Maybe California Has ‘Gotten Ahead Of Itself’
The Valley Voice reports from California. “In Visalia, inventory has reached over 1900 single family homes on the MLS, up from 1801 July 1. There were just 437 homes for sale in the Visalia/Tulare MLS in July 2005. ‘It’s getting worse,’ says long time realtor Sherry Tietjens, with sellers having to lower their expectations significantly from just the first part of this year.”
“‘A home that might have sold for $315,000 last year in on the market for $250,000 today with no offers,’ says realtor Brad Maaske. ‘We’ve got nine and a half months of inventory’ in existing homes in Visalia, he says. Sales here were off about 30% in July compared to last year, something that is happening all over California.”
“With home prices declining in some places foreclosure activity was the highest in 14 years. Statewide foreclosures were up 67% from the same time in 2005. Tulare County was up 46% with 250 notices of default compared to 177 during the second quarter of 2005. Fresno County was up 55% and Kern 69%.”
The LA Times. “Suburban home builder Standard Pacific Corp. has opted out of an agreement to buy a major Los Angeles condominium project, another sign that downtown’s once-sizzling condo market might be losing steam. The condo development was behind schedule and was having trouble attracting buyers.”
“Instead of being sold as condos, the 272 units will be leased as apartments beginning today by the project’s owner.”
“Sales have slowed considerably while the supply of units continues to grow, creating what some analysts say is a condo glut. From January to June, sales of existing downtown condo and loft units plunged 25% compared with the year before. But developers have added 6,900 condo units and lofts in the last five years, with an additional 5,600 slated to be built in the next two years.”
“‘Maybe downtown has gotten a little ahead of itself,’ said Jack Kyser, chief economist for the Los Angeles County Economic Development Corp. ‘Downtown is a young market, and we don’t have that much history as to how it will perform in a true cycle.’”
The Roseville Press Tribune. “The prospect of people losing their homes has increased in Placer County as mortgage default notices have more than doubled. The amount of default notices in the county for the second quarter has increased 126.2 percent compared to numbers from the same time last year.”
“Placer County had the second largest percentage increase in the state behind Sutter, which had a jump of 229.4 percent.”
“‘What I’m seeing from clients I had a year ago, and especially the people that bought homes with 100 percent financing, they’re now upside down,’ said Tom Urbani, branch manager for Jim Leonard’s Mortgage Connection in Auburn. ‘Those people who did 100 percent financing are seeing the home values drop anywhere from $10,000 to $30,000.’”
“With home values dropping, those homeowners that have ‘aggressive’ financing are not able to refinance because the value of their home is not high enough to make it profitable.”
“‘For some clients we’ve suggested that they sell their homes,’ said Mike Ferguson, owner of Windsor Financial Services in Granite Bay. ‘They’re at their maximum debt ratio and the value is not going up so, unless they sell it, their credit is going to erode and they’re going to be heading into a foreclosure situation down the road.’”
‘ Los Angeles-based KB Home, one of the largest U.S. homebuilders, on Wednesday cut its full-year profit forecast for the second time in three months, saying a more difficult housing market is causing orders to decline.’
‘The company said preliminary net orders declined 43 percent in the quarter to 5,989 units, and cancellation rates are increasing.’
‘Orange County home prices increased at their slowest rate in nearly three years, a government report said. Prices slid $7,000 from June, the first time since January that county homes sold for less than the prior month.’
‘It was quite a 10-year party, from 1996 to August of 2005,” Dick Lobin, a Realtor in Huntington Beach said. ‘It’s not a crash, just kind of the doldrums.’
not a crash, just a ‘bummer’.
yeah, a bummer when sales are off 50%. what a joke.
not a crash, yet.
I remeber in Feb 2006 BW - CEO Karatz said it would take 6 months to shake out then things would be GREAT. WHAT A FUCKING LIAR!
hey,
he needed some time to dump his stock, you know.
I need to review the SEC filings - I would bet money he did. This country keeps letting these crooks get away with this crap.
Yes, I remember reading somewhere that they liars sold around $100 millions worth of stocks. These suckers will be damned to the lowest rung of hell.
In case you haven’t already recognized, the Crooks run this country. One in hundred is caught and fed to public as a “proof” that the “system” workd.
The system of the Crooks, for the Crooks and by the Crooks.
Jas Jain
“The system of the Crooks, for the Crooks and by the Crooks.”
A “Kleptocracy”.
“Kleptocracy”……….sweet…
Every American still has their God given right to sell short. If you all aren’t making money on the builders roller coaster down you have no one to blame but yourselves.
I have made money (and lost some). My point is - on the heels of Enron, Worldcom, .com’s, etc.. this country (dems and reps) have let another set of corporate crooks lie, cheat and steal their way to another great transfer of wealth to their own pockets. Look to the bottom of this post - Arwen posted on a Senate Hearing on the bubble. Maybe they will invite Ben (Jones not Bernake)!
Lots of folks dumped his stock today — down by 7.25% including after-hours action, and yet, strangely, still above the 52-week low. Curiouser and curiouser…
I appreciate your anger. Thank you. It’s good to see somebody that says what needs to be said.
Dude…language. Please use F***ing if you must drop the F-bomb.
unless, of course, on the rare occasion the anger justifies a full and accurate spelling. Crispy was justifiably fried.
LOL! Thanks!
I get fired up all the time when I read about the systemic corruption and deceipt. Still, restraint is an admirable human quality in a blog read where some might justifiably take offense at the use of profanity.
As someone with young kids, I guess I’ve become aware of how casually so many people use obscene language when it isn’t justified [if it ever is] or appropriate. I hate it when people swear around my kids — it’s a sure hallmark of poor breeding and zero class. Yes, I know we’re all adults on here, but for the sake of the blog as a whole we can still practice restraint.
I get fired up all the time when I read about the systemic corruption and deceipt. Still, restraint is an admirable human quality in a blog read where some might justifiably take offense at the use of profanity.
As someone with young kids, I guess I’ve become aware of how casually so many people use obscene language when it isn’t justified [if it ever is] or appropriate. I hate it when people swear around my kids — it’s a sure hallmark of poor breeding and zero class. Yes, I know we’re all adults on here, but for the sake of the blog as a whole we can still practice restraint.
Point taken.
However, with a name like Shadenfreude - are you not gaining pleasure from the misfortune of others? Is this a quailty of a high class person?
Amazing news out of California: Silicon Valley Homes Lose $50,000 In Two Months!!
Article at http://www.realestatedecline.com
It’s public record. He’s been cashing in:
http://finance.yahoo.com/q/it?s=KBH
Obviously this man has not read The Rhyme of the Ancient Mariner. The doldrums are definitely not a nice place to be in the good sailing ship HousingBubble.
Houses, houses, everywhere,
Home sales begin to shrink;
Houses, houses, everywhere,
The buyers will not blink.
The excess rose, the sales dropt down,
‘Twas sad as sad could be;
MSM prints all bad news
Yet sellers refuse to see!
Day after day, day after day,
We get the tales of the RE bubble
Sale signs keep going up
I think we are in trouble
Very nice indeed!
Brilliant!
doldrums
(dl´drmz) (KEY) or equatorial belt of calms, area around the earth centered slightly north of the equator between the two belts of trade winds. The large amount of solar radiation that arrives at the earth in this area causes intense heating of the land and ocean. This heating results in the rising of warm, moist air; low air pressure; cloudiness; high humidity; light, variable winds; and various forms of severe weather, such as thunderstorms and squalls. Hurricanes originate in this region. The doldrums are also noted for calms, periods when the winds disappear, trapping sailing vessels for days or weeks.
The Columbia Encyclopedia, Sixth Edition. Copyright © 2001-05 Columbia University Press.
and so the metaphor unviels itself.
It seems odd how KBH and other big builders can have so many 3%+ one-day selloffs, and still seem to keep going sideways. My guess: Somebody with lots of market clout who understands how to profit on the way up and on the way down is milking these shares for all they are worth in both directions. Eventually the HB share prices will revert to fundamental value, which will have to be a lot lower than they are currently to reflect the steady drumbeat of downward revisions that have continued almost all year without ever really getting priced in…
http://finance.yahoo.com/q/bc?s=KBH&t=3m&l=on&z=m&q=l&c=
SPF - was down big today also.
What is interesting is you know the Hedge Funds who loaded up on all these sub-prime MSBs are shorting the HBs stock as a hedge.
Yeah — I am expecting the hedges to all pull the plug at some point, and make a big killing on shorts / puts, as the homebuilders really have no fundamental support at this stage…
Oh really, Mr. Lobin? Why is it then that one Huntington Beach zip code had double digit price declines yoy last month in condo/townhouses? You call those doldrums? I call it “just getting started.”
This guy needs to be bitch slapped.
‘It was quite a 10-year party, from 1996 to August of 2005,” Dick Lobin, a Realtor in Huntington Beach said.
I was always better at science than math, but isn’t 1996 to 2005 a nine-year party?
You add a year for appreciation and inflation. Similarly, by 2014, another 10 years will have gone by from today’s date..
LAY says it’s a BALANCED market. What is this doldrums crap? eh? eh?
A soft landing is when your neighbor loses his/her home, a crash is when you lose you own.
Exactly!!
I don’t know if this has been posted. looks like even the non-bubbly midwest is having problems.
Home Prices Fall in Nearly One-Fourth of Metropolitan Regions
By VIKAS BAJAJ
Published: September 6, 2006
Prices of traditional single-family dwellings fell in 87 of the nation’s 379 major metropolitan areas from the first quarter to the second, the government reported yesterday, as the overall value of homes leveled off across the country.
On a quarterly basis, prices were lower in Boston, Sacramento, Pittsburgh and much of the Midwest, where the loss of manufacturing jobs has hit the housing market hard.
Nationally, prices increased 1.2 percent in the quarter, the weakest gain in almost seven years, leaving them 10 percent higher than a year earlier, according to an index of home purchase and refinances produced by the Office of Federal Housing Enterprise Oversight from mortgage data supplied by Fannie Mae and Freddie Mac.
By comparison, prices rose 2.2 percent in the first quarter and 3.7 percent in the second quarter of 2005.
http://www.nytimes.com/2006/09/06/realestate/06home.html?ex=1315195200&en=88aafb0004ed5caa&ei=5090&partner=rssuserland&emc=rss
it’s ‘different’ in the midwest.
- It is different! I am from Indiana and the work that I continually get from relatives there is things are terrible as far as any employment goes…except for Wallymart and Dairy Queen
Wow, thanks. I’m in the Ozarks in SW MO. I spoke with a realtor on Sunday. She said nothing above $120K is selling…only less expensive houses are moving. There are spec houses everywhere even a bunch in our tiny 4,000 person town. Lots and lots of them in Republic, MO. Mostly priced from $120K up. This may seem cheap but there are NO jobs here…the best paying job is at the cheese factor for $16/hour. The typical worker gets minimum wage and no benefits. Some people live here and commute to Springfield or Joplin but the jobs aren’t plentiful there either. (I do consulting where I can live anywhere…I even kept my Silicon Valley phone number so people don’t even know I am in flyover country.) A bunch of coasters moved here over the last 2 years but I guess this has ended.
I’m down the road a bit from you in the Bull Shoals area but my brother lives in Nixa, MO. For some reason (I don’t see the income to support it) they are building McMansions (4,000+ sqft) 400K to 600K+ in that area and rumor has it that a subdivision of a couple hundred has about 40 for sale still with nothing moving. The Branson area is now showing signs of distress with developers trying to sell their land/development plans. I will say that it still seems like the construction folks are still busy in my area but it could be left over inertia from the equity bandits flocking into the area the past few years buying land to build on(myself being one of those).
Hi auger-inn — are you from CA too? Some friends were in Branson over the weekend and they said the shops were packed. I haven’t been to Nixa yet but just by looking at the map it clearly defines “middle of nowhere”. McMansions for $400K-$600K???? Who could possibly be able to buy them? The mini-McMansions here are only $250K but still no one to buy them. I live in one of the small towns near I-44 between Joplin and Springfield. I might have been the last person to leave CA and move here — I’ve met a lot of coasters but no one newer than me (I came here in Nov ‘05).
I’m not from CA but I lived in the bay area for a few years in the 80’s and lake tahoe in the 90’s. Been traveling with the family for the past couple of years but ended up in this area because of my brother and the climate/lake (although I’m not impressed with 60 days of 90+ heat
)
My wife goes to Branson quite often and she says it is pretty busy as well. The anecdotal evidence coming our way is that sales are down though. My brother says the same up in Nixa but a little more pronounced I believe. Anyway, give a shout if you have any further observations as I’m tracking our area best I can.
OK let’s track this area together! Have you seen all the new homes in Republic? (MO, near Springfield)
Is that on cty rd 14? I went through an area I believe is what you are referring too. I saw a relatively rural area that sprouted a couple 5 acre mini-developments with no particular rhyme or reason to them, in the middle of no-where. Lots of building near hwy 60 outside of springfield towards the west. I think they are going to go down hard here shortly. I can already sense the tapering off.
Not sure about city rd 14 but Republic is the “town” on 60 that you are referring too. It’s anchored by a Walmart and a Lowe’s
If you just get off of 60 and wander around you will see many new houses. Take 174 off 60 toward Mt. Vernon. The real unanswered question is — why does every new house have to have that fake brick and stone along with cheap vinyl siding, and sometimes, just for good measure, a bit of stucco? Oh, of course TWO kinds of fake stone. It’s the dollhouse mini-fake-chateau look.
Maybe the Osmonds will move their extended family into those $400K+ McMansions in the Branson area…
“the best paying job is at the cheese factor for $16/hour”
Well then, I would say your neck of the woods has a “cheese factor” of 10+.
of course, it might well be more than the 87 areas mentioned. As I recall, the OFHEA numbers are only on Freddie/Fannie stuff. Because of the 417k limit, those are meaningless in the high price markets (SD, LA, SF, etc).
It’s very spotty in the Chicago area. Homes that are in the near suburbs, and near commuter train lines are going to hold their value. We’ve seen around 9%/yr appreciation, which is relatively “un-bubbly” compared to, say, San Diego, but still frothy. The areas that are going to get punished worst are in the boonies where tract subdivisions have been building up like crazy over the past five-to-ten years.
Those people who did 100 percent financing are seeing the home values drop anywhere from $10,000 to $30,000.
This is the stupidest quote I’ve seen in days. So then people who made sizable down payments haven’t seen home values drop? Egad.
- ‘We’ve got nine and a half months of inventory’ in existing homes in Visalia, he says. — That’s a LIE, what about FSBO
Sales here were off about 30% in July compared to last year, something that is happening all over California.”
That’s a good point. Whenever I post months of inventory I don’t include FSBO. What’s a good figure for guestimate, or is it traditionally not included?
I don’t believe it is important to include FSBO, unless the percentage is changing, because what is really important is to see the changes by figuring your numbers the same way each time.
And that it’s a rare loan that follows the old traditional lines…20%/30fixed. That leaves the 10%er’s flatlined, and edging over.
Well, many of those 100% financing deals were really 110% deals with a free kickbacks for the phoney appraisal thrown in.
Those loans really irk me. So you mean to tell me that if I want to rent I have to come up with first and last month’s rent and a security deposit (can be $5k or more in total), but if I want to buy this 600k house, you will give me $20k. These borrowers have absolutely no skin in this game.
At least you have the satisfaction of knowing that longtime owners who lived off MEWs will finally get the boot. They deserve it, IMO, because they were arrogant and stupid.
The Valley Voice link (first one) is FILLED with development news. My guess is that 50% of it won’t happen.
“Home prices in Orange County gained 1.70 percent in the second quarter, down from 2.95 percent in the first quarter. The current rate translates into an annual appreciation of 6.8 percent.”
Rest easy OC bubble believers, Gary Watts has invented some new math to make the numbers look even better than these manipulated ones.
Isn’t one of the reasons that median prices aren’t showing the level of drop we’re seeing in more select markets is that with all the high-end spec homes built in the last couple of years, this could possibly increase the ‘median price’ of a city even if the majority of homes are slightly dropping in price??
Damn straight, sparky. Those that can buy are only one’s buying. Which leaves that below-median boys and girls outaluck.
Yes, of the 12 houses sold last month to the 12 buyers who still qualify, the median price was higher than the median price of the 88 sold last year to Joe Blow during the same month. So the “median price” rose. Go figure!
Advice to sell the home? And what dumbshit GF is going to buy these homes at the price the foreclosing FB is going to need? And many new ones each day? They’ll just walk.
Hey, Fred. I’m behind on my house payments? Got a foreclosure notice.
BUMMER, dude.
Visalia had it’s 15 minutes of fame last year. Small window of opportunity to cash in there.
I want to see the new In the Bag Gary Math.
His year-to-date price appreciation (which according to him is something like 10% in OC) is based on each quarter’s YOY appreciation number, which for Q1 and Q2 obviously includes a large portion of 2005’s appreciation. So he is taking most of the appreciation from 2005 and including it in 2006 for his year-to-date appreciation number.
Check out page two of this and see his YTD definition:
http://www.homesforsalehuntingtonbeach.com/Mid-YearOutlookJuly2006.doc
“In June, they admitted that not only were housing prices not headed downward, but they felt that today’s prices are at their lowest point for the next 5 years. Hopefully, this will end the Bubble Talk!”
See, Gary *is* right!
That is basically what Thornberg1 said, not to be confused with Thornberg2. They seem to alternate on the speaking engagements.
“The buyers normally begin entering the market in February and stay strong through June. However, this year is . . . INVERTED! The latter half will be more active.”
Why? Hmmmm, no reason is given. Let’s see how this prediction pans out…
Isn’t Gary fun?
Inverted Year
How about inverted a$$hole, aka hemorrhoid.
Gary is a hemorrhoid (sp?).
OK, ok , just one more Garyism:
“Please do not put a “price reduced” banner on your listings, and if you have one up, please take it down. It “falsely” advertises to the neighborhood that prices in the area are going down. What is more true is that sellers are lowering their expectations and becoming realistic.”
May I suggest a “priced more realistically” banner instead?
Better yet, all the neighbors should form a neighborhood vigilante team to tear down any and all For Sale signs and to beat up any human directionals seen twirling signs in the area. After all, it is their God-given right to protect their hard-won paper home equity gains.
Out here in the Central Coast, they use the phrase ” new updated price” instead of “price reduced” on the magazine listings.
“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!”
Sorry, that was just too precious to pass up.
that whole presentation is full of it.
I been to Visalia there just isnt any economy to sustain these prices…
Needless to say the price is still way out of wack…another 50% for this one below…
http://www.realtor.com/FindHome/HomeListing.asp?snum=3&locallnk=yes&frm=bymap&mnbed=0&mnbath=0&mnprice=0&mxprice=99999999&js=off&pgnum=1&fid=so&stype=&mnsqft=&mls=xmls&areaid=6299&poe=realtor&ct=Visalia&st=CA&sbint=&vtsort=&sorttype=&typ=1&typ=2&x=54&y=5&sid=0737E6AF1E9FC&snumxlid=1064984915&lnksrc=00001
This may look nice but were you gonna get over $400K. Bogles the mind! This needs a 35-45% haircut. Things are pretty screwy in the central coast.
http://www.realtor.com/FindHome/HomeListing.asp?snum=27&mlsttl=&frm=bymap&pgnum=3&mls=xmls&js=on&target=&ct=Visalia&st=CA&sbint=&sbls=&sblo=&stype=&areaid=6299&mnsqft=&fid=so&vtsort=&mnprice=400000&mxprice=99999999&mnbed=0&mnbath=0&typ=1&typ=2&poe=realtor&x=22&y=7&sid=0737E75235A7C&snumxlid=1065655780&lnksrc=00001
In Visalia, those that made big down payments got some more appreciation and didn’t take a 10-30K hit. Oh, wait, nobody there put any money down. All funny money financed. Never mind.
Not to worry ….. only the 100% financed owners are experiencing any loss in value.
To keep the erosion of values slow and orderly, you have to remind those treading water, that the Carpathia will be here next spring ………
“Instead of being sold as condos, the 272 units will be leased as apartments beginning today by the project’s owner.”
So with so many condos that are reverting to apartments and 4.7 million or so homes for sale which may soon revert to rentals if the owners can’t get their asking prices, are rents still predicted to go up?
That 272 is just the tip of the iceberg. There are tons of conversions going on down there. That article was propably the kiss of death for downtown.
Don’t know about SoCal, but rents in NorCal have definitely gone up. Papers speculate rents are up 20% in the last year here in the Bay area, driven by the fact that the RE market is “uncertain”, so nobody is buying and everyone wants to rent and see what happens.
Yep, I figured that would happen although in very overbuilt areas SFH may stay relatively inexpensive compared to apartments.
A 20% increase in Bay Area rent would still leave you at less than 80% of the monthly payment for owning a comparable property, and that is before factoring in the extremely high cost of negative equity gains.
Rents in SoCal have risen in the 18 months or so after being fairly flat for a few years. I thought this would happen, but now reading about all those condos going on as rentals I think that trend might reverse for a time in 2007-08. I’m also seeing a LOT more low end multifamily buildings going on the market now than last year at this time. I think this crash is going to hurt a lot more than just SFR owners.
I been to Visalia there just isnt any economy to sustain these prices…
Needless to say the price is still way out of wack…another 50% off for this one below…
http://www.realtor.com/FindHome/HomeListing.asp?snum=3&locallnk=yes&frm=bymap&mnbed=0&mnbath=0&mnprice=0&mxprice=99999999&js=off&pgnum=1&fid=so&stype=&mnsqft=&mls=xmls&areaid=6299&poe=realtor&ct=Visalia&st=CA&sbint=&vtsort=&sorttype=&typ=1&typ=2&x=54&y=5&sid=0737E6AF1E9FC&snumxlid=1064984915&lnksrc=00001
This may look nice but were you gonna get over $400K. Bogles the mind! This needs a 35-45% haircut. Things are pretty screwy in the central coast.
http://www.realtor.com/FindHome/HomeListing.asp?snum=27&mlsttl=&frm=bymap&pgnum=3&mls=xmls&js=on&target=&ct=Visalia&st=CA&sbint=&sbls=&sblo=&stype=&areaid=6299&mnsqft=&fid=so&vtsort=&mnprice=400000&mxprice=99999999&mnbed=0&mnbath=0&typ=1&typ=2&poe=realtor&x=22&y=7&sid=0737E75235A7C&snumxlid=1065655780&lnksrc=00001
Although I readily see prices falling in many midwestern cities, I also have to believe that the damage will be moderated by affordability factors and cost of rent-to-buy ratios (I believe it’s not an “it’s different here” argument, but rather based on the fundamental of affordability)
For instance, in many coastal markets affordability is horrendous. People simply don’t make enough to pay their mortgage.
however, many midwest markets have reasonable home price to income values. Although they have been affected by the bubbles on the coast, I have a hard time believing the RE in those markets will crash too far, so long as JOBS remain that can pay the mortgage, and the cost of renting vs owning remains relatively balanced.
Clearly, some markets like Detroit are in serious trouble, but that is because they don’t have the jobs to support even the modest prices seen in detroit.
similarly, I know that it is almost unimaginably cheap in outstate New York, but that comes back to jobs again.
But when I honestly think of cities like Omaha and Des Moines and Kansas City even… the house prices there are not THAT much more than they were 10 years ago. And incomes remain relatively high.
I can see my home for example losing 33% off peak value, but I live in one of the bubbliest places in all of the midwest. And I have to think it require more than bubble implosion to get to that 33%… it would require a secondary recession or something.
Thus, although I see a possibility for some downward trend in many midwestern markets, I just don’t see the reason why many people would need to sell, since they can afford their places.
not that “it’s different here”, more that I truly think the fundamentals were not lost here as they were in the coasts.
Most of the downfall in the midwest will be (IMO):
1) Chicago
2) Minneapolis: condo segment and newly gentrified areas. some secondary effect to the SFH market
3) Detroit, due to jobs
4) other midwest cities: condo segment. (like the new condos in Des Moines, Omaha, Kansas City, etc)
*** Disclaimer: I don’t consider places like Ohio to be the Midwest. That’s more the industrial belt to me. Those areas will fall due to job concerns from manufacturing base loss.
I just have a hard time believing that the “major” midwest cities will have RE values in the 100k range. It’s just too low, given their incomes.
HIC-
I basically agree, I don’t see more than a 20-30% correction in the Midwest.
I do think that the high end of Midwestern RE will fall, though. There simply aren’t enough people out there with incomes to justify $800k McMansions in places like Arlington Heights and Naperville, Chicago suburbs. They are nice towns, but even in Chicago the number of $250k earners is very limited, there certainly aren’t enough of them to justify the tens upon tens of thousands of homes valued at those levels.
Sure there are…on an I/O with a 2% teaser….
$800k x 2% / 12 = 1,333 per month..
Just think, there is someone out there that thinking, “wow, I can afford that”…..
Joe:
that’s what I see, too… 20-30% in the most bubbly of areas.
But it will be very unevenly distributed.
I especially agree about the far flung 600K and up stuff way out in the suburbs (we have that too, unbelieveable)
The condos will fall big time
the exurban places will likely do poorly, as it becomes cheaper to live nearer, and gas/time concerns
the newly gentrified areas may fall back to disrepair
I’m thinking my home will go up 20% or so a year the next few years though!
(actually, I honestly project a 15% decline in my personal dwelling. Up to 33% decline if other factors, like recession, hits the economy)
The problem is that a significant number of west/east coasters sold their houses and moved to the mid-west over the last few years. And they bought without bargaining because prices were so cheap (comparatively). So they pushed up the prices in places where even a 10% price increase is a problem for locals, but what’s worse is every farmer and his brother decided to turn some of their land in to little subdivisions and then built spec houses. It’s so ridiculous. I just saw one of these houses on Sunday. The farmer, carved out 5 acres of his land and had a local builder plop a house on it using a building plan that he must have bought for $1K or less. The house has no style, the windows were completely the wrong size, the cabinets are cheap Home Depot specials…and he wants $239K for this. In a place where people typically make minimum wage! But there aren’t any more people coming from CA/MA/AZ/NV to buy this stuff!!! I will say that the builder did a fabulous job on the basement…it is the best part. Same size at the house upstairs, has a bathroom, a walkout section AND a large concrete on all sides, floor, and top, TORNADO shelter. I told the agent I was interested in buying the basement, but not the house
“…a local builder plop a house on it using a building plan that he must have bought for $1K or less. The house has no style, the windows were completely the wrong size, the cabinets are cheap Home Depot specials…and he wants $239K for this.”
These POS sorts of homes have been thrown up (pun intended) in every bubble market. They are hideous and sickening eyesores which need to be torn down. They exemplify the housing bubble.
I had posted the following link on Monday regarding affordability DuPage County (part of suburban Chicago). Essentially, the median income no longer affords the median house (big surprise).
http://www.chicagotribune.com/news/local/chicago/chi-0609040075sep04,1,29829.story
“With home values dropping, those homeowners that have ‘aggressive’ financing are not able to refinance because the value of their home is not high enough to make it profitable.”
Yep, it’s end of the road. Can’t sell, can’t refi, can’t make payment…..game-set-match!
But somehow there’s always “hope”. The time to sell is now, but they’ll ride it foreclosure.
My question is, if you audited all the loans these mortgage guys quoted in the story did in the past 24 months, how many would turn out to be the very same “aggressive” financing they’re now saying “Tsk, tsk” about? 50%? 75%? All of them? Inquiring minds want to know.
“Yep, it’s end of the road. Can’t sell, can’t refi, can’t make payment…..game-set-match!”
nnvmtgbrkr…have enjoyed your straight-forward and informative posts. It has been refreshing getting fresh un-filtered info. from someone in the finance field.
DOC
“‘Maybe downtown has gotten a little ahead of itself,’ said Jack Kyser, chief economist for the Los Angeles County Economic Development Corp.”
Maybe $600,000 is too much to pay for a small apartment right between the train yards and the county jail, down by the river, walking distance to Skid Row. Ya think?
I think $1400 is too much to pay in rent for one of the studios in that complex (the lowest rents they will be charging for any of the units, according to the article). As I recall some of the studio condos were somewhere under 700 sq ft and they were asking in the upper $300s.
If you are going to live in downtown, I just can’t see that area being anywhere near the top of the list of choices, unless maybe you work at Union Station or Olvera Street so you can be home in 30 seconds.
That’s if you actually get to finish your walk without drunks and druggies trying to get you to part with your wallet. Also, there’s nothing like the smell of dry urine wafting out of the alleys to make you appreciate that shoebox you paid $600,000 to occupy. I’m a pretty liberal person but I really hope this stupid greed runup ends in a depression that will wipe out hundreds of thousands financially.
sounds like Kenmore Sq/Fenway park area at game time
On the bright side, if we’re really lucky, this will be a flourishing new bohemian district in 10 years with cheap rents for real artists — they’ll tolerate the underclass to some degree…bring in botique shops and restaurants slowly over the years. Then, the slighly seedy night clubs will come in to support the thriving artist district. Soon it will be edgy, then cool, and the yuppies will take it back and drive rents and prices back up, and in 10 more years — YOU’LL BREAK EVEN.
“……soon it will be edgy, then cool, and the yuppies will take it back…..”
They own it now, and are banking (literally) on that future desire …… (great RE history/summary)
Don’t forget the smog so thick you can taste it.
For those who don’t live in Los Angeles, this is no joke. Commute to downtown some morning, get out of your car, and you can _taste_ the air. Most of downtown is at the intersection of three major freeways: the 110, the 10, and the 5. Throw in the 101 on the north side, and the brown cloud over downtown makes going outside the equivalent of smoking a pack a day.
Having moved to the boondocks a year ago, I marvel now at how bad the air smells when I drive through Charlotte or Richmond. Of course the air really stinks in the D.C. suburbs. Yet I never noticed it when I lived there.
pack a day, but think of all the money you’re saving (30packs x what $5?) and no messy hands.
But seriously, the air is getting better. Used to be equivalent to two packs a day–HACK HACK.
It doesn’t help that the 10K-foot Saint Gabriel Mountains create a high wall to the east which sends LA smog right down into the lungs of those SUV owners whose cars spewed it. San Diego and the Bay Area are geographically advantaged by relatively low stretches of the coastal range; the trade winds have no trouble sending their rather considerable amount of automotive exhaust straight to the heart of the Central Valley, where the Sierra Nevada keeps it trapped.
The scientist who coined the term smog, called the LA Basin a 3 sided coffin, due to the geography.
Nowhere for air pollution to go to, actually kind of fitting.
No city’s air has ever been worse than Pittsburgh’s was from the 1920’s - 1940’s. The steel mills would throw up so much soot that the sun was literally blocked out. The middle of the day looked like dusk. Anybody who worked in town had to wash their clothes at the end of every day. It was BAD.
http://www.latimes.com/business/la-fi-downtown6sep06,The LA Times. “Suburban home builder Standard Pacific Corp. has opted out of an agreement to buy a major Los Angeles condominium project, another sign that downtown’s once-sizzling condo market might be losing steam. The condo development was behind schedule and was having trouble attracting buyers.”1,5328069.story?coll=la-mininav-business”
Have frequented the dwtn LA area and have noted all the new condo projects either going up or just completed. A lot of projects going up right along Wilshire west of 110 fwy. Verosouth.com is a 297 unit condo/lofts at wilshire/lucas almost ready.
Have seen several projects emerging, grand and 11th. the grand lofts 333 w 11th is available. A new project emerging corner grand and 11th,50% completed and built with union pension funds. Seedy, somewhat trashed out area even in daytime.
There are emerging Bohemian Lofts structures favored by artists emerging in an area east of alameda just south of Little Tokyo, next to the old LA industrial areas.
The area with the highest density of condos/apts is just west of the 110 fwy between 8th st/wilhire and 1st st, what is called bunker hill. There is a hugh amt of teardowns and redevelopment/new structures going up in that area, condos,commercials, offices, schools.ect. Easy to raze and eminent domain that area as it is/was a former rundown third-world ghetto, heavily immigrant.
need to modify a few comments. It’s Verodowntown.com and actually it is still only a timber skelton barely 1/4th completed. Worse, the project seems to have come to a dead construction halt. No activity at that site at least for past 2 months. The two half-completed Condo structures at wilshire and bixel have also come to a construction halt:it may be a temporary break in construction activity for all i know, but i have passed thru that area 6-7 times past month and noticed same thing.
Just a thought. has the dwtn Condo Market cooled down so much that Builders are suspending furthur work on those sites? Or is it a long summer recess for the contractors/developers’s.
That stretch of Wilshire problematic, as it extends into a gritty slummy area(pico-union). Maybe the developers are cutting their losse’s as the Dwtn RE market slackens.
It’s really sad in some ways that the downtown LA projects won’t work out.
I actually LIKE downtown LA (during the day). It’s actually a pretty cool and vibrant place. (ever taken the AAA walking tour through LA?)
After 6pm… not so much.
I was thinking that the bubble would provide enough downtown condo tower projects to hit that “critical mass” needed to make it viable… but I guess not. (it hit critical mass alright, but in a different way)
In order for Downtown L.A. to become viable 2 things need to happen.
1. Eliminate the existence of the ACLU
2. Eliminate Skid Row
In that order
Down with countermajoritarian institutions and poors!!
You forgot “illegals.”
Oh yea, Thanks for reminding me. Your heart can bleed all it wants, but untill you get rid of the sidewalk cardboard mcmansions, the shopping cart bentley’s, the homeless shelters and their inhabitants. Getting 600k for a downtown condo is a pipe dream. L.A.’s liberal PC policies have killed downtown. Especially after the latest win by the A.C.L.U. They killed any chance of a viable downtown Los Angeles in the near future. Bubble or no bubble. It’s a damn shame.
I agree that $600k is a pipe dream. I avoid LA like the plague now. It may be because of some of the poverty/homelessness, or consequences of the actions of the ACLU. I am open to that possibility.
What should we do with people who are homeless for reasons other than choice? Skid row is not a good solution, a better solution would be institutions that provide the psychiatric and/or subtance abuse help to the indigents who end up there. Who will pay for it? Places like Skid Row exist precisely because of the majority’s indifference to their plight.
I just don’t understand how we can justify not providing proper services to indigents and then being angry at them for ending up on the street.
“I just don’t understand how we can justify not providing proper services to indigents and then being angry at them for ending up on the street.”
Agreed, but here’s something to ponder. Most of these folks have psychiatric disabilities and/or substance addiction issues and could use all the help they can get–no surprise there, what’s weird though, is that a study was done where it was learned that most of these folks are more fearful of “getting their s**t together” with the help of programs than continuing living on the streets. Seems to defy logic, doesn’t it? but it’s true nonetheless.
Now, I cannot say if the findings of that particular “study” should attributed to all indigents, but it is interesting, no?
DOC
From the LA Catholic Worker:
“On March 31st, Mayor Antonio Villaraigosa removed all portable toilets from skid row, toilets used by thousands of homeless for the past 11 years. A homeless person generates seven pounds of fecal material and over a gallon of urine each day. Now, more than 35,000 pounds of untreated human waste daily cover downtown sidewalks,exposing all to the unacceptable risk of contracting deadly diseases as they travel around the city.”
“Everyone working or traveling downtown is at risk after tracking fecal material from soiled sidewalks into offices, gyms and restaurants. Contamination with even small amounts of feces can result in large outbreaks of food-borne hepatitis, salmonella or shigellosis as well as E-coli, giardia, amebibiasis, or campylobacter. Health risks are not limited to downtown. They extend to areas receiving surface runoff from skid row after rain or daily sidewalk and street cleaning. Human exposure to fecal material includes bay areas and adjacent beaches.”
The mayor removed the portable toilets because of stuff like this:
“A few hours after a homeless guy named Virgil died of an overdose in the portable toilet, the blue plastic outhouse at 6th and San Julian streets was back in business. Not as a toilet, but as a house of prostitution.”
“Five portable toilets stand at that corner in the darkened heart of skid row. T.J. says she sometimes has a customer in each of them — a john in every john — and scurries from one to the next, taking care of business.”
“”I run this corner,” says the stocky 52-year-old woman, whose initials stand for Thick and Juicy. “I’m the madam, and those are the cathouses.”"
LA’s Skid Row is an intractable problem, because the courts and the ACLU insist that people have a right to camp out, shoot up, “get down”, and relieve themselves on public streets.
For full coverage of this mess, see Steve Lopez’s series from the LA Times.
On that page, you can also find a link to a series of stories about “Nathanial”, a treatment-resistant schizophrenic musician.
All that, right outside your $600,000 conapt.
“but untill you get rid of the sidewalk cardboard mcmansions, the shopping cart bentley’s, the homeless shelters and their inhabitants. Getting 600k for a downtown condo is a pipe dream.”
May I direct you to Santa Monica, with some of the kindest homeless laws on the books. For all the homeless in Santa Monica, crime is pretty low.
MB Renter-
See sm_landlords post above, when was the last time SaMo had a hooker in the outhouse problem, or open-air illegal drug farmers market which spread out over a three block area, or better yet I have never seen a cardboard hotel in the area. Here’s a better question how long do you think law enforcement or the residents in the area would tolerate it. I would imagine not very long. Didn’t take them long to rid themselves of that encampment on Ocean Blvd by the pier entrance now did it. Compared to L.A. SaMo doesn’t have a homeless problem.
‘L.A.’s liberal PC policies have killed downtown. ‘
Hmmmm… liberal PC policies kill property values? Maybe that’s why San Francisco real estate is so cheap!
“In order for Downtown L.A. to become viable 2 things need to happen.
1. Eliminate the existence of the ACLU”
WTF? This sounds like a statement from the “Stop the ACLU” kook crowd, who never let facts get in the way of bashing the ACLU.
So what things need to be done downtown that the ACLU stands in the way of? Establishment of Christianity as an official religion, warrantless wiretapping, arrest and detention of individuals who haven’t committed any crime, or something else?
Start with getting rid of the bums on the street. The ACLU successfully litigated a challenge to LA’s no-public-camping ordinance.
Now, you may well be enough of a bleeding heart that you think bums SHOULD be allowed to sleep/panhandle/crap on the sidewalk, but (leaving aside the question of whether you’d change your mind if it was your doorstep the bums were pissing on) mrincomestream’s point was that downtown LA simply isn’t going to become liveable unless the chronic homelessness problem is dealt with. That means (1) making sure there are enough shelters for those who truly have no other options, and (2) finding some way to deal with the people who refuse either to use those shelters — as many do. (Seems the shelters don’t allow you to get wasted on the premises.)
And (2) isn’t going to happen until the ACLU takes a breather. Simple, objective, unpartisan fact.
First, let’s call the homeless what 99% of them are: bums, druggies & winos. They gravitate to places like LA because it’s warm year-round — you don’t see too many homeless in places like Bismark, ND or Duluth, MN.
Clearly this the correct analysis. Bravo.
I imagine all you humanitarians consider yourselves “good christians?”
Absolutely. Being a Christian doesn’t mean you have to be a fool. (Ignore that thing Paul said about being “a fool for Christ,” which had to do with something entirely different.)
“Humanitarians” simply refuse to make any distinction between the truly helpless homeless, and bums. To pretend that all the homeless could pull themselves up by their bootstraps is absurd. To pretend that none of them couldn’t solve their problems with a little effort and a little encouragement (which society does provide by the boatload, believe it or not), is equally absurd.
The problem with you guys is you’ve taken egalitarianism and non-judgmentalism too far (except when it comes to judging us for not being “good christians”). You in the reality-based community refuse to accept reality when it’s staring you in the face — and the reality is that plenty of “homeless” bums are more than capable of being responsible, but can’t be bothered.
Any rational solution to homelessness is going to have to recognize that different kinds of homeless people are going to have to be treated differently. They are simply not a monolithic mass of sad-faced children starving on heating grates because the industrialists’ dark satanic mills threw all the weavers out of work. There is plenty of help for the unlucky to get back on their feet, but no number of shelter beds is going to help a lazy drunken bum.
You guys threw the same conniption over welfare reform, saying it was worse than anything Hitler ever did and would literally kill the poor with privation. Didn’t happen. People who were able to get jobs, got them (granted, it’s no picnic working at unskilled labor, but you weren’t getting rich on welfare, either), allowing us to focus on serving the truly chronically dependent. The key there, also, was recognizing that not all disadvantaged people are the same.
Yes, I believe that is a VERY GOOD idea.
The ACLU is the enemy of Free Americans.
Please name for me a single GOOD thing the ACLU does??
I know they like to SUE every Christian group and support every Communist cause they can muster, along with illegal aliens, perverts, thugs and drug-dealers.
Is there any good case they have brought to help an average person win some good cause? I dont’ know of any.
Wish they’d sue the “Christians” into abject poverty so they wouldn’t have the funds to subvert the constitution or play around in politics.
“Wish they’d sue the “Christians” into abject poverty so they wouldn’t have the funds to subvert the constitution or play around in politics. ”
This is one of the dumbest posts I’ve seen on this blog. Congrats.
Good lord…educate yourself before saying something like that.
Heard of Brown v. Board of Education or Roe v. Wade? How about Smith v. Allwright? Like the idea of free speech being applicable to all the states? Look at Gitlow v. New York.
You really believe the ACLU is the “enemy of Free Americans?” You have an interesting interpretation of “Free” it seems. The purpose of the ACLU is to defend the Bill of Rights. You may not like it that communists are allowed free speech (Stromberg v. California and others) but I would say that if you do, you are in fact the enemy of Free Americans.
The ACLU regularly defends Christian groups on free exercise clause cases; they only oppose them on establishment clause cases.
“Is there any good case they have brought to help an average person win some good cause? I dont’ know of any.”
Many. Here’s recent one I’m sure you’ll agree with.
I don’t know what the latest story is involving the ACLU, but getting rid of the only organization that supports the constitution does not seem a wise idea. The constitution is a road map to wealth and prosperity, if we would only follow it, especially by adopting the honest money system outlined in Constitution. Which reminds me, why does the “conservatism” of “conservatives” never include conservation of our constitutional money system.
I say support the ACLU, unless you can prove they aren’t arguing in favor of a constitutional principal or that the constitution was “wrong.”
I’d reluctantly agree that the ACLU serves a vital function as a check on otherwise unchecked government depredations and encroachments on civil liberties and individual rights. All of the other guardians, especially the press, seem to be asleep at the switch.
The ACLU is not the only org that defends the constitution. Every one does that when it benefits their interests. There are many good conservative legal groups which specialize in suing communist governments when they attempt to violate the law. I contribute to them. These groups are probably closer to what most Americans want than the ACLU is.
Somehow, the ACLU has created the perception that if they don’t exist to cause havoc, no one else will take care of the good stuff.
Why doesn’t the ACLU support my constitutional right to have the immigration laws, that are currently on the books, enforced?
I have to agree with Mike/a.k.a.Sage. It seems common sense goes out the window in a lot of these cases. Since when do ILLIGAL aliens have rights in this country? Yet I see them protesting on our local news. Where is the INS in this situation? They are cowering for fear the ACLU will get on the bandwagon.
“Illegal aliens” are individuals who have violated the law by crossing into the country illegally, but they still have rights, whether you like it or not.
True. Some of the Constitution’s protections cover all persons in the country — not just citizens — and some of them do not.
The ACLU isn’t just “defending the Constitution,” it’s pressing the limits of the Constitution, often far beyond a reasonable interpretation of the language, to advance its political agenda.
The ACLU “defends the Constitution,” in that it presses its interpretation of the Constitution. The Pacific Legal Foundation and other conservative legal foundations likewise “defend the Constitution” by advancing its interpretation. Sometimes the advocacy groups find themselves on the same side; I believe both the ACLU and the conservative foundations filed amicus briefs opposing the Connecticut government’s position in the case that resulted in the ghastly Kelo eminent domain decision.
But mostly, I find that the ACLU’s interpretation of the Constitution is not supported by what the actual text says. Even some liberal legal scholars acknowledge that the constitutional foundation for Roe v. Wade decision (the infamous “penumbras and emanations) is shaky, and it’s pretty clear that the justices who decided that case decided how they were going to rule, and then made up their argument to support the decision. And I’m not entirely convinced that the ACLU has gotten entirely over some of its intellectual infatuations of the 1920s and 30s.
In short, pretending that the ACLU’s only purpose is the defense of unambiguous, foundational principles that all of us agree are found in the Constitution is simply unrealistic.
Having grown up in Lincoln Heights, I often took the bus to downtown L.A. to read in the library. The poor part of downtown (Broadway) is actually the vibrant part. The part of downtown that’s lined with hotels and the concert is actually the dull part, since it’s not pedestrian friendly, and built like a fortress. Read Bill Fulton’s Reluctant Metropolis… lots of cool behind-the-scenes stories about L.A.
have to agree with the area of dntwn LA west of hill st being built like a fortress. Imagine if you are residing in one of those new condos sprung up right off the 110 or to the west of it, and having to walk to your job in one of those high rises along figuroa st or hope/grand ave. Cannot do it easliy as the traverse across the 110 fwy is itself problematic for pedestrians. All routes thru this area of dwtn is designed for auto traffic and access/exiting off the 110 fwy. No way to make pedestrian walking safe or easy thru the bunker hill district. Wlishire blvd route crossing the 110 fwy seems a bit more walkable and here indeed is where a lot of new condos are springing up. Still, it is a long way to making dwtn a pleasan walkable experience. Many dwtn office bldgs along figuroa st.hope/grand ave( the true nerve center of LA dwtn is along hope/grand ave betweeb 1st and 4th st.andalong figuroa st)seem to discourage easy walkable access. The configuration of the tall hi-rises seem to discourage easy access off the street, which may be deliberately designed to ward off the common mill crowd.
The more crowded livelier areas east of hill, along broadway st and in the garment district, are more accessible but have problems with homeless street people. Have noticed a few condo projects springingup in the garment district, which has a lot of deteriorating older structures and abuts the old run down indusrtial-slum district east of san pedro st.
Creating a livable walking dwtn with a flourishing dwtn apt/condo housing market seems probematic and possibly ill-conceived, as are all projects conceived from the top by Gov’t bureacrats and billonare developers way out of tune to what dwtn LA is about.
Not to mention that Bunker Hill is, well, a HILL. A big honking steep one. There’s a reason they built the Angel’s Flight tram. I thought I’d be a nice blue-state public transportation user once and take the train from OC to a deposition downtown (in the Biltmore Hotel office tower). The walk from Union Station to the building didn’t look too far on a map. (Silly me, I didn’t realize the Red Line subway would’ve taken me right there from the station. LA has subways?)
Bottom line, you damn near have to rappel down the sidewalk on the south side of Bunker Hill, and climbing back up was a death march in brand-new stiff dress shoes. By the time I got back to the station, I looked back and I’m not kidding, I could actually see blood marking my steps from where the blisters had broken and bled down my heels.
The entire LA dwtn west of hill st and from temple south all way to 8th st was designed for automotive traffic flow, not for easy pedestrian foot walking. It’s all completely concrete paved with lots of bridges, tunnels, offramps, forbidding fortress-like skyscraper ground-level entrances with 50 steps to climb to get into an office tower, with secuirty guards maintaining vigilance. You actually need thick-soled running-hiking shoes and be in fairly good condition to traverse across LA dwtn on foot. They do have Dash Buses which for a quarter will ferry you short distances around in dwtn area.
I’ve taken the architecture tour of downtown, and there are some very neat old buildings down there, the Bradbury probably being the most famous, but very cool grand theaters, hotels, etc. The more modern stuff (other than Disney Hall) is so sterile looking that it just isn’t interesting. And everything is so filthy - when they hose down the streets, it becomes an EPA Superfund site.
After dark, fuggedaboudit. The place makes Blade Runner look like a documentary.
I’m trying to decide whether that Blade Runner reference is coincidence, or if you really knew that they filmed Blade Runner inside the Bradbury building. So, uh, it could be a documentary.
Good catch. As I was writing that, knowing that Blade Runner was filmed there, I got blocked and couldn’t think of a better allusion, so I went with that one. Mad Max and Escape from New York were the only other movies that came to mind, and they did not fit. I could have reached farther into dystopic literature, but very few would have recognised the references.
That is one positive feature of dtwn LA, the old historical preserved bldgs. At least during the daylight hrs one can admire the stylistic grand old architectural designs, the curvy columns and roofs with sculptures. Been inside some of these old restored structures and their grand old hallways, with arches, domes and naves, sort of like old gothic/medieval hallways.
The thing that amazes me is the 7th st metro station on wilshire and 7th, which is just an unmarked street leval entrance right below a tall bank bldg, but when you walk into it you dicover 4-5 metro rail levels and a major metro transit junction deep below LA dwtn. Only used metro rail 6 times in my life so it would be an eye-opener for me, though not for daily LA metro rail commuters.
I love Broadway, although you have to imagine what the old theaters once must have been. (They’re storefront fundamentalist churches, discount stores, and apartment lobbies now — vibrant in their way, but a little sad and faded, too.)
The Disney Concert Hall, BTW, was a construction lawyer’s paradise. Lawsuits galore, with literally millions of dollars at stake (thus, lots of people willing to spend lots of money on litigation — which is nice.) It’s not surprising they got cost overruns trying to replicate a giant crumpled soda can.
‘Those people who did 100 percent financing are seeing the home values drop anywhere from $10,000 to $30,000.’”
Only another $100/150k to go…
And you can damn well be sure the MBS holders will be coming after the foreclosure deficiency judgement amounts.
FB’ers to the nth degree.
Thank you Realtor nation.
“And you can damn well be sure the MBS holders will be coming after the foreclosure deficiency judgement amounts.”
I don’t disagree, but this will be like trying to get blood from a stone…
exactly…the party hasn’t even stopped..The musicians are still playing away on the mezzanine. Some people are noticing the crew fumbling with the lifeboats ,but the crew is just telling them it’s just maintenace..”no reason to be alarmed, go back to the punchbowl” …yet he feels something ominous is amiss…..
For those not familiar with Visalia, it’s a small (60K) town on the southeast edge of California’s Central Valley about 100 +/- miles norht of LA. Ag base and some Sierra Nevada tourism. Ok place, really…fairly clean, middle class small town America. Other than the hot, dry summers, it’s not much different than the mid-west towns most of my family live in.
But in no way, in no shape could the current housing prices be real. They are a mirage. And they are slipping away. The same is true throughout the valley. Visalia just may end up being one of the worst of these falling prices.
At least Bakersfield has oil (Exxon, Chevron, Occidental, Haliburton, etc..) and a food processing base (Frito Lay, Nestle, etc..) and the west coast HQ of State Farm.
Visalia has nothing! Prices there will drop 70% GUARANTEED!
OOhhh! The AntiWatts arises. And…drumroll…I would not take that bet. 70%? Could be close, very close.
Don’t get me wrong - Bakersfield will fall 50%!!
I used to work as a city planner in Hanford (half the size of Visalia), and honestly, there are a number of nice little cities in the Central Valley, Visalia included, which has a nice downtown area - but as previously mentioned, there is no economy to support the housing prices, even at 250K. Fresno and Bakersfield are a little bit different, since they are sizable cities over 300,000 — nonetheless, speculation is rampant. My in-laws, who I frequent, bought a home in southwest Bakersfield in 2003 for 115K and now it’s valued at 260K. Many nearby homes sit vacant or are rented out. Now I work as a planner in Lancaster, even scarier speculation there. At least the customer phone calls of “how many homes I can build?” are decreasing.
Compared to hell, Bakersfield has a lot going for it.
LOL.
Well, they both of plenty of brimestone in the air.
Compared to Bakersfield, hell has a lot going for it.
Actually, Visalia is 111,000 people now.
The 99 corridor from Stockton to Bakersfield has more rednecks than Tennessee and Kentucky combined. Visalia is like the redneck crescendo of the whole strip. The sheep believe they’re living in hell!
California, minus the cities of San Francisco and LA, is full of rednecks. It is amazing how many dually pickup trucks are in this state. Where did this ever come from? As dumpy and small Springfield, MO and other backward ass areas are, California really has nothing on them anymore.
Hey, why are you picking on Springfield, MO? It has lots of great features — no crowded beaches (no ocean), no emphasis on looks (teeth optional), wide-open freeways (this is true, NO traffic on the major roads), a good symphony (ok, there are only 8 or so concerts per year), nice weather (in the spring and fall), just about every restaurant is a buffet, and it’s cheap to live here (good thing since many people only make minimum wage). Oh, also, MO is the meth capital of the nation. Kidding aside, it’s not bad here, assuming you bring your job with you. The people are incredibly friendly. Great local coffee houses with wi-fi even in the small towns.
Duallies do not a redneck make. I drive one (wife likes ponies) and I’m an engineer (aerospace by training, mechanical currently). I know a couple other engineers driving duallies as working trucks. Maybe we’d be rednecks, but we’d raise the median income in all but a handful of zip codes.
it is actually a cultural shock to drivr thru the 99 and hear country music blaring on many stations. Actualy if you’re 100 % LA born and bred and you drive thru the central valley it is more than a minor cultural shock. For one thing they all drive a bit slower and the pace of living seems to crawl. Another shock is that in some of the smaller towns the fast-food and gas stops are actually worked by white folks. Love taking trips thru the central valley just to get a fresh cultural perspective.
Actually, Visalia is over 110,000 population now.
Have been thru Vialia 50 times on my way to sequoia NP. Never had the desire to actually stop there except to gas up. It has grown very rapidly into a good-sized Cvalley city with suburbs and shopping centers no different than what you see in LA burbs.
I remember back in the late 60’s early 70’s when visalia really was a tiny rural agricultural hamlet, with a rural country road called lovers lane which was all pasture and fields.
I always prefer to jet past visalia and get out to at least 3 rivers before i slow down/stop to take in the interesting sierra nevada foothill region.
OT..
Not long ago the folks here on the blog though this bubble thing would take many years to unwind. I opined that it would be much quicker with the majority of the drop taking place sooner than later (more like Dec 06/Jan 07 is what I think I theorized).
It seems to be manifesting itself as such, both locally (MASS) and and even more so nationwide.
Does anyone have any thoughts on this?
Do folks think it will pick up speed now that we are truly and indisputably on the way down?
You’re right if by “the folks here” you mean most. Some of us have been predicting a very quick crash for some time now.
Yes, I meant that it seemed to me that most folks here thought it would take many years to unwind.
Thats what I thought. This will not be the first or last time I am wrong.
I don’t think it will happen as quickly as you, but I plan to be out shopping next year for a home in the L.A. area and I plan to pay approximately half what the previous “owner” paid.
A 50% haircut gets you to 2004 in my hood. I doubt I’ll be buying here ever. But we will be looking elsewhere where the same 50% takes you to 2000-2001
There can be no doubt about the acceleration, but I believe it will be a longer trip than you imply. The majority that bought did so with sick-loans ,which in turn supported this economy for the past few years. Construction, retail, Banking we are a country in debt. When this unravels I hate to say there will be much less jobs etc to slow the trip down. Objects in rearview mirror are closer than you think….
My totally unscientific forecast is 20% - 25% decline in 07.
5% - 10% (closer to 10%) for the next 3 years. Then flat for 3 - 5 years.
The dropping prices will actually bring some stimulus to the economy as priced out buyers can get in, and businesses can pay lower wages in the most over priced markets.
5% - 10% (closer to 10%) for the next 3 years THIS IS PER YEAR.
1997 or BUST!
That is a serious chop. Are sellers ready for that kind of reduction yet. That is bankrupcy territory. Thank God my mortgage is paid off.
I still think it will take years to unravel **all the way**. There are still buyers paying close to wishing prices, and there are still ads saying you get get a $300K mortgage for $63/mo. Until a critical mass of suicide loans are washed out (loans even from 2002/2003 and newly refi’d loans), this thing can turn around, IMHO. In San Diego (and many parts of So Cal), we saw inventory build suddenly and sales slow rather dramatically. Then, in 2005, it came back to life, although it was a shallow and short bounce.
IMO, I’m not ready to call a victory until the economic errosion (recession/depression) has done its damage, lending standards are brought back in full force, home price/income and price/rent ratios are back to historical norms, and the kamikaze borrowers are out of the RE market, altogether.
Of course, I could be wrong (I hope!).
Meant to say:
In San Diego (and many parts of So Cal), we saw inventory build suddenly and sales slow rather dramatically in 2004.
I was one who thought it would be a quick drop in 2007…
But the pace its going at… is scary.
What I do know is jobs are fleeing the bubble areas like I’ve never seen before. Yes, I’m well aware industries will get priced out of a city. New York city is a great example of this. No longer does New York city do meat packing, clothing, or a dozen other industries that used to dominate the city. But it still thrives.
But the problem is the transition years. What businesses can still turn a profit in Boston, Los Angeles, etc. IF they paid wages that justified today’s home prices? 10% of the jobs? 5%? In LA the old measure of affordability was below 2%!
Interesting times…
yep…I know a few single people that make $75k or so, which is about 50% above the median income here and without a large downpayment or suicide loan, there is no way they could buy something at these levels. I know $75K isn’t all that much in some circles, but it isn’t poverty either.
I was one of the people that predicted a quick drop ,in fact I wanted the loan madness to stop . But, I got to say it’s going even quicker than I thought ,which shows just how false and speculator driven and unaffordable the market was behind the rah rah real estate. The media shut up about one of the worst false run ups in real estate history .
NYC is rapidly getting too pricy even for the finance world.
There’s a slow leak to Westchester, and Connecticut.
OK, it’s taking place very slowly but the trend is absurdly clear. It’s still like Silicon Valley that it has a talent pool of finance professionals, but there’s a slow leak as people realize that they can pay the same, and yet “spend less” than in the city.
I don’t know. Cote said 2Q 2007 all along. And most see this as a long term burn. But damn, it is kicking up dirt!
i think you may be right. my original prediction of 5-8 years to the bottom seems awfully long now. but god knows what a really quick haircut will mean for the whole f’n economy! it’s gonna be seismic.
What happened to AuctionHeaven07 and his rallying cry, “All hell breaks loose in September”?
Man NAILED it.
How about the Labor Day Massacre…all the 4 month old and older listings get relisted this Friday (to change DOM) at new lower competitive prices as the real estate lottery winners watch their profits erode from the MSM constant reporting of the bubble. There are no qualified buyers left, none, zero, ziltch.
The ones that have to sell because of mortgage resets, job transfer, divorce have no place to turn but to cut and run. It’s PANIC time.
Auction_heaven_in_07 and Cote definately are better at predicting the future than I. Auction… has almost be scary with the accuracy of his information.
The labor day masacre has begun. Its almost like watching a herd of sheep as the lord casually states: “release the hounds upon the flock, this should be entertaining.”
I agree with arroyogrande that the downhill plunge won’t complete in 2007. But it could be quicker than any of us imagined.
Heck, who can buy at today’s prices? Who’s insane enough?
Once the word is out prices are declining, don’t stand near the doors, this theater is going to empty fast.
“Heck, who can buy at today’s prices? Who’s insane enough?”
That’s just it…there ARE still buyers out there, albeit much less of them. With a good old Option ARM, they can still “afford” $600K and $700K houses here on the central coast. As word continues to get out about what these “exotic” loans can do to them, the buyers will continue to thin…however, the fuel mixture STILL isn’t lean enough to completely extinguish the flame…yet.
however, the fuel mixture STILL isn’t lean enough to completely extinguish the flame…yet.
Beware the backdraft. (Dead cat bounce)
“folks here on the blog though this bubble thing would take many years to unwind.”
I still think it will take years to unwind…and no actual “panic” until the summer selling season of 2007 (at the earliest). And we may yet have a fake bottom and a dead cat bounce in 2007 (or even 2008). I’m still not convinced that things are playing out as quickly as you seem to imply.
My thought is that it may take very many years to recover, given the extremes of euphoria the market was in as of last year, but the initial drop is hard to predict, due to countervailing forces of real time information (blogs, internet, etc.) versus a Fed which officially claims to want to target inflation, but which unofficially is worried about the possible consequences of ending asset price targeting.
Good thing all the Agents saved there boom dollars for a rainy day.
more like the Ant and the Grasshopper, I bet…
Real Estate, Mtge, Stock brokers always think the only thing that comes down is rain….
LOL please just one more boom and THIS time I’ll save.
Orange County resale statistics per MLS (for homes priced
A preview of things to come?
“A television reporter was bitten and beaten as he and his cameraman, who captured the attack on video, tried to do a story on a couple they believed were involved in a real estate scam.”
http://tinyurl.com/ghdb2
The guy pulled up in his Mercedes before going on the attack. These people should be shot.
Warning: the video might be unsettling to some people. Not gory or anything, but watching these people makes you sick.
Bruin
I saw this mess on the web. They should be in stocks in town center. In China if a bank fails the Prez is hung. We need these kind of laws.
No kidding. We need to institute Singapore-style caneing (a Karate expert wielding a ten-foot bamboo cane) and a generous dose of public humiliation, like riding these scumbags out of town on a rail or tarring and feathering them. It’s idiotic to pay $40K a year to send most of these shysters to a country-club minimum security prison. Crimes of all kinds, including white collar, should have consequences dire enough to scare the bejusus out of all but the dumbest or most lunatic criminals.
That video rocks!
I just wish I was a bystander, nothing like having a legally justified reason for laying my hands on an RE scumbag.
The reporter was kind of a wimp though, he needs to watch some UFC and practice up.
There will be a number of follow up stories particularly it was a Fox affiliate.
If i was doing an investigative story which might involve physical confrontation with the parties being investigated i would at least carry mace/tear gas. people are nuts these days expecially in Scal which has a lot of stress factors which lead to folks snapping and losing it. That is why i will not honk in anger when on the road: you never know if the other guy might jump out and go bonkers.
Wonder what type of RE scams these attackers were involved in . guess we’ll know soonn enough if fox pursues this story. That dude who attacked the Reporter looks more like a Mafia thug-enforcer than a licensed realtor.
Here is what happens when you do an investigative report on the fraud going on in the mortgage industry:
“Investigative journalist John Mattes is an attorney and reporter known for his tenacity in tracking down cases of deception and consumer fraud. It was one such story John was working on today when he was viciously attacked by a man who had been making threats for weeks. The attacker is Sam Suleiman and his wife Rosa.
video: http://tinyurl.com/lwg3j
image: http://tinyurl.com/lhtm2
Earlier in this newscast we showed you dramatic footage of one of our reporters being physically attacked and beaten. It was an assault that left him bloody and in an emergency room but earlier tonight John Mattes was able to share his thoughts with us on the conflict.
video: http://tinyurl.com/q62pw
image: http://tinyurl.com/rgs3h
Text story which links to both videos:
http://tinyurl.com/qf6mm
Now I know why most bloggers prefer to post anonymously. (The Roberts, Cote and Campbell, are much braver then me, and also more famous — no guts, no glory!)
I am firmly in the thank god for anonymity aspect of the bubble blogs.
My name pops right up on google with my work numbers, work e-mail, address and bosses contact info.
Kinda scary.
Your famous GetStucco ,your about as insightful as one can be .
I can hardly wait until the camera footage of those financially and physically abusive grifters in action is aired in court to help send them to the slammer for fraud, assault, and a threat to use a deadly weapon.
Or, as Rosa suggested to John, let’s deport Rosa and Sam, back to Tijuana.
I hope they are in there for at least a decade!
United States Senate
Wednesday, Sep. 13, 2006
10 a.m.
Banking, Housing, and Urban Affairs
Housing and Transportation Subcommittee
Economic Policy Subcommittee
To hold joint hearings to examine the housing bubble and its implications for the economy.
SD-538
The witnesses will be announced at a later date.
Arwen posts “Wednesday, Sep. 13, 2006
To hold joint hearings to examine the housing bubble and its implications for the economy.
Sept 13, 2006 Nice to see they are right on top of this! Don’t worry they will have this fixed in no time.
Is this legit? If so I wonder who the guests are? Also, Ben does anyone from this committee visit this blog?
It is legit! Thanks Arwen. This might be very interesting!!!
You’re welcome! I told my contact in the Senate they should call Ben Jones as a witness.
Not sure. It is not on thier schedule.
http://banking.senate.gov/
David
Wow, I thought they were going to leave this for after the elections.
Can’t wait to see who the witnesses are. Might be interesting to see some of the bubble deniers testify under oath. I’ll bet Learah is studying old Greenspam transcripts tonight to improve his obfuscation skills.
Could you guys find out what happened to the listings on these homes?
115 S. Mohler Drive, Anaheim Hills 3,800 sq ft+ 4bd/3 1/2 bath $1,485,000
and
111 S. Mohler Drive, Anaheim Hills 3,645 sq ft 4/3.5 $1,495,000
The builder is SEPULVEDA BUILDERS, Inc.
This is the email I received from the ziprealty agent about the financial state of the builder:
Builder’s construction loan has expired needs to refinance. but if we submit offer today may be able to hold off from the refinance. If he does a refinace that means it will cost probably $10,0000 or more in cost for him to do so. which would eat into the profit and cause less reduction for you if you still are serious.
Time is of the essence,
Connie Beverly
Broker Associate, REALTOR (R)
ZipRealty, Inc.
Licensed in California
connie.beverly@ziprealty.com
Toll Free: 1.800 CALL ZIP x5204
Cell: 714.914.6115
Fax: 888.754.6048
My Profile: http://www.ziprealty.com/agent/cbeverly
ZipRealty cut me off because I wouldn’t respond to the agents e-mails.
Ghost towns are nothing new to California & Colorado. The Japanese tourists will pay big bucks and get a kick out of those 4 car 7000 sf McMansion’s with driveways like runways out in the tumbleweeds. Stage a few debtslave/repoman shootouts, let them pan for the hidden equity and sell a few cowboy hats and they will all come. Hell, they found Calico, California and I still CAN’T !
I honestly don’t think it is Japanese in this case. They were truly humbled and reflected on their experience with RE bubble in late 1980s. JMO
“Gotten ahead of itself”
All this tip-toeing around, polite euphemisms, and spin make me wanna puke…
Its a CRASH!!!
If you are an infestor and you lose everything, MAYBE I’ll “flip” a penny into your sorry-ass cup.
Gawd I miss Texas…ain’t no beatin around the bush in that part of the world.
http://www.ktvb.com/
See San Diego reporter attacked on camera. RE scam investatgation turns ugly. This whole RE bubble is going to get ugly.
SD 4BR market got a little ahead of itself, and is quickly unraveling, with 200+ new listings since Labor Day, and many more priced below $500K than last year…
If there is a Labor Day massacre, I don’t see it. Dumpy house on Rose Avenue by me here in Venice just sold for 950K. Maybe would have sold for 1M six months ago, but that’s hardly a massacre. I know, I know, 2007…
Heh heh, you really *are* anxious, aren’t you.
Venice is trendy and hip and goes against the grain, including the RE commonality. The hip hollywood artist crowd has “discovered venice” and are doing the Gentrification thing. No RE bubble pop in venice(as of yet) . Don’t folks know that the hollywood trend setters love disjointed aging but hip beatnick eclectic multi-cultural districts such as venice, Berkeley or hait-Ashbury. No boring dull average middle-class neatly trmmied middle -class suburban tract exists in venice-the houses all small older units, many fixer-uppers needing teardowns, remodels by well -heeled hollywood purchasers.
Note: Dennis Hopper, the hippee off beat actor, has his riveted sheet-metal hideaway(residence) in venice.
I live in west LA and my impression is that the “industry” folks around here live in a fantasy world. There are also a ton of trust-funder types who could care less about underlying fundamentals.
If OC down 20 - 30% in next few years, guess who is still the BIG winner ? I think is Irvine Company.
My friend works for a big construction company, told me the builders actually does not really like Irvine markets, because Irvine company’s has so called profit sharing policies and lot of restrictions, the builder only make a faction of it.
For a million new dollar home, guess how much IC get from it? if he is not exaggerate, the number is $600K. so even if down30%, IC still a BIG winner.
I don’t know, everyone seems to be acting like this bubble will work itself off in 3-5 years, maybe a little longer. I don’t see it. Without the boomers buying there is no where for prices to go but down.
Welcome to the Japan experience.