Industry Consolidation Amid Record Unaffordability
The NAHB reports on a new record. “Higher interest rates and rising home prices caused nationwide housing affordability to slip for a fourth consecutive quarter to its lowest level on record. ‘The latest HOI shows that only 41 percent of new and existing homes that were sold during the final quarter of 2005 were affordable to families earning the national median income,’ said David Pressly.”
“‘This is down from 43.2 percent of homes sold in the third quarter and 52 percent of homes sold in the final quarter of 2004.’”
“At the bottom of the affordability scale was Los Angeles-Long Beach-Glendale, Calif., where just 2.3 percent of homes sold in the fourth quarter were affordable to families earning the area’s median household income of $54,500. And as usual, the bottom of the affordability scale was dominated by large California cities, including Santa Ana-Anaheim-Irvine, San Diego-Carlsbad-San Marcos, and Stockton. New York-White Plains-Wayne, N.Y.-N.J. rounded out the list of the five least-affordable major housing markets.”
And the Orange County Register reports that some incomes are coming down. “Irvine-based BNC Mortgage, a lender specializing in home loans for consumers with impaired credit, plans to lay off 95 workers by March in two Irvine offices, according to state regulators.”
“BNC is the second mortgage subsidiary of New York’s Lehman Brothers Holdings Inc. to face job cuts in as many months as the lending industry reels from a drop in demand for home loans and higher interest rates. Last month, Littleton, Colo.-based Aurora Loan Services LLC said it will close its Irvine office by April 28. Nearly 100 local jobs will be eliminated when the Von Karman Avenue operations center closes.”
There are rumors of ‘massive’ layoffs at Option One, H&R Blocks’ lending arm, but this is all that’s known. “H&R Block Mortgage Corp. is closing its Trevose, Pa., office in a move that is expected to cause 97 layoffs, according to a notification the company sent to the Pennsylvania Bureau of Workforce Development.”
“The office will close April 24. Many of the employees, 44, are loan officers. H&R Block Mortgage Corp. is a wholly owned subsidiary of Option One Mortgage Corp. of Irvine, Calif.”
Update. “Option One and H&R Block Mortgage are consolidating a number of operations to better compete in the aggressive operating environment that has developed over the past year. These actions include consolidation of Option One branch offices and, within H&R Block Mortgage, the closing of small financial centers and consolidation of regional call centers. The actions will reduce staffing by about 600 positions.”
From Inman News. “As real estate industry layoffs continue and the toll mounts, some industry experts predict a toll of as much as 40 percent of existing jobs lost by the end of the year. ‘Reductions in the mortgage banking industry are somewhat due to the end of the refinancing boom,’ said (economist) Brian Carey. ‘You’re probably talking 25,000 to 50,000 jobs lost in the real estate finance industry in 2006.’”
“Because real estate brokerages are operated differently, that part of the real estate industry will be affected differently, Carey predicted. ‘I would look for a drop-off in their income,’ Carey said of real estate agents and brokers. ‘Their incomes will go down and a lot of them will turn to another line of work,’ Carey said.”
“According to the NAR, there are 1.2 million Realtors in the United States. ‘Let’s say there’s only room for half the Realtors. It could be 500,000, it could be 700,000,’ Dr. Delores Conway, at USC said. ‘In the margin you would have people moving out of the industry. I would be surprised if it was more than 30 or 40 percent.’ The director said that for real estate agents, ‘it’s not so much losing their jobs as changing their jobs.’”
“‘A friend of mine’s husband is a Realtor and he is going into auto sales,’ said Conway.”
“Higher interest rates and rising home prices caused nationwide housing affordability to slip for a fourth consecutive quarter to its lowest level on record.”
That bodes well for future sales of McMansions, right?
GS,
Check out this quote from my Money and Metals blog.
‘Meanwhile, the minutes released from former Federal Reserve chief Alan Greenspan’s last interest-rate meeting showed that Richmond Fed President Jeffrey Lacker dissented from votes to authorize the Fed’s trading of foreign currencies, including the euro and yen, according to Peter Grandich, editor of the Grandich Letter.
This raises two questions: ‘Why does the Fed think it must be prepared to intervene … and if they’re willing to intervene in the currency market, how about the stock, bond or gold market?’ said Grandich.’
The gold market is already manipulated and has been from at least the mid 90’s. Anyone that wants to spend several hours going through the available information will have no doubt about that after finishing with the reading. The fact that the subject of market manipulation is considered to reside in the realm of conspiracists makes it all that much harder to expose. From here on out, given all the incredible financial inbalances in the world, people are going to witness an increase in attempts to maintain stable markets through these illegal schemes. http://www.gata.org
“The fact that the subject of market manipulation is considered to reside in the realm of conspiracists makes it all that much harder to expose.”
People who reject conspiracy theories out of hand provide great cover for those who perpetrate them.
I’m reading a biography of Teddy Roosevelt and learned about the the Panic of 1907 (which was actually two panics). Although JP Morgan is credited with bailing out the market, in addition, the treasury pumped $12mm of gold into the system during the March panic, and $35mm during the second panic in October.
So maybe your not crazy after all.
What’s the name of the TR boook, I’m reading “Mornings on Horseback” right now, it covers the area of an earlier panic (’73)which also sounds eerily similar to what’s going on right now.
It’s Theodore Rex by Edmund Morris. Begins with his “accidental presidency”. He also wrote “The Rise of Theodore Roosevelt”, covering his earlier years.
I’m interested in this era because there are some simliarities between the 1896-1904 era, and today. Perhaps we’ll have our own panic in ‘07. Also, I’m looking for parallels between the 1904 election and the coming election in 2008. Mostly, I enjoy American history, and am amazed how little I learned about in school (mostly due to my own disinterest)*.
However, the more I learn about TR, the more second thoughts I’m having about John McCain:)
* I didn’t even know that until 1967 (and the 25th amendment) that when a VP ascended to the presidency, no VP was named to replace him. And, that the secretary of state was third in line from 1886 till 1947. Fascinating stuff.
Is the Fed going to trade these? I posted this elsewhere, as well.
They’re coming!
I received this today:
Introducing CME Housing Futures and Options
Capitalizing on the U.S. Housing Markets
CME and TFS Brokerage invite you to a special launch event and cocktail reception for CME Housing Futures and Options on March 21, 2006 at the Waldorf Astoria Hotel in Midtown, New York. The featured speaker will be Robert Shiller, the Stanley B. Resor Professor of Economics, Department of Economics and Cowles Foundation for Research in Economics, Yale University, and Chief Economist of MacroMarkets. Professor Shiller, along with representatives from CME, TFS, and MacroMarkets, will discuss the Case-Shiller Home Price Indexes and new trading opportunities with CME Housing Futures and Options. In addition, Dennis Gartman, author of “The Gartman Letter,” will join the panel discussion to add this perspective.
Tuesday, March 21, 2006
3:00 p.m. - 7:00 p.m.
Waldorf Astoria
Duke of Windsor Suite
301 Park Avenue
New York, NY
very, very quiet on the mortgage front. the phone is ringing constantly, but its from wholesale reps that i have not heard from in six months and boiler rooms selling leads. i have not spoken with a rep that was not truly concerned about the lack of volume.
A friend of mine who quit tech in 2001 to start a mortgage business in Palo Alto is calling it quits. He laid off his entire staff of 45 last month and closed up shop because cashflow was just beginning to turn negative. He told me that he didn’t want to give any of his gains back to the bursting bubble. He mentioned that he had a great run for the past five years, clearing $3M+/year. He’s planning to retire and he’s only 47. Smart money, IMHO.
we did the same (i’m not talking about making $3M), paring down staff while we ramp up reo services. we also were very concerned about the liability of 15 loan “officers” booking 100%ltv, stated income, neg am loans. having been through a few cycles in my years, you can be rest assured everybody will be suing everyone when the s*&t hits the fan.
Couldn’t agree more. He had the same concerns about liability. He is planning to retire overseas. Maybe that has something to do with it.
a friend of mine is 26 and he made 100mm in mortgages over the past 5 years in LA. granted, his dad gave him about 1-2mm to start off, plus they have an amazing business sens in that family… now he’s back home and damn what a car he has… and this is aguy who was in medicine in university and quit to go do the refinancing. damn…
boulderbo
What type of REO services are you ramping up? I specalize in marketing REO properties for lenders & MI cos. Got 2 REO listings the other week, haven’t seen any in years.
“You got to know when to hold ‘em, know when to fold ‘em.
Know when to walk away and know when to run.”
Willie Nelson
You mean Kenny Rogers.
Sorry — I guess I accidently let it slip that I am no country music buff…
Blasphemer!
Ha! Reminds me of the line from Bob Newhart:
Smart dude…knowing when to fold um with pockets still full of $$$. The folks who made all the money by folding before the downturn of the Stock Market bubble bursting did the same thing. It funny how all you hear about is the $$$ LOST from the stock market crash…that money wasn’t literally “lost”, just transferred from the losers to the winners while the bubble ran it’s cycle. You just never hear about the individuals who were smart enough to manipulate the markets and cash out before things crashed. Maybe they were all like your friend and retired over seas and have are also smart enough to keep their mouths shut and not brag about how they took advantage of a situation that left lots of other people screwed.
He mentioned that was the easiest money he ever made- Everyone was so eager to sign on the dotted line, thinking they were going to be the next Donald Trump.
Like the merchants supplying that gold miners, IMO this guy was shrewd enough to know when the diggins were getting light and moved on before he lost any of his profits.
Smart money indeed.
Ditto that here in N. Nevada…..
Grandich just went way up in my estimation. Since when is this kind of stuff a concern of a board charged with stable monetary supply unless they’ve already nscrewed up the supply so bad that short term interst rates are not effective?
uh oh…
Sounds like some of the ‘crap’ we have been saying for a long time now is starting to happen. Inventories up, losses in the secondary market, builders cutting prices, creative financing is being tested….etc.
I wonder if any of these people in the mortgage biz that are getting laid off have mortgages?!?!?!?
SoCalMtgGuy
Another F@CKED Borrower
FB FORUMS
You becha. My real estate buddy that sells condo conversions was still trying to buy one a month ago until I talked some sense into him. They drank the Kool-Aid from the NAR keg too. Now, at least in San Diego, they’re starting to get laid off in droves, at least according to my realtor buddy. He’s now looking into foreclosures, and gold.
When I look on craigslist for rentals, an oddly high amount of contact e-mails are so-and-so@randommortgagecompany.com
So, yeah, I would say the mortgage people have more mortgages than average folk
About a year and a half ago my wife and I found a place here in San Diego that we liked and was in our price range. Unfortunately the Real Estate agent representing the seller had just bought it herself as an investment. CAR had told her that houses would appreciate at least 10% over the next year. Of course San Diego has been flat ever since.
She then asked us if we were interested in renting it from her. We politely declined. Of course now I believe she did us a favor, because if we had bought then we’d be sitting on an $850k liability, instead of $300k.
I wonder if she’s ready to pay her April tax bill…if the house is in a Mello Roos district the bill will probably be over $10,000. Ouch!
Many, many, many….. they’re all sweating bullets. It’s funny… they blame the company owners for not “making the phone ring”. Can you believe it?
They never realized that the past few years we have seen was nothing but a fluke (as far as deals falling from the sky is concerned). They never paid attention to the market. They just thought they would make $15K-$30K per month forever.
Most have blinged all the money away and they think they “deserve” the easy money we were making.
Socal…. Is there a section on your site for f@cked loan officers?
In the forum, yes :).
Wow! That’s just unbelievable. I don’t see how things can go anywhere but down. According to the FHA, a family making $54,500 per year should be able to afford a note of $1,317, which, depending on taxes, insurance, and interest rates, works out to about a $100,000 - $150,000 home. I’m sure there aren’t many homes in that price range in LA.
JLP
AllThingsFinancial
Quite literally, there are no homes in the actuall “affordable” price range. The cheapest homes in the whole of the San Fernando Valley are about $450k. This would get you a really crappy area, about 900 sq ft, with really bad schools, and it would need lots of work! Nice, huh?
For $150k you can get a nice 1 bd/1 ba condo in Lancaster!
“Higher interest rates and rising home prices caused nationwide housing affordability to slip for a fourth consecutive quarter to its lowest level on record.”
This seems to suggest that homes were somehow AFFORDABLE just months ago when rates were lower. Ridiculous. For most people, homes have been horribly unaffordable for years, unless you take a scary mortgage.
Yes, but the RE industry cannot suggest that affordability be restored by falling prices, both because of their business mantra and because doing this would acknowledge that affordability was destroyed in the first place by rising prices.
Given this, interest rates are the only available variable factor.
Just posted in another thread, but yes, HRB is doing layoffs at Option One. Link …
http://biz.yahoo.com/bw/060223/20060223005898.html?.v=1
Hey Mike, what’s going on in Naples, FL as far as inventory, prices, etc. are concerned?
ockurt — I’m on the east coast in Jupiter, FL, not naples on the west coast. So I can’t say from first-hand experience. I know that someone posted a link to one of the local agents who had a very dire, yet realistic, report on current market conditions (inventory way up, speculators trying to exit, etc., etc.). Should be in the archives here somewhere.
In my neck of the woods, inventory growth is going ballistic. I track all listings with at least 2 beds, 2 baths, $100,000 to $500,000 price range in zip code 33458 on Realtor.com. It’s gone up virtually nonstop since I began in June 2005, but the pace has picked up quite a bit. We had 150 when I started this exercise … 343 at the end of the year … and now, we’re adding a couple listings almost every DAY. Today’s count: 470 vs. 459 only two days ago and 437 a week earlier. Total increase in about 8 months: 213%
mike, what is the population of the communities you’re tracking?
The 2,000 Census pegs the zip code population at 33,000. Sounds about right to me, though maybe more due to FL growth since then.
I should add that total listings for my community (Realtor.com also gives you the tally for properties that do NOT meet your search criteria) are 948 as of today. I haven’t been tracking that number consistently, but going from memory, it has probably at least doubled in the past few months.
Just saw this, don’t know if it’s relevant:
http://www.msnbc.msn.com/id/11520738/
“Average American family income declines”
Seems like this just emphasizes the absurdity of some of the increase in home values we’re seeing.
According to the article, between 2001 and 2004, median net worth increased 1.5 percent, while debt as a percentage of total assets rose 24%. (From 12.1% to 15%).
When 90+% of the market can’t afford your product, it’s not a good business model.
but who cares when your ‘product’ only goes up!!!
SoCalMtgGuy
How about when 97.8% can’t afford it?
How homes in LA are still selling is truly beyond me.
Aren’t LA buyers mostly people just trading up from LA homes they recently sold? I can’t believe there are many newcomers here buying homes out of their savings, at this point.
a friend is selling his starter home in the hollywood hills he paid 325k in 1993,asking 899k and has had lots of action,he says most people are first time buyers,young couples w/no kids as the house is only 1440 sq ft,so yes los angeles has not cooled off,in fact prices still seem to be going up,with a lack of inventory in the nice areas,and starter homes a 890k…ouch…..
lainvestorgirl-
Having the ability to research a lot of the homes that have been purchased recently there are A TON of homes (on the west side, at least) that were bought years ago by mom and dad, were sold to family members who seem to be testing the market to see if they can turn a profit. Homes have been listed for months with minimal price reductions.From what I can see that is one of the reasons we have not seen the price reductions we’re all hoping for. The trustafarians have deep pockets and they’re probably looking to sell to others who can finance the deal through The Bank Of Mom and Dad.
For first-timers, The Bank of Mom and Dad has been seen often in the SF Bay Area.
How could it not be?
That’s right. This is why the RE market is bound to implode. Someone has to be able to buy your product or else it’s not worth it to produce.
“At the bottom of the affordability scale was Los Angeles-Long Beach-Glendale, Calif., where just 2.3 percent of homes sold in the fourth quarter were affordable to families earning the area’s median household income of $54,500.”
Lowest affordability should mean the biggest bubble as well. Can’t wait to see the crash in SoCal hit long and hard. As I’ve stated before on this site, I know too many unscrupulous mortgage lenders and RE agents not to enjoy watching them squirm. As an aside, I have five fliers (minimum) a day on my doorstep from agents looking for business, also found 2 yesterdy from mortgage lenders (”look how low your new payment can be with our flexible 4 option payment plan, you can pay less than interest if you choose.”). This is absurd.
We have been renting in this So Cal neighborhood for about 11 years. This month a realtor left her refrigerator magnet calendar for us on our doorstep. Late last year I was contacted by a local Zip Realty representative by email asking what my housing needs were. (I’ve been registered at Zip for over 2 years now.) These are the first times that realtors have ever approached us. I am convinced these are agents are trampling through the bushes with a stick to try to uncover the last potential buyers.
Asgadragnarok, yes, the joke in my household in response to what our local economy runs on is, “we sell real estate to each othe and teach each other yoga”.
Remember all the talk about how it would be imposssible to have a crash without a massive amount of job losses and how all the areas over the past cycles that had price drops were in areas where the economy was bad or going bad anyway? Well, here is the self fufilling prophecy of the housing bust. A large percentage of the jobs created were in housing and a large percentage of the houses lost are going to be in housing, causing the economic job loss scenario that will allow the burst to take place.
That’s especially true in SV and SoCal.
The coming implosion should be spectacular to watch.
I wonder how many of these scummy subprime loan officer people are also specuvestors? If they get laid off at the same time as values decline, wouldn’t that be awesome?
As part of their continuing efforts to improve cost structures and streamline processes, Option One and H&R Block Mortgage are consolidating a number of operations to better compete in the aggressive operating environment that has developed over the past year. These actions include consolidation of Option One branch offices and, within H&R Block Mortgage, the closing of small financial centers and consolidation of regional call centers. The actions will reduce staffing by about 600 positions
Doesn’t surprise me to see that many of these mortgage-related businesses are in the OC taking it in the shorts. Orange County is the sub-prime lending capital of the world. All along that Von Karmann corridor in the Irvine Business Complex (IBC) there are all kinds of these r/e related businesses. This is only the tip of the iceberg.
On a side note, I used to work out at this gym off Von Karmann Ave. there in Irvine and used to hear all these knuckleheads talk about r/e pulling up in their fancy cars at the valet. Guess they’ll have to talk about how much they’re bench-pressing now.
Unbelievably, I just heard a Wall St. carnival barker interviewed on Bloomberg Radio commenting on TOL. He ended the tripe by stating that “the housing bubble doesn’t exist” and that “those who believe a bubble exists is misinformed”.
Actually, though, I’d have to agree that there is no bubble. No joke, honestly. After all, once a bubble pops, you don’t call it a bubble anymore, do you?
Cool comment…but’s what’s left? Expanding air?
did the quote include the grammatical error?
From Boise: average wages have increased only 3% in 2005 while housing costs in the Boise area increased 17%. The story mentions that first time home buyers will have a hard time qualifying for loans. http://www.idahostatesman.com/apps/pbcs.dll/article?AID=/20060223/FRONTPAGE/60223006
Ya I notice my next door neighbor a Loan Officer/Manager has been home alot lately, like I mean during the day when i go to work he there, and when i come home for lunch he’s there and after work he’s there. He just bought a New hummer, a new Chevy truck for his Daughter, and had new wood floors put in, in just the last few months. oh and his wife is a stay home mom nothing worng with that, but they have a mortgage and three kids hmmmmmmm?
Can they repo new wood floors?
No, that’s what the foreclosure process takes care of!
The repo man is lurking…
Actually, a SAHM (stay-at-home mom) is an asset right now, aside from the obvious benefit of having your children being cared for by their parent.
A SAHM/D is untapped earning capacity. If a couple is double-income, they are at maximum earning capacity (can’t easily make more). If they NEED that second income to live, they are twice as vulnerable in the event of a job loss.
Lot’s of good posts today. I’m counting on my SAHM asset to augment my retirement income starting late next year when I transition to becoming a SAHD (I hope). I’m trying to time my retirement with the bursting housing bubble. Hopefully I can buy near the bottom (though I’m worried late summer 2007 may still be too early).
A REIT cuttin some jobs in VA… think we will see a push down in the commercial RE as well? Or mostly residential RE?
——————————————————————————
[MLS] Mills Corp to cut 77 positions as part of restructuring
Mills Corporation (The). The Group’s principal activity is that of a Real Estate Investment Trust. The Group has been approved as a Real Estate Investment Trust under sections 856 through 860 of the Internal Revenue Code of 1986, as amended. The Group owns, develops, redevelops, leases, acquires, expands and manages retail and entertainment real estate properties. The Group also provides development, redevelopment, leasing, financing, management and marketing services with respect to all properties currently in operation. The Group conducts all of its operations through The Mills Limited Partnership. On Jan-2004, the Group acquired Westland Mall.
Do you think we should be selling REIT mutual funds? Mine have done awesome the last few years, but I don’t want to hold if they go negative.
Arizona RE agent seeks greater fools; see link if interested.
http://boise.craigslist.org/rfs/136432764.html
I’m normally not a doomsayer type but - boy oh boy, does this look bad. We have a housing market where very few people can afford a mid-priced home. We have a negative savings rate and an economy where many people are in debt up to their eyeballs. And I am sure a lot of people who HAVE bought homes can’t really afford them - they’ve gotten one of those exotic mortgages or are paying over half their income on mortgage/tax/insurance. A bit of bad luck or a financial misstep and BOOM!
I hope the deflating or popping bubble doesn’t drag the whole economy down with it. But if all the people propping up the economy are employed in RE and/or have to foreclose or declare BK because they can’t afford their overpriced crackerbox anymore, let alone all their toys - yikes. Things could get very, very bad.
I am hoping for a soft landing but I worry.
what does anyone hear about IHP Capital Partners? They’re Irvine based big investors in luxury housing. I can’t imagine they’re going to keep going at the rate they’ve been.
But if y’all think this is cool…
…ya ain’t seen nuthin’ yet.
In the first two weeks of March, we’re going to see another 3,000 homes hit the market- just here in Orange County.
I went to Home Depot last night to get some stuff and there they were, lined up 20 deep, paint buckets in hand…
…just like in December.
I felt like the odd man odd, not having paint.
I just smiled this time, and acted unaware.
To put it mildly-
EVERYBODY LOOKED SCARED.
The Orange County Inventory Fire- Part II…
…is about to begin.
Take a trip to Home Depot tonight or tomorrow to see for yourselves.
THESE PEOPLE ARE SCARED.
Or maybe ’cause there was a sale on Behr paint over the weekend and it’s great paint. Almost thought about painting our brand-new luxury rental then thought - nah.
Painting is good therapy to sooth anxieties
I hope you bears are right. I have watched the unimaginable arrogance here in the OC from all the R/E types, endless boasts about personal genius, wisdom, etc.
Everything seems to be out of whack and ready for a fall, but…….
WHEN!!!!!!!! There are no price drops to speak of here in the OC, and I know MANY MANY people who are sitting on the sidelines who would jump in if prices went down just 10%. I want prices to really fall and come in line with fundamentals, but if so many people have been priced out, one might think that prices will never really go down, just stay flat for many years as the buyers who have been on the sidelines decide not to hold out any longer.
I hope not, but here in the OC, it is frustrating, and you begin to wonder if it is actually different here. Nearly half of Southern California would move here in a heartbeat if they could afford it, just look at the backup on the 91 every night to see all those poor souls in the IE who bought because it was all they could afford who would move to the OC in a second if they could afford it.
Thoughts?
Patience. Patience. Patience.
Say it three times, take a deep breath. And relax.
OC will never be inexpensive (again), but it surely won’t be as expensive as right now in a few years. Look at the previous housing cycle turns for comfort.
And save like you mean it.
It will take a little while for the speculators, flippers, and other assorted so called investors to truly understand that the free ride is over (too much chatter about wating for the Spring and Summer for things to rebound). Once they start hemoraging any remaining capital they have through the negative cash flow of holding their properties and truly believe that appreciation is over for the next few years they will be stampeding to get out. I give it until late summer (or when tax bills start coming due).
OCmetro…
You aren’t going to see price drops until the homes rot on the market for months.
By the time most homeowners in the OC realize they need to be dropping their prices, they’ll have to slash their prices 30% just to catch up.
This price slashing will commence at the end of August.
See, the arrogance that you and I have had to endure will be the same arrogance that does these homeowners in.
When they finally figure it out, they’ll be faced with foreclosure, or slashing prices.
The End of August, my friend.
It’s been about a month since I’ve heard anyone in the OC talking about their incredible home, and how much it’s worth.
Panic has begun to set in.
But arrogance and greed have a funny way of prolonging agony.
For every bit of truth the people on this board tell them, they can always come back with “but Jonathan Lansner said…” or “but Gary Watts said…” or “my good friend who’s in Real Estate said…”.
The media won’t tell us there’s a crash until after it’s already happened.
It’s going to be an interesting summer here in the OC…
…watch out for all those For Sale signs littering the street corners, when crossing the street.
They might have to start posting them up on telephone poles.
I agree, this summer we’ll see panic selling in earnest.
i like your call on August slashing. That will be right when the real estate season is winding down, parents are preparing to send the brats back to school, and sellers will be thinking (well sh*t how come I havent had any offers since listing in February (ahead of the crowd). August will be prime time for price slashing.
p.s.
sfjack is correct.
I made $4,000 last month selling stuff we don’t need on Ebay.
I will make another $3,500 this month selling all my wife’s old clothes.
I bought me a couple of mannequins on Ebay for $40, already have a digital camera and ’skillz’, and an open second bedroom.
I’m a walking, talking Ebay store right now.
My best sale so far:
I got an incredible price for a TOOL t-shirt I bought in ‘98 at an exclusive ‘industry’ show in Hollyood.
Never wore it, kept it in the back of my closet.
Sold it for $250.00.
9′ Softops Surfboard I paid $100 for…
…sold it for $200.
And a multi-station gym I paid $1,500 for ten years ago…
…sold it for $1,000.
I would add to sfjack’s comments by saying this…
SELL SELL SELL
and
SAVE SAVE SAVE.
Auction:
You got me pumped up to get rid of stuff that we don’t use.
I will be joining you on E-bay soon.
OCmetro said:
“just look at the backup on the 91 every night to see all those poor souls in the IE who bought because it was all they could afford who would move to the OC in a second if they could afford it.
Thoughts? ”
Yeah. They can’t buy in OC til they sell their crashed Riverside house which they committed financial suicide to buy.
Not all did. Friend of mine bought there in 1998 and was smart to get a fixed 5.25% 15-year loan. Problem is, he took out an adjustable HELOC which has now indexed up to 7%, still not historically that bad. Does anybody have any stats. on what percentage of recent buyers subsequently took out a HELOC?
Sunsetbeachguy…
Remember I told you this…
It’s all about the presentation on Ebay.
Adobe Photoshop is a necessary ingredient, as is a 200-300 watt light.
Before you list what you’re selling, research what the thing you’re selling sold for before. Then go look at the presentation. Better presentations yield far more money than badly lit ones.
Also-
Be HONEST and DISCLOSE EVERYTHING about what you are selling.
Does your old surfboard have a ding in it?
Repair it, and disclose that you repaired it.
Or- don’t repair it, and disclose that you didn’t repair it.
Mostly, great selling on Ebay is about stellar presentation, and honesty.
That’s my two cents.
The market determines the rest.
Set your starting bid at about a third of what you think X should sell for.
People LOVE to compete- so let them compete.
If you set your starting bid too high- they can’t do that.
Have fun!
It’s all about saving for the downpayment, baby!
“I hope not, but here in the OC, it is frustrating, and you begin to wonder if it is actually different here. Nearly half of Southern California would move here in a heartbeat if they could afford it, just look at the backup on the 91 every night to see all those poor souls in the IE who bought because it was all they could afford who would move to the OC in a second if they could afford it. ”
OCmetro, I totally agree with everything you say, BUT you’re forgetting one thing. The IE people will have even MORE trouble selling their (less-desireable) homes than anyone selling in OC, which will prevent them from being in a position to buy in the OC no matter how badly they might like to. Falling prices be damned, they’ll be stuck shovelling mortgage payments in La Verne or Fontana or wherever they exiled themselves to. People in LA want to live in LA, so they’ll stay there. SFV people are to LA what IE people are to OC, so really, the majority of OC buyers will be OC residents who were priced out but continued to rent here. SoCal real estate is going to continue to see slowing sales and, at some point, substantially growing inventories. Once/If the OC market cools, I don’t see a flood of relieved buyers rushing in. The general market sentiment will be that of people “anticipating future depreciation” — the flipside of the 2000-2005 general market sentiment of “anticipating future appreciation”. Nothing slows sales like the smell of fear, just as nothing drives sales like the smell of easy profit. Even if OC is the last market to capitulate, once the stampeding herd changes direction, no one will have any doubts about what is going on.
I agree with all your comments, however a lot of people who have bought in the last couple years CANNOT afford what they got into. They only got into the properties because they expected to make money on it through continued appreciation. They will hold on as long as possible, but many will be forced to sell, some at losses. However, just because prices are coming down (even 25%+), lots of people can sell and still come out ahead (the earlier fools, not the “later” fools). Remember, that the appreciation between 2002-2005 had been so rapid that a house on the market for $850K now may have been purchased in 2004 for $725K and in 2003 for $625K, etc. There is a lot of wiggle room on the way down. Many people were probably in over their head buying that example house for the $625 in 2003 and can still get out ahead even if prices start retreating…that will add to the freefall of prices. AND don’t forget about all the folks like my 83 year old dad-in-law in Orange County who still lives in his four bedroom/swimming pool house that he paid $45K for back in 1965. $750K or $500K is almost irrelevant to him as he will live in the house until he can’t get by on his own. LOTS of wiggle room on the pricing there as it will just be passed on to the heirs who will be glad to get whatever the current market is. There are a fair amount of old folks like him the neighborhood.
p.s.
All of the above assumes you already own a digital camera.
There are lots of price reductions going on in the OC, you just have to look for them (usually in the form of big incentives and/or cash back to buyer deals)! Smart sellers have already begun “discounting” aggressively, although the prices on homes are so high that there’s still alot of reduction potential.
Unfortunately, we are still very early in the RE correction cycle and there are alot of dummies who still think the great “spring bounce back” is going to save them!. Worse, there’s still this arrogant attitude that the seller is “entitled to their price” mentality going on.
It won’t be until late 2006 or summer of 2007 before the real bonfires heat up!
this guy says there is no bubble, as of dec 2005. I didn’t understand what he was saying very well, but it struck me that he was saying it out both sides of his mouth, nonetheless. but i think he was saying that for the most part the costs of owning are quite reasonable right now!
(sorry to repost if it’s been posted before…)
http://www.smartmoney.com/theproshop/index.cfm?story=20051229
cheers!