‘Correction Or Crash. Either Way, The Party’s Over’
The Tribune reports from California. “San Luis Obispo County real estate agents should not expect a return of the sizzling housing market anytime soon. ‘Prices aren’t falling off a cliff, but they definitely are taking a breather, said Leslie Appleton-Young, chief economist for the California Association of Realtors.”
“‘I don’t see a slowdown lasting two or three months,’ she said. ‘It may be a couple of years.’”
The LA Times. “The anti-depressants said it all. In the mostly empty house, wires hung from ceilings, gaps yawned beneath kitchen counters where appliances had been removed and apparently sold and, most heartbreakingly, paintings done by the owner hung on the walls with price tags by their sides.”
“This was not a scene from ransacked New Orleans. This was what I saw Sunday in a hilly Los Angeles neighborhood in a house that was facing imminent foreclosure by the bank. The owner had purchased it with a five-year, low-interest loan for more than $100,000 over what the real estate agent was now trying to get.”
“So I guess it’s official: The real estate market is tanking. If you’re a renter, you now have permission to be as self-satisfied as the homeowners who once taunted you with their dizzying appreciation rates. As for us owners, we can just cover our ears and sing ‘Correction! Correction! I can’t hear you!’ until things start looking up again. Call it a correction or call it a crash. Either way, the party’s over.”
The Desert Sun. “Continuing a trend of the past several months, the number of homes sold was down 41.2 percent from a year ago. That’s the biggest drop seen so far this year in the monthly data. Ginny Becker, an executive with (a) real estate firm in La Quinta, noted that there were at least 117 price reductions posted Friday on the MLS, well up from past months.”
“The real estate market is one of the most important segments of the Coachella Valley economy. Thousands are employed as agents, brokers, bankers and escrow handlers. Experts note there will likely need to be more price reductions to move the current unsold inventory, which at more than 7,000 properties is at twice the level of a year ago.”
“‘Agents need to educate sellers, and sellers need to be realistic,’ Becker said. ‘It’s very much a buyer’s market right now.’”
The Merced Sun Star. “At the height of Merced’s real estate frenzy last year, Bay Area Realtors drove vanloads of clients through town on the hunt for investment properties. Now the out-of-town speculators are gone, leaving behind streets lined with For Sale signs and new subdivisions filled with freshly built houses standing empty.”
“Clearly the real estate party is over, and in Merced the hangover is bad. ‘I knew it was going to soften, but I didn’t know it was going to slide this quickly,’ said (realtor) Mike Salvadori.”
“The boom was fueled mostly by the out-of-town investors, creating what Realtor Kay Flanagan calls a ‘false market.’ Now, the market is shifting back to reality. It’s time for what people in the real estate industry optimistically refer to as a ‘correction.’ The question is, how long will it last and how bad will it be?”
“The downturn brings back memories of 1995 when Castle Air Force Base closed and 6,500 military personnel left town. Home prices fell dramatically, said Andy Krotik, a Realtor and Atwater city councilman. There’s one key difference between the current market correction and what happened after Castle closed, said Realtor Gail McCullough.”
“‘We didn’t have all the new homes (after Castle closed),’ said McCullough. ‘We’ve never had this many new homes. In order to sell now, one has to be quite motivated and realistic.’”
“In 2005, developers pulled a record number of permits to build houses in the city of Merced. The building spurt created jobs, a record 3,800 construction jobs in August 2005, that helped swell the number of people working in Merced to an all-time high.”
“When the dust cleared, Merced was left with more housing inventory than ever. Now developers looking to move new units are offering slashed prices. Salvadori said he’s seen $100,000 discounts on some new houses.”
“Ranchwood Homes, the county’s biggest developer, is offering $25,000 incentive packages and advertising $1,500 referral fees. Ranchwood is even listing some new houses as rentals.”
“With more than 1,000 houses on the market right now, sellers are working harder to make their houses an attractive buy, said McCullough. McCullough, who’s worked in the real estate business for 36 years, said she’s confident the pendulum will swing the other way.”
“‘I’ve seen a lot of different turn of events in real estate,’ said McCullough. ‘I still feel Merced and Merced County is the new frontier. There’s more opportunity here than anywhere else in California.’”
“a smug renter”
ya gotta luv it
“the final cries of a dying animal”
aka FB aka road kill
The owner had purchased it with a five-year, low-interest loan for more than $100,000 over what the real estate agent was now trying to get.”
You can take this scenario and multiple it X the thousands all across the country.
Yup! I have been laughed at by home owners on real estate message boards in 2005. Now I’m laughing back. Vanguard Prime Money Market fund is yielding 5.14%. B of A recently had a 5.35% High Yield CD special for a 10 month CD, and now dropped it to 5%, which is still goood, considering the alternative of owning a rapidly depreciating asset! SLO county prices will be flat the next two years, eh? Great opportunity for me to keep loading up on money market funds, T-bills, and short term CDs!
I use bankrate to find the very best rates. Check it out. ELoan has a CD product at 5.70%APY!
Try Emigrant online. 5.15% savings rate. $1000 minimum
I suggest you spread your money out. Think globally and diversify. If you like cash, then put some of your U.S. Dollars into foriegn currencies. In the next couple of months (especially when the FED starts to lower again) the dollar will tank and you will lose a lot more than the 5 to 6 percent on your CD or Money Market.
Just a thought.
Got it. But note that if the rates are further cut during the next ten months, my 5.35% yield will still be giving me the 5.35% at the end of the ten months. That is what a CD is all about. Locked in rates. And my 10 year note I bought in June is 5.125 - locked in.
Bill,
It is also locked into dollars. You will get the principal and the interest back, but it will be in dollars. If you don’t think the housing bubble is a very large problem, then you should be OK. If you think it is a very large problem, then you may not want to have your entire savings all tied into dollars through TBills, CDs, money markets, etc. Do you see how you are still putting all your eggs in one basket? A lot of financial “experts” talk about diversification. They usually talk of CDs, TBills, Large Cap, Small Cap, etc. That is fine if you don’t think the record deficits and record home debacle is an issue. If you do, you’d be smart to put some of your savings into things inversely tied to the dollar, whether that be other currencies, Precious Metals, oil, or whatever.
You could go half blind trying to debate whether those mentioned above are truly inversely tied. However, I think you’d be better off than keeping it tied directly to the dollar with CDs, etc. Real estate used to be a fairly safe alternative, but look what the lending institutions have done to that.
So are you suggesting that in the future, we’ll be buying houses in yen? I really don’t see where you are going here.
Kerk, I think I’m diversified. 5% precious metals bullion, 10% cash (including money market funds), 10% T-bills and savings bonds, 10% Arizona municipal bonds, 12% in dividend stocks of large brick and mortar multinational corporations and the remainder in stock mutual funds (20% of that international). There was more fear in 1980 than in 2006. I remember talk shows with survivalist guests talking about bad times. Remember Howard Ruff? Rough Times. How to Prosper During the Coming Bad Years. Bam! Ronald Reagan and morning in America. 1981 through 1988 was golden.
With all the debt that’s been created, Gov., consumer, and business, then next time the FED cuts rates the dollar will start to crash. All you holding bonds will find them less than ideal (risk/vs/reward). Inflation will start to accelerate (in my opinion it’s already over 5% now) for key items like food, gas, utilities, etc. Sticking your money in “safe” banks is like slowly bleeding to death. Your substituting shot term peace of mind for long term risk.
I agreee, divesification is the only answer (cover the bases). Spread the risk.
the fed wont cut.too much inflation.
“There was more fear in 1980 than in 2006. I remember talk shows with survivalist guests talking about bad times. Remember Howard Ruff? Rough Times. How to Prosper During the Coming Bad Years.”
I am not sure what your point is. Why would there be a lot of fear now at the top of a big market rally and at the bare beginnings of the bear market in RE? 1980 was towards the end of a 16 year bear market in stocks, or you can call it sideways movement if you want. Before all the imbalances in the economy are corrected we will see books like you refer to on survival but it will be more toward the bottom and not now at the top, and I guess we will see another back to the land self sufficiency movement such as in the late 70’s.
Was that what you were trying to say? That since there is no fear it must mean that everything may be about to turn down? Or were you saying that since there isn’t much fear compared to 1980, everything is OK?
Kerk,
“If you don’t think the housing bubble is a very large problem, then you should be OK”
Do you mean that if the housing bubble is a very large problem, the dollars will be worth less when he gets them back? I don’t follow your reasoning. If the housing bubble is a very big problem, and housing tanks, and jobs are lost and money is scarce, then those dollars should be worth a great deal, as long as they are liquid enough to get out at the right point. As far as I can see, the greater part of the inflation that we have experienced has been caused by the increase in money supply brought about by the housing bubble, it has caused about 10 times as much increase in the money supply than the war. When the housing bubble collapses, it will be a deflationary collapse.
Kim,
Deflation can be defined different ways, but I think the most accurate deals with a contraction of the money supply. This contraction will come in the form of loans going bad.
The money supply has been inflated so far by different means (either FED or fractional reserve lending). Inflation isn’t bad if it is based on wealth versus debt. Another potential debate. I think we’ll have the correct answer in the aftermath of the housing bust.
Initially the deflation will come in the form of banks and the market falling due to loans going bad. The FED will try to stop the bleeding by injecting liquidity through various forms. When foreigners holding all of our debt realize their purchasing power is being eroded, those dollars will come back to haunt us. Then we’ll be having an attempt at inflation by the FED and sure inflation from foreigners. Not only will they be sending our money back, but they’ll be demanding more for the same goods. Globalization working in the opposite.
I am sure the FED and Treasury are studying the problem, and their solution is to slow leak it as best they can. I personally don’t think they can pull it off. The housing bubble is bursting. I guess the chips are “all in” that foreigners are ignorant. I’ve known plenty. I don’t think that is a sure bet. Maybe they can be persuaded to help us out in our situation.
Kim wrote: “Or were you saying that since there isn’t much fear compared to 1980, everything is OK?”
That’s sort of what I mean. I don’t mean everything is actually okay because reality has not sunk in yet. When reality sinks in, we’ll see a bunch of survivalist books and ideas on how we each can thrive in the next crisis (or crises). But it seems our problems are building up. Old problems (federal debt, fiat money, the demand for entitlements) just get bigger. New problems (peak oil, consumer debt, Muslims wanting to kill everyone living the philosophies that sprang from the Renaissance) and more are joining in. These problems are starting to appear unsurmountable (hopefully spelled correctly), compared to the crises in the 1970s.
These problems are starting to appear unsurmountable
I’m with you on that perspective.
US is goin’ 3rd World.
Lead story in the Boston Herald this morning notes that their is a “bedbug” (lice) epidemic going on in the city.
They don’t dare talk about the TB.
Any western culture that allows the indiscriminate breeding of those unable to be productive or simply care for themselves (like washin’ your fuckin’ bed linen) is doomed.
You don’t know anything about bedbugs. The resurgance has nothing to do with hygeine. They can live for months without eating, and washing your linens will not get rid of them. The problem is that we stopped using chemicals like DDT, which nearly wiped them out, because the pesticides cause cancer. Eventually, we’ll probably go back to using harmful chemicals to rid ourselves of these pests. Also, TB is making a comeback because strains are becoming resistent to anti-biotics. The fact is, diseases and pests are more adabtable than we once thought. To try and equate this with a moral decline is absurd.
Carefull with Foreign currencies ! I lost my ass on a New Zealand Krona denominated CD when there was a run on their currency. Didn’t do much better yeild wise after fees on other currencies either. I’m back to surfing U.S. based CD’s for income.
even Wrren Buffet lost when he bet against the dollar the last couple of years. Although I think He was right to bet against the dollar but the timing was too early!! Next year may be the year.
He lost last year. year before wins still beat these losess.
“Carefull with Foreign currencies ! I lost my ass on a New Zealand Krona denominated CD when there was a run on their currency.”
New Zealand dollar, or Iceland krona?
Don’t put too much in small currencies, like the currency of Iceland. Split the savings and invest in big currencies, which are more secure against runs, like yen, euro, pound, and, of course, US dollars.
hasn’t the krona made up all it’s loses?
Most of the Scandinavian countries have some form of krona. I believe New Zealand krona could have been Norwegian krona - sort of rhymes.
The good thing about Iceland is that their debt, while large per capita, was incurred in the construction of a new aluminum smelter to operate on geothermal energy. Thus instead of incurring debt for wars and consumption, they incurred debt for productive purposes. Consider the Iceland govt bonds of 2013 yielding about 8% in Iceland currency which I believe will hold up well against US dollar during this 7 year period.
Joe — depends a lot (no-brainer) on which currency. About one year ago on this blog, some posters were recommending CDs in New Zealand and Iceland currencies. Both subsequently tanked re the USD. Me, based on zilch, the only curency I would buy as a counter is the Swiss Franc and that based on the fact that they are the most clever money-gatherers I have ever worked with. They have a magnificent foreign policy; they host every do-good organization in the world at rates that would make Disney envious; and they (each canton does its own thing) will cut every expat with beaucoup bucks an individual deal on their taxes. To boot, even the French have to commute into Switzerland each day on the type of worker visas we envisage for the Mexicans. If the U.S. had been run by the Swiss for the past 100 years, we would have no debt, no wars, no poverty, no undesirable immigrants, no worries and a booming tourist trade. No joke.
I was looking at the Swiss Franc and found this chart that shows it increasing about 300% relative to the dollar from 1971 to 2006. http://www.volcon.ch/Swiss_Annuities/1034DCA.htm The US stock markt probably did better than that.
The Swiss Franc has tracked the Euro very closely since the latter currency was created, and before that the German Mark. I don’t see any reason for this to change since the Swiss do so much of their trade with the EU. How did the Mark-Euro do against the $ over the same period?
How many special forces can Switzerland drop into USA on 6 hours notice?
None, but that doesn’t matter.
What good does invading another country and occupying it do?
Why aren’t Japan, Italy and Germany the 51st, 52nd and 53rd states?
That being said just try invading Switzerland where every resident male has a machine gun in the closet and was required to go through military training.
How does one do this? I cashed out on my real estate, but I’m ignorant when it comes to investing outside of mutual funds. How do I go about buying gold or buying swiss francs, etc? What would you specifically recommend purchasing in order to diversify? Many thanks!!!
If you buy gold or silver, take physical possesion, and don’t talk to anybody about it. “Paper” gold and silver aren’t worth much more than the paper dollar when push comes to shove.
There ya go!
Wow, just 6 months and I haver been elevated from renter trash to smug renter. Next year they will be calling us smart!
posted “Wow, just 6 months and I haver been elevated from renter trash to smug renter. Next year they will be calling us smart!”
Not long from you could be a guru.
Not long from you could be a guru.
Yeah, just like not long from you could whatever.
I think your ready for economist at the NAR.
I thought renters were a lower form of life. And now we are smug? I didn’t realize that renting had suddenly developed snob appeal.
I am sitting very smug, especially as I read how often single divorced women’s names are appearing in foreclosure action notices in the local newspapers.
Oprah sucks.
Heh Heh! Revenge?
‘Prices aren’t falling off a cliff, but they definitely are taking a breather, said Leslie Appleton-Young, —>>chief economist
Leslie, taking money for your BS pits you in the oldest profession in the world. Next stop, Girls Gone Wild, or how about a prono to revive your pathetic career
misogynist much?
Yeah, I’m getting a bit tired of all the remarks about how the (female) renters are sluts/whores/should go back to pole dancing. Give it a rest already with the sexist claptrap.
i don’t think that’s a fair (misogynist) remark. i’ve seen several posts suggesting the same fate for David Lereah and other dufus male realtor experts.
I’m thinking more a dying gasp!
Leslie is talking about SLO county, and she has another think coming. The % of recent purchases that were done by “investors” was unusually high in SLO county. 18% I think. Thus, the likely trajectory of prices over the next couple of years would be -10% per year or perhaps worse. Probably the REAL prices in the last 12 months already went down 15-20%. I have been watching them, unfortunately have a FB friend there.
What’s wrong with that reporter? Many homeowners are just as concerned about the bubble. This isn’t about “renters” getting to sneer at “owners”.
(And, we’ll also find that people who bought in the last few years with liar loans hoping to get a quick flip will wish they had been renters.)
Tradionally, rent vs. own was simply a business decision. Companies make it all the time with equipment and office space. So should households.
Apparently, you haven’t interacted with many RE permabulls.
For a sample go here and check out the antangonistic comments.
http://blogs.ocregister.com/lansner/
“‘I’ve seen a lot of different turn of events in real estate,’ said McCullough. ‘I still feel Merced and Merced County is the new frontier. There’s more opportunity here than anywhere else in California.’”
Comedy. There’s a career in stand-up for this comedian.
All those homes sitting empty. The best frontier for meth labs to be set up in! The better add more students to that new dump of a UC called UC Merced quickly to suck up housing inventory.
Banana Slugs finally have someone to bash, huh?
LOL! About time too!
In the words of Carlos Mencia
Dee dee dee
‘Bay Area Realtors drove vanloads of clients through town on the hunt for investment properties. Now the out-of-town speculators are gone, leaving behind streets lined with For Sale signs and new subdivisions filled with freshly built houses standing empty.’
Those Bay Area speculators may be back home, but the mortgage bills on those unrented houses keep hitting their mailboxes.
BTW, for those newer to this blog, the Desert Sun used to provide the only bearish news out of California, with the exception of reports on San Diego condos. The Coachella Valley is well ahead of the rest of the state.
At least I saved my mom from being an FB, she was looking at a home in Desert Hot Springs.
She thanked me last weekend and acknowledged the bubble.
Cool! The prices out there are a joke. Yes, they used to talk about a ’shortage’ of land in that desert.
As a former Border Patrol Agent in that lovely corner of California, I can assure everyone, there is no shortage of land… or would-be construction workers for that matter.
“…or would-be construction workers for that matter.”
LOL.
Dumb question I am sure. What is an “FB”?
I’ll take this one
FB = F#cked Borrower
We really should make an entry in Wikipedia for that one.
I’ve wondered that too. Thought it might mean Foolish Buyer or F##ked Borrower.
And all this time I thought you guys were referring to F’ing Bast***s
I struggled for a long time with all of these, but then I know I’m “blog challenged” ….including: LOL, LMFAO, GF….. I think I’ve got them all now. You guys are hysterical ! Learned FB over at Patrick’s …. pretty good and knowledgeable and comical bunch there as well.
I enjoy reading this site more than any newspaper, or MSM (hey, there’s another one) report on current affairs. If it’s important, the truth is noted by some enlightened poster here. Look out CNN.
What’s CNN?
Oh, that’s easy, “Chicken Noodle Network” ^_^
I always though CNN was “Clinton News Network.”
CNN = “Craptastic News Network”.
lefantome — your comment reminded me of something very important to me — during my long life, I have taken care to associate myself only with people who have a good sense of humor. That turned out, IMO, to be a great choice, though I use “choice” loosely because humor is in my DNA. Sure, there are successful people who never laugh, but I’ll bet the great majority love a good laugh. As you observe, Ben’s blog is a great mix of opinion, knowledge and humor — the only combination that could ever, as it successfully has done, convince me to turn over ownership of the TV remote to my wife.
Rated G: Foolish Buyer
In polite company FB = Forlorn Buyer
Freakin’ halarious…
What a crew!!!!!!!!!
SBG — good for you. Very few of us get thanked.
“Bay Area Realtors drove vanloads of clients through town on the hunt for investment properties”
Classic. They’ll all be “vanpooling” again…to rehab centers to deal with the severe mental agany of facing the backlash of their greed-driven “investments.”
DOC
The LA Times article hits the nail no the head. Most people buying a house get emotional/psychological with the purchase. Either from the “high” of living in a nice house to start a family or from the greed of future profits, people will get delusional with regards to the affordability of the purchase. Too bad the real estate industry does not guard against these actions but rather is in it for the commission. As always, “buyer beware.”
Nobody should have to guard against these actions. If we had a free market the banks wouldn’t make the loans. Unfortunately we live in a world of Government Sponsored Enterprises like Fannie Mae which cannot fail because they’re supported by the Federal Reserve. They have no problem buying toxic mortgages because they can’t fail.
Interesting Graph
It wasn’t as much a lack of a free market but a market where those who made the loans could quickly repackage and sell them and the risk associated with them and make a profit. If one is offered high gains with little to no risk they will take it anytime. No wonder so many entered the easy money game of RE. You are correct, Fannie Mae is the entity that provides the vehicle of offloading these junk bonds. I would take a close look at any investment one has, whether individual or a company plan, to ensure your retirement is not backed by mortgage based bonds!! If so raise bloody hell and educate others that these are a timebomb waiting to go off!! Get out of these “investment vehicles” I think they hold way more risk then what they are rated!!
Good lord. Just once I would like to see someone post some evidence that Fannie is the major buyer of this toxic junk. Everything I’ve heard is that most of this junk is going to hedge funds and overseas investors. Would someone please post some evidence that it’s going to Fannie, instead of just insisting that it is?
If you go to Fannie Mae’s Website ( http://www.fannieMae.com )and look under Business Partners-Debt Securities you will see they issue Benchmark notes. Fannie Mae and her Brother Freddie buy mortgages and resell them on the secondary market. These notes are sold as Mortgage backed securities a 10 year note for just over 5% return. These securities are typically bought by large entities. Retirement Funds, Overseas investors, insurance or other corporate financial entities that need a place to put excess cash. If anyone else has more insight please post!!
One thing I forgot to post was Fannie and Freddie do have certain requirements for them to purchase these loans so the really toxic loans are not purchased from them sicne they do not meet their requirements. In this market and with the low standards they have I think the rapid or large swing in home vlauation will put these securities at larger risk then what is assumed.
Benchmark notes are not what are generally considered MBS. Benchmark notes are straight debt or callable debt that back their retained portfolios. MBS are pools of loans sold with agency guarantees.
More likely is the indirect confidence that the GSE’s fostered. They’ve stood by and guaranteed mortgages for 70 years in one case and 30 years in the other and basically minted money (because Americans hate to lose status by being admitting to foreclosure and the macroeconomy has been excellent for a half century). Others have stood by and decided that they would like to join in but can’t compete with the cost of funds from the implicit guarantee so they’ve backed far worse paper (which is the impetus of the housing bubble). The GSEs weren’t the direct creators (they really can’t be with a pretty tight (and slow gowing lending limit) and the 20% down rule, but they opened investors eyes to what was a pretty good credit risk (American homeowners) and investors did what they do best, create a bubble. On the plus side, assuming our economy doesn’t swirl down the drain our housing stock has been almost totally renewed.
Honestly it doesn’t matter how much of this Fannie and Freddie hold. When the paper defaults, whoever the end buyers have traditionally been will cease buying, taking a lot of liquidity out of the market and putting further pressure on prices.
Raines be walkin
w 100k a month for life
thanks Whitey !
Many people these days are medicating away their worries as well. If you’re loaded up on anti-depressants, it’s easier to carelessly walk into financial disaster - feeling great, no worries, be happy. Maybe it’s no coincidance that the last two bubbles coincided with the large-scale availability of the SSRI class of these drugs.
Now before someone accuses my of tinfoil-hattery, I’m not saying that this was a conspiracy to mass-medicate the consumer. Just that Meghan Daum’s piece leads me to wonder if some of the insane behavior that we have witnessed in the RE market over the last several years could be due to a small but significant percentage of the population making financial decisions in an altered state. It would only take a small percentage of irrational buyers to push the market into a mania - standard lemming theory and crowd behavior would explain the rest.
I sill maintain that the two biggest factors causing the economic decline of the 70s were Nixon (1) lowering the speed limit on all highways to 55, and (2) mandating an 80% reduction in the supply of amphetamines.
The day I closed escrow on my last house I thought….
“I picked a bad day to quit sniffing glue!”
Seriously - I don’t think SSRIs give most people enough of that happy feeling to take total leave of their senses.
Good point, I think SSRI’s could be a factor.
I know a friend personally who has changed his personality due to anti-depressants…while ruining himself financially. I would not doubt it for a second that it takes people’s discrimination away and makes them a little “too positive”.
And brandy doesn’t do this, too?
That’s not how SSRIs work. You don’t become a zombie. If the one you are taking is effective for you, then it basically just takes the edge off the too-intense sadness. You still feel. You certainly still have your intellect (assuming you had any to start with).
SSRI’s don’t make anybody “happy”.
They certainly won’t make you “manic”
You confuse an SSRI function with that of something like Crack cocaine or methamphetamine or Extacy.
Read up on this stuff.
As for friends who become erratic and weird on the SSRI’s. Definitely possible. But equally (actually more) possible is that they have untreated or poorly treated mental disorder. which tends to worsen over time. example: Ted Kacinzki,(sp?) the unabomber, who was not on meds, and gradually decompensated from world Class PhD to Unabomber
People are very ignorant about mental health issues. They are moreso ignorant about mental health treatments.
I think that it was greed that cast it’s shadow over the decision making process rather than any medication. Greed affected all parties involved in the buying, selling and lending. Everyone involved was convinced they could make a killing financially, and some actually have. But like all pyramid schemes, many of these players will have a bonafide need for antidepressants now that the music has stopped. But your point about this being a trigger may have some merit if we had any data to support it since that scenario is as likely as any. One thing though, this bubble is not the first financial bubble in history and if the SSRI class drug use precipitated this one, then what were the triggers of the pre SSRI bubbles? This why I see greed as the root cause as greed is something we humans have had for all time and that is one commonality across all of the bubbles.
gotcha! “can you design us a drug that will make people want to shop and never stop shopping until they shop themselves into bankruptcy? and then get up and do it again?”
voila: PROZAC!
“could be due to a small but significant percentage of the population making financial decisions in an altered state”
World’s oldest drug… is, has been, will always be…Greed!
Sir Greenspent was just a historical bit time pusher.
Where’s Tom Cruise when you need him?
merced IS the new frontier,just look at all the buyers that got scalped,and staked out in the sun to die an agonizing death,praying for gary watts to rescue them.
- “The real estate market is one of the most important segments of the Coachella Valley economy.
- Thousands are employed as agents, brokers, bankers and escrow handlers.
CORRECTION … WERE employed!
eLoan has 12-month CDs for 5.70%APY. Woo-hoo! Gonna grow my future down payment funds big time!
Before you go jumping in, I’d look and see what they do with your money. They sure do advertise a lot about how to get really cheap loans for a lot of money, with very little down. Where do you think they are coming up with that money to loan? They are getting it by taking nearly all of yours (depending on what the required reserve ratio is…but I’m sure something less than 10) and giving it to these same people being labeled as the last of the greater fools catching the falling knife.
In the end, who will be the greatest of fools. Those who borrowed the money and spent it on a house, or those who loaned it out with nothing to show for it after their bank goes bust except for 5.2 percent for maybe a year? I’d say that should be the real question.
That is why I settle for slightly lower rates at a large established bank. It’s seen its share of bubbles, and has been operating for decades coast to coast. I also have stock in it and it yields 4.2% with a P/E of under 12. I think my bank has been on the conservative side in the loans. Today I looked at the home loan rates and they are about 6.5 for a traditional 80/20 I think. But my prescription glasses need an upgrade for me to see smaller print from where I stood in line…And yeah, that is where I buy CDs from and I have a credit card through the bank. Been a customer most of the last 29 years.
What the heck. I figure I should also take advantage of the moral hazard of FDIC. I’ll take my 5.5% on their perfectly liquid savings account. Just opened one today with our $20,000 future down payment.
“‘I don’t see a slowdown lasting two or three months,’ she said. ‘It may be a couple of years.’”
So uh. Will it still be a soft-landing?
She already said no soft landing anymore.
It is every seller for themselves, Lord of Flies/Fool’s RE market.
The Evidence:
“The chief economist of the California Assn. of Realtors has stopped using the term “soft landing” to describe the state’s real estate market, saying she no longer feels comfortable with that mild label.”
New title for Leslie’s upcoming real estate movie
“Soft Landing Leslie Now Likes it Hard”
I think this one’s for you, auger.
And a “couple of years” estimate, would suggest she likes it “long time”.
The question I suppose, is not really how hard or soft, but where it will land. I have taken the “soft landing” senario to mean level off or increase slowly, but not decline. We are alredy seeing substantial (not enough, but a good start) declines in many markets. I doubt anyone upsidedown 100K is using terms like “soft landing” to describe their position.
LA times article is great! Where was this content 2 years ago?
posted “LA times article is great! Where was this content 2 years ago? ”
It was in the “Windy City”….with dem Bears! The LATimes is a late great newspaper. Well I suppose the you culd same for the silly FED….. to insist people be able to payback thier loans? What next no Santa or Easter Bunny?
The Orange County Register is scheduling layoffs. Ad revenue is down in all areas EXCEPT New Home Builder ads.
WTF!
Worth noting it’s an op-ed piece. Still haven’t seen much frank discussion of a potential bust on the news or business pages. Of course nothing negative ever gets printed in the real estate section.
My favorite line in the article was;
“But like children, houses are highly efficient delivery systems for denial….”
It was very obvious that reporter had spent a lot of time reading Ben’s Blog I wonder exactly what hilly area she was speaking of with that kind of reduction.
With the artsy owner, I would take a guess and say Silverlake or Echo Park.
Good guess I was thinking Mt. Washington or Woodland Hills
maybe the older parts of the hollywood hills right near the hollywood bowl. Some ancient declining fixer-uppers up there along tortuous,twisted steep alley/streets, similar to parts of the hilly silverwood district.
There’s more opportunity here than anywhere else in California.
Yeah, lots of opportunities to lose your shirt.
Interesting how the housing defenders have always said that there is no national housing market bubble - In case there were regional or local ones, they would still have a feather left to put in their caps. We have all known that when all the major markets are tanking practically in lock-step. What do these people get paid for btw? Being stupid?
No national bubble, no nationwide price declines since the 1930s. Except the NAR recently admitted prices had just declined nationwide “for only the sixth time in the past thirty years.”
That’s a well thought of ploy to take the edge off the bad news. It’s like saying - yeah decline, it’s happened before, in fact 6 times in the near past, so it’s not a big deal. If instead they said “prices declined nationwide for the first time in modern history, and we are entering a period we have never before seen” it’s going to spread panic.
It may be a distinction without a difference, but I still see this as “a thousand bubbles of blight” rather than a single national bubble. Each locality is at least slightly different - it just happens that right now, most of the bubbles are heading in roughly the same directions (flat to down), which gives us the appearance of a national decline.
For example, some markets are suffering from an oversupply of new homes. Others (like mine) have essentially zero new homes available, but more and more older homes are coming on the market. Some areas are seeing falling prices, giveaways, and other gimmicks. In others, prices have not moved down yet.
The bubble that is truely national (or international) is the credit bubble. Real estate markets are still local. The stupid part is that people in general are only recently catching on to (or admitting) the existence of the credit bubble and the enabling circumvention of lending standards coupled with mass securitization of junk mortgage debt.
“The anti-depressants said it all. In the mostly empty house, wires hung from ceilings, gaps yawned beneath kitchen counters where appliances had been removed and apparently sold and, most heartbreakingly, paintings done by the owner hung on the walls with price tags by their sides.”
This reminds me of one recurrent local market feature — I always see hand-lettered “garage sale” signs at the entrances to subdivisions, alongside the Open House signs. Maybe it is a tradition around here in San Diego to unload your cheap used junk on the neighbors; I have not lived here long enough to know what is normal. But I will say that garage sales don’t jibe well with the hoity-toity image of America’s Finest City, and they make me wonder how many of our neighbors are selling off all the appliances to raise cash for the next mortgage payment.
The first rule of garage sale shopping is that it should always be done in a better neighborhood than the one you live in. You don’t want your neighbor’s old junk.
My question is, if the appliances and fixtures have been stripped from the property, where are the proceeds from the art sales going? Aren’t these formerly build in and attached appliance items part of the house?
“ uh, yeah …. I’m being foreclosed on, so I’m going to strip everything possible from this structure and hock it for a few dollars …… oh, but in the meantime Mr. Realtor, could you see of you could get a few bucks for my very valuable paintings” …..
Maybe I missed something in this story. If it’s being foreclosed on, then you don’t own it …..
uh, yeah …. I’m being foreclosed on, so I’m going to strip everything possible from this structure and hock it for a few dollars
Man, I’ll bet all those old FHA/HUD/VA POS dwellings have been totally picked clean by the buzzards.
You can bet anything with copper in it aka the plumbing system has been stripped out.
Thank US Mr. US Taxpayer for your mortgage guarantees on this plethora of thoroughly trashed housing.
i think there’s some evidence that ssri’s (like prozac) absolutely encourage or, at the very least, tend to nudge people in the direction of sociopathic behavior…. (see p. kramer, (”listening to prozac”). ’cause when you feel ‘good’ about yourself, you can do no wrong.’
i thought that SSRI’s like prozac or paxil were for CALMING PEOPLE DOWN, such as those with anxiety disorders or anger management issues. My view is these drugs alter your phychological state and personality such as to make you an unreal person with a fake personality. Sort of like combining cocaine(stimulant)and marijuana(depressant) into one compact all-purpose legally-prescribed pill.
As to whether SSRI’s may drive one to sociopathic behavior:it may depend upon the persons original personality makeup. Just like some persons are disposed to violent reactions when drunk:others just conk out.
“i thought that SSRI’s like prozac or paxil were for CALMING PEOPLE DOWN, such as those with anxiety disorders or anger management issues.”
no, you are thinking ‘valium’, etc. i think ssri’s tend to make you more assertive and confident in interpersonal dealings. sometimes, one can have too much of a good thing!
“This was not a scene from ransacked New Orleans. This was what I saw Sunday in a hilly Los Angeles neighborhood in a house that was facing imminent foreclosure by the bank. The owner had purchased it with a five-year, low-interest loan for more than $100,000 over what the real estate agent was now trying to get.”
A hilly LA ‘hood? I wonder if this is near where the Beverly Hillbillies once resided?
“So I guess it’s official: The real estate market is tanking. If you’re a renter, you now have permission to be as self-satisfied as the homeowners who once taunted you with their dizzying appreciation rates. As for us owners, we can just cover our ears and sing ‘Correction! Correction! I can’t hear you!’ until things start looking up again. Call it a correction or call it a crash. Either way, the party’s over.”
It’s not a crash, and there is no bursting bubble. It is a normal slowdown at the end of the cycle, no more, no less, fine, end of story.
Any one else more than a bit concerned at the speed at which the housing market seems to be crumbling?
Not me. It seems awfully slow for someone having been priced out of the market 2 years ago.
Can’t happen soon enough for me, too. A couple of years ago we started looking to buy but refused to pay over half a million for a POS in a scary LA neighborhood. So we’ve rented, and put up with incredible arrogance on the part of delusional landlords, acting as if they were doing us a favor by accepting market rate ($2000 plus in all cases) for their “million dollar homes”. It was obvious from the dollars signs in their eyes that just below the surface they felt they deserved to get from us what it would cost to buy their POS — e.g., double the rent.
The speed means it’s going to reach bottom sooner. By mid-2007 in my opinion.
I disagree. The speed means the bottom is going to be lower.
Why? Because the speed will lead to more of a panic mentality, and also because it will put more people upside-down or otherwise in an untenable financial position sooner, which will lead to the inventory being flushed to market sooner.
The thing feeds on itself, just as the boom did. This is not a normal economic cycle playing out, it’s the unwinding of a severe financial mania.
I go back and forth on this, but after getting out a for a few hours today: no, I’m not concerned about the speed. It’s a little like watching pain peel from week to week.
pain == paint.
paint == skin
No, not at all. Asking prices still in the stratosphere today, tomorrow, until when, who knows. We have got a long way to go. No time for rejoicing just yet.
No concern here. The quicker the market corrects, the sooner I will end my tenure as a tenant. And it will actually make prospective FBs better off — if they see prices dropping quickly, they will have reason to avoid losing their shirts.
I’m a little concerned that the drop could get out of hand and will result in a “disorderly decline”, as the euphemism goes that I’ve been seeing a lot recently. That is, I don’t know if being able to pick up a few bargains will give me a net benefit if the economy really tanks and our civilization suffers a minor breakdown (or worse) over this. Then again, I have no control over what happens next, so I’ll just try to play whatever happens to my advantage
“Any one else more than a bit concerned at the speed at which the housing market seems to be crumbling?”
——————–
Not at all. Some of us have been watching this unfold for YEARS. We’ve been lamenting that it was taking far too long to unwind. In Southern CA, prices were too high in 2001. The credit bubble, beginning about that time, took prices into the stratosphere. The correction’s been overdue for five years, IMHO.
I second what CA renter just said. This correction has been overdue for five years.
posted ” Any one else more than a bit concerned at the speed at which the housing market seems to be crumbling? ”
I think we were just past the “tipping point” but history will most likely write the FED’S silly notion that people be able to pay back thier loans will get the credit. This is going to be pure gasoline on a fire.
One more thing Oct. has been a wicked month for the stockmarket in the past…. hum…. one never knows?
But let me add- then it’s just going to lie there like road kill for the next 2 to 3 years before going up at the same rate as inflation.
.
I agree a quick trip to bottom, but there’s no going back up for the non-prime condos and the 1/8 acre, garage/driveway front yard, garbage construction, lousy location tract houses. Ever.
When a market falls it falls like a V when a market recovers from a fall it rises like a U. In other words the slide down is pretty linear but once it approaches the bottom it will stay there for a while then slowly creep up and then accelerate from there. In Normal markets it will end up rising a little faster then inflation unless outside forces act to change the rate. If you think we have hit bottom it is best to wait a few months to be sure rather then to risk that it is a pause and you are catching the falling knife. One must remember that RE is seasonal so it is reasonable to assume next summer the fall will pause or the rate at which it falls will slow.
“….it is best to wait a few months to be sure, rather than to risk that it is a pause and you are catching the falling knife…”
I agree!! I would only add that it is best to wait a few YEARS rather than a few months. This dead cat bounce for housing (which I think ….. one could be happening even now) is too slow to recognize.
Housing falls slooooly like a lava flow, and always cools last at the ocean. But in the end, they join the rest of the destruction of values. No hurry to return to this market, unless it’s a bad buy you can live with …..
Except for Florida …..
It falls like a lava rock dropped from the Sun-Sentinel.
You may be right!! No one knows for sure. I agree it is better to wait longer since the risk is less on the backside of curve. I also like your lava flow analogy since RE is extremely slow in its rate of change compared to other markets like the stock market. If one actively tracks prices (sold), inventory and current economic news events I think one can use those tools to gauge the future to some extent but one must be careful when they dip their toe back in. It could be water or it could be lava!!
You guys worry too much, you’ll end up getting nothing. When the numbers make sense, I’m back in.
‘Dead Cat Bounce’ investors club member …….
Not entirely, She did say when the numbers make sense!! I guess it depends on what numbers you use. I would assume rent to mortgage payment. Are we including taxes and Insurance? Also when a market corrects it typically overcorrects so If you get in once ‘the numbers’ make sense you may be a bit early to the game.
posted “You guys worry too much, you’ll end up getting nothing. When the numbers make sense, I’m back in.”
Me too. I need a house for my biz. I did not sell at the tip top and don’t expect to get the cheepest house when I buy again. For me this place is a great place to learn, have a few laughs and wait. I had only 2 decisions to make . When to sell, I did in Aug of 05 and now when to buy again. So only one real decision left to be made. Mean while just watch the funnies and lug on the dummies.
Agree 100%!
Oops. Meant to embed under “no rush to buy.” The bottom does remain relatively flat for a while. Even if prices rise a bit while you wait, it’s not a problem. They don’t usually rise very quickly in the beginning (maybe $10K/year, depending on location & type of house).
Copper is in contango after years of backwardization.
Interesting… I watch silver and gold futures for signs of backwardation. I’m guessing that means someone has figured out we’re in a global slowdown. Next week should be interesting. Where did you get this info on a Saturday?
“This was not a scene from ransacked New Orleans. This was what I saw Sunday in a hilly Los Angeles neighborhood in a house that was facing imminent foreclosure by the bank. The owner had purchased it with a five-year, low-interest loan for more than $100,000 over what the real estate agent was now trying to get.”
This is what I saw in SoCalif in the early 90s. Even if someone can make the payments, they often walk when their equity becomes negative. Figure 7% selling expenses and the equity disappears quickly in a dropping market.
Did you hear me? Copper is in CONTANGO! If you don’t know what that means then you need to do soom googling.
So suddenly there is no shortage of copper. Either the Chinese are manipulating the copper market again, or demand caught up with supply. Maybe because the home builders stopped buying wire? Not sure I get the connection.
Of course I meant supply caught up with demand. I seem to remember that the Chinese created a buyer’s strike about six months ago when the spot price got too high.
So does “contango” foretell further inflation and mean you should snap up PCU? Or does it mean to dump copper?
You should post this on Ben’s metals blog. We need the traffic over there, though I suspect we will lots more traffic there as PMs complete their correction.
In the mostly empty house, wires hung from ceilings, gaps yawned beneath kitchen counters where appliances had been removed and apparently sold…
They left the wires? That’s the most valuable part. You’d think they’d teach a class down at the vo-tech on how to strip a house properly.
There’s much more money in the plumbing, provided it still had copper, which many don’t anymore these days.
Guess I’ll go point by point on this one.
We’ve never had this many new homes. In order to sell now, one has to be quite motivated and realistic.
And wealthy, don’t forget wealthy. In the future the seller will need to be quite equity or cash wealthy to sell a house. The new paradigm will go along the lines of: “Did you hear about Joe? He sold his house, man he must’ve been loaded.”
The ripple begins…
http://www.chicagotribune.com/business/chi-0609300045sep30,1,7014344.story?coll=chi-business-hed
University of California at Merced opened in 2005. The UC system can’t keep up with enrollment so I suspect this Campus and Merced, with it’s glut of homes, will recover as the Campus attracts fantastic faculty, students and spin off industries.
Keep drinking that kool-aid.
After 2008-09 University populations in CA will be dropping.
Going to be difficult going past 2009 academic year.
They’ll have to push for more professional schools rather than relying on undergraduate enrollments. We all know the California Dept. of Finance predictions for 18-19 year olds levels off or drops for most CA counties. Unfortunately the system doesn’t have central enrollment planning–so campuses are all competing with each other for students. The old model of UC system was that all schools were as good as each other. Now we have Berkeley and UCLA dominating the most-desired list–with Merced flailing in its enrollments this year.
Sounds like another insider!
The UC system can’t keep up with enrollment…
That’s because those kids ain’t workin’. “I know, I’ll get a master’s degree!”, etc.
How many homes are you trying to flip in Merced? You are looking the wrong place for some GF’s!
If I were the UC System with all of their tallented Economists, I would be buying up all of that soon to be cheap housing for student housing to perpetuate the the enrollment that will hit because of the cheap off campus student housing.
“This was our chance, she implied, to get a great deal by taking advantage of someone else’s royal screw-up (call it a schadenfreude sale!).”
It’s not a buyers’ market — it’s a Schadenfreude market, where would-be buyers watch and wait while saying, “There but by the grace of God go I.”
‘But like children, houses are highly efficient delivery systems for denial. Just as no parent would admit that his or her offspring — no matter how costly, ill-behaved or intimately acquainted with the juvenile justice system — is anything other than a source of unmitigated joy, people who own their homes will tell you that the market is just fine. Best to listen to National Assn. of Realtors chief economist David Lereah, who said in a quote in this paper Monday: “This is the price correction we’ve been expecting — with sales stabilizing, we should go back to positive price growth early next year.”‘
But like children, NAR spokesmen are highly efficient delivery systems for denial.
Well, let’s not go TOO far. The truth is somewhere between what you say and what the reic says.
Ah, the cult of even-handedness. Nobody is ever correct, the truth is always a compromise of two different opinions. Absurd.
GS, I think you post too much. You should keep it to 3 wise opinons a day, IMHO.
Price_Doubt — Me thinks you are a troll. Don’t post at all unless you can honestly say otherwise.
I ain’t no troll. I’ve been here as long as you have. You just don’t like what I said.
Price Doubt – never one to jump into even a ‘minor bar brawl’ that’s none of my business, but ….. well I guess I just did…..
I think GS does post quite a bit, and I haven’t been here long at all. But I do like his very informed and knowledgeable input, which is not alone on this site. I don’t have time to read all the posts here, but I generally do pause and read the GS comments. They spark debate and create thinking ……
Now ….if you attacked my useless input, I wouldn’t have any argument with that!
I think GS just really likes this blog. Personally, I’m addicted.
Did I miss the three post rule somewhere?
If you are tired of reading his posts, just ignore them and scroll down. It’s that easy! It is what I do anytime I see one under the moniker of Price_Doubt. Just kidding. I enjoy reading all you guys’ posts. But seriously, as a newcomer to this blog, I find that GetStucco, as well as yourself, and many, many others are like the familiar faces on the stools at the corner bar day in, day out. The place wouldn’t be the same without them. Keep up the good work GetStucco.
Ditto to that! I like your description of the regulars down at the local bar. It think it’s rather fitting.
Love to see all the familiar faces here everyday as well.
Hey GS,
Can you find a balcony like Denny & Alan have on Boston Legal?
I’d love to chat with you over a scotch and a cigar!
Post Away!
Cheers!
NAR spokesmen are highly efficient delivery systems for denial
__________________________________________
Actually I agree! These guys will say ANYTHING to keep this boom going! The REIC is a corrupt bunch!
Actually, since Price_Doubt took particular exception to this one, I am wondering if he works for the NAR, and even whether his initials might be DL.
“‘I don’t see a slowdown lasting two or three months,’ she said. ‘It may be a couple of years.’”Well, that seems honest.
After denying the whole bubble for the last year! How many GF’s did she suck in with her crap the last year? Price_doubt you have been here a while, but come on… these clowns have LIED and LIED and LIED…
“The house, a lush, breezy villa with enormous windows and a majestic fireplace, suddenly made our own perfectly decent homes seem like airless hovels. Each room we entered was like a drug that made the next room that much better. Never mind that the deal potentially involved assuming a suicidally low- interest loan that would have to be refinanced to astronomical levels in just a few years. Never mind that, as we later discovered, the house had been on the market since April, listing at almost $1.1 million and then $899,000 before dipping to its current price of “just make a reasonable offer.” Never mind that we were in no position to buy a house together, separately or with the entire string section of the L.A. Philharmonic (as the payments would likely require). All that mattered was the moment. And in that moment, I, for one, could see nothing but my own desire.”
That is a fascinating look into the inner workings of the mind which can easily be manipulated by an unscrupulous lender. Such are the GFs who willingly accept the Faustian bargain of a few years of living large in exchange for a protracted period of penance as a debt serf.
Got in over your head while taking Prozac?
No problem, you can manage the penence with Lexapro!
“Lexapro has been prescribed to over 13 million patients in the U.S.”
“It’s no wonder that it’s the fastest-growing SSRI in the United States.”
http://www.lexapro.com/
The sky is falling! The sky is falling!
TROLL!!!!!!!!!
Wake up and smell the refried beans, Pancho. It is falling.
Price_Doubt a.k.a. Agent REICo! Busted!
You say the sky is falling. I say it is not falling. Therefore, the sky is only half falling.
The sky has only fallen half-way so far
You’re all wrong. It’s adjusting downward in an orderly fashion, which is not to be confused with a fall or, god forbid, a crash in any way.
Barron’s slammed HBs this weekend…LMAO (short)
No doubt they will rally on Monday, then!
(short, also)
Most HBs fell 50% then rose +/-25%, the usual sucker rally. Now its time to really play the game. Dow is at near record high but failed on Friday. Why is the Dow rallying? Fed contemplating pause in interest rate hike. Economy slowing down (good for interest rate). Housing slowing down and starting to have ripple effect on car and other industry (good for interest rate). I guess we rally because all the bad data shows that interest rate will not be raised the next time the Fed meets. The last time Long Term Capital nearly failed, the market was in the dumps. This time we have Amaranth Hedge Fund losing 6 billion dollars and more as they try to liquidate… The loss has affected several institutions, including the pension fund of 3M Co. (MMM : 3m co com
News , chart, profile, more
Last: 74.42-0.18-0.24%
4:08pm 09/29/2006
Delayed quote dataAdd to portfolio
Analyst
Create alertInsider
Discuss
Financials
Sponsored by:
MMM74.42, -0.18, -0.2%) , funds of hedge funds run by Goldman Sachs (GS : The Goldman Sachs Group, Inc.
News , chart, profile, more
Last: 169.17-0.83-0.49%
4:02pm 09/29/2006
Delayed quote dataAdd to portfolio
Analyst
Create alertInsider
Discuss
Financials
Sponsored by:
GS169.17, -0.83, -0.5%) and Morgan Stanley (MS : morgan stanley com new
News , chart, profile, more
Last: 72.91+0.02+0.03%
4:02pm 09/29/2006
Delayed quote dataAdd to portfolio
Analyst
Create alertInsider
Discuss
Financials
Sponsored by:
MS72.91, +0.02, +0.0%) , as well as a $7 billion retirement fund run by San Diego County… The ripple effect of this fund and is already hitting others. I wonder if the market will rally on these negative news.
I was trying to simplify and edit but i realize I cant. Thus to sum up… Amaranth’s 6+ billion dollar loss and investors fleeing is causing harm to other firms like pension fund of 3M Co, funds of hedge funds run by Goldman Sachs and Morgan Stanley, as well as a $7 billion retirement fund run by San Diego County.
This is just the beginning, so many pension funds (hedge funds, foreign funds) will get hit hard with the Mortgage BS (MBS) when the home buyers start skipping payments. These brains thought it was a good idea to buy and invest in U.S. housing. I hope they stayed wise and stuck with ones that are backed by good ole Uncle Sam and not the others. 2008 to 2010 should be real interesting to say the least. I am a bit nervous about how this might play out. Not sure how to invest my down payment. Very tricky play.
As the tide starts to go out it will be the RE Agents who shift their focus from manipualting the buyers with fear to manipulating the sellers with fear. As more potential buyers see the risk and decide to sit this out it will be the agents, driven by their need for income, who will drive price reductions. But, there are many FB’s out there who have have no wiggle room. They have little or no equity and thus nowhere to cut the price, no saving to dip into for a short sale and now the double whammy of reseting ARMs and declining comps. So, IMHO, the downward pressure will come in two spurts. Those who have equity and room to lower prices and want to liquidate will move first. This includes developers who have the margin on new homes. Then, after holding out for too long and exhausting any savings and maxing out other credit, will come the foreclosures of those who overextended using toxic loans. Seeing some of the latter now is only the tip of the iceberg that will spur the first group. This is getting ugly.
for those of you who use Zip realty, here’s the link to the LA Times house. It’s in Silverlake.
http://www.ziprealty.com/buy_a_home/logged_in/search/home_detail.jsp?listing_num=06_027599&page=5&property_type=SFR&mls=mls_so_cal&cKey=575q3vj4&source=CLAW
the address is 1515 Murray Circle LA 90026
Thank you eastsider. I really needed to know the location of that home. It is in silverlake just north of Sunset blvd and west of sliverlake blvd.
I am sure that the folks who live in or near that area know a lot more than i do but i will give a birdseye view of that area. Silverlake is a front-line buffer zone in the LA Getrification wars. Immediately to the south, east, and west about a mile or so away, are decrepit-run-down areas(Echo park/Rampart/westlake, Thai town, little Armenia, Far eastern Hollywood district). Silverlake hill Section(lake district)may have some nice homes occupied mostly by entertainment folks but when they come down out of their neighborhood they have to contend with deteriorating slummy apt areas. Plus those narrow, twisting, old-pavement alleys/streets must create some hassles in entering/exiting this area.
This may be a clue as to the price drop,and subsequent foreclosure of this property. RE is always about Location,location,location.