‘The Market Looks A Lot Different’ In California
Some housing bubble reports on California. US News and World report. “Sales of new homes fell 3 percent in June, the biggest decline in four months and 11 percent below the same period a year ago, the Commerce Department reported today. The figures are more good news for buyers, who are already benefiting as homebuilders reduce prices and throw in a range of freebies, from granite countertops to extra rooms.”
“‘They started at $821,000, but we’re now down to $789,000,’ Sheila Anderson said of the deal she is negotiating for a new home near San Diego. ‘And that’s on top of $25,000 in upgrades.’”
The Tahoe Daily Tribune. “With lagging sales and record prices, California homes may still be listed higher than what the market will bear in an industry that revolves around expectation.”
“The association’s chief economist Leslie Appleton-Young discussed the real estate economy for the South Tahoe Association of Realtors meeting. ‘What I can tell you is the market is good, not great, and looks a lot different than a few years ago,’ she said. ‘But what you need to note is this is a cyclical business. The economy is growing but not growing as fast as we thought it would.’”
“Moreover, the sellers have to change their market psychology to list their prices at a going rate to accommodate stubborn buyers. ‘Clients are very impatient. The biggest question I get (from sellers) is: ‘At what price should I be selling my home,’ real estate agent Monique McIntyre said. ‘The only houses selling are desperation sales.’”
“Indeed, the median asking price for half the year was $569,000 in South Lake Tahoe. The median sales prices this June turned out to be $485,000. And active residential listings last month almost doubled to 575 year to date. In 2005, they hovered at about 300, according to the South Tahoe Association of Realtors.”
The LA Daily News. “Foreclosure activity in California soared an annual 104.4 percent in the second quarter as the housing market slump deepened. In the April through June period, 27,606 property owners entered some stage of the foreclosure process across the state, the second most in the nation.”
“A key factor to track now is the extent to which some of the higher-risk, adjustable-rate mortgages go into default, Realty Tracks Rick Sharga said. Hundreds of millions of dollars of these types of loans are due to re-set during the rest of this year.”
“It’s a worrisome trend,’ said Jack Kyser, chief economist at the Los Angeles County Economic Development Corp. ‘There are some people who could fall off the edge. We’ve got to watch this trend very carefully.’”
The Daily Bulletin. “When the ARMs begin adjusting, when payments begin climbing, more homes likely will find their way into foreclosure. Regional economist John Husing said that he thought buyers who took the mortgages out in 2003 and 2004 would be fine.”
“‘They’ll have some equity in their homes,’ he said. ‘It’s the ones who bought in 2005, since there hasn’t been much appreciation since then, who could be in trouble.’”
‘active residential listings last month almost doubled to 575 year to date.’
From this link:
‘While 216 homes have sold this year, 575 remain active, according to the multiple listing service from the South Tahoe Association of Realtors. The number of listings in El Dorado County have also gone up to 1,700. That’s 1,000 more than the number recorded in January 2003.’
Hmmm, 216 divided by 6 is about 35, which when divided into 575 yields about 16 months’ supply.
Brutal
Just wondered how all these electrical brownouts will affect the price of real estate? What a joke! The electrical power distrubution system is litterally exploding. Another blow I think is coming for house buyers. Much much much bigger utilities bills. The electrical insfrastructure is old, inadequate and overloaded. And guess who will bear the brunt of the new investments?
Thank god for that republican de-regulation
Bigger utility bills…Wont that be a blow for everyone? Owners and renters?
Here in LA the DWP has transformers that are blowing out that were built in the 1920’s, no joke.
“It’s a worrisome trend,’ said Jack Kyser, chief economist at the Los Angeles County Economic Development Corp. ‘There are some people who could fall off the edge. We’ve got to watch this trend very carefully.’”
And what exactly will you do when you see this suckers falling off the edge? Yell watch out? It is a little late to be worried about folks taking out I/O’s wouldn’t ya think?
‘It is a little late to be worried about folks taking out I/O’s wouldn’t ya think?’
Good point. The only way this situation wouldn’t have eventually occurred is if trees grow to the sky. And wasn’t 2005 the biggest sales year, ever?
this will cause major tightening in the mtg market.so cal is toast i have watched listings in palmcaster go from 1400 to 4750 since january.the outlying areas will crash hard like a nuke bomb retracting after spreading out.
And I have watched inventory climb from about 15 thousand in March 2005, to 33,947 as of Monday. The inventory just keeps climbing. Lots of 10K- 70K price reductions, too.
I can see the outer fringe boonie desert/inland empire regions such as Palmcaster, victorville, Barstow, Hesperia, Menifee, Perris, Hemet,San Jacinto,Beaumont,Palm desert,ect. becoming post-apocalyistic, post bubble collapsed wastelands strewn with weedy abandoned foreclosed properties.and inhabited by Hairy dingy drug addicts, Desert Bums, released convicts, sexual predators, hard core Gang-bangers, ect. Kinda like in a Kirt Russel movie. Title: “Escape from New York” would be rescripted as “escape from Victorville”
Mad Max
“And what exactly will you do when you see this suckers falling off the edge? ”
That is the only thing about this bubble that has me worried. There is going to be a whole lot of crying going on, by FBs and more importantly, by member banks. If enough polititians are “watching” we may have a bail-out scheme, even outside of the FED printing $$$$ and lowering rates, the scale of which none of us will be able to believe.
What I see is by the time the bail-out is around, FB’s houses will have been in foreclosure. As a result, prices should go down due to foreclosures. But FB’s will also benefit due to bailout.
borrowers never get a bailout.the banks might get one though.
This time might be different. If the Fed pauses, get out of the dollar for sure.
Dunno. Think Katrina and how the polititians tripped over their dicks to give away money to people that knew they lived in a flood prone area. The crying will be a lot louder and by people that vote. I wouldn’t count out a bailout.
Yes, but in the case of the FB’s, their problems come down to individual stupidity not an act of nature. Also, FB’s are only a percentage of the home buyers over the last few years, there will be plenty of responsible people that continue to pay their mortgage regardless of what prices do. I think there are enough of us responsible types that our outcry would be large enough to quell any aid to FB’s. No one came to my rescue to replace the money I lost when the stock market bubble popped (and I wasn’t even heavy into tech), why should any help these idiots that are in over their heads…especially when others have made huge profits during the bubble. NO BAILOUT!
I think there are enough of us responsible types that our outcry would be large enough to quell any aid to FB’s.
I wish I could agree with you, OoSD. But, why do I get the feeling there will be no meaningful outcry? I mean, yeah, resulting anger will be vented between parent/child, man/woman, neighbor/neighbor, driver/driver, but will people analyze and digest what’s happened to them, organize and demand fair play? I just don’t see it. I’m not sure why we don’t. But most Americans would rather bitch and whine between each other then actually exercise any power they have. The politicians and those in power not only know that, they count on it.
I can already see the politicians, flanked by some blue collar workers, looking into the camera explaining how these poor souls were just trying to achieve the American dream, but were railroaded by corrupt mortgage lenders who ‘tricked’ them into unsavory loan products.
Scott, you nailed it. Blame game. Millions of FBs in danger of losing their HOMES - same result as Katrina, different cause. I hope not but I wouldn’t be surprised. Gonna take polititians with strong will and perhaps no desire to get re-elected that stare into the eyes of a mother holding her 3 babies as the boards get nailed up to her house - all while the evening news is recording…
FED won’t lie down to fight this one. They’ll try to engineer a “soft landing” through accelerated inflation in other asset classes. Think they got a chance??
k-Canuck
Tried that , done that, been there,one after the other since 1987.
Can you imagine what assets class now?
Well it’s pretty obvious - gold. Just one problem. A boom in gold sucks money out of the US economy, not into it like the housing bubble.
The Fed can drop all the money it wants, but it cannot control what people buy with it.
Any time you have asset inflation in commodities, the infrlationary effects show up very quickly. It won’t be commodities, if the Fed has it’s way
Who said it has to be a new bubble? I can see the Dow @ 15,000 in 2007 with CPI at 7% if the helicopter gets warmed up.
Also, I don’t think it will be the banks the get a bailout since they only keep the best loans for themselves. Fannie & Freddie might get a bailout IF the FED determines enough Americans hold their MBS - otherwise, it would be in their best intrests to burn foreign investors here as that would drive the money to explicitly backed treasury notes, driving down mortgage rates, prolonging the game.
So what is worrisome about it Mr Kyser. There are more houses on the market with prices soon to fall in SoCal. Does this goverment economist prefer we pay higher taxes so THEY can spend it on affordable housing. What is up with that? Let the market take its coarse.
OH I forgot this is SoCal where everyone is in RE industry. I should get a clue next time I rant off.
Actually the LA City Council just voted to approve that 100 billion affordable housing Bond measure. This is nothng but a Tax-payer subsidized housing giveaway to the poor working classes of the central city. They say it will provide affordable housing to the homeless. Actually it is meant to provide tax-payer subsidized low-cost housing to the thousands, maybe 10’s of thousands of lowly-paid immigrants who work in dntwn LA as Hotel workers, elevator security, janitors, hi-rise and lobby security workers, bellhops,ect. 95% of them hispanic, which is why Mayor villarigosa is pushing this measure so hard.
Yeah, screw low-paid workers!!! Especially if they’re hispanic!! Long live the priveleged white overclass.
Douchebag.
If you actually read what he wrote he didn’t disparage low-wage workers or Hispanics.
“Moreover, the sellers have to change their market psychology to list their prices at a going rate to accommodate stubborn buyers.
You know, this Leslie Simpleton-Young has got a lot of nerve, stubborn buyers my A$$.
I think that was the writer who inserted that, althought it may have been paraphrased from the speech.
stub·born adj. Firmly resolved or determined; resolute.
I hope she’s right.
I say stubborn sellers. In normal times you could expect to break even on RE if you sold within 3 years. Now people think that doubling your money in 3 is a God given right. I think a little mean reversion is in the cards for sure.
I think these stubborn sellers need a little dose of mean reversion reality / pain.
Definitely.
LAY: “Stubburn buyers! They are not willing to pay 20% more each year for depreciating assets until the end of the universe. WHAT IS WRONG WITH THEM!??!”
“Regional economist John Husing said that he thought buyers who took the mortgages out in 2003 and 2004 would be fine.”
“‘They’ll have some equity in their homes,’
Only the ones who didn’t go HELOCrazy, and they’ll only have equity for the next six months or so.
Name me someone who didn’t go out and buy new furnishings and upgrades for the house they bought on yet more credit. Easy to forget those blossoming credit card bills can’t be HELOCed away anymore.
Atleast when they leave the keys behind they will have some furniture and a big screen TV complete with an SUV to tow the U-Haul trailer stuffed with that and more HELOC merchandise. Plus they got away with free rent for a couple years.
Question is, who gets left holding the bag?
The “bag” gets spread out to investors, whether in MBS, bank stocks, etc. and somewhat to the folks that leave the keys and foreclose as their credit should be ruined and they lose whatever they had put in the house (closing costs, down payment if any, etc). Investors of RE securities should be currently analyzing the risks and dumping their holdings if they things are going to get bad. Same thing as when the tech bubble exploded…it was a lot of individual investors who got screwed. That’s why I think the government should not do any type of bailout. What they SHOULD do is ensure more realistic lending standards (i.e. minimum down payment, debt to income ration analysis, actual income…kind of like the old days) to prevent this from happening again. Also, they should curb CEO pay and other excess from lending institutions that fail, so it isn’t only the investors that get screwed, but some of the hardship also falls on the leadership and other executives of the institutions that made poor lending decisions. Right now they (CEOs, etc.) can legally rob the company blind (based on pay approved by Board of Directors) until it fails and walk scott free.
How with “they be fine”? This is not a matter of equity in their homes or not equity in their homes, it’s a matter of whether they (or ANY prospective buyer for their home) can afford the higher payments required with a new ARM.
These “fine” homeowners will either replace their ARM with a new neg-am ARM so they can make payments (who’s stubborn now?), or sell to a greater fool who will buy with a neg-am ARM (if they can).
There will be knife catchers on the lending side as well as the buying side, until, of couse the second round of ARM lenders and/or buyers find out that neg-am ARMs on depreciating houses are not any fun.
“Moreover, the sellers have to change their market psychology to list their prices at a going rate to accommodate stubborn buyers.”
It’s the buyers fault. Wahhhh!!!
“The association’s chief economist Leslie Appleton-Young discussed the real estate economy for the South Tahoe Association of Realtors meeting. ‘What I can tell you is the market is good, not great, and looks a lot different than a few years ago,’ she said. ‘But what you need to note is this is a cyclical business. The economy is growing but not growing as fast as we thought it would.’”
Will we ever see this supposed economist acknowledge that in California a growing economy won’t rescue housing prices unless it translates into higher wages (and soon)? If the median income family can’t afford 90% of the houses and the mortgage gimmick bag is nearly empty, how can people afford these houses?? Oh, and by the way, has CAR even released the affordability index in the last 3+ months? These people have no qualms suckering in the last fools with their BS.
I emailed CAR about the affordability reports earlier today. They refered to it as a quarterly report, although it used to come out monthly. They also said it was delayed to mid August.
Funny, I emailed them about it in early June and they said it was scheduled to be released at the end of June. They announced back in December or January that they were switching to a quarterly report, but at that time they said the first quarterly report would be released sometime in April or May. Hmmm, I wonder what they’ll say in mid August.
They’re trying to figure out why they’re getting a negative number in the affordability statistics . . .
I emailed them back in April, and got the exact same ‘quarterly report’ spiel, and that it was due ’sometime in June’. LAY also made a press announcement that they were “adjusting” the formula to be more reflective of the “current market reality”. I guess they haven’t yet hit on the magic formula that produces a 90% affordability rating for CA.
“They’re trying to figure out why they’re getting a negative number in the affordability statistics . . .”
Good one!
First they take away our M3 than they take away the Commitment of Traders Report and now there goes the real estate affordability index. What’s next? Are they going to switch the CPI to semi-annual?
Someone should do an op-ed piece on the disappearing public information. Any of the resident heavy hitters interested?
The CFTC’s Commitment of Traders report has a very high probability of continued publication.
‘What I can tell you is the market is good, not great, and looks a lot different than a few years ago,’ she said.
She? Not only did “She” change the “Soft Landing” moniker he became a women.
yes but they are reversing rather quickly soon they will tell sellers to cut prices 20%.they are whores.
“Stubborn buyers”–too funny! The ball is clearly in the seller’s court.
In our court and will be dragged down deep for a long time BABY!
It was the buyers “fault” that drove prices up, so buyers should have the power to force prices down.
“‘They started at $821,000, but we’re now down to $789,000,’ Sheila Anderson said of the deal she is negotiating for a new home near San Diego. ‘And that’s on top of $25,000 in upgrades.’”
Oooh, how screwd! The beginning of the biggest frickin RE bust in the history of the world and you get a whopping 32K off the top of an 821k financial coffin. Great, see you in the soup line.
And we all know the buyer of that $789K coffin is a McMillionaire who makes around $100K/yr. That buyer should be willing to spend no more than $400K on a house, IMHO. And that’s an absolute max with mortgage rates no higher than 7%, and a 20% downpayment. And a $100K buyer will not want to live in today’s $400K house with all the gang-bangers and such loitering around. It’ll take a long time for prices to get back to where they belong…many years, IMHO.
I’m personally trying to figure out my threshold for pain when I’ll buy (a few years from now), and I can’t seem to mentally get my mind above 3.5x my income with 25% down. I’d really like to buy with a 15-year fully amortizing loan.
If you earn $80,000, that makes $80000×3.5 = $280,000 mortgage loan + $90,000 down (24.3% down) = $370,000 house price. 15-year loan with 7% interest will be in $2300 a month region (guessing here). Still a lot for $80,000 income.
Actually I’m thinking home price at 3.5x my income, not mortgage at 3.5x my income. With income of $80k, my math would be more like $280k Less $70k down, $210k mortgage. Monthly payment at 6% (today’s 15-year rate is listed at 5.95%), call it $1,770 per month, or around 26% of gross take home pay per year. People have stretched more, that’s for damn sure, and doing so during a seller’s market.
Of course, when I’m willing to buy, the rate likely won’t be 5.95%, so my math my change then . . .
Auger you beat me…
‘They started at $821,000, but we’re now down to $789,000,’ Sheila Anderson said of the deal she is negotiating for a new home near San Diego. ‘And that’s on top of $25,000 in upgrades.’
Great $32k off? something that will be work $350m in a couple years…exxcellent deal !
‘And that’s on top of $25,000 in upgrades.’”
Bet she doesn’t know shes getting screwed on the upgrades too.
Yeah, because those $25,000 in upgrades cost the builder $12,500, tops.
Good one. “Financial coffin”. How ’bout instead of McMansion we call the Sh*tboxes; McCoffins.
“‘The only houses selling are desperation sales.’”
That is the sort of statement that starts making every house a desperation sale. California homes for everyone!
I found this report this morning. This afternoon, the AP picked it up and it’s running in over a dozen California newspaper websites. All of them dropped that quote.
DL must be doing some editing??
You maybe onto something. In google news, searching for “only houses selling” (in quotes) hits the link above and this one (seems like a sister newspaper):
http://www.nevadaappeal.com/article/TD/20060726/NEWS/107260039/-1/REGION
And google corrections recommends “only homes selling” but that turns up with only big fat zero hits.
So no one else is using that phrase out there. A bit spooky.
The MSM is beginning to tear into this now because they see blood in the water so to speak. Pretty soon the FB’s will not be able to ignore it anymore. That’s when the real panic begins.
This pretty much reflects what I see. The same houses have the same For Sales signs out in front week after week. And more of them are appearing. Today I drove through Brentwood on a route that I take about once per month, and noticed at least five For Sale signs on a 3-block neighborhood street that had none last month.
The other interesting thing is that I am starting to notice For Lease signs in single-family neighborhoods that until recently would never have anything other than For Sale signs (this in Santa Monica).
Now if the prices would just start moving…no sign of that yet around here.
flippers have definitely purchased several of the recent homes sold in Santa Monica. I called up some of the numbers to see how much they’re asking for rent: about $5000/month on places that should rent for about $3000 tops. Needless to say, they are still vacant 4-5 months after being sold.
Hmmm. Maybe I’ll pay a few of them a visit after school starts and see what the real rental prices are
As you say, a fairly nice 3/2 should be around $3000/mo. in today’s rental market here. I took a quick look at craigslist, and I see what look like flipper-infested condos asking $3500-4500. These guys will be disappointed, methinks. You can rent a fairly nice 3/2 apartment here for $2500 - but it won’t have granite countertops 
Check out 1741 Maple and 1320 Pearl, both SFRs and both definitely purchased by “investors” (and both still available for only about $5000/mo. In fact, you only have to call one phone number to check on both, because they’re both being offered for rent by the same outfit (hmmm))
Even paying $3000/mo in rent sounds painful. $5000, OUCH! Imaging the income needed to handle $5K in rent? No tax break so at that income level you’re looking at a 40% tax bracket in CA. Just for shelter alone you’re looking at $7500/mo. Forget about car/food/insurance… And that’s for a PoS rental.
Amazing. Talk about a long way to fall. We’re talking a 60% crash here minimum to get back to fundamentals…
And this time ’round really is different because of Globalization’s downward pressure on wages. Soft landing?
The movie industry is slowing down — you may have caught the recent LA Times articles about studios cancelling movies and/or renegotiating fees with big name stars.
The westside’s economy is certainly fed by Hollywood cash. Box Office receipts dropped in 2005 and are on track to drop again in 2006.
At somepoint, the agents, the lawyers, and the writers living in the Westside are going to see that their income isn’t what it used to be.
That is bad news if the westside LA Hollywood sector sees a slowdown in the Entertainment industry. The astronomically high Prices for the Westside(Santa Monica, Beverly hills, Rancho Park,Culver city, Brentwood,Cent City, west hollywood/hollywood,Pacific Palisades, Bel-air, Westwood, ect,)are IMHO keeping the entire LA Metro Re Median YOY prices up(Barely).
If this sector goes down, then the rest of LA collapses, because the rest of LA county has no comparable Hi-income jobs sector to keep the $500,000 Median county Homes prices from collapsing.
Si Senor….
I read that article but it didn’t say anything about television. Most of my entertainment clients are in the tv production industry, which seems robust.
Have been tracking Pacific Palisades for almost a year.
Only 16 homes sold last month. Median price down -30% from last August’s peak. Price per square foot continues to slide, down -10% rolling average since last August peak.
Per Melissa data, only 4 homes have sold/closed through July 18. maybe the slowdown is finally hitting here too.
I’m salivating at the thought that what you posited may come true. I cannot see myself living anywhere else except the West Side. Then again, any thoughts on the fate of the Santa Barbara market?
Cannot really say how far prices will fall for South Santa Barbara coastal Homes but it too is rediculously overpriced. I have haerd that the city’s maintenance workers, firefighters, teachers, ect.cannot afford to buy homes in S. santa Barbara and have to commute from such places as oXnard/North county areas, which has lead to severe overcrowded commutes and congestion problems along the PCH route. What S Santa Barbara needs is to increase supply of both mid and hi-rise condos, but that of course would spoil the view of the Locals.
This is pure tin-hat speculation but i would bet that the westside areas mentioned above(including Malibu) have maybe 5% of the total LA county Housing stock but 50% of the Total appraised/assessed price value of all County Homes. IF California/SCal has 20-25% of the total RE value of entire US, then what happens to westside RE Values could indeed start a ripple effect leading to a SCal?LA RE plunge in values, which could in turn have ripple effect for rest of the country.
Just a wild speculation, folks.
Note : have been out too some of those fabulous palaces/estates in Malibu/Brentwood/hollywood hills/muholland drive/Bel Aire, ect. Some McMansions/estates occupy entire hillsides:one estate has entire 1/2 mile right side section of Benedict canyon all to itself. Just 10,000 of these monster mega MaMansions owned by the rich and famous of hollywood, assuming average med price of 10 million each, alone would prop up the LA RE bubble.
this quote strikes right to the heart of the inventory issue as was discussed in a thread a few days ago. There is now so much inventory that the only way to find out what homes are really worth is to slash the price until someone is willing to push the button. These “desperation sales” will become the comps that sellers will then have to base their prices on. But if inventory continues to swell, as we know it will, these comps will become nothing but signposts where fools tried to catch that falling knife.
This one statement sums up the true current state of the entire market perfectly. No wonder, as Ben pointed out, they pulled the quote!
” these comps will become nothing but signposts where fools tried to catch that falling knife”
Classic. I’m saving that one.
These “desperation sales” will become the comps that sellers will then have to base their prices on.
Eureka, bingo, right-on!!!
Clasic “sticky downwards” behavior. I think Wyle E. has finished feeling around with his toes and discovered he’s not on solid ground and now we’ve got the two blink reaction shot. We’re almost to the “infinite streatch” stage where his feet free-fall while his head is still looking quizicly at us.
Also, this:
“When the ARMs begin adjusting, when payments begin climbing, more homes likely will find their way into foreclosure. Regional economist John Husing said that he thought buyers who took the mortgages out in 2003 and 2004 would be fine.”
If your monthly payment goes up, and the value of your house drops, what does it matter how much equity you have?
I was wondering the exact same thing. I guess it means they might be able to sell without a short-sale or foreclosure, as long as that equity cushion exists. They’d better hurry, as that equity is quickly losing value every day.
I take this to mean that buyers who bought in 2003 and earlier paid a overall price significantly less than a buyer would have to pay for the same home in 2005, 2006 (40% to 80% less in some bubble locales). So they have much smaller payments too.
Sure, these “early bubble buyers” will have their ARM payments adjust up the same as everyone else. But, the adjusted payment amounts will continue to be significantly less than an ARM adjustment on say a 2005, 2006 loan.
Basically, if you bought I/O at the most extremely inflated prices in 2004, 2005, 2006, you are toast. The wages needed to service one of these loans after ARM reset are just not there for the vast majority of the workforce.
As long as equity > house-note foreclosure can be avoided. What the RE complex won’t be able to cope with is mass foreclosures. That’s what this chump is *hoping* for. Financial ruin for the seller- tough shit. It will likely take that broke seller out of the market if equity = house-note, which won’t be good for the housing market either.
How much equity does someone have if they bought in 2003?!? That’s why the statement is so ludicrous.
If they hurry and haven’t done a cash-out refi or minimums on option-ARM, they may still be able to avoid foreclosure. The rush is on.
Sellers, take you mark, GO & SELL!!!!!!!!!
Great point. It really shows the absurdity and unsustainability of the bubble mania when two-three years of appreciation is enough to provide a “foreclosure cushion”. Historically, two-to-three years of appreciation should only amount to 6-9% of the home value.
The problem as I see it is that massive foreclosures are the only way to avoid the huge bloated M3 from flowing out of housing and causing inflation in the rest of the economy. Otherwise the banks have their money back to lend out again.
Moreover, the sellers have to change their market psychology to list their prices at a going rate to accommodate stubborn buyers.
There it is again!! *stomps* I am NOT stubborn! I’m NOT! pffflllllbbbbt!
Okay, maybe I am. A little.
Century 21 Commercial
“The Stubborn Buyers”
Husband and wife sit at the kitchen table with the speakerphone in the center. The table is lit from a single light above.Two young children play in the dimly lit background. Husband and wife look exhausted and are sweating from the heat. The house is obviously not air conditioned.
Pudgy Husband: What the heck is wrong with these people? Why are they so stubborn?
Pasty Wife: (sniffing tears) They’re greedy that’s what, they want us to give our house away… I HATE THEM!!
Soothing voice of a Realtor ™ over the speakerphone: Don’t worry you two, we’ll sell your house… and you’ll get exactly what it’s worth. We did knock five thousand off the price, soon you’ll have buyers fighting for your place.
Husband: Suzanne, I’m just worried we won’t be able to sell in time, our mortgage is killing us.
Suzanne: Have I ever steered you guys wrong? Ok, maybe you bit off a bit more than you could chew with your new place, but remember the schools are awesome.
Wife: (to husband) Maybe if you made more money we’d wouldn’t be in this mess!
Husband: Hey the loan officer gave us the loan…
Wife: (eyes widen disapprovingly) What? What about the loan?
Husband: (looking down) I didn’t think they’d give us more loan than we could handle.
Wife: You can’t handle it.. you’re the -loser-. Everybody else has a nice home with nice furniture. What’s wrong with you? What? (she pushes back the hair plastered to her sweaty forehead)
Suzanne: Ok you two, calm down. I told you I’ll take care of this. We’ll get your house sold for a big profit and then we can find your perfect house.
Wife: This is my perfect house Suzanne! Remember how you researched it? I don’t want another house.
Husband: We can’t afford it, we’ve got to sell before it’s too late.
Wife: Too late, too late, we’re always too late to everything… for once can’t we be on time? Just for once… (sobbing, she places her hands over her face)
Suzanne: Hey you know what we’ll do? Let’s have an open house, that will do the trick, buyers love open houses. I’ll put out lots of signs with lots of balloons, it’ll be a lot of fun. You’re house will be packed with buyers.
Husband: Does that really work? Our neighbors down the street had an open house all weekend and the only person to show up just ate some snacks and used their bathroom. He stunk the place to high heaven.
Wife: That’s disgusting! You’re disgusting! I can’t stand this… Suzanne, can’t we make someone buy this place? Can’t we just.. (gritting teeth) MAKE THEM?!
Suzanne: Welllll…. I do know this guy, he could set up a situation where some compromising photos could be taken of someone. It would have to be the right person, someone with money and status.
Wife: (wiping away tears) That’s it, let’s do that.
Husband: (worried) Honey, I don’t know, we could get in a lot of trouble…
Wife: (snaps back) We’re already in a lot of trouble if you hadn’t noticed! This might get us out of trouble.
Husband: I don’t know…
Wife: What?!!
Suzanne: Hey you guys, don’t worry, I’ll research this and get it all set up. It will work like a charm, what could go wrong? You just figure out who to target and we’ll make it happen. You can do this.
Wife glares at husband.
Husband: Well… ok.
Wife: (hugs husband) This is awesome.
How much $$$ would we pay to see a commercial like THAT on TV!!!! I know I would chip in $20 to get it produced!!!
Someone with a good video camera has got to shoot that.
It would get played in a lot of places.
‘The only houses selling are desperation sales.’
Desperation sales tend to screw up the comps, as these take place at the lower end of the list price range for similar properties. The resulting drop in market prices sets the stage for a new wave of desperate sellers, for whom holding on to their homes would only pencil out if prices went up forever, or at least stayed on a permanently high plateau. (This example fits nicely into the paradigm of Thomas Schelling’s book “Micro Motives and Macro Behavior.”)
Especially if there are some appraisal fraud lawsuits, where the appraiser market actually brings some ethics back into the fold, making it impossible to refinance, getting some more forced sales . . . and some more “desperation” pricing.
If it were only true that the *only* sales were desperation sales. Unfotunately, we still have enough GF’s to keep us going. However, the tank is on low. When will we run out? Certainly in September, probably earlier. However, its amazing how long you can beat an almost dead horse.
The thing is, there will be some rational sales that are low now. Anyone who bought pre-2003 can still make a nice profit if they undercut the market by 10%! For them, it might be more rational to give up $100k than to wait out 2 to 6 months.
I have no doubt there *must* be a lot of Californians taking jobs in non-bubble markets who want to get out with a “nest egg” while the getting is good. 
Hey, if someone knows their $500k profit is gone and is willing to settle for a quick $400k profit, more power to them; otherwise wait for a mere $250k (or less) as they follow the market down. 
I admit this is happening faster than I thought. Man will I be curious to see July’s sales…
Neil
So far, this hasn’t surprised me too much yet. I expect some y/y declines, then buyers will dry up altogether except for the true bottom feeders. Then we’ll see real desperation, and sales volume dropping off a cliff.
A friend of mine told me that there are alot of people who are more willing to have their houses forclosed than reduce the price significantly. It is a matter of pride!! What a bunch of IDIOTS!
This varies a lot by area. Where I am some of the most recent sales just happen to be the few places that were two owners ago owned by builder/designer couples and got upgraded to gossy magazine levels of charm and some flipper homes that were full of nothing but the highest end finishes. The result is that the comps are incredibly skewed toward the high end. The Zillow Zestimate for my house jumped like +5% just in the last few months. Right here it seems that things have peaked, but looking at the numbers it is not obvious how overblown all the latest comps are relative to the vast majority of housing in the area.
“‘They’ll have some equity in their homes,’ he said. ‘It’s the ones who bought in 2005, since there hasn’t been much appreciation since then, who could be in trouble.’”
I guess John Husing has never heard of cashout home equity ATM financing of consumption spending?
Or the $100,000 backyard BBQ/TV/POOL/Bondage Dens in Rocklin County CA
“Sales of new homes fell 3 percent in June, the biggest decline in four months and 11 percent below the same period a year ago, the Commerce Department reported today.”
Sounds as though the builders are not offering big enough discounts. I suggest $100K off the recent comp price plus free Beamers…
Bimmers!!! Please!
Bim Wahhhh. Take it from someone who remembers BMW standing for Black Mit White.
Maybe a nice Isetta.
I still wouldn’t take it cause it will be even lower in 12 months
Regional economist John Husing said that he thought buyers who took the mortgages out in 2003 and 2004 would be fine…
What if you can’t afford your post teaser mortgage payment? What if you can’t sell your house?? Or qualify for a bigger HELOC? Are these buyers still fine??
The economy is growing but not growing as fast as we thought it would.’”
CAR needs a new economist. Perhaps one who could have foreseen economy was slowing down.
Or promote Leslie Apple to vice president of BS.
they’ve got just the person they want, no question. Although the fact she won’t call it a soft landing any more probably has her in hot water with Darth Liareah.
never mind. it is obivious she has been their biggest BSer.
Have to disagree with you on LAY being replaced.
I rather have a “FOOL” for the CAR spokesperson anyday.
A quote from the US News article: “Housing is still a cyclical sector,” says Nicholas Retsinas, director of Harvard’s Joint Center for Housing Studies. “This is a reminder for those who have short memories.”
Didn’t these guys just come out with a report that the housing market is in good shape?
“Didn’t these guys just come out with a report that the housing market is in good shape?”
Nicholas is hoping his readers have short memories.
Actually Harvard’s Joint Center for Housing Studies has been backed by homebuilders, Fannie Mae and Mac and the rest of RE industry. They were the proponents of “There is no Housing Bubble”
BAAHAHHAHAHAHAHAHAHAHAHAHAH ! Harvard my #SS
Yes they did, and it was quoted all over the place… here is a sample I picked off the web.
—————————————————————————–
While the study maintains that interest only and option loans will become problematic a few years down the road when principal payments come due, borrowers have bought time for their incomes to catch up, interest rates to reverse their recent increases, or to refinance their loans or sell their homes. Thus these loans may not be a problem because, citing figures we have not seen elsewhere, the report states that most homeowners have “sizeable equity stakes to protect them from selling at a loss even if they find themselves unable to make their mortgage payments.” Using 2004 figures (and we know what 2005 did for housing prices) the study states that only three percent of homeowners had equity under five percent and fully 87 percent had a cushion of 20 percent or more. The implicit caveat, however, is that any drastic decline in house values will let the wolf at the door blow the house down.
But Harvard does not see this happening. Historically sharp declines of five percent or more “seldom occur in the absence of severe overbuilding, dramatic employment losses, or a combination of the two.” That these conditions did not exist, it says, is the reason that the housing boom survived the recession that started in 2001.
“With building levels still in check and the economy expanding, large house price declines appear unlikely for now.” However, should the economy falter, an end to job growth could create a situation in which mortgage default rates would increase especially among those who gambled on the riskier mortgage types and housing could change “from an engine of economic growth to a drag.”
Ha! Severe overbuilding: CHECK, Dramatic employment losses: COMIN’ UP! Engine of economic drag here we come.
There has been a huge shift in psychology just in the last couple weeks. Leslie A-Y (CAR) saying that she’s searching for a new word, as “soft landing” no longer applies. David L (NAR) saying that prices will most likely fall. Mozilla (Countrywide) saying that prices are definitely going down. All the terrible reports from the home builders…. on and on. Former cheerleaders who saw nothing but sunshine and roses are all changing their tunes.
“Yeah stupid sellers, forget what we told you last year about lack of supply and no more buildable land, and get realistic with your asking prices! Everyone knew this couldn’t go on forever (even though we told you prices ALWAYS go up).”
love,
David and Leslie
It’s a good time to be a RE bear, isn’t it?
It’s beginning to look that way isn’t it. Maybe now my wife will believe me.
Not until Opra confirms it.
Sad, but true.
For most women today, it is simply not a real problem unless Oprah puts a stamp on it.
Can we all look forward to Oprah’s Housing Bubble Show?
Probably.
Most likely, in October.
That is too rich, but truly it would be a good show. The sick association between womanhood, motherhood and home ownership. All women should know that you can be the “woman of a… rented house or apartment”.
For most women today, it is simply not a real problem unless Oprah puts a stamp on it.
Don’t make us go all Naomi Campbell on you, now. Some of us chicks are actually here. Not in front of Oprah.
Estrogenly yrs,
SFR
No longer “Ooh, soft landing” now it’s “Say, what’s a mountain goad doing up in this cloudbank?”
“She [LAY] stressed high energy costs as a major reason for a cooling real estate market, telling the Tahoe Daily Tribune that some local governments in California have responded with zoning changes that would accommodate mixed use so homeowners don’t have to drive several miles from suburbia to buy commercial goods.
“It’s a huge problem that’s hit or miss. Some communities are doing it,” she said, mentioning Los Angeles as one city.”
Anyone who is counting on mixed use as a panacea for transportation/congestion/etc.–much less housing costs–is seriously delusional.
Where’s Robert Cote when you need him?
I’m here gloating. I know better than to make a pest of myself. What’s that old saying? When your opponents are self destructing, just stand back. Having LAY pumping TOD and NURB and Mixed-Up says more about how bankrupt those concepts are than any dozen omy densest blog bloviations.
Mixed use actually makes things worse for most of the shopping that I do. Mixed use means overloaded, inconvenient parking, congested streets and intersections, and inefficient automobile operation at low speeds or stopped with the engine running. And you still need to travel at least several miles for most purchases, because small local shops are not price-competitive and don’t carry deep inventory. But the trip is less efficient coming from or going through mixed-use neighborhoods because of the congestion problems.
Thank your gods that Macerich gave up on their Übermall in Soviet Monica.
Mixed use is a concept i hear bandied about often these days. I am seeing nore and more Condo/apts complexes being built close to or immediately adjacent to industrial/office parks. One place is at Jamboree and Main(Irvine). Costa mesa is putting up two towers(its only cleared ground now) on Macarthur/mainst which is right next to the office parks on macarther/imperial way.
9-unit condo complex going up at pico/century park east, right next to Fox Studios/century city.
There is the large apt complex on towne and country rd/main st. in City of Orange, which is placed smack in middle of a commercial office corridor.
And there is the large Stuart Apt Project going up on corner of Sierra Madre villa ave/Foothill blvd in East Pasadena, which is a busy commercial zone.
And there is Fusion in El Segundo/Redondo, almost completed , which is smack dab in middle of the industrial/commercial zone right next to Northrup-Grumen and the Green line.
A Large Apt/condo project going up a few blocks north of 101 on Lankersheim right across from Universal Studios. And A similarly-sized project may have been just completed a short block north, where Lankersheim and Cahuenga split off.
The Huge Platinum Triangle multi-unit Complexes going up along State college/Chapman Ave/Katella near Anaheim Stadium is primarilty a commercial office/warehouse zone.
The Brand new Playa Vista Master-planned, just completed community on Lincoln/jefferson looks like it incorporates offices/Art-media studios and workshops/eateries/apts/condos together in the same Buildings.
The Marina del Rey tall Condo towers have professional, Law, and other offices on their ground floors with condos above them. Marina DEl Rey is really small in area and has all essential banks, shops/malls within 1 mile from the condo towers. It is in fact an almost self-contained community.
“And there is Fusion in El Segundo/Redondo, almost completed”
That place is a joke. You’re living right next to the train yard. You may as well not build any windows on the buildings, because the views are all going to suck. And it’s right at the corner of Rosecrans and Aviation, which is just about the worst intersection in the South Bay right now.
Playa Vista, don’t even get me started. Let’s just say I won’t be surprised at all when the entire place burns to the ground from the massive methane deposit catching on fire.
The Marina towers aren’t so bad, admittedly. Maybe the county can give breaks to married couples moving in there, so that Marina del Rey is no longer at the top of the list of divorcees per capita.
If you think Fusion is bad , how about constructing a massive condo complex off Chapman Ave, and the entire complex constructed in a narrow triangle between the 5 and 57 fwys in Anaheim. Chapman Ave is a very wide busy street and those condo unit occupants will not have quiet safe neigborhood strolls in that area.
I guess these are the first few cracks in the So. Cal. area. I drive around my hood Simi/ So Ventura and see few for sale signs, no signs of past panics. I guess this rolling slowly west?
Simi Valley has a population of about 110,000 and according to ZipRealty has over 1600 listings. Sounds like a lot of listings to me.
I love Semi - They have a right to carry law. Plug ‘em, you don’t need to drag them back over your thresh hold. Even in the back. Comprende?
pismobear - you’re a gun nut too? Heh, if centralcoastbear is one also, we should all meet at the range on Hwy 1 past Cuesta, blow off some rounds, and talk trash about Suzanne, Leslie, and Liareah!
If you guys are also goldbugs, that would mean we are three for three!
Hi Dwr
I realy think we here are behind the curve I sold out at the top of 05′. I am a long time property owner and saw no need to block another one with my face! ….LOL…I am not an investor just a guy that needs a place to live.
My wife and I are going to rent for at least one more year, moving to N Venture. Today I did stop by and pulled a flyer from a 04′ construction house. It was bulit butt against the Apt. area we will be renting. 3+2 1600 sq feet nice house BUT,,,,,,,,,,, a mear…………. 698,000 US DOLLARS….
I sez many fazes of hart break to come…. This still is no AZ or Vegas by a long shot YET…….
How many Home owners in Simi (or Ventura county in general) used equity to buy rental homes in Phoenix? My sources ( RE agents ) say more than a few. Phoenix is going down. Will it pull down these out of town speculators ?
Q: How many.. Ventura county… used equity to buy rental homes in Phoenix?
Ans: Sh!tloads. It’ll take the shakeout to find out exactly how many but for starters we’ve got 9500 Countrywide employees here. The rest of the demographics are “favorable” for these kinds of “investments” and the massive appreciation (me, 5x since 1995) made a lot of people financial geniuses in their own minds. Homeownership has always been high and prior to the recent crazy years a huge supermajority of housing in the county was owned by residents of the county. All you need now is to check the one way U-Haul rates to see the new trend. And then there are people like my brother and sister-in-law who live in Iowa but never sold their Ventura house. The question will be; will they pull back to VenCo or will they bail here and move on?
John, please post if you do start to notice price drops. I would lilke to buy a rental property in Simi or Moorpark if the prices do drop, but only if they drop!
“Oooh, how screwd! The beginning of the biggest frickin RE bust in the history of the world and you get a whopping 32K off the top of an 821k financial coffin. Great, see you in the soup line”.
Crap! I just quit laughing …. about the funniest comment ever …. had to change my wet undies ….twice.
Lets see …. the median asking price fell from $569,000 to $485,000 …. inventory ballooned from 300 to 575 ……the only houses selling are desperation sales …..
Leslie Appleton-Young:
“What I can tell you is the market is good …..”
What market is that Leslie? Mortgage equity puts?
de ja vu 1989 again.only this time much worse.
Yeah, see comment below. We’re at the point of no return, now. The market is NOT going to recover enough to make up for the losses this spring and summer.
Generally speaking, August goes as June and July go… and we already know June and July will stink.
Generally, the RE season performs as the summer does. That’s where most of the volume is!
A strong autumn or winter is “helpful”. But it won’t make up for a crummy summer. No way.
Leslie Appleton-Young:
“What I can tell you is the market is good …..”
She must mean the market of spewing BS…after all she’s still drawing her big paycheck no matter how she spins this. Bonus this year for Leslie? Probably, after all …”the market is good”
When the price of 100 oz. of gold intersects with the median price of a home in the state of California, that’s when it will be time to buy. I peg that number at $200,000. And yes, gold will go to $2000.
John, you’re right on. I want to submit for everyone else’s consumption that your estimate is extremely reasonable.
The inflation adjusted all time high for gold is just over $2000. Of course, it will overshoot during the public mania 3rd phase of its bull market.
If gold does what it did in 1980, in terms of its value times the claimed ounces held in reserve at Fort Knox divided into M3, gold is heading for $4872.
Of course, they stopped publishing M3 as of March. Who knows where the printing presses will take us now?!
Several times in the past, the Dow could be “bought” for 1 oz of gold. Think about that, the Dow at 2000, and gold the same. Or 4000. Don’t know if it will happen again, but if it does, r/e bubbles are going to the be least of our worries.
A Bank REO in Pacific Heights in SF, CA. It is starting to hit the best areas. Too debt can sink any ship or investment.
http://sfbay.craigslist.org/sfc/rfs/187088405.html
that is “Too much debt …”
I know exactly where you are talking about, Norcal. Pacific Heights has beautiful homes. I took a cooking class in one of them a couple of months ago….outstanding architecture. And I totally agree…you can be in over your head in any socio-economic class. But some folks just fake it seamlessly until they run into trouble.
Talk about being screwed, though. Take a look at this:
http://sfbay.craigslist.org/sfc/rfs/186793451.html
…a preconstruction in SF that won’t be finished until 2007 or 2008.
BayQT~
What a brilliant listing:
“Pay today’s prices”
“Largest residential towers in San Francisco”
Who the hell in their right mind would want to pay today’s prices to live in 2 or 3 years in some big ass project with a bunch of other fools? If they even sell that many?
“Welcome to the San Francisco Bay Area: global center of the financially self-delusional!”
LOL! These were going for around $350K less then 10 years back … they want $1.4M today…. Not worth it! Way too many problems with these old homes.
I thought I saw Michael Keaton in one of those pictures
That is not an R.E.O.. That is a probate. Someone who didn’t have a will or a trust died and indentified heirs are selling the property to split the loot. They are selling based on a court mandated appraisal more than likely.
And I get your thoughts Ray, but it’s not in Pac Heights if the Pine Street address is correct.
AFTER THE BELL #’S FROM Standard Pacific:
Stephen J. Scarborough, Chairman and Chief Executive Officer, stated, “The changing market tone that surfaced at the end of 2005 has continued to evolve during the first half of 2006, and we are clearly facing an increasingly competitive environment in most of our major markets across the country. We are impacted by growing levels of both new and existing home inventories, a steadily increasing interest rate environment, reduced affordability and weaker homebuyer confidence. All of these conditions have resulted in lower sales rates and higher levels of cancellations which have given rise to a greater use of incentives and other forms of discounting”
“It is difficult to predict when market conditions will stabilize and improve in our primary markets. However, we are taking the necessary steps to respond to the challenges that we all face while positioning the Company for the future. We have intensified our effort to manage our cash flows, including slowing our starts and reducing our capital outlays for land. And while we have had reasonable success during the first half of the year with the introduction of a number of our new communities that are well located and competitively priced, we have moderated our planned openings for the balance of the year in response to the slowing market environment that we face.”
Other income (expense) for the 2006 second quarter includes a pre-tax charge of approximately $16.3 million related to the write-off of deposits and capitalized pre-acquisition costs for abandoned or uncertain projects.
Net new home orders were down 67% in Florida on a 13% lower community count. A number of factors contributed to the year-over-year decrease in Florida order activity: (1) a softening in buyer demand, most notably in South and Southwest Florida, Jacksonville and Orlando, (2) a nearly threefold increase in our cancellation rate, and (3) reduced product availability in our Orlando and Jacksonville divisions.
The Company’s cancellation rate (excluding joint ventures) for the 2006 second quarter was 36%, up from the year earlier rate of 15%. As mentioned above, the Company’s cancellation rate was up meaningfully year-over-year in California, Florida and Arizona.
In Arizona, net new home orders were down 62% on a 100% higher average community count. The Phoenix market is clearly experiencing challenging market conditions for new and existing homes as evidenced by the surge in our cancellation rate during the second quarter and the increasing need for incentives to sell homes.
Nice quarter. Should be a good year. I imagine this is exactly what the longs were hoping for. HB’s are suffering a chronic accute demand meltdown epidemic. No builders are immune. And they are still buying back stock with their scarce cash reserves. Smart!
Could the HBs all be taking as many lumps as possible, hedging on Q2 sales in an attempt to beef up Q3? Maybe? It’s an old WS trick. Depress your shareprice artificially by delaying recognition of sales/closings, buy up shares and put some lipstick on the next quarter??
Stick a fork in it. Really, this market is done for the rest of 2006.
We already have plenty of evidence that July’s numbers are going to stink, when they are released in another month. (Applications down, traffic down, hungry Realtors, etc. This is obvious.)
Go ahead and make the optimistic assumption that sales return to prior year’s levels, starting immediately. The problem, however… if that August is the beginning of the downward seasonal slope. Families that may have been looking, are starting to feel like there isn’t enough time to mess with a move before school begins. They will go hunting next spring.
Most of the buyers now, will be the childless and those facing job relos. In other words, fewer buyers.
Which direction has inventory been trending all year long? (Uh-oh.)
been thinking about this - buyers who are waiting now (like me) and what they will do next spring…will anyone want to buy then?
Some undoubtedly will catch that falling knife.
This is from the Florida article in the thread below. Just wanted to bring up why we need a different commission structure for RE agents/brokers (discussed a bit here before, but this is blantant):
“Most real estate agents are pushing sellers to come out low and competitive. A lesser-heard but valid point of view is to keep your price high, and swamp the house with buyers by offering the agents higher commissions and bonuses.”
http://www.heraldtribune.com/apps/pbcs.dll/article?AID=/20060727/BUSINESS/607270336
———————–
So, are buyers’ agents acting in their “client’s” best interests, or what? Ignore that rock-bottom priced house down the street with 1% commission.
“Let’s look at this overpriced POS with a delusional seller since they’re paying 5% to the buyer’s agent.”
We either need flat-fee brokerages OR we need completely transparent MLS-type data, publicly available (detailed reports could be for a fee — the MLS companies would likely make even more money that way, anyway).
This kind of stuff makes me sick, and it’s one of the many reasons agents/brokers are feeling the anger around here, IMHO. Someone needs to clearly state that Realtors are **SALESPEOPLE**, not experts or advocates, and do not have any fiduciary responsibility to their clients.
Sure they do - but their clients are the sellers ONLY. Anyone receiving a sales commission is an agent of the seller, not the buyer.
A true “buyer’s agent” would receive a commission inversely correlated with the sale price.
That’s a great point. Never thought much about it but makes sense. I don’t know what or how it should work since a buyer’s agenet should get to the best deal possible regardless of the dollar amount of the home.
Amount of money you ’saved’ and split the diff? How much you got below the ‘appraised’ value?
I’m going to disagree here. I know there are some who are going to slay the broker. But to hell with them. Offering a bonus or higher commission is an excellent way to dump a house in a down market. Your example above only works if your client is an idiot or doesn’t speak or read english. A high priced POS is a high priced POS no matter 1% commission or 10%
Typically in a “true” buyers market which we are not in. A bonus is a sure fire sign that the seller is ready to go and properly motivated. H.U.D. and Banks are heavy users of this technique. Usually in these situations a buyer can get a good price at current market or a little below, his closing costs paid and a repair credit.
Unlike a lot of the gung ho charlies here with boat loads of cash the average buyer will appreciate the savings. Typically if he reinvests that cash he saved he can come out ahead in the long run.
Unfortunately right now it’s a bad time to implement that technique. Because their is so much fluff in the prices. It’s also a signal that people are more aware of the state of the market than is being reported and their memory of the last downturn is not as distant as I thought. They are trying to give the false impression that we are at the bottom and we are far from it.
Brokers and Agents are going to feel anger in any market. Just like Car Salesmen, Lawyers or any other hated industry.
If the M.L.S. figured there was a way to make consistent money off the average joe blow consumer it would have already been done. Hell the zillow guy would have done it. It’s not happening because there is no consistent money in it. Realtors feed the employees of the M.L.S. the revenue from ads on zillow surpasses anything the average consumer is consistently willing to pay. Last time I checked you don’t bite the hand that feeds you.
Yea, Yea, I know I know. Put your calculators away I stand by what I posted
Read about 2 weeks after i moved in they dropped the base price to $230,000. i did not know the price decrease until i was informed by one of their employees who has nothing to do with sales..
I see this happening more and more.
They don’t call them Greater Fools for nothing.
Bunch of whiners.
If you buy a car, and a new factory rebate is announced a week later, do you get to collect it? Nooooo. It’s for the next set of buyers.
If you lease an apartment, and a week later they start a “free month at move-in”, do you get a free month? Noooo… it’s for new tenants.
If you get hired to do a job, and they company hires someone else to do the same job a week later for $1/hr more, do you get a raise? Nooooo… you work for the amount you signed on for, with your W-4.
Sheesh. Do your frickin’ research, and live with the consequences of your decisions. Ya know, like an adult?? Your mommy is not gonna follow you around, and kiss your financial decisions to make the boo-boo all better.
and If you have a money market account at a bank and bank offers a higher rate to new depositors shouldn’t current depositors be given same higher rate?
Depends. If you threaten to move you money to another bank.
Did you see this repsone to the sad sack story?
“next time… take a realtor with you. They will be able to tell you if you are buying in a poor area or paying too much for a home.”
Yeah. Cuz we all know Realtors (TM) sell the home for 16% more on average.
If you are a buyer, they help you buy a house for 16% less!
Amazing how that works.
They may be able to…but that doen’t mean they will.
They forgot to add to the contract that they promise not to reduce their sale prices once this person bought their home.
Eh, with statements like:
“now the houses in the neigborhood are going for the high $100’s. this is just ludacris.”
I guess it figures.
He forgot to add how clever he thought he was when he bought, because he paid 10K less than the other GF who bought the month before him. Now that the shoe is on the other foot, it’s just not fair, Whaaaaa!
LOL, and he’s in Queen Creek AZ, mile zero of the bubble implosion. Another would-be genius cryin’ that life ain’t fair; he should write a country song and hope someone cares.
Unfortuntely, pickups and dogs aren’t allowed according to the Queen Creek CC&Rs.
Crack-smoking transvestites and gangs, however, aren’t precluded.
Perhaps a rap song then?
Read about Pulte Homes, Misleading Sales Staff Beware of Buying into a Pulte Community,High Involvement with Investors Ripoff Corona California.
“Current Conditions
Because of the disastrous sales mismanagement fiasco, we (the few owner-occupied homeowners) live in a brand new community that has turned upside down over night into an unsafe, unkempt, and devaluing environment. We have experienced multiple home break-ins, constant graffiti, drug houses, neglected homes with burned up lawns, excess trash flowing through the streets and gutters, multiple-family residences, and unsupervised children wandering the streets leading to police interventions at all hours of the day and night. These problems are due to the large portion of homes sold to investors that are now the Section 8 rentals that have over-run the neighborhood. The local law enforcement refers to the Ridgemont Heights Development as, “The Projects.” “
I’m shocked. SHOCKED that a builder would watch investors sign “owner-occupant” papers and pocket the money. What’s the world coming to?
This is in Adelanto (high desert), if I were qualified to offer advice, I would recommend sucking on a tail pipe. But I’m not qualified since my PhD/psychologist/professor sister says I’m insensitive…
Tailpipe anesthesia is the kind way out of Adelanto. If you were really cruel you’d suggest buying the bullet with a credit card.
Adelanto is a very large newly-sprung desert community west of Victorville. I understand the problems these homeowners are having with the development becoming section-8 rentals and creating havoc with the lives of the few homeowners who were completely cheated by Pulte as to the terms of the agreement not to sell to investors.
Ths is the reality: The majority of all newly-built homes in the outer desert Boonies such as Victorville, Hesperia, Adelanto, apple valley,ect are being sold to investors/flippers. Most of the investors are from the cash-flush SCal coastal areas no doubt. What do they do? rent out their homes if they cannot flip for a quck easy profit. Unfortunately this region of the hi-desert is attracting a lot of low-income, section 8 folks. I have gone thru Victorville area and thought: hey, this looks like Compton in the desert.
And having the Men’s Correctional facility in Victorville just add’s to it’s luster.
The speculator who bought 10 houses, the builders, the bankers all knew about it. They were all in bed together, everyone made big bucks.
Remember the posts a few threads ago about bying 2nd trust deeds? Don’t do what these guys just did with property in SoCal. Man, whatta way to kiss $96K goodbye.
http://www.foreclosureforum.com/mb/messages/17816.html
Ouch! Now that’s a lesson learned!
Well, a third of $96K is 32 thou. Assuming he puts away $500 a month for 4 or 5 years, he can save it again. (Everyone has an extra $500 a month lying around, right? No problem.)
I’m not really snickering at the guy. I’ve bought foreclosures, and this siutation is every bidder’s worst fear. Just shows how important a good title search is! Double, triple check that grantor index…
I wonder why the home-builders are walking away from their land-purchase options. Don’t they realize they’re not making anymore of it?
LOL!!!
Remember the thread recently about investing in 2nd trust deeds? Here’s a quick way to lose $96000 and a couple of friendships over a deal in Riverside County.
http://www.foreclosureforum.com/mb/messages/17816.html
Ouch. I still think of an amount more than a paycheck or two as “a lot of money”.
They actually thought that they could purchase at auction foreclosure sale a first TD on a home in temecula for $96,000? They obviously do not have a clue about SCal current RE Market prices. A first TD sale at that price might get you a burned-out 500 sq ft compton crack shack in 2008.
The CA equity locust spigot is turning off. House on Seward Park Ave (view of lake) was for sale for several months. Then it was “sold”. Now “sold” sign is gone and back on market. I asked the agent about the sold sign and was told that the CA couple had a contingency sale but could not sell their home so they had to back out.
It begins…at last.
OT from Salon.com
“How the World Works
Andrew Leonard
Housing geek heaven
For months, I’ve been studying the housing market economic indicators, learning to distinguish between month-over-month and year-over-year comparisons, the relative volatility of multifamily housing sales figures, and the idiosyncrasies of seasonally adjusted and non-seasonally adjusted data. As I grapple with the granularity of the data, I enjoy watching seemingly random or otherwise inexplicable fluctuations start to make sense. And in an era where every economics professor has a blog, there’s always someone to turn to for further insight.
Today’s release of new home sales figures offers a perfect illustration. In line with other recent data that strongly suggests the housing market is in a serious slowdown, seasonally adjusted new home sales dropped in June, both as measured against May (by 3 percent) and by June 2005 (11 percent).
However, if you look at the non-seasonally adjusted raw data for the whole year it doesn’t look so bad. Eighty-seven thousand new homes were sold in December 2005. By March, that figure had risen to 108,000. April, 103,000, May, 107,000, and then June, back to 103,000.
Thanks to an informative post by U.C. San Diego economics professor James Hamilton, I now have a much more nuanced understanding of how to look at these numbers. Seasonally adjusted data tries to take into account recurring factors that warp the numbers. As Hamilton explains, in the case of housing December is always the worst month for sales and March is the best. So if you just plotted the raw numbers for December to March (or for December to June), you’d think the housing market was fine — in fact, sales of new homes are up 17 percent in June over December.
But sales are always up over that time period. And after crunching the data with a slew of neat charts and judicious context, Hamilton encourages us to look at the numbers with wiser eyes. “In an average year prior to this one, June sales would be 36 percent above the December trough, whereas this year they are up only 17 percent since December. Only 4 years out of the last 41 years (which includes 6 recessions) saw as weak a December-to-June gain.”
It’s fun to watch a master at work. If you are a housing market data geek, and right now, that hobby has become an increasinlgy popular pasttime, as everyone from Bob Bernanke on down wonders if a housing bust is going to drag the U.S. into a recession, Hamilton’s seasonal adjustment post is essential reading.”
Fantastic article, fantastic post.
Seasonally adjusted, my brain is bigger, year over year, from reading that article.
However, if you take into account all the high alcohol beer I drank this winter, (after debating out of touch bulls on the OC Register blog), I might be a bit silly in the head.
Seasonally adjusted.
I think I got some of that overspray brain damage too from OCRs blog.
My new motto is don’t try to teach a mule to play the violin. The mules is not going to like it and it is not going to sound good.
I try not to go there (OCR’s blog) and just go outside and have some fun.
“as everyone from Bob Bernanke on down wonders if a housing bust is going to drag the U.S. into a recession”
And who would Bob be?
Now this seems like a buy!!!
Read about Wowie, tell me how he pulled this off?.
Mel,
I’ve seen weird stuff like that on other homes. I can only guess that perhaps it’s a divorce and one spouse buys the other out…or a partnership where a partner is bought out.
Would like to know more about these sales from someone who knows better… mrincomestream???
No it wasn’t a divorce. The house sold recently for 940k had a 750k loan balance on it. It’s new owner is an LLC probably a forclosure buy or someone needed money fast for bail, gambling or business debt or to pay attorney fees. There’s many reasons for this type of sale but divorce is rarely one of them.
He was a she and she divorced his poor ass had her laywers go after his share of the house.
She bought him out? Are you looking at public records?
‘But what you need to note is this is a cynical, I mean cyclical business. The economy is groaning, oops I should say growing but not growing as fast as we thought it would’”