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Tell us ‘Is O.C. housing approaching bottom?’
August 18th, 2008, 3:31 pm · 23 Comments · posted by Jeff Collins
Some reaction to today’s news that Orange County home sales increased in July, ending the longest streak of falling sales in records dating back to 1988:
“It’s crazy.”
– First Team agent Connie Alonzo, describing how one home in Santa Ana’s 92707 ZIP code got 20 offers within two days of coming on the market. The city’s 92707 ZIP code posted a 215% increase in home sales last month, largely because it’s a desirable area of single-family homes located near South Coast Plaza, Alonzo said.
“Barring some major disruption of the credit markets and a recession, we’re pretty close to the bottom.”
– Kerry Vandell, UC Irvine finance professor and director of the UCI Center for Real Estate, explaining that sales declines may be at an end, although price declines likely will continue falling until mid- to late 2009. (More on price here.)
“Until you get this inventory in some of the communities absorbed and in balance, you’re still going to have a drag on prices.”
– Vandell
“I’ve been doing this for 38 years, since 1970, and we’ve never had a market like this, where prices are low and interest rates are low.”
– Molly Doughty, broker-owner of Santa Ana Realty
“Houses are becoming a little more affordable (because prices) have dropped 20-25%. There has been a pent-up demand. (Buyers) have been waiting to buy a house.”
– Tom Moon of Pacific Moon Real Estate in Huntington Beach
“I think we have pre-bottomed out.”
– Mike Hickman, general manager and president of Seven Gables Real Estate, explaining that Orange County is six to eight months away from the bottom of the market.
“You can clearly see it’s not any one particular end of the market that is safe, it’s not any particular end of the market that’s growing. To me, that says the entire market has been affected.”
– Hickman, who cited statistics showing that the median home price has fallen by $181,000 in the past year and that the average price per square foot fell $95, to $329 in July from $424 per square foot in July 2007.
What’s your view?
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There you have it folks, every broker thinks this is the bottom. You can’t ask for any more proof then that.
As a seasoend investors, not a speculator or broker, I know that we are still headed down.
If you would like a further educated discussion on this please e-mail me at
solutions4investors @ yahoo . com
LOL!!!!!!!
The same people said “housing only goes up”.
“I think we have pre-bottomed out.”– Mike Hickman, general manager and president of Seven Gables Real Estate, explaining that Orange County is six to eight months away from the bottom of the market.
“pre-bottom” LOL!!!!
Classic
WANT WAR MORE YEARS?
VOTE MCCSAME
I think these so-called “experts” are dreaming; not to mention putting on a good face. It doesn’t take a geniuos to see that their livelyhood depends on a good real estate market.
92707 isn’t that great of a ZIP to call home and to gauge an entire county off this is stupid. Sorry to say this to all the present home owners but as a near-future home buyer, I hope the prices continue to drop and inventory continue to rise.
92707 is a dump!
Vote for whomever you wish…just vote! People died for the right. Don’t waste it. Always vote whenever there is an election.
Folks, we are witnessing an absolute unprecedented event with Orange County real estate. I, in my wildest dreams, never thought it would get this bad, this quickly.
Despite all the “bottom” calling from local Realtor’s, these people are simply wrong. They are clueless, and do not know what they are talking about. This market is going to overshoot the fundamentals, and drop even deeper than most of us bears thought. We’re going to see an absolutely shocking event!
With that said, despite the cheaper prices, this is NO TIME to be a buyer in Orange County real estate!
The market will continue to fall off since most liar loans have still to hit the adjustments they call for this year. Look for 2009 to see another 10% fall from high end homes and 15% from medium priced homes inOC.
The market has been falsely pumped up by those that have used loose financials and ballsy appraisals to sell homes over the years.
Brokers just continue to BS, just as all salespeople do whether times are tough or not. Do the crime, serve the time.
The credit crisis is moving up the food chain into ALT A and Prime. The economy in CA is weakening, there are still shoes to drop here that will impact the market. Until we get through this bad paper we will not see a bottom anytime soon.
Lee “housing speculator” Irvine has resorted to begging people not to buy. Sad. Hey genius, your comments on this blog have ZERO influence over the market.
Man, with all those NOD’s going out this summer, we’ll see a wave of foreclosures in 6-9 months and then a rash of REO selling in the next six months. Maybe the wave of NOD’s has crested. Even so, we are talking still a year out for the bottom.
When a doctor or a lawyer can buy a nice house in a good neighborhood based on what he or she earns, then we’ll be APPROACHING a bottom. Until then, please, stop complaining. Prices are going down further.
You must not pay any doctors or lawyers!
No one knows, the same stories have been going back and forth every six months for the last 2 years. There isn’t an economist out there that can tell us anything about what is going on.
Wall Street has no idea and is falling apart, blaming it on brokers for selling liars loans, but they made the underwriting guidelines and lenders and brokers sold them.
It’s ridiculous, Lansner and Padilla are just “talking heads” with no real idea of what is happening.
it was supposed to be the bottom by 1st qtr 2008, no one knows, this is such an unprecidented turn of events there.
Doom and Gloom chatting it up with each other on this blog once again. Lets look clearly here. Yes 92707 is not the greatest spot in OC but in a Bear market low cost homes in a decent area are snapped up first with Beach homes (read johns article) getting snapped up later. When homes in nice middle class areas of OC are moving up in sales near the pace of 92707 then we are at bottom. Look for Fall of 2009 for the bottom to hit. With full recovery and 2006 prices in late 2011. But dont expect a V shape recovery. But we also shouldnt expect the doom and gloomers to stop crying that the end of the world is upon us.
You know, for every bull that accuses the media of just portraying negative information, Lansner sure does like to display the RE cheerleaders.
Of course those in the RE business are going to say it is a bottom. Not once have I heard any national, CA-wide, or local office flatly say that this is a poor time to purchase. It is ALWAYS that ‘this is a great time…. to buy’.
DID YOU KNOW LONG BEACH MEANS “WHITETRASH” IN SPANISH?
How can there be a bottom if the government continues to bail out the homeowners? All it does is extend this real estate meltdown for several more years….
These numbers are fuzzy math. These are NOT arms length transactions indicating market recovery. This is just the media trying to sell papers.
Do this math with me and see if you agree…. brace yourself, it’s a word problem.
If the median income for OC is 79K and the median home price is 465K and the lowest you can hope for is a 3% down payment let’s look at the numbers:
465,000.000 x 3% = 13,950.00 + closing cost. Lucky to find people with money in the bank these days…. but let’s just say…..
Loan amount of $451,000.00 at a 6.5% rate, 30 year term….. payment before prop taxes,Home owners ins. and MI is $2,852.00 add in the $667.00 monthly for prop taxes and 70 bucks for ins. and another 100 for MI (I don’t sell MI so correct me if I am wrong here) not even counting HOA, and you have a monthly payment of $3,689.00.
Add in the fact we have fewer and fewer programs available today to make these outta whack numbers live together on the same balance sheet, and you have a mess.
Based on the numbers above, the gross monthly income is $6,583.30. Housing expense is $3,689.00 We are over 55% Debt to income ratio just in housing exp. You can not qualify with that debt ratio these days.
Let’s just assume that the buyer actually has 93K to put down (20%) and money for closing cost. Thats a loan amount of $372,000. We are only dropping the payment by $500.00 to $3,189.00. 3189 /6583 = 48%+ JUST IN HOUSING EXP. Again, 48% housing ratio is NOT a qualifying number.
Now tell me who are these people who have more than 20% down and where do I find them? I do not believe we will see any real recovery until the gap between median income and median home price narrows A LOT and the property taxes are gotten under control. AND we start to see more 40, 50 and yes 60 year programs. I don’t think Interest Only Neg am will be back in great force for some time (Oh but they will be back, they made way too much money for Wall street for them not to at some point) so the only other way to qualify buyers when the loan amount and the income are so far apart is to lengthen the term.
If we could get a small contribution from all 3 areas (Price, tax and term) we could get to recovery faster.
I am no genius, but I have been a mortgage planner for a while. I do not see why a 50 or 60 year term would be risker than a 30 year term. People would like to pay off their homes, but they don’t. The bank doesn’t really want you to pay off your home (no money in it for them if you do) No risk of reset….. I bet we will see the 50yr and 60yr sooner than later.
Now here is the dangerous part of what this report of recovery is doing. What about all of those people who up until now have been in denial that they are in trouble? People who need to do a loan modification, short sale, short refi, cash for keys or just walk away before they can’t feed their families? This is giving them false hope in a time where they need to face facts.
Denial of what could be afforded and what was risky is what got is into this mess, let’s not go back into denial and prolong it.
Anybody want some help or to know more? straight talk, real help, ethical practices. http://www.MoneyNavigation.com
Next year. Far, but not too far.
“I’ve been doing this for 38 years, since 1970, and we’ve never had a market like this, where prices are low and interest rates are low.”
I guess after the recent crash in prices they think thats it, just like that, we gave some back and now it’s over…
Still missing the point, “prices are lower” but not low enough. Still hung over from the koolaid. Thats why they say prices are sticky, it takes time for the market and people to re-adjust.
Look at the archives we heard it over and over until it happened.