“Waiting To See What Will Happen Next” In California
The Sacramento Bee reports from California. “California’s slowing housing market has dampened sales at Sacramento’s largest high-rise condominium and hotel project. John Saca’s 53-story project has presold a little less than 50 percent of the 799 units to date, and sales in August and September have been particularly slow. ‘Our sales are slower than I’d like,’ Saca said, ‘but I think that things will get better when the housing market improves.’”
“‘Some people may have planned to use home equity to pay the deposit,’ Saca said. ‘A lot of people don’t have that kind of cash laying around.’ The sales slowdown may also reflect a change in buyer psychology, said Bob Bronswick,of Coldwell Banker Residential Mortgage’s Sacramento-Tahoe region. ‘A lot of people are sitting on the sidelines, waiting to see what will happen next,’ he said.”
The Orange County Register. “The grand mystery to many watchers of the Orange County housing market remains, ‘Who can afford these prices?’”
“By researcher Chris Cagan’s math, Orange County has 79,000 of these ‘exotic mortgages,’ loans that delay big house payments at risk, and 18,601 mortgages will default in the next five years. Bankers and loan investors will lose $3.9 billion on these busted mortgages. Cagan insists that’s a manageable pain.”
“So, the housing market must wait to see how many lending mistakes were made, and what’s the fallout from the ensuing mess.”
The Desert Sun. “Longtime Coachella Valley real estate agent Michael Lambert admits it has been awhile since he’s seen many foreclosure signs in front of valley homes. But on Tuesday he put out his second in only a few months, notifying potential buyers of a home being listed for $799,000 in an exclusive, high-end Palm Springs neighborhood.”
“Initially, the owner had hoped to recoup about $925,000 by auctioning off the property, Lambert said, but now it’s in foreclosure. ‘I think this is the tip of the iceberg, unfortunately,’ said Lambert, a broker in Palm Springs.”
“Lenders notified 3,040 homeowners in Riverside County during the third quarter that they were in default of their loans. That was a 140 percent increase compared to 1,266 default notices sent out during the third quarter of 2005. In San Bernardino County, 2,548 default notices were sent out during the third quarter, nearly a 101 percent increase compared with 1,269 a year ago.”
“John Sloan, real estate agent in Palm Desert, said fewer and fewer investors are buying the foreclosed properties. Sloan said some homeowners who now are finding themselves in trouble took out home-equity lines of credit and bought cars and other personal items during robust economic times, and now they’re trying to make payments on the original loan and a home-equity loan.”
The Union Tribune. “As San Diego’s housing market continues to slow, home sellers have started turning to a new tool in hopes of drumming up buyers, the auctioneer. Tomorrow at Bressi Ranch in Carlsbad, 16 furnished, landscaped model homes will be up for sale via auction in what is believed to be the largest event of its kind in the county in years.”
“A group of three Los Angeles area lawyers who purchased the 16 model homes from Bressi developer Lennar Communities, bought the Wisteria model for $853,500, according to county deed records. How much will it go for at auction? That depends. It may not sell at all.”
“William Lobel, one of the partners in Model Homes, said the key to getting homes sold is to generate a lot of traffic from buyers. ‘The fact is, San Diego is not the hottest place right now to sell homes,’ Lobel said.”
The Press Enterprise. “In a real estate market described as tepid at best, sellers are trying something different to drum up excitement and stand out from the crowd. They’re putting their homes on an auction block. On a recent Saturday morning, a small crowd gathered on the front lawn of an attractive two-story house in Highland as an auctioneer issued the challenge: ‘Who is going to win today?’”
“In less than five minutes, the Highland auction was over. The four-bedroom, three-bath house with swimming pool on a quarter-acre lot sold for $528,000, including a 10 percent premium to pay the auction company.”
“After some deliberation, the owners, a middle-age couple looking to downsize and cash out their equity, accepted the bid. The buyers, young parents buying their first home, sat under a blue awning on the front lawn and signed papers opening escrow.”
“Auctioneer Mike Grigg said he has seen mounting interest in auctions as the Southern California housing market softens, beginning with investors who are no longer able to ‘flip’ houses.”
“The young couple who bought the house in Highland, got ‘quite a deal,’ said Sharon Smith, an agent in Fontana. Smith said a similar house on a similar lot in Highland closed escrow in early August, after 168 days on the market, for $97,000 more than the Amads’ winning bid.”
“The sellers, Henry and Joyce Higginbotham, said they were happy to avoid the months-long wait, a period during which prices could fall. They put the home up for sale about a month ago, intending to auction it. Henry Higginbotham said his selling price was about $30,000 to $40,000 less than he hoped but he wanted a quick sale.”
“‘We were worried about the value dropping too fast and not getting what we actually paid for (the house),’ Joyce Higginbotham said.”
“The Higginbothams said they bought their house two years ago for about $400,000 and paid for upgrades, including the swimming pool, spa and landscaping. In hope of feathering his retirement, Henry Higginbotham, said he plans to reinvest in Texas real estate.”
“The biggest argument for auctions, auctioneers say, is an explosion of resale listings. The number of homes for sale in the San Gabriel Valley and Inland counties, excluding the Coachella Valley, have more than doubled in the last year.”
“Auctions are not suitable for all sellers, said Todd Wohl, an auctioneer based in Manhattan Beach. ‘We turn down probably nine to 10 auctions for every one we do for the reason the seller has unreasonable expectations or believes he can control the sales process.’ he said.”
“And some good deals may be had at the auction. In the Wisteria Place neighborhood of Bressi Ranch, a 2,366-square-foot model home for sale featured plank hardwood floors, brick accents, crown molding, stainless steel appliances and a landscaped courtyard complete with a built-in gas barbecue. It was listed in mid-August with the county Multiple Listing Service for $849,500.”
I thought it was Wisteria Lane — like in the TV show, Desperate House Sellers?
“The Higginbothams said they bought their house two years ago for about $400,000 and paid for upgrades, including the swimming pool, spa and landscaping. In hope of feathering his retirement, Henry Higginbotham, said he plans to reinvest in Texas real estate.”
Another sheep looking to be shorn. And someone in TX will be happy to do it for him.
Some people simply don’t want to learn.
Yea, Reading the article Higginbotham sounded pretty savy till I got to the “Feathering retirement part”. Ouch!
As I’ve noted before, the flipping isn’t over. I personally cannot believe people are still flipping… but they are. In fact, a coworker is flipping in Torrance, CA.
Another was going to flip a San Deigo condo; but then she broke up with her Realtor ™ boyfriend who was to be her “partner” in the flip… Hmmm… is this the newest scam. Going after lonely women and desperate men?
Neil
Hmmm… is this the newest scam. Going after lonely women and desperate men?
Nope. It’s OLDEST scam.
Yeah, I hear you can get a heck of a deal down around McAllen right now…, if you don’t mind mass exodus illegals, drug mules, and running gang gunfights. Sounds like retirement heaven.
And, some pretty nice houses near the coast you can’t insure and destined to flood even after a heavy rain. Yep, come on down to Texas
I thought that too, initially, but maybe he’s just saying that to keep the buyer interested until escrow closes? I.e., if the buyer reads the article a week later, but before escrow closes, and the seller is saying things like, “Phew, I didn’t think any sucker would buy this POS from me for this insane price!”, I’d worry he’d hand over the ernest money. Just a thought! (Trying my hand at having a wee bit of faith in humanity, for a change. :-))
You may have a point there. I made a deal in June to sell my one and only house, with a closing date of Sept 15th. At the time I didn’t know how BIG a risk I was taking. Sweating bullets as summer went forward. Couldn’t afford to brag too widely about my narrow escape, until the deal actually closed. Which it did. NOW i can say, Phew. But I still wouldn’t want the buyer reading this blog, as I took paper for 80% of the purchase price. P.S. The buyer’s first mortgage payment was prompt.
>
LOLOLOLOLOLOL. That sums up the whole situation.
(Yea, Reading the article Higginbotham sounded pretty savy till I got to the “Feathering retirement part”. Ouch!)
makes you just want to hit your head against the wall.
Does anybody know if, in order to participate in one of these auctions, a prospective bidder must show prrof of being pre-approved by a lender? (No, I’m not thinking of new marketing strategies.
Secondly, what are the requirements to set up an auction house for selling real estate? Would it be easy for, say, Century 21 to establish an auction spinoff in order to capitalize on this developing trend?
I don’t know.
But I do know that in order to participate in the current market, you are required to have a letter from the Short Bus Driver saying it’s OK for you to be there on your own.
Actual physical presence? Wow! I missed that development.
I guess the standards really are tightening.
Does this mean that we are going to have a new ‘Midget’ MLS?????????? hehehehehehehehehe
Stucco, I know the show you’re talking about… Desperate House Sellers. But I think the name of the street on that show is “Hysteria Lane”. Or was is, “Hysterical Lane”? I keep forgetting.. there’s just so many out there.
10% buyers premium for the auction co.? That’s a better scam than the R.E. agents have!
At least they work for 5 minutes.
lmao…you all are too much but, thanks for the laughs everyday.
The funny thing is that the buyer is paying 10% more than what the seller is willing to accept. Doesn’t sound like a good deal to me.
Paying a middleman 10% for something E-Bay does pretty regularly for 1 or 2%? Sounds like a pretty good scam to me!
Surely for less than $52,000 the sellers could have paid for a lot of advertising, and done their own auction. Sheesh.
“Auctioneer Mike Grigg said he has seen mounting interest in auctions as the Southern California housing market softens, beginning with investors who are no longer able to ‘flip’ houses.”
I hope these “investors” are not seriously toying with the notion that there’s a chance to break even on these overpriced homes.
These so called ‘investors’ are getting burned right now. I’ve come across several examples of specuvestors trying to flip a property purchased in 2006! They’ll quickly go from wanting ‘a big easy profit’ to ‘hoping to break even’ to ‘just please let me recoup some of my down’.
When I reread this article, I came to the realization that the Higginbotham’s were, in reality speculating on this property. Who would buy a house and then 2 years later look to “downsize”? No, I bet 2 years ago, they “over bought” buying more than they could afford cause the “more you buy the more you make” on appreciation.
People who are really downsizing have usually owned the house for 10 or 15 years (long enough to have raised kids), but 2 years? Naw… What’s happening here is their investment didn’t pan out. That’s probably why he still raring to “invest” where he thinks the market “still hot”
I think a lot of people did this, over bought on their primary residence using funny money loans, to get “more appreciation”. In this way there is more speculative property out there than just Flippers. Now that appreciation won’t enable a buy down and re fi what happens to all of this hidden speculation when the ARM loans reset nest year? In Southern California this kind of speculation happened at every level, from, Starter home to Ocean View. I think the poo poo really hits the fan here next year……… and repeats for 3 years after as the loans reset.
You’re right. Who did they think they were kidding with that “downsizing” crap?
It is just like some others I read “Owner is relocating, job transfer, divorce forced”
It’s just like the overpriced seller saying “If I don’t get my price, I’ll take it off the market, till springtime”
Yeah, you and every other infomercial graduate who is going to beat the system. I’m betting the water cooler talk at most XMAS parties will have all these smart as_ es,
_hitting in their pants. (_=s)
Good catch. And that 2 year window allows the seller to take his full capital gains write-off. I would also suspect that this house #2 in their search for ‘feathering’. And the buyer’s 15% ’savings’ based on another over-inflating listing is a moronic move.
I thought you had to own the place for 5 yrs, and live in there for at least 2 years for the tax free capital gain. A lot of people misunderstood this part.
“I thought you had to own the place for 5 yrs, and live in there for at least 2 years for the tax free capital gain. A lot of people misunderstood this part.”
I think the law is that you have to live in the house for a total of two years during the last 5 years, so the minimum time is two years to meet the requirement. The two years of living in the home do not have to be a consecutive period of time, it just has to add up to 2 years.
DINKs buy large homes (4+ brdms) and expect to someday downsize and cash out. My question is how many future buyers that need the space (i.e. have a large family) can afford that home?
College savings in a 529 will suck up about $500 per child over 18 years. That rate would, according to the CA 529 calculator, be just short of the anticipated cost of a middle-tier public college (CalStateUniv) education.
I don’t get it.
East Highland is located 10 miles west of Old San Bernnardino city center. Bet this seller took some trips into dwtn SB and realized his mistake. San Bernardino city Metro area is what i would call one of the Black holes of the IE. It is in fact a festering cancerous tumor in the IE body. It has a higher crime rates and gang infestations than Scentral LA. Highland zip 92346 showed sept Median sales price of $370,000 at anemic 2.8 %yoy. And this is the high-rent area of SB. Those young Naive folks who purchased this overpriced, oversized elephant forgot the no 1 rule in RE:location, location, location. Even if East Highland is the most recent razziest development in SB, just being close to the rotten SB dwtn core district will sink prices in all of highland.
“East Highland is located 10 miles west of Old San Bernnardino city center”
Actually East highland is located 10 miles EAST of old San Bernardino dwtn city center.
This story about auction sale of investor-owned homes represents the tip of the iceberg I refer to as “latent inventory” — all the SD and SoCal homes purchased by dentists, doctors, hairdressers, loan processors, Realtors (TM) and other non-traditional New Age Donald Trump types who recently learned about the sure-fire way to become a millionaire by watching Flip That House, reading on the SDCIA website, or attending real estate investment seminars. We are seeing the leading edge of auction sales by this group, which will drive down the comps and force more auction sales. Think of this as the flip side of the buying frenzy which was taking place about two years ago.
By the way, does anyone have any numbers for the percentage of San Diego homes which are seconds (especially investment properties)?
“Investors accounted for what’s likely a record 23 percent of all home sales [in 2005]. All second home purchases — investment properties, vacation houses, and retirement homes — accounted for 36 percent of all home sales, and second homes now comprise 38 percent of the nation’s entire existing housing stock, according to the National Association of Realtors’ “2005 National Association of Realtors Profile of Second-Home Buyers” released earlier this week.”
Source: Milk Money Realty Times March, 2005
Source
“second homes now comprise 38 percent of the nation’s entire existing housing stock”
Holy crap! If this is right, then latent inventory could be over 50% of SD’s housing stock!
SDCIA web site. Those guys are pros, very sharp investors on that board.
When you watch Flip that House, and you see the truck driver, and hairdresser do a flip, it is real easy to think that anyone can do it. The problem is most of the recent episodes don’t show that those guys actually made money. The one they did earlier this year in Palm Springs was suppose to sell for $925k. It is still on the market, and for $799k. The flipper has $780k in it, and that does not include holding costs or re commissions.
SDCIA web site. Those guys are pros, very sharp investors on that board.
imploder says: why swat fly? Fly only live one day. Same with Troll.
imploder,
They really do have some very intelligent and experienced people on the SDCIA board (all seem to be just as bearish as we are right now). They are the ones trying to tell all the newbie investors to sell now by being the lowest priced house. I’ve seen them advise against renting their “investments” out with a neg cash flow because this downturn will not likely be quick.
Then there’s Jeff…….
Saca twin towers in Sacramento was supposed to be home to the largest residential building on the West Coast. Now we got the two largest residential holes in the ground on the West Coast. That’s pretty good, I guess.
Nice city council in Sac town. Maybe they can loan me $11 million for some dumb a$$ idea.
Continue digging holes. Use as dump site for freshly bulldozed unsold Developer tracts.
just fillim with concrete, “cement ponds” for the youngins in Sactown.
they can always rent it to toxic waste dumping companies to try to get some $$$ back
You imply construction has or will stop. Has it? I have not read anywhewe that it has… so an update if things are different would be appreciated.
If it hasn’t stopped, then I’d speculate that it is only a matter of tiem that the project fulfills its promise.
Construction has not stopped, but Saca has not established funding from Deutsche Bank yet. That would be key to the situiation, however, Deutsche is funding $350 million so if this thing goes into cost overruns, then either Deutsche will fund or PERS.
Orange County’s pain will not be limited to the “$3.9 billion on these busted mortgages”. What about all the realtors, brokers, lenders, appraisers, escrow officers, title officers, notaries, etc that will be affected by the slowdown in real estate? It’s hard to believe all this pain will be ‘manageable’.
OC is the sub-prime capital of the US. They pain will be managable only by jumping from the 20 story of the Westin near South Coast plaza!
Pool side or street side? I guess at 20 stories it just doesn’t matter…
My brother had a friend whose mother did that very thing right after it was completed, late 70’s I think.
Couldn’t agree more. It will impact us and it could be a difficult period for those who did not live under their means.
hehehe…hustlin’ biz on craiglist.
You know the lending sleazes are in deep shite with postings like this.
http://boston.craigslist.org/gbs/w4m/223379649.html
F*ck me now, or I’ll fook ya later.
these realtwhores are now morphing into workers in the oldest profession
whores are whores
That looks like a towel rack in the background. Is she/he sitting on the crapper?!?
imploder laughs out loud
As Mo Money Said: (Via Austin Powers)
‘THAT’S A MAN, BABY!”
don’t forget the entire RE food chain including movers,all kinds of retail and the many shopping centers that have and are being built in the boondocks!
The YOY RE sales decline is and will continue to have a considerable shock to the economy, and maybe the worlds.
Yep. Caterpillar missed profit estimates today, blaming in part the housing slowdown (which probably has far to go). Many people will be waking up in the next couple years.
Glad you mentioned the movers, lineup32. I do have a bunch of furniture to move, sitting in a rented house in an area where I do not intend to settle. You are pointing out that if I wait a while I will pay less for the move. Oh, I guess I already got some savings out of decrease in fuel prices since movers estimate
- Orange County … Bankers and loan investors will lose $3.9 billion on these busted mortgages. Cagan insists that’s a manageable pain.”
Thanks goodness for this good news! I thought that the news would be worse. Now I know that everything will once again be ok.
“I think that things will get better when the housing market improves.’”
What kind of brain-dead tautology is that?
The same kind of brain-dead tautology as the one that says, “As long as the labor market stays strong, the housing slowdown will not affect the broader economy.”
Or my favorite, “It takes job losses in two sectors to negatively affect RE prices.”
I think that one was UCLA Anderson Forecast.
Kind of like ” The floggings will continue until moral improves”
“In less than five minutes, the Highland auction was over. The four-bedroom, three-bath house with swimming pool on a quarter-acre lot sold for $528,000, including a 10 percent premium to pay the auction company.”
Now wait a second. A ten percent premium for five minutes’ work?
Where do I sign up?
Of course that 10 percent premium was not subtracted out of the appraisal and was financed as part of the home’s purchase price, or am I just being too cynical here?
the question is why are we still here? why haven’t we started an auction company. it’s better than being a realtor.
Remember the last downturn and the Kennedy-Wilson Auction ads everywhere?
A bit too cynical, I think. Think of the 10% premium as a commission on steroids. The price I would say is more indicative of value than an incentive laden home since the buyer is (presumably) accepting 100% of the stated price, not 90% after incentives.
It’s 4% over traditonal RE
“Smith said a similar house on a similar lot in Highland closed escrow in early August, after 168 days on the market, for $97,000 more than the Amads’ winning bid.”
The buyers did not get a good deal, they are paying 52,800 (10% premium),
so net saving is only 44K. Could have gotten a lot more to (97K) just by waiting. Now similar house will not sell higher than 528K.
I don’t think that’s an apples to apples comparison. My understanding is that the Amad’s paid $97k less than the buyer on the market, and that the seller paid 10% of the Amad’s bid to the auction house, 4% more than the seller that sold for $97k more earlier.
If anything, the seller got a bit screwed because presumably they paid a 10% commission rather than a 6% commission.
SOLD occurrs when new deed of trust is recorded
… Right now we have an “open escrow” where new home builders are reporting a 40% cancellation. Do you think the happy winner might be going thru a little “buyer’s remorse” right about the time he finds out what kind of mortgage he doesn’t qualify for???
Again SOLD occurrs when new deed of trust is recorded.
Alas, while I agree with you, the stats we hear in the MSM “sold=enters escrow”
Now what fraction exit escrow?
Last I heard, 15% national, up to 40% in some brutal markets.
Neil
“By researcher Chris Cagan’s math, Orange County has 79,000 of these ‘exotic mortgages,’ loans that delay big house payments at risk, and 18,601 mortgages will default in the next five years. Bankers and loan investors will lose $3.9 billion on these busted mortgages. Cagan insists that’s a manageable pain.”
Does anyone else suspect the 18,601 defaults will prove to be an underestimate and the pain will not prove that easily managed? How could it end otherwise for a market where expectations for future appreciation reached completely ridiculous levels of euphoria?
He also doesn’t take into account the home ATM’s that refied up to underwater status.
Yep, it’s total BS. The 18,601 represents just short of 13% of the 79,000 toxic mortgages originated in OC in 2004-2006. BUT, it only represents those that he thinks will default because the FB has BOTH a reset that he can’t afford and no equity. It ignores those who will default for typical reasons (job loss, divorce, etc.). And, I’m betting (not real clear from the report) that he is not taking into account the declines in RE that will happen, which would put more people into the negative equity position. So, yeah, I think that this number grossly understates reality. But, it is still pretty amazing that First American is forecasting a 13% default rate for these loans based just on the resets.
“A group of three Los Angeles area lawyers who purchased the 16 model homes from Bressi developer Lennar Communities, bought the Wisteria model for $853,500, according to county deed records.”
Lawyers turned wannabe flippers. Fads are all consuming.
Lawyers and dentists are going to be royally burned in this crash
Lawyers are going to be royally burned!
It could not have happened to any better people>
Don’t forget your neighborhood friendly brokers, loan officers, realtors…. and DOCTORS!!!!!
The joke use to be,’Every Realtor needs a Doctor’. hehehehe
yea, soon just one kind…… Proctologist
Starlog Update - Despite rising radio radiation, the colonists on YiYamFahZing4Kosher refuse to evacuate. According to their religious beliefs, a powerful God, “Rich Dad”, will appear from the Heavens to save them, bringing forth lowered interest rates, St. Joseph statues and a flood of 14-year-old subprime buyers. Heat and radiation levels continue to rise…
http://www.realmeme.com/roller/page/realmeme?entry=yiyamfahzing4kosher_emergency_transmission
“The young couple who bought the house in Highland, got ‘quite a deal,’ said Sharon Smith, an agent in Fontana. Smith said a similar house on a similar lot in Highland closed escrow in early August, after 168 days on the market, for $97,000 more than the Amads’ winning bid.”
And thus begins the comp lowering domino effect that now resets the neighborhood to $100,000 below August.
Cool that these folks only broke even. Now their neighbors get to shave off $150,000 just to catch up.
Which means, of course, that the so-called ‘lucky’ winners of this all-to-soon auction just bought a property that they will watch slide downhill another few hundred thousand dollars.
What a steal!
Let’s see… buying an over-priced commodity in a market known to be falling ( the lowered selling price ), unstable ( auctions ) and slow ( 168 days listings). Good Lord, sign me up!
I’m truly beginning to believe that people are whacked out on anti-depressants.
Only someone with a glaringly psychotic false sense of security would think they were getting a ‘deal’ at an auction right now.
Sadly, this may not be out of the realm of factual possibility.
Any anecdotal stories pertaining to the use of Zoloft, and the purchase of real estate…please post here…
Anti-depressants actually make you MORE rational and level-headed, rather than less. I think people who got on anti-depressants after getting into a house may have finally woken up to the fact that buying wasn’t a wise decision.
Can’t afford prescription.
I’ve thought this for years!! When I lived in Dallas my doctor told me that he handed out Zoloft and Prozac like candy! Everyone was taking it! He even wanted to put me on it! No Way!! Something has to be causing these people to be sooo stupid! Sheer greed? Prozac? Stupidity?? Who knows! NOT ME!
talk about “buyers remorse”
Are non foreclosure auction such as this included in comps? Are foreclosure auctions? Still foggy on this.
From what I understand, the sale is NOT included in comps immediately. There is a lag time.
Tell me if I’m incorrect, but I think that the sale has a certain amount of time to be recorded at the county recorders office.
The sale IS NOT reflected on the MLS, since it didn’t take place on the MLS.
BUT-
BUT-
BUT-
When an APPRAISER comes to comp a house in the neighborhood for a LOAN, the APPRAISER will find the sale in the data at the recorders office and use it in his/her comps.
Thus, realtors do not see the auction data on the MLS, the public does not see the auction data on the MLS…
…and you have a LAG TIME.
What that means is that the ‘comps’ from the MLS might say the house could get $800,000, but when a buyer goes to apply for a LOAN, it will come in lots and lots lower…
…when the APPRAISER finds the auction sale.
Complicated, but I believe that’s correct.
Thanks for the input.
SOLD occurrs when new deed of trust is recorded
thank you
“Auctions are not suitable for all sellers, said Todd Wohl, an auctioneer based in Manhattan Beach. ‘We turn down probably nine to 10 auctions for every one we do for the reason the seller has unreasonable expectations or believes he can control the sales process.’ he said.”
I think all these sellers have unreasonable expectations. Why wouldn’t this dildo just lower the price by the 40k or whatever and sold it thru normal channels? I guess they think the auction drums up more interest?
Right, Kurt. Should we tell them that the auction price is generally lower than the price you can get on the MLS? When you sell by auction, your market is limited to the GFs who show up on auction day, which is generally a smaller market than you are exposed to when you let your overpriced home sit on the MLS for seven months or more…
My point is, you don’t have to resort to the auction process when you can simply lower your price. Just sounds like a big hassle to me.
I agree with your point in every dimension, including the hassle factor as well as the cost. Would you rather pay 10% comission to the auctioneer and get a lower sale price than if you paid a Realtor (TM) 6%? Stupid is as stupid does.
All true. The only possible counter arguement is that in a falling market, a well run auction is the only way to get to the bottom line market clearing price quickly.
A realtor led sale would likely take more time, and you might be chasing down the price in an uncertain market by even reasonably dropping prices in 5% chunks ($30k) every month or two.
Said another way, if you knew for certain that the correct price drop from the last comp was 16% ($97k more than $528k is $625k, then you are correct–drop the price to $528k and save 4% on the commission. But if it takes you 6 months to gradually get to $528k, the price might be $475 at that point, in which case you lost 10% because of market, not 4% because of commission.
Different stokes for different folks, but in certain circumstances, I can see the logic in an auction.
“A realtor led sale would likely take more time, and you might be chasing down the price in an uncertain market by even reasonably dropping prices in 5% chunks ($30k) every month or two.”
I’ve sold two homes (on two tries) within one week each with a Realtor (TM). It is a matter of pricing the home to market conditions — forget your home improvements, duck suits and open houses.
auction is the new bidding war.
or I really should have wrote…”the new multiple bids”
Sorry to comment so much on one post, but there is another reason the auction price is generally lower besides the size of the prospective buyer pool, which is that there is a greater risk in making a mistake when buying at auction than through the MLS process, where the buyer generally has more time to make sure they know what they are buying. So hence an auction sale price is reduced by a (quality) risk premium, in addition to being limited by the size of the prospective buyer pool on auction day. Generally auctions are for those who want to unload quickly (e.g., the bank’s REO department) rather than for those who want to sell for top dollar.
The 3 post rule was overturned along with the writ of habeaous corpus…
yes, write as much as you can before being taken away
It seems to me like the auction process would only bring in more money if the house were truly unique and desirable in some way. You bring in a bunch of prospects and they outbid each other since they all want it. But I don’t see this working for people who just want to sell yet another suburban tract home with 5 identical homes for sale in the same area. It would be hard to get people caught up in the excitement of bidding when they know that if the price gets kind of high they can just go put in a lower bid for one of the houses down the street. The buyers of tract homes who overpaid at the top of the bubble and are now trying to unload them will face a real struggle and almost certainly have to sell at a loss or just let it foreclose.
“It seems to me like the auction process would only bring in more money if the house were truly unique and desirable in some way.”
Sorry, that is irrelevant to the comparison.
auctions work for sellers when there is a “mob”.
how much would you bid in an “auction” with two or three others? Wouldn’t the utter lack of interest TELL YOU SOMETHING!
On Fridays, the Wall Street Journal has a section titled, “Weekend Journal.” At the back, there are usually about six to eight pages of display ads for upscale properties and developments. I’m noticing every week that more of the ads are for upcoming auctions.
Don’t forget the Journal article of a few months ago where the sellers accepted $530K at auction for their Virginia house that they originally listed via a realtor at over a million dollars. Talk about a reset of comps! I’m sure that really made their neighbors happy.
Jobs Growth Eases Air From Housing Balloon
http://tinyurl.com/y4mo85
On a side note, I’m happy to say that we in the OC enjoy the Southland’s lowest unemployment rate! Thank god because we have to pay for those high housing costs…
Kurt,
Could the low unemployment rate in high-cost areas like OC be due to the high cost of living (housing)?
If you don’t have a job, you leave because you can’t afford to stay.
On the flip side, you can’t move to a high-cost area like OC, unless you can land a high paying job.
Both of these scenarios would help to keep unemployment low.
So unless taken in context, I am not sure a low unemployment rate is a cause for celebration (and not just in the OC).
Very astute observation and I would tend to agree. Can there really be that many truly unemployed lingering in the OC for very long? I doubt it. Unless you’re living on the street or in your parents house in the OC, you gotta go somewhere else and you don’t move the OC unless you’ve already got a job lined up for it.
Agreed. I work in Manhattan Beach and the only unemployed folks there are the homeless who are quickly escorted ou to Hermosa and Redondo Beach.
Bike path has it’s regulars (Homeless)
in Manhattan Beach…
Yes, I agree. Most people I know in my surrounding community either have been living in SoCal for many years (lower cost of living as a starting point) and/or have good-paying jobs to support their lifestyles. Keep in mind, though, there are poorer sections of the OC where the cost of living is cheaper. Not all of the OC is super-expensive.
BTW, I wasn’t really celebrating, that was just my bad sense of humor. Guess I won’t be a comodian anytime soon
‘Comodian’!!! Enough with the toliet humor already. I just blew coffee all over my screen.
It does not matter what the gov’t stated unemployment rate is. Double it and you get a more realistic idea of what the unemployment rate actually is. And that might be low.
Can’t jobs grow without impacting a housing implosion?
What if the jobs don’t pay more than the “median”? How is that going to improve affordibility?
Work 3 jobs, 24 hours per day. Have photo in wallet of house you own, but have never been to. Show photo to co-workers. Affordability problem solved.
wow,18,601 defaults! and such precision!!! if it turns out to be 18,602 will he feel bad? will the other 51k in toxic loans end up as short sales?was he wearing latex gloves when he produced this number?
No, but he did have on his rose-colored glasses.
Wait till you see his study in The Lancet. Turns out there were 898,414 defaults extrapolated from a sample of four homeless people’s verbal recollection.
“and 18,601 mortgages will default in the next five years.”
Hmmmm, how the f@#$%ck he knows that there would not be 18,602 defaults instead. These guys are full of Sh!!!!!!t.
Are there idiots are there who would listen to crooks like this guy?
man is idiot. have personally refigured; correct number is 18602
Over 500K for a house in HIGHLAND! CraZzzzzy! Well, I hope they don’t have to commute to Orange County. What is that a 3 hour drive in traffic? LOL!
500k in the IE is freakin’ insane. Where in the hell is Highland by the way?
I can tell you that most IE residents either work in LA or the OC. Many of my co-workers here at the best utility in the world SCE
live in the IE…some are smart and take the train or a vanpool to save time but some drive 2 hrs each way from places like Adelanto.
When I have business in the IE, and drive back to the OC you wouldn’t believe the traffic on the toll road going the opposite direction. Total gridlock. Not worth it to save some $$$ on a house and live in a smog-laden, crime-ridden hell-hole with lousy infrastructure. It’s one thing if you have like 5 kids and need a huge house and can’t buy one closer to LA/OC…but if you have a smaller clan, and don’t need 3000 sq. ft. I’d rather buy a condo closer to job centers. But that’s just me, I guess.
Sorry for the rant. I’m bored at work.
A couple of years ago, I saw a homebuilder who’s business model was to try to build homes in the IE with a price that started with a $1xx,xxx. He was doing it for a while–THAT business model makes sense to me. You could sell those homes all day long.
I don’t know how long he was able to buy land cheaply enough, or keep costs under control with materials and labor costs as they were, but $500k!?!?!? I don’t think so . . .
ockurt-
If your bored, flip a few switches. Lets have some EXCITEMENT around here!
OK, I’m turning off the power to 13 million people…ha ha…I’m only in the corporate office, I can’t do that…but if I worked at a power plant I could cause some ruckus! I’d better stop this conversation or Homeland Security is gonna get my ass!
Funny you say that because I used to run that risk all the time. I worked for IT and directly with GCC and the switching centers. I fondly remember NO TOUCH DAYS, wildfires, earthquakes, Y2K and all other maladies (like technicians) that affected SCE.
About 5 min after I wrote that… My service provider WENT DOWN!
OCKurt,
I used to work at Edison. Started at SONGS, moved to IOC(Irvine), then moved to GO2/GO3, then quit. I was tired of working 70+ hours a week, leaving at 0500 to commute 30ish miles from behind the Orange curtain to Rosemead only to face a 2+ hour commute home, then to CSUF till 10PM, only to be called at 0200 in the morning about some unexpected outage. I missed the people, but am glad I left. I may go back someday, but for now I am a great SAHD in Hawaii.
Hey, you got this site unblocked, congrats.
ockurt posts ” live in a smog-laden, crime-ridden hell-hole with lousy infrastructure.”
That about sum’s it up. When it hit’s out there it will look like a “nutron bomb” strike…. the building will still stand but no people.
already been hit by “nutron” bomb. homeowners all “nuts” from commute
Highland?east highland is the more upscale(laugh) part of San Bernardino located immediately due east of the San Bernardino city district. there would not be any high paying jobs within 70 mile radious of highland, and yes the commute to LA/OC would be horrific. The 215/10/210/30 fwys running thru SB/Riverside are among worst fwys in Scal, with horrific gridlocks to rival LA’s worst fwy congestion nightmares. Large sections of old San brnardino/riverside metro regions are really slummy exurban ghettos, with large popluations of poor hispanic immigrants and gang infestations. The old dwtn cores of these cities are really deteriorating: if you go into these dwtns you see large numbers of poor down and out welfare folks, urchins, and street ruffians milling around. The sounds or police/fire/ambulance sirens wail away endlessly in the old dwtn rotting SB/RSide city cores.
Anybody have anecdotal information about how the realtor’s are doing?
Heck, volumes were 56% down in my business, I would be doing major restructuring, as in retrenchments.
Maybe they are all unemployed, but due to their denial mentalities they just don’t know it yet.
Everyone is feeling the effects right now, though nobody will openly admit that times are (relatively speaking) “tough”. Some have prepared for this, others have not.
Most seasoned “vets” welcome the impending fallout because there will be fewer realtors/loan officers/brokers, etc. chasing what little business there is.
That reminds me of the used house salesman’s prayer as posted at OCR’s RE blog.
“Dear God, please let real estate boom again. I promise this time I won’t piss away the money.”
realtors™ all making tons of dough….unfortunately at Pizza Hut
A realtor in my neighborhood bought a home three years ago for $1.5, listed about 6 months ago for $2.2, now is down to 1.8, and she cannot lower any more if you know what I mean. I receive her flyers all the time, I doubt she’s sold more than 2 homes in the last six months (which is corroborated by the frequency with which she is taking money out of the house).
Multiply this drama by 18,000 and you have today’s inventory on ziprealty.
Not including FSBO’s. Anyone’s guess as to how many more listings that makes up.
Can realtors that are getting foreclosed on do their own foreclosures? Is that like eating your own foot? What about auctions? Can they do their own auctions? Is that like eating a leg?
Can’t wait ’til next months data comes out. Or maybe I need two wait two more months for accurate data to come out.
The house of cards is coming down, and coming down quickly.
Looks like a good day to head to the ocean.
At least fish aren’t concerned about this.
When THEY ‘flip’, they don’t have their house fall down on them.
lol…i was just picturing a Realtor eating his/her own foot…ha ha ha
I hope my little symbol comes thru
damn
Otto posts ” Anybody have anecdotal information about how the realtor’s are doing?”
I call the realtor, I used to sell in summer of 05′ ( against his advice and not buying right away)
Usually I will leave a message saying” I need to buy 25 home’s over the next 3 weeks! Plus don’t try any tricks I only pay full price and only pay cash!
I will say he did take my advice and sold his condo at the peak… this kid owes me big time…. long story… I could only half unwash his brain….
My realtor (in Phoenix) calls her own cell phone to make sure it’s working. Sometimes she goes for more than a couple of days without a call.
imploder calls self then lets go to message. That “teaches” imploder.
anyone have an auction results site ?
2004 pricing here we go
Kennedy Wilson
Spoon boy: Do not try and bend the spoon. That’s impossible. Instead… only try to realize the truth.
Neo: What truth?
Spoon boy: There is no spoon.
Neo: There is no spoon?
Spoon boy: Then you’ll see, that it is not the spoon that bends, it is only yourself.
All sellers — bend over.
Tom Foley tapped this same mind power
Ha Ha HA
“In less than five minutes, the Highland auction was over. The four-bedroom, three-bath house with swimming pool on a quarter-acre lot sold for $528,000, including a 10 percent premium to pay the auction company.”
I think realtors will be moonlighting as auctioneers before long.
$52,800 for less than five minute’s work? Surely that beats driving around to multiple properties to show prospective buyers, sitting all day at open houses and making small talk while stuck on the 405?
money.cnn.com claims the Fed will most likely start raising rates after the elections and it says they now realize they were wrong to listen to the market and pause.
Forget rates being cut, they are going up.
Even if the rates were to dip it would mean nothing to fbs. It’s all about equity now. You either have it or you don’t. Even if you do your neighbor could well slice into that when he/she bails/defaults.
The tide has turned. Psychology has changed.Grab your popcorn and don’t skip through the commercials.
Yes, but rising rates makes it even harder for those to get out of those ARMS, I/O’s and it makes the actual house less affordable.
If you got anything other than a 30-F with 20% down(minimal term and downpayment….15 year term is best if you can hack it though I know few could) that house was NEVER affordable in the first place. Especially with rates at historic lows.
if the rates were that low they only had one place to go: up! Just look what has happened to the LIBOR in the last couple of years.
Unless you were a seasoned investor with piles of backup cash and more profitable investment vehicles to put your money into at the time of buying your home you should not have purchsed with an ARM.
Don’t believe the media/ realtors/loan officers or brokers when they talk about affordability. It’s been smoke and mirrors all along and the smoke is clearing.
You get an ARM when rates are high, not low. If your barely affordable at low, variable rates, how lucky do you have to be just to have rates stay…..at ALL TIME LOWS?
You get an ARM when rates are high, not low. If your barely affordable at low, variable rates, how lucky do you have to be just to have rates stay…..at ALL TIME LOWS?
Exactly.
Lowering the cost of borrowing and dropping lending standards to the point where an unemployed 24-year-old idiot can borrow $2.5 million does not “help” regular working class people. It merely helps stimulate a reckless asset bubble and forces everyone to pay more than they should for basic shelter.
Q: Which costs you (the borrower) less money in interest, prperty tax & insurance over the lifetime of the loan? low interest + high sale price or high interest + low sale price? Duh.
The “rising rates = less affordability” crap is total BS spun by the REIC to try to pressure the Fed from raising. Higher rates would punish specuvestor FBs who took on way too much debt in order to squeeze into a payment they really could not afford (good) and help everyone else by bringing house prices back down into line with fundamentals more quickly (also good).
“If you got anything other than a 30-F with 20% down(minimal term and downpayment….15 year term is best if you can hack it though I know few could) that house was NEVER affordable in the first place. Especially with rates at historic lows.”
Notice that the only decision when buying a home is not what kind of loan to use (I/O Option ARM, 15-F, 30-F, whatever) but also how expensive a home to buy and even whether to buy or rent. The problem many face today is not that they used the wrong kind of loan, but rather that they bought a house they could never possibly afford to purchase over time, partly due to taking advice from Susan’s ilk that “real estate always goes up.”
I have long been wondering how people in East Bay afford buying a 600K+ house (don’t mention the 600K- craps, they are hardly called a “house”). My household income was around 150K/year. After tax, 401K, medicare etc., we can get around $8000/month. Our rent is $1500/mont. Two children’s preschool tuition takes another $2000/month. About $1000/month for 2 cars (car loan, gas, insurance etc.). Groceries and other things about $1000. We can save barely $30K each year. At that pace, we need 4-5 years to save for the downpay for a starter house in East Bay. We need 20 years to pay off the whole loan. It’s hard to imagin we live a hard life for 20 years just for that simplest house (salary raises may relief a little bit). How others managed to do that for far more expensive house?
The official avrage household income is around $70K-80k. I doubt it because I know a lot of transactions in bay area went by cash which are hard to track. I once bought a piano from store by cash. They gave me discount for cash. So my guess is that average household income in Bay Area should be more than $90k if include the cash income which is not taxable. How do you think? This may help to explain the high house prices. But still it is too high. Don’t want sacrifice my life for an ownership.
8000/mo on 150 after taxes and 401k - where do you live and how much in 401k -
Try more like 6500…..
the tax rate for household income over $100K is 28% which deducts 42K from 150k. Put 15K for 401 and medicare. The left is around $95K which is 8000/month. Yeah, the payroll only deducts 20% for tax. But we paid another 8% in April. If you can reduce my tax, I may hire to calcuate my tax in April every year. Anyway, you are a MBA.
Not meaning to imply you’re not trying or doing anything wrong, 30K is non-trivial and with 2 kids in preschool, is excellent.
I’m a big fan of have the option to be car independent. We rented and then bought a home in locations that didn’t require a car for our long bay area commute. We can reasonably walk to public transportation (Caltrain and bus) and work pays most of our monthly pass costs.
On several occasions I have tried to post a comment saying that I find it appalling and yet ultimately sad that so many posters here seem to relish in the idea that anybody who bought a house in the past two years—as well as ALL mortgage brokers, realtors, appraisers, lawyers–are despicable fools. How interesting that all comments deriding anyone who has anything to do with real estate are terrible human beings, while all renters are brilliant financiers. The wallowing in other people’s misery here should be toned down several notches. After all, it could be YOU some day.
Nah. We do our homework.
lol, I don’t think it’s strident enough!
I want to see realtors eating Tender Vittles!
Play fair, they don’t knock top ramen, you don’t knock tender vittles
Ignore the bashing of those of us in the industry ( I do it all the time). Don’t take it personally. There are still great, insightful pieces of information to be found in this blog. I know the knowledge I have gained has benefitted me greatly.
Susan:
“After all, it could be YOU some day.”
Was me, 1991. Bought a house I was very young and dumb ….And they learned me good! Under water till 2001. Sold it in summer of 2005, and I was labeled a “crackpot” for doing so.
No one, and I mean NO ONE wanted the benefit of my experience. That’s how I end up here. I’ve been reading this blog almost 2 years, and just started posting recently. I think it’s been a rare voice in an ocean of insanity.
As far as Demonizing Realtors, sure people go over the top, I’ve been guilty of it., but HEY! it is “THE HOUSING BUBBLE BLOG!”
We’re not sitting on a jury.
By the way, I don’t know how the Realtor’s, Builders & Brokers et.al., played it in Wisconsin, where your from, But I can tell you 2001 thru 2005, here in So CAL, they “TOOK NO PRISONERS”.
The greed and arrogance and borderline dishonesty was astounding in it’s breadth and revolting in it’s regularity. Buyer’s were relentlessly humiliated and abused by those that held the PRODUCT. There was no civility proffered. People would enter a Development office to inquire about purchase and be rudely shoved a waiting list and told “leave us a deposit and maybe you’ll get something…. “We’ll CALL Youuuu…..”
Your Damn Right people got mad……
Just my 2 cents
Imploder posts “Susan:
“After all, it could be YOU some day.”
Was me, 1991.
He is telling the truth.
posted in responce to Susan and to my own post ( atleast you get a smart reply)
““After all, it could be YOU some day.”
Let’s see 1979 then dead till mid 80’s then goodtimes till 1991 then pop! add an earthquake feb 94′….I always love the kick to the nuts just when you think you have seen it all……… now lookie see good run from late 99′ to mid 05′…. Now guess what Susan? The big size 13 to the nards again….Oh rat’s I hate it when that happens!
Dear what do you think? Me and many of the other posters here are a bunch of spoon fed panisys? We never took a knock…. I loved that “fatcat Boomer” argument of resent…. don’t get me started. I wish on ill will but old Ben Franklin said it best and I qoute ” Experiance holds a dear school, but a fool will learn from no other”
> many posters here seem to relish in the idea that anybody who bought a house in the past two years—as well as ALL mortgage brokers, realtors, appraisers, lawyers–are despicable fools
I know some buyers from 2005, nice and intelligent people. Despicable fools they are not, but, unfortunately, part of the herd who believed that buying a house (within their means but stretching) is the right thing to do. They will not loose everything but a lot. I feel sorry for them, but are we not all self responsible for our decision? Caveat emptor.
To the professional salespersons: They repeated what they had heard and benefitted their business, because they live by promoting sales. Caveat emptor.
I own my home. I use to own a rental. I handle the investments for several individuals, which includes real estate. That said.
The REIC is rampant with FRAUD and LIES!
These fools and the sheeple they sucked in will learn some valuable lessons.
My hatred comes from all the flippers and speculators and REIC spin doctors - “in the bag”, “real estate only goes up..”, “buy now or be priced out forever”, “we are not making any more land”, ETC….AND the FED who allowed this to continue unabated for so long with NO lending standards and by keeping rates WAY TOO low for WAY TOO long.
Have a nice day.
Mine too. I don’t give a damn if people buy houses. It’s the profiteers and moneygrabbers who irritate me.
txchick posts ” It’s the profiteers and moneygrabbers who irritate me.”
Hey Tx, I thought I had heard it all. Until I read about the “stated income” loan I have posted about this before but…. really have a hard time digesting it… the idea… the concept…. the sheer stupity of it (them)
It’s like Bruce Springsteen wrote in a song ” I done my best to live a good life, but a storm is a commin’ that will blow away everything…. that can’t stand it’s ground”
Good God we really deserve what we get.
*sniff, sniff* Do I smell a Realtwhore (with several underwater properties)?
What the hell, I’ll bite…
On several occasions I have tried to post a comment saying that I find it appalling and yet ultimately sad that so many posters here seem to relish in the idea that anybody who bought a house in the past two years—as well as ALL mortgage brokers, realtors, appraisers, lawyers–are despicable fools.
No one here has ever said ALL REIC-employed people (or lawyers) are despicable fools –just the overwhelming majority of them. And the flood of daily news articles we read here and elsewhere about rampant mortgage fraud, crooked floppers, greedy clueless in-denial sellers seeking GFs, etc. PROVES they are despicable fools.
The wallowing in other people’s misery here should be toned down several notches. After all, it could be YOU some day.
I would never jeopardize my family’s financial future by taking on insane amounts of toxic debt that I know I cannot possibly repay –unlike millions of idiot specuvestors. If that means I must leave Bubbleville Central (California) in order to buy a house someday or forever remain a renter, so be it. I will never willingly commit financial suicide, even when 99% of the population (that cannot work a calculator) is willing to do so.
And btw, everyone here has EARNED our schadenfreude. We’ve had to endure endless taunts and idiot rants by bullshit artists such as yourself, telling us how we’re all “jealous bitter renters” who will be “priced out forever”, “they’re not making any more of it”, “rich immigrants and Boomers wil prevent prices from falling”, “XXX city is special”, etc., etc.”
If you can’t take criticism, go post somewhere else. I recommend Craigslist or the WSJ RE blog –they seem to welcome clueless trolls & REIC apologists such as yourself.
Susan
You and your ilk created this. Now live with the bad side of it. “Priced out forever” “Not making anymore land” propaganda hounds. “Housing never goes down”.
*sniff, sniff* Do I smell a Realtwhore (with several underwater properties)?
What the hell, I’ll bite…
On several occasions I have tried to post a comment saying that I find it appalling and yet ultimately sad that so many posters here seem to relish in the idea that anybody who bought a house in the past two years—as well as ALL mortgage brokers, realtors, appraisers, lawyers–are despicable fools.
No one here has ever said ALL REIC-employed people (or lawyers) are despicable fools –just the overwhelming majority of them. And the flood of daily news articles we read here and elsewhere about rampant mortgage fraud, crooked floppers, greedy clueless in-denial sellers seeking GFs, etc. PROVES they are despicable fools.
The wallowing in other people’s misery here should be toned down several notches. After all, it could be YOU some day.
I would never jeopardize my family’s financial future by taking on insane amounts of toxic debt that I know I cannot possibly repay –unlike millions of idiot specuvestors. If that means I must leave Bubbleville Central (California) in order to buy a house someday or forever remain a renter, so be it. I will never willingly commit financial suicide, even when 99% of the population (that cannot work a calculator) is willing to do so.
And btw, everyone here has EARNED our schadenfreude. We’ve had to endure endless taunts and idiot rants by bullshit artists such as yourself, telling us how we’re all “jealous bitter renters” who will be “priced out forever”, “they’re not making any more of it”, “rich immigrants and Boomers wil prevent prices from falling”, “XXX city is special”, etc., etc.”
If you can’t take criticism, go post somewhere else. I recommend Craigslist or the WSJ RE blog –they seem to welcome clueless trolls and REIC apologists such as yourself.
many posters here seem to relish in the idea that anybody who bought a house in the past two years—as well as ALL mortgage brokers, realtors, appraisers, lawyers–are despicable fools (DF)
?
“After all, it could be YOU some day.”
It could be me today if I had listened to a Realtor (TM) last year.
OK, now I feel sorry for Susan. lol.
gs, how do you get that Realtor symbol to appear?
™ option 2 will give you a tm the rest he just spells out :Realtor™
“(TM)” (without the ” “)
Realtor(TM) test
Ms. Jacobsen,
For the last five years at least, most with the opinion expressed on this blog with the courage to publicly state so have been derided as fools, bitter renters, and worse. We have witnessed and issued logical and reasoned warning against a loose-credit driven financial bubble manifested in housing prices only to be ridiculed for it. In the meantime, the number of realtors looking to exploit this catastrophic and historical theft through debt has exploded, the number of loan brokers and the products they peddle to somewhat ignorant yet trusting “sub-prime” borrowers has grown exponentially. The federal reserve and banking institutions enabled it, the government promoted it, and the print and television media has been virtually complicit through their neglect to research even the most basic fundamental theory relative to speculative bubbles. It has been a “gotta get mine too” greedy feeding frenzy that has, in too many cases, brought out the worst, and the worst in people.
Rest assured that we all know that there are many honest realtors, loan brokers, real estate investors, and others associated with the real estate business. Many of them participate on this blog and provide some of the most lucid and relevant factual and anecdotal information provided here. The attacks against the “despicable fools” you reference, are aimed at those who do not have today and never had any real interest in sound investing, real estate, or anything remotely related. They were simply interested in profiting for themselves, and they attempted to do so through blind speculation or by taking advantage of others’ gullibility by pushing fundamentally overpriced real estate, no documentation loans, by encouraging loans with pre-payment penalties, etc. for their own benefit and noone elses. They exploited others shamelessly for their own personal gain. What benefit have they provided their clients, their neighbors, their hometowns, or our society?
There is no love lost for such people on this blog, and rightfully so. For five years those who bought far more than they could reasonably afford with high risk financing that could easily ruin them were the “brilliant financiers” based on no argument other than “new paradigm, not making any more land, real estate only goes up, 15% is in the bag” arguments with no basis in logic or reason. They were fools, thieves, charlatans and consipirators all.
Now that the contrarian view is being shown to be truth, we are all of a sudden the bad guys? I think not. It is about time the fraud is exposed, the Casey Serin’s are sent to jail, and reason is returned to a financial sector that has been anything but reasonable for years. We do not wallow (def: to flounder, stagger, or stumble) in their misery. They however, surely, and rightfully, will.
Well written manifesto…. Here, Here!
Applaud is in order. Good job ric.
Plus: we speel bettter and arnt loosers.
touche Auction.
“Plus: we speel bettter and arnt loosers.”
LOL! Spelling errors (”you” in place of “your” and “loose” in place of “lose”) are among my pet peeves!
Susan,
I hope you are still reading the responses to your post. While some on this blog do match your description, that’s nothing compared to the rabid wolf reaction to boomers who have somehow incredibly foisted their overpriced shacks on younger but greater fools. You must have missed the post on this topic a few days ago; it was a real low point.
? uhhhhh ?
Just the facts Maam, Realtors are whores.
you wouldnt be the susan jacobson of h pierce co realtors in connecticut would you.
No, it can’t be me someday because I’m not that stupid. It’s like buying a house with a suicide loan is something that happens by accident. Go Troll Somewhere Else.
Susan –
If you can’t stand the heat, then stay out of Ben’s kitchen
Even I knew they should have kept raising rates. Given my grasp of economics, this is scary.
They ain’t done raising rates.
Dow just went over 12,000.
Rates are going back up after the first of the year.
imploder see Fed like doctor who decides housing like a chicken bone stuck in economy’s throat. Will continue to
while throttling patient with both hands.
commodity prices have come down, the stock market isn’t too rich (its no bargain but its not crazy) and the economy is slowing.
There isn’t any reason for the fed to increase rates. There may not be a good reason to lower them but, if unemployment starts to pick up (and how won’t it with the real estate the way it is) the pressure to lower rates will increase.
Remember, housing prices were never factored into inflation. This is why inflation seemed check. What do they use instead? Rents! Now, if landlords jack up rents, they will force the Fed to raise rates. Either way, they’re screwed if they have an option ARM, Can’t Sell, Can’t raise the rent, must eat the loss… they’re screwed.
Rents are rising strongly (housing is, what, 27% of expenditures?) and wages are going up, just like the Philips model predicts, in response to low unemployment numbers. And then there is the moral hazard of these growing piles of debt at all levels (hh, city, state, federal, trade, pension, etc), which tends to make creditors nervous, and require signalling from the Fed to convince them that they will remain vigilant in the fight against inflation.
So are you sure the Fed can afford to respike now?
A stronger dollar will benefit the RE industry rather then a falling or weak dollar-With a stronger dollar it takes less cash to buy. Put it another way I purchased a home in Feb 01 for 880K, dollar was 1.07 vs euro, come 2005 sold for 1.0 but dollar was around.85, so basically I made nothing just dollars running around in circles. So the Fed may need to keep the dollar up and up big to save whats left of the RE business.
Chris Cagan (First American Real Estate Solutions) was one of the distinguished panel members on the OC Register’s sponsored real estate “circle jerk” roundtable back in Dec 05. This is the same roundtable made up primarily of local RE hacks like Gary Watts who during this roundtable made his famous “15% it’s in the bag” prediction and Walter Hahn (another RE “economist”) who predicted that “OC will continue to see double-digit gains in appreciation until the next recession”.
Back in Dec 05, Chris Cagan was predicting that the number of homeowners at risk of foreclosure was in the range of 7 to 8,000 which equated to two-months worth of inventory being added back to the market. Now the number of potential foreclosures is getting revised upwards to 18,000 …but still no cause for alarm!
Anecdotal evidence from the trenches here in the OC suggests that many are holding on by their fingertips and that the spinmeisters are working overtime to calm the masses.
That roundtable discussion was one of the funniest things I read last year.
Like fine wine, it just gets better with age.
Wow — Cagan’s estimate is growing as fast as for-sale inventory!
Anecdotal evidence from the trenches here in the OC suggests that many are holding on by their fingertips and that the spinmeisters are working overtime to calm the masses.
_____________________________________________________
Sounds like these guys could work for Don Rumsfield and IRAQ spin campaign!
I just found the article and cross posted at OCR’s blog.
At that rate of change in 10 months time there will be 45,200 NOD’s forclosures in OC.
Which gets near the early 1990s number of foreclosures.
Actually you don’t need to be that bucks-up to live here, you can do this thing called “rent,” and it’s no more expensive than lots of places. $1500 or so gets you a nice townhouse or maybe a quaint SFR with a yard in a good part of town close to the beach.
Tho it’s funny, lately i see lots of ads in the little local, people trying to rent similar for like $4K. In for a Rude Awakening i fear…
“Tho it’s funny, lately i see lots of ads in the little local, people trying to rent similar for like $4K. In for a Rude Awakening i fear…”
Don’t you wish you could get good data on how many of these dreamers never find a tenant?
imploder says: data forthcoming, known as foreclosure rolls
Hah. They probably bought so they wouldn’t have to “throw money away on rent anymore”. I know a lot of people throwing away a lot of money renting from the bank.
They are not throwing away money on rent. They are now throwing away money on subsidizing their renter. Thanks FB!
I’ve said it before, the “have-nots” are more aptly described as the “never-wills.” I work near the top of the food chain for a large company, with hundreds of low to mid-income support staff. I cannot tell you how many have simply given up on the “dream” of ever owning ANYTHING, much less a house. The numbers just don’t work and won’t work unless prices reverse to 1997. OC is very segregated, most of the never-wills live in or around Santa Ana. That’s why you see 3 families to a home there.
eh? I know lots of renters in Costa Mesa and newport beach. I think most of us have figured out there is more than one way to make $$$. Paying $4 or 5k to buy a thing you can rent for 1200-1500 is not one of them. How economically savvy you have to be to figure that out?
Rent in a nice place or buy in a bad place. It is not that hard a decision. Still a lot of peer pressure to buy.
imploder say; rather fart in rented silk, than own dung heap
One of the benefits of this blog is that it provides those of us who do see the insanity of buying an extended peer group with shared values to counter the GF peers we are surrounded by each day. Thanks Ben, you have probably saved quite a few of us from capitulating or going nuts.
I’m right with you. From an investment standpoint, it makes no sense to buy now. I’m not implying that a renter is necessarily a “have-not.” I’m speaking more of low-income people who, even if homes were still more affordable and increasing in value, do not make enough to buy a home or a car, etc. They are essentially the working poor, and aren’t even in the market. Nor will they ever be.
Actually, it was especially the low-income people who were suckered into the bad loans. One of the problems was that the people you’re talking about actually were buying and had no business doing so.
That is a good point, probably better made at OCR’s RE blog with the posters claiming if you don’t clear 200K in OC you are poor and everyone else clears $200K.
Simply not true 30% of the population in OC in 2000 cleared over $100K.
However, don’t confuse well off bubble sitters with working poor.
imploder is not “working poor”, imploder is “poor worker”
The low income people were targeted by the campaign to make everyone a homeowner (remember the “ownership society”?). Unfortunately, encouraging them to buy houses with 0% down and I/O Option ARM payment plan was a recipe for disaster.
imploder will translate. “Ownership Society”: “You’ve Been Owned Society”
When you say “most of the never-wills live in or around Santa Ana” you really mean everyone living in the area bordered by the 605, 55, 91, and Pacific Coast Highway, right? I guess Laguna may stay nice.
Well, i feel sad for adults who make important economic decisions based on “peer pressure.” Say OC median comes back to a more reasonable 400k. How many months of saving 1k a month by renting will it take me to have 20% down?
Never say never, dude.
Let’s do say the median in OC drops back to 400k. Rates go up slightly to 7% and lending standards tighten after the foreclosure fallout. 20% down is 80k, which will take 7 years to save at 1k/mo. Mortgage payment on conv 30 yr loan plus about $500/mo property tax will cost you $2,630/mo. If this represents the traditional 1/3 of gross income for housing, you will need to earn $7,890/mo or 95k/year. That’s what, the top 2 % of earners? Still a lot of have-nots, or never-wills, in 2013 I suspect.
Which is why prices could well drop below $400K. Make no mistake, there has never been a time when the housing market was tied to this much debt with DTI ratios this high and with suicide loans so common. This thing will fall much further than any market before UNLESS there is some govt interference (and I don’t doubt there will be some, unfortunately).
Why not have prices at $250K to $350K median in OC? Because “everybody wants to live here”?
Sobay… i did not know both our (Redondo Beach) bumbs came from Manhattan Beach…
bums have timeshares in both cities as well as Hermosa…
Please dont hate me gang (I know its bubblin) but I must point out one thing re: owning vs. renting. I can’t find a link but an excellent history channel special about 5 years ago followed red-lining after WWII. A bonus to the data collection was clear evidence that multi-generational achievement (education, health, wealth, employment, prison stats, etc.) were no different for blacks vs. whites when you factored in whether or not their parents owned their own homes or not. Since red-lining eliminated home ownership for most black families in the 40s - 50s they had much worse achievement stats even today, but those with home ownership showed no significant difference today with their white counterparts.
Again I say ‘ownership’ which mandates no indebtidness at some point in the process but you get the point. I would not buy my home again today, but Im glad I did buy it in 01.
Now go ahead and bash if you must but i’d bet most on this blog actually do own a home, after all 70% of us do
Imploder not like smiley face. Also, imploder suggest cancel cable TV, read books. Thick books. From library. imploder also suggests you cancel internet connection. Not good for you.
well all i can say to that is, we are not in Mayberry RFD anymore, are we?
no, but i recall my folks paid 2k for a mustang convertible in 67 and about 45k for a house… that car would be 50 grand today, and the house…. 900k. both about 20x since 67. no either is not as affordable as it was then for the average worker, but what else is?
The 2K mustang in 67 is not comparable to a 45K top of the line mustang from 06. That’s not an apples to apples comparison.
True. The ‘67 is way, way better.
yes, but door hinges crack
The problem is that incomes haven’t increased 20 x since ‘67.
yes thats my point. wealth in this country is in direct relation - over generations - with home ownership. Not 100% but the vast majority. So - since things will continue to be more expensive relative to incomes as we go forward - one can get ahead by eliminating housing costs. The only way to do that is to own the house. Many recent buyers will be hosed … this is true. But needing to pay rent when your 80 does not make sence to me. This is probably why the SFR market has rarely carried for rents as the 2-4 and above sometimes has.
Sorry, but I don’t understand your point. What, that everything is more expensive now relative to income since the 60’s??? Sure, but not with the degree of disproportionality that exists with housing. Like you said, 70% own and 30% cannot afford to own. Who do you think wins that stand off? Think very hard about that one.
right, but if you take out the last 3 years, and the buyers who really could not afford to be owners, then you are left (i believe) with a group that will be better off in their retirement not having to pay rent until they drop. If this were not true, then lets all (unless we bought in 03 or later) sell and rent forever… who’s with me? my guess is absolutely noone because you know you are better off owning even though your home (03 prices 30 fixed) will not be carried with fair market rents.
imploder again urges again cancel internet connection. information not good for you. 03 prices go bye bye and cause you much pain. dragging on deflationary recession also hurtful. imploder change mind on cable keep cable. watch gong show.
Or, after 50 years of INflation, maybe it is time for a little DEflation? That, or eveybody’s wages are going to start going up a LOT!
imploder sadly agrees. deflation like poor mannered relative who is house guest. refuses to leave and then starts sleeping with your mistress.
well i think 2 things are going on… yes lets wring out 03,04 and 05. then take out those that bought but could not actually afford to own. that leaves (im guessing here) about 50% of us who can afford a home. and that home is not our folks home. its chicken wire and chewing gum vs their cedar and oak etc. with these adjustments id say most of the 50% will still be better off in their retirement owning vs. renting.
Again, you are not factoring in the price point. Real Estate is all about what point you buy it at. Just like any other depreciating asset. If the investment cost is too high, then you will not get the returns required.
i agree on that point… i think my original post was not understood. see the last line… i said i would not buy my home today, but im glad i did buy it in 01. the bozos who are buying with no equity, neg am etc will be hosed, but their actions are not my idea of home ownership, and i like the idea.
Sure, owning (meaning, actually paid for) is better than renting (whether in retirement or not). Folks on this blog aren’t against buying or owning their homes. We’re just saying that prices right now are so totally out of line with fundamentals that it makes sense to rent v. buy at this time (and for the past several years). You always need to do a buy v. rent analysis when considering your options, and right now renting makes far more sense than buying. For those who bought pre-bubble, they can either hold on (ignore their paper wealth and know that they are paying off, or have paid off, their house) or sell and rent for awhile before getting back in at lower prices. There are people on this board who have chosen option 1 and others who chose option 2. Personally, I am waiting for prices to come down to a reasonable level before I purchase. I don’t look at the house as being an investment, just as a place for me to live. Renting and owning each have their advantages and disadvantges, and my personal choice is to buy when prices make sense and I can actually afford to buy. In the meantime, I am much better off financially by renting and waiting for the prices to fall.
yes today that is true almost everywhere and probably will be for some time. I guess I was responding to ‘ill never buy’ comments and so I just started stating the obvious.
Yes, in the long run, I’d prefer to own as well (but not for the reasons you’re stating about retirement). However, you cannot just look at 2002 and earlier. It’s an unrealistic argument. The reality right now is that housese are price too high. I don’t care about 3 years ago when I wasn’t in the California market.
Prices are not high every where. In up state NY you can buy a a home for $120k. I was looking at one that was converted to a duplex and they are getting $1400 a month in rent. It was in a nice area too.
imploder say, please move there
test
Prices go a lot lower than that upstate. Try Buffalo, for example.
You can’t just look at prices. You have to compare prices with local fundamentals. People buying just because prices looked “cheap” are responsible for the bubbles in Boise, Vegas, Montana (really), etc.
imploder agrees with yogurt and still reiterates: please move there.
test
Realtor(TM)
test
Realtor=”TM=”
stupid RealtorTM
try this…..
stupid RealtorTM
just take out the - characters
well the code i used worked in a normal browser, and the - character allowed the code to show, but it does not work on this site… so screw it. i used the small and sup tags incase you want to try it
test
Realtor=”TM”
damn, I give up. Screw the Realtors anyway.
lol… man i cant believe you are still on this blog… remember me… i was under a different handle (cant recall… might have bean redondo_dude or something). anyway i was all ‘crashing’ in 04-05 then my neighbor sold their unit in 3 days for over asking…anyhow good luck weathering oc dude.
So is that why you’re trolling here? Because your neighbor sold at the peak of the market and you’re extrapolating that circumstance forward? I don’t get it. What exactly are doing here?
Not a single one of Brassi Ranch auction was sold.
I went to the auction and there were about 110 people showed up. Only 10-15 people were holding “auction number” at their hand and the rest of crowd were just observer.
Last night I looked at the San Diego County records web-site and found out that these properties were sold on Feb. 2005. Price paid for these 16 properties were in the range of $950K to $1.31M.
Highest bids were in average $250K-$300K less that the sold price of Feb. 2005. As a face saving measure they called these bids “subject to approval”.
Lady who was sitting beside me told me that most people in the auction are residences of Bressi Ranch who came to see how much their properties worth. That explains sad and somber faces that I saw at the end of the auction.
Owner of these properties who are investors/lawyers from L.A. are screweeeeeeeeed.
These smart guys are going to lose $300K-$400K on each property. Lawyers, Huhhh, it could not have happened to any better groups of people.
Virginia running her dark hair fisting orgy floated above the right thing and he stood up anddown.