Here's recent history of the Fed’s policy committee and its Fed Funds rate. Next Fed decision is June 24/25.
Late-Sept. home prices at April ‘05 level
October 5th, 2007, 5:58 am · 163 Comments · posted by Jon Lansner/O.C. Register columnist
DataQuick’s latest sales update reveals a serious disruption to the O.C. housing market created by the mid-summer credit crunch. These new stats — for the 22 business days through Sept. 21 — show an O.C. median selling price of $590,000. If that held for the full month, that would be the lowest since April ‘05. (ZIP data HERE) In addition, that price would mark a 8.1% drop from August, the biggest one-month drop in DataQuick’s 20-year history of O.C. buying patterns. (Oh, by the way, the typical August-to-September price drop is 0.67%!) And the 6.3% decline from a year ago would be the biggest year-to-year drop since Dec. ‘95.
The sales activity news is no better with house buying through Sept. 21 off 36% vs. the ‘06 pace. If that pattern holds for the full month, September will be the slowest selling month since Jan. 1995 (and the second slowest in DataQuick’s 20-year record.) Did we mention that September’s a lock to be the 24th straight month that home buying failed to beat the year-ago pace?
Here’s a wrap, by key market slice, for the 22 business days ended Sept. 21 …
| Slice | Price | Vs. ‘06 | Sales | Vs. ‘06 |
|---|---|---|---|---|
| Single-family houses | $675,000 | -1.5% | 1,240 | -40.2% |
| Condos | $430,000 | -4.0% | 519 | -38.0% |
| New, all residences | $537,750 | -34.7% | 301 | -5.6% |
| All combined |
$590,000 | -6.3% | 2,060 | -36.2% |
• COMPARE: To see how other indexes measure O.C. pricing, CLICK HERE
• ZIPS: CLICK HERE to see the results by ZIP code.
October 5th, 2007 at 6:10 am
Per DataQuick, Single Family Median Home Price for the 22 business days ending:
6/26 = $735,000
6/30 = $734,000
7/12 = $725,000
7/17 = $725,000
7/25 = $720,000
7/31 = $718,000
8/07 = $719,000
8/15 = $712,750
8/22 = $710,000
8/30 = $710,000
9/11 = $700,000
9/14 = $689,000
9/21 = $675,000 ~ NEW
That’s a $60,000 or 8.2% decline in less than 3 months.
I want to make a point. I knew that when the inevitable drop eventually started, it would be serious, but I didn’t expect such ruthless drops, like the one’s we’re presently seeing in asking prices. And to think, that some dolt tried to explain this drop as seasonal, right in the heart of the summer buying season … what an idiot.
October 5th, 2007 at 6:22 am
[…] unknown wrote an interesting post today onHere’s a quick excerptDataQuick’s latest sales update reveals a serious disruption to the OC housing market created by the mid-summer credit crunch. These new stats — for the 22 business days through Sept. 21 — show an OC median selling price of $590000. … […]
October 5th, 2007 at 6:38 am
Question for the bears: If the median is a worthless indicator while prices are climbing or holding, shouldn’t it also be considered worthless when the numbers point downward?
October 5th, 2007 at 6:44 am
This is only to very beginning of a massive correction. Home prices will drop a total of 40 to 50% when it is all said and done over the next 4 years. The market needs this correction anyway. The median income in OC is around 75k. Stated loans are gone. So, it is not hard to look see where the market is headed. There is only one place, down down down.
October 5th, 2007 at 6:49 am
Resale family median down by 1.5%? That means the big mortgage crisis, which nearly gone, did almost no damage to house prices. This is an amazing story. Not that the mortgage market is mostly recovered, the credit crunch is a non story. I just don’t understand how anyone can be worried about a 1.5% price slip after a 400% runup. Lee in irvine, all your example displays is a pattern in prices that exists every year. Prices are always highest in late spring and early summer, then lowest just after the holiday. That is a well known pattern. So what is your point?
October 5th, 2007 at 6:54 am
I think Jimmy is smoking some credit-crunch dope. 400% runup? When? Not any house I’ve ever followed. Anyway, it’s obvious this guy just enjoys arguing. Who is right or wrong doesn’t change reality. If you are happy with the way the housing market is dropping then be happy. If it makes you mad then smoke some Jimmy-credit-crunch dope and you’ll see blue skies forever - no matter what happens!
October 5th, 2007 at 6:54 am
“shouldn’t it also be considered worthless when the numbers point downward?”
The DataQuick median is a lagging, unreliable, indicator. Single family homes are clearly down more than DataQuick reports on a YoY basis (-1.5%). I’m seeing homes on the MLS that are right in the heart of Orange County’s most desirable neighborhoods, with declining asking prices of $200,000 or more. And yet, these homes just sit on the MLS (no sales), kinda like Christmas ornaments hang from the tree. They’re still way too high.
I think you should look at the most recent comps in your neighborhood to help give you a more accurate figure. That is, if you have any recent comps.
October 5th, 2007 at 6:58 am
By the way, I’ve seen houses drop about 100k since Aug 2005 and they are still not selling. Very few sales, very stale. Same houses just sit there month after month. So regardless of what people or the news is reporting it’s obvious just from a simple observation that things have taken quite a big change for the worse if you want your home to sell or go up in value. If things aren’t so bad these homes would be selling and the price would remain firm.
October 5th, 2007 at 7:05 am
Jimmy, Jimmy Jimmy, Yes a 400% runup for the people that bought 10 years ago. Of course with a projected 20% drop predicted (so much for your 400% increase) and the fact that a bunch of people bought on speculation within the last 3 years the bottom is far from in sight. And if you think the mortgage fiasco is over read the papers. Everyone including the Fed is holding their breath waiting for the impending implosion!
October 5th, 2007 at 7:06 am
“all your example displays is a pattern in prices that exists every year”
Oh Really.
Can you please provide that data that would give your point credibility. In other words, please go back the last 6 years, and show me if we’ve seen an 8.2% decline in the prime summer months … or anything even close to an 8.2% decline.
I’ve already looked, and we’ve haven’t seen anything like this, since the mid nineties.
It’s Over!
October 5th, 2007 at 7:11 am
No it is NOT EVEN a 400% runup for people that bought 10 years ago! 1997. So if you paid 200k it’s now worth 800k with only a 1.5% dip on that? No way! Very few people saw that happen - that is the exception not the rule. Then again certain types of people like to use that tactic to make people think reality isn’t what it really is. Not entirely sure why though… The way I see it, the tip of the iceburg is starting to show and it’s name is “dropping fast”
October 5th, 2007 at 7:12 am
The mortgage crisis is NOT nearly over. The fallout will continue for another 12 to 18 months at a minimum! There are tens of thousands of loans in Southern California alone where the borrowers were all “A paper” and went stated income and refinanced in the past 6 to 9 months before the crackdown by lenders on lenient lending policies. Those borrowers all went into a payoption ARM which will adjust sooner or later. Just wait until all of these “A paper” borrowers begin defaulting, then you will see the real crisis.
October 5th, 2007 at 7:13 am
I am not sure why many talk of what happened in the credit market as a “crunch”. I believe it was a change in the credit market. A change from a time when anyone could get financing to buy a home to a time when it requires an income and down payment..
This change in credit is of course, is creating a change in the values of homes. Homes are now worth far less than they were 6 months or a year ago. It is still uncertain how much less, the market will dictate that. I would not be surprised if by this time next hear the median home price in Orange County was $500,00.
October 5th, 2007 at 7:19 am
Oddly, I have to agree with Jimmy here. The decrease in home pricing during the fall compared to the summer is seasonal. We saw exactly the same thing last year. You will also notice a decrease in inventory until late November-Jan when it will pick up again.
Even so, there are two salient issues to consider. Median home prices are down YOY, which means that even with continued buying of higher end homes that skew the numbers, the market is slowing down and it’s having an effect on sales prices. Jimmy is completely dilusional if he believes this is all over. Second, while inventory of existing properties has stopped growing for now, it hasn’t dropped as precipitously as it did last fall (August 07 ~ 19700, Oct 07 ~ 19500, per Ziprealty.com). I guess there must be more properties out there that just cannot be taken off the market. Looks like about 11 months inventory for existing properties.
October 5th, 2007 at 7:19 am
In 98, you could purchase tear downs just west of newport high school in the mid 300’s. Those same teardowns are currently selling for 1.3 million. That is the picture.
October 5th, 2007 at 7:38 am
Shut up already.
October 5th, 2007 at 7:42 am
I cannot believe that people are still trying to defend this ponzi scheme … using the argument that home prices normally decline in the summer months.
People need to read what Lansner wrote above:
“that price would mark a 8.1% drop from August, the biggest one-month drop in DataQuick’s 20-year history of O.C. buying patterns”
NO permabulls, this IS NOT NORMAL!
October 5th, 2007 at 7:51 am
Jimmy Said:
hat means the big mortgage crisis, which nearly gone,
Jimmy you like baseball? If you do you might want to understand this, right now as far as this crises is concerned we are in the top of the first inning. We have barely begun, hence why the depression in housing is being claimed and expected 50% drops.
Anyway, good luck with holding onto “we are different”.
October 5th, 2007 at 7:54 am
Nano,
Yes, there is/was a “credit crunch”. There were weeks where lenders stopped taking submission entirely - who are funding loans today. You don’t have to claim every point.
These are totally expected numbers. Frankly, I’m suprised existing held up as well as it did. And if you look deeply into new sales, you will see that they are “skewing” all right - to the low side. People are buying smaller products right now.
People wanting to buy should be jumping for joy - and would we wise to get their ducks lined up.
October 5th, 2007 at 7:56 am
Lee’s a moron. You can’t have a rational argument with a moron. Yes he’s right. there’s been an 8.1% drop OK. But Mr. Lansner in his original post shows Y-O-Y (That’s Year Over Year Lee). Its a drop of 1.5% for SFR (Single Family Homes — would you like it in phonetics?). So yes there’s been a drop in median price of home sales. yes prices are falling. And yes Lee’s a moron who can’t understand which data is relevant and which isn’t.
October 5th, 2007 at 7:58 am
“There are tens of thousands of loans in Southern California alone where the borrowers were all “A paper” and went stated income and refinanced in the past 6 to 9 months before the crackdown by lenders on lenient lending policies. Those borrowers all went into a payoption ARM which will adjust sooner or later.”
Proof please.
This is completely absurd.
October 5th, 2007 at 8:00 am
And since when does an “A” paper borrower need to go stated income to get into an option arm.
Geesh.
We should have a test to post (beyond adding two numbers).
October 5th, 2007 at 8:04 am
When are people going to wake up and realize that asking prices are being cut out of fear.
Fear will not stay forever.
Smart people should use it to their advantage.
October 5th, 2007 at 8:09 am
ROC, you’re hilarious. If prices started going up today this would be the shortest housing bust ever recorded!
You need to step back from your emotional attachment to increasing property values a little bit.
October 5th, 2007 at 8:12 am
eprobert,
No attachment to anything here.
Show me where I said prices will go up.
We won’t see 2005 numbers for at least 3-5 years.
I don’t have to agree to 1997 prices either.
October 5th, 2007 at 8:13 am
Jimmy, I think you need to be just a little bit better at the math to understand this better. Either that, or you are a front for the NAR.
By invidual area, prices are down: Anaheim is down 5%, Brea almost 7%, Irvine over 8%, Buena Park over 13%, Orange almost 16%.
What is skewing the numbers are the Newport Beach numbers where one area is up 305%.
Your kind of comments are examples of why the NAR has no credibility anymore. While I don’t think that is your intention, it is an example of the type of spin Realtors are still trying to fool buyers with.
October 5th, 2007 at 8:15 am
ROC said…
“When are people going to wake up and realize that asking prices are being cut out of fear.”
When are people going to realize that median OC home prices and median OC incomes will eventually have to mesh to reach equilibrium? At this point in the game, we are still WAY off from equilibrium. How we reach that equilibrium is a matter of debate (e.g. decreased home prices, income inflation, or both). I still can’t understand the logic that says that someone with above median OC income can only afford a “starter” home. After all, this is the median, not the “starter” income.
Those who seem to see a light at the end of the tunnel here are ignoring the facts of high inventory, historically low sales, and financial troubles in the lending industry. Those of you seeing this near term recovery, please cite some points to back up your assertions.
October 5th, 2007 at 8:18 am
I think it depends on which side of the fence we’re on. The guys on here projecting a rosy future and that the impending doom and gloom is over and things will get better are probably the ones holding a couple of investment properties or in the real estate business, i.e. Jimmy. Pick and choose where your data is coming from. A lot of these supposedly neutral unbias reports are actually being spoon fed by those in the real estate industry. Things are bad and if you read an article that says otherwise chances are the writer is being given some incentive to write a favorable outlook.
October 5th, 2007 at 8:19 am
“I still can’t understand the logic that says that someone with above median OC income can only afford a “starter” home. After all, this is the median, not the “starter” income.”
A first-time buyer should be happy with a starter home. This is not a novel idea. This is the way it’s done.
“When are people going to realize that median OC home prices and median OC incomes will eventually have to mesh to reach equilibrium?”
Please show me your rent versus own calculations. Rents are not that far off from prices - and the gap is narrowing every day (from both directions).
October 5th, 2007 at 8:24 am
I did some rent versus own calculations on my own home yesterday.
I live in a very large (2,800 sq. fl.), very elegant townhome.
The most I could save by renting is $2,000.
In exchange, I would have to squeeze into an 1,800-2,000 sq. ft. townhome or apartment.
Not exactly a fair comparison.
And, by the way, the $2,000 advantage does not even include the tax benefit I have in realtiy as an owner.
October 5th, 2007 at 8:28 am
Funny how no one remarked on Jon’s story showing a rent in Irvine of $3,500.
Undoubtedly, on a 3 bedroom apartment. My guess is squeezed into 1,500 sq. ft. or so.
October 5th, 2007 at 8:30 am
Rabbit (crying permabull),
Quit babbling and make your point. Show me how prices declined 8.2% or more in the summer of 2001, 2002, 2003, 2004, or 2005. Provide some data to prove your point!
You’re problem isn’t with me, but rather the real estate market.
LoL
October 5th, 2007 at 8:36 am
““When are people going to realize that median OC home prices and median OC incomes will eventually have to mesh to reach equilibrium?”
This will never, ever happen.
Median income includes a whole lot of low-wage renters.
The median income of owners, or would-be owners, is the only thing that counts.
October 5th, 2007 at 8:50 am
I guess the median is sort of a tool that can be used to see where the market is as a whole, but I dont think it is very representative of the market.
That being said, people like Jimmy loved the median when it was going up and now pretend that the drop is nothing when it is going down. He is one that had always says prices never drop. I also think Jimmy just likes to stir the pot, so arguing with him is pointless.
What I see as I do my daily searches of homes in my price range are homes asking prices have dropped 10-20% or more in some cases.
Some are right at the price the current owners paid and in some cases less. I guess you can call the price drop fear, but I think it is where the market as at this time.
As I always say it is about affordability prices and income need to come more into line with each other. The lending industry has changed, for now the easy money is going. Once the correction has occured and most of the subprime fallout has passed, they may go back to more risky lending. The only problem with that is those in Sacramento and DC are tightening standards, so the hay day of easy money is likely gone forever.
I am glad to see prices falling, for me it gives me a chance to get into something I can truly afford. I still think prices need to fall a bit more for it to make sense. I dont need a 2,100 sq. ft. on 6K sq. ft. A nice 1,000 sq. ft. condo with a couple of bedrooms and a garage detached or otherwise is fine with me. My income is far above median, but even most entry level places are not affordable.
Im my conversations with others looking to buy, most say next spring is about the earliest they will jump. I think prices will be down another 10% by than the median will probably reflect a drop of another 50K by than. Not that it means anything.
October 5th, 2007 at 8:56 am
Lee:
I absolutely agree that prices have declined and will likely continue to do so. I readily admit that I was wrong–not about the price declines, but in the timing–I anticipated it happening several years ago. As I’ve stated to you previously, I have no plans to sell anything I currently own but will likely take advantage of buying opportunities in the future. I don’t fit into the label of “bull” or “permabull”.
I am in agreement with Anonymouse’s post far back in this thread. I have trouble with the hypocrisy of your repeated use of the median price as the measure of price changes. You have consistently been one of the biggest critics of this measure and blasted it repeatedly as the median increased. Now, though, it supports your personal opinion so you post it over and over again.
You’ve exhibited your intelligence in many prior posts, now please show some character and quit being hypocritical in using data that you previously branded inaccurate to support your position.
October 5th, 2007 at 8:56 am
Samson,
I love it. A man with a plan - and specific wishes.
Best of luck to you.
October 5th, 2007 at 9:00 am
ROC: I think you may have something there. But I would really like to see what assumptions are being made about income, since you have to make a certain amount to pay a certain amount in taxes to reap the full tax benefits of paying property taxes and interest. Second, what assumptions are you making on investment returns on any monies that could have been used for a downpayment and what is saved on lower monthly outlays? Lastly, what time domain is your comparison being run under? As NAR and CAR frequently attest, most people buy for short term and not long term - not sure why they state that but they do quite frequently - I guess because it’s encouragement to use ARMs and so forth. Anyway, your analysis should go out to 4 or 5 years instead. Then compute the cross over and what time frame that would be in. I do believe that eventually, regardless of when you buy, owning will always beat out renting - but there is definitely a clear delineated time frame in which that will occur. Also, what is the average HOA / Mello-roos on SFR?
Also, no one actually has done a comparison of the benefits of waiting out the correction to jump in when prices are even lower. As for prices not going any lower, I am not saying anyone is saying that, but they had better bring some data to back up that argument. We’re not even in 2008 yet and the homebuilders’ forecasts (at least most of them) is quite dismal for 2008. All depends on perspective as well.
Its like going to buy a car knowing that if you wait until late fall, you’ll be getting the great deals. If you can wait, why not? The probability of prices rising in the short term is quite slim, unless sales volume takes a turn.
Finally, in order to really make the case for affordability either way, we need to see what people have been doing to buy homes in the last few months. What kind of cash downpayments they’re using, how many are taking out seconds, types of loans they’re using and even their motiviation - is it to use an ARM and sell in 5 years, or possibly refi and pray for equally low interest rates? Of course there are other IO loan products that can make home buying very affordable, but who wants to be paying for their house for the next 50 years? I’m sure some do and some will be able to make it work within 30.
I do like the encouragement though - please keep up the good work.
October 5th, 2007 at 9:06 am
Not Buying It,
Thanks.
In my case - it was absurdly simple.
I compared my mortgage, taxes, mello-roos and hoa (2) to the rent on a 3 bedroom place.
No interest calculations, no appreciation/dereciation, no tax advantages.
Too simple, really.
Do you know why I did it?
Because I am open to the possibility that I could be wrong, and that it might make sense to rent.
It’s not worth it for me at this time, because the savings don’t justify the change in lifestyle it would take (for me).
October 5th, 2007 at 9:11 am
Well the good news is that this report will make it much harder for next years report to show lower sales
October 5th, 2007 at 9:12 am
Roc, so they are reducing because of fear currently? So, what do you think they will do when panic sets in? Then after that we have a few more levels to go through, interesting times.
October 5th, 2007 at 9:16 am
Realist:
You really shouldn’t post comments. You obviously have no idea.
October 5th, 2007 at 9:22 am
I agree with ROC here,
people who think that Median Income will equate to Median house price are totally insane
you need to look at the supply of houses…… there is not a house for everyone in Orange County
you need to take the supply of houses and then divide by the total population in Orange County
let’s say, just to stupid here, that percentage is 50%……. then you need to look at the top 50% of wage earners….. take that median salary…. and then determine their affordability….. then you have a way more realistic median for where home prices should equilibrate to…..
unfortunately this still does not take into account all the people who will never leave southern california living in houses……. you really need to take them out of supply……….
in addition you also have to take into account all of the hotshots from other places moving to southern california with good salaries….. let’s face it this is a desirable place to live… there will always be an influx of people
I think that the Median home price will continue to drop….. that is pretty clear
but thinking that it will drop to a poing that equlibrates to median income of 75K is not very realistic
October 5th, 2007 at 9:25 am
Patricio,
Is that a real question? Panic has set in - for some.
I like Samson’s take on this whole thing. He knows what he wants and what he wants to pay for it. I admire that he put some work into arriving at his conclusion, rather than holding out hope that a broad-based decline will drop something great into his lap.
I don’t care what state a market may be in, finding real estate is never an easy task. It takes planning, searching, budgeting, etc.
There is one hell of an opportunity coming - better get ready.
All I’m saying!
October 5th, 2007 at 9:25 am
ROC,
I have been an underwriter for the last 4 years for “A-paper” and Alt A loans. Out of the last 1200 loans I have underwritten, 36 of them were fixed!!! So there is your proof. People cannot afford a fixed loan, therefore a pay option ARM is all they can get into. When all of the ARM’s from 2 years start adjusting in the next couple of months we are going to see some drastic problems…
October 5th, 2007 at 9:29 am
Kim,
I don’t believe that for one second.
You work at an option-arm shop, apparently.
The true “A” paper client is not coming to your firm.
I would have accepted your answer if it didn’t sound so extreme.
October 5th, 2007 at 9:33 am
Who are these people who do not understand the terms of an option-arm?
I was in lending for many years, and I can tell you that 98% of people know their loan’s terms.
Are you telling me that bright people are going into homes knowing that they will use the negative amotization feature?
I simply do not believe this is a broad-based fact
October 5th, 2007 at 9:35 am
I knew to stay out of the market when our realtor and mortgage broker both told me that no-one gets fixed rate loans anymore, and that we didn’t need a down payment. After a little research I found out they were right, so we decided to rent a little longer, thinking (correctly) that what other people do definitely affects us.
As to the fear thing, fear is what drove prices up. Fear will drive them back down again.
As far as my personal entry point, our 2-year lease ends in March. We’ll not renew for another year, instead going month-to-month. When I find a nice house that seems like a good deal compared to renting the same house (less than 50% more per month), in a neighborhood where other people with similar income to us live, I’ll buy it. Ultimately the price of the house is irrelevant - if it seems like a good deal and we can afford it we’ll buy it. It’s simply not possible for a couple making almost double the median income to be priced out.
October 5th, 2007 at 9:38 am
Roc,
No, what I am telling you is that 90% or more of borrowers are getting into ARM loans because fixed loans are out of the question. And NO most people dont know what the hell type of loan they even have because we go through only brokers, not borrowers. We are not retail, but wholesale. I’m not arguing with you, I am stating a fact.
Most borrowers with great credit and money down normally go to banks with great rates, not lenders like Ameriquest, Argent, Countrywide and SFC. But I have worked for all of them and they all operate the same.
We’ll see what happens….
October 5th, 2007 at 9:39 am
“As far as my personal entry point, our 2-year lease ends in March. We’ll not renew for another year, instead going month-to-month. When I find a nice house that seems like a good deal compared to renting the same house (less than 50% more per month), in a neighborhood where other people with similar income to us live, I’ll buy it. Ultimately the price of the house is irrelevant - if it seems like a good deal and we can afford it we’ll buy it. It’s simply not possible for a couple making almost double the median income to be priced out.”
Well said. This too is a plan.
October 5th, 2007 at 9:39 am
John raised the bloody red flag! What happened to my green arrow?
October 5th, 2007 at 9:39 am
Psssst Roc, I would have to disagree.
http://biz.yahoo.com/brn/070326/21330.html?.v=1&.pf=loans
October 5th, 2007 at 9:40 am
The most important number in this set is volumes. The new homes are priced almost 35% lower than last year, and their volumes are off by less than 6%, which means they are realistically priced to sell in the current market.. Resale SFR home volume is down over 40%, which indicates that SFR pricing doesn’t match market conditions.
Very clearly, the new home volumes show that there are plenty of buyers out there, provided the pricing is right.
October 5th, 2007 at 9:40 am
Kim,
What do you believe the mortgage co’s are going to do if the government changes the bankruptcy laws, and allows judges to markdown mortgages to affordable levels?
BTW, I am for the most part, a libertarian type a guy, but I actually think this is probably the best way to keep people in their homes, and make certain that the loose lending standards don’t come back. Make the investors in the CDO’s the bagholders.
October 5th, 2007 at 9:45 am
ROC is our new ezbabbler he would babble on for hours
saying nothing of relevance- just unsubstantiated rhetoric
hell even he finally saw the writing on the wall an