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Realtors forecast 24% price drop for California houses
May 2nd, 2008, 4:04 pm · 98 Comments · posted by Jeff Collins
(Update: New chart and more comments added.)
The California Association of Realtors is forecasting that the median price of a California house will fall 24% this year to $424,000 — a price not seen since 2003.
In March, CAR was forecasting a 9.5% price drop statewide, to $505,100. The median price of an existing single-family house in California has been above $500,000 since 2005.
“This 24% decline just has no precedent,” said CAR Deputy Chief Economist Robert Kleinhenz, who delivered CAR’s latest forecast today at the annual expo at the Disney Hotel by the Pacific West Association of Realtors. He said afterward that association economists still are unsure how much the median home price will fall this year. The 24% drop is CAR’s best figure at this point, he said.
Here are CAR’s median price figures for existing single-family homes:
| Year | Price | Vs. 06 |
|---|---|---|
| 2000 | $241,350 | 11.0% |
| 2001 | $262,350 | 8.7% |
| 2002 | $316,130 | 20.5% |
| 2003 | $372,700 | 17.9% |
| 2004 | $450,770 | 20.9% |
| 2005 | $524,000 | 16.2% |
| 2006 | $556,640 | 6.2% |
| 2007 | $558,100 | 0.3% |
| 2008* | $424,000 | -24.0% |
*Forecast / Source: California Association of Realtors
Kleinhenz repeated earlier CAR predictions that the number of home sales in California may have bottomed out and are starting to pick up in recent months. CAR forecasts that 332,100 single-family homes will sell this year, down 6% from last year. Sales peaked at 625,000 house sales in the state in 2005, CAR figures show.
“I know I’m the bearer of bad news. I’m just trying to give you a sense of how we got here,” Kleinhenz said. “The housing market fundamentally needs one thing to move forward, and that’s jobs.”
Other highlights from Kleinhenz’ presentation:
- The market will bottom out sometime later this year, with the latter half of 2008 stronger than the first half.
- Foreclosures represent about 2.2% of all home loans in the state. “It’s not like everybody’s losing their house. Still, we have a huge number of distressed properties on the MLS, and it’s driving prices down. So it’s not like it’s not a problem.”
- Adjustable-rate mortgage resets peaked in late 2007 and early 2008. Hence foreclosures likely will peak later this year and decline in 2009.
- “We do think this is the year we’re going to see our low point for sales. … Monthly sales have already bottomed out.”
- “All these numbers are going to stabilize and slightly improve. … We’re basically climbing above the liquidity crunch to pre-liquidity numbers.”
May 2nd, 2008 at 4:07 pm
Yikes!
May 2nd, 2008 at 4:11 pm
So they are saying that the market will now drop by 2.5 times their original assesment. They must not listen to Thomas either.
This shows how a big hit to the pocket book will change your though process real fast.
Much like the price of oil is having on how people feel about global warming.
May 2nd, 2008 at 4:46 pm
Watch out for media spin, economists, and experts. Losing your home is a blessing in disguise. Save your money for raining days ahead as much as you possibily can. Taxes are high. Food Price is high. Gas Price is high. Inflation and Recession is here to stay for a very long time.
Losing your job is the worst part. It will take a longer, much longer time to find a job, if you are lucky. Take any job to get by for the next few years. Save yourself.
If you cannot handle the heat, get out. It is not easy. Let’s go the house the sooner the better. Credit Card’s crisis will follow the housing crisis very soon.
May 2nd, 2008 at 4:49 pm
No Job. No Health Insurance. Many thanks to President George W. Bush and Financial Wizard Alen Greenspan.
We harvest what we planted. Every country deserved its president. Make sure you vote this year.
“God Bless America” Pope John Paul to President George W. Bush during his visit.
May 2nd, 2008 at 4:50 pm
If they are saying prices will decline 24% in one year, it sounds about right.
May 2nd, 2008 at 4:54 pm
Yes, but they aren’t the ORANGE COUNTY association of Realtors led by Steve Thomas…he knows that OC won’t drop, trust him.
May 2nd, 2008 at 4:54 pm
hey, don’t pay attention to the California Association of Realtors.
Listen to Steve Thomas, the real estate in OC will never ever ever go down.
We are soooo special, we are immune
May 2nd, 2008 at 5:37 pm
Kleinhenz: “The housing market fundamentally needs one thing to move forward, and that’s jobs.”
That is exactly what firms like ours are attempting to do - generate jobs. But we must be competitive to recruit and to sell product (inversely proportional - usually). When we are trying to compete against companies whose local housing markets are priced at one third that of ours, it makes doing business on the same field a bit harder. Our original projection for 08 was to increase our staff by 14% - that has since fallen to 10% - and paying our current people more to retain them since they are working more hours. Catch 22 no matter how you look at it.
The more this home market declines - the better the job outlook will get - at least for non-housing related industries.
take the emotion out of it - there are many aspects to this decline that are good and bad - all depends on perspective. I think everyone who has been monitoring this blog can attest to observing most of them - especially over the last few days.
May 2nd, 2008 at 6:02 pm
Yes, all of CA is the same. A statewide median for value assessment sounds very astute. I need to call that appraiser in Beverly Hills for this loan I am trying to get in Stockton.
May 2nd, 2008 at 6:06 pm
I can see the median home in California price dropping to $424K. That’s just half above and half below, since the foreclosures are now selling from last year at around $350K in Anaheim and Garden Grove, the hardest hit areas for foreclosures. The paper now reports that Coto is being affected by lower pricing, only there, the foreclosures are still at above $1M.
May 2nd, 2008 at 6:21 pm
Mulliganville Says:
May 2nd, 2008 at 6:02 pm
“Yes, all of CA is the same. A statewide median for value assessment sounds very astute.”
What’s your projection for the fall OC prices for this year? More or less than the statewide median?
May 2nd, 2008 at 6:24 pm
Go to the bottom left hand corner at the link below to for a past prediction from our Expert blogger!
http://bp3.blogger.com/_pMscxxELHEg/SBuJksncv0I/AAAAAAAAB7A/3I95FUPS7u0/s1600-h/OCRegister.jpg
May 2nd, 2008 at 6:29 pm
IDK Price…I know it is tough out there for sellers these days. Let me get back to you on that after I think about it.
May 2nd, 2008 at 6:46 pm
We are not at 2002 prices yet, I’m not sure where everyone is getting there data. Homes are far from reaching an affordable level. Forclosures are the rule in the RE market in California and will be the driver for more than a year. Then another adjustable loan reset and it will begin again because those homeowners will be upside down and they can’t refi and will have to saddleup to the huge payment, get a big inheritance from their parents (which is dwindling away as we speak , due to the housing market) or let it go back to the bank.
The later is most often the occurance. Tough times for those folks I’m affraid to say. Tough Times…………..
May 2nd, 2008 at 7:04 pm
Fascinating.
Even the Realtors are calling for the huge drop these days. What happened to the “get off the fence” and “good time to buy” rhetoric?
Maybe, just maybe, realtors have decided that long-term credibility is </strong? more important than short-term financial gain….
May 2nd, 2008 at 7:17 pm
Absurd. I presume they think the state will lose many, many times more jobs than it has AND all towns will see foreclosure rates like Santa Ana. That combo is the ONLY way even half of that damage could be seen. They are senile.
May 2nd, 2008 at 7:20 pm
What is the statewide median now? This drop is from the PEAK, not from today’s number.
May 2nd, 2008 at 7:22 pm
It sounds like they are forecasting an additional 4% drop to the bottom. Lansner, your reporting is really sloppy lately.
May 2nd, 2008 at 7:24 pm
“Kleinhenz repeated earlier CAR predictions that the number of home sales in California may have bottomed out and are starting to pick up in recent months. CAR forecasts that 332,100 single-family homes will sell this year, down 6% from last year.”
That’s what everyone else is seeing too.
May 2nd, 2008 at 7:37 pm
I agree that looking at a median alone is quite useless when quantifying real loss in value.
However, when looking at the same metric over many years - the degree of this turnaround can be given some perspective.
The recent rates of RE appreciation and depreciation are staggering, historically.
And given that perspective, the drop has been one of the steepest and the magnitude the greatest. I just can’t see how prices - not sales volume - can simply land flat in such a short time.
May 2nd, 2008 at 7:40 pm
This is the perfect place for this ignored story:
Home-price data has its flaws
Market anomalies painting skewed picture, index producers acknowledge
Commonly cited measures of U.S. home prices are overstating the degree to which the vast majority of Americans’ home values have declined in the last year, producers of two of the most widely tracked indexes acknowledged this week.
Top officials with the National Association of Realtors and Standard & Poor’s, which issues the S&P/Case-Shiller Home Price Index, agreed this week their monthly reports are giving imprecise readings of price changes at all levels — national, state and regional — due to rare market conditions that are skewing survey results.
The NAR reported last week that U.S median home prices fell 7.7% in March from a year ago. The decline resulted largely from a market anomaly — a steep decline in costlier home sales due to tighter lending standards and high jumbo-mortgage rates, coupled with a foreclosure-driven spike in cheaper homes.
“If there are a lot more homes sold on the low end and fewer on the high end, the median price is bound to drop dramatically,” NAR Chief Economist Lawrence Yun said. “In normal times, a median price would reflect typical homeowner equity changes, but these are not normal times. The jumbo (mortgage) market is frozen and the buying activity is more concentrated in lower-value homes.”
The S&P/Case-Shiller index, which Tuesday posted a 12.7% decline for February, is skewed for two reasons of its own — it tracks just 20 major markets, many among the hardest hit, and its “repeat sales” survey by design pulls in individual homes both bought and sold in the last few years. Many of those are now being dumped by distressed homeowners and investors who bought at peak market prices and face higher mortgage-rate adjustments.
A widespread problem
The misleading home-value figures are just one example of recently sketchy readings of the U.S. economy. U.S. consumer-confidence readings, for instance, have been wildly divergent.
The Conference Board’s closely tracked index Tuesday showed confidence falling in April to its lowest since the eve of the U.S. invasion of Iraq in March 2003. A University of Michigan survey incorporated in the U.S. Index of Leading Economic Indicators last week rang in at its lowest level since November 1982 –when the country was suffering through 10.8% unemployment and the worst recession since the Great Depression.
That 26-year-low confidence mark grabbed headlines nationwide while the Conference Board number that many economists find equally reliable drew far less media attention. Not one journalist who contacted Conference Board Communications Director Frank Tortorici’s office Tuesday inquired why there was such an astounding discrepancy, he said.
NAR’s Yun said the financial media is seizing on gloomy numbers and providing little analysis or historical perspective. He freely admits NAR’s readings aren’t accurately reflecting what’s happening with home values for the overwhelming majority of Americans.
“Like any economic measure, it can be imprecise, and it is especially so now,” Yun said.
Grim reapers
As reported Tuesday, the S&P/Case-Shiller Home Price Index’s12.7% decline in February was the largest drop since its creation in 2001. Despite that index’s limited seven-year history, the Associated Press reported that home prices “plunged by a record” percentage and “at their fastest rate ever.”
The glaring discrepancy in this case is that 17 of the 20 metro areas posted record annual declines, and yet 78% of the 330 metropolitan regions that NAR tracks reported price increases in the latest period — and that despite the acknowledged downward bias in current price readings.
S&P Index Committee Chairman David Blitzer acknowledged his organization’s overall and metro-market readings paint an incomplete picture. For that reason, he said, the report now charts price changes in 17 of the markets at three specific levels - low-, mid- and high-priced homes — to provide a clearer assessment.
In the high-priced San Francisco area in February, for example, homes priced below $512,000 fell 32% in value from a year ago, while homes priced from $512,000 to $750,000 fell 21% in value and those over $750,000 fell 6%.
“The homes that had the biggest run-up and biggest run-down more often than not are the least-expensive homes,” said Blitzer, S&P’s managing director of portfolio services.
Yun said the S&P/Case-Shiller Index is flawed because “if you focus on down markets you’re going to get a downward price. We are disappointed that its very limited market coverage gets such attention.”
Conversely, Blitzer said the NAR figures are faulty because “it’s well understood that a median is subject to sharp swings in the sample. The only plus is that it’s easy to compile using inexpensive computing resources. If I had 88 years of data, I wouldn’t want to change (methodologies) either.”
In both cases, pockets of severe price declines in local markets are skewing figures, Yun said. If homeowners want to determine their property’s value, it’s never been more critical to take the measure of recent sales by home-price level in their town or city neighborhood.
“Just like saying the average nationwide temperature today is 57 degrees doesn’t tell you anything, the same is true for real estate prices,” Yun said. “The only way to tell what your own home is really worth is to look at local-market conditions, do Internet research and utilize professionals (such as licensed appraisers) to help determine the value of your home.”
May 2nd, 2008 at 7:43 pm
So let’s get this straight. Realtors are a bunch of no good lying, low life, bottomfeeding, useless bloodsuckers,UNLESS, they say something you agree with. And there is something funny about this article. The guy is never qouted as actually saying that prices will drop 24%, he says “This 24% drop just has no precedent”. Just a little strange, don’t you think?
May 2nd, 2008 at 7:49 pm
“The homes that had the biggest run-up and biggest run-down more often than not are the least-expensive homes,” said Blitzer, S&P’s managing director of portfolio services.”
This dovetails nicely with my argument about loss severity and absolute losses:
A bank that has a portfolio of $1,000,000,000 and has foreclosure losses (after liquidation) of 30% on 5% of its portfolio loses $15,000,000. Does it matter if that comes from 15 loans or 150 loans? Only very marginally, because the amount of profit derived from the 95% of $1,000,000 loans that DO perform is 10 times greater than the 95% of $100,000 loans that DO perform. The difference between these two scenarios is due almost entirely to variances in the underlying loss severity. Due to the fact that more expensive homes typically require a longer sale time, you would expect the loss severity to be worse for those loans. However, this is not engraved in stone. We have seen in our own market some larger percentage losses (loss severity) on the lowest of our properties. Anyone who is distracted by absolute dollar losses simply doesn’t understand statistics, is trying to sell you a bill of goods, or both.
May 2nd, 2008 at 7:57 pm
I must say I was taken aback by it.
First they act like the downturn didn’t exist and then they denied it was foreseeable.
This year - they go off the other end - what are they smoking? I see a strategy behind this more than any real analytical approach.
May 2nd, 2008 at 7:59 pm
The CAR projects have been reliable wrong since the bubble burst. Home prices in california have always ended up being worst than the CAR has projected. They tend to be very optimistic. So if they are projecting -24 Percent for 2008…………………………………………YIKES!
This baby is quickly becoming the worst housing bust since the dark ages! Almost as many houses standing vacant since the big plague!
By the way, someone should check TF for rabbies. Sounds like TF is foaming at the mouth, wow, and you thought Baghdad Bob was in denial…………………………………..
May 2nd, 2008 at 7:59 pm
Thoughtful
Here’s a good artcle to go along with the Case Shiller story
http://www.ofheo.gov/media/research/notediff2.pdf
May 2nd, 2008 at 8:03 pm
They have people who can help you with your illiteracy, blackbox. The rest you’ll have to live with.
Thanks for the article Seeking. Good to see another perspective.
May 2nd, 2008 at 8:07 pm
Thoughtful: You would have to admit though - that the losses are very high, especially given the fact they should be reporting profits. Moreover, this country needs a certain amount of jobs to be created every year, otherwise the inertia against which the recovery must push grows.
May 2nd, 2008 at 8:09 pm
Yes, they are seeing both unusually high frequency together with unusually high loss severity. No doubt about it.
May 2nd, 2008 at 8:13 pm
“SeekingAlfalfa Says:
May 2nd, 2008 at 7:43 pm
So let’s get this straight. Realtors are a bunch of no good lying, low life, bottomfeeding, useless bloodsuckers,UNLESS, they say something you agree with. And there is something funny about this article. The guy is never qouted as actually saying that prices will drop 24%, he says “This 24% drop just has no precedent”. Just a little strange, don’t you think?”
Did you question the unprecedented magnitude of the bubble as much as you questioned the projected downturn? What are the chances of an equally historical downturn taking place?
May 2nd, 2008 at 8:20 pm
Wishful thinking! 2003 prices, along with the financing that made such mortgages possible, are what got us into this mess. Declining wages and jobs have not helped the problem since then. There are, though, a couple things on the horizon that could support such prices. One would be horrific inflation, and the other is the influx of illegals who show untarnished credit and dont mind 20 adults living in a three bedroom house (yard, garage, attic included).
May 2nd, 2008 at 8:27 pm
There’s one more important distinction in the loss severity analysis: very expensive homes are far, far more likely to have a good sized downpayment, which takes the first loss position. Your typical $200,000 is much likelier to have used little/less down.
May 2nd, 2008 at 9:23 pm
We should note this article on the front page of the OCR:
http://www.ocregister.com/articles/anaheim-hotel-martinez-2032877-room-suicide
“A man believed to be in his 30s or 40s apparently jumped to his death today from the 14th floor of the Disneyland Hotel’s Wonder Tower, authorities said.
The man was in town on business and was staying in a room with a business associate; the business associate was in the room when the man jumped, Martinez said. ”
What business was going on at the DL hotel today? Oh yeah. A realtor convention.
Which makes me glad because I was concerned Truthiness had done something rash. Seek help girl.
May 2nd, 2008 at 9:38 pm
Given that prices have already dropped 20% in my neighborhood [Laguna Niguel], does that mean there’s only 4% more to go?
Studying an average price for CA is not a meaningful data…
We all know prices have fallen BEFORE 2008.
May 2nd, 2008 at 10:03 pm
Chaos in the Luxury Finance Market.
The Other Shoe Has Dropped.
http://thegreatloanblog.blogspot.com
Take care Housing Junkies. Enjoy your weekend.
May 2nd, 2008 at 11:07 pm
not buying it:
LOL-the strategy is to tell homeowners to come back down to reality.
They need those commission checks.
May 3rd, 2008 at 1:11 am
Here is another recent link from calculated risk to another look at the differences between the different indices:
http://calculatedrisk.blogspot.com/2008/05/flawed-house-price-indices-flawed.html
There are 3 Case-Shiller indices, the National (covers about 70% of nation’s housing), the Composite 10 (10 cities), and the Composite 20. The difference (see graph) seems to be the more narrow (fewer cities) indices depict a housing price increase and decline that is more steep than the National index.
To compare, the OFHEO index show a much more muted rise and also fall — so less of a price appreciation and less steep of a price decline.
They are all paralleling each other in their trends however, both in the appreciation and the now decline.
Larry Yun is right — you have to look at the “local market conditions”! Guess what? Ours out here in OC and LA is NOT doing that hot right now!
May 3rd, 2008 at 6:03 am
Joseph,
The median price has dropped 9.3% so far this year.
CAR says it will drop another 14.7% this year.
After 2 years of bad forecasting and a tarnished reputation, the CAR is finally trying to gain some respect back through a more realistic forecast.
May 3rd, 2008 at 6:53 am
“In coming months, more foreclosed homes for sale will likely put further pressure on prices”
“That’s because banks that own those homes must slash prices, forcing home sellers to compete and squeezing sellers who already owe more than their homes are worth”
http://www.usatoday.com/money/economy/housing/2008-04-29-shiller-home-prices_N.htm?csp=34
May 3rd, 2008 at 8:45 am
Wrong Bill, do the math. The peak number is from the chart next to the numbers “2007″. Still lacking a semblance of critical thinking here I see.
May 3rd, 2008 at 9:06 am
Ready to start another 12 hours shift Thoughts? Yesterday you started at about 7:30AM and went all day long to 8:27PM, and what do have to show for it? It must be really depressing to argue all day long and not convince one person of your position that the house price decline will stop and reverse itself soon. Remember to get out in the sun once in while for vitamin D.
May 3rd, 2008 at 9:34 am
Hey moron, I was out most of the day. Quit humping me.
May 3rd, 2008 at 10:18 am
I thought I’d pull up some random recent sales. Ones that are NOT cherry-picked, you know, to balance things out a little. These are random sales from three middle-class neighborhoods in Orange County:
15 Woodhaven Lane
Irvine, CA 92620
Sales History:
November 13, 1997
$530,000
July 21, 1998
$600,000
March 6, 2001
$720,000
April 15, 2008
$1,195,000
25251 Del Rio
Laguna Niguel, CA 92677
Sales History:
August 16, 2002
$435,000
February 7, 2005
$696,000
April 8, 2008
$695,000
90 Dawnwood
Mission Viejo, CA 92694
Sales History:
August 24, 2000
$364,000
October 3, 2006
$835,000
March 28, 2008
$765,000
Where’s the beef?
May 3rd, 2008 at 10:23 am
Thoughtful,
I guess we both stand corrected;
“California Association of Realtors’ state and annual median house prices”
2007 $558,100
Thoughtful Says:
May 3rd, 2008 at 9:34 am
“ I was out most of the day”
I thought the unemployment lines were getting longer in OC, but thanks for confirming it.
May 3rd, 2008 at 10:33 am
I only see you corrected, Bill. You’re growing.
May 3rd, 2008 at 11:01 am
Well, well, well, what do we have here? It seems they are projecting an INCREASE in prices this year! We’ve already blown past the 24% number:
“The median price of an existing, single-family detached home in California during February 2008 was $409,240, a 26.2% decrease from the revised $554,280 median for February 2007, C.A.R. reported. The February 2008 median price fell 4.8% compared with January’s revised $429,790 median price.”
http://rismedia.com/wp/2008-03-25/california-real-estate-sales-decrease-285-median-home-price-falls/
Of course, it’s up to ME to figure these things out. What happened, Lansner?
May 3rd, 2008 at 11:04 am
Sorry, not an “increase in prices this year”, make that an “increase in prices from today”.
May 3rd, 2008 at 11:09 am
Thoughtful,
Part of the problem I think you have is that you think that a 1.2 million dollar home is middle class.
The first house you listed is at the upper end of the market and has had an increase of a little over 6% a year. The other two homes have lost money. Those folks have basically rented their homes for the last two years at a loss and then sold them. It seems that you are proving that the market has declined greatly even in “middle class” areas.
May 3rd, 2008 at 11:17 am
The point is lost on you, Samson. These are just facts, they don’t need your twisted logic.. Hey Lansner, you owe ALL of the Register’s readers an apology. Your headline of “Realtors forecast 24% price drop for California houses” is shockingly misleading. You may have harmed countless families with your carelessness. Even the seasoned readers of this blog fell victim to the misleading headline. Shame on you!
May 3rd, 2008 at 12:26 pm
It is a common malady of our times that headlines (print, news, internet) often are extremely misleading. The distorted, screaming headline becomes the message, and critical thought is discarded. This seems to occur with greater regularity involving “hot topics”. Right now, housing is a top hot topic, and we get these garbage headlines as a result.. Caveat emptor, baby.
Thoughtful, you’re doing good work here, and that’s coming from a bear. Conclusions may vary, but honest analysis is always welcome.
May 3rd, 2008 at 12:52 pm
so many posters and the OC reg stories are not honest. friday i saw headlines in other papers saying shiller home price number and all other medians are being highly distored by the market activity. the headline said prices on an average house is down much much less than the prices being reported. the OC reg people must have seen this. they did not print this story. this is not honest.
May 3rd, 2008 at 1:29 pm
Im not attempting to use twisted logic. I am using fact as you clame to be.
The middle class (according this very recent study) is a family that makes 75 to 150% of median income.
http://pewsocialtrends.org/assets/pdf/MC-Middle-class-report.pdf
For the entire us this income is as of 2006 is between 45K and 90K. To be fair for Orange County median income for a family of 4 is roughly 84K . This would place the middle class income level for Orange County 63K to 125K.
A home that cost 1.2 Million even with 20% down….or 240K which is about a full 2 year salary at the upper teir of the middle class.
So a 960K loan at 6% with taxes added would be rougly 6900 a month.
That means a family would need to make roughly 18K a month which allows for 38% of their gross income to go to the purchase of this home.
18K a month is a total income of 216K a year or 257% of median income.
So if you slow down a minute and stop accusing people of using twisted logic or false facts, try looking at things in reality. If anything I am using perfect logic.
I will say it again…a part of your problem is that you think that a 1.2 million home is affordable to someone in the middle class.
With the median income in orange county being 84K a home that is 1.2 million is far out of reach for them and is meant for a family that is well above middle classed.
Using the same logic again at the upper tier of the middle class an income of 125K a year at 38% of income can get a loan for roughly 4K a month. This means that even with 20% down an upper tier middle class family can afford to purchase a roughly 700K home at best.
This is of course without using any crazy financing. So if you look back at the homes you listed, only one of them would be affordable to anyone in the middle class.
Now those are facts and reality….I know you are going to throw back at me that these are move up homes, etc…but few can move up anymore with all of their equity now gone…and I dont think that 140K is much to sneeze at
May 3rd, 2008 at 2:24 pm
sampson,
Well done.
As has been said countless times here, it’s all about affordability.
You did a good job of illustrating this — and you know (and expect:) that some of those that know better than what the market is showing (reality) will come back at you and say how wrong you are.
Interesting to contemplate what desperation drives them.
May 3rd, 2008 at 2:36 pm
PDU, You are a suckup. Talk about desperate!!
May 3rd, 2008 at 3:35 pm
samson samson samson. you know the median income is rental income. to own, you need a much higer income than the median. those are the fundamentals. this will upset you. owning in OC is not a right of the middle class. it is a privledge of the well to do. if you only have a median income, you are are a renter for life. if that is an issue, then deal with it. move out of the state.
May 3rd, 2008 at 4:08 pm
Thoughtful says at 9:34AM May 3rd 2008
Hey moron, I was out most of the day. Quit humping me.
Oh really let’s just see about that…(ticky, tap, a little search engine, ticky tap and presto) a list of you posts from May 2nd..Ready? 735AM 805 809 812 847 855 858 908 920 922 957 1036 1050 1056 1144 1149 1154 106 118 120 122 (is this the most of the day part) 717 720 722 724 740 749 753 803 809 822PM May 3rd..845 934 1018 1033 1101 1104 1106 1117 then I guess you really needed to get out of the house maybe to check all those long lines at the open houses? Or wait a minute…maybe YOU ARE AT AN OPEN HOUSE AS THE REALTOR!
You have a serious addiction problem to this blog, but you want a challenge don’t you? Try going over to housingbubbleblog and take on Ben Jones and company…oh, remember to ask about a Joshua Tree..they’ll know what you’re talking about..see you over there if you dare!
May 3rd, 2008 at 4:18 pm
TRS,
First off…I wasnt speaking to you. Secondly, I was speaking how many people often mistake what middle class truly means. I did not elude to someone making a median income needing to purchase a median priced home. Of course you need a higher than median income to purchase in the OC or almost anywhere when you compare median income to where you are purchasing.
If you must know I make about double the median income of an individual in the OC.
If you think owning is a privledge of the the well to do than you also have a problem. That is exactly where our society starts to go down the toilet. If you want to live in a feudilistic society than maybe you should move to the middle east.
So back to the original issue. What I was pointing out to thoughtful is that the middle class is an income of 125K or less. Incomes under 125K represent 75% of the people who live in Orange County. Last I checked that was a majority.
Prices are falling because they are not inline with incomes. If you think otherwise you are a fool.
Do youself a favor drive around all of OC, get away from the 5 or 6 cities you dwell in that are not representative of the county as a whole. You will than see who your true fellow OC residents are and realize that most live in the middle class realm that you seem to think is subservient to yourself.
Not everyone needs to live a mile from the beach to be happy. Most just want to have a comfortable life in a safe neighborhood, close to work and decent schools….More so, they want to live somewhere they can afford and build a life for them and their family.
That is begining to happen again in the OC for more and more as prices continue to fall. I guess you will just have to live with us “renters for life” longer than you may want. The fundamentals have changed and it is all about affordability and always will be.
May 3rd, 2008 at 4:47 pm
Again, NOBODY will pay to see a kissing contest, but they will fill Staples twice on Sunday to watch the UFC. That succinct logical statement speaks volumes about the psychological mindset of the US consumer.
It is why we stop and stare at car accidents and why most of us cannot bear watching figure skating.
Middle class income does put you as a renter in many areas of OC, unless you purchased some 8-10+ years ago in your preferred area.
Like I have compared in the past…there are many desirable driving forces which drive the housing market here…it is way beyond simple affordability. If that were the case, then 5-8 homes at $750,000 would not have closed in my neighborhood in the last couple of months.
The same thing happened to Beverly Hills, Santa Monica, West Hollywood, Malibu, Brentwood, Century City, etc.
Many of parts of our county will be very desirable to those with the cash. GG and Santa Ana are not them along with Anaheim. It is what it is.
May 3rd, 2008 at 4:55 pm
Samson, your logic is “twisted” in that post in the following ways:
1. I didn’t say all three properties were “middle class”, I said thery were in “middle class neighborhoods”. There is a difference.
2. You claimed the second property “lost” money when they didn’t. Yes, the seller paid transaction costs, inclusing commissions, and technically they “lost” money on the deal. However, that has NO BEARING on the discussion of prices. THE PRICE HELD. What is it to you that transaction costs come out of price? It means NOTHING to you!
THAT is what I was talking about!
May 3rd, 2008 at 5:00 pm
Eat it, you MORON! I was online for six hours (actually WORKING) and then for a little over an hour at night. YOU said I was on for 12 HOURS! Then to throw up a smokescreen you added TODAY’S posts! Ha! You look more stupid than EVER! How sad.
May 3rd, 2008 at 5:01 pm
How funny. I bring TONS of facts and people like Eat It, bring……………. my schedule! Very sad. Very, very sad.
May 3rd, 2008 at 5:31 pm
Who was saying Buffet was all doom and gloom? Not only does he say “The worst of the crisis in Wall Street is over”, but his own company will recoup much, if not all, of its derivatives investments (which include mortgage backed securities):
“Berkshire’s own investment in derivative contracts recovered $500 million to $600 million of lost value since the end of March, Buffett said. The company will make “significant money” on the derivatives over the long term, he said at the meeting. Berkshire said yesterday the value of the investments had declined by $1.7 billion in the first quarter. The entire company’s quarterly profit plunged 64 percent to $940 million.”
May 3rd, 2008 at 7:34 pm
dont worry bloggers it wont be long until even thoughtless
will abandon this blog– the embarrassment of having
been so wrong will become unbearable
remember back in 05 when the register ran the FRONT PAGE
story on housings parabolic rise? well the house they featured
is now on the market for 50,000 less and its still not
selling lloolll
http://cr4re.com/documents/OCR_07192005.pdf
May 3rd, 2008 at 8:55 pm
Thoughtful-
Talk about critical thinking. All you have to do is divide $424 by 76% to get the median that CAR is forecasting from:
$424K/76% = $558K median.
This coincides with the yearly median for 2007 of $558,100.
Which means that CAR is assuming that the average annual median for 2008 will be $424K.
We are already down to $500K+/-, so that means there is an additional 15% to fall for California.
How this coincides with the OC I don’t know.
But with LA and OC being the Lion’s share of the RE market, you have to presume there will be more downside to come in OC as well.
May 3rd, 2008 at 9:40 pm
wow that chart looks really bad.
Summer is right around the corner. I wonder what prices and inventory will look like.
May 3rd, 2008 at 9:54 pm
I’m one of 3001 just laid off by Washington Mutual as a Home Loan Consultant. The NINJA (No income, no job, no assetts) loans done by mortgage chop shops countrywide financial and wamu over the past 5 years contributed greatly to this disaster and house of cards. Now watch these two mortgage chop shops losing $1-2 billion per quarter go under in the next 3-4 quarters and demolish millions of peoples 401-k’s and pensions funds. Wamu rates Caiifornia as a risk level “D” and “E” now which means its very difficult to qualify for a mortgage and 5%-10% is automatically deducted from the appraisal price in this declining market , no condo loans, non-owner occupied loans almost impossible, and the only sure way to get underwriting approval is with a full doc loan w/ 2 years w-2’s, Fico score over 720, 20-25% down, large cash reserves, and qualifying on both front end and back end ratios. Welcome back to the fundamentals of mortgage lending California with prices heading down to year 2000 level pricing when the median sfr home price in the untouchable OC was $300k!!
May 3rd, 2008 at 11:01 pm
I am so tired of Thoughtful. Just sick of her crap.
Sorry for the crudeness, but this poor soul needs to get a life and give up her one-person attack on any and all logic.
11 out of 26 just today…..not counting “trs” and “shockg” and what-ever-all she uses.
Pathetic.
Half the posts here, often more.
May 3rd, 2008 at 11:07 pm
samson Says:
May 3rd, 2008 at 4:18 pm
TRS,
First off…I wasnt speaking to you.
—
Samson,
trs, thruthful, shockg, —- all the same.
Sometimes she forgets which name to revert to when responding. Sometimes it’s amusing, sometimes confusing….always bemusing.
May 4th, 2008 at 12:02 am
Ban “Thoughtful” from this blog, Jon. She’s obviously a hyperactive professional troll. She makes us want to read another newspaper.
May 4th, 2008 at 12:06 am
If Wall St is in the know…
http://www.bloomberg.com/apps/news?pid=20601087&sid=anL286vy_iZM&refer=worldwide
Then you may want to consider…
http://www.ft.com/cms/s/0/29c8b9f6-17b2-11dd-b98a-0000779fd2ac.html?nclick_check=1
ITS NOT ALL DOOM AND GLOOM…WHAT IS RANTS GOING TO DO NOW.
May 4th, 2008 at 7:04 am
Check out this posting from Calculated Risk on a Costa Mesa house.
Jon (blogger),
You should do a posting on this. This is eye opening.
http://calculatedrisk.blogspot.com/2008/05/orange-county-ca-prices-from-front-page.html
“It appears the price for the Traverse Drive house followed the Case-Shiller index pretty closely. It is now being offered as a short sale for $559 thousand, well above the $475 thousand that the Case-Shiller index would suggest for February 2008.
The dashed line shows the inflation adjusted prices, based on the Sept 1994 sales price. To reach the inflation adjusted price, the Traverse Drive house price would have to decline to $246 thousand - almost another 50% from the current Case-Shiller indicated price!
For areas with limited land and zoning restrictions (like Orange County), house prices might rise faster than inflation (depending on income growth). Even with a real annual price increase of 1% to 2% (on top of inflation), the Traverse Drive house would still only be selling for $280 to $320 thousand today (based on the ‘94 price)
Yes, nominal prices in Orange County are off about 22% from the peak, and real prices (inflation adjusted) are off about 26% from the peak - but prices will probably fall significantly from here.”