http://www.latimes.com/business/la-fi-foreclose17apr17,0,3729854.story?page=2&coll=la-headlines-business

D.R. Horton’s Q1 profits plunged 85%, will cut 2700 jobs.

www.signonsandiego.com/news/business/20070419-1339-earns-d.r.horton.html

www.msnbc.msn.com/id/18203147/

"the company had cut prices in California in the past month after trying to hold them steady".  46% of its construction is spec, without a specific buyer.

US CREDIT-US home builders risk further ratings downgrades
weak spring sales season raises expectations that housing market weakness will persist into 2008.

IIIrvine - Did you happen to listen to the conference call for DR Horton? With California in particular affordabilty and lower prices was mentioned over an over again.

Subprime assault on southern California

Far away from the sun-kissed beaches and palm trees that make up southern California’s idyllic coastline, trouble is brewing in the Inland Empire.
Two years ago the sprawling arid region that lies to the east of Los Angeles was one of California’s property hot spots.
House buyers priced out of expensive Orange County and the more affluent neighbourhoods of Los Angeles poured into towns such as Riverside, Moreno Valley and Perris. Limited housing stock and a relatively benign regulatory environment attracted developers, who built scores of new homes.
For a while, the Inland Empire rode the coat-tails of the California housing bubble as buyers, many of whom had limited financial means, took out subprime mortgages with low "teaser" rates.
But with the subprime sector collapsing, the area is facing a looming crisis, with an increasing number of homeowners delinquent, or failing to make payments on their loans. Delinquency often leads to mortgage foreclosure, or the repossession of the house by the lender.
"It used to be that we would get one call a month from someone needing help [about mortgage foreclosure]," says Vilma Mercado, home ownership centres manager with the Neighbourhood Housing Service of the Inland Empire, which promotes home ownership. "Now we’re getting close to 50."
It is easy to see why towns in the region appeal to property buyers. In Moreno Valley, in the heart of Riverside County, residential streets are laid out in a grid system of predominantly low-rise homes, well maintained with large gardens and quiet, safe streets.
Riverside County appears to have been most badly hit by the subprime collapse, with mortgage defaults in the first three months of the year up 168 per cent on the same period of 2006, according to DataQuick.
Several factors have contributed to the region’s problems. "There’s a lot of predatory lending going on," says Gary Aguilar, vice-president of counselling services at Springboard, a national service for people struggling with debt, which is based in Riverside. "I heard of one homeowner going through a divorce who ended up with a $115,000 [£57,410] mortgage on a $45,000 home."
When property prices were rising, buyers did not want to miss out, he says. "Everyone was jumping on board to buy a home. The majority of people did whatever they could do to have the American Dream and purchased homes they just couldn’t afford."
Ms Mercado says many buyers were not adequately prepared. "A lot of people moved into these areas thinking they were more affordable, but didn’t understand what they were getting into." The increase in foreclosures in the region, she adds, is "absolutely overwhelming".

Almost two years ago Sonya Mcphearson and her husband moved from Los Angeles to San Bernadino, where they bought a six-bedroom house for $480,000. Ms Mcphearson works in a hospital in Los Angeles 70 miles away. She commutes by train but stays with her sister during the week to save money. Her husband is a truck driver.
Ms Mcphearson says that the couple were unaware they had taken out an adjustable rate mortgage. "Our payments went up and we couldn’t afford to pay. Now we’re three months behind and we’ve been told we have to leave. I don’t know what we’re going to do."
Refinancing the mortgage is not an option. The Inland Empire was one of the last parts of California to experience dramatic house price inflation, with the price of property in some towns doubling in five years.
But last year the number of newly built houses coming on to the market reached its highest level in two decades. Prices fell and many of the buyers who had taken out subprime mortgages found themselves trapped. They could no longer rely on the equity in their homes to refinance their loans.
"Anything can turn that has doubled in five years," says Dr Christopher Cagan, director of research and analytics at First American Real Estate Solutions, which tracks real estate sales. Meanwhile, the Inland Empire "ran out of new buyers" which exacerbated the problem.
"What we have [in the Inland Empire] is an explosion of building and an explosion of generous lending. There was no single villain: this was a market phenomenon characterised by 30 years of [house price] growth with very few defaults. There is no one person or company to point to," he adds.
This has not stopped the California Department of Justice from pressing on with an investigation into predatory lending. It is unlikely that action will be taken imminently, though, as the state has been examining the issue for almost five years.
Further, the US Supreme Court appears to have curtailed California’s ambitions with a ruling this week that limits the power of individual states to regulate lending practices.
However, any action that California or the federal government takes to resolve the subprime collapse is likely to come too late for the people currently facing foreclosure in the Inland Empire.
The increase in foreclosures has "come on strongly and quickly and none of us anticipated it", says Ms Mercado. "And it is nowhere near ending."

U.S. Home Sales Drop In March

"On Tuesday, the National Association of Realtors reported existing home sales for March fell sharply by 8.4%, to 6.12 million units. That was significantly below the Wall Street consensus estimate of a decline to 6.45 million units, down from February’s 6.69 million. The drop was the largest since January 1989."

Credit tightening, sub-prime implosion, etc. I doubt any regular readers of this blog are shocked.<strong></strong>

U.S. consumer confidence fell for a second straight month in April, retreating to its lowest level since last August, the Conference Board reported Tuesday.

The consumer confidence index fell to a reading of 104.0 from a revised 108.2 in March. Read full survey.

The April decline was larger than expected. Economists had been expecting the index to drop to 104.9, according to a survey conducted by MarketWatch

The outlook for the labor market also soured in April.
Those saying jobs are "hard to get" rose to 20.4% in April from 18.9% in the previous month. Those saying jobs are "plentiful" fell to 27.8% from 30.3%.
Drew Matus, U.S. senior financial markets economist at Lehman Brothers, said the less upbeat view of the labor markets is a hint that the unemployment rate may rise in April. The Labor Department will release the April unemployment report on May 4.

<u>Ian Shepherdson, chief U.S. economist at High Frequency Economics, noted that only 2.7% of consumers said they plan to buy a home in the next six months. This is the lowest level in 10 years.</u>

The woes in the subprime-mortgage market are hitting consumers’ perceptions of housing, Shepherdson said.
This lack of interest in home buying seems to square with a separate report released Tuesday by the National Association of Realtors. The trade group said existing home sales fell 8.4% in March, the biggest drop since January 1989

Housing is well contained.

Subprime `Liar Loans’ Fuel Housing Bust With $1 Billion Fraud

The article tries to make it out as being a sub-prime problem, but it is not. Liar loans are primarily Alt-A.

20% down seems like ancient history

This one is a few months old, but the data is still good.

“We are forecasting another leg down in the housing market,” says economist David Shulman of the UCLA Anderson Forecast. “This could last into 2009 or 2010.”

Looks like IrvineRenter is not alone on his prediction.  http://realestate.msn.com/Buying/Article2.aspx?cp-documentid=4734564

ECONOMIC REPORT
Home vacancy rate rises to record 2.8%
2.2 million unoccupied homes were for sale at end of quarter

By Rex Nutting, MarketWatch
Last Update: 10:56 AM ET Apr 27, 2007

<label class=“StoryContent” id=“StoryContent_Content”>
WASHINGTON (MarketWatch)—The vacancy rate for owner-occupied homes rose to a record 2.8% in the first quarter from 2.7% in the fourth quarter, the Commerce Department reported Friday.
A year ago, the vacancy rate for homes typically occupied by their owner was 2.1%, a record at the time. The median asking price was $185,200.
The vacancy rate for rental homes rose to 10.1% from 9.8%, the highest in two years. The median asking rental price was $659 a month.
Of 127.3 million housing units in the United States, 17.6 million were vacant at the end of the quarter, including 2.2 million vacant units that were for sale, 4 million for rent and 4.2 million seasonal homes. The number of vacant homes for sale has increased by 599,000 in the past year, up 38%.
Compared with a year ago, the housing stock increased by 1.9 million, with vacant units rising by 1.5 million and occupied units increasing by 415,000.
The homeowner vacancy rate increased the most in cities, rising to 4% from 2.5% a year ago. In suburbs, the vacancy rate rose to 2.4% from 1.8% a year ago. In rural areas, the vacancy rate remained at 2.2%.
The vacancy rate increased in all four regions, led by the South increasing to 3.2% from 2.3%. The vacancy rate rose to 1.9% in the Northeast, 2.6% in the West and 2.9% in the Midwest.
The seasonally adjusted homeownership rate dipped to 68.6% from 68.7%, a statistically insignificant change, the government agency said. Of families earning less than the median income, 52.1% lived in their own home, little changed over the past five years. Of those making more than the median income, 83.3% lived in their own home.
</label>

Standard Pacific reports a swing of Q1 loss of $40.8MM from $94.8MM profits a year ago, then immediately declares a dividend.  Do I smell another NEW CENTURY?

IIIrvine - Don’t forget the $98.4MM loss stan crap had last quarter for a grand total of $139.2MM in six months. They might be on the list with a cash flow problem.

Bullshit real estate economist to step down

David Liarhea calls it quits.

<em></em>

New Century gets no bids, lays off 2,000 workers
The fat lady is singing.

Irvine OKs housing, retail project near Spectrum

Looks like more apartments on Pacifica and Alton between the new hospital and the new apartments.

Buffett says subprime won’t take economy down unless rates dramatically rise or umemployment increases significantly.
The downturn in housing is hurting construction and will continue for quite a while.
Bloomberg Link.

IrvineRenter…..is it just me or is the IAC building apartment complexes at alarming rates?  Everywhere I look their are more and more apartment complexes.

mino2126,

As long as the demand is there, they will build them. Plus, they will likely convert most of them to condos after 10 years, so they need a steady stream of replacements.

IR,
I know it is OT but I am not aware of IAC ever coverting to condos even if most of their portfolio is zoned condo. I lived in Rancho Mariposa for a while and they are zoned condo which made me think they were a prime choice for conversion in 2004 or 2005. They were built in 1992 and you can tell but they just recently remodeled them instead. If they ever do start to convert I would never buy one knowing what I know about them.
On a side note it looks like NODs in OC are down month over month to around an estimated 863 for April compared to the actual 968 for March. Last month I was too low by 23 with an estimate of 945 but the upward trend I was seeing just took a break. Year over year it is still up and I will give a mid-month update for May. 

graphrix,,
The easy money was extinct 4 months ago so I do not expect NODs to head north.  The easy money was very short lived for >$1M (only 4 months); therefore, I do not expect to see much for this group of homes to have NODs.  90% of NODs is a result of Mortgage frauds for profit.  Sad!
That being said, I still think it is a buying opportunity for homes less than $650K (limit for 100% financing when easy money was avail).
Nice homes are appreciating 5%.  I know because I am selling them.
Recocation is on the rise in Irvine.  I know because I am a big leasing agent too.
No puffing here.  Just FYI.

nirvinerealtor,

You should check out the site: Bubble Markets Inventory Tracking. OCRenter has documented dozens of cases of 100% financing on multi-million dollar homes going into default. The easy money was everywhere, for all price ranges, and it was available since 2003 or earlier.

NIrvinerealtor, could you show us one example of a home that has appreciated 5% a year since late 2005?  Just curious.

I found this neighborhood with the ZIP 92602 in Irvine.  Same housing tract - similar sq. footage ~ 3,500 sq. ft.
31 Pacific Grove  $1.325M  COE 10/6/06
5 Rolling Hills  $1.325M  COE  6/23/06
32 Montclair $1.325M  COE 11/7/06
———
30 Montclair $1.5M COE 12/18/06
9 Ivanhoe  $1.485  COE 4/27/06
20 Buelton $1.580  COE 3/29/07
40 Westlake  $1.635 COE 3/22/07
There are many other neighborhood with similar market trends.