66% of O.C. shoppers buying distressed homes

December 1st, 2008, 12:51 am · 52 Comments · posted by Jon Lansner

How’d your ZIP rank? Q3 results! CLICK HERE!

The latest O.C. home inventory report from Steve Thomas at Altera Real Estate in Aliso Viejo says …

Current demand, the number of new pending sales within the prior month, dropped by 111 homes in the past two weeks to 2,446 — double a year ago.
The total active inventory is now at 12,947 homes — down 311 homes in two weeks and 23% below a year ago.
Distressed homes (foreclosures or short sales, as listed in the MLS) are 66% of that new demand vs. 26% one year ago.

Thomas calculates a “market time” benchmark tracking how many months it theoretically takes to sell all the inventory in the local MLS for-sale listings at the current pace of pending deals being made. By this Thomas logic …

It would take 5.29 months for buyers to gobble up all homes for sale at the current pace vs. 5.18 months two weeks vs. 13.49 months a year ago vs. 7.09 two years ago.
Note that homes under a million bucks have a market time of 4.54 months vs. 17.91 months for homes listed for more than $1 million.

Here’s the data, as of last Thursday, for listings, deals pending, and market time in months vs. 2 weeks ago and a year ago (Note: k=thousand; m=million) …

SLICE	Listings	Pending	Time (mos.)	2 wks. ago	1 yr. ago
•$0-$500k	6,805	1732	3.93	3.75	11.42
•$500k-$750k	2,416	421	5.74	5.33	14.14
•$750k-$1m	1,309	164	7.98	9.10	15.70
•$1m-$1.5m	946	79	11.97	14.43	16.40
•$1.5m-$2m	592	32	18.50	18.55	18.92
•$2m-4m	675	28	24.11	32.05	18.49
•$4m+	366	5	73.20	90.00	14.56
All O.C.	12,947	2,446	5.29	5.18	13.49

Here are a few noteworthy O.C. business stories you may have missed …

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lee in irvine says:

December 1, 2008 at 6 am

Oh My … look at the Comp Killers in Newport Coast:

http://www.redfin.com/CA/Newport-Coast/7-Wayside-92657/home/5928297

http://www.redfin.com/CA/Newport-Coast/1-Cottonwood-92657/home/5928698

I stick with what I said in the past … of all the communities in Orange County, Newport Coast is the most vastly overpriced, and will lose on a dollar basis, much more than the typical OC single family home.

dafox says:

December 1, 2008 at 7 am

bubble years are gone now Steve. Please break out the sub-500k grouping. >500k is unaffordable to the majority of OC residents.

NationalBubble.com says:

omg, it looks like the high end market is hurting big time.
No surprise here. With the stock market sinking, rich people are suffering and they know that things are going to get much worse for them. Here in Newport, I see a lot of desperate people who are tying to figure out how to keep their lifestyle when they are making a lot less money than they did a year ago.

I feel sorry for all those people who are going to lose their homes.

Do you remember the days when people on this blog used to debate whether there was going to be a recession at all?

I don’t see anybody challenging us anymore. lol
I guess we now know who was right.

One more point regarding Newport Coast. It has two huge factors going against it.

1) It’s part of Orange County

2) It’s the most expensive new community in Orange County. Think, Ladera Ranch & Talega, except on steroids. Newport Coast drew in many new buyers, pretending to be wealthier than they actually were, using dirty-nasty, ponzi scheme mortgages.

but you wouldn’t know there was a recession by reading Steve Thomas blog.
he’s been calling the bottom since August last year.
Last year his argument was “well, nothing is selling but at least prices are not coming down that much and everybody wants to live in OC. We might have all the rich people in Japan in China moving here”

now, Steve’s argument is “well, prices are dropping like stones and nothing over 800K is selling but a lot of foreclosed homes under 500K are selling like crazy. Everybody wants to live in OC, blah, blah, blah”

bloodinthestreets says:

In case someone else doesn’t bring it up, did you ever notice that Steve Thomas (RE Agent) uses PENDING sales ? That makes this “data” essentially useless.

Want to know what actually is going on? Check out here:

http://voiceofsandiego.org/toscano/

There are a lot of reasons why these Steve reports are among the most useless ‘analysis’ we’re offered, (yet strangely, it typically inspires the most dialog).

This data might be useful :
1. if it wasn’t about ‘PENDING’ sales,
2. . . . if this inventory volume wasn’t “tainted” *
3. . . . it was offered by a more credible source
4. . . . if it was proven, based on earlier data sets, that this ‘Steve Thomas’ parameter has ANY value whatsoever with respect to hinting at what the market is actually going to do.

* Regarding tainted inventory: There is a clear tendency of agents to shun listings for quite a few sellers. I have an agent friend who just stopped taking listings. He had plenty that weren’t moving, and most of potential sellers were not ‘in touch’ with the market trends and valuations such that it was a WASTE OF HIS TIME AND THEIRS to list a house that clearly was not going to sell at the seller’s price. It costs him money to list the house, yet they had no chance of return.

Jon Lansner, your blogger says:

Pending inventory has its problems, but it’s as good as a forward-looking indicator as we got … it’s just one of the many sources we provide here.

This index was falling in late summer 2007 as the cerdit crunch begin to whack the market — we saw the “results” weeks later in DataQuick’s closed sales data. Then, pending sales hinted early at the modest sales rebound we’re seen late in 2008.

Blogger Jon

Jimmy2 says:

December 1, 2008 at 8 am

6% of O.C. million-buck home listings are distressed

If you read this post in today’s register, and I am sure all of you did, you will see Corona Del Mar has the lowest number of distressed properties in OC. The number is 3%. This discredits all the garbage posted above. Keep dreaming.

shockg says:

Bubbs says:”I feel sorry for all those people who are going to lose their homes.”

buubs,Yeah right, you have been cheering for people to lose their homes from the begining.

Bogey says:

LOL Jimmy, still pretending he lives in CDM. Isn’t the internet great? LOLLL!!!!!!

“buubs,Yeah right, you have been cheering for people to lose their homes from the begining.”

You are just wrong. I feel the pain of those people who are losing their homes and jobs. It’s horrible to see the economy collapsing in front of us but unfortunately, I need to warn people like I did last year than things are going to get much worse. Those who didn’t listen to me last year and now underwater on their homes.

The fact that Jimmy is now admitting that distressed properties in Corona del Mar are 3% is a sharp change from what he was saying just a few months ago. Remember? CdM homes keep going up in value?
Well, he is now happy to see “only” a 3% in distressed properties. Guess what, the trend is what matters.

We are now seeing how the crisis is spreading onto the high end market. These are the people who are losing tons of money in the stock market and in their businesses. On top of that, while the conforming loan market has stabilized, the jumbo market keeps getting worse by the day.

I was talking to a realtor friend of mine (believe it or not, I have friends who are realtors) and he was telling me that things are getting much worse for buyers trying to qualify for loans over 625K. Since the jumbo conforming limit is going down to 625K from 729K on 1/1/09, FHA loans are history for people buying houses over 700K.
Even, if you apply for a loan over 625K today, you won’t get the conforming rate because the loan has to close by 12/31/08 and banks won’t even try to offer you the lower rate.
So, those of you trying to buy a 700K or more home, wait until later next year because sellers will be dropping prices like crazy when they see that very few can qualify for those loans. You want to give the unrealistic sellers time to understand that the boom days are over and not coming back any time soon.

Dan says:

“I need to warn people like I did last year than things are going to get much worse. Those who didn’t listen to me last year and now underwater on their homes.”

Classic….

it must be tough being the smartest guy in the country…maybe you can get on a Presidential committee to clear this mess up….

Lee in Moms in Irvine ….glad to see you being the first to comment….you were slipping there…You were #3 the other day…but much to my surprise you think the housing market is going down…what caused your change in thinking???

December 1, 2008 at 9 am

Breaking news:
“Obama announces Hillary as Sec.State; Dow tumbles 375”

Oops, sorry :

Updated news flash:

“Obama announces Hillary as Sec.State; Dow tumbles 400″

Err … one more time.

“Obama announces Hillary as Sec.State; Dow tumbles 440″

this is for the permabulls of the world.

It’s official: US is in recession

Samson says:

December 1, 2008 at 10 am

Nice try! Connecting Obamas nomination of Hilary (which we have known for weeks) as Sec. of State being the reason the economy is down….Really??

The person who isnt President announcing a cabinet position that has little to do with the economy?? The reason for the drop is do to what is listed in this article and the fact that we have now officially in a reccesion since Dec. of 2007.

http://biz.yahoo.com/ap/081201/wall_street.html

The current problems in the economy have been brewing for years, mostly due to greed, corruption and lack of regulation. To blaim the man who is not the President yet is myopic at best.

Nice straw man arguement though.

bubble and lee, can you explain to the world how, while you claim the coastal market is in meltdown while the statistics published today show Seal Beach and Corona Del Mar ( part of Newport ) are in great shape? Even in a normal market, beach cities will have a low single digit distress. bubble and lee, you are pushing misinformation.

“bubble and lee, can you explain to the world how, while you claim the coastal market is in meltdown while the statistics published today show Seal Beach and Corona Del Mar ( part of Newport ) are in great shape?”

simple, these numbers are worse than they were just a few months ago which shows that the high end market is not immune to the crisis and that rich people are just the last ones to get impacted by the recession.

I never said that the rich areas are going to collapse. All I’ve said if that if you wait a year or two, you’ll get a much better deal in a house by the beach and sale numbers for 1M+ homes seem to agree with me.

wow, here is another genius in CdM.

He bought in 4/10/06 for 929K and sold in 6/23/08 for 705K

http://www.redfin.com/CA/CORONA-DEL-MAR/316-1-2-HELIOTROPE-AVE-92625/home/5943023

That’s what I call great investment!!! LMAO

But I thought homes in CdM never go down in value?????

I’m sure this CdM genius followed Steve Thomas advice……

lol

December 1, 2008 at 11 am

So 929K-750K=179K…..is that 3%??? No its 19.3%. I am certain if you where smart and bought in 1995 you are in great shape…probably if you bought in 2002, you are in great shape…Anyone after that, not so great.

Bubble, dont confuse Jimmy with logic. The three houses on that one street that faces the ocean that is west of PCH, will never go down in value…so because of this all of CDM and the OC is safe from price declines.

UH OHHHHHH !

“It argues that most of the Countrywide loans are not Countrywide’s or Bank of America’s to modify”,

The battle over the mass modifications of troubled mortgages has begun in earnest. On Dec. 1, William Frey, a private investor in mortgage-backed securities, filed an unprecedented lawsuit in U.S. District Court in the Southern District of New York alleging that the proposed modification of some 400,000 home loans originally underwritten by the defunct lender Countrywide Financial is illegal.

http://www.businessweek.com/bwdaily/dnflash/content/dec2008/db2008121_173068.htm?chan=top+news_top+news+index+-+temp_news+%2B+analysis

bubble and lee, whose advice did you follow? Who told you not to buy a single family CdM in the late 1990s for a song with no money down? Who was the genius?

Jimmy,

I think most peoples point is it is a different decade and a different century. In terms of the current housing market you are talking ancient history. Using your logic, everyone should have bought almost anywhere in Orange County before 2000. As for me I was working an internship and waiting tables, until I got my full time job….I was in no position to buy a home back then.

What most here are talking about is the rise from to 2000 to 2006 and now the decline back to 2002/2003 prices. Some areas may still be at 2005 prices…but that isnt so good for those that bought in 2006.

Can you understand that much???

Yes we all missed the boat and didnt buy in 1997 or before….but using that concept you can replace CDM with Fullerton, Brea, HB, Anaheim, etc….and you would still be in decent shape. For certain, CDM has held its value more than many areas…but again, moslty if you bought before 2000.

So can we move on and talk about this decade and this century?

Can we do that much to move the conversation past what happend pre-2000?

Jimmy2

You WERE right, and we ALL secretly admire your savvy investment skills, tact, and humility. We anxiously await your next timely market tip.

( yeah, I got that retro-active tip, “buy CdM in ‘98” . .. except it is late ‘08 now )
( here is an equally useful tip in trade from me: “Buy Microsoft in ’86 ” )

Should we buy now in CdM ? Is that your recommendation ? That is a BOLD position . . .

“ Obama + Hillary = -450 Dow ”

“Who told you not to buy a single family CdM in the late 1990s”

Well, I wasn’t here in the late 90s. I was in the Bay Area riding the dotcom boom which allowed me to make enough money (not as much as I would have liked) to move down here and buy a home in Newport Beach.
See… some of us actually build real products and make money instead of just hoping that our home goes up in value.

By the way, I had no intention to buy in CdM. I’m too young to live in CdM. I prefer to stay on this side of NB with the under 50 crowd.

December 1, 2008 at 12 pm

bubble, you recently posted you were a renter in Newport. Now, you are telling me your are an owner. What gives? Is your whole life a story?

Mick says:

The main point is that most people that are buying homes are buying short-sales and bank owned homes. Once the distressed properties dry up, (when will that be??) will most buyers sit on the sidelines? People want to think they are getting a deal. Most sales are happening in Santa Ana, Garbage Grove and Anaslime. Overall, sales are still below average. People can gobble up all they want, but it’s still slow and a buyer’s market with deteriorating values.

Brain says:

What about those of us too young to buy in ‘97? I graduated high school in ‘97, undergrad in ‘02, and completed grad school in ‘05. By the time I finished college, the market had risen so dramatically that housing was out of reach for me and for an entire generation of young professionals. Professionals who would have easily been able to afford homes 10 years ago all of a sudden could not; at least not without “creative financing” and liar loans. How many people that bought in the 90s could afford to buy their own home in ‘06? Did incomes really increase dramatically enough to keep pace? No.

It would seem that you want us to believe that you bought a home in CdM in the 90s with no money down. I didn’t know banks did zero down in the 90s. Did you really buy a home in CdM in the 90s? Do you still own it? What have you done with your equity? Did you go on a MEW spree? If you were really wise in the 90s then you bought with a conventional loan and you haven’t spent blown all your equity. If that’s the case then why do you even care if your home’s value decreases? You didn’t buy it speculatively did you?

“Brain Says:
December 1st, 2008 at 12:27 pm
Jimmy2

What about those of us too young to buy in ‘97? I graduated high school in ‘97, undergrad in ‘02, and completed grad school in ‘05. ”

Looks like one of Lee’s aliases found a time machine that shaved 25 years off his life. lol.

Jimmy2 Says: “bubble, you recently posted you were a renter in Newport.”

This just show how senile you are. No wonder you live in CdM.
Go back and read my posts for the past 2 years or ask people around here with better memory than you.

Obama, Hillary, -600 Dow

they are down says:

December 1, 2008 at 1 pm

Obama, Hillary, -679 Dow

Nice Straw man arguement Blood. Good try.

When it goes up will you say it was because Bush pardons another drug dealer?

“Obama buys second puppy for his kids, Dow up 250″

(Disclaimer - This document contains forward-looking statements.)

Petsmart stock should go through the roof!!

just another beautiful day in Southern California

WHO CARES ABOUT “CDM” AND Newport Coast? NOT ME!

I like Melba Toast and PBJ.

rants says:

December 1, 2008 at 2 pm

watch out for all those shoes fallin off our
ponzi scheme debt based house of cards
economy… commercial and credit cards are next

http://www.cnbc.com/id/15840232?video=946475488&play=1

jim says:

December 1, 2008 at 3 pm

i’m afraid da fox is correct. O.C’s sub 500 k is near which means a reality check. Care to guess how low it will go?

Price of Bad Tidings says:

December 1, 2008 at 5 pm

shockg Says:

“Looks like one of Lee’s aliases found a time machine that shaved 25 years off his life. lol.”

Looks like RE bulls continue to take the “plankton theory” for granted. If they had it their way, the current generation of home owners in O.C. would be the last.

Shane says:

December 1, 2008 at 6 pm

I think we have a lively debate here between Lee in Irvine and Lee in Irvine !! This guy is posting under 5 different names !! That’s what happens when you miss the boat in buying R.E. during the downturns, in his case in the late 90’s. Don’t worry Lee, you will catch it in 2021. Of course, you can always move to Oklahoma and share a house with NationalBubble, if you’re not the same person. Cheers !!!!

December 1, 2008 at 7 pm

Shane

It is fascinating to watch some of you permabulls in your desperation. You can no longer debate numbers or facts so now you are stooping to personal attacks and accusations about who has multiple accounts. Not just one or two of you. All of you! It is a stunning display of solidarity borne out of desperation. Seriously, you all have the same talking points. All you “contributed” in this thread was a single off-topic personal attack. Shockg only made off-topic personal attacks. And Jimmy2 at least started out on topic but as expected digressed into off-topic personal attacks.

“Shane Says:

“I think we have a lively debate here between Lee in Irvine and Lee in Irvine !! This guy is posting under 5 different names !! That’s what happens when you miss the boat in buying R.E. during the downturns, in his case in the late 90’s.”

I’m not sure what exactly your point is here. Is it that everyone who missed the late 90’s boat goes to online real estate blogs and develops multiple personalities? Really? I can’t believe you just made that connection.

Maybe your point is that because housing prices were cheaper in the 90’s, we all need to go out and buy now. And that prices are going to stop falling soon. Because houses were cheaper in the 90’s. Somehow you are connecting two dots in your mind that don’t belong connected.

“Don’t worry Lee, you will catch it in 2021. Of course, you can always move to Oklahoma and share a house with NationalBubble, if you’re not the same person. Cheers !!!!”

No, those of us who are waiting will catch it in 2010-2014. No need to wait until 2021 or move to OK. We’ll be fine…please don’t worry about us.

not buying it says:

December 1, 2008 at 11 pm

Brain,

They don’t realize it, but the fear of their homes losing value shows through in their writing. They have no reason to monitor this blog whatsoever unless that was a primary concern. They obviously are not looking to purchase.

These guys are lying awake at night wondering how long it will be before their homes value equals what they paid for.

Fortunately, many of us homeowners are not in the same boat and see value in a return to fundamentals. I just wish it wasn’t so severe and am very concerned about those losing jobs.

PEACE

December 2, 2008 at 1 am

# not buying it Says:
December 1st, 2008 at 11:36 pm

“They don’t realize it, but the fear of their homes losing value shows through in their writing. They have no reason to monitor this blog whatsoever unless that was a primary concern. They obviously are not looking to purchase.”

EXACTLY! You absolutely nailed it right on the head here. Some people’s entire self-worth seems to be tied into the value of their home. But bubble equity was something unearned. There was no actual “work” done to EARN bubble equity. During bubble years, one only had to purchase a home and just wait. Some people feel entitled to this equity. Like they deserve it or something, for making “a savvy, astute, and enviable financial decision.” Now they see their equity slipping away along with their entire sense of self-worth. Your self-worth should have NOTHING TO DO with the value of your home or other material things!

“These guys are lying awake at night wondering how long it will be before their homes value equals what they paid for.”

Aside from the self-worth issues, I really think that a lot of these guys are afraid because they have already taken out so much equity from their homes via HELOCs and refis. I don’t think that merely losing paper equity would motivate people to such vitriolic, pretentious, hateful posts. They are beginning to realize that a HELOC must be paid back and a refi into a larger mortgage results in a larger monthly payment. And if the value of their home didn’t go up by $80K this year, they will not actually “earn” enough money to pay their debts via more HELOCs and refis. Borrowing money to pay debts is usually bad.

“Fortunately, many of us homeowners are not in the same boat and see value in a return to fundamentals. I just wish it wasn’t so severe and am very concerned about those losing jobs.”

Awesome! It’s great to hear that not everybody out there only cares about themselves. I’m not a homeowner but when i do become one, I will completely ignore equity due to market fluctuation. I only get that equity when I actually sell my place anyways! The only equity I will ever care about will be built making my monthly payments. The rest is irrelevant because I will be buying a home to live in, not to speculate with.

“PEACE”

Peace brother.

December 2, 2008 at 2 am

Brain Says:
December 2nd, 2008 at 1:27 am

“Borrowing money to pay debts is usually bad.”

Understatement of the year.

December 2, 2008 at 7 am

Brain brings a new perspective to this blog. I am getting to like him !!

Myrtle Beach Condos says:

December 2, 2008 at 10 pm

It will take time for buyers to knock back to all homes for sale at current pace.Note that homes under a million bucks have a market time of 4months vs. 17 months for homes listed for more than $1 million.

Myrtle Beach Condos

December 3, 2008 at 12 pm

In other words, borrowing money to pay borrowed money.

Slice	Price	Ch.	Sold	Ch.
House	$495,000	+4%	1,841	+3%
Condo	$304,000	+3%	845	+8%
New	$500,000	+4%	150	-26%
All OC	$430,000	+2%	2,836	+2%

Orange County Register