Orange County Real Estate Bubble?

Orange County Real Estate Bubble

Is the Orange County Real Estate Market Heading for another bubble? Is the US housing market in general heading for another bubble?

Taking the US market as a whole is Macro Economics and that really only has relevance with politicians, school and discussion like this one.

Let us focus on is there an Orange County Real Estate Bubble?  Orange County real estate saw a huge appreciation from September 2012 to September 2013.  (About 30% This would definitely make one believe there is an Orange County real estate bubble).  It has gone relatively flat since with some small exceptions.  The usual market time has tripled since a year ago hovering at about 2.5 months.  I hear people saying that prices are dropping, and I explain prices are not dropping they have stabilized.  Sellers were over zealous thinking prices would continue to rise, so they would price their home 5% to 10% higher than the comps.  Homes sit as the sellers realize they need to bring the price down to match the market.  Buyers are no longer willing to chase and are waiting for a correctly priced home.  The market is primarily equity sellers that are contingent on finding a replacement home, and smaller scale investment companies or individuals.

When I listen to some investor radio shows that focus on the more stable markets, it seems they are about 1 year behind what  OC experienced.  Extremely low inventories and multiple bids on homes.  We are near a point where most of the large investors are leaving or are gone.

Many economist have predicted about a 5% nationwide appreciation, and also state this could be the first time the real estate peak is lower then the previous peak.  (I know in San Francisco they are already above the last peak in 2006.  So there is an exception)  The buying pool will not be ever expanding this time.  John Doe the bartender qualifying for a 500k home purchase with a 110% LTV to wrap in closing cost and maybe a small kitchen rehab.

So in short I think the bubble markets in general are becoming relatively flat, with the more stable markets continuing a generous appreciation.  There is no such thing as a United States Real Estate Market.  There is about 400 distinct in diverse real estate markets in the US.  There is not an Orange County Real Estate Bubble.  We are relatively flat and hopefully will continue this way.  Memphis, Tennessee on the other hand will be seeing generous amounts of appreciation.(Generous for Tennessee at least)

This was a response to a comment on a site called biggerpockets.com  This is a site where real estate professionals colaberate and discuss anything real estate.  To see the thread click here

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Your Neighbor in Real Estate

Patrick J Parry

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