‘The Market’s Looking Where It’s Going To Settle In’: CA
Some updates from California. “Sales of existing single-family detached homes dropped 25 percent in the Bay Area from second-quarter 2005 to second-quarter 2006, Prudential California Realty reported, while the inventory of active listings increased 34 percent. Sales of existing single-family detached homes dropped 35 percent in Napa County in second-quarter 2006 compared to second-quarter 2005, and fell 32 percent in Sonoma County and 30 percent in Solano County.”
“Despite a significant increase in multifamily housing starts, California’s overall residential real estate construction in June was down 10.9 percent from a year ago, the California Building Industry Association announced. Last month, building permits were pulled for 12,292 single-family homes statewide, down 24.9 percent.”
“‘Several metropolitan areas had a major increase in multifamily permits, predominantly related to vertical condominium construction in their urban cores.’ CBIA Chief Economist Alan Nevin said. ‘The principal areas with gains are Los Angeles, the Bay Area and Orange County.’”
“Nevin attributes the slowdown to a substantial unsold inventory of homes, both under construction and completed. He says that the depletion of that single-family inventory is under way as builders are offering concessions throughout the state.”
“San Diego County’s new housing market is beginning to look like the TV game show ‘Let’s Make a Deal,’ as builders throw in offers that include spiffy appliance packages, pet services and even a set of new wheels.”
“‘As we are now able to sit back and look at the market, I think what we’re going to recognize is that the second half of 2004 and first half of 2005 was the peak,’ MarketPointe President Russ Valone said. ‘The market peaked, and it’s now looking at where it’s going to settle in.’”
“Market watcher Sharon Hanley in Oceanside said the percentage of home-sale cancellations has run as high as nearly 40 percent certain weeks this year. ‘It’s getting tougher and tougher to get the tail-end stuff (final homes) sold,’ she said.”
“Higher cancellations are occurring at condo and conversion projects, she said, adding, ‘We’re starting to see (developers) take them off the market and go back to rental. Builders are pulling back on new phases. That’s been going on for six months. They’re cutting staff significantly.’”
The Conta Costa Times. “Long-term fixed home loan rates are getting closer to those on shorter-term adjustable mortgages, but many East Bay home buyers still prefer the riskier ARMs because they offer lower monthly payments.”
“The majority of new home buyers want the least expensive monthly payment possible, broker Jay Damato said. For many buyers, the only way to afford a lifestyle of two cars, good schools and a nice house is with an adjustable-rate loan.”
“And Jason Doolittle, loan consultant in Danville, said that these alternative loans show no signs of slowing down. ‘There’s definitely not been a run on 30-year, fixed-rate mortgages,’ he said. ‘People say, ‘I’m not ready to pay another $855 a month.’”
“For other buyers, lower payments are often the only option. Hans Johnson, a demographer based in San Francisco, said it all came down to monthly income for Bay Area home buyers. ‘For many people, it’s not a question of choosing a fixed-rate or adjustable-rate mortgage, it’s, ‘Do I buy the house with the adjustable rate or not?’ he said.”
“Local brokers said that they have seen those trends continuing. ‘Cash flow is king,’ said Bob Visini, spokesman for LoanPerformance. ‘Some people, as long as they have a house, good credit and a write-off from Uncle Sam, are as happy as clams. Maybe they don’t care about building equity in their house.’”
“Robert Kleinhenz, deputy chief economist with the California Association of Realtors, agreed that riskier mortgages today leave little financial choice. ‘There has been an increase of the number of households who have used these alternative loan products,’ he said. ‘If we had a serious economic downturn, we would see the housing market at considerable risk.’”
‘At first glance, the Central Valley city of Bakersfield may not seem to have much in common with Silicon Valley or the coastal college town of San Luis Obispo, but the three cities do share one thing: They were the only metro areas to see an increase in single-family housing starts in June compared to a year earlier.’
‘Over the last seven years, nearly 400 students have left the public school rosters in Santa Barbara. Enrollment..has dropped as steadily as home prices have risen. ‘It wasn’t that long ago that we couldn’t build schools fast enough,” said Hans Johnson, a demographer at the San Francisco-based Public Policy Institute of California. ‘Now we’ve switched to which schools to close.’
‘Santa Barbara’s housing market is so out of reach for young families, Johnson said, that when couples there decide to buy a home, they move inland. The pattern is common throughout California, he said.’
“Cash flow is king”
And that is the problem - nobody has cash….
That dawned on me, too. For such a wealthy bunch, they don’t act like they have much excess.
Everyone knows ppl in McMansions without a stick of furniture inside!
There are so many examples of this. I knew someone with a condo on the beach on LA and would REUSE/REHEAT coffee for up to 3 days. WTF? Why were they really that cheap? I think it was that they were wickedly overextended….
Funny that you mention coffee. I was sitting where I could over-hear a couple of condo flippers yesterday. They were talking about how they would just rent them out for a while, even if they were losing a few hundred a month on each unit. (The rentals market here is terribly weak).
Then they started talking about coffee. How it costs too much at Starbucks and they make it themselves at home. Went into where was the cheapest place to buy mocha, etc. But at the same time, they completely expect some GF to hand them a windfall for a condo in Arizona?
Sad the flippers did not check the Coffee prices…
Seems coffee prices have been declining on NYMEX.
It might even dawn on them they are being scamed at StarBucks (overcharged) ….
“But But But.. everyone wants to buy at StarBucks”
Check the down trend in the bean….
http://quotes.ino.com/chart/?s=NYBOT_KC.U06&v=d12
To Larry^^^^
Actually… now appears to be the time to buy beans. Check out the 2 year trend.
It appears late winter thru late summer that prices tank… while they soar in fall and early winter. Could it be that there are more coffee drinkers when it is colder and darker earlier??? And the chains begin to stock up…. say for this and the holidays.
There are a few wealthy people living in SF Bay, with many others trying to live way beyond their means. To many, there was no question about paying most of your monthly income on a house. Everyone else was doing it–and a sure-fire way to spend more of your disposable income, as your house became your primary investment. Perhaps this is true everywhere, but our sense of Bay Area cultural superiority convinced many that our RE would remain strong, despite what happens elsewhere. Most fittingly, I bet our sense of entitlement will only be surpassed by the level of risk exposure for those who bought up into “prime” areas.
Excellent post.
Yes, most excellent analysis…
I see this, albeit on a different wavelength, in Scottsdale…there are some incredibly wealthy people living in AZ, but the majority of the Hummer drivers are managers at Chili’s. The wealthiest person I know still lives in (albeit, very nice!) the house he bought 10 years ago, and drives a Suburu.
There is a lot of net worth/self worth confusion out there and it isn’t been a small part of the housing frenzy.
All I hear is…”everyone wants to live in Scottsdale!”…
yeah, right.
I agree. I’ve heard the “but there is too little supply in the Bay Area for home prices to drop” arguement far too often, as people continue to stretch to buy homes with ARMs.
Lots of risk has been taken based on superiority complexes, and not just the Bay Area. Everywhere else in the US where there are bubbles that are considered “special” to those living there.
From my experience, a lot of wealthy people are very frugal and smart with their money. They did not get wealthy from living beyond their means.
“but there is too little supply in the Bay Area for home prices to drop”
The many times I drive into the City of San Francisco, the most land lock city in the Bay Area, one cannot hope to notice all the new housing that has and is currently going up. Have you seen all the new construction of high rise condos from the Ball park to Van Ness.
Larry-I remember hearing recently that over the past 15-20 years, at any given time, there were typically 1-3 condo projects for sale. Apparently there is expected to be something like 10-15 on the market at the same time as some of the projects under construction come on line. Lots of housing supply for a near-island.
AZ Dude - I agree with you–but not everyone in the Bay Area is wealthy, which is why there used to be a wider spread (percentage-wise) in prices between the premier locations and the “not-so-premier” locations. That spread has been whittled down as people have been pushing and pushing to get into housing over the past few years. I expect that spread will increase again over the next few years.
Your right Rental Watch. I find the most wealty working in the City San Fran usually comute from Mill Valley or Woodside area. I just dont see that much real wealth in SF exept in parts of SeaCliff or Pacific heights…But these are small areas in the city.
I live in the Thousand Oaks area in Ventura County between LA and Santa Barbara. I put out some resumes a couple of months back and was immediately bombarded by e-mails about Bay Area programmer/analyst positions. It almost made me imagine they were having a hard time to get analytical types to move to or stay in the Bay area for a mere $90K. As a former Bay Area resident, I’m well aware that “The City” is the cultural center of the universe and virtually all Americans spend their idle time dreaming of moving there. About half the people I know here in Southern Cal also lived in the Bay Area during their youth and are also aware of this. But at some point, people reach an age where they want to live where the cost of housing doesn’t consume most of their net income and where they don’t have to put up with homeless people screaming obscenities while they walk their six-year-old to school, even if it isn’t the coolest place on earth. Then they develop skills and discover they can.
Everyone knows New York is “The City”
Perhaps this is true everywhere, but our sense of Bay Area cultural superiority convinced many that our RE would remain strong, despite what happens elsewhere.
That superiority did not last long when Bank of America moved out of San Francisco due to merger with Nations Bank. Lots of jobs were lost and real estate prices did indeed tumble.
“But at some point, people reach an age where they want to live where the cost of housing doesn’t consume most of their net income”
Yes the SF North Beach strip clubs can empty a wallet fast when you young.
“e-mails about Bay Area programmer/analyst positions. It almost made me imagine they were having a hard time to get analytical types to move to or stay in the Bay area for a mere $90K.”
The headhunters are very agressive. But after a while you begin to see they just interested in putting you into a dead end job anyway. HH in the bay area a pretty bad bunch. They are a notch next to realtors in my book. You cant trust what they say.
Print it!
And the “King” is dead!
Did you get my email on the Bakersfield building permits. June was the 4th most ALL TIME. Build until they go bust!!
In Santa Barbara Unified’s 13 elementary schools, 70% of students are Latino and 25% are white. Citywide, population estimates are nearly reversed: 58% of residents are white and 35% are Latino.
That’s the funny thing about high-prices, it doesn’t keep the poor out - it causes the middle class to leave. I’m not bagging on Latinos, but they are the poor around here (aside from a few white RV bums)
True, but the school stats are what they are because public schools in CA are so horrific that nobody but the poorest send their kids to them.
In LA, kindergarden at Crossroads Elementary is $22 THOUSAND a year. The sheer stupidity of LA’s residents clearly extends way beyond real estate. They must hand out gold plated crayons!
No, they just don’t hand out bullets, beatings, racism, drugs, and condoms. Now how much would you pay?
Actually Crossroads does hand out condoms, and in plentiful fashion. It also has a great sex-ed program, its one of the most liberal k-12 schools in the country. Its pretty cool.
Oh, and as someone who spends a lot of time around the Southern California educational system, you are completely ignorant (or delusional, have your pick) if you think shootings, beatings, racism and drugs are common on public school campuses. Theres a big gap in the educational quality of a place like Crossroads and a public high school, but you seriously need to stop listening to talk radio if you really think that image you just painted is anywhere near close to reality.
Either your blind or trying to pull the wool over his eyes. The reasons he states are the very reason private schools are big business in California. Has nothing to do with educational quality but the fact that most folks want their kid home in one piece not drugged out of his mind with his head shaved. Voluntarily or Involuntarily.
It’s not the actual quality but the perceived quality that is at issue here. If parents think their child will be at a school which even has a possibility of drugs or gangs, don’t you think they’ll be looking into private or charter schools?
Incidentally, the book The Two-Income Trap deals in part with perceived quality of schools and its effect on housing prices. If you live in the “right” neighborhood, the price is more expensive than for the school that is seen in a bad light.
So that plays a factor, too. If you’re scared about your kids going to a bad school, sometimes you’re willing to mortgage your own future. (Personally, I’d look into homeschooling first, because if it’s come to that I’m not sure I’d trust the “good” school either.)
I love when mrincomestream screws up the “YOUR” in a sentence wherein he’s insulting education.
If anyone in AMERICA believes that a particular school or district is the reason some kids do drugs or shave their heads… man, talk about self-righteous, naive, it-ain’t-my-fault, sad, sorry little people.
Your kid comes home on crack - take a look in the mirror, pal. YOU’RE to blame. Shit happens in rich white schools, too, dipshits. Quit blaming someone else for YOUR (see, isn’t that hard to use properly) mistakes.
Some of you are not so different from the very people you claim to despise on this blog.
Oh, and as someone who spends a lot of time around the Southern California educational system, you are completely ignorant (or delusional, have your pick) if you think shootings, beatings, racism and drugs are common on public school campuses.
I’ll switch categories here Alex and pick Jeparody subject; “Self Interested Sel-Denial” for $22 thousand.
And your answer is: “BW.”
“Denial? umm I mean; Who is in denial here?”
Right you are pick again.
“Oh, and as someone who spends a lot of time around the Southern California educational system, you are completely ignorant (or delusional, have your pick) if you think shootings, beatings, racism and drugs are common on public school campuses.”
I have to differ here, this may be off topic, but my son is disabled and was brutally beaten in a San Diego public school, so we KNOW it happens. I notice, local realtors always hype the school to prospective parents too…
Now that we are already way off topic, IMO there is one easy solution to the Nation’s education (and many social) problems - vouchers. Maybe too much to hope for…
But would vouchers just do what bussing did in the 70s? Would it “spread out” the criminal & less motivated kids enough that they would lose their power (and become good), or would it introduce more bad apples into the better schools, pulling the good schools down?
Do not assume schools are bad because of the teachers. Look at where the good and bad schools are located. Where are the students coming from? Are they coming from wealthier, more intelligent, better educated, more motivated parents? Or are they coming from homes where the parents are on drugs, most do not have a high-school diploma, they are on welfare, they move constantly, they live with criminals and gangmembers, not to mention the fact most of the people in their community might not have basic skills in English or even in their native language? Gee…think that might have an effect on school scores/reputations?
No, the 70s are just not applicable today. In the 70s there were two forces; busing/desegration and disaggregation of resources. Everyone knows about the first. It was the second that did us all in. Another phrase for the results of disaggreation would be lowest common denominator. Real Harrison Bergeron stuff. [See; http://instruct.westvalley.edu/lafave/hb.html for the uninitiated.] Anyway, where was I before that loud noise?… oh yes, following the money. The money stopped being local and was commonwealed. In 1978 Kalifornia took all the school money and redistributed it according to politcal need. The result was that between 1978 and 1981 Kalifornia went from among the top 5 to the bottom 5 states in primary/secondary educational outcomes. [People blame incorrectly Prop 13.]
My daughter’s HS spends more on translation services than a new laptop annually for every student. What results would you expect from both that effort and an administration that supports that direction? For the record, as many longtime readers may suspect, my oldest Alex is in all AP/honors classes in a school which is essentially a school within a school but also gives her needed socialization exposure. Thus French III is worth college credit and “Health Class” throws her into the general population. The HS district tolerates this policy of stratifed education because without it they’d never meet minimum performance standards.
The reason? Easy, the courts determined that local control and funding were racist because of unequal outcomes. Doesn’t matter if it is true or not the result has been a nationwide implosion of educational outcomes. This in no small part due to richer people voting with their feet and pulling their kids. This in no small part to removing local authority. This in no small part to allowing politics to determine spending allocations. Local school districts locally controlled and funded provided the best (but not equal) outcomes for 350 years. Too bad that unequal outcomes are the new discrimination, look where that’s got us.
“In 1978 Kalifornia took all the school money and redistributed it according to politcal need. [People blame incorrectly Prop 13.]”
So what happened in 1978?
So what happened in 1978?
The Calif Supreme Court ruled that local funding of schools was discriminatory. the State confiscated all funding and reapportioned it so that big cities got more and large districts got more and high performing districts not only got less but were prohibited from raising more. Punish success, punish efficiency and the result was foregone.
Harrison Bergeron — great story.
Robert,
Even though more money was shifted from the better neighborhoods to the poorer ones, the “good” neighborhoods still have better schools (you assume the school causes the high home prices, I suggest the opposite, as better educated, wealthier, more intelligent people ususally have more money to buy expensive homes with…their children attend that school, bringing the scores up). The formerly “bad” schools are still poor-performing. It goes to show, IMHO, that spending more money does not produce noticeably better results.
People like BW are standing ready to oppose any form of financial, performance based or market reform of the US public educational system. And no, the quality of education is not off topic. My neighborhood owes some of its high home pricing to a quality local k-8 district. I know it saves me $30,000 per year compared to my last primary residence where I would not let my children attend. Indeed, our current district is considered very good in the county and the county is considered very good in the state and yet I only consider their product adequate. Still, when adequate costs $0 and probably but not definitely better costs $8-12,000 more… Heck, I could do what a neighbor and local School Bord member does; send her two to Thacher in Ojai. That’s only $36k… EACH!
Rich areas tend to have good schools. Poor areas tend to have poor schools. Putting a financial or market based system onto an already poor school’s area is not going to improve the poor school. This is just another example of the wealthy claiming the poor are “lazy” and if they’d just work harder, they’d get ahead.
Robert, before your next criticism of poor schools, why don’t you try teaching at one for a few days. You’ll find that the main reason it costs so much to educate the “average” student is that the “average” student comes from a household where school is not exactly the first priority, and the kids end up needed a lot more resources than your average upper class kid. Personally, I went to both a school in a poor neighborhood and a school in a wealthy neighborhood. The poor neighborhood school has a lot more crap to deal with, believe me.
I went to school in a small town in Oregon (graduated in ‘88). The district wasn’t wealthy by any means, and most of my classmates and I were lower middle class. The school systme was excellent. I received a good, broad based education from teachers who cared about me. If a student was a distruptive F*up who was hindering the learning process for others, they were removed from class or even encouraged to drop out. Education was valued in the community and they voted in a higher property tax rate to pay for a new highschool (the money stayed local).
I was able to take auto shop where we had donated vehciles to work on, drafting class, electronics, metal shop, and had a weight room for a school of less than 300 kids which would rival many private gyms. AP Math, English etc. The key was living in a culture where education was valued and parents demanded a stable, safe environment where the teachers ran the school, not the students.
FFward to today. I have a daughter who goes to a high shcool in SoCal with more than 3,000 students. She is an excellent student in what is considered a good public shcool (for California). I have been to various events at her schools over the years and have been suprised at the lack of dicipline and control the teachers have over their students. My daughter has told me that some teachers don’t mind if the kids sit in class IMing on their cell phones. There are alot of distruptive kids in every one of her classes, and they are taught to the lowest common denominator. I know she is frustrated by the slow rate of advancement in some of her classes. She is taking as many AP classes as she can to stay out of that environment as much as possible.
Its too bad schools try to integrate kids of all levels of educational aptitude (desire and ability) in an effort to bring the less adept students up, but really just wind up dragging the brighter students down.
Oh yeah, we spend more than enough money on the public shcools in California, and throwing more $ at the problem won’t help.
Is it the case that students whose parents don’t care about education “need” a lot more expensive resources than your average upper class kid?
It does not follow from a poorer kid’s poorer school performance that he “needs” the additional resources the public schools can provide, anymore than he “needs” a monkey. That is, neither a monkey nor whatever it is the public schools spend the additional money on seem to be doing any good. Children of smart parents that value education do well; children of not-smart parents that do not value education, don’t.
Maybe gold-plating the former child’s education may close the gap by a hair — but it doesn’t even seem to do that, and certainly doesn’t do enough to make much if any practical difference.
We are an egalitarian society, so we refuse to consider whether there might be cultural or hereditary factors that will cause unequal outcomes to persist, no matter how much money and effort we throw at closing the gaps.
I’ll grant that there probably are many legitimate additional expenses faced by schools in disadvantaged areas. There will be higher costs for security, maintenance, meal assistance (now that the schools have adopted that responsibility), special education, ESL, etc. But there ultimately comes a point of diminishing returns, where additional money spent might as well be flushed down the toilet (whose seat has been broken for the fourth time this year) in the graffiti-covered high school restroom.
But hey — spending more money makes us feel good, and prevents us from having to consider the alternative, so results or not, it will continue.
Hereditary factors?
Which hereditary factors might those be?
The FACT that intelligence is a characteristic which is as inheritable as eye color, hair color, size, weight, body style, mental/emotional disorders, etc.
I believe that’s what he/she was referring to.
“…the main reason it costs so much to educate the “average” student is that the “average” student comes from a household where school is not exactly the first priority…”
See, this kind of thinking is what really infuriates me. Call me naive but I still think that the “average” family in the U.S. DOES embrace education. The parents that I see in many CA public schools are pathetic, lazy, selfish fools that expect the government to accept the responsibility for raising THEIR children. They don’t expect mediocrity, they DEMAND it (refer to recent lawsuit filed by liberals that thought that their kids should be able to graduate even though they could not pass a basic exit exam).
Education begins at home - public school is merely a supplement. And if the parents don’t give a crap about their kids’ education, as someone else stated, there is a law of diminishing returns.
Sorry, off my soapbox now…
Ca Renter:
The implication was that poor people (correlated with poorly performing school districts) are less intelligent than wealthy people, and therefor “unequal outcomes,…, no matter how much money and effort we throw at closing the gaps” are unavoidable with these poor people. This is the “Bell Curve” view of race and poverty, and has been pretty much discredited. Not because it wasn’t PC, rather because the research behind the book was incomplete and sloppy and the conclusions drawn were not warranted (see the APA task force report).
jjinla:
I agree, but bad parenting is no excuse to not want to try and do what we can to help in the classroom. A single good teacher can turn a kids life around if they are viewed as a rolemodel.
Mike,
I know a lot of people would like to discredit “The Bell Curve” but have yet to see a logical, objective, fact-based argument against it.
While you have very unintelligent people who live in wealthy areas (perhaps by inheritance or some other “chance” happening), and highly intelligent people in poor areas, **in general** there is a strong correlation between wealth and intelligence. I’ve seen it in study after study. Can you explain why this would be wrong?
Mike:
The APA report on “The Bell Curve” actually endorsed several of the book’s main theses, including:
–IQ scores have high predictive validity for individual differences in school achievement.
–IQ scores have predictive validity for adult occupational status, even when variables such as education and family background have been statistically controlled.
–Individual differences in intelligence are substantially influenced by genetics.
“The Bell Curve” was not “discredited.” There were critical responses to some aspects of it (and there were responses to the responses). “Disputed,” maybe; “discredited,” absolutely not. No surprise there — science, especially social science and psychology, is more ambiguous than physics.
What’s not ambiguous, and not generally disputed, is that smart parents tend (in the aggregate) to have smart kids, and not-smart parents tend to have not-smart kids.
Now, so what? First, everyone should have equal educational opportunity. As a practical matter, that means underperforming, disadvantaged school districts should get more money. In addition to the legitimate extra costs associated with disadvantaged neighborhoods, it might be justified to “upgrade” the education available there for the benefit of those promising kids that do appear in those neighborhoods, although in lesser numbers on aggregate. It’s harder to achieve in an environment where your peers lack the commitment or ability to perform well academically, and that handicap ought to be compensated for.
One way to do so might be to offer higher pay to teach at an underperforming school (and have positions be competitive) in order to try and attract the cream of the teaching crop to those areas. (Although I understand that teachers’ associations oppose that kind of differential pay, especially within the same district.)
Anyway, helping the diamonds in the rough, disadvantaged neighborhoods achieve ought to be the focus of any differential in school funding — not a fantasy that gaps caused by largely immutable factors are going to be closed by more money.
The big problem with vouchers, is that public schools have a budget of approximately 15K per student per year, at least based on San Diego (1.1billion /66K students). In order for vouchers to work, the voucher would need to be the same, and I believe would foster a competitive spirit to the public school monopoly. The voucher proposals I have seen give out about 20% of this amount.
This will never happen, so we are stuck with what we have now or worse what it will be in 10 - 20 years.
In order for vouchers to work, the voucher would need to be the same, and I believe would foster a competitive spirit to the public school monopoly.
————————-
You are wrongly assuming the reason for disparate school scores are because of teacher/administrator quality.
Try fixing the communities/families/students first…that is where the problem lies.
“You are wrongly assuming the reason for disparate school scores are because of teacher/administrator quality.”
Exactly! Why is it so hard for some to believe that in general, crappy parents make crappy kids? Public schools in CA teach to the lowest common denominator because they HAVE to since the school boards decided that “mainstreaming” kids with disabilities, language barriers, etc. was a nifty idea. Never mind that brilliant kids would be bored out of their minds - hey, their rich parents can afford private school, right?
If you give vouchers to poor, underperforming kids, just where, exactly, are the smart kids supposed to “escape” to in order to get a quality education? Besides, since “No Child Left Behind” passed, the kids from poor areas would be hard-pressed to find a school willing to accept them anyway, since they would likely pull down their test scores.
I have heard people talk about going back to 20% down payments and the easy credit to blame on a portion of the bubble. I am not sure this would ever happen beacause the industry would be cutting off a lot of potential buyers and really screwing themselves. Any thoughts?
Slippery slope syndrome. A decade of undercutting the other guy has paid off handsomely. They were screwing themselve then. Returning to sane safe lending practices doesn’t make the finanically transmitted diseases you aquired over the years go away.
they would probably be cutting off about 80% of the southern calif. buyers. gotta say though ever since the at least the late 1970s borrowers could et 95% LTV loans on purchases, but they did have to qualify.
Anyone know how buying on spec affects total sale #s?
If you buy on spec and walk away from it, if the initial buy is considered a sale, what’s walking away? A negative one sale?
[Maybe they don’t care about building equity in their house]
I’ve stumbled across quite a few dumbass brokers but Mr Visini might be the dumbest ass of all. How does Mr Visini think the bubble became a bubble? It was because a SFR is the incredible perpetual equity building machine. There is no need to buy equity from the note holder any more. It just magically grows forever at 20%/yr and in fact, it’s possible to go to the well to tap some at will since there will always be more there every time.
What people don’t want Mr Visini, is to pay down their loans to build equity. That’s simply uncool. No one on MTV talks about paying off loans.
It’s far more exciting to skim all the equity off, have ever increasing debt and new plasma TVs in every room and a couple of Hummers in the driveway. That’s living large. It’s really hip!
I have one word for Mr. Vicini: Inconceivable!!!
I can watch that movie every night and never get sick of it!
As you wish…….
It is now my daughter’s favorite movie, so I will enjoy watching it at least another 10 times over the next six months or so.
“Soft landing” — You keep using that phrase. I do not think it means what you think it means.
And don’t forget the Dread Realtor Suzanne…
speaking of hummers. i think i saw a Hummer 3 on the road today in Laguna Beach–looked like a baby hummer. now we have a papa hummer, mama hummer (hummer 2) and baby hummer. all just tall station wagons in disguise!
Follow the Hummer to a soon-to-be-foreclosure. It is the trophy of the FB.
I couldn’t believe how many Hummers I saw in the Temecula area. Hell, all over SD too.
I believe the H3 is the Canyon pickup truck with different sheet metal and the same engine/frame/etc.
Have you guys seen this TV commercial now advertising Hummers to mommy-housewives?
Yes, you mean the commercials about the gutless wonders who let everybody walk all over them, and then buy a Hummer to compensate? I’d be embarassed to buy a Hummer based on those ads. Makes the buyers look like LOSERS!!!!
“Maybe they don’t care about building equity in their house.’”
I suggest we start a “Most Idiotic Comment of the Month Award.” We all vote at the end of the month. I’ll start by throwing this comment in the bag. Good job, Bob. You’re officially a moron!
WHY NOT RENT THEN!!!! This guy is a MORON!!
“Maybe they don’t care about building equity in their house.’”
So much for “The Automatic Millionare”
nnvmtgbrkr,
I like your idea, however there are so many idiotic comments that pop up in the articles Ben finds that it would be hard to pick just one a month. I’d love to see a compilation of idiotic comments from the articles which have been referenced by Ben. Here are just a few examples I dug up with a little site review:
“The increase in housing inventory might help push prices higher, said Marilyn Newell, another Realtors Association board member. A surplus means buyers have more choices and homes on the market must be well-kept and competitively priced, she said.” Original post
“Findlay said the market for investors looking to ‘flip’ properties is cooling off as prices level. ‘There is going to be a little softness. But we are not going to have this giant bubble. That’s not going to happen, real estate doesn’t work that way,’ Findlay said. ‘The Boise market is still one of the best markets in the United States.’” Original post
“‘A lot of that seller expectation, in our neck of the woods California and the Central Valley in particular, (they) think the national (real estate) news applies to us,’ Norvis said. ‘But it doesn’t. We’re like our own country.’” Original post
“Each time he lowers his price, I see my potential profits next year getting squashed. Doesn’t he realize he’s hurting the comps for all of his neighbors by doing this? I want to say something to him and tell him he should stop putting his interests ahead of his neighbors. What can I do to stop him?” Original post
Thank you. I remember reading them all, but it’s nice to see them collected in one place. Perhaps someone could save all the precious gems like these so we could take them out and admire them from time to time.
nnvmtgbrkr,
I like your idea, however there are so many idiotic comments that pop up in the articles Ben finds that it would be hard to pick just one a month. I’d love to see a compilation of the most idiotic comments from the articles which have been referenced by Ben. Here are just a few examples I dug up with a little site review:
“Each time he lowers his price, I see my potential profits next year getting squashed. Doesn’t he realize he’s hurting the comps for all of his neighbors by doing this? I want to say something to him and tell him he should stop putting his interests ahead of his neighbors. What can I do to stop him?” - July 7
“‘A lot of that seller expectation, in our neck of the woods California and the Central Valley in particular, (they) think the national (real estate) news applies to us,’ Norvis said. ‘But it doesn’t. We’re like our own country.’” - July 8
“The increase in housing inventory might help push prices higher, said Marilyn Newell, another Realtors Association board member. A surplus means buyers have more choices and homes on the market must be well-kept and competitively priced, she said.” - July 11
“Findlay said the market for investors looking to ‘flip’ properties is cooling off as prices level. ‘There is going to be a little softness. But we are not going to have this giant bubble. That’s not going to happen, real estate doesn’t work that way,’ Findlay said. ‘The Boise market is still one of the best markets in the United States.’” - July 17
Oops, sorry about the double post. It didn’t show up and I waited awhile to repost, slow server I guess.
Thank you for posting those again. Priceless…just priceless.
“The majority of new home buyers want the least expensive monthly payment possible, broker Jay Damato said. For many buyers, the only way to afford a lifestyle of two cars, good schools and a nice house is with an adjustable-rate loan.”
…“For other buyers, lower payments are often the only option. Hans Johnson, a demographer based in San Francisco, said it all came down to monthly income for Bay Area home buyers. ‘For many people, it’s not a question of choosing a fixed-rate or adjustable-rate mortgage, it’s, ‘Do I buy the house with the adjustable rate or not?’ he said.”
Word problem
Buyer A and Buyer B both would like to purchase a “handyman’s special” in [insert "unique", utopian, everyone-wants-to-live-here CA market here]. Buyer A has pre-qualified for a maximum of $250K, using a traditional 30-year FRM that requires 20% down to avoid PMI. Buyer B has pre-qualified for a maximum of $1.5 million, using piggy-backed $0-down neg-am stated-income voodoo loans for 110% LTV.
Q: Which buyer sets the market price?
Eventually buyer A.
I’m inclined to agree, but that “eventually” may take years if not decades to reappear. The fact that banks are offloading pretty much all default risk to foreign and institutional investors thanks to the “magic” of MBSs/CDOs makes me wonder for how long they can keep delaying the inevitable. So far, they’ve been quite successful at it, and if anything have RELAXED lending standards even more, even as sales and inventory are already shouting “correction underway”.
Like most here, I’m counting on this house of cards to eventually implode and for sensible lending standards to return in the aftermath. For the time being though, it really sucks to have the entire housing market ruled by reckless idiots.
Watch what the coming economic slowdown does to loss rates. So far, the perpetual equity gains coupled with strong employment allowed people to refi their way out of trouble and/or at least maintain their rising payments (even if it meant eating bologna and cereal). But once the layoffs start, it’s game over for mortgage credit quality. And if you look at things like the yield curve, the deceleration in anything housing-related, the big slump in retail spending we’re seeing now, it’s hard to come to any conclusion other than that the employment market is going to start slumping. THAT, plus the slumping/stalling home price picture, is what will cause loss rates to rise fast enough that lenders are forced by the secondary market to back off the junk mortgages. Or at least, that’s what I’m counting on.
That’s the very same thing I’ve been suggesting since 2002. The fact that funny money has driven the entire economy since 1997 to the tipping point leads me to believe the tipping point can be averted again… somehow. How exactly I don’t know yet but we have been postponing the meltdown from the NASD bubble for close to a decade. It’s eother going to get ugly as hell or another gravy train will cruise into the station to pick the passengers up until the next stop further up the hill…
Fear not, AZ. There was only one asset class large enough to absorb the credit expansion needed to bail out the stock crash, and that was housing. Credit can no longer expand enough to stave off deflation.
Well, I take that back. Perhaps we’ll decide that the next great investment is oceans. Or Mars.
HARM,
This seems to be the concern of most bears here. We see the obvious and make logical conclusions, but the market continues to defy reason. That’s why I’m not counting on this being a quick downturn. I think there will be years and years of painful, grinding losses. The PTB will/have been trying to avoid the cleansing by all means at their disposal. IMHO, we need that systemic event (derivatives???) which will bring things to an abrupt halt.
“David Seiders, the association’s chief economist, likened the confidence level to that of 1994-95 at the tail end of the last decade’s major recession, when interest rates were rising. Back then, sales cooled in response, and the same response is occurring today with the Federal Reserve’s recent spate of short-term interest rate increases, which have reached the 6.8 percent level on 30-year, fixed-rate loans, compared to 5.73 percent at this time last year.”
Good try, David, but this straw man comparison ignores the fact that 1994-1995 was at the tail end of the last housing bust, after some areas of California had already experienced several consequtive years of falling home prices. We are at the top of the roller coaster at the moment; 1994-1995 was near the bottom.
“1994-1995 was near the bottom”
that was also back to a normal market.
“David Seiders, the association’s chief economist, likened the confidence level to that of 1994-95″
David S is sure a numb nut, really Dave… we are more like at 1988-89 right now on the time scale. Wait for 2-3 years see prices nose dive like made +30-50% and then … and then…
it will be like 1994-95.
All this nonsense from CAR is public relations crap…
David Seiders is with the National Association of Homebuilders, but the two Daves (Lereah and Seiders) obviously have similar motives…
There’s definitely not been a run on 30-year, fixed-rate mortgages,’ he said. ‘People say, ‘I’m not ready to pay another $855 a month.’
Bartender, give me another Arm.
‘Some people, as long as they have a house, good credit and a write-off from Uncle Sam, are as happy as clams.”
So the conversation goes like this 6 months from now- “Dude, I’m like totally way upside down on my house, but it’s all good ’cause I got a rippin write off. Yeah, I’m stoked!”
You’re an idiot Mr. Visini!
Actually, Mr Visini statement is correct if the homeowners bought way before the bubble, and didn’t refi.
Got a few relatives in this situation where they don’t care if the bubble burst or not. Their goal is to continually pay down their principal.
Dramatic market swings like this are not good for anyone except those that buy low, sell high, and then run like hell with their lotto winnings. Even the “pre-bubble” buyers can be injured as the housing market collapses and no one wants these structures as an investment or personal use …… for a very long time. Not uncommon for values to drop below the “old” peak ……
It’s nice to have the “goal” of owning for a long period, but realities of life might force a change in plans. If you find yourself in a below market situation several years from now, and the only buyers are people posting here (God help you ….), I’ll bet you’ll look back to circa 2000, and say, “you know, I wish the market would have just stayed normal…. I would have been happy with a steady 3-5% appreciation …..”
“IGNORE THAT MAN BEHIND THE CURTAIN, I THE GREAT SAY THERE IS NO BOOM/BUST MANIPULATION AND PROFITEERING GOING ON”
Taxes are another way this bubble market is harming people who aren’t speculators/flippers, just regular folks who happen to own a home or land and get stuck with a big tax bill after it’s reassessed at the new market value. Here’s an article from our Tacoma paper about whopping new tax assessments on vacant land in Pierce County:
Fields of gold: Value skyrockets on vacant land in Pierce County
Alex Bruski, the Bonney Lake resident who owns a parcel near Algona and Pacific, couldn’t believe the assessed value jumped 361 percent in one year, to $83,400. He bought the land 10 years ago for $6,000.
There was a time when Bruski planned to build a house on the property.
But he ran into expensive regulations from the City of Edgewood. Over the past couple of years, he’s offered to sell the land to developers for $30,000. One made a counteroffer of $7,000. The others rejected his offer. There’s no sewer, they said. There’s a big hill in the middle of it, they said. And the trees stand at odd angles, making them too much trouble to clear.
“You can’t build anything on it the way it is,” Bruski said.
He plans to appeal the valuation.
“They mailed me a packet with the forms to contest it,” he said.
It’s small comfort. Bruski isn’t looking forward to the tax bill he’ll receive next year.
Oh, we REFI’d we just didn’t take equity out ;- 0 I got me a 15yr fixed in ‘03. Now CDs pay higher interest rates than my mortgage. I just want prices to go down before the tax assessor doubles my taxes.
“it all came down to monthly income for Bay Area home buyers”
For most buyers yes. But there still seems to be a lot of cash sloshing around this area. Socket Site has a feature about a “former Google engineer” who paid over $5 million cash for a house in San Francisco. And that’s just “new” money.
Google shares traded on the open market for lets say around $400’s. That was a mear trade from paper to money. The risk is on the new shareholder to see if their new investment pans out.
Lets not forget there are a few of these goog people around. You had to be an employee and fully vested around 2001 for it to make you a millionaire by IPO date. Not to mention there were only around 200 employees. Google did not make a big dent in the housing market.
Exactly, Larry. I think Google has been stretched far beyond its actually impact by real estate brokers constantly touting the “Google effect.” A few wild-ass stories of real-life millions spooks the herd, and makes everyone believe that everyone else is rolling in money. (For one thing, as tech companies go, Google’s not even that large, employee-wise.) And if there were really that much cashing sloshing around all segments of the BA housing market, then we wouldn’t have one of the highest prevalence of IO ARMs and piggyback loans of any region in the country.
““Google effect.” A few wild-ass stories of real-life millions spooks the herd”
I can tell you since I work in SV, many of these guys at Goog who hit it big are gone from the local maps. The goog effect was to leave the Bay Area to where ever!
The “old” money Bay Area families like Getty, McGowan, Packard, Dolby, Kaiser, Bechtel, Shorenstein, Hearst, et al trump whatever “new” money Google has generated.
Not to beat a dead horse, mad tiger, but EVERY major metropolitan area — not just the SF Bay Area — has a laundry list of “old money” family names and whatever new industries have come in. I’ve traveled a lot and lived all over the world, so this seems obvious to me, though maybe to others it isn’t. Keep your eye on median household incomes and mortgage financing trends in the Bay Area if you want to best understand what’s going on in the housing market, not what the Gettys/Google millionaires are up to.
I was just reading the list of articles from patrick.net and it had this utter piece of garbage in the San Francisco Chronicle. Click the link if you must read it but I recommend against it. It’s called “Newton’s laws prevail on the housing market” which makes you wonder if it is a sudden shift of attitude for the most worthless newspaper in the country, but of course you eventually read down to the bottom and it might as well have been David Liar-eh from a year ago who was writing it. How can they even call themselves a newspaper, printing drivel like this?
Just recieved this e-mail from one of my reps of a major player in the wholesale market. They’re bouncing the credit requirements 20 points on their 80/20’s. Not huge, but possibly the beginning of the credit tightening that will soon pick up momentum. I’ve taken out the names and numbers just in case.
“Hi Everyone,
As I feared, we just received notice from upper management that a pending change regarding our minimum FICO score requirements will be increased due to major changes taking place in the secondary market (ie: Wall Street).
WHO: All deserving SUBPRIME borrowers - Purchase and Refi’s.
WHAT: Upcoming changes to 100% financing (see WHERE).
WHEN: Within the next 24 to 120 hours. Don’t wait - get the loan in ASAP!
WHERE: XXXXXXXX SUBPRIME 100% (80/20 Combos) FICO bands:
(Full Doc = 600; Bank Statements = 620; Stated S/E & W2 = 640).
WHY: The Secondary Market has implemented these changes.
HOW: You can still get these loans done, but you MUST have the loan submitted prior to the official announcement being distributed to the XXXXXXXXX sales force and the loan MUST fund by Aug. 31st - no exceptions!
If you have borrower’s that are sitting on the fence, then please do whatever you can to help them “SEE THE LIGHT” and get their loan submitted to me ASAP!!! Do whatever you can to get this message out to the real estate agents you are working with in case they came across a borrower this past weekend that needs one of these programs!
I have attached a Loan Submission form for your use. Please feel free to call me at”
“our minimum FICO score requirements will be increased due to major changes taking place in the secondary market (ie: Wall Street)”
Yes. The major force behind tighter lending standards will be the secondary market, not the Fed as many believe.
Agree entirely. Most loans were sold. Once those loans are less appealing to the buyers, their prices need to change (greater spreads), or the security needs to improve (higher FICO scores).
I suspect this is the start of a larger tightening trend.
Don’t you just dig the “SEE THE LIGHT” comment?
Buy now, or be priced out of the mortgage lending market forever!
nvmtgbrkr-
Now this is exactly the kind of info I’ve been waiting to see.
I don’t care how small a “tightening” it is, please continue to fill us in on any and all.
Thank goodness there are lenders contributing to the blog!
One small step in the right direction.
I wish I could get more information like this. I even have a family member working wholesale lending at Countrywide. But she’s not too bright. Oh well.
Just received a notice of a price reduction of $10,000 on a condo conversation in Las Vegas, from $160,000 to $150,000 BUT the earnest money deposit reuirement of 10%…that means $15,000 earnest money to open escrow. That might eliminate the no money down crowd. This is the largest marketer of condo conversations in Vegas, who still has 10 buildings and 100’s of units. Drops the price, raises the escrow. Now thats tghtening
nnvmtgbrkr,
Thank you for your post! Still doesn’t sound like a lot, but hopefully it’s a start. Amazing how loose these terms are considering the changing market. If it were my money, I’d want full doc on 100% LTV even with 800+ FICOs…but that’s just me.
This time next year you’ll probably need a 700+ FICO, minimum 10% down, and 3 years worth of bank statements to prove income.
We can only hope!
And in the meantime, people needing that refi will have slipping FICO scores since they will be late on their credit card payments, furniture lay-away, BMW lease payments, AND existing mortgage payments.
The amazing thing to me is that we have already seen falling prices (Beantown and SD) and we have not even had a significant tightening of lending standards. It is hard to imagine how far prices will have to fall when your 700+ FICO / 10% down / 3-years of bank statements scenario comes to pass…
I could only dream of that scenario of 700+ FICO/10%+/3-yr.
We’d have those of us on this board the only qualified buyers!
Personally, I think lenders will “boil the frog” as slowly as possible… but they’re going to get bitten again and again as wall street refuses to buy more and more mortgages. Thus, the market is going to tighten and quickly.
The days of non-FHA loans having less than 10% down are soon to be over. Also, forget avoiding PMI for less than a 20% down payment. In fact, 25% or 30% might become the new minimum to avoid PMI. Forget hybrids. Their day is about done.
Neil
Yes, but I think it will take more than a year.
Way off topic:
REMINDER….16 days from today, all cell phone numbers are being released
to telemarketing companies and you will start to receive sale calls.
…..YOU WILL BE CHARGED FOR THESE CALLS
To prevent this, call the following number from your cell phone:
888-382-1222.
It is the National DO NOT CALL list. It will only take a minute of your
time.
It blocks your number for five (5) years.
You must call from the cell phone number you are wanting to have blocked.
You cannot call from a different phone number.
HELP OTHERS BY PASSING THIS ON TO ALL YOUR FRIENDS
OR GO TO: http://www.donotcall.gov
Not meaning to disparage you:
This is just not true.
…Search
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From David Emery,
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Netlore Archive: Forwarded email (example below) warns that a directory of cell phone numbers will soon be published and urges users to enter their cell phone numbers on a federal ‘Do Not Call’ registry to prevent unsolicited calls from telemarketers.
Description: Email rumor
Circulating since: September 2004
Status: Mostly false
Examples: See below
Comments: While it’s true that the major wireless phone providers (Verizon excepted) have announced their intention to establish a 411 directory of customers’ cell phone numbers in the near future, it is not true that they plan to “publish” said directory for any and all to read. Participating companies say the numbers will be made available only with customer consent, and only via telephone to users who dial directory assistance and pay a fee.
The companies also insist the numbers will never be accessible to telemarketers. In fact, per FCC regulations, telemarketers are already prohibited from calling cell phone numbers using automated dialers, which are standard in the industry.
Not everyone is convinced that consumers’ privacy will be adequately shielded, however, as evidenced by a privacy protection bill already introduced in Congress which would modify the plan to allow 411 callers to be directly connected to requested parties without the latter’s phone numbers being given out. Lawmakers have yet to act on the legislation. …
Urban Legends
http://tinyurl.com/78wf8
Thanks! This was forwarded by a friend through the MBUSA network. I called the number and put my number on the list. Hopefully its not a scam. UGH!
….16 days from today, all cell phone numbers are being released
to telemarketing companies and you will start to receive sale calls.
Unbelievable. Whoever’s bright idea this was should be body painted with the Stars and Stripes and dropped smack in the middle of Beirut.
imho
the bubble hit san luis obispo county..hugh inventory increases and centex is dealing with its term fixed 5.25% for its new developments ….but the prices are still to high,seller reality has not set in,they all think this towns bubble proof,no fundamentals to support 600k starters,once the pipeline burst in la and san francisco
“they all think this towns bubble proof”
You’re absolutely right. I am so sick of hearing this crap, that SLO is “special”. As you also point out, they don’t realize their bread is buttered by high prices in LA and SF.
In ‘90-91 we saw an across the board 25% correction in SLO county, with lots of foreclosures and REO activity. This time around, even Centex came to the SLO county party in spades, with several developments, plus a lot of mini Centex wannabe’s (JMDI, Midland Pacific, etc.) building as much as they could. Now we not only have a high price bubble, but an inventory overhang as well. The big Centex development in South Atascadero is going nowhere fast.
I continue to see weekly price reductions in the six homes for sale in our development in Atascadero. They are taking turns knocking off $10 to $15k at a time. What is interesting is that they must really want to sell, because they are reducing the price. But they are not desperate, at least not yet.
I can’t wait until Sept/Oct!
Right on schedule. SLO is on my short list for future investment. Nice place, not yet overrun, school thingie goin’ on, desireable climate and demographics and location. Only problem, housing prices. No problem, that’s what the coming contraction is for.
Same here! I need a place in cambria for relaxation!
We’ll go halvesies on one of those funky 1950s cottages a block off the beach up on the bluff. We’ll keep windboards. toys and motorcycles locked in the garage for our occasional visits and rent it out by the week to jaded victims of Crisp & Cole who can’t afford to travel any further away from Bakersfield.
I like Cayucos and Cambria, myself. I am going to be watching ocean view R.E. prices for awhile. My current job is very lucrative and I am used to working hundreds of miles from where my permanent address is. I’m using this time to shore up my government securities, value stocks (with trailing stops), international funds, and precious metals. My best outcome is to save double the amount of the purchase price of an ocean view home. At my income level and the demand for my kind of work (a specialized type of sotware engineering), i think that is possible within 4 years.
I suppose ‘overrun’ is a relative term. 101 is starting to get pretty bad. A lot of monster trucks up from the redneck riviera as well.
When we moved here in 91, we were amazed how courteous people were on the road. Thats so over now….and downtown is in the process of being converted from funky little stores to stucco chain store monstrosties.
I used to really dig SLO, but I can hardly stand to go into town anymore…the nostalga and the irritation are just too much.
SLO is nice, I get up there for business.
But just don’t try to get through Santa Barbara on the 101, I always get stuck in 1-1.5 hrs of traffic through SB.
In SLO favorable comparisons of the area to those “damn city liberals” down there in SB will get your tires slashed.
“downtown is in the process of being converted from funky little stores to stucco chain store monstrosties”
That may change when consumer spending slows, and the overpriced chain stores retract their business.
I mildly disagree. I too miss local color but branding and such are pretty effective and pervasive. Got any “local” video stores? Stationary stores? Sears and Roebucks is almost quaint in the age of Walmart yet they were the innovators. they used the rails to reach out until the roads took over and Walmart found their sweet spot. That “spot” is turning rotten and we’ll see the next “whatever” fairly soon. I can go to the GE website and order a Klystron for my microwave or my missle. Or I can go to the GE website and order a fuel injector for my jet or generator. If we went to storefronts of old these last examples would be about 4 inches wide on Main St.
Change is oportunity not disaster.
This one is a classic
http://globaleconomicanalysis.blogspot.com/2006/07/lights-out-in-georgia.html
Wow, that is fascinating! It carries a lot more weight in my book since it comes from a realtor who was so recently a raging bull.
recession has started for me and everyone that doesn’t work for the gov- most have just missed the memo
Funny stuff about tightening credit requirements. Imagine what this will do to the armies of idiots waiting for a fed pause or interest rate cut to refinance.
http://www.fbrnetworknews.blogspot.com/
So much for everyone wanting to live in CA:
Exit Plan: Follow Nissan
With so many workers opting to relocate to Tennessee, the message may be that California’s charms aren’t what they used to be.
“Whatever workers’ reasons for going, Nissan’s 42% employee retention rate sends a message to businesses in California: The Golden State’s charms aren’t what they used to be.
“There is a bit of that attitude, especially at the state level, that California is just so great that no one would ever want to leave — that its natural features, creative services and the quality of its higher education system are so good they’re enough to get the job done,” said Greg Whitney, vice president of business development for the Los Angeles County Economic Development Corp.
Nissan’s experience argues against that conceit, he said. Typically, a company moving its headquarters 2,000 miles, especially from a major urban center to a smaller, more rural region, is fortunate to hang on to 25% to 30% of its workforce.”
“For single mother Johnston and her three daughters, ages 11 to 17, the move was a chance to start a new life in vastly improved surroundings.
In Torrance, her family was squeezed into a 1,064-square-foot home she rented from her mother, who has moved to Tennessee as well.
In Franklin, the family was able to trade up to a 4,000-square-foot, two-story, all-brick home with five bedrooms, four bathrooms and a quarter-acre lot. Instead of power lines and neighbors’ fences, the views are of tree-covered hillsides.
And at $449,000, Johnston said, the house cost $217,000 less than what her mom received for selling the Torrance place. ”
http://www.latimes.com/business/la-fi-nissan31jul31,1,5891325.story?coll=la-headlines-business
Trickle to become a flood. What exactly will the other 58% be doing to pay their HELOCs since they are now out of a job? Gonna get ugly…
bleepin amazing! what an increase in the standard of living if they can make the adjustment. I imagine all the stress of moving to TN and adjusting goes away with 5 BRs and $200k in the bank!
Ummm… I’ve talked to a couple of Asian people who are trying to live in Tenn. They are thinking of moving back.
Ah yes, and that’s where the trap gets sprung. Tennessee, Texas, whatever hellhole they choose. They see prices cratering back in CA and want to go back but can’t sell their McMansion in Tennessee because in their own selfishness and arrogance, they have priced the locals out.
So sit back in your rocking chair on the porch and have another glass of moonshine! You’re not going anywhere!
Just FYI, Franklin, TN is one of the nicest places you will ever go. Many transplants from all over and a great community. I would bet they don’t return to CA once they settle in.
Can you get sushi there?
I rest my case.
http:fbrnetworknews.blogspot.com
http://nashville.citysearch.com/review/9290810/422308
In point of fact, you can get sushi virtually anywhere — if nothing else, by visiting the local redneck bait shop.
Foriegin people often want to live in Ca. They will pay the high price. More than half of the Engineers I used to work with in Ca were from other countries, europe and asia. They lived in other states and hated it and would never move out of CA. Gun racks in pick-ups really freak them out.
They’d freak out anyone with a full set of teeth and an IQ in the three digits.
You guys are too easily freaked.
When Toyota moved, a large percentage also went from CA to another state. Two years later, I have heard, all but one employee returned to CA. Many could not buy again, and they had to content themselves with renting (probably cheaper)
Yes that happens all the time, and the common saying is ” once you leave CA you can’t come back” because of housing.
According to LoanPerformance, a San Francisco-based company that tracks interest-only and negative amortization loans, called exotic loans, the East Bay’s consumption of negative amortization loans rose from 0.8 percent in 2003 to 39.3 percent of all new loans in the first four months of 2006. Interest-only loans peaked in 2004 with 43.2 percent but dropped to 30.6 percent in 2006. Nationally, both kinds of loans only made up 35.1 percent of all new loans in the first four months of this year.
So in the East Bay in the first four months of 2006, 69.9% of all new loans were interest-only or negative-amortization.
Yes, but they’ll be able to refi…right…uh, oh…
A Preview of things to come from England
http://tinyurl.com/nb9w2
Well, well, well…so much for the idiots who were coming here a few months ago citing Britain as evidence of soft landing probability. Debt is debt is debt… it has to be paid back at somepoint before you die.
and little movement on RE prices in 2 years since rates went up in UK
Positive news. I knew Briton lending market would go to crap. Greenspan cited Briton leveling housing market as a reason why U.S. housing market was not in turmoil. Level my ass I think the Feds are trying to snow the public through this mess. The beast is out and nothing is going to stop it.
What a bunch of BS. Let me guess: buyer still has to pay taxes and insurance, can’t rent out the unit without lender approval, can’t do work on the unit or add a room, and probably can’t have his girlfriend over for the night. Sounds like the American dream to me!
I don’t think that product will last, though of course those who say that tend to be wrong.
Daily Mail is a bit of a joke newspaper in the UK (though popular with the masses) so don’t read too much into this. Prices in the UK have been surprisingly (to me anyway) robust over the last year or so (at least so far).
‘Some people, as long as they have a house, good credit and a write-off from Uncle Sam, are as happy as clams. Maybe they don’t care about building equity in their house.’
Isn’t that called RENTING but at a much higher price?
-Greg