Orange County

[BobPhillips-RE]

Who says what goes down, can't go up?

http://www.dsnews.com/articles/mortgage-rates-reverse-course-2012-01-26

"Freddie Mac reported Thursday that mortgage interest rates have done a 180 and are now starting to climb, buoyed by positive housing data over recent weeks which show the market ended 2011 on a high note. Still, interest rates on home loans remain extremely low by historical standards.

Frank Nothaft, Freddie Mac’s chief economist, cited several pieces of positive housing data that point to improvements in the marketplace.

New construction of single-family homes rose 4.4 percent in December to an annualized rate of 470,000. That’s the most since April 2010, Nothaft noted.

Existing home sales increased 5.0 percent at the end of 2011 to an annualized sales pace of 4.61 million units – the largest amount since May 2010.

In addition, Nothaft points out that pending home sales in November and December averaged the highest reading since the March and April 2010 period."

This news should be obvious to anyone who has been making offers in Orange County over the past couple of weeks. ( Or even back in the final quarter of 2011.)  This year is already shaping up to be a good one - a gradually growing number of sales, stable prices, and still attractive interest rates.

[Cadenza]

The other part of the article... 

+++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++

"For the week ending January 26, the 30-year fixed-rate mortgage averaged 3.98 percent (0.7 point), reversing its previous three-week trend of setting all-time record lows. Despite the jump, this marks the eighth consecutive week the 30-year fixed rate has remained below 4.00 percent.

The 30-year rate jumped 10 basis points over the past week, up from 3.88 percent reported by the GSE last Thursday. As a point of comparison, though, last year at this time the 30-year averaged 4.80 percent."

+++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++

Who's to say it won't yo-yo to newer and newer lows???

Where do you think home prices will go if the 30-yrs rate climbs to 6%???

One month or one quarter isn't a trend.  New home sales over the last 3 years has been in the gutter.  

10 worst years for New Home Sales since 1963...

   Year      Sales (000s)

2011	302
2010	323
2009	375
1982	412
1981	436
1969	448
1966	461
1970	485
2008	485
1967	487

http://www.calculatedriskblog.com/2012/01/2011-record-low-new-home-sales-and.html

[BobPhillips-RE]

OR, from the opposite viewpoint:

http://www.dsnews.com/articles/index/rise-in-home-sales-signifies-strengthening-market-economists-20...

"The long-awaited housing recovery is beginning to blossom, according to industry experts taking a look at recent existing-home sales.

While admitting home sales “are still very low,” Paul Dales, chief economist at Capital Economics, says “it is clear that housing recovery is now well underway.”

"Housing inventory is on the decline and fell to its lowest level since March 2005 last month, according to NAR. Approximately 2.3 million homes are available for sale currently.

However, listed inventory is only part of the equation, and according to CoreLogic’s latest numbers, shadow inventory stands at about 1.6 million.

Regardless, Dales believes sales will rise this year. “Housing still won’t contribute much to GDP growth over the next few years, but at least it will no longer subtract from it,” Dales says."

Sounds kinda like six of one, and half a dozen of the other, but both having a similar conclusion.

[BobPhillips-RE]

Cadenza, of COURSE NEW home sales have been minuscule!  They stopped building them over the past few years.

That is changing now, though.  Building is about to begin - next Tuesday - in the Great Park of Irvine.

As for resale houses, in Coto de Caza, the number of sales has gradually increased in each of the past 3 years, while the price per square foot has declined a scant 5% over that same period, and is starting the new year in an upward direction.

[cdcrezz]

2 Skylark Way, Coto de Caza

July 08,2009 - Sold for $915,000

Sep. 09, 2011 - Sold at foreclosure for $602,000

Jan. 20, 2012 - Sold for $780,000 or $195 psf

Five new Notices of Default recorded for Coto de Caza last week.

must be part of that "2009 bottom" or that "stabilizing market"

[Goran_K]

Despite what people will say, rates going up will have an effect on prices (downward).

[AlexSin]

There is much more to it. Rising interest rate indicate healthy economy and rising inflation. It is expectations of higher growth tend to push longer-term interest rates up. Mortgage rate from 1970 to 1980 went from 7% to 18% while median home price increased from 23K to 62K.

[Goran_K]

Alex, what about 1980 to 2012? 

[AlexSin]

---

Goran_K wrote:

Alex, what about 1980 to 2012? 

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Are you implying that rates were going up while RE was going down?

From 1982 to 1987 rates went from 18% to 9% Median from 60K to 65K. (Rates down RE flat)

From 1987 to 1990 rates from 9% to 11% Median from 65K to 96K.  (Rates UP RE UP)

From 1990 to 1995 rates from 11% to 7% Median from 96K to 115K. (Rates down RE UP)

From 1995 to 2002 rates flat (First up then down). Median from 115K to 165K. (Rates mostly UP RE UP)

From 2002 to 2006 rates flat (First down then up). Median from 165K to 225K. (Rates mostly down RE UP)

From 2006 to 2012 rates from 7% to 4%. Median from 225K to 150K (Rates down RE down)

[Groundhog]

Hiya Cadenza,

Nice post........Including the chart of the 10 worst years since 1963.

I would mention that when also considering the current population size relative to that of those prior years, the numbers you quote for 2009-2010-2111 represent a decline which is astronomical in scale.

You said "One month or one quarter isn't a trend.  New home sales over the last 3 years has been in the gutter."  

You see REALITY, while another is "grasping at straws", hoping against all fact to forestall the ongoing decline of a real estate market which is tepid at best. A market which will NEVER get back to the level or volume of the now infamous "Bubble Years".

THIS real estate market correction still has marathon legs, IMHO.

Groundhog opinion

OGR