Tuesday, December 13, 2011

Irvine Housing Blog

Irvine Housing Blog

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OC Median price on houses down 9%

Posted: 13 Dec 2011 02:33 AM PST

The median home price for single-family detached homes, excluding condos and new construction, was down a whopping 9% over the last 12 months. As a sign that prices are still far too high, sales volumes are still more than 20% off their historic norms. The housing market will not bottom until prices get low enough to entice buyers to clean up the mess the banks made. The distressed properties must be taken from those who cannot afford them and resold to buyers who can. Foreclosure and short sale are the most likely paths forward as loan modifications have generally failed miserably. In the meantime, prices continue to fall.

Home Address ...    104 MILLBROOK Irvine, CA 92618
Asking Price .......     $650,000

O.C. median home price slumps 6%

December 9th, 2011, 1:06 pm -- posted by Jon Lansner

Highlights of DataQuick’s Orange County homebuying report. For the 22 business days ending November 23 — the latest numbers — Orange County’s real estate market saw …
  • Median selling price for all residences of $408,000 — that is off 6.3% vs. a year ago.
  • Total Orange County sales of 2,647 residences closed in the latest period — that is off down 0.2% vs. a year ago.
  • When broken down by sales volume by price segment, the priciest Orange County ZIPs had sales up 10.5% vs. a year ago. Meanwhile, sales of homes in middle-priced ZIPs were off 4.7% vs. a year ago. As for the bottom third of ZIPs by pricing? Sales off 0.5% vs. a year ago.

The increase in sales rate at high-end zip codes is a direct result of lenders finally moving to sell their REO. This increase in sales volumes is coming off very low sales levels. As banks increase their discounting to find the market, high-end asking prices continue to drop, and sales prices are falling precipitously.

  • Note: 9 of 83 Orange County ZIPs had both rising sales and prices in the period. Is your ZIP one of those neighborhoods? To see, CLICK HERE!
Here’s the breakdown of recent activity by key category; included is how the latest results compare to the average monthly sales pace from 1988 through 2010:
Slice Price Price vs. year ago Sales Sales vs. year ago Sales vs. ’88-’10 avg.
Houses $455,000 -9.0% 1,756 +3.2% -22.2%
Condos $265,000 -7.0% 738 +3.5% -14.3%
New $566,000 -4.1% 153 -35.2% -70.9%
All O.C. $408,000 -6.3% 2,647 -0.2% -27.4%
And more analysis …
  • $408,000 median selling price is 37% below June 2007′s peak of $645,000.
  • Current price is 9.3% below 2010′s peak (May and July) of $450,000; 0% below end of 2010′s median ($410,000.)
  • The most recent median is 10% above the cyclical low hit in January 2009 at $370,000 — so the median has recouped 14% of the $275,000 price drop from the peak.

It bears repeating that the drop in the median in 2009 was artificially low due to the change in sales mix. Very little was selling at the high end while condo were being cleared out as subprime REO. More accurate indicators of the change in value of individual homes is the Case-Shiller index or the $/SF. Both of those indicators show the market at new lows.

  • Compared to cyclical low, single-family house median is 9% higher ($418,250 in January 2009); condo median is 5% higher ($252,000 in March 2009.) Builder prices for new homes are 33% above June 2009′s $424,000 bottom.
  • The median selling price of a single-family home is 38% less than their peak pricing (June ’07). Condos sell 44% below their peak in March 2006. Builder prices for new homes are 34% below their February ’05 top.
  • Single-family homes were 72% more expensive than condos in this period vs. 75% a year ago. From 1988-2010, the average house/condo gap was 57%.

Yet another sign of lower prices to come at the high end. The premium for detached is well above its historic norms. Either condo prices have to go up, or detached house prices need to go down. The latter is the more likely scenario.

  • Builder’s new homes sales were 6% of all residences sold in the period vs. 9% a year ago. From 1988-2010, builders did 14% of the Orange County homeselling.

The Irvine Company isn't selling much because their prices are too high. They have targeted the weakest part of the market as the lack of move-up equity and a weak economy make their houses unaffordable.

When will the crash end?

The good news for the market is that lower prices, low interest rates, and firming rents is making home ownership much more attractive to potential buyers. In most markets in Orange County, prices are at or below rental parity. Affordability is at record highs in many locations. Of course, prices are still dropping, and many buyers will sit on the sidelines knowing they will either save money on a future purchase or obtain a better house for the money they spend. Deflation psychology is keeping many of the depleted buyer pool from buying homes. It should. Until the monthly cost of ownership declines enough to entice renters to take the leap, prices will continue to fall.

$314,000 in mortgage equity withdrawal

The owners of today's featured property clearly believed prices would rise forever. Over the course of six years, they refinanced their home seven times pulling out more and more equity. Since this is being sold as a fixer, it is safe to assume they didn't spend much of this money on the house. They ended their journey with a $640,000 Option ARM and a $38,000 HELOC in 2007. Falling prices cut off the Ponzi borrowing. No NOD has been filed on this property, so it's impossible to tell if they are still making payments. If not, this is an example of shadow inventory. Given that it is being marketed as a short sale, I doubt they're making any payments.

The loudest and most polluted house in Oak Creek

This house is located in the extreme southeast corner of Oak Creek adjacent to the interchange at the 5 and Sand Canyon. Having lived in Oak Creek more than 200 yards further away from the freeway, I can attest to how loud it can be. With the extra exhaust from cars accelerating to enter the freeway and the nearby power lines, this isn't my first choice for an Irvine home. It can be yours for only $700,000. I think I will pass.

This property is available for sale via the MLS.    
Please contact Shevy Akason, #01836707     

Home Address ...    104 MILLBROOK Irvine, CA 92618
Asking Price .......     $650,000
Beds:  4    
Baths:  2    
Sq. Ft.:  2079    
Property Type: Residential, Single Family    
Style: Two Level, Other    
Year Built:  2001    
Community:  Oak Creek    
County:  Orange    
MLS#:  S680823    
Source:  CRMLS    
Status:  Active    
On Redfin:  14 days    
End of Cul de Sac single family detached home in Oak Creek. 4 Bedrooms, 2.5 Bathrooms, 2 car attached garage, 2 story home with upgrades. L shaped backyard with BBQ island. Gated community of Kelsey Lane. Upstairs laundry. Kitchen has granite counters and island. Property has unfinished repairs and needs some work. This is a short sale.     
Proprietary commentary and analysis    
Asking Price .......     $650,000
Purchase Price …    $364,500
Purchase Date ....    4/13/2001
Net Gain (Loss) ..........    $246,500
Percent Change ..........    67.6%
Annual Appreciation …    5.4%
Cost of Home Ownership    
$650,000 .......... Asking Price    
$130,000 .......... 20% Down Conventional    
4.02% ............... Mortgage Interest Rate    
$520,000 .......... 30-Year Mortgage    
$135,496 .......... Income Requirement     
$2,489 .......... Monthly Mortgage Payment     
$563 .......... Property Tax (@1.04%)    
$233 .......... Special Taxes and Levies (Mello Roos)    
$135 .......... Homeowners Insurance (@ 0.25%)    
$0 .......... Private Mortgage Insurance    
$80 .......... Homeowners Association Fees    
$3,500 .......... Monthly Cash Outlays    
-$403 .......... Tax Savings (% of Interest and Property Tax)    
-$747 .......... Equity Hidden in Payment (Amortization)    
$182 .......... Lost Income to Down Payment (net of taxes)    
$101 .......... Maintenance and Replacement Reserves    
$2,634 .......... Monthly Cost of Ownership     
Cash Acquisition Demands    
$6,500 .......... Furnishing and Move In @1%    
$6,500 .......... Closing Costs @1%    
$5,200 .......... Interest Points    
$130,000 .......... Down Payment    
$148,200 .......... Total Cash Costs    
$40,300 ............ Emergency Cash Reserves    
$188,500 .......... Total Savings Needed    

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