Welcome to 
Eyeball 2009! This is our holiday gift to you: Two weeks of outlooks on local real estate conditions! A new vision every day of the week at noon through Jan. 6! Day No. 5’s guest is …
Economist Anil Puri is the dean of the Mihaylo College of Business & Economics at Cal State University Fullerton, the third largest business school in the country. His latest widely watched annual forecast for Orange County’s housing markets saw home prices rebounding not until 2010, at the earliest. We got him to elaborate!
Eyeball: What’s the OC housing outlook for 2009?
Anil: Given the overhang of foreclosures and other macro factors, we expect continuing slide in the median housing price through the middle of 2009 in the range of 5% to 7% from a year ago level. Prices will stop declining appreciably after that but will show little movement for a while. Any uptick will have to wait until 2011 or later.
[ More Eyeball '09 HERE | Eyeball '08 | '07 ]
Eyeball: What do you fear the most about the real estate market?
• Click to vote on '09 pricing!
Anil: There is little inherently wrong with the OC housing market as such (other than the current mismatch) and its long term prospects are bright. But the biggest danger is further deterioration in general economic conditions, i.e., deflation. This will depress asset prices even more and push the housing recovery much farther.
Eyeball: What gives you hope?
Anil: The best thing going right now for the economy is low oil prices but it is not enough by itself and these are not likely to stay at the current levels. But if the next administration takes aggressive actions to re-build business and household confidence, quickly starts working on the new rules for financial markets and quick-starts the promised public investment program, we may avoid the worst. My hope is that they will.
Eyeball: What surprise or surprises will we be talking about at a year from now?
Anil: In these dark times, any significant short term improvement will be a surprise. It will be a positive surprise if the still unknown but feared financial losses fail to materialize.
And you’ll want to come back …
- NEXT UP: Renter advocate David Levy
- THEN: Commercial investor Robert Brunsiwick
- All of Eyeball 2009 to published date is HERE
We, the readers, demand another Gary Watts prediction!!!
He makes a good point about oil. Just imagine how much worse it’d be with gas still at $4.50/gallon.
Just don’t look for a bounce. A below inflation creep will be all that ensues for several years.
Hey, this guy obviously nose what he’s talking about.
All these predictions are fun but worthless. No one can predict that far ahead. Mr. Alan Greenspan predicted that home price would have bottomed at the end of 2008, but we now know he is wrong. What makes another economist’s prediction better than Mr. Greenspan’s?
bloodinthestreets……… rotfl!
2011 “or later”? how can anyone reasonably predict such a thing. I think there is certainly a prolonged trough coming, but that’s because would-be foreclosures keep getting pushed back later and later, delaying the inevitable recovery. but 3+ years out? I mean who knows what anything’s going to be doing then. I’m as skeptical as any, but this sounds like those 7-10 day weather forecasts on tv: yeah right!
Your right blood…his prediction is as plain as the nose on his face….(sorry im not so good with puns)
I think most have predicted an L shaped curve for the next few years. …The timing of the bottom is tough. I think that it is likely it will happen this summer and go flat or possibly down further for another year, depending on the area.
I agree though that there wont be any appreciations until 2011 in most areas.
I wonder want the median will bottom at..My guess is around 350K and back to around 2001 prices.
Much of this of course depends on if banks will start loaning again or not.
1998 here we come right back where the bubble started from-
Don’t you guys get it already?
It’s not about predictions!!!
its about predicting risk to your own position and making adjustments for it.
You see, home buyers in the OC evaluate risk for those people actually buying - not for themselves buying.
Case in point - you can have a well-off business owner go out and buy 10 homes at 45% off peak pricing - low enough to just break even on rent.
They own them for the long term - leverage the tax write-offs - leverage the equity when all this turns around for more investing - and be in a pretty good financial position in 12 or so years on those homes.
But look at their risk - what happens if they cannot afford the payment? OOPS!!!! you got that right - that day does not occur because they never risked that in the frickin’ first place!!!
someone buying a home today with their great credit, steady paycheck, lifesavings and risky loans should have their head examined. or they just like being a loser for the next 20 or so years.
Buy multiple at huge discounts or don’t buy at all.
I am not sure what to think about this, yes he is correct with the information at hand that we wont see anything until after 2011. However, what does that mean? What I am saying is ok it is 2011 now we make a new ponzi scheme to get rich selling houses to one another and banking signing off on morally bankrupt paper and douchebaggery of the highest order? I guess that is my question what happens after we bottom? More like the growth of the NASDAQ or maybe housing from 1960’s through the 1980’s type growth? Will that support our new economy built upon us spending money? Well, I would like to know what this all amounts to I guess, and what we should expect - I think grave consequences are in our future from 20+ years of greed driven ponzi schemes myself.
Great….comment went to the ethereal realm….this blog software is weak sauce Jon get your IT dept on the ball and get some real software.
1998 was a good year. Rants still had a few strands of hair to “combover” his ever growing forehead.
Still alive and viewing from the sidelines…I see not much has changed.
Patricio-
Lansner’s blog has been eliminating my posts as well. I believe I was put in the “penalty blog box”.
Out of frustration I’ve moved over to Matthew Padilla’s blog site instead. Why is the software so different for the 2 sites?
This place is dead. Come on over to the Irvine Housing Blog.
The bottom will be placed this winter. Spring 2009 will be the start of the recovery in OC market!!
There is little inherently wrong with the OC housing market …But the biggest danger is further deterioration in general economic conditions, i.e., deflation.
So, except for the depression, everything is great.
Shane Says:
December 23rd, 2008 at 9:58 pm
“The bottom will be placed this winter. Spring 2009 will be the start of the recovery in OC market!!”
Thanks for the laugh.
The media is overplaying this downturn big time. They act like the sky is falling. They are just looking for ratings. Even with an unlikely event of 10% unemployment, 9 out of 10 people are working. People will soon get tired of gloomy talk, very soon !!
I doubt the media is to blame. Just take a look at company financials, its double digit losses across the board. Ask people around what they think about the economy, they’ll say its bad. Then ask why?
they don’t know because they dont read the news. im surprised how many are not informed. Ask these people where they get their news, and be astonished at the answer.
shanes not quite smart enough to see that the media
is actually being too optimistic– they like shane- still dont
get whats happening– the media in 1930 didnt get it either–
so this is just par for the course– shane may I make a slight
suggestion– OPEN YOUR EYES
Rants, You look very desperate wishing for a another 1930’s depression all so you can get a break on a home. Try increasing your salary by getting a real job.
I dont know if shane understands basic economics. Let’s say national unemployment goes to 10%. This 10% only represents those that are made claims for unemployment. This does not take into account the large amount of contract employees/self-employed. This includes Realtors, brokers, construction contractors, government contract employees, etc….possibly another 2-3%
This doesn’t take into account those that are no longer receiving unemployment, which could be easily another 2-3%. The largest group that is not counted is the underemployed. Those that had jobs making much more than the current job they have had to take in order to have some sort of income.
So that being said the true unemployment rate is likely closer to 15%. What this means is that all businesses will be getting on average 15% less revenue. Some will be fine, while others likely have declines of near 50%…..when you have a profit margin of something like 10-15% on most goods and services, than these companies will fail.
To simply state that 90% of the population is still employed is extremely myopic. As job losses increases, profits decrease…when you see Casinos laying people off, you really know there is a problem.
Credit card debt is getting higher and higher…have you checked your statement lately. Most companies seem to be raising their rates to make up for any losses.
Our savings rate is close to an all time low…so few people have a down payment or any equity to help them “move up”.
Banks are tighter than has been seen in recent years. Most want 10% or more down before they will even think about giving out a loan (see savings above).
So of course consumer confidence is down. For certain there are people who can afford to buy, have a down payment, the credit score and income to do it….but why would they in a declining market, with so much job uncertainty??
I’d would love for the media to report good news…I just dont see it in the near future. Let’s get through the summer and see what happens then.
The entire price hike between 99 and 07 is being shaved OFF. It was a BUBBLE fueled by the loosest credit terms in history. You think that’s going to happen again in our lifetimes? Get real. 99 prices will be here in 2011/2012…then it will be a +2% annual crawl after that.
Thank God I sold my house in So Cal in 2007 and moved out of state.
I LOVE Wisconsin ever since they invented these things called 4 wheel drives.