Here's recent history of the Fed’s policy committee and its Fed Funds rate. Next Fed decision is June 24/25.
O.C. sellers of pricier homes halt price hikes
July 1st, 2008, 7:49 am · 72 Comments · posted by Jon Lansner/O.C. Register columnist
HousingTracker’s June data suggests that sellers of the higher-priced O.C. homes may have been a bit too aggressive. Why?
- After four months of rising pricing for the 75th percentile — that’s the median of the top half of properties listed for sale — June averaged out at $828,800, or 1.9% below May.
- That’s the first drop since January, leaving the upper crust’s pricing 7.8% below a year ago.
The deep-discounting message has long sunk into sellers of more affordable O.C. housing …
- June market the 14th straight month the median asking price for the 25th percentile (median of the lower half) fell.
- Last month it came in at $354,960 or 4.3% below May (largest monthly percentage decline on this 14-month downward trend.)
- That adds up to a 28.7% drop vs. a year ago.
As for the overall O.C. median (yes, the 50th percentile), in June it fell for the 14th straight month, too — down 2.8% — and if off 20.2% from June ‘07. Inventory of homes for sale at all price points, by Housing Tracker’s math, was below the year ago level for the second consecutive month.
Other pricing trends …
- SoCal home woes could mean 50% price drop
- 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
- Chapman sees O.C. home price off 16% in ‘08, down 9% in ‘09
July 1st, 2008 at 8:09 am
I think this is probably a sign that the option ARM fiasco is starting to catch up with the posers and wannabes in the nicer areas. I expect this trend to accelerate as more option ARMs recast due to negative amortization.
July 1st, 2008 at 8:11 am
Since inventory did not go up 12% in one month, all other data from that site are bogus, including this.
July 1st, 2008 at 8:13 am
……………. it’s going to be a slow burn for these people…………. but the cash will burn away………….. pulling the bandaid of slowly is going to prove to be a big mistake……….
…………… the mr. / mrs. liquidities of the world…… are going to feel this recession pain the most……
July 1st, 2008 at 8:33 am
Orange County homes priced at the 75th percentile, sit on the MLS like Christmas ornaments! They look so pretty.
The tide is rolling out, and we are gonna see who’s been swimming without bathing suits. Translation for PermaBulls, we’re about to discover who’s really got money, and who’s been pretending to have money.
July 1st, 2008 at 8:35 am
The data presented here signals the start of the downturn in orange county real estate……….the higher end finally realized what is going on and they will join the race to the bottom, prices will now start to really go down.
July 1st, 2008 at 8:48 am
why would you think prices will really go down? Those that have to sell will, and there may be a good oppertunity if you have the resources. Otherwise people will just go on with their lives, hopefully happy with what they got.
July 1st, 2008 at 8:52 am
Banks are not going to give those houses away - take a look at the Ladera house that was part of the auction coverage by the OC-register. The house sold in the high $800 + commission to the auction house + back taxes. Sure this house was a deal compared to the prior sale price, the and the person that bought is now in a $1M neighborhood - but the bank did not give the property away by any means.
July 1st, 2008 at 8:56 am
This is slightly off topic but I have to vent about it anyway if y’all don’t mind.
Every time I receive an email from a friend of mine, he asks if we’ve bought a house yet (mind you we just sold ours not even a month ago and we’ve filled everyone in on how we’re renting until the dust settles.) It irks me that he asks constantly… and same with another friend and a relative of mine. It seems like they just don’t “get it.” Further proof of their lack of awareness is demonstrated by the fact that Friend A purchased his home in Spring ‘06… Friend B does not and has never owned a home (can’t qualify)… and the relative lives in a highly undesirable area (a hot, humid, white-trash kind of state.) But that is the exact mentality I am banking on. Most people don’t seem to have a grasp on what’s going on out there and when they finally wake up they will realize just how unprepared they are. I hope this was coherent enough - I haven’t had my coffee yet but felt the need to rant. Thanks for reading.
July 1st, 2008 at 9:02 am
what took so long? DOWN DOWN DOWN
July 1st, 2008 at 9:09 am
SoCal78,
When those same people start shaking there heads about how bad housing has become and nobody in there right mind would every buy is the point where the dust settles. Look at them as a barometer. Do the exact opposite of what they want you to do.
July 1st, 2008 at 9:11 am
Friend B does not and has never owned a home (can’t qualify)… and the relative lives in a highly undesirable area (a hot, humid, white-trash kind of state.)
LOL!!!
July 1st, 2008 at 9:14 am
good morning folks,
some articles that might give you a good idea of where home prices are heading.
http://www.cnbc.com/id/25464952
http://gas.freedomblogging.com/2008/06/30/oc-auto-sales-dive-18-as-truck-sales-drive-off-cliff/
http://www.mybudget360.com/is-oil-having-an-impact-on-housing-taking-a-look-at-los-angeles-county/
Need I say more?
July 1st, 2008 at 9:43 am
“Provider” or whoever you used to be,
I dont understand what you mean about inventory not being up 12%? I can only assume that you are arguing that the number of units on the market housing track is different than other #’s that are out there.
So are you saying that they are double counting foreclosures or REO’s or something else? Do you have data (as in a chart) that shows that the inventory increase isnt 12% or is some other #?
MY thoughts are that even if housing tracker uses inventory differently if they are comparing their own “flawed” numbers, than the iventory change would be roughly the same.
Regardless if there as massive inventory changes or not, the market is still dropping and approaching 30% below peak of 2007.
July 1st, 2008 at 9:50 am
SoCal,
I have been getting the same thing from friends and coworkers for about 2 years. I was under a lot of pressure in April of 2007, got some basic financing approval from Country Wide and started my search.
Even though I could afford some of the stuff out there, I felt the prices where way to high. I have been actively watching ever since. By not buying than I have easily saved 50 to 100K. People ask me almost daily when I am going to buy. I tell them whats the rush? I pay low rent, almost paid off most of my bills, my credit rating is now in the excellent column, and prices are still falling.
The best thing I ever did was to do nothing! I think those that bought in 2005-2007 think prices are bargain now in comparison, but they really have no clue where the market is and where it is headed. So there are many that must sell that are holding out…thinking they deserve to get a certain price. Most cant hold out much longer or they will lose everything.
For me I dont see much of a change in inventory…homes fall off the MLS, but are replaced with others….usually the ones that come off the MLS are back on since the deal fell through.
July 1st, 2008 at 9:53 am
……… it’s hard for them to come to terms with the fact that they are the greatest fool……….. holding the bag……..
July 1st, 2008 at 9:57 am
No, the banks won’t give them away but instead of some puffy-lipped ex-cheerleader and her fratboy husband using an option-ARM to buy these homes, people with actual money and incomes will buy them. My theory is that nice homes in nice areas like MV, LN, Tustin, etc will draw down their prices and draw in people who might have been thinking about Laguna, Dana Point or Newport since they will be getting a bigger home on a bigger lot with other amentities like views, pools, entertainment backyards, extra garage space, nice schools as well. You can argue that you are paying a premium for the beach areas which is fine but if the differiential cost between these areas becomes too large you will pull market share away from the higher end coastal markets.
July 1st, 2008 at 10:01 am
The same people that told me to buy a house in 2005, 2006, 2007, are still trying to convince me that the rent money is a waste. In my eyes, I’ve earned somewhere between $100K to $150K these last few years.
As the stock market continues its decline, the “rich” are going to feel less and less rich each day. I’m taking my extra cash out of each paycheck and buying as much as into my 401K as I can.
Our realtor said that inventory is decreasing. Maybe he’s not paying attention to the latest data? Should I fire them? I wish I knew a bit about the process of buying a little bit. I was told a real estate lawyer can be a way better option?
July 1st, 2008 at 10:04 am
The inventory is down…so what? All you are concerned about is finding a house you like at a price you’re comfortable with.
It comes off like a scare tactic where they are trying to fear you into buying because you think the selection of houses is shrinking by the day.
July 1st, 2008 at 10:05 am
samson:
I’m thinking every time they ask us, “When are you going to buy?” we should ask them, “When are you going to fold?”
July 1st, 2008 at 10:09 am
Even my friend’s spec’g on 3 build-outs in Shady Canyon are having to lower their asking price by $1-mil on the first one…#2 & 3 are going to be in real jeopardy? And, they are far from newbies! Let’s see what the profilers around them do with their newbie once-upon-a-time $10 mil plus values! My friends have deep pockets & can cut to meet the market…
It’ll be insightful to watch. I believe the new high-end neighborhoods like this will lead the decline in the coastal values:
http://mls.ocexclusives.com/703796w/860-Custom-Homes-in-Shady-Canyon
Here are some others:
Current N.B. actives $2 to $38 mil:
Total ….232 active
$2.2 M Cliff dr 244 DOM
$12.9 M Lido 420 DOM
$14.9 M Linda 399 DOM
$38.5 M Harbor Isle 60 DOM
July 1st, 2008 at 10:14 am
……… wall street is in capitulation mode…………
………. the DOW and S&P500 experienced the greatest June decline since the Great Depression……..
……….. yes the Great Depression………
…………. dear readers……….. this is not Doom and Gloom…….. it is reality……….
……… the OC housing market is already in Great Depression mode……… prices have another 20% to drop…….. the tsunami of foreclosures is like an ice berg dead ahead…………….. as prices drop, foreclosures will increase further……….. everybody who bought after 2004 is subprime………
July 1st, 2008 at 10:27 am
Bills chart from other thread:
June 30th, 2008 at 6:08 pm
Orange County Foreclosures Pre-Foreclosures
01/2008:……………..1,940………………………13,829
02/2008:.…………….2,387………………………. 7,402
03/2008:……………..2,513………………………..8,537
04/2008:……………..3,006………………………..9,497
05/2008:……………..3,829………………………10,685
06/2008:……………..5,529………………………11,479
Bill good chart,
Parsing what the true foreclosure numbers are is like fiddling while Rome burns…All it demonstrates is that they (MLS REO # listings) are what makes up the market today….Volume & DOM mean nothing in this market when the vast majority are distressed sales. It gets skewed as non-distressed listing are usually on the market for over 100 DOM, where the aver REO is now sold in a fraction of the time. Why… they’re cheaper, and dropping as we speak!
Accent is on distressed-sales. To deny that fact is to truly be a head-in-the-sands observer! Reality is a good thing! It’ll set you free…It has nothing to do with Perma-Bear or any such thing!
It’s real buyers, with real income, borrowing from real lending guide lines, with real down payments & real full-doc loans! Then the market will get back to normal…
July 1st, 2008 at 10:32 am
Fantasy.
July 1st, 2008 at 10:46 am
Did I mention, Head-in-Sands?
July 1st, 2008 at 10:53 am
This is funny - really funny.
Imagine being an employee at that bank having to tell the boss that we are now selling properties at 25% or more discounts - which is probably equating to similar real loss on the loan seeing how many people used zero down loans recently, or at least less than 10% down.
Folks - this is all after just one year of declines. I own in LN and we haven’t seen those same declines - but I know its just a matter of time. Fortunately I’ve owned since ‘97.
Does anyone here think that paired sale pricing being down by almost 20% overall for the entire county is a small decrease? Are you kidding me? Can you people frickin’ add?
Imagine an employee at the bank taking that attitude at a board meeting - you have any idea what attitude they’d be met with? Doom and gloom would be a favorable response. Try “your fired without any severance” for being such an idiot.
What is that metric now? The percentage of home sales that are resulting in a loss from original purchase?
Just imagine - on almost every block there will be at least one family paying significantly more per month for the same house and more in property taxes than the newbie on the block. Yeah - I’ll sign up for that right away - NOT!!!
it just amazes me how many people will dive in and then wish they had done more research and consideration of these factors before doing so. It makes sense for some to buy right now - just make sure you do the research to see if you fall into that category - which includes the ability to comfortably ignore near term losses in exchange for getting into a house sooner (and deal with higher recurring costs such as payment and taxes)
Anyone that tells you to ignore the fallout of near term losses is looking out for their own interest - period - plain and simple. Just use your damn head.
July 1st, 2008 at 10:59 am
It was going to catch up to them sometime. You just can’t keep rising prices thinking there is going to be no end.
July 1st, 2008 at 11:05 am
The bigger they are, the harder they fall.
July 1st, 2008 at 11:16 am
Let me play Bubble for a minute. Check out this article in Biz Week…have a great day! I just love the news!
http://www.businessweek.com/magazine/content/08_27/b4091032364818.htm?chan=top+news_top+news+index_dialogue+with+readers
July 1st, 2008 at 11:29 am
Even I am stunned on how well the beach market has held. Sure, sales are slower. But, the beach has remained a “foreclosure free zone”.
July 1st, 2008 at 11:40 am
I think that if the BW story came from Bubble, it would have been “dateline July 1″. I think you’re on the right track though Mulli.
I read this story the other day. My favorite paragraph:
(Referring to dropping into an abyss)
”
That process has already started in parts of Arizona, California, Florida, and Nevada. The drop in those markets “is being fueled with jet fuel,” says James L. Smith, executive vice-president for portfolio services at Fiserv (FISY), a Brookfield (Wis.) company. His unit works with borrowers to restructure delinquent mortgage loans. Smith worries that instead of settling at a reasonable price level, “we’re going to blow past [it] without even looking back.” ”
Many of the “non-head in sand” readers (folks who are not agents or special interest RE employees … like Provider and Active Buyer) here have described this same expectation - huge undershoot.
Jet Fuel … super heated and at high pressure !
July 1st, 2008 at 11:44 am
Do you all remember “Soft Landing” talk of previous RE special-interest braniacs ?
“Im forcasting a mild dip, essentially a soft landing, followed by a period of normal growth.”
July 1st, 2008 at 11:53 am
European Inflation has Dire Implications for U.S. Recovery
http://www.beyondthemargin.net/2008/07/european-inflation-has-dire.html
July 1st, 2008 at 11:54 am
BIS–I actually enjoy the banter back and forth…I love my gloss (Gilligan) and jake and rants provide me with more laughter than they could possibly fathom. pdu and I somehow have manged a blog relationship with respect to differing pov’s and we do not result to name-calling etc. There are those here where sparring has resulted in the aforementioned childish antics, guilty parties on both sides.
Bottom line: the housing economy is in turmoil yet there are some good options for people out there…there are good buys in every market. Most importantly, buy when you are ready. I have said it a million times: rent or buy I do not care. Just look at your home as that: your home. Once it becomes a commodity, the business aspects rise to the top and the enjoyment of home ownership retreats to the background.
I call this the renters blog a good bit as my opinion is most here are renting. Thus, the bearish attitude for additional price drops. I understand where you all are coming from. As an owner, I wish for the opposite. Make sense?
July 1st, 2008 at 11:58 am
bloodinthestreets Says:
July 1st, 2008 at 11:44 am
Do you all remember “Soft Landing” talk of previous RE special-interest braniacs ?
“Im forcasting a mild dip, essentially a soft landing, followed by a period of normal growth.”
That is a perfect description the CdM and Newport markets.
July 1st, 2008 at 12:00 pm
Mulli - I don’t include you in the special-interest crowd … even though you have an RE background. It seems clear that you call it as you see it for the most part. I’m glad you’re here to offer some of the more reasonable ray-of-optimism balance.
July 1st, 2008 at 12:04 pm
I guess nobody seems to care about the Coastal NOD stats I’ve posted in another thread…
( http://lansner.freedomblogging.com/2008/06/30/demand-for-oc-homes-takes-first-08-dip/#comments )
Corona Del Mar had 10 NOD from March - May of 2008, compared to 5 in the same period of 2007 and only 1 for the same time frame in 2006. Is 10 impacting the entire Corona del Mar Real Estate market negatively? Absolutely not. I’m not arguing that. But what will negatively affect home values is what has yet to come…a momentum graph can indicate that. Want broader Coastal OC NOD stats? From January through the end of May of 2008, there were 212 NOD’s recorded in the Coastal area ranging from Capo Beach to Corona Del mar. Compare that to 85 for the same period in 2007 and only 32 in 2006. Now if you study the ratio of NOD that become NTS, the data indicates that the situation is much worse than those naked NOD numbers indicate. In the previous years the homeowner fell behind on payment and received a a NOD could more easily refinance or sell the property. That is changing and it’s just a matter of time until the public accepts the fact that the Coast is all but immune from significant home price depreciation.
July 1st, 2008 at 12:05 pm
“The speculator’s deadly enemies are: Ignorance, Greed, Fear and HOPE.”
http://www.fibtimer.com/subscribers_historical_reports/060521_fibtimer_commentary.asp
July 1st, 2008 at 12:07 pm
Thanks BIS…that is appreciated.
July 1st, 2008 at 12:08 pm
Check out this page on Subprime and Alt-A stats. This is ‘must read’ data:
http://www.bubbleinfo.com/journal/2008/6/25/data-on-subprime-and-alt-a.html
The comments below it are useful as well.
(Predicted RE special-interest spokesperson response: “Fantasy”, or maybe “these people refinanced to safer loans long ago”)
July 1st, 2008 at 12:09 pm
has anyone stopped to ask this question..
where are the “high-paying” jobs going
to come from that are required to hold
the home prices in the nose bleed stratosphere
dont look now but we are bleeding those jobs
the mortgage business is just ONE prime
example- hey blogger whose gonna be able
to afford these over-priced homes?
July 1st, 2008 at 12:17 pm
hey folks,
some more good articles
http://money.cnn.com/2008/07/01/markets/thebuzz/index.htm?postversion=2008070110
July 1st, 2008 at 12:26 pm
Wouldn’t the higher end homes be bought by move-up buyers using their equity to bring the loan value down to an amount that they can afford with their current income? If so, as the roll back home prices continues, aren’t the number of eligible buyers shrinking since wages have actually fallen in real terms over the last 7-8 years? So, if the high prices homes aren’t selling, the move up buyers can’t sell at a price high enough for the carry over the equity necessary for the move up purchase and their wages are flat then where are those buyers suppose to come from?
July 1st, 2008 at 12:30 pm
Mulli: that article mentioned that the legislative package is meant to also stimulate first-time home purchases.
I haven’t seen much on that package and nothing at all that would lead me to believe it would stimulate first-time home purchases.
Can someone help shed some light on that? I’m very curious as to what they are referring to.
I’ve said it time and time again - that is what they should be doing - giving tax incentives to buyers and not get into the business of forcing tax payers to buy a ton of depreciating assets just so the banks don’t have to own them.
That is what I don’t get - banks can’t sell the inventory they put themselves in - so what do they do? Ask the taxpayer to take over the problem. That is just wrong.
July 1st, 2008 at 12:39 pm
not buying it……
……….. by giving tax incentives to buyers……… you are in essence forcing tax payers to buy a share in depreciating assets…..
July 1st, 2008 at 12:43 pm
At some time, you need to stop beating a dead horse. If the beach homes have not dropped big by now, they are most likely in for a small fall. Why? Many I know bought these homes for less than 600K ten or more years ago. Current market value is in the 2M to 3M range. No crisis here. It is called the Debt/Equity ratio, and it is very low in the beach cities. Finance 101. In the areas with high foreclosures, the Debt to Equity ratio exceeds 1.0. Case closed.
July 1st, 2008 at 12:47 pm
rants, you’re always right on.
Maybe people should start planting “money trees”…now that the “house atm” is no longer working…and if that doesn’t work, then there is always the possibility of home price correction to “affordable” levels.
I always have to laugh when people say OC is so rich…especially the coast…then why did so many of those rich people have to rely on home equity…why did they refinance so often if they are rich and have such a high income? And why does the rich Coastal areas experience a significant rise in home loan defaults??
July 1st, 2008 at 12:48 pm
Jimmy2,
so what do you conclude from the NOD data I’ve posted?
July 1st, 2008 at 12:52 pm
nvest80, 10 NODs, half of which are bogus, is insignificant.
July 1st, 2008 at 12:54 pm
Those who have to sell in the next 1-2 years will, and it will be at some value less than the peak. Those that do not will sit back and enjoy their lives.
At the end of 2-years when the REO drys up (gets back to historical norms) it will be very interesting to see what happens when the majority of the market is driven by equity sellers.
Of course there are many on this blog that are really cheering for a total melt down in our economy. If that really does happen I am glad to currently be located at the beach. I may end up poorer, but those cheering will most likely be in even worst shape.
July 1st, 2008 at 12:56 pm
and yet, I keep seeing the same “open house” signs here in Newport Beach week after week.
BTW, upper income people will have a hard time next year when President Obama will tax the heck out of them. Fasten your seatbelts ultra riches.
July 1st, 2008 at 1:00 pm
Current N.B. actives $2 to $38 mil:
Total ….232 active
$2.2 M Cliff dr 244 DOM
$12.9 M Lido 420 DOM
$14.9 M Linda 399 DOM
$38.5 M Harbor Isle 60 DOM
Data & MLS info don’t matter to the predisposed to hide from reality
FYI this… is… current NB MLS data. Need more?
July 1st, 2008 at 1:04 pm
Don’t bother Jimmy with data, including the paired sales data that conclusively shows that the Beach is down 25-50%. We have asked him to show us just one property (a sale within the last 30 days, please) that isn’t off 25% and back to 2004 levels, but he can’t.
The high end folks have been creamed in the hedge funds that have blown up, and are getting ripped limb from limb in the stock market now in bear territory (if you are on margin you are down 30-40%).
No he just repeats the mantra: we have lots of equity, we are all millionaires.
July 1st, 2008 at 1:10 pm
………….. LMFAO………. Active Buyer / Dimmy don’t think rich people feel pain when the economy goes into melt down………….. are you kidding? the rich feel the most pain when the stock market crashes………… rich people who are leveraged are crushed……………
the other rich people feel more pain than the poor……. the poor are used to sub standard living………………. to eat the poor steal from the rich………… that’s what happened in the last great depression……….. the rich were in denial until they lost everything……….
July 1st, 2008 at 1:12 pm
Jimmy2,
you know, a couple years ago when I first looked at the NOD data of other OC geographic areas I got the same reply from people such as Ken et. al.
If you read what I wrote about the data you would realize that I acknowledged that 10 by itself aren’t much and won’t impact the market much. What’s alarming is the momentum of NOD along the Coast. Maybe you should go beyond Finance 101 and study about the significance of momenta in the financial world. What will come next with depreciating home values is the lack of refinancing options out of ARM. That will only amplify the problem as it also done so in non-coastal OC areas.
I charted the momentum data of NOD and NTS and I take an objective look at it. It doesn’t look good at all. It’s not the “now” that’s alarming it’s the “what is to come”. How do you downplay 212 NOD’s vs. 85 just a year ago? What would you say if it were 85 this year vs. 212 last year? I’m sure you’d consider that a bullish sign for RE and so would I. You can always flip a chart and data 180 and test yourself if you are honest in your evaluation.
The difference between us is that I look at data and draw my conclusions by analyzing it while you and your buddy trs et al. already have the conclusion and cherry pick data to support your agenda.
Let me give you some advise when it comes to investing…it works much better for you in the long term if you leave emotions aside and just take a thorough look at all available variables. There’s money to be made on the long and short side of the game, so why fall in love with an asset or security? “Love makes blind” and sooner or later you that investing strategy will “dump you” and leave more than just a “heartache”.
July 1st, 2008 at 1:25 pm
Yes, I know about Thoughtful’s denial of data…
I’ve grown up around the NB & LB areas since the late 60’s. Anyone who thinks the “Rich” don’t price down for losses is probably not “Rich” *(at least not for long). One thing I learned about the so-called rich…Is they know how to cut their losses and move on. Unlike some who seem to be denying reality as if that’ll help their lost equity to come back. Cut your losses & move on!
July 1st, 2008 at 1:28 pm
Mav- I respectfully disagree. Th