O.C.: 39% upside-down
Zillow reports today that 47% of Orange County homes sold for a loss in the year ending Sept. 30, the seventh highest rate among 27 featured metro areas.
That compares to 30% of homes nationwide that sold at a loss, Zillow reported.
In addition, 39% of owners here who bought homes in the past five years were upside-down on their loans — meaning they owe more than their homes are worth. Nationwide, 30% of homeowners buying in 2003 or later were upside-down in the third quarter, Zillow says.
Home values in Orange County fell nearly 17% in the third quarter from the same period in 2007. The median value of all Zillow estimates for O.C. homes, or the median “Zestimate,” was $507,150, Zillow reports.
For the Los Angeles metro area as a whole (which includes O.C.), 48% of homes sold at a loss, while 40% of homeowners were upside-down. In San Diego County, the market is even worse: 53% of homes sold at a loss and 51% were upside-down. (That’s the third-worst showing among the 27 U.S. metros in Zillow’s sample.)
The once fast-appreciating housing market in Las Vegas suffered the biggest losses, Zillow reported: 64% of homes there sold at a loss, while 55% of homeowners there were upside-down. The second-worst market, by this math: Detroit. Half the homes in the Detroit area sold for a loss, and 54% of homeowners there were upside-down.
Meanwhile the median home price fell below levels seen five years ago in 27 of the 163 metropolitan areas included in Zillow’s reports. The price was equal to the 2003 level in 12 other markets.
Detroit experienced the worst overall long-term depreciation, with five-year annualized change (or average price drop per year) at -3.1%. Despite the losses of the past two years, Orange County prices increased an average of 1.7% a year during the past five years, Zillow said. Prices were up 7.7% a year for the past 10 years.
Said Zillow numbers guy Stan Humphries:
“The fact that one-quarter of markets in Zillow’s third quarter reports show negative or relatively flat annualized change over five years is an indication of the enormous amount of value that has been taken out of the real estate market through home value depreciation in the past few years.”
Half of U.S. homeowners continue to be unrealistic (delusional might be a better term) about the value of their own homes, the latest Zillow Homeowner Confident Survey shows: 74% of U.S. homes lost value in the third quarter. But 49% of homeowners believe their home’s value either increased or stayed the same over the past year.
Here’s a breakdown of Zillow’s third-quarter numbers by metro area. Median values are based on the median “Zestimate” for each area. The areas are ranked by percentage of homes selling at a loss:
| Metro area | Median value | Sold at loss | Upside down |
|---|---|---|---|
| Las Vegas | $200,307 | 64.1% | 54.9% |
| Sacramento | $276,974 | 59.8% | 42.6% |
| San Diego | $391,565 | 52.5% | 51.4% |
| Detroit | $125,855 | 50.0% | 54.0% |
| Phoenix | $195,947 | 49.8% | 41.9% |
| L.A.-O.C. | $443,559 | 47.9% | 39.9% |
| O.C. | $507,150 | 46.8% | 38.9% |
| San Francisco | $566,917 | 46.2% | 37.8% |
| Denver | $219,058 | 42.8% | 33.9% |
| D.C. | $353,981 | 38.0% | 37.5% |
| Atlanta | $172,696 | 37.1% | 15.6% |
| Minneapolis | $216,611 | 34.4% | n/a |
| Boston | $338,538 | 29.0% | 14.7% |
| Orlando | $186,275 | 28.0% | 38.7% |
| Tampa | $158,021 | 28.0% | 42.4% |
| Miami | $213,134 | 27.1% | 48.1% |
| St. Louis | $146,739 | 24.1% | 20.5% |
| Jacksonville | $173,450 | 23.5% | 28.3% |
| Charlotte | $159,710 | 22.1% | 16.5% |
| Chicago | $237,504 | 18.5% | 22.7% |
| Nashville | $165,405 | 18.3% | 10.6% |
| Seattle | $340,907 | 15.2% | 16.1% |
| Portland, Ore. | $269,003 | 14.7% | 16.6% |
| Raleigh | $206,775 | 12.8% | n/a |
| New York | $408,830 | 11.8% | 16.2% |
| Dallas-Fort Worth | $137,791 | 11.0% | 10.2% |
| Philadelphia | $220,123 | 8.7% | 13.0% |
| U.S. total | $202,966 | 30.2% | 29.5% |
Source: Zilliow
Other real estate news …
Not the best news in the world, but it’s backing up what we are seeing here in Florida as well. One thing though, I just read an article bashing zillow’s #’s saying that they use old information and that it is all computer generated(no adjustments for local factors and such).
If i find the article I’ll put a link to it or summarize it for you to check out.
http://www.inexpensiveinvestinginflorida.com
Thanks
But the “Real Housewife” house is going to sell for a profit………….. Do you believe what you write all the time?
Zillow is great, that Zestimate thingy is always a hundred grand higher than the list price for homes on the market and priced to sell.
I love the delusional thinking on the part of homeowners. People are still clinging to the 600K price when the 300K price is just around the corner. Well, I guess it is like a cheating spouse, if you can’t do anything about it, you might as well lie to yourself and try to ignore it.
MP
Remember when the bulls here were calling a bottom about a year ago?
That was funny.
50% decline. That is what I said back then, I’ll repeat it today. 50% declines in price when all is said and done. If the percent underwater looks bad now, it will be worse in 18 months.
And “people buying in the past 5 years” isn’t that just about everybody. Who didn’t buy in the past five years?
What it all comes down to is we’ve been running a sham here in Orange County. Not only were we one of the key contributers to this scheme by creating and selling toxic mortgages to the public all over the country, we were also huge participants in biding up local real estate to unthinkable levels.
Now we pay the price of 10 years of a complete abandonment of financial sanity. Wall Street will not reinstate the securitization of mortgages to the same levels as before, therefore home prices must return to fundamental values. That includes, 20% down payment, 30% (+/-5%) debt to income. And that’s what will place further pressure on Orange County real estate. So to sum it up, we’re not even close to a bottom in the current real estate debacle.
Per DataQuick, Single-Family Median Home Price:
2006
$690,000 = Feb ~ Watts 15% “In The Bag” for SFH
$695,000 = Mar
$705,000 = Apr
$705,000 = May
$700,000 = Jun
$699,000 = Jul ~ Watts revises forecast to “11%” for SFH
$685,000 = Aug
$680,000 = Sep
$665,000 = Oct
$660,000 = Nov
$665,000 = Dec
2007
$675,000 = Jan ~ Watts forecast “7%” SFH
$675,000 = Feb
$695,000 = Mar
$720,000 = Apr
$695,000 = May
$734,000 = Jun ~ Peak of O.C. Housing Bubble
$718,000 = Jul
$710,000 = Aug
$655,000 = Sep
$650,000 = Oct
$655,000 = Nov ~ Roger Rabbit “decline is DECELERATING”
$600,000 = Dec
2008
$583,250 = Jan ~ Watts declares “Pent up Demand”
$575.000 = Feb
$570,000 = Mar ~ Thoughtful declares “bottom”
$555,000 = Apr
$537,000 = May
$550,000 = Jun ~ Watts apologizes “I Got it Wrong”
$515,000 = Jul
$500,000 = Aug
$480,000 = Sep
$470,000 = Oct 6
$475,000 = Oct 13
$480,000 = Oct 21
Per DataQuick, this loss represents a $254,000 decline in single-family home prices from the June 2007 high. And the beat goes on … and on … and on!
My predictions:
$460,000 ~ Year End 2008
$435,000 ~ April 2009
$415,000 ~ July 2009
$400,000 ~ Oct 2009
$385,000 ~ Year End 2009
$370,000 ~ April 2010
$355,000 ~ July 2010
$345,000 ~ Oct 2010
$335,000 ~ Year End 2010
If my prediction becomes true, that will be a loss of $439,000 (almost 60%), in single-family home prices from the June 2007 high. I also predict that a bottom will not happen until sometime around the summer of 2012, and home values will not increase greater than the rate of inflation until the end of the next decade.
http://www.zillow.com/homedetails/11321-S-Colbow-St-Orange-CA-92869/25176992_zpid
This home is back to 1999 price; check out the link above. Zillow is behind the times, and the seller woke up.
Check your upside-down definition. Should say “owe” not “own” more than the home’s value.
But Lee, Obama will buy my gas and pay my mortgage, won’t he?
How about digging out, just from this blog alone, the vitriolic and exquisitely WRONG perma-bull comments from 2006?
I think I remember a real piece of work named Max.
Lee, I agree with your projection, but it’s almost not fair….. like shooting fish in a barrell….. or like impresing a 2 year old with the quarter behind the ear game.
sunsetbeachguy….
this should provide you with all the 2006 Bull Schadenfreude you need today…..
http://www.youtube.com/watch?v=IU6PamCQ6zw
History repeats itself?
I have heard, that during the Great Depression, you could buy a 1.5 million dollar house for about $35 thou
Others say that this time, prices will come down to AT LEAST pre 1992 levels
you guys suck.
you all sacred the bulls away.
I haven’t seen a post from our resident bull, in quite some time now.
Her/his posts were great entertainment.
I appreciate when Mulligan chimes in — one of the last remaining non-bears here. He deserves kudos for sticking it out, even after so many months of spiraling prices and economic hard times for the industry. How can we lure some bulls back, or are they all gone forever?
“In addition, 39% of owners here who bought homes in the past five years were upside-down on their loans — meaning they own more than their homes are worth”
I believe the correct word is “owe” not “own” and the current useage in real estate is “underwater” for those who have a negative net worth on their house.
You can thank the people who wanted to give people loans who couldn’t afford them. This would have never happened if they let the responsible people buy. If you do not have good credit or a job that can afford a loan then you should get that loan. You should also know what you can afford. We’ll all survive though as it’s not the end of the world.
POWMIA, we don’t need it to down to pre 1992 level. I want it down to 1995-96 level, which is a lot lower than 1992.
i want it down to 1982 level.
Chuck: I think people here misuse those terms.
In order to be a bull or a bear - you must be someone CAPABLE OF BUYING and want to or not want to buy depending on the anticipated return on the investment and the risk assessment.
People buying homes to simply live in without any consideration for return on investment are not bears or bulls. For they could not care less what the market is doing. If they find that the market is affecting their decision, then they are concerned with returns - period - no question about it.
Now once its determined the decision is based on potential returns, it is the decision to buy or not that differentiates bulls from bears. This decision is not based on if they would buy if they had some schmucks money to do so. That is someone who is simply talking. What do you think of the folks that encourage going to war, knowing damn well their sons and daughters are not and will not be in the armed services?
Given that fact: many (not all) here touting to be bulls had NO INTENTION OF PUTTING themselves in the buyer domain. Therefore, they should only be classified as Bulls if they were IN the market. Make no mistake about this fact: Many will tout that now is a good time to buy but they would not touch this market with their enemy’s money. If they are simply sitting on RE and not buying then that is called HOLDING. They should not be encouraging others to buy because they would not do that if we were speaking about some other asset class.
Ironically, most would call me a bear, yet I have purchased three properties personally this past year (two out of state) and am a co-investor on a recent purchase of a lender’s small REO portfolio containing local properties. I just prefer to keep the dialog very real. Those that want to get as much home for their money as possible and are currently renting would find greater value in waiting it out (my opinion). Those that have the resources to offset near term risk can find better opportunities for investing with greater risk by playing this market (my opinion). Problems occur when you find a person that fits the former category playing the game as if they are in the latter.
As for Mulli: he never really touted that he is buying nor that he is in the market for buying. He has been pretty forthright, focusing more on the positive, but he has made many attempts to “keep it real.” I also appreciate his presence on the blog.
I previously said that prices would fall to 1998 levels-
that may prove to be too optimistic as the economy is
even worse than I thought- we are in real trouble folks–
new loan qualifications are getting tighter which will
make selling even harder forcing prices even lower
in an unending spiral
http://mrmortgage.ml-implode.com/
Good Morning Helen HighParrot,
Once again, you are up fresh in the morning campaigning against Obama. I have some sound advice for ya.. Give it a rest!! Your current party had ample time (8 yrs plus Dads exp) to budget and manage the likes of us Americans, they failed!! I understand you are Libertarian however I felt the need to answer based on your critiques and prognosticating…:)
American is a great place and if i’m not mistaken, the WORLD spoke!! Time for change is now..Perhaps Obama does have some of the same friends as the Repugs but this temperature of water we as Americans are standing in, is too hot…We need to change the Temp and cool things down a tad.
Obama has much to learn as do we all.. He will make mistakes but the one thing I am certain of is that other countries are looking in and applauding our decision to elect President Obama…That to me is extremely encouraging because if you hadn’t noticed, our reputation has been tarnished to say the least…
In closing, I recommend you save some of your Lib Pennies and stop spewing such negativity and start focusing on things that are positive in YOUR life….Have a great balance of the week…
p.s. You mentioned that you voted for the first Black before I voted for a Black? What did that comment come from..I never mentioned anything about Black or White…Although I am Black…cheers
That was a funny vid Mav. 2006 “Economy is in fine shape . . . ”
Do you agree with the essence of his Shiff’s quip at the end, that the dollar will be worth a penny ?
I don’t solidly know what to anticipate regarding inflation/deflation. The dollar in house values is obviously deflating. Energy dollar is deflating. The Dollar vs. other producing-country currencies seems likely to continue suffer inflation (?).
Helen, I’m with you. I am also waiting on Obama’s promises to come to fruition…..gettin tired of riding my skateboard to work.
BIS,
That’s the interesting part. Schiff might be wrong about global economic decoupling. In the next few years it appears we may get deflation in america with our currency actually increasing in value versus world currencies due to the fact that the global economy was based on our debt spending. This can’t continue long term, but it’s a scary thought to think over the next 3 years we will see huge deflation with the US dollar showing strength versus weakening global conditions….. this is the worst possible combination…. with a day of reckoning coming for the US dollar…. the next bubble might be the US dollar.
Instead of guessing an arbitrary price from an arbitrary year that house values will goto, or that one hopes it will goto. Simple math will prevail. Look at you neighborhood and ask yourself, who would have a high desire to move in here? A couple with a combined income of 80k, 100k, 120k? lets say its 120k for example and really do you think a couple making 120k would want to move into your neighborhood or a better one.
Banks are willing to lend 30% of annual pretax income with good credit and down payment of 20%. So 30% of 120k is 36k, or 3k/month. A jumbo rate is running about 7 ½ % for 30 years. A loan amount of 429,000 for 30 years(where you actually pay the full P and I) will be 3k per month. If they put 20% down to purchase, the price could be as high at 536K. That assumes this couple making 120k per year has saved up 107k for a down payment and another 10k for closing costs. Does someone with 117k in the bank and 120k per year income want to live next to you? If you think that the couple whom would want to live in your neighborhood is more like someone with a combined income of 80k that reduces the purchase price to 357K.
357k is my prediction for a bottom. If you are making less than 80k you probably should not be buying a house in Southern California.
Those are amazing stats … I wonder though, if no one watched the news would the numbers be that bad? I don’t think they would. I’m not saying that wouldn’t be down but I don’t think they would be bad. The media does a great job of scaring the general public.
Ray Ray,
As long as President Elect Obama has surrounded himself with the people that caused this mess I will dog him every step of the way so get used to it; I’m not going anywhere. And as far as the WORLD has spoken, don’t you mean the Central Banking System and the CFR? And as I told you earlier don’t hold your breath for Change, you may get some window dressing but that will be it. Obama is controled by the same One Worlders Bush and his father were and if he were to try to deliver on the promises he made I’m sure he would be Clintoned too. You will be very disappointed very soon and you should begin to focus on that. You are naive. I will suggest a book for you to read, Tragedy & Hope by Carroll Quigley; Professor of History a Georgetowm, Princeton and Harvard and a mentor of Bill Clintons’. It’s 1300 pages so if you want to just cut to the chase find it in a library and read the top of page 950. As for the remark about Alan Keyes, let’s say I’m a mind reader.
Hey, Helen…if you don’t like it..then there’s always Canada…wasn’t that what the Bushbots were saying in 04?
Eat it, Unlike liberals who moaned they would move to France if Bush won a second term, I’m staying put. I enjoy being a needle in your and your ilks side. And why should I leave when there are so many like you that are sorely in need of enlightenment. I’m afraid you are the one that will not like it soon. And I did not vote for Bush. I did not vote for McCain. Voting as far as I am concerned is an exercise in futility.
The CHANGE, it had to come
We knew it all along
We were liberated from the foe, and all
And the world looks just the same
And history ain’t changed
‘Cause the banners, they’ve all flown in the last war
I’ll tip my hat to the new constitution
Take a bow for the new revolution
Smile and grin at the CHANGE all around me
Pick up my guitar and play
Just like yesterday
Then I’ll get on my knees and pray
We don’t get fooled again
one loss is anothers gain, I just bought house that was first bought for 697K on its last sale. REO owned I got it for less than 400K - GReAT FOR ME
I just heard a friend here say today that “this is the best prices you’re going to find in CDM or NB, you’d better buy now…” hahahahahahahahaha
As the French saying goes,
“La plus ca change, la plus ca meme chose.”
(The more things change, the more they stay the same.)
Thanks for the lesson Helen. You are very eloquent in your speech however I think you’re wrong. If you and Carroll Quigley; Professor of History a Georgetowm, Princeton and Harvard and a mentor of Bill Clintons’ have it all figured out, don’t ya think you should run along and save us simpletons from the next batch of Kool Aid?
Cmon, we need you. If Obama can’t and you can then by all means, get to work.. As for you being a mind reader, nice try but you debated a subject with me yesterday..We call that early dimensia…Peace and Love Helen Hightower
Nice nod to the Who, H.H.
By the way gloomsters, I know 2 families who just bought houses in So Cal, one as a bargain basement repo investment, the other purchased up and is just renting out their previous home. See? It’s not all bad. Some people are using this downturn to build wealth. OK, now return to your tantrums and depression.
I might buy when 80% are selling for a loss. Housing here is still outrageously overpriced. To the greedy mortgage brokers who are rooting for price increases: boo hoo!! Now it’s your turn to suffer.
I moved to CA a year ago from the east coast and I’m still not convinced I should buy. Besides I’m surprised to see how much Southern CA has turned into Northern Mexico. Why live in a hole in the wall here in “Mexico” when you can live in a mansion in another state? If Gov. Schwarzennegger wants to impress me he can start by making housing affordable for buyers not just keeping people in homes.
Mikey, check back with those families in 2 years and report back.
mememe, here is some advice a bit late for you: don’t even look at the price the home sold for at the peak, it is a worthless data point. Look at what the home sold for in the 1990s.
Thanks Not Buying It for the tutorial on bears/bulls. I do think the Mulligan would consider himself bullish, to a degree. Not a classic bull, like you described, but bullish nonetheless. He wants/expects things to improve, and would probably agree that “it’s always a good time to buy”- -generally he qualifies that by saying that a person’s personal circumstances should dictate whether it’s a good time or not, not the economic factors exclusively like potential investors. I am bearish, basically b/c I see real estate as being inflated, and I think that to live somewhere nice, one should not have to pay such a large percentage of their income- - nor should they be forced to use crazy loans just to compete with the people who are using them and making it harder for people who think that saving for a nice dow npayment is the way to buy a house that makes the most sense in terms of not overextending one’s budget. I’d rather not have to use some ARM with a balloon in 5 years just to compete with the folks who think that is the way to go. I’d like to buy a house and stay, perhaps as long as I live. But it is tough competing with those folks who use “magic” loans to buy into the houses I should be able to afford using traditional numbers (20 percent down, 30-38 percent DTI, etc.). So I’ll sit and wait until the prices come down in my hood and I can afford to buy using a solid formula of significant down payment and 30-year fixed money. It may be a while, but I’m renting and can afford to wait.
Chuck: I agree.
The only reason we purchased was because the deals included larger than usual discounts. Having cash in hand paid in this case.
Helen, your guy lost, get over it. Geeze!!
Or as you said “lied”, you did not vote for Bush, did not vote for McCain, yet you whine about Obama. Are you a single 50 year old, wondering why you can’t get a date? Please, move to Canada, Mexico or better yet, Alaska.
Lee, are you a Billionaire? You are so smart on your predictions! NOT!
Hey Mav,
What’s so important about 2 years? Want to bet that in 5, 10, etc., they’ll be whistling Dixie?
Concerning predictions: I think many here have not either seen the recent news or is ignoring it:
the use of bailout money has changed significantly - bad debt will not be purchased by the taxpayers (RIGHT ON!!)
workouts for homeowners will be much fewer than many had predicted - loans will not be modified to include significant drops in principle, most will be offered an extended term. But having to default for 3 months first will certainly cause ratings to drop - good luck with spending for the holidays.
given these facts alone - we will begin to see the factoring in of this recent news in home values - it will take time.
My point - I would refrain from stating anything overly optimistic as it most surely would put you in the category of another “idiot smoking kool aid.”
with businesses struggling to get loans - especially in the OC - just wait until the job loss numbers hit home next March. I, myself, as a business owner, am very concerned. Funny thing is that we’re still very profitable and do not have a need to borrow - our plans for our product pipeline are still on track 100%.