‘It’s A Very Tough Market’ In California
MarketWatch reports on Bakersfield, California. “Just 12 months ago, this sun-baked Southern California city was one of the hottest real-estate markets in the country. Those days now are dust in Bakersfield’s gusty winds. ‘Yeah, we miss those times,’ Darrell Muhammed, a local agent, said of last year’s market.”
“Concern mounts that an ever-increasing housing inventory, coupled with coming hikes for variable rate mortgage holders, could send the market south in a hurry. Trouble signs are everywhere. At Lennar Corp.’s Artisan/Terra Vista tract on the city’s west side, about 20 homes only a year old are back on the market.”
“They compete with dozens of other new houses Lennar is building in later phases of the same development, which agents say makes the older homes tougher to sell. Six of the resales are within view of each other on the same street. ‘It’s very tough market,’ said Joginder Gill, the agent trying to sell one of the six houses. ‘If you look at past history, it’s going to go way, way down.’”
“Leslie Appleton-Young, chief economist for the California Association of Realtors, said, ‘It’s been completely unsustainable.’ To many, the Bakersfield situation was inevitable. ‘Why shouldn’t there be retrenchment in housing?” said Stuart Gabriel, of the University of Southern California. ‘It’s appropriate that housing take a breather.’”
“Gill, the real estate agent trying to sell the home in the Lennar tract, says it was about a year ago that the market started turning. He’s about to take over as agent for one home that was put on the market a year ago for $950,000. It, like many other homes, has been reduced several times. He’s about to re-list it for $785,000.”
“Despite the more competitive climate, it doesn’t seem as if builders intend to slow down at all. Jim Eggert, a city planner, says there only are about 300 to 350 fewer building permits taken out throughout Bakersfield when compared with last year. ‘They’re still out building, but I don’t know if they’re selling,’ Eggert said. ‘These prices have to come down a little bit. They have to.’”
“The next 12 months should be revealing, said appraiser Gary Crabtree. ‘I do think we’re in for a period of some foreclosures in 2007,’ Crabtree said. A flood of resold homes could also hit the market. ‘It could very well be that some of these people are looking at these interest rate increases and are trying to get out,’ he said.”
“‘It’s what I would say is balanced,’ said Don Cohen, president of the Bakersfield Association of Realtors. ‘You’re seeing what I saw in the ’90s but you haven’t seen since 2000.’ Others, however, wonder whether the Bakersfield real estate market..will keep heading down. Agent Ryan McDonald said the jump in inventory is disturbing. ‘I don’t think it’s normalized,’ he said. ‘I definitely think it’s reverted to the buyers.’”
The Monterey Herald. “July was a record month for Monterey County home sales. But it’s not the kind of record anyone would want. As prices slipped and sales slowed compared to the previous month, unsold home inventory for July jumped to its highest level yet, and sales slumped by 50 percent over the previous summer’s sales volume.”
“July’s single-family home inventory was at an all-time high of 2,502. Median home prices dropped to $659,000 in July, down from $687,5000 the previous month, according to numbers provided by the real estate association. That median home price for July also slipped behind the median price of $698,000 for the same month a year ago.”
“But while prices in Monterey County haven’t dropped as drastically as in some regions of the country, the number of homes selling, or not selling, is the most dramatic shift in the local real estate environment. For Monterey County, July’s unsold inventory index was 14 months; Salinas was 15.”
“Buyers continue to gain ground compared to recent years, some sellers are resorting to incentives to lure buyers in. ‘There’s a lot of that going on,’ said Sandy Haney, CEO of the Monterey County Association of Realtors.”
“And skittish buyers, fearing they might be paying too much as prices drop, are becoming bolder in escrow, even asking to renegotiate. ‘Sellers don’t know what hit,’ said Haney, ‘and buyers are trying to figure it all out.’”
“(Realtor) Pam Panzis concedes that it’s a tough market right now. ‘I know there are new agents who are wondering, ‘Why did I get into this business?’ she said.”
Finally! I was starting to get the shakes.
But… but… we were told that home prices never go down!
It took CAR what, 2 months to change their tune? I love how last years market was unsustainable when real estate is always a good investment becuase it never goes down!
There’s that word again ‘Balanced’. Don Cohen, shill for the real estaters, is still drinking hemlock. I’m going to heave if I hear it one more time. What a dumb a-s hole.
“Leslie Appleton-Young, chief economist for the California Association of Realtors, said, ‘It’s been completely unsustainable.’”
“Completely unsustainable”? Is this the new moniker?
I hope she is held accountable for all the LIES she has been spouting the past few years. From RE won’t go down because it is “econ 101″….to a soft landing….to a more normal market…to “It’s been completely unsustainable”????????
Where is the accountability???
SoCalMtgGuy
http://www.housingbubblecasualty.com
THERE IS NONE!
The debtors are accountable. No one forced them to sign on the dotted line. The insanity of paying far too much for homes in Bakersfield should have been obvious to anyone.
One macro level sort of comment.
Is there no shame left in this world?
How can the REIC make these sort of statements and not get called on it?
“Leslie Appleton-Young, chief economist for the California Association of Realtors, said, ‘It’s been completely unsustainable.’
Ben has the record of their comments and nowhere (prior to today) did LAY make a comment about the unsustainability of the RE market.
Bring back public floggings for liars.
Lennar is going for broke in this town. They have pulled mega permits this year!
Let’s not forget “City on the Hills.”
http://www.cityinthehills.com/
“What color are your dreams? Do you gaze rolling hills of Mediterranean gold hills or stroll the shores of a swan-dotted lake under the cypresses? In the hills above Bakersfield, a new dream of master-planned living is taking shape. It’s City in the Hills, an inspired collection of homes in an exquisite master-planned community that is like nothing else the region has ever seen. Here, find a landscape to thrill your senses—hundreds of heritage olive trees swaying over Italianate porticos and fountains, a grand amphitheater made for concerts under the stars, shaded stradas connecting quiet neighborhoods with lush parks, charming commercial districts with every convenience. It’s truly a place like no other. Discover City in the Hills. Travel the country of your dreams.
Or as our local rag describes it: “…surrounded by the scenic foothills of Northeast Bakersfield.”
city on the hills.
i knew if we kept looking we’d find utopia. look at those perfect people living perfect lives.
sounds better than the smell of cow dung in the air.
That’s the smell of equity in the morning.
And the remarkable thing is that it’s only a 200-mile or so commute from downtown L.A.
Oh, you mean get a job in Bakersfield that would pay for one of those houses? Good luck with that.
‘Overlooking Sharkstooth Mountain where the spoors give you valley fever. E.B. aka East Bakersfield High has the moniker of ‘The Blades’. With 75% of the sheeple in E.B. composed of illegial aliens and Article 14 citizens NE Bakersfield is a wonderful place, NOT.
Ohhh goodie, a readymade gardener and housekeep class, they won’t have to import from Tehachapi.
The more I learn about BF the more I’m thinkin’ it will be a poster child.
MISSING: Bakersfield
LAST SEEN: being pulled behind a 2007 Ford F-350 Dually extended Cab Powerstroke Diesel with diamond steel tool box and peel on construction logos. Too new to have plates.
DATE: Oct 6th 2005
SUSPECTS: David Crisp, various acomplises
REASON FOR ABDUCTION: profit, pure and simple
HOW: negligent, even willing adults on the city council
CONTACT: Interpol. Crisp is suspected of fleeing the country with the entire equity of the metropolitan area.
Do not approach, suspects are extremely facile. Cover your wallet and walk away slowly. Contact the City in the Hills Federal Homedebtors Detention Facility administration.
“Gill, the real estate agent trying to sell the home in the Lennar tract, says it was about a year ago that the market started turning. He’s about to take over as agent for one home that was put on the market a year ago for $950,000. It, like many other homes, has been reduced several times. He’s about to re-list it for $785,000.”
The mere fact a house was going for $950K let alone $785K in Bakersfeild boggles the mind. For those of you who have never passed through the area, Bakersfeild is an ugly smelly industrial/agriculture town and I can’t think of a good reason to stop there other to use the restroom at the truckstop before moving on. If not for I-5 the place would be a ghost town. Look for a housing debacle over the next year.
I agree our prices are 50% overvalued, however, we have some things going for us. The largest oil reserves outside of Texas(state & gulf) and Alaska in the US. Also, the largest producer of many agricultural crops. Worlds largest ice cream plant and the home of 90% of the worlds carrot production. And a few other things…
Bakersfield has a very aggressive political climate when it comes to water. What Kern Water Agency wants it gets or it sues.
“50% overvalued?”
So you’re saying that the prices should only drop 33.3%???
Bakersfield doesn’t even have I-5, it has SR-99.
It seems like the 99 has more 18-wheelers than autos these days.
I saw a list of ten most polluted towns in US, and at least 6 or 7 were in Central Valley, including Sacto, Bakersfield, Visalia, Merced. Made me think of the line “Just the price of living in paradise (CA)”
Bakersfield exists to keep Oxnard and Fresno from feeling inferior. All the weather of Fresno, all the culture of Oxnard. Must be said however for bored Lancasterites Bakersfield is a destination spot.
What, no blanket blame on Ben Bernanke and his Evil Interest Rate hikes? Because, of course, that’s the primary reason nobody’s buying right now. /snark
I was watching Nightly Business Report and some guest analyst said stocks are stagnating because it’s a pause between when interest rates are level, before they start to go down. As if interest rates are going to go down…
Buy your Euros now. BB is stuck between inducing a recession by hiking rates, or letting the dollar fall by lowering them or doing nothing. Either way, the Euro is a safe bet.
Blaming it on Ben might be a good way to get a rate hike. Besides, oil is down so I’m surprised that they didn’t try to spin that. Something like gasoline prices are down quite a bit so now buyers can spend gas money to drive their F350 to go to open houses.
That Leslie - person is something else.
I was astonished to learn that my cousins are spending over $600/month on gas - and they don’t even have commutes!!
You mention that gasoline prices are down “quite a bit.” In my area, we have only seen 5 to 10 cent price reductions which is a far cry from a large drop. We would need to see another 75 cent drop additionally to give a little breathing room to those who are really feeling the effects. Things are really tough right now for a lot of people and housing is just at the forefront. I have noticed more and more people “begging” in front of grocery stores, asking for money at gas stations, and sitting on roads and highways with signs. And it is not just the individuals who look really dirty. It is young and old alike, folks who are just broke with no hope right now. I noticed a clean young couple with a baby in a not so old Ford Ranger asking for gas money at a nearby station not so long ago. I helped a man fill up a gas can because he was in between paychecks (he seemed credible). I see really tough times ahead for a lot of people. Reality is going to slap this country in the face very soon.
Now that you mention it…I was in our local Citibank the other day, rolling over a CD into our new savings account — one of three people in the bank. The other two, both women, were lined up at the next teller over. Both of them were looking to get new credit cards with zero percent teaser rates. It occured to me as I was leaving that they could have just as easily opened up these accounts on line, but must have needed the new, “free” money immediately…hence the in-person visit to the bank.
Crikey!
- ‘It’s very tough market,’ said Joginder Gill, the agent trying to sell one of the six houses. ‘If you look at past history, it’s going to go way, way down.’”
- Bakersfield is a toilet bowl. In the 1970’s it was strictly a oil well town. How in the world a home could even be priced @ $950k is unimaginable!
- HOW THE MIGHTY HAVE FALLEN!
- But, the Inland Empire is different.
Inland Empire = Riverside and San Bernadino Counties.
Golden Empire = Kern County
I’ve posted graphs of the OFHEO HPI for all 300+ metro areas here:
http://www.housedata.info
very cool
Yeah, the Inland Empire was link #1 on the most polluted towns. We are way overbuilt and only 70% overvalued. Much different.
Angela
Sorry. Meant “Like”
Angela
Sorry. Meant “Like”
Angela
“(Realtor) Pam Panzis concedes that it’s a tough market right now. ‘I know there are new agents who are wondering, ‘Why did I get into this business?’ she said.”
Ya think, Pammie?
The minute heard ads on radio about real estate investment seminars, agent courses about a year and half ago I knew it was almost over. And then I heard Trump on on radio ad about his “classes” few months later I knew it was way way well done. I guess people listened to the radio and signed up …. Trump made money, why not others right? NOT.
The quote next month will be. “Every agent is wondering,’ Why did I get into this business?
I think that should be Pam Ponzi.
Oh come on, this housing boom was just stupid …stupid . The prices should not of gone up higher than 2001/2002 prices and than it should of stagnanted until wages caught up.Instead you know what happened .I still blame the lenders for allowing it . I really understand now what a stupid mania is . People thinking that real estate would continue to go up 20% a year for another 5 years and there would be qualified buyers able to buy ? ….Nuts ..They should of been saying “get in now before it crashes and get out before people figure out the values/affordability is “unsustainable “.
- “Nuts”
- Could this be a ‘Bastogne?’
I can’t imagine that the 101st Airborne could hold out against this massive price decline that is only BEGINING!
“But while prices in Monterey County haven’t dropped as drastically as in some regions of the country, the number of homes selling, or not selling, is the most dramatic shift in the local real estate environment. For Monterey County, July’s unsold inventory index was 14 months; Salinas was 15.”
I would have liked to see the hard numbers on this one. Boy, more than a one-year inventory and the asking prices are still holding fast. Looks like sellers won’t going down unless somebody puts a gun to their head or something.
Without a major recession or foreclosures hitting the market, or a MAJOR tightening of lending standards, it looks like we are in this for the long haul.
Monterey is not a good indicator of national RE trends or even NorCal trends. It’s a town of second homes for the uber-wealthy (celebrities, international business people, etc.). Very few people there will be forced to sell by rate hikes/ARM adjustments.
“Monterey is not a good indicator of national RE trends or even NorCal trends. It’s a town of second homes for the uber-wealthy (celebrities, international business people, etc.). Very few people there will be forced to sell by rate hikes/ARM adjustments. ”
I wouldn’t be so sure on this. I fear the speculative frenzy has swept across the economic strata. Irrational exuberance even hits the uber-wealthy–as you call them, and they’ll get skiddish like everyone else when they see they’re throwing dollars at their “depreciating investment.” I’ve also come to the conclusion that many folks who are supposedly “wealthy” are terrible savers. I have a relative in Monterey that married a very intelligent accountant there…they bought an “investment” property there in 05′. This is a CPA, not a checker working at Safeway, or a Holloywood celebrity–but someone who should have known better. We’ll just have to wait and see.
DOC
Ehhhh… I’m not so sure about this either. There may be some truth to this, but overall when you go there it doesn’t come off as some glitzy boutiquish uber-$$ place. And even if Monterey were that way, then what about Salinas??
1. The hard numbers for Monterey county are available through a link at the bottom of the story:
http://www.mcar.com/statss/2006July.pdf
2. Monterey COUNTY is not just for the super wealthy. Carmel, Pebble Beach, and Carmel Valley are super wealthy. Pacific Grove and Monterey are upper middle class retirement towns. Marina, Seaside, and Salinas contain good and not so good working class areas. Soledad, Greenfield, etc. are dumpy farm and commuting towns.
Home prices in Carmel-By-The-Sea have doubled in the last 5 years, but as the attached link shows for (”CAR”), inventory and sales price numbers are not good.
Too right, on all accounts.
Much of Monterey County is inhabited by the less than super wealthy. The economy depends on Tourism and Agriculture which aren’t exactly known for their high wages in general.
I visited there a couple of weeks ago and I can believe that RE has fallen off a cliff. I took some time to drive around and admire the bubble. Lots of For Sale signs scattered around. I was more than a little surprised to see how many places in Carmel were for sale. I couldn’t look down a street without seeing at least one place for sale. Eleven sales closed on existing homes with 30 new listings in July in a place small enough that mail has to be picked up at the post office.
How sharply this has turned.
Thx, if those sales are for July I wonder what they are going to be looking like in November. That place is dead.
That’s Carmel. Monterey is tony, but not quite that much so. From what I recall, normal people do live there. Neat place, though I certainly wouldn’t pay a king’s ransom to do so.
Yeah, downtown Monterey there is an all-you-can-eat Chinese buffet for like $6.95 I think. Definately less than eight bucks, and the food is pretty reasonable. There are plenty of other places in that price range. Monterey is not oozing with megabucks. Even Carmel doesn’t hit me over the head with Lifestyles of the Rich and Famous.
I hear things are being done on the QT. I did notice this past weekend one house in particular. It had been sitting vacant with weeds growning in the yard while boasting a for sale sign for about three months. This past weekend when I drove by I noticed that it was wearing a new coat of paint, the yard had been greened and mowed, and now through the window you could see that it was fully furnished, but the for sale sign was still the same. Me thinks that the house has been staged.
Roadrunners and horny toads WON’T be the only things running for shelter from the Heat in the summers of 2007-08. Don’t count on the the over-priced Shack in the Sand for cooling either !
“Looks like sellers won’t going down unless somebody puts a gun to their head or something.”
They’ll get tired of watching their liquidity slide in tandem with their equity. Compulsive gambler’s call a similar scenario “chasing losses.” They know its over, they just don’t want to believe it. People will divorce, move, lose (RE related) jobs, transfer, etc. Then there’s the irrational speculators that just knew they were going to make a killing–who are all waking up from their delusional stupor. Well, they’re going to tap out (if they have not already) with nowhere to turn. They will have to sell by lowering their prices.
No gun needed.
DOC
Point being, even in the face of humongous inventories sellers are holding out to the very end and won’t give up voluntarily. With a greater than one year inventory real estate agents should be telling them to cut their prices or no listing.
It’s NOT a tough market UNTIL I see the bearers of “Homeslaves will Lower House Price - For FOOD !” bumping into each other on the sidewalks.
After dot com bust and 9/11 Bush wanted an ownership society. And thats exactly what we have here, only trouble is it’s a bubble.
Wait till after the election before the SHYT hits the fan and sprays us all. This is a poltical/economical problem of massive propotions. And guess what it will be left to the next prez (Rep/demo) don’t matter.
Who believes we found 50 % of oil reserves in the Gulf of Mexico, 2 months before an election?
We don’t have an ownership society…we have an OWErship society. If you have a mortgage…you don’t own your house yet.
SoCalMtgGuy
http://www.housingbubblecasualty.com
A quick google search on Leslie Appleton - according to her forecast for 2006, prices should be up 10% this year and there is no bubble..
http://www.laedc.org/forecast/2006/2006Forecast_Appleton-Young-presentation.pdf#search=%22Leslie%20Appleton-Young%22
Where the F are the journalists to call her out and spread at least a little bit of shame?
California’s House Madam
Hot real estate market gets chilly in Bakersfield
…
“Leslie Appleton-Young, chief economist for the California Association of Realtors [California’s House Madam], said sales are down 30% statewide from what they were a year ago. She said the market is correcting but it’s not recession-fueled. The interest rate environment remains favorable.”
The fuel that you speak of is coming, my dear Madam. Just wait for the winter. As to the interest rates, Madam, the home prices have very little to do with the interests rates and a hell of a lot to do with the supply-demand. The supply, in relation to the current demand, is 3-5 times, depending upon the area, what it was when prices were rising rapidly. In a depression, the rates will be 0-2% and home prices in California will be down 70-90% from their peak. Can’t happen? Have you checked your historical records, Madam? Why bother, just pontificate? I guess, we will see lots of wrinkles on your face in a couple of years. In the mean time why don’t you get your beauty sleep.
If housing is chilly in Bakersfield during the fall, it would be in a deep-freeze during the winter.
what has bad boy Gary (in the bag) said?
“It’s in the bag,” lit on fire, and placed on the homedebtor’s doorstep.
The most shocking thing about this story is that someone thought they would get $950K for a home in Bakersfield. In Bakersfield???? Have you ever been to Bakersfield? It’s not somewhere you would want to pay almost a million dollars to live, and seemingly a lot of people are buying homes there and commuting to L.A. What a brutal existence that must be.