02-05-2011 09:38 AM
Prices usually reflect demand, we live in a very desirable part of the country, near perfect weather year round. There are also many high tech, high paying jobs in OC which also support housing prices.
Most 1st time homebuyers have to start off with smaller then desired homes and move up over time as income and appreciation grow.
02-07-2011 05:35 PM
The allowable debt ratios lenders use are the same here as everywhere else, it is just a matter of how much home you can get for the money. I guess it is the price we pay for being able to sit here with the windows open enjoying the day in the middle of February. Being a corn fed midwestern boy I can still remember growing up in the long cold months of winter.
Prices have adjusted A LOT here in the last couple years. Maybe I am an optimist but I don't foresee any huge drop in prices coming, barring some catastrophy. I really believe that those who are the most price sensative need to move soon to take advantage of the lower prices and great interest rates we are seeing now. Even small movements in loan rates could price them out of the market.
02-24-2011 06:45 PM
Bao, the answer to your question is yes. OC will always be overpriced. If you are looking for a house under $400,000 in OC then you will have to buy in a bad(or not so great) neighborhood. Your house will most likely be buit in the 70's or before and the sq footage will be less than 1,800.
06-15-2011 10:16 AM
Bao, prices are still out of whack with what people can afford. If you look at the average income for buyers in this country, you will see that they still can't legally qualify for a home purchase. You look at places like Huntington Beach or other O.C. locations and the average income is around 50k a year. The rule of thumb has always been that you could afford twice your yearly income and you could stretch to three times that if you could work it. If that is the case, most people should only qualify for homes costing around 100 to 150k but the market is averaging at least twice that.
I have read a few news stories where banks are starting to make the same kinds of bad loans that almost led to the last meltdown. I don't know what will happen but they can't sustain that.
Now if banks are giving loans to people for 300k and 400k who should only qualify for 100k to 150k, that can keep the prices up there but it sets us up for another fall. If sellers see that banks are still making loans for over priced houses and buyers are still stupid enough to sign the contract, I am sure the sellers will hold out as long as possible to get out of their upside down mortgage with as much credit intact as possible.
With these conditions, it will take a while for the prices to wind down to their natural value. In my opinion it's still a game of musical chairs. Everyone is trying not to be the one left with an upside down loan when the music stops.
06-22-2011 10:57 AM - edited 06-22-2011 10:58 AM
Excellent response Frogman. I'm sure most people out here buying these rediculously priced homes aren't spending 2 to 3x their income so I wonder just how exactly are they doing it??
06-26-2011 02:28 PM
JWright, you would have to do some research to find out if the people buying were spending 2 and 3x their incomes or not.
I have read numerous news articles and know many people who bought during the bubble expansion. Most of these people were buying homes they could not afford, 5 and 6x their incomes. No one I know is buying anymore and some are stuck in homes they cannot pay for in their lifetimes.
If these homes are still selling at rediculus prices, it would be interesting to see who is buying them. It would also be interesting to see what kind of loans they are getting. My guess is that it is a mini version of what happened in 2006. I have also seen houses come on the market at these rediculus prices and then dissappear, then come back, then dissappear, etc...
I think the reality is a lot different than what we are seeing in the news etc...
06-27-2011 07:56 AM
Sometimes, (but certainly not always), the homes you see for sale and then disappear are first for sale as a traditional sale, if they don't sell they may come off the market then reappear as a Short Sale. Not all Short Sales get approved by the bank so those listings may fall off the market and if the homeowner isn't making mortgage payments the home eventually gets Foreclosed upon and reappears on the market as an REO (Real Estate Owned), but now listed by the bank.
Some of the homes are being bought by investors at any one of the previous steps mentioned, cleaned up or even remodeled and then relisted.
Hope this helps!