Readers Say Prices to Drop 15 to 20% in OC!

The results of January's reader poll are in and they paint a very dismal picture for OC's housing prices for 2008.

Thanks to everyone who voted in the January poll regarding their predicition on this December's YOY pricing change. While being a died-in-the-wool bear myself, I have to admit that even I was a bit surprised by the outcome as reader's of this blog have an such an overwhelming negative view of pricing strength here in OC.

As one can see from the chart above, the most common sentiment (30%) expressed in the poll (the mode) was that prices in OC were set to drop between 16.1 and 20%. The weighted average of the votes (the mean) expressed that readers felt collectively that prices would drop 15.6%.

If you recall, the median price dropped in OC 10.2% between Dec2006 and Dec2007. So, the largest plurality of poll respondents seems to believe that this year prices will drop between roughly 150 to 200% as much as last year! And on average they expect to see prices by 150% as much!

Pricing optimism was very hard to find in poll responses--only 11% of respondents felt that prices in OC would drop 8% or less this year; actually, more respondents (14%) think prices will drop 24% or more!

All things considered, I would offer that this crowd on the whole seem to believe that prices will drop between 15 and 20% this year. Quite a drop and quite the boon for bears if our collective wisdom is correct.

Stock Market Sees OC's Economy as Weak

From the Bloomberg.com website:

BLOOMBERG ORANGE COUNTY SNAPSHOT

"The Bloomberg Orange County Index is a price-weighted index designed to measure the performance of Orange County's economy. The index was developed with a base value of 100 as of December 30, 1994."

The most-current performance is plotted here:

If Bloomberg is correct and this collection of local stocks is reflective of OC's economy, it would seem as though the stock market has a very poor opinion of our short term prospects.

Last year we actually had a net job loss here in the county, is the stock market predicting more?

New Poll: Where are Prices Headed?

The last pricing poll had too many votes toward the high end of the scale, so I've rejiggered the categories to be more expansive and inclusive of higher rates of decline.

Please vote again!

Lies, Damned Lies and Realtor "Statistics"

I went to an open house in my neighborhood today, just to check it out. While I was there the realtor made the comment that "any home purchased in OC has appreciated over a five period." I'm not going to call the guy out by name, though I am tempted to, but I am going to call bullshit on this oft-cited "statistic."


Have a look at the chart above. It shows the Case-Shiller index for LA/OC for the period Jan 1990 to Dec 1999. The line in this chart shows the relative price for homes in the area on a monthly basis. Does it look like a house purchased any time in 1990 had regained it's value 60 months later? How about 1991? or 1992? No, no and no. In fact, it's not until roughly the Spring time frame of 1993 that they typical home purchased would any appreciation over a five-year period.

Put another way, for roughly 39 months starting in Jan '00, the typical home did not seen any appreciation over a five year period. In fact, for the poor bastards who bought in Jan '00, had to wait 10 years for the market to just break even. Seems like our Realtor's claim collapses under the weight of data/facts.

What's even more important, loyal Reader, is that the aforementioned period was at the beginning of that downturn and maps EXACTLY where we are with today's downturn. If history is any guide, I submit to you that it is more downside risk in buying a home today than any time in since 1990, or the last 18 years. (Will have to write more about this later.)

Another Realtor myth laid to rest, another self-inflected head wound to Realtor credibility.

Viva los Osos!

Off Topic: Lester Burnham and Mike Huckabee

Have you ever noticed how you never see fictional American Beauty character Lester Burnham and presidential hopeful Mike Huckabee at the same party?



Coindence?

Maybe, maybe not.