers to reveal themselves hit home. I moved here a year ago from the midwest and have a house to sell there. My wife and I would like to buy in Irvine because it’s close to our jobs, but until the other house sells, we’ll probably stay put. IR’s and readers’ insight into the market is helping me to hold off. My wife wishes we had bought when we first moved to OC, but I remind her we’ve saved at least $150,000 by not making that leap. Cheers on the book and thanks for the blog.

  2. disposable income

    I live in a >really< depressed part of Michigan. We paid $10,000 for our duplex in the mid 80s, and the entire county is now unsellable, even at that price. Both sides of the house are nice, and will take as pretty pix as anything I've seen here. Of course, if you have to move, you just go away, quit paying your property taxes (900/yr) and the township owns it in 3 years. Banks used to lend out 80k at a pop into this market as recently as a year ago, but the foreclosure ads are getting pretty numberous now. We're grossing $75k and saving like crazy because we will move in the next 5 years when the 3 car makers disappear. How do the economics work for a half million house, with 8k in taxes and crazy HOA fees? There can't be that many households grossing 250k a year to support California prices. I'd like to see the family budget for a mortgage payment like that.

    1. alan

      I wouldn’t be too worried about walking away from a $10,000 purchase in the 80’s. You have already made much more than $10,000 in savings vs. renting. I’m sure anyone in Irvine would kill to be in your shoes.

      1. Forbear

        “I’m sure anyone in Irvine would kill to be in your shoes.”

        You mean boots, it’s damn cold up there!

  3. Dia

    I’ve been lurking for a year now. Don’t live in or near Irvine, but come to the site almost daily for the best insightful commentary and on the housing situation available anywhere. I’ve been to all the blogs in the U.S. and IHB is the most consistently excellent.

    Agree with many predictions here. I was predicting the bubble burst to anyone who would listen in late 2005. I’m now predicting stablization of prices by early 2011 and recovery to 2006 prices by 2018. Sorry, a return to unrealistic pricing levels, particularly in Cali is inevitable. Easy credit (er..creative financing) will return, the flippers will reappear, dreamers will be reinvigorated and the Kool Aid will flow. Sadly, human greed will always find a way.

  4. Fever

    Irvine Renter saved my financial ass, for which, thanks! I have a gig that has me working in Orange County and pays pretty well, and I considered buying a condo or something to have a place to stay the 3-4 nights per week I’m in town. This was in late 2006. Just searching on properties led me to this blog and a whole range of really insightful analyses that convinced me I’d rather burn my money than invest it in Irvine housing at the moment.

    Instead I worked out a reasonably fair reverse timeshare arrangement in Newport Coast, which is a bit more of a drive but gives me the use of a nice place at a net cost of about 1/3 a hotel room, when the full costs of ownership are considered. Having the tools to work through that kind of analysis is something else that I can thank Irvine Renter for.

    See you in Tustin on Wednesday!

  6. ruralkansasobserver

    Love your blog! I have been reading it for over a year and it helped me in anticipating the economic problems we are now having – though I had not imagined the degree of the system breakdown. Living in rural KS, we do not have the overinflated dreams of having our house make our financial future so I have not felt in a position to comment. I do hope that housing prices come down to something reasonable in CA. I am always shocked to see what people were willing to pay for almost nothing in a house. I look forward to reading your book.

  7. granite

    I’ve lived “next door” to Irvine in Tustin Ranch until now. I’m leasing a house ($2260/mo) in Irvine which makes a lot more sense since the lease payment is $900 less per month than buying the house with 20% down. The taxes are $6,600/yr and the association fee is at least $150.

    One look at Irvine Renter’s chart above is pretty convincing evidence that this asset is still depreciating. The house (on Wakefield) is valued almost exactly as shown in the chart. By 2010 or 2011 I will begin to get serious at the mid to low $400s, just like the chart shows.

    Readers of this blog didn’t drink the Kool Aid, thanks to IR.

  8. TustinRanchLurker

    I found the IHB while selling my Tustin Ranch condo last June and searching for a new condo. My wife and I intended to move up to a larger one right away because prices had come down so much. Because of the information here I was motivated to do much more research than I would have, and deciding to wait and see what happens in the housing market was an easy choice for us. I have to thank IR and the others members for their help.

    I’m not one for astute observations and usually won’t have much to add to the post here, so I’ll continue to lurk . I just wanted to let you know that what are doing is helping people and keep up the good work.

  9. Mcdonna1980

    I like to send my Congrats to Irvine Renter & all that make this site great.
    I was very please to find the IHB featured on the front page of the paper this morning. I hope your site traffic skyrockets! I have been coming here for my daily reality check since early 2007. I don’t post often, though. Not sure why. Shyness I guess. But today you inspired me to come out of the shadows and I’ll try to keep it up.

  10. Gray

    Uh, I’m sure it’s mentioned in one of yor postings, IR, but, honestly, I’m too lazy now to search for it:
    Why the temporary increase of median home prices in July 2010?

    1. IrvineRenter

      There is often a spring rally even in bear markets. The close prices get to the bottom, the more likely we are to see a spring rally.

      1. Gray

        Ah, ok, thx. Looking at the graph again, I see that there’s a similar spring rally in 2011. Makes sense.

  11. Mitch

    My wife and I have always loved Irvine since the days (1999-2000) when I lived there when we were first dating. Unfortunately, we likely couldn’t live there because she’s in animation, and the only concentration of such jobs is Burbank/Glendale and thereabouts. Perhaps someday, though, when she makes a mint in children’s books! 😉

    meanwhile, we enjoy watching prices in Irvine fall closer and closer to merely outrageously high levels.

  13. 25inIrvine

    Hey IR,

    This is my favorite graph on this site. A couple of questions about it:

    1. The Annual % Decline #’s – Why don’t they add up year to year. For example, 2007 is 8%, 2008 is 12%, but the total is 19%. I am guessing this is due to rounding, is it possible it add like .5 or something like that so we know the rounding? so then we know its like 7.5+12 = 19.5%? or whatever the numbers are.

    2. Also, is it possible for you to add on the actual % decline per year so there is a compareable to what you projected?

    Tnanks, 24

    1. IrvineRenter

      Each period is evaluated independently. A 12% decline after an 8% decline rounds to a total 19% decline from the top.

  14. Austin Real Estate

    Congrats to IHB and all the contributors. I love reading this blog and learning about the financial impact of this whole mess that we’re in right now. Keep up the good work.

    Joe

  15. Mark

    I’ve been reading IHB off and on for a few months. I’m a Irvine homeowner, sort of. I work for UCI and own a house in University Hills, but the land below the property is subleased to us. We buy the houses at artifically controlled below-market rates, and sell them back at artifically controlled sub-market rates if and when we leave UCI.

    We have a decent-sized home (~2200 sq feet), but we might eventually want to move either to get a bigger house (we have 3 kids) or to be closer to my wife’s work. Thus we’re waiting for when the California housing market comes down, since we won’t get much for our current house. IHB has been very helpful to me to better understand what’s going on, and what is likely to occur in the future.

    Thanks for a great site! Even though I’ve read some of the background analysis, I’ll probably buy the book too just to get it all in one book.

  16. zeo

    Long time lurker, first time poster. Since so many are coming out of the woodwork I guess I’ll add to the pile.

    I wasn’t even looking for a house and had no clue, but back in 05 I contracted with Option One Mortgage for 4 months. After seeing the market prices and doing some quick calculations I came to a conclusion: How the heck were people able to afford these homes? Irvine is middle and upper middle, but this was nuts. Not long after that I found HBB and IHB! Then it all started to make sense. Instinctively I knew something was wrong with the housing market, but I wasn’t sure what it was. A big thanks to IR for helping quantify it!

  17. lu_backout buyer

    I’ve been lurking for 3 months since I put down my deposit for buying a townhouse at Tustin Square. I was trying to find more information about the neighborhood over there, end up struggling on the decision of whether to buy or not since then, especially after the stock market crash and the economy data. Even the price have been drop quiet a bit, but the HOA and Mello Roos are way too high for that neighborhood compare to other communities. If I buy the house now, I will be frustrated for the next few years. If I back out, I might loss all of my deposit and be upset for a few months but will be able to save more money and not to worry about losing job. I wish I had done enough share of research before putting down my deposit, but I hope I had make a right decision of backing out. I have one question, my closing escrow is next Friday, is it too late to tell the sales rep that I want to back out?

    1. Chris

      It’s not too late to back out. However, say goodbye to your deposit.

      Could’ve bought a few rounds of beers for this advise with that deposit. Oh well.

  18. Shawn

    I’m new to the world of real estate, and I’m trying to start out in investing as well. I love the info and the way this blog is set up.

    I’m actually in S. Florida so it’s enlightening to hear about what’s happening in other parts of the country from people who are actually there.

    I’ll check in regularly with word from this side.

    http://www.inexpensiveinvestinginflorida.com/

    Thanks

  20. ockurt

    Congrats Larry, I got the paper the other day and read your piece. Nice to see they recognize the quality work you do.

    Thanks for the informative blog. It’s helped me stay informed of the Irvine r/e market, and has actually kept me from pulling the trigger too soon.

    Question: If we’re able to buy a place at a 15% discount to compensate for the future downside would you go for it?

    Hope to see you on Wed. I live down the street so it’s easy for me to get over there.

    1. IrvineRenter

      Rental parity or bust…

      Actually, if it is the 2010-2012 period, you could pay 10% over rental parity and you might still be alright. The point of measurement shouldn’t be today’s prices, it should be the fundamental value.

  21. alex

    Ive been reading this blog for a couple of years now. I am one of those people who has been waiting on the sidelines waiting for prices to drop and now starting to look. many hav the opinion that prices will continue to drop much more but I am starting to think that its about bottomed out based on the following:

    1) The inventory is almost half what it was a few months ago.

    2) Ive make some very good cash offers on several properties and I have lost all the bids to others.

    3) banks are not very cooporative and not in a hurry to get rid of the properties.

    4) investors are gobbling up most of the good properties and they have lots of money.

    All you have to do is look at Redfin and see whats happening. Also, most of the post and prices on this site are rather missleading since these homes are shortsales. The agents are lisying the prices rather low just so they get get some offers in to the bank. Afterall, you can not get the baks to consider a shortsale unless they have a few offers. The reality however is that majority of these properties are not selling for the shortsale listed price. What do you folks think?

    Discuss

    1. SanJoseRenter

      What alex said also describes the house market around San Jose’s Japantown, at least in the low-end.

      Houses churn pretty fast once they fall to $299k to $399k. This is very evident in Redfin.

      However, I haven’t seen any bidding wars – just the first qualified purchaser grabs it fast once it hits the sweet spot.

    2. IrvineRenter

      Anything is possible, but it is pretty unlikely that this is the bottom. The major pain for our market is ahead of us, not behind us. Also, we have featured a large number of REOs where the asking price is the real price. Most of the short sales we feature will probably be featured again after the foreclosure. The banks will be in more of a hurry to get rid of their properties because they are getting more faster than they are selling them. That is when the price drop picks up steam.

      1. Mikee

        “the banks are…not in a hurry to get rid of the properties”

        Isn’t that the problem? The inventory is not realistic as the bank are circling their wagons and figuring out what to do with all that inventory. With the foreclosures that have happened and the ones that will (see the analysis on the Alt-A and Option resets,) there is a lot more inventory to put out there.
        Once they do, the prices will fall again. IMHO, of course!

  22. sanjoserenter

    Hats off to Irvine Renter. IHB has become daily reading. It saved me when I almost bought in Irvine 2 years ago, when people were saying “Housing never falls” “Foreigners will flock in when prices drop 5 %” yada yada. IHB has been a unique mix of analysis and facts (starting with flips gone bad – what happened to ocfliptrack!)

    I have since moved to San Jose. Wish there were sites like this here. I have never found anything quite like it.

  23. Mooser

    There’s nothing like a “Learn to be Rich in Real Estate” Google Ad to give IR that final touch of class. I love it.

    Alex, don’t confuse a root or projecting rock one can grab on the way down for the bottom. Now is when the rising unemployment will really cut into home ownership.
    But you go ahead and do what the “investors” are doing. Hell, we are all “investors”, huh?

  24. Mooser

    I’ve been reading IHB off and on for a few months. I’m a Irvine homeowner, sort of. I work for UCI and own a house in University Hills, but the land below the property is subleased to us. We buy the houses at artifically controlled below-market rates, and sell them back at artifically controlled sub-market rates if and when we leave UCI

    Sounds like socialism to me. Or something even worse.

      1. Bitter Renter

        UCI is the University of California, Irvine. I don’t think controlling the prices of the houses that are on the university land and only making them available to faculty / higher-end staff is tantamount to socialism. They need to be able to attract and keep good professors and researchers, so good on them for being able to use their land to take the hideous local real estate bubble out of those prospects’ decision process.

  26. no_vaseline

    I want to note that anyone who was fabricated when Guns N Roses released Appitite for Destruction is now legal to drink, and thus invited to the book signing.

  27. sd_kitkat

    I’ve been reading for a few months, but I’ve read most of the archives. I grew up in South Orange County (Dana Point), and stupidly decided to buy in 2005. Too much kool aid, not enough common sense. We bought a condo, with an 80/20 combo loan, 5 year arm, interest only and a small down payment. After a year and equity gain of $30k, we refinanced to a first that had a 7yr arm, still interest only and a smaller, fully amitorized second, and we did not take any equity out. We still have 5 years left on our fixed payment, but my husband got seriously ill and is unable to work, so we’re facing a work out at best, foreclosure at worst. Had it not been for the illness, we would still be ok, and due to where we planned to be in our careers (he was in the process of taking the bar, and i’m in pharmaceutical school), we’d even planned for an increase of payment in 5 years.

    So I have the unique perspective of being a stupid homeowner, but I still am pissed off by the equity abuse I read here! When we got our loan, we told our mortgage broker what we could afford, and he told us, “But then you’ll only be able to buy a house for $x. You qualify for $y (about $125k more). We said, “So, what? We can’t afford the payment’s for y, so we’ll find a house for $x or less. Our house was $8,000 less than x! When we refinanced, we didn’t take any equity out even though we could have. But we made our bed and will lie in it. Hindsight is always 20/20!

  28. Editor

    I’ve followed IHB since June when I started blogging for a national real estate site – I linked to you a few times and always enjoyed your commentary. I’m no longer blogging for them but still check in. I wasn’t a regular reader when you last asked for lurkers seven months ago. I clicked on your link and truly enjoyed the ponzi scheme collage. Keep up the excellent work.

  29. ochomehunter

    IrvineRenter,

    I knew that actual numbers would beat our forecast and that is exactly what happened. New thing to note here is that there will be shift in new foreclosure sources in the coming months. So far the foreclosures were triggered from sibprime, then from speculators who walked away, then from those who HELLOC’ed and walked away, then from those who caused fraud.
    Now the time has come for foreclosures from joblosses, prime and subprime combined. It will be the saddest of the foreclosures as jobmarket is getting worse every day. I was proud to have enough cash to pay 20% downpayment, now I am not sure if I will be employed in the next six months and cash will last me a year max. I am sure there are lots of others on this board who are in the similar situation. This was my biggest fear that when time would be ready, my circumstances my change.

    Is there anyone else experiencing this?

  30. PDamian

    Kudos for your newly found notoriety! I started reading IHB only a few months ago. I’m a professional educator, and up until very recently, my salary was so low that I thought I’d never retire, let alone buy a house. No complaints, as I love my job and am content to live frugally as long as I can do what I love.

    About a year ago, I was hired by a small midwestern university at a much higher salary than my previous employ — so high, in fact, that I began to contemplate purchasing a house for the first time in my life (I’m 44). My pre-purchase research led me to this blog, thank goodness. I’m saving about 35-40% of my take-home salary now, living austerely, piling up a war chest of sorts, and waiting for house prices to sink a bit more until I make my move, a game plan I created due in no small part to this blog. Thanks for keeping house-purchasing neophytes like me informed and educated!

  31. priced_out

    I’m another lurker. I read an article on Slate about your blog about this time last year and have been hooked ever since.

    I moved to Seattle from North Carolina, moving out of a 1200 sqft house on 3/4 acres to an 800 sqft apartment, paying a little less than double in rent what I payed for my mortgage. I need more room but can’t afford it — at least, I can’t buy a house here in Seattle. In fact, I can’t understand how anyone can afford a house here in Seattle.

    I appreciate the IHB for opening my eyes to the idea of renting houses (obvious, right?) and for forecasting a market bottom. Seattle was slower than Irvine to start deflating, so I expect we’ll lag in hitting the bottom of the market, too.

  32. WagTheBlog

    I’ve got brilliant timing. Bought first house (condo) at peak of prices in 2004, but luckily at bottom of interest rates (5 year arm at 3.5% – expires June 2009). My purchase price is still more than what I could sell it for today. Fortunately, I have renters that cover most of the mortgage.

    I bought my current house in Aug. of last year just before the bubble officially burst. 10 year interest only on a 30-year fixed of 6.6%.

    But it’s the second mortgages (HELOCs) on the two properties that are killing me. They’re fixed at 8.5% or so and I can’t get rid of ’em. No equity in the house to re-fi, and no one wants to re-fi an investment property.

    At this point, just crossing my fingers until June 2009. I don’t know what my ARM will adjust to or if the rental income can cover it. Bollocks!

  33. Mind Power Blog

    Appetite for Destruction, undoubtedly, is the finest hard rock album written in the history of music. Axl and Slash did a fabulous job.

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