‘Winds Of Change’ Hit California’s Housing Market
The Tracy Press has this update from California. “The winds of change have hit the housing market, according to real estate agents and analysts. According to agent Grace Alvarez, who was born and raised in Tracy and has watched the city’s market the past 18 years, this is the time to buy. As of Thursday, there were 764 homes and condos for sale in the Tracy area, not including Mountain House. ‘It’s the highest (number) that we’ve ever seen here in Tracy, in my experience,’ Alvarez said.”
“The huge surplus of unsold homes means that sellers are lowering their asking prices. Which means those searching for new homes can get a lot of bang for their buck.” “In Tracy, though, one wonders how low housing prices can go. Despite the glut of homes and condos on the market, Tracy won’t stop being a hot spot for Bay Area commuters looking to save on housing.”
“Alvarez and other real estate agents expect the rate of foreclosures to jump in the coming months. That’s because in the extreme seller’s market that preceded recent falloffs, many people stretched beyond normal means to get into a home. For many who are finding they can’t make their astronomical payments, losing a house is a real possibility.”
“And trying to get out of trouble by selling in a depressed market, where properties are sitting unsold for months, not weeks, is almost impossible.”
“Nearly 350 homeowners in Tracy are on the verge of losing their homes because they’ve fallen behind on their repayments, and auction dates have been set for 63 of the properties.”
“San Joaquin’s foreclosure rate was the highest in the state between April and June, with one out of every 154 homeowners behind on repayments at some point during the three-month period. That’s more than double San Joaquin’s foreclosure rate at the same time last year, and three times the California average.”
“Karl Enzman, a director at the Central Valley Association of Realtors, said many homebuyers bought their properties ‘with too rosy an outlook of the market.’ He said many of these buyers couldn’t afford to make their repayments when bond-market pegged variable interest rates rose, forcing them into foreclosure.”
“Countrywide Home Loans consultant Lynda Mendoza said that some homeowners lose their homes after becoming unemployed but that many foreclosures are the result of poor financial planning. ‘They’re talked into buying a house that they can’t afford,’ said the loan agent, who claimed none of her clients have gone into foreclosure.”
“Real estate agent Tony Nance said many homeowners pulled equity out of their homes as house prices rose, and as some house-prices dropped they were left repaying loans with higher values than their homes.”
The Union in California. “For the first time in many years, median prices for real estate in Nevada County dipped, declining 3.6 percent in June compared to median prices a year earlier. Rather than the bubble bursting, however, sellers are bringing prices closer to values as the supply of available houses swells, local real estate agents said.”
“Prices also are being pressured by more supply. More than 1,400 properties in the county are on the MLS, compared to 400 a year ago, Greg Seghezzi in Grass Valley said.”
“‘The bubble has not burst,’ said agent Sandy Wilson. ‘Sellers should not panic, although they need to be more realistic on their prices.’”
‘there were 764 homes and condos for sale in the Tracy area, ‘It’s the highest (number) that we’ve ever seen here in Tracy, in my experience,’ Alvarez said.”..Nearly 350 homeowners in Tracy are on the verge of losing their homes because they’ve fallen behind on their repayments’
No problem here?
And “ENDLESS” amounts of land….
“San Joaquin’s foreclosure rate was the highest in the state between April and June, with one out of every 154 homeowners behind on repayments at some point during the three-month period.”
That’s actually a pretty shocking ratio. This is pretty serious and sobering.
Simmssays…10 Types of Men to Avoid
http://www.americaninventorspot.com/men_to_ avoid
Actually, not too surprising. Default rates of 1% to 1.5% are acceptable to lenders. So 1 out of 154 is around .65 of a percent.
There’s room to get worse.
Tracy, a hot spot? That city stinksall of the time due to food processing. Those leaving should begrateful.
Tracy, a hot spot? That city stinksall of the time due to food processing. Those leaving should begrateful.
“The winds of change have hit the housing market, according to real estate agents and analysts.”
Given the ambient stench, I feel sorry for whomever resides in the direction Tracy’s “winds of change” are blowing…
“Tracy won’t stop being a hot spot for Bay Area commuters looking to save on housing.”
Anybody planning to commute from Tracy to the Bay Area will spend 4 to 6 hrs a day in their car.
That 4 - 6 hour commute will be good training for when they need to live in their cars. The Real Estate parrots still don’t get it. They will sell anybody down the river.
I was in Tracy, CA in 2001. If I remember right it was in the middle of nowhere. It seemed like it was strictly an agricultural area with a few small towns here and there. Has it boomed that much in 5 years? To justify such a boom somebody would have had to physically lift that town up and move it closer to one of the major cities in California. Were they able to levitate Tracy and move it closer to other cities?
“…Tracy won’t stop being a hot spot for Bay Area commuters looking to save on housing.”
This is another way of saying “It can’t happen here!”
The commute must be a “really nice” one…
No, but I’ve driven that route to get to San Jose and they’re not kidding about the Bay Area commuters. Traffic is utterly horrible if you mistime it.
Bear in mind that according to the byline, the author of the article, and that comment, graduated from college in May, 2005 and works as a copy editor at the Tracy Press. May be a nice person, but not exacly an authoritative voice.
And $3/gallon of gas x 5 to 10 gal/day! But they love thier SUV’s!
“According to agent Grace Alvarez, who was born and raised in Tracy and has watched the city’s market the past 18 years, this is the time to buy.”
Another typical comment from a “salesperson” (agent, broker, etc).
Just because inventories are at an all time high…does not mean it’s time to buy (yet at least). Foreclosures are going up on a weekly basis…more properties are coming available for sale…affordability has not gotten any better. What’s the rush to buy now?
Does she honestly think people believe the “correction” is over, we are at the bottom and this is the “time to buy”?
Agreed these small concessions at the begining of the downturn are for suckers.
it’s time to buy because this idiot needs a paycheck so she can make her lease payment on the Mercedes
“‘The bubble has not burst,’ said agent Sandy Wilson. ‘Sellers should not panic, although they need to be more realistic on their prices.’”
I guess that’s an admission that there is a bubble. And bubbles always burst. So you can panic now or panic later.
Don’t panic, but if you do, be the first one to panic.
t Hovnanian Enterprises, one of the nation’s largest homebuilders, executives are renegotiating the company’s options to purchase land for future developments, in an effort to delay some transactions and reduce the purchase price on other parcels of land. In April, it forfeited $5.6 million in deposits on property near West Palm Beach, Fla., and Minneapolis, because it was not ready to build in the area.
“It doesn’t make sense to own the land and have it sit there,” said J. Larry Sorsby, the company’s chief financial officer and an executive vice president.
Orders for Hovnanian’s homes fell by 18 percent in the three months ended April 30 and cancellation of existing orders by homebuyers rose to 32 percent from 21 percent a year ago. The company, whose earnings jumped 34 percent to a record last year, is expecting a mere 3.4 percent profit increase this fiscal year.
Mr. Sorsby said the company had not resorted to layoffs, but it had been asking sub-contractors to lower labor costs — with some success.
Cheaper land, lower labor costs, lumber down 30%. Looks like builders are transitioning into cost cutting mode. Supply and demand economics are starting to swing the other way. Over the next few years it should be possible to buy new construction a lot cheaper than the last few years.
It’ll suck for the highly leveraged buyers of the last few years.
I think “sellers,” if they’re serious about selling, would be better off panicking now, if panicking means lowering prices. Best to get ahead of the curve. Because in a falling market, holding out means holding out for less money.
And the smart ones are. But just like everyone couldn’t dump JDSU at $200, everyone cannot get out of the housing bubble. Some will. They will be the winners. But almost everyone else is going to ride it all the way back down.
Also, it’s funny (but not at all surprising) that the same real estate agents who told would-be buyers to panic over the past two years, “HURRY, better buy a home now or you’ll NEVER be able to afford one” are the same real estate agents now STILL saying “there’s never been a better time to buy” while telling sellers that everything will be OK. No, it won’t! Time to panic! Better sell your home now or you’ll NEVER sell it for close to what you paid!
Great point De Lake !!!
It’s gone half past midnight here in Canberra, Australia, and I have just spent the last 20 minutes listening to someone at my club slowly and painfully attempting to articulate her case for renting instead of buying (at 240+ months rent).
She was literally being laughed at by two arrogant young $hits, who from the sounds are involved in RE. Every cliche associated with the bubble has been trotted out by them, “rent is dead money, you’ll never see it again, if you buy you’re building equity”, “every 5 years, the market will go up”, and the classic “people I know in the industry are sure the market here is about to take off”.
Jeebus; we’ve had the Treasurer and Prime Minister in the last week making speeches demanding that the Reserve Bank ignore the latest inflation figures (6.5% annualised and 4.6% in last 12 months, against a target of 2-3%, so we’re not talking about being a little bit over) when meeting next week to set interest rates.
The ‘RE is the only way to wealth’ mindset is going to take a long time to kill.
I always imagine things being different in other countries. Thanks for the reality check.
New updates to the Sacramento Area Flippers In Trouble blog:
-Updated listings for this week
-New in-depth flipper analysis showing acual losses based on loan amount
Max
I would love to do this analysis for my town. Truly amazing!
I think they’re going to start popping up. This is the kind of information people need to see in order to bring this market back to sanity.
Ditto here! Very good site, I too would love to know and montior our local events.
Rather than the bubble bursting, however, sellers are bringing prices closer to values as the supply of available houses swells, local real estate agents said.”
Huh?
Huh indeed. Double speak - a realtor specialty.
“Real estate agent Tony Nance said many homeowners pulled equity out of their homes as house prices rose, and as some house-prices dropped they were left repaying loans with higher values than their homes.”
As this scenario becomes more commonplace, it should accelerate weakness in the market. Take away the guarantee of future riches, “can’t lose” attitude, and why pay anywhere near these prices?
As many on this blog have recognized for some time now, a flat YOY increase, which is where we are now, would still kill the market. Far to many bought banking on future gains and financed accordingly.
No gains brings many pains……
As many on this blog have recognized for some time now, a flat YOY increase, which is where we are now….
Like a “soft landing”???
No, not like a soft landing. I guess you didn’t get the memo CAR isn’t calling it a soft landing anymore because it isn’t.
More like the first phase of a multi-year bust.
“The huge surplus of unsold homes means that sellers are lowering their asking prices. Which means those searching for new homes can get a lot of bang for their buck.”
What? Does that comment make any sense at all? When she said this did her lips explode?
The phrases that are coming out of these newspaper “stories” are truly original.
One can get a lot of bang for the buck by playing Russian roulette, as well, especially in the earliest reported version of the game, which was played with five loaded chambers and only one empty…
http://en.wikipedia.org/wiki/Russian_roulette
Countrywide Home Loans consultant Lynda Mendoza said that some homeowners lose their homes after becoming unemployed but that many foreclosures are the result of poor financial planning.
You got that right, Lynda!
“‘The bubble has not burst,’ said agent Sandy Wilson. ‘Sellers should not panic, although they need to be more realistic on their prices.’”
Sandy, Bubble has burst if I have to be more realistic in my sales price.
sandy has made my bubble quotes file.
Sandy,
Remember last year when anyone who suggested the possibility of a real estate bubble was shouted down as a fringe lunatic? If you and others in your industry are compulsively insisting “the market will not crash” and “the bubble has not burst,” then that is a clear signal that the bubble has indeed burst, and the market is headed south.
Here in New York City you are still treated like a leiper if you even hint that real estate is going to decrease in price. Crappy neighbhorhoods in the boroughs like Brooklyn and Queens have exploded in price. They are building luxury condos amongst housing projects. It is insane. There is absolutely no belief that even a slight correction in prices can occur here. They are all handing out Kool-Aid and grinning like idiots.
It’s different here in Phoenix. At the mere mention of a real estate collapse, people’s faces just go blank, like they’re a computer that just froze, and they’re speechless.
>>>Crappy neighbhorhoods in the boroughs like Brooklyn and Queens have exploded in price.
When I was in NYC for a visit earlier this year, some cousins mentioned how much a house next door to their grandmother sold for (not my grandmother, other side of their family). Having lived across the street from these houses as a little kid in the early ’80s, it was pretty surreal. It was a shady area in Queens back then, it has since deteriorated much more. I guess that you would call it a duplex, studio apartment downstairs, 2 bedroom unit upstairs. Backs up to the chain link fence of a rough looking schoolyard. Sold for over $700,000. Of course I live in the Phoenix area, so insane RE news should never surprise me.
Queens was an interesting place. I had some friends from there, use to visit them quite a bit about 20 years ago. But over the next 5-10 years, the transistion down was very apparent. I have not been there in about 10 years but I’d think it has gone down-hill drastically since then.
Is even Mayor Bloomberg treated like a leper? Because I remember him expressing grave concerns about the real estate market last year. These have mysteriously disappeared from the Googlesphere, however…
GetStucco,
I haven’t seen or heard “Googlesphere” before. It’s a fantastic word, I know exactly what you’re talking about even though the word is new. Obviously based on “Blogosphere”. Did you make that up or did you read it somewhere else? Either way I think it’s a natural to get picked up by the “internets.”
“The huge surplus of unsold homes means that sellers are lowering their asking prices. Which means those searching for new homes can get a lot of bang for their buck.”
A lot of bang for their buck? That won’t be true for at lease another 3 or 4 years. What is true is that there are far fewer people searching for homes right now. I know several people that were looking to buy and even making offers just 6 months ago in Los Angeles. Now they are saying “We’re going to wait a while and see what happens to the market.”
“but that many foreclosures are the result of poor financial planning. ‘They’re talked into buying a house that they can’t afford,’ said the loan agent”
*ahem*
Wife: “Suzanne researched this!”
Suzanne the Realtor: “This listing is special, John; you guys can do this!”
http://www.youtube.com/watch?v=Ubsd-tWYmZw
Tracy is a bedroom community now. The agriculture industry there has not increased at all, and it was marginally useful land as agriculture anyway. Tracy has months of no sunshine as the fog dominates the winter, and then transitions rather abruptly to searing heat. All the while, winds blow pretty consistently. Other than a couple of malls, there is no employment in Tracy that can remotely support the insane cost of housing there. Tracy is tenuously tied to the bay area by a single, often congested commute freeway. It’s a sign of the insanity of housing prices in the bay area that people made the decision to overpay for such inconvenient homes.
BTW, the “Mountain House” they mention is a whole new city that is being built from scratch near Tracy. There is no shortage of land. Even west of Tracy, the sad fact is that there are miles and miles of marginally useful scrub oak grazing land that can easily be converted into a superior housing option for future homedebtors.
I live in Lodi which is just 15 miles east of Tracy. This thing is playing out just like clockwork. Bad loans, stupid greed, manipulative realtors, mortgage brokers and appraisors. I can tell you, that drive from Tracy to the bay area is total hell, and I only drive it when vacationing there. The combination of having no life due to that crappy commute and bad loans resetting are beginning to show. This things really going to start gaining more momentum, it’s unstoppable. The house I spent my childhood in went up for sale and sold last month. A nice 3/2 built in the 50’s. Let’s just say it makes me cringe when I drive by. 5 cars parked out front, lots of people milling in and out. I’m not one to judge, but this truly looks like someone stretched (income stated loans) to get in–and they’re in for a rude awakening down the pike. When the prices start dropping and the loans reset, are counsin Elmo and uncle Larry going to pony up their share when the comps are dropping like rocks?
It’s amazing isn’t it? I mean, let’s say someone needed to buy a car in 04′ 05′, right…say a Toyota Corolla. Now, they know that in 01′, 02′ the car sold for about $15k and now all of the sudden (like houses), asking price is $38k. They’d have a fit. But housing is different, they say. Right. But now in 06′ the “demand based on undersupply” issue is dead, Corollas everywhere for sale. NOW they know, or are going to know–the hard way, that it’s all been a collective mania after all (and they were happy to join the fold). We’ll folks, the hangover sucks, doesn’t it? And it makes you nauseous just to look at that kool aid cup.
DOC