Orange County Green Shoots
Housing recessions don’t end when starts, sales, and pricing data say they’ve ended.
Everybody who’s been through them knows it’s different than that. Bob Toll, Toll Brothers’ patriarch and CEO, has put it this way:
“Somebody gets up on a Saturday or Sunday morning and decides it’s a good day to buy a house, and a reporter for the New York Times finds out and reports in a Monday headline that it’s a good time to buy a house.”
It has gone like that enough times that veterans of residential development and home building swear that’s what happens.
In an isolated number of markets–including ones that were doing nothing good six months ago–people are starting to say, “the light’s back on.”
Here’s a note from the Orange County Register’s real estate writer Marilyn Kalfus.
“Orange County is continually trending to inch up month over month,” said Kristine Thalman, CEO for the Orange County chapter of the California Building Industry Association.
She said the $10,000 tax credit for new home buyers is continuing to spur demand since it went into effect in March.
“As one of my builders called it, somebody turned the light on,” she said.
Statewide, builders pulled permits for 2,203 single-family homes in May, down 7 percent from April but 40 percent lower than in May 2008. On a seasonally adjusted basis, CIRB reported that May’s figures were down just 1.6 percent compared to April.
“This is very good news,” said Robert Rivinius, the California Building Industry Associaton’s president and CEO. “As this continued strength in new-home construction shows, the credit is indeed working.”
The Franchise Tax Board has reported that nearly all of the $100 million for the program is spent. The homebuilding industry is trying to get it extended.
Based on the strength in the single-family market, CIRB for the first time this year has adjusted its annual forecast upward this month. The Board now expects single-family housing starts to total 24,900 and total housing starts to be 40,200 for the year.
Those familiar with the plotline of housing downturns know that recovery isn’t a single event, but a process. It’s the light going back on in multiple markets, when enough prospective buyers believe that the market has made enough prospective sellers capitulate.
The constant flow of policy has slowed down and added complexity to the process. Big, noteworthy players have capitulated, but only in isolated instances. The heavy hand of a corrective market has not driven enough property holders to their knees for potential buyers to believe their moment has come.
The policy game has favored sitting tight in hopes of some form of bail out as opposed to cutting one’s losses and moving on. That’s probably why the bottom, so to speak, is proving to be elusive.
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The best thing about the housing market is that it is truly no fail. People must live somewhere, and it is the American Dream to own your own home. With Americans flocking to wherever they can locate a job and needing a place to live, as more persons are coming to an age wherein they can take advantage of some of the mortgage rates and as more people are getting back on their financial feet, the housing market will certainly be one to bounce back, which is, a very good thing.