Irvine Real Estate News


Jan. 15, 2020

Bone-Dry: A Supply Problem

For years, there have not been enough homes on the market, and the start to 2020 is especially pronounced.


Low Supply: The active inventory is extremely low to start the year, down 34% compared to the start to 2019.


Life is a time crunch. Inevitably, important errands are left to the last minute. It’s happened to everybody at one time or another. With Valentine’s Day on the horizon, it will happen again. Many will head to the grocery store on February 13th and make a bee line to the greeting card aisle, only to find twenty other procrastinators hurriedly looking for the best card. Squeezing between the crowd reveals a half empty shelf with the best cards undoubtedly already taken. The whole ordeal is frustrating. Similarly, buyers this year are just as frustrated.


The Orange County housing shelves are half empty. It is tough being a buyer looking for a home in today’s market. The year started with 3,692 homes, the third lowest start in decades behind 2013 and 2018. There were 5,565 homes to start 2019, 51% more than January 1, 2020. There were a lot more choices a year ago, but not today. The trend of the supply problem dates to the beginning of the Great Recession, 2008. Ever since then, fewer and fewer homeowners have placed FOR SALE signs in their front yard. This trend is hardly a blip on the radar screen; instead, it has continued for twelve consecutive years.


Last year may have seemed like a better year with more homes to choose from, but that was caused by diminished demand due to higher interest rates. Homes that typically would have sold in prior years lingered on the market until interest rates dropped to historical lows, dropping from 4.5% at the start of 2018 to below 3 by the end of May.


All Irvine's active inventory can be seen at this link.


Posted in News
Jan. 8, 2020

Low housing inventory persist as the decade begins

While getting perspective on what the real estate market was like a decade ago can help make you appreciate the current market, it won't make some realities disappear. Back in 2010, many homeowners were desperately hoping to hang on to their homes. Others were desperate, doing everything they could to attract buyers.

Those buyers were happy with being courted by home sellers but were struggling to get financing from lenders who had seen their industry take a cautious turn after having so much flexibility for so long.

According to's managing editor Cicely Wedgeworth (using data collected by its chief economist Danielle Hale), the past ten years have been the most consequential stretch in American real estate history —one that has fundamentally altered the landscape. "Cosmopolitan coastal cities are out; affordable midsize cities are in," she says. "Baby boomers and Gen Xers are no longer the dominant forces in buying, ceding that turf to millennials. Yet after all this time, it seems that home buyers still can't get much of a break."

In her housing trends study, Hale admits that while there will be opportunity for millennial buyers in the coming decade, in many ways the challenges buyers have faced for years are going to persist—challenges like difficulty finding the home that's right for them, and competing with other buyers, especially at affordable price points. Low inventory has been making things tough for buyers since 2015, and next year inventory could reach historic lows, with single-family home construction increasing but falling well short of keeping up with demand. The bright side? Mortgage rates are expected to remain reasonable.


Orange County & Irvine's housing inventory shows a similar challenge -- as of December in Orange County inventory was 3,038, down 23.7% from 3,980 in December 2019.

Irvine's inventory as of December was 267, down 14.7% from 313 in December 2019. 

All Irvine's active inventory can be seen at this link.

Here is some data on Irvine's List Price and Days on Market today.

Millennials continue to be the driving force, while achievable prices are continuing to present challenges for them. According to Hale, they often place themselves in positions to overpay, especially if they are trying to find homes in larger cities. Price points are driving them to smaller cites, where sales are expected to be healthier.


"Texas, Arizona, and Nevada are expected to welcome an influx of home shoppers priced out of California," says Wedgeworth. "Meanwhile, would-be buyers from pricey Northeastern markets will likely head to the Midwest or Southeast. There, they can find affordable housing as well as solid, diversified economies."


Millennials are no longer the new kids on the block." The largest cohort of millennials will turn 30 in 2020—historically, that's when people tend to think of buying their first home," says Hale. This means the oldest millennials will be turning 39 and the demographic will account for more than 50% of mortgages taken out in the country — more than all other generations combined.


While millennials (those born between 1981-'97) are big on buying experiences instead of "stuff," they are not that radically different from past generations, partnering off and starting families, which triggers home-buying decisions. Having kids is a huge driver for home sales. "But while they may be motivated, they'll face a lot of competition for the scarce homes on the market—from roughly 71 million of their peers nationwide," says Hale.


What about everyone else? Wedgeworth notes that Gen Xers and boomers are pretty comfortable where they are. Boomers, not quick to accept older age, are living longer, healthier lives, and staying in their houses longer, while Gen Xers aren't quite ready to retire, making them stay right where they are. What this translates into is fewer homes on the market.


As for new construction, Wedgeworth notes, "After the housing crash in 2008, which wiped out quite a few builders, those who remained have largely focused on higher-end developments with bigger profit margins. Although they're finally showing signs of a shift toward building more entry-level homes, faced with overwhelming demand, it will take a few years for a significant number to come to market."


Sources: Realtor. TBWS


Rates Currently Trending: Neutral

Mortgage rates are trending sideways this today.  Last week the MBS market improved by +33bps.  This was enough to move rates or fees lower last week. We saw high rate volatility at the end of the week.


Posted in News
Dec. 18, 2019

Orange County Housing Report: What a Difference a Year Makes

The housing market is a lot hotter than many think and 2020 is going to line up heavily in favor of sellers.

A Warm December: With an Expected Market Time of 70 days for all of Orange County, this is the warmest December since 2017 when housing was hot.

So much can change in the course of a year. From one year to the next, professional sports teams can go from the bottom of the standings to playing in the playoffs, babies go from crawling to running, and kids go from picking up an instrument for the first time to playing in the school orchestra.

It’s not an immediate change; instead, it is a slow evolution.

That is precisely how the Orange County housing market has evolved, going from a slight Buyer’s Market last year to a slight Seller’s Market today. 

Active inventory in Irvine

December is the slowest time of the year in terms of new escrows and the number of homes that pop on the market. Both buyers and potential sellers divert their attention from housing to enjoying the holiday season. Yet, despite all of the holiday distractions, it has been a slight Seller’s Market every December since 2012 other than two years, 2014 and 2018.

Many intuitively think that because it is the slowest time of the year that housing lines up in favor of buyers; it is just not true. While it may be true that demand drops to its lowest point of the year by the end of the month, so does the active inventory. The muted demand is offset by a drop in supply.

And, this year the inventory has dropped by 40% since July, shedding 3,055 homes. Demand (last 30-days of pending sales) dropped by only 22%, 556 escrows. As a result, the Expected Market Time (the amount of time it would take from hammering in the FOR SALE sign to opening escrow) dropped from 91 days in July to 70 days in the middle of December.

Housing is actually hotter today than it was in July! What happened? How is housing hotter today than July? With mortgage rates dropping all year, the housing market slowly thawed. The thaw continued through the Autumn Market as rates reached their lowest levels of the year and remained between 3.5% and 3.75%. Demand climbed and the housing inventory dropped. That is the recipe for a Seller’s Market where housing stands today. Year over year, the differences are staggering. The active listing inventory is down by 36% compared to December 2018. 


Posted in News
Dec. 17, 2019

The housing market continues to see strength in 2019


Bankrate's Natalie Campisi reports that as the third quarter of 2019 closed, homebuyers were in control, with lower rates and slowing home price appreciation. Housing inventory, however, remains squeezed.


Campisi quotes Fannie Mae's chief economist, Doug Duncan: "Our view is that the housing market peaked in 2017, we saw about a 3 percent drop in sales in 2018. The pace of home price increases started to slow in 2018. Starting at the beginning of 2019, rates started to come down, and then we saw this big drop in rates. We didn't expect such a significant drop-off — it was 30 points more than we forecasted."


According to Bankrate's weekly indexes, during the third quarter of 2019, mortgage rates fluctuated nearly 50 basis points, with the China-US trade talks prodding investors toward shelter in US Treasuries, all of which helped flatten interest rates. "Most experts predict that rates will remain flat, but there's no promise as things can change overnight," says Campisi.


Inventory, however, remains low. (See the low number of Irvine homes for sale here.) "On the for-sale side, the homes that are being started are priced above what many homebuyers are prepared to pay, so there's an affordability problem," says Michael Neal, a senior research associate in the Housing Finance Policy Center at the Urban Institute.


It's no secret that construction costs and labor shortages continue to plague the entry-level construction market. "Costly resources, including everything from building materials and permit prices to labor, drive up construction costs, which filters through to the price of the home. This is one reason folks are staying in their houses longer," says Campisi.


While millions of homeowners are refi eligible, many might be waiting for better deals before locking in a rate. However, experts warn that homeowners could end up losing out if there's an uptick in rates.


Sources: BankRate, FannieMae, WellsFargo, TBWS


Rates Currently Trending: Neutral

Rates are trending sideways to slightly higher so far today. Last week the MBS market improved by +10bps. This caused rates to move sideways for the week on relatively low volatility.


Posted in News
Dec. 10, 2019

Housing inventory expected to naturally free up over the next 20 years


It’s being called the Silver Tsunami. Zillow analysts report that over the 2017-2027 period, 920,000 baby boomer-held homes will be freed up yearly, with 1.17 million materializing in the succeeding years, from 2027-2037. That means 20 million more properties, (approximately 27 percent of the current owner-occupied stock) will flood the market, as the elder generation passes on or gives up their homes.


Zillow’s report says the boom compares to the construction onslaught before the recession and could counterbalance home-building in the next 20 years.


Arizona and Florida, the two states that have the most retirees, will have the highest inventory jumps, with boosts expected to top 30 percent. Zillow’s economist Jeff Tucker explains, “In many parts of the country, the Silver Tsunami will dampen new-home construction, as a flood of existing homes vacated by boomers comes on the market. The places best situated to absorb that new inventory and still drive new construction are ones with booming job markets and plenty of buildable land.”


The National Association of Realtors says that with inventory issues persisting, the boomer drop may be a kind of panacea for housing shortages, as existing-home inventory shrank to 3.9-months supply in October, compared to 4.3 months the prior year.


What is still in doubt regarding the supply side of real estate is the ability of the nation’s builders to keep up with demand due to costs, labor, and land shortages. This means accessibility and affordability concerns remain, including the need to retrofit properties.


Changing demographics are a powerful force. Tucker adds, “Demographic trends are critical to the real estate industry because the most common reasons for home purchases and sales are demographic life events, such as births, deaths, marriages, and divorces. Along with job relocations, these factors drive the underlying demand for housing around the country, and at the population level they can actually be predicted fairly accurately.”


Sources: Rismedia, Zillow, NAR, TBWS


Rates Currently Trending: Neutral

Mortgage rates are trending sideways this morning. Last week the MBS market worsened by -2bps. This caused rates to move sideways for the week on low volatility.


Posted in News
Dec. 5, 2019

OC Housing Report: Baby It's Cold Outside

The holidays are officially here, and so is the slowest time of the year for real estate.

The Holiday Slowdown: From Thanksgiving to the end of the year, it is the slowest time of the year for housing when both the inventory and demand drop to annual lows.

Starbucks does everyone a big favor. Right after Halloween, they reveal their latest holiday cups. This is a glaring reminder for buyers, sellers, and everybody involved in real estate that the Holiday Market is upon us. Costco, CVS, Albertsons, and just about every other retailer quickly follows suit, taking advantage of the busiest retail season of the year.

What happened to Thanksgiving in Orange County?

Everyone shakes their head in disbelief, feeling as if Thanksgiving has been skipped. It foreshadows that there isn’t much runway left to cash in on 2019 housing.

In the blink of an eye, the housing market has quickly changed and revealed a much different real estate environment.

There are fewer and fewer homes for sale as the number of homeowners opting to enter the fray drops to its lowest level of the year. Many sellers who have not found success, mainly due to price, opt to throw in the towel and pull their homes off the market.

At the same time, with all the holiday distractions, buyer demand drops to its lowest point of the year as well. In just the past two weeks alone, the active inventory dropped by 11%, shedding 599 homes, the largest drop of the year by a landslide.

From Thanksgiving to New Year’s Day, the average drop since 2013 has been 20%, 1,234 homes.

Many homeowners avoid placing their homes on the market from December through February, opting to sidestep the holidays and the cold winter weather. Look how few homes in Irvine there are for sale.

Ultimately, many homeowners are waiting to sell. They want to take advantage of the absolute “best time of the year” to sell a home, the Spring Market. They may be right, that the spring is the most active time of the year to sell, when demand (new escrows) climbs to a peak for the year; YET, the increase in escrow activity is met with a flood of new FOR SALE signs, competition.

In reality, Orange County housing is still hot today for all homes priced below $1 million. It is even a slight Seller’s Market from $1 million to $1.25 million. 


Posted in News
Dec. 3, 2019

Home Sales Report Good Numbers

Way to begin ending 2019 with a bang. According to The U.S. Census Bureau and Department of Housing and Urban Development reports home sales surged to surpass sales a year earlier by 31.6 percent, more than doubling the annual increase the prior month.


While sales of newly constructed homes were actually slightly lower than in September, sales during the month at a seasonally adjusted annual rate of 733,000, down 0.7 percent from September. That previous number, however, was revised from an originally reported 701,000 to 738,000 units. Sales in October 2018 were at the rate of 557,000 units.


According to Mortgage News Daily’s Jann Swanson, “On a non-adjusted basis, there were 57,000 newly constructed homes sold during the month, unchanged from September but up from 43,000 a year earlier. On a year-to-date basis, sales have totaled 586,000 units, 9.6 percent more than during the same period in 2018.”


While Irvine November Property sales were 203, up 6.8% from 190 in November of 2018 and -8.6% lower than the 222 sales last month. November 2019 sales were at a mid level compared to November of 2018 and 2017. November YTD sales of 2,373 are running -4.4% behind last year's year-to-date sales of 2,482.  


With the Median Sales Price in November was $885,000, down -1.4% from $898,000 in November of 2018 and up 1.5% from $871,500 last month. The Average Sales Price in November was $1,018,680, down -3.9% from $1,059,641 in November of 2018 and down -6.9% from $1,093,775 last month. November 2019 ASP was at the lowest level compared to November of 2018 and 2017.


At this point, 2020 might just turn out to be a good one for home sales.


Rates Currently Trending: Neutral

Mortgage rates are trending sideways so far today.  Last week the MBS market improved by +10bps.  This caused rates to move sideways. We saw very low rate volatility all week.


Posted in News
Nov. 26, 2019

Single-family rentals continue to get more expensive


Apartment living has its advantages, but it seems today's renters are opting for single-family homes instead of schlepping their bags of groceries up elevators. More room for their pets to roam? Possibly. After all, it's reported that 75% of renters own a furry friend. All we know is that apartment rental occupancy rates hit an all-time low. Meanwhile, single-family rental prices have also surged.

CoreLogic reports that U.S. single-family rent prices rose 3% in September over August. If we compare this to last September, however, the national rent increase has remained flat. Looking around for comparisons, Phoenix saw the highest year over year rent price increase, 6.7%, while Miami saw the lowest, 1%.

Low rental home inventories seem to spur the growth of single-family rental prices. September is also the 65th month in a row where low-end rentals spurred national rent growth, according to HousingWire's Julia Falcon. "Rent prices among this segment, defined as properties with rent prices less than 75% of the regional median, increased 3.8% year over year in September 2019, the same as in September 2018," she says.

Upscale rentals (more than 125% of a particular region's median rent), increased 2.9% in September, slightly up from last September's 2.5%. But Phoenix is still the rising star, having seen the highest year-over-year increase for the 10th year in a row, at 6.7%. Phoenix also had an annual employment growth of 2.4%, which is higher than the national employment growth average of 1.4%.

"Metro areas with limited new construction, low rental vacancies and strong local economies that attract new employees tend to have stronger rent growth," says Falcon.

Source: CNBC, CoreLogic, TBWS

Rates Currently Trending: Neutral

Mortgage rates are trending sideways this morning.  Last week the MBS market improved by +1bps.  This caused rates to move mostly sideways for the week on low volatility.


Posted in News
Nov. 19, 2019

OC Housing Report: Don't Miss Out

It is time to get off the fence before values rise and while mortgage rates are so low.

Cost to Waiting: Housing is poised to get hotter next year, setting the stage for appreciation.


Disneyland is known as “The Happiest Place on Earth.” Yet, sometimes the amusement park can be so crowded.

The lines for Space Mountain are often the longest. So many people take a look at the length of the line and turn around claiming that they will try to wait for the perfect time. They rationalize that the evening will be much better after a ton of families with little kids leave for the day. To their dismay, after returning to check the line in the evening, the line has not changed. In fact, it is a little bit longer. Was it because of the warm evening? Did all these people in line try to time the line too?

Many buyers are trying to time the housing market. They too are trying to wait for the “perfect time.” They hear that the real estate market is doomed, that housing is on the verge of a bubble, or how the next downturn will be worse than the Great Recession. These buyers are sitting on the fence and are waiting for it to be there turn. It is inevitable, right?

Unfortunately, all the noise, is just that… noise. The facts and data simply paint a completely different picture. It has been frustrating being a buyer. From 2012 through the first half of 2018, everybody was acutely aware that there was a supply problem.

That changed last year when the active inventory ballooned from August through Thanksgiving. There was finally a lot more supply, but it was only due to a demand problem. Demand dropped as mortgage rates climbed all the way to 5% in November. Everybody thought it was the beginning to the end of housing’s 6-year run-up. But that was then, and this is now. Mortgage rates today are at 3.75%.

This year has been all about recovering from the sting of high interest rates and low demand. Rates continuously dropped and bottomed at 3.5% in September. They had plunged by 1.5% in such a short period of time. It was unprecedented. As a result of the current low interest rate environment, housing has transitioned from a slight Buyer’s Market at the beginning of the year, to a Balanced Market in February, to a slight Seller’s Market ever since.

Of course some Irvine areas are exceptions.

In fact, the market has been picking up steam and the Expected Market Time (time from originally listing to opening escrow) just dropped to its lowest level of the year. Regardless of the time of year, housing is heating up with the active inventory dropping like a rock and demand remaining relatively flat. Since the end of July, the active listing inventory has shed 2,067 homes, a 27% drop. That’s the largest decline since 2012. At the same time, demand (last 30-days of pending sales) has only dropped by 7%. It has not looked that good since 2011. Consequently, the Expected Market Time dropped from 91 days at the end of July to 71 days today, a slight Seller’s Market (from 60 to 90 days), which is when there is not a lot of appreciation and sellers get to call more of the shots during negotiations.

Housing is knocking on the door of a HOT Seller’s Market (less than 60 days) where there are multiple offers and home values appreciate. While it may be frustrating for buyers to hear that the supply problem is back and the market is getting hotter, these frustrations can be overcome by focusing on the payment and diving into the market now before it heats up further. A $700,000 mortgage has a monthly payment of $3,242 today. For perspective, that same payment last year was $3,758 with a 5% rate, an eye-opening $516 extra every single month. But, let’s take it a step further. With a supply problem in 2020 coupled with low mortgage rates, home values are forecasted to appreciate between 2 to 4%.

Even if rates remain the same, at 4% appreciation, that $700,000 mortgage would become $728,000 and the monthly payment would be $3,371, that’s an additional $129 per month or $1,548 annually. What if rates grew to 4.25%? A mortgage rate of 4.25% would still be a great rate and would not rock the housing boat much at all. With 4% appreciation and a rate that is a half percent higher, the monthly mortgage payment would be $3,581 per month. That is an additional $339 per month or $4,068 annually. 


Posted in News
Nov. 18, 2019

The same reasons millennials want city-centered living now applies to boomers


They’re built in the heart of the city, these high rise buildings close to restaurants, shopping, and entertainment. The demographic developers had in mind was millennials, who would prefer to walk their babies past five different Starbucks than live in suburbia.

See Irvine's "Airport Area" to see what I mean.

What’s happening, however, is the invasion of 50-65-year-old empty nester renters downsizing from homes in which they raised their offspring, mowed lawns and threw back yard parties. It’s all about scaling down, simplifying, and eliminating the commute. This is evidenced by a recent Curbed article, where Patrick Sisson describes a Chicago high-rise on the lakefront.

Watermarke in Airport Area, Irvine

“While the real estate preferences of millennials and young adults get the bulk of media attention, older renters actually have as much or even more to do with the last decade’s upswing in downtown urban living,” says Sisson. “According to the Urban Land Institute’s latest Emerging Trends Report, urban growth has come from two distinct age groups. Over the last decade, the urban population of 20- to 29-year-olds grew by 4.7 million. But during the same time, the number of 55- to 64-year-olds living downtown grew by 10.3 million.”


He goes on to say that while the new glass high-rises sprouting up in emerging downtown neighborhoods may be marketed to millennials, many of the units may end up being occupied by their parents.


“Developers have always focused on consumers with money,” says real estate consultant John Burns in the Curbed article. “Even though some of these new developments are in areas people think are cool for millennials, those who can afford them are often in their late 50s and early 60s.”


The idea of ex-surburbanites moving downtown once their kids are out of the house isn’t anything new, but their numbers have skyrocketed over the last decade. According to U.S. Census Bureau figures, the 55-and-older demographic represented the largest jump in the renter population in the U.S., growing 38 percent between 2007 and 2017 (the number of renters over age 65 grew by 65 percent). For the 54-and-under age range, the percentage of renters only rose 10 percent.


What no one could predict was a trend for older Americans to both live and work longer than previous generations. In the past, when golden parachutes and final retirement checks were reason to celebrate and move to warmer climates, boomers haven’t taken the bait. Renting can make more financial sense than holding on to a large suburban home, and the ease and simplicity of it make life easier. The reasons millennials would be drawn to city-centered living —transit access and proximity to retail and restaurants—are precisely the things drawing in older renters who consider a future of decreased mobility, the desire for less responsibility and a set of elevators delivering them to everything they could possibly need as they age.


Older renters are a major focus for developers, according to Sisson, who points out that a number of large national firms have product lines dedicated to older adults and seniors, including luxury options. Greystar has a series of projects under the Overture banner, meant for residents 55 and older. Carlyle Group is investing billions of dollars in the market. And Related announced a $3 billion urban senior living project with Atria.


Even the units themselves are morphing to meet the needs of these older buyers, with more two- and three-bedroom units to attract older residents looking for homes somewhere between starter-home and suburban-house size. Planning that focuses on senior living also includes fitness centers, bike repair shops, walkability — all things millennials want but may not be able to afford until their student loans are paid off and their kids are grown.


Source: Curbed | AppleNews | TBWS


Rates Currently Trending: Lower

Mortgage rates are trending sideways this morning.  Last week the MBS market improved by +21bps.  This may've been enough to move rates or fees slightly lower last week. We saw moderate rate volatility through the week.


Posted in News