Every three months, your blogger takes piles of economic data — tosses it into his iMac — and comes up with his Big Orange Index that weighs the current promise of the local economy.
This latest edition, while not totally complete, clearly will detail the sharp pain dealt to Orange County’s business climate in the horrendous downturn. Nothing shows it better than The Big O’s Property Index. Looking at year-over-year change in this index, or a 17.77% drop in a year — see the chart here, and click on it for a bigger view — you can see that this real estate freefall now exceeds the pain felt in the early 1990s disaster.
In coming days, we detail more of my findings from The Big Orange Index. Here’s a quick look at factors — we use 12-month moving averages — driving The Big O Property Index:
- Real estate-related jobs, down 8.4% in a year.
- Home sales, off 25.3%.
- Home values, off 10.7%.
- Homebuilding permits, off 18.8%.
- Mortgage lending, dripped 43.1%.
- Rental income rose 3.2%.
Read More:
- O.C. homebuilding down 94%
- O.C. home inventory lowest since March 2006
- Builders shave $430,000 off new O.C. house prices
- Sales halted at San Clemente oceanview villas
- Real estate boom set up SoCal for a tumble
- Early Sept. home sales take biggest jump in 5 years
- O.C. housing premium falls to 2002 level
i got some economic data for renters. banks figured long term renters often walk away from a home when they buy. banks are fixing this problem. renters for more than four years now need more down payment and get smaller loans. banks are getting this right.
I see a bottom.
Hey Jon-
So are we going to get September numbers before October is out?
GREAT article on bailout:
http://www.voiceofsandiego.org/toscano/
The Bernanke quotes … mind boggling.
TRS:
Larger down (’check’, got it ready, and it will still be ready in 2010)
Smaller loan (yep, the rate prices are falling, I expect to need only a small loan. The more patient I am, the richer I get.)
Renter’s have the choice of “walking” away. It’s called giving notice. That’s one of the great things about renting. You can’t give notice on your mortgage.
trs: boy - the angst against renters is quite telling
Feeling the pinch of that mortgage buddy?
You should have done what we and many others have done when we purchased back in the 90’s - like Jimmy.
BUY LOW WITH A LOAN NOT MORE 3.5X ANNUAL INCOME
BUY AS BIG OF A HOME YOU CAN AFFORD AND STAY IN IT
AS PRICES BEGIN TO RISE A BIT (WHICH AIN’T HAPPENING HERE FOR SOME TIME), BUY ONE OR TWO MORE INVESTMENT PROPS, MAYBE EVEN LEVERAGING SOME EQUITY FROM THE FIRST, FOR THOSE NOT VERY INVESTMENT SAVVY
FOR THE INVESTMENT SAVVY - SELL THE INVESTMENT PROPS AT THE PEAK (THIS IS OC - THERE IS ALWAYS A PEAK, WHICH MEANS THERE IS ALWAYS A PERIOD OF DECLINING PRICES, WHICH MEANS THERE IS ALWAYS A BOTTOM) - Jimmy doesn’t fit this bill
THE STOCK MARKETS ALWAYS BECOME BULLISH AS INVESTORS RUN FROM LOCAL RE - SO YOU CAN PROBABLY FIGURE OUT HOW TO MAKE MONEY OFF THAT REALIZED RE EQUITY
REPEAT FOR NEXT CYCLE
Seems to me your just frustrated that those renters that can buy are simply waiting for the killer deals - they’re only getting better with each week. Good for them.
There is a reason why the cries of homeowners are much louder than that of people waiting to buy. Correction: homeowners that require home equity to support their standard of living. Personally, I see local non-RE related business owners looking forward to the easing of the cost of living adjustments required to do business in this town.
Day Traders and Speculators - OK. Like TRS said. If you put 50% down, I will give you a taste of a nice neighborhood. Hopefully, you will stop speculating. It was people like you that cause this debacle. The people that are sleeping soundly at night are homeowners that did not speculate. If you continue to do so, go buy in their neighborhoods.
People in my neighborhood are going about their daily lives. Yes, they talk about the financial world but it’s just talk. Their jobs are secured! Unlike yours!
why the hatred toward renters?
What is wrong about not buying when the prices were to much for what someone can afford. The same persons did want to get into a bad loan either so they have sat on the sidelines. What is wrong about that, oh yeah its called being responsable.
Oh btw what about all the 20/30 somethings that were not in spot to buy 8 years ago but now have careers to support owning. Do you have hatred towards those people too because of their age?
This may be bad news to people who bought homes after 2003 and now find they owe more than they can sell or borrow. But it’s a relief to people who have been priced out for so long. Unfortunately, there’s money on the way to allow the state to buy fix up and sell foreclosed properties to “protect” the value of surrounding homes. Why do I say unfortunately? because, it creates false value further denying homeownership to hard working people while protecting the status quo.
Blood-
I enjoyed that video on banks you posted earlier, although I was only able to watch the first 12 minutes. Thanks for that.
let’s just hope that all of those morons that bought homes when they could not afford it will have bad credit and not be able to take advantage of this now buyers market…
beelzebub: It is not unfortunate if you really stop and think about it
The lending standards are going to continue to be stringent and tied closely to income and size of downpayment
So now the losses have been “accounted” for and taken off the books of lenders, watch how fast the state and the fed want to see these homes sold. Inventory will be high for a long time to come. That pipeline will be in full swing soon.
Seeing that investors in the secondary mortgage markets are requiring the same level of scrutiny as the GSE’s, don’t count on people being able to circumvent the key issue that caused this debacle - affordability. Those days are long gone. People will continue to be limited to borrowing what they can trully afford to repay.
if long term rates keep going up in the continuing absence of a reduction in short term rates, you can bet the rate of home value declines locally will continue on the same slope.
With 15% of all US mortgage holders having to pay out 50% of income to home payments alone - and that percentage is most definitely higher locally, you can bet home value appreciation has taken an extended holiday - other markets and businesses will make up for those losses now the lenders have been freed up to pour money into less risky industries - high tech, medical, defense, shipping, infrastructure, etc.
Not to say that the US RE market will not recover sooner - as we all know, RE is local. Most other industries with high local employment is global based - which is why unemployment wasn’t more severe. Our products and services are selling like hotcakes overseas.
Buying a home locally right now that entails pinching pennies and struggling to make ends meet is one stupid move to make right now.
As for hating renters: over 90% of all of my new hires in the last two years earn over $120K annually - almost all of them are still renting - as they watch the prices on homes they are interested in keep dropping. Morale in this group is quite high. Productivity is off the charts. Only self indulgent whiners would complain about renters in an attempt to divert attention away from their ever growing financial position in the local marketplace.
thanks TRS for stopping by every once in a while
to drop off your pearls of wisdom…. when TRS
finally capitulates and states that real estate is
a horrible investment — run dont walk- to the nearest
real estate office and buy with reckless abandon
Definitely not bottom…wait until the coastal area gets crushed by the mighty fist of fear and loathing. I love the fact that the occasional bull comes in and blathers on about “bitter” renters. Yes, I am so bitter about saving nearly 200K and actually have a savings accounts, taking vacations, driving a nice car, taking my kids to disneyland …all without incurring debt. Eat that.
The worst has yet to come. All these inflated house prices during the past 8 years are out of control.
How many people can afford a $400,000 dollar house?
Hey guys, anybody notice TRS is back but this time representing all 3 of the troll aliases he/she used to assume. Similar writing style, get a life ! Thoughtful, ROC and seeking alfafa all rolled up into one… TRS.. genius!
A leaf blower in Santa Ana can afford a $400,000 house!