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c1ue
02-04-09, 07:45 AM
http://lansner.freedomblogging.com/2009/02/03/52-of-homes-in-laoc-sold-at-a-loss/13444/


Home values in Orange County declined 16.5 percent in 2008, an analysis by online hometracker Zillow shows. That compares to a drop in value of 11.6 percent for homes nationwide.



The median value for all homes in Orange County was estimated — or by Zillow’s calculations, “Zestimated” — at $474,560. That differs from the number released last week by DataQuick, which cites recent transactions showing the latest median value for homes sold in O.C. was $395,000.



In the Los Angeles metropolitan area, which includes Orange County (see chart at right), 94 percent of homes lost value in the past year, and 52 percent sold at a loss, according to Zillow’s report. Foreclosures made up nearly 36 percent of transactions.


The interesting thing about this is that the scale of losses is probably being adjusted upward because of the foreclosures.

Why? The price which a bank takes a foreclose home is generally the outstanding loan amount. And that outstanding loan amount is almost certainly low or negative equity - or else why bother foreclosing?

I'd argue that the market price is lower than the loan amount.

we_are_toast
02-04-09, 08:24 AM
http://lansner.freedomblogging.com/2009/02/03/52-of-homes-in-laoc-sold-at-a-loss/13444/







The interesting thing about this is that the scale of losses is probably being adjusted upward because of the foreclosures.

Why? The price which a bank takes a foreclose home is generally the outstanding loan amount. And that outstanding loan amount is almost certainly low or negative equity - or else why bother foreclosing?

I'd argue that the market price is lower than the loan amount.

The good news is that the decline in values is so steep that it almost has to bottom sometime in the later part of the year. Then comes a dead cat bounce and the belief that the good ole days are back, and maybe an opportunity to play in traffic.

swgprop
02-04-09, 10:07 AM
The good news is that the decline in values is so steep that it almost has to bottom sometime in the later part of the year. Then comes a dead cat bounce and the belief that the good ole days are back, and maybe an opportunity to play in traffic.


I think the nice work by Jimmygu3 indicates otherwise:

http://www.itulip.com/forums/showthread.php?p=74042#poststop

we_are_toast
02-04-09, 10:50 AM
I think the nice work by Jimmygu3 indicates otherwise:

http://www.itulip.com/forums/showthread.php?p=74042#poststop

Thanks for the link swgprop, but that's the work I'm basing my guess on. The slope is so steep that all 3 classes will be well below Jimmy's trend line by the end of the year. As soon as the drop starts slowing, people will start believing we've reached bottom and will start jumping into the market. I'm guessing this illusion of a bottom will lead to a false start of a recovery.

zoog
02-04-09, 01:23 PM
Thanks for the link swgprop, but that's the work I'm basing my guess on. The slope is so steep that all 3 classes will be well below Jimmy's trend line by the end of the year. As soon as the drop starts slowing, people will start believing we've reached bottom and will start jumping into the market. I'm guessing this illusion of a bottom will lead to a false start of a recovery.

I understand your reasoning on this but I have doubts that the drop is going to be slowing down anytime soon, especially while unemployment continues to rise. In addition to those who are unemployed, many other people will be kept out of the market by the psychological effects of widespread unemployment. I have read that people spend money now based on what they expect to make in the future.

rabot10
02-04-09, 03:50 PM
I lived in OC for most of my life, still have a lot of friends in that area. They don't see it getting better anytime soon. Guess we will have to wait and see.