‘Buyers Are Not Willing To Take Risks’ In California
The LA Times reports from California. “KB Home has started pruning its land portfolio in Southern California, a byproduct of a slumping housing market that is forcing big builders to reevaluate their property holdings. The Westwood-based builder said Tuesday that it had sold its 49% stake in the massive Anaverde master-planned community in the Antelope Valley.”
“With demand for new homes declining, major builders are under pressure from Wall Street to justify their ownership of land that isn’t already primed for building and that doesn’t have a prospective buyer lined up. ‘Under current market conditions we are focusing our attention on our core business, which is home building,’ said KB spokeswoman Caroline Shaw. ‘The sale of our interest in Anaverde furthers that objective.’”
“Some analysts also worry that builders could be forced to write down the value of their land if they can’t unload it, or if land values start to decline.”
“Like other Southland locales, the high desert has seen home sales drop dramatically. In the first six months of 2006, new-home sales in the Antelope Valley fell to 1,307, down 41% from the 2,222 sold in the year-earlier period. Yet builders obtained permits to add 11,851 additional houses, up from 8,478 the year before.”
“Less demand for new homes mirrors the soft demand for land in the area, said Michel Faris, a land broker (who) specializes in Antelope Valley real estate. ‘A lot of the market is psychological,’ he said. ‘Buyers are not willing to take risks now, whether with raw land or finished lots.’”
The North County Times. “A report showed a dramatic slowdown in residential construction, both in Riverside County and across California, as builders continued to eye large numbers of unsold homes. Builders received permits to build 2,051 houses and 106 apartment and condominium units in Riverside County last month, according to the California Building Industry Association. Compared to July 2005, that represents a drop of 37 percent, the largest such decline in at least five years.”
“Across California, builders started 11,121 new houses, condominiums and apartment units, a 43 percent decline from 2005, according to the group.”
“Builders have put up hundreds of houses in Temecula’s Wolf Creek neighborhood in the last two years; when the houses didn’t sell as fast as expected, Temecula Valley Unified School District responded by postponing the opening of nearby Temecula Luiseno Elementary School.”
“Dave Gallaher, facilities manager for the district, said it is adding fewer students each school year than in the year before. ‘We’ve seen recently that (annual increase) drop to 2,000 from 3,400, which is a dramatic drop,’ Gallaher said.”
The Union Tribune in San Diego. “The runaway home prices and building boom of recent years put lots of money in the pockets of real estate agents, loan officers and construction workers. If there is a real estate slowdown, which many experts say has already begun, San Diego may be disproportionally hurt.”
“Already hit hard is construction worker Sergio Curiel. Curiel hasn’t worked for a month. ‘Income is really bad right now,’ Curiel said. ‘I’m living day by day, check by check.’”
“Local real estate agents are incensed after code-enforcement officers collected more than 100 open-house signs and threw them in the trash behind City Hall. Real estate agents say that without the ability to post clear signs directing potential buyers to open houses, properties will languish unsold in an already tough real estate market.”
“Escondido real estate agents and sellers say they saw proof Sunday of how important their signs were, reporting that attendance at open houses was much lighter than usual.”
“Donna Davis wondered why only one person showed up for a viewing of a single-family home in north Escondido. At the end of the disappointing day, she realized her four signs were gone. Davis said she later found them and about 150 others in a garbage bin outside City Hall. Code-enforcement officers told her to leave them because the city would be liable if she got hurt in the bin, she said.”
“Real estate agents said Councilman Ed Gallo, who is an agent himself, warned them about the code crackdown at a Realtors association meeting last month, and that they tried to comply. Gallo said they planned to meet next week to try to resolve the real estate agents’ concerns.”
“‘I’m hoping to come to terms and make sure everyone’s happy,’ Gallo said. ‘We don’t want to shackle one of the city’s major industries.’”
“Agents all over the county are facing a sluggish market, with about one-third fewer homes sold last month than in the same period the year before.
‘code-enforcement officers collected more than 100 open-house signs and threw them in the trash behind City Hall’
What a great metaphor for the state of real estate in California!
my thoughts exactly
Hey, maybe the man was just following Gary Watt’s advice. Remember when he said this:
“Signs: If you have a listing where there are other (or many) for sale signs nearby, I would recommend that you call the other agents and see how many of them will remove their signs from their listings. At the very worst, rotate your signs until one (or more) of the listings sell, then make sure it has a sold sign on it!”
This dude just wanted to sell his listing real bad so he tossed everyone else’s sign in the trash. Problem is he failed to call the other agents for the ol’ heads up. See what ya started Gary. Nice!
This is definitely happening in Sonoma. There seems to be an effort under foot trying to downplay the number of houses actually on the market. Not only does the PressDemocrat flat out lie about the statistics… over the weekend there were over 60 open houses listed in the newspaper, but the signs were decidedly absent. Where there were pushing 6-8 signs on corners I counted 8 signs throughout the valley on Sunday.
Someone’s trying to put one over on those foolish enough to think of buying by making it look like houses are a bit more scarce than they are.
Nevermind that the real estate section alone was three times the thickness of the entire paper in Sonoma Valley.
:-/
Luv to see a photo of that…
When real estate was booming how many “SOLD” signs did code enforcement officers throw in the trash behind City Hall?
Ha! One time back in my young and foolish days, some obnoxious realtor went around on July 4th and stuck a plastic flag in EVERYONE’s yard, which flag promiently stated “Made in China.” I got incensed and picked them up in a three block area, put them all in a trash bag and dumped them on the realtor’s front step (office)
He came around the next day going door to door trying to find out who did it. I laughed my ass off.
Awesome. Did you confess? What was his reaction?
No, he was pretty mad. I didn’t confess. I didn’t even answer the door. But he never did it again. He had his business card stapled to them like Salinas Ron said. I’m not jingoistic at all, quite the opposite, but for some reason, that whole thing just rubbed me the wrong way.
I think that he moved to salinas. This past 4th he put out the little made in china flags and rubberbanded his business card to them. I meant to send a photo to Ben but forgot.
I thought at first you meant it was a flag that said nothing but “Made in China” and that it was a comment on the Asian support of U.S. debt and, thereby, the housing bubble.
mad_tiger ,…”SOLD” signs aren’t quite the same thing. “SOLD” signs are usually only on the private property of the house that was sold, & most communities, even those with strict bylaws, typically allow one sign per private property yard. The “litter” of all the “Open House” signs all over public property is not only an eyesore, but potentially dangerous. I had a great chuckle reading this story. I thought the preferred Realtor business model has Realtors representing clients (buyers), and the Realtors (buyer agents) take their clients to view potential homes for sale. I would expect the Realtor should be able to figure out how to find their way to a MLS listed home that is for sale.
anaverde in palmdale will be finally built in the 2025 re bubble.they have tried to build that since the late 1980 era and they always wait till the end of the bubble to do it.it is one of the last unspoiled areas in so cal except the bob hope holdings and the getty land north of simi.sad to see nice green pasture get sold to greedy bastards then they dont build and when they do they build crappy micky dee houses.by the way ana verde sits directly on the san andreas fault.when that baby lets go those crappy houses will be rubble.palmcaster homes quaudrupled in prices since the last crash so expect those 500k mc mansions to sell for 150k in 3 or 4 years.
Things were so bad in Palmcaster in the early 1990’s that folks were simply ‘Homesteading’ the vacant homes. They would move in, change the locks and turn on the utilities.
“code-enforcement officers collected more than 100 open-house signs and threw them in the trash behind City Hall’”
Went thru Escondito on a job assighment, along rte S21 from Del mar all way to escondito ave before getting back onto the 5 fwy. Did notice a lack of Re signs. Nice shoreline however.
Also driving along the 52 frw(Ted williams) and noticed a lot of newly spung housing developments. One Thing different about SD as compared to LA, at least in this area(North county) is there is a lot more buildable open space for putting up huge SFH tracts. Comparing counties, SD is far less crowded and with more open space than the South LA county basin, which is almost wall-to-wall asphalt.
A good part of that space in San Diego is due to topology and soil conditions. That’s one of the nice things about SD - the geography keeps it feeling less overcrowded and cleaner than LA.
I pluck them out of the ground and throw then in the nearest dumpster on a regular basis. They are nothing but an eyesore.
The outskirts of LA will probably get hit harder than most areas. Bakersfield, Lancaster, Antelope Valley, Hemet…the places where no one wants to live but have been very popular lately because houses cost less. I am amazed to hear how many people that bought in Bakersfield last year commute to LA…thats insane…what a horible commute.
I feel bad for the sucker that “takes one for the team” and commutes for 4 hours a day so his wife/kids can “own” a home.
Once prices drop people will either move to places that they actually want to live.
Gas prices have to be killing these guys.
Remember Leathal Weapon…I wonder how many developments will be burned in the movies over the next couple years!
Gene
If you don’t have $$$ or work here - there is no reason to buy here. There are many from LA county and Ventura county that bought here and now commute - I have seen a few in my neighborhood. I seem them in the morning when I get my lazy ass to the gym at 5:30 am and they are leaving for work. Maybe they workout in their cars??!?!?
A former co-worker of mine still drives from Bakersfield to Rosemead every day, when he can make it thru the pass in the winter. I lost count of how many miles he has put on his car. Doesn’t look like he works out much either…
Yeah, I cannot fathom commuting such distances for the sake of home ownership in a place you really don’t want to live. Eep. And, yes, health issues are a concern. All that time sitting in the car, a higher probability of eating out / hitting the drive thru…
I’ve only had one job in my life where I had to commute, and it was just a 10 minute drive. All other jobs I’ve either worked from home or was able to walk to work. My wife is currently at her first “walk-to” job after all-previous ones being 45-60 minute commutes. I doubt she’ll go back to the commuter world.
There is an article about commuting in the UT today:
‘For four years, Sara and Oscar Lopez have been rising long before dawn to make the more than 90-minute commute from their home in Hemet to jobs. As aggravating as long-distance commuting may be for many, transportation experts don’t expect the trend to change anytime soon. A survey conducted four years ago for San Diego’s regional planning agency, found that roughly one-third of the households in the Temecula-Murrieta area included someone who commuted to a job in San Diego County.’
Boo Hoo for the Inland Empire and North County! Great weather but…talk about legions of clueless people. We moved to O’side in ‘98 and took advantage of the bottom of the last slowdown for them. We were fortunate to be able transfer with our company to decent paying jobs there. We bought a new 2,000 sq ft home on a 10K lot for 230K..a deal by Bay Area standards. Then we sold our house in Oceanside almost two years ago with the intent to buy land in Temecula. (I could go on about MORON RE agents in SoCal but that’s another post.) Then it just got too crazy; prices were rising by the day. We rented for awhile in Temecula (that landlord is currently taking bath on his ‘investment”). We were surrounded by neighbors who did not have the income for the houses they bought since 2003…almost all with pymt. option mortgages. About 75% commuted more than an hour to work. They all had new cars and Re-fied every six months to pay off credit cards and finance those cars over 30 yrs. instead of 5 yrs…brilliant!
I couldn’t make ANY headway trying to explain why it was cheaper to rent than to buy…oh well. We couldn’t take the idiots another day and moved back home to the Bay Area. Of course sellers aren’t behaving too bright here either. Wouldn’t ya know it, we’re just in for slowdown here. LOVE having liquidity and low risk right now. We ain’t buying a thing for awhile…
lol. I was in Pacific Grove a couple of weeks ago…awesome!
I just can’t understand this. Wouldn’t their quality of life be better if they rented a modest apartment a few minutes from work?
I’d rather have 3 hours back in my day (2x 90 minute commute)! I guess people need a house to put their plasma-TV and SUV at (which they’re paying off, too!)
Just doesn’t make any sense!
If this were Europe, yes. But we’re talking California, and apartment living truly sucks here. There is absolutely no sense of community, even if you can speak your neighbors language (que?). I was going absolutely nuts after 13 years of living in apts here… Renting or owning a SFH is magnitudes better.
I was sick of hearing the parties and the sexcapades all around me. I must confess apt. life is NOT like living in a home. I think it is the noise more than anything. So if you can put up with it great. And even if you have ok neighbors now, that is not necessarily the case 3 months from now. Know what I mean?!
Yes, there is something (bad) to be said about American apartments. Mind you, some converted-to-apartment buildings in Europe are just as noisy and just as much a pain as American ones, but with the exception of Florida concrete-block construction, EVERY apartment I’ve had in the USA has had thin, hollow, sheetrock walls. Noise galore.
(I’m sure glad the Mexican guy next door in Dallas was a good guitar player because I’d get a reasonably good serenade at dinnertime every evening. The same can’t be said for the headbangers on the other side. Ugh.)
If you have to rent, it’s much better these days to rent a house, even considering the yard work. And with the state of today’s real estate rental market, you can often get a house for just a few $hundreds more than a “decent” apartment.
“And with the state of today’s real estate rental market, you can often get a house for just a few $hundreds more than a “decent” apartment.”
This is so true…during Aug ‘05 we were looking for a rental in Sacramento. At the time many of the apartments were full and the selection of homes sucked. We almost rented a real crappy, 2 bd/1 ba 40s/50s era home in downtown Sac. for $1,600 mo. Settled for a new 1 bd/1 ba apt on a 3 mo. lease at $1,300 mo.
Fast fwd to Dec ‘05–Tons of homes for rent, moved into 3 bd/2 ba 2003 home in nice Natomas neighborhood w/ 1 yr lease. Neighborhood has HOAs paid by owner. We get club membership at $40 year (for both of us) and can use the gym and jacuzzi daily. Beginning in Oct we’re shopping to see if we can upgrade to a slightly larger rental home with same or less rent or maybe just stay put for another year.
Renting SFHs rules for right now!
Forgot to mention, we pay $1,500 rent on the 3 bd/2 ba SFH, only $200 more a mo. than a 1 bd/1 ba apt. was costing!
worked first IT job in Ranch Bernardo in the 80’s with a lady that commuted from Corona. 90 miles each way. Her husband worked in L.A. so they split the difference. Sheer lunacy. Is their time worth nothing for all these long commuters?
Just saw an article that some ‘economist’ said that gas may drop to $2 per gallon. If he went to the same schools as Lereah or LAY good luck! In any event. Run the math. It’s 85 miles from Bak to Magic Mtn.. Extra cost at extra 150 miles commute, divided at 18 mpgal, times $3.10 (Bakersfield reg.), say 9 times equals extra $27 per day time 5 equals $135 extra per week times 4.3 equals $580 per month extra. 280k median in Bak vs 580k in LA. 300k times 6.5% (I/O/) extra $19500 per year vs $7400. Savings of $12K less tires and maintenence,wear and tear, air conditioning, and divorce. Better schools, redneck neighbors, great fishing, hunting, lower cost of living, country western music : Priceless
You should never listen to what economists say about oil. They do not comprehend what a finite resource is, and seem to think that oil companies mae oil the same way a furniture maker makes chairs.
http://www.theoildrum.com/
Labor Day Massacre….the prices plummet come next Friday. Are there any qualified, motivated BUYERS after the school year begins? It will be like a 2 by 4 smack on top of the high priced listings, and the herd metality will rush towards the exits by competeing with lowered asking prices. This is the big bang we have been blogging about!!!
‘Be careful what you wish for’…..
must be that high desert sagebrush and yucca trees which evokes feelings of rapture owning a home in the outback.
http://www.latimes.com/news/local/valley/la-me-skyview31aug31,1,4739567.story?coll=la-editions-valley
A very thorough article in La times about Hispanic Immigrants finding”happiness and peace od mind” in buying affordable homes in Lancaster. Specifically deals with the tract called Skyview and the stories of several Immigrant families being able to purchase housing at “reasonable”prices out in the high desert/antelope valley.
I am quite aware of what the real costs of ownership are for antelope valley homes priced from the $250,000’s up to $400,000. Owning and maintaining even a small SFH runs several thousand dollars per year besides PITI. These folks will have to brng in additional relatives to provide “rental” income or boost household income.
Antelope Valley and Riverside etc are …
‘Decidedly in the Toilet’.
They are done - put a fork in them.
As Amigo construction worker Sergio Curiel suffers. Curiel hasn’t worked for a month. ‘Income is really bad right now,’ Curiel said. ‘I’m living day by day, check by check.’”
Enough said.
Temecula– great wine, lousy (everything else).
I’d say the wine is marginal at best.
Unless you like old vine, old clone Zin. One of the few places that still have those vines producing. But I admit it’s a matter of taste.
Napa winemakers still buy Zin grapes from Temecula because they can’t grow the same stuff there.
Interesting, didn’t know that about Zin in Temecula. I like Zins, but never have been crazy about them. I’ll have to try one of the Temecula ones though.
Temecula also has Pechanga. Nice casino. Great place to spend those refi $$….
I recently read a observation regarding the OCC (Office of the Comptroller of the Currency) guidelines about toxic RE loans that seems to be below the radar screen of most folks, What do you folks think?
“You may remember that very early this year, the OCC (Office of the Comptroller of the Currency - the banking system regulator) set forth proposed guidelines that essentially mandate that banks knock off no-doc, negative am, option ARM, etc. lending. Well, it has been one of the longest “comment periods” we’ve ever seen for this type of regulatory guideline enactment. But, as of now, these guidelines are set to take effect by the end of summer. The only loud vocal opposition has come from the NAR (Natl. Assoc. of Realtors). We’re certain the guidelines will be enacted as almost completely originally handed down due to the fact that neither Congress nor the Senate even made a peep about them. So, there’s going to be additional mortgage credit cycle pressure yet to come. We have not even experienced the fallout effects of this yet. And it’s clear that both consumer and industry sentiment is literally plummeting prior to this . Will tightening the mortgage credit tourniquet improve consumer sentiment towards housing or make it worse? Go ahead and take a wild guess. Lastly, it’s only serendipity that so much ARM debt is set to reprice at the exact time banks are being implicitly mandated to stop risky mortgage lending, as they have enjoyed for so long now. Oh those fat sub prime margins, right? We’re gonna miss ya.”
“Agents all over the county are facing a sluggish market, with about one-third fewer homes sold last month than in the same period the year before.”
This and other real estate employment represents a huge portion of the employment base. In Vegas, it feels like 50% of the market. I wonder where they are all going ot go.
Hand out porn pamphlets on the strip
Oh my, the City of Escondido at its finest once more. I love how these goons are scooping up open house signs, obviously focusing on what is really important here.
Now what is intersting to note is the new Centex development near 15 north of 78. The build a privacy wall around it, and of course the taggers have been having at it. You want to beautify this place? They could try stopping that crap. Someone has too much time and money. Oh wait, this comes from the budget surplus. Ok, that problem will resolve itself in a few months.
There weren’t any “SOLD” directional signs. I get sick of all these signs too… I used to volunteer for my county, to remove them. Trash begets trash.
Somewhat off topic, but I just went onto our local MLS to check the listings, and almost every SFH came up as “new”. This seems to be because the street address has been removed from most listings, the upshot of which is that: 1) you can’t go by and take a look at the place without contacting the realtor, and 2) you can no longer compare the asking price with the past sales history (e.g. via Zillow).
This is tweaking my paranoia button big time (not to mention depriving me of a lot of free entertainment). What do others think is going on here?
REIC at work here!
Probably a computer glitch. This happened to our MLS a few weeks back - all the listings for the last 10 years showed up as available.
Thanks crispy&cole. I hope it is a computer glitch, and that would explain it. On the other hand, I spend way to much time cruising the listings, so a continuation of the situation would incease the time I am actually working and thus saving for a downpayment. We’ll need a large one even if housing returns to historic norms, as this area was expensive pre-bubble!
Atascadero and Paso seem to be heading in the right direction - DOWN. However, SLO city is a tough nut to crack. The city leaders and land owners are NO GROWTH. My goal is semi-retire in Cambria!
Well, I am seeing Zillow “zestimates” for some houses in SLO city as showing year-over-year percentage declines in value for the first time. I know that these “zestimates” are not very accurate, but they are showing the beginings of a downward price trend. And I don’t see how prices here can do anything BUT go down, as North and South county become more affordable again, since people will just buy 20 minutes north or south of SLO and commute. Prices went up here first, and will decline here last, but I think (significant) declines are inevitable.
but I think (significant) declines are inevitable.
________________________________
AGREE!!!!
Arroy Grande is alredy seeing 10-15% declines. My house is in Escrow as we speak and it is about 12% less than the likely June 2005 price.
Thanks crispy&cole. I hope it is a computer glitch, and that would explain it. On the other hand, I spend way to much time cruising the listings, so a continuation of the situation would incease the time I am actually working and thus saving for a downpayment. We’ll need a large one even if housing returns to historic norms, as this area was expensive pre-bubble!
I just got back from 10 days vacation in Cambria. Go there every year with my kids. We rent one of the few houses actually available on the beach, next to Shamel Park. I love the fog, love the atmosphere, love the peace and quiet. But for the first time in 5 years I noticed that the realty storefronts along Main St were absolutely plastered with listings. With the water meter scarcity up there, I can’t anticipate a big drop in pricing, but still, there were an awful lot of houses for sale. Maybe the locals cashing out?
Lots of Open houses on my last visit in July. One of the streets up from the park had 4 for sale signs on the same street. Its a start and I can wait - LOL
Lots of houses available everywhere, not just here. Just got back from a 3500 mile road trip up the west coast…drove all the way up to Coeur d’ Alene ID…went to a local realty office….TONS of listings
Did you play the course with the floating green? Sorry Ben, off topic - Do you or anyone know anything about the area arround Ashton,especially house prices and winters, eastern Id.? I’m a member of the Henry’s Fork Foundation on the Snake.
No, I gave up golf years ago…I sucked. Sorry, don’t know anything about Ashton.
I grew up in Idaho Falls, so Island Park/West yellowstone was our summer playground. Ashton is just about the coldest place imaginable in the winter, and just about the most beautiful in it’s 3 months of summer. There isn’t much of anything there but outdoors, so if you’re into that, it would be a good spot for a summer home and/or winter snomobile cabin.
This happened in several MLS areas that I follow in the South. I’m not positive, but I think it has to do with a change in MLS service providers. It is a major pain and does not net-benefit the agents, IMO. With a GPS, I would happily curb-preview all listings that looked of interest, not burning a drop of an agent’s fuel. Then I’d find an agent and get showings for the few that really interested me.
There is a further problem with this sort of changeover. If you track inventory via realtor.com, as I do, when they introduce the address-free listings, in my experience they leave the old ones on for a while and the totals counts are totally screwed up for a long while.
Crispy, SLO_renter, and other semi-locals:
One of my fantasies has been to buy out one or two of those crappy motels along Moonstone Beach in Cambria and convert it to an SFH or at least a combo. But the impression I get is that some single owner has already snapped up all of those properties and is running them as nominally independant crappy motels in order to maximize profit.
Any comments or insight????
Thanks,
–SM
Many of those hotels are advertised in the Bakersfield newspaper and they are shown togethter as a group of hotels by the same owners. I don’t generally stay in them as it is much more cost effective to rent a house near the park with my family (my household, parents, brothers, etc..). I have been to Australia, Hawaii, most of the other Ca beaches, however, I enjoy the peace and quiet and small crowds (if any) in Cambria and its only 2 hours away - but 20 to 30 cooler than home!
In the 90019 area, such tactics usually means that the price has been dropped significantly. For example, two homes that have been on the market for over six months (that I can remember) have gone down $85,000 and $120,000. The $120,000 mark down (original listing price $980,000) home sat on the market for over 8 months until it was taken off the market. The owners bought this traditional two-story Craftsman for $207,000 or $275,000–I can no longer find the original sold information on domania.com. It was a probate sale. The house needed extensive work–the original owner had lived their for decades and was quite elderly, he died. The new owners worked on that house for almost two years before they put it on the market for the outrageous price of $980,000. Part of the reason it didn’t sell was that they didn’t add a second bathroom with the renovations. They added a second and a half bathroom and added a fancy door, and now rent out the second floor of the house to their children with their grandchildren. The kids couldn’t afford to buy; so they moved in with Mom and Dad hoping to eventually save enough for a downpayment.
Another home across the street from this one, had been on the market for $890,000. The owner of four years ago had purchased it for $355,000 (domania.com); Sold it for almost twice that. The new owner(s), who put it on the market for $890,000 within 14 months, ended up taking it off the market. It sat eerily empty for a full year. One day in May during my morning constitution I changed my route to see what was listing. After checking the MSL, I found out that this same house is currently on the market for $1,100,000. Ssssssssssssssssssssick! All of these houses either no longer have their photo or their address posted. I have also seen more and more homes listed without an address or a photo. When you contact the agent, it sometimes difficult to get them to give you the address for a drive by! Also, sometimes the price reductions have been so fast and furious that they now post price ranges (i.e., $499,000-$620,000)! Can you believe that?!!! That is just stupid crazy!……..
Mary
JDS Uniphase shares plunged 14% in Wednesday’s extended trading, weighing on the tech sector after the fiber-optic company warned of lower revenue in the first quarter.
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Remember when all the analysts keep saying - wait for the fall rally in tech and the spring rally in tech and the ….
I think this is how the RE game will play out in the shitty areas - like Phx, Lancaster, Central Valley, etc.. The rally will be just around the corner - “Oh Great Pumpkin Where Are You” - and NOT show up for years!
The Union Tribune in San Diego. “The runaway home prices and building boom of recent years put lots of money in the pockets of real estate agents, loan officers and construction workers. If there is a real estate slowdown, which many experts say has already begun, San Diego may be disproportionally hurt.”
“Already hit hard is construction worker Sergio Curiel. Curiel hasn’t worked for a month. ‘Income is really bad right now,’ Curiel said. ‘I’m living day by day, check by check.’”
Boy, one Joe Sixpack is already hurting from the RE slowdown. The lesson in this is industries and the economy are cyclical. It isn’t smart to live paycheck to paycheck. Everybody if they can should have 3 to 6 months living expenses.
More dislocation on the way when the RE correction shifts into higher gear. We are only in first gear right now.
You are right, it’s scary…most people live paycheck to paycheck but people in the r/e industry will get hit even harder…
3-6 mos for Joe Sixpack. But the rule is 1 month of job search for every $10,000 you make. So that is 12 months if you make 120k….. only 3 will put you in foreclosure
Where do I sign up to be a code enforcer here in SD? The city could pay me a nickle a sign and I’d be rich!
Lower your asking price appropriately, put a $12 classified in the Tribune, you will need no stinking sign. Those things are adds for agencies anyway…..
I agree, if your property is the lowest price listed (even if it is still outragous) buyers will find the address without a freaken sign.
Amen! In this insane market there are thousands of folks prowling the net for a deal…daily. A fair, honest price doesn’t need signs or balloons or sign twirlers.
“Until recently, building prices continued to rise because of a phenomenon known as cap rate compression. In part because capital was cheap, buyers were willing to accept an ever-declining initial rate of return, which is known as the capitalization rate.”
think that was about residential real estate? nope! commercial RE.
“Real Estate Deals to Flip Over” from the New York Times.
“Buyers have often been able to meet their investment objectives ahead of schedule without spending additional money to spruce up their buildings, said Robert M. White Jr., the president of Real Capital Analytics, a New York research firm that tracks sales valued at $5 million or more.
In the past, Mr. White said, most buyers would evaluate the potential cash flow for a particular building over a 10-year period. Insurance companies often used 30-year projections, he said.
“Investors have greatly shortened their time horizons now,” Mr. White said.
Flipping, the practice of reselling real estate quickly, has been occurring in all commercial property sectors, but Mr. White said the trend was most pronounced among office buildings. Nationally, of those sold so far this year, 40 percent were acquired within the previous five years, and 13 percent were held for less than two years, he said.”
Closing the barn door with the horses halfway to town, as usual.
I’ve said it ’till I’m red in the face. When the easy mortgage money dries up there is going to be hell to pay in the marketplace….
You really need 18mo of living expences. Trust me…. that’s what I needed a few years back.
In 1999 or 2000 (I forget), I listened to the CDs of a financial guru (last name Carlson?) who suggested 2 years of living expenses. It made an impression upon me back then. His point was that 2 years expenses provides someone with more flexibility. His example was two people looking for the same type of work. It required a move to another city. The one who only had 3 months expenses could not take the job. The one with 2 years could easily take the job and live in a hotel for a few weeks before finding an apartment or house. I have about 8 years of living expenses in conservative investments. You only really need 1 year of living expenses in a savings account and the rest in perhaps Savings Bonds (or T-bills). Savings bonds require a minimum of a year to hold.
Yields on 2 and 5 year housing agencies are 12 basis points less than this week’s 5.191% four week T-bill auction. Talk about absolutely no credit spread, or fear of housing difficulties, or higher rates, amazing levitation.
http://www.rbsgc.com/rbsgcconnect/home.aspx
Isn’t this like f’ing crazee?
Maybe they are expecting a dollar devaluation? Wouldn’t MBS do better than T-bills in that case, due to the collateral value of a home?
I hate to make such an extreme suggestion, but I cannot otherwise fathom why the risk premiums on MBS are nonexistent in a rising default environment.
OT, I just calculated months of inventory for Palmdale, CA 93551. Are you sitting down?
13.9 months. We are most certainly on a backside and it’s big and long and steep and slippery and ends in a long nasty skidmark.
Driving through Ana Verde (KB homes) on a Saturday morning it is clear to see that upwards of half of those houses are not lived in. I’m beginning to think the state may just turn them into projects (ala Watts) most of the Antelope Valley’s GFs are coming from Watts and Compton, so they should feel right at home.
Boy oh boy! Here we go again. I’ve lived in Lancaster and Palmdale during the 90’s crash and considered buying in Aneverde last year. Sanity prevailed and I left California all together. They promised a new park, school and fire station, but when pressed, they said they don’t have to build them. This was supposed to be a 5,000+ home community, but they are only about 1,000 into the development. KB remembers the sea of HUD foreclosures that were rampent in the Lancaster and Palmdale in the mid 90’s. This time its going to get down right ugly. At least in the 90’s, the Antelope Valley was still a nice and safe place to live. Now Its just another East L.A. shithole with gangbangers and Section 8 galore (3% of L.A. County’s population and 18% of its Section 8).
I shopped for home there from Oct 04 to Sep 05 until I gave up all hope of buying in the Antelope Valley. You have plumbers making $30 an hour buying $472,000 homes. Anaverde will not finish! They are a day late and a dollar short like many of the big builders in the A.V. KB is just smart enough to cut its loses before the thermo-nuclear meltdown that will see 40-50% reduction in Lancaster and Palmdale over the next five years. Let’em Burn!!
lol. You said it all buddy…
Plumbers that make $30 an hour? The lowest I have seen around Chicago is $100 an hour w/ a $175 minimum trip charge. Just had a customer of mine tell me about getting charged $2000 labor for a plumber and his helper to install a spa tub…in ONE day! I gotta change professions.
yes but we have juan and carlos from tj here to drive labor costs down.
ha, and thats nearly 14 months at the CURRENT super inflated sales rate… do the calculation at a sales rate of 2001 and just think about how much trouble is coming down the pipe.
With all the talk about how Homebuilders were very cautious in building on Spec and now the sudden retraction (confirmed first hand by a buddy in upper management at a top-10 home builder), the question going forward is whether, notwithstanding all the plugs the HBs are pulling on projects, whether they still overshot.
I believe that the rush to the door is proof 1 that they did overshoot and are now trying to minimize the pain. Too bad for them that this pain can’t be avoided.
Hint: San Diego unsold new home inventory is currently at a record high level, according to one of Ben’s illustrious posts from yesterday.
Builders are like sheep…they would follow each other off a cliff chasing the $.
Ben, love the blog. Can we get a way were people can post upcoming media coverage on housing, i.e. if dateline were going to do a special we could all be alerted in advance?
bens face on the cover of time magazine,its possible.
“Some analysts also worry that builders could be forced to write down the value of their land if they can’t unload it, or if land values start to decline.”
Whoa, you mean land actually goes down in value? That may be news to a lot of people!!!
I’m sure this was posted already…
Housing prices post no growth, according to report
Six of 10 metro areas had declines from May to June, which may signal a deeper slump.
Reuters
NEW YORK
U.S. single-family house prices showed no appreciation from May to June, dragging down the annual rate of increase and signaling a deeper slump, according to an index of 10 major metropolitan areas.
The composite year-over-year gain in the Standard & Poor’s/Case-Shiller Home Price Index slowed to 8.2 percent in June from 9.7 percent in May, S&P said on its Web site. The index has reflected a deceleration of price gains over the past seven months and is well below its peak of 20.4 percent reached in July 2004.
The index was co-developed by Yale University economist Robert Shiller, who has warned of a house price bubble after correctly predicting that phenomenon in the stock market of the late 1990s. This index complements other signs that the housing market may be eroding at a faster rate.
“Home prices are clearly decelerating,” Shiller, who is also chief economist at MacroMarkets LLC, said in a statement.
Six of the 10 metro areas had month-over-month declines, led by Boston, where prices are down 1.9 percent from a year earlier, index components show. Prices in the San Diego area halved annual gains in June to 1.7 percent. Prices in the Los Angeles/Orange County area gained 13 percent from a year earlier. And Miami had the biggest increase from a year ago at 19.2 percent.
I thought a article was posted a couple of weeks ago on this blog that said that Palmdale/Landcaster went up 28% in the last 12 months ,(which shocked me ). The area sure went cold quick . Of course all areas has gone cold .
Ok a few posts ago someone asked for “Jingle Bells”. So here is “Jingle Mail Rock”, since I am really a rock guy and anyone could do “Jingle Bells”.
accompaniment
Jingle keys, jingle keys, jingle keys mail
Jingle keys swing and jingle mail ring
Wishing and blowing up bubbles of fun
Now the jingle mail has begun.
Jingle mail, jingle mail, jingle mail rock
Jingle mail chime just in jingle mail time
Wanking and prancing in Jingle Keys Square
In the turgid air.
What a fine time, it’s the right time
To send the keys back home
Jingle mail time is a swell time
To get jumping with a B.K. put
Giddy-up vulture man, pick up your bids
Jingle around the clock
Mix and a-mingle in the price hemmorage
That’s the jingle mail,
That’s the jingle mail,
That’s the jingle mail rock.
===
Ok, sorry.
I promise, I have better stuff in development that I’ll post once the server problem is fixed. And Rainman, please come back and grace us with another BTC episode! That is, as soon as Bubbles comes down from the pentathol and has his mojo back
“‘I’m hoping to come to terms and make sure everyone’s happy,’ Gallo said. ‘We don’t want to shackle one of the city’s major industries.
Repeat after me….Reselling Houses is not an ‘industry’.
“With demand for new homes declining, major builders are under pressure from Wall Street to justify their ownership of land that isn’t already primed for building and that doesn’t have a prospective buyer lined up. ‘Under current market conditions we are focusing our attention on our core business, which is home building,’ said KB spokeswoman Caroline Shaw. ‘The sale of our interest in Anaverde furthers that objective.’”
I guess the news that the HBs’ land deals are biting them in the @$$ will result in a massive contrarian rally in their share prices tomorrow? Because HB stock prices always go up, just like the price of the homes that support them…
“Local real estate agents are incensed after code-enforcement officers collected more than 100 open-house signs and threw them in the trash behind City Hall. Real estate agents say that without the ability to post clear signs directing potential buyers to open houses, properties will languish unsold in an already tough real estate market.”
I propose a little experiment for any San Diego seller who believes they will not be able to attract a buyer without a trashy open house sign at the nearest busy intersection: Lower your asking price by 20% below the lowest comparable home listed on ziprealty. I bet you will learn that an open house sign is not only a visible sign of desperation, but is unnecessary.
But they can’t do that because:
“their clients counted on the 20% higher price to cover their purchaser price + transaction costs + cumulative negative cash flow losses”
year 2010,
We had reached the summit of the Cul-de Sac. For some minutes the old man seemed much too exhasted to speak. “Not long ago I could have guided you on this route as well as the youngest of realtors, but about three years past there happened to me an event such as never happened before to RE, or at least no RE economist ever survived to tell the tale of- and the last 3 years of deadly price drops which I have endured have broken me up, body and soul.
You suppose me to be a very old man- but I am not. It took less than a few years to change these hairs from a jetty black to white, to weaken my limbs and to unstring my nerves so that I tremble at the least exertion and am frightened at a shadow. Do you know I can scarcely look at the sea of open houses without getting giddy. How did I get this way? A descent into the RE BUBBLE………
Another nice EAP reference. Well done.
A descent into the RE Bubble part 2….
I looked dizzily and beheld a wide expanse of empty housing. A panorama more deplorably desolate no human imagination can conceive. ” the neighboorhood in the distance” resumed the old man, ” is called Happy Park USA. But why it is thought necessary to name it is more than either you or I can understand. Do you hear anything? Do you see any change in the place? ”
We had now been 10 minutes at the cul-de-sac at the edge of the development to which we had ascended from the interior, so that we had caught no glimpse of the urban sprawl until it had burst upon us as we acheived the summit.
As the old man spoke I became aware of a loud and gradually increasing sound, like the moaning of a vast herd of sheeple upon the American landscape.
An Auction! The homes were being auctioned off one by one.
I think this thing is going to take a little longer to bust in South OC, but on the other hand I’m seeing a ton of inventory rising almost by the day in the Robinsons Ranch, Dove Canyon, and Coto de caza areas. Prices are gradually dropping and sales comps are are going down. At first I thought this would take 18 months but now I’m leaning towards 6 months to the bottom. Put on your safety belts as this thing appears to be ready to free fall! I believe there are more people than one can imagine that are headed for a fall as a result of ARMS and ATM Housing practices. This is really a scary time for many people.
I’m surprised the math nuts have called BS on this. 100 signs thrown away, 4 of them owned by one realtor. That’s possibly on 25 open houses without signs. I think the industry is in far deeper trouble than just 25 houses.
“Local real estate agents are incensed after code-enforcement officers collected more than 100 open-house signs and threw them in the trash behind City Hall”
How fitting that this guy:
http://www.websitetoolbox.com/tool/post/sdcia/vpost?id=1345698
is planning on setting out 125 “bandit signs” (as he calls them) this weekend. Poor guy - he’s hoping he doesn’t get caught by the city of San Diego. He’s openly discussing this on a publicly accessible forum. I wonder - are there conspiracy charges associated with planting bandit signs?
What a bunch of douche bag morons. I swear, is there just something in the water in San Diego that turns ordinary people into complete idiots? I’m just asking…
Yeah, it’s called avarice and greed.
Pretty funny thread on SDCIA. Wow, the discussion has really died there. Now they’re just insulting each other. That happens when you’re “all in” and it all goes to hell on you!
http://www.websitetoolbox.com/tool/post/sdcia/vpost?id=1337073
Another quote from one of those poor souls:
What has happen to this board?
It is filled with miserable trolls that provide no positive feedback.
Seems they’re going downhill! Well, like another one said, the days of feel-happy price appreciation are over; now you’ll have to do real work for your money. That must put lots of people in a miserable mood, actually working for their money! Hee hee.
Wow, that was an interesting read! There are some people on that board who are in deep denial. Information is power, but I guess the old saying, “You can lead a horse to water, but you can’t make him drink” is appropriate. The sad thing is by the time reality sinks in, it will be too late.
-
this is funny -
Escondido code sweep nets pile of real estate signs; agents irked
By Sarah Gordon
August 30, 2006
ESCONDIDO – Local real estate agents are incensed after code-enforcement officers collected more than 100 open-house signs and threw them in the trash behind City Hall.
http://www.signonsandiego.com/uniontrib/20060830/news_1mi30real.html
Folks, California is going down, and very fast indeed! Here’s an interesting article on those Exotic (I love that word) Mortgages:
http://www.msnbc.msn.com/id/14584569/
Here’s a quote from the article “…more California homeowners are having difficulty making their mortgage payments, according to a report by DataQuick Information Systems. Banks and mortgage companies sent warning notices to more than 20,000 homeowners earlier this year, telling them they were in danger of foreclosure. That’s an increase of 67 percent, the biggest one-year jump on record. Though a notice of default doesn’t mean a homeowner will lose their house, it could be a key measure of financial distress.”
Reality is setting in folks… Sweet!
http://www.mercurynews.com/mld/mercurynews/business/15368275.htm
State of affairs in Silicon Valley are pretty dismal. Avoid “Santa Teresa” is the message I get from this article.