A ‘Countdown To Zero’ In Orange County
The Orange County Register reports that home sellers are facing ‘hard choices.’ “It’s not pretty, but homesellers are closing deals by whatever means necessary. They’re asking for less money, paying closing costs for buyers or stepping up their marketing amid an eighth straight month of sluggish sales in June.”
“The rate of appreciation has decreased each month since February’s 11 percent. It will keep dropping ‘kind of like a countdown’ to zero by fall or early winter, said DataQuick analyst Andrew LePage. Orange County’s median could dip slightly late this year, as San Diego’s did last month, he said.”
“The median home price has increased so much that many buyers are sitting on the sidelines. Mortgage and insurance payments add up to about $5,000 monthly for median-priced homes. Buyers also are pausing because of fear prices will drop after they make a purchase, brokers say. Or some may be waiting because they think they’ll get a better deal.”
“None of this is good news for sellers. And it gets worse. The number of sales last month plummeted 26.3 percent from a year ago to 3,608 homes, the slowest June sales pace in a decade. Yet there are more than twice as many sellers today, there were about 15,000 homes on the market at the end of June. The buyer pool, meanwhile, is drying up, say some brokers and sellers.”
“Alan Partch cut $40,000 off his asking price for a one-bedroom condo on Pacific Coast Highway in Huntington Beach. He still hasn’t found a buyer for the 719-square-foot unit, plus a closet and loft, at $457,777. If he doesn’t find a buyer by August, he listed the condo in February, Partch said he’ll take it off the market.”
“Richard Brock, of Westminster, knocked $20,000 off a two-bedroom house in La Mirada, but that hasn’t been enough to attract a buyer at $579,900. He needs to sell the investment property soon, which he bought in February for $550,000 and immediately put back on the market, he said. He’s pumped nearly $20,000 worth of improvements into the house while it’s been listed, Brock said.”
“‘Whether or not I come out ahead, I don’t know,’ Brock said. ‘It’s not a good situation for me.’” “There are signs more homeowners are under financial stress. Lenders last month mailed 462 notices of default to borrowers who had missed several mortgage payments, a 90 percent jump from a year ago.”
“Some sellers are reacting by paying up to $10,000 of a buyer’s closing costs, said (realtor) Dick Lobin in Huntington Beach. Sellers are more willing to negotiate on price and concessions, he said. And nowadays sellers are making deals to less qualified buyers, he said.”
“Things could get rougher from here, Lobin said. Sales volume, which has been down around 30 percent over the past few months, could drop an additional 10 percent, he said.”
“Richard Brock, of Westminster, knocked $20,000 off a two-bedroom house in La Mirada, but that hasn’t been enough to attract a buyer at $579,900. He needs to sell the investment property soon, which he bought in February for $550,000 and immediately put back on the market, he said. He’s pumped nearly $20,000 worth of improvements into the house while it’s been listed, Brock said.”
I’m picturing Kevin Bacon in “Animal House”, bent over, pants down and yelling “Thank you Sir, may I have another!”
Sad fact is many who pulled out equity to do renovations may find no increase in value. Value/Price is what the market will bear. Home prices are sitting on layers of ‘froth’ which now being discounted each month.
And why exactly is that sad?
Sad there is miscompection by many that renovations will increase their value. Sad for them sweet for me… Pennies on the dollar is what im paying for.
…..G R E E D…..
ORANGE ALERT!
>He’s pumped nearly $20,000 worth of improvements into the house while it’s been listed, Brock said.”
I don’t think we should always believe what the dollar amounts of improvements that these owners say that they “pumped into” their houses. I bet they are many times highly exaggerated.
Actually I was thinking $20,000 doesn’t sound like much. I own what was once a fixer upper. My husband and I do most of our own work and it’s still amazing how fast it goes. $20,000 could go for just a roof on a larger home or one w/ a more complicated roofline (lots of turns). Painting the home costs thousands if you hire out. $6000-$10000 to pave a driveway. Replacing rotting cedar—we spent over $1000 and were not as aggressive as we could have been replacing all the splits. Remember that was just the wood. My h still did the labor.
La Mirada is actually a pretty decent community, thou it is somewhat out of the Scal RE Limelight. Also not close to any major freeways. That purchase made a bit late in the RE Cycle, some months past the peak.
These are some of the still solid well-kept communities which may not be widely known in the SCal Re market.
La Mirada, Tustin, Glendale, Santa fe Springs(surprise but it has a very clean orderly, thou small, residential community among all those industrial parks), Pico Rivera, lakewood, Artesia, Brea, arcadia,San Dimas, Cerritos, west Covina,Walnut, Diamond Bar, Los Alamitos, Cypress.
shhhhh. don’t tell anyone about our little “west covina” secret…
Thanks to the reader who sent in this link. Check out the data on the links’ insert for some interesting numbers. The article reports that new home prices were up. but that’s from last month. New home prices are actually down over 12% YOY. Also, look at the price action on homes over 2,500 sq ft.
‘He still hasn’t found a buyer for the 719-square-foot unit, plus a closet and loft, at $457,777. He wants to sell to buy a bigger place in Seal Beach, Partch said.’
I bet!
stupid buyers…he has a closet and a loft. what’s their problem?
$640 a square foot? What a bargain! Where do I sign up?
It must be tiled in gold. One ounce gold tiles.
This guy owns a closet within a closet. He’s going to have to chop $400K off the top to even make it worth someone’s time to consider the POS. And I thought some of the crap in Dallas was overpriced. I’m laughing at the sheer stupidity of so many people in this country. How many other complete morons paid $600 sq ft for a closet and think they’ll be able to turn around and flip that junk on to some other idiot. I think this guy may have a way out of the transaction by claiming a complete lack of capacity to contract because of his utter lack of a measurable IQ.
Try Paris. 6,000 euros per square metre in the 16ième arrondissement! That is about 6,000 dollars per square feet. Same thing in London, probably worse. See! You are not alone in the USA. Stupidity is globalized when it comes to real estate.
Actually a square meter (unit of area) is nearly 11 times as large as a square foot:
meter = 3.281 feet
3.281 ² = 10.764 sq ft.
Given that 1 USD converts to about 1.256 Euros, 6,000 Euros/meter = 6000Eu/1M ² * 1.256USD/1Eu * 1M ² /10.764 sq ft. = $700.11 USD/sq ft.
Not too much higher than our La Mirada FB’s price. Of course, Paris is a *bit* nicer than La Mirada.
http://www.metric-conversions.org/area/square-meters-to-square-feet.htm
http://www.x-rates.com/calculator.html
Actually a square meter (unit of area) is nearly 11 times as large as a square foot:
meter = 3.281 feet
3.281 ² = 10.764 sq ft.
Given that 1 USD converts to about 1.256 Euros, 6,000 Euros/meter = 6000Eu/1M ² * 1.256USD/1Eu * 1M ² /10.764 sq ft. = $700.11 USD/sq ft.
Not too much higher than our La Mirada FB’s price. Of course, Paris is a *bit* nicer than La Mirada.
The 16th is also the very nicest/snootiest part of Paris.
A comparison to CA is more like Bel Air north of Sunset or Rancho Santa Fe.
Yeah, really. This guy is dreaming! Sure buddy, you will still be able to purchase that larger place if you like, but not with any proceeds from this sale!!!
Here’s my favorite quote: “Buyers can’t afford property tax, mortgage and insurance payments that add up to about $5,000 monthly for median-priced homes. ”
This is news? Doh! Never mind that the same homes would probably rent for a third of that.
In California a $500K home will run you prop tax at $7.5K per year to start. Thats $625/month… heck my rent is only $990/month.
5K a year? 1% of price isn’t that it.
“Under Proposition 13, the real estate tax on a parcel of residential property is limited to 1% of its assessed value, until the property is resold. This “assessed value”, however, may only be increased by a maximum of 2% per year. If the property’s market value increases rapidly (values of many detached dwellings in California have appreciated at annual rates averaging more than 10% over the course of several years) or if inflation exceeds 2% (common), the differential between the owner’s taxes and the taxes a new owner would have to pay can become quite large. The property may be reassessed under certain conditions, when additions or new construction occur; the assessed value is also subject to reduction if the value of the house declines, but this is rare”
Almost all the newer areas (newer means built in the last 15 years, and of course there are exceptions) have some type of extra assessment like Mello Roos. My prop taxes when I owned in San Diego (EastLake) ran right at 1.5 %. I was also checking a home up in Temecula and the realtor told me the taxes were 1.5%. The extra .5% is huge when you are talking about a 700K house!
If you can actually afford a 700k house an extra .5% property tax should be no big deal.
Not to pick at this, because I agree that prices are way to high in CA.
But, the assessment rate is 1% (excluding other kinds of assessments), and increases are restricted because of CA’s Prop 13 (which as a non-homeowner sucks–why should I pay full income tax and 4x the property taxes of a family next door just because they bought 10 years ago?–I’m sure my tune will change once I own).
Anyway, Prop 13 limits the amount property taxes can only increase by 2% per year, so once you buy, you are much less likely to be pushed out of your home by re-assessments. If your home appreciates by 10% next year, your property taxes only go up 2%. Same story if the appreciation is 50%.
How about if it depreciates by 50%, what is the calculation then?
50% say a prayer…LOL
Auger:
In CA if your property value drops you can petition the county for a downward revision in your assessed value.
However, as the market enters the next bubble your assessment moves back up to your original purchase price, negating much of the benefit of Prop 13.
The only solution is to buy relatively low and get grandfathered in at a low tax rate and don’t move until over 55 and can make your basis portable when you downsize into retirement.
Add in maintenance and that could easily add .5% to make the total 1.5% a year!
“The buyer pool, meanwhile, is drying up, say some brokers and sellers.”
Small wonder that would happen with sellers whose asking price has not adjusted whatever to reflect higher interest rates, tightening credit standards, expectations for falling prices, and competition from builders offering $100K price discounts. A used home seller will generally only be able to find a buyer going forward if he discounts his asking price for the above considerations.
All this talk of “better marketing” for a property to aid a sale is absurd.
By the time I see a realtor’s “marketing” about a given property, I’ve already known about the house for a week, and weighed it’s prospects.
It’s about three things: price, price, and price.
Save the marketing budget, lower the price.
I agree. Nothing says “overpriced” like too much marketing.
“It’s not pretty, but homesellers are closing deals by whatever means necessary. They’re asking for less money, paying closing costs for buyers or stepping up their marketing amid an eighth straight month of sluggish sales in June.”
In the early part of a market downturn, price declines are masked to some extent by nonpecuniary incentives, like sellers paying closing costs, or sinking more into renovation before putting a home up for sale (forget about selling “as is”!). Once these avenues are exhausted, further equilibrium adjustment entails falling sale prices.
“Richard Brock, of Westminster, knocked $20,000 off a two-bedroom house in La Mirada, but that hasn’t been enough to attract a buyer at $579,900. He needs to sell the investment property soon, which he bought in February for $550,000 and immediately put back on the market, he said. He’s pumped nearly $20,000 worth of improvements into the house while it’s been listed, Brock said.”
“‘Whether or not I come out ahead, I don’t know,’ Brock said. ‘It’s not a good situation for me.’” “There are signs more homeowners are under financial stress.
Huh!? Ok…can I just put him out of his misery now? His last three lines are just, I don’t know…priceless (more like clueless). I’d be interested in knowng what he got for his $20k improvements that he figures he should get that all back in his sale price.
BayQT~
Agreed. I think I can clear it up for him as to whether or not he’ll come out ahead. The answer is no. He bought for $550K, and put another $20K into it, so there’s $570K, plus whatever his holding costs are until he sells. He’s listed it at $580K, so unless his holding costs and sales costs (including commissions, escrow, etc., plus any costs associated with his initial purchase) are less than $10K (very unlikely), he is going to need to get more than his asking price (also, very unlikely) in order to just break even.
And, as BayQT noted, what improvements did he make that he thinks will get him 100% return on his money? Most improvements return less than their cost. The property has been on the market since February (when he bought it - the ultimate in flipping), and apparently he hasn’t gotten any acceptable offers yet, and the end of July is fast approaching.
This flipper will get what he deserves. And hey, maybe his son will learn a lesson from his dad’s misadventure, as the son (who is about to go to college) is forced to go community college (not anything wrong with that, but it’s definitely more fun to go away at a good 4-year college) for a couple of years because dad’s little investment foray cost him the college money.
and don’t forget:
points on his new loan(s), other closing costs at purchase and something we don’t discuss much here - early prepayment penalties.
he’ll lose fifty thousand dollars ez.
You’re right! The good ole prepayment penalty, along with the costs that DC mentioned…..Dude is definitely screwed. And then there are the comps and appraisal. I would think that appraisers are watching their P’s and Q’s these days…numbers may not line up for Mr. Brock.
Dude should probably break out the piggy bank and start counting. He’s gonna have to bring money to the table in order to sell, and I’m sure he doesn’t want to do that. Why? Because he’s an “INVESTOR”. Sure he is…..
BayQT~
BayQT~
I figure his loss is at least $35,0000 and that is with sales price at listing. I am using typical buying and selling expenses. Why he did not do the numbers before he bought is a big mystery unless he is really stupid. Before you buy you look at your rent vs expenses and see if you can hold it for a number of years ….
Pathetically, the clueless wannabe specuvestors simply looked at the double digit appreciation of each year, assumed that held for any home and for eternity, then bought a property which, in their own expert opinion, was a gem of a fixer/flip. But reality has set in for these poor misguided souls. The dog days of summer are filled with deep regret, remorse, shame and despair as they cry in their beer realizing they never were an investor, but just a sucker who got burned by someone who sold at the top.
“The dog days of summer are filled with deep regret, remorse, shame and despair as they cry in their beer realizing they never were an investor, but just a sucker who got burned by someone who sold at the top.”
Yep.
I don’t understand how people keep falling for the same ruse. There has never been, and never will be, a method to get rich when the public at large thinks they will get rich the same way.
That is, if you hear a bright idea around the watercooler at work, stay the f*ck away from it. The fact you heard it at the watercooler means you’re at least a year too late.
I bet the guy who sold it to him still has a hard time not busting up laughing whenever he thinks about it.
A fool and his money….
He doesn’t know if he’ll come out ahead? Why don’t we end the suspense right now…
Wait, wait, wait. I don’t understand.
What about “leverage?” I was told that leverage is a GOOD thing - a powerful tool for making money.
If I bet 10k on the NASDAQ and lose 75%, I still have $2500 - if not my pride.
You’re telling me that if I bet 10k (or even less), on the US Housing Market - which never goes down - I could lose MORE than $7500 dollars?
I don’t get it.
He obviously hasn’t seen http://danwho.net/mp/index.php?id=snl_dontbuystuff
sfbayQT,
Its his birth right!
For his improvements:
10) its all about price appreciation Qt! anyway
9)After all, he held this hot potato for 6 months. 25% on $580k is ?
7) #1 Law of OZ, all Real Estate everywhere always goes up!
6) He watched the upgrade show, & put the expert advice into action
5) Granite counters & stainless aplliances always lipsticks the pig.
4) He is a broker and spent his purchase commissions
3) Because he is a broker so he reports “income” on both transactions
2) The six month teaser rate saved him $20,000 in interest
But#1) reason
He his one of the countless “Bagholders” now desparately searching for the greater fool! (His twin financial WIZARD)
These guys are getting eaten alive by their mortgages. Oh the horror!
Brittneys next single, I’m a debt slave for you baby!
Hit Me ARM Resets One More Time!
Oops, I Defaulted Again
Good one LOL!
You drive me crazy,
But I’m in too deep
I owe so much money,
that I just can’t breathe!
Sometimes I pay the mortgage,
sometimes I don’t.
But I just want to be near you
since the collectors call me day and night.
I’m addicted to you
Don’t you know that you’re [a] toxic [loan]
lol…you guys are too funny
Good! Let them suffer. I am tired of these stupid morons that God imposes to us. Let them suffer plenty. I hate them. Really I hate them. Let them starve.
Can I participate in the eating ? With BBQ sauce, fine herbs and a lot salsa and tabasco, I am sure we can do something eatable and very tasty.
IGNORE THIS BLOG!!
ITS IN THE BAG!!!
MOVE ALONG, NO BUBBLE HERE…
“The rate of appreciation has decreased each month since February’s 11 percent. It will keep dropping ‘kind of like a countdown’ to zero by fall or early winter, said DataQuick analyst Andrew LePage. Orange County’s median could dip slightly late this year, as San Diego’s did last month, he said.”
Paging Mr. Watts, Mr. Gary Watts…..Mr. Watts…..
Ground control to Major Watts
This is Ground Control to Major Watts
You’ve really made the grade
And the papers want to know what sh*t you speak
Now it’s time to leave the capsule if you dare
GARY WATTS IS BEING PROVED A FRAUD!!!
Too bad he can’t be sued for the promise of 15% “in the bag”. Of course he revised his statements saying that a soft landing isn’t possible for OC, “it isn’t even in the approach pattern, we’ll see 12% and if we get a tailwind, perhaps 15%”
The only tailwind, is the noxious gas comming out of Gary’s foul lying mouth.
Everyone should send him a fax of his quotes. His contact info can be found on his website
Impact Real Estate http://www.impactre
Sorry about that, it is:
http://www.impactre.com
Ground control to Major Watts:
Your prediction’s dead, there’s something wrong.
Can you explain Major Watts?
Can you explain Major Watts?
Can you explain Major Watts? Can you …
here I am I’m sitting in a bubble
far far above the world,
Orange county is looking very blue
and there’s nothing I can do……….
Though I’ve lost one hundred thousand dollars
I’m feeling very still
And I think the market knows which way to go…
Can’t tell my wife she’ll divorce me if she knoooows.
clearly a lad, insane
“Some sellers are reacting by paying up to $10,000 of a buyer’s closing costs…”
I understand why homebuilders would offer incentives and pay for closing and such. After they hose you, they have more inventory to unload, so they don’t want to hurt the comps. But why would an individual seller pay for closing costs instead of reducing the price?
Seems to me that reducing the price instead by $10k instead of paying $10k in closing costs would reduce your realtor’s commission, and reduce any taxable capital gains (if over the $250k or $500k limit). All good for the seller. You think realtors are telling them, “no don’t reduce, just offer to pay for the closing. Buyers like crap like that.”
“But why would an individual seller pay for closing costs instead of reducing the price?”
Because it opens up the pool of potential buyers.
I think you forget how RAZOR thin the buyer’s finances have been of late. Closing costs can run into the $5k to $10k and up range. A lot of the buyers these days DON’T HAVE 5 dollars, much less $5,000.
Thus, by paying closing costs, you attract buyers who don’t even have closing costs saved up…
just shows how pathetic it’s become of late.
When I sold my condo March 2005 (in San Diego) the new buyers got a 103% loan (interest only first, option arm second I THINK). They needed that 3% to pay for closing costs. (this was on an over $500k condo).
clouseau
Exactly right. I sold a house in Menifee (Riverside County) in May ‘06 an the buyer speficically asked for closing costs to be paid. She didn’t want to put 1 nickel of actual cash into the house.
“When I sold my condo March 2005 (in San Diego) the new buyers got a 103% loan (interest only first, option arm second I THINK). They needed that 3% to pay for closing costs. (this was on an over $500k condo).”
Game over. They’re done. Finished. Buh-bye. Next?!
When I sold my condo March 2005 (in San Diego) the new buyers got a 103% loan (interest only first, option arm second I THINK). They needed that 3% to pay for closing costs. (this was on an over $500k condo).
Insane. I wouldn’t even think of such a thing. Guess that makes me “unsophisticated.” These people have no business buying a car, let alone a house.
So… how much equity can this new happy homeowner expect to liberate now?
Are the lendors still going along with this? Has anyone noticed if the standards are tightening any?
Friend (FB) of mine turned down an offer to buy his NB condo for 1.1 million in December because he didn’t want ot pay the buyer’s closing costs. Buyer was approved for the loan, but could not bring the $50,000 to the table to close. Of course, there hasn’t been a single offer on the place (which sits vacant) since, and the asking price has been dropped twice. Original cost basis of the unit was in the mid-300’s (bought in 1998) but its been HELOCed to hell, so now he has to sell it for more. The story is a common one, and it will have an unhappy ending.
Following the musical spoof theme…
Greed hurts, Greed scars,
Greed wounds, and marks,
Any flopper, not tough,
Or strong, enough
To take a lot of pain,
Take a lot of pain
Greed is like a cloud
Holds a lot of rain
Greed hurts, ooh, ooh… Greed hurts
I’m young, I know,
But even so
I know a thing, or two
I learned, from you
I really learned a lot,
Really learned a lot
Greed is like a flame
It burns you when it’s hot
Greed hurts, ooh, ooh… Greed hurts
Some fools dream of endless wealth
Blissfulness, togetherness
Some fools fool themselves I guess
They’re not foolin’ me
I know it isn’t true,
I know it isn’t true
Greed is just a lie,
Made to make you broke
Greed hurts, ooh, ooh… Greed hurts
Ooh, ooh… Greed hurts
[guitar solo]
Bravo! Greed hurts the one who has it! And the one who has it deserves the hurt. What a lesson they will be taught. Sadly, many of them won’t recover for many years, maybe 10 years, maybe 15. And they have meager savings as it is. They will eat dog food in their old age all because they were greedy with the real estate bubble of the century.
When do the CAR #’s come out for June? Friday?
You mean the housing affordability numbers? June 2008. Or the “Income Gap survey”? Never again.
Bwhahahahaha
LOL!
Good one…. LOL around the 20-22th….
CAR’s website says they come out on the 24th or 25th, check their press release section for January, there is a schedule there. I’m particularly interested in the months of supply. If there are twice as many homes and half as many buyers …
Take on rate hikes, stark housing forcast etc.
http://www.howestreet.com/goldradio/index.php/mediaplayer?audio_id=372
GEESH.. sounds almost like he reads this blog. Nice to hear the confirmation out there of what was on here 8 months ago.
“Things could get rougher from here, Lobin said. Sales volume, which has been down around 30 percent over the past few months, could drop an additional 10 percent, he said.”
Make that, “Things will get rougher from here.” And, with declining sales volume, appreciation flattening out, ARMs re-setting, rates on HELOCs going higher, CC minimum payments doubled, layoffs (Ameriquest and other lenders, as well as other RE related occupations), and increasing inventory, it’s going to get real rough for the FBs.
“Richard Brock, of Westminster, knocked $20,000 off a two-bedroom house in La Mirada, but that hasn’t been enough to attract a buyer at $579,900. He needs to sell the investment property soon, which he bought in February for $550,000 and immediately put back on the market, he said. He’s pumped nearly $20,000 worth of improvements into the house while it’s been listed, Brock said.”
somebody earlier today wanted to know what an “fb” is. this seems like a pretty good example
roger that …
Let’ see:
550k @ 6% is $2750 a month for interest. $460 per month in property tax, 5% fee when he finally sells it, plus the 20k in improvements. I think he should find another word for this thing. Investment is not the right one….
If he sells in 6 months this all adds up to about $66k (OK, pre-tax, so lets say $55k)
Oh Waitress!!!! A round of very painful ass-poundings for my flipper friends from Orange County over at the corner table please!
I picture something from “pulp fiction” with the gage ball.
“im going medevial on his …..’
This really is getting old. Can’t you come up with something new on occasion?
i’m a simple man with simple pleasures. i like lollipops in my mouth and butter in my ass. please don’t take away my fb ass-poundings
sorry, I’m easily amused. (you are a sick man, chilidoggg
)
And, of course, he will tell his friends how much money he made , not lost, so he can still believe he is one great investor and awe all his friends with his expertise.
Westminster to La Mirada is about a half-hour drive. I doubt he did his homework, other than Realtor.Com.
First mistake flippers make is not knowing the territory. I bought in my home town, know every neighborhood, and would only buy a rental with positive cash flow. Home to live in, not a rental.
Saw them years ago, when cash could flow, but I was unable to buy. Now, everything in North (and, I suspect South) Orange County is a negative cash flow, even with a 25% Down.
You would be right. You’d need about 50% down in most areas to positive cash flow now. I would even wager many areas up to 70% cash down to cash flow.
“Things could get rougher from here, Lobin said. Sales volume, which has been down around 30 percent over the past few months, could drop an additional 10 percent, he said.”
Sorry Dick, sales volume isn’t the only thing that could be dropping by double-digits. However, you are correct when assuming things could get rougher from here.
Do any folks feel that this market will drop more quickly due to the availability of info? In the early 1990s, there really wasn’t an internet and my guess is the “info lag” was much greater. It seems that the pace of change in the last six months and the info describing this change could expedite the correction (not to mention that this will be the first “correction” in the post down payment/30 year mortgage era).
That has been discussed here in recent months. I think you’re seeing the effects of it already. This housing market has gone from white hot to stone cold amazingly fast almost nationwide, and that has to be in good part due to the constant flow of information. Look at this group. In every state practically and many other countries. We’re hearing it in real time.
Of course it has. Back in the early ‘90 it took _months_ before txchic57 and I realized that we agreed on something. Now, we know the very same day.
In all seriousness, I think the answer is a strong yes. Not only for this phase of the bubble, i.e., “the popping”, but the speed and availability of information is big factor in the 2001-2005 run-up.
Consider if we only had pre-1990 information and systems, would the bubble run-up have been as fast? Involved as many people? Migrated from place to place so fast? Peaked prices so high? Enabled shady lenders and others so easily?
I feel strongly that out current information infrastructure has played a bigger role in all this than most of us give credit for.
Absolutely.
“In a bubble, high prices are sustained only by the expectation of more high prices. That is what makes a bubble a bubble, prone to bursting.” - Robert Shiller
With the high availability of information the reality of what is happening will spread much more quickly, bringing the “expectations” that Shiller describes lower that much faster. The fact that anyone with a pulse could get a mortgage over the last few years will also have a part in the rapid decline as well.
Zillow and ZipRealty. The MLS. Great blogs like this. After a while, even the most dense among us will be able to sniff the changes in the wind. The bubble was borne of glowing reports, get-rich-quick infomericals and herd mentality. I guess it’ll die the same way.
I concurr… before we had N.A.R. press releases and word of mouth.
Now? I told a co-worker not to flip a san Diego McMansion… He then talked with his “flipping cheerleader” who tried to talk him into a condo. But because coworkers were bearish on home prices, he held off… in fact until his “flipping cheerleader” walked away from the deposits on three McMansions down in San Diego. (awww… that HELOC on the primary residence is going to be a “don’t be greedy” reminder for years to come.)
Before… we had N.A.R. press releases…
Are you implying it’s different this time?
I’m implying the lack of information sustained bubbles for long periods of time in the past. Yes, it is different this time. The slowdown is happening faster (not fast enough for us bubble heads, cest la vie).
We’re in for interesting times.
Personally I think the internet may play somewhat of a role but not as much as people think. I’m inclined to believe that, even though there is a plethora of information out there, people are more inclined to only hear what they want to. Besides, most people who read blogs like this are actually trying to research if buying a house makes financial sense. Not the type to jump into something that doesn’t pencil out.
I agree. A former co-worker stopped by (left here to go to a real estate job, dontchaknow). In the “deep south” aka Orange County. The idea of a housing bubble was alien to her - I think she didn’t even know what I was talking about. She remarked “prices are really high”. She continued “but you and your wife better buy a home soon ‘cuz the prices will be a lot higher in the future”.
That just means I’ll be saving even more money by renting!
Ditto to what DG & John P said. For the information on this or any other anti-bubble site to be of assistance to any would-be FB, you need to satisfy at least three conditions:
1. Be able to FIND this site through all the NAR/media-cheerleader clutter.
2. Be receptive to the overall tone/slant before you can absorb any useful information.
3. Be intelligent enough to apply the information to your particular circumstances and use it to your advantage.
Based on your average prospective FB out there, I’m guessing this would be a VERY selective cross-section of the public.
Ditto to what DF & John P said. For the information on this or any other anti-bubble site to be of assistance to any would-be FB, you need to satisfy at least three conditions:
1. Be able to FIND this site through all the NAR/media-cheerleader clutter.
2. Be receptive to the overall tone/slant before you can absorb any useful information.
3. Be intelligent enough to apply the information to your particular circumstances and use it to your advantage.
Based on your average prospective FB out there, I’m guessing this would be a VERY selective cross-section of the public.
Most people I speak with (mostly gen Xers and young boomers) don’t seem to be aware of the bubble. When I mention it almost all are very suspect. The few times I tried to quote some #s their eyes glazed over. They don’t want to know.
Oh yeah and then there was the friend who replied to my e-mailed links to this blog with links to statements from the NAR.
She told me there was info out there that supported opposing views to my arguments.
I don’t discuss housing with her anymore.
Sorry to sound like an IQ snob but I think “valuable” information (subjective, I know) dissemination via the internet does not reach sheeple. Their source of information is the watercooler and Access Hollywood. that is what they tend to care about. that is why they are sheep.
They never were taught (nor, for the most part, saught) how to reason independantly or objectively and they feel safe going with the herd.
Just as the average Joe nowadays would not even consider investing in today’s stock market (because a buddy of his got burned 5 years ago) we’ll see the same aversion to housing around 2010….. Once the bloodletting cannot be ignored.
Any guesstimates as to what percentage of borrowers got their loans online in the past few years? Could be interesting.
Those who did tend to be more A-paper (good/great credit, high fiscal discipline). they got their 5.25% 30-F and stuck with it.
The FBs tend to respond to mailers and phone calls…… why? Because pucking up a flyer requires less effort and it says “You are pre-approved for a loan that will give you an absurdly low payment so you can pay off all year debt and rack up $#@!loads more over the next year. Call now!”
He needs to sell the investment property soon, which he bought in February for $550,000 and immediately put back on the market, he said.
Reminds me of the tv commercial where the guy buys a piece of art at auction and then immediately stated: “Okay, I’d like to sell that thing I just bought”.
“Things could get rougher from here, Lobin said. Sales volume, which has been down around 30 percent over the past few months, could drop an additional 10 percent, he said.”
He should change his last name to Broke.
Contact Gary watts and ask him about “15% in the bag”
He has convinced thousands based on his “expert” economic forecast. He should come to this blog and answer the basis
EMAIL US: info@impactre.com
FAX US: (949) 707-5275
PHONE US: (949) 707-5011
MAIL US: Impact Real Estate
27742 Vista Del Lago, Suite J-3
Mission Viejo, California 92692 - 1119
Of course, you could always order his winning “why the housing bubble is bogus” CD’s that have been quoted like gospel by Realtors far and wide.
What?? This guy has a CD titled “why the housing bubble is bogus”? Holy Sh*t! Nothing yells out “I’m a testicle” louder than that title. This guy should go to jail.
“I’m a testicle”…. Bwuahahahahahahahahah!
Is he “nuts”, or are you? I think Watts takes testerone injections. Maybe he can sell a house to Barry Bonds.
DONE! Lets see if he responds to me!
Crispy,
Awesome, be sure to post if he responds to you. I am wondering if he has the integrity to respond to the tailwind and “in the bag” comments. He should know that it is always foolish to say something is “impossible” but that is precisely how he described OC housing prices.
each time I see tailwind, I get a Beavis and Butthead moment.
He said tailwind, heh, heh, heh.
Top hit on google for “gary watts” - an article from october titled “Gary Watts will burn in Hell”.
Yes, that’s on my blog. I still get people hitting it constantly. I also followed up with one titled “Gary Watts will Still burn in Hell” earlier this year. I will most definitely have to post a three-quel.
John Doe
Gary Watts will burn in Hell in perpetuity
Gary Watts will burn in Hell it is in the bag.
The chances of Gary Watts burning in Hell only goes up.
Check this out …. Gary watts I sure dont see any 15% gain in the bag. The Oceanside home..Listed at $2,399,000. Price reduced to $1,900,000!! Owner’s are in a partnership and want to become independent thus the huge price reduction. Priced to sell immedialty.
Now check out zillow….
http://www.zillow.com/Charts.htm?chartDuration=5years&zpid=16584070
Looks like they bought it for 1.55 last Oct and zillow has it at the same price. Looks like they are still looking for the big kill to me. Hope they follow the market down about a mil before it sells.
5% isnt that big…
For the record Oceanside will get hammered!
Unless you like living with a bunch of illegals, drunken and angry Marines (Camp Pendleton next door) and no jobs without driving 1.5 hours north (oc) or south (SD).
These homes will be will under $1M in due time.
Oceanside blvd(Ave?) does look a bit ragged. Looks like all the local raggedy folks from north County have collected here.
They bought it for 1.55 10 months ago and have it listed for 1.9 today. Zillow puts the value at 1.55ish. That is a nice bump for 10 months of holding time, IMO.
Dropping $10,000 - $20,000 is a teaser– it’s nothing. Sellers need to think bigger or their houses will remain unsold. The housing bubble is here and you have to realistic to sell your house in this market.
I was in the Bay Area last week. They are now selling postcards in Chinatown that make fun of the real estate bubble there, showing a dilapidated shack as a “California Starter Home”.
I hadn’t been out to California since 2004. From what I’ve read here the past 1 1/2 years I was expecting to see foreclosures and For Sale signs lining every street. Maybe I was looking in the wrong areas (San Jose, Gilroy), but I didn’t notice anything unusual. That’s my honest opinion. Or maybe I was visiting too early.
Six months too early.
Come back in February.
Of course, by then, all the TV reports will be pleading with you to feel sympathy for those who laughed.
‘Kill ‘um All’…I say…
…to quote a favorite band.
One thing I couldn’t figure out is the 30 mile rush hour traffic jam from San Jose to Gilroy. I saw thousands of acres of undeveloped land on 101 between San Jose and Gilroy and was wondering why that land hasn’t been sold to developers. It seems odd to me to have an employment center separated from housing by 30 miles of farms.
I believe this is referred to as a “community separator” (Google this term, you’ll find plenty of info) where development is limited. This is relatively common is northern California…
One thing I couldn’t figure out is the 30 mile rush hour traffic jam from San Jose to Gilroy. I saw thousands of acres of undeveloped land on 101 between San Jose and Gilroy and was wondering why that land hasn’t been sold to developers. It seems odd to me to have an employment center separated from housing by 30 miles of farms.
It’s a nice place, though. Too bad the commute is such a bitch.
As every RE agent will say there is no land to build on … lol… more marketing hype.
No mercy, what is good for the goose is good for the gander.
Lou, here is some local foreclosure data from Orange County. Definitely more activity now than a couple years ago.
http://tinyurl.com/lzgbg
The only reason the foreclosure rates are below national averages is because people have made so much equity on their homes the past few years out here. People could be complete morons and HELOCing their life away or just sell if they couldn’t afford it because the market was hot. Now it isn’t, so these morons won’t be able to get rid of their financial problems so easily.
The only reason the foreclosure rates are below national averages…
Correct. My favorite site to keep an eye on the local OC foreclosure
situation is http://www.foreclosure.com/
Sorry if this was posted already. Classic consequence of the housing bubble.
Summer Bargains for Rent
http://tinyurl.com/p8p38
Homeseller sweetens deal with Hawaii trip
Like those stupid plane tickets are going to make the cutting edge in a $1.5 million deal.
http://tinyurl.com/hum6q
“Findly and his wife, Sandra, 42, are selling to move to a home with a yard for their two dogs, Molly and Reggi. Their four-bedroom, three-bath home sits just blocks from the beach, a neighborhood pool and tennis courts.
The couple dropped the price by $41,000, to $1,549,000, since they first put the house up for sale in June. But while pricing a home accurately is essential, it’s not enough, he said. Nor is merely holding open houses every weekend for up to six months, he said.
Findly believes that more sellers will resort to such tactics as the market continues to slow.
“For people to sell their house, they have to differentiate themselves,” Findly said. “Reducing the price alone is extremely costly.”"
Not reducing the price could prove to be even costlier when the house dosn’t sell quickly…
Mentality of someone actually listening to Watts. If I buy an ave priced OC house at $640K, in 12 months it will be worth $740K. Wow, 100K for staying home and watching Jerry Springer and Oprah. If I can lie and get 10 loans (homes), I will be a millionaire. Quick, I need a realtor. The million is in the bag.
Oh SHIT, I am now $2M in the SHITTER. Bummer. Where is “in the BAG”. I have something to share with him.
New buyers might need those Hawaii plane tickets when they are hiding from the mortgage holder.
We have FINALLY run out of idiots. I never thought we’d have 4 years worth…
July 19th, 2006.
In Orange County, California…
…Flipping…
…is Officially Proclaimed Dead.
From http://www.nvar.com/market/marketstats/jun06/index.html
In Prince William County, 4812 single-family listings,
but only 602 contracts (of which we can expect some fraction
to fall through and not close) — and 1777 new listings.
With the market already north of eight months inventory,
additional inventory is being listed at three times the
rate of real sales at the very peak of the selling season.
The pace of sales is down about 40% year-over-year.
Judging from June reports for past years, the pace of “contracts”
slows slightly into July and August, then drops about 20% in
September and slows even more in later months, but the rate
of new listings doesn’t fall as much, so inventory normally
rises into the fall. Inventory may be at 12+ months by this fall.
Other NoVa counties are in similar straits.
“Alan Partch cut $40,000 off his asking price for a one-bedroom condo on Pacific Coast Highway in Huntington Beach. He still hasn’t found a buyer for the 719-square-foot unit, plus a closet and loft, at $457,777.”
LMAO…. “plus a closet” =)
These fools are off the hook…
$637/sqft??????
And if he doesn’t sell he will take his ball and go home! “I won’t give it away” becomes the mantra of the doomed FB!
http://www.ziprealty.com/buy_a_home/logged_in/search/home_detail.jsp?listing_num=P496541&page=2&property_type=SFR&mls=mls_so_cal&cKey=v7pr70sz&source=SOCALMLS
This appears to be Mr. Brock’s house. I live about a mile from this place so I know the area well. Let me tell you, no way this house is worth 579 even in today’s overpriced market. This house isn’t even in the nice part of La Mirada. I feel sorry for the guy.
Why feel sorry for this flipping flopper Mr. Brock. I have really bad memories of La Mirada, but that is not related to this dude. I am happy to read stories specifically of La Mirada taking a dive. Very heartwarming to me.
Taking solace in anothers misfortune….seems to be your MO need2leave. You sound like an angry guy in need of some help. Zero class.
“Alan Partch cut $40,000 off his asking price for a one-bedroom condo on Pacific Coast Highway in Huntington Beach. He still hasn’t found a buyer for the 719-square-foot unit, plus a closet and loft, at $457,777. If he doesn’t find a buyer by August, he listed the condo in February, Partch said he’ll take it off the market.”
I show Alan Paid $490,000 for the condo on 4/22/05.
Flipper alert!
The psychology has really changed. Who is going to pay top dollar to get an ass blastin?
Not many I suppose.
such denial!
Nevertheless, buyers are not going to see prices tumble, said Hall, of New Homes and Communities by Illustrated.
“Builders might offer cash at closing instead of upgrades, or buy down the interest rate, but construction costs haven’t come down,” he said. “The buyer out there is in a little bit of fantasyland thinking he will get a reduced price.”
But Realtor Sarah Mazor of Mazor Realty in Boca Raton says it’s still a good time to buy.
“There are deals out there,” said Mazor, a buyer’s agent who specializes in pre-construction and new construction. “This is the time to do it before the market gets back to a normal pace and these incentives disappear.”
it gets worse. there is truly going to be some blood on the dance floor!
Nevertheless, buyers are not going to see prices tumble, said Hall, of New Homes and Communities by Illustrated.
“Builders might offer cash at closing instead of upgrades, or buy down the interest rate, but construction costs haven’t come down,” he said. “The buyer out there is in a little bit of fantasyland thinking he will get a reduced price.”
But Realtor Sarah Mazor of Mazor Realty in Boca Raton says it’s still a good time to buy.
“There are deals out there,” said Mazor, a buyer’s agent who specializes in pre-construction and new construction. “This is the time to do it before the market gets back to a normal pace and these incentives disappear.”
A lot of condo conversions are waiving developer fees or paying the first year’s mortgage, she said. One large home builder is offering $30,000 at closing or 3 percent of the purchase price, she added, while others are pledging to sell homes at lower prices if they go down after buyers sign contracts.
“It’s up to consumers when they decide it’s safe to go back into the water,” said MetroStudy’s Hunter. “Sooner or later people will get tired of waiting on the sidelines, and when they have a reason to buy a home, they will just make that choice and not worry about it.
“They will go back to thinking of a house as a path to a lifestyle and not a way to get rich.”
Who are all those people buying all those houses in Orange County? They must be making 200-300K. I am stunned!
I couldn’t agree more. We just made an offer on a home in Orange Co, New York, at 95% of asking price and were slapped in the face with a rejection. The house has sat on the market for two buying seasons now and was originally listed at $575,000K. It dropped to $545K and now to $499K and we were told to take a hike at $475K. “Buyers are still coming up from NYC,” we were told by our agent, “and they have the money and means behind them to pay these prices.” Yeah, they also have a 1.5 hour commute each way to get there. It’s very discouraging. From what we’ve seen/heard the suburb’s of NYC are heating up again as buyers are getting worried that rates will continue to raise and sellers aren’t budging much on their prices. We’re re-signing our rental lease for at least another 6 months.
Read this!
Husing still optimistic
Says economy too strong for residential bubble
“Anyone waiting for a housing bubble to hit the San Bernardino/Riverside area will be waiting for a long time.”
“Senior economist Christopher Thornberg of UCLA’s Anderson School of Management had called the soft-landing theory “nonsense” on Tuesday and said we are in a “classic bubble.”
“If we are lucky, prices will go flat,” he said, suggesting that we could see five years without price appreciation.That may be true elsewhere, Husing said, but it won’t happen here.”
http://www.sbsun.com/business/ci_4071510
See how good our economist is in the IE!!! heheheh
“Like those stupid plane tickets are going to make the cutting edge in a $1.5 million deal.”
Frequent Flipper Miles for everyone!.