October 16, 2006

‘Buyers Are Waiting, Expecting Prices To Plummet’

The LA Daily News from California. “In a declining real estate market, condo sales were on the downswing last month, with fewer units changing hands than in any September since 1998. Young potential first-time buyers are waiting, perhaps expecting prices to plummet, said Realtor Mike Lebecki.”

“‘They’re very cautious, and I don’t think they’re thinking their caution through necessarily,’ he said. ‘If all their friends are being cautious and not thinking it through, then they’re all doing the same thing, and they’re going to continue to … buy BMWs and pay rent.’”

“In all, only 109 condos were sold last month in the Santa Clarita Valley, compared with 173 in September 2005, according to the Southland Regional Association of Realtors. There were 178 new listings and 679 active listings. The active listings outnumbered those of September 2005 by 423, a change of 165.2 percent.”

“‘This is not the market for anybody to buy something and then expect to sell it next year for more,’ Lebecki said. ‘It’s a traditional market: You buy something and you hold it for five years and sell it for more.’”

The Press Democrat. “The rush to convert apartments into condominiums has slowed to a crawl in Santa Rosa, where a downturn in home sales and a tightening rental market have prompted landlords to put the brakes on conversion projects.”

“In Santa Rosa, apartment owners submitted plans to convert more than 1,000 units in about 15 complexes. Home sales are down 25 percent and condominium sales are down 35 percent compared with a year ago. Prices for resale houses have fallen 6.7 percent and condominium prices are down 3.6 percent, compared with a year ago, according to The Press Democrat’s monthly real estate report.”

“A 74-unit complex in southwest Santa Rosa won approval from city officials to convert to condominiums a year ago. But the units won’t go on the market until home prices rebound, said Jim Wilson, who is overseeing the conversion project. If put on the market today, the 1,100-square-foot units might sell for $325,000, down $50,000 or so from a year ago when the city approved the proposal, Wilson said.”

“‘The story has changed quite a bit. There’s a glut on the market,’ Wilson said of the home sales outlook. ‘But it’s going to be back, let’s face it. It’s just a matter of time.’”

“In Santa Rosa, more than a half-dozen downtown projects totaling about 600 dwellings are planned or under construction. City officials are so committed to the concept that they eased Santa Rosa’s 10-story height limit on buildings.”

“A $50,000 study commissioned by the city and issued last year found the market could support about 50 to 100 units a year of downtown housing.”

“‘It can probably be quickly overbuilt,’ said developer Hugh Futrell. ‘No one knows how deep the market is. Developers and the city will find out very quickly.’”

“But developers and real estate agents said sales are slower than they would like for the new downtown units coming on the market. Stan Paule, marketing sales director for The Burbank, acknowledged the sluggish real estate market is having an effect on potential buyers.”

“‘I do see some hesitancy,’ he said. ‘Everyone wants value for their money. As resale homes are more available on the market and prices drop, there are other affordable alternatives.’”

“Dan Rumrill, a co-developer of two small downtown ‘live-work’ projects that came on the market in May, said ‘it was just in time for the market to go bad on us.’”

“Billed as ‘San Francisco loft-style living,’ the 1,500-square-foot units are selling for $595,000, with about $150 more tacked on per month for homeowner’s fees. So far, four units have sold, including the one townhouse Rumrill is buying for himself. Three others are in escrow.”

“As an inducement for buyers, the developer is offering to pay the first year’s house payments, which amounts to about $20,000 off the sales price. While there has been plenty of foot traffic, many potential buyers are waiting for prices to go down even more.”

“‘People think it’s going to go lower. They’re maybe waiting for a better deal,’ Rumrill said.”




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235 Comments »

2006-10-16 14:16:55

Slightly related, did anyone here the “editorial” real estate advice on KNX 1070 Saturday night? They recommended offering “cash rebates” to keep a “domino effect” collaspe of housing prices. I wondered why they didn’t recommend Exxon and the rest offer cash rebates to keep oil prices higher.

Comment by nick the wizard
2006-10-16 14:26:47

yeah, nothing wrong with cash rebates if you’re will to pay the tax on inflated house price. I would rather have lower house price and lower property tax, insurance etc. people are generally dumb but i doubt it if they are that dumb.

Comment by reuven
2006-10-17 05:58:59

They are that dumb. I really think that Harry Howmuchamonth, who doesn’t care what the cost is as long as he can get started for $0 down and 999/month for the first six months, would rather live in a “Million Dollar Home” than a $350K home.

Eventually, people will realize. In CA, initial property taxes are fixed at 1%, so a million dollar 4br ranch in Sunnyvale will “only” have 10K/year in property tax.

But in Florida, the legal max is 3% for initial assessment, and actual millage rates are closer to 2%. So if ordinary houses go up to 1 Million, there’s a 20K property tax! So far, nobody’s wincing at this.

(Florida recently repealed the “intangbile” tax–one of the worst taxes in America–in an attempt to keep wealthy folks buying houses in their state and moving there. Houses in FL are already judgement-proof, making a 5 million dollar florida home an essential part of any one worth more than 100Million or so’s portfolio…..

 
 
Comment by bubble buttt
2006-10-16 15:49:07

I would consider a 60% rebate.

 
Comment by TG in Norfolk, VA
2006-10-17 04:48:14

I don’t understand the advantage to the house BUYER of these “rebates” as compared to lowering the house price. In addition to the added property taxes due to the artificially high sales price of the house, don’t you potentially have income tax due on the cash “rebate” they give you?? I saw a house listed for almost $1.5 million in a beach town in Delaware with a listing that trumpeted that there was a “$25,000 decorating allowance” that would go to the lucky buyer. Wouldn’t the IRS consider that $25,000 as taxable income to the buyer?? Then, on top of that, the buyer pays higher property taxes, presumably, because the purchase price of the house is artificially inflated by $25,000. Finally, why should the buyer care whether his good deal is harming the comps for the rest of the neighborhood??

 
 
Comment by txchick57
2006-10-16 14:18:12

Trying to sucker the young in. Word. They aren’t the ones with the money. Obviously the realtor thinks they ARE, however, loaded up with da dumbazz.

Comment by Getstucco
2006-10-16 14:53:50

They are the ones who *had* the money last year when lenders were giving it away for free.

 
 
Comment by OCDan
2006-10-16 14:19:34

After reading this story I want to puke. How many more planned condos are in the pipeline? This is really getting out of hand. In a couple of years when the entire housing industry completely bottoms out, there are going to be a lot of empty buildings and homes, etc. around many metropolitan and smaller areas of the US. I know I am stating that obviuos, but this is really going to get ugly seeing the vacancies and ghost towns.

Comment by wawawa
2006-10-16 16:43:47

planned condos R US.

Idiotic!!!!

 
Comment by KirkH
2006-10-16 17:10:12

They say it’s now a buyers market, we here know that it’s still a seller’s market if you bought the home or land during normal times. Prices can drop 50% in some areas like San Diego and if they have land from ‘98 they can still turn a profit, especially if commodities continue their fall. It’s a race to the bottom for those builders with old land.

Comment by Houstonstan
2006-10-16 20:05:24

Question is : How many builders have ‘old land’ ?
Ans: Depends. Any ‘old’ but ‘good’ land they had, would have been “flipped”. If not, it was wasteland.

Duh-Duh-Duh.

 
 
Comment by peter m
2006-10-16 20:46:53

They’re not making anymore land in Los angeles(except out in SClarita and palmcaster), but they can sure as hell squeeze condos and apts onto any and all available vacant space. Or in the case of Dwtn LA just raze the pico-union district(west of the 110 fwy) and stick some hi-end stacked condo units( 3 projects ongoing). Near Marina Del rey/Mar Vista area along redwood st s. of Washington at least 3 massive apts complexes going up.

Then there are the huge masses of Condos/apts going up along Jamboree rd north and south of the 405 fwy in Irvine(OC).
One really ugly site is the Stadium lofts near Anaheim stadium(Katella and state college blvd). In fact the entire Platinum Triangle development(north OC/Anaheim) area seems to be the ugly duckling of all residential/mixed use developments.

There are hundreds(maybe thousands) of large, medium, and small apt/condo units going up all over LA?Oc. Many are either stalled or going up real slowly. At some site there may be just 3-5 workers total. A few have been abandoned. These are in the marginal areas of LA.

One project which appears to be going full blast is the promenade 133,an ambitious attempt to bring serious loft living into dwtn Long beach. Said to be ready by mid-2007.

 
 
Comment by OCDan
2006-10-16 14:21:18

Geez, based on this story I think I am going to get me one of those high-rise 15-25 story penthouses in fabu donwtown Santa Rosa.

Comment by Ben Jones
2006-10-16 14:25:12

You just gotta dream:

‘Within about a block’s radius of their two-story townhouse are eight restaurants, a nightclub, two coffeehouses, a wine bar and antique stores. ‘I like to pretend I’m in Paris,’ she said’

Comment by sfv_hopeful
2006-10-16 14:51:58

It’s nice she has a good imagination….especially since given the fact she is most likely a FB, she won’t be able to afford to go see the real Paris anytime soon.

Comment by imploder
2006-10-16 17:52:13

‘I like to pretend I’m in Paris,’ she said’

But you are Dearie, you are….. Paris… May of 1940

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Comment by Pen
2006-10-16 14:52:17

‘I like to pretend I’m in Paris,’

Me too!

I like to pretend I’m in Paris…Hilton…..

Comment by Catherine
2006-10-16 15:00:06

Oh Lord. Even pretending, wear protection, dude.

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Comment by Pen
2006-10-16 15:04:21

That’s a given….plus I was just funnin’ wit ya’ll…

 
 
Comment by Apocalypso
2006-10-16 17:00:07

Thanks Txchick57.
Perhaps just a tad off topic, but, without a doubt, the best post of the day!

 
 
Comment by bubble buttt
2006-10-16 15:38:01

ROTFLMAO X 100

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Comment by Pen
2006-10-16 15:47:39

ROTFLMAO?

 
Comment by walt526
2006-10-16 16:15:11

Rolling On The Floor Laughing My Ass Off.

 
Comment by Walker
2006-10-16 16:22:12
 
 
Comment by imploder
2006-10-16 17:49:30

mmmmm…. cupcakes

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Comment by Sammy Schadenfreude
2006-10-16 18:39:18

Ewww, icky. Like the Lincoln Tunnel, only she sees more traffic and doesn’t charge a toll.

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Comment by imploder
2006-10-16 18:51:55

mmm…. sticky….cupcakes

 
 
Comment by peter m
2006-10-16 21:33:38

i think that P Hilton missed her true calling, being a strip tease showgirl.

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Comment by SFer
2006-10-16 14:52:18

Except that for these prices, I could buy an actual apartment in Paris. But I’m sure Parisians are sitting around daydreaming about moving to Santa Rosa.

Comment by Michael Fink
2006-10-16 16:55:04

Didn’t you hear?

Everyone is moving out of Paris, with boxes of cash to buy overpriced POS condos in Santa Rosa. They are totally price insenstivite because they sold their POS in Paris for tons of money…

Come on, everyone knows that!

\:)

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2006-10-16 22:31:09

It’s buckets of cash and a box of stupid.

 
 
 
Comment by Apocalypso
2006-10-16 14:55:58

‘I like to pretend I’m in Paris,’ she said’

LMAO.

Does she also like to pretend she is not retarded?

 
Comment by Sammy Schadenfreude
2006-10-16 18:38:08

Ah yes, Paris 2006. The scent of burning cars as young jihadist wannabes stream from their ghettos to riot, rob, and burn. The intoxicating essence of tear gas wafting on the gentle breezes. An unemployment rate of 12% and a corrupt, dysfunctional gov’t. Hey, wait a minute. Santa Rosa won’t be so different in 2009 or so.

 
 
 
Comment by imploder
2006-10-16 14:24:46

“They’re very cautious, and I don’t think they’re thinking their caution through necessarily,” he said. “If all their friends are being cautious and not thinking it through, then they’re all doing the same thing, and they’re going to continue to ”

Just insert “buy” or “buying”, where “cautious is.

“They’re very buying, and I don’t think they’re thinking their buying through necessarily,” he said. “If all their friends are being buying and not thinking it through, then they’re all doing the same thing, and they’re going to continue to…. buy”

Why didn’t he warn on the “up” side?

Comment by Betamax
2006-10-16 16:06:34

If “they’re all doing the same thing” - i.e. being cautious and not buying - then prices will collapse. So they should keep doing it.

 
 
Comment by turnoutthelights
2006-10-16 14:25:32

“‘They’re very cautious, and I don’t think they’re thinking their caution through necessarily,’ he said. ‘If all their friends are being cautious and not thinking it through, then they’re all doing the same thing, and they’re going to continue to … buy BMWs and pay rent.’”

“Noboby goes there anymore. It’s too crowded” - Yogi Berra

What a brick. Let’s see - twenty-something, paying cheap rent and driving Beemers - talking with their friends about how nobody should buy a house. Somebody help me here - is any single thing wrong with this picture? What a maroon.

Comment by optionedunarmed
2006-10-16 15:16:44

they are “being cautious and not thinking it through” ???
as opposed to last year, when they were being reckless and not thinking it though??? WTF???!

Comment by HARM
2006-10-16 15:47:17

Yes, now that some potential suckers buyers are sitting on the sidelines, rather than bidding prices up to the sky with Neg-am/I-O borrowed money (like they have for the last 5 years), let’s portray them as stupid, heedless, groupthinking lemmings. It’s SOOO foolish to let unimportant things like market data or risk-reward calculations interfere with one’s emotional attachment to that “special” property Suzanne showed them. Demonstrates a lack of “sophistication”, and a “fear of commitment”, to paraphrase D. Lereah & the NYT.

Comment by Pen
2006-10-16 16:47:07

“lack of “sophistication”, ”

I once had a mortgage broker call me “unsophisticated” for being willing to only discuss a 30 yr fixed.

I almost called him an order taker, but I was guest a someone’s house, so I had to restrain myself.

He even put his own kids in IOs and ARMs.

..and I’m the unsophisticated one…

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Comment by AE Newman
2006-10-16 17:18:25

Pen posts ” I once had a mortgage broker call me “unsophisticated” for being willing to only discuss a 30 yr fixed.”

Better to be a simpleton, I had the same thing happen to me….. by a tatooed kid younger than my son.

 
 
 
 
Comment by lefantome
2006-10-16 16:05:13

What the hell is “thinking caution through”? Isn’t critical thinking just part of the process of decision making? Who would not recommend a person making one of the largest financial decisions of their life, allow a significant amount of time for debating the cautious and ‘worst case scenario’ aspects of the decision?

This is clearly the babble of an angry Mike Lebecki. His statement rambles on, and finally begins to make sense to him as well, so he turns to what he knows best;

Insult the prospective buyers by referring to them as “Beemer ownin’ loser renters”, and hope they will be embarrassed into overpaying for property. Throwing caution to the wind would really work out well for Mike Lebecki……

Comment by lefantome
2006-10-16 16:10:32

Truth be known, I’ll bet Mike Lebecki spent his last several commissions on a BMW, instead of shoving that money into a 401K like all those losers …..

Comment by NikiBayArea
2006-10-16 16:15:56

Nah, it must have gone to Meth

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Comment by reuven
2006-10-17 06:26:28

The sad thing is, he may get the last laugh. If you were a careful saver and retire with a couple of million, the government will tax the crap out of you to pay for services for everyone else….

I fear that I’ll end up in the same place when I retire if I had saved nothing….

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Comment by Grant
2006-10-17 08:26:43

Two words: gold and silver. If done properly is untraceable by the feds and therefore can’t be taxed.

 
 
 
Comment by KirkH
2006-10-16 17:22:48

“Beemer ownin’ loser renters”… As opposed to uber-hip bike riding mortgage slaves? Maybe Mugatu was onto something with his Derilicte campaign.

“Let me show you Derelicte. It is a fashion, a way of life inspired by the very homeless, the vagrants, the crack whores that make this wonderful city so unique.”

Comment by lefantome
2006-10-16 18:24:43

Derelict: Any article of abandoned property, especially in maritime law ….. A primarily British English synonym for Abandoned or dilapidated property used to describe buildings and other man-made structures.

You may be on to something Kirk …..

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Comment by awaiting bubble rubble
2006-10-16 20:52:32

That was bizarre, attacking people who refuse to make an their life’s biggest financial decision into an impulse buy! Also, where I live it’s the idiots who bought condos at the top of the market who are driving around in status cars.

 
Comment by Barelyescaped
2006-10-16 21:19:10

I would absolutely LOVE to run into this idiot Lebecki a couple of years down the road when I buy my house at it’s greatly depreciated price. I think he’s just jealous that some of us do indeed own a BMW free and clear and choose to rent instead of being up to out tutus in debt with a house that is puking equity my the day.

Comment by Barelyescaped
2006-10-16 21:22:38

uh oh….time to sign off for the night.
It’s supposed to say “being up to our tutus in debt with a house that is puking equity by the day.” :-)

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Comment by LArenter
2006-10-17 13:49:44

I own 2 BMW late model 5-series free and clear! And I am a proud RENTER!!! We took one of them up to Santa Barbara this weekend with NO worries! Ate where we wanted and did not worry about the cost!

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Comment by need 2 leave ca
2006-10-16 14:25:56

A 74-unit complex in southwest Santa Rosa won approval from city officials to convert to condominiums a year ago. But the units won’t go on the market until home prices rebound, said Jim Wilson

Mr. Wilson is a housing bubble bull wanting to become a basketball coach. He needs some GFs for his players to develop a team there in Santa Rosa. LOL

 
Comment by need 2 leave ca
2006-10-16 14:25:56

A 74-unit complex in southwest Santa Rosa won approval from city officials to convert to condominiums a year ago. But the units won’t go on the market until home prices rebound, said Jim Wilson

Mr. Wilson is a housing bubble bull wanting to become a basketball coach. He needs some GFs for his players to develop a team there in Santa Rosa. LOL

 
Comment by truthbetold
2006-10-16 14:30:48

When they say “San Francisco style”, do they mean the condos come complete with raving lunatics and agressive bums lining the streets?

Comment by Shannon
2006-10-16 15:18:12

Drove up the coast over the weekend. I was amazed at all the bums in Old Town Ventura. Beautiful buildings, some museums, a mission and nice architecture. The shopping area consisted of 40 thrift shops and 25 very expensive eating establishments. I was surprised to see older, wealthy couples walking among punk rockers and many bums. The later were more like qypsies traveling in groups. The thought that has stayed with me is the vast differences between the haves and the have nots. Economic embalance has always been around but it just seems so extreme and prevailant lately.

By the way, I highly recommend the drive up PCH from Santa Monica to Point Mugu and back. Viewing the coast line was absolutely breathtaking.

Comment by imploder
2006-10-16 17:14:48

Ventura’s always been like that. On Main street, towards the end. There are relief organizations, and also I think the Mission has programs. Some of those thrift shops fund them. There used to be board hotels but now I think there’s only one left. Homeless sleep in the river bed and camp grounds. Ex girlfriend had a house there.

Comment by Sammy Schadenfreude
2006-10-16 18:42:00

That’s the cool thing about dating homeless chicks. After the date, you can drop ‘em off anywhere….

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Comment by imploder
2006-10-16 19:09:49

“Tell us about it…. inquiring minds want to know”

 
 
Comment by awaiting bubble rubble
2006-10-16 20:58:21

I lived in midtown Ventura and when they started gentrifying the downtown area. There is some charming architecture and a walkable space, but I really don’t understand how they expected it to ever really attract a Santa Barbara crowd since most of the local residents live in trailer parks, cracker box houses along Ventura Avenue, or, as another poster mentioned in the river bed or along the railroad tracks. I moved to Camarillo after several frightening incidents with skinheads (who hang out in front of city hall) got too close for comfort.

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Comment by imploder
2006-10-16 21:04:41

Person I knew lived up the hill. But I never felt threatened… bored, yes… but not threatened…… (disclamer, I am white trash)….

 
 
 
Comment by AE Newman
2006-10-16 17:29:47

Shannon posts ” I was amazed at all the bums in Old Town ”

It’s the weather. Not too hot , not too cold. I know alot of bum’s and hobo’s it is always the same. They perfer thier lifestyle and will not take any action to change it. It is kind of like people in the Real Estate biz except bum’s for the most part are honest and do know the differance between right and wrong.
BTW this is not a funny, this is the truth as I have seen it.

 
Comment by peter m
2006-10-16 19:20:14

Back in the 60’s and early 70’s Ventura(and main st) was a typical midwestern slice of Americana transplanted out to the California coast (Think Andy Griffith or the small town scene in Back to the future). Probably there are some buildings still standing along main street which reflect that small towm midwestern ambience.

Ventura Gentrificaton started in the 80’s and values for those ancient hillside clapboard Victorians shot up.

Haven’t been thru old Ventura along main st much recently but the section along Ventura ave which parallels the river seems to be the real seedy section.

Comment by Alex
2006-10-16 21:13:28

Ventura has changed in the past three years. Bums have always been there same as Santa Monica and S. Barbara. It is the weather and a place to sleep, the riverbed which attracts them. However, Ventura is a lovely city and is getting better. It built a mult-story parking lot, a Cineplex and now attracts a lot of people on weekends who don’t want to travel to SB. Now it has some good restaurants it is not yet Santa Barbara. Ventura, may well be one of the few areas’s that will not be hit too hard by the run down in RE prices. But it will get hit.

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Comment by happy renter
2006-10-16 15:43:37

“San Fransisco style” means small and overpriced.

Comment by walt526
2006-10-16 16:25:07

Don’t forget underinsulated and mold infested.

 
Comment by bubble buttt
2006-10-16 16:39:56

Oh, I thought San Fransciso style meant lube up and bend over

Comment by Pen
2006-10-16 16:54:38

given your screen name, you may want to rethink making “lube up and bend over” comments… :)

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Comment by imploder
2006-10-16 17:16:21

and…. “Cue Auger-inn”

 
Comment by bubble buttt
2006-10-16 18:16:44

Touche’

You got me on that one.

 
 
 
 
Comment by AE Newman
2006-10-16 17:32:40

posted ” “San Francisco style”, do they mean the condos come complete with raving lunatics and agressive bums lining the streets?”

No not the bums…. But the Realtors do mass in the area.

Comment by Mike in Pacific Beach
2006-10-17 09:53:59

SF really needs to pass some city ordaninces to deal with their problem. The bums can stay though.

 
 
 
Comment by Neil
2006-10-16 14:32:22

“‘This is not the market for anybody to buy something and then expect to sell it next year for more,’ Lebecki said. ‘It’s a traditional market: You buy something and you hold it for five years and sell it for more.’”

Wait a second… if you cannot make a profit *next year* its not justified making the current payments ergo the current selling price doesn’t make sense. When the perceived risk of purchase reaches the height it has now, no one will buy unless there is a perception of a high, low risk, quick return.

No one is going to go out and go from $1,600 to $2,000 rent to $6,000+ month payments unless they think they’re going to get *a lot* for the extra next cash (post taxes).

Let us educate you on the value ratios of a traditional market.
Neil

Comment by az_lender
2006-10-16 17:46:14

And that I’d like to add: five years my a$$. Today I sat in the office of a 69-year-old Boston investment advisor who had called the NASDAQ meltdown perfectly. He agreed with most of you bubbleheads that the year when 2005 prices will be back is closer to 2026 than to 2008.

Comment by tj & the bear
2006-10-16 19:26:32

He didn’t happen to proffer an opinion of the current market, did he?

Comment by imploder
2006-10-16 21:10:42

Excellent question…. usually why it’s not answered.

Hollywood…. Hollywood has disowned me, yet I smell a new job on the horizon……

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Comment by lainvestorgirl
2006-10-16 21:12:57

Sheesh, by then, will any of us really need to buy a house?

 
Comment by lefantome
2006-10-16 22:12:58

He agreed with most of you bubbleheads ……..

(YOU bubbleheads) ……

Yeah …. “Well guys, looks like it’s goin’ to be about 2026 before this baby turns around again, so ….. I don’t know ….. hey, you’re guess is as good as mine ….. I mean, crap – looks like the ‘Sage’ has said it’s 20 years before this thing rebounds again ….. man, can you wait that long”?

“Gosh, market don’t look good, but you’ll be 50 before this thing looks any better ….. maybe best to just get something now so you have a place for the kids to play with the dog ….”.

2006-10-16 22:34:41

You don’t understand peak to peak marketspeak. Please report back when you do.

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Comment by lefantome
2006-10-17 06:38:37

If you would read the post, the allegation was that some see a return to 2005 prices by 2008. Who? This will be half way toward the trough. And 2026? We will have gone through two RE cycles by then. Peak to peak useless speak.

Thanks for your council though…..

 
 
 
 
 
Comment by imploder
2006-10-16 14:32:56

cautious
adj 1: showing careful forethought; “reserved and cautious; never
making swift decisions”

“They’re very cautious, and I don’t think they’re thinking their caution through necessarily,” he said. “If all their friends are being cautious and not thinking it through,….”

So He’s saying they are not doing what he says they are doing?

Wow….. I’m convinced! Where do I sign? Is a X ok?

Comment by dwr
2006-10-16 14:40:36

he’s a realtor, don’t expect too much and everything will be fine.

Comment by Premature Curmudgeon
2006-10-16 16:22:43

How about by waiting a year or so you save enough money (over the long haul) compared to renting to buy a BMW and then some. Why do these idiots pretent that you don’t lose money by having a larger mortgage amount? If he can gaurantee that the same home/condo won’t be available for less money in a year or two, I’ll buy. Otherwise, quit spewing idiotic garbage.

Comment by Premature Curmudgeon
2006-10-16 16:27:06

Correction: “save enough money compared to owning …”

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Comment by Mike in Pacific Beach
2006-10-17 09:57:27

The BMW would hold its value better than that starter condo.

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Comment by Neil
2006-10-17 15:33:37

ROTFL

I look at it this way:
1. Buy today for a home I’d be resigned to.
2. Buy in a year for a home I could settle for.
3. Buy later (two years?) for a home I can be happy in.

I’ll take door #3.
Neil

 
 
 
 
Comment by Backstage
2006-10-16 20:10:04

Have you ever noticed that you seem to get a different realtor being quoted for every article?

I think that once a realtor is quoted, all their realtor ‘friends’ point him/her to this blog for insightful, gentle, constructive criticism. After having their spin and lies gently analyzed (like a fish in a bass-o-matic), they decide never to open their mouths again.

I think Ben must relish it when these dumba$$ quotes appear. He can smell the blood.

Comment by imploder
2006-10-16 20:59:23

Drink from the “ben ‘o’matic”….. aaaaa the smell of it!!!!

 
 
Comment by Mike/a.k.a.Sage
2006-10-16 23:19:40

The self serving quotes are the best. I think they actually pay people to come up with these types of quotes. They’re not easy to come up with, you know. But they are so entertaining to poke fun at. It’s like an art form.

Comment by imploder
2006-10-17 16:09:38

yea instead of Haiku it’s “High Fool” the art of realtor quotation creation

 
 
 
Comment by ockurt
2006-10-16 14:34:11

A Hitch in the Plan

Residents are faced with a tough choice when their mobile home park “goes condo.”

http://tinyurl.com/yn2khy

Comment by MacAttack
2006-10-16 17:03:51

The timing stinks, but it’s not a bad idea, actually. MHPs are an ultimate ripoff - why buy a depreciating asset that costs thousands of dollars to move from its rented spot?

 
Comment by az_lender
2006-10-16 17:54:09

There are a bunch of these condo-ized parks in PHX area. They are the main source of my lending biz. Lots go for low 5-digits instead of low 6-digits. Residents basically enthusiastic. Each park has its swimming pool, billiard room, library, laundromat, etc and water, sewer,cable,trash included in condo fee $100/mo.
It’s a way people can actually live on Social Security.

Comment by imploder
2006-10-16 18:51:03

My friend’s dad inherited a place in Sun City. The original from the 70’s. I couldn’t believe the construction. The roof venting etc. . basically a mobil home, bolted to cement.
Now that is rich comparatively…. Every one there “able to live on SS as well)………

 
 
 
Comment by Louie Louie
2006-10-16 14:34:39

“A 74-unit complex in southwest Santa Rosa won approval from city officials to convert to condominiums a year ago. But the units won’t go on the market until home prices rebound, said Jim Wilson, who is overseeing the conversion project. If put on the market today, the 1,100-square-foot units might sell for $325,000, down $50,000 or so from a year ago when the city approved the proposal, Wilson said.”

Its no mystery to many in the Santa Rosa, East Bay, or South Bay that $325K is unrealistic for 1000 sq ft. In Santa Rosa back in 1999-00 $325K would get you a very nice SFH around 2500 sq ft nice area, up in the SR hills. Many condos were listed for $100-110 sq ft. back 5-6 years ‘98-99. Typically for $120-130K. For Santa Rosa, prices are unrealistic since no jobs can support kind of pricing…

Prime target for deep price reduction… aka “Correction”…

If Dan Rumrill is thinking that it will come back he is sure to suffer real deep pains…. HAHAHAAH Let him bleed, when no one comes to buy.

Comment by Norcal Ray
2006-10-16 14:48:12

These projects are headed for the BK court before an “All Sold out” sign will appear on the site. Salaries can’t support such prices only stupidity can.

 
Comment by Ben Jones
2006-10-16 14:48:23

Those prices don’t make sense in light of the rental costs for a new townhouse:

‘The Jaspers..plan to live downtown in their $1,300-a-month rental, a one-bedroom townhouse.’

 
 
Comment by vioviv
2006-10-16 14:34:57

“‘They’re very cautious, and I don’t think they’re thinking their caution through necessarily,’ he said. ‘If all their friends are being cautious and not thinking it through, then they’re all doing the same thing, and they’re going to continue to … buy BMWs and pay rent.’”

Maybe they just can’t f*cking afford to buy $500,000 condos. My wife and I were both working, making a combined $100,000 a year seven years ago, and we could BARELY afford our $275,000 starter home. We were broke for two years. Our income last year was over $350,000, and it’ll be around $250,000 this year. And guess what - we couldn’t afford to buy our $275,000 starter home (now valued at $950,000). We could easily qualify for the mortgage, but qualifying for a house and affording it are two entirely different things. Simply put, I would tell this realtor to shut the f*ck up, because I refuse to pay $1000 a month just in property tax for the rest of my life.

Someone else mentioned the “it’s just like Paris.” Hell, I’d rather rent and spend a few weeks a year in the real Paris than buy real estate at today’s ridiculously inflated prices.

Comment by lefantome
2006-10-16 16:32:25

Would you adopt me? I come with a fairly nice pension and investments…..

 
Comment by BanteringBear
2006-10-16 21:11:35

I think people are finally getting fed up with this BS. I just read an article in the Reno Gazette Journal talking about an affordable housing development proposed for the Truckee California area. Townhomes ranging from $300-$600k! I don’t know who in their right mind could consider that affordable housing. It is so unbelievably proposterous. Salaries don’t even remotely approach the level needed to support that. Only wealthy folks looking for vacation homes could pay those prices. A lot of these builders (and planners) have completely lost touch with reality. I look forward to their bankruptcies. Bring on the pain for all who contributed to this bubble.

Comment by CA renter
2006-10-17 00:38:27

Yep. Affordable housing for the median wage earner (around $60K in So Cal) would be around $150K, IMHO. That should buy an older 3/2 SFH on a 6,000 SF lot in a “working class” neighborhood — in LA or SD or SF outer suburbs, NOT the Central Valley. The desert & Central Valley areas should have SFH homes around $80K to $130K, IMHO.

In the real world, $500K should buy you a REALLY NICE house fairly close-in to work.

 
 
 
Comment by Jas Jain
2006-10-16 14:36:41


““‘People think it’s going to go lower. They’re maybe waiting for a better deal,’ Rumrill said.””

Reversal of the p-sy-cho-logy is taking hold. Reversal of the price gains will follow at the same rate, or worse, i.e., 20%+ YoY declines for many parts of Californica. Give it another 6-8 months, i.e., strong season for home sales during 2007.

Jas Jain

Comment by turnoutthelights
2006-10-16 14:52:54

Or worst case scenerio. 1% a month for 3 years+ - and the buyers just say no, the sellers bleed and gnash teeth, realtors say it’s just around the corner forever. This is my guess.

Comment by walt526
2006-10-16 17:15:56

I would be surprised if that’s what actually happens. Once ARMs reset en masse, banks will wind up with a ton of properties and look to dump them as quickly as they can for whatever they can get. That will bring the market down pretty damn fast.

Comment by still not time
2006-10-16 19:17:04

I would be surprised if that’s what actually happens. Once ARMs reset en masse, banks will wind up with a ton of properties and look to dump them as quickly as they can for whatever they can get. That will bring the market down pretty damn fast.

Part of the problem with this is banks don’t own the homes anymore, their sold off as mbs to whomever will buy them. So after forclosure who am I buying it from, could be anyone!

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Comment by jim A
2006-10-17 05:03:39

Which does bring up the question, who actually forecloses? Who makes the decision to foreclose on “differently performing” loans? Is it the bank that services (sends the mortgage statements and cashes the checks) the mortgage? Do people who bought the MBSs have any say? How are the costs of defaults passed on to the holders of MBSs?

 
Comment by Grant
2006-10-17 08:37:09

Actually, that statement isn’t true. Banks’ exposure to real estate is at an all-time high so they must be keeping (or buying back) a fair amount of the mortgages they issue.

 
 
 
 
Comment by AE Newman
2006-10-16 17:12:57

Jas Jain posts ” Reversal of the p-sy-cho-logy is taking hold ”

Another great post Jas man!

 
Comment by Backstage
2006-10-16 20:20:51

Jas,

I don’t think it will play out that way. The declines will be slower. 20% by next summer is not realistic. In addition, a 20% decline in housing is such a short time span would indicate a recession in place or knocking on the door. Folks without jobs or scared about losing them don’t buy homes.

Several realtors have said that housing does not crash without an outside cause, like job losses or a slumping economy. This time, RE will be the cause that creates job losses and a slumping economy.

Comment by yogurt
2006-10-16 23:09:45

Many markets are down 20% from the peak already. Check out Sacramento Flippers in Trouble, or Mish’s Global Economic Analysis (google them).

ANd about that recession - it’s already arrived. It’s just not official yet.

 
 
Comment by Mike/a.k.a.Sage
2006-10-16 23:41:03

This is all because of the LSD mindset. If we all put the power of our minds together, we can levitate Manhattan. What was the name of that great experiment in CA? The power of positive thinking and all that crap. Than the trip wears off, and back to reality. CA, the LSD capital, is in for one big reality check.

 
 
Comment by Happy_Renter
2006-10-16 14:43:23

“‘They’re very cautious, and I don’t think they’re thinking their caution through necessarily,’ he said. ‘If all their friends are being cautious and not thinking it through, then they’re all doing the same thing, and they’re going to continue to … buy BMWs and pay rent.’”

How do you like these people talking about renters (me, a lifer) as if we are some lower form of life comparable to an amoeba.

When all else has failed, these Realtors (TM) resort to insults to motivate people into what could very well be the worst financial disaster most people will ever commit in a lifetime.

“Come along now, amoebea err renters, co-operate and get all lined up, I got what y’all need.”

Comment by walt526
2006-10-16 16:05:43

How do you like these people talking about renters (me, a lifer) as if we are some lower form of life comparable to an amoeba.

I really couldn’t care less, actually.

In fact, I would refuse to work with a realtor who believed that buying is a sound financial decision at every life stage. Up until a year or so ago, it would have been silly for my wife and I to even consider buying because our employment situation could have changed dramatically from year to year. Now that we’re more settled in our careers, it still makes more sense for us to eliminate debt and save up for a 20% down payment (plus sufficient cash reserves). The pending real estate collapse will probably keep us out of the market for another year or so beyond what we originally planned–but that’s the upside to adopting a flexible financial strategy. And if in the meantime I lose my job or there’s another unexpected setback, we won’t be financially devastated because we’ve been enjoying a $40,000/year lifestyle despite an $80,000/year gross household income.

So if some college dropout with a cheap boob and nose job and high pitch squeal of a voice wants to look down on us for that decision, they can kiss my ass.

 
Comment by happy renter
2006-10-16 16:12:56

hey Asshat,
Stop using this screen name and any form of it. I’ve been using this screen name, for well over a year, on this blog. I’ve been registered with blogger since october 2005.

http://www.blogger.com/profile/13915737

Comment by Trojan Horse
2006-10-16 16:37:01

Maybe YOU should change your handle to “unhappy renter”. Get over it pal. Don’t worry, the world won’t come to an end just because someone is using a fake name similar to your fake name.

Comment by Ozarkian from Saratoga, CA
2006-10-16 16:43:56

I can’t stop laughing this is about the funniest thing I have read on this blog ever. Thanks!!!!

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Comment by Mole Man
2006-10-16 20:18:23

It just goes to show you that there are a lot of happy renters out there!

 
Comment by Rich
2006-10-16 20:52:54

LMAO, I am sure Ben will be more than happy to quell your kindergarden tiff!!!!!

Ben, just split the crayons up evenly regardless of color and put in a Barney tape, it works every time.

 
 
Comment by happy renter
2006-10-16 17:10:59

I know it’s funny especially out of context. You have to understand that this guy has been following my comments telling me to stop using his screen name. I’ve been using this name on half a dozen blogs for over a year and some guy pops up telling me to change it.

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Comment by nnvmtgbrkr
2006-10-16 17:26:21

…..someone needs a hug……..

 
Comment by imploder
2006-10-16 17:26:59

Uh oh, Now I’m confused. Now Is this the Happy renter who is an ASshat? Or the one who is Unhappy? Or one who……?

 
Comment by happy renter
2006-10-16 17:39:27

Your right! Thanks for the perspective. When you’ve fought the battle as long as I have you can get a little touchy. Pismo Bear would understand.

 
Comment by az_lender
2006-10-16 18:00:38

Both of you happy renters have erred in picking a name that probably describes half the people who post on this blog !!! maybe more than half

 
Comment by happy renter
2006-10-16 18:11:38

“Both of you happy renters have erred in picking a name that probably describes half the people who post on this blog !!! maybe more than half ”
I know, I know, and I’m regretting it as it seems generic now. It didn’t seem generic when there were maybe 50 of us on this blog.

 
Comment by imploder
2006-10-16 18:34:48

I can honestly say I’m not a Happy renter. Glad I Did though.

 
Comment by imploder
2006-10-16 18:41:12

Mort’s handing out hugs if anyone needs one…..

 
Comment by Happy_Renter
2006-10-16 19:21:11

“hey Asshat,”

Umm, is your lack of civility a character trait of yours or you are just having a bad day? I hope you are just having a bad day. We all have. But if not, that is OK with me since we all have run into childishly objectionable people before (in person), and most of us have developed thick skins by now.

“You have to understand that this guy has been following my comments telling me to stop using his screen name.”

The following is my one attempt to ask you to change your screen name:

*******************************************
Comment by Happy_Renter
2006-10-06 14:54:52

Ummm… would you mind getting a new nick like happy renter 428 or something like that? I have been posting as Happy_Renter and I do not want people to be confused. Thanx…
******************************************

This was your repsonse: (Which I am reading for the first time today.)

*******************************************
Comment by happy renter
2006-10-06 15:11:25

“You get the New nick name I’ve been posting as happy renter for years.”
******************************************

Where have you been posting with this screen name for years? And how many years? In this blog? or other blogs? It is not clear from your two posts on this thread. I have been searching with google (TM) and Yahoo (TM) and I do not see any blog entries by a happy renter any older than one year, but I could be wrong. Please clarify.

I am willing to let Ben Jones be the final arbiter since it is his blog. Ben, any suggestions?

 
Comment by walt526
2006-10-16 19:27:53

Lamest. Argument Topic. Ever.

I suggest a King Solomon approach. “happy renter” your new handle is now “happy.” “Happy_Renter” from henceforth you will be known simply as “Renter.”

So are we all happy now?

 
Comment by Backstage
2006-10-16 19:51:58

No walt, only one is happy. The other is renter.

 
Comment by Backstage
2006-10-16 19:54:32

P.S., walt, change your screen name. Walter Cronkite used on May 26th of this year. And he wants it back.

 
Comment by Happy_Renter
2006-10-16 20:02:49

OK, this is lame; and the screen name is far too generic for this blog or any other related blog. (Thanx Walt256 and az_lender.)

From now on I will be blogging as TCM_GUY. (I like classic movies.)

 
Comment by tcm_guy
2006-10-16 20:07:03

testing

 
Comment by happy renter
2006-10-16 20:27:32

My apologies to all including Happy_Renter. If I could access Bens thehousingbubble2 archive I’d find an earlier post.
On this new blog you can Start here 2006-02-27 12:57:39 . If you scroll through you’ll find I’ve spent entirely to much time blogging as happy renter. Understand it’s an old shirt,generic maybe, but should I be the one to have to change it?
As annoyed as you were when you posted
“Ummm… would you mind getting a new nick like happy renter 428 or something like that? I have been posting as Happy_Renter and I do not want people to be confused. Thanx…”
Can you understand?
My apologies to all for gumming up the thread.

 
Comment by tcm_guy
2006-10-16 21:06:49

Apologies accepted. I am using this opportunity to change my screen name sooner than later since it is far too generic to be used in blogs with this topic.

 
Comment by imploder
2006-10-16 21:19:59

If any one wants my name please just start using it: It will further confuse the “Karl Rove Inquisitors ” Please live and stand by my posts… I am grateful

 
Comment by dr strangemoney
2006-10-16 23:47:45

How about… ‘The Poster Formerly Known As happy renter’ (Tpf-Kahr), or maybe you can go the symbol route: ‘+$’ or maybe just: ‘wah! *rattle* *rattle*’ I’m sure if you start posting as “happy” renter everybody will remember your sad, sad tale. And then once a year, on this very day, you can repost the Tale of The Stolen Nickname. I’ll vote for whoever gets the tatoo.

Reasons like this are why we need DNA verification at all access points to the internet. Please write your congressman.

 
Comment by CA renter
2006-10-17 00:47:31

Not sure why all of you are piling on Happy Renter. Yes, the “Happy Renter” without the underscore HAS been posting here for some time. While many here might find it childish that he/she wants the new poster to find a more unique name, it DOES make it difficult to keep track of who is saying what when people are using the same name. It’s not at all unreasonable for the original Happy Renter to ask the new poster to change the name a bit.

BTW, quite a few of us have had this happen to us before (including myself, and the other poster very kindly started using another name). It can color other posters’ opinions of one another and cause unnecessary friction at times.

Back when the blog first allowed comments, many of us were posting as “anonymous”. As things grew, it made it very difficult to carry on conversations.

Anyway, just MHO. :)

 
 
 
Comment by MacAttack
2006-10-16 17:06:11

So sue me!

Comment by Judy Blue Eyes
2006-10-16 21:37:01

so, nu?

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Comment by cactus
2006-10-16 18:10:07

They are just buying BMW’s and renting

 
Comment by SeattleMoose
2006-10-16 18:25:22

Well, given that the only alternative (currently) to renting is buying a home that is about to fall off a cliff just so some RE agent can drive a BMW…count me in with the “lower life forms”….

Besides, I love pinosytosis and phagosytosis.

 
Comment by lefantome
2006-10-16 19:57:02

‘Lefantome’ never existed until I chose it on the AT&T @Home broadband …..

I was the original Lefantome on eBay, circa 1995, but lost it due to inactivity and lack of interest…..

But now…for the low price of $349,995, it can be yours for unlimited use on Ben’s Blog ….. bid with confidence. (powerless seller)

(it is okay to contact this seller with any antidotes, personal attacks, or insulting offers….) :-)

Comment by lefantome
2006-10-16 20:18:28

Special discount to Franc DiAmbrosio, box seat for two at the Curran Theatre 2010…..

 
 
Comment by Mike/a.k.a.Sage
2006-10-16 23:46:38

This is all because of the LSD mindset. If we all put the power of our minds together, we can levitate Manhattan. What was the name of that great experiment in CA? And all that;The power of positive thinking, and all that crap. Than the trip wears off, and back to reality. CA, the LSD capital, is in for one big reality check.

 
 
Comment by stanleyjohnson
2006-10-16 14:46:35

You want plummet, I’ll give you plummet

39 Ranchview Road, Rolling Hills Estates, 90274 $1,368,000*
Status: ACT Orig Price: $1,698,800
this is in California just south of LAX facing ocean on that big hill or whatever call palos verdes peninsula.

Comment by peter m
2006-10-16 22:08:01

Palos Verde Penninsula is a great place to own a McMansion if you like dull quiet undisturbed secluded places. The whole Pennisula is like one gigantic exclusive Country club estate. The thing that folks do in PV is horseback riding. For that kind of money you might as well get a home in Malibu, Santa monica or Brentwood, which have far closer access to beach/Mountain recreation areas plus nearby urban/shopping/entertainment amenities.

The Rocky bluffs/headlands of PV(There are no sandy beaches)might appeal to some folks but have little recreational value. Then there is nearby San pedro, where you can dine on crabs at ports-of-call village and see the Harbor sights:views of docks, cranes, wharfs, fishing tugs, that sort of thing.

 
Comment by pv tom
2006-10-17 06:11:16

LesJohnson, what is the obsession with this house??? Probably third or fourth post… Come on, tell the truth!

 
 
Comment by Louie Louie
2006-10-16 14:48:56

“When they say “San Francisco style”, do they mean the condos come complete with raving lunatics and agressive bums lining the streets? ”

Actually Santa Rosa has more visable crackheads than SF mission district. Southern part of SR is rather run down and looks like Gilroy/Stockton. There are nice areas but very few in the northern parts. The vast majority >90% are aged housing not even worth $125K. Looks more like the old 70’s apt buildings if you can picture that.

Comment by Catherine
2006-10-16 15:07:18

OT about Santa Rose…
What’s the name of the little Italian restaurant downtown, walking distance from Hyatt? Cafe something??? Great food.

2006-10-16 15:13:39

Yeah, let me know I might be in Santa Rosa for a day soon.

 
 
Comment by Norcal Ray
2006-10-16 15:30:38

Doesn’t sound like Sonoma wine country to me.

Comment by ockurt
2006-10-16 16:41:57

norcal, speaking of wine…

Raising a Glass to Wine Bargains
Record Calif. harvest is good news for lovers of the grape

http://tinyurl.com/yfzgzs

Comment by Sunsetbeachguy
2006-10-16 18:29:41

Trader Joe’s has really good Napa wines bottled by Bronco for $4.99. I bought as much as I could store.

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Comment by oliverks
2006-10-16 22:01:37

Grape quality for my Chardonnay was down this year. I am still worried about my Syrah and Zin that have yet to come in.

Oliver

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Comment by Getstucco
2006-10-16 14:51:47

“‘They’re very cautious, and I don’t think they’re thinking their caution through necessarily,’ he said. ‘If all their friends are being cautious and not thinking it through, then they’re all doing the same thing, and they’re going to continue to … buy BMWs and pay rent.’”

Smart kids! You could have already paid off 1/2 a BMW on the amount that anyone who bought a home in San Diego four months ago has lost in home equity.

Comment by JWM in SD
2006-10-16 14:58:44

“‘They’re very cautious, and I don’t think they’re thinking their caution through necessarily,’ he said. ‘If all their friends are being cautious and not thinking it through, then they’re all doing the same thing, and they’re going to continue to … buy BMWs and pay rent.’”

Man these realtors are stupid. No wonder there’s no barrier to entry in that line of work. I guess he doesn’t understand supply and demand curves.

Comment by MacAttack
2006-10-16 17:08:45

Not stupid, desperate. So desperate that he’s accusing his potential customers of being conformists, and thinking that’s the most motivating thing he can say. Just relax and enjoy :) this used-house salesman sit there.

 
 
Comment by nm
2006-10-16 15:18:37

lol - thats pretty funny.

What the difference between a condo and a bmw, both purchased new in 2005? The bmw will only depreciate 30% in the next 3 years.

 
 
Comment by shadash
2006-10-16 14:53:50

‘If all their friends are being cautious and not thinking it through, then they’re all doing the same thing, and they’re going to continue to … buy BMWs and pay rent.’”

My new car and my Rolex were paid for in cash. How’s your equity? I’ll bet my car’s lost less value than your house.

Comment by San Mateo, Bitch!
2006-10-16 15:37:22

That’s exactly it. Right now a $45k BMW is a better ‘investment’ than an overpriced $750k townhouse. The most you can lose on the BMW is about $40k in 5 years. You could lose $250k+ on the townhouse.

 
Comment by imploder
2006-10-16 17:38:50

You fool… I got a great Rolex for $5 at the Saugus Swapmeet. Bought it from a guy named …. uh… Lebecki, yea Lebecki. He only had a few left (like 15 or 20) I said, “let me think about it” he said ” by thinking about it, I was not being cautious” or something I don’t know…. (think I smelt beer on his breath, but hey its was like, 7am, the weekend ya know)

get your self one, saver yer self Thousands!

Comment by shadash
2006-10-16 21:39:35

Ha Ha I know getting a Rolex is kinda silly. But, All I can say is when you’re wearing one it feels neat. Keeps good time to, ;-)

Cut me some slack I’ve got thousands in the bank just waiting for the right house to buy when prices aren’t so stupid.

 
 
 
Comment by Thomas
2006-10-16 14:57:55

Anyone who expects any kind of recovery in housing within the next two or three years is whistling past the graveyard. True, it’s normal for real estate prices to rise long-term. But it’s not normal for them to rise 20%+ for any extended period of time, as they’ve done for the past few years. What’s happened is that we’ve used up a decade’s worth of appreciation in three years. One of two things must happen: a prolonged stagnation, or a drop back to the long-term trendline.

This has been said on this blog approximately 3,483,235 times, of course. What idiot Realtors need to recognize is that the rapid price appreciation after 2001 priced first-time homebuyers, who normally made up about 1/3 of demand, completely out of the market. But just as rapidly-rising prices knock consumer-buyers out of the demand pool, they attract investor-buyers. The problem is that when appreciation stops, speculative investors stop buying. (And with prices this high above rents, long-term investing is difficult to justify, or even manage, given the high carrying costs of property). What makes this painful is that unless prices adjust, the speculators who’ve left the market, aren’t replaced by the first-time buyers they displaced. It’s not a matter of “occupiers out, investors in; investors out, occupiers in” — because the occupiers don’t have the ability to buy, even if they had the psychological desire to do so. (That’s completely aside from the obvious question of, why would anyone want to lock himself into an asset purchase, even for consumption purposes, when it’s likely to decline in value for the near future?)

Comment by Pen
2006-10-16 15:33:14

the Rule of 72 applies here…

20% appreciation per year…house price doubles every 3.6 years
10% appreciation per year…house price doubles every 7.2 years

given either of those rates, the “doublings” would be much too frequent and…it wouldn’t take long before virtually everyone gets priced out…

the low interest rates (teaser and fixed) plus some of the stock market wealth effect helped support the first doubling..(or 100% price increase)

I don’t see anything to provide support the next doubling…or anything even close

lower interest rates…doubtful (we’re still at historic lows)
ARMs, IO, teasers, etc…doubtful (word is out on these, for now)
reduced lending standards…doubtful (reduced to what, a pulse)
stock market wealth…doubtful (broad avgs still off prior highs)
income increases…doubtful (not even beating inflation)
wealth transfer…doubtful (negative savings rate ring any bells)

Comment by Getstucco
2006-10-16 16:23:02

10% depreciation each year — house price falls by 1/2 in seven years.

Comment by az_lender
2006-10-16 18:11:08

More like 6.6 years (no offense), even better.

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Comment by walt526
2006-10-16 15:50:19

(That’s completely aside from the obvious question of, why would anyone want to lock himself into an asset purchase, even for consumption purposes, when it’s likely to decline in value for the near future?)

Why do people buy new cars?

Speaking of which, does anyone else think that one of the first major causalties of the real estate collapse be the auto industry? Outside of housing (and depending on their employer, perhaps healthcare), the next biggest expense for most households are auto expenses. When ARMs are reset, there will be a flood of people trying to restructure finances in order to afford the 60%+ of their take-home pay going to pay for their home. For those determined to keep their homes, it seems to me that scaling back the size of their auto loan in their best bet. So that means fewer new car purchases and probably a lot of young used near-luxury cars (3 or 4 years or fewer, less than 50 or 75,000 miles) hitting the market over the next 18-24 months (whose availability/falling prices will divert the attention of those who can afford a more expensive car to consider CPO or whatever). End result is probably some really sorry looking sales reports across the board–possibly enough to be the final nail in the coffin for one of the Big Three.

Comment by ACCROYER
2006-10-16 16:06:34

It’s already there, Ford is taking a beating right now. The dealerships are dead right now, they are looking at 50% reduction of sales from last year.

Comment by tcm_guy
2006-10-16 20:33:31

Good point Walt. I have read other blogger entries about how some Chrysler Dodge dealerships are so inundated with inventory that they are leasing parking space in other parking lots just to park them. Also, there are rumors that Chrysler is paying their dealerships several hundred dollars per vehicle just to accept delivery of even more vehicles. The pipelines are swelling with vehicles right now, and this is probably true for more than one car make.

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Comment by CarrieAnn
2006-10-17 08:58:52

I noticed local Toyota dealers are offering 0% financing. That’s new.

 
 
 
Comment by Walker
2006-10-16 16:35:28

Why do people buy new cars?

A car is an expense that is often necessary for a job. The price of the car (including insurance, gas, etc.) is amortized over the live of the car.

If properly taken care of, you can keep a car 10-15 years with minimal repairs. I find that the amortized cost of a new car is comparable to what it costs you with an older car when you consider issues like repairs.

The exception to this is one year-old used cars with minimal mileage. You get a lot of depreciation on a vehicle that probably is not in worse repair shape than a new one. Hence these are ideal to purchase. But this is a narrow window, and you cannot always find the car with the feature you want.

Comment by walt526
2006-10-16 16:57:56

Well okay. But most Americans don’t buy a new car and hold onto it for 10-15 years. A good number of people trade it in as soon as its paid off (or before). Or they lease it.

If anyone has numbers, I’d be curious. But I imagine that the vast majority (65% or more) of 10 year-old cars on the road right now are owned by at least their second owner.

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Comment by B. Durbin
2006-10-16 18:54:04

My parents owned the big van for eighteen years. They owned its successor for “only” nine years… but given the price of repairs, and the need to downsize, that’s understandable. Their current car is four years old.

I have a car that is less than a year old… because a hit-and-run driver totalled my paid-off car. (Still unhappy about that.) It’s a model that was too young to have used versions on the road, but it had exactly the feature set we’ll need for the next ten to fifteen years (including six seats AND good mileage.) Heck, we even paid the bit for guaranteed maintenance for seven years, because we had the money then, and a well-maintained car should last a goodly time. (The car prior to the totalled one was about fourteen, and was half again the mileage expected for that make and model.)

Now, most Americans may not do this. But then, to my mind, most Americans are willing to spend an absurd amount of money for a little piece of cloth that is free advertising for someone else (Ralph Lauren, anyone?) I never understood that, either.

 
Comment by imploder
2006-10-16 19:05:53

“Americans are willing to spend an absurd amount of money for a little piece of cloth that is free advertising for someone else (Ralph Lauren, anyone?) I never understood that, either.”

I’ve said this forever as well. People get PAID to wear someone’s logo, name etc. And when you do it. It categorizes you, dates you, through association defines you.

Id rather wear clothes from Penny’s….. Yes… PENNY’S

 
Comment by jim A
2006-10-17 05:14:19

“Americans are willing to spend an absurd amount of money for a little piece of cloth that is free advertising for someone else (Ralph Lauren, anyone?) I never understood that, either.”

An old New Yorker cartoon. Man talking to clerk in store “If my mother had wanted me to have Yves Saint Laurent’s monogram on my shirt, she would have named me Yves Saint laurent.”

 
 
 
Comment by Rich
2006-10-16 20:59:30

Hahah, haven’t you been watching the business news. The domestic auto industry is cooked, well except for Toyota =)

 
Comment by oliverks
2006-10-16 22:07:50

I have been wondering if the fact that the average place in CA went up by the price of a Porsche 911 convertible over 2004-2005 has anything to do with the enormous number I see on the road?

I just love the ones been driven at 40 MPH over Hwy 17 in the morning. At least they’re safe.

Oliver

 
Comment by yogurt
2006-10-16 23:22:18

Why do people buy new cars?

Beacuse it’s cheaper to buy one than to rent one, of course.

Now why do people buy new houses?

 
 
 
Comment by Pen
2006-10-16 15:02:51

What do you fine people define as plummet, in terms of percent?

For me it would be 20% or more off of any 2004 - 2006 sale price, here in Massachusetts that is.

Comment by gepetoh
2006-10-16 15:38:06

I think anything in the 25%+ area from the high would be defined as a plummet. That’s still overpriced on the trend line, but still substantial.

 
Comment by az_lender
2006-10-16 18:16:35

“plummet” seems to carry connotation of a speedy or steep descent, not just a descent of great magnitude. 25% in a year would be plummeting, 25% in 3 years would be sliding. (???)

Comment by Rich
2006-10-16 21:20:57

Wouldn’t a plummet infer a fall bellow the basline? Here in NorCal (Stockton) a return to the NORMAL 10 x rents would mean $330k POS would fall to less than $180k which would be a 45% drop.

Keep in mind this 45% drop would return us back to normal times 98-00′.

Now a plummet would dive past this. In the mid 90’s $650/mo rentals would routinely sell for $70k ($650*12*10=$78) valued by 10 x rents at $78k (with other consessions) or 10% bellow NORMAl.

Some great deals fell more than 30% bellow normal, foreclosures at the courthouse steps sold (for cash) for $40k and could be resold in a month FHA (paint, roof and pest clearance) for $70k.

So for me a plummet would be going from the ignorant crap at $330k today falling to $130k at the courhouse steps in foreclosure.

The thing is being a landlord is work. It is even harder work (and costlier$$) with property that demand repairs before they can be let. This work must earn money before people with half a brain will re-enter the market. All these ignorant IO, ADJ, NEG AM SUPER INVESTORS must be replaced with real landlords that can do this for a living without thought of a lender bailing their asses out.

I feel a totally FB at the top of the bubble paying $330k makes envisioning courthouse sales at $130k for the same property (now dammaged) and easy possibility.

 
 
 
Comment by Pen
2006-10-16 15:08:00

and they’re going to continue to … buy BMWs…….from Realtors. Mtge brokers and flippers….

Comment by asuwest2
2006-10-16 20:48:28

ah, saw a Jag XK8 sitting in front of the development sales office here in Irvine on Sunday. Huge orange FOR SALE sign filling the windshield. really was 10k off book (hadda look!). Looked cherry, too! I asked, but he wouldn’t give me a 10 year, IO on it.

 
 
Comment by formerlahomeowner
2006-10-16 15:29:14

I rent a townhouse in Valencia. The Madison condo conversion the realtor is talking about is nice but not worth the money. It opened about a year ago with and they were offering a 1-bedroom condo to current complex renters for $410,000 and $430,000 for non-renters. About six months ago, similar condos were reduced to high $300s and now they are listed for high $200s. Ouch!! Those kids who waited can buy a few BMWs with the money they will be saving just for waiting.

Comment by Desmo
2006-10-16 18:38:00

former, While at lunch today I was looking thru one of those Pennysaver ad magazines, they are stil trying to rent those Madison condo’s out with a monthly lease. Sales must be so bad to do that. btw, those condos look good from the outside but are pos.

Comment by formerlahomeowner
2006-10-16 19:32:32

Desmo,

That’s so funny. When my lease was expiring last January, I inquired at the Madison (used to be Prado) for a lease and I was told that they no longer are renting due to condo-conversion. Now they are renting again?!!! Somebody here called it “REPARTMENTS!”

 
 
 
Comment by tom stone
2006-10-16 15:38:23

i’m sitting at 2nd and E st in santa rosa right now,and i frequently walk by these condo projects at lunch,just to see how they are coming along.the best of them are of average construction quality.however you can get a $1m house in the best part of town on a 1 year lease for less than you would pay for a $350k condo.the location of these condo’s in downtown means that they are noisy,the air quality is bad,and there is no shortage of impaired and marginal street people.one of my favorites is right next to a large multistory parking garage,on a busy street,and it is built of stucco over cardboard,or whatever that formaldehyde outgassing stuff is called…glue and pulp.

Comment by just another boomer
2006-10-16 17:13:28

Oriented Strand Board ( OSB )

Comment by jim A
2006-10-17 05:20:39

Back East, where building codes don’t worry about earthquakes the walls often only use OSB at the corners. Most of the wall is this stuff that looks like 1/2″ thick rigid sheets of tarpaper. If you’ve got steel toes on and avoid studs the average person could kick through an exterior wall.

 
 
 
Comment by Mo Money
2006-10-16 15:44:02

One of my co-workers is very excited. They are renting and wanted to buy a house soon but one of the extended family is a realtor and told them to wait till end of next year and pick up a foreclosure. Foreclosures are apparently accellerating in the bay area.

Comment by walt526
2006-10-16 16:08:55

Why only wait until the end of this year? There’s going to more attractive low-hanging fruit around this time next year if not beyond. Anyone who purchases a home between now and June 2007 (at the absolute earliest) is just setting himself up to catch the proverbial falling knife.

Comment by Pen
2006-10-16 16:38:22

June 2007 is way too far off in the future..hmm..wait a minute..let’s see..we are in mid-Oct, two weeks from Halloween, then four weeks from Thanksgiving, the four/five weeks from Christmas, then the New Year rushes in, then Super Bowl Sunday..and by then June 2007 is only five months away…

point being..waiting until June 2007 really ain’t that long a wait, now is it?…

time flys for fence sitters..

I bet it feels like sand through the hour-glass for sellers and brokers…

Comment by Neil
2006-10-16 17:03:08

June 2007 is the earliest to buy… maybe.

I’m thinking by then even Joe sixpack will be too scared to buy. But we have to wait for the later “waves.” I’ve seen far too many flippers dodge 2006 via renting. Thus, I won’t buy until I see those properties back on the market in mass or foreclosed upon.

Interesting times ahead…

My prediction is June 2008 is the earliest to buy.

We’ll see… Since my savings are growing as a “fence sitter,” I can be very patient. Mr. and Ms. seller, how is that Alligator bite doing? Has it eaten an arm and a leg yet?

Neil

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Comment by AE Newman
2006-10-16 17:48:29

Neil posts “My prediction is June 2008 is the earliest to buy.”

This really gets to the only of the two questions this Board exist for. When to sell and head for ground, and when to rebuy.
The rest is an idle waste of time in my view. I only have one bite out of the apple. Last year I made my first move and only have one more to make.
As this event unfolds I will be looking forward to more post like this. Perhaps we will all buy one by one and leave this place?

 
Comment by az_lender
2006-10-16 18:23:22

I am fascinated with your final question and all it implies. For example it implies we are really living here in Bubblehead land rather than in our rented properties. That’s a possibility, but I lived in rented property age 17-26, age 34-48, and age 50-58, as well as now. So I might “leave this place” w/o ever buying another house.

 
Comment by Neil
2006-10-16 18:30:25

AE Newman,
I do think that the highest value these blogs provide is information on when to buy. (Hint, the time to sell has past as most of us know.) But it also provides information and confirmation that holding off is the smart move currently. Some of it is entertainment. ;)

Az_lender: I hope you are in good enough health to buy again. You should be much less stressed than many a FB right now!

Neil

 
Comment by tcm_guy
2006-10-16 21:36:43

In terms of when to buy, this might help.

We can expect a stream of foreclosures three years out after loose credit is made tighter, since some of these ARMs reset in 3 years. Nobody here is reporting any visible signs of tighter credit (at least not yet), so the (decreasing) stream of foreclosures will continue through at least 2009 (and counting).

 
 
 
 
2006-10-16 16:37:51

Why would anyone bay if prices won’t increase next year but the implication is they will decrease. Wait 5 years to make a profit, or let someone lese make a profit today and you wait 5 years.

hmmm… interesting concept.

 
 
Comment by safe_as_apartments
2006-10-16 16:07:49

Here is a fantastic article about the housing slump in general, and the Boston market specifically:

http://www.boston.com/news/globe/magazine/articles/2006/10/15/the_homeowners_day_of_reckoning/?page=1

Comment by Pen
2006-10-16 16:16:15

I read this yesterday.

People just never learn..

Stupidity is like a tax on the naive…..

 
 
Comment by txchick57
2006-10-16 16:21:14

Unbelievable. They’re still at it

http://dallas.craigslist.org/bus/221516940.html

Comment by Pen
2006-10-16 16:32:36

I’d love to be a State’s Attorney General and show up on their doorstep…

 
Comment by Mo Money
2006-10-16 17:01:14

damn, missed it by minutes……deleted

Comment by txchick57
2006-10-16 17:08:07

No problem. I grabbed it to send to the AG here.

Make $30,000 in 30 DAYS!!!
Reply to: job-221516940@craigslist.org
Date: 2006-10-16, 4:53PM CDT

First of all this is a 3 hour contract position with my company, so therefore you do not pay me anything ever!

Our process is simple. My company (PublicHomes.com) hires people with a credit score of 700 or higher to assist in the funding of homes. The payment for their services is $10,000. We typically can do 3 homes in a month. So this would equate to $30,000 in 30 days, with about 3 hours of total work and ZERO risk.

We have a flawless track record with other Credit Investors, builders, title companies, mortgage companies and lenders.

Check out our site and you will see the builders that we work with and the homes that we currently have purchased.

Our company has been in business for almost 2 years utilizing the same business model.

If you are interested in makeing $30k in 30 days, then feel free to contact me at anytime via phone or stop by our corporate offices in Plano for more information.

Thank you

Eric R. Marascio
CEO/President
PublicHomes.com, LLC
(469) 368-9800 Main

Job location is DFW

Compensation: $30000

This is a contract job.

no — Principals only. Recruiters, please don’t contact this job poster.

no — Please, no phone calls about this job!

no — Please do not contact job poster about other services, products or commercial interests.

no — Reposting this message elsewhere is NOT OK.

Comment by Joe Momma
2006-10-16 17:55:58

Why does it not surprise me this slimeball is from Texas?

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Comment by SeattleMoose
2006-10-16 18:34:02

A fool and his money…….

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Comment by imploder
2006-10-16 19:31:44

txchic57… you are a real ass kicker and I can admire that. Anyone that gets themselves busy with getting thing done is all right by me. (as referring the post above to the AG) Wish I’d seen the posts that brought Mort to the edge. Having read your skill at the insert, I’m sure you expected it. Did you ever practice trial law… If not. I bet you would enjoyed it cause you are quite the “advocate”

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Comment by FutureVulture
2006-10-16 23:06:36

No problem. I grabbed it to send to the AG here.

You da woman, txchick!

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Comment by tcm_guy
2006-10-17 06:10:04

From the PublicHomes.com web site:

“All the normal rules concerning credit, debt ratio, proof of income and yes, even down payments are thrown out the window”

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Comment by Mike in Pacific Beach
2006-10-17 15:17:20

The old straw buyer scam.

 
 
 
 
 
Comment by Anthony
2006-10-16 16:56:58

“‘They’re very cautious, and I don’t think they’re thinking their caution through necessarily,’ he said. ‘If all their friends are being cautious and not thinking it through, then they’re all doing the same thing, and they’re going to continue to … buy BMWs and pay rent.’”

This describes me perfectly. In fact, I just bought a 2003 BMW (in cash not credit) and am very happy renting my house. Cars are expected to depreciate, but at least I know the person who bought it before me paid more…I’m not the sucker holding the bag on some piece of overpriced property. Would I have bought my BMW at twice its original 2003 selling price? Of course not! So why would I buy a fundamentally depreciating asset like a house at twice its 2003 price?

This lady needs to get a clue. Stop blaming the smart people for their inaction in buying property. No body is entitled to twice their 2003 price! What I saved by renting for the last 10 months paid for my BMW in full.

Comment by 4shzl
2006-10-16 19:10:28

“Cars are expected to depreciate.”

Not necessarily. Bought a ‘70 VW convertible used in 1972 for $1500. Put 100k miles on it and then resold it in 1979 for $3000. Never expect to have as much fun with a house as I did with that car. ;>)

Comment by walt526
2006-10-16 19:40:53

My sister bought her Prius in early 2004 for $21k. Last April, it was totalled. Her insurance company gave her $22k for it, based on what two year-old Priuses (Prii?) with 30k miles were going for in Berkeley at the time.

 
 
Comment by Auction Heaven in '07
2006-10-16 19:27:22

I also happen to be the proud owner of a BMW, and a Renter.

If you understand cars, you know how to buy BMW parts online and have your local mechanic put them in for you at half price.

This requires being honest, studying, and developing a good relationship with another human being. Not sure realtors understand this concept.

Since I bought my 328i I have replaced exactly one hose, and done oil changes on schedule. Not with the BMW dealership, of course, who would rape me, but with my honest mechanic.

My car is wonderful and I will be driving it for years to come, since it happens to be WELL MADE. Another concept lost on realtors, who are under the illusion that Mercedes Benz’s are well made. Might as well buy a Ford Taurus. Big engine that breaks down a lot.

As for renting, I live next to the ocean, and pay about 1/4 of what it would take to ‘own’, or, as it were, ‘rent’ from the bank.

My wife and I found our dream neighborhoods.

That’s important.

We haven’t found a dream house.

That would be dangerous.

In our dream neighborhoods ALL of the homes for sale all already down 12% from their prices last May. And we’re just getting started.

We aren’t particularly interested in one house for a reason: we aren’t about to get ’sucked out’. (Surfing term).

Our feet are firmly planted in our cozy 328i, that never breaks down, while watching the rip current take all these overpriced flippers out to sea.

When the current subsides, and prices are down 50% from their spring 2006 highs, we will jump in.

Only 38% to go.

The other option, which Mr. Realtor chose to either ignore or is too young to understand, involves negotiating the price DOWN.

If sometime soon we can take a seller who has already cut 20-30% off his/her asking prices and knock them down to 50%, that will work, too.

Either way, we win.

We get to live next to the ocean in our wonderful, speedy car that never breaks down while Mr. Realtor applies for waiter positions to serve the very customers he now insults.

Let’s see if we leave him a tip.

Comment by peterbob
2006-10-16 23:21:06

I don’t understand why some people tie up so much cash in a car. My car is a BMW that is almost 20 years old. In great shape, and I don’t mind babying it. It’s fun to drive and reliable. It seems like a lot more sense to me to pay low insurance and registration (in CA) than to drive something newer that depreciates.

I live a twenty minute walk from work, but that is too long, so I’m restoring my 1969 Raliegh Superbe 3 speed. It’s a tank that has cleaned up real well. Maybe I’ll splurge $60 for some new alumnium rims!

I also rent, and I don’t anticipate buying until prices are off about 45% from peak. Maybe that day will come soon.

 
Comment by Left LA Behind
2006-10-17 11:04:33

First car: 1972 2002 (used), second car: 1982 320i (used), and third and current, 2000 328ci (new). ALL paid in cash. And I, too, found an honest mechanic who is like a friend. Great cars and a joy to drive.

 
 
 
Comment by flatffplan
2006-10-16 16:57:15

do taxpayers ever get mad ?
sheople
“A $50,000 study commissioned by the city and issued last year found the market could support about 50 to 100 units a year of downtown housing.”

 
Comment by Tweedle-Dee
2006-10-16 16:59:19

Longtime lurker, haven’t posted in months …

Well, i did it. I got lucky. I sold my house. I really hope I’m not jinxing it by posting it on here, but the closing date is scheduled for the end of this month. They’ve put down a deposit. Had the walk-through. Had it appraised.

The key? Lowering the price. I’m in Florida in a ‘boom’ market … after only one person came through in 2 weeks, i dropped it 20k. Then i got an offer - for 20k less. I countered with 5 k more (needed to sell, I’m moving) and they took it.

So in theory, I lowered the price 35k and it sold in about 2 weeks.

The upside is that I’ll walk away from it having made a nice chunk of change in less than 2 yrs (after everything, 52k). I wish i could have stayed 2 yrs and avoided cap gains, but i had no choice.

Good buddy of mine has refused to lower his price and he’s sucking wind. He’s paying 2 mortgages starting next month, and i keep telling him to just lower it and take a profit.

We’ll be looking to buy when the market bottoms out, hopefully in the next 8 months.

Comment by Paul in Jax
2006-10-16 17:37:53

I hope the deal goes through - chances are it will, but there’s a not insignificant chance it won’t. (Hope that deposit is sizeable.) Don’t count your chickens til they’re hatched and if you have an agent make sure she stays on top of every step of the transaction and instruct her to notify you *immediately* if even the slightest problem arises. Think of that extra $5K you got in the counter-offer as money to *immediately* take care of any and every trivial issue that the seller might raise.

Good luck!

Comment by waaahoo
2006-10-16 18:23:53

P in J

That’s exactly what I told a customer of mine. He has a realtor buying his house for cash and he was gonna argue about 5k worth of fix ups if they were mentioned in the inspection report.

 
Comment by cactus
2006-10-16 18:25:56

Yes good luck keeping the deposit if the buyers back out.

 
 
Comment by Catherine
2006-10-16 18:17:39

Be SURE the lender is on top of this. I know we have some great lenders who post here, but most are lazy and stupid. They’ll wait until the last minute to check on funding….sometimes if it doesn’t fund on time, the buyers can back out. Not to scare you, but call the lender yourself to make sure he/she is on top of it. (But you already might have a smart broker working for you…but still!) Did the buyer order an inspection? Make sure you stay on top of any requests to fix what you agreed to and watch the time limits. Buyers will use any excuse to back out, and you’d be surprised what it could be. Read your contract again, and check on final walk-thrus, etc….make sure you know every date/time limit on any contingent agreements.

 
Comment by az_lender
2006-10-16 18:33:13

Congratulations. Don’t count on that 8 months idea, though.

 
Comment by Barelyescaped
2006-10-16 20:57:41

Best wishes to you, but don’t jinx yourself! I had a buyer earlier this year for a house I have since sold. The guy decided to pull out of escrow the last day before he would lose his deposit…..all inspections had been passed and everything. I wasn’t mad at him for changing his mind…I knew the market was already starting to turn in Jan 06′. I was pissed that he had submitted an offer in the first place; the house was out of commission for 4 weeks and time waits for no one. My realtor initially put the “sold” sign up right after the final inspection was done. When I went into escrow for a second time, I didn’t allow him to post it until the day we were moving out!

 
 
Comment by 4shzl
2006-10-16 19:18:54

Oct. 16 (Bloomberg) — “Goldman Sachs Group Inc. says the Federal Reserve’s benchmark rate will fall from its current 5.25 percent during 2007, ending the year at 4 percent. The economic gurus at JPMorgan Chase & Co. see it rising to 6 percent.”

And JPM is the outfit that just recommended you home builders to your stock portfolio. Go figure.

2006-10-16 22:42:42

But who has an inside man in the White House?

 
Comment by Uncle Git
2006-10-17 07:49:16

And this morning the core CPI jumped…..

With certain Fed members jawboning inflation still they may just raise again - but not until after the elections I expect - gotta give their masters all the juice they can get.

 
 
Comment by Home_a_Loan
2006-10-16 20:46:47

All this bubble-sitting reminds me of an article my friend sent me several years ago. I wish I could remember the source, but it was called something like “Why it pays to slack.”

The gist of it was how it could pay to take off for a couple months if you had a huge calculation to perform on a PC. Because of the doubling of computer power every 18 months, the fastest strategy to getting your computational project done was to wait a few months for computers to become faster, then get a computer and start the calculation.

Anyway, the housing bubble made me think of this. Now, it actually *pays* for potential buyers to slack - i.e. wait “on the sidelines” paying rent. The rent cost much less than the mortgage carrying costs, taxes, etc., and prices are going down, so might as well sit tight for a few years.

The OC register a couple years ago had a front page article with a headline like “Median OC Home Appreciates $350 Per Day!”. Now the headline could be “Renters Make $100’s/Week by Not Buying!”.

 
Comment by Darth Toll
2006-10-16 21:42:13

Just when we thought inventory was going to take a breather for the rest of the year - surprise! Sacramento inventory makes an unexpected jump. Meanwhile flippers are losing their a$$es and the pending rate is just awful. MUAHAHAHAHA!!!!

Holy crap this is getting ugly.

http://sacrealstats.blogspot.com/

 
Comment by HonestAppraiser
2006-10-16 23:17:02

There is no end what these greedy people will do…WTF
http://austin.craigslist.org/cas/221715586.html
I will post this again Tuesday
Whats wrong with the mortgage industry

Comment by txchick57
2006-10-17 03:30:40

Oh boy. I could rant for an hour about this and why idiots like this make it difficult for other women. It’s sick on so many levels. I just hope that most of you guys can keep the blood at the top end of your body and your wallet in your pocket when some bimbo with a pair of Dow Cornings puts this move on you or tries to use sex to sell you a house. Damn, this stuff makes me ill.

Comment by MazNJ
2006-10-17 08:24:02

Alrighty, I might have to stop reading at work, I’ve been flagged twice today… *grumble*

 
Comment by Grant
2006-10-17 09:08:17

Wow, that takes marketing to a whole new level. It might set up an interesting “grifter” dynamic. Assume that her post isn’t on the level. She doesn’t really want to have sex with her “clients” but just wants to drum up business. Then assume that her clients don’t really want a home equity loan but just want to have sex with the realtor. Which side blinks first? “No, no, first sign the paper, then we’ll play”.

 
 
 
Comment by Chad
2006-10-17 11:45:04

“‘I do see some hesitancy,’ he said. ‘Everyone wants value for their money. As resale homes are more available on the market and prices drop, there are other affordable alternatives.’”

This one actually made me groan out loud. I just find it sickening how they still throw around words like “value” and “affordable”. Somebody shoot these guys.

 
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