Costa Mesa Real Estate Bubble or Good Times

 

Costa Mesa Real Estate Bubble or Good Times Yes, believe it or not, we now hear Costa Mesa pundits claiming the recent advances in home prices should be viewed with steep skepticism, as in the minds of these purported experts these price increases may already be overdone. I’m all for a healthy debate. But some of these comments feel more like sour grapes from a bunch of Costa Mesa real estate market observers who not too long ago thought prices had further to fall.

 

I had a great conversation with a doctor the other day. We laughed at how bad it the Costa Mesa market was a few years ago, and even just 8 or 9 months ago. People weren’t convince it was time to buy, regardless that the interest rates were in the same place. Now folks line up for Costa Mesa real estate like there will never be another home for sale! He likened the phenomenon to lemmings all following each other.

 

Is there a chance that home prices may have gotten ahead of themselves in a few markets? Perhaps. Could Costa Mesa real estate prices plummet if the nation’s economy turns south, or if interest rates were to spike? Well, that’s not a reasonable bet – but it makes for fodder for the professional worrier. Housing got overdone in the middle of the last decade and got fair economic punishment. Deep discounting, just as the economic gods ordered, now creates the demand that’s got housing percolating once again. Still, today’s conditions – especially the lending tactics – are far more subdued than the crazy days of the past. But I wanted to back up my gut with some numbers, so it was time for my trusty spreadsheet – using Orange County as a proxy for this bubble debate, since we’ve had a few real estate bubbles here.

 

The number of homes for sale in Orange County last week fell to their second-lowest level in numbers dating back nearly nine years. As of March 14th, 3,183 Orange County homes were listed for sale in the Realtor-run Multiple Listing Service, or MLS. The only time in the period that listings were lower was on Jan. 3, when there were 22 fewer homes for sale. A year earlier, Orange County had 7,000 homes for sale. The average in figures dating back to June 2004 is 10,000 listings.

 

Although the inventory “sits at an unprecedentedly low level,” the local housing market shed 54 homes in the preceding two weeks and 89 in the previous month. The inventory is off to such an anemic start because the number of short sales and foreclosures coming on the market thus far this year has plummeted compared to 2012.

 

 

As of this writing, Costa Mesa’s zip 92627 only had 2 distressed property listings, which represented 12% of the market. Only 2!!! A year ago we were still trending around 30% distressed listings per area. So, how’s the market? Strong, no doubt.

 

I still think the market could give back a little- we’ve had too much rise way too fast. If interest rates were to go to 5%, which is still historically low, I think we would drive half of the buyers out of today’s market. Prices would give a little bit if that event happened.

 

We’ll see…it seems the government doesn’t want to rock the financial boat until jobs are back and Europe’s financial woes subside. Take advantage of the rates while you can, whether it be refinancing, buying, or reducing your current Costa Mesa loan.