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Housing market slowdown hits the O.C.

September 18, 2008 12:00:00 AM PDT
Scenic beach homes in Orange County were precious commodities just months ago, but realtors and homeowners have taken a big hit. "I see a lot of signs ... you know, for sale signs and foreclosure signs and things like that," said Chris Patapoff, a Huntington Beach resident. "The economy is pretty bad down here ... especially in Huntington Beach."

DataQuick showed nearly 400 homes selling in beach areas in Orange County in August. That number is down more than 20 percent compared to a year ago. The median price change is nearly 18 percent lower than last year as well.

While the price of some beach-area homes has started to drop, some experts say the price has not gone down as sharply, or quickly, as homes further inland. Part of the reason is that it is desirable to be by the beach, so such homes have retained a little more value.

Some say it was just a matter of time before the slump reached higher-end homes.

"You see Wall Street crashed, you see AIG, you see the banks merging," said Mark Etzel, another Huntington Beach resident.

"Those people who bought high end of the market -- beach properties, homes around $2 - $3 million -- Some of them, they used similar exotic mortgages," said Esmael Adibi, an economics expert. "They're not necessarily subprime borrowers, they're good borrowers. But, they got in too strongly, they got negative-amortized loans. And now, with the economy going down, they have to sell or they have to refinance. And that means there were would be a supply of more expensive homes. Beach properties are going to increase."

Some experts say with more supply, prices are bound to drop and continue to drop until at least 2009.

Experts say mortgage rates have gone down, but loans are harder to get. So, affording your dream home could be a trickier question than you think.

"But, if you find a home -- your dream home, beachfront -- you can afford to put down 20 percent. And then get a mortgage, that under different conditions, you would be able to support it. You could buy it. Of course prices will go down, but they're going to come back up," said Adibi.

 

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