‘Existing Home Sales In ‘Freefall’: California
From CBS News in California. “The unsold inventory of new homes in Orange County is at the highest level since 1996, according to an economic forecast released Friday in Irvine. Through August, sales of existing homes in Orange County were off 29 percent compared to the same period a year ago, the largest year-over-year decline, according to the UCLA Anderson Forecast: Orange County Economic Outlook for 2007.”
“The rate of sales over the last five months have been ‘brutally low,’ with Southern California home sales falling to their lowest level in nine years last month, according to the forecast. The current state of existing home sales in Orange County and most of Southern California is in ‘freefall.’”
“‘The long-awaited real estate correction is under way, but there’s little agreement about how brutal the landing will be,’ the report states. The report noted there is a ‘growing notion that this year’s sales decline is the roughest, most sudden correction ever observed in the housing market.’”
“The report noted that what usually happens when a real estate market bubble bursts ‘is that sales just dry up’ because buyers won’t buy homes at the listed price and sellers are unwilling to cut their prices. It described the result as ‘the economic equivalent of Chinese water torture.’”
The Union Tribune. “Locally based DataQuick Information Systems said foreclosures totaled 171 last month, more than 10 times what they were a year ago and the highest since 1998.”
“Similarly, the number of default notices – the first step lenders take toward foreclosure, was 872, nearly triple the 334 filed in September 2005. Meanwhile, RealtyTrac, based in Irvine, reported area default notices totaled 1,236, up from 287 a year ago, and notices of trust-deed sales, the final notice before foreclosure, were at 247, up from 56 over the same period.”
“DataQuick analyst John Karevoll attributed the rise to the flattening of home prices. ‘The people who get into trouble are not able to use their homes to get out of trouble the way they were able to do when there was strong appreciation,’ he said.”
“RealtyTrac’s Rick Sharga said the recent increases reflect the ‘first wave’ of defaults and foreclosures stemming from the rise in adjustable-rate mortgages whose interest rates are rising too fast for some borrowers to afford. At the peak of the buying boom, he said, as many as 70 percent of borrowers in San Diego were signing up for ARMs, DataQuick has reported.”
“‘What we don’t have a precedent for in the marketplace is that many of that type of mortgage, especially not all that adjust at the same time,’ he said,”
The San Francisco Chronicle. “The number of homeowners in foreclosure has soared in Solano and Contra Costa counties in the past year. Foreclosure activity in Solano County increased nearly fivefold, while in Contra Costa County they almost quadrupled, according to RealtyTrac.”
“‘These are all the fast-growing regions in terms of home building, where a lot of first-time home buyers were getting into the market,’ said economist Christopher Thornberg. ‘These are the people who are most susceptible to a slowdown in market and these are the people who are the most overexposed.’”
“New construction attracted some investors who got in over their heads and buyers who relied on discount mortgages that are now resetting at higher rates, two factors that are pushing up foreclosure activity, said Leslie Appleton-Young, chief economist for the California Association of Realtors.”
“‘The majority of new construction, well over 50 percent of the new construction in Southern California, took place in the Riverside-San Bernardino Inland Empire,’ Appleton-Young said. ‘That’s where you saw the most activity in terms of people coming in and perhaps buying a few units to invest or driven by affordability issues got in at a very discounted mortgage rate.’”
“She and Thornberg both said they expect foreclosures to continue to climb. ‘The foreclosures, at least for a while, are going to keep going up and up,’ Thornberg said. ‘This is going to feed on itself.’”
The Sacramento Business Journal. “New-home sales tumbled 46 percent in the third quarter from a year ago, the latest evidence of a struggling housing market in the Sacramento region.”
“Only 1,956 new homes were sold in the just-completed quarter in the six-county area, 1,634 fewer than a year ago, according to The Gregory Group. It was the worst third quarter since the Folsom company started keeping track of the market in 2000.”
“The region’s median-home price dropped 3.9 percent to $440,240, the lowest price since the second quarter of 2004.”
“Housing inventory in the region, including lots ready for building, reached 4,598 in the third quarter, more than five times the 875 homes and lots in second-quarter 2004, the lowest point since 2000. About 20 percent of the current housing inventory is completed homes waiting on buyers, Group owner Greg Paquin said.”
“Not including incentives, the average new-home price dropped to the lowest level since third-quarter 2004 in Sacramento, Placer and Yolo counties. From the second to the third quarter, the average price dropped almost 5 percent in Sacramento and Yolo counties, respectively. New-home prices fell 3.6 percent in Placer County.”
“El Dorado home prices continued to rise as new high-end homes opened in Serrano. But overall sales in the county still dropped 59 percent.”
“Rising incentives could lure bargain hunters. The average incentive of $14,916 in the third quarter was 218 percent higher than in the third quarter of last year. The perks reached up to $50,000 for new homes and $125,000 for existing homes, according to the Gregory Group.”
I looked around on the web and this is the only reference to the UCLA report I found.
Some more data:
‘Sales of existing homes slowed in San Joaquin County last month, but prices rose slightly overall, despite being down from a year ago. A total of 435 homes sold last month throughout the county, down nearly 18 percent from 530 in August. Pending sales also slipped, falling from 545 in August to 507 last month.’
‘Housing prices have been sinking this year as the number of homes on the market began climbing by about 300 per months since summer of last year, putting pressure on sellers to cut prices to compete.’
Ben, check out the U-T article on this guy that fraudulently purchased 30 units in his condo conversion complex and has now defaulted on all of these units.
Here’s an example of one of such units I posted on my blog.
****vent on****
Mr. Norton sounds like one of my uncles. My uncle honestly would see nothing wrong with buying properties in someone else’s name if “he believed” it would make the other person wealthy. (Of course, nothing wrong with taking a cut of it.) And my uncle would also not believe himself to be at fault if the clients lost everything.
Mr. Norton will probably be like my uncle, who coincidently was an ex-football player, and be hounded by the IRS for decades. To be precise, about 28 years to pay off the full sum.
Thankfully, his kids are wonderfull and took after my blood relative. (Yes, even women can suffer for going for looks.)
*** vent off***
$35 million? Petty cash. This will be one of a thousand such tales. For this guy invested in the absolute worst and least liquid investment (condo conversions). Soon we’ll find out about similar funds in townhomes and eventually even homes. These funds liquidating should free up inventory. How much? Maybe a trivial amount, maybe a significant amount. Any guesses?
Watching this unravel is quite entertaining.
But I’m worried on how the “uninformed masses” will react to this shock. Cest la vie. I just found the right white wine for my upcomming wedding. One must have priorities.
Neil
Talk about illiquid, you mention condo conversions, then marriage. I would say that one is easier to get out of than the other, (hint its the conversions.)
Josh
thanks for the article, I live right next to those condo conversions, I never knew they were once apartments. They are a blight on our community, since they are 3 stories tall they block out the entire street.
“DataQuick analyst John Karevoll attributed the rise to the flattening of home prices. ‘…”
I think he means “levelization.”
“Entroprization?”
Rigor mortis?
Rigor mortgage-is?
I love the last line of the CBS piece, after using the terms “freefall” “brutally low” and “brutal”
“The economists said they do not expect a major decline in home prices this year…….”
Man, even a COMPETE MORON could finish that sentence for themselves..
“This the captian, We are in flames, we have no power, we are in a screaming dive pointed directly towards the ground…”
“the time is 11:59 and 55sec pm…… We are not expected to crash today”
“Sit back, relax and enjoy your flight”
How could it with only 2.5 months to go?
yea, not to worry……. Because, NextYear it will be a “Brutally Soft Landing”
Sound like a keeper as the new “Charmin” tag line….
“Please don’t squeeze the (homebuilder profit) margins.”
- The report noted that what usually happens when a real estate market bubble bursts ‘is that sales just dry up’
- because buyers won’t buy homes at the listed price
- and sellers are unwilling to cut their prices.
Sellers WILL cut their prices. The sweet spot for the sellers was over about 7 months ago.
posted “‘Existing Home Sales In ‘Freefall’: California”
Sweeter sound never said. Love it! Can you do the new dance? It’s called the “limbo”….. how low can the limbo go?
Remember that old song “Free falling”, don’t remember who sang it but would be great to have in a youtube video clip. This bubble is certainly gaining steam.
Tom Petty.
“The Union Tribune. “Locally based DataQuick Information Systems said foreclosures totaled 171 last month, more than 10 times what they were a year ago and the highest since 1998.””
Vow. At this rate, 10 times, it wouldn’t take long. Also, at 1998 levels when the correction has barely gotten underway, while in 1998 the correction had gone on for a very long time.
It would get uglier and uglier by the quarter.
Jas Jain
posted “It would get uglier and uglier by the quarter.”
and the nickle, dime and penny too!
The perks reached up to $50,000 for new homes and $125,000 for existing homes, according to the Gregory Group.
125,000 in perks,why not drop the price and let the comps do the math
Because the neighbors would light you on fire, and use you as a hazardous waste container.
lol . That’s one “BRISK” visual…
Two interesting questions at this point
1) For what length of time can current homedebtors manage carrying costs? How do the numbers truly break down, for both owners of single residences and owners of multiple residences?
2) Will there come a point where current owners conclude that the market will not head back up in ‘07, leading to a panic to sell to realize whatever equity gains remain?
I suspect we’ll have some sense of the answers to these questions by Q2 2007.
“For what length of time can current homedebtors manage carrying costs?”
It might be more appropriate to ask for what length of time current home CREDITORS can manage carrying costs. Most UFBs (ultra-FBs) are operating outside rational financial behavior, on the cusp of criminality, and it is only their creditors who can really drive the prices down. And these creditors really run the gamut - pension funds, hedge funds, and other pooled investments as well as the usual banks, mortgage companies, credit unions, etc.
It reminds me a little of the ‘98-’00 telecom/internet boom. All the local telephone companies looked at WorldCom and Adelphia and figured, hey, these guys must know what they’re doing, paying $xxx per household for the right to provide wireless service. So little local-telephone-company, always conservatively managed and serving one small area for years, goes out and does the same thing, figuring Bernie Ebbers must know what he is doing.
There is no leader (yet) in the unraveling. The mortgagees (creditors) are deer-in-the-headlights the same way the mortgagers are. The light is being turned on and everybody is standing around naked or half-dressed and holding their breath.
“hey, these guys must know what they’re doing,”
You may have identified the second most expensive phrase in the English language, right after “It’s different this time.”
Re: Calpers,Pensioners up to their eyeballs… I am convinced like you that alot of these funds are leveraged over the top in some form of the RE sector. There was a firefighters fund that got stuck in Texas I think? that was unknowingly invested in some condos that went belly up…Not to mention the San Diego hit last month. My point is that they are more deep than even they imagine much less the pensioners themselves.
–
This from Mauldins article this week…
‘” “Indeed, in typical suckers’ rally mode the S&P index rallied a whopping 18% in April and May 2001. It was only in June 2001 when even more severe signs of a recession clearly emerged that the stock market started to rapidly tank into a free fall. So, such stock market suckers’ rallies are very common at the outset of the recession. The reality is that stock markets are often wrong: sometimes they predict recessions that do not occur but, at times like in 2001, they fail to predict recessions that are already ongoing.”
I think less than 5% of economists are predicting a recession today. Take no comfort in the consensus view. “
Paul in Jax is right about the mortgagees. Even if we have been Very Very Careful about LTV ratio these past couple of years, we wonder how we will be doing if (in my case, low-end) housing declines by 50%. Most of my loans at this point have fewer than 10 years to run, so my self-interest would be served sufficiently if the decilne were slow. Maybe it’s the same for the Big Boys. Play for time so that amortization takes care of part of your problem. On the other hand, my schadenfreude and my home-buying possibilities would be served better if the decline were spectacular and fast. Guess I can’t have it both ways.
I feel like stating up front that I am more bear than your average bear, but thats innaccurate to say the least. in 1998 we were out of real estate recession (or damn near). Bascially what you are comparing is heading into a real estate recession vs coming out of one. Either way we are at a boundary condition, so that makes sense.
Josh
Jas Jain, I think you may be making a mistake. In 1998 the last so-called correction was actually OVER and prices were rising. When foreclosuers get to 1993 levels, that will be interesting. No offense.
More stories about home sales declining and an op-ed that home prices will not fall. This is getting to be monotonous that people will stop reading “headline grabbing, jump on the bandwagon, real estate is in a correction” articles/news reports.
People that own houses will keep reading EVERY “real estate is in a correction” headlined story they see, IMHO. I know that everyone at work used to know EXACTLY how much their area had gone up the moment it got printed in the LA Times. Friends have brought out the paper’s listings of open houses in their neighborhood while I was over for a visit, under the guise of “isn’t that price crazy, they’ll never get THAT MUCH” (i.e. look how much MY HOUSE is worth!) People follow closely, I think. A lot of “ego” (this represents me) tied up in it.
“The report noted there is a ‘growing notion that this year’s sales decline is the roughest, most sudden correction ever observed in the housing market.’”
Well we only had the biggest housing sales increase in history, so having the biggest correction ever observed would not be too much of a stretch now would it.
Now we should see the biggest price decline in history now won’t we Mr. Bill.
Oh no don’t say price declines. Ohhhhhhhhhnoooooooooooo!!!!!
I like the term “notion” in there, like it’s still just some “idea” or “possibility” floating around in the Ether…
The only thing “notional” going on, is that everyone has the “Notion” that if they keep minimizing the problem with hazy assessments it will go away…
Here, here, dear Chap, I was looking at my recently reset arm payment and I just had a “Notion”…. I’M GONNA GO BROKE!!! WAaaaaaaaaaaaaaaa!
Hey, what’s going on here?
Has this “slow moving train wreck” suddenly gathered speed?
These posts remind me of an absurd article I recalled from the San Francisco Chronicle a couple years back, about a 23-year-old girl who works the flower stand at Costco, who bought a $500,000+ house in Hercules, California (Contra Costa County). I remember at the time thinking this girl was setting herself up for disaster. Hercules is a sh*thole town that is near all the oil refineries and chemical plants in the East Bay. She bought the house with a 3/1 ARM and confidently proclaimed she bought it as an “investment” and would probably sell before the ARM reset. I just found the article, by that moronic real estate columnist Kelly Zito, from the Chronicle archives on 6/19/04 … It’s pretty amazing to read this now, over two years later, with the latest news from the Bay Area market… This girl must be totally screwed by now….
“How high can they go? Single-family homes’ overall median price tops $500,000 in Bay Area”
- Kelly Zito, Chronicle Staff Writer
Saturday, June 19, 2004
The median price of a single-family home in the Bay Area hit a record $530,000 in May as home prices jumped 18.8 percent year-over-year and sales reached a 16-year high, according to a real estate information firm.
…
The Bay Area’s residential real estate boom is being fueled by consumers’ rush to capitalize on low interest rates, said DataQuick researches. In mid- March, the average U.S. rate for a fixed 30-year mortgage hit 5.38 percent before advancing above 6.3 a scant eight weeks later. This week, the benchmark rate edged up slightly to 6.32 percent, according to mortgage titan Freddie Mac.
…
The higher rates spurred Rhiannon Albano, owner of a flower shop in the Antioch Costco, to take out an adjustable loan. Albano’s loan is fixed for three years at 5.3 percent, then floats either up or down, depending on the current rate. Though monthly payments for adjustable loans are generally lower than those for loans fixed for a longer period, they are riskier because market rates may be significantly higher at the end of the fixed period.
Albano, who on Friday closed escrow on a $500,000, three-bedroom home in Hercules, isn’t worried about shouldering more risk, however. “I’m buying it as an investment, so I’ll probably sell it before the three years are up,” said Albano, who also turned 23 on Friday.
The whole article is at
http://tinyurl.com/y2ntlk
Anybody want to speculate whether this girl has panicked yet?? Her 3-year ARM is due to reset in a matter of months (assuming she has not refinanced or sold the home). How will she hold onto this home, when the ARM resets and she gets nailed with higher payments?? On a Costco salary?? And good luck trying to sell a house in Hercules in this market!
posted “Anybody want to speculate whether this girl has panicked yet??”
Better Question. Has the lender pooped his pants yet?
>Rhiannon Albano
Guess we know which Fleetwood Mac song her parents liked…
She gets a roommate.
Using google and sfgate.com, I found some homes, in the same city, that approximately matched her new 2004 home. Here is a URL pic of her place - pretty standard but a single family home. http://www.sfgate.com/cgi-bin/object/article?f=/c/a/2004/06/19/MNGVD78VEC1.DTL&o=2
1500-1600 sq ft homes built in Hercules, CA in 2005 sold for 542-556 K in May ‘05 now sold for 625-650k August 06.
She paid 500k in 2004. With current home sales well above 600K, she now has 80% equity. A worse case 100% financed purchase converted to a jumbo 30 year fixed is 6.5%. That would cost $384 more than 500K borrowed at 5.3% - her 2004 ARM rate.
I’m not defending her but if she refinances her home now (she’s still under the 5.3 ARM) she can get a jumbo 30 fixed year for about $400 more than her current ARM. (corrections welcome)
That additional $400 cost is probably significant for her budget but getting a roomate would cover it.
BTW it says she the owner of a flower shop in the Antioch Costco.
“BTW it says she the owner of a flower shop in the Antioch Costco.”
Please … “Owner” of the “flower shop” at a Costco? That means she’s a non-employee independent contractor or something. They let her sell flowers there for a steep fee. That means she’s probably making essentially the same $15/hour as the employees, but she’s not getting the other benefits. She was 23 at the time of of the 2004 article, she’s not exactly Martha Stewart.
And I would like to see all the “current sales” of homes like heres in crappy Hercules selling for $600,000+ … Places like Hercules will be the first to get hit with the crash … and will get hit the hardest.
BTW … For those unfamiliar with the Bay Area, Hercules is sandwiched between Richmond and Pinole to the south (cesspools of crime, probably the worst in the Bay Area) and the huge oil refineries and chemical plants to the north towards Vallejo and Martinez. Every few years there’s a huge fire at one of the refineries or chemical plants, causing toxic clouds to cover towns like Hercules and sending all the residents scurrying to the emergency rooms. Sounds great, huh? $600K+ for that? Hercules is one of those towns (like Vallejo, Tracy, Stockton, etc…) that had big jumps in prices only because the more desireable parts of the Bay Area had climbed so high, and people felt desperate to grab a house anywhere they could get it … It will be one of the places in the Bay Area that falls most and fastest in this housing crash.
Hercules is toxic waste dump with cul-de-sacs. TG is right: Those neighborhoods will get absolutely hammered in the coming year.
Your description of Hercules sounds lovely. Kind of like “Road Warrior” only you can have all the gas you want.
Sorry, I need to pay attention. I thought the “har har har” was about her inability to pay her soon to float ARM. The bank would refuse to refinance the overvalued home if she tried to refinance.
Doing some digging, she’s not a poster child for someone about to lose her shirt or the home because of an ARM. There’s now 20% equity. A switch to a 30 yr fix costs under $400/mo. That’s less then what she’d earn by adding a roommate.
I’m not advocating living in Hercules. I’m not saying her property isn’t going to crash and burn real soon now. Right now, this summer, new single family units are roughly selling for 120-160K more than what she paid in 2004. If she had to sell before now, she probably broke even or made money. If she’s holding on, then she can sell now at a profit or try paying $400 for a 30 yr fix. Maybe she sold already and is renting.
“Right now, this summer, new single family units are roughly selling for 120-160K more than what she paid in 2004.”
The market in the Bay Area has changed drastically in the last 6 months … Yes there are SFH listed at 120-160K more than what she paid in Summer of ‘04. In today’s market, however, listing prices do not reflect reality and for that reason listings are sitting on the market forever, unsold. Now, if SFHs like hers are SELLING NOW (meaning in the last 4-6 weeks, or so) for $120K-160K more than what she paid, then maybe she’s not in bad shape … yet.
I’m looking at actual sales reported in the same newspaper the story ran. It’s hard to know for sure because the data are weekly so I’m trying to match sq ft and year built. Worse case value is just under 600k.
In this area, 2004 ARM buyers still have wiggle room to refinance into a fixed at what would be an historically low rate.
Will they?
from the North County Times (San Diego, CA) newspaper:
Foreclosures up dramatically in SD, Riverside counties
The article is interesting, but the comments are even better…they are beating each other up out there in Temecula, Murrietta, and Lake Elsinore. I have to admit I feel a huge sense of relief that I was able to sell my elderly relative’s house in Menifee in May ‘06 at a good price. [Actually, I feel kind of smug and superior which is not kind I could easily be in trouble with that house -- it was the sole asset of my ailing relative and I waited almost too long to put it on the market while I was busy working and selling my own house. She had a variable rate reverse mortgage, which people haven't talked about here on this blog.]
There but for fortune….
Here’s some of the comments…but you gotta go read them all…You’ll be crying and laughing simultaneously.
Renter wrote on October 13, 2006 9:15 AM:”Hopefully all this foreclosure misery results the huge price drop us hold-outs need to be able to afford our own home. I have no sympathy for anyone who bought a home for twice what it was worth, then rolled cars, credit cars and swimming pools into the loans on the false promise that “housing prices always increase”. Good luck trying to offload it. See ya at the auction!”
Pop! wrote on October 13, 2006 9:43 AM:”30 to 40% correction within 3 years.”
Gee, ya think? wrote on October 13, 2006 10:37 AM:”I gotta buy that big, expensive house to impress my friends. Oh wait, I need a couple of those brand new, shiny SUVs to go with it! Don’t forget, the kids HAVE to go to private school too! So why is it that I don’t have any money left? ”
Just great… wrote on October 13, 2006 10:50 AM:”You know if a meteor were to smash into the Earth somehow, someway some dolt would find a way to try and blame immigrants for it. So let me get this right. People got into great “No doc high interest adjustable” loans given to them by the many “LOAN OFFICERS” out there (Actually loan brokers) and then blame immigrants for living in the lower cost apts. Now that they have to become apt. dwellers again. This housing cycle has only been going on for the last 40 years it wasn’t a surprise to anyone who could read a graph of prospective interest rates in a wartime economy. Well I’ll tell you this… this immnigrant ,as most people like call my family, (even though I’m half apache indian of hispanic descent and pretty much truly the only real american typing on these comments right now.) I’m going to buy their homes at deep discount because if there’s one thing that is right is the stupidity cycle of life. In ten years their kids will be the one trying to grab it all again and I’ll be here to sell them the dream. If they have to live a little lower because they wanted it all too fast so be it. ”
It was bound to happen wrote on October 13, 2006 11:16 AM:”I think Gee, ya think? hit the nail on the head. I look around N. County and see all these young families in these outrageously expensive tract homes with a stay-home mom, two kids, a Beemer and an Escalade in the driveway, a gardener, a housekeeper, you name it, and I’m wondering how they swing it at all, much less on one income. Turns out they’re not swinging it, after all–the cars are leased, the credit cards are maxed out and the mortgages are interest-only or adjustable with massive balloon payments. No wonder everything is caving in on them.”
From the CBS News report:
“The current state of existing home sales in Orange County and most of Southern California is in “freefall.” However, few markets have experienced price declines, and in many areas, selling values for homes continued to rise as recently as September, according to the forecast.”
“The median value for all existing home sales in the county has increased 3.5 percent this year. Compared to the previous August, median selling value is off 2.5 percent.”
Why no price declines yet?
Are they still reporting year-to-year median price changes as if this reflects current activity?
Ben Jones for President, 2008.
He has my vote.
Now what will we call our party?
How about ‘The New Homeowners?’
The Tupperware Party
Motto:
Ben Jones - He’s smarter than the average Bear.
Taking my son home from his soccer game today I observed so many “Open House”, “For Sale” signs. Could have walked home on them without ever touching the ground.
“California” “freefall”
Thank God.
Yea, and now the sheeple will MAGICALLY HEAR IT cause IT’S ON TV. So N-O-W IT’S TRUE.
You’re giving the sheeple too much credit. They need repetitive reinforcement.
They’ll know its true only when they, their spouse, a child, parent, or good friend get laid off. Then one day they’ll wake up and *listen* to that TV report.
Then they’ll panic… and keep stay in that panic.
Will it be in 2008, 2009, or 2010 when this blog turns to BUY, BUY, BUY? (I’m assuming they don’t pull of Japan deflation. Long topic, but I don’t believe the US could pull it off due to our need for cash to flow into this country to feed our spending binge.)
And the sheeple will give us their homes for less.
I used to be less cynical about the sheeple. But I still recall trying to tell them about the NASDAQ when it broke 4,000… they wouldn’t listen. And I get lectured at work on why I *need* to buy a home. I don’t *need* a home. My little apartment fits me, my scuba, ski, and surf gear quite fine. Soon I’ll get a bigger one (I’m getting married), but I won’t buy. Not until the sheeple have been bleeting for a bit.
We’re a long way from despondency emotionally. But how far in calandar years? My best guess:
http://recomments.blogspot.com/2006/10/market-cycles-time-to-buy-2008-or-2009.html
Neil
Congratulations on your upcoming marriage.
-
Another Sucker!
Just Kidding. Congrats.
p.s. Make sure you get a prenup.
Neil’s story about being lectured at work on his “need” to buy a home reminds me of sitting at a dinner full of academics and listening to one of them tell me, “You can’t live in your bonds.” Well, the fact is, one can perfectly well live in (on) one’s bonds, if one saves enough of one’s salary in early life. Good times to buy houses do come. Now is not one of them.
Neil,
Are you changing your stance on 3Q 07?
Just to be clear, 3Q 07 is now when I predict the maximum rate of home price declines (emotional desperation per my blog). So no change in stance. The bottom? That I’m not sure on. While I’m doing educated guesses on the bottom (per my blog summer through fall of 2008), I’ll use inventory,sales, and loan information to determine when we’re close to the price bottom. In other words, I accept I could be “optimistic” on when the bottom will be and thus it might be a later date until I should buy.
Neil
“The rate of sales over the last five months have been ‘brutally low,’ with Southern California home sales falling to their lowest level in nine years last month, according to the forecast. The current state of existing home sales in Orange County and most of Southern California is in ‘freefall.’”
How long until the article which notes that existing home prices in Orange County and most of Southern California are in ‘freefall.’ Any predictions?
“New construction attracted some investors who got in over their heads and buyers who relied on discount mortgages that are now resetting at higher rates, two factors that are pushing up foreclosure activity, said Leslie Appleton-Young, chief economist for the California Association of Realtors.”
Good thing Leslie warned everyone about the risk of getting in over their heads — otherwise lots of folks might feel like the CAR helped them down the path to bankruptcy.
Leslie is just begging for “Toxic Waste Procedure” first documented By Auction in 07′ early in this thread..
I attended the fourm where DataQuick analyst John Karevoll was speaking at the UCR center for sustainable growth. Most of the attendees were mortgage brokers, agents and RE scmucks, with all his charts and graphs wackyJohn assured the room “there will be no crash”. After the meeting I spoke with several attendees, no one agreed with a “soft landing” or belived good ol John.
Inland Empire had the highest numbers of REO’s in the country in the last dive.
Data quick needs to go “data long”
That is funny and a great anecdote.
So RE analysts even when surrounded by others in the REIC aren’t believable.
Keep those updates coming.
I got a similar invite for the Anderson Forecast in LA/OC but they want a couple of hundred bucks to attend.
No thanks, I have a pretty complete picture from the internet.
I had to get it off my chest, so I wrote this at the fed website with their feedback feature. Don’t know if it will be read, but I feel better:
You guys won’t have to worry about the housing market. By the time inflation is contained it will be COMATOSE. And even if you were to lower, no one wants your phony negative am loans which is what got us into this mess in the first place. I live in Reno, and anyone who buys a house at the prices offered will be upside down for years. And that is just with a fixed loan, which no one can afford because no one has a 20 percent down for a junky 300k house!! And don’t think for a minute that Greenspan won’t be blamed regardless of what he says. And don’t think for a minute that his guilty attempts to jumpstart housing will work because it won’t. I would not want Bernanke’s job because he will look like a villain no matter what. But it was greedy Greenspan and his banker friends, coupled with misplaced supply side economics that has us in this mother of all real estate disasters. Thanks for your time. Don’t let inflation ruin it for those who are frugal. If you do, you are scoundrals once again. Good luck.
It can be rewritten a thousand ways Gary, but well done with the “saver” argument ……
I’ve noticed a few posters here have brought up the argument that the lower Fed rate AT THE BOTTOM (1%) didn’t really affect the lending rate. So, no saving this nightmare with Fed efforts. Bernanke and “his (same)” banker friends cannot find new investors (us) to support the existing value of housing, let alone promote it going forward.
If we do, just take a look at the next generation of future buyers ….. living paycheck to paycheck, and always holding that “move back home” card while working twice as hard as their parents.
Yeah, that’s a plan for the future. Feel better for your comments, I do ……
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10-12-06
More Crammer -
Heckled on Housing
“There are two reasons why housing gets bought: lower interest rates and lower prices,” said Cramer.
And both are true now. “This is not genius,” he said. “It’s the way every business cycle works.”
Stocks such as Lennar (LEN - news - Cramer’s Take) and Centex (CTX - news - Cramer’s Take) bottomed out in July after analysts downgraded them as a group, but they’ve come back up.
Cramer said he’s been getting feedback from hedge fund managers and their minions that he’s dead wrong on housing. But those folks just want to bring stock prices down so they can buy, Cramer said. “Housing stocks have spoken.”
http://www.thestreet.com/funds/realmoneyradiowrap/10314487_2.html
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Free Fallin’
http://www.youtube.com/watch?v=3qn8DH03KaE
BHAHAHAHHAHHAHA!
Just drove by the “KB HOMES MOOLIGHT MADNESS SALE” - My family was the first and only visitors.
Did they do this in other parts of the country? They used a Spotlight also?
DESPERATION!!!!!!!
*MOONLIGHT
“Moolight Sale”
Thank God…for a minute I thought you were talking about Texas.
No, I liked MOOLIGHT better lol
moonlight drive baby
moonlight drive
gonna take a little ride
down by the ocean side
Drive by…. and MOON THEM….
Yep, same thing here in Tucson. Moonlight Madness w/ spotlight, balloons, all the trimmings. Complete joke.
Cramer, what a real estate shill. I hope he loses his shirt. But maybe he is in these just for the short term run. You never know about Cramer. He would have us all buy and he may just sell us all out. He only invests in a few stocks for the truly long term. I wish he would read my letter posted above to the fed.
Does Warren Buffett have a TV show? The reason that clowns like Cramer and Trump spend all their time on TV is that it provides a lot better income than their “investing” skills.
That’s what I think about all the TV investment people, if they are so great at investing why are they wasting time (and money) on TV.
Today’s LA Times “Real Estate” and Celebrity Gossip Section has this wonderful piece on all those nasty stats and concludes…
Don’t Worry
Be happy!
Everyone is now going to rush out and buy more homes!
http://www.latimes.com/classified/realestate/news/la-re-harney15oct15,0,1209869.story?coll=la-class-realestate-news