(CORRECTED @ 2:30 p.m. 11/19 to show gain was 16%)
O.C. home shoppers are slowly returning to the market after the summertime credit crunch. According to market watcher Steve Thomas at Re/Max Real Estate Services in Aliso Viejo, as of last Thursday, the number of homes placed into escrow within the past month has increased by 182 homes in six weeks to 1,295. That’s an 16% increase since escrows hit the lowest level of the year on Oct. 4.
Still, it must be noted that the number of homes in escrow is 35% lower than a year ago and 51% below the same time in 2005. (To read how distressed properties are a growing part of the market, CLICK HERE)
Inventory of O.C. homes for sale, by Thomas’ count, is down 3% in four weeks. That leaves the intersection of demand and supply, as measured by Thomas “market time,” in a slightly improved condition. (Thomas divides inventory by homes in escrow to get a theoretical number of months it would take to sell current supply at the current sales pace.) Here’s the status, as of last Thursday …
| Slice | Listed | Deals | Months | 2 wks. ago | Year ago |
|---|---|---|---|---|---|
| All O.C. | 17,233 | 1,295 | 13.31 | 14.06 | 7.13 |
| •$0-$500k | 6,244 | 537 | 11.63 | 12.78 | 6.61 |
| •$500-750k | 5,948 | 425 | 14.00 | 15.11 | 6.27 |
| •$750k-1m | 2,242 | 165 | 13.59 | 12.74 | 7.26 |
| •$1-1.5m | 1,420 | 94 | 15.11 | 15.02 | 8.41 |
| •$1.5-2m | 696 | 37 | 18.81 | 18.20 | 13.11 |
| •$2-4m | 797 | 43 | 18.53 | 17.76 | 14.44 |
| •$4m+ | 244 | 13 | 18.77 | 17.50 | 15.13 |
(Note: k=thousand; m=million)
It’s time to jump back in the market before price star to go up again!
Cool, so all the other services say down down down, but the Realtor says up. I wonder how many will close escrow? I wonder how many really are in escrow….far be it for a Realtor to skew facts and reality I know.
Sheik Mohammed Alabbar of Dubai has said publicly announced that Dubai is buying American assets, including commercial real estate and Home Builders. They have retained the services of one of the large Financial companies in New York to broker the deals.
Yes, you better buy quick! The houses selling for $750K are soon going to be worth $900K. People are saving for the 20% down payments at a feverish pace. How long does it take to save up $200K?
What 10 years? You guys are dreaming’! This market is DOA and will be so for the next several years.
Everything I see in the business papers and web sites such as FT.com, WSJ, Bloomberg, and WSJ say 2008 will be so bad you will wish it was 2007.
Better get those mega jumbo loans ready!!! Here comes the second wave of flippers!!!!
Hopefully prices will not soar. If what I have seen remains true then a 2% to 3% gain over the next year is what sould be expected and also it would be good for the market. A 30% decrease in escrows would take the market down to a more normal and sustainable volume. A slow working through of inventory should occur but excelerate slightly going into the 4th quarter of 08. But then if things do heat up quickly expect a mini downturn again in 09. Just my best guesstimate.
wow, it is different in the OC!
who woulda thunk it?
The OC will get hit harder then LA and San Diego. Higher median income in the OC gives home owners hope that they will not drain thier bank accounts before the rebound, but as soon as the money is gone, foreclosures will follow in mass……….
Good to see people getting out there and finding the good deals to be had. Next summer? Maybe yes, maybe not so much. All the latest local news has been trending up, not down.
3,300 distressed properties, and only 1300 sales per month - that’s a 2.5 month supply of distressed properties. Two years ago we had a 2.5 month supply of all properties.
Talk of a turnaround is wishful thinking.
The market will be bad for a long time to come.
Market timing is always a suckers bet!
Don’t try to buy “before prices start going up” . Instead wait till prices have clearly bottomed and start going up again (I really don’t think you have to worry about rapid increases and “missing out” for a few years). Personally, I would rather buy and discover I paid 5%more than the neighbor who bought a few months ago, rather than to finding out my new next door neighbor bought for 10% less than I did.
If we use the Thomas method when homes stay in Escrow for a longer period of time, which is considered a negitive, it make things look better. Talk about spin.
I like how the article discusses homes in escrow, as opposed to homes that sold. I am not RE expert, but it seems a bit like putting the cart before the horse. Lets see how the numbers pan out when the homes actually sell.
I think you will see waves of improvements. It is hard to say what the situation is for these homes, how many are foreclosures, how far below the asking price did they sell for, how long where these homes on the market, etc…Much like the median Im not sure if one simple stat can be used to demonstrate what the market is doing in either direction. Im not trying to be a doomsayer, I just think that many of the RE cheerleaders will find any stat to try to pump up the market. I could be wrong though.
Ed, the data are for homes “placed into escrow”. Those are in addition to existing escrows.
Samson, this is one indicator, not the whole enchilada. It has its own value. No need to discount all news as bad.
The corner is turned
Note to self: save faster now
Damn, the race is on
What do you mean by “the corner is turned”?
We’ve turned the corner! BTW, Lansner also reported that OC distressed properties for sale are up 8.7% so that 19.3% of the market is now made up of distressed properties.
What’s the matter Bill, cat got ur tongue? I told you so. Green arrows and blue skies. Bulls rejoice.
Welcome back Calm Down. Been a while for you since “good news” has been few and far in between.
I just have a hard time taking this one stat and projecting a turn around from it. To me is is just spin. It is much like many of the bulls taking the 2.3% median drop as meaning less. I guess its the same spin on either side.
I was watching inside OC on PBS yesterday and the had the CIO of Lennar Emile Haddad. He was stating that Lennar is basically going to finish the 250 homes they are building now and mothball all of their other projects. In fact they may not even attempt to sell the homes that are built since they done want to further add to the inventory nor deflate the market any further. The thing that stuck with me most, that I think is the problem with home builders and homeowners for that matter is that he stated that “it isnt about price it is about the morgatge problems.”
That statement to me says alot. The problem is always affordability, fancy morgatges where just a temporary shot in the arm (pun intended). That shot in the arm became like a heroin addiction and now the market is going through withdrawls. Hopefully we will come out clean in the end. Only time will tell.
Not Buying It
FYI the article states that inventory decreased 3%
I know you pride yourself on being accurate when it comes to facts and figures so you might want to make this adjustment
Hear yee - Here yee! Home prices are out of whack relative to incomes and the ability to pay for mortgages. This fact trumps anything an overly optimistic real estate agent can suggest. Peak home prices in Southern CA were about 50 percent too high relative to incomes. The last So. Cal real estate downturn lasted about 8 years and prices dropped 20 to 25 pecent (+/-). The average real estate downturn in the US is a little over 4 years. If the Orange Co. peak price occurred in Summer 06, then the future trough price might predicably be in Spring or Summer 2010 or after. Expect homes that sold for 600K dollars to routinely go for $ 450K when the bottom hits. Even this lower amount is hight relative to the rest of the USA. Me…. I’m saving my pennies for 2010, but I must admit, it will be difficult to be patient till then. It’s a long time away and the stock market doesn’t seem like a good alternative right now.
Samson, how did you arrive at your conclusion given this: “it isnt about price it is about the morgatge problems.” Mr. Haddad specifically said the prices are fine. He is saying mortgage availability/pricing is not good. No where did he say people are not able to qualify.
Now if only we could afford the gas to go looking at houses.
Isnt morgatge availability and affordability fundamentally the same thing. If people cannot qualify for a loan or find a loan it usually only relates to a few things. Credit score, amount of down payment and ability to repay the loan (income). The last two directly relate to afforadability. It is more likely that more people will qualify for a loan if the price is more affordable. Maybe I am assuming that those that are not able to get loans fall into the catergory of not able to afford them.
Of course there is also the issue of banks tightening standards, since they are unable to sell the loans off later. So there are just fewer loans available.
It just seems to me that affordability is rarely discussed by any of the Builders/REA/Lenders etc. I think they will always stat the mantra that prices/interests rates are low, so you better buy before you get priced out of the market.
ROC,
Did you expect Mr. Haddad to say anything along the lines of their pricing being too high? :)
How’s this for an original thought? — If pricing was good, maybe mortgage availability and mortgage pricing would be better.
Would you loan 90%. or even 80%, of the purchase price of anything out there today?
I meant to mention that the same guy from AV (according to Matt’s article) stated that there where a greater number (265 ) of distressed properties (foreclosures/shortsales) listed in the same time frame. Isnt it possible that good percentage of the 182 “extra” homes that sold where these properties.
So inventory levels modestly, and likely temporarily, improve from “catastrophic” to “abyssmal” and this is cause for celebration amongst the bulls?
Samson, I think there are some differences. Remember Loretta Sanchez? There is so much confusion and knee-jerk non-lending, that it takes time to sort it out. Regarding jumbos, pricing was the thing. That is also sorting itself out. I am not saying lending has not been diminished, it has been. However, even option arms still exist. There is more on the menu than 30 year fixed with 20% down.
There are always the people that keep trying to squeeze anything they can out of a bad situation. I don’t believe that this market is going anywhere but down over the next several years. It is unsustainable long term.
What’s your point on the extra 182 homes Samson? That makes no difference, except they could weigh on comps and the median. We’ll know that soon enough. It is good news except for those wanting a collapse.
I agree with Jeff of Seal Beach. The banks and realtors are now sticking together to keep the prices as high as they can for as long as they can. It’s going to be up to us, BUYERS, to show them we can hold on longer. REMEMBER: the longer we wait, the more money we save while the banks keep on loosing money on the properties they own month in and month out.
If we as BUYERS want to drive prices down, WE HAVE TO STICK TOGETHER AND NOT BUY for at least the next 6-12 months. Let’s see if the banks and Real Estate agents can artificially keep the prices high for that long all the while loosing money!!!
HB Bear runs a bubble blog. What’s the matter HB? Not enough visitors so you have to branch out? That’s pretty comical that we get visits from people running bubble blogs. They must be getting nervous.
nbi, I believe sahm meant this: “Sales have gone up, but so has inventory.” With all due respect, that can’t be explained away by your variance defense.
My sister is in escrow and hopes to close soon, but, she is getting the house for about 24% off peak.
Will reductions like this be the norm …
For the 11% increase, were the homes purchased at a discount to list price? It could be people trying to catch a falling knife or maybe the market is returning.
I’ll have to find an LO to get me a 100% loan for 750k to buy before it hits 900k next year!
My point was if there where 265 more short sales and foreclosures on the market than there where last month. It seems fairly likely that there would be more overall homes in escrow (IE the 182 additional). That may be assuming alot, but if these homes are deeply discounted it is reasonable to assume that they would sell more quickly than non-distressed properties. So it is possible that a large percentage of the 265 distressed homes sold in the last six weeks, that would increase the amount of homes in escrow for that period of time.
An increase in the number of homes in escrow isnt necessarily a good thing if these homes where sold greatly below there peak price or even below what is actually owed on the loan.
apparently that “dubai investor” aint puttin alot of money into the “homebuilders” cause their stock prices are DOWN again today hey ART you like apples? good howd you
like those apples? lloolll
Bad day for the Bears….home prices not plummetting like they hoped. Your window for buying was the last six weeks.
If you can’t afford OC now, you never will…..
Data is just that. data. No need for you permabears to get your panties in a twist. One month of improvement isn’t a trend. Last month foreclosure data showed modest improvement, this month it turned south again pretty badly.
Foreclosure data is a great leading indicator to watch since it takes 4-6 months to foreclose. Not only are Foreclosures up, but NOD’s are way up. And the % of NOD’s that actually get Foreclosed on is also way way up.
Also, I think Mr. Thomas’ data shows something disturbing that isn’t being mentioned. Normally there is a significant drop in listings during this time of year. This year its been < 10%. With so much inventory lingering, this spring should really surge with listings.
I talked to a builder rep over the weekend, and they indicated that the problem is not escrows, it is closes. They have several promotions in place, but they will not consider an offer with current home sales contingency, due to the fact that they have been burned so badly in the past.
It would be interesting to know three things about these numbers:
What is the ratio of escrow to close?
What percentage of these escrows have a sales contingency?
What percentage of these require approval from a lender (i.e “short sale”?
Jnoc, nope 24% off peak is not going to be the norm we are looking at 40-50%, however at that point RE prices will be the least of our worries. Our fearful leader has driven us into a ditch and we are in big trouble, the happy smiley gang is going to be washed out to sea by a reality tsunami.
But it is fun to talk about right now….
This is phony data - look at the person who reported it - another realtor hack.
Dream on people. The housing crash is underway and will continue on its spiral down.
It’s time for a career change realtors. Your con game is up.
That all might be true but I know that prices are still alot cheaper than they were a few weeks ago. All the new listings in the areas I want to buy in (North Orange County) are now around 420 -440. These homes would have been or previously have been listed for closer to 500,000 dollars. I dont predict that these will disappear over night.
cdm, I’ve never seen a builder take a contingent offer even at the height of the market.
The sratification is very interesting!
This chart seem to verify one of the principal arguements that that bears have been making:
“It’s affordability, stupid!”
The biggest drop in inventory is in the sub $500,000.00 strata. In fact, in the higher priced strata, inventory is growing. The lesson is, if you want to sell your house, seek affordability with your price.
Also, one storm cloud on the horizon: Foreclosures. I know that people are calling into question the reporting of filings of “Notice of Default” due to the fact that many properties have multiple “NOD’s”.
However, no one is questioning the actual “Foreclosure” (end stage, property returned to bank) numbers. There are over 1,200 REO’s from the past three months alone just coming on to the market.
One note about this, after the Trustee Sale is completed (the stage where the property becomes formally becomes REO), it can be a while until the property comes backon the market, for several reasons:
- Assesing the appropriate price for the market (which intodaysmarket means a new BPO and appraisal.
- Perfecting the title (paperwork to wipe out any subserviant leins, payments to bring taxes and HOA current.
- Eviction
I have been told by someone at a servicing company that the last one has turned out to be a un-anticipated wildcard. If, after the trustee sale, they find any personal items still at the property, and they do not have a quit claim from the previous occupants (or can not locate the previous occupants), they feel that it is legally advisable (due to the tenancy laws in California that favor occupants) to go through a formal eviction process.
This can add several months on to the process of bringing a property back to the market..
There are a number of properties that foreclosed in August, September, and October, that will not be back onto the market until late December, January, and February due to this.
-
Turthi:
I have. It happened all the time. My brother and his wife scored a S&P home with over $120K in incentives because the original buyer fell out when the contengent property “gasp” didn’t sell.
So, once again, you’re wrong. And your a donkey.
I wouldn’t get too excited. There is no reason to “rush” back into the market. The pace of sales in summer of 2008 will tell a more accurate story than an upward blip during a general decline. If the upward trends continues at a steady pace, then I’d give credence to the theory that we’ve hit bottom.
However, the foreclosure issues have only just begun. Give time for the expiring ARMs to hit full swing in January and we’ll see how things are next summer.
Trojan, a more accurate tale will be told when it isn’t a Realtor telling it.
Wouldn’t activity in the discounted home sector drive the median down and thus create even more downward pressure on the housing market and appraisal values?
Glad I sold my Anaheim house in Oct 2005 and moved to Calgary.
The way I see it the market is so bad right now that you will probably see some false upticks in the near future and the Bulls blowhorn will go into high gear. If unit sales stop falling and flatten out here that will be a disaster for S. Cal RE. Right now sales volumes have fallen below the worst levels of the 90’s downturn, plus those numbers are not adjusted for population growth. The winter season is the bulls best friend right now. The market traditionally goes into hibernation so that gives the RE Establishment a window TO Make Stuff Up. And they will be successful in rounding up a few suckers that will end up buying RE in one of the worst hit areas of the biggest housing slump in this nations history. Think about the poor saps that got suckered this Spring. If you are wealthy who cares, if you are anywhere in the middle class and work for a living you just put your financial future at grave risk. The RE shills could care less about the working middle class, they are only shilling for their own vested interest. Any student of RE markets knows how long these things take to play out. Suggestion of a rebound in 08 when the markets fundamentals are accelerating their deterioration is simply ridiculous and intellectually dishonest.
Eat it in OC, you are making assumptions. Last month prices on resale home were off by just 3% YOY. We will see what prices were later. If they remain fairly heathly, we will see other excuses employed by the bears. It’s a lose-lose proposition discussing real estate with bears. Even a story on “green” building is pissed on.
Truthi says:
“cdm, I’ve never seen a builder take a contingent offer even at the height of the market.”
——-
Question — Where were you when the builder’s guaranteed to purchase your home if it didn’t sell?
For such an “expert” you are quick to expose your lack of expertise.
The contingency sales to new home buyers is alive and well.
—-
“Bob Yoder, president of the Inland Empire Division of Shea Homes, said because Shea builds homes primarily for a move-up market, it has seen a 40 percent cancellation rate since March.
“We have to sell 10 homes to get six that stick,” he said.
In an effort to reduce fallout, he said, Shea has hired a consultant to work with contingent buyers and make sure their homes are priced realistically.
Harold Vandiver, chief executive of HomeSold, a company that does contingency consulting for about 35 California homebuilders, said he’s never been busier. Vandiver said he works with builders to motivate buyers to price their homes aggressively in a down market by offering cut-rate commissions, free staging of their property and a $3,000 moving allowance at the close of escrow.
Despite the turnover, some builders say they see signs the market is improving. At Pulte, Warren credited a recent dip in cancellations to a stabilizing of prices, the departure of investors and better management of contingency sales.
——-
Misinformation helps no one here.
“Better to remain silent and be thought a fool than to speak out and remove all doubt.”
Abraham Lincoln
I know it’s hard for you to admit anything pdu, but trust me: builders did not until recently accept contingent buyers (not in OC at least). If they switched during the downturn, and are now switching back that is understandable. Why do you follow me around like an inscure child? I am flattered you consider me so threatening.
“Despite the turnover, some builders say they see signs the market is improving. At Pulte, Warren credited a recent dip in cancellations to a stabilizing of prices, the departure of investors and better management of contingency sales.”
Drip, drip, drip comes the good news.
The time to buy is now in Newport Beach. If anyone doubts the strength of the market, just ask yourself this: “Am I afraid of success?” If not, take that first step and join the ranks of property owners, or move up if you already are!
Cali, there were mixed signals in the builders report:
“The message from today’s report is that builders do not see any significant change in housing market conditions as compared to last month,” said NAHB Chief Economist David Seiders. “While they continue to work down inventories of unsold homes and reposition themselves for the market’s eventual recovery, they realize it will be some time before market conditions support an upswing in building activity - most likely by the second half of 2008.”
(Meaning they expect to build MORE in 2008)
“He said builders are particularly concerned that negative media reports about the weak housing market are dissuading buyers, and fueling unrealistic expectations regarding home price discounts. Those reports are helping to spread weakness from troubled housing markets with a glut of homes available to more healthy markets, he said.
(“Unrealistic expectations” means they are not going to get them)
The group’s reading improved slightly in the Northeast and West regions, but it continued to weaken in the South and Midwest. The South accounts for nearly half of all new home sales nationwide.
(We are in the West)
I still find it interesting how they’re (along with the NAR) trying to blame the media for this.
Is that your bubble blog, Caliguy? What’s with all the bubble blog publishers coming here? I smell fear.
Must be all those brilliant flippers out there - the NAR told them that prices will triple in the next few years so they are buying like crazy now! The NAR said there’s never been a better time to buy! That’s funny, I would have thought 2000 would have been a better time to buy, but not according to the NAR!
Caliguy, I’ll type S L O W F O R Y O U. H E A L T H Y M A R K E T S B E C O M E U N H E A L T H Y F O R N O R E A S O N O T H E R T H A N F E A R G E N E R A T E D B Y M E D I A R E P O R T S.
Truthiness,
Fear no media. Unaffordable housing is not healthy. Getting a “jumbo loan” to pay for an average home is not healthy, in fact is hard to do for the average wage earner in OC. On top of that, don’t most people buy a home because they can afford it and want to live there - not because the media tells them the price will drop in the future? Most people don’t buy for investment purposes.
Riigghhhtt….. And the media made the banks buy the loans back from Wall Street Investors.
Thanks Mick, that really explains the national malaise. Good job. Oh yeah, the definition of jumbo is about to change.
The average/median home is still over $450,000.
The median wages are under $100,000.
Soooo… you honestly think people making $150,000 are going to buy $450,000 homes in Garden Grove? I believe they would rather rent and save up for a bit to buy the $800,000 home they think they deserve. As for the large segment of the market between $400,000 and $600,000, there is a huge problem of affordability. The neighborhoods catering to these entry level homes consist of wage earners making less than $80,000 per family.
Funny stuff Truthi…could have been more creative with the insult though.
Now that you exposed me, I’ll retreat back to blogging about how the world is coming to an end ;)
Wow, Truthi…
You think what we had was a “healthy” market??? And you put that in writing??? Wow.
I don’t get personal and it’s not meant to be, but if you think what we had was/is ‘healthy’ then you really need to go to school or take an econ class or something. “Healthy” is the furthest thing the market could be. And to think the Media is the cause, well that’s just plain ignorance. Sure the media can fan stuff, but with banks literally wrtiting-off billions of bad loans (b/c of the ‘healthy ‘market…) as we speak, how could you even jokingly claim the media is the source? It will be hard to take you even remotely serious after that comment.
I’m sorry if I insulted you caliguy. It’s all in fun - don’t take it personally.
jj, what the $%#)??? Go back and read again. The builders discussion we are having is a national one. The “healthy markets” statement came from the story in question. Stop putting words in people’s mouths. I think the bears arguments are weakened by such outrageous claims as yours.
Truthiness, Do you realize where your name came from? Colbert, right? You do realize he’s a spoof, right. Just curious if you get that or not.
The Sunday article in the print edition by Andrew Galvan exposing Realty Tracs foreclosure reporting procedure also has several quotes regarding how negative media reporting can effect peoples willingness to enter the housing market.
The CNBC story was actually positive.
Truthi, if I sell you a candy bar at $100 however let you pay for it by paying for it at only a 50 cents a month….does that make that candy bar a $100 true value?
14 months is that all… sounds like it’s time to drop the price people. assuming you need the money, if not then just hold on and enjoy the ride
caliguy, Good Post!
also this just came from the Goldman Sachs conference call
“Eight states … for which there is greater than 30% house price depreciation forecast would be California, Florida, Arizona, Nevada, Virginia, New Jersey, Maryland, and Washington D.C. … 13% to 14% nationally masks some states that we have accute concerns.
Goldman Sachs, Nov 19, 2007″
caliguy, thanks for your reply. I stand corrected. I have no further quarrels with you.
The most people know when the price is going down. The most people also know when the price is going up. the most people DON’t know when the price hits the bottom, before they buy. OC home price is down and will be down for a bit longer until 08 Summer. The price will go up anytime after that but more importantly the mortgage rates will go up for sure from that point.
truthi:
clear it up for us then. you wrote:
“Caliguy, I’ll type S L O W F O R Y O U. H E A L T H Y M A R K E T S B E C O M E U N H E A L T H Y F O R N O R E A S O N O T H E R T H A N F E A R G E N E R A T E D B Y M E D I A R E P O R T S.”
so are you agreeing with the statement, or do you disagree, & you’re just “passing on” what a builder would say? Which one?
# Truthiness Says:
November 19th, 2007 at 11:10 am
I know it’s hard for you to admit anything pdu, but trust me: builders did not until recently accept contingent buyers (not in OC at least). If they switched during the downturn, and are now switching back that is understandable. Why do you follow me around like an inscure child? I am flattered you consider me so threatening.
————
Again, you’re wrong - about contingencies, now and then.
I don’t follow you around, I correct you when you’re wrong.
I don’t find you threatening in the least. But you are a little tough on the truth.
Ignorance and deception put forth like fact isn’t helpful to anyone coming to this blog for information.
if truthi was on the TITANIC she woulda said something like
this …. oh dont worry weve just stopped for more ice-cubes
next thing she’ll demand to see is a solar eclipse
llooollll @ribsplitter
jj, the builder story was a national one. There are, according to those in the trenches, formerly healthy markets that have been adversely affected for no apparent reason other than media reports. How else can I possibly explain it? It is not a reflection on Orange County.
pdu, I speak from my own experience. Contingencies have never IN MY EXPERIENCE IN ORANGE COUNTY BEEN AN OPTION. I don’t give a flying f*** what you claim.
Nice how the focus is on challenging me all day. Could it be you don’t like the story itself?
And pdu, 2/3 years ago you couldn’t even be put on a waiting list if you were contingent. You are a piece of work and a liar.
Actually, Truthi, I do know of home builders letting people buy contingent on sale of their homes. Now, I am not certain of any in the OC first hand, but I am of builders elsewhere. So it is something builders will do. As in it isnt out of the question. If sales are slow, I would think they would rather take a chance at a sale than miss out all together.
Tiny uptick in crappy market
Truthiness shouts and stomps
Market still sucks
Thanks Samson, I was speaking historically. As I said, “builders did not until recently accept contingent buyers (not in OC at least)”. I am speaking about what I have seen over the past six years. Nothing at the present time would surprise me.
truithi, nothing personal, but it sounds like you don’t want to answer. Simply put, do you believe whether here, or in other parts of the country, that :
(1) the boom was “healthy” or based on a “healthy” environment?
(2) that the macro-environment (both real estate and the economy as a whole) that we are NOW in is “healthy”?
(3) that the media (or blogs for that matter) can really change a “healthy” enviornment into an unhealthy environment?
You don’t need to explain anything. I’d just like to know YOUR answers to these questions. Like I mentioned before, I’m on the sidelines waiting, and value input on both sides… but I gotta know who’s credible, and who’s in the industry hoping that I get burned in order to save their skin. The answers to these basic questions would be quite telling if bulls actually believe it, or if you’re just ‘relaying’ whatever can be found that appears positive in hopes that something sticks.
jj, several regulars here know my positions are moderate. The quick answers (just for you):
1. Somewhat to very unhealthy (dependent on market area)
2. Very unhealthy (but signs of strength can be found in some sectors)
3. Blogs: no. Media in general: not intentionally, but phsychology is an important factor.
Nowhere did I blame the media. I simply agree that media reports affect psychology.
Well I can see when people where camping out of new developments to be the first in line for a new home they would not need contingencies. Now the market is so tight, that they dont have much of a choice. I know of at least 3 people who where planning on buying, and where given a 90 day contingincy only to have to cancel the sale since they could not sell their place.
Probably more typical than it was years ago.
Again, Truthi, your lack of knowledge should temper your replies.
Shouldn’t hold yourself as an expert in an area which you may have had limited experience.
Just because you haven’t experienced something doesn’t mean it isn’t so.
Kind of all comes back to what I suggested one time. You need to recognize this blog isn’t all about you.
Yes master. How could it be when it’s about you, the all-knowing. What a donkey you are.
Not name calling, just correcting you because you posted bad info. Thanks for showing your character too.
These number make sense. The 45-50% drop in sales were way too high even for a slow housing market at present. The reason of course was the credit crunch, one of the side effects of the housing bubble. The panic in the lending sector caused those numbers in August & Sept. For the current bubble market sales drops lof about 25-35% are more meaningful and represent the actual housing demand.
Uh, no - I didn’t. You are astoundingly dishonest. For your information the conversation started with this by cdm:
“They have several promotions in place, but they will not consider an offer with current home sales contingency, due to the fact that they have been burned so badly in the past.”
I simply stated that IN MY EXPERIENCE that is the normal way of doing business. Those were the facts as I observed over a half dozen years.
You then wrack your brain to figure out a way to discredit me (all the while boring the crap out of everyone else). You did nothing more than try to tear me down. Unsuccessfully, I might add. You really need to get a real life.
# Truthiness Says:
November 19th, 2007 at 10:20 am
cdm, I’ve never seen a builder take a contingent offer even at the height of the market.
———————–
That’s what you said.
I only explained that builders do, and have in the past, taken contingent offers. Sorry you didn’t know this.
Not trying to tear you down. You need no help there.
I stand by my statement. I have not seen that in Orange County. I will take the word of people who say it might be happening now. You and I both know this is not about contingencies. This is about you needing to one-up me. Funny you think I tear myself down - of course you do.
I want to apologize to everyone here for my responding to and encouraging Truthi.
I beg pardon, but last time I looked I believe the article read Demand Up 11%? I come back after an afternoon of socializing and now the headline reads Demand Up 16%! If I leave for another hour or so maybe we’ll clear 20%.
YOUR BLOGGER: I made a math error.
pdu, you reveal your own lack of character. It’s pretty funny that you think you have to apologize to your fellow enlightened human beings for encouraging me. That kind of pompous demeaner does not bode well for success in life - which in turn explains why you have nothing.
Great news Arthur!
truthi says:
jj, several regulars here know my positions are moderate. The quick answers (just for you):
1. Somewhat to very unhealthy (dependent on market area)
2. Very unhealthy (but signs of strength can be found in some sectors)
3. Blogs: no. Media in general: not intentionally, but phsychology is an important factor.
Nowhere did I blame the media. I simply agree that media reports affect psychology.
———————————————-
Thanks for answering straight up. I think most eveyone but the vested salespeople would agree. the question then becomes:
(1) why is/was the environment ‘unhealthy’? and
(2) do those conditions still exist (in order to predict the future)?
I think the bear argument is that those conditions still exist (primarily true affordibility) and in fact are getting worse (i.e. credit crisis overall recession potential) and therefore prices must come down over the next several years.
A bull argument would be that the conditions no longer exist… hence a rosy outlook. With you acknowledging this is not the case, sounds to me like you’re having a little fun with the blog, that you’re hoping things stabalize since you’re already in the game, but really know that things are out of whack and we’re headed south. Correct me if I’m wrong, but we’re all looking for the reason WHY I’d be wrong and how the environment is changing for the better.
Yes it is! However, to the nay sayers it must feel like Holy Water to a Vampire.
Allow me?
“I think the bear argument is that those conditions still exist (primarily true affordibility) and in fact are getting worse (i.e. credit crisis overall recession potential) and therefore prices must come down over the next several years.”
With pricing all over the place, I think those conditions still exist for most, and are close to not existing for some.
A bull argument would be that the conditions no longer exist… hence a rosy outlook. With you acknowledging this is not the case, sounds to me like you’re having a little fun with the blog, that you’re hoping things stabalize since you’re already in the game, but really know that things are out of whack and we’re headed south.”
With pricing all over the place, I think those conditions still exist for most, and are close to not existing for some!
jj, I have said prices could afford to be lower. Having said that, there are great deals out there at this minute. Affordability is not one size fits all. I do NOT think that everyone should be able to afford most homes. That would be a disservice to people who have been in the game for decades.
I do thank you for the civil exchange. They are few and far between sometimes, so I appreciate it when they arise.
I dont think that most homes should be affordable to most people either. I do think that some kind of home should be affordable to most. I dont know if I have an exact figure for that. Maybe a small family that makes around 85K a year should be able to fairly easily afford a decent 2 or 3 bd. place. That doesnt mean they should have an ocean view, but they should be able to buy in a decent neighborhood with decent schools. Since the median income is less than 85K, that means that this group of people represent the majority or most.
I dont though see how homes being affordable to more people is a disservice to those that have owned for decades. Explain what this means if you would. If you see your home as just that your home and not a tool for profits, than what difference does it make. In fact, like I stated earlier, the more people who own homes in any given neighborhood, improves the neighborhood since people actually have a stake in what happens around them.
“I dont though see how homes being affordable to more people is a disservice to those that have owned for decades. Explain what this means if you would.”
People who have owned for decades can afford it more because they have more equity and other wealth. To expect a person coming in with 20% (or less) to afford the same homes, is unreasonable in my opinion. If the median homeowner has owned for a long time, why should values not reflect that? Certain desireable locales will always outperform all other places. I think it unfair that newbies should be expected to live in the best locales (and without a struggle).
AJ et. al.
Take a look at the chart above, and you will see confirmation of what the bears have been saying - that affordabilty is the key to volume.
The sub $500,000.00 strata saw the best action, and above $750,000 saw inventory levels get worse.
This has the potential, if all close at the same ratio, of bringing the county wide median down even further.
People who have owned for decades did not have to purchase a home at 8 to 10 times income. They also bought prior to prop 13 and are barely paying any property tax, they should feel blessed that they have what they have. I highly doubt those same people going in cold could afford to purchase their own home even if they wanted to.
I think it is fair to expect that they should have value in their homes, that isnt unreasonable. In a personal example my parents bought a home in 1970 for $28K. My mom did not work and my dads income was roughly equal to the cost of the home. Their payment was around $250 a month.
The home now sells for roughly $700K, which is nearly a 2,500% increase. Median family incomes are roughly 300% of what they where in 1970. It seems the disservice is to the young people and those trying to buy their first home and at current income and price levels may never be able to do so.
The point being how much equity is too much, it is all paper equity. It seems that the only way the children of those owners who have owned for decades need to wait for their parents to die, before they will have a home to call their own.
Cdm,
Welcome to 2004……… it’s coming soon.
However; shame on you to use logic to poo poo this great headline.
AJ et all realize this……. to be honest I’m not really sure why they post.
….I’m not a psychologist.
cdm, you ignore that there are multiple income and savings levels. You also seem to ignore the move-up buyer. Both are fatal flaws in your argument. Your thinking is the bear problem in a nutshell. They have first time homebuyer tunnel vision.
CDM,
While you are fiddling with your statical alchemy, it appears that some of your brother Bears have broken ranks and are out in the orchard picking the low hanging fruit. Greed trumps logic and even more so psuedo logic, everytime.
Truthi,
By “move up buyer”
do you mean the distressed sellers in this 1295 deal count?
Mav, 80% of 1,295 could very well be move up buyers. The circle of life continues.
And Mav, that’s 1,295 families to compete with for either rentals or sales.
Truthi,
Let’s see………. crazy high housing inventories………. crazy amounts of distressed sellers……..
It would stand to reason that most deals are probably in distress…… and not the shoot the moon seller who is still hoping for 2006 peak prices.
I don’t know…. call me crazy… I’m just speculating like you are
But the number that doesn’t lie is 537 deals out of 1295 below $500K……… and an increase in inventory turnover time on the deals above $750K…..
the median will be back at 2004 levels by July 2008 at the earliest……. December 2008 at the latest……
“Soooo… you honestly think people making $150,000 are going to buy $450,000 homes in Garden Grove? I believe they would rather rent and save up for a bit to buy the $800,000 home they think they deserve. As for the large segment of the market between $400,000 and $600,000, there is a huge problem of affordability. The neighborhoods catering to these entry level homes consist of wage earners making less than $80,000 per family.”
OC Trojan, well said!!!
Truthi, while the media may have a slight impact on people’s decision, no amount of good news, hype, etc is going to change the buying power of the money that people make currently. It really is economics. If you can’t afford, you don’t buy. It’s that simple. Affordability is the issue. Credit problems would be non-existent if prices were more in line with peoples incomes.
Dang truthi,
You have been on this blog from early morning to sunset, non stop.
I’m getting exhausted just reading all your posts.
Please get off the crack, clean yourself up and get a job.
You’ll feel a heck of a lot better if you do.
I think bears focus on entry level homes, because that is where the affordability problem lies. More importantly you cant have move up buyers without entry level buyers. If no one can buy in at the bottom how can anyone move up. Plus if prices drop it will be easier for people to move up.
Thanks Bill, but I got a boatload of work done today. This is not as taxing to me as you might imagine. Now, I bid adieu in favor of Monday Night Football.
Holy cow!! I just got in from work - there is no way I’m catching up on this blog.
Does anyone else here actually work for a living? I mean, does anyone else actually do or create something of real value with their 8 or so hours?
I just got to it:
Truthiness: I see what you are saying, but that would be true if Thomas was counting actual sales as opposed to open escrows.
Look - I believe the inventory numbers reflect open escrows, not actual sales. There is absolutely, unequivocally error in those numbers in stating actual inventory at the end of the day - and sales as well - since we know that not all open escrows turn in to a successful sale. That’s all I’m putting out there. I don’t have any numbers on actual sales for the same time domain. I would feel foolish to present that as my only piece of collateral to intelligent investors. Especially in light of the other recent news, like the continually increasing number of distressed properties with no sign of slowing down.
Sales are good, but less NOD’s, and more importantly, less foreclosures, would be a better start, combined with a trend in sales increases. This is not a trend yet.
Predicting a turn around at this point based on this data would be premature and decisions to buy now made from this would be met with a loss at the end of next summer, in my opinion.
The reality is that truthiness will never agree that anything contains bad news.
The reason truthiness claims that she accomplished alot at work today is because truthiness is at work on this blog. As in… Gets paid to argue and blog all day long, no doubt by the NAR or some other real estate association. Put that in your pipe and smoke it all you fellow bears.
It’s really nice that Truthiness allows Jon Lansner to post on his blog
I told you the bottom was behind us. BUY BUY BUY!!!!!!!
AJ
T
et al
It doesn’t matter whether the buyers are move-ups, or not. As long as the increase in volume is largely below the last county wide median (and this report shows it is) it will drive the county wide lower (AJ, a well rounded idividual might know how medians work in statistics, as well as be able to quote latin).
I do not think that it is a coincidence that the volume comes from the areas that have the highest distress. I would not be suprised if the not only the county wide median declines, but also some zips in central OC show some interesting declines.
Perhaps this is the upswell of the people taking advantage of some fantastic deals, and locking in even lower comps for their zip codes.
Viva Zapata!!
The headline should be about the 35% drop in escrows over last year at this time and the 51% drop from 2005 — with inventory much higher than either time period.
It’s all about perspective; who puts the story out and the slant they give it.
Bottom or on the edgde?
The crux of the problem is and always has been affordability and the inherent issue of rent vs. purchase carrying costs.
It’s not a question of bull or bear, it’s a question of looking at the market conditions and deciding whether the pricing today in OC is sustainable.
Behavior in the market (sales activity), family income, financing options available, all seem to point to a market that is overvalued by the sellers.
For one to postulate that those who bought before the prices rose to an unsustainable level are privileged and/or entitled to retain that artificial valuation is foolishness.
The buyers of the last few years were buying payments, not prices. Some saw this. Some didn’t.
NO BAIL OUT.
That’s funny…I keep my own stats maybe not as accurate as a powerful all knowing Re/Max expert and they keep showing supply demand worsening. I only use data easily available from Realtor.com and sales data obtained from the OC Register. Actual sales vs listed properties on Realtor.com. Just about every track I check out has many many vacant properties and short sales. The banks are trying to play creative games and list inventory at higher prices than the market will bear. They are obviously afaid to price this stuff to sell and start a real price drop. Many have been on the market for 6-8 months(obviously over priced). One recent offering hit the market at 281/sq foot. It had an offer on it almost immediately. Most other are listed in area at about 330-400/sq ft. It just to show that it’s not the market it’s the price. Drop the prices and people will buy. I agree that prices will go lower…how much it hard to say. Realtors all live in a dream world always trying to tell you that prices are ready to start going up.