The math of Steve Thomas at Re/Max Real Estate Services in Aliso Viejo says demand for O.C. housing is growing. As of last Thursday, 2,374 existing homes and condos had been placed into escrow in the past 30 days, a 23% gain vs. a year ago. It’s a strong hint that when these deals-in-the-works are completed in the next two months, we’ll see a mathematical end of the county’s home-buying losing slump. By DataQuick’s tracking of closed deals, it’s a losing streak that’s run 30 months back to September 2005.
Also, Thomas calculates a “market time” benchmark tracking how many months it theoretically takes to sell all the inventory in the local MLS for-sale listings at the current pace of pending deals being made. By this logic, it would take 6.55 months for buyers to gobble up all homes for sale at the current pace vs. 6.77 months two weeks earlier and below 7.75 months a year ago.
Thomas notes: “Our agents in the trenches are unanimously reporting that there is a large wave of first time home buyer activity. … prices have finally fallen to a point where they can now afford to purchase and that is precisely what they are doing.” And, “inventory has not changed much this year and has actually dropped by 61 homes over the past month.”
Here’s how listing, deals in the works and market time look as of last Thursday …
| Slice | Listings | Pending | Market time (mos.) | 2 wks. ago | 1 yr. ago |
|---|---|---|---|---|---|
| All O.C. | 15,556 | 2,374 | 6.55 | 6.77 | 7.75 |
| •$0-$500k | 7,226 | 1293 | 5.59 | 5.74 | 7.37 |
| •$500k-$750k | 3,692 | 657 | 5.62 | 6.01 | 7.33 |
| •$750k-$1m | 1,778 | 225 | 7.90 | 7.85 | 7.67 |
| •$1m-$1.5m | 1,274 | 117 | 10.89 | 10.26 | 7.47 |
| •$1.5m-$2m | 719 | 55 | 13.07 | 15.64 | 9.43 |
| •$2m-4m | 805 | 51 | 15.78 | 15.13 | 14.44 |
| •$4m+ | 285 | 13 | 21.92 | 28.40 | 10.67 |
(Note: k=thousand; m=million)
Here’s the entire report:
Market Time Report: April 17, 2008
First Time Home Buyers are Back
Good Afternoon!
Current housing demand continues to outpace last year and the reemergence of first time home buyers is a major factor. If you listen to or read all the recent reports regarding “sold” statistics for March, one would quickly come to the conclusion that the real estate market is continuing to sputter along at a slow pace. However, this could not be further from the truth. Sold activity is a snapshot of the past, about a month and a half in the past to be precise. So, March “sold” statistics are really a snapshot of the second half of January through the first half of February. The market did improve during that time but was still extremely anemic as demand, a snapshot of the prior 30 days of escrow activity, grew from 989 escrows in mid-January to 1,630 escrows in mid-February, a gain of 641 escrows. Since then demand has continuously grown to its current height of 2,374 escrows. Last year at this time demand was at 1,925 escrows, 449 fewer than today. This recent escrow activity will translate to sold data reported in the months to come. The big story will be that the year over year sold statistics will be better for the first time since the Autumn of 2005. Demand already crossed that threshold two weeks ago. Some skeptics attempt to discount the uptick in demand, claiming that many will fall out of escrow. That is simply not statistically true. The data does not support their claim. Yes, some escrows do fall out; however, the snapshot of 30 day escrow activity misses some escrows that have already closed because they were less than 30 day escrows. The average escrow is about 45 days, but we do have one, two and three week escrows that won’t show up in the data for long. So, the less than 30 day escrows offset most escrows that fall out. The bottom line: the market is improving. Market time has dropped from 15.6 months at the beginning of the year to 6.55 months today, not as deep of a buyer’s market. The active inventory grew by only 82 homes in the past two weeks to 15,556 homes. The active inventory has not changed much this year and has actually dropped by 61 homes over the past month. Last year at this time the active inventory was only 745 homes fewer homes than today and it was growing at a rate of 700 homes every two weeks.
The majority of the upswing in demand is in the lower ranges. Our agents in the trenches are unanimously reporting that there is a large wave of first time home buyer activity. First time home buyers had been priced out of the market and dwindled in numbers during the last couple years of the housing boom. But, prices have finally fallen to a point where they can now afford to purchase and that is precisely what they are doing. One year ago there were only 408 condominiums priced below $250,000 compared to 1,263 today, more than triple. One year ago there were only 343 detached homes priced below $500,000 compared to 2,848 today, more than eight times. The market time for detached homes below $500,000 is at 4.61 months, a slight seller’s market. It is not a coincidence that 75.7% of all condominiums and detached homes below $500,000 are either a foreclosure or a short sale. This fact has provided many opportunities for first time home buyers to finally enter the market. The first time home buyer activity is the seeds to the rebirth of the Orange County housing market. That does not mean that the market is going to right itself overnight. But, it is the first positive step in the recovery process. It was the lower ranges that were hit hard last March with the beginning of the subprime meltdown and it makes sense that it would be the first to take a step in the right direction. Many homes and condominiums in the lower ranges are receiving multiple offers. Foreclosures and short sales are not only securing multiple offers, they are closing above their asking price.
The upper ranges remain sluggish due to the financial crunch. The financial system is still not functioning properly. Lenders are still having liquidity issues and their lending requirements and interest rates for loans in the upper ranges are too rigid and are deeply cutting into demand. For example, the market time for homes priced between $1 million and $1.5 million is 10.89 months compared to 7.47 months one year ago. The upper ranges will remain sluggish until the financial markets start buying pools of mortgages once again. Since the beginning of the financial crunch in August of 2007, the financial markets have refused to buy any pools of mortgages. But, there are some signs that their appetite has been growing. First, a major national lender attempted to sell a pool of only the best of the best loans at the end of January, but the financial markets would only purchase them for a discount. They repeated their effort in March and the financial markets bought it at “par.” The logjam in the financial markets should begin to ease by the end of the third quarter, as will the disparity between conventional loans up to $417,000 and the new loan limit of $729,750, as well as jumbo loans above $729,750. Currently, there are three tiers of mortgages. The cheapest rates are for loans below the old conventional loan limit of $417,000. Rates for loans between the old conventional limit and the new $729,750 limit are three-quarters of a point higher. And, lenders tack on an additional three quarters of a point for loans above the new limit. As the financial markets’ appetite for pools of loans increases, these disparities will begin to diminish. This will be the second big positive step towards recovery. At that point, demand at the upper end of the Orange County real estate market will increase.
Buyers, what to do? First, it totally depends upon the area and price range on the approach. Naturally, in dealing with foreclosures, short sales and the lower ranges, be prepared for much more competition than any headlines would lead you to believe. There is a strong probability that you will be competing with other buyers in writing an offer on a home. In some cases it will take an offer to purchase above the asking price to secure a home. Due to the sluggishness in the upper ranges, buyers are more in control of their destiny with less competition. For those buyers looking for a deal in the higher ranges, keep in mind that only 5.7% of all distressed homes, foreclosures and short sales, are found above $750,000. Be prepared for increased activity on these properties too because every buyer is looking for a “deal.” Also, it is important to point out that lenders are in the driver’s seat when it comes to foreclosures. Currently, the market time for foreclosures is 2.05 months, a deep seller’s market. It is important to point out that the low interest rates should remain intact throughout 2008, but pressure is mounting for the Federal Reserve to raise rates as they grow more concerned about an increase in inflation. Rates have been favorable for a long time, but do not get comfortable with today’s interest rates, they WILL eventually increase. As soon as the economy starts humming along again, expect the Federal Reserve to reverse course and push rates up higher. By the way, for every 1% that interest rates increase, it erases approximately all of the benefits of waiting for property values to decrease 10%. The payments are virtually identical.
Sellers, what to do? It is extremely difficult to navigate in the current Orange County real estate market. Now more than ever it is essential to have an experienced Realtor® guide you throughout the process. There are numerous variables and market changes to continuously watch for: area short sales, foreclosures, local trends, detached versus attached pricing, etc. Be prepared to constantly reevaluate your pricing position within the market. The key ingredients to a successful sale are an excellent price and excellent condition. In arriving at price, the condition and location increase or decrease the market value. This market can also test a seller’s patience and you must be as prepared for a showing on day 120 as you were the first week. Stage your home for success: turn all the lights on, have soft music playing in the background, open all of the shutters and blinds to allow in natural light, turn on the air conditioning on hot days, box up and store all clutter and your home should be neat as a pin from top to bottom.
Have a wonderful weekend.
Sincerely,
Steven Thomas
RE/MAX Real Estate Services ( End of report.)
Next year or shortly after, myself (and 3 or 4 other 1st-time buyer couples that we know) will buy, but not until prices fall back in line with fundamentals. A usual summer bump is nice (nice for those buyers who are impressed by getting 150k off what their home price was in 05), as these will continue to bring comps down. With job loss, income stagnancy, credit card debt, high gas prices, recession-related issues, no more home-refi ATMs, and tighter lending, we’re not fearful at all that prices will rise in any sustainable period. Not until 09 or 10.
So, keep pushing it, bulls.
Future home buyers: Look at any graphs comparing income levels, the local economy, jobs/wages, and housing and how closely they mirror each other - they’re still out of whack. Hold on and don’t be impressed by the summer bump, this market is still moving DOWN.
Bulls: Tell me where all of this money will come from…
Jon
Steve Thomas claims that with his math he can predict what will happen 2 months down the road. Let’s have Mr. History look back and see what Steve said in Jan and Feb. Jan 25th he said 22% increase in demand. Feb 25th he said 49% increase in demand but at the end of March we are still 50% below normal. Steve and his math is about as good as Gary Watts and his cyrstal ball.
I really doubt we are going to see any kind of a significant turnaround. Home prices are still very high.
People always want to buy a home. Wouldn’t anyone? The problem is the banks/lenders ran out of fundings? The secondary market for mortgages is dead! Investors worldwide who have been burnt by the US’ toxic mortgage back securities (now the UK’s) realize that until prices fall back down to fundamental values measured by affordability, income-dependent metrics, or housing P/E ratio, etc., they will not step in. That is why banks hesitate to lend. ( Without the fools at the end of the chain, lending now requires banks to hold onto assets with rapidly depreciating price). The only sources of fundings is from the govt. And how much subsidies can the govt., on behalf of US taxpayers, can provide to a market of falling asset price? The biggest trend of all out there is de-leveraging of bad-debts (yep, including the over-price mortgages)! And the process requires new fools, besides the govt. the last-resort buyer of bad debts, to step in to ease the loads. Don’t be fooled by these self-serving interests out there.
Sorry bears, but this is the stat that is key:
—Market time has dropped from 15.6 months at the beginning of the year to 6.55 months today, not as deep of a buyer’s market.—
Sellers that do not have to sell are not putting their homes on the market as evidenced by market time stats.
Look at the number of condos under 250K: —One year ago there were only 408 condominiums priced below $250,000 compared to 1,263 today, more than triple.—
Look at the number of SFR below 500K…—–One year ago there were only 343 detached homes priced below $500,000 compared to 2,848 today, more than eight times. The market time for detached homes below $500,000 is at 4.61 months, a slight seller’s market.—-
The national average to sell a home is traditionally 90-120 days. OC is moving back to fundamentals. Somehow, this will still not be enough for you all. May I then suggest a very nice agent and internet search for Tulsa, OK? It is in locations like these where your median income theory and housing costs matrix will coincide with one another. It will not happen here.
re:” It is in locations like these where your median income theory and housing costs matrix will coincide with one another. It will not happen here.”
Yet.
You left off “yet” at the end.
When prices become more affordable, people buy. Doesn’t take a rocket scientist to figure that out.
If the lower priced homes/condos are the ones that are selling, other would be sellers will drop their prices accordingly.
As long as prices aren’t going UP, then buyers are still in the drivers seat.
Escrows WAY up.
Inventory down and almost a seller’s market.
Rates attractive.
ARM indices PLUMMETING.
Affordability off by less than a measly 7%.
First time buyers back IN FORCE.
FHA/Fannie/Freddie to fund large, flexible loans.
Fannie to KEEP billiions in loans rather than securitize them.
Additional bailouts in the pipeline to be announced SOON.
Good start to the week!
Keep dreaming Min Sky. You might find it in one of these lovely areas:
Santa Ana 92707 10.43
Santa Ana 92701 10.14
Anaheim 92804 8.47
Santa Ana 92703 8.23
Santa Ana 92704 7.86
Anaheim 92801 7.56
Stanton 90680 7.28
Anaheim 92805 7.16
Garden Grove 92844 6.62
Garden Grove 92843 6.36
Garden Grove 92841 6.18
Garden Grove 92840 5.95
I wonder why GG and Santa Ana get so much heat…those are foreclosures per 1000 homes. My zip, 92692 is a paltry less than 2. Yes dear ones…rush out and find that “deal” of a foreclosure. I hear there are some in Ladera too if you prefer upscale pillaging.
Thoughtful said:
“Rates attractive.”
Food and energy prices also up thanks to low interest rates. Hmmm…a 500+K house or eating.
“First time buyers back IN FORCE.”
Great. Let them drive prices down.
“Additional bailouts in the pipeline to be announced SOON.
Good start to the week!”
In other words, bulls are nothing but welfare queens who prefer to keep prices artificially inflated. Do tell us what the next bailout (and low interest rates) will do for RE that the last bailout couldn’t. The level of desperation is directly correlated with the number of government “actions”
Is Steve Thomas buying? Or is he just telling you that it is a good time to buy and a good time for him to make commissions?
Just curious: Why do so many of you bears out there HATE, wait that is not strong enough, LOATHE, wait that is not doing it either, DETEST, well just use your favorite negative connotation here, why do so many of you have this mega-problem with RE agents? I find it comical that so many of you believe that they can actually influence what someone will be willing to pay for a home.
You may not agree that Jimmy Choo stilettos are worth $700, but Nordstrom does as do the buyer’s of these shoes.
You may not agree that Ferrari believes its 599 to be worth $270,000, but their buyers do and you cannot buy a new one (any Ferrari–unless you are a celebrity type) unless you are a previous customer…so you have to start with a used one to enter the family. You have to prove who you are BEFORE they will sell you one of their cars. Reverse capitalism.
Scale it down? OK, you may not agree that the BMW 3 series is worth $40,000, but plenty of people around here do. Matter of fact I see more of them than prius’ or civics it seems.
Point being: the bears in this blog in no shape, form, or fashion represent the majority of the buying public. Most of you are naysayers, hanging on every negative headline you can find for your own amusement. Were you the kids that burned ants with a magnifying glass? I at least give Poggi credit as he put his money where his mouth is….he is not buying anywhere in OC….for now.
Facts are indisputable: oil is at $117, gas is at $3.80, and demand is up for OC housing for the first time in a long time. Foreclosures on the market for about 2 months? A huge seller’s market in that category…again, facts are indisputable. Better go get yours as their prices will not be coming down.
“Sellers that do not have to sell are not putting their homes on the market as evidenced by market time stats.”
Who cares what they do, the people (and banks!) that need to sell set the market.
Broker David @ M & M yields this stat: The metropolitan area with the largest number of millionaires = Los Angeles, CA.
The second largest population = Cook county, Ill.
Third most millionaire population = OC, CA.
The money is ALREADY here.
dude, the ferrari is worth every penny!!! don’t own one but i get to drive new ones all the time. i would buy a ferrari before i bought an over-priced condo/townhome/sfr in so cal. i wouldn’t even get insurance, just a half million dollar bond and list it as office equipment.
One posative report (by a realtor) does not make a trend. maybe the free-fall is slowing down , but I bet if these houses close and the median drops because of it , people will go back to the sidelines.
I do not hate agents, though I see them as salespeople who are trying to push their product (homes) on me. I think it is wise for people, especially the first time buyer types, to do the work themselves because it is easy to be taken advantage of.
The money is definitely here. I work with high net worth individuals and know that OC has a lot of money that will be invested in one of the best assets money can buy RE! Many Investors are now buying. Interest rates and inventory are great.
I think it is amusing to read some Bloggers say that not until prices come down further will they buy. You should not buy in OC and move to where you can afford to live. I have read that you can buy some great homes in the inland empire. Maybe many of you that say that the prices are still too high here should move out there until you can get a better job that pays a higher income to support the purchase of a home in OC. Since a huge population can afford to buy and will eventually buy many homes that will stablize this RE market.
DonS, so what you’re saying is that all the millionaires in OC are going to buy all the condos that are $300k? Get a clue.
I am agent and I have been pushing people not to buy for 4 years now. But I really think that we will see a turnaround in sales this summer. I’m confident that prices should be stable or decline for another year. But… with people paying 50K a year to income taxes, they are ready to buy to save on their taxes. If one can buy a decent condo for 300K or a house for 400K, they will be sold. The real estate investment era is over for now. This summer will begin the regular home buying cycle.
foreclosure and sales info for all of CA, year to date:
Jan 08- April 08
Total Foreclosures Available: 216,985
Number of Sales: 5,764
Avg. Foreclosures Sales Price: $322,463
Avg. Savings (average percentage below market value that buyers are saving on foreclosure properties in a given area): 27%
john g Says:
April 21st, 2008 at 8:38 am
—One posative report (by a realtor) does not make a trend—
Funny, the weather is reported by weathermen…sports are reported by well, sports reporters…news is reported by newscasters…earnings are reported by companies (enron aside, the overwhelming majority are honest).
So the discredit to a RE agent who has been in this area for a very long time is an error in judgment at best. Don’t paint with a broad brush…you lose control very quickly.
Mulliganville ,
The answer to your question is that Realtor’s are loathed is similar to why used car salesmen are… because of peoples’ experience with them! For a long long time, there was no real viable alternative and they would take large sums of money (fees) for doing very little, often times, and I’d say much more often than not, putting their own self-interest, before their clients. Stated more clearly, I dislike most realtors b/c they purport to have the best interests of their client in mind, when they have NO fiduciary duty or obligation to them and therefore will almost always put their own interests first.
To a realtor, there is never a bad time to buy, obviously, b/c their income depends on it. The problem is that there are a lot in our society that are not all too educated, and when they brand themselves as “experts”, those not-too-educated tend to listen. The fact is, while some are experts and knowledgable, most are not. Many have very little education, and did nothing more than take a quick weekend class or online class and an easy test to get a ’salesperson’ qualification.
The result is situations like now where people can claim they were ‘duped’ by their realtors and mortgage broker, and we’re in this whole mess we’re in now, with talks of bailouts etc.
If there was ever a time in this world when it was a bad time to buy, and it was patently obvious it was a bad time, it was from 2005 -2007 , and even sooner, when everyone and their dog knew prices were way too high and unsupportable, where people had to lie (income) and make “adjusted” payments to stay in on a hope and a prayer that they could one day refinance or sell. But no, almost every realtor was saying buy, buy, buy! Why, b/c that’s more money for them, for doing even less work.
In a few years, realtors as we know them will be gone. There is too much technology and alternatives coming on line to make a flat 3% regardless of the work, a thing of the past.
Bottom line, any time you pretend to put my best interests at heart… I’m not going to like you much.
note/disclaimer, I have several realtors in my family.
Chris: the really wealthy ones will buy mortgages.
Mulligan,
Recently bought a 3-Series. It was worth it.
Looked at houses recently, again. Not worth it.
Rental lease was up — no increase and no demand for new lease…………continuing to pay less than half what it would cost for a comparable purchase IS worth it.
So let me get this straight. Sales are half normal, but because they are up a bit is cause for celebration. Probably some buyers today are of the same mindset of those who created the problem we are working through now.
They too will learn………it’s not about a perceived opportunity, it’s about affordability. ……..Which is related to the rent/purchase ratio.
Steve Thomas has been providing this data for a long time. He’s only been slandered for it since it turned promising. He is simply reporting the facts on the ground. Live with it.
Chris states it well, No doubt there are more millionaires here than a lot of places. Almost all will admit there is a lot of money here, but as capitalism goes, it’s concentrated with a few. Those few couldn’t care less about starter homes and non-luxury/vacation condos. Get real.
Again, bulls are being thrown off by the aggregate as opposed to the individual transaction level. Supply and demand is one buyer and one seller, AT A SPECIFC PRICE POINT. The millionaire ain’t buying up all the $500K basic starter homes. So, that leaves us poor joe’s, i.e. the majority to ’supply the demand’ at $500K. Guess what, that’s too expensive for the masses, and even for many professional households who don’t want their life plan to be exotic loans with a hope and a prayer.
The claim that realtors serve the uneducated is without merit. The richest, smartest, wealthiest people on the planet wouldn’t do a deal without one. You people are simply trying to find a scapegoat for your problems.
jj,
I love it!
You just came up with the new slogan for the NAR:
“Realtors! Pretending to put your best interests at heart.”
JJ–
So let me get this straight…one does research on a car before they purchase it. They do not rely on the salesman to tell them whether to by or not. Why does that ridiculous notion apply here? The thing is: when you are selling your home, you do not just want to let anyone in your home to view it. It takes an agent of sorts to facilitate the traffic. Unless you WANT to host all visitors yourself, you will be listing with an agent. You can choose redfin, but they make you do ALL of the work yourself. It all depends on what you are willing to pay for and/or do yourself.
Most areas are dominated by the 80/20 rule…20% of the agents do 80% of the business. I would wager that those 20% are straight shooters, very professional, and work mostly on referral business.
I personally think it goes back to a bit of jealousy at the proposition that some of them earn ungodly money. They do and they earn it.
You may be competing with other offers on bank owned homes.. but they are other lowball offers and the bank is willing to deal. The banks are leading the market lower.
I still think there is a flaw with Mr. Thomas stats as others have already pointed out we aren’t seeing the pull through. But I am patient and willing to give him the benefit of the doubt. I look forward to significantly better numbers in the months ahead.
It is important for buyers to realize that there are two different ways to measure “the market”.
Realtors ™, mortgage brokers, title insurers, etc. are worried about sales VOLUME. Since they are repeat players who survive by taking a cut of each sale and price affects revenue only modestly.
Buyers and sellers are concerned about sales PRICES. Since they are one-time players.
Steve’s report is about sales VOLUMES. Don’t be deceived buyers, this is not a good time to buy. Wait six months to a year, and save $50,000 or more.
“By the way, for every 1% that interest rates increase, it erases approximately all of the benefits of waiting for property values to decrease 10%. The payments are virtually identical.”
Steve Thomas loses all credibility with this moronic statement.
There sure is a bunch of stupid talk in here this morning.
Sorry Permabulls, we’re not even close to a real estate bottom. After all, the last bubble took about 60 months from top to trough … we’re about 18 months from the top of this ponzi scheme. If anything, this bubble will likely be deeper due to more job losses than last time and a further stretched home buyer.
some of you people are seriously crazy. If the index/data supports your view wave it and shout hoorah! IF the index/data disagrees with your theory — loudly shout down the messenger. Data is just data, as long as it is measured and reported consistently it should be unemotional and detached.
I have previously mentioned that I think that Mr. Thomas index is the most forward looking of the indexes as Dataquick is a couple of months behind and personally I think NOTS and NODS are almost all in the MLS as short sales months prior to them being reported by RealtyTrac or other foreclosure reports.
SO as an unbiased / detached observer of this data, bears and bulls alike have reaons to cheer. THe bulls: its not as bad as it was. Transactions are up, while inventory is flat. The bears: yes transactions are up compared with the last few months, but they are still WAY WAY WAY off historical levels.
The story now is continued falling prices, but maybe not COLLAPSING prices as was the case last winter.
Stay tuned in, and don’t tune out data that conflcts with your opinion. It is neither good to be a perma-bull nor perma-bear.
pdu–
Don’t buy until you feel it is right. I would never want anyone to purchase anything unless they were comfortable with it.
I would encourage all of you to go back to 2000 for your zip, find the median price, and bring it to current at 5% gains annually, about the normal rate of appreciation in socal the last 25 years or so. You will find we are very close if not on in several areas. Are we in yours?
Roger, I will be interested to see what happens when this demand Steve Thomas is talking about now shows up in the data (in May perhaps?). What kind of homes are selling, and for what prices? If the homes that are selling are sold by the bank, what will that do to prices?
From what I have personally seen, the homes that are selling are either very low cost, or very expensive. I don’t know what it is like all around the county.
Despite what you hear:
1. We are a solid 2 1/2 years into this malaise (aside from it being obvious to anyone paying attention, it is also consistent with Lansner’s very own sales statistics)
2. Whatever happened in 1994 has no bearing whatsoever to the current situation - those two events are apples and cantelopes. This event was more than anything about a severe worldwide credit disruption, which is improving daily.
Real estate agents respond to the market. People who are unrealistic about the value of their home hired agents who told them what they wanted to hear–then they blame the agent when it didn’t sell. It is the rare person indeed who will tell you what you don’t want to hear against their own economic interest. I’m not fan of most real estate agents, by they are largely a reflection of their clients.
There’s so much inventory on zillow, I can’t get the map to work it overloads my computer. Right around me for sale signs are sprouting liking wildflowers in the desert after a rain. I don’t seem to see to many sales, only more people moving out and “for sale or for leasing” their place. This must be in some other part of orange county than along the beach.
john g had this to say: “One posative report (by a realtor) does not make a trend. maybe the free-fall is slowing down”
Well, OK, john, except that Steven’s report since Feb. 1 have been increasingly positive.
A market does not turn on a dime. Kind of like making a U-turn with an aircraft carrier. By the way, in case the bears become fearful that their prospective dens might become too expensive, these increasingly positive reports do NOT suggest that prices will start rising anytime soon - just that the decline is grinding to a halt, right before your eyes.
Once that is accomplished, probably in weeks, not months or years, the market will probably become normal - rather flat - for a year, two, or three. A nice time to climb aboard home-ownership in Orange County - before prices DO start up again - probably within 3 years.
This statement seems to have not been commented on:
“It is not a coincidence that 75.7% of all condominiums and detached homes below $500,000 are either a foreclosure or a short sale. This fact has provided many opportunities for first time home buyers to finally enter the market.”
Aren’t therefore most of the sellers out of the market to move up? 75% of homes as foreclosure or short sale? That’s scary!
We are a solid 2 1/2 years into this malaise
Hey Thoughtless … how are you measuring this collapse vs. the last collapse. I’m basing it on PRICE, not volume. And if this scheme pans out like that last one (I think it may be worse), we’ve got at least 3 to 4 more years of declining prices.
Why is it different this time? LoL
Thoughtful & Mullig,
If the realtors don’t serve the uneducated, then why all the talk of a bailout (that I believe you guys support, no)? That means everyone knew what they were getting in to, and therefore have earned the results of what the market brings, good or bad. right? Heck, my brother is a doctor and I advise him on Real Estate and what to do b/c although he is educated to the n’th degree, he is not educated in finance and real estate. He could easily fall for an ‘expert realtor’ pretending to put his best interests at heart.
Also to clarify, I did not use ‘all’, I said most. The ultra wealthy and high-end is a very different category and market. Yes, you need a realtor or broker in those markets as that is a big job with few available buyers, etc. Also, any unique property or land that is out of the norm that wouldn’t have a normal market, etc Finally, I also didn’t say there are services worth paying for, but lets face it, driving you around town to look at homes shouldn’t cost $15-20K. I’d pay to show my house and have it shown, but not that kind of money. Anyone can do that.
I learn by first hand. My extended family (custom home builders) got into realty b/c they got tired of paying a realtor a large commission to do basically nothing, since the homes sold themselves. This is particularly true as the internet came of age, as most people were searching out areas & homes & listings online… They started just selling their own homes after getting licensed, and realized they were making big chunks of money for doing very little, so they expanded that side. Needless to say, they made bank in the boom. One of the biggest earners, was one who had no post high-school education, and no clue about what the market was doind, but rather just used the software that just helped fill out forms when poeple called in to say they wanted to make an offer on a house they themselves had seen. She is now making 0 as everything has basically come to a standstill. And one other thing, you are dang right that during the boom, they showed housed that offered the highest commissions, and avoided the houses that offered lower. Why? b/c they have no obligation to do so.
Well, Lee that changes everything. Oh wait, it doesn’t. It was a slow, steady decline last time. This time, not so much. They have nothing in common.
Lee…always in housing, volume precludes price. Prices soon follow volume…if you want a foreclosure “deal” better hurry. Most of the good ones are going for above market value, btw.
I completely disagree with this article. Homes and condo prices will continue to drop until they align with local incomes levels (which might I add are declining). Once this happens, the real estate market will then level out.
I think its time that citizens learn to be realistic about the economy, their purchases, and make realistic financial decisions.
JJ–
When you said: –She is now making 0 as everything has basically come to a standstill. And one other thing, you are dang right that during the boom, they showed housed that offered the highest commissions, and avoided the houses that offered lower. Why? b/c they have no obligation to do so.–
What you described is a free market system. Any seller can put a bonus on their home to lure agents to keep it at the top of their list. With all of this technology available, why do new homebuilders still staff their model homes with salespeople? Answer: Because this is a people oriented decision, unlike checking yourself out at the grocery store.
You can take this to the bank: cars, homes, etc. will NEVER be without salespeople as the primary form of transaction facilitators. And, as long as you expect these salespeople to work 24/7, they will continue to command the dollars they do.
I loathe RE agents because of the tactics that agents use against the buyer:
Show you homes that were absolute crap then they show you homes that are more than you are willing to pay
Show you homes of friends and colleagues lisings only
Repeatedly tell you to make an offered quickly before the house was taken by some else
Evade questions that would led to your not putting an offer on a house.
Think about it…the more time a agent spends with buyer the less money they make. The lower the offering price the less likely the seller will accept thus the incentive to dupe the buyer into offering too much.
lee in Irvine made this preposterous statement: “the last bubble took about 60 months from top to trough”
Lee, I called you on this “factoid” before, as a silly conclusion, and now you’re here bringing it up again. Here’s what I pointed out to you less than a week ago:
In 1970 the market stalled for ONE year. In 74-75, TWO years. In 80-83, THREE years. In 90-93, 3.5 years. In 95, ONE year. ( Yes, there were TWO cycles in the early 90’s. 94 was actually a pretty normal year.
NO local ( Orange County.) downward cycle has lasted more than 3.5 years, and the average has been about TWO. Source of this info? Scroll up to the upper right column, look at What’s up, then click on building permits. This is the ONLY consistent data on O.C. housing that goes back further than 82.
Before you tell me that those figures don’t relate, I’ll tell you this. New houses and resales are almost ALWAYS in synch. If not, there is no more than a 6 month lag time between one following or leading, the other.
So, where you bears came up with this poppycock that ALL CYCLES LAST 5, 6, OR 7 YEARS, JUST LIKE CLOCKWORK, is beyond belief.
Probably more of Peter Schiff’s nonsense. Remember, THAT idiot called the bubble to burst in 2000, a FEW years too soon. Leave it to him, the UBER-Bear, to call the bottom 3 years too soon.
Mulli had this say:
“You can take this to the bank: cars, homes, etc. will NEVER be without salespeople as the primary form of transaction facilitators. And, as long as you expect these salespeople to work 24/7, they will continue to command the dollars they do”
Tell that to the people who created Craigslist…
“By the way, for every 1% that interest rates increase, it erases approximately all of the benefits of waiting for property values to decrease 10%. The payments are virtually identical.”
Since that measure of affordability affects all buyers, it means that you can expect home prices to ultimately DECLINE 10% with every 1% increase in interest rates. The fallacy of the “buy now while rates are low” slogan is that when rates rise, buyers can’t afford to pay as high of a purchase price, and sellers have to reduce prices. The process is not instantaneous, but it is a consequence of the basic math.
It’s true that you can “afford more house” when rates are low, but that leverage will tend to put you deeper underwater equity-wise if rates go up.
People who bought at sky-high rates and low purchase prices in the early 80s (and to a lesser extent, early 90s) made a killing when rates calmed down, they refinanced at a lower rate, and home values went up as a result of the increased leverage available to homebuyers. Those are the smart guys, not the ones who buy when rates are low.
Craiglist? That’s rich. Never have I seen a place loaded up with more gobbledygook. THAT’S a marketing strategy? Ok, where’s the camera?
Realtors always think it is a good time to buy, and for them it is. They are paid when they sell something. Anything to stimulate buying. Nice try Steve. This recession isn’t going anywhere in some time.
Hmmm…..buy with high rates! Does that come with a money back guarantee that you will be able to refinance later? Where, oh where, have I heard that one before?
Yeah you’re right truthi…even eBay sucks as a business strategy.
The supposed correlation making a 1% increase in rates forcing a 10% drop in prices is wishful thinking. It is not consistent with history.
Eat it in OC had this to say: “I loathe RE agents because of the tactics that agents use against the buyer:
Show you homes that were absolute crap then they show you homes that are more than you are willing to pay
Show you homes of friends and colleagues lisings only
Repeatedly tell you to make an offered quickly before the house was taken by some else
Evade questions that would led to your not putting an offer on a house.
Think about it…the more time a agent spends with buyer the less money they make. The lower the offering price the less likely the seller will accept thus the incentive to dupe the buyer into offering too much.”
Wow, Eat. Sounds like you should write a book “Buying real estate for Dummies.” I’m not an agent, but have probably bought more houses than you will in your lifetime. ( And held on to most of them.)
I cannot remember one experience with an agent that was as laden against a buyer or seller as the vile comments you’ve made. Either you had an experience with one REALLY unconscionable agent, OR, and more likely, you’ve never bought or sold a house.
Maybe I’ve just been lucky - about 50 times, lol.
Point of clarification–I meant real, i.e. inflation-adjusted prices…if we enter a high inflation period coupled with high interest rates then you should have your money in something else anyway.
If anything, home sales will probably create an equilibrium in stabilizing supply, but sales (demand) are a long way from influencing price. It’s possible for volume to increase from an all-time low, and price to continue to decline.
As long as the number of distressed property remains high, then prices will continue to decline … PERIOD!
From Padilla’s Mortgage Blog today:
“As of last Thursday, 5,461 homes were listed in some form of distress, up 126 vs. two weeks earlier, or a +2.4% change.”
“Since Dec. 27, the number of distressed homes on the market has grown 1,710 (+46%) while the non-distressed supply is 1,669 (-14%) lower”.
Hey Permabulls … I promise you, there’s one hell-of-a “Pent Up Supply” out there too. A lot of people will be listing their homes in the coming months.
Let’s take trip back in time (courtesy of the Housing Bubble Blog)..quotes from the past..
April 18, 2005. “On a recent Monday evening in suburban Philadelphia, two dozen sober-suited executives huddle around a giant conference table for the weekly ‘ops’ meeting inside the nerve center of Toll Brothers, the hottest homebuilder in America.”
“Suddenly co-founder and CEO Bob Toll bursts in and starts firing questions at his brain trust: Are local managers doing enough to deter the buy-and-flip crowd? Are rival builders throwing up houses without signing up buyers first? His lieutenants reassure the boss that their customers are bona fide primary- and vacation-home owners who just keep coming, and that speculative building isn’t widespread.”
“Finally, with his paranoia assuaged, Toll allows himself to do what he loves best: ratchet up prices.”
“On this night he’s so confident that people will keep buying that he lifts the prices on projects in Florida, Las Vegas, and other markets by 1%. That amounts to about $10,000 for each house over the list price from the previous week.”
“It’s nothing new; he’s been hiking prices Monday after Monday. At Toll’s Frenchman’s Reserve community in Palm Beach Gardens, the price of a Florida rococo confection called the Signature has jumped $200,000 just since January, to $1.4 million. That’s an average increase of $15,000 a week.”
“‘People just keep buying anyway,’ Toll marvels. ‘I’ve never seen anything like this in almost 40 years in the business.’”
jj…
You are a very dangerous person. Someone who knows nothing but preaches knowlege to the ignorant.
First off, all real estate licenses are bound by law to a fiduciary duty to their principal. Not you. Their principal.
Do you have a sales license? If it is so easy to get? Did you know that all sales people must have anything they do signed off by their broker within 24 hours? Why not skip sales and just get a brokers license? They get half the commission and never leave the office.
The real estate brokers exam in CA was the hardest test I have ever taken. Why don’t you try it?
Now define “Realtor”. Is this the salesman or the broker? You seem to know everything. Don’t look it up. Define it off the top of your head.
“Houses sell themselves.” Doctors could doctor themselves. Doctors have a saying. A doctor who treats himself has a fool for a patient.
How much do you know about financing? What is the current Wamu program with the best terms over $417k? How about First Federal? How much are comps selling for? Do you subscribe to DataQuick?
Enough! You opened your mouth and proved your knowlege. NONE!
>Does that come with a money back guarantee that you will be able to >refinance later?
I would much rather have bet on 1982’s 15% interest rates reverting to the mean than 2002-2005’s rates going lower or the same period’s record home price appreciation going higher. Were you giving similar guarantees about home price appreciation during the latter period?
May 20, 2005. “Some regions of the U.S. housing market show signs of unsustainable price speculation and ‘froth’ from rapid sales, Federal Reserve Chairman Alan Greenspan said. The surge may ease as homes become less affordable, he said.”
ONYD
Everyone hurry up and buy soon in OC so you too can lose your down payment in the first few months. Sigburfool and thoughtless say it’s a good idea so don’t think, just go do it.
More blasts from the past..
“There’s a risk that consumer consumption may decline if the housing market slows, Greenspan said. ‘If it occurs, and eventually it will, it will reduce the fairly large and still accelerating degree of extraction of equity from existing homes,’ he said. ‘This has been a major force in financing consumption expenditures.’”
“There is ‘considerable unlikelihood of a major decline’ in prices because that’s ‘very rare’ in the U.S., Greenspan said.”
“‘Even if there are declines in prices, the significant run- up to date has so increased equity in homes that only those who have purchased just before prices literally go down are going to have problems,’ he said.”
“Earlier this week the Fed and other banking regulators warned banks that they should tighten controls on home equity loans that they said are too often offered with no documentation of a borrowers assets.”
“‘That kind of moral suasion approach should probably have been done two years ago,’ said John Silvia, chief economist at Wachovia Corp. in Charlotte, North Carolina. ‘It is very hard for them to jack up interest rates to deal with this, but they can get tougher on their guidance.’”
It gets better!
“In the San Francisco Bay area, the nation’s most expensive region for homes, the median price was $689,200. ‘The housing market doesn’t have a regional problem; it has localized hot spots,’ said Robert Brusca, president of Fact & Opinion Economics in New York.”
Most of the millionaires in OC, and CA got it from real estate. They got it by buying homes when they are cheap, renting them out, and selling them when they are expensive. When condos get close to $200K, they are close to being “break even” on mortgage payments and rental income. It isn’t just 1st time home buyers buying these, 1/2 of my clients (I am RE agent in San Diego, a similar market) are investors looking for deals, and they are finding them. Prices have gone down, but rents are going in the opposite direction. It helps these investors that lots of properties are vacant, banks and short sellers don’t rent out the properties while they are for sale. In my area, the banks price their foreclosures under the market, this causes a feeding frenzy, One recent example, a $350K 1600 sq ft home in terrible condition got 21 offers, some well over asking price. Bears will wait till the market gets overheated again and complain that they are priced out of the market.
Oh … another bullet point from this report:
As a percent of all listed homes for sale, distressed properties as of last Thursday were 35.1% of the market vs. 34.5% two weeks earlier
LoL
David “Escrow Boy” Poggi, your purchase at half of OC’s price is worth half of OC’s price. You are now…..TADA……in the same place financially!
I take that back……your price is MORE than half of OC’s price for the same unit!
excellent point lee– distressed properties
make up thirty five percent unreal…
only fools and realtors will fall for steves
voodoo spin statistics we aint nowhere near
the bottom not even close biggest bubble
ever is gonna take years to work off — ask
the japanese what happens when really
big bubbles pop dont fall for the realtor hype
use your own two eyes and common sense
Actually I know exactly what to do with them…shoove’m up your ars*! and it won’t take 15 minutes either.
The fact is Realtards don’t want anything other than to get paid…how many of those 50 homes you bought had the realtor come by and fix up the problems that were missed by the appraiser that he hired to catch them?
Eat it in OC, your link about mortgages being more difficult to obtain is correct in one regard. Now, loan brokers won’t be able to use the “fog a mirror” approach to qualifying.
It will still be easier to obtain loans NOW than it was a few months ago, because FHA has come to the rescue, not only with less restrictive qualifying ( than conventional, or conforming loans.) but with substantially higher loan limits.
Getting financing now is not nearly the problem a lot of Bears here are claiming. I’m sure a few good lenders here could chime in on that.
I wish California regulated Realtor and required them to have a Bachelor Degree to even apply for a Real Estate License. If that happen the amount of Realtor would be cut by 80%. Most of these Realtors don’t have any fundamental education of economics or finances. All they do is look up property, drive around and show house then write up an offer for 6% commission. It doesn’t take any brain cells to do that hence one of the reason for mess we have today.
DonS,
“…. That’s right, Iceman (DonS), I am Dangerous!”…
I did take/pass all the required classes and requirements to sit for the broker exam, but opted not to take the exam or get into the biz as the market had gotten so crazy that there were 6 realtors on my block. (Family was trying to get us to get licensed to participate with them) I also was busy getting my mba, which I completed in dec. now I’m starting prep for the cpa exam, which i think may be a hair tougher than the salesperson exam or broker exam.
You’re right. I know nothing. I sold my house to a fat profit while all the RE folks were telling me to buy buy buy, and have since watched things fall dramatically. But wait, I don’t subscribe to DataQuick and Sandicor and can’t type in an address like they can, so the fact that I made good money while they’re causing people to lose by the vault-load… you’re right. what can I say.
It’s folks like you who overhype what realtors do and what their worth is that cause the perceptions that now rate realtors lowest on the todem pole. If they were wise, they’d recognize this. As “countrywide” has the possiblily of creating “negative equity” for BofA (as a result of such a bad reputation and image), branding the “realtor” image in ads when the public thinks so poorly of them could cause long term problems. Maybe having Lawerence over at the NAR, or whoever it is now, stop calling a bottom every week for the past year might be a good start.
My post was simply in reply to the question as to why realtors are “loathed”. You got your answer, but you don’t like it… And I’ll take my knowledge vs a realtors anyday.
–
My the bulls are out today. They must be paying time and a half. All b/c of a steve thomas report on “potential”. Just more of the same insanity of the past 5 years. Meanwhile, BofA, lender to a lot of the folks, raises it’s provision (again) for loan write-offs today another 3.3 BILLION and 4.7B overall counting other credit. Maybe we should send them Steve’s report so they know everything is A-OK?
Eat it in OC had this to say to me: “Actually I know exactly what to do with them…shoove’m up your ars*! and it won’t take 15 minutes either.”
I guess I should have realized about 3 exchanges ago that I was dealing with a mental lightweight. Good luck with your lifetime of renting, Eat.
Now I’m off to check out an application to rent one of my 3000 sq ft houses for over $4,000./month.
Sure, our economic model is just like Japan’s in every other way and our economic circumstances are exactly the same. Never mind that Japan’s real estate was so overpriced, it was still the most expensive real estate in the world, AFTER the crash. Never mind that Japan had a bubble in stocks at the same time. Never mind that Japan had huge trade surpluses. Never mind that the value of the Yen was incredibly high. Yeah, we are just like Japan.
WOW! LOL! The Bears are coming out of the woodwork with ridiculous claims in their futile attempt to restore any semblance of a continued decline.
Rants offers house values in Antioch, Eat it is on an anti-realtor rampage, Irvine Lee is citing Peter Schiff BS, ( Bear sewage! ) and even Dave Pogo stuck his head up from the Temecula/Murrieta ground. The scent of Bearish desperation is like a smog heading inland.
And in the midst of all this bear despair, it’s a beautiful day in Orange County. Land that I love. The ocean breeze is pushing the bear stench toward Temecula. ( Did a gas mask come with that condo, David? )
Hi All,
Since when do starting of excrow equal sales. Never has it. Also I understand that manu more excrows are falling out than unual, because of tough financing. Alos typical time for a exrow to close is much longer than last year ( 2 to 3 time longer).
Which mean the comparison is not valid.
Zoom
Hey Eat, I never said it was easy to get a loan.
Here’s a novel concept for some of you bear cubs that think that there is an entitlement to be able to own your own house. You actually not only have to QUALIFY for the loan - you have to MAKE THE PAYMENTS, just like your parents had to.
My first house was 7%, back in 1970, and I NEVER saw lower rates until about 5 years ago. To you kids who think you should be ENTITLED to a sub 5% rate, grow up!
No more of my time for you, Eat - I actually have work to do. Ask your mom to fix your lunch - maybe that will balance your sugar level a little. Then take your nappy.
We’re a long way from the bottom. Any short term fluctuations do not change the fundamentals here. Resetting ARMs, record foreclosures, huge number of REO’s not even on the market yet, economic recession, prices still completely out of whack with incomes. If you want to lose your down payment fast then by all means purchase now!
from the la times yesterday:
[The biggest lending headaches seem to arise among buyers of higher-priced homes and those who want to refinance their old jumbo loans.
Under the old federal rules, Fannie Mae and Freddie Mac couldn't buy loans larger than $417,000, the limit for conforming mortgages. Any loan greater than that was considered a riskier jumbo, or nonconforming, loan and borrowers paid a higher interest rate on it.
Under the Economic Stimulus Act, signed into law on Feb. 13 this year, the U.S. Department of Housing and Urban Development boosted conforming loan limits in higher-cost areas, such as Los Angeles and Orange counties, to as much as $729,750, until Dec. 31. The goal was to get more borrowers under the "conforming rate" umbrella and out purchasing homes.
The plan hasn't elicited the anticipated enthusiasm.
"They're a useless proposition by the government, a joke," said Mark Cohen, owner of Cohen Financial Group in Beverly Hills, echoing a number of brokers. "I've done only one of those loans so far."
The reason brokers and many borrowers are turned off by these so-called "jumbo conforming" loans -- between $417,000 and $729,750 -- is that they require a ream of documentation and high FICO scores, and they offer only 15- and 30-year fixed terms, currently at 6.625% with one point. No interest-payment-only loans are available.]
Thoughtful says “Affordability off by less than a measly 7%.” Yeah, almost everyone is jumping into OC real estate because it’s so affordable!!!
“Scale it down? OK, you may not agree that the BMW 3 series is worth $40,000, but plenty of people around here do. Matter of fact I see more of them than prius’ or civics it seems.”
Here’s the thing about BMW’s: a large number of them are leased, not bought.
“Point being: the bears in this blog in no shape, form, or fashion represent the majority of the buying public. Most of you are naysayers, hanging on every negative headline you can find for your own amusement. Were you the kids that burned ants with a magnifying glass? I at least give Poggi credit as he put his money where his mouth is….he is not buying anywhere in OC….for now. ”
There are radicals and there are pragmatists. The pragmatic bears know it’s not the end of the world but also realize that OC RE is highly overpriced for the regular prospective buyer. Radical bulls on the other hand always say that now is the best time to buy.
“Facts are indisputable: oil is at $117, gas is at $3.80, and demand is up for OC housing for the first time in a long time. Foreclosures on the market for about 2 months? A huge seller’s market in that category…again, facts are indisputable.”
Look at the larger context. This report presents an inkling of potential good news. However, the overall economy, which RE is highly depedent on, is bad. RE sales and prices are still down by a large margin. GDP and job growth are contracting. Consumer sentiment is weak.
“Better go get yours as their prices will not be coming down.”
Radically bullish statement.
I make close to $95k per year and still can’t afford a decent sfr in OC. Wheeee!!!
“Better go get yours as their prices will not be coming down”.
Duh. Okay boss. I’ll start flipping houses!!! Derrrrr.
Somethings gotta give here,
where is NationalBubble and his Parade of negativity?
I’m guessing he took the day off today. What a shame, someone here needs to step it up and encourage people NOT to buy right now. Save their poor souls from being a HOMEOWNER! lol
NAR: There’s never been a better time to buy a house!
“…stocks declined Monday after a poor quarterly report from Bank of America, while markets broadly were weaker as some of the earnings optimism that carried stocks to strong gains last week dissipated.”
There is still too much instability. And banks are sitting on many foreclosures. If you are not looking for equity and have cash buy.
If you’re looking for a return on your investment wait a little longer.
There are indeed spring buyers. Wait until fall chills. Where is the lending? This is what my fortune cookie says.
If ya’ll think now’s such a good time ta buy a house, then BUY AWAY! Please don’t worry, it’s all blue sky from here!!
I guess your comments get deleted when you provide factual info that shuts up people like thoughless and sighberdud.
I told you the bottom was here. Bottom Bottom Bottom!! BUY BUY BUY!!!!
If you want a entry priced foreclosure in GG, or SA, you might want to move quicker than most. Since they have 10 per 1000 homes, 1% is the highest in the area regarding foreclosures. Wait, Ladera Ranch has 0.5% of its homes in foreclosure. Mission Viejo has 0.25% of its homes in foreclosure. Yes, I stand by what I said…if you want an entry level foreclosure, with a 2 month market time, the banks are calling the shots, not you mr. buyer.
Poor Sigh..I think you forgot your meds and remember your Depends when you go to the Elk Lodge..
Oh, and just so that we’re not lying to eachother…I’m selling my Monet this week and I’ve been invited to have personal audience with the Pope and the Rolling Stones want me as the new front man when Mick can’t make it.
Right Mulli…the banks are calling the shots and they are way lower and move much faster than the comps so if you want to sell I suggest you follow their lead on the way down.
Mulliganville Says:
“Yes, I stand by what I said…if you want an entry level foreclosure, with a 2 month market time, the banks are calling the shots, not you mr. buyer.”
Is it 2003-2005 again? Banks can simply decide to have buyers bid up prices on, of all things, foreclosures?
Banks do not decide Price…buyers do.
Tell you what Eat it…you can list your home for sale on craigslist, I will take my chances with a local RE professional from my community. I can virtually guarantee you one of these will receive top dollar in today’s market. You can meet and greet the budget shoppers and take care of all of the paperwork, run your ads, host your open houses, etc. My time is worth more than that. I will leave it to someone who focuses on this area as their speialty. I do agree that craigslist is worthy of one thing: if you are renting your home out, they attract the right demographic for that aspect of RE. Beyond that, it is completely worthless with respect to this market.
Sigh had this to say:
“Here’s a novel concept for some of you bear cubs that think that there is an entitlement to be able to own your own house. You actually not only have to QUALIFY for the loan - you have to MAKE THE PAYMENTS, just like your parents had to.”
Haven’t most of us being saying this all along…the issue is affordability and when that returns..then the RE market will return to normal and no before. Thanks for agreeing with us Sigh.
I was a somewhat early bear on this blog, repeating the mantra “rust not bust” (having stolen the line from somewhere). Back then, it seemed clear that the top of the market (the furthest bubble expansion) was roughly autumn of ‘05 when volume sank but the median kept rising (anybody feel good about stocks when volume drops and price keeps going?). By my guesstimate, we’ve been in the downturn for about 30 months. The credit crunch from last August/September let a lot more air out of the bubble, very quickly. Credit may now be starting to heal. Isn’t it logical that the eventual stabilization of the housing market would be led by foreclosures getting gobbled up? Calling a bottom is beyond my poor mortal skills, there are too many moving parts. But, we’ve now had many months of falling nominal prices, coupled with inflation. The OC has for decades been overpriced by reference to metrics that make sense elsewhere, regardless of where we are in a given cycle. I believe that now is not a bad time to buy, assuming a legitimate need, decent credit, and steady income/ employment. Will we have a long bottom like the 90’s, where you would have done fine across a span of several years? Wish I knew. Will there be more rust? Maybe. Will there be bust from here? Nope. I’m not ready to trade in my bear fur for bull horns just yet, but hibernation may be mostly over.
I don’t know Mulli..there’s an awful lot of RE agents listing there homes on Craiglist…are you suggesting that they are not getting there moneys worth (it’s free!).
Mulliganville Says:
“Banks do not decide Price…buyers do.”
Then banks are not calling the shots.
A word of caution: There are a few errors in Thomas’ city-by-city data. The part that gives the total number of active listings for each city does not match up on both charts.
Check out the full report and you’ll see the active number of listings for a few cities in South OC are different on each chart. Obviously just a mistake since the data is the same but on one chart it’s moved down one row, but be careful about trying to draw any conclusions about Ladera Ranch, Laguna Beach, Laguna Hills, Laguna Niguel and Laguna Woods, because the number of actives on one of those charts is wrong.
Sighburdoodoo,
Now that you have managed to impress all of us bears with your RE prowess and your oh-so-impressive $4,000 rent on a 3,000 sq. ft. McMansion, you might want to take the time to consider why us bears are so bearish on RE. Would you consider selling your 3,000 sq. ft. house at the historical gross rent multiplier of about 160? which would put your sales price at $480,000? how about 200, which would put your price at $600,000? No? I didn’t think so. I’m sure you believe that house, that you can only rent out for a measly $4,000, is worth at least a million $, right? There is no point in buying something now when we can rent it much cheaper.
Price: here is the deal on foreclosures…they are receiving multiple offers. The banks are not sitting on these homes for more than 2 months on average. Many of these are getting bid up to and beyond market value. Since so many people are hot for them, their demand is up, hence the banks are calling the shots on these, and the buyers are creating the activity here. If you want an entry level in GG or SA or parts of Anaheim, you might want to move quickly.
Eat it…you know they are just doing that to cover all bases as they are going for maximum market exposure. My contention is that serious buyers of RE are not going to craigslist. And I recall that my point of salespeople always being in the mix, you brought up the craigslist vehicle as a counter. So, please help me understand…are realtors listing their homes on this non-producing site for home sales (much like ebay) or would you list your own home for sale there and take care of all the responsibilities with respect to showing, selling, and signing?
“Bill Says:
April 21st, 2008 at 12:38 pm
Pending sales are not a factor since a huge number of them are denied.
FICA now includes unpaid/late utility bills in your credit score.
A large percentage of people will drop to a lower score now.”
Wow, a wrong trifecta!
1. Pending sales are closing with little fallout. Your sayso, notwithstanding.
2. FICO (not social security!) only counts utilities if they are in collection, same as always.
3. The “people who will drop to a lower score” are those recipients of “authorized user” credit accounts. That is 99% of the FICO ‘08 change.
Again, I still want to know: Where’s the beef?
Oh yeah, pending sales continue to climb!
I thought the market had moved from the denial stage to the fear stage, but it is quite evident from reading the posts in here that there are many who are still in denial.
On most financial charts documenting prince, there are several upticks on the way to the bottom — and there will be variation on the way up, too. That is why it is so hard to really call the bottom, or to see when the party is over.
Good try stoking the market, though. Let’s revisit this in October, when home prices will be even lower.
Know nothing of momentum and velocity? Who does not notice the historic downside to the historic runup? Any clue what is happening one county over, not to mention the rest of the country and the world? Know what is happening in the rest of the economy?
Good luck, bulls. Cling to your slender reed.
To the other posters, sorry for going over an old post with Bill, but I’ve been a bit busy the past few days and haven’t had a chance to respond to another of his brilliant posts.
Bill Says:
April 18th, 2008 at 8:22 pm
OC Native Says:
“Shoot, I don’t tell people to buy real estate now and that’s what I do for a living”
Is there any way you could just stop lying for a second?
Look, I don’t have anything against most of the realtors out there.
But since a majority of folks put 100% of their faith in realtors on one of the biggest decisions of their life, you would think a realtor would be as honest as possible.
You rely on real estate as your profession but yet you’re telling everybody not to buy?
Either you’re the dumbest realtor alive or you’re lying through your teeth.
Real estate is cyclical, so when times are bad you move on.
Moving on requires effort and most will gladly put in that effort to support their family.
So, enough with the extended Dear Bill letters, you need to just move on with your life.
Bill: Once again, you’ve gone off half-cocked and read what you want to read, regardless of what was written. I’m surprised that you choose to quote me, but if you do, wouldn’t accuracy dictate the use of the entire quote?
“Shoot, I don’t tell people to buy real estate now and that’s what I do for a living. If you want to buy my listing, feel free to make an offer. If not, have a nice day!”
So, where in that quote do I tell people NOT to buy real estate. The answer is, I DON’T and neither do I tell them to buy real estate. I am offering a product and it is their choice to buy or not without any prompting from me. And if you want to go back into the archives, you will see that I don’t typically deal directly with buyers. I am a listing agent–I represent the bank on their REO properties; that keeps me busy enough. I refer buyers to an associate of mine and take a referral fee for the lead if it closes.
Bill, you slander me constantly, yet you really condemn yourself with your own words. Long ago I learned from a quote,
“It’s better to be silent and thought a fool than to open your mouth and prove it.”
You might want to consider that before you continue to rant and rave prior to actually thinking. You also might want to look into an anger management program or a group that deals with helping to build your self-esteem; that might reduce your need to constantly lash out at others. I doubt that you are intraspective enough to heed this advice.
As I mentioned before, I am certainly not the brightest guy in the world. But, with people like you around, I can rest assured in the knowledge that I am not the most ignorant person posting on this blog.
oc native and mikey likes it:
you 2 have proved to be among the best bloggers here with well balanced pov.
i for one would like to listen to both sides of the debate.
do not let any personal attacks to stop you from writing and contributing to this blog.
thank you.
“Mulliganville Says:
April 21st, 2008 at 1:16 pm
Price: here is the deal on foreclosures…they are receiving multiple offers. The banks are not sitting on these homes for more than 2 months on average. Many of these are getting bid up to and beyond market value. Since so many people are hot for them, their demand is up, hence the banks are calling the shots on these, and the buyers are creating the activity here. If you want an entry level in GG or SA or parts of Anaheim, you might want to move quickly.”
No thanks. I see plenty of downside in RE given the overall economic conditions and risks. Unless these foreclosures are heavily discounted, I see no reason to rush out there and bid on them.
……. in other news…..
McDonalds said it was a great time to eat Big Macs
they said they were part of a balanced diet
———-
come June, the predictions will be for a housing rebound next year……
and the year after that…… and so on…… and so forth……. this bubble doesn’t correct in a year….. no way, no how
Good idea, mav - you’re now on record:
“come June, the predictions will be for a housing rebound next year …and the year after that…… and so on…… and so forth……. this bubble doesn’t correct in a year….. no way, no how”
I too, am on record, for the past 2 months. I have yet to be proved incorrect.
I’ll be happy to wait until June to say “I told you so.”
Hey I went to do a little work and what a great bunch of comments. Sigh had a good one - when we do hit bottom we will drag along for a couple of years. Thats what we are talking about and then you should really find some good deals from people who have to sell
Sigh…I never said I’m entitiled…I have always said that I will not be the bag holder and overpay. I am waiting for the fraud equity to burn off back to 2003 prices and if I can’t afford to pay then that’s my problem. The problem with the majority of the bulls on this board is that THEY feel entitled to their fraud equity. If I can’t afford to buy a home then I’ll rent or move but I’m not going to overpay for a rotting stucco box just so some over-leverage idiot can feel like he made a buck.
What I see over and over again is that people are pricing their houses lower and lower to move them…I have saved $100K+ in the last 2 years by not buying…I have saved my family from financial ruin by not taking an exotic loan (although I was offered them times). What everyone should be encouraging is a quick return to fundamental valuation and it is already happening and fast. I am thrilled at the momentum of this market and can’t wait to see what happens next.
The median was, is and always will be useless. What we will see is a divergence in the marketplace. You’ll get your affordable housing in undesireable areas. You’ll have to pony up much more for mid level towns and the upper end (nevermind, you can’t afford it).
Eat, I actually agree with pretty much your entire statement. I too, did not buy in the past 5 years, for similar reasoning. So, on that point we have synchronocity.
Where we DO disagree, for the moment, is whether it is now a good time to be looking and buying. ( And whether to engage the services of a trusted realtor, lol.) As I’ve said, I am now in escrow, and looking to possibly buy a second property, so, at least I’m willing to put my wallet where my mouth is.
One other point. Not ALL the properties on the market are as a result of fraud equity. There ARE some sellers who have to sell for normal reasons - divorce, transfer, death, a bigger family. Some of those houses are priced a bit higher, but show a LOT better. I’ve looked at many of the lender repos on the market right now, and it is depressing to think that there are multiple offers on such keewrap.
Oh well, enough for now. We have some agreement, and some disagreement. Good luck to you. ( Depending on an area you might eventually look in, I CAN recommend a trusted realtor, or two.)
I don’t know if anyone else has commented on this (I went straight from the report to the bottom of the comments), but the median for Steve Thomas’s pending escrow report is now below $500,000.00.
The price declines continue!!!
Great news if you’re buying a Santa Ana condo!
Mulliganville Says:
April 21st, 2008 at 1:16 pm
Price: here is the deal on foreclosures…they are receiving multiple offers. The banks are not sitting on these homes for more than 2 months on average. Many of these are getting bid up to and beyond market value. Since so many people are hot for them, their demand is up, hence the banks are calling the shots on these, and the buyers are creating the activity here. If you want an entry level in GG or SA or parts of Anaheim, you might want to move quickly.
You have got to be kidding, right?
Country Wide is setting on over 4,500 homes in California and a good chunk of those have been well into six months. They and the other REO’s are not motivated to drop there price because there is a nice PMI policy attached to almost everyone of those repos. A number equal on average to 40% of the original mortgage amount. So there is no motivation to really drop the prices down. Believe me if that PMI was not there you would see massive price reductions.
Thoughtful,
Once again you’re wrong.
I can back up my information, can you?
“Everyone has monthly “non debt” payments. Rent, phone, electric and cable bills are prime examples”
” Previously, these had little influence on credit scores. No longer. Major credit reporting agencies like Experion and TransUnion have developed new credit scores that consider payment histories for rent, utilities, insurance and other factors such as overdraft charges”
“Fair Issac, the company that gives us the ubiquitous FICO credit score has also added similar items to its calculations. Equifax uses LexisNexis, an internet search application to check on identities, bankruptcies, and criminal records”
“Your payment record for everyday living will be scrutinized. A spotty payment record could jeopardize a currently good credit score. Credit reporting agencies will be collecting data from everyone-even that day care center for your children. So pay everything on time”
as I indicated previously, permabulls such as thoughtless always rip on Santa Ana (see above). That is how they spin bad news: blame it on illegals. You can translate his comments as follows: it’s just a bunch of mexicans and worse that are pulling down the market. Us white folks have nothing to worry about.
the racism on these blogs is so transparent.
Bill, the FICO credit score has no creditability. Everyone knows that now. Many banks now look at a borrowers Debt/Assets before establishing a credit line. Assets matter. FICO is dead. If you have no assets, you are toast.
sighburknifecatcher or has he/she likes
to think of himself- the donald trump
of south OC- has made his/her prediction
so in june when he/she has been proven
wrong do you promise to disappear like
ezmoney and his band of gypsies?
troughless, troughless, troughless
the debt to income requirements won’t be any different in your so called nice areas
if you want to believe Santa Anna is the only place that has experienced significant price drops, be my guest….. I don’t really care…………
south county has been hit hard, and will continue to see downward pressure as the REOs flood the market…….keep your eyes on santa anna if that’s all you care about……. we are still headed down the trough….
Madmonkey had this to say–
–You have got to be kidding, right?
Country Wide is setting on over 4,500 homes in California and a good chunk of those have been well into six months–
I am not concerned with Ca as a whole…just the community I might want to purchase in. The following table is foreclosure’s per 1000 homes:
Santa Ana 92707 10.43
Santa Ana 92701 10.14
Anaheim 92804 8.47
Santa Ana 92703 8.23
Santa Ana 92704 7.86
Anaheim 92801 7.56
Stanton 90680 7.28
Anaheim 92805 7.16
Garden Grove 92844 6.62
Garden Grove 92843 6.36
Garden Grove 92841 6.18
Garden Grove 92840 5.95
They are the bulk of the activity for a reason…there are some pretty good deals out there. They are also getting bid up in the more desirable locations by people with lots of cash…go out and enjoy. Oh, and the best one’s? Never hit the market as they are sold by realtors to insiders…I don’t think Redfin can pull that off for you.
mav had this to say: “Dood! we are headed to a low $400K median and it could go lower than that - you won’t be around for that though…. you will be long gone”
I MAY be older than most people here, but I DO plan to be around to wipe your nose in THAT prediction. June it shall be. Dueling predictions! ( anybody got a banjo? )( oops, that probably went over the head of most of the bear cubbies here, LOL.)
Mulliganville had this to say: “Oh, and the best one’s? Never hit the market as they are sold by realtors to insiders”
Mulli! SHHHHH! You’re giving away my secrets, man! Oh wait!
I already posted that, didn’t I?
This story was covered on KNX radio today and on ABC 5:00 news. Their conclusion? Probably a good time to buy, especially for first time buyers. I think that is the consensus. And, who would question the press?! Prices are at 04/05 levels. Conforming loan offers that expire at the end of the year. Better step it up, bears.
Jeez, Mulliganville, 92692? I’m sorry, I didn’t know.
You’ve got enough problems without me throwing out bearish opinions.
VoiceofReason Says:
April 21st, 2008 at 7:14 pm
“This story was covered on KNX radio today and on ABC 5:00 news. Their conclusion? Probably a good time to buy, especially for first time buyers. I think that is the consensus. And, who would question the press?! Prices are at 04/05 levels. Conforming loan offers that expire at the end of the year. Better step it up, bears.”
So what would happen if the sales volume doesn’t pick up at the end of the year? Will prices magically increase?
You just have to listen to Bruce Norris to know when the real estate market is going to turn around.
I love Bottoms. BUY BUY BUY!!!!!
# Min Sky Says:
April 21st, 2008 at 7:29 pm
—Jeez, Mulliganville, 92692? I’m sorry, I didn’t know.
You’ve got enough problems without me throwing out bearish opinions.—
If I did not like it here, I would not live here. Although, I have to say, you all better hope for a RE rebound soon as this area produces very little regarding consumption by consumers. You like your little economy here? Totally tied to RE.
# Thoughtful Says:
“This event was more than anything about a severe worldwide credit disruption, which is improving daily.”
—
Several times I’ve suggested you are delusional. Thanks for this post.
Credit? Don’t need no stinkin’ credit !
Just need the price to make sense. Just need to be able to pay for it.
I wish that everytime there is an OUNCE of positive news (in this case increasing escrows) that the housing bulls would not exclaim all at once, “And yes folks, there you have it! The bear market is officially over!”
Please, does anyone here have any common sense?
First of all, we still haven’t even seen the SALES yet. If this guy is correct, we should be seeing increased sales from April 2008 compared from April 2007 (and not March 2008), yes? Well why don’t we wait for the data before people start arguing back and forth?
And let’s say that this guy is correct. It takes more than one data point to make a trend. Let’s see how if this market can be sustained.
I am indeed waiting for the right time to buy. I am ready and I can buy. However, I don’t need real estate cheerleaders who seem to have other motives, and who can’t seem to be very objective to give me advice when to buy.
It seems that all of the bulls are convinced that the market is turning around. Well that’s great! Why don’t you heed your own advice and get out there and support your own market? Buy some houses!
My money and future are valuable to me. I’ll make an educated decision based on the facts, not propaganda.
And by the way, I seriously DOUBT this is the bottom of the market. I personally do not see us approaching bottom until 2010, but that’s another discussion. If sales do skyrocket in 2008 from 2007, however, I am not so bull-headed that I would ignore this and it’s impact on the market. It’s probably because banks are cutting their prices, government intervention.
But you really need good data before any conclusions can be made. Not just hopeful optimism (which unfortunately too many realtors preach).
Can’t afford it Says:
April 21st, 2008 at 11:43 am
I make close to $95k per year and still can’t afford a decent sfr in OC. Wheeee!!!
You can buy a condo in OC or if you want a SFR move to Riverside. Better yet get a better job!
Price,
I doubt it. This could be just a blip on the chart. If it fizzles out, no increase. If it continues, maybe a stabilization of prices. Increases are a ways out.
Can’t Afford it,
You could always get married and become a “two income” family. Hmmm, marital bliss (??!), condo in OC or SFR in EI? I’ve tried all three………..take Condo. Much less maintenance.
jj…
“I did take/pass all the required classes and requirements to sit for the broker exam,”
Is this what you call “bad planning” or what? Maybe you can tell us what “all the required classes and requirements” are. But, somehow I doubt it.
“but opted not to take the exam or get into the biz as the market had gotten so crazy that there were 6 realtors on my block. (Family was trying to get us to get licensed to participate with them)”
This has to be one of the sorriest excuses for not taking a test I’ve heard since the fifth grade. Why don’t you just admit that you chickened out?
“I also was busy getting my mba, which I completed in dec. now I’m starting prep for the cpa exam, which i think may be a hair tougher than the salesperson exam or broker exam.”
Probably harder than the salesperson exam but not harder than the broker exam. If you even knew the requirements to take the broker exan, which you don’t. The brokers exam is constantly changed with the objective that half those “qualified” to take it will not pass.
Since when is a cpa wanna be qualified to give advice in real estate? An expert in “accounting systems” is no guru in much. But, you could be an overpaid pencil pusher.
jj…you didn’t answer any of my questions. Was that test too hard for you also?
The real issue is the desperate fixation we all have on these home prices. I think it reflects the sad state of our entire economy. We all need to know where this is going because we need (or will need) every damn penny we have. (gas prices, healthcare, retirement the list goes on and on) Homeowners are so heavy invested (in so. cal) with their homes that any loss is a disaster. Most buyers take a huge risk because average people can’t afford these ( inflated?) home prices. It’s all a big gamble and we gamble on our families future. I feel bad for everyone, bulls and bears, homeowners and homebuyers, because a home has become a make or break financial commitment. For the record I’m a renter who belives in cycles, this housing market is a big ship that takes along time to turn around. Based on past cycles (and how different and worse this one is) this is way to soon to be calling a bottom. Still, I feel bad for us all because I think everyone would agree that a normal cycle is better than a bubble. Ultimately very few people will have come out ahead and most will have suffered.
Not at bottom yet. Anyone who thinks otherwise needs their head checked.
This first time buyer re-emerged this weekend, only to go back into the shadows till this winter. Of course you are going to see sales in the summer. Agents have resorted to listing properties well under what they will accept to entice multiple bidders. I have sterling credit, earn a very good living. Even with that, banks require at least 10pct down. I’m happy to continue to rent in Irvine and live far better than the Condos I can afford on the market. I’m sure there are many more like me who feel the same and are waiting for agents and sellers to wake up, swallow the market adjustment and move on so we can buy and see a market recovery.
Can’t afford it Says:
April 21st, 2008 at 11:43 am
I make close to $95k per year and still can’t afford a decent sfr in OC. Wheeee!!!
On a $95K income you should have a healthy savings for a down payment, which should be enough to afford a SFR in OC. If you haven’t been able to save some money on that income, you are not ready for home ownership.
I think we are at the beginning of a new trend……
simply, a period of “non-news” where the good/bad, up/down are more balanced instead of being just on the downside or upside. This would indicate to me more normalization in the market…or at least the “hype” softening.
ps. Just bought house #3 in this market. all mortgages 30yr fixed, less than 5.75%. Cash flow positive. weeeeeeeee…..I have a 4bd/3ba SFR now available for rent. Anyone care to pay my mortgage for me, since some say its cheaper to rent? hee heee…
[...] To be fair, these stats measure closed deals, buying and selling decisions made a month or more ago. Do note that other stats show recent deals to buy local homes, those in escrow, are on a sharp upswing. (Read it HERE!) [...]