Enough Already with the BS!

Is it just me or has the mantra of local real estate agents taken on a more drastic tone that is intended to mislead home buyers? You've probably had the same experience - you go to an open house, ask about the price of the house and the bad market and you get an answer that is not on point and intended to distract you from the TRUTH, which is that the house you are looking at is probably worth less, possibly much less that the asking price. It is no secret that Laguna Beach home prices are down, down big, yet I've never heard a realtor actually say it.

Case in point. Michael Gosselin of Surterre Properties says in a January 15, OC Register article that "...there are some bright spots, too. In Laguna Beach, our median price for 2007 is actually up from 2006, albeit by just a small amount. Based on the MLS data, the median price in Laguna Beach rose from $1,655,000 to $1,700,000, or a little less than 3%." I'd like to see that data, Mike, because the media seems to be reporting a much different picture.

I checked Dataquick's December numbers posted by the OC Register. December 07 median price for a home in Laguna Beach is down a full 14% from a year ago. Up 3%??? Not. Down 14%. The most current numbers in a dynamic market can't be disputed. Even if somehow Mike was referring to the median sale price for all 12 months of 2007, he is still wrong. That number, while probably a meaningless indicator of the current state of the market, is also DOWN 4.4% per the OC Register and Dataquick. Again, comparing the median price for ALL of 2007 to ALL of 2006 really is not too close of an indicator of where the market stands TODAY. For that you want the Dec 07 median v. the Dec 06 median that shows a decrease of 14%.

What is that in money terms? Well, it means the owner of a median home would have lost over $150,ooo in 2007 - more than $10,000 per month!

Some "bright spot"!!!

Chapman Economists Predict OC Recession in 08 and 8% Loss in Home Prices in 08

The OC, normally a solid job engine, is headed for a recession in 2008, according to economists at Chapman University. Chapman economists Esmael Adibi and Jim Doti have been predicting job growth in Orange County for 30 years. They say job numbers will turn negative starting in the second quarter of 2008 and stay negative in the third quarter. That qualifies as a recession, according to Chapman’s definition. “There is little doubt that the economy is hurting from the demise of real-estate related activity,” the economists write. “It is clear that construction and financial activities are the weakest sectors of the economy followed by trade, transportation and utilities which are indirectly affected by the housing market.”
Most importantly, they also foresee an 8.1 percent drop in the median price of a resale single-family home in 2008. Applied to a Laguna Beach home bought today for $2,000,000, that would mean a $160,000 loss in one year. Scary for homes in Laguna Beach.

You can view the story here.

Huge Resale Losses in Laguna Beach

Cal State Fullerton professor Michael LaCour-Little has done a study looking at recent sellers of O.C. homes who sold for less money than they paid. (And that’s losses without transaction costs figured in.) Laguna Beach was the top lower in Orange County with a staggering average of about $577,000 per money losing home sale.

He also found that 37.6% of all sales he tracked resulted in a loss and typical ownership tenure of losers was two years.

These deep losses weren’t the most startling result to LaCour-Little. Rather, he was startled by how the size and scope losses grew as the year progressed. For example, losing sales were slightly more than 20% of deals tracked in January but nearly 70% in October. “I didn’t expect to see so much of a time trend,” LaCour-Little said.

You can get the full story here.