Irvine Housing Blog

As long as the sponsored posts are identified as such, I think it’s a fine idea.  After all, if you can’t monetize your site, what’s the point?

IR,

I like the idea of profiling properties outside of Irvine; you deserve some financial reward for your service.  I would especially like seeing properties in the South Huntington Beach area, after living/renting in Irvine for 5 of the last 8 years we’ve decided it won’t be where we buy.  I’ve worked in Irvine for the last 17 years and it’s not as nice as it once was.

“The high end of the market is still in denial.”

Regarding your chart today, where do you think the mid range is?  Some colleagues of mine are seriously considering 9 Pinebrook in Irvine, they seen a flattening of prices on Zillow and of course figure this is bottom.

IR,

Just clearly identify the sponsored posts and I’m all for it. You’ve put a lot of time, hard work and diligence into this site. As long as you are upfront about what you do, you won’t lose any credibility. You’ve earned our trust.

Before I saw your analysis, I thought - “you could probably get 1,750 for this place, which should be a net positive”.
Then I saw the association fees…$370!!
WTF!?!  Probalby because this is a 1983 condo and there needs to be some capital improvements, but wow!
I am really glad I never bought the “starter” condo and straight for an old bungalow as a starter.  $370 just about kills any cost/benefit analysis on this one.

I would be fine with this idea IR.  A lot of people on this blog are looking at other cities and besides, you more than deserve the extra income.

Okay, this description was just plain lazy.  C’mon, realtors:  either follow proper capitalization rules or capitalize every blasted word.  This just looks like something written with a cell phone.

Sounds like a great idea IR! You deserve it!  Writing blogs daily takes much time and research.  You should have some compensation.  Also, it would be nice to actually see properties that would cashflow positive. I wonder how long it will take to see more of that in Irvine!

I think it would be a great idea to apply the analytics on this site to other markets and would be valuable.

as a reader who mostly lurks, I think you deserve some money for all the time and analysis you’ve put in…and I’ve actually been curious to see your skills applied to an area other than the OC. seems like a fine idea.

Showing properties outside the area would be good.  Are we talking about OC/Riverside properties?  I would assume so or there’s no likely target market for the Realtor to sponsor.

Property taxes are overstated on your calc.  Monthly tax burden with special assessments, which are quite low due to the age of the unit, would be around $235 per month at list price.  That’s $110 lower per month than the calculation depicts.

I am assuming that you left off taxation on the lost income from down payment also so that line item is overstated as well.  For an owner occupant, a tax-effected rate of 3% would probably be more appropriate, so the forgone income on down payment is around $140 instead.  This overstates the monthly cost by around $90.

So instead of a cost of $2007 per month it is probably more like $1807.  If it costs less than the $229 per month you have to maintain the unit, it would likely be below rental parity for the owner-occupant. 

Do you really think also $3K per year for a unit such as this is appropriate for maintenance?  On these apartment style units the roofing and exterior paint are covered by association typically.  There is no landscape to maintain.  The only material things to maintain are the flooring, appliances and AC/heater.  Can someone really spend the equivalent of $3K per year on those things?

Does anyone seriously think the foreclosure problems are behind us or that the problem is overstated?

Forecast: 8 Million Homes Could Foreclose in Coming Years

http://www.housingwire.com/2008/12/10/forecast-8-million-homes-to-foreclose-in-coming-years/

I actually like the idea of seeing some properties profiled that are at rental parity or lower.  As someone who is currently renting and would like to buy when it makes sense, I value the exercise of running the numbers.  While it’s entertaining to see the extreme disconnect it is very helpful to see examples where it does make sense.

My two cents - whether it’s sponsored or not I’m looking forward to seeing the pro-purchase posts.  If you can make some money off of them then more power to you.  You’ve consistently been open and honest with us and the integrity with which you and Zovall have managed this blog to date speaks well for you both.

Hey IR,

Thank you for inviting our opinions about the sponsorship opportunity. I definitely support you on this one. Irvinehousingblog has come a long way and opportunities like these will only embellish the rational view points promoted by this blog; it is then likely that more people will shed denial and face up to reality.

Regards,
PH

IR,
  As a long time silent lurker, I’m all for the weekend advertisements.  You’ve done a great service with IHB and deserve some of its rewards.  I always intuitively knew prices were high, but through your site I now have to vocabulary to describe why its too high.  And the insight that goes with it too.
  I would recommend to follow some advertising ground rules though (and everyone here should contribute.) Otherwise, soon you’ll find yourself chasing some advertising dollar kool-aid.

  1.  Clearly mark that this is advertisement.

  2.  Continue with your deep analysis on why this would make a good rental property.  I learned a lot through your “rent vs buy” analysis.  Now I would like to see details on why this is a good investment.

  3.  The day you push a POS place that even a poor college kid wouldn’t live in, regardless of how profitable the investment may be, you’ve jump the shark.  Don’t jump the shark.

I think it is a great idea, if done with moderation (as in only on the weekends). It is much easier and way too tempting to mock overpriced mediocrity, then to identify and analyse something that is worth the money. And if restricted to Irvine, there just isn’t any of that to find for now. I would like to see such posts.

Go for it - aside from the fact that I totally support the IHB group getting some money - I think I would enjoy reading information on some housing outside of Irvine.  Personally I would love to see this extended to other areas of the country.  I feel like we are getting to the point where some areas of the country have started to find a bottom - while Irvine is still in la la land a bit.  It would be interesting to get a fuller perspective on things as we head in to the next few years!

I think your idea is a win-win.  There may actually be people on this site who would consider properties outside of Irvine if the location was decent and the price was right.  This benefits the readers and the Realtor.

I think receiving money from a realtor to finance the work on this site is officially known as “coming full circle”.

It is honorable to seek the concurrence of your long time members before accepting this offer.  Combined with the fact that the sponsorship will be clearly revealed will make this palatable to most.  After all, we can’t wait forever for Irvine properties to actually reach rental parity or a reasonable income multiple.

If there are IE properties that investors should consider fine, but I think most people on this blog would never live there anyway.  What we are anxiously awaiting is an Irvine, Laguna Niguel, CDM, HB or even Lake Forest property that is at parity.

“a realtor that would like us to profile properties outside of Irvine and provide our unbiased opinion of the investment potential.”

Unbiased - LOL

You guys are sick. $275k for this thing is way overpriced. It’s only 1000 sqft! You could build it for less than $150k. Any land title that comes with it is near worthless.

Do you guys even realize what you’re saying?

For the median household in Irvine, gross income = $84000, monthly gross = $7000.

Even $1800 rent represents 26% of gross income for this median family, barely under the 28% guideline.

So, a median Irvine household (including dual earner families) deserves to rent a less than 1000 sqft 2 bedroom POS boxshack with a carport? Are you kidding me? Keep dreaming. $1800-$2000 is too much for rent of this place, even if *today’s* renters are crazy enough to pay it.

IR,

On the Psychology of the Bubble the time line needs to be extended and some new indicators need to be added.

There will be flat periods or slight bumps upward every time a new “hope for homeowner” plan is announced.  So most recently it the indicator would be Fannie and Freddie put a moratorium on foreclosures.  Prior to that there would be a bump for the stimulas plan and so on.

These mini bumps would look a lot like the bull crap (i mean bull trap) that is there now.

I have always thought that the rental parity equation, without qualifiers had dubious value. For me the most important qualifier is the type of property, IE nice place you would enjoy living in for an extended period and would have some pride of ownership verses crappy apt. When it comes to crappy apts like the one I currently rent there is no way I would want to own it even at rental parity. Maybe if owning resulted in a 30 percent discount over renting otherwise forget it.

When it comes to rentals there is value in not being finacially tied to the property and having the options to simply give notice and leave with minimal hassles plus you don’t suffer the opportunity costs that result from tying up money in a down payment.

To me the rental parity equation only begins to become applicable for a property that I would like to live in for an extended period like a decent SFR. Todays property is another crappy apt that I would never consider purchasing even at rental parity.

It seems like folks underestimate the responsibilities, costs and hassles of homeownership. Plus unless you have sold a home people don’t understand what a huge, time consuming hassle that can be. In my opinion these factors need to be included in any cost verses rent equations.

You may be worried about selling out, but as long as it’s transparent, no one will mind.  I believe fark has sponsored headlines as well.

I also like the idea of profiling other cities because not everyone who reads this blog wants to move to Irvine.

(daily lurker, enjoyed book) There is only so much Schadenfreuden(sp?) I can deal with.  Applying your analytical skills to real world REOs worth buying would be beneficial to us renters who have never done more then window shop for houses.  As someone who puts a premium on renting (yard work thumbs down) i’m real curious about when i should jump into the market to save money (2012, but specific houses demonstrating said rentsaving thumbs up).  The same principles apply to future 330K houses worth purchase as too the crack houses currently worth leasing to people you don’t like.

As previous posters state, as long as it is clearly labeled I have no problem with you making money off giving us a fuller picture of the housing market.

IR, If one is receiving money to do rental parity analyses? Wouldn’t one be more willing to fudge the “parity” numbers?

What would be the business model/trigger for income for a weekend-featured/analyzed property (e.g., if property is sold - a percentage, number of page views, click throughs, etc)?

Inquiring minds want to know…

IR,

As a daily lurker, you’re doing a great service to us (and saved me a ton of cash from diving into this crazy market).  I think making a few bucks off your website is great, please just identify the sponsorship stuff so we know it’s an ad.  Thanks again for all your insights to date!

Larry,

Of course you deserve to make some coin.  I read you blog daily.  After moving here in 2004 and witnessing the craziness of the housing bubble firsthand, your blog helped keep me sane. 

Thanks for all of your hardwork.

Jon Alexander

As a mostly lurker, occasional commenter, I would welcome your forays into markets other than Irvine. (Not that Irvine isn’t infinitely interesting!) Go forth and be rewarded for your outstanding efforts! I’d love to see your analyis of the Orlando market.

Seriously, money changes everything. Resist the temptation. It is why Consumer Reports does not take advertizing. You cannot even allow the appearance of duplicity. I would consider your reputation to be a much more valuable thing.

It seems very unethical to take money from the seller for an unbaised analysis. Such a report would instantly lose credibility if it was revealed that the seller paid for it. Yet, I can imagine a scenario where a buyer would pay for such a report. A big “no dice” to a potential expensive hit on your reputation.

Actually, it would be helpful to us readers, too, to be able to gauge the level of craziness in Irvine.  If these other properties are in Orange County, what a revelation to see what comparable houses are listing for in other OC locations.  It adds another dimension to the analysis, actually.

Of course I echo what everyone else here has said about you deserving it.  Most of us suspected that there was something seriously wrong with the housing market in Irvine, but you put a frame around it, explained what was happening and why, and gave us perspective on what we saw and heard on a daily basis.

“I thought Washington Mutual was supposed to be a conservative lender”

You’re kidding right?  They were the biggest advocate of option arms.  They owned Long Beach Financial, which wrote plenty of subprime.  “Out of WaMu’s $231.1 billion loan portfolio, it’s $52.9 billion in option ARMs and another $62.5 billion in home equity loans and lines of credit”  http://www.housingwire.com/2008/07/22/wamu-59-billion-provisioned-for-losses-during-q2/

IR-
Thanks again for a great post.  I’m sure you know that many people all over Orange County (and SoCal) read your posts.  Do you think that you would ever consider doing a week on Newport Beach, HB, or Laguna?  It would be interesting to hear some perspective on the other towns adjacent to Irvine.

http://www.usatoday.com/money/perfi/housing/2008-12-09-homeowners-late-mortgage_N.htm?POE=click-refer

and now we have these fantastic honest folks who have decided not to pay their mortgages because what is in it for me mantra——LOL

I think due to the way the blog is set up, if you do take money for a sponsored housing post, it will be ok, because there will be a lot of comments below from us….analyzing it even more.

So if you are fudging any numbers, the readers will call you out anyway.  So it would be bad to do it…..your site is self-policing.