Irvine Housing Blog

IR,

One piece of data I think you have been leaving out of your housing payment calculations is the PMI.  FHA has a .9% per year PMI factor on these loans with less than 5% down, that’s an extra $184.48 per month.  The PMI will in by another .25% in April.

Something to keep an eye on: The next downward leg in price might be lead by financing again.  Talks of winding down FMNA and Freddie leading to higher rates and fewer 30 year notes. Contined increases in the costs for FHA financing and the move to min 5% down.

Those fees have been changing erratically over the last couple of years so I haven’t been able to keep up. I will look into it and adjust my spreadsheet accordingly.

You just answered your own question. Your statement was vague, and IHO’s wasn’t.

Sorry, I didn’t mean to attack you; my main concern as I pointed out is not that your statement isn’t specific enough, but that it doesn’t include any context to make it meaningful. IHO doesn’t provide this context either. If you have some I’d appreciate it.

I wasn’t specific enough, are you kidding?
IHO lives and breathes this stuff.
His entire life revolves around Irvine Real Estate.
He attends the grand openings and blogs about the Irvine market 24/7
Of course, one would expect a more accurate number coming from him.
I said north of 30%, he came back with the 50% number.
Either way both of our numbers indicate large down payments are being made and not the 5% that most here seem to think.

The context is on the site I linked to, just click on the closed sales links and look for the columns regarding loan information for the years you are interested in.

There is data there for 2008 and 2009 where the average was close to 40%. 2010 does not have that data but when I started looking up that information myself, it was very similar to previous years but a bit higher.

2011 has started close to 50%.

The data culled from IR2’s site just for January 2011 in Irvine shows 49%, compared to 27% nationally on today’s blog.

I am confident that down payments in Irvine are higher than the national average.

IR: Do you want to bet me the cost of that Dataquick data to find out?

OK. I officially apologize for using the word “vague.” Can we move past this please? Once again, you have ignored my point, which is that the number means nothing by itself without any context. How does Irvine compare to other areas? How does Irvine of today compare to Irvine of the past?

Thanks IHO, this is exactly what I was curious about. If down payments in 2011 continue running substantially higher than 2008-2009, then that may be a relevant bit of data.

“I am confident that down payments in Irvine are higher than the national average.

IR: Do you want to bet me the cost of that Dataquick data to find out?”

I won’t take that bet. The down payments here are likely higher than surrounding areas.

The real question I hope to answer is the degree to which down payments have gone up or down, and how we compare to other areas. It will also be interesting to see the relationship between down payments and price declines. Do increasing down payments really blunt price drops? Conventional wisdom says yes, but what does the data say?

OT, but I was looking at 92603 sales this year at the spreadsheet by Scott Gunther (sp?) and noticed that 0% down is still possible…

14 Vernal Spring closed on 2/24/11 for $2,300,000 with 100% financing from Merrill Lynch (BofA).

Yes, if the price is reasonable, I will get the entire history back to 1988. Dataquick has it. I just requested a quote.

@bigmoney:

How do you define “rapid downward price movements”?

I believe it’s a common opinion here by bulls and bears alike that Irvine’s price declines have been slower than surrounding cities.

While we see huge reductions in the ultra high end like Shady Canyon and the lower end like the 1br attached condos, many of the middle-tier homes have kept their valuation… some are even higher priced now while some are only 10% off of peak. Almost none are close to 1999 valuations.

Do you feel Irvine has undergone a “rapid downward price movement”? I’m just trying to adjust my parameters so I can understand your comments better.

Good question. Well, the case-shiller index for LA-OC fell at a 26% rate in 2008. Now I certainly agree that Irvine has in general been falling at a slower pace than the rest of the market since the crash started. From what I remember as I was tracking prices back then, I’d say that Irvine prices were falling at least half as fast as the rest of LA-OC in 2008. That gives us a 13% YOY decline. I’d call that rapid; you may not. Certainly as a potential buyer I’d consider any double-digit YOY decline worth waiting for.

Fair enough.

Thanks for clarifying.

I’m just wondering how that YOY tracks to 2011 because from my non-professional viewpoint (despite tenmagnet’s assessment of my affinity for Irvine Real Estate), it just doesn’t feel like prices are dropping rapidly comparatively.

Back in ‘09 when I was looking at South County 3CWGs, they were near the same price as Irvine’s, but now, in 2011, they are in the $600k range. Whereas most newer 3CWGs in Irvine are still $900k or higher.

I guess I’m just looking at the wrong houses.

2008 was definitely the best year so far. Price declines since then haven’t kept up that pace, in any city. All I’m saying is that if high down payments didn’t stop 2008 from happening, they also might not stop further declines in the future either.

These are all questions I hope to be able to answer with the data I am assembling. When I am done, we will have median and Case-Shiller by Zip Code and Irvine village. That will settle arguments about how much prices have declined. I am also likely to get this information for surrounding communities to provide context.

Please add Aliso Viejo, Laguna Niguel, etc. Thanks!

IR - orange county register should really pay for this or pay you to do the work and keep an updated tracker specific to OC and OC cities.  this is valuable data

Agree.  But I don’t think the OC Register can afford that.

I have waited off on buying a house for a very long time and still believe the market has room to go down so by no means am I a bull.  We are discussing what is appropriate amount for a DP and not whether its right or wrong to buy right now. 

Personally, I am not speculating on appreciation and the decision for me is based on me being there for 15 years and not seeing any appreciation. 

My point is that for those who want to buy and have large DPs, what should they do?  While having liquid cash is great, how much should one have?  Doesnt it make sense to not pay the bank interest and pay that interest to yourself?