Wednesday, December 01, 2004

Housing-Market Pessimism Grows in Orange County, Calif.

By Hang Nguyen

The Orange County Register, Calif.

RISMEDIA, Dec. 1 – (KRT) – A small but growing group of county residents think it's a bad idea to buy a home right now in Orange County, Calif., according to a new poll.

Fifteen percent of local renters surveyed in early November said buying an O.C. home is a poor investment, according to an annual survey by the Public Policy Institute of California and the University of California, Irvine. The last time pollsters found more pessimism was eight years ago at 17 percent.

Even 7 percent of current homeowners thought a home purchase would be a poor investment. That's more than triple from last year and the greatest skepticism since 1996.

"The fact that the market has slowed down has given them some pause," said Mark Baldassare, the survey's director.

Local home sales have fallen behind last year's pace for the past seven months, DataQuick reports.

Experts say part of the reason for the sales slump is that local home prices doubled in four years. That means the typical home sells for more than a half-million bucks.

Skyrocketing values shut out renters from their first home and prevent many homeowners from affording bigger homes.

Only 15 percent of local renters surveyed said it was very likely they could afford a mortgage for an O.C. home they'd like to live in. That share wasn't drastically higher for homeowners, at just 26 percent.

"Many (homeowners) feel trapped by the run-up in prices because they know their home equity won't get them far in today's market," Baldassare said.

Investor Pej Hamidi knows the market cooled. He's unsure if it's temporary or will get worse, so he's seriously considering selling four investment homes in Irvine.

"There are so many uncertainties now," Hamidi said. "I'd rather put my money on the sidelines and decide later what to do (with it)."

Still, an overwhelming number of residents think a home purchase is a good idea, PPIC found. Eighty-one percent of homeowners and 67 percent of renters said buying a residence was a good or excellent investment.

Baldassare says that statistic shows that most county residents don't believe that local home values, which have been increasing since 1997, will collapse.


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