How bad is it now?

Here is the median price per square foot of a single family detached home in Orange County from 1980-1993, according to the LA Times:
1980: $73
1981: 84
1982: 85
1983: 84
1984: 85
1985: 88
1986: 93
1987: 104
1988: 125
1989: 149
1990: 152 (108% increase since 1980)
1991: 147
1992: 142
1993: 133 (Prices would not reach $130 again until 1997)

Here are median price/sq ft numbers for Orange County from the following years, which I collected from other sporadic LA Times stories. Since this data is from different articles, it's not going to be perfect; the importance is not the exact data points themselves but their directionality.

1994: $124
1995: Not available
1996: 124
1997: 129 (This was the highest point in two years)
1998: 147

These numbers suggest Orange County real estate prices were highest in that cycle in about 1990, and hit a bottom in about 1996. Yes, there were concerns about the market well before 1990, but median prices were still going up until that point (sound familiar?).

The 1990s downturn, then, took about six years to go from peak to trough. The median price/square foot of an OC house fell from $152 in 1990 to approximately $124 in 1996 (this was the lowest number I could find). That's a nominal decline of roughly 18% over the course of about six years.

Also notice that despite the huge rally in 1998, the median still had yet to top the number it had achieved eight years earlier.

"South OC" (Laguna Beach, Lake Forest, Newport Beach and San Clemente) had an average price per square foot in 1992 of $234.70, according to an LA Times story. This number was 64% higher than the county median at the end of 1992 and "bucked the trend" of price declines in other regions. Since Laguna, Newport and San Clemente were on this list, it is not surprising this area fared best, since the luxury market tends to hold up better.

Fast forward to now. Vincent Bindi recently posted on ocrealestateblog.com about South County price/sq ft numbers for all detached homes. The short answer: Not good news. How bad? Here are his numbers:

2006 at the peak: $4o7/sq ft
Now: $356
Decline: 12.5% from the top. Bindi goes on to say, "...since closed sales prices are always a lagging indicator, and given the recent sales that I have seen in certain areas, I predict this number will show prices having already fallen to a level of 15% to 20% for certain areas and product types." Wow.

To sum up: OC's nominal peak-to-trough, six-year decline in the early '90s, in terms of price/sq ft, was about 18%
Nominal decline from the peak to the current price for South County only, in a little more than one year, has been estimated by a real estate pro to be as high as 15-20%, depending on the type of product and its location.

Sure, individual regions can certainly be more volatile than the overall county. Bindi's numbers include detached condos, while the previous data was for single family detached homes, so that culd easily factor in as well. And yes, this is an apples to oranges comparison, since the information is from two different sources and tracks two different sets of data.


The point, though, is that the magnitude of the median price/sq ft decline estimated to have already taken place in segments of South County real estate is very close to the amount of decay OC as a collective whole witnessed during the entire length of the 1990s housing slump.

Pretty interesting stuff, especially since many think this latest downturn is still in its beginning stages. But considering how much faster and further prices escalated during the recent upswing, is it really that surprising how quickly they're falling back down?