There is mounting evidence that the gap in the relationship between Orange County real estate and the overall health of the economy is widening.
Once joined at the hip, real and economic factors such as consumer confidence, manufacturing orders, auto sales and more, are acting independently of the housing market.
And that’s a good thing, for a diverse economy is less likely to be severely impacted by any single factor. So, for example, if auto sales decline, the balance of consumer spending could make up for the shortfall.
At his first-ever press conference on April 27, Feral Reserve Chairman Benjamin Bernanke said, “It is a relatively slow recovery. A factor is that this is triggered by a double dip in the housing market and the housing market remains very weak. And under normal circumstances construction, both residential and nonresidential, would be a big part of the recovery process. There are a number of other factors — oil prices and other things — there are a number of factors holding the recovery back. So there are good reasons for why the recovery is slower than we would like.”
What Bernanke did not say is also important to note. First, Bernanke did not indicate just how much faster he believes or would like the economy to grow. Second, he failed to point out that the economy is in fact growing without any help from housing.
Today, the continued real estate malaise is not affecting the other key components of our economic health.
The latest news comes from DataQuick, the La Jolla-based real estate new service.
According to DataQuick, there was a total of 68,239 Notices of Default for the state in the first quarter of 2011.
A Notice of Default, aka “NoD,” is the first step in the foreclosure process. That number may seem large without the accompanying context: The total NoDs for January — March, 2011 is down 2.2% from the prior quarter. And when compared year-over-year with the first quarter of 2010, the figure is down 15.8%.
There is more good news.
According to DataQuick, “Last quarter’s activity was the lowest since 53,493 NoDs were recorded in the second quarter of 2007.
It was just over half the record 135,431 default notices recorded in the first quarter of 2009.”
In Orange County, the year-over-year drop in NoDs for houses and condominiums was down 11.7%.
Of all the reasons for the drops, there is only one that is connected to the overall economy, that is that growth is providing more confidence and more income.
The final step in the tragic process of foreclosure is the number of Trustees Deeds (TDs) recorded, which indicates the number of homes actually lost to foreclosure.
In Orange County during the first quarter of 2011, TDs were down 3% to 1,926, compared to the first quarter of 2010.
There is important context here as well. For the entire Southern California region, TDs were down 4.6%.
Also according to DataQuick, during the period from May 21 to April 12, home sales in Orange County were down 11% versus the same period last year. The countywide sales were -11% vs. a year ago.
As Orange County continues to find its real estate footing, we should be pleased that the remaining economic factors are improving independent of home prices and home sales.
STEVE SMITH is a Costa Mesa resident and a freelance writer. Send story ideas to smi161@aol.com.
