Appreciation is Dead. It is not merely delayed for a temporary housing price crash only to resume its historic 7+% rate. Appreciation is dead. We will never see high rates of house price appreciation again in California. Sacrilege! Yes, but there are reasons to believe this may be true.
In October of 2000, I attended a conference put on by TradingMarkets.com. The NASDAQ had experienced the spring collapse and summer bear rally. The huge fall sell-off (which was the first of many sell-offs before the bottom was reached in the spring of 2003) was just beginning. One of the speakers at this conference was a very successful hedge fund manager named Mark Boucher. Everyone gathered at the conference had just been through the wildest bull market in history. All were convinced that the market was going to come roaring back. We just needed to get past this painful correction. Does any of this sound familiar?
When Mark Boucher spoke he dropped a bomb on the audience -- 20% annual gains in the stock market were not going to be seen again in the next 20 years and perhaps in lifetimes of those assembled... Silence... A pregnant pause... One of the most successful money managers on the planet just spoken the unspeakable; the audience had to think the unthinkable. Heresy! Blasphemy! Was this possible? For a few brief moments the audience was exposed to the naked truth; the veneer of denial was stripped from them. It was a paradigm shift with seismic repercussions. Those who heeded his words made wise investment decisions and survived the bear market. Those who failed to listen bought the bear rallies and were destroyed. Seven years after the peak, the NASDAQ is still down 50%, and none of the last seven years favorably compares to the seven that preceded it. Mark Boucher was right.
I am not as smart as Mark Boucher, and I am not a preeminent real estate investor (I didn't buy the bubble rally.) My words do not carry the same weight. However, consider what I write here, and you may save yourself a lot of money and avoid a lot of stress as the bubble deflates and the post-bubble market emerges.
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Have you ever wondered why California's housing market bubbles so frequently and other markets do not? It stems from a combination of two factors: limited supply and high wage growth (and, of course, Southern California’s Cultural Pathology).
Supply is not limited in the way most people think. We are not running out of land. Supply is limited because the process for obtaining supply is cumbersome -- which is good for me because that is my job. In other areas of the country, when supplies of housing are low and prices begin to rise, a large amount of supply is brought to market quickly to meet this demand. In California, this is not the case. The entitlement process as outlined in CEQA is both lengthy and costly; therefore, when supply runs low, new supply is slow to the market, and prices rally higher than they would in other areas of the country. The point is that supply shortages are a temporary phenomenon not the permanent result of "running out of land." Have you noticed that during the crash there is excess inventory on the market, and the builders have overbuilt? This is why.
The fundamental value driving up home prices is the growth in wages -- at least indirectly. Wage growth drives rental rates higher, and it is rental rates which determine the fundamental value of housing; therefore, wage growth determines the rate at which housing will increase in value. Irvine has experienced wage growth exceeding other areas of the country. This is why pay scales are currently double the national average. However, this trend cannot continue forever.
Factor Price Equalization
When the cost of a good or service rises, people seek out lower cost alternatives. When the same product is available in a different market, buyers will purchase in the lower cost market until prices equalize. This is most notable in labor markets. After NAFTA was signed, wages for unskilled labor declined in the United States and rose in Mexico. Of greater importance to the higher skilled labor of Irvine is the problem we know as "outsourcing."
Outsourcing
Outsourcing is happening all around us. I have a relative who works in customer support for a major computer maker. They are working to outsource most of his department to Banglore, India. Nissan has relocated its North American headquarters from Southern California to Tennessee. These are examples of high-paying, high-skill jobs leaving our area. This is happening for two reasons: one, they can pay less in other markets, and two, they can't get employees to move to Southern California because the cost of living is too high. The second problem will lessen as house prices crash, but the first problem is not going away. We are paid too much in Irvine, and businesses are moving where skilled labor can be found less expensively; therefore, we many not see a continuation of 3% wage growth in Irvine for the future.
Wage Growth vs. House Appreciation
House appreciation cannot exceed wage growth forever: trees cannot grow to the sky. People have to earn money to buy a home (unless of course we become a nation of the landed gentry in which real estate is only transferred through inheritance.) Over the last 25 years, house appreciation in Orange County has outpaced wage growth. Wage growth has averaged 3.4% while house price appreciation has averaged 6.9%. Notice the bubble years (1986-1989) where house prices outpaced income growth followed buy bust years (1990-1995) where wage growth made modest recoveries. What is in our future?
There are only a couple of ways house prices can outpace wage growth: 1. interest rates must decline allowing people to finance larger sums with less money, and 2. debt-to-income ratios must rise as people put higher percentages of their income toward making payments. Both of these phenomenons have been occurring in Orange County over the last 25 years.
Interest Rates
Mortgage interest rates have been on a slow but steady decline since the early 1980's. Interest rates were at historical highs in the early 80's to curb inflation, and the decline from these peaks to the 7% to 9% range was to be expected. This initial decline in interest rates coupled with low inflation caused house prices to begin rising again in the late 80's culminating in the bubble that burst in 1990 leading to 5 consecutive years of declining prices.
During the early 90's while prices were declining, notice the drop in interest rates from 10.6% in 1989 to 7.2% in 1996. This 30% decline in interest rates made housing more affordable and help limit the declines in the early 90's. If interest rates had not declined, house prices certainly would have dropped further than they did. Does anyone think interest rates will decline 30% from the 6.3% they are today down to an unprecedented 4.4% to match the debt relief of the early 90's? The FED is not going to save house prices. In fact, today's mortgage interest rates are likely not sustainable. The 6.3% today is 20% below the historic 8% average of the last half century due to global capital markets being awash with liquidity from Japan and China among others. With the declining dollar, growing national debt and inflation pressures, it is more likely that interest rates will rise rather than fall.
Debt to Income
One of the often overlooked phenomenons of real estate bubbles is the fluctuations in debt-to-income ratios. DTI ratios is an interesting measure of buyer psychology. In market rallies people act with greed and put larger and larger percentages of their income toward purchasing houses because they are appreciating assets. In market busts, people put smaller and smaller percentages of their income toward house purchases because the value is declining.
Some of the bulls speculate that we have reached a permanently high plateau. This is crazy. The only thing justifying a DTI of 62% is the belief in high rates of appreciation. Why would anyone pay double the cost of rental to "own" unless ownership provided a return on that investment? Once it is obvious that prices are not increasing and even begin to decrease, the party is over. Why would you buy under those circumstances, when it is more rational to wait and pay less? Why would you stretch yourself to buy a house when prices are dropping? This is why prices drop until house payments match their rental equivalent value. At the bottom, it makes sense to buy because it is cheaper than renting. When the market debt-to-income ratio falls below 30%, the bottom is near.
Future Appreciation Rates
As you can see from the charts above, interest rates are at all-time lows, and debt-to-income ratios are at an all-time high. Prices are going to fall -- make that crash. This post isn't about the crash, it is about the lack of appreciation in the aftermath. House prices over the last 25 years have appreciated at a rate greater than wage growth because interest rates have been falling and debt-to-income ratios have been rising. Interest rates cannot continue to fall. As they rise in the future to rates nearer their historic norms, house price appreciation will be held in check. It is likely that house prices will appreciate at rates of less than 3% while interest rates rise, and it will only match the 3% rate of wage growth thereafter. It is also possible that Irvine and Orange County may not see 3% wage growth in the future due to factor price equalization and outsourcing. Sustained appreciation rates of 7% will not be seen in the next 25 years -- assuming of course we don't have another bubble.
Buying after the crash
So what implication does all of this have on a future buying decision? Don't count on appreciation. If you need to factor in appreciation to make the math work on a home purchase, you will buy too early, and you will pay too much.
Then again, you wouldn't be alone. Pros make this mistake too. Some of you may have heard the story about one of our major homebuilders in Southern California who had to close their San Diego office due to poor performance. The president of the division routinely used high rates of appreciation in his financial models when analyzing properties to purchase. As a result, the San Diego division overpaid for almost all of its projects and lost the company a great deal of money. Usually, when a major company has problems at a division, they rotate staff. The problems here were so severe it was judged more prudent to wipe the division out and start over. Amazing.
When the cost of ownership is equal to the cost of rental it is safe to buy. Even if prices drop further -- which they might -- you will not be hurt by it. If you are counting on increasing rents or house price appreciation to get you to breakeven sometime later, you will probably get burned. Remember, appreciation is dead. Rest in Peace.
The Quail Hill neighborhood of Irvine is located south of the 405 between Sand Canyon Avenue and Highway 133. South of Quail Hill is a nature preserve and the exclusive Shady Canyon. The primary access is from Sand Canyon and through a unique roundabout. The community increases in elevation from the entry point at Sand Canyon and the 405 to the southernmost portion of the site. The hill gets steeper as you go south, and many of the larger homes on top of the hill have spectacular views of Orange County.
Nearest the entry to the community is the main commercial center gathering place. This is another suburban plaza that functions to provide a sense of place for the community. It is the "third place" for those living in Quail Hill and Shady Canyon.
The designers used a combination of trellis work and glass enclosures to define the space and provide noise and wind buffering from the parking lot.
An attractive water feature serves as a focal point for the center, and the falling water serves to mask the noise of cars moving in the parking area.
The homes in Quail hill are attractive and varied, although some of the neighborhoods are a bit too dense, in my opinion.
The front yards are typically elaborate landscaping rather than grass.
Alderwood Basics Plus School is a California Distinguished School typical of the high quality schools in the Irvine Unified School District.
The view from of the parks and houses is wonderful; however, the north exposure in Irvine means you don't get sunsets over the ocean, but you get city lights and distant vistas. Nice place for a picnic, wouldn't you say?
The parks have gathering places for people of all ages.
The pools are all of the highest quality, and many offer panoramic views from your lounge chair.
The children's tot lots are some of the best in Irvine. They play areas are well landscaped and the groundcover is either sand or a soft rubberized compound which minimizes potential for injury.
There are associated gathering areas for adults to have a small group of friends congregate around a fire.
Did I mention the view? In case you wanted to enjoy the view while your children played below...
Irvine's Quail Hill: a great place to live.
How are the bulls going to spin that?
I am introducing an new honor at the Irvine Housing Blog: the Knife Catcher Award. This dubious distinction goes out to all the knife-catchers stupid enough to attempt to flip a property in this declining market.
As you can see the knife-catcher is poised to eviscerate any greedy flipper with a death by a thousand cuts: a slow bleed of monthly cashflow and depreciation. To be eligible for the knife catcher award, the property must be put for sale within 6 months of purchase, and it must look like it has little or no chance of success (admittedly, the last hurdle is not very high).
One would think properties put for sale immediately after purchase would be difficult to find. Some may be bank repossessions, but some are simply delusional kool-aid drinkin' fools who really believe this "softness" in the market is temporary and they are betting on the speedy return of double-digit appreciation. There is a special measure of schadenfreude for these fools worthy of unique honor on this blog. So without further delay, our first knife catcher award goes to...
Asking Price: $567,900
Purchase Price: $505,750
Purchase Date: 2/13/2007
Address: 162 Hayward, Irvine, CA 92602
Beds: 2
Baths: 2
Sq. Ft.*: 1,550
Year Built: 2002
Stories: 2
Type: Condominium
Neighborhood: Northpark
$/Sq. Ft.*: $366
MLS: P570133
Status: Active on market
On Redfin: 20 days
From Redfin: "Beautiful townhome in Northpark with cathedral ceilings. Turn key condition with fireplace in living room. Balcony and windows provide great view of area. Large kitchen. Separate laundry room. Huge two car garage with direct access. Separate formal dining room next to kitchen. Private large master bedroom. Lots of storage throughout. Floor plan is excellent. All the rooms are large. Northpark has many amenities for all ages. Quick access to freeways and shopping."
This flipper couldn't even be bothered to replace the tile counters with granite. The unit appears to be empty, so the bleeding has already begun. I have to wonder if this isn't a realtor or a bank. If this seller pays a full 6% commission, they only stand to make about $28,000. IMO, it doesn't seem worth the risk. However, if it is an agent paying only half a commission, this could net them $50,000 in just a few months making it at least worth dreaming about.
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Today's knife catcher award is a double feature as a neighboring property is also a 2007 flip...
Asking Price: $590,000
Purchase Price: $545,000
Purchase Date: 1/31/2007
Address: 259 Lockford, Irvine, CA 92602
Beds: 2
Baths: 2
Sq. Ft.*: 1,496
Year Built: 2002
Stories: 3
Type: Condominium
View: Mountain
Neighborhood: Northpark
$/Sq. Ft.*: $394
MLS: U7001632
Status: Active on market
On Redfin: 7 days
From Redfin, "Auburn at Northpark community. Great end unit location directly across from the pool and park. Dramatic 20 ft. ceilings, and decorator touches. Upgraded sile stone counters in kitchen which is open to a great room, great condition, ceiling fans, windows in 2 car tandem garage. Office area outside master bedroom. Home shows well and has easy access for viewing. Washer, Dryer and Refrigerator included. Wonderful gated community with basketball courts, parks and nature trails. For lease also @$2500"
Another treasure trove of interesting information. My first observation is the price to rent ratio of 218 -- assuming this floplord could actually get $2,500 a month. I doubt they will get that much rent as there are many better properties in better neighborhoods for less. My guess is a rent ratio of 250 leaving a $2,180 rent is more realistic. Since this flipper has fantasies, let 'em dream. Also, because it is being offered for lease, this isn't a bank REO.
Another item I found interesting was the photographs. Notice the 2006/10/31 date? It is possible the buyer took these photos and later used them in the MLS listing, but is is also possible these photos came from the previous listing and the same realtor is involved in both transactions. These photos were taken 3 months before the closing, so it was either a very patient buyer, or these were realtor photos.
So there you have our first knife catcher award. In the future, you will know these special flips by the knife catcher image next to the property breakdown as it was displayed above. If anyone notices when these sell or rent, please email me at irvinerenter@irvinehousingblog.com and I will be sure to update everyone on the carnage.
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BTW, Redfin updated its look last night. Check it out.
Hello fellow irvinehousing blog readers. First I'd like to thank zovall and irvinerenter for inviting me to join them and irvinesinglemom as a contributor to the blog. Have no fear readers the failed flips will not go away and if anything we may have more. I decided to join them because I was not adding new posts to my blog ocecon101 which led to little traffic and even less motivation on my part to add new topics. Zovall thought that having me post here would get better traffic without the pressure on me to keep adding new posts. The idea is to add more content without taking anything away from the original purpose of the blog. Most come here searching for more information on the Irvine housing market and my goal is to add interesting and relevant content for those in search of more information.
For my first post I will give you a little background on myself, why I am a housing bear and what subjects I will be writing about. As some of the readers of the forums here know that I was in the mortgage business and for the majority of my time in the business it was for a lender for one of the larger homebuilders. I decided to leave the business for various reasons but it was on my own terms. I really did enjoy working there and gained a tremendous amount of knowledge from it. I am very thankful for all of great people I met there and remain friends with many of them today. I may in the future post topics on some of the reasons why I left if the curiosity is there.
Even though I am a homeowner I am a housing bear. The appreciation simply does make sense as there is no way I could afford my home that I bought in 2002 today. My income has increased more than inflation but housing prices have soared way beyond my income and many others in OC. I am also an investment property owner and I would like to buy more but I have this unique requirement called positive cash flow. Since 2004 it has been almost impossible to find and 2-4 unit investment property any where in OC with positive cash flow. Depreciation is supposed to offset your income from the property not your regular income.
I am a born and raised OC native who remembers the last crash in the 90s and I will be posting topics on the similarities that we are seeing today. My first topic on my blog has the headlines from the OC Register on housing from 1987 through 1993 and it really is not all that different than this time. I also will be posting about the economy and how it relates to housing. It may not be specifically Irvine but Irvine will be affected from these factors too.
Coming soon will be a post on a deeper look into the jobs in OC and what history can tell us.
Asking Price: $280,000
Purchase Price: $265,000
Purchase Date: 10/8/2004
Address: 302 Tangelo, Irvine, CA 92618
Beds: 1
Baths: 1
Sq. Ft.*: 662
Year Built: 1978
Stories: 1
Type: Condominium
View: Lake
Neighborhood: Orangetree
$/Sq. Ft.*: $423
MLS: P564627
Status: Active on market
On Redfin: 40 days
They say a picture is worth a thousand words. The following is pure speculation based on the picture above...
Toward the end of 2004 a young family wanted to get in on the hot housing market and perhaps make some money to trade up to a larger home. They found what they could afford: a 662 SF condo in Orangetree. The family has been living in these cramped quarters for two and a half years sacrificing the much larger space they could have rented in order to build equity in a home (sounds better than flipping, doesn't it?) After all the sacrifice, they missed the peak of the housing bubble, and they need to sell now for full asking price just to get out at breakeven. It probably won't happen.
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Do we feel sorry for these people? Didn't they do what you are supposed to do in Southern California? Is this the profile of a greedy flipper? Where did they go wrong?
What happens if they can't sell now and end up the bagholder? How would you like to be trapped in a 662 SF condo and be $150,000 underwater for 5 or 10 years? Do you walk away and declare bankruptcy?
Just one example of the death of the California Dream...
I walk a lonely road
The only one that I have ever known
Don't know where it goes
But it's home to me and I walk alone
I walk this empty street
On the Boulevard of Broken Dreams
Where the city sleeps
and I'm the only one and I walk alone
Green Day -- "Boulevard Of Broken Dreams"
Denial runs deep in the financial markets. The vast majority of participants either want or need prices to steadily increase. Any facts or opinions that run counter to the idea of ever increasing prices must be quelled in order to prevent a catastrophic collapse of prices due to panic selling. One of the more glaring examples of this phenomenon has been the slow leak of information regarding the upcoming debacle in our housing market.
In February and March as the sub-prime lending implosion became front page news, market bulls were presented with a major public relations problem. It was imperative for the bulls to convince buyers the damage from subprime lending was "contained" and would not "spill over" into other borrower categories and ultimately into the overall economy. The supposition is that the widespread use of exotic loans is not the problem, it is the practice of giving these loans to those with low credit scores. In other words, it is not the loans, it is the borrowers. This is wrong. It is not the borrowers; it is the loans.
As a primer, I would like to illustrate the basic distinctions made with the type of borrower and the type of loan (for a better, more detailed analysis see Calculated Risk). There are 3 main categories of borrowers: Prime, Alt-A and Sub-Prime. Prime borrowers are those with high credit scores, and Sub-Prime borrowers are those with low credit scores. The Alt-A borrowers make up the gray matter in between. Alt-A tends to be closer to Prime as these are often borrowers with high credit scores which for one or more reasons do not meet the strict standards of Prime borrowers. In recent years one of the most common non-conformities of Alt-A loans has been the lack of verifiable income. In short, "liar loans" are generally Alt-A. As the number of deviations from Prime increases, the credit scores decline until finally you are left with Sub-Prime.
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There are also 3 main categories of loans: Conventional, Interest-Only, and Negative Amortization. The distinction between these loans is how the amount of principal is impacted by monthly payments. A conventional mortgage includes some amount of principal in the payment in order to repay the original loan amount. The greater the amount of principal repaid, the quicker the loan is paid off. An interest-only loan does just what it describes; it only pays the interest. This loan doesn't pay back any of the principal, but it at least "treads water" and does not fall behind. The Negative Amortization loan is one in which the full amount interest is not paid with each payment, and the unpaid interest gets added to the principal balance. Each month, the borrower is increasing the debt. One of the features of all interest-only or negative amortization loans is an interest rate reset. All these loans have provisions where the loan balance comes due either in the form of a balloon payment or an accelerated amortization schedule. Either way, the borrower must either refinance or face a major increase in their monthly loan payment. This increase in payment is what makes these loans such a problem, and this is why it isn't the borrower, it is the loan.
As you can see from the table above, the category of loan and category of borrower are independent of each other. Starting in the lower left hand corner, we have the lowest risk loan for a lender to make, a Prime Conventional mortgage. As we move up or to the right, the risk increases. The riskiest loan a lender can make is the Negative Amortization loan to a Sub-Prime borrower.
The market apologists have admitted there is risk going up the side of the chart because sub-prime borrowers are beginning to default. These same spin-doctors are denying the risk of default will spill over into Alt-A and Prime. They making this argument because these two categories have historically had low default rates. They conveniently forget all the "liar loans" taken out by those with higher credit scores and payment resets for I/O and neg am loans which were also given to the Alt-A and Prime crowd. Historically, this group has not defaulted because they have not been widely exposed to these loan types. Basically, they are ignoring the risk moving along the bottom of the chart: the risk endemic with Interest-Only and Negative Amortization loans. This is a fatal flaw in their analysis.
So why will so many Alt-A and Prime borrowers go into default? To answer that question, we need to make a more detailed analysis of the exhibit: Adjustable Rate Mortgage Reset Schedule
First, I would suggest you review Financially Conservative Home Financing. In that post I stated, "At the time of reset, if you are unable to make the new payment (your salary does not increase), or if you are unable refinance the loan (home declines in value), you will lose your home. It’s that simple." It is my contention based on the information in the above chart, we can deduce the Alt-A and Prime borrowers will face one or both of the conditions which will cause them to lose their homes.
Look at the gray bars which make up the majority of the reset amounts due over the next 24 months (2007 and 2008). These are the Sub-Prime borrowers. They are already defaulting in large numbers, and we have all witnessed the tightening of credit (or elimination of credit) being offered to these borrowers. We also know many of these borrowers were put into the dreaded 2/28 loans and they cannot afford the reset. And, as if that isn't enough, most of these borrowers were given 100% financing (if they could save up for a downpayment, they probably wouldn't be Sub-Prime.) Therefore, it is probably safe to assume many if not most of these borrowers will default. Why wouldn't they? Most haven't put any money into the transaction, they have no equity as prices are declining, and they already have bad credit. What is the worst that could happen? They will just go back to renting, big deal. Think about what that means... a large number of defaults and foreclosures will occur over the next 3 years (the time span will be spread out due to differences in borrower holding power and the time spent in the foreclosure process).
In addition to the tightening credit and worsening buyer psychology, if large numbers of sub-prime borrowers are defaulting over the next 3 years, prices will certainly fall. Therefore, it is also safe to assume that when the Alt-A and Prime borrowers who have taken out adjustable rate mortgages need to refinance starting in earnest 3 years from now (see the red and light gray bars in the Adjustable Rate Mortgage Reset Schedule), they may be underwater and unable to refinance.
Why do I think so many will be underwater? For one, prices will be significantly lower in 2010. In the forums, we have already documented price reductions by the builders of about 15%, and we also know it isn't helping sales. More builder price reductions are on the way. It isn't difficult to imagine prices being 30% or more below the peak by 2010. How many Alt-A and Prime borrowers with adjustable rate mortgages do you think have more than 30% equity in their properties?
Nationally, approximately 40% of residential real estate is owned outright; therefore, if the total equity in real estate is 55%, the remaining 60% of homeowners have a total of 15% of home equity. This is admittedly a rough calculation, but it certainly does not appear as if a great many people with mortgages have more than 30% equity in their homes to ensure they are able to refinance. Many bulls have speculated that most Irvine homeowners are sitting on mountains of equity because home prices have increased so dramatically over the last 5 years. Sounds plausible, but it isn't true. Where did this equity go?
Has anyone else noticed all the conspicuous consumption in Irvine? Every house has two luxury cars in the driveway, the Spectrum is always full of shoppers, and every homeowner is busy competing with their neighbor to see who can look richer (see Southern California’s Cultural Pathology). If you want to know where all the equity went: they spent it.
To bring us back to where we started, a great many Alt-A and Prime borrowers will lose their homes because they will be hopelessly underwater when they need to refinance 3 to 5 years from now. If they had borrowed with conventional mortgages as they did in the past, they would not be facing this mortgage reset timebomb, and they would simply ride out the Sub-Prime debacle just as many homeowners made it through the declines of the early 90's. However, it is different this time. This time, the loans they have taken out are going to ruin them. It's not the borrowers, it's the loans.
The Oak Creek Community in Irvine is bounded by Jeffrey Road and Woodbridge to the northwest, the 405 and open space to the southwest, Sand Canyon Road and a commercial district dominated by hospitals to the southeast, and Barranca Parkway and Orangetree to the northeast. Alton Parkway is the main arterial moving traffic through the area. Due to its proximity to the 405, the 5 and 133, it has great access to the surrounding area. Plus, it is 5 minutes from the Irvine Spectrum. Oak Creek is a newer community built in the late 90's and early 00's.
One of the features that makes Oak Creek a successful neighborhood is the vibrant "third places" you will find there. A "third place" is a place of public gathering for social and recreational activities. This contrasts with the home and work environments and special purpose public places like grocery stores, restaurants and other businesses. Third places create the sense of place which makes a community identifiable, unique and special to the inhabitants.
The suburban plaza at the shopping complex at Alton and Jeffrey is truly a special "third place." It is one of the most functional suburban plazas I have ever encountered. It is rarely empty, and the variety of people provides a glimpse into the lives of those who call Oak Creek home.
The central feature of Oak Creek is its elementary School.
The park and ball fields are generally abuzz with activity.
One very nice feature of the Oak Creek plan is the pedestrian crossing over Alton Parkway. It provides a safe link for children walking to the elementary school in the morning.
There are several community parks in Oak Creek. They are all well designed and well maintained.
The community pools are also first rate. Unfortunately, this pool is not heated. It doesn't seem to bother the duck though (left side of picture).
The parks all have great play areas, shade structures and clean bathrooms.
One of the unique features of Oak Creek is the multi-use trails built along both sides of the large drainage feature. This trail is great for bicycling, rollerblading, jogging, or walking.
Apparently, there is some available inventory in Oak Creek 
Notice the random BMW?
In many of the comments on the last community profile, people expressed concern over the lack of children in Irvine. Based on the pictures above, I think it is safe to say, Irvine is still for families.
Irvine's Oak Creek: a great place to live.
Address: 26 Perennial, Irvine, CA 92603 (Quail Hill)
Plan: 1174 sq ft - 2/2
MLS: R65314 DOM: 138
Sale History: 7/6/2005: $532,000
6/26/2003: $312,500
Price Reduced: 06/20/06 -- $648,000 to $599,000
Price Reduced: 07/26/06 -- $599,000 to $579,000
Price Reduced: 08/21/06 -- $579,000 to $575,000
Price Reduced: 09/01/06 -- $575,000 to $570,000
Price Reduced: 09/18/06 -- $570,000 to $565,000
Price Reduced: 09/22/06 -- $565,000 to $559,000
Current Price: $550,000
This Plan 3 in the Jasmine tract built by Shea Homes in 2003 is in the village of Quail Hill. In the spirit of saving money and being an efficient builder, this tract was reincarnated in Turtle Ridge as Ashton Green. This condo was purchased on 7/6/2005 and then put back on the market less than a year later on 5/26/2006. The greed is clearly evident when you realize that this flipper expected a $116,000 profit! They quickly wised up and started reducing the price. I think they may have reduced the price so many times that ZipRealty currently doesn't even display the most recent price reduction.
If they obtain their current asking price and we assume 6% in selling costs, this seller will lose $15,000.
UPDATE #1 - October 19th, 2006
This greedy pig actually raised the price $50k yesterday as evidenced by ZipRealty:
Price Increased: 10/18/06 -- $550,000 to $599,000
Current Price: $599,000
You've got to wonder what's going through this seller's mind as they keep messing with the price. LOL, Perhaps they were getting too much interest at a price of $550k? This hog will get slaughtered.
UPDATE #2 - November 4th, 2006
The last price increase lasted only two days and then the listing was taken Off Market on 10/20/2006. I'll post another update when/if it gets listed again.
UPDATE #3 - April 21st, 2007
Well, this one is back on the market with MLS #: S474139
Price Reduced: 03/07/07 -- $595,000 to $575,000
Price Reduced: 03/27/07 -- $575,000 to $549,500
Current Price: $549,500
The $550k price didn't work 6 months ago but since the market is hot now, I'm sure this home will just fly off the market now 
Asking Price: $547,500
Purchase Price: $542,239
Purchase Date: 12/5/2006
Address: 8 Mozzoni Aisle, Irvine, CA 92606
Beds: 3
Baths: 2.5
Sq. Ft.*: 1,676
Lot Sq. Ft.*: 1,623
Year Built: 1990
Stories: 3
Type: Condominium
Neighborhood: Westpark
$/Sq. Ft.*: $327
MLS: S469169
Status: Active on market
On Redfin: 124 days
Categories: Unsold in 90+ days
Sales History:
Date -------------- Price ---------- Apprec
12/05/2006 -- $542,239 -- -10.8%/yr
08/11/2005 -- $630,000 -- 15.5%/yr
09/24/1999 -- $270,500 -- 0.8%/yr
04/04/1991 -- $252,000
Redfin, Zillow
When I was looking for my most recent rental, I viewed one of the units in this community. The whole place is just too dense (a 1,623 SF lot, WTF?). When your in there, the claustrophobia is inescapable. The unit I viewed was completely updated. This one doesn't look like it has been touched since 1991.
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Some properties just have bad karma. This one was purchased at the peak of the last bubble for $252,000. The original homedebtor sold 8 1/2 years later and made a whopping $2,270 after a 6% sales commission. When adjusted for inflation and accounting for the stress of being underwater for 8 1/2 years, I consider this one a loss. The second buyer did well doubling their money in 6 years. 
The third buyer... well, they lost about $120,000 after commissions in just over a year -- a 20% loss. Here is where it gets strange; the fourth buyer appears to have put the unit up for sale almost immediately after purchase as it has been on the market for over 120 days, and the last sale was almost that long ago. If this fourth buyer sells at the current asking price, assuming a 6% commission, they will lose $27,589 in just 4 months. I would add in some carrying costs as the unit is empty, but does anyone think this flipper is actually making any payments? I doubt it.
This property has had 4 owners; 3 of them are going to lose money on it. Who says real estate always goes up?
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