The Quail Hill neighborhood of Irvine is located south of the 405 between Sand Canyon Avenue and Highway 133. South of Quail Hill is a nature preserve and the exclusive Shady Canyon. The primary access is from Sand Canyon and through a unique roundabout. The community increases in elevation from the entry point at Sand Canyon and the 405 to the southernmost portion of the site. The hill gets steeper as you go south, and many of the larger homes on top of the hill have spectacular views of Orange County.
Nearest the entry to the community is the main commercial center gathering place. This is another suburban plaza that functions to provide a sense of place for the community. It is the “third place” for those living in Quail Hill and Shady Canyon.
The designers used a combination of trellis work and glass enclosures to define the space and provide noise and wind buffering from the parking lot.
An attractive water feature serves as a focal point for the center, and the falling water serves to mask the noise of cars moving in the parking area.
The homes in Quail hill are attractive and varied, although some of the neighborhoods are a bit too dense, in my opinion.
The front yards are typically elaborate landscaping rather than grass.
Alderwood Basics Plus School is a California Distinguished School typical of the high quality schools in the Irvine Unified School District.
The view from of the parks and houses is wonderful; however, the north exposure in Irvine means you don’t get sunsets over the ocean, but you get city lights and distant vistas. Nice place for a picnic, wouldn’t you say?
The parks have gathering places for people of all ages.
The pools are all of the highest quality, and many offer panoramic views from your lounge chair.
The children’s tot lots are some of the best in Irvine. They play areas are well landscaped and the groundcover is either sand or a soft rubberized compound which minimizes potential for injury.
There are associated gathering areas for adults to have a small group of friends congregate around a fire.
Did I mention the view? In case you wanted to enjoy the view while your children played below…
Irvine’s Quail Hill: a great place to live.
Is it possible to drive from Quail Hill to Newport on Shady Canyon (rather than taking the 405 up to Jeffrey and going that way)?
—–
I would think so – assuming you can get through the gates. On weekends during the day, I tell them I’m there for the open house. 😉
Wish we would have pulled the trigger on one of those 2 bedroom 3-story condo/townhome units back in 2003 they were about $300K.
Hope To Buy In Irvine Some Year,
It will be interesting to see if you think that way 5 years from now. These units may drop below their 2003 prices.
I am a housing bear as some of you would call me. The way the market is going, I am being priced out of the market. I have read about the market correction. But I dont see it being corrected to match the fundamentals. I want a detached home of 2000 sqf or a bit less in a decent neighborhood ( I dont even dream about irvine) and that would take a household’s incomes of 250K per year. We are at making around 200K per year. The idea of paying too much for so little.
I am so frustrated. Does anyone share the same angst and frustration? I am slowly and slowly begin to accept the fact that I (and my family no kid yet) will be a renter forever.
When I see all the resale home ads, they were all at the 600K range for places such as Santa Ana or Garden Grove (aka garbage grove). I cannot believe that I have to pay so much to live in such places. I see people buying nice, large and beautiful homes left and right, and it makes me wonder, “are they all making 300K per year to afford such homes?”
Anyone know what the detached condos went for originally. I think it’s Sage, like Cortile in Woodbury. I’m sure they are over $600,000 now. I really like the smallest 2 bed. They are $524,000 right now at Cortile. What did these things go for in 2003? If they drop back to those prices I’d be all over it.
“But I dont see it being corrected to match the fundamentals.”
Don’t give up on this happening. It does after each and every market crash. Why would this one be any different? It just means prices have a long way to fall.
Sage in Quail Hill’s residence 1 like Cortile was about 299K way back when they first came out. A relative of mine bought there and paid 363K for her residence 3.
Aeneid –
No, I honestly don’t believe there are thousands upon thousands of households with 250K incomes in OC… so just who is buying all of these homes is a mystery to me…
Last night on public tevelision, the show “NOW” featured the likely housing bust… showcasing one family in particular that earned 100K and used 300K in equity to buy a million dollar home… (so 100K handling a 700K mortgage – CRAZY) and they are now getting worried with prices leveling off, and the fact that they only have one year left in their interest only mortgage (before the loan readjusts and they have to start paying principle).
Another “showcased” family had a 60K income and purchased a 500K home… now (after the readjust) the poor souls have to manage a 4K monthly payment – on 60K! Good luck eating Top Raman every day for life.
Then they had an economist from UCLA Anderson School of Business basically talk about how everyone was about to get soaked…. Followed up by a John Wayne looking ranch man who makes extra $$$ by buying distressed properties on the court house steps…
But remember, if you have children, don’t go to Santa Ana School Districts…. just look at the State “Star” reports… you’ll run away from that district…
Like you, Eaenid, I looked around a few years ago and knew something was not right in the state of Denmark? I’m a doctor, earn good money, but knew this market was too fishy, with far too many people living well beyond their means.
We now know that all the people out there AREN’T making tons of money, but are willing to live well beyond their means temporarily using ‘toxic’ loans and credit debt. That’s right: these people have NO idea of what’s about to hit them, as the sub-prime meltdown in the mortgage business has triggered credit tightening, and people who were given loans last year are being sent out the door; credit constriction means prices will be falling. Credit feeds prices, pure and simple.
The mortgage business had to be reminded that giving money to people who cannot repay is a stoopid idea (as IF anyone should’ve needed to tell them THAT little premise!).
Eaenid, you need to do some research on current market conditions, as well as calculating ‘rent vs’ buy costs, as making the wrong choice right now could put you and your family in for a world of pain in the next few years….
If sage Plan 1 went for $299k when they came out, I wonder what would be realistic to think they’ll come back down to. Plan 1 in Cortile at Woodbury is $524k. I quite like the floorplan but would much rather have it in Quail Hill.
I’m renting in Woodbury right now but previously rented in Quail Hill. Quail Hill is much nicer. The roundabout feature and curvature to the the roads lends the area some personality. Woodbury feels like a giant box. One giant grid on a piece of flat land. The path in Quail Hill that runs through Shady Canyon is quite nice too.
BTW – if anyone is interested in the IUSD schools scores by school, you can get them online at http://iusd.org/schools/
In 2005, for the census, Irvine residents claimed 6800 over $200K, another 7200 between $150K-$199K with another 13,000 between $100K-$150K.
Of 91,000 employed Irvinians, only 6500 were self employed.
Mean household income was $102K with a median of $82K. With earnings, the mean rose to $104K.
See the American Fact Finder reports at the census.gov. http://factfinder.census.gov/servlet/ADPTable?_bm=y&-geo_id=16000US0636770&-qr_name=ACS_2005_EST_G00_DP3&-ds_name=ACS_2005_EST_G00_&-_lang=en&-_sse=on
Here is a rent vs owning calc:
http://realestate.yahoo.com/calculators/rent_vs_own.html;_ylt=AqamOIJkC9Ya.QnCh1DPH639j8kF
Aeneid — Either you’re not being honest about your income, or you haven’t been seriously looking at homes. If you’re making 200k you should be able to easily afford a 2000 sq. ft. home, even in the psuedo-utopia of stucco sh!tboxes that is Irvine.
Joeblow,
Our incomes are around 200K (one has a ph.d and the other has a pharm.d) if I were to do the traditional mortgage, then the 600K price range would be correct. My feeling is that 200K is a lot of income but yet for 600K will only enable me to get a 30 year old house in Garden Grove or Santa Ana. Alternatively, I can buy one of the attached units in Irvine with a weird floor plan. For 600K, I was hoping to get something decent (i.e no shared walls or weird crammed lots).
aeneid,
Your answer is to save up for a larger down payment. Our household income of $100k has found a way to purchase a 600k place. I’m talking 30 year fixed traditional mortgage with savings every month. Sizable down payment of course…
I won’t pretend to know your situation though. If you’re renting a pricey place, have kids or other expenses, then yes, 200k ain’t exactly going to comfortably buy you a nice SFH in Irvine.
aeneid,
Your situation exactly illustrates the affordability gap; regardless of what people say, you are bringing in an income that is in the top 1% of the population here or anywhere in the U.S. You don’t even want to know how rare that income level is on a global scale. For $600,000, you should be able to afford the “final home,” one with enough space for a family to at least be able to exist somewhat comfortably if you had to stay there the rest of your days. That is not possible in Irvine right now, but it was possible five or six years ago, and there is no economic reason (other than irrational exuberance, exploitation of the ignorant, and destructive financing which is finally faded away now that it was destroyed a lot of people and businesses) that tiny condos with outrageous taxes, litigation, HOA fees, and dozens of significant flaws cost more than a five bedroom home did a few short years ago (and will again in a few more short years).
You do not want to play the game people have been playing in Irvine. The people who have been playing it are being burned and in for much more pain ahead.
Play the waiting game. Save the downpayment. Enjoy the weather, and enjoy buying a home in another two years for $600,000 that has closer to 3,000 sq ft and the location and features you always wanted.
The current affordability gap is precisely why homes absolutely have to come down in price. The vast majority of people in OC are still in fantasy land, but it is mathematically impossible for an area that is staring at crushing job loss as the RE industry collapses (led by New Century?), a medium and mean income in that is around $100K, looming increased supply of homes (through foreclosures and staggering vacancy statistics, both homes and available rentals), and shrinking demand for homes (because tightening lending standards are removing more and more potential buyers from the market) to remain at artificially inflated prices.
Historically homes have matched income growth; they have been a tool for preserving and building wealth, but not an “investment” like we have seen attempted recently by desperate baby boomers with their gift for irrational schemes to try to make up for a lifetime of financial irresponsibility.
Only a moron would by right now, and that is precisely why prices will return to a level where a purchase could be justified (about 60% of the amount most people are asking right now).
Here is my question about the anticipated upcoming housing meltdown as a result of the availability of easy credit to many who really could not afford it: I can see how this will impact those in the mid to lower housing market; but do you see this affecting prices in the higher market, say one million dollar homes and up?
I ask because I am not convinced that the owners of houses in this market are as dependent upon interest only loans and the like. So will the prices in these homes collapse as well and if so why?
SmartMoney,
I couldn’t agree more.
Ecmo,
In a bear market, all price levels are impacted. The people buying at the high end of the Irvine market are still people who work and pay a mortgage. Irvine has not become Santa Barbara or Carmel. The high end market still has people who must sell for one reason or another, and when someone must sell, they take what the bidders are offering. Since bids will decline once people are unable to finance outrageous sums with their real incomes, prices will fall. The market will collapse from the bottom up, and we are already seeing major stress at the base of the market. In the last two bubbles that burst, the high end was hit very hard. This time will be no different.
Hi Ecmo,
Simply put, the problem is not the FICO credit rating of the homebuyer, or even the price of the home, but the LOAN being used to buy that home, regardless of the buyer’s income or FICO. See the recent thread titled, “it’s not the borrower, but the loan”.
The increasingly use of so-called toxic or exploding ARMs is the problem, since the loan device itself is structured as if intended to fail: this is risky financing. Last year’s home purchases used record numbers of loans that included toxic elements such as PPP (pre-pay pentalties), negative amortization, minimum payment allowances, teaser rates, etc. These have been called “neutron loans” for a reason, comparing them to neutron boms which explode and kill people via radiation, but leave the homes intact….
I was talking to a CSR (customer service rep) from a large nationwide lender last week who said they’re receiving record numbers of calls from people who are in deep trouble. While some are the typical job losses, etc, unfortunately the great majority boils down to people buying stuff they cannot and never could afford in the first place. She says they’re getting calls from all over the country, from Florida to California.
Even though the loan amounts are different, the bottom line is people are stretched too thin based on rampant speculation, as they bought into the “real estate only goes up” hype, or “real estate is a safer investment than Wall Street, which is like gambling while real estate is not gambling” nonsense. Maybe in the last century, but certainly not in the Great Real Estate Bubble of 2000-2006!
Now that EZ credit has been withdrawn, and fewer buyers are getting in to the market (to gamble with someone else’s money: leverage is wonderful, huh?), the bubble’s deflating, and prices are falling. In short, these troubled borrowers gambled on guaranteed appreciation, and now are losing the bet. More people lose, and depreciation falls further.
Remember principles: a pyramid scheme requires exponentially greater numbers of new recruits to enter the market to sustain the top of the pyramid (i.e. those who entered last year), and by pulling the EZ credit supply, there’s going to be NO way to keep the scam operating. Prices will fall, as they MUST fall. No way around it (barring hyperinflation, ALA Weimar Republic Germany, circa 1930’s).
And to answer your question, she said the problem is effecting ALL segments of the market, including top-end: she gets calls from Laguna Niguel, Malibu, etc. with people who bought $2 mil homes (payments are $17k per month!) who only got in to the house via neg-am loans, or 5-year teaser ARMs, etc, who are ALREADY in trouble BEFORE they’ve hit the fully-adjusted rate! Many of the neuveau riche in these areas are faux riche (AKA posers), displaying irrational exuberance about their future income potential.
The catch-22 is falling home values means the exits are blocked, and it will be impossible to re-fi to fixed when you’re already ‘upside down’ in the home….
@@@@
As an aside, this person mentioned how she and her husband re-fi’ed their home a few years ago to a fixed mortgage, at an agreed-upon interest rate. However, when they went to the signing, she noticed the rate was 1/2 % point HIGHER than the offered rate. She refused to sign, immediately calling the loan officer who said, “go ahead and sign it, and we can fixed it later”. She refused. The LO said, “you know this is going to slow down things by a few weeks, and rates might change in the interval”, etc, trying to pressure her to sign. She said she was a CSR in the business, and the LO laughed and said, “sorry, I didn’t realize you were in the business!”. Of course, she was IN the home and current on payments, so it’s not like there was any point in signing a document that had a HUGE mistake….
So if the “professionals” try to BS someone who’s even in the business, what makes anyone think the average consumer stands a chance here?
IrvineRenter, thanks for the response.
What is the consensus regarding the timing of the nadir in the Irvine market?
Aeneid,
A very nice 2000 sq. ft. home runs you about $900K or $7,000/month with 5% down. Sounds OK for $200K income. Have you checked with your CPA? Since you are in the high tax bracket, your tax saving is about 35%, making your adjusted payment of about $5,000. The same home $900K home is leasing for about $3,700.
Saving up and Smart Money,
I get what you guys are saying. I will be saving for a larger down payment. It is just frustrating. I think we will be OK. I am thinking that by 2009/2010, the market will stabilize and the housing prices will match with the fundamentals. For me, it is about finding a decent place to live. At the same time, we want to save a lot to reach “financial freedom.” In that sense, we will not be spending all that we can afford. I was thinking of spending about 2X our incomes for a decent place. For 400K, you know how that going to be at this market.
Currently, we don’t have any expensive toys like a beemer 7 series or a Lexus. We don’t have any kid either. However, I do have a big student loan (120K). The only big ticket item is the travel twice yearly (8-10K total). I suppose, we can economize a bit with the travel as well. I am hoping that we are doing a right thing. For now, it seems that waiting is the first step.
It seems that the market is not sizzling hot. However, from other posts in this forum, all the houses from builder sare till sold out. In addition, builders offer less incentives. In some cases, the builders even say that there will be price increase for the next phrase. I am not how true that is but that is what I got from them. Currently, I like the Kensington in Tustin. Plan 4 is about 800K. That is lots of money.
Hey everyone –
I was in Quail Hill just yesterday – yes, I was enticed by the blog write up… I had not previously considered Quail Hill… and it wa a nice area. I noticed a property for sale at 90 Canopy that appears to be a “for sale by owner” which is offered at $924,900 ( I took a copy of the flyer)… When I checked this home out on Zillow, the property records seem to say that the 2006 property tax was only $8715 with an assessed value of about 600K…
So, it that an accurate picture of what the home was originally purchased for? 600K? I mean, Quail Hill has only been there for 2-3 years right? So this guy expects to make 300K on his condo in 2-3 years? Maybe that is why the Irvine median income is about 100K… its just a reflection of housing turn-over, not actual employment.
to those with questions regarding pricing, plz keep in mind that quail hill started selling in 02 or 03, so it’s more like a 4 or 5 years old neighborhood.
we bought new in QH in 04 for mid-500’s, the builder rep told us that the same house in phase I was 380k. the high in 06 was 725-740 (not from builder so upgrades/backyard already paid for). there are some on the market now asking 700-725 but have been sitting for months…
its just a reflection of housing turn-over, not actual employment.
I think you may be onto something, with many O.C. residents who’s salaries depend on housing-related industries (agents, brokers, etc). Need I mention that the home of sub-prime lenders is considered to be O.C., with New Century, etc? That’s going to leave a scar to the local economy, however you cut it.
Even if they’re not employed by REIC, alot of people in O.C. are heavily-leveraged in real estate, via REIT, rental properties, etc. I know some who went to real estate within the last few years as they the considered the stock market as being too speculative, as if it were gambling! They’re going to learn a painful lesson, I suspect.
Here’s an article about how the Vegas RE market has burst, leaving many naive specuvestors who wanted to get a piece of the “equity investment” holding the bag in the aftermath:
http://tinyurl.com/2rryxj
I can’t believe that self-labelled “life coach” mentioned in the article would be so stoopid as to not recognize a speculative mania when he saw one! That’s the kind of guy I’d like to get advice from!!
to those with questions regarding pricing, plz keep in mind that quail hill started selling in 02 or 03, so it’s more like a 4 or 5 years old neighborhood.
we bought new in QH in 04 for mid-500’s, the builder rep told us that the same house in phase I was 380k. the high in 06 was 725-740 (not from builder so upgrades/backyard already paid for)
So the price doubling in 3 years makes sense? Yeah, that sounds like sound market fundamentals to me, since the price of lumber/dry wall, etc doubled in three years? Oh, no, it didn’t? You mean the price of lumber has fallen, as have labor costs?
Prices doubling in 3 years does NOT sound like a speculative-driven market, with anyone who could fog a mirror was invited to enter the game using other people’s money to buy stuff they never could afford in the first place?
In response to the comment about the “tax savings” don’t forget that a 900k home will have 10k+ in property taxes which probably are not fully deductible at 200k income because of the alternative minimum tax. Throw in a few kids and the AMT will surely get you.
Just curious – what are the master HOA fees for QH each month? Also, what are the CFD/Mello-Roos? IIRC, the master HOA fees are pretty high because of the gym and other community amenities.
By contrast, I think Northpark (guard gated) is $200/mo and Northpark Square (not gated) $65/mo. I think Turtle Ridge is $395 (whoa!), and new Northwood is $114. I think Woodbury is “only” $105.
What a nice area! It seems to have everything. There must be a lot of upper management around, to afford such a place. Are there really that many companies in Orange County? But what for a hardworking person with talent? Garden Grove for you!
corea,
My numbers include all the costs (PITI, HOA, Tax, Mello-roos, and Fire insurance)
nirvinerealtor..you got to be kidding, if aenoid making 200K is going to buy a 2000 sf house paying 70% of his take home pay, what is the person making a 100 k suppose to do? and who is buying 3000 sf houses and there are alot of these??????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????
MMG,
Most of the housing costs are tax deductible (interests & taxes); therefore are before-tax expenses.
Aenoid can do the following financing options:
1. Go full doc: Bank will allow monthly total debt of 55% of Aenoid’s gross of $16,600 or $9,166. Anenoid can allocate all of the $9,166 for housing. Therefore, Aenoid can purchase a 3,000 sq. ft home at the price of $1.1M. 5% down. Anoid can live pretty comfortable. Aenoid will have roughly $5,500 take home for other expenses such as food, travel, non-house payment expenses.
2. Anenoid can be even more agressive and go stated. Anenoid would have to be on a budget and be discipline enough to stay in the budget.
It’s the matter of what you can do and what you want to do.
For those who is making $100,000/year. You can easily afford $4,100/month payment. I guess we are looking at $500K condos.
I think the problem with affordability is apparent, wouldn’t you say?
Slightly differing subject…but along the same general theme…people living beyond their means…
I live in Pasadena, CA, and I like to go down to OC just to enjoy that fresh ocean breeze. I am AMAZED at all the sleek new BMW’s, Mercedes-Benzes, etc., that I see everywhere, and I wonder where the dough is coming from. If they lease, they still have to come up with a lot of dough. At the malls it looks like everyone is buying stuff from Hermes, Neiman Marcus, etc. I go to Target. I am NOT complaining…my life is pretty happy. I am just wondering!
Oh my, what a bunch of bologna. As I’ve thought about the foregoing, I came up with this. Lets take this not-so-hypothetical financial break down: A couple earns 200K per year. They also want to retire someday, so they max out on their 401K. At 15.5K each, we’ll just subtract 31K off the top. So, now we’re down to 169K per year. Let’s get taxing! Roughly 1K per month (each for federal alone) takes away 24K… now we’re down to 145K. Whoops! They have 2 infant children… and good day care runs about 1K per month, per child. So, we’ll just take another 24K off the ole bank-roll. Now we’re down to 121K… or just over 10K per month.
What’s left? Hmm. Eating? Gas? Health Insurance? That 529 plan to make sure the children can go to Harvard someday?
Back to the 121K per year to spend. In fairness, I’d subtract 3K per year for the health insurance (PPO all the way). But what about the insurance for the cars? Ok, subtract another 2K. So now where were we? Oh, yes. 116K per year and we still needed to eat. Ok, family of four that loves to shop at Wholefoods… $500 per month (or 6K per year)… down to 110K. Gas at 3.50 per gallon? Let’s just say $200 per month on gas for the family… and round down… 2K per year. Down to 108K per year or 9K per month.
So what was omited? State taxes, property taxes, clothing, emergency fund, and that 529 to send the kids to Harvard.
So back to the 9100 monthly payment as roughly 55% of gross income…(as discussed earlier)
9K income – 9K payment = 0 per month… which on a million dollar home, would mean that you’d have to take out a HELOC just to pay the property taxes and melloroos.
Is this an extreme example? Not in my opinion. Afterall, I left out one key factor. I assumed for this hypothetical, that the couple making 200K has no debt whatsoever. No student loan. No car loan. No credit card payment. No desire for cable TV. No interest in taking an obligatory vacation. No desire to celebrate holidays or birthdays. No need for money to landscape the new home or the “dirt backyard.” No worries about HOA’s.
Is there a larger “tax savings” because of the larger home interest obligation? Sure. Maybe you get 17K back (950K loan at 6% and .3 value of deduction for interest paid)… 17K gets to cover everything that I left out… and doesn’t even cover the property tax…
Which is exactly why the market sucks royal for people that want to buy, and why it sucks even more for people that actually signed on the dotted line…
**Clap**
**Clap** **Clap**
**Clap** **Clap** **Clap** **Clap**
Standing O, anyone?
You guys are a tough group. I had a theory that buyers now need realtors more than ever to show you how to become a homeowner. And it is very apparent to me that I am dead right, being a pro in the business.
You will only can become new homeowner if you are READY, WILLING, AND ABLE. All 3’s in that order. And only if you are able to, or a realtor can help you, with the assessments.
nirvinerealtor,
u really make no sense. If buying a house is equal to living on the edge for 30 yrs, I pass it.
I had a theory that buyers now need realtors more than ever to show you how to become a homeowner. And it is very apparent to me that I am dead right, being a pro in the business.
Bank will allow monthly total debt of 55% of Aenoid’s gross of $16,600 or $9,166. Anenoid can allocate all of the $9,166 for housing.
Sorry, I find that follow-up completing disgusting giving the earlier second comment. To be frank, if your advice is for someone to run a 55% of gross debt service, just enslave them it’s easier on everybody.
Aeneid has a $200K income. A $600K house is readily affordable. A $800K house is stretch, you can possibly go a bit further. The big key is where that income puts them relative to the rest of OC and Irvine and want kind of house it buys.
There is a very good reason why most living wage proponents peg minimum wage to average rent. A living wage requires no more than 33% of income to go to housing expense. Any more and trouble typically follows.
Former guidelines where also to run mortage debt about 28% with an agressive level of 33%, that was before Ginnie Mae and the other started pimping loans like the other banks.
Just because you could fork over 55% of your gross to finance virtually 100% of a depreciating asset does not make it a wise decision. Its only a matter of time before this liquidity bubble runs its course and lending standards return to normal.
More like “mortgage” slave. No thanks!
You guys are a tough group. I had a theory that buyers now need realtors more than ever to show you how to become a homeowner. And it is very apparent to me that I am dead right, being a pro in the business.
Homeowner? I’d say you could only show someone how to become a mortgage debtor: because with your advice, that’s what alot of buyers in today’s market will be, if they follow your piss-poor advice and “go more aggressive” as you say (getting into a $1M home with a so-called “creative” loan in today’s climate). That’s absolutely insane in today’s climate for anyone earning $100k.
As far as your “professional” fees, the only calculation you need is 0.06 x (asking price) = realtor’s commish. Hmmm, it doesn’t take a financial guru to explain why you’d LOVE everyone to stretch affordability to get everyone into an over-priced home they cannot afford. You NEED to get people into homes they cannot afford, as YOU cannot afford your home without them. That’s a parasitic relationship at this point…..
See, the thing you STILL don’t get is that those days of incredible promises of wealth for everyone based on unrealistic expectations of continued “easy home equity” are dead, as it never WAS a sustainable trend. Learn basic economics, focusing on pyramid schemes, because that’s what you participated in, pure and simple. Struggle against it with all your might, but soon reality should dawn on you that much like prior bubbles (1980, 1990, etc) that’s what this WAS: the Great Housing Bubble of 2001-2006. And as far as bubbles go, this one was completely unprecidented: we’ve NEVER seen such a massive run-up in such a short time, in such a widespread manner.
Whatever: it’s now officially over: even the NAR (your organization) has declared that by now. Such extreme over-leveraging was all the rage in 2001-2006, but is exactly the kind of approach that melted down the sub-prime/Alt-A loan business, helping to usher in the new Depression of 2008, the U.S. Depression 2.0. Does anyone want to jump in on that slow-motion train crash (it’ll take 5-10 years to wind down), literally less than a year after the price appreciation started moving down?
nirvinerealtor–>You guys are a tough group. I had a theory that buyers now need realtors more than ever to show you how to become a HOMEOWNER. And it is very apparent to me that I am dead right, being a pro in the business.
irvinerealtor’s RECOMENDATION–>1. Go full doc: Bank will allow monthly total debt of 55% of Aenoid’s gross of $16,600 or $9,166. Anenoid can allocate all of the $9,166 for housing. Therefore, Aenoid can purchase a 3,000 sq. ft home at the price of $1.1M. 5% down. Anoid can live pretty comfortable. Aenoid will have roughly $5,500 take home for other expenses such as food, travel, non-house payment expenses.
NO THANKS.
P.S. MMG’s proposal–> I have a theory that buyers now need HOUSING BLOGS more than ever to show you how to become a HOMEOWNER.
I, for one, agree with nirvinerealtor. Two important factors were left out by GrewUpInIrvine and others claiming that a couple earning 200k cannot afford a house in Irvine. First, you assume that the 200k income won’t increase over time. Most people earning 200k in a professional capacity will see their incomes grow each year. I, for one, earn about $200k a year now, but 5 years ago my income was more like $100k. So a home I may have stretched to get into 5 years ago is much more affordable to me today (twice as affordable to be precise). Second, you ignore inflation. Inflation makes a loan balance easier to pay over time. A $1 million loan may seem like a lot today, but it would be the equivalent of waiting 10 years and then borrowing $1.28 million (and that’s assuming the same rate of inflation we had over the past 10 years — when in fact, the inflation rate may be much greater).
To be fair, I am not advocating that people stretch themselves to the breaking point to buy a home. But young professionals should not be (and most are not) fooled into thinking that they are going to be mortgage slaves for the rest of their lives if they were to purchase a home today.
Everyone keeps pointing out how insane it is to use 55% of gross income for housing. 55% does sound like a lot but as one’s earning goes up, they can afford to put a bigger percentage of their gross into housing or any other purchase. For example, if my family needs $40K a year for all of our needs outside of housing, that would mean that I could put 60% of my gross towards anything else if my gross was $100K or 80% of my gross if my gross was $200K.
55% does sound like a lot but on a salary of $200K, one can afford to put that much towards housing or any other purchase. Now whether or not that is a wise financial decision is an entirely different story.
Guys – If you allocate 30% for house payment, then 70% of $20,000 is $14,000 for other expenses.
70% of $10,000 is $7,000 for other expenses.
70% of $5,000 is $3,500 for other expenses.
Do you get my point here for using the absolute debt ratio?
Anyway, we can not generalize the buying power as each of you have a different debt obligation and life style need. My job is to show buyers what buyers can do given their unique situation. Buyers would have to be comfortable with the numbers and make their own decisions and live with it. That is how it works.
David – Did I mention anything about wealth?
FYI – I do not just sell a house to someone and disappear. My business is based on taking care of people, trust, and repeating business. Why would I get someone into a bad situation and risk getting into law suites?
Frank and rpk – thank you thank you.
I once was a young professional and my income was doubling every 5 years. I did not hold back with home purchase (you name it, I cleaned out my 401K for down payment). And thanks god I can say that I am financially set now for the decision that I made early on. Eventhough I lost most of my savings through the stock crash in 2000’s, I am still good.
Frank said:
I, for one, agree with nirvinerealtor. Two important factors were left out by GrewUpInIrvine and others claiming that a couple earning 200k cannot afford a house in Irvine. First, you assume that the 200k income won’t increase over time. Most people earning 200k in a professional capacity will see their incomes grow each year. I, for one, earn about $200k a year now, but 5 years ago my income was more like $100k. So a home I may have stretched to get into 5 years ago is much more affordable to me today (twice as affordable to be precise).
All well and good, except professional salaries (except for REIC members) have been largely FLAT over the past 5 years; many professions’ wages are either just keeping up with inflation, as measured by the CPI (consumer price index), or falling behind.
Second, you ignore inflation. Inflation makes a loan balance easier to pay over time.
No, YOU ignore inflation; namely the home price inflation that’s occurred in 4-5 years, where home prices are at least 2-3x what they were! That’s not indicated by the CPI in any way, shape or form, just as gasoline prices aren’t. Makes you wonder why the government chooses to ignore the prices of things that constitute major expenses for most people’s budgets….
I’ll bottom line it for you: the prices we’re in are atypical, abnormal, only reflected in prior housing booms that have busted, just like this one. I know, many of you MUST be under the age of 40 and unable to remember prior boom/busts, as NO ONE who understands the characteristics is doubting this is happening once again. This is no crack-pot theory, or egg-head idea: it IS reality, and the market peaked in Mar 2006 in California. All of the respectable economists (including the ever-rosy economist for the NAR, David Lereah) have stated as much.
Here, look at the website for the CAR (California Association of Realtors) if you don’t believe me:
http://www.car.org/index.php?id=MzY3OTM=
Here’s a link from Money magazine, issuing a stern warning about the back-to-back asset bubbles (where housing just drove up prices, as desparate buyers ran to real estate as the “can’t lose” investment from 2001-2006):
http://tinyurl.com/ythknz
The evidence is staring EVERYONE in the face; don’t tell me I didn’t warn you. What you do for your financial future (as well as your families) is up to you….
The point is you’d be VERY SMART to wait ONE YEAR before doing ANYTHING, as if you can’t see that we’re in the midst of a correction then it will be clearer then.
Frank said:
I, for one, agree with nirvinerealtor. Two important factors were left out by GrewUpInIrvine and others claiming that a couple earning 200k cannot afford a house in Irvine. First, you assume that the 200k income won’t increase over time. Most people earning 200k in a professional capacity will see their incomes grow each year. I, for one, earn about $200k a year now, but 5 years ago my income was more like $100k. So a home I may have stretched to get into 5 years ago is much more affordable to me today (twice as affordable to be precise).
All well and good, except check the stats and you’ll see professional salaries have been largely FLAT (or declining) over the past 5 years; many professions’ wages are either just keeping up with inflation, as measured by the CPI (consumer price index), or falling behind.
The ONLY profession where salaries have DOUBLED in 5 years are typically sales professions, like real estate agent or mortgage brokers. That is typical of sales, when the particular market becomes ‘hot’ or speculative in nature, with people rushing to buy in a mass mania.
Second, you ignore inflation. Inflation makes a loan balance easier to pay over time.
No, it’s YOU who ignores inflation; namely the home price inflation that’s occurred in the unprecidented 4-5 years where home prices are at least 2-3x what they were, pre-bubble!
THIS inflation is not indicated by the CPI in any way, shape or form, just as gasoline prices aren’t. Which makes you wonder why the government chooses to ignore the prices of things that constitute major expenses for most people’s budgets, instead worrying about the price of a loaf of bread….
I’ll bottom line it for you: the “get rich via real estate” trend we’re in is atypical, abnormal, although it’s been reflected in prior housing booms that have also busted, just like this one. I know, many of you MUST be under the age of 40 and unable to remember prior boom/busts in Southern California, but NO ONE who lived through those episodes is likely to forget how things changed following the market turn, with houses slowly dropping constantly for years following the peak. Real estate operates in CYCLES, and that’s just how it is.
This is no crack-pot theory, or egg-head idea: it IS reality, and the market peaked in Mar 2006 in California. All of the respectable economists (including the ever-rosy economist for the NAR, David Lereah) have stated as much.
Here, look at the website for the CAR (California Association of Realtors) if you don’t believe me:
http://www.car.org/index.php?id=MzY3OTM=
Here’s a link from Money magazine, issuing a stern warning about the back-to-back asset bubbles (where housing drove up prices, as desparate buyers ran to real estate as the “you can’t lose” investment in 2001 when the stock market dot-com bubble burst in 2000, and Greenspan set the stage for an old-fashioned land rush to avoid a recession which threatened in 2000, and 2001):
http://tinyurl.com/ythknz
The evidence is staring EVERYONE in the face, so don’t tell me I didn’t warn you. What you do with your financial future (as well as your families) is up to you. If you want to buy now and sacrifice YOUR financial future to help some specuvestor and their agent secure theirs, then that’s up to you! Fools and their money are soon parted, as they say.
The point is: you’d be VERY SMART to wait ONE YEAR before buying ANYTHING, as if you can’t see that we’re in the midst of a correction, then it will be clearer as time goes on. The MOST BASIC premise of building wealth is “buy low, and sell high”: buying now is like buying at just past the peak (Mar 2006 buyers got that “honor”) when you can see that the market is cycling to drop! We’re nowhere close to a “bottom” yet: we still haven’t even seen the effects of sub-prime and Alt-A loans hitting the stats!
@@@@
Oh, I must comment on this:
North Irvine Relator said:
FYI – I do not just sell a house to someone and disappear. My business is based on taking care of people, trust, and repeating business. Why would I get someone into a bad situation and risk getting into law suites?
FWIW, the phrase is law SUIT, not law SUITE. I know, just a typing error (I hope).
Anyway, that “we’re here for the long term” is what ALL the sub-prime and Alt-A lenders said, and you see how well the repeat business idea worked out for THEM. If they didn’t actually go out of business due to bad lending practices (too many toxic loans exploded on them before they could pass them on to Wall Street), then the borrower who’s in trouble may call, only to be told there’s nothing that could be done since the market turned, and they’re “upside-down” in the loan; thus unable to re-fi into a more conventional loan. Basically a “sucks to be you” answer….
Besides, let’s be honest: the only repeat business the LO/MB/REA are interested in is another sale that generates more fat commiss… Your repeat customer means nothing, UNLESS it’s a sale. How many of those have you had?
The REIC has bollocked the market by focusing on YOUR short-term gains, precluding the concept that the market could be sustainable. It’s like fishermen who over-fish below sustainability, fishing the species to the point of extinction, and then wonder why they have bad catches in the future!
I once was a young professional and my income was doubling every 5 years. I did not hold back with home purchase (you name it, I cleaned out my 401K for down payment). And thanks god I can say that I am financially set now for the decision that I made early on. Eventhough I lost most of my savings through the stock crash in 2000’s, I am still good.
What “profession” are you referring to? Your income profile sounds QUITE similar to that of NIrvine Agent: are you also in the biz?
Because apart from real estate or mortgage brokering (both of which are SALES), what real profession offers such an opportunity for explosive growth after obtaining college level training and certification and licensure? Answer: none (unless you’re willing to break the law), as most professions top out with only moderate growth rate as the practitioner hits their “power curve” after about 5-10 years in practice.
Wow, did you admit to getting wiped out by the dot-com bubble? And now you’re on the verge of getting caught on the second asset bubble that followed? There’s nothing like missing the ‘big picture’, and getting reamed repeatedly; I fear you’re now more interested in DOING the reaming (only the jig is up, and you’re now determined to spin the market back to 2005 mania via sheer will power and ‘power selling’). Good luck with that!
Oh, that “I am still good” stuff sounds an awful lot like Casey Serin’s “it’s all good” mindless optimism, even in the face of crushing reality (the guy bought 8 houses in 8 months in a declining market last year, only to lose them ALL to foreclosure; he’s now facing a life with bad credit, no job, no career, living with the in-laws if not prison for mortgage fraud, etc.)
Might take a look, if you’ve never heard of him:
http://www.iamfacingforeclosure.com
Makes for some compelling reading to see what happens when people jump into legal contracts without thinking first, hoping that things magically will work out for them! That might’ve been OK in the past, but a stoopid thing to do in 2007.
I guess the topic is no longer about Quail Hill huh?
LOL
Quail Hill has been a really nice place so far. The parks and trails are exceptionallymanicured. It is a pet friendly community with lot’s of open space, although the units are tightly packed together as someone else posted. I haven’t been able to cut through Shady Canyon. It would be a nice straight shot into newport though.
Another reason why homes are over-valued is the cost of construction versus the cost of completion. My bank is the 2nd largest construction lender in the country. I am flabergasted by what I am about to explain to you.
A borrower can obtain a construction loan to build a 2,500 sq ft home in OC for 300k. As soon as the construcion is complete and the certificate of occupancy is issued the new homeowner can “roll-to-perm” and get a traditional mortgage. The new mortgage will be secured by the NEW COMPLETED VALUE of 575k-600k!!
WHAT!??
Yes, that’s what’s been happening. That’s why builders were going absolutely beserk and building homes faster than you can say “holy crap we’re in a bubble!” There is no sound financial reason why homes are selling more that much more than its intrinsic value of.
Now you understand why a builder can start offerring massive cuts in asking prices. This will drop an instant financial MOAB bomb to someone who bought “Phase One’ at a higher price. Can you imagine buying a home on 100% financing for 650k and then see the builder selling a newer model a year later for 575k???
Ouch!! Welcome to risk buddy-boy. Time to wake up. There is a definite correlation between risk and rate of return. the higher the risk, the higher the return and vice versa. If you shout from the mountain tops that Real Estate is a very safe investment then it must be because you know that real estate has only appreciated by 3%+ a year historically.
Oh wait…..you were expecting a low risk investment to produce a double digit ROI??
foolishness of the highest degree
I think that buying a home at 4 times your income is pretty achievable, without really having to make too many sacrifices. Just don’t go crazy on cars and shopping and it should be fine (assuming you don’t have a ton of other debt). I think 5 times your income is going too far, but if you really want to sacrifice on other stuff you can do it.
So with a $200K income, you can comfortably afford $800K. That can get you plenty of nice 2,000 SF to 2,500 SF homes in South OC – Ladera, MV, RSM, Aliso, LN, Lake Forest, Foothill Ranch. It probably won’t get you Irvine.
This is a separate topic from ‘is now a good time to buy.’ I don’t think it is. But if you do think it is, and you’re planning on being in the home for a long time (more than 5 years, hopefully closer to 10), then go for it.
Getting back to commenting about what the post was about… 😉
Couple buddies of mine live in Quail Hill, near the large apt complex, lots of young professionals there, but honestly there’s not much around it but hills to one side and mostly commercial to the other. They plan on expanding this village a lot more in the future?
The wine place in the shopping center is pretty nice, and Kinecta there is a lifesaver.
Roundabouts? Is this the UK? It still trips me out whenever I come to Quail Hill.
There isn’t a “ton” of things there other than the Albertson’s plaza, but that’s what I like about it. It’s right on the other side of the 405 from the industrial heart of Irvine, but it’s tucked behind rolling hills. I like the feeling of being away from work. The “round about is nice because it prevents the normals delays you get with a stop light or stop sign. It does kinda suck that it’s hard to get to newport.
Very pretty pictures, but where are all the people? It’s kind of sad looking at your shots of empty playgrounds and conversation areas. 🙂
@36GrewUpInIrvine
Seriously, Health Care is not an afterthought. It is number two expense, right after taxes. I pay more for that, than for food.
$200,000 income, and you tell people to expect it to double again? That is a laugh! This is already in the top 1%, and you really expect to make as much as the President of the United States? Just what kind of diminishing returns are they teaching in real estate college these days? Earth to North Irvine!
Ack, borrowing from a 401(k) to fund a home purchase?
That money is supposed to stay there until you retire!! (Retirement plan, that’s what it’s called, that’s what it’s for!!)
I see folks trying to justify borrowing from a retirement plan by saying that they are just repaying themselves over time, but where is that money going to come from? It vanished inside the home!
And in this day and age, that home’s appreciation is going to be nothing like the appreciation in the stock market (even if you put it in the fixed-income bond fund, or the sweep account for crying out loud).
bottom line: if you are forced to pull out money from places where it’s not supposed to come out of, it will only hurt you. Buy what you can afford with your income … remembering you need to eat, wear clothes, and do other ‘normal’ stuff too!!!
“Very pretty pictures, but where are all the people? It’s kind of sad looking at your shots of empty playgrounds and conversation areas.”
i agree…we live in quail hill and the albertson’s plaza is only busy during lunch time. my wife says due to doctors/nurses/professionals from the other side of 405.
playgrounds are usually empty too, except for 2 hours daily. but the seclusion is what my wife likes about quail hill (and what i dislike, by the way)…
tennis courts are always full though. it’s like TIC putting only 2 there just to say, “we have tennis courts!”
to steer people back to talking about quail hill, here’s my list of pros and cons:
PROs:
1- new neighborhood – nice lawns, fresh homes, everything is new.
2- alderwood basics plus – it’s one of the highest scoring elementary schools in irvine, if you don’t mind your kids under pressure.
3- location – i’ll take my wife’s view and call it a pro. tucked away from rest of irvine (405 on north, 133 on east, permanent open area on west, shandy canyon on south)
4- diversity – it’s heavily asian (outside of the large apt complex). i was at my son’s school play, and someone’s grandfather (obviously from outside irvine) commented loudly, “it’s like vietnam here!” i almost told him to shut the fuck up in front of all the 7- and 8- year olds.
5- proximity to highway – those who are worried about noise need not to. the apt complex buffers much of it.
6- the view – good job on the photos, irvinerenter!
CONs:
A- pricey – there must be a “south-of-405” premium going on.
B- lack of “3rd place” – the albertson’s plaza is really the only gathering place, unless you count the basketball/baseball areas.
C- diversity – what’s good for me is bad for you, i guess.
D- hoa and mello roos – for all the money we pay, they still couldn’t keep all 3 swimming pools heated throughout the year (only 1 is heated during winter/spring months)
E- homes too close to each other – as many have said.
lastly, it would be nice to have a park at the top of the hill. would be a great spot for a picnic.
1. I am not sure of the math, but it seems to me if Anenoid’s gross is $16,600, his family will take home much less, so they will have much less than $5,500 take home for other expenses, probably more like $2,000. If the bank allows a monthly total debt of 55%, is it necessarily prudent to take a loan for that percentage of income? How much would it cost Anenoid to rent a home of the same value?
2. Why would stated be any different than documented? By more agressive, do you mean lie? What exactly is more agressive?
Wow! We sure came to different conclusions by reading the same thing. My take from reading this, is that if real estate agents are mostly concerned with what is the maximum loan a family can get, they must be part of the reason so many folks are in over their heads, making payments they can’t afford. Is what someone can do and what they want to do, alway what they should do?
I doubt prices will drop to or near to what the originally were. Take my parents house in Santa Ana. They bought it 20 years ago for 70k. The last time I check it was at 580k. There is no way, even with a housing crash, the price will drop back down to 70k.
My bro-in-law bought a home in the newer development in Orange. Cost him 600k and in 2 years, it’s worth 1.2 million. And not just his but all the home in that neighborhood too. Not kidding.
Of course, just my luck. When I was ready to buy. The market turned. =(
I remember my wife and I looked at Quail Hill at the end of ’03. And there were 2 bdrm condos going for 800k. And yes, when they were first built, they were around 400k and we thought that was expensive. =( Missed out again.
Just wanted to bump this. Take a look at the discussion about borrowing up to 55% of income. Guess that can’t be done anymore. Amazing how much has changed in four months.