This blog launched exactly a week ago and the response we've gotten has been AMAZING! We'd like to send a big thank you to the sites that were kind enough to link to us: OC FlipTrack, Bubble Tracking, and Cryptogon. You guys have given our little blog some great exposure and without it, we'd just be writing articles to ourselves 😉
We also want to thank all of you for checking us out and posting some great comments! If you have any ideas on what else you'd like to see us write about or if you have tips on a flipper in trouble, just send us an email (see the About page).
Thanks again!
You guys have a stats counter on your site?
It’s quite rewarding to see the numbers at the end of the week. I threw one on and expected to see 20-30 visits per day. I saw 300-700.
Provides encouragement, etc etc.
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Never mind, you’re using Google Analytics.. I see that now.. 🙂
Hi Guys,
I used to work in the IT department of a subprime paper mill in Irvine. You might like this:
http://cryptogon.com/2006_09_03_blogarchive.html#115726846532246735
I used to work for one of the oldest and largest financial services companies in the world. But you wouldn’t have known it from looking at the sign on the outside of the building. You see, the firm kept its name out of public view when it came to this business: the sub prime mortgage lending racket.
Why?
This Wall Street firm, spoken about in hushed tones around country clubs and cocktail parties, DOES NOT want to have its name associated with the financial services equivalent of a chop shop or a whore house. Oh no. It just wants the money associated with this despicable operation, and none of the press. Questions in the media about the propriety of these activities might cause discomfort for investors. Certain public appearances need to be maintained, after all.
This firm premeditated the exit from the crash unfolding before our eyes, both legally and in terms of public relations, years in advance.
Here’s what it did…
the link to your blog is well deserved. very well done and keep up the good work!
Great work on this blog! It is nice to see something so focused locally with some great writing, logic, humor, etc.
Great work on this. I know you’re spending a lot of time putting very useful information on your site, but what would be really interesting is if you could provide us with detailed statistics on the Irvine market, similar to what ocrenter is doing.
Some metrics that I would like to see is:
# of homes for sale in Irvine / month
# of homes sold in Irvine / month
# average sales price / month
# median sale price / month
% reduced price / month
Mos. inventory /month
It would be great to see this data in a graph format so that everyone can see trends. In fact, if I am able to get a good handle on this information, maybe I could send you the data and you could post on your site?
Thanks again for your hard work. My anecdotal story: talked to a preschooler parent the other day in our area (92620) and he firmly believes demand for Irvine schools is going to keep appreciation rising in Irvine regardless of what happens in the rest of the county, state, country. Is he an island of delusion or am I an island of pessimism? Fundamentals will rule the day…
I think about Irvine a lot since I live there. Sellers are holding the line on their prices while DOM rises and I ponder whether or not that can continue.
I don’t think it can. Irvine will continue to command a premium over surrounding communities, but there will come a time where the Irvine premium is too dear and buyers will head elsewhere.
Irvine schools are great and all, but how many people would pay $500/sq ft for a condo in Irvine when they can pick up SFH in Tustin at $250/sq ft? Yes, this comparison is extreme but it’s the kind of differential we’d see if Irvine stays high while everything else corrects.
oc_fliptrack,
Yup, Google Analytics is pretty cool! Our stats went up big time thanks to you guys!
Kevin,
Great article and an awesome post! After reading it, I wonder exactly who are these people pulling the strings and making all this money. Are the people working for this company aware of it or do they believe it themselves?? I think a lot of the idiot salespeople (loans and RE) just repeat what they hear from their managers and really believe what they are telling their unqualified customers – similar to the dotcom boom and bust.
ocrenter,
Thanks! I just read your latest post and am amazed at how that whole story in Laguna Hills developed. Crazy!
kellerlbc,
Thanks for the compliments! I’m tempted to blog about some of the other crazy things here in OC RE but I’m trying to stay focused. Maybe another day 🙂
nonoboy,
It would be great if I could gather this info. I’ll shoot you an email.
Irvine has a lot of things going for it… Hell, that’s why I’m living here. The highly rated public schools and the large amount of jobs will help soften the blow here. Other parts of Southern California will be hit much harder, for example some of the places talked about here.
But housing in Irvine has obviously appreciated at an unsustainably high rate. There are hordes of people/companies who made money in RE (flipping, lending, selling, etc) and are based out of Irvine. When these people’s incomes are reduced and/or jobs lost, the supply/demand for housing in Irvine will definitely be affected. It’s just a question of how much and for how long.
I’m with you. Irvine is the place to be for families in the OC. Outside of the beach cites and some other high end enclaves (Coto etc.), Irvine should remain priced higher than other cities in OC.
That doesn’t mean there won’t be a price correction. Prices are going to go down.
Does anybody know how Irvine fared in the early 90s bear market? I heard that it held up better, but I couldn’t find any data either way. I would have liked to have known before I sold, but that decision has been made already.
Great blog!. I’m always interested in Irvine since I grew up there. My parents bought a 3500 sq ft house (w/ up to 7 bedrooms avail for that model – we only had 4) in 1970 for $28,000. It was in a tract called Ranch West (now called Racquet Club) on Culver next to the 5 fwy. My parent’s friends thought they were nuts to pay “so much” for a house out in the middle of nowhere. It wasn’t even Irvine then. It was a Santa Ana zip code. No High School (till early 1972 – I was first graduating class). Irvine Middle School was in the middle of a celery field off of Sand Canyon. Back then it was a great place to grow up – farmland and orange groves everywhere. I still get a little nostalgic when I smell smudge pots on a cold night! I left Irvine after high school, but my best friend still lives in Woodbridge.
I escaped from behind the Orange curtain twelve years ago and now live in South Pasadena, a small town (23,000 residents) that was mostly built early 1900’s. So we have no tract housing, vintage Craftsman houses, charm and character, no HOA’s and no mellos roos. Our schools are consistently rated higher than Irvine’s and we have great public transport to downtown L.A. (about ten minutes by train). We also have higher crime in surrounding areas (not in So. Pasadena, really low crime here) hotter temps and more smog. The home prices are comparable to Irvine for comp sq ft., but our lots are usually larger w/ many mature trees. We also have a couple of areas that sell in the 8 to 10 million range. (Not the part I live in – most are in the 700k to 1.5 mil range here)
The reason I bring my current city up is that I think Irvine will be harder hit with this crash than many other older cities like mine. It was with the last crash in the late eighties. Many areas in Orange County, including Irvine) lost 30-50% in value then. So. Pasadena lost about 25-35% during that crash.
Even with the differences, I think many of the same kind of HB’s bought in both places. Very few true “starter homes” price wise. Most buyers wanted the good schools, family friendly town and the “cachet” that goes with the name. They were willing to “stretch” financially to get in. They took out ARMs, I/Os and anything else that could get them into the neighborhood. The difference is that older cities don’t have mello roos and hoa dues on top of outrageous mortgage and tax bills. I think those will be the straw that breaks the homebuyer’s backs in Irvine.
My friend in Irvine and I regularly trade horror stories about the housing market in our cities. The bust hasn’t hit too hard here yet, but it will. I think Irvine is ahead of us in inventory increases, but both cities have maintained value (to a point). I am starting to see huge increases in DOM, though, and many more reduced prices. This area saw a 300% increase in prices from 1999 to 2006.
My main point ( I know it took me forever to get here) is that many areas have the same desirables as Irvine, without as many of the financial drawbacks. IMHO I think you’ll see at least a 50% drop in prices in Irvine before the end of this crash. I also think we’ll see close to that here in So. Pasadena, as we have many of the same affordability issues that Irvine has, just not quite as severe.
Again, thanks for a great post. I’ll keep checking here for good info.
Great site. I own here in OC but was considering a move up recently. No way, just a bit of an upgrade would triple my tax basis. But I still look occasionally.
I looked at the nicer SFH in Turtle Ridge because of the ideal location. There are a lot of homes on the market currently, most of which are looking to make over a million dollars from their purchase prices. I’m not one of those who begrudge people for making a killing because of the market conditions allow it. But I thik the market itself is a wee bit twisted. It would be nice if you could do a piece on the area.
Keep up the good work
Re: the paper mill. The level of incompetence and total ignorance about the bigger economic picture was astonishing. Most of the people writing these loans weren’t qualified to answer the phone in a pizza parlor, but get a client “done for about a mill” with no money down? Oh sure. I’m deadly serious. Many of the salespeople smoked dope and were basically bums with Rolex watches and grotesque SUVs. It was the full horror of the bubble economy, unfurled to the max.
The people making the most money, of course, were the investors in the Wall Street firm that was running the thing.
I was actually saving every penny I could to leave the U.S. with my wife. (Ironically, my last full time corporate job before this one was during the .com bubble. HAHA. I wanted to play this one to win.) We had been fed up with everything there for a long time.
We’re in New Zealand now, on a small farm, and very happy:
http://farmlet.co.nz/
We laugh about Irvine now. I just shake my head and think about the absurdity of the entire thing, and how thankful I am to be out of there. No debt. With our farm paid off. No surveillance cameras gawking at everything. No home owners associations. No traffic. Etc. Etc.
Trishyla, thanks for the informative post. It’s always nice to hear about what things were like back in the day. That’s pretty cool you remember the details of the tract in Irvine!
I don’t know much about South Pasadena but from what you’ve said about the population and the age/style of the homes it’s quite different from Irvine. The HOA and Mello Roos definitely add to the burden out here. I wonder if Villa Park is a better comparison for South Pasadena (although I admit I don’t know too much about Villa Park either).
I’ll maintain that I believe Irvine will not be hit as badly as other cities due to the excellent public schools and abundant employment. Some cities may fare better but there are plenty that will fare worse.
Cheers!
ocpaul, Thanks for your comments! I haven’t yet come across a flip in the Summit at Turtle Ridge but I’ll keep looking. The prices really exploded since construction began in the village and perhaps I’ll be able to locate an entertaining listing.
Kevin, glad to see you got out of the rat race here! Your move to New Zealand and life on a farm sounds like a dream to me. But I don’t know if I’d be ready for the reality of it. I’ll check out your blog to see what it’s like! 🙂