Here's recent history of the Fed’s policy committee and its Fed Funds rate. Next Fed decision is June 24/25.
Sales of O.C. houses up to nearly 2007’s pace
June 27th, 2008, 12:01 am · 112 Comments · posted by Jon Lansner/O.C. Register columnist
Is a 32-month losing streak ending? DataQuick’s mid-June report shows resales of O.C. single-family houses nearing the year-ago pace, down just 4.2%. (Full ZIP analysis is HERE!) Shoppers haven’t beaten the previous year’s pace since Sept. 2005 for single-family homes or condos or the overall market.
While this buying trend hints at a possible bottoming of the ailing market, it must be noted that the 1,604 single-family O.C. houses sold in the 22 business days ended June 11 are well below the 2,636 monthly average for the boom years of 1997-2006. And an average June in the boom had 5,103 sales!
Obviously price cuts are spurring the recent sales recovery. The median selling price in the 22 business days ended June 11 for single-family houses is $197,500 lower (that’s a 27% discount) from June ’07’s peak of $734,000.
Here’s how the market shaped up for the the 22 business days ended June 11 …
| Slice | Price | Vs. ‘07 | Sales | Vs. ‘07 |
|---|---|---|---|---|
| Houses | $536,500 | -24.4% | 1,604 | -4.2% |
| Condos | $351,000 | -23.7% | 558 | -17.6% |
| New | $479,000 | -22.8% | 173 | -49.3% |
| All | $485,000 | -23.6% | 2,335 | -13.3% |
Other signs of a possible rebound …
- Realtors put O.C. home supply at 2-year low
- Century 21 boss talks of ‘tremendous’ opportunities
- O.C. builders drop house prices, raise condos
- Demand for O.C. homes highest since Sept. ‘05
June 26th, 2008 at 11:31 pm
Price cuts only in slum areas like Santa Ana, Cypress, Anacrime, or the Villages of Columbus.
June 26th, 2008 at 11:56 pm
OC Bargains?
“Barclays warns of a financial storm as Federal Reserve’s credibility crumbles…”
“Barclays Capital said in its closely-watched Global Outlook that US headline inflation would hit 5.5% by August and the Fed will have to RAISE INTEREST RATES SIX TIMES by the end of next year to prevent a wage-spiral….”
http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/06/27/cnbarclays127.xm
Oil hit $140, Dow down 350 today…
Let’s think. Hmmm, how long can FHA keep making zero down loans before they too, implode like all the other subprime lenders? What will happen to ARM payers after even just 1 or 2 rate hikes, much less SIX by end of NEXT YEAR?
What happens to the prices of the real estate that looked like a bargain today, a year from now when interest rates are higher and there are fewer people able to buy? How long can soon-to-retire baby boomers who are “choosing” not to sell their homes during this “slight temporary dip” in house prices, stick to that choice, especially if their 401K’s (assuming they had one) holding STOCKS are slipping 1-3% per day? Capitulation is a bi#$tch, but even coastal RE sellers will realize (sooner than I thought) that this is for real, and the sooner they unload to a knife catcher the better.
I’ve said it before and I’ll say it again, if you’re looking at RE prices top-down, thinking “30% off the peak” is a bargain, you are going about it backa$$wards.
June 27th, 2008 at 12:58 am
LMAO blogger must have taken the gary watts
crash course on how to spot market
bottoms in real estate yeah these sales
numbers are a sign from god himself that
the OC real estate market has bottomed
hell I’m going out first thing tomorrow morning
and making an offer on the first house I see
that has a for sale sign lloolll @ribsplitter
June 27th, 2008 at 2:54 am
Yeah!!! We are back to the pace of that most depressing quarter in the history of real estate! There is a positive spin if I ever heard one!!!
June 27th, 2008 at 6:17 am
“KB Home posts deeper loss”
“Persistently poor demand for new homes during the second quarter amplified pricing pressures and diminished asset values in many of our served markets”
The company said net new home orders fell 42 percent in the quarter to 4,200
http://biz.yahoo.com/rb/080627/kbhome_results.html
June 27th, 2008 at 6:24 am
“Merrill may take $5.4 bln in Q2 bad loan writeoffs”
“AIG to lose up to $5 billion from investments”
More losses means housing prices will continue spiraling lower for quite some time.
June 27th, 2008 at 6:47 am
Per DataQuick, Single Family Median Home Price:
2006 ~ Month End
$690,000 = Feb ~ Watts 15% “In The Bag” for SFH
$695,000 = Mar
$705,000 = Apr
$705,000 = May
$700,000 = Jun
$699,000 = Jul ~ Watts revises forecast to 11%
$685,000 = Aug
$680,000 = Sep
$665,000 = Oct
$660,000 = Nov
$665,000 = Dec
2007 ~ Month End
$675,000 = Jan ~ Watts forecast 7% SFH
$675,000 = Feb
$695,000 = Mar
$720,000 = Apr
$695,000 = May
$734,000 = Jun ~ Peak of O.C. Housing Bubble
$718,000 = Jul
$710,000 = Aug
$655,000 = Sep
$650,000 = Oct
$655,000 = Nov
$600,000 = Dec
2008 ~ Weekly ~ Month End
$583,250 = Jan ~ Watts declares “Pent up Demand”
$575.000 = Feb
$570,000 = Mar ~ Thoughtful declares “bottom”
$555,000 = Apr
$537,000 = May
$531,000 = 06/05 ~ Watts apologizes “Got it Wrong”
$536,000 = 06/11
Per DataQuick, this loss represents a $197,000 decline in single family home prices from the June 2007 high. And the beat goes on … and on … and on!
June 27th, 2008 at 7:03 am
Forget the numbers. Go to some open houses in areas that you want to live in and can afford. Then make your judgement.
June 27th, 2008 at 7:09 am
If we can double the rate of foreclosures again, we might have the transaction volumes of the good old days back again!
June 27th, 2008 at 7:12 am
# Bruce Says: “Forget the numbers. Go to some open houses in areas that you want to live in and can afford. Then make your judgement.”
Sure buy, buy, buy, and then next year join the millions who are being foreclosed on. That is great advice.
June 27th, 2008 at 7:16 am
Good morning folks!!!
http://www.usatoday.com/money/industries/energy/2008-06-27-oil-prices-friday_N.htm?loc=interstitialskip
Do I need to say more?
June 27th, 2008 at 7:19 am
hey, I wonder what happened to Sighburdude? He is probably fighting foreclosure on his home. Good luck Granpa, you keep fighting those greedy banks.
I don’t worry about Thoughtful because we all know he has a new name now: Provider.
June 27th, 2008 at 7:41 am
# Bruce Says: “Forget the numbers. Go to some open houses in areas that you want to live in and can afford. Then make your judgement.”
Bubble says:
“Sure buy, buy, buy, and then next year join the millions who are being foreclosed on. That is great advice”
Heaven forbid that people would make their judgement and decide for themselves.
What a pompous ass.
June 27th, 2008 at 7:50 am
Bubble is an economic PHD. He’s so smart! We should all bow to his superior intelligence. Pompous doesn’t even come close. Jackass
June 27th, 2008 at 8:07 am
I hope the streak is over so I can look like I make more money than I do again….I need a new Hummer on a equity loan.
June 27th, 2008 at 8:18 am
Current DQ stats for Newport Beach/Coast:
92660 ~ $1,250,000 ~ -12.3%
92661 ~ $2,050,000 ~ -18.2%
92663 ~ $875,000 ~ -34.5%
92657 ~ $1,800,000 ~ -32.0%
NO COMMUNITY will be excluded from the wrath of this massive Ponzi scheme, especially Newport Beach/Coast!
JMHO … the vastly overpriced beach communities will be crushed by this implosion … mainly due to all the people living way beyond their means. The quote bellow will become more applicable in the coming years.
“When the tide goes out, we find out who’s been swimming without a bathing suit” ~ Warren Buffett
June 27th, 2008 at 8:23 am
Since when did Cypress become a “Slum”?
June 27th, 2008 at 8:24 am
“NO COMMUNITY will be excluded from the wrath of this massive Ponzi scheme, especially Newport Beach/Coast!”
LMAO
June 27th, 2008 at 8:36 am
permafools………………. the bears continue to be right……….
here’s an idea……… why not listen to them…… and save your families from the perils of your own leadership………..
……. that is of course if it’s not already too late………..
the OC housing market has another 20% in price declines……….. it’s in the bag………………… it’s time for you to accept the fundamentals of our housing market………. price to income ratios…… price to rent ratios…….
……………… you fools have proven you have no clue what you are doing….. it’s time to listen up……….. take action……. save what ever you have left to save……..
…… buy now…. and lose your shirt in a year……….
June 27th, 2008 at 8:45 am
lose your shirt and your pant too.
June 27th, 2008 at 8:52 am
It is a little bit misleading that Lansner compares the sales volume with the average for the past 10 years. Why not compare the sales volume for the same period for the past ten years. My recollection is that at this time of year the sales volume is typically between 3500 and 4000 homes per month……………anyone know for sure?
June 27th, 2008 at 9:12 am
So in Lansner’s previous post CAR declares that OC SFR sales are up 24.5% and here DQ declares that sales are down 4.2%. It’s kind of like when you see a poll that shows Giuliani or Hillary leading in the primaries by a huge margin, only the fine print says 15% margin of error.
Maybe Lanser should put a disclaimer when posting numbers from CAR: Sales volume has a 30% margin of error.
June 27th, 2008 at 9:17 am
Why does anyone really care about the volume.
Things that are important:
1. Quantity of RE on market in the area of your interest (both REO and equity sellers.
2. Current sale rate for RE in that area.
3. Current trend in median price for that area.
It is interesting to see that the meidan for all of OC seems to be flattening month to month - wonder if this is says that the REO in the hardest hit areas has reach the proper price point.
June 27th, 2008 at 9:19 am
Calm Down Says:
June 27th, 2008 at 7:50 am
“Bubble is an economic PHD. He’s so smart! We should all bow to his superior intelligence.”
Welcome back, Calm Down. BTW, what color is the arrow and which way is it pointing?
June 27th, 2008 at 9:21 am
cypress is a nice place to live. it is not a slum.
June 27th, 2008 at 9:28 am
Remember people we are on the cusp of the point last year where all of this unravelled in a huge way. So the YOY comparison will appear rosier, as the example above. Nano’s absolutely right, we should be looking at the same time point over a 10 year period to see the real trend. Look for houses that are cutting their askings by 20% in the next few months. Particularly in the formerly insulated markets.
June 27th, 2008 at 9:30 am
sure there are some legit buyers who have been waiting for prices to come down, but there are also alot schmucks buying now thinking they can make a quick buck to flip which was part of the problem that got us in this mess, speculators. this is NOT the bottom for housing, look at the home inventory, it keeps going up. these schmucks think similar to the schmucks who bought Bears Sterns stocks at $100 because it was once at $165 thinking it’s a great value and then the stock dropped to $2 within 6 months. how do you think they feel losing 90% of their equity?
this is the biggest housing bubble in history of the US and you think it will recover within a year or two? sure… ok. Look at Japan housing bubble in the 90’s, it took over a decade for them to just recover. It aint over folks! some people will be feeling alot pain, more than the fookin gas price.
June 27th, 2008 at 9:33 am
Any bit of good news is jumped on and turned to a supposed negative by all the “tenants” who read this. Amazing.
June 27th, 2008 at 9:38 am
It took a long time, but the future Comp Killers are finally starting to pop up in Newport.
Number of defaults per Foreclosure Radar in Newport Beach/Coast:
92660 ~ 48
92663 ~ 41
92657 ~ 28
And look at Laguna Beach … Oh my … the map is now littered with green pointers. This was not suppose to happen!
92651 ~ 54
LMAO
June 27th, 2008 at 9:47 am
wow, this blog has nothing but doom and gloom housing speculators who work in teams to stomp any good news that comes out.
June 27th, 2008 at 9:53 am
I am curious what areas are seeing the most increase in sales.
June 27th, 2008 at 9:54 am
Bears you can’t pretend that facts don’t matter any more than bulls. The real estate market is slowly improving, even with the press exagerating negative economic news to the point of panic. My theory is that after the election cycle the left wing press will no longer want to scare the public to death and consumer confidence will improve. That will solidify the normalization of the market.
June 27th, 2008 at 9:57 am
Crystal,
The market is improving………and at this rate homes will be about 50% off peak in a year or two……that would be a huge improvement.
June 27th, 2008 at 10:04 am
Active Buyer-
The month over month median isn’t flattening at all. Scroll up to Lee’s post and track the median price for each month starting in June 07. You’ll see that it’s been in freefall for a good year now. We only have numbers through June 11th, not far enough into June for comparison to month end May.
June 27th, 2008 at 10:11 am
The sky is not falling yet folks. Everyone did not buy at the peak. There are still lots of smart, hard working people out there who bought homes with traditional loans before all this crazyness. They even have some equity because they didn’t re-fi and pull money out. They will not lose there homes and will survive all of this mess without a scratch. For those expecting to buy a home in Newport Coast for $300K, forget about it.
June 27th, 2008 at 10:18 am
You can’t ignore the fact that inventory is being replenished more quickly than it’s being bought up. This can and will only do one thing to home prices. It’s no wonder you have more buyers the more prices are slashed. Wake me up when you have something new to report.
June 27th, 2008 at 10:24 am
The median is irrelevant–indeed when the market mix changes the median will probably go up in a way that overstates recovery or shows phantom increases. The increase in volume is what shows improvement and it is not being replenished more quickly than it is being purchased.
June 27th, 2008 at 10:29 am
welcome back CALM DOWN we missed your
pointing out the blue skys arrows LMMFAO
prices down 30% and this jerk has the nerve
to come back on this blog calling someone
else pompous- not only are you the pompous
one youre a friggin hypocrite to boot
June 27th, 2008 at 10:37 am
hello folks,
more juicy articles
http://www.cnbc.com/id/25269297
http://www.usatoday.com/money/industries/energy/2008-06-27-oil-prices-friday_N.htm
http://www.bloomberg.com/apps/news?pid=20601087&sid=ajMo97E3ZvS0&refer=home
Have a great day!!!!
June 27th, 2008 at 10:38 am
hey calm down syndrome read this
then have your neighbors 10 year old
explain it to you lloolll @ribsplitter
http://economistsview.typepad.com/economistsview/2008/06/fed-watch-this.html
June 27th, 2008 at 10:46 am
In order to believe that, you would have to completely ignore the shadow inventory sitting on bank shelves and properties being sold without ever hitting the MLS. Just take a gander at the number of NOD’s and then ask yourself if we are chewing through inventory.
June 27th, 2008 at 10:48 am
If the trend we are seeing in asking prices continues(realtytracker) then we are in for one huge decrease in the median home prices. When the median asking prices for the top 75% of sellers starts to dramatically fall, the overall median will plummet.
We will know more by October - November of this year. Until then, all we can do is guess.
June 27th, 2008 at 11:18 am
Simons says (get it?): Any bit of good news is jumped on and turned to a supposed negative by all the “tenants” who read this. Amazing.
No, the amazing thing is how absolutely intense the down fall is proceeding, at blistering pace. Most of the RE bears here (not all are tenants btw), predicted where we are now (-24%), nor can we predict (exactly) where will be a year from now…one thing though that is nearly certain, is that prices are going to fall even further. Think of it as a sand castle with the tide coming in, the bottom portion of the castle begins to melts away while the prince and princes at the top don’t believe that the whole castle will fall..until it does.
June 27th, 2008 at 11:32 am
Hey, I read somewhere recently that lenders consider you to be a first-time buyer if it’s been three or more years since you’ve owned a home. Anyone know if this is true?
June 27th, 2008 at 11:46 am
Now that the market has returned to relying on fundamentals, the fundamentals are turning on the market!
June 27th, 2008 at 11:57 am
SoCal78, that is true. You can also be considered a first time buyer even if your name is still on mortgage and title for a property. If that is the case, you cannot have claimed the deduction on your income taxes for three straight years and the bank will want you to prove that your aren’t paying that mortgage.
June 27th, 2008 at 12:12 pm
SoCal78-
Yes, that is true.
June 27th, 2008 at 12:19 pm
Villages of Columbus is a “slum area” now? Howso? When I was shopping for a home a few years ago, those were some pretty nice homes.
June 27th, 2008 at 1:06 pm
Awesome info - thanks SoCal78 for asking that.
June 27th, 2008 at 1:21 pm
Simon Says:
June 27th, 2008 at 9:33 am
“Any bit of good news is jumped on and turned to a supposed negative by all the ‘tenants’ who read this. Amazing.”
Be careful. Everyone, except those born with a silver spoon was a tenant. Not advisable to make fun of your future customers either.
June 27th, 2008 at 1:24 pm
24% price drop…amazing…
June 27th, 2008 at 1:27 pm
Crystal Balls Says:
“Bears you can’t pretend that facts don’t matter any more than bulls”
Who’s pretending?
This Recession, It’s Just Beginning.
So much for that second-half rebound.
Truth be told, that was always more of a wish than a serious forecast, happy talk from the Fed and Wall Street desperate to get things back to normal.
It ain’t gonna happen. Not this summer. Not this fall. Not even next winter.
This thing’s going down, fast and hard. Corporate bankruptcies, bond defaults, bank failures, hedge fund meltdowns and 6 percent unemployment. We’re caught in one of those vicious, downward spirals that, once it gets going, is very hard to pull out of.
http://www.washingtonpost.com/wp-dyn/content/article/2008/06/26/AR2008062604030.html
June 27th, 2008 at 1:28 pm
Prediction: 80% of all escrows opened in July will fall out. The credit market will dry up on July 1.
June 27th, 2008 at 1:32 pm
“Homes Less Affordable as Prices Fall, Rates Rise, Zillow Says”
“We’re going to need about a 30 percent decline in house prices if you are going to keep payments stable,” said Morris Davis, a former senior economist with the Federal Reserve”
http://www.bloomberg.com/apps/news?pid=20601068&sid=aRDMJGbadcWY&refer=economy
June 27th, 2008 at 3:20 pm
Awgee…what is the wager on that prediction of yours?
June 27th, 2008 at 3:25 pm
haha I guess that’s why they call it LAGuna…?
June 27th, 2008 at 3:29 pm
I don’t know what makes people think that all of the sudden folks who own higher value homes will start dropping their prices by huge amounts. The median is going down so quickly precisely because these folks are taking their homes off the market or leaving them on at higher prices by in large, leaving the recent more financially challenged people selling. Unless we have a severe economic downturn, your dreams of huge price drops at the high end will just stay dreams. These folks just aren’t selling. The price drops we have seen largely reflect those who have no choice but to sell.
June 27th, 2008 at 5:28 pm
Crystal Balls,
I’m not sure you understand.
There was a large amount of lower income people who were able to buy million dollar homes throughout OC.
These people were buying three or four times as much home as they could legitimately afford.
Now these homes sit empty with 24% lower prices but still cannot sell.
Sellers and banks have no choice but to lower another +25% if they want to move the house.
If you’re thinking it’s just a waiting game to receive a 2005 price, you will be stuck waiting 15 or more years.
Higher fuel, food and utility costs are strangling family’s budgets.
Unemployment is mounting and the stock market is draining the wealth for a majority.
With the credit crunch full speed ahead, people want out of high housing payments and are seeking a return to cash.
June 27th, 2008 at 5:38 pm
Active Buyer: you’re list contains sales volume - sales rate is essentially looking at volume for that location
By the way - your list is not nowhere near comprehensive as to what people should be looking at.
June 27th, 2008 at 5:45 pm
Anyone know what is the current rate of dropped escrows in OC?
That is a very big indicator of the buying capability for those that are actually trying to get in.
That is a good indicator of affordability by the buying market
Anotehr one is to look at lending metrics for sales in the area you are interested in. With fixed rates poised to increase - any buyer looking to stay in the home long term is probably trying to lock in a fixed rate for 30yrs. Putting 20% down, that is a buyer that can afford the home (if they can afford that payment).
But a family buying right now using non-fixed products is either looking to move again in the next few years, or they really can’t afford the property they are moving into and are gambling with short term rates.
Look at what those metrics are in the area you are interested in and that will give you and idea of “whose” buying and “what will happen” in the near term.
June 27th, 2008 at 6:13 pm
NBI…we are closing 2300+ now on a monthly basis…it would stand to reason that we are losing about 3 or 4 out of 10…a gut hunch.
June 27th, 2008 at 6:46 pm
NBI - should have been more specific, but was between meetings and in a rush. It would have better if I said:
1. Quantity of RE on market in the area of your interest (both REO and equity sellers).
2. Current average time to sale (days on market from list to sale) for RE in that area that “you would buy”.
3. Current trend in median price for that area.
Obviously this is a simple micro-economic view, but my goal is identify areas of stability with the potential of long-term asset growth. As everyone is quick to point out on this blog, there are a lot of people who could and/or want to buy but have decided to rent due to RE uncertainty. There is a subset of these people who are also willing to spend a little more on rent to live in the areas where they are waiting to buy. With the proper capital this is obviously an opportunity.
June 27th, 2008 at 6:51 pm
The great depression was bad for the country, but in the end there was a new group of multi-millionaires – they saw the opportunities, they scrapped the capital, and took the risks with an educated eye – see what is going on, but do not get held back by the pure doom and gloom outlook.
June 27th, 2008 at 7:16 pm
Bill,
If you were right, we would have already been seeing the same rate of foreclosures, reo’s and sales for those homes. The action has been is in the lower end because that’s where most of the borderline financing took place. The fact that we haven’t seen a great number of distressed sales at the higher end and prices have held up better is evidence that you are wrong. No offense but I’ll go with the numbers over your unsupported conclusion.
June 27th, 2008 at 7:29 pm
Active Buyer Says:
“but in the end there was a new group of multi-millionaires”
This is true, but we are nowhere near the end of this crisis.
Realistically, we have another 2 or more years of losses.
People were buying into the tech bust all the way down to bankruptcy.
June 27th, 2008 at 8:30 pm
Bill,
If you were right, we would have already been seeing the same rate of foreclosures, reo’s and sales for those homes. The action has been is in the lower end because that’s where most of the borderline financing took place. The fact that we haven’t seen a great number of distressed sales at the higher end and prices have held up better is evidence that you are wrong. No offense but I’ll go with the numbers over your unsupported conclusion.
June 27th, 2008 at 9:01 pm
Paper can go to zero value - RE does not - that is why they call it “real” estate.
Are we at the bottom - maybe not, but if you are going long why wait for the hills to get full of prospectors.
June 27th, 2008 at 9:03 pm
Also look at what happeend during the depression - the investors did not wait untill the bottom to start buying - .070 cents on the dollar or 0.60 cents - how much difference will this make 10-15 years from now? Not much.
June 27th, 2008 at 9:15 pm
“investors”……R