‘The Cooling Trend Is Here To Stay’ In California
The Voiceofsandiego.org has the latest Dataquick numbers from San Diego. “Overall median home prices dropped 2.2 percent last month from August 2005, sliding from $493,000 a year ago to $482,000, according to new numbers from DataQuick today. The number of sales in August, 3,666, dropped 31.8 percent from 5,379 in August 2005.”
“Andrew LePage from DataQuick said, ‘The main thing is, unfortunately, more of the same,’ he said. ‘The market’s entered a lull, and is spinning its wheels in the sand.’”
“LePage emphasized how much uncertainty there is in the market. But he speculated that we might see a more pronounced decline as autumn begins. ‘Anyone who was going to buy a house and move in before the kids started school, they’ve already pulled the trigger,’ he said.”
The North County Times. “For the first time in recent memory, the median price for an existing house selling in North County has declined year over year, according to a report released by the North San Diego County Association of Realtors.”
“Providing fresh evidence that the cooling trend in housing is here to stay, the North County market ended the summer buying season with single-family prices sliding down to $628,750, 1.4 percent below August 2005 and 3 percent off the all-time high of $650,000 reached in June, the report showed.”
“The number of houses sold in August declined 25 percent over the same month in 2005 and condo sales plummeted 22 percent. ‘I have noticed that in, some neighborhoods, prices are lower than they have been in quite some time,’ said Dolores Wellborn, a real estate agent in Carlsbad.”
“Robert Campbell, a San Diego economist, suggests prices could fall as much as 40 percent by 2010. ‘We’re in the first year of what is going to be a four- to five- to maybe six-year downturn,’ Campbell said. ‘This demand was artificial because it was driven by funny-money loans. When these things reset, it’s over.’”
The LA Daily News. “The San Fernando Valley’s residential real estate market continued its free fall in August with sales dropping an annual 32.9 percent. ‘Today’s market is sustainable and can be used as a benchmark, not last year’s inflated, artificial madness,’ said association President Steve White.”
“The inventory of properties listed for sale soared an annual 115.7 percent to 6,832 properties. The smaller condominium market plunged an annual 34 percent. This supply surge is allowing buyers to shop around and force many prospective sellers to reduce prices.”
From the Signal. “A total of 250 single-family homes in Santa Clarita changed hands in August, the lowest total for the month of July since 2000. The 250 homes sold in August still represents a 29.4 percent decrease from the same period a year ago. Active listings more than doubled to 2,598, the highest figure on record during August.”
“‘Some sellers cling to unrealistic price expectations and some buyers incorrectly think they can make incredibly low, equally unrealistic offers simply because sales are down from record-high, unrealistic levels,’ said Jim Link, the association’s executive VP.”
The Contra Costa Times. “Robert Burton of the Hofmann Company looks back fondly on the summer of 2005, when the home-building firm had a growing list of prequalified buyers who eagerly awaited one of its homes. All that changed this summer, said Burton, the company’s sales manager.”
“The tide began turning, and builders began posting colorful signs and advertising ‘Summer Blowout Sale!’ ‘$100,000 off!’ or ‘Save Big!’ ‘The first thing people say when they enter the sales office is, ‘What’s your incentive?’ said Burton. And Burton doesn’t disappoint.”
“If builders want to throw in a car, that’s standard marketing, and God bless the buyer for taking it,’ said Joseph Perkins, president of the San Ramon-based Homebuilders Association of Northern California.”
“‘Inventories are not going to keep building up; that would be irrational,’ said Ben Bartolotto, research director for the Construction Industry Research Board based in Burbank. ‘In my experience, it tends to fix itself, and prices change.’”
Where’s our good buddy Watts?
Watts dropped out.
The new knucklehead is Pat Veling.
Check him out here.
http://blogs.ocregister.com/lansner/archives/2006/09/oc_home_inventory_bumps_up_1.html#comments
His prediction as of a couple of months ago was 11%.
He changes his tune everytime he posts! He new name is Taco Boy!
Let the Congressional hearings begin. CCP link below. From Reuters.
http://today.reuters.com/news/articlebusiness.aspx?type=ousiv&storyID=2006-09-12T191303Z_01_N12323829_RTRIDST_0_BUSINESSPRO-ECONOMY-HOUSING-SENATE-DC.XML&from=business
I infer that RE/construction/finance campaign donations are drying up.
Exactly!
I put this up on a previous thread, but will repeat here.
Note that the other 3 organisations have their Chief Economists as witnesses, but the NAR is fronting with their President instead.
“David Lareah, paging David Lareah, dang where the heck is he?”
Robert Campbell, a San Diego economist, suggests prices could fall as much as 40 percent by 2010.
__________________________________________________________
One of our guys!!!!! Way to go Robert!
I think by 3Q-4Q of 2008 in some mkts
Thank God for economists who speak the plain truth!
Comment by Getstucco
2006-09-12 14:57:13
Thank God for economists who speak the plain truth!
Yes, Yes, Yes! Atleast they (he) can see the 900 Lb. Gorilla in the house! This guy will be right in half the time and the down side will be worse.
I have some money and really need a house for Biz, reasons but I will be dammed if I will buy untill, I have met my needs. I do not care if I get the lowest priced house. I want the right house. I only have one bite out of the Apple comming up and will strike when most of my need are met in this imperfect world.
One other note, do you guys see how a lesser known Econ. person if floating the, first trial balloons of fact, too greases the skids for the big shots? I can see it already “our office reported” etc etc etc……
It’s the job of economists to predict a rosy future. They get in trouble when they say the housing market is about to take a nose dive and will be all but dead by 2009, and then 2009 comes along and things are chugging along. None of their fellow economists would ever let them forget it. For some reason the reverse doesn’t happen. It’s just safest for everybody to stay together in the politically safe boat. And I’m okay when they do that, because who knows what the future holds. Maybe a worm hole is going to open up in the Earth’s orbit tomorrow and that’s it for everybody. Maybe some corporation will invent cold fusion or artificial sex slaves and their stock and the shares of all related industries will skyrocket and the U.S. economy will kick back into high gear with a new bubble the world has never seen before. Who knows.
Point being: economists shouldn’t be in the business of predicting the future at all, because that is really anyones guess, but rather they should be presenting relevant data with commentary on current trends of activity and patterns in the market. If anyone looks at the current data and hems and haws, or worse, tries to twist it into some lame soft landing scenario with bogus data and analysis, well then, they get a boot to the head from me, and will be justifiably forgotten by history.
“economists shouldn’t be in the business of predicting the future at all, because that is really anyones guess, but rather they should be presenting relevant data with commentary on current trends of activity and patterns in the market.”
Exactly! That’s why Robert Shiller is good.
Right on SF Mechanic . Why was the media giving the trade groups like the NAR etc.,so much press regarding their future predictions . The NAR should of just stopped at giving out the data on the sales figures ,none of this we expect further 25% increases etc. predictions .
Now you got the NAR/DL trying to convince everybody that its a two month correction and 2007 will be the year of the market bounce back .
If the media was going to give so much coverage to the rah rah cheerleaders predictions ,why not equal coverage of the “bear’ view predictions also ?
I think that the public can be informed that a high inventory market usually means prices go down rather than calling it a “buyers market ‘, oh what a great time to buy .
Last year when they stated that 40% of the purchases were speculation/second home purchases ,why couldn’t predictors of said that % is very adnormal ?
Yes, it’s good to see that Robert is quoted rather than the usual CAR mouthpieces.
It seems that some journalists may be looking at what economists have been saying these past months and years. Robert’s past forecasts are coming true; CAR and NAR forecasts are proving wrong.
I know everyone on this board knows this, but to see this change in print is very helpful.
Journalists: keep it up. Do some research. Compare the past statements of economists and “experts” to the present data. It’s not that hard to do!
Imagine this:
LA Times:
Mr. Robert Campbell, you have correctedly forecast the downturn of RE in Southern California, while the NAR and CAR have been promoting that RE here always goes up, and they are proven wrong. Can you tell us why you are correct and they are not?
Robert Campbell:
Uh, I just tell the truth.
ROBERT CAMPBELL FOR PRESIDENT!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
Ken Posts LA Times:
Mr. Robert Campbell, you have correctedly forecast the downturn of RE in Southern California, while the NAR and CAR have been promoting that RE here always goes up, and they are proven wrong. Can you tell us why you are correct and they are not?
“beacuse I know my ass, from a hole in the ground”
But The NAR and CAR do spend ton’s of bucks on your Rag to blast our point of view and to lure the GF and FB’s of this world.
The fact a newspaper reports and the funny pages got screwed up in this printing. It will never happen again…. Not to worry!…….LOL
Try 2008
Are people aware that at one time in late 1800s prices in San Diego fell 89%, i.e, to only 11% of the prior peak price!
Jas Jain
Sorry, it was 84% drop and not 89%.
1873-1877 -84.00%
Jas Jain
Jas –
Are you willing to divulge your data source? Is there more where that came from (e.g., what is the largest drop on record for OC, LA or the Bay Area)?
For whatever reasons, San Diego seems to have the best historical home price data. availabilty. Anyway, I am not an expert in data soruces for home prices. I just happen to be re-reading a book for some quotes and I saw the table in the book (see my long comment below).
Jas Jain
That was another Depression era….the 1873-1879 timeframe. Deflation continued throughout much of the US till 1896.
Good thing that could never happen again. After all, lightning never strikes twice in the same place.
True. The 89% might be a Freudian slip, who knows.
Then there was the 79% drop at different time. For more you can check out my latest comment below.
Jas Jain
“It has been seen using “stop action” movies of lightning strikes that most lightning strikes consist of several (up to 12) separate discharges of different intensities, causing the “flickering” effect commonly seen during a lightning discharge. Each successive stroke re-uses the heated path taken by the previous stroke” - wikipedia
In other words… San Diego’s screwed
“Each successive stroke re-uses the heated path taken by the previous stroke”
Very applicable to SoCal real estate cycles indeed!
Speaking of flickering… I downloaded & printed this analysis by Christopher Cagan last year. I’m sure most here are familiar with it. If you staple the graphs together and flicker through them (after a few beers of course), it makes a nice psychedelic movie… transistioning between housing bust red and housing bubble blue. Note-don’t actually try this unless you have absolutely no life whatsoever.
Housing bust red… sounds like a new Crayola color.
http://www.firstamres.com/pdf/Cagan_FireBurn_1104.pdf
Lightning Bolts?
“I’ve seen things you people wouldn’t believe. Attack ships on fire off the shoulder of Orion. I watched C-beams glitter in the dark near the Tannhauser gate. Eighty-four percent drops in San Diego real estate. All those moments will be lost in time, like tears in rain. Time to die.”
-Roy Batty
One of my all time favorite movies
Mine too. Blade Runner, for those who are wondering.
sm_landlord,
That was sweet. Nicely done.
“Are people aware that at one time in late 1800s prices in San Diego fell 89%, i.e, to only 11% of the prior peak price!”
Hmmm, guess I was asleep that day in my California studies class in the 6th grade… sounds interesting… do tell… how long was that after the Mexican land grants, and was there any connection?
There were major financial panics in 1873 and 1893, and others in between. Perhaps one of those was the proximate cause.
What economists don’t include in their models is that the primary cause of the runup and crash is the same as the crash in ‘89: Inflated appraisals and massive broker fraud. After the FBI, IRS, OTS and the rest get through, the market will probably be determined by academic principles. Until then, economists can’t forecast the market, because it has little to do with economics.
But in 1989, we didn’t have the suicide loans in the quantities we do today. People actually had 20% downpayments and verified income…and they STILL lost their homes in foreclosure.
This time is different. It will be much, much worse.
But in 1989, we didn’t have the suicide loans in the quantities we do today. People actually had 20% downpayments and verified income…and they STILL lost their homes in foreclosure.
This time is different. It will be much, much worse.
Very worthy! Very True and well said! With all of those fact many people still went broke. I recall it well.
1989 onward was job loss related in California followed by a big earthquake . It would of been worst had they had the toxic low down loans of today .
The earthquake was a good thing economically. It saved a lot of people from losing their homes, I’m one of them. Without the earthquake there wouldn’t have been a turnaround in the construction industry for years.
I think Robert Cambpell is right on. Beyond 2010, I think real estate prices will be 50% cut by 2012 in San Diego, LA, Phoenix, Las Vegas, Florida, NYC area…
40% decline in 3 years..here’s why–>
Mr. Aliber professor at the University of Chicago’s Graduate School of Business says—>U.S. equity prices declined by 40% in the three years after the dot.com bubble imploded. The decline in property values on average could be as large, and because of the regional character of the bubble, much larger in what had been the hot property markets.
The decline in household wealth that will follow from lower home prices is likely to be comparable to the decline in 2000, 2001, and 2002 that followed from the lower stock prices. Moreover the sharp slowdown in the rate of economic growth is not good news for corporate profits.
The New York area will be sharply affected both by the decline in home prices and in stock prices. Homes in the metropolitan area will remain more costly than in most other parts of the country, but they will become much more affordable than they now.
Good going Robert!
oldest trick in the book:
regularly 99.99 - buy today, and i will give you $30 off - you can’t go wrong!
meanwhile, it is really a $3 pos….
Or… a $100 value, yours for $19.95. And if you call now, get a second one free! Does anyone really believe the infomercial gadget was ever worth $100 to begin with?
It must work because they keep on using in and I suspect Ron Popiel have never gone to bed hungry.
Neither have the fat lazy POS couch potatoes who buy his crap…
“This demand was artificial because it was driven by funny-money loans.”
In fact these “buyers”, knowingly or not, serve the same function as shill bidders on ebay. Both bid up the price of something they never were going to pay for. Who gets burned? The home buyer paying with real money (as opposed to Monopoly money) gets burned, just like the unsuspecting ebay buyer paying cash at the “market clearing” price when the only other bids were shills.
- 1 But he speculated that we see a decline as autumn begins.
- 2 suggests prices could fall as much as 40 percent by 2010
- 3 ‘This demand was artificial - driven by funny-money loans
- 4 “The inventory of properties listed for sale soared
‘Who gets burned?’
The weak hands that extended themselves way beyond their means.
Well put, mad tiger! I do believe that’s why so many of us (truly qualified buyers) are sitting patiently on the sidelines.
These brokers and Realtor’s association mouthpieces can talk all they want. We won’t buy until prices come back to what they would be if the suicide loans never existed in the first place. That would be a minimum of 35-50% in San Diego, by my calculations. We’ve got a long, long way to go.
Finally, YOY declines. We went over the mountaintop 7 months ago, and have been driving down the hill on the backside since then. NOW the experts realize we are going down hill! Brilliant!
As Outkast said: “Now what’s cooler than bein’ cool? Ice cold!”
The ebay comment is absolutely correct. Thanks.
wow it is actually happening. Feels strange to be right after all these years being wrong…
I know exactly what you mean. Logically, I knew it had to happen, but the bubble grew bigger and lasted longer than I imagined (as, I guess, most bubbles do). Sometimes I actually doubted myself and thought that maybe I really was going to be priced out forever. But, I stuck to my guns and searched for any housing bubble info I could find. Eventually, I found this blog, and it was very helpful to know that there were others who saw the same bubble that I did. And while I initially came here for reassurance of my beliefs, I also found that I have received a great deal of economic and investing wisdom on this blog. Thanks to Ben for hosting this blog (I’ll be donating again), and thanks to everyone who posts, it has helped me tremendously (although I do spend waaaaay too much time on this blog).
Just proves that any forecast comes true sooner or later .
My fearless forecast: Since prices are now falling fast, the monthly median selling price will hit bottom in the first half of 2007. But the climb back up will be very slow. Areas where the bubble runup wasn’t ridiculous will recover to 3Q05’s median price levels by the end of 2010. Bubble markets like CA, AZ, NV, FL, etc. will take much longer, not before 2015.
MY fearless forecast: Since prices are now falling fast, the monthly median selling price will hit bottom in the first half of 2017.
“MY fearless forecast: Since prices are now falling fast, the monthly median selling price will hit bottom in the first half of 2017.”
Not to worry we are not Japan. We will turn in less than 40% of that time. Unlike Japan the “Zombie Banks and lenders” will be turned to dust, without mercy. No matter who’s feelings get hurt. We play Hardball, they hide under the covers and play soft ball…. more like wussie ball!
Two differant cultures period.
What an odd thing to say.
This forecast puts you in the same league as David Liar of NAR.
Back up your guesses with reasons as to why it will hit bottom and turn around. and a guess of 2nd quarter or 2007/2008 is outside the bounds of +or- 3% that any good projection would say as valid.
Give me reasons behind your thinking, cause right now I see nothing on the horizon to stop the fall.
>> wow it is actually happening. Feels strange to be right after all these years being wrong…
So does a “1.4 percent below August 2005″ (YoY decline) plus 5.5% inflation rate equal a 6.9% decline in real dollars?
real dollars, perhaps. But not flipper IOUs.
Actually slightly less, a little over 6.5%. (100 - 98.6/105.5). When the inflation rate is close to zero, simple addition/subtraction is a close approximation. The higher the inflation rate, the more important to do the actual calculation.
Catspitt,
You were NEVER wrong. Just a little off on the timing, perhaps…
Catspit said:”wow it is actually happening. Feels strange to be right after all these years being wrong”…
It’s a great feeling!
Roller coasters make me queasy, especially the downhill drops.
Yes and the flippers filled up on cotton candy, chili dogs and nachos with jallepenos all washed down with a big gulp of Dr. Pepper before they got on the ride. In otherwords, watch out below.
LOL — You remind me of a near-miss my wife and I had on a double-loop roller coaster a few years ago. As soon as we got off at the end of the ride, the guy who sat one car ahead of us leaned over the nearest guard rail and heaved his lunch. I was quite relieved that did not happen when we were following his car on the uphill side of one of those two loops!
“Overall median home prices dropped 2.2 percent last month from August 2005, sliding from $493,000 a year ago to $482,000
This will be the nail in the coffin. Year over year price DECLINES. We all knew they were around the corner (at least here on Ben’s blog). Now once this gets out it will be entrenched. Real estate NEVER goes down… uh… except for this and last year.
Soon, they will start spinning in other ways. Like “Real Estate falls in San Diego by $1,100 a month!”
Using the North County numbers, it looks even worse.
At first, you’re might think they’re “only” down 3% these last 2 years.
But then do the math 650,000-628,750= 21,250.
So lost 21,250 in 2 months (60 days)
That’s LOSING $354 a DAY.
Once the press prints that in big headlines it’s over.
“North County Real Estate Loses $354 a day”
(anybody like me from San Diego remember when we got the headlines of “RE up $1,000 a day” for all of April, May, and June and even July I think of 2004?)
Of course they’ll spin the price declines as temporary anomalies. In the grand scheme of things everything can be spun as a temporary anomaly, excluding death and taxes! :0
The YOY declines are key. Time to short some of those futures based on the S&P/Schiller index.
“Overall median home prices dropped 2.2 percent last month from August 2005, sliding from $493,000 a year ago to $482,000
This will be the nail in the coffin.
Wait till you get the Month over Month decline’s. That will be the stake in the heart.
This 2% yoy decline is above and beyond the fact of a massive slowdown and that only the nice properties are selling at anything close to peak prices.
I remember those headlines. I remember hearing people quote those numbers smugly. I wish that I had kept those front pages now.
-$354 dollars a day. It really is different here.
Keep in mind that the MIX is probably quite a bit different from last year — in 2005 there were probably many more Condos —- in 2006, my wisdom would hunch that the condos weren’t selling but actual, real, livable single family homes. That probably “propped” up the 2006 number a smidge.
Just my 2 cents but I’ll wager that a similar house in 2005 vs. 2006 was off more in the high single digits.
True, and factoring in inflation we are down 15-20% in SD right now.
Wait til we pass 40% down. At the rate we’re going, I’m thinking 40% down by mid 2008.
I’ve definitely seen homes down around 10-15% in nominal terms already (and many **still** aren’t sold…just sitting there at a 10% off sale that nobody wants to attend). Funny thing is, so many people are still in denial and insist prices can never go down in SD.
Look out below!
And the stat to back up my hypothesis…
Drop in total 31.8%
Drop in condos 39%
And unless there is some other classification, then 2005 had more filing cabinets for young professionals in the mix vs. real SFR that would trade higher, hence the smaller decline than expected.
Quotes:
August was also the 26th consecutive month in which the total number of homes sold fell on a year-over-year basis. The year-over-year decline in total sales last month was 31.8 percent, the biggest for any month in 11 years.”
“DataQuick reported that resale condominium sales volumes were down almost 39 percent countywide from August 2005. Economists say downtown San Diego’s condominiums are vulnerable to price drops because of the high number of speculators in the market. The number of resale condo sales downtown dropped from 83 in August 2005 to 42 last month.”
interesting to observe the effects this has on actual lives. My wifey moved out few weeks ago, and part of it had to do with “you never bought me a house, we are going nowhere, etc….”
Anyway, I was glad to see her go, so… but I wonder how many happy relationships have gone bust over the stress of non-howeownership, and how many will go bust in the future for just the Opposite reason: Homeownership. Ie, I told you not to buy this stupid house, now we are stuck in Menifee and…
Sorry to hear that. I wish you the best of luck!!
Like someone once said: “Why get married? Just find a woman you don’t like and give your house to her.”
And what if SHE is the one who owned the house before marriage (which is quite common today)? No offense, but there are many marriages where the woman is the one who is financing and taking care of everything while the husband is out drinking with “the boys.”
It runs both ways.
Where do I find a woman like that???
Jon
And if you bought ‘her’ the house, you would have been the one going …..
You’re a double winner!!
Exactly my thoughts!
Sorry that this happened to you. Hope better future ahead will overwrite unpleasant memories. Take care till then.
Sorry to hear about the wife leaving. However, if she left because she feels that way, you are better. That has to be one of the most shallow reasons ever, never bought me a house, sheesh.
Marital breakups inevitably suck. If there is a silver lining, it is that you did not break up because you bought a home you could not afford, then watched your household finances stretch to past the breaking point, the way my neighbors a few houses up the street did. Now Mom lives in an apartment with the kids while absentee Dad is trying to sell the house into a very tough market.
Well, I hope it doesn’t turn out to be one of those “community property” divorces for you. You know, she keeps the property and you have to get out of the community. Good Luck!
Oh so sorry to hear this bad news…I can’t tell exactly from your post but sounds like you did NOT buy a house in Menifee, despite your (ex) wife’s wishes.
I just sold a house in Menifee, closed in May ‘06, and barely got out in time. I essentially lowered the price according to comps by $25K thru cash allowance for closing costs, new fence, and put in new carpets, fresh paint inside and out, blah, blah, blah. ONE person in 5 months made an offer and she put nothing down and only $1K in deposit. Menifee is toast for existing home owners who want to sell because of the thousands of new homes coming on the market in Menifee, Sun City, Murrietta, Temecula, Wildomar, Canyon Lakes, etc. etc. etc.
You may have a new wife and 5 kids before you would have been able to sell the house in Menifee that you didn’t buy
hang in there - you sound better off…there is nothing wrong with renting. shame on her
but you are right - the stress level is on 3 - on the way to 10.
Comment by catspit1
2006-09-12 15:13:16
interesting to observe the effects this has on actual lives. My wifey moved out few weeks ago, and part of it had to do with “you never bought me a house, we are going nowhere, etc….”
Sorry to hear this. The facts stated on this Board will have events that end like this and it is really sad.
For better or worse, for richer or poorer and age old pre-nup. You are better off knowing the bottom line now. I hope you are young or tough and can rebound before life deals you a really tough hand, this was just a trial run…. good riddence!
Yep, for me it has affected relationships, in a big way, and yep, I’m bitter about it. It’s an expectation most women have, whether they say it or not, it always comes up somehow.
…come to think of it though, this was 2003, and I could have bought something. I think maybe i was just digging in my heels to get rid of her…
Another ‘double winner’ …….
Relationships so affected by issues like our housing ’station in life’ have got to be among the most shallow …….
(Of course, I didn’t mean now …. very important today…)
You got to keep the dog, I hope.
No his wife left, didn’t you read?
It never ceases to amaze me how hardwired the idea of homeowership is in most people. Paying on a suicide mortgage for an overpriced house someplace where no one really wants to live somehow equates to ‘financial success’ in way too many people’s heads.
I hope things work out for the best for you, catspit1.
Amen.
Sorry to hear about that. Hope it all works out in the future. Stick to girlfriends till you find a better woman.
Hey sorry about what’s happening… My wife and I have been married for over six years and have rented all this time for different reasons, being in and out of school, etc. - but this is girl from Texas where a Dairy Queen manager can own two houses. Fortunately, my wife has a basic understanding about economics, and knows that love is more than about the things we are surrounded by. Here’s a chiche for you - it’s not the “house” that matters, but the “home”. Unfortunately, I suspect that your wife moving out has a whole lot more to do with the “other” aspects, than not just getting a house. Nonetheless, I wish you the best.
Sorry to hear this catspit. I hope it does not hurt you too much. I agree with some of the others, if that was her reasoning, then good riddance. But I also hope you find peace somehow and a better partner in the future.
you were right- hang in there
‘Some sellers cling to unrealistic price expectations and some buyers incorrectly think they can make incredibly low, equally unrealistic offers simply because sales are down from record-high, unrealistic levels,’ said Jim Link, the association’s executive VP.’
Try saying that real fast…
“buyers incorrectly think” — ha ha ah ah aha ahah aha hah !
Then keep all those empty houses! In fact shove them…
“…buyers incorrectly think they can make incredibly low, equally unrealistic offers simply because sales are down from record-high, unrealistic levels,’ said Jim Link, the association’s executive VP.’”
————————–
Were they claiming that sellers were unrealistic when asking for 30%+ increases, YOY, when inventory was at all-time lows?
I didn’t think so.
Lowballers, unite!!!
And the nerve of those unrealistic banks forclosing on these listed homes becuase the seller didn’t have any equity left to find a new buyer at the unrealistic listed price which he had to have to pay off his HELCO.. WHY can’t you low-ball buyers just understand the seller has needs to!!!
rotfl
A market is determined by whatever price buyers and sellers come to terms with. Unreaslistic? When the heck did 10X median wage become a realistic home market?
Do recall the first news of a buyers standoff is *over* six months old. This isn’t new… If a seller doesn’t like the price a buyer is offering (up hundreds of percent in a few years), then they are *welcome* to take their home off the market. (e.g., Boston, 1980’s, 50% home price decline, 66% of homes put on the market were pulled off the market).
And yet… look at the inventory. Why all of those homes for sale should be driving up the sales rate… oh wait…
Neil
he likes that word ” unrealistic ” rhymes with unrealtoristic.
“buyers incorrectly think they can make incredibly low, equally unrealistic offers”
Idiot. Buyers *can* make incredibly low offers, and as many as they want. Who’s going to stop them, the Lowball Police?
LOL @ ‘lowball police’ lol
“…and some buyers incorrectly think they can make incredibly low, equally unrealistic offers simply because sales are down from record-high, unrealistic levels,’ said Jim Link, the association’s executive VP.”
Oh, just give it a few more months there, Jimmy. Then we’ll see how “unrealistic” those lowball offers are… my guess is that many sellers will pine for those lowball days given where we are headed.
When those sellers start calling their agents in two months and ask them to contact the rejected buyers then the blood bath is in full swing. Link better get use to it when the old buyers come back with an even lower offer or no offer. hehehehehehe
I just hope the rejected buyers low ball all these greedy pigs by undercutting them 50-75% of their gains. Yeah, you want 700K for that thing, I’ll give you no more than 300K, just like it was 5 years ago. Should have taken my offer of 550K last year, idiot.
You say “I’ve since revised my position, and now I will only offer 60% of what I originally offered. And, oh, before I forget, I hate squirrels, so the buyers will have to agree to coming by the property periodically and eat the squirrels.”
The great unraveling in RE is beginning. Enjoy the movie, folks!
Enjoy the movie, folks… methinks it’s going to be a double feature with newsreels.
Here is a great article from Robert Aliber. Mr. Aliber is professor at the University of Chicago’s Graduate School of Business and president and chief investment officer of Dorchester Capital Management.
http://www.nysun.com/article/39480
If I hear the phrase “buyer’s market” one more time I’m gonna punch your momma in the mouth. Sorry… a little Buford T. Justice snuck out there. Low prices = buyer’s market. Falling prices= renter’s market. Great article by the way.
Is *this* the article which sent homebuilder shares soaring 5%+ today?
——————————————————————————
Real Estate Recession Coming
By ROBERT Z. ALIBER
September 12, 2006
The housing market now is increasingly a buyer’s market. One of the major builders of luxury homes reported that both its third quarter and full year earnings “would fall short of its previous forecasts as a result of slower sales.” The firm noted that “high cancellation rates on contracts in backlog that were projected to close this year, and more pronounced use of price concessions and incentives, particularly on the resale of those homes which have experienced contract cancellations.”
Aliber on the homebuilding outlook:
“In the next few months more and more of those houses on the market will reduce their asking prices, both because of the mounting costs of owning unoccupied properties and in response to the price reductions by the major home builders who will be seeking to reduce their inventories of newly built and unsold homes.
Moreover no builder is likely to put a shovel in the ground to start a new project until home prices stabilize.”
OK, so these companies will pretty much stop building until prices stabilize, meanwhile sitting on their stockpiles of land and land options and watching land prices drop even faster than home prices? I guess homebuilder share prices will go up again tomorrow and tomorrow and tomorrow.
I think the HB stocks got bid up because of recent retreat in oil prices. You might notice that almost every stock went up today. Because oil price went down below $70/barrel, people can afford more house. Let say the everage American driver saves $1000/year on gas, so he’s rushing out to buy a McMansion. Meanwhile, yoy price is going down, just 2% or 3% lately. What a bargain! : )
The explanation which Wall Street discounted or ignored: Falling oil prices and home prices are both signals that the economy is slowing down into a recession — seldom a bullish sign for future share prices.
Amen!
Getstucco,
Are you shorting homebuilders or is the fact that their stock is still buoyent so mindblowingly illogical that it’s driving you into madness? I’m totally perplexed by it.
Short BZH — already in the money. But my main concerns are (1) I’m a priced-out renter, and (2) I am worried that the longer the bubble continues, the worse the long-term devastation the US economy will suffer from the correction needed to restore macroeconomic equilibrium. I still have quite a few working years ahead of me, and I would rather not have to endure them against the backdrop of a permanently crippled economy.
The article seemed to miss the fact that the Airlines have taught all American companies the way thru BK to restructure their debts, reduce their costs, and screw their employees. Nothing will stop the builders from building until the first lender stops giving them more credit lines. This is truely the World Series of Poker. Unfortunately, everyone is bluffing.
Best comment ever!
No shovels in the ground? Guess that means a lot of unemployed shovelers, which means a lot of empty stores and restauraunts and movie theaters, which means even more unemployed, which means…..
Robert Campbell is on the money here. This is going to be long, painful and slow downturn after an initial flourish that flushes the weak turds down the toilet.
I have no idea what nominal prices of housing will be, but in real (inflation adjusted) terms, I am willing to bet prices *at least* 50% below today in 2016. Even a 50% drop in real terms is not too much of a tanking - that’s only a 20% drop in nominal prices over 2 years and then 0% appreciation over the next 8 years, which I think is an optimistic scenario - a soft landing Bulls can hope for.
The next Realtor trick is gonna be - forget 2005, for that was an abnormal frothy year. It makes more sense to compare against 2004
Part of the NAR/CAR proganda machine has started to work the seller (to reduce prices) and get the market going. But that’s a slippery slope - once the perception of appreciation vanishes, the incentive to mortgage your life upto your eyeballs diminishes sharply.
Crowd psychology and greed in market participants never ceases to amaze me. I would have thought that people would have learned a thing or two after the TMT Bubble collapse.
“I would have thought that people would have learned a thing or two after the TMT Bubble collapse.”
Every conceivable lesson about bursting bubbles was learned by someone in the tech stock bubble collapse, but not everyone had a chance to learn. Some other folks who were not bright enough to connect the dots will now enjoy the pleasure of discovering that the same lessons apply to the housing bubble collapse.
In response to GetStucco,
You’re right. The madness of the crowds is what enables some of us to make money in markets. In the equity markets, if all participants were to look for companies selling at a good discount to intrinsic value, life would become very difficult for Value Investors and for Indexers who tilt heavily towards Value
Fortunately, the supply of fools though clearly not unlimited, seems very very large.
I am thinking 2010 will present us with some very nice opportunities. Until then, rent and ignore the RE noise around us.
But then do the math 650,000-628,750= 21,250.
So lost 21,250 in 2 months (60 days)
That’s LOSING $354 a DAY
But I am sure that Mr Watts (he will appear in some bag somewhere), Mr. Liar-rah, and Ms. LAY (as in F&CKED) are secretly hatching a plan to help all of these $8/hr McD, TacoBell, BK, Subway, etc workers to get their own home to slow down the bleeding. LOL
I am comfortably watching and listening for the carnage from CA. I know it will be really bad when I can hear the squealing all the way here in Albuquerque.
This May be relevant:
July 23, 2005
Housing: Blasts From the Past
I like to read and re-read books written in the past to find out what people said about things that are hot topics today and in some cases to see parallels to today’s issues. I was doing this today and here is what I found in two books, one written ten years ago and one written 30 years ago. Below are few quotes on housing in these two books that are not particularly about housing but investments in general:
1. Fortune Building In the 70’s by Sidney Fried
“Housing [section title] …that the only thought was to keep it [prosperity] going without regard to the reckoning which must one day come. In the same way, new techniques developed in the past few decades to stimulate housing, introduced at a small scale first, suddenly were found to “feel so good” by so many influential groups, that the programs [for example, Fannie and Freddy, today] commenced to grow and grow without regard to an “ultimate reckoning.”
“…Is there any wonder that, along with other types of help for housing mortgage needs, a housing boom developed in the early 1970s, the over-all statistics soaring to two million units annually? …More low-income and middle-income people had houses and apartments, builders were happy, mortgage bankers were ecstatic, the economy was being greatly “stimulated.” Who could argue with such success?
“Only those who bothered to analyze what was really taking place.
“…Business Week article: …”Families that are cheated into buying defective houses or ones they cannot afford generally stop making payments and walk away from them; after all, they have little equity to hold back. HUD (Housing and Urban Development), therefore has been forced to repossess thousands of dwellings …”
My Comment: The Inflationary Recession phase of the current Longwave, 1966Q2-1982Q4, see:
http://www.financialsense.com/fsu/editorials/2005/0704.html
did not experience its worst period until after 1973 and is very instructive for the current Deflationary Depression phase. The housing boom of the early 1970s has a lot in common with the current period in that respect. In both cases, the housing boom supported the economy and postponed the worst.
2. Crisis Investing For The Rest Of The 1990s by Doug Casey
“The Problem with Real Estate [chapter title] In the United States there is more space where nobody is than where somebody is. That is what makes America what it is. – Gertrude Stein.
“On January 3, 1930, the following ran in the town paper of Greenwich, Connecticut, a fashionable suburb that had long been favored by the well-to-do. “Invest in Greenwich Real Estate Instead Of Stocks: The town of Greenwich ‘market’ never hits toboggan. In 50 years, there has never been a decrease in value, but in 50 years total assessed value has risen 50-fold.”
“Of course, that was still early enough in the last depression for people to believe optimism would support the market. As it turned out, some estates that had sold for a $1 million in 1929 subsequently sold for as little as $75,000 in the ‘30s [down 92.5%!] Greenwich was considered as recession-proof then as California was in the ‘80s. New York was still expanding and Greenwich was where a lot of the rich folks went to live.
“A crash in housing prices would be more devastating than a stock market crash, not only financially but psychologically. …Home ownership is more the stuff of the American middle class than motherhood, baseball, and apple pie put together; a real [estate?] price collapse would be the stuff of a political revolution.
“But social consequences aside, real estate is a market like any other. No bull market goes on forever, and bull markets are inevitably followed by bear markets; but no one knows how long it might be before the inevitable occurs. And, oddly, the longer a bull market continues, the more certain people are that it will continue even further.
Deflation [section title] …Unless we have entered a New Era, something both different and unpalatable is just around the corner.
“A deflation, a drop in the money supply that, in turn, results in the drop in the general price level, could either cause a collapse in real estate or be caused by it. If the Fed contracted the money supply by adopting excessively restrictive policies, or if people and companies decided to pay off and scale back debt, it could cause widespread failure and decreased price.
”On the other hand, a collapse in real estate could bring on a deflation.” [This from a guy who is not a deflationist.]
Here is an example of Historical Home Price Volatility from the same book:
Single Family Homes In San Diego
Gain or Loss From Previous Period
1867-1873 1000.00%
1873-1877 -84.00%
1877-1888 1500.00%
1888-1895 -79.00%
1895-1913 960.00%
1913-1917 -46.00%
1917-1926 190.00%
1926-1934 -57.00%
1934-1963 Missing
1963-1989 970.00%
Approximately, a home that sold for $125 (One hundred and twenty five dollars) in 1867 sold for $250,000 in 1989 and now it is close to $600,000. BTW, the prices in 1917 were the same as they were in 1888. Home prices have given back gains of 10, or 20, or 30, years many times in the past in many parts of the world.
Jas
Excellent post!
nhz, take careful note:
“The Problem with Real Estate [chapter title] In the United States there is more space where nobody is than where somebody is. That is what makes America what it is.” – Gertrude Stein.
” ”On the other hand, a collapse in real estate could bring on a deflation.” [This from a guy who is not a deflationist.]”
As far as I know, Doug Casey is an inflationist, b ut even he did recognize that “a collapse in real estate could bring on a deflation.”
BTW, I have predicted a Deflationary Depression to take place within this decade based on my read of the Longwave Cycle, also known as Kondratieff Wave, or Cycle.
Jas Jain
Jas’ keep the good stuff coming.
Have you heard of a book called “The Boom and The Bubble” by Robert Brenner? I remember there being chapters on kondratieff cycles. I skipped reading it in college and I have the urge to go buy a copy now. Does anyone know if it is any good?
My wife was also in the ‘I want a house’ mode. At least she did agree to move out of California as opposed to getting a toxic mortgage there (which I would die before agreeing to there).
Given that home sales declines eventually lead to a price drop, and these declines have been shoving the median higher for nearly a year…
Any guesses out there as to the actual future rate of price drops do to the this artifical top? Mine is 3% per month this winter…
“‘Inventories are not going to keep building up; that would be irrational,’ said Ben Bartolotto, research director for the Construction Industry Research Board based in Burbank. ‘In my experience, it tends to fix itself, and prices change.’”
Irrational ……. Now I’ve heard that word used …… before….?
Apparently, prices can keep going up, but inventory? That would be IRRATIONAL!
Once again, lets look at what IS going on rather than biased opinion, even if it does try to sound bearish. A lot more of irrational to go ‘Ben of Burbank’ ……
“‘Inventories are not going to keep building up; that would be irrational,’ said Ben Bartolotto, research director for the Construction Industry Research Board based in Burbank. ‘In my experience, it tends to fix itself, and prices change.’”
In the “Valley” and general areas there are projects going up like crazy! Mc Manisons in Chatsworth, New baldies for hills on the way to Simi for future Condos. In the flats of Simi Valley a very large Condo Deal just breaking ground. No slow down in Building here period.
There is a growing disconect but word has not reached the projects yet. I assume many of these deals were made years ago under a different matrix, but they countinue on under thier own power.
Ya’ll notice that we start every day in Florida now and end it in California? Just like the sun. Maybe Ben’s got a astrological thang going on there or sumpin’ ….
I like the new format. It keeps my time on this blog down.
Now that CA is officially going down, does that mean that the HELOC ATM machine is finally closed? So, Hummer and other SUV dealerships will be closing? Fancy restaurants? Exotic vacations? Las Vegas? Most high roller will be magically gone? LOL
Funny you should mention about fancy restaurants. I decided I was in the mood for a nice juicy steak and did not want to make dinner after working all day. So being the single working mom/renter, I picked my son up after childcare and we drive over to the neighborhood Black Angus. So it is 6:30 p.m. and the place is empty! Hardly no one there eating. My son even asked me, ‘mom where is everybody’? We had a nice juicy steak, although the portions were tiny! The price for dinner for 2, which one was a kid’s meal was $35.00. So where are people? Well, not eating at Black Angus! I had been to Black Angus previously and it used to be crowded.. hmm.. sign of the times I suppose.
“So it is 6:30 p.m. and the place is empty! Hardly no one there eating. My son even asked me, ‘mom where is everybody’?”
Maybe the Outback Steakhouse?
It must really SUCK to go to work all day, figure out what you earned, and then subtract how much value your house lost that day. And then realize you still HAVE to pay the mortgage on the actual mortgage balance, or higher neg am balance when the loan resets. LOL
Absolutely! Humans are risk-averse, loss-averse. A dollar loss is more painful than the pleasure of a dollar gain. That’s why God created Hell, ya know!
I don’t think most FB’s are going to be thinking very much about it except when the repo man and the bank come knockin’ at the door. Oh it will be eating away at them in the back of their little FB brains, but they won’t be saying anything, or much less doing anything to stop it or even mitigate the damages.
I might have to apologize to fire fighters for yesterday’s comments. They may really have some work to do here in putting out fires (of suspicious origin) as loans reset and people realize they are losing $353/day (and more).
OT…..but worth a read, especially for those that thought Australia managed a soft landing…….pay particular attenion to the last paragraph……..looks like we are just starting our decent……..Has this world gone mad?
look out below…………….
http://www.invbiznews.com/wordpress/?p=451
There is more on the OZ situation in this article in the current Economist. The short version: US price/rent ratios are 50% above historic norms, but it is worse in OZ and the UK. Further, the accompanying graph suggests price/rent levels never stayed far above historic norms in the past. But I guess this time is different, with the prices having reached a permanently high plateau and all.
http://economist.com/finance/displaystory.cfm?story_id=7891311
Great research and comments jas, nice to read your stuff
Need 2 Leave CA,
Don’t apologize to the firefighters. Yes, the guy on the actual fire line deserves far more than he/she is being paid (typically GS-4 or 5), but fire management (CDF middle-management) can make $200K/year. That is one reason why CA is going down the tubes: ever since 9/11 every union, public service outfit is earning far more than any other state: Nurses start at $80K/year, middle-management police personnel $85-105K, CDF captains $150K-$250K, etc. and all think they are not making enough.
Also, for what it is worth, many of the fires now burning in CA are being deliberately let go to burn…management on these fires (I know from personal experience) wants overtime and a reason to be “out of the office.” This is how the GS-9 fire manager manages a six-figure income to buy their jacked up trucks and Humscalade.
There was a firefighter poster at the OCR blog bragging about the OT for firefighters and it was guaranteed money in the bank for him.
He was a moderate bull, but has disappeared lately.
But if they are making so much, why are they having such a difficult time finding qualified candidates to take these jobs — especially nurses!!!
Again, if anyone thinks these jobs are so easy and paid so well, why aren’t they racing to the HR departments and applying, themselves???
“…and Humscalade.”
LOL!
‘Today’s market is sustainable and can be used as a benchmark, not last year’s inflated, artificial madness,’ said association President Steve White.”
Yeah, and I’m sure that last year, Steve White and his RE minions were shamelessly parroting the party line: “Buy or get priced out of the market!”
Oh, and Steve, I prefer to use next year’s prices — or 2008, better yet — as my benchmark.
the inventory right now does not include GS’s “shadow inventory” of houses bought by flippers who are watching the market, deer-frozen-in-headlights-like, not knowing which way to jump. They’re hanging on, watching their equity slowly drain off like a handful of sand through their fingers. They lie awake at night, praying the market will turn up next year, then the next, when they finally throw in the towel it will be at the bottom.
So last night I was on my agent’s MLS listing and I noticed the house that I had been eyeing since May was no longer listed. This home was originally priced at 570k for a 3 bed/2 bath, 1245 sq ft. Very nice neighborhood. Similar homes, albeit with larger sq. ft. were going for 600k at that time, back in May. So, 1 month ago the home is finally lowered to 550k. The other homes in the neighborhood, per my research on Zillow I had noticed had dropped. One particular home originally at 585k had dropped to 518k and sold about 1 month ago.
So anyhow, I called my agent this morning curious if that house was in escrow. I had already decided back in June that I would hold off on buying till perhaps December, or ‘2007 in light of what I have been reading here as well as witnessing first hand in the market and business community. I am a renter making 120k with no debts. So my decision was to continue to rent and save up even more money so that I can get a reasonable loan and not be the one to ‘catch the falling knife’.
Anyhow, so my agent responded via email, after a conversation we had when I expressed to him that I felt the market was still too high and although it was a beautiful house I was willing to wait longer for further price reductions and I told him I believe it could drop by 20% by next summer (I truly believe this).
So, thought I would share his email he sent to me following our conversation. Here it goes:
The house on ____is now in escrow, it is Pending. I agree with you on many of your points ___, but you should also look at Real Estate as a long term investment. With income tax benefits, and
not throwing your money away on rent. Everyone wants the best price and market conditions and they deserve it. I do not think the market is going to go down in price as far as you think it is. Prices have stablized and will continue to, but let’s be realistic the prices are still strong. Prices have not dropped 100k, the percentage is low. The price reductions are mainly people who overpriced to begin with. People have to pay attention to the
comparable sells again. The seller’s that are not are going to sit
longer. In the price range you are looking in, the average market time is approximately 90 days. Buyer’s have more choices now and negotiating power.
If you want to spend 500k then you should not be looking at homes
listed at 550k. We will talk and stay in touch. Thank you, it was nice
to talk to you today. Take care.
Signed, Realtor (name omitted)
—————-
My question to you all is: Do you think I would be unreasonable to offer 500k for a house that was going for 550k? I think it is not unreasonable or too lowball of an offer in light of current market inventory, yet from the email I received that is what is essentially being inferred. Do you agree or disagree? By the way, I am glad I passed on this, because I know I will get a better deal.
Correction: 550k house is actually 1,435 sq ft., (not 1245 sq ft. like I posted) 2 car garage, on a cul-de-sac. However, comprable homes in that price range are 1600 sq. ft.
Pending does not me closed. Ever hear of “buyers remorse” The major homebuilders are reporting 35% to 50% cancellation on their pending sales. And, whats more, buyers are walking away hours before closing, giving up their deposits, just to be out from under a house losing value.
Tell the listing agent you have a back up offer at $500,000..and will wait to see how the new buyer reacts when the appraisal or the financing doesn’t come in at $550,000
Pending does not me closed. Ever hear of “buyers remorse” The major homebuilders are reporting 35% to 50% cancellation on their pending sales. And, whats more, buyers are walking away hours before closing, giving up their deposits, just to be out from under a house losing value.
Tell the listing agent you have a back up offer at $500,000..and will wait to see how the new buyer reacts when the appraisal or the financing doesn’t come in at $550,000
Pending does not me closed. Ever hear of “buyers remorse” The major homebuilders are reporting 35% to 50% cancellation on their pending sales. And, whats more, buyers are walking away hours before closing, giving up their deposits, just to be out from under a house losing value.
Tell the listing agent you have a back up offer at $500,000..and will wait to see how the new buyer reacts when the appraisal or the financing doesn’t come in at $550,000
“I am glad I passed on this, because I know I will get a better deal.”
I agree. From your name I take it you live in LA as I do. My sense is that many people in our area including (or especially) realtors are engaged in wishful thinking regarding this market. To quote the Stones “Time is on my side” — and yours too.
I’m shocked that a realtor wouldn’t take in an offer that’s only 10% below asking. In a ‘normal’ market I think it’s pretty standard for homes to sell for low 90% of asking price so you’re definitely in the ballpark.
First thing I’d do is look around for a new agent. Just the tone of the email this person sent to you is very condescending and makes it sound like you’re wasting their time.
I agree. This person, despite being full of $hit, sounds completely arrogant. Get away from this moron and find someone who wants to serve you and is in touch with reality.
Better yet, cool your heels for a while longer. You will soon be able to get do better than @380/sf.
No, you were not. 10% below asking price does not even qualify as a lowbal offer.
Just an arrogant and ignorant realtor, like most of them
Sometimes you just have to wait until the market goes down .
I don’t think that a realtor is making a good argument these days when they use the tax write off throwing away rent line so that makes anytime a good time to buy .
The market has not stabilized therefore it is not a good time to buy .
I don’t think you have any price stability at all right now . When a realtor says something like “sellers get 90% or more of ask price “,it doesn’t matter .
When the market was going up 25% a year or more that wasn’t a stable market either .
I’m sure the realtors have promised a bounce back in 2007 ,so you better get in now ,but I think you have to agree they have been wrong .
I don’t see how buyers have anything to lose by waiting IMHO.
You better NOT offer 500K for a 550K house. Remember the mantra here: If you’re not embarrassed about your offer than it is probably too high.
You can wait a year and easily offer 425K!
$1.00 anyone? lol…. j/k ! Thanks! Let the embarrassment begin.
I wouldn’t offer more than $400K, and even that would be high. Look at 1998 prices and add 10-20%. That’s your price, IMO. Offer not one penny more. There will always be another house, but once you make the committment to buy, your power and leverage are gone.
Really, don’t even waste your time with this realtor idiot. Like Wiz said, it sounds to me like a lot of arrogance (and ignorance). I’m guessing this realtor wasn’t doing business in 1989. Find one who did…and wait. This will take a while, and as a single parent, you do not want to be upside-down on a house in LA, IMHO.
Good luck!
Patience. This is just the beginning. 10-1 it falls out of escrow.
Just another example of realtors being ‘in the moment’. All of their reasoning and logic is applicable to current market conditions. For example, a year ago it was ‘this market will never go down’. A few months ago, ’soft landing’. Now, it’s ‘prices may come down a little but not much, still makes sense with the tax credit’.
We, on the other hand can process the data and extrapolate into the future. I say lowball, a lot of inventory is just sitting, someone is bound to take your offer.
I offered 500k on a house in North San Diego County that had been on the market for 749k for a year until it was reduced to an asking price of 600k just a month ago. Beautiful home with great view of golf course, but needed paint, carpet, etc.
They laughed at my offer. The house went into escrow a week later at a price inknown to me, but I am sure for no more than its 600k listed price. It fell outof escrow a week later and was then pulled off the market.
hang on buddy the prices are only going to get better…my wife is also putting pressurw on me to buy,we sold our home in 3/05 for a 500k gain and she cried all the way to the escrow office,she know busineeswoman but a good cook. i sit here on this blog when her nagging gets to much,and she quiets down for a while,and does realize that waiting has paid off,can i keep her calm untill 2009…
Does anybody recall the median prices for SFR and condos for July 2006? I’ve been looking for it and haven’t seen it anywhere.
http://piggington.com/july_price_and_sales_data
test
Please help my close friend! He is a medical doctor and does well financially, but he cannot afford to simply throw away hundreds of thousands of dollars. He is considering buying a home in Laguna Beach, CA that is listing for a little under 1 million dollars, 770 sq ft, 1 bed 1 bath MLS # L20047 . I am trying to warn him to hold off for a while, but he insists the high-end market will be immune from the suspected downturn. Any comments or suggestions about the “high-end” market being immune?
How can the “high end” be 1 bedroom 1 bathroom? That’s an oxymoron.
Obviously it has granite countertops!
1 million for 770 sq. ft. you have to be kidding! That is just too much money for a little cracker box. The smallest apt. I ever lived in was 850 sq. ft. and I felt claustrophobic, it was so cramped. I can’t imagine 770 sq. ft. What I have noticed is that the high end market is impacted big time by a downturn, they are not immune. I can’t tell you from years past, only from my recent observations. I am sure others on the board can give you some stats to support what occurred to the high end market in past cycles. For a real example today, my brother in law decided to sell his 1.2M home because he felt the price was going to drop due to the bubble, he had to slash off 300k before anyone would buy it. The home was finally sold and now he rents. This was last summer. Please tell your friend to wait. Why is he so anxious to buy right now? Any children or family? If so, I can’t imagine them living in 770 sq ft. He needs to be patient, especially being single with no wife and kids he should be able to wait till ‘07, IMO.
Your friend has an interesting definition of “high end”. Good luck!
This guy is a freakin’ retard!
That’s roughly $1300/sq foot. That’s higher than some of the priciest properties in Manhattan (which are currently roughly $1000, or so.)
For the debt service on that baby, you could rent a gorgeous 3-bedroom in the best neighborhoods in Manhattan.
Has the world lost its freakin’ mind?
Thanks for your all your input and encouragement folks!
david cee - True about ‘buyer’s remorse’. I have heard that it seems to be more common in new housing developments. You bring a good point up because now I bet it will be buyers also walking away from the existing homes (not sure correct term for this) in escrow and not only new developments. Question though: Can a buyer request an appraisal even before putting in an offer? To me it would seem the more prudent thing to do. Is this allowed? Pardon my ignorance but I haven’t bought my first home.. yet.
manraygun - Yes, I live in a suburb of L.A. I am actually approximately 35 miles North of L.A. My place of work is about 32 miles away from where I rent, which is about a 45 minute drive to work with traffic. I agree about realtors in the L.A. area, they all seem to have a sense of entitlement or belief that the market in L.A. could never go down. Let’s keep waiting, what do we have to lose, but gain … more money in our pockets.
CanuckinTX - Interesting, “In a ‘normal’ market I think it’s pretty standard for homes to sell for low 90% of asking price .. ” Seems like everyone around here forgot what is normal anymore. :O So I am glad I was not way off in stating to the realtor that a 500k offer on a 550k home is what I was planning on. That’s ok, probably by next summer more and more sellers will be cutting further! About the tone of the email, I agree with you, it did sound condescending and I was really disturbed by the tone actually. This coming from a realtor with 15 + yrs. experience.
Pasadena Renter - Wait till the real lowball offers start pouring in! I am looking forward to that actually. Put those low ball offers in people! je je je
soldinstudiocity - Thanks for the encouragement. Regarding the wife, well you did the right thing in selling when you did! Take her on a few weekend get away’s to the wine country, a spa get away 6 months later. I am sure you can keep her plenty happy till ‘2009 !
Hey La Gal! Good to see you waited to buy. Yes you can get an appraisal, anyone can. Hire a reputable appraiser to do a drive-by appraisal. Then you may have an idea of what the homes int he neighborhood are really worth right now. A good appraiser will also include a fourth and even a fifth sales comp (but these two comps will be listings). This would give credence to the fact that the market is declining in value.
I would stick with the others’ suggestions and wait until next December at least to buy. Dont buy in summer, because may be a dead cat bounce (prices temporarily go up due to last few FB’s). If you wai tuntil next December, when people are really trying to just get out, you may get a better price.
Considering 2,000,000 people live in the San Fernando Valley, 7000 homes for sale isn’t really that many homes. The ratio in Phoenix has to be much much higher.
True. Can someone post the inventory high from the last downturn in the SFV (Deb)? IIRC, it was somewhere around 10K or 11K at the peak, but I could be totally off here.
Cali is toast, Phx is toast, but the Repugs gotta keep this going till Nov 7th if they want to hang on to their power. Ain’t gonna happen ‘tho as people will see the light and realize the corruption and scam/ponzi scheme of this bubble.
More Phx news here:
http://www.azcentral.com/class/marketplace/homevaluesspring06/articles/0305vhv-slowdown.html