Real Homes of Genius: Biggest Ever Percentage Housing Drop Ever in Santa Ana! 68 Percent Drop in 1 Year. The Journey of One Home in an Epic Housing Bubble.
Orange County, an area with over 3,098,121 people sometimes has a reputation at least nationwide as being an exclusively prime area. What most people that don’t live or work here realize is that the media perception of the “OC” is guided by a few prime cities such as Laguna Hills and Newport Beach. These tiny cities hold a very small percentage of the overall county population. The largest city Santa Ana, has 353,428 people making up for over 11 percent of the entire county. Let us take a look at the county and run some quick numbers:
Source: Wikipedia
Let us look a few of the most populace cities in terms of population:
| City | Population | Avg. Household Income |
| Santa Ana: | 353,428 | $44,505 |
| Anaheim: | 345,556 | $60,881 |
| Irvine: | 202,079 | $91,114 |
| Huntington Beach: | 194,436 | $75,900 |
| Garden Grove: | 165,196 | $50,038 |
With these 5 cities, 1.26 million people make up these areas or more specifically, they make up over 42 percent of the entire county’s population. As you can see from the average household income, we aren’t in incredibly affluent areas although certain enclaves such as Anaheim Hills, Huntington Harbor, or certain areas in Irvine have very expensive niches but this isn’t the majority as you can see from the average. So let us now take a look at a few of the more expensive mainstream ideas of what Orange County is:
| City | Population | Avg. Household Income |
| Newport Beach | 70,032 | $137,226 |
| Laguna Hills | 31,178 | $103,419 |
| Coto de Caza | 13,057 | $153,118 |
| Villa Park | 5,999 | $203,091 |
| Laguna Beach | 23,727 | $141,916 |
Now with these 5 cities, we have a total population of 143,993 or 4.7+ percent of the entire county population. The point again here is that incomes never justified the absurd prices reached in certain cities. Will the wealthier areas stay high? Of course! But look at how much of the entire population they impact. We haven’t even talked about Westminster, Stanton, Fullerton, Tustin, and Orange which also have similar income profiles like Santa Ana and Anaheim.
The overall halo effect took a major hold of prices during the past decade. Just because you were a few miles away from a prime area doesn’t mean you are prime. We saw this in Los Angeles County and I have talked about this extensively for a county with 10,000,000 people and 88 cities. That is why Orange County as a whole has seen the following:
-Orange County Median Home Price: $506,000 (down 19.6% from a year ago)
-Sales are down by 46.9% from a year ago.
Now with that background, let us now look at the largest percentage drop ever in Orange County (hat tip to reader J). Before we begin, you must brace yourself and take your motion sickness meds because we are jumping onto a crazy rollercoaster! Today we salute you Santa Ana with our Real Home of Genius Award.
Real Homes of Genius – 68 Percent Drop in Santa Ana
There are few homes that encompass the mania of the housing bubble. Multiple sales, quick price movements, and an ultimate fall from grace. This home is located in the largest city in Orange County and as we have stated above, the average household income for the city is slightly over $44,000. This majestic 825 square foot home with 2 bedrooms and 1 bath has it all. It was built in 1918 and has been on the market for almost one full year. For all you folks out of town who want to own a piece of the OC here you go.
This home has a current selling price of get this, $177,495! Before you go running to your agent let us look at the background story of this place. It is always important to look at previous sales history and once again, here is the reason we discussed why housing will continue to go down because technology has leveled the playing field:
Sales History:
With this home, you can see the amazing appreciation that occurred during this decade long boom. In fact, we get a perfect view of what happens in a financial mania. Don’t forget this is a 825 square foot home that is nearly 100 years old! What you see above is 4 sales transactions which each subsequent buyer got a taste of the “real estate never goes down” Kool-Aid. It was manic! The most significant jump of course occurred during the 2006 sale price where it almost sold for twice the price in 3 years! Or what about the person that sold it for a 124.8% profit in 6 months back in 2002? This went over and over like a broken record here in California. This seemed all orderly but what wasn’t orderly is the correction. Let us now dive into the listing price action. Get your scroll button finger ready:
Listing Price:
Now that has to be the worldwide record for most price changes in less than one year! I’m actually at a loss for words here. How do you go from an initial listing price of $569,000 in July of 2007 to the current price of $177,495? What is certain is that lender who financed that sale in 2006 for $505,000 is going to be in a world of hurt. Aren’t you ecstatic that your tax money is going to bailout places and lenders like this? I have placed a link on the right hand sidebar that’ll take you directly to your Congressional Representative so make sure you write a polite letter letting them know you will not stand for having your money squandered on speculative banana republic mortgages. I plotted this listing movement on a graph so you can see bubblicious prices in a graphical format:
Today we salute you Santa Ana with our Real Home of Genius Award.
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22 Responses to “Real Homes of Genius: Biggest Ever Percentage Housing Drop Ever in Santa Ana! 68 Percent Drop in 1 Year. The Journey of One Home in an Epic Housing Bubble.”
Un-frikking-believable. Not the overall decline itself, but the number of adjustments in short periods. WTF lower the price in increments of a half-grand at a time? EVERY FEW DAYS!!!??? (Sorry about the repeated punctuation marks and caps–this style kinda’ rubs off.)
If I were a prospective buyer looking at this pricing history, I’d sit back and see if the seller gets a case of loweritis one more time. And I might wait for anouther outbreak after that. As for the big surges in price, another huge WTF for me. If you are trying diligently to find a price point, what are the odds that it will be a few tens of thousands ago–given that the market might be descibed as “a tad softened”?
Someone has a genuine marketing genius for a realtor, I guess.
Thank you for the excellent analysis. This is such an interesting article.
Damn! That is ridiculous. They need the circus to come back to Santa Ana so they could bring some knife catchers to help this lender out. The funny thing is that the neighbor living next to this home believes their house is still worth over 500,000$.
Ridiculous! I’m still having trouble wrapping my mind around the prices of property in CA, and I used to work with grossly large numbers all of the time. Just yesterday, I stopped by a local realtor to ask if he could print me an area map. He started trying to guess what I was interested in and said that his company has several shortsale offers in the works but that the banks haven’t been responding to them, or that they wait so long that by the time they have ok’d an offer the property price has fallen 20-30K. I said, “Of course you’re not getting any response from the banks. Once they’ve got those properties back, they’re asking full price (~FMV a la 2004) for them. They don’t want to short sell. Once they get em back, forget it. You’re not going to get one for a decent price.” He says, “Oh, no, the bank owned properties are selling really fast. You can close on a bank owned property in under two weeks.” He also said that some of the local realtors were listing some of the properties for under FMV, and the banks refused to close. We were talking about some of the properties I’ve been following online: default, foreclosure auction, lender REO, then realtor listing. UN-BE-LIEVable. Told him that one property, just recently foreclosed is currently listed for 294.5K, over 50 y/o, and only worth maybe 49K. Another, across the street from where I live, over 65 y/o, also just recently foreclosed, now listing for 290K: it’s a Shack! It Leans. He says, ” Oh, you’re not going to find anything for under 300,000. Everything’s going for right at 300,000 now. Well, duh. Have been here almost 10 years, always been amazed at how ungodly high property prices are, especially in any stinkin little town that thinks it has an image to maintain; and most of these little towns are just way too proud of their extra long waiting lists for their housing assistance applicants: locally between 18mos and 5 yrs. Now this stupid town I live in is confiscating productive farm land to build new and better when half the buildings in town are standing empty and they could have taken advantage of their position and foreclosure availabilities, bought up a bunch of low cost properties, re-zoned where necessary and gotten a bunch of people into legal residences.
Thanks for putting into writing an example of what I’ve been marveling at, and thanks for the opportunity to vent.
This is awesome… so may people have the “not in my community” angle.
On the other side, this is absolutely horrifying…. because teh implications of what is going on, the scale, is huge….
Thanks again… adding another 6 months to my homebuying wait..
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I have placed a link on the right hand sidebar that’ll take you directly to your Congressional Representative so make sure you write a polite letter letting them know you will not stand for having your money squandered on speculative banana republic mortgages.
======================================
Fine, I’ll swallow my pride…. where exactly is this link? I see the text for it on the sidebar, but at least in my browser, there is nothing clickable.
I bet the spike back up to 205k to 339k on February 12 was a result of the increase in loan limits and the homeowners assistance plan or whatever it was called.
Well it IS an historic house by Southern California standards. Maybe Richard Milhouse Nixon slept there. $360,000 was made on this property in less than 5 years. WOW! Now some $300,000 plus is going to be lost on it in less than 2! Up in the better residential areas of the Bay Area homes such as these are bulldozed to clear the lot for a new house. I suppose the same would happen in OC IF this house was located in a coastal town. Oh well, I suppose we should be glad the rest of the country is not as densely populated with Real Homes of Genius as SoCal is otherwise we might not have a bank left standing.
What most americans completely miss over their heads – is that house and land value in this God blessed country has nothing to do with the free market price. They were told by real estate agents, that it does not matter what the price is, because they will sell it for significantly more, and make money! Not earn by working hard and producing national incom, but…. just make money!!!!! And so they did, without realizing, that a piramid, not substantuated by products is doomed to collapse. Very simple, if you studied political economy of capitalizm by Karl Marx.
I wrote my rep, Congresswoman Jane Harman, a letter today after getting hung up on by a staffer when I asked why the Congresswoman thought it was OK to use MY money to bail out the greedy and stupid. I got a bit bothered when the guy informed me that “this is a bill people want”, and may have been rather more direct than he was used to, but hanging up on me really grated my cheese .
Here is the letter, enjoy!
Dear Congresswoman Harman, Mongoloid, Esquire.:
Way to go! Good job on voting for what is quite possibly the worst piece of legislation to come in front of the House in recent years, HR 3221. How dare you use MY tax money to bail out the stupid speculators, builders and lenders that got themselves into this mess? I have been saving for years trying to buy a house and now – finally – that values have begun to correct where I could actually afford to buy a house in MY district you step in and prop them up in the hopes of getting a few votes while rewarding those that were stupid and greedy and punishing those that practiced thrift and caution.
Well, Jane, the majority of your voters are not happy about this, and we have long memories when it comes to stuff like this. Consider yourself on notice that moving forward I will be saving up for one more thing: money to donate to whoever it is that runs against you in the next election. I have never really been active in politics before, but I will be now.
Because you know what, Jane? I can’t wait to see you get thrown out of office and see you have to go out and get a real job. I can’t imagine what being a Congresswoman qualifies you to do next (startup dot-com CEO maybe?) but I guess you could always pimp your bony ass out on the corner of Lincoln and Venice. I can’t imagine anyone would pay much to get freaky with you, but hey – maybe you could steal some more of our tax money for that too?
A VERY upset (and hopefully soon to be ex) constituent of yours
Matthew XXXXXXXXXXX
Whoever bought it at $177K is ‘soon’ to called a knife catcher, this property is headed toward $116,160. Or 32% higher than its 1988 price. Guess that makes me predicting a 77% total drop from the peak and only a 35% drop for this last guy.
I won’t be surprised if its even more down until the market stabilizes.
Of course, 1918 vintage might wear out before then….
This home should bottom around $50K and bounce back to $90-100K if it’s maintained well.
How do I figure this? Well the $44K income figure is a peak for the next few decades, so that will need to drop to I’m guessing $35K.
A good family starter home should go for 3X income or $105K, but this is a very small home, so maybe 30% off that or about $70K.
Since markets overcorrect and there is more than likely way too many homes in this area for way too few people, I discounted another $20K.
So make an offer of $50K and you should be fine (Assuming you pay taxes based on the $50K value)
This isn’t rocket science folks… Just math…
Steve,
Math doesn’t work in California.
Matt,
If you expect your Congresswoman to take that letter seriously, you’re kidding yourself. That is not only derrogatory and unprofessional, it’s downright mean, cruel, and full of disrespect. Whomever you elect to represent your district will never vote in your favor 100% of the time. While free speech is is certainly a right, and an important one. While I applaud you in voicing your opinion, broadening of your political activism, and becoming more involved in your community – insulting a member of Congress and professing that she should try her luck as a streetwalker is absurd. My guess is your letter goes straight to the trash can.
> insulting a member of Congress and professing that she should try her
> luck as a streetwalker is absurd. My guess is your letter goes straight to
> the trash can.
Yeah, well… Being polite and not holding Congress accountable has not worked very well. It is *DAMN* time they start to hear the outrage. This Congress woman has been whoring her vote for a living. Perhaps it is time she is forced to be a little more honest and whore her body instead.
I’m sick of Congress pandering my tax dollars for votes. And I’m sending a message with the same words and tone in it too!
How do ya go up and down so much? Lots o’ confusion.
What I think is funny is while you point out how much money will go to bail out crap mortgages and yet the Google Adsense ads on your own website brings up, “Costa Mesa 0 down homes!”
Maybe you don’t have control over what ads appear directly, but it certainly looks hypocritical – since it’s crap like this that probably fueled all the idiots who got in over their heads in the first place.
For the record – I think the ONE THING Mr. Bush is actually going to do right while in office is VETO the house bill for a taxpayer funded bail out of this situation. Amazing – you’d think he finally hired someone with a little brains.
Grow your seeds!
Plant them everywhere!
Happy420!
Make houses out of natural Hemp! It costs less, non-toxic, stronger than concrete!
I love to grab a quick snack when I get home, come upstairs, click the emial link read and laugh. Bail out what? The price of houses? Isn’t that in esence what they really want to do? Get merican’s to start living the new American dream again of spending more money in 5 years then you could ever hope to make in a life time to fuel our %70 consumer driven economy to its next RECORD HIGH!!!!
Fact of the matter is the gig is up, people are lacking the one thing they actualy need, real money. With out it when credit is gone, so is the $500,000.00 870 square foot DREAM HOME!
And on the other end of the spectrum; if the Federal Reserve (which really isn’t a branch of the Federal Govt at all) keeps printing money like crazy to grease the liquidity of the banking system your tax dollars could be possibly better off traded for pesos.
I guess when you’re willing to pay above $600/ft2 in Orange County, you also receive “life everlasting” as the loan signing gift…… 🙂
(I’ve come across many nice newer homes (typically built 2002-2008) on craigslist located outside Phoenix and/or in SW Florida down in the range of $35-60/ft2. Why folks continue to pay such outrageous prices for homes in California is completely beyond me and many Americans)……..
I need home for me and my children I’m work en newport beach but a live en anaheim
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