Masada is an ancient fortress in what is now modern Israel. It may be best known as the last outpost to resist Roman rule. The Jewish Zealots which inhabited Masada finally committed suicide rather than suffer defeat at the hands of the Roman siege army. It isn’t known how they committed suicide. Perhaps it was hemlock, the deadly poison Socrates drank. Masada has become a symbol for zealous devotion and dieing for one’s beliefs.
Turtle Ridge is Irvine’s Masada. There are physical similarities in that they are both isolated outposts of prized real estate. The zealous devotion of housing bulls inhabiting Turtle Ridge and their ritual kool-aid drinking is evident in the prices of homes there.
Prices on a per square foot basis (the best way to compare one neighborhood to another) are very high. From the listings I have seen, I would estimate the median listing price is around $600 / SF. About 10% are in the $400s, about 40% are in the $500s, about 40% in the $600s, and the remainder are over $700 / SF. This is a 20%-30% premium over most of Irvine.
Over the next few days, I am going to profile a variety of homes in Turtle Ridge. I have identified 4 properties which are selling below their 2004 or 2005 purchase prices, and I have identified 4 properties which have such ridiculous asking prices that you have to ask, WTF?
First let’s profile two of the rollbacks:
Asking Price: $759,000
Purchase Price: $808,000
Purchase Date: 10/11/2005
Address: 55 Greenhouse, Irvine, CA 92603
Beds: 3
Baths: 2.5
Sq. Ft.: 1,275
Year Built: 2004
Stories: 2
Type: Condominium
County: Orange
Neighborhood: Turtle Ridge
$/Sq. Ft.: $595
MLS#: U7001496
Status: Active on market
On Redfin: 64 days
From Redfin, “Beautiful detached Turtle Ridge Property. Hardwood floors, stainless steel appliances, plantation shutters and custom paint. Light and bright throughout. Great dutch door from family room to back patio to feel cool breeze. Located on quiet street. Gated community features resort like pool, spa, cabanas, and clubhouse. “
.
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This is a beautiful home in one of the best neighborhoods in Irvine, and this seller is still going to lose money. If they get their asking price, minus a 6% commission, they will lose $94,540. So much for that “safe” investment.
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Asking Price: $719,900
Purchase Price: $760,000
Purchase Date: 9/13/2004
Address: 213 Lonetree, Irvine, CA 92603
Beds: 3
Baths: 2
Sq. Ft.: 1,790
Year Built: 2004
Stories: 1
County: Orange
$/Sq. Ft.: $402
MLS#: K07084046
Status: Active on market
On Redfin: 3 days
From Redfin, “Nice property in this great area!! You can & apos; t pass up this price for such an awesome unit!!!Needs very little to be ready to move in to. Bring even your fussiest buyers You won & apos; t go wrong on this one!! “
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If they get their asking price, they stand to lose $83,294 after commissions.
Check out the price per square foot. This will likely sell for under $400 / SF in Turtle Ridge. This is a real comp killer.
So there you have 2 properties selling for less than their purchase prices from 2004 and 2005. These are two of the less expensive homes, but the top of the market is not immune. On Thursday, I will feature two more from the high end.
IrvineRenter – not sure if this has already been presented, but here’s another good pdf chock full of data including % overvaluation by region and past price corrections by region.
Some important tidbits include:
– they illustrate a +.36 correlation between appreciation and valuation.
– as recent 1Q 2004, only 3 metro areas (1% of sfh values) were considered extremely overvalued. by 1Q 2006, 71 metro areas (39% of sfh values) were overvalued.
House Prices
in America (updated for 1Q 2006)
(Hey, Gary, read this report. Ya see how it’s done without using any bold or exclamation points, you putz?)
—–
It thrills me to see homes priced less than 2004 & 2005 prices. Next year we may see them priced at or below 2003 prices. We’re going down!
Turtle Ridge is indeed overvalued, particularly as Turtle Rock next door sells for quite a bit less.
However, I think the prices of SF homes with views, forget the condos for a second, will not drop below $500 sq. foot. Some of the homes without views, like those around Bonita Canyon I don’t think justify much higher prices than the Broadmoor, gates or not.
As far as condos are concerned, the whole area was so overpriced that they better get a parachute. Particularly as you can still get a SF in TR for less than 500 sq foot, and perhaps something like 400 by the time this is over.
Heck, I remember touring the model homes in Turtle Ridge and they were telling us that the first “X” phases were sold out and that the currently available phases ( something like 10 homes at a time ) were selling for 50% more. The builder timed the market, built the expectations and milked the buyers.
Personally, I’m a renter and in the market to buy a home.
The conclusion from my own research & finances is that I am looking to buy a home at 2000-2002 prices + inflation & slight appreciation given its CA.
I bought a home in 2000 which was sold in 2005 and thought prices were still reasonable up until 2002. So I would be willing to pay about 8% per year above those prices.
This puts reasonable prices for me right now, on par, with about 2004 prices. Most homes that have been slashed and are selling are around 2005 prices. Some are quickly approaching 2004 prices. It has my eyes starting to open.
The problem right now, for me, is that even though inventory is high, most of it is priced in terms of 2006 and 2007 prices. The price reductions to 2005 levels are not all that many. Once inventory at the 2004-2005 price levels increases, I think I will bite, putting in a below list offer to hopefully offset some continued weakness.
I sold my home mainly when I was able to and got lucky with price in 2005. I plan to buy, not at rock bottom prices, but when I am again able to in terms of a good selection of homes and at prices I am offering not at the prices the seller is demanding. I plan on living in it 15+ years. I cannot stress enough “buy/sell when you can, not when you have to.”
I hear from fellow renters all the time who missed the latest housing cycle. Now many of them and many here think prices will easily crater 40-50% and they will buy at rock bottom prices. That may or may not happen. For example, sure prices may crater to 40-50%, but at the very bottom of the cycle, it’s likely that only the shittiest bank owned properties will be left and the home you wanted (for those of you who are picky) sold at only 30% below peak. Be prepared for all possibilities is what I’m saying.
Ignore the hype. Ignore the doom & gloom.
It is hard to digest paying multimillion for a house in Turtle Ridge when you can buy ocean view house for about or less. This place is more like desert. I don’t even partition it to with-view and view-less
I agree with what you are saying. I will not try to time the exact bottom of the move. Once prices fall within parameters I am willing to accept for a purchase, I will start looking in earnest. If prices rise or fall from there, I really don’t care as I will be locked into a 30 year fixed at a payment I can afford. I am not trying to maximize my profit in a commodity market, I am trying to buy an affordable home for my family. Near, but not at, the bottom, you will have the widest selection from the most motivated sellers.
“I think the prices of SF homes with views, forget the condos for a second, will not drop below $500 sq. foot.”
I don’t believe any home will be excluded from this slow train wreck. I don’t care if you’re home is backed up by the Blue Pacific in Irvine Cove, it’s GOING DOWN!
As far as Turtle Ridge goes, The homes with views will get hammered too … well below 500 sq. foot. This price range will feel the pain as the prior lending free-for-all tightens up the food chain.
Trust me, no home, no community, no view, no price range is excluded from this inevitable collapse. We’re going down, and right now, though we don’t see it due to the delay in RE data, we’re in a semi-free-fall!
Sounds good. BTW, keep up the great work!
You include inflation and a housing premium of 8 percent per year in your opinion, but I still believe that we have a price to pay or the 20+ percent annual gains we made in the early part of this decade. That cannot be swept under the rug. So far what we’ve seen with the mild declines in prices, does not justify we’re near a bottom. I don’t even think we’re even close to a bottom.
Ultimately prices will search and find their fundamental range … this is inevitable and undeniable. And if historical precedence has anything to say about this train wreck, we’re going to see declines well below 2004 prices. In your eyes, that may be “doom & gloom”, in my eyes, that’s an economic re-balance.
Good Luck.
IrvineRenter, where’d the kitchen picture come from in the blog post? On Redfin, it has a dated white laminate looking cabinets with either a white tile or white corian style countertop for a kitchen.
From the pictures, this place is small and very cramped. The “kitchen” eating area is stuck onthe side of the living room area and you tell from the photos that they’re carefully trying to stand and take the shots so you can’t see it’s virtual on top of the living room set. Also, there’s no shots of the master or baths. Yet, they have 5 shots or the Turtle community facilities.
Frankly, I know it’s nice, but if the best thing your home has to show is the pool club house, I get disgusted.
Sadly, I suspect this will sell too much lower, yet, IMHO, it has a long way to go to fall in line with rents and reality.
I don’t really put that much emphasis on the “bottom” nor on price predictions. I’m not an analyst nor a Gary Watts and don’t pretend to be so.
I’m looking for a home, I’m looking for a good price.
Some people can wait until late 2008 or 2010. Not me. Some people want to wait until prices turn up. Don’t care for that.
That “we have a price to pay for the 20+ percent annual gains” doesn’t really matter. And why should it, I’m not an economist.
I need a nice home for my family. That’s what it’s all about in the end isn’t it?
You say the slight declines in prices do not “justify” that we are near a bottom and that they will find their “fundamental range.” The housing market, despite factors of legislation and illiquidity, is still a free market. Prices do not have to justify anything, nor find any fundamental range. The housing bubble itself clearly attested to this.
BTW, in citing historical precedence and declines well below 2004 prices, where do you think that would put us then?
My mistake, I have changed the photo.
When I wrote the series of posts coming out over the next 4 days, I had several photos to upload. I posted the wrong one. Sorry.
Was the Masada reference really necessary? If the Jewish Community Center wasn’t there, I wouldn’t find it offensive. But it is, so that’s a rather tasteless reference (although, I assume you didn’t mean it that way).
I did not realize there was a Jewish Community Center there. I intend no disrespect to any religious or ethnic group, but then again, I will not worry about they may think, nor will I censure my posts for fear of it. The reference was about zealotry, it was not directed toward any religious group — other than perhaps the real estate permabulls.
That’s a sticky wicket. Unfortunately, prices have extended so far beyond comparable measures such as price/rent or price/income that return to more historically normal valuation ranges leads to extreme and unprecedented valuation losses. Of course, the fact that the recent double digit gains and doubling and tripling of home value in the last 2,3,4 years was equally unprecendented doesn’t seem to concern people.
IR has covered it well in the Anatomy of a Credit Bubble post: https://www.irvinehousingblog.com/2007/05/14/the-anatomy-of-a-credit-bubble/
“Prices do not have to justify anything, nor find any fundamental range.”
I agree!
Prices can go in any direction based on consumer demand. The components of the demand might be more emotional than need. Its just a matter of people spending less on everything else in order to pay more for housing.
But we have a special situation here in that when the consumer ran out of the ability to pay for ever higher prices, the lending industry came in with products that were sure to fail for the consumer in the longer term.
When I bought my first house in 1978, the 30 yr fixed rate loan was all we had (as far as I know). Prices were only able to go so high at that time. We had three-month escrows and lenders who scrutinized every aspect of the loan application.
To make a long story short – this is only the beginning of the implosion for real estate. If you can easily afford a 30 yr fixed rate mortgage and plan on staying in the home for the next 15 to 20 years, then you should be ok if you buy now. Just don’t expect any price appreciation, and be prepared for your house to be worth a lot less than what you paid for it for several years.
PMI report is out
http://media.corporate-ir.net/media_files/irol/63/63356/PMI_ERET061907.pdf
Irvine is on page 6.
Ha ha, love the Masada illusion…. And no i’m no in a uproar about what is PC….
Anyway, TR is WAY overpriced. I just don’t understand how people can be asking for the price per sq.ft. range that is completely out of proportion for the area.
anyways good luck
-bix
I bought a 2000 sq-ft SFR in the broadmoor for $359/sq-ft in Nov 2003… I think it will end up much lower than that when this is over. I’m guessing a little above $300.
Mr. Vincent – just read your latest blog.
Both my parents and parent-in-laws did exactly that. One is still renting it out, the other moved into it and cashed out on the main.
Sound advice.
how about 200 per square foot soon.
“in citing historical precedence and declines well below 2004 prices, where do you think that would put us then?”
No one knows for sure where a bottom may loom, however, I believe the most important fundamental factors to consider are incomes, inflation and rents.
If I had to guess where the OC median price may be when we finally “hit a bottom”, I would say somewhere around 4.5 to 5.5 times the median household income. Assuming the median OC HH income, inflation adjusted, is about 75,000 in 2011 (in 2005 it was about $62,000), and assuming 2011 is the bottom of this housing cycle, the median OC home prices could be somewhere between $337,500 to $412,500.
I don’t think you can classify Turtle Ridge and regular irvine in the same breath. TR is basically in newport coast and has a premier location when compared to quail hill, northpark, or other more congested areas of Irvine. Also Crystal Cove is really a 5 minute jaunt right over the hill via Newport Coast Drive. Not to mention its proximity to Fashion Island, Corona Del Mar, the 73, and everything Irvine has to offer.
The location is why you see the premiums over other areas in Irvine. I agree that the they are crazy overpriced but so is everything in so cal. I don’t see any major price collapses except for those folks who bought in late 05 or early 06.
Just an FYI, on the 55 Greenhouse property.
That property was bought by former tennis star Lindsay Davenport. I beleive for one of her family members to live in.
Let us remember that just because the property was purchased for a set price in 2004 or 2005 doesn’t mean that the homedebtor owes that much or less.
In many cases the poor homedebtor probably sucked out more cash. I’ll bet that close to 50% of homedebtors that purchased from 2002 to 2005 owe more than what they paid for the property. They were banking on appreaciation. Add this to your calcualtion of the bloodbath’s magnitude
I wish we had better data on OC or Irvine equity. Bulls argue everyone in Irvine is sitting on so much equity that they won’t feel a financial pinch. I think cash-out refinancing was far more widespread than anyone knows, and a great many homeowners took out their equity and spent it. The anecdotal evidence from lenders such as yourself has been pretty consistent with the idea the cash out refinancing is widespread.
I think the smaller, older, nonupdated homes in the Broadmoor will indeed end up at around 300, that’s pretty much where they were back in ’02. There are a number of larger, fully rebuilt homes that I think will end up at around 330 to 650. Inside the TR loop the homes will settle around 330 to 380. With a view perhaps past 430 or so.
As far as everyone being brought down, yep I agree. But remember that EVERYHOME in Turtle Ridge was bought at the peak of the market (03->06). Meanwhile only a small percentage of TR is carrying such onerous mortgages. So, while Turtle Ridge will likely drop 40% and possibly 50% back to “Phase 1” prices, TR proper will only drop 20%.
Also, as prices drop, you will see far less homes on sale in TR that you will see in Turtle Ridge. Hence, until you see parity in both villages -which I think is coming- the homes in TR will appear as a far better value and this, combined with less supply, will help to support their prices.
Turtle Ridge, OTOH, is gonna be a falling knife. If parity with TR is around 360 bucks, that means a huuge drop.
Forget the condos….
Now, for those of you who are hoping for TR and Turtle Ridge to drop to 200 per sq. foot… You are simply dreaming. Historically the villages near the ocean do far better. Northwood, Westwood and the rest of Irvine would have to be at 120 sq foot before TR drops to that price.
Again, I think prices in TR and Turtle Ridge will settle at where TR was in ’03 or even late ’02. This will not present a huge issue for most TR residents because this is a established older neighborhood, but it will really create a big issue on Turtle Ridge.
OK… and now for an even more interesting one.. How about those villages in Newport Coast on the other side of the 73? The ones with those fancy french names? The ones built right along the old dump?
Ay… I know that’s not Irvine technically but.. dudes… that’s a Ginzy Knife waiting to fall….. I think it has the potential to make Turtle Ridge look like a paring knife.
Bottom line is that, yes all places will fall, but that while the coastal areas have some known base prices to come down to, the inland areas are gonna get really hosed. This is because all things being equal, Southern Californians will migrate to the coast.
Moreno Valley? It dropped like 50% in ’91… where is it today?
lemme guess.. you live in a newer, larger, updated home in Broadmoor?
Here’s yet another thought on TR and Turtle Ridge prices. There are no more new homes being built in Turtle Ridge. I think the last ones were sold last year?
So, both villages are in 92603.
The median for the zip code took a big hit, something like 35% from last year?
That means that the median is now shifting to the natural mix of homes. And since TR is larger than Turtle Ridge, you’d expect the prices of TR homes to weight more on the median.
So, there you have it folks….. Turtle Ridge median prices, meet Turtle Rock.
Oh boy.
If it weren’t for my prop 13 tax savings (same house for 20 years) I’d be ready to sell and move up the hill soon.
I just wish there was solid data on real estate and it just irritates me that there isn’t.
For example, I work in the finance industry, and for the S&P index there is concrete indisputable data.
You want to know what happens when the market is down 4 days in a row? (I’m making these numbers up so to make my point) Well, there are 90 instances in the last 10 years that fit this scenario and 68% of the time the market is positive on average by 0.24% the next day. I subscribe to a market site that has mounds and mounds and mounds of data on the market like this and what that data has resulted for the market.
However, in real estate, I keep hearing data like foreclosure is up so and so or affordability is down so and so. But what exactly has this meant in the past? Most of the time no one even brings this up, yet even when they do, it is only 1 or 2 data points because of the limited availability of information and the housing cycles are so damn long, so it could easily be statistically insignificant.
To me, this is one of the most frustrating things about researching real estate.
All in all though, this site does a great job of presenting data. However, what it will portend is anyone’s guess. …Unless someone here can show me 90 instances and give probabilities and average results.
Speaking of Moreno Valley… you gotta see this
http://www.redfin.com/stingray/do/printable-listing?listing-id=773580
They want an appreciation of over 100% since ’04.
I think I’m gonna bookmark that one.
Gee Lee, I thought I was extreme
OH, OOOPS… that was a TYPO… I mean to say that the rebuilt homes will go for 330 to 365. NOT 650…. Jeez… if that were the case I better refinance and buy a vacation home in Hawaii. 😉
As a matter of fact yes, we did rebuild the house, down to a couple of stud walls…. and my mortgage is pretty low and my real estate taxes are like…. eh eh eh! 😉
I figure the fully “rebuilt” homes are in many ways better than the new ones. Mostly as the quality of new homes sucks… so the rebuilt homes do go for more than the ones that are still 1969 standard ( you know.. like 100AMP service panels) and how many new homes have 1600 feet of Cat6 and multiple drops in every room? Or dedicated 30 amp romex lines running everywhere?
But, of course, the new homes are “sexier” and tend to command higher prices
oc – Thanks, that was great info. Is there anything more recent?
Why should I trust you? Because you constantly post fanatical diatribes on housing blogs?
The fact that so many people are hoping for a “free fall” is one of the myriad reasons it’s not happening.
Hi, Irvinerenter,
Are flippers in Northwood still very active?
In April the flipper bought this at 1.4 million.
Now put back on market asking 1.5 million.
7 HEATHER
Irvine, CA 92620
Hi tonye,
If you or your spouse are over the age of 55, you may be able to keep your property tax low AND move to another home. Check out Proposition 60:
http://www.ocgov.com/assessor/FAQprop60.asp
If re prices actually go into “free fall”, very few folks would be able to take advantage of them, no matter how many are waiting for it to happen. The only way, and I mean only way, for re prices to free fall is for all mortgage money to dry up. As long as lenders are willing to lend, prices can only fall slowly. If however, there is a major credit contraction … well then, who knows?
Your post exemplifies the market’s insanity, perfectly. We simply have not seen such a massive run-up in prices ever. Most foreclosures in the past were initiated by high unemployment rates and recession. People couldn’t make their 30 year fixed rate payments because they were laid-off.
Totally different ball game now. People will be getting foreclosed on because they can’t make their payments WITH the job they have AND they will owe more than what their house is worth. We will see many more foreclosures than any other housing crash has seen, simply because of the amount of homeowners.
When investing in the S&P 500, DOW, Funds, etc., you are purchasing something that will:
A) hopefully appreciate unless you’re short
B) pays a dividend
C) has the possibility of being bought out by another firm
Homes should do nothing except appreciate equal to the rate of inflation. Housing is a commodity like gas, food, water, etc. My response would be to look at investments as a whole. When you are valuing a stock based on dividend yield, market cap, PE ratio, etc..You can find things like the affordability index which is at historic lows. You can also look at the difference between the cost to construct a home versus the final sales price.
It is ridiculous how far above intrinsic value (cost of materials) that homes are selling for. The cost of labor and materials has decreased with the advent of technologies and JIT production systems. I’d equate it to the PE ratio of a stock that is trading way above normal earnings. You’d hear analysts screaming that this stock is way over-valued.
I don’t think I’ll ever understand the choice of pictures agents put on the web. Is a front elevation mandatory because that front door may look nice, but it’s… a front door. I understand that IR took 2 pics and usually picks a front elevation shot. But seriously, do we actually *need* to put any pictures that don’t help to sell the place.
The other 8 look great, but the living room white balance is totally blown out. How many times do these realtors take pictures of a house versus how many times do they actually scrutinize the pictures they take. I’m not here to nitpick photography technique; but, generally speaking, this is just yet another example of how an agent can somehow be the “expert” or “professional” when obviously they aren’t.
That is facinating, I had no idea. I wonder how many long time Irvine owners are hanging on to their houses until they turn 55 to take advantage of Proposition 60. Are there going to be a lot more places for sale in the older neighborhoods of Irvine when they turn 55?
http://www.cityofirvine.org/about/demographics.asp
“Because the City of Irvine is a relatively new City and started with a young population base, only 12.7% of Irvine’s population was in the over-55 category in 1990. By the year 2020, however, 28% of the City’s population is expected to be over 55. Where today there are about 21,000 residents over the age of 55, in 25 years that number is expected to grow to over 60,000. “
The greater the number of assumptions you rely on, the more likely your analysis is to be incorrect. You make three: (1) home prices will be 4.5 to 5.5 times the median household income at the bottom of the housing cycle; (2) 2011 will be the bottom of the housing cycle; and (3) the median household income will be $75,000 in 2011. All unknowns. The result is a “bad analysis,” as IR would say.
The only principle that ensures success is buying when you can afford to and not attempting to time the market.
We’re still under 50. But even so, Prop 60 is very limiting. If you’ve been in TR (dunno about the yuppies in Yuppieville, ie: Irvine to the East of the 405) for a sufficiently long time where else would you go within OC?
To go to NB, Laguna or Corona del Mar would hardly be a move down in price, to go inland would be to encounter worse weather. To stay within TR would be a lateral move so why bother?
Our neighborhood has a mix of original owners (in their 70s) and a big bunch of us in the 40s and 50s. There are few in their 30s or even 20s like it was back in ’87 when we bought in. The affordability has indeed gone down the toilet.
I figure to move from TR is to move out of California or to move up.
Hawai’i Kai (aka Irvine West) is beckoning.
Oh come on … It was purely a guess. It wasn’t an “analysis”. For Christ Sake, WTF are you talking about?
Another Point
You say:
“The only principle that ensures success is buying when you can afford to and not attempting to time the market.”
Actually I totally disagree with that, and I suspect I’m not the only one that disagrees.
First of all, I can afford to buy a home right now. I have a funny feeling I’m not the only one that rents and comments in this venue that can afford to buy a home, but just choses not to for obvious reasons.
Secondly, I’m not attempting to time anything. I’m just using my brain, which tells me that home prices have vastly increased past their sustainable values, and will ultimately decline.
And finally third, just because you have the money to buy a home, doesn’t mean you should. One of the reasons why I have money is because I don’t let my emotions or my wife’s emotions supersede my brain. We drive used cars, we have ZERO debt, and a treat for my family is a trip to Claim Jumper.
Ending, I just want to say, I’m never going to hand over a massive profit to some average Joe for doing nothing other than watering the grass and maintaining my future home. Get it?
Sue, thanks. The “heat map” on page 11 was also very telling.
WaWaWeeWhatever
“The only principle that ensures success is buying when you can afford to and not attempting to time the market.”
ok so that means someone making 200k a year should go out and buy a fixer in Santa ana ( 500-600k) because he can afford it.
and for everyone else with 3 working adults making 60-100k should go and buy a studio or 1 bedroom because they can afford one.
put down the koolaid and step back for a second.
2 working adults not 3 working adults
Whew, I thought we were in Utah for a minute.
I kind of like a shot of the front “curb appeal” of a house…. but agree much can be done to improve these photos ! Virtual tours should be mandatory !
I said “semi-free-fall”, and I was alluding to the entire industry, not just prices.
AWGEE,
Be careful what you wish for:
The only way, and I mean the only way, for re prices to free fall is for all mortgage money to dry up.
I’d say that buyer psychology has a lot to do with prices… perhaps more than you’re willing to admit.
in 2001, income was actually not that much different, Fed funds rate was between 5.5 and 5.0. Mortgage rates were about 7%, and prices on houses were less than one half of current prices. Income was only slightly lower than now. The only thing different was the price of houses.
Chuck Ponzi
There is truth in what WaWaWeeWah is saying. You shouldn’t time the market, and should instead buy when you can afford it. The key word to define there is “afford.” Just because some idiot lender will loan you the money doesn’t mean you can afford it. If you are borrowing more than 3 times, or at most 4 times your income, you really can’t afford it.
I am sure there are properties in Irvine almost everyone on the board can truly afford (given the income demographic that seems to post here), but are any of us willing to take such a dramatic step down in quality from what we are currently renting? I am not.
Irvine Renter,
One new find I have generated is the use of de-facto or controlled auctions by some realtors. I found a property which was brought down from 699k to 599k. The morning after the price was dropped, the seller’s agent claimed that there was already an offer and no price below 599k would be accepted.
What this story told me was that here was a house that was not selling at its current valuation and was facing a real threat of staying on the market for days. The owner and the agent decide to take the risk of a controlled e-bay style auction where they drop the price to a little ridiculous as opposed to comps. Then they start getting offers from buyers who think that this is a hot buy at current market prices. Then you finally have bids from different buyers coming above the so called ridiculous price decrease. The end result is that the property will get sold faster and at probably a better price. If the seller does not get a better price, he can always change the price again. Just wanted to share some of the tricks that are going on out there.
Four times?
You know, that’s the scary part.
Once upon a time, I bought my house for a price about twice our income.
Today, I doubt I’d be able to buy my house. And we make doggone good money.
Not to mention what a 1.1% tax bill on a 1.2 million house would be. How many of these people are getting killed by the Alternative Minimum Tax?
I agree, I paid 2.5 times for my first house, but even in 1997 here in California, prices bottomed at about 4 times income.
People get stupid when bidding at auctions. Particularly if the “auction” is controlled by the realtor, you can almost be sure there is shill bidding going on.
Thanks for the update.
“The only principle that ensures success is buying when you can afford to and not attempting to time the market.”
????????? Huh?
Can anyone check the MLS to see what 28 Climbing Vine (92603) sold for? I almost threw my balls out there on that one. Nice house, perfectly clean. It was at 1,499,999 when I almost went after it, about 3 months ago. I am pretty sure this blog saved me 100K or more, by not buying on the way down. I am still proud to py my $2,200 rent in TRidge. 🙂
Interesting. The URL above also mentions some Prop 90 thing too (pasted below).
Q: Can I receive Prop 60 benefits if my original property is inside Orange County but my replacement dwelling is in another county in California?
A: You may, qualify under Prop 90. call the county Assessor’s Office where the replacement dwelling is located and ask if that county allows transfers of base year values between counties.
lee in irvine — you forgot to mention that you browse the housing blogs from the public library because you’re too cheap to pay for internet access. I’m sure your family is grateful that you treat them to Claim Jumper; they must think you’re the next Warren Buffett.
Funny that you readily admit to asking yourself how much profit is the “average Joe” you’re buying from going to make. This, along with your fanatical ramblings on this blog, demonstrates that you already are allowing your emotions to “supersede your brain.”
MMG (and lee) — I figured it went without saying that you should actually WANT to live in the home you purchase. What does MMG stand for anyway, Moron Monkey Goof?
Here’s another nut case.
25 Cobalt Sky. Bought for $3,458,000 (07/29/2005) and now they want $5,200,000. Listed for 190 days at $912 per square foot?
http://www.redfin.com/stingray/do/listings-search#residential=true&condo=true&min_price=&max_price=&num_beds=&num_baths=&time_on_market_range=-&min_listing_approx_size=&max_listing_approx_size=&sold_within_months=0&lat=33.619497533358505&long=-117.8118896484375&zoomLevel=15&disp_mode=B&market=socal
Compare it with it’s neighbor at
http://www.redfin.com/stingray/do/listings-search#residential=true&condo=true&min_price=&max_price=&num_beds=&num_baths=&time_on_market_range=-&min_listing_approx_size=&max_listing_approx_size=&sold_within_months=0&lat=33.622535126349405&long=-117.81691074371341&zoomLevel=15&disp_mode=B&market=socal
Which at $3,595,000 is only selling for $631 per square foot and has had no takers for 326 days (maybe they ought to post pictures).
Jeez, when I first got turned on to this blog I had no idea what home prices were like. I thought I could sell my house for 350 bucks per square foot (completely rebuilt and expanded) and move to Hawaii.
But now I realize that this market was well beyond nuts. This market was on pure LSD and crack at the same time. A lot of these people bought very high and now want to walk away with seven figures on their pocket. It looks like a lot of people simply overbuilt their homes as if they all were competing for TROPHY HOMES that would go on Architectural Digest. These homes don’t look like homes but more like status symbols.
Kool Aid? Sorry, these people are on pure greed. As a homeowner I hope these flippers all lose their shirts and normalcy returns to the market.
28 Climbing Vine sold for $1.435m on 4/25/07. Also note that 23 Climbing Vine sold for $1.43m on 1/9/07 and 31 Climbing Vine sold for $1.4m on 5/1/07.
But how could that be, since the housing market is crashing?!?!?!?!
Ah well, these people all probably bought with exotic subprime loans that will reset 5 years from now, and then we’ll be able to buy their Turtle Ridge homes from them for far less!
SCHOOLS!
YUCK!
The homes in Turtle Ridge are on the Vista Verde Elementary and Middle schools, NOT on TurtleRock and Bonita Canyon Elementary and Rancho Middle School.
The main Vista Verde campus is down by the 405. I guess they’ve built a “satellite” campus up in TRidge.
So, here’s the deal… you paid a ton of money for your home, and your developer tried to get your kids on Bonita Canyon and Turtle Rock Elementary… but the folks in TR and UCI decided that if you had so much money you could send your kids to private school…
This, btw, is a true story.
So…. Vista Verde is a year around school and all your money doesn’t get your kids into the Turtle Rock elementary schools NOR into Rancho!
Oy Vey! What a bunch of schmucks…. in Irvine it’s all about the school. At least they get to go to Uni High but, dudes, while the rest of the kids are kicking back in the summer on the hill, TRidge’s kids are gonna be stuck.
Now, is that a deal or what? Wanna pay 800 bucks per square foot for that?
WaWaWeeWah,
That is enough. Please refrain from the personal insults. If you are a troll, you will be asked to leave.
MMG,
If you wish to address someone specifically, please be respectful and use the correct handle.
Tune in tomorrow…
I believe it was Forrest Gump who said, “Stupid is as stupid does.”
Perhaps the market isn’t crashing. Maybe the two houses for sale in this post are asking less than their purchase price to induce a bidding war and offers will pour in for more than their purchase price plus any commissions. They will make money just like every buyer who has ever bought a piece of real estate in California…
Or not.
… 28 Climbing Vine (92603)… it was at 1,499,999 …
…proud to py my $2,200 rent in TRidge. …
Hopefully there is no comparison between your rental and 28 Climbing Vine.
The monthly carrying cost difference is $6000 after taxes assuming you’re in the top marginal bracket.
I just requested the 2007 1st quarter report. I have to qualify for it and I will let you know if I do.
You can request it as well here http://www.globalinsight.com/Highlight/HighlightDetail2350.htm
Just click on the full study.
You can get the press release now here http://www.globalinsight.com/PressRelease/PressReleaseDetail9610.htm
Scratch all that just go here http://www.nationalcity.com/corporate/EconomicInsight/HousingValuation/default.asp?WT.mc_id=100206 and scroll down to where it says download full report.
OC’s score was 577 and a score of 100 represents a 10% chance that two years from now prices will be lower. So OC has a 57.7% chance. OC also has the third worst affordability score in the top ten.
IR – I may be able to at least get a sample of Irvine report. I will let you know what I find.
WaWa,
Why don’t you just come clean?
You’re not fooling anybody! 🙂
WaWa,
I’m almost certain who you really are.
You’ve got your ass in a wringer, and now you’re hoping (and praying) for an escape. Sucker!
You’re not fooling anybody. It’s over, get over it!
LoL!
You don’t know anything about Vista Verde and Irvine schools. Obviously you didn’t attend schools here because your grammar sucks! Residents of TR have the OPTION to attend Rancho if the want; some do but most opt to stay at Vista Verde. It is not a “satellite campus” but a brand new, state of the art campus, much better than TR or BC, imo. I actually like the year-round schedule. BTW, some parents who live within the TR or BC school boundaries choose to send their kids to VV, some can’t even get their kids in. Don’t get me wrong, TR and BC are great but so is VV on many other different levels besides academics. So, do some research before you blab about schools in Irvine, I’ve owned properties in Irvine for over ten years and I know my sh*t when it comes to schools and different communities here.
The one I don’t get is moving El Camino Real (http://www.iusd.org/ec/) to Woodbury.
That’s the #1 reason I don’t want to buy in the Woodbury.
Before you engage into ad hominem attacks, you might want to rethink your points. After all, in my book you’re a newcomer to Irvine. Only 10 years? Phat!
TR parents have the right to send their kids to TR or Bonita Canyon Elementaries and to Rancho Intermediate. We have the option of sending them to Vista Verde.
In TRidge you are stuck with the satellite Vista Verde and its year round plan, And, btw, good luck getting them into either Bonita or TR elementaries because those two are oversubscribed.
Now, a bit of history you may not be aware of. Back when TRidge was being layed out, the IUSD floated the plan to remove the UCI kids from TR, transfer some kids from Bonita Canyon to TR and then bring the kids from TRidge into TR and Bonita Canyon. The UCI kids were to be bussed somewhere else.
The community was up in arms. After all, ever since time immemorial UCI kids have come to TR. And, besides, they make for some pretty interesting parents. Anyhow, we had a movement to rebuff TRidge and let the developer put the money to build the new schools.
So, yep Vista Verde is very good too. but it’s a hassle. And, sorry to burst your bubble. but TR and Bonita Canyon, along with Rancho and Uni are still the top schools in Irvine. And they take the summer off.
So, don’t assume that people know little because they may know a lot more than you do.
I thought you would figure it out sooner or later. Next time please leave me more than a 5% tip!
Sincerely,
Your Claim Jumper Waiter
If you miss the bottom, you can always just buy your perfect home on the way back up. Have to wait a little longer, but a certain % of people are always selling due to job relocation, divorce, etc., so it’s not like inventory can be zero forever.
If you buy too early way before the bottom though … not so easy to get out of that one.
BTW – for those curious about the schools, you can to to this URL
http://iusd.org/schools/
and click on the school name
and then read the links at the bottom under the “reports” section
Ah yes, the “Affluent Dynamics” Panel. A.K.A. the conspicious consumption test market…
Tonye-
Ten years is a lot, when I ‘m in my early thirties, you’re like fifty right? So, I would think you’d know a little more about Irvine than me. My point is that you don’t need to insult a school like VV. After all, Irvine has great schools in general. If you wanted the best, you’d send your kids to Whitney High in Cerritos or Troy in Fullerton. It’s not all about having the highest API or CAT scores. It’s the environment too (neighborhood, teachers, PTA, etc.). Parents tell me that Turtle Rock and Bonita Canyon have the academics (as does Alderwood), but the overall atmosphere is sterile and no fun. There’s really no need to bag on VV (calling it a “satellite campus”). It’s a neighborhood school now. The UCI parents are wonderful and make for a great mix. The teachers are great. The campus is awesome. It just sounds like you have a gripe with Turtle Ridge. Who cares if a school is year-round or not? I, along with many other parents, prefer it so what’s the point of bringing that up? I usually don’t comment on blogs but I’m glad that I did because it obviously motivated you to kick your brain into high gear with you new comment (with the help of a dictionary of course)! 😛 Oh, btw, don’t assume that people can’t get their children into TR or Bonita. When you’re young and have money, you can get your kids in wherever you want (ie. buying a rental propery or home in TR or Quail Hill). Or is TR and Bonita turning away kids within their school boundary these days? I CHOOSE to send my kids to VV. If I wanted TR or Bonita, we would make it happen, believe me. Assume = making an ASS out of U and ME. Give it a rest with the schools, Irvine has great schools for all of you out there who aren’t able to live within the TR, Bonita, VV, or Rancho boundaries. I’d like to read about the housing market in Irvine, not the schools.
Hmm.. I have nothing against TRidge. Indeed, in due time, TRidge will raise the prices in TR which is fine with me.
The red flag that I’ve brought up is that TRidge as originally planned was not supposed to be the McMansion Ponzi scheme that it ended up being. The prices shut up via the manipulation of the developer (only a few homes per phase, but many phases), cheap lending and the almost constant flipping by the early ones that won the lottery in the early phases.
This doesn’t make for a good, stable neighboorhood, it’s more of a bunch of transients that move in for the kill.
Indeed, you yourself moved out within a couple of years!
Insofar as the schools go, my point is very simple. For the kind of money the developer charges, he should have put the schools in place at the very beginning. Whether you think that TR’s own elementaries are sterile – I disagree – that’s an irrelevant issue.
The point is that the TR schools score very high in the state and the country, the parents are happy, the mix is very heterogenous and the results have proven that these schools are top notch for a long time.
So, the property values in TR reflect the schools.
TRidge prices are a greater gamble because the schools are unknown and force you into a year around schedule that is not something most people want. In TR, year around is an option, in TRidge it is not.
Lastly forget about other unique schools in OC. After all, in our part of Irvine we have University High. And as my son says: “we not be the fastest on the track, but we have the highest IQs”.
Indeed, you comment about non Irvine schools is a logical flaw (weak analogy) and almost qualifies as a non sequitur.
Note- I’ll save you the dictionary, see here:
http://www.fallacyfiles.org/wanalogy.html
Now, since the school quality affects the prices of homes, then you can isolate one from the other. QED
And, btw, I think we’ve shown by now that a $5mil home in TRidge and TR makes no sense -at this state of the market- because it competes with very good homes in Shady Canyon, Laguna Beach, Corona del Mar and Cameo Shores.
BTW- Forget the sea of McMansions in Newport Coast. They have absolutely no taste and are bound to become dated… indeed, when you see Italinate design in Bakersfield, you realize this style is already passe.
Oh, we’re in our 40s. Bought our house in TR when we were in our mid/early 20s.
I worked like a dog for those first five years.
The Turtle Ridge photo is quite striking. Thanks for sharing it with us!
Can we just all get along? We are all neighbors in Irvine. You two are like little kids debating who’s school is better; though interesting reads.
The Lakers is a great franchise, but it doesn’t mean they always in the championship.
Doesn’t matter how good the school is, only a well rounded student can get into Harvard or Stanford.