After we finished Eyeball 2009 last week — 19 days of Orange County real estate outlooks (Entire series is 
HERE!) — we realized we didn’t discuss the local condo market. So to make up for that ommission here’s a bonus Eyeball with …
Realtor Veronica Hicks of CondosEtc.
Eyeball: What’s the OC condo outlook for 2009?
Veronica: 2009 is going to be another good year for buyers; but not a hot year for condo sellers. Prices are continuing to decline and distressed condo inventory has grown to more than 50% of the active inventory. On the average most condo owners stay in their condos on an average of 3 to 5 years, so most would-be sellers will have purchased peak of market or pre-construction condos. Most of the condo owners that purchased a condo between 2004 and 2006 will look to sell within the next couple years, so supply will continue to outpace demand over the next couple years. High-rise condos will take a bigger beating than any other segment of the condo market because of cost of ownership and the difficulty to get a loan in these buildings, especially with the new loan guidelines. Many of the high-rise buyers are buying second homes may not be willing to plop down the 30% to 35% down payment requirements many lenders are requiring and are certainly being cautious about overpaying in any event.
Eyeball: What’s the chance we bottom in 2009?
Veronica: As much as I would like to believe the condo market will bottom in 2009 it is more than likely to be 2010. The condo market tends to lag the Single Family Housing in its recovery. As single family home prices drop, and inventory builds, buyers will look to get into a single family house before a condo if it is affordable causing condo inventory to run a little higher.
Eyeball: What do you fear the most about the real estate market?
Veronica: I fear the impact of the limited mortgage products available and the tougher guidelines in the lending segment of the real estate market. The lack of available stated income and “low down payment” programs for first time homebuyer and second homeowners will have a negative impact on re-sales. As first time buyers have more difficulty buying, sellers who would otherwise trade-up to a house will find themselves locked into their condo. Mortgage products are going to require tougher guidelines for owner occupancy and delinquencies in HOA dues, making it harder for first time buyers to get loans on these products.
Eyeball: What gives you hope?
Veronica: That the market is going to become more affordable and equivalent to rental cost which will allow more first time buyers in the market and many of the loan products out there will cater to that buyer group. That is a really fun group to work with because they know what they want and they are excited about getting into their first home. They really appreciate the work that we do and that makes the job worth it.
Eyeball: What surprise will we be talking about at a year from now?
Veronica: Don’t be surprised if twice as many short sales happen in 2009 than in 2008. More condo owners are being affected by their community short sales and tighter lending guidelines on communities with higher delinquencies and a higher percentage of rentals will take a bigger toll on sales. 70% owner occupancy rates and 15% or less in HOA delinquencies may be tough for communities who had so many speculators, especially the condos built between 2002 and 2007. The lower prices go, the less likely condo owners can dig into their pockets to avoid a short sale or foreclosure. The numbers of condos purchased in 2004, 2005 and 2006 were more than twice the number of 2008 condo re-sales. Those are the owners that are more than likely needing or wanting to move and that will in turn slow down the single family residence sales.
Here’s the 19 other O.C. outlook interviews that made up Eyeball — in order of reader popularity, as measured by our click counter …
- UCI economist Vandell eyes housing recovery in 2011 or later
- Realtor Thomas eyes O.C. housing bottom by summer
- CSUF dean Puri eyes no home-price rebound until 2011
- Brokerage prez Cosner eyes home-price rebound in 2010
- Pimco’s Simon eyes O.C. home price bottom in late 2009
- Forecaster Watts eyes slow recovery for pricier O.C. homes
- Consultant Gollis eyes flat-at-best O.C. housing market
- Outgoing Realtor prez Gaylord eyes O.C. rebound by summer
- Economist Thornberg eyes grim-to-nasty year for housing
- Investor Norris eyes tough 2009 for O.C. housing
- Lender Bour eyes hard choices for O.C. home shoppers
- O.C. builder group prez Greminger eyes undramatic recovery
- Developer Halford eyes real estate’s bottom by summer
- Realtor group prez Cambria eyes housing’s opportunities
- Apartment manager L’Ecuyer eyes flat or falling O.C. rents
- Adviser Kelly eyes rough ride for O.C. coastal homes in 2009
- Tenant advocate Levy eyes falling O.C. rents
- Property investor Brunswick eyes new, cautious paradigm
- Ad exec Most eyes O.C. home market at its bottom
an honest realtor- more rare than an albino unicorn
There’s an old joke, whats the difference between venereal disease and a Condo? You can get rid of venereal disease.
She fails to mention that owing these units costs less than renting, especially with interest rates the lowest in the history of the US. And that it’s easy to get low down loans, and even stated at 30% down. Condos have always turned over faster than SFRs, and it has never been a given they would outstrip demand. What has changed?
Ladera Ranch mayl be the Canary in the Coal MIne. With the way Condo prices are being driven down by the Banks, people may start giving it a serious look.
Well, a quick fact check reveals she is wrong. There are 3,633 (resale) condos and 7,185 homes on the market right now. In 2008, 7,702 condos and 16,305 homes sold. That computes to slightly under 6 month supply of each. They are virtually identical in market times.
Condos in south county (nice areas) have fallen around 50%. SFR price drops are around 25%. Owning condos are just about the same as renting them now. (in terms of cost) while the SFR’s have more room to go down. So I disagree with her. I don’t see the condos going down 60% from the peak. There is too much demand. That’s where all the multiple offers are these days!
What about thos crazy condo’s near Jamboree and the 405. There is nobody living the those two tall towers, I think it’s called the Marquee.
Koolaid-
You are saying there are only 10K in inventory for all of OC for condos and sfrs?
That belies what dataquick is showing.
I think your numbers are low. Where are you getting your inventory #’s from please?
Just fyi, for all of OC, from Zip Realty, which only shows active, no pendings, there are at least 4,660 condos for sale.
So again, I think Koolaid needs to lay off the, you know, Koolaid.
You are wrong, lady. There are 3,634 actives, 718 pendings and 480 in backup offers.
You are saying there are only 10K in inventory for all of OC for condos and sfrs?
I take it you find this low?
in a self perpetuating deflation- which we are currently in-
rents will go down too- prices will chase rents- down down
down they go where they stop nobody knows-
xtra xtra read all about it- obamas economic team has come
up with a grand scheme- er I mean plan- to create 4 million
jobs out of thin air then pay for them with money created out
of even thinner air- someone forgot to remind them of those
silly laws of mathematics- jobs added by the government
take away jobs that would be created in the private sector- where
real wealth is created instead of real debt- and god knows weve
got enough debt to last for generations- oh and dont tell the children
this is on the hush hush- dont want to cause any nightmares
Exactly how do government jobs prevent the private sector from creating jobs? Maybe it’s your theory that is made out of thin air?
This sounds about right. Condos will recover in 2010 and since SFR will recover faster expect recovery in 2009.
Hey Koolaid,
Since the government and California have put a temporary freeze on foreclosures (going on 3 months now) the MLS inventory numbers are only a fraction of true inventory.
How many times can they re-write the same modifications over and over again before they learn there are no other choices but to release the property back on the market?
Over a million jobs have been lost in the last 2 months alone and the real effects on mortgage delinquencies have not been felt yet.
December 524,000 revised to?
November 533,000 revised to 584,000
October 320,000 revised to 423,000
How many times can the government purposely underestimate the numbers so they appear to beat Wall Street forecasts, preventing a selloff, only to give the actual results at a later date?
43 states have an estimated combined budget deficit of about $100 billion.
Obama’s plan is already receiving heavy conflict from both sides, insinuating this bill will be debated on for a longer period before it gets passed and an even longer period before it is put in place.
None of this is good for housing prices, but don’t take my word for it, you can all watch for yourselves.
http://www.iht.com/articles/2009/01/04/business/real.php
I will never own a condo again due to the always rising condominium association fees, free-spending condo board members, and eventual degradation of common areas unless continuous assessments or dues increases occur. Condos are not and never will be worth the investment. When monthly association dues increase or an extra assessment is added on for a project, the market value of your unit can go down a few thousand dollars, because buyers balk at the high additional monthly dues. I would hold out for a SFR if I were looking to buy right now.
Bill,
I thought December was 693,000 lost..
next comes the inflation. stupid people will keep stocks and bonds. they are going down. gold. blue chip homes. silver. the flip to inflation will be sudden. people will rush to cash out mutual funds. depression will be widespread. crime. gangs. no utilities. no police. only the rich areas will be safe. get in while you still have time.
Veronica, you said 2009 is going to be “another good year for buyers”…was 2008 a good year for buyers? Oh, you mean the ones that bought and are now down 20% on their “investment”? Yes, of course, last year (and the year before) was a great time to be a buyer. Let’s not forget you a tad bit biased in that gullible buyers provide a transaction which helps to pay your commission. No, 2009 will not be a good time to buy. Prices are in a strong down trend, and real estate is like a big, slow moving ship….it ain’t going to just turn on a dime, and start going up again. I’ll be happy to see the vast majority of Realtors perish from this housing bubble. The majority of them, including you, Veronica, are harshly under educated about the true value and pricing of real estate. -Tom
2009 is the time to BUY BUY BUY!!!!!
in Detroit maybe
trs,
maybe stagflation…home prices will go down some more, and then stay flat..in nominal terms stll going down, since inflation on anything but assets…r u saving..got cash?
condo sfr - it makes no difference, they are hand in hand. reality is setting in. and its a good thing…..
Tom,
Lashing out at Realtors is not the solution…ridding the planet of them is not the solution either. There will be a budget oriented broker for those who seek minimal service. You can do it all yourself: search the homes, set up appointments, have an attorney draw contracts, etc. Hire the inspector(s), work with your lender or bank, and go to closing. The problem is most people are busy in THEIR own profession and do not have all of the time and energy to expend themselves.
I do not do general RE…but there are millions of people who utilize the services of RE agents. They will be around for a long, long time.
Now, will commissions always be 5-6%? Maybe…this range has been the norm for a very long time. Check out business to business brokers: they charge 10% for the sale and closing of businesses.
obviously people feel that their agent was not a good investement. unfortuneltly that goes hand in hand with the uterly impossible investement that most people made. if the agent would have told you not to buy, you would have found another and bought…. blaming the agent is the easy cop out…… check my posts, ive been negative on value for so long ive problably been deleted. oc real eastate is still so over valued its a laughable….
i am rich, im a teacher and i bought a house in laguna beach in 1970…. my kids are rich now and my grandkids will be rich….. lol…… ridiculous. you are what you are, a teacher……….
ex_owner_now_renter,
The 693,000 jobs lost in December was from a private report (ADP Employer Services) based on payroll data.
Here are some more numbers worth noting despite the states resistance;
On December 31st, 301 default notices were sent out to OC homeowners.
In the first 6 business days of January, 321 default notices have been sent out to OC homeowners.
The government’s decision to abandon the very same rules and regulations that this country has relied on and conformed to for strong stability, reliability and future growth in our economy will now be forced to face a very dismal future.
Bailing out the very people that have corrupted our country’s financial system is putting the entire country’s future in the hands of the uneducated.
http://www.bloomberg.com/apps/news?pid=20601068&sid=axprAUuvIM3A&refer=home
Bill,
Here you go again!! Spinning your wheels and saying a whole lot of nothing !!
It appears there are lots of fools and realtors (same thing) leaving messages. Only fools think that 2009 is the bottom!!!
Shane (Sean),
Only a clueless bubble buyer would not understand useful information.
Based on your very informative posts, I think I might add just a little more to the conversation.
Riddle me this Batman or in your case, boy blunder
As inventory decreased days on market have increased.
As inventory decreased the $/SF has decreased.
As inventory decreased price trends have continued to drop.
As inventory decreased market action has started to slow.
Why are market forces bucking the outside manipulation?
This is not good news for bubble buyers especially if they are in jeopardy of losing their job.
The uptick in unemployment coupled with the foreclosure moratorium ending and the next wave of mortgage resets hitting this year will increase inventory substantially, which will only complicate matters for someone that’s in your predicament.
I hope this post was more informative to you!
http://www.businessweek.com/ap/financialnews/D95HPKD80.htm
Ah, well, we are getting there now aren’t we?
Where are the new median numbers for January? I’m thinking 390K.
Bottom 350K or so. Condo market will take years to recover.
Even if the high end stabilizes at these prices (dn 33%), real gains in price over the next decade will be zero.
No wait, real price gains in real estate over the last 100 years were zero. Yikes.
Just remember an ounce of gold was $20, now its $900, but gold didn’t really go up in value. And neither did your house.
whatflavor- how do govt jobs take away from private sector jobs?
its elementary math- theres X amount of capital in the market for use
in creating businesses- if that capital is taken and used by the government it cant be taken and used by the private sector- is that
simple enough for your child-like mind to comrehend? do I have
to explain everything to you realtors?
Hi Rants-
I agree with you, except that I would add that the reason govt jobs take away from private sector jobs has more about the industries that are created falsely when govt “invests”. A good example is the war industry, making bombs, etc. When the govt “invests” in this market, it shifts private sector resources from “butter” jobs (home building, etc) to “guns” type jobs (building bombs, etc). This causes a dislocation when the war stops. Now we have trained employees to build bombs, not buildings. So now they become unemployed and have to be re-trained…a bit like what Detroit is going through now, because Barney Frank et al, kept Detroit humming with free money (home equity lines of credit). We are now seeing that dislocation in full force. As the real market tries to absorb all this excess labor, and as labor tries to retrain (note how enrollment at the university level has exploded), the economy goes through one heckuva recession.
Does this stop the govt from “helping”? Of course not. All they know how to do is create a problem by throwing money, and then try and solve the problem by throwing money, when the only problem IS throwing money.
What are the differents between Lawyers, Realtors and Used Cars Saleman?
Foreclosure is the Only Best Option. Keep you cannot handle the heat, get out.