Orange County monthly stats 2003-2007

[kev374]

Interesting median price stats from Jan 2003 (Source is DataQuick).

OC Median prices

Note how the median home price in OC Jan 2003 was ONLY $369,000!!! Think about this for a second. If prices retreat to 2000-2001 levels median price should be around $280k or so which is the point of equilibrium with rents and income in my opinion. Given the subprime fiasco unfolding right now I’m thinking we could reach Jan 2003 price levels by 2008 Q4, that’s my theory and I’m sticking to it 😛

[kev374]

noticed that the page has 2001-2003 data as well, starting out at Jan 2001 with the median price of $276,000.

[Happy renter]

Thank you kev374! It is a very good web site with a lot of valuable statistic data.

[Duck]

Subprime is about 10% of the market and is decidedly the low end of the market. Of that 10%, 15% might be in troule. So you’re saying that 1.5% of the overall market which is almost exclusively lower end borrowers is going to cause the overall median to drop 50% or more?

[davelj]

Duck, these subprime borrowers are a major issue. I’ll explain. First of all, if Countrywide’s most recent release is a good indication – and it should be, as Countrywide is one of the nation’s largest subprime lenders – roughly 20% of subprime borrowers are in trouble. So, assuming that subprime represents about 10% of the market, that’s 2% of the overall market. Which is to say that 2% of ALL mortgages are in trouble due to subprime ALONE right NOW. Well, what percentage of all homes with mortgages are are for sale currently? 10%? 5%? I don’t know the answer but I’d bet it’s somewhere between 5% and 10%, or thereabouts. You see where this is leading? Now you’re looking at that 2% number – which will likely be for sale either by either the owner or the lender in the not-too-distant future – relative to 5%-10%. So when you look at it this (the correct) way, it’s a HUGE issue. Now, I’m not saying this will cause prices to decline by 50%, but you gotta remember: everything important in pricing happens at the margin. You add 10%-20% more homes on the market by sellers that MUST sell and it creates real havok for pricing equilibrium.

[kev374]

Duck, it’s not only Subprime but also Alt-A that is in trouble because it’s the same type of financing that was extended to them as well. Also, it is an estimate that 20% of subprime loans WILL default, this does not mean that the rest 80% WILL NOT default at all, many of those subprime borrowers will face the same fate as well so don’t think the percentage is just 20%, it will be much higher than that.

[Bugs]

The percentages of those loans locally are a lot higher than that, which means the numbers of at-risk borrower locally is a lot higher than that.

A subprime loan on a $100,000 is going to be a lot less risky than one on a $600,000 home. The amount of the loss is also going to be much higher.

[PerryChase]

Here’s what Roubini said. His numbers are for the nation. Think how much higher it is like in pricey California.

Bugs is right, the higher the subprime loan, the riskier it is. There are plenty of Alt-A loans out there that will reset as well. Those will soon end up in the subprime category.

————————

http://www.rgemonitor.com/blog/roubini/180573

Where did the Mortgage Bankers Association (MBA) get the “sub-prime is only 6%” figure that it is spinning around in every possible media? Their trick is to consider all homeowners, even the 35% of homeowners who do not have any mortgage and then argue that only 6% of homeowners are sub-prime borrowers. Why is this spin and why is the actual figure for “garbage” mortgages actually closer to 50% of the flow of new mortgages in 2005-2006 rather than the “6%” being spinned around? Several reasons.

Why is this spin and why is the actual figure for “garbage” mortgages actually closer to 50% of the flow of new mortgages in 2005-2006 rather than the “6%” being spinned around? Several reasons.

Let me elaborate:

1. Sub-prime are now 13% of the stock of mortgages, not 6%.
2. Sub-prime mortgages were at least 20% of mortgage originations in 2005 and 2006.
3. The same “monster” lending practices used for subprime mortgages were also used for most “near-prime” and “prime” mortgages.
4. Many pseudo “near-prime” mortgages (such as Alt-A) are undistinguishable from sub-prime ones and have now sharply rising default rates
5. What is defined as sub-prime is subject to highly cosmetic accounting by banks: the rule that FICO scores of 660 or below are sub-prime is often diluted down to 630 or even 620 to exclude many mortgages from a sub-prime classification.
6. Counting all of the categories above, subprime-like mortgages accounted for almost 50% of all originations in 2005 and 2006 not the 6% figure spinned by the industry lobbies.

So whenever you hear the spin about the sub-prime meltdown not being such a big deal as “sub-prime mortgages” are only 6% of the housing market beware of such misleading spins. Properly measured sub-prime and near sub-prime and effectively sub-prime (because of creative accounting) mortgages accounted for almost 50% of all originations last year. So the mountain of “garbage” and “trash” that has been piling up in this sub-prime carnage includes a good half of new mortgages created in recent times. And the meltdown of these mortgages – both those that are formally sub-prime and those that are effectively sub-prime – will create a massive credit crunch in short order. At the end of the day “garbage” is garbage, whatever you name it. What is labeled as “Prime Garbage” stinks as much as the “Subprime Garbage”. And if it walks, ducks and quacks like garbage it passes the smell test of being garbage. Some of that garbage may rot more or faster than the rest but the overall state of the mortgage and housing market is the worst in decades.

[lendingbubblecontinues]

Duck–

You really ought to try and spin this stuff somewhere else…

[no_such_reality]

It doesn’t matter if your credit rating was 620, 720 or 820, if you didn’t pay attention on the toxic mortgages and know you can handle the max payment, they will sink you. I don’t if any less than 95% of the borrowers are thinking of anything other than the minimum payment.

A classic example is Lending Tree’s $400,000 for $1334 a month ads. When you payment jumps from $1334 a month after your optional 12 month minimum payment expires reseting to $3050 a month, most buyers are going to be financially stressed.

[PerryChase]

Lowermybills.com is owned by Experian (of the big credit reporting agencies). You’d think that they’d encourage people to be judicious in their use of credit, right? Wrong!

$145,000 mortgage for under $484/month! Where do you think people in this country have been getting the money to buy inflated houses?

http://www.adblock.org/2006/03/hall-of-shame-lower-my-bills/

[kev374]

Even responsible people with good credit scores can be convinced by aggressive loan officers 😉 Responsible people tend to “follow the herd” and don’t want to stand out. If all of their friends and relatives are in a buying frenzy they don’t want to be doing something else. After all if everyone else is doing it then it must be the right thing correct?

Homeownership has been lauded as the cornerstone of stability for so long that people are convinced that they can never go wrong by owning a home in the long run. No matter what kind of toxic mortgage they get, they believe their home will appreciate and things will be okay. Most of these new homebuyers have not done any due diligence or independent research to find out that Real Estate is cyclical and tends to have steep increases and decreases. Rather they operate on implicit trust of their “friends” who never stop to remind them how homeownership is going to slip out of their hands forever if they do not act immediately. The pressure to conform is tremendous.

They have been brainwashed into believing that the most important thing is that they don’t miss the boat to homeownership. So these normally responsible people with good credit do anything and everything possible to “not miss the boat”.

This is why even prime borrowers will lose their homes in this downcycle.

[hipmatt]

Subprime is about 10% of the market and is decidedly the low end of the market. Of that 10%, 15% might be in troule.

You wish dude! Sub prime in the last 3 years has been closer to 85% for all first time buyers.  Of that, at least 20% right now are in trouble!  Since first time buyers are what drives the market, there is gonna be a big problem.  Who is gonna buy the all the $500k entry level homes (people moving up or into those desirable ares) in SD with what money????  Especially now that the toxic loans are disappearing and when the loans reset this year, and more and more people start to realize that they owe more than their home is worth, they will start wondering why they are living off of PB&J for a lost cause and they will walk.  Its is already happening badly in the IE.  I agree that SD will handle it better.  But it is still relative, and it'll be much more than 1.5%

[Cow_tipping]

Nationwide its ~10% of total outstanding mortgages by number, not amount, but number. However that includes the 30 yr mortgages that originated in 1977. Last 3 years the sub primes were much much higher and that is nationwide. CA presumably has much more jumbo, alt A, subprime and no doc, and heck lots of super stretch mortgages as in someone who can get a 300K house, cant find one for 300 so he gets a 800K house hoping he’d be bailed out when his house triples in value. Huge huge numbers. And surprisingly, 2% is enough to crash the market. Housing without someone living in it cost you a lot …
Cool.
Cow_tipping.

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