In the past nine years, almost 108,000 more people moved out of Orange County than moved in. Where will the demand for housing come from?
Irvine Home Address … 35 COLUMBUS Irvine, CA 92620
Resale Home Price …… $649,000
All my bags are packed I'm ready to go
I'm standin' here outside your door
I hate to wake you up to say goodbye
But the dawn is breakin' it's early morn
The taxi's waitin' he's blowin' his horn
Already I'm so lonesome I could die
So kiss me and smile for me
Tell me that you'll wait for me
Hold me like you'll never let me go
Cause I'm leavin' on a jet plane
Don't know when I'll be back again
Oh babe, I hate to go
John Denver — Leaving on a Jet Plane
The California Ponzi scheme economy collapsed as the Great Housing Bubble deflated. I have documented over a thousand cases of HELOC abuse here in Irvine, California. Most economists underestimate the economic stimulus of millions of homeowners being given hundreds of thousands of dollars in free money by our banks. Now that this money is gone, Orange County home prices too high for incomes or rents, and Orange County home sales are falling with prices to follow.
These economic woes are prompting families to leave the state. With new household formation near historic lows as we get off the Ponzi juice, there is little tangible demand for housing, and prospects for this demand increasing appear weak.
People keep moving out of O.C.
December 27th, 2010, 3:20 am — posted by Jan Norman
In the past nine years, almost 108,000 more people have moved out of Orange County than moved in, according to newly released data from the state Department of Finance.
Source: California Dept. of Finance
If everyone wants to live here, why are so many people moving out? 
The out-migration was higher in 2005 through 2007, which would coincide with the soaring price of Orange County housing. Between 2009 and 2010, 6,475 residents moved out, but the county’s population grew 28,190 because 12,223 people from foreign countries moved in, the Dept. of Finance said.
Since 2000, Orange County’s population has increased 335,882, the Dept. of Finance estimates. That growth comes from residents of other nations, legal and “unauthorized” as the department labels them.
Loren Kaye, president of the California Foundation for Commerce and Education, does the calculations for the whole state in this article for Fox & Hounds Daily. California gained 350,000 residents from 2009 to 2010, he reports but 72,484 more people moved out of state than moved in from other parts of the United States. The gain was from more births than deaths of current residents and foreign immigrants.
The Dept. of Finance based its estimates on driver license address changes, birth and death records, tax return data, Medicare and Medi-Cal enrollment, immigration reports, elementary school enrollments and number of people living in group quarters.
Bill Watkins, director of the Center for Economic Research and Forecasting at California Lutheran University, has a more complete analysis of current Californians moving elsewhere at newgeography.com. Among his negative points:
- The projected $28 billion state budget deficit with shortfalls in excess of $20 billion a year anticipated by the California Legislative Analyst’s Office
- Unemployment that is 30% higher than the national average (12.4% in November)
- California’s credit rating is among the lowest in the U.S.
- California’s loss of 1.3 million manufacturing jobs
- California’s 41st ranking in creating scientific, technical, engineering and math jobs
“In just a couple of decades, California has gone from being America’s economic start, a destination for ambitious people from around the world and abundant with opportunity, to home of some of America’s most depressed communities,” Watkins wrote.
And what's worse is the supposed prosperity of the last couple of decades was built on a foundation of Ponzi borrowing on inflated home prices. 
“California isn’t broken,” replied State Treasurer Bill Lockyer and Stephen Levy, director of the Center for Continuing Study of the California Economy, in this Los Angeles Times opinion piece. Among their arguments:
- California’s state government general fund expenditures are $2,246 per person less than 10 years ago.
- The state’s number of businesses per capita “held steady” from 2000 to 2009.
- The state’s share of domestic film industry jobs is 45% in 2010, compared to 44% in 2000.
- Businesses moving to other states accounted for “just 1.7% of California’s job losses” from 1992 to 2006, according to the Public Policy Institute of California. (It did not include data for 2007 to 2010.)
- California’s gross state product grew 27.2% from 1999 to 2009, higher than the U.S. as a whole.
“California no doubt faces serious challenges. But our obstacles are not insurmountable,” Lockyer and Levy wrote. “California has the most diversified economy in the country. It has the most diverse population and the youngest.”
With all these people moving out, who is going to be buying Orange County homes?
Irvine Ponzi of the day
I have my own indicator of when the housing market will recover: the day I can't find a property for sale with HELOC abuse. I have contended for years now that mortgage equity withdrawal and peak buying has created far more debt than borrowers can comfortably pay without continued Ponzi borrowing. Until the Ponzis are wiped out, they will implode a few at a time and continue to put distressed properties on the market.
Most distressed Ponzis are waiting for house prices to come roaring back so they can resume their unconstrained borrowing and profligate spending. That isn't going to happen. The weight of distressed inventory is going to keep the market from appreciating for quite some time.
- Today's featured property was purchased for $494,000 on 12/8/2003. The owner used a $444.600 first mortgage and a $49,400 down payment.
- On 12/23/2004 she refinanced with a $455,000 first mortgage and obtained a $73,312 HELOC.
-
On 12/28/2006 she obtained a $572,000 Option ARM with a 2.25% teaser rate.
- On 6/26/2007 she obtained a $123,500 HELOC.
- Total property debt is $695,500 plus negative amortization.
- Total mortgage equity withdrawal is $250,900.
- Total squatting time 11 months so far.
Foreclosure Record
Recording Date: 08/30/2010
Document Type: Notice of Sale
Foreclosure Record
Recording Date: 05/27/2010
Document Type: Notice of Default
Irvine Home Address … 35 COLUMBUS Irvine, CA 92620 
Resale Home Price … $649,000
Home Purchase Price … $494,000
Home Purchase Date …. 12/8/2003
Net Gain (Loss) ………. $116,060
Percent Change ………. 23.5%
Annual Appreciation … 3.8%
Cost of Ownership
————————————————-
$649,000 ………. Asking Price
$129,800 ………. 20% Down Conventional
5.07% …………… Mortgage Interest Rate
$519,200 ………. 30-Year Mortgage
$135,455 ………. Income Requirement
$2,809 ………. Monthly Mortgage Payment
$562 ………. Property Tax
$0 ………. Special Taxes and Levies (Mello Roos)
$108 ………. Homeowners Insurance
$0 ………. Homeowners Association Fees
============================================
$3,480 ………. Monthly Cash Outlays
-$482 ………. Tax Savings (% of Interest and Property Tax)
-$616 ………. Equity Hidden in Payment
$257 ………. Lost Income to Down Payment (net of taxes)
$81 ………. Maintenance and Replacement Reserves
============================================
$2,720 ………. Monthly Cost of Ownership
Cash Acquisition Demands
——————————————————————————
$6,490 ………. Furnishing and Move In @1%
$6,490 ………. Closing Costs @1%
$5,192 ………… Interest Points @1% of Loan
$129,800 ………. Down Payment
============================================
$147,972 ………. Total Cash Costs
$41,700 ………… Emergency Cash Reserves
============================================
$189,672 ………. Total Savings Needed
Property Details for 35 COLUMBUS Irvine, CA 92620
——————————————————————————
Beds: 3
Baths: 1 full 1 part baths
Home size: 1,507 sq ft
($431 / sq ft)
Lot Size: 5,000 sq ft
Year Built: 1978
Days on Market: 249
Listing Updated: 40310
MLS Number: P731953
Property Type: Single Family, Residential
Community: Westpark
Tract: Othr
——————————————————————————
According to the listing agent, this listing may be a pre-foreclosure or short sale.
Short sale. Sale subject to bank approval.
Net domestic migration is a hugely inaccurate measure for a city or area with significant foreign immigration. NYC had negative net domestic migration, does that mean no one wants to live in NYC? Orange Co, CA’s growth has definitely slowed in the naughties than in the nineties, but the census says it’s bigger in 2009 than it was in 2000, while your selective data would lead people to believe otherwise.
Your basic premises and analysis are mostly sound, so there is no reason to use misleading data.
Depending on your area’s dependence on the building trade, this slowdown in growth may or may not be a problem. Where my parents live in FL, much of the middle class jobs were in construction-related fields. Also, for the first time ever, my school system growing up (6th largest in the US) had less students than the prior year. At least that will somewhat dampen the sting of education budget cuts.
Its even more complex.
Even if OC population has seen a net increase,
the implicit assumption that housing demand
will likewise increase is not necessarily true.
RE:
‘Doubling Up’ in Recession-Strained Quarters
http://www.nytimes.com/2010/12/29/us/29families.html?_r=2&hp;
Given the increase in “unauthorized” residents, and from personal observation, I believe points
made in nytimes article hold in OC.
Exactly. You can have a numerically increasing population but if you also have a steady unemployment percentage then your jobless ranks are actually growing every year as well.
House prices will ultimately reflect local incomes regardless of population growth.
The bulls better hope that all these foreigners are snapping up high paying jobs (unlikely).
Spend a weekday night at the Irvine Spectrum and it’s like the recession never happened.
I’m always impressed with the lines out the door at restaurants such as Javiers. Irvine keeps humming along. There have been 2 classes of this recession, and one has been largely unaffected some have even prospered.
Agreed. South Coast Plaza had lines of cars circling for parking spots on a recent holiday shopping weekend. People here love to buy stuff.
Scott in many parts of the country Malls have closed or are on the verge of closing, yet Irvine Spectrum and South Coast show a far different reality.
oblivion spenders at the spectrum means little. i’ve experienced the same observation at the same 2 places and each time joked in a british accent, “recession. pfffft. depression. pfffft.”
These are the mindless who dont understand the gravity of our situation and spend like they owe it to themselves.
a % of those people are spending the money they are saving by living rent free. others are in good financial shape.
I would say that a formula is much more complex than even these would say.
In the end, it is many, many factors which play into rising costs, not the least of which are income and population growth.
However, we can’t rule out the effects of sentiment, which is a powerful force. Likewise, we are affected by access to alternatives (like Riverside, traffic on the 91/57/405. Job markets in places like NYC/SanFran and Texas/NV/UT. There are many, many moving parts.
On one hand, we are much more expensive than Las Vegas. But, we are much cheaper than SanFran/NYC. There are counterbalancing forces that have held our prices high, surprisingly for most rational analysts.
Chuck
Well said chuck ponzi, at some point it would be good for many to attempt to understand and accept the facts for Irvine.
Home prices do not reflect incomes alone. Consider a town with ten residents making $1M each. They’re the only residents and currently live in $4M homes. Let’s build ten more identical homes. Will each person buy one additional home? What will those ten empty mansions do the ‘value’ of the original ten? It’s income, but it’s also supply and demand.
In at least one area of FL that I’m familiar with, the people buying those additional 10 homes were the speculators. At least in that smaller-town (25k people) home prices have probably fallen to or below a pretty reasonable level relative to incomes. It also has not helped that the town was very dependent on the construction/RE sector.
Look at Detroit. Median household income is at 30k, the same as it was in 2000, but home prices are 40% down from there. If you have a population declining and no source of back-up buyers (South Florida vacation purchasers) you have no real price support. You can say that an area should have a DTI of this or that, but if a buyer can get a home for less, they will. Likewise, if supply is constrained, they will pay more.
Oversupply can kill home prices even in very high income areas, especially if there is no growing number of high-earners.
http://www.marchandmeffre.com/detroit/index.html
Those are not the pictures of a city with declining income, those are the pictures of declining population.
i’m hoping you might post your 2011 predictions.
in particular, you used to predict irvine prices which i thought was the best part. i haven’t seen that chart updated in 2 or 3 years. any chance we can have an update?
thanks, mike
Agreed; this would be cool to see.
While predictions are great and fun to read, it’s a fool’s game with all the chicanery going on in the housing market. Most sane people agree that prices will go down in 2011. However, if we get principle reductions, more housing welfare gimmick programs and more Fed manipulation of mortgage rates and other assets…anything is possible. No one in their right mind could have predicted events from the last 3 years. We truly live in unprecedented times.
c’mon larry, have some balls, predict prices! predict chicanery! predict can kicking measures!
Larry – why the realtor like headlines and hype? OC overall population has increased due to foreign and “unauthorized” as article says. Have not clicked on link but a better data point is OC vs US avg. Or at least OC vs CA average. That would tell us if OC is growing at slower or faster rate.
So the upshot of the article is that people who live in the other 49 states are in no rush to move to California but no worries because there are enough existing residents making babies and plenty of foreigners to pick up the slack to maintain steady growth.
Don’t forget about all of the
companies moving away from California for other states such ashere. I would love to live in Boulder at some point.
Boulder is the Irvine premium on steroids. If you don’t accept the Irvine premium you are going to absolutely hate the Boulder premium .
I think businesses will simply fold, instead of leaving Southern California. After at least 40 years of warnings that California taxes will drive businesses elsewhere, it’s time to admit it has never happened, and never will. In good times, businesses that leave are always replaced by others, since corporate officers all dream of living near the beach. The only thing which will cut business activity is simple economic contraction.
Boulder is a target of the look-how-green-I-am entrepreneurial types, they of the Subarus and SUVs with sanctimonious bumper stickers about saving the planet or practicing random acts. Lots of trustafarians or genuine tech entrepreneurs do start-ups in Boulder, or move headquarters there, with the idea that they’re somehow being oh-so progressive. The problem is that no employee earning under $125K can sensibly live in Boulder, so each business in Boulder adds a few more vehicles to the thoroughly-clogged two-lane Rte 36 out of Denver. The green thing to do would be to set up shop in downtown Denver, but that would require actual sacrifice on the part of the CEOs.
If you’re looking to move to Colorado, there are opportunities galore: it’s a center of telecom and energy, which should both do slighly less badly than everything else as America collapses into disease, beggary, and civil war. Just don’t hold Boulder in your mind as a goal unless you have a household income above $200K and are willing to forego retirement.
Jah trustafari!
Glory be to Jah, glory be to the trust fund, now get your dreads and your escalade hybrid and smoke a joint in your multi million dollar boulder home where you will proceed to save the world.
Demographics are changing; in twenty years, OC majority will likely be Asian or Hispanic; housing choices will be based on multigenerational needs. A continued exodus of more conservative middle class of all races, especially with kids, out of California because of economic/quality of life issues. A stable population of liberal white singles/couples with decent incomes drawn to hipster urban communities with “culture”. If gas prices continue rising, suburban communities far from job centers could be in big trouble.
Not necessarily bad, good, or whatever. Just my opinion.
Fair opinion – most people are afraid to share these opinions. I have friends that really want to leave LA/OC for Austin, TX.
I’ve spent time in Austin. Positives…beautiful town, lots to do, state capitol/college town. Vibrant mix of interesting/educated people, jobs, more affordable housing, no state tax. We laugh that comparing TX to CA; Frisco is Irvine, Austin is Santa Monica.
Downside; my experience; saw lots of homeless in certain areas (train hobos, runaway teens). Humid summers. High property taxes. I’d like to invest in Austin; I think it’s got great potential; however too far for me; I like to be within reasonable drive distance to my rentals in case an issue arrives that needs quick resolution.
What if the Irvine experience isn’t about population, prices, economics, interest rates, etc.? What if Irvine is becoming the upper middle class version of Bel Air? What if those with the money are using the inflated prices in deflated times to displace the undesirables and replace them with mid income families? I’m seriously beginning to think that the price resistence in Irvine is less about HELOCs and stubborn knife catchers as much as it is about socioeconomics. If the demand for financial homogeny absorbs the limited supply of houses in Irvine, the normal housing rules won’t apply. winstongator’s NYC analogy may be our future.
Exactly, you are right on the money with that astute observation. It won’t be understood by many for another decade or 2.
I don’t understand what an upper middle class Bel Air even means, but what you are missing is income. Bel Air was a magnet to people with high income jobs in various fields (show biz, finance, doctors, lawyers, etc). Irvine has a decent job base, but not like LA.
You create high prices by attracting people with high incomes, such as Newport Beach tends to do locally.
Hmmm… I don’t think those “with money” would purposely over-invest in price-inflated regions, knowing they’re paying more than what market demands would otherwise have dictated, with the hope that enough others “with money” will do the same and inflate the entire neighborhood (a city of 200,000, in this case) into the next stratosphere. That type of collusion would be tough to pull off. Let’s face it, Irvine to Newport is NOT Bel Air to Beverly Hills…
I’m still trying to figure out what makes Irvine “different” that their prices hover above $300/sf while perfectly nice neighborhoods around it (MV, Laguna Niguel, Aliso, etc.) have fallen to around $250/sf. Maybe there is something there but I’ve not heard a good argument from anyone that makes me go “oh yeah, maybe that’s why…”. Someone please give me a better reason than “rich people are moving there”, “roads are wider”, or “we have good neighborhoods”. All those can be re-butted too easily.
My commute is 5 minutes (to Irvine office towers) and my wife’s is 10 minutes (to Costa Mesa office towers). That has huge appeal for us.
I don’t think vast majority of the 40%+ Asian residents of Irvine has the same reason as you… There are probably very few Irvine residents whose primary reason for living in Irvine is because they work in there. I agree that there must be some reason that Irvine buyers CHOOSE to pay the premium – otherwise it would have evened out by now – but the logic still escapes me. And as such, I am still of the opinion that Irvine is just a bit late in catching up to the norm.
Yeah I mean it’s not like Irvine is a major job center with six figure salary jobs concentrated in a 5 mile radius, no nothing like that.
You guys, how many times has it been said on this blog? It’s the combination of several different assets that makes Irvine attractive to families.
1. It has consistently good schools. Other OC communities have pockets and sprinklings of good schools. Irvine’s are good, across the board. It attracts middle class families of varying incomes, but all of whom value education. Geez, just go look at some numbers on a state education website.
2. It has successfully pushed that FBI statistic about being the safest large (over 100,000) ciy in the U.S. Actually, there are other cities in OC w as good/better statistics but they don’t fall into that 100,000+ club, AND Irvine has aggressively used that to market itself, more than other OC cities.
3. It has location, as stated above. Not driving up from south OC to get to work, it’s between the 405, 5 and 55.
4. It has great public recreational facilites, all over the city.
5. Face it, Asians and Persians love Irvine, they think it has a great future.
6. The university is here – great rental potential.
IN summary, it’s safe, it has good schools, and there’s convenient parks and green space for kids to play in. Just the way I see it. No, I don’t work for the Irvine company and in fact I count the days until I can move out of Cali. But, I see the attraction.
@nefron:
Great post… but it will be largely ignored because you’re not bashing Irvine.
It isn’t bashing Irvine to point out that the prices are too high and they are going to come down.
@IR:
But inferring that Irvine is the “epicenter” of HELOC abuse and Ponzi housing is.
At least that’s what many of the readers think.
Every city has that… and I actually think Irvine has less of it than others… which is why the prices are still holding up (albeit slowly dropping).
There is one and only one reason prices are holding up: banks are not foreclosing on the HELOC abusers and others not paying their mortgages and putting that supply on the market. Limited supply coupled with delusions about premium values is keeping prices high.
From my observation, Irvine is typical of every town in California with its rampant HELOC abuse. People can infer whatever they chose from my daily examples. The facts are that Irvine prices are not holding up because borrowers here were more prudent and less indebted or because they are making their payments. My daily posts have proven that.
Irvine prices will bottom at a price higher than surrounding communities because Irvine is more desirable. Nobody reasonably disputes that. The question is how much lower will prices fall, and that depends on what happens to unemployment, wages, and interest rates while the banks work through their backlog of delinquent borrowers and shadow inventory.
Even though you give lip service to acknowledging prices will fall, you really don’t believe it. You are kool aid intoxicated with the usual myths about how Irvine is special and its different here. When the crash is finally over, you will remember that prices held up not that they crashed, not because it is an objective view of reality, but because it reinforces what you already believe and want to see. I don’t mean to single you out. All the bulls suffer the same malady.
I agree with you, nephron. I would add that when workers come here from overseas, they are generally told by their employers that Irvine has that combination, and they invariably buy here.
From my observation, Irvine is typical of every town in California with its rampant HELOC abuse.
Have you compared the data to every town in California? Do you know for a fact that Irvine has just as much HELOC abuse as Santa Ana, Las Flores, Riverside, Sacramento or Carlsbad?
People can infer whatever they chose from my daily examples. The facts are that Irvine prices are not holding up because borrowers here were more prudent and less indebted or because they are making their payments. My daily posts have proven that.
Really? So you think that a city that has an average of close to 40% down payments can’t weather dropping prices better than a city that has an average of less then 20% down payments? Why am I one of the few that can connect those dots. If you are NOT underwater on a mortgage (a combination of slower dropping prices and a lower LTV), you will be less likely to foreclose. Less stressed inventory feeds slower dropping prices. You may not think it’s a factor and I’m not saying it’s the only factor but I would think you would recognize that.
Even though you give lip service to acknowledging prices will fall, you really don’t believe it.
You know this is not true… or we would have not done what we did in 2008. What you mistake for kool-aid intoxication is surprise at how long it’s taken and like even you admit yourself, it will not drop as much as you originally predicted.
Or is course-correcting your percentage drop based on government intervention just a mask for your own kool-aid consumption? Before you start throwing around accusations, you might want to remember what ACTUALLY happened vs. what most thought would happen.
I don’t mean to single you out. All the bulls suffer the same malady.
That’s fine, but then you must suffer the same malady because like myself, you have adjusted your outlook. And since you have me on blast, why will you never recognize the new home sales? You go on about how sales numbers are down from previous years thus “proving” your “lack of demand” theory in Irvine yet you never said if you factored in the 800+ new homes that sold. And if there IS a “lack of demand”, then how can you say “Irvine is more desirable”?
Irvine Renter loves to call people bulls who disagree with him. It’s typical of our time. Call people names to classify them in a segment without acknowleging the facts and trying to learn from them.
Irvinehomeowner is not a bull.
Expecting one stock to go down 5-10% while the rest of the market goes down 30% does not make you a bull.
During my home search I found it difficult to get a home in Aliso @ $250/sqft. Homes that show well and have a good location in Aliso go for atleast $280/sqft. I found something close to $300/sq ft in Irvine recently. The 10% premium was well worth it for me given the proximity to work, friends & family and the shopping of interest to me.
However, there are people who pay close to $380/sqft or more to be in the “premium” areas of Irvine. I have a hard time understanding that…but to each their own..
According to Ziprealty the median psf price in Irvine is $350+, whereas it is in the $280-290 range for Mission Viejo, Laguna Hills, Aliso Viejo, etc. I can understand the difference between Irvine and Costa Mesa or Santa Ana, but to me there’s not much of a difference between Irvine and Mission & Aliso. Maybe being another 10 miles north has merit, but not 20%+ premium for what essentially are comparable quality neighborhoods.
I agree those areas are very nice.
The Irvine premium over those south county areas comes in many flavors but all of the following add up to the premium:
1. Closer to work for those who work in Irvine.
2. Closer to work for those who work in the other major job centers of Long Beach and LA.
3. Better schools, those so county areas have good schools but Irvine is slightly better
4. The FCB and ethnic factor, some just need to live in Irvine and those nice so county areas are not acceptable alternatives.
Different people have different reasons for the premium but all of those factors contribute.
4. The FCB and ethnic factor, some just need to live in Irvine and those nice so county areas are not acceptable alternatives.
While people joke about this (myself included), the ethnic composition of Irvine is a meaningful statistic.
How many Korean churches do you see in South County compared to Irvine? How many Ranch 99s are in Mission Viejo? How big are the Persian New Year celebrations in Aliso Viejo? How many Taiwanese, Vietnamese or Indian restaurants are in Laguna Niguel?
Who really thinks ethnicity does NOT factor into the equation?
That reminds me of some saying about “The Greater Fool”
IRVINE will never be Bel Air! That’s just a foolish wishing. Unless of course the great quake comes and Newport gets swallowed by the Ocean. The real rich go to Newport or Newport Coast. Period. Irvine is a planned community for the upper middle class.
This “affluent people are moving into Irvine” idea just doesn’t make sense. I mean… LOOK AT THAT HOUSE! Do you honestly think that the hypothetical high-earning couple will see that dull house and think, “Yes, that is our dream home”? Do you think they drive by the Irvine Spectrum and think, “if only we lived here, we could eat at CPK and Chipotle’s everyday”? You’ve got to be kidding me.
Sadly I think they do, but Toshi you need not worry about it since you won’t be an Irvinite long term. You will live in the multi million dollar SF / Seattle / NYC / Manhattan beach etc etc etc home you deserve.
Hi Planet Reality,
Actually, I’m not an Irvinite. I live in San Diego, but I enjoy following this blog for the same reason that I enjoy watching “Hoarders” and eagerly anticipating the new show “My Strange Addiction”. That is, I’m fascinated by the weird, self-delusion of the Irvinites who post here as well as the ones spotlighted by IR. Plus, there is no equivalent blog in SD.
I’m not rich either — far from it, infact. I hope I didn’t imply that I was.
Oh you will be, you will be.
@toshi:
Unless you live here or want to live here… it will always be hard to understand the “premium”.
I don’t want to live in Bel Air yet we know how much homes cost over there.
“the normal … rules won’t apply” … jeez usually people wait for the bubble run-ups to pull that phrase out of the hamper. If there is one thing I’ve learned it’s that the normal rules ALWAYS apply.
Personally and I know a lot of people with kids, even given the option to live for free in Santa Ana, would not do so. Some people will avoid areas with high Latino concentration at all cost.
hopefully this does not offend any one
I can remember going to mid school, high school in rancho cucamonga, CA. damn there were a flood of latino, blacks.
then the moment I get to college, bamn!! they magically went away.
Can i say i enjoyed college? 🙂
What a dumb analysis. Who cares if domestic migration is down, there is more than enough foreign migration to replace it. Sometimes I wonder if Irvine Renter even lives here and sees what is happening, or is posting these sensationalistic stores to rev up his out of state fan base.
You want a real Irvine story of migration? Here is one: We moved out of Irvine in October, and back up to Los Angeles County (near our extended family) to buy our *dream* home. Yes, we left Irvine be stated simply — we could not afford our dream home in Irvine. We wanted 5 bedrooms, we wanted a view lot, we wanted a 3CWG. But we couldn’t afford $1M+ for those things in Irvine. So I bet you folks are frothing at the mouth saying “look, look, look — it’s too expensive, people are leaving!!!” And you probably think our former Irvine home is now boarded up? Nope, that 3/2.5 crackerbox in West Irvine sold in less than 30 days to a nice young couple from China. For $380 per sq ft. But I guess they would not be captured in your analysis, would they?
That’s an excellent example
Granted $1M+ in Irvine doesn’t get you much compared to some other areas.
Despite all of that, demand for Irvine remains strong and has accelerated through the economic downturn
Meanwhile, secondary markets have gotten killed
It’s been a long time since I’ve had time to read IHB and the comments section. Spent about 90 minutes for a peek today (for a sentiment/data dump into my head).
My question: Have more people pointed out what Patrick Star just did above? There is no way for me to quantify it, save for some cases I know of or about personally, but I believe foreign investment is an influencing factor contributing to the levitation act in Irvine (or at least specific parts of it). How big, or how sustainable, I can’t say. My gut says it won’t be enough, and market forces will eventually assert themselves, but I’ve seen weirder things.
My parents have several friends that have purchased with 60%-100% down, after their properties in Asia have seen 300-1000% increases. Read that again, not a typo. They believe the market there is overheated, and are using the opportunity to purchase a residence in Irvine/SoCal. Their money has to go somewhere, and it may as well be here. In some cases, they purchase more than one property, and some of them help their children out (flat-out putting a roof over their head and handing them the keys). If they are to spend part or a an increasing part of their future here, they don’t care that it’s expensive relatively, since they are in no danger of meeting any stretched mortgage payments. It is like the global rebalancing act we keep hearing about, except this is it in action. These homes that have been purchased will be inventory OFF THE MARKET for a good amount of time. This is of course, unless prices shoot up in ridiculous fashion, in which case the buyers would probably reassess (but who honestly believes this scenario could develop). They are not counting on seeing the money sunk into their newly acquired properties, or any HELOCs/MEWs. I believe these types of buyers exist in much larger numbers, simply because if I know several (these people don’t consider themselves rich), then there are many more out there.
I thought about this today as I was searching Redfin for the 92603 zip code, and checking out the recently sold inventory. This area encompasses Shady, Turtle Rock, and Quail. You guys/gals can do this too, and have Redfin filter prior sales history. I just picked 1 year, and saw a lot of blue dots in 92603 (denoting completed sales within the user-selected timeframe). In many cases, drilling down to each property shows some sales coming rather quickly, such as in 1-2 months. Other sales appear to have taken longer, but the price reductions from the initial offer price seem minor. It was all pretty amazing to me. I hope others with access to real market tools can comment. IR, you have always struck me as telling it how you see it, is 92603 weird to you?
Irvine residents of this site, if you haven’t spent time at Diamond Jamboree or Sam Woo/99 Ranch, check these centers out. Took some family to Sam Woo for dinner this past Sunday and had to wait half an hour, where banquet-style dinners at each table saw the patrons dropping $30-60 a head, easy. My Dad made the observation of, “where’s the recession.” Exactly.
If what I have observed is indeed enough to levitate Irvine, it would really suck, as my dream house will take a long ass time to obtain. Even with that reality, most likely this is where I want to raise my family. Speaking of families, I was at a Kaiser Permanente maternity ward tour last week and noted that maybe 10-20% of the expectant mothers/fathers were Caucasian. Indicative of anything?
Hi krt,
We also sold to a nice Chinese family for $380/sf 7 months ago. They turned around and purchased another house in our development and rented a house again in our development in order to bring their family over. The area is zoned for Univerity High. We are China’s Mexico, lol.
We wanted to buy again, since we do like Irvine and it would have been a long-term purchase, but the asking prices jumped in the May-June timeframe. So we are happily renting and reading about this sad debacle. I hope to buy again…in Irvine. But not now.
Oh, and I just noticed your Diamond Jamboree comment. My friends and I went out to dinner last month, and as we drove by DJ at 11pm, they said, “Let’s stop off and get our fix.” I didn’t know what they were talking about. The place was crazy! It felt like we were in the middle of San Francisco on a weekend night. It was a blast.
there might be a few left, but that isn’t the overall population picture. the overall population still GREW from ~2.85 million in 2000 to ~3.03 million by 2009.
as far as i know how logic works, the ~ quarter of million people need roofs to stay. no?
If everyone wants to live here, why are so many people moving out?
richer people in, poorer people goes else where.
and living people make babies too.
“We had a ball”
The whole CA and especially Southern CA had a ball during those years too, just like Ms. Carr!
“After the Good Life Goes Sour
Like many Americans who saw their home values shoot up during the housing boom, Christine Carr found lots of ways to spend her equity windfall.
A decade ago, she and her husband paid nearly $180,000 for a three-bedroom home in Dallas, N.C., outside Charlotte. Their income easily covered the $1,100 monthly mortgage payment.
In 2006, after discovering the house’s value had skyrocketed by $100,000, the couple took out a second mortgage and got cash. They bought a $70,000 camper, took a cruise to Alaska and vacationed in Belize. The new loan added $698 to the couple’s monthly payment.
“We had a ball,” she said.
Three years later, her husband moved out and stopped contributing to the mortgage payments, she said. Then she lost her job as a consulting firm’s marketing manager. In April 2009, Ms. Carr put the house on the market for about $235,000. With no income, Ms. Carr, now divorced, didn’t qualify for a loan modification, which would have lowered her mortgage payment.
In July 2009, she asked the lender, Bank of America, to let her hand over the home to avoid the foreclosure process. But the two sides couldn’t come to terms.
With no interest from buyers, Ms. Carr stopped making payments that August. “It was a gut-wrenching decision,” the 46-year-old woman said. “I was raised to live up to my commitments.”
These days, she receives a monthly statement that details the swelling late fees and penalties for both of her loans. Although she found work in March this year, Ms. Carr said she had no intention of paying: She has moved to a rental and her Dallas home sits abandoned. The luxury camper was sold for “a lot less” than the purchase price, she said.
Ms. Carr said she felt guilty but was ready to move on. “It makes me sick to my stomach sometimes, just thinking about it,” she said. “But once you make the decision, you stick with it.”
http://online.wsj.com/article/SB10001424052748704610904576031632838153532.html?mod=WSJ_hp_LEFTTopStories
Seeing how this is the Irvine Housing Blog, might it not be a good idea to look up the Irvine population specifics before extrapolating OC’s?
http://www.cityofirvine.org/about/demographics.asp
YEAR POPULATION
1971 10,081*
1975 31,750
1980 62,127**
1985 84,400
1990 110,330**
1995 120,000
2000 143,072**
2005 183,457
2006 194,126
2007 201,154
2008 207,848
2009 212,793
Hey… stop using data to show that Irvine <> Orange County.
“Seeing how this is the Irvine Housing Blog, might it not be a good idea to look up the Irvine population specifics before extrapolating OC’s?”
I wasn’t extrapolating anything. Irvine was not mentioned in the article. It was about Orange County of which Irvine is a part. Further, the reason we have population growth in Irvine is because it is one of the few places left where new houses can be built and the population can increase.
Don’t you think it would have been a good idea to at least mention the FACT there has been continued population growth in Irvine? That seems like something an honest irvine housing blog would mention.
The most genuine trend here is to ignore Irvine based facts. That’s been the most accurate and easiest trend to predict, this blog continues to stray from the realities of Irvine. Denial on price per sq feet increases since 2008, denial on what inventory level is significant, denial on the significance of continued Irvine development and continued high level of cash down payments. At some point it’s best to try to accept and understand the facts. Go ahead ignore, follow the herd to Vegas.
If you don’t like what you read here, why do you stop by every day?
You must be very worried about your great investment that you feel the need to come here each day and talk up the market with the nonsense you write in the comments.
BTW, now that interest rates have reversed strongly and permanently and the value of your bond-laden portfolio is collapsing and the value of your Irvine property is dropping, you must be pretty shaken up by your wrong call on interest rates. I suspect you will stop posting once interest rates creep up above 5.5%. You can be sure that I will remind you of your incorrect call and bring up quotes from the comments to drive the point home. 2011 should be a very entertaining year.
You don’t recall.
I posted here that I captured profits in my bond portfolio of 25% year over year. What is left of my bond portfolio continues to perform very well, it’s all about timing and I bought in when everyone was running.
It’s hard for you to accept the reality that my wealth has nothing to do with Irvine prices. I respect honesty and accurately reflecting market facts.
Don’t get emotional just because you now realize you bit off more than you can chew and things are not turning out as planned. That is another consistent trend I’ve seen here.
again PR, right in the short term, wrong in the long term.
On that South OC vs. Irvine question… while homes are cheaper, for people who can afford large down payments, the 10-20% difference isn’t worth it.
For those who have a certain price point, they would rather settle for smaller in Irvine than bigger elsewhere.
That’s why it’s called a premium… again… not just geographics… but also demographics.
Excellent point.
The rationale is not directly focused on the 10-20% premium.
The rationale is: “I would rather buy a 2000 sq ft home in Irvine than a 2200-2400 sq ft home in south county.”
I just moved to Portland, OR from OC. I don’t regret it California is broken – socially as well as financially. When one of the things I marvel at here in Portland is the idea that I can actually *talk* to people, something’s wrong.
I agree life in Portland,OR. is so much more accessible and easier than life in O.C.(people are polite) Used to live in eastside Costa Mesa and while I enjoyed the neighborhood and weather I always felt isolated. Irvine had a reputation for being new and and ohh so nice in my mind, Newport seemed a bit more ostentatious w/ more poseurs and glitz. O.C.-Nice but kinda souless. Really Doubt Irvine is going down another 20% in value , as said elsewhere…. new houses still sell well. How much did they fall percentage wise nationally in the 1930’s depression peak to valley ? How many more peak buyers to washout now? It’s got to be over soon….Expect to see multi family starts rise. UCI is a great plus as is the central location and Irvine is well planned . Don’t think Cali. is broken and would not talk it down such. Sick maybe. Prop thirteen-itis. Check out Portlandia on IFC in Jan.