All-Time Inventory Peak

effenheimer_IHB

effenheimer_IHB

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<p><em>"Last month, the inventory of homes for sale in Orange County was the sixth biggest since 1992. The all-time peak for local inventory was April 1995, when the backlog was 26.2 months."</em></p>

<p><a href="http://www.ocregister.com/ocregister/money/homepage/article_1743422.php">Linky</a></p>

<p>That's one piece of the puzzle... The inventory peak happened on 4/95. In theory, we could take the sales for that month and multiply it by 26.2 to get the all-time peak number of homes for sale. Trouble is, I don't know how they're calculating their data. Read on:</p>

<p><em>"The state group estimates that in Orange County it would take 19.8 months to sell all the homes currently listed for sale, and that in California, the backlog equals 10.7 months."</em></p>

<p>We know that Orange country sales have been about 2600 (per month) for the last two months and Zip shows 19100 homes. That's 7.34 months. Could the Dataquick number be a future projection based on seasonally-adjusted consumption expectations?</p>
 
<p>I'm as confused as you now. I thought maybe it was because CAR doesn't include condos in their data but that doesn't make any sense. The only other thing I can think of is they are including new home inventory.</p>
 
<p>If the all-time peak for local inventory was April 1995, does anyone know approximately when prices bottomed? </p>

<p>never mind, found the data for OC:</p>

<p>1987 163k


1988 203k


1989 241k


1990 242k


1991 239k


1992 230k


1993 217k


1994 214k


1995 209k ***


1996 213k


1997 229k


1998 261k


1999 280k


2000 318k


2001 360k


2002 435k


2003 526k


2004 627k


2005 610k


2006 630k


2007 629k (April)</p>

<p>Seems like prices bottomed out that same year. Was this relatively true from experience, being how median prices are deceiving, for those close to the market during that time?</p>
 
<p>My family bought many homes in 1980 and still have them. Seems that price double every 10 years, here is one example.</p>

<p>1980 - $150K</p>

<p>1990 - $300K</p>

<p>2000 - $600K</p>

<p>2006 - $1.2M</p>

<p>2007 - $1.1M</p>

<p>... 2010 - $1.2M (extrapolated) except, I could be dead wrong because new homes are being build on the "last OC frontierland").</p>

<p>Perhaps, we are somewhat bottoming? I know I sound like a realtor "puffing". Just provide a real stat.</p>
 
Nir....I think you are a little off b/c you did not include inflation. I think in the early to mid 80's inflation was somewhere in 4.3% so that eats away at some of that appreciation.





As for the numbers b/w 2000 and 2006...well those are once in a life time appreciate rates that you are not going to see for quite sometime again.
 
<p>mino,</p>

<p>I am just reporting the time-actual price, no inflation adjusted. Regarding 2006 pricing, I agree it was very usual (notice I am doing a 10-year step pricing). One house I bought in the 80's I did see a 80% jump in just 2 years.</p>
 
Nir....I understand what you are trying to show, however the data you are giving is skewed in favor of showing that homes in SoCal always appreciate.
 
A more accurate "extrapolation" using 1990 and 2006 as tops and 1995 and 2011 as bottoms would put a $1.2 mil 2006 home at $912,000, not $1.2 mil.<p>



The trend of home prices now is depreciating and there is no logical reason to think this cycle will be any shorter than the last cycle, nor is there any logical reason to think re is somewhat bottoming and there is every indication that the depreciation rate is accelerating.
 
I should elaborate and state that I spend more time looking at condos. 1990 to 2000 looks flat to slightly up in nominal dollars. SFR's probably did better but I don't buy the notion that they doubled. 1990 was just before the hammering and 2000 was only the fourth year of the recovery.
 
<p>In real dollars the DataQuick OC median price from 1990 to 2000 was 4.4% above inflation however the year before 1999 was still 12.4% below inflation. The DQ average price from 90-00 was still 3.8% below inflation.</p>

<p>For a history lesson in 1990 Irvine and the other surrounding areas i.e. Portola Hills, RSM, Mission Viejo, etc. were not the most desirable areas of OC. Most people wanted a more developed area like Tustin, Orange and Costa Mesa and paid a premium for them. So if you compare the "newer" areas of OC like Irvine the price increases from 90-00 will be higher compared to the "older" areas. Since what were the "newer" areas are now developed and in some ways more desirable they have caught up to in price to the older areas. Or maybe the older areas are lower because the newer areas are more desirable? The point is it wasn't until the late 90s that the locals of OC thought hey these areas are pretty cool.</p>
 
<p>We live in a fiat based monetary system with a government deeply in debt. </p>

<p>There is only one out, and that is to print money like there is no tomorrow.</p>

<p>That is the number one reason for buying a home and holding onto it as long as you can.</p>
 
<p>oc_fliptrack,</p>

<p>I do not disagree with your number.</p>

<p>Home appreciation rate slows when the homes are entering a new phase such as builder warranty expires, needing new roof, needing new landscape, needing remodeling, demographic change, ....</p>

<p>Older condos see a huge jump in maintenance costs when they hit the 15 yr- and 30-yr marks; thus a big increase in HOA dues. This factor also slow down the appreciation rate.</p>
 
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