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O.C. housing gets ‘riskiest’ ranking
November 12th, 2009, 12:20 am · 120 Comments · posted by Jon Lansner
New report from mortgage insurer PMI Group on potential home-price stability in major U.S. markets lists Orange County as tied for having the highest risk of future home value depreciation.
PMI uses various economic and real estate factors — from employment to pricing trends to broad business climate trends — to compare various markets. So PMI’s study tracking the 50 largest U.S. metro areas puts Orange County real estate in a noteworthy, national perspective …
- Risk? 99.9% chance of home prices falling in next two years. That score tied Orange County with eight other markets for the the crown of “nation’s riskiest!”
- OK. You ask … “The other 8?” Nearby Inland Empire and LA; an I-15 drive away, Vegas; and 5 Florida markets (Miami, Fort Lauderdale, Tampa, Jacksonville and Orlando!)
- Pricing? Orange County values fell at a 7.81% annual rate in Q2, that’s 14 percentage points better than Q1. That’s the biggest improvement among the top 50 markets tracked by PMI.
- Affordability? Orange County buyers found a harsher market, by PMI’s math, in Q2 vs. Q1 as local affordability ran 19% below the top market’s average.
- Jobs? Orange County unemployment was not helping as Q2 local joblessness (8.8%) was 3.7 percentage points above the 5-year average. Top markets average ran 3 percentage points above their respective 5-year trend.
And nationwide? PMI concludes …
- “Appears that risk may be close to peaking.”
- Risk increased in just 55% of all-size markets tracked (384.)
- Average risk rose to 51.6% from 50.3%, an increase much smaller than in previous quarters.
- Of the 50 largest markets, 19 were in the moderate, low, or minimal risk categories.
- Markets in California, Nevada, Florida, and Arizona continued with high risk as did markets with high unemployment (such as Detroit.)
Big real estate woes:
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This can´t be. We have been assured that the economy is recovering and that home prices will rise next year. The 2010 Outlooks (at right on my screen) forecast price increases ranging from “tiny” (CSUF) to 9.5%.
They will just institute more government handouts (tax credits, deductions, cash-for-clunkers programs) and hand out 3% FHA loans regardless of credit quality with the responsible taxpayers ultimately paying the price!
http://www.beyondthemargin.net/2009/09/keynesian-economics.html
LOL UCLA said 16% in 2010. At least CSUF was a little more down to earth. They must not have as many friends in the RE industry like the UCLA folks do. ;-)
Those who have done their homework and ‘get it’ that RE is toast don’t need any more data. Housing is done!
VOILE!!!
Housing here is burnt toast.
PMI has no agenda at work — unlike VORs foolishness below.
PMI insures mortgages and needs to accurately asess risk or they lose money. In otherwords, PMI puts their money where their mouth is.
“PMI has no agenda at work”
You’re sure about that?
There is no reward without risk
The truth comes out!
This assessment is based on a critical analysis of the real risk to actual money not just the flagellation of some air bag blogger who can run away from their erroneous opinions simply by changing their name.
All those who “get it” (translation: those who subscribe to conspiracy/anti-Obama blogs) will be getting is non-buyers remorse when they miss the OC RE boat. Then they’ll blame……..you guessed it…..the govt.
It’s all the govt’s fault!!!!!!!!!!! (it always is, right?)
llllllooooolllllll!!!
Aw, look at the damage control by VoiceofDouchebagery. I’m sure our non-buyers remorse will be comforted by the thousands of dollars we’ll save by not buying now. How many houses have you bought during these “once-in-a-lifetime” deals? Didn’t think so…Like I’ve said before, there are no bulls here. Just realtors, brokers, and underwater homeowners that need other people to buy. Any of you “bulls” want to show me a non-REO home that you purchased in the last 2 years that is worth more now then when you bought it and I’ll gladly give you props. But, I won’t hold my breath.
Why don’t you address the article then - rather than making useless general statements.
I was addressing Bogey’s post. As for the article, it’s all speculation. It’s just as easy to find an organization that predicts a double digit gain, as we’ve seen here. They all need to say something that will get their name in the news. If they turn out to be wrong, they can just say “market conditions changed”, or “the government did it!!”.
Ok, all together now, “we’re number one”
OK, but you still haven’t addressed the article. Yes, there are articles on both sides.
I’ll give them this. There probablly is a 99.9 percent chance that home prices will fall in the next 2 years. Prices could dip for 1 month, and they’d be right. So the article is not definitive enough to really even address because they didn’t specify how much or for how long.
VOR, are you really so dense as to believe what you say here?
That foolishness about prices dropping for one month making PMI right only shows you have no idea what PMI does or what they are saying.
You’d be better off keeping quiet rather than showing all that you don’t know, which is your recurring pattern here.
Ha! I’ll be happy to miss a sinking boat! Cue drowning sound effect.
Voice of Reason
You really are a joke and you don’t know it.
Is VOR only a “Joke..?”
It does the best to please his/her Masters. But deep dpwn is a good dog.
Thanks Jc. I love dogs. They are loyal, sincere and without pretense. I’ll take that any day.
I knew that, is only barking, and no bites. good dogie.
Ed,
All I can say is that humor is for the swift of mind. Do you get it?
Jon
PMI gives a 99.9% chance that home prices will drop in the next 2 years so you still have some chance of being right.
Geez………………whatever happened to buying a house to live in for the rest of your life? Everybody wants to through their house on the roulette wheel, spin it and hope that it lands on “Red, multi-million plus”.
because “the rest of your life” could mean the rest of your career, which could be next week or next month when your struggling company lays you off with apologies and your income goes *poof*
Then you have to face reality and acknowledge your home worth/debt ratio, because if you have to sell your overpriced home, you’ll very soon become interested in whether that will involve a short sale or foreclosure.
Ah, the recurring NAR/CAR theme of “don’t speculate on housing just buy right now so I can get my commission” rears its head again.
There are 360 payments over the lifetime of a mortgage. By refusing to overpay for a home, you are potentially saving yourself 100s of dollars on each payment.
Aside from any non RE issues- rising oil prices, increasing unemployment etc.- here is what Diana Olick ( CNBC housing reporter) mentioned in her blog as headwinds for home prices.
What I am most worried about is March and April of next year. What happens to a housing market that seems like it is finding its footing at that point? Because several things will happen simultaneously: You’ve got the option ARM resets beginning to kick in, you have the home buyer tax credit expiring, maybe for real that time, and you have the Federal Reserve maybe running out of money to buy mortgage-backed securities. If we add on top of that, banks beginning to release some of this inventory ,which they have been holding on to for a long time, those three items are potentially very destabilizing to the marketplace. So I’m concerned. I think buckle your seatbelts for Spring of next year.
This is basically a backwards looking analysis. We are in the middle of a rain storm and PMI is telling us its wet. In fact, they are using second quarter data, which is pretty stale by now. We will be far into recovery by the time PMI predicts increased prices using this model.
And your comments show you are wet behind the ears despite your age.
Why don’t you offer something of substance rather than a childish insult? Or is that all you have?
I give you what you deserve.
M-A
You should be more mature and stop defending incompetents arrogants. Who are “childish-in-Denial” just because.
That’s all she has/is, Mark.
Poor tracker, trying desperately to spin bad news. Nothing more to add I see.
Don’t you have homework to do?
Or are you spending all your adolescent on blogs?
Maybe when you graduate and have to leave home you can apply for HUD housing.
Yes, I am 16 - I just got my license! And you respond to me - you are a puppet like Tracker. Too funny.
Yes Mark, with all the new jobs being created, prices will only go up.
I found these quotes on the internet yesterday. Very interesting time line …
The smartest man in the room:
“[T]he long-term cost of a bubble to the economy and society are potentially great. They include a reduction in the long-term savings rate [and] a seemingly random redistribution of wealth … I think it is far better that we burst the stock bubble while the bubble still resembles surface froth and before the bubble carries the economy to stratospheric heights” ~ Larry Lindsey, Federal Reserve Governor, FOMC transcript, September 1996 [Greenspan chaired this meeting]
The Prophet:
“There is room for the Fed to create a bubble in housing prices, if necessary, to sustain American hedonism. And I think the Fed will do so, even though political correctness would demand that Mr. Greenspan would deny any such thing.” ~ Paul McCully, PIMCO, July 2001
The Table setters:
“[B]anks of all sizes bucked their stereotype as conservative investors and gorged on subprime, which can be as much as three times as profitable as their equivalent prime products. Indeed the big banks have been snapping up subprime lenders, and been bolstering their own internal subprime lending units.” ~ Wall Street Journal, August 2001
The Chairman:
“A substantial part of equity extraction related to home sales, which is running at an annual rate close to $200 billion, is expanded on personal consumption and home modernization, two components, of course, of GDP” ~ Alan Greenspan, FOMC, August 2002
The Idiots:
“The nations home builders have said it, the Realtors® have said it, and now Alan Greenspan has said it once again, in no uncertain terms: there is no such thing as a current or impending house price bubble.” ~ David Seiders, Chief Economist, National Association of Homebuilders (NAHB), July 2002
“I believe that in years to come historians will see the beginning of the twenty-first century as the golden age of real estate” ~ David Lereah, Chief Economist, National Association of Realtors, March 2005
The dumbest men in the room:
“Go shopping more.” ~ President, George W. Bush, December 2006
Speaking about Freddie Mac and Fannie Mae: These institutions are fundamentally sound and strong. There is no reason for the reaction we’re getting” ~ Senator, Christopher Dodd, Senate Banking Committee, July 2006
Ahhh. Those quotes just made my day.
Very entertaining Lee.
thanks obama, your healthcare tax will hurt us all-he has no clue
Yes I’am sure the health care will hurt us as much as every other country that offers it to their citizens. Lets just start shooting people w/o health insurance when they get sick and remove the surplus population, right Luke?
have you even looked into the issue? at least half the countries offering socialized medicine are running huge deficits due to these programs, all while providing “waiting lists” and substandard care for their middle and lower class people. the upper class then typically goes elsewhere and pays cash. that’s really what you want? that’s your DREAM for America? wow
Oh, the “waiting list propaganda”. Maybe the health insurance companies aren’t making enough money? How do these other countries spend a lot less then we do and live longer?
We will soon be finding out because the insurance companies will be flying us overseas for operations.
We already have gov’t run healthcare in this country. Go over to any county hospital and ask yourself if that is what you want….
no, you’ll be paying for it yourself, if you can afford it. everyone else must wait.
Hey Luke you still reserve the right to keep being screw by your Insuranse-Masters.
Don’t worry be happy (and clueless)
Why are you complaining about something that has not even been enacted instead of the welfare that is already costing us dearly? How about corporate welfare? Or the wars that are draining us of lives and resources?
Yes Mark, PMI hasn’t taken into account the millions of jobs that Obama will create. They also aren’t aware of the fact that interest rates will stay low forever and the feds will continue to use every trick in the book to prop up home values.
Say it aint so . . .. ..
The Mortgage Bankers Association (MBA) weekly Purchase Index is at its LOWEST LEVEL SINCE DEC 2000.
The seasonally adjusted Purchase Index decreased 11.7 percent from one week earlier. The seasonally adjusted Purchase Index is at its lowest level since December 2000.
The unadjusted Purchase Index decreased 13.7 percent compared with the previous week and was 21.6 percent lower than the same week one year ago.
http://www.mbaa.org/NewsandMedia/PressCenter/70938.htm
Funny, yet they try to say prices are slightly going up in OC. The banks and the lenders needs to release the flow of homes into the market, let them garner cheap bids etc. Sale them, and the market will start to grow again. The issue is, a few greedy theifs up top dont want to drop their cash flow. So they will continue this crime of grand theft, at the expense of the ordinary citizen.
The bailout firms Chase and so forth have caused this issue.
Disgusting!!!!!!!
The banks are concerned about the coastal areas of SoCal … Orange County in particular. The longer they hold this shadow (and future shadow) inventory, the larger the explosion on the other side.
There’s about 33,000 homeowners in Orange County, who are presently delinquent (90+ days late).
the other side of what? water?
You’re right, I should have been more clear.
The other side = when the govts games of pumping more free money and bailing out the system losses stem, and/or they are forced to stop due to political pressure.
Also:
The other side = when the banks have so much inventory, or future inventory because they haven’t kicked out the freeloaders yet, that they are incapable of operating, and are forced to move these assets to the other side of the ledger.
agreed
Buy now so that I may eat you indebted soul.
For data needs in making your decision contact a NAR or CAR “economist”.
Please contact you local realtor for assistance.
yes they’ll all be happy to drive you around the block at breakneck speeds so you can’t notice all the fallout, while talking your ear off about their new blue rinse hairstyle.
This article makes no sense, and PMI makes no sense. The ability to forecast anything is fairly fruitless, and yet everyone as an opinion, just like everyone has an you know what.
So here’s my forecast. Job growth will take off in 2010. By 2012, there will be a severe inventory crunch in housing, because nothing now is being built. The Great Park will be built, with much of the property becoming an NFL Stadium. They will start building high speed rail between LA and LV, causing a housing crash in LV because no one will need to live there.
What do I know? About as much as PMI and all the other “experts”.
You are right about one thing; you don’t know much at all.
The article makes sense and PMI makes sense.
PMI doesn’t make forecasts. They assess risk.
The PMI insurers have been at this a long time - they got in trouble a bit in this downturn, as did so many others - however, that is no reflection on their ability to assess risk in the market today.
“This article makes no sense, and PMI makes no sense.”
I trust the mortgage insurers advice a lot more than any other entity. Remember, this company is an odds maker to the future.
The Great Park will be built, with much of the property becoming an NFL Stadium.
Gosh, I hope so!
They will start building high speed rail between LA and LV, causing a housing crash in LV because no one will need to live there.
I think the opposite would happen. In fact I know the opposite would happen. Remember, they don’t have state income tax in NV.
yes that’s true. people would want to make their residence in NV for tax benefits, not the opposite.
The problem with these “global” analyses / predictions when it comes to the housing market in OC is that they don’t recognize the market segments that exist. The high end doesn’t perform like the low end. Different areas within OC are performing differently than others (eg, Ladera v. N. Tustin). Thus, you can’t use a global analysis to really understand what’s happening in OC real estate. A more accurate assessment would break it down by price points and geography. Real estate really is local.
But OC home prices will NEVER go down! Because OC has such GREAT WEATHER!
LMAO
haha…..no?! Really?!
Let’s see. People with huge money on the line spill the beans, while everyday underwater Joes who need RE to go up since they already spent their equity lines can only dream of something other than reality.
Dreaming?? that is not dreaming. It goes beyond. It’s an Obcene denial driven by their own outlaw behaviors.
Tell that to the people who have more money invested in RE than you and strongly disagree with you.
Whoops - read over your post too quickly
hey yo…read again will’ya
Jc, you are the master……… of hyperbolic overstatement.
Thank you VOR . But that’s call Diplomacy.
I’m sorry is do hard for you. But …?
SC2, is that an example of concise analysis………..or just another useless, general statement????
You’re the expert…
It’s good to be the king!!
lol
Indeed - kings get killed
Go ahead buy a house, ill buy it from you in 2012 for half price.
Housing is so last year………. buy gold!
OC housing riskiest? For who? Speculators?
Down-play facts. don’t sound to “Smart”
“Appears that risk may be close to peaking.”
translation: when it becomes a 99.99% chance of prices dropping, then local risk will have peaked.
The people who bank on real estate going up are not only hoping and praying the article is wrong, in fact they need it to be wrong. Their livelihoods are quite literally on the line.
My brother’s a real estate appraiser who also provides expert witness testimony. His bet is values here in OC will continue to errode for some time. Despite what the real estate people will have you hear, prices are not going up. The median is going up which is indicative of the problems in the market finally hitting the high value properties, most notably the custom and coastal home markets. For the other 99% of OC homes, foreclosures are still hitting (my next door neighbor’s home was just foreclosed a few weeks ago) and the banks are holding some properties in the hopes of seeing some value increases. That’s delaying the inevitable and I’m sure that’s what PMI is seeing, thus the 99% likelihood of further value decreases.
As a side note, there are still plenty of people who didn’t take the equity out and overspend themselves. Those people are now in a position to potentially purchase ‘up market’ or are seniors who could downsize and make other investments. If the government really wants to help the housing market, finding ways to incent those people makes more sense to me than first time home buyers who are looking to put 3% down.
The more things change, the more they stay the same.
Freshly-closed:
1 Kara Ct, Aliso Viejo
3/2.5/1,965 sf
$600,000
All within 300 feet:
2 Kara Ct, Aliso Viejo - more info »
Foreclosure: $680,000
0 bed 0 bath
“This property is a Pre-Foreclosure
1 Gala Ct, Aliso Viejo - more info »
Foreclosure: $612,000
0 bed 0 bath
“This property is a Pre-Foreclosure
1 Gala Ct, Aliso Viejo - more info »
Foreclosure: $612,000
0 bed 0 bath
“This property is a Pre-Foreclosure
12 Pierremont, Aliso Viejo - more info »
Foreclosure: $577,500
0 bed 0 bath
“This property is a Pre-Foreclosure.
The more things change, the more they stay the same.
Freshly-closed:
36 Arborside, Irvine
3/2.5/1,545 sf Condo
$708,000
128 White Flower, Irvine - more info »
Foreclosure: $645,000
0 bed 0 bath
“This property is a Pre-Foreclosure.
63 Arborside, Irvine - more info »
Foreclosure: $620,000
0 bed 0 bath
“This property is a Pre-Foreclosure.
36 GARDENPATH, Irvine - more info »
Foreclosure: $749,000
0 bed 0 bath
“This property is a Pre-Foreclosure.
57 Greenhouse, Irvine - more info »
Foreclosure: $631,000
0 bed 0 bath
“This property is a Pre-Foreclosure.
48 Arborside, Irvine - more info »
Foreclosure: $734,000
0 bed 0 bath
“This property is a Pre-Foreclosure.
77 Canyoncrest, Irvine - more info »
Foreclosure: $607,200
0 bed 0 bath
“This property is a Pre-Foreclosure.
Thanks for the itinerary update.
The more things change, the more they stay the same.
Freshly-closed:
5692 Belgrave, Garden Grove
4/2.5/1,881 sf
$526,000
I wont waste time with this one.
The more things change, the more they stay the same.
Freshly-closed:
106 Sidney Bay Dr, Newport Coast
4/4/2,850 CONDO
$1,600,000
The more things…..
1026 White Sails Way, Corona Del Mar
4/3.5/?
$2,925,000
Wow, mortgage fraud alive and well.
2511 Bungalow Pl, Corona del Mar - more info »
Foreclosure: $650,000
0 bed 0 bath
“This property is a Pre-Foreclosure
2671 Point Del Mar, Corona del Mar - more info »
Foreclosure: $595,000
4 bed 3.5 bath
“This property is a Pre-Foreclosure.
Seafaring Dr, Corona del Mar - more info »
Foreclosure: $964,895
2 bed 2 bath
“This property is a Notice of Foreclosure Sale
717 Fernleaf Ave, Corona del Mar - more info »
Foreclosure: $7,773,896
0 bed 0 bath
“This property is a Pre-Foreclosure
720 Fernleaf Ave, Corona del Mar - more info »
Foreclosure: $1,400,000
2 bed 2 bath
“This property is a Pre-Foreclosure.
1400 San Miguel Dr, Corona del Mar - more info »
Foreclosure: $2,200,000
0 bed 0 bath
“This property is a Pre-Foreclosure.
Blah, Blah, Blah!
Tracker desperately trying to spin by posting closings that mean nothing. Yes, tracker, we know you can copy and paste (now move onto the next computer lesson), and we know that people bought houses recently, just like the past, just like they will in the future. Wow - so insightful tracker. Your knowledge and experience amaze all.
Yawn, prices haven’t budged in, well, years.
I guess you cannot comprehend simple numbers (even when presented as a pretty little picture/graphs with a single line showing changes), but what else is new.
Multi-year DEATH GRIP?
You obviously have a problem with simple data as well.
T R O L L
What’s wrong - data proves you wrong, so you can only respond with “t r o l l” - pathetic.
LOL…
Multi-year bottom call?
The few and not long experiences with items by Lanser are always the same … lacking sophistication as to merit/application.
By the sea, by the sea?
FIRE! In a theater?
Oh well, that ugly warehouse on Grand is tilting and the whole thing is tumbling down.
The blood bath in the orange county housing market is just getting started……next year there will be substantial depreciation in the higher end markets, that will ripple all the way down to the lower priced markets.
Wanna be investors that think they got bargains over the past year or two are going to be stunned at what is happening now.
Agree, Nano,
Have said the same and find it astounding that it’s not obvious to so many dreamers here.
It’s just logicical to see that the higher end is unaffordable to most, including many already in those homes, and needs to drop to become affordable to enough to create a viable marketplace. As the higher end drops the relative values of properties priced below that will follow the same drift downward.
Logical and inevitable.
Nanowest is back with his doom and gloom hopes and dreams. I guess you fell out of escrow again.
Anyone know the supply of new houses available in the OC?
Endless supply if you are willing to pay too much……..
But hey, no rush. There’s more on the way and prices will drop:
http://mortgage.freedomblogging.com/2009/11/11/foreclosure-notices-hit-record-8800/21021/
.
pdu,
I understand that. But my question is that in the past there had been large developments offering new product. Ladera Ranch, that San Clemente place, etc. etc. I am wondering how much inventory there is today. Will those foreclosures easily be absorbed by those who used to buy new? Granted now we have people doubling up. But if we need 10,000 new units per year to keep up with population growth, will we find an equilibrium.
No jobs. Why would anyone come here, we gave our jobs to overseas and we spend overseas, building more factories and such.
So you’re telling me there’s a chance of appreciation?
There’s also a chance you will die in a car accident tomorrow. So what.
There’s also a 99.9% chance that you will contribute nothing meaningful to this blog.
There’s a 99.99999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999 (and repeat…)% chance that you will contribute nothing meaningful to this blog.
Who cares. You said this was entertainment, as did I. What is your point? Do you really think it matters what you or I post on this blog? If so, you need to re-evaluate your priorities.
Thank you for the enlightenment. I had no idea. Any more tidbits of wisdom for us?
Your tidit was enough strain for you - can’t put too much pressure on that little brain of yours.
Folks, it seems really simple. Banks have regained control of housing prices by controlling lending practices. 5% DP to a guy with a 70k job to buy a 700k house can’t happen anymore. Unless he has a significant windfall. That means that most people’s false sense of ability to buy a home has evaporated. Housing values have to drop.
Do some research. Go back to 1970 and chart growth in home prices for So Cal. Do the same for housing prices. They both track pretty closely, until the balloon began to inflate. These two numbers are fundamentally impossible to decouple, without some major outside influence. That influence can, in a small universe of possibilities, be as simple as a new business coming to town. In this case, it was the virtually complete removal of any sort of “ability to pay” criterion, and the dicision to allow the buyers to have little or no skin in the game.
Wages have increased between 2-4% annually depending on where you live. Home values tracked that until lending requirements changed. Now, lending requirements are back to where they were when those numbers tracked each other. Go back to the old charts, and draw the lines forward. That’s where the values are headed, in my opininon.
AVG cost per sq ft (once a normal distribution of sales start occurring across all price ranges) should be about:
Laguna- 624
Dana Pt- 289
San Clemente- 269
Which brings me to the absurdity of these people’s “housing will be up.” The metric they use is a piece of crap right now. Cost per sq ft is down in general because it’s cheap stuff that’s moving. Not a representative cross section. It’s easy to say prices will be up. Eventually, more expensive homes will sell. Right now, they just aren’t.
But from PMI’s perspective, they’re worried about true apples to apples, not the BS comparatives on which jouralists create headlines.
Happy to be renting, for now.
xtra xtra xtra read alll about it- undeniable historical housing price data
confirms the housing price bottom still has another 25% drop–
at least
http://theautomaticearth.blogspot.com/
tracker - the square root of stupid
wow… I ain’t ‘ever ready from so many angry and frustrated folk…. is a shame you all converge on this poor blog… dang shame…
To NAR-
Don’t confuse pessimism with realism.
..Or optimism with delusion.
Are you from Englland, you crazy wanker! Cut the flim-flam and use the Kings English….it’s called an arse, old boy.