Here's recent history of the Fed’s policy committee and its Fed Funds rate. Next Fed decision is June 24/25.
O.C. ranked nation’s 7th riskiest home market
July 1st, 2008, 2:08 pm · 43 Comments · posted by Jon Lansner/O.C. Register columnist
And that’s good news. Mortgage insurer PMI’s quarterly rankings of the shakiness of the 50 big U.S. housing markets says there’s a 85.8% chance that O.C. home prices will be lower two years from now. How’s that stack up with the ugliest of the group for the summer of ‘08?
- Inland Empire, 95.5% chance of decline
- Fort Lauderdale, 92.2%
- West Palm Beach, 91.9%
- Orlando, 91.1%
- Las Vegas, 88.1%
- Tampa-St. Pete, 86.6%
- Orange County, 85.8%
- Los Angeles, 85.7%
- Miami, 84.8%
- Sacramento, 82.2%
By my count, 7th riskiest is the best O.C. has held in these rankings since the spring of 2005. For the spring, O.C. was 6th riskiest. Nationally, PMI says:
“The risk of lower prices in two years declined in 35 of the nation’s 50 largest MSAs (metropolitan statistical areas,) and among all 381 MSAs, 326 experienced a decline in risk. Among the top 50 MSAs, 16 ranked in the two highest risk categories, and among those, 15 were in California, Florida, Nevada, and Arizona. Risk of lower prices in two years is greater than 50 percent in all of these MSAs.”
To read the PMI report, CLICK HERE!
Other housing news …
- Schwarzenegger says Calif. will ‘grow out’ of housing ills by ‘09
- O.C. homes seen as undervalued; 1st time since ‘03
- O.C. builders drop new house prices, raise condos
- S&P ranks this house-price slump as deeper than 1990s
- Realtors put O.C. home supply at 2-year low
- O.C. homebuilding runs at slowest pace in 60 years
- Big Orange property index takes worst hit in 13 years
July 1st, 2008 at 2:15 pm
david poggi just bought in the inland empire?
what happened to him?
July 1st, 2008 at 2:26 pm
Can’t be right. To read everybody’s diatribes here, OC is the worst place ON THE PLANET to buy or own, so there must have been a computing error in these results.
It seems that prices are coming down….but not fast enough for greeedy renters / wanna-be owners. Keep holding out for that ocean front mansion for $400K. I am sure some CDM or Laguna seller will soon be desparate enough to sell to you for that. They may even throw in their Bentley!
Good luck with that!
July 1st, 2008 at 2:33 pm
“there’s a 85.8% chance that O.C. home prices will be lower two years from now”
There’s a 85.8% chance that O.C. home prices will be lower 10 years from now.
July 1st, 2008 at 2:46 pm
more signs of a booming economy, right? …… wrong
http://www.usatoday.com/money/industries/food/2008-07-01-starbucks-closing-stores_N.htm
July 1st, 2008 at 3:05 pm
hey folks, don’t forget to take action to fight the housing bailout
I’m sure the bulls in this blog will join us since according to them, there is no problem with the housing market and therefore, they don’t need a bailout.
July 1st, 2008 at 3:18 pm
David Poggi had to learn the hard way that a big price decline does not equal a good deal. Those foolish enough to invest in bank stocks are learning the same lesson.
July 1st, 2008 at 3:20 pm
What’s interesting is that it seems only Florida and California are having major problems. Two places where people think their homes are worth way more than they really are….lessoned learned I guess.
July 1st, 2008 at 3:23 pm
There’s a 99% chance of mortgage rates being higher 2 years from now so you can take your pick of low home prices or low interest rates, either way it will probably cost you the same each month.
July 1st, 2008 at 3:25 pm
I used to watch PMI projections, and thought they were useful.
On closer look, how insightful are their metrics if it can’t see through this one?
Detroit-Livonia-Dearborn 11.1
I’d suggest that their analysis is shallow … shoddy stuff.
Does anybody doubt that Detroit is in for some severe hurting simply due to recession and aggressive consumer pull-back? Even without the double digit drop in auto sales reported just recently and the accompanying plant closures … this should have been expected and factored into such analysis.
Any permabulls think Detroit will be smilesville in 2 years?
July 1st, 2008 at 3:36 pm
Low interest versus lower prices:
$100K @ of 8% 30 yr fixed = $733 pr mo
$100K @ of 6% ” ” = $599
I choice the $200K & lower price wouldn’t you? Not to mention the $135 pr mo interest is deductible. A $100K loss isn’t.
July 1st, 2008 at 4:13 pm
Agreed beachcomber. I’d prefer a higher interest rate with a concomitant lower purchase price. Less risk of a declining asset, lower property tax, and potential to later refinance to a lower rate. It also would mean that my sizeable down would cover a greater percentage of the purchase price.
July 1st, 2008 at 4:20 pm
fencewalker…Sorry I meant 100k lower price not $200K (typo)…well, you know what I meant anyway…
July 1st, 2008 at 4:22 pm
Inbred Empire #1
July 1st, 2008 at 4:26 pm
no rush to buy now. The week of Christmas was my target date to make a bid on a property but, I might just wake until June of 09 or even 2010.
July 1st, 2008 at 5:51 pm
You mean Orange County is not the bubble we all thought? I wonder how many people are now going to bed at night thinking their goldmine(retirement) just turned into a nightmare that there upside down in. Hey at least Starbucks is hiring, oh until today I thought that, layoffs. Enjoy the weekend all you wanabe trend setters!
July 1st, 2008 at 6:14 pm
Beachcomber,
You’re so right.
History has proven the median income will offset interest rates going up by forcing prices to go down.
It’s all about affordability.
Don’t let any realtor try to use these phony scare tactics on you.
July 1st, 2008 at 6:17 pm
UsuallyRight-
I agree with Beachcomber.
Interest rates can go up or down. So even if you have an 8% rate in 2 years, at some point you can refinance into a lower rate, given market cycles.
However, you can never recover the loss of the $100K. You will not only have to pay for the $100K in lost equity, you get to pay 6% a year for 30 years on it.
Just in case you are wondering what the cost over 30 years of that $100K mistake is…try $602K at 6%.
This is for all those permabulls who say you can make that back. By the way, that is after tax dollars to boot.
July 1st, 2008 at 6:34 pm
nay, I say 1st….. ok, yeah, 2nd. forgot about the IE
July 1st, 2008 at 6:46 pm
Bpsqwerty,
Stop painting your toe nails for a second and start using two syllable words.
This who’s on first what’s on second stuff sounds goofy.
July 1st, 2008 at 6:48 pm
You mean to tell me my condo isn’t worth $750,000?!!!
July 1st, 2008 at 7:22 pm
now all we need for a nail in the coffin is for everybody to go out and buy all their stuff at Wallymart…say good bye to our economy!
July 1st, 2008 at 7:36 pm
I’m not sure we are going to see 6% interest rates again in our lifetime, but I have to agree with everything else “Marc” says. That is 100K you owe, its more property tax and it is 100K less gain if you are looking to sell at some point and relocate to a less expensive area.
For many people, that 100K is their life savings.
Since lending has gone back to the old standards and there is plenty of supply coming on the market due to the foreclosures, it really doesn’t make sense to buy in anticipation of higher interest rates. Benefit from the higher rates by getting a lower price.
Furthermore, we can expect one last plunge of rates to the downside, at least for conforming loans, as a result of the fear in the markets due to the coming climax of credit terror. GSE paper is government guaranteed (implicitly). Yields will drop with Treasuries as the terror reaches peak. Everything else is just the promise of someone who might be insolvent. The government, since it can just print the money, will always be good for it.
But shoot for the low in price, and don’t worry about the payments. Remember, you can always pay it off early if the principal remaining is low.
July 1st, 2008 at 7:37 pm
It all makes sense, except unemployment is very low by catastrophic standards. Also, there is no oil shortage. I remember 1979 and 1980 when rationing was in effect. There is no rationing today anywhere in the country. This oil bubble is pure spec created by ultra low rates by our fed which has devalued our dollar to 2/3 the value of the euro. Once the fed begins to increase rates, the dollar will strengthen and the commodity bubble will again burst.
July 1st, 2008 at 7:51 pm
Bill,
BTW, I am a realtor…that’s how I get the info straight…I got my real estate lic in 1999 because I got tired of being under rep’d by board house wives. I usually new more about the market & transaction than my own realtor did. My main objective was to invest & rehab. I’ve done so and have done well. But, I’m on hold since I sold my last place in AV 07/06 . I’m keeping my custom SFR in Palm Desert…I’m not trilled about my beloved OC coastal market right now. Maybe Fall 2010? Who knows? If Obama gets in I’m out!
July 1st, 2008 at 8:15 pm
Mulli, I believe that it is now accepted by virtually everyone who knows anything that the rationing of the 70’s were created by price controls. If you control price, supply and demand don’t balance so you have shortages. Now the sheiks can and will continue to say that “markets are well supplied” at $140.
The markets will be well supplied at $300 oil, too, everyone who is willing to pay $300 can buy a barrel. Very well supplied.
It isn’t interest rates, it is declining production worldwide. Welcome to the end of oil
http://www.theoildrum.com
July 1st, 2008 at 8:29 pm
Mulliganville Says:
July 1st, 2008 at 7:37 pm
“It all makes sense, except unemployment is very low by catastrophic standards.”
The unemployment rate has been meaningless for a long time. Unless the population has stopped growing, It’s job and wage growth that matters. And those have been pathetic.
“Also, there is no oil shortage. I remember 1979 and 1980 when rationing was in effect. There is no rationing today anywhere in the country. This oil bubble is pure spec created by ultra low rates by our fed which has devalued our dollar to 2/3 the value of the euro. Once the fed begins to increase rates, the dollar will strengthen and the commodity bubble will again burst.”
Speculation is a player, but there are other factors:
- Competition from emerging economies
- Devalued dollar due to not only low interest rates but also to our account and trade deficit
- Natural peak global oil inventories (unlike OC RE); the oil shortage of the 70’s was man-made
Raising interest rates will only do so much. We can’t control global demand and supplies and our fiscal health.
BTW, if there is no oil shortage, then we sure don’t need to drill, right?
July 1st, 2008 at 8:36 pm
Hey I thought Orange County was different and immune from the downturn??
http://www.redfin.com/CA/San-Juan-Capistrano/26514-Calle-San-Francisco-92675/unit-34b/home/5317520
July 1st, 2008 at 8:44 pm
It is really hard to watch people get their loans modified even though they can afford the payments. I know of one person that owns two houses. Both loans were modified so that she could make the payments. With a deal like that I bet she is looking for a third house.
July 1st, 2008 at 9:03 pm
testing
July 1st, 2008 at 9:12 pm
Beachcomber,
Sorry, my sincere apologies to you.
It’s just that there aren’t any realtors in this blog that are talking with any type of sensible discussion, so I figured you were a buyer.
Most realtors in here are bent on deception as the preferred choice of speech on this blog.
I also agree with you if Obama gets elected the economy will end up in a more dire position then what already exists.
At least Clinton had a Republican-controlled House and Senate, passing sensible bills.
Clinton spent the last 2 years of his term joyriding to friendly countries, vacationing on the tax payers expense while Afghanistan was plotting the destruction of the World Trade Centers.
Remember the haircut on LAX runway that delayed flights and jammed airports for hours.
You can already see the type of criminal bailouts the democrats are passing even before Obama gets elected.
If you can remember the Carter years, we’re in for Deja Vu all over again.
Obama wants to bail out of Iraq, leaving it in the hands of the terrorists.
Can you imagine what oil will do then?
Bernanke will be forced to jack up interest rates so high trying to combat oil; we will be looking at 15% interest rates with $300 barrel oil and 15% unemployment, with a mothballed military.
We are in for some tough times ahead.
Welcome Back, Carter!
http://query.nytimes.com/gst/fullpage.html?res=9F0CE7D8173BF932A15756C0A965958260
July 1st, 2008 at 9:38 pm
we should drill price to lower our dependency on foreign nations for our oil supply.
July 1st, 2008 at 10:08 pm
I do agree to some extent that the rise in oil does have some to do with speculation. Most of the other markets have failed….so all that is left at the moment is commodities. That being said, anyone would be a fool to think oil prices are going to go down anytime soon.
The demand worldwide can not keep up with supply. They are predicting that there will be 140 million cars on the road in China by 2020 where there are around 20 million now. This 140 million are more cars than are on american roads right now.
Oil is a finite fuel….bottom line is we need to find alternatives to fuel. I think in the short term we need to improve battery technology and just consume less.
I have spoken about this before. As gas prices rise more urbanized areas will become more popular and the far flung suburbs will fall into decay.
,,,but that may be too doom and gloom for most. I think there are alot of great oppertunities here to improve life for everyone, but it requires too much change and sacrifice for most.
July 1st, 2008 at 10:26 pm
I remember just a short time ago everyone was saying we know prices are going to fall, we just don’t when and by how much.
It looks like it was faster and harder than most predicted and has surprised most/some of us non believers. Now, they are saying we have more to go and almost everyone expects further declines and again the question is:
Prices are going to fall, we just don’t by how much, 10%, 15% or some say 20% either way another even 10% is a serious, serious decline.
The markets don’t wait and are adjusting with our without sellers and I have a feeling those who dont sell are going to be singing the blues just like renters did up until this house of cards fell.
I guess if you dont have to sell and can wait it out for who knows how long its just a mental thing.
This year we found out OC is not special. Two years from now and after a lot of pain I would have to agree prices could in fact be lower its called boom and bust.
July 1st, 2008 at 11:22 pm
I think this was pretty obvious. But it is nice to see something else that agrees with me. At this rate I might be able to get my shotgun shack for 200,000. I found a few I like at 275,000 but I am hoping for some more declines!
July 2nd, 2008 at 12:17 am
Mulliganville Says:
July 1st, 2008 at 9:38 pm
“we should drill price to lower our dependency on foreign nations for our oil supply.”
OK, then the oil companies better cut the American people a good deal off their profits for pumping oil on public land.
July 2nd, 2008 at 12:25 am
Samson said:
“I have spoken about this before. As gas prices rise more urbanized areas will become more popular and the far flung suburbs will fall into decay.”
Not necessarily. More public money could be devoted towards building a larger public transportation infrastructure.
July 2nd, 2008 at 8:46 am
I agree with you on that, but that depends greatly on how the public transportation system is fueled. Instead of adding lanes to the freeways, we need to look at maglev or systems like the green line that runs on the 105. The problem is how long will that take? To get a system in place that can support the population?
Oil prices will not slow down long enough to get these people out of their cars and into a train before the ability to afford to live so far away becomes so great.
The future is new urbanism. More people will need to live, work and shop within a much smaller circle than they do now in order to survive.
More goods and services will have to be produced locally and not be transported from long distances…this includes the raising of animals and farming.
It is going to require a more communal approach to living, it may not be fully seen in our life times, but it is very probably. The only thing that I can see that can save us from all this are some serious changes in how the use of energy. Extremely improved battery tech., wind, solar and just less consumption are the most likely answers….but I dont think most of society (especially in OC) are ready for it…and yes that includes me.
July 2nd, 2008 at 9:59 am
Sounds like Americans are turning European…I really think so.
July 2nd, 2008 at 11:29 am
I was in New York recently and at least in most of manhattan I didnt see nearly as many chubby people as I do here. Getting people out of their cars and walking seems like a good thing to me.
July 2nd, 2008 at 1:48 pm
american are the fattest people on earth.
July 2nd, 2008 at 5:01 pm
renter, have you seen the Samoans?
July 2nd, 2008 at 6:01 pm
85.5% chance you need a brain transplant to buy anything in OC today
July 2nd, 2008 at 6:45 pm
“The markets don’t wait and are adjusting with our without sellers and I have a feeling those who dont sell are going to be singing the blues just like renters did up until this house of cards fell.
I guess if you dont have to sell and can wait it out for who knows how long its just a mental thing.
This year we found out OC is not special. Two years from now and after a lot of pain I would have to agree prices could in fact be lower its called boom and bust.”
Scare tactics from an impatient renter.