So where's the net...

[optimusprime_IHB]

Layoffs are happening left and right. We have got a pretty crazy economy so anything is possible even a pre 2000 roll back.

But I agree its all about income. So does 5x median family income for a SFR sound too unrealistic?

I can't get the image to work. Here's the link:

http://bp3.blogger.com/_pMscxxELHEg...MQ/HMwTAKlcLzg/s1600-h/HarvardMedianRatio.jpg

You tell me.

Thx for the graph Ice Cube.

Looks like LA has always had a premium but it's been pretty ridiculous the past 5 yrs.

Currently the LA ratio is 10...looks like if history plays out the ratio will be around 4-5 when it bottoms out...ughh..does this mean a 50% drop in median prices is in the cards? YIKES!

 

[stepping_up_IHB]

2002. It won't get any lower than that UNLESS there are massive layoffs in OC/LA.

How much you wanna bet on that? I'll book a gentlemans wager on this as large or small as you like (we could agree to go to lunch with The Hat crew and one of us could pick up the tab).

We were overpriced 9/2001. I know 2002 was worse.

I was looking at a few listings recently that had sales in 98/99 and 2001/2002. Prices doubled over these few years. This is the period that prices went from 3.5x income to 5x income.

I predict that it overshoots back to 3x income, and then stabilizes at 4x income. It is all about income!

1998, here we come!

98 prices adjusted for inflation at 3%/yr would put this area at a 75% drop in value. I just can't believe it's going to get that bad.

 

[PANDA_IHB]

2002. It won't get any lower than that UNLESS there are massive layoffs in OC/LA.

How much you wanna bet on that? I'll book a gentlemans wager on this as large or small as you like (we could agree to go to lunch with The Hat crew and one of us could pick up the tab).

We were overpriced 9/2001. I know 2002 was worse.

I was looking at a few listings recently that had sales in 98/99 and 2001/2002. Prices doubled over these few years. This is the period that prices went from 3.5x income to 5x income.

I predict that it overshoots back to 3x income, and then stabilizes at 4x income. It is all about income!

1998, here we come!

98 prices adjusted for inflation at 3%/yr would put this area at a 75% drop in value. I just can't believe it's going to get that bad.

It did in Japan during the Asian Financial Crisis in the 90's. It is amazing to see history repeat itself from east to west. What is happening to the United States right now looks so simlar to the Asian Financial Crisis. The Japanese were almost certain that the decline could not last more than 5 years. After 15 years of decline, real estate value were 70% off from the peak.

Home prices in OC went up from 1984 - 1990, and dropped from 1990 - 1995. This is a small hill in Wisconsin, compared to Mount Everest we are in now. OC had a 11 year run from 1995 - 2006. Going to a 10 year decline to get to 1998 prices is not unreasonable if the mortages rates climb to 10% - 15% levels. I believe the OC herd believes that home prices will rebound by 2010 - 2012.

Panda

Robert Kiyosaki from Rich Dad said, "Your primary residence is not considered an investment, it is your home."

 

[optimusprime_IHB]

Robert Kiyosaki = clueless pimp

 

[no_vaseline_IHB]

98 prices adjusted for inflation at 3%/yr would put this area at a 75% drop in value. I just can't believe it's going to get that bad.

I can, and fully expect it to do so.

People said the same things about the NASDAQ too. Hell, they said them about Enron.

 

[FairEconomist_IHB]

If you click on the "housing affordability in Orange County" link on that HousingTracker site you get "page not found".

Somebody has a sense of humor there.

 

[freedomCM_IHB]

2002. It won't get any lower than that UNLESS there are massive layoffs in OC/LA.

How much you wanna bet on that? I'll book a gentlemans wager on this as large or small as you like (we could agree to go to lunch with The Hat crew and one of us could pick up the tab).

We were overpriced 9/2001. I know 2002 was worse.

I was looking at a few listings recently that had sales in 98/99 and 2001/2002. Prices doubled over these few years. This is the period that prices went from 3.5x income to 5x income.

I predict that it overshoots back to 3x income, and then stabilizes at 4x income. It is all about income!

1998, here we come!

98 prices adjusted for inflation at 3%/yr would put this area at a 75% drop in value. I just can't believe it's going to get that bad.

I calculated it last night for the housingtracker numbers:

The 25% tranche is off ~35% from peak

The 50% tranche is off ~25% from peak

The 75% tranche is off ~15% from peak

Given the huge coming influx of REO property, and the diminishing supply of qualified buyers (I'm not talking 20% down here, but simply enough income to qualify according to FHA), I don't see how we could be any more than halfway down to the ultimate terminus.

Prices rose 300% in the past ten years, while income basically was frozen for the bottom 90%. To get back to 100%, it will take a 67% decline.

 

[awgee_IHB]

The market will do what the least number of people think it will do.

 

[optimusprime_IHB]

The market will do what the least number of people think it will do.

Cool...I guess 2000 price it is.

 

[awgee_IHB]

The market will do what the least number of people think it will do.

Cool...I guess 2000 price it is.

or 1997

but more likely, the IHB and it's posters are not a good sample of what most folks think.

 

[trrenter_IHB]

I think prices will continue their downward decent until housing is afforadable.

Pre 2000 isn't inconceivable if interest rates climb.

As the bubble proved it is not the cost of the home but the monthly cost people are concerned with.

With the lending standards becoming stricter loans will need to conform. I keep thinking that the median income in Irvine is about 85k that means a monthly mortgage on a median type home should be about $2,300.

At a 7% interest rate on a 30 year term that is about a $350,000 mortgage. So add on for a down payment.

As interest rates rise (to fight inflation?) the price of the house has to go down to stay within that $2,300 range.

I hope intrest rates go up to fight inflation to further push down housing prices.

Then after I buy I would love for intrest rates to go down then I can refi at a lower rate and save some money.

 

[momopi_IHB]

The average or median income stats for a city doesn't always reflect its housing market & buyers. People who bought early and are retired with little income, is quite different than a new arrival (DINK couple?). My friend's mother, for example, is retired and lives in a ~$600k house in Irvine. They bought the house when it was $140k and it's already paid off. Compare that with some of you here, making 6 figures and renting. You take an average and it doesn't reflect either extremes.

 

[awgee_IHB]

This article explains what I mean when I say real estate prices will attain 1998 prices in real vs. nominal dollars:

http://www.financialsense.com/fsu/editorials/walayat/2008/0630.html

 

[freedomCM_IHB]

This article explains what I mean when I say real estate prices will attain 1998 prices in real vs. nominal dollars:

http://www.financialsense.com/fsu/editorials/walayat/2008/0630.html

I have two big problems with that analysis:

First, it is assuming that stability is a 4% annual increase in *inflation adjusted* house prices. Historically, the increase has been ~4% *including inflation*, as i've read. The real increase is 0.4% inflation adjusted. This suggests that *absolute prices* might return to 40% above the 1998 price.

Second, of course it is using national (USA-wide) data, and the bubble markets seem to be gyrating at a much different slope.

 

[optimusprime_IHB]

*BUMP*

Looks like we have hit 2003 prices....IHB looking good..looking better for 2002 and earlier peeps now too.

 

[irvine_home_owner_IHB]

*BUMP*

Looks like we have hit 2003 prices....IHB looking good..looking better for 2002 and earlier peeps now too.

Is this overall or just for Irvine?

I don't think all of Irvine has hit 2003 just yet... still a few holdouts.

 

[optimusprime_IHB]

*BUMP*

Looks like we have hit 2003 prices....IHB looking good..looking better for 2002 and earlier peeps now too.

Is this overall or just for Irvine?

I don't think all of Irvine has hit 2003 just yet... still a few holdouts.

Just looking at Irvine.

I think the newer neighborhoods built around 2002 or later have.

 

[irvine_home_owner_IHB]

*BUMP*

Looks like we have hit 2003 prices....IHB looking good..looking better for 2002 and earlier peeps now too.

Is this overall or just for Irvine?

I don't think all of Irvine has hit 2003 just yet... still a few holdouts.

Just looking at Irvine.

I think the newer neighborhoods built around 2002 or later have.

I disagree.

The majority of QH homes are still going for higher than in 2003/04... as well as Woodbury.

Even areas like Westpark I/II are still listing at 2004/05 prices.

 

[Anonymous_IHB]

*BUMP*

Looks like we have hit 2003 prices....IHB looking good..looking better for 2002 and earlier peeps now too.

Is this overall or just for Irvine?

I don't think all of Irvine has hit 2003 just yet... still a few holdouts.

Just looking at Irvine.

I think the newer neighborhoods built around 2002 or later have.

I disagree.

The majority of QH homes are still going for higher than in 2003/04... as well as Woodbury.

Even areas like Westpark I/II are still listing at 2004/05 prices.

http://www.redfin.com/CA/Irvine/25-Autumn-Oak-92604/unit-4/home/5505878

25 Autumn Oak #4

Irvine, CA 92604

Price: $279,900

BEDS: 3

BATHS: 2

SQ. FT.: 1,150

$/SQ. FT.: $243

LOT SIZE: -

PROPERTY TYPE: Condominium

STYLE: Traditional

YEAR BUILT: 1978

STORIES: 2

FLOOR: 2

VIEW: Has View

AREA: Woodbridge

COUNTY: Orange

MLS#: S553943

SOURCE: SoCalMLS

STATUS: Active

ON REDFIN: 104 days

UNSOLD IN 90+ DAYS

FIXER-UPPER

Bank Owned proeprty! Second Floor unit on quite cul-de-Sac. Property with great potential. Needs TLC on the inside but is basically in good shape minus cosmetics. Light and Bright with front to back windows. Parks and pool nearby and close to all the convenience of Irvine living. Located on a street with Single Family Detached homes. BUYER'S here is your second chance, fell out of escrow. Lowest 3 bedroom condo in Irivne.

Oct 08, 2008 Sold $362,500 -4.7%/yr Public Records

Jul 01, 2005 Sold $425,000 18.1%/yr Public Records

Oct 30, 1998 Sold $140,000 -- Public Records

==================

Really in Oak Creek by address, not Portola

http://www.redfin.com/CA/Irvine/227-Tarocco-92618/home/5480278

227 Tarocco

Irvine, CA 92618

Price: $280,100

BEDS: 3

BATHS: 3

SQ. FT.: 1,192

$/SQ. FT.: $235

LOT SIZE: 3,999 Sq. Ft.

PROPERTY TYPE: Condominium

STYLE: Contemporary

YEAR BUILT: 1983

STORIES: Split-Level

FLOOR: 1

AREA: Portola Springs

COUNTY: Orange

MLS#: P676428

SOURCE: SoCalMLS

STATUS: Active

ON REDFIN: 4 days

Great Condo, Great Area near Irvine Spectrum Shopping Center, Near UC Irvine and access to 405 fwy and 5 fwy. Great Community with tennis courts and pools. A must see this is a 3 bdrm and 3 bthrm jewel. Great for the College son or Daughter or even for 1 st time home buyer. Great Ameneities, Nice parks in the area for hiking and running. Wont last. Its located near Valley Center College as well, and walking distance to Golf course.

Sep 29, 2005 Sold $475,000 20.8%/yr Public Records

Mar 08, 2000 Sold $166,000 0.2%/yr Public Records

Aug 16, 1990 Sold $163,000 -- Public Records

 

[irvine_home_owner_IHB]

Anon's examples of old condos

Sure... there are older low-end units that have dropped... but remember... I said "all of Irvine" and "still a few holdouts". In addition, Prime said homes built 2002 or later which is where my main contention is.