31% Sales Drop “Consistent With Recent Months”: CAR
The California realtors have Septembers numbers out. “Home sales decreased 31.7 percent in September in California compared with the same period a year ago, while the median price of an existing home increased 1.8 percent, the California Association of Realtors reported today.”
“The median price of an existing, single-family detached home in California during September 2006 was $553,050, a 1.8 percent increase over the revised $543,510 median for September 2005, C.A.R. reported. The September 2006 median price decreased 4 percent compared with August’s $576,360 median price.”
“The statewide sales figure..is adjusted to account for seasonal factors that typically influence home sales.”
“‘Overall, year-to-date sales were down 24 percent, in line with our 2006 projection. Regional trends in sales and prices were consistent with recent months,’ said C.A.R. Chief Economist Leslie Appleton-Young. ‘Areas that experienced a lot of homebuilding in recent years or second home activity have experienced larger declines in sales and weaker prices than the state as a whole. These include Northern California, the Northern Wine Country, the Central Valley, San Diego County, and the Lower Desert in Southern California.’”
“In a separate report covering more localized statistics generated by C.A.R. and DataQuick Information Systems, 59.6 percent, or 227 out of 381 cities and communities, showed an increase in their respective median home prices from a year ago.”
The LA Times. “California’s housing market continued to cool in September as..the pace of sales in September plunged from last year. ‘High and rising inventory [of unsold homes] is killing prices,’ said economist Ian Shepherdson.”
The Orange County Register. “Freedom Realty Exchange of Newport Beach is just one of a growing number of firms offering homes for auction, as sellers seek to distinguish themselves from the pack of at least 15,000 other Orange County homeowners trying to unload their properties in a slow market.”
“‘The residential market’s in the tank right now,’ said Bill Lange, CEO of the Newport Beach firm that runs the web site. ‘The more progressive agents are going to use this as a tool to service their clients.’”
“Lately a growing number of ordinary homeowners are turning to auction companies to speed up their home sale at a time when Orange County houses average two months or more before they find a buyer. A Manhattan Beach real estate auction firm, held its second auction of an Orange County home on Oct. 14 and plans to auction off three more Orange County homes on Nov. 4.”
“The Norris Group, founded by Riverside real estate investor Bruce Norris, is launching a home auction business Nov. 19 at a Cal Poly Pomona auditorium, hawking 19 vacant, investor-owned homes.”
“‘These are investors who are in strong positions, and they think things are getting worse, and they’d rather come to an end sooner rather than later,’ explained Norris’ son, Greg. ‘People are getting to the point where they cannot afford to hold on to properties anymore.’”
“Auctioneer Todd Wohl, vice president of Premier Estates, concurred, saying the real estate market has changed this past year. ‘People are starting to say, ‘I want my home sold now. I don’t want it on the market another two months, three months, five months – or a year,’ he said.”
“Until the current slump, the general residential market wasn’t ready for home auctions, Lange said.”
The Desert Sun. “The valley’s recent real estate boom, and the current correction in sales counts and appreciation rates, have done more than alter buyers’ and sellers’ expectations. They’ve also got the experts wondering what ‘normal’ should be these days. ‘It’s been so long since we’ve seen a normal market, we’ve forgotten what it looks like,’ said real estate analyst Pat Veling.”
“A downturn in home sales, soaring home inventory and a slowing of home price appreciation, which may drop to between 2 percent and 4 percent by 2007, should be expected after the frenetic and unsustainable pace of the past few years during which time price appreciation reached 25 percent, panelists told a group of about 400 attendees.”
“That anticipated dip in annual home price appreciation is doubly disheartening considering it had been as high as 37 percent in 2004.”
“About 11,700 homes sold in 2005 across the valley, but only about 7,200 have sold so far this year. More than 8,200 homes were listed for sale in the valley this week, compared with 4,700 during the same period last year.”
“Only 15 percent of valley workers are able to afford a median-priced home. ‘The prices are out of whack still, and until they are adjusted it’s going to be pretty slow,’ said Bill Powers, president of Pacific Western Bank.”
The LA Daily News. “In yet another sign of a slowing real-estate market, mortgage giant Countrywide Financial Corp. said Tuesday that it will cut 2,500 jobs nationwide, saying it needs to save $500 million a year.”
“The Calabasas-based company, said the cuts will come from operational and corporate administrative staffers but remained vague about what parts of the country would take the biggest hit. ‘In response to changing market conditions, management has initiated an expense and headcount reduction program,’ CEO Angelo Mozilo said.”
“‘I don’t think there has been any decision where the jobs will be cut at this point in time,’ company spokesman Rick Simon said. ‘The analysis is still going on but … it won’t be all in California.’”
“However, an analyst who participated in the earnings conference call but asked not to be identified said he thinks most of the cuts will come in California. In the past, the company has said future expansions would be out of state because of the high cost of doing business here.”
“Last month, sales of previously owned single-family homes in the San Fernando Valley plunged 31.1 percent from a year ago to 814 transactions, or 368 fewer, according to the Southland Regional Association of Realtors. The median price increased 0.8 percent, to $595,000, just $5,000 more than a year ago.”
“Countrywide has about 18,000 employees in California, including Calabasas, Simi Valley, Agoura, Westlake Village, Thousand Oaks, West Hills, Warner Center, Irvine, Pasadena, Rosemead and Lancaster.”
The Orange County Register has this update. “The median price of an existing single-family house in Orange County fell in September from the year before, the second straight month of year-over-year price declines, the California Association of Realtors reported today.”
“The number of Orange County houses sold also fell, by 32.2 percent, the association said. The California association reported that the median price for an existing Orange County house was $706,490 in September, which was 0.3 percent below the median price in September 2005. The median price a year ago was $708,840.”
If any other California reports come out on the CAR numbers, I’ll update this post. Here is the CAR/Dataquick table. A report from the Union Tribune:
‘Despite a relatively strong economy, many of San Diego County’s office landlords are finding only tepid demand for their buildings, according to a recent report. Prospective tenants are balking, brokers say.’
‘The activity has slowed down quite a bit, and the supply has more than caught up with the activity,’ said Brian Ffrench of Studley, which specializes in representing tenants. ‘We’re starting to see major landlords go after short-term deals today that they would not have done at the end of the first quarter or the beginning of the second quarter.’
‘Without the demand from Qualcomm, Sorrento Mesa landlords saw demand for a newly constructed building and some sublease buildings dry up. As a result, some have started lowering their asking rents, Fleck said. ‘There was a time when every landlord with vacancy in Sorrento Mesa felt that Qualcomm was going to lease their building,’ he said. ‘Now I think reality is starting to hit.’
9/06 9/05
Santa Barbara $917,500.00 $1,081,000.00 -15.1%
OUCH!
Oh,it’s worst than that in South Santa Barbara County( which includes Santa Barbara) :
2006 2005
Sept. median home prices (SFR’s) $1.025M $1.425M -28%
August median home prices (SFR’s) $1.190M $1.301M -9.2%
July median home prices (SFR’s) $1.075M $1.325M -17%
There were just 63 closed escrows in September, down from 104 in 2005 (SFR’s only). Foreclosures in SB county are up 188% from 3rd qtr of 2005. You cannot tell me that the high priced “exclusive” areas of California are not going to take a hit. Nobody gets out of here alive, unless you rent or bought before 2001.
Sorry, my 2006 2005 column headers got stuck up in the left hand corner. the prices in the left column are 2006, the prices to the right are 2005
I have been saying the high priced “exclusive” areas of California are going to take a hit since over a year ago. Thanks to suicide lending, many neighbors of the truly wealthy residents of La Jolla, Rancho Santa Fe, Santa Barbara, Rancho Palos Verdes, Santa Cruz and Burlingame (to name only a few among many others) will prove to be hapless pretenders who got in on high risk loans thinking they would be able to retire as millionaires despite meager incomes, as California real estate always goes up. I am guessing a 15% drop in Santa Barbara easily wiped out over 1-year’s worth of labor income in household net worth for a considerable number of coastal California residents. When the weak ARMs can no longer stay in the game, they will be forced to sell into the downturn and drive prices still lower.
It’s all one big sky scraper. Failure in the lower level ultimately brings down all the the higher.
Good analogy, Jack. I keep trying to explain this to a friend who argues that she can “always make her monthly payment so what’s the problem”. Her coastal neighborhood is in very weak hands.
One more useful comparison for Santa Barbara:
July 2005 median $1.325M
September 2006 median $1.025M
Cumulative drop = (1.025/1.325 - 1) X 100% = 22.6%
(or $300K if you prefer the dollar amount).
Oh, the median falls below 7 digits … good god, the world is ending!
Psst, Ben! An ellipsis [...] has three periods. (Sorry, I just had to say something. It’s a gift *and* a curse.)
Damn English teachers.
Can’t they just let us be loosers?
Dam them! Dam them all!
I hate them alot..
noone hates them more than me.
Nobody hates them more than they hate you?
GetStucco spoiled the chain where everyone made their own grammatical/syntactical/semantic errors just like me.
Median used home prices dropped 2.2% yoy. Given the total value of used homes at 20 trillion, the equity destruction so far in this down cycle is 500 Billion dollars. The poverty affect, or wealth destruction so far is substantial.
“effect” since we’re being didactic today… (note three dots)
Should be four dots as you are ending the sentance.
Realized, poverty effect, not affect, after posting, and knew you would bite.
I will duplicate an earlier post I had (please forgive me):
The OC is now down .3% YOY per the CAR report. Notice how the OC register is silent on this? Normally they have these numbers up ASAP. Gotta keep the advertisers happy
The down .3% is in the summary (non-seasonally adjusted).
Where does this leave Gary Watts’ forecast? Is it still “in the bag?”
Gary’s future is looking bright. Does the name “Ray Combs” ring a bell?
He may find himself in a bag, a body bag, if a sufficiently crazy angry Watts-follower listened to his predictions of 15% appreciation and is now in total financial ruin with nothing to lose…
Beat me to the punch. Yes, exactly!
Jimmy “No Neck” Buzzano knows how to put things in the bag and.. keep them there….
It’s bad form to even mention the possibility of violence against people in the RE industry. Yes, a lot of FBs are going to be bitter and ruined, but a) they should’ve done a proper due dilligence instead of believing the touts — each of us is ultimately responsible for our own decisions; and b) violence or threats of violence against people like Watts, as odious as they are, is completely wrong and unacceptable regardless of the degree of outrage. I’ve seen several comments in here (not this one) that come close to suggesting that some realtors or RE touts might get what they have coming, i.e. being assaulted or worse — not advocating it, just discussing the possibility. Personally, I don’t think comments or sentiments like that have any place in this blog.
I concur. Caveat emptor — if buyers choose to listen to Gary Watts, David Lereah and Alan Gin instead of taking the sage advice they can receive on this blog, that is their free choice, and they can take responsibility for the consequences. Don’t blame Gary, David or Alan when you lose your shirt as a consequence of foolishly following their bad advice.
Me and my lynch mob with pitchforks and torches agree.
NO ROASTING BOTH SIDES!
(As long as he’s been marinated.)
Well said, Sammy. While schadenfreude allows for enjoyment at the trouble of others, injury crosses the line, IMO.
Right into sadism, as a matter of fact.
Never said I was angry. In fact, he makes me laugh. There are however MANY others that probably are. Merely stating the obvious. Prudence suggests Mr Watts sleep with 1 eye open, just in case.
GS posts “Where does this leave Gary Watts’ forecast? Is it still “in the bag?”
Yes it is still in the bag. “It” should remain in the bag “It” is really starting to smell very rotten. I don’t think “it” is 15% ….”it” is much softer and getting mushy…. starting to atract fly’s too.
imploder found such bag on fire on step after doorbell ring. imploder stomped fire out. imploder recommend to others not to do same. leave %15 in the bag.
I keep imagining “Him” from Wonder Showzen every time Imploder writes…
But Gary said that this year was going to be “inverted” and the sales and prices would rise dramatically during the last few months of the year, despite the fact that this has never happened before (and he did not explain why it would happen, although he said he was going to when he talked about his inverted year theory). I can’t wait to see his report in December. Time to eat some crow, Gary.
Can we give him until after the Super Bowl to decide whether prices are coming back in The OC?
I guess I was wrong - looks like Ben added this to the post.
Thanks for the update Ben.
That headline should look real nice in tommorows register.
Actually Gary said two things, the “in the bag comment is well known. But as recent as July he stated the following beauty:
OC REGISTER JULY 8th Dissent on housing descent –
Gary Watts, the Mission Viejo broker and economist, says “I would imagine that a ’soft landing’ would have home price appreciation equaling the inflation rate, but O.C. home prices won’t even be in the ‘approach pattern!’ We are and will continue to climb to an ‘altitude’ (with price gains) between 10 percent and 12 percent this year. And if we pick up a tail wind in the latter half of this year, we may climb to 15 percent. Next year’s appreciation should also keep O.C. home prices up in the air with no plans for landing anytime soon.”
The only tail wind is comming from, well… I guess its best not said in polite company.
I would recommend that someone check the 9/2006 archives, for last years NAR reported OC Median sales prices.
As I mentioned last month the Fla NAR was caught shifting the prior year data… Oh yea that’s right 2005 needed “adjusted down and went unreported as revised 2005 comps until the August 2006 release.
Crispy, looks as if Johnson had better start stocking up on those razor blades!
“Countrywide has about 18,000 employees in California, including Calabasas, Simi Valley, Agoura, Westlake Village, Thousand Oaks, West Hills, Warner Center, Irvine, Pasadena, Rosemead and Lancaster.”
I’m not thinking that number will be over 10,000 by 2008. I’m serious. Countrywide will start layoffs slowly (the pain of “manning up” to meet current demand is still fresh on their minds). But due to the persistance of this Mexican standoff… they’ll have no choice but to cut ~25% nationally. I’m predicting the majority of the cuts will be in California.
Neil
“(the pain of “manning up” to meet current demand is still fresh on their minds)”
I doubt it matters. They’ve already outsourced jobs to India and can ramp up there rapidly.
Seems completely possible to me.
Neil “I’m predicting the majority of the cuts will be in California.”
Yes. The neutron effect, no people, empty buldings.
2008? Try summer 2007, immediately after the spring bounce is a no-show for the second straight year.
My friend who works for Countrywide in IT in California has already had to submit names to put on the chopping block. He just hopes there isn’t someone above him putting his name on the block too.
“Calabasas, Simi Valley, Agoura, Westlake Village, Thousand Oaks, West Hills, Warner Center…”
Given that they have 7 offices within a 10-mile radius, it looks like they could stand some consolidation anyway.
It sounds like we have a quarum on this topic.
But which of the offices? Which are leased (and thus can be cut, quickly)? Any worth selling?
quorum
Neil (go back to your comment above) it’s “persistence”
I have a couple of friends who work for Countrywide. They told me that layoffs started already back in October. However, in addition CW will be slashing another 2500 jobs before the end of 4th quarter. What they have told me is that yes their will be some consolidations. The Rosemead office will be closed and Lancaster is a Call Center that may be closed as well, how soon this will happen is yet to be seen, as it has been in the planning for awhile. As I understand it the majority of cuts will be in CA as the cost of doing business in CA is higher than TX and AZ, where the other main offices reside.
Countrywide had “bloody Monday” on October 9th. I know from friends who work there that up to 60% of staff were laid off in many departments. The shoe has already dropped!
I wish there were more comments from men/women on the inside (in banks, homebuilders, RE agents) to offer observations. I’m in the securities business and was told by higher-up manager that if the Amaranth collapse occurred together with 2~3 others, the system likely would not have handled it very well if not a collapse - sort of like the LTCM affair.
Industrial Bank of China IPO will start trading tomorrow in HK. Tons of liquidity out here in Asia following the printing press of Greenspan from 2001~2004. Largest IPO globally this year, I believe.
ciao
“Blogs are helping to confuse buyers about everything from rumors to “bubble” theories.”
No, they’re just telling the truth and the idiots in the RE cabal don’t want the buyers to hear it.
We’re just trying to offset the lies from the REIC propaganda factory.
Most of the idiots in question have one thing in common. They don’t read. They can’t. Well they can a little but take all their information on CNBC.
There are three kinds of people in the world: those who can count, and those who can’t. -Warren Buffet
Which article was that from?
The Desert Sun. Ten Fast Facts about RE (according to them)
Desert sun top 10 things to know #2
Nice facts in the article. LA has a 1.9% affordability index and the OC is at 2.5%. This alone should be enough of a clue to suggest what the future may hold for RE prices. The “re-balancing” act has quite a lot of re-balancing in store. It suggests at least a 50% haircut for prices.
I always see these numbers. Can anyone provide context?
That is to say, what is the range for these affordability numbers over the past, say, 25 years? How “affordable” were LA homes in 1990?
Look up NAHB/Wells Fargo affordability index.
It is all right there including the history.
I am personally honored to have achieved number 2 on a top ten list.
When do we get to meet Letterman and guess what it was before it exploded?
Seems to me like The Desert Sun has been getting too much sun.
The only Free Speech worth hangin’ your hat on is on the blogs, you morons.
We ain’t sponsored, we got no loyalties to nuthin’- including readers-, and we say what we damn well please (except sometimes over at Jon’s where I often have to act crazy and like I’m living under a bridge just to make an important point in a funny way without getting edited).
That said…
Who the hell reads The Desert Sun anyways?
Ain’t Liberace dead?
So if any did not realize the bubble before thanks to the CAR for pointing out the impending collapse.
That is the last thing that pompous blogger needs - more traffic. Ugh!
“‘These are investors who are in strong positions, and they think things are getting worse, and they’d rather come to an end sooner rather than later,’ explained Norris’ son, Greg. ‘People are getting to the point where they cannot afford to hold on to properties anymore.’”
If you can’t afford to hold onto the property anymore, then you’re not in a very strong position …..
Or you can afford to take the hit, and cover your losses. The smart money knows when to bail - it’s the weak hands that can’t or won’t…
Right. I think many investors that feel they are in a strong position financially, equates to ability to demanding the wishing price, or reduce it 10k for the quick sale – which isn’t happening. I would like to see the “take the hit” price on more investor properties than I’m seeing today. Until then, they can keep wishing.
Like those L.A. investors of Bressi Ranch in Carlsbad. I am opening a cold beer for you guys.
Yes, I have a $100 dollar bill on my desk when they’re ready to talk turkey…
The sellers are idots for not selling sooner..but Norris is a smart dude. He called this a bubble (and that the top would be in FAll of 06) a few years ago. Now hes collecting fees from these auctions. Hes making a killing playing it on the down side.
Norris rocks.
Absolutely one of the few who called it early, stuck with it, and never waffled.
Bubble Hero Status.
“‘Overall, year-to-date sales were down 24 percent, in line with our 2006 projection. Regional trends in sales and prices were consistent with recent months,’ said C.A.R. Chief Economist Leslie Appleton-Young.”
How many months of 24 percent YOY downtrend in sales do you need before there are virtually no sales?
“‘Areas that experienced a lot of homebuilding in recent years or second home activity have experienced larger declines in sales and weaker prices than the state as a whole. These include Northern California, the Northern Wine Country, the Central Valley, San Diego County, and the Lower Desert in Southern California.’”
In other words, pretty much the parts of California where people live in houses (which includes some parts of San Francisco and Berkeley).
Didn’t CAR just revise their forecast to reflect the current market last month? This is just like sellers behind the curve and chasing the market down.
Dataquick put a positive spin on the decline in prices. In 60% of regions, the median price increased YOY. Last year, 100% of regions increased and the only question was how much. Now the situation has detirorated so that 40% of California has declining prices. When all the regions report on declining prices next year, the questions will be how long and how much will the pain last?
“down 24 percent, in line with our 2006 projection.”
Hey, Leslie, when did you make that projection for 2006. Was it Jan 2006, or last week. These experts have no shame, none. Pay me, and I’ll do and say anything you want.
5 Minutes before the reporter asked her!
david cee ” Hey, Leslie, when did you make that projection for 2006. Was it Jan 2006, or last week.?
2 days ago. She locked herself in her closet and in a very low whisper said “down 24% in 06″ he he he he he!!!!
What about LA
lainvestorgirl posts “What about LA”
The way I see it once the blood is clearly in the streets in LA ballgame over. In the last go around we (LA) went into “the downturn” last and came out very late…. thank you Northridge EQ in feb of 1994…. this was a major blow worths many, many months of recovery.
We are going into this mess last again, causing much more damage. By reconning we are one full year behind FL, AZ and Navada. Not too worry we will get our’s. Sad and sick in some way’s just like Sadam’s goofy kids would put a person in a tree shreader…. then ask the next person would they like to go in feet first or head first?…. tommrow.
Look to the facts only. Nobody can aford thier home adjusted or not. Everybody lied about everything, buyer’s to themselves, lenders and Realtors …. except Susan. The party is over period.
Others know better than I, but that trillion, zillion or what ever it is that flip’s soon has alot of So. Cal’s name on it….LA being number one! BOO YA…. Would’nt WANT TA” BE YA!!!
Thanks, but I could have done without that analogy…yuck.
Don’t see Fargo.
I would have gone head first.
Probably with a running head start, just to speed things up.
No need to see the Johnson become Little Bob and Tiny Tim.
Oprah does enough of that kind of stuff every day, anyways.
Stop the Violence!
While it certainly doesn’t come close to justifying even a fraction of the mess we’ve created, I gotta admit at least I’m glad those two are gone - from everything I’ve heard from sources both international and domestic, they’re two truly evil bastards.
Actually, you can go down 24% forever. The numbers just keep getting smaller and smaller - ((((( x*0.76) *0.76) *0.76)*0.76) etc.
I’m still surprised that the median price increased. I know that the homes are probably “more home” than last year and that there are probably incentives etc that were offered, but still, the median price actually going up is not what I expected.
Going up ? Bring a parachute.
Mark “Going up ? Bring a parachute. ”
Sorry going down. Bring depends.
I have no idea what they are doing to pull that number out. Here is Sacramento, zip 95827, I have already seen as house that sold for 585K last year be listed as sale pending for $440K. That is a massive haircut.
Wow, what a drop. I have heard Sac is getting hit hard lately. Any new homes selling ?
I have already seen as house that sold for 585K last year be listed as sale pending for $440K. That is a massive haircut.
Might be a RELO company that took the hit.
They are always gettin’ beat.
Appraiser comes in with a legit number and the transferee goes ballistic to his superior who in turn rags on the relocation company to get another set of appraiser’s.
So they shit-can the reports which are accurate and get some number fudgers to do the transferees bidding.
In the end the client company gets the final bill which in this case cost the finance division $145k + the services of the relo outfit.
Nasty comp for the market though…
Another example of garbage appraising.
“The statewide median sales prices for existing, detached homes rose 1.8% in September from the same month last year to $553,050, according to the California Assn. of Realtors. September’s price increase came after the median sank in August but is still far behind the double-digit gains homeowners enjoyed for several years.”
Have noticed that for the following listed LA/SCal sept dataquick county zips, there are seven triple digit yoy increases and one quadruple yoy % increase. The OC shows up in the condo data. No similar large yoy declines show up at all. Often there would be just one home sold in a particular zip which caused a triple yoy% increase. The one that really pops out is the 1440 % yoy gain for two homes sold in llano. Sounds like a bit of Data manipulation but i am no expert. Any math wizards here?
LA County SFH”s selected zips
Glendale 91204 1 $660 112.5%
LA 90020 2 $2,775 91.4%
Llano 93544 2 $385 1440.0%
SigHill 90755 2 $1,164 126.0%
Riverside selected zips
Desert Hot Springs 92241 5 $220 72.5%
Indian Wells 92210 6 $1,463 72.3%
Thermal 92274 1 $775 116.2%
San Bern zips
Cedarpines Park 92322 2 $613 178.4%
Fawnskin 92333 3 $390 257.8%
OC condo data
2 92624 $1,300 251.8%
2 92651 $4,233 268.8%
Those small sample sizes aren’t statistically relevant for computing median or average values. If only one big, fancy house sells in an area code, it will obviously skew the numbers higher.
volume decline is always the first leg, also as the number of sales decline it tends to push up the medium
then all of a sudden the trap door opens…
Yes, and that’s why it ends up being called a crash.
Who makes less money due to fewer transactions?
Course they don’t report that the “Median” price should be discounted by the (vastly understated) inflation rate in the last year. Add that factor in, and whoooossshhhh. Air leakin’!
‘I’m still surprised that the median price increased. ‘
This has been the pattern in most areas just before prices begin falling in such obvious ways that the REIC can’t lie about them. I would suggest it’s more like low end sales down 70%, mid range sales down 40% off and high end sales down 20%. Thus the ‘median selling price’ might actually increase. Also, the incentives thrown in are not counted. I suspect a small increase in the median with incentives actually means a small decrease in real prices.
Only 15 percent of valley workers are able to afford a median-priced home. ‘The prices are out of whack still, and until they are adjusted it’s going to be pretty slow,’ said Bill Powers, president of Pacific Western Bank.”
Pretty much tells the story. Just how far “out of Whack”
means though is never discussed in the media. The homes forsale in my area now in the $550K to $625K need to be closer to 225K to 250K. Sounds like a big drop but in 98 they were 170K. The true numbers will be such a shock to J6P.
In the OC Register article regarding auctions, the caption mentioned that auctions used to be for distressed sales but are becoming more commonplace today. I see the market differently. Auctions are more common because distressed sales are more common.
The OC Register also has an online poll with predicted appreciation for 2007. Then in parentheses, it specifies the predictions for December 2006 - which are two completely different time periods. I voted for -2 to -10%, which was the second most popular choice. Most voters went for greater than -10%.
Outstanding!
- ‘“The Norris Group, founded by Riverside real estate investor Bruce Norris, is launching a home auction business Nov. 19 at a Cal Poly Pomona auditorium, hawking 19 vacant, investor-owned homes.”
This will help to get that Lugubrious Dinosaur moving!
Lugubrious=sorrowful, melancholy.
Yep…….that’s about right
Right now some sellers are simply using auctions as an alternative marketing distribution tool to generate attention and pull unsuspecting GFs away from normal distribution channels. It’s an effective competitive tactic b/c it allows these sellers to dramatically leap frog all other sellers.
In other words, some sellers are effectively creating the illusion of major price cuts by exploiting/leveraging the ‘auction’ brand. However, like incentives, it’s a gimmick, an attention grabber with no real concession and a royal waste of time.
Wake me up when the auctions aren’t using reserve prices anymore. Until then, it’s just another house selling gimmick, wishing priced to sit.
I will wake you up. Promise.
Go ahead and smoke some Opium, though, because this might take a really long time, and I don’t want to hear any snoaring.
p.s.
I have a very loud voice, like James Earl Jones, and I am ten feet tall, with large giant feet for stomping.
Perfect!
Thanks Auction Heaven. I wouldn’t want to miss the best part of the show.
Wake me up when there are as many radio ads for foreclosure auctions as there as been currently for funny money loans or Guitar Center
Sales. Then I’ll know an equilibrium has been reached. Sound crazy? I remember.
“In a separate report covering more localized statistics generated by C.A.R. and DataQuick Information Systems, 59.6 percent, or 227 out of 381 cities and communities, showed an increase in their respective median home prices from a year ago.”
It would be fun to take these statistics apart … $$ / sf, upgrades etc, because I am quite certain that for any particular house that in almost all cases the September 2005 selling price would be higher than the September 2006 selling price by a fair margin. Further, houses in poor condition or with less desirable locations are most likley not selling at all, further skewing the figures given. I guess these guys are just desparate to pull a rabbit out of their CAR hat.
Good point; “houses in poor condition or less desirable locations”,
in the hot market those were as much in demand as anything, now they will NEVER sell.
Why would anyone bother with them with so much other inventory, in ever weakening hands, to choose from?
Rocket J. Squirrel: But that trick never works.
Bullwinkle: This time for sure!
Take me home country roads!
“Good point; “houses in poor condition or less desirable locations”,in the hot market those were as much in demand as anything, now they will NEVER sell.Why would anyone bother with them with so much other inventory, in ever weakening hands, to choose from? ”
Exactly. Looks like the 5 year RE run-up mantra of “buy now, buy now, buy now” will revert back to the age old RE mantra “location, location, location.”
DOC
Sure am glad i sold That dog of a place I had in 2005. rut-rut-ruoooooooh!
imploder posts “Sure am glad i sold That dog of a place I had in 2005.”
You had a dog house? Go ahead and rub it in. Where was it Compton?
“Good point; “houses in poor condition or less desirable locations”,in the hot market those were as much in demand as anything, now they will NEVER sell.Why would anyone bother with them with so much other inventory, in ever weakening hands, to choose from? ”
Yoy mean to tell me that such LA Garden locales as Wilmington, Boyle hts, Lynwood, Montebello, Compton, East LA,La Puente,Maywood,cudahy,Bell, won’t see 15-25%yoy anymore. Gee, i wonder if the supply of PDF’s(poor dumb f*cks)overpaying $400-500,000 for 3/1 70 yr plyboard/stucco POS’s in LA’s felluja districts will actually dwindle.
I think houses in hood areas of town, which were selling based on only one housing myth, low inventory. Now these homes are not moving. To me this scenario will be the first pawn to fall in the final housing battle coming this spring. Tha NAR, CAR, and every realtor is going to pull out all the stops and sink to new loans to hype the market. They know if these spring ends up like last spring they are
in deep, deep, deep, shxx.
“houses in poor condition or less desirable locations”,
This is almost certainly what is going on in Marin County, just north of SFO.
LA County showed 75 zips declined yoy out of 270, or 28% of total. 8-9 hi-end LA coastal zips showing average 10% sept yoy% drops, and that is only for zips showing at least 9 sales min. Still I would take the Sept Dataquick with a grain of salt, due to questionable methodologies(E.G,.they should throw out zips listing only one or two home sold, which distorts the true picture).
“A downturn in home sales, soaring home inventory and a slowing of home price appreciation, which may drop to between 2 percent and 4 percent by 2007, should be expected after the frenetic and unsustainable pace of the past few years during which time price appreciation reached 25 percent, panelists told a group of about 400 attendees.”
So for appreciation to “slow” to 2 - 4 % it must be that appreciation between last year and this year then is over 4%? Following on it is then reasonable to assume that a given property that sold for say $500K in August 2005 will appreciate around 10% by the end of 2007 and should then be sellable at $550K
And… What is this guy spouting about? ‘High and rising inventory [of unsold homes] is killing prices,’ said economist Ian Shepherdson.” By “Killing” he means rising or going down?
What a bunch of balarky! Find me a house in California which bought around August 2005 sold recently for more!
“That anticipated dip in annual home price appreciation is doubly disheartening considering it had been as high as 37 percent in 2004.”
Waaaaaaa Poor cry babys!!
‘High and rising inventory [of unsold homes] is killing prices,’ said economist Ian Shepherdson.”
————————-
We hear this a lot from the REIC. Let’s fix this for them…EVERYBODY sensed a market “top” because we reached an affordability ceiling, even with suicide loans, and the market began to slow. Buyers backed off and sellers are trying to sell at the peak. Inventory spikes don’t happen in a vacuum, and buyers don’t hold off because of the rising inventory; inventory rises because buyers stop buying (and sellers try to time the top).
This is why the best move is to sell **into** the strength, and leave some money on the table — nobody knows in advance exactly where the top is. By the time you’ve figured it out, so has everybody else.
Good luck to the REIC trying to goad buyers back into the market. The ONLY reason people were willing to spend 40%+ of their *gross* income was because they could make a profit on the deal. But for a few exceptions (someone needs handicapped access & amenities, for instance), there is NO REASON to buy instead of rent when the cost to rent is often 70% or less of the buying costs.
Looking forward to watching them squirm over the next few years, as all their lies and exaggerations are exposed, and they are seen for what they really are: overpaid, uneducated, deceiptful, unethical salespeople (except for a few).
Yes. Yes. Yes.
“Ah, but that’s just what they want us to think that they thought we thought because they know that if we thought that we’d think that so it can’t be true, since CA Renter is saying it, right?”
- Orange County Home Seller after reading CA Renters comment after listening to Pat Veling and after some really strong Liquor in a dark room in a quiet house
The ONLY reason people were willing to spend 40%+ of their *gross* income was because they could make a profit on the deal.
This is the most concise statement about what happened and how it is affecting the current behavior. Excellent!
they are seen for what they really are: overpaid, uneducated, deceiptful, unethical salespeople (except for a few).
Pretty legit summation of the real estate sales industry.
Amazing how Joe Q. Public could be so ignorant of the fact.
“The more progressive agents are going to use this as a tool to service their clients.”
Should read…”The more progressive Tools are going to use this as an agent to service their clients.”
DOC
And a third-
The more progressive agents are going to use this as a service to tool their clients.”
I’m reminded of the comedian who said that ‘to service’ is what a bull does to a cow, so remember that next time a company says it’s “been servicing you for X years.”
From the update:
‘The median price of an existing single-family house in Orange County fell in September from the year before, the second straight month of year-over-year price declines, the California Association of Realtors reported today.’
‘The number of Orange County houses sold also fell, by 32.2 percent, the association said. The California association reported that the median price for an existing Orange County house was $706,490 in September, which was 0.3 percent below the median price in September 2005. The median price a year ago was $708,840.’
“The median price a year ago was $708,840.” And what’s the median HH income in OC? I swear, the SoCal populace has been living in a complete fantasyland for the past several years. It needs to end…now.
What other markets like Sacramento have shown is that even flat prices put people who overpaid underwater. IMO, that’s why we went straight from flat to auctions. Happened in Florida, Boston and Sacramento.
Ben,
This is especially the case given the cashout-ATM habit which many Californians developed in recent years. Given the juxtaposition of flat prices versus a habit of massive ongoing equity cashouts, it is easy to see how owners could go underwater with only the slightest price reversal.
Don’t say that over on the OC Lanser Blog…that would be like heresy there.
Apparently there is yet ANOTHER loan product out that allows people to skip 3 months payments. Extend it out a bit more but the dam has broken. . .
Loan products are becoming obsolete.
Sacramento was flat back in July/August. Lagging indicators like sales prices from September might not show it, but I’ve seen a LOT of reductions in asking price. And homes still aren’t moving. I think we’re into “declining” and moving in the direction of “free-fall.”
I’ve moved from scouting out homes that are listed at 25% higher than our price range in the expectation that they’ll be within reach in late 2007/early 2008.
All I want is to be the guy on your TV show who sits next to you on the couch at the beginning of the show.
‘The Ben Jones Show’, that is.
What I want even more is to sit next to Angelina Pitt and see exactly how big those lips really are, and if they are real.
Maybe I’m getting ahead of myself.
Ben Jones needs to host the MTV Music awards first.
That all might be a way of saying, again, “Ben, we all really appreciate what you do for us.”
Or something like it, in my own spatial way.
Alright I’ll bite on this one. JWM you are so correct. Even if we assumed the average income in the so OC is 100K, we’d still be running home prices at 7x the income, well above the traditional 2.5-3x the annual income. As a renter here in RSM, I can tell you that this place is nuts and that is why I am looking to get out. Right now I would like to get a nice job in my field in South Carolina, preferably Spartanburg. I have been applying and once I get a job me and my family are gone. Clownifornia, esp. the south OC is nuts. People live like they are all millionaires. I realize that many bought long ago, but even they are amazed at how many people bought in the last 2 years. They readily admith they could never buy their houses at todays prices. Where are all these buyers of the last 2 years getting the money? I think we know and will see the fallout over the next 2-3 years. Hopefully, I will watch from the other side of the country.
OCDan, even with the toxic loans this makes no sense. I mean seriously, HOW ON EARTH does a family making 100K make payments on a house that’s 700K? Throw in all the other costs of living in CA - the taxes, gas prices, utilities, etc. It just blows my mind. Do these people not eat?
Posted “Do these people not eat? ”
Yes. They get all of the bald head rat they can gobble down.
Yeah, sure they eat. They just charge the Jack In the Box meals to their HELOC Credit Card..bwahahahaha
imploder has found many hearty meals “behind” Jack in Box in “big blue hearty meal container” suggest they try same. no credit card needed.
Everyone knows they eat their ramen off of granite counter tops…. 7 different flavors! -Mr and Mrs Too Much Homebuyer.
OCDan, I am in RSM as well (best community in South OC IMHO). I had a silly magazine in my mailbox about a month ago talking about how all the “new residents of OC are 100K+ income earners. My wife and I are in the 150K+ range and we rent a condo becuase with our conservative financial leanings, we could not afford to even buy a condo, let alone a home. We often wonder who all the these people with these “fabulous” incomes to afford these homes.
OCDan, I echo your sentiments exactly…I packed up my family and left Ladera Ranch for central Ohio back in March. Never looked back. The entire south OC is insane and headed over a financial cliff the likes of which I hope to never see. Good luck to you with your job prospects.
708K??? unbelieveable. even with suicide loans how can any upper middle class family afford this?
i just checked out city-data.com and looked at irvine, ca. - one of the nicer areas of OC. these are the statistics from the year 2000:
Median resident age: 33.1 years
Median household income: $72,057 (year 2000)
Median house value: $316,800 (year 2000)
Now, let’s assume that median household income rose to $100K since then… even still it’s mind boggling.
According to US Census Bureau, the median household income for OC for 2003 was $55,861. Trust me, it hasn’t gone up much since then. They list the median value of owner-occupied housing for year 2000 for OC as $270,000. City-Data website lists median household income for 2000 as $58,820.
Let’s be generous and say that median household income is $75K, houses are running at around 9.5 x median household income (I recently saw a report on OC Register that showed prices closer to 11 x income). Granted, OC has historically run higher than the usual 2.5-3 x income, but OC’s historical basis for homes is around 4.5 x income (that is our historic “sunshine tax”).
So, assuming the generous $75K median income and reverting back to the historical 4.5 x income, the median house price should be about $337,500. So, unless incomes rise dramatically, we should be looking for prices to drop by around 50%. All of these numbers are rough, but they give a pretty good indication of how far out of whack prices are here relative to historical prices in OC.
waiting OC: good guess. I am with you on 50%
the sellers are in total denial but within 5 years that will be the number
2nd straight month for YOY???? Did I miss that last month??
don’t be surprised if these numbers are revised down again next month.
If the market is slowing and the prices are being reduce on new homes, then how the heck have homes appreciated from last year?! Can someone explain this to me?
Do we really have to explain the median issue…again…somebody else please.
Kinda feels like the South Park Warcraft episode.
Sigh.
“Okay, Kenny increase Magic to 8 and reduce Sensitivity…”
Not sure, but incentives to sell new homes are certainly part of the story. If a home with current market value of $700K officially sells for $750K because of a new car (valued at $50K) was offered as part of the deal, then 6.7%-worth of price decline is hidden in the price reported to the data grubbers.
The so called 1.8% price “increase” is compared to the old selling price 12 months back. (August 2005)
The current price is 4% LESS compared to last month’s price for example.
The September 2006 median price decreased 4 percent compared with August’s $576,360 median price.”..
Based on 4% decline in one month, we can truthfully say price has fallen 48% on an annualized basis. (4%x12= 48%)
Price has is falling 48%/year!!!
Only works out to a 36.2% decline. Compounding works the other way when compounding negatively. Still damn good though.
It seems that incentives are running out of steam. With sustained MOM declines, the deals offered to buyers are not having as much effect. Should be a cold winter.
I need help! How in the hell does NAR get only a 2.9% nationwide drop when California has a 31.7% drop? It just does not compute. I mean California is the most poplous state in the union. What the hell!
Simple. NAR puts out it’s figures before CAR, so I would guess they’re not included? CA has about 13% (?) of the national housing stock, so I get 4%+ nationally. What’s up with that?
The implication would be a modest rise in sales nationally outside of California, but I think that’s quite impossible. Where is that 2.9% figure from? I’m thinking it’s either a YOY price drop or has an inappropriate decimal point.
New quote from David Lereah, in the Houston Chronicle:
“The worst is behind us as far as a market correction — this is likely the trough for sales,” said David Lereah, the Realtors’ chief economist. “When consumers recognize that home sales are stabilizing, we’ll see the buyers who’ve been on the sidelines get back into the market.”
What a liar…
The article is here, entitled “US existing house prices fall at record rate”: http://www.chron.com/disp/story.mpl/front/4286322.html
Oops, it was already posted in the other thread. Sorry about that. Well, Lereah’s stupidity deserves more space, I’d say…
After several years of people buying one or more houses in a complete feeding frenzy is there anyone left in large enough numbers to be a buyer ? We’ve qualified everyone who can draw an “X” on the signature line at these prices.
Jason posts ” New quote from David Lereah
“The worst is behind us as far as a market correction”
No David. It is an “market erection” and it is behind you!
That was one of the funniest lines I have ever read.
And squirted nosejuice on.
The CAR reported 650,780 August ‘06 sales of existing homes vs. 444,780 for Sept. ‘06 - a 208,000 unit drop in sales for a minus 31%. Yet NAR reports only a 120,000 unit drop nationally, and a 3.1% drop in the ‘West’. Any thoughts?
“In a separate report covering more localized statistics generated by C.A.R. and DataQuick Information Systems, 59.6 percent, or 227 out of 381 cities and communities, showed an increase in their respective median home prices from a year ago.”
CaAR and DQ in bed with “joint-agreements” yea… I seen
plenty of these.. “Barney Agreements” at work… you scratch
my back and I scratch yours we will both agree onthe numbers
and its a win-win situation… screw the consumer!
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.
“In the past, the company has said future expansions would be out of state because of the high cost of doing business here”
Congratulations employees of CFC! You succeeded in helping America get in debt to their eyeballs, pushing the cost of living through the roof and now you got yourself priced out of a job.
gong1 xi3 gong1 xi3 -> Congratulations in Chinese, you may need to learn the language soon.
http://sfgate.com/cgi-bin/article.cgi?file=/c/a/2006/10/26/HOMESALES.TMP
From sfgate.com:
“You’ve got sellers who are slow to accept the new market realities and buyers that are just kind of waiting for a market that I don’t think they’re going to see,” said Leslie Appleton-Young, chief economist for the California Association of Realtors.”
Priceless.
Those pesky buyers waiting for deals… Well, I for one am certain we will see a market I like. Just not short term, but my option loan is not resetting anytime soon because I don’t have one, so I am not under any pressure to buy at all. I wonder how many will have no choice but to sell though.
She means the market that she never saw that we saw and kicked and screamed for her to give attention to so that when she did she had to ignore that it was there so she could say something utterly ridiculous like that which means that she sees the market going where we know it’s going that she sees but doesn’t want to see and yet will admit to later in front of congress with big bright lights and a lot of gavels and tv cameras and everyone playing stupid and saying it wasn’t my fault they made me do it.
That’s what she really mean, I think.
Hey, that just made me think…
Can we go on a Housing Bubble Field Trip to Congress when all this gets played out on CNN?
I wanna be behind Bernanke.
Can I wear a speedo with an American Flag on it like Will Ferrel did on Saturday Night Live…or would that be inappropriate?
I know it’s late, and you’re drinking some powerful juice, but I actually think the “Field Trip to Congress” might not be a bad idea if they decide to bail out the FBs and banks at our expense.
Kinda like the “Million Man March”, but with thirty bubble bloggers instead.
I am positive Ben gets more than 30 unique hits every day.
At my daughter’s wedding reception in San Jose, May 2005, I asked her new father-in-law, the banker, how average income buyers could qualify for $700K starter home purchases; he had no answer. Told him that 20 years ago we were warned with jailtime for present day mortgage tactics. No reaction. CiscoKid.
Here in Santa Clara County, y-o-y volume was negative for the 22nd straight month (since December, 2004) and 25th out of the last 26. The median price is hanging on although y-o-y $ are down to +4.3% (& actually negative in San Mateo County).
See the latest snapshot of Silicon Valley housing numbers at:
http://www.viewfromsiliconvalley.com/id273.html
And the latest jobs snaphot at:
http://www.viewfromsiliconvalley.com/id274.html
Thanks!
$700K + for a McMansion in OC? People affording on their $100K (two earners) salary. What about the $10K per yr in taxes also ($900+ per mo)? No problem for the rich OC folks. They can also afford the $35/plate dinners at Disneyland and everywhere else. I thought Compton was on the top 10 list for most expensive housing in California. Isn’t that where everyone wants to live (don’t forget your gun, doberman, knives, etc so you fit in with your new friends). LOL
Yowza!
http://biz.yahoo.com/ap/061026/economy.html?.v=10
Still boggles the mind to see anyone trying to buy in the OC right now. Went to the new homes available in Irvine over the weekend and still incredible what the home builders want for a 1000+ sq ft condo….450k….and $800+ per month on fees, mello roos + property tax……any single person making $200k a year can afford it easily…but beyond that you would have to have own a home/condo pre2003 boom to have any money to buy it….The OC pretty much screwed any new home buyer…as any new home buyers has zero chance on purchasing anything except a 30 year old condo that is 425 sq ft in Irvine all for a affordable price ranging from 250k to 320k……What a joke……OC prices will need to drop 60 percent in the next 3 years before any new home buyers can afford it…likely….NOT.
WHAT is mello roos?
Mello roos is a special assessment tax. It’s a way to get around the restrictions of Prop 13 so the government can raise (take) more money.
Yep, and those Mello Roos taxes usually last for about 40 years (the govt gets money by issuing bonds, usually 40 year bonds, secured by the property in the Mello Roos district (also known as a Community Facilities District or CFD) and uses the money from the sale of bonds to pay for roads, sewers, schools, fire stations, and other infrastructure, and the property owners have to pay the Mello Roos assessments to pay off the principal and interest on the bonds). Failure to pay the Mello Roos can lead to foreclosure, basically the same as foreclosing due to tax liens. These are specific to California (although other states may have their own version) and not all homes are subject to them, only those that are in a special district that was created after the law was passed in 1982. So, it is possible to have two new housing developments side by side but only have one of them in the CFD.