O.C. builder group prez eyes undramatic recovery

January 2nd, 2009, 12:00 pm · 30 Comments · posted by Jeff Collins

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! Our 15th guest is …

David Greminger, division president for California homebuilding for Fieldstone Communities, was 2008 president of the Orange County Building Industry Association. According to his company’s Web site, he’s held various positions at Fieldstone since 2000, including director of land acquisition and project manager. Prior to joining Fieldstone, he was a senior manager in Ernst Young Kenneth Leventhal’s Real Estate Consulting Group.

Eyeball: What’s the O.C. housing outlook for 2009?

David: I believe we will see the O.C. housing market improve in 2009, although it may not be dramatic turn. New housing starts will remain very low, while we continue to sell through existing inventories. Prices will stabilize, and buyer confidence will begin to return to the market. There is an argument that we will begin to see a supply shortage by the end of 2009 in Orange County.

Eyeball: What’s the chance we bottom in 2009? What might it look like?

David: Very high. I believe many submarkets in Orange County have already hit bottom, or are very near today. The bottom of a market is very difficult to time and once it becomes clear it has occurred, it will have already passed. Buyers who are waiting to know they’ve hit bottom to purchase, may find they miss the best opportunities.

In general, I think the correction will be relatively flat. We are likely to see a small bump at the beginning of the recovery when a large number of buyers jump off the fence, then a period of time when prices stay flat.

[ 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!

David: My largest fears center on the overall financial health of our economy. If what we are going though was only a housing correction cycle, I firmly believe we would be thought it. Housing values and mortgage rates are great right now, but when people are fearful of losing their jobs, or their life savings, it has a very negative effect on their confidence in buying a home.

Eyeball: What gives you hope? Why?

David: We are three years into this cycle, prices have dropped significantly, and new home starts are almost non-existent. There is still some supply to work through, but now is a fantastic time to buy a new home. Once the consumer realizes this, I think we will see a very strong and stable recovery.

Eyeball: What surprise or surprises will we be talking about at a year from now?

David: I think that at this time next year we might be talking about growth in our industry. We could have a supply shortage and builders could be hiring again. Housing is most often the industry that leads out of recessions, and I this one won’t be any different.

And you’ll want to come back …

NEXT UP: Economist Kerry Vandell
THEN: Realtor Steve Thomas
All of Eyeball 2009 to published date is HERE

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Bill says:

January 2, 2009 at 12 pm

Guess Again!

http://biz.yahoo.com/cnbc/090102/28470517.html

poneeboy53 says:

Wow, another person in the real estate industry saying buy now or you will miss the boat. Who would have guessed?

Gunner says:

Why interview people who earn their millions from house value appreciation? Of course they are going to be niavely optomistic. I hope everyone can read these “forecasts” with a grain of salt. I am in sales and my income depends on rising sales, so I always forecast growth no matter what. Got to keep my job. And when it does not happen, I blame the economy, not my forecast.

meltdown says:

so i’ll miss opportunities if i wait for a bottom?
so what happens if i buy now and it isn’t the bottom??
not very good advice from this guy.

I say WAIT for the bottom, It will show AFTER it has formed. wait for normal volume and normal YoY price appreciation.. and YES you will miss some opportunities. but not much.. IT is very risky to buy now. Prices are still falling. There will be NO supply shortage. Be patient.

lee in irvine says:

Yawn … same story, different face.

sunsetbeachguy says:

January 2, 2009 at 1 pm

I am with the rest of the posters.

Another interview with a Hacky Hackster.

Did everyone see David Lereah’s mea culpa on CNN money?

http://money.cnn.com/magazines/moneymag/moneymag_archive/2009/01/01/toc.html

Buy the dip later says:

Those who buy now are knife catchers. These buyers will soon realize how bad that decision was.

Barry says:

He seems to contradict himself.

First he says “Buyers who are waiting to know they’ve hit bottom to purchase, may find they miss the best opportunities.”

Right after that he says “In general, I think the correction will be relatively flat.”

So what is there for buyers to “miss” if the recovery is flat?

rants says:

this guy was saying the same thing last year and will
be saying the same thing next year– whos next– gary watts?
then we’ll get “real data strategies” patty veling– thanks
for providing us with true unbiased “expert” opinions there blogger lloolllllllllll

shockg says:

January 2, 2009 at 2 pm

More attacks from angry speculators who will never the see significant drops in the better areas of OC.

bloodinthestreets says:

So . . . highly educated shockg;

Most of the bears here have been correct for many months, yet you are calling them on their ‘09 predictions.
Precisely what is your logic for a recovery this year? (I’m guessing that you have nothing to say, so I’ll throw in some token answers on your behalf.)

1. Obama is “smart”, and he will implement real change (even though he has ‘zero’ track record of any manner of successful endeavor, managing people, solving a problem of any significance . . . as far as I am aware . . . tell me I’m wrong with data or example).
2. Inventory is falling, this means an end to home price erosion (Inventory is an irrelevant parameter to watch when prices are falling like they are).
3. Interest rates are super low! (I understand your problem, years ago I used to think that everything hinged on interest rates . . . I know better now. I admit that it does affect the velocity of the market, but it doesn’t in itself change the direction of the market).

Mr. Lansner: The link for ‘All of Eyball’ above seems to be broken:

”
NEXT UP: Economist Kerry Vandell
THEN: Realtor Steve Thomas
All of Eyeball 2009 to published date is HERE
“

OCTrojan says:

January 2, 2009 at 3 pm

The “bottom” in the real estate market can be measured in months, not days, so an observant investor will know when we are very near the bottom and pull the trigger. It’s not like the stock market where the bottom may last no more than one day.

Those who are ready to buy and are just waiting for the “bottom” can afford to wait and will not “miss” the boat on prices. If they stick with the rule “buy a home you want to live in for the next 10 years at a price you can easily afford”, then buying at the actual bottom becomes irrelevant.

The only people would be concerned about timing the market are speculators, flippers and short term investors (less than 5 years).

January 2, 2009 at 4 pm

OCTrojan says:
“The only people would be concerned about timing the market are speculators, flippers and short term investors (less than 5 years).”

So what are you saying about 99% of the regulars on this blog?? LMFAO.

Bogey says:

Poor shockg,

how does the saying go….

‘you can lead a horse to water, but . . .. .

shockg’s life …… attacking speculators on an RE blog. So sad.

Talk about LMFAO

Tom M says:

January 2, 2009 at 5 pm

Steve Thomas has been interviewed for Blind Eye 2009. He is already on this blog every other week (26 times a year). If you want to see what he has to say just go back to his last post, it never changes.

O well, I guess he is the warm up act for the one, the only, Mr Gary Watts.

Whatflavorisyourkoolaid says:

You can’t deny that inventory low and rates have brought prices in line with both rents and incomes.

Sorry, that was supposed to read: you can’t argue that inventory is low and rates have brought prices in line with both rents and incomes. The only issues are employment and confidence.

Theresa says:

January 2, 2009 at 7 pm

Keeping Dreaming…….,these are the guys that said there was no bubble. Bottom hits when most people can afford the mortgage. Can people put 20 percent down with these prices. Is that happening? No. Will it happen next year? no. Prices need to come down further before people can afford mortgages again. No more creatiive finances. Back to roots 20 percent down on a 30 year fix and average mortgage is no more than $2000 a monthanf thats includeing insurane. That tells you there is no bottom yet for next year neither.

pdu says:

January 2, 2009 at 8 pm

shockg,

You and most of those who bought in the last five years fit very neatly in that category of “speculators, flippers and short term investors (less than 5 years).”

Think about it. It was obvious to many that the market was overvalued. I didn’t buy because buying into an overvalued market IS speculation.

Many of those buying were getting in “before they were priced out forever.”

Many of those buying were planning to “profit and move upmarket.”

Hence, a market of speculators, flippers, and short term buyers.

Greedy or ignorant. Some were both. They got caught in the game they entered, beaten to the exits by those who were smarter.

Speaking of Gary Watts……..here’s a fascinating look at some opinions from 2006.

http://www.socalbubble.com/2006/04/gary-watts-will-still-burn-in-hell.html

Mr. BlueMove says:

January 3, 2009 at 12 am

Bluemove has identified a builder in Laguna Beach who is headed toward foreclosure on an upscale beach close project.
http://bluemove.blogspot.com/

David Poggi says:

January 3, 2009 at 3 am

It’s funny how some people here like shockg, thoughtless, truthi etc. who are losing their arse in their own home values, think that anyone who’s a bear here doesn’t own. I bought recently outside OC and now have a mortgage cheaper than renting a room in OC, in a newer and nicer place. Yet I still have the common sense to know that values are falling and will continue to do so. Yes, I’ve lost money since I purchased, but it was the right move for me. I waited until the value of places here crashed 50% and then I bought. I don’t really care that my place has gone down in value even more because I can easily afford my place, have a great job, I’m not sitting in traffic anymore, and love my life. Bottom line is if you’ve been waiting to buy and can easily afford it in OC, then buy when it’s convenient for you. If you’re planning to stick around awhile, values will come back up some day. I think they’ll come down a good amount more, but all factors considering, it’s already a good time to buy there. Buying when the values have already crashed 30+% is never bad, even though it was from some artificial high. Just don’t be bitter if values fall another 10-20%, which I think they will there. Know what you’re getting into, and buy for the right reasons, and life will be great.

January 3, 2009 at 7 am

The real estate industry just cannot tell the truth.

Here’s more proof that housing will get much worse this year and not recover.

http://finance.yahoo.com/tech-ticker/article/152524/No-Housing-Recovery-No-Bottom-(Period-End-of-Story)?tickers=%5Edji,%5Egspc,TLT,XHB,SPY,DIA,XLF

The realtors don’t want you to see this list!

A huge problem for the housing market in 2008, foreclosure sales will continue weighing down the market next year. “There was a surge this year,” Zandi says. “But next year [there] will be even more.”

http://realestate.yahoo.com/promo/9-housing-market-head-winds-for-2009.html

Shane says:

January 3, 2009 at 9 am

Bill,

I hear you work for Remax. You Realtors want to talk down the prices so you can have more transactions !!

Shane,

The Realtors should be beating the sellers over the head and refusing listing above market prices. Otherwise they just sit in these open houses
and waste their time.

Myrtle Beach condos says:

January 3, 2009 at 11 am

I agree agents should be very proactive about listing properties for what they will seel for or either price reducing them

The voices you keep hearing in your head seem to indicate that a doctor’s visit might be appropriate.

Your bitterness towards realtors as well as your fear of this bubble collapse clearly indicates that you are an overleveraged bubble buyer.

People like you need to jump ship before the market takes your very last dime.

samson says:

January 3, 2009 at 12 pm

I just dont understand while home sellers are still using the “buy now” mantra. It seems that they transform that statement regardless of the situation. I have rarely seen an article or statement from a builder/lender/RA, etc that said it is a bad time to buy.

I do agree to a certain extent that prices will likely bottom out this year, and go flat for sometime longer. I have no real info to back this up, but neither does anyone else. I also think that buying sometime later this year isnt the worse idea, if you plan on living their for 6+ years. I of course would love to buy at the absolute bottom, and build equity from there…but that would be difficult.

I think future buyers should look, find a home they like and can afford, offer 15% off the asking price (unless it is in line with comps) and dont settle for anything under 7.5% under asking price. I think this is a good strategy to get a home that you want and can afford. Oh, I also think you must work with the Realtors to get them to drop their commission to under 2% each if they want the sale to work.

Lastly, I disagree that prices are in-line with rents/incomes. I dont know many people that are paying 2,500+ a month to rent a 2-3 bedroom condo in decent neighborhoods. Forget the cost of renting a house.

The Donald says:

January 5, 2009 at 5 pm

Finally an intelligent article from a true professional. Unlike the rest of you lemming “bloggers”, Mr. Gremminger appears to realize that California production homes are a lot more attractive investment at their current 30-40% depressed levels than where they were when you were all bragging to your friends at cocktail parties about how much money your 2006 home purchases were going to make you over the coming years.

Bravo Mr. Gremminger, brilliant!!!!!!!!!!!

Slice	Price	Ch.	Sold	Ch.
House	$500,000	+18%	1,833	+11%
Condo	$290,000	+7%	881	+22%
New	$617,500	+24%	171	-17%
All OC	$435,000	+10%	2,885	+12%

Orange County Register