“Following A Falling Market” In California
The Daily Sun reports from cal. “Step 1 in dealing with today’s Coachella Valley real estate market: Don’t panic. Bill Powers may have summarized sentiments of local real estate veterans best at this morning’s annual ‘State of Real Estate in the Coachella Valley’ forum at the Doral Palm Springs Resort in Cathedral City.”
“‘Really, my message is, ‘No hard hat necessary. The sky is not falling,’ said Powers, president of Pacific Western Bank. Although the meeting was dubbed ‘I Survived 2007: How to Make It Through Next Year,’ real estate and business experts were upbeat and said they believe the downturn in overall valley home sales compared with recent years and a slowing of annual home-price appreciation is a cyclical adjustment.”
The Press Telegram. “About 12,000 Realtors gathered in Long Beach for three days last week to hear the fate of the market at the California Realtor Expo 2006 at the convention center. It was hard to find anyone at the conference who was down on housing.”
“Christopher Cagan, director of researchfor First American Real Estate Solutions, said foreclosures will have some effect on the market, but it won’t be anything like the gloom and doom scenario of a bursting real estate bubble.”
“‘Reset will affect the market, but not break it,’ he said. Cagan’s estimates show Los Angeles County will experience 46,000 defaults in a five-year period from 2007 through 2001. Those defaults will result in an $8.2 billion hit on the area’s economy. That’s minor when you consider the county is one of the biggest economies in the nation, Cagan said.”
“Orange County is expected to see 18,000 defaults for a $3.9 billion loss during that period, he said.”
“The individuals who should have some worries are the people who purchased a home at the peak of the market, from 2004 to early 2006, with little down and an adjustable mortgage that’s due to reset to a much larger rate. With no equity to refinance, and a ballooning monthly payment, they may be faced with nowhere to go but into default, he said.”
“All three speakers also agreed that those reporting on housing have not given an even account of the good and bad in today’s market. ‘You have a lot of media wanting to put a negative spin on the numbers,’ said Jack Kyser, chief economist of the Los Angeles County Economic Development Corp.”
The Marin Independent Journal. “Home foreclosures in Marin County were up nearly 60 percent in the third quarter compared with the same period last year, Dataquick reported. Eighty-nine foreclosures were reported in the quarter ending Sept. 30, up 58.9 percent over last year, when there were 56.”
“The foreclosure numbers were also a steep jump from the second quarter, when 58 were reported. But Marin’s foreclosure picture was still rosier than most of the other eight counties in the Bay Area, where overall foreclosures surged 89.2 percent in the third quarter.”
“‘I’m not surprised by those numbers because of all the products that have come out - no down (payment), interest-only loans,’ said Russell Colombo, chief of Bank of Marin, which does not offer residential loans. ‘A lot of these people go in with the expectations of appreciation, but in Marin County that has not happened recently.’”
“According to DataQuick figures released this month, Marin’s median single-family home price declined 3.3 from September 2005 to September 2006.”
“‘But in this type of market, with the adjustable rates out there, I’m not surprised that the foreclosures would jump,’ said Kathy Schlegel, president of Marin Association of Realtors. ‘And they probably will in the next quarter.’”
The Washington Times. “Cher is quietly trying to unload her gothic Pacific Coast Highway mansion in Malibu. Actor Nicolas Cage wants $35 million for his Bel-Air home. But even in the land of $2 million ‘tear downs,’ housing prices are dropping faster than Jamie Foxx’s Lamborghini.”
“‘It’s a buyer’s market,’ said real estate agent Ben Young Mason, who works with upper echelon clients. ‘Houses which sold within 60 to 90 days last year are now sitting on the market for four to six months.’”
“Los Angeles is in the midst of a housing market slowdown, just a year after sellers were enjoying giddy times of bidding wars and multiple offers. Prices in Southern California rose in September at their slowest pace in nearly a decade. Realtors say there are several causes, but none more than greed.”
“‘Unfortunately, there’s a discrepancy now between sellers’ expectations and a realistic view of the market,’ Mr. Mason said.”
“Real estate is the L.A. topic du jour. Homes are simply worth less than they were a year ago, and many sellers are pulling their homes off the market. ‘The problem is people are not reducing the prices. They’re following a falling market. Sellers need to be realistic,’ Mr. Mason said.”
“The housing market slowdown also has led to a sharp rise in mortgage defaults. Foreclosures among Californians more than doubled in the three months ending in September, according to DataQuick. Higher payments on adjustable rate mortgages are being blamed for the rise in loan defaults.”
“Realtors admit that they were putting more people in homes they eventually would not be able to afford. ‘In the inflated market, they paid top dollar,’ said real estate agent Alison Mitchell. ‘Now, they’re in trouble.’”
“Which leaves jittery Los Angeles homeowners with the question: Is it time to panic? ‘Absolutely not, it’s not time to panic,’ Mrs. Mitchell said. ‘All it has done is to return to a normal market as opposed to an exaggerated, overinflated market.’”
Here’s a new one to me:
‘Santa Rosa and Sonoma County officials are moving quickly to impose emergency moratoriums on mobile home park conversions, setting the stage for a legal showdown with Southern California forces trying to sell park dwellers the lots they now rent. Opponents of conversion contend that purchase prices of lots could range from $100,000 to $200,000. ‘People our age are not going to take out a 30-year loan for $100,000 when we aren’t going to be alive in 10 years,’ said Jean Warnes.’
This makes me sick! I can’t believe that this could actually happen.
I don’t think it will happen, just scraping the bottom for GF’s. What will they call it when they revert to mobile homes? Re-mobiles? Re-parks?
Re-parks is funny.
I’ll take ‘Re-parks’ for a hundred, Ben.
Wow, greed at its worst. Trying to make old seniors buy the land under their mobile home at peak prices. The RE owners suck big time in this case.
big gov will save us
Corporations are governments.
Really? I can get the power to tax and regulate and throw people in jail merely by filing articles of incorporation? What a deal. I’ll plunk down my $200 to Nevada tomorrow. First order of business will be to impose confiscatory taxation on all people with suspicious associations with German sausages.
well done, Thos
You need to contribute alot more than $200, and be in the good circles
Let me see if I remember this right… a local city forced sale of property to assist in a huge hotel project. The city built the parking garage and some other stuff for the hotel project. Before built, it went to the polls and the voters said they wanted a park there versus a parking garage that would take forever to break even (at a cost of $30,000 per space). The council guffawed at it, and wala, it’s a parking garage. Voters were ignored. Just like gov’t contractors. If your in, you get hooked up. Wealth begets wealth. Sure the hotel will generate tax revenue and what not… but normal citizens don’t get to bargain… “Give me free water hookup, and sewage, and paved driveway, and I’ll build a house and pay taxes on it..” Heck, the local gov’t waived taxes or gave other perks to get chain resturants to come to an area they were promoting, and it looks to be doing much damage to the higher end resturants of the area. Oh well.
I think the reason they like to get folks all riled up about people on welfare is to distract us while corporate america picks our pockets.
Amen. Corporate America is robbing us all blind.
ditto - amen, brother
OT:
SAFE AS HOUSES?
“In the past few months, it’s been almost al bad news for the housing market Homebuilders have had to tell Wall Street tha between twenty and thirty per cent of thei contracts have been cancelled. Janet Yellen, th head of the Federal Reserve Bank of Sa Francisco, has said that streets full of unsol new homes now make parts of Phoenix an Las Vegas look like “ghost towns.” Selling home takes longer than it used to, and th inventory of existing homes for sale has gon up almost forty per cent in the past year. Yet through it all, one fact has continued to provid solace to anxious homeowners and real-estat brokers alike: housing prices have stayed remarkably stable.
“The lesson we’re supposed to take from this is that a home remains as solid and safe an investment as ever. After all, we’re constantly told, you have to go back to the Great Depression to find a full year in which housing prices fell. Unfortunately, the numbers upon which these comforting conclusions depend—namely, median home prices for the country—are unreliable and misleading.”
Jumunnie
AND “baked” for public consumption!
This is an example of the legal and unethical abuse a renter can suffer when they’re in retirement.
One of the motivations for buying is protection from unexpected housing costs in retirement. Thats what prop 13 did in CA by almost freezing property taxes.
I am *not* advocating buying in this market but it’s important to recognize that renting has risks not obvious in this renter’s market.
Renting does carry risks. In the present market, the biggest risk to a renter is a risk that he/she will have to move, sometime. There is plenty of rental housing for those who CAN move.
yes, if you outright OWN in retirement, you have only 2 things that I can see that can rain on your parade: increase in property taxes (of course anyone should factor this in - but I mean skyrocketed increases) and eminent domain taking your property (see New London/Groton CT and how our rights have been sold down the river) If you own ppty that is desirable and you live in a POS, this could happen. Not just for public highways, but for pvt development…
My two cents.
3. Using equity in home to pay for Long term care/Assisted Living
‘The Washington Times. “Cher is quietly trying to unload her gothic Pacific Coast Highway mansion in Malibu. Actor Nicolas Cage wants $35 million for his Bel-Air home. But even in the land of $2 million ‘tear downs,’ housing prices are dropping faster than Jamie Foxx’s Lamborghini.”’
To paraphrase Chicken Little, it sounds like the top of the sky is falling…
“The Oscar-winning Mr. Cage bought his seven-bedroom Bel-Air home — once owned by pop singer Tom Jones — in 1998 for $7 million. Although home values in his ZIP code have appreciated by 90 percent since then, according to DataQuick Information Systems, properties are sitting longer and longer on the market.”
90 percent appreciation since 1998? Ahem…
He paid 7 million in 1998. Now asking 35 million asking in 2006.
What am I missing; apart from my sense ofcourse.
Only one way to go, falling “Off the ritcher scale”
He hasn’t made a good movie since Raising Arizona. He needs to squeeze as much out of his real estate as he can.
Start Amount $7,000,000
End Amount $35,000,000
Years 8
Rate 22.28%
What, you didn’t think “Windtalkers” was Oscar material?
posted ” What, you didn’t think “Windtalkers” was Oscar material? ”
Sounds like gary watts or david L…. two of the best windtalker’!!!!
guy imploder sat next to on bus was windtalking. imploder not like “conversation”
Try ‘Red Rock West’
‘Leaving Las Vegas’
‘Adaptation’ — applicable to Florida condo flippers who have to adapt to the extinction of buyers…
>‘Leaving Las Vegas’
that was a terrible movie. i dont see how that prick won an oscar for playing a bad drunk.
Agree. I hated Leaving Las Vegas. However, I concede on Adaptation. Pretty decent flick.
Yeah, that got me too. If appreciation in his zip in 90% (never mind the insanity of that), the price should be around $13.3 million, but he has the balls to ask for a wishing price of $35 million? Hmmm, he’s only looking to make $3.5 million per year on his $7 million home. Yeah, that seems reasonable. Oh, I meant Insane.
Don’t forget — Donald Trump down here in my neck of the woods is asking $125 million for a Palm Beach, FL mega-mansion in he’s been having renovated. A recent story in our local paper said it WAS the highest asking price in the country, but apparently there’s somebody who wants $138 million or something like that for a spread in Colorado.
yes, but must remember nick personally shat in each bathroom greatly raising value. sometimes you people seem to ignore the “fundamentals”
Mike — re Colorado, I think that’s a Saudi — Prince Bandar — big cheese and super-rich. Will be interesting to see if he has any real concern about selling it — certainly doesn’t need to. He may just get a kick out of the notoriety of having the most expensive house in America.
“Lou Pai is the real mystery man in the Enron scandal. A former executive of the energy trading firm, he cashed in an estimated $270 million in stock and left the company before it collapsed, divorced his wife, married an exotic dancer, bought an enormous piece of Colorado, sold it and then disappeared into obscurity. “
I’m wrong Pai was the 2nd largest land holder in Colorado. http://en.wikipedia.org/wiki/Lou_Pai
Lou Pai owes his wife much more than half, cause without the divorce he would be in jail with Skilling.
Luckiest man at Enron.
Those Hollywood mega-stars up there in their fancy castles up in Bel-aire, brentwood,hollywood hills and Malibul live such insulated lives so far removed from actual reality that they actually think that their mega-estates are worth 5x times the original purchase value.
Maybe he thinks someone will pay an extra $20M for the privilege of bragging that they bought Nicolas Cage’s house. bwhaha
At this price point the chances of finding a sucker are limited.
I guess if we all took Cage’s lead the average Joe could troll his 1998 300K home for 2.1M in 2006.
Yea, I can see the logic here….
He isn’t that good an actor. If he wasn’t related to Francis Ford Copola he never would have had a job. Hollywood keeps it all in the family to a high degree. He’ll have to put on quite a performance to sell that place.
“All three speakers also agreed that those reporting on housing have not given an even account of the good and bad in today’s market. ‘You have a lot of media wanting to put a negative spin on the numbers,’ said Jack Kyser, chief economist of the Los Angeles County Economic Development Corp.”
Right. Blame the media. Don’t blame greed, RE false advertising, and hallucinatory delusions.
after meeting was over speakers were sighted sharing a joint behind parking garage laughing about how their BS was so believable.
pictures to follow.
http://tinyurl.com/yzvyev
Photos of speakers congratulating each other about BS they just promoted to a room full of dolts.
Cracked me up. Mmmm
That guy looks like a Shivarati — they trek into Nepal once a year from India and Sikkim for a hash-laden sorta-Hindu festival. The government gives them free hash while there.
jack kyser downtown pitchmiester for junk a$$ loft condos. 10 min of him speaking better than sleep eze for insomina
Imploder you misspelled Kyser…. the correct spelling is Keister.
Posted “About 12,000 Realtors gathered in Long Beach for three days last week”
Too bad we could have tested the new “daisey cutter”
“Posted “About 12,000 Realtors gathered in Long Beach for three days last week”
Does anyone on this blog think that these 12,000 realtors brought a ton of dough to spend in the Long Beach downdown. With sharply declining RE sales throughout Cal, which implies drastically reduced commission intake, i wonder what % of these realtors/brokers attending the LB convention are actually flat broke.
Note: Dwtn LB certainly needs Tourist/convention doscretionary spending. LB and private developers have poured enormous sums into developing a razzy scenic harborwalk, with the pike at rainbow Harbor, big-name hotels, ocean blvd Condo towers,Aquarium,restored old sloops and paddlewheelers,Queen Mary,ect. Not to mention some powerhouse new diners along “restaurant row” at the pike. Problem is that very few tourists seem to come into LB dwtn. LB cannot depend just on convention dollars if the dwtn is to thrive. It badly needs more hi-powered businesses and residents to put down roots in dwtn LB, which is not happening. As a comparison, Santa Monica, West hollywood, and Marina Del Rey have the hi-end businesses and residents which LB lacks, tho there are a few such operations in dwtn LB(Perkowitz & Ruth Architects is one), as there are no doubt a few top-notch professionals living in dwtn LBCondos. LB just needs a lot more of these folks to really take off as a lively happening dwtn scene.
Very funny!
I work in downtown LB.
The bartender at Parker’s Lighthouse, I have been slowly educating about the housing bubble.
He said the realtors came in and spent like madmen, on food and drink.
So at least the ones that went to the convention were still spending.
Imagine having a crush of REaltors/Brokers strolling shoreline Village. As they gaze out over the placid LB skyline partaking of the views of the Dwtn or imbibing a frosty brew at Tequila Jacks, Rock Bottom Brewry, ect., what thoughts go thru their minds? Do they ponder much beyond the infequency of sales/commissions: these dreary fall months, or do their probing/broad wide-ranging intellects ponder the broader questions of future LB, and Regional, state and national economic/political/cultural trends.
Shoreline village does attract it’s share of boozers and aging boomers :you see them seated, Buddha-like, at various watering holes along the plankwalk or along the railing, beer mug in hand.
–
“‘All it has done is to return to a normal market as opposed to an exaggerated, overinflated market.’”
“normal market,” says who? Prices are normal? Leverage is normal?? supply-demand is normal???
I don’t know about Mrs. Mitchell’s ass, but her head is not normal.
Jas Jain
“Normal market?” So, YOY price declines are a “normal market?” Price v. income ratios higher than they’ve been in history in many major markets are a “normal market?” No, this is not a “normal market,” but we will get there in the next couple of years (at least in regards to prices; the typical appreciation of 1% above inflation will likely take much longer as people will be afraid of purchasing RE after it crashes).
“Which leaves jittery Los Angeles homeowners with the question: Is it time to panic? ‘Absolutely not, it’s not time to panic,’ Mrs. Mitchell said……”
No, time to panic is next year when your ARM resets. Then Mrs. Mitchel says “OK, now it is time to panic.”
Don’t panic, but if you do be the first to panic.
Yeah, I was one of the first to panic here on this Maine island. Sold my one and only house this summer. Last night I had dinner w/ a guy who has two houses and who would rather be rid of one of them. He had seen a TV show indicating that outright-auction sellers get “taken for a ride”. I asked him how so, he said the auctions brought only half of what the houses were “worth”. I said the houses were “worth” what they brought at auction. He said “if they had waited they might have gotten their price”. I said if they could afford to wait, they were welcome to risk it. Speaking for myself I am glad to have panicked early.
So much time and effort by the RE industry proclaiming that we are in a normal market.
Methinks he doth protest too much.
‘Absolutely not, it’s not time to panic,’ Mrs. Mitchell said. ‘All it has done is to return to a normal market as opposed to an exaggerated, overinflated market.’”
Normal market my butt, to many people living of their housing ATM’s and there are plenty of people not getting any sleep. There will be panic no matter how much they try and talk it to the elusive “soft landing”… OT. I see over on E-Bombay there are plenty of the no money down get rich in real estate CD’s up for bid in case anyone wants to get in before you are priced out forever!
Whenever people say “don’t” …..(something) I get the feeling they know in their hearts its happening already.
“Don’t panic”……who’s thinking about that? You?
Repost:
Waiting for 3 years for bubble to deflate. Yes, the show took too long…the correction has been S—L–O-W over the past one year in So. Cal.
Recently seeing some speed. An openhouse for a town home I visited last was asking for $565k in Thousand oaks,CA.
Fast forward 4 months and last weekend, they had new carpet and other upgrades, asking for 485K (negotiable). Owner is a real estate agent.
Was purchased for 200k in year 2000 end.
Will not sell at the current price, another larger and better located unit came to market last month and sitting…
Meanwhile RENTs in area are up 12% for me, and wait for this, if you lease for 6 month, is CHEAPER than if you sign lease for a year!!
First time ever I came across this “Inverted lease Curve” (C).
Inflation or deflation, anyone?
What’s the FED gonna do, they have painted themselves in a corner. My hope is that they raise rates next go round and get on with it. Dropping rates would spark higher inflation, of course I do not believe their inflation numbers at present anyway. Who the hell can not factor in energy, housing etc. into their budget. Deflation at some point but how can we rule out hyper-inflation either? Stagflation??
14% off original wishing price, and still too high. I always appreciate good anecdotal evidence. This still has a ways to go, but at least it’s moving in the right direction.
I’m seeing a lot of six month leases in Westlake Village too. My theory is that the FBs want to sell the units but can’t right now, so want to rent them out until the great rebound of 2007…
Yep. “Springhopemania ‘07″. Guess we’ll be hearing about this every year on the way down. Best just to get used to it.
“Realtors admit that they were putting more people in homes they eventually would not be able to afford. ‘In the inflated market, they paid top dollar,’ said real estate agent Alison Mitchell. ‘Now, they’re in trouble.’”
And that isn’t prosecutable? Not even against their tissue-thin Code of Ethics? I realize the buyers made their bed and must now lie in it, but the Realtors did plenty of lying themselves. When do they get called to account for it?
An admission…gtfooh.. must be those new realtor™ torture laws of supply and more supply; if you can’t make a sale, confess your sins, tell the truth, and get sellers to finally lower prices.
Speaking of which…
http://www.realtor.org/mempolweb.nsf/pages/printable2006Code
“Realtors admit that they were putting more people in homes they eventually would not be able to afford.”
What about fiduciary responsibility? It’s only the largest financial transaction of most people’s lives!
I guess they must not be concerned about reputation. All too typical of salesmen. I will never understand why the public places any trust in realtors.
Come on. We’re only paying them 6% of an $800,000 sale. Can we really expect them to do more than smile and mention how good the schools are? My realtor took me around in a Mercedes, which I thought was a nice bonus! God forbid that s/he ruin a quite pleasant tour with actual data on where the market is at.
sarcasm off
You should talk to Susan Jacobson the realtor from WI. She will set you straight on the ethics of realtors (snicker).
Susan J. actually made some pretty good points and as someone said on a previous thread, I have to admire her courage to keep coming back here. Also, I think she may be in a somewhat insulated market, bubblewise. I have a feeling that if Ms. Jacobsen went to one of the true bubble areas, and witnessed what has been going on there for the last few years, she would be ashamed of her peers and profession.
You’re right WI is pretty isoloated. I lived in Chicago up until 04 when I had to move to SD. I was also the one who said I admired her honesty.
Not to mention their extraordinary intellect (guffaw!).
The fiduciary duty of any salesperson is to the seller, not the buyer. Only exceptions are stockbrokers and related people who have legally mandated duties to both parties.
A Realtor has no more fiduciary duty to a buyer than a car salesman. They have an obligation not to represent material facts, but that’s it.
Send them all to Gitmo. After all, waterboarding isn’t really torture, right?
you mean they let prisoners surf too! what next? a trial?
Now lets not get carried away!
Requires careful translation:
Realtors (Me)admit that they were putting more people in homes they eventually would not be able to afford. ‘In the inflated market, they paid top dollar (cause I said it would only go higher),’ said real estate agent(yes, I did this) Alison Mitchell. ‘Now, they’re in trouble. (and I’m rich!)’”
Sales agent beware? Isn’t the rule buyer beware, with beware of the sales agent being only one of the important axioms that flow from the all important base rule of commerce.
“Which leaves jittery Los Angeles homeowners with the question: Is it time to panic? ‘Absolutely not, it’s not time to panic,’ Mrs. Mitchell said.
So can we assume she will call a press conference to tell us when it IS time to panic?
After she gets out the door ahead of the mob, then it’s time to panic.
Sure it is. One of my favorite lines I read at this blog (can’t remember who, or else I would give credit to them): “Don’t panic. But if you do panic, panic first.” Time to panic first and get out before the prices fall even more. No fun chasing the market down.
“If you do panic, panic first.”
I like that. Outrun the Slowest Antelope.
It’s been a trading axiom for at least a few decades (probably more like centuries).
No no no! It’s a GREAT time to buy! There are plenty of bargains! Haven’t you read the NAR press releases? Or are you listening to those pesky out-of-touch gloom&doom naysayers and the misguided media reports that are responsible for the slump? Sheesh. Get with the program or you’ll be priced out forever!!
“This is your captain speaking. The ship is not sinking. I repeat, the ship is not sinking. It is merely ‘normalizing’ closer to the surface as it progresses into its ’submersible’ stage. Please ignore those men in ship’s uniform getting into the lifeboats; they are just going on ’shore leave’ and will return presently.
Please return to the party in progress in the lounge. Remember, drinks are on the house. That is all, enjoy your voyage.”
“All’s well. Remain calm.”
“‘All it has done is to return to a normal market as opposed to an exaggerated, overinflated market.’”
Return to normal market means return to normal prices….. hasn’ happened yett
From the Daily Sun article: …”real estate and business experts were upbeat and said they believe the downturn in overall valley home sales compared with recent years and a slowing of annual home-price appreciation is a cyclical adjustment.”
What they don’t know, or refuse to admit is that this cyclical adjustment is going to last for the next 5 years (maybe more).
Exactly they see a one year adjustment and then the plateau. That is the party line speaking. To me next spring will be the final battle.
“Exactly they see a one year adjustment and then the plateau. That is the party line speaking. To me next spring will be the final battle.”
The battle lines are drawn and the massed battalions on either side are arrayed with raised shields and spears. On one side are the REIC legions, drawn up in a defensive posture, defiant but cowering behind their earthworks and trenchs, awaiting the inevitable charge of the Battle-hardened veterans of past RE bubbles, the well-aimed piercing arrows of Ben’s RE Bloggers, and the auxiliary forces of Deflation,recession,collapsing dollar,unemployment,foreclosure,bank closings,hedge fund collapse: all rushing in upon the collapsing caving pitiable earthworks put up by the pitiful fleeing remnants of the once mighty REIC hoards.
What if there was a pricing war and no buyers came?
Yep. Hey, the run up was 5 years and 100% (or more, depending on the market). Do they really expect the run down will only last 1 year and only drop 5-10%. RE cycles don’t work that way.
More Orwellian Double-speak coming from the orifices of the CAR/REIC propagandists as they serenade the duped masses.
“All it has done is to return to a normal market as opposed to an exaggerated, overinflated market”
That’s called wishful thinking. The strategy is to get the word out that this is “normal” and, no “need to panic” - soft landing etc etc. It’s a mesage aimed at would-be buyers that simply aren’t buying it. On to message # 16 - Toss the keys on the counter on your way out…
Well, it’s getting closer to that time of year, so we’ll need to be singing “Jingle Mail” this Christmas.
You are right about that, how are folks going to buy all those X-mas goodies without their home ATM?
imploder, while walking to Savon to catch up on reading, heard on his transistor radio White house Economist: He said all is well gasoline is down adding $800 in pocket of every working family in USA. He said guess what that average amount working family in USA spend on Christmas! See! X-mas goodies on their way! Imploder knew this goberment cared!
imploder “Imploder knew this goberment cared!”
Yes Inploder you away’s get a cookie before an election. Then bact to your usuall diet of force fed toobsteak.
My favorite surf shop, had this on their sign.
“If the oil companies can have a pre-election sale, so can we.”
The last real surf shop, The Frog House in Newport Beach.
And yeah, they vacuum the carpets twice a year if they need it or not!
Bought my first wetsuit there, way back when. Sounds like things haven’t changed there. Good to hear.
The individuals who should have some worries are the people who purchased a home at the peak of the market, from 2004 to early 2006,
______________________________________________
As home prices have not reached 2004 - This is still not a good time to buy - using his analogy!??!
“The individuals who should have some worries are the people who purchased a home at the peak of the market, from 2004 to early 2006, with little down and an adjustable mortgage that’s due to reset to a much larger rate. With no equity to refinance, and a ballooning monthly payment, they may be faced with nowhere to go but into default, he said.”
Umm. One could translate this as: “We’ll be back to 2003 prices before long.” Wouldn’t that equate to about a 25% drop … which would be pretty severe?
It would be interesting to tally all of the realtor admissions that are made in the midst of the correction poo-poohing.
The best possible outcome for the soft landing crowd is a 25% drop overnight. We’re going to see a 30% nominal drop inside of 2 years and a grind lower for another 2 years to the tune of another 10%+ nominal… to flatline for who knows how long, provided inflation remains in check during that period. The real $ declines will be difficult to swallow, but expect 60%+…
Nah… prices will only decline 2%. Didn’t you hear? We’ve already hit bottom and prices will soon start heading up again. http://graphics8.nytimes.com/images/2006/08/26/weekinreview/27leon_graph2.large.gif
Depending on the market, it could be quite a bit more than 25%. Some markets in Cal were going up 30%/year during 2003-2005.
Mr. Kyser the Cheef “Great” another “Economist” never blamed Media, when his compatriots were paying stupid prices to those sheet houses in third world country Panorama city, or North Hollywood, as they were bying in Beverly Hills or in Newport Beach.
“Mr. Kyser the Cheef “Great” another “Economist” never blamed Media, when his compatriots were paying stupid prices to those sheet houses in third world country Panorama city, or North Hollywood, as they were bying in Beverly Hills or in Newport Beach”
Look forward to seeing zillions of apt units springing up in N Hollywood like gopher mounds on an ill-maintained park. N hollywood has gone Apt/condo mad! Created especially for legions of sone-to-be FB’s and the never-ending supply of incoming third-world guest workers.
OT: I just took a peek at Ben’s most recent additions to the photo album, and was stunned by the cranes in Florida. My god, who do they think is going to buy all those condos??
Or, for that matter, rent all of those condos?
I will take one, when I retire in 25 years.
Provided the keep the coveted granite counter covered up and dust free.
Think Section 8. That’s what’s going to happen to many of them.
by then known as section 4, due to deflation
I am absolutely convinced some type of REIT, Hedge fund, etc are buying into the scam…The builder ,Brokers are making a killing ,and some unknowing pensioner ,or Japanese investor will be shaking his head in dis-belief.
Not Kenneth Heebner’s, that’s for sure!
http://tinyurl.com/ws82q
How are the streets in that local area going to accomodate all of this new car traffic from the people living in these condos? Does anybody in FL know what percentage of these condo units are being built with a parking spot?
In my area, most of them (West Palm) come with parking. But only for one car.
However, in Miami, parking is more of a problem; and I don’t have anything but “third hand” to say that unless its a higher end unit (750K+) you may not have a deeded parking spot. There will be parking, but who knows where (probably just a deck with an access card type thing).
I am just about to pay a visit to my cousin in Jupiter FL to see if I would like to rent some POS at its new reduced price…will post my findings in a week or two.
“Which leaves jittery Los Angeles homeowners with the question: Is it time to panic? ‘Absolutely not, it’s not time to panic,’ Mrs. Mitchell said. ‘All it has done is to return to a normal market as opposed to an exaggerated, overinflated market.’”
I don’t know about you, but when somebody tells me it is not time to panic then it is time to do just that. Especially when that person is a real estate agent!
Exactly. The only reason to tell people not to panic is because people are already beginning to panic (with good reason, I might add) and they are hoping to avoid more people panicking. As people panic, more will follow their lead and it will simply build on itself. Just one more stage in the psychology of bursting bubbles.
On a side note - while I have been waiting for this bubble to burst for a long time, I have to admit that the turning of the psychology of the GFs is happening faster than I thought it would. I mean, there was absolutely no mention of panic just 3-4 months ago (in fact, many FBs still thought that the housing market was great back then), and now it looks like the first of the FBs are really starting to panic, and more will quickly follow. We sure moved out of the “buyers are being cautious and taking their time” mode pretty quickly.
yea, every time some boss said “don’t worry” imploder got layed off. Is there some other meaning to “don’t worry” imploder don’t know about?
So true!
This don’t panic stuff seems to me to be kind of ridiculous coming from a realtor who lives by the trade, not by the price. For the last five years they have been screaming to every potential buyer “PANIC OR YOU WILL BE PRICED OUT FOREVER!” It seems to me that on the downslope they should now be screaming to the seller “PANIC AND CUT YOUR PRICE 40%, BECAUSE NEXT YEAR, YOU WILL HAVE TO CUT BY 60%.”
By saying don’t panic, they are encouraging “wishing prices” and nothing will sell, and they will not make any money. I guess that’s the barrier to entry to becoming a realtor is so high.
Oops… I guess that’s WHY the barrier to entry to becoming a realtor is so high.
Well said, ric!
Ric,
Think about it, they need to do this (on both sides of the bubble). It made NO sense to buy a home in S. FL for the past 2-4 years; the only way to sell one was to invoke panic (you will be priced out forever). Now, on the way down, same thing applies (you will lose more money by not cutting the price RIGHT NOW).
Relators do not help you make financial decisions, they help you make emotional ones. Panic is a very strong emotion, and one that they love to play on.
Good point Michael. Ultimately, ALL prices are set emotionally. The bigger, more personal the purchase, however, the more emotion plays a part.
Does everyone recognize that? Even when they do, its a tough factor for the best of us to manage when the emotions involved are particularly ripe.
I think there is a misprint in this article. It says that they’re expecting 46,000 foreclosures in L.A county in the five year period between 2007 and 2001. I think they mean 2007 to 2011.
With that being said, DataQuick shows there were 5,565 foreclosures in L.A county in the third quarter of 2006. If that is an average for each quarter taken over 2 years (07-08) then there will be over 40,000 in just 2 years. However, the trend for L.A County is showing that the pace of foreclosures is increasing. YOY numbers show that foreclosures increased 72% from 3rd qtr 05 to 3rd qtr 06.
But let’s look at San Diego County, which has been leading the way downhill in California. Foreclosures are up 160% YOY, with over 2,355 in the 3rd qtr of 06. That’s almost half of L.A county’s number, but SD County has maybe 1/3 of L.A county’s population. Based on the trends, the 46,000 number for foreclosures in L.A county between 2007 and 2011 is way off.
I don’t know what they’re basing that projection on, but I’m highly suspicious of the methodology.
The problem is that the industry does not seem to do a good job collecting data on mortgages and the context of borrower’s circumstances (or at least they don’t publish them anywhere that I’m aware of). The problem is that it seems like most risk models are not accounting for the idiotic levels of risk-layering that anecdotally seem to be rampant. An ARM’s not necessarily a bad idea, but when you couple that with no-down, qualifyin for an amount that they can pay only through negative amortization (never a good idea), etc. then its not really a question of “if they can’t keep up” but “when they can’t keep up.” When homes are appreciating at 10-20% a year and can be sold within 6 weeks, then a lot of silly borrowing gets forgiven.
Another aspect that I don’t think the 46,000 over five year period is accounting for is the number of “investors” with multiple, non-primary resident properties. Take a friend Casey, for example. The 24 year-old with no stable source of income outside of his real estate “investing” owned a half dozen homes. When he defaults, that’s six foreclosures. A good number of people are spread pretty thin across the country, so when they go down its multiple foreclosure (some concentrated in very small areas).
Until we see accurate data that profiles:
1) number of mortgages with LTV of more than 90%
2) number of mortgages that will reset over the next two years
3) number of people holding multiple mortgages
Without that data, I don’t think that anyone can make an informed projection on foreclosures over the next two years. And even with good data, trying to figure out where things will be in 2011 is a fool’s errand at this point, IMHO. The next 2-3 years will be exciting enough.
I don’t know what they’re basing that projection on, but I’m highly suspicious of the methodology.
The problem is that the industry does not seem to do a good job collecting data on mortgages and the context of borrower’s circumstances (or at least they don’t publish them anywhere that I’m aware of). The problem is that it seems like most risk models are not accounting for the idiotic levels of risk-layering that anecdotally seem to be rampant. An ARM’s not necessarily a bad idea, but when you couple that with no-down, qualifyin for an amount that they can pay only through negative amortization (never a good idea), etc. then its not really a question of “if they can’t keep up” but “when they can’t keep up.” When homes are appreciating at 10-20% a year and can be sold within 6 weeks, then a lot of silly borrowing gets forgiven.
Another aspect that I don’t think the 46,000 over five year period is accounting for is the number of “investors” with multiple, non-primary resident properties. Take a friend Casey, for example. The 24 year-old with no stable source of income outside of his real estate “investing” owned a half dozen homes. When he defaults, that’s six foreclosures. A good number of people are spread pretty thin across the country, so when they go down its multiple foreclosure (some concentrated in very small areas).
Until we see accurate data that profiles:
1) number of mortgages with LTV of more than 90%
2) number of mortgages that will reset over the next two years
3) number of people holding multiple mortgages
Without that data, I don’t think that anyone can make an informed projection on foreclosures over the next two years. And even with good data, trying to figure out where things will be in 2011 is a fool’s errand at this point, IMHO. The next two years will be exciting enough.
I know, the report is BS and the reporter is lazy. Those default numbers relate only to defaults caused by ARMs resetting (not to defaults that occur for other reasons, such as job loss, divorce, etc.). But the basis for the numbers is still pretty suspect, as Cagan says that defaults will occur only if the ARMs reset AND the FB has zero or negative equity. He then tries to quantify those who have zero or negative equity, without taking into account what falling prices will do those with 5, 10, 15% equity. The analysis also ignores the fact that even an FB with limited equity (say 5%) couldn’t sell in this market because of the transaction costs (commissions, escrow, paying for buyer’s closing costs, etc.). I think that it is probably safe to say that the number of defaults that will arise in LA and OC due solely to ARMs resetting over the next few years will likely be at least double what the report predicts. And then when you add in those defaults arising from other causes, the numbers will get back to at least the levels seen in the early to mid ’90s.
In his powerpoint presentation, under the chart of equity by purchase year, it says to move up the chart one cell if prices rise by 5% and down if they fall by 5% (it was in 5% equity increments) Of course he doesn’t seem to have extrapolated that into his conclusion.
He seems to be saying that if house prices don’t fall then there will be little downward pressure on prices. This makes sense given the feedback loop that exists between prices and price expectations. The problem is that it only takes prices leveling off to get started on the long downhill trend.
(Repost?)
I don’t know what they’re basing that projection on, but I’m highly suspicious of the methodology.
The problem is that the industry does not seem to do a good job collecting data on mortgages and the context of borrower’s circumstances (or at least they don’t publish them anywhere that I’m aware of). The problem is that it seems like most risk models are not accounting for the idiotic levels of risk-layering that anecdotally seem to be rampant. An ARM’s not necessarily a bad idea, but when you couple that with no-down, qualifyin for an amount that they can pay only through negative amortization (never a good idea), etc. then its not really a question of “if they can’t keep up” but “when they can’t keep up.” When homes are appreciating at 10-20% a year and can be sold within 6 weeks, then a lot of silly borrowing gets forgiven.
Another aspect that I don’t think the 46,000 over five year period is accounting for is the number of “investors” with multiple, non-primary resident properties. Take a friend Casey, for example. The 24 year-old with no stable source of income outside of his real estate “investing” owned a half dozen homes. When he defaults, that’s six foreclosures. A good number of people are spread pretty thin across the country, so when they go down its multiple foreclosure (some concentrated in very small areas).
Until we see accurate data that profiles:
1) number of mortgages with LTV of more than 90%
2) number of mortgages that will reset over the next two years
3) number of people holding multiple mortgages
Without that data, I don’t think that anyone can make an informed projection on foreclosures over the next two years. And even with good data, trying to figure out where things will be in 2011 is a fool’s errand at this point, IMHO. The next two years will be exciting enough.
I don’t know what they’re basing that projection on, but I’m highly suspicious of the methodology.
The problem is that the industry does not seem to do a good job collecting data on mortgages and the context of borrower’s circumstances (or at least they don’t publish them anywhere that I’m aware of). The problem is that it seems like most risk models are not accounting for the idiotic levels of risk-layering that anecdotally seem to be rampant. An ARM’s not necessarily a bad idea, but when you couple that with no-down, qualifyin for an amount that they can pay only through negative amortization (never a good idea), etc. then its not really a question of “if they can’t keep up” but “when they can’t keep up.” When homes are appreciating at 10-20% a year and can be sold within 6 weeks, then a lot of silly borrowing gets forgiven.
Another aspect that I don’t think the 46,000 over five year period is accounting for is the number of “investors” with multiple, non-primary resident properties. Take a friend Casey, for example. The 24 year-old with no stable source of income outside of his real estate “investing” owned a half dozen homes. When he defaults, that’s six foreclosures. A good number of people are spread pretty thin across the country, so when they go down its multiple foreclosure (some concentrated in very small areas).
Until we see accurate data that profiles:
1) number of mortgages with LTV of more than 90%
2) number of mortgages that will reset over the next two years
3) number of people holding multiple mortgages
Without that data, I don’t think that anyone can make an informed projection on foreclosures over the next two years. And even with good data, trying to figure out where things will be in 2011 is a fool’s errand at this point, IMHO. The next two years will be exciting enough.
Another point is that there were quite a few buyers who likely used 30-yr FRMs, but stretched the DTI ratios a bit too much. As prices went up, they cash-out refi’d and covered their expenses (increasing their debt to even less managable levels). Even these “owners” are going to be in trouble if there is no price appreciation, much less depreciation.
The problem is the INDUSTRY collects the data……a third party (if not the government) needs to collect the data. The problem with that is; the data is in diverse hands and its not easy to aggregate nor parse with consistency.
“Realtors admit that they were putting more people in homes they eventually would not be able to afford.”
No, Realtors were putting people in homes that they NEVER could afford, although they could make payments for a short time with a teaser rate on a toxic loan.
You would have to wonder who is dumber. The flippers that bought at the end of the mania thinking prices would just keep going up…or the current buyers who know prices are going down and buy regardless?
The buying opportunity is still 2-4 years away. Just wait until the boomers get spooked and decide to bail. Remember, most have zero retirement funds besides real estate. They are not going to like what comes next. Expect 2nd home market to implode.
“‘It’s a buyer’s market,’ said real estate agent Ben Young Mason …”
Previous thread:
“In the end, stubborn sellers could lose more home value the longer they delay.”
I don’t know what to do ….. this market changes course more rapidly than I can keep up with ….. prices are falling at noon, but then it’s a buyers market at 2:30 …..
Remember, most have zero retirement funds besides real estate.
And you know this how? All of the ones I know have high six figure to seven figure retirement accounts.
All of them?
if they are female, like men and have 4% body weight please have them contact imploder. imploder needs reading partner at Savon
Has imploder’s ID been jacked?
Normally, he/she isn’t that dumb.
As of the end of 2005 the average balance of Baby Boomers 401K accounts who were turning 60 was $112K. http://tinyurl.com/tsatw Not much to fund the golden years. The switch to defined contribution plans will be a disaster for most boomers who will look with envy at their neighbors who worked for the government.
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It’s kind of easy for people to fake financial success when they’re in their 30s and 40s. It gets much tougher when they get into their 50s, 60s, and beyond.
imploder always find it easy to fake financial success. imploder ALWAYS wears socks. See?, easy! Get at Savon. 2 birds, 1 stone!
imploder smart like that.
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ok - stop talking about yourself in the third person. and stop talking gibberish. not funny but annoying.
Yes Sir
Most of the people I know w/ million-dollar retirement accounts are not boomers but were born in the late 1930’s or early 40’s to parents who remembered the Depression very, very well. Yes, there are some Boomer millionaires but my subjective impression is, it’s a small fraction.
Think so?
A letter to the Boston Globe from Laurence Kotilikoff, professor of Economics at BU notes that while private pension funds are underfunded by $45 0billion. The short-fall for public employees is $800 billion for a $1.25 trillion total.
hehehe…like I’m gonna hang around in Mazz to pick up the tab for cops doin’ flagman details @ $42.00 per hour to puff
up their top 3 years salary for inflated pension benefits.
“All of the ones I know have high six figure to seven figure retirement accounts.”
You certainly would agree, Chick, that all the ones you know do not, as a group, form a representative sample of the larger population of those people of whom you speak. All of the ones I know are broke or negative, yet I do not claim that this must necessarily be the case for all - or even that it were “typical.”
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Most are broke. Cash poor.
Yep. The average is a few rich folks and then millions totally screwed. Averages don’t tell the story.
Most people (i.e. the average Joe, not a tiny slice of the population) have no where near the cash to fund retirement. And they didn’t fund it because their RE holdings (their home) was appreciating. Who needs to save when the house is making you rich? That is going into reverse.
So what will the sheep do when they see their retirement vaporize? I think they will dump second homes and other investment properties.
Reverse mortgages.
So much for inheriting mom & dad’s house.
The “ones you know”? That’s hardly a statistically relevant sample. The numbers I read are something like the average boomer has $60K or so put away for retirement outside of the equity in their home. A shockingly high percentage of boomers (~30-40% ?) have saved nothing for retirement. Your half-dozen or so friends will be fine but that says nothing for sheeple masses.
Does anyone know how to fly a 737?
Not sure if you were refering to Airplane, but that’s what I thought of. “There’s no reason to become alarmed, and we hope you’ll enjoy the rest of your flight. By the way, is there anyone on board who knows how to fly a plane?”
No, no, no! You guys have it all wrong. Prices are INCREASING. It says so here! Prices continue to climb due to the interest in the second home market which focuses on quality of life. http://tinyurl.com/yl3o96
She learned ethics during her 1 week ‘degree’. It must be true.
(note the miscalculation 680 Vs 404 = 24% reduction in sales)
That “quality of life” crap makes me want to chum!
wa wa we wow
Are these guys being interviewed by Borat?
nice
Based on the trends, the 46,000 number for foreclosures in L.A county between 2007 and 2011 is way off.
I agree. I don’t know what they’re basing that projection on, but I’m highly suspicious of the methodology.
The problem is that the industry does not seem to do a good job collecting data on mortgages and the context of borrower’s circumstances (or at least they don’t publish them anywhere that I’m aware of). The problem is that it seems like most risk models are not accounting for the idiotic levels of risk-layering that anecdotally seem to be rampant. An ARM’s not necessarily a bad idea, but when you couple that with no-down, qualifyin for an amount that they can pay only through negative amortization (never a good idea), etc. then its not really a question of “if they can’t keep up” but “when they can’t keep up.” When homes are appreciating at 10-20% a year and can be sold within 6 weeks, then a lot of silly borrowing gets forgiven.
Another aspect that I don’t think the 46,000 over five year period is accounting for is the number of “investors” with multiple, non-primary resident properties. Take a friend Casey, for example. The 24 year-old with no stable source of income outside of his real estate “investing” owned a half dozen homes. When he defaults, that’s six foreclosures. A good number of people are spread pretty thin across the country, so when they go down its multiple foreclosure (some concentrated in very small areas).
Until we see accurate data that profiles:
1) number of mortgages with LTV of more than 90%
2) number of mortgages that will reset over the next two years
3) number of people holding multiple mortgages
Without that data, I don’t think that anyone can make an informed projection on foreclosures over the next two years. And even with good data, trying to figure out where things will be in 2011 is a fool’s errand at this point, IMHO. The next 2-3 years will be exciting enough.
How many times is this going to get posted? I feel like I’m experiencing Deja Vu.
Yesterday i was trying to post a comment and several times it appeared to fail. Maybe
walt526 is having that same problem.
“Realtors admit that they were putting more people in homes they eventually would not be able to afford. ‘In the inflated market, they paid top dollar,’ said real estate agent Alison Mitchell. ”
Did not Suzanne research that?
‘Now, they’re in trouble.’
Those Vioxx pills suzanne researched and FBs could not get enough.
They were very effective pain killer,went straight for the heart.
Many FBs would wish they stuck to 30 year fixed mortgage Aspirin.
Songs that explain the housing market…
1)Free Falling (Tom Petty)
2)The Song Remains The Same (Led Zeppelin)
add your favorite to the list and see what we come up with…
3) Blowing in the wind (Bob Dylan)
How many times must the cannonballs fly
Before they are forever banned
The answer, my friend, is blowing in the wind
The answer is blowing in the wind
…………………………………….
How many times can a man turn his head
And pretend that he just doesn’t see
The answer, my friend, is blowing in the wind
The answer is blowing in the wind
………………………………………
How many deaths will it take till he knows
That too many people have died
The answer, my friend, is blowing in the wind
The answer is blowing in the wind
1) Won’t Get Fooled Again
2) It’s Now or Never
3) Surrender
1) Comfortably Numb
2) The Final Countdown
3) an oldie but goodie, Suspicious Minds
4) Trampled Under Foot (wasn’t this a Led Zepp tune?)
5) First 4 notes of Beethoven’s Fifth (Sheriff knocking at your door with the foreclosure note in hand)
Who’s Crying Now
One Lender feeds the fire
One Realtor burns desire
I wonder, who’s cryin’ now
Two Flippers born to run
Who’ll be the f**cked one
I wonder, who’s cryin’ now
http://www.journey-tribute.com/journey/sounds/midi/whos-cr2.mid
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p.s. that midi is so good - it really rocks - you have to listen to it and sing along.
Ok Gekko, I listened to the midi track, read your words and this is what I honestly think; the midi tracks don’t “really rock” in complete honesty, they sound like schmaltzy pap. The words too, that you wrote as accompaniment are trite, unfunny and don’t adhere to the melody. Gekko, no one wants to sing along.
But that’s cool, it’s just some fools post on the Housing Bubble Blog. A bit of self expression. I wouldn’t normally voice my opinion on it. Why? Just somebody having their wee bit of fun on a Tuesday night. But since you need to critique mine… I stoop.
Please stop posting unfunny lyrics and bland musical links that make you look like an addled fool. They’re boring and I suspect, you are as well.
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well at least you’ve finally stopped talking in the third person.
What happened to the former DJ that lived in Westside LA?
Was that Mr. IncomeStream?
Those were great bubble parody songs.
Ask and thou shall receive Gekko. My first person responses are all yours.
Geeko posts “well at least you’ve finally stopped talking in the third person.”
Please stop singing in the turd person…. iy hurts my ears and it stinks.
“God money I’ll do anything for you.
God money just tell me what you want me to.
God money nail me up against the wall.
God money dont want everything he wants it all.
Bow down before the one you serve.
You’re going to get what you deserve.
Bow down before the one you serve.
You’re going to get what you deserve.”
I see the bad moon arising.
I see trouble on the way.
I see earthquakes and lightnin.
I see bad times today.
Dont go around tonight,
Well, its bound to take your life,
Theres a bad moon on the rise.
I hear hurricanes ablowing.
I know the end is coming soon.
I fear rivers over flowing.
I hear the voice of rage and ruin.
Dont go around tonight,
Well, its bound to take your life,
Theres a bad moon on the rise.
All right!
Hope you got your things together.
Hope you are quite prepared to die.
Looks like were in for nasty weather.
One eye is taken for an eye.
Dont go around tonight,
Well, its bound to take your life,
Theres a bad moon on the rise.
4. World’s Greatest Fool by the Tractors.
Let’s just do a study of the insanity of the statement, “Buy now or be priced out forever.” If this is a true why realtors ever get into the profession? This would mean eventually no one would be left to buy and the sellers, well they would have no one to sell to, except maybe each other, meaning a lot less business for realtwhores. Secondly, as a buyer I would be skeptical because what if I am the very last buyer before all the non-buyers are priced out forever. I will never be able to sell unless I lowered the price to less than I paid or priced relatively speaking in accordance with inflation and wages at the time of putting said home up for sale. Lastly, how can anyone even make that statement with any authority, especially w/o any data to support it? I guess what i am trying to get at is why does anyone even listen to this kind of dreck anymore? In fact, why do we even listen to about 97.56786754356576445% of those in the real estate business anymore? All they say is just cheerleading for the profession or their own commissions.
“I can’t be priced out of the market. I AM the market.”
(Uncle Git)
“Poop Ship Destroyer” by Ween
Ship of Fools
I saw your first ship sink and drown
from rocking of the boat.
And all who could not sink or swim
was just left there to float
Though I could not caution all
I still might warn a few
Don’t lend your hand to raise no flag
atop no ship of fools.
Ship of fools, on a cruel sea
Ship of fools, sail away from me
It was later than I thought
When I first believed you
Now I cannot share your laughter
Ship of Fools.
Our House.
In the middle of a foreclosure,
Our house…
Burning Down The House, Talking Heads.
Anything to get away from the damn mortgage reset.
they use to have Deed burning parties. This may be new take on such.
We haven’t seen anything yet. Wait tell the big drops of 30% to 50% hit home values next year. No where to run. Contracts are contracts.
After living in San Diego for 35 years and the bustling bumper to bumper traffic, corrupt city government, illegals out of control,it was time to move. Sold in July/05 and bought a beautiful rural home for 1/3 the price. California will raise taxes but will be bankrupt within 10 years. The middle class will be all but gone except for the few who will continue to use credit. Keeping up with your neighbors has been a very “expensive” and painful lesson to learn. The history books will write about this for years.
Jerry be careful about what you predict. I for one agree with the very real possibility that this state will go broke. Funny but people forget the IOUs that were issued back in 96 or somewhere in there when the state couldn’t get the budget passed. I know that is a somewhat different situation, but don’t for a minute think it can’t happen. OC went broke and NYC was broke during the Ford admin. At any rate be careful because there are quite a few on this board who are sick and tire of the doom and gloom. I admit I don’t care for everything Jas Jain writes, but ease up this guy is trying to get some people to think and get prepared. With the massive amount of debt in this country it is only a matter of time before we reach end game. Some people like to think you can just keep printing money to pay off past debt. Sorry, eventually that will run out and when it does look out!
Sorry to be so direct but my good old mid west common sense tells me differant. The bubble math caught up, not only in housing, but local and federal governments as well. Now we are paying the price. I wish it was otherwise but it is not.
Being positive which I am, made me face reality and am glad I made the move.
Jerry, no need to be sorry. I think it is about time Americans woke up to the very real possibility that this nation is broke. We talk about how the economy is anywhere from 67-75% consumer driven and then those who look around see that consumer credit keeps going up and savings is negative. You don’t need to be an Einstein to figure out how long that kind of process can keep going on! Alas, too many just keep going along or don’t want to discuss the issue for any number of a myriad of reasons. I, however, welcome the fresh point of view you bring. Glad you got out, my family and I are still looking for that opportunity. We sold and have really lightened the load, so to speak. We are just waiting for the tight opportunity and time and it will be soyonara Clownifornia! I will miss the friends and my alma mater, USC, though.
I agree with the assessments made by OCDan and Jerry about the debts this country and its people incurred. But the idea that America will go broke or bankcrupt is not going to be born out. No nation has ever filed bankcruptcy. What they always did and will do is to cut down some trees and start printing money. The Roman Empire debated their currency at the end of their existence. Argentina has done it so many times. Germany before WW-II. If we look into the history books, we can go on and on with similar examples.
I think Jim Rogers and Sir John Templeton are right about this country’s debt levels. The US dollars will fall into disgrace and its position as the reserve currency will be down the toilet. Along with the US dollar will go the US economy.
I went to Canada last weekend to open a bank account so I can keep some of my money in Canadian loonies. On the way to Canada and on the way back to the US, at the border at Blaine in Washington state, most of the cars crossing the border had Canadian lincense plates. Back in 1999, US $1 = C $1.51. Now they are almost on parity. So you can see how much value the US dollar has gone down. Greenspan had printed so much $ to save the economy from the tech mania. Now Ben Helicoper looks the other way so he can save the housing market while inflation is still firing on.
I’m not afraid of deflation. I don’t think we will ever see its face again as we did in the Great Depression. Inflation is our chief enemy, who is any gov’s friend. For the gov, it’s a great way of stealing from the citizens by debating its currency. And gov always does.
“I’m not afraid of deflation. I don’t think we will ever see its face again as we did in the Great Depression. Inflation is our chief enemy,”
Yes, that is the concensus. When was such overwhelming concensus forecast of the inflation come true?
Jas Jain
So what do you predict, Jas Jain? If we are NOT going to have big inflation, what would be the point of diversifying out of US dollars?
Jerry, where do u live now…state/county? Thnx
walt526 really likes to get his point across!
It was a good point the first time.
Everyone, if you post something with many links or long, it gets put into moderation, until Ben or his “staff” read it and OK it.
Be patient.
Sorry.
everyone has had same experience, no need for sorry
OT:
Brookfield Homes reports tonight:
The Fairfax, Va.-based home builder posted revenue of $176.2 million vs. $267.7 million. Brookfield said the decrease in housing revenue was primarily due to 137 fewer units closed during the quarter compared with a year ago, offset by an increase in the average selling price to $702,000 from $693,000.
I purchased a new home in Irvine in April of 2001 for $312,000 , a bedroom ,2 1/2 bath. I sold in Feb. of 05 for $312,000. I just saw my same exact floor plan sold in Sept. 0f 06 for $680,000. 217% increase plus property taxes of $6,000 per year. OUCH
OOPs I meant to say $612,000 sold in Feb05.
No worries, some here believe they will be going for $312k in 2009-10.
Did your buyer use suicide loan? You may be able to buy back the house in a year, again at 312K.
Speaking of Irvine housing Market, there is a massive Apt complex just nearing completion, called The Village at Irvine. Located across from irvine spectrum at corner of Alton and Irvine center drive, and right where 405/133/5 come together(El Toro ‘Y’). It is a massive complex measuring several blocks long and wide, and some phases still in construction, but most of it seems ready for occupancy.
This area of Irvine still relatively uncluttered but with some hi-end/hi-tech Corporate parks(and RE lending operations)located here. Looking several years down the road this area primed for future expansion in corp parks and mixed-use developments.
Further up the 405, Jamboree rd/micheson area south of 405 seems primed for massive construction of Mixed-use/residential condos/apts. Just go south along Jamboree for about a mile off 405 and you see a vast row of new construction of mult-units. This area will incorporate the latest concept in urban residential: building muli-unit housing next to commercial parks. Park Place is the designated name for an entire mixed-use master-planned project which is situated at Jamboree/Michelson.
Interesting….I read the following article about foreclosures increasing in LA:
http://www.contactomagazine.com/calforeclosures1006.htm
What I found interesting was the following quote:
“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.”
Median of only 306k??? Anybody who knows the LA market knows that almost nobody who got in in the last 3 years had a mortgage that low….so the real FBs have yet to meet their maker…when this median increases to 450k we’ll know they’ve arrived.
Eric
interesting how the RE professionals are on the sellers to lower the price. It’s all the sellers fault for the slow YOY sales. If the sellers would only take a dive then the market would be ok.
Foreclosure sales will be the next RE bubble:LOL
Do any of you guys think this is actually going to be different from the last downturn in CA? I recall it was horrible, but we all got over it. Anyway, we sold most of our CA properties, but kept a couple becasue in the long run we will be glad we did.
There are a couple of things different from last time. One is that employment is good, and the other is that IO loans are a factor. I would like to think that these two things would off set each other causing the actually decline to be comparable to last time.
What do you all think?
This is going to be an historic event, like the Great Depression, only greater. Employment is “good” only because of the insane building boom caused by insane credit inflation, and will collapse with the end of that boom. House prices will go down more than 50% in real terms, in some cases much more. This will ruin pretty much everyone who has ended up with the bad loans. The really “fun” part is that, thanks to securitization of those loans, no one knows who that is!
Where do you think a lot that “employment” in the OC came from? Could it maybe be…oh, I don’t know….REAL ESTATE.
Well said.
In 1989 Americans had a positive saving rate. Today we have a negative saving rate for the last 16 months.
Also wages were higher in 89-90 vs today, the only people making money now are CEO types.
89-90 20% down was the norm, I don’t have to tell you what it has been the past 6 years.
And let’s just add in neg am loans, serial cash-out refinancing (got to keep paying off the credit cards, amortized over 30 years), and HELOCs. All of these are important factors now that really weren’t present in any significant way in 89-90.
One thing to note about Cagan’s prediction.
Just 10 months ago he predicted 7,000-8,000 arm reset defaults in the Orange County Register.
Now he is predicting over 18,000.
That is an error factor of 2.25.
If his accuracy holds, in 10 months we could have over 40,000 foreclosures in OC alone.
That is great news.
RE only goes up,( In answer to your question )….Excess foreclosures ,excess building ,excess short term speculators needing to sell ,possible higher interest rates ,ARM loan adjustments , employment loss in real estate and construction , the bubble was nation wide ,massive fraud and inflated appraisals ,etc. ..will lead to a bigger correction than in prior real estate cycles IMHO .
“Homes are simply worth less than they were a year ago”
While we all know this is true, it wasn’t that long ago that Realtors were trying to dispute this notion and explain away any negative news. Now, they are all saying that prices are down (attempt to influence sellers to lower their prices by using MSM?), even though in most areas of SoCal the median isn’t down much (I know, the numbers seem to move around in weird ways due to the use of median prices, incentives, etc.). Still, I do think it is a significant shift to see the Realtors now routinely saying that prices are down.
Ben-
A gentleman over at Jon’s posted this wonderful link to a 1990 NYT article about how California was talking about the coming ’slump’.
Being a responsible citizen, I must transplant it over here, and request that you possibly give it it’s own header.
http://query.nytimes.com/gst/fullpage.html?res=9C0CEFD6133BF93AA1575BC0A966958260&sec=&pagewanted=1
Again, ‘Repoman’ was the ‘reposter’, and deserves the credit.
Does that blow your freaking mind, or what?
Wow.
THAT’S IN-CREDIBLE!
Yes, that’s an awesome article. Like a script for the current downturn — we have a long way to go before hitting bottom.
I posted this article from 1988 awhile ago. Again, it could have been written now.
http://query.nytimes.com/gst/fullpage.html?res=940DE3DA1539F935A35750C0A96E948260
THE NATION; U.S. Is Getting Stuck With a Glut of Repossessed Houses
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By LISA BELKIN
Published: March 6, 1988
LEAD: When a foreclosed home falls into the hands of the Federal Housing Administration, ”we try to get it back on the market within 14 days,” said James C. Nestler, the deputy assistant secretary for single-family housing, says. The Federal National Mortgage Association, in contrast, does everything it can not to sell.
“And while prices in some inland cities like Sacramento continue to rise, prices are dropping in the population centers along the Pacific Coast. The median price of a single-family house sold in Monterey was down 9.3 percent from July 1989, and in Los Angeles it was down 4.5 percent. Prices in Santa Barbara dropped 2.9 percent from a year earlier. In the San Francisco Bay area, the drop was 1.8 percent.
Statewide, the median house price in July, at $194,099, was down 3.7 percent from a year earlier, when the statewide figure peaked at $201,653.
After the heady atmosphere that made this one of the nation’s most overheated housing markets for the past several years, the new reality has come as a shock. Starting in 1986, prices rose as much as 30 percent annually in some areas, with the sharpest increases in 1987 and 1988.”
2005 = 1989 (price peaks before CA bust began)
But crazy inflation only lasted from 1986-1989; this time it went from 1998-2005, twice as long and much higher.
It’s probably too late to get a reply in this thread, but can anybody recommend an analysis of the California economy in the early-to-mid 90s, after the housing downturn and aerospace collapse? While the circumstances aren’t perfectly parallel, there might be some interesting data to be mined.
where you think David Lier get all his talking points from?
‘When a foreclosed home falls into the hands of the Federal Housing Administration, ”we try to get it back on the market within 14 days,” said James C. Nestler, the deputy assistant secretary for single-family housing, says. The Federal National Mortgage Association, in contrast, does everything it can not to sell. ”If there’s any way to keep a mortgage and a house together, we do it,” Bonnie O’Dell, a Fannie Mae spokesman, said.’
So what is FNM going to do next — start making payments on reset ARMs when the FBs cannot make the stretch?
“Realtors admit that they were putting more people in homes they eventually would not be able to afford. ‘In the inflated market, they paid top dollar,’ said real estate agent Alison Mitchell. ‘Now, they’re in trouble.’”
“Which leaves jittery Los Angeles homeowners with the question: Is it time to panic? ‘Absolutely not, it’s not time to panic,’ Mrs. Mitchell said. ‘All it has done is to return to a normal market as opposed to an exaggerated, overinflated market.’”
There’s a old saying on Wall Street- “In the investing world never panic. But if you are going to panic, panic first.”
I have lived through very similar housing bubble bursting in my country (Finland) in the early 90’s. The similarities are striking, from consumer indebtness to giant trade deficit except statistics are MUCH worse for the US at the moment.
Because of our housing bubble collapse, we did “enjoy” 15+ interest AND unemployment rates for years and one huge collapse of housing prices, 50+ percent. Finnish government had to borrow about 10-15 percent of GDP EVERY YEAR for about five years in order to avoid total economic collapse.
All those junk mortgages was eventually put to special government controlled “junk” bank and that saved most of the banks. Total of 25 percent of companies went bankrupt during early 90’s.
The most deadly sin of banking sector is the disregard of lending standards and that will cause pain and more pain. It was really close that Finnish bank customers of several major banks would have lost their money. Only all-out government intervention saved the day back then.
I do not see how US government could avoid collapse of the US banking sector and the Greater Depression. Asians stop financing Americans the minute when US consumer starts cutting their spending (right now) and that will spike interest rates and/or cause the dollar crash.
This is not being especially pessimist but just sharing my experience. Especially, the speed of the US house bubble bursting amazes me, 5-10 percent price cuts EVERY MONTH. I would withdraw all of my money from any major US banks and put it to cash (several currencies) and gold and whatever, anything but banks. It is going to be very ugly.
One big difference between Finland of the 90’s and the U.S. of now is that the dollar is the world’s reserve currency. That fact has been the only thing keeping the U.S. party going for as long as it has. The downside of keeping the party going is that the imbalances and excesses become worse over time so the ultimate retrenchment is going to be that much more severe. Your Finland story is quite chilling and not well known in this country.
Time to panic. What dumbass would pay 500,000 for a house worth 120,000 ? THe crash is coming where truth sinks in and people lose their homes. It is going to be a slaughter.
I’m sitting 15 feet away from a real estate broker who is absolutely confident that the market will rebound in the spring,and soar to new heights! and we are just going through a short “rebalancing” period.he believes it.and he has 15 years experience as a broker.when i hear this crap i feel like screaming “MAYDAY!,MAYDAY!,MAYDAY!”.he is in denial,the ones who know better deserve to drown in a bucket of cat pee.after 2 years in the biz,i know 4 honest and competent loan brokers,and two honest and competent real estate brokers in my area.in my county 2% of the population is licensed to sell real estate.i ran across 2 interesting stats,7% of the populace thinks realtors are trustworthy,13% of the population is seriously mentally ill.
Anybody remember all those profiled “Millionare in the Making”’s on CNN’s Money site? Half those people claimed a quarter to half million banked on their home equity. Guess what??? U NO LONGER ON THE ROAD TO MILLIONARE.