Housing market drag on state until 2008? The downturn in the housing industry will continue to depress the state's economy for most of next year before stabilizing in 2008, the Legislature's top budget analyst predicted Wednesday. Legislative Budget Analyst Elizabeth Hill forecast that residential construction will fall by 4.4 percent in 2006 and by an additional 13 percent in 2007. Then the analyst said it should stabilize with about 175,000 permits issued annually through 2012. The real estate industry, which includes developers, contractors, real estate brokers, title companies and financial institutions, make up 15 percent to 20 percent of the state's private sector economy. The slowdown in this industry was the largest single factor in a sharp decline in personal income growth, resulting in a drop in withholding tax payments from over ten percent in the first half of 2006 to less than five percent in the third quarter. Source.
Study: Home sellers making big money. Experts say profits especially big for those who hold on to houses for years. Nearly half of homeowners in Riverside County who sold their residences last month more than doubled their money, a new study shows. Home sellers across the county came away with a $178,000 "median" profit, meaning half of them earned more and half earned less, according to statistics compiled by economist Christopher Cagan, who heads the real estate research arm for Santa Ana-based title company First American Corp. Median dollar gains from home sales ranged from $178,000 in Riverside County to $331,500 in Orange County, according to Cagan's analysis. The median profit earned in San Bernardino County was $203,500, while homeowners saw profits of $331,500 in Orange County and $266,000 in Los Angeles County. In San Diego County, where the median profit was $243,000, home sellers earned about 91 percent profit. In the Coachella Valley and elsewhere across Southern California, those who've remained in their homes three or more years appear to have reaped some of the biggest financial rewards. It also allowed them to avoid a tax hit on significant equity gains they may have netted, real estate agents said. Median profit figures are based on sales of existing homes occurring from Sept. 27 through Oct. 26 in the five counties. Cagan's analysis didn't take into account homeowner expenses for everything from landscaping upgrades to repairs or agent commissions. Source.
OC Market Plays Waiting Game. "The waiting game" was a common theme reverberating throughout yesterday's third annual RealShare Orange County conference, held at the Hyatt Regency Irvine. With roughly five million sf of office product set to hit the market over the next 24 months, developers and tenants alike are waiting to see who will blink first. And with good reason--Orange County's been here before. The early 90s saw many deep pockets emptied as supply outpaced demand. A shared mindset said "never again." John Parker, chairman of Parker Properties, said it can be difficult to avoid a dip once the machinery gets going. "After the last cycle, lenders said they would not let this happen again, but they're pushing money at us," he noted. Insiders debated whether history is set to repeat itself, asking if the market is gearing for a precipitous fall. The general consensus favored cautious optimism, echoing the familiar refrain "no, but… ." Source.
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