Demand for O.C. homes above late 2005 actvity

December 15th, 2008, 11:58 am · 60 Comments · posted by Jon Lansner

First, a sample of new listings …

$499,000

$3.649 million

$36.9 million

And, now …

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

“Last year at this time, demand was at 1,148, 51% less than today. Two years ago it was at 1,839, 21% less than today. Three years ago, demand was at 2,175, 6% less than today. The last two reports mark the first time that demand exceeded levels reached three years ago, that’s 2005.”

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 ago 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 4.53 months vs. 19.16 months for homes listed for more than $1 million.

Here’s the data, as of last Thursday, for listings; deals pending; market time in months; vs. 2 weeks ago, a year ago and 2 years ago …

SLICE	Listings	Deals	Time (mos.)	2 wks. ago	1 yr. ago	2 yr. ago
•$0-$250k	2,142	513	4.18	3.93	11.91	6.68
•$250k-$500k	4,363	1148	3.80	3.93	11.91	6.68
•$500k-$750k	2,286	405	5.64	5.74	14.42	5.65
•$750k-$1m	1,245	149	8.36	7.98	14.86	7.52
•$1m-$1.5m	887	74	11.99	11.97	19.26	9.41
•$1.5m-$2m	582	27	21.56	18.50	20.94	11.31
•$2m-4m	647	24	26.96	24.11	20.60	10.57
•$4m+	356	4	89.00	73.20	22.30	17.67
All O.C.	12,388	2,322	5.34	5.29	14.05	6.88

(Note: k=thousand; m=million)

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Dan says:

December 15, 2008 at 12 pm

This MARCH/APRIL will be the BOTTOM of the decline in housing prices for South Orange County. After that it will be FLAT for 12-18 months.
Inventory is very low….
Banks will start to pimp 50 year morgages
Hiring will start back up

The people that suggest my prediction is outlandish, or cannot happen, should be completely disregarded. These people simply have no credibility. They have been trained to believe that the most basic fundamentals like people need a place to live, the tax codes benefit owners, and people want to have the freedom to own.

Mom in CDM says:

December 15, 2008 at 1 pm

First, would love to see what percentage of “pendings” are actually closing.
Second, look at the huge numbers of 1m+ homes and look at the number of pendings! not too many people interested in real financing a million + home these days…..

Tom M says:

With all those new jobs at the new plant that was built by the sawmill these houses are flying off the shelf.

Dejavu says:

Pendings=closings, not much drama to report. I wonder if/when sales numbers will go lower?

lee in irvine says:

All you have to do is watch this video from 60 Minutes, to understand the calamity that Orange County faces. Once you fully understand, how and why, it’s very easy to suggest it’s gonna get a lot worse. The people that deny this, have their heads in the sand. Period!

http://www.cbsnews.com/stories/2008/12/12/60minutes/main4666112.shtml

honky says:

just another propaganda from the real estate industry.

Liar Loan says:

Mom-

2,694 deals closed for the 22 days ending November 22nd. That’s more than the current number of pending deals (if you trust Thomas’ numbers). But it seems safe to say that a good percentage are closing.

shockg says:

Like holy water to the housing speculators.

Lee….
I believe everything I see on TV……..
Mark my words….bottom in South OC this MAR/APRIL
The people that suggest my prediction is outlandish, or cannot happen, should be completely disregarded. These people simply have no credibility. They have been trained to believe that the most basic fundamentals like people need a place to live, the tax codes benefit owners, and people want to have the freedom to own.

waitingforgodot says:

December 15, 2008 at 2 pm

Dan,

Are you talking price bottom? Median? Or are you focusing a few zip codes? Do tell.

Eat it in the OC says:

Dan, you seem very emphatic and we’ve seen that BS before. The bottom will only occur when the fundamental conditions for affordability have returned. That bottom could happen next March or April, provided that homes continue to decline in value to the tune of another 15-20% between now and then which would put OC at around $350-370K median. Or are you saying that no further price declines are going to happen?

Mick says:

So what about average sales?

This chart shows that the cheapies/condos are what is selling. It shows that the top end homes, especially those, need to come down in price to get people to “gobble them up” to or to get anywhere near normal sales. By the way, none of these numbers reflect average sales, they are all below.

mav says:

foreclosures continue to be the market makers
in this debt deflationary death spiral
as jumbo prime defaults (already at 13%)
alta-a defaults
option arm defaults (50 - 70% default rate)
are forming a tasty set of debt deflationary waves
in the next 2 - 5 years
just watch this video, we are no where near bottom:

http://www.cbsnews.com/video/watch/?id=4668112n

or just watch the merry band of gypsies: Dan, LiarLoan, pow3d_home, etc…..get more and more pissed off and angry…… to let you know we are no where near bottom….

NanoWest says:

Steve,John,
Thank you for breaking down the numbers below 500K, This gives real insight into the dynamics of the market.

NationalBubble.com says:

December 15, 2008 at 3 pm

Poor Steve Thomas. He tries so hard to make it look like the housing market has bottomed.
I know he depends on suckers buying homes to feed his family but a little bit of honesty doesn’t hurt anybody.

“Note that homes under a million bucks have a market time of 4.53 months vs. 19.16 months for homes listed for more than $1 million.”

It looks like my own area of Newport Beach has a long way to go to bottom. Maybe in early 2011.
Did I mention that the jumbo conforming limit is going down to 625K at the beginning of the year?
Another nail in the coffin for the high end market.

This from Steve “in the bag” Thomas report:

“Since demand is higher today compared to the prior three years, it is expected that we are in for healthier demand in 2009. All of the ingredients are there: lower interest rates, lower inventories, better values, more affordable housing, and more government programs geared towards stabilizing housing to come.”

Interesting he doesn’t mention unemployment going up, 2 million jobs lost in just one year, the state of California in a financial crisis, very tight lending standards, no more “no money down”, no more “interest only”, no more “negative amortization”, no more “stated income”.

See what I mean by being dishonest? The guys is making sound that the housing market have nowhere to go but up and that is just not true.

Hey, I don’t deny that more homes are selling now compared to a year ago but last year at this time, we had the worst housing market in history and you had sellers who were in denial so of course, any sales is better than no sales at all which is what he had last year.

Jimmy2 says:

For all of you optimistic posters, I have an investment idea for you. You can build wealth by stockpiling cans of soup, bottles of water, and slingshots. Then, trade your stockpile for a beach front home. What an idea. Bubble, this strategy can launch you from your third world city rental to millionaires row in CdM.

mav-

How can you accuse me of being pissed off? Your idol rants exudes 20x the anger I do on this blog.

My prediction for housing is that fundamentals will be reached when prices hit 375k. Anything past that is gravy for the fence sitters like myself.

I’ve said repeatedly here and on the mortgage blog that Alt-A resets will peak from Dec 09-Aug 2010 so wait until winter 2010 to make your move. That’s what I plan to do. Pick up property #2 as a Christmas gift to my family in 2010.

waitingtobuy says:

December 15, 2008 at 4 pm

You don’t have to be a genius to understand that the massive REO’s and bank repossesions are responsible for these numbers “increasing.” The time on market difference between prices under 1 million and above 1 million highlight this.

VoiceofReason says:

December 15, 2008 at 5 pm

Dan,
A lot of people in this blog have short memories and zero sense of humor. But, then again, their dreams of 3000sf, split level homes in the burbs for $100k and making a fortune day trading junk stocks are just not working out! Bummer…dude.

rants says:

dimmy2- being the gardner at a home in CDM doesnt
qualify you as a homeowner there lloolll @ribsplitter

liar loan- just drop the loan part off your name- or try
upside down loan- its more fitting for your situation

Hiflyer says:

Dan:
You can’t even write your own words. So you are resorting to copying a paragraph from lee in Irvine’s posts that usually follow Dataquick’s numbers.

You realtor types have been predicting market bottom even before RE market started declining. David Lerach of National Association of Realtors called bottom in October of 2006. Once that proved to be a laughable idea, realtors like you have been calling for a bottom in spring for last two years and now you are the one who is calling for a bottom this spring. That will make it a third year in a row realtors have been calling for a bottom in spring. One of these years you guys will be right but not in the year when unemployment is sky-rocketing and when banks are asking for a proof of income to lend.

Also realtors are promoting 50 year loans for last several years. Too bad, a lender has to agree to your fantasy.

shane says:

Don’t hold your breath on these resets !! You need to add 5 to 7 years to your reset scehules as the Govt is about to unlish the biggest modification program !!

I feel sorry for Lee, Mav,rants. You guys are definately on the WRONG track. Good luck with your Alt a / option ARM reset dreams. It will never materialize. You will see the biggest loan modification effort unfolding in the next few months! (Real modification, not the ones with the current 50% re-default rate).

rants-

Those insults were weak… even for you.

Bill says:

VoiceofReason,

How many “voice of reasons” does it take to screw in a light bulb?

You have no clue of what’s going on in OC so let me have the honors!

Financially-strapped Orange County is laying off 210 social services workers and forcing 4,218 employees to take two weeks off without pay.

625 jobs will be eliminated by Feb. 1

You’ll have plenty of company in the unemployment line.

http://cbs2.com/local/Orange.County.cuts.2.885077.html

How are you bubble buyers (liar loan, voice of reason and shane (liked you better as sean) going to ever sell your home when things are getting worse for OC?

“$84-million budget gap next year, may cut more jobs”

http://www.latimes.com/news/local/la-me-ocbudget12-2008dec12,0,2839856.story?track=rss

You poor little ding dongs!

jeff says:

December 15, 2008 at 6 pm

The bears are starting to lose their thrust! It is cheaper to buy a $500,000 house then rent one. Do they math. 10% Down. 4.9% interest rate. 1.3% taxes. No Brainer if you calculate it with the principal reduction and tax write offs. No Brainer. Take advantage now!

Here you go Bill,

$500,000 home rents for about $2,700 more or less in Ladera.

10% Down = $450,000 mortage.

$2,388 mortage.

$1,838 interest

$551 Principal 1st month and improves every month after

Taxes at 1.3% = $6500 or $541 per month

Association = $217

Insurance = $50

Total monthly cost = $3,196

Now subtract principal reduction and over $28,500 in tax write offs and see the no Brainer!

k.hb says:

Jeff, HUH!!!!!!

450,000 = 2205
pmi = 250
hazard insurance 175
taxes = 562

=3192
write off of 700
=2492

AND…….your house is going to depreciate another 50,000-100,000 for 2009. Why the Hell would anyone buy. Trying to justify what you bought recently????

Republicans are TRAITORS says:

I agree with all the bulls. House prices can only go UP from here. House prices will explode higher. Now that we all agree house prices should and will only go up, can we stop printing money to artificially prop up house prices. Let’s all band together to stop Bennie, Hank, George and the other money printing republicans from ruining our country and debasing our currency. If house prices are going to explode higher it only makes sense to stop the government welfare to the banks, lenders, idiots that can’t afford their house and the criminals that lied on their applications to speculate and daytrade houses.

samson says:

December 15, 2008 at 7 pm

Thanks K in HB….2,500 a month seems like a lot to pay in rent….don’t forget the interest you would make off the 50K by not buying.

I think in certain price ranges it might be time to buy…maybe below 400K. I believe they will drop a bit further in those markets, but the higher end seems to be where the price declines will be.

own_home says:

December 15, 2008 at 8 pm

this data is encouraging
it appears that activity is picking up pointing to price stabilization.

lets assume that home value lost in 2008 is $2T
president Obama plans to invest about $2T in the economy in 2009
So these 2 numbers will cancel out, and the home values will stablize at their December 2007 values.

OMG its a realtard luvfest today- this video is the mirror image
of the realtards on this blog- taped in the summer of 07 from
the larry kudlow show- please watch as don luskin debates
peter schiff on the stock market and tells the viewers to buy
stocks with both hands– the dow was over 13000 at the time–
fast forward to today– dow 8500– do you think he would
apologize to schiff and larrys viewers and admit he was dead wrong
oh no not don he still talks as if he is the genius of market analysts
unfriggin real– just like the realtors on this very blog they dear
readers will never admit they were dead wrong- they’ll just keep changing names and making ridiculous claims– like
this is the bottom… how can someone whos been so wrong
for so long still have the unmitigated nerve to post their obviously
clueless opinions? it boggles the mind

http://www.youtube.com/watch?v=aFY4QspQT_0

dan says:

December 15, 2008 at 9 pm

hIfler,
You caught me, I did use Lee at moms in Irvine closing statements…I can not get anything by you…you are one smart cookie. It is no wonder you are a renter.

need a really good laugh? check out fred thompson
explaining the government bailouts–

http://www.theospark.net/2008/12/fred-thompson-explains-bailouts.html

Shane says:

December 15, 2008 at 10 pm

Lee, Mav, Bill, Rants are all socialists. You should move to France and Russia. They have cheap homes there for your type!

rants,

You really are a news junkie. Is that what you do all day? Read all these articles by fellow losers and get even more brainwashed.

Brain says:

Shane

What did you think about what he actually wrote? Or the news article? Do you have anything pertinent or relevant to add or just another personal attack?

December 15, 2008 at 11 pm

Brain,

These guys go to certain radical website looking for a particular types of articles to justify their positions. They are not interested in being informed about facts. They are just looking for people or articles that say what they want to hear !!

Noz says:

@ DAN:

“”hIfler,
You caught me, I did use Lee at moms in Irvine closing statements…I can not get anything by you…you are one smart cookie. It is no wonder you are a renter.”"

Yeah well….smart renter whose saving money versus dumbass who’s losing his house….I know what I’d rather be. How about you Dan?

You know….if I could fool everyone to buy a home and use the tax break as an excuse (a financially disastrous reason to buy a home), I’d be a rich man too. Maybe I’d be called a realtor?

I know you guys depend on selling home to make your livelihood, but come on, you’re all sound like cheap used car salesmen now.

Have the decency to admit that a market that is in so much trouble financially, fiscally, job-wise, home wise, credit wise, investing-wise, bank-wise, isn’t going to just correct itself after only ONE YEAR of coming down.

You people are delusional….

Bruce says:

December 16, 2008 at 12 am

More evidence for the April 2009 OC SFR short squeeze.

Snacker says:

December 16, 2008 at 1 am

Never fails.

Every Steve Thomas report and all the bulls suddenly see a glimmer of hope. And they all of a sudden get louder and louder.

It’s great to have predictions. I have my own.

Predict all you want. Results are what matter. We’ll see who’s right.

Let’s wait til spring 09 and see what the verdict is. (I personally am excitied to see this data — winter will be a long wait!)

I will condede that it is possible the low end of the market (the place where the price falls have dropped the most AND where there is most demand rise) could be nearing the bottom.

But this does not follow for the higher end housing market.

Steve Thomas’s data also attests to that. Did you note above that the market time for houses over $1 million is 19.16 MONTHS!!! Don’t think this is a bottom folks.

ALT-A will be the next subprime. Read the news. Even Sheila Bair of the FDIC, champion of the foreclosure modification programs, admits that the option ARMs mortgages will be much much harder to modify.

Oh yeah, by the way. Government could try to stop all the foreclosures in the US and housing would still decline. That’s because foreclosures weren’t problem. Easy money was. People buying beyond their means was. Government’s attempt to lower interest rates to ’stimulate’ buying sounds awfully familiar to the easy money doesn’t it? How can the problem be the solution? Answer: it won’t.

There is nothing ‘radical’ about the truth. Ignore it at your own risk. I suppose for some of you ignorance is bliss. Maybe that’s best as long as you don’t plan on selling your place anytime soon.

Marcia says:

December 16, 2008 at 2 am

Lee-

Make sure you add Dan’s “Mar/Apr 2009 bottom” prediction to your graphs.

You can put Steve Thomas back on AGAIN as well…just for more laughs.

Thanks.

December 16, 2008 at 7 am

Marcia,

Don’t talk to Lee right now. He’s leaking his wounds!!

Buy Houses Now! says:

Steve Thomas has been touting pending sales all year, yet the market has continued to drop. This is because distressed sales are nearly half of the market and rising. Non-distressed sales are 30% below 2005/6 levels and dropping. No turnaround until the distressed sellers are cleared out.

shane, your realtor spelling is hilarious:

“leaking his wounds”
“Govt is about to unlish ”

it’s never too late to go back to school and become a productive member of society

http://business.theglobeandmail.com/servlet/story/RTGAM.20081216.wusinflation1216/BNStory/Business/home

awgee says:

Steve Thomas - Would it not be a bit more helpful to publish the months of inventory for distressed vs non-distressed properties?

December 16, 2008 at 8 am

Have you guys noticed that every time Mav posts he has a link to some article? That’s because he can’t think on his own. He depends on these nerds who are wrong 90% of the time. It’s like blind leading blind !!!

Chuck in Newport says:

Seems like Shane is playing his old Beatles records backwards and following the advice embedded (”smoke crack, worship satan”). Mav does everyone a service by providing evidence for his views. Unsubstantiated opinions aren’t worth reading and are easy targets for people who have evidence to back up their claims (hint: you need to make some progress in this area for everyone to stop laughing a your comments).

More signs that the worst is yet to come for Real Estate.
Fasten your seat belts folks!!!

December 16, 2008 at 9 am

Shane,

I can see why you don’t link articles, you have enough problems figuring out which name to use without getting yourself caught again.

People linking articles to facts or distinguished individuals with opinions that differ greatly from a high school realtor’s opinion must really piss you off.

It severely reduces your swindling capabilities on here.

Thankfully, people like you are not able to hide the facts anymore.

http://money.cnn.com/2008/12/15/real_estate/underwater_borrowers_near_12million/index.htm?ref=patrick.net

I don’t blame you guys for being so angry. It must really hurt not to be able to get a loan to buy. That’s what’s happenng here. people that can’t get a loan like Mav, Lee, rants are trying to keep the market down (in their minds) until the lending guidelines loosen up so they can get in!!

It’s not the lending that is keeping us out - it is the falling prices and global economic meltdown. We have plenty of access to loans and plenty o cash in the bank. Again, another knucklehead that thinks that more easy loans will fix things. W-r-o-n-g.

Something for the renters to think about:
You better hope that more owners don’t lose their places, because it could be your LANDLORD that could be next. Then you would have to pack up your plastic brick-a-brack and head out to Riverside County looking for a new guy to call lord.
Lee, you and your crew would be like the Joab Family. ( I am guessing only a few of the renters will get that reference)

December 16, 2008 at 10 am

Renters have the superior bargaining position - take a look at inventory of rentals to be had, even in Newport Coast, CdM, etc. No need to go to Riverside. My “landlord” paid 400K for this place in a nice area of Newport and his loan is tiny — our rent covers that and probably 2K more so he isn’t going anywhere. Nice try to make renters fear being on Route 66 - -we are so far from that it isn’t funny.

Chuck….
Excellent point…you mean not everyone is upside down on their house/rental and losing their job? If one were to believe all of the gloom and doom posters on this thing, no one was safe from losing it. Now, if your landlord posted what you just posted–can you imagine the response he/she would have received… Brain et al would have called him a dreamer or liar.

Dan, I agree- -there is room in between the extremes- - not everyone sees this as a “crisis” - -even though the impact may be indirectly not a good thing for everyone (ripple effects). My landlord I think DID lose his job and he’s living with his parents. He bought over 10 years ago, so his loan is much smaller than those that bought in the last 5 years. So he’s not upside down but he is as far as I know unemployed…

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