Sweet Orange

Following are some housing market numbers for Irvine. The 92603, 92604 and 92614 ZIPs are particularly interesting.

Note that the 92603 July asking price of $582 per square foot seems particularly unrealistic considering that the July selling price for the 92603 ZIP was $374 per square foot. The 92603 ZIP includes some of the most expensive homes in Irvine, including Irvine’s most expensive neighborhood, Shady Canyon. Other neighborhoods in Irvine’s 92603 include Quail Hill, Turtle Rock, and Turtle Ridge.

You might also want to pay special attention to the Woodbridge ZIPs: 92604 and 92614. As reported in the The Orange County Register, the increase in the percentage of Woodbridge foreclosures are some of the  highest in Orange County, especially in the 92604 ZIP. The 92604 ZIP includes the upper part of the Woodbridge neighborhood as well as the  El Camino neighborhood (See the map.)

According to DataQuick, Irvine’s July 2009 housing numbers by ZIP are as follows: ZIP/Median Selling Price/% change in price from previous month/# of homes sold/% change in number sold from previous month (DQNews).

Tomorrow: Irvine detached and condo stats

Chris Thornberg, a principal with Beacon Economics, had some comments on what the leading and lagging indicators of market recovery will be for this recession (AirTalk, Larry Mantle, August 7, 2009). (By the way, Tim Quinlan, a Wells Fargo analyst, says that the recession ended in June. Michael Murphy of New World Investor also says the recession is over. Maybe I’ll write more about that later.)

According to Thornberg, the following sectors of the economy are leading us to recovery:

• professional services
• export services

In addition, Thornberg states that, although the manufacturing sector is not growing, this sector  is “firming up.”

Before I go on to state what Thornberg sees as the sectors that will be the lagging indicators in this recovery, here is what Joel Kotkin, a fellow with the New America Foundation, says about the professional services sector:

Media coverage of America’s best jobs usually focuses on blue-collar sectors, like manufacturing, or elite ones, such as finance or technology. But if you’re seeking high-wage employment, your best bet lies in the massive “business and professional services” sector.

This unsung division of the economy is basically a mirror of any and all productive industry. It includes everything from human resources and administration to technical and scientific positions, as well as accounting, legal and architectural posts.–Joel Kotkin, “Best and Worst Cities for High Paying Jobs,” Forbes

Unfortunately for those of us who live in southern California, Forbes ranks Los Angeles-Long Beach-Glendale as the fourth worst area to find these jobs and the Irvine-Santa Ana-Anaheim area as the seventh worst.

Now for the lagging economic indicators: According to Thornberg, improvement in the following sectors of the economy will not show considerable improvement until sometime after the recovery has begun:

• construction
• finance
• retail

Thornberg, as well as most other economists, sees employment (which is a factor of all of the above mentioned economic sectors) as another lagging indicator. He also states that recovery in each sector will vary from region to region.

Note: For Beacon’s economic forecast, see Beaconomics.

GRAPH COURTESY BEACON ECONOMICS

Yesterday’s post was about the current Anaaheim housing numbers, including a breakdown by ZIP. Following is a closer look at how housing prices have changed over time in one of these ZIPs, Anaheim’s 92804. (This is also the ZIP that contains the Palais Road home that I highlighted last week, “Anaheim Short Sale Showing Badly.”)

According to Trulia , the median price for all homes, detached houses and condos, in Anaheim’s 92804 ZIP was as follows:

• May to July 2009–$303,592
• The previous three months–$297,833
• One year ago–$357,000
• Five years ago–$453,750.

And according to Trulia, 75% of Anaheim homes are distressed.*

According to Redin, the July 2009 median sales price in the 92804 ZIP was as follows:

• detached houses–$240 per square foot
• condos–$147 per square foot

And according to Redfin, 23.1% of Anaheim’s 92804  homes have price reducitons.**

*Defined as homes in the pre-foreclosure, auction, or bank-owned stages of the foreclosure process. Different groups use different inputs and, therefore, come up with different percentages. In this case the foreclosures are not necessilarly on the market yet (and may not end up on the market).

**Based on homes sold or taken off the market between May 26, 2009 and August 24, 2009.

According to DataQuick/OC Register, Anaheim’s July 2009 housing numbers by ZIP are as follows.

The percent change is the percentage increase or decrease that results when current numbers are compared to the numbers of one year ago. Anaheim contains some of North Orange County’s lower-priced areas. (Stanton currently has the lowest median list price housing in North Orange County.)

The Anaheim Altos Market Action Index for the week ending August 23, 2009 is 22.38. Above 30 is a sellers’ market; below 30 is a buyers’ market.

According to Redfin, 29.1% of Anaheim homes have price reducitons.* According to Trulia, 68% of Anaheim homes are distressed.**

*Based on homes sold or taken off the market between May 26, 2009 and August 24, 2009.

**Defined as homes in the pre-foreclosure, auction, or bank-owned stages of the foreclosure process. Different groups use different inputs and, therefore, come up with different percentages. In this case the foreclosures are not necessilarly on the market yet (and may not end up on the market).

Previously, I wrote that  Americans 65 to 74 had been increasingly taking on a large amount of housing debt. Another indication of our unhealthy reliance on debt is the numbers from the Federal Reserve that compare our disposable income to our personal debt. It’s not a pretty story.

Keep in mind these numbers are for our individual debt, not the national debt. (The national debt is a story for another time.)

1975:

• Personal Consumer Debt–736.3 billion
• Consumer Disposable Income*–1187.4 billion
• Personal Debt as Percent of Disposable Income–62.0%

1990:

• Consumer Debt–3592.9 billion
• Consumer Disposable Income*–4285.8 billion
• Personal Debt as Percent of Disposable Income–83.8 %

2000:

• Consumer Debt–6960.0 billion
• Consumer Disposable Income*–7194.0 billion
• Personal Debt as Percent of Disposable Income–96.8 %

2005:

• Consumer Debt–11496.6 billion
• Consumer Disposable Income*–9039.5 billion
• Personal Debt as Percent of Disposable Income–127.2%

*Disposable income is the income after paying taxes.

As I look at these numbers–over 100% of disposable income is consumed in debt–I can’t help but wonder why organizations like the Federal Reserve weren’t sounding the alarm: DANGER-Cliff with steep drop ahead. Surely, these organizations that deal with financial matters every day should have seen this coming.

And what about the media? Especially the financial media. Why wasn’t this information plastered over every newspaper’s front page? And then there is the rest of us? Were we sleeping? Was this information available to us, and we just didn’t see what we didn’t want to see?

In hindsight, it is easy to see that 100+ percent debt to income ratio is not sustainable. But the numbers are so blatant that it should have been obvious in foresight.

Sources: Monthly Review/Board of Governors of the Federal Reserve System, Flows of Funds Accounts of the United States, Historical Series and Annual Flows and Outstandings, Fourth Quarter 2005 (March 9, 2006). Available at http://www.federalreserve.gov/releases/Z1/Current/.

GRAPH: SEEKING ALPHA

Update: To see the 2007 personal debt to income ratio as well as the current ratio, see “Personal Debt to Income Ratio Rose to Over 100%–Revisited.”

What’s up with these pictures of the home at 2628 West Palais Road in Anaheim? This short sale has been on the market for only a few days, but I have to wonder if the owner is really interested in selling with pictures like this showing on the MLS online site.

OK, I admit the first picture did get my attention, but not in a good way. And then there is the one of the in-construction bathroom. And the final two pictures: Why the bad lighting? In addition, if you click on the MLS link, you will see a picture of the bedroom curtains tied in a knot. Why?

The asking price is $355,000 ($224/SF) for this 4 bed, 1583 square foot, detached house that was built in 1956 in the Anaheim West of Harbor area. What do you think? Are you enticed to buy?

Note: According to Redfin, the median sales price in July for a detached house in the 92804 ZIP was $240 per square foot. This home sold on June 28, 2002 for $315,500.

Next week: a look at how home prices have changed recently, and over the years, in this low-priced ZIP

Today, we will take a look at how the North Orange County housing market for detached homes is doing as shown by the Altos Market Action Index. The most interesting numbers are for the highest priced market in this area, Yorba Linda, and the lowest price area, Stanton.

According to the Altos index numbers for North Orange County, the Yorba Linda housing market has the least healthy outlook, and Stanton has the healthiest outlook. However, as shown by the index numbers, the housing market in all North Orange County cities is a buyers’ market. This is a repeat of what was happening in May.

Note: The Altos Market Action Index shows the balance between potential buyers and sellers, in other words, the balance between supply and demand. Above 30 is a sellers’ market; below 30 is a buyers’ market. The Altos numbers are for detached houses only (condos are not included). For this reason, I have included numbers that show the percentage of houses in each city that are detached.

Anaheim: Approximate % homes on market that are detached: 73%

• Median list price (August 16,2009): $364,232
• Altos Research Market Action Index:
  August 16: 22.19
  July 5: 23.69

Brea: Approximate % homes on market that are detached: 89%

• Median list price (August 16,2009): $550,327
• Altos Research Market Action Index:
  August 16: 16.57
  July 5: 20.14

Buena Park: Approximate % homes on market that are detached: 85%

• Median list price (August 16,2009): $357,945
• Altos Research Market Action Index:
  August 16: 21.09
  July 5: 23.32

Cypress: Approximate % homes on market that are detached: 67%

• Median list price (August 16,2009): $502,327
• Altos Research Market Action Index:
  August 16: 20.12
  July 5: 25.82

Fullerton: Approximate % homes on market that are detached: 78%

• Median list price (August 16,2009): $545,955
• Altos Research Market Action Index:
  August 16: 18.90
  July 5: 21.41

Garden Grove: Approximate % homes on market that are detached: 78%

• Median list price (August 16,2009): $376,622
• Altos Research Market Action Index:
  August 16: 26.00
  July 5: 27.56

La Habra: Approximate % homes on market that are detached: 69%

• Median list price (August 16,2009): $508,236
• Altos Research Market Action Index:
  August 16: 21.56
  July 5: 21.64

La Palma: Approximate % homes on market that are detached: 81%

• Median list price (August 16,2009): $606,200
• Altos Research Market Action Index:
  August 16: 18.77
  July 5: 18.65

Placentia: Approximate % homes on market that are detached: 75%

• Median list price (August 16,2009): $527,559
• Altos Research Market Action Index:
  August 16: 18.14
  July 5: 20.49

Stanton: Approximate % homes on market that are detached: 66%

• Median list price (August 16,2009): $309,736
• Altos Research Market Action Index:
  August 16: 25.48
  July 5: 23.67

Westminster: Approximate % homes on market that are detached: 87%

• Median list price (August 16,2009): $451,536
• Altos Research Market Action Index:
  August 16: 23.12
  July 5: 27.83

Yorba Linda: Approximate % homes on market that are detached: 79%

• Median list price (August 16,2009): $804,377
• Altos Research Market Action Index:
  August 16: 15.00
  July 5: 17.88

Following are some numbers that show how Americans have changed the way they look at debt–and not for the better. As these numbers show, age does not always result in cautious actions.

According to the Employee Benefit Research Institute, the percentage of Americans that were 65 to 74 and had housing debt were as follows:

• 1992–18%
• 2004–32%
• 2007–43%

And the Employee Benefit Research Institute also states that Americans in the 65 to 74 age group had the following median amount of debt. Both numbers are in the equivalent of 2007 dollars.

• 1992–$24,609
• 2007–$69,000

The 2007 numbers are the most recently available. As updated numbers become available in the coming years, we will see if we return to our past more prudent debt levels.

A few options exist: The economy improves; we learn our lesson and become more financially prudent. Or economic conditions improve; we develop a short memory and return to bad habits that queue ourselves us for another ride on the bubble wheel.  Or, finally, “the crisis of 2008 represents something much more fundamental than a deep recession” and economic conditions change to the point that we have no choice but to return to our more frugal financial roots.

Source: Tom Lauicella, “Pay Off Your Mortgage,”  The Wall Street Journal

GRAPH: THE FEDERAL RESERVE/MY BUDGET 360

Note: The quote is from NY Times columnist Thomas Friedman.

Back in May, I wrote that the Altos Market Action Index numbers are showing the low-end of the Orange County housing market to be healthier than the high-end. An article by Kelli Hart in Sunday’s Orange County Register backs up the theory (”Luxury homes fall into slump“). It seems that the high-end of the housing market is going through something similar to what the low-end has experienced.

Hart gives these Real Data Strategies numbers:

From July 2008 to the end of June, home priced at $1 million and more received an average price reduction of 14.2 percent. By comparison, homes priced at $500,000 and less received an average price reduction of 7.6 percent.

And Hart quotes broker Phil Immel as saying:

“Last recession, in the early ’90s, oceanfront (houses) dropped 50 percent before stabilizing.”

Following are the current Altos Research index numbers for some of the high-end  Orange County housing markets. Above 30 is a sellers’ market; below 30 is a buyers’ market. For comparison, Irvine is currently 18.01, and Costa Mesa is currently 17.70. And often criticized Santa Ana scores best with an index number of 20.53. Santa Ana’s current list price for a single-family home, according to Altos Research, is $326,573.

I also included, in bold, the current (August 16, 2009) Altos median list price for each of these housing markets.

Altos Market Action Indexes

• Corona Del Mar: $2,411,818 median list price
  May 22, 2009: 12.28
  August 16, 2009: 9.97
• Dana Point: $1,040,681 median list price
  May 22, 2009: 12.16
  August 16, 2009: 13.68
• Laguna Beach: $2,270,116 median list price
  May 22, 2009: 10.38
  August 16, 2009: 13.27
• Newport Beach: $1,948,468 median list price
  May 22, 2009: 10.11
  August 16, 2009: 9.80
• Newport Coast: $3,157,636 median list price
  May 22, 2009: 10.18
  August 16, 2009: 11.54
• Villa Park: $1,247,864 median list price
  May 22, 2009: 7.36
  August 16, 2009: 10.78

Since its incorporation in 1953, the city has grown from a semi-rural farming community of 16,840 to a suburban city with an economy based on retail, commerce and light manufacturing.–Wikipedia

For more information on Costa Mesa history and statistics, see the Wikipedia’s Costa Mesa entry.

Related post: “Market Watch: Costa Mesa Housing Stats and Foreclosures”

Income: The estimated median household income in 2007 was $63,619; the estimated per capita income in 2007 was $31,218. The 2008 cost of living index in Costa Mesa was 152.1 (very high, U.S. average is 100).

CNNMoney states that Costa Mesa’s 2008 median family income was $71,450.

Note: Household and family income do not have the same definition.

Population Density: The land area is 15.6 square miles. On January 1, 2009, the population was 116,479. Density was 7,448 people per square mile.

2008 FBI Crime Data: For 2008 Costa Mesa crime statistics, see the FBI Uniform Crime Report data provided by the OC Register.

But in two Orange County cities - Costa Mesa and Huntington Beach - the number of violent crimes increased in 2008, according to the FBI’s preliminary report of 2008. Violent crimes in Costa Mesa increased by 36 percent, with the bulk of the increase occurring in reported robberies and aggravated assaults.–Salvador Hernandez, “Two O.C. cities buck trend of lower violent crime, says FBI,” The Orange County Register

2000 U.S.  Census Crime Data: