Losing The ‘Gold Rush Mindset’ In California
The Californian press is buzzing about the housing bubble. “Cheri Colon has been selling (Silicon Valley) real estate for more than a decade. Last month she watched home sales drop to their lowest level in five years and watched prices dip as well. Colon said, ‘It’s a tough time to be a seller and to lose the mindset of the Gold Rush days.’”
“‘Sellers are becoming nervous about how long it’s taking to sell,’ said Aaron Zapata in Whittier. ‘There are many sellers who have contingent offers on properties that they’re having to withdraw because they’re not getting their homes sold,’ added Zapata.”
“‘We’re seeing buyers out there, but they’re a little more hesitant, they’re waiting a little longer,’ Patrick Lashinsky said. ‘There’s a mismatch between what buyers are willing to pay and what sellers want to take right now.’”
“Zapata said his firm hasn’t seen many first-time buyers lately, and those who are looking to buy feel little pressure to pay sellers’ asking price these days. ‘Buyers are nervous that they’re buying at the top of the market,’ Zapata said. ‘Most offers now are coming in under full price, somewhere up to 10 percent less than asking price.’”
“Chris Thornberg, a senior analyst at the University of California, recollected an epiphany he had while eating lunch at a West Hollywood restaurant. Sitting in the booth behind Thornberg and his colleagues was a trio of actors, who were discussing home vales. Thornberg recalled the conversation he overheard. ‘One of them said ‘Dude, my condo’s gone up in value by $100,000, what should I do,’ his friend told him ‘Pull it out, buy yourself another condo. It’s free money.’”
“That ‘free money’ line sent shivers down Thornberg’s spine. He said it signaled to him just how dangerous the real estate ‘feeding frenzy’ could become. ‘A bubble is when the market price of an asset has no basis in what the rate of return on that asset is going to be; when the fundamentals say one thing and the market says another,’ he said. That’s the market we are in right now, Thornberg argued.”
“‘At some point we have to come to grips with the basic affordability question. This is not an affordable market,’ said Stephen Levy in Palo Alto. ‘I think prices could drop, and once these things start, they have a snowball effect.’”
“Levy, who estimates prices could drop by as much as 20 percent in the next couple of years, said rising interest rates are quashing the segment of buyers who can only get into the market using riskier, adjustable loans. ‘People chose to bet on future appreciation by choosing loans where they knew payments would go up by a lot, but they got in cheap,’ Levy said. ‘There are no cheap loans now.’”
“In January, the average rate for a one-year adjustable rate mortgage was 5.17 percent, compared with 4.12 percent in January 2005 and 3.93 percent in January 2004.”
“Meanwhile, notices of mortgage defaults and foreclosures are rising as some builders report more buyers backing out of deals, canceling purchases at new-home tracts. Sharon Hanley said 89 single-family homes were sold and 30 sales were canceled for the week ended Feb. 5, representing a 33.7 percent cancellation rate. For the same week two years ago, near the peak of the boom, the cancellation rate was 10.9 percent.”
“Suzie Ek, vice president for sales and marketing at Standard Pacific’s San Diego division, said higher cancellations come from buyers unable to sell their present homes at the price they needed to afford to move up.”
“Sandy Perlatti, spokeswoman for McMillin Communities, her buyers are not expressing concern with macroeconomic forces around them, she said. Greg Geisen said he closed escrow on a Quintessa house, priced at just over $1 million, even though he has yet to sell his current home. ‘It’s not real money,’ he said of the anticipated profits. ‘It’s transferring equity from one home to another.’”
‘It’s not real money,’ he said of the anticipated profits.
Well, we all get a little loopy when things are GOOD. What happens when this turns south and he owns more than the property is worth?
TUNE CHANGES: “My bank tells me I STILL OWE the full amount… regardless of what the property is “WORTH”. (ouchhhhh.)
Translation: Debt IS real money… you dink! and unless you take the low road and declare bankruptcy- You’re just another FB.
AG Fed = Drunken debit debauchery w/spiked punchbowl
BB Fed = MFer of a bankruptcy hangover
This bust is going to be so much worse than previous ones because of the number of buyers who used these idiotic interest-only, option ARM, etc. loans. There’s going to be a panic when these fools realize that they are underwater and their monthly payments are about to shoot up. Not to mention those buyers who “cashed out” with home equity loans - yikes!
it’t not real money? this is always the refrain when Re knuckeheads think that a $100,000 increase in value from doing nothing is leveraged into another home for investment. When the Re asset values decline and that $100,000 leveraged increase vaporizes, the monthly payment on that borrowed $100,000(or $500.000) IS REAL.
‘There’s a mismatch between what buyers are willing to pay and what sellers want to take right now.’
This gap in OC must be about 87% of the recent comp price, as Shiller’s recent poll suggests that until lately, OC households believed another 10 years worth of 23% YOY appreciation was going to make them all multimillionaires. This 23% YOY appreciation would have translated into a 10-year price increase by a factor of 8, explaining my 87% (= 7/8 X 100%).
My back-of-the-envelope calculation ignores inflation, as we all know that Ben Bernanke has sworn to be vigilant in keeping inflation within a low target range. I also am conservative, in assuming that prices will flatten out (as Thornberg claims), rather than dropping like a rock. But if Thornberg is right about prices flattening out like a pancake, then there is an 87% gap between recent comp prices and what a rational buyer should be willing to pay for the prospect of no appreciation in the next 10 years. Sorry folks, but something’s gotta give. (Maybe after the five flat years that Thornberg predicted, OC homeowners will earn an annual appreciation of 50% for the subsequent five years to get back up to that 23% YOY figure that Shiller’s poll suggests they are anticipating?)
Greg Geisen said he closed escrow on a Quintessa house, priced at just over $1 million, even though he has yet to sell his current home. ‘It’s not real money,’ he said of the anticipated profits. ‘It’s transferring equity from one home to another.’”
A year ago, Greg Geisen said he closed escrow on a Quintessa house, priced at just over $1 million, even though he still has yet to sell his current home. ‘It’s real money,’ he said of the anticipated losses. Geisen is considering filing bankruptcy if the home doesn’t sell soon.
I closed escrow on the sale of my home last year and the money in my savings account sure looks real to me.
The bank, the IRS, and the companies bills I have paid off with some of the interest seem to think it is real too…
Nice move.
Just don’t succumb to the temptations of the wealth effect and spend all the money in that savings account, just because it is “house” money!
“Levy, who estimates prices could drop by as much as 20 percent in the next couple of years,”
Try 20 percent per year for each of the next couple of years and then you’re in the ballpark.
if we get into hyperinflation then %20 percent “real” decline sounds reasonable. If instead the economy deflates or goes into recession then try 30 % or more in the highest-risk bubble areas : E.G. LA or Riverside.
This type of talk about “free money”, when Re bubbleheads think that several hundred dollar asset increases for doing nothing is “free” is laughable and delusional. During the stock Market runup prior to the great stock Market collapse of 1929, everyone was buying stocks on Margin, or borrowing to buy more stock against recent stock price gains, the exact type of leveraged buying based on ficticious asset bubble increases which we see in Re today, especially among speculators. As in the stock market collapse of 1929, a lot of folks will be wiped out and financially ruined once this RE Bubble collapses.
It’s free money for everyone. Every American should all quit her/his job and buy 10 $1M homes. We will be billionares with 15 years of double digit appreciation on those homes.
yeah, but lunch will cost at least a million by then.
“Dude, where did my equity go.”
I have no sympathy for these people who are about to lose everything they own out of sheer greed and stupidity. Hopefully Rent-a-center does not repo his TV so that he can watch American Idol.
That quote from Thornberg is exactly the kind of conversation that has come to an end here in SF recently. For a couple years before that, it was a very common one and one that occurred in the way one would have five years before that with regard to stock options.
“It’s free money.”
How many times can I use “one” in a sentence? Well, at least 3x.
I for one thought your comment was a funny one.
Well it just human nature - everyone loves free money. It beats working for it.
Sure, it’s human nature, I agree.
But sometimes it not’s free any longer and people have real trouble with the adjustment.
About a year ago in Chicago the local government offered 100 surplus outdated laptop computers for $50. Thousands showed up and a riot insued. People were injured and killed and some of the computers were destroyed.
Looking forward to the spring.
The laptop riot was in Henrico County, Virginia, not Chicago. Richmond to be precise, making it a minority issue.
The local news station still has the story up, and probably the Video too.
http://www.wwbt.com/servlet/Satellite?pagename=WWBT/MGArticle/WBT_BasicArticle&c=MGArticle&cid=1031784465955
Tom, you know u watch American Idol…c’mon now!
Dammit! I replied to the wrong comment.
Guess I picked the wrong week to stop sniffing glue!
I don’t watch that TV show. The last thing I watched on TV outside of News and Weather was the Super Bowl.
I might catch some Hockey games, but that’s about it.
Oh, and CNN, Foxnews, CBNC, Bloomberg. I’m trying to watch my shorts as TXCHIC does
girls beach volly ball here in nw az.
he probably will be too depressed by then to even think about it.
“Thornberg recalled the conversation he overheard. ‘One of them said ‘Dude, my condo’s gone up in value by $100,000, what should I do,’ his friend told him ‘Pull it out, buy yourself another condo. It’s free money.’”
When even economists are noticing this kind of conversation, you can stick a fork in the bubble.
It’s hard to miss all the shoeshine boys masquerading as real estate investors these days..
God, if I am Thornberg sitting there listening to those tools I would be laughing my ass off!
Hey,
I’m in Tampa. I’m going down to Sarasota, Bradenton, Naples, Cape Coral. I’m going to take pictures of all the activity. Would anyone be interested in the pictures? Any personal requests of an area you’d like to see photographed??
Respond to me here or shoot an email to djtomr941@gmail.com
Thanks!
P.S. Would anyone be interested in a Florida bubble blog? Is there one already and I don’t know about it?
There is a South Florida Blog
http://southfloridarealestatebubble.blogspot.com/
Here’s another Florida blog:
Landless Gentry
I’m always looking for more blogs to put on my blog map (scroll down).
Cool map. I’ll bookmark your blog, too.
Thanks!
BayQT~
I have relatives in Spring Hill (North of Tampa) and Sarasota. My aunt (in law) owns 4 or 5 properties somewhere around Sarasota and is also an agent. She said things started really slowing down in October - gave her time to come out to visit. I haven’t heard any business reports from her lately. I really like her, she quit teaching and wanted a part time job. I guess she did ok for a while, at least she has skills to fall back on (and a nice pension that will kick in soon).
She needs to unload those properties now. Prices are just too high. Not to mention the increases in tax and hurricanes. Paper is just paper until you can unload it.
“Levy, who estimates prices could drop by as much as 20 percent in the next couple of years, said rising interest rates are quashing the segment of buyers who can only get into the market using riskier, adjustable loans. ‘People chose to bet on future appreciation by choosing loans where they knew payments would go up by a lot, but they got in cheap,’ Levy said. ‘There are no cheap loans now.’”
The models these big name economists use to predict price changes rely heavily on irrational thinking. Now I will not say the sheeple have been particularly rational in the bubble runup, but widespread household bankruptcies could potentially have a sobering effect on the thought process.
i just sold my home of ten years…i paid 230k sold it for 645k,living beyond my means caused me to take out over 100k in equity from the home over ten years….its real money i can assure you after closing i made about 300k….i dont excpect anyone to feel sorry for me,but i wish i had that 100k back…. i spent that 100k extra on silly consumer items we didnt need….i bet many house rich consumers have done the same thing,and arelot poorer that they think,once the smoke clears and they sign their final closing statements…the profits vanish fast…and now with the pending drop in price these same homeowners may have no equity left…thus they wont be able to sell,because they cant afford to…
At least you got out when the getting was good. Kudos.
Awesome, another “OUT”! Congrats.
Somedays I was tempted to take out a HELOC, but I was able to wing it with some low APR credit cards. When I sold, I was finally out of the rut and with real money.
Feel sorry, no way. My total net worth is way less than 300k. my house is worth less than $200k (or will be soon enough), and I still have a mortgage on it. It sounds to me like you made out ok. Don’t sweat the lost money, be happy with the phenominal profit you have been entrusted with.
300k? you’re in great shape! congrats, my friend
Think we can all see it now:
I just entered bankruptcy. I paid 645k for for my home 2 years ago - bank took it and gave it to someone for 230k…
Maybe you can ask the Bank to sell it back to you for a loss.
Are you liable for the difference?
hickiwawa,
where are you?
i wonder who will be buying those consumer goods now that the atm is out of money.
“With prices not rising as fast as they have in previous years, would-be homebuyers may find themselves in a better position to afford a home, but many are not eager to rush into the market just yet, said Patrick Lashinsky…”
Just yet? What exactly does he mean by “just yet”? Hmm…maybe everyone is waiting for prices to go into a free fall, then they’ll lose all hesitation and bidding wars will ensue. Give me a break. If you’re trying to sell to hesitant buyers you may want to come up with a more clever strategy than thinking they’re not ready to “rush into the market just yet”. I would suggest pricing it to sell before the situation gets much, much worse.
“Sitting in the booth behind Thornberg and his colleagues was a trio of actors, who were discussing home vales. Thornberg recalled the conversation he overheard. ‘One of them said ‘Dude, my condo’s gone up in value by $100,000, what should I do,’ his friend told him ‘Pull it out, buy yourself another condo. It’s free money.’”
That is a modern version of the 1929 shoe shine story. “Joseph Kennedy, the SEC’s first chairman and father of President John F. Kennedy, reputedly told colleagues that he sold most of his stock prior to the 1929 Crash after his shoe-shine boy started giving him stock tips. He reasoned that if his shoe-shine boy knew something he didn’t, something had gone seriously awry with the markets (SEC Speech)”
David
Bubble Meter Blog
Sounds like maybe we are just entering the “we knew it all the time” phase.
Marinite
Marin Real Estate Bubble
I’m interested in what the $100K got you. Even if I replaced the windows in my place and added new carpet & air conditioning I only come up with $15-20K. If I added a home theater that’s maybe another $10K max.
probably a few vacations, new car(s), shit for the gf/wifey…
hey, give ‘em credit at least he admits it! most people are in denial that they live beyond their means…
my sister spent $50k on a home theatre, my friend spent 65k on a boat.
It’s easy if you try.
2 yr 99 15/32 +2/32 4.66 -0.02
5 yr 98 22/32 +4/32 4.54 -0.03
10 yr 99 22/32 +12/32 4.53 -0.05
30 yr 99 29/32 +1 4.50 -0.06
Some heavy buyin on the 10 and 30 yr today… Flight to safety?
Are you sure it is safe? It seems as though there is noplace left to hide.
Betting on a recession is my bet.
I beleive it was Joe Kennedy who once said something along the lines of “you know its time to get out when the guy shinning your shoes is telling you what stocks to buy”.
Out of work actors sitting in a both talking about how much money their condos are “worth”.
Its only worth what someone else is willing to pay for it.
Oh, come on… The real estate agent’s name is “Cheri Colon”!?
LOL!
Ben you’ve got to post this article I found online.
DOH! Here it is below…
http://www.sltrib.com/utah/ci_3518695
Thats funny… few hundred dollars for land you can’t step foot on because you will be trespassing to get there… ha
the 100k was over ten years ,so we took out about 10k a year,a couple trips to europe, new golf equipment,not much to show for that 100k,because yes, i had the house as atm mentality. i have a friend who owns a house in santa clarita ca, he has not worked in 6 years and has pulled 50k a year out of his home,he now owns 500k on his 1st 2nd and 3rd mtge,w/ a monthly nut of about 3k…this bubble has enabled him to live for many years w/out working….to him it is like free money,because he never excpected his 150k starter home to be woth 600k….this mentality is going to create pain for many homeowners in the coming years as the dynamics change in the housing market.
Your friend hasn’t worked in six years? That’s frightening…is he disabled or just doesn’t want to work?
That HELOC bum is about to get a real awakening.
no he feels all the equity that his home has given him was a great reason not to work.his rational is i worked for twenty years and was not able to save a dime,so why not take it easy with my new found wealth.
and he’s going to start to pay off the balance how?? If prices drop below what he owes he cant sell. Sounds like he has no money to pay off the short sale. His HELOC rate is going up as rates go up…so..Another F’d Borrower
“this mentality is going to create pain for many homeowners in the coming years as the dynamics change in the housing market.”
It sure will and especially for people like your friend. If he has been out of the job market for six years on some kind of a mid career retirement, it is going to be difficult for him to get back into the job market again because potential employers will rightfully think that there may be a lack of ambition here. Also, his job skills are probably a bit rusty a this point. Wow.
The unemployment rate doesn’t count people if they don’t apply for benefits. So these cash starved HELOC junkies are about to kick rate up in a big, big way. Unfortunately their benefits are calculated based on their recent income and as far as I know home equity cashouts aren’t considered employment.
Does anybody know the rules for this?
I’ve been thinking about the impact of a more subtle version of this. How many couples have had one parent (almost always the wife) stop working to look after the kids full time, because the home ATM allows them to do so?
I can think of a couple of regular posters on this blog and patrick.net in this very situation.
If house price appreciation stops or slams into reverse, and interest rates kick up, I can see a (perhaps high) proportion of these non-working parents re-entering the job market in an attempt to shore up the family finances.
Don’t lenders require the borrower to be gainfully employed or self-employed? I guess standards have slipped since we bought our house in 1995.
30-Year Mortgage Rates Highest in Two Months
From Associated Press
Rates on 30-year mortgages rose to 6.28% this week, up from 6.24% last week and the highest level since the week of Dec. 15, when they stood at 6.3%, mortgage giant Freddie Mac said.
Rates on 15-year, fixed-rate mortgages, a popular choice for refinancing a home mortgage, averaged 5.91%, up from 5.83% last week. One-year adjustable-rate mortgages increased to 5.36%, compared with 5.34% last week. Rates on five-year hybrid adjustable-rate mortgages rose to 5.95%, up from 5.89%.
“89 single-family homes were sold and 30 sales were canceled for the week ended Feb. 5, representing a 33.7 percent cancellation rate.”
Guys!!!! This is the news I have been waiting for.
This was instrumental in the early 90’s. The builders have allready counted these as income. If they don’t sell them fast they will become huge losses forcing them to miss their estimates and crushing their stoc prices.
The greater the magnitude of the miss the more stock price lost. Builders are now in the stock business, not the home building business.
They will now have to sell these for less profit. The only way they can attempt make their numbers will now be on higher volume with lower profit/unit.
They will quickly abandon these huge McMansions in favor of 1,200sqft 3/2’s priced to move. The builders will press the market lower and crush any competition from resale housing.
The builders can still make a profit selling these smaller homes for 150k plus land cost. Their focus will now turn to keeping their business in tact and retaining as much of their skilled labor as they can. They will try to assure they are in business to enjoy the next bubble.
As they have all along they will price their inventory at what the market will bear and the market will only bear affordable homes. The bubble times defy logic, but not gravity. Housing can never stay far above affordability for long, at some time an end user (permanent occupant) must carry the cost of the home. The homes value is inextricably to this end users ability and desire for said housing.
As the bubble burst the premium paid for owning over renting will collapse. In less than 5 years (I believe) we will see the pendulem swing the other way and RE will be hated and feared by the masses. For a short time it will actually be cheaper to own than to rent.
Much pontification has been expressed on “how far will we drop and how fast?” How far? We will drop to the point above, where it is cheaper to own than rent. The bottom will be there and not drop much lower. How fast? The builders will determine this and their cancelled orders is their first step. I believe that next you will start to see major consolidation in the builders as one consumes another to sustain growth. Consolidation is their only option now for growth and this is all that matters to them now. Any other plans will pummel their share prices.
Maryland home sales fell 19.4% in January, while inventories rose 178%, from January 2005. Story on quinhouse.blogspot.com
The msm and real estate “experts” always blame rising interest rates for price or volume weakness. The fact is, rates have not risen that much in the last 12 months (4.12% to 5.17% is noted in the article means an extra $190 on a $300,000 mortgage), hardly enough to pop the biggest bubble in history.
More likely, it’s high prices that brought sellers out of the woodwork and caused buyers to sit on their hands. Or, the market simply ran out of reckless borrowers. Regardless, it wasn’t higher rates.
And the importance of this fact is that these same fools will turn bullish on real estate after rates fall, because they know, “lower rates are good for real estate.”
I can hear them now, “Prices are better, rates are down, now’s the time to buy”.
Good luck to all of those that want to try and call a bottom in the next 15 years.
Mr D,
Followed your observations for sometime and to me as I try to learn from all here, would want to what will be your advice to a first time home buyer. Married with kid, decent income, age late thirties and in southern Cal.
Anybody? Any advice! (feel free, any risk is mine!). Also is there anyway we can gain from the coming housing price decline.
This can be nice thread of conversation IMHO.
My first advice would be to keep reading this blog. Otherwise group think that “it’s always a good time to buy especially with the market stabilzing/softening/falling” will be hard to resist in the years ahead.
Second, I would advise moving to somewhere that’s more family friendly. That means better schools, and shorter commutes, so that you can actually see your family. I suppose SoCal has a lot to offer for singles, but I see little to offer to families, which is why so many are leaving/have already left.
The bottom line is that unless you are part of a small group of people able to earn a very large income, you’ll spend your life in Socal traffic commuting to your job, just so most of your income goes to taxes and housing.
There may be some unique reasons that compel you to stay. If that’s the case, you can either rent the best you can find for what you can afford. Or, lock into the most expensive housing costs in history for the rest of your life.
1. Buy a house as a home you can live in for 10 years. You must also get a mortgage you can handle for 10 years. Anything short of that and you are speculating.
2. Start a ROTH IRA and start slamming 4k a year in there.
3. Start a traditional IRA and start slamming money in there.
4. etc, etc, etc. Don’t get caught spending all of your money…you have 25 years until retirement!
5. If you can’t simultaneously handle steps 1 to 3, continue to rent until you can (not investment advice).
I would suggest holding off on 1., regardless of your time horizon. Even if you plan to be in your home for 10 or more years, there is no point in risking you household net worth by buying an overpriced asset at historically high prices at a time when renting is relatively cheap. Points 2-4 I agree with, however.
The best cities for families in Scal are 1. huntington Beach2. Irvine 3. Santa Clarita 4. Thousand oaks 5. Aliso Viejo 6. Rancho Margarita 7. fullertin 8. Simi valley 9. diamond Bar 10. Torrance. Reasons : open space, low crime, plenty of parks, thriving industrial centers, involved city governments, ect. This is just a short list. SFH’s in these cities average $600,000-$700,000. My personal favorite would be Santa Clarita because of all the open space and closer proximity to the Sierra Nevadas. Not to say that it is the best choice for families, just my choice. A second-tier list should include Temecula/Murrieta, Redondo beach, East Long Beach, Chino, Rancho Cucamonga, San dimas,Glendale,
yorba linda,Brea,Walnut.
I have been following OC, the prices are dropping big time. Just saw a 2600 sf house with view, updated and great location for $850,000. 2004 would have been $999,000. hahahaha that makes me very happy!
Some people who purchased homes interest only and borrowed 105% over the purchase price don’t care if they loose the house. They cashed out and used the money for other things. They should pay every penny back but they don’t. They had bad credit anyway and they don’t care about another bad credit.
Got the MLS # ?? I might want to follow it.
Greg Geisen said he closed escrow on a Quintessa house, priced at just over $1 million, even though he has yet to sell his current home.
Without knowing his specific situation, he could be setting himself up for a real disaster.
The comments by Rich (aka Prof. Piggington) above provide an excellent primer on the builder’s strategy and tactics and reliance on stock price. The builders are wholesale mass production, they will beat the single home seller every time! It’s their game, the rest of the market has to follow. Thanks Rich for providing this perspective.
No No No!!!! Gary Watts said, and I quote that 15% appreciation is “in the bag” for Orange County. He is getting paid $500 for his speaking visits. You can log onto his website to see the next scheduled seminar at Impact Real Estate.
I wonder if anyone will every ask him to speak again by the time we get to June and YOY declines are “in the bag”.
It is http://www.impactre.com. Sorry for the incorrect link earlier
Ben, Just so you know, when you click to Gary Watts from your blog, you get a “this website is temporarily unavailable message” But if you open a new browser window and go to his site, it comes up fine. I wonder if they are blocking referals from your site. Gary must be personally aware of your blog.
If you can save even a few lost OC souls from this fraud, you will have helped save marriages, families, and lives.
Go Ben!
LMAO,
Hes right It won’t link you through Bens blog, but will if you use another sire.
Shit Ben,
You better seek witness protection!!!
They are on to you and the ninjas are surely on their way to your location.
Grow a beard and move to a non-bubble area. Ahhhh, well there is no non-bubble area, your screwed.
No wait better idea, move into a new condo!!
They would never look for you in a new condo!!
correct link:
http://www.impactre.com
your link is still incorrect; it has an extra period at the end - maybe that’s why it doesn’t work from here.
”
“These issues are creating a state of permanently higher prices!”
Didn’t Gary mean to say “permanently high plateau”?
Betamax,
Thank you, I was wondering what the problem is. I wouldn’t want to accuse Mr. Watts of any impropriety. I do wonder if those people who pay him will demand their honorarium back at the end of the year for all the lies he keeps selling
I remember a few years back seeing a segment on how Japanese companies would put inflatable bounce-back dummies printed to look like company executives in their gyms. Lower level workers could take to them during their meal breaks with an inflatable baseball bat as a stress reliever.
There might be a few bucks to be made later on getting some of these printed with Mr Watts’ features, and selling them over Ebay or whatever.
Dataquick numbers for Sacramento just came out. 5th Month of Price Declines; Sales Lowest in 5 Years
Lander
Sacramento Land(ing) Blog
financialsense.com has Adam Smith’s quotes on why housing is just an expense and not an investment - “The first, is that portion [of capital stock] reserved for immediate consumption, and of which the characteristic is that it affords no revenue… The whole stock of mere dwelling-houses too subsisting at any one time in the country, make a part of this first portion… A dwelling-house, as such, contributes nothing to the revenue of its inhabitant; and though it is, no doubt, extremely useful to him, it is as his clothes and furniture are useful to him, which, however, make a part of his expense, and not of his revenue.”
Nice one! Apparently Adam Smith did not walk the planet during a housing bubble, or he would surely have appreciated that under the right market conditions, the wealth effect of homeownership can be just as profitable as owning a money-tree orchard.
P.S. As to “just an expense, not an investment”, this may be true in the layman’s definition of investment, but not the economist’s definition. Since homes are generally built for residence over a long term future period, they are investments, regardless of whether they offer positive returns.
My grandparents lived in Box Elder county (that is in the far northern part of Utah). Most of the land outside of Brigham City (the county seat) is pretty much useless. I couldn’t help but laughing my XXX off that someone is illegally dividing and selling this land. That is as good as the blog several months ago about the same thing being done in TX on some worthless desert land. Since I am new to NM, I have done some driving and there is a lot of vacant land just outside of Albuquerque. Perhaps we can do the same, except most of this land belongs to the Native Americans - maybe they will do that. Ciao - and I hope the new Box Elder county owners become readers of Ben’s blog. Then they wouldn’t be doing such a stupid thing - at least visit the property before seeing it.
Here is that article posting
BRIGHAM CITY - Land speculators are illegally subdividing land in western Box Elder County and selling the small parcels on the Internet, County Planner Garth Day said. Day told county commissioners Tuesday that several land speculators have bought plots of land, divided them into much smaller parcels and are selling the smaller parcels on Internet sites. ”It’s a violation of our subdivision ordinance and our zoning ordinance,” he said. Zoning in western Box Elder County sets the minimum lot size in the area at 160 acres. ”We have that zone out there because the area is kind of sensitive,” Day said. ”It’s in the west desert. There’s really no development potential because it’s so far from services.” But some have bought land, divided it into quarter- to half-acre lots and are reselling the smaller lots for about $300 to $500, Day said. Those who buy the land aren’t able to build on it, he said. ”It lends itself to some problems,” he said. ”I’ve received phone calls from people who want to know what they can do with their land and are surprised when the answer is nothing.” People can engage in recreation on their land - if they can find it, Day said. ”Some of those areas, I think you need some pretty sophisticated survey equipment to find the property,” he said. Some parcels that have been sold are also landlocked, and it is impossible to
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get to them without trespassing, he said. The number of people who have bought the small parcels could be in the thousands, Day said. Deeds for the small parcels have also been inundating the office of County Recorder/Clerk LuAnn Adams. ”We’re getting flooded,” Adams said. ”We’re getting more and more of them, and we’re just trying to figure out what we can do.” Despite not being able to build on the small parcels, some want to own land simply for the sake of owning land, said County Commissioner Suzanne Rees. ”There’s some people that the idea of owning a parcel of land means something to them,” she said. Commissioners appointed Day, Adams and County Attorney Amy Hugie to look into possible action on the subdivided parcels. The county could decide to prosecute sellers of the subdivided parcels or take no action at all, Day said. Zoning violations are a class B misdemeanor, he said. Class B misdemeanors are punishable by up to six months in jail and a $1,000 fine. -The Associated Press
Here is a great link that shows all of the future Condo complexs that will be built in downtown San Diego. It has construction completion dates as well.
http://www.ccdc.com/index.cfm/fuseaction/projects.printableList/category/residential
Markmax33…that is unbeleivable! Condos for everyone, no two condos for everyone!
Wow! That page might need its own thread: Maybe “When Condo Dreams Meet Reality”? How will all these ill-conceived and irrationally exuberant plans reconcile with the reality of darkened windows that already haunts the downtown SD condo market?
“‘At some point we have to come to grips with the basic affordability question. This is not an affordable market,’ said Stephen Levy in Palo Alto. ‘I think prices could drop, and once these things start, they have a snowball effect.’”
Yah no kidding here in THE OC California, 10% can afford a median priced home of $700K+ with 20% down and a 30-year mortgage. Who has $140K to put in a down first time buyer??
The web page with San Diego condo projects is stunning.
Who wants to live in a condo in the 30th storey of a tower in Earthquake Country? Have the developers drunk that much koolaid?
I remember the tremors felt by M=6 earthquakes in the Imperial Valley, a 90-minute drive away. No way Id live on the 30th floor in SD!!
Actually the earthquake risk in SD is not as great as in the Imperial Valley, not to mention LA and SF. The latter three locations all have the dubious distinction of straddling the San Andreas fault. This is not to say that SD has no earthquake risk, but rather that the risk of a truly catastrophic quake is lower here than in many other places in CA.