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Lansner on Real Estate ~ The latest news about the housing market from Orange County Register columnist Jon Lansner.

O.C. home prices remain triple U.S.

May 15th, 2008, 6:22 am · 86 Comments · posted by Jon Lansner/O.C. Register columnist

blog-ocpremium.pngFresh Realtors statistics from 2008’s first quarter tell us this about a home-value benchmark I like to watch …

  • In the last quarter, O.C. single-family homes sold at a median price of $597,900. That’s off 14% vs. the year-ago period.
  • Meanwhile, U.S. single-family homes sold at a median price of $196,300, down 8% vs. the year-ago period.
  • Thus, my “Orange County premium” — how many typical U.S. homes you can buy for the cost of one mid-priced O.C. residence — was 3.05 vs. 3.2 U.S. homes to O.C. homes in the previous quarter and 3.28 in the year-ago period.

If you look back over time, you see this premium parallels broad movements in the local real estate market. In the mid-1980s and mid-1990s, a bottom in the premium it seemed to hint that price rallies were possible. And twice in recent memory — 1989 and 2004 — the premium peaked just as those rallies were running out of steam. (Read read how this premium got me “in trouble,” CLICK HERE!) I’ve now broken the premium down by quarters dating to the first quarter of 2007. You see those quarters in orange in the accompanying chart. We find that the Orange premium at 3.05 for the first quarter was at its lowest since all of 2003. Still, that’s well above the 1982-2007 average of 2.33 U.S. homes for the cost of a single O.C. house.

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86 Responses to “O.C. home prices remain triple U.S.”

  1. Mulliganville Says:

    You mean that there is a premium to live around these parts????? nooooo way.

  2. Mike Says:

    Yes there is a premium to live here and it is not worth it. The crime, traffic, smog, primadonna attitudes, subpar educational system, high unemployment, and high cost of living just dont add up. I don’t get it.

    I can get a nice 3/2 in Iowa for $150k and have none of the problems of OC. Who cares if it snows? My kids will have a backyard, better schools, and values are still rising in Iowa thanks to it’s low < 4% unemployment rate.

    California is old school, played out and highly overrated.

  3. Mick Says:

    Yeah, and the salaries around here are THREE times what they are everywhere else too!!

  4. NationalBubble.com Says:

    Well, it looks to me that we are moving back to the average of 2.33 U.S. homes for the cost of a single O.C. house.

    I guess people are not paying such a premium price to live in the OC anymore. What is going on? They don’t like our polluted air and oceans, congested traffic, oil wells and rigs all around the coast, power plants, high taxes, underfunded schools?
    What’s wrong with them? We are an international destination, everybody wants to live here.

  5. SeekingAlfalfa Says:

    Roll down the window put down the top
    Crank up the Beach Boys baby
    Don’t let the music stop
    We’re gonna ride it till we just can’t ride it no more

    I Love OC!

  6. HB Bear Says:

    That we collect a premium compared to the US makes sense to me; that the premium is on the decline makes even more sense.

  7. Mulliganville Says:

    If it is so loathsome for you here Bubbs, it is a big country…pick a place.

  8. The Money Pit Says:

    More troubling is the fact that the baby boomers are hitting retirement and are going to need to cash in the OC equity to fund their golden years elsewhere. I hear Vegas is getting cheap.

  9. Thoughtful Says:

    There is no better place to retire than right here. We may get more retirees than we lose.

  10. mav Says:

    poppycock!

    this ratio should go to the moon……. hell, what am i thinking the moon?…… to mars and beyond !

    http://www.youtube.com/watch?v=1rAsoLm1Ges

    we are running out of land ……….. home prices are not bound by incomes from local jobs…….., they are bound by how much equity you can pull out of the home…… home prices to the moon !

  11. lee in irvine Says:

    I wonder how long it will take for Orange County to reach its 1.8 to 1.9 premium multiple.

    Meanwhile the comp killers expand in Orange County, and entire neighborhoods are being repriced at market.

  12. SoCal78 Says:

    That’s a pretty strong statement to make considering we have a negative migration rate.

  13. Thoughtful Says:

    Lee, not quite. There’s plenty of activity that’s taking place at much higher levels than what you fantasize about.

  14. NationalBubble.com Says:

    I’m seeing lots of price reductions. I guess sellers are realizing that the spring selling season is pretty much over. I sense some panic among sellers. I saw the same thing last year.
    I have to say something positive about realtors. They are in fact telling sellers to lower the price if they want to sell at all. I have actually spoken to a couple of realtors who refuse to take new clients who are unrealistically pricing their homes. Good for them.

  15. Zed Says:

    Thoughtful Says:
    “Lee, not quite. There’s plenty of activity that’s taking place at much higher levels than what you fantasize about.”

    Oh, BS! The upper-income markets in OC have consistently shown the worst sales volume numbers over the past year and that trend is only picking up pace. You really are embarrassing yourself here.

  16. Thoughtful Says:

    Sales volume? Ok. Price? Not as bad as you want.

  17. rants Says:

    this thread confirms it– OC prices have
    a long way to fall we arent even close to the
    bottom no how no way……

  18. Carlos Says:

    The worst has yet to come to Orange County yet. Toxic loans started to reset in April 2008. Housing is not a bubble until it busts.

    Making ends meet before was difficult, but it is nearly impossible now. If you lose your job today, who would take care of your family and loved one? Now I wonder we are going to survive this recession or stagnation –whatever you want to call it.

    We got all caught up in the “square footage” of the home. Well, what we didn’t realize was that with our BIG HOUSE comes BIG EVERYTHING! Big taxes, big insurance, big water bills, big electric bills, Home Assocation Fees, etc. We were prisoners of our mortgage and slaves for fatcat Banks and greedy Lenders.

  19. Thoughtful Says:

    Some interesting facts from the link:

    “One out of three the metropolitan areas in the United States showed rising home prices in the first quarter, with only a small number of jumbo loan originations and higher foreclosures resulting in greatly mixed conditions around the country, according to the latest quarterly survey by the National Association of REALTORS®.”

    “In the first quarter, 48 out of 149 metropolitan statistical areas1 showed higher median existing single-family home prices from a year earlier, 100 had price declines and one was unchanged. NAR’s track of metro area home prices dates back to 1979.”

    A third went higher despite jumbos limping during that period.

  20. NationalBubble.com Says:

    Thoughtless Says:
    Some interesting facts from the link:
    “One out of three the metropolitan areas in the United States showed rising home prices in the first quarter”

    I’m sorry to let you know that your beloved Orange County is NOT one of the metro areas that showed home appreciation in the first quarter. LOL

    It is interesting to see how the permabulls are looking at national numbers now while always saying that OC is different than the rest of the country and that the national numbers don’t matter.
    one out of three is pretty good, ah?
    how about 2 out of 3 metro areas are going down in value?
    I see some signs of desperation…..

  21. Thoughtful Says:

    No, bubs, we’re not. But that is good news for the national economy. You know, the one you are so concerned about.

  22. Thoughtful Says:

    Location, location, location.

    The median home, circa 1956, in Saginaw, MI at $63.98 per square foot:

    http://www.realtor.com/search/listingdetail.aspx?ctid=29021&ml=3&mnp=15&mxp=14&typ=1&sid=81b3b87b826a400ea28bc7fbf51d9329&sdir=1&sby=2&pg=3&lid=1082923659&lsn=23&srcnt=87#Detail

    A circa 1930 steal at $4.09 a square foot (1/4 acre land included):

    http://www.realtor.com/search/listingdetail.aspx?ctid=29021&typ=1&sid=69612905fd844ee98b7db5fa6c39dfb5&lid=1091362863&lsn=3&srcnt=1288#Detail

  23. Thoughtful Says:

    http://www.realtor.com/search/listingdetail.aspx?ctid=29021&ml=3&mnp=15&mxp=14&typ=1&sid=81b3b87b826a400ea28bc7fbf51d9329&sdir=1&sby=2&pg=3&lid=1082923659&lsn=23&srcnt=87#Detail

  24. Sighburrdood Says:

    Carlos had THIS to say: “We got all caught up in the “square footage” of the home. Well, what we didn’t realize was that with our BIG HOUSE comes BIG EVERYTHING! Big taxes, big insurance, big water bills, big electric bills, Home Assocation Fees, etc. We were prisoners of our mortgage and slaves for fatcat Banks and greedy Lenders.”

    What you mean, WE, Kimosabe?

  25. pdu Says:

    7 out of the last 16 posted Thoughlessly….opps 17.

  26. NationalBubble.com Says:

    Thoughtless Says: “But that is good news for the national economy.”

    “One out of three of the metropolitan areas in the United States showed rising home prices in the first quarter, ”

    How is that good news? These are news coming from Realtors and that is the best they can come up with?
    Aren’t home prices supposed to always go up almost everywhere?

    I can understand places like Detroit going down but why would the OC housing market go down unless the bubble is bursting?

  27. Yogi Says:

    Thoughtless is either a paid shill or has OCD. There is no other explaination for the countless hours she spends on this blog. Whichever it is, her credibility is ZERO.

  28. Thoughtful Says:

    Blow it out your ears, NationalHater.com and Swami. You can’t touch me with a ten foot pole.

  29. Yogi Says:

    Uh oh, don’t look now, but foreclosures are moving up the food chain.

    http://calculatedrisk.blogspot.com/2008/05/foreclosures-moving-up-housing-chain.html

    Guess they were limited to just Santa Ana, etc. I guess it was inevitable if prices really are three times the national average. Just a matter of time before order is restored.

  30. Yogi Says:

    correction: “weren’t”

  31. NationalBubble.com Says:

    # Thoughtless Says: “Blow it out your ears, NationalHater.com and Swami. You can’t touch me with a ten foot pole.”

    Oops, it looks like somebody is getting upset.

    hey thoughtless, do you ever get out of the house?
    At least, I’m at work and get paid while I post messages but you are at home just wasting your time. You must have some sort of obsession with this housing crash.

  32. Thoughtful Says:

    I don’t have a boss to steal from the way you do. And moron, YOU are here more than I am!

  33. Thoughtful Says:

    Upset? Me? I laugh at your childish barbs.

  34. BottomWatcher Says:

    There is a premium to live here. My IE friends always talk about wanting to move here. Especially with high gas prices.

  35. poneeboy53 Says:

    thoughtful,

    are you realling say that 2/3 of metropolitan areas having a decline in prices is good news on the housing front.

    WOW you are even more delusional then I thought.

    Yes I am one of those renters that did not buy the last 5 years and am very unsympathetic to all bought homes they couldn’t afford. You know that affordability thing that you actually have to make a payment every month.

    And don’t give me the credit crunch BS. The credit crunch wouldn’t make a difference if people could afford there housing payments, or not got themselves into loser loans, or maxed out all their equity and then couldn’t affoard their loans.

  36. Mom in CDM Says:

    test

  37. Mick Says:

    *WARNING*

    The message board’s commentator and infamous blabbermouth and liar is here! THOUGHTFUL

    BEWARE!

  38. Mick Says:

    These home prices are insane and can not be sustained. The “experts” here will claim that they will stay this way based upon all their nonsense opinions. These are the same people that believed, like David Lereah and his kind, that we would see single-digit gains even after 2005. Funny how they keep hollering all the way down with excuse after excuse. It must suck to have bought a house around 2005 thinking you could sell it for a profit within the next 5 years!

  39. Thoughtful Says:

    Let it out, son. Boy, renting makes people so angry! I thought it was just swell?

  40. NationalBubble.com Says:

    Thoughtful Says: “And moron, YOU are here more than I am!”

    Oops again, somebody is getting really upset.
    It must be painful to be a bull these days.

  41. Clay Says:

    Nice post.

  42. Mick Says:

    Thoughtful says: “You can’t touch me with a ten foot pole.”

    Is that a boast or a dare?

    Well, my guess is that no one would ever want to touch you, even with a ten foot pole.

  43. mav Says:

    Thoughtful is trying to achieve a velocity and volume of blog post that take her back in time………

    The theory…………. if she can blog fast and frequently enough….. she will head back in time…… back to 2006……… while back in 2006 she could prevent herself from purchasing a home in the OC at bubble prices…… she probably has a few other things to fix in her life as well….. but those are secondary targets…..

    LOL@ribsplitter

  44. Thoughtful Says:

    When was the last time Mick or Bubble or Mav added 2 cents worth of information or logic or insight to the blog? All I ever hear from you wack jobs is the verbal equivalent of stomach acid.

  45. OhhNinjaPuhlease Says:

    Bullying bulls want to stop the real estate burn down by making this blog a distasteful experience. They can’t.

    They can use dialog-killing tactics: insincere remarks, condescension, insult, and demeaning epitaph to debase and stifle rational dialog.

    As if blogs like this are the reason for the financial pain of RE shills / speculators, and not deceitful lending, lies with paper blizzards no one could read.

    I wonder how many lawyers who should have known better got stuck with those bad loans. I’ll bet there are more than a few.

  46. Eat it in the OC Says:

    http://www.latimes.com/business/la-fi-poll15-2008may15,0,3503120.story

    Looks like more people are worried about their financies…but I thought everyone had tons of cash and were just itching to pay top dollar for any thing?

    Some tidbits from the article:

    More than three-quarters of those polled said they thought the economy had fallen into a recession and that the country was “seriously off on the wrong track.”

    Two out of five Americans who have credit card debt said it was more than it was five years ago — with 22% saying they owed “much more” on their cards.

    Money worries plague Americans across the financial spectrum. Of those making between $60,000 and $100,000 a year, 26% described their finances as shaky; 10% of those making more than $100,000, including Fleckenstein, used the same terminology.
    (I wonder how many people there are in OC that fit this profile and how many of the >100K have already or recently bought and are now in a position to sell their current home and move?)

    Just slightly more than half of homeowners polled said they thought their homes would appreciate in value over the next three years. In a poll taken 14 months ago, 83% expected to see gains in the value of their homes.

    In the most recent poll, 24% of those with adjustable mortgages said they didn’t think they’d be able to handle the payments if interest rates went up.

    All-in-all it suggest that we are still moving in the negative direction (less disposable income, higher debt, less confidence etc.) I’m sure that our moderater will have some choice words about how this doesn’t mean anything for OC or that it’s not that bad or that the media is blowing it all out of proportion etc.

  47. Eat it in the OC Says:

    More facts for you…

    http://www.nahb.org/generic.aspx?sectionID=134&genericContentID=529

    Housing Index fell this month to 19 from 20 last month..all the components fell one in particular SFH sales for next 6 months..from 30 to 27..a 14 point drop YOY.

    Last year was bad but this year is going to be much much worse.

  48. Eat it in the OC Says:

    This from the NAHB report really spells it out..

    “Despite the Federal Reserve’s concerted efforts to lower short-term interest rates, free up credit markets and shore up the national economy, the housing market has shown no evidence of improvement thus far. In fact, conditions have continued to deteriorate in recent times,” said NAHB Chief Economist David Seiders. “The latest HMI shows that even fewer builders now foresee market conditions improving over the next six months compared with our April survey, and builder ratings of buyer traffic through model homes also have dropped off over the past month on a seasonally adjusted basis. This certainly adds fuel to the argument that targeted policy stimulus, in the form of a temporary tax credit for home buyers, is essential to halt the housing downswing and remove the heavy drag being exerted by housing on overall economic growth.”

    My only comment would be…well if you had bought so much land, built so many over priced homes, and sold homes to people who could not afford them…you wouldn’t be in this position.

  49. bpsqwerty Says:

    “Yeah, and the salaries around here are THREE times what they are everywhere else too!!”

    No…more like 1 1/2 times.

  50. Mick Says:

    “When was the last time Mick or Bubble or Mav added 2 cents worth of information or logic or insight to the blog? All I ever hear from you wack jobs is the verbal equivalent of stomach acid.”

    I personally think you have more of an acidic effect on people than I do here. All we ever hear from you is you stupid opinions, put-downs and boasting. Like all of us here, we don’t really know where the OC RE market is heading for certain, but we like to guess, unlike your “facts”.

  51. Mick Says:

    Besides that, it’s fun to pick on thoughtful.

  52. Thoughtful Says:

    I rest my case.

  53. Eat it in the OC Says:

    You never had a case to rest so it must have been easy.

  54. NationalBubble.com Says:

    Folks, read this post from Dr Housing Bubble.
    Look at the listing price history that home in Santa Ana.
    It’s insane.
    Housing bubble??? What bubble?

  55. NationalBubble.com Says:

    Here is the actual listing.
    Scroll down and look at the price history. LOL

    http://www.redfin.com/CA/Santa-Ana/1032-N-VAN-NESS-Ave-92701/home/4469453

    BTW, it sold for 505K less than 2 years ago.

  56. DigDoug Says:

    It appears that you must begin all of your blog entries with some sort of slam against someone else, so Mick you are an RTard (not sure why though).

    Inflation was intended as a tool to avoid stagnant wealth.
    Stagnant wealth was due to the gold standard limiting the amount of cash in play in the economic system, so the people with money remained the people with money.
    We no longer have a gold standard, and at this point it is IMPOSSIBLE to return to one.
    The people in this world that truly have the money now can not possibly EVER become unwealthy…Financial institutions that made TRILLIONS off of the moving of money that could care less about the offloaded assets and their dwindling values…the profits were moved out of that cycle and are being enjoyed to no end as we speak.
    Since the rich (100+ mil) would have as hard a time going broak as we do trying to get rich will never go without money, the system is broken.

    There must be a way for everyone that is playing the game to go broke at any time…if not then the game is broken…the game is broken folks.

    how many games of ball would you play against Jordan in his prime knowing you would never win?

    How it failed is rather simple…capitalism is NOTHING when you remove morals and ethics and inject greed in its place. It is not enough anymore to do well, you must be on top…and since on top is not real, companies keep striving for this unreal place instead of just doing ‘well’ so that other companies may do ‘well’ as well…

    anyway, back to the norm around here…uh…Eat It in OC is a nerd…

  57. Crystal Balls Says:

    I just don’t get all the anger and personal attacks over the direction of the price of homes. It’s like getting in a fight about the weather next month. Nobody really know the answer and arguing about it isn’t going to change the result. DigDoug, you are confusing a market system with a value system. I think that is the source of much of the anger on this blog. People think they have been “cheated” out of the home they “deserve” by an “unfair” market system. They celebrate foreclosures as some kind of “justice.” Get over your resentments and don’t measure your value by the size of your house. National Bubble could own a mansion in Corona Del Mar, but he would still be a scumbag in my book for gleefully stealing his employer’s salary.

  58. rants Says:

    this is the end
    beautiful friend
    the end
    of our elaborate plans
    the end
    no safety or surprise
    the end

    http://www.iht.com/articles/2008/05/15/business/rtrcol16.php

  59. SoCal78 Says:

    You bulls need a serious dose of Mr. Mortgage. This guy rocks.
    http://www.youtube.com/watch?v=pmeBSWI9sF8&feature=related

  60. rants Says:

    socal78 the bulls never respond to mr mortgage— WHY?
    because facts are stubborn things even more stubborn
    than truthiness lloollll @ribsplitter

  61. Mom in CDM Says:

    The home prices here are not only insane, the fact is that many, many qualified candidates for high paying jobs refuse to move here because they cannot afford a home (unless one purchased before the bubble and then sold to make a million dollar profit). The salaries are not 3x the us, and even if they were- you still cannot come here from a different area (even at 3x the salary) and buy a decent home.
    renters aren’t angry, I’m not angry, I’m just saying that there is no basis for the home prices here. This is not NYC (where actually 45 min. outside of the city - where you take the train into the city for work- AND you can buy a home for less than a million…trust me we almost moved there and that was in a very very good location).

    The OC, with these home prices is set up to fail, if you cannot bring in highly qualified professionals- your businesses are set to fail. period.

    3x the national is not a good label to have if you want your county to continue to economically thrive.

  62. Scott Says:

    Mom in CDM,
    You should buy this house in Santa Ana. It is affordable.

    http://www.redfin.com/CA/Santa-Ana/1032-N-VAN-NESS-Ave-92701/home/4469453

  63. Mick Says:

    “I rest my case”

    Ha ha ha ha ha ha ha! Haaaa ha ha ha ha!! That is funny!

    You’ll be hootin’ and hollerin’ and shoutin’ and a jumpin’ the second you find something to cry about, which is anything!! You’ll rest NO case, cuz you’re on everyone’s case about every case!

    I rest my case.

  64. Truthi Says:

    scott you are mocking mom in cdm right?

  65. Scott Says:

    Well she is complaining about affordability in cdm. She should look elsewhere. That house is pretty cheap in SA.

  66. Truthi Says: