]]>Prices Are Still Falling With The Economy In California
The LA Times reports from California. “Southern California home sales rose last month for the first time in nearly three years, although prices continued their downward spiral, data released today showed. In July, the region’s median price fell 31% from a year ago to $348,000, the lowest since February 2004, when the local real estate market was in the throes of an extraordinary boom, according to DataQuick.”
“There’s no question that it’s the purchase of the foreclosures that are driving local sales. Foreclosure resales in July composed 43.6% of all transactions, DataQuick reported.”
“Los Angeles County was the weak link for home sales. The region’s biggest county posted an all-time July low of 6,592 sales, down 3.2% from a year ago. The median price, meanwhile, dropped 27% to $400,000.”
The Union Tribune. “San Diego County home sales rose to their highest point in more than a year last month, but prices, depressed by growing foreclosures, continued to fall, DataQuick reported Monday. Overall median prices dropped to $364,000, down 1.6 percent from June and off 25.6 percent from year-ago levels.”
“The median price of single-family resale houses dropped to $399,000, the first time the price has dropped below the $400,000 mark since June 2003. The latest figure was $6,000 less than in June and $151,000 or 27.5 percent below July 2007’s $550,000. The all-time resale single-family peak was $574,000 in May 2006.”
“In North San Diego County coastal ZIP codes, where foreclosures and defaults have been relatively few, the overall median price on a resale home slid the most in July of any of the five subregions – down 31.1 percent from $697,000 in July 2007 to $480,000 last month.”
The North County Times. “Foreclosures ranged from 22.2 percent of resold homes in Orange County last month to 64.4 percent in Riverside County. DataQuick said foreclosures were at record highs and continue to be “the dominant factor’ driving sales.”
“‘What we’re looking at is a fire sale of properties in newer affordable neighborhoods that were bought or refinanced near the price peak with lousy mortgages,’ said John Walsh, president of MDA DataQuick.”
The Press Enterprise. “The number of homes sold in July soared nearly 50 percent in Riverside County from July 2007 and about 25 percent in San Bernardino County, DataQuick reported. But the traffic in foreclosed or defaulted properties is continuing to drive down sales prices. The median sales price in July was $260,000 in Riverside County and $230,000 in San Bernardino County. Both represent declines of about $10,000 to $15,000 in the last month.”
“Prices in the Inland Empire are down roughly $170,000 from their peaks of late 2006.”
“Real estate agents and lenders warn that the federal housing package that goes into effect October 1 is likely to cut short this year’s surge of foreclosure purchases by first-time home buyers.”
“Concerned about a setback in what may be the start of a housing industry recovery, they are lobbying to reverse a provision of the legislation that would prevent first-time buyers from obtaining down payment assistance from sellers, including the banks that own foreclosed properties.”
“Rich Cosner, president of nine Prudential California Realty offices in Southern California, said the potential loss of these down payment assistance programs should be enough to push some prospective home buyers off the fence.”
“‘If someone is thinking about buying a first house, it would behoove them to get into escrow and get it closed—now,’ he said.”
The Desert Sun. “The TV ad looked so attractive. No down payment and low fixed rates, the commercial promised. Doug Cron and Ernie Meeker called, got a $280,000 loan and moved into their first house three years ago. But within a few months, the couple’s dream in Cathedral City turned into a nightmare. ‘We figured, like the property we owned before, that the property would go up in value,’ Meeker said.”
“Then, the five-year fixed rate the couple thought they had received began to adjust as home values began to crash.”
“‘The truth is real estate goes up and down,’ said Assemblywoman Bonnie Garcia, Cathedral City, who has tried to address the housing crisis with a lending bill that would have eliminated pre-payment penalties that discourage refinancing on nontraditional loans.”
“‘If your pocketbook doesn’t go up that fast or life happens to you, you’re derailed,’ she said.”
“Within three months of the ink drying, the couple’s $720 mortgage started creeping up. First by about $50 a month. Then another $50. And another. When their mortgage payment jumped to more than $2,200 a month, they stopped making payments.”
“‘I wasn’t reading stuff,’ acknowledged Meeker, who at the time of the contract-signing was on dialysis because of kidney failure.”
“And Cron is legally blind and could not read the contract. They trusted the real estate agent, who earned top commission in the deal by brokering a higher loan and interest rate, documents show.”
“About a year after they moved in, the couple realized their $720 mortgage was, in actuality, a minimum payment that did not cover the mounting interest, let alone the principal. They now regret signing the contract, saying they felt pressured to do so when the loan officer told them they would lose their $75,000 down payment.”
“In June, the couple sidestepped formal foreclosure proceedings to salvage their credit by signing the home back over to the bank.”
“‘We lost our life’s savings in (that) place,’ Cron said. ‘Our savings are depleted. We’re back to (living) month-to-month again. So, there’s really no way of getting back into a home.’”
“‘Who’s to say who’s right and who’s wrong?’ said Ray Henderson, a former loan officer with a now-defunct mortgage brokerage and now executive VP of National Real Estate Solutions in Palm Springs, which sells homes headed into foreclosure.”
“‘The underwriting standard became more and more lax,’ Henderson said. ‘They made it a little too easy to get loans.’”
“Despite the collective hand-wringing about the economy now, some saw the economic downturn coming. Charlie Reeds, a financial analyst and Wall Street consultant, predicted it four years ago.”
“While slow to respond to market indicators in a booming economy, Reeds believes Congressional oversight and investment fears have been and will continue to be the right economic correction.”
“‘You just cannot build the economy on the appreciation of real estate,’ said Reeds. ‘No one wanted to get in the way of what was making the economy do well.’”
The Ventura County Star. “Simi Valley could become the home of Ventura County’s largest Habitat for Humanity housing project. The nonprofit organization has been working with the Affordable Housing Subcommittee of Simi Valley with the hopes of purchasing property on Patricia Avenue to build 10 town homes.”
“Rob Bruce, deputy director of housing and special projects for the city of Simi Valley, noted the city’s housing slump has made it easier for nonprofits to buy land.”
“‘No new projects are really selling right now. Prices are still falling with the economy,’ Bruce said.”
From KFSN TV. “Merced is number two in the nation when it comes to foreclosure filings and the county’s unemployment rate is the highest in valley. Only Cape Coral/Fort Myers Florida has it worse, giving Merced the dubious distinction of second in the nation.”
“The ranking came as a shock to Ellie Wooten. She said she knew things were bad, but she didn’t realize her community was among the worst in the nation. ‘I just hate to see that,’ said Wooten.”
“Wooten now finds herself wearing two hats; one, as the city’s mayor, the other, as a realtor. She and her fellow realtors say it’s common for each of them to see 5-10 new foreclosure listings a week. White boards in several offices show dozens of REO’s, or real estate owned listings.”
“The foreclosure issue in Merced is now capturing the attention of national media. Wooten was interviewed by a New York Times reporter last week and drove him around town to show him the reality of the problem. ‘This is the real story. It’s not a fairytale, it’s not pleasant, it’s not funny, it’s serious. And people are being hurt,’ said Wooten.”
The Contra Costa Times. “Brian Riley of Martinez, a day trader, once lived for his twice-monthly boating trips to Bethel Harbor. But now, with the cost of gas, ‘I’m lucky if I get there once a month,’ Riley said.”
“And there hangs the economic fate of California’s Delta, which comprises roughly 1,000 miles of navigable waters from Pittsburg to the west, to Courtland to the north, to Stockton to the east, then on to Tracy and back to Pittsburg.”
“As of May, California had 799,918 registered pleasure boats and an estimated 36.5 million residents, or roughly one boat for every 46 people, according to the Department of Motor Vehicles. In July 2007, there were 914,448 registered pleasure boats in the state. ‘It went down quite a bit, over 100,000′ said Armando Botello, a DMV spokesman.”
“‘The whole Delta economy is based around boating,’ said Jamie Bolt, harbormaster of Bethel Harbor marina. As gas prices soared, business at marinas, bait-and-tackle shops, boat dealerships, restaurants and repair shops plummeted.”
“Bolt and others point out that gas prices aren’t the only problem. The housing market crisis has combined with fuel costs to deal a one-two punch to Delta businesses.”
“For example, construction on Delta Coves, planned as Bethel Island’s largest and most upscale residential development, with 494 single-family homes and 66 condominiums, halted in mid-July because of East County’s troubled housing market. Irvine-based developer SunCal Companies put the project on hold when demand for new homes plunged, according to company spokesman Joe Aguirre.”
“Home prices have plunged in the area, according to Annie Brown, a Zip Realty agent in East County.”
“‘I’m swamped because $800,000 homes are going for $340,000, $400,000 in Antioch and Brentwood. Even in Discovery Bay, there are homes in the $300,000, $400,000 range,’ Brown said.”
“Riley is trying to sell his sports boat. ‘Nobody is interested,’ Riley said. ‘I offered it super cheap and I still haven’t heard anything. I bought it for $43,000 three years ago. Even if I sold it for $40,000, it would be a cheap price. I chose $36,000 for a quick sale and I haven’t had any calls at all.’”
“‘I wasn’t reading stuff,’ acknowledged Meeker, who at the time of the contract-signing was on dialysis because of kidney failure.”
“And Cron is legally blind and could not read the contract. They trusted the real estate agent, who earned top commission in the deal by brokering a higher loan and interest rate, documents show.”
Oh, good lord. They thought $720 was a normal payment on a $280,000 home. How many disabilities can two victims have? They have bad kidneys, bad eyes, defective brains and absolutely no common sense. And these morons still get a vote that is equal to mine?
Unfortunately, there is no prosthetic for stupidity.
And I don’t believe they really put $75k down. I want to see the $75k check.
Do they have Scarlet Letters in braille?
Is this for real? One has a bad kidney and the other is blind and they are going house hunting. And people say american does not make anything anymore. We make fools…. and we mass produce them.
Lane
And they vote for the most telegenic and least intelligent politicians, religiously.
Telegenic: They look good when viewed from a distance.
Two more interesting sound bites:
- “…said Assemblywoman Bonnie Garcia, Cathedral City, who has tried to address the housing crisis with a lending bill that would have eliminated pre-payment penalties that discourage refinancing on nontraditional loans.”
Is the existence of a pre-payment penalty somehow unconstitutional? You don’t want one? Don’t sign papers that include one! Why is money being wasted for her to write this bill?
- “They now regret signing the contract, saying they felt pressured to do so when the loan officer told them they would lose their $75,000 down payment.”
Don’t you have 3 days after doc signing to change your mind?
I know they want to portray these guys as victims but couldn’t both issues have been handled by them going to the local library and borrowing a copy of “Mortgages for Dummies.” Clearly such a book was written with these two in mind.
sleepless,
I wouldn’t say that but in the age of ever appreciating homes and loans that were somehow in “auto-securitizing” mode, it certainly seemed out of place to me? Normally it’s compensation for the investor in the event the borrower found another loan or hit the lottery and paid it off, then at least he’d get his first 1, 2 or 3 years int.
Well, we threw everything aspect of traditional underwriting out the window? How did this last little vestige somehow survive? Just a thought.
” How many disabilities can two victims have? They have bad kidneys, bad eyes, defective brains and absolutely no common sense. And these morons still get a vote that is equal to mine?”
thanks a LOT NYCityBoy! here I thought my bagel-eatin docker-wearing yuppie ass had lost a few pounds until I split my seams laughing at that comment.
you owe me a new pair o’ dockers. khaki, of course. 44″ waist/22″ inseam.
(yeah, I’m an effin oompa loompa)
I was under the impression that you just lose your earnest money, not the down payment.
That was my thought. Did they give up 75k in earnest money?
That article is full of contradictions. First, it describes the property as their “first home”, and then two sentences later quotes Mr. “I Don’t Read Stuff” kidney-failure guy as saying he thought the place would increase in value “like the property we owned before.”
And if you doubt that they put any money down, look no further than the first two sentences for confirmation. “The TV ad looked so attractive. No down payment and low fixed rates, the commercial promised.” There can’t be a catch there! Hmmm. Methinks someone is full of it.
I heard the house they bought was all white, with the bottom tip in red.
“And these morons still get a vote that is equal to mine?”
depending on how you vote and how they vote we don’t know yet if that’s a good thing or a bad thing…!
“‘I’m swamped because $800,000 homes are going for $340,000, $400,000 in Antioch and Brentwood.”
I have a dollar bill I would like to sell for $6. So, obviously my dollar bill is now worth $6. Somebody, please kick Annie Brown in the t*ts. Olympiagal, do you have anything with a steel toe? If so, give her a shot.
Kicking any woman from california in the t*ts is a truly deflationary event.
LOL
Not any but most perhaps.
“Kicking any woman from california in the t*ts is a truly deflationary event.”
ROFLMAO! Picturing the motel parking lot fight scene from movie “Kingpin” where Woody Harrelson’s punching her (can’t remember name) in the tits. LOL
DOC
Hey this gal is born and raised most of my life in CA and there is nothing deflationary about me.
Hey! My wife is a born and bred So Cal girl. I do all kinds of things to her t*ts and they have never deflated. They were deflated after two kids though, and now they look great!
“Riley is trying to sell his sports boat. ‘Nobody is interested,’ Riley said. ‘I offered it super cheap and I still haven’t heard anything. I bought it for $43,000 three years ago. Even if I sold it for $40,000, it would be a cheap price. I chose $36,000 for a quick sale and I haven’t had any calls at all.”
Just one more in an unending line of complete F-ing idiots! A boat is a hole in the water into which ones pours money. Especially a power boat! Hey Riley drop it to $15,000.00 perhaps then some sucker will come along. There are thousands of boats being re-popped, and Banks damn sure don’t want them. Or better yet just hang on to it, the market will rebound any minute now.
I agree as, a ex Floridian…Our idea of boating was renting 2x a year with a bunch of friends… spliting the cost…
didn’t have to store it, wash it, maintain it, all we did was
enjoy it and give it back!
I have a private pilot friend who has the same philosophy about airplanes. Much, much, MUCH cheaper to rent than own.
it all depends.
buddy i work with owns a boat but he fishes just about every weekend.
he’s a fishing nut.
This is different. It’s a hobby.
I don’t expect to make money off my hobbies. I pay for them. It’s fine. I do it to have a good time.
I know a few sailing nuts too. They go sailing 5x a week. It makes sense for them to own.
Hence the old saying: If it flys, floats or f**ks, rent it!
The guy thought that at 40K it’d be a good deal? WTF pal, you couldn’t have sold it for that price the day after you bought it. Dolt.
Ah, I take you aren’t married…
“I have a private pilot friend who has the same philosophy about airplanes. Much, much, MUCH cheaper to rent than own.”
The same is still true of homes in almost all areas of the United States. Until it is cheaper to buy than to rent, the housing market will not bottom out.
Keep the popcorn popping,
Red Baron
Oh, he wrote “boat”. I thought he was talking about a goat. I think a good power goat would be worth more than a power boat in our current environment. There is so much that can be done with a good goat.
Those who say America doesn’t produce anything, also forgets that America also produces a lot of reality shows –sell the fools a house, a large screen tv, and give them the choice between The Hills, Rock of Love, Tilla Tequilla, Living Lohan, Keeping up with the Kardashians, Million Dollar Listings, etc. etc. etc. etc. etc. seriously I can’t keep up with them all and I only know about most of them from watching The Soup.
Is Tila Tequila really a dude? I’ve heard of “her” but didn’t know “she” had a show as I don’t have the cable.
Seriously, besides being a cross-dresser what could “she” possibly have to offer?
tila takilla= shower goat.
porns not just for breakfast anymore.
How’s that old saying go? Rent it if it flies, floats or XXXXs, or somesuch?
You renting your wife then, professor?
Or is she renting him? I swear, you guys are so stupid.
Or they could be both renting each other, no?
I swear, the PC Californians are so stupid. Particularly the broads. They make you want to wear a “I club baby seals until they bleed” T-shirt.
It works both ways in marriage. (Anyways, I was just trying to remember an oft-repeated quote from the early days of this blog, not talking about my own life…)
“Particularly the broads.” Ha! Calling women broads does not make you sound cool and tough pussycat. . .
Pretentious east coasters make me laugh. especially when they talk about “broads” like they think they’re a member of the mafia or something.
I think it’s supposed to be funny.
It must be his first boat. As a boater I laughed my a$$ off with that one. I paid more per year for: slip fee,taxes and insurance than he thinks he is going to lose in 3 years of boating. LOL
Lane
I think I found the best of both worlds in that I have a dogged out mid-60’s Uniflite trailered in the garage ( no storage costs ) but if I were to expect Mrs. DinOR to join us it had best be a little nicer and for that we can always rent a houseboat for the week. You just top it off like a rental car when you bring it back.
I’m a big fan of boat ownership, as long as it’s your neighbor’s.
Score this summer:
We’ve gone on the lake 2 out of 4 times they used it…
I agree. Mine runs $15 a year for trailer tags, liability ins. and if someone comes up with beer, I’ll spring for the gas. Making payments on a boat is an entirely different matter.
Can`t trailer my boat, weighs about 8000 pounds. I wish I could though. Renting is nice but if you use most weekends you will spend more.
Lane
I recently bought a boat….
It’s an Old Town “Pack Angler” canoe. Weighs 33 pounds. Fits in the back of my pickup. If I want to launch it I pick it up and carry it down to the water.
Sale price for a new one at Cabelas: $599.
No gas payments. No license fees.
Talked to a guy at the College who said he was taking an Ebay class. Apparently, he’s repoed a buttload of Harleys (former Dealership owner) and he wants to dump em’ on Ebay.
DOC
Time to short HOG?
I wouldn’t take that stupid-ass BOAT for free, much less paying it for the asking price $36,000 U.S devalued dollars. Boats are worse than condominiums when coming time to sell the sucker.
Most people that are experenced boaters understand they they are going to lose a pile of money. If you are in a position to lose alot of money its not a problem. I have spent a lot of money over the years boating, and It was worth every bit of it. Having said that they are not for everyone. IE, don`t use the little johney college fund to buy the boat. For us it was fun money and I have no regrets.
Lane
“A boat is a hole in the water that you fill with money”
Waterskier husband had a plaque w/that saying hanging in his room when we met. I already knew that helping other people race sailboats every weekend. One boat I crewed on for a 2 day race blew 2 spinakers in one race. I think that was a $15k weekend for the skipper before the food and beer. We did win though.
I also crew on someone else’s boat. A few weeks ago we stayed in the harbor for a few extra minutes to let a storm pass before heading to the start. We passed a nice 50 footer heading in the other direction with its mast in the water. I never expected to see one bend like that.
Racing a sailboat is taking cold showers while tearing up $100 dollar bills.
No wonder sailboaters were such lousy tippers :p
Misspent a month one summer as a dockboy at a pretty big marina, always got the good tips from big powerboats as long as I hustled.. Lost a bit of weight, got a great tan, but I had to split town in a hurry after getting into a fight with a spoiled brat.. Idiot threw an oak lounge chair at my face, thought that would stop me…
ps: the lousiest tipper of all was reported to be Billy Joel..
“Riley is trying to sell his sports boat. ‘Nobody is interested,’ Riley said. ‘I offered it super cheap and I still haven’t heard anything. I bought it for $43,000 three years ago. Even if I sold it for $40,000, it would be a cheap price. I chose $36,000 for a quick sale and I haven’t had any calls at all.’”
———————————
Call me clueless but why does this guy think a used three year old boat is still worth 84% of its cost when new?
What a dope - I’ll give you $18,000 for your SS Minnow, pal, and YOU need to tow it over to Arizona for me!
“There’s no question that it’s the purchase of the foreclosures that are driving local sales.”
Maybe I’ve just become bitter and cynical over the past 6 years, but I totally read this as an indirect way of saying, “If it weren’t for all them foreclosures, prices from 2006 would still be intact.”
“There’s no question that it’s the purchase of the foreclosures that are driving local sales.”
Funny how they never said anything a few years ago about rampant fraud driving the price increases. If foreclosures are driving the sales, it’s because they’re the only thing priced close to market levels versus super-elevated fantasy land wishing levels.
Foreclosures are today’s living remnants of the fraud that spiked the market.
see it as a.. way of saying, “If it weren’t for all them foreclosures, prices from 2006 would still be intact.”
..and in a way you’d be correct..
Without sales there are no comps, and without new comps an area’s prices are stuck.
Sales are what re-set prices/valuations for all the unsold property around them. Slow sales volume is why the bubble has been slow to deflate. Prices will remain where they are until something (sales) moves them.
hmm.. i think i repeated the same thing 4 times..
It runs in the same vein as “if it weren’t for them damn sub-prime loans”. That got old quick, and so will blaming foreclosures.
exactly. they say it as if the current wave of foreclosures are completely unrelated to the things that caused high prices.
i keep re-reading these comments but i must be completely missing the point..
In my mind, without foreclosures there would be no sales. Foreclosures are what stalled any further growth in the bubble. Foreclosures force (some) prices downward, towards affordable levels, and the approach towards the edges of affordability is why sales are now happening.
One of the many plateaus a bubble will pass through at some time during it’s evolution is the “foreclosure-sales” stage. Why look at it as anything else?
Riddle me this…….
With millions of unoccupied houses out there, why is “Habitat for Humanity” still in business?
My brainstorm (more like brain-drizzle) from this weekend:
Solution to the Unsold McManshion problem:
-College/University buys out gated McManshion community for pennies on the dollar
-Build new campus in the center of it.
-Turn the McManshions into Student housing, Sorority/Fraternity Houses.
I can see it now ….
“University of California, Victorville……..the Fighting FBers”
I am a Habitat volunteer, but I’ll confess to having the same question. In fact, I’ve been wondering how Habitat’s business model would hold up during an extended economic downturn.
I’ve also wondered about how Habitat’s houses hold up over the long run. Case in point: I recently did a week of post-Katrina reconstruction in Mississippi. The organization I went with wasn’t Habitat, and, quite frankly, there was more than a little bit of joking going on about its construction quality standards vs. Habitat’s. In a nutshell, this organization’s standards were MUCH higher.
And our crew was run by a trio of construction pros who were forever on the cases of those who don’t work in the construction trades. I got more than a little bit of feedback on how I worked, and lemme tell ya, I never heard such things while pounding nails for Habitat.
There are plenty of articles of how well Habitat houses stand up after disasters - and they do. they are very well built. I volunteered for them and was very impressed with the program. I have never seen their equal.
Gulfstream-fixer,
I was tinkering with something similar last week when I rolled out the notion of a “housing lottery”? Scratch tickets for 1,3 and 5 year “rent free” prizes then take a shot at the big time with our “free house for life!” drawing. It might help clear some inventory and get someone in there that will hopefully cut the lawn and pay property taxes at greatly reduced rate.
At this point… I’m open.
How about like the old Sooners and Boomers and just make it a shotgun start mad scramble to secure your claim?
Right up my alley……my Great-Grandfather participated in the Oklahoma Land Run. And I was born in Muskogee, (and it don’t get more Okie than that).
The trouble was, they didn’t let them check out the property before they grabbed it.
I can see it now………a line of Suburbans, Escalades, and Expeditions lined up on the California-Nevada border at Needles, loaded down with the family and all their household belongings and towing rented U-Haul trailers, revving their motors waiting for the gun to go off……..
Where’s Cecil B. Demille when you need him??? ROTFLMAO!
I’m done for the day, now that I have that scene in my head.
1889: Sooners
2009: Later, dude.
Right, as they’re knocking over fences and foreclosure signs in the process! With 5 to 10 new foreclosed homes coming on the market in Merced a week it would take some real creativity to contend with that growing inventory.
I know we’re having some fun here but the “foreclosure bus” was just the start. We’ll see all kinds of outlandish schemes hatched in the upcoming months.
“‘If someone is thinking about buying a first house, it would behoove them to get into escrow and get it closed—now,’ he said.”
Again with the scare tactics….You know, if you can’t save/”scrap” up $7500 for a down, why even buy a house in the first place. REwhores today just doesn’t give a hoot about a buyer’s well being. They just want the quick sale and go to the next person they want to scam.
I remember when we got tortured by not only the bankers but RE “agents” when we first bought our house (sold awhile back). They just drilled us carrying too much debt, working only a few years with the employer, our savings were borderline unacceptable. The told us to save, save, save just in case of emergencies and not lose the house.
Times have changed.
..told us to save, save, save just in case of emergencies and not lose the house
They must have had fresh, painful memories from the previous bust. Maybe this mentality will return in 5 years.
Does anyone else find the fact that 40%+ of sales are foreclosures to be absolutely staggering? If sales are reasonably high and most of those are foreclosures … wow! How are people not panicking by now?
“‘If someone is thinking about buying a first house, it would behoove them to get into escrow and get it closed—now,’ he said.”
The thing is so many people just have no cash. They really won’t be able to take advantage of lower prices later. Of course these folks are better off renting. If you can’t manage the down payment you probably won’t be able to manage the property.
The housing glut will be alleviated by deferred maintenance.
“If you can’t manage the down payment you probably won’t be able to manage the property.”
Bingo!! And there’s no “probably” about it.
Having the single qualifier of say a 10% documented and verified “accumulated/saved” not “borrowed” or “gifted” down payment from buyers from the start of this mess would’ve prevented it from getting any legs at all. I know people making good money who can’t save a freaking dime.
The RE mantra should be: “If you can’t budget, you can’t buy it!!”
DOC
Perhaps he meant this:
“‘If someone is thinking about buying a first house, it would behoove them to get into escrow and get it closed—now,” before Fannie and Freddie and gone forever.
Ay, you’re right about that Lass.
“In North San Diego County coastal ZIP codes, where foreclosures and defaults have been relatively few, the overall median price on a resale home slid the most in July of any of the five subregions – down 31.1 percent from $697,000 in July 2007 to $480,000 last month.”
That is a nice warmup act for prime and Alt-A resets, which will disproportionately impact (formerly) pricey coastal ZIP codes…
There are a lot of people trying to sell out before the boom falls. Lots of For Sale signs on PCH through Malibu. The LATimes RE section is carrying a lot of pretty nice places for sale in the weekend RE sections, but the wishing prices are still way up there.
This weekend, I noticed another batch of local condos on the market for $1 million plus. I really thought we were past that, but apparently not yet.
The upcoming prime and Alt-A ARM resets should have an impact in the (still) pricey coastal ZIPs, but this is just getting started - the coastal ZIPs around here are only starting to correct now.
Even the Ventura County beach areas still have asking prices like it’s 2006. Lots more selection now, though…
I have been having an interesting discussion on another website with folks who insist that FBs will not walk from their Alt-A and Prime mistakes.
Do they have reasons for believing that, or is it all just denial talk?
“Do they have reasons for believing that”
Yes. They are f-cking idiots.
pretty easy to walk away no matter what when your house is worth $300,000 less than the peak price.
walk no matter what?
That’s what down payments are for.. $60K worth of skin might give an FB pause.
But since property prices could only rise, buble lenders felt anti-walkaway insurance wasn’t necessary.
I was in Boulder last week. Multiple folks tell me it’s a “buyer’s market” now. After I mentioned that Alt-A and Prime will have a devil of a time with walkaways so we are nowhere near a bottom, people looked at me like I was nuts.
Several took the time to explain that it’s different there. ::eyeroll::
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CA unemployment rate is up to 7.3% from 4.8% less than 2 years ago. This is a confirmation that the recession is getting worse. It will hit 10%+ some time next year.
The Vicious Cycle:
falling home prices — > falling employment– > falling home prices…
will push California into depression by 2010.
Jas
Jas Jain, you nailed it. Who is going to buy the hundreds of thousands of REOs now for sale in California when the unemployment rate is already 7.3%? The California economy basically consists of government and housing. What will happen when the unemployment rate hits 15%?
Do the following to get through the depression that has already started:
1. Get and keep a job.
2. Rent so you can be mobile for your job.
3. Save at least 25% of your after-tax income.
4. Eliminate debt unless you could pay it all off if you lost your job.
Keep the popcorn popping,
Red Baron
“they are lobbying to reverse a provision of the legislation that would prevent first-time buyers from obtaining down payment assistance from sellers, including the banks that own foreclosed properties.””
I wonder how many of these folks buying foreclosures with the aid of downpayment assistance programs will themselves be foreclosed on down the road? After all, all we are doing is creating a new set of borrowers who have no skin in the game. Any continued downtown will see many walk, imo.
“…will themselves be foreclosed on down the road?”
IMHO a large percentage, unless we get substantial wage inflation going forward. Which I don’t see happening. Yes, I think we’ll continue to see inflation, but I’m afraid it won’t help most people retire their debts, as they won’t see it in their paychecks.
People who borrow heavily (including the down payment!) to buy now are like generals fighting the last war. We may have to see another round of low-end foreclosures in 2010-11 to convince J6P that real estate doesn’t always go up.
“Concerned about a setback in what may be the start of a housing industry recovery, they are lobbying to reverse a provision of the legislation that would prevent first-time buyers from obtaining down payment assistance from sellers, including the banks that own foreclosed properties.”
By all means, let’s just leave the fraud window wide open in a financial hurricane. Instead, let prices fall enough and the down payment “problem” becomes much smaller and manageable.
This “seller assistance” looks like morgtage fraud to me. The transaction is recorded, and loan granted, at above-the-market price–that which the buyer pays and the seller recieves. Am I missing something here?
If the buyer pays zero down and a six percent real estate commission he is already underwater by six percent plus the amount of seller assistance when he signs the contract. Are there lenders this dumb still out there?? Fannie and Freddi perhaps?
I’ll bring the Harshmallows…
“‘What we’re looking at is a fire sale of properties in newer affordable neighborhoods that were bought or refinanced near the price peak with lousy mortgages,’ said John Walsh, president of MDA DataQuick.”
Harshmallows?!?
LOL. I’m stealing that one.
“I bought [a sport boat] for $43,000 three years ago. Even if I sold it for $40,000, it would be a cheap price.”
Out of all the delusional statements ever quoted on Housing Bubble Blog, this has to be in the Top Ten Most Delusional.
Naah, the Top Ten is pretty crowded. Top Hundred, maybe.
Between Diarreah and FunYun-Onion and Leslie Assmunchton-Toungue alone, we got all the material that was ever needed.
Not to mention the original Florida “classic” which I reproduce below for your collective debauched delectation:
In Miami, Ron Shuffield, president of Esslinger-Wooten-Maxwell Realtors, predicted that a limited supply of land coupled with demand from baby boomers and foreigners would prolong the boom indefinitely.
“South Florida,” he said, “is working off of a totally new economic model than any of us have ever experienced in the past.”
BWAHAHAHAHHAHAHAHAHHHHHHHHHHHHHHHHHHH!!!
remember the guy in florida who said the price of homes wouldn’t go down because of the price of drywall was up?
sounds like a Yogism if I ever heard one “No one goes to that night club anymore, it’s too crowded”
“The latest figure was $6,000 less than in June and $151,000 or 27.5 percent below July 2007’s $550,000.”
Cool — we saved two months’ rent by not owning a home in June.
Your ROI is probably off the charts in annualized terms.
High five, professor!!!
The 25% haircut in a year has resulted in multiple *years* of renting in San Diego for me! So glad I didn’t do as all of my “friends” suggested and take the path to financial ruin…
the 2 best days as a boat owner:
The day you buy it.
The day you sell it.
When I was growing up, I had next door neighbors who were avid sailors. My folks thought that their past-time was a real money-sucker. And they were entitled to their opinion. Me? I enjoyed tagging along when my friends went boating.
I was given this sage advice while crewing aboard a 32′ sailboat from Hawaii to San Francisco when I was a kid. The navigator-for-hire told me “There’s only one thing better than having your own boat to sail… Sailing on other peoples’ boats.”
Since this is the Cali thread…Have fun with this:
Millionaires in the making: The Rodrigueses
A few juicybits:
“Carrying costs for the properties exceed the rental income they generate by $9,000 a year. Given the downturn in real estate prices, if they sold all three homes today, they’d barely break even.”
“Last year Gina quit the mortgage underwriting business - the hours were too long, she says, and the work wasn’t creative enough…Then, earlier this year, Gina found a boutique called La Lavande, which sells imported soaps and handbags, for sale in nearby Walnut Creek.”
Yeah right! She quit cuz she wasn’t making a dime! And does anyone else get the feel from the story that Gina is being held hostage by her husband?
This part gets me going:
“The Rodrigueses took out a $75,000 loan to buy the store - and Gina had found her calling.”
I dunno about you, but I’ve always been of the opinion that owning a boutique (or any other retail store) is a business proposition. It is not a calling.
Yeah right! She quit cuz she wasn’t making a dime! And does anyone else get the feel from the story that Gina is being held hostage by her husband?
yea and hes a compulsive dope
Yes, he is. His plan is to retire at age 40 and make Gina do all the work on the farm while raising a family. He owns a superflous sports car, while she has to wear her sister’s hand-me-downs, even though she loves to shop. I think they will get divorced and, since he is obviously the one with a high salary, he will owe her alimony.
The other thing that is annoying about the story is that the reporter calls them “savers”, yet they have more debt than savings. That’s a net negative.
“Last year Gina quit the mortgage underwriting business - the hours were too long, she says, and the work wasn’t creative enough…”
Oh it was plenty creative, maybe not as creative as a couple of years ago. Yet another person viewing bubble conditions as normal and trying to find them somewhere else.
It sells soap and handbags? Well, honey, I’m going out now. I have to go to the soap and handbag store for soap and a handbag. Tootles!
Dang, can’t you read? Those aren’t just any ol’ soaps and handbags. Those are IMPORTED soaps and handbags!
Imported from India, perchance?
No, not India, China.
You also notice that they don’t have kids. If she decides to want kids, this marriage is going to strain. The guy is not the type of person to be held back with kids because of his ambitions. And when you have kids, then there goes the savings.
BUT they are careful about their money and I give them that.
YES. I absolutely got the feeling when I read that article that the wife is being held hostage by the husband.
She doesn’t buy new clothing, but gets hand-me-downs from her sister. He buys a $30K Subaru for racing.
They spend less than $300 per month on food…that’s groceries AND eating out (which they apparently do once a month at a fast food joint). Yet hubby insists that they hang onto the properties that are costing them $9000 a year for the mortgage payments alone! (Although the article says carrying costs, if you look at the budget on the right, the mortgage alone costs them $9k per year more than they get in rent…these people pay more than $30K per year in property taxes).
They live in the guy’s parent’s old house with their old furniture, while he continues to insist that these properties will somehow become profitable as long as they just hang onto them.
When couples are on the same page as far as how frugal they want to be, that’s great. But for one spouse to dictate ridiculous terms that the other “goes along with” half-heartedly? That’s a recipe for divorce.
I posted this the other day but just a reminder about the american dream. I had a plumber over to the house to fix a leaking faucet. By the time he left, $3500. Home owning blows.
What did he install? Solid gold washers?
It’s a freakin’ faucet.
How on earth did it cost more than my monthly rent?
BTW, if my faucet blows, I don’t get all anxious. I make a phone call, and some people show up, and make it all better. Preferably while I enjoy a martini and a nice dinner.
Hmmm…. maybe home owning does blow.
At that price it should be solid gold dancers!
http://www.youtube.com/watch?v=47oZF15omxk
I re-plumed my entire house for less than half that. It blows when you hire the man. Learn to DIY and the price plummets. There are a few things I don’t do (high ladder work), but everything else?–these houses are not that complex.
I’m calling BS on this one. Tell me how a leaky faucet became $3,500. You can practically get a whole house re-plumbed for $3,500.
Anybody want a couple of brand new condos that are bank owned in Las Vegas (with granite counter tops ) for 40K .
3+2 1,209 sq. feet MLS # 818705
2+2 MLS# 837741
When I lived in Vegas (like, early 90s), I lived in a brand new 5-bedroom house in a safe neighborhood with good schools. Cost my dad $60k.
I just found a condo on the internet for 29K . Built in 2005 2+2 983 Sq feet 5052 Kell Ln MLS # 837157. Don’t know about the neighborhood
but maybe it will go down to 10k .
That is cool.
Do you really mean that Big V . I don’t know anything about those neighborhoods over there ,but it doesn’t look like the best construction ,but that’s about 29dollars a square foot .
Sounds cool to me, but I don’t follow the Vegas market. Let me check Zillow. I’ll be right back.
I just found a real estate search site that gives regular listings and foreclosures that goes all over called “cyber homes .” They also give the recent sales data and comps and charts and the whole nine yards . Just put in cyber homes on the search engine and it will take you to the site .I have not looked at it long enough to say if its good or bad ,but the layout is easy on the eyes .
My post isn’t showing up, so I’ll paraphrase here:
The bad parts of LV are still overpriced by 25-30%.
“The bad parts of LV are still overpriced by 25-30%.”
And you base your projection on ????
Gee, I thought we had a field day when the Real Estate crowd make these wild ass projections, now we get it from the “bubble” crowd. Show me the data.
She said her post wasn’t showing up . But almost everyone projects on this blog that real estate will still fall more and in some locals over correct because of the amount of foreclosures .In some of these ghost town projects they might not even be able to give away the house or condo ,(especially if there isn’t employment near by ).That 29k Condo projects was going for 170k at peak according to the information they provided .
If the economy keeps slipping into the abyss along with job losses, I fear Vegas could get pretty damn creepy. I picture empty casinos and Randall Flagg types wandering the streets like in Stephen King’s book, The Stand.
DOC
“I bought it for $43,000 three years ago. Even if I sold it for $40,000, it would be a cheap price. I chose $36,000 for a quick sale and I haven’t had any calls at all.’”
Come on, Riley. That boat wasn’t worth $36k the second you pulled out of the dealership parking lot. Suck it up and mark it down, dude.
DOC
–
CA lost 153,200 jobs in July alone.
Expect huge downwards revisions of the GDP and Employment for the US for 2008Q1 and Q2.
Jas
I was wondering what happened to my morning traffic on the way to work — it has basically vanished.
My sister says the same thing. She lives just south of Shallow Alto in the Bay Area.
So does another friend in Santa Barbara, and the trains in NYC are looking mighty empty these days too.
FWIW.
Jas,
I suspect Joe and Jane sixpack have “had it.”
They Borrowed and spent and…
Bought gadgets, clothes and toys: Didn’t make them happy.
Bought Big screen TVs: Didn’t make them happy.
Bought vacations: Didn’t make them happy.
Bought Hummers and Boats: Didn’t make them happy.
Bought homes: Didn’t make them happy.
So now they’re freaking miserable and “underwater” on all the above, and finally figuring out rampant consumption and risky borrowing are destructive indeed.
They may “do it all over again” but I don’t think that’ll be anytime soon. No?
Less borrowing=less consumption=mega job losses. Christmas 08′ should be interesting.
DOC
Christmas ‘09 is where the fireworks are though.
–
Yeah, a bit more than they could handle! Like a 12-pack each every evening. Now, they are in a 10-step AA program.
Jas
Yup…who needs those extra two steps?
job loss? Perhaps.
How about this scenario:
Many tens of thousands of jobless willing and even desperate to do anything, even for lesser wages. Businesses cutting labor costs as well as prices so people can afford to purchase their products, in order to stay in business.
..aka deflation.
In any event, anyone who thinks incomes will rise and drive RE prices (perhaps anything-prices) upwards any time soon is delusional, imho.
http://www.nelsons-christmas.com/
68 years in one location (33yrs.hardware) and then 35 years as a Holiday only store (Oct- Feb) just closed in my neck of sunnyside queens
They know whats coming….they admit it on the website
Store has a big for rent sign
I bet back to school is a bust. Merced has a 12.7 unemployment rate per the Merced Sun Star.
%
“Riddle me this…….With millions of unoccupied houses out there, why is “Habitat for Humanity” still in business?”
Because the unoccupied homes are not in places that want Habitat for Humanity beneficiaries living there?
Seriously, beginning next year the “affordable housing” programs and organizations would do well to stop building and start buying and repairing in the suburbs. But that would prompt the political backlash from hell.
Meanwhile, perhaps there is a new debate to add to inflation vs. delfation: Florida vs. California, which is ground zero?
Why a political backlash? With 99% of the country in dire poverty, the 1% will prevent it?
8:09 p.m. EDT Nikkei slumps 277.46 points to 12,887.99 in early minutes
I know this could be back to even by the close but yikes!
First they came for my McMansion, and the liberals said nothing.
Oh fark, I don’t know where that one’s going….
We need to eliminate these no money down loan programs once in for all. The realtors and their lobbiest should stop lobbying congress to reverse the new law that goes into affect October 1st.
By Oct 1st there won’t be a lender in all the land that will fund a “special” assistance loan of this type.
They might as well tattoo FB on these buyer’s foreheads.
“POOR IMPULSE CONTROL”
Question: How many of the reported SoCal home sales are foreclosure “sales” back to the bank that holds the mortgage?
Just came back from a public auction by REDC (www.ushomeauction.com) for OC (Hilton Anaheim - my first trip). My co-workers told me you should be able to get in just to observe. Now? You need to be registered (ie cashier’s check for 5k plus additional check for the 5% premium). Just stayed in the hallway right outside the ballroom, yet there were still quire a few people just like me (to observe). Was able to talk to someone there who came just to observe this time, but has gone to a couple of auctions before. She said people tend to overbid. Must be the atmosphere, the rush, whatnot. Anyway, she also mentioned how properties are just going back to the block because the winning bidder can’t qualify. Overheard a couple of people. There seems to be a growing sentiment that more foreclosures are coming. I also noticed that some of the properties they have listed for sub-100k are also listed at ZipRealty for just under 300k. So…I guess that’s the minimum reserve the lenders are really looking for?
Since most “sales” fail, it tells me they are currently hunting for greater fools and requiring minimum-bid, wishing prices instead of letting the auction market determine prices.
When auctions are peopled by genuine, qualified buyers competing for no-minimum-bid properties, I might attend a couple.
Their faqs page is mildly interesting..
Q. May I attend to just watch?
Ans. Yes, however, Registered Bidders will be granted access before the general public. If we are nearing room capacity, we will have to restrict attendance to Registered Bidders only. We cannot violate fire and safety codes.
http://www.ushomeauction.com/faq.php#q7
hey Knife, we went to the same show. A waste of $6 parking if you ask me, traffic coming out of the parking lot was horrible.
Oh, yeah. Traffic was a nightmare. It was at least a good 30 mins. just to get out of the structure.
We at least learned something: how such a waste of money (for gas and parking) and time going to these auctions right now.
KTLA called the housing sales increase “good news”. I laughed.
Yep, it’s a joke. Gas goes up a buck a gallon (about a $100 difference a month for me) and the world screams bloody murder. Houses go down and that’s a bad thing?
Barbaques Galore files for bankruptcy… Shock.
What, we don’t need a store that just sells 7+ burner, 1 zillion BTU, stainless steal, outdoor cooking tools that can blow through a full tank of propane in 7 minutes flat?
But, what am I going to cook 157 hamburgers on, at the same time, when a couple neighbors stop by?
How will I ever prove to them that I am more “the man” than they?
How will I ever compensate for my tiny tool and low self-esteem?
“Prices in the Inland Empire are down roughly $170,000 from their peaks of late 2006.”,
A drop of $170K? You couldn’t even make me live in the Inland Empire if the home prices WERE $170K.
What a total cr*phole that place is.
Anyone suggest we start looking for a place to buy? Or is it still too early?
Pasadena/Glendale/Burbank/Valley area…
Any suggestions?
It is still 2 years too early, at least. Ride this out. Prices have only just started to come down in those areas. I’ve been watching a house that has crept back to 2005 pricing after wishing for a 20% gain.