Here's recent history of the Fed’s policy committee and its Fed Funds rate. Next Fed decision is June 24/25.
Newer O.C. apartments suffer more vacancies
May 13th, 2008, 6:23 am · 132 Comments · posted by Mary Ann Milbourn
REIS Inc. reports that during the first quarter, O.C. apartments built after 1999 had 2.5 times the vacancy rate of the county as a whole.
Countywide vacancies were 4% in the 784 O.C. complexes that REIS studied. Units constructed after 1999, however, had a 10% vacancy rate. The oldest apartments — built before 1970 — had the fewest vacancies at 2.8%.
Rents made the difference. Apartments built before 1970 rented for $1,359 while those constructed after 1999 went for $2,055. The average county rent was $1,550.
| Year Built | Vacancy Rate |
|---|---|
| Before 1970 | 2.8% |
| 1970-1979 | 3.2% |
| 1980-1989 | 4.2% |
| 1990-1999 | 3.6% |
| After 1999 | 10.0% |
| All | 4.0% |
Related items:
- Investor/attorney sees tough times for landlords
- Bad O.C. economy hits 1-bedroom apartments
- Foreclosure refugees head for O.C. apartments
- O.C.’s high-rent districts suffer higher apartment vacancies
May 13th, 2008 at 7:03 am
Can anyone provide any evidence why this trend won’t continue throughout this year and next year.
May 13th, 2008 at 7:15 am
I suspect that there are millions of people in our country that have been living far beyond their means. Now that their ability to borrow from their house has been removed, they’ve sought out other ways to keep the pace.
Example — this news regarding Bank of America was reported this morning from Bloomberg:
Bank of America, the nation’s largest credit-card issuer, is also seeing a “recent sharp increase” in spending on necessities by its credit-card customers. That has curbed retail, travel and entertainment purchases, McGee said. Economists and bankers have said the economy may be teetering near a recession as consumers struggle with job losses and gasoline prices topping $4 a gallon.
May 13th, 2008 at 7:40 am
Unfortunately, today we had more horrible news for the housing market. Are the price declines ever going to stop? Let’s hope so but it might take years.
Home prices continue sharp descent. Steep drops in West
May 13th, 2008 at 7:45 am
Oh-Oh, hope you guys took your Blood Pressure medicine. This may be the begining.
While most of the nation appears mired in the middle of a severe housing slump, the southwest corner of Riverside County may be showing signs of recovery.
In April, the number of houses sold was higher than the year before for the fourth straight month, leaping 73 percent last month from a year ago.
And, for the first time since the housing market took a dive, house sales in the Temecula-Murrieta region were higher than sales in 2006, near the peak of the housing boom.
May 13th, 2008 at 7:50 am
Oh No.
This is just the beginning.
Last Year was just the beginning.
6 months from now, it will be just the beginning.
1 year later, it’s will be another beginning…
May 13th, 2008 at 8:00 am
Permabull SeekingAlfalfa says: “Oh-Oh, hope you guys took your Blood Pressure medicine. This may be the begining.”
Interesting that you failed to mention anything about prices. Ok, I’ll complete the information for you so our reader get the whole picture.
Here is what else the article said that SeekingAlfalfa is not telling you:
“To be sure, not all housing data in Southwest Riverside point to recovery.
Some prominent housing analysts think the region’s housing recession is far from over, chiefly because foreclosures have doubled from a year ago, and an oversupply of homes for sale threatens to further depress prices.
Yet sellers have already been slashing prices, setting the stage for the recent surge in buying.
The median home price —- in which half the homes sell for more and half for less —- in the region sank to $265,000 in April, a mammoth 36 percent off the $415,000 median in 2007 and 40 percent below the $439,900 level of 2006, according to an analysis by The Californian and North County Times of data from the Multi-Regional Multiple Listing Service.”
For those of you that like to read the whole story and not just what this permabull SeekingAlfalfa wants you to believe, here is the link.
http://piggington.com/signs_of_life_appear_in_southwest_riverside_count
May 13th, 2008 at 8:05 am
Good for you Bubbie if you knew this now why didn’t you post the artcile yourself? I guess increased sale don’t fit your agenda. You forgot this part.
Escalating home sales, widely considered an indicator of an incipient housing market recovery, have encouraged some analysts to predict that price declines will soon cease in the region.
May 13th, 2008 at 8:11 am
No, I didn’t have that story. I googled it because I could tell you were not telling the whole truth and I was right.
If you are going to post something here, you should always include a link to the original article like I always do in my posts so readers can make their own opinions.
This only shows your desperation.
May 13th, 2008 at 8:12 am
It’s reasonable to expect that the lower the home prices become, the more buying activity we see. This doesn’t deter from the fact that those who choose to buy today will be upside down tomorrow. There are plenty of foreclosures waiting in the pipelines that do not bode well for today’s buyer… who should be the ones staying on top of their daily blood pressure meds.
May 13th, 2008 at 8:14 am
Another day, another worthless guarantee.
May 13th, 2008 at 8:41 am
Here’s a worthwhile guarantee. No, here’s two.
Truthiness is crazy. In a bad way.
Big end apt. complexes are heading south.
Tally-ho!
May 13th, 2008 at 8:46 am
How much would you like to wager this includes the many complexes that just opened their doors?
May 13th, 2008 at 8:51 am
I did provide a link a couple of days ago and someone who knows computers delinked it. And you didn’t tell the whole truth either did you pencil neck? I think you’re just PO’d cause that guy Poggi may turn out to look smarter than you and God forbid anybody ever be smarter that Computer Geek. As a matter of fact I have my suspicions about who might have screwed this blog up by trying to punt some of the posters he didn’t agree with.
May 13th, 2008 at 9:03 am
“As a matter of fact I have my suspicions about who might have screwed this blog up by trying to punt some of the posters he didn’t agree with.”
Oh sure, and I’m also responsible for global warming, aids, and the weak dollar.
“I did provide a link a couple of days ago and someone who knows computers delinked it.”
Sure, it was probably the chinese mafia who did it.
BTW, I found a picture of SeekingAlfalfa if you guys want to see him.
He is crazy like a fox #$%@&#$
May 13th, 2008 at 9:08 am
So higher rents lead to higher vacancies. This is news? That is is a trend? High end homes take longer to sell. That is not a trend either. [Why is it such a pain to post these days?]
May 13th, 2008 at 9:31 am
~It would be interesting to see this is broken down by zip code.
~There are many new developments (07& 08) that are still not at full capacity. I would like to see the present category broken down 2000-04 and 2005-present.
May 13th, 2008 at 9:57 am
Apartment vacancies make sense. Who would want to live in an apartment when houses/condos/townhomes are becomin so affordable?
May 13th, 2008 at 10:03 am
But they’re not affordable, OC Pro. They’re not. They’re not. They’re not. Lalalalalalalal, I can’t hear you.
May 13th, 2008 at 10:16 am
Of course homes are starting to sell again on Riverside. The median is at 265K. The median household income in Riverside County is 55K. This means the median home price is 4.9 times median income. When it was 7.5 times income.
Again, it is all about affordability. Homes are now affordable for more people. A 36% drop in prices makes perfect sense so the the increased sales make sense.
Here in the OC the median household income is roughly 510K with the median income being around 75K…that is equal to 6.8 times income. Being that the OC is “special” I think somewhere between 5.5 to 6 times income is a logical point for the market to be.
So a median of around 420K to 450K makes perfect sense to me. The key to the recovery of this market is when more homes become more affordable to more people. It is very simple.
May 13th, 2008 at 10:25 am
test
May 13th, 2008 at 10:36 am
anyone else having trouble posting? the little “anti-spam” thing went away. when I type “test” it goes through… if I type something out, it doesn’t (or is real hit & miss)???
May 13th, 2008 at 10:41 am
this is so funny!!!
joe shmoe Says:
March 15th, 2008 at 9:04 am
I object to this because I belong to the Sacred Church of No Bail Outs and No Government Interventions. No one should ever change anything once it has been signed. It is religious principle. God says so. Government should never interfere. No police. No Fire department. No street cleaning. Everyone should just fend for themselves. Spending public money on anything - saving your child’s life with paramedics or paying for a court to cram down a mortgage and alter a contract - is but the first step to the apocalypse.
Don’t be fooled by people who study issues and do research. God’s will is that we claw each other to death.
No Bail Outs! Save No One! The Weak Were Made So That They Could Perish! One Person Who Hordes All The Money Is Stronger Than 200 Million People Who Band Together As A Society.
Oh. But please spend a few billion on missile defense projects that don’t work because they can be easily defeated by countermeasures. I own defense contractor stock, and I have a right to make money there.
Free Duke Cunningham!
No Bail Outs for Mortgage Holders!
Joe
Joe
May 13th, 2008 at 10:45 am
Well said, Samson. (Except I think a couple digits in that 510k were transposed.)
I would like to know why the bulls on this board expect home sales to pick up in OC when a household with a 6-figure income would be unable to afford a meager SFR at the current rate.
May 13th, 2008 at 10:49 am
Thanks truthi, that was good.
May 13th, 2008 at 11:06 am
I Just have a minute…but I find most of the thesis from the ones posting the bottom-is-here, probably don’t have personal access to the MLS! It takes the MLS at least 3 consecutive qrts to establish a trend-indicator-turning-point!
Even a true recession is defined by at least two qrts…which hasn’t been confirmed either. I just don’t get the agenda behind the Bottom-is-Here crowing! The MLS data is moving down in price even though some volume may temporarily/seasonally be up. Volume is often misinterpreted, even DataQuick confuses it along w/median price (irrelevant)…My MLS shows me price reductions even in N.B. on Bay Island ($12.7 M to $10.7 DOM 328) granted it was probably over-priced to start with, but there are many others going thru a find-the-bottom of the market like it…
Has anyone noticed the Calif 20 bil deficit spending? Which is causing Sac (the powerful OZ) to drive wealth from the State by way of business leaving?. I’m convinced the truly liberal minded folks won’t get the bigger picture here? W/respect to all…be objective!
May 13th, 2008 at 11:09 am
Lets do a little math on that one…
6 Figure income = 100K
Appropriate Down Payment = 20%
Price for a Decent SFR = $600K (this is high but I’m making a point)
If purchase price is 600K, loan amount = $480K
Monthly Mortgage (assuming 6.75% 30 Year Fix) Payment X 12 = $37,359.24
Property Tax & Insurance = $12,750
Even with all of these VERY conservative assumptions, you are still pretty close to making the DTI to qualify w/20% down.
Now for the best part…there are 56 homes that fit the search criteria of 4 Bed, 3 Bath, between 500-600K in the better parts of South OC. Sure some of them are short sales and the prices aren’t realistic, but some aren’t.
All told… I think OC is very affordable, much more so than 2 years ago.
May 13th, 2008 at 11:15 am
The impact of State-deficit-spending is not yet seen in your example…public confidence isn’t factored in either! Which is an unknown by-product!
May 13th, 2008 at 11:26 am
Well people are leaving OC and California in droves. Young people are moving back in with their parents or teaming up with roommates so they can survive. People are foreclosing so they move in with family or take on roommates for a while. Of course these factors will cause there to be less demand and more vacancies. Less demand = lower prices. I’m wanting to move up from renting an apt. to a condo, but am waiting for rents to come down a bit more. I’ve also been unemployed for almost a year so we don’t have much of a choice!!
May 13th, 2008 at 11:36 am
I’m sorry but it seems to me that the housing market is getting worse, NOT better. The bad news keep coming….
It’s sad to see this because too many families are hurting.
http://latimesblogs.latimes.com/laland/2008/05/foreclosure-flo.html
May 13th, 2008 at 11:37 am
I’ve only seen higher prices, not lower ones.
May 13th, 2008 at 11:38 am
That assumes you have $120k stuffed in your mattress, aren’t paying PMI, have 3 month’s worth of mortgage payments set aside to prove to the bank you are worthy, and let’s not forget closing costs plus HOA dues. Let’s hope the kids don’t need new shoes.
May 13th, 2008 at 11:42 am
All the kids I see are wearing shoes.
May 13th, 2008 at 11:45 am
So with your math assuming a couple who makes 100K a year has been able to save 120K. The payments would be 4,175 a month including taxes and insurance.
A couple making 100K a month make 8,333 gross. After taxes using a conservative assumption of 25% placing this couples take home income at $6,250 a month. Subtract the 4,175 payment. it leaves you with 2,075 a month.
Two car payments at a consevative 400 a piece is 800 a month. So that leaves you 1,275, car insurance another 200 a month. Leaving you 1,075. Cell phones, cable, water, ineternet, gas, electricity another 400 a month. So this leaves you with $600 to spend on food, clothes, car repairs, credit cards, etc….not mention any repairs the house may need or buying furniture, window coverings, appliances, etc.
This of course assumes that this couple has no children, and isnt saving anything for the future…(why should they…they will have all that equity to live off of)…or dont plan to take a vacation in the next 10 years.
Also a couple making 100K is 133% of median income….well within the middle class which is defined as 75% to 150% of median income.
So no a 600K home is not affordable to a couple making 100K.
My math, and I can do it if you like puts a 450K home at best being affordable to a couple that makes 100K a year.
May 13th, 2008 at 11:49 am
OC Pro,
Just because they are more affordable than 2 years ago does not make them “affordable” in any objective measure. Here is the crux of the problem: People who make $100,000 do NOT have $120,000 saved up for the 20% down payment GUARANTEED. Even if they are able to put aside $10,000 per year in savings after spending beyond their means, it will take them about 10 years to save up enough.
95% LTV and better was the NUMBER ONE REASON the bubble came to being. You take away that lenient downpayment requirement and nobody qualifies except for “savers”, and guess what kind of income a “saver” has before they have $100,000 to $200,000 saved up? Most likely $200,000+ income annually - but these are not the people who will save the real estate market. It’s the Joe’s making $100,000.
May 13th, 2008 at 11:51 am
The wealth-effect of the great OC is being drained by tax-&-spend demagogues…Some of my long term N.B. fiends have already liquidated & moved their money out of this state, while maintaining a res here. They will decide in the future as to weather they’ll make it a 2nd res with a primary in a no-income-tax state…As will I…This is the life-blood of Calif leaving!
It’s why after 44 yrs in the Coastal OC my money has been removed from the OC real estate market and parked in the bank…. I’ve, for the time being, kept my primary Palm Desert property… I even paid my taxes on the OC property 2nd home/investment to do so. But, I was far ahead of the declining market by doing so (7/06)!
May 13th, 2008 at 11:58 am
Again with the first time buyer has a right to the median home, gadgets and vacations? First time buyers can get financing with 3% down, which they can use for a starter property.
May 13th, 2008 at 12:01 pm
Wasn’t someone saying just yesterday that bulls invariably turn out to be realtors? That was not true, but what IS true (by their own admissions) is that bears invariably turn out to have recently sold property.
May 13th, 2008 at 12:02 pm
What really matters:
A) Comp Killers are now all over Orange County, driving down the price of real estate. This is the same real estate that was once driven up by one’s ability to borrow, instead of one’s ability to repay.
B) PermaBulls are now in complete denial, and still believe the banks and/or the gubernment will reestablish the Ponzi Scheme.
C) So called, local, real estate professionals like, Gary “in the bag” Watts, have been completely discredited.
D) Homeownership is being returned back to a conditional right that is EARNED, instead of an entitlement that was perverted by riverboat gamblers, Wall Street scum, irresponsible home debtors, carnival barkers and latte drinking bimbos.
May 13th, 2008 at 12:04 pm
I’m sorry, but that’s just downright bizarre. If they believe that OC sucks as much as they say, WHY OH WHY, do they pound the keyboards night and day, instead of just moving on?
May 13th, 2008 at 12:06 pm
Your Bulls & Bears nonsense should be left for the Stock-Market…Where big-block-traders move the markets…I guess we know who the Liberals are?
I heard that the Sac/demagogues are getting ready to propose $35 bil in new back door taxes. I’m attempting to get solid info on that but haven’t confirmed it yet…If so, like they said in Seattle when Boeing threatened to leave during the 70’s recession…”Will the last person to leave Seattle please turn out the lights”
There’s more at work here than the Real Estate cycle this go round!
May 13th, 2008 at 12:10 pm
Not to mention I’m still vested in the real estate market with my $1m primary…so again your theses fails!
May 13th, 2008 at 12:12 pm
Thoughtful,
You know that I recently sold my property and two weeks ago you were using me as your poster-child for a thriving real estate market, until you realized the type of buyer I had come knocking on my door. I am not a bear because I am a seller. I am, in part, a seller because I was a bear first. I can understand some property owners being in denial, or even just plain ol’ optimistic… but for you to say, “I’ve only seen higher prices, not lower ones” is, with all-due respect, delusional. But I suppose in order to see the lower prices, you’d first have to open your eyes.
May 13th, 2008 at 12:14 pm
What really matters:
A) Comp Killers are now all over Orange County, driving down the price of real estate. This is the same real estate that was once driven up by one’s ability to borrow, instead of one’s ability to repay.
B) PermaBulls are now in complete denial, and still believe the banks and/or the gubernment will reestablish the Ponzi Scheme.
C) So called, local, real estate professionals like, Gary “in the bag” Watts, have been completely discredited.
D) Homeownership is being returned back to a conditional right that is EARNED, instead of an entitlement that was perverted by riverboat gamblers, Wall Street predators, irresponsible home debtors, carnival barkers and latte drinking bimbos.
May 13th, 2008 at 12:15 pm
I meant this:
“my money has been removed from the OC real estate market”
May 13th, 2008 at 12:18 pm
“You know that I recently sold my property and two weeks ago you were using me as your poster-child for a thriving real estate market, until you realized the type of buyer I had come knocking on my door.”
(Wrong, you had a lot of traffic and several offers. You decided to take lower ones of your own accord)
“but for you to say, “I’ve only seen higher prices, not lower ones” is, with all-due respect, delusional.
(I was talking about rents. That is the thread we are on)
“But I suppose in order to see the lower prices, you’d first have to open your eyes.”
(Whatever)
May 13th, 2008 at 12:19 pm
Now lee, you know very well that new home prices are stubbornly high and resales in Irvine are doing extremely well.
May 13th, 2008 at 12:22 pm
I guess this must be repeated over and over….ad nauseum……….First time buyers are not buying $600k houses!!! They would buy a $300k condo and go from there, like the rest of us did. As they make more money at their jobs and gain equity (normal market), they move up. So simple. This whole scenario of saving $120k and not being able to make payment, etc, etc. is completely irrelevant. A couple making $100-120k can do this.
Also, samson, obviously I agree with you that this hypothetical couple cannot afford the home, but it speaks volumes to me that part of your equation is a $400 car payment for each person. You have to have priorities and you have to sacrifice to get where you want to be.
May 13th, 2008 at 12:22 pm
Right, I rejected all good strong offers of qualified buyers and considered just the lower ones. Not.
May 13th, 2008 at 12:24 pm
This blog is a total waste of time…have fun hallucinating! I’m out…I’ll save my insights for where usful dialog exists…
May 13th, 2008 at 12:25 pm
Uh, if I recall you had several different types of buyers, including a cash buyer.
May 13th, 2008 at 12:26 pm
VOR -
Samon’s scenario left out “luxuries” such as health insurance, life insurance, 401k, etc. So just substitute one car payment for those and voila.
May 13th, 2008 at 12:26 pm
Oh my god, did you guys see this?
“Oil prices shot to a new record near $127 a barrel Tuesday on concerns that Iran may consider cutting crude oil production. Gas prices, meanwhile, rose to a new record over $3.73 a gallon Tuesday, and their advance shows little sign of slowing with Memorial Day weekend, the traditional start of the summer driving season, just 10 days away.”
http://biz.yahoo.com/ap/080513/oil_prices.html
This is going to hurt the OC market more than anywhere else. Residents in San Francisco or NYC couldn’t care less about these high prices, but we here in the OC are hurting big time. I see all those SUV owners on the road and I feel sorry for them.
This can’t be good for the OC housing market.
Prepare yourselves for even lower home prices.
May 13th, 2008 at 12:28 pm
Here’s what I know! I do know that the bulk of real estate being sold today is distressed. And I know that the percentage of distressed property available in Orange County is expanding.
May 13th, 2008 at 12:30 pm
Gas has nothing to do with housing, except making it more expensive to build. Get a grip.
May 13th, 2008 at 12:31 pm
And you also know that your beloved Irvine is still way out of your league.
May 13th, 2008 at 12:31 pm
When are the bad news going to stop coming?
Now that we finally started to see lower rates for the new conforming jumbo loans, interest rates are going back up for all loans.
Look at the 10 year Treasure Note (up 13 basis points just today)
http://finance.yahoo.com/echarts?s=%5ETNX#chart1:symbol=^tnx;range=3m;indicator=volume;charttype=line;crosshair=on;ohlcvalues=0;logscale=on;source=undefined
This is going to put even more pressure on the housing market. Expect 30 year fix rates to go up in the next few days.
God help us
May 13th, 2008 at 12:32 pm
Thoughtful,
The cash offer was from a Chinese investor to use the home as an investment property. Less than half of our offers were from typical American families and they were our weakest in terms of offer and financing.
May 13th, 2008 at 12:33 pm
And they’d still be at near record lows.
May 13th, 2008 at 12:33 pm
What is a “typical American family”?
May 13th, 2008 at 12:34 pm
SoCal, Exactly. My point in that part of the post is that you’ll probably have to give up some luxuries at first to get your first home. Otherwise, I agree. First timers cannot afford the top-medium of the market.
May 13th, 2008 at 12:34 pm
the SUVs are recasting quicker than Option ARMs
LOL
but thoughtful says this has ZERO effect on rents or housing prices, so don’t sweat it
May 13th, 2008 at 12:34 pm
Nationalbubble,
Thanks for the info… however don’t we actually get most of our oil from Venezuela? I could be wrong on that but that was last I heard…
May 13th, 2008 at 12:35 pm
Not zer