A ‘Significant Drop’ For San Diego Condo Prices
The Voice of San Diego has this report on the condo market. “While the news that home prices finally went negative year-on-year last month grabbed plenty of attention this week, a new report shows that the price dip has been even more exaggerated for condos and townhomes.”
“When compared with June 2005, median prices dropped $20,000 in the county last month for single-family attached homes, a category that includes condos, condo-conversions and townhomes. That’s a 5.2 percent drop over the year. The prices also decreased by 2.4 percent from May to June and 5.7 percent from the beginning of the year, according to HomeDex.”
“Realtor Jim Klinge, who has been in the realty business for 22 years, said the current conditions are unlike anything he’s seen before. ‘It’s anything but normal, if you ask me,’ Klinge said.”
“Chris Thornberg, at the University of California, Los Angeles, said the housing market is in uncharted territory. Thornberg attributes the ‘everything’s fine’ response from the realty industry to the ‘bunker mode’ mentality that comes in circumstances like these.”
“‘People are loathe to realize losses in homes,’ Thornberg said. ‘They don’t want to talk about it, to think about it.’ Thornberg said that these numbers aren’t evidence of a soft landing. ‘The industry has been really blase,’ he said. ‘This cooling off of the market is very, very hard and very, very fast; more than we’ve seen before.’”
“The lower prices have also had an impact on the rate of production undertaken by San Diego builders and developers. In the market heyday in recent years, builders held back on production of detached homes, but overcompensated and ‘got a bit crazy’ in the condo market, said Alan Gin, professor of economics at the University of San Diego.”
“‘They were counting on condos being new starter homes,’ Gin said. But, he thinks the changing prices will lead first-time homebuyers to wait until prices drop low enough for them to afford a detached home. That reluctance to jump into the market will reduce the demand, and will thus reduce the prices, even further, Gin said.”
“While marked decreases in the median prices of single-family attached homes were noticed in all areas of San Diego in June, South County experienced the largest differential, with decreases of 11.3 percent from the same month last year, 12.6 percent from January and 7 percent from last month. That’s a year-on-year price drop of more than $40,000.”
“Those decreases are hitting home for several of Chula Vista Realtor Dawn Lewis’s clients, four of whom are what Lewis calls ’short sales.’ These are people whose initial home loans were for a higher price than their homes are currently worth. ‘They think it’s better to cut their losses now than to wait to see what happens later,’ she said.”
“Lewis said she’s even willing to take less on commission if it means finding these often desperate clients a way out.”
“Builder incentives and price reductions, often about $20,000, accompany nearly every condo sale in the current market and have taken the place of upgrades and gimmicks that used to help sellers close a deal, said Peter Dennehy, senior vice president for Sullivan Group Real Estate Advisors.”
“‘People are saying now, we need more help making our monthly payments than we need granite countertops, flatscreen TVs and that sort of thing,’ Dennehy said.”
“Chris Redfearn, an analyst with the University of Southern California’s Lusk Center for Real Estate, agrees that San Diego, especially downtown, will benefit from the aggressive underwriting and investing in condos, he said. ‘The original investors may get hammered. But ultimately, downtown is going to become a great place.’”
There is also this report from the SD Daily Transcript:
‘With sales and refinancing cooling, appraisers also caught in the slowdown’
‘As interest rates increase from historically low levels and housing inventory and time on the market rise, appraisers — much like real estate agents and lenders — feel the influence of a changing market.’
I was born in san diego and I’m disgusted with the greed down there. The place has turned into a total cluster F@ck. At least other states have affordable housing for the working class. It is arizona or bust for me at this point.
“At least other states have affordable housing for the working class. It is Arizona or bust for me at this point.”
Are you freaking kidding me??? Arizona no longer has any affordable housing for the working class after the bubble increases of 100% over the last 2 years. In addition salaries in AZ are much less than the ones in California. For example the biggest employer in Phoenix is freaking WALMART!!!
wal-mart is the biggest employer in the entire US.
Also, he may be confusing plurality with majority. A lot of people make a similar mistake with median and average.
I’d much rather buy in arizona than anywhere in california.
If you do your homework you can still find good deals in arizona.
I vote for bust.
WalMart is going to have a tough go of it over the next few years, given the giant sucking sound of home equity ATM cash leaving consumption demand. In fact, I will go out on a limb and predict that low-end retail (WalMart and other BigBoxMart-type stores) will get hit harder than upscale retail establishments, where shoppers are less dependent on liberated equity.
http://jibjab.com/JokeBox/JokeBox_JJOrig.aspx?movieid=122
Au contraire, my friend. With the precipitious drop in prices in San Diego, you might well afford a home beyond imagination only 6 months ago. How about a 40-50% price reduction. But the key thinkg, will be hard cash, 20% down sort of thing. Forget AZ, keep on renting and start picking your desired neighborhood. “The end is near!”
These recent buyers thought they were getting a deal. In a few years they’ll be the desparate sellers trying to minimize their losses on a short sale.
Oddly enough, It seems that about 1600 properties have dropped of the MLS in San Diego county in the past week. I am not sure if they were withdrawn or there was a sudden buying frenzy. Someone like Carlsbad Jim should be able to find out for us.
Time to unload other assets except for precious metals and oil.
Oil? Would it worry or surprise you to discover that its quite possible that oil is in a speculation mania right now? Be careful, there seem to be multiple bubbles out there right now.
I gotta disagree, the troubles in the few super-giant oilfields are significant and there is NO swing capacity to produce oil.
See Matt Simmons (energy investment banker) on peak oil and his book Twilight in the Desert.
The only way oil comes down (below $50) is recession/depression worldwide.
peak oil.
Rather demand is down
WRONG!! Inventory came in last week and reserves were much lower than expected. Demand is increasing.
Hording instinct runs high at a time of Middle East tensions. This will exacerbate already tight oil supplies, drive inflation through the roof, and force Central Banks following inflation targetting rules to either continue hiking interest rates or lose inflation-fighting credibility. The unfortunate consequence will be a stagflationary recession, as in the mid-1970s.
“The only way oil comes down (below $50) is recession/depression worldwide.”
No prediction here - just a “What if?” Would you suppose that demand for energy could weaken if US consumption fades? Japan & China’s economies are fairly export-oriented. We crash, they crash. Oil falls.
Not a prediction - just be careful “knowing” that oil will forever remain high. YOU can’t be sure.
If we and Japan/China slowdown, that is a worldwide recession/depression as I stated in my post.
There aren’t anymore oil supplies (online or near online or even promising in the pipeline) available so the only price relief will come from waning demand.
Precisely. People who are SURE, without a DOUBT, that oil will remain at some sort of peak…? I’m not saying that I KNOW much about it - but what I DO know is that people who are SURE, are wrong to be so. Kinda like religion, yeah?
To mis-quote our favorite Realtor euphemisms:
But in this case it is true-
They aren’t building any more oilfields!
Do just a bit of reseach for yourself.
Here I will give you a start.
http://www.simmonsco-intl.com/research.aspx?Type=msspeeches
Read twilight in the desert cheap oil is over!
If you think about it this way.
1 barrel of oil roughly contains the same amount of energy as one laborer for a year.
Given a laborer efforts for a year is going to cost a minimum $20,000, is oil fairly priced at $50, $75, or higher.
Might there be a reason for someone to say this? Don’t tell me altruism or some lofty search for truth. People giving big speaches wearing suits usually have some personal gain involved. Again I AM NOT making any counterclaims, here. Just recommending everyone NOT stake personal financial security on someone else’s “research” or otherwise doubtable attempts to influence opinion on particular issues. Believe what you will on oil, g.warming, etc. Both sides. Oil could skyrocket to $500. Oil could plunge to $10. The more extreme the event/statement, then less likely to occur, naturally. However, anyone here claiming to KNOW TRUTH is lacking in fundamental logic skills or selling something.
We Rent,
Gonna pick on you here.
I think you SSBG is saying exactly what you are. He did qualify his statement with “unless there is a recession/depression.”
Personally, I’m short (by a small amount) some oil companies right now…**just in case** we get a deflationary depression. It will be interesting to see how all this plays out against a backdrop of the tremendous unrest in the Middle East.
“Kinda like religion, yeah?”
Kinda like getting fooled by randomness.
No swing capacity implies high price volatility, but not necessarily only in the upward direction. In fact, once the Mideast tension settles down, and the incipient recession becomes a reality, oil prices will drop like a rock, as fools like yourself will learn the hard reality of bubbles yet again.
There is a huge speculative premium in oil right now. It may go significantly higher with all the unrest in the Middle East. That said, buying oil is definitely speculative, while gold or other precious metals could be a wise investment.
??????
Oil stocks have amongst the lowing P/E ratio of any sector. Wall Street is placing a current value on big oil companies as if oil were $50 a barrel.
That’s because the E is expected to drop (just like the E in homebuilders is dropping…).
Gold is speculative also, but just because something is “speculative” (i.e., housing up until 2005) doesn’t mean that it is a bad investment in the short term.
Just my thoughts exactly when I posted my comments regarding precious metals and oil. Both investments are speculative and who knows what the truth is regarding these asset classes (peak oil, hedge against inflation). Personally, both looks good in the short term but I prefer oil since oil is being consumed (or used up) while gold is simply stored in a vault or used for jewelry.
Condos were the 10c-on-the-dollar pariahs at the end of the last RE bubble. They make no sense to me at all except in very dense urban/downtown areas. Let’s face it. Most of them are apartments with a few up-market cosmetic features for which people pay a criminal markup.
I’d say it was around 2002 when newspapers began writing articles about condos becoming good values again. That’s part of the reason I decided the market was a year or two from topping out.
Next time I will remember to watch for the ‘apartment conversions’ — it’s a better measure of the end of a housing bull.
Check yesterday’s posts…it’s already happening (reconversions).
The cost of lumber has been dropping since the begining of the year( down almost 20%). The slowdown in building has to be causing other building related material costs to fall. The suppliers of building materials, when faced with lower demand, will start discounting to try and support sales and move inventory. Labor cost should also fall as contractors and laborers start getting hungry for work. The high demand period of the last few years caused construction costs to increase significantly, the low demand going forward should create the opposite effect. The big builders may actually be able to continue increasing supply going forward, albiet at much lower profit margin. I think we’ll see a transition period as the builders work to unload current inventory and focus on reducing their construction costs going forward. The name of the game will be discounting for the builders. Expect them to do whatever it takes going forward to keep building houses to stay in business.
Builders will begin ‘decontenting’ like auto manufacturers do. They’ll make smaller, simpler, cheaper units in order to be price competitive with the bloated houses they have been making.
I agree, the builders wont’ stop. It’s their business. They do it until the owners die, sell out, or go BK.
True, the price of lumber has been falling lately, but other costs are rising at an alarming rate. Asphalt, concrete, steel, and anything made out of petroleum (almost everything) like shingles, siding, and water pipe are inflating fast. I’ve seen material price increases of 25% a year or more. These costs are fixed. Take it or leave it. I also don’t see labor costs decreasing substantially, although I don’t see them rising either. What I see happening is both the reduction in profit and the downsizing or simplification of housing. I hope this downward cycle will cause people to rethink the inefficient and wasteful housing we’re building.
If the markets are working, the supply demand fulcrum will before too long take care of all of this, even stuff that is made from oil. Looking around it would seem the asset bubbles and credit bubbles have distorted multiple segemtns of the economy. I would suggest sitting out activities like building a house if you can. The material costs are going to be coming down, just like the labor to build it, the land to place it and everything else.
For the builders, they are stuck having to build. However what they are doing in San Diego and the rest of Southern California right now is beyond what I can figure out. They seem to be ramping up production like made, perhaps to cash out before it’s too late?
My wife and I are having some modifications done to our wee house, and we have had 3 contractors come by to give us estimates. All 3 showed up when they said they would, all 3 were intersted and eager to bid on the work. One of these fellows remarked about how they had 2 lots they had to build “at once” because the carry costs (land, construction loan) were killing him, but he feared to add inventory to the market. Sounds like a game of musical chairs and the music has stopped, and this poor fellow is looking for a place to sit. Anyhow, he was very interested in our project because it would mean fast cash income for him to keep things rolling. Good for him
Be VERY careful when dealing with these people. I just had to finish a job that a builder took on “for fast cash income”. It was fast cash all right. He took all the money up front, did 25% of the job, than vanished.People are honest when they can afford it. If someone is in a cash flow problem you do not want to hop into his river of debt.
Always use a licensed, bonded contracter.
Most homeowners don’t bother with bid or performance bonds.
They are available as a insurance policy for the owner for mis-bids and contractors going BK.
They are required for pubic works in CA.
Unfortunately, even licensed and bonded contractors burn people. Never pay full price up front. NEVER! Give a small amount up front for materials, if anything, and pay the balance upon completion. If the contractor is not game for that “Seeya buddy”. There are plenty of reputable contractors who will do great work for fair prices. It is up to the homeowner to find them. Always get at least 3 bids for the job (I like to get 4 or 5), and get everything in writing. There are a lot of resources in virtually every community which help people find reputable contractors.
This is why we must enforce our immigration laws. Give the legal citizens at least a snowballs chance in hell of surviving.
It’s about time! I live in north county SD and would give anything to be able to afford to buy here.
North SD is a fascinating measure of bubbledom. In 1999, the bubble was just beginning to percolate into Orange County with 10% a year gains. I remember scouting north SD a bit… it wasn’t hard to find a 3-br-2 in Oceanside or Carlsbad for 125k. It was still ‘middle America’ then…. not so much ‘SoCal irrational.’
In the end, I bought in Anaheim anyway. Just thought the commute was too far a stretch.
“Jim the Realtor” provides excellent NC coverage and refreshing straight talk at his blog: http://bubbleinfo.squarespace.com/
Its starting to fall in North County. It has a long way to go, and may be one of the last to finish falling. I say this because I don’t get the same feeling of realization talking to my neighbors that I do talking to friends who live closer to downtown SD.
sig,
Your neighbors aside, in North San Diego County there has also been a huge inventory increase, much longer days-on-market, stagnant sales etc. just like big sista to the south. Even if we are lagging, when prices keep dropping in SD proper then it will eventually draw a lot more buyers (especially first timers) from here down there. When that happens it will just put more downward pressure on prices everywhere in the county. North San Diego Co. may not be ground-zero but it’s ground-zero.1
In addition, North SDC isn’t what it used to be. The crowds (and building) have become maddening and the traffic going south and back has become borderline intolerable. (It took me an hour and a half to drive downtown last night – southbound!!!). The draws that used to make this a great place to live have been eroding for some time now.
“inventory increase”
Yup, anyone seen the monstrosities that line the new 56? Daaaaaaaaaaaaammmmnnnnnn!!!
Not to long ago that corridor was devoid of anything but a nursery and a few scattered ranch homes. One of my co-workers had a little spread out there with a couple of horses etc and has watched in abject horror as the bulldozers came charging over the hill one wave at a time. They built so much around her that she had to be airlifted out.
“Yup, anyone seen the monstrosities that line the new 56?”
Every time I commute between work and home! It is beige-stucco McMansion hell out there.
Alan Gin, isn’t he the professor that was proudly gloating that San Diego had a chronic housing SHORTAGE only a few months ago stating that prices wouldn’t fall because demand so far exceeded supply?
He is not as bad as pseudoeconomist Gary “in the bag” and now “tailwind” Watts, at least he actually has a PhD and is a professor. However, he was singing a very different song, I remember reading quite a few quotes from him over the last year spewing the lie about how “demand exceeds supply, chronic housing shortage, etc”
How quickly they all change their tune when the facts become undeniable. All that is except Gary Watts who still claims that not only will OC not have a soft landing, “it isn’t even in the approach pattern!!”
These guys are a real joke, too bad they can’t be held accountable for their actions.
Beware the predictions of professors with ties to the real-estate-industrial complex.
(At least other states have affordable housing for the working class.)
Something tells me the Downtown San Diego is going to be a really nice working-to-middle class neighborhood, along with a few better off people who appreciate the ambiance. This assumes, of course, that all those condos under construction are finished, foreclosed, and sold. San Diego wins, financiers and flippers (and, perhaps taxpayers) lose, like Texas in the 1980s.
“(At least other states have affordable housing for the working class.)”
Ever ask yourself what that phrase “working class” means? Do you think other “classes” don’t work? What is work? Physical labor only? Can it be mental labor? How about abstracting a model of an embedded computer system with one million lines of code that protects national security? Why isn’t that “work?” Many people who can do that are earning more than $100,000 annually. Is that not “working class?”
Slogans are just my pet peeve. I know what group of people tend to pine about “working class,” as if people at the peak of their professions earning perhaps 10 times the minimum wage do not work at all! Sheesh!
Bill I understand your frustration, but I think in this instance “working class” refers to those of modest education and income (like trade school grads). They used to be able to afford to raise a family in a clean safe environment, even in CA, before much of the housing mania.
My wife and I both have our Masters degrees from UC schools, earn 150K a year, and rent a condo because “starter” homes in decent areas have rocketed beyond what is rational for us. Five years ago, we would have been able to afford an affluent gated community, now we rent albeit in an affluent community, because the costs are so outrageous.
So by those measures, we, meaning 100K+ earners are the new “working class”. Only limo liberals classify us as “Rich” and tax us to the moon. Of course limo liberals like to pile on the payroll taxes because most of them do not get a normal paycheck, but yield income through trusts, inheritances, and investments. All of this is fine, just wish they weren’t so hypocritical about wealth.
I have no problem with wealth, I just hate the hypocracy of the liberal wealthy elite. I lived in Santa Barbara for eight years, believe me, I know pseudocompassionate limo liberals, they cried about the lack of affordable housing in Santa Barbara, but whenever any major housing development was planned, they would go high order to try and stop it. Anyone familiar with the area will know of the tragedy of the Bishop Ranch. Thousands of middle class homes planned for Goleta, would have really helped the housing situation, all stopped by the same people.
Very sad indeed
BTW, for clarification, I have no problem with liberals, progressives, nor conservatives. I have views that span the spectrum.
The most frustrating individuals however is the superwealthy leftist who manipulate rank and file liberals and activists to do their bidding, but in reality hold none of their values and use them as a diversion for their own gains. Not unlike a current administration on the other side of the spectrum. Perhaps it is hypocracy in general that we should rail against
Hillary has 22M in the warchest. You ain’t seen nothing yet.
The Kennedy’s are the true masters of leftist manipulation.
The phrase you’re looking for is “limousine liberal.”
The phrase “working class” definitely has a Marxist element to it. People who use it either deliberately do so for this reason, or do not realize the baggage it carries.
For descriptive purposes, “lower income,” “modest income,” or “average income” would be more meaningful as they actually mean something. I’m not sure what “working class” means except as a codeword.
yeah, but do you hate the hypocrisy of the wealthy conservative elite? sorry, but there’s no real diff.
Asuwest2, Yes I do, the current administration is a classic case, manipulating the rank and file, in this case conservative America, to benefit their elitist friends. Elitist hypocracy on any side should make people angry. I am beholding to no political party or ideology, I think for myself, I don’t need the Kennedy’s, Bush’s, MoveOn.org, FreeRepublic, Sean Hannity, etc to tell me how to think, I can judge for myself.
That is what I love about this blog, Ben posts articles, albeit favoring a housing decline, but lets the blog readers decide and debate.
same type of people in Pacific Beach down in San Diego. Some have even put up web sites like http://savepb.org their current mission is to stop the building of more housing on a plot of land by the beach that is a vacant lot that is an eye sore. If the builder put that up it would be a benefit to the community, but maybe a drain on some established homeowner’s property value. The Greed in this area got out of control years ago and has begun to peak.
To me ‘working class’ are the cable installers, auto mechanics, secretaries, etc. There is still a fair amount of education and certification involved in those trades even if it doesn’t require a master’s. These kinds of people used to be able to get a modest home for $100k and hopefully move up a bit later on.
That’s what “The American Dream” was supposed to be about. Not that anyone and everyone could qualify interest-only for $500k…
On this topic, over the next 10 years the trades won’t be a bad place to work.
Over 70% of tradespeople at 55+ and going into retirement and there aren’t enough journeyman to replace them.
Trades will be the next booming job market.
I think it is because they actually produce a tangible result. If you look at an RE agent, what do they produce?
It’s a combination of several four letter words, and has no intrinsic value to anyone.
Interesting, because certain auto mechincs can reasonable salaries. “Legal assistants,” i.e., secretaries for lawyers, can easily make significantly over the national median.
This is why labels such as “working class” can be tricky.
‘They think it’s better to cut their losses now than to wait to see what happens later,’ she said.”
And thus the panic began.
“‘People are loathe to realize losses in homes,’ Thornberg said. ‘They don’t want to talk about it, to think about it.’
Just about says it all…..eat,drink, and be merry, for tomorrow we’re hosed! What else can one do when there’s no room left to HELOC yourself.
“Lewis said she’s even willing to take less on commission if it means finding these often desperate clients a way out.”
What an amazing woman! Instead of $30K, she’ll take 20K. Oh, the sacrifices some will make. What a humanitarian. (puke!)
“Chris Thornberg, at the University of California, Los Angeles, said… …This cooling off of the market is very, very hard and very, very fast; more than we’ve seen before.’”
We are facing much mare than a “cooling off”.
But still, these is an gloomy description…
I have to like Thornberg. He says it how it is. Don’t just go off the press quotes, try to find the videos of his presentations. Why? He makes a bunch of side comments that on their own are not quotable, but dramaticly change the tone of his presentation. e.g., “Orange county is different, its going to get hammered.”
We are in almost uncharted territory. As someone who must get government funding, I see why no one is referencing the 1930 market. Don’t worry, that one was worse… but back then home values lost 70% to 90% of their value too!
This will turn into a national panic by 2Q ‘07. The question is, when will it be a good time to buy? 2008? 2010? 2012? I’ll keep reading (and throwing Ben donations) to find the answer!
Neil
I don’t know about Thornberg. He seems to be influenced every now and then by the RE Complex. He used to be on message and was out early trying to talk the market down. Then, when the market was truly beginning to show its decent, he all of a sudden came out with his FLAT-LINE outlook? Puzzling. He didn’t reconcile it with his earlier predictions of decline (before the last 50% of increase) even though that’s clearly what’s underway. I think he has been receiving threatening messages from either RE complex or more likely, the government.
“They” want a soft landing even though the RE complex and the FED engineered an economic scenario that precludes one. Talking about the myth of an invention called a “soft landing” doesn’t mean one can actually ever happen…
Is a Balloon doing a “soft landing” when it lands in a patch of prickly pear cactus, or a pile of broken glass?
‘This cooling off of the market is very, very hard and very, very fast; more than we’ve seen before.’
Realtors running out of adjectives? This really, really, really must be the end of the world.
I have to agree, it is strange diction for an educated individual like Chris Thornberg to have an over-reliance on very in that compound sentence.
Remember Thornberg is serving two masters and himself. I’ve been taking sh!t for a year claiming things that are proving true, in this case the sudden drop in volume and the steep rapid upfront correction. I was looking for 20% off the peaks this summer and lots of people took me to task. Thornberg has been saying correctly for two plus years that the situation was not sustainable. Now after being burned his current predictions were soft peddled and he’s caught yet again. He should have shouted “Bubble!” even louder but instead he got cautious. Now he’s got to go with what the evidence was telling me all along.
Did you lift that post from one of mine?
It’s funny to read the impression that the posters on SDCIA have of this blog. Someobdy called it a Romper room of doomsdayers, with cherry picked articles from tin-foil hat websites.
OK, I might concede that for never ending axe-grinders like gold-eagle.com and fallstreet.com, but most of what’s been appearing here for the last six months are sources more like … Newsweek, Forbes, Wall Street Journal, etc.
The bubble deniers still think it’s only the goldbugs blowing on this horn.
80,000 - 95,000 pages viewed every hourday on this site? Hmmmmm…..that’s a hell of a lot of goldbugs. I’ve been visiting this blog for over a year now, and it’s been amazing over the last several months the support that has come on board. I think it’s fair to say the tide has turned.
I’ve seen my name brought up in other threads on the SDCIA than the one I posted on. Must have really ruffled a few feathers.
You are famous! You get to buy the next round as I think Auger is feeling a bit thin. Seriously, you keep speaking your mind, I would suggest that for each vocal detractor you have 5 fans over there. Most fans don’t feel the need to speak up, as a well studied and (and likely correct) opinion stands on its own. Only BS and baloney tends to need a chorus of support (look at how the RE memes were parroted by all the usual culprits).
I appreciate the sass as much as the smarts; it’s probably the former that has them excited over there.
Txchick,
Please provide your approximate GPS coordinates, as I wish to genuflect in that direction every morning. Loved the cold water you threw on the SDCIA bagholders-to-be.
Sammy
I’ve seen my name brought up in other threads on the SDCIA than the one I posted on. Must have really ruffled a few feathers.
Yes txchick, cuz you kicked the double doors of their saloon open with yur six-shooters on and shot up their little investin’ party. Keep ridin’ towards the border lil’ lady, I hear the sheriff’s getting’ a posse together. Yee-Haaaaw!!!
I keep trying to join I wonder why I never get approved.
I guess on the registration form “Real Estate Specialty:” of “Dot Condos” gives me away.
I wonder what they think of just losing $20,000 in value in their flips in a few weeks, its the race for the bottom.
Got any best hits of interactions with SDCIA posters? I would like to see those.
Please provide links, as my brain cannot take browsing that website for very long.
What’s funny is the level of paranoia and denial on the SDCIA board. Each of the now-proliferating legion of distressed flippers who posts their tale of woe on the board is reflexively accused of being a troll and “Ben Jones groupie” as some undoubtedly are. The former smugness of the flippers is dissapating, and the fear is becoming palpable.
SDCIA is a bunch of real estate flippers who are scared of the flop, scare of the truth.
Woohoo!!!! San Diego condos for everyone!
can someone tell me why the homebuilders have tanked, yet the mortgage and financial stocks are basically flat over that period? wasn’t wall street supposed to be smart? how can HB not effect the financials and mortgages?
It’s working like the Sawtooth Fire. You hear them talk about a 50,000 acre blaze out there, that does not mean at 50,000 are on fire at once. It’s a hell-storm that moves the way the wind blows it looking for fuel. It will continue as long as conditions are right for it to continue. The only way for it to be stopped short of nature getting tired of maintaining it is for humans to modify the conditions (it take away its fuel).
Sorry for the long analogy, but unwinding this bubble works the same way. We are starting to burn through the home builders. From there it spreads to their suppliers, their customers, their bankers. Then it will move up the economic chain unless it runs out of fuel.
basically you’re saying homebuilders are just kindling wood! I’ve started to notice some weakness in BBY and some other after they were going up, to my amazement. I don’t see how some of these consumer stocks could have gone up with Fed hikes, gas prices and everything else.
There are several segments of the “investment” world that seem to be disconnected from fundamentals. As in some elements of the market are not running on anything you can do math with. I have noticed this too Mr. Law. I cannot explain it either. My solution was to realize there was something going on that I could not figure out, and to pull all investment money out of stocks a few weeks ago. I will come back eventually, but not until I can understand what is happening and why. Besides, I don’t think Auger is done buying rounds for folks yet. Would hate to catch some of that.
I don’t read this blog from work anymore, since I’m in the mortgage lending industry and I don’t want to jeapordize my job passing out proprietary information.
Let’s just say… that prime lending began to really soften in the last half of June. Enough that upper level management starting asking if the reports were correct, because the declines were so noticable.
I suspect this will all be disguised in 2Q earnings since April and May were pretty good.
It’s 3Q that will be much more interesting.
Thanks for the juicy info, Mozo Maz!
I share your frustration; I have shorts on FED, FNM, LEND and NEW and they just sit there week after week. Here’s what I think is happening:
1. Nothing will happen until loan loss provisions start increasing beyond normal historical levels; so far, they are still well below that. When you look at the loan loss aging analyses (see, e.g., the charts LEND has on its website), we have a long way to go.
2. There is consolidation in the industry that lets acquirers (NEW, LEND) either diversify their portfolios with prime mortgages or show growth. Same thing is happening in prime mortgages.
3. There are enough fly-by-night subprime lenders hitting the wall that the survivors can maintain high levels of mortgage originations while the overall market declines. Yeah, the survivors are pressing the gas pedal as they approach the wall, but for now it lets them seem strong.
The only possible source of acceleration I can see is a strike by the MBS buyers, but there seems to be no evidence for that. So I am guessing we get into 2007 before we see real weakness. But that’s only a guess.
tom- so the big lenders look good because they are essentially increasing their bets?
I can’t believe nobody has posted these yet:
We’re beginning to take a pause from that heated market,” said Paul Tryon, CEO of the Building Industry Association in San Diego. “It’s a repose, a rest.”
(”The first thing I ask people is why do they want to buy a condo,” Dennehy said. “If someone is wanting to live downtown and doesn’t want to pay rent, then I would say, ‘Absolutely, now is the time to buy.’”)
ok.
“‘They were counting on condos being new starter homes,’ Gin said. But, he thinks the changing prices will lead first-time homebuyers to wait until prices drop low enough for them to afford a detached home.
This hits home for me, new condo prices are now so insane that your 1st condo is not your starter home anymore. It’s your permanant home unless you completely leave the area, there is no longer any hope of moving up as you can never accumulate enough equity or savings. I don’t think people realize this. I had brokers banging on my door last summer wanting to know if I wanted to sell. I told them I would love to sell, but where would I go ?
‘This cooling off of the market is very, very hard and very, very fast; more than we’ve seen before.’”
So, instead of “cooling,” perhaps it’s time to find another word to describe the situation.
(The bubble deniers still think it’s only the goldbugs blowing on this horn.)
at least goldbugs have the sense to own what they invest in. it’s probably why they are amongst the housing bubble people.
OCMetro: ten of the twelve richest Senators are Democrats, and they comprise the top five, too. It used to be Democrats could at least claim they were for the little guy, but now it’s such a joke. Limo liberals’ motto to the little guy: “I’ve got mine, now screw you!”
Boomers too.
Read the quotes from this article. It’s absolutely remarkable! Alan Gin actually speaking about a reduction in prices! Veteran RE agents never seeing anything like this! I remember last fall and into early this year we would all read about tantalizing hints of a correction then some discouragement would creep back in as it moved at the slow pace of a super-tanker changing course. But I gotta tell ya, this may have been a bear cub compared to the rampaging grizzly to come but in and of itself, this past week was truly a watershed moment in the Bubble world.
they didn’t factor in the toxic/exotic/suicide loans.
everyone needs to calm down, this is nothing in San Diego, like the above poster said, the ARMs are going to break in 2008, trillions of doallers, 63% of San Diego homes bought on some type of creative financing, its going to be a bloodbath, this initial slowdown, $20,000 reductions is nothing big, give it another 2 years.
Free mortgage payments for everyone. wahoo!
Wait a minute: I guess this means that debts are turning into OUR problem [taxpayer's]. Sigh….
I meant “Their debts are turning into OUR problem.”
“While the news that home prices finally went negative year-on-year last month grabbed plenty of attention this week, a new report shows that the price dip has been even more exaggerated for condos and townhomes.”
Who would have guessed this would happen? Especially since they aren’t making any more Dark Towers!