In my view, the housing market here in Orange County is entering a three to five year period of spring rallies and fall declines with prices likely to flatten. The low end may appreciate while the high end will likely come down. That makes me somewhat bearish, certainly not bullish, but neither do I believe we will see another 20% to 30% leg down in the market to match the one we already witnessed. The first drop in the market was necessary to adjust prices back to their historic relationship to rental parity. That decline was destined to be steep because the elimination of Option ARMs and interest-only ARMs caused a sudden and dramatic decline in loan balances. The second…[READ MORE]
Archive for April, 2012
This year lenders drastically reduced the number of REO they are getting at auction. The numbers are down 62% over this time last year. Further, they have reduced their MLS inventories by nearly 20% from last year's levels. Apparently, lenders are going to continue to reduce MLS inventory until prices bottom to reverse the two-year slide. This unexpected change is a desperate move to stop the market's downward spiral. It means we will likely see depleted MLS inventories through the spring selling season and into the fall. At that point, the new crop of REOs from today's default notices will enter the market. Lenders are hoping positive momentum from the spring rally will carrry them through the winter. I have…[READ MORE]
A common meme in the realtor community is that distressed sales, REO and short sales, are somehow not part of the market. It's a common misconception shared by agents, sellers, and some misguided housing market analysts. This idea emanates from the desire to see prices rise. Every seller wants to get a premium price, and agents are prone to pander to seller delusions to get listings. When the market moves the other way, agents have to explain to sellers why they couldn't get their WTF asking prices, and rather than admit they pandered to a seller's delusions, agents will blame those pesky distressed sales taking down the market. If not for those distressed sales, prices would be going up, right?…[READ MORE]
Is it time to formally make “Single Asset Real Estate” entities ineligible to file for bankruptcy?
Have you ever come across some really in-depth writing on involved topics on the internet? It's pretty rare. I try my best at the OCHN to give a greater level of depth than what people find in the mainstream media, but there are others out there who take it to another level entirely. Last weekend, I introduced you to the Strategic Deals Law Blog. In their own words, “Strategic Deals Law Blog offers insights into the complicated world of business transactions, bringing clarity and the tools needed to make your business a success.” The blog is written by clear-thinking practicing attorneys who really know what’s going on. Is it time to formally make “Single Asset Real Estate” entities ineligible to file…[READ MORE]
I still rent. I own investment properties, but I still rent my primary residence. In all likelihood, the properties at the mid to high price points common in Irvine will continue to come down over the next few years, so there is little urgency. I am enticed by the low interest rates and the historically low cost of ownership, but there are advantages to renting that shouldn't be overlooked. There are two good reasons to rent in today's market: (1) prices are still going down, and buying may result in a loss of equity, and (2) buying today sacrifices mobility. The problem of falling prices is overcome by those with a long ownership period. Locking in a low monthly cost…[READ MORE]