Bloomberg article on Irvine & subprime employers & housing

[almon_IHB]

I thought of this article from this morning when reading iceeman's post on buying-vs-waiting. While some numbers in the article seem unreal, they are really interesting. No registration required to read, methinks:





http://www.bloomberg.com/apps/news?pid=20601206&sid=alOjASNOLKcQ&refer=realestate





Things like:


1- "house and condominium prices are down 17 percent since June".


2- "office vacancy rates are poised to double this year"


3- "New Century, Irvine's second-biggest employer"


4- "New Century is supposed to be the anchor tenant of an almost-complete, 20-story office tower being built ..."


5- "collapse of the subprime industry probably will affect everyone from printer-paper suppliers to office-maintenance companies to retailers who depend on employees of lenders"


6- "New Century had 7,400 employees, compared with 8,600 at the University of California"


7- "expects the foreclosure rate for subprime loans to exceed 22 percent ... including Irvine ..."


8- "Half of the 20 biggest U.S. subprime lenders are in California, including three in Irvine"


9- "2.5 million square feet of space are set to open this year in Irvine, which may boost the city's vacancy rate to about 22 percent from 11.2 percent now"





Graphfix - I think there are some opportunities for shorts here! : )





Anyway, I feel for you iceeman, but I really don't think it's a good time to buy! Market psychology is something you can't fight. RIght now, everyone who wants to buy is trying to dodge the bullet and wait a few months. If you really have too much time on your hands, learn the foreclosure process and I bet you can pick up some really good foreclosed real estate in the upcoming months.

 

[graphrix_IHB]

<p>almon - While this was already posted in the headlines topic I do think it deserves it's own category. Anyway I have been meaning to pick a part some of these numbers.</p>

<p>1- "house and condominium prices are down 17 percent since June". - This is actually true and if you take the latest numbers from Dataquick it is 18.5%


2- "office vacancy rates are poised to double this year" - Poised as in hopeful but in reality it is not going to happen. There are many office buildings in the pipeline . I can't remember the guys name but he wants to build the tallest tower in Santa Ana but they won't let him build it until he has enough tenants. Good thing New Century wasn't one of his possible tenants.


3- "New Century, Irvine's second-biggest employer" - Sure if you look at their peak employee numbers which were across the nation and not just in Irvine.


4- "New Century is supposed to be the anchor tenant of an almost-complete, 20-story office tower being built ..." - True and good luck finding another tenant like New Century. Last spring commercial properties were reluctant to lease to a company that was mortgage related. I can't imagine how they feel now. Look at the jobs being created in OC. Teachers and ambulatory services do not need offices.


5- "collapse of the subprime industry probably will affect everyone from printer-paper suppliers to office-maintenance companies to retailers who depend on employees of lenders" - This is a sad but true fact. One company that will be hurt is <a href="http://tbscouriers.com/">http://tbscouriers.com/</a> too bad they are not public. I really do feel sorry for the owners of Taleo and Baguette Time. Maybe we should have irvinehousingblog reader lunch gathering there to help support them.


6- "New Century had 7,400 employees, compared with 8,600 at the University of California" - Nationally at peak this was true and many have found other jobs at other near death lenders like Accredited.


7- "expects the foreclosure rate for subprime loans to exceed 22 percent ... including Irvine ..." - This is a number that is unfortunately twisted to look worse than it is. Dataquick has 2893 sales for Irvine in 2006 and if 20% were subprime that is 579 and 22% of that is 127 foreclosures. Judging by the numbers I am seeing this is about right and maybe a little high.


8- "Half of the 20 biggest U.S. subprime lenders are in California, including three in Irvine" I think it should state were in California and were in Irvine. Yes we have a lot of jobs tied to RE and it will not be good.


9- "2.5 million square feet of space are set to open this year in Irvine, which may boost the city's vacancy rate to about 22 percent from 11.2 percent now" Honestly it could be worse since Irvine isn't the only city in OC building office space.</p>

<p>Yes there are some shorting opportunities here but most commercial property groups are well diversified throughout the nation and world. Altough I wouldn't let that stop anyone from finding the right one. I did get a nice little pop on the VIX today. I thought the news with Iran would make it jump. Little did I know that Ben was going to scream inflation at congress today. Thank you Ben </p>