How low will home prices go in OC?

[Fiddlehead]

Originally Posted by OCADA

The biggest culprit is freddie mac + fannie may and our Fed. Keeping interest rates unnaturally low for years and the government telling freddie/fannie "don't worry we'll back up all your crappy loans" lead to this mess. So if you were a lender, why wouldn't you give someone a loan if all you had to do was sell it to freddie/fannie and make money?

If you were standing in front of a black jack table in vegas and someone walked up to you and said, "Go play, if you bet and win you keep it. If you bet it and lose, don't worry we'll cover your losses," how would you respond? You'd be putting everyone past the felt line. It's called moral hazard and when there is no real loss to take a risk, people take them.

This is what drives me insane about all this. Some people made tremendous gains for doing nothing, whereas we had to bail out everyone else. Your typical joe cannot cover a $100k loss, yet they were flipping two and three homes in the half million range. And of course everyone up the food chain was in on the take. And the decent people in this country get the shaft yet again. Really disgusting.

[CmpEngineer]

Originally Posted by flo2900

Just curious if prices here will ever go as low as pre 1999 level.
Between 1999 and 2006 home prices in OC grew 180%...thats almost 3 times.

Your opinions please

In 2012, you will get a 1400 sq ft 3 bedroom 2 bathroom Mission Viejo house as a prize when you buy a box of Cracker Jacks. Ha Ha. Just kidding.

I think prices will go down to the 2001 level. With the high unemployment rate and people leaving California for other less expensive states, I do not see any reason for Orange County prices to go up. I think they will go down some more from here.

[svillechris]

Originally Posted by CmpEngineer

In 2012, you will get a 1400 sq ft 3 bedroom 2 bathroom Mission Viejo house as a prize when you buy a box of Cracker Jacks. Ha Ha. Just kidding.

I think prices will go down to the 2001 level. With the high unemployment rate and people leaving California for other less expensive states, I do not see any reason for Orange County prices to go up. I think they will go down some more from here.

You bring a up a good point here about people fleeing for less expensive states. You think that your taxes and the cost of living are high now? Just wait for another few years when the state has to ratchet up taxes even more because it's completely bankrupt and has no money to pay for anything other than hair spray for Arnold.

[GoldenZephyr]

Originally Posted by svillechris

You bring a up a good point here about people fleeing for less expensive states. You think that your taxes and the cost of living are high now? Just wait for another few years when the state has to ratchet up taxes even more because it's completely bankrupt and has no money to pay for anything other than hair spray for Arnold.

You are absolutely right, and it will get worse because higher taxes will cause more to flee, which in turn will reduce revenue more, and so on. Also pension obligations will explode further destroying services and cities, counties and the state will have to pay retirees to do nothing and cut services and not replace them when they retire.

There is going to be a really ugly fight in the next couple of years when working residents stand off against retirees. At some point public retirement benefits are going to be cut dramatically, just like with corporate retirements.

I read an article that in Yonkers NY, they had 390 police officers with 97 retiring and will not replace 90 of them so they can pay retirees. Residents are upset because services will eventually have to be cut to near zero just to pay people to do nothing. The coming generational storm isn't going to be pretty.