January 2011 - California Home Price's Biggest Fall in 14 Months

As you can read here in the Orange County Register, California home prices fell in January on a year-over-year basis for the fourth consecutive month, according to real estate tracker CoreLogic’s math.  Certainly looks like we are firmly in a housing double dip.  Buying a house now is buying a depreciating asset - one that loses money every month.

CoreLogic’s latest reports shows ..

• The last time California prices were falling at a faster rate was 14 months earlier — November 2009, when year-to-year depreciation ran 4.78 percent.
• National index declined on year-to-year basis for the sixth month in a row: off 5.7 percent vs. January 2010. Declined 4.7 percent in year ended in December.
• Orange County? Prices down by 3.25 percent in year ended January 2011 vs. dip of 4.29 percent in previous month.

Mark Fleming, chief economist with CoreLogic, said, “A number of factors continue to dampen any recovery in the housing market. Negative equity, which limits the mobility of homeowners, weak demand and the overhang of shadow inventory all continue to exert downward pressure on housing prices. We are looking out for renewed demand in the coming months as the spring buying season gets underway to hopefully reduce the downward pressure.”

Coldwell Banker Fail - Coldwell Quietly Closes Office In Laguna Beach

Coldwell Banker quietly closed its Laguna Beach Office on North PCH.  This reflects the Laguna Beach home market, which is sinking as well.....Buying a high end home in Laguna Beach is buying something that will lose value, month in and month out for the foreseeable future.

CnnMoney - Housing Double Dip Near

According to CnnMoney.com, the recent housing data indicates a coming double dip in home values.  Not wise to buy a home right now if you can wait .......just sit back and let the market bring down those prices for you!

January Home Sale Data Shows Continued Weakness in Laguna Beach

The latest housing numbers for sales during January 2011 have just been released and have been published by Dataquick, a reliable source.  The median price numbers show a continued plunge in Laguna Beach, while Newport Coast has posted a good increase. The takeaway? Buyers in Laguna Beach need to be careful that they are not paying too much for a home that is declining in value every month.

I doubt home values in Newport Coast are actually going up - the median price increase probably is likely to more sales of discounted high end homes as compared to a year ago.  More high end homes than low end homes sold in January in Newport Coast as compared to last year.  Less high end homes sold in Laguna Beach and Corona Del Mar, as compared to low end homes.

The highlights:
Laguna Beach:
only 27 homes sold, median price down 16.7% to $1,020,000.

Coronal Del Mar:
only 12 homes sold, median price down 12.5% to $1,570,000.

Newport Coast:
only 11 homes sold,  but median price up 11.2% to $1,890,000

The changes in the median price statistic probably indicate that the mix of homes sold has changed.  When the median price goes up, that indicates more higher value homes have sold as compared to lower priced homes. 

Crystal Cove Sale Trend Points to Huge Declines By Summer 2011

If the trend for Crystal Cove White Sails homes continues to next May, the price per square foot will be in the $500 range - down from the $800 range today.  This means huge losses for any new buyers and existing homeowners. Chart below.

Yet Another Recent Buyer Burned in Crystal Cove as Values Continue Crashing

 
28 Cruisers Bluff sold in June 2010 for $5,195,000.  And its value today? - Recent comps show a sagging market that has crushed the value of this home.  When someone loses a million dollars in home value after owning a home for only six months, there probably are some lessons learned and some important trends that a buyer should become aware of.   More detail below.

Crystal Cove, long resistant to falling home sale prices because its owners could simply afford "not to sell" is now at the tip of the deflating housing bubble in Orange County.  Of course, you won't hear this information from any real estate agent, but that's why I'm here - to make sure you get more than the positive fluff you may hear at open houses.

28 Cruisers Bluff had been languishing on the market for more than 700 days - being originally listed for sale in September, 2008.  It is a White Sails model with great ocean views, and 4 bedrooms in 5000 square feet on a large lot.  The White Sails models are all more or less the same kind of tract built homes.  The June sale price works out to $1039 per square foot.  This house was last sold when it was new in January of 2005 for about $3,300,000.  Common sense would put its value closer to that sale price than the listing price of the languishing listing.  But we don't need to postulate about the value - we have comps:

Three other White Sails homes have recently sold, both about 5000 square feet in size.  2 Gondoliers Bluff sold on November 8 for $4,100,000 ($820 per square foot.).  36 Gondoliers Bluff sold just 8 days later for $4,074,000 ($823 per square foot.). Then 6 Cruiser's Bluff sold in December for $4,150,000 ($756 per square foot.)

You can draw your own conclusions on the impact on the value of 28 Cruisers Bluff.  In my opinion, that home has lost more than 20% in value in about 6 months.  This is a huge loss, a million dollar loss. Buying an expensive house that is rapidly losing value is a bad idea!  A proven, bad idea.

In the $2.5-5 million price range, I believe there is a larger trend of Crystal Cove home values decreasing about $100,000 to $200,000 per month.  Buyer beware.

The main purpose of this blog is to focus on the importance of valuing a property accurately and discounting the fluff that is common from buyer's agents and listing agents.  When I point these things out, I'm not making  fun of any buyer - I feel for them, but I want to help that next buyer avoid the same mistake.

Dataquick November Stats Show Double Dip - Home Market Sinking

According to reputable real estate statistics company Dataquick, Southern California home sales fell in November to the second-lowest level for that month in 18 years, reflecting the weak economic recovery, a dormant new-home market and tight credit conditions. High end home sales are especially weak, but the median price paid for a home rose above a year earlier for the 12th consecutive month, though November’s gain was the tiniest yet.  Buyers be careful out there - factor future home value declines into your offering prices!

OC Home Prices Falling - Double Dip Confirmed

More evidence that Orange County home values are on the decline once again! This year’s price rally has faded, according to the OC Register.  If you are a home buyer, keep in mind that you are buying a declining asset and you will lose value every month, on top of your mortgage payment.  Renting is far superior at this point in time.

This data comes from CoreLogic, whose Orange County slice of its nationwide home price indexes shows local values falling at a 2.56% annual rate in October.
It was the second month of year-over-year declines following eight consecutive increases. Before that upswing, the CoreLogic index for Orange County had fallen 37 straight months on a year-over-year basis.

High End Listing Prices Too High - Increase in Price Reductions - OC Register

Buyers, another reason not to trust those high end list prices in Orange County - most were way too high and are being reduced by a whopping 10% compared to last year. Yet high end home sales are still stagnant. This means that even the reduced list prices are far above the real market values of these homes. Buying a high end home entails a risk that you will pay way too much and be left holding the bag. Can you say "poof, there goes your downpayment?"
For more info see the OC Register here.

Forecast: Calif. home prices to drop 9.9%

The OC register reports - Real estate trackers from FiServ and Moody’s Economy.com forecast that California home prices will fall 9.9% in the year ending in June 2011 — fourth biggest drop across the nation.  Essentially, all meager gains from June 2009-2010 will evaporate......