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55% think U.S. home prices will rise
March 3rd, 2008, 12:00 pm · 87 Comments · posted by Jon Lansner/O.C. Register columnist
The Pew Research Center for the People & the Press poll 1,502 Americans from Jan. 30 to Feb. 2. And I thought many of you would at least like to debate the poll answers in the accompanying box. Other poll highlights about housing …
• 55% of those polled — including identical percentages of homeowners and non-homeowners — say that home prices will increase in coming years. In September 2007, 53% of the public said they expected home prices to rise, but last June somewhat more Americans said they expected home prices to go up in coming years (62%).
• Overall, 24% cite concerns over prices — with the cost of energy and healthcare mentioned most frequently — as the most important problem facing the country; 18% volunteer jobs as the nation’s biggest economic problem, while 13% cite housing — including 6% who specifically cite the sub-prime mortgage crisis. And 19% of mortgage holders say they are most worried about falling real estate values, compared with just 6% of homeowners with no mortgage, and 7% of non-owners.
• 46% say that home prices in their area have gone up in the past year while 41% say that prices have declined; 49% of homeowners who are paying a mortgage say that home prices have declined in the past year; that compares with 39% of homeowners who own their houses outright, and just 32% of non-owners.
• 67% of homeowners say that, over the past few years, the value of their own home has increased vs. October 2006’s 84%. Homeowners saying their house value has increased “a lot” has fallen from 46% then to 25% today.
• 27% with household incomes greater than $100,000 are very satisfied with the housing they are able to afford; in 2001, 42% of the highest-income Americans said they were very satisfied with their housing.
To read more, CLICK HERE
March 3rd, 2008 at 12:10 pm
Jon,
You might want to write a post about the end of the inflated home appraisals with the changes that are going to be announced by New York Attorney General Andrew Cuomo. Another blow to the housing bubble.
Inflated appraisals was a common practice during the housing bubble.
http://www.nationalbubble.com/no-more-inflated-home-appraisals/
March 3rd, 2008 at 12:11 pm
55% of Americans are idiots! Actually, since the poll did not specify how long we had to wait, then it’s sort of meaningless. If 55% of Americans thought home prices were going to rise in 2008, then they would be idiots, with the exception of a few loacalized, ultra exclusive locations.
I believe home prices will ultimately start rising again, at a more traditional 3-5% annual rate, but not until the current bubble correction back to that historical curve is complete.
March 3rd, 2008 at 12:29 pm
So? 51% voted for George Bush.
March 3rd, 2008 at 12:33 pm
Yes they are right “U.S. home prices will rise” but they did not complete the sentence “U.S. home prices will rise in 2011″
March 3rd, 2008 at 12:37 pm
It is possible that 55% of the American public correctly understand the relationship between inflation and hard assets, one of which is real estate.
March 3rd, 2008 at 12:48 pm
DENIAL!!
How else can you explain that 46% think prices went up in their area when the reality is that nearly all metro areas saw 10% declines or better?
So, of course, they think the market will rebound.
2012, given the lag between the price declines and the coming foreclosure wave. That will be the bottom.
And please: this has nothing to do with inflation. Wage inflation is missing. Food and energy inflation will only leave less for the mortgage payment. Silver is up 37% ytd, there is your inflation hedge. Not RE which is cooked.
March 3rd, 2008 at 12:49 pm
46% blame George Bush? Gimmee a break…does the man cause hurricanes and earthquakes, too?
Here’s a couple of choices the Pew Research Center left off.
–The Media (for putting a negative spin on everything, thus creating a climate of fear)
–The reflection in the mirror (for keeping up with the Joneses, buying everything on credit, getting in over one’s head, and not living within one’s means)
March 3rd, 2008 at 12:51 pm
along with jimmy the general public doesnt
understand diddly squat which explains why
there was a bubble to begin with… hell the
head of the federal reserve doesnt understand
inflation.. watch ron paul grill this moron…
http://www.youtube.com/watch?v=gldETRlhiXk
March 3rd, 2008 at 12:56 pm
CNBC interviewed Marc Faber today.
This guy Marc Faber called the 1987 market crash and he is now predicting a bunch of different bubbles imploding.
http://www.cnbc.com/id/15840232?video=671495486&play=1
Let me see, who should I believe? Marc Faber or the permabulls in this blog?
March 3rd, 2008 at 12:57 pm
Let’s ask the homeowners in Ladera Ranch who bought in the last 3 years the same question.
March 3rd, 2008 at 1:31 pm
rants, the reason that most OC home owners have no less than hundreds of thousands of equity is because of inflation. Some have seven figure equity in those homes. So far, the so called “housing crisis” is an event that is mostly playing out in lower income cities. Those is the facts.
March 3rd, 2008 at 1:33 pm
Uneducated and in denial is all I can say.
I was looking at homes in my area (Anaheim Hills) yesterday and I showed my dad this home I liked for $575K. I told him I would wait a year for it to go to $500K and he told me I was crazy and that house prices will NEVER fall that much aagin! I told him he was an idiot!!! Being in the lending biz for only a mere 5 years I know we are nowhere near the bottom. He is a frightened homewoner and his home was appraised for $667K in June 07. So he thinks is will not depreciate anymore…..the problem is these people HOPE that they will not decrease but reality says:
March 3rd, 2008 at 1:34 pm
Uneducated and in denial is all I can say.
I was looking at homes in my area (Anaheim Hills) yesterday and I showed my dad this home I liked for $575K. I told him I would wait a year for it to go to $500K and he told me I was crazy and that house prices will NEVER fall that much aagin! I told him he was an idiot!!! Being in the lending biz for only a mere 5 years I know we are nowhere near the bottom. He is a frightened homewoner and his home was appraised for $667K in June 07. So he thinks is will not depreciate anymore…..the problem is these people HOPE that they will not decrease but reality says: THEY ALREADY ARE!!!!!
WAKE UP PEOPLE!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
March 3rd, 2008 at 1:48 pm
Why isn’t Alan Greenspan’s name included in the “blame box”?
March 3rd, 2008 at 1:51 pm
Yesterday, I visited a friend in Humbolt Island in the Huntington Harbor. This is one of the most expensive areas in Orange County. I couldn’t believe how many “For Sale” signs I saw.
Somebody is trying to unload a bunch of overpriced homes. I saw 4 “for sale” signs in one single block.
So my guess is that the burst of the housing bubble is starting to impact the rich areas.
March 3rd, 2008 at 2:00 pm
The table is interesting. Given that housing/credit crisis is a big part of the problem, how about an entry for new homeowners, and speculators who paid these outlandish prices? Apparently no one lied on the forms where it asked what their income was? Also, the small time loan originator who immediately turned around and sold the loan to the big banks should be on there. The banks are rightly on there for being stupid enough to take the loan on. Where did these guys get their degrees? That would be interesting. And finally, how about the buyer’s RE agent. Did she/he counsel that this loan could be prove to be a problem? Or is that too much to ask? It is always someone else’s fault…..
March 3rd, 2008 at 2:03 pm
Will the press ever disclose how overinflated foreclosure numbers being produced by RealtyTrac were? All I have seen is a couple small articles that pale when compared to the big front page headlines printed day after day. I feel sorry for anyone who made a decision to sell at a discounted price because of this misrepresentation. This story seems to have had the most damage in lower-income cities. The only winners may be some renters who can now purchase in a lower-income area. Did you notice how the constant drumbeat of RealtyTrac foreclosure misinformation did not cause a price drop in wealthy beach cities? You can’t fool smart people.
March 3rd, 2008 at 2:11 pm
Well of course they are going to go up eventually. Duh. But not for a long, long time. They are still waaaaaaaaaaaay too high in O.C.
March 3rd, 2008 at 2:23 pm
There were so many bad news for the housing market and the economy today. Here are just a few of today’s headlines.
Oil Prices Hit Yet Another Record, Socking Everyone Who Drives, Heats, Eats, Buys or Sells
Oil Jumps to a New Record Above $103 As the Dollar Declines to a New Low Against the Euro
Buffett Says US Economy Essentially in a Recession, Expects Rough Ride for Insurers in 2008
Construction Spending Plunges in January by Most in 14 Years
Factory Activity, Construction Both Show Declines
By then again, no need to worry, the media is making all of this up (according to the permabulls in this blog). Everything is great in Orange County. Best time to buy a home!!
Hurry and buy your home (before you lose your job and can’t qualify for a mortgage anymore)
March 3rd, 2008 at 2:26 pm
Everyone’s still forgetting the $2000+/month it takes to rent a small 2 bedroom apartment in Orange County. Vacancies are still at all time lows, so don’t tell me that people don’t have money.
These prices aren’t going down. All it takes is someone coming up with a down payment and they can buy instead of rent at these prices.
March 3rd, 2008 at 2:27 pm
the funny part is: at least half the bulls have already lost their job or significant income.
March 3rd, 2008 at 2:36 pm
Looks like the public sentiment is turning more positive.
March 3rd, 2008 at 2:49 pm
Jimmy,
The foreclosure information provided by RealtyTrac has little to no influence on anyone trying to sell their home.
As much as I enjoy the way you poke the middle class in the eye with your arrogant posts, you are completely clueless as to the real estate business. You remind me of the many spoiled brats still living off their mommies in CDM.
March 3rd, 2008 at 2:56 pm
bubble. I hate to tell you this, but no matter how many horrible headlines written by the attention-hungry press you post on your website where you claim the mission of; “exposing the real estate bubble and the greedy people behind it” (the site also advertises foreclosure property sales. hmmm), you can’t single-handedly make any actual difference in this market.
And by the way, Oswald acted alone.
March 3rd, 2008 at 2:59 pm
Law_Student, what are you talking about. The foreclosure crisis was largely supported by RealtyTrac data that was just plain wrong. This gross misinformatuion was presented daily by the press to the public. Many made poor investment decisions based on this data. Only the smart people realized asked a basic question: How can there be so many foreclosures if there are so few around my home? The OC register owes the public a FRONT PAGE SUNDAY ARTICLE CLEARING THIS MESS UP with an apology that the average person can understand. After it became clear something was wrong with the RealtyTrac data, the media contined and contine to publish this absolute garbage.
March 3rd, 2008 at 3:01 pm
They poll 1500 people and then figure that this is representative of what the other 300 million think. It’s like that survey they did in the UK where they announced 60% of Britons think Winston Churchill is a fiction character. They surveyed a few hundred people (obiously from mental hospitals). What 1500 people did they survey? Certainly not 1500 from California, Florida, Nevada or Arizona. Why even post this dribble, it’s such nonsense.
March 3rd, 2008 at 3:11 pm
Too bad for home sellers that “all” home buyers think the market is going down. Yes folks, that 100% of the people in the market right now think the market is going down……..some think the downside risk is small……they are going to be very, very surprised.
March 3rd, 2008 at 3:12 pm
Jimmy,
You are saying that people are selling at a discounted price because of foreclosure information provided by RealtyTrac.
Your words: “I feel sorry for anyone who made a decision to sell at a discounted price because of this misrepresentation. This story seems to have had the most damage in lower-income cities. The only winners may be some renters who can now purchase in a lower-income area”
I am saying that the people that are selling their homes don’t even consider these foreclosure numbers. What they do consider are the comps in their neighborhoods, which may or may not include some foreclosure sales.
By the way, if you decide to drive sometime from CDM to the ghetto you will see quite a few foreclosure signs in these neighborhoods.
Also, if the market were to rebound anytime soon, then whoever bought these properties would be “winners”. I don’t know any serious investors who are looking to buy these properties yet. They are waiting for another drop in prices.
March 3rd, 2008 at 3:15 pm
It still amazes me that there are many that are in complete denial about the housing crash that we are experiencing…..take Jimmy, he thinks that there is some sort of conspiracy that is being staged by the papers…………….
We had a housing bubble, and now we are having a housing crash. Home prices will fall between 40% and 50% over the next few years. We already have a reasonable 20% drop.
March 3rd, 2008 at 3:20 pm
I guess if you say it enough of times, people will believe it. People are so brainwashed by grossly inflated RealtyTrac numbers, that they decided not to buy. Many did just that. Where is the media now? They should retract hundreds of articles that printed defective data as fact. As far as “housing crash hysteria”, where is the CdM housing crash? 20%? More misinformation.
March 3rd, 2008 at 3:23 pm
Jimmy reminds me of a realtor I spoke to recently. He said: “the only problem with this housing market is that people are reading the newspapers” I responded: “oh, great. Now you want consumers to be ignorant so they fall for your lies”
I don’t remember any realtors complaining when the media was reporting new record home prices every month during the housing bubble.
March 3rd, 2008 at 3:28 pm
Hmmmm, 100% of people think the market will drop further? Which market would that be, Sacramento? Sounds like a bottom if I ever heard one. Too bad that will be disproved by the many homes in escrow at this very moment.
March 3rd, 2008 at 3:30 pm
comments like that were also very typical during the Tech Bubble collapse….
it always comes down to fundamentals, in this case affordability ratios with fundamental financing
house prices are only worth what people can finance.
it’s back to basics, down payments and prices less than 4 X income
March 3rd, 2008 at 3:34 pm
Prices are falling, make no mistake about it. This is particularly true over the last 2 months. Call it seasonality if you want, but I believe that the culmination of recession fears, tighter credit, and higher jumbo rates have finally taken their toll. They are NOT only falling in lower income areas such as the IE, that is if you consider Aliso Viejo, Mission Viejo, HB,Tustin, Irvine, and Lake Forest to be “lower income.” These prices are falling right down the middle of OC.
Based on homes that I have been tracking, the apparent recent drop in price suggest that SFR values in mainstream areas could have fallen by more than 20% from their highs if these new sales in fact become comparable prices over the next couple of months. This may be on the back drop of a recession which will only exasperate the problem
Inflation is an important inflence to providing a floor to home values, but I don’t think we are anywhere near an equilibrium for this to have occurred. Once values are closer to comparable rents, I will buy this argument. Until then home values will have to go lower, rents will likely rise, and the buyer psychology will have to improve from fear for there to be a bottom.
March 3rd, 2008 at 3:35 pm
Thoughtful Says:
“Too bad that will be disproved by the many homes in escrow at this very moment.”
Too bad DataQuick numbers disagree with you. The trend is still down.
http://lansner.freedomblogging.com/2008/02/29/mid-feb-oc-home-sales-off-49/
March 3rd, 2008 at 3:45 pm
There are parts of Tustin, eastern HB, and Lake Forest that scare me. That may not be investment quality.
March 3rd, 2008 at 3:59 pm
Uh, national…..those represent November and December escrows. Try again. What will your excuse be then, I’m certain you will have a few.
March 3rd, 2008 at 4:03 pm
There will be a bottom, in the far distant future. As banks continue to critically look at mortgage applications, the pool of qualified buyers will continue to decrease. In addition to tightening credit, informed buyers that understand laws of supply and demand will continue to wait. Real estate agents, and mortgage brokers can continue to fantasize that the housing market will pickup soon…..but this is just a fantasy. This bubble started in 1999 and continued through 2007…….it will take a minimum of 7 years to unwind…….Anyone in the real estate industry that can’t live on about half of their 2006 salary, should start looking for a second job.
March 3rd, 2008 at 4:05 pm
55 % of people think price will go up… ( in the comming years )
Key part of this statement is the latter ….
SHORT TERM ==== Downward pressure
LONG TERM ==== Prices go up
If you bought right and are on 30 year fixed….
You only lose money if you sell…….!!!!!
The Mass of Foreclosures comming in 2008 / 09
will be the fools who did not buy right
they will be forced to sell when their IO option comes up
their mortgage will double and they cant RE-FI
That will be the cause of the SHORT TERM downward pressure
Long Term
RE in CA is a no brainer.
March 3rd, 2008 at 4:06 pm
We had some guy on this blog last year named realtor dave…..he used to claim that he was seeing more business every week and that the market was turning around……..I guess he was hoping that there was someone out there that was just a little dumber than he seemed to be……
Where’s realtor dave now?
March 3rd, 2008 at 4:10 pm
Nano…… this is typical bubble psychology for the people who bought in and can not admit they were wrong.
This is a classic bull trap.
When the bears turn into bulls we will be at a bottom.
Most likely this will coincide with the old bulls wanting nothing to do with RE………….. classic free market bubble psychology at work.
March 3rd, 2008 at 4:10 pm
Jimmy:
You, too, remind me of a friend of ours who is also named Jimmy, and is also a realtor. Realtytrac had nothing to do with this, you need to quit blaming them. So, they report twice- if someone has 2 outstanding debts that are both going into foreclosure- they have no other way but to report both of those. You need to spend the time to sort through the numbers.
People who borrowed over 100% of their mortgage, used their equity like credit cards, lied about their income, and bought into the whole “your house will always appreciate here, it’s the OC- it’s special theory” are the ones to blame (we won’t even go into the whole brokers, RE, etc. thing here)
People cannot afford their own homes, do some research! The only reason you are not seeing lots of foreclosures yet in NB and CDM is because of the fact that most of these people were smart enough to save something for a rainy day, enough to last them for a while- but mark my word- the house of cards is falling here too. I hear it through the other moms. People are putting their homes on the market left and right to try to save some equity because they’ve spent it all!!!! The majority of these folks’ incomes do not justify the house they are living in. It is all coming to light.
Now, I think CDM will have less than NB only because CDM has a large older population who have been in their homes for a long time, they are retired. But watch places like NB and NC- new money- real estate brokers, agents, etc. that aren’t making a living right now. It is really sad of you to think that this place is immune to this sort of thing.
Unless a lot of the rich parents bail them out, be sure that it’s coming to a town near you- millionaires or not!!
March 3rd, 2008 at 4:17 pm
The only trap we have here is the classic “Renters Trap”, where people who did not buy a well located property years ago are either stuck in a rental for life or settle to own in a scary city. In the long run, this will hurt OC, since smart people will leave the area in search of a save and affordable area. This is what OC should be worried about. Right now, thousands upon thousands of job openings requiring an advanced education will never be filled, and this will only get worse.
March 3rd, 2008 at 4:22 pm
hey dimmy please tell us what would have to happen
for you to say…. damn this is a housing crash? what
evidence do you require?
March 3rd, 2008 at 4:27 pm
Jimmy
I have a PhD in Physical Chemistry and a ex MBA from Stanford…..oh yea, I did my post doc at Cal Tech.
I sold my Irvine house in 2005 for a nice profit and the money is in the bank right now. I’ve lived a dept free life for about 10 years……………….gives you a real since of freedom.
Hey Jimmy, what are your education credentials?
March 3rd, 2008 at 4:32 pm
Let’s have a moment of clarity. Lot’s of doomsday headlines, but each Sunday, the Register runs a feature called “Buying it in…”. This week it shows a 4 br, 2.5 ba home in Seal Beach. Current sales price; $701,000. Previous sale $790,000 in July. This home lost 12.7%, of it’s market value. That is real information that is representative of most of OC. Most of OC is not low income shacks and condos. It’s also not Newport Coast. and Villa Park I think this is a realistic example of the situation on the ground right now. (Despite what Buffett has to say about the insurance industry).
March 3rd, 2008 at 4:34 pm
the bulls can’t handle the truth in regards to the education level and asset level of many bears here……. oh well…. good for us I guess.
March 3rd, 2008 at 4:40 pm
So what if a house drops 10% of its value after going up 300-500% over the last ten years. That is not a housing crash. That is inflation. You want to see a housing crash? Detroit, Clevland, Inland Empire. OC had a housing crash in the early 1990s. Well located beach homes selling for 50 cents on the dollar everywhere. Not this time.
March 3rd, 2008 at 4:42 pm
“C had a housing crash in the early 1990s. Well located beach homes selling for 50 cents on the dollar everywhere. Not this time.”
Jimmy you finally said something I can agree with.
Not this time. This time it is much worse.
March 3rd, 2008 at 4:54 pm
Jimmy……..
I am waiting…..Your education credentials?
My educational credentials mean nothing with regard to real estate….I am an expert in a field of science. However, after living through the downturn in the early 90’s, I have a very good idea of what can and will happen to home prices and lending standards when there is a credit contraction.
March 3rd, 2008 at 5:00 pm
NanoWest,
I have almost the exact same education experience as you…. just at your rival schools, so mine is better.
March 3rd, 2008 at 5:14 pm
One funny thing I learned about scientists is that they are great at math, until you put that $ sign in front of the numbers.
Hey Nano - went to Cal Tech too.
March 3rd, 2008 at 5:54 pm
Mav, Law-S.
Glad share this blog with such an educated bunch…..I guess Jimmy must have been talking about himself when he alluded to uneducated people on this site. For the most part scientists don’t care much about money, they just have to have enough to pay the bills………….
March 3rd, 2008 at 6:28 pm
I’ve got to stick up for Scientist. We (yes I’m proud to be one) have been training at gathering data, sifting through the data to determine what is relevant, and then evaluating the data. Frequently, we hypothesize some sort of model or come up with a prediction based on the data. It doesn’t matter if the data has dollar signs $$$ or doesn’t have dollar signs.
I’ve hired a number of engineers and scientists (men and women both) to work for me at my company which I previously sold. About half of them were sharp and the the other half weren’t. The one’s that were sharp were probably sharp before they ever enrolled in college. Sometimes military experience helped shape their character. The job-projects are the real teachers. If, like many government employed scientist, they only put in a 2-3 hours per day of real work, their intellectual progress is severly retarded. In private industry, if they have challenging projects, they will advance intellectually. It also helps to have good mentors, as there is a lot to learn and a lot of judgements to be made.
One important thing to know about scientist is that they have a reverence for the Truth. If E didn’t = MC2, then electricity wouldn’t get generated at the nuclear power plant. Scientist are very comfortable with the truth. The history of science is also one of the greatest stories ever told. Scientists have transformed society like no other group of people. Collectively, the better science professionals can figure anything out given the proper data. Yes, we have some mediocre scientist in our fold, but we also have the finest minds in America and the world. Scientists know things others can’t imagine.
Now I’ll step off my soapbox.
March 3rd, 2008 at 6:38 pm
Jimmy,
Those areas I reference above are the nice parts and I can show you examples if you like. Unlike some of the ultra bears here, I don’t think house prices will fall 50% in nominal terms unless there is a severe recession at which point people will be more worried about their paycheck. The scenario that I explained above assumes that local unemployment stays grounded below 6% and that inflation (thanks to uncle ben) continues to push rents higher until we near equilibrium. I believe that a 25-35% reduction in nominal price from the peak is very plausible for main stream OC
Your coastal property should be better insolated given the desirable location in what will become a global 2nd home market.
March 3rd, 2008 at 6:44 pm
Addendum to the above remarks …. I personally know a healthy number of wealthy scientists, all of whom are either company owners or inventors. I suspect that as a profession, there are more wealthy scientists per 1,000 people than most other professions. Don’t forget that medicine is a science. It does however take a large amount of time for us to achieve wealth status because it takes a long time to master our craft. In my case the Tony Robbins CD series was a difference maker along with many books / tapes on the subject of sales. Knowledge must be acquired and daily consistent actions taken.
March 3rd, 2008 at 8:14 pm
Our country is so absorbed with assigning blame. GREED is to blame for the current situation. Greed on the banks, greed by would be homeowners, etc. You can point the finger at RE agents if you want to. But they list it, execute the docs, which we all sign on our own!
The funny part here? George Bush is responsible…yeah, that is the absolutely most moronic statistic I have seen on this pointless diatribe as of late.
March 3rd, 2008 at 8:51 pm
I’m not so sure calling your father an idiot is something you should brag about Kim. Talk about being educated, you keep on posting Kim and sooner or later, the guys on here will educate you on a thing or two. It happened before and it will again.
March 3rd, 2008 at 8:52 pm
Hey NanoWest,
Someone with an education would not brag about their credentials. Besides, some of the wealthest indiviuals in this country have no formal education. SO what is your point and I do not think anyone cares where you went to school.
NanoWest says-
It still amazes me that there are many that are in complete denial about the housing crash that we are experiencing…..take Jimmy, he thinks that there is some sort of conspiracy that is being staged by the papers…………….
We had a housing bubble, and now we are having a housing crash. Home prices will fall between 40% and 50% over the next few years. We already have a reasonable 20% drop.
I have a PhD in Physical Chemis