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Latest REOs
- $199,900 :: 3125 Watermarke Pl, Irvine CA, 92612
- $349,900 :: 10 Greenleaf 16, Irvine CA, 92604
- $439,900 :: 61 Olivehurst, Irvine CA, 92602
- $889,900 :: 14 Upland, Irvine CA, 92602
- $429,900 :: 56 Great Lawn, Irvine CA, 92620
- $465,000 :: 212 Garden Gate Ln, Irvine CA, 92620
- $329,000 :: 1006 Terra Bella, Irvine CA, 92602
- $579,900 :: 8 Star Thistle, Irvine CA, 92604
- $398,900 :: 191 Lockford, Irvine CA, 92602
- $750,000 :: 69 Lakeview 6, Irvine CA, 92604
http://www.nytimes.com/2008/05/28/business/28leonhardt.html
People might find the above article interesting and useful. I would say some of Irvine houses around $650K to $800K range are now around 23 buy/rent ratio. Anyone agree or disagree?
http://www.redfin.com/CA/Irvine/76-Fanlight-92620/home/5959098
Given that this house was sold at around $1.1 Mill, and both houses seem to my untrained eye to be “equivalent”, the listed price appears to be somewhat high.
Here is a more recent (April this year) table of rent ratios across the country:
Recent Rent Ratios
Also, their Buy vs Rent calculator is fun to play with . . .
Buy vs Rent
Enjoy!
The coastal areas of Orange County thus far have been essentially immune to significant price drops. I’ve been following San Clemente for several years. Currently selling prices for 30 yr old condos and even older homes are double what they were in 1999-2000 in defiance of long term real estate appreciation rates roughly equaling inflation. Historical inflation norms would place current selling prices about 25% above 1999-2000 selling prices.
I think it will take 2 more years (prime loan recasts will be finished) to get a reasonable idea of where the bottom is assuming no further artificial manipulation of prices by govt.
Who are the current buyers? My guess is retirees who have cash or sellers who have owned long enough to make very large down payments. I would be surprised to find out that there is a significant number of people under 40 buying in San Clemente (or Irvine) who don’t fit into those categories.
Undoubtedly, someone will note that their new neighbors are under 40. If they aren’t retired, age alone would be incomplete without also knowing how big their down payment was and whether they are getting continuing financial help with carrying costs. Again, significant numbers is the operative adjective.
Meantime, rents are relatively cheap.
Have a nice weekend!
Yes, I also noticed that most of the current sellers who have owned their homes for long time are putting their homes on sale. And a few of the homes listed appear to be pretty reasonable in terms of rent price. For example, annual rent for 4 bedrooms in Irvine might be $3,000, which would make it $36,000 per year, and some 4 bedroom houses are listed at around $730K, so it seems to me if you buy (assuming you have the financial means) the house for around $700K, it’s not too bad.
I noticed that some houses in Valencia, CA that go for $720K will go for around $900K in Irvine, which makes me think there must be some things that are considered to be “better” to most people who buy homes in Irvine than in Valencia. I did notice that weather was a little dryer and hotter in Valencia than Irvine, but Valencia homes were newer. If I had to drive to Los Angeles frequently, I would live in Valencia. What do you think?
I can’t comment cogently on Valencia vs Irvine. The summer temps run about 12 degrees hotter and can get into triple digits. Irvine rarely seems to get over 90. Both have evening temps in the low 60s so there is respite from heat in either place. I’ve driven to Pasadena from Palm Springs several times during morning traffic on the 210. If you don’t get past the 605 eastbound by 6 a.m. your dead in the water. The 10 is even worse. Can’t comment on Irvine to L.A. traffic. In the mid 70’s my accountant was in Encino and lived 5 minutes from work. He thought he had died and gone to heaven having done away with the morning commute - and thought the home price premium at that time was a small price to pay.
As for rents vs buying, the rules-of-thumb seem to vary but a multiplication factor of about 150-185 x mo. rent seems reasonable. At $3000/mo. rent, price should be $450K-555K.
Any higher would make renting the better choice.
Correction: should have said 605 westbound.
I follow the rule of thumb that I pay no more than $1000/month in rent for $200K in value. If I pay less that is great, but I am realistic to know what real fees are required on the backend even if the property is 100% paid off.
I guess the real question comes when there is a disagreement on the property value. Zillow gets a good ballpark number.
*BEST REAL ESTATE STORY… EVER!*
http://www.laweekly.com/2010-05-06/news/torture-lies-and-louis-xiii-cognac/?source=patrick.net
It’s long, but worth the read. I wish I had Hollywood connections as this would make a fantastic movie (think: Resevior Dogs or The Usual Suspects, etc.).
I think this story captures EVERYTHING about the 00’s perfectly - including all the players from the housewife right on up to the top banks - and would be looked back on by future generations that want to know WTF happened… Damn, I wish I knew how to write a $creenplay.
Oh, and if you can read this story and favor ANY of the “bailouts”, you are a moron
Orangerenter, Thanks for linking this unbelievable story. Would it be that the great James M. Cain were alive to have witnessed the past twenty years- he would have grist for another dozen spectacular Morality Play of the sort he was so gifted at writing. This reads like one of his novels, except that the characters here lived yet have not learned their lessons, and even a genius like Cain couldn’t have written a better morality play than this one,one that more beautifully illustrates the consequences of the lapses in morality, responsibility, and ordinary good judgment that made the credit rampage of the noughties possible.
The only things missing are the collapse of the people at the top of the financial system who drove it all and profited from it the most. They, unfortunately, are still living in their $80M mansions in the Hamptons and braying about doing “God’s Work”. When these criminals are at last arraigned for their crimes and are forced to live in flophouse poverty, and are considering suicide, then the morality play will be complete.
From the loan officer’s perspective:
Case situation is loaning the money with nothing down, no chance of borrower paying back.
Authorize or Don’t Authorize the loan
Don’t authorize the loan:
1. Do get the 0.5% bonus/ commission
2. Fail to reach target (boss angry and year end bonus not met)
3. Client is mad, boss is mad and both log complaints.
4. Bank makes record profits, stock goes up, exec. and analyst are giddy with $^$.
5. Save the bank money in the long run but get fired.
6. GS can’t make money and govt is mad.
Authorize loan:
1. Get the 0.5 % bonus/commission
2. Surpass target and get big bonus
3. Client and boss are happy.
4. Bank may loss in the long run, but house is sold so loan will not be bad or bad loan is passed on to the taxpayer.
5. I might be laid off, when SHTF, but that’s better than being fired.
6. GS can short while tell others how great the market is and get another round of $$.
The people involved all have more reasons to make bad loans than to deny the loan.
Zero down was better that 20% for the borrowers. Just do the math. For the taxpayers, it a whole lot different.
Lesson, the bigger you are the less personal negative consequences of bad business decisions—the middle and lower class pays. It’s creating a situation the Marx/Lenin wanted for their revolution and CP state led terrorisms.
When is commercial RE going to collapse or is the overall rents covering the interest payments and expenses less depreciation?
SEE MY RECENT POST IN “CLUELESS ACADEMIC” POST.
I’m not sure that this neighborhood qualifies as a Super Rich or even merely Rich neighborhood. If they can get this price, considering the current lending climate, maybe it does qualify.
Hey, this is a bit off topic, but can this site consider taking a look at small business rents in Irvine? My favorite local pizza place (also in the same zip code as this 1.6m house) is apparently going out of business because Irvine Company rents are too high… which really makes me mad. As the name might suggest, I’ve lived in Irvine since the mid-80s, and it seems that very few “small businesses” last more than a couple of years. It would be really awesome if this site could do an in-depth discussion of “why” this happens… and maybe highlight a couple of businesses that have suffered…I mean, even in a recession, people buy pizza…so I am inclined to believe the rumors that outrageous rents are to blame…since Obamacare hasen’t got up and run off with our wallets just yet.