OC Prudent Bears

RSS Feed Homepage

Articles: 1, 2, 3

We Bought a House!
2009-09-20 08:07:00
I know that over the last couple of years I have been one of the most ardent bears relative to the real estate market. But I want to share with the small handful of readers that I've got left that as dour as I have been, my family and I just took the plunge and bought a very nice house in Huntington Beach. Nice property, great location, saved hundreds of thousands by avoiding the peak...kids and the wife are very happy. I may have bought before the bottom, I may have been slightly late. I may be making a great hedge against inflation, I may not be as well. At the end of the day, none of that really matters. I am just happy that I finally get to live in a house and in a neighborhood that I really like and for less than it would cost me to rent. What's not to like?
More About: House , A House

Conidering Buying A Bank-Owned Home?
2009-02-05 18:44:00
If you are considering buying a bank-owned home, particularly one from Chase Bank , you have to check out this blog. It tells the story in sort of a novella format about a family that got royally screwed by Chase Bank.Check it out here: www.unethicalchase.com
More About: Buying , Home , Owned

I've seen some weird shit in my day...
2008-10-02 04:27:00
This is even more, um, entertaining.
More About: Weird , Weird Shit , Shit

How Much Is It Worth?
2008-08-15 02:57:00
I've been scratching my head a lot lately wondering how to estimate a fair market price on properties for sale here in Huntington Beach.Asking prices are out-of-touch with the market and seem to be driven delusional, denial-based wishes of homedebtors. Take as an example this listing from Redfin:1,100 cramped square feet for $629,000 or $554/sqft where other properties in the area are selling for under $400/sqft. No wonder the house had been on the market for almost half a year.Comprables properties are of some value, but are problematic because with property prices plummeting as they are, any property sold more than 30 to 60 days prior is no longer reflective of current values.Then there are also comprables where the buyers, IMHO, paid much more than they needed to for properties thus biasing values upward. These buyers are like the idiot who split sixes at the blackjack table when the dealer has a ten showing: not only do they screw themselves but they also mess up the game for e...
More About: Worth

Right Time to Buy: 2014
2008-08-11 03:42:00
A great article came up in one of my news feeds today that I wanted to share with readers. This provocative Business Week article, says, among other things:Prices will only stabilize once foreclosures and sales volumes stabilize first.While some areas will stabilize as early as 2010, national prices won't stabilize until 2011.For the "bubbliest" of markets, including the author's home turf here in OC, prices may not stabilize until 2014.When prices do stabilize in OC in 2014, prices very well could be lower than in the early 90's.His and my advice to buyers in SoCal is simple: wait.Viva los Osos!
More About: Time

HB Comp Killer - 6202 Point Loma Dr
2008-08-07 04:56:00
6202 Point Loma Dr Huntington Beach, CA Sold For: $550,000 (06/27/2008)Beds: 5Baths: 2.5Sqft: 2,276Price per sq ft.: $242I've seen a lot of comp killers over the last several months, but this one takes the cake. Five bedrooms, two-and-a-half baths and almost 2,300 sqft of living space in one of the nicer/nicest parts of West Huntington Beach for only $550,000. That, friends and neighbors, is mind-boggling even to me.At the peak, $550,000 wouldn't have bought you a sub-1000 sqft bungalow fixer-upper, on a busy part of Heil that may have had some foundation issues relative to "liquefaction." Seriously, it wouldn't have.But, now the proverbial tides have changed and 2,300 sqft can be had in a nicer part of West Huntington Beach, in at least in one instance, so far, for only $550,000.Now, particular property does have its issues. Even from a drive by the place I could tell that it clearly needed some work; it would be fair to call this house a "fixer-upper." It also backs a "major" s...
More About: Comp , Killer

HB Haircut - 5091 Linda Cir
2008-08-02 19:10:00
Beds: 4Baths: 2Sq. Ft.: 1,750$/Sq. Ft.: $357Lot Size: 6,360 Sq. Ft.Property Type:Single Family ResidenceStyle: TraditionalYear Built: 1959Stories: 1 LevelArea: Northwest Huntington BeachCounty: OrangeMLS#: S520813Source: SoCalMLSStatus: ActiveOn Redfin: 177 days***Update: This property went into escrow in the last couple of days; it will be VERY interesting to see what they got.***This single story cul-de-sac home has been remodeled and was spared no expense in the quality of materials and workmanship used throughout. It boasts nothing but the best. New Custom Landscaping, New Custom Vinyl Patio, Custom New Hardscape, Newer Carpet, Seperate Laundry Room, Recessed Lighting, New Interior doors, Baseboards and Moldings, Solid mahogany front door, Formal Dining Room, New Anlin Energy Efficient windows/sliding door, new central heat and water heater, new paint, new exterior, stucco, and new interior texture. Located in a family friendly neighborhood within walking distance to the disting...
More About: Linda , Haircut

Case-Shiller Futures Bear Porn
2008-08-01 22:58:00
Beautiful, isn't it? I wouldn't go as far as the kid in American Beauty, but to a died-in-the-wool bear, there is something vaguely comforting about this graph.
More About: Futures , Case

McCain = Bush = McCain
2008-07-26 01:37:00
I've kept the blog largely apolitical, but after watching Obama's masterful speech in Berlin, I had to post this. If you'd like four more years of Bush , by all means vote for McCain.If you want change then Obama is your man.

Interest Rates Rise, Housing Death Spiral to Ensue
2008-07-25 02:29:00
Due to the problems that housing and lenders have had as of late, interest rates for California home purchases have gone up, way up, in the last couple of months. Have a look at this graph from BankRate.comIt shows that the interest rate for a "typical" home in OC has gone up from about 5.7% to about 6.5% since May. When I run the numbers, this translates into a roughly 9% higher mortgage payment! My guess is that this change alone will cause 10 to 20% of those that could have qualified for a loan in May to now be unable to qualify.Put another way, the recent run-up in interest rates has reduced the effective demand for homes in OC by 10 to 20%. Now, if we assume that housing prices are unit-elastic, this change in interest rates/demand ought to cause home prices to drop between 10 and 20% more.Then there's the compounding effects of the price/demand declines. If prices drop, more people will walk from their homes. If more people walk from their homes, then there will be more inven...
More About: Interest Rates , Housing , Death , Interest , Rise

Are Your Bank Assets at Risk?
2008-07-20 03:23:00
Regulators learned in the 1990s that the higher a bank's Texas Ratio the more likely it is to fail. Is your bank on this list? If it is, move your money. And call mom and dad to be sure that they don't have any money in these insitutions either.Using this ratio, regulator say as many as 150 financially strapped institutions could fall over the next 18 months. You do NOT want to be one of the "statistics" in this fallout.
More About: Risk , Bank

The (Un)Natural (De)Evolution of the Blog
2008-07-18 00:47:00
As I have mentioned before, the cratering of the OC RE market is now so obvious, I find it uninteresting to comment on it any further. Once things start to turn, I'll be back on topic, but for the moment I still want to blog about something, though I have no idea what.Until I figure it out, or the market turns, I'll just try out some random concepts and see where they go.I've always enjoyed the message and simplicity of the "Wear Sunscreen" song. If one were absent a defined moral or ethical perspective, I think one could use its message as a reasonable surrogate, at least on a short-term basis. It is definitely better than MOST ethical systems I have come across.While "Sun Screen" is fairly light-hearted , Chris has made an even more light-hearted parody of the video. Some might consider it profane; I think it's funny and it contains a few good nuggets of wisdom. Having traveled to Amsterdam as much younger man, I will also offer that based on first-hand experience central prem...
More About: Evolution , Natural , Blog

90% Marginal Tax Rate for the Middle Class
2008-05-12 04:55:00
I gave some thought about how those making above $160K (for a couple) aren't welcome to receive the $7,500 First Time Buyer's tax credit and realized that we're actually getting more screwed than I originally thought.You see, the phase out for this tax credit starts at $140K runs to $160K; so it's a total of 20K in income that determines whether you get the full $7,500 or zilch. It works the same way for the Bushie tax credit: with two kids at $140K in annual income you'd get $1,200, but at $160K in income again, you'd get zilch. That is one expensive $20K in income, but how expensive is really?On 2oK we suffer the following losses and taxes:$7,500 exclusion from First Time Buyer's Credit$1,200 exclusion from Bushie Tax Credit$7,200 Federal Taxes (would have paid regardless)$1,800 State Taxes (ditto)For a grand total of $17,700 in taxes or loss of tax credits or the equivalent of a 90% marginal tax rate. 90%! I defy any reader to find a single group in America that pays the s...
More About: Middle , Class , Middle Class , Rate , Middle-Class

Feds Set to Screw OC's Middle Class Again!
2008-05-09 19:51:00
Many of middle-class families in OC are still stinging from being excluded from Bush's tax rebate program. While many of our friends got checks of up to $1,200, we got nothing. The reason? We made a bit too much money to be included and were summarily "phased out" of that particular gravy train.Guess what? You're about to be "phased out" again.Yesterday, the House passed HR 3221 aka the American Housing Rescue and Foreclosure Prevention Act of 2008 on May 8, 2008. This piece of homedebtor rescue legislation spends billions helping those folks in trouble keep their homes, to refinance existing mortgages, for cities buy blighted properties and so on. So, if you're were unfortunate enough to have bought a house that you couldn't afford, the taxpayers are here to bail you out.You're welcome.Then there's this little provision called "First-Time Homebuyer Credit" which essentially says that if you are a first-time homebuyer then you can get a $3,750 federal tax credit if you are an ...
More About: Middle , Class , Screw , Middle Class , Middle-Class

Why are OC Inventories Flat?
2008-05-04 05:41:00
I've seen some anecdotal evidence that inventory levels of are essentially flat since the end of January this year and on year-on-year basis as well. This causes me a great deal of cognitive dissonance; it may do the same to you.As examples, I'll site the inventory graph from IHB which show inventory levels flat for Irvine and the OC inventory numbers found on Bubble Tracking which show inventory flatness for OC.If you have a close look at the OC inventory data, what you're going to see is that according to Redin on Jan 30, 2008 there were 17,151 homes for sale in OC; on April 30 there were 17,358. A couple of hundred more homes in April than January, a bit more than 1% which I would call essentially flat. So for the year, inventories are essentially flat.Even if you don't consider the 1% increase to "flat", I'd point out that in the same period in 2007, we saw inventories rise 28.5% rise from roughly 13,200 units to just under 17,000 units and that historically a rise in inven...
More About: Flat

Moving On...
2008-03-31 22:02:00
Today is my last day with my current employer. With that in mind, I've pulled some of my favorite work-related video clips together for your viewing pleasure. Enjoy.Okay, this R-rated one has little to do with works, but I had to include it regardless:
More About: Moving

Contest: What Day Will the OC Median Drop Below $500K
2008-02-23 03:37:00
I'd like to have some fun and encourage some discussion here on the blog; so I am going to sponsor the first-ever OC Prudent Bears Real Estate Prediction contest. Here are the rules.Readers of the blog will try and predict the day that the median price of the Orange County All Homes Median Price as reported by DataQuick will fall below $500,000.Readers are to add a comment to this post that includes the date of he predicts the median will drop below 500K and their nickname as they are generally known around the RE blogosphere. (See example prediction in Comments section)The reader guessing closest to the actual crossover date (actual event date, not reporting date) will be considered the winner.If two or more readers guess the correct day, the reader who entered his guess first/earlier will be considered the winner.Readers can revise their guess as many times as they like, but only a reader's last and latest prediction will be considered for purposes of determining if he is a winn...
More About: Contest , Drop

It's Funny Because It's True
2008-02-21 03:13:00
Another classic posted by Trooper on IHB.Oh, and Treasury Secretary Henry Paulson, feels as thought the "worst is just beginning" for housing which, depending on your perspective may or may not be more funny than the comic above:
More About: Funny , True

Bernanke Bearish on Economy
2008-02-14 18:22:00
Helicopter Ben seems more than a bit dour on the prospects for the economy:"The outlook for the economy has worsened in recent months, and the downside risks to growth have increased," Bernanke said. "To date, the largest economic effects of the financial turmoil appear to have been on the housing market, which, as you know, has deteriorated significantly over the past two years or so." Bernanke also said that the "virtual shutdown" of the market for subprime mortgages ? given to people with blemished credit histories or low incomes ? and a reluctance by skittish lenders to make "jumbo" home loans exceeding $417,000 have aggravated problems in the housing market.Unsold homes have piled up and foreclosures have climbed to record highs. "Further cuts in homebuilding and in related activities are likely," Bernanke cautioned.Read the full story here....
More About: Economy , Bearish

S&P: LA/OC Home Prices Set to Drop 17% in 2008
2008-02-10 01:39:00
If there are small children or LA/OC homeowners in the room, you might want to have them leave before you have a close look at this chart: I think we've covered the methodology for interpreting this kind of chart frequently enough that we can dispense with any explanation. The net-net is that the S&P futures market is predicting that real estate prices are set to drop in the an additional 16-17% in 2008 in the LA/OC market.With the current median selling price at just under $600,000 for the median existent SFDU in OC, that means that we can expect to see prices drop an additional $100,000 for a median EOY 2008 price of just under a half-million dollars.I will write more on this topic later, including the fact that these S&P number align very-closely with reader-poll-derived predictions from this blog, but I have to head out to Costco and pick up a bottle of Dom for me and Mrs. HB Bear. We have some celebrating to do.Viva Los Friggin' Osos!
More About: Home , Drop , Prices

A Little Fed Humor for the Weekend
2008-02-09 05:52:00
A great find from our friends at the Irvine Housing Blog. Just hilarious.
More About: Humor , Weekend

Shiller: Current Housing Bust Comprable to The Great Depression
2008-02-03 19:16:00
If you are buying or selling a home, the video below should be considered mandatory viewing.
More About: Depression , Current , Great , Housing , Bust

Readers Say Prices to Drop 15 to 20% in OC!
2008-02-01 01:18:00
The results of January's reader poll are in and they paint a very dismal picture for OC's housing prices for 2008. Thanks to everyone who voted in the January poll regarding their predicition on this December's YOY pricing change. While being a died-in-the-wool bear myself, I have to admit that even I was a bit surprised by the outcome as reader's of this blog have an such an overwhelming negative view of pricing strength here in OC.As one can see from the chart above, the most common sentiment (30%) expressed in the poll (the mode) was that prices in OC were set to drop between 16.1 and 20%. The weighted average of the votes (the mean) expressed that readers felt collectively that prices would drop 15.6%. If you recall, the median price dropped in OC 10.2% between Dec2006 and Dec2007. So, the largest plurality of poll respondents seems to believe that this year prices will drop between roughly 150 to 200% as much as last year! And on average they expect to see prices by 150% as...
More About: Readers , Drop , Prices

Stock Market See OC's Economy as Weak
2008-01-23 00:51:00
From the Bloomberg.com website:BLOOMBERG ORANGE COUNTY SNAPSHOT"The Bloomberg Orange County Index is a price-weighted index designed to measure the performance of Orange County's economy. The index was developed with a base value of 100 as of December 30, 1994."The most-current performance is plotted here:If Bloomberg is correct and this collection of local stocks is reflective of OC's economy, it would seem as though the stock market has a very poor opinion of our short term prospects. Last year we actually had a net job loss here in the county, is the stock market predicting more?
More About: Economy , Stock Market , Market , Stock

New Poll: Where are Prices Headed?
2008-01-17 02:33:00
The last pricing poll had too many votes toward the high end of the scale, so I've rejiggered the categories to be more expansive and inclusive of higher rates of decline.Please vote again!
More About: Poll , Prices

Lies, Damned Lies and Realtor "Statistics"
2008-01-06 18:57:00
I went to an open house in my neighborhood today, just to check it out. While I was there the realtor made the comment that "any home purchased in OC has appreciated over a five period." I'm not going to call the guy out by name, though I am tempted to, but I am going to call bullshit on this oft-cited "statistic."Have a look at the chart above. It shows the Case-Shiller index for LA/OC for the period Jan 1990 to Dec 1999. The line in this chart shows the relative price for homes in the area on a monthly basis. Does it look like a house purchased any time in 1990 had regained it's value 60 months later? How about 1991? or 1992? No, no and no. In fact, it's not until roughly the Spring time frame of 1993 that they typical home purchased would any appreciation over a five-year period.Put another way, for roughly 39 months starting in Jan '00, the typical home did not seen any appreciation over a five year period. In fact, for the poor bastards who bought in Jan '00, had to wait 1...
More About: Statistics , Realtor , Lies

Off Topic: Lester Burnham and Mike Huckabee
2008-01-04 22:10:00
Have you ever noticed how you never see fictional American Beauty character Lester Burnham and presidential hopeful Mike Huckabee at the same party?Coindence? Maybe, maybe not.
More About: Topic

Price per Sqauare Foot Off 12% in OC
2007-12-23 21:36:00
I was tooling around the DataQuick site and found an interesting stat I thought I'd share with readers.According to the most-current data found (October LA Times chart) on the DataQuick website, prices per square foot are down versus the 2006 median a whopping, mind-bending 12.2%. This is more than double the change in the of the median which was reported at 5.2% for the same period.The disparity between these two numbers leads me to believe that:The change in housing prices for OC as reported by the median is historic in magnitude, but is still under-reporting the actual decline in housing prices. As a result, many sellers are still pricing their homes at $/SF prices above the market rate.Seller's, once they understand that they are actually priced above the market (in $/ft) they are going to lower their prices further, and possibly dramaticaly so, in an attempt to undercut one another, exacerbating pricing weakness. There are big pockets of this activity in OC already, but I exp...
More About: Price , Foot

OC Median Asking Price Down Almost $120,000
2007-12-16 19:32:00
I poured myself a cup of coffee this morning and decided to have a look at asking price data at one of my favorites sites Housing Tracker.According to the data at Housing Tracker, the median asking price for homes in OC reached it's peak in May of 2006. At that point, the median seller was asking nearly $700,000 ($694,600)for her home. Today, she is asking nearly $120,000 less.Over life of a 30 year loan at 7.5%, a buyer purchasing a home at today's median versus the median at the peak will save almost $300,000 in principal and interest. That buyer would also save rouhgly $53,000 in property taxes, for a total savings of about $350,000.That is an amazing amount of money and a tremendous reward exercising bearish prudence. You should be proud of yourself.Viva los Osos!
More About: Price , Median

OCPB/Lansner Reader Demographics
2007-12-03 17:17:00
Quick summary of the survey results; details of bet later.In general, when I consider the 'icon' associated with my current outlook on OC residential real estate, I consider myself:Bear 93.9%Bull 6.1%In terms of political party, I most consider myself to be a part of:Registered Unaffiliated (Independent) 31.8%Republican 30.3%Democratic 27.3%Other Party 10.6%Which best describes your living situation: I rent or lease the property I live in. 62.5%I own the property I live in. 37.5%Choose the location that best and most-specifically describes the locale in which you live? I live in Orange County 67.2%I live elsewhere. 15.6%I live in Southern California 10.9%I live in California 6.3%
More About: Reader , Demographics