ZIP Median Change Sales Change
92602 $662,000 -23.9% 8 -78.4%
92603 $760,000 -29.3% 22 -31.3%
92604 $630,000 5.9% 11 -31.3%
92606 $867,500 19.7% 11 -56.0%
92612 $397,500 -34.3% 18 -14.3%
92614 $650,000 8.3% 8 -63.6%
92618 $742,000 11.9% 21 23.5%
92620 $892,250 24.8% 20 -66.7%
This is the first median I have seen reported under $400K (92612). It is also the first time I have noticed any zip codes with less than 10 sales in a month (92602 & 92614).
If you recall, 92612 was the one zip that was showing huge sales and price increases last year. It was all of the condos being closed on after construction was finished. Contracts entered in the halcyon days of 2005. High rise construction always has that long delay between contract signing and closing. Helps you in a rising market, hurts you badly in a falling one.
—–
Thanks for all posters’ inputs for such a great blog.
Happy New Year!
http://www.icq.com/img/friendship/static/card_16961_rs.swf
Happy New Year All!
…who’d a thunk it…turns out that not everyone in Irvine is rich – median household income of about $85K and ‘family income’ of about $103K according to the 2006 census.
Look for yourself – (http://en.wikipedia.org/wiki/Irvine%2C_California). This would indicate that real equilibrium for median housing is closer to $300 or $400K. Regression to mean – it’s happening now…
Yup. It all boils down to fundamentals. At some point this “irrational exuberance” will subside and things will fall back into line. Irvine will still be expensive but not insane like it got the past few years.
Irvine Renter,
I was wondering if you are holding to your predictions of last March
https://www.irvinehousingblog.com/2007/03/11/predictions-for-irvine-housing-market/
I have not seen a total median for Irvine, but based on these numbers your prediction of 632 seems to be pretty close.
Are you still predicting the same time table?
But Irvine is different, and now is a really great time to buy!
IMHO those figures are going to see a small drop for 2007. Thousands of high-salary jobs have been axed already. If they outnumber the low-paying jobs that have been eliminated, then the median income figures will be coming down.
Right now it certainly does seem to be happening on schedule. Next year may actually be worse than I expected, but if the FED keeps lowering rates, nominal prices may not decline as much, but the inflation adjusted prices will take a beating.
Fundamentals always win out in the long run. We should focus not on what is going to happen next week or month or year but, what when this downturn will eventually change course.
I will always wonder why someone who bought an expensive home (any home for that matter) in 2004 thinks it’s worth double now ( for instance, I live in Huntington Harbor CA and you can find any number of people who bought $1M dollar plus homes in 2004 / 05 and now have those same homes for sale at $2M and $3M!). This truly has been an unbelievable confluence of macroeconomic and social / cultural events. I guess it boils down to expectations and risk assumed for those folks.
Anyway, this decline will not stop until we have equilibrium. If you believe that the history-proven 20% down and 3 to (may be) 4 times income is where we are headed for housing prices then look for very significant declines. If the govt stays out of the way this will happen over the next 3-5 years. If they get ‘involved’ to shelter and socialize debt problems then we could be in for what Japan has suffered – 20+ years of slowly declining prices. If you believe that people secretly make lot’s more than the census reflects or that millions of foreigners are moving to OC to buy our ‘cheap’ real estate then, well maybe, prices only adjust 20-40% downward. BTW, OC census shows peolpe leaving – probably due to cost of living issues. Where else could you be a family practice physician and only (currently) be able to afford a crap condo or simple SFH (average OC primary care doc makes about $150K and that is nearly 50% more than the reported family income for Irvine)!
No amount of govt intervention will work here – there can be no bail out. Ultimately the govt doesn’t control the banks and THEY decide on what you have – unless you are a 100% cash buyer. THEY make the loans that fund your debt. THEY have now decided that things must change (after THEY have lost tens of billions of dollars). They market is collapsing… sales down 20 – 80% in some zip codes – prices will follow. Worst yet, this is spreading to other securitized debt…autos, etc.
Worst of all, this will likely take OC into recession. Check out how many of the top job producing companies (big incomes here) are now OBLITERATED (New Century, et.al.). Just checn with the chamber of commerce. Six of the top 20 companies in OC are GONE! What happens to the rest of them that still work in RE is going to be ugly (New Century was in the top 10 and THE Irvine Co was number 2).
What do you think will happen? When will this perfect storm resolve and what will prices be????
B
I think that this is good. Those “top” companies didn’t really produce anything. We have some pretty good companies in OC (Boeing, Linksys, Broadcom, Beckman, etc…), these are the companies that make things and should be the leaders.
To say that we have the top RE companies is a bogus statement… it’s like saying that we have the biggest leeches around.. Big Deal!
In so far as prices, yep we agree. Anyone that thought that their home would double in three years and stay like that needs a serious lesson in economics. The sense of entitlement is nuts.