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I've been tracking housing prices in Aliso Viejo and Laguna Niguel for several years now. I am just amazed at how quickly prices of lower end housing (single family homes in the $300K - 500K) have gone up in a relatively short time.
Most of my tracking has been done via Zillow, as I believe that to be a fairly reliable source. Has anyone else experienced this same phenomenon? If my findings are correct, this area of the country is definitely resurrecting from the great real estate slump.
Now, in case anyone is wondering, the reason why I've been so researching this area is due to my interest in moving there sometime in the next 3-7 years. If prices continue rising at such fast clip, affordability will prevent me from making such move.
If anyone cares to share their opinions on my findings, please do so.
~ Sammy
Sitting on the sidelines, it's interesting how the RE market can change in such a short period of time. Currently, there are only two Aliso Viejo homes under contract for less than $600,000.
What's even more amazing, is that the average (not median) contract price for an Aliso home, per Redfin, is currently $837,881 (I removed the two condos on the list and averaged the remaining SRF's): http://www.redfin.com/city/224/CA/Al...6&market=socal
Who knows where AV prices will head as Mello-Roos is retired? Of course, since RE is cyclical, prices here and elsewhere in the region could, at some unknown point, take a serious dip.
OC has always been a very desirable area in which to live, and housing is indeed in short supply due to local zoning ordinances and environmental restrictions, but if/when interest rates start rising to a normal level, the inaffordability problem will only get worse, and renting will continue to be the only option for lots of folks for years to come.
Supply and demand... there are a lot more people now that want to live in Southern California for a multitude of factors, weather, economy etc. and the demand is now global as opposed to the past.
The days of middle class professionals (teachers, accountants etc.) buying homes in a place like LA/OC are long gone and i'm afraid they are never coming back. It's just the fact that our society is becoming increasingly polarized.
Quote:
Originally Posted by Marv101
OC has always been a very desirable area in which to live,
Yes, but it was also very desirable in the 90s when OC real estate was about a third as expensive as it is today. My buddy bought his 2500 sqft house in Irvine in 1996 for $330,000, current price is $1.2 million. I think back in the 90s demand was less global, there was not much speculation from investors and qualification guidelines were much much stricter than today - those days you had to have 20% down, seasoned reserves and a strong income with a max DTI of 35%. Today, even post-crash, DTIs can go upto 45+%, FICOs with FHA can go super low with less than 5% down. There are virtually no underwriting standards compared to the 90s.
it was also very desirable in the 90s when OC real estate was about a third as expensive as it is today. My buddy bought his 2500 sqft house in Irvine in 1996 for $330,000, current price is $1.2 million.
The housing bubble that burst in 1989-90 was still being felt then. In 1996, housing prices had declined from the previous peak and were at their lowest in most of southern CA.
Supply and demand... there are a lot more people now that want to live in Southern California for a multitude of factors, weather, economy etc. and the demand is now global as opposed to the past.
The days of middle class professionals (teachers, accountants etc.) buying homes in a place like LA/OC are long gone and i'm afraid they are never coming back. It's just the fact that our society is becoming increasingly polarized.
Yes, but it was also very desirable in the 90s when OC real estate was about a third as expensive as it is today. My buddy bought his 2500 sqft house in Irvine in 1996 for $330,000, current price is $1.2 million. I think back in the 90s demand was less global, there was not much speculation from investors and qualification guidelines were much much stricter than today - those days you had to have 20% down, seasoned reserves and a strong income with a max DTI of 35%. Today, even post-crash, DTIs can go upto 45+%, FICOs with FHA can go super low with less than 5% down. There are virtually no underwriting standards compared to the 90s.
You can say that again. There is already talk about Chinese banks committing fraudulent transfers so houses can be bought here cash. And IMO FHA loans are the new subprime loans. But banks will do ANYTHING they can to salvage their books and make themselves look solvent and in the black. Lowering standards and keeping interest rates low is the only way to sell houses at these prices.
FHA is clearly subprime but it's the government. FHA loans are also ultra expensive with their upfront MIP etc. so anyone who has to resort to using an FHA loan has to be looked upon with GREAT suspicion on whether they can actually afford the place.
The United States has a monthly payment cuture...as long as the monthly payment makes sense people here do not really care about what the product is exactly. And there could be a huge baloon payment in 15 years, people just do not care. With the speculative mindset it's always... we can always sell at a higher price so why stress about these things. Of course, we know that real estate is cyclical and it does crash from time to time and huge swathes of people get wiped out in the process...it's happened in the past and it will happen again. I see a 30-40% correction for real estate in Southern CA, it's not a question on IF, just when.
There is still a lot of momentum in real estate right now and it will keep rising to the stratosphere, but as they say the higher it goes the harder it falls Right now inventory, although it has been rising a bit, is still almost at zero. I am just astonished at how little inventory there is and how ferocious demand has been. Even now, properties in the $400-500k bracket get snapped up at asking price as soon as they are listed. The demand is there.
FHA is clearly subprime but it's the government. FHA loans are also ultra expensive with their upfront MIP etc. so anyone who has to resort to using an FHA loan has to be looked upon with GREAT suspicion on whether they can actually afford the place.
The United States has a monthly payment cuture...as long as the monthly payment makes sense people here do not really care about what the product is exactly. And there could be a huge baloon payment in 15 years, people just do not care. With the speculative mindset it's always... we can always sell at a higher price so why stress about these things. Of course, we know that real estate is cyclical and it does crash from time to time and huge swathes of people get wiped out in the process...it's happened in the past and it will happen again. I see a 30-40% correction for real estate in Southern CA, it's not a question on IF, just when.
There is still a lot of momentum in real estate right now and it will keep rising to the stratosphere, but as they say the higher it goes the harder it falls Right now inventory, although it has been rising a bit, is still almost at zero. I am just astonished at how little inventory there is and how ferocious demand has been. Even now, properties in the $400-500k bracket get snapped up at asking price as soon as they are listed. The demand is there.
I agree with a lot of what you say. But I'm seeing a lot of price drops. So sellers are overly optimistic and overpricing their houses. On that note I'm really not seeing the furious bidding wars that were so prevalent in the first part of 2013. Nor am I seeing the tons of pending and sold. The sold listings aren't as numerous either. And a few more pending/back on market are showing up. I think the '13 market was thought to start again in early '14 and it simply did not materialize. This market is nothing like last year. The reason there is so little inventory is IMO two fold.
1. Lots of people are still underwater and can't sell without coming up with cash to the negotiating table. Sure prices in some areas are close, as or higher than "bubble" but it's not in all areas. Not every house that's underwater is in a hot area. Yes there are hot areas but its cooling a bit due to conditions in some cases
2. Lots of people are priced out. They are very sensitive to even a small increase in monthly payment. To the extent that a extra $100 bucks may mean the difference between buying and not buying. Doesn't matter what hocus pocus loan you get since there are no loans like interest only neg/am etc. If you don't make enough you can't afford it. Unless banks go back to crazy loans or loosen loan guidelines I feel this market will go on hobbling. Cash buyers and investors are pulling away and the first time buyers or move up buyers are simply not materializing as was expected. People will stretch but they can only stretch so much before they say nope or snap.
Unless wages start going up to catch the huge price increases or all of the sudden a crap load of houses are gonna go up and for sale cheap and specifically targeted to first time buyers I feel that this market will claw along as it is. High prices, low inventory and few buyers who qualify.
I've bee subscribing to email alerts from a popular real estate website for a couple of years now. What I've observed as of the past six months or so is a consistent number of price-drop alerts coming across. Much more so than the prior year. Is this a topping signal? Perhaps, but who knows...
I've bee subscribing to email alerts from a popular real estate website for a couple of years now. What I've observed as of the past six months or so is a consistent number of price-drop alerts coming across. Much more so than the prior year. Is this a topping signal? Perhaps, but who knows...
I think this fall/winter will have a lot more price drops IMO if the sellers want to unload. Maybe some late listings. I'm seeing 8-10% price drops and no bites. If you search and look at certain advertised places you can see they are staged. You can also go on property shark and find out the owner. If you really want to know. If its a private or REO. I guess you can also call the listing agent. Private sellers just havent gotten the notice the market changed. Or they did and either refused to acknowledge or read it. And they are still hoping for uneducated buyer to come along with his sack of gold and buy at crazy price. I may not be actively buying but I like to see what and how the market is doing. And right new it's simply stagnant.
I saw this house. Description was the typical bring your ideas and make this home yours. ALL ORIGINAL quaint etc bla bla bla. Translated into this house has never been upgraded and its on its last leg. You will need to do a complete tear down and remodel. And the low low price of $650,000. For a house built in 1972. Lol you gotta be out of your mind to pay that money for that house in that condition. Even by looking at very bad pics you could tell it needed EVERYTHING replaced. To have things done right you're looking at about 60k. Yeah you may get it slightly cheaper but you're skimping on either parts labor or end product quality. And believe me I can tell if someone polished a turd or took the time to do it right.
Buyers today don't want a house they gotta dump money into. They want move in ready. When I listed one of my rentals that was completely remodeled in the beginning of the year for rent every call I got in the beginning was Would I do a rent to own or some realtor asking if I wanna sell it.
Most people are willing to pay more for a complete remodel simply because the average person shops by monthly payment. I make x and I can pay y leaving me with z. Therefore I can afford it.
Since I feel we hit affordability ceiling this high price low interest seems to be the new normal
Judging by the tons of ads for new home development every weekend in the OC Register, many sellers are downright clueless about what their house is really, worth, and especially if they haven't spent some serious $$$ to make it impeccable.
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Right now inventory, although it has been rising a bit, is still almost at zero. I am just astonished at how little inventory there is and how ferocious demand has been. Even now, properties in the $400-500k bracket get snapped up at asking price as soon as they are listed. The demand is there.
