Author Topic: Housing Analysis  (Read 101047 times)

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Re: Housing Analysis
« Reply #1155 on: January 21, 2020, 07:40:36 PM »
Trojan, Here are three dates from the past and three prior recessions. Just for fun, let's pretend that the unemployment % = magnitude # of an earthquake.

March 1990 Unemployment rate 2.7% and recession started Aug 1990 Unemployment rate 3.8%, Magnitude 7.1
Dec 1999 Unemployment rate 2.2% and recession started Mar 2001 Unemployment rate 3.6%, Magnitude 5.3
Dec 2006 Unemployment rate 3.1% and recession started Dec 2007 Unemployment rate 4.2% Magnitude 10.2

Oct 2019 Unemployment rate 2.5% and recession will start (??) The earthquake Magnitude of a 5, didn't really impact the housing prices in Irvine, but if number hit 7 or above... Irvine Home Prices will be hit just like it did in (1990-1995) and (2007-2009). The current unemployment rate in the OC have very little margin to play with as 2.2% seems  to the record low unemployment rate in the OC and the unemployment chart never flat lines horizontally, but always moves like a wave moving either up or down.

Trojan.

The charts don't lie... look at the OC unemployment chart. So you think that unemployment rate in OC is just going to flat line here at between 2 - 2.5%? If this chart was a stock, I would be loading the truck and betting big time going long here.

Mety,
Yes. Take a look at the OC unemployment chart above. The unemployment % cannot be negative therefore it is a matter of time of a reversal. If the OC employment chart was a stock, I would be loading the truck to bet big that the OC unemployment rate will reverse from its all time low.

The gray bar indicates previous recessions. Irvine housing was not impacted too much in the recession between 2000-2002 where the unemployment rate rose to 5%, however when it reached 7% from 1990 - 1994 and 10% between 2007-2009, you will see the Irvine home prices drop. Trojan's median and average Irvine home price chart is already start to see the beginning of a reversal.   

Mety. The unemployment chart for OC moves in a wave pattern. You can see that currently that the unemployment moves in a wave pattern and never in a horizontal line. The gray bar indicates previous recessions.

So you predict it will go up and the housing price will go down soon?

The job market from what I hear from my clients is very strong. Employees getting poached for higher salaries, higher bonuses, promotions, stock option values increasing, and employees thrown relocation packages to move.  Just like with interest rates, we can keep bouncing around this very low unemployment rate for a bit and I'd argue that there is some frictional unemployment rate that we won't go below.  I think the real estate market is currently in a digestion phase of the prices increases since the last election.  My clients asked me where I think the market will go this year and my prediction is that prices will essentially stay flat (assuming rates stay below 4%) in 2020.

I don't think the unemployment rate can flat much from current levels but yes, I don't see anything in the near term that would cause the employment rate to materially rise. It's the same way that bond rates stayed lower for longer than people thought. I remember telling clients in late 2018 that rates go back down into the 3s before they went into the 6s. There has to be catalyst/s for the unemployment rate to go up and I'm not seeing anything like that right now (doesn't mean that one can't appear), not just because the unemployment rate has been low for too long (i.e. using technical analysis like you would with a stock chart). 
James Park, MBA
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Offline Mety

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Re: Housing Analysis
« Reply #1156 on: January 22, 2020, 10:42:59 AM »
The RE cycles along with the unemployment rates tend to form up and down waves like Panda said.

But is it important to single out just the OC or LA area?

When such drastic changes/recessions hit, I believe it was the entire US region, not just OC.

Would it be fair to see the whole US chart instead of one single county?

Offline irvinehomeowner

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Re: Housing Analysis
« Reply #1157 on: January 27, 2020, 09:24:44 AM »
*Still* waiting for those December price lags to catch up.

And the "pain" in Irvine... who is feeling that?

Where are those OCReg articles talking about price drops in Irvine and Tustin? Are they still writing those zip code specific housing articles? Can someone post them here again?

Still no explanation as to why such a decrease in volume did not lead to a proportionate decrease in prices?

Is it too early still? Is 2020 the year of the price lag catch-up?

This always happens on the IHB before and TI now... people who are so adamant about their position disappear when things don't exactly turn their way.

The exception... Panda... who sticks around no matter what and actually, if he stayed in Irvine... may have been able to build just as successful a real estate business here.
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Offline Compressed-Village

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Re: Housing Analysis
« Reply #1158 on: January 27, 2020, 11:28:19 AM »
Yup,,,,,it is different this time.  :)

Offline irvinehomeowner

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Re: Housing Analysis
« Reply #1159 on: January 27, 2020, 01:47:54 PM »
Just checked some Redfin data... looks like Liar Loan's "safe haven" of Newport Beach is the one experiencing some "pain".

Looks like FCBs are a more stable demographic than surfers?

Until coronavirus decimates Irvine house values... maybe that's the X factor everyone has been waiting for.
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Offline Compressed-Village

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Re: Housing Analysis
« Reply #1160 on: January 28, 2020, 09:53:27 PM »
Orange County home sales jump 37% as median price hits $732,750
Median is 1% off the county’s record high of $740,000 set in October 2018.

STAFF GRAPHIC
By JONATHAN LANSNER | jlansner@scng.com | Orange County Register
PUBLISHED: January 28, 2020 at 11:59 am | UPDATED: January 28, 2020 at 2:19 pm
Orange County homebuying rose and prices increased as Southern California’s median hit an all-time high in December.

Orange County home sales totaled 3,109 in December — up 37% in a year, CoreLogic/DQ News reported. Still, Orange County’s latest sales count is still 12% off the December average of 3,533 since 1988.

The countywide median selling price was $732,750 — up 3.2% over 12 months. The latest median is 1% off the county’s record high of $740,000 set in October 2018.



So, looks like the trends is moving up. Another black dice comes out. We will have to continue to wait and see if the next black swan event to occur before the shift of downward buying demands. Can cheap money, even gets cheaper in the next crisis? FED caved in before, so it can possibly do it further.




Offline irvinehomeowner

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Re: Housing Analysis
« Reply #1161 on: January 29, 2020, 08:37:56 AM »
So despite lower volume... and after all this time for prices to catch up, December is actually closer to the all time high?

How does the data explain this?
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Re: Housing Analysis
« Reply #1162 on: January 29, 2020, 09:14:03 AM »
In 2008 when IHB was talking about all the shadow inventory and how Irvine was doomed to 40% drops or more, no one expected the FED to rescue housing and the economy with such great gusto!......and it worked.

So now 2018-2019 realestate looks wobbly....once again the fed comes to the rescue and we only drop 5%.

Every time the FED rescues the US economy the gini coefficient increases....now you gotta decide which side of the equation you wanna be.


It's like the Chinese wealthy who buy properties in China knowing the government will never let it drop....same shit here.


So what's the take away?
The US government will prop up our economy forever no matter what. (for the rich)
They will kick the can as long as possible until we end up in momopi paradise.
In the end, the people who bought in the 2006 high got their valuation back about 10 years later.
« Last Edit: January 29, 2020, 09:30:09 AM by zubs »

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Offline irvinehomeowner

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Re: Housing Analysis
« Reply #1163 on: January 29, 2020, 09:33:45 AM »
In the end, the people who bought in the 2006 high got their valuation back about 10 years later.

For Irvine, it was actually earlier... at least that's what the "data" says. :)
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Offline Compressed-Village

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Re: Housing Analysis
« Reply #1164 on: January 29, 2020, 09:48:11 AM »
In 2008 when IHB was talking about all the shadow inventory and how Irvine was doomed to 40% drops or more, no one expected the FED to rescue housing and the economy with such great gusto!......and it worked.

So now 2018-2019 realestate looks wobbly....once again the fed comes to the rescue and we only drop 5%.

Every time the FED rescues the US economy the gini coefficient increases....now you gotta decide which side of the equation you wanna be.


It's like the Chinese wealthy who buy properties in China knowing the government will never let it drop....same shit here.


So what's the take away?
The US government will prop up our economy forever no matter what. (for the rich)
They will kick the can as long as possible until we end up in momopi paradise.
In the end, the people who bought in the 2006 high got their valuation back about 10 years later.


Yeah, one of the thread late last year discussed about pricing in 2018 / 2019 and my thought was that by 2025 I should have bought in 2020 when prices were ways lower.

People forget that Local government relies heavily on real estate and taxes collections to let the shit hit the fan.


And you have private equities and corps flushes with cash and credit lines up the wazoo playing the residential real estate market and scoops up properties and willing to hold it on their books. Banks still practice with cautions. All this will support and prevents any type of crazy low price.

« Last Edit: January 29, 2020, 10:02:08 AM by Compressed-Village »

Offline Mety

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Re: Housing Analysis
« Reply #1165 on: January 29, 2020, 01:04:36 PM »
If there is a no sign of a price drop, then that’s a good thing. There is a no sign of the insane price increase either, so that’s a better thing. But for the a huge price drop to happen, that would be something the whole nation has to suffer together, not just Irvine or OC. As of now, it seems like some zip codes in Irvine home prices decreased and some appreciated by a very little %.

Offline irvinehomeowner

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Re: Housing Analysis
« Reply #1166 on: January 29, 2020, 02:15:36 PM »
C'mon slowdowners... joo got sum splainin' to do.

:)
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Offline Compressed-Village

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Re: Housing Analysis
« Reply #1167 on: January 29, 2020, 04:55:12 PM »
Ha ha, for a second there, it sounded like boyz in the hood movie.

Offline irvinehomeowner

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Re: Housing Analysis
« Reply #1168 on: January 30, 2020, 08:59:13 AM »
Okay... new year... let's reset.

It seems like volume data doesn't have the impact on pricing as we would have thought (unless someone can explain otherwise).

So... now that we see that... what do we think housing will look like in the next 1, 2, or 5 years?

Since housing is usually cyclical, aren't we overdue for a big drop (I think that's what the slowdowners were betting on because it's been over 10 years since the last significant drop)? I remember from a long time ago that real estate was 7 year cycles but I'm not sure if that applies now. If 94 and 08 were the last troughs (14 years difference!), would 22 be the next one?
Once you go 3-car garage... your junk can never go back.
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FCB: Foreign Cash Buyer
I recommend:
www.irvinerealtorsite.com
member: Soylent Green Is People (loans/refis)

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Re: Housing Analysis
« Reply #1169 on: January 30, 2020, 09:06:10 AM »
Denying that the new Trump tax law had no effect for housing is laughable.

Sorry it’s political, but that’s what happened clear and simple.
« Last Edit: January 30, 2020, 09:12:26 AM by eyephone »

 

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