“Buyers Have Finally Taken Off Their Rose-Colored Glasses”
The Press Telegram reports from California. “California’s median home price will drop in 2007 for the first time in 10 years, according to the California Association of Realtors. ‘The housing market has slowed down at a much faster pace than anybody has anticipated,’ said Robert Kleinhenz, a CAR economist.”
“The CAR forecast also calls for sales to continued to decline in 2007 by 7 percent. The projected fall off for 2006 is 23 percent, meaning the worst of the sales fall off may be behind us, Kleinhenz said. ‘I’ve become very fond of saying things will be less worse,’ he added.”
“‘While we recognize that the frenetic sales pace of the past four years could not continue indefinitely, the housing market in 2006 did not fare as well as we initially expected,’ said C.A.R. Chief Economist Leslie Appleton-Young.”
“‘Looking to 2007, we expect that some regions of the state, including the Central Valley, San Diego and Riverside/San Bernardino regions, will experience sales declines greater than the state as a whole,’ she said. ‘That also holds true for several second-home markets, including the desert areas of Southern California and the Wine Country.’”
The Sacramento Bee. “Home prices are still falling, and this time it doesn’t matter where you live. ‘Prices are dropping every day, and they’re not little any more,’ said Mike Toste, a real estate agent in Antelope.”
“‘We can see the prices coming down,’ said Diana Wallace, a Sacramento resident who hopes to buy houses to rent out for retirement income. ‘I feel sorry for these people. But I want a deal. I want to get the best value I can. But I hope they don’t drop too much because I have a home myself.’”
The San Francisco Chronicle. “Across the state, inventory more than doubled in the past year. Bay Area home prices fell last month for the first time in more than four years. ‘This is an enormous real estate bubble, bigger than we’ve ever seen,’ said economist Christopher Thornberg. ‘You’ve got to pay the piper.’”
“Claudette Center is trying to sell a Bernal Heights home that belonged to her uncle. After gutting the kitchen, refinishing the floors and putting in new bathrooms, she still hasn’t received any offers, and traffic at open houses has been slow, she said.”
“‘Last week nobody came,’ she said. ‘The first week it was mostly all neighbors.’”
“She is considering lowering her $829,000 asking price. ‘I understand that if I really want to sell the house fast, I’ll probably have to drop the price,’ she said.”
The Santa Cruz Sentinel. “What goes up must come down, according to Isaac Newton’s law of gravity, and that may tell the story of the Santa Cruz County housing market, too. The median price for single family homes in September was $743,000, the second consecutive decline from this year’s peak of $775,000.”
“‘We’re going to see every county go a little bit negative within the next three or four months,’ predicted Dataquick analyst John Karevoll.”
“‘It is definitely a buyer’s market,’ said (realtor) Dave Mann in Aptos, pointing out the record number of listings. There are 1,361 homes listed for sale, 49 percent more than a year ago and the highest in 10 years. The 132 homes sold in September represent an 11-year low. Sales were down 41 percent from one year ago at this time, and down 51 percent from two years ago.”
The Voice of San Diego. “San Diego homebuyers have to sift through nearly 30,000 new and resale homes currently on the market. The number of homes for sale is up more than 50 percent from the third quarter 2005, and up 135 percent from the same period 2004.”
“And then they face a slew of aggressive marketing techniques from homebuilders. Indeed, of the unsold units in the county last quarter, about one-quarter were newly built units. That’s about 7,600 brand new homes, sitting unsold. And more than 6,400 of those are in the attached sector, condos, condo conversions and townhomes. And that doesn’t count the number of housing units under construction, more than 10,000.”
“The county’s 4.4 percent drop in overall median prices was announced last week by DataQuick. That was driven largely by a 17 percent drop in new home prices, declining from $498,000 in September 2005 to $414,000 last month.”
“‘This cycle is pure supply and demand, just like in musical chairs,’ said Jack Haynes, a Countrywide Financial VP specializing in homebuilder loans. ‘The music stops and you have too much supply.’”
“Foreclosure activity in San Diego county last month continued to rise. September’s 403 trustee sales were more than double the 122 such sales last year. For REOs: There were zero in January 2005 and four in September 2005. But that rate increased nearly 5,000 percent to last month’s 198.”
“‘The negative-am ARMs are catching up,’ said Phyllis Ingraham of e-foreclosuresdata.com. ‘You either hang on and make the payments to ride this through, or if you can’t afford it you go into default,’ Ingraham said. ‘It could be several hundred more a month.’”
“Residential foreclosure activity in California reached its highest level in more than four years in the third quarter. Lending institutions sent 26,705 default notices to homeowners in the state during the three-month period ending in September, DataQuick announced.”
“The median age of the home loans that went into default last quarter was 14 months, and more than half were originated in 2005. On primary mortgages, homeowners were a median of five months behind on their payments when the lender started the default process. The borrowers owed a median $9,829 on a median $306,000 mortgage, DataQuick reported.”
“On lines of credit, homeowners were a median six months behind on their payments.”
The Press Democrat. “For the second straight quarter, mortgage defaults jumped in Sonoma County. Default notices increased 83.3 percent in Sonoma County during the third quarter, following a 53 percent increase in the second quarter, according to DataQuick.”
“The Bay Area experienced an 89.2 percent increase, with Solano County’s 171.3 percent increase being the largest.”
“Buyers in the region, which includes Silicon Valley, were not in a hurry to buy homes last month and likely will not be over the near term because they expect home prices to flatten or tick down.”
“‘Buyers have finally taken off their rose-colored glasses. Once interest rates started to go up that made the housing market slow, which in turn made buyers wonder if this is the right time to buy,’ said Cynthia Kroll, senior regional economist at the University of California, Berkeley.”
Bottom Feeders hold all the cards.
now i just relax and wait.im living off my interest from sold properties in fall 04.im 47 and semi retired,i work when i want.
The “rush to the exists” will surge in 2007 as people who were planing on selling in the next couple years, decide they better get out now and add to the inventory of those forced to sell. And the builders keep on building.
2007’s going to be ugly . 2008 even worse for prices.
$250,000 to $500,000 is a 100% increase.
$500,000 to $250,000 is a 50% decrease.
In absolute dollars the small percentage declines, were starting to see, are are more painfull than they appear on the surface. And for those people with a lot of leverage, it will be devestating.
GOOD POINT
And for those people with a lot of leverage, it will be ‘foreclosing.’
Actually it will be more painful for the long-term holders who will feel the sting of a long held gain and regret of not selling sooner. The flippers never had anything to lose, it was all house money. Easy come, easy go.
As a long-term RE holder, I can honestly tell you I couldn’t care less about the recent loss in value, if any, of my properties, I never took it seriously to begin with. But then, I’ve been reading Ben’s blog each day so I’m more informed than most.
I hope my (new) landlord thinks the way you do. I don’t want to buy (my 1st purchase) until this mess is near to running its course but recently had to move from one sfh rental to another because the owner wanted to cash-out. Not a flipper. Just an elderly man who had held this particular rental for a very long time and didn’t want to be holding it thu a prolonged down period. Seems understandable to me. I’m sort of expecting a fair number of (long-term) RE holders to want to get out as this plays out over the next year or so (or longer?) … depending on how abrupt the correction is.
I agree with lainvestorgirl. I think it’s worse to buy into the “I’m going to be a rich flipper” and then have reality come crashing down. Especially when they read about the earlier flippers who made so much money. That will be so, like, totally unfair.
Hey lainvestorgirl, you sound awfully sensible - can we rent one of your properties when we move there next year? =)
I’ve heard several Realtors and sellers say they were taking listings off the market so they could re-list in spring of 2007. No doubt, that inventory increase will be more dramatic than 2006, IMHO.
2006 is just a warm-up. 2007 is when the bloodbath begins. In 2008, RE will get hammered. I don’t expect prime buying time until 2009-2012, at the earliest. Let ALL the FBs get shaken from the trees. No sense in jumping in too quickly.
Yep. How many FBs were told (and foolishly believed) that they could just re-fi or sell when the mortgage reset in a few years? Well, it looks like plan A (re-fi) is becoming harder to do with the new federal guidelines (and hopefully the states will be following soon), and plan B (selling) is almost impossible. So, I guess it’s going to be plan C - foreclosure.
What’s so sad, and pathetic, is that you listen to folks lately and you’re hearing the “it’ll all turn around next spring”. They’re drinking the Koolaid again. One LO that works for me has re-done her HELOC and maxed-out the equity withdrawl so she can make it through the winter. Sort of a “burning the house to stay warm” type of thing. She made the comment the other day that if she can just get to next spring it’ll all be good. Unfortunately, not only will it not be good, but the remaining equity she pulled out of her home will put her at least 50K-75K under-water by next spring (in addition to the 50K she’s already lost).
“One LO that works for me has re-done her HELOC and maxed-out the equity withdrawl so she can make it through the winter….She made the comment the other day that if she can just get to next spring it’ll all be good.”
Talk about nerve. I bet she thinks she can just live off her house and then some fool is gonna come pay for her house and her line of credit. Well, she is going to be waiting a long fricking time. Is she in Reno? I’ve been keeping my eye on that place, and it is curtains. Hardly anything seems to be selling. I have seen the same listings for over seven months in the zip code I have been tracking. Talking with friends and family, the number of for sale signs is absolutely remarkable. And not much traffic. The things just sit and sit and sit. People cannot afford $450k for some 1950’s sh!tbox. What has become of our society?
not to mention the increased monthly debt service she just rang up
“What has become of our society?”
It’s dubya’s ownership society!
Sounds like she’ll be walking before it’s over.
Would you please ask the next home seller and real estate agent that talks about the spring rebound, what will the 30 year mortgage rate be? And are they willing to carry back paper for all the buyers who can’t come up with the 20% down requirement from the stricter lending practice?
So let’s see, they missed in March of 2006 the dramatic downturn, but they can now tell you with the same thinking that cost them a sale now, the same thinking will produce better results in Spring 2007. Mr NAR, David Leaher, told you in Spring 2006 a great market was here, and you believed him. Now, in Oct 2006, he tells you a bad market, and you don’t believe him. Time to get back to watching
Crammer and his uncanny stock picks
Vmax..How true!
Did you see the new home starts today?
The builders are lke the enegizer bunny they keep building & bulding…who is financing these ghost villages? Last night FED Yellen said, these builders are facing 80% of current production unsold! More starts in Sept. while , fewer sales (Sept falls off the August table)…
Sounds like an auto manufacturer making it up on volume problem!
posted ““‘Looking to 2007, we expect that some regions of the state, including the Central Valley, San Diego and Riverside/San Bernardino regions, will experience sales declines”
Brillant! simpley Brillant!!!
I check.
Others, like Beacon’s Thornberg, say it may take longer.
“You’re going to see this market continue to slowly decline,” he said. “You’re not going to ever see any explosive depreciation in prices. But you’re going to continue to see prices go down at an annualized pace of 2 or 3 percent, and that’s going to continue and continue and continue.”
At least Thornburg is on record with his prediction of what he means by “train wreck” and “paying the piper”. Now we can track just how far off his prediction will be.
There’s our man Chris floppin like a Fish. Maybe now that things are SO OBVIOUS, he’ll stay flopped.
(like someone mentioned he at least has to look more bearish than Leslie, stay ahead of the slowest gazelle, cause the Cheetah’s coming)
What if there are several cheetahs and some lions too?
And some alligators and crocodiles? Krikey!
And stingrays? (too soon?)
Did anyone see the photos of his little daughter about 2 feet from some 10,000 pound bison? That family is asking for a twofer.
Did anyone see the photos of his little daughter about 2 feet from some 10,000 pound bison?
——————–
My husband and I were commenting on that just yesterday. It must have been old footage???? What in the world are they thinking?
They were thinking….” Wait till that big goofy smiling one put’s down the little one, then rush his a$$!”
Did you see the footage of him holding his baby while feeding the crocodile?
Ha! I finally said something someone thought clever enough to repeat!
(Which cheers me up, since “suicide loan” won out over my “death-or-glory loan” phrase.)
New motto for clueless economists racing to maintain their credibility: Outrun The Slowest Gazelle. (That wouldn’t be a bad book title, come to think of it.)
Hey, I cross posted your comment to OCR’s blog.
They didn’t like the analogy quite as much as we did.
Didn’t Thornburg opine, just a week or two ago, that “prices will be the same in 5 years as they are now”? I’m not sure how that jibes with prices going down 2-3 percent year after year after year…
im in los angeles and i am seeing 2 or 3% a month.
The homes that are selling in my part of LA are priced about 15-20% below what comparable homes were selling for last year, in my estimation. There are lots of homes for sale with astronomical “wishing” prices but those aren’t moving at all.
I’m on the West side and FINALLY I’m seeing asking prices drop in Westwood and Brentwood. Of course they are still too high and are not selling but market wtaching is getting more entertaining with the passing of every day.
Yea, In LA it’s …. oh yea I heard something about prices not going up so fast…… ah, huh.. yea… double latté please….
Clueless
I’m in San Diego, and just in the last week or two, am starting to see some very good prices coming on (late 2003/early 2004). There is no way anyone can deny the price declines (um, I mean “slower price appreciation”) at this point. Some deals are almost tempting, when one forgets what reality looked like before the 2001-2003 era. Then, of course, you realize a house selling for $750K in 2005, when dropped to $575K isn’t really a deal because it was at $300K in 2001. We really have to keep a clear focus on what things are truly worth without the credit bubble.
Don’t bite until 1998 levels. They will occur. Somewhere between 2010 and 2012.
Probably not in San Diego, its different here. I’d love to see it, and possibly adjusted for inflation you might, but if 40% is reversion to the mean (about 2000) pricing you have to honestly believe that the end of the world is nigh to predict more than that for one of the few places that people really do want to live in. Especially while there is a war and defense spending helps prop up our economy.
Josh
Probably not in San Diego, its different here.
Uh, sure.
Bill in Phoenix,
I agree that 1998 prices (or thereabouts) are coming in San Diego — no matter how different we are.
“It’s different here.”
So you’re New around here, aren’t you, Barnaby?
Welcome. You’re just in time for 2007-2010: Years of RE Carnage. And as a San Diegan, you pretty much have a front row seat!
It’s different here at Ben’s Blog…..We don’t believe that it’s different anywhere.
I agree with Barnaby33, though it may not actually be “different here”, to think things will revert to 98 prices is ridiculous. The house I bought in 99 in San Diego was priced 15% under its sales price when bought new by the original owner in 1992. So if you are saying that prices are going to revert to 1998 in San Diego, you are actally saying they are going to revert to 1989 prices. Don’t get me wrong, I think there is a big drop going to happen, but mid to late 2003 prices is where they will probably stop. Late 2003 is where a current $700K asking price house was probably selling around $500K…that’s a huge drop, but still about 80% higher than what the price was in 1999.
On what do you base this cunning analysis? Why is 2003 the magic cut-off point in your mind? (As in: Prices won’t get any lower than they were in 2003…) I’m just wondering.
I’m somewhere in the middle of you all - I doubt 98 prices will hit but I think they will bottom out lower than 2003. 2003 is maybe where prices SHOULD be if the market moved up normally, but it will likely overshoot on the downside before it levels out. So my guess is like 2001 numbers.
In the 1880’s San Diego properties has massive speculation followed by an 80% drop. Anything can happen here.
why don’t we all just admit: THE PRICE DROP COULD BE ANYWHERE FROM 0-100% AND NONE OF US KNOWS OR CAN PREDICT!
A friend in Mar Vista (West LA) was just commenting today that a neighbor’s house, which last year would have sold for $1.6 million is now for sale for $860 K and not moving
Looooovely… just shave off another $300K and we’re really getting somewhere!
Friend selling (trying) 3 &1 PaLMS 840$ No bites…
You’re right. About another $300 K of would put it about right. Actually $400 K would put it even closer to where it should be. Weren’t those houses, eg the Palms house (by the way, which one is it?) around$400 K a few years ago? (my office is right near there)
Mar Vista has gangs and Section 8 housing - just illustrates how bubblicious this market still is…
Jesus! I just looked on Zillow for the old prices for one of those $850 K houses in Palms/Mar Vista. The house I found in Palms for $855 K was $200 K in 2003 and $225ish into 2004
“Mar Vista has gangs and Section 8 housing - just illustrates how bubblicious this market still is… ”
If yoU drive down Centinela ave south of Washington blvd all way to the marina Fwy entrance, it does have That high-density section 8, tenement apt look. Looks like large sections of Mar Vista/Palms becoming the housing of choice for the West Side LA Proletariat masses. Actually you can see these Tenement Row Apts as you pass thru the 405 fwy between the 90 fwy and Venice blvd, along with the graffiti art sprayed on the 405 fwy signs.
Mar Vista Gardens It’s always been there. Just past that is DEl REl Which is soon to be Playa Vista Adjacent . Lots of Japanese long term residents in Del Rey. It’s tidy post war boxes. There’s a Buddhist temple on Centennial . They are fixing the area up. Culver City has a massive redevelopment plan for Washington Blvd. That’s why so many buildings are boarded right now “eminent domain”
all in all defiantly a mixed bag. May do the opposite of “get better’ once a down turn ensues.
As to where his home is, I rather not get busted even mentioning it, wouldn’t want him to think I’m baggin on it, or him. Hey, he’s like, if I can find someone at this price I’ll take it. He doesn’t have to move, But he and his wife have a master plan if they get what they want. Think he bought in 02, and he’s not sweating it.
Where are you guys finding these price declines? The best “deal” I can think of around here is a house on Rose Avenue that sold for 925K, would have been maybe 950K six months ago. Otherwise, no apparent evidence of a downturn.
lainvestorgirl-
The PV area for one. Looking around the MLS the other day and saw quite a few that had taken a 100k to 200k reduction also quite a few under a million. Still overpriced a tad but it’s a start.
Gardena also has a large Japanese community and the Japanese do keep their homes and neighborhoods tidy. Gardena also has some dense tenement apt areas, mainly east of Vermont close to the Harbor strip, populated mainly with lower-working class Hispanic immigrants. A lot of the Japanese homes are occupied by single 1st generation Widows. When they pass away their homes end up being sold off as their well-educated Children tend to prefer better exurbs out of LA. This has been happening in the old West Side Long Beach Neighborhhod, which once had a thriving Japanese community as well, but the second/third generation preferred greener pastures.
These LA beach cities are taking a bit of a haircut,
going from the stratosphere to the merely rediculous.
SFH
City zip homes median %yoy
sold price decline
PalosVerdesPen. 90274 23 $1,500 -10.4%
Rancho P.V. 90275 32 $1,150 -9.8%
Venice 90291 14 $940 -10.5%
Santa monica 90402 4 $2,288 -30.2%
Santa Monica 90405 12 $1,175 -6.0%
Manhattan Beach 90266 31 $1,379 -13.8%
El Segundo 90245 3 $680 -22.6%
Hermosa Beach 90254 9 $1,030 -12.0%
Palms, Mar Vista, Airport Del Rey and all their ilk have the bad potential to become high priced ghettos. Truly, the sings of blight are too frequent for you to actually want to plonk down several hundred thou for that sh!t…
Just my two cents worth but I agree with dwr. The economy is simply too strong to allow this market to implode. If anyone is looking for a collapse, I’m afraid they’ll be disappointed.
!?Que dice usted!?
What you talking about Willis?
no no no… “Whatchu talkin about Willis?”
Was the RE bubble due to the explosive growth of our economy…or was it due to the actions of the fed, flooding the economy with money?
If it was due to the economy…then you are probably right.
Personally, I don’t believe that is the case. Annual 15~20% growth rates for home prices were totally out of synch with the economy…and because of that, we will see the same growth rates, but in reverse, back to the mean.
That is a legitimate debate. If the economy holds it will soften the blow. However we have not truly felt the impact of this slow down just yet. I’m thinking it will really start showing up on the radar by Q1 and Q2 of next year. California’s economy has been extremely dependent on RE. I really don’t see how we can escape a substantial downturn.
I’m thinking Q3-Q4. Post income tax/ holiday shopping credit card late payments season when people hoping for an upturn finally realize Uncle Sam’s coming for his and the housing ATM’s empty or they don’t qualify.
I just don’t see the economy holding up with the real estate market disintegrating before our eyes.
Given that the easy money flooding the economy is gone, the Real Estate market has essentially been cut off from speculation and is poised to wither and die on the vine. I mean I don’t know anyone whose personal income was growing at 15~20% a year, so who is going to buy the huge, and still growing supply of homes on the market? All of us here know how out of whack these prices are, so that rules us out. Unless there is a huge supply of GF’s, our economy is FUBAR.
Things have gotten so bad that not even a strong economy can save the crash. We haven’t even seen inventory problems compared to what is in store for next year. Add massive foreclosures, much more new construction, and re-sellers hoping for the 07 turnaround to the current glut of inventory, and the recipe spells disaster. Denial will run deep until the spring selling season never materializes. Then panic selling rules the market.
Newsflash guys:
Real Estate is the economy! No Real Estate=no economy.
” California’s economy has been extremely dependent on RE. I really don’t see how we can escape a substantial downturn. ”
Strange things happening in the RE loan business. Went out to Mellon Financial in Irwindale: they have a very large 2-story corporate office building
bigger than your ave Wal-Mart. The huge employee/visitor parking place was VIRTUALLY EMPTY
and the place seemed to be running almost on empty.
At a small operation in S.Irvine called US trust Mortgage same thing except that the receptionist and another co-worker were very edgy and defensive when i went to pick up the routine documents/bank bag to be returned to American Business Bank. They said there was nothing to pick up, and my company had to call ABB to verify. Very fishy business going on, as if US trust failed to make a due pmt on a note or loan. or a timely deposit.
Been out to New Century Mortgage a few times as well: they are located near Michelson/jamboree in a huge ultra-modern corp complex the size of a factory.
There are a lot of hi-tech and other modern corporations locating out to south OC, but there are also a lot of Lending operations as well, and this will sting S OC’s economy a bit, though OC will fare better economically overall than the hapless IE.
Dan,
How long have you been a realtor?
Perhaps he also participated in the New Economy of 1996-2000. Funny how things end suddenly when they are based on nothing but greed and pieces of paper. So you say real estate is not paper. I say who is making a down payment these days? They don’t own real estate, they own an options contract. It doesn’t matter if Granny never sells her Lucent shares. It’s the margin calls that determine the price at market, not the sock drawer in Granny’s dresser.
sd renter,
I’ve been accused of being a lot of things; but never a realtor….ROFLMAO
I’m searching for a house in several markets, will be a cash buyer, and have my own opinion. Can someone share their conclusions or are you just bitter about being on the bottom of the food chain…..?
Dan,
do yourself a favor and wait until the 3rd quarter of 2007. If things are strong in the real estate market. Buy. My honest advice, and believe me I’m not on the bottom of the food chain.
This is my conclusion
Dan,
I bought in 98 and sold in 04. I’m getting 3/4 of my house rent paid for with interest income from the sale.
I’m not exactly eating hot dogs each night to stay above water.
Jared never lost weight eating hot dogs; he lost weight eating Subway! But for all the others out there who can’t afford to eat out twice a day, every day, well, maybe this will put a big BITE into the obesity problem.
Of course, the obesity problem is somewhat related to the housing bubble - they both have their roots in the Culture of Entitlement that we have embraced.
Top Ramen is not exactly low calorie
Dan,
How many investment properties do you currently have on the market?
Getstucco,
ZERO
Dan:
Here’s what I don’t get, when people debate whether or not there’s going to be a collapse in RE — where are the buyers going to come from? Last time I checked, something like 70% of everybody owned a home in this country. And in CA, less than 10% can afford a median priced home. That leaves a very, very tiny pool of prospective buyers, especially with tightening loan standards, for an enormous (and growing) inventory of properties.
When you add to that mix the fact that 40% of all the new jobs cerated in the past five years have been real estate related (including construction, mortgage, etc.), and the $40 Billion in HELOC $$ propping up this so-called “thriving economy”, I don’t get how we’re not getting a major recession in the next year or two, either.
I’m curious as to how you reconcile these facts.
Bubblewatcher,
While CA is, in and of itself, the 7th largest economy in the world, it’s not the “be all and end all” of the US economy. There is no doubt there will be SOME impact over the wacky real estate situation in CA; but bringing the US economy to it’s knees is simply wishful thinking. A full blown collapse in real estate prices is, in my humble opinion, impossible. Where will the buyers come from? People have always gravitated to CA and will continue to do so. Business will continue to invest in CA; creating demand for housing. Again, it’s going to take a major shakeup and some time, but prices will firm and demand will catch up to inventory. It’s another cycle in a long history of cycles.
40% of all new jobs are a CA statistic; not a national one.
I’m researching several markets to purchase my retirement house and all the “housing bubble” chatter is a joke. Those markets have experienced a slowdown but fundamentals are firmly in place to accomodate it.
I have a son in the Bay Area so I take no glee in how much damage speculators have done to the housing market there. I simply have a different point of view; having seen other parts of the country where the “bubble” is put in proper perspective.
I have no crystal ball and don’t pretend to have some special insight into the future. I rely on a team of experts who manage my portfolio…..quite successfully. I called them a couple of weeks ago and they explained it this way……this situation has long since been factored into the market as a whole. Without going into some long winded speech……there is no real concern and a market correction is due and will occur. Major players have hedged their positions globally making the CA and FL situation merely a bump in the road.
I know this isn’t a popular opinion here; but I share what I learn just like everyone else here.
Best wishes
Dan posts “If anyone is looking for a collapse, I’m afraid they’ll be disappointed.”
Even drw just said he thought prices were really off 15-20%!!!
Come on man what do you call that? I hope you do not won now. If you did you would be hurtin’ either on paper or for real if you bought in the last 2 years.
Please understand this is a “slow-mo” deal this could take years to unwind. Not like the stockmarket. if you own your feet are locked in concret. You can’t sell and you can’t stay plus you can’t pay!
It is worse than a “collapse” this implies a swift out come. Be slowly crushed in a realestate downturn is the death of a thousand cuts, far worse. Trust me, I have all the old scar’s too prove it.
To be on the bad sid of a housing deal, is more like the old seasick tale.” First you are afraid you will die, then you are afraid you will not.”
Let’s talk again in 3 years or so…….
AE,
We are not that far apart; it will take some time for the suckers and their money to be shaken from the tree and many markets will see declines; that’s not at issue. My point is the ” bubble enthusiasm” clouds the overall financial reality of our economy. Contrary to some people’s opinion, housing is not as great an impact on the overall economy as a lot of people WISH it were. Wishing doesn’t make it so……
I learned a long time ago trying to time a market is a fool’s game; one very few win. When I locate the house I want, I’ll write a check. It’s value in 10, 20, 30 years is of no consequence to me. My wealth is elsewhere; always has been. Housing is where I live; not part of my investment portfolio.
I’ve seen, and come through, more tough markets than most anyone here. A lot of people get their opinions from web sites and magazines; I get mine from real life experience.
Again; just one person’s point of view. No offense to anyone. I find Ben’s site a fantastic place to learn and be entertained…..not to govern my business choices.
Can you please learn me on your experience? I’m too poor and lazy to want to make these mistakes myself. Thanks!
“I learned a long time ago trying to time a market is a fool’s game; one very few win. When I locate the house I want, I’ll write a check. It’s value in 10, 20, 30 years is of no consequence to me. My wealth is elsewhere; always has been.”
Fortunately, for hard working middle class individuals like myself, the “could care less what the house costs” wealthy folks like yourself do not dictate prices in the housing market. Otherwise, it may never be prudent to purchase.
Bbear,
I don’t consider myself wealthy, just in a position of no debt and enough assets to live comfortably with little monetary concern. Now, I don’t have several vacation homes, a designer wardrobe, drive expensive cars, or any of the other “bling, bling” crap you see on TV so my financial needs aren’t that great. In my youth, when my friends were in debt up to their eyeballs, I waited and paid cash. When they were trying to outdo each other in housing by saying “mine’s bigger than yours”, I was spending a whopping $248/mo in house payments. They went on vacations several times a year…..I worked. I guess I’m a character in the book, “The Millionaire Next Door”.
I KNOW what it feels like to be “shut out” of the housing market. Try going through the days of 17% mortgage rates and see how tough it is to buy a house; regardless of how cheap….LOL
Anyone serious about buying a house, can do so without forfeiting their future. It takes a lot of work, negotiating, and hard work searching for what will work for themselves; but it CAN be done. If someone wants the whole world to come down to their wishes; THEY are the ones hitting the bong. Save for 15 years, buy a POS..cheap….fix it up; enjoy the accomplishment and live there. Then, after 10 years, sell and move up. That’s the only “flipping” I know about.
I’m not going to bore anyone with my story…it would come across like “Back when I was born in a log cabin and taught myself to read”…..
Best Wishes
Sol….if you hadn’t included your snip about “lazy”, I’d give you some advice. Sorry, but I don’t do “lazy”….I truly pity you, but whatever failure comes your way; it’s bought and paid for with your check on 1st Lazy Bank.
Beautiful!
Dan,
Your description of yourself fits half the people on this blog. I’ve been through everything you describe. Doesn’t change the fact that if you buy in the So Cal market right now, you will see a minimum of 20% (prob. more like 45%) reduction in the value of the purchase and that reduction in value may linger a good min. 5 years. If losing money on housing is of “little monetary concern to you” Buy a house, please, buy 3. If you owned since interest rates were 17% then you’ve already gone through at least one bust, especially if you live in LA. So your eyes are wide open.
I guess you’re the kind of guy that if he received his Treasury Bonds Statement and found 200k missing from it wouldn’t bother you. God bless you, the country needs more hard working folk like you, of course with that kind of logic, you won’t stay the “Millionaire Next Door” For Long.
P.s. I don’t know why you’d waste your time reading this blog. Things that don’t concern me,…….bore me.
Good Luck with your Future Holdings
Dan-
Step away from the bong!
Was this comment beamed in from the W2k blog?
None of these variables is exogenous (outside the system). If the economy is too strong the Fed will raise rates again, causing housing to weaken further. If the housing market continues to weaken rapidly on its own, the economy weakens enough to keep both weakening until the Fed lowers rates. Once the Fed lowers rates the economy won’t recover for at least 6-12 months, and inflation expectations will be higher, also a negative for the economy. Housing prices are going to revert to BELOW their mean trend.
uhhh…Hello? McFly? The economy IS real estate. We’re all gonna see just how strong our economy is once real estate is taken down.
Posted by Dan “Just my two cents worth”
You get a penny back.
Oh yes the economy is just tooo strong!
Real estate is down 30-50%….
Autos down not less than10%
Tech sector has some beating 3 times lowered estimates.
The economy last reported Q2 @ 2.6%.. but that uses inflation at 3.5%..or some foolsih number..that CPI has every thing worth spending money on stripped out!
Just look at the retailers with the 2-3% YOY increase in sales numbers….Did you not know that those are not inflation
adjusted?
Rail car loads only up 1.4% thru mid October…the increase in coal / petrolium increases exceeds the entire growth in total carloads. ..Net net rails have shipped less in 2006 than 2005. Wall Street is calling this the “delayed peak shippping phenomenom”, certain Christmas Holiday shipments will soon show!
As for the unemployment numbers…that is nothing but total B/S.. The government adds 200k in jobs based on births & deaths.. to report a headline 4.6% while back on 16 pages is the OLD method reported on Sch A-12..”Other methods of calculating underutilized labor”…this has averaged 8.5-9% for 14 months.
Ok you bet the ranch, but Japan R E has fallen 16 of last 17 years and interest rates are 0.25%
Let’s not forget the increases in personal income that has not kept up with inflation, and the negative savings rate, or the huge numbers of jobs created since 2002 realated to RE. Or the inverted yield curve…or….or…or
The elephant in the living room right now is that while we are constantly told the economy is booming, no one is getting much in the way of wage increases. Exactly how are all these toxic loans going to be repaid, now that refinancing is not within reach for many borrowers? I see a big time collapse heading our way unless something happens to get wages rising at 20% a year to keep ahead of the flood of resets heading our way. Also, with stricter lending standards how many $200K per year households are there who can afford even close to current prices?
The elephant in the living room right now is that while we are constantly told the economy is booming, no one is getting much in the way of wage increases.
———————-
GH,
Absolutely. Let’s not also forget the gradual disappearance of DB pension plans and employer-paid healthcare. Seems to me prices would have to be lower than 1999/2000 (wages have been stagnant since) to make up for the decline in benefits — we are all going to have to SAVE more, every month, in order to make up for lost benefits. And then there’s the whole globalization (bringing our wages down to meet those in “developing” nations). And the fact that jobs are much less stable these days, which makes being underwater on a particularly bad situation. Remember the 28/33 DTI ratios were determined when there was wage inflation, good benefits and stable jobs. Sounds like the DTI ratios should be about 10-15% of gross income should be allocated to housing costs, max.
which makes being underwater on a mortgage a particularly bad situation.
I get too excited when posting sometimes…
My husband and I make close to $200k a year and we aren’t buying!! We simply cannot afford it even with 2 paid off Bimmers and moderate credit card debt. We enjoy being able to go out to eat whenever and wherever we choose and to buy whatever we want without worry!! How many of these homedebtors can do that?? Thank you, but I will continue to rent!!
No offense, but at 200k a year, shouldn’t you be paying off that credit card debt?
yes, esp if you rent. Unless you have kids in pvt school, you should have ZERO credit card debt - or any debt, for that matter..
GH - not only no real decent wage increases, but white collar LAYOFFS GALORE!
FUBAR is the correct term
All the initial beneficiaries of the FED’s credit policies are in decline or about to fall. Our auto industry is close to BK. Housing has tipped. Oil prices off 25%, lumber prices down 40%, retail sales are near a top. If these industries go into decline what will hold up the economy? Don’t look through a rear view mirror. Anticipate what the cycle portends. Deflation.
Many of you state that “I can not wait for prices to fall some high %”. You will probably get what you wish for but we all may not like the invironment that goes along with it.
Faster price deprecation, would more accurately describe the situation.
Can anyone say wealth destruction? What, too painful?
‘The housing market has slowed down at a much faster pace than anybody has anticipated,’ said Robert Kleinhenz, a CAR economist.”
I guess that depends on the “anybody”s one chooses to associate with/listen to.
Or the “nobodies”
“said Robert Kleinhenz, a CAR economist” another over educated
pompass ass being a mouthpiece for the highest bidder! Don’t they teach ethics in business school anymore. or how about integrity. An economist is dangerous to your wealth
And how would they teach ethics in business school? Have you ever seen how the business schools get their money (and professors their salaries)?
economists don’t go to business school!
‘The housing market has slowed down at a much faster pace than anybody has anticipated,’ said Robert Kleinhenz, a CAR economist.”
OK folks. You can finally clue in to the real estate trends. I know this blog is all about how a housing bubble will never end, but now we have the economists to show us just how wrong we were.
Sarcasm off. Given that our economists pretty much tell us what happened six months ago, maybe we should just refer to them as econohistorians.
General rant:
If an “economist” has an adjective in front of the title, such as CAR economist, he’s probably not a real economist. Most of these so-called economists (Lereah is an exception) have no formal understanding of economics - it would be like calling a weatherman a physicist.
Real economists are not educated in business school. Economics is an academic discipline, more akin to mathematics than business. Also, ethics can’t be taught in school.
I’ve noticed a correlation on this blog between how much people yell and scream when they see the word economist and how much economics they really understand.
“I’ve noticed a correlation on this blog between how much people yell and scream when they see the word economist and how much economics they really understand.”
I’ve noticed it, too, and it approaches -1.
Paul,
I agree, real economists spend there time worrying about much more arcane things than predicting house prices in the next 3 months. They also know better than to say that house prices will bottom in Feb 2007 at 8.9% from the high.
Its like people thinking mathematicians sit around adding numbers up all day.
The people doing these predictions are really shills for their employers, and or are desperate celebrity seekers.
Oliver
How about “economissed”?
Sorry, imploder, missed your earlier entry!
Where I went to univesity, Meteorology was a 3rd-year Physics class, and there are full GRADUATE degrees at other colleges for full meteorology, which are mostly math and thermodynamics from what I could see. Check out Dr. Jeff Masters’ bio on http://rss.wunderground.com/tropical/.
I understand what you are trying to say, but it’s a very poor analogy in that it is inaccurate and spreads mis-information.
A better analogy would be: it’s like calling the local TV news weatherman a meteorologist (granted there are some exceptions even to this analogy).
Well it looks like all us bubbleheads were totally up in the night on this one, everything apparently is all well in California.
I love how this data is a surprise to LAY and the realtors who are supposed to be the experts yet it always seems like things are falling exactly in line with our predictions. It just goes to show you how important an inquiring mind and blunt objectivity can be to someone’s consistent financial success (i.e. bears make money despite their skeptical natures).
“Residential foreclosure activity in California reached its highest level in more than four years in the third quarter. Lending institutions sent 26,705 default notices to homeowners in the state during the three-month period ending in September, DataQuick announced.”
“The median age of the home loans that went into default last quarter was 14 months, and more than half were originated in 2005. On primary mortgages, homeowners were a median of five months behind on their payments when the lender started the default process. The borrowers owed a median $9,829 on a median $306,000 mortgage, DataQuick reported.”
“On lines of credit, homeowners were a median six months behind on their payments.”
I realize this is only the beginning, however, this is going to get very ugly. If people are going into default just a little more than a year into the loan, things are heading dow the toilet real fast.
We had a whole bunch of ‘irrational buyers’ on the way up wait utill the ‘irrational sellers’ finally present themselves….
irrational lenders is more like it.
They were rational if they sold all the paper before it rotted.
How to make a fortune in stated income mortgage lending:
1. Incorporate sub-prime mortgage firm in Cayman Islands, Bahamas or some other con-man/mobster safe haven.
2. Locate homeless person, illegal alien, recent Carlton Sheets/Robert G. Allen/Marshall Reddick seminar attendee or Casey Serin.
3. Loan that person millions of neg-am voodoo loans to buy absurdly overpriced flip houses.
4. Before the ink is dry on papers, bundle fraudulent loans as “low risk” investment to China/pension/hedge funds, collect origination fees, wash hands and walk away.
5. Before mortgage Ponzi scheme blows up during the inevitable crash (after safely having transferred profits to numbered Swiss accounts), close shop & file Ch 11.
6. Skip town before federal/state regulators or MBS buyers come looking for you with “repurchase agreements” (or handcuffs).
7. Change name & location and repeat steps 1-6.
How to make a fortune in stated-income mortgage lending:
1. Incorporate sub-prime mortgage firm in Cayman Islands, Bahamas or some other con-man/mobster safe haven.
2. Locate homeless person, illegal alien, recent Carlton Sheets/Robert G. Allen/Marshall Reddick seminar attendee or Casey Serin.
3. Loan that person millions of neg-am voodoo loans to buy absurdly overpriced flip houses.
4. Before the ink is dry on papers, bundle fraudulent loans as “low risk” investment to China/pension/hedge funds, collect origination fees, wash hands and walk away.
5. Before mortgage Ponzi scheme blows up during the inevitable crash (after safely having transferred profits to numbered Swiss accounts), close shop & file Ch 11.
6. Skip town before federal/state regulators or MBS buyers come looking for you with “repurchase agreements” (or handcuffs).
7. Change name & location and repeat steps 1-6.
Harm “How to make a fortune in stated-income mortgage lending”
I swear if I had know this I would have done it 5 years ago!
Just think, the time when a mortgage is at its greatest risk of default is 36 to 60 months into the loan. That says that the cohorts of today’s defaulters hasn’t hit its stride yet.
It all gets interesting 2Q 2007.
Neil
I’ve heard that figure and I’m wondering if it came from past (i.e. 30 fixed) data. Wonder if the new mix of loan products has a different window? (may be sooner?)
Its possible the window shifted. More likely, it hasn’t. Yikes!
“The median age of the home loans that went into default last quarter was 14 months, and more than half were originated in 2005. …”
omg! Loans going bad after 14 months! Were these neg am that reset after 12 months? Are there such a thing?
“The CAR forecast also calls for sales to continued to decline in 2007 by 7 percent. The projected fall off for 2006 is 23 percent, meaning the worst of the sales fall off may be behind us, Kleinhenz said.”
Wasn’t it just a few months ago that the CAR we predicting a 7% drop for 2006? They’ve got time to revise that “7% for 2007″ down about 14 times between now and EOY 2007. Something tells me they’ll be using every one too.
Their numbers are so bogus.You just can’t trust the data as we all know. Just numbers for the herd.
dude,
Exactly. NONE of their predictions have been correct, so why should the future be any different. If you happened to read the CAR report, they happily announce that RE has appreciated at an average rate of 9.1% since 1968. Well we all know how badly averages can be skewed, and the last four years have certainly done that! It’s right there at the bottom of their own article! And what is with using 1968 as a baseline? Why not 1965, or 1978 for that matter? Could it be that 1968 presented the best outcome? They are only cherry picking the data that best suits them. The bloggers here have proven to be much more on target with their predictions, so I am obssessed with following comments here. Still, sometimes I don’t want to because these types of bogus articles make me so angry!
16% is in the bag you know.its negative, but they didnt tell you that oops.
I predict lots more downward revisions ahead from the CAR and Thorberg as well.
Just like the builders and their EPS estimates!
just like the gubment and every estimate they every make.. “Oh that’s not working for this other stat, what we do?
I KNOW! revision.revision.revision.revision………………
Get
stucco
I’m Going out on a limb here…. got a more dangerous prediction than yours
I predict the sun will rise tomorrow…
The Arizona Republic reported today that asking prices in the Phoenix area have dropped a full 25% from the market peak of last year. I think this drop is unfolding at a pace we have not experienced before. California will follow suit.
They say a 25% drop only to make some feel that the bottom is here. I have been watching prices closely and so far I’m seeing minimal drops. They are clouding reality for the benefit of realors.
But are you watching asking prices or closing prices?
I am assuming the closing prices will be well below the asking prices if the houses are to sell. I think this article is a wake up call to sellers to get in the game.
California is in big trouble here folks. There has been a carnival atmosphere there for several years. Why work when your making 100k in 6 months on your house? It is going to get ugly, especially sacramento. There was basically a feeling that you were anobody if you didn’t own a home and take equity and buy a bunch of crap. Oh and if you want to build a house might as well bend over for all he so called impact fees. Another excuse to rake you over the coals for your hard earned cash.
Why save when you’re making 100k in 6 months on your house?
Sac is screwed!
Sac was screwed before this bubble. It is a god-forsaken horrible place. Ditto Palmcaster and IE
Financial/Housing sewage pip-line has started to rupture.
Don’t forget the rachet effect, in a downward market and a slow economy everyone wants to LEAVE California and no one wants to trade a lesser liability for a greater liability. In past busts the Calif. median has bottomed at a 1:1 ratio with the US median. That’s what I call “equilibrium” as opposed to the New Equilibrium quoted in most of these stories.
“‘The housing market has slowed down at a much faster pace than anybody has anticipated,’ said Robert Kleinhenz, a CAR economist.””
…Unless you happened to be reading this blog last year, or saw that sales had fallen off by more than 30% last winter, or unless you had a brain and eyeballs, or saw all the for-sale signs and lines at Home Depot last spring…
…yeah, it was really, really hard to see this coming…
…if you happened to have an interest in SELLING HOUSES…
…and sending your fellow man into financial ruin.
p.s…
Please, for the love of God…
Please get the word out that NO ONE IS GOING TO GET A DEAL ON HOUSE OR CONDO BY GOING TO AN AUCTION RIGHT NOW.
Yes, I know my name.
But it says ‘Auction Heaven in ‘07- not 2006.
Plus, these homes may need to go to MULTIPLE AUCTIONS and BACK TO THE MLS multiple times BEFORE they finally go to an auction that you’d actually want to buy any one of them at.
Auctions ARE NOT A DEAL RIGHT NOW.
Please don’t allow your fellow man to become a FB if you can prevent it.
(Yes, I heard about the Canyon Villa auction. No, it was not a good idea to go to it. We have a LONG, LONG way to go before auctions actually make sense.)
Please change your name to Auction…2008! LOL
I’m thinking about ‘Perp Walks Look Great in ‘08′.
07′ posts “‘Perp Walks Look Great in ‘08′.
Too funny! and Too true! We need some neck tie parties…. filled with liar lenders!
Or ‘I May Finally Sign in ‘09′
I agree. If those Canyon Villas on OC were going for 295K, just wait until late next year or ‘08. I think some sweet deals are coming, but we just have to hang on a little longer. As some have said before, we are just beginning to go over the big drop on a roller coaster.
Agreed……………
The only time to be at an auction is when no other potenial buyers show up.
Be cashed up or have pre-arranged finance ready. Watch the show but don’t bid!!!!!!
Look to negotiate after the property is passed in. Perfect time for low ball offers.
We are probably a couple of years away from this yet, but the time is coming.
Okay, luvs_footie, I’ve held out long enough so I have to ask: Where are you from?
Australia………but I have been watching the American housing situation with great interest.
cheers mate
It’s the “footie” part that I latched on to. I knew you had to be from either the UK (I’m English) or Australian.
“Residential foreclosure activity in California reached its highest level in more than four years in the third quarter. Lending institutions sent 26,705 default notices to homeowners in the state during the three-month period ending in September, DataQuick announced.”
“The median age of the home loans that went into default last quarter was 14 months, and more than half were originated in 2005. On primary mortgages, homeowners were a median of five months behind on their payments when the lender started the default process. The borrowers owed a median $9,829 on a median $306,000 mortgage, DataQuick reported.”
…. Don’t stop there with your analysis. What percentage of those defaults were on 80/20 purchases, no doc/stated loans, subbprime, etc.?
Homeowners 5 months behind on a mortgage. I thought I was sufficiently bearish on this market before…… I thought predictions of bloodbaths were a little too much but now I’m starting to agree. On top of that these numbers come from DQ and I always thought they tend to sugarcoat so that means that the $#!t’s gonna knock the fan over this time around.
“The median age of the home loans that went into default last quarter was 14 months, and more than half were originated in 2005.”
Is it normal for loans in default to have such recent origination dates?
I do not think so, In early 90s it was not like this. This is a direct consequences of puting people in houses that they could not/should not have purchased to begin with.
You will see more of this crap in the coming months and years. I am a broken record, but all this debt crap get me mad as he$%. Credit cards a rebad enough, but when 100K guy is buying 900K home something has gotta give. The problem is that the many in the RE industry pushed this crap. Appraisers, realwhores, loan officers, and banks, as well the fed and Bush. Buy, buy, buy! That’s fine if you have the money, but if not, your fu$%#$!
I suspect that a bigger factor is the end of insane appreciation rates. Yes, people have been able to get loans easier, so some are in trouble earlier. I think though that people who bought 2 years ago have had a year of 20%appreciation means that those who got into trouble at an average rate could avoid foreclosure and sell. In another year, those who got into trouble 2 years into their mortgage will mostly be underwater even if we don’t assume a large depreiation in home prices.
Most foreclosures tend to happen during the 1st 2-3 years of homeownership but this figure is no less mindboggling. Unfortunately we have no breakdown as to what portion of these defaults are ftho’s as opposed to serial refinancers. maybe the National Mortgage Banker’s Association will come out with a report soon.
What are “ftho’s”?
Sorry… first time home owners (mortgage loon jargon).
GS-
Yea, if there was fraud or the buyer was shoe-horned in. Compound that with the Option Arms you’re probably going to see double the numbers of the last downturn. 198 R.E.O.’s are a lot but not enough. After people over-extend themselves over the holidays the R.E.O. inventory should pick up.
Dumb question: what is REO? Repossessed something something?
Real Estate Owned, which is the term banks use for property that they own after they foreclose.
Real Estate Owned (by the bank when the borrower has defaulted).
Most of these idiots are flippers caught with their dicks in the vaseline jar. they have to flip within about 2-3 months max before the well runs dry. after that they say, Oh Fudge, I’m hosed!
Thanks for the subtle use of imagery. /end sarcasm
“Oh Fudge, I’m hosed!”
Try “Oh Fudge, I’m housed!”
“Oh House, I Fudged!”
From the same article: “Foreclosure activity hit a low during third-quarter 2004 when 12,145 default notices were recorded. Defaults peaked in first-quarter 1996 at 59,897. DataQuick’s default statistics go back to 1992 and the quarterly average is 32,653.”
So, we are at about 82% of normal for the historical foreclosure rate, and rising rapidly? This, after house prices have more than doubled in the past 5 years. And most of the re-sets haven’t even happened yet? It’s going to get very ugly, very quickly for FBs in California.
And they note that the median age of the loans in default is 14 months? What happened to the historical trend of defaults being most likely to occur during years 2-5? These loans are 14 months old, and people are 5 months behind on payments, so they aren’t even making their payments for a year!
And, as property prices fall, fewer and fewer will be able to get out by selling, so trustee sales and REOs will continue to increase dramatically, thereby lowering prices even more. Some call it a vicious cycle, but I see it as a virtuous cycle that will once again lead to affordable prices. Toxic mortgages built this bubble, and they are blowing it up. Hoisted on their own petard.
WTF! After only nine months they throw in the towel. Oh no Mr. Comptroller of the currency, there is no speculation in this RE market. Buyers have to live somewhere.
In mortgage fraud throwing in the towel is part of the conspiracy of buying a place way over market value and splitting the difference with the original seller.
“Some call it a vicious cycle, but I see it as a virtuous cycle…”
Beautifully stated.
-
We built this bubble, we built this bubble on toxic loannnnnnns!
you should cut a record, stucco! maybe get Starship as vocals.
I’m no e-bayer but what’s the likelihood they’ll have an reo section up and running soon?
How soon is the question. It’s almost certain they will have it eventually.
I thought predictions of bloodbaths were a little too much but now I’m starting to agree
__________________________________________________
Please join us on the Dark Side!
Please join us on the Dark Side!
———————-
Yes, it’s getting a bit crowded over here though…time to be a contrarian? Nooooo! (just kidding)
When DL and LAY get jobs away from RE….Then it will be time to be a contrarian.
DL’s been pretty silent these days. Cat got his tongue? Maybe one of his spinning lies got caught in his throat.
Posted ” $#!t’s gonna knock the fan over this time around.”
Yep! this dummy never heard of a “stated income” loan. Before reading this Board. As a novice, if you are freakin’ ….I can only shake my head. I have no idea how this will play out… but I do know it will not be good.
Hell, *I* had never heard of a stated income loan until I started reading this blog, and I worked for a housing non-profit! In the predatory lending department! Of course this was 6 years ago, before everything had gone quite so FUBAR.
But I’ve certainly been flabbergasted by some of the stories of loose lending I’ve been regaled with on this blog. And while I can see them (SI loans) as a boon for the self-employed, et al, they are like I/O loans — designed and appropriate for a small minority of financial circumstances, *not* the population at large.
“‘We’re going to see every county go a little bit negative within the next three or four months,’ predicted Dataquick analyst John Karevoll.”
Didn’t Karevoll say last month that prices would go up or down just a little over the next couple of months, then flatten and start rising? Now he’s saying that they will go negative “everywhere” during the next 3 or 4 months? What will his “prediction” be next month, since he simply seems to predict what has already happened?
“since he simply seems to predict what has already happened?”
At least his predictions are accurate…
LOL!
20:20 hindsight
Hindsight is for a$$holes.
“‘Buyers have finally taken off their rose-colored glasses. Once interest rates started to go up that made the housing market slow, which in turn made buyers wonder if this is the right time to buy,’ said Cynthia Kroll, senior regional economist at the University of California, Berkeley.”
Sellers and realtors better put on their hard hats because of falling prices ahead for a few years.
And they still don’t get it: rates have almost nothing to do with the burst. They are about 1%-1.5% above what they were 2/3 years ago…. they are still low.
It’s the damn asking prices together with the mass exodus of specuvestors that has left us with too many overpriced homes for sale and too few gfs to sell them to.
Oh they get it alright…they just still don’t want to publicly say that.
Exactly,
Rates, my ***
It’s the PRICE, Stupid…
Doesn’t matter what the rates are if most people can’t afford it. Affordability rates are cyclical too and will be rising over time (with price falling).
I submit that when the marginal buyer is 100%+ financed, Option-ARMed and dangerous, a little increase in rates has a lot to do with the burst. Suppose, for example, that you could have financed this kind of suicide loan for 1% at the interest rate trough, and now the same buyer came in with 3% suicide loan rate. If he could have “afforded” a $600,000 home at 40% of monthly household income w/ 1% I/O ARM financing, then he could only “afford” a $200,000 home at the 3% rate (assuming 40% of the same monthly income). If you know the actual numbers, feel free to substitute (1% and 3% were for illustration purposes, only).
Yes, to a point but most of the people buying in the last few years could NEVER actually afford their martgage payments in the first place but it did not stop them from buying. They just wanted in on the homeownership fad and the lending industry was more than happy to facilitate.
But, Stucco, we have yet to see the real fallout from these marginal buyers defaults. The effects we are seeing so far are from high prices, high inventory, and increased awareness of the nature of the RE market.
You are right on the money mr loonofficer.Look at the huge cancellation rates of the new home builders. The end of speculation and price are the main problems.
I thought the low interest rates were the cause of the speculation that flooded the market…given the attractiveness of real estate vs. other investments.
With the rise in interest rates, speculation dried up because better returns could be found elsewhere.
I am not sure what the “break even” value for the interest rates were, nor am I sure what “other” investments these speculators turned to….can anybody enlighten me?
I thought the low interest rates were the cause of the speculation that flooded the market…given the attractiveness of real estate vs. other investments.
———————–
From everything I’ve seen, heard and read, the “excess” money is NOT coming from the buyers. The “savings surpluss” is on the mortgage (credit) side. When *mortgage (MBS, CDO, ABS types as well as those heavy into credit default swaps) investors* see better returns elsewhere (and consider mortgage/default risk too high), then we will see the spigot turned off and that is what will truly bring down this house of cards.
Most of the idiots buying houses the past couple of years have little real money. What money they have is from flips and they usually double-down on more with every bet. They are using the money from the mortgage lenders to push prices up.
surpluss = surplus, sorry!
The low interest rates were one of the causes of the speculation. But probably more important was the lowering (eliminating?) of lending standards. GFs buying multiple properties on stated income, neg am loans, all because they could “make” money on the appreciation. Once the bubble psychology took hold, the interest rates weren’t necessarily that important, as the expectation of future price increases continued to lure buyers. Eventually, all bubbles fail. This one did, and I don’t think that it was merely rising interest rates that did it. I’m not really sure what the cause(s) were, and I don’t know if we’ll ever know for sure, but I don’t think that it was simply higher rates because the profits these guys were making due to the leverage and 20% price appreciation would have meant that rates would have to have been significantly higher before they really started to hurt their returns. No, there was something else. Maybe just mere exhaustion. I don’t know.
It was (initially) the dotcom bust, the tax break on capital gains and the flood of liquidity into lending that drove the investors into the market. Then everyone heard of a guy who bought a house, held onto it for a while, flipped it and made tons of cash.
Everyone’s mom, dad, uncle, doctor, cab driver bought the notion that “real estate only goes up” and they all wanted a piece. Enter Mr. Sheets with his “No Money Down” system and real estate “investing” became the national passtime. The seasoned investors loved it because there was a lack of available inventory and a wealth of gullibles. They flipped their last flip, coubnted the dosh, waved goodbye and returned to the stockmarket. Foolish Joe Sixpack tried to emulate……
Then the smoke cleared and all of a sudden it was Sep ‘05. You know what happened after that.
“‘Buyers have finally taken off their rose-colored glasses.”
Wait till they take off the Kid Gloves,….and start bare knuckle punching to the Mid-Section.
The piper has got to be paid and he is a bit pissed off since he has been asleep for about 5 years, he has gotta make up for lost time.
A.KA. “the grim reaper”
“Cynthia Kroll, senior regional economist at the University of California, Berkeley.” Hey, Cynthia what exactly did you study in school, to qualify as an economist, to come up with this brilliant, and totally bogus statement. And she puts Berkely in her title. When did real estate become a part of being an economist?
People wehnt into hock with governement education loans, and come out this stupid.
I know this is old news, but sometimes I just need to take a step back and actually look at the prices people are “paying” for homes!
EVEN with funny money mortgages, I don’t see how those Californians are spending $700,000 and up for mediocre dwellings! It is seriously just mind boggling.
I know that all areas will get hit, but I feel that the coasts and more expensive areas will get really hit simply due to the level of insanity.
Here we complain and moan, but our median SFH price is well within the affordable range for middle class people. I mean think about it, how many of you Californians would buy a 1800 sq ft 3BR 2Ba house if it was $200,000?
I will take three. Oh wait that is speculating, only one please.
I couldn’t agree more. We hear about Boston being a big bubble, but when you look at the ratio of median home price to median income, it’s something like 6 in Boston, compared to approximately 11 for all of California (including the half of the state that is more like Missouri than California). California is so far off the charts it’s beyond belief.
It’s that whole power of positive thinking craze that caused prices in CA to balloon into the stratosphere, Just like the dot-com bubble. CA housing is a dot-com style bubble all by itself. We all know how the dot-com bubble ended, with like 5 trillion dollars of wealth destroyed in the end. Ouch.
Sign me up. It’s what I want at a price I can afford.
That same house in any decent neighborhood here in OC would $700K or more. I make good money, more than the median here, and there is no way that I can even remotely afford to actually buy (20% down, 30 yr fixed) anything more than a 2BR/1Ba condo in a so-so neighborhood. No thanks. I’ll wait for prices to come back to reality and then I will buy something that I actually want.
House Inspector, you read my mind. When I see Ben’s stories with people making 120K, which is still way more than I mkae, buying 845K homes, it is mindnumbing. Just think, if you earned 80K/year, a very good salary for many in most of the country, esp. 1 person and you kept all the money, no taxes, etc., it would still take 8.5 years of nonstop monthly payments to pay that sucker off, with no interest on the mortgage. Truly amazing!
Actually, it would be 10.5 years, but I get your point, and the correction just makes it that much more amazing. The stupidity of FBs and lenders throughout this bubble has simply been incredible.
Sorry, my bad on the math. 10.5 makes it even worse!
House Inspector, this one’s for you, since you brought up the topic:
Credit to this to precious metals columnist David Vaughn, Gold Letter, Inc.:
http://www.kitco.com/ind/vaughn/oct182006.html
“Yesterday I ran into a friend of mine at the post office who is a millionaire. His one indulgence is an expensive motorcycle with a trailer attached in the back. His dog, Echo, rides in the trailer. Funniest thing you ever saw to see this dog riding around in town in back of this motor cycle sitting up like a human just enjoying the ride and wind blowing in his face. Well, this millionaire is a conservative and it is always interesting to hear his concepts of money because he is prudent about spending it.
We stood there in the post office parking lot talking and we commented on the million dollar plus subdivision being developed across the street. A place called Montebello. And this millionaire comments to me in wonder at where folks get that kind of money to buy those homes that are close to a million bucks. And I knew what Mike was talking about. Mike paid 200 grand cash for his home on the mountain. And he sure as the devil was not going to either spend all he had for a stupid house or borrow it.
But the point of the story is that if this millionaire is typical of many self made millionaires who refuse to part with their money then who is buying these million dollar homes and with what? Answer as I have said before it is not the ones who have built significant sums of real wealth. These people are generally frugal because they know how hard it is to both make and to keep money and they sure as heck are not going to spend it on a house that may or may not go up in value.”
I bought a 3/2 1850 sf home in California for 232,000 and I was happy with it. It was on a half acre too. I’m glad we sold it, I wish we had held onto it for one more year but my husband lost his job. The people who bought it had a 103% loan, and did not seem very smart about money. I bet they took out a giant heloc on it and they are now underwater. Which would make me quite happy because they were horrible durring escrow.
“‘Buyers have finally taken off their rose-colored glasses.”
Wait till they take off the Kid Gloves,….and start bare knuckle punching to the Mid-Section.
‘The Press Telegram reports from California. “California’s median home price will drop in 2007 for the first time in 10 years, according to the California Association of Realtors. ‘The housing market has slowed down at a much faster pace than anybody has anticipated,’ said Robert Kleinhenz, a CAR economist.”’
But the CAR forecast is for only a 2% drop, right? Shuuuure…
I’m very sceptical of the motivations behind CAR’s forecast. I think they know that the appreciation game’s over for the moment, so they have to coax sellers off their high asking prices in order to keep up sales volume. Otoh, they don’t want to scare potential buyers away with a forecast of a significant drop. So what do they do? Come up with a forecast of a very small drop. Quite honestly, I don’t think CAR’s forecast is worth the paper it’s written on, and I fully expect it to get “revised” as we progress through ‘07.
“Quite honestly, I don’t think CAR’s forecast is worth the paper it’s written on, and I fully expect it to get”
In this case from the Long Beach press telegram, which is written at the 6th grade reading level. That report from CAR is more bogus REIC prop BS. Only 2% yoy decline in Cal State median for 2007? What a crock!
“homeowners were a median of five months behind on their payments when the lender started the default process”
I guess this means Casey at http://www.iamfacingforeclosure.com has about 1 more month before the banks foreclose on his 5 remaining properties.
I saw this Casey guy’s blog posted here about a week ago and have been hooked ever since. He chronicles his debacle of an idea to become a real estate “investor” starting last year. He bought 8 properties and used cash back on new deals to service the debt of older ones. If you haven’t checked out his blog yet, it’s quite entertaining. From the real estate seminars he took, the mortage fraud he has admitted to, and the comments by our very own txchick57 and Robert Cote. It’s a shadenfreude extravaganza.
Oh, my…. My good half wants to feel sorry for this guy but then the “I purchased 8 properties with $0 down” resonates through my cranium……
Tragic comedy but compelling nonetheless.
and just this week he borrowed 3k from a friend and put a deposit on another one.
Yeah, that was the best post ever. “let’s see, I am paying $20K/month to service $2.2M in RE loans, I’m paying $6K/month to service $140K in credit card debt. What to do…what to do. I know! I’ll borrow $3k from the last friend I have on the planet to launch my comeback!”
Anyone who hasn’t figured that giving that loser a “loan” is really a “gift” deserves to lose their money–and then some.
someone should suggest to Casey that he should confess to the murder of Jon Benet Ramsey. worked out Ok for that John Carr freak.
Don’t forget his Hawaiian vacation in April. I really feel sorry his vacation planner who won’t be able to plan any more vacations for him.
>He bought 8 properties and used cash back on new deals to service the debt of older ones.
Sounds like WCOM and ENE.
-
As we have said, a few of these corporate Caesars are ahead of the others. They are Web zealots. Proud to be named America’s most innovative company by Fortune, Enron (ENE; http://www.enron.com) brags about how it trades energy and does a host of other things over the Internet: it includes a special section on its fiber optic broadband services. Ken Lay, the Chairman, says he is kneedeep in the New Economy, “We are participating in a New Economy, and the rules have changed dramatically. What you own is not as important as what you know. Hard-wired businesses, such as energy and communications, have turned into knowledge-based industries that place a premium on creativity.” - William P. Dunk, May 2000
thanks for posting that incredible quote. The only thing missing in it are the words “new paradigm”.
The sickest part is, if he did it in 2001 or 2002, He’d probably be worth 3/4 of million in profit by 2005. Now, would he of been wise enough to sell?
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this is why i don’t trade individual stocks or flip houses. you have to be consistently right TWICE - knowing when to buy and when to sell.
“What goes up must come down, according to Isaac Newton’s law of gravity….”
It’s ironic the author selected Sir Issac Newton to describe falling prices; after all, he was a victim of another bubble, the South Sea bubble.
First Sir Isaac made lots of dough, but then he gambled again when the South Sea Bubble got new legs, which turned out to be a dead cat bounce. Sir Isaac caught a falling knife, which should be a cautionary tale to those who are champing at the bit to gamble during the unraveling phase (e.g. lainvestorgirl). Sir Isaac was thereafter quoted to say: “I can calculate the motions of the heavenly bodies, but not the madness of people.”
That sounds like many of the people in the Bay Area I know, who 1) made lots of money on stock options, 2) bought homes around 2000-2001 that appreciated 100% through 2005, and 3) now think they all have the Midas touch as they upgrade to multi-million dollar homes and buy second and even third homes.
Sir Isaac Newton deserved to lose everything on the south seas trading company. Their primary “sales good” was SLAVES! Oh wait, now is home-owning serfs…
http://en.wikipedia.org/wiki/South_Sea_Bubble
We publish the actual facts about Silicon Valley RE on a weekly basis.
Santa Clara County:
http://www.viewfromsiliconvalley.com/id125.html
San Mateo County:
http://www.viewfromsiliconvalley.com/id157.html
Santa Cruz County:
http://www.viewfromsiliconvalley.com/id156.html
Our most-recent, “The Last 30 days,” is at:
http://www.viewfromsiliconvalley.com/id264.html
A new edition will go out this weekend.
I look forward to your new stats every weekend. Love your website. Thanks!
Chief Economist Leslie Appleton-Young.
“‘Looking to 2007, we expect that some regions of the state, including the Central Valley, San Diego and Riverside/San Bernardino regions, will experience sales declines greater than the state as a whole,’ she said.
Read it. Inherent in this statement: ALL REGIONS WILL FALL…. just these ones mentioned, MORE than the others…..
Quite the 180 from 6 month ago, eh Leslie? And a wide covering CYA….
San Bernardino is TOAST!!! The IE is going to wither and die in the 105 temps of next summer. I lived there for 10 years and it is literally as hot as Hell sometimes. On top of that you get the winter Santa Ana winds for days on end that blow 40-50 mph gusts continuously. One nice side effect is that the smog gets cleaned out. However, still not enough to justify 400K+ homes, esp. with the incomes out there.
You’re only focusing on the negatives. What about the leisurely commutes to work, excellent public schools, and world-class entertainment and dining opportunities?
Oh sure, don’t talk to me about the leisurely commute. I made the 1.5 hr trek to south OC for 3 years. It got so bad that I actually started recognizing some of the cars because of the vanity plates. In the winter with shorter days, if it rained it would take upwards of 3 hours to get home! As for world-class entertainment, what single A baseball. While enjoyable, I wouldn’t say world class. And dining opportunities, yeah, right, carl’s jr. and taco bell.
Yeah, well ok, but you conveniently failed to address the school issue. I for one am hearing GREAT things about Fontana High School.
Must be plenty of clubs (gangs?) at school for kids to join.
Plenty of social affiliations, plenty of exercise (a full hour of cardio is good for the heart), they get to interact with government officials and see how the criminal justice system works first-hand.
drw posts “Yeah, well ok, but you conveniently failed to address the school issue. I for one am hearing GREAT things about Fontana High School.”
Hellhole, Bunghole, wait till the little gangsters wait to ditch school to rob your house. While you are driving 100 miles to work…….LOL….LOL…. the IE will give Plamcaster a good name in 3 year’s.
Even with the knowledge that IE will probably lose at least 50%, hearing these descriptions, I’m thinking about making that 1.5 hour trek right now and see, no HOPE that I can put my John Handcock on a sales contract RIGHT NOW! I CAN’T HOLD OUT!
CHINO HERE I COME!
(economic prosperity there you go)
Chino is barely the IE.
Get out to San Bernardino, Riverside, Moreno Valley, Perris, Fontana, etc and you will see the real IE.
The 917 zip code is more East LA than IE. To get true IE you need 923, 924, 925 zip codes.
Yes, I spent some time is college working at UPS.
“And dining opportunities, yeah, right, carl’s jr. and taco bell.”
I’m seeing the opposite problem. You should take a trip to Rancho Cucamonga’s Victoria Gardens, a lot of high end shops in there. I don’t know who they think lives out here. I guess the $Million homes and Hummers with a 2 hour commute to work fooled someone.
LOL Victoria Gardens. Outdoor shopping in Cucamonga. Delightful for all of April and October. Make your plans today!
500 riot at Fontana High: More than 100 law-enforcement officers team up in response
Yes siree, this is the kind of socialization my homeschooled children are missing. NOT!
We live in IE [San Bernardino County] and the smog is bad [better than 20 years ago when I was studying in Riverside County but still not clean enough]. At least I’m renting now [the rent is high compared to Austin,TX but cheaper than SouthBay/L.A. county] and commute to work by walking about one mile….
OUCH!!!!!!
that was beutiful,
I agree. The IE is toast. In Riverside’s 92508, according to the DQ data on sales/prices, this zip lost 4.4% from last year (2nd worst in Riverside). This is where I live and I track it carefully. This is the area with the best schools in all of Riverside, and the most new construction.
http://www.dqnews.com/ZIPLAT.shtm
Angela in the IE
But, but, but, they’re building soooo many new homes out there, and surely the HBs know what they’re doing (I’m sure the commute won’t get worse, though), and wasn’t it Jack Dekayser (sp?) who said just last month that the IE will be just fine because their economy is so good and diversified? So, I’m sure that you must be mistaken.
sarcasm off
“‘Looking to 2007, we expect that some regions of the state, including the Central Valley, San Diego and Riverside/San Bernardino regions, will experience sales declines greater than the state as a whole,’ she said.”
LeslieApp-Young and Car must have really done some Major Data Crunching and stupendous Analysis to come up with that Conclusion!
Gee, looks like Inland empire and central Valley wiil experience sales declines greater than the state! I wonder if it might be due to maybe just a bit of inventory over building of tract homes(I bet that these two regions have built or have in the pipeline at least a half-million SFH’s from 2004 to 2007.
“‘The negative-am ARMs are catching up,’ said Phyllis Ingraham of e-foreclosuresdata.com. ‘You either hang on and make the payments to ride this through, or if you can’t afford it you go into default,’ Ingraham said. ‘It could be several hundred more a month.’”
I can see the headlines now, “California FB mauled by his very own ARM!”
LOL……….to good
Remember that old, old black & White Horror move, where “the Hand” strangles the guy? Peter Lorrie I think?
“Claudette Center is trying to sell a Bernal Heights home that belonged to her uncle. After gutting the kitchen, refinishing the floors and putting in new bathrooms, she still hasn’t received any offers, and traffic at open houses has been slow, she said.”
“‘Last week nobody came,’ she said. ‘The first week it was mostly all neighbors.’”
“She is considering lowering her $829,000 asking price. ‘I understand that if I really want to sell the house fast, I’ll probably have to drop the price,’ she said.”
Why? I thought $829K in SF was cheap. Plus, it has (from MLS ad, 44 Arnold Ave., the only $829K house in Bernal Heights): New kitchen featuring stainless steel appliances, granite counters and oak cabinets. New tile in bathrooms and updated fixtures. New furnace. New roof, new windows, new garage door. Fresh paint in and out. New windows, a real beauty!
Gotta admit - does look a little better than that Craigslist SF stuff we’ve been seeing:
http://www.zephyr-re.com/listingdetailmls.cfm?ID=60774
Bernal Heights has nice weather but high crime and an overall skeevy ambiance. I’m very familiar with the SF Mediterranean house style in the photo, and I will estimate its size at 1100 sf. So that’s about $800/sf. For a gangland adjacent ‘hood, that’s just silliness.
You could buy that crap for 250k in the mid-90’s.
House Inspector that house is for you. You can own (I mean be in debt) to the California Dream for just 829K. Also, while that house looks nice, would give you more than 250K for it. My goodness you have no property, but the house.
great for skakeboarders…probably reach speeds of 40 mph on that grade.
Just about as fast as this real estate pig is unwinding.
I lived in Bernal Heights about 8 years ago and liked it. But that house is on the wrong side of the hill, not a great neighborhood. The area around Courtland St. was a nice place to live. If we move back to SF I’d live in Bernal again.
“The CAR forecast also calls for sales to continued to decline in 2007 by 7 percent. The projected fall off for 2006 is 23 percent, meaning the worst of the sales fall off may be behind us, Kleinhenz said. ‘I’ve become very fond of saying things will be less worse,’ he added.”
Correct me if I am wrong but lets say the housing slowdown at 27% is a car moving at 27mph…for it to slow down, does it not have to hit 26,25,24,23mph…before it slows to 7mph (or 7%)…and before it starts to even slow down, don’t factors such as applying the breaks, slope inclines have to be in place to effect to speed of the car…
Anyone listening to this spin is “FU@KED”!
The only thing which instantaneously changes velocity like this is the REIC spin on current market conditions.
Beleive me probably there are so many dummies who listen to $h!t like this.
Tell me about it. I know two owners, I mean debtors, who cite BB and the fed for the latest rate hikes/drops to determine what will happen to their i/o ARMs. What a crock! Their rates will always go up. I am familiar with ARMS from the mid 90s, and trust the formula used is so convoluted Einstein couldn’t figure it out. Needless to say, your rate is almost always going to go up.
As an aside, did anyone catch the front page story in yesterday’s L.A. Times? Workman’s comp is getting harder to get paid. Wonder how many workers who thought the house would go up while the payments would come in are going to take it on the chin?
“trust the formula used is so convoluted Einstein couldn’t figure it out.”
The details are somewhat unimportant, save one: Eventually, ARMs require amortization of principle, and generally over a shorter time horizon than, say, thirty years. An increase in adjustable rates layered over the onset of amortizaton can potentially double the monthly nut.
I heard most of the people on workman’s comp in Cali are state workers. hahaha
posted “Beleive me probably there are so many dummies who listen to $h!t like this.”
Well, more than 50% of the people voted for GWBush.
And the alternative was Theresa Heinz Kerry and her 6 foot 3 hard-on. Big deal! It was damned if you do, damned if you don’t. Move along.
Well that settles that argument.
Yup nothing like listening to the people who have a hammerlock on government complain about the people who control nothing….hey those people over there, you know the ones who arent in charge of anything…well it is there fault.
The party of personal responsibility accepts none. Just like they hate gays….except the ones with R’s after their names even if they are preying on 16 year old boys….Hey IOKIYAR (its okay if you’re a republican).
Using Kerry’s wife as the juggernaut of your statement is classic “Rovian Slimus”, should of smeared his War Record again too. Nice…..
“Well, more than 50% of the people voted for GWBush.”
um, yeah…whatever you say, ‘AE Newman.’
Diebold Systems? Caging lists? Massive Roll Purges?
What, Me Worry?
“The county’s 4.4 percent drop in overall median prices was announced last week by DataQuick. That was driven largely by a 17 percent drop in new home prices, declining from $498,000 in September 2005 to $414,000 last month.”
Holy catastrophe! Just think of the new home price percentage drop if you subtracted out the value of incentives used to inflate the official sales prices!
““‘It is definitely a buyer’s market,’ said (realtor) Dave Mann in Aptos, pointing out the record number of listings. There are 1,361 homes listed for sale, 49 percent more than a year ago and the highest in 10 years. The 132 homes sold in September represent an 11-year low. Sales were down 41 percent from one year ago at this time, and down 51 percent from two years ago.”
Aptos is about 1.5 hr drive from me.
Only 132 sold in one month yet there are over 1,361 listed
10x more available… 10 available for ever buyer….Only 9.5%
actually sold … while over 90% did not sell…. no more demand.
Inventory will climb even further since many homes are investment property … vacation spots purchased from dot.com stock options.
No one will buy these… the local economy is so darn small it goes to sleep during fall to winter. Major tourist spot at best.
But buyers are not interested in paying these prices which are 2-3x above nornal historical averages in Aptos….
Ha! this is only the beginning…
When ever I hear these idiot realtors saying “it is buyers market”, it makes me to VOMIT. Excuse me I have to go to the bath room.
I grew up in Aptos! I agree with everything you say. No real economy, you must commute to Silicon Valley if you want to make any decent money. This goes for all of Santa Cruz County. Median income there is in the $60K range I believe. Totally unsustainable.
It is definitely a sucker’s market!
The Relator Econo-Misseds are capitulating. The turd train is officially leaving the station.. Everybody wave bye, bye…..
I am tiring of hearing LAY and DL now claim they knew it couldn’t go on forever. They are just two of many “lyin sacks oh sh*t” that have opened they traps to spew falsehood on the housing topic. Maybe they did know, but chose to misrepresent what they knew then to keep they ponzi scheme going just a wee bit longer.
It would be tremendously refreshing for one of these REIC representatives to admit that they were wrong last year and may be wrong this year and that while they could not see the writing on the wall, that others did indeed see and were ridiculed for their honesty and foresight by the REIC and their shills.
So, Gary, David and Leslie, gonna step up to the plate and do the right thing?
Prove me wrong, but I think you and your fellow agents and brokers knew all along what you were doing lining the sheeple up in the ARM/IO/NegAM chute as GFs just to push the house prices higher and higher with fear of being “priced out forever”. Tell me those closest to the action were completely blind to the simple economics that the toxic loans being granted to buyers who could not afford fixed 30 yr mortgages would reset and drive many of those buyers, who should have known better, out of those homes and into foreclosure and bankruptcy. Tell me agents, brokers and the lot really did not know this was coming. Or fess up and let us know you did, but wanted to lead the sheep to slaughter as you continue to do now with these feeble predictions of a rebound in mid 2007.
The very act of claiming that the slowdown in housing was something you “expected” even though you are documented on many occassions saying quite the opposite indicates one of two things. You set up the buyers then or you are brazen liars now. In both cases you have impeached your credibility.
“I am tiring of hearing LAY and DL now claim they knew it couldn’t go on forever.”
Someone should cough up $1.27 and buy a copy of David’s book and read it back to him and ask him to respond. I’d pay $40 on Pay-per-view to watch an hour of that.
Why waste money. Find it in “free box” at Yard Sale.
The yard sale of someone who read the book and took his advice, now selling everything of value to pay their mortgage/heloc.
Given….
DL certainly wasn’t espousing this “expectation” in his book, “Why the Real Estate Boom Will Not Bust - And How You Can Profit from It: How to Build Wealth in Today’s Expanding Real Estate Market”
Why don’t reporters ever call him on his book?
Realtors shouldn’t just say, “Don’t sell if you don’t have to.” They need to say, “Don’t buy if you don’t have to.” Today’s buyers will be tomorrow’s plaintiffs after they lose their life savings in a falling market.
Now they cunningly say to the sheeple, “Don’t sell if you don’t have to” and “the market has bottomed and will rebound at the end of 2007,” while they quietly liquidate their RE holdings ahead of the bloody Spring massacre.
“That’s about 7,600 brand new homes, sitting unsold. And more than 6,400 of those are in the attached sector, condos, condo conversions and townhomes. And that doesn’t count the number of housing units under construction, more than 10,000.”
It also does not count latent inventory of used homes which owners will not be able to hold on to in the face of falling prices, thanks to Russian roulette financing that only made sense if home prices kept rapidly appreciating.
You mean like Bob Toll saying on CNBC he was going to burn the shorts and then selling out the back door?
http://southerncalifornia.lyonhomes.com/htmlmail/southerncalifornia/agiftforyou/index.html?utm_medium=email&utm_campaign=msgid.5100
Who on earth is left that can afford that crap, let alone want to buy it? 600K here,, 1m there, low 1Ms at another spot. Geez, the OC isn’t that valuable. This county is in for a major meltdown. Also, what’s up with 5K for referrals. What a crock. Hey, your buddy that you referred just took a 1m loan and here’s 5K for him and another 5K for you. What a load of crap. This sheit makes me want to throw up.
What is really sad, and I want your take on this ladies and geneltmen, is that housing, which I guess at one time was held in somewhat decent regard, seems to become with these cheap tricks, nothing more than something out of a cheesy used car lot. I expect to see some of these builders’ sellers at the models with a tablecloth-looking jacket from the 70s on!
My wife has a propensity to assume that so many $1m homes for sale in San Diego implies that every other household besides ours is worth $1m+. I infer otherwise, based on a median hh income between $60K-$70K…
Now that I am over the counter whore ad on craigs list. I find this one surfing the net in between typing up a couple of tough appraisals… I can almost here them calling to delay the closing to get out of paying the cash.. and then of course they will blame the appraiser for being slow when it reality they got the appraisal 3 days after ording it…
http://southerncalifornia.lyonhomes.com/htmlmail/southerncalifornia/agiftforyou/index.html?utm_medium=email&utm_campaign=msgid.5100
Im thinking about changing my screen name to Mr.Negative.
I’m sure people will be recommending their “friends” to these homes. People they really care about, no doubt. Mother-in-laws, ex-girlfriends, the guy that got the promotion instead of you, and the like.
Here are some great investment recommendations from your always trustworthy friends on Wall Street:
Don Hodges, who helps manage about $488 million as chairman and chief executive officer of the Hodges Fund, talks with Bloomberg’s Monica Bertran from Dallas about the outlook for the U.S. housing market, his strategy for homebuilding and railroad stocks, and his recommendation of Centex Corp. and Burlington Northern Santa Fe Corp. (Source: Bloomberg)
Bonds of U.S. homebuilders are becoming more attractive as the economy strengthens and the companies adjust their inventories to accommodate for a slowdown in housing sales, according to Bear Stearns Cos. (Also Bloomberg)
Nothing to worry about in the housing sector, I guess. Hmmmmm.
Hodges is a piece of work. That fund has done pretty well. Remember Warren Buffett buying LVLT bonds when it looked like they might go bankrupt? Worked out pretty well now, didn’t it?
Based on what I see here, it looks as though he’s done well pumping and dumping. The smoke that Team Wall Street is blowing on the housing sector can only be explained in terms of distribution. The people are the masters of this trade — and pensioners, widows, orphans and assorted other chumps will wind up with this crap in their portfolios before it’s all over. Shameless, but highly profitable for the sharks.
I’m not familiar with Buffett’s LVLT trade — are you talking about Long Term Capital Management?
http://finance.yahoo.com/q?s=lvlt&d=t
I couldn’t figure out why Buffett would invest in a dotcom company but if it was bonds then it might make sense…..
“‘Looking to 2007, we expect that some regions of the state, including the Central Valley, San Diego and Riverside/San Bernardino regions, will experience sales declines greater than the state as a whole,’ she said.
These people are geniuses.
“These people are geniuses.”
That is why they are in propaganda business. People who really work for a living don’t have the time to develop the genius.
Jas Jain
WaitinginOC said…Why don’t reporters ever call him on his book?
———————————————————————————
This is the real tragedy of our times. The journalism profession has turned into a joke! With very few exceptions, most financial reporters are dumber than a bag of hammers.
That’s what happens when all the media is held by a handful of conglomerates, or beholden to advertisers. ” Pay no attention to the man behind the curtain”
Wow, someone else who actually gets it.
oh boy now my turn to butcher the Upton Sinclair quote!
“It is difficult to get a man to understand something when his livelihood depends on his not understanding it.”
SD Zip: New listings 10/18/06 (today) = 101
Overall new listings (since 10/17/06) = 200+
Isn’t 200+ new listings in two days a pretty big number this close to the holiday season? And the price reduced percentage is up to 44% now - seems to be growing slowly but steadily. No worries, sellers — there are only 10,000 new homes under construction to add to the growing inventory pile in the next little while…
” 10,000 new homes under construction to add to the growing inventory pile in the next little while…”
..not to worry snow birds, and new immigrants will snap them up…there’s only so much land you know..
What about the aging baby boomers??
Stop the insanity!!
I am renting an apartment in San Hosebag. Got a flyer in the mail today from Saunders Funding Corp touting a $1M loan for $209/mo, fixed for 5 years. It is far a max of 70% LTV which is a good thing because after 5 years of neg am payments you will probably owe another 30%. This mortgage is like selling a zero coupon bond. Seriously, why bother charging any monthly payment — why not just have a giant balloon at the end including principal and interest. No wonder real estate prices are out of control here. I really don’t think prices will go down until lending standards become tighter.
Oh, and the loan has NO AGE RESTRICTON. Gee have all the kids borrow a million too. LOL
I wonder the same thing. What’s the point charging a pittance during the negative amortization period? Just so they can keep track of your mailing address??? You could just send them a monthly post card instead, and expect to pay a “balloon” payment (maybe “mushroom cloud payment” is more like it) in a few years.
In any event, housing’s gonna crash even if lending standards don’t tighten. Housing prices can’t flatten. If they stop appreciating, they’re gonna tank because the buyers will bail and the sellers will try to sell. If they keep appreciating, the stakes just get higher.
Of course, this should be written in the present, not future tense. Check out this realtor’s post at SDCIA:
http://www.websitetoolbox.com/tool/post/sdcia/vpost?id=1456326
I wonder if he/she is recommending a house to her friends and family. Didn’t think so.
This is kind of funny, first the housing fizzle and now this to slow down the developers…lol
Scientists: Prehistoric Ground Sloth Fossils Found In OC
ORANGE COUNTY, Calif. — Experts said they believe old bones found in Orange County are prehistoric fossils.
Paleontologists said contractors have unearthed the bones of a ground sloth. The discovery was made just two stories below street level.
First there was an arm, a rib and then a skeletal body took shape in the discovery.
“If this was alive it would be the size of a small SUV. It’s pretty impressive,” said archeologist Janell Mort.
Experts found the Harlan’s ground sloth at the base of what will become a 15-story condominium tower. By law, the construction can continue, but must be outside a 2-foot radius.
“We have to stay out of the area. We wanted to pour concrete holding it up a little,” said Mick Sheedy with the Intergulf Development.
It is the second find at the Central Park West Development in less than a year. Pictures showed the tusks of a mammoth also found at the site.
“The mammoth skull and jaw was here. It stretched 60 feet to the south,” said paleontologist Kim Cross.
Authorities said they believe the area, near Jamboree and the 405, was once under water and possibly an inland extension of what is now the Newport Back Bay.
Good post! I love Paleontology, Geology,ect. The Newport Back bay must have been a rich ecological wildlife niche before it was reshaped into an exclusive coastal exurb.
That area of Jamboree near the 405 is seeing a massive amount of new construction of Condos, apts, commercial bldgs. Jamboree/michelson/VonKarmen streets south of 405 very busy with housing/commercial site construction.
In the end it’s all about supply & demand, the HB’s have been over builidng for years, the over-supply of houses is statospheric, I read that 2-3m surplus homes exist today. As an aside canada has 280k surplus homes, based on a 1/10 ratio the US and Canada are on par for insanity. Nevertheless, today we see some news that HB’s broke ground on more homes than last month…..some wags said this was a good sign….ah no….it’s the thin edge of the wedge, the HB’s have a machine that they can’t stop, that continues remorselessly to overproduce homes, just as North American’s can stop there pedantic and unseemly over consumption. What a disaster this is…..
At the end of the day, prices have to reflect the median income, which hasn’t moved for years, Toronto, Canada’s premier city has had flat median income since 1970. The US is very similar. I really feel a grave degree of trepedation for our collective good, as well as a bit of frustration at the slowness of the real estate correction…it’s sooooo slowww……..
” I really feel a grave degree of trepedation for our collective good, as well as a bit of frustration at the slowness of the real estate correction…it’s sooooo slowww…….. ”
Yes, and I can’t shake it. Every day. I wake. Is this the day? It is so slow. The cancer eats. Every day.
I read today that Wells Fargo and Countrywide are brainstorming on ways to keep people out of foreclosure…didn’t say what was on their mind. Someone else said a foreclosure can cost a bank $50K, sounds high but red tape is expensive.
I feel like I must be living on another planet, because I’m barely seeing any of this bubble-popping stuff here in LA.
I’m in LA as well. I’ve kept a close eye on for sale signs and they are increasing gradually, but consistently. I also noticed that over the summer, many of the houses for sale had few visitors to open houses. Anecdotally, friends who are trying to sell say it is tough. When LA starts to fall, watch out. It had the lowest affordability measure of any region in the country before the CAR numbers were cooked. In short, I agree that prices haven’t started to plummet, but I think they are poised to do so, and when they do, it will be fast and furious. One other way of looking at it is this: if you are in LA looking at a $700,000 condo and decent SF homes in the SD suburbs have fallen to $500,000, people will head to SD or elsewhere, forcing LA sellers to chase down competitors. You just have to be a little more patient.
How’s this for patience: I haven’t bought anything since 2002.
I don’t care that much for the condo or SFR market, as it is very difficult to even break even on those properties. I’m looking for another apartment building at less than 8 times gross, and as of right now, I’m lucky if I can find a run-down building in the hood, all singles, at 10 times. Who would buy a money losing property at these prices just to put up with all the abuse from the tenants, rent control, code enforcement inspectors, etc., is beyond me. All I know is, there are no income producing properties anywhere in southern California, not even the IE, not Bakersfield, not even up in Fresno. So, if we are in a downturn, we got a looong way to go before someone like me, who actually expects a ROI, can jump in.
To reply to you more directly, Curmudgeon, there are a lot of people here in LA with a lot of money, who all seem to be waiting to pick up a deal, and also a lot of people who are so up to their ears in mortgage debt that they are going to be really, really reluctant to lower their asking prices (unless they lose their job or have some such emergent situation). There are also a lot of fairly high paying jobs here, the economy is very diverse, a lot of people from all over seem to want to be here, I don’t know, I’m pretty skeptical at this point of a major price decline. Hope I’m wrong and you’re right
How of much of that is real estate related though…quite a bit I’ll bet. Not everyone can work in the film industry. Other people do have to have real jobs.
If you think everyone, or even close to everyone, who has $$ in LA made it off RE or film, you are so wrong. It’s just not true. Just a sampling, but I know a guy who’s a partner at a major accounting firm, I know a Mexican guy with like 14 taco franchises, I know a plastics dealer who sells wholesale all over the county and the IE, I know a spanish language radio millionaire, I know a bankruptcy lawyer who has a knack for making it big in equities on the side, and a sculptor of ballet dancers, all of the above with lots of cash, who are always on the lookout for a RE deal to park their money. There’s a lot of competition here for good properties, investors in LA will pay a premium to own within a convenient commute.
I’m sure everyone you mentioned is just hoppin to spend 825k 3&1 rental house in Culver City. Even if they wait and buy when it hits even 675k, they’ll be wasting their money., but it make for interesting stories. People in Los Angeles (my lifelong home) aren’t getting it….Yet.
As a [former] job seeker in SoCal, I noticed that the pay scales for software engineers were less than what I was making in Austin, TX. Less pay for 3-4x home prices? For example, we were renting a 2,200 sq ft 1980’s home in Austin which was on sale for $144K (we almost bought the house but our owner beat us to it: ironically, we ended up renting it instead for 8 months). The 1940’s home near my parents’ home in Gardena went into escrow has around 1500 sq ft and was listed for more than $500K.
It sure is different here in SoCal…
I think you have hit on one of the key points for me in SoCal. Is anything here worth the premium? The only things I can think of are the ocean and the weather and those only apply if you live in a beach city. Austin is a very nice town and as I recall (former Texan) the weather in the Hill Country is reasonable if not downright nice. I guess being able to swim in the ocean in the morning and then ski by afternoon is another good point.
But as you pointed out, wages are not better here. Cost of living is higher with fule going for approximately 10% more than elsewhere. Property taxes are about 1/2 of those in TX, but TX has no state income tax so I’ll take the difference there.
One intangible is the community … I moved to OC because it was a more conservative community - that was 14 years ago, not now. Last Friday I was surrounded by SWAT and patted down and my Jeep searched because some touron (tourist + moron) saw me loading BB guns into my Jeep as I was getting ready to go camping. Orange tipped BB guns, and they called in the chopper and had me in their sights. Now I question whether I am willing to live in the land of fruits and nuts where a gun is seen as only a malicious weapon and police swarm to “protect” society from BB guns. What a waste of tax money. I can only imagine a Sheriff in Fredrickburg getting that call and falling off of his swivel chair laughing while telling the caller that if he/shi/it looked out the other window they would probably see three more people loading guns into their trucks. Jeez! What happened to the 2nd Ammendment here???
So, back to my original point, is it really worth the premium of 2 or 3 x in price? I am beginning to think not, but I have to stand in the ocean and think about it some more.
I didn’t mean they are paying a premium to have their investment properties near the beach and great weather. What I meant was, there are a lot of RE investors here in LA, they have a lot of money, and it’s easier to own within 1 hour or so than to own out of state and rely so much on a management company.
Why is there such myopia about real estate in SoCal?? Real Estate is not the only investment vehicle available to people. I have a pile of money to put somewhere as well. It sure as hell is not going into real estate in SoCal given current conditions and direction.
It’s part of the culture of the place. A lot of people come to “make it” here. All of our parents got rich just buying a house to raise their family.
“It’s part of the culture of the place. A lot of people come to “make it” here. All of our parents got rich just buying a house to raise their family.”
It’s going to be the undoing of a significant number of their progeny if they don’t get their f**king blinders off already.
JWM …. I couldn’t agree more. Housing crashes keep happening, but, just like the earthquakes. Wait 5 years and everyone forgets. I’ve been through 2 of each…..
Speaking of LA SFH’S market, i happened to notice two abandoned SFH’s near Glendale Dwtn. Both right next to each other and both old homes built in the 1920’s. addresses are 349 and 347 milford ave zip91203.
These homes are 3 or 4 bdrm, 2 baths on 7-8000 sq ft lots. Both homes 2 story with large attic spaces. Here’s the catch:these homes are sitting there virtually abandoned and their yards are extemely overgrown with weeds and trash. Recent sales Data from zillow very strange:one home shows last sale was for 248,000 in 2004. These homes are just 2 blocks due west of dwtn glendale on Milford. The dwtn Glendale residential zone is in good shape, with lots of new construction of Small-side Condo complexes going up.IT is not a deterorating dwtn at all, which puts glendale in a small select group.
The 347 home does have a RE max 4-sale sign on it. Cannot located this property on RE Max Glendale listings. The Comps for similar homes in this part of Glendale are around $700,000.
What a waste of someones life work, to throw away every cent they earn on the overpriced house they bought.
Exactly.
Dan doesn’t seem to mind…. It doesn’t concern him in the least. Just wait it out 10, 15 years, living inside your own personally purchased prison ….. don’t worry, someday you’ll break even again.
Oh yeah, Dan…that idiot with verbal diahrreaha. He was the typical move up buyer. The underlying pretext in his posts were “…I was able to buy a house, why can’t you do it too?”.
JWM,
You either start somewhere and work your way up the financial ladder, or remain where you are and have a great view of people’s asses while they are on their way up. ROFLMAO
Not if they used I/Os and Neg Ams to do it I won’t. I’ll be watching as they fall off the property ladder all together in the 2 years Douche Bag.
I had two funny ancedotes today.
I went to lunch in Belmont Shore, one of the nicer neighborhoods in Long Beach.
Some dumba$$ was flirting with the waitress about buying her a nearby condo.
I made the remark wait 3 years and get it for much cheaper. I didn’t expect him to respond but he did, he said you know you are right RE is tanking (making a whistling noise of a dropping bomb).
That was anecdote #1 today.
This evening I had to go to Von’s in Huntington Beach for a prescription for the baby.
I am wandering around the store waiting for the Rx and I hear a mortgage broker telling a sub-prime GF/FB that every buyers FICO scores are so low that he only has expensive loans for them. He then steps through the GF/FB that this loan is only temporary until he can refi to pay off CC debt and then improve his FICO score and get a better mortgage in a couple of months, after they dispute the dings on his credit report.
I was fascinated.
yeah, right,dude. The Mine Shaft ain’t in Belmont Shore.
Belmont Shore is still Long Beach and Long Beach ain’t 500K nice.
Belmont shore/Naples/second st has always been the fashionable hi-end corner of LB, where 900 sq ft cottages would go for 1 mil. Some new teardown/new McMansions going up near the Colorado Lagoon area, but these folks should take note:this zip area 90803 has taken a -9% yoy haircut in sept.
Heres LB SFH sept dataquick nos.
Long Beach 90802 2 $423 -11.1%
Long Beach 90803 14 $1,002 -8.9%
Long Beach 90804 9 $468 2.1%
Long Beach 90805 56 $450 7.8%
Long Beach 90806 21 $490 5.8%
Long Beach 90807 30 $602 -2.1%
Long Beach 90808 54 $612 3.7%
Long Beach 90810 22 $438 4.4%
Long Beach 90813 5 $445 12.7%
Long Beach 90814 14 $695 -5.7%
Long Beach 90815 27 $620 3.3%
Long Beach will take a bad beating. During last RE meltdown in early 90’s the Marina Pacifica Mall on second/PCH almost went belly-up.
Ho Ho. Ain’t it though? There are four (4!) little tiny shacky houses for sale up in just one short block up here in “historic” California Heights neighborhood of Long Beach. All asking low sixes. This in a neighborhood several miles from the beach and hemmed in on two sides by ghettos. One of them is the house I rented for three years (until the owners decided they had to sell because they were underwater on their SD home…and could you please move out now?). Of course, they’re all just *sitting* there, not moving. And every day there’s a shiny new For Sale sign that adds to the inventory. Just last week, another: two-bedroom/one bath 1,00 square foot “Spanish.” The asking? $625K. HO HO HO!.
I’m now renting a fabulous, light-filled Spanish, 2 bedroom, 1.5 bath for $1800, just around the corner. And my landlady has owned the duplex forever. My rent’s all gravy for her.
Boys, I’m just rubbing my hands and watching with glee as this whole house of cards starts to tumble…
Where is the “Mine shaft” Chilli?
I went to a tupperware party last night. One of the other moms there mentioned that they were renting because they couldn’t afford a home in the area and I whispered not to worry because prices were coming down. She responded that that’s exactly what her husband has been saying. Another woman who heard me also said she heard prices were coming down. This is on the westside of LA.
Ya, Baby!!!! OH, YA!!!!!!
(my lame Austin Powers impression)
Interesting, unrelated anecdote. Eastside (Seattle, WA). Ran into a realtor today. She goes, I quote “Wow, you still haven’t bought. You’re in luck, inventory is up 50% and houses are just sitting there. I have one that is 30% reduced. This is a GREAT time to buy!!”
I nodded sheepishly, and asked for the link. No way in heck we have a meaningful 30% reduction at this point. The change in realtor attitude is fascinating though. So is the # of $600k+ houses for sale in this area….I’m loving it. Neighborhoods that didn’t have any houses for sale (”multiple offers” etc.), now have 10-15 for sale.
For locals, a sample neighorhood would be the Trossachs in Sammamish. Check out the # of $700k houses for sale. One 3580 sq ft house reduced the price from a ridiculous $989k to $799k over the course of 6 months. Still sitting….
At the peak a home in my neighborhood in San Diego was going for $750k. This same home sold for $340k in 2000. Basically it more than doubled in less than 5 years. I would say it is down 7-10% from the peak. Does anyone truly think that homes will decline 50% from the peak???
If that were to occur I honestly do not see how this state would recover. My guess is a 25-35% decline over the next 3 or so years. And it is going to suck for many.
We bought a house in SD for under $120K in 1998. Sold it in 2004 for $400K. It later peaked at around $475K in 2005 (one of the few neighborhoods that did well in the 2004-2005 period). If prices dropped only 50%, it would be priced at $237,500. Not bad, but you have to consider this was very much a starter home in a working-class neighborhood. The kind of people who live there make around $40K-$60K per year. Wages have been fairly stagnant to maybe up 15% since we purchased in 1998.
Unless wages increase, how would prices not fall 50% (or more)?
Oh, BTW, I lived in LA during the last downturn. Prices there dropped around 40% when comparing SAME HOUSE sales (forget the median BS). These declines happened even in the best neighborhoods.
I had similar story.
Bought SD condo for $212k in 99
Sold SD condo for just over $500k in 2005 (I sold in 3 days)
Other units in that building are going for around $465k now, but none are selling.
Even a drop of 50% brings this down to $250k. I don’t know that it will go that low, but I don’t see why $300k isn’t possible, and that’s quite a haircut.
I’m trying to figure that out myself…..
You’d be surprised what humans can survive when pressed. A 50% drop won’t destroy the economy.
At the peak a home in my neighborhood in San Diego was going for $750k. This same home sold for $340k in 2000. Basically it more than doubled in less than 5 years. I would say it is down 7-10% from the peak. Does anyone truly think that homes will decline 50% from the peak???
That means, given Prop. 13 in California, those who buy after the decline will be on an equal valuation basis with those who are long term holders. Those who bought in the last couple of years have locked themselves into permanently higher property taxes. The strong hands will come out of this even stronger.
More good news, fellow bubble watchers…
More Homeowners Going Into Default - LA Times
A housing market slowdown combined with rising payments on adjustable-rate loans is leading to a sharp hike in notices from lenders.
By David Streitfeld and Martin Zimmerman, Times Staff Writers
October 19, 2006
The number of Californians who are significantly behind on their mortgage payments and at risk of losing their homes to foreclosure more than doubled in the three months ended Sept. 30, providing the latest evidence of trouble in the housing market, figures released Wednesday show.