Boker's Blog

"Glass Half Full" Perspective

ORANGE COUNTY REGISTER REAL ESTATE SECTION 10/16/2011
Jonathan Lansner
“6% OF O.C. MORTGAGES MORE THAN 3 MONTHS LATE”
The number is 19% lower than a year ago. The 90-day delinquent number is seen as a key indicator of future mortgages woes.

THE WALL STREET JOURNAL 10/15/2011
Jack Hough
“IT’S TIME TO BUY THAT HOUSE”
The U.S. house prices have plunged by nearly a third since 2006, and homeownership rates are falling at the fastest pace since the Great Depression.

The good news? Two key measures now suggest it's an excellent time to buy a house, either to live in for the long term or for investment income (but not for a quick flip). First, the nation's ratio of house prices to yearly rents is nearly restored to its prebubble average. Second, when mortgage rates are taken into consideration, houses are the most affordable they have been in decades.

Two of the silliest mantras during the real-estate bubble were that a house is the best investment you will ever make and that a renter "throws money down the drain." Whether buying is a better deal than renting isn't a stagnant fact but a changing condition that depends on the relationship between prices and rents, the cost of financing and other factors.

But the math is turning in buyers' favor. Stock-oriented folks can think of a house's price/rent ratio as akin to a stock's price/earnings ratio, in that it compares the cost of an asset with the money the asset is capable of generating. For investors, a lower ratio suggests more income for the price. For prospective homeowners, a lower ratio makes owning more attractive than renting, all else equal.

Nationwide, the ratio of home prices to yearly rents is 11.3, down from 18.5 at the peak of the bubble, according to Moody's Analytics. The average from 1989 to 2003 was about 10, so valuations aren't quite back to normal.

For example, the median home in the greater Phoenix market, including houses, condos and co-ops, costs $121,700, according to Zillow.com. With a 20% down payment and a 4.12% mortgage rate, a buyer's monthly payment would be about $470. Rent for a comparable house would be more than $1,100 a month, according to data provided by Zillow.com.

Houses aren't the magic wealth creators they were made out to be during the bubble. But when prices are low, loans are cheap and plump investment yields are scarce, buyers should jump.

ORANGE COUNTY REGISTER BUSINESS SECTION 10/15/2011
Jeff Collins
“HOME SALES INCREASE”
Sales of single-family houses increased 4.1 percent in September.

Taking sales volume into consideration, home-sale pricing is up in ZIPs representing 52 percent of the county market.

Cheapest ZIP is Laguna Woods 92637 with a $165,000 median selling price.

Priciest ZIP is Newport Beach with a $2,985,500 median selling price.

ORANGE COUNTY REGISTER BUSINESS SECTION 10/10/2011
Jeff Collins
“LENDERS SEIZE 28% FEWER O.C. HOMES”
In all, 577 homes either went back to the banks or were auctioned off to third parties, down 27.9 percent from September 2010.

The number of homeowners losing their properties was at its lowest level in the past 10 months.

NOD’s dropped 11.2 percent over the past year to 1,634

ORANGE COUNTY REGISTER BUSINESS SECTION 10/10/2011
Jonathan Lansner
“O.C. HOME SALES UP 6.5%”
Orange County closed 2,707 residences in September…up 6.52 percent vs. a year ago.

“Glass Half Empty” Perspective

ORANGE COUNTY REGISTER REAL ESTATE SECTION 10/16/2011
Jonathan Lansner
“MODEST PRICE CUTS FOR COUNTY, NATION”
Southern California markets are to remain relatively flat in the next 12 months. One of the key reasons for this continuing softness is that the supply of homes in Orange County remains stubbornly high. A modest change is seen as a 1.7% decline is predicted.

The 5 strongest markets for 2012 are:

1) Bismarck, N.D up 5.6%

2) Honolulu, HI up 2.9%

3) Fargo, ND and MN up 2.0%

4) Harrisburg, PA up 1.9%

5) Pittsburg up 1.9%

The 5 weakest markets for 2012 are:

1) Bakersfield, CA down 5.5%

2) Reno/Sparks, NV down 5.1%

3) Daytona Beach, FL down 5.1%

4) Las Vegas, NV down 5.1%

5) Fresno, CA down 4.8%

The nation’s weakest housing markets are found in Nevada, Inland areas of California, Washington and Oregon, accounting for seven out of the bottom 10 housing markets.

ORANGE COUNTY REGISTER REAL ESTATE SECTION 10/16/2011
Jonathan Lansner
“DENIED HOME LOANS”
2 million borrowers were denied home loans last year.

ORANGE COUNTY REGISTER BUSINESS SECTION 10/14/2011
Jonathan Lansner
“HOUSING REMAINS STUCK”
Six years into the housing slump, the market remains bogged down by foreclosures, underwater properties and tight credit. Orange County home sales fell 0.6 of a percent last month to 2,510 transactions, the lowest level for a September in four years.

ORANGE COUNTY REGISTER BUSINESS SECTION 10/9/2011
Jonathan Lansner
“THE CRISIS IS NOT OVER YET”
There are many property owners delinquent by over 18 months who have yet to be foreclosed on. Someday soon, these delinquent properties will hit the market either as a short sale or REO.

In Riverside, about 65% percent of properties sold are either short sales or REOs. Former owners with a foreclosure or short sale on their record don’t re-enter the market as a buyer because they can’t financing. For every 1000 sales, Riverside needs to find 650 new buyers to replace those that are now non-buyers.

In Orange County, It’s closer to 30 percent to 300 new buyers. Both areas are seeing all-time record numbers when comparing percentage of distressed sales to normal sales

ORANGE COUNTY REGISTER BUSINESS SECTION 10/6/2011
Mary Ann Milbourn
“COUNTY IS REGION’S MOST EXPENSIVE”
A local family of four requires an income of $75,000 to cover expenses.

Most Expensive Counties

1) Marin $86,629

2) Santa Clara $83,640

3) San Mateo $82,665

4) Santa Cruz $78,858

5) San Francisco $76,352

6) Orange County $75,668