Year-Over-Year Home Price Declines In San Diego
The Union Tribune has the new Dataquick numbers. “San Diego County’s housing market continued to lose steam in June, with median home prices posting their first year-over-year decline in a decade and sales dropping for the 24th straight month.”
“Last month’s median home price dropped to $488,000, a 1 percent decline from a year earlier and a 6 percent decrease from last November’s peak of $518,000.”
“‘To me, this is just part of a plateauing of prices,’ said John Karevoll, of DataQuick. ‘Between now and the fall, I’d say half the months will be slightly positive and half slightly negative, but I really don’t read the drama in these numbers that most people will.’”
“Yet another indicator of the county’s flattening market is the growing supply of homes for sale. As of Wednesday, there are 22,460 homes on the market, according to Sandicor.”
“The numbers should come as little surprise to home sellers, who have watched their properties sit for months on the market while they lowered their asking prices in hope of getting offers. Similarly, builders are seeing sales slow. In response, they are dropping prices and offering generous incentives, noted industry insider Peter Dennehy.”
“‘Across the region, prices are coming down, incentives are rampant, and sellers are adjusting to longer times on the market,’ said Dennehy.”
“Todd Fleischmann moved from Escondido to Portland, Ore., in January to take a new job. He has yet to sell his Escondido condominium, but he recently lowered the price from $361,5000 to $338,000. ‘It has been a disappointment but it is what it is,’ he said of the cooling housing market. ‘I am more concerned with selling my property than trying to get top dollar.’”
‘Todd Fleischmann moved from Escondido to Portland, Ore., in January to take a new job.’
This was what crushed housing in the Texas bust. You can’t stuff a house in a suitcase. And what is a 26 year old doing with a $300k condo?
People who grew up in Southern California really should not try to move to the Pacific Northwest. I know from conversations I have had with acquaintences that a large number wind up moving back after spending one or two dark, gloomy, rainy winters in Oregon.
Ranch Gal,
And then there’s the REST of us that wish we had! I grew up in the mid-west but spent much of my early adulthood in sunny SoCal or SE Asia. We used to have it good up here and that offset the weather issue. Now we have the same problems anyone else does AND the rain. Maybe Todd can “rent it out”!
Rancho CAL!
(my bad)
“I know from conversations I have had with acquaintences that a large number wind up moving back after spending one or two dark, gloomy, rainy winters in Oregon. ”
that sure doesnt show up in the numbers. moreso i meet many who are very pleased with their lives. it may seem hard to understand but the weather in SF is windy and rainy even in Summer. It was freezing last night…. Couldnt see the sun at all from all the fog. Go figure…
SF is rainy in the summer? If you’re referring to San Francisco, I don’t think you know what you’re talking about.
Maybe the Portland weather is a shock if you are from So Cal - but moving from San Francisco to Portland would probably be an improvement, weather wise. At least Portland isn’t socked in with fog all summer.
” At least Portland isn’t socked in with fog all summer.”
You sure would have seen plenty of fog this past week in SF.
No just all winter. I grew up there and the winters are wet and ugly.
It’s ridiculous to say that San Francisco is stuck with fog all summer. I guess if you live on the western side of the city, it could be, but if you live east of Twin Peaks, it’s sunny almost every day of the summer.
Seattle is even more rainy and gloomy than Portland (we call them our sunny neighbor to the south).
Please include us on the CA equity locust “black list” of undesireable places to live. PLEASE!!
Ditto for the Puget Sound area of Washington. I heard a lot of griping this past winter when we had 24 inches of rain in less than 6 weeks in my neighborhood and at one point 30 straight days of rain. I think I saw the sun once in 60 days. It is definitely not for everyone… But my plants and I, we love it!
I grew up in Florida and chose to move to Minnesota when I was 20. I loved the climate.
It’s generally not a good idea to say that someone “shouldn’t” move somewhere because of a difference in climate or because others have tried to make the move and failed.
FINALLY!!!!!!!!!!!!!!!!!!
It has been a long, long wait.
This is a very happy day for long-time RE bears.
Early reports are showing YOY small declines ( In the neighborhood of 1%) in Sacramento as well. Larger declines are just around the corner, as Sac peaked in August.
This is excellent news! With any luck, we will hopefully see YOY price declines in SoCal and the Bay Area within the next year, and more of the same for five or six years after that. Keep up the good work everyone, our patience is being rewarded!
From Ben’s latest article: “As the housing market slows, the entry-level sector basically disappears, while the move-up markets garner a larger share of the remaining activity. Thus, it is not unusual to see median prices to be stable or even increase as the move-up market works to be satisfied.”
Add this factor in to the fact of YOY price declines, and the real price declines are likely much more than the 1% reported.
It’s a step in the right direction. We’ve still got a loooooong way to go before we get back to sane home prices (either in percentage drop and/or time).
(patting self on back)
I believe it was I who called the last day of school in June as the tipping point for San Diego, thankyouverymuch.
Sorry to be a killjoy, but after being up 20 to 25 percent a year for 6 years here in Sactown, being down a meager amount seems hardly commensurate. Not quite time for bear-rejoicing, if there will ever be such a time ( and I’m a bear).
Skipintro:
I consider you a BINO.
Look to partisan politics for a hint on the acronym, not that I a agree with the RINO slur.
Bear in name only?
“The Trend is Your Friend”..or how about “What Goes Up Must Come Down”…or bad news is followed by worse news
Skipintro,
It means we have officially “tipped” to the downside. Bulls have been hanging on to the single-digit appreciation in order to justify RE purchases and the belief that “RE always goes up.”
Your posts are unbelievably optimistic. Perhaps you really believe what you say, but often sound too much like a troll. If you can’t see the writing on the wall, you need new eyeglasses.
(Last month’s median home price dropped to $488,000, a 1 percent decline from a year earlier and a 6 percent decrease from last November’s peak of $518,000.”)
This is what they mean in the stock market when they say the comparables age getting harder. By third quarter, year over year figures will be compared with the peak of the bubble. Imagine if a 10 to 15 percent decline is reported in much of the country.
Totally OT, but if I hear one more “expert” say Wall Street is worried about the consumer slowing down, I’ll….well, I guess write a post about it. Just call it like it is. They fear the consumer might stop borrowing money to buy things since they are in debt up to their eyeballs. Houses are included, and yes, consumers can’t service their debt. Game over.
Federal Reserve reported that the consumer debt burden hit a record high 13.9% in Q1. While renter’s financial obligations fell, homeowners became more indebted. David Bach, are you still out there peddling your new book bashing renters?
As a matter of fact he IS! My wife tell’s me he will be on “Oprah” this week telling us all about the “Instant Millionaire” or whatever he calls it. Set your TIVO folks.
I went with a friend to one of his book tours (sponsored by Wells Fargo). He states it so eloquently: The Automatic Millionaire ..(pause for effect)…Homeowner.
Too bad you didnt ask him about his MS days and how he helped prop the Internet Bubble.
David Bach is pathetic. He worked at Morgan Stanley as a tech analyst. When MS started throw out the bums that started the hype buying of internet stock. Bach was the first to go.
Home Depot fell to a two year low today. Hmmmmm. Somebody with money thinks the end is drawing nigh.
And all consumer discretionary stocks are getting hammered. Boats, Electronics, Dining. Looks like people are pulling back.
Posted this a fe days ago but may have gotten buried. A friend of mine is a ship captain on East coast. he has been doing more and more boat repos. Says people are nonchalantly handing him the keys.
The toys are the first thing to go I guess.
” but if I hear one more “expert” say Wall Street is worried about the consumer slowing down, I’ll….well, I guess write a post about it. Just call it like it is. They fear the consumer might stop borrowing money to buy things since they are in debt up to their eyeballs. Houses are included, and yes, consumers can’t service their debt. Game over. ”
Hey! Experts on Wall Street:
1. Give executives 262x avg worker pay with pie in sky post retirement benefits.
2. Decrease wages (after inflation) /medical coverage (Even with PPP insurance this area is killing us and we’ve started to go without) /retirement for the masses.
3. Create a competitive education environment where people are taking education loans for their 5 year olds
See http://tinyurl.com/phj4o
Education is all about jobs. There is obvious fear in Americana when people are borrowing for 5 year olds. Hiring practices are the antecedent.
4. Reduce or eliminate corporate training programs and/or r&d and instead hoard record profits. (Stagnation in one’s career path reduces positive thoughts about one’s future causing hesitation in spending)
5. Outsource jobs forcing people into early retirement. (This may be necessary for competition but you can’t think it won’t affect your bottom line once numbers reach critical mass)
Hmmm….wonder why the markets for your products are shrinking? When corporate policy began to redirect our disposable income to the chosen few, did you really think it wouldn’t eventually catch up with the bottom line of your company? Families making less than 6 figures are financial toast in most markets. I believe the national average family income is in the $60ks (escalating out- of-pocket $$$ for vaporizing benies not reflected)
That means more than 1/2 of us have probably been eliminated from your market. When the smart ones with disposable income realize its time to go liquid…..well, that probably won’t help you either. You don’t need your Ivy League MBAs to read the writing on the wall!
Sorry for the rant (but that felt good).
I just want to add my mortgage payment is $550 after a 50% down payment. My rant was not due to poor choices as my family has not vacationed more than camping in 10 years and our tvs consist of 1 regular format 27″ and 1 $69 13″. I have dial-up, we never eat out….we’re not that far away from 6 figures and we feel majorly squeezed. This after beaucoup bucks on education! Forget housing….the whole system feels stacked against us.
1% is a nominal decline. Lets not forget about inflation, which is running about 4% YOY. With inflation factored in, the decline is about YOY decline is about 4.8%.
Good point. However, when it comes to housing affordability the only component of inflation that really matters is wages. They have been stagnant for the last 6 years. Furthermore, with globalism, they are likely to continue to remain down for sometime.
I think a nominal decline of 40% or more in most bubble markets is likely.
Furthermore, with globalism, they are likely to continue to remain down for sometime.
DG- I don’t think sometime, I think for good. More and more types of good jobs are being outsourced and, quite frankly, we are turning out lazy, cynical, spoiled dummies from our school systems. They cannot compete with the eggheads in Asia, etc. And we are too fat and spoiled to want to do manual labor (and if we do nothing about illegals, that will not be available anyway).
Of course this is not indicative of ALL kids and young adults, but I am scared seeing what is entering the
“professional” workforce at my company and similar companies.
Wages are not going anywhere? I look at where we are as the plateau in front of the mountain we just fell off of - but in front of the plateau is a cliff.
If we don’t get it together, wages are going DOWN for most people. CEOs and board members excluded….of course
It’s difficult to not be cynical when you look around and realize your parents’ generation has squandered your future just to have more toys in the here and now. Isn’t that a major theme of this very blog?
Globalism will have a leveling effect, raising poorer countries’ standards of living and lowering those of richer nations. Sucks to be in a richer nation, but in the grand scheme of things, having a more prosperous lower class / more equitable wealth distribution is ideal to having just a few first world nations and many third-world ones, especially in today’s ever-connected world where one can commit an act of terror with some homemade tools and a will to die.
All successful wealthy empires and countries eventually get to the “fat Roman stage”. We are there. It is all downhill for us.
The rest of the world is much more “hungry” (in every way) than we are.
Who gets paid “wages” anymore? Most employees receive salaries, bonuses and probably have other passive income.
If net incomes are down in real terms, then I’d agree.
Falling “real” wages might hurt the low end of the housing market. Or even parts of the rust belt where there continue to be overpaid union workers who receive a wage.
And, btw, wages are not a component of inflation. Inflation is a monetary phenomenon. The cost of labor will reflect inflation - you’ve got it backwards.
And all inflation matters with respect to determining whether the real price of a home has increased or decreased. Unless you can explain how, say, a 10% currency devaluation matters less than 10% for the price of home that is priced in that currency…
Ah… spoken like a true Austrian.
BTW, you’re mixing up your definitions:
Currency Devaluation: Refers to international economies and trade of currency, not directly related to inflation
Inflation: Loss of purchasing power (has nothing to do with cost of labor, and they can be decoupled; hence even the montion of “real wages” denotes this)
Finally, if you hold your money and get your income in a foreign currency, then, yes, a currency devaluation will matter to the price of the home. For the rest of us living here, currency devaluations don’t mean jack squat.
At that point (10-15 YOY decline in national median), Karevoll will say that prices are plateauing on a national level.
‘Between now and the fall, I’d say half the months will be slightly positive and half slightly negative’
To be flat in November prices would need to rise 6 percent in 6 months after a period of declining 6 percent in 6 months. NFW.
This was the most asinine comment in the whole piece. So let me get this straight, after years of through-the-roof appreciation, San Diego will flatline between now and the end of the year. This is basically what Karevoll is saying. Duplicitous bastards!!!
I read that to imply the price drop to $488,000 was the leveling off number. Thus for the next 6 months monthly average prices, half the months would be above $488,000 and half would be below $488,000. Though I agree with your sentiment NFW!
No no no, silly! You’re reading the word “fall” to mean “autumn.” He meant “Between now and the gut-wrenching plummet…”
Good one!
Translation: there’s no reason to wait to buy, as prices won’t change much between now and by the end of the year… and who knows, after that we may be back to 20% YOY gains again!!! BUY A HOUSE! NOW!11!! PLEASE!!1
“Imagine if a 10 to 15 percent decline is reported in much of the country. ”
Already taking place. Early reports from Boston, Miami, Marin, NYC have already posted current year declines up to 10%. This was from peak to current market. With inventory increasing each month, builder incentives, and rising interest rates we can see an acceleration of the price declines.
Well, about time! Perhaps a celebration is in order? Waitress! I would like to buy a round of “painful ass-poundings” for my San Diego Flipper friends over there in the corner booth!
NO lube either!
ROTFLMAO ! No lube ! You are a sick puppy ! But I like it !
Don’t forget that the Waitress will also be a flipper with multiple properties.
LOL
And force them to wear T-Shirts that say “Parking In Rear”…to help things get rolling.
“painful ass-poundings”
That booty will be very sore by the end of third quarter.
Good God, the SD UT actually printed that?!!
Last I heard 2-3 months back SD inventory was some 18,000
Now sits at nearly 23,000
http://www.ziprealty.com/buy_a_home/search/form/cityG.jsp?usage=search&cKey=74rbwvlk&metro=sandiego
Thats up 490 listings from Saturday morning. Go baby go!
Man I am going out and buying the edition of today’s UT.
Maybe I should frame it, I have alot of “I told you so” to be doing.
Pacific Beach:
Before you run…i suggest a large scrap book style binder, rather than a frame….The bears are just getting to bat!
Sellers see suger plums ($) in their heads still.
“Last month’s median home price dropped to $488,000, a 1 percent decline from a year earlier and a 6 percent decrease from last November’s peak of $518,000.”
This is a great example of what can be hidden by using year-over-year figures. YOY figures are reflective of trends, not current activity.
The trend is down…
And the headline on San Diego Union Tribune website reads “Housing market turns lukewarm.”
Remember the hb is not ready the paper anyway. And even with all the hush hush I think anybody in the market already knows what is going on.
RealtorThink[tm]: Prices are going down — now is the perfect time to buy!!
Prices are going up. it’s the perfect time to buy.
I just have one question- with rates rising on these geniuses’ leveraged bets, foreclosures spiking, and prices headed south, who’s going to be left to feed the squirrels?
The new owners will be feeding the squirrels…
… to their kids.
It will be good to give them some protein with their Top Ramen.
There you go again dissing Top Ramen
I’ll have some for dinner and will think of you.
Top Ramen kept me alive as an undergrad (and do not forget the awesome Kraft dinner - Mac&Cheese either).
Now that I can read the sodium levels on the pack, I will pass!
I still like McCheese too. Once a peasant, always a peasant.
college staples: mac ‘n’ cheese, Top Ramen, Kool-Aid, milk. I lived on that and those $.89 chicken sandwiches at AM/PM for most of my college years. Thought I was the only one living like that. Good to know I had company.
I guess you can call it normal then.
Peasant, and damn proud of it….
My college diet was heavily subsidized by 29c Hamburger Tuesdays at McDonalds… I used to spend $5 and speed home, like the Hamburguler with Al Pacino in pursuit. I’d eat 4 and throw the rest in the freezer to be later microwaved. Wait seven days. Rinse Repeat.
It’s amazing how little one can live on when push comes to shove. One Starbucks Coffee or ten hamburgers.
am/pm corndogs 2 for $1
little debbie snacks used to be 25c
In the summer while hanging out in my college town (Corvallis, OR), we would schedule which bars had free food during happy hour on certain days of the week. Buy a happy hour draft beer for $1 and eat for free! Those were the days.
I love Top Ramen.
And quite dissing the sodium pack. Sometimes I skip the noodles.
College survivial cheap eats: Bread & applesauce. Generic pot pies. Peanut butter & bannanas. Oatmeal. Stewed tomatoes (drink the juice too).
Open faced PB sandwich with an apple grated (cheese grater) over the top. Eat quick as the bread gets soggy!
My college roomies and I used to go to the supermarket and just eat from the bulk food bins. “Grazing” we called it. Not exactly honest, but hey, if you’re hungry your morals get looser. After awhile they moved those bins up near the front of the store, where the cashiers could keep an eye on them.
I ate pancakes many nights for 10 weeks to save up for a trip to Florida. Luckily I was younger then and it didn’t change how I looked in a bathing suit.
beautiful!!
““‘To me, this is just part of a plateauing of prices,’ said John Karevoll, of DataQuick. ‘Between now and the fall, I’d say half the months will be slightly positive and half slightly negative, but I really don’t read the drama in these numbers that most people will.’””
What a spinmeister. This is ridiculous
David
http://bubblemeter.blogspot.com
“I really don’t read the drama in these numbers that most people will.”…………….tell it to the guy that bought last November with the I/O or NegAm loan……talk about taking an ass-pounding!
Please keep in mind…
This is said by a man who doesn’t believe in keeping track of the number of homes on the market.
(Not done, just lurking, much, much more to follow- soon.)
- Auction
We need a couple more articles like this, and some honest TV news regarding this, and we will be on our way (we are already on our way, these will just accelerate the ball that is already rolling).
Remember this median price includes a great deal of incentives. Taking out these incentive & the true median price is perhaps another $15K lower.
My realtor says lukewarm is closer to sizzling than to ice cold and I should buy now.
I wonder if there is similar news in Orange County, I’m wondering if 15% is still “in the bag.” My guess is Orange County is up, but it will be down probably by the end of the year.
Once November comes around look for about a 10% YOY decline in San Diego.
Mr. Watts said the other day that 10-12% is guaranteed and 15% is possible.
This is his SOP. Ever wonder why his “forecasts” are so accurate? He finalizes his published yearly forecasts in November.
10% puts the median home buyer around $75k in the hole.
In one year.
And it’s accellerating.
I think it’s hilarious when i hear some of these guys talking about a recovery in the second half of the year. You don’t think 1% is huge, huh? Well, here’s the way I see it. We’ve got a 1% decline right now, what happens when we start posting as sold all the homes that are sitting on the market right now reduced? Right now in our area we’re sitting on about 5%-10% down from top of the market. But we’d be further along if things were actually selling. We’ve got a large inventory sitting out there reduced right now, and when it pops we’re going see a huge drop in the median. I imagine it’s the same in San Diego County. When all these reduced listings finally start selling the YOY is going to really look ugly.
Now’s when we start hearing the realtors compare todays prices to 2004. I wonder what they’ll do for spin when we finally over-correct below mean. You know it will be something good.
I’ve been bubble watching for a few years now. Posted the other day about how prices in June 2004 were not much lower than May 2006 (most recent info at the time).
In SD County, 26% of the zips were already negative when comparing May 2006 to June 2004. They’ll have to go back to 2003 to spin this.
You are exactly right, nnvmtgbrkr. Here in SD County, I’m guessing prices are already down 10-15%. The price declines are hidden in the inventory.
Yes. Exactly right. The real “price” or “prices” for homes right now are not known. Just think, though, what sort of decrease in price it would take to clear enough inventory to reduce inventory levels to a “market clearing” level.
The lack of economic understanding and honesty in the financial press is staggering at times. The massive and unprecedented build up of inventory suggests that homes are greatly overpriced, even at the current -1% in SD, YOY, figures.
Understand when things are not selling asking price is not only irellevant but an indicator that selling prices are much lower. Normally price reductions resolve the issue but in this case selling prices are in a freefall and no one is is in a postion to find out how far the knife has fallen. Next up creative terms for this event; clear air turbulence, pocket, one time correction.
Remember this summers phrase when teasing the trapped animals; “What’s wrong with the price? No, not the first digit… the number of digits!”
Downtown San Diego hasn’t even finished all the pre-construction condos that were sold. This is the tip of the ice berg. Just wait until all that inventory comes online. We haven’t even seen too much real estate/construction jobs lost, once those dry up it is going to get very ugly in San Diego.
‘I am more concerned with selling my property than trying to get top dollar.’”
I don’t now if any had seen the peice on the Today Show about foreclosures, but I was shocked that they had a straight-shooter on the program. I forget exactly how it was worded, but she said that sellers today should be less concerned about making money, and more concerned about at least breaking even. I nearly fell out of my chair.
at least someone has the integrity and the courage to speak the truth.
On a another eariler topic, it was proposed that prices will begin their serious fall when the under-average priced homeowners cave. Based on high end still selling and skewing the average. With IO’s due to reset, say this fall or winter?
The funny thing about this San Diego news is I’ll bet the average person trying to sell there would say it’s been cruddy for two years now and it’s time for a rebound. Instead, they get this tough love. What’s a brain dead flopper to do?
Fast forward to 2020 and they might still be waiting for that rebound that never comes.
Be nice, now. I think we’ll hit bottom (and start the rebound) by 2018. Maybe 2019. This 2020 talk is just plain crazy. CRAZY! Mind you, I’ll eat my shorts if the San Diego median begins to rise from its floor (125k in today’s dollars, anyone?) before 2016.
You have to consider by 2018 there will be lots of aging Baby Boomers (66-75 yr olds) leaving their homes for assisted living. Im already seeing such places spring up.
Forget the “we are living longer” crap… There will be so much unused homes in 20 years.
“we are living longer”
fine print
If you did NOT engage in risky sexual behavior
1) If you did not smoke
2) If you did not eat pesticide ridden food
3) If you did not eat/drink hormone drenched animal products
4) If you did not consume mass quantities of twinkies, chips, ho-hos, etc.
5) If you did NOT go in every year for your yearly X-ray
6) If you did NOT take FDA approved experimental drugs
7) If you did NOT take FDA approved experimental vaccines
9) If you did NOT take drugs or alcohol
10) If you exercised regularly
11) If you did NOT breathe lots of polluted air
12) If you did NOT get too much sun
13) If you ate plenty of fruits and vegetables
14) If you did NOT eat mercury/heavy metal laden seafood
Other than that yea, we’ll all live to be 100.
SeattleMoose -
Are you my wife? I love your list…don’t hear enough about some of these things/poisons in mainstream conversation. The old lady has me on organic meats and veggies, organic cotton clothes, no “western” medicine, and now we are moving (renting!) to a street with less traffic because she is expecting.
Then again, I guess I shouldn’t be surprised to hear this stuff from you. Your name “seattle” says it all!
New in town sailor?
Is the US Bankrupt? By the Fed Reserve - Interesting read! http://research.stlouisfed.org/publications/review/06/07/Kotlikoff.pdf
It is surprising to see on a half-official website stated that the US is indeed bankrupt. I would dispute that conclusion, however, not with better numbers, but with the observation that the US debt is so far only in US dollar. While the US federal government will not default, they might very well pay back inflated money. If, as a consequence, the interest on dollar bonds increases far above bonds in yen, euro, or renminbi, the US government might be tempted to borrow in those currencies. THEN it could go bankrupt.
He misspelled bear - should be “stripped bare”. Freudian slip?
What’s a brain dead flopper to do?
Call Suzzanne, and quick!!
“‘To me, this is just part of a plateauing of prices,’ said John Karevoll
——————————————————————-
A permanent plateauing!? What an idiot!
Ben, you should set up a “famous quotes” section to your blog that we can all re-visit a few years from now and call some of these morons on their proclamations.
I noticed zip realty stopped showing number of homes available for sale. See: http://tinyurl.com/znn8m
Looks like they are desperate to hide the true
I am still able to access the information today.
Bye the bye, in March I started checking the percent of “reduced” SFDs and Condo/Townhouses in the City of San Mateo. At that point the percents were ranging between 7% to 12%. Today, 27% (54 of 200) on offer are reduced price.
Give these RE shills credit. They come out every time and excuse away the bad numbers. Any bad numbers. At least they are consistent!
LOL
I’ve said it before: What Realtors are doing is no different at all from what Ken Lay was convicted (and stressed literally to death) for doing: putting an indefensibly bright face on a crash-and-burn in progress.
Ken Lay is not dead! He lives in my basement, with Elvis. I feed them table scraps and watermelon rinds, and squirt them with the hose when they get smelly.
Ken Lay closes at 0, down from 98.6.
Gas prices, health care, energy, food, interest rates on credit cards etc etc etc INFLATION all shooting up at a time when the HOUSE ATM breaks down. The same source of funds that have been used to keep many families afloat.
What now? Oh, I guess it means we’ll see house prices flat for the foreseeable future - plateauing . That makes perfect sense. What a bozo.
remember the old traders adage “Don’t panic, but if you do panic - panic first!”
“‘To me, this is just part of a plateauing of prices,’ said John Karevoll, of DataQuick. ‘Between now and the fall, I’d say half the months will be slightly positive and half slightly negative, but I really don’t read the drama in these numbers that most people will.’”
This guy doesn’t realize if this actually happens, prices will DECLINE in the long term. Go ahead, do the math and see for your self.
Of course it won’t happen this way at all, stuff will keep going down a steady 1-3% a month or whatever, which isn’t too bad until you realize this gives us 20-30% annual drops.
This means that if prices stop falling at what amounts to an annualized rate of 10% and flatten for the rest of the year then by November we will have a 6% YOY decline. If they keep falling, we will be looking at 10 - 12%. Read the drama into that!
Don’t expect the MSM to go negative any time soon. I remember reading articles from the experts in Japan during their brutal deflationary spiral and real estate plunge.
They defended real estate all the way down, month after month. They didn’t go fully negative until the bottom was near. And I think Japan’s MSM is a lot more legit than our own.
Expect lies and BS all the way down.
From the UT article:
“San Diego real estate agent Calvin Goad said the region is experiencing a normal cycle of price fluctuations.”
“The prices are coming down right now, but it is a good time for the buyer to jump into the market,” he said. “San Diego historically does take a small drop in price, but then the market levels.”
———————————
This is why many of us believe RE agents, brokers and representative “experts” should be held liable for trying to convince unsuspecting buyers to buy into a dramatically falling market.
Yes, due dilligence and all that; but how many people can dedicate as much time to this housing bubble as we do? At what point do we hold industry “experts” accountable. Either they are accountable or we need to clearly define their role as salespeople only — not advocates for buyers/sellers — who are doing what they do simply because they want the commissions, without any responsibility for whether or not the purchase/sale is in their client’s best interests. Sales volume is at least as important as price, so they just want buyers to buy and sellers to sell.
Agreed. The confidence with with agents, brokers, loan officers, etc. project future returns is truly questionable.
In the Stock Market world, this conduct is actually prohibited by internal guidelines. This is the contents of NASD (private regulator of brokerages and securities dealers)
Rule #2210.D
“(d) Content Standards
(1) Standards Applicable to All Communications with the Public
(A) All member communications with the public shall be based on principles of fair dealing and good faith, must be fair and balanced, and must provide a sound basis for evaluating the facts in regard to any particular security or type of security, industry, or service. No member may omit any material fact or qualification if the omission, in the light of the context of the material presented, would cause the communications to be misleading.
(B) No member may make any false, exaggerated, unwarranted or misleading statement or claim in any communication with the public. No member may publish, circulate or distribute any public communication that the member knows or has reason to know contains any untrue statement of a material fact or is otherwise false or misleading.
(C) Information may be placed in a legend or footnote only in the event that such placement would not inhibit an investor’s understanding of the communication.
(D) Communications with the public may not predict or project performance, imply that past performance will recur or make any exaggerated or unwarranted claim, opinion or forecast. A hypothetical illustration of mathematical principles is permitted, provided that it does not predict or project the performance of an investment or investment strategy.
(E) If any testimonial in a communication with the public concerns a technical aspect of investing, the person making the testimonial must have the knowledge and experience to form a valid opinion.
”
Are we missing a similar code of conduct in the real estate industry?
Thank goodness we have these regulations and there is no unethical behavior by stockbrokers.
Where there is financial behavior, there is fraud.
EVERY DEAL YOU MAKE YOU ARE BEING SCREWED ON.
Invest accordingly.
This is as close as Realtors get:
From their Code of Ethics
In recognition and appreciation of their obligations to clients, customers, and the public, REALTORS® continuously strive to become and remain informed on issues affecting real estate…They identify and take steps, through enforcement of this Code of Ethics, to eliminate practices which may damage the public or which might discredit or bring dishonor to the real estate profession.
The term REALTOR® has come to connote competency, fairness, and high integrity resulting from adherence to a lofty ideal of moral conduct in business relations. No inducement of profit can justify departure from this ideal.
In instances where their opinion is sought, or where REALTORS® believe that comment is necessary, their opinion is offered in an objective, professional manner, uninfluenced by any personal motivation or potential advantage or gain.
“EVERY DEAL YOU MAKE YOU ARE BEING SCREWED ON”
You are absolutely correct, which means Buyer Beware. My basic thought if a deal seems to good to be true is to question why is the seller selling? When buying stocks, always remember that you are in a secondary market…if you think a stock is such a great pick, then question yourself as to why all the people selling the stock think differently. Same with land deals and all these condo pre-sales etc. If RE was always going to appreciate, then why would the rich developers bother selling anything. It would be more profitable to just build first and sell afterward. Obviously, the big money knows that things go up AND down and want to pass the risk off as soon as possible after locking in a reasonable profit.
Carlsbad Jim,
Before you jump in here and worry that I’m bashing all agents/brokers, I’m not (don’t know if you saw my response to your “ouch” the other day). You, for instance, provide your blog which has good numbers and provides a perspective most buyers might not be aware of. Whether or not you intended it this way, it could very well save you from lawsuits as you could show that you provided clear information and solid advice to both buyers and sellers. Ditto, Bob Casagrand.
That being said, all the shills out there telling buyers to get in now because prices WILL NOT drop, no matter what; or that carrying costs will go up with rising interest rates (they won’t because buyers will not be paying the ATM/gold mine premium AND they have to discount the risk of buying an asset which my still loose value)…they need to be held accountable for the damage they are causing. Oh, need we mention the “running out of land/prices only go up” mantra we’ve been hearing the past number of years.
CA renter,
I just looked it up. I’m with you - I should probably use those smiling face things to help communicate.
I don’t mind the realtor-bashing when it’s accurate, and it’s directed at the vast majority of agents who are lazy pigs and deserve to be run out of the business. I agree.
Most here think that realtors are lying. You’re wrong, they aren’t lying, they are ignorant. In 1990 I didn’t have a clue either. How many of today’s agents were around in 1990? Maybe 5%? 1%? Not many.
You know more about what’s really going on than they do. They’ve never seen anything like this, and its their so-called career! I don’t blame you for not hiring them.
I also agree, my blog is doing the CYA.
Carlsbad Jim,
Most here think that realtors are lying. You’re wrong, they aren’t lying, they are ignorant. In 1990 I didn’t have a clue either. How many of today’s agents were around in 1990? Maybe 5%? 1%? Not many.
I tend to agree with you on this.Here in the South Bay,many of the realtors/mtg.brokers were not even living in this country in 1990!They were still in The Philippines and Mexico,and those that were here were still in The Navy…………..The “suicide loans” you speak of up there in the North County have are an art form down here.Creative financing has been taken to another level.That’s why I believe the ethnic markets specifically Filipino and Hispanic will get torched even more than everyone else.
BTW,
I enjoy reading your blog!
aguho
Uh-oh, just noticed I did the “loose” — “lose” thing. Amazed We Rent didn’t catch me on it.
Sorry for the typo!
Actually, I just hadn’t read the post yet!
Yes, but then the Realtors would literally be lumped into the same class as used car salesman….and they wouldn’t like that. But it would be accurate.
I disagree. Used-car salesmen can sell.
I’m so glad it finally drops. I keep telling my friends to sell and they didn’t listen. Now, SEE!!!
I sold mine this past May and I’m a very happy renter.
“They defended real estate all the way down, month after month. They didn’t go fully negative until the bottom was near. And I think Japan’s MSM is a lot more legit than our own. ”
Reminds me of Jim Crammer 2000-2002 when he finally gave up in Oct 11, 2002…. that was actually the day of the final bottom.
He was crying on Crammer and Kudlow that evening and said it was horrible. LOL!
Cramer crying on television: that must be someplace on youtube….
This time though, he’s trying to get out in front. On the way to lunch today, I caught about 5 minutes of his radio show. He was recommending to his listeners that they sell on the rallies.
Normally I would take this as a buy signal. But I happen to agree with him this time.
He’s not crying but he talks about ending it all on this clip after losing his ass…
http://www.thestreet.com/video/cramermarketupdates/10277591.html
Cramer is fairly entertaining, but I wouldn’t pay any more attention to him than a number of other financial gurus (e.g., Joe Granville, Elaine Gazarelli, Dan Dorfman etc.) other the last quarter century.
If anyone of these could really call markets, they would be busy being the next Warren Buffett. Why would they waste their time helping me make money?
I am especially skeptical of Cramer’s calls on biotech, which is one of the few markets that I know well. As has been written on extensively by Don Bauder (once, financial editor of the San Diego Union Tribune, and now of the San Diego Reader), many of the small-cap biotechs are little more than elaborate storefronts for confidence scams.
Hi there — Original Thomas here. (No offense, Junior Thomas.) What these “permanent plateau” guys are doing is no different at all for what Ken Lay was doing: Being more optimistic about a doomed asset than the evidence reasonably allows.
The only difference is that I suspect that Lay actually believed his own BS, since he pretty much rode Enron down holding most of his own stock. Most of his sales were forced sales, either on margin calls or demands from creditors who were watching the stock he offered as collateral for loans circle the bowl.
There may be a few brain-dead young Realtors who don’t remember past declines and actually believe their spiel (actually, having written that “brain-dead” bit and recalling my experience with the average Realtor, maybe more than a few), but the more experienced onces have simply got to see the collapse in progress. They deny it, because they can: Real estate brokers have never really been held to the same standards as securities dealers or corporate officers, probably out of a recognition that large numbers of them are too dumb to breathe, let alone understand basic economics. They are not professionals by any legitimate standard, so they aren’t held to professional standards of responsibility. Caveat emptor.
Santa Cruz prices are also down yoy, but somehow the Santa Cruz Sentinel managed to phrase the situation as . I wrote the following letter in response:
There are a couple of glaring inaccuracies in this article.
The headline is incredibly misleading. The median price is actually
down 4% year over year. The median price for the first half of 2006 is
1.5% lower than the median price for 2005. These numbers are according
to the Santa Cruz Association of Realtors. How you conclude that
“prices continue a steady climb” is unfathomable to me.
“Camp said he doesn’t see sellers flooding the market.” This claim is
easily refutable with SCAOR’s data at
http://www.scaor.org/html/singlefamily.htm. The number of new listings
in the first half of the year is up 26% over last year. At the current
rate of growth, Santa Cruz will see the largest inventory in the last
ten years by the end of the year.
A great disservice is done to your readers when claims like this are
printed without any fact checking. Due to the fear of being priced out
forever, many new home buyers have rushed into this overinflated
market using loans that put their financial futures at great risk.
Articles such as this one are partly to blame.
Thank you sw! I find it amazing that many Santa Cruz locals deny the existence of flippers helping the run-ups and also deny that people are overextended on mortgages. I wonder if Gil Dassorio(sp?) is still in business and is looking to go bankrupt again like he did in 94? I’m sure he learned his lesson and is out of the game. I would like to see the Baileys go down though. I’m sick of their smug mugs, plus their service sucks.
This is why many of us believe RE agents, brokers and representative “experts” should be held liable for trying to convince unsuspecting buyers to buy into a dramatically falling market.
—————————————————————————-
As much as I get annoyed with RE Agents and the Real Estate Associations spinning their BS, I blame the news media MORE for not calling these people on the inconsistencies and outright BS!
Where’s the “investigative journalism” these days? Motley Fool did a great story a few weeks ago on how the NAR is full of shit but that’s about the extent of it. When I see Geraldo do an expose on Dave, Gary, and Leslie I’ll know there’s justice!
San Diego real estate agent Calvin Goad said the region is experiencing a normal cycle of price fluctuations.
“The prices are coming down right now, but it is a good time for the buyer to jump into the market,” he said. “San Diego historically does take a small drop in price, but then the market levels.”
Thanks for the great advice Calvin….very reassuring.
“‘Between now and the fall, I’d say half the months will be slightly positive and half slightly negative, but I really don’t read the drama in these numbers that most people will.’”
What exactly does “between now and the fall” mean? August and September’s releases?
I noticed that, too. What’s left unsaid (what happens in the fall/winter months and beyond) is what matters.
exactly, at first I read it as a prediction of the next 5-6 months, but it could be read as the very near term.
Nah, he meant THE FALL, el cliffo, the big jump, here’s your hat what’s your hurry FALL. Until then half the months will be slightly positive and half slightly negative. The real drama hasn’t occured yet…
Long overdue! Now the big question, is this an aberration or the beginning of the end. I’m putting my money on the latter. If the next 3 months are down also, especially if the downward rate accelerates, stick a fork in it. The next questions are how fast, how far and how long.
This bubble has been one of the fiercest and longest lasting in San Diego history, having lived through the 2 previous booms/busts. If there is truth in the adage “The bigger they are the harder they fall”, this bust is going to make the previous ones feel like a walk in the park. In my estimation, this bust will be downright ugly.
In my neighborhood, Point Loma/Ocean Beach, I still see the loons buying these grossly overpriced shacks, although not at the pace they were selling before. The panic to buy is still somewhat out there, although ebbing.
Karevoll doesn’t want to admit that the market is slipping. He is both a land owner and homeowner up in the Big Bear area of So. Cal. If he admits there is an issue, he’ll be admitting that he made bad investments.
Few words with very great meaning.
I applaud.
I just got a call from my former RE agent who helped me sell my Oceanside home in Feb ‘06. She and her husband were neighbors of ours and good friends but they called to say they just bought a brand new house in Encinitas and are moving in 2 weeks. They’re not even thinking about selling their existing home. Un-Freakin’ believable! They refuse to believe the market’s crashing even though she admits herself that nothing’s selling. They’re still convinced prices only go up, up, up never down. I tried to talk them out of it and told them to walk away from the $10K deposit rather than loose $100,000s over the next few years. I even pointed out the Union Tribune y-o-y price decline article today but there’s no changing some people’s beliefs. They’re nice people but they’ve loaded themselves up with real estate rental property over the bubble years and it looks like they’re getting ready to learn a very hard life lesson.
How much money did she take from you for selling your home? Now compare that to a starting teacher’s YEARLY salary in San Diego (high 30’s). Um, who do you think did more WORK for the money? For society?
Don’t feel bad. Don’t feel bad one bit.
Not only should you not feel bad, but you should be careful about telling them what’s going on in the first place. I have learned to be very careful in talking to homeowners about the bubble. Every time I even lightly bring up my thoughts on housing prices, I feel an icy dagger being envisioned in the back of my skull and ripping down to my kidneys. People are so invested in this thing it’s incredible. At first, I thought it was just a few head in the clouds types who don’t believe in negative things, but it’s far scarier. I worry that the messengers are going to be cursed for many years after this, even if it’s because the hearers are embarrassed. This is truly a mass psychosis, with a lot more than just the housing money tied in. Retirements and hope for a happy future are tied in to this. People’s self esteem is tied in to this.
Good comment. It really has been (still is?) a societal mania.
so true, so true.
Once I mentioned in my office about the bubble and explained the underlying reason for the bubble, then everyone in my office gave me nasty look. Since then I do not speak my mind about this subject.
You’re right.
Absolutely true. The great thing about this blog is that we can all get a sanity-check. When we first sold and rented, we were so naive and assumed the whole world knew it was a bubble. We openly admitted to why we were renting (as other bubble-sitters know, people cannot, for the life of them, understand why a former owner would actually choose to rent). We quickly realized that the space aliens had invaded the minds of most people, and our procalmations about “the housing bubble” were ruining relationships with friends and family. We don’t talk about it anymore unless asked directly. Even then, we just try to be more neutral in bubble discussions. Lots of emotions here, which prove, IMHO, what a powerful mania this has been.
Wait until the down Y-o-Y headlines have come out for multiple cities for multiple months in a row (like 5-6). New orders for housing will evaporate. Any sense of urgency will go away completely, people will do the rental/ownership math, and just wait–just at the time that $2+ Billion ARMs begin to adjust between now and the end of 2008.
Pain is coming.
You are off by three digits.
It is 2 Trillion of mortgage resets between 2006 and 2007. If you include 2nds the number is nearer to 3 trillion.
“Last month’s median home price dropped to $488,000…a 6 percent decrease from last November’s peak of $518,000.
“To me, this is just part of a plateauing of prices,” said Karevoll”
Plateau. You keep using that word. I dunna think it means what you think it means.
In a fair world all the bozo’s (Karevoll, Liarreah, Suzanne, Toll, Appleton, Greenspan, etc.) would be held accountable for lying to people by being put in stocks and having those who fell for their lies, throw pies in their faces…and of course the pie throwers would be dressed as fools (jester costume) to acknowledge their part in the charade.
And I’m being “nice”……
Pain is closer than you think.
A new listing today on Tremont in Oceanside, a nice little 3 br beach bungalow.
Sold in May 2005 for $850,000, financed 100% by Long Beach Bank.
Listed today for $619,000. That’ll be close to a $300,000 haircut/scalping. Impressive that the bank is that realistic - they’re scrambling for the exits. The list price is about 95% of retail.
Heard about another one today listed for $699,000. The seller got low-balled at $460,000, and took it. Owned it for forty years and thought that was still a lot of money, and that got ‘em where he wanted to go.
I say keep looking, you never know what you might find.
‘All Hell Breaks Loose in September.’
And we watch.
Good to have a thinking brain.
Bad to be a slave.
We’ll all be neighbors by next July if this keeps up.
Sure hope Ben knows what kind of wetsuit to buy.
The kind that keeps you warm.
Just some advise. I sold my home last year made 300K have it in CD’s. I am renting back from the person who bought $1,500.00 per month. (San Diego, CA). Since I have been on this blog, I have decided to wait. I want to rent a house for $2,300.00 with a pool. My thought is If I am waiting why not live good. What is your opinion?
Stay in your home until people come to your front door…
…begging you to buy theirs.
Until then…
…Find something else to do in San Diego that DOES NOT involve Real Estate.
You escaped.
Don’t look a gift horse in the mouth.
Go have some fun, for crying out loud.
Dammit.
p.s.
If you spend $2,300 on a pool you have to take care of, when you should have been going and having fun, like I told you to…
…I WILL HUNT YOU DOWN AND DRAIN YOUR POOL FOR SKATEBOARDERS TO USE.
All that’s meant to say is this…
DON’T BE GREEDY.
“‘To me, this is just part of a plateauing of prices,’ said John Karevoll, of DataQuick. ‘Between now and the fall, I’d say half the months will be slightly positive and half slightly negative, but I really don’t read the drama in these numbers that most people will.’”
Sorry, Johnny. A 6% drop since last fall is not part of any plateauing of prices — rather it is the first part of a crash.
You on vacation, GS? Usually you’re all over this.
A bubble blog toast to you as well on this good news. Cheers!
Frankly, I’m even a little surprised that Karevoll is now addressing negative YOY data. If you go back 2 years, SD home prices are still in the green.
Now, while we slide down the other side of the cycle, we will persistently hear the “this is this is the bottom, buy now” market timing calls.
“Now, while we slide down the other side of the cycle, we will persistently hear the “this is this is the bottom, buy now” market timing calls.”
Yes, most probably we will hear that and it will be more challenging for those us with spouses who want to buy. I’m going to have to explain the “falling knife” theory to wife…won’t be fun.
Just drop a carving knife a few times and have her try to catch it.
After a few trips to ER she’ll get the picture