Orange County construction related unemployment at 38%

The Orange County unemployment rate is under 10%, but unemployment in the construction industry is an astounding 38%. Projections are for a slow recovery.

Irvine Home Address … 4 PINEWOOD #67 Irvine, CA 92604

Resale Home Price …… $498,000

When they've tortured and scared you for twenty hard years

Then they expect you to pick a career

When you can't really function you're so full of fear

A working class hero is something to be

A working class hero is something to be

John Lennon — Working Class Hero

I know many people whose livelihood depends on construction and real estate. Most of them are hurting right now. With 38% unemployment, and 62% underemployment (that's a guess), nearly everyone in a real estate related field is suffering. Thirty-eight percent unemployment is remarkably high. Unemployment rates higher than 10% represent widespread suffering. Back when the government kept accurate and reliable records of unemployment during the Great Depression, the rate exceeded 25%. Thirty-eight percent unemployment is beyond description.

It's not only people in construction and real estate that suffer. With so many out of work, the demand for goods and services of all kinds is diminished. In short, the troubles in construction and real estate are not confined to that sector of the economy. On the bright side, it is getting a little better.

1st gain in O.C. construction jobs in 4 years

By JON LANSNER — July 5, 2011

The number of Orange County construction workers in May was 200 jobs higher than a year ago. That's no hiring spree but it's the first year-over-year gain since December 2006.

State Employment Development Dept. stats show Orange County construction bosses reported 67,000 workers in May – up 1,800 from April. That's the largest month-to-month gain since June 2007.

What's driving what is at a minimum a stabilization of Orange County construction work?

  • Well, EDD figures show big Orange County projects – so-called heavy and civil engineering jobs — up 600 in a year to 6,900 positions in May. That's the 7th consecutive gain for this Orange County construction niche, driving by big infrastructure programs such as highway work in northern Orange County and grading efforts for new housing in Irvine. Heavy and civil engineering jobs had previously been falling, year-to-year, for 16 months before the recent surge that leave employment in this category 2,200 positions – 24% – below the September 2006.
  • Specialty trade contractors add 300 workers in the year ended in May to total reported Orange County payrolls of 46,200 positions. That's the second straight year=to-year gain; and third in four months. This Orange County group is benefiting from slowly improved homebuilding efforts around the county and renewed boost in remodeling work for both homeowner and corporate clients. Specialty construction trade jobs in Orange County had previously been falling, year-to-year, for 51 months before the recent surge that leave employment in this category 30,000 positions – 39% – below the September 2006.
  • Still hurting are jobs in Orange County building construction, down 700 in a year – the 41st consecutive drop in a losing streak that dates to August 2007. Modest homebuilding efforts have not stemmed job losses in this niche, as construction of Orange County commercial real estate – from offices to shopping centers – remains all-but dead. Employment in this Orange County construction niche is down 10,300 jobs – 41% – from its September 2006.

Nobody wants to dampen good news, but it's been a painful Orange County real estate downturn: 42,500 construction jobs – 38% of the work force – gone since the September 2006 peak. In that same period, Orange County lost 157,000 jobs – so, construction alone was 27% of the drop.

The end of this suffering is nowhere in site. The Irvine Company has been employing construction workers for the last couple of years, but they aren't selling many of the homes they built recently, and some wonder if they won't stop due to lack of sales. If the Irvine Company stops construction, it isn't very likely that Rancho Mission Viejo or other competitors will pick up the slack. With residential, commercial and industrial all out of commission, only apartment construction will keep the industry afloat.

UCLA: Calif. housing ‘completely imploded’

June 15th, 2011, 12:00 am — posted by Jon Lansner

UCLA economists offer little near-term hope for California real estate in their latest forecast:

  • “Even the glimmer of hope we saw with slightly elevated prices in the coastal cities of California during the home purchase incentive months has now faded. The basic story of today's housing markets is that of a market that completely imploded, that has many Californians underwater and a market with demand diminished by both a lack of easy financing and a lack of jobs.”
  • “Another year before we see significant increases in the demand for housing.”
  • Homebuilding runs at historically low levels. “There are no signs of that changing soon.”
  • “When the potential demand finally turns into actual demand it is going to look a bit different than just a recovery in the housing market. It will be on the coast, and focused on multi-family housing. That is important because it has implications for the number and location of construction and real estate jobs generated by the resurgence in residential markets towards the end of next year.”
  • Multifamily construction is expect to eclipse its peak of the previous cycle — permits pulled for 62,000 units — by 2013. But home construction will peak this cycle at 119,000 units — 23% below the 2005 peak.
  • Construction employment will grow 25% in the next decade to 709,000. Still, that’s 225,000 jobs short of the previous cycle’s 2006 peak.

If UCLA is correct, we are witnessing a structural change in the California construction industry. The golden age of homebuilding and construction has past. By the chart above, they do not project reaching year 2000 employment levels by 2020. The only thing reducing unemployment will be workers giving up and seeking work in other fields.

Why the Housing Crash Remains a Wreck

By Marcie Geffner — Published June 27, 2011 — Bankrate.com

Foreclosures. Short Sales. Unemployment. Tight credit. Overbuilding. Those are but some of the reasons housing markets in many parts of the country remain stubbornly depressed, even while activity in other economic sectors has begun to rebound.

New-home building and sales of existing homes historically have been leading economic indicators, pointing the way to robust recovery after a downturn. In the current cycle, however, that hasn't happened, says Lawrence Yun, chief economist at the National Association of Realtors.

“Housing has always been the leader in terms of getting the economy back on track,” Yun says, “but that is not the case this time around.”

On rare occasions, Lawrence Yun says something that is not complete bullshit. In this instance, he is right. Residential investment has historically been the best indicator of the bottom of a recession. With homebuilding at historic lows, construction employment and spending is not boosting the economy and helping us pull out of recession.

Housing Starts Shrivel

The biggest stumbling block has been the sharp downturn in new-home construction, which is usually a major contributor to economic growth not only through new-home sales, but also jobs in home construction and purchases of new appliances, fixtures and furnishings.

But construction starts for residential units fell to an annualized pace of 560,000 units in May, a drop of 3.4% compared with the 582,000-unit pace for construction starts set a year earlier, according to the U.S. Census. Sales of new-built homes have lifted from last year's rock-bottom levels, but are still far lower than normal.

Building has been constrained, Yun says, due to a plentiful supply of existing for-sale homes relative to demand, rising prices of building materials such as lumber and steel, and builders' difficulty in getting construction loans.

The ample inventory of for-sale homes includes an “enormous overhang” of bank-owned properties that depress home prices and present tough competition for builders, says Rick Sharga, senior vice president of RealtyTrac, a foreclosure data firm in Irvine, Calif. Homes that are in some stage of the foreclosure process are so commonplace that they accounted for 28% of all homes sold nationwide in the first quarter of this year, RealtyTrac's latest survey showed.

Anyone who believed residential investment would bottom in 2009 was ignoring the overhang of REO. The UCLA forecast is probably a realistic assessment of what the future holds.

Tight Credit Squeezes Demand

Meanwhile, homebuying has been held back largely due to lenders' tighter grip on mortgage financing. Higher credit scores, fatter down payments and pickier underwriting have combined to outweigh fallen home prices and low interest rates, which have made owning cheaper than renting in some U.S. cities. One indicator of just how tight lending has become: 31% of U.S. home sales in April were to all-cash buyers, down only slightly compared with a record-high 35% share of cash transactions in March, according to the National Association of Realtors. Most cash buyers are investors who don't intend to occupy the homes they purchase.

The influx of all-cash buyers has corresponded to the declining home ownership rate. This was fully expected by anyone who anticipated a looming foreclosure crisis from insolvent borrowers.

Another demand-depressing factor has been the trend toward young adults living with their parents or an additional roommate, rather than forming their own new households. Household formation traditionally creates demand for smaller or less costly starter homes, the sales of which, in turn, allow current homeowners to buy larger or more expensive residences.

“What we have today is a weak recovery in the labor market, which is holding back some of the household formation,” Yun says. “The only way to unleash this household formation is to have strong consistent job growth.”

The national unemployment rate stood at 9.1%, or nearly 14 million people, in May. Another 8.5 million people were employed part time, but wanted full-time positions.

Homeownership Loses Appeal

Sharga points to a shift in consumers' attitudes toward homeownership as a factor in the housing sector's weakness: People aren't as interested in buying homes as they used to be. One recent RealtyTrac survey found that a huge percentage of today's renters don't want to buy a home — ever.

“No one wants to catch that proverbial falling knife (of lower home prices) and no one wants to become the next foreclosure statistic, so it really is an issue,” Sharga says.

Like the slower household formation, that lack of homebuying enthusiasm translates to less demand for entry-level houses and less opportunity for current homeowners, who might not have much equity, to trade up to another home.

So what will it take to get housing back in action? In short, a chain reaction of a robust economy, strong job growth and more household formation, easier credit, fewer foreclosures and an absorption of the existing excess supply of for-sale homes.

I have argued it will take an outside stimulus from an industry other than homebuilding to restart the economy. Once one sector the economy begins to flourish, the demand for housing will pick up, and then we will see the chain reaction everyone is waiting for.

Perhaps that Option ARM wasn't such a good idea

Today's featured property is an Option ARM gone bad. The owners are Ponzis savvy mortgage managers who extracted about $350,000 after investing $13,750 of their own money. Now they are selling short.

  • The owners paid $275,000 on 9/18/2001 using a $220,000 first mortgage, a $41,250 second mortgage, and a $13,750 down payment.
  • On 8/29/2002 they refinanced with a $268,000 first mortgage.
  • On 3/3/2003 they obtained a $60,000 stand-alone second.
  • On 3/17/2003 they obtained a $66,000 HELOC.
  • On 10/28/2003 they refinanced with a $346,500 first mortgage and a $99,000 stand-alone second.
  • On 4/12/2005 they got another cash infusion with a $190,000 HELOC.
  • On 11/10/2005 they refinanced with a $600,000 Option ARM.
  • In a stunningly stupid move, Bank of America gave them a $37,900 HELOC on 1/18/2008. They quit paying shortly thereafter.

Foreclosure Record

Recording Date: 03/02/2009

Document Type: Notice of Default

I looks like they followed with a loan modification which allowed the Option ARM holder to delay the short sale or foreclosure until today.

Foreclosure Record

Recording Date: 06/09/2009

Document Type: Notice of Rescission

Apparently their income did not more than double while their mortgage did.

——————————————————————————————————————————————-

This property is available for sale via the MLS.

Please contact Shevy Akason, #01836707

949.769.1599

sales@idealhomebrokers.com

Irvine House Address … 4 PINEWOOD #67 Irvine, CA 92604

Resale Home Price …… $498,000

Beds: 3

Baths: 3

Sq. Ft.: 2300

$228/SF

Property Type: Residential, Condominium

Style: Two Level, French

Year Built: 1977

Community: 0

County: Orange

MLS#: S661690

Source: SoCalMLS

Status: Active

——————————————————————————

BACKS TO SHOREBIRD PARK!!! BEAUTY & HARMONY SURROUNDS YOU IN THIS LOVELY 3 BEDROOM (MASTER & OTHER DOWNSTAIRS), PLUS ARTIST/SEWING ROOM & 3 FULL BATHROOMS. SUNSHINE FILLS THIS HOME WHICH HAS BEEN EXPANDED/REMODELED FOR ELEGANT ENTERTAINING, & MAKING MEMORIES WITH FAMILY & FRIENDS. SNUGGLE AND READ A BOOK IN THE CHARMING, QUAINT LIBRARY/OFFICE UPSTAIRS. KITCHEN FEATURES CORIAN COUNTERS, UNDER COUNTER LIGHTS, CANNED LIGHTS, TILE FLOOR, PANTRY CLOSET, GAS COOKTOP. BREAKFAST NOOK LEADS TO PATIO & VIEW OF PARK. LIVING ROOM & FORMAL DINING ROOM INCLUDE SOARING VAULTED CEILING. WOOD/GAS BURNING FIREPLACE IN ELEGANT LIVING ROOM WITH SLIDING DOOR LEADS TO BACK PATIO/PARK. TRAVERTINE FLR IN MSTR SHOWER RM. NEWER HVAC SYSTEM & SOME NEWER DUCTS. EXTERNAL GAS HOOKUP IN BACKYARD PATIO FOR PICNICS. RAISED PANEL DOORS THROUGH-OUT, DECORATOR INTERIOR PAINT, NEWER SKYLIGHT IN MASTER BATH, SPECIAL TREATED WOOD SHAKE ROOF. WOODBRIDGE OFFERS TENNIS COURTS, CLUBHOUSE, BEACH, BOATING, POOLS.

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Proprietary IHB commentary and analysis

The word “snuggle” has no place in a real estate listing.

This property is at the cusp of what I consider an FHA financing candidate. With the cost of mortgage insurance, this property is still quite expensive. With 20% down, perhaps the cost of ownership is close to rental parity.

Resale Home Price …… $498,000

House Purchase Price … $275,000

House Purchase Date …. 9/18/2001

Net Gain (Loss) ………. $193,120

Percent Change ………. 70.2%

Annual Appreciation … 6.0%

Cost of Home Ownership

————————————————-

$498,000 ………. Asking Price

$17,430 ………. 3.5% Down FHA Financing

4.49% …………… Mortgage Interest Rate

$480,570 ………. 30-Year Mortgage

$104,234 ………. Income Requirement

$2,432 ………. Monthly Mortgage Payment

$432 ………. Property Tax (@1.04%)

$0 ………. Special Taxes and Levies (Mello Roos)

$104 ………. Homeowners Insurance (@ 0.25%)

$553 ………. Private Mortgage Insurance

$456 ………. Homeowners Association Fees

============================================

$3,976 ………. Monthly Cash Outlays

-$390 ………. Tax Savings (% of Interest and Property Tax)

-$634 ………. Equity Hidden in Payment (Amortization)

$29 ………. Lost Income to Down Payment (net of taxes)

$82 ………. Maintenance and Replacement Reserves

============================================

$3,063 ………. Monthly Cost of Ownership

Cash Acquisition Demands

——————————————————————————

$4,980 ………. Furnishing and Move In @1%

$4,980 ………. Closing Costs @1%

$4,806 ………… Interest Points @1% of Loan

$17,430 ………. Down Payment

============================================

$32,196 ………. Total Cash Costs

$46,900 ………… Emergency Cash Reserves

============================================

$79,096 ………. Total Savings Needed

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Have a great weekend,

IrvineRenter

49 thoughts on “Orange County construction related unemployment at 38%

  1. Robert Worthington

    That’s a steep construction unemployment rate. wow. In a nutshell the person with the least amount of bills that makes the most money wins.

  2. Planet Reality

    Conversely the unemployment rate for everyone else is much less than 10% especially those with higher educations, premiere degrees, buying in premium areas in the best neighborhoods.

    The 38% unemployed in real estate related professions, they should have seen this coming. They could have made the decision 8, 9, 10 years ago to change professions and/or get a better more profitable education.

    1. IrvineRenter

      “The 38% unemployed in real estate related professions, they should have seen this coming. They could have made the decision 8, 9, 10 years ago to change professions and/or get a better more profitable education.”

      Perhaps you can get out your crystal ball and tell us what industry is going to implode 10 years from now so those people can rethink their professional training.

      1. architectdave

        Guess I should have had my crystal ball out 10 years ago when getting an architecture degree. I apparently also should have known then as a wet-behind-the-ears college student that we were in the midst of the most unprecedented building boom and subsequent bust in our nation’s history and that architects and contractors would be irrelevant 10 years later. I could then go back 5-6 more years in time and “rethink” my choice of educational path with the help of all sorts of other guidance counselors who themselves had a crystal ball to predict a building industry bust in 2008.

        1. Planet Reality

          It was a sunk cost 6 years ago, and it’s a sunk cost now. If you need to move on, the faster you do the better. It will be a sunk cost next week as well.

        2. Normally Silent Observer

          Reality is that the unemployment rate for college educated workers barely went above 5% even at the peak of the recession. The general 10% figure doesn’t really show the lack of true impact to the upper and upper-middle class.

          The standard post of very general fact followed up by outrageous conclusion from the general fact gets everyone up in arms every time. This time PR took it way out of reality by insinuating that despite an entire world being caught with its pants down, construction workers should have been smart enough to identify the end of the housing bubble. There is a reason the moniker is Planet Reality… because it ain’t reality on this planet.

          1. Planet Reality

            I never said construction workers, I said real estate related and I was focusing on those with college degrees. However construction workers have now had 5 years to adapt.

            In any event you solidified my point. There is very low unemployment at the higher end.

        3. PasadenaGal

          Glad I saw your comment. I have a friend who is thinking of either going into architecture or environmental design. She is considering Otis or Art Center ( with huge loans to be taken on). Just wondering if this is a wise decision right now and what, if any, jobs are out there in the Los Angeles area. Any advice would be fantastic, Dave, thanks!

          1. Pascal

            Tell her to go into stripping. She can make $100k+/year and pay no taxes. By the time she is too old to strip, she will have been able to put away enough money to retire, assuming she puts away the savings due to not paying taxes.

            I can’t speak for Dave, but I believe that by the time your friend graduates, she will be fine. There will always be a need for architects. Of course, it’s like lawyers… if she’s good at what she does, she will do fine. Finally, you can’t buy the satisfaction of doing a job you enjoy doing.

            Bottom line is, if she wants to go into architecture mainly for the money, I would reconsider, otherwise, I believe she will be fine.

            Or again she could strip.

          2. OverKill

            Even during the good times, architectural jobs were hard to find. My friend (who went to school for architecture) eventually ended up in construction management instead.

      2. Planet Reality

        You didn’t think there was going to be a real estate collapse in the 2001-2004 time frame? When did you figure it out? Even if it took until 2006 to figure out that’s still almost 6 years to make a change.

        My crystal ball is screaming disaster for Las Vegas 10 years from now. Higher energy cost, water cost, and substitution in entertainment consumption behavior.

        1. architectdave

          I did figure it out in plenty of time, that’s why I now own a profitable business in a completely different industry now in 2011. It’s easier for some construction industry folks to make training/skill shifts since it doesn’t take as much effort and time to become say, a mason, or even a real estate agent, as it does to become an architect or engineer. But to make decisions based on speculation of circumstances 10 years in the future isn’t easy to do.

        2. Normally Silent Observer

          Unfortunately, that crystal ball prediction is not going to come true. Vegas is already repositioning itself as it does every time the economy or gambling demand cycle changes. They are now catering to the 20-something crowd and establishing themselves to be the top spot for their adult entertainment. They are cultivating their market for the next 50 years. Despite a recession, increased competition and a decrease in gambling revenue, the casinos are recovering. Vegas will be just fine.

          1. Planet Reality

            Your crystal ball must be more fine tuned than mine.

            Let it ride, baby! Go all in on Vegas.

            Those 20 something’s are going to save Las Vegas in the face of global warming, the 20 something green movement, higher energy cost, higher water cost, the disappearance of the blue haired crowd, and general information network and entertainment networked trends. Debauchery market needs to be in Vegas and nowhere else.

          2. Eat that!

            Disappearance of the blue haired crowd? You do realize that over the next 20 years, there is a giant mass of people retiring called the Baby Boomers and although their hair won’t be blue, they’ll be dropping plenty of coin in those slots (most of it unneeded Social Security payments).

        3. flyovercountry

          PR,
          When did you figure out that there was going to be a real estate collapse? Just curious… You’ve been here around a year, so you at least recognized it in 2010.

          And why are you saying that it is still a disaster? I thought everything was sunshine and roses in Irvine with values that would only go up from here?

          Why would anyone want to leave a real estate career now in your world?

          1. *

            who cares.

            pr is full of himself and full of poop. he hasn’t provided one solid piece of analysis that i can recall.

            if you read his posts, they are full of boasts of how great he is, how everyone else is dumb. when the truth is the opposite.

            that’s the sign of insecurity and low intelligence.

            people don’t need to boost themselves when they are smart, because other people will praise them. unlike pr who is roundly, and justifiably criticized by readers and his only fan is himself.

            i wish people would stop responding to the troll(pr).

      3. awgee

        You don’t need a crystal ball. All you need is the arrogance to tell everybody else what they should have done. And a level of denial that thinks that if you know what is best for everone else, your thinking changes reality, ie. unemployment is less for those with higher educations, therefore unemployment is not a problem.

        1. Planet Reality

          It’s a problem, but not much of a problem where higher educated people live.

          1. lee in irvine

            The Problem is expanding into the “higher educated”

            Irvine Prices per DQ:

            92603 $695,000 -34.4%
            92618 $550,000 -6.3%
            92606 $524,000 +14.7%
            92604 $514,750 -10.9%
            92614 $514,000 -4.8%
            92602 $481,000 -25.4%
            92612 $440,000 -5.4%

            By the look of those numbers, it’s apparent that the double dip has hit the beloved Irvine.

            BTW, Homes sales are down YoY in every Irvine zip code.

    2. Walter

      Or show up on time, do good quality work and charge a fair price.

      I have a friend this is an architect and has been putting in 12 hour days for as long as he can remember. There is less business out there, but he says a lot of requests are coming in because his competitors are dropping out or cutting corners.

      I am trying to book contractors with a good reputation for a number of jobs and I am standing in line while they finish their current pipeline. I wait because the contractor that is available today may cost me more in the long run.

      I am sure there are some good contractor feeling some pain, but the boom also pulled in a lot of less qualified types. Flushing out the industry is painful will result in some collateral damage.

      This reminds me of the tech boom and bust. In 1999 if you could spell ‘keyboard’ you could get a tech job. Now, you need some chops to get a good hacker job.

  3. tazman

    So using the numbers in the article, the “real” national unemployment rate is north of 14.6% (9.1% unemployed, still looking, 5.5% working PT and wanting FT). AND, this number (14.6%) doesn’t include the people who just stopped looking. When will the mainstream media just stop colluding with government and publish the real unemployment rate (U6) instead of the U2 number?

  4. architectdave

    Architects are hurting terribly too… I myself haven’t worked on a building design project since early 2009 and have moved my priorities to running a business in another completely different industry. And my story is quite common for the A/E/C trades these days

  5. architectdave

    Fortunately, the smartest people in any industry adapt to the current situation(s) and make decisions accordingly with their present knowledge. And my own buying power has certainly diminished temporarily with a career shift, but in time that will likely change for the better.

    1. Walter

      Exactly. I am happy you are adapting & surviving instead of asking for a bigger unemployment check.

  6. lee in irvine

    Great news for our bubble dependent economy … the Department of Labor reported today that the US economy painted 18,000 jobs in the month of June.

    I’m sure the jackasses at the Fed & Treasury, White House, and Capital are all scratching their heads today. The old tricks ain’t working anymore.

    This is a zombie economy.

    1. IrvineRenter

      Calculated Risk has a post on the subject.

      June Employment Report: 18,000 Jobs, 9.2% Unemployment Rate

      “The current employment recession is by far the worst recession since WWII in percentage terms, and 2nd worst in terms of the unemployment rate (only the early ’80s recession with a peak of 10.8 percent was worse).

      This was very weak and well below expectations for payroll jobs, and the unemployment rate was higher than expected (both worse). A terrible report. I’ll have much more soon …”

    2. wheresthebeef

      Those 18K jobs must have been the “smart” people Planet Reality always talks about. Probably no value added, just more Ponzi economy low hanging fruit pickers.

      Don’t worry Lee, I sleep well at night knowing the greatest minds in this country are working 24/7 trying to figure this problem out! :)

    3. tenmagnet

      Don’t worry they’ll raise the debt ceiling and QE3 will arrive by September.
      Irvine homes located in the first-class areas will continue to command a premium.

  7. Woodbury Renter

    great song, I think of the ‘folks on the hill’ in Irvine – Turtle Ridge and Quail Hill. I guess to live there you have to learn how to ‘smile when you sign a huge mortgage’.

    A working class hero is something to be in Irvine these days – much better to be a plumber/HVAC specialist than a Realtor or Architect. With all of the rapid building over the last 5 years there is an unending need for repairs – in what other business can work whatever hours you want and make $200/hour?

    1. Swiller

      I’ve worked in Irvine since 1986 and there’s not many “plumbers” buying new, or even old homes in Irvine. Now, if you own a plumbing business and have other plumbers working for your profit, then you can afford to live in Nirvine.

  8. Pascal

    to the realtor who wrote that listing in all caps, thus causing me the painful headache I am experiencing now, I AM GOING TO FIND YOU AND MAKE YOU SNUGGLE WITH MY KNIFE COLLECTION
    Oh yeah, Suzanne wrote it

  9. bigmoneysalsa

    Even with how much prices have fallen, they’re still way above construction costs. Demand is very high for OC homes. So correct me if I’m wrong, but as I see it the most significant impediment to new homes being built is that the housing bubble has left land owners with an inflated sense of how much their land is worth.

    I get the feeling that if land owners had a crystal ball, and could see where home prices will be 10 years from now, we’d see much more new home construction going on.

    1. IrvineRenter

      That is exactly right. Unlike Riverside County where lots have a negative residual value, house prices in Orange County are still high enough for construction to go forward if landowners simply lowered their price to meet the market. Land value is still positive here in OC, just not as positive as landowners would like. Most of the construction action in OC and LA counties is occurring on small infill sites.

  10. chewb43

    This is a pretty nice property. I almost rented it for $2700/ month about 2 years ago. At that time the owners had just moved out of state.Glad I didnt rent it as I would probably be looking for a new place to live now. I wonder how far this prcie will decline over the next 12 months… Id give em $350k…

  11. Mark

    Maybe I’m crazy, but by looking at these graphs aren’t we just seeing things, you know, sort of returning back to what they used to call “normal”???

    I could bewrong, but with some of the shoddy construction work I’ve seen in some homes (kitchens & baths!!!) there were obviously a lot of people doing construction and contractor work in OC who were way out of their element and were being opportunistic during the housing run up.

  12. nefron

    You can’t build and develop the land forever and I don’t see how people in the construction industry can think their jobs will always be secure.

    You can switch over to remodeling existing homes, but if I were in construction, I’d always have an exit plan in the back of my head.

  13. darms

    Hmmm, wouldn’t this be a golden time for remodeling contractors as the homebuilders cannot keep their people busy?

      1. SanJoseRenter

        Yes, and since there’s less HELOC loans available, buyers have to either buy pre-renovated houses or self-finance the remodels after purchase.

        So that limits the pool of eligible buyers or houses, depending on how you look at it.

        Also, during the bubble one could get an inflated appraisal to get cash back from the seller in order to finance the remodel after purchase.

        Then the fraudulent sale becomes the next comp. :)

  14. Anonymous

    Article in July 4th Bloomberg Businessweek about Tuscaloosa, Ala. having a shortage of construction workers after Alababama’s governor signed a 72 page anti illegal immigration bill on June 9th. If I were an unemployed or underemployed legal status construction worker, I’d go find an online copy of the Tuscaloosa yellow pages and give all the construction companies a call and see if they were hiring.

Comments are closed.