The median price continues to fall and if the trend holds it should be under $400,000 by year’s end. That will be close to a 40% decline. I believe even Chuck Ponzi is surprised.
From the figures in the MLS the Median price of all homes sold last month (September) comes in at $429,000. That’s down another $11,000 from August.
As of October 4, 2008, there were 4,232 pending sales in Orange County with a median asking price of $399,500. My tracking of pending sales has been an accurate predictor of future prices thus far and it will be interesting to see if the trend holds true.
I have a lot of contacts in the REO business and I’m being told that the number of BPO (broker price opinion) orders are high. Lenders order BPO’s when a property enters foreclosure to get an idea of what the property is worth for when it’s an REO or for a short sale negotiation. These contacts feel that the next wave of foreclosures could be big. Not surprising considering everyone who bought for about a two to three year period is underwater.
Even the house next door to mine is empty and the lawn is brown. It would have sold for more than $800,000 two years ago. I’m told no neighborhood will be immune in the next wave.
Brad Davidson
Personally I’m not surprised yet; I put my initial prediction at around 50%, absent bailout factors, and there’s definitely a next wave coming. With all the slow-burn alt-a garbage just waiting on the reset timer, and the pent-up foreclosures pushing through the dam of idiotic bureaucracy as fast as the brainless legislatures can enact it, there are still plenty of defaults in the pipeline. The government “bailout” (payout to reckless banks and speculators) programs will eliminate some foreclosures as taxpayers are charged for bad loans, and the FDIC will keep piling up losses holding off on foreclosing, but there’s not yet nearly enough money being paid out to the criminals to support the entire housing bubble, even in its current somewhat deflated form.
I guess the only silver lining of the massively large and monumentally stupid bailout programs is that they are not nearly big enough to stop the asset price decline, so there’s still a chance that housing can become affordable again despite all the government efforts to the contrary. Now if we could only figure out a way to stop the $700 billion being paid to the people who caused the bubble in the first place…
Well. This is going to get way uglier. Seems like the derivative mess is a gordian knot.
The government intervention has created more uncertainty as shareholder will get destroyed at random. Investors have to be weary of the government picking winners and losers in all of this.
So, say hello to 40% down as we pass her by.
Sincere Good Luck to you Brad
LAEF2
Brad,
Good information….What is the disconnect from what the OC Register reports from your numbers? I was a bit surprised in the past Sunday’s report that it appeared the median price ticked up slightly to $449,000 from the week before…I thought was $445,000. I was expecting further decline given the current financial crisis. Is their some slide-of-hand tricks the OC Register uses to appear more positive about the real estate situation? Why is it the total combined reflects $440,000 in the subtotals above while the lower section using the same 4 week period shows $449,000…. I’m not sure why/how they come up with $449,000…. can anyone help me bridge this?
The data gets very noisy when the sales are so low. You can look at total dollars transactions, case-schiller index and a few other stats.
So, just sit back and wait for housing to align with incomes once again.
The Register get’s their numbers from Data Quick and other sources that pull from public records. My numbers come from the MLS and don’t reflect many new homes sales or sales that don’t go through Realtors. New homes tend to sell for more and skew the median upward slightly.
As far as a weekly uptick, it’s probably just a reflection of the mix of properties that sold in a particular week. Also keep in mind that the numbers you see are sales that were put into escrow four to eight weeks ago.
Believe me, prices aren’t headed up anytime soon. I’m seeing lots of single family homes coming on the market for under $300,000 in Santa Ana and Anaheim that were selling for over $500,000 two years ago.
Homes in the Central County (Garden Grove, Westminster, Santa Ana, Anaheim, Orange) that come on the market priced under $400,000 are flying off the shelves and that’s bringing the median way down. It’s also killing everyone who bought or refinanced at those levels.
We are seeing the same thing up here in the suburbs of San Francisco. Everything is getting crushed. Too many people bought outside of their means and now are paying for it. Surprisingly, San Francisco is still doing fairly well. Houses and Apartments are selling for over asking pretty quickly. Who knows how long that will last though.
Sean Murphy, Rofo – Oakland Office Space
as LAEF2 said – wait for prices to align with incomes once again. some data points:
OC median income is ~$72k/yr
Here is a spreadsheet of median incomes vs median home prices AND the ‘multiplier’ therin. http://spreadsheets.google.com.....d2KJvInRJg
The median multiplier over the past ~27yrs is 4.7. 72k * 4.7 =~ $340k. That would be normal. It is nearly *everyones* impression that bubbles overshoot the high AND low side. We could see a 4.0 multiplier ($288k) median. 4.1 (’85, ’96) was our lowest and we’ve NEVER seen numbers as high as they have been. If it overshoots proportionately, it could be under $250k or less.