Irvine Income Data
This was posted in a thread on Thursday, but it is such important data, it deserves its own post. The blogging software does not do tables very well, so I apologize if it a bit difficult to follow.
The first column is the income range.
The second column is the percentage of the total in each income range.
The third column is the cumulative total. It shows you the percentage of households that makes at or less than the specified range. I find it interesting that 78% of the households in Irvine make less than $150K.
The fourth column is the most expensive house someone who makes the maximum in the range can afford with a total price of 4 times income. Some will argue this is too conservative, and some will argue it is too high. I think it is a bit too high, but the market bottomed at 4 times income last time, so it is a useful point of reference.
The fifth column is the downpayment that would be required assuming 20% down.
B19001. HOUSEHOLD INCOME IN THE PAST 12 MONTHS (IN 2006 INFLATION-ADJUSTED DOLLARS) - Universe: HOUSEHOLDS
Data Set: 2006 American Community Survey
Survey: 2006 American Community Survey
Estimate -- Percentage -- Cummulative -- House Price Limit -- Downpayment
Total: 63,646
Less than $10,000 -------- 4,633 -- 7.3% -- 7.3% ---- $40,000 ---- $8,000
$10,000 to $14,999 ------ 2,015 -- 3.2% -- 10.4% -- $60,000 ---- $12,000
$15,000 to $19,999 ------ 1,159 -- 1.8% -- 12.3% -- $80,000 ---- $16,000
$20,000 to $24,999 ------ 1,973 -- 3.1% -- 15.4% -- $100,000 -- $20,000
$25,000 to $29,999 ------ 1,233 -- 1.9% -- 17.3% -- $120,000 -- $24,000
$30,000 to $34,999 ------ 1,069 -- 1.7% -- 19.0% -- $140,000 -- $28,000
$35,000 to $39,999 ------ 2,021 -- 3.2% -- 22.2% -- $160,000 -- $32,000
$40,000 to $44,999 ------ 2,071 -- 3.3% -- 25.4% -- $180,000 -- $36,000
$45,000 to $49,999 ------ 2,353 -- 3.7% -- 29.1% -- $200,000 -- $40,000
$50,000 to $59,999 ------ 3,108 -- 4.9% -- 34.0% -- $240,000 -- $48,000
$60,000 to $74,999 ------ 6,169 -- 9.7% -- 43.7% -- $300,000 -- $60,000
$75,000 to $99,999 ------ 8,666 -- 13.6% -- 57.3% -- $400,000 -- $80,000
$100,000 to $124,999 -- 7,924 -- 12.5% -- 69.8% -- $500,000 -- $100,000
$125,000 to $149,999 -- 5,279 -- 8.3% -- 78.0% -- $600,000 -- $120,000
$150,000 to $199,999 -- 6,495 -- 10.2% -- 88.3% -- $800,000 -- $160,000
$200,000 or more -------- 7,478 -- 11.7% -- 100.0% -- $-
Irvine's median income is approximately $85,000:
$85,000 * 4 = $340,000 house with a $68,000 downpayment.
I know I should modify this graphic to fix the title, but it is too much work. Just know it is 1986-2006.
I would like to thank a reader for updating this graphic for me. I am not sure if I can post your name, but thank you.
It is what it is. What do you think?
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FYI,
This is for households and not individuals. These are gross income numbers, not after tax or otherwise adjusted.
Methodology:
The ACS program was fully implemented in 2005 in every county of the United States and in Puerto Rico, with an annual sample of approximately three million housing units.
The ACS is conducted using the best mail self-response techniques of the decennial census combined with follow-up techniques that produce high-quality data. For households that do not respond by mail, the quality of data is improved by using well-trained, permanent interviewer staff using computerized interviewing, which incorporates edits into the collection process. Using a permanent coding staff provides additional improvements in data quality.
Households that receive the American Community Survey are required by law to respond. As with all other census answers, a Federal law, Title 13 of the U.S. Code, provides strong confidentiality protections for all individual information collected by the Census Bureau. Violating this law is a Federal crime with serious penalties, including a prison sentence of up to five years and a $250,000 fine. For more information, visit the American Community Survey Web page at http://www.census.gov/acs/www.
Los Gatos, Saratoga, Palo Alto, Alamden Valley, Cupertino - whatever. Any town up here that lacks a large hispanic population and thus has better *perceived* schools is f’ing pricey. Even with the credit freeze there are so many cash buyers up here that deals keep flowing on the aforementioned desireable areas. My post was meant to foster debate on what effect the local economy will have on slowing or even stemming the decline. SV and OC represent a very intresting dichotomy in that regard.
As for Turbans, give me a break. In SV it is all about competition. The smartest, most ruthless and hungriest survive, and the best of those thrive. If you have such strong feelings about Indians maybe you should move to OC. Indians rule the Valley.
My OC prediction: You will be able to buy a condo or small sfr on Balboa peninsula for less than $750K by 2009. As for Irvine, I think TIC’s execution of their holding pattern strategy for the next few years will end up one way or another as a classic case study for future generations of MBAs.
Uh Laing, Kirk is just pulling your chain. Successfully I might add. Bravo, Kirk.
Kirk:
(1) I am hardly an elitist. If you don’t understand the rationale for my posts…then perhaps you should scroll back further and read why I posted some of the things I did.
I was answering the following post:
Comment by Jim
2007-09-09 18:24:02
I’ve been reading this blog for awhile now. First time I’ve looked at the comments. I didn’t realize there were so many trolls on here. Very funny. There are only two reasons I can think of that a housing bull would bother to read this site:
1. They work in real estate -or-
2. They’re up to their eye balls in housing debt
My household will make ~$210K this year. We will continue to rent for at least another 2 years. Why? If we were to purchase something at price we could reasonably afford, we’d be living in a working class neighborhood, not one with families like ours. Clearly, that’s not a choice worth making.
Cheers,
Jim
(2) I don’t live in Irvine, however I wouldn’t want to live in Hollywood either - but I do thank you for the suggestion.
(3) Let me give you one suggestion - read the entire thread of posts before you comment.
So, according to you… first I am “working class and shouldn’t attack the rich?“
Then, all of a sudden, I’m “an elitist?“
So… which is it? Am I working class or an elitist?
Hmmm…. make sure you decide before just abruptly answering.
Great Info I was looking for! Thanks!
Very good analogy, Sue.
Suppose at the end of the bidding war, Person 1 bought the house at $10 million with 0% interest only loan… he/she would be making a payment of $0 per month and would continue to refinance under similar terms. Who cares about principle, right?
But what happens when interest rate goes up to 1%???? Oooops, a payment of $8,333 per month interest only.
Sure, 200K+ is significant, but it’s what you keep and save that quantifies whether you are “rich” or not. If you make 200K+ and you live way below your means, then you probably have some assets lying around. If you make 200K and spend like you make 250K, then I wouldn’t say that you are rich. Just my opinion.
Unfortunately, I bunch of those sellers have a ton of equity to watch wash away before they really open their eyes. The banks might not ever see some of these houses. They’ll just turn into serial market chasers, never readjusting their expectations until the market has bottomed.
We tried to pick up a nice little place in Harvard Square last month. Sellers had it range priced from $929-989K. Exactly same model and size house, with nicer upgrades, right across the street, had sold in January 2007 for $960K. We come in thinking a good market price is $915-920K given recent depreciaton, market conditions, etc. Harvard Square didn’t run up quite as hard as other areas, so the depreciation its experiencing now is slower as a result.
The sellers refused to budge past $965K. They wanted $5K more than an eight month old direct comp! That’s the kind of psychology that is still prevalent out there. People are still listing places at 15-20% premiums over what they paid in 2004 and 2005 and think they can get 2006 prices. These sellers were using a comp at $985K on a recent sale that was 12% bigger with a ton more upgrades to justify their belief that they should get $960-970K.
It’s now over 30 days since we ignored their final counter and the place still sits, unsold of course… A place with 500 sf more a couple streets away just dropped their low list range price to $975K. Seems like sellers have to pass on at least one good offer nowadays and continue to chase the market down before the reality check hits.
Who is going to pay the property tax on a million dollar place? This will be the item that makes the prices fall. $2000 a month for tax and HOA and insurance? Not on my paid off million dollar McMansion!
A few weed infested abandoned mansionettes and blank office towers will do wonders to the real estate prices in Irvine. I see that they already have a big empty hole in their future.
The higher prices are stickier because the sellers have less room to negotiate.
Just give them some time and it’ll be the banks selling. Then we’ll see the newer homes, with newer buyers, really take the hit.
Okay, maybe there is some sanity in the high-end. This new listing is very reasonably priced compared to others in the market near it. A 2005 roll-back price… NP and NP Square sellers must be POed at these people!
200K+ per year household income is not rich? Hmm. Well, that might not make a person “rich,“ but it does put them in the top 10% of incomes according to the IRS… and if the top 10% is complaining about home unaffordability… how messed up can the system be? Anyway, I am sure that the other 90% might disagree with the characterization that 200K+ doesn’t make you rich. It might not be Warren Buffet, but it ain’t nothing to sneeze at.
Laing_Lies, you are an elitist that could use an etiquette class. Perhaps you should consider living in Hollywood rather than Irving.
The trick Tonye is that your home and the move up home depreciate at the same rate. Ideally in this situation, the move up home falls at an even greater rate and you save evem more whole dollars on necessary mortgage and some extra peanuts on the prop taxes.
As a locked and loaded potential home buyer, the equal depreciation rate is not what I am seeing at this time. I suppose it just has to work its way up the ladder, but the majority of the softening is at 25th to 50th of median. The higher end homes haven’t fallen at the same rate.
One eaxample, in the Fall of 2006, my neighbors sold their place, exact same model as mine, very similar upgrades, for around $740K. They moved up a 2,900 sf Lennar Villa Rosa house for $1.225M. Now, a year later, their house (my house too) is going for around $650K. We have had 2-3 REOs that have pinched the comps, with a number still left to go… The same Villa Rosa house is selling, and yes it is selling, for around $1.125M now. Their old home has fallen by over 12%, while the new one has only come down by a smidge over 8%. The decline has only cost them a theoretical $10K so far plus an extra grand a year in property taxes.
Hopefully the bigger, nicer stuff starts correcting at the same clip as the rest of the market. I stayed put in my place in the hopes the move up house would cost me less whole dollars in mortgage. Not sure the meager improvement in property tax is worth staying put…
Fact is that when TRidge started selling at 800 sq foot while nearby TR was running at 500 you could tell that someone was ready for a fall.
Fact is that TR is an older, more stable community and you would expect that the homeowners there would be far less exposed to credit risks.
Fact is that TRidge is a brand new community, at incredibly inflated prices, and the homeowners there financed in the last three years. Hence they are all more likely to be exposed to credit risks. Furthermore there was (is) a lot of speculation in there.
Fact is that at this point I would not want to own property in TRidge. You can just see the number of green houses in Redfin to realize that there’s a serious problem going on.
You might be surprised… a lot of people in Irvine do.
Don’t look into the highly leveraged new villages, look into the older villages instead.
Sorry.
It’s a paper loss.
What do you expect us to do? Cry? Why?
If I sold my house in a down market I would still have to buy a replacement.
So for those of us with plenty of equity that could nicely ride it down 40%, prices going down would allow us to “move up” without taking the RE tax hit.
Look.. say my house is 1.1 MIL today in a reasonable market. Say I got 800K in equity and my taxes are 3600 per year.
Now, the move up house is 1.6 MIL. My additional mortgage will be about 500K and my taxes will be about 16000 per year.
However, if both houses go down 40%, then my house is worth about 660K and the move up house is worth 960K. I still have the equity to put down a hefty 20%+ downpayment and my new mortgage will be about 300K more. My taxes will be around 9600 a year.
So, all in all, I come out ahead after a 40% drop and I can handle a 50% as well. And, I might handle a 60% drop as well.
Of course, this all means I want to move. If I don’t want to move, then with a 6 1/8 fixed, I figured if such events happened, the builders will be asking for work and I could get an additional 400 sq feet built over the garage (with bath) for $50K.
Whoops, commented on the wrong post. IR, I gave you $5, get some better blogging software!
OK…. We had the “move up” dilemma ourselves a few years back.
We could have taken our $300K set aside money and our equity and “moved up” to another house or “move up” in our own house.
We were in synch with the market, so we could have taken our money and our equity and made one huge downpayment into a bigger house with the same mortgage as our old one.
However, given the RE taxes and Prop 13, we stayed and rebuilt the house. To have gone to a house that was worth 300K more than ours would have quadrupled our taxes! 2000 to 8000.
So, if you tell me that Prop 13 distorts the move up market because it discourages large price increases then I’m with you. But if you tell me that the move up market is affected by the exotic mortgages then I’m not with you.
I will give you though that the availability of exotic mortgages encouraged people to take out their equity in cash and then move into another home with no cash down.
But given the tax and mortgage implications, those people were like self destructing heroin addicts anyhow.
When I say the Japanese are saving too much, I was just pointing out that there are societal problems associated with excessive savings rates. You are correct saving is the path to wealth creation, but you need to be saving at a greater rate than your peers to gain any benefit from it. If everyone saves 70% of their income, consumer spending is low and the economy suffers. The best way to become wealthy is to live in Southern California where you can be certain that saving $1 a year puts you ahead of 90% of your neighbors
“The thing MEW is a symptom of a run-up in prices, and this is important, NOT the cause.“
Generally this is true, but many people took money out of their primary residence to finance other properties. There are several people in SoCal with 4 or 5 properties acquired during the bubble (I have access to property records, so I spotted many of these people when I looked for my latest rental.) Some of these deals were probably 100% financing, but many were also financed through MEW.
That being said, the three causes you list as primary are certainly the case.
I live in TR.
There are quite a few people who are retired. Perhaps they couldn’t afford their homes today if they had to work for them, but that is irrelevant as they are otherwise wealthy.
You guys keep making comments about Irvine as if the whole city was new fangled. Heck, in my experience, West Park is newfangled and I can’t comprehend the stuff way out there on the wrong side of the Santa Ana Fwy.
Gotcha!
On the topic of nice pictures of the neighborhood, I found a lovely home in Columbus Grove if any wants it:
http://www.homeseekers.com/Scripts/detail.asp?_org_id=casocal&_uid=5B21F26D-9AFA-4068-86E5-E080FC7F794B&_current=17&mls_property_id=P593999&_per_id=&_vp_cb=
If you look at image #11, you can see the fabulous view of the power lines as they travel down Warner. What the MLS description fails to mention (would be a nice pic to include, NOT) is the unbeatable panorama of the Waste Management facility just over the backyard wall past the flood control channel. You can see the garbage trucks come and go all day long from the comfort of your master suite!
There is a peek-a-boo of the Mini-U Storage facility and the concrete mix place. And to top it all off, you get the lovely aroma of, yes, you got it, trash, when the ocean breezes are blowing nicely. At this house, you pray for Santa Anas all year long! All this for the low-low price of $377 per sf.
The Japanese save too much? I thought saving was the path to long term wealth creation. Are you turning supply-side on me now (I thought this was an Austrian board). No wait, you switched back to Von Mises at the end, whew!
Corporations have been killing it for years. Global growth is blistering, and depending on what numbers you believe should exceed 5% growth again this year. Other than the elmination of second-tier intermediaries from the banking system, coupled with moderately restrictive Fed policy, the macro view is pretty sound.
The big risk is housing. And it is a very big one. No reason to continue on this line. The Fed will answer the bell on the 18th, ahem IMO. Why does the interest rate matter? (see below)
“Not long ago I read that in Hong Kong residential real estate goes for 30 times earnings. You can bid prices up very high when you only have to pay 1% interest on a home loan.“ - IR
As for the savings rate, that oft quoted statstics is bullshit. The figure is archaic and excludes DC asset flows from personal saving. Thus if you throw money into a 401K rather than a bank CD, you aren’t saving! Now there is some credence to the use of home equity like ATMs. Consumer spending growth has indeed outstripped wage growth for (and I read this today, perhaps on this blog) 6 of the last 7 years. That is unsustainable. The thing MEW is a symptom of a run-up in prices, and this is important, NOT the cause.
The run up in housing prices was created by three things (1) low rates (2) ludicrous lending (3) irrational buyers that counted on a continuation of an incredible run in housing.
Sorry, I’ll have to get to the liquidity stuff later. Suffice it to say I found the articles on personal wealth growth, which were net of mortgage obligations very compelling. The Keller Group, a local RIA, published a piece on this in 2006.
so facist elitism is wrong yet racism is ok?
This housing crash will signifcantly widen the spread between the classes. We’re talking about obliterating the middle class. Either you were smart and have a good amount of assets. Or you don’t. There will be the upper mid class/wealthy and the pretender class.
Many in the OC belong to the latter.
I actually thought turban city comment was hilarious. I am not a big turban fan either.
The latter comment did slightly reek of fascist elitism
His chart’s only show home prices vs income. NOT if high income earners bought certain homes.
Janet, I’m almost convinced someone stole your password. I disagree with you s lot, but I never thought you had a brainfart before as bad as this.
Owned.
Just a reminder that a lot of potential first-time buyers in the high income range ($200K +) probably have significant student loans that enabled them to earn such high salaries. Having a household income of over $200K sounds great, but think about paying $2K/month or more for student loans that are stretched out for 30 years. I don’t know how many people are in this boat, but they definitely exist and skew the numbers slightly as far as what people can actually afford on housing.
“Rich” is relative, so to me, making “~$210K this year” is NOT rich… and is hardly grounds for making others feel bad about their neighborhoods.“
It isn’t rich, but it’s not working class either. Look again at the income distribution that IR put together.
I think the big problem with a lot of the posters here is that of being SoCal / OC centric and extremely myopic about these matters.
Let me tell you something about working class neighborhoods because that is where I came from. I grew up on the South Side of Chicago near Midway airport. THAT is working class…not Irvine. I had to move to SoCal back in late ‘04 and couldn’t believe what people were willing to pay for homes here and yet the incomes were not particularly stellar compared to upscale areas of Chicagoland.
Sorry but I don’t think I was being specific enough. Correct me if I am wrong but that is 4 in the tract behind the gates and not the condos down below. As far as I can tell from the tract maps and satellite photos there is not 600 homes in there. There are currently two more in the foreclosure process. If I include the condos it gets a lot worse.
Plus I wouldn’t look at the foreclosures as a percentage of the homes there. You and others like you are having difficulty grasping that foreclosures increasing at rate 3 times as fast as in the 90s. Comparing the 2006 to 2007 increase in foreclosures you would have to look at 1990 compared to 1993. It was much more gradual then and this time we can’t blame it on the manufacturing job losses. It isn’t the amount that is scary it is the amount that it increases every month that is scary. The other thing that just amazes me is two months ago NODs were coverting to a foreclosure at a 40% ratio currently it is a 52% ratio. That translates to 3400 foreclosures in the next 6 months.
I respect the fact that you bring a different opinion and you have made some valid points. I do hope you and anyone else who is somewhat bullish starts to see the bleep storm that is about to hit us with the foreclosures. I have been following RE since 96 when we had the worst amount of foreclosures on record and I have never seen anything like I see today. I will work on a chart so you can see how bad it really is for a post I have in mind for the blog.
I’m sorry if this sounds rude, but Janet is either a troll or a dumb-ass realtor. A small amount of research will verify what is being said on this blog. I too know plenty of people underwater and borrowed way beyond their means. This should all be very obvious by now.
It’s also a recipe for lower prices. Eventually, some of those people with ‘lots of cash’ will lower their prices to get out. There are always people who need to sell.
I know exactly what he meant about “working class” neighborhood. it is not derogatory, just matter-of-fact. For example, i recall my realtor sister-in-law proudly touting her purchase in an older section of Tustin in 2003-ish when i started realizing the insanity of this bubble—i drove around the neighborhood and it was what i would denote as “pickup truck” friendly—now, God bless people that work for a living, whether or not they are blue collar, but such a neighborhood is not for me. so despite my income, i rent in irvine because if i had to buy, there i would be in Tustin. and that ain’t gonna happen, my wife is high maintenance.
Four out of 600 is not a big number either (0.6% to be exact).
Please check the amount of cash the vast majority of people put down. Then add $100,000 to $500,000 in landscaping outlays.
The number of homes for sale is high because sales have stagnated for over two years. No real estate sub-market can survive without the ability to buy and sell property.
Inventory in + no inventory out, is a recipe for increase.
Please read things more carefully before you respond.
“Rich” is relative, so to me, making “~$210K this year” is NOT rich… and is hardly grounds for making others feel bad about their neighborhoods.
Where were all the buyers in the mid 90s when prices were $150-200 per square foot? Incomes were still relatively high back then.
Just because you are working class doesn’t give you the right to attack the rich. An etiquette class would do your kind good.
I do. I can lend you some @ 10% if you want… I require a 28% DTI though
Oh my god, I can’t even believe that income / price ratio is still being debated here.
Janet, have you seen the news lately??? Also, Janet, what is your occupation and that of your husband if you are married???
If you work for the REIC, then that would explain quite a bit.
Another question to ponder, how of the income growth in SoCal and specifically in OC has been generated through REIC activity? In the past 5 to 7 years? Now how many high paying Mortgage jobs have been lost in past six months and will be lost going forward?
“How many people who make wise, well-informed investment decisions believe that Irvine property is a good investment right now?
Don’t you know? It’s all that foreign money and all those millionaires with cash. They are lining up to invest in depreciating assets.
Many of us readers appreciate hearing views from the trenches. Thanks for the comment.
The market has been saying every single neighborhood is at least 2-3 times more desirable than a few years ago; or maybe just some cool-aid drunken marginal buyers have been saying that.
multiple points of views on current market conditions should always be valued, whether we agree with them or not.
i hope what we do not tolerate are comments such as “turban city” or “working class neighborhood, not one with families like ours.“
Looks like I am overdue for an update on the foreclosures. I know that I found about three others in Summit Ridge and saw one that got the NTS this month.
By the way 92602 is going to take another beating in foreclosures this month. Just brutal.
Guilty here!
In fact, in 92603, all the recent developments (Turtle Ridge, Shady Canyon, Quail Hill) have lots for sale. But there’s much less for sale in the much older community of Turtle Rock.
Hmm, why is that ..... (fill in the blank here and you’ll have the answer to your question).
Go to RedFin.com and search 92603
Then zoom in on Turtle Ridge
Those are a lot of places for sale.
Why do they all want to move?
Answer _________________ (fill in the blank)
Southern California is one of the “richest” places in the country. LA, OC and SD all ranked in the top ten counties in the nation for millionaire households sans primary residence equity. Actually, #1, #3, and #5.
http://money.cnn.com/galleries/2007/pf/0704/gallery.Millionaire_Counties/index.html
That said, it’s only 468,000 households in all three counties. Total number of households are 5.24 Million. Roughly 9% of the tri-county area have a million net worth.
Graphix has posted in the forum thread on foreclosures a number of properties in Turtle Ridge are NOD on their way to foreclosure.
Have you looked at Turtle Ridge on Redfin lately? The density of little green boxes is very high there as it is in the other communities built since 2003. Ordinarily there would be very few homes for sale in a new community. These places must have been purchased heavily by flippers and specuvestors rather than homeowners. Go on to Redfin and see for yourself. Compare the visual density of houses for sale in older neighborhoods versus Turtle Ridge, Quail Hill, Northpark II and Woodbury. It is the opposite of what it should be.
It isn’t a good sign for price stability when 10% of the homes go up for sale. Also, look at the expired listings in these neighborhoods. Many more would be for sale if they thought their was a prayer of selling them.
because you are the only person with the name mark?
I see you have been reading some of Nassim Nicholas Taleb’s work. My favorite book is “Fooled by Randomness”.
Funny how heated everything got today. This was a good discussion minus the sarcasm (I was guilty too.)
Your perspective is right on. None of us knows for sure, but it doesn’t seem to stop us from having strong opinions.
The 32.2% ratio came from an examination of the rental market. When you look apples-to-apples at what people are renting versus what they are making, people are putting more than 28% toward housing.
I am glad you enjoyed those posts.
IR,
One is not a big number. I do know, for a fact. that there will be some others.
I have seen the downpayment data from there, and people put down serious, serious cash.
Appraisers will not make a single foreclosure one of the three required comparable sales (maybe they’ll have it as an extra comp, but it is not relevent when the count is so small).
I can find one for sure:
http://www.irvinehousingblog.com/2007/08/06/crimson-and-clover/
Perhaps Graphix will be so kind as to provide the full list.
How many does it take to bring down values? Price are set at the fringes.
Perhaps property values will fall everywhere but Turtle Ridge. Anything is possible.
Jim, if your $205K is derived from earned salary or wages, then you are working class. By your comment though I gather you’re independently wealthy and your 205k is made passively from investments.
I do like those posts. I really liked the Credit Bubble one. I especially enjoyed this line:
“Buyers / borrowers behave much like drug addicts — they will borrow all the money a lender will loan them whether it is good for them or not.“
That is dead on and is the heart of the problem. Quite in contrast to what this guy says:
http://www.lewrockwell.com/murphy/murphy120.html
“Despite the presidential candidates’ desires to mother all of us, most people aren’t nearly as incompetent as the politicians would have us believe, especially when it comes to huge decisions such as financing a home purchase.“
And this guy is supposedly a Ph.D. Hope it’s a pretty piece of paper, because I don’t know what else it’s good for. You have to have one hell of a set of blinders to say something like that. Then again, he’s probably right that most people aren’t incompetent. But, enough are that they can screw the rest of us. That alone is enough reason to make sure the regulators do their jobs and force lenders to check the borrower’s ability to repay their loan. Quite frankly, the government can ban ARM’s along with prepayment penalties and I wouldn’t be crying over it. Hope that site is just a parody that I didn’t get, because here are some other gems:
“As always, they have diagnosed the problem as too much contractual freedom in the marketplace, and so prescribe ever more government regulations and prohibitions as a way to (allegedly) make our economy stronger.“
Wow. Yeah, it’s not the government’s job to keep the economy more or less stable. That’s why most of Africa does so much better than us. Contractual freedom. I hear Nigeria is really good with that.
“Banks aren’t stupid; they’re not simply going to give money away to borrowers.“
One word: Countrywide.
I like the fact that I found you using 32.2% as the debt to income ratio for some of your tables in the other post. It’s reassuring to see that someone else came up with a similar figure.
I wasn’t trying to be rude, but more so trying to show how absurd those statements about making $210K/year and not wanting to live in a working class neighborhood were.
Nothing is owed to you just because you make a certain amount of money - and nothing is certainly beneath you! And, you shouldn’t rub it in the faces of people who make less than you because there are many who make a lot more than you!... myself included. However, I won’t be so declasse as to mention how much my “household” income is.
I know neighborhoods that wouldn’t want someone who broadcasts their income to live nearby. I slap my hands every time I consider typing my household income here…
You’re right for the most part, but purchasing a home to live in is not solely an “investment.“ And even well educated, intelligent, informed, high earners cannot predict the future. Every decision you’re making daily includes thousands of assumptions. We’re using statistics to make the best decisions, but, to steal a line from a good book out now, it takes just one Black Swan to change everything.
Cool, Sue!
“My household will make ~$210K this year. We will continue to rent for at least another 2 years. Why? If we were to purchase something at price we could reasonably afford, we’d be living in a working class neighborhood, not one with families like ours. Clearly, that’s not a choice worth making.“
Have you ever considered that some of the higher end neighborhoods may not want a family who makes merely $210K/year to be in their neighborhoods?
Why? Because you family is not like theirs.
IR,
I really want you to show me this data.
Turtle Ridge has nearly 600 homes - in The Summit, that is.
Please show me short sales or foreclosures as a percentage.
I see a lot of comments about “wealth” in the OC and high incomes in the OC. Both of which are true. However, people with “high incomes” tend to earn that income by making smart, informed decisions. How many people making smart, informed decisions would buy a house in Irvine right now and put a strain even on their higher-end incomes? Or would they wait for prices to come down?
People with “wealth” tend to accumulate that wealth by making wise, well-informed decisions. Also, much of that wealth is in invested assets. How many people who make wise, well-informed investment decisions believe that Irvine property is a good investment right now?
So the high income, wealthy individuals will likely sit this one out and wait until prices drop dramatically. After all, they probably grew their wealth by “buying low, selling high,“ not vice-versa.
My, my…someone who makes that much certainly cannot live in a working class neighborhood. God forbid.
Debate illuminates the issues. Multiple points of view are good - I’d rather not be a sheep herded by bears or bulls…
Interesting what they do and don’t recommend. No Cramer advice here…
What People Can Do If Foreclosure Looms
As Mortgage Woes Mount, Squeezed Homeowners Have Options
To Try to Avoid the Worst—From Counseling to the Courtroom
http://online.wsj.com/article/SB118903997029818836.html?mod=hpp_us_personal_finance
You know, after spending the day following this, I think that each person has a slightly different take on what the numbers show.
As far as I’m concerned, there are good arguments on both sides (slam here).
Given that, I don’t see how either side can claim, with any vehemence, that they know what will unfold - or to what extent.
The fact of matter is, today, incomes are not horrible and equity exists.
There are also destructive forces swirling about.
We will see.
Wow, a bit judgmental I’d say - “trolls” and “working class” ...
Are my comments that of a troll? I try to add another perspective even though I agree with IR 95% of the time. How boring is it reading the same comments? “The market’s dead! 60% depreciation! I wouldn’t buy that if it were $100 per sq ft!“
So I find myself playing devil’s advocate even though I think the Irvine market will depreciate 20%+/- over the next couple years. That’s not as aggressive as others’ forecasts, but hardly a bull troll.
That 2003 sales price must be an error.
I agree it is still too high at $473/SF.
Are you referring to me? I have no idea what you are talking about. I work for a private land developer. We might sell property to Lennar, but we have no interest in buying out their business.
If Turtle Ridge is not highly leveraged, why are there so many foreclosures and short sales?
Who has admitted his employer is anxious to take over Lennar.
Did they lose out on the Great Park and now want revenge?
I know a girl like this. . . Her ‘wealthy’ parents from Laguna Niguel gave her a downpayment, courtesy of a HELOC on their own home. To top that off, her father’s employer decided to cut his pension benefits, forcing him to return to work after what he thought was a comfortable retirement.
There’s a lot of money floating around, I won’t deny that, but it’s not as much as people think they have.
“I think it’s more interesting that 22% earn > $150k! Glass half full? I guess it depends on your perspective.“
How much of that $150K+ is commission-based?
A few people I know in Irvine are making close to $200K, and a big chunk of that comes from a commission of some sort - their base salaries are fairly low by Irvine standards, around $60-70K.
When economic times get tough, those commissions evaporate. I read an article on some site (can’t remember offhand) that analyzed the residential RE market in Manhattan (NYC) and it all came down to the stock market. When the market is doing well, there is a ton of cash floating around the financial sector in the form of bonuses and commissions, and RE prices get and stay bloated. As soon as the market dips, the party’s over.
How do commission-based jobs factor into a bank’s decision to issue a mortgage? Is a person making $120K salary any less of a risk than someone who makes $80K plus $70K in commission?
I’ve been reading this blog for awhile now. First time I’ve looked at the comments. I didn’t realize there were so many trolls on here. Very funny. There are only two reasons I can think of that a housing bull would bother to read this site:
1. They work in real estate -or-
2. They’re up to their eye balls in housing debt
My household will make ~$210K this year. We will continue to rent for at least another 2 years. Why? If we were to purchase something at price we could reasonably afford, we’d be living in a working class neighborhood, not one with families like ours. Clearly, that’s not a choice worth making.
Cheers,
Jim
IR -
Keep it up. Even though I have decided to pass on Irvine (now decided to look in the South Bay Los Angeles area), I still read the blog because I find the info and perspectives invaluable in my search for a home.
I enjoy watching prices slip and I enjoy even more, the sellers that get heckeled for WTF pricing. Keep up the great work! I tell everyone I know that is looking for a home about this blog. And can’t wait to order a T-shirt.
IR,
Since there are a grand total of three mortgage professionals contributing here, I know this is patently false.
I KNOW you are not speaking for me.
Go take look at Turtle Ridge stats - then come back and tell me how leveraged those people are.
IR,
what is your opinion about this house in westpark listed again for $614,900. the house looks good (bit too high at 473 per sqft for me)the sale history seems interesting.
http://redfin.com/stingray/do/printable-listing?listing-id=978363
Sales History
Date Price Appreciation
04/18/2007 $601,917 -14.4%/yr
04/25/2006 $701,000 20.5%/yr
09/28/2005 $630,000 120.8%/yr
10/30/2003 $138,643 -3.8%/yr
07/26/1995 $190,500 —
You might be correct. Perhaps a working-class community that is barely 40 years old has lots of old money. It would seem plausible that much older communities with a reputation for old money might actually have more of it.
BTW, do you have any data that suggests otherwise? I am certainly open to changing my opinion if it is in conflict with the facts.
How can you say that? With all due respect you have zero facts to back this statement up. I appreciate the song/lyrics/tie to house..yadda yadda but seriously… You have no idea about where “some” of the money in Irvine comes from. There may be some people out there that actually have generational wealth. I read your bio…you are NOT a local. I was born and raised here. It always amazes me that the outsiders are so quick to judge. Remember, it was YOUR decision to come to Irvine. Nobody held a gun to your head. I can appreciate the blog but as the primary poster you have the responsibility to get the facts 100%...or at least try. Generalizing like this does nothing but destroy your credibility. Now I better not visit the site for at least a week as the replies from all the “fan boys and girls” that come to your defense will try to insult me.
...and I thought that making $108k a year somehow made me rich. Thank you for shattering my delusions.
It’s the older crowd that tends to be wealthy (ex. empty nesters) and that is also the crowd that doesn’t need to upside to a bigger space anymore.
As ElricSeven pointed out in his post lower down - why raise your property taxes by moving when you’re in that situation?