Russ, there is no real estate bubble in Orange County according to my discussion today with First Team in Huntington Beach. Here is a transcript:
you: how is the market right now?
First Team 1: I guess if you're looking at it from the internet, then you'll have access to the address information. We're just not allowed to give it out from here. Since you already know the exact location, when would you be available to see it?
First Team 1: The market is currently in a kind of neutral position, as is common this time of year--neither up nor down. But prices usually start rising within about six weeks from now.
you: i've heard the real estate bubble is popping right now
you: is that true?
First Team 1: As the weather warms up and we get closer to spring, people flood back into the market. There is no bubble. It is only a myth propogated by the press. There are still thousands more people who want to move into the area than we have housing for and the buildable land is gradually decreasing. We expect prices to rise another 15-18 per cent this year.
you: so it's not true that the number of sales has slowed down dramatically in the last 2 months?
First Team 1: Nobody has a crystal ball, but we follow along with the predictions of Gary Watts, who has correctly predicted every upturn and downturn in the market since 1989.
First Team 1: It has slowed a little, but that is perfectly normal for this time of year. It always slows down before the holidays and then gradually picks up after the first of the new year.
you: how is the inventory of unsold homes compared to the same time a year ago?
you: hasn't it gone way up?
First Team 1: I would have to do some research to get exact numbers, but according to Gary Watt's recent seminar, it was actually less this time than the comparable figures from a year ago. Yes, inventories are up, but not by that much. The homes at the higher ranges (where you're looking) are at a higher inventory, but that's to be expected. Far fewer people can afford those prices, so they don't continue to go up as fast as, say, the condo market.
you: that's interesting.
you: so how will prices go up 15% to 18% this year if few people can afford the current prices?
First Team 1: If you'd like, I could have you meet with one of my agent partners in the Huntington Beach area, so they can give you more specific info relative to that area. Anybody who has lived here for more than 5 or six years has, generally speaking, had a huge increase in equity. They are cash rich. Also, most of them have fixed mortgages, so they still have tremendous buying power. And the employment picture is still excellent. Last month another 33,000 jobs were created, after the experts expected only 22,000. With rates still reasonable, that makes it possible for the market to remain very strong.
you: thank you for your time and information
you: i think the real estate bubble is popping
you: i also think prices will be at least 15% lower by this time next year
First Team 1: With reasons like that, we are confident that anybody who buys now won't be disappointed come next December. If you would like any additional info, please ask for Bob Astor at 866-748-4969. As I said before, nobody knows for sure. Anything is possible, but given the current economic factors in OC, there would have to be something pretty catastrophic to make prices drop more than a few percentage points. Barring that, it should be another very solid year. Gary Watts believes that the median price will be over 700K by then. Right now it is around 615K.
you: I wish you well. I would be careful about telling people there is no bubble. This is the biggest bubble since the stock market in 1929. If/when it crashes, you could get sued for telling people there is no bubble.
First Team 1: If you decide that you want to see the HB property, or anything else, feel free to give me a call and I'll be delighted to help you in any way that I can.
First Team 1: We can't get sued for giving an opinion. Nobody knows for sure what will happen. It's just that given the current statistics in a lot of areas, it is very unlikely. There could always be an adjustment downward, just not likely to be a bubble, where prices would have to go down more than about 30 percent.
First Team 1: It's all about supply and demand and right now demand is still way too high for the supply overall.
you: good luck. it's amazing how many people have forgot the Orange County real estate market of 1990 to 1993. |
