‘Buyers Market Of 2006 Has Begun’ In California
Realty Times has this report from Sacramento. “The buyers market of 2006 has begun. Following years of a sellers market in Sacramento, many consumers are facing a more normalized market across the region. Sellers must learn a lesson early in a normalizing market; HOLD ON TO YOUR PROPERTY! Once the market begins to shift back to neutral and the price trend starts back in an upward momentum, sell!!”
“But If you must sell in this market, it’s time to price ahead of the market (that means get ahead of the price reduction curve). Pricing ahead of the market, makes many sellers cringe, but it’s the only way to get your home sold without it sitting on the market for a long period of time.”
And from the Santa Cruz Sentinel. “The home-buying frenzy of 2005 appears to be over, with the number of single-family homes sold in January, 107, setting a 10-year low for Santa Cruz County. The median price dropped for the third straight month to $729,500, That’s a significant fall from where it was last summer but still far out of reach for some buyers.”
“According to (realtor) Gary Gangnes, who compiles the figures, ‘the market has calmed down.’ One indicator, the Unsold Inventory Index, is at a five-year high but in the normal range for a stable market. The index stands at 7.3 months, representing the number of months it would take to sell all houses for sale at current rates. Normally this is six to seven months. By way of contrast, in December 2004, it stood at 1.8 months.”
“The Unsold Inventory Index stands at five months, a three-year high, while the number of listings is up 152 percent from the same time one year ago.”
“‘Sadly, this price is still way too high for faculty and staff at UC Santa Cruz,’ said Ted Holman, associate professor of chemistry. ‘Oh well, I hope this is a trend that continues. Lord knows this whole community needs lower housing costs.’”
Median price drops
June 2005: $785,000
July 2005: $755,000
August 2005: $780,000
September 2005: $749,950
October 2005: $767,000
November 2005: $789,250
December 2005: $739,000
January 2006: $729,500
The market will much more favorable to buyers in 2007 then the ‘buyers market of 2006′.
David
Bubble Meter Blog
“Sellers must learn a lesson early in a normalizing market; HOLD ON TO YOUR PROPERTY!”
WTF! Remind me to NEVER take advice from a realtor.
Jimmy Castro also said this:
“I highly encourage investors to hold on to their properties! The market is going to rebound and you are going to wish that you didn’t dump your investment at a fraction of what it is going to be worth in the next year or two.”
Agent’s Plea: Don’t Dump Your Properties!
Lander
Sacramento Land(ing) blog
People, we now have year-over-year depreciation in California. Let the popping begin!
Placer Pops - YoY Depreciation Era Begins?
Lander
Sacramento Land(ing) blog
Mr. Castro Responds
Lander
Sacramento Land(ing)
My reaction exactly.
Don’t confuse advice to benefit the realtor with advice to benefit the homeowner.
The advice to hold on is a benefit to the realtor.
Not exactly, how do you figure someone holding onto a property is helping the realtor. Really just sit back and think on that for a moment. What realtors don’t have bills. If it was the realtors choice he would be encouraging to drop the price and sell. Sometimes the folks bitterness on this blog belies good old common friggin sense.
RealtyTimes.com is full of crackpot realtors. I’m sick of them…I could care less about the housing market…what I really want is pick of the litter on a sea of late model mercedes. The FACT here is that realtors ONLY say things that benefit themselves. Who on earth in their right mind would listen to a salesman about anything? Do your own research. That’s what the internet is for. Salesmen are dead.
Sounds like a lot of jealously there dude. If I conducted myself like that in this business I wouldn’t have been in this business 15 yrs. You may want to be a little more selective of the salesman you speak too. As far as your internet has replaced salesman comment. Always remember one thing in 80%+ of all jobs in America if there wasn’t a salesman selling something you’d probably be unemployed whether it’s real estate or widgets.
Jealously? Sounds like you’re reaching there, dude. This sea of out-of-work real estate agents (probably 40 of your 80%, oops) is producing an equally large sea of late model luxury autos for sale…(along with BIG trucks, from contractors that are also out of work) . You can already get a pretty good benz for practically nothing here in Sac…from a desperate agent. They’ll even throw in teeth-whitening supplies and their Dale Carnegie books-on-tape (my favorite of which is “How to make money when you aren’t good at anything”). Face it; no matter how well a salesman dresses or how nice his car is, he still belongs to the ethical armpit of America. Good products sell themselves.
Realtors have a vested interest in trying to protect their liabilities. Realtors were (are) significant holders of investment and 2nd home properties. They do not wish to get mortgage calls on their NegAMs. Therefore “Don’t sell” means let me get out first.
I don’t think most realtors–at least in California–actually sell any houses. A quick Google search found an article in the Santa Cruz Sentinel that said:
“Last year, 2,820 single-family houses were sold. The Santa Cruz County Association of Realtors has 1,473 members — almost 400 more than five years ago. ”
…so there’s basically 1 realtor for every 2 houses sold.
Usually more of some person providing a service means lower prices for consumers…but with every bored housewife becoming a r-e agent, it’s a wonder anyone makes a living! If there were fewer agents, they could all be happy with 2% commissions!
That makes absolutely no sense.
Realtor says” Hold your property till I get mine sold”
Sounds like sales are slowing for you, “dude.” Is this Mr. Castro?
“HOLD ON TO YOUR PROPERTY! But if you must sell reduce your price.”
The fear is setting in.
Or, HOLD ON TO YOUR PROPERTY, WE ALREADY HAVE PLENTY TO SELL. YOU’LL ONLY MAKE PRICES GO DOWN.
NAR is like OPEC.
“HOLD ON TO YOUR PROPERTY!”
This makes the assumption that most can afford to “hold on”. I’m sure there’s some that can, but for the most part, as has been discussed many times on this blog, even a flat market would slaughter most that have banked on equity appreciation.
Also, the writer doesn’t give his readers a time frame. I wonder if the readers realize that by “hold on” the writer means “hold on until 2015.” (Spring of 2015, ofcourse)
Anyone still holding on to your Global Telecom stock, the turn is around the corner….hold on just a couple more months!!!
Don’t forget the Enron, JDSU or Worldcom stock!
Hold on to your Fannie (Mae stock)!
Hold on to your Webvan!
And hold on to the mother of them all - QQQ !
Wait, I just noticed the ticker symbol has changed, it’s now QQQQ .. how does one say that, “4Q” ?
OK, the obvious point has been made here twice already — but this realtor’s F’d Up advice — HOLD ON and wait for the appreciation machine to begin anew after a presumably short pause — has all the hallmarks of the bubble mindset that has dominated the market so long, and which many will find painful and difficult to relinquish. This really is a fascinating time. The notion that real estate always goes up is so firmly embedded in so many people’s minds that it will take 2-3 years to jar it loose. Even if prices come down 20%, many will take that as a BIG BUYING opportunity. This may slow the rate at which prices come back to earth. Only after we have seen 2-3 years of steady declines, along with media carpet bombing reports on foreclosures and the “bursting of the bubble,” will the public capitulate to the truth, that the run-up in prices since 2000 was a timebomb all along.
Realtors realize that a mass stampede would result in a widening gap between sellers’ unrealistic expectations and buyers’ willingness to catch a falling knife. Unfortunately, it appears that most CA markets are already at the point they are hoping their comments will forestall — a growing glut of inventory is matched by increasingly reluctant would-be buyers who can bide their time until the market stabilizes.
It’s like the scene from the end of Animal House where Kevin Bacon is telling everyone to not panic and then gets flattened by the stampede. These realtors are seeing the inventory numbers going off the map and now are resorting to this Hold on to your property B.S. Good luck - can’t wait to see what the talking points will be next week in the attempt to stop the bleeding. I’m really getting tired of all the Normalizing garbage. There’s really nothing normal about inventory going up at this outrageous pace.
Why?? Why would a Realtor who earns his money from commissions of sales tell a seller to hold on. That guy is not a real Realtor he’s a jackass.
Because many “realtors” are RE speculators themselves.
Your sadly misinformed. Out of an office of 100 you might have 1 or 2.
I would have to strongly disagree thats just wild ass speculation. Realtors realize nothing of the sort. Sheesh come on people think a little bit.
i don’t think there will be a BIG BUYING opportunity for a long time. what will be the ratio of those who can afford to pay the 20% down compared to those in default will be there to change the general mood of the buyers. even the banks who will provide the loan will be scared to lend to anybody.
“Even if prices come down 20%, many will take that as a BIG BUYING opportunity.”
Many may take it as such, but not many will be qualified, as there will be no home equity appreciation available to roll into a nicer home, and downpayments will be necessary to qualify for a loan. Given negative savings rates, downpayments will be hard to come by, as will loans on collateral whose value is dropping like a rock with no bottom in sight.
True, true. Any drop in prices will vaporize what little equity people have. Any still above water will not be rushing to dump cash into another losing “investment.”
Jimmy also said this:
“I highly encourage investors to hold on to their properties! The market is going to rebound and you are going to wish that you didn’t dump your investment at a fraction of what it is going to be worth in the next year or two.”
Agent’s Plea: Don’t Dump Your Properties!
Lander
Sacramento Land(ing) blog
This is off topic, but I wanted to mention that I have been having a lot of fun looking up houses that are for sale around here in the Phoenix area on Zillow.com. They will tell you the price the current owners paid for the house, and when, and any other sales of the house going back at least 10 or 15 years. It is interesting to see houses that people bought for 500K 8 or 9 years ago being priced at 1.5 million. Of course maybe these people took out 500K equity loans and spent the money, but I would be surprised if they get these prices. You can also find out what price the owner spent on a rental house. I checked our own house, and they had the price we paid 5 years ago right on.
Today our house goes on the market. I hope we priced it right. The real estate agent suggested a price that was about 10% lower than we had been hoping, but she had the data to back it up, and we want to sell pretty quickly, even if we have to lower the price.
Kim,
I have an even better one. A house that was purchased for $142K in 2000, now on the market for $640K. This is Dublin, California. I almost choked when I read that mess. That was only 6 years ago!! Damn house was built in the mid-60s…the tail-end of the run of the TV series Ozzie and Harriett.
UN-believable…
BayQT~
Got you both beat: A family member’s house was sold for 50k in ‘99, 255k in ‘03, then for 508k in ‘04!!!!!!!!!!! Zillow says it peaked in upper 500’s last summer, and is steadily dropping now. Granted, there was a major fixing-upping between 03 and 04, but to jump TEN TIMES in price in five years??????
kim
be grateful you have a realtor who has advised you to be competitive in your market…there are LOTS of realtors who will take a listing at what YOU want or “need”, then talk you down in price after they’ve secured the listing….remember that buyers are more likely to make a full priced offer on a property that is competitively (and accurately) priced than a low ball offer on a property that is overpriced. But, that said, what I just wrote is what happens in a fairly “normal” market…and the Phx market is anything but. Be prepared to cut your price quickly and don’t take discounting your home personally. It’s not about you or your home, it’s about the market. Good luck!
Our house isn’t in Pheonix, it is in Arlington, Washington. 4100 square feet, custom, 4.6 acres of land for 545K. This is less than a 25% increase from what we paid 5 years ago, but we may have paid a bit more than we should have, but I don’t regret it. We were not trying to make a profit, but I am glad we will probably not loose money either, even after selling costs and the money we have put into upkeep, about 22K (we had to replace a 1500 square foot deck, for one thing). We are tired of having the responsibility of upkeep anyway and want a break from it.
Kim, I live in Arlington and your realtor clearly knows best but 4.6 acres in Arlington for $545K sounds cheap to me. Which part of Arlington, if you don’t mind me asking? We live in Courthouse and 2 bedroom condos in our building went for $550K at the spring peak (currently one has been sitting for a few months and been reduced from $560K down to $530K). My husband and I want to buy a SFH in McLean eventually and would love to have an acre or more but that much land in McLean is usually priced at $1 million plus. If you bought in 2000 or 2001 in this area, I highly doubt you paid more than you should have. I’m a housing bear but I don’t think prices in DC will ever make it back to 2000 or 2001 levels.
I’m pretty sure Kim was referring to Arlington, Washington state, not D.C.
Thanks - need to remember to read more carefully next time!
Good luck selling your place. Let us know how it goes!
Be prepared to cut your price quickly and don’t take discounting your home personally. It’s not about you or your home, it’s about the market.
Sound advice. Today’s sellers may be offended that no offers are forthcoming, but remember that it is better to lose 10% than 30%. Try to sell before each and every buyer out there realizes how far this thing will fall.
When we bought after the crash in 1991 in Sonoma CA, for 200k down from its 350k peak.The seller treated us like shit, accused us of stealing thier house. He almost punched me when I said “Its not about you or your home, its the market, amd your lucky I’m buying a house thats been sitting for almost a year. I had my lawyer complete all comumications after that. They also left the house a mess. I would have swued if they had any assets.
Kim,
Be skeptical of comps. Agents will show you data that lower your expectations. They show data to buyers that raise their expectations. Their goal is not to help either party or to raise to the price. Their goal is set up the deal. They don’t care about the price as long as the deal closes. They may show you comps to lower your expectations not to give you an accurate picture of the market. Often they will withold comps that make you think prices are higher. Be very skeptical of them.
Santa Cruz prices have always been lower then in Silicon Valley ( over the hill) its been true since the 70’s. Prices will capitulate! There are no jobs but construction and goverment in Santa Cruz. Let them bleem!
BTW- we are looking at 40% haicut off prices just to break even with rentals. BAHHAAA BAHHAAA!!!!
At the current pace SC has gone down by about 7% in 6 months. That’s about 14%/year if this trend holds. I think the decline will accelerate come this summer when panic selling sets in.
You may get your 40% discount sooner than you think.
santa cruz is not what it’s cracked up to be. even back in the 80’s when i lived there it was choking to death in traffic. there is zero economy outside of ma and pa businesses and it’s an absolute crawl over the 17 into san jose (and back). and when the 17 is running full speed it’s the world’s scariest freeway.
it’s got its plusses for sure, but give it a rest fellas. it’s no $750,000 town.
I had high school friends in Santa Cruz in 89 - we couldn’t get over there to see them after the earthquake for a long time. I remember when they first opened 17 again - one lane, each direction. I will never forget the absolute destruction of that quake. I get those images when I think about buying.
“it’s got its plusses for sure, but give it a rest fellas. it’s no $750,000 town.”
Hey, this is the place where they want to put a solar panel on top of an electric city bus so that all the flower people can ride around town for free…courtesy of the sun. Don’t forget to factor this benefit into your home purchase!
Don’t foget Boulder Creek golf and Pasatiempo, an Alistair Mckinzie masterpiece.
Those in the know call the town ‘The People’s Republic of Santa Cruz’.
San Diego Inventory is now over 17,000 according to Zip Realty.
we’re looking at close to 6 months of inventory for SD.
for Sacramento, a little over 8 months of inventory.
Bubble Markets Inventory Tracking
oc, or anyone else, is there a magic number of available inventory months that traditionally throws the momentum in the buyer’s direction?
I’ve heard that >6 months makes Realtors ™ squirmy.
Why would it??
Well, non-bubble cities tend to be buyer’s markets. So if the months of inventory in non-bubble cities like Houston works out to be 7.5 months in November 05, let’s just say 7-8 months of inventory would be a buyer’s market. Which means Sac and Phx are already there, and SD is right at their heels.
Houston inventory and sales figures in 11/05
Make that a 25+ month inventory for downtown San Diego condos at current selling pace.
Not including new builds, builder condos, or FSBO’s….just MLS.
SoCalMtgGuy
Another F@CKED Borrower
FB FORUMS
25+ months!
Whaa…. waitasecond - now that deserves a special edition:
“San Diego condos for everyone AND their mother!!”
How do you get a 25 month inventory? The SD MLS only shows 500 listings with 100 sales in January. That’s 5 months inventory.
There were 619 on the market, I think it is right at 600 now. The sales pace was 26 homes sold in January.
I have no idea where you are getting 100 homes sold, or 500 on the mls.
I was using this link to track the sales: http://www.sdcondo.com/activity.html
There are only 19 so far in February.
SoCalMtgGuy
OC Renter, thanks for all that you do
you are very welcome
I walked down and visited 3 different major condo builders in downtown San Diego. Prices have been reduced fairly dramatically. The condo I looked at was listed and sold for 410k but the buyer backed out. It had 20k knocked off the top. It had 2 years of HOA fees included (12k total). It had 1% of the closing cost covered (4k). Additionally a realtor could pocket 3% for a referal (12k). 410-20-12-12-4= 362k! That is a 48 k price drop from a few months ago. Don’t tell me prices aren’t dropping already…
I say: “San Diego condos for everyone!”
bring it on!
Sorry OT,
But they need this here in California …
No Citizenship, No green card, No mortgage
http://www.inman.com/inmannews.aspx?ID=50139
“It seems to me the last thing we would want to do legislatively is impede the market,” said Janis Bowdler, a housing policy analyst withNational Council of La Raza in Washington, D.C. “It seems counterintuitive to artificially stifle the market.”
Kind of like how we ‘legislatively impede’ the illegal immigration market? Or the illegal employment market? Or even the predatory lending market?
Why should I as an H1-B and resident for tax purposes (pay the social security tax) be prohibited from getting a mortgage? Or even why should a foreigner investor be prohibited? Now if you can show someone is an illegal immigrant that is another story.
I am also a tenured professor waiting interminably for a green card….
This is stupid. There are lots of H-1B and L-1 professionals working on the US soil, who pay taxes and SS just like overybody else.
WHAT? Why would someone want to hold on to a falling asset where they owe more than the damn thing will be worth, especially the FBers that just bought with an IO. Take your losses, cut and run. Dublin is a nice town, but 120K to $640K in 5 yrs is ridiculous. And they are building McMansions in every nook and cranny of the Tri-Valley. No more nice country drives there. Glad I am out of that mania. ABQ is much quieter.
I am interested in ABQ. What are your likes/dislikes?
Santa Clara County inventory heading up:
2/1/2006 3094
2/2/2006 3090
2/3/2006 3095
2/6/2006 3098
2/7/2006 3144
2/8/2006 3195
2/9/2006 3239
2/10/2006 3268
2/13/2006 3277
2/14/2006 3307
2/15/2006 3344
2/16/2006 3366
2/17/2006 3376
2/21/2006 3384
2/22/2006 3424
Hmm… the Super Bowl was on 2/5.
Small data set, but it appears to have turned upward noticeably by then end of the week after that!
You’re right. The high for last year (May-Dec) was 4354 on 10/28. May-August inventory hovered between 3500-3800.
Small data set, yes, but if you look closely, there was only one day (2/2) when the inventory fell from the previous date in the list, and overall it was up by more than 10% in twenty-one days. This is fairly strong evidence that an inventory correction is underway.
The rate of change is obviously increasing. It’s gaining velocity.
Another anecdote: My mother (retired, long-time RE broker/investor) just sent me an e-mail saying some of her RE agent/broker friends are now getting into foreclosures. They say the foreclosure market is beginning to heat up. This is in North San Diego county.
Wood keeps piling on to the bonfire…
Dont you think they may be a bit early?
Per the e-mail, nothing specific (I e-mailed back requesting more info, of course!), but she stated, “going into foreclosure-type transactions.”
No, they are not early. See Ben’s post about 45% increase (I believe) in foreclosures yesterday. Around here, people are literally one paycheck away from BK. That is not an exaggeration. They have been using their HELOCs and cash-out refis to pay their mortgages for a couple of years now. That is why this thing will be much bigger than previous crashes. It was absolutely necessary for appreciation to continue just so many recent buyers could buy food and pay their monthly bills.
This is not limited to “poor” people, either. Those who make six-figure salaries have stretched their finances just as much. It’s why we got out of the market after we sold our house. We would have doubled+ our monthly payments just to get a pool OR a fourth bedroom in an equivalent neighborhood to what we sold.
I’ve stated before, as have other SD posters, San Diego has basically been flat (our area is down) since summer/fall 2004.
I agree. North San Diego County has been flat as a pancake, price-wise, since July 2004, in spite of that stupid median-sales price increasing every month.
My explanation on why the median price has continued climbing is that it’s too simple. I think the “big squish-down” is underway, where the sales in the top half of the measurement are losing steam. You wouldn’t see it if you just look at the midpoint, and call it the median sales price.
So even though there have been enough higher-end sales to keep the median rising, I bet that group is compressing and starting this month or next you should see it start to lower, probably dramatically. (I know it already has in some areas - here in Feb 06 we’re currently up a measly 2.5% over Feb 2005 with 30% less sales)
>A HREF=”http://www.bubbleinfo.com”>bubbleinfo.com
I’ll try that again
bubbleinfo.com
Actually what I meant by early was the discount they think they will get may be smaller than if they wait a year or two. You know, when the real blood is in the street..
I’m right there with ya. I sold in July 04 and have been monitoring my old zip code (91915) ever since (while renting and watching my CD’s compound at 5%). Prices haven’t changed, inventory has soared (400%), but what is interesting is all the shittly TINY houses that people are trying to sell for way to much. I think the late buyers who already overpaid feel they should make their 100-200K by being homeowners for the last year or two. They don’t understand that they OVERPAID when they bought the home to start with and by summer will be underwater. Here’s how I see it (realistic example and numbers). The little houses in the neighborhood (1400ft2) sold for 195K in early 2000. That guy could sell now at 400K and still walk relatively happy (100% gain). That same little house was selling for 500K (to idiots) in summer 2004, now those knuckle heads feel entitled to sell for 600K. What do you thinks going to happen? Some sellers have a LOT of wiggle room, others will be 100K underwater before they know what hit them. Hope they like staying put for the next 7-9 years until the next cycle returns prices to what they paid for the house. This is just history repeating itself.
No. In fact, if you look over a sample of ziprealty listings from SD, you will notice they are suddenly peppered with statements like, “Short sale subject to lender approval. Submit all offers.”
THE END IS NEAR!
What do they mean specifically by “getting into foreclosures?”
Handling the process, buy/sell or ?
I would be interested to hear some opinions regarding a rebound after a slowdown, possibly to include flat or negative appreciation.
It seems to me that at drop of 30%-40% in medium home price in California, followed by a few years of flat price growth, would set us up for what realtors like to refer to as a true ‘Normal’ market.
Wouldn’t it be safe to assume that after a correction and cool down, prices would likely follow at least the traditional 6% per year growth rate?
With this thinking, those who may find themselves upside down on there mortgage need not panic if they are in for the long term.
“Wouldn’t it be safe to assume that after a correction and cool down, prices would likely follow at least the traditional 6% per year growth rate?”
No, because the inflation-adjusted appreciation rate has only been that high for two brief periods over the past century — once immediately following WWII (when servicemen were returning from Europe and new household formation was taking place at a furious pace, laying the foundation for the Baby Boom) and in the recent period from, say, 1998-the present. Otherwise, as documented in Shiller’s Irrational Exuberance, the real appreciation rate of residential housing has been below 1%. But thanks for perpetuating the Realtors’ (TM) urban legend once again.
To answer your question, it’s worth looking at the last big housing boom-bust cycle in CA. In 1988 the stories in SF bay were just like those we’ve heard recently — multiple bids — people making offers without seeing homes as soon as they are listed — etc.
By mid-1989, our house, which was built for $42k in 1969, would have sold for $545k. Then came the October market crash, the invasion of Kuwait, and the general recession. We bought that house for $455k in early 1992 after it sat for 8 months on the market.
By mid-1993 we refinanced to 15 years and the appraisal came in at $435k — and it would have been $410k had we not spent $25k on a new kitchen.
By 1995 things were crawling back — a neighbor, who’d bought at the peak in 1988 for $550k — felt lucky to get $495k in the late summer.
By 1996 prices were back over 1988 levels — in 1997 they shot up over $700k, hung in the low 700s for a couple years, then in 1999 shot up to $1M.
So, in short, a buyer in 1988 probably had to wait 7 years to break even, but if they held on 5 years more they would have made enough profit to cover the first 7.
Yes. I guarantee you the next big thing will be ’saving you from foreclosure and buying foreclosure’ bandwagon. My buddy who was peddling IO and NegAms on immigrants has now turned to foreclosures. Hec, I can see in the not to distant fufure ‘Tom Vu’ making a comeback on late night ”’Hi I’m Tom Vu, You too can make $$$ buyinh foreclsoures”
Hey, how come not many have started piling on all these guys like Carlton Sheets and Tommy Vu, who push real estate? If investors are largely responsible for the current bubble, where do you think they got the idea?
Generally this blog pounds all of the RE gurus. They generally deserve it. The last one was Kiyosaki, but they were some defenders due to his RE bubble pronouncement.
Check out John T Reed’s guru ranking service.
http://www.johntreed.com/Reedgururating.html
I have some serious issues with Kiyosaki. For example, I attended one of his seminars and most of it was a bunch of sales pitches from companies looking for investors. They were from oil, Texas real estate, stock options, and others. I felt shafted that I’d paid $150 to listen to sales pitches. I couldn’t get my money back, so I took it as a lesson learned.
Having said that, Mr. Reed’s analysis of Kiyosaki shows that he can’t distinguish between a fact and an opinion. He uses his opinions as a basis to support his conclusions. I have never read so many assumptions and so few facts delivered with so much self-righteousness.
If you must read his analysis, count how many times he uses speculation, assumption, opinion, and hearsay versus how many actual verifiable facts he uses, and you’ll see what I’m talking about. I was repulsed.
That Reed link is fascinating.
I like the “BS Detector List” thing.
My realtor roommate is doing the same, sounds like there is going to be fierce competition in foreclosures.
I can think of four people in my close circle who fit this description perfectly. It’s really horrifying to watch.
Even if their property falls by 50%, many will still have available their HELOC line that was based on the bubble valuation. Just like a credit card junky, they’ll burn every last dollar of that HELOC before giving up the keys and going BK.
I think you’d be surprised to see how much they’ve already maxed out those HELOCs.
Unfortunately, the only people I know who have been responsible in this mania are from the “older” generation. They have HELOCs which remain untouched. They also still have Formica countertops, linoleum flooring and their 10-year old+, paid-off cars. No “bling” for them. Smart. Unfortunately, our society discounts older people as obsolete relics. Too bad, because they are our greatest source of unbiased, “in-the-trenches” knowledge (history). I try to talk to them every chance I get. The older, the better, IMHO.
Why would a lender blithely allow a bankrupt HELOCked borrower to dig himself deeper into the hole?
Because in many cases, the HELOC was already approved using a a peak bubble appraisal (and possibly even more, depending on the appraiser’s good word).
Even if the property then falls in value by 50%, the approved (bubble) HELOC remains, that is if it wasn’t spent already.
I have over $100K in HELOC financing available. I paid nothing to get it. It is prime + 0.25%. The current balance is exactly 0. It “expires” in February 2014 and if there is a balance will convert to a 20 year fixed.
I use it from time to time to roll balances around from stupid credit cards offering 0% interest. I can’t just write the check to myself because the CC companies are too smart for that… I have to pay off another creditor. So I write the check from the HELOC from myself and transfer the balance of the HELOC immediately to the 0% credit card. Then I put what I got into a CD (now running around 4.5%).
Not a whole lot of money but it’s fun to screw the CC companies.
Nice move!
Awesome arb!
feepness,
I love you, man.
Oh, when I said we would have had to pay more than 2X our previous monthly payments, that was after we put down !
Really, this bubble will be one for the history books.
Sorry, used wrong tag. Meant to say we would have doubled monthly payment after putting down 40%.
An escrow company is putting on a training class next week entitled “Short Pay Seminar”. I’m guessing there will be at least 50 agents there.
I think the banks know what’s going on this time. They are going to be more accomodating with approving their short pays, as long as the owners/sellers are 3+ months behind on payments and foreclosure is assured. The smart banks will try to get out quicker, and can do so with a short pay.
I just hope they don’t base their decision on their zillow “zestimate”.
Jim: As always, thanks for the info.
For those of you in SD who haven’t seen it yet, please check out Jim’s site:
http://www.bubbleinfo.com/
Jim: As always, thank you for your info. For those of you who haven’t looked at Jim’s site (San Diego specific), it’s a good read.
http://www.bubbleinfo.com/
Thanks ca renter. I hope I can help you buy a house someday!
I’ve been on a FSBO kick lately on my blog, for those of you who are thinking of selling yourself, take a look. It’s a lot tougher now than before, I can’t find any FSBOs who have sold in the last 60 days around here, and minimum service agencies aren’t much any luck either. But then again, it doesn’t look like any of us will be setting any sales records this year (myself included)
I loved that preview/edit button
I agree. FSBO down the street from me has been there for 8 months. No change in price either.
Jim, you’re a good guy. I hate realtors but I’d work with you. I’ve sent a person to you who is moving out there to San Diego and refuses to listen to reason (wait and don’t buy now). Ihope you help her find something.
Though I’m not a fan of Realtors and don’t like the way the industry is currently set up and (un)regulated. I agree with your comments. It seems as the market turns toward a buyers market with lots of inventory, why would anyone bother looking at a FSBO (unless the property was extra special)? I would not want to have to try and get in touch with an owner at his convenience, have them walk me through the home looking over my shoulder, and even if I liked the house I doubt the owner would discount the price of the saved commission (probably feels he deserves it since he is doing the work). FSPB worked easy during the height of the bubblemania where you could put a sign in the yard and get 3 offers that day. I would rather be with a realtor who can use the lock boxes on listed houses to get me in on the spot or at my convenience, look around at my hearts content (without the owner present), and have the realtor present my offer for me. I’m surprised I’m saying that, but I’ll be buying again in summer of 07 and that’s what I’ll probably do.
Wow, this is amazing! This guy writes well with correct grammar and spelling, says intelligent things, understands what’s going on in the market, and doesn’t try to spin it.
This guy is actually PROOF that there are in fact Realtors ™ that don’t have their head up their ass. My faith in humanity is restored!!!
It’s funny. I come home each night to read this blog and leave convinced of the impending meltdown. Then I read the paper the next morning and read all the spinning bs from realtors and industry insiders.
I hope you folks on this blog are right about the bubble. I’m getting ready to sell and rent as a direct result of reading this blog. And trust me, i’ve done my homework.
Can we get the demise underway, i’m getting impatient……….
Best sell now and price it aggresively below comps.
Happy renting!
Get the thing sold, then sit back and be patient. Don’t even think about real estate for a few years. Put the money in the bank. Rent just enough house or apartment for your needs. Don’t gamble with your money from the sale. Keep it nice and safe and add to it for the next few years. Enjoy your low cost of living, and not being a slave to a money pit. Then make a substantial down payment and buy. And remember you will have the upper hand, sellers want the money and you have the money. Always look for a good deal. The money can be in your pocket or theirs , it’s up to you.
JMO
The lady i’m renting from has to be taking a huge negative. But apparently she’s loaded with money. Makes me wonder why people still want to chase tough money in RE. Something to talk to their friends about I guess.
Once I cash out of here i’ll be throwing a huge party. All of Ben’s bloggers are invited if you can get to Annapolis.
it may be too late to sell….. and i agree you will have to check all comps, then go 3-5% less. keep your lawn green, clean up, paint, and if you do an open house make sure it smells good… buy a Mrs Smiths Cherry pie and put it in oven at 180degrees… not enuff to cook , but enough to make the house smell homey all day when you hold it open each weekend. good old trick i learned from a guy who sold new homes for 40years
In order to determine the house prices in the normal market , some one needs to perform calculation to related the median price house to median income for different areas. We need to find out what is median house (living sq ft of house.) My gut feeling is that a median house would be 3 bedroom, 2 baths, and about 1800 sq ft of living space in Sacramento. Now take median income and assume 28 % (this is still higher than tradition 25%) of monthly income. These are your monthly payments with 20% down on the 30 yr mortgage. Median income for a family in Sacramento is $51K that gives a monthly payment of $13K/12= $1100. This gives you a house price of $180000+$45000 = $225K.
This is not way off the average/median reported here which shows that the median in 2006-2007 should be at around $225K. This is a hair cut of about 30% from today’s median of ~360K. I would like to know what you guys think about this calculation.
I can’t wait this bubble to burst and wipe all those irresonsible people out of financial markets for years to come.
This site has historic prices.
http://overvalued.blogspot.com/2006_01_01_overvalued_archive.html
I think that price to rent ratios are a better measure of worth than price to income ratios, but the story probably doesn’t change much for today’s overheated markets.
I think that your calculation is roughly accurate; in the past you’d add taxes to that number; at about 1.25 % in CA you’d be looking at roughly $200/month. Plus a bit for maintenance — a realistic number is $1400-1500/month. So a $50k median income should be approximately correct, using the “old” formula.
But frankly, I wonder if the “old” formula isn’t TOO liberal in this day and age. When these rules of thumb were developed (maybe 50+ years ago), most households had a single earner. Most households today have two earners — and the additional earner is not “pure profit”; there are costs with getting up and going to work. 2nd car, insurance, gas, clothes,etc. In addition, many costs today are “fixed” to a greater degree than in the past; there is less slack in the typical budget than in years past. CC loans, student loans, cable, cell phone, etc. etc. And to top it off, most individuals (and all under the age of 40) must anticipate funding their own retirement.
Frankly, I think that 28% PITI is the MAX that a reasonable person should take on as a payment (give or take a %).
One final comment on “how much it will drop”. In my humble opinion, it’s all regression to the mean. Take the median and average price per sq. ft. in any area for 1994, 1995, and 1996; average the three together, multiply by the CPI-U since 1996 (~~3% per year — compounded about 40% over the time period). That should give you a “normal” value. Example: Avg $ ‘94-96 $100/sqft; “normal price” $140/sqft; peak price $280/sqft; Regression to the mean — 50%.
That’s the what — but when — maybe faster than we all think, maybe slower. But I suspect that there are a lot of people who have 1) ARMS that they can’t afford, and/or 2) 2nd or 3rd properties that they can’t sell or rent. How much financial pain these people can endure is anyone’s guess.
How can it be a buyer’s market when the price hasn’t gone down much? Is cereal a “BUY” at the supermarket just because they have more brands (inventory) than before? Give us some big discounts and then it will be a real buyer’s market.
Transaction volume always dries up before prices drop. It’s classic market dynamics( it’s the same whether it’s stocks or houses).
Another thing about California and its inflated real-estate prices is that we lost so many jobs during the dot-bomb recession. It actually reached Great Depression levels in the Bay Area. Sacramento, IIRC, lost a lot of jobs too. If too many middle-class people with good, college-level jobs are priced out of the market, either it’s a resort area or a bubble. And Sacramento, last I checked, was not Carmel.
In the long run, if a particular area is not a gorgeous “resort” type area which can depend on a steady stream of wealthy retirees, trust-fund babies and rich nerds with telecommuting jobs to buy houses and live there - it’s going to have to have prices that enable normal people to buy. If it takes a six-figure income to buy an average ordinary everyday house, and not very many jobs in the area pay six figures, trouble’s a-brewin’.
Depends what you mean by 6 figures. People earning $100K cannot afford a decent home in SV, SF or OC. To have a decent life and be able to buy a good 3BR SFR in Northern or Southern Calif. you need to make atleast $200K. I know of many couples who have left California because they could not afford to live there (with a regular 30 yr, 20% down mortgage). They were usually making $150-$180K/yr.
Holy cow - $200K. Now how many people, even DINKs with two good jobs, clear that? Not many, I wager. And from what you and many many other people have noted, people are fleeing the state in droves. Even if you do earn 150K or so, why buy a crackerbox in CA when you could have a nice spacious house in a good neighborhood in Georgia, Texas, or much of the Midwest? Yeah, sure, quality of life, diversity, culture and other ephemeral things that have always been part of the California image - but are they worth it? An increasing number of people are saying “no.”
If housing prices remain as untenable as they are, soon much of California will consist of the very wealthy, the working poor, and those who have bought before the bubble and are aging in place. Not exactly a middle class future or one that bodes well for democracy or the much vaunted “quality of life.”
I totally agree. The last couple we knew who bugged out of CA (to TX) were constantly crying about the cost of living here. After they left, I found out the husband alone was making 120K!
KaliNotaffordYa is already a 3rd world country… just look at LA basin.
California is and always has been a transient state. People come here when times are good, and they jump ship the moment the California dream turns into a harsh fantasy-busting reality. California was one of the last states to sink into the last nightmarish recession that most of the other states were already drowning in–California was also one of the last states to drag (limp) itself out of the recession.
What will be interesting to see is how many of those “leaving CA in droves” will be returning to the state once the RE market returns to normal.
Having lived in other regions (supposedly cheaper in terms of the cost of a building/house); I was slapped back to reality when I learned first hand that a heating bill can, and often DOES, cost more than the mortgage on that “cheap” house. With the winter season averaging six months (it actually SNOWED ON MOTHER’S DAY), it would have been cheaper to live elsewhere in the long run. Who knew; I sure as heck didn’t!
Also, the people I know, including those high-end six figure salaried people, like to “play” away from work and the house.
There is more to the “quality of life” than your living room and your back yard.
I’m not sure how they do it either. We are double income, one kid, good money.
Very average cars and lifestyle. Those with the Beemers and the SL500s, and ski trips and massive remodels and what not… you gotta wonder!
Of course 401K and Roth IRAs contributions are maxed out.
I asked a good friend of ours in their mid 30s if they knew what a Roth IRA was. The answer was a simple ‘no’.
I wouldn’t call us rich nerds but we do have telecommuting jobs and would love to find a deal in one of the resort areas. So far, no luck getting people to get real.
I think this might be the great-grandson of the captain of the Titanic.
I hate to be mercenery (mercenary?) about this, but show me the money. Can anyone post actual listings that have been reduced (where it wasn’t ridiculously overpriced to begin with), or listings where the property is selling less per SF than comparable properties a year ago, in the So. Cal. area? I look at LA and Ventura listings every day, and I still can’t find anything I’d break even on with less than fifty percent down. I know, I know, patience, patience!
lainvestorgirl,
I don’t know of any dedicated “price-reduced listings” tracking sites, or of anyone who is compiling this information on a regular basis, but you can certainly go to ZipRealty.com, Realtytrac.com, Foreclosure.com, etc. plug in the ZIP codes and have a look.
In fact, I’d wager that most Realt-whores DON’T WANT to advertise this information (for obvious reasons). Even so, the worm has clearly turned.
If you’re hoping to get into something cash-flow positive in LA/Ventura County, though, I believe you are in for a loooong wait. Prices have gone so high and RE is so notoriously sticky on the way down that it may take several years to reach that point.
Check out Ben E’s asking price tracker.
LA is off a bunch.
http://www.benengebreth.org/housingtracker/location/California/LosAngeles/
NJ Senator/Realtor is pushing for legislation to block public access to tax records. That data would still, of course, be available to the real estate industry. Talk about self serving legislation.
Make tax cards available to all
Utterly disgusting.
grim
Northern NJ Real Estate Bubble
Here is how I see it,
1. I do not have a crystal ball and neither does anyone else I know.
2. The prices went up a lot longer than I thought they would.
3. There are a lot of people who chased prices with voodoo loans - a lot.
4. There are a lot of RE related jobs in CA.
5. The internet is where most people look for RE and also may provide more timely info to them on this bubble. Thus the spread of info may be quicker this cycle.
6. Despite claims to the contrary, when availability goes down to levels
need to finish this … it clipped my last few points.
6. (cont) levels below 10%, the pool of buyers is pretty dried up.
7. The shift is underway, has been since last summer.
8. Good things come to those who wait.
That is how I sees it.
The value of waiting this one out may surprise even the most bearish poster on this blog.
I agree. I have a pretty basic point (among other factors) to make, but I have always known that the entry market level of buyers would be unsustainable in the hot bubble areas (SoCal, etc.). They are OUT of buyers (or suckers) for the 1400ft2$600K homes. All those dinky 3/2.5 homes will sit on the market forever, especially as rates go up and folks realize that a home purchase will not make them rich (rather they will realize it will make them poor). As the entry homes crash back to the $275-350K level where they should be (still providing a decent appreciation for those that bought pre 2000), then the ripple effect will force down the prices of the next level of homes and so on. It will great to watch from the sidelines. There is just NO way to justify a home that was 200K in 2000 on the market for 600K now. The smart folks that can have sold, the others are sitting out, and the fools have run out. I want to move back to SoCal, but will only do it with a minimum 25% price correction from current levels (that should put things back to Oct.-Nov 2003 prices).
Oct-Nov 2003 RE prices were already ridiculous. I’m waiting for tech-bubble-era prices.
Hi Oc-ed,
I’ve often thought about the effect of your number 5. Could faster info from the net and more informed homeonwers mean that it only takes 3 or 4 years to bottom out instead of the 8 years it took during the last downturn? Maybe unlike the last downturn we will not see a brief respite uptick this spring as we did during the first year of downturn last time? As many have said, this spring and summer will be telling. If we don’t see a temporary uptick in sales, less accerlating inventory, and a slight uptick in prices, we’re not in Kansas anymore.
Hi Dont know …
To be honest I think there are still a lot of folks out there who are still completely clueless that there even is a bubble. The reality will hit them indirectly when lenders start tightening up. I am still hearing ads for no doc and 100% IO loans on the radio and until these all go away there will still be greater fools out there snapping up those “great buys”. Having said that, I do think that the overall number of clueless people will be smaller than it was in the 1989 - 1996 downturn because of the internet factor. This one area where it actually is different this time. There was no WWW before 1994 (forgive me O Lords of the Internet If I have gotten my date wrong here) and it is the Web that not only may quicken the downturn this time, but I believe has been instrumental in the magnitude of the upward run. So IMHO there is a serious possibility that the time frames and magnitude of the collapse will be effected by the broader awareness available now through the Web. (note the Internet != the Web, the Internet came to life well before the Web). I believe the declines will be quicker and deeper, but will still follow basic economic fundamentals so an overshoot may occur and then a reversion to mean.
Great point. Modern communication, especially the WWW has sped up most everything. I hope it speeds up the deflation of the bubble. I want to buy in the summer of 07.
hop on the bmore RE bus!
City hot spot for investors
A National Real Estate Investors’ Conference at BWI this week drew about 500 people, and many of them hopped on a bus to Baltimore for a tour of potentially lucrative investments.
lainvestorgirl…
Market dynamics dictate that you must let the supply build up, let the supply sit there for a while- perhaps months, before you see any major price reductions.
The Inventory is still building.
Of course the price hasn’t dropped. These people all think they’re going to get $900,000.
You have to let them sit.
Sit, and rot.
And you have to tell everyone within shouting distance to do that too.
You won’t see any significant price reductions from homeowners until the end of August.
I’ve said that since October, and it’s just the way things work.
You gotta let ‘um rot.
I think you’ll be able to tell how volatile your town is by how soon you see six-figure reductions.
I think we’ll see some sellers bailing out by April in SD. On the high-end especially, we’ll see $100+K reductions. But will buyers make an offer?
Jusr got back from seeing X at the House of Blues in SD. They are the best rock and roll band in the world. See them if you get a chance.
X is still playing? Golly. I have their records and play them often.
I like the use of the adjective “potentially” used with lucrative investments. Doesn’t that mean it potentially could be lucrative or just as likely potentially be a huge mistake?
Ron Paul just wrote an interesting piece which lends support to the wooly bear theorists…
Speaking of petrodollars, do you think Bush’s nutty and urgent support of the UAE port purchase is related?
Great.. Just Great… I was on my way to bed and thought I’d check the net one last time… Now I’ll be thinking about Paul’s piece all night long…..
Kirk,
Thanks for that link. That’s why I keep coming back to this blog.
To think that Ron Paul stood before the House and gave that speech and not a word of it was covered by mainstream media. It’s appalling! Here’s a link to a video of the speech.
It’s great to see we can have a guy like Ron Paul in Congress. He tells it like it is! Thanks for that link.
97% of those under the new BK laws cannot afford to pay it back and end up filing Chap 7 anyway. So much for trying to save everybody’s but in this lax lending environment. Many companies will feel the pain of defaults as consumer continue to be squeezed.
http://money.cnn.com/2006/02/22/pf/bankruptcy_survey/index.htm
Attorneys say new bankruptcy law ineffective
Consumer bankruptcy lawyers survey finds most potential bankruptcy filers can’t afford to pay even a portion of their debts.
By Jeanne Sahadi, CNNMoney.com senior writer
February 22, 2006: 7:06 PM EST
NEW YORK (CNN/Money) – Ninety-seven percent of consumers seeking to file for bankruptcy so far this year cannot afford to pay back their debts, according to a survey by the National Association of Consumer Bankruptcy Attorneys (NACBA).
NACBA surveyed six credit counseling agencies that have been working with over 61,000 potential bankruptcy filers and assessing their ability to pay what they owe under a debt management plan.
Going for credit counseling within six months of filing for bankruptcy is a new requirement for debtors seeking bankruptcy relief under a reform law that went into effect in October.
The reform law was intended in part to prevent consumers from abusing the bankruptcy system by clearing all their debts when they might have the ability to repay at least some of them.
Critics of the law contend that it is overly broad – imposing greater costs and obstacles to filing on everyone in order to ferret out a small number debtors who have the means to pay off at least some of what they owe.
That the NACBA survey found that only 3 percent of potential filers have the means to pay back some of their debts didn’t surprise Sam Gerdano, executive director of the American Bankruptcy Institute (ABI).
In 1998, when bankruptcy reform legislation was first proposed, the ABI conducted a study of how many filers could afford to pay something and found that only between 3 percent and 3.5 percent could.
The NACBA survey also found that 79 percent of potential filers said their financial troubles were the result of circumstances beyond their control – e.g., a medical crisis or job loss.
“(T)he credit counseling requirement under the new law, designed to steer debtors who could repay their debts into a debt management plan, simply imposes new costs and time burdens on individuals who can ill afford either – and clearly are not the people for whom a DMP is feasible,” the NACBA report states.
Bankruptcy filings year-to-date are down 74 percent from the same period last year, according to data from Lundquist Consulting, Inc. Filings hit an all-time high this past fall just ahead of the new law going into effect.
Brad Botes, NACBA’s executive director, said the filings may be down because some consumers falsely believe bankruptcy is not an option for them because of the more stringent law.
It’s impossible to tell, however, who simply is not coming forward because they mistakenly think they won’t be allowed to file for bankruptcy or feel they can’t afford the increased costs of filing or those who are not filing because they can pay some of their debts and likely wouldn’t be allowed to clear their debts under what’s known as a “fresh start” – or Chapter 7 — bankruptcy.
During January of this year, the percentage of people filing for Chapter 7 fell while those filing for Chapter 13 bankruptcy – under which you must pay a portion of your debts over five years — rose considerably from the levels seen in January 2005, according to Lundquist.
“That the NACBA survey found that only 3 percent of potential filers have the means to pay back some of their debts…”
I have friends that work in the debt collection business, and they say it’s normal for a young techie, who lost a job, to run up credit card of $60k-$90k while they wait for the next job opening. Settling for a job where you might have to get your hands dirty isn’t an option for today’s twenty something slackers with effeminate features.
Bottomfisherman. ABQ is really nice. A much cleaner place than the Bay area. Housing costs are about 1/4 of that in SF. If anyone is interested in moving here, I would recommend living east of the Rio Grande river. The west is where all of the sprawl (and less expensive, less desirable people are). Also, crossing the river in rush hour is a mess. The outdoor scenery is awesome. The city is much more navigable (spelling doesn’t count) than the Bay (or LA). The skies are much cleaner (less smog). Most other things are much less expensive than CA. Of course, winter is a little colder in the evenings, and it will be hotter in the summer (haven’t experienced that here yet). The wages will be a little lower, but quality of life is much better than what I was experiencing in CA. Also, this area didn’t have as much of a run-up, is still growing as sunbelt people leave places like the Gulf coast, and so I don’t think it will be as much of a risk for a bubble. I will be looking for ways to cash in on some of the financial troubles of others. There are lot of Indian casinos here, and that is not good for society as a whole, as some people get addicted to gambling (and tourists don’t come here for the casinos). My wife is so much happier in this area, and now would never want to leave. Hope that helps, let me know if you want to know more about ABQ.
Are there jobs there? As in middle-class, college-degree jobs (other than teaching and medicine)? Because New Mexico is breathtakingly beautiful, and uncrowded. It’s on my shortlist of places to relocate to when I am finished with school.
“Settling for a job where you might have to get your hands dirty isn’t an option for today’s twenty something slackers with effeminate features.”
Nor do they have to. They delegate all real work, and always will. Find me one person under the age of 40 in the entire State of California who changes their own oil. I’m 32, and most of my 20-something friends are already very wealthy, and retired, from having bought a house early in the game. The way they work it is their house goes up, let’s say $100k a year, which is far from abnormal in any California market. They pull $50k in equity annually, and leave the other $50k equity in the house. I know, I know, this is just “more borrowing” not actually extracting equity (by actually selling something), but until houses go down in price here, the system works. And any house under $700k in SoCal still causes a nasty bidding war when it goes up for sale. San Diego, Phoenix, Las Vegas, etc. are seeing an undeniable slowing of sales and ballooning of inventory, but LA/OC seem to be immune. These kids might just get the last laugh after all. I always tell the story of the 1500 sq ft 3 bed 2 bath house my family bought in Palo Alto for $100k in 1984, then sold for $200k in 1991, and most recently it changed hands again for $3.2 million in late 2004 (full disclosure: a 2nd story was added to the house prior to the most recent sale). Sometimes, the laws of economics REALLY DON’T apply in real life.
I have a buddy in SF who turns 40 on March 16th. He has always changed his oil.
As for the “rich” 20-somethings - good for them!
38, female. Change my own oil, timing belts, spark plugs, battery, replaced a head gasket, replaced an alternator (twice, stupid ramans!), replaced a starter. After 11 years replaced the car.
Comment by rms
2006-02-23 06:54:33
“That the NACBA survey found that only 3 percent of potential filers have the means to pay back some of their debts…”
I have friends that work in the debt collection business, and they say it’s normal for a young techie, who lost a job, to run up credit card of $60k-$90k while they wait for the next job opening. Settling for a job where you might have to get your hands dirty isn’t an option for today’s twenty something slackers with effeminate features.
No sh1t! You just described the majority of my relatives in this age bracket (i’m 29). My husband is the same age, and works in the plumbing/handyman business, and I cannot tell you how much sh1t my husband has had to endure from them, telling him to “Go get a real job in an office somewhere.”
Never mind, most of them are subject to layoffs at anytime from their “real office jobs”, while my husband always has work. Never mind the fact that none of them know how to do simple tasks like cleaning a house, changing the oil on thier car, plunging thier toilet should it get clogged up, and other minor tasks in life. My husband’s own brother fits the description of the average techie in debt…he often gets laid off from his tech jobs and then runs up massive amounts of debt up on his credit cards (and then brags about it at family gatherings). And he won’t lift his hands and do anything dirty at all. Seriously, the amount of people like this who try and do anything for money (no matter what the financial or moral implications) except actually physically work astonishes me.
I’ve viewed the upcoming downturn of this real estate boom with some apprehension, because a good chunk of the jobs my husband has been getting over the years has been new home related (minor repair and remodeling type stuff). But then again, my husband is starting to see new, different kinds of jobs coming in: jobs from the homeowner now stuck with a primary resident home they can’t sell, and repairs that HAVE to be done to keep the place liveable. My husband also has the advantage of being an American citizen who speaks perfect english, as many Americans do not want to hire a plumber who they cannot communicate properly with in order to get their home repair problem solved. This downturn should be interesting watch, no doubt.
Plumbing is one job that will not be going anywhere. Wages might decrease as more compete for the future’s “good jobs,” but you’re in a good place there, IMHO.
Spacepest:
If my kid asked me whether he should become a techie or a plumber, I would say “plumber” without a moment’s hesitation. Another factor to consider regarding techie vs. plumber = outsourcing techies happens every day, but you can’t have your drain unclogged by someone in India.