Anyone else wondering where buyers for 16000 new OC homes will come from? (Irvine: middle-class, sale)

[bhcompy]

Housing is so expensive in OC partly because of limited inventory. So there is no shortage of buyers. Only difference will be price(and mello roos cost)

[Charles]

Originally Posted by EscapeCalifornia

So are these going to be $800K+ houses on 1/6 acre lots or $500K+ "houses" 6 inches apart with shared driveways?

I think, in Mission Viejo, it will be a combo of both plus even more types of housing.

Here are more details with good graphics:

New community coming to south O.C. | develop - News - The Orange County Register

[Charles]

Originally Posted by a34dadsf

They build those homes so cheap though. I did some temp work on the weekend where they were building those homes. I couldn't believe what I saw. They actually have this Styrofoam concrete stuff. Its completely Styrofoam with a 1/10 inch thick concrete layer surrounding it. They put it around the edges of the roof. When its installed it looks like solid concrete. Talk about cutting corners! The entire home is built like that. When its done it looks like a solid home but once you look at the fine details you will see all the spotty construction.

That's how they make their money these days. Selling overpriced homes and tricking people into buying them. They could sell them at a steep discount and still make money on it. Plus lets face it, south oc is still in a bubble if you ask me.

I'd personally rather have 500k worth of stock rather than a 500k home in south OC.

I doubt it.

Our new home built in Thousand Oaks in 1997 had that stuff but it was for appearance. I didn't like it either. When I'd pull my trashcans out from the side yard I'd bang into it and crush it and you'd see this Styrofoam stuff under the plaster.

[ducviloxi]

I believe prices are actually going up all over South OC due to buyers (and investors) jumping back into the market.

[mrwumpus]

Originally Posted by bhcompy

Housing is so expensive in OC partly because of limited inventory. So there is no shortage of buyers. Only difference will be price(and mello roos cost)

The shortage is an illusion by banks artificially restricting the supply: Living the California debt based dream

Who will buy these styrofoam and chickenwire clone homes except investors who will rent them out as clown houses? In my friends' condo unit in Lake Forest, there are so many people crowded into each unit that every parking spot is taken up, and cars line the streets outside the complex.

[EscapeCalifornia]

Originally Posted by a34dadsf

They build those homes so cheap though. I did some temp work on the weekend where they were building those homes. I couldn't believe what I saw. They actually have this Styrofoam concrete stuff. Its completely Styrofoam with a 1/10 inch thick concrete layer surrounding it. They put it around the edges of the roof. When its installed it looks like solid concrete. Talk about cutting corners! The entire home is built like that. When its done it looks like a solid home but once you look at the fine details you will see all the spotty construction.

That's how they make their money these days. Selling overpriced homes and tricking people into buying them. They could sell them at a steep discount and still make money on it. Plus lets face it, south oc is still in a bubble if you ask me.

I'd personally rather have 500k worth of stock rather than a 500k home in south OC.

The high cost of new homes is due to the cost of the land, permits, and regulations (such as mandatory fire sprinklers).

[bhcompy]

Originally Posted by mrwumpus

The shortage is an illusion by banks artificially restricting the supply: Living the California debt based dream

Who will buy these styrofoam and chickenwire clone homes except investors who will rent them out as clown houses? In my friends' condo unit in Lake Forest, there are so many people crowded into each unit that every parking spot is taken up, and cars line the streets outside the complex.

I don't mean shortage of homes for sale, I mean shortage of homes, period. The reason why people move out to Victorville to commute to LA isn't because they want a cheap house, it's because there's not enough land in LA to build those houses, so existing prices go up due to low supply.

Prices might be going up NOW because of that, but it doesn't change the fact that there are not enough homes for the people that want to live here, otherwise prices would go down.

[DocGoldstein]

Prices have been going down YOY for 2 years straight, and 3 years straight before 2009/2010 (tax credit period). It shows me that prices are not where they should be.

Inventory is artificially low all over (not just OC/LA) because of banks purposefully lagging on the foreclosure process, and then lagging on putting those REOs on the market.

The S&P reported that there were over 4 years worth of "shadow" inventory to clear in August of 2011. Right now I just checked, OC is down almost 50% YOY in inventory. That means based on current sold numbers, there is barely 2.5 months of inventory left in all of OC. It's the same all over the Bay Area.

Does that seem normal or realistic? Or artificial and manipulated?

[Charles]

Originally Posted by DocGoldstein

Prices have been going down YOY for 2 years straight, and 3 years straight before 2009/2010 (tax credit period). It shows me that prices are not where they should be

They might not be too far off from where they should be - considering 3.8% 30 year loans.

From one of my older posts:


Housing prices in SoCal aren't that much higher than they would be if they had appreciated at an average annual rate of 4% (sort of a real estate appreciation average) since 1982. They bubbled, the bubble burst, and prices are returning to "SoCal" norm.


Los Angeles Median Housing prices (blue) starting around 1982 plotted against a 4% real estate appreciation (red, about what "normal" is). Notice that prices have nearly returned to where they would be if they had appreciated at a 4% rate. Even if that is a stretch assumption, we can see housing prices have come down a lot.

[DocGoldstein]

Originally Posted by Charles

They might not be too far off from where they should be - considering 3.8% 30 year loans.

From one of my older posts:


Housing prices in SoCal aren't that much higher than they would be if they had appreciated at an average annual rate of 4% (sort of a real estate appreciation average) since 1982. They bubbled, the bubble burst, and prices are returning to "SoCal" norm.


Los Angeles Median Housing prices (blue) starting around 1982 plotted against a 4% real estate appreciation (red, about what "normal" is). Notice that prices have nearly returned to where they would be if they had appreciated at a 4% rate. Even if that is a stretch assumption, we can see housing prices have come down a lot.

Even if you assumed a friendly 4%, bubbles always over correct, and we're also assuming that there is normal employment. But most importantly we're also assuming there is wage inflation of at least 4% per year as well since incomes are one of the primary factors that determine what any individual can afford.

I think those assumptions would be flawed, making the "4% inflation back to normal" model flawed as well (IMO).