That's an excellent question. Either way, you are asking for an opinion, and none of us have a crystal ball.
I would recommend choosing the single-family detached dwelling for several reasons:
1) A SFR holds it's value and is not as affected by market fluctuations as condos/townhomes.
2) Quality of Life
3) Condo HOAs are unpredictable, and you may incur unexpected (and sometimes substantial) assessments.
4) You mentioned "newer" on the Tustin property... All condos built between 2004 and 2007 are projected to have a continual downward price pressure from Short Sales and REOs, since so many were financed with 100% financing through the builders. These units, in particular, may have a 10% or more price depreciation until after 2012.
5) You can write-off interest, not HOAs. You'll have a greater interest deduction with the house than the lower priced condo.
I hope this helps! Good luck. I can refer you to an agent that knows OC if you haven't selected one already.
I am an Expert in the Simi Valley real estate market but I know a little about the O.C. I can tell you from a general stand point a single family residence will be a better investment later down the road. I know Irvine is always in the top 10 safest cities much like the area I specialize in. A safe city is a good choice especially with a family. Your question would also have to include the size home you will need? If a 2+1 is not adequate then the 3+3 is the right choice. Also is your family growing? As you stated you are planning to live there for 5-8 years, If your family is growing then planning for the next 5-8 years should be considered. When I consult my clients I try to help them make the right decisions based on the present and the future. A condo is going to have an HOA, please consider the cost of the non deductible HOA fees to the interest and tax deduction on a single family residence priced slightly higher. It is a buyers market right now, so you should have a lot of choices. Given the affordability of the real estate market today you should be able to find a home that fits your needs. I hope this helps. Good Luck :)
Have a great day, Larry
Larry and Stephanie Watson
REALTORS, E-Pro, Eco-Broker
Both Of Us 818-606-0080
R.R. Gable, Inc.