‘They Don’t Want To Buy At The Peak’ In California
The Napa Valley Register reports from California. “According to Trendgraphix, the number of Napa County homes available for sale almost doubled, from 450 in August 2005 to 801 in August 2006. However, the number sold decreased 54 percent, from 172 to 79, said the report. Simultaneously, the home sale price per square foot in Napa County declined 8 percent year to year.”
“Realtor Elliott Faxstein manages both buyer and seller expectations. ‘I’m telling sellers to get their prices down to a realistic market level,’ he said. ‘I’m telling buyers I don’t know whether we’re at the low point or not and I can’t predict that. Buyers are hesitant. They don’t want buy at the market peak.’”
The Pacific Coast Business Times. “Recent reports in a Santa Barbara County real estate outlook suggest that as housing sales come to a halt, tenants are going back into the rental market. The outlook, presented by Mark Schniepp, discussed the end of the Central Coast real estate bubble and its impending soft landing.”
“Comparing the first eight months of 2006 to the same period of 2005, condominium sales have dropped 35.3 percent and single-family home sales are down 20.3 percent in South Santa Barbara County. Sales have dropped 25.7 percent in the Santa Maria Valley.”
“Overall, home sales have decreased by 27.4 percent in Ventura County, and in certain areas that drop is closer to 40 percent.”
“On Sept. 18, the design for a nine-unit apartment building at was returned. ‘It seems to make sense when you look at the economy, when condos are really that bad off right now, who would build condos?’ said Craig Lieberman of The Apartment Specialists.”
The Record.net. “When the home-sales market is hot, the remodeling business usually is, too. But home sales began slowing last fall, and a downturn is starting to show up in the renovation sector, say local contractors.”
‘”I think people are a little unsure of finances,’ said Rick Fooy Stockton. ‘It’s all about money.’”
“Daniel Maloy said there’s still a lot of work out there, but he has noted that a lot of customers are concerned about the scope of remodeling projects and pushing their lines of credit. Plus, with home prices flattening or even sinking in a slow housing market, there’s more concern about whether the cost of a remodeling will be recovered when the house is sold later, he said.”
“Julie Anderson said she also has been getting calls from real estate agents looking to fix a house up for sale. During the housing boom, sellers could often sell ‘as is.’ Real estate agents and brokers now say that increasing competition is forcing sellers to get their properties into top shape if they wish to sell.”
“Fooy said he hasn’t found that most people are downsizing jobs, there are just fewer customers. ‘There were just so many people borrowing money,’ he said. ‘Everybody was in a big flurry to do it.’”
The Orange County Register. “Melanie Toranto already has the land for the dream home she hopes to build near her native New Orleans. The only thing standing in her way is her Santa Ana condo, which she needs to sell before work can begin.”
“But after two months without a buyer, Toranto hoped to enlist a higher authority in her sales campaign, entreating St. Joseph to help sell her tidy two-bedroom unit. ‘Usually, I’m skeptical about these things,’ said Toranto. ‘But the times we’re in, the market being as slow as it is … I figured I’d give it a try.’”
“‘When there’s a slowdown in real estate sales, sales in statues go up,’ said Sam Romero, owner of St. Teresa’s Catholic Gift Shop in downtown Santa Ana. ‘Right now, it’s picked up quite a bit.’ Romero says he’s selling up to 30 statues a month. That’s double the number sold four months ago, he said, and customers include real estate agents buying a dozen at a time.”
“The Catholic Gift Shop in Fullerton reported sales of two to three dozen statues a week, compared with a half-dozen per month a year ago. At Catholic Books and Gifts in Huntington Beach, sales jumped from 25 a month to 25 a week. Gaby Koo in Anaheim, said he recently put in an emergency order to keep from running out. ‘The real estate market’s … been slow,’ Koo said.”
“Among the faithful, stories of uncanny results abound. Kathy Lopez, a Washington Mutual loan consultant, said St. Joseph helped her sell her home at the height of the housing slowdown in the mid- 1990s although she did end up taking less than she paid.”
“Back in Santa Ana, Toranto’s already dropped the price once, from $409,900 to $399,000. But hers is one of at least a dozen units for sale in the Hillview Regency complex where she lives.”
From Ben Stein. “In March of 1990, after two years of looking for a house during a hysterical real estate boom, I bought a modest home in Malibu for exactly $600,000. The real estate crash to end all real estate crashes began the next month. Within three years, I couldn’t have given that house away. If I’d been able to sell it, I might have gotten $350,000 for it.”
“The price languished in the same miserable range for a few years, then revived, and then took off for the moon. By early 2005, I might have been able to sell it for $1.8 million.”
“Then, in the early months of 2006, the real estate boom collapsed. I could put the house up for sale, but there are few buyers out there. I certainly couldn’t get anywhere near what I could have gotten for it in early 2005.”
“There’s a bit of a moral here. When real estate crashes happen, they rarely involve that elusive creature called ‘the soft landing.’ Yes, friends, when real estate starts to fall after a meteoric rise, it tends to fall hard.”
A letter to the editor in San Francisco:
‘Editor — As someone who is in the for-sale housing market for the first time, I am certainly happy to see sellers drop their asking prices by as much as 10 percent over the past few weeks. However, I think agents do a disservice to their profession when they say that it ’still makes sense to buy instead of renting because you’re gaining equity.’
‘We buyers should make sure that it wouldn’t make more economic sense to rent a comparable apartment. A visit to an online rent-versus-buy calculator can show that, in the Bay Area at least, one can build up equity more quickly by renting and disciplined saving than from buying.’
‘Renters also benefit from having cash available for emergencies and larger down payments in the future, while buyers who stretch to the limit will be vulnerable to losing their homes if they lose their jobs.’
‘It may be fair for real estate agents to push their clients to buy for emotional reasons, but for many of us the economic argument is pretty weak for now.’
Affordable housing project goes wrong in San Diego:
‘A review of two affordable housing projects completed in the last six years found instances in which SEDC has failed to properly enforce both affordable housing standards and its agreements. Carter Reese & Associates awarded one of the projects’ affordable homes to an SEDC consultant. Five months after purchasing the home, Harris received a $50,000 contract extension for her SEDC work. She has since refinanced the house twice, cashing out $124,000 in equity in the two years since she purchased the home — potentially driving it out of the affordable range if it were to be put up for sale because of the increased size of the mortgage.’
>>still makes sense to buy instead of renting because you’re gaining equity.
Momoney… there are times (this is one of them) when you can get a better return on savings than on real estate.
In a stagnant or declining market where the holding costs of owning are significantly higher (about twice as high in the area of the letter writer) than the cost to rent an equivalent property, it makes little or no financial sense to buy. Far better to “build equity” by saving elsewhere.
I think Mo Money was being facetious — he’s a true-blue bear.
If you buy with a neg-am loan your loan balance is rising while your house is losing value. Sounds like sound economic advice.
I left the Bay Area 12 years ago for this reason: lose your job, lose your house. We really wanted a place of our own, but we weren’t willing to pay a huge weather premium. You could tell the homeowners in Santa Cruz…they were the ones who drove the beater cars.
“Pinch me I’m dreamin”
http://bubblemeter.blogspot.com/
See utube video, a classic.
Here’s how the scam works. You qualify, straight up, for the affordable housing and close escrow at the reduced price. Then, you HELOC or put a hard money second TD on the property, basically ‘cranking’ out available equity or more. Then you walk. The HELOC or 2nd forecloses and is not bound by the affordable caveat. They can sell at market or someone buys at auction. Result one less affordable unit in the pool but the orginal buyer has gotten all his equity back plus. Good scam, eh?
Then you walk.
What does this do to your credit?
The SF letter is a bit misleading. SF has rent control with a 4% cap on rent increases per year so it is an ideal place to rent and not own. I moved there in ‘96 to protect myself from rent gouging. 1800 month was high in 96 but a steal in 2001. It’s one of the better places in CA to rent.
Also, owning a home provides assurance of housing in retirement — you can plan. That’s the top reason I bought in 2001. The number of fixed income renters displaced form long term apts. (20+ years) due to condo conversions during the insane SF boom was sickening.
Rates are still very low. I remember the early 80’s with inflation fighting rates over 10%. We’re more likely to see home ownership (in areas of infrastructure and close to jobs) move well out of reach of many people than see property crash so its more affordable. Think Europe.
Where to start?
Affordability rates are already at alltime lows. Rather than thinking Europe, think Japan. Think Japan.
Affordable Housing never liked the idea too many ways to pull a fast one as this article shows.
The last time the stupid St. Joseph story angle came up a poster here had an excellent rant.
It started with a bit about being theologically suspect and went into would God really be on the seller’s side.
If you could repost, I would love to post it over at the OC Register’s RE blog.
Interesting that these statue reports come out of every market just as they start tanking. People in Washington/Oregon could get a jump on that trend.
But wouldn’t the more appropriate saint for FBs be St. Jude –patron saint of lost causes?
“Hey Jude” plays in the background.
What I said was, who do these people think they are to turn the Almighty into a financial servant for their own selfish gain? You don’t pray to God to get things, you pray to try to understand His plan for you. Do you think God would enrich you by screwing over a potential buyer? When you reduce God to a voodoo charm, then you are practicing IDOLATRY, and we all know what God had to say to Moses on that topic.
You go Georgie boy!
And don’t forget that the Holy Real Estate Agent charges a whopping ten percent of everything!
No disrespect, you said it way better than I did or could.
And I agree!
Although I don’t have an ounce of religion in me, your post is a good one George. It’s against the hypocrisy that some people in religion have.
How about skipping the statues and lowering the price… I heard somewhere that it brings “uncanny” results, too.
LOL!
the st. josephs that you buy at a catholic bookstore come with instructions. one of the items of on the list is “PRICE YOUR HOUSE REASONABLY.” i think alot of these chumps tossed the instructions and are questioning their faith now.
Every time I hear this St. Josephs story I picture a group of archaeologists a thousand years from now, dusting off the statues found on many sites around the U.S, scratching their head wondering about their significance and I think “housing bust” is going to be the last thing come to mind…
It’s the next bubble! St. Joseph’s statues. Hurry! Stock Up now!
“Melanie Toranto already has the land for the dream home she hopes to build near her native New Orleans. The only thing standing in her way is her Santa Ana condo, which she needs to sell before work can begin.”
Building her dream home in New Orleans and trying to profit off condo in Santa Ana……real shocker that this one turned to the St. Joe porcelain god for some practical help. I’m sure somewhere on ABC’s receiving dept. is her videotape addressed to Extreme Makeover.
Oops…
New Orleans,
Kewl…now that’s a real “safe investment”. I hope Melanie gets some help…after dodging bullets in Santa Ana, now she has to take on the hurricanes…
From Ben Stein’s article:
(Although I do recommend that you never buy a home with a septic tank.)
So Cal surfer can thank all of the wealthy and celebrities homes in Malibu with Septic tanks for the abysmal water quality at Malibu.
Go surf a famous wave while bathing in wealthy people’s sh!t leaking from poorly maintained septic systems.
I think it’s mostly sh!t from those rich people’s horses.
Great idea. If I can’t meet into a celebrity in person, I can at least swim in their crap.
Hey it’s cleaner then surfing the Tijuana Sloughs! 20 years ago or even 10 years ago no one cared about clean water and the runoff from the watershed. Now it’s hit mainstream media just like housing.
On a side note, Go Padres!
GOD does not care if you want to sell your home! If the buyer is a “Christian” has GOD now screwed this believer over a non-believer?
Greed is considered a SIN in the Bible. Also, Jesus took out a can of whip a$$ on the money changers in the church. I would love to see him do this to some Flippers - maybe start with that Casey Clown first!
I see Casey the clown w/36 responses to one of his blog posts. Not good. He’s trying to egg you guys on to make money off that blog. Don’t bite. He knows we all think he’s a crook and a loser and doesn’t care.
>> He knows we all think he’s a crook and a loser
Speaking for myself, I do think he’s a loser, but I *know* he’s a crook.
I refuse to visit his FBlog (f@cked blog)!
I admit, I’m weak and check for responses. But I figure he’s getting ad revenue from pretty crooked mortgage companies so it all evens out karmically.
Also, he is so screwed already, a couple hundred dollars of ad revenue is not going to make a major different.
Put him behind bars where he belongs.
Put him behind bars where he belongs.
I’d love to sneak in and tamper with all those St. Joseph statues so they shriek incessantly: “Lower the #!!@*! price, you stupid cow!”
Is the Real Estate Market in Bubble Trouble?
By Kendra Todd
http://promo.realestate.yahoo.com/
>>That’s why the Internet boom of the late 1990s was a true bubble; people suddenly realized that ninety percent of the dotcoms were companies with no way to make money.>Talking about a bubble implies a sudden burst, and real estate does not work that way. You don’t go to sleep one night with your house worth half a million dollars and wake up to find it’s lost half its value.
Sorry, a bubble is malinvestment due to cheap credit. How this malinvestment is liquidated depends on the realm in which you are dealing.
You don’t go to sleep one night with your house worth half a million dollars and wake up to find it’s lost half its value.
Correct. Takes a couple of soul-destroying years.
Don’t forget to include: the seller isn’t sleeping much as the home loses its value.
LOL!
… and in this market one real estate transaction will take many months to go through, whereas during the dot-com burst, I could have sold my HomeGrocer(webvan).com stock in a few seconds … which I didn’t … I was young okay, and learned a good lesson in “new paradigms.”
A sidd note a little OT, but I wonder if the Internet, or immediate access to RE information in general, will catalyze the downturn to any great degree, and have us at market bottom much much faster than many are predicting.
I think the flat world is an accelerating force. The experts are not the only ones who have access to the information. One can search the MLS via realtor.com or other MLS websites to see prices. Other websites will tell you what they actually sold for and the numbers sold. Forclosure websites, government statistics, etc the possiblities are endless if you look to the right places. Hell this blog site allows one to find sites they otherwise would have never seen. All this from your computer!!!! I am in Iraq right now and have a pretty good handle on what is going on half way around the world due to this flattening.
Shakes –
Are you really in Iraq? Bless your heart if you speak the truth.
Yes I am. In between blogs, I fly an AH-1W attack helicopter in support of the troops on the ground. I protect them when they are attacked and escort the assault helicopters to extract the wounded. This blog site is my way of ‘getting away’ and staying in touch with my hobby and my secondary income source.
Shakes,
My prayers are right there with you. My son just got back from a second tour - USMC. Stay safe and keep us posted.
I am a Marine as Well, Ohh Rah and Semper FI!! I have only 1 more payday until I hope to return to my family.
Hi Shakes,
My best wishes that you come home soon. Please keep posting.
Shakes
how many people have you killed?
That question is best asked of Bush and his trusted partners, Rummy and Dead Eye Cheney.
Be safe, no matter what, Shakes. Keep posting when you get home.
Doug…..KEEP YOUR PIE HOLE SHUT!
God Bless you Shakes! Keep safe…. Next time Doug says something stupid get in your bird and roll hot on him!
Shakes
Thanks for the sacrifices made by you and your family. Stay safe!
I appreciate everyones comments, I only fire in self defense of our troops or myself so I consider myself a protector of our troops rather then an aggressor!! Our purpose here is to try to lessen the kinetic battles at this stage. Everyone wants the Iraqis to take over their country, it will just take some more time then most of us want!!
The very fact that at one site we have the great fortune to have Ben’s expet eye distilling the nationwide bubble news is strone enough indication that the Internet WILL and has affected the speed of the decline.
In 1970, could you have easily been able to see what’s going on across the country?
LMAO!!!!!!!!!
“You don’t go to sleep one night with your house worth half a million dollars and wake up to find it’s lost half its value.”
True. You first waste a year-or-so of your life trying to sell it at last year’s wishing price, then take it off the market for a while, try to sell it again, decide to get comfortable where you are and stay put, and finally, ten years down the road, discover that prices are still 50% of where they were at the peak. Maybe… (My crystal ball is a little foggy here, but I can say that it is even worse than this for those who bought in Japan circa 1990).
10 years in Palmdale, CA from 1988 to1998 on a 3 plus 2 bed house, and I had to bring $2,000 to the closing to get out from under this loser. And this was a bread and butter, low priced starter home that people with any income could afford. I lived through this once, and these fools will find out what losing sleep is all about.
Agreed. Know some folks who were upside-down in Lancaster, CA for 12-years during this same period, slowly watching the place turn into a Section 8 barrio-ghetto slum. They got out without having to bring a check to the closing table, but they did lose when inflation was accounted for. Looking back, as the wall coming down in Berlin they should have put it on the market at 15% below comps, but they didn’t “see” the big picture.
if you would have hung in there tilllast year you would have tripled your sold price in palmdale.
i bought a house in lancaster for52k in 97 sold in 04 for 249k.who says you cant time the market.
But you had to live in Palmdale for seven years.
Sorry, Lancaster.
52k in 1997… unbelievable
That must have been the idea of all those investors who watched their dot.com millions bleed away day by day. However, ‘You go to sleep one night with your house worth half a million dollars and wake up 3 years later to find it’s lost half its value.’ does ring true.
some people put little money down, no money down or they finance at 115%. now, at some point they’re underwater, they’ve lost not half their money, they’ve lost ALL of their money and they OWE money. leverage is a.
leverage is a …killer, bitch, THOR HAMMER destroyer of the unwise…(insert descriptive here)
This is the brillian Kendra Todd. Her claim to Fame, winnning the apprentice by stabing all of the other contenders in the back and kissing “The Donalds” A$$ for 12 weeks. Her first project - remodel a POS in Florida. Current price $125 Million. HMM anyone think it is going to go for that?
Why does anyone listen to these people. “The Donald” wouldn’t be anyone without daddys money and $600 Million in Debt forgiveness in the 80’s. Hard to go broke when you keep the assest and the banks get screwed. His apprentice is probably in the same boat, levered up the hilt in debt and figuring out ways to get the banks to forgive her indebtness when she goes BK….
Thank you, RMB. I knew that name “Kendra Todd” was familiar but couldn’t place it. I even watched that particular apprentice series. Was ( I hate to admit this ) positively impressed with her at the time. Right, her position in the Trump organization does require her to be a total jerk now. Anyway, it’s surprising how many people have woken up some time this summer to notice their house is worth (say) 25% less than they thought it was. And if they HAVE to sell the damage is already worse than that.
Amen
Anyone thinking home ownership is like a IT stock like pets.com isn’t seriously looking at history.
There are barriers to selling property that do not exist for stocks. That means the panic with a stock selloff isn’t possible with property. People with property are more likely to wait the market out. The few sad sacks we read about are going to have to sell or face forclosure.
MANY can’t make the mortgage payment anymore.
posted “MANY can’t make the mortgage payment anymore. ”
I hate it when that happens.
“There are barriers to selling property that do not exist for stocks. That means the panic with a stock selloff isn’t possible with property. People with property are more likely to wait the market out. ”
The same lame crap that Godspan spouted a couple years ago. The problems are exacerbated by the inability to sell easily. When the slide begins in earnest, the dot.com bust will seem like an orderly divestiture of their positions. The losses will be tremendous. We’re still early in the game and it’s getting ugly already.
Foreclosures will become rampant (remember all the ‘investor’ owned properties?) as the flippers get flipped upside down in multiple mortgages. 5 years from now they’ll still be wondering what hit them and they’ll be thinking RE never does anything but go down.
You’re right - pets.com wasn’t mostly bought on 90% margin. Sheesh.
I think Ben Stein has seen the light in his latest column. Just a year ago, right at the peak, he was actually cheerleading for buying real estate.
love a link on that one- Ben found out if you’re a bear you don’t get much print
I don’t remember him being a housing bull.
Yeah, he was a bull. I recall a debate about it between him and Jim Rogers once. I believe he changed his tune in May 2005.
I remember him writing a bearish column after returning from a trip to Florida. As I recall, what he saw happening there convinced him that Florida, at least, had a bubble.
I think I recall Ben Stein saying on FNC that if you bought ONE house for your primary residence, put down a reasonable downpayment, don’t have an ARM, have a fixed mortgage, have a stable job with a reasonable PITI relative to income, and you plan on staying in it for a while, you will be OK regardless. But if you speculated - you will be in trouble.
It looks like the archives on Yahoo Finance don’t go back as far as 2005, so I can’t give you a link. But his comments were in reference to the Fed raising interest rates. Ben wrote something along the lines of ‘don’t raise rates too high or you’ll kill the healthiest part of our economy, the housing market’. I generally respect what Ben says in his columns, but I took exception to that one.
Ben Stein was not only a bull, he vehemently insisted for years there was no housing bubble — on that fox cable show with jim rogers, hosted by Cavuto. rogers would say there was a housing bubble and Stein would snort at that. constantly
TRUE! He blows with the wind like all of these other clowns!
-
Jim Rogers was a few years early -
http://www.jimrogers.com/content/stories/articles/Unreal_Estate.html
19 Apr 2002 Unreal Estate
I first heard about the real estate bubble in March 2002. It was in a presentation by University of Arizona economist Marshall Vest, who’s internationally renowned for the accuracy of his forecasts.
He drew a simple graph with the top line showing Arizona housing prices rising to the moon. Below that steep line, he drew another line with a gentler slope. That line represented job growth, which was (and is) accelerating at a more modest pace. Between the two lines, he drew a circle and said, “Here’s the bubble.”
Once again, it looks like Dr. Vest was right on the money.
Speaking of Ben Stein, doesn’t anyone else find it ironic that he’s now become so bearish after popularizing supply-side economics into our pop culture through this famous line,
“Something ‘d’-'o’-'o’ economics”
“The real estate crash to end all real estate crashes began the next month.”
I don’t think it was “to end all real estate crashes.” Maybe this one will for awhile.
Yes. My reaction to his description of 90’s decline was the same as yours. THIS one to be much worse. This one to be comparable to 1929-33 stock crash. That ended serious stock crashes for 70 years till tech bubble. So, if we haven’t blown ourselves up by then, the next real estate bubble might be around 2070, when yuppies will not have parents who remember the housing crash of 2005-2012.
-
Recap of Saturday, November 19, 2005
Cavuto on Business
Neil Cavuto: If home prices slip will it lead to a housing bust or a major buying opportunity? Barbara Corcoran says a dip in home prices is a big buying opportunity! So, Barbara I don’t mean to be cynical but you’re in the business so you’re going to hype it all you can.
Barbara Corcoran: Well, no I’m not going to hype it all I can. I’m also a buyer in the business and a seller in the business. There’s so much uncertainty in the market right now that it really is a great time to buy. And I don’t think it’s going to last very long. Come January, everyone who doesn’t buy their house right now for the price they can afford is going to wish they had because they’re going to be paying more in January.
Jim Rogers: What’s going to make them go up in January?
Barbara Corcoran: In January you can set your watch to Super Bowl Sunday.
Gregg Hymowitz: We’ve been talking about this for years now, right? And it’s always been about interest rates. Interest rates were low, and home prices went up — money was cheap. Interest rates are up materially from where they were, and homes prices have stopped going up. It’s dead in the water for a long time to come.
Neil Cavuto: But not a crash.
Gregg Hymowitz: No there’s never been a crash.
Neil Cavuto: Well there was in the late eighties and nineties.
Gregg Hymowitz: In isolated places. Homes prices aren’t like stocks. It’s very geographically driven. Overall, throughout the country, there’s never been a home crash. It’s very much interest-rate driven.
Ben Stein: Well we most certainly had a crash in Malibu and in Beverly Hills where I live. Historically, just after the peak of a bubble is not the best time to buy. Historically, once you’re off the peak of a bubble it goes down quite a ways before it recovers. And as to why you can set your watch to Super Bowl Sunday, I’m mystified. Usually people have to have a reason for something. I’m not quite sure what Barbara’s reasoning was.
Barbara Corcoran: First of all interest rates are not high. You’re just comparing them. Even though we’ve had five big rate hikes by the Federal government, what has it done to mortgage rates? Really nothing. What I mean by Super Bowl Sunday is this whole media babble stuff that’s out there is going to get old and boring. The media is going to move on to something else.
Neil Cavuto: John Rutledge, I know you pay cash for all the buildings you buy, but what do you think of that?
John Rutledge: Barbara I love you, but we’ve got Barbara’s bubble-busting babble going on over here. Interest rates are all that matters. They’ve been priced into the market. Banks are now not financing spec houses. And Ben, I live in Greenwich, and you live in Malibu. We can buy homes now for less than $4 million. It’s a heck of a market. This is not a crash, but this not the right time, other than a busted spec deal, to buy a house. Stay in the stock market. Stocks are going to give you 10 percent a year.
Jim Rogers: Houses are going to go up in some parts of the country where they haven’t had the bubble, but buying a house in Greenwich or Malibu at these prices is total madness.
Barbara Corcoran: Those houses that you live in now are going to go up. I would put my life on it. More than that I’d put my money on it.
http://www.foxnews.com/story/0,2933,176238,00.html
is it ok to kill her ?
real hores are dumb hens
My thoughts exactly!
It would be great to execute her since she offered when she is wrong.
“There’s so much uncertainty in the market right now that it really is a great time to buy.”
Seriously. What the hell does that mean, Babs? How does uncertainty equal a “good time to buy”???
How do these people get paid? Are they funded by some special needs program???
Here are my favs….all candidates for the RE hall of shame. I’ve put a translation after each so that lurking realtors can easily make the connection to the RE talking points of the past 5 years.
- There’s so much uncertainty in the market right now that it really is a great time to buy. And I don’t think it’s going to last very long.
(Get in now or be priced out forever)
- You can set your watch to Super Bowl Sunday
(It’ll rebound next year, this is just a temporary correction)
- This whole media babble stuff that’s out there is going to get old and boring. The media is going to move on to something else.
(The MSM is to blame. When they are done talking, everything will be back to normal)
- Those houses that you live in now are going to go up. I would put my life on it. More than that I’d put my money on it.
(House prices always go up)
I still don’t understand her thoughts about making a major investment when the future is uncertain.
I mean, C’MON LADY! Even DL has stopped singing those old tunes.
Even though she did write her own obituary, leave her alive. I can use the laffs.
“uncertainty”. This word is the single most idiotic word used in investing. Think about it; when is ANY market ever “certain”?
I’d say the ONLY time a market can be “certain” in one direction or the other is when “experts” like Corcoran say it will certainly go up (then it will certainly go down) or when they agree it can only go down (then it certainly will go up).
Study investment history, solid market appreciation always climbs a “wall of worry”. Why? No one ever knows what the “right” price of anything is. The only time (most) people know what to do in a particular market is when it is FALLING. Just about everyone knows what to do when prices begin to fall. The fall stops when prices are seen by CONSERVATIVE investors as being fundamentally cheap. In other words, seen as cheap by people who actually know how to measure value in a particular market.
“uncertain” is the most grossly overused, worthless, yet revealing word in investments. Those who use it, generally, don’t have a clue otherwise they’d never, ever, use the expression.
“According to Trendgraphix, the number of Napa County homes available for sale almost doubled, from 450 in August 2005 to 801 in August 2006. However, the number sold decreased 54 percent, from 172 to 79, said the report. Simultaneously, the home sale price per square foot in Napa County declined 8 percent year to year.”
This gives out-of-state bloggers a fairly close idea of California RE in general. The rate of sales drop seems fairly dependant on the amount of home-price runup, not absolute price. Central Valley is about dead too, with 50/60% YOY sales fall-offs common. It seems though that the next round of price reductions will be the hard ones, as people have only given up on their ‘in-the-bag’ 15%, but are starting to approach their financial limits, where HELOC’s, IO’s and poor saving habits will bite.
OT– but maybe you guys can help. First important thing to note: I am a financial no nothing so if this is a stupid question it is because I’m one of those financial idiots spoken about here so often. You guys have helped me learn a lot and saved my ass in RE (got out at the top with a nice chunk of $$$), so thank you.
The OT question. My company is going public, and with the suggested offerring price plus the dividend plus the split, employee owners are actually taking a hit at the offerring price.
Why would a company do that? I’m sure the stock price will go up looking at other comparable companies with at or about the same P/E ratio and our company (SAIC) has no debt. I’m a little pissed but I know I’m a financial dunce so I figured I’d throw this out there and ask for any insight.
Can any of you recommend a book to get started learning about the basics with regard to investing?
Last, if anyone can recommend a good financial planner or stock broker in the NoVa area I’d appreciate the tip.
Thanks in advance.
Novasold
Oh god. I hope you don’t have a link to your email on here. Your mailbox will blow its doors off.
Well, Ben’s blog tells me that It doesn’t share my email so there shouldn’t be, but I’m no internet genius either. That email address is a throw away address anyway.
But seriously Txchic, have you ever heard of such a thing in an IPO?
If the original investors have liquidation preferences, those preferences will be honored. Then the shareholders split what is left over.
I’ll read the offering materials. They appear to be on your company’s website.
Thank you very much. I’ve simply never heard of an IPO where stockholders came out with the stock value at less than what it was worth held privately.
Any book ideas would be much appreciated also. I haven’t done much with the house dough b/c I realize I know squat and am hesitant to go with the random advisors I have been pointed towards.
A person has to begin learning somewhere and from everything I’ve read on this site, you all know your stuff.
Thanks again.
Novasold.
look at the last huge employee owned company to go public, UPS. Study their stock charts…
…also depending if the Dems take control of the Congress and presidency in 2008 do you think defense spending will go up or down? Just don’t put all your eggs in one basket, SAIC is a GREAT company, but examine their sector.
here is a SAIC stock forum which would be a great place to ask your questions:
http://tinyurl.com/sxmdg (RagingBulls)
Also sorry about “no nothing” too emotional about this one.
Know nothing.
First off, quit referring to yourself as a “idiot” or “know nothing” or any other negative thing. You’re here, you’re aware of potential issues, and you’re asking for help. That accounts for a lot of smarts. Admitting the need to ask for help means you’re half-way there.
(It’s kinda like a 12 step program here…lol)
Why would a company do that?
Because the people at the top (the ones taking it public) are getting a huge kickback in the form of options/stock purchase.
I have yet to find a book that is useful for the IPO process, ie, few that will tell you exactly where to apply greasing to pull one off. Perhaps others will have a source.
My quick thoughts:
1. Why is the company taking public money? In the case of SAIC, it’s gov’t service, and that is presently a bubble. So I’m guessing that somebody is deciding to monetize at the top price.
2. The alternative would be that they really really really need the money and are willing to put up with all the crap of being public. (Sarbanes-Oxley has made this even worse.) Unless you know something from the inside, I would guess this is not the case. I doubt that it would be offered to the public under these circumstances.
3. I would sell as soon as your lock-up expires. Yes it will go higher, but take the bird in the hand. I’ve known many sad stories where it only went higher during disallowed trading periods.
4. Do not screw around with short/long term cap gains. Take the bird in the hand. You don’t know what surprises your management has hidden away, and that AMT bill will screw you royally.
5. Take the bird in the hand. OK, I’m redundant.
6. As was posted earlier today, the worst vice is advice.
Good luck.
This is what I heard about SAIC. They spend a lot of their money buying back stock from their employees. Since they have grown so much over the years, they are almost to the point where they can’t afford to buy-back stock from departing employees. Therefore, they are going to allow the public to start buying the stock instead of the company having to do it. Read the prospectus, it should give you a good clue what is going on. Also, the blogger of piggington.com is also started a career in financial management. Looks to be pretty savvy. I would give him a look if you are in the market.
Why would you sell something at a seemingly “low” price? Because you KNOW its going lower.
IPOs often do poorly because the owners are smart enough about the business to get out (or liquid) while the getting is good.
Maybe your business can get needed working capital in the market to enable it to rapidly grow, maybe much faster with the additional capital. However, a lot of times that isn’t the case. The numbers you are looking at may not be all that reliable. Remember, numbers are only as good as the character of the people behind them. Being at the company, you probably know the character of the owners as well as anyone? Do you trust them? If you do, this is probably a sound move. If you don’t this is probably a sound move….FOR THEM!
Thank you all so much. I am definitely getting out as the wait period allows. You guys are great thanks so much for the advice.
I agree with Mike that SAIC is a great company, that’s why I was shocked at the initial price of the stock.
I’m going to check out piggington. On this and the housing blogs I have seen a lot of financially savvy people, I figured this would be the best place to ask!!
Thanks again to everyone and thanks Catherine for the encouragement.
Kendra says it’s cool - notice the link name
http://promo.realestate.yahoo.com/
Ben Stein is about as smart as they come, if one’s academic record means anything at all. He graduated Summa Cum Laude from Yale Law School, the top law school in the country.
He points out the obvious also, we’ve never had a soft landing before so why does anyone think one’s going to happen now?
David Lereah wants you to think he thinks there is going to be a soft landing because he has some Florida investment condos he wants to sell you.
The fact that he got a pretty little piece of paper does NOT mean that he’s aware of the real world. Somehow, I figure those wienies over at the fed, or on the Council of Economic Advisors got em too. Remember that it was a S*pot full of highly educated propeller heads that came up with program trading (re: ‘87 crash). This time around– hedge funds. oooohhh… or hi-rise condos in the OC. Or $500k starter homes in Temecula….
Common sense– ‘taint so common.
not to beat a dead horse–
Greenspan’s Educational Background: Completing his three degrees at New York University, Alan Greenspan received a B.S. in Economics, summa cum laude, in 1948, an M.A. in Economics in 1950, and a Ph.D. in Economics in 1977. According to his official Federal Reserve biography, Dr. Greenspan has received honorary degrees from Harvard, Yale, Pennsylvania, Leuven (Belgium), Notre Dame, Wake Forest, and Colgate universities.
Dr. Bernanke was born on December 13, 1953, in Augusta, Georgia, and grew up in Dillon, South Carolina. He received a B.A. in economics in 1975 from Harvard University (summa cum laude) and a Ph.D. in economics in 1979 from the Massachusetts Institute of Technology.
Those guys at LTCM (When GENIUS failed) had some nice college diplomas and nobel prizes.
He also had one of the best gameshows ever, “Win Ben Stein’s Money”. Very rare was the contestant that ever beat him for the big money at the end. It also had Jimmy Kimmel as host. You had to have some major IQ to compete on that show.
A “soft landing” is largely defined by who it lands on…
“Ben Stein is about as smart as they come, if one’s academic record means anything at all. He graduated Summa Cum Laude from Yale Law School, the top law school in the country.
He points out the obvious also, we’ve never had a soft landing before so why does anyone think one’s going to happen now?”
I stumbled onto Ben Stein’s columns about a year ago. He is my favorite columnist. And to think he plays roles in movies. Usually actors know nothing. Mr. Stein is one actor I respect. Great financial sense!
how does building an apartment building pencil out?
“Among the faithful, stories of uncanny results abound. Kathy Lopez, a Washington Mutual loan consultant, said St. Joseph helped her sell her home at the height of the housing slowdown in the mid- 1990s although she did end up taking less than she paid.”
Wow, she took less than she paid. Uncanny result indeed!
Way to go, St. Joe! Mission Accomplished!
Let’s see more of those uncanny results, with FBs bringing checks to the closing.
“‘I’m telling buyers I don’t know whether we’re at the low point or not and I can’t predict that. Buyers are hesitant. They don’t want buy at the market peak.’”
Maybe word is getting around that it takes four or more years for a real estate correction to play out, and that buyers early after prices have peaked get to own an investment with negative appreciation on a high base value for several years hence?
Something tells me he was making lots of predictions a couple years ago along the lines of “buy now, prices are going to go up forever!”
Maybe people will being to use the old hueristics. It takes at least four or more years to break even after buying a home.
When I bought in March 2001 NorCal peaked and prices dropped slightly before the market picked up in 2002 and then went nuts. At the time of purchase, I figured it would be ~2006 when I could expect to sell at a net wash.
Part of buying was access to the deduction and establishing a credit record.
Some of Dataquick’s numbers for August ‘06:
Napa County 105 $615,000 $615,000 0.00%
CITY SOLD 8/06 8/05 INC/DEC
AMERICAN CANYON 15 $669,000 $649,500 3.00%
CALISTOGA 4 $657,500 $696,000 -5.53%
NAPA 76 $579,045 $585,000 -1.02%
SAINT HELENA 6 $687,500 $902,000 -23.78%
YOUNTVILLE 4 $620,000 n/a n/a
And now Trendgraphix’s:
In year-to-year comparisons for August, Trendgraphix Inc., reports an 18 percent increase in the median sales price for a Napa County home, rising from $615,000 to $725,000 in August 2006.
Ben, somebody has a problem.
“Fooy said he hasn’t found that most people are downsizing jobs, there are just fewer customers. ‘There were just so many people borrowing money,’ he said. ‘Everybody was in a big flurry to do it.’”
——————————————————————–
major credit crunch coming, the hangover is always equal to the binge.
-
“There are no atheists in a foxhole.”
Great, now the churches will be flooded with people looking for a quick fix.
And can we see some more monkey chanting slogans here?
Is it any wonder the morons that drove this mania would now be looking for some help from above to bail them out? There are just as stupid now as they were then.
Many people in this country are embarrassing.
-
Good article:
The Times
October 03, 2006
The end is upon us, real-estate brokers look terrible - and forget the canapés
LA Notebook by Chris Ayres
IF YOU’RE wondering why I’m sweating so much, the answer is simple: I’m waiting for The End. It’s been a long time coming, there’s no doubt about it. But I still feel unprepared. During my 31 years, I’ve lived through a few traumatic events: the dot-com crash, September 11, anthrax, the Iraq war, Simon Cowell’s America’s Got Talent.
And yet this new Armageddon fills me with equal dread. Yes, the explosive charge in the foundations of America’s housing boom has been detonated. The wrecking ball has swung. After 17 consecutive interest-rate rises by the Federal Reserve, sales of existing homes in California have suffered their biggest fall in nearly 25 years, while the median home price across the entire country has recorded its first decline in a decade.
http://www.timesonline.co.uk/article/0,,6-2385537,00.html
and Uk home prices are up- go figure
Was out in Glendale, CA and was checking out this 11-unit condo project in last stages of completion. here is the website: http://www.thecondopeople.com
address is 531 n.louisa st.,close to dwtn Glendale’s main drag. These are pink/brown-toned three-story units in a respectable dwtn area of Glendale, which gets an “Aa+” rating for livability index(I have my own ratings system for grading LA county communities, similar to the weiss/Standard & poor ratings). No evidence of aging ramshackle structures nor homeless in the meticulously-scrubbed dwtn area.
I always put Glendale in top ten among livable LA communities, and the 2 fwy is fastest Scal route into dwtn LA.
Took a quick run thru Mid-Wilshire LA along highland ave and noticed two homes had for lease signs displayed(Ave-sized SFH’s probably run around a Mil in this area close by Hancock Park/Windsor).
Update on the 3 Wilshire Blvd condo/apt projects in LA DWTN Central city West Redevelopment Area(w.of 110). Thought they had stalled out but there appeared to be a bit of activty at sites(a few construction workers and a single concrete truck in action). The Verodwtn.com project(Bixley and Wilshire) still looks like a dead duck. That area, Pico/Union,still a raunchy third-world cesspool even as the LA City West project attempts to Remake it.
Glendale’s nice but it gets some exceptionally bad smog, from what I remember living in the Valley 15 yrs ago.
Ben Stein. Another brilliant guru who seems to make more out of giving advice than anything else. Buy on the way down, huh? Seems this guy has a short memory. Buying the likes of CSCO or INTC or hundreds (literally) of tech stocks in the meltdown, would have left you with an empty bank account (all the way down) and it would still be empty. The DOW is rallying because of a few stocks. It is NOT a healthy broad based rally. Not that you would know that listening to the cheer leading comedians on CNBC. The tech sector is nowhere near it’s top of 2000. Had you bought a basket of tech stocks (the QQQQ’s) all the way down, you would have traveled quite a sad distance. Try $120 down to $20. Where are they (the QQQQ’s) in 2006? At $40. Gonna be a loooooong while (try years and years) before the QQQQ’s hit $120 again (if ever). Ben Stein is another of these “advisors” who are full of sh*t.
Ben Stein had a column in the NYTimes a few years back where he advised (not completely seriously) NEVER to sell real estate, after lamenting about the various houses his family owned over the years and what they’d be worth today.
‘“Overall, home sales have decreased by 27.4 percent in Ventura County, and in certain areas that drop is closer to 40 percent.”’
Here in Westlake Village, single family homes in 91361 are coming on the market priced in the 700s for the first time since late 2004. I think actual sales are off more than 40% in August/Sept and deals seem to be falling out of escrow more often even though mortgage rates are down slightly from summer levels. One reason is that the area’s second biggest employer is CountryFried.
Lots of Vitess execs. live in Westlake Village. Back-dating options is even a better scam than flipping affordable housing.
posted “CountryFried.”
LOL, LOL…. I would like, I will to steal this line!
Did anyone see Barbara Corcoran on GMA this past week. She had a challenge to sell a home in a week. After rearranging a New Jersey couple’s home (must be fun living without curtains) they had an open house on Sunday. On Monday the moment of truth came. 80 people came to look at the house and no one bought. This is after a week of national television exposure.