Irvine Housing Blog

TX real estate has had busts before, in residential as well as commercial, but yes, this bust is not nearly as bad in TX as other places.  Mostly their past busts were tied to oil & thus to incomes, which is somewhat inevitable.  Banning cash-out refinances would probably do as much as the dp requirements.  In FL, it was common for people to cash-out their primary home, buy one or two more, refi them in a year and lever up even more.  You had realtors with sub-100k incomes ‘owning’ four or 5 500k-1M properties, 90-100% mortgaged.  100k in total income will never cover 2.5M in mortgage payments.

If a bank is stupid enough to give someone a cash-out refi, then who ‘s to say it’s wrong? Just don’t let the Gub’ment bailout the lender when things go wrong! Just say “NO” to corporate welfare!

Off topic - I know.  Did you hear about the lay-off notices of City of Costa Mesa?  People keep talking about recovery…but it don’t look so good.

The pricing history on this listing is completely ridiculous.
Shaved off 9K any takers?
No
Shave off another 5K
Still no takers?

The Texas law is further proof that YOUR home is ONLY worth what a bank is willing (or governed by law) to loan a 1st party (refi) or 2nd party (sell) to borrow.  Can you even imagine how the Ca REIC would react if a similar law were proposed in this state.

In Texas they spend a lot less of their income for housing (mortgage & rents), therefore freeing up more disposable income for activities.  These people have boats and go to the lake on weekends.

I’m surprised. Yesterday, IR (almost) called the bottom for 2011 - Is this condo at >600k$ any close

It does meet the 300$ or less /sqft and it is in TR !

And by the way, I’m still surprise that any house in Irvine with >350$/sqft is at rental parity.

There was a hell of a bubble in Austin also.

Look at some listings and then check out the purchase prices from the mid 90’s on Zillow.

Irvine motto contest
http://www.ocregister.com/news/motto-290585-city-irvine.html

I rated like Gemfinder’s comment:
“Irvine. Where my violin-playing nerd grows up to be your kid’s boss.”

Email from a reader:

Today’s post needed two additional sections.

First, would be something that is the underlying problem of this housing downturn that no one wants to address.  And that is the PRICE of housing.

Frank-Dodd is necessary.  Some parts of it (in my opinion) do not go far enough.  Specifically, all securities brokers should be subject to “fidicuary status”.  All real estate agents are.  Stock brokers often deal with more valuable assets than real estate agents do.  Have you seen the TV commercial about the guy complaining that his broker “just wanted to sell him stuff”....very true, and very sad.  GREED personified.

Back to Frank-Dodd…..20% down is purdent, reasonable.  Texas proves that (mostly).  And historically, that was good banking policy.  It worked.  We’ve always had some banks (World Savings, Home Savings, Lincoln Savings, a few others) who would make up their own rules for lending criteria, but they had to keep those loans in their portfolio, and even that portfolio had to be balanced against bank assets.

The changes that began to happen in the 1980’s changed everything.  Particularly land prices.  Land prices made billionaires out of many who had land holdings.  As lending loosened up, more potential buyers could buy homes formerly out of their reach because of their INCOME.  The old relationship of payment to income vanished.

Now, the lending institutions are reluctant to incur the losses resulting from those changes and are doing everything they can to sustain prices, especially in areas where there are a lot of delinquent loans.  Hoping to fend off dramatic price drops, they are willing to absorb (accounting magic) loss by non-performing loans, rather than bring the property to foreclosure.

This, in turn, encourages land owners…such as TIC….to still think their land is worth 2004 land values, which were part of the inflated bubble.  It all starts with the land.  The sticks & bricks cost doesn’t vary that much, nor does labor.

The Second aspect is….a paradigm shift in the reason people buy houses.  It used to be they bought because of a desire to own a home, establish a home base for all members of a family.  In the 1970’s a new notion took root.  That was that a home represented a form of wealth, not unlike stock market speculation, that while providing for basic family needs of shelter, would also contribute to overall net wealth.  The whole “Planned Community” concept offered just that….from Reston, VA to Irvine, CA and Mission Viejo, CA….housing was planned and marketed expressly to those looking to begin in a starter home, move-up to a larger home, all the while remaining in the same community.  We now have 2 generations of children who, having grown up in this environment, have a feeling of ‘entitlement’ to the “California Promise”.