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Pricing bottom ‘getting close,’ South O.C. agent says
April 4th, 2008, 12:01 pm · 127 Comments · posted by Jeff Collins
South Orange County real estate blogger Vincent Bindi (pictured right) reported recently what we’ve been hearing from a number of O.C. real estate agents: signs that the local housing market is starting to pick up a tic from the moribund doldrums that hit following the late-summer credit crunch. Specifically, many agents speak of rising escrows amid falling prices, with some bidding wars erupting.
Bindi, an agent with Keller-Williams Realty who regularly analyzes South County housing numbers, picked up that trend as well. He cites rising escrows and stable inventories, while projecting that prices will drop about 10% more. He writes:
“I’m not ready to ring the bell declaring that the bottom of the pricing cycle has been reached, but I think we are getting close. The Months of Inventory which is a 6 to 8 month leading indicator for eventual pricing, is showing signs of strength. … The total Months of Inventory for all price ranges has dropped to 7 months, whereas for most 2006, Months of Inventory was at 8 to 9 months. In addition, the Months of Inventory for the lowest price range (less than $450K) is leading the way to new lows (a good thing), and is now at 5 Months!
“Also … the number of homes in escrow has risen sharply in the past several months, while the number of homes for sale has remained flat, which is unusual for this time of the year. In years gone by, the number of homes for sale would have risen sharply by now. I think this is due to many discretionary sellers (non-bank REO and non-short sale) making the decision to sit this market out and not sell now.
“I do expect the Months of Inventory to jump back up as summer approaches, but so far this is a very good sign. There are still lots of buyers in this marketplace, albeit most of them are still scared to buy. But when a low-priced bank REO comes on the market for sale, you will sometimes find 7 to 9 offers in the first 2 days.
“Our time sensitive Price per Square Foot indicator graph is still heading lower but at a slower rate recently. I still expect this graph to flatten out at about the $300-per-square-foot range (another 10% or so).”
April 4th, 2008 at 12:33 pm
I am surprised that he is not ready to declare the bottom officialy. Dude : The volume picks up a little bit this time of the year.Specially this year when banks are really starting to dump the forclosed properties and accepting the offers on the short sales and the bottom feeders are seriously bargain hunting .When 40% of all sales are short sales and forclosures and the ones that get absorbed are replaced with the new ones at record levels the indicators are not pointing to getting really close to the bottom.Until and unless banks loosen the lending standards I do not see any real bottom. Either they have to give the loans based on peopl’s stated incomes or the prices have to come down to what they could actually qualify for. Please stop the spin or at least do it where people are a little less informed.
April 4th, 2008 at 12:38 pm
Talega is already below $300-per-square-foot. The graph did not flatten there.
I know it’s not beachfront, but it’s not Riverside, either.
April 4th, 2008 at 12:41 pm
Talega is already less than $300-per-square-foot. The graph did not flatten out there.
I know it’s not beachfront, but it’s not Riverside, either.
April 4th, 2008 at 12:47 pm
KENZ, Stop your crying. This guy has many valid points. The people working out in the trenches have the best perspective of whats happening real-time. If you want a one -sided blog go to the Irvine Housing Blog.
April 4th, 2008 at 12:48 pm
He tried calling the bottom in February 2007 and look what’s happened since then.
http://www.ocrealestateblog.com/blog/_archives/2007/2/26/2766985.html
April 4th, 2008 at 12:54 pm
Apparently jobs don’t matter much.
Jobs lost, unemployment spikes:
http://money.cnn.com/2008/04/04/news/economy/jobs_march/index.htm?postversion=2008040412
The entire subprime/mortgage industry, the backbone of the OC economy, has collapsed and thousands of OC workers aren’t making any money:
http://money.cnn.com/2008/03/31/news/economy/copes/index.htm?postversion=2008033105
Real Estate related commissions have collapsed.
Inflation exploding, interest rates increasing, credit availability decreasing, foreclosures increasing, interest rate resets about to take place, devaluation of your money.
This isn’t the bottom, this is the TOP.
April 4th, 2008 at 1:00 pm
“He tried calling the bottom in February 2007 and look what’s happened since then.”
ha ha! nice find! that is hilarious.
real estate is always a great investment when your income depends on rising markets and sales.
April 4th, 2008 at 1:03 pm
shockg, stop your whining. The guy is lying. He should be arrested.
These types threats to America besides a threat to your pocket book.
The pigmen shall be hunted and strungup as all hunters do.
April 4th, 2008 at 1:07 pm
Escrows are taking longer, especially Short sales and REOs, and they are making up a larger and larger portion of the market. So watching pendings get a skewed result because of this fact.
Inventory has stabilized though, that is a positive sign.
April 4th, 2008 at 1:22 pm
This guy is a realtor. Of course he is going to tell you that the bottom is almost here.
These are the same realtors that got us in the housing bubble to begin with.
http://www.nationalbubble.com/flipper-the-subprime-borrower/
April 4th, 2008 at 1:30 pm
This is what Bindi said in his blog on Fed 26, 2007:
“As we stated in a previous article several weeks ago ( Orange County market is Alive Again ), it is our opinion that the downward pricing is coming to an end here in south Orange County. If we haven’t already reached the bottom of the downward pricing cycle, then we are very close to the bottom. How can I be so confident you may ask ? Well as they say, it’s all in the numbers.”
LOL!!!!!
At least he is honest (or dumb) enough to leave his posts from last year up on his blog for the whole world to read it.
Ok, so now we know how credible he is.
Next realtor please…..
April 4th, 2008 at 1:45 pm
Counter point from Calculated Risk which is oft quoted by Krugman at the NYTimes. Regarding LA.
“It might be reasonable to expect that the dynamics of the current bust will be similar to the previous bust. After another year (or two) of rapidly falling prices, it’s very likely that real prices will continue to fall - but at a slower pace. During the last few years of the bust, real prices will be flat or decline slowly - and the conventional wisdom will be that homes are a poor investment.
The Los Angeles bust took 86 months in real terms from peak to trough (about 7 years) using the Case-Shiller index. If the Composite 20 bust takes a similar amount of time, the real price bottom will happen in early 2013 or so. (But prices would be close in 2010).”
April 4th, 2008 at 1:48 pm
That is pretty funny. Making such predictions that didnt come true and than to make basically the same prediction a year later.
It is difficult to say, but there may be some truth related to how many homes that have sold in the last few months are houses that had to sell. I have to say though, based on people I know, there is still a lot of market stress out there.
There are those that have a little equity in their home, but their loan keeps going up and they cant refi. There are those out there that are using credit card debt to cover costs.
You can only do this for so long. I think there is still some time until alll the bad money is flushed out of the market.
I wouldnt predict a bottom until the end of 08 at the earliest. I expect that we will over shoot the bottom and go flat for 6 months to a year and start to see a rebound I would predict not much earlier than summer of 2009.
Im no fancy real Estate agent or blogger and for certain not both! So what do I know?
April 4th, 2008 at 1:57 pm
Eventually there will be a bottom, and if this guy says the same thing every 12 months he will eventually be correct. The same thing happened with those that tried to call the top of the market.
I am with thruthful, truthi, Roc, PEBBLES, ETC. on this one. It is very difficult to call the top or the bottom. Predicting the future can be a very dangerous game.
This being said, the fact is that inventory in OC grew by 3.4 % this past month and the median asking price went down by 1.8%. This suggests to me that we are still a ways from the bottom.
http://www.housingtracker.net/askingprices/California/LosAngeles-LongBeach-SantaAna/SantaAna-Anaheim-Irvine
April 4th, 2008 at 2:01 pm
Realtors are fos. As much as you want to believe them, you cant.
At a place in Newport Coast we were checking out, she mentions that we better hurry up and put an offer in since they are about to accept an offer. She says this with complete conviction right to our faces. Guess what…? 100 days later, another 20K price drop. Boo-ya.
April 4th, 2008 at 2:15 pm
Every single person who follows the day to day activity is saying the same thing: multiple offers are back, NEW escrows are up and inventory is flat. Denial is more than a river in Egypt.
April 4th, 2008 at 2:15 pm
Soon, everyone will all rush down the the locak RE office, and attempt to purchase a home at the same time. The result of that will be an inflation shoot. That is how “Housing Crash Hysteria” will end. Then, the fed restricts monetary policy to put a lid on run away prices. That policy will cause a painful economic contraction complete with layoffs and a potential housing price decline with one exception. Unlike the current market condition that is largely the result of hysteria, that housing price decline will be real since it will be driven by job losses. Watch out.
April 4th, 2008 at 2:19 pm
Methinks him smell his own bottom.
Maketh him think it is close.
Cure for smelly bottom:
Stop always talking about bottom.
Man who call bottom become bottom.
Bottom bottom bottom.
If I hear this word one more time on CNBC, the ultimate cheerleading channel… I am going to send something that’s been on my bottom to the bottom of their mailbox.
Enough bottoms, already.
Can we talk about DIVERSIFYING the Orange County ECONOMY yet?
Oops.
Methinks I just saw the bottom of the 800 pound gorilla in the room.
April 4th, 2008 at 2:23 pm
That Housing Tracker inventory number is bogus. It is overstated by at least 2,200-2,500 units. I guess they are too lazy (or too biased) to take off units as they close.
April 4th, 2008 at 2:28 pm
“Both home asking prices and inventory are tracked for the real estate markets listed below based on Realtor MLS listings”
Where is the bias? And, the number of homes on the market is less as important as the trend. As long as they are using the same consistent metrics to measure inventory, the data is relevant.
April 4th, 2008 at 2:31 pm
For those that don’t like the housing tracker site…..there is always Catalist homes and redifin, and zip……Take your choice. The fact is that inventory is increasing and prices are dropping.
April 4th, 2008 at 2:33 pm
And we saw last week the hugely disproportionate number of listings in the severely distressed cities of Santa ana, Anaheim and Lake Forest. Inventory in desireable areas has gone down, not up. Prices to follow.
April 4th, 2008 at 2:34 pm
Those websites don’t show our market as a whole, only city by city.
April 4th, 2008 at 2:35 pm
Thoughtful- If your accusation is correct, then median asking prices are even lower than reported.
April 4th, 2008 at 2:37 pm
AS IF we are going to hit bottom soon and the start going back up! Ha!
April 4th, 2008 at 2:40 pm
Well if you want city by city then try:
http://realty.fatwalletdeals.com/overview.html
This site has pending sales also….city by city………….it also has rentals, closed, and other great information.
There is too much information available on the internet and Real Estate agents can’t B.S. the general public any longer.
April 4th, 2008 at 2:41 pm
“There are still lots of buyers in this marketplace, albeit most of them are still scared to buy”
Can’t this statement be made at any time? They are “scared buyers” who aren’t really buying. Dude, I’m not buying this guy’s thinking.
April 4th, 2008 at 2:42 pm
Are they really a “buyer” if they are not buying, or is this more pent-up demand…
April 4th, 2008 at 2:45 pm
I think this guy is whistling in the dark.
April 4th, 2008 at 2:46 pm
I thought about that. But according to this wishful thinker, if they are not buying then they still qualify as buyers. Just scared ones. With that logic I’m superman, I’m just too scared to jump off a building to see if I can fly.
April 4th, 2008 at 2:48 pm
You’re right Thoughtless, but only about one thing. Multiple offers are up, but only on foreclosed homes in areas like the 909 where I’m buying, and only on properties that are down 50% already from peak. The fact remains that if you buy in South OC for at least the next year, kiss your down payment goodbye until at least 2012. The end.
April 4th, 2008 at 2:49 pm
Years later, when the gravity of this situation is firmly understood, the question won’t be… “When did Orange County fall apart?”, but rather… “How did Orange County fall apart?”.
You folks, both the bears and the bulls, need to start asking your city councils to start TEARING DOWN HOUSES and start PUTTING UP BUSINESSES. You need to CUT TAXES and BRING MANUFACTURING back to Orange County.
Or, people who should be acting responsibly, like Mr. Lansner, can choose to avoid the subject of what got us here.
City councils took bribes for housing.
City councils failed to adequately create room for manufacturing in the county.
City councils thought ‘real estate never goes down’.
City councils, and their ‘Psychotic Optimism’ did this to Orange County.
When all of this is said and done, and all of the Equity Zombies have come out of their homes… the question is going to be…
WHERE ARE THE JOBS?
Better get workin’ on that, Orange County.
And you better start working on it real, real quick.
The housing collapse is a moot point now.
You people need JOBS, or you will find yourselves staring down the barrels of guns in the street in a very short time.
April 4th, 2008 at 2:54 pm
has this guy no shame he called the bottom
last year 20% down since– keen insight
of the “numbers” knucklehead lloolll
well its certainly not hard to pick out the
posters who bought within the past two years
is it thoughtful would be one of the unlucky
ones who got caught up in the mania llooll
way to go einstein now you get to spend
your days rationalizing why it wasnt a bonehead
move the bottom is years off get over it
April 4th, 2008 at 3:04 pm
One of the biggest differences between multiple offers in 2008 versus 2005.
In 2005 multiple offers were leading the market higher. Taking a 3/2 shack and raising the bar on comparables for the whole neighbordhood.
2008, there are 5 offers on a short sale priced 100k below comparables.
The market is just night and day. Volume, pricing, inventory. It is all pointing to the same thing.
April 4th, 2008 at 3:08 pm
Auction Heaven is living in an alternate reality dominated by a post-apocolyptic, Mad Max like existence.
We’ll all be driving around in junked out cars, squatting in abandoned REO’s, and running around with armed mobs to steal what we need from The MAN!
Ha Ha Ha……. This blog gets more interesting all the time.
April 4th, 2008 at 3:17 pm
When the State of California can’t pay unemployment anymore…
You’ll look back at this moment and say… “Maybe he new where this was going, after all.”
But, for the moment, y’all can keep bickering about who’s a bull and who’s a bear and who’s who if you want to.
You have about one year.
To guage the accuracy of my previous calls, please look them up.
Might sober you up a bit.
April 4th, 2008 at 3:20 pm
Cal,
Good point……multiple offers way below asking price……..
Asking price $700K
Offer 1 $ 500 K
Offer 2 $ 505 K
Offer 3 $ 395 K
April 4th, 2008 at 3:21 pm
Lets hear it for the realestate cheerleaders!!! Ra Ra Ra! Buy a house now, I need a pay check!!! Ra Ra Ra!!
Not……Save your money, don’t spend it, save for your down payment. Rent is cheaper, and prices are still falling!
April 4th, 2008 at 3:30 pm
They have to make prediction every year .
I sold my house in 2003 and they predicted that the market was overpriced and would be top in 2004 but it did not until almost three years later . Now if they say the market is closed to the bottom , you just have to add three years to it. They could not predict the top, how could they predict the bottom? There are a lot of realtors got busted in the housing crash. Should we believe them?
April 4th, 2008 at 3:34 pm
So Thoughtful,
On zip you can search multiple cities in any price range. If homes are getting so many offers why do they have so many days on the market with lowered prices?
Another trick is to take houses off the market that have lingered and put them back up with a lowered price. As to show that it is new to the market and doesnt have multiple price reductions.
Maybe this inst the case at the higher end of the market, but thoughtful. The OC isnt made up of just a handful of cities.
You are starting to sound like Jimmy. That all that matters are high end neighborhoods. Or in his case CDM only and only houses that are withing 3 streets of the beach.
The OC isnt that big of a place, what happens in Santa Ana has an effect on what happens in Newport Beach. It may take awhile, but it is the truth.
April 4th, 2008 at 3:40 pm
Not only are escrows picking up, there is starting to be a greater demand for mortgage workers with New Century reopening as well as Fremont plus other smaller companies. There is not a foot of office space available in Irvine. How do I know this, Vinny Bindi told me.
April 4th, 2008 at 3:47 pm
Sounds like a Dead Cat Bounce to me.
April 4th, 2008 at 3:53 pm
No one can really call a bottom, but you’ve got to consider that the last of the ARMs are set to adjust at the end of this year. That means it’s going to take a while for those owners to start to foreclose and then we’ll see those homes on the market as well, only adding the growing inventory of unsold homes — all of which brings prices down even further. You can still see that many clueless homeowners — even though they are distressed — are refusing to budge on their prices. That just makes the whole process take even longer. Prices will be coming down for another couple of years from here on out. Too many people can’t afford a 500K home without exotic lending.
April 4th, 2008 at 3:57 pm
http://ezinearticles.com/?It-Still-Makes-Sense-to-Buy-a-Home-in-Mission-Viejo-Versus-Renting&id=122499
Another gem from Mr. Bindi.
I like this part the best.
“A major mortgage industry group recently release it’s three year economic forecast, projecting robust economic growth for the Nation and projecting a small rise in long term home mortgage rates to about 6.5% by the year 2007. Again, making the likelihood of a real estate bubble bursting unlikely in Orange County.
Price declines are unlikely, but we do expect a slowing in real estate appreciation in the years to come to a level of 3% to 6% per year, which is still good. Unfortunately, the talk of a real estate bubble, has been going on for some years and has victimized many renters who could afford to buy. Is it too late?”
The last person to listen to in the market is anyone that stands to gain from it economically…..mainly realtors and brokers.
April 4th, 2008 at 4:16 pm
Hey you know, if this guy makes the same prediction every year, sooner or later, he’ll get it right. Then he can brag about his correct prediction.
April 4th, 2008 at 4:18 pm
I’m shocked a realtor calling the bottom and stated that everything is alright. He is a salesman nothing more. He does not have any buyer best interest at heart.
April 4th, 2008 at 4:19 pm
Wow–lots of discussion, some excellent links, so much to chew on today.
I had planned on a new projections post today, so spent some time talking with other agents & brokers. General consensus from the OC/LA County line is that activity picked up in February, with tightening prices and multiple offers in March, but things have been slowing down over the last few weeks.
Lots of different things happening at once. Hard, maybe impossible, to figure out what’s next (OK, maybe not if you’re a bear or permabull).
That’s what makes life, and this blog, interesting!
April 4th, 2008 at 4:26 pm
There are so many possibilities. One is that maybe many of the pent up demanders really wanted to buy and did so in feb-mer. So there may not be as many of those left.
It is difficult to imagine that there are 15K plus buyers just sitting idlly by. Or at least those that can afford to purchase in the current market.
April 4th, 2008 at 4:29 pm
nbsp;NationalBubble.com Says:
April 4th, 2008 at 1:22 pm
This guy is a realtor. Of course he is going to tell you that the bottom is almost here.
These are the same realtors that got us in the housing bubble to begin with.
By this same logic, Bubble, should we assume that because your income relies upon attracting viewers to a web site regarding a housing bubble, you cannot be trusted to give accurate, non-biased information either?
April 4th, 2008 at 4:32 pm
By the way, I am a Realtor but it is actually in my best interest for the market to remain depressed as I deal exclusively in REO.
April 4th, 2008 at 4:51 pm
I bet Lansner was cracking up when he posted this piece because he knew it would get all the permabears going. Its sort of like dropping some bloody meat in a shark tank. Just stay clear and watch the animals attack!
April 4th, 2008 at 4:54 pm
OC Native says:
“By this same logic, Bubble, should we assume that because your income relies upon attracting viewers to a web site regarding a housing bubble, you cannot be trusted to give accurate, non-biased information either?”
Big difference. I don’t make a living off my blog. It is just a hobby. Unlike realtors, I have a real job (software engineer) where I actually build a product (what a concept!!) that gets sold to other countries and helps to minimize our trade deficit.
Realtors, on the other hand, don’t produce anything. They just take a commision out of a real estate transaction.
I write about the housing bubble on my blog because I feel strongly about it and I want people to wake up. I’m sick of people using homes as ATM. I own my house but I don’t see it as an investment..I see it as a home, a place to live.
If I thought that there was no bubble, I could just as easily switched to other topics. There is so much to write about.
If you can’t see the difference, I’m afraid I can’t help you.
April 4th, 2008 at 5:05 pm
Having a realtor in my family, let me just say the following to this idea that they do not contribute anything. That is absolutely not the case: any one with some economic sense knows that trade creates wealth: you have oranges and I have apples, if we trade some with each other our net worth increases. So a salesman that greases a deal is doing a public service. If the world consisted of just two people, there would be no role for a middleman in a deal. But our world is a lot more complicated than that so we will always need salesman: I never look down on anybody who works for a living and that includes salesman, they are necessary to the proper functioning of a market and that’s that.
April 4th, 2008 at 5:17 pm
Good post, Shiny. As for this:
“I’m sick of people using homes as ATM.”
Mind your own effing business, freak. Your attitude represents everything I detest in others.
April 4th, 2008 at 5:21 pm
Shiny,
The difference is when you have people who have a true talent, knowledge and are looking for your best interest. I am certain there are many very qualified ethical realtors. For each of them their are 9 more that are not.
Any job that you take a weekend course in and a test to me is not a professional. The ethics behind it is more my point. Now maybe he truly believes the bottom is near, but he has much to gain from people going out and buying.
If realtors stopped taking a commission or took a flat fee for each sale, I would be more likely to believe them, but at this point I do not.
Why should I? Especially one that has been so wrong in the past.
Lawyers are middle men and we often dont need them to solve disputes, but at least they have at least 7 years of college to get there.
April 4th, 2008 at 5:22 pm
nbsp;NationalBubble.com, do you belong to that church that goes to veterans’ funerals to teach lessons to Americans about accepting homosexuality? You have an equal zeal……and a similar god complex.
April 4th, 2008 at 5:40 pm
This is like watching an argument on the deck of the Titanic, after the ship has gone under, with only half of it sticking up out of the icy water.
You are all in this together, you freaking idiots.
All of you are acting like a bunch of third graders when the teacher has left the room.
Pointing fingers at each other won’t get you anywhere in 12 months.
Fine then.
Listen to the morons on CNBC talk about puts and shorts and call each other names.
Plead your case as ‘victims’ next year.
I won’t be listening to you.
Not even the ‘Bears’.
You could have DONE SOMETHING.
Instead of bickering with each other, there was another way to go.
But you all wouldn’t choose that path. No. It was better to WIN, than to actually discuss a way out of this mess for Orange County.
Blame it on the other guy.
This is like watching a Scientologist’s child dying, knowing the medicine is right over there… in that cabinet.
More painful than words can reveal.
Can’t any of you understand that this is the time for out of the box thinking and solutions?
I need to go lie down.
I’ve done all that I could.
The rest is up to you.
Housing was, and is, all Orange County has.
I don’t understand why I can’t make you all see this.
I give up.