Sweet Orange

The National Association of Realtors (NAR) has come out with the August housing numbers. They show a mixed-bag for the U.S. housing market:

U.S. Sales Numbers
U.S. housing sales in August were 5.1 million. This is a drop of 2.7% from the July number of 5.24 million and a drop of 30% from the peak, which was about four years ago. However, this is up 3.4% from this time last year and up 14% from the bottom which was in January.

According to NAR economist Lawrence Yun, a stable housing market cannot be claimed until U.S. home sales increase to about 5.5 to 6 million.

U.S. Median Sales Price
In August 2009, the median price for housing in the U.S. was $177,700. In July 2009, it was $178,400. The August 2009 number is down 12.5% from the August 2008 number.

U.S. Inventory
In August, 3.6 million homes were on the market. This is a decrease from the July number, which was 4 million. According to the NAR, if homes sell at the current pace, it will take 8.5 months to sell these homes. This is the shortest time in two year that analysts have predicted it will take to sell existing housing inventory.

Conclusion
The good news for anyone who wants to sell a house is that inventory is down when compared to last month and sales are up when compared to a year ago.

The bad news for anyone who wants to sell a house is that home sales need to increase substantially if we are to return to a stable market. In addition, housing analysts expected August housing sales to be larger than they were in July; instead, July home sales went down 2.7%.

This month-to-month sale decline has some wondering if we are in for a reverse in that has been an improving market for national housing sales. However, Paul Dales of Capital Economics thinks that this is not the case:

We suspect it is just a temporary blip in the improving trend rather than a sign of renewed weakness.

We’ll see…

Note: See the LA Land blog for additional information and a link to relevant housing charts and graphs.

As I wrote yesterday (”The Stealth Sell Out of Phase 3 Ivy homes in Irvine“), prices for Ivy homes, the new construction development in Irvine’s Woodbury East, have increased as each new phase was put on the market (except for Residence D, which went down $1,000 from the last price that was listed for this model).

As the following lists show, current prices are between $2,000 and $6,000 more than they were in phase 2 (again, this excludes Residence D, which was not available in phase two). The address for the Ivy homes, built by William Lyons Homes, is 20 Opus, Irvine 92618.

Current Prices  (as of September 10, according to Trulia):

• Residence A: Two bedrooms, 2.5 baths, 1,180 square feet, priced from $356,990
• Residence B: Three bedrooms, 2.5 baths, 1,394 square feet, priced from $400,990
• Residence C: Three bedrooms, 2.5 baths, 1,500 square feet, priced from $441,990
• Residence D: Three bedrooms, 2.5 baths, 1,503 square feet, priced from $421,990

Phase 2, August 1 prices:

• Residence A: Two bedrooms, 2.5 baths, 1,180 square feet, priced from $354,990
  
• Residence B: Three bedrooms, 2.5 baths, 1,394 square feet, priced from $394,990
• Residence C: Three bedrooms, 2.5 baths, 1,500 square feet, priced from $439,990
• Residence D: Three bedrooms, 2.5 baths, 1,503 square feet, NOT AVAILABLE

Phase 1, July 11 prices:

• Residence A: Two bedrooms, 2.5 baths and a 2-car garage; 1,180 square feet, priced from $349,990
• Residence B: Three bedrooms, 2.5 baths and a 2-car garage, 1,394 square feet, priced from $389,990
• Residence C: Three bedrooms, 2.5 baths and a 2-car garage, 1,500 square feet, priced from $427,990
• Residence D: Three bedrooms, 2.5 baths and a 2-car garage, 1,503 square feet, priced from $422,990

Additional costs:

• Mello Roos fees about $3,971 per year
• HOA dues about $134 monthly for the master association and $175 for the sub-association

GRAPHIC IS THE FLOOR PLAN FOR THE FIRST AND SECOND FLOORS OF RESIDENCE B. WHEN COMPARED TO PHASE TWO PRICES, RESIDENCE B IVY HOME PRICES INCREASED MORE THAN RESIDENCE A, C, OR D.

Note: See yesterday’s post (“The Stealth Sell Out of Phase 3 Ivy homes in Irvine“), for a list of additional posts on the Ivy development.

We’ve had a stealth event concerning the housing industry happen in Irvine a few weeks ago. What I am writing about is the mysterious sell out of the phase three Ivy homes that went on sale recently.

There has been a lot of buzz around the quick sell out of the Ivy home offered for sale in phase one and two. Ivy is the new construction development that is in the process of being built in Irvine’s Woodbury East community. These homes will not be available for move-in until sometime next year; however, both phase one and phase two sold out within 15 minutes of going on sale (July 11th and August 1st respectively). The Irvine Company announced that phase three homes would go on the market in 3 to 5 weeks of the phase two date. So I have been watching for an announcement of the exact date.

Phase 1 and 2 came out with a lot of fanfare: newspaper ads, e-mail announcements, Google banner ads on numerous blogs, and newspaper articles. Not so with phase three. I saw no mention of the phase three opening date until  I got an e-mail  on Wednesday of last week (September 23rd) from the Irvine Company that said:

“Homebuyers are continuing to prove that Woodbury East is Irvine’s most popular new address. Our first neighborhood, Ivy, continues to be a huge success and has sold out its first three phases. With pricing beginning in the mid $300,000s, Woodbury East has made its debut as a great place to buy now and enjoy for years to come.”

Apparently the phase three sale date has come and gone with hardly a word. It must be all a part of the marketing plan.

Tomorrow’s post: a look at the current prices for the Ivy homes. Hint: Prices have increased with each new sales phase.

Related posts:

• Deja Vu in Woodbury East! Phase Two of Irvine’s Ivy Housing Development Sells Out in 15 Minutes-Prices Increased
• New Construction Housing Development Sells Out in 15 Minutes
• Ivy. an Irvine Woodbury East Development, Opens with Smaller, More Affordable Housing Options
• Pros and Cons of New Irvine Development: Ivy, a Woodbury East Neighborhood

Driving that train, high on cocaine…
Trouble with you is the trouble with me,
Got two good eyes but you still don’t see.
–Grateful Dead

In one of last week’s posts, I wrote about the dueling opinions that exist on how we will react when the economy and employment improve. Some think that we will become more frugal, and some think that we will have short-term memories and will return to over spending.

Those who think that most of us will opt for the more cautious choice say that, although we have had short-term memories in the past, the seriousness of this recession will affect this generation to be more frugal–the same way that the Depression influenced that generation to be frugal long after the Depression had ended. But here is why change is so difficult:

“the neural activity of someone whose investments are making money is indistinguishable from that of someone who is high on cocaine or morphine.”–Author Jason Zweig on neuroeconomics

So what about it? When the economy recovers and employment is once again at a normal level, will we kick the spending addition? As New York Times columnist Tom Friedman points out, we might have come to a point where we have no other option:

Let’s today step out of the normal boundaries of analysis of our economic crisis and ask a radical question: What if the crisis of 2008 represents something much more fundamental than a deep recession? What if it’s telling us that the whole growth model we created over the last 50 years is simply unsustainable economically and ecologically and that 2008 was when we hit the wall - when Mother Nature and the market both said: “No more.”—Tom Friedman, “The Inflection Is Near?“

Note: If you are in the frugal category, the FDIC has some tips on managing your money wisely: “Managing Your Money in Good Times and Bad.” Also, for information on the current market for small homes, see my previous post “Note to Homebuilders: Small Homes Sell!“.

GRAPHIC COURTESY JASON ZWEIG WEBSITE

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. Also, these Altos Research numbers are for detached homes only (condos are not included). For this reason, I have included numbers that show the percentage of home on the market in each city that are detached.

To see which homes are currently on the market as well as which homes have sold recently, click on the city name. To see additional Altos Research numbers for each city (listing price, price per square foot, etc.), click on the index number for each city.

Aliso Viejo: approximate % homes on market that are detached–26%

• September 20, 2009: 20.37
• July 19, 2009:  18.09

Coto De Caza: approximate % homes on market that are detached–87%

n/a

Dana Point: approximate % homes on market that are detached–69%

• September 20, 2009: 14.32
  
• July 19, 2009: 15.68

Ladera Ranch: approximate % homes on market that are detached–69%

• September 20, 2009: 17.38
  
• July 19, 2009: 6.20

Laguna Beach: approximate % homes on market that are detached–82%

• September 20, 2009: 13.69
  
• July 19, 2009: 11.84

Laguna Hills: approximate % homes on market that are detached–48%

• September 20, 2009: 16.27
  
• July 19, 2009: 13.26

Laguna Niguel: approximate % homes on market that are detached–62%

• September 20, 2009: 16.69
  
• July 19, 2009: 15.23

Laguna Woods: approximate % homes on market that are detached–5%

• September 20, 2009: 3.04
  
• July 19, 2009: 6.07

Lake Forest: approximate % homes on market that are detached–61%

• September 20, 2009: 16.95
  
• July 19, 2009: 17.37

Mission Viejo: approximate % homes on market that are detached–68%

• September 20, 2009: 18.69
  
• July 19, 2009: 16.23

Rancho Santa Margarita: approximate % homes on market that are detached–55%

• September 20, 2009: 16.45
  
• July 19, 2009: 16.64

San Clemente: approximate % homes on market that are detached–76%

• September 20, 2009: 14.95
  
• July 19, 2009: 12.67

San Juan Capistrano: approximate % homes on market that are detached–68%

• September 20, 2009: 13.24
  
• July 19, 2009: 10.86

Summary: According to the index numbers, all South Orange County markets for detached houses are buyers’ markets. In general, the health of the Central Orange County housing market has increased since July 19th; however, the index number still show South Orange County housing is in a weaker position than the North or Central areas.

The hard-hit area of Ladera Ranch saw the biggest improvement. The detached houses in the  55+ community of Laguna Woods is the weakest housing market in South Orange County. But only about 5% of these homes are detached, so this number is not that telling.

Fall, the season of reaping what we have sown, starts today. And what we have sown, according to many economists, is an economy that is coming out of recession. But as is common in recessions, employment numbers are lagging behind in the recovery and will lag for some time. The result is that donations of all kinds are down but the need is up. Food banks are no exception. This is particularly troubling at a time of year when we should be seeing the abundance of the harvest season.

But maybe we have resource that we are not using fully. I read an article a few months ago about a local church that had a harvesting/gleaning campaign. The parishioners noticed that the some of the fruit and vegetables from their gardens often end up on the ground and went to waste. I know the times I had a garden more was produced than I could eat or even give away.

The church asked the parishioners to collect the extra fruits and vegetables from their yards, and they had a sale. The money collected as well as the produce that did not sell was given to a food bank. Perhaps some version of this could be done on a larger basis. The harvesting program could be overseen by either individual cities or organizations. Or individuals and neighborhoods could glean the extra fruits and vegetables from their yards and have it delivered to a local food bank. And maybe the harvesting program could be maintained throughout the year.

What do you think? Can we put to use what is readily available instead of letting it go to waste? Maybe we have more available to us than we realize.

It is only the farmer who faithfully plants seeds in the Spring, who reaps a harvest in Autumn.
- B. C. Forbes

Here are some locations that accept food and cash donations as well as donations of your time and services:

Second Harvest Food Bank of Orange County
8014 Marine Way
Irvine, CA 92618
Phone: 949-653-2900
Web Site: http://www.feedoc.org

Community Action Partnership of Orange County Food Bank
12640 Knott Street
Garden Grove, CA 92841
Phone: (714) 897-6670
Web Site: http://www.capoc.org/

GRAPHIC COURTESY BILL BARBER

I’m hopeful in that Santa Ana will some day become a true destination city; where new circulation is brought to our streets-where places like Downtown, The Fiesta Marketplace, 4th Street, and the Station District (including the train depot) are ventured to by people all over Southern California.–Ben Dayhoe, Life at the Santiago Street Lofts–The Good, the Bad and the Ugly

I came across a blog that I haven’t seen before, Life at the Santiago Street Lofts–The Good, the Bad and the Ugly. I thought that it had some interesting info on life in Santa Ana, and since I write about development in Orange County, I thought that an excerpt from a recent Santiago Street post was appropriate for reprinting on this blog.

After living in Santa Ana for over three years, it seems as if things are finally happening in the empty lots just West of the Santiago Lofts.

When I first told my friends and family I was moving to Santa Ana, they thought I was crazy. But to me, it made perfect sense because I believe in this city-what it is, what it was, and what it could be.

As of Monday night [August 17], the Related/Griffin team is now one step closer in becoming the master developer for these nearby lots. And after three years of watching other cities evolve while Santa Ana moved at a snail’s pace, I am filled with hope with the thought of what could come to our city.

But at the same time, my hopes are equally met with trepidation and fears.

He goes on to state some of his hopes and fears for the area (one of which can be found at the beginning of this post). Check them out at his blog.  All the Google ad money he gets is donated to Pet Pro Life, a dog rescue program.

Related information:

• The City of Santa Ana: The Station District RFQ
• Santa Ana Downtown National Register District–Wikipedia
• “Santa Ana sees new neighborhood on vacant lots,” The Orange County Register, Doug Irving
• “Santa Ana plan aims for downtown rebirth,”  The Orange County Register, Doug Irving

2007 ARTIST RENDERING OF THE STATION DISTRICT IN SANTA ANA COURTESY THE ORANGE COUNTY REGISTER

Which of these competing statement about the housing market do you think is true?

During the housing boom, homeowners had no qualms about spending money to commute to distant suburbs carved out of the hinterlands. But frugal home buyers, [Economist Edward Leamer, director of the UCLA Anderson Forecast] said, will be more inclined to look first at homes that are closer to their jobs.

“We’re going to see more multifamily-dwelling units,” Leamer said.

The real estate industry is known for its bigger-is-better attitude, but even some industry pros sense a change.

“We’ll probably be seeing a trend toward smaller, greener, less-costly-to-maintain houses,” said Walter Maloney, spokesman for the National Assn. of Realtors. It’s “a return to basics.”

OR

“People have short memories and just look a couple years ahead,” said San Fernando Valley real estate agent Gary Rapoport, who represents clients generally looking for properties in the $400,000 range. “They just want to buy whether they qualify or not.”

Real estate economist Christopher Thornberg seconds that view. Californians display a sort of amnesia about downturns that affect the housing market, he said, whether caused by financial-market debacles or the collapse of the technology boom. Price slumps in each of the last four decades, he noted, didn’t dispel the perception of residential real estate as a sure-bet investment.

“We’ve been here before,” Thornberg said. “People have a shocking ability to forget the past.”–Chris Jacobs, The Los Angeles Times, “Recession may forge a shift in California housing

Next week I will take another look at this topic and provide a third option.

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. Also, these Altos Research numbers are for detached homes only (condos are not included). For this reason, I have included numbers that show the percentage of home in each city that are detached.

To see what homes are currently on the market as well as what homes have sold recently, click on the city name. To see additional Altos Research numbers for each city, click on the index number for each city.

Altos Market Action Index for Central Orange County cities, week ending on September 13, 2009:

Costa Mesa: approximate % homes on market that are detached–72%

• September 13, 2009: 18.97
• July 12, 2009: 21.13

Fountain Valley: approximate % homes on market that are detached–81%

• September 13, 2009: 20.72
• July 12, 2009: 26.05

Huntington Beach: approximate % homes on market that are detached–69%

• September 13, 2009: 16.63
• July 12, 2009: 14.50

Irvine: approximate % homes on market that are detached–43%

• September 13, 2009: 17.18
• July 12, 2009: 18.31

Los Alamitos: approximate % homes on market that are detached–77%

• September 13, 2009: 12.31
• July 12, 2009: 11.90

Newport Beach: approximate % homes on market that are detached–67%

• September 13, 2009: 11.04
• July 12, 2009: 11.42

Orange: approximate % homes on market that are detached–86%

• September 13, 2009: 18.15
• July 12, 2009: 19.26

Santa Ana: approximate % homes on market that are detached–64%

• September 13, 2009: 20.40
• July 12, 2009: 21.75

Seal Beach: approximate % homes on market that are detached–26%

• September 13, 2009: 14.24
• July 12, 2009: 12.91

Tustin: approximate % homes on market that are detached–51%

• September 13, 2009: 17.55
• July 12, 2009: 19.09

Villa Park: approximate % homes on market that are detached–100%

• September 13, 2009: 14.33
• July 12, 2009: 8.43

Summary: All Central Orange County housing markets are buyers’ markets. In general, according to the index numbers, the health of the Central Orange County housing market has decreased since July 12th.  And in general, the lower-priced home markets are currently healthy than the high-priced areas.

Here are some observations on the economy that Chris Thornberg, a principal with Beacon Economics, made during one of his visits to AirTalk. What do you think? He hit the nail on the head?  Or he missed the mark?

• Foreclosures will remain high next year.
• The stock market is the ultimate “drama queen” when it comes to predicting the direction that the economy will trend and, therefore, is not a good economic indicator. (Michael Murphy at Seeking Alpha thinks otherwise, but that’s for another time.)
• An increase in exports is needed if the U.S. economy is to improve. Therefore, the world economy must improve so that we have somewhere to send our exports.
• Although many believe that the root of our economic problems was the housing market collapse, Thornberg says that is a symptom, not the root problem. He states that the root of the problem was that we were spending more than we made. Thornberg further states that debt is what we used to fund this spending beyond our incomes. Note: According to the Federal Reserve, we were spending 127% of our personal income in 2005. Obviously, not a sustainable amount.