S. California Housing Bubble ‘Losing Steam’
The Dataquick numbers are out. “Southern California home prices climbed to a new peak last month, even as June sales fell to a seven- year low; the result of higher borrowing costs, more inventory and less urgency among buyers.”
“‘Many view this as a great conundrum: Prices continue to rise, as sales continue to slow. It happened for two years in San Diego before prices last month finally fell slightly below year-ago levels. We view this as the normal winding down of a real estate cycle, where declining demand gradually erodes price growth until it halts or reverses. We expect more markets to see prices flatten or decline a bit in the second half of this year,’ said Marshall Prentice, DataQuick president.”
“A total of 29,237 new and resale homes sold in Los Angeles, Riverside, San Diego, Ventura, San Bernardino and Orange counties last month. That was down 17.5 percent from 35,454 in June last year. Sales have declined for seven consecutive months on a year-over-year basis.”
“Last month’s 29,237 sales were the lowest for a June since 1999, when 29,076 homes sold. The strongest June was in 2005, when 35,454 homes sold, while the weakest was in 1992, with 16,335 sales.”
“The typical monthly mortgage payment that Southland buyers committed themselves to paying was $2,437 last month, up from $2,376 for the previous month, and up from $2,021 for June a year ago. Adjusted for inflation, current payments are about 8.4 percent above typical payments in the spring of 1989, the peak of the prior real estate cycle.”
“The remaining June results released today were highlighted by some steep sales drops: 32.3% in Ventura County, 26.3% in Orange County, 14.9% in San Bernardino County and 8.6% in Riverside County.”
“Orange County’s housing market is losing steam. The median price of $646,000 was up 7 percent from a year ago, the smallest annual increase in nearly seven years, DataQuick said. The rate of appreciation has decreased each month since February’s 11 percent. It should drop to zero by the end of the year, said DataQuick analyst Andrew LePage.”
“Buyers closed on 3,608 homes last month, a 26.3 percent decline from a year ago and the eighth straight month of sluggish sales.”
“A slip in home prices in San Diego as demand for condominiums slackens is giving the chills to some in this sun-drenched California city. San Diego is experiencing a ‘condo-led decline’ because owners are putting units on an already glutted market, said consultant Alan Nevin. ‘In a lot of parts of San Diego, there is no give at all on the single-family side,’ Nevin noted.”
“John Burns, an Irvine, California, consultant to home builders, notes San Diego area prices for existing single-family homes have been flat for a year. ‘There are no desperate sellers in the resale market with two exceptions,’ Burns said, pointing to investors who overestimated demand for high-end condos and apartments converted to condos.”
“Home prices across San Diego will plateau, (economist) Alan Gin predicted. ‘The conditions aren’t there for a big rebound in prices or for a big drop,’ he said. ‘We would need a big drop in interest rates to get any significant movement on prices on the upside. We would need to see some significant job losses, a recession at the national level, to get a big drop in prices.’”
“The market’s median price for resale condos fell 2.1 percent to $386,750 in June from $395,000 a year earlier. The month’s median for new homes, which includes new condos and buildings converted to condos, dropped 8 percent to $422,000 from $458,750 a year earlier, according to DataQuick.”
“The typical monthly mortgage payment that Southland buyers committed themselves to paying was $2,437 last month, up from $2,376 for the previous month, and up from $2,021 for June a year ago. Adjusted for inflation, current payments are about 8.4 percent above typical payments in the spring of 1989, the peak of the prior real estate cycle.”
Too bad that after ARM resets and the onset of amortization, those high monthly payments Southland buyers initially commited to make will miss the amount needed to actually pay off the loan by a wide margin.
Funny they talk about them ‘committing’ to their low early payments and not the ultimate payments they will make when the teaser rate runs / ARM adjusts. Becasue they committed to that too. But hey, why think about silly stuff like that. That’s tomorrow and we need to be only mindful of the present right?
“Funny they talk about them ‘committing’ to their low early payments and not the ultimate payments they will make when the teaser rate runs / ARM adjusts.”
How do you know?
$2437 a month is a serious stretch for 90% of Los Angeles residents. No wonder the malls seem abnormally empty this year.
Taxes and insurance on a median priced home is over $600 per month…..
No wonder the malls seem abnormally empty this year.
Thats was very true over the last weekend in SF Union Sq. Not as much foot traffic. I had no problem parking.
A few weeks ago, our wait time dropped, mysteriously, at an El Torito, from 25 minutes to 5 minutes.
It seems the high-dig restaurants still want to keep up the appearance.
I wonder how much of this is the stiffling heat in SoCal lately, though? I was at Fashion Valley in San Diego this past weekend and the stores and outside were much lighter than usual, but it was like 85 degrees outside, too.
And what will become of those high-tone boutique shops when the house ATM goes dry?
The average household in not purchasing these homes — think two professional incomes. This is why the median price keeps rising — better, more expensive homes are selling at a small discount.
I’m suspicious of their choice of the word, “typical”. It seems evasive to me.
Using the $2437 per month figure, that means that the couple is making $97,500 per year? What is the median wage in SoCal these days?
Can anyone take a stab at what $2437 would come out as over 30 yrs fixed using 6% interest?
Less than 400,000.
The number is “cooked”. I believe that it only includes primary mortgages (no 2nds like 80/20). Their down payment numbers are similar - they count an 80/x/x as a 20% down payment.
Just shy of 1 mil, $929959.20 is what I got.
Sorry, try it again. I got $406,471.16, too.
Take a stab??? $406,471.16
Median wage in LA is about 57K these days.
But we have a *very* wide range. I was talking to a friend who lives in Pacific Palisades today, and he mentioned that young families were quite present and that oldsters were moving out and downsizing. I asked him how “young families” were affording three million dollar houses, and he said “well if the wife is a doctor and the husband is an investment banker…”
Even given those circumstances, they must be stretched. My guess is that old money is renting to young money.
No, it means that they SHOULD be making around $97,500 per year. But, in reality they’re probably making much less, and the lenders are still willing to loan them the money. Also, I’m guessing quite a few of these FBs aren’t using 30 yr. fixed rate loans - those are so five years ago.
Also, while the article says that the payments are only 8.9% above 1989 payments (adjusted for inflation), it fails to note that $500 billion of loans will re-set this year, and $1.5 trillion will re-set next year, which means that the payments will skyrocket in less than a year compared to the height of the last bubble.
A first year law grad makes about 120K in LA, if he’s from a decent law school. If he’s married to a professional, they can easily manage 2400 per month. That’s like, 1200 each, and people making much less than that commonly pay that in rent.
The law grads that make 120K in LA are few and far between. The reality is that only the top 5-10% of the class from decent schools make anything close to that amount of money the first couple of years on the job. The truth is that even professional salaries are stagnant. I don’t think that there are enough people out there even the “professionals” that make that kind of money. If they do, they aren’t going to purchase a $406K condo.
That’s a ‘commitment’ to $30,000 per year on average. I don’t know if that includes taxes and insurance, but even if it does, with the average household income in CA being in the mid-$50k range, the average home owner seems happy to commit about half of his gross pay toward home debt.
I thought the ol’ standard was not to exceed 33%? Crazy times, these be!
“Many view this as a great conundrum: Prices continue to rise, as sales continue to slow.”
The only folks who view this as a “conundrum” are the ones who think prices are set in the real estate market the same way they are set in the stock market. These two markets are like night and day as this blog has made clear. And will someone please give that Greenspan “conundrum” cliche a rest?
‘And will someone please give that Greenspan “conundrum” cliche a rest?’
Ben Bernanke is working hard to give it a rest — about six feet under ground.
It’s actually playing out a lot like the stock market. Volume usually dries up at the top, as the last few clueless suckers get in. The prices are now supported by vapor. This is typical market behavior, for any market. Rising prices on low volume is a bad sign. Considering the speed in which prices rose, the prices of a few years ago are still fresh in peoples minds. This will add to the fear as people realize prices went up to fast. the downturn is still in the begining stages. People are starting to sober up. We still have years to go. The whole way down from Nasdaq 5000, people were continuing to buy and “experts” were encouraging people to buy the whole way down. The spector of the Nasdaq crash is still fresh in peoples minds, it’s got to be having some effect on real estate investor psycology.
“Home prices across San Diego will plateau, (economist) Alan Gin predicted. ‘The conditions aren’t there for a big rebound in prices or for a big drop,’ he said.”
All plateaus are high and permanent, right?
So much for the plateau theory. Now 3 other California counties are showing year over year declines!
Article at http://www.homepricebubble.com
Indicators of market distress are still largely absent. - Dataquick
See no bubble, hear no bubble, shout “No Bubble!”
Let’s hear them say that next year at this time. He who laughs last laughs loudest. (cliche tag off)
Along those lines, I’m wondering about the “stable” down payment size they refer to. If someone takes out a piggyback 80/20 loan (or 80/15/5, etc.), does the second mortgage count as part of this stable down payment percentage? (In other words, the person gets credit, in their numbers, for putting down 20%–whether it’s in the form of cash or debt.) I ask because every person I know who’s bought in CA in the past several years has used a piggyback loan. No one pays PMI anymore. Maybe that’s what Dataquick considers to be market “stability.”
Unfortunately I only have suspicions but I suspect that there are two buyers; those with very large downpayments and those with none. Anyone scrimping and saving for years to get 20% bought last year with 10%. The only ones left in this market are the bagholders and thosse that sold them the bag.
I think you’re basically right. I and my SO have almost saved up a 20% downpayment. But I’ll be damned if I’m throwing 6-figures worth of cash into a real estate market where no one else in my house price range seems to have any skin at risk.
Wisdom at work
Exactly, even a professional can get hurt if the field is crowded with amateurs.
I wonder about even those with substantial downpayments from previous home appreciation. They still have the same big monthly nut as the FBs. House rich/cash poor won’t cut it when the house equity is illiquid due to lender tightening. They’ll lose their house quicker from a few missed payments than the FBs where the banks won’t have any equity to chase. And don’t think they’ll be alright when the bank sells out from under them and they get back a big chunk of their large downpayment. The payments arears, taxes, penalties, paying off the ccards, relocation expenses, etc. will eat it all up and then some.
Lalaland …Good point . Old time lenders always like the buyers to put a down payment into the deal because it’s proven that borrowers are less likely to default if they have savings in a house .
We almost have enough for 20% down on a 3br townhouse in the OC. Am I going to sink a hundred grand into something I rent for 1700 a month and don’t pay maitenance?
I would love, love, love to own a home. But I worked too hard for this money to throw it away.
http://www.BuyMoreHouses.com
If it looks like a bubble and inflates like a bubble, then it must be a bubble.
From DQ: “Indicators of market distress are still largely absent.”
What about rapidly increasing inventory levels?
and significant declines in sales.
and Home Builders tanking
these are a few of my favorite things…
Sweat drops on granite and stainless steel kitchens
ARMs due to reset for those didn’t listen
Middle class finances held together with string
These are a few of my favorite things!
Good one!
When the dam breaks,
when the banks tank,
when they’re feel-ing sad,
I simply remember my favorite things -
and then I don’t feel……. so bad.
Those will be some of my favorite things!
The ARM resets,
Card minimums double,
And I feel like a target,
Although I feel now I’m a truly-FB,
I’ll just put it on the market!
and a lack of any significant wage increase since the 90’s
I just did a quick graph of LA, OC and Riverside median price % increase from the DQ press releases so far this year (Dec ‘05 sales-June ‘06 sales). The trendline shows them going negative around December-January. I’ll bet it’s sooner than that once the July figures tweak the trendline down further.
If I can do this in 10 minutes with almost no computer/excel skills how can these lying idiots get away with this.
Is Alan Gin drinking with Gary Watts?
A shrinkage of appreciation to flat or negative levels precedes a crash in prices be3cause a shrinkage of appreciation to flat or negative levels IS ALREADY A CRASH IN AND OF ITSELF.
Argh.
We’ve had the first YOY decline in my zip code, Huntington Beach, 92648. We dropped -0.4%. Not much, but a start.
However, unlike Mr. Gin or Mr. Watts, I do recollect WHERE this drop came from. It came from a GREAT HEIGHT.
The crash in California home prices DOES NOT REQUIRE AN INCREASE IN JOB LOSSES, or A RECESSION ON A NATIONAL LEVEL.
The crash in home prices is happening because Americans decided to day trade houses like stocks.
Nuff said.
Slowing appreciation establishes that prices don’t go up fast and forever.
That itself kills the bubble. No extrinsic recession needed.
Because perpetual appreciation was the only reason speculators and FBs mortgaged their family jewels for three generations. Once the illusion is gone, the momentum stops.
Doesn’t anyone understand the basics of Ponzi schemes anymore?
Joe Sixpack needs an exogeneous event to blame his “bad luck” on to avoid any sort of responsibility.
The exogenous event is just a place to hang their hat (blame).
Alan Gin would do well to drinking gin and tonic with lime in an overheated market. Refreshing, yet a little bitter aftertaste from the lime.
Gary Watt’s coctkail, on the other hand, needs lots of bubbles as the main ingredient. Tons of soda water. Lots of froth to be added by steaming milk. Now wondering if it should be a cold or hot drink. Bubbles seem to go away in hot drinks, so we’ll choose to make it cold, like the market. A half ounce of abysynthe and it’s perfect! Maybe two ounces.
Could serve it margarita-style in a glass with a rim coated with salt to apply to the area where the drinker is bleeding most. Just to help them remember.
“Orange County’s housing market is losing steam. The median price of $646,000 was up 7 percent from a year ago, the smallest annual increase in nearly seven years, DataQuick said. The rate of appreciation has decreased each month since February’s 11 percent. It should drop to zero by the end of the year, said DataQuick analyst Andrew LePage.”
But Gary Watts said that 15% (OK, now only 12%) was “in the bag.”
On a serious note, Dataquick here is actually predicting that prices in OC will be FLAT (0% YOY) by the end of the year. So, can we expect the price declines to begin in OC in early 2007? Woohoo.
Take a look at the personal savings rate from the BEA:
http://www.bea.gov/bea/dn/nipaweb/TableView.asp?SelectedTable=75&FirstYear=2006&LastYear=2006&Freq=Month .
Pretty darned ugly. -1.7% rate of savings (line 25). People sure are piling on a lot of debt.
It’s hard to see how this bubble isn’t going to completely implode. Rising rates are going to take a toll. Keep in mind that the expenditures to service mortgage debt are not included in the personal savings calculation, and the picture is even uglier. Why aren’t the owners of the vacant houses dumping them yet? If the numbers of vacant units I’ve heard about are true, people are really losing a lot of money.
A fan of this blog (don’t know her, but man is she good) could use a little help educating some jackass about the current state of the housing market over at Business Week’s real estate blog…
http://tinyurl.com/jvyrn
Real Estate has definitely cooled down, but the -40% dire predictions one hears from the priced out/don’t know how to save money crowd are basically overblown. If they would take some of the energy they spend in their groupthink mantra repeating wishful thinking and work harder and save smarter, they’d be a lot better off.
That’s a quote from that tinyurl by the way, not me.
Thanks!! That was hilarious. I’m so glad this blog fingered the “Havard” studies long ago. It makes those who quote them look like ignorant shills themselves.
that is funny - as if one needs to know how to “save money” to fill out two loan applications, which is why people with 3 digit IQ’s have been ‘priced out.’ Of course, all these homeowners are going to be “priced out” of nice clothes, eating out, vacations, new cars, etc to pay their rapidly increasing nut.
By using the term “priced out/don’t know how to save” it points to this guy as being a complete relic! As if anyone needs to save to be homeowner. I’ll wager I could qualify 95% of the people on this blog for whatever home they wanted. And as far as not saving, pleeeeease! I’ll line up the savings of the those purposely standing on the sidelines right now against any crowd of housing bulls.
Sounds like libel to me. I have far greater than negative savings account of her homemoaners. In fact, most here on this blog have considerable savings, not negative equity.
Notice how these guys never cite to statistics. It’s always reliance on sayings like “you rent” and “priced out.”
Is he claiming the suckers who took out the interest only/neg. am. loans are “priced in?” Who’s he kidding? The whole concept of being “priced out forever” as if there’s going to be some massive class of landless serfs is hilarious. Being priced out forever presumes that there are buyers out there doing the pricing out. Apparently with the drastic slow down in sales that isn’t happening.
By 2008 everyone across the country will think real estate is the most horrible investment since pets.com. It simply boggles the mind that people think 750k crapboxes all over VERY average areas of So Cal is a normal thing when the same thing could have been bought for 250k pre-bubble. What’s changed in about 6-7 years to justify the TRIPLING of prices? Why aren’t these perfectly, rational, common-sense questions being asked by all clear-thinking people? Once the lending dries up, and it will, the sales will crash even more, and prices along with them. We still haven’t seen a real drop in lending so the fact that prices have started declining or remaining flat is very illustrative.
The key is first time buyers. If you price out the majority of first time buyers by price, credit standards, or a combination thereof, then the game is over. No first time buyers..no move up buyers. It’s that simple. The only way for current prices to be sustained is if incomes double of triple in places like SD…aint’ going to happen anytime soon.
Where does this guy live, he needs a smart kick in the ass. Thems fighting words. It his lying no-doc debtors that have caused the bubble, no one here but us savers.
That guy is so ignorant it would take too much time to correct all his errors.
Just be happy. We need idiots like this for counterparties.
World Domination(tm) is so much easier when they hand it to you on a silver platter.
That “Frank” is a piece of work. Just point him to the discussion of the two married Pomona college profs who are stretched out on their own mortgage rack claiming there is no bubble: http://thehousingbubbleblog.com/?p=402#comments
Their theory fails miserably for their own neighborhood.
If any one of us had the time or inclination to rebut Franks ‘impressive’ list of anti-bubble articles that we have picked apart on this blog, it would be mildly entertaining. But I think I will settle for the image of Frank stumbling around blindly in 12 months wondering what the hell happened.
Way to go lizziebeth - these people just don’t understand the effect of driving through town after town where 10-20% of the homes are VISIBLY for sale…
Housing perma-bulls better really like their trite and unsubstantiated opinions. Cause that is all they are going to have in 12-24 months.
Don’t try to teach a mule to play the violin. It sounds bad and the mule is not going to like it.
They have received fair warning and won’t receive any charity from me.
Ahhh but as ong as it loks like you are still trying you can say you haven’t failed yet.
“Home prices across San Diego will plateau, (economist) Alan Gin predicted. ‘The conditions aren’t there for a big rebound in prices or for a big drop,’ he said. ‘We would need a big drop in interest rates to get any significant movement on prices on the upside. We would need to see some significant job losses, a recession at the national level, to get a big drop in prices.’”
This guy is a moron. If real estate prices stay flat(which they are not), there will be job loss in the real estate industry. Anyone who tries to read between the lines can see what he is saying “When job losses occur real estate prices are going to crash”. He must be getting paid.
He is. Read his bio.
Some folks will never learn
http://tinyurl.com/qotrr
“This is when we talk and dream,” Cross said.
Of a day when you don’t have 5 hours of your day wasted commuting ?
5 hours a day of commuting. five freaking hours a day. I mean, how can anyone live like that? That has to be the most miserable life for a person, the kids, the wife, you name it. Sign me up for a condo (or a rental!) any day of the week vs. that miserable experience.
you think that is a bad commute, look at this poor sap at CISCO:
http://tinyurl.com/f8n6e
Should CISCO of all companies be offering a telecommuting option?
That is just insane. And to make a 372 mile round trip in 7 hours there needs to be no traffic. Factor in some accidents and things, I am sure this guy has seen 12 hours behind the wheel on certain days. I kind of feel sorry for him. Sounds like he really wants to keep the wife and kids happy. A nice guy.
Hey, long commutes can be done!
One of my coworkers figured out how far of a commute was required to make commuting via private (prop) plane cheaper than a car-commute (or campus is near a small public airfield). Well… he bought a home within a short bike ride of an Inland Empire airport and now works four days a week commuting via his little plane. (There is a convienient free shuttle to and from the other airport to work.)
So there are some times a long commute isn’t too insane!
And it allows him to enjoy one hour a day, uninterupted, of his favorite hobby.
All of that horrid 91 freeway traffic is bypassed. 
Neil
Antelope Valley Is Upscale Bound.
These areas will take the biggest hit up and down in Calif. We have these areas too up here in Stockton, Lodi, and Merced. The middle class will flee when the economy tanks and the crime goes up even higher. There will be no one to buy these McMansions from them.
You are right, some folks never learn. This happens in every RE cycle in a different way.
“Five years ago, developer Capital Pacific Homes was selling similarly outfitted homes in the upscale Orange County suburb of Laguna Niguel for $2.2 million.
But here in the arid, recently plowed high desert in west Lancaster, where Joshua trees sprout in wild clusters across from rows of new houses, they’re going for about $500,000.”
That’s what really caught my eye about the article. If you bought in Laguna Niguel last year for 2.2 mil you have to really feel like an a$$ reading that. Even if the lot cost you a million bucks you would have came out 500k ahead by hiring a GC and doing it yourself.
And yea driving longer than 30 minutes to a job is complete insanity unless your making a very large sum of money.
You think OC residents care? They could pay 80%-90% less for food and clothing than they do, they enjoy the mark up as a sign of their self-worth. You’re confusing the old fashion notion of wealth and savings. It’s actually how much and how fast you can spend, while getting the least for it.
These people are NUTS!! Hopefully you won’t get shot by a gang member when you are going home! Also, good luck selling the house if you have to!! They will do anything to keep this thing going!!
We have a friend that moved to Palmdale 15 years ago and it took 7 years for her to get out . Her comment was, “i have never seen so many toothless adults in my life in the markets “.
Oh, my God!
BayQT~
Well, that just says it all!
Palmdale is the new Compton.
Deliverance anyone?
The Antelope Valley will soon lead the nation in foreclosures.
That’s for certain. The only reason these 2-hr-commute residential communities exist is because of the bubble.
No bubble — No community
Happened like this in the early ’90s. My bonehead brother-in-law, against my recommendations, elected to buy in Lake Los Angeles. Within a year he was way upside down. Another year later he deposited the keys on the counter and fled. the bulk of his neighbors did the same. Almost every single PoS in his neighborhood had been boarded up. Expect a repeat, only this time it’ll be granite countertop homes that get the fashionable plywood window treatments to compiment…
Yeah, happens in every cycle. The high desert always takes an ass-pounding in a downturn. Last to catch fire and first to go down. Scary to think that if you bought around there say, in 1989, it would have taken you like 15 yrs to get in the black again. I think I would have drank myself to death during those 15 yrs knowing I was upside down and living in Palmdale or whatever.
In Dante’s real estate Inferno, high desert communities are well inside the seventh circle.
Lancaster and Palmdale: upscale bound?
That really taxes the imagination.
Actually, it taxes credulity. But that’s what this is all about, right?
Read that boneheaded article in LA times about Palmcaster property values and population continuing to go up. It is full of misrepresentations and factual negligence. Newhall Ranch is 40 miles SW of Lancaster in an entirely different region (Santa Clarita Valley/Gorman/Castaic).
Has the auther mentioned that 2300 homes are listed for sale in Lancaster alone. 18 SFH’s homes- 4/2 1500 + sq ft 5000+lots= under $300,000. 65 SHF’s 4/2 1500 sq ft 5000+ lots under $350,000. 31 4/2 1500+/5000+ reduced price sfh’s under 300,000. Most of these are located in the eastern section of Lancaster off the 14 between K and H streets. Admittedly the western portions
are higher quality areas but there is still a lot to complain about in this article.
QUOTE:
“Lancaster, the fastest-growing city in Los Angeles County, saw its assessed property values increase about 29% last year, according to a report released last week by the county. And its neighbor to the south — Palmdale, the second-fastest growing city — was not far behind.”
Very irresponsible statement. Bubble can and do decline, even overshoot, downward. What is fastest growing mean? Throwing up the most new massive housing tracts.
Just because a few quoted individuals purchased SFH”s in a few posh west Lancaster areas for $500,000 is to imply that entire Antelope valley is experiencing this type of growth This is taking things out of context. The author(s) need to scope the entire AV region up and down, not just a few select upscale West?far West Lancaster communities. I doubt that they have even been to the east side of 14 fwy at all, where the declines are occurring.
Have lost the article before I really began to demolish it but you get the drift.
Another Whopper regarding LA times Article(July 18th) on Lancaster/Palmdale “Upscale Growth”
The authors’ quote residents saying that their ave commute time to LA is 90 minites or more from Palmcaster. Best fastest time anyone will do is a little over ONE HOUR, IN MID-MORNING/EARLY AFTERNOON WITH NO TRAFFIC AND ZIPPING OVER 75 MPH NON STOP!!
Morning/afternoon commute periods have to be at least two hrs normal traffic( with no accidents) to both dwtn and westside. With accidents , which happen alost everyday along the 5/405 southbound, you’re looking at 2.5 to 3 hrs. If it’s a big-rig or rainy weather, add at least another hr. On friday afternoon getaway traffic, at least 4 hrs minimum without accidents and in good dry weather.
Funny the first person mentioned, “actor” Scott Coleman, is not in imdb as an actively working actor. You don’t earn enough to buy a $500,000 house by just doing commercials once in a while.
They mean “waiter” Scott Coleman.
They mean “waiter” Scott Coleman.
************************************
LOL - you got that right. You have no idea how many waiters - er I mean actors - we have here.
I thought the same thing - how in the world are these people buying a 500k house - we have the “actor”, the “recently trained” air traffic controller, and the SAHM married to a welder - are you kidding me?
my coworker is a part time sherrif’s deputy. he and his law enforcement buddies call lancaster “compton north”. cheap? well, compared to the lunacy in most of LA county yes, but “desireable”? Hardly.
“Orange County’s housing market is losing steam. The median price of $646,000 was up 7 percent from a year ago, the smallest annual increase in nearly seven years, DataQuick said. The rate of appreciation has decreased each month since February’s 11 percent. It should drop to zero by the end of the year, said DataQuick analyst Andrew LePage.”
Hmmmm, I guess they neglected to get the 15%-Is-In-The-Bag Watts to comment.
I see a YoY decline by Sept for the OC.
Didn’t Watts recently “revise” his estimate to like 6% for this year? He’ll probably re-revise soon to “flat growth” or a “plateau” of 1-2%. LOL.
I think he revised it to 12%, last time I read. Something about how all the appreciation will occur later in the year. Wish he would guarantee that for someone.
‘There are no desperate sellers in the resale market with two exceptions,’ Burns said, pointing to investors who overestimated demand for high-end condos and apartments converted to condos.”
What? What about the following types of sellers:
1. Sellers whose ARM is resetting adding and can’t afford a payment increase of 50-100%
2. Sellers who have lost their jobs
3. Sellers who are going through divorce
4. Sellers who have to move because of a job change
5. Oh, and let’s not forget, the sellers who just can’t afford their mortgage anymore because they…couldn’t afford it in the first place. In other words, the house ATM is dry.
Are any of the above desperate? Who is this Burns clown anyway? More irresponsible crap coming out of the mouths of idiots.
There are no buyers in this market except for two exceptions, Unicorns and Leprechauns
That’s funny…had a good laugh. Thx.
You missed one, sellers who couldn’t keep their hands off the housing ATM and their creditors.
“The typical monthly mortgage payment that Southland buyers committed themselves to paying was $2,437 last month, up from $2,376 for the previous month, and up from $2,021 for June a year ago. Adjusted for inflation, current payments are about 8.4 percent above typical payments in the spring of 1989, the peak of the prior real estate cycle.”
A point of order. A ‘typical’ payment in the spring of 1989 was a 30 year/20% down traditional. How can today’s ‘typical’ IO/ARM/NoDoc bullshit be compared to that???
NOt really, we were doing a lot of ‘creative financing’ in the late 80’s, too. Not quite as idiotic but the S&L debacle is witness to the creativity…
really, I did loads of deals in the Regan bubble and never was offered any of this BS
It’s different this time maybe ??
Wow, the fact that payments are > 8% HIGHER after inflation adjustment AND with so many suicide loans…
Sound the dive alarm, we’re going down!
The same type of people who buy out of fear will run away out of fear…
2007 is “in the bag” as in we’ll be in a Recession.
Neil
2008 will be the year when bubble-moms finance their 10% ARMS by selling their eggs!
The problem is not many people are willing to pay top dollar for a financial ass blastin. Yeah, I’d like to pay big bucks for an asset I cannot sell, that is dropping like a rock, with taxes that are going through the roof. Your downpayment (i.e. equity) would disappear almost overnight.
How many people are lining up to take advantage of this “deal”?
So prices have to adjust to a level that makes financial sense. As long as the assumption is that I’m going to lose my ass, I’m not buying. And I don’t suspect a lot of other people will be either.
People without assets like these deals. They put up nothing, 100% LTV, so nothing to lose.
This is on target, and the crux of the problem. With 100% LTV financing, the bad credit risks with nothing to lose drive out the good credit risks.
“The typical monthly mortgage payment that Southland buyers committed themselves to paying was $2,437 last month, up from $2,376 for the previous month, and up from $2,021 for June a year ago. Adjusted for inflation, current payments are about 8.4 percent above typical payments in the spring of 1989, the peak of the prior real estate cycle.”
A point of order. how in the HELL can a ‘typical’ 1989 30year/20% down be compared to todays ‘typical’ IO/ARM No Doc bullshit as if the mortgage amounts are nearly equal?? I would guess the typical loan payment is 2X 1989 - if the loan basis is equally compared.
Article in the Sac Bee about the YOY price decrease
http://tinyurl.com/ktj9o
Sac down 1.3%, Placer down 6% and we still have a long way to go.
This is a sign of YOY price decreases in all parts of Calif. coming soon within 6 months or less.
alan gin and gary watts are blivets,which is defined as five pounds of shit in a one pound bag…i get this same line in my local paper and from people in the biz.and nvmtgbrkr is right about still being able to qualify anyone for a loan,the rate are higher but i can still easily get an unemployed person a million dollar loan secured by that gold plated california rel estate that never goes down.
This guy doesn’t even know English…
Alan Nevin. ‘In a lot of parts of San Diego, there is no give at all on the single-family side,’ Nevin noted.
Blivets tend not to.
Although sales as down 17.5, there were still over 29,000 houses sold. How the heck did you afford them - that continues to amaze me. Can anyone tell me how these people could afford it?
My question all along has been “Who is paying the premium prices to all these equity locusts”?
Most can’t, but that doesn’t stop them. With teaser rates and neg. am. loans and all of the other suicide loan products out there, they can get their foot on the rung of the housing ladder. Of course, they will need massive appreciation to keep the house after the re-set (as they will re-fi, probably with MEW), but they don’t worry about that. The problem, as is now becoming apparent to some of these GFs, is that appreciation is not guaranteed, and getting that re-fi might not be possible (and selling at a loss isn’t possible, either, because they don’t have the cash to bring to the closing). So, then foreclosure.
We’re already witnessing the beginning of the foreclosure increases. These will continue to increase as more loans re-set and FBs find themselves without any options. The increased foreclosures will put further downward pressure on prices, and thus put more people underwater. Rinse, repeat.
my guess is half of them can’t, the lenders must be packaging up these worthless loans and selling them to the gov’t.
Yo if u think people in Antelope Valley grocery stores are unattractive, you need to crash your bike at Willow Springs raceway and get taken to Antelope Valley Hospital emergency room. Take me home now, Jesus… I am ready to be with you. No, really…
Recently, my wife and I almost made an offer on a house in San Diego. Despite earnings 6 figures a year (and some), I was horrified when I did the sums and came up with the potential mortgage. This would’ve been a 20% down, 30 year fixed rate. No Mello, no HOA. House priced in the very low 700s. You know what? we may have been able to afford that house, but I’m dammed glad we didn’t follow through. We almost bought even though we’re bubble believers. The want of owning again (currently renting) almost overcame our doubts. I don’t believe we could afford that house by any reasonable measure, and if we can’t, then absolutely lots of others can’t either. Point is, I don’t see how many people can afford these prices in San Diego. I have no doubt that prices will (continue) to fall. God help people who make the mistake that I almost made and buy into this market. You would have to be mad.
“You would have to be mad.”
Other possibilities:
1) The buyer is ignorant, and fooled into buying by the availability of financing under which you can make the initial monthly payment.
2) The buyer is indifferent, as he has nothing to lose anyway.
3) The buyer is so wealthy that the loss of a few $100K means nothing compared to the joy of owning a SD home a couple of years sooner.
With the bubble losing steam in SoCal, how will I get properly steamed milk in my extra-dry cappucino at Starbucks? Double-foam lattes could be a thing of the past! Now if we could just put the unemployed mimes and wannabe actors to work steaming milk, we might be able to pull this out after all.
They could use the hot air from the Realtors(tm) as a power source.
I’m not whining. I’m not complaining. I’m getting all my assets lined up so when this market bottoms I can pick up a great house for pennies on the dollar after the bubble-buyers lose it to foreclosure.
I love the smell of eviction in the morning. Smells like ….