Wednesday, September 20, 2006

OC Home Prices: Still Fucked Up

In 2003 the current owner of this 4 bedroom, 2 bath house in Lake Forest, California purchase it for $340,000. Three years later he wants sell the house for $599,000 thereby earning - hey, why not? - $260,000 profit!The house has been on the market for 12 days, and according to the realtor, everybody better "hurry" the hell up, because it "won't last".

Nevermind the fact that the owner could never afford to buy the home himself at the sale price.

So what is it exactly that makes an Orange County homeowner rationalize their right to a $260,000 profit on a tiny 4 bedroom home, built before the Reagan presidency, with no backyard?

a.) "My realtor said that's how much the house is worth."
b.) "Everyone else is doin' it and getting away with it!"
c.) "The great sunny weather, mild temperatures and family community of Lake Forest contribute to the home value and justify the $600K asking price.
d.) "My neighbor sold his larger home for $650K. My home is comparable."

Well, which is it?

This may be what sellers are thinking. But more and more prospective buyers are deciding to hold their horses and wait on the sidelines. Things are starting to get ugly for the real estate market... and potentially very interesting.

Sales of homes in Orange County are on the decline. Foreclosures are on the rise by 75% year-to-date 2006. Median home prices in OC remain high at $633,000, over 10 times the median family income. Now may not be the right time to buy a home.

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