June Home Sales ‘Plunge’ In California
The California realtors have their June numbers out. “California home sales plunged 26.3 percent in June compared to last year while the median price of an existing home increased 6.2 percent, an industry trade association reported today.”
“‘Mortgage interest rates rates continued to edge up for the fifth consecutive month in June, contributing in part to a slowdown in sales,’ said C.A.R. Chief Economist Leslie Appleton-Young.”
“‘June 2006 was the first time since late 2001 that the sales pace fell below 500,000 for two consecutive months. Home sales declined 26.3 percent last month compared with June 2005.’”
“C.A.R.’s Unsold Inventory Index for existing, single-family detached homes in June 2006 was 6.2 months, compared with 2.5 months (revised) for the same period a year ago.”
“‘For the first time since November 2001, we experienced back-to-back months of single-digit price appreciation, moderated in part by increased inventory levels,’ said C.A.R. President Vince Malta.”
“In the Central Valley, the median price of a single-family home was $362,960 last month, up 2.1 percent from the previous month and up 2.6 percent from a year earlier, according to the Realtors. But Central Valley home sales dropped more sharply than the state as a whole, down 34.5 percent from June 2005.”
From the Orange County Register. “The Realtors noted today that, ‘In a separate report covering more localized statistics generated by C.A.R. and DataQuick Information Systems, 78.7 percent, or 322 out of 409 cities and communities showed an increase in their respective median home prices from a year ago.’”
“A year ago, ‘In a separate report covering more localized statistics generated by C.A.R. and DataQuick Information Systems, 97.5 percent or 396 of 406 cities and communities showed an increase in their respective median home prices from a year ago.’”
“So that’s 21.3% of the state with losses vs. 2.5% last year. Ouch!”
Looking at the CAR link, 11 out of the 20 regions had sales declines of 30% or more. All were down by double digits.
Here are the details from the CAR/Dataquick link.
Has anyone seen $/sqft numbers?
exactly- when are they going to guit w the median BS
The animal backed off but I could still feel its breath and the blood running down my leg. Then a shot and a yelp. ‘Holmes, Holmes, is that you?’ ‘Stay still my good fellow while I tighten this tourniquet.’ I thought that I told you not to go out at night to appraise the Baskerville mcmansion. Just stay safe and cozy at Baker Street and use the old comps and pictures, and measurements of 1869.’But Holmes—’ Don’t worry, Lloyds will loan his grace the necessary funds to purchase the estate.The market is still going up. Let’s get back home. Moriarty will laugh at our misfortune if he hears of it —- (to be continued)
DURING the whole of a dull, dark, and soundless day in the autumn of the year, when the clouds hung oppressively low in the heavens, I had been driving alone, in my Beemer, through a singularly dreary tract of suburbia; and at length found myself, as the shades of the evening drew on, within view of the melancholy House of Flipper. I know not how it was; but, with the first glimpse of the building, a sense of insufferable gloom pervaded my spirit. I say insufferable; for the feeling was unrelieved by any of that half-pleasurable, because poetic, sentiment, with which the mind usually receives even the sternest natural images of the bankrupt or foreclosed or abandoned.
I looked upon the scene before me—upon the mere house, and the simple landscape features of the McYard—upon the bleak beige stucco walls—upon the vacant vinyl windows—upon a few rank cactii—and upon a few brown clumps of dying bushes—with an utter depression of soul which I can compare to no earthly sensation more properly than to the after-dream of the reveler upon opium—the bitter lapse into every-day life—the hideous dropping off of the veil. There was an iciness, a sinking, a sickening of the heart—an unredeemed dreariness of thought which no goading of the imagination could torture into aught of the sublime. What was it—I paused to think—what was it that so unnerved me in the contemplation of the House of Flipper?
Ahh, “the fall of the house of the Flipper” is this where the apprasier is buired alive after giving a low apprasial ? Or is it the mortgage lender locked up in the tower due to insanity? haha loaning out all the family money on over priced homes.
What doth the Raven cry?
‘Foreclosure’?
I was always partial to Poe’s “Tell Tale Heart”. However, in this updated version I would have the real estate touts (agents, so-called economists) and creative-mortgage lenders be condemned to listen to the heartbeats of the conned buyers, now in foreclosure evermore.
excellent vivid poetic imagery, something lacking in the Re Business. You can Parlay that into a long bleak shadow casting it’s spell over the SCal Re Market. The Shadow of decling YOY numbers, the gradual uncertain fear of rising ARM’s, the slowly simmering anger/bewilderment over the high gas prices, the gloomy sense of some impending financial meltdown(Bank failures here and there),a creeping realization that the economy may slip into recession, The frantic pleas for relief from the ever constricting death-grip of Debt, debt, and more debt.
Heh heh heh, posts like these PROVE there is a hint of glee now in the hearts of bloggers, and that we are now at the teetering points, and good news may not be so very far away in our destinies.
Zillow or your online Tax records are best bet.
Keep this in mind: Housing sales have fallen to the level last seen just after the worst terrorist attack on US soil.
THIS JUST IN!!!!!!!!!
Just heard on the radio that Full Focus on KPBS San Diego this evening will be discussing the issue of sign-spinners! Are they really useful in moving condos, or are they just a nuisance? Tune in tonight to find out!!!
SAN DIEGO FOLKS, TUNE IN TONIGHT!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
On TV, that is. 6:30pm.
For those of us who can’t see it, be sure to give us the full synopsis.
6:40pm
They’re talking about REPARTMENTS and the faults of yoy median measurements!!!!!!!!!!!!!
Right NOW!!!!!!!!!!!!!!!!!
Complaints about people living downtown in virtually empty newly constructed buildings because everyone else was an investor!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
He said San Diego is the “CANARY”!!!!!!!!!!!!!!!!!!!
Now they’re going to talk about the Tijuana River Estuary!!!!!
?
Pretty good spin on the situation, dear listeners. First was some talk of sign-spinners and the like, then they went into a discussion of the condo glut in San Diego. Pretty bearish Brit doing all the talking.
Why is it that a well-groomed british person sounds educated to me?
The video can be seen here:
http://tinyurl.com/fcjlz
From the video above:
Griffin: “You’re fixing your prices at the wrong level, maybe that’s why they’re not selling. I mean, putting 100 spinners in front of your project isn’t going to sell any condos if the price is still too high.”
Classic. You bet it’s a “Project”.
Hmm! Projects…Is that like the projects in Watts-Willowbrook?
Excellent interview with Will Careless, that guy knows what he is talking about. Noticed he could hardly stop from bursting out laughing when they were talking about the “dark towers” downtown. Huge smirk on his face the whole time, he knows the prices in San Diego are absurd.
That sign spinner had some skills! I like the bucking bronco, and the break dancing on the sign moves.
Ok Ben: 11of 20 regions in Cali Down.
CAL sales average down 23.6%
FLA ” ” ” 29%
MA ” ” ” 16.6%
National only down 1.6% to 6.6million.
Is there a state by state total…..or are we just to SWALLOW that National number reported.
2=2 - isn’t adding up here?
maybe they use the same trick as in Netherlands: the national number is the average or median of all the states (or provinces in our case), where all states are weighted equal irrespective of their population numbers / housing numbers.
Wow. You gotta love the number spin-meisters.
Right, I’m tired of interpreted data. In one ear and out the other. All I want anymore are the raw numbers.
YOY national was down 8.9%, the 1.6% is May vs June. But still, it does seem fishy, just like last month.
Ben- great photo album.
Luved the “rebalancing R E market photo!
Correct me if I am wrong, but this is not the average but median price? Isn’t the median price the highest price paid plus the lowest price paid divided by 2? If this is the case, this number is obviously misleading since the most expensive end of the RE Spectrum can extend to infinity while the lower end cannot be less than zero. Nice way to fudge the numbers people….
Duh, Im wrong.. but seriously.. it’s easy to see why they love this number so much.
The median house is just that. Make a list of home prices and find the middle price. So if you had seven homes the median of the group would be the price of the 4th home. As you can see the very low and high will not throw off the median.
Read Tom’s question again.
“‘Mortgage interest rates rates continued to edge up for the fifth consecutive month in June, contributing in part to a slowdown in sales,’ said C.A.R. Chief Economist Leslie Appleton-Young.”
Hey Leslie, you are suppose to be an economist, how about higher home prices playing some teeny tiny role in this slow down.
Right, interest rates are still low, historically. Maybe we should ask to see the latest affordability report?
Affordability report ? Nice. Affordability ? Do not even ask.
> how about higher home prices playing some teeny tiny role in this slow down
12 months ago, the home prices were not much lower than today, but selling was brisk.
The expectations, however, changed - without 10-15% appreciation, overpriced homes finally look overpriced. Classic bubble.
There they go again with the interest rate crap. Sure, everyone who bought a home in the last three to five years got a full doc, 20% down 30-yr fixed and now that the average rate is about 75bps above what it was a year ago that has just jettisoned previosly qualified buyers out of the market.
Gimme a (expletive) break.
Sheesh….. it’s even easier for someone to qualify now than it was a year ago. Pay Option ARM with 0% downpayment (full doc) or 10% (liar, sorry stated income).
When is someone going to confront these bile blowers on that simple fact?
Bill Engvall just came to mind for anyone thinking of buying in Cali…..”here’s your sign.”
funny!
Nice to see that the summer market is picking up. By August all of this “bubble bursting” talk here in southern California will seem like the tired rant of a bunch of nervous nellys. Better buy now before the prices start climbing again.
Yes, buy some houses, flipper. And I have some swampland in Florida to sell to you.
Stop. Untwist panties.
Premature Curmudgeon is almost certainly engaging in satire — transparently so. No need to go all Tora! Tora! Tora! on him. And in the remote event he IS actually a Bubble doubter, our last laugh is “in the bag” to paraphrase Gary Watts.
SATIRE:
The ability to understand an un-understandable situation, as it is presented to ones self, the knowledge of the factors behind the situation, and the ability to present the silliness of the un-understandable situation to others…through humor.
Also requires an ability to understand, and use humor…correctly.
Bravo.
Don’t recognize the name. New here? If so, please comfirm that comment was tongue in cheek. Please.
I believe his tongue was planted firmly in his cheek.
But that’s ok. Didn’t someone just the other day ask about comments from bulls on this blog? If they don’t have a problem coming into a room full of bears, then let’s not discourage them. The choir is here….for the most part, we’re all preaching to each other. Differences of opinion and healthy debates should be welcomed.
My 5 cents.
BayQT~
2 would have been fine.
LOL! Yeah, 2 would have been fine, but that’s so old. And I don’t like to run with the herd.
BayQT~
Don’t you have some papers to grade?
And there is some congressman somewhere who’s trying to eliminate the penny–everything might be rounded to the nearest nickel anyway!
That’s inflation adjusted.
Yeah, at this point they might as well eliminate both the penny and the nickle. I think they both cost more to manufacture than they are worth at this point. And neither one of them can be used to purchase anything - even parking meters won’t take them around here any more.
It was 2 cents in 1999, but as of Nov. ‘05 it’s up to five. If you cannot afford it there are several alternative loan option other than the fixed available to you. Pay no mind to those bloggers who say it will be 2 cents again in 2 or 3 years, or perhaps even 1.5 cents with a global recession. They aren’t making any more thoughts you know! Ideas only go up!
I don’t mind “BULL” comments as long as they have accurate supporting data and provide thier sources. That is how we can all learn new information.
(smile)
Premature Curmudgeon … I’m curious why you think its nice for prices to be increasing when the affordability index in California is so low . Also , do you feel comfortable with a high percentage of people going on loans that are going to skyrocket in payments to the point where they can’t afford the payments ? I’m just wondering why your not nervous ?
That’s what I’m talking about, Wizard…a healthy debate. Let’s DO this.
So…PC? Gonna answer the Wiz’s questions? I’m interested in your answers, too.
BayQT~
Shirley you jest!?
I’m doing everything I can… and stop calling me Shirley.
Oh and another quazi pertinent Airplane quote…
“Ben Bernanke: There’s no reason to become alarmed, and we hope you’ll enjoy the rest of your flight. By the way, is there anyone on board who knows how to fly a plane? “
i picked a bad day to stop sniffing glue!
If you click on his link, is says go away chicken little. Come out and play Premature Curmudgeon, do you have any facts to back up what you say?
He must be from SDCIA, they have been reffering to the blog here, and refer to us visitors as paranoid and chicken little. I believe we will have the last laugh.
Wow. I don’t quite know where to respond. The comment was tongue-in-cheek. Unfortunately, I didn’t quite manage to convey that through the over-the-top content (and I realize that in our “truth is stranger than fiction” real estate world, absurd responses to factual information can’t be discounted as in jest). I’m far from a housing bull, don’t own, don’t plan to buy until the affordability index increases to somewhere between 20% and 30% for LA/OC (where I live).
And please don’t call me a flipper! It exemplifies the worst of our pathetically materialistic, entitled, toy-owning, juvenile culture.
Too many quick triggers on here sometimes. All one has to do is look at the ‘handle’ and realize it had to be T in C. Well said, satire at its finest.
I heard a radio commercial yesterday advertising loan refinancing telling people the “bubble” talk is nonsense and everyone should go out and buy! We are all a bunch of kooks!!
In interest of disclosure and honesty, we may be kooks, but that doesn’t make use wrong.
BUT Gary Watts said things are fine!!!
10 years of crazy gains, and a few months to ‘normalize’ then off to the races again….right???
With people ‘over stating’ their income by 50% on stated loans…to get low adjustible rates…things will be fine. 80%+ of Californians are using Neg-Am or Interest only loans to ‘afford’ their homes. Sounds like a recipe for success to me.
Stay tuned….
SoCalMtgGuy
SoCalMtgGuy,
Yep, in fact Gary said that 15% was “in the bag” then when asked about a soft landing, he said that OC home prices weren’t “even in the approach pattern” and will stay lofty and in fact we’ll see 15% appreciation by year’s end if we get a “tailwind”.
The man is personally responsible for tooling up thousands of realtors across the OC to decieve tens of thousands.
That’s true. We regularly receive flyers from local realtors quoting his lies and deceptions. There’s been a conspiracy between realtors and this “economist” that should be held accountable in court.
The villagers meet, plan the ascent to Dr. Frankenstein’s castle, and gather torches, and weapons.
Which Hawaiian island will Mr. Watts fly to?
Haiti.
Just like Hannibal Lecter.
You need to feel badly for someone so delusional. Even the borderline dull are now getting the hint that things will not be soft. He obviously does not care on looking like an imbecile and ill-informed in front of the masses. That is sad.
And any sheople who want to believe him are also the dumbest of the dumb.
It is not their fault that they were born with half a brain!
;) 
Where is your charity people?
^the above is sarcasm, indicated by the winky winky….
“What’s that mountain goat doing in the cloud?”
Update your blog man. I keep going back and it has May on there
“California home sales plunged 26.3 percent in June compared to last year while the median price of an existing home increased 6.2 percent, an industry trade association reported today.”
And we all know why there are still increases, as we have seen on this Blog the Banks Appraisers are hitting the numbers, other wise why with all the inventory would prices still go up.
I live in LN and have serveral houses around us that are on the market, with no traffic what so ever, and I have seen for sale signs with price reduced, so tell me again where that 6% went.
What really amazes me I hear friends and business associates talk and tell me oh my house/condo just went up another X amount, and when I ask where they got the statistics, well I got a postcard from a realtor, or I read it in the paper, but no real comps. Thats where we are at here in the OC.
Sorry just a rant day to day.
I always tell people who brag like that “it is profit only if you sell it”
No……..only if you can sell it!
Please clarify “No…….only if you can sell it!”
What’s with you OC people? “LN”??? Ok, I get it. I’ll get all hip and start slamming down with “BP”, “GG”, and “WM.” I’ll even throw in “HG” its OC-adjacent.
Study up on the concept of the MEDIAN. You CAN have individually falling prices and still see a median increase. This is very easy to do when the numbers on the lower end occur with less frequency. (Sound familiar to anyone?)
Thank you, rent. You got there first.
My point being is to point out why are some of these rpices going up most probably because Appraisals are having to hit the numbers probably for ReFi’s. And again for all the people who keep telling me oh my price has gone up 1) have not got an actual appraisal. 20 not one of them have actually sold.
You explanantion I understand, but like most here I am get tired of hearing yep inventory hit record but hey prices are up, even though crap is selling. But as someone mentioned patience is a virtue (did I spell that right?)
Yep. You spelled virtue correctly, but you spelled prices (rpices….slip of the finger?) wrong.
Just messin’ with ya, oc.
I know you were probably just pissed with you were typing. 
BayQT~
with=when
That’s OK always in between working, and of course trying to get comment up quickly. :>
Also, a contributing factor in prices are “incentives” which have been reported to be on the increase in substatial quantity.
Additionally, these sellers are paying alot more hard cash to prep and marktethere properties than they did a year ago. The added marketing costs are not deducted from the sale price stats, to my knowledge. And the incentives are not deducted from the stats, to my knowledge, as well. So if you incorporate those issues, among others, the real estate prices of anything selling today would more accurately be less, when deducting these added costs, which were not present a year ago.
Look the Median price may actually be sound statistics, BUT they don’t mean a damn thing! And I a m skeptical of that coming from the NAR as a source.
The only price that moves these markets is the 2 bedroom starter.
If no one can buy that, then no one can move up!
When BofA. announced “we are making loans to (felons) illegal immagrants”, the case for higher property values blew up!
Why? The starter buying pool had been fully drained!
Remember they are not including incentives given to make a sale ,which amounts to less money in the sellers pocket . I think the incentives are averaging 5 to 10% of sales prices in alot of cases . Why doesn’t a reporter question the incentives given , which in effect reduces the sales price?
Interestingly, the “sales plunge” coincides with a record number of California realtor licensees–now at over 500,000!.
I want to pan for gold too!
Levi’s was the one that made out during the gold rush.
Lowes and Home Depot.
“‘For the first time since November 2001, we experienced back-to-back months of single-digit price appreciation, moderated in part by increased inventory levels,’ said C.A.R. President Vince Malta.”
Ya gotta love how they spin this. In order for “appreciation” to have dipped to single digits YOY, it must have DEPRECIATED in the past few months.
You’re correct sir.
Homes are down 5% in the south bay. But YOY, they’re up. The peak was nominal last October/November (city dependent).
And the depreciation is speading up.
How the *ell are they going to spin the number this fall? Ok, I have to admit, for me this is going to be like watching Baghdad Bob; you know its a lie, but oh is it so entertaining!
The thing is, but spinning the numbers now… its only going to make the fall look really bad. Then… people will hear how the high inventory is pushing homes down, they’ll have heard a few friends admit mortgage resets are killing them, and suddenly homes will have dropped double digit percentages!
I hope I’m off my low carb diet by then so that when I sit back to enjoy the show there can be a little popcorn to go with the entertainment.
Neil
They won’t spin it, once they can no longer spin the stats in a favorable light, they’ll put the scapegoat outfit on Bernanke and claim it all happened because interest rates were pushed too high.
They are already setting him up with all this “interest rates are effecting sales” BS.
Hey Neil, I don’t know if you went to sleep already but I was wondering if you read that Daily Breeze article a couple of months back…I can’t seem to find it…but I think it mentioned the first YOY price decline in the South Bay. Did you see it?
I did see the daily breeze article, but it was mentioning the first decline (not YOY, but since the peak).
That alone was great news!
Neil
Or are you refering to the LA Times article on San Deigo real estate?
No, I was talking about the Daily Breeze article. I thought it mentioned a YOY price decline, maybe it was month to month. My bad. The Daily Breeze doesn’t have the article on their website any longer.
It is possible that the July statistics could show the San Fernando Valley median prices below those of a year ago for July 05. The median was about $539k last July. So far this July, the weekly medians are coming in between $530-$549. At the very most appreciation y/y should be a whopping 0-1%. I am so looking forward to the July stats.
On another very happy note, the weekly average list prices on new escrows opened in the past few weeks have been very low, so this should mean some low numbers in the pipeline.
I will post when the July stats are up, sometime next week. They take forever to work their way into the press.
Thanks, Deb! Hope you are staying cool down in the valley . . . .
We’re melllltinnnngg….
How about sales? Any sign of a pickup from June to July? Curious since we’ve seen rates tick down ever so slightly and the housing stocks rally from their lows. I’ve also seen a slight inventory decline here in my neck of the woods (south FL) from June-July. Not sure if it’s listings expiring or some product actually moving. Thanks for any insight you can provide!
Actually sales look to be really slow. I’d guess they’ll come in around 1200-1300 for the month, so far this month there’s been just over 800 closings (as of the 20th). Last month there was 1413 sales and last July there were 1779. That would put the y/y volume decrease at almost 30%.
okay, thanks. Like I said, just curious if there’s a sales “bounce” in the works or not to account for the slight decline in inventories and the other (stock) market action I’m seeing. Asking prices definitely keep falling here though — one complex of condos I follow here in Jupiter, FL had a lowest asking price of around $215,000-$220,000 several months ago. That had steadily fallen to just under $175,000 last week, and this week, one popped up on Realtor.com at $170,000. Not sure if any of these guys PAID more for their units (haven’t researched that), but definitely asks are on the way down, down, down.
LOL. I just got off the phone with mortgage broker. Now keep in mind I do commercial lending for a bank. This broker does both residential and commercial RE. He brings up the option arms. I say something like:”Oh yeah, I think that term is going to be taboo here in a few years.” He says he likes the option arm for investors. He says if you are going to hold on to the property for 2 yrs why pay principal or even interest for that matter. Surely the appreciation will make up for the neg am. I politely ask him,”But what if the property doesn’t appreciate?” He says,”Well we all know RE always goes up.” Then he started to mumble some other mumbo jumbo jibberish and I tuned him out and began to read some emails I had yet to open…
Yes, people, there is us and then there are fools and those who listen to fools.
And thus begging the often asked Q:
Who’s the bigger fool, the fool, or…
“‘Mortgage interest rates rates continued to edge up for the fifth consecutive month in June, contributing in part to a slowdown in sales,’ said C.A.R. Chief Economist Leslie Appleton-Young.”
And all this time, I thought it was just the stubborn, greedy buyers’ faults. They are going to collapse the economy because they won’t bankroll Aunt Edna’s retirement by buying one of her overpriced properties. How un-American.
An example that works very well for explaining bubblenomics to friends and/or relatives.
If 100 homes are for sale, and 1 home sells for 1 million and another home for 500K, the average is 750K. (only 2 homes sold)
….well, if last year 100 homes were for sale and 90 sold for 700K and 10 for 1 million the average price is 730K.
So, the price of that 700K home is now selling for 500K. The 1 million dollar home is still 1 million.
But wait, 100% of homes sold last year, and only 2% sold this year.
Median numbers are reported, not mean.
Using your numbers still looks good, however-
Median last year: 700k (average of the 50th and 51st homes sold, by price)
Median this year: 750k (average of the 1st and 2nd, of two, homes sold - happens to also be the mean)
To expand on that: To find the median of a finite list of numbers, arrange all the observations from lowest value to highest value and pick the middle one. If there are an even number of observations, one often takes the mean of the two middle values.
If you really want to understand what’s going on, you want a little flash animation of a bar chart with a seprate bar for each 10k increment. Then animate it, maybe .5 seconds per month. You can see the wave as it moves right, stops and then starts rolling back.
For most people, it’s probably better to avoid math as much as possible. Here’s how I say it: median sales prices mean anything only if ever single property on the market sells, or if the vast vast majority of them do. With a lot of houses sitting around, median sales prices is almost worthless as a figure.
Dollars per square foot would be better, however there are so many other factors which gives a property its value that I’m not even sure that would be telling us anything.
It’s just a matter of time before you see more widespread YOY median price declines in CA, especially the OC…where most people are living a life they can’t afford. Reasons:
1) several months in a row of falling sales volume
2) rising interest rate environment affecting most borrowers in CA
3) exorbitant energy prices here (gas, utilities, etc.)
4) absolutely dead open houses (word of mouth)
5) CAR actually saying that “soft landing” needs to be rephrased
6) many more reduced listings than a year ago
7) also the median household income in OC is only about $65k/yr and the median home price is $640k?
Lots of people are still drinking the kool-aid here, but I think the word is out now and it just takes time for the cycle to unwind.
No wonder houses seems expensive, they are almost 10X the median income in CA. Even the move up market seems expensive
if you can’t sell a house for what you want/need to move up.
Affordability is cyclical too and points to lower prices.
I live in the OC and there are a lot of people whose “household income” comes entirely from their “home appreciation” by way of their ever larger cash-out refi’s and HELOC’s. Some jokingly call it “income property” and note that if you buy an expensive enough home you can quit your day job and live entirely off your home appreciation. A $1M house will return a solid $150K per year in tax free cash … but a $4M house returns $600K in cash. Liv’n large in the OC.
Ok I’ll bite how does that work.
It works because someone forgot to tell them they have to pay those loans back.
OK, how ’bout this. Some 80-yr-old dope takes a 50yr I-O option ARM with $2M cash-out on his paid off home. Will he have to pay it off? Of course not. Homeless people are getting mortgages on new homes. The MBS market is printing $$$$$$$$$$.
Or die before the I/O period ends.
This is how it “works” …
1) Buy a $4M house using 100% LTV neg-am no-doc product (and yes, believe it or not you absolutely can).
2) If you’re new to the game, allow the house to “appreciates” 20% over the first year … but if you’re in the know (a savvy player), refinance after just a few months with the condition that you want to take 20% cash out. Again, go with the 100% LTV neg-am no-doc product, use the same broker he will appreciate the repeat business and he’ll find a way to hit the $5M valuation for the your one-of-a-kind home. One week later, you get $800K in CASH, broker and other parties get $150K in fees and you have a $4.95M mortgage. Use $200K of your cash to pay the mortgage, property taxes, and gardener for 12 months. The other $600K is yours to spend as you wish … take a vacation .., buy a Ferrari … after all you deserve it, don’t you?
3) Wait one year and allow the home to appreciate another 20%, now $6M! Refi with a 20% cash out then … (I think you get the idea)
Income property!
Charles Ponzi would be beaming.
Subsidizing your lifestyle with income from your job, as secondary to, income from your refi’s and HELOC’s. How can things not end badly?
that sounds like the ‘New Economy’ of the Netherlands; people have been doing that here for more than 10 years. It’s getting a bit more difficult nowadays because appreciation is now in single-digit territory, but you can always refinance and take out extra cash thanks to the unlimited flood of credit from the ECB.
I don’t think the cool aid drinkers know or understand median prices or year to year increase or decrease. All they know is the house down the street is listed at $750,000 and we have a gold faucet in our master bath, so ours is worth $800,000. I would say most research from 99.9% of homeowners is thru neighborhood gossip, they don’t trust anybody, including their realtor. And since the house down the street sold 6 months ago in 22 days for $$$, theirs is worth more and will sell any time they want to. All those listings and median prices Don’t Apply to Them. We are different
guess what. not most californians live beyond their means. but it is still a big number.
Oh the humanity, didn’t anyone think of the realtors, the realtors!
in Uk they split 2% - soon to be coming to the USA
How does that work?
Thanks in advance!
Fees for sole agency c.1.5-2.5%.
Fees for joint agency c.2-3% where both agents split the fees.
Lots of negotiation also goes on, with it being quite common to step the fees based on actual price achieved, with full fees only when the asking price or above is reached.
Worked for me.
Regards,
Loafer
in Netherlands rates were around 2% some years ago, some realtor agencies (especially those with more limited services) are now using rates below 1% or a fixed price that does not depend on the value of the home (like 1000 euros, which is way below 1%).
Hmmm….a take on a quote from the Hindenburg disaster. Yeah…I’m a trivia nut.
BayQT~
http://www.flickr.com/photos/ulrichp/1362599/
“Oh, the huge Manatee!” (Wail of the Florida FBs)
lol
so on my way to work today i saw this bright flourescent green sign planted by the freeway exit to PB ”www.dumpingcondos.com”
is that one of you guys at work?
also got an email from my dad, a builder in LA, about how condos and homes in SD/LA aren’t selling, prices are dropping, and to save as much dough as I can so I can buy something in 2008.
That’s what I have been telling people.
Love the site operator’s handle: “WilliamTheLiquidator”.
I’ll bet his acquisitions guy is named “Vlad”
These signs must be out in force. I saw my first http://www.dumpingcondos.com up in Del Mar today.
I saw mine in Encinitas.
Yeah, I believe these people are really hurting! My husband and I are probably going to buy a “cherry” BMW for about $5k below Blue Book because the guy needs the money quickly! Guess what?? He’s a real estate investor!! What a joke! If you need anything take a look on Craigslist and you can find these people selling stuff - cheap! We just bought another BMW in March from a guy in San Diego who bought a million dollar house he could not afford for about $3k under Blue Book. It’s mint too! Craigslist is a goldmine to find stuff these people are selling! I can afford these 2 cars because I save and do not spend!! I don’t have to finance them and both will be paid off in a few months - not years!! This guy talked about being a real estate investor like it was a badge of honor! What a joke!!!
soon that investor will be wearing other ”pieces of flare” and serving dinner at TGIF…
I could set this place on fire.
Now that is a show to see. I might actually enter a TGI Fridays to see a waiter wearing flares.
I think the term is “flair” from the very classic movie “Officespace”.
So was my comment.
I didn’t even notice the flare/flair error!
Yeah, but you shoulda bought a Toyota.
the open houses on my street are so dead every weekend, you’d think the realtor put strychnine in the guacamole
Yeah, I know but my husband thinks they are safer. I have been in 4 bad car wrecks in my short life and one of the accidents almost killed me. BTW.. 3 Of the accidents were in Japanese cars and I am still alive!
My wife is Japanese and her father retired from a Honda owned company but we own 2 Fords: Volvo 740 and Expedition. [When I was single, I used to own another Ford: Mazda RX7.]
It’s funny how my wife is accused of being rough with her friends’ car doors (who all drive Japanese branded ones) because Volvo (and Expedition) doors are so heavy that you have to slam them good. Her friends, on the other hand, have to shut our cars’ door 2 or 3 times to get it right, since they are used to much lighter doors.
Will I ever buy a Japanese car? Only when they make them as [safety-wise] solid as Americans do (or used to do)….
Honda Pilot is pretty dam safe…..
Here’s what I don’t get: prices in Culver City were up 35.5% YOY. There aren’t any mansions in CC (that I know of) to pull up the median. And most of the housing stock is old, small, and decaying. The rest of it is condos, condos, and more condos. Maybe there’s a new tract of McMansions that I missed somehow.
Nope, LOL everyone wants to live there. But seriously Culver City is a strange place. I read an L.A. Times article where a lady spent 850k for a 800 sqft shack by the freeway over there. I guess it’s the studios over there go figure.
There is not a whole lot of SF housing stock to begin within Culver city. What makes CC highly desirable for the hi-income entertainment workers is two things:
1 location. CC is only 10-20 min drive to Century city, Beverly hills,Santa monica which have some h-powered entertainment corporations, law firms, banking,ect. CC is also 30-40 min drive from west hollywood/hollywood , another center for the Entertainment/media industry.
Also, Sony pictures Has their Main studio lot in CC.
2. The City itself is well-kept, organized and clean, within its city limits . As I said, the no of SFH’s available in this small burg is extemely small, which means that the highly-paid Entertainment folks will of course snap up the limited no of units and jack up the prices.
Yes, there are no mega-Mcmansions in CC, just your ave sized humble 3/2’s, 5000 ave sq ft SHF’s going for $800,000.
CC means Culver city, not Century City.
“The City itself is well-kept, organized and clean, within its city limits .”
Yes, but - - - we must clarify here: clean compared with LA stds, not a bar set that high. And if you are near the borders/fringes, you have scum nearby. Palms has tons of crime, for instance.
As a former LA’er I would say if you want white, yuppie with a police squad that will question ANY little infraction, go to Glendale. Downside, is as you point out, not as close to studios - except WB and Universal. It is closer to those.
You can step over the Culver city limits into the unincorporated areas of LA such as Mar Vista. Palms, Venice blvd and immediately note the sudden increase in crowded tenement apt units housing low-income immigrants. Centinela ave south of washington blvd all way to 90 fwy getting to look like Compton.
School system not part of Los Angeles Unified. Highly rated and very white. That’s what they are paying for
When they completed the downtown CC, they put up a ton of high-priced condos. Also, isn’t Playa Vista technically part of CC?
The culver city Dwtn would officially be at corner of Washington and Culver blvd, just east of Sony studios. Playa Vista is a brand-new masterplanned mixed-use development sprung up from the Ballonia Marshes just south of Marina Del REY. It is likely a district of Los Angeles. Like Marina del Rey it will have expensive condos as its predominant housing unit.
titos tacos on wash place.best tacos in los angeles.
Johnnie’s Pastrami, right next door best Pastrami place in L.A.
The Hat Pastrami is best Pastrami In LA! one is in Alhambra on valley blvd east of atlantic. The second one is in Brea off 57 fwy on Imperial hwy.
Just need to mention a few communities in greater LA metro area that will be good places to relocate after the RE Bubble prices come down a bit. Especially for the stressed out commuters fleeing from the Moonscape outer barrens of the Inland empire/outer desert fringes.
Note: have deliberately avoided listing the overpriced
Coastal beach cities of the South bay or West LA. Have omitted The San fernando valley as it gets enough attention on SCal blogs.
Have left out East side Long beach which is solidly middle class and respectablely clean.
Just listed those LA burgs which may escape the attention of Scal/LA bubblewatchers and which are IMHO respectablely clean, organized burgs somewhat out of the limelight. Also should be reasonably priced areas in the aftermath of the bubble burst as they are not fancy-overpriced rich enclaves.
1. Pico Rivera-nothing fancy, just a solid, clean burg with a burgeoning middle-class Hispanic presence.
2, La mirada- stable neighborhoods, clean parks, equally close to OC?LA.
3. Glendale- well-kept lively dwtn, air not as bad as Pasadena, 2(Glendale) frwy fastest route into LA Dwtn.
4. Santa fe Springs-small size residential area but very clean.
5.Lakewood/Artesia- McDonnel-Douglas Closing crippled Lakewoods local Economy but still a clean burg.
6.Carson-a surprize. Has had its problems with middle-class ethnic gangs but that is because city is evenly divided (25% each) between Blacks, hispanics, Asian/pacific Islander and whites. They really do not bother the mostly middle class residents of this parks-rich burg.
7. West Covina- a bit better than it’s poor stepsister, Covina.
8.San Dimas-Lots of open space parkland.
9, Arcadia/Sierra Madre-
10.San gabriel.
#8, San Dimas High School football rules!
Waiting to see Ben put up “CA home prices plunge”
well i just tracks ziprealty in costa mesa and compare PRICE REDUCED to total listings. Total keeps climbing and almost 1 price reduced for each 2 for sales. Watched it go from 1 in 4 not long ago…
I am tracking 90802 in Long Beach, and a lot of condos have been on the market for almost a year! A lot are reduced as well, and the number of new listings for June is insane.
“am tracking 90802 in Long Beach, and a lot of condos have been on the market for almost a year! A lot are reduced as well, and the number of new listings for June is insane. ”
Lets me throw some light on the Dwtn LonG beach Condo Market. Was in Dwtn Sunday afternoon/earky evening to escape the Fearful heat. Was walking around the new Pike/harborwalk just south of ocean blvd. I could look up and almost directly above me i could make out two tall condo scrapers going up, with cranes and all.
Drove down Pacific ave and there was a large banner hung on a block- sized bid-rise condo/apt complex begging for buyers.
As I walked aroung the dwtn LB shoreline area on a sunday, 100% day in mid-summer i was struck by the lack of tourists and well-heeled middle-upper income folks: 98% of the walking traffic was lower-income locals. Most of them looked like they could only afford only ice cream treats.
Dwtn long Beach really invested ab enormous sum to build up a first-class Harborwalk shopping/entertainment/fun cruise district. Problem is they cannot attract tourists or out of towners.
As for those hi-rise condos, it may be the view of the Port and all those container ships wallowing in the harbor which may be a turn-off. Or maybe it is the Big-rig truck-jammed Long Beach Fwy which causes frustration getting into and out of the Dwtn Area. Or maybe LB just has a huge oversupply of condos, not just those hi-rise towers on Ocean Blvd but all over the dwtn area there are hugh numbers of block-sized,mostly mid-rise(4-story ave) condo-apts complexs.
The one i actually felt was a good concept is the Harborview Apts, a group of mid-rise apts off ocean blvd where you can walk down a few steps and be strolling the pike.
wait till the bloods and cripps buy a few set up shop in those condos.i see section 8 hi rise living in a few years.long bch is a 10 munute ride to south central and much of long beach is gang infested.terrible investment.
I remember watching the adverts in the LATimes when new condos came up for sale in LB. What I saw was a bunch of crappy old industrial buildings that had been converted into crappy new condos, with exposed pipes running across the concrete ceilings and down the concrete walls.
I’ve lived around here all my life, and the few times I have been in LB have always reinforced my negative opinion of the place. Great place for a container port. But not someplace I would want to visit, let alone live.
Problems with port/truck pollution may also be a factor in dwtn LB livability. I have heard that The Port and city authorities are working hard to mitigate or reduce Port pollution problems( the concept of “green Port”).
I have lived in Long beach Most of my life, and the city has really poured humongous sums to build up a scenic, walkable urban HarborWalk complex. Unfortunately the Ports infrastructure is right there next to dwtn. Note: 40% of all US imported goods comes through the Lonf Beach?Los angeles ports.
I live in Long Beach. It’s funny…neither I or anyone I know goes to this new shoreline developement. Sadly. I agree, the middle class people go to Belmont Shore. But actually…there are a lot of middle class people on PIne, which is close to Shoreline shops, because I know of a hair salon that charges over a hundred dollars to cut and color your hair. There are also some high end restaurants as well that don’t appeal, in general, to the lower income types. It’s almost as if there are two distinct groups…the high end who bought the expensive lofts and who work downtown and then the lower income groups who ???. I don’t know. Anyway, LB like other cities, was too eager to provide more and more retail without thinking if it’s supportable. Means more taxes, you know.
The lower Pine/Pike area restaurants/shops get a lot of business during the week with the convventions. The conventioneers at the convention center can walk across the street. Try to go to lunch there when a big convention is on, and see how long you have to wait.
One place that does get the business is Tequila Jacks in shoreline Village. They are always packed.
To walk from 3rd and pine all way to shoreline would be a 15-20 min fast walk along the promenade past the convention center. They used to have those shuttle people movers(like at disneyland) running along the promenade all way to the end( maybe they still have them!)
Dash Buses scurry back and forth shuttling folks all over the shoreline area. I figure a good fast paced walk could take you from pine area all way to shoreline village, then walk west along boardwalk to the rainbow pier/aquarium of the pacific area where all those ancient restored boats dock, then cross shoreline drive at pine,walking north to the pike shoppping center. This might be a one-hr walking tour. They also have those segeways to rent at pike center which look like just the thing to motorscoot all over the dwtn.
If you really have good legs, take a walk along the jetty which runs off shoreline village( a good mile walk) all way to its end. Good views of dntn skyline, queen mary, boat recreationists, the Marina Docks, and the well-decked oilrigs.
Have done dwtn cycling tours, which for me is the easiest fastest way to zip around the Long Beach Shoreline area.
I am tracking Valencia 91355 and currently almost half of the homes for sale are reduced! 329 Listed and 119 reduced in price! I thought everyone wanted to live here due to the safe neighborhoods and schools??? I thought the prices would appreciate forever!
I want to nominate The ugliest siting for a housing tract development in Scal. It is in Newhall/Santa Clarita. Just go up the 14, exit going north on Golden Valley rd for 1 or 2 miles and presto, there it is! A massive cookie-cutter tract of SFH’s which sit atop a barren ridge/slope without so much as a single tree or even a blade of grass. The surrounding area looks like it is a mining strip zone. Even some of the Moonscape Inland empire tracts do not top this!
What about the “Post World Series” sales surge?
That’s a good one.
Maybe by then it will be a housing market “on steriods.”
Gotta laugh. I was in the stadium watching Bonds go 0 for 4 last night.
No wonder Leslie Appleton-Young has started backpeddling. She knew the June numbers were going to be uglier than a sack of assholes.
Bad news for homebuilders. Forbes article reports on coming write-downs by homebuilders to reflect lower prices on the land they hold. So earnings will go down for this reason as well as all the other reasons we all know so well.
http://tinyurl.com/ft4gl
GAAP gives companies an extraordinary amount of discretion when it comes to writing down impaired assets. It will be interesting to see which HB’s cling to current book values and which HB’s take the “let’s get all the bad news out now since our stock is in the toilet anyway” tack.
If Bernanke DOES’NT raise rates on August 8th, then the dollar is through. Buy gold, silver, Euroes and Yen.
Why do you say that. Any evidence to back it up.
…or logic? That’s the kind of talk that gets the sheeple drinking the kool aid but is otherwise of no value to anybody.
No need for BB to do that. The USD will keep up like a brick doesn’t. It’s all explained here in “America’s External Balances”, By John H. Makin, AEI, Posted: Tuesday, July 25, 2006.
By the way, I got a buffer overflow while trying to parse Makin’s argument.
“The USD will keep up like a brick doesn’t.” and “I got a buffer overflow while trying to parse Makin’s argument”
Ummm…huh? Is that Canadian lingo? Please explain.
Could you please quote the section in Makin’s article that supports your argument?
LJR-
Here are some of the quotes which support my contention (I think)
“In fact, both the broad trade-weighted dollar and the dollar exchange rate against other major currencies such as the yen and the euro have been remarkably stable. Today, the real trade-weighted dollar is virtually at its average level for the past sixteen years and is slightly stronger than it was in 1991, when the U.S. current account deficit stood virtually at zero. More recently, after adjustment for relative inflation rates, the ‘real’ trade-weighted dollar has actually strengthened against surplus countries, such as Japan, that are allowing markets to determine exchange rates.”
…
“The explanation for the stability–strength, in fact–of the U.S. dollar, even as the current account deficit has since 1990 risen from zero to 7 percent of GDP, lies with the globalization of wealth storage by rapidly growing countries–both advanced and emerging. Wealth is increasing rapidly in emerging markets, China of course being the largest, but also in Europe and Japan, not to mention the oil-exporting countries. The United States offers the largest menu of wealth storage options, not only in terms of variety, but also in terms of liquidity (defined as the ability to move huge sums–tens of billions of dollars worth) with only a small impact on price.”
…
“A rising current account deficit is no longer a sign of weakness in this context. The fact that global savers accommodate U.S. consumers by keeping U.S. interest rates lower than they otherwise would be and the dollar stronger than it otherwise would be is simply a manifestation of America’s comparative advantage at supplying wealth storage facilities.”
UW-
The first is a Dougls Adams reference and the second is from IT crossed with old Bill Clinton scandals.
I’m still working out Housing Bubble’s allusion space.
If you want to compare the dollar’s relative strength vs. other currencies, one of the best plces to do so is on the IMF’s site. Our dollar’s SDRs (Special Drawing Rights) have been declining steadily over the few years. The dollar index is about to test the all-time low of 81.
Gold doesn’t lie, and it is an inverse indicator of the dollar’s weakness. There is plenty of wealth outside of the US, thank you.
What gold tracking tickers do you suggest? I am thinking gld.
Mutual fund or ETF? Gold stocks or bullion?
Check these out: ACGGX, USERX, UNWPX, CEF
This article certainly doesn’t argue that the dollar is going to fall.
It is pretty funny though. Apparently we aren’t borrowing from abroad, we are providing “wealth storage” services (”In the new global economy, America offers prime wealth storage facilities on par with the Lexus as a source of automotive services”). I think the guy is actually serious, but it could be irony as rich as anything from Jonathan Swift.
“Wealth storage facilities.” Man, I love that idea. I just hope it translates well into Mandarin and Japanese…
This is a propaganda piece from AEI (aka “American Enterprise Institute”).
Hmm! I don’t own a condo — it’s really a “wealth storage device.”
It would all make a lot of sense, if only we made things here in the U.S. that the rest of the world wanted to buy.
lmg -
Yes it does seem to be a propaganda piece. That being said, their Housing GSEs Project contains some of the very best material available on the net regarding Fannie and friends.
the dollar is not dropping relative to the euro (and most other fiat papers) because the other central banks are at least as good as the FED at printing toilet paper. e.g. the ECB recently vowed that they will make sure that the Euro never gets above 1.30 US$ (which is just a little more than the current value). I don’t think the arguments about investment etc. are relevant.
If you measure relative to gold the picture becomes clear:
http://tinyurl.com/gc3nv
Isn’t it on august 28th?
Sales are down from last year while inventories are at record levels. Interest rates are reasonable too. I can’t imagine what the problem could be.
I just saw my realtor who sold my condo (San Diego, CA). He just sold one by the one I sold. (I am renting back.) He did telll me it is a buyers market (which I know it is). He kind of made some points as to buying now due to interest rates going up. I feel confused. Doesn’t it make sense to buy now. I have the money to put 20% down. Have a good job (combined 120K). Please help and give me some good advise (maybe Ben.) I want a home to live in, not to make a profit. I did with this one that I sold, but never refinanced. I bought for 90K and sold for 385K. I really want to buy a home to live in. I sold this condo because I wanted a house. Just getting anxious and since I have been reading this log, I have waited, but I am getting anxious. Should I wait? If I buy a house I will live there. Help!
xmas eve 06 1/2 the way down
then 07 most of the way down- be patient
If you are happy with the price and will put money down and can afford payments on a fixed rate mortgage, why not? You may be stuck there a long while and you risk losing your equity/down payment if you have to move but if you can otherwise can stand the thought that you might have got a better deal waiting but still don’t want to wait I say go ahead. As long as you know the potential down side you can make an informed choice. Good luck.
There’s always another house available. We bought midway through the decline in the early 90s thinking we’d be there awhile. After we bought, cheaper and better homes came on the market. We liked them better, but we were stuck. So if you buy now, it had better be something you can’t live without.
Keep on waiting. What area are you looking at? The areas, I have been tracking Tierra Santa and Poway have gone down drastically in the past 8 months.
I have been looking in Eastlake and Rolling Hills (no mello roos in Rolling Hills). Do you think it is worth waiting for homes to go down, when interest rates will keep going up?
It is good to do the math. You can always refinance to a lower interest rate. Those always fluctuate. If you look at what happened in Japan when the market crashed they lowered the rates to zero percent.
$550,000 at 6.5% is $3,476
25% of 550,000 is $412,500
$412,500 at 8% is $3,026
and you would have $137,500 in cash, which at a 5% return in a CD would give you $6,875 in your pocket.
It would not be a wise time to buy, do not catch a falling knife.
Realtors are paid a lot of money to put doubt into their customers mind.
I have seen a property in Poway that was listed on 4/6/06 for $874,876 and is now listed for $675,000-$750,876.
Here is the link, you can sign up for free. Then look at the homes in the area that you want. You will see the same thing. http://www.listingssandiego.com/search/homeview.asp?id=1503220&p3=-1&ix=14
Here is one in Eastlake Vistas that has been discounted 65K.
http://www.listingssandiego.com/search/homeview.asp?id=1524618&p3=-1&ix=9
65K is nothing wait till you see 3-4x that much going off the top
“I am getting anxious.”
Anxious is the last thing you should be. Take your time. Stash the cash you intend to use for a down-payment in a money-market or short-term CD’s that you can roll over. In my opinion home prices are not going back up for at least three to five years. Rates may go up but that is likely to be more than offset by home prices going flat-to-down. Plus if mortgage rates go up CD rates are likely (but not guaranteed) to go up so you will earn more interest and have more to put down.
Thats how we got into this problem to begin with.
Got to have this that and everything no problem let
me use a cc and worry about it some other day.
You will save on property taxs on a lower priced home. You will have to guess what interest rates are going to do in the next few years? Thats the risk, what will rates do?
certainly you can take your time to find just what you want these days, not like last few years.
Yes, Yes, Yes….WAIT! I recommend holding out for at least one year. I sold in Eastlake in 2004. It is a lovely neighborhood, but WAY overpriced right now. When I sold there were 41 listings in the 91915 zip code. Yesterday there were 265! I research the area almost every other day and have seen definite softening in prices. This area (South Bay) had always had a price differential (lower) compared to North County. Now it is as expensive (or higher “asking” prices”) than Carlsbad, Rancho Bernardo, etc. This is unrealistic considering the proximity to the border. Most folks in Rolling Hills ranch and Eastlake are middle income people, and original owners included lots of military. Prices just 6 years ago were at a level where many enlisted people could even afford homes there. Some as low as 190K (3 br, 2 1/2 bth, single family detached). Most of the BMWs, Mercedes, Hummers, etc you see in the area are surely HELOC vehicles. There are also lots of flippers that will be dying in the area. I firmly predict a minimum of 10% drop by next summer and more likely a full 20% over the next several years. Many of the Million dollar homes only cost 500K 4 years ago. Even with a 20% cost down to 800K, they would still be over appreciated/valued. The same example on the lower priced homes also applies. There are lots of owners who are still sitting on a ton of equity (120% + gains) and will still be able to sell as prices drop and get big money out.
OMG, Rolling Hills, isn’t that out on the peninsula where Richie Rich resides? I would think money would be no object out there. If you have to ask… On the whole lower prices with higher interest rates is a better combination for a number of reasons.
Do some math and look at some rentals. I think most people on this blog are right in their estimate that appreciation is not running away from you right now. Compare the after tax costs to renting vs. owning, and rent a place that is nice enough that you don’t feel like you are giving up lifestyle to not buy.
I have rented a house that my wife and I love. It’s the best cure for anxiousness. At the end of each month, I watch the amount I can afford for a down payment go up, and up, and up.
Consider this–today, you are competing with a bunch of other buyers that are willing to take a lot of risk on financing (Option ARMs, etc.) and make a lot less money than you. Banks still lend these people money today. They have no underwriting standards. Today, you are competing with buyers who in a normal financial market should not be shopping for the house that you are shopping for.
Liquidity in financial markets has a way of drying up. Once banks require down payments again, you will be in better shape (since you have the 20% down), lots of other potential buyers will simply go away, since they can no longer buy with 2% down, or less.
Not to mention the fact that as a renter, you will be able to give the (then) desperate seller the carrot that you don’t need to sell your house before buying their home–that ought to shave off a few thousand on the purchase price right there.
IMHO, time is on your side.
P.S. If you can’t tell, as a renter who has been waiting for years to buy, I’ve given this a lot of thought.
P.P.S. What the hell do I know, I’ve been expecting a correction for years, and it hasn’t come–in the end it’s your decision, but consider the potential downside if the folks on this board are just 50% right.
You want to buy a home without concern for profit. Do you have concern for loss? If buying a home right now means $20K (or more) of your down payment will evaporate over the next few months, why would you do it?
It is a want, not a need. Rise above the want to “own” and enjoy the absence of risk until the mania subsides. You will then be able to buy without downside risk. Patience is a virtue.
Don’t worry about interest rates. We are in a dynamic time with respect to interest rates and home prices. Interest rates will rise, and home values will fall. Absolute worst case is you end up paying the same payments on a lower-value home with higher interest rates. More likely interest rates will go up anyway as risk premiums increase and lending standards tighten, and home values will continue to descend for some time (years).
Your 20k down payment is a hint. In a few months, it will be much harder to get a mortgage without a large down payment, so you’ll be part of the dwindling number of people who can even qualify for a loan. That’s where you want to be.
Being anxious is a BAD SIGN. DO NOT let your emotions guide your homebuying decisions, ESPECIALLY RIGHT NOW. Calm, cool, clinical analysis without emotion is what you need. If you can rent an equivalent place and continue saving, that’s really what you should do.
Blessed are the savers and the skeptics, for they shall inherit San Diego!
I’m thinking that focusing your mind on another excursion might be a very good idea.
In other words, this inkling might be a waste of a good mind.
Better uses of a good mind:
1. Not thinking about what the guy you talked to said.
2. Swimming better, and in the Ocean, with Viper Fins.
3. Attempting to create an interstellar highway by chopping up humans (animals, first) and attaching them to near invisible particles. Of course, you need to re-assemble them correctly at the other end.
4. Why is AIDS? Sounds stupid, but look what YOU’RE THINKING ABOUT?
5. Can Braingate, and Mr. Nagel, help me cut down on spam? Or could it set off a housefire if I happen to have a nasty nightmare?
6. If my breasts were larger, would I be a Real Estate Agent or a Porn Whore?
7. If my nads were larger, would I fire rockets into Israel and think I might get off lightly?
8. Why was Tiny Tim ever a ’star’?
9. If Stephen Hawking is correct, and the time will eventually run in reverse, will I get my wife back? Should I get my wife back? What about a runny nose?
and of course…
10. Why in the name of Whatever Almight Deity You Might Feel The Need To Donate To are we discussing this issue?
Don’t you have better things to do?
For crying out loud. Even fish sleep.
When the pornstar “Sunrise Adams” left adult films, she reportedly became a California real estate agent.
Presumably her surgical enhancements came in useful.
The first consideration I would make in buying a house in this declining market is your tax bracket, and what other deductions you have. In high tax Cal, a solid 30 year fixed mortgage at todays still low 7% (remember 10% being low a few years ago) might be OK to buy if you go out 10 years, and are confident your income is strong enough to make the payments. Most buyers think the prices of houses will tank, and it won’t effect the economy or they job security. Everything must be considered, including losing your job in this new real estate era
Why you want to buy an asset that is going to depreciate.
Wait and buy in a couple of years at 30% discount and mean while save your money to put more downpayments and therefore will have smaller mortgage.
Ok guys.. you might find this entertaining..
I received a report that the big discussion today at a local Cosmotology school was buying real estate. It appears that a few of the students and low wage staff their have gotten the notion that it is a good time to buy real estate.
Something tells me that smart money people would see this as a sign of something.
A sign that this is a good time to buy? Them cosmetologists r smart.
you mean cosmetology, right? i do not know of any cosmotology school, maybe astrology.
No date on this, but I assume it is from today.
“The great American condo glut”
“1980s all over again
There hasn’t been a condo boom like this one, economists say, since the late 1980s when rising home prices and out-of-sight interest rates spurred developers to begin churning out a flood of condominiums. Many of these properties wound up back on the market, pushing prices down further.”
http://realestate.msn.com/buying/Articlenewhome.aspx?cp-documentid=386136
Great article. Why the hell did the realtor buy that condo?
http://www.bloomberg.com/news/av/
Then click on “Low of FTN Financial Says Fed Growth Forecast Is Way Too High”. (Christopher Low) This is an Audio File, warning it is 15 minutes long, first 8 min or so about housing. Demonstrating bearishness/concern about housing while hedging his bets. Slowly but surely they are stepping up to the plate.
Can someone confirm this:
Rumor has it Genisys Financial filed for bankruptcy and locked its doors Monday. No explanation, no paychecks, no nothing.
This is their website:
http://www.nobills.com/contactUs.htm
I just called at 7:29. A machine said they were closed, but said there office was open until 8.
I called also and no one answered. LOL
I like that picture of F#)@ED BORROWERS on that site. Looks like the lendars took the money and ran.
http://www.gfcw.com/broker/default.cfm
It says “wholesale”. What does that mean?
I’ve sometimes wondered about how some of these lenders and brokers operate. So many radio ads promoting loans that seem “impossible”. Why would so many companies be offering 1% neg-am ARM loans, especially in the current market? Considering market conditions, it seems like suicide, for both lender and borrower - only home seller will really make out.
Also I don’t trust companies with names that are deceptively spelled. Too much fly-by-night tactics.
I think I will have to call in the morning to see if anyone is there. LOL. Their website says “…our goal at Genisys Financial is to be the best mortgage lending company in the business…”
Yeah they might have been the best in the business that I have never heard of, and just went out of business. Hopefully their employees did not get screwed.
Fly by night mortgages, how much do you need?
Last news from 2003
OR IMMEDIATE RELEASE
TUESDAY, JUNE 17, 2003
GENISYS FINANCIAL CORP., SAN DIEGO, CALIFORNIA
Commissioner Issues Cease and Desist Order to Genisys Financial Corp., San Diego, California
SPRINGFIELD, IL – June 17, 2003 — Commissioner of the Illinois Office of Banks and Real Estate, D. Lorenzo Padron, today announced the agency issued an order to cease and desist to Genisys Financial Corp., San Diego, CA. The Order to Cease and Desist – Genisys Financial Corp., San Diego, CA can be viewed on our Enforcement Actions page or by clicking on the above link.
The Illinois Office of Banks and Real Estate oversees state-chartered banks and thrifts, electronic funds transfer (EFT) networks, ATMs not owned by financial institutions, corporate fiduciaries, real estate brokers and salespersons, real estate appraisers, real estate companies, time-share/land sales, mortgage bankers, mortgage brokers, leasing agents, check printers, pawnbrokers, and auctioneers.
Yeah they might have been the best in the business that I have never heard of, and just went out of business. Hopefully their employees did not get screwed.
Thank you! I guess I got my brain washed a little! (a lot). I do have my money in CD’s, but I have become very delicate with it. I do not want to touch a dime of it and have not. Maybe that is bad. I’ve read about people using there homes as an ATM, but I have become, I guess greedy with it. I just do not want to spend any of it on the contrary, I want it to be more! I just spend what I earn and that is it! Is this bad? I am just looking forward to buying a home, and that is it! I tell other people of what I have learned about the housing market and they tell me that I am stuped in not buying and It makes me feel (stupid) but I now I am doing the right thing. Thank you all!
just wait san diego prices are falling and will fall for at least 3 years.patience will reward you greatly.
There are many people who have purchased a home who are feeling a little anxious and stupid right now. Imaging yourself in that position. Look at the dramatically climbing inventories of unsold existing homes for the evidence. There is a reason they are selling and fewer people are buying. If it was such a great deal maybe they wouldn’t sell it to you!
I’m no expert on CA real estate, but I am very confident in predicting that lawsuits will be flying fast and furious in the California courts over the next few years. There will also be more than a few people facing prison sentences for fraud.
Do I wish that the many people who illegally LIED on their loan applications go to the pokey? I don’t know at this point. I do very much hope that the people who encouraged them to lie get very stiff prison sentences.
The CAR have already taken out a Error and Ommission Insurance.
This is the same insurance Corporate CEO use incase of accounting blunders.
“The California realtors have their June numbers out. “California home sales plunged 26.3 percent in June compared to last year while the median price of an existing home increased 6.2 percent, an industry trade association reported today.”
What can I say, except that by the grace of God I sold in ‘04. Sellers now are having such a hard time. But if they didn’t NAAVLPE HELOC, then they can stand it.
Oh well. Good evening to all.
By the grace of GOD I sold in June 2006!!!!!!!!!!!!
Talk about cutting it close..
San Diego is a very nice place to live. I was born and have always lived here. (35 years). Sometimes, I feel bad to feel that I want people to default on their mortgage. I hate to feel that way. I feel we have become very greedy and don’t care about each other as people. It sucks, but that is just the way the world is. In reality, nobody cares about what happens to anybody, we just care about ourselves. I feel bad about what is happening on Earth. Think about it. Even if we have wealth, money and houses, we are still not happy inside.
ru single
I have the song for you. The video isn’t that great; just listen.
http://www.youtube.com/watch?v=-24O86otMGk
Great song, and I liked the video, too!
What you wrote is something of concern to me as well.
I found this video to provide some comfort, empowerment, and inspiration on this subject. The online video at the link is 8 minutes from the one hour and 30 minute video.
http://www.mindstudio.net/products/prosperity.htm
“law of attraction” Don’t you think this maybe a scam?
What I don’t like is speculators buying up housing and making it too expensive. Using borrowed money which many have no intention of paying back if things go wrong. This hurts the real home buyer who just wants a place to live with there family.
I’ll tell you a true story, a realtor sugguested to my wife that we sell our Townhome and buy a similair Townhome with no money down, bank the equity we have now turned in to cash. OK now if prices continue up we win big and if they go down we hand keys over to bank… who cares if credit gets trashed we have cash in bank and “the big secert” in CA the bank can’t come after me for the difference when they sell this property i have given back for a loss. And it will be a loss thats why I would hand keys back and take off with money I have stashed in bank.
Realitor said all his friends were doing this. nice. realtors are giving legal advice, and poor advice at that.
So yes many of us are a little ticked, but usually at the ones who caused this bubble not the regular home buyer.
But did they tell you after the bank ‘forgives’ the difference between what they lent you and what they sold the home for, they tell the IRS who then tax you on that ‘gift’?
I’d like to see the look on the realtors’ faces when they get a tax bill for 36% or so of ~$200k+.
do you guys think the banks and lenders are going to start to rollover now?
From the OC Register article:
Statewide, the 10 cities and communities with the highest median home prices in California during June 2006 were: Beverly Hills, $1,877,500; Burlingame, $1,725,000; Manhattan Beach, $1,575,000; Los Altos, $1,543,500; Newport Beach, $1,347,250; Saratoga, $1,309,000; Mill Valley, $1,294,500; Palos Verdes Estates, $1,225,000; Orinda, $1,207,500; La Cañada Flintridge, $1,150,000.
A year ago? Statewide, the 10 cities and communities with the highest median home prices in California during June 2005 were: Manhattan Beach, $1,570,000; Malibu, $1,550,000; Laguna Beach, $1,537,500; Los Altos, $1,424,000; La Canada Flintridge, $1,395,000; Palos Verdes Estates, $1,360,000; Saratoga, $1,350,000; Newport Beach, $1,300,000; Coronado, $1,275,000; Hermosa Beach, $1,249,500.
Now, if I’m reading this correctly, am I to infer that in the space of one year, Malibu, Laguna Beach, Coronado, and Hermosa Beach all fell off the top ten list? Meaning, for instance, that Malibu dropped from $1.55 million median to below $1.15 million? [BTW, what the hell is up with Hermosa Beach? I lived in the South Bay in the mid 1990s, and Hermosa was actually cheap then.]
What’s happening in Hermosa Beach is a spillover from Manhattan Beach. People paying anything to live right on top of one another.
WTH is Los Altos, Saratoga and Burlington doing the list to begin with …LOL they are inland and are not even in par with Malibu, Laguna B, Newport B ,or Hermosa Beach… I mean really what is with these buyers do they even know the difference.
Once can understand $1M pad in Beverly Hills and parts of Socal.. Just nonsense…..
IMHO Beverly Hills sucks. It is probably the most overrated, character-less bastion of austentatiousness in all of California. For the price of one of those places, there are many, many places I’d rather live.
I agree that Beverly hills is one BORING CITY. I still see tourists strolling thru Rodeo drive clicking their cameras. What a waste of film! Better to get some mountain/desert shots i think.
There is nothing in Bh’s except some very rich Doctors and Bankers.
IF Brentwood and Bel-air were listed as communities they would easily top the list of most expensive homes in California.
This blog has been talking about the slowdown in FL a long time now, well, it if really starting to hit the mainstream media. ENJOY!
South Florida home sales plunge again
South Florida Sun-Sentinel
July 26 2006
“…and the huge price increases of the past few years have shrunk to near nothing.”
“The market’s done a complete 180-degree reversal,”
“Existing home sales fell by 39 percent in June in Palm Beach County.”
http://www.sun-sentinel.com/news/local/southflorida/sfl-zchomesales26jul26,0,7744046.story?coll=sfla-home-headlines
As the TV announcers like to say after giving the Florida Lottery numbers on Wednesday and Saturday nights: “Good Night and Good Luck, Florida!!”