Home Prices CA (Irvine: sales, real estate, rent)

[Soccersupporter]

The median home price for my zip code in Irvine has dropped $158,000 since we sold and moved out of CA in November 2007. The sales are down 54%.

This is not just a blip, it is a crash. Be real careful about buying in SoCal right now, you can still be upside down real quick if you don't watch out. This is the worst housing crash that I have ever seen and I lived 50+ years in SoCal. It will recover eventually but it will take many, many years after it finally hits bottom and there is no telling where that bottom is.

[endofmyrope]

Thanks for the California update, from Texas!


Please let us know when to expect the next earthquake as well.

LOL

[endofmyrope]

A lot of Bears post negative article after negative article, as links to bubble reports dot com, and the like. Here’s a positive article from an unexpected source. Sorry, the link required a password, so I cut and pasted this recent article from Time Magazine:
“Ignore the Headlines! Except this one. Sure, housing’s in a hole. But there’s a potent case for buying now, whether it’s real estate or stocks
By Dan Kadlec February 14, 2008
Famed Money Manager Peter Lynch is perhaps best known for his timeless wisdom that you can beat the pros by focusing on stocks of companies where you either work or shop or have some other edge. But a more relevant Lynchism today is this gem: Ignore the headlines.
That’s no easy thing. How do you tune out all the chatter and ink on recession,housing, subprime woes, the credit crunch, rogue traders, insolvent bond insurers, $100 oil and nukes in Iran? It’s enough to make you sit on your thumbs and wait before making any big moves. But what, exactly, are you waiting for?
There has rarely been a moment in history when you couldn’t scare yourself into doing nothing. And yet, as Lynch observed nearly 20 years ago, “in spite of all the great and minor calamities that have occurred … all the thousands of reasons that the world might be coming to an end–owning stocks has continued to be twice as rewarding as owning bonds.”
A top reason to not buy stocks, in Lynch’s view, is if you don’t already own a home–in which case, that should be your first investment, since an owner-occupied home is nearly always profitable. Through a spokesman, Lynch reaffirmed these views to me–housing debacle and all.
When prices are falling, few people have the discipline to buy stocks, a house, gold, art or any other asset. But those who do pull the trigger excel in the long run. As John D. Rockefeller famously said, “The way to make money is to buy when blood is running in the streets.”
And the streets are stained crimson. Start with stocks. They have been pummeled this year. GDP braked sharply last quarter, and there has been plenty of panic about a recession. The Federal Reserve is slashing short-term interest rates at the fastest clip in decades. But if you stick to your steady, diversified plan while everyone else is retreating, you will be happy years from now. For one thing, Fed rate cuts always lift the economy eventually, and the stock market typically starts responding just as headlines get gloomiest. Sure, the market could fall again before recovering. But the recession may be half over already–or we may avoid one altogether. You just never know.
As for housing, certainly some skepticism is in order. Formerly sizzling markets in
Florida, Nevada, Arizona and California probably haven’t seen the worst headlines just yet, though they may well be close. And “jumbo” mortgages, those more than $417,000, are likely to remain artificially high for a few more months while banks work through their credit issues.
But let’s say you are emotionally ready to be a homeowner. You have good credit, plan to stay put for five years and have been waiting for the perfect entry point. It’s time to get serious–before an inevitable rise in interest rates wipes out your advantage. “The thing that will make home prices stop falling is the very same thing that will push mortgage rates higher,” says Jim Svinth, chief economist at mortgage firm Lending Tree. So anything you gain by a further drop in prices might be offset by rising financing costs.
Consider a typical home that sells for $218,900. You put down 20% and get a 30-year fixed-rate mortgage at today’s rate of 5.5%. Monthly principal and interest come to $994.31. Let’s say that 12 months from now the same house goes for 10% less, or $197,010. But by then the recession is history and the Fed is jacking up rates to stem inflation. If mortgage costs rise a point, to 6.5%, your monthly payment would be $994.94 and you’d have saved nothing. Meanwhile, home prices might steady and sellers might become less willing to negotiate. And you have spent a year living someplace you’d rather not be.
It’s more complicated if you must sell before you can buy. But that logjam won’t persist forever–and if it appears you’ll be trapped for a few years, try to refinance at today’s lower rates. Risks always seem most acute when the headlines give you ulcers.
But that’s exactly when you should think long term–and get off your thumbs.” End of article.

[Soccersupporter]

Originally Posted by endofmyrope

Thanks for the California update, from Texas!


Please let us know when to expect the next earthquake as well.

LOL

Sorry that you have such a problem with facts, it wasn't a prediction.

Can't tell you about the earthquakes but maybe a tornado watch or an unexpected 6 inches of snow might do.

[Soccersupporter]

Originally Posted by endofmyrope

A lot of Bears post negative article after negative article, as links to bubble reports dot com, and the like. Here’s a positive article from an unexpected source. Sorry, the link required a password, so I cut and pasted this recent article from Time Magazine:
“Ignore the Headlines! Except this one. Sure, housing’s in a hole. But there’s a potent case for buying now, whether it’s real estate or stocks
By Dan Kadlec February 14, 2008
Famed Money Manager Peter Lynch is perhaps best known for his timeless wisdom that you can beat the pros by focusing on stocks of companies where you either work or shop or have some other edge. But a more relevant Lynchism today is this gem: Ignore the headlines.
That’s no easy thing. How do you tune out all the chatter and ink on recession,housing, subprime woes, the credit crunch, rogue traders, insolvent bond insurers, $100 oil and nukes in Iran? It’s enough to make you sit on your thumbs and wait before making any big moves. But what, exactly, are you waiting for?
There has rarely been a moment in history when you couldn’t scare yourself into doing nothing. And yet, as Lynch observed nearly 20 years ago, “in spite of all the great and minor calamities that have occurred … all the thousands of reasons that the world might be coming to an end–owning stocks has continued to be twice as rewarding as owning bonds.”
A top reason to not buy stocks, in Lynch’s view, is if you don’t already own a home–in which case, that should be your first investment, since an owner-occupied home is nearly always profitable. Through a spokesman, Lynch reaffirmed these views to me–housing debacle and all.
When prices are falling, few people have the discipline to buy stocks, a house, gold, art or any other asset. But those who do pull the trigger excel in the long run. As John D. Rockefeller famously said, “The way to make money is to buy when blood is running in the streets.”
And the streets are stained crimson. Start with stocks. They have been pummeled this year. GDP braked sharply last quarter, and there has been plenty of panic about a recession. The Federal Reserve is slashing short-term interest rates at the fastest clip in decades. But if you stick to your steady, diversified plan while everyone else is retreating, you will be happy years from now. For one thing, Fed rate cuts always lift the economy eventually, and the stock market typically starts responding just as headlines get gloomiest. Sure, the market could fall again before recovering. But the recession may be half over already–or we may avoid one altogether. You just never know.
As for housing, certainly some skepticism is in order. Formerly sizzling markets in
Florida, Nevada, Arizona and California probably haven’t seen the worst headlines just yet, though they may well be close. And “jumbo” mortgages, those more than $417,000, are likely to remain artificially high for a few more months while banks work through their credit issues.
But let’s say you are emotionally ready to be a homeowner. You have good credit, plan to stay put for five years and have been waiting for the perfect entry point. It’s time to get serious–before an inevitable rise in interest rates wipes out your advantage. “The thing that will make home prices stop falling is the very same thing that will push mortgage rates higher,” says Jim Svinth, chief economist at mortgage firm Lending Tree. So anything you gain by a further drop in prices might be offset by rising financing costs.
Consider a typical home that sells for $218,900. You put down 20% and get a 30-year fixed-rate mortgage at today’s rate of 5.5%. Monthly principal and interest come to $994.31. Let’s say that 12 months from now the same house goes for 10% less, or $197,010. But by then the recession is history and the Fed is jacking up rates to stem inflation. If mortgage costs rise a point, to 6.5%, your monthly payment would be $994.94 and you’d have saved nothing. Meanwhile, home prices might steady and sellers might become less willing to negotiate. And you have spent a year living someplace you’d rather not be.
It’s more complicated if you must sell before you can buy. But that logjam won’t persist forever–and if it appears you’ll be trapped for a few years, try to refinance at today’s lower rates. Risks always seem most acute when the headlines give you ulcers.
But that’s exactly when you should think long term–and get off your thumbs.” End of article.

The article was great as far as housing in general goes and I agree with the writer. However when you read this, Consider a typical home that sells for $218,900, in the article it has to still scare anyone wanting to buy a house in one of the higher, still over priced markets. I think the adjustment in prices in these markets has not worked itself out quite yet. I also doubt that it will recover to the pre-crash levels in the next few years if ever at all.

If the prices keep plummeting in CA I might just use the remainder of our equity from our CA sale to buy a condo for a nice vacation home in CA, rent it out to my son to cover expenses and not have to stay in a hotel when we come out to visit family.

[endofmyrope]

After 50 years, I'd have assumed you had plenty of equity though it sounds like someone sold at the bottom and can't let go.

[endofmyrope]

QUOTE:If the prices keep plummeting in CA I might just use the remainder of our equity from our CA sale to buy a condo for a nice vacation home in CA, rent it out to my son to cover expenses and not have to stay in a hotel when we come out to visit family.

Good luck with that, not everyone can afford to retire in CA and coming back for a visit will be a nice respite from the 6 months of 100 degree heat and humidity of those Texas summers.

There's a reason people pay good money to live in CA and weather is just one of them.

[Soccersupporter]

Originally Posted by endofmyrope

After 50 years, I'd have assumed you had plenty of equity though it sounds like someone sold at the bottom and can't let go.

Let me see, I bought a 3400 sq. ft. house on a third of an acre cash, left all our furniture in CA and completely re-furnished the house top to bottom. We will be putting in the pool in spring. After all of that we only have a couple hundred thousand left over. Yeh I guess you're right.

[endofmyrope]

Originally Posted by Soccersupporter

Let me see, I bought a 3400 sq. ft. house on a third of an acre cash, left all our furniture in CA and completely re-furnished the house top to bottom. We will be putting in the pool in spring. After all of that we only have a couple hundred thousand left over. Yeh I guess you're right.

So move on.

OWNED!

[Soccersupporter]

Originally Posted by endofmyrope

So move on.

OWNED!

You know what's funny? I just start a thread as a warning for people looking to buy vs rent at this time and you take offense. Your response and the tone says a lot. Oh well!