Us: How do you see what’s happening in the O.C. housing market and when do you think the market will hit bottom?

Merage: For the first time since the down cycle started, the market is now “in alignment” in terms of prices, with sellers & lenders (loss mitigators) on one hand and home buyers on the other.

This is evidenced by the fact that in the month of April, more home buyers and sellers came together and not only had more transactions and achieved more sales than any of the previous months in 2008, but for the first time since April ’06 pending sales almost matched that of 24 months ago. We are also seeing many investors and speculators bidding on properties obviously hoping to better the market turnaround.

Further, second quarter of 2008 will see the economy infused, not only with income tax refunds, but the drastic measures of the federal economic stimulus package. We are now seeing the first glimmer of consumer confidence: our Realtors are reporting substantial increases in the levels of buyer inquiries and an increase in foot traffic, following months of price declines. A recent survey of institutional investors concluded that 86% believe that the market should reach the bottom of the cycle within the next 12 months, but no one can pinpoint down to a month.

Us: How long until we get back to the latest peak, which was when, 2005 or 2006?

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Brenda Magana, a housing specialist at the Fair Housing Council of Orange County, says the problem is snowballing. “Last year we were seeing three or four tenants (facing foreclosure) a month,” she says. “Now we’re seeing three or four a day.”

Dianna Baumann, a Tarbell Realtors leasing agent in Mission Viejo who represents tenants, recounts horror stories of renters caught up in the mess. In most cases, she says, the first time the tenant knows there’s a problem is when the notice to vacate is tacked on their door.

Increasingly she is seeing situations in which a landlord leases the property after already getting behind on the mortgage. Some have even received a notice of default, the first step in foreclosure. In many of these cases she says the owners pocket the tenant’s first and last month rent and security deposit instead of bringing the mortgage payment up to date.

“They know they’ll need to find a place to rent, too, so they just use the (tenant’s) money to rent a place for themselves,” says Baumann.

To read the rest, CLICK HERE!

Before the credit crunch zapped easy mortgage money beginning last summer, only two months since 1988 saw less than 2,000 O.C. homes changing hands. O.C.’s suffered seven straight through March. To be sure, 2,000 sales ain’t huge. Since ‘88, DataQuick reports show sales averaging 3,793 per month.

DataQuick’s latest report shows that 15 of 83 O.C. ZIPs had year-over-year sales gains; 13 ZIPS had year-over-year prices gains. See the ZIP-by-ZIP data HERE! Perhaps you can ponder why it takes a $191,106 income to buy an O.C. house.

Here’s how the O.C. market performed in this most recent period by the slice: By the slice …

• COMPARE: CLICK HERE to see how other home-price indexes see O.C.

Some conflicting signals, no?

Shopping centers are modeled on the open-air lifestyle concept popular in California, featuring beautifully landscaped terraces and dancing fountains, spacious eateries under the sun and stars, and relaxing coffee shops to meet friends or do business. The town center is a lively palm tree-lined retail promenade blending the best of European city lifestyle and Santa Barbara architecture, and with leading retail brands and restaurants.

Just what the world needs, more faux Spanish-Moorish architecture! To read more, CLICK HERE!

Brokers sold 19% less attached homes this April vs. ‘07 and the median price received was off 18%. All told, $270 million of O.C. attached homes were sold, a 32% drop in a year.

As for detached homes, 1,021 houses were sold by brokers in this count for April, a 9.5% increase. It took a 23.6% drop in prices for those homes to draw out more buyers in this category. All told, $937 million worth of O.C. detached homes were sold, a 10% drop in a year.

It’s worth noting that April’s O.C. sales-dollar total is half April 2005’s O.C. housing bounty. Or $1.2 billion less.

• In the last quarter, O.C. single-family homes sold at a median price of $597,900. That’s off 14% vs. the year-ago period.
• Meanwhile, U.S. single-family homes sold at a median price of $196,300, down 8% vs. the year-ago period.
• Thus, my “Orange County premium” — how many typical U.S. homes you can buy for the cost of one mid-priced O.C. residence — was 3.05 vs. 3.2 U.S. homes to O.C. homes in the previous quarter and 3.28 in the year-ago period.

If you look back over time, you see this premium parallels broad movements in the local real estate market. In the mid-1980s and mid-1990s, a bottom in the premium it seemed to hint that price rallies were possible. And twice in recent memory — 1989 and 2004 — the premium peaked just as those rallies were running out of steam. (Read read how this premium got me “in trouble,” CLICK HERE!) I’ve now broken the premium down by quarters dating to the first quarter of 2007. You see those quarters in orange in the accompanying chart. We find that the Orange premium at 3.05 for the first quarter was at its lowest since all of 2003. Still, that’s well above the 1982-2007 average of 2.33 U.S. homes for the cost of a single O.C. house.

Brian Moore, Wedbush Morgan Securities: Linda, you certainly have been in the industry a long time. Can you give any kind of macro view on, I guess what we’ve seen has been a trade down or deceleration of sales within fast food or (quick-serve restaurants)? It seems casual diners have suffered for so long and (quick-serve restaurants) has held up well. Now we just get negative retail sales numbers yesterday for (quick-serve restaurants.) Sales appear to be softening. Any thoughts on your experience during previous kind of downturns?
Linda Lang: If you go back to 2000-2001, where some of it was self inflicted because we were doing aggressive discounting at that time, and there is a little fear of that. If you have read about Taco Bell, they are rolling out a very aggressive value menu. I think it is all related to the economic conditions; and you have that coupled with the high fuel costs and the regionality of the low housing market. I think it is a little bit tougher. It is tougher than I’ve seen in my 20-plus years in the industry.

To read more about Taco Bell’s cheap eats, visit the Fast Food Maven’s blog RIGHT HERE!

Landlords in the Los Angeles-Orange County-Riverside area, however, still were raising rents. In 1995, at the height of the last big recession, rents declined at a 0.4% annual rate.

Annual rent increases for homeowners renting out their house were 3.6% higher in April than in April 2007. Last year, the so-called owners’ equivalent rent of a primary residence grew at a 6% pace in April. The price overall to keep a roof over your head (minus purchase costs) rose 2.5% over the last year, the slowest rate since March 2004 when it was 2%.

Other local consumer housing price news:

• Fuels and utilities overall jumped 7.2% in the last 12 months
• Residents using natural gas saw prices surge 27.8% annually
• Household furnishings, hit by the housing downturn, continue to be a bargain, with prices down 3.4% in the last year.

LA-OC-Riverside CPI rent changes

CLICK HERE for other local April consumer price info. CLICK HERE for Fast Food Maven’s take on grocery prices. For the full CPI press release, CLICK HERE.

Other recent rental news:

• House/condo renters latest victims of foreclosures
• Newer O.C. apartments suffer more vacancies
• Insider Q&A hears of tough times for landlords
• Home/condo rentals not hurting apartment rentals
• What niche will be real estate’s star?
• Could foreclosures help increase affordable rental stock?
• Bad O.C. economy hits 1-bedroom apartments
• Foreclosure refugees head for O.C. apartments

Agents with HÔM Real Estate Group said their brokerage just got the listing along with Willis Allen Real Estate of La Jolla. This big-ticket listing follows news that an O.C. price record was just set for an off-water home: a $27.1 million sale of a Corona Del Mar house.

This pricey waterfront property new to the market, at the tip of Harbor Island whose residents include Irvine Co. boss Don Bren, is described by HÔM’s listing as a 23,000 square-foot lot hosting a house having 10 bedrooms and 12 bathrooms within 18,000 square feet of living space.

Willis Allen’s Web site described the Harbor Island home, completed in 1990, this way:

“Spectacular and elegant French neo-classic bayfront estate. One of Newport’s most prominent and coveted properties with approx. 300ft of waterfront with stunning views of the main channel. Docks several boats. Expansive garden & pool, cook’s kit., butler’s pantry, 6 fp, elevator, staff quarters 8 car garage.”

Rob Giem of HÔM said, “It is considered to be the finest piece of bayfront property in Newport Beach.” When asked if it would sell quickly, he first said he didn’t make predictions, then added … “But I think so.”

If the Harbor Island home sells for $38.5 million, its price could set a record for a single-family home in Orange County. But it’s got competition from at least two other homes offered for sale in Orange County with higher asking prices. Newport Beach agent and developer John McMonigle currently is asking $77 million for the Villa del Lago estate under construction in Newport Coast. And McMonigle also is listing the beachfront Portabello Estate in Corona del Mar for $75 million.

For the next year, the county will now charge developers when they actually build a home, not when they file building plans. (Fees included are some road, library, park and other development taxes.) To read more, CLICK HERE!

Your blogger dialed up John Moorlach, chair of the Board of Supervisors who dreamed up the builder break. Not that we begrudged builders any help, I was asking when the county’s small fry might see county financial aid. Moorlach did note that builders employ people who’d be considered small fry, and what’s good for the building companies might be good for their worker bees.

And Moorlach was fairly cool to my consumer-based “tax holiday” suggestions — say, cutting auto sales tax for a weekend, or the like — suggesting that state law may prevent the county from reducing or delaying many of the levies it collects.

But Moorlach says he’s open to suggestions. And I know people on this blog have plenty of suggestions about what bureaucrats can do with taxes. So, my dear crowd, please fire away. I’ll make sure Mr. Moorlach is reading us. Fire away!