Market watcher Steve Thomas at Re/Max Real Estate Services in Aliso Viejo has a new stat out: foreclosures and short sales listed for sale — what I’m calling distressed properties — as a share of total for-sale inventory by major O.C. communities. Short sales are where the bank agrees with a troubled borrower to take less than the loan amount due at sale.
The report (derived from MLS listings) shows that as of last Thursday, Santa Ana’s home inventory had the highest share of distressed properties in O.C. at 32.8%, just ahead of Anaheim at 32.6%. While we’ve discussed mid-county housing woes before, it’s noteworthy that the next two communities with high levels of distressed property for sale were Rancho Santa Margarita (31.3%) and Lake Forest (29.8%.) Read how beach towns fared HERE.
Overall, Thomas found 17.5% of all O.C. inventory was of the distressed variety. Here’s a look at the distressed property count and share of inventory by key O.C. neighborhoods ….
| Community | Distressed | % of Inventory |
|---|---|---|
| Santa Ana | 539 | 32.8% |
| Anaheim | 423 | 32.6% |
| Rancho Santa Marg. | 108 | 31.3% |
| Lake Forest | 131 | 29.8% |
| Laguna Hills | 60 | 25.4% |
| Foothill Ranch | 22 | 23.2% |
| Garden Grove | 177 | 23.0% |
| Aliso Viejo | 100 | 22.6% |
| San Juan | 66 | 21.7% |
| Buena Park | 74 | 21.1% |
| Mission Viejo | 113 | 19.4% |
| Ladera Ranch | 65 | 19.2% |
| Talega | 33 | 18.3% |
| Westminster | 50 | 18.0% |
| Tustin | 104 | 17.7% |
| Laguna Niguel | 90 | 17.1% |
| Portola Hills | 9 | 17.0% |
| Costa Mesa | 79 | 16.7% |
| Orange | 120 | 16.0% |
| Fullerton | 101 | 15.7% |
| La Habra | 49 | 15.3% |
| Placentia | 38 | 14.8% |
| Fountain Valley | 26 | 13.7% |
| Brea | 24 | 12.3% |
| Anaheim Hills | 37 | 12.0% |
| Yorba Linda | 50 | 10.8% |
| Cypress | 18 | 10.3% |
| Huntington Beach | 91 | 9.7% |
| Irvine | 103 | 9.4% |
| San Clemente | 53 | 9.2% |
| Coto De Caza | 14 | 8.5% |
| Dove Canyon | 4 | 8.2% |
| Dana Point | 18 | 4.9% |
| Villa Park | 2 | 4.3% |
| Seal Beach | 7 | 3.8% |
| Corona Del Mar | 3 | 2.2% |
| Laguna Beach | 6 | 2.1% |
| Newport Beach | 9 | 1.7% |
| Newport Coast | 1 | 0.6% |
| Laguna Woods | 2 | 0.5% |
| All of O.C. | 3,059 | 17.5% |
| By price slice | Distressed | % of Inventory |
| O.C. $0-$500,000 | 1,833 | 30.1% |
| O.C. $500-750,000 | 1,052 | 17.1% |
| O.C. $750k-$1million | 154 | 6.7% |
| O.C. $1-$1.5 million | 54 | 3.6% |
| O.C. $1.5-2 million | 10 | 1.4% |
| O.C. $2-4 million | 3 | 0.4% |
| O.C. $4 million + | 0 | 0.0% |
As for the overall inventory trends, Thomas says …
“The bottom of the financial crunch, in terms of demand (escrow activity), was about a month ago. Demand, the number of homes placed into escrow within the prior month, increased from 1,113 homes four weeks ago to 1,241 homes today, that’s an increase of 128 homes, or a 12% increase. With the start to the Holiday market, it looks as if many homeowners are opting to pull their homes off of the market. The active inventory dropped by 305 homes in two weeks to 17,454 homes.
With an increase in demand and a drop in the inventory, market time (time to sell all inventory at current new escrow pace) decreased from 15.11 months two weeks ago to 14.06 months today. Last year at this time there were an additional 746 escrows within the prior month, the active inventory was at 14,729, or 2,725 fewer homes, and market time was at 7.41 months. Two years ago, there were 9,195 fewer homes on the market, 1,509 more escrows within the prior month, and the market time was at 3 months.”
jon what is 7+4 equal to? don’t make me do addition please.
it is now 9:30am.
rants is getting lonely in here.
i think the market is going to hit bottom now.
Interesting data. It would be nice to see it further split by Condo vs SFR. The price stratification implies that it’s more pervasive in the condo sector. This also implies an affordability problem given the the coastal & more affluent sectors have barely been impacted by this.
14 months is still too much inventory for this season. If the % of distressed properties continues to grow, 2008 may very well be the year that we see shaper price declines. It feels like many parts of the OC market has turned from spectator sellers to forced sellers over the course of this year. Forced sellers lower comps
the resale housing market has a new competitor…
builders already adjusting their price to move inventory…
banks are adjusting prices to move inventory…
pressure to sell…
no pressure to buy…
same question…
how do realtors and sellers sell homes in the oc without creative financing?
realitycheck is right- or at least I agree.
More inventory, more competition, more days on the market, fewer financing options means somethings got to give.
Simple economics, excess inventory equals lower pricing.
Bottom is probably not near yet because most people, including reo’s, are going to hold to as much value as they can… even if the value is not there. It may be called greed, but it is also the propaganda that has been fed to us all that the “value is there.” Apparantly it is not.
The bottom of the financial crunch, in terms of demand.
This guy should read some of the financial papers. The Mortgage insures are ready to go belly up this week. I’m sure this will help liquidity.
Were in the early innings of the game and this guy is saying it’s over?
Great data, thanks Jon and Mr. Thomas.
Gosh, that report made me hungry…
FYI: prices have already dropped. If prices “stayed the same” as the dollar devalued, your home has lost value. Check what your house was worth a year ago in Canadian compared to now (hint: dollar has dropped over 10%; almost 15% vs. the Euro; .)
People make statements about the economy based on the stock market reaching new highs, but if the dollar drops the stock market MUST increase in order to break even. Same for real estate.
Sorry to add to the gloom.
Yes, it would be nice to see these numbers split into condos and detached homes.
Sadly, the Register won’t or can’t report on the bigger condo story brewing in OC. Lennar has just announced that it has halted all sales at its Central Park West development in Irvine. That includes the high-rise luxury Astoria tower, as well as 500 other mid-rise units nearing completion across the street. Lennar has closed its Living Studio sales center for CPW, while it finishes completion on the current buildings in early ‘08, and then seals the buildings and puts the homes into mothballs to await an upturn in the market in ‘09 or ‘10 or ‘11.
And that news from Lennar comes one week after the Register was silly enough to put a picture of Central Park West in its story of how the loss of 16 (sixteen) homes in the OC wildfires may spur interest in condo sales. What exactly are they putting in the coffee makers at the Register’s office?
Lennar has also stopped construction on its bigger Platinum Triangle development in Anaheim, and has halted preparation work on its even bigger Great Park property in Irvine.
Just the recent actions and announcements by Lennar regarding its Irvine and Anaheim properties it is now shelving is huge. Nevermind similar announcements coming from other OC luxury condo developments from D.R. Horton, or few sales for those Skyline towers near South Coast Plaza. And then there’s the entire SunCal mess near Disneyland that is also imploding in on itself to Disney’s delight.
But the Register won’t or can’t report on this big story. See the front page of todays Orange County Business Journal for the for the interesting story on Lennar about their mothballed high rise towers and the halt to sales at Central Park West. That corner of Jamboree will soon look eery with mothballed high rises and abaonded luxury housing. We’re ready for that story when you are, OC Register.
What is inventory going to look like in August of 2008?
25,000 homes?
attaboy Troy. that is huge news. I work just down the street from the Central Park West development — a development premised on the sales at Marquee Park Place just across the street, sales buttressed on flippers and bubble buyers. What the OC Register should do is revisit their Marquee Park Place article, which starred some twenty yr old “broker” crowing about his killer investment there. Now look at you all: Lennar has turned on the lights exposing all you naked folk! Oops, but Lennar is just as naked.
The whole idea of an “urban” lifestyle at the corner of Jamboree and Michelson kills me. Try walking around here, this ain’t Manhattan.
I wonder what this means for the “Great Park.” Irvine should have held off buying that balloon.
shame on the realtors, if it hits 25,000 homes for sale…
while they wait for creative financing to return… people will continue to lose their homes.
face the facts… creative financing is gone and will not return.
still affordability…
My guess is that the residents of the wealthier areas are looking at these tables and thinking…..good this problem will not hurt my home values……good thing I purchased in a desirable area. We will not know if this is the case or not for another year or two. My hunch is that as time goes on we will find that all areas of OC were impacted by the housing bubble and that there will be distressed properties in all demographic and economic areas……poor to rich……… Santa Anna to Newport Coast.
realitycheck,
I agree….. i think we might be seeing realtors chase the bottom….. by not decreasing prices faster they might actually be hurting their clients
The bottom fill out yet Sun-Cal and the City of Anaheim still want to build slum housing next to Disneyland and Anaheim stadium. LOL
——————————————————
COMMENT #25,000
THANK YOU, BULLS & BEARS !!!
Jon
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NanoWest Says:
November 5th, 2007 at 12:19 pm
My hunch is that as time goes on we will find that all areas of OC were impacted by the housing bubble and that there will be distressed properties in all demographic and economic areas……poor to rich……… Santa Anna to Newport Coast.
Nano West your hunch is correct. The way it works is that there are roughly two types who are in trouble with their mortgage at this point:
The first group are the folks who had minimal savings, income and credit, just managing to qualify under “aggressive” mortgage financing - they fell immediately since their little remaining credit was most likely exhausted with the few new items of furniture they purchased right after closing.
The second group also stretched into aggressive mortgages, but they are “professionals” with savings, 401Ks and non-real estate credit lines which are right now being rapidly being drawn down each month to stave off public humiliation. (don’t for get to multiply the drawdown rate by the number of investment condos they purchased).
When the reality of how just long it will take for prices to “recover” those folks will stop wiping out their credit (and kids’ college funds), quit the cocktail party chatter about those “stupid subprime borrowers” and quickly point out that bankruptcy is a “respectable financial option in the modern economy.”
Don’t worry, NanoWest this one will drag on long enough for everyone’s dirty laundry to get exposed.
sidewatcher,
you are sort of funny and disturbing at the same time…. nice work
Could have we put a more negative title on this article?
How about this title: Newport, CDM, Laguna Beach don’t have any distressed home problem.
YET…Jimmy….yet.
Hey Jimmy,
Let the bears have their blog It is written by and for extreme bubbleheads. By posting here you are actually perpetuating their philosophy and talking points.I don;t know if you have noticed but the tide is slowiy, ever so slowly, changing to a more stable market. We are obviouly not there yet but light is at the end the tunnel. Why waste your time posting here and giving bubbleheads energy and credibility. Its a worthless use of your time
Jimmy,
right now 2.2% of inventory distressed…….
lets look at sells volume though… rather than the large inventory
how many homes are selling in CDM per month these days?…… 20 homes or so per month?
3 homes in distress……
Does anyone know where to find the results of the auctions conducted by REDC or Hudson and Marshall for SoCal? I don’t like waiting for it to record and don’t have time to attend.
it’s not just the number of distressed sales on the market in Santa Ana and Anaheim, but it’s the fact that there are so few sales that is distressing.
Per MLS, in Santa Ana, there are about 1,644 homes and condos on the market. During the month of October approx. there were 33 closed sales which works out to about a 49 month supply of homes available for sale. Anaheim with an approx. 25 month supply isn’t much better off.
And as to the Marquee Park Place, per MLS there are 40 units for sale, 1 currently pending sale and no closed sales in the past two months. Can inventory be infinite??? (40 / 0 sales lol).
that is the problem…
realtors do not want to discuss this topic… they think the problem is not theirs to resolve…
or it does affect the neighborhood that they live…
when creative financing was available… all a realtor needed to do was to open the front door and the house was sold.
maybe raise the commission to 10% and the realtors will work a little harder..
when the going gets tough… blame the buyer…
Is it just me or this blog full of extremist: those who either claim the world is ending (e.g Nanowest & Slidewatcher, are you kidding?) or those who totally ignore realty? House prices are falling and will likely continue to fall, less so on the coast. It is unlikely that they will fall 40, 50%+ from current levels and if they do so, housing prices will be the least of our concerns.
On the other hand, you cannot ignore trends in increasing inventory, dlinquency/foreclosure rates, declining affordability, higher unemployment, and the risk of an impending recession. Price declines have traditionally occurred over the course of several years. It would be nice to see more objective discussion here.
The bottom is here, most that are posting here are just upset they missed out in 2001 and can’t afford anything decent in OC.
There is plenty of affordable mortgages out there with 10% down, average credit scores, with some proven, some stated income, with rates
Sick_Of_Bears,
when did you buy?
It’s nice to see some bulls posting.
so you think inventory will be lower in August 2008?
the subprime mess won’t peak next summer?
Some of my post got eaten.
The point is that so-called creative mortgages are here to stay, at least in OC. If you want to buy then be prepared to pay 10 times your income and use a “non-traditional” mortgage. That’s how the game is played now.
All of this longing for the good old days of proven income, asset verification, and 20% down are long gone. Live with it or rent. Those are your two choices.
Subprime will affect the loser areas that no one here would ever want to live in. If you want to take advantage of the subprime mess go to the Inland Empire, Las Vegas, or Bakersfield. Otherwise deal with the fact that OC costs more now, and will forever.
With all of this doom and gloom existing SFR prices (not builder’s fire sales) in areas where decent people would want to live, has gone down 5% at most. Yes the gang infested areas have declined, what did you expect!
here is Lennar’s spin straight out the OC Biz Journal:
Central Park West’s location and unique design should command premium prices, Haddad said. Four of the six home types being built at the project, including the high-rises, have starting prices near or above $1 million. Two other home plans start in the $700,000s, according to Irvine-based Hanley Wood Market Intelligence.
“For that location, the last thing we want to do is engage in a sale program that (emphasizes) heavy discounting,” Haddad said.
This is hilarious: Lennar is engaging in the same shenanigans as the investment banks: just as the banks would rather not admit to horrific losses so that they continue to represent their mortgage-backed debt as sound so does Lennar continue to dream that their folly in developing Central Park West based upon trees-will-grow-to-the-sky flipper prices paid at Marquee Park Place will one day be solved by some sort of market turnaround: as if this market could ever turn back to 750K for smallish apartments gussied up with granite counters: talk about lipstick on a pig!
I suppose that after sufficient debasement of our currency, one day these 2-bedroom closets will be worth 750K, but that will not save Lennar from colossal losses: they financed this deal with current dollars, not in-the-year-2017 dollars. Koolaid drinkers are at all levels in this society.
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AsIseeit,
One of your points of view that I don’t understand is why you think anyone would care if home prices went down 50 % in orange county….who cares? Your statement ………..”housing prices will be the least of our concerns”………………..baffles me. Housing prices falling 50% would mean a reversal of 3 or 4 years of application, why would this be a problem for anyone? For some reason I get the idea that you think the financial world is centered around orange county home values.
I do feel sorry for the professionals such as real estate agents, mortgage brokers, title companies and other real estate related industries that have substantially reduced incomes. However, most of these professionals are very smart and must of known that the bubble would burst at some point. I am sure that they saved a lot of money to get through the tough times that occur when a market slows down.
Such a revaluation of market value would have zero impact on me or for that matter anyone that purchased before 2002. For those that purchased after 2002 then it is only a problem if they can’t afford their mortgage or they have to sell their home. No big deal here.
creative financing…
fool me once… shame on me.
fool me twice… shame on you.
wallstreet and the banks are not supporting it…
maybe the realtors can start putting their own money up… its easy to spend someone elses money…
Sick_of_Bears,
where are you getting your credit information?
You are seeing people get loans 10 times their income?
are you sure that is even possible?
Yes people are making purchases like this every day in OC. Go call any mortgage broker. Lenders have had to adjust to the fact that this isn’t Arkansas. People around here make it sound like you call for a mortgage nowadays and the person on the other end of the phone says, “Sorry, morgages are not avaialble anymore, you must pay cash”. Give me a break. Are the 100% LTV liar loans gone, yes they are. Lenders realize that NO ONE in OC can afford to put down 20% on a decent house. The lenders have had to adjust to the new reality. Things are never going back to the “good old days” of 80/20 proven income loans, never!
Educate yourself, don’t listen to the bears around here.
“Lennar has just announced that it has halted all sales at its Central Park West development in Irvine. That includes the high-rise luxury Astoria tower, as well as 500 other mid-rise units nearing completion across the street. Lennar has closed its Living Studio sales center for CPW, while it finishes completion on the current buildings in early ‘08, and then seals the buildings and puts the homes into mothballs to await an upturn in the market in ‘09 or ‘10 or ‘11. ”
Now that is very interesting news. One wonders what the objective is. It may not be all that stupid of a move, for a few reasons:
1) If Lennar dumps these properties now there is the potential that it will show up on their balance sheet as loss, which they deffinitely do not want - moving that loss to other quarters may help moderate short term effects to the company’s market position.
2) Dumping these units into an environment where inventory is already bloated will only put further downward pressure on prices, and I think it is a fair bet that Lennar does not want to do that. I would not be surprised to see other builders doing this same exact thing… because they will all be furiously doing the math on the carrying cost of these properties vs. the probable costs associated with liquidation of this excess inventory. They may just decide that carrying cost is lower, especially if they expect to see a rebound soon. In fact, they may be doing this to try and spark a rebound, especially if they believe, as many of these guys seem to, that this is all just bad attitude and there is no real structural reason behind the market conditions right now. If a Jimmy were sitting on 1000 homes he could not sell for some reason… I would not be surprised to see this kind of move. After all, in that market view, the market CAN absorb these units… it just doesn’t want to for some reason. Dropping supply to increase demand pressure and hold up prices is not something too far fetched for that kind of mindset.
3) Lennar could also be banking on erosion to the dollar and ensuing monetary inflation… in which case the real dollar denominated debt cost of these properties will be much lower in 2010 or so than they are today.
That’s an interesting move I totally did not expect.
Sick_of_bears does not understand what it means when the CEO of Citibank gets fired for losing billions of dollars as a result of mortgage investments. He does not understand what it means when the CEO of Merrill Lynch gets fired for losing billions of dollars in mortgage related assets.
Sick_of_bears…….what this means is that wall street does not think that homes are worth as much as people were paying for them. Wall street is preparing to lose more and more money over the next year or so…………..this means that loans are drying up….its actually pretty simple to understand.
The Fed is giving the banks and Countrywide plenty of money ($41 billion last month) to keep making loans. No Wall Street money necessary.
listen to the realtor… who stears the buyer to a creative finance package… who instructs the appraiser to overvalue the home…
commission earned…
the buyer… who cares… what happens to them…
creative financing… a good deal for the realtor…
that’s all they got…
Sick_of_Bears,
August 2008 is going to be ugly.
I hope you bought in 2001 and not 2004…… if you bought in 2005 / 2006 you should not even be posting here.
“no wallstreet money necessary”
again spending someone elses money… the taxpayers…
Shiny said: “I suppose that after sufficient debasement of our currency, one day these 2-bedroom closets will be worth 750K, but that will not save Lennar from colossal losses: they financed this deal with current dollars, not in-the-year-2017 dollars. Koolaid drinkers are at all levels in this society.”
Not that I am a fan of currency debasement, Shiny, but I think you are incorrect here. You assume that devaluation of currency happens in a static fashion with no follow-on effects. But that’s not typically true. What typically happens is that davalued currency = more currency in circulation = inflation in consumer and asset prices . The end result is that a dollar denominated debt of $60000 (price of a house in 1985) winds up being the same debt in 2007… but $60000 in 2007 is trivial. The debt doesn’t change, but inflation alters the current debt burden dramatically.
If, and I am being hypothetical here… IF someone were to expect an inflationary episode and perhaps a concommitant weakening of the dollar… then holding a debt and liquidating it later is not really all that dumb.
To illustrate a different way: I make a heck of a lot more money today than I did 10 years ago. Oddly, it really doesn’t go all that much further thanks to inflation… but that $4000 debt. I had from 1997 is sure not much in terms of percentage of my total income now. Heck, if I were a business and I chose to maybe write that debt off… it would be nary more than a blip on my balance sheet.
Put yet another way, Lennar is choosing to be long with their holdings, assuming that the cost to carry the liability and elliminate it later will be less than the cost associated with doing so today. And for a lot of potential economic scenarios, they could be right.
I understand you are all upset. I may not agree with what is happening, but it is the truth. The Fed will do whatever it takes to prop up home values. If that means printing money and giving it to Countrywide or lowering interest rates to zero they will do it. That is a fact.
Sick of bears-
Sorry in the business and your statement is incorrect. They are not getting those loans and if you look at the sales number you can see for yourself. Why wear pink colored glasses when it’s so nice outside?
The sunset of 10 times your income home loans is already set. It was beautiful though but so is the sunset after they fire one of those ICM ballistic missles from Vandenberg.
Correction is definitely 40% across the board in all areas. Citi just confirmed it via Mr. Princes new VM.
thomas, wrong.
If you own a property on mostly borrowed money, inflation sticks the loss on the bond holder because that debt will trade off. You, as the owner, are short the debt, so you win, and win big. That is why OC homeowners have done so very well. Inflation is running high, certainly higher than the CPI. That is why OC properties are up so much. Forget all the bubble talk. That assumes inflation is a minor issue. Not the case. Just look at you food and gas bill. Case closed.
Thanks for the kind words shiny, rants, and others. For a while here I thought I was the only one who felt that Lennar’s 180 degree turnaround in the OC market was really big news.
Just the simple fact that the Astoria luxury towers will now sit next to the freeway for the next few years vacant and in mothballs seems like a big story to me. How creepy is that going to look? Like those big skyscrapers that Kim Jong builds in Pyongyang North Korea, but then doesn’t have the money to furnish them or the electricity to light them. Astoria will just sit there in the middle of Irvine’s snazzy “business district” darkened and mothballed.
Then add in the surrounding Central Park West mid-rise “luxury” buildings also sitting sealed and vacant, and that entire property will be a living testament to how quickly and severely the OC real estate market has flipped. And I agree with you shiny, the kids across the street who bought glorified apartments in Marquee Park Place will look out their windows at the Central Park West ghost town and worry. As well they should.
But I ask yet again, where the heck is our once-great local newspaper covering this story?!? The Lennar angle alone with Central Park West, Platinum Triangle, and now Great Park is enough for a major article. But add in the SunCal implosion near Disneyland, the rest of the Platinum Triangle woes, and the one-offs also struggling like Skyline at South Coast Plaza, and all of those stories should equate to a major expose’ that runs for several days from the Register’s front page. Instead we get the same tired articles about charity fun runs and pumpkin pie recipes.
I used to think so highly of the Register, but in the past few years I’ve changed my tune. Sure the Corona story is big this month, but the LA Times has already run circles around the Register’s tepid coverage on that. And now there’s this BIG, FAT real estate business story sitting right under their noses and the Register has thus far ignored it. I’m just a regular guy with a laptop computer, but where are the real journalists covering this story? How very odd.
But not as odd as a 15 story luxury condo twin-tower put in to mothballs in Irvine.
not sure where the $41 billion number came from???
looked on countrywide’s site… no info on their press releases…
but here are the early numbers from moodys.
Moody’s Economy.com projects that more than 2 million mortgages worth about $450 billion will default. Even after homes are sold at foreclosure auctions, investors are still likely to be hit with nearly $150 billion in losses, according to the forecast.
the financial markets are still adding it up…
but if you got the answers… give them a call…
First off Troy, nice work.
Secondly, if people on here think this is the proverbial bottom, well guess what we are going to do this all over again and call a new bottom in 2008. And then more and more and more and then 2009 will come, this is NOT the bottom and we have been hearing that bottom crap for far too long.
Here is a hint, when affordability and the savings of the people in OC support the prices, you will see mild growth yoy. That aint anywhere near here now.
Sick of Bears….
you are kind of funny….
you don’t like the Doom and Gloom that half the people post here….
yet you basically post the same type of gloom and doom with:
“10 X income loans”
and
“the Fed giving away ‘free’ money”
Don’t you realize that is a route to financial chaos?
you are basically a Doom and gloomer yourself
I see the IT crew at The Register negelcted to reset the clock.
I’m not saying it’s right, but it is reality. It’s happening right now, as we speak. Go read the Bloomberg link I posted. Whether it’s a “route to financial chaos” is up for debate. But it is obviously Fed policy, and it will continue.
Why is 10 times income for a house doom and gloom? Again, it is reality. It is what people are buying houses for. The number of transactions is down, but it isn’t zero. People are paying that price. If they weren’t you would see much lower median price drops, and you are not.
I have a family member that works for Lennar. Lennar is currently cutting back drastically on its employees. Phasing out departments and relocating the ones left to centralized locations. They have quietly gotten rid of thousands of employees over the last year. Another phase will happen around December 31 of this year.
Also, they will not complete any more phases out in Orange. Lennar is bleeding money right now. I don’t think they have the money to complete anything at this point even with steep discounts.
What you see with Lennar is what you will see with all large builders: lay off the employees, mothball the properties, and wait it out while the Fed loans them cheap money.
And to think so many of us here hadn’t heard of the Lennar news until I mentioned it this afternoon. Just a guy with a laptop and a bowl of Haagen-Dazs here. ;-)
For what it’s worth, a week ago I did actually write a polite email to Mr. Glenn Hall, the “team leader” for the OC Register Business section. First time I’d written a newspaper in years. I told Mr. Hall that I found the quick turn in the OC luxury condo market to be an interesting and alarming story worthy of mention by the Register. I even provided Mr. Hall with some leads on recent public statements from Lennar to the Anaheim Planning Commission regarding the Platinum Triangle and such.
I thought it was an important and interesting story that was worthy of at least one or two articles in the Register, and let Mr. Hall know as much. I never received a reply from Mr. Hall or anyone from the Register staff; not even an automated form letter back.
That email was a week ago, before Lennar announced halting all sales at Central Park West and putting the Astoria twin-highrise in mothballs. Maybe now the Register staff might deem it newsworthy? Just the question of how Lennar plans to maintain security and cleanliness at that abandoned housing development for the next few years is a question of importance, at least to those who live and work near Central Park West. Or are we going to open the newspaper tomorrow and find more holiday pumpkin pie recipes instead?
Sick of Bears
What fool would buy a home at 10 times income now that it is painfully evident that rapant appreciation and easy refi’s are as extinct as the typewriter. Lets do some math here:
1mill home = 900k mortgage @ 7% is 5987.00 per month. Add another 1000 for taxes and 200 month for insurance. Now we are at $7187.72 per month. 100 k income is only 8333 per month. He doesn’t even have gas and utilities left over let alone any income taxes. Please post sense, not nonsense.
10x income for a house is not normal here - it only came about during a bubble built with mass speculation and ridiculous lending practices.
There is a premium to live here, but historically the median income/home ratio here is less than half of 10 - that’s where it was up until the bubble took off early this decade.
OC was a good place to live before the bubble. Nothing changed except an influx of ill-advised mortgage funding.
Patty is angry because he can’t afford a nice house. I bet the bottom will come when he can afford a nice home with a mortgage that is 3 X his salary. Life is so unfair.
Sick_of_Bears,
Reality is that sales volume is because people can no longer get fantasy loans………….foreclosures are high, inventory is high….. and both are only getting larger……… if you look at the Data….. the peak of the subprime resets is going to hit in March 2008…… add on about 3 months for people in distress to miss payments…. and next summer is going to be ugly for the OC housing market.
is it the end of the world? no….. markets have cycles…… we are in down cycle……
Sick_of_Bears,
Reality is that sales volume is low because people can no longer get fantasy loans that they can not afford………….foreclosures are high, inventory is high….. and both are only getting larger……… if you look at the Data….. the peak of the subprime resets is going to hit in March 2008…… add on about 3 months for people in distress to miss payments…. and next summer is going to be ugly for the OC housing market.
is it the end of the world? no….. markets have cycles…… we are in down cycle……
Damn Shockg, even a busted clock is correct twice a day, a busted clock has more accuracy than you….sad.
I think the Fed controls the interest rate charged by the FHLB, but who cares anyway, there’s no difference, just alphabet soup. The policy is the policy, it may not make sense, but it is what it is.
The cheap money will come back with a vengance - it already is. People won’t have to pay 7% on a $900k loan, they will pay 2% interest only and sell out to the greater fool. That’s how you pay 10x income for a home.
Jimmy,
while I think you have made many interesting points on inflation, I don’t believe “That is why OC properties are up so much.” At the very best, inflation is an argument that supports prices not falling going forward. By most measures (whether you agree with them or not) inflation was relatively tame during most of the late 90s through 2005. I agree that inflation is now the greatest risk to this economy next to a recession. Having said this, I think we are in unchartered territory relative to affordability and credit. Because of this, I think the extent of home price changes will be local.
Yeppers. Sick of Bears cannot handle it.
I just love watching him/her/it squirm in agony as houses plummet.
Probably yet another out of work realtor with absolutely nothing to do.
Munching on my popcorn. Biding my time.
;)
Sick_of_Bears…….
2% interest only on a depreciating asset?….. 10 X income?
yep…. banks are lining up for that deal
Banks are in the business of lending, give them cheap money and they will lend it - and sell the loan to Fannie Mae. A riskless exercise.
Cheap money will inflate the housing assets, not depreciate them…
so if i drink the kool aid…
my 20% down… will get me an interest free loan?
Mav’
Jimmy ignores any attempt to help him see the reality of CDM.
He says CDM is immune to what is going on EVERYWHERE, while the numbers and the real situation show BIG problems for CDM.
A few days ago I posted here showing Jimmy there were 148 listings in Corona del Mar and that there were 5 (FIVE) sales in the 22 business days leading up to October 16th. Twenty-two BUSINESS days. There’s your month and there is your answer. FIVE lousy sales.
It’s getting worse by the day. Today there are 152 listed properties in CDM, up from 148 of a couple days ago….don’t know if any of those 5 ’sales’ fell out, but of those 152 listings, 62 have reduced their prices
and you will find many homes have been on the market for months.
Hey, Jimmy has a problem with the math, but at about 5 sales a month how many months should it take to unload those 152 listings?
Kind of puts a different perspective on the significance of those 3 foreclosures too, huh?
Jimmy wasn’t paying attention during the 90’s when the high end got walloped. It just takes a bit longer to work it’s way there.
Maybe the earthquake starts inland a bit, but the tsunami decimates the shoreline.
Sick_of_Bears… you are smoking some crazy stuff
it’s like you are capturing / summarizing what happened in 2004 - 2006
forgetting what happened in 2007
and then living in a fantasy land
Sick_of_Bears,
“Banks are in the business of lending, give them cheap money and they will lend it - and sell the loan to Fannie Mae. A riskless exercise.”
is that why US banks have lost 30 - 50% of their value on Wall Street this year?
riskless? hardly
LOL! Sick of bears. What ever you are smoking I want some!
Let’s take a look at the last “crash”. Median California home prices from 1985 to 1991 - a 67.4% increase:
1985 $119,860 4.9%
1986 $133,640 11.5%
1987 $142,060 6.3%
1988 $168,200 18.4%
1989 $196,120 16.6%
1990 $193,770 -1.2%
1991 $200,660 3.6%
And now the “crash”. Median California home prices from 1991 to 1996 - a 11.7% decrease:
1991 $200,660 3.6%
1992 $197,030 -1.8%
1993 $188,240 -4.5%
1994 $185,010 -1.7%
1995 $178,160 -3.7%
1996 $177,270 -0.5%
After 1996 the median price has increased every year. Anyone that is expecting anything more than a 10-15% decrease is smoking something.
# Patricio Says:
November 5th, 2007 at 5:33 pm
Damn Shockg, even a busted clock is correct twice a day, a busted clock has more accuracy than you….sad.
—-
Just an attempt to lighten things up here a bit — but the busted clock on the blog (Still set for daylight saving time) isn’t going to be correct even ONCE a day, let alone TWICE, until someone resets it. :)
What a stupid thread. I can buy any home I want tomorrrow morning at 10 times my income, with or without a large deposit. Ignorant bears think everyone’s poor. As for Central Park West - dream on. Just like The Irvine Company, they’ll wait instead of donate. Pick a less desirable place for your fantasies.
I spent the weekend in St. George, UT. Met several friends of friends. All have second homes there. All of us are chomping at the bit to pick up properties. Baby boomers rule. They will snap up what’s worthy - and leave the scraps for the rest. Sorry, you will have to get up early in the morning and pay your dues for years and years and years to compete with us.
Sick of bears
Guess I can’t argue with logic like that. You and Arthur ought to get together and see if loans to illegals and space aliens can be paid back with klingon dollars.
Sick-of-Bears…….
You either weren’t here or you slept through it.
1990-97 saw many good areas drop 30-40% and it took 9 years for homes to return to the prices they had reached prior to the drop.
Your median price figures have NOTHING to do with the change in valuation of a specific home — true then and true now.
Sick_of_Bears……
gone from being a bull to predicting a 10 - 15% decrease
Truthiness,
Good luck tomorrow morning on you 10 X income loan application…..
wear your best suit ! smile a lot !
The gang infested areas will go down a lot. The places in OC where decent people want to live with hold. Supply and demand.
Sick_of_Bears,
I’d agree with you…. if your interest only, 2%, 10X income loans weren’t a pipe dream
Truthiness
OK, give up the details. Use any home price you like. Heck pick a mls# and show us how you will buy it using 10 x your income without substantial cash. Otherwise see my last post to sickobears.
The 10-15% decrease is an average of the large declines in Anaheim and the increases in CDM, Laguna Beach, etc…..
usedtoreadtheregister- gee I hope you used to have a brain
as well.. you miss those days of front page headlines
NEW HOME PRICE RECORD… and gary watts with
his crystal ball leading the sheep to slaughter you miss
those days dont you too damn bad now get used to
dealin in reality
Last post for today.
Mav, the 2% loans are coming, the Fed will see to that. They will do everything in their power to keep prices where they are. Open your eyes, it is already happening.
Mav, I could apply in my pajamas and be approved for anything I want,. That’s what you don’t get. Work hard and play by the rules and over time you’ll get to this place. You dismiss my story from my weekend at your peril. Do you think baby boomers are all poor and clueless? Hell, 20% of my friends have planes. And I’m not talking billionaires. Just savvy boomers. And you would poop your pants at how many of us there are - and what risk we’re willing to take on. You might find a deal here and there - if you’re faster than us!
Sick_of_Bears….
haha….. is “etc.” supposed to stand for every other town that has declined in price and is building up inventory?
Truthiness,
I could buy a house with cash tomorrow….. but then that money would no longer be “Smart Money”
20% of your freinds have planes?………. now theres a smart investment
Mav, Mav, Mav, the planes are for lifestyle, not investment. So is the $200 bottle of wine with dinner and the $500 greens fees (for non-members). You’re quite funny. One day you will see. Work hard and play by the rules. Keep your nose clean and your head down.
haha, I think I already see Truthiness
the planes are to escape after your freinds mail in their keys when they default on 10 X income home loans
Jimmy said:
“If you own a property on mostly borrowed money, inflation sticks the loss on the bond holder because that debt will trade off. You, as the owner, are short the debt, so you win, and win big. That is why OC homeowners have done so very well. Inflation is running high, certainly higher than the CPI. That is why OC properties are up so much. Forget all the bubble talk. That assumes inflation is a minor issue. Not the case. Just look at you food and gas bill. Case closed.”
Jimmy Lennar does not “own” a property “on mostly borrowed money”. You are confusing the effect of inflation on properties owned by individuals with inventory owned by a corporation and the rules of the game are very very different. That said, you must be disagreeing with something you only thought I said.
Here is essentially what I said:
Lennar can sit on their inventory A) without paying property taxes or any of the things an upside down homeowner has to do on a depreciating asset and B) they can write off the entire carrying cost of that inventory every year on their books until such time that inflation has driven the selling price of homes sufficiently high to allow them to be unloaded at losses that, inflation adjusted, are small or nonexistent.
I really don’t see what you have to argue with me about. My statement is essentially that Lennar probably expects the market to change… either through significant monetary expansion inflation adjusting their debt burden, or just via a recovery - and they think the cost of liquidating their inventory now is greater than the cost of carrying the inventory until such time that they can sell it without realizing that loss.
How you of all people can find fault with that logic I am not sure… but be my guest if you must.
Truthiness: I guess the smart money knows better. yee haw! (having been to St. George, I would think that expression is familiar to you). Get them houses boomers! git some, git some!
Shiny, I have “comfortable” boomer friends all over the USA. Not everyone can have access to the elite areas I am referring to, so I can forgive your confusion. Trust me, that is living. They don’t require your affirmation.
Smoke em’ out Truthiness !!
Truthiness says: “20% of my friends have planes”.
Having a couple of friends in the Air Force Reserve doesn’t count as having planes.
Truthiness says:” I can buy any home I want tomorrrow morning at 10 times my income”
Truthiness, meet Mr. Foreclosure, you two have a lot to talk about.
You really are a twit aren’t you?
Questions I keep asking myself.
If people thought OC homes were a good investment, “why” did they stop buying them a long time ago, way before the credit crunch, when you could still easily get a loan with any terms you what?
Why are values dropping in most areas, not just areas like Santa Ana and the IE?
Why are so many people losing their homes?
Why are inventories so high?
Why are sales at historic lows?
Why is it that now just about everyone agrees prices will fall further, even those in the RE industry?
If 10x loans are available “why” are people not using them, even with some serious deals out there?
Prices on some homes are down over 100k “why” are people still not buying them?
Why are all the selling points used over the years and today turning out to be totally bogus?
What happens when the bubble drives prices to levels not supported by local incomes?
What happens after almost everyone is priced out of the market.
They don’t need Bill’s acceptance either. Then again, who does?
Truthiness-
He who knows he has enough is rich!
If your house is your most important possession then it is your prison.
Your house should be a hostel you stay in day after day.
So do you wear striped shirts a lot?
People who talk about thier money are usually pretty boring. You bore me! St. George is a retirement community, go play some bridge.
Sick of Bears. I take amusement at your numbers.
For the seven periods from 1985 to 1991 the CAGR was a mere 7.64% (At least better than a savings account)
(Compound annual growth rate AKA return rate, is a better measure of your overall return on investment.)
For the five periods from 1991 to 1996 the CAGR was a negative -2.45%
But overall the kicker is that for the combined 11 periods you attempt to portray as a huge increase and minimal loss, you neglect to note that overall if you owned a home during this time you would have received a measly 4.8% CAGR. You would in essence have made more money if you stuck your money in the bank. Once we consider upkeep and maintenance as well as principal, it would pretty much be a wash.
A couple of notes.
1) If you are trying to make a comparison, let’s try using similar periods. Using 7 periods prior to the crash and 5 periods provides an artificial sense of expansion. If you went back far enough I am pretty sure that you could have found someone in the 1800’s who sold a farmstead for $500. Does this mean they got a huge increase ? No. It means that the market increase was relative to the increase in fundamental values. Our first evidence that you are a scarlet deceiver.
2) If you want to venture into financial commentary land, then use financial methods. CAGR is a far more accurate determinant of financial gain than simply picking out the first and last numbers and calling it a 67.4% increase. It’s cute. But also painfully clear you know little about investment math.
Now about your numbers. There are some other factors you are forgetting.
Here is median California income and median California home price changes from 1980-1985:
Year Fam Inc % Chg. Home Pr % Chg.
1980 $21,200 N/A $99,550 N/A
1981 $23,300 9.9% $107,710 8.2%
1982 $24,300 4.3% $111,800 3.8%
1983 $25,200 3.7% $114,370 2.3%
1984 $26,400 4.8% $114,260 -0.1%
1985 $29,000 9.8% $119,860 4.9%
See how median family incomes rose at a faster pace than median home prices during this time period? This trend reversed itself (home prices grew faster than incomes) in the runup in prices prior to last bubble (early 90’s) bursting.
This is the case yet again. But this time the increase went up almost uncontrollably due to all the toxic loan products which are no longer available. Further driven by a faulty perception that housing only goes up forever, the general public became involved in a speculative frenzy that created an irrational exuberance which will most certainly leave a long lasting and severe correction in housing prices. In other words, for no good reason, people were paying 8 times what they paid for a house in 1980.
So although you might not like it, the reality is that you are probably a member of the real estate industry that propagated it, and so you and your cohorts made the bed. Now lay in it.
Such cognitive dissonance! Who would buy real estate in that nuclear disaster St George UT? This is not a thing of wisdom.
A rising tide lifts all boats, but a tidal wave approaches, folks.
Billy Bob, consider these numbers. A 200K NB home in 85 was worth 400K in 92. This is based on Newport Heights data. Consider one who put 10% down on the 200K home. He is up 31% per year return on his 20K investment. This 31% number comes from a 39% annual number adjusted for the mortgage payments. Then, when you consider the tax benefits, …
Jon, Your blog has officially been taken over by the lunatic preachers from the bubble blogs. it’s too bad you lost control of your blog. If you browse the end of the world blogs you will find the same idiots praying for the apocolypse. Do you guys ride around town on 10-speeds wearing cheap suits going door to door preaching about the end of the world?
Shockg, riighhht…..we have all lost it. You can see the stark contrast between the bulls and the bears, and how the bears are …ummm….freaking out. I guess as in beauty is in the eye of the beholder or beer holder, the sanity and the panic is in the eyes of the blog reader. So far bulls can’t handle or accept the truth, and the bears have been talking about what is currently happening. How many bears have freaked out and thrown a gasket and left, compared the the bulls freaking out that Watts and the NAR and the facts don’t jive with their fairy tale?
Get a grip.
we do not preaching the end of the world…
the market will determine price…
no pressure to buy…
mounting pressure to sell…
we are discussing reason… make smart and sound financial decisions… live within your means…
the anxiety and frenzy is coming from the realtors/bulls…
The lights are out in Patricio’s head. I watched week after week as all the reasonable posters left. They left for a single reason: disgust. Most were treated beyond rudely and appear to have taken the high road and ended the conversation. Kudos to them - that’s the only honorable thing to do. I also agree with Shockg about the bubble bloggers. Our Grapix is the biggest poster on the Irvine Housing Blog - the biggest bunch of losers there are. They have soiled this valiant effort here.
Truthiness,
I think a portion of the bulls left to focus on repairing their credit
That is honorable
yee haw……… git dem houses
I still can’t figure out why people get so worked up over housing prices…..they go up, they go down. After all its just a place to live.
Of course when I lost 170,000 because I was taking the advice of a Realtor Professional I still get sort of upset. I post on these sites to advise home sellers not to listen to Realtor professionals because in general they are not the sharpest tools in the shed.
And another shows up, it just goes to show you the lengths people will skew things to bend to their perception. In the immortal words of ST:
Just cause you don’t understand what’s going on
don’t mean it don’t make no sense
And just cause you don’t like it,
don’t mean it ain’t no good
And let me tell you something;
Who the hell you calling crazy? You
wouldn’t know what crazy was
If Charles Manson was eating fruit
loops on your front porch….
Time out-let’s get something clear
I speak-more truth than you want to hear
Scapegoat-to cover up your fear, you can’t bring me
Great song…and we can read as well…and think for ourselves and see the glaring truth…go read more NAR and neo con spine to make you feel better.
NanoWest: That’s a great question. One that came up during a conversation with my wife not too long ago. Here’s our opinion as to why there is so much grief to see home values drop - more so than one would normally expect from a homeowner:
Imagine buying a home last year or in the last 6 months for $700K. You put down 20% - now that is 20% of your own cash in hand. Then, over the course of the next year, you see that very same home drop in value by that same amount. That means you essentially have lost that cash (if you were to sell) or if you had waited, you would have that much less of a home payment - for the next 29 or so years - and/or have more cash in the bank. That is less recurring costs (lower taxes and a lower monthly payment, seeing that rates are still low and probably will be for a while) that translates into more disposable cash. Moral of the story - 20% on a $250K house is chump change while 20% on a $700K house is nothing to sneeze at.
Now throw the family element in the mix. If that person was a man with a wife and one child - do you honestly think they can’t lead a very high quality of life while renting an apartment for an extra year and save that money and end up owning more house for less money? Imagine all the men out there right now being looked down upon by their “significant other” for having lack of foresight. But the wife can’t rightfully get mad since the man can easily say he did it for her and the kid. All depends on the person. I assume that the homeowners here that are complaining on this blog probably have a good chance of falling into that category, or at least they thought it was all about the family until the bills came in. It can’t possibly feel good to be losing money - even if your living space is larger and you have a yard. Can’t really speak from experience though.
I am sure glad I haven’t had to make such decisions on where to live since ‘97 when we bought our current home. So much easier to go to bed knowing that I only gamble with investment property using other people’s money. But my home is mine - or at least it will be free and clear within 10 years - gotta love low rates and low balances - doesn’t even make sense to pay it off with what we’re earning elsewhere on that investment cash. As for my losing money on my home - I bought in ‘97. I am losing equity but do you honestly think I care about losing 20% to 30% of my home equity - equity that I gained in only the last 3 years or so? I’m not selling, no plans on selling and have no use for that equity but to sit right there above my head. Come on now - the responsible homeowners couldn’t care less - this market will return eventually - and even then I will be passing this home down to my children. So that equity is a mute point - I’ll never see it.
Let’s not forget about the many others that have very little of their own $ into their homes - these people are playing the same game we play with investment property. The only difference is that its their primary residence and they’re using those loans to be able to afford the bills - we use them to generate cash flow. [Lucky enough - they haven't completely wrecked the "party" for the investors with cash and great credit].
Billy Bob, (AKA financial wiz kid), You are forgetting to factor in leverage in your 1980s housing vs wage inflation thread (Jimmy is right)….Your investment return only includes your return on your investment (i.e down payment) adjusted for inflation.
Leverage works both ways, it’s hard to beat when prices are rising, however so slightly, and terrible when they are falling IF you must sell in a down market
not buying it………..thanks for your input.
I got the same feeling when Enron went belly up. Many employees invested $10K or $20K in the company stock…..and the stock became worth a lot more, say a million dollars. Then the company goes bankrupt and the employees get all cranky and say they lost a million dollars……well they never actually had the million dollars, it was only a paper gain.
It seems the same with the houses in orange county……..so prices doubled or tripled between 1999 and 2006. Did people actually think that was money in the bank…..didn’t they realize that for the money to be in the bank……the money actually has to be in the bank.
For those that purchased after 2002 it will probably be a little painful, but if they hold the property for 25 - 30 years they will do just fine and will get their money out. They are certainly better of than the purchasers of Enron stock that became worthless.
Nanowest, that’s a serious load of crap you are trying to sell. Real estate equity is real wealth at all times. All you appear to be doing is trying to stroke your own ego about your heinous actions. Acting like it’s no big deal for families to lose hundreds of thousands of dollars. Yeah, yeah - it’s all their fault. What a bunch of asses this board draws. The more I read, the lower my opinion of my fellow human beings. Lowlifes all.
Let the bears have their blog
. Whats the point of continuing to read and post on this blog when all that does is give the extremist bubbleheads credibility and energy
Move on and spend your time more productively
Truthiness: you sound like a very undeducated, disgruntled baby boomer with some serious problems.
Let me get this straight:
Nanowest commited heinous actions when he decided to correctly predict the market downturn and wait for the optimal time to leverage his cash to purchase a home he knows he’ll not have any problem paying off using fixed paper. His recurring costs will be lower and he’ll have more home for his family - a home he’ll be passing onto his children instead of trying to figure out what to do with it in 5 or 7 years when a reset is looming.
Then you promote those actions that others have made, actions that are actually part of the cause of this downturn, where they overleveraged themselves by buying a home that is near or at 10X their income using risky loans. The same loans that intelligent investors use to put cash elsewhere while earning cash flow on a property they probably have no real long term interest in. Yeah- that must have come across as a novel idea to the many that believed the same old story “people only live in their homes for 5 years anyway, the rates will be lower not higher, home values always go up, yada yada yada.”
So if I understand you correctly, you are mad at the people who currently are not buying instead of the people that are actually part of the root cause.
Good luck with that dementia setting in. Violence, anger and confusion are the early warning signs. Better see that neurologist soon.
(Shockg, Jimmy and anyone else: please add this to the comments anytime you feel it could benefit from it. Whoever was saying “leave the blog to them”: that’s not good enough because it does a disservice to those seeking an unbiased view of the market.)
Dear Reader,
Please accept this disclosure regarding many of the comments you will read on this blog.
Despite the best intentions of Mr. Lansner, this forum has been hijacked. In the past, there have been many balanced opinions expressed here. Over time, that has ceased to be the case. There are many regular posters here who have berated, insulted or otherwise harassed posters holding opposing views into leaving. As a result, the opinions expressed here have become completely one-sided.
Please also be advised that these same posters are overwhelming participants in many other “bubble blogs” (several even operate them). This group has one goal in mind – to drive the market down so that they may profit from it personally.
While Mr. Lansner had a lofty goal with this forum, it now serves another purpose altogether.
Truthiness you should probably add the following to your list of bubble blogs:
http://www.cnn.com
http://www.cnnmoney.com
http://www.forbest.com
http://www.wallstreetjournal.com
http://www.nytimes.com
http://www.businessweek.com
any others I missed?
Let the bears have their blog.
Without comments from reasonable people to attack and humiliate they will lose their energy and collapse and rot like a 3 day old carved Jack O Lantern
Move on and use your time more productively
Truthiness,
One of the good blogs is the Irvine housing blog(IHB). On the IHB you see specific cases of homes that are now selling for less than their purchase price a few years ago. Also on the IHB you can find some very detailed facts and figures that help to understand why home prices in orange county are falling. I comment on the IHB on a daily basis. Are there any good “pro real estate blogs” that I should be subscribing too? There were a few webs sites run by real estate agents, but those are pretty much gone now.
Fact is, now is not a good time to buy a home unless:
a) you plan to hold it for 10 or more years
and
b) you can afford to purchase the home with a traditional fixed rate loan.
Truthiness: who said anything about being massacred? Unless going back to renting is considered next to dying to you. As for myself, how many employers do you know currently are offering low interest loans up to $75K to help protect their own? That’s right - take your attitude along with the rest of the folks that enjoy spending their day whining about how much $ their losing when they could have easily done things to avoid the problem. Hell - go start a blog and be done with it.
Talk about extremism - “massacre”. Please find a single comment of mine where it was extreme. Look - this is all based on common sense - if you lack the ability to respect logic, then you have the problem - point the finger where it belongs.
Face facts - you hate the fact people are not buying right now. You hate the fact that your home is losing value. You hate the fact that your brethren in the RE industry now have to put up or shut up and show some skin, if you will. You definitely hate the fact that your bottom line is being affected since you obviously rely on your home equity for your quality of life.
As for those that have or are using conventional loans being in trouble - how in the world can they possibly be in trouble when their loans are not going to reset, and they are already in their homes? Oh wait - you must be talking about the ones that are much like you - they lose sleep when they see equity disappearing instead of just enjoying the home they’re in at a fixed payment. Oh - and I forgot about those HELOCs - yeah - those can sure bite you in the arse, can’t they?
Look, buying anything is a gamble. Buying a home is one of the biggest gambles. If someone found themselves making risky moves like buying with a risky adjustable during a time of double-digit appreciation, rampant use of ARMS during a time of low fixed rates, they sure as hell better be prepared for the contingencies. How many investors have you mentored? Maybe the last 100 that had to foreclose? Low rates like we have seen is the best time to get into a fixed loan on a primary residence- not use an ARM. Grow up, take some finance classes and move forward. Begging for more buyers has not worked, is not working and will not ever work. Lowering the price and getting a great loan rate - now that works!!
You should take that cross you’re bearing to Wall Street - I’m sure they’re are a few NY’ers that haven’t had lunch yet and are hungry for a good meal.
Lastly - wait -listen - that’s the BRONX CHEER!!! I enjoy being able to debate without using profanity.
started out bragging about buying homes at 10 times their annual income…
drinking $300 bottles of wine and $500 green fees…
owning airplanes…
we are discussing affordability…
saving money…
protecting our families assets…
making sound financial decisions…
the blog will continue because we understand were the real wealth resides…
reality check….
I don’t think he qualified for the loan this morning
Just the kind of harrassment I warned of. You should work for Dreamworks - they need your kind of imagination. My warnings stand.
I believe it’s possible that Truthiness and Roc learned the same lesson and are experiencing the same emotions.
Interchangeable - could just swap names and you’d have the same delusional anger and multiple attack-posts. Could be twins :)
Triplets ——– truthi, ROC, hater
Yep. Trips, with a bastard sibling or two popping up on occasion.
Posted by: TruthiRocHaterUsed toReadgShockSickobear
For Sale. Near new house. Bought new late 2006.
Don’t miss out on this chance of a lifetime. A place to house your family in an area of OC immune from price drops.
Your lucky chance - seller willing to part with this wonderful bargain at the same low, low price the builder sold it to me for last year.
Only $800,000.
Buy now, before those nasty bears are able to drive prices down and profit from me.
I am able to help with financing, as I am an expert in this area.
Many good loans available for borrower with 80K annual income; we have the 10X income standard loan readily available here.
Free airplane with purchase of this home.
Truthiness: pure entertainment value - absolutely zero educational value.
About my lies - where did I lie?
Oh wait - you’re trying to hide the fact that you fall into that category I described above.
Do yourself a favor - suck it up, pay your bills and buy more RE. Oh wait - you’re already in an ARM, on an overvalued, overleveraged property and are wondering what you’ll be doing in a few years when your rate(s) resets.
Next time - do the smart thing and buy what you can afford and stop blaming the responsible ones for your loss.
You do understand that acting the way you do will just dissuade more readers from thinking now is a good time to buy. That disclosure is classic. I’m waiting to see the full page ad that you’ll be paying for with that HELOC you use to maintain that quality of life, along with those low-interest credit card offers.
Truthy is one of those characters that can’t help but put their foot in their mouths - and I’m getting tired of pointing that out for him/her/it.
Anybody recall the early 90’s in Orange County? Plenty of people were upside down in their homes (myself included). We just kept working, paying the mortgage, and griping at neighborhood barbecues. Fast forward 10 years, none of it mattered. It will be the same this time around, for a lot of people. The fact that some folks owe more on the mortgage than the house is “worth” on paper will not result in the dumping of those homes. Most people will just keep paying, and patiently waiting for the long run.
Mikey,
Agreed
Home value is irrelevant if you plan on owning the home for an extended time. Depreciating value is only a problem if you have to sell or refinance the property.
Dear Reader,
Please accept this disclosure regarding many of the comments you will read on this blog.
Despite the best intentions of Mr. Lansner, this forum has been hijacked. In the past, there have been many balanced opinions expressed here. Over time, that has ceased to be the case. There are many regular posters here who have berated, insulted or otherwise harassed posters holding opposing views into leaving. As a result, the opinions expressed here have become completely one-sided.
Please also be advised that these same posters are overwhelming participants in many other “bubble blogs” (several even operate them). This group has one goal in mind – to drive the market down so that they may profit from it personally.
While Mr. Lansner had a lofty goal with this forum, it now serves another purpose altogether.
Mikey - exactly.
Being upside down in any loan (owing more on any asset than its worth for that matter) - is not a bad thing as long as people pay their bills - which is exactly what everyone should be doing.
It’s when they decide that it is no longer worth it to pay it off that those people’s problems become someone else’s problem. That is something many have a serious problem with, including myself.
I would bet that there are quite a few people deciding to foreclose that could actually make it work - if they just did some serious budgeting and pulled back on the “OC lifestyle.” Unfortunately, these are people that are content putting that burden on someone else’s shoulders. If I was one of what many call the Permabulls, I’d be setting my sights on those folks. It’s quite ridiculous to sign up for such a huge commitment and then simply turn around and default.
Mikey,
You are right….. people who can afford their loans…… buy and hold….. they will be OK in 10 years.
If everyone could afford their loan who purchased in 2004 - 2006 …. there would be no problem…. no bubble….. maybe just a basic price correction.
Foreclosures and Distressed homes are growing in number….
Inventory is growing in number….
Sales volume is low because banks will not and can not give money away to people who are high risk…. these same people drove up prices in 2004 - 2006.
All parts of this equation yeild price drops… the price drops we have already seen…. and the price drops that are coming next year…… March 2008 is the peak for subprime resets. The only quesiton is how many years this will last and how low prices will go….. and if Jimmy will ever start sweating.
That is exactly what I dont understand. I am certain most of us own stock, mutual funds etc. Some have hundreds of thousands in them.
If you lose sleep every time the market drops 2% than you have no business investing.
If you bought a home with a real loan (meaning a fixed rate with a down payment) and one you can actually afford than what is the problem. No one will take that home from you if you make that payment. The payment is the same it was a year ago or longer depending when you bought. Those people are safe unless they panic.
I do feel bad to some extent for those who believed the hype, bought more than they can afford. I hardly think this is most people. Most knew what they where doing. They wanted to be able to feel “rich” to their friends, rub it in the face of their brother in-law that never liked them, wanted to impress women to get more tail. Whatever the reason. Many did it hoping and praying they would make a killing.
Now that reality has set in, it is all crashing down on them.
So truthiness, which are you? Be honest with us, we are here to listen!
Mikey Likes it,
I recall the 90’s very well. Yes, many were upside down in their homes and many toughed it out and recovered after 9 years.
However, times were different.
The drop was slow; spread over several years.
There were no OptionARMs, far fewer adjustables.
2/28s and 3/27s — low start rates and big increases after 2-3 years — were unheard of.
Stated income liar loans were yet to be.
Zero down ez-quals were a dream in some schemers future plans.
Interest rates (Fed fund rate) weren’t going from 1% to 5.25% causing payment spikes.
Untold numbers of unqualified buyers hadn’t just bought using bad loans with big payment increases.
People weren’t using their homes as ATMs to live beyond their means.
Most important of all, prices had not escalated beyond the reach of the average family’s budget.
Most were insulated from the drop in values unless they had to sell, and many were able to sell and move up to a more expensive home that had dropped in price also.
Buyers were out there and the loans were still available.
Not now. The credit markets have retrenched, buyers need to show they can pay for what they want to buy, and most homeowners can’t qualify for a refi on the home they’re in after having withdrawn and spent their equity.
Times, they are a-changing.
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