Welcome to the first chapter of 
Eyeball 2009! This is our holiday gift to you: Two weeks of outlooks on local real estate conditions! A new vision every day by noon through Jan. 6! We start our series with …
Long Beach broker Dick Gaylord, the outgoing president of the National Association of Realtors, lives and works on the fringe of Orange County, although he’s been active in O.C. associations. During his year at the helm of the nation’s largest real estate trade group, he has lobbied for such NAR platform planks as keeping banks out of real estate, while advocating that the government support the housing market as a way out of the economic crisis. “Historically, housing has led the nation out of downturns,” Gaylord says.
Eyeball: What’s the OC housing outlook for 2009?
Dick: California home prices have tumbled in 2008 — falling by nearly 30%. Orange County prices fell 27% through the third quarter. Because of the large price decline, about one-half of all sales in Orange County are distressed sales, either foreclosed or requiring a short sale.
On the positive side, buyers are coming back to the market to take advantage of the much lower prices. Home sales are rising solidly. The latest pending home sales in Orange County more than doubled from last year and inventory has been drawn down to more manageable levels. There are also reports of multiple biddings in the county. Therefore, home prices may be touching bottom already.
• Click to vote on '09 pricing!
Mortgage rates should remain favorable for most of 2009. NAR pressure in Washington is having an impact with the Federal Reserve buying mortgage-backed-securities, which is resulting in mortgage rates around 5.5%. These are historically low rates.
The job market is challenged and we may see more net job losses. But past experience show that when rates are favorable, people respond. More than 90% of the workforce does have jobs even in the worst of economic circumstances.
I expect home sales to continue to rise and home prices will turn the corner in 2009. What is unique about the current housing cycle is the speed of adjustment. Prices fell sharply — but they fell quickly, thereby bringing buyers back to the market.
Eyeball: What’s the chance we hit bottom in 2009? What might it look like?
Dick: I would say that the bottom in home sales has already been achieved in Orange County. Home prices could be bottoming very soon — before summer of 2009.
[ More Eyeball '09 HERE | Eyeball '08 | '07 ]
Nationally, there are still some struggling markets. But I also see some uptick in sales nationally due to low mortgage rates and some housing stimulus that is likely to come out of Washington (home buyer tax credit and higher loan limit for example). All real estate is local, so some markets will see price growth while others will see some price decline. For O.C., I think prices will turn up.
Eyeball: What do you fear the most about the real estate market? Why?
Dick: I do not have great fears about the real estate market. The present market is not comparable in scope to other markets, including the 1930s. What sets us apart is that the federal government has responded to this downturn — with several pushes from NAR — very quickly, as compared to the Depression when the government waited for two or three years before it responded. We’re going to pull out of this situation sooner or later, and I’m betting sooner.
Eyeball: What gives you hope? Why?
Dick: Housing has always led this country out of economic downturns, and this period is no different. NAR has spearheaded a housing stimulus effort to the current administration and Congress and to the incoming Obama administration.
[ More Eyeball '09 HERE | Eyeball '08 | '07 ]
That effort, called our 4-Point Plan, is bearing fruit so far, as the Treasury and the Federal Reserve have taken the steps we recommended to spur the housing market and stabilize prices. They are buying down securities in an effort to stabilize the market and lowering interest rates to bring more buyers into the market, and those are great.
We will continue our efforts, as the Obama administration has indicated willingness to give housing a top priority. These things make me optimistic about housing in 2009. And housing is now and will continue to be a good long-term investment.
Eyeball: What surprise or surprises will we be talking about a year from now?
Dick: If I had a crystal ball that could predict surprises, I’d be a billionaire!
And you’ll want to come back …
- NEXT UP: Pimco’s Scott Simon
- THEN: Realtor Mary Jane Cambria
- All of Eyeball 2009 to published date is HERE
This guy is pretty right on with his facts, he’s right, homes sales have been increasing steadily and now with mortgage rates of less than 5% for well-qualified buyers…I wouldn’t be surprised if we are near the bottom. There isn’t nearly as much bad news as there was in October.
remember– only listen to those whose forecasts were correct–
ignore those that didnt see what was coming- if they couldnt see
this bubble - they are- without any doubt- totally clueless- to even
print what they say is an insult to our intelligence– period
by the way just how can a housing market bottom when the
economy is bleeding jobs? or didnt this genius know about the
job losses- he must’ve been too busy watching wheel of fortune
http://ocbiz.freedomblogging.com/2008/12/19/oc-unemployment-rate-hits-14-year-high/6934/
“prez” spelled with realtor spelling llloolll@ribplitter
i guess he didn’t get the memo:
http://www.designs.valueinvestorinsight.com/bonus/pdf/T2_Housing_Analysis.pdf
Realtor = no credibility pertaining to RE predictions/forecasting due to conflict of interest issues. Although, reviewing MLS rosters, sitting at open houses all day and carting people around in ’show-mode’ are areas where their credibility can be deemed valid.
Gaylord: “More than 90% of the workforce does have jobs even in the worst of economic circumstances”
This will come back to bite him.
“the federal government has responded to this downturn — with several pushes from NAR — very quickly”
This will continue to bite taxpayers.
The republicans, Bush, Paulson and Bernanke are the most fiscally reckless and irresponsible politicians in history. The taxpayer subsidized housing prices are an illusion. Once the government handouts of the real estate and finance “industries” stop, all hell is going to break loose.
Jon,
Don’t invite any of the Eyeballers from ‘08 or ‘07 as they were all incredibly wrong.
But you can invite Gary Watts back - if he has the stomach for the lynching he’ll deservedly receive.
I’ve been laughing all afternoon reading the NAR/CAR propoganda.
I posted this on another tread and reposted here because it seemed appropriate in response to the delusional statements from Dick..
As the data the Mav provided shows, the option-ARM storm is coming and the Fed knows this. They may try to avoid complete collapse but the damage will still be very severe. Banks aren’t going to lend like the glory days..The bottom will be reached once people can come close to bringing reasonable down payments with documented income. The move-up homes will be next to the slaughter as the combination of lack of 2nd mortgages and lower equity gains fail to bridge the gap of not enough income coupled with high debt loads due to credit card and car loans (this is where we are now!). The claim that all will be well with the RE world again in June of 09 is the same mantra that they chanted in Dec 07. The fundamentals will dictate the outcome with perhaps some low interest rate effects but unless you start handing out cash to anyone with a pulse, the home values are headed to historic fundamentals and perhaps lower. Stay liquid and stay sane.
This is a classic example of “spin”:
“More than 90% of the workforce does have jobs even in the worst of economic circumstances.”
What is the median income of this 90% employed? $50,000 soon to be $40,000
What is the median price of OC home? $400,000 soon to be $350,000
Price of ghetto entry level home with major repairs needed? $240,000
Sooo… it looks like he expects people making $50,000 to start buying up the worst parts of Anaheim and Santa Ana? Even though he’s completely overlooked the fact that the people that moved into these parts were making $20,000 using Alt-A/Option ARM/Subprime to get in.
Let’s see his predictions from the last couple of years to see how well he knows the market.
Classic relitter, buy now!
Find any reason and buy now!
DId I say buy now yet?
Gaylord: “More than 90% of the workforce does have jobs even in the worst of economic circumstances”
Well, that completely overlooks the ‘employed part time but WANTING full time work’ stat. Usually its good for another 5%+. I realize that brings it to 85% of people have work, but what KIND of work? I’m sure all those high school dropout loan officers who were making $10k/mo are making the same now, right? uhhh, no. they’re pumping gas, if they’re lucky.
We’ll see!
My (*updated) prediction for Orange County single-family home prices:
$450,000 ~ Year End 2008
$425,000 ~ March 2009
$405,000 ~ June 2009
$395,000 ~ Sept 2009
$375,000 ~ Year End 2009
$355,000 ~ March 2010
$335,000 ~ June 2010
$315,000 ~ Sept 2010
$295,000 ~ Year End 2010
(*It was necessary to update my prediction, due to me underestimating the sheer tenacity of this meltdown with regard to the financial lending industry)
lol @ lee. Your year end is already too high! You gonna revise it again? :)
What amazes me is that NAR and anyone else whose math skills are sorely lacking, or whose spin skills are quite well-developed see nothing wrong with the artificial low loan rates of 4.5%.
The classic econ example is if you have a 5% $1,000 bond, it will pay $50 a year. What happens to the value of that bond when interest rates go to 10%? Well, if $50 in income equals 10%, then $50 divided by 10% gives you $500.
Let’s take the same example and apply it to a $500K home. You have a 4.5% interest rate on a $500K home. Take 0.045 x $500K, and you get $22,500. Now divide $22,500 by 6%, and you get $375K, or another $125K fall off in price.
This is called price fixing. Only the government is using low interest loans instead. The minute the government comes off the low interest rates, housing prices will have to fall again, until they reach their natural market where you have exactly the same number of buyers and sellers, otherwise known as the equilibrium price point.
So any realtor, like the above, who points to the govt intervention of low interest rates creating a bottom is either talking out their backside or a complete idiot. Take your pick.
Dick needs to zip it up.
Does Dick know that a 10% unemployment rate equates to 16 million people of out of work?
16 million out of work people equates to a comparable amount of foreclosures.
The problem is we don’t have the demand (millions of buyers) ready or even capable of depleting the excess of homes coming down the pike.
Plus Dick forgets to mention how demand would pick up when more are moving out of California than in.
For a fourth year in a row, residents moving to other states outnumber arrivals from other states, a trend that underscores the sour economy.
Just another salesman spewing propaganda!
http://www.latimes.com/business/la-fi-leaving-california18-2008dec18,0,5838.story?ref=patrick.net
Lee, you’re too conservative.
The real ‘capitulation’ will begin end of Q3 09.
End of Q4 09 - $335k
End of Q3 10 - $236k
The correction begins Q3 09……………
Marcia, everyone knows what is going to happen, there is a massive effort to slow the correction down…….if it happens in 6 months, there is a fear that we may end up in the dark ages.
NanoWest-
So what is the thinking in slowing the correction down? Is the fear that a speedy correction will create a deflationary cycle? To me, the best way to rip off the band-aid is quickly, so the healing can begin. Buyers would’ve entered the market in droves; banks wouldn’t have run out of sales, but could’ve had an orderly liquidation.
The best way to guarantee a deflationary cycle it seems to me is to have this agonizing slow meltdown in the RE market. I’m not the brightest bulb in the pack, I admit, but it scares me if I know more than the current pack in D.C.
Lee? Mav? Thoughts?
Had the RE market been allowed to meltdown without intervention, buyers would’ve entered the market at the lowend, gone to Home Depot, bought tons of gadgets to fix up the units, kept people in their jobs. Yes, there would be those who lost their homes, but we wouldn’t have seen this spread like a cancer because the demand hasn’t been allowed to enter the market due to the govt and NAR trying to keep the prices up. How incredibly bass ackward is that? RE agents would make less on the sales, but at least they would’ve had sales. I bet if you ask an agent today, they’d rather have a $300K sale than none at all. I know I’m not out there buying or running up my credit cards. But I can tell you that if home prices fell to fundamental pricing, I’d be right back in there (sold in Aug 2005). But I refuse to take over someone else’s mistake or pad someone else’s retirement account while putting mine at risk. The feds need to get out of the way. Did you see that lead-in on the City of Huntington Beach buying foreclosed homes and making them into low-income housing. Yeah, like that’s exactly who I want moving in next to me in my neighborhood. I’m sure that will keep property values moving in the right direction. What kind of answer is that?
Yes Folks, my estimates are too conservative.
Jon has been interviewing these “Realtor types” every weekend for at least year or so (eyeball series), yet they all say the same thing, and they’ve been wrong. It’s comical … pure vaudeville.
Folks … just set back and watch 2009 … what a gas it’s gonna be.
Marcia,
I agree with you……lets get it over with. However, politicians want to make it really hard to figure out exactly what happened, and who caused it. So we will wait. It is sort of watching a fish dye on the deck of a boat.
Oh…..me too, I got out in august of 2005.
I see Lee is back with his “updated” prediction.
NW-
Except for the sheer grim voyeurism of watching a fish die on the deck of a boat, why in heaven’s name would we want millions of unemployed to have to linger for what may be 2 years instead of 6 months?
And if the current spate of Republicans can’t figure this out in the form of Bernanke and co., what hope do we have when the bleeding heart but mindless Dems take over? (I voted for Obama by the way, because he was a better choice than McCain, who, I am sad to say, appears to be exhibiting signs of Alzheimers. My mother has been in the throes of Alzheimers for over a decade now…I’ve gotten familiar with the progression. It is a horrifying prospect of a disease. I don’t wish it on anyone.)
While I appreciate the team Obama is putting together, and the rapidity and seriousness of his actions, having the Barney Franks of the world making economic decisions, will, I fear, only make this mess a whole lot worse.
I would be more impressed if Obama named someone like MItt Romney as Car Czar, because I do think we need some good old fashioned business sense back in the white house. The Republicans were supposed to be that party. And they turned out to be the looters of the century (I guess I shouldn’t be surprised, given how many cry for deregulation and unfettered capitalism).
I guess it is oxymoronic for me to want a Jimmy Stewart to be my congressional representative.
I think we need to go back and revisit the arguments between Jefferson and Adams, where Jefferson warned against a strong centralized govt, thinking it would be unresponsive, and Adams pushed for one. I know my reps totally ignored my calls for them not to bailout the banks. So they voted against the first one, just to get another $150 billion tacked on to the second one.
Where do we go from here? Really. We need the Republicans to get back to the party of Goldwater. Reagan moved away from that with his massive spending programs, which W. Bush continued madly.
If the Republicans would just support my constitutional rights to my own body (life, liberty and the pursuit of happiness), as opposed to that of an unborn citizen, I would be a Republican.
So I am currently without party.
Marcia
PLEASE!
1. Keep it civil and stay on topic.
2. No profanity, vulgarity, racial slurs or personal attacks.
3. People who harass others or joke about tragedies will be blocked.
DO NOT LISTEN TO THESE REALTARDS…..
Remember the SOFT LANDING??? Remember that HOME PRICES ALWAYS GO UP???
These REALTARDS helped to spur the sudden price in homes. They made MILLIONS in commissions helping people buy homes that they couldn’t afford, and then ASSURED them that home prices stay up.
THEY ARE CHEERLEADERS. They must keep you EXCITED about the prospect OF GETTING SCREWED on your next home purchase. ‘WE ARE TURNING THE CORNER!!! TIME TO BUY!!! INTEREST RATES AT HISTORIC LOWS!!!!
Oh yeah? Well, Dickie boy, a MAJOR RESET OF LOANS IS ABOUT TO OCCUR IN MARCH 2009. LARGER THAN THAN THE LAST TWO YEARS ALONE. ONE MILLION MORE FORECLOSURES ARE EXPECTED. GET REAL. HOME PRICES ARE STILL TOO HIGH IN OC, AND WILL CONTINUE TO DROP.
BUT, IT’S A GREAT TIME TO BUY!! HAHAHAHAHAHAHAHAHAHAHAHAHAHAHA
Marcia,
I am going to an ugly Christmas sweater party on saturday……so at least I have a party.
What a nice forum here. All you guys (2 or 3 of you using several names) think the same way and pat each other on the back and terrorize any body with opposing views!! Keep dreaming. We will be back at 2006 highs by 2012!!
Ok Shane, I’ll bite. Your statement is based upon what fundamentals please?
You are projecting wages to increase by x:
You are projecting banks to go back to 0% in 3 years because there will be so many new mortgage banks reforming and coming to market?
You are projecting mortgage rates to stay at 4.5% or go lower?
What please?
Not to be pedantic, but upward pressure on prices requires demand in the form of the ability to afford higher home prices. The only way that can happen is if the fed goes back to sub-prime lending. While not impossible, probably highly improbable in the next 3 years.
So, without the price fixing in the form of increasingly lower loan rates, what do you base your statement on?
Banks aren’t biting. They aren’t reducing loan balances. They know that sets a really bad moral hazard. Huntington Beach can buy homes and sell them to low-income deadbeats, but I don’t see that helping increase home prices elsewhere. So what are we missing here?
I can’t imagine you are making that statement without having some data points to back it up.
And lastly, if I’m a taxpayer in Huntington Beach? I’m voting out the council members who try to put in place that waste of my tax dollars. That’s a pretty easy vote. With 90%+ of homeowners able to meet their loan payments, why would I want my tax dollars bailing out those who have no intention of making good on any contract they’ve ever signed up for, much less a home loan? Why would you, as a taxpayer, want to incent that kind of behavior?
lee in irvine Says:
December 19th, 2008 at 5:42 pm
We’ll see!
My (*updated) prediction for Orange County single-family home prices:
$450,000 ~ Year End 2008
$425,000 ~ March 2009
$405,000 ~ June 2009
$395,000 ~ Sept 2009
$375,000 ~ Year End 2009
$355,000 ~ March 2010
$335,000 ~ June 2010
$315,000 ~ Sept 2010
$295,000 ~ Year End 2010
(*It was necessary to update my prediction, due to me underestimating the sheer tenacity of this meltdown with regard to the financial lending industry)”
Interesting prediction Nostradomus. How about giving us a more discrete finite sample of your statistical data? What? You don’t have it? That’s what I thought.
Shockng-
Just fyi, you may have missed the post when Lee did give his basis.
So are you both Shane and Shockng now? Maybe you can answer my questions to Shane as Shane is saying that by 2012, prices will be up 100% (50% down requires 100% rebound to get back to the same levels). Let’s see. Forecast is another 7% down next year, so that means 50% up in 2011 and another 60% up in 2012. Given we never had those sorts of returns even in the froth of the last market, it seems a rather aggressive prediction. But hey, throwing spaghetti against the wall seems pretty standard operating procedure anyway.
Even the most aggressive RE agents on this blog aren’t predicting a 100% rebound in the next 36 months.
One thought for his prediction:
HAHAHAHAHAHAHAHAHAHA! (I think that’s one word!)
All of these hopes on the federal bailout and keeping mortgage rates low.
I have reason to believe that mortgage rates may actually climb UP in the next coming months DESPITE all of the money the Fed wants to pour into this. I don’t believe they will stay at this level for long. I wonder what this will do with these predictions.
You can’t base the prediction of housing prices on low or high mortgage rates. Rates change very quickly and frequently and they are really out of the control of the Fed reserve; even if Bernanke decides he wants to print or borrow a lot of money to buy Treasury bonds. By the way, the money used in this bailout is not our tax money — it’s non-existant money. This is money that ultimately we will likely borrow at a price and that price will end up being higher long term interest rates. I believe the Fed’s move will ultimately backfire in a way they do not intend. We shall have to see but it will be an interesting ride.
Housing fundamentals are based on all the things they never talk about. When does any housing bull talk about income and affordability? When does any housing bull actually admit to the presence of any housing bubble?
Let’s take a slight step back and try to remember exactly what is happening here. WHY are we in this ‘credit crunch’ in the first place? What caused the depressed economy? EASY MONEY! Low interest rates! Teaser rate loans! People buying houses they couldn’t afford! Now tell me how is EASY MONEY again supposed to be the solution to the problem here? Understand these rates won’t/can’t last…and what will happen to prices then???
I love hearing financial ‘guru’ predictions — there are so few who actually ever get anything right. The next two weeks (of 2009 predictions) should be fun. I’m sure there will be lots of opinions from the people on this blog.
By the way, everyone is entitled to their opinion. If you think housing prices are going to go up soon, I don’t think of you as a bad person, I just happen to disagree strongly with you. I have some friends who are hopeful that housing will turn the corner soon (they really need to sell their home NOW and potentially for a loss) and I definitely feel for them. But at the same time, I feel it is my responsibility to let them know what I believe to be true and the reasons for it and not just to listen blindly to these ‘experts’ who probably led them to buying too much house at the top of the market thinking it was going to continue to appreciate indefinitely.
Wonderful & Detailed information. thanks for sharing.
Reading this “article” is just astonishing. Well, breathtaking really. How can anyone, even the most optimistic, believe any of this given ALL of the data, not just a misinterpretation and extrapolation from a few data points? Like Marcia and Nano, I sold in summer of ‘05 in the DC suburbs (closed in July). Had we sold a year or so earlier, we’d have been 100-150K richer, but as it was, we made about 75K a year after having bought in ‘99. Does this guy not see the 2000-2005 period (more or less) as a classic “bubble” with no similar run-up in incomes (except those of feasting agents and loan folks) across the house-buying board? Optimism is one thing, but reckless pie-in-the-sky predictions are quite another. This guy is off the charts and if anyone listens to him, I feel for them as I do anyone who bought in the last few years here in the OC or anywhere that has gone down so much (is there anywhere safe except Iowa?). Doesn’t it make you feel like the captain of the Titanic AFTER hitting the glacier and trying to convince people that they’d better get into a lifeboat and stop partying but no one is listening, like this guy?
Realtors, shockg, shockg’s little brother shane,
Bank of America, Barclays, Citigroup, Credit Suisse, Deutsche Bank, Goldman Sachs, JPMorgan Chase, Morgan Stanley have all just lost their credit rating.
The S&P lowers General Electric outlook to negative and the chance of losing its AAA rating in 2 years.
With trillions of dollars in bailouts and stimulus programs going forward the U.S. is now facing not only losing its credit rating, which would be a severe blow to our economy, but a complete bankruptcy of its own government.
http://www.cnbc.com//id/27641538
As any sensible person should realize, these are not the signs of a turnaround going forward in our economy.
If I can’t trust my realtor in these times, who then can I trust?
Thank God we still have WWF wrestling.
Chuck in Newport,
They don’t believe what they say about the market rebounding. The Realtors are just reading from the official script.
Lee, please give us an example of the location, size of home, median or average income and any other data you used to come up with your predictions. My question to you is where is this mythical $295K SFR located, and who will be buying it. Thanks.
Speaking of realtors and their cheerleaders, has anyone wondered where David Lereah (for chief economist of NAR) is?
Recent issue of Money (January 2009) has a mini interview of him. (I couldn’t find online link to share. I am reading from hard copy of Money.)
In this issue, David Lereah finally admits, ‘I Spun’. He said he had to do this because he worked for an association that promotes housing.
Now he claims he is bearish (since he is no longer working for NAR). He says home prices will continue to drop with a very modest recovery in sales activity in 2009. He further adds, ‘It will take a long time to get back to the peak prices we saw in many markets.’
Any regrets? Like any shameless paid shill, he says he would not have anything different but he admits he was wrong.
Does he care about people who got hurt by overly optimistic propaganda of NAR? The article does not talk about it.
Sounds very similar to Dick Gaylord’s spin in this thread. Some day he will fess up too.
Reposting previous story with minor corrections:
Speaking of realtors and their cheerleaders, has anyone wondered where David Lereah (former chief economist of NAR) is?
Recent issue of Money (January 2009) has a mini interview of him. (I couldn’t find online link to share. I am reading from hard copy of Money.)
In this issue, David Lereah finally admits, ‘I Spun’. He said he had to do this because he worked for an association that promotes housing.
Now he claims he is bearish (since he is no longer working for NAR). He says home prices will continue to drop with a very modest recovery in sales activity in 2009. He further adds, ‘It will take a long time to get back to the peak prices we saw in many markets.’
Any regrets? Like any shameless paid shill, he says he would not have done anything different but he admits he was wrong.
Does he care about people who got hurt by overly optimistic propaganda NAR? The article does not talk about it.
Sounds very similar to Dick Gaylord’s spin in this thread. Some day he will fess up too.
Shockg,
We all know Lee can’t back up his “predictions” with any solid info. He’ll rattle off some cut-and-paste national article that has little or nothing to do with local conditions, call you a realtor and then start work on his next five paragraphs of useless ranting, as if it will change anything. LMAO!!!!!
Despite the constant barrage of overstated media hype, skewed, bottom-weighted stats and bold statements by “experts” trying to crowd their way into the spotlight for personal gain, oh, and of course the voodoo hex the uber-bear-haters have attempted to throw, it still takes $500-$600k to buy a SFR in a nice area of OC, and when the dust settles………………it probably still will.
The 2nd Wave of Foreclosures has finally made it to the mainstream Media. CBS’s 60 Minutes had a segment on 12/14/08, but they missed a very important point. Here is a post which may have merit for your blog…….
I would like to bring a very important bit of information to your attention that relates to this economic crisis that was overlooked until now.
On Sunday, 12/14/08, CBS 60 Minutes aired a segment “The Mortgage Meltdown”.
Scott Pelley’s piece on the 2nd Wave of Foreclosures overlooked a critical fact.
The segment missed the fact that this next wave of Foreclosures in 2009 Will Take Self-Employed and Smaller Businesses who have these TOXIC mortgages. In fact, ALT-A, Option ARMS, Interest-Only, the TOXIC Mortgages that are considered the “Troubled” assets in TARP were specifically marketed to the self-employed who fell prey to them.
The upcoming defaults on these risky “Toxic Mortgages” will result in an increase in foreclosures. But worse, once these small businesses fail, the resulting loss of jobs will cause millions to add to the ranks of the unemployed. Note that self-employed business owners (16.2 million according to the SBA) employ between 1-10 employees.
An NASE survey at http://www.nase.org , was the first to provide compelling evidence of small business involvement in the upcoming toxic mortgage crisis. The survey was created by Prof. Samuel D. Bornstein and Jung I. Song, CPA of BornsteinSong Consultants in Oakhurst,NJ,and was conducted by the National Association for the Self-Employed (NASE) which issued a Press Release on November 21, 2008.
According to this survey, it is estimated that 3,709,800 small business owners hold Alt-A and other toxic mortgages, and 1,279,800 are already delinquent as they have missed one to three or more monthly mortgage payments at mid-November, before the expected Resets that are scheduled to begin in 4th Quarter 2008 through 2012.
These small business owners will be at-risk of payment shock and default as their monthly mortgage payments skyrocket. Small business owners were especially targeted for these Alt-A loans which required little or no documentation of income which appealed to many small business owners who previously were unable to qualify.
The resulting defaults will be the cause of the upcoming second tsunami wave of foreclosures that will dwarf the subprime crisis and will take many homeowners, small business owners, and their employees at this critical time when our economy can ill afford it.
Thank you,
Samuel D. Bornstein
Professor of Accounting & Taxation
Kean University, School of Business, Union, NJ
VoiceofReason Says:
“He’ll rattle off some cut-and-paste national article that has little or nothing to do with local conditions”
OC prices are down 41% from peak
US national prices down 17% from peak
OC is facing much worse conditions than the rest of the nation.
Here’s a reminder to keep you honest.
http://lansner.freedomblogging.com/2008/11/28/gap-between-oc-us-home-prices-at-6-year-low/7454/
Shilling :
75 million US homeowners
50 million US mortgages
25 million US homeowners will become underwater
Average U.S. home prices will fall another 20% from current levels, bringing the peak-to-trough decline to 37%.
If prices ultimately do fall 37%, 25 million Americans or about 50% of all U.S. homeowners with a mortgage will be underwater, meaning their house will be worth less than their mortgage.
Millions of Americans won’t be able to make mortgage payments, even if they’re able to refi at today’s low rates.
Realtors will try to spin that 33% of underwater homebuyers by saying it’s a small percentage compared to the total, but if you look at the actual amount (25 million) it becomes all too obvious the dire situation that housings approaching.
It will become impossible to replace 33% of total US homeownership in the matter of a few years.
Thanks for proving my point Bill. You site national stats, bottom-weighted OC stats and went off on your own completely unprovable claim. Bottom line:
OC home still costs 2.5 times the national average (according to your article). It peaked at over 3X according to the same article. There’s a reason for that. It still takes well over $500k to buy a SFR in a nice OC area.
Oh yeah, and please feel free to move to Detroit, Philly, Pittsburgh, Stockton, or one of those places you seem to think are doing so well, and experience the difference. That is, if you don’t already live there and you’re just another jealous, angry, outside wannabe.
Now, feel free to blow hard for another five or six paragraphs and see if it makes a difference.
I have said it before and I will say it again……
Southern California is always the last to go into these downturns, and is always the last to pull out of them.
It has been true for the past four decades and I do not see things changing this time around.
Don’t know about all of you, but to the best of my knowledge the rest of the country is still on the ropes.
This guy is clueless. He is a realtor. Does anyone here think he is going to say “The market is going to be in the tank for another year or so and all of my constituent agents are going to continue to eat Mac & Cheese when they go home every night”?
VoiceofReason,
Thanks for proving my point.
I post an article pertaining to OC, on an OC blog and you go right into complete denial.
“the last time the so-called “Orange premium” was this low was 2002”
To decipher for you: that means that OC’s value is dropping at a faster pace than the rest of the country.
I bet you’ve sold a lot of two story houses in your time - one story before the sale, another after.
Q) There is a Used Car Salesman, a Realtor and a Lawyer. And you have a gun with two bullets… Which should you shoot?
(A) You should shoot the realtor twice… Just to be sure.
Billie was sodomozed by a realtor!!!
# VoiceofReason Says:
December 20th, 2008 at 3:57 pm
“Oh yeah, and please feel free to move to Detroit, Philly, Pittsburgh, Stockton, or one of those places you seem to think are doing so well”
I challenge you to find ONE (1) single post where he said “Detroit, Philly, Pittsburgh, Stockton are doing so well.” Your words are nothing more than a pathetic attempt to put words into someone else’s mouth that he/she never said in order to then discredit them on those words…the very words that THEY NEVER SAID. LIAR!!!
Brain (aka Lee the lunatic in Irvine) It’s pretty funny that you of all people have the nerve to call others a liar. lmao.
I hope they NEVER legalize pot, a lot of you have been doing your share of smoking it anyway!!
Shockg
Find my lie. Back your claim up. I backed mine up. Can you?
Brain, the fact that you post as Lee in irvine, Eat it in the OC and many other names speaks volumes about your lack of character and integrity. Yes you lie by always getting caught up in different stories. First, you were a homeowner that sold in 05. Then you are a 25 year old first time buyer who was too young to buy. The list goes on and on and on!!
I only post under Brain and Lansner can confirm that.
I demand an apology from you. Show your character and integrity. I don’t suspect you have any.
I didn’t really read everyone else’s comments, but that guy Chris on the top really has no clue what he’s talking about. He obviously has no idea that 8-10 million more foreclosures are predicted for the next few years. Nevermind the bad economy that’s only expected to get worse for the next year plus. A couple hundred thousand stores across the country are expected to close 2008-2010. Do you know how many lost jobs that is? Nevermind the white collar stuff. Pretty soon people will be competing to work at Walmart. Sorry to be so doom and gloom but wake up and read a little.