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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
- $750,000 :: 69 Lakeview 6, Irvine CA, 92604
- $499,900 :: 84 Deermont 51, Irvine CA, 92602
So this condo sold for $128,000 in 1999.
That is about $173,000 in todays money according to
http://www.usinflationcalculator.com/
Shouldn’t this be the value unless there have been improvements to the property? Or is it because Irvine has become a more sought after area? I am looking to buy a condo but can’t see why I should pay over the cost in year 2000 adjusted for inflation.
Is there something I am missing?
You’re not missing anything. The only argument that can be made is that today’s lower interest rates make the higher price more affordable on a cost-of-ownership basis. However, you would be paying $60,000 more than you should because of the lower interest rates which doesn’t seem like a benefit to me.
I truly believe Irvine is more sought after area in the last decade. Look at how many more companies are HQ’d and how much more retail and entertainment has been developed since 1999. Simply put, the city has really grown. Things like The District and Diamond Jamboree didnt exist in 1999. Spectrum has grown significantly as well.
That isnt to say the price is the right price for this unit but there has been changes in Irvine that should be considered above just inflation since 1999.
“I truly believe Irvine is more sought after area in the last decade.”
The real test of your belief is this: have rent increases in Irvine outpaced the rest of OC since 1999? The answer to that question would provide a lot more insight than anecdotal speculation about jobs or retail centers.
That is a good point. Maybe IR can add this to the data posts. Gut says it has.
Good news—we will be answering this very question in tomorrow’s post. Global Decision has created a hedonic-based model for Irvine rents. Our post tomorrow will show the relationship between Irvine rents, Irvine home prices, and Irvine cost-to-own (rents modulated by interest rates). The use of the hedonic model allows the rent trend over time to be (less) distorted by changes in the mix of what is renting.
Awesome. Just curious, will you be making comparisons to the rest of the Southern California market? Or is this just Irvine-specific data?
The post will, as usual, focus on Irvine. We have a lot of analytics related to Irvine prices (purchase price hedonic, rent price hedonic), but we will frame the analysis with other SoCal data where we can. I personally like to use the Case-Shiller LAOC Top Tier index as a comparable for home values. However, we don’t have a lot of other rent data (yet).
Another growth factor people rarely mention is UC Irvine.
Back in the 80s… it was almost like a community college. If you look at it now, with all the new buildings and greatly expanded on-campus housing, you can imagine how much the off-campus housing population has grown in the last 20 years.
As to BMS’s question, rents are still high for private SFRs. Anything newer than 1990 with a 3CWG usually rents for more than $4000 (I usually try to check rental rates that match the type of homes I am looking at). 4/3s start at around $2900+, about 5-6 years ago, they rented for $2500.
Do other OC cities have similar rents?
You misunderstood the question, which was whether Irvine rents have increased at a faster rate in the time period rkp mentioned. Not whether they are currently higher than average.
I was trying to address both.
In my 4/3 example, rents have risen about 15% in the last 6 years… is that the same elsewhere? If I recall correctly, in the 80s a 2br apartment rented for about $900 a month, what does it rent for now? $1700?
We all know that Irvine is one of the few cities that continues to build new homes… but it also continues to build new apartment communities. The Village by the Spectrum has more than doubled. Would people continue to build new apartments if Irvine wasn’t in demand?
And I do think a higher than average rent (which Irvine does have) is an indicator of “more sought after”.
The full quote is “more sought after area in the last decade.” Nobody ever disputed that Irvine rents were higher both than and now. Magnitude and rate-of-change are two distinct quantities.
I don’t know how much Irvine rents and OC rents have risen in the last decade. Unfortunately the american factfinder doesn’t seem to have all the 2010 census date yet, so we can’t make a direct comparison to 2000. It’ll be interesting to look at it when it does come out.
You might want to use the American Factfinder with the ACS (American Community Survey) 2009 data for Irvine. Because Irvine has a fairly large population, you can pull Irvine-specific estimates on a 1-year basis.
Using that dataset, median household income for Irvine (2009) is listed as 84,950 (+- 4,331 margin of error). Median family income is listed as 102,681 (+- 4,407).
Family income takes into account only households where the earners are related by blood or marriage. On that basis, it’s probably a better metric for the income of a unit that would be likely to purchase real estate.
That is about $25K lower than I would have guessed, but I don’t know much about the lower-end segment of Irvine.
If this is not being weighed down by a significant population of lower-income residents, then Irvine prices are vulnerable indeed.
Thanks Jaysen; great tip! I wasn’t aware I could get just the 2009 numbers, but with a little Googling I found them.
I was suprised by what I found. I would have guessed that rent increases would have been very similar between Irvine and OC as a whole, with Irvine perhaps outpacing OC by a few percentage points.
Median gross rent Irvine 2000: $1272
Median gross rent OC 2000: $932
Median gross rent Irvine 2009: $1760 (38% increase)
Median gross rent OC 2009: $1439 (56% increase)
To put it another way, Irvine in 2000 commanded a 36% premium. In 2009, it commanded a 22% premium.
http://factfinder.census.gov/
BMS - Wow: interesting find. The ACS data should have annual results for Irvine and OC for 2005 to 2009 (and going forward). Would certainly be interesting to understand how the Irvine vs OC ratio has moved over time.
@php…you’re not missing anything. How many improvements can you put into 840 sq.ft?????
It does not need “a little TLC” it needs a lot of THC, or good old alcohol, to want to deal with it at that price. The madness continues.
But this time it’s different…
Every day I get this line:
“Well, the seller wants it priced at $500,000. There are a couple of closed homes in the area at $375,000 but (always the “but”) those are short sales, and aren’t really sold at fair value”.
When I say every day, that’s an average. On the days I don’t hear it, that average is made up with the two or three other realtors who do believe this claptrap.
I wish often, although carefully refrain, from reminding these realtors that indeed the closing price of any home, REO, Short Sale, or Equity Sale is the correct value. Any Realtor worth the brand name knows it.
My .02c
Soylent Green Is People.
SGIP,
You might shout is, but as in the movie “Soylent Green”, when the people heard that SGIP, they chowed down anyways.
As long as people can borrow without skin in the game, the prices will be inflated. Do you find people complaining about the documentation requirements for the 3.5% downpayment FHA loans?
Do they complain that the comparables are too low? Or the FHA requires verification of income?
Realtors have too much to gain from their vile, pernicious lies to abandon them, and this is among their most effective distortions.
How many agencies post ads claiming to offer “multiple properties at prices below market value”?
Unhappily, this delusion is so widespread that I can’t blame it on realtors. Most people are idiots, and define “market value” as “the price I should be paid if I were selling this asset.”
This enables people to claim, without irony, that all real estate in city X is currently selling at “below market value,” or that they only purchase real estate at prices “below market value.”
Of course, if you pay a price for something, that price is the market price, but education is wasted on most humans.
I have no idea if this will ever change. The English language will still exist; it has survived worse abuses.
How many Best Buys, Costcos, and asian noodle shops can one city handle? Is that really your argument for buying in Irvine? LOL. Also, The District is technically in Tustin. As for the Spectrum, it’s been a place for bland corporate shopping since it’s inception. South Coast Plaza is much nicer for that sort of thing. Just my 0.02.
“Together with cash buyers and investors, first-time homebuyers are key to the market’s recovery.”
I’m curious about the current definition for “first time homebuyer” - if I recall correctly, the $8000 tax credit defined it as “someone who has not bought a house in the past 3 years” - is that what everyone uses now, too?
That’s a good question. I don’t know how it is being defined now. It used to be defined as someone who never owned a home, but then it was modified to be someone who had not owned a home in the last 10 years. The key requirement was an extended period of renting.
Found it
-
An individual who has had no ownership in a principal residence during the 3-year period ending on the date of purchase of the property. This includes a spouse (if either meets the above test, they are considered first-time homebuyers).
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A single parent who has only owned with a former spouse while married.
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An individual who is a displaced homemaker and has only owned with a spouse.
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An individual who has only owned a principal residence not permanently affixed to a permanent foundation in accordance with applicable regulations.
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An individual who has only owned a property that was not in compliance with state, local or model building codes and which cannot be brought into compliance for less than the cost of constructing a permanent structure.
Median existing-home prices crashed completely in the second quarter with 73 percent of metropolitan areas experiencing price declines from a year ago. [...]
The median existing single-family home price declined in 110 out of 151 (72%) MSAs in the 2nd quarter from the same period in 2010. One was unchanged and only 41 areas (27%) showed price increases. [...]
Lawrence Yun, NAR chief monkey, said some home prices have been increasing. [...]
NAR President Ron Phipps [...] said the key to healthy housing is irresponsible lending. [...] People with good jobs, long-term plans and who are willing to stay well within their means deserve an opportunity to realize their propaganda-fed American dream of loan ownership. When banks return to reckless lending standards, housing will be able to contribute its bubble-age share to economic disaster.