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30% gain predicted for SoCal home prices by 2012
October 13th, 2009, 2:00 am · 82 Comments · posted by Jon Lansner
Private economists at California Forecast — with chief economist Mark Schniepp — made this stunning prediction for the Ventura, Santa Barbara, Orange, and San Diego counties’ housing markets in their October newsletter …
By mid-2012, selling values return to 2004 levels, a gain of approximately 30 percent from the lowest levels recorded earlier this year.
What supports this optimism? Snippets from the report (READ COPY HERE!) …
- The gradual increase in selling values in the aftermath of the 2008-2009 recession is consistent with the 1990-95 recession that severely impacted California and prolonged the recovery in home values.
- Prices bounce up because distressed sales no longer dominate the mix of sales and therefore the median selling price after 2009.
- We forecast 20 percent more sales during the second quarter of 2010 than during the second quarter of 2009. Sales continue to expand in 2011.
- The likelihood that mortgage rates will remain competive into 2010 is high.
- The likelihood that credit market conditions will continue to ease is very high. They are already easing now. Mortgage-rate spreads have narrowed and bank lending standards are no longer tightening.
- Already there are hopeful signs in the Southern California economy with a recovery in housing and a rebound in export traffic at the Ports of Los Angeles and Long Beach. The recession is no longer intensifying and private sector labor markets are stabilizing.
[ VOTE! Could real estate lift O.C. out of recession? CLICK HERE! ]
Various outlooks:
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30% gain???
Anyone who thinks that is delusion.
Someone call the mental hospital one of their patients has escaped and is writing crazy articles in the OC Register.
30% Your an idiot
I say 50% gain anyone want to buy my house so I can get out of California?
That is pretty optimistic concidering the rate of CA unemployment in just 3 years:
http://economy.freedomblogging.com/files/2009/10/cajoblessbyyear.gif
Lasners article is speculation (from a realtor type?) and the link above is fact.
i guess they are correct on this issue since soneone trying to get the approval of free trading cocain in California :) 30% gain comparing to profit getting from buying and saling cocain is not too muchhhh though… hihihihi
On the other hand, this is very possible when the dollar falls through the floor and we will be paying $15 dollars for a gallon of milk also.
This is probably posted somewhere below, but just in case…………….
http://realestaterecord.blogspot.com/2008/10/mark-schniepp.html
It seems as if someone has been busy getting many of the previous predictions of Mark’s deleted from the links on google, however I was able to find this on freelibrary.com.
—–
Economists were generally optimistic about the economic climate in the coming year. Some are predicting more success than others, but in general they see companies hiring and nothing to significantly derailde·rail
intr. & tr.v. de·railed, de·rail·ing, de·rails
1. To run or cause to run off the rails.
To look ahead to 2006, the Business Journal spoke with four economic experts about what they see on the horizon.
Mark Schniepp
Director
California Economic Forecast
“I don’t expect to see the same type of bursting growth in things like housing and commercial real estate demand and retail dependency, but we’re not going to see a huge change in the cards.
“The retail build-up won’t be as great simply because it’s starting to run out of gas. Consumers are just getting to the point where they’re not really leading the charge in terms of spending. They’re just flowing along right now, they’re not spending quite as much as they were.
“Job growth will also be OK, but not great. The housing market is going to be a big factor there. The reason things are going OK is because we don’t see the housing bubble exploding yet. If it does, all of the bets are sort of changed.
“Interest rates are not rising that fast, mortgage rates kind of went up and stopped. There’s nothing major in fundamental economic news that will necessarily dash the market.
“The state budget problem in California is resolving itself, we’re not out of the woods yet, it’s still going to take a few more years but we’re moving in the fight direction. I just hope the legislators don’t spend all the money that’s coming in and let it go to debt reduction.
“We have high-profile trade at the port. All areas will benefit from port activity, that creates jobs in a variety of markets. Warehousing and industrial markets will be quite vibrant.”
Having trouble getting this to post so I’m trying again.
If one googles Mark it appears someone has been hard at work deactivating the links to his previous projections.
Did find this :
Economists were generally optimistic about the economic climate in the coming year. Some are predicting more success than others, but in general they see companies hiring and nothing to significantly derail the housing boom.
To look ahead to 2006, the Business Journal spoke with four economic experts about what they see on the horizon.
Mark Schniepp
Director
California Economic Forecast
“I don’t expect to see the same type of bursting growth in things like housing and commercial real estate demand and retail dependency, but we’re not going to see a huge change in the cards.
“The retail build-up won’t be as great simply because it’s starting to run out of gas. Consumers are just getting to the point where they’re not really leading the charge in terms of spending. They’re just flowing along right now, they’re not spending quite as much as they were.
“Job growth will also be OK, but not great. The housing market is going to be a big factor there. The reason things are going OK is because we don’t see the housing bubble exploding yet. If it does, all of the bets are sort of changed.
“Interest rates are not rising that fast, mortgage rates kind of went up and stopped. There’s nothing major in fundamental economic news that will necessarily dash the market.
“The state budget problem in California is resolving itself, we’re not out of the woods yet, it’s still going to take a few more years but we’re moving in the fight direction. I just hope the legislators don’t spend all the money that’s coming in and let it go to debt reduction.
“We have high-profile trade at the port. All areas will benefit from port activity, that creates jobs in a variety of markets. Warehousing and industrial markets will be quite vibrant.”
Tried to copy and paste this but this software won’t let me. Here’s the link:
http://www.thefreelibrary.com/In+their+own+words:+experts+talk+about+local+economy.-a0141492455
Yup, more and more predictions in line with what I have been saying for months. And you bears laugh at me….haha, look who will get the last laugh!
I tend to think this headline will create a firestorm of vitriol…/
Agreed!
Query how someone can predict something without addressing actual facts.
I predict Dow 15,000 by 2012, and housing to increase by 100%. Yeah - that’s it.
Hell, it could actually go up 30%. There are a lot of fools in California and just as many scammers to take advantage of them. I’ll continue to rent my big sweet house for 2/3’s. If everything goes up 30%, guess I’ll be renting at 1/2. Woo hoo! Thanks landlord.
I have a prediction !
30% of the economists at California Foecast will lose their jobs by 2012.
I can outdo you, I think 100% of employees at California Forecast will lose their jobs before 2012.
pdu, great link!! What a disgusting (and proven wrong) shill! Trust him and lose your money.
These guys are clueless idiots. Their “analysis” is basically that it’s happened in the 1990s so it should happen in the future. How they can’t see the difference this time is beyond me.
Do they get these numbers after dropping a few hits of LSD?
And, might I ask where they got their degrees? Was it Devry or Kaplan? Or, maybe they got their degree by being home schooled!
Please tell us. It would help us understand their logical thinking ability.
The flaw in their thesis is comparing the current debt-based deflationary credit contraction recession (similar to the Great Depression) to the 90-95 typical business cycle recession.
These goofballs at CF are amateurs. What a joke.
As opposed to Bogey, who got his BS in economics, who is a true professional in his field.
As the bears launch into the predictable these guys are “morons…idiots…clueless…etc,” Lansner is sipping coffee and belly-laughing as the web hits increase and the OCR can ask for just a little bit more for online ad space. Keep helping the economy bears.
Predictions are futile…nobody knows what tomorrow will bring. And certainly NOBODY (yeah you too rants) knows what 2012 has in store for the CA RE market.
But how now cow can there be a 30% increase? That is the problem with this article….
perhaps THEY are basing it on THESE opinions…
* The gradual increase in selling values in the aftermath of the 2008-2009 recession is consistent with the 1990-95 recession that severely impacted California and prolonged the recovery in home values.
* Prices bounce up because distressed sales no longer dominate the mix of sales and therefore the median selling price after 2009.
* We forecast 20 percent more sales during the second quarter of 2010 than during the second quarter of 2009. Sales continue to expand in 2011.
* The likelihood that mortgage rates will remain competive into 2010 is high.
* The likelihood that credit market conditions will continue to ease is very high. They are already easing now. Mortgage-rate spreads have narrowed and bank lending standards are no longer tightening.
* Already there are hopeful signs in the Southern California economy with a recovery in housing and a rebound in export traffic at the Ports of Los Angeles and Long Beach. The recession is no longer intensifying and private sector labor markets are stabilizing.
Gotta touch on this guy’s “proofs.”
* The gradual increase in selling values in the aftermath of the 2008-2009 recession is consistent with the 1990-95 recession that severely impacted California and prolonged the recovery in home values.
They lost me with “aftermath of the 2008-2009 recession.” Doesn’t something have to be over to have an aftermath? There is not much fundamental similarity between 90-95 and 08-09.
* Prices bounce up because distressed sales no longer dominate the mix of sales and therefore the median selling price after 2009.
Small decrease in domination does not equal “no longer dominate.”
* We forecast 20 percent more sales during the second quarter of 2010 than during the second quarter of 2009. Sales continue to expand in 2011.
Why would you forecast this with the current unemployment numbers? I forecast snow today in Irvine. Despite the 67 degree temperature. Despite every indicator disagreeing with me, I can play this game too.
* The likelihood that mortgage rates will remain competive into 2010 is high.
Agreed. Absolutely agreed. Q: Low mortgage rates indicate what? A: Little/no inflation. Q: Which indicates what? A: Little to no wage growth. So with bleak unemployment numbers and very little wage increases, you argue that a catalyst for 30% increases in housing prices is leaving interest rates where they’re already at?!? Logical/mathematical dot-connecting FAIL.
* The likelihood that credit market conditions will continue to ease is very high. They are already easing now. Mortgage-rate spreads have narrowed and bank lending standards are no longer tightening.
Depends on your definition of “credit market conditions” and why they are “tight.” Sounds like your definition of tight credit markets is somewhere along the lines of: “tight markets = responsible lending to those who actually have a hope of paying back the debt.” If you are advocating the return of $1/2million mortgages to janitors then please quit your job.
* … The recession is no longer intensifying and private sector labor markets are stabilizing.
Uh, I thought you just said earlier the recession was over. Selling values are already “gradually increasing” in the “aftermath” of the recession. But we must still be in the recession because you say it is “no longer intensifying.” Oh, and I think instead of “private sector labor markets are stabalizing,” you actually meant to say “private sector unemployment is still increasing.”
Do you even try to think objectively? Your cheerleading talking points don’t even agree with each other. You seem far more interested in convincing us THAT you are right than in discovering IF you are right.
I dont think we are going to increase by that amount…but that is my opinion.
The current state where the Fed is printing money to buy up virtually all US mortgages is unsustainable. When it is forced to end, then you’ll see the real pain.
HA. The bears are reaching for the B/P meds as we speak. But, let’s look at the facts (you know–that stuff that isn’t your opinion). The middle of 2012 is 20 months away. That’s about a 1.5% gain per month and an average sales price of $556k at the end. I don’t think it will get quite that high, but not completely impossible.
Unless of course you believe in The Phantom. Phantom inventory, phantom buyers, phantom lenders, phantom bloggers, blah, blah, blah……
“That’s about a 1.5% gain per month and an average sales price of $556k at the end. I don’t think it will get quite that high, but not completely impossible.”
I want to touch on this. Do you think wages are going to rise 1.5% per month? If not, then what would support higher prices? Do you realize that rental vacancies are very high right now and even notoriously stingy apartment companies like TIC are offering reductions in their rents without their tenants even asking for it? Perhaps you have seen the unemployment numbers? Maybe the stats on small business? Read any articles about strategic defaults? Seen the FHA delinquency numbers? TARP repayment delinquencies?
I could go on and on. In addition to your lack of consideration for things like…oh, I don’t know…REALITY or NEWS or LOGIC, you have failed in your post to back up anything you said. It’s just pure, blind, emotional NAR-logic. I’m surprised you didn’t throw in a “buy now or you’ll be locked out forever” or a “they ain’t makin’ any more land” or “it’s real estate baby, you CAN’T lose” or “Suzanne researched it.”
What makes you think 1.5% increases per month could even be remotely possible? Other than (1) Your employer wants you to say so or (2) You will benefit financially if it does
Only if the government blows another RE bubble. But they can’t keep interest rates at practically zero% forever. Once those rise RE values must come down. Government must decide. Save the dollar or save the RE market. hah. Good luck on that! And if they blow another RE bubble prices may rise 30% by 2012 only to crash 60% by 2015.
Pick your poison.
“time to buy buy buy! buy now before you’re priced out!”
man, these realtors (lower case on purpose) are gonna pull that line out again. this is annoying.
granted, if you think about it, flat prices from 2004 to 2012 sounds about right (weren’t prices flat for the better part of the 90’s?)
I was waiting to hear the Gary “in the bag” Watts explaination that everyone in SoCal is RICH… not any more! The only way values rise is IF incomes do the same, ALL borrowers must prove they have the TAXABLE income to services their debt! And what IF interest rates do rise? 1% rate increase = 10% buying power decline
Five year ago I read an article on OCregister.com from an economist at Chapman University. She said worst case scenario, housing would decline in value 5%. How wrong she was. For the most part, any massive appreciation articles on ocregister are an attempt to draw readers and sell copies. There is NO WAY 30% is going to happen 5 year, much less 3. Save your cash folks, don’t use your credit cards and buy up the market in 6 months!
“30% gain by 2012″
“Peace in the Middle East 2010″
“Angels Win World Series 2009″ (wink)
“We look forward to finishing what we started this season and never losing sight of our goal - to bring another championship to the best fans in the world and the great city of New York.” -George M. Steinbrenner 10/5/09
YOU ARE NUTS——RATES WILL NOT STAY @ZERO FOREVER–
WHAT HAPPENS WHEN MORTGAGE RATES GO UP–HOME PRICES GO DOWN–
MY VIEW THIS ARTICLE IS MISS-LEADING AND NOT FACTUAL.
ANOTHER BONE-HEAD -OUTRIGHT STUPID ARTICLE–PEOPLE NEED SOLID FACTS TO BASE THEIR INVESTMENTS–NOT A BUNCH OF BULL -
Wow, already predicting gains when housing, especially the high end, is still coming down and more people are losing their jobs.
But even so, a 20% gain after losing 50% isn’t too bad.
Means a $750,000at the peak house will be $450 in 2012. Still significantly lower price.
I think the economists are following the stock market trend and not looking at the way the government and banks are falsely manipulating the current real estate market. Its still going to tumble more.
I also forgot to add…..maybe they are just looking at all the debt the country is going into and all prices are going to be up by 20% due to out of control inflation.
Bingo
Except jobs / wages.
I predict 100%!!!!
Increased is just another meaning of more tax property we have to pay.
What a joke. Lamo Real Estate people PR. Haven’t we learned anything?
UE at 26 yr high. Increasing pressure on higher interest rates. From yesterday’s posting, which predicts housing problems to 2012.
A 30% increase? I thought we already had a median spike…. So I guess the article is correct in that whatever has occured thus far could be it.
“It’s going to drip on the market,” said broker Fred Arnold in Stevenson Ranch, California. “We don’t have the state and federal government that will let the natural supply and demand market occur which is pushing the real estate problem into 2012.”
Come on, what are these guys smoking and what Weed shop are they buying from…this must be soem good stuff to think 30% by 2012?
If this housing market grows and it will it is funded by more cheap money and unrealistic fundamentals. What happens when interest rates go up..say 8 percent average. Let’s see what the housing market looks like than. Last time it crashed. Cheap money and taxpayer bailouts is in control of this housing market for some time. Until the beast arrives high interest rates with high inflation that day will come for all of us and the housing market will go back down to what their worth we still have not reached those prices. They are propped up and are higher because of cheap money and bailouts. A fake economy and fake propped up for casts and prices.
The reason property prices will increase considerably by 2012 and beyond will be the severe inflation we will be experiencing by that time.
Our money supply is out of control thanks to the triumvirate of Obama, Pelosi & Reid, the most socialist group of leaders in our nation’s history.
We are witnessing the fall of the American Empire, folks, and the rise of the Far East Empire.
The 20th century was the American century.
The 21st century is the Asian century.
http://online.wsj.com/article/SB125530360128479161.html?mod=patrick.net
Party like its 1999!!!!
Oh, but wait. Upper end continues to crater. NYT, a real paper, actually has actual facts. That green spike for upper end foreclosures is anything but a green shoot… I guess that is consistent with more people at the upper end and with high credit scores walking away - surely, that will fuel a 50% increase!!!!
“New data suggest that foreclosures are rising in more expensive housing markets.
About 30% of foreclosures in June involved homes in the top third of local housing values, up from 16% when the foreclosure crisis began three years ago, according to new data from real-estate Web site Zillow.com. The bottom one-third of housing markets, by home value, now account for 35% of foreclosures, down from 55% in 2006.
Foreclosures are rising in more expensive markets as home values in those areas fall, leaving more homeowners with mortgages that exceed the value of their properties. Prime loans accounted for 58% of foreclosure starts in the second quarter, up from 44% last year, according to the Mortgage Bankers Association. Subprime mortgages accounted for one-third of foreclosure starts, down from one-half last year
Did you just say the NYT is a real paper? Wow. They will be lucky to survive and no go online only.
late to the game, but I found another prediction from this Econo-tard. So last year, i the midst of the almost collapse of the economy, he said California would be fine and experience a slow down - not a recession. LOL
http://realestaterecord.blogspot.com/2008/10/mark-schniepp.html
Clearly an example of too much “medicinal” marijuana. ;-)
Assuming this:
“Prices bounce up because distressed sales no longer dominate the mix of sales and therefore the median selling price after 2009″
THEN:
The 30% figure might be correct but that’s not really the case in California, is it?
http://www3.signonsandiego.com/stories/2009/oct/11/foreclosure-lifeboat-facing-uncertainty-about-futu/?business&zIndex=180796
And with unemployment the highest its ever been and rising it isn’t likely to change soon.
FANTASY
Here’s a section from the chief economist’s bio. I think he is trying to help out his clients.
Dr. Schniepp provides economic consulting for Irvine Company, Kaiser Permanente, California Association of Realtors, John Burns Real Estate Consulting, and The Southern California Association of Government.
just another usless azzhole who can predict anything just to get some attention then not be accountable to anybody about anything said. oh I get it now, he thinks he is a california politician or someone that didnt get enough mommy attention when he was young.
Well theres nothing wrong with trying to be optimistic. They may be right, but at the wrong time.
I say give it 5 years, THEN the market will maybe make its climb to the 30% mark.
Just keep in mind when you loose 50% value, you need to make 100% gain from the bottom, to get back to where you were.
I agree this is more likely for 2014, assuming a 30% gain from today’s price. Most of the gain will occur during the final 3 years from 2011-2014. Recoveries tend to start slow and build momentum as more people take notice and jump on the bandwagon.
This is consistent with the facts on the ground.
Have your head in the dirt again, eh?
Facts on the ground, what does that even mean?
That’s what happens when people keep walking all over you - you just get used to being on the ground…
He just killed his career, no one will ever take his work seriously now. You no longer have credit in your choosen field. There is a second wave of foreclosures coming that will swamp this country, espeially California dreamers. Values will continue to drop till 2012, then stay flat for a few years, then maybe you will see some very little appreciation.
Funny thing is if you g oogle him you will find multiple links to previous predictions of his that somebody has been hard at work removing.
That tells you all you need to know.
I was able to come up with two previous links that make him seem to be not too prescient.
Both of those are near the top of this thread.
i have a thought :) should we find the way to make it increasing in the price since that is the only way to get bailed out money from goverment :)
A house is supposed to be a place to live, not a profit center. It’s a home, not an investment portfolio. Home price gains for one, mean giant mortgages, overtime & time away from family and tons of stress for thousands. It means that our children are having to move away to BFE in order to buy a home that a young adult can afford. The American dream turned into a dark-ages nightmare by the greedy. You’d think that most people would’ve learned their lesson after this latest bubble popped, but, apparently, some people’s greed is insatiable….at any cost. Go ahead, pave the road to the next bubble, but….someday….the truth of these words will come to light.
SBN, I’m in your camp on this subject of housing. A home should be a “life-enriching” investment first, then icing on the cake if it becomes more valuable later on. The investors and flippers have turned the housing market into what it is today, a broken and potentially scary portent on things to come in our country.
This speculative behavior ruined it for many who would’ve bought a home in recent years, but were priced out of it. And the OC market is still being manipulated instead of letting market factors take their natural course.
Hmmmm what can you do with a worthless economics degree that’s all based on theory?
(note to self) Don’t listen to Mark Schniepp
These guys sound like the same kind of shills you find on CNBC
The one who came up with this article. Is really smoking the best in town.
Mid-while I will have my coffee, and out this non-sense
Yesterday they posted prices going back to 2001 levels. Today going up 30% by 2012. Does that mean my employer wll give me 30% rise by 2012?
He will be wrong just like all the bears.
30% gain in certain areas doesn’t seem too far fetch. 3bds/2bths foreclosed properties in the IE were going for less than $100K; hence, it is possible that these property values can come back up to $120 - $130K in 3 years.
He isn’t talking about certain isolated areas in the IE. He listed 4 entire counties and he’s talking the median.
I posted on here a couple of years ago about how real estate in oc was going to go down because of affordability. I predicted that the median price for a house to be around $417,000 because that’s what the FHA would allow.
My buddy told me that at that time the median income in oc was about $60k or $5k per month, 40% of that is around $2k. IF the banks go back to reality and change to 33% of gross then people will be able to afford about $1600 a month. Interest Rates will now drive the market as will the cost of building a new house with land going down in value to offset these variables. I am speaking in averages so there is room either way of $417,000. As the dollar falls, interest rates will go up to attract foreign money to support our over spending, inflation will also rise. Will wages keep up with inflation ? Will the fed keep interest rates low? The median price of a house in oc will be dependent on A. Interest Rates (higher - less can buy), B. Cost of Building New (If it goes up prices of older homes go up), C. Employment and Wages, D. Obviously Inflation. I think that the overall outlook for real estate pricing is great but I think that rise will be more than offset by inflation from a fall in the dollar (creating a rise in interest rates). So my theory is that prices will rise but by less than inflation and the other factors.
just another lansner trick to get more hits on his blog-
boycott the register and all other corporate funded media
who could care less about finding then disclosing the
cold hard facts- which is supposed to be their “job” to
begin with-
what is the percentage of real estate ad revenue the register gets?
exactly
It doesn’t take much to get all of the renters excited!
In any case, is it really a farfetched prediction to say that the 400,000 median might reach 520,000 median in 3 years?
Not really, considering how it fell.
This guy may have a job in the obama administration. He could sell his healthcare plan. They use the same fuzzy math!
As a previous poster noted the only place this guy belongs is in a mental facility.
It’s more like a 30% decline into 2012 looks most probable given shadow inventory yet to hit, increasing trend of foreclosures, increasing unemployment and negative wage growth.
Another 30% when my landlord is already subsidizing 30%, I’m making a killing renting. Doesn’t get any better than this.
Yes, inflation is going to happen. In real prices, real estate will remain nearly stagnant for a while, but in dollars it will go up. Inflation is going to be at least 3% a year very soon. That alone will be responsible for price increase of 10% in 3 years. However, the major factor to impact prices that nobody is considering on this thread is house permits. With house permits down to 1946 levels, OC will keep the inventories down and it will drive the prices up. I don’t see a 10% per year a realistic price increase, but at least 4-5% is real, granted OC stops banking on real estate as its major industry.
30% increase?
Sure it might happen - if you can forget about a few facts:
1) $5 Billion in NegAm loans are defaulting in SoCal - Along with a 62% increase in late payments on other mortgage products. Do you think using tax dollars to artificialy stabilize those home values (125% refis and mods) is REALLY going to “save” them…?
2) Lower wages and higher unemployment and higher taxes. I find it comical that in 2002 the politicians altered the unemployment calculation. If you input todays numbers into the pre-2001 model - We are already over 20%.
3) A normalized market has a 2.5 ratio of median income to median home prices. (If you make $100k - You should buy a $250k home.) At $84k vs $450k SoCal is over TWICE the ratio of a normalized market….
But this does make for excellent hand-outs at open houses - And generates a fair amount of revenue when agents want to buy reprints with their information attached to it - And hand them out to foolish buyers are waiting to roll the dice with their life savings. Again…..