O.C. home-price dip nation’s 22nd worst

August 26th, 2008, 7:57 am · 69 Comments · posted by Jon Lansner

Federal house-price trackers say this AM that Orange County home values fell at an annual rate of 15.3% in the second quarter, the 22nd worst drop among major markets in the nation …

It’s the sixth straight quarter of year-to-year O.C. price declines in this index from The Office of Federal Housing Enterprise Oversight — it regulates mortgage giants Fannie Mae and Freddie Mac.
It’s easily the largest drop in the O.C. series that dates to 1976. The old record was the 10.9% drop for this year’s first quarter. Worst of the last cycle? In fourth quarter of 1994, a yearly drop of 6.35%.
California and Florida cities dominate the “Who’s Worst” list, with only Vegas (-17.7%) cracking the second quarter’s national bottom 20 from outside those two states. Merced (-34.5 for a year); Stockton (-31.7%) and Modesto (-28.5%) were the nation’s hardest hit towns.
Houma, La., was best of the bunch at +9.1%.
California was the worst state, off 15.8%.

[ More housing: PRICING | INVENTORY | RENTS | FED | RATES ]

The regional OFHEO index tracks price changes on homes by looking data from mortgages purchased by Fannie and Freddie, both for sales trends from purchase loans and appraisals from refinancings. Full report is HERE.

Since these two agencies bought few subprime loans, those made to the highest-risk borrowers, or jumbo loans, the largest deals, the index seems to understate the price losses in many regions. DataQuick, for example, showed Orange County’s median selling price falling an an average 22.5% rate in the second quarter vs. OFHEO’s 15.3%.

Also, the National Association of Realtor data for the second quarter showed O.C.’s home-price drop was fifth worst in U.S.

Related stories:

You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.

See blog content by category ...

nanowest says:

August 26, 2008 at 8 am

It really is hard to imagine that we are in the early phases of this correction. The substantial price declines won’t start until the third quarter of 2009. This is when the higher end sellers will wake up and realize that we experienced one of the greatest asset bubbles in the history of modern economics, and that home values will continue dropping until they reach values that are in line with historical averages.

Jimmy2 says:

It is really hard to imagine that the bears will ever get that beach home for a late 1990s price. The substantial price declines in the lower end will cease once people realize the high end beach cities will never show any significant price decrease. This is when the high end buyers will wake up and realize that the media overplayed the housing story and created “housing crash hysteria”, and they had better sign that deal fast. Housing crash hysteria was unfortunate at it destroyed the wealth of many lower income families. High end beach prices are bound to at least double again in the next ten years. These prices are already in line with the historical average of the higher income demographic.

Chris says:

Just like people thought prices were going to go up forever, now people think they are going to be dropping forever. Don’t believe the hype, the bottom is getting closer every day.

own_home says:

all these surveys are so confusing
one says that the prices are dropping, one says that we are at the bottom, one says OC prices are increasing and finally no two people agree on the same survey result.

whose adivse should i follow for buying a house?
if there is any one in this forum, who can give advise, devoid of any self interest, please write

Patricio says:

The bottom…I suspect what you believe as the bottom would be not what you intend. You think that this proverbial bottom will in some way resemble something from 2004 or even 1999, it wont. This bottom the bulls are waiting for is going to be stagnation in pricing and at the best fractional increases in pricing, not double digit returns on a house in 2 years. The pyramid scheme/ Ponzi scheme is over, big money to be made is over.

It is relatively simple and I will explain it as I did for my wife.

Man buys house for 275k man uses typical loan and has down payment an average Joe not aware of the RE scam being laid out in the coming years. Man gets new job and needs to move, appraiser comes in and says that house is worth 750k now after mere few years, man can not believe it nor his good fortune but this guy is an expert and says whatever if you can sell it.

A new man walks into modest house and talks to ponzi setup man number 2 the RE agent. He says nice house but he doesn’t think it is a 750k house and he can’t afford that anyway, RE agent scoffs and shows him the facts. Fact is this house had over 100% appreciation in a matter of a few years and will appreciate another 50% minimum in the next 2 years, and the money is nothing just ask the next guy the mortgage broker. Enter scammer number 3 you can and will afford this house he tells the potential buyer you need no money down and you don’t even have to pay that big nut every month you can afford an apartment payment right? And this loan will mature when the house is 50% higher anyway so who cares? Man believes in the pros and accepts his destiny to failure from the ponzi scam agents.

That reality is done, your bottom will come but you will never have that ability to be able to screw up people lives or the Country’s financials again. And the prices will be lower than you expect because of the splash damage this scam has wrought on other industries and weakened the Country as a whole, it will be staggering.

Jon Jonson says:

The last few posts by Mr. Lansner have been very confusing. Is he playing a mind game with all of us?

YOUR BLOGGER: Confusing, how? You mean they send mixed signals? Often happens at turning points. Or do you mean my authorship is poor. Could be FRIED BRAIN after doing this for 30 months!

carrie M says:

We are no where close to the end in my opinion, forget the subprime disaster still in the middle of resets, what about all the uneducated people that took out the neg am loans, these will be the killer of home values, I mean really , Owner has a neg am rate of 1-2% (teaser rate) meaning they are paying less than the interest owed, Example here,
$500,000 loan at lets just say 2% estimated payment of $1400.00 until the reset point which is 5-7 years from original note date. SO now owner owes $530,000 on same note because they did not pay all the interest due, loan resets and now the full payment is due, no more teaser rate. So now they owe more and are paying anywhere from 7-9% interest on a higher balance, Payment jumps up to around $4,000+ a month, no way can they afford that jump, they cant refinance because their home value dropped and thir principal balance we up. So now they owe that same $530K on a house worth 450K, what would most people do, stop making payments and give house back to the bank. WOW, we havent even seen the begining of the failure of the housing bubble. Who gives a hoot about the subprime it is the neg am loans that will KILL California’;s home values

provider says:

August 26, 2008 at 9 am

Gawd, are people still worried about resets when rates are ultra low? If the argument is IO will end, that’s an easy edit to make. Don’t kid yourself that banks won’t be eager to accomodate.

“The average price of a Los Angeles-area luxury home is now $2.37 million, a 1 percent increase from the first quarter, First Republic said. The average San Diego price is $2.02 million, down 2 percent, and the average San Francisco price is $3.01 million, up 0.1 percent, according to First Republic.”

Your article, not mine. The “most in ten years”. Duh, those were 10 good years!

yourkillingmelarry says:

Hey provider if this wasn’t happening in the current context of what is basically a 100 year flood in the financial markets of which RE is the primary culprit these numbers would not be that big of a deal. But it is happening in that context and we are now…Finally…seeing deterioration in the luxury market.

provider, get with the bear program. Have you heard? A true disaster is at hand. After enjoying a 500%+ increase on beach properties, a 2% fall might wipe me out. Such a fall might cause me to sell for pennies on the dollar to a happy bear. I am really distressed and worried. I don’t think I can handle another 1% decline.

Eat it in the OC says:

Tell that to there investors when the bank stock value plummets to nothing. Gawd, don’t worry about it.

And another thing…when are we going to see that massive wave of closing?

“Finally, let’s compare the newest sale with the seller’s acquisition price. In August 2002, according to PropertyShark.com, 225 Homer was purchased for $1.342m. Fully 6 years later, it was up just $358k.”

“Just $358,000″

I nominate this sentence to the Wishful Bear Hall of Shame.

You know what would be fun? We should all have a few drinks at a beach bar after the holiday. I floated this idea before, but no takers. How about late September? We would all enjoy such an event. Perhaps Jon would make a showing and publish a few pics?

Wishful Bear? HA! That’s rich coming from the Queen of Fanastyland.

August 26, 2008 at 10 am

““Just $358,000″

He came out OK, i wonder what his neighbors think of that price that bought a similar property somewhere between 04 and 07. Ouch! The trend is your friend here, this puppy is heading down.

Bogey says:

-Summer buying season ending, CHECK
-OC unemployment up, CHECK
-Credit extremely tight, CHECK
-HELOC ATM machines closed, CHECK
-Minimal available capital to fund, CHECK
-Homeowners underwater, CHECK
-Unable to re-do terms due to neg- equity, CHECK
-Pay Option ARM default rates spike, to peak in 18+ months, CHECK
-Luxury sector last to get hit, CHECK
-NOD’s, foreclosures in the pipeline up, CHECK
-Further downward pressure on pricing, CHECK

mav says:

-Provider reaching for the meds, CHECK

Maybe Jimmy can hold a seminar on how to build a real estate time machine.

August 26, 2008 at 11 am

Good thing that guy got out of his house now with his 385K profit, because in 2 years he would be getting no profit……and in 4 years he will be under water by a few hundred grand. I am sure that he/she is upset that they didn’t sell 2 years ago and make a 650K profit.

For you real estate professionals, prices are trending down at this point in time…..that means houses will be worth less in the future than they are now…….called a depreciating asset.

Any economists out there have a formula for the difference in value of an asset that is going up 15% per year versus going down 15% per year?

I am up for drinks………………what beach bar ?

not buying it says:

Provider: Concerning those IO’s.

Is it the goal of the buyer to own that RE or simply leverage it?

Sometimes you come across as two different people with two completely different sets of goals.

First you state that people should buy for the long term (maybe first time buyer or move up buyer - but essentially the home they live in). I would think those folks would not want to accept the current risk of short term rate increases in the next few years on a primary if they have to do so to simply afford the payment - pretty stupid move there.

Then you state its still a great time to leverage IO and ARMs with current low short term rates that are definitley poised to go up and not down from here - (which will work for the savvy folk that know how these work and have the resources to leverage such risk for bigger gains)

Question: who exactly are you addressing with such back and forth banter?

Any reason you always fail to qualify your remarks until someone points out certain discrepanices? Something tells me you will now.

Ambiguity is a great sales tactic, especially when selling to the general public - not that you are selling anything.

pdu says:

How about Blackies?

The Bulls come dressed as Set Free Soldiers and the Bears come dressed as Hells Angels.

My vote is Mutts or Sharkeys on a Saturday mid afternoon

Gawd, not buying it. I didn’t offer any advice of the nature you accuse me of. I said that IO loans will be modified due to this crisis.

rants says:

provider of propaganda says– IO loans
will be modified due to this CRISIS–
crisis??? what crisis??? according to you
everything is just hunky dory
SO WHICH IS IT?????

Melody says:

August 26, 2008 at 12 pm

Rants - good call, I asked myself the same question.

We knew it was a crisis - wow, she’s finally getting it.

The Standard & Poor’s/Case-Shiller U.S. National Home Price Index tumbled a record 15.4 percent during the quarter from the same period a year ago.

The worst performing city in the index was Las Vegas, where prices plunged 28.6% year-over-year, followed by Miami, down 28.3%, and Phoenix, down 27.9%.

Ummmm…..that would be the liquidity crisis.

Halfway through but prices are firming everywhere and volume is growing steadily. Makes perfect sense.

Scott A says:

Captain says:

I am not a bull………….

I am not a bear………

I am not an agent……..

I am like some of you out there…………

Owner…&…… Investor in the long term CA RE rental/ model..

I should have flipped at least one, i must admit…….

This storm aint over yet………………………….!!!!!!!!!!!!!!!!!!!!!!!

Scott fortune teller say’s……………………………..

December 2010 for the bottom………………….!!!!!!!!!!!!!!!!!!

Time to acquire yet again in the CA RE Game..!!!!!!!!!

stashingmycash says:

You can all stand stand at the alt-a/option arm dam with your finger in the hole saying that the beach communities won’t be effected, but only time will tell and from what I see coming down the river your in for a good soaking.

VoiceofReason says:

Hey Captain S!!!….
Good to hear from you. Don’t worry, you didn’t miss a thing.

Mom in CDM says:

August 26, 2008 at 1 pm

Stash
I sure hope you are right. I see the logic in it, I’m just not seeing it happen here yet. A lot is not selling, but what is selling seems to be keeping the numbers high here. Hopefully, the buyers will run out soon and prices will start coming down.
I would love to have numbers on who ,here, could afford their own homes now.
I’m just not seeing how the numbers here are sustainable , it just doesn’t make sense. I’d love to know what you know about the problems in the pipeline.

VOR:

Sounds like the same old…..same old………

Yo Vor:

You would be proud……………….

I pulled off a venture capital deal…………..

Got 4 investors to put up the cash………..

Bought an Ins Agency from a lady going BK

Flipped the agency to a big time player in woodland hills.

Now I work for them………………………………………………………

Along way from home…………I miss salt creek and aliso park..!!

OC rocks however,

All the big ins players are in LA…………so……….go where the $$$ is..!!

scott a’s new occupation- fiction writer- you go scott–
give stephen king a run for his money … lmfao

LIQUIDITY CRISIS LMFAO what kinda lame ass
answer is that supposed to be .. I got
your liquidity crisis … right here

Scotty,
Good job, mate. You looked Davey Jones in the eye, put the pedal to the metal and saved the ship from certain doom!

seekingaCLUE– 40 million… forty million… did
they say forty million lmfao that is the equivalent
of a mesquito on an elephants ass… dude you
better come up with somthing better than that

Was almost as good a s@X…!!!!!

Much better and faster ROI than the gold play…………

All in all……………..got my a$$…………. out of a the sinking ship……

Got me a new…… twin Turbine 85K HP powers stroke diesel…..

To run the massive oceanic liner……………………………………………..

1st stop the port of long beach

Got to unload 50,000 containers off the bow………!!!

August 26, 2008 at 2 pm

Rants:

To much drama to be fiction…………

Sold my agency and the agency I bought for a consistant pay check..

I hope my life calms down now…………

My wife and kids are in OC…………………..

I am in LA 4 days a week…………………….I dont get home till friday…..

When I am Jimmys age this all would have been worth it…………..

You are right about starring Davy Jones in the face……..

Doom however was not certain……………

Just imenent if I did not get my A@@ off that reef……………!!!!!

New engine however…………………………………….

Sut pump is working over time as there are 30 holes in my hull……

It will take 1.5 years of unloading containers and fixing the hull before…..

I can acquire # 5 in 2010

Cap,

Just hang on to that Belmont property. In 10 years, you’ll be able to retire on that one.

Great articles today, Alfalfa. The tide is definitely turning.

VOR! Where the heck have you been? I guess lurking, cause you showed up pronto when the Captain resurfaced.

I got tired of banging my head against the wall on this blog on a daily basis. But, I still read it and chime in when I just can’t resist either saying hi to Scott A or busting some bear chops! Provider, you and a couple others are carrying the “Reasonable Thinking” torch in fine fashion. Although it is falling on deaf ears, the day of reckoning is coming. Get the balloons, noise-makers and crow-meat ready!

LOL! We aim to please.

Mulliganville says:

August 26, 2008 at 3 pm

VOR–good to see you on here again…some here think that the ole RE profession will be replaced by automated paper pushers…rofl@ribsplitter. HAHA GET IT HAHA LOLOLLLLLL. WHAT A GOOFBALL U R. HAHA.

sure scott what was the name of that agency you sold?

the title of this blog is

the title of this blog is ::::::

OC’S home price dip is 22nd worst in nation

the median price of homes in OC is down 29%
IN ONE YEAR

the very same morons who didnt see the worlds greatest
real estate bubble ever are now calling the bottom

their audacity and shamelessness is simply mind-boggling

Mom I just wanted to see what you were talking about and I can’t see how this is sustainable either. 2.7 M for this piece o sh**

223 MARGUERITE AVENUE, Corona Del Mar, CA 92625

I thought I would go through the listings becuase I really never looked at CDM and I wanted to see this mystic land where everyone sells at list or above. What did I find? 80+ out of 200 listings have reduced their price from original list price. Most are very small drops but any reduction says something to a buyer and we all know what that is!

These people are starting to drop their prices-

3508 SEABREEZE, Corona Del Mar, CA 92625
441 DAHLIA, Corona Del Mar, CA 92625
612 POINSETTIA, Corona Del Mar
401 SEAWARD ROAD #6, Corona Del Mar
329 DAHLIA PLACE, Corona Del Mar
509.5 NARCISSUS AVENUE #1
130 SHORECLIFF ROAD, Corona Del Mar
501 ANGELITA DRIVE, Corona Del Mar
1800 TAHUNA TERRACE, Corona Del Mar
315 FERNLEAF AVENUE, Corona Del Mar
410 HELIOTROPE AVENUE
1807 GALATEA TERRACE, Corona Del Mar -reduced 755k
509 NARCISSUS AVENUE
4507 DORCHESTER ROAD
2724 WAVECREST DRIVE -reduced 500K
1621 BAYADERE TERRACE
718 LARKSPUR AVENUE
401 SEAWARD ROAD #11
1900 SEADRIFT DRIVE
2525 OCEAN #F3, Corona Del Mar
1611 BAYSIDE DRIVE, Corona Del Mar -reduced 600k
1306 DOLPHIN TERRACE, Corona Del Mar
433 SEAWARD ROAD, Corona Del Mar
617 CARNATION AVENUE, Corona Del Mar
3808 SANDUNE LANE, Corona Del Mar
435 ACACIA, Corona Del Mar,
620 JASMINE AVENUE #A, Corona Del Mar
8 MONTEREY CIRCLE
613 JASMINE AVENUE #A, Corona Del Mar
28 SKYSAIL DRIVE, Corona Del Mar
412.5 FERNLEAF AVENUE, Corona Del Mar
19 JASMINE CREEK DRIVE, Corona Del Mar
417.5 FERNLEAF AVENUE, Corona Del Mar
4600 WAYNE ROAD, Corona Del Mar
612 AVOCADO AVENUE
320 POINSETTIA AVENUE, Corona Del Mar
2720 BAYSIDE DRIVE, Corona Del Mar
924 GARDENIA WAY, Corona Del Mar
602 NORTH HELIOTROPE AVENUE,
710 MARGUERITE AVENUE, Corona Del Mar
720 FERNLEAF, Corona Del Mar
409 COLUMBUS CIRCLE
618 MARGUERITE AVENUE #B, Corona Del Mar
225 POINSETTIA AVENUE, Corona Del Mar
621 POPPY, Corona Del Mar
308 EVENING CANYON ROAD, Corona Del Mar
247 MORNING CANYON ROAD, Corona Del Mar
234 POPPY AVENUE, Corona Del Mar
422.5 MARGUERITE AVENUE, Corona Del Mar
310 POINSETTIA AVENUE, Corona Del Mar -almost 800k reduction
2682 BUNGALOW PLACE, Corona Del Mar
516.5 ORCHID, Corona Del Mar,
17 MONTECITO DRIVE, Corona Del Mar
4645 GORHAM DRIVE, Corona Del Mar
1932 ALTURA, Corona Del Mar
441 FERNLEAF AVENUE #1, Corona Del Mar
316 HELIOTROPE AVENUE, Corona Del Mar
512 HAZEL DRIVE, Corona Del Mar- reduced 850k
314 LARKSPUR AVENUE, Corona Del Mar
1452 KEY VIEW, Corona Del Mar
720 FERNLEAF AVENUE, Corona Del Mar
2733 SHELL STREET, Corona Del Mar
705.5 ACACIA AVENUE, Corona Del Mar
518 MARIGOLD AVE., Corona Del Mar
2749 BUNGALOW PLACE #0, Corona Del Mar
412.5 ORCHID AVENUE, Corona Del Mar
310 JASMINE AVENUE, Corona Del Mar
230 POINSETTIA AVENUE, Corona Del Mar
2708 BUNGALOW PLACE #1, Corona Del Mar
1520 SANDCASTLE DRIVE, Corona Del Mar
1221 OUTRIGGER DRIVE, Corona Del Mar
322 HELIOTROPE AVENUE, Corona Del Mar
215 EVENING CANYON ROAD, Corona Del Mar,-reduced 1.5m
3451 2ND, Corona Del Mar
3014 BREAKERS DRIVE, Corona Del Mar - reduced 1.5m
3 SEAFARING DRIVE, Corona Del Mar
2562 BUNGALOW PLACE, Corona Del Mar
329 MARGUERITE #7, Corona Del Mar
415.5 GOLDENROD AVENUE, Corona Del Mar

Here is one lone foreclosure for you- (don’t worry little buddy you will have friends soon)

1114 GOLDENROD AVENUE

August 26, 2008 at 4 pm

Wow. that’s a lot of work, maybe by the time debacle has played out, these will be a half off sale! yahoo!

OMG - I just did a search on sold homes in cdm in the last 2 years. They’re toast.

Marc says:

August 26, 2008 at 7 pm

Provider-

You missed an important tidbit farther down the article about 225 Homer in MB.

“Anonymous said…
When you calculate inflation, the seller made just under a 1.23% annual return on his/her “investment.” Not very good if you think about it.”

The running giggle this morning was the comment that price declines were starting to lessen.

Does that mean that as prices fall, the next year’s comparison is less?

So if the price was $300K in June last year, and $225K this June, that would be a 25% fall off.

But if prices had fallen to say $280K in July and prices in July were $215K, then the price fall off would only be…
23%. Wow, that’s really a good thing right?

How is that even relevant? Isn’t the fact that prices are still falling off a cliff the relevant part of any of this?

Active Buyer says:

August 26, 2008 at 8 pm

Where exactly are prices falling off a cliff? To me that wouldmean that every month (or what ever time period you like) the prices would fall by some addional amount. Everything I see says prices fell 10-25% (excluding central OC which has been slammed) by January and have been there ever since. To me that is he definition of a bottom.

The Money Pit says:

It is always possible that the trend to greater income inequality will continue and CDM will escape the carnage, but the peak of the credit cycle tends to coincide with the peak in inequality. Think 1929.

After this comes massive taxation on the rich (just think what Pelosi and Obama will do when given the chance), the stock market will crash when all these losses get translated into a PE near 10. Massive inflation will wipe out the bondholders.

The rich will get hammered worse than the poor in the wreckage that is coming.

Even so, however, it’s always better to be in that upper 2%, even if you have to trade the Bentley for a Mercedes.

Slice	Price	Ch.	Sold	Ch.
House	$500,000	+18%	1,833	+11%
Condo	$290,000	+7%	881	+22%
New	$617,500	+24%	171	-17%
All OC	$435,000	+10%	2,885	+12%

Orange County Register