Mortgage defaults Spike in Inland Empire

NEW -> Contingent Buyer Assistance Program
<a href="http://calculatedrisk.blogspot.com/2008/09/mortgage-defaults-spike-in-inland.html ">http://calculatedrisk.blogspot.com/2008/09/mortgage-defaults-spike-in-inland.html </a>
 
There are many locations across Riverside County that are at the bottom or very close: those that have already dropped 50% or more. In the more desirable areas where prices have held up better, the defaults will blast them back down to reality soon enough. It is the same dynamic as Santa Ana and Irvine. Santa Ana is probably near the bottom in pricing whereas Irvine has a long way to go.
 
I disagree.



My post yesterday had the real data from CS, but basically If you assume that CS=100 is the sustainable level, then the 25% housing tracker number suggests that these areas, which are the epitomy of the the median of the lower half of the LA/OC metro housing market, should fall from the peak (CS=~340) by 70%.



currently, the Riverside numbers on Housingtracker shows that asked prices are off 51% in the 25% group, 44% for the 50%, and 39% for the "high end" (whatever that means in Riverside...).



This would suggest that the IE still has 40% to 80% to fall.
 
I have to also disagree with Irvine Renter. There are homes in the neighborhoods around 5th and Harbor that rent for $1300 a month. Nobody would want to live there by choice (no matter what the price) and I haven't seen one crack $250K (that was habitable) - <em>yet.</em>



Santa Ana has a ways to go, Irvine has a long way to go just to catch Santa Ana.
 
[quote author="no_vaseline" date=1221285285]I have to also disagree with Irvine Renter. There are homes in the neighborhoods around 5th and Harbor that rent for $1300 a month. Nobody would want to live there by choice (no matter what the price) and I haven't seen one crack $250K (that was habitable) - <em>yet.</em>



Santa Ana has a ways to go, Irvine has a long way to go just to catch Santa Ana.</blockquote>
So then what % off the peak will Santa and Ghettoside prices fall? 60%? 70%? 80%? 90%?
 
it's funny, in the two big cocktail-party conversation macroeconomic metrics, no one ever looks at the other side of the coin.



no one ponders that in the 'price of oil' discussion, the dollar is the real variable, just as no one thinks about the fact that rental prices aren't static (or guaranteed to rise) when one does the classic purchase cost vs rental cost math.



how's this for a scenario? north orange county sees 15% unemployment and rental prices fall a third from current levels within just a couple of years. makes calling a bottom a little more interesting, doesn't it?
 
[quote author="usctrojanman29" date=1221287042][quote author="no_vaseline" date=1221285285]I have to also disagree with Irvine Renter. There are homes in the neighborhoods around 5th and Harbor that rent for $1300 a month. Nobody would want to live there by choice (no matter what the price) and I haven't seen one crack $250K (that was habitable) - <em>yet.</em>



Santa Ana has a ways to go, Irvine has a long way to go just to catch Santa Ana.</blockquote>
So then what % off the peak will Santa and Ghettoside prices fall? 60%? 70%? 80%? 90%?</blockquote>


We moved here in September 2001. My rent was $1600 for a SFR in Chino Hills. The house across the street sold for $275 the same week I moved in. I thought the folks who bought it had lost thier minds.



We moved to Orange in May of 2006. My rent was $1700 for a SFR in Chino Hills. The same house across the street sold for $675 the same week I moved out. I nearly cried.



Fair value of that house in 2006 dollars? About $230k. That makes it, what, 66%?



Santa Ana had those shitboxes selling for $600K at the peak and they rent for $1300-1400.
 
Jeez, don't you read what I post? getting to the end of the paragraph for you, the cliff notes version:



<blockquote>should fall from the peak (CS=~340) by 70%.</blockquote>
 
[quote author="Hormiguero" date=1221293657]it's funny, in the two big cocktail-party conversation macroeconomic metrics, no one ever looks at the other side of the coin.



no one ponders that in the 'price of oil' discussion, the dollar is the real variable, just as no one thinks about the fact that rental prices aren't static (or guaranteed to rise) when one does the classic purchase cost vs rental cost math.



how's this for a scenario? north orange county sees 15% unemployment and rental prices fall a third from current levels within just a couple of years. makes calling a bottom a little more interesting, doesn't it?</blockquote>
I don't see rents falling that much...I think they will stay about the same but if they do drop it'll be no more than 10-15% (of course, it all depends on the location of the property).
 
[quote author="freedomCM" date=1221298347]Jeez, don't you read what I post? getting to the end of the paragraph for you, the cliff notes version:



<blockquote>should fall from the peak (CS=~340) by 70%.</blockquote></blockquote>


I like to do math. It helps me realize I'm still sane.
 
[quote author="usctrojanman29" date=1221302303]

I don't see rents falling that much...I think they will stay about the same but if they do drop it'll be no more than 10-15% (of course, it all depends on the location of the property).</blockquote>


Hmm, isn't that what they said about home prices a year or so ago?



It really depends on what you call 'rent'. If you mean the "average" rent, you may be right. If you mean $3000/month for a two bedroom private townhome or $4500 for a SFR, that'll depend on how the county's employment and income holds up.



But frankly, I think the rent coup de grace will come from the housing market itself. Rental after rental was removed from the market to sell for the capital gain.



And of course, the other thing too. All those empty houses you see on the open home tour or sitting on Countrywide's REO page will eventually need people in them.
 
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