Irvine Housing Blog

92612’s sales are attributable to contracts signed a year or two ago and only closing now with the completion of the condo buildings.  These were basically 2005/2006 purchases where people don’t want to walk away from their deposits.  With this high volume of high-end inventory newly coming to market, one would expect the numbers to look positive.  Most of them are flippers, you can tell by how dark the buildings are at night.  Maybe one unit per floor has the lights on during a normal weekday.  So, I think we’ll see a sharp drop in those numbers when the places resell under pressure.
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Why is Oak Creek blowin’ up “Like, Whoa”?

This data is statistically insignificant….it is way too spotty.  The margin of error (noise) wipes out any relevant info (signal) that can be gleaned.

Statistically insignificant by which standard? With an n=18, a 70% change is easily statistically significant. The chances that it is all due to chance (aka the null hypothesis) is the same as saying that if I had a fair coin and flipped it 25 times it would come up heads all 25.

And margin of error? There is no margin of error listed on this chart, because it is not a poll, it is the full data set. Not sure what he means by that, but margin of error and “noise” have nothing to do with one another. Margin of error has to do with how well one has nailed down a number in a huge poll (like voters in the US picking a candidate) when you have a sample (they don’t poll every citizen every time, but if you know what 10,000 think you can start to talk about what the trend of the whole population will be).

If he means to say that there is no general trend because different zip codes have disparate data, okay, that works. But the data is like putting some cream in the coffee, it takes a while before it all gets mixed down, and no white spot is going to stay that way for too long.

Brokers to Westside elite accused of fraud
2 Beverly Hills agents and appraisers are indicted in a scam that allegedly inflated home prices and loan amounts.

http://www.latimes.com/business/la-fi-agents3aug03,1,3534312.story?coll=la-headlines-business

And yet the featured home in the times is listed by one of the agents in the article on fraud.

http://www.latimes.com/classified/realestate/news/la-re-home5aug05,0,755768.story?coll=la-class-realestate-news

What slowdown?

High-rise developers take bashes over the top
http://www.signonsandiego.com/uniontrib/20070805/news_lz1h05hirise.html

So, for those of us who are statiscally challenged, what do these latest stats tell us?

it’s not only oak creek. i think 92618 includes portola springs

It’s interesting that when there’s some bullish news the comments are few…

It’s hard to explain why 92612 is doing so well in this environment, just as hard as it is to explain why the starting point for a typical detached home with no frontyard is one million dollars in Irvine.

IR, I really respect your putting the raw numbers out there with so little spin.  What do these data tell us?

Your regular examples of individual homes on the market are very helpful, but they are necessarily selective and anecdotal, and not all undecided readers will be fully convinced by them that we have a market turnaround on our hands.  (I am convinced, but I know many other are still skeptical.)  I think we’re all looking for that first irrefutable hard numerical proof that Irvine prices are dropping in general, and many readers assume this 4-week measure of Irvine median prices by zip code will provide it.

They are mistaken, I think, because there is so much noise in these 4-week statistics (hush, statistical purists) that they will only clearly show a price drop when it’s already quite large.  Is there any way to get and use median prices per square foot (for SFRs or condos in each zip code) instead?  Maybe that wouldn’t do much.  Do you think that would provide a noticeably sharper measure?

I think he means, the results are statistically valid (ie. those prices & volumes did rise, for real, it’s not sampling error).

Why is another matter.  Knowing the why is probably the key to knowing how to take the results and what results they do or do not imply for future sales.

Well, ever since that incident a few years ago, the LAT has claimed to strengthened the wall between the sales sections and the news section.  I hadn’t realized, though, that it meant the sales people couldn’t read their own newspaper. 

It is easy to explain why 92612 shows the increases in price and volume. The Plaza condos have been closing there and there was 19 that closed in that timeframe. With an average price of $850k it would make make it easy for the median to be in that range. I also have a feeling some were well over a million when Scott Boras was one of the buyers.

92618 only had 18 sales so all it takes is one higher priced home to be added and one low end home to be subtracted and the median would be off. Just a month ago the median was $670k.

What is the bullish news?

Why do we never get a site that shows the history price by month in a chart form.  Wouldn’t we be able to see the trend if we graph the trendline since we know real estate prices don’t go up and down crazily and takes time to change direction (up or down)?

You’re confusing median with mean.  Adding a high priced home and subtracting a low priced home would not materially affect the median unless there is a huge price spread between individual homes.  With a sample size of 18 homes in 92618, this is likely not the case.

You know, that’s a really great idea.  MoneyNing, could you please go through the archives and compile one?  IR gets his data from the OC Register / Data Quick(?).  Given all the work he puts into all the other posts he writes, I’m sure he would appreciate the help - especially since he writes for free and holds a day job.

It’s already done at the county level: http://www.thebubblebuster.com/orangecounty/summary.html

Potentially Irvine as a whole has a sample that’s large enough to mean something, but even that is pushing it.  By zip, the sales counts are so low, they’re virtually meaningless.  And info comes from the composite of all.

I beg to differ. If a month ago there was 18 sales and the median or middle price was $670k the next home up was $799k and the next up was $810k then this month if you subtract one sale below $670k and add one above $810 that would make the $799k and the $810k the middle priced homes for a median of $804.5k. With only 18 sales this is very possible.

If they’re accurate, they’re valid—there was no pole here. As far as interpreting the results of a data set of highly disparate means, that’s the analysis that I would leave to the folks on here who really know about the market! I’m glad to chime in about the nuts and bolts of stats, but the boy named Sue is right about the “why” factor, I’ll leave that to the experts!

The Real Morons of Orange County

Why America’s most reckless real estate investors come from Irvine, California

http://www.slate.com/id/2171235/

Sorry, but his guy is a twit:

He starts:

“Until recently, Orange County was the New Jersey to Los Angeles’ New York City. Upscale, but generally ignored, and nowhere near as chic or happening as its urbane neighbor. Television helped change the image, with glitzy offerings like The O.C., Laguna Beach, and The Real Housewives of Orange County.”

Then he moves on:

“When I visited in the late 1990s, the mayor freely acknowledged that many non-Irvine dwellers view it as sort of a Stepford community,”

Continues:

“The subprime loans made by Irvine-based subprime lenders”

And ends by comparing Irvine with Silicon Valley in ‘00:

“...and with many of the investors who got killed when the NASDAQ tanked. Irvine may have built up a diversified economy, but it remains a company town—one whose fortunes are highly leveraged to the highly leveraged real estate industry.”

Now… this twit -because he is by the bad logic of his article- equates the sub-prime mortgage firms based in Irvine with Irvine proper.  WTF?  Did he ever notice that companies like Broadcom (Tech) is very prevalent in Irvine?  Does he think that the only companies in Irvine are sub-prime lenders.

But more to the point.  Why does he correlate the business that are based in Irvine with the people that LIVE in Irvine.  It’s a completely unproven thesis.. He makes no supporting statements whatsoever, not does he explicitely make the point… He just lets the impliciteness hang there.

Nor does he even note that those subprime companies were not all based in Irvine.  How about those based in Texas?  Does that make the good citizens of Texas as clueless and screwed as those of us in Irvine are supposed to be.

Look, this article is a hatchet job wanna be.  Starts by equating OC with New Jersey and introduces two pretty bad shows as if OC was needed “THAT” kind of help from Hollywood.

Me thinks this guy was either kicked off from D-Land for bad behavior or his parents never brought him down to the Magic Kingdom when he was a kid and now he’s into butchering OC.

Or maybe he took a 2/28, 100LTV mortgage on his condo in SF and now he’s out on the streets looking for a room.

We went to see the Highest Priced models in Portola Springs.

Lots of wasted hallways and nooks. A 4000 sq foot home with a tiny front room but no living room.

But worst… on the models, when you sit in the toilet in one of them, they can see you through the window from the 3rd floor of the house next door.

Now, if I pay 1.6M for a home, I surely don’t want my neighbor to see me reading Sunset Magazine -if you get the meaning.

Besides, the place looked like a ghost town.  Not many tradesmen working on the homes.  I wonder how long it will take for them to built out the next 20 homes planned for that builder.

If you go back to the July 16th numbers, which half would still be included in the July 30 numbers, you see exactly what Graphrix is talking about.

With only 18 measures, there will be too much variation in the numbers.

You guys are both right. Generally, there will be a large number of data points in the middle of the data set so taking one off the top or the bottom just moves the median to the next data point. This shouldn’t be too far away from the last one, but with only 18 data points, it could be.

I have no idea why 92618 had such a dramatic change. It could be from some sales in Portola Springs. It doesn’t seem likely it was because of a sudden and dramatic upsurge in house valuations in Oak Creek, but that is possible.

Don’t you mean three pretty bad shows?  None of which are about Irvine.

Why shouldn’t he bash Irvine—**TRAFFIC**NOISE**POLLUTION**NO BEACH**AND GREAT RE PRICES!!!!  Oh yeah, I forgot the SportCourt.

A little off topic, but is anyone else licking their chops at what the next Gary Watts newsletter might say?

:-D