Eyeball 2010 is our holiday gift to you: Two weeks of outlooks on local real estate conditions! A new vision every day of the week at lunchtime through Jan. 4! Our third guest is …

Homebuilder adviser John Burns of the Irvine consultancy that bear his name …

Eyeball: Did Orange County housing have a bottom in 2009 — full or partial?

John: Sales bottomed and the median price bottomed. This is why the media reports have gotten better. Unfortunately, a lot of neighborhoods are still experiencing falling prices, and the “option ARM” mortgage distress will be felt in the more expensive neighborhoods in 2010.

[ Check Eyeball '09 | '08 | '07 ]

Eyeball: Driving forces in local housing — good or bad — in 2010?

John: How long will the government intervention continue? Never in my wildest dreams did I think we would get tax credits to buy a house, sub-5% mortgage rates and 96.5% loan-to-value mortgages through the FHA, all driven by government policy.

Eyeball: Predict 2010 gain in DataQuick’s OC median home-sale price …

click to enlarge

John: Over what price (average for 2009 or today?). That is a big difference. Check out this chart (right) showing how the mix shifted from an evenly split mix of lowest/middle/highest. We have been reporting on apples and oranges all year.

Eyeball: A year from now, what surprise might we be talking about?

John: The change in government policy post-election. The Democrats have had their way this year. If the power becomes more balanced after Nov. 2, 2010, how will the intervention change?

Eyeball: Thinking back over this decade, list “lessons learned” from the roller coaster ride?

John: One, We need better data on what is going on in the mortgage industry. Knowledge of debt-to-income ratios and combined loan-to-value ratios would have helped avert the problem.
Two, institutions whose collapse can take the economy (like AIG) should not be allowed to exist or should be required to have massive oversight and reserves.
Three, our founding fathers missed out on the checks and balances of budgeting. Elected officials should not be allowed to run for reelection if the budget was not balanced during their term. That would solve the problem.