‘Now It’s Payback Time’ In California
The Daily Bulletin reports from California. “If you aren’t panicking about the downturn in the housing market, you aren’t paying attention. There is a massive inventory of unsold homes on the market, causing homes to take longer to sell and forcing some sellers to become more motivated by cutting their prices.”
“Regional economist John Husing says there is ‘definitely a psychological element to the housing market. People are confused right now,’ he said. ‘They don’t know what’s happening with the market. Nobody knows anything.’”
The Valley Voice. “The price of an average Visalia area home may have fallen about $50,000 in the past year. That’s the assessment of Joe Leal, general manager for McMillin Homes. ‘Still we feel our company is in good shape’ with some 6000 to 7000 lots in the central valley we can build on, some 6 years worth of work, he says.”
“The $30,000 to 50,000 drop in house values may be conservative by some measures as there are plenty of stories of home sellers lopping $100,000 off their asking prices on some higher end homes.”
“Unlike some builders who just recently came to the party buying land at prices as high as $200,000 an acre, McMillin and other builders who have been in the marketplace for a long time are expected to have an advantage—a lower cost per acre of land purchased years ago.”
“One clear signal that builders are adjusting their expectations is virtually all of them have given up some optioned land in the area in recent months, says Brad Maaske. That includes McMillin Homes, Centex and others by their own declarations. ‘Deals just didn’t make sense at levels we had agreed to before,’ says Leal.”
The Record.net. “The median sales price for existing homes in San Joaquin County stood at $425,000 in December. By August, that sales price had slipped to $395,000, a 7 percent price decline.”
“Until recently, Marcia Ourganjian and her husband, Walter, were in the Stockton housing market, dropping out after six months of, well, much of nothing. They’d had enough would-be homebuyers come to look over their home in north Stockton and tell the couple how beautiful the place was. And the lookers would walk without ever making an offer.”
“They did get one offer: After the couple had cut their sales prices $10,000, to $435,000, someone offered $390,000 but wanted all the furnishings in the house as well. ‘I thought, ‘Are you kidding?’ Marcia Ourganjian said.”
“Marcia Ourganjian quoted her husband’s philosophy of: ‘I’m not going to give my house away.’ ‘We’re going to wait three years,’ Marcia Ourganjian said. ‘Maybe the market is going to go up. Something has got to happen.’”
From News 10. “An economic research firm actually use the word ‘crash’ to describe the forecast for several northern California markets, including Sacramento, Stockton, Vallejo, Redding, Chico, Merced and Fresno.”
“‘Prices in places like Stockton, Merced and Sacramento were pushed artificially high by investors,’ said Celia Chen, for Moody’s Economy.com. ‘And so now it’s payback time.’”
From KCRA.com. “In Stockton, developers continue to build homes. ‘There are more than triple the number of houses, existing homes on the market as were on the market two years ago,’ said Dr. John Knight of the University of the Pacific School of Business.”
“Realtor Sheri Midgley said she has already seen the change as investors have left the market. ‘We were having investors buying two or three a year, or even more than that, and then flipping, but the flippers aren’t in the market right now,’ Midgley said.”
“For Judith Zann, it also means asking less for the house she’s selling. ‘We went on the advice of our real estate agent and we dropped ours lower than everybody else,’ Zann said.”
This is why it won’t get good for a couple of years. When resetting ARMS and foreclosures destroy comps for those unwilling “to give it way” — they will be laughed at in 3 years when they list their property anywhere near their wishing price today.
“Something has to happen.” Oh yes, very true madam. You keep your price EXACTLY where it is. Don’t drop it again. Keep insisting that selling for $45K under list is “giving it away”. I think everything will turn out for the best in three years. Your house will probably be worth twice what you are asking now.
(Sarcasm off)
in 3 years she won’t be giving it away.
She’ll be paying to get rid of it. (i.e. writing a check at closing)
She will be giving it away in 3 years…. to the bank.
You’re probably joking, but most people don’t realize that isn’t as far fetched as it sounds. When I was growing up in Manhattan in the 1970’s people were actually ‘giving away’ their apartments for free in order to get out from under their apartment-building maintenance fees. The monthly fees were loosely based upon the mortgage of the building which vastly exceeded the 1970’s value — the monthly fees also exceeded rental equivalents.
Those were dark days for Manhattan. I remember driving up through Harlem and passing block after block of buildings that had been burned (arson) by landlords who were in equally bleak situations…
It could all happen again.
I think we will see this in Las Vegas High rise market. Most of these have $400-$1,000 per month maintenance fees. Thanks for the history lesson!! I never liked history until I was old enough to see history repeat itself and I think we will see similar issues with todays housing bust.
Shakes,
Hope you are ok!
In 3 years this woman will be the proud owner of a dilapadated shopping cart, a tin can, and a cardboard box to sleep in.
Get out NOW with at least SOMETHING!!!
At least she’ll still have her furniture.
People should learn from history. re cycle is 7-10 years up and 7-10 years down. scary but true. haha
Try this one, GENESIS 29-30. Seven years started in September ‘05. Six to go eh?
seven lean cows and seven fat cows…. its in the bible. the cycle goes waaay back.
Posted seven lean cows and seven fat cows…. its in the bible.
seven fat realtors…. seventy-seven skinny ones! its in the want Ads.
“seven fat realtors…. seventy-seven skinny ones! its in the want Ads.”
Bwwwwaaaaahhhaaa, I’m stealing that line.
“seven fat realtors…. seventy-seven skinny ones! its in the want Ads.”
Ben………ya gotta save this one………..
Bwwwwwwwhahahaha………..
So why are all these NAR people already calling a bottom?
This thing just got started, we got a long way to go.
What you’re mocking is the reason prices are not going crash. Owners are pissed and not stupidly going to dump property at a loss. I expect that people will tighten their belts and make their payments. If inflation is in check, it’s going to be workable.
They will not crash, but they will slowly go down over the next six years. Is that going to be workable for folks in San Diego that took variable rate loans with nothing down? Doubt it.
just got back from looking at antelope valley horse property,there are tons of homes for sale and the only ones selling are after 30 to 50 k price drops.many of the flyers i picked up not showing on zip realty so it looks like alot of hidden inventory.people laugh at palmcaster but there are some nice ranches out on the west side quartz hill area.i was only looking not even going to consider buying for 1-3 years.people who say this will take 10 years to go down are wrong the last 3 years appreciation will be gone in 1.5 to 3 years.
I agree there will be people who do exactly as you say but I think the numbers are against you on this one due to the nature of the loans that were secured in order to get into the house. People will be stubburn for the first year which we are just finishing. Next comes the few who throw in the towel (just started to happen). We are approaching the flood of ARM resets in 07 and when people are looking at the increased cost and decreased home price they will see things differently. Someone posted a few days back how a year ago people would do anything to negitiate to keep their home and now the are trying to negotiate the home as part of getting out of the debt. I am one who owns my home and am planning on riding this out with a plan to rent and be cash flow positive fi necessary but I think I am a small minority. At least from those who I work with and live next to as my frame of reference.
Yes. I agree that there are some with serious problems and people will lose their homes. Foreclosures were at historical lows because those in trouble could borrow equity to postpone judgement day. All of them will come due soon and others that stupidly speculated non-sustainable loans.
I think that with the new anti-consumer bankrupcy law, people will try harder to keep a home than they tried to keep a .com stock. They’ll be on the hook for the money anyway.
I also see uneven corrections. Demand in areas close to jobs and infrastructure will be strong so I expect prices will be stable. In suburbs, demand will be much weaker. The stories we see in this post are for commuter cities in CA and by that I mean long two-hour commutes one way. MountainView CA is home to Google — no way prices will crash there. Tracy, CA is a commuter city 60 miles away in the Central Valley. I’m less hopeful about there.
While I agree that home prices are regional, I don’t believe the scenerio you are describing would work out that way as these two areas (city and suburbs) are in direct competition with each other. That is, if suburban prices go down but city prices do not, guess what? People will swarm to the suburbs and less willing to pay the high premium in the city (this, of course happens already but it would even more so in your situation). If the city wants to keep up, then those prices would have to fall as well.
“If you aren’t panicking about the downturn in the housing market, you aren’t paying attention.
Why do writers always talk about the drop in prices as a NEGATIVE thing? Remember, asset price changes always have a winner and loser. The seller may hate the price fall, but the future buyers love it.
Why don’t reporters put the positive spin on it?
I expect you haven’t a clue.
Yes, it’s true for those who can afford to hold on but the reality is — most people will be forced to sell. Well, if I’m the seller, I would not want to hold on overrpiced property anyway. We all know housing in Cafornia is way overrpiced.
Not even most people have to be forced to sell… just enough. The thing is we won’t have buyers. Financing will get REAL hard.
This isn’t about sellers, this is about buyers!
I hope their Option Arm’s don’t reset on them.
So, if someone is pissed they just won’t sell? Sound financial advice - lets see: avoid foreclosure and sell OR be pissed and get foreclosed on?
Surprisingly this is human nature. I’ve seen many people who won’t let an item go for $XXX on ebay because they’d be “giving it away”, only to have sell it a garage sale later for $X. Liquidation is the only true motivator for mentally challenged, greedy people.
My Father is paying $70 a month to store a bedroom set purchased in 1968 in an air-conditioned unit because he won’t lower the price below $2500 any time he makes a feeble attempt to get rid of it.
He has been doing so for 18 months and counting.
Only 18 more months and he will have lost the entire 2500 to the storage place. Maybe you should write it out for him.
He just lost have his money on storage alone. The “carrying costs” are killing him!! This is what all the FF’s (F@#$ed Flippers) are finding out right now.
OK fair enough. Until they divorce. Or they die. Or they lose their job.
People on the buy side don’t HAVE to buy. Many sellers do. I’ll wait.
“People on the buy side don’t HAVE to buy. Many sellers do. I’ll wait.”
Bingo — for the vast majority, only one side “has” to buy or sell. The alternative to buying is renting, an attractively-priced proposition almost everywhere, at the moment. The alternative to selling is, um, give me a minute…keeping the place! Wow! For a moment there, I was afraid sellers might not be able to *afford* their house payments, especially after their ARMs re-set and their HELOCs are turned off by drop in equity.
And their prop tax bills go up and insurance premium rises to match the new valuation.
And their HOA dues, too.
Or do only the property prices go up and all others stay equal?
[For a while when prices were going down in Austin, TX (2001-2004 or so), we were threatened to get our rates RAISED to keep city workers employed].
If some people default on their HOA payments the others will have to take up the slack….and if the HOA decides to sue for nonpayment, then all the other homeowners will be assessed to pay the legal fees. Just like ARM rates going up and up, so, too, can HOA fees.
Or the house next door sells for $50,000 below what they think their house is worth, and all the appraisers now have a new comp to work with. Try to get a loan for your over priced turkey, when the new comp is lower, and the whole loan industry is under scrutiny from the feds. Let the slaughter begin!
If Inflation is in check? I’m sure you don’t buy into the Gubment numbers.
Actually, if you thought inflation was going to be higher than historic, buying the most expensive house you could with as much fixed rate money as you could would be one of the better moves you could make. Inflation would boost the nominal value of the home (potentially keeping up or exceeding the real declines) in its value while greatly shrinking the real size of your payments.
When we bought our first house, I told my wife, “I’m going to get on my knees and PRAY for INFLATION,” for that very reason. Buyers in the Bay Area in the mid-’70s made out like BANDITS.
Bluto — Your posts are very accurate and I agree with the basic premise, but I have one question re this one — wasn’t that inflation accompanied by concomitant wage increases? The latter looks mighty hard to come by in the foreseeable future here. For example, look at the Goodyear strike today, just as car sales drop and Goodyear proposes to close a plant or two. Bad karma for those of us who don’t “earn” our living from our hedge fund investors. God love the guys who serve us burgers at McD’s, but how are they going to be able to afford much of a car or a house, even if interest rates went to zero, if inflation heats up?
I think you’re on to something about inflation not necessarily helping out recent homebuyers. You can’t really have inflation without wage increases. That’s the whole point of inflation, no? And there’s been nary a peep on the wage rise front — in fact I seem to remember some recent report saying wages have been flat since 2001, and factoring in inflation, have actually gone down.
(I meant my post to nest under Chip’s…)
Oh, you can have inflation without wage increases all right. However, that just makes it even worse for workers, and of course those on completely fixed incomes have the worst situation of all. In any case, inflation won’t reduce your debt burden if you don’t have more “money” to pay the debt with.
How would inflation heat up if wages are stable and job creation remains low? Stagflation?
Maybe with increasing energy prices and devalued dollar driving up import prices.
I agree, we don’t have wage inflation so 70’s style rates are not likely to repeat. That means ARMs can stay low and borrowers have a better chance of staying up with payments.
How would inflation heat up if wages are stable and job creation remains low?
———————
one word: DEBT (some call it credit)
Inflation is the government stealing from creditors and giving it to debtors. Why would anyone pray for that?
Gubment numbers.
LMFAO !!!
This would be a realistic interpretation if all owners were prudent invidividuals and prices were within the reach of the average purchaser. The fact is, price is driven by those who are selling, not those who are not, as well as the ability of purchasers to pay. If there were very few sellers, it is possible the low supply would keep prices up. There are quite a few sellers, including many who will have no choice to sell or default (if you think the average person can tighten his or her belt with the debt they have, you traffic in a much more responsible circle than I do). And current price levels are way beyond the average purchaser’s reach (particularly for a first time buyer). There will be owners who sit on the sidelines, but that isn’t going to affect the market. But I applaud your faith. Wish I had it too.
But just as it is the 5% FB’s that could set the price because they have to sell, don’t forget the people that made a killing and pulled out a year ago. I don’t think they blew all the money on cruise’s and humvee’s.
Just being devils advocate here. We sold 9 months ago, and we’re only going to buy one house. If prices drop by more than 15% from the peak, I’m going to have a tough time convincing my wife we should wait it out even longer.
Yes, you see a lot of people here who did that, but by and large, they are not the majority.
You can have 15% off a particular listing easily now. Why wait on a sound bite median price? Time to buy if you only want 15% off. Even the builders are offering this.
That is exactly why I’m waiting to buy when prices are off 50% from the peak, which should be in several years.
If you buy right now, it is like buying the Nasdaq in late 2000…it is down, but the ship has a LONG way to sink!
Don’t tell my wife!
Just kidding. In our neighborhood (Ocean Beach, San Diego) prices have only dropped 6-8%. The ones where the seller is asking 10% lower than at the peak are gone in 1-2 weeks.
I know someone who sold near there at 15% off 2005 comps. Make your offer at 15% off in Ocean Beach. You will get takers.
And why would you want to buy in OB anyway? Gawd, that was revoltingly overpriced when I bought there in the 1980s. Point Loma is much nicer.
BTW, is the OB Co-Op still there?
Curmudgeon — in a free market, there are always two prices, the asking price and the selling price. The seller controls only the asking price, Robert’s “wishing” price. The buyer controls the selling price, 100% of the time.
Which one is recorded on the permanent books?
-
my offer = 1997 + 3.5% annually compounded.
Do what I try to do. Hold off your wife as long as you can!! Postpone the inevidable. Eventually it comes down to an old acient chinease proverb Panties not best thing on earth - But next to it” Best of Luck!!!
Chip - in a free market there are three prices:
1. listing price - set by the seller
2. asking price - set by the highest buyer
3. selling price - set when the two come together.
If there is no selling price, then there is no market, no commission for the realtor, and the seller is left holding his overpriced home.
These real estate types at least need to grow up and take it on the chin like they’re supposed to. These guys make the Beanie Baby “investors” look like absolute warriors!
LOL.
Well, I always say….better to be pissed off than pissed on! I guarantee you in 6-8 months, her husband’s philosophy will change and he’s gonna wish they accepted that offer of $390K.
lol…..the nerve!
“better to be pissed off than pissed on!”
Buyers will just buy a new house for cheaper than their house.
New houses are going to get cheaper so they can keep sales decent.
the mysterious “they”
They can’t make their payment. That’s the problem. we are now giving back about 80+ homes here in San Diego. Not unusual to see 80%+ of net income devoted to house payments. It cannot be sustained. With adjustments to variable loans coming/happening they cannot hold on waiting for a rise in prices for years and years and years and years and years and years and years (repeat for approximately 7-10 years). . .
We’ve seen quite a few stories where the reset payment is 100%+ of income. Brilliant.
“Owners are pissed and not stupidly going to dump property at a loss.”
Au contraire, au contraire. They ARE stupid, and will either take the loss voluntarily or involuntarily. You see, most of these FB’s cannot afford their homes. Maybe in your braindead stupor, you believe they got into an option ARM because they liked them, or wanted to save their mountains of cash for other ventures. But the reality is, that was the ONLY way they could get into the home. And it was all based on expected appreciation. That’s over, they’re over. They don’t have the staying power. Get a clue.
“They don’t have the staying power”. The OPTION ARMS were their little blue pill (VIAGRA) that provided them the buying power and the initial staying power!! There are no more answers once the effect of the initial low rates wears off other then to give it up at this point!!!
Braindead stupor…??? Please
People also use ARMs because they expect to move in 5 or so more years — a reasonable estimate. Why pay higher interest and pay points with a 30 year fixed if you have no set plans to be there for 10 years? Many ARMs I saw locked in a very low rate for approx. 5 years and with no points.
So the buyer stays a few years past five years to wait out a bad market — what’s the current adjusted rate? 7-8? That’s not a high rate using historical norms.
There are some uglystereotypes that cloud the benefits of wisely using ARMs and misunderstanding of the folks that use them. I know several people who used ARMs for this reason and see no fault with the decision.
You are giving the masses who use exotic mortgages too much credit. You simply can’t assume that people were rational during the last two years. You have lenders lying to buyers, and buyers lying to themselves.
Everyone?
I know three ARM users in CA - 2 in So-Cal. All three did what I mentioned for the reasons I mentioned. I’m an over-educated professional so my sample is biased but this Blog readerships seems to assume all ARM users are losers heading to brankrupcy.
The problem is that with an impending decline, especially one that will last between 5 to 10 years, all ARM users in vulnerable markets (pretty much everywhere) will become losers - despite all good initial intentions.
Aztrias,
The problem I see is this:home appreciation over the next 3-5 years is flat or negative; incomes are flat; inflation runs an optimistic 3-4%; ARM resets will add hundreds of dollars to the monthly PITI… how does the average owner deal? Can’t refi unless rates are lower and there is equity in the house. Can’t sell because the market it illiquid and/or no equity.
Does the average home owner have the ability to absorb $3-500/mo in increased mortgaged payments along with increases in everything else (inflation) based on their monthly cash flow? I think not, especially with flat incomes. And this isn’t even mentioning the issue of Option ARMS with negative equity or IO Arms. If you think this is far fetched I’ll give you an example…
I checked my loan docs last night just to remind myself what my index was and the max interest rate was on my loan. Worst case scenario when my loan adjusts is a rate capped at 10.75%. Fully indexed rate based on current Libor is 8.5%. Current rate is 5.35% with 1/2%TAMI. Because it is an IO, with the rate increase, my payment could jump from the current $1625/mo IO to almost $3200 PI. How many people do you know could absorb a $1600 increase in monthly payment? I can, and as it happens I have no debt beyond my car payment, live in my mulitfamily, and have a income over $100K. How many average owners can say that? In my circle of friends there is only one other person as well off balance sheet wise, everyone else is maxed on credit/car loans/mortgage/HELOC. For most people, this type of situation would force a sale or foreclosure…
Sure, they can resist selling… and increasing the inventory. People don’t exactly put their home on the market for fun of it!
Don’t forget, in the 1980’s, Boston home prices dropped about 50% and yet 2/3rds of the homes put on the market were withdrawn.
Prices will drop, a lot. In 2006? Maybe. Its all a warm up act until 2Q2007.
Neil
aztrias - “prices are not going crash”
Thank you, I was feeling a little down until you said that. That was the best laugh I’ve had all day! BTW, David Lereah called, he said the new batch of Kool-Aid was all ready for your immediate mass consumption–it’s Tropical Fruit flavor, yummy. Enjoy!
SanFrancisco crash?
If prices “crashed”, money would flood in and stablize the market before it fell far if at all. It’s a international treasure. I’ve seen the city change since ‘91. It’s not a city for families or working people anymore. The money isn’t leaving the bay area or the city. Wealth has been concentrated and those with money move to SF, buy 2 flat homes and rework them into a single family unit and live in them.
But you think otherwise, so save those pennies and buy a cheap foreclosed home in SF real-soon-now.
That’s the trouble with credit contractions…there is no money, no desire to lend. Time for you to open up a financial history book or two.
I think the one thing that will hold the RE market together in SF and other places *for a while* is the hope among many sellers that prices will soon start heading back up. When this illusion is dispelled whether suddenly or gradually, that’s when I think you’ll see the panic selling.
I think you meant to say,
“It’s a(n) international treasure”.
Tokyo is an international treasure as well. Nothing stopped Tokyo real estate prices from dropping for 15 years.
My nose is an international treasure, because I claim it is.
posted ” I expect that people will tighten their belts”
They will boil and eat thier belts.
That was funny. It has alot of truth to it.
There is discressionary spending: cell phones, cable, dinning out, vacations, lux cars and etc. It might not be enough but there are going to be attempts. Maybe futile.
It doesn’t matter how long some sellers “hold on”. Prices are set at the margin, and the *selling* price for a home is set by the comps, not the seller. It doesnt’ take very many lowball comps to make it so that sellers in the area either accept the lower price or don’t sell at all. The banks are going to finance the buyers based on the comps, not what the “hold out” sellers want.
“Marcia Ourganjian quoted her husband’s philosophy of: ‘I’m not going to give my house away.’ ‘We’re going to wait three years,’ Marcia Ourganjian said.’”
I don’t see how waiting three years can ever be worth putting off moving plans, etc. Why wait three years and hope for better prices instead of just sucking it up and moving on. I don’t think that people are correctly valuing the opportunity cost of not selling.
Yes, makes you wonder why they’re trying to sell. I couldn’t stand having my house on the market for 3 months, let alone 3 years. Its not pleasant to live like that, always having to be ready to let some real estate agent and potential buyer come in and go through your house. Its always best not to be there when they come but how long do you want to live like that, trying to stay away from your own home?
“The $30,000 to 50,000 drop in house values may be conservative by some measures as there are plenty of stories of home sellers lopping $100,000 off their asking prices on some higher end homes.”
Looks like amateur hour is coming to an end…
I expect that people will tighten their belts and make their payments….yep…until
1) That ARM is just too much
2) Rising taxes are just too much
3) Someone has an expensive illness
4) Someone loses a job
5) Someone dies
6) Someone gets a divorce
7) That half-baked condo complex reverts back to rentals
etc…
There many reasons why people will always have to sell but absolutely zero reasons why someone MUST buy.
Add in those who buy a new home at a $100,000 discount and are intelligent enough to be willing to reduce their cuurent home by an equal amount. A win-win!
Litmus test question for aztrias:
Under what kind of market conditions is it NOT a good time to buy a house.
PDXrenter
Seriously, do not buy when you’re unemployed or have unstable work. If you expect to move in under five years. You can’t afford the payments. You don’t have a budget.
Some might say don’t buy when renting is cheaper than ownership but that doesn’t factor intangibles of owning a home and the long term stability it offers — having predictable housing costs for retirement and planning. Anyone who saw the horrible impact the dot.com boom had on rental housing for fixed income retires would understand.
Better yet I meet damn few people that bought at the right time. In the long run, it’s the right time when you buy a home you like and you can afford the payments.
Seriously, do not buy when you’re unemployed or have unstable work. If you expect to move in under five years.
——————————–
aztrias,
During the last downturn in LA, prices didn’t see peak (1989) levels until around 2000/2001. That’s a long wait if you bought at the top. Buyers usually had 10-20% down and actually had to qualify for a loan in those days. This time is much, much worse.
Yes, there is a right time to buy. Since nobody knows what the future holds, it is always best to position yourself so you’re least likely to lose money if you should need to sell. That would mean buying at or near the bottom.
As for those “intangibles” of owning…are you refering to the constant maintenance or fear (in CA) that an earthquake could damage your house — and FEMA is unable to bail you out because they don’t have the money and taxpayers are screaming about having to bail everyone else out when they should have had their own insurance?
How about being *stuck* in a location when you lose your job?
Renting has at least as many benefits — especially when the RE market is tanking, jobs are less secure and we’re heading into a recession.
I would agree wage inflation is in check. Not much in the way of raises, but I do not see how this will permit over extended debtors (as opposed to owners) from keeping things in check. The properly “owners” (lenders in this case) will want to dump these properties at what ever price they can get once the debtors fail in their mortgage obligations. This is not conjecture, but simple reality.
“An economic research firm actually use the word ‘crash’ to describe the forecast for several northern California markets, including Sacramento, Stockton, Vallejo, Redding, Chico, Merced and Fresno.”
I believe the wording of the statement was something to the effect, “The California housing market is not going to crash.”
Some will no doubt be able to, but how many people won’t when their Option ARM stops negativly ammortizing and they begin to actually pay it down? Far more important is how many will exercise the equity option provided by bankruptcy and walk, if enough of the Option ARM lenders flood the market?
Also, high inflation would be far better for levered homeowners because the rent produced by their asset increases while their costs should have been at a fixed interest rate. Low inflation greatly favors renters over homeowners.
Posted ““Marcia Ourganjian quoted her husband’s philosophy of: ‘I’m not going to give my house away.’ ‘We’re going to wait three years,’ Marcia Ourganjian said.”
LOL Mr. O. Is large and in charge. I am sure the the Earth, Moon and Sun will bend to his will. This person will get a better outcome by sticking thier head in a buzz saw.
It’s not all doom and gloom. Those areas near jobs and with lmited gorwth are still strong. Central valley towns with long commutes and / or limted job growth are going to price correct but the most expensvie places seem to be stable.
“Prices in San Francisco, Marin and San Mateo counties will rise about 3.6 percent a year for the next two years even as home values in the East Bay slip, according to a Moody’s Economy.com report.”
…
“There doesn’t appear to be much excess supply in the San Francisco market,” said Gus Faucher, director of macroeconomics at Economy.com. “A lot of the growth has been occurring in the outlying metro areas. It’s the case in San Francisco that supply has not really gotten ahead of demand.”
http://www.sfgate.com/cgi-bin/article.cgi?file=/chronicle/archive/2006/10/05/BUGPLLICBL1.DTL&type=business
Sure, as long as there are still plenty of funny money, liar loans. If that spigot stops, then even all those places that “are different” will find no buyers despite the lack of excess inventory. When there’s no lower rungs on the property ladder, who’s going to buy the top rung?
PRICES ARE DOWN YOY IN SAN MATEO COUNTY! SORRY THIS IS A FACT!
PRICES ARE DOWN YOY IN MARIN COUNTY! ALSO A FACT!
So that means there’s a crash and time to snap up all those deals?
Are you buying now? Also are you a member of the REIC?
It’s not all doom and gloom in CA. So sorry. It’s even written in the local newspaper. Are we only allowed to post bad news on this blog?
Whats written in local newspaper?
REIC employer? or Industry?
Its not all doom and gloom here - just as it relates to the most overvalued or overleveraged asset class in the last 70+ years!
Jeez, what’s up with all the nervous nelly trolls (i.e., aztrias, Hopeful)? They seem to be out in force today…
“It’s not all doom and gloom in CA. So sorry. It’s even written in the local newspaper.”
LOL! Good one! Aztrias, don’t go anywhere, stick around!
Double lol….this is a RIOT! “the local paper”!!!????
Seriously…is that you, GetStucco?
You guys are Teh Funny
aztrias you are perfectly welcome to post information indicating prices are rising. I am guessing you are a frustrated seller and are finding fewer potential buyers have considerable choice today, including the choice not to buy at all right now. This is understandable, but many here are looking at the facts of the market as it currently stands and realize virtually no one has sufficient income to qualify to purchase a home in California at current prices and that many those who have in the past couple of years are now facing foreclosure or bankruptcy as a result of anticipated gains not materializing. I can see NO upward pressures on prices at all. What figures to you have to support a stable or even upward price trend over the next 5 to 10 years?
Seriously, troll somewhere else. You will get your ass handed to here.
Sorry, but as a San Franciscan who knows this market, I can personally tell you prices here are definitely falling with no bounce yet. It’s great that the Chronicle (and bloggers) can regurgitate 2nd hand heresay from a Moodys’ report (which I’ve coincidentally seen), but a lot of the numbers in that report were not reflective of the market here.
I’m a bay area resident and former SF resident so let’s use some data.
First, this blog regurgitates news so what’s wrong with a link to an article in the local newspaper?
If it’s wrong then what was specifically was left out? Why not regurgitate those numbers ? Let’s send off a letter to The Editor.
Any plans on where to buy when the crash comes? I’m hot on moving back to Noe Valley!
Aztrias you are offically at tool status.
OK, here goes (sigh).
To summarize, the report comes to the conclusion that San Francisco real estate is highly overvalued given economic fundamentals here, but a crash is unlikely because throughout the years and economic cycles, SF has always been overvalued from that perspective. So they assume 3.6% appreciation, or basically coverage of inflation, since people here will continue to over-leverage themselves just to get in and will support prices. Because it’s happened before. They also assume that inventory remains low and is not building given MLS listings. Finally, locals seem to employ low leverage when purchasing, meaning they can weather some price volatility.
What’s wrong with this picture?
First, prices to incomes here have never been higher, so even though SF has always been expensive, it’s the most expensive it’s ever been right now. Median home price > 7.0x median wage, so roughly the same as Europe.
Second, inventory is way understated because, as I wrote below, MLS does not include FSBOs or the gazillion new condos being built/converted here in the city.
Finally, the low leverage argument is a crock. Many put large amounts down, but over 70% of the bay area finances through 2 mortgages (making leverage look lower on each loan since cumulative LTV is not considered for most reports), at least one of which is adjustable.
Anyway, this is exhausting. Aztrias: please google “cap rate”, and then do an anaylsis on a property you fancy in Noe Valley. See what your required holding period on it would be, or what rate of appreciation you would need over that time frame, to break even. THAT’S WHY prices are falling and will continue to fall.
I lived in the bay area for 30 years… I say prices won’t go down more than 10%. they’ll just stay flat for quite a while (which, given inflation, is a loss).
I think Aztrias is Lingus regurgitated yet again. Notice he says, “…so let’s use some data,” yethe doesn’t add any. And no one calls him on that. That’s a classic Lingus ploy.
Same troll — changes screen names, slimes back in periodically. IMO.
Big Mac Attack-
Buy up every property you see then. Report back here in 2 years!
Buy up with what money? That’s why I BAILED on the Bay Area 12 years ago! But the money does seem to come from somewhere. Overseas?
“I lived in the bay area for 30 years… I say prices won’t go down more than 10%. they’ll just stay flat for quite a while (which, given inflation, is a loss).”
I also lived in the Bay Area, but for only eight years. I saw prices triple. My neighbors had amnesia about the big (nominal) drop in prices from 1990-1996 — same condition you suffer from, pal.
Cncerning SF, Anyone notice all the TIC’s available? Very nice, but who but in the mose desperate market for buyers would “go eighths” on a mortgage with people you don’t know.
When will SF and CA for that matter learn about the law of unintended consequences.
“Median home price > 7.0x median wage, so roughly the same as Europe.”
…and our gas prices will never be as high as Europe either. Housing in America’s most European and 2nd most dense city is very expensive.
“Second, inventory is way understated because, as I wrote below, MLS does not include FSBOs or the gazillion new condos being built/converted here in the city.”
So what fraction of the market is FSBO? I don’t recall seeing any FSBO in NoeValley. What are you thinking fractionally?
Yeah I bet some large condo projects are over valued or poorly planned or speculative. Yeah some new developments are going to be over priced.
“Finally, the low leverage argument is a crock. Many put large amounts down, but over 70% of the bay area finances through 2 mortgages …”
“Anyway, this is exhausting. Aztrias: please google “cap rate”, and then do an anaylsis on a property you fancy in Noe Valley. ”
I understand cap rate. SF has intrinsic value but you will not admit it. It’s not like living in Waco, TX only more expensive. It’s a world class city and attraction that was undervalued. The three flat next door to my home held three families and it reworked and expanded into single family unit and they had one kid — that was not “economically driven”. They did not do it for a ROI. That’s the kind of devleopment I saw in Noe. The people had money to burn and they burned it and they got their money’s worth. It’s a unique place and I see the city attracting that kind of wealth. It’s changing.
I agree–people come from all over the world to buy in SF, but those people do not move the housing market. Ultimately, the buyers that move the housing market are those that live and work in the area.
Given that, in supply constrained markets, RELATIVE prices matter, not absolute prices. So, when a place 30 minutes outside of the SF falls 30%, the even greater price differential is going to move some marginal buyers to the choice of buying in the outlying area, necessarily effecting demand at the then current prices in SF (putting downward pressure on prices).
No, SF will not necessarily move downward lock-step with Burlingame, or Daly City, but in my opinion, it will move down somewhat, and will be effected by the downward movement in those areas (even East Bay).
In the end, I think we will see all markets effected by the lending excesses of the past few years. SF and better CA cities were the first to benefit from the rise in housing, pushing prices of outlying areas up (as those areas seemed much cheaper)–as prices of outlying areas fall, SF and better CA cities will be last to suffer, but they will suffer.
That is why I believe patience is warranted at this time if you want to buy in some of the better areas–risk of apparent strength disappearing is greater than the risk of prices running away from you in the next 3-4 years.
Just my $0.02.
Time to put down that crack pipe aztrias.
David is that you? Oh yea, we should see the bottom in January and then back to price appreciation… uhh, SURE.
If you look at the ARM reset numbers coming in 08/09, the declining/stagnant wages, and those are most certainly coming, add in the variables that may or not come to fruition, like a recession or huge job losses in real estate sector and you are holding dynamite with a short fuse.
The only way to keep the party going is more cheap credit and the well is starting to dry up.
Mike — even with more cheap credit, we eventually would do a Japan. My day of pre-enlightenment was two years ago when I said, “Hey, Honey! If prices keep going up like this, our place will be worth $1.3M in 7 years!” I knew that there will be no buyers for that place at $1.3M. If you’re talking California, just triple the numbers.
posted “Aztrias you are offically at tool status.”
Better said “at stool status” and heading to Long Beach.
No, that means it’s time for fools to catch falling knives.
“Supply has not gotten ahead of demand.” Maybe, but only if you’re just looking at the number of people in a given area and the amount of housing up for sale and assume all these people both want and are able to buy at any price. But if you take price into account- which you obviously must- then the demand shifts dramatically down, the supply goes up and all those mythical buyers that create this so-called demand, irrespective of price, either cannot, or will not pay to own something they can rent at a fraction of the cost.
It’s really that simple. When there’s shortage of rentals then we can talk about a shortage driving up the market. The real determining factor is if there are enough people making sufficient cash to REALLY afford the average place. If not, then I submit then there will always be enough supply until the price is right.
Quick, somebody tell Andre Agassi! He can raise the price of his two year unsold home back up to $24 million (I think it now at or below the $20 he paid for it).
PRICES ARE DOWN YOY IN THE CITY OF SF! ONCE AGAIN, FACT.
And still falling. Inventory here is greatly understated due to FSBOs and new condo developments. Leverage understated as well due to the 1st/2nd combo most people use. SF is not immune.
A few weeks ago I was thinking of creating a new username “David L” and posting ridiculous crap. It appears as though others had the same idea.
lmao!
I think San Francisco is toast. Just about everyone who lives in the Bay Area thinks they’re living in some Eden and that it is they’re God-given right to price newcomers out of their market.
Well, San Francisco has been losing population and businesses like crazy these last six years—a housing bust is just going to accentuate the bleeding. I eagerly anticipate the day when my FB friends, who bought in Monterey a shack for $750K earlier this year, have some bum next door move in that paid only half that.
I won’t have to wait long!
Wait — they can convert the empty schools into more condo units — SF RE prices have created an exodus of families with children.
And folks, no kids in a city means that city is dying. This is for those who like to read outside of one academic discipline.
And folks, no kids in a city means that city is dying. This is for those who like to read outside of one academic discipline.
In that case, it’s sayonara to big portions of SoCal and Florida as well…
But wait…are kids really that important? I read an article in the SF Chron awhile back that said that there are now more DOGS in SF than KIDS! As a dog lover (and pet guardian of 4), I think that is a positive trend.
“I eagerly anticipate the day when my FB friends…”
Anthony — presumably you mean “friends” in the same way as “my friends across the aisle” in Congress.
Who would want to live in SF? Those stupid tourists.
SF is losing population because working families are displaced by double income, no kid couples and type-A professions with 1 kid.
The global real estate bubble is a result of larger issues regarding monetary policy and massive increases in the supply of money (debt). Historically, in all cases, the financial system on which fiat currencies are based has collapsed. Real estate values will collapse, as will equities. San Francisco will not be spared, and then there’s always an earthquake to make this discussion moot.
Fred — I’m comforted to note that today, the Orlando Sentinel, on its front page, confirmed that It’s Different Here and we are not going to suffer the fate that the rest of the US will. What a relief. Sorry for all the rest of you folks, though. Hey, not all of us can be impervious to downturns.
Me, I love renting because my wife has decided she loves renting and she’s cookin’ a lot better.
SF does not have any job growth. Businesses have been leaving due to the lack of affordable housing and rising land values.
A lot of those departing businesses sold off their land to condo developers.
Do the math. SF prices will fall. SF is a fun place to visit, a nice place to live, but it is not immune from the problems of the real world.
There is nothing desirable enough about SF for people to sacrifice their financial future to buy a tiny glorified apartment. Most people bought because they expected big returns.
We’re in the process of relocating to SF. I’ve been researching rentals in the city for the past 4 months. Recently, I’ve been pleased to find a number of $500/mo. price reductions for SFR properties in our $5000/mo. rental range. As such, it seems that the prolonged contract negotiations for this job have saved us around $6000/yr. in rent. BTW, those $5K/mo. homes are selling (when they do sell) in the $1.6-2M range. The math just doesn’t work to purchase right now and I’ve been a full-time RE investor for the past 23 years. Sold our home here on Maui in March and we’re gonna rent for awhile.
Trading Maui for San Francisco? I feel for you Mauibear. I lived in the Bay Area for 35 years and in my opinion this “SF is a glorious, world-class city” is full of hooey.
Is “aztrias” latin for ostrich?
Did you just fall off the turnip truck?
“It’s not all doom and gloom. Those areas near jobs and with limited growth are still strong. Central valley towns with long commutes and / or limited job growth are going to price correct but the most expensive places seem to be stable.”
Burger flippers, check-out boys and girls at the super market, waiters and waitresses, and valet parking attendants jobs, do not count as real jobs.
“Regional economist John Husing says there is ‘definitely a psychological element to the housing market. People are confused right now,’ he said. ‘They don’t know what’s happening with the market. Nobody knows anything.’”
Huh? Visit this blog any time in the last 2 years (or more) and we can tell you what’s happening with the market. It’s dying. Everyone is waking up to the idea that these homes are OVERPRICED. We knew they were overpriced, and you know they are overpriced. What you don’t know is why they aren’t making many more GFs.
We know. You know we know. We know you know We know. We know Ben knows, and Ben knows we know it. We’re knowledgeable bloggers.
“Regional economist John Husing”…I get better real estate info from the Psychic Friends Network. Is Dionne Warwick still in business?
Had lunch with a VP of Homebuilding - his quote:
“We are not selling $hit right now. In fact, we won’t build another home the rest of the year”
At least the market is so bad he would say “We are not selling F__king $hit right now. That wil come later.
Comment by crispy&cole
Had lunch with a VP of Homebuilding - his quote:
“We are not selling $hit right now. In fact, we won’t build another home the rest of the year”
I sill see zillions of new homes and construction going on all over the place. This here in So. Calif. The SFV, Simi Valley, Chatsworth, Ventura and the big DADDY of all in Oxnard…. River something…….. miles as far as the eye can see!
I do belive we are in deep dodo and do understand these get a life of thier own BUT…..?????? My God?
Construction has really accelerated on the approx. 1000 condo units under construction in several large and several small projects in Jacksonville Beach. I assume (1) that the developers are desperate to get the current bagholders, I mean pre-construction buyers, into their units and get everything else on the market as quickly as possible and (2) the subs want to get done and paid before the corporations start pulling funny business on them. If you were a naive observer you might say, wow, things are really cranking along, but my interpretation is that everybody is realizing how bad the dowsnide could be and time is of the essence.
For many of the builders the only way to get rid of the excess land is to build and try to break even on the deal- hence the option giveaways.
Projects take a long time to build and take on a life of their own. The land is purchased and cleared, the plans are drawn, the contractors are on board, the loans are made.
All this started in early 2005.
You can’t give back 1/2 of the loan to the bank. If you have nothing to sell, that spent money is gone. Leaving a 1/2 completed job is the very last option.
With commercial building, you can complete the core and shell and leave the building empty. Can’t do that with residential RE.
Similar comment I heard at work this week from Forecast Homes (K.Hov) - last year, they would easily sell three in a week in a subdivision - they are lucky to get one a month now. Things have stopped dead in its tracks in Lancaster CA.
I call B$ on McMillian. They took out a large HB last summer in Bakersfield for $100k per acre. They will not make money on these homes!
$100k per acre in Bakersfield?! Might as well just take a loss now before even breaking ground. These inconceivable land purchases are the first foul in this market. Unreal.
How many houses can they fit on one acre?
Depends on the zoning. Standard single-family zoning allows for 6,000-8,000 sq. ft. lots. 43560 sq. ft. in an acre - take away 30% for public improvements (roads) - and you get about 30000 sq. ft. left for homes.
Answer: about 4 homes per acre.
I’ve seen may developments cram 10-14 homes per acre. Near zero lot line “cluster home” product. If you have that type of zoning, $100k per acre works.
Land in other places in the Central Valley had been selling for $200k and $300k per acre.
‘I’m not going to give my house away.
___________________________
Make that 5,287 times this phrase has now been uttered!
And just wait until someone TAKES it away.
Reminds me of detention, when I had to write all that crap on the blackboard. How come girls never got detention?
The funniest thing I notice now is that there is a plethora of FSBO’s in my area right now. I wonder how many of these are people that can’t afford to pay a RE commission?
Who buys FSBO’s anyway? Buyers don’t pay the commission anyway, so why would I fly blind so that this SOB can make an extra 6%?
At any rate, I guarantee 90% of these homes will get pulled or list within 60 days. When there are almost no buyers anywhere right now, what agent would show their house?
“Who buys FSBO’s anyway?”
Sharks who laugh all the way too the bank when they see do it yourselfers.
I think the FSBO would only save the 3% if i show up with my realtor, and the 3% that they save on the seller’s agent commision should be negotiated off the housing price by the buyer.
I beg to differ: The buyer pays for everything in a purchase, no matter how its divied up… (unless the seller is upside down on the mortgage and actually brings a check to the closing)
Can a realtor sell his/her flip as a FSBO…?
No, they have to disclose they are a realtor…state law (AZ)
but they bend or break laws all the time.
Same here in California. It’s amazing how many risk that. It’s really no big deal to disclose that. If it’s priced right they will come.
“Who buys FSBO’s anyway?”
JJ — in Weekend Observations, I am going to post my own humble thoughts on that, and observations from the south-of Tampa Bay area. I agree with all of your points, particularly now. FSBO worked sorta-OK in a rising market and is dead meat in a collapsing one, IMO.
posted ““Who buys FSBO’s anyway?”
The Help you sell, FSBO…. is the mark of the Beast. The last gasp prior to getting gassed.
I have done a couple For Sale By Owners” and had excellent luck. Put sign in ground and 4 days later Sold. The key is just as you stated “Rising market”. In a declining market you don’t have an abundance of people driving by looking for houses or if you do, you should cut 10% + off the price of your home VS all comparables to show you are lower. This market will only sell a small portion of homes at these prices and if you price it low enough VS Comparables you could sell it. Remembering that your pool of buyers that feel comfortable with a FSBO is even smaller thus PRICE is your only tool to bring them in.
Someone we know just sold their FSBO in the St. Pete area. They received a cash offer in less than a week, 3% below their asking price, and they paid a 2% co-op commission. The listing price was above the median for the community. We thought it would never sell, but obviously the house was just right for someone.
Houses ARE selling, and I’ll bet they’re selling at the same monthly rate as 2003 and early 2004. It’s silly to compare this year’s sales per month rates to last year’s. 2005 was an aberration.
The smart money is already sniffing out the best bargains, and will have made their purchases long before YOY prices are shown to be starting a slow trend up.
It is a good time to buy, but just not a house. You should wait at least another year before you venture into a 1-4 unit. The deals are coming I got my first R.E.O. list from a lender today. California is getting kind of fat on those particularly Northern Cal.
I believe it, my advice is was geared to ensure you get it sold as opposed to having a chance of getting it sold. If one prices a FSBO for 6% below comparables he loses nothing VS going with a full priced Realtor and has potentially gained a sale or at least a look at his place. It all depends on the location and local market of course! I personnally think we will have a lot of sales until 2Q2007 (I agree with you Neil who said it first). The interest rates are coming back down which is providing an opportunity for those last people to get in and also catch the falling knife to prevent too much of a drop in recorded home prices. People are definately sniffing around looking for bargins but I think these so called bargains are not even workable from a long term positive income stream point of view. At least not in SOCAL or Las Vegas!!
‘The smart money is already sniffing out the best bargains, and will have made their purchases long before YOY prices are shown to be starting a slow trend up. ‘
LOL. Inventory has exploded, is exploding, and will continue to explode. It will take years at the current sales rate to work off. Speculators have left. Sales are off 30% YOY despite mortgage rates that have been dropping for nearly three months now. The car has gone over the cliff edge.
“SBO worked sorta-OK in a rising market and is dead meat in a collapsing one, IMO.”
Not if the seller knows what they are doing. I sold a home in Sacramento for $410K in May 2006. FSBO. Sold the home in one week. Why? Because it was priced correctly, which at the time was 10% off the peak. There were 3 other exact same model homes in the subdivision for sale. They were $10K-$40K higher then mine at the time. Two of those three are still for sale…both at $379K now. The third sold for $399K last month.
I’ve said it before and I will say it again. Selling a tract home is no harder to do then selling a pair of tickets to the ball game. Lots of recent sales make it easy. #1 most important tool is to use the YOY appreciation rates for your zipcode, and of course recent comps.
“Marcia Ourganjian quoted her husband’s philosophy of: ‘I’m not going to give my house away.’ ‘We’re going to wait three years,’ Marcia Ourganjian said. ‘Maybe the market is going to go up. Something has got to happen.’”
LOL! They don’t want to “give the house away”? Someone did offer $390,000, for STOCKTON. Unheard of just a small number of years ago. Now it’s a given that they’re DUE this kind of money for that city?
They’d better, for their sake, not have an ARM pending adjustment as they wait. And they’d better count on more than a few years…..
Sadly their reason for hanging on for a high price is their dream of retiring to a 3rd world nation with a fat bankroll to live like kings. These articles never seem to give enough information, like what did they pay for it ?
Sale Date: 12/17/2002
Recorded Date: 12/20/2002
Sale Price: $ 221,000 (Full Amount Computed From Transfer Tax)
Of course they now owe well over $300K.
If they had sold at $390,000 on the way up, they’d be thinking they were geniuses right now for getting out in time. I don’t get it. Why does everyone think they are entitled to the peak price when things are going down, down, down? They should be estatic to have done so well with such a small investment. I bet they didn’t pay cash for the house, and even then the ROI would be roughly 75% over 4 years (pretty darn good).
Their ancestry likely is eastern Turkey/Armenia or Iran, or maybe the Caucusus. Good prices there, generally.
If you price your property “right” why not sell it yourself?
If you price 10% below “comparable” properties you’ll (net of the commission savings) only be “giving up” 4%? And if you don’t sell it, as you are ahead of the competition, well, just aggressively lower the price, day by day or week by week. After all, if your property is “comparable” and cheaper and you continue to the cut the price, at some point you’ll sell and be 6% ahead.
Put an ad on Craigslist, in the paper. Don’t have an open house. Offer to tell anyone who calls everything about the property EXCEPT its precise location. Tell them you only want qualified buyers who REALLY are interested in your type of home.
Psychologically, by withholding information and making your property somewhat “mysterious” you’ll attract more people and better qualified people.
Its a bit counterintuitive but I sold my house in about ten phone calls and only 3 visits. No fuss, no muss, no wasting your (or anyone elses) time.
jag,
Did you sell your home in California? I’m in San Diego and have been thinking about doing a FSBO, pricing it below the comps.
Timber,
We sold our house FSBO in O’side in 2004 (very hot market). We used a flat-fee MLS listing ($300, IIRC) and it sold in an hour. I highly recommend using such a service so your listing goes on the MLS (very important in a slow market, IMHO). You will have to offer a commission to the buyer’s agent, but I think it is well worth it.
Good luck!
Jag — that seems to be a pretty shrewd approach, if you’re going to do a FSBO. But it begs the question of how many potential buyers would you miss if you advertised on Craigslist and not in an MLS? If your target buyer is young, probably not many, but old coots like myself generally do not use Craigslist very much. In a declining market, the incentive to learn it (the site) declines, too.
Sorry, Chip, but I gotta butt in here.
“Begging the question” does not mean raising the question or bringing up the question. “Sir, when did you stop beating your wife?’ - that is an example of begging the question.
One more, and one I am seeing a lot here recently: A pun is a play on words. It is using one phrase which is etymologically different from another but sounds similar. “Janet Jackson’s performance at the Super Bowl was titillating” is a pun. Slightly different shades of meanings of the same word does not any way, shape, or fashion form a pun, and when people say no pun intended or pun definitely intended it about makes me hurl.
Thank you for that indulgence.
Putting the home on the MLS is a MUST when doing a FSBO or you are spinning your wheels. Sad but true. Also one must give 2.5%-3% commision to the buyers agent, which 90% have.
Luckily, there are RE brokers out there (not just agents, they cannot w/o their bosses approval, which is unlikely) who will place it on the MLS, take care of the discolsures & contract fro between $500-$1000
Anybody who pays 4%-6% to a listing agent is a fool.
“Anybody who pays 4%-6% to a listing agent is a fool.”
People following that advice in the coming market are going to take an a$$pounding.
“They did get one offer: After the couple had cut their sales prices $10,000, to $435,000, someone offered $390,000 but wanted all the furnishings in the house as well. ‘I thought, ‘Are you kidding?’ Marcia Ourganjian said.”
10-15% low ball offers are becoming standard but demanding all the furniture? Nice!
Stop it !! I hate seeing that 10-15% off list price is not a lowball offer. Repeat it untill you get it. Most sellers price their house expecting that. You’re not even in lowball airspace untill you exceed 25% off list.
But they asked for the furniture too! I’m sure it was worth $100k or so. Thus, that’s 25% off the asking price!
Agree……….if you are coming off a price boom, your buying range should be minus 30-40%. Timing is all important and I personally think the time is not yet right. Maybe 2 years time
“You’re not even in lowball airspace untill you exceed 25% off list.”
For a true lowball, I agree with that. And true lowballs are coming soon to a market near you. Except Orlando, of course.
Also depends on the asking price . . .
Next time you hear a seller bitch about the “lowball offer”, counter with a little venting about all the “highball list prices” for the past 5 years.
The proper response to “Are you kidding?” in response to a lowball offer for $390,000 is “No. See you later. If you haven’t sold in a year, give me a call and I’ll consider offering $350,000.”
No try 290k
Bernanke says.. and I repeat lol… don’t laugh at me.. he says We as American’s have to do something about our entitlement mentality or future generations will be burdened by our screw ups.
Well let me say to Mr. Bernanke. If you lower rates, then you will be giving all American’s the sense that they are entitled to cheap money and all the exotic vehicles that go with it.
Not only will you be buying more than you could afford, but there will be no equity built up since everyone will just go out and buy a mcmansions and hummers.
Don’t forget the equity extractions to the tune of 6% of GDP last year to send to our Asian friends so they can loan the money back to us. Brilliant. Bring back Paul Volcker!!! He’d squeezed the FB’s til they puked.
Perhaps if we had higher interest rates, people could actually SAVE money toward retirement and wouldn’t have to gamble in order to survive. Bring on the rate increases, already!
I don’t think sellers should be the ones wreaking revenge. People like us who’ve been waiting for YEARS while Real Estate went ape and knew prices were ridiculous should be the ones laughing, sitting down with a nice couple of beers, and watch the circus unfold as tons of people who paid too much for their houses get screwed. Payback time? definantly. Enjoy the show folks. It’s going to be a fun 2-3 years before I consider anything.
I agree, enjoy the show and watch these greedy bastards learn the lesson that is long over due.
“sitting down with a nice couple of beers, and watch the circus unfold”
Great analogy! I think all the flippers and FBs are all lined up and getting ready to ATTEMPT to get on board that little clown car right about now. Only problem is they’re not all going to fit but watching them try should be a laugh riot. I like it best when head clown Lereah’s tie squirts water at the poor unsuspecting GFs.
Thanks for the imagery!
Not so much a circus as a great big, slow motion accident on the freeway. I mean, we can see the tanker truck with it’s brakes locked slowly starting to jacknife. There it goes, crushing the idiot in the BMW. Will it hit the minivan? I don’t know, but somehow I just can’t look away.
“Regional economist John Husing says there is ‘definitely a psychological element to the housing market. People are confused right now,’ he said. ‘They don’t know what’s happening with the market. Nobody knows anything.’”
John, thanks for guiding us to the light…
It’s better to admit you don’t know anything than to spout off a bunch of garbage about how “real estate always goes up”. But a “regional economist” should know something, like perhaps the law of supply and demand!
unfortunately, isn’t this the same guy who said just yesterday that the beautiful inland empire will be spared because “everyone wants to live in Riverside”?
anecdote..
went to a house yesterday because a friend just bought it, and then my other friend is thinking of buying a house near it because as he said “were wasting money by leaving our equity alone and not using to buy another property.” i was thinking how sad it would be if prices crash. This is in the IE (Loma linda), where its diffrent here because we have a university hospital. By the way this friend of mine whose thinking of buying don’t as me questions about real estate anymore because he knows my answer, and i’ve referred him to this blog already.
Report from the scene of the crimes:
So Cal Area:
Have a Realtor friend that took out a client for a week or more. Looking and looking, buyer was about to pull the trigger on a condo, about $350K. Was about to write the offer, the night that the Realtor and buyer were going to submit the offer, the buyer pulled out. Reason: The buyer said: “I hear housing is starting to go down and want to wait”. This was a qualified buyer.
We store some manufacturing good in a commercial/industrial park area with a lot of wood shops in the area. Last year you could not drive into the industrial park due to all the wood and materials stored in the parking lot. This last week all the wood shops were very clean and did not hear the any sounds coming out of the shops not a person in sight. Was able to get into and out of the storage area very easily.
SimiWatch — nice anecdote. Thanks.
posted “Have a Realtor friend that took out a client for a week or more.”
I hate it when that happens.
This last week all the wood shops were very clean and did not hear the any sounds coming out of the shops not a person in sight.
——————-
This is the part I don’t like. Going to be a lot of “collateral damage” coming our way. EVERYBODY will get hit, one way or another.
Definitely wish this bubble never got started to begin with.
Marcia Ourganjian quoted her husband’s philosophy of: ‘I’m not going to give my house away.’ ‘We’re going to wait three years,’ Marcia Ourganjian said. ‘Maybe the market is going to go up. Something has got to happen.’”
You just go ahead and do that. Meanwhile your neighbors will be cutting the legs out from under each other with price cuts and distress sales. By the time you dolts wake the fu*k up to reality, another 100k will be lopped off of your house from comps.
You aren’t going to get rich passing the buck to the next GF. No one owes you jack squat. Continue denying the obvious at your own risk and no whining when you go upside down on your LTV.
With out assinine quotes like this it would become very difficult to identify who are to become the biggest dolts at the end of this debacle. Thanks.
Another story of I wrote about a few year back:
Background:
Guy makes $17/hr in homebuilding trade, girlfriend works for Country Wide (He declared bankruptcy about 5 years ago). About two years ago he gets a loan for $450,000 on a condo (ARM). He tells everyone “the condo has to go up 70,000 in two years for everything to work out”. Yes, I had to explain to everyone what a neg am loan is and why his condo had to go up $70,000 in two years.
Currently, the condo has not gone up $70,000. It is worth less than $450,000. He said he is just going to walk away. Everyone is saying you cannot just walk away. County Wide has layoff notices going out soon. All I know at this point is he must not be sleeping very well at night!
Priceless.
Longtime lurker, first time poster…
I had a conversation with a co-worker this afternoon, about how one of her kids (single mom, ~30, no education, 2 or 3 kids, $25k truck loan) is about to be ruined when her Option-ARM resets next year (and there’s a massive prepayment penalty). She bought the thing 2 or 3 years ago with a low-doc loan. Anyway, mom wants to blame it all on the sneaky real estate agent who snuckered her into a bad loan. So as politely as possible, I ask “Didn’t she realize that this was a real possibility? Why did she overstate her income?”
Her response: “Well everyone knows that you have to fib a little to be able to afford anything around here” (Sacramento).
To which I responded, “Well doesn’t facing foreclosure three years into the loan kinda indicate that she could’nt afford it.”
I got an icey glare back.
I feel sorry for her kid and all the rest. Really I do. But people really should have known better.
As for the lady in the article, if you’re going to downsize and move to another country, is leaving behind most of your furniture really that bad a thing? There might be a few things that you’ll want to take with you, but most people that I know want to redecorate with new furniture as soon as they can afford it. And its got to be expensive/risky to ship that stuff. Its a little unusual, but they’ll probably be sorry that they didn’t at least counteroffer it.
I wonder if they crunched the numbers and figured out how much holding onto the house for three years was going to cost them versus what their housing costs would be in Nicaragua. I’m guessing that the difference would be a lot more than $45,000.
Walt — thanks for the anecdote. We can’t get enough “true stories” like that. SAd for her, reaffirming for us.
Yeah, thanks. Since anotherf*ckedborrow.com quit his job, we’re missing out!!
And how would the property going up by $70K make things “work out” for that couple? I’m assuming they would extract the equity but then they would owe $520K. Their situation wouldn’t be better; it would be worse because they payments would go up.
Report from Tucson: Today, I went to the monthly meeting of an organization I belong to. In the 5.2 miles between home and the restaurant, I counted 19 for sale signs. Many of them have been up for months.
I also spotted a condo conversion attempt that doesn’t appear to be going well. It’s a cinder block apartment complex with a new paint job and other cosmetic enhancements. (The “lipstick on a pig” analogy comes to mind.) I didn’t see any potential buyers in the parking lot. Nor did I see any evidence that any of the units had been sold yet.
Always nice to hear about Tucson! Do you know how the condo conversions on Skyline (towards Sabino Canyon) are doing? When I visited earlier this year I saw 2-3 condo conversions going on.
“I also spotted a condo conversion attempt that doesn’t appear to be going well. It’s a cinder block apartment complex”
Used to live there know what those look like. Tell me your kidding.
My old apt complex converted to condos — two story cinderblock, four units per building. They did a pretty nice job, but the prices were (of course) too high. There were at least 17 of the units on the MLS a month ago and according to the county assessor, more than 1/2 still in the developer’s name (evil laugh).
“People are confused right now,’ he said. ‘They don’t know what’s happening with the market. Nobody knows anything.’”
Wrong. Some people know exactly what’s happening with the market. Not much confusion on this blog.
HOT OFF THE PRESSES:
Standard Pacific employees notified homebuilder cutting jobs
Company memo sent out earlier this week.
By JEFF COLLINS
The Orange County Register
Irvine-based homebuilder Standard Pacific Corp. has notified employees that it is eliminating some jobs and restructuring others following continued reports of lagging home sales across the nation.
Company officials couldn’t be reached to confirm rumors of layoffs in at least three Southern California divisions and one in South Florida.
But a company memo to employees of the Orange County and Coachella Valley operations notified workers of an Oct. 3 “reduction in force.”
The company’s finances have been hit this year by a slowdown in new home orders and rising cancellations, fueled by a backlog of unsold homes in the existing-homes market, company officials said.
The company reported that net income was down 10 percent in the second quarter of the year and recently announced that orders had fallen 58 percent in July and August.
Company CEO Stephen Scarborough said also in a mid-September Web broadcast that the company’s cancellation rate had grown to 50 percent as new-home buyers failed to sell their existing houses.
All those vaporized cancellation won’t show in the stats. Somebody’s got to fix that.
cancellation rate had grown to 50 percent as new-home buyers failed to sell their existing houses.
Folks, anyone doubting there are layoffs comming should re-read that sentence a few times. Those “buyers” got lucky. By not selling their current home they just might be “stuck” with a home they can afford. (Notice the “might,” we know a fraction are doomed anyway.)
Look at the Jobs California has created since 2000:
#1 Home construction
#2 White collar home transaction jobs
#3 Durable retail (probably includes wood shops…)
#4 medical
#5… oh wait, most of the other stuff has shed jobs…
For some reason the animal house scene is coming to mind:
“Assume the possition.”
Neil
So much for a soft landing!
I bet CEO Stephen Scarborough knows exactly whats going on!
I remember one-poster-wonder, Gary, a few weeks back telling us that a whole division in Highland, CA sold out in one day. Guess at least half canceled!
Aztrias says….
What you’re mocking is the reason prices are not going crash. Owners are pissed and not stupidly going to dump property at a loss. I expect that people will tighten their belts and make their payments. If inflation is in check, it’s going to be workable.
—————————————————————————–
I heard this same logic here in the OC back in 1991. Nobody believed their home could ever possibly decline in value, yet by 1995 many homes lost as much as 40% of their value. Also, keep in mind that toxic mortgages weren’t that readily available in 1995, people had to actually come up with downpayment money.
I know plenty of people who “tightened their belts” and it didn’t stop the market from crashing last time. They just sat in the houses depressed they could NEVER move or they’d have to take a huge loss. Just because some will sit it out, doesn’t mean comps from other sales won’t lower prices.
OC has huge defense contractor layoffs and little else to make up the difference. Sunnyvale in 91 lost 18,000 Lockheed jobs but IT was hiring. Prices were off (10-15%) at the worse.
Employment looks okay this time — individuals unable to meet commitments will flounder and there will be forced selling but there are jobs and some homes are very close to these jobs. Those in the Central Valley are not so lucky.
aztrias,
I know I shouldn’t feed, but are you aware of how much money RE brokers/agents and mortgage peddlers have been making? I didn’t believe it when I heard it (but got it confirmed by some in the industry), but some of these people were making over $100K PER MONTH!
I lived in the San Fernando Valley during the last bust, and we had many friends in the defense industry. None of them made as much as these RE/mortgage salespeople have been making; and we knew top engineers.
Sorry, but that whole theory about job losses is going to be turned upside-down.
No employment does not look okay especially here in So Cal some foul winds are blowing and I’m not speaking of the re industry.
“The price of an average Visalia area home may have fallen about $50,000 in the past year.”
That is probably about right. My former neighborhood is now about $75K less than it was at this time last year–except none of the homes are actually selling.
I do find it ironic that the spokesperson for McMillin homes (a San Diego outfit that has done massive building in the San Joaquin Valley since 2002) is commenting that they’re in good shape—it is them, along with Centex, that helped drive up land prices and house prices to begin with.
Can’t forget this group who also swooped in.
“The fact is that our market is dependent to a degree on the statewide market,” says Maaske since “about 30 percent of our calls come from outside the area.” The truth is that if out of town buyers can’t sell their home in the Bay Area they won’t buy here.”
I know someone at Centex who has stated the same about many of their buyers having come from LA and SF. These idiot builders have still been buying up farmland recently as high as $120K+ an acre. Yeah, that will help matters.
I wish I could find the article I was reading earlier this week that talked about 50% cancellation rates in parts of the Valley with the homebuilders. Gotta hate it when half your customers vanish.
I looked at new homes there a few years back when prices were less than half of what they are today. It certainly isn’t the quality of the jobs there that has suddenly made $350K houses the norm. There are no fundamentals there to cushion this crash, and the coastal money is no longer able to cash out and buy. Adios Valley cities!
Centex and McMillin ate up the little builders in the Central Valley during the last three years. I suspect the little builders will come back and start building homes again at affordable prices (pre-2002 prices), in small subdivisions (20 lots on 5 acres).
But yes, Centex paid a premium for land the last couple years. They begged for increased density for a Small-Lot Planned Unit Development in Hanford, CA - first denied by the Planning Commission, but later approved by the Council. I admit it’s a decent project, something different for the Central Valley. Anyway, a year ago, during the tentative approval stage - they were hoping the units would sell for around 300K. (It’s funny because they had to prove to the Commission that increased density doesn’t mean Section 8 housing - dumb, silly Commissioners). It’s selling for about 50K less than that now. Without the increased density, I don’t think they would’ve made much of a profit with that project.
If you’re interested, look up Copper Valley in Hanford in the Centex website.
The Daily Bulletin made several references to the “psychological element” of the housing market by indicating that people continue to hear news stories of the downturn and consequently they panic and are afraid to buy. But why doesn’t the media focus on the the “psychological element” that drove this market in the first place? You know, the psychology of, “If I don’t buy now, I’ll never get in on the market!”, or “I know it’s so frickin out of my price range now, but in two years I’ll make a kajillion dollars when I sell it.”
Did they ever think that rather than some psychological element taking place that just maybe…. just maybe… we’ve finally come to the end of the line of stupid gullible people who would purchase insanely overpriced homes, and that now what’s left are people who refuse to pay the prices (and had for the past 5 years), and are sane enough to not overextend themselves with creative financing schemes?
“we’ve finally come to the end of the line of stupid gullible people”
Well, the stupid and gullible behavior could be psychological. No?
People can be duped into believing many things are bad for them and serve the interests of those who pay for the duping, i.e., propaganda. The home buyers were just as much duped by propaganda of false supply-demand, totally unsupportable by actual data.
Jas Jain
posted ““we’ve finally come to the end of the line of stupid gullible people”
Not at all but the FED’S new guidlines will cut off the Kool-aid
Anyone else think that the new guidelines were a spark for last week’s increased sales. Would realtors and lenders say that they couldn’t qualify clients for “liar loans” after next week?
All I know is suddenly the press is harping on month to month figures, when they were harping on year to year numbers earlier this year when the month to month was DOWN. Funny how that works.
On NPR yesterday they spoke to some lumber suppliers who said lumber is a leading indicator of where the construction sector is headed, they said they haven’t seen demand for lumbar fall so far and so fast in 15 years. Building material costs are plummeting. They said it fell off a cliff this year and they expect it only to get worse.
The VP of homebuilding I referenced above made a similar comment. The suppliers have a significant amount of inventory they are trying to pass to builders who are now (this company) balking.
I’m a purchasing agent for one of the largest union electrical contractors in Sacramento and I can confirm that building materials have definitely fallen dramatically just in the past 6-8 weeks. Its pretty incredible how volatile the last year has been, sometimes in unexpected ways. For example, for a brief time this year, diecast conduit fittings were actually more expensive than stainless steel ones (usually DC is about 30% cheaper than SS).
Post-Katrina, PVC was in very short supply. This time last year I was literally begging vendors to find us pipe so that we could finish underground work before it started raining. Meeting demand hasn’t been as big a problem since Q1 06, although prices are still twice what they were a year or so ago (basically PVC mirrors gas prices, as both are petrol-based).
Also, this time last year, copper futures were trading at around $1.80/lb (they saw a bit of a jump, post-Katrina but not much). By January, it was around $2.20, early April $2.80, and the last of week of April it broke $4.00. Its been around $3.40-3.60 for most of the summer. Earlier this week it fell just below $3.20 for the first time since April before finishing the week at $3.30. As a point of reference, back in 2000 the price was less than $1.00 While a lot of the runup was caused by problems with producers (Brazilian mine strike), but a sizeable chunk has been demand driven. We’re cautiously optimistic that it will drop below $2.50 by the end of the year.
Labor is still in very short supply, though. As a union shop, we have never done very much residential (cheapass developers don’t want to pay qualified journeymen electricians $34/hr), so nearly all of our work is commerical, industrial, and institutional. We actually have more future work under contract right now than we have ever had in the nearly 50 year history of our company. A general recession would obviously hurt a lot, but for the time being we’re in very good shape.
Great info! Thanks for the view into the supply chain.
Instutional construction projects tend run partly counter-cyclical to the private sector due to bond financing cycles and voters moods.
Mike — this is why I’m thinking about having a custom house built in late 2007 or in 2008. I can buy a 5-acre lot in the neighborhood I want, for less than at any time since the development was established, and it looks like I’ll be able to build for way less than anything spec there has ever sold for, it being a two-year-old development. Bad for the hosed, great for the un-hosed.
Freddie Mac CEO Richard STyro Speaks!
http://www.freddiemac.com/speeches/syron/ds120605.html
“My own view is that we do not have a national house price bubble today. We will see a significant slowdown in housing, but this slowdown is from record levels. Housing starts and home sales will stay strong. Prices will likely rise at rates more in line with long term historical averages, not at the double-digit rates we’ve seen recently. And a nationwide decline in housing prices remains highly unlikely, based on history and the underlying fundamentals.
It has become clear, however, that there has been a fair amount of froth in certain markets – mostly along both coasts, and in some fast-growing cities in the Sun Belt. In these markets we could see price corrections, especially if economic growth slows. Elsewhere – across large geographic areas of the country including the Midwest and most of the South – incomes have generally kept up with prices and we’ve seen few signs of overheating.
At this point in the cycle, a “soft landing” that allows incomes to catch up with house prices would be healthy. A crash landing provoked by bad policy decisions and spiking interest rates would not. I believe a soft landing is achievable – but it won’t be soft at every airport. “
right…no national bubble, just a nation of individual bubbles that are all correcting around the same time. What a coincidence.
Meanwhile, we can all look forward to our wages doubling or tripling to catch up with house prices so we can have the soft landing that the Dick in charge of Freddie envisions for us all.
“it won’t be soft at every airport” - translation: the runway lights are out on a pitchblack night, the landing gear won’t drop, a perfect storm is brewing, and the plane is headed into a mountain. Carry on.
“right…no national bubble, just a nation of individual bubbles”
Stop it Betamax………your breaking me up………bwhahahahaha
“At this point in the cycle, a “soft landing” that allows incomes to catch up with house prices would be healthy.”
So, he thinks it would be healthy for everyone in OC to have their incomes increase by 100-200%? That’s what prices have increased, so for incomes to catch up, that’s what we would need. I don’t see that happening, especially with globalization, and I don’t think it would be “healhty” either, unless those income increases were the result of similar sized productivity increases.
Clearly, this guy is trying to cajole the FED and the market to behave as he wants it to. It won’t work. Markets can get out of balance for awhile, but they eventually regress to the mean. This one will too, even if that means that Freddie Mac takes a beating. Poor guy, he’s probably worried about his bonus. Oh well, too bad fo him. But it will be healthy for prices to return to normal so that the average person can once again afford to buy a home.
It has become clear, however, that there has been a fair amount of froth in certain markets – mostly along both coasts, and in some fast-growing cities in the Sun Belt.
So just both sides. And along the middle. Representing about 90% of national housing wealth.
Well, thank Gawd it’s not a NATIONAL housing bubble.
Unbelievable that people play these semantic word games… why? For themselves? Their job?
I think you’re reading too much in. He’d probably agreed that there’s a bubble national housing wealth-wise. What he’s saying is that if you count each house regardless of its price, then most of them outside of the two coasts and the largest cities - have not reached bubble-like valuations.
I can confirm this for many, many small Midwestern towns all across IL, WI, IN , OH, MI. The prices are the same as what they were in 1990, 1995, 2000 … Now, given that inflation has been eating away at their value, the prices are actually lower today.
I suppose we should appreciate people like this. They are milking the last ounces of loss out of the FBs, thereby ensuring the greatest measure of savings to ourselves.
Am I the only one who hates the word “froth”. What the hell is that word supposed to mean? It’s a fluffy little word that won’t scare the lumpen but lets the Freddie Mac huksters cover their a$$ if things blow up.
“They did get one offer: After the couple had cut their sales prices $10,000, to $435,000, someone offered $390,000 but wanted all the furnishings in the house as well. ‘I thought, ‘Are you kidding?’ Marcia Ourganjian said. Marcia Ourganjian quoted her husband’s philosophy of: ‘I’m not going to give my house away.’”
They probably paid $150,000 for it originally yet now if they don’t get their ridiculous asking price they consider it “giving it away”.
To them I say, “Stick with you’re asking price!. That way I can pick it up a foreclosure in 2 or 3 years for half the price!.
Greedy bastards.
If you think they got it for $150K why do you expect it to go to foreclosure?
Ever heard of a HELOC???????
Oops. Richard F. Syron
“Point Loma is much nicer.”
I rented in Point Loma many years ago. You never
get used to the airplane noise. At least, for me.
Don — that reminds me of a place we looked at, out of stat, last year. Agent pulls into the drive and owner is there, somewhere in the chit-chat, the owner mentions the trains. Me: “What’s the deal with the trains?” Owner: “They’re just over there, behind the subdivision — they run day and night, but you really do get used to the sound pretty fast.” Me: “Thanks!” Me thinks: “Toxic waste, chlorine spill, evacuations, never-ever re-sell this house.” Bye! (Pronounced “Baah” in Southern)
The best part of this blog are priceless comments like this:
“Marcia Ourganjian quoted her husband’s philosophy of: ‘I’m not going to give my house away.’ ‘We’re going to wait three years,’ Marcia Ourganjian said. ‘Maybe the market is going to go up. Something has got to happen.’”
And ya, Chico, where the median income is around 45k/year is going to crash especially hard.
-Greg
God I hope so, what has happened in Chico and Paradise, Butte County in general has been rediculous!
test (c)
test(c)
test ™
test (r)
test(tm)
anyone here confused ?
People are confused right now,’ he said. ‘They don’t know what’s happening with the market. Nobody knows anything.’”
Yes, Mr and Mrs Organjian of Stockton are confused. Confusing denial with reality.
I want to hear as many stories of FBers in CA as possible. Bring em on - will be a great show.
Agree, but who cares about these locations: modesto, sacramento, visalia. When I see declines in LA, which I haven’t really seen yet, or San Francisco, or OC, or even Ventura, then I’ll get excited. Those other areas don’t even count as CA.
Something has to give in Irvine. I just saw a home built in 1980 selling for $595,000. This home of 1200 Sq Ft. sold new in 1980 for $105,000. I bought one just like it in 1986 for $135,000. This home has gone up $460,000. Someone is going to get $crewed!!!!
But hey in Irvine they say nothing goes down! Everyone wants to live here. YEAH!!!!
If I had to live somewhere near LA, at least Irvine would be a livable choice. But, much happier to be out.
Irvine - all I remember about that place is you have to drive 15 minutes to get to a supermarket.
I have been waiting for this for years. Bushs anti-bankruptcy law is going to destroy them all. A freind who is a real estate agent phoned up asking if I had freinds who wanted to rent a house for 2,600 a month, they cant sell , cant get out and the 500,000 cracker box is costing them 600,000 now the rates are going up. Hell is coming folks, true hell. Be afraid, be very very afraid.
As an aside, the president doesn’t make laws; he is not a king. Congress makes laws. The recent bankruptcy law was bi-partisan; passed the senate 74-25, passed the house 301-126.
True, ronin, although Bush could’ve veto’d the law… Has he veto’d any law since he’s been in office?
Yes, every single one that called for reduced government spending.
I believe the bankruptcy law will be the victim of unintended consequences and will create a whole class of folk who have no choice but to live in the murky underground economy. Once exiled, these people may resort to crime and other means of survival. Under the old law, folks had a chance to try again, and frankly even that did nothing to stay the IRS when they came looking for their 1099c money. I am wondering if at some “conspiracy” level this is not really all about control and power?