Your blogger’s quarterly economic review — The Big Orange Index — comes is now out. (Read full report HERE!) We’re sure you’ll instantly want results for The Big O’s Property Index, tracked by the accompanying graph (Click on it for a larger version!) …
The Big O’s Property Index this spring suffered its worst drop since 1995. This benchmark for local real estate has fallen seven quarters in a row. The index now rests at a level last seen in 2002.
Real estate’s pain is not just about weak house pricing. House shoppers have dramatically slowed buying, lending don’t lend like they used to, and developers have halted building. So property-related employment gets hammered.
By the Big O’s math, 28,000 of local real estate and finance jobs have disappeared — or 1-in-8 of the workers who once toiled in what was once was an Orange County growth engines. Real estate’s tumble is a key reason why O.C. unemployment is at a five-year high.
You have not seen the worst housing price drop in Orange County yet.
OC is going to break records with housing declines in the next 18 months…this will be huge.
OC is easily worth 2x the national average. When I can buy a home in let’s say Dana point that is 2000sq with 6000sq lot and peakaboo view of ocean for 350k we are there baby…back in line with historical and ready for a slowwww steadyyyy increase of maybe 3-5% annually again.
18 months tops…WHY????? HOW????
people are hanging by threads…trying to rent to cover mortgages…trying to work 5 jobs to cover mortgages…none of this will help.
rates are going up…equity lines are closing and going away…i can here the coin in the tin cup baby…I LOVE IT…
all i can say is…GET OUT OF MY HOUSE!!!!
I am having the best year in business ever, it is too good to be true.
the greater economy is still wonderful and looking good. we will pull thru, we will just have less of these tards in my beautiful OC.
buh…….bye….buh-bye
see yah, wouldn’t want to be yah…now get on with your bad self!!!
From what I read and hear all day long, the news just continues to get worse, unless you call homes selling for a 25% discount good.
I think we get a small spring/summer bump and fall back into a dark hole.
Good job DigDug, that’s what its all about for the bears. You want a beach view home on your 75K salary. It isn’t going to happen. Your pocketbook doesn’t determine market price.
Bush is an insane idiot
Dear Crystal Ball,
You may have figured it out…………………..DigDog’s pocketbook does set the price !!!!!! The value of homes is what people like DigDog earns and is willing to pay. The value of homes is not established by wishing prices of “homeowners”.
P.S. Most “homeowners” are actually home debtors….the banks actually owns the home.
Bitter Dig??? Watch out for karma baby…you sound like a native Hawaiian bent at the man…welcome to capitalism…sometimes it creates value and sometimes it diminishes it.
No, Nano, supply and demand set price. There are plenty of people wiling and able to pay far more than 350K for an ocean view 2000 square foot home in Dana Point. At 500K with 10 percent down you could rent it and maybe have a small positive cash flow or at least break even without considering tax benefits.
I want my shotgun shack!
So many of the rents were supported by cash-out equity from people who sold at tremendous profits or by RE and mortgage industry salaries that are gone. Or by people making due temporarily who will move away given the chance.
Those were not supportable long-term rents. Again, even with significantly higher than the median income, your take home is 3,500, you can afford maybe $1,200 in rent. Median your take home is $2,500, you can afford $800 in rent. The bubble inflated everything including rents.
That is the reality. Dream on if you think rents will support prices at anything near bubble levels.
Crystal Balls Says:
June 26th, 2008 at 10:23 pm
No, Nano, supply and demand set price. There are plenty of people wiling and able to pay far more than 350K for an ocean view 2000 square foot home in Dana Point. At 500K with 10 percent down you could rent it and maybe have a small positive cash flow or at least break even without considering tax benefits.
Huh, check back with me in a few months, and I will let you know how some of the foreclosures go. Hopefully you have cash to bid them up above $350k, but it is not as much fun when you are the only one bidding.
The reality is that most folks will not live here if it means renting a studio. A significant number will move to another state and that is all that it will take to balance out supply and demand so that rents fall into line with national norms taking into consideration the nice weather and the value of the occasional trip to the ocean.
I say this only because I am trying to time my own entry back into the market, and I want to vett these ideas with other folks to see if any strong counter arguments can be made. It is not about wanting prices to fall. It is about wanting to know how far they will fall so that I can buy at the low.
If you are in the market and holding on then just make your mortgage payment and don’t worry about it. People have way too much of their ego tied up in the bubble value of their home. Enjoy your place to live and leave it at that.
If you are timing your exit or entry then engage in the debate. I would just like to hear a coherent argument for why prices don’t drop 50-60% and I haven’t heard it yet. I keep hearing about rents, but the rents were a bubble too as far as I can tell, just not as big a one.
Take me for example. I make several times the median income and I could make roughly the same amount in any number of states. Should the price of homes not fall in OC back to some resonable level, I’ll pack up and move and take my bubble gains with me. All it takes is enough people at the margins doing that and supply and demand balance. Viola! OC prices come down.
And the most glaring problem with the idea of rents staying at these levels is the number of houses sitting vacant that will eventually be filled with people.
speaking of worst in years– the stock market
hasnt had this big of a drop in the month
of june since 1930– you history buffs will
immediately recall what was happening in 1930
its referred to as the great depression
Money Pit?
“And the most glaring problem with the idea of rents staying at these levels is the number of houses sitting vacant that will eventually be filled with people.”
Right on…Have you noticed all those new apts IAC & others are coming on line with? They’ve already built out ahead of supply. Also, no one mentions much about the delayed impact from the loons in Sac & the $20 bil in over spending budget crisis. They are driving Biz from Cal at a record pace. Couple that to places like Temecula bedroom communities & gas prices., I believe we’ll see more than a 10% added decline in 09? I too have my $$-profits parked (7/06). This is a new & different time for SoCal…Lots to prove out yet!
Sure is nice to read the site now that Thoughtful is gone! It’s almost cival again. I’ve read some insightfull things here for the first time in the last week or so!
thoughtful=provider
TMP - I think most here are making this too complex. Sure food and gas price impacts everywhere, but exactly how much depends on the area and the median income in that area (not everyone in OC makes $75k/year).
My answer to your question is:
1. Identify the areas you want to live in.
2. Actually go out and identify houses you would consider buying and watch them.
If they just sit for 120-days+ the price in that area is not yet reached the selling point – kick back and relax.
If the RE is turning in 60-days or less than the area is very close, or at the selling point in dollars/sq ft.
I have been watching two areas for investment property and I am seeing that the RE prices are all very closely packed and the RE is turning in 45-days average - at about $315/sq ft. Good for the people buying (18-20% off peak), but bad for me - too high for investment. I have seen only a couple of REO in those areas the past 6-months and they vanished within days - of course these are not areas where every 3rd house on the block is an REO.
I don’t really give a crap what you think no_vaseline. What’s it to you? Who the hell died and made you boss? Just asking. You are very desperate.
Truthiness/Pebbles/ROC/Ken/Thoughtul/Janet/Provider:
Thank you for your response. I sincerely appreciate the heartfelt comments. It’s wonderful to see your true personality come out, and fill all of our lives with light.
Enjoy your weekend!
Sincerely,
no_vaseline
You need help. Your hate filled rants have many people scratching their heads in disbelief. How about you worry about your own damn self? You sound like a big man online, somehow I sense you are far smaller in real life.
Truthiness/Pebbles/ROC/Ken/Thoughtul/Janet/Provider…………….. how is the HELOC………… sucker !
Guess you gotta own something to attach a HELOC to. That’s ok, you’ll save up enough one day.
Truthiness/Pebbles/ROC/Ken/Thoughtul/Janet/Provider…………
I will never need a HELOC…………… you got burnt by the kool aid………. time to mail in the keys……………….. game over….
Mav, I made more in real estate than you ever will. Dream on.
*made* LMFAO….
wow, HELOC… thankfully i’ve been very lucky to never pully any money out of the apartments. I’ve been tempted though. I eagerly look forward to purchasing a few more places.
good luck
-bix
# Beachcomber Says:
“Sure is nice to read the site now that Thoughtful is gone! It’s almost cival again. I’ve read some insightfull things here for the first time in the last week or so!”
—
Oh Man……. you spoke too soon.
I had noticed the same thing - civil exchanges …….it was nice for a while.
One strange character. The anger is escalating. Sad…..sad, but interesting.
Interesting in that she shows a period of elation after interpreting some bit of news with a blanket positive read brought about by finding a small part of the story that she’s able to put a positive spin on, then making a sweeping generalization of the inevitable return to the good times of yesterday that she is so sure are just around the corner.
After this is met with some resistance on this blog she backs off and acts somewhat civil, posting compliments to her multipersonas’ various posts and links to anything remotely positive to her mindset.
Then there is often a lull……. followed by a full bore rude and crude angry series of attacks out of nowhere. Almost as if someone alerted her to the fact the blog was becoming an interesting place frequented by interesting people……….an intolerable situation to her.
Strangely fascinating.
“followed by a full bore rude and crude angry series of attacks out of nowhere”
I know what you mean.
Provider Says:
“Mav, I made more in real estate than you ever will. Dream on”
Aren’t you the same guy that gets into bidding wars right in the middle of a housing bust?
You’re kind of an oxymoron.
>House shoppers have dramatically slowed buying,
this means prices are too high, basic econ
>lending don’t lend like they used to,
the days of lending to anyone with a pulse are gone for good, those that did it will be losing billions for years to come.
>and developers have halted building.
they too see that the prices they pay for land and materials are too high and they can never make a profit if they were to sell the finished product at market value. also they can’t sell currently finished inventory at market for what they paid.
There are plenty of people wiling and able to pay far more than 350K for an ocean view 2000 square foot home in Dana Point. At 500K with 10 percent down you could rent it and maybe have a small positive cash flow or at least break even without considering tax benefits.
One important change to your comment, sir. People are always willing to pay far too much when someone is foolish enough to lend. Foolish lending is over….prices will revert to norms in 5-10 years…relative to other commodities. Either housing can go down or commodities go up, or a mix. But everything is relative, and with peak oil and peak credit, I’m afraid the loser will be the carbon fuel user and money borrower. Soon we’ll be back to 8-9% mortgages, seller financed real estate transactions, and foreigners purchasing larger and larger portions of the USA. And America will be going on a diet…smaller houses…cars…bellies. Thank goodness things are reverting back to normal.