Irvine Housing Blog

That house seems good to me… I mean from pricing standpoint.  It’s a bit dated, but at $251/sf it seems reasonable.

Anyway, housing market is officially lower than during the Great Depression.  We’re down 33% from peak as of April report (I know it went up a bit in today’s May report), whereas it was 31% & change peak-to-trough during the Depression.  Irvine is at 32% & change as of April.  The peak-to-trough occurred over approximately a decade in the 30’s, it took about half that this time around… so far.  -source: CNBC

I have often wondered if single family homes that
are now part of the shadow inventory will eventually be recycled into multifamily rental units.

If true, the implications are enormous, especially for cities like Irvine. I don’t believe Irvine’s master plan takes into account the added stress on infrastructure such as roads, schools, utilities added by 2 or more families living in a space designed and planned for one.

I have lived in Irvine for 32 years.  I have
seen evidence of doubling/tripling up in recent years.  How do I know? Some of these folks are friends and I helped them move in!

2.4% annual appreciation for this property from 1992-2011.

I disagree with your thought that gas prices will not impact behaviors.  No one would say that gas prices at $1/gal vs. $3 would not change people’s behavior, and the move from $3 to $5 will continue that change.  People are making decisions to leave jobs with long commutes for jobs closer to home, so the flip side impacting where people move will also take place.  You have people going from two cars to one, even with both spouses working.  That just doesn’t fly far from job centers.  People want to be closer to amenities also.

I think you’ll see people reconsidering suburb-type homes with yards for more urban type settings.  Mowing and landscaping is a pain in the add, especially for people who really don’t want to be doing it.  It costs more to contract for that to be done to your home than it does for a HOA or condo to get things taken care of.  Either way exurbs away from jobs, kid activities, and entertainment are going to lose out, but we’ll see what the market bears.

Who needs to pay-down debt when you can just pay the interest?  There were no lessons learned…

“Rise in Interest-Only Lending
American Banker (06/16/11) P. 16 Muolo, Paul
National Mortgage News and the Quarterly Data Report shows a 60 percent jump in interest-only mortgages to $11.3 billion funded in the first quarter of 2011 from the same period last year. Wells Fargo & Co.‘s interest-only originations rose 55 percent to $3.1 billion. Rounding out the top three were PHH Mortgage of Mount Laurel, N.J., with $2.3 billion in interest-only originations, and Union Bank of San Francisco, with $1.8 billion.”

lmao @

http://www.ocregister.com/news/woman-304715-police-gun.html

I’m wondering whether the other big financial bubble brewing right now in the US - education loans - will not become an increasingly important variable impacting a housing market recovery in 2013/2014 as well.

I mean, how can someone with very little to zero savings get a mortgage loan for a $350-$450K condo or SFH when they may already have $100K+ in education loans? Higher mortgage interest rates in the future are also an issue?  The rental market will always be massive, but not without risk.

I’ve read that there’s a lot of people who are already on their knees in terms of student loan debt, and some will default.  Except unlike a bad mortgage on an underwater house, the student can’t simply walk away from the student loans, which cannot be expunged in bankruptcy. The former student (ages 22 to 50?) would have that loan hanging over their neck well before they even filled out a mortgage loan app.

Predicting a date when House prices bottom out is like predicting what happens to us when we die,let’s face it, nobody knows.

Why 2013? Are we going to see Wages triple in SoCal and an unemployment rate of zero before then? Are we suddenly going to solve the lack of skilled labor along with investment and enable Manufacturing to boom? Heaven forbid we actually create a real economy by producing Tangible Goods by 2013…

Irvine is a terribly difficult City to do or create a business in, why? Because it’s prohibitively expensive and there is way too much Red Tape when trying to get anything done here.

Why do People commute from the IE? Because they have to. They have no other choice, they work in Irvine but don’t earn enough to live here.

I’m not sure if you guys saw this, but uhh…whoa.
Gun fired for “talking”.
Are we on notice?

New rock band in town - Guns and Realtors?

http://www.ocregister.com/news/woman-304715-police-gun.html

http://www.homes.com/Agent/283669/SANDRA-SMITH/

People don’t base housing decisions on gas prices. They may choose to buy a car that guzzles less gas while prices are high, but the moment gas prices go back down, demand for SUVs goes right back up. Gas prices may influence how much of a discount is required to get someone to move inland ...

As I interpret this, you’re saying that gas-price fluctuations are not decisive in housing choices. I think this has merit: full-sized pickups would not still be selling if the roller-coaster price action of the last 3 years had any effect on consumers.

I think the long-term picture is far different. If gas prices ascend past $7.50 per gallon and stay there - the facts of declining petroleum extraction leave little doubt this will happen - then there is a point at which gas prices matter.

Some are saying we’re at that point - I have my doubts that this is the real cause - but the New York Times recently passed on some evidence that outer-ring Chicago suburbs are seeing such an effect:

Builders and analysts say a long-term shift in behavior seems to be under way. Instead of wanting the biggest and the newest, even if it requires a long commute, buyers now demand something smaller, cheaper and, thanks to $4-a-gallon gas, as close to their jobs as possible.

Probably bull____, but if builders are saying it, then something is up: they’re not known for their smarts.

This does not sound permanent to me - yet. But there are pain receptors for gasoline prices within the human brain, and, incomes being finite, there is a point at which we all run out of cash. They’ll still want houses, but distance from work will become a determinant of buyer behavior at some gas price point.

Demographic shifts doesn’t determine buyer behavior.

Are you talking about tastes/desires here, or are you including demographic financial problems?

What if baby boomers, dependent on social security and busted 401k plans, and the current twenty somethings with student loan debt and poor earnings, are the primary actors in the housing market? This isn’t a matter of desires or tastes: they got no frickin’ money!

Move-up buyers: gone from the market. That means that first-time demand will be key to supporting the demand tower, which is top-heavy with over-leveraged 46-to-65-year-olds who will be watching their earnings drop as they age. They won’t be downsizing out of fashion. This isn’t about psychology: they won’t have enough money to service their debt and buy food.

Since there is such a healthy chunk of the population in this predicament, the government will bail them out: student-loan forgiveness is coming for the young ones, and high inflation for the elderly debtors. If you’re going to be stupid in America, join a large enough herd and your elected representatives will put it right.

Also, large public-transit systems will be built to service the poor outer-ring suburban dwellers, would could not have known that petroleum could would ever run scarce, and surely deserve our sympathy and prayers. Most of the beneficiaries will claim, if asked, to be strictly opposed to socialism.

Gas prices will not matter in the long-term - not because public will tolerate ever-escalating gas prices, but at a certain threshold in price alternative energy sourced vehicles will become viable and eventually commonplace.  Once this happens (and we recover from recession, of course), there is likelihood home purchasing behavior will go back to what it was.  As they build 400-mile range electric cars, who cares how much gas will be?  Now we have a potential 60-mile commute each way with very little consideration for fuel costs.  That’s why it won’t matter.