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Home-sales tsunami reaches O.C. beach towns
April 17th, 2008, 12:01 am · 112 Comments · posted by Jon Lansner/O.C. Register columnist
Analysis of DataQuick’s March homebuying report shows the county’s beach-close communities are no longer immune from the current housing slump. DataQuick identified 295 homes selling in beach cities’ ZIP codes last month, a 46% drop from a year ago. In these 17 ZIPs, last month’s median price change was off 11.9% vs. a year ago.
It’s a sea change, so to speak, as last year beach towns enjoyed some breaks from housing’s rough seas. For all of 2007, there was an 18% drop in sales in beach cities’ ZIP codes vs. 30%-plus declines in the rest of the county.
So, compare March at the beach to conditions in other O.C. regions …
• Surprisingly, mid-county ZIPs had a smaller percentage-point sales drop than seaside towns: the 386 sales marked a drop of 41% from a year ago. In these 24 ZIPs, last month’s median price change was down 27.2% vs. a year ago. Could price cuts be key?
• South inland ZIPs had 447 sales, a drop of 54% from a year ago. In these 19 ZIPs, last month’s median price change was down 12.7% vs. a year ago. (To read what one broker from this part of O.C. thinks, CLICK HERE!)
• North inland ZIPs had 413 sales, a drop of 52% from a year ago. In these 23 ZIPs, last month’s median price change was down 14.1% vs. a year ago.
All told, countywide sales were off 47% while the median selling price fell in the past year by 20%. (ZIPS: How did your town do? CLICK HERE!)
April 17th, 2008 at 12:20 am
dimmy oh dimmy wheres dimmy?
April 17th, 2008 at 5:21 am
If your neighborhood has people in it who owe more than 5 times what they make, it will be affected by defaults and foreclosures. The beach has been no more immune to “posers” than the IE. Only those posers started with 200K of income and thought they could borrower 1.5 Million. A little too much debt there, surfer dude.
April 17th, 2008 at 5:45 am
A blind person could have seen this coming.
April 17th, 2008 at 6:16 am
Now I don’t want you guys to get all worked up because you proved the t r o l l wrong. I mean that was like taking money from a subprime borrower.
And anyways you cannot prove the t r o ll wrong. But I guess it is fun trying.
He will say ya but look at how much it is up before.
Or you will never own you ugly renter.
Or he will come back with his Richard Head character and say something sexual.
You see you can’t win. Only Jon wins cause he gets more traffic. Although I am not sure what the traffic is anymore since we don’t appear to see any new blood. I think this blog may have been clotted by the troll.
There really could be good discussion but the tr o ll serves up softballs and the bears hit him out of the park.
Go Bears!
I think it will all turn around soon. ( Jon paid me to say that. 25 cents)
April 17th, 2008 at 6:39 am
I guess we now know that the beach communities are not immune either.
Peter Schiff was so right.
http://www.nationalbubble.com/tribute-to-peter-schiff/
April 17th, 2008 at 6:42 am
Less than one week ago, LA times ran an article titled:
“Southern California beach house prices staying afloat”
My, how things change in one week. Must be a one week price crash.
http://www.latimes.com/business/la-fi-nubeach8apr08,1,4182814.story
April 17th, 2008 at 6:46 am
This downturn is the opposite of the one in the 90’s which started at the top of the market and worked its way down. This time it started at the bottom with the marginally (un)qualified unable to make the payments on their subprime loans. Many of those were concentrated in the outlying new suburban tracts. But, the wave is working its way to the more expensive established areas. It is only a matter of time.
April 17th, 2008 at 7:09 am
This can not be correct. Steve Thomas says pendings are up. Up! Up! Up! And he is a realtor; a real estate professional. He is an expert. Do not listen to the naysayers. Now is a great time to buy. Pent up demand is coming to the table. Buy now before you are left behind. If you plan on keeping your house for 50 years, does it really matter exactly when you buy?
April 17th, 2008 at 7:12 am
The high end is immune. Beach property is immune. My community is immune. Newport is immune. Irvine is immune. Huntington Beach is immune. Asian money is buying and will stabilize prices. If you wait, you will miss out on this great buying opportunity.
April 17th, 2008 at 7:14 am
Face it. The housing downturn is big and getting bigger.
April 17th, 2008 at 7:38 am
” This can not be correct. Steve Thomas says pendings are up. Up! Up! Up! And he is a realtor; a real estate professional. He is an expert. Do not listen to the naysayers. Now is a great time to buy. Pent up demand is coming to the table. Buy now before you are left behind. If you plan on keeping your house for 50 years, does it really matter exactly when you buy?”
I’m feelin’ what my pardna awgeee is preaching. And would like to add: prices are very favorable, the selection is great, and when you have a family (or even just a cat), it’s always a great time to buy.
Semper fi!!!
April 17th, 2008 at 7:41 am
We all know it is not immune. It is vulnerable to the same degree that it was unrealistically inflated… which may not have been as bad as other areas ….
Toscano had a timely story on this topic last week:
(He defines:
low-tier: under $421k
mid-tier: 421-629k
high-tier: over629k )
“A big part of that resilience has to do with the fact that prices in that part of the market never got so out of whack in the first place. The heavy influence of the subprime mortgage securitization boom led to much larger proportional increases in low-tier home prices than in the high-end markets. This is illustrated in last week’s price update, but to put some quick numbers on it: in the five years leading up to the price peak in November 2005, the Case-Shiller low-tier index increased by 144 percent versus a much smaller — though still enormous in absolute terms — increase of 88 percent in the high tier. (The middle tier split the difference at 116 percent).”
http://www.voiceofsandiego.com/articles/2008/04/17/toscano/823highendprices033108.txt
April 17th, 2008 at 7:46 am
I would have liked to see the zip codes DQ is talking about. HB is a coastal town, but reaches pretty far inland and has some rough areas. San Clemete isn’t as big but isn’t all millionaires either. I think when people think coastal here, they tend to think of NB, Main St.in HB and Laguna. Technically wrong, but just more familiar. It would have been interesting to see the breakdown.
April 17th, 2008 at 7:47 am
More useless median statistics. Didn’t we just see yesterday how new homes are off by 3%, but when mixed in with condos, the nubmer is off 20%? Hmmm.
April 17th, 2008 at 8:07 am
I can’t help but notice the foreclosure signs in CDM these days
how is this possible? how do rich people get foreclosed on?
LOL
April 17th, 2008 at 8:31 am
Let’s face it. Owning a beach front property would be a real bad deal right now. No one wants to live there anyway.
April 17th, 2008 at 8:37 am
mav, you must be in Corona. That is not Corona Del Mar. Corona Del Mar has a beach. Corona has smog.
April 17th, 2008 at 8:38 am
hey thoughtless didnt you tell us that dimon said
the worst was over? well either he was lying or you were
http://www.bloomberg.com/apps/news?pid=20601087&sid=acsByxgYaDvM&refer=patrick.net
April 17th, 2008 at 8:39 am
Watch the median now……
April 17th, 2008 at 8:42 am
Glad to see you read your links, rants.
April 17th, 2008 at 9:17 am
no Jimmy, this is CDM, there are for sure foreclosure signs there, right now !
do you have sun glasses that filter these out?
the funny part…… they would not be in foreclosure…… if there was any equity left in their homes
April 17th, 2008 at 9:19 am
Bbbb-ut, but, but, but this is Orange County and the beach- where home prices never go down! Poppycock!
April 17th, 2008 at 9:22 am
…… or if they were actually rich LOL
not well to do yuppies making $250K a year with $1.5M loans
April 17th, 2008 at 9:25 am
Jimmy: I don’t argue with you: having lived there for years, I say that Corona Del Mar is unbeatable. The place has charm, I love the beach air, and you can even hear the breakers/seals on a quiet night in the 700 blocks (very inland edge of CDM). Irvine is a wasteland in comparison: trust me, I had the misfortune of leaving CDM for Irvine years back so as to get more bang for the buck. But there is a reason it is cheaper — Irvine is nasty, just plain nasty in comparison. It is so plastic, very foreign feeling. Now you can say that CDM is full of pretentious windbags but in reality the average neighbor there is far more welcoming than your typical Irvinite: you go to pick up your kid at school in Irvine and are assaulted with jabbering foreign tongues, you feel like you are at the UN or something. I find it just plain rude because you don’t know what they are yakking about, it is no different than whispering around others. But we are each entitled to our opinion, I know that to many, Irvine is wonderful but that is because they are comparing it to Orange or Santa Ana, not to CDM.
But it looks like there is trouble brewing in paradise: http://www.foreclosure.com indicates that zip 92625 (CDM) has 3 foreclosures and 6 “pre-foreclosures” as well as a score of tax liens. How can that be??? Jimmy needs to ride to the rescue.
April 17th, 2008 at 9:29 am
Jimmy, I think you overlooked this one. Just a stones throw from the PCH. Booya.
http://www.redfin.com/stingray/do/printable-listing?listing-id=1639109
Whats that sound?…rrrriiiiiiiiip. Ouch!
April 17th, 2008 at 9:54 am
Lived in OC all my life except for 21 years in military. Grew up on Edinger near Marina HS when street was called Smeltzer and Bolsa Chica was a dirt road. Listened to coyotes at night and got our milk from the corner Adohr Diary. My first elementary was 6 Quanset Huts for each grade and outhouse for bathroom. I remember the day when we moved to our brand new school, Ocean View Elementary which has since been torn down and is now a Costco. Our house on Edinger cost $9900 in 1959. I came back to OC after retiring in 2000 and refused to buy a home then as I thought prices were too high. I’d been stationed all over, Florida, Washington State, Upstate NY, and Hawaii. Owned a home in all of them. Paid way less for them too. I don’t like HB anymore, the place is not the same, crime, traffic, strange people, no more charm. You guys can talk about the OC all you want, I no longer see what the big deal is. Tell me what I’m missing and maybe I’ll be persuaded to stay and TRY and buy a stucco box for half a million.
April 17th, 2008 at 10:00 am
Housing is a pyramid scheme built on excessive leverages. Subprime loans allowed the build up of the lowest rung of shaky buyers. The recent sellers then doubled down on their next, more expensive home purchase, believing the OC mantra that houses here never go down. On and on it goes all the way to the top. ( I know people having no business owning million dollar home were trading and flipping them like stocks the past 2 to 3 years in Irvine). At every level, the new buyer leverages as much as he/she can by taking out the largest possible mortgage allowed by the banks. Now the scheme just stops and pyramid begins to crumble, bottom first then working its way to the top. It was a game of leverage from Wall Street to Main Street. Greed is good for the few who got in the game early and got out, but bad for the public now as bagholder of trillion of bad debts and toxic leveraged derivatives.
April 17th, 2008 at 10:02 am
Where are the CDM foreclosure signs?
And how do you explain the difference in opinion between the LA Times and OC register?
LA Times prints an article saying beach homes are holding their value. Then, OC Register prints an article claiming beach homes are being hit by a tsunami.
Either the LA Times or the OC Register is telling a tall tale.
April 17th, 2008 at 10:05 am
Shiny
I loved your comment. We moved here from the midwest last summer. Picked cdm because of the schools, proximity to the beach, lack of sexual predators, safety, and the reputation. Saw the same thing you did at the homes/schools we looked at in Irvine. We decided to rent until we found the perfect neighborhood and house, not to mention we were pretty sure that prices were coming down.
Even though NB and CDM have the reputation of being plastic, rich, etc. I haven’t found that at all. I have found the neighbors, school parents to be totally down to earth and very friendly. I haven’t seen any of the cliquish rich jabber I thought there would be. I never want to leave this area.
But unfortunately, I think that a lot of these people do not make the salary to afford a 1.5+ home. Don’t get me wrong- a lot of them do, there are a lot of old family businesses that support a nice lifestyle for some. But I am seeing my friends (30’s and young 40’s) talk about their friends losing homes and having to sell. It is happening here, it is going to get worse. It’s sad but this is what we get for living beyond our means in this country.
btw- we were fishing down on little island yesterday and there were 4 sea lions that had taken over a boat and you could hear them yelling at eachother. What a great scene. My kids never want to leave! we’ll rent until we can afford a nice home here.
April 17th, 2008 at 10:09 am
shiny,
i used to live in an expat community in se asia.
i speak english with other expat while we travel around.
no one call us rude or anything like that.
maybe you just have a problem with some certain inferior race?
April 17th, 2008 at 10:16 am
Coco,
I, too, have lived in OC most of my life, in Orange. Orange groves on Tustin Ave., no 55 fwy, no AC, very Leave it to Beaver-like. Where do you find that now? I don’t know if it exists anymore. It’s a different world. But, there are still vestiges of that time around here and there. And it’s still a lot better than…………….Stockton (and most other metro places). Maybe Cap Bch or San Clemente?
Maybe the bears are right. Maybe OC is special only to those who remember how fantastic it was and still see a little bit of that.
April 17th, 2008 at 10:17 am
Mom in CDM and Shiny- Thanks for the good info on Corona Del Mar. I’ll check it out. Always liked Oceanside/Carlsbad area too. HB is bringing me down, making me feel poorer. Gotta be a better place to live in SoCal.
April 17th, 2008 at 10:19 am
Wow….an 11.9 percent decline for the beach communities….what a disaster! This, after a 200% run up in the last 5 years. How will these people survive this?!?
Maybe someone who bought last pring with 100% financing might be a little nervous, but most in these areas can rest easy with a nice little nest egg for when they retire.
April 17th, 2008 at 10:38 am
truthi: It is just a personal preference: it is unsettling to me to have everybody speaking a foreign tongue when I am in my hometown. Honestly, I have no idea what they are saying. And my point would be: when in Rome, do as the Romans do. This is the USA: to quote Jules from Pulp Fiction: English, [expletive deleted]!!, do you speak it?
April 17th, 2008 at 10:45 am
A REO in Monarch Beach….
http://www.redfin.com/stingray/do/printable-listing?listing-id=1642118
April 17th, 2008 at 11:15 am
Jimmy, I have seen a number of foreclosure signs in Corona Del Mar right smack dab on PCH…… to be honest I was shocked at the blatant advertising in CDM…… plenty of rich peole, but the faux rich people who could only afford the min payments on an Option ARM…. I guess they are being weeded out
April 17th, 2008 at 11:24 am
The worst is yet to come. Watch this video …..
http://www.tickerforum.org/cgi-ticker/akcs-www?post=40563
April 17th, 2008 at 11:36 am
mom in cdm: i couldn’t agree more — I often read the “irvine housing blog” and think to myself, you folks are worrying about a place that ain’t worth worrying about. Now CDM, that is a community. And my point to the Irvine Co. would be: go visit there, scratch and sniff it, you can’t manufacture it, a community like CDM is organic, it evolves just like a living thing. When you plan something down to every detail like Irvine, you get a plastic home town, not the real thing. Irvine depresses the hell out of me. The “weeds” theme song must have been written for the homes there: They’re all made out of ticky-tacky. And they all look just the same.
April 17th, 2008 at 11:37 am
Foreclosure signs on PCH? What state are you in? Have you ever been to OC?
April 17th, 2008 at 11:43 am
LOL Jimmy, I will take pictures next time…… I know, I myself was shocked !! you can’t make this stuff up if you tried
April 17th, 2008 at 11:51 am
Let people who have money to burn buy boxes on the beach. Let the rest wait until the prices drop further.
April 17th, 2008 at 12:22 pm
Sick_of_bears,
I know 11.9% sounds miniscule compared to 200%. However, a 50% decrease will wipe out a 200% increase.
April 17th, 2008 at 12:35 pm
Sal, your numbers are wrong. A 200% increase would make a $100,000 property worth $300,000, A 50% decline from that would make a property worth $150,000. Just sayin.
April 17th, 2008 at 12:42 pm
sal, check the matk.
Buy a home for 1M. A 200% increase puts it at 3M. Then a 50% decrease puts it at 1.5M. Still up 500K. Assume 20% down.
On your initial investment, you are up 250%, and all tax free, if you are married.
Now, for the nightmare CdM beach owners face.
Purchase CdM in 98 for 500K. At peak, 2.5M. Now 2.3M. Wow.
April 17th, 2008 at 12:43 pm
shiny,
your opinion about other languages that tells me you never been living in foreign countries for a long period. What would you speak when you work in foreign country? Can you do as Romans do? Luckily for you to be able to affort to live in CDM, but that doesn’t makes a man. Open mind, understanding and sharing that will be good for your health. My $ can affort more than I’m having now, but I found a good place and neighbords in Anaheim (not hill), where I can have a perfect environment, I don’t think I can find it in CMD, HB or Newport. Don’t feel offense, I just share my feeling and hope you understand to make your good health.
April 17th, 2008 at 1:12 pm
My post was not clear.
If your investment doubled (200%), it would only need to be halved (50%) to get you back where you started.
For example
100k * 200% = 200k
200k * 50% = 100k
The point I’m trying to make is that you have to be careful when comparing % increases vs % decreases. If you invested 100 bucks and it went up 10%, you’re at 110. If it goes down 10%, you’re down to 99. You’ve actually lost a buck from your original investment. Just sayin.
April 17th, 2008 at 1:32 pm
Exactly Jimmy….I had a chance to buy a small Beverly Hills SFR in the mid 90’s for $325,000. It’s now worth well over $1,000,000. It may go down to the low $900,000’s.
The point is, highly desireable areas have the same percentage increases as everywhere else when things are going good, but never fall back like the Riverside’s and Palmdales of the world. That’s why if you can get a 10-15% decrease in a good area, you should jump on it IMHO.
April 17th, 2008 at 1:36 pm
Sal:
You need to buy a new calculator.
$100,000 x 200% = $300,000
$100,000 x 100% = $200,000
$300,000 x -50% = $150,000
April 17th, 2008 at 1:40 pm
Correctly stated, a 100% increase is wiped out by a 50% decrease.
April 17th, 2008 at 1:41 pm
shiny will never survive in a foreign (non-euro) country.
April 17th, 2008 at 1:59 pm
Sick_of_bears,
Umm…200% = 2. What calculator did you use?
$100,000 x 200% = $100,000 x 2 = $200,000
I just wanted to explain that 1% going up isn’t the same dollar amount as 1% going down. The 1% going down is more because it’s a percentage of a larger amount. That’s all I’m trying to say.
April 17th, 2008 at 2:19 pm
Truthi:
I am grateful for the diversity is southern california / Irvine.
I think the influx of Asian population contributes to the quality of OC life
They are wonderful carring people. Often RN’s and in health care biss
Dont mind shiny…….he is an looking for the top pick…best OC towns.
He also has very strong oppinions.
Shiny:
Easy there big fella.
April 17th, 2008 at 2:28 pm
Ok Sal, lets put this one to bed…..
If you have $100,000 invested and you get a 100% return on your investment, you would end up with $200,000.
$100,000 x 100% increase (return) = $200,000
or
$100,000 x 2 = 100% increase (return)
If you have $100,000 invested and you get a 200% return on your investment, you would end up with $300,000.
$100,000 x 200% increase (return) = $300,000
or
$100,000 x 3 = 200% increase (return)
If you want to multiply, you don’t count what you already have (your original $100,000 investment).
April 17th, 2008 at 2:38 pm
(third time trying to get this spam word right…keep trying to type the same thing over and over)
I have reread my comment to shiny and it didn’t sound like I wanted it to. It sounded offensive to some I believe. I wanted to clear that up. When I said that I found the same thing in Irvine as he/she did, I meant that there were a couple of people that were not as nice (2 principals in fact) and that I preferred CDM over Irvine. I in no way meant to give any offensive remarks validation. Sometimes we type faster than we think and send it off. I had actually looked in Irvine to rent because of the schools testing scores. Even though I was a little hesitant about putting my kids into a school where they would now be the “minority”, I also felt it offered them academic challenges and structure they needed. But the principals were not that nice and felt “plastic”. I did like the newer homes, gated communities, and neighborhood pools, etc.
I prefer CDM, but in no way meant to offend anyone.
April 17th, 2008 at 2:53 pm
Sick_of_bears,
I multiplied because I was describing the scenario where your investment doubled. It’s clear now that you were trying to describe a different situation.
You are talking about a 200% return on investment which would be equivalent to tripling (300% x orig. Investment) your investment.
I just wanted to explain that there’s more than meets the eye when you compare % increases to % decreases. Hopefully that point has not been lost through this discussion.
April 17th, 2008 at 3:05 pm
Shiny,
I agree with you regarding the lack of character or creative design in Irvine. But, the truth is that The Irvine Co., by making every resident, whether private or corporate, subject to their CC&Rs which contain strict rules of design and maintainance probably saved the area from becoming a mish-mosh of even more boring designs put up by out-of-the-area developers who would have just thrown up some junk, made millions and left town. It’s not my cup of tea, but I think it’s much better than what would have happened otherwise. And don’t forget, The Irvine Company dedicated over 20,000 acres of their land to a nature conservancy, so it will never be developed. It could have been a lot worse.
April 17th, 2008 at 3:07 pm
Nothing wrong with Irvine. A fine community. I prefer the older west end near UCI.
April 17th, 2008 at 3:08 pm
is the third grade math display really necessary here?
wow, talk about over analyzing the obvious
bottom line a 20-40% drop in housing prices in the face of inflation over a number of years translates into a massive asset bubble in real terms
period, let’s move on
April 17th, 2008 at 3:11 pm
A Mom in CDM: Your kids would be the ‘minority’ in an Irvine school? Are you sure you were in the right city?? I doubt that statement is correct.
April 17th, 2008 at 3:18 pm
Another thread, in the Mortgage section, had this to say: “Gimein is referring to the hundreds of billions worth of option ARM loans that were marketed to people in California with good credit. With home prices plunging and possibly headed for a 40 to 60 percent drop, many of these folks will be mighty tempted to walk away once their loans start resetting next year”
There are two components to the above statement to be concerned about. One, “loans that were marketed to people in California with good credit” should speak for itself. As Thoughtful has OVERWHELMINGLY documented in posts above, the majority of these loans were made with a very conservative LTV, as opposed to the problem loans of this past 6 months, which were mostly at 100% LTV at their origination - a recipe for disaster.
The option ARM loans were, for the most part, made to people who are going to continue to make the payments on their obligations.
The second part of that statement, “With home prices plunging and possibly headed for a 40 to 60 percent drop” is the type of preposterous bear droppings that spew untethered over this blog, and most of the “bubble blogs” conveniently posted in the “Blogroll” above, and even more so on Lansner’s threads.
Depending on which source you cite, there has thus far been somewhere between a 10% and a 20% drop in prices, over the past 2 years, in Orange County. A report that I will be posting within a day or two ( Steven Thomas’s latest O.C. market report, that I have advance knowledge of.) will be convincingly showing 3 things.
First, that at the worst, from this point to the end of this year, there will be no more than an 8% further drop in house prices in O.C.. PERIOD!
Second, that by no later than June ( my earlier layperson’s prediction was May.) the YOY median prices for O.C. will be heading up, instead of continuing down. ( For obvious reasons that I have described numerous times in the past 2 months.)
Third, that the ABSOLUTE bottom of this current real estate cycle will be NO LATER than January of 09.
As a result, the predictions of a 40-60% drop in prices is pie in the sky speculation, ( Or, from the glass in half empty bear crowd, “doom & gloom” prognostications.) of someone with NO knowledge of the conditions in O.C..
I’ll be back with GOOD news in the next day or two.
April 17th, 2008 at 3:22 pm
dood, way to shove your typical 10 pounds into a 5 pound bag
fundamental debt to income ratios suggest a 40% drop in price is going to happen.
In real terms that will easily be a 60% drop (inflation adjusted).
April 17th, 2008 at 3:27 pm
Jason
go to greatschools.net , you can do a compare of the schools in irvine.
April 17th, 2008 at 3:31 pm
More good news from a lender