• Hate it? Love it? Email Jon by 
Here's recent history of the Fed’s policy committee and its Fed Funds rate. Next Fed decision is June 24/25.
Tell us ‘Can housing’s bottom be far away?’
July 23rd, 2008, 12:13 pm · 22 Comments · posted by Jon Lansner/ocregister.com
Plenty of dour news lately on the housing front. Like troubles at IndyMac, Fannie Mae, Freddie Mac, etc. Yet, to be sure, there will be no obvious signal when the O.C. housing market’s turnabout begins.
As a public service, though, we’ve dug up certain bits of fresh evidence (click the blue links below for more details on each trend) that hints that a bottom might be close. That’s “bottom,” as in end of relentless declines, not any kind of return to the easy-money, easier-profits days of not-so-long-ago.
So, with that in mind, let’s go bottom fishin’ by grading the chances that the market’s tumble is over. Review our recent catch of trend-hinting news …
- O.C. home prices rise for 1st time in 7 months in June
- 24% discounts at Platinum Triangle condo sale
- Gov. Arnold says Calif. will ‘grow out’ of housing ills by ‘09
- Sales of O.C. houses up to nearly 2007’s pace
- Realtors put O.C. home supply at 2-year low
- Century 21 boss tells Insider Q&A of ‘tremendous’ opportunities
- Early June’s O.C. homebuying dip smallest since Nov. ‘05
Hard evidence? Mere blips?
Is turnaround near?
July 23rd, 2008 at 1:10 pm
Is next year kinda close or far away? How about ‘10?
July 23rd, 2008 at 1:13 pm
When you say far off (which I did) are you talking months or years? I think by mid 09 is the earliest we could see bottom but that really depends on the foreclosure rate, overhang and the state of unemployment. Not to mention Fannie & Freddie and a host of other factors. If all goes exactly perfect then maybe mid 09 but things don’t seem to be going perfect. In either case when condo’s in Ladera that are 3 bed over 1800 sq ft fall below 380k I will stop paying my $2400 rent in Capistrano Beach and buy. Just make sure when we do hit bottom we don’t let people qualify with stated income or do option arms on there primary residences. Geez I knew those loans would go bad and yet they allowed LO’s to get 5 points on that back end of those loans. Of course people will push Options arms if they can make 10k a loan. I worked for New Century and never did a single option arm. Maybe because I explained my loans to my borrowers or maybe I believe in Karma. In either case see ya at the bottom——–
July 23rd, 2008 at 1:28 pm
The stock market is seeing a bottom coming. Financials are rising and commodities are going down. Consumer stocks such as Starbucks are going up.
So the stock market clearly sees a turnaround(say 6-9 months).
I don’t but the stock market does!
Hey is that girl searching for me or Mully?
July 23rd, 2008 at 6:09 pm
Yes
July 23rd, 2008 at 6:37 pm
JAKE THE STOCK MARKET IS TAKING A DEAD CAT BOUNCE. DONT GET SUCKERED IN QUITE YET SHES GONNA FALL AGAIN REAL SOON CLEAR ALL THIS CRAP OUT THAN RUN . BUT U GET A LIL BOUNCE HERE
July 23rd, 2008 at 6:47 pm
Somebody at work who purchased only 7 months ago just said their house is already close to being upside down and the payment was probably a little more than they wanted.
A friend just got a job out of state and needs to sell. They plan to just get it sold and realize the market is about $150k less than peak but will still make $200k even if they price it a little lower than comps. “I say get er done”.
I have a few homes pretty much like mine that have been on the market for about 540k for months with little interest. I think $500k-$525k would do it but once the selling season is over we go back to a major rethink.
Lets see what it looks like in 6 months, nothing has really changed except prices have moved lower but still out of reach to the people who would normally be buying our homes.
Another 10%.
July 23rd, 2008 at 10:46 pm
Guys, jumbos are getting close to 8%. The number of defaults is three times the peak of the early 90’s rout and we’re just getting started with the resets and the years of declines. Defaults should max out at ten times the 96 number. This is Armageddon for CA real estate.
We’re talking 200K for the nice homes when it is done, and even that will be too much. 66% declines across the board. I do not have an axe to grind. Personally, I do not care as my financial interests are not in real estate nor will they be anytime soon.
I’m just looking at the hockey stick called defaults and guessing what the probable impact will be especially considering the fact that interest rates are trending much higher.
The recent rise in rates takes another 15% off the market without giving anything in the way of affordability.
Armageddon.
July 23rd, 2008 at 10:50 pm
“Maybe this winter.” Why is it so inconceivable that homes should go back to a reasonable multiple of income? Joe and ane Boomer are in their mid 50’s and are getting ready to sell and move out of state.
The Gen Y couple making 50K together can’t pay half the current market price.
Its demographics, interest rates and sustainable financing. The job market is just the final nail in the coffin of this secular bull market that was called OC real estate.
Go back to your lives citizens.
July 24th, 2008 at 6:25 am
moneypit, how dare you come out with all that logic and reasoning? and basic economic fundamentals too. are you really believing that prices will become ‘affordable’ without exotic loans (that basically dont exist now)?
crazy talk I tell you…
July 24th, 2008 at 7:10 am
TO REALTOR DAVE
YOUR CREDIBILITY FELL TO THE NEGATIVE WHEN U STARTED USING ALFALFA IN YOUR ARTICLES FOR UR BLOG.
ALFALFA HAS BEEN THE WORST GUESSER OR TRYING TO PREDICT OR SOME OF THE MOST GOOFY BLOGGING EVER SEEN ON THIS SITE….
HE USES MANY DIFFERENT NAMES COMES UP WITH NOTHING TO BACK UP WHAT HE SAYS AND HAS SAID NUMEROUS TIMES BY REAL ESTATE FOR THE PAST SEVERAL YEARS . AND IF WE FOLLOWED HIS ADVICE WE WOULD ALL BE ANOTHE NOTH FOR A FORECLOSURE…
U SHOULD DO SOME RESEARCH BEFORE U START QUOTING SOME QUACK
July 24th, 2008 at 8:14 am
uncharted territory is right.
July 24th, 2008 at 9:07 am
Those tulip bulbs got pretty cheap there at the end, when people went back to valuing them as the precursors to flowers.
July 24th, 2008 at 10:14 am
With so many REO’s not on MLS can we really expect a bottom soon?
July 24th, 2008 at 10:18 am
With so many REO’s not on MLS and a host of other negative factors the only way we can see bottom in the next 12 months is if home prices slide drastically. Maybe 15-25%.
July 24th, 2008 at 10:40 am
More importantly I believe is regardless of the prices and the season, the main ponzi scheme of housing has been exposed and hopefully a house will be just that a house not a retirement vehicle. With that being said, and it being that in many places in the world and people not getting rich from selling houses to one another - who knows where the bottom is and we will definitely not see any of the ridiculous gains we saw in the 2000’s ever again or their scam propping loans.
July 24th, 2008 at 12:02 pm
Good point Patricio, very good point.
July 24th, 2008 at 12:24 pm
I always thought a house should be first and formost a home and 2nd a good investment. I completly agree Patricio.
There are way to many exotic loans set to recast that were an were going to have many more REO’s. Trust me I worked for New Century and many other mortgage companies and we are not close to seeing the amount of forclosures ahead.
Too many people treated there HOME like a giant credit card. Refinancing every 2 years to pay 45k in credit cards. People live with in your means and treat home like you would your family. Or at least like a firend. (I see how some people treat family)
Well the bottom is like death it is inevitable but we just don’t know when it comes.
July 24th, 2008 at 10:29 pm
@TheMoneyPit: Well said.
To address Jon’s news items–quickly now:
1. Seasonality.
2. Looks like a nosedive, not a bottom.
3. Arnold has no idea what the housing market will do, and no interest in making an accurate prediction.
4. Seasonality.
5. No seasonal adjustment.
6. For the Used House Salespeople, it’s always a great time to buy or sell a home.
7. Sales can stabilize while price decline.
July 25th, 2008 at 3:11 am
Nicely said everyone! I’m glad to see there’s no wool being pulled over anyones eyes here! Unfortunately, I’m a little bit more pessimistic than the average blogger. With ALT-A loans performing in a similar fashion as sub-prime loans were a year ago, and with 80% of these borrowers only paying the neg-am amount, it’s another train wreck in the making! When the next wave of foreclosures & discounted REO’s hit the market, it will result in another low benchmark in property values. Add to this stiffer underwriting guidelines, inflation, a down payment, & who knows what else, and you can expect to see 1998 values to return. Somebody aptly called it “Armageddon,” and I agree.