90 Comments

From Jay Brinkman

But Brinkmann pointed out that the overall delinquency rate was driven by loans that were 90 days or more past due and those that were in California and Florida. The 30-day delinquency rate was below levels seen in 2002, he said.

NationalBubble.com says:

yes Helen, I hope you are right because with unemployment rate going up to 6.1% in August, those people need all the help they can get. Imagine what would happen if we didn’t have those loans modifications. The unemployment rate in OC has more than doubled since 2005. That is a disaster.The stock market is down another 130 points today.

Here says:

Almost bought a house for $549k one year ago, but I backed out when the mortgage crisis started and couldn’t find a GOOD loan. The house is now worth $363k. Because I was smart enough NOT to take a bad loan, I saved myself $186k.

I also looked at another house in Rancho they ended up selling for $614k. This was before I backed out of the other deal. Whomever lived there couldn’t afford it and lost the house. House just sold for $406k. A loss of $208k.

This is going to continue till home prices come back to where lenders will loan money to people looking to buy. No loans = no home purchases. And the downward spiral continues.

mav says:

…..RealtorDave….

……. what you don’t get…..
…… is that the prices that low end homes….
…… are going for right now……
…… are the prices that mid range homes….
…… will be going for in a few years…..
…… guess what happens to the low end?…..
……. i’ll tell you: it goes even lower…..

….. qualified buyers are jumping in too early….
…… they are called knife catchers…..
….. every day the pool of qualified buyers shrinks…
….. every day the pool gets smarter……

NationalBubble.com says:

ReloMan,

This is simple basic math.
Housing price declines have to slow because if they keep going down at the same rate, they will be (0) zero very soon. Obviously, that is not going to be the case. Homes are worth something. They have a value but it is definitely still lower than it currently is.
Today’s housing numbers are being compared to last year’s which were already pretty bad, given the fact that the credit crunch was already in full force. As we continue on in this pricing correction, housing prices will be compared to the most recent even more depressed prices so you should see slower rates of declines but declines nevertheless.
Even when prices eventually reach bottom, don’t expect the market to turn around and start going up. We can have a flat market for years which mean that adjusted to inflation prices will continue to fall.
With the economy losing more than 80,000 jobs per month, there are not enough employed people to keep buying houses.

NationalBubble.com says:

RealtorDaveE Says: “I’ve been telling sellers to sell for at least three years”

I don’t remember reading any postings from you here telling people to sell, but then again, you are a realtor.
If somebody remembers RealtorDave telling people to sell, please correct me.

I do remember you saying for almost a year that the bottom was pretty close. Before that, I don’t know what the heck you were doing but certainly not here warning people of the housing bubble.

NationalBubble.com says:

RealtorDaveE Says: “There are lots of buyers waiting on the sideline,”

I also know of a lot of sellers waiting on the sideline for the first signs of a recovery so they can dump their investment properties on the market. Particularly here in Newport Beach, I see a lot of people saying: “I want to sell my home but not at these prices”, “I’ll test the market next Spring”

I remember you realtors saying that real estate prices was all about employment. Well, guess what? We are losing jobs (80K+ in August alone). Where are your new buyers going to come from when people are losing their jobs?

ReloMan says:

I understand the math (as you said, simple basic . . ). My question was in regards to the credibility of the Global Insight and National City studies.

My clients are employers in the area and are asking about the long term health of the real estate market in LA/OC. Regardless of the unemployment numbers, they are still having a difficult time filling certain types of positions

they are down says:

I’m going to share something very interesting. I have a search built in Ziprealty with the following parameters:

SFR, 1250+ sq ft, 3+bed, 2+bath, $500K or below in:
Aliso Viejo
Costa Mesa
Foothill Ranch
HB
Ladera Ranch
Laguna Hills
Laguna Niguel
Lake Forest
Mission Viejo
Tustin
Portola Hills
Rancho Santa Margarita

When I run that search as of this morning it shows 184 properties matching those parameters. I asked my realtor to set me up with a search with the same parameters but to EXCLUDE SHORT SALES.

Guess how many properties that search yielded????

86…

Jimmy2 says:

bubble said:

“Particularly here in Newport Beach, I see a lot of people saying: “I want to sell my home but not at these prices””

bubble, good point. Why sell for 2M when you can get 3M if you wait. Remember, the owner likely purchased for 500K.

NationalBubble.com says:

“My question was in regards to the credibility of the Global Insight and National City studies. ”

I don’t know them well enough but what they are saying seems reasonable to me.

“Regardless of the unemployment numbers, they are still having a difficult time filling certain types of positions”

well, home prices are still too high. That is the main reason why many people don’t want to take relocate here. Salaries are not high enough (like they are in NYC or SF) to justify somebody to move here to pay these prices to live in the suburbs. So tell your employers that the market is correcting this and in a couple of years it will be much more affordable to own a home in the OC.

Orcian says:

Lee in Irvine, maybe you can add next to August 2006 that Gary Watts declared that the bottom is near. He was off by a few years!

Mulliganville says:

Welcome Back Dave…since you are in the RE profession, Bubbs and his ilk, most notably rants, have already formulated a “factual” opinion that you caused this nonsense. They swipe with the broadest of brushes 24/7. They have a disdain with the RE community as a whole. They may prefer the cockroach to you, myself, and others. This blog has turned into a typical far-left whack-job lovefest of moveon.org mentalities. The blamers vs. everyone affiliated with the industry at some minute level.

Bogey says:

RE DAVE AT IT AGAIN…LOLLL!!!

RE DAVE SAYS: “the bottom’s probably a few months off”

This is more of the same nonsense from RE people who helped cultivate the accelerating ‘bust’. YOUR INDUSTRY IS 1/3 RESPONSIBLE.

Making such a claim (especially on an RE blog) only makes you look un-professional and foolish.

THE HARD DATA AND ECONOMIC LANDSCAPE DOES NOT SUPPORT YOUR POV.

rants says:

how can we even be close to a bottom in prices
if the economy is going into a severe recession?
WE CANT
the government says the unemployment rate is now 6.1%
which means its really about 10%
how the hell can prices stop dropping in that type of
economic environment–they cant– and the really scary
part is were in the early stages of this meaning its
going to get worse alot worse

fasten your survival seat belts dear readers

meltdown says:

I dont think its important to go back in history and dig up quotes. If you were wrong, dont be afraid to change your views / opinions. If you were right then congratulations. The market is dynamic, so should your views and opinions.

If only people allowed themselves to change their own views, they wouldn’t have been left holding the bag.

“Successful speculation begins with objective observation.” - B. Shannon

Mulliganville says:

Just curious: when the semi-conductor industry was suppressed, were the salespeople responsible for that too?

Bogey: He who controls the money controls the business. Buyers were greedy, but money was easy. Lenders were greedy and loose and gave money to virtually anyone with a pulse. Here is where you miss it: The buyers would have purchased anyways…regardless of what the agent told them to do. You do not talk someone into spending that kind of jack. They have made the decision to purchase. What, did the car salesman talk you into buying that car? Or did he/she facilitate it for you? Come on…use your noggin.

Active Buyer says:

dafox - I think what is missing is the fact that not every area in OC has the same median income. If you include that modification than I think once houseing gets between 4x and 5x of the median for the area (may be a zip, but in some cases will be smaller) that area will be at bottom.

dafox says:

ABuyer-

And not all houses are equally priced in OC either. Thats why you have to look at median-to-median. And if many peoples’ claim is right where the median is being pulled down by the low end market, and the true value is higher - well that means its even more unaffordable.
If you have a better apples to apples comparison, I’m all ears.

Also, redfins’ neighborhood demographics are good too. The few I’ve seen in Huntington Beach (where we’d like to buy eventually), the multiplier is still > 6

lee in irvine says:

Gary “In the Bag” Watts at his absolute best! Pay special attention to the first quote, “Look mom, no hands!”:

10/23/2005 ~ “I only forecast off the numbers … It’s all based on pure economics.” ~ Orange County Register

02/13/2006 ~ “Fifteen percent is pretty much in the bag for Orange County in 2006 … It’s impossible for prices to go down this year.” ~ Fortune Magazine

07/21/2006 ~ “I think we probably are not going to see 15 (percent), but I think 11 or 12 (percent) is still realistic.” ~ Orange County Register

07/22/2006 ~ “”August ought to be the last month of weak appreciation numbers.” ~ Orange County Register

07/22/2006 ~ “I really think that we are pretty close to the bottom of our real estate prices … August ought to be the last month of weak appreciation numbers.” ~ Orange County Register

12/31/2006 ~ “If the un-motivated sellers stay out of the market, we could be in for a very big surprise.” ~ Orange County Register

01/01/2008 ~ “Cyclical housing downturns have always occurred. The good news is these situations do not last forever. The cycles tend to run approximately 27 to 36 months, so this cyclical downturn should run its course by summer.” ~ Impact Real Estate Jan 2008 Housing & Economic Forecast

06/23/2008 ~ “I apologize for not knowing what Wall Street did to our mortgages” … “I had no idea how Wall Street restructured these loans.” ~ Orange County Register

stashingmycash says:

1. Looking at the local numbers for homes going into foreclosure, there’s good evidence that defaults may have peaked. This is corroborated by what I’m seeing in the field.

1. The recasts of option arms and ALT-A will be the next cyle. There could be a lull but expect them to effect the industry this winter. This is what I see from recast charts.

2. The various work-out and bail-out programs are, indeed having a positive effect.

2. As the article I posted indicates they may be slowing forceclosures slightly but are they just delaying half of them with not actually modifying the terms but creating a repayment schedule on the same terms?

3. If unemployment increases, mortgage rates will decline, so there’s an element of self-correction there. Many potential buyers still have stable jobs. We’re talking 6% or 7% unemployment–not 100%!

3. The rates may go down but will confidence rise in terms of job stability and security? Will people want to give up lower rents and the ease of mobility to get locked into a long term debt? Will they want to empty thier savings during a time of high unemployment?

4. The market cycle always makes year-end a good time to buy. (See “Predictions 101: Our 2 market cycles“)

4. This is in a normal RE cycle but this is by no means i this a normal RE cycle.

I understand what you are saying but I see too many areas of concern. Too many unanswered questions that lead me to believe bottom will not happen until min. 2010.

Active Buyer says:

I agree that not all OC RE is priced equally. If you believe the economic numbers posted in redfin or zip reality (what I use to monitor areas) in areas like HB you have to scratch your head and wonder how people who make the displayed “average” can afford the houses - can they all really be that good at investing, or are the numbers dated/skewed somehow?

On a different topic, I do not see how the unemployment number impacts the average person thinking to buy RE. If a family is worried about their job/income than they would not be looking to buy in the first place.

In today’s business world there is no such thing as 100% job security. For this reason alone it is important to be constantly monitoring the overall job market and refining your skill set to stay in synch.

yourkillingmelarry says:

Good post…Buy Houses Now. I totally agree. The real question is…What is the new normal? Credit spreads will never get back down to where they were, you are not going to see the existing or new home sales remotely approach what we saw during the boom years. This isn’t just the OC, this is something we are looking at as a nation. The new normal is going to disappoint many of those ready to jump back on the speculative bubble bandwagon that no longer has any wheels.

Scott A says:

Median is $200 K

$2,250.00 a month less with taxes & Ins.

New howmes 45% OFF
This is money……………………………………….
This is what I have been talking about…………..

Buying new from a builder going broke…………………

New homes are still the best deal out there…………if you can afford it….

dafox says:

Active Buyer-
“areas like HB you have to scratch your head and wonder how people who make the displayed “average” can afford the houses ”
My wife and I have been doing *exactly* that for the past 8 months. I want to go interview all these people buying 700k homes and ask how the heck they’re doing it.

As for “If a family is worried about their job/income than they would not be looking to buy in the first place.” - exactly. thats why current volume is SO low right now. And with volume so low, prices have to come down in order to entice buyers. its called a sale! :)

Mulliganville says:

Lee is back to mancrushing Gary Watts. I hope Gary is unlisted.

NationalBubble.com says:

Active Buyer Says: “On a different topic, I do not see how the unemployment number impacts the average person thinking to buy RE.”

Wow, I’m still trying to recover from this last statement.
You should pursue a career in Economics.

If unemployment rate goes up, there are fewer people that can buy homes which means prices have to come down to get people to buy.

At the same time, people who lose their jobs might also lose their homes, adding to the already high inventory and further depressing prices.

Let me remind you that the days of buying a home without a job or assets are gone.

NationalBubble.com says:

now if you want to buy a home when prices are declining, I have some condos in Miami to sell you.

pdu says:

# awgee Says:
‘What is the zip code for Corona del Mar? You know, that area that is immune to the decrease in prices?’
# Mulliganville Says:
“Well Awgee, it is the area that is down 1.2% over the last 12 months. Compared to the county as a whole…it seems to be doing OK”.

–

Awgee,

Your question didn’t really get a straight answer from the “professional” realtor.

The zip for CdM is 92625.

Not sure those numbers are anything more than comparing the 22 business days in August to the same period last year, however it does show a couple of interesting things.

The median did drop only 1.2% from that period last year; not much, just about $1715/month loss…….chump change. When you take inflation into effect — Jimmy’s biggie:) — it does start to have an impact.

Additionally, sales were down (the infamous volumetric averages) :)) by 46.7% to 8 sales. There are aprroximately 200 homes listed so we have a lot of imbalance with the supply/demand issue. Unless the rules no longer apply you should expect a significant drop in prices before seeing an increase in sales.

Think of it this way…….. 200 listings — a lot of people spending a lot of time and effort (To say nothing of the money) to sell 8 properties. There are also, obviously, a lot of owners out there spending time and money while their overpriced properties languish on the MLS. Well over half those good people have already reduced their price since their homes were currently listed.

The skies over CdM are still a bit hazy this year.
………………but, I know you know all this:)

bpsqwerty says:

wheeeee!

Mulliganville says:

Sorry pdu, my guess is awgee is a pretty smart guy. He does not need to ask the blog for the zip code, when you can maps.google.com and “poof” there it is!

pdu, why do you have to be such a saphead?

Bill says:

National Bubble,

Thanks for taking the time to look up realtordave’s repeated bottom calls.

I also remembered him calling a bottom this spring, this summer and this winter as well as next spring, summer….etc.

When he makes comments like “We may not hit bottom until 2010, but I think there’s a very good chance we’ll hit it this winter” he forgets to tell you that if his 2010 prediction is true and you buy now, you have a very good chance of losing 25% -35% of your home’s value.

Coined phrases like “I’m in this business for the long term” and “For most people there really is more to life than market timing” means prices are certain to drop considerably more than what you will be paying for it.

Sorry realtordave but Sighburrdood already played those cards in here.

This blog would be a whole lot better without the subtle, sneaky sales schemes that try to make it past the bloggers.

pdu says:

September 5, 2008 at 1 pm

Mulli,
Just mocking your one-sided response to his post.
……but you knew that already, too. Right?

You took his post mocking the situation in CdM and tried to twist it into a positive picture of the CdM situation.

You needn’t try to chastise another for responding to a post with facts. Go sell a house, or something.

nimhrat says:

dafox, interesting post regarding the historical multiplier of median price vs median income. I wonder if the historical multiplier of 4.7 includes the recent unprecedented boom. I would be interested in what that historical average would be if years after 2001 were excluded. Does anyone know where I can get data to make such a calculation, perhaps by area/zip? I’m currently interested in the West LA area as well as OC…

Bogey says:

September 5, 2008 at 1 pm

Mulliganville Says:Sept 5th, 2008 at 10:06 am…… Bogey: He who controls the money controls the business. Buyers were greedy, but money was easy. Lenders were greedy and loose and gave money to virtually anyone with a pulse. Here is where you miss it: The buyers would have purchased anyways…regardless of what the agent told them to do.

HELLO MULLIGANHEAD.

Yes, you’re actually correct for a change :) But, you are the one who is not using the noggin.

I SAID …. “THE RE INDUSTRY WAS 1/3 RESPONSIBLE FOR CULTIVATING THE BUST”

THAT WAS YOUR QUE TO CHIME-IN AND ASK WHO THE OTHER 2/3 WERE … BUT YOU MISSED THE BOAT AGAIN.

THE OTHER 2/3 OF THE EQUATION INCLUDE:

* MORTGAGE INDUSTRY
* IGNORANT BUYERS

RE agents were the primary enablers. They were there to assure reluctant buyers that …

“RE only goes up in OC-

There is nothing to worry about regarding ARM’s-

There’s plenty of time between the resets to boost income-

Better hurry before you miss out, there are 10 other offers on the table-

You really want this house, let’s bid 20k higher to crush all other offers” And on and on and on.

So, as you can see, we agree.

awgee says:

September 5, 2008 at 1 pm

Shoot, I just wrote a doggone book and “wordpress” dorked me.

pdu says:

awgee,

That’s OK.
Those you were addressing already know everything.

Mulliganville says:

Nope Bogey…the lenders were the primary enablers…they loaned the cash. Without it, no deal would have been done. RE agents could have talked til they were blue in the face…no loan, no home. Why is this sooooooooooo hard for the bears den to comprehend? It’s a real head-scratcher.

Buy Houses Now! says:

I’d blame Wall Street peddlers of fake AAA securities before the lenders that supplied them with poor quality mortgages. That’s where the fraud occurred. The Countrywide’s were just supplying what the secondary market demanded of them.

New2OC says: