The Real Overpriced Homes of OC!!

[ochomebuyer]

Des-Lab I understand what you are saying. As GalaxieGirl pointed out, there is some theory behind what happened to our market this year and this is what I was looking for. I could not understand how prices swelled so drastically since 2012. Many of the condos I have looked at and researched sold last year for nearly half their asking price today. That is not a healthy increase and not good for anyone but investors. Realtors need a healthy and stable market in order to survive, and housing needs to be affordable for FTHB's. I make a really good living and most homes here are simply out of my reach, which is why you said you moved away. Unfortunately there are several reasons as why I cannot move away. For one, my job keeps me here. Unfortunately I will just keep renting until something reasonable (IMO) comes available, or sellers realize this isn't a cash cow.

[ochomebuyer]

Originally Posted by Fontucky

If you're referring to Sandlewood Ct in SJ Village, that's a ridiculously high price to pay for tiny lots, zero lot lines, no parking, and lots of absentee owner rentals rented out to multiple families in one house, if you know what I mean...

Yep. I thought so too. Although at $370, what it sold for last month, I would have considered it.

[Galaxie Girl]

Originally Posted by ochomebuyer

Thank you so much GalaxieGirl! This was the kind of response I was looking for, a real explanation of what is happening. I have not been watching the market for some time now. My career has totally shifted away from real estate. I would love to know what your thoughts are for next year. Any predictions? I know it is impossible for anyone to really know, but always interesting to hear what others think will happen.

Assuming there is no major catastrophe (The Big One hits, we get sucked into a war, aliens attack us LOL), seems like prices should slowly increase for the next few years (probably no 25% price jumps). I have heard interest rates should stay relatively low for a little while, until they start tapering and the economy improves more. Obamacare will probably continue to hamper economic growth, so the economy (and thus, real estate prices) probably will not increase very fast until that settles down and businesses see what the "new normal" is for healthcare costs.

[thelopez2]

Originally Posted by ochomebuyer

Is anyone else sickened by the recent home value inflation?
What is going on!!??
What has happened in a years time that these prices can be justified?
And why would anyone buy a place that is 40%-50% more than comps just a year ago?

First time buyers, please do not fall for the trap! Just wait it out because this little housing bubble we experienced in the summer of 2013 is on the verge of popping.
So nature walks cost money now?

Seriously, how are buyers this foolish?
Anyone else witnessing this mess and just as confused as I am?

I refuse to accept this and will hold out on buying until sellers & agents come back down to earth.

I wan't sure if you really wanted an answer, your last line make it sound like just a rant and you will refuse to accept this. A few things happened.

1) Lender were giving away money to people that were unable to afford the mortgage payment. Many of those people thought they could just sell later and make a nice profit. Inflation occurred, prices ran up.

2) Those programs went away, Those people who bought on speculation couldn't afford to make the payment, they burnt through their savings, they couldn't sell, they walked away from their obligation, or was foreclosed on. They borrowed money, they couldn't sell it, they might not have had any skin in the game, they walked away form the property.

There was a credit squeeze that affected credit to business. It was very difficult to get credit, run a business on credit, get , borrower money , sell bonds. I don't know if you know but business don't like to burn through their cash to run a business. Most would rather cut production than risk their capital.

Hiring froze, small business shut down, unemployment increased , people couldn't afford their homes. Businesses left town, downsizing, relocating to more business friendly areas, lower cost, etc.

3) When they lost their property , they didn't care how much they lost, prices fell. When those prices fell, non speculator, didn't want to sell their homes, but had to due to moving for job, needing a larger place, divorce, loss of job etc, what ever the reason, when those people had to sell, the comparables were low because of the foreclosures and short sales.

4) Programs were created to get people to move out of their unaffordable homes.

5) People became accidental landlord and some held on instead of dumping the properties.

6) Lending programs were created to help Fannie Mae and Freedie Mac, rewarding those that kept their properties.

7) Investors were still quietly buying up properties.

8) Lending tightened, it became harder to buy and get more loans if you had a bunch of properties already.

9) Prices dropped, the supply of money was greatly reduced, banks got a bail out , but didn't lend that money as some people had expected.

10) Those with money were left as the only buyers, the sellers didn't care about what they sold for, the sellers that cared were the victim of the situation because of comps.

11) Inventory dried up.

12) Lending loosened , the supply of money flowed, credit was available to run business, people put their money back in the market to let other people make money off their money.

13) People were timing the market, they didn't want to buy as prices were falling ,they didn't want to put a down payment of 20% and lose tens or hundreds of thousands of dollars overnight, they said, I'll buy when the market turns,

14) When the market turned, all of the pent up demand of non speculative buyer hit the market driving up prices with lack of inventory.

15)Business that relocated now ramped up production, hiring more people.

16) Comparables increased, short sales, foreclosures , banks now holding housing inventory , supported increasing sale prices.


I'm not offering any type of prediction on home prices, but the monthly payments are only supportable by income. If rates go up without income improving ,then loan amounts will fall brining down prices.

As a licensed agent, you know it cost a seller nothing to list their home, why wouldn't they put it up with a price that would make them move, it cost them nothing. They might not even care if it sells since they have no reason to move.

Here is a question for you , why didn't you buy over the last few years?

I don't live in OC and I see a lot working in the lending industry.