Comments on: Still just another McMansion

By: george8

george8 — Thu, 29 May 2008 14:07:07 +0000

I doubt it that Arcadia will get a lot more (net in flow) of this type in the near future. Irvine is getting more of this type nowadays. Even then, the bubbly money, clean or not, is simply disappearing.

By: T K Eng

T K Eng — Thu, 29 May 2008 05:51:42 +0000

I fully agree. It is sort of pleasant to do business with corrupt officials and their family members (especailly the spoiled children) because they don’t bargain. But it’s an entirely different scenario to have them as your next door neighbor!

By: SavedByGrace

SavedByGrace — Thu, 29 May 2008 02:00:39 +0000

If these folks and their spoiled children are going to take over Arcadia, then you can count me out of the buyer pool because I wouldn’t want to live next to them.

Stop buying from Walmart already! Great point about the commodity prices; I’m waiting to see what happens as gas passes $4/gallon and on the move to $5/gallon.

By: T K Eng

T K Eng — Thu, 29 May 2008 01:51:20 +0000

Hey George8, with 1.3 billion people and growing, I am afraid more than a few PRC Chinese have access to easy corruption money. Many MacMansion buyers in Arcadia are Chinese govt officials (or their children), or rich coal mine bosses (or their family), who easily make over $1 mil USD per month. So long as China continues to be the “factory to the world,” the booming economy will continue to enrich the coffers of well connected individuals in that country. Unlike the majority of frugal, self-made immigrants, this special group from the PRC are spendthrift (especially their children)and care little about bargaining. Their demand for Arcadia MacMansions will continue to keep $$$ high until the slowing global economy become a big drag on the Chinese economy. Given the skyrocketing commodity prices, it may just happen in the near term.

By: SavedByGrace

SavedByGrace — Thu, 29 May 2008 00:35:45 +0000

Everyone’s situation is different, but it was easier to hold onto property (even underwater property) during the previous boom because interest rates were dropping during the bust. That allowed them to refinance to lower payments if needed. This time around, interest rates are likely to increase later this year – making it difficult for distressed owners to hold on.

Surely owners who used conventional 30/15yr fixed financing can choose to hold on, but that may not be an option for all those who used creative financing.

By: SavedByGrace

SavedByGrace — Thu, 29 May 2008 00:31:43 +0000

True, but you’re assuming that these Asian buyers are willing to buy in this market. Perhaps some are, but I think those will be the exception rather than the norm.

By: puckhead

puckhead — Wed, 28 May 2008 23:00:08 +0000

Tim K,

You’re assuming that most of the buyers that bought in the bubble years will sell, I have a hard time believing that. When I bought my first house during the last RE bubble, I was underwater for about 5 years but I held on because the payments were manageable and I liked the house. I think most in the better areas will do the same during this bubble. Another thing you have to consider when you walk away from your house is what kind of work do you do. If you’re just another schlub working at a large company, then there’s not much of a downside. But if you own your own business and you need access to capital from banks and investors, then you might think twice about walking away from a house.

By: Tim K.

Tim K. — Wed, 28 May 2008 20:50:12 +0000

By the same token, if Asian buyers were present during the runup, they are part of the excess inventory as sellers too. What, Asians don’t sell? Can’t have it both pays, puckhead.

By: puckhead

puckhead — Wed, 28 May 2008 17:36:08 +0000

No one is saying that the Asian buyers will “save” the SGV housing market. But it does add one more layer of buyers that have money to buy in this area that probably would not buy elsewhere. So maybe we see another 10% downside instead of 20% downside if these pool of Asian buyers did not exists.

By: george8

george8 — Wed, 28 May 2008 15:00:07 +0000

Some observation on Asian rescue scenario:

I believe most of the bubble era Asian buyers, like Taiwanese or Chinese, were willing and active participants of the RE speculation. The rampant buying was also aided by the real estate and stock market bubbles in Taiwan, and especially in China.

Most of these speculators are astute and they cetainly will not through money away except a few that have easy or corrupt money. They are also being squeezed by the deflating assets they own in US as well as back home in Taiwan and China.

This real estate bubble indeed was global in scale.