From CBS 2: “The unsold inventory of new homes in Orange County is at the highest level since 1996, according to an economic forecast released Friday in Irvine.”
“The report noted that what usually happens when a real estate market bubble bursts “is that sales just dry up” because buyers won’t buy homes at the listed price and sellers are unwilling to cut their prices. It described the result as “the economic equivalent of Chinese water torture” — with the decline in prices starting slowly but lasting a long time.”
“The economists said they do not expect a major decline in home prices this year.”
From the OC Register: “Orange County’s home prices continued to soften last month as sellers weathered the slowest September in 14 years, new housing figures released Thursday show.”
“The median price of an Orange County home sold last month was $626,000, according to DataQuick Information Systems.”
“Although the median price is up $16,000, or 2.6 percent, from 12 months ago, it’s the third monthly decline in a row.”
“In addition, the median price of an existing condominium fell from year-ago levels for the first time since June 1997. Last month, the median condo price was $440,000, down 3.3 percent from September 2005.”
From the LA Times: “Sellers who aren’t keeping pace with buyers’ expectations are growing discouraged and withdrawing their listings.”
“That’s exactly what Kurt Freck did. His Anaheim Hills home was on the market at the same price of $849,000 for three months. But after no nibbles, and seeing price reductions at comparable homes for sale in his neighborhood, he decided to cancel his listing agreement when it expired Tuesday.”
“‘I’m fortunate because I don’t have to sell,” said Freck, who purchased his home three years ago and believes that it has since doubled in value. “But as a homeowner, you got so used to watching homes sell quickly in the last couple of years.'”
“‘The market hasn’t gone into that desperation mode yet, but we see it as in the earliest stage of the downward pressure on prices,’ said Adibi, director of the A. Gary Anderson Center for Economic Research at Chapman University in Orange.”
“His Anaheim Hills home was on the market at the same price of $849,000 for three months. But after no nibbles, and seeing price reductions at comparable homes for sale in his neighborhood, he decided to cancel his listing agreement when it expired Tuesday… Freck, who purchased his home three years ago and believes that it has since doubled in value…”
Freck, take a stand. Who cares about affordability or inventory levels. Stick with your price and I am sure in the next 25 years you might sell it. In the meantime, watch it go down and down as interest resets and foreclosure start to escalate. What a F..ck-er
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849K. In Anaheim Hills. Unbelieveable. When we moved to OC in 1987, the law firm that recruited us (and was trying to recruit at UT law school) couldn’t keep the Texans they recruited because housing costs were so ludicrous. In those days, 300-500K in OC, Newport Beach, Irvine, etc. You could buy one of those nasty shacks in West Park for about 250-300K. Corona,Anaheim Hills was kind of a joke but some people were starting to buy houses and schelp in from there because you could get stuff under 200K, but it was nuts and only a few people did it. 500K out there just blows my mind. There was a whole class of people from Austin who came to OC that year to work for that firm and two years later, all of them were gone.
How humiliating to have to resort to nonsense like that Anaheim Hills seller.
Well, I remember when a new house was 100k in OC, not at the beach but in a nice area in 1974. I am here in Reno where the buyers have been on strike for sometime, and we have 6k houses for sale and less than 500k people.
We are watching the other bubble areas implode, and even Orange County, that bastion of middle class wealth will not escape. In fact, if that homeowner doesn’t drop his price and sell his house it could be decades before he sees 800k for his house.
Also, easy money is history, and because of inflationary pressures, houses will not be refinanced to help those house poor souls escape from their arms. The lost decade is beginning, as it has continued in Japan for 16 years of continual RE price decline. The party is over. Save your money and don’t buy Real Estate!!!
“…and believes that it has since doubled in value”
Will Kurt believe it has only increased 5% in value or even halved in value when this whole thing shakes out? I sold out in 04 and used the proceeds to start a business (and we rent)–the opportunity was there to actually invest in something. I couldn’t stand all the vanity talk about “oh, our neighborhood’s homes are worth this much now” when it’s not even real until you SELL it. Duh, huh?
the downturn has just started, we’re just at the upper tip of the bell curve right now which is headed for a freefall, so I find it really funny that these bufoons are looking at the little movement in prices and saying it is a “soft landing” or the downturn is “orderly”…rubbish I tell you! Of course, it’s the calm before the storm… prices will be flat for a bit and then start aggressively finding the bottom.
Quote:
“When my real estate agent told me I should drop the price again, I said ‘That’s it. We don’t have to move,’ ” the grocery store supervisor and father of two said.
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What extreme arrogance I tell ya. These fools don’t realize that prices are determined by market forces and not by his personal greed. Why does he think he DESERVES that price? I am sick by these people. Did they earn this appreciation through backbreaking labor? Nope, so why this attitude of entitlement?
Oh yes, I’m drinking the crash Kool-Aid.
Sit on your cash folks. Next year the monkeys start falling out of the trees. Later-on we’ll buy the whole damn forest.
It is unbelievable how overpriced Orange County is, especially Irvine. I spoke with a couple of friends that own property here and believe their condo (otherwise a glorified apartment) is worth $200,000 more than it was in 2004. I am surprised that little by little is being said about this in the media. The fact that sales have fallen in record terms, in some areas steepest drops ever recorded, surprises me that the media isn’t saying much about this. Somehow I feel that we will be in stagnant territory until Q2 of 2007 when we will have a glut of inventory in spring and the true battle of prices will begin. The buyers will expect year over year negative appreciation and sellers with pie in the sky dreams will try to up the ante in terms of prices.
Somehow I feel that 2007 will put buyers largely in control of the market.
I wonder how many Option ARM’s will re-set during, say, 2007. This is the real gloom and doom hanging over the market. Affordability is less than 1/2 the problem. There’s a structural time bomb that will go off. I think in San Diego the problem will be worse, but I still think the Option ARM’s will cause a disaster in the OC.
What happens to people who paid $650K for a house using 95% financing when that house is only worth, say, $550K? Their equity is gone and their payments are about to go up. They can’t afford the new payments, but they can’t refinance their existing debt, either.
William:
I discuss this over in my blog. The time bomb you speak of will first explode with subprime buyers. Why subprime? Because they pose the biggest risk of default. By definition these borrowers are high risk. Resets are only starting this year but in 2007 the estimate is that over 50 percent of subprime loans will reset.
Keep in mind that the market hasn’t seen this yet because for the past six years if you had trouble making your payment, all you needed to do was to refi with the equity that was made in one-year or sell the place off and pocket the change. Next year we’ll begin hearing “short-sale” lingo back in the markets. In addition, keep in mind that many of these subprime loans have prepayment penalties adding gasoline to the fire.
Take a look at this stat for the bay area:
1. The following chart shows the percentage of Bay Area loans that were interest only or Option ARMs (know as negative amortization).1
Year Interest Only Option Arm
2005 42.6% 29.1%
2004 43.7% 9.6%
2003 20.3% 0.8%
2002 12.0% 1.7%
2001 2.9% 1.6%
1 Kathleen Pender, Mortgage options explode, SAN FRANCISCO CHRONICLE, April 13, 2006
So I cancelled my Cox cable television service today…
When the customer service representative asked the reason why I was canceling, I replied,
“Well you see… greedy mortgage lenders and real estate investors made the cost of living so high that in order for me to keep up with my rent and continue to save for a house I have to cut luxury items out of my budget.”
I used the same line on some Boy Scout trying to sell me popcorn in front of Ralph’s over the weekend. Sorry kid… Maybe you’ll have better luck selling in Newport Beach or selling to Real Estate investor.
So much for charities and worthy causes…
The sad thing is, my wife are only paying $1,500/mo for our 2 bedroom town home style apartment by the Tustin Market Place and we are putting away $1,700/mo toward our down payment. Even so, it’s going to be awhile before we’ll be able to afford a home at today’s prices. We are both 31 years old and our biological clocks are ticking.
Favorite quote: “A college degree? I fell for that scam too.”
as much as I dislike West Park, the homes there are certainly not “nasty shacks” as deemed by a previous poster. the place i rent has a relatively spacious backyard as Irvine goes, around 2600 sq. ft with vaulted ceilings, (and a vaulted ceiling in the second floor master). the owners are immigrants so all the walls are stark white and beige carpet (although upgraded) but a little paint would provide quite a nice home.