Foreclosure data for Orange County is in from three different market trackers. Each has a different tracking method, but all three show a dramatic spike in foreclosure filings in January ‘08 vs. January ‘07.
Below is a table that speaks for itself.
| Company | Forec. F. | %vs.’07 |
|---|---|---|
| DataQuick | 3,154 | 215% |
| RealtyTrac | 3,197 | 128% |
| ForeclosureS.com | 3,114 | 223% |
Note: Forec. F. stands for foreclosure filings. DataQuick tracks notices of default, which a bank typically files after a borrower misses at least three payments, and trustee’s deeds, which are recorded after a home is sold at a foreclosure auction known as a trustee’s sale. RealtyTrac and ForeclosureS.com also track NODs and they have an REO figure, which is homes sold at auction that go back to the bank. In addition, RealtyTrac monitors notices of trustee’s sale, basically a warning that a home will be sold at auction.
I’m thinking of buying a home this spring, should I wait?
I still would like to see some further clarification of these figures. It is entirely possible that a property could go into default multiple times and still not be foreclosed. That’s a lot of foreclosure related documents being recorded on a particular property without the end result being an actual foreclosure. Having worked in the title insurance business for 25 years, I’ve seen it many times. Delays can be caused by many factors. A trustee’s sale requires exact timing of certain filings that sometimes do not get done correctly, requiring them to start over, sometimes the borrower convinces the lender to give them more time, etc. It is a complicated process that doesn’t always go as planned. I wish they would just give the number of Trustee’s Deeds. That would be the true number of completed foreclosures.
I agree with you VOR. Besides working in loans in the 90’s. I worked for a company that was owned by First American, so I’ve got some experience in the business as well. However, the numbers are undeniable. And since they were tracked the same way back then as well, one thing is very clear. Whether these numbers show the actual number of foreclosures or not, you cannot argue that these stats clearly show that people are having a much harder time paying their mortgage payments than even a year or two ago. This is caused by ARMs and option ARMS increasing, the real estate industry tanking, and probably a recession in the economy. Oh yeah, and people that bought homes that were 250% more than they could afford.
What these numbers DON’T tell you is that in the years from 2001 through 2006 the numbers of foreclosures in O.C. were almost non-existent. Troubled borrowers were able to either refinance ( probably prolonging their troubles.) or sell, at a profit, avoiding foreclosure. Now, neither of those options are reasonably viable. If a borrower has a lot of equity another option is to rent the place out, probably at a positive cash flow.
Anyway, now, OF COURSE the numbers look gigantic by comparison, but frankly, today’s scenario is closer to “normal” than the deceptively low numbers of 2 years ago, and further back.
There are two things on the immediate horizon which, in MY opinion, will both contribute to easing a foreclosure epidemic. First, lenders have realized their mistakes of the sub-prime variety and are taking massive strides to work with borrowers in trouble to modify the terms and payments of their loans or resets-to-be. The lender do NOT want to take the properties back.
Second, the new conforming loan limits coming by way of the stimulous package will help two entities. (1.) Troubled borrowers might now be able to get a new higher fixed rate loan, with better terms and LOWER payments than their previously reset ARMs, thereby bailing themselves out of the foreclosure pile. (2.) Buyers, armed with new higher loan limits - at lower rates and better terms - will be in a better position to take advantage of some great buys, presently out there.
The new CONFORMING loan limits, of at least $630,000. and as high as $730,000. WILL stimulate some buyers off the fence. There is a pent up group of buyers who DO qualify, ( as opposed to the “fog a mirror” bogus buyers who got sub-prime financing.) and who DO have 10-25% down, who can now buy that better house with more favorable loan rates, coupled, of course, with today’s lower prices.
In South O.C., where I live, there are some excellent buys of houses from “distressed” sellers, but the numbers of those good buys is getting smaller - they’re currently selling faster than their being replaced. Contrary to areas of North O.C., where many of us moved away from ( escaped? ) 20-30 years ago, Coastal and South O.C. hasn’t had nearly the same level of foreclosure activity, or price declines.
Many of the drastic numbers posted by not only the media, but also by Bears hibernating amongst these blogs, reflect activity that is in NO way relevant to our area. Would YOU want to move to the Inland Empire, or Stockton, or Sacramento? How about Detroit?
My conclusion is that I, for one, take a lot of this doom & gloom with a grain of salt. If you were fortunate enough to have purchased a home in South Orange County, before 2004, you haven’t - and won’t - lost a red cent. And, if you bought WAY before 2004, you should have a HUGE cushion of equity to protect you from loss - unless you succumbed to the fickle temptation to use some of that equity as an ATM machine. ( In which case, many the stimulation package will be of help, to you.)
As I look out my window, this morning, the sun is shining, I have good health, I have money in my pocket, and I choose to be optimistic - not delusional - but really optimistic. I have lived in an incredible area, for 40 years, and feel really blessed to be here.
David Poggi had this to say: “This is caused by ARMs and option ARMS increasing, the real estate industry tanking, and probably a recession in the economy. Oh yeah, and people that bought homes that were 250% more than they could afford.”
Don’t neglect to let people know your perspective, Mr. Poggi - that of someone who has been renting for $1000./month, or less, in Irvine, since 2000. Someone who thought houses were too expensive in 2000, and chose to rent, until house prices became more reasonable.
Has your rent gone up, in these 7 or 8 years?
So, if home prices are 250% higher than people can afford, and the median price is - let’s simplify by rounding down to $500k - at present, that means that you’re expecting home prices in Orange County to come down to a median of about $100k, before you’re moved to buy?
Hmm, based on my own purchases at that time, that equates to about 1978.
Happy life of renting, my misinformed friend.
Lee in Irvine had this to say: “Don’t mean to change the subject.”
Uhh, I think you did.
Here’s more info proving my points about financing options dwindling.
Wells Fargo Names Most of California Severely Distressed
Published by Morganat February 27, 2008 in Mortgage News/Insight.
Wells Fargo has named nearly every California county a “Severely Distressed Market” which requires LTV reductions of 5% for any conforming loan over 75% LTV and also eliminates financing over 75% LTV for any non-conforming loan. The Wells Fargo Mortgage Express product (which is Wells Fargo’s stated income/stated asset program) is also not permitted in “Severely Distressed Market” areas.
Look for the rest of the market leaders to quickly follow suit. This immediately puts a huge swath of the state with increasingly limited refinance options. A huge portion of California loans are of the non-conforming variety and well over the 75% LTV mark (especially factoring in the major price drops over the last 16 months). This does not bode well for the folks in the Golden State.
I agree partially with Sighburrdood when he says that foreclosures now are because of homeowners cannot sell their homes at or more than they owe, you are right here.
Now when we talk about lenders working with homeowners to change the loan packages so that they can afford payments. Problem here is a person bought a home for let’s say 650K and now he owes around 625K (assuming that he in not on interest only or he has put something down for which chances are very less). Now if value of home is around 500K-525K, no lender will refinance the loan for 625K when the value of home is 500K.
Now keeping in mind economy is also going slow, there are not many actual buyers in the market who want to spend money and banks are not willing to lend money to a person without atleast 10% down. Now if we are talking about investors they will not invest money in buying a home unless they are getting it at a dirt cheap price so that they can think of making profit which will actually reduce the market price.
I do not think anybody is expecting home price median to fall to 100K but at the same time it is still well above the affordability level and keeping in the view the market conditions home prices will fall further before they start to recover.
So if we say is it a good time to buy, I will say do not rush assuming market price will go up, buy only if you think this is a house you like to stay in, getting it at a very good price, you can very well afford it and you do not bother if the price goes down upto 10% in future.
Do not start jumping to buy a house like lot of people did in 2005 - 2006. It is buyer’s market.
Sighburrdood:
You’re really bad at assuming things and you’re quite ignorant.
You said:
“Don’t neglect to let people know your perspective, Mr. Poggi - that of someone who has been renting for $1000./month, or less, in Irvine, since 2000. Someone who thought houses were too expensive in 2000, and chose to rent, until house prices became more reasonable.
Has your rent gone up, in these 7 or 8 years?”
WRONG, I have rented in Irvine for about 8-months, and never told anyone what I did prior to that. Very sad that you think you know-it-all.
You said:
“So, if home prices are 250% higher than people can afford, and the median price is - let’s simplify by rounding down to $500k - at present, that means that you’re expecting home prices in Orange County to come down to a median of about $100k, before you’re moved to buy?”
Please learn how to do some math. The price would be $200,000, not $100,000.
You said:
“Happy life of renting, my misinformed friend.”
It appears that you are the misinformed one, yet again. I am about to purchase by the end of summer, but only because in this tiny area, values are close to bottoming out. That does not include OC though. And I feel sorry for anyone who is foolish enough to purchase in OC right now. Please keep your comments about me going. You’re wrong with almost everything you say, and I loving proving it in public over and over again.
Oh yeah sigburignorance,
I never said I thought values were too high in 2000 either. I said they were too high during the last few years of this bubble.
Wrong once again.
David Poggi says: “I never said I thought values were too high in 2000 either. I said they were too high during the last few years of this bubble.”
Uhh, in another thread you stated that you COULD have bought in 2000, but chose not to, losing out on 125% appreciation over the ensuing 5 years. ( All, while squandering over $60,000., in rent.)
And THAT gives YOU credibility? Wrong again!
david pogi,
your life story is getting more interesting by the day!
at least we have some kind of debate here between david pogi and dood.
i hope that crazy newport renter will not come in here and accuse someone of abusing their children like in lanser blog.
i know matt is doing a good job monitoring this blog.
keep that crazy newport renter out of here matt!
matt,
can you talk to lanser about this crazy guy?
newport renter Says:
February 26th, 2008 at 4:19 pm
Joe spews his milk in his mother’s mouth every night.
Sighburrdood:
That’s the first correct thing you’ve said here. I did say I could have bought in 2000 and chose not. But I did not say what I did during the past 7 years. You are assuming things again without any information. A bad habit you seem to have in your childish attempts to insult me. I did not rent most of that time and did not spend anywhere near $60,000 on it. Even if I had. If I had put the savings into good investments vs. having all my money tied up into the equity of a home, I would be ahead many times over. If you talk to any credible financial planner, they will tell you not to pay down your home. You should at most make an IO payment and invest the difference where it’s liquid. All while taking advantage of the maximum tax write off on the mortgage interest possible.
But never mind all that basic economics.
Go ahead and write more about me since you know my life story. The best part is that you feel the bears here are against home ownership and it’s many benefits. We’re not putting down home owners, other than those who purchased during the past few years at the top of the bubble when they should have known better. I am for home ownership, which is while I will be buying within the next year. But home ownership is like stocks. Buy low and sell high. Right now is not a time to buy in OC. That’s obvious to anyone who’s taken an economics class and has a little common sense. When major lenders like Wells Fargo has OC and most of California listed as a distressed county, something has to be wrong. But don’t take my word for it. The facts for the past year plus speak for themselves. Good luck to anyone taking your advice and buying now. So sad that your net worth and your down payment are about to be gone.
JazzyB had this to say: ” I will say do not rush assuming market price will go up, buy only if you think this is a house you like to stay in, getting it at a very good price, you can very well afford it and you do not bother if the price goes down upto 10% in future. It is buyer’s market.”
I pretty much agree, although I don’t think prices will go down another 10% in MY area - South O.C.. I ALSO agree that I don’t expect prices to go up, over the next couple of years.
I DO expect houses to FIRM up however, over the next few months, and for there to be some buyer/seller equillibrium over the next year or two.
I agree that if you can located a good buy, right now, in an area that you will enjoy living in, with interest rates where they are now - you ought to buy, and stop waiting for further declines.
I will add this, however. Interest rates SEEM to be nudging up a tad, also, so even if prices come down another 5% over the next year, a higher interest rate would reduce any gain you’d made by waiting. Your monthly payments might be the same.
My protagonist David Poggi, had these things to say:
“You’re really bad at assuming things and you’re quite ignorant.
( I’ll assume that’s NOT a compliment.)
I have rented in Irvine for about 8-months, and never told anyone what I did prior to that.
( No, you DID state, on another thread, that you didn’t BUY in 2000 - so it’s fairly safe to assume one of two things. 1.) that you rented. or 2.) that you lived with your parents or your girlfriend.)
“Very sad that you think you know-it-all.”
So, if home prices are 250% higher than people can afford, and the median price is - let’s simplify by rounding down to $500k - at present, that means that you’re expecting home prices in Orange County to come down to a median of about $100k, before you’re moved to buy?”
Please learn how to do some math. The price would be $200,000, not $100,000.”
( Let’s see, if it was $200k, as you’re suggesting, a 100% increase would amount to $400k, a 250% increase, over $200k, would amount to $700k.) So, who’s the math whiz?
“You said: Happy life of renting, my misinformed friend.”
“It appears that you are the misinformed one, yet again. I am about to purchase by the end of summer, but only because in this tiny area, values are close to bottoming out. That does not include OC though. And I feel sorry for anyone who is foolish enough to purchase in OC right now. ”
You’ve lost me here. You’re going to buy in “THIS TINY AREA” but that is NOT in O.C.? And if it is, are you contradicting your statement that it would be foolish to purchase in OC, OR admitting to being foolish?
“Please keep your comments about me going. You’re wrong with almost everything you say, and I loving proving it in public over and over again”.
Let’s take a vote here - who’s proving what, to whom?
David Poggi had these things to say: “I did say I could have bought in 2000 and chose not. But I did not say what I did during the past 7 years. You are assuming things again without any information. A bad habit you seem to have in your childish attempts to insult me.
I did not rent most of that time and did not spend anywhere near $60,000 on it. Even if I had. If I had put the savings into good investments vs. having all my money tied up into the equity of a home, I would be ahead many times over.”
So, I was correct? You lived with your parents?
Here’s part of a discussion you and I had on a different thread - that you never responded to:
“David Poggi had this to say: “Sighburrdood, why do you pretend to know anything about my finances? You said me not affording to buy in 2001 is a fact? And how do you know that? Do you have my bank statements and investment portfolio handy?”
David, what I said was this: “you missed out on over 100% appreciation that occurred between 2001 and 2005, because you knew the bubble was going to erode prices by 10-15%, right?
And you call THAT helping people, by giving them accurate advice? The fact is, you couldn’t afford to buy in 2001, when prices were about 50% less than they are now, SO, you’re HOPING that prices come back down near those levels, so you MIGHT then be able to buy a house?
So, by your latest rationale, you COULD have afforded to buy in 2001. Let’s take the house I purchased back then, as an example. I bought in 9/11, a house for $535,000., in South Orange County. It is now worth - if I chose to sell, which I don’t, because my tenant is MORE than making my payments - at LEAST $950,000.
Even if I deducted 7.5% for a 6% commission and closing costs, I would net a profit of $343,750. over and above my purchase price, 7 years ago. Even disregarding the tax writeoffs I’ve received, for interest, taxes, etc, I still come out WAY ahead of you, who, at , up to $1000./month, for the past 84 months, are OUT $50-60,000. that you’ve paid ( frittered away? Or that your parents, or girlfriend ended up eating.) in rent. ( Assuming that your rent hadn’t gone up in 7 years - not too likely.) Adding your rent lost, to my profit gained, I come up with a net gain, over your recommended scenario, of well over $400,000.
You lose, Mr. Poggi, and I haven’t even resorted to calling you names, or insulting you, other than by “outing” your flimsy credibility.
Why does anyone thing that south OC or coastal OC, or anywhere nice OC and not the inland empire/coronoa or elsewhere, is immune to price drops. Ladera is a masacre. However, Nelle Gelle prices are back to mid2005 levels. The price drops is like a wave that rides east from the desert.
With that said, I am not saying that prices will crash in Laguna Beach/Niguel, but are almost as likely to take the 20-30% drops we are seeoing, going to see.
Reason is - OPTION ARM or PAY-OPTION Mortgages. All you have to do is see who got into them, and most (not all, but 80% qualfiied) on the pay-option 1% teaser rate, which causes a recast within 3 years or so, if the min balalnce hits 110 to 115% of the loan balance. At that point, this owners will not qualify to refinance for two reasons, - existing loan balance is too high for the fmv of the property, and two, that that they don’t have real documented income to support this. The Pay-option loan is nothing more than the subprime loan for the middle-upper class. It just takes long to hit
(I’m not opposed to pay-option arms, so long as people can qualify on them based upon real income, and incomes to pay the true interest cost, not the min pay option)
So, unless all of the home remodelers,mortgage brokers, real estate agents, title officers see new employment with 200k plus salaries, it will be hard to keep up the prices of those homes in the near future.
This thing has a few years to shake off. It won’t magically stabalize because we want it to. That’s how real estate moves.
David Poggi says:
“If you talk to any credible financial planner, they will tell you not to pay down your home. You should at most make an IO payment and invest the difference where it’s liquid. All while taking advantage of the maximum tax write off on the mortgage interest possible.”
David this would be an extremely aggressive financial plan, frought with several different kinds of risk.
First of all, if you plan on living somewhere for more than 5 or 7 years (typical IO terms), than you’re going to be refinancing at least this often, due to the full amortization that comes due after the IO period. Refinancing is an expensive hassle and there’s definitely no guarantee that rates will remain this low. Seems to me a credible financial advisor would advise you to lock in long term rates.
Second, you’ll want a paid off home to provide a safety cushion for yourself in retirement. Your plan is to avoid paying any principal and invest that money instead, which assumes you’ll be able to make an after-tax return that exceeds your mortgage interest rate. Not everybody is successful enough to do this, and nothing is guaranteed in the stock/bond markets. (Companies do go bankrupt. Bonds get defaulted on.) A credible financial advisor would tell you to diversify by building up assets in RE, while investing in the stock/bond markets at the same time.
Third, IO loans cost more which no credible finacial advisor would advise. You want to borrow money as cheaply as possible and IO loans have higher rates, not to mention the thousands you’ll pay to refinance each time.
In short, you’re advice is not good for most, and risky for those that follow it. I read about some advisors recommending IO loans during the boom, but that advice has surely proven bad now that values are dropping.
Liar Loan, based on what you’re saying, you sound to be about the most conservative investor around, along the lines of a Susie Orman who just says pay off your home and get a 401K. While that path is great and can lead do a comfortable retirement, it’s certainly not the path to long-term wealth. But I’m not here to debate investment strategy with you. If that’s what you chose to do, so be it, and best of luck to you.
Sighburrdood, I don’t even have time to read what you wrote, and I don’t care to. You’ve already proven publicly 3 times that you cannot do basic math. The only point I’ve made here the whole time is that now is a stupid time to buy. You said the next 3-4 months is the bottom in OC and it’s a great time to buy. I guess the future will tell right? You’re about 30-years older than I am, just so you know. I don’t try to compare my place in life to yours, because you are my parents age. When I am 30-years older I’m sure my financial situation will be much different. And I’m confident that I’ll be in a great place, because I don’t take the advice of people like you who say to buy at the top of the biggest real estate bubble of all time. My girlfriend bought a place 3-years ago not far away for $260,000. I saw saw one sell in a short sale the other day for $150,000. Obviously that’s not in the OC and it does not matter. The point is, she’s now lost her whole down payment and is upside down to the tune of 40%. This is what happened to everyone who bought the past few years. But according to you that’s still a smart thing to do. I disagree. I saw to all first time buyers like myself that you should wait for a bottom and buy. And ride the appreciate wave that will come again some day. People who take the advice that you give will have to wait 10-years to recover. We’ll see how long it will take for values to hit the peak that they hit when this bubble market popped. You keep mentioning 2000 or 2001. I’ve been talking this whole time about the bubble created by option ARMs and stated income loans of the past 3-4 years. Stop confusing yourself.
If you bought prior to about 2002 then you are one of the people who is in a good spot. Good for you.
This whole time I’ve been saying that buying during the bubble of about 2003 on was a stupid idea. Especially if people bought with stated-income financing or option ARMs, when they could not qualify for a traditional loan. They are getting foreclosed on and ruining their credit. If they had rented for a few years, they soon will be able to buy the same exact place for 20-50% less by the time values correct. So for an average home in OC that would be a savings on their monthly mortgage payment of about $2,000 a month. Gee, who in OC wouldn’t want to save that much money on their payment for the exact same place for the next 30-years just by being patient and renting for a couple extra years? That’s kindof a no-brainer if you ask me. And all the while, if they had purchased in 2004-2007, they’d be losing about $5,000 a month in net worth like you are right now. Again, a no-brainer. So yes, I am very happy to be paying my $850 a month in Irvine renting with friends and having a great time enjoying the bachelor life while I’m young, unmarried, and without kids. If I had bought a place in OC the past few years, I’d be getting foreclosed on too or would be kicking myself in the head for being a moron.
Sighburrdood gets my vote. Your facts are 100% correct and your nemesis’ facts are 100% incorrect. I also like how he (of the accusing tone) insulted you several times, but you rose above it.
FairEconomist had this to say” “Sighburrdood, These are not “normal” foreclosure rates. They are the HIGHEST EVER RECORDED in OC. Previous high of 2,320 mentioned here”
F.E., the numbers at the beginning of this thread are foreclosure “filings” NOT Trustee Sales, where the house actually sold, which were the numbers in the link you posted.
There’s a big difference between filings, which can happen multiple times per property, vs. the actual sale, which either goes to a new owner, or back to a lender.
Anyway, my original statement, way at the top of this thread, was comparing the ULTRA light foreclosure rate of the period between 2001 and 2006, saying that it was MUCH less normal, than today’s higher rate, which is more than normal, but not drastically so. No big deal.
“Interest rates SEEM to be nudging up a tad, also, so even if prices come down another 5% over the next year, a higher interest rate would reduce any gain you’d made by waiting. Your monthly payments might be the same.”
Higher rates support the bear argument. The higher the interest rate, the lower home prices will go. Interest rates are currently artificially low by historical standards. They are likely to go higher over the next 18months as inflation creeps in which will likely put more pressure on home prices. The other wild card is jobs. If we get higher unemployment, all bets are off. If we get stable employment we will see higher inflation which means rents will rise but I believe that home prices will still fall until the rent/own option makes more sense.
No one knows where the bottom is, but to suggest that there will not continue to be pressure on prices is naive. If I were a buyer with a 6-12 horizon, I would be praying for higher interest rates….
asiseeit had this to say: “Higher rates support the bear argument. The higher the interest rate, the lower home prices will go. Interest rates are currently artificially low by historical standards. They are likely to go higher over the next 18months as inflation creeps in which will likely put more pressure on home prices.”
Your theory SOUNDS valid, until you realize that we’re talking smidgins here - a difference of being at 5.5% vs. being at 6.5%. As for your statement that rates are currently artificially low, I’m inclined to disagree.
Most sources I talk to seem to think that we will continue to have rates under 7% for YEARS to come, on average.
Here’s another theory I’ve frequently heard. When markets are good, rates rise - when markets are bad, they go down. Don’t know how valid it is, but it seems to make sense to me.
Thoughtful had these words, to say: “Sighburrdood gets my vote. Your facts are 100% correct and your nemesis’ facts are 100% incorrect. I also like how he (of the accusing tone) insulted you several times, but you rose above it.”
I appreciate your words of support. Thank you very much.
Justs look at 30yr fixed rates over the last 40years and you will see that the last 7 have been abnormally low. This is “artificial” principally because of perceived low inflation and the bidding down of US treasuries yields by far east governments. Inflation is back and as those expectations of “real return” change, you will see rates continue to rise.
A 100bp increase in rate could easily translate into 10% increase in maximum borrowing. This is significant and exactly what happened over the summer and fall. Jumbo rates moved higher by about 75ps and housing came to a stand still. As rates have risen over the last two weeks, mortgage applications have fallen sharply. At the end of the day, people figure out how much they can afford, then go out and buy that out amount. My advise to a buyer is to get the best price possible and don’t worry about high rates. You can always refinance the rate on the way down, but can’t do the same for the price..
We shall see, but my guess is that OC median could have another 10-15% left easily, at which point prices may stabilize and inflation should allow a catch up in nominal terms. Long-term, I am bullish on OC real estate
Sighburrdood says:
quote
“…So, if home prices are 250% higher than people can afford, and the median price is - let’s simplify by rounding down to $500k - at present, that means that you’re expecting home prices in Orange County to come down to a median of about $100k, before you’re moved to buy?”
Please learn how to do some math. The price would be $200,000, not $100,000.”
( Let’s see, if it was $200k, as you’re suggesting, a 100% increase would amount to $400k, a 250% increase, over $200k, would amount to $700k.) So, who’s the math whiz?…” …unquote
X + 2.5 X = 500,000
X = 142,857
(not $100,000 per sighburrdood or $200,000 per David Poggi)
Gee, I sure wish I had purchased in the past few years like all the bulls told me I should have done… LOL
Home price plunge accelerates
2007 year-end results are in and the news is bad: Major housing markets were down even more than anticipated.
NEW YORK (CNNMoney.com) — The decline in residential real estate accelerated though the end of 2007, and home prices in 20 key markets plunged 9.1% for the year, according to a survey released Tuesday.
The S&P Case/Shiller Home Price index showed its largest annual drop in its 20-year history. By comparison, during the 1990-91 recession, home prices fell 2.8%.
Prices dropped faster throughout 2007 with the index recording a 9.1% year-over-year drop in December.
“We reached a somber year-end for the housing market in 2007,” said Robert Shiller, Chief Economist at MacroMarkets LLC and co-founder of the index, in a statement. “Home prices across the nation and in most metro areas are significantly lower than where they were a year ago.”
All metro areas are now reporting at least four consecutive monthly declines.
Case/Shiller’s 10-city index fell even more sharply and finished down 9.8%.
The Case/Shiller indexes compare same-home sale prices. The industry considers them to be among the most accurate snapshots of housing prices.
Of the 20 metro areas examined, all but three posted declines for the year. Miami homes lost 17.5% in value - more than any other metro area - and Las Vegas and Phoenix both had 15.3% declines.
The three that posted modest gains: Charlotte, N.C., 2.3%; Portland, Ore., 1.2%; and Seattle, at 0.5%.
Los Angeles, the nation’s second biggest housing market, was the worst performer in December, when prices fell 3.6% compared with November; the decline for the year was 13.7%.
Other double-digit losers for the year were San Francisco, down 10.8%; Tampa, 13.3%; Detroit, 13.6%; and San Diego, 15.0%. Losses in the nation’s biggest market, New York, were more modest, down just 5.6% for the year.
Fred2 you’re wrong,
250% of $200,000 is $500,000.
LOL, you people crack me up.
But no, really people, the lack of neg am, sub prime, and stated income loans is not having any effect on the real estate market. Not even in perfect South OC where sales are at a new all-time low. LOL
David, what’s funny is you think you’re math is correct.
$142,857 + 250% = $500,000
If prices are 250% higher than people can afford and the median is 500k, than the affordable price is $142,857 as Fred2 pointed out above.
Now, what were you saying about the path to long term wealth…haha??
Liar Loan you’re not even talking about the same thing. Take a calculator out, now multiply $200,000 by 2.5 and what do you get?
Thoughtful, funny as always, and completely wrong as usual. Keep it up.
Fred 2 had this to say:
“Please learn how to do some math. The price would be $200,000, not $100,000.” ( David Poggi’s calculator’s math.)
( Let’s see, if it was $200k, as you’re suggesting, a 100% increase would amount to $400k, a 250% increase, over $200k, would amount to $700k.) So, who’s the math whiz?…” ( Sighburrdood’s upward math.)
X + 2.5 X = 500,000
X = 142,857
(not $100,000 per sighburrdood or $200,000 per David Poggi)
Thank you Fred - not being a math whiz myself, I can appreciate a little help. Actually, I think my upward math, above MIGHT be correct, but I won’t swear on it. Frankly, it isn’t that big a deal, for me. Thanks again.
David, what does your calculation prove? I think the overall point is that homes were not 250% overpriced as you asserted at the top of this thread. 25% overpriced would be a more likely number.
Liar,
you must not have seen the full conversation, which had started early yesterday is some other post I believe. What I had originally said is that during the bubble, many people used stated income loans to increase their income to as high as 250% above reality, in order to qualify for the mortgages they received, which are now causing many of them to go into foreclosure. These gimmick loans, are largely what has caused the bubble and the lack of them is what is causing lending stardards to return to traditional places. And it is the lack of gimmick loans that is causing values to fall. As much as 30% of all loan originations during the peak years of the bubble were these types of loans. So basically in laymans terms, 30% of the people who bought in OC over the past few years did so only by lieing about their income. They should not have purchased the homes that they did and therefore you can easily explain the foreclosure increases and nationwide high defaults on credit cards and the like. This is not just an OC problem, but we are greatly affected by it. Everything I’ve said is factual. I know because I deal with in on a daily basis at work. Disagree if you’d like if you want to prove yourself ignorant.
And how my simple point about stated incomes came into an arguement about a simple math calculation is beyond me. It just goes to show the length at which some bulls here will go to try and personally attack someone who is presenting facts that they don’t want to see. Not only that, but some of you keep argueing that 250% of $200,000 is not $500,000. I can’t believe some of you own, or even hold a job, if you can’t figure that one out.
San Diego County home prices posted the second-steepest monthly drop in the nation to close out 2007, according to the Standard & Poor’s/Case-Shiller home price index.
The index for December, released Tuesday, showed prices plunging 15 percent from December 2006. That left home prices at a level not seen since spring 2004. From the peak of the housing boom, prices for resale detached homes fell by 19.1 percent.
On a national level, prices also posted a record 8.9 percent year-over-year drop.
Meanwhile, national foreclosure tracker RealtyTrac reported Tuesday that San Diego County foreclosure activity rose 20 percent between December and January. The foreclosure filings recorded in January numbered 5,428 last month, a 165 percent spike from January 2007. Filings count all records associated with a foreclosure — default notices, auction sales notices and bank repossessions.
“Judging from memory and so on, it’s way way way beyond what we saw before,” said Ramsey Su, a retired real estate broker and investor who sold bank-owned properties in the 1980s and 1990s. “There still seems to be the complacency that we are in this position. Nobody seems to be concerned that this is going to hit home, hard, sooner or later. How do you handle so many foreclosures?”
While some employed in real estate-related professions find ways to paint cheer into local housing, many others join market observers who say the situation is bleaker than the region yet realizes.
Yamila Ayad is the president and broker of Mission Home Loans in San Marcos and a board member for a local consortium of nonprofits that hosts events for distressed homeowners. She said San Diegans, even some of the professionals attempting to curtail the spread of distress, are growing used to new records being set every month in the data.
“I think that the sad thing is that we’re just not amazed anymore,” she said. “I hate to say this, but we end up feeling numb, anaesthetized by the issue.”
Homes on the bottom end of the price spectrum recorded the sharpest drops in the December Case-Shiller index. Homes priced under $431,605 sold for 23.1 percent less than they did in December 2006. The middle tier, representing homes sold between $431,605 and $638,891, showed a 16 percent drop from December 2006. And the highest-priced tier, priced higher than $638,891, showed a smaller drop of 8.6 percent over the year.
In her specialty market, the corridor surrounding Interstate 15, real estate associate broker Kris Berg said she’s noticed that trend among the lower-priced homes.
“Some communities are being hit more dramatically — the lower end communities, like Mira Mesa,” she said. “And certainly the condo markets, regardless of their location.”
Mid-boom, those homes at the bottom of the price spectrum tempted first-time buyers to stretch with unconventional financing just to get into a property. With little equity to begin with, the lowest-priced properties were the first to fall when the market turned.
Berg said she is seeing buyer activity picking up, an interest level growing among people who are tired of waiting. That’s not necessarily translating into a slew of closed transactions, though.
“No buyer wants to feel like they’re going to buy a house today and it’s going to be worth less tomorrow,” Berg said.
The ease with which unqualified borrowers obtained hundreds of thousands of dollars for mortgages and the way that trend drove up home prices in the region left a market in desperate need of correction, Berg said. Such a long run-up in prices “put us in a lot different situation than we’ve ever been in,” she said.
“It’s not going to be as speedy-quick a recovery as it’s been in the past,” she said. “It’s going to be slow, it’s going to be cumbersome. I think all of those things will be good, in the end. But it’s hard to convince somebody of that if they’re losing their home.”
David Poggi had this to say: “some of you keep argueing that 250% of $200,000 is not $500,000. I can’t believe some of you own, or even hold a job, if you can’t figure that one out.”
David’s ORIGINAL post regarding this, near the top of this thread, said this: “So, if home prices are 250% higher than people can afford…”
Let me try this REAL slow. In order for a price to be higher, you add something to the original amount. Let’s take the above figure of $200,000., shall we? If the price was 100% higher ( than $200,000.) that would be adding $200,000. TO $200,000.. OK? Now we’re up to $400,000.
If we were adding 200% to $200,000., that would be $400,000. PLUS $200,000.. Still with me? NOW, we’re up to $600,000.
Now this last part is pretty tricky, so pay close attention. If we add ANOTHER 50% - 50% of $200,000. = TADA! $100,000.! Now we’re up to $700,000., NOT $500,00.
I do NOT claim to be a math major - not even close. But this is pretty basic stuff - even for a 30 year old. ( Fred2, please double-check my computations, OK? I sure wouldn’t want to be looking like a dewfuss when correcting Mr. Poggi. Thanks, in advance.)
David Poggi is a mental midget. And the worst part? He has no idea.