“We Have A Big Issue On Our Hands” In California
The Union Tribune reports from California. “San Diego County figures from DataQuick indicated a downturn trend in prices. The median price last month for newly built houses and condos and condo conversions locally was $413,500, down 17 percent from a year earlier, with analysts speculating that much of this change was the result of an increase in lower-priced condo conversions.”
“On sales, DataQuick said San Diego County’s new-housing total was 885 transactions last month, 37.5 percent lower than in September 2005.”
The Press Enterprise. “Inland economist John Husing said homebuyers won’t become active again until they are convinced it is a good time to buy. ‘What the market is facing is a buyers strike, and until buyers see prices come down they probably are going to stay on strike,’ Husing said.”
The Contra Costa Times. “Solano County homes stayed on the market longer than those in any other Bay Area county, according to a report released by Prudential California Realty. Single-family, detached active listings went up 43 percent in the county.”
“Scott Kucirek, general manager of Prudential California Realty, said the trend is fed by sellers refusing to budge on prices. ‘Competitive sellers need to lower prices or risk missing the sale,’ he said.”
The San Francisco Chronicle. “Some economists said the state’s housing market is likely to deteriorate further before it recovers. ‘We haven’t seen the bottom yet, and we won’t see bottom until 2007,’ said econmist Christopher Thornberg. ‘We have a big issue on our hands.’”
“‘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.”"
The Daily Bulletin. “Regional economist Jack Kyser of the L.A. County Economic Development Corp. noted the contrast between the California market and the national one. ‘There are definitely bubble markets nationally,’ he said. ‘We have bubblettes in California - folks are worried about Sacramento and the Central Valley - but we don’t have anything like Las Vegas or the Florida condo market.’”
“Kyser said two factors were keeping California housing relatively strong. ‘Our economy is doing well and the population is still growing,’ he said. ‘Yes, it’s a shift to a buyer’s market where prices may flatten some, but anyone looking for a blowoff like the early ’90s, forget about it.’”
The Napa Valley Register. “Residential foreclosure activity in California reached its highest level in more than four years in the third quarter, reported DataQuick. ‘I think the foreclosures that will happen will be those people who took out 100 percent financing loans over the last two years,’ said loan consultant Michael Madsen in Napa.”
“‘They bought with no money down and then today the houses are worth the same or less than when they purchased, and so there’s no room to refinance into a more favorable loan product. When the payment adjusts upwards there’s nowhere for them to go. The equity isn’t there. That’s where you are going to see the squeeze,’ he said.”
“Martha Pedroza-Ramos, Loan Consultant in Napa said she is also seeing a small increase in default notices. ‘A lot of the people that got in recently were speculators, and I believe those are some of the people that are receiving notices of default,’ she said. ‘Some negative amortization loans on 100 percent financing that are not appropriate for all clientele.’”
“‘People that are in foreclosure are generally people that shouldn’t have gotten a loan in the first place; they were approved for something they couldn’t qualify for. You have to really look at what you can afford,’ said Kevin O’Neill, branch sales manager, at Countrywide Home Loans.”
“During the housing boom, people flocked to become real estate agents and mortgage brokers, sending the tally of those holding California real estate licenses to more than half a million this year.”
“Experts say it’s inevitable that there will be a shake-out. The attrition has already begun, some say. ‘There may not be a real estate bubble, but there might be a real estate agent bubble,’ said Gino Blefari, president of Intero Real Estate Services.”
“Small-business owner Mike Pfaff was part of the ‘agent bubble.’ Pfaff got his real estate sales license in 2004 and started working for Coldwell Banker in March 2005, ‘at the tail end of the high point’ of the boom, he said. He sold one house and helped one buyer make a purchase.”
“But it soon became clear to Pfaff, a former engineer, that selling homes was a hard way to pay the bills for his family of five. ‘I went a couple of months without any income at all,’ he said. When he started in the business last year, competition was already tough, Pfaff said, ‘and now it’s even worse.’”
“‘Starting next year, you’re going to see more of the fallout,’ said Joe Brown, president of the largest brokerage in the South Bay. ‘There’s this whole group of agents that have done two or three deals a year, and that’s not really enough to sustain you,’ he said. ‘They might be saying, `You know what? I need to go get a job.’”
‘AutoNation Inc., the nations biggest car retailer, said Thursday that third-quarter profit fell 37 percent, weighed down by a drop in new car sales in California, its biggest market.’
‘California’s economy has been suffering due to rising interest rates and soft housing market and this has had a marked impact on our third quarter,’ said Mike Jackson, AutoNation’s CEO.’
Ben, Did you see his interview on CNBC? He was miffed that the big 3 also posted retail inventories while including fleet sales etc…so he showed charts where days of inventory was much much higher than they were reporting! …facts, figures,lies.
A huge amount of cars are coming in off lease. One of the guys here just got an 2004 Acura 3.5 RL for $26K with 30K on the clock. Why buy new ?
It sounds like he paid too much.
I heartily agree.
I think the guy paid too much. 20K would have been an appropriate price. Acura’s are mechanically good cars, but there’s something about their styling that just does not click with used car buyers like Lexus does.
Sorry, should be “Acuras”.
26k for a freekin honda,its worth 7k at most.
An Acura is nothin’ but a thief magnet here in San Diego.
Why buy a car at all? Buy a bike, which one can around with just fine in a lot places (more than you might realize) - provided one has stuck to the “location, location, location” principle all along - which most haven’t - suckers! Any mass produced car is a horrible investment. (obvious exceptions excluded - collector cars etc.)
Are you a 40-year-old virgin by any chance?
On the topic of cars…
Taurus approaches the end of its road
http://tinyurl.com/ya4pea
‘California’s economy has been suffering due to rising interest rates and soft housing market and this has had a marked impact on our third quarter,’ said Mike Jackson, AutoNation’s CEO.’
Funny that — who would have ever suspected a soft housing market in California could have anything to do with auto sales?
GS posts ” Funny that — who would have ever suspected a soft housing market in California could have anything to do with auto sales? ”
It will really get funny, when it hits Wall Street!
I guess I have more faith than you do in Wall Street’s ability to keep stock prices pumped up regardless of the bad news from Main Street.
But sometime their arms will get tired from pumping. Then we can find out just how large the leak is.
Backstage
so\
backstage, this sounds like imploder’s last date
Oh, so that’s it…I was wondering how all the other mommies at my kid’s preschool are driving these humungous lexus or mercedes benz van-suv-like monstrosities…while I am driving a 2002 sienna.
Then again, my monthly mortgage payment is far less than most people’s rent here in LA.
Is that the monthly mortgage on your minivan? We call it a “payment”, but technically, I guess it is a mortgage. Especially if you live in it.
posted ” I guess it is a mortgage. Especially if you live in it.”
That was a cold.
Haha, yeah, I live in my minivan. Makes it easier to collect the rent that way
Comment made by the Manager of the Merk Hard Currency Fund………
“Centex, one of the nation’s largest homebuilders, advertises in the Bay Area that “for a limited time”, if you buy a home from them, they will keep your monthly payments low for 5 years. The buyers are promised to pay “below market rates”.
Centex is joining the game shady lenders have been playing for a long time: your monthly payment is “low”, say 1%, but your yield is still 6%. The way this works is that the principal is increased every month.
This latest campaign will keep new home sales higher than they would be without such incentives - at least for now. It does, by the way, also keep banks happy. Accounting rules require bank to record (in the example above) the full 6% in income as long as the mortgage holder does not default on his or her 1% payment.
The automotive industry could push out their demise with enormous subsidies for some time; let’s see how long the home builders can keep things going. For now, home builders are given a lifeline because long term interest rates have not moved up much.”
“Centex, one of the nation’s largest homebuilders, advertises in the Bay Area that “for a limited time”, if you buy a home from them, they will keep your monthly payments low for 5 years. The buyers are promised to pay “below market rates”
So.. that’s how CTX intends to maintain strong earnings throughout the downturn. By using the accrual method of accounting, it’s lending unit can give out these low pmt loans and book the unpaid interest as income. Link: http://www.ctxmort.com/
This will just delay the piper….and to what end? Essentially, CTX will still own a depreciating asset (the moment someone defaults). That should nicely compound their current problem.
What are they going to do? Make it up on “volume”?
The majority of CTX customers fall into the sub-prime catagory. CTX will be able to offer these mortgages only so long as there’s a low cost secondary market for sub-prime MBS. And those days are few.
The “cheerleaders” were out in force today. Trying to spin the new home sales. I heard a several so called experts calling a bottom today. They’ll be calling the bottom for the next two years.
K. Hovnanian hombuilders just called me lettin me know one of their “top view models” in a local CA development just fell through, and would I be interested? Their asking price last year WITHOUT any upgrades was $2,100000. Now they are desperate to sell the exact home and are willing to negotiate in the 1,900,000 range (5700 square foot house) and throw in more upgrades. I was tempted, but after reading this we site I think we’ll stick with existing home and wait it out.
“San Diego County figures from DataQuick indicated a downturn trend in prices. The median price last month for newly built houses and condos and condo conversions locally was $413,500, down 17 percent from a year earlier…”
Holy pricey poppee BubbleMan™, Cali is going down…
“…newly built houses and condos and condo conversions …”
That part of the market is small in SD County. The overall/all median dropped 4.0 or 4.4 percent for the County. Although, still notable.
BubbleMan™ say pricey trend no longer go up up and away; therefore, pricey poppee!
BubbleMan™ feel deflated; so, go bye bye now.
If a $400K house had a built-in profit margin of 30%, then cost would be $280K and profit $120K. Inventory bulges, the bust is in full bloom. So the builder cuts the price to $332K. That’s a 17% reduction, but the builder *still* makes $52K minus additional interest carrying costs. He has a long way to go before zero profit. I think this is what will totally screw the used-home sellers. Without owning some spectacular piece of land, they cannot outcompete the builders in the price slide.
Also don’t forget, Chip, that many owners liberated all their equity so it could be used to fuel luxury consumption spending, and they now have no wiggle room for lowering the price to the new, lower market price. Those who can afford to hang on will do so, while those whose cash burn catches up with them will hand the keys to the bank and move on.
I think this is an under discussed topic. Sellers could go to break-even if the market got bad enough and they wanted to eliminate carrying costs on inventory. On the house in the example that could be a 25% haircut.
How many homeowners who bought in the last 5 years can afford that kind of trim?
At some point the market locks up.
I disagree. The market would only lock up if the current “homeowners” are able to make their monthly payments. However, if the ARM resets put a homeowner cash flow negative they will not be able to hold on very long. Unless some new innovative loan product comes on line to save them (or postpone the inevitable) those people will lose/give up their homes.
In fact, I would assume that HBs could even sell at a loss. The costs of the land and construction are sunk costs, and the carrying cost is an alligator, even for HBs. So, I would think that HBs would do whatever they have to do to get out from under their carrying costs, even if that means selling at a loss. I have no HB experience, so maybe I’m wrong, but it would seem like that’s what would happen.
lets add the fact that lumber prices are down 50%.
Material costs are going down…
My understanding is that the profit margin is highly dependent on exactly WHEN the builder optioned the land. If they had an option on the land pre-bubble, they have a huge margin. If they bought land at bubble prices, much smaller margin.
OK, Kids; as fall is upon us, it’s time for another sing-along. Apologies to DH for abusing his wonderful song.
accompaniment
No buyers on the road
No buyers on the beach
I feel it in the air
The price is out of reach
Open house,
Empty streets
The Realtor sits alone
I’m drivin’ by your house
Though I’m sure - no one’s home
But I can see you-
Your sale signs shinin’ in the sun
You got your hair combed back and your
Sign spinners on, baby
And I can tell you my need for you will not be strong -
after the prices of summer have gone
I never will forget those heights
I wonder if it was a dream
Remember how the price was crazy?
Remember how it made me scream?
Now you don’t understand whats happened
To your sales,
But babe, I’m gonna get you back
I’ll be watchin’ as the market fails…
I can see you-
Your sale signs shinin’ in the sun
I see you talkin’ real slow and you’re smilin at everyone
I can tell you my need for you will not be strong
After the prices of summer have gone
Out on the road today I saw a Realtor sittin’ on a stucco shack
A little voice inside my head said,
“Dont look back. you should never look back.”
You thought you knew what homes cost,
What did you know?
Those days are gone forever
You should just let them go but-
I can see you-
Your sale signs shinin in the sun
You got that price pulled down and
that push-up bra on baby
And I can tell you my need for you’s completely gone
Now that the prices of summer have gone
I can see you-
Your crab grass dying in the sun
You got that hair slicked back and
That smarmy smile on, baby
I can tell you my need for you’s completely gone
Now that the prices of summer have gone
Rock on!!!
excellent…
Hilarious! I’m seriously in tears over here….
Same here…Excellent…
great one!
classic, dude.
That rocks, thanks.
Could we forward that to his publicist? Maybe ask if he’d sing it?
Josh
Oh, Dear God that’s hilarious…LMAO!!
lol - awesome!
I missed your posts, don’t be a stranger!
‘Boys of summer’, lyrics by Don Henley. Classic Rock & Roll for Aging Boomers as we pour down a frosty mug and watch the auburn sky at the Sunset Grill.
Thanks to everyone for the kind words.
Since folks here seemed to like that one, here is an update of of a parody that I did (badly) off the top of my head back in August. After much searching, I found a not-so-bad MIDI realization of Locomotive Breath to post with these “modified” lyrics for your enjoyment. Thanks to “Backstage” for pointing out that I had slandered the wrong politician in my first attempt, this version is corrected along with a small amount of polishing given time to think about the piece. I admit that the sentiments are “so last week”, but hey, this is free
accompaniment
In the festering madness
Of the housing bubble stretch,
Runs the small-time flipper,
Headlong to his death.
He feels his finance failing –
Sweat breaking on his brow –
Sir Alan stole the handle and
Bernanke won’t stop going,
No way to slow down.
He sees the buyers begging off
Out of patience — one by one.
His credit and his broker –
All gone and no more funds.
He’s pleading as a mortgagor
On his hands and knees –
Sir Alan stole the handle and
Bernanke won’t stop going,
No way to slow down.
He hears the silence howling –
Grasps at offers as they fall.
And the patient buyers
Have got him by the balls.
He picks up gideons Bible –
Open at page one –
Sir Alan stole the handle and
Bernanke won’t stop going,
No way to slow down.
==
17% YOY in San Diego? I’m ready to declare we’re moving into the top of the third inning.
Just wait. You know those 14-run innings where the team bats around twice and the losing manager has to bring in his right fielder to pitch? That’s still a year or so away.
Third inning? We haven’t even sung the national anthem yet. Remember, this thing isn’t over until people have sworn off real estate as ever being a good investment, fathers are advising their children to never buy real estate, real estate is never mentioned at cocktail parties, empty closed bank branches cover the nation etc.
Keep in mind, it’s new home prices YOY…
But, it’s still good…
Keep in mind that the reported declines are biased to the smallish side of reality by the use of incentives to hide falling market values.
“‘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.””
You’ve got sellers who won’t lower their wishing prices, buyers who don’t want to catch a falling knife, and Realtors (TM) just kind of waiting for a market that I don’t think they’re going to see.
Moet and Chandon anyone?
It strikes me that as these numbers continue to weaken, the sound bites of Watts, Lereah, and Appleton-Young will lose some serious luster. It was oh-so easy to type up a quick cheer to ever-rising prices using the The Three Mouthateers - but as it dawns that the king has no clothes they’ll be quick to go to the blade.
Hey but at least Kyser/Liareah/LAY are sounding more bearish than ever before…now if we could just get that Watts guy in line…
Does Watts speak in public any more?
only while wearing a mickey mouse costume.
Yeah — didn’t you love the imagery of a polar bear on Learah’s NAR powerpoint presentation (”Reality Check”)?
I couldn’t believe the bear! Also, they had bubble patterns as the backround on some of the slides. It makes me wonder if some administrative assistant was having a subtle joke on them.
These guys just kill me! They speak with such confidence, yet they change their tune with every report that’s issued. And they have been wrong so often.
Buyers are going to have whatever market they have the patience to create. Buyers created the up market (abetted by lenders), and they can create a down market.
Realtors just go along for the ride. Like every backseat driver, LAY should just shut up.
“And they have been wrong so often.”
one thing imploder know for sure: consistency is everything.
“Buyers are going to have whatever market they have the patience to create.”
Backstage: that’s some profound wordiage, there.
Hell, it’s my new MOTTO…
I like how they usually include the comment “consistent with my FY06 forcast” like they’ve been predicting the future all along.
“‘There may not be a real estate bubble, but there might be a real estate agent bubble,’ said Gino Blefari, president of Intero Real Estate Services.”
Everyone, let’s say it together now, MORON!
And the reason so many people wanted to be real estate agents is…?
imploder doesn’t understand the question… but mind is currently filled with tremendous undertaking…… studying for Real Estate License. Got hot tip from ad in back of magazine.
Hey wait a minute .. this is in Silly valley aka Silicon valley… they dips have been saying this place is different.
Well Ill be damned … these guys tipped overr like a dead cow…
They might be saying, `You know what? I need to go get a job.’”
Costco and Sams club handing out finger food is my suggestion.
whole new meaning to “getting the finger”
no, you don’t want to do that. I used to work for the company that handled demos for Costco on the west coast. It was a sh*thole and paid their demonstrators as little as possible. Most of them had something really wrong with them, so they came to work for us.
“We have bubblettes in California - folks are worried about Sacramento and the Central Valley - but we don’t have anything like Las Vegas or the Florida condo market.’”
Kaiser is the cheerleader for the Old School Downtown LA Crowd. Down down LA has a big problem with loft conversions. The big problem is NO BODY WANTS TO LIVE IN THEM!
Furthermore saying LA has no problem cause it doesn’t have a messed up “Ghost Town Condo ” market like Las Vegas is nuts. Who does Mr. Kyser think OWNS all those “lights out” empty Condo investments in Vegas? In Phoenix the empy flips there, as well. The fuse has already been lit back there (Vegas, Phoenix) It leads to the powder keg….. Los Angeles and greater So Cal.
Exactly right. None of the papers/economists seem to realize that if Vegas and Phoenix fall, Cali is next because its the local moguls here who own half that empty stucco.
100% right. Making that equity work overtime. The margin calls on the liberated equity out of CA used to snowball those gains in NV & AZ are coming in… in the form of notices of default. A lot of fuses all burning at the same time leading to the same place. Once they all come together, and they will, look out below.
California is the flipper lair. Once Cali starts going down the waves of equity locusts that have been blanketing the country will be in full retreat. Hurray!!!
Leverage coming home to CA in reverse. Gonna be a lot of boarded up early ‘50 dumps cause no one is going to want one of those $1M+ shacks pretty soon, even for 150K.
“The margin calls on the liberated equity out of CA used to snowball those gains in NV & AZ…”
Don’t forget FL; some of that CA equity went into the Miami market too.
I know one stuck Cali flipper currently sitting on two negative cash flow West Palm Beach 650 sq foot condo conversions.
Does he have the juice to feed the alligators? Never ceases to amaze me how much “good money for bad” people will waste around here.
Yes - and he will. He thinks this is a just a short blip (thanks to his RE investment ‘coach’).
His liar (second home rider) 80/10 neg am cash back at closing (for the other 10) I/O loans don’t reset until next March, so the full magnitude of his folly hasn’t quite hit him yet (payments will be $1194 - at 9.5%, taxes are $266 per month, one year deferral on HOA kicks in at $110 - but they are raising it next month, and it rents for $750 per month). His Cali house, purchased in August for 1.2 million now Zillows at $960,000.
Imploder - BTW, I love your posts!
I appreciate you saying my posts are OKIE DOKIE by you. I just figured Ben would turn me off and then I’d get the hint. I’m Glad others have as ill bred a humor as myself. I don’t feel so bad. Thanks!
Oh man, your friend sounds like a couple people I know and it’s a drag to witness. I have tried so hard to relate my experience about this whole mess, but it’s true, people don’t listen. I don’t begrudge them. Everybody’s got the right…NO the DESIRE, to make their OWN mistakes. In the end, what does it matter.?…………. but, what about right now?
Right now? HELL yes it matters! ARE YOU PEOPLE CRAZY?
9.5%!!! Is that just the 10 or the whole 80? He might as well have put it on his credit card.
At least with a credit card, he would have gotten points or cash back. Yes, the 9.5% is on the 80.
I know of someone else who has a neg am two year ‘teaser’ of 8.5%!!!. At the end of two years, it resets to adjustable and can “never be higher than 15.5%.”
Are these people insane?
Yes. California will like be both the last and the hardest to fall, for that reason.
There are some mighty short fuses with a lot of powder at the other end of those fuses for many Californians. Remember the liberal use of abstract financial instruments was by far the highest in CA - the place with the lowest affordbility. House of cards. Don’t bet on CA being the ast to fall. My expectation is it’ll fall the fastest - freefall once the REOs hit saturation point.
I don’t know about that. With enough equity extraction, they can feed the gators for a while.
“…abstract financial instruments …”
I really like that, vice “toxic loans.” Sounds like vintage Greespeak.
Imploder notes misspelling should read “asstraction financial instruments”. watch for skid marks
emcee ” Yes. California will like be both the last and the hardest to fall, for that reason. ”
It will be a double funny, since I think most were financed with either HELOC or 2nd’s or RE-FI’S….
First laugh when you cannot pay for house in Vegas. Next funny when house is worth less than you paid. Then best for last when you cannot pay for old home sweet home…. still gets more funny when your LA home take’s a major dump in value.
Has anyone ever wanted to live downtown LA if they could afford not to?
Personally, I love downtown. Spend a lot of time there. MOCA, library, flea markets, Ciudad, Water Grill, the bar at the Biltmore (and Bernard’s for anniversaries), gun club, Philippe’s French Dip, Traxx at Union Station, Grand Central Market, opera and plays at the music center, Olvera St. Love it. During the day particularly, living in downtown LA has great appeal. Lots of cultural institutions, lots of activity, and lots of jobs.
At night, however, the businessmen and lawyers drive home to Pasadena or Beverly Hills, and the hordes of homeless people emerge. Not to say that it is dangerous to live in a loft downtown (crime stats don’t back that up), but it is just bleak and very sad. Except for a few isolated places, it’s like a neutron bomb has gone off.
The wife and I went downtown two summers ago to check out a loft as a possible investment. The smell of baking urine wafted all the way up to the 12th floor, and we had a nice view of a homeless persons’ encampment just below the building.
We live nearby in Silver Lake, and we used to have a gym membership at the Biltmore Hotel for the pool (very small pool but great for young kids). One day we decided to hit the Central Library, and a poor mentally ill homeless man tried to grab our new baby out of our stroller. Poor man was completely insane, so I don’t begrudge him, but whenever a person with fecal encrusted hands lunges for your baby, it kind of diminishes your appetite for living in the area.
So in short, maybe downtown LA is livable in about 10-15 more years of consistent growth. It desperately needs green space too, not to mention day-to-day retail (grocery stores, etc). But right now? You’d have to be nuts to pay what they’re asking, and they’re asking A LOT for those lofts. I saw one listed recently - 900 sq ft for 800K. Someone’s smokin’ crack.
A lot of crack, they are building a Ralph’s down there along with some other stuff from what I understand. But untill the ACLU turns their head 10 to 15 years may not be realistic for a truly liveable downtown
Better go and take a picture of downtown LA so you can sit back and reflect about its 2006 heyday. The al fresca dump spots in the alleys should make a nice photo.
When the meltdown gets into full swing downtown LA will be slammed the hardest, along with the rest of the marginal areas that make up 70% of Los Angeles. Think LA riots and where you wouldn’t have wanted to be during that memorable event. Those are the places that will probably never recover…
I agree. Like I said in an earilier thread today. They put lip stick on this pig and trot it out every 20 years. Good luck fellas.
Talking about the riots and downtown: Sandra Tsing Loh wrote a clever book around that. “If you lived Here You’d Be Home By Now”. I enjoyed it.
Thanks for the tip. I’ll order the book today.
whenever a person with fecal encrusted hands lunges for your baby, it kind of diminishes your appetite for living in the area
You’ve certainly diminished my appetite for even going near that area. Very nice imagery, I give you that. Yikes!
imploder find himself in downtown sometimes… well, whenever local cops discover imploder in “blue hearty container of plenty meals” behind Jack in the Box. imploder’s “friends in blue” take imploder on “free vacation” to visit “downtown hotspots” mentioned by “vioviv”. imploder fails to grasp why people in magazines at Savons “enjoy” vacations” so much.
Have checked out Traction ave off 4th st east of Alameda where the Bohemian Arts crowd resides. I cannot figure out how they can reside in such dismal surroundings, on the edge of the old dtwn warehouse district, but they seem to have created their own little bohemian niche, with outdoor parisian cafes, ect.
The attempt by LA to put up dtwn upscale Condos/lofts is sort of scattergun. Besides the lofts in the warewhouse district you have condos situated along 1st st near figuroa, fairly close to Civic center and hope/grand ave(promenade towers). Then there is a massive attempt to construct condos/apts/lofts south of 8th st near Staples Center, which is a somewaht dismal area at least for now. Across the fwy there is more condo construction activity in the pico-union district. This area still somewhat grimy, with areas which resemble the third world.
What the LA dwtn developers are thinking is beyond comprehension. They are just ramrodding condos/lofts/apts into outlying city quadrant areas with the hope that well-heeled Angelinos will flock to them. I have perused the areas in which these new and existing dwtn residential units are located: some are situated right at fwy off/onramps or along busy but barren thoroughfares. Some are constructed with thick lower buttress walls which insulate the inhabitants from the constant traffic/street riff-raff.
I have also seen quite a few instances of very questionable condo siting all over LA and the OC, both big and small projects.
Over The next several years as the Scal RE bubble deflates, 10’s of thousands(even hundreds of thousands)of new muli-units will come to market. This is the future LA housing paradyne-Condos,apts,conversions,re-partments, affordable housing units,ad nauseum.
I agree. I worked at a telco switch at Wilshire and Grand in the mid 90’s and pulled some graveyard shifts. During the day it was nice, but when the sun set it got creepy.
Nice place to visit, but I wouldn’t want to live there.
sorry but downtown is a depressing dump, day or night. there are a few civilized spots here and there but 90% of it is disgusting. thousands of homeless people, a huge section that looks like tijuana, etc.
I worked downtown during my lawyer days. It’s improved a lot, but I still couldn’t wait to get the heck out of there at the end of the day. Which was usually well after dark.
“So in short, maybe downtown LA is livable in about 10-15 more years of consistent growth. It desperately needs green space too, not to mention day-to-day retail (grocery stores, etc). But right now? You’d have to be nuts to pay what they’re asking, and they’re asking A LOT for those lofts. I saw one listed recently - 900 sq ft for 800K. Someone’s smokin’ crack.”
Yeah, during the day DWTN LA teems with folks out on the streets, and there are cultural places galore. I once walked the plaza at 350 S. Grand grand ave(site of Moca) and took old Angels flight stairway down to hill st. The restored Historical Bldgs in dwtn are a treasure.
At night as you say the place gets deserted and taken over by homeless. Intractable problem.
There is a hugh amount of new hi-rise residential multi-units going up along Grand/hope/flower streets south of 8th. The plan is to situate dwtn residents near the commuter rail system(Social engineering).
Being so close to staples center has one benefit: the homeless do not encamp out there as much as in the union Station/little tokyo/warehouse district.
Cannot imagine dwtn having any future new green spaces anytime soon.
My favorite new loft site is at sixth and hope. It is called the Library lofts(the Central Library is right across the street). Practically every Dwtn cultural activity, and Major Financial Workhub, is within comfortable walking distance. Homeless problem not as bad as Alameda st loft areas. These 91 units said to range from the $400,000’s and up.
How funny. I drove around with my GF a few weeks ago because I was curious where all of these Condos were going. That place was a madhouse during the Saturday afternoon. But trying to explain to my coworkers how there were tiny condos bordering Skid Row for $600k was very hard to not laugh. My work is doing some of the engineering for some of them. So I am always curious what exactly my job security is going to look like for the next few uncertain years.
imploder has “magic 8 ball” “borrowed” from Savon……….
prospects not good? Hang on to girlfriend (imploder add that, but, imploder smart sometimes)
Those LA Downtown loft conversions are a sight. One converted loft looks like a former Gov’t Bureacratic office bldg. Others converted from what used to be warehouses/small manufacturing shops. these are located right next to the homeless encampments along alameda/los angeles st near 4th. Little Tokyo lofts is on alameda and 4th:imagine coming home at night in that part of town.
I like the location of the medici apts at 727 S. Bixel, right at the bixel entrance to the 110 harbor fwy southbound onramp. Good dwtn residential planning from the Dtwn Planning geniuses.
““Small-business owner Mike Pfaff was part of the ‘agent bubble.’ Pfaff got his real estate sales license in 2004 and started working for Coldwell Banker in March 2005, ‘at the tail end of the high point’ of the boom, he said. He sold one house and helped one buyer make a purchase.”
“But it soon became clear to Pfaff, a former engineer, that selling homes was a hard way to pay the bills for his family of five. ‘I went a couple of months without any income at all,’ he said. When he started in the business last year, competition was already tough, Pfaff said, ‘and now it’s even worse.’”
“‘Starting next year, you’re going to see more of the fallout,’ said Joe Brown, president of the largest brokerage in the South Bay. ‘There’s this whole group of agents that have done two or three deals a year, and that’s not really enough to sustain you,’ he said. ‘They might be saying, `You know what? I need to go get a job.’” ”
Where do they find these knuckleheads. How does one expect to feed a family of five first year in the business. I could barely feed myself first year in. He obviousily had the notion that the gig was easy and anyone could do it. I wonder which family member he sold the house too and for. He should have did a little more research.
“He obviousily had the notion that the gig was easy and anyone could do it.”
Oh, I guess it’s a job only a select few can do & because of those high barrriers to entry there are only 500,000 of them in CA.
Face it, RE sales is a low value job that anyone with a pulse can do, or I should say - pretty soon, used to be able to do. This RE meltdown will have many positive outcomes - 1 will be the elimination of RE agents and a move to a more open marketplace where transaction costs get slashed. I’m looking for a good used Century21 Suit for a Halloween costume. I’ll look good in it. Should get me laid, LOL.
This year Laid. Next year it, Tarred & Feathered!
No didn’t mean only a select few can do the job. You’re right anyone with a pulse can do the job. Just like any other job in America. There’s very few jobs in this country that anyone with a pulse can’t do. The difference is can you make a living doing it. That’s the question. It would be interesting to see how many of those 500k licenses are hung at a shop, then how many are actually are going at it every day and then how many are actually earning their sole and only living from it. The reality of those numbers will give you real perspective.
Here’s a question define a high value job for me?
High value in this case implies substantial renumeration. Any job with an educational barrier to entry and then real experience would qualify. MD, Senior level Engr, Senior Level Manager at a respectable org…
Professional athletes get paid too much and so do those in the entertainment business, but in some respects they earn it.
Now, a real high value job is a teacher, since they are the ones trusted with the next generation of workers that will be responsible for running this country. Many don’t get paid enough.
“Any job with an educational barrier to entry and then real experience would qualify.”
You’re not serious are you?
Not debunking education, more of it is sorely sorely needed. But to say that someone has to have a degree to be entitled to have a high level of income or high value job is foolish arrogance. Which is why you see so many bankrupt and destitute Lawyers, Senior Level Engineers, and this priceless one Senior Level Manager’s. That last one being the biggest crock of horsesh*t I have heard in awhile since when is being an experienced a$$ kisser highly valued (no answers to that one from the peanut gallery please). Which is what most Senior Level Managers bring to the table. The rules of the game must have surely changed since I bounced around in the corporate world.
The same to be said about whether someone’s job is of high importance.
Example of high importance jobs MD’s, Teachers (we agree), Law Enforcement especially in Los Angeles, Nurses, Pilots, Military Personnel. Other than MD’s and Teacher’s most true high value jobs have very low educational barriers of entry.
The rest of these so called high importance jobs are just ego and currently being replaced by slave labor overseas. Even those Senior Level Management positions where the only requirement is to be able to kiss a$$ in english to continue to get the salary of 2 dollars a day. Please spare me.
The level of American arrogance never ceases to amaze me.
High value job Senior Level Manager Bwwwaaahhhhaaaaa. Someone’s started drinking early
I hope you don’t go into the hospital for emergency open heart surgery and the doctor slips you his REMax card before reaching for the hacksaw.
Look, I know many senior level managers stink. They’re not supposed to though. The best and most capable are the ones that should be the ones that advance. Those are presumably high value jobs because their value gets identified and that’s the reason they move up. Of course there are plenty of exceptions, but I have yet to see a high level manager anywhere I’ve worked that is worth less than the best RE agent in the country.
You need to go back to school to re-learn supply and demand. That’s what determines high value. That’s why teachers, military, police… earn so little, because there are so many of them competing for the same scarce supply of jobs, because of a low barrier. Same is true about RE, and given the supply is at 500K in CA, they’re gonna learn that lesson the hard way.
In many cases importance has little to do with renumeration.
Low barrier for teachers? So many of them?
Dude, every school in the nation is short at least two math and two science teachers. Why? Better pay and a LOWER barrier of entry for jobs in the private sector. Our pay is low because we are public servants - our salaries are paid by your and my taxes (why do public employees pay taxes on income from state employment?). YOU try a teacher credential program - it ain’t pretty. Oh, and then you must satisfy the state with a two year induction program (evenings and saturdays full of classes and seminars). Then there’s the $92 monthly union dues. $500/month going to a retirement system about as flimsy as social security.
All told, new teachers in San Diego (on the high end as far as national averages go) take home about $2500 a month.
There is no shortage of credentialed teachers. There may be a shortage of those willing to work for the low pay, although that’s not what the stats showed last time I looked. Many teachers are second income earners so the other earner subsidizes the educational system with applicants willing to work for low pay.
I don’t agree with the pay standards. I think good qualified teachers should be paid double what they earn in most areas. Perhaps if unions were wiped out the pay conditions could resemble those in the business world where pay hand performance had some correlation.
FYI I have been handed a real estate card by both practicing MD’s at all levels and Dentist’s. It happens quite often out here.
What you don’t seem to understand and so many miss is that even though their are 500k licenses only a small percentage actually practice full time. A smaller percentage of that who don’t have a spouse carrying them actually earn a decent living if you look at the census numbers the average agent makes $25k and the average broker makes $40k the last I checked. Like myself I practice part-time most of my income comes from my various ghetto palaces that I have accumalated. I made the money to acquire them servicing a niche. A damn good niche at the time but a niche nonetheless.
Most have “important jobs” to tend too and many jump in when the going is good and jump out when it’s bad. They’re mostly fodder for brokers to get dumbass luck business nothing more. Sure agents are going to shake out but they shake out everyday. Good or bad market.
I didn’t mean to imply that the barrier for teachers is low. They are on the supply side of the problem.
Many don’t get paid enough.
Tenured 1st grade teachers and other assorted low echelon grade levels in MAZZ pullin’ in $80k with 3 months off, 100% health care, and pension benefits?
F*ckin’ spare me.
Glorified baby sitters.
Kids today know dogshit save for dialin’ up some dip on their text messege machine or to score some alcohol for an underage drinkin’ party.
I thought you both made some good points. Worth reading.
If I stake my life on the results of a job, that is high-value. Pilots, doctors and surgeons are the obvious ones. Firefighters and cops are there, too. But it is also the anonymous worker who builds the high-performance tire on which I am crazy enough to drive 135+.
Maybe I’m mistaken, but i was under the impression that teachers, cops, firefighters, and nurses all earned more than 80% of workers.
And i know there are lots of millionaire plumbers, landscapers, carpet cleaners, etc., but i don’t think that means we stop encouraging kids to go to school to be doctors, dentists, engineers, phd scientists, etc.
You can get three degrees and be a starving writer, or starving academic, or starving editor.
Or you can learn a trade and make bank.
That’s what we should be teaching the kids these days. Can’t outsource a plumber?
Cops, firefighters, and nurses make more than the median (especially firefighters and nurses) but teachers do not. My wife is an elementary school teacher in WA with 3 years on the job and she makes about $40K per year.
My husband is an elementary PE Prep teacher with 8 years on the job. He has a Masters plus 90 units and he makes $55k a year. I don’t think he’s overpaid.
That’s a good idea. Go to a Goodwill store and buy a crappy suit. Wear a nifty name tag and make some sporty fliers that have some overpriced listings that say things like “Ultra Modern Home” and “Luxury Living” or “Breathtaking Italian Beauty”. Throw in some comments like “It’s in the bag” or “Heaven in 2007″ too!
Hope you get laid. Good luck.
I don’t need to make them up. I get them in the mail and they’re hanging on For Sale signs everywhere. I just need to get the best ones. I like the ones with poor grammar and spelling mistakes with imaginative text. What I need to do is get dressed up, stand in front of a Benz with my dog & a hot chick and put on a fake smile for a pic to make myself a fancy business card… to make the costume work.
Ha ha…sounds like you got the game down…let me know how it goes
That’s what happens when people turn to the television set (MSM) for advice on life choices.
“‘People that are in foreclosure are generally people that shouldn’t have gotten a loan in the first place; they were approved for something they couldn’t qualify for. You have to really look at what you can afford,’ said Kevin O’Neill, branch sales manager, at Countrywide Home Loans.”
So, Kevin… Why did you approve them then?!?!?
said Kevin O’Neill, (ex)
branch sales manager, at Countrywide Home Loans.”What a dope Kevin is. Watch for him in the papers. He’s gonna be in court and the prosecutor won’t have to look too hard for evidence to convict the moron.
This is like a drug dealer saying someone who OD on drugs should of not have been sold drugs.
Exactly. Cmment by the guy that sold the OD case the drugs.
“Experts say it’s inevitable that there will be a shake-out. The attrition has already begun, some say. ‘There may not be a real estate bubble, but there might be a real estate agent bubble,’ said Gino Blefari, president of Intero Real Estate Services.”
I’d rather take RE advice from Jello Biafra than Gino Blefari.
“California Uber Alles” We will go down more “Over All”
Soon wish we were all taking “Holiday in Cambodia”
Ahhhh, good ol Dead Kennedy’s.
imploder posts ” “California Uber Alles”
My friend, we will be Stalingrad.
:-)!
my smiley was for the jello biafra comment .
of course….
“‘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.””
We’ll see whatever market we want! We are the ones with all of the power! What a A$$!
There is absolutely NO indicators which say the market can, let alone will bounce back. I would hate to “speculate” as to how many recent buyers (debtors) will end up in foreclosure, but based on how few can afford to buy and how many do anyway, it cannot be a good thing…
That’s the best way to look at the CA market. The affordbility index, even after the last tweaks, stands at 1.9% for an average Korean War Era dump in the barrio. Places sold to drop the number from 5% to 4% to 3%… All those marginal buyers with innovative mortgage products are gonna be squirming when they realize too late that they were the last fools. Funny how the NAR and CAR conveniently overlook the elephant sitting in the front row at their symposiums…
Another example of the mush-spin of CAR and NAR. Sellers won’t accept new realities, buyers waiting for a market they won’t see. So … the market will remain flat even though even the realtors have admitted prices will drop in 2007? Hey Leslie: You can’t predict a drop and predict a leveling to occur at the same time! Someone wake my up when the BS is over and the affordability index has at least reached double figures.
“”“Kyser said two factors were keeping California housing relatively strong. ‘Our economy is doing well and the population is still growing,’ he said. ‘Yes, it’s a shift to a buyer’s market where prices may flatten some, but anyone looking for a blowoff like the early ’90s, forget about it.’””
This guy probably hasn’t been a economist long. I suggest he get a refund on his tea leaves. What’s coming in Los Angeles/California is going to make the 90’s look like an upswing. Forget tthe blog and the news articles. There is too much evidence on the street to say otherwise and god forbid if the Fed stops pausing. Bloodbath would be considered a good day. The stuff I’m getting on the phone from speaking to clients and other agents is something to behold. Lots and lots of folks are in trouble and there will be no spring swing.
“Bloodbath would be considered a good day. The stuff I’m getting on the phone from speaking to clients and other agents is something to behold. ”
Please share the gory details!
I share what I can some stuff I can’t I have friends and clients that read the blog. Don’t want to piss anyone off.
Second that! It’s Halloween… we expect gory details!!!
Please - DETAILS!!!
Yes, details, we enjoyed your stories the last time - after the party full of RE bulls.
RE-read that post several times!
Oh please don’t remind me of that, I’m still trying to shake that off geez…. One update though the lady who was trying to juggle two homes dipped into the equity of an elderly relative to save herself. The question is for how long.
Kind of her version of a “reverse mortgage”? Only the old relative doesn’t know of they’ve been “Reversed”?
Hey, mrincomestream I have to ask you the following: When was the last time you came across a CA borrower who qualified full doc?
I ask this because I cannot truly remember. it has been that long. I mean, income aside (it’s a given they don’t earn enough verifiable income) but what is it with people living in $600K+ homes with $2000 in checkings, $50 in savings and $100K in their 401K (which they have recently borrowed from)?
Even the $1M+ deals I’ve done have all been stated income (granted they are business owners and they do have verifiable reserves). I’m just amazed at how liitlle the average homeowner has in the bank.
Sorry, “$1000 in their 401K”
$1000 in a 401K, you really must have meant $100K, right? If they are over 40, means they are in trouble….
$1000 in 401K left after borrowing? I think you can only borrow 50%…don’t say they borrowed $1000 from their 401K! :-0
You’re not seeing anything different then what I’m seeing. You probably see more because I tend to shy away from the residential stuff unless it’s a referral. I hate dealing with the Tweedle Dee and Tweedle Dums(Residental Buyers and Sellers) of the world. I’m more into small cap . The last full doc I did see was last month but I winded up taking the guy stated after he threatened to beat me senseless if I asked him to provide any more docs or ask him one more question about his income luckily I found a lender with no hit to the rate. Older guy high fico below 50% LTV. You get the picture. He needed a loan like he needed another hole in the head.
“The last full doc I did see was last month but I winded up taking the guy stated after he threatened to beat me senseless if I asked him to provide any more docs or ask him one more question about his income”
“$1000 in 401K left after borrowing? I think you can only borrow 50%…don’t say they borrowed $1000 from their 401K! :-0 ”
I’m serious. I had a person with $1,000 left in their $401K that they had borrowed from. I ish you not.
I folded with laughter on that one. Too funny. i know EXACTLY what you’re talking about
Mr. IS’s post about the party was the best post ever on this blog!
You are a superstar, I encourage you to share a bit more.
You know reading about it in the paper is a lot different then actually being in it. You read and see things on T.V., in the paper and the blogs and you say ahh hell these dudes are sensationalizing this crap to sell papers and ad space. But then you listen to someone on the phone and it’s like “Wow” how can anyone be that stupid. Then you hear it over and over again and it’s like “Houston we have a big friggin problem”. I talked to a kid last week in the entertainment industry who did one of those one year arm’s it adjusts every 6 mo’s. A job he was banking on too make a load of cash didn’t fall through the project was cancelled. He’s been trying to sell on his own for the last three months. No luck. So he wanted me to put the property on the market. I refuse to be caught selling a condo so I passed it on. But here’s the kicker in order for him to sell this thing he has to bring in close to 60k in pre-payment and commission. That’s if he can find a buyer at 650k. I looked at the comps it’s not going to happen anytime this year. Luckily he has the 60k but I think having to pay much more than that will wipe him out. Needless to say he’s a little concerned. Claims he couldn’t live with himself if he bk’d but I don’t think he has a choice in the matter. The funny thing about it is the complex he paid 650k for when I was selling R.E.O.’s in that area of the Valley they were selling for 100 to 125k for something a lot larger then what he latched on too. When you see economists and other folks talking about how L.A. or the Inland Empire is only going to drop 3,5,10% they really have no idea or a clue of the market and how fast the downturn is coming. I’m actually starting to believe there is a PPT thats spinning the media to let masses down easy. Crazy stuff.
Thanks for throwing us a bone!
Yeah, really fascinating. Thanks.
“”Yeah, really fascinating. Thanks.”"
Maybe, but not for me it get’s depressing. As someone who had to work himself out of hole due to a layoff many years ago to see this kind of stuff is kind of heartbreaking especially since the last downturn in Los Angeles was not that long ago and had it’s own set of horrors. As the days go by and I get more and more exposed to what is going on in the streets I’m amazed at how soon folks memory lapsed and why people enabled their kids,spouses, loved ones, friends to get sucked into the craziness. I’ve got a deal on my desk right now, where I advised a guy to wait 6 more months see what direction the R.E.O.’s are going to flow see if what they say about the resets are true. What does he do a week later waltzes his dumb a$$ in my office with a signed contract on a quad with negative cash flow and a silly grin on his face. What can you do.
Again, thanks for your thoughts. I hear what you’re saying and you’re right. This bubble certainly has a depressing side, especially here in LA. You’d have to be callous to enjoy seeing people suffer even if they’ve brought it upon themselves through greed, fear or manipulation. Thing is, in ‘04 after many years of struggling my wife and I were finally in a position to buy a house. But with prices being so insane, we’ve been forced to keep renting. It’s clearly the right choice for us, but in some ways our life has been on hold. We’ve moved three times in the last three years (landlords selling caused two moves). While we make between 125-150k a year, it’s not enough to buy anything we’d want to live in. I’m no FB but being priced out, I still feel like a victim of this market in some sense. With so much money having been pulled out of this pyramid, there’s no way for it to end well.
On the sunny side, at least I don’t have a bankruptcy hanging over my head.
If there’s one thing I love about this blog, it’s honest anecdotes like that one.
No need to mention names…just the situations.
If the Federal Reserve knows what’s good for it, it would be reading this blog.
This is the finger on the pulse of America.
Again, nice post Mr. Incomestream.
I might add this glimmer of hope to your depression, though.
We aren’t going to let things get so bad that they aren’t livable.
That’s the nature of the people on this blog.
We do our homework, we give a crap, and we participate.
First, however, the prices of the homes need to drop by 50% so we can actually buy one and not go broke owning one.
I say this because we are responsible, when others have not been responsible, and we did not give in to peer pressure.
That made us stronger.
What is going to happen over the next couple of years will be like a giant enema, unclogging the most severly constipated patient. We need to clean the pipes.
After that, however, things will be much better…
…because by then…
WE’LL BE IN CHARGE.
I don’t feel sorry for anyone that gets in way over their head spending 50%-70% on shelter. They should rent or move somewhere cheaper - period. There’s a reason that lenders had a formula for loans that allowed 30% or so, depending, for shelter. That’s because the number was reasonable based on data.
ok ill bite… where is the original ‘party’ post.. if its that good i have to read it!
I was caught in the early 1990’s bust (learned a good lesson) where I saw prices drop by 1/3. This time it will be by at least 1/2. In both cases it is playing out via the same script (denial, spin, fear, etc.).
Mr. Kyser is just running the standard spin to try and keep the Titanic afloat a little while longer while he tries to find a lifeboat.
“”…but we don’t have anything like Las Vegas or the Florida condo market.
“Kyser said two factors were keeping California housing relatively strong. ‘Our economy is doing well and the population is still growing,’ he said. ‘Yes, it’s a shift to a buyer’s market where prices may flatten some, but anyone looking for a blowoff like the early ’90s, forget about it.’”"
What he is saying is a guess. And Economist’s guesses are as good/bad as anyone elses. No one knows what will happen. From my view, trying to qualify people for loans, I am more concerned with the higher priced markets. They have more room to drop. In areas like Los Angeles, where only 3% of the people make enough to qualify for the median priced home, big reductions are needed to get back to normal. I will not predict, but a big crash is more likely in high priced areas, just because of this non-affordabiility inbalance.
I agree, at least here in CO there is enough room in a $1,000,000 house for 3-4 families to gang up and pay the mortgage/rent. My mom has a house in MI (almost paid for) that, in a pinch, can hold her, grandma, my family and my sister - it would suck big time and we’d be screaming at each other a lot, but it’s better than living under the Speer Street bridge in Denver. Dad’s got an extra house too, needs some (ok loads) of work, but if I’m living with dad, it means I have no job.
Climber, You touched upon a very important fact: Housing Elasticity. When all the pundits espouse that we can not build housing fast enough, they miss the effect of Housing Elasticity. The kids graduating from college move home for a couple of years. Elderly parents sell the home and move in with the boomer children. The Yuppie living alone in the 3 Bd, 2 Ba condo, gets two roomates. You can produce a 10% vacancy factor just out of economic necessity of the general population. Some one on this blog even suggested counting on the RV parked in the side yard of America, to factor in this effect. The fact is, there are is a lot of underutilized housing and vacant bedrooms in this country and if the bubble popping leads to a recession, you will see very substantial consolidations. Supply and demand is a fragile balance. You only need 1 extra seller to produce the imbalance, just as one extra buyer drove the frenzy. This is the most overlooked factor, which was taught to me by a real estate genius named Bob Waller, as I humbly drove him to the airport whenever he needed a ride. He told me this in 1989, just before the 1990 crash.
“The fact is, there are is a lot of underutilized housing and vacant bedrooms in this country and if the bubble popping leads to a recession, you will see very substantial consolidations.”
JR — good point. I’ve already seen a couple examples of this very near to me. Very quiet — nothing said — just extra young people who didn’t come and go every day before now.
I keep wondering how anyone can estimate the amount of indefinitely-unoccupied housing in the country.
I agree, at least here in CO there is enough room in a $1,000,000 house for 3-4 families to gang up and pay the mortgage/rent.
Who in his right mind would do that? Renting an apartment is far cheaper and a far superior lifestyle.
“Who in his right mind would do that? Renting an apartment is far cheaper and a far superior lifestyle.”
I agree that 3 to 4 families is a little overboard, but apartment living is hardly a superior lifestyle. I, personally, have never even considered it.
sensible, think this will make any difference?
Mortgage brokers propose loan reforms
http://tinyurl.com/y2cz4r
If they eliminated the ability of the unlicensed to originate loans that would cure 50% of the problem. That and the elimination of things like CFL licensing where all it takes is a 25k bound and your in business
I think it could make a big difference, even though it’s a little late in the game. I’m sure the larger lenders would welcome it, too (less competition for business).
I, for one, would welcome sweeping changes. I think mrincomestream is right: It should be required that any individual involved in originating loans should have their own broker license and not just be able to use the license of the brokerage owner.
The proposal will help for the future. But enough incompetent/dishonest/criminal lending has been done by brokers in the last several years to cause major damage to the housing market for years. I think part of the reason for this proposal is fear for severe legislation when all is known about what actually happened. The California Mortgage Brokers group wants it to look like they have actually done something.
…anyone looking for a blowoff like the early ’90s, forget about it.’
There’s probably a reason why really big bubbles don’t come several times each generation: people remember. Almost all people who are in a position to buy saw the dot.com bust. Most lived through the early ’90s housing down turn. Many saw the late ’70s downturn. Why should they think this time is any different?
What I love are the people who put a $490,000 house on the market and it gets no lookers for two months so they lower the price $5000. A lot of these houses will be selling in the mid $200’s soon enough.
They might be saying, `You know what? I need to go get a job.
Wow - Selling real estate is not a job after all. It’s about time somebody in the R/E industry said something that made sense. Who knows how many agents in the industry have gone 5 or 6 months without a sale???? Run for the exit while you still have time before all of the Wal-Mart cashier positions are filled?
Mr. Buffet, what is your secret for getting rich?
” I sell too early “
“‘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.””
——————————————————————————–
Buyers waiting for a market that they’re not going to see? This, along with “the worst is behind us” message seems to be the new NAR talking point. If this RE crash keeps on with the same trajectory in 2007, it’ll be interestng to call the CAR on their predictions.
“I don’t think they’re going to see,’
Lady, I don’t need to see it, I can SMELL IT!
imploder posts ” Lady, I don’t need to see it, I can SMELL IT! ”
Like old war movie, the guy “likes the smell of napalm in the morning”……… New housing war “I like the smell of poop in the pants in the morning!”
Does Apocolypse Now qualify as an old war movie? Hmm, feeling old all of a sudden.
“Scott Kucirek, general manager of Prudential California Realty, said the trend is fed by sellers refusing to budge on prices. ‘Competitive sellers need to lower prices or risk missing the sale,’ he said.”
Blame the sellers for the lack of buyers-pretty funny but seems to be the song the RE professionals are singing now.
Homeownership is near or at 70%, with HB moving inventory NOW, just how much forward demand for housing can be left?
“Homeownership is near or at 70%…”
Do you know how much of that is owner-occupied, principal-residence ownership?
i interpret that to mean that 70% of households do not rent their principal residence. The real scary numbers are the 30% second-home ownership, the 25% third-home ownership… and the 10% more-than-six-homes “ownership” just guessing these numbers
posted ” “Scott Kucirek, general manager of Prudential California Realty, said the trend is fed by sellers refusing to budge on prices. ‘Competitive sellers need to lower prices or risk missing the sale,’ he said.”
They do not understand that the German Army is “rolling hot” now. Get smart or get mashed under the tank treads.
Who else are they gonna pound on? there ain’t any buyers left to b#tch at! What have you people done with my PAYCHECK? (sob, sob,…. sniffle, sniffle)
I think Mr. Kyser means that we might see 95-97 prices in Southern California RE again. He is very smarth “Eccccconomist”…
“‘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.””
I’m so damn glad Leslie SIMPILTON-Young is out on the left coast!
She’s really good at comedy. We’ll sell her to you. Act now and we’ll ship for free.
“Inland economist John Husing said homebuyers won’t become active again until they are convinced it is a good time to buy. ‘What the market is facing is a buyers strike, and until buyers see prices come down they probably are going to stay on strike,’ Husing said.”
What the market is seeing is the combined effects of seven years of unprecedented real inflation which has priced out almost everyone from California housing coupled with a collective realization among buyers that prices are falling and have much farther to fall to revert to historical levels of affordability. You will notice that absent from all the propaganda the REIC representatives are spouting to the press these days is the continued insistence that “California real estate prices always go up” (with the exception of the faith-based prophesies of real estate evangelist Gary Watts, of course).
Getstucco:
The new York times a while back had an article and chart (I will dig around to find it) that showed US RE prices since 1898 without inflation. 83% of the price increase since 1998 was due to the bubble rather then inflation. the is easy credit etc.
Thanks — the chart is by Robert Shiller, and don’t post it here on my behalf. That chart, which gets posted here every two weeks or so on average, is the basis for what I was saying about the unprecedented level of real home price inflation since 1998. I hope Shiller’s research analyst knew what he was doing, as a lot of conviction about where we are and where we are heading is riding on that graph…
What the market is facing is a buyers strike, and until buyers see prices come down they probably are going to stay on strike,’ Husing said.”
Slight correction, John: until buyers see prices stop falling they are going to stay on strike.
As a long time reader/poster here (since before registration was required).
I have just one thing to say to Husing, LAY, Thornberg, Kyser, Watts and every other 2 bit wh@re “economist” out there, that obviously lurk here.
“F@ck You!”
I am tired of wading through their Bullsh!t.
I will buy when it makes economic sense, when compared to quality corrected rents with a reasonable and historically supported premium for owning.
You know have 2 months of YOY declines in Orange County. The tide is going your direction!
Ahh…I remember the pre-registration days…too bad all the spam/trolls ruined it for everyone.
Anyway, I just talked to Gary Watts and he said you should buy now because it will be “Heaven in 2007″.
If you allow a premium for owning based on historical norms you will buy too early. All bubbles overshoot on the other side. My new mantra is a 1200 sq ft house within 4 blocks of the beach in FL for 100 ounces of gold. (More a housing bear than gold bull.) I think it is a reasonable expectation, and I’m targeting 2008.
But many people who are trying to calculate bottom are doing so by looking at the previous bottom (which also overshoot) and adjusting for general inflation. Really, bottoms are almost as difficult to find as tops. You really have to estimate comparable rental costs over the period of time that you are likely to own the house. Do you come out far enough over that time period to make up for the lack of mobility and the risk of putting alot of your eggs in the one basket. Transaction costs are high enough that whether it makes sense to buy or not is very dependent on how long you anticipate staying and is therefore not the same for everyone. Of course now prices are so high that even owning for 30 years won’t mean breaking even.
One complicating factor is the degree to which the overbuilding of the last few years will send rents downward. My guess is that since rents are more responsive to market forces than sales prices, we’ll see how that works out by late 07 or mid 08. It will be much easier to see whether buying makes sense by then.
Couple of questions regarding rents:
1. Why is there pressure on rents to rise currently?
2. If lending restrictions get stiffer, inflation is running higher than stated by the government thus reducing actual savings, and there is a preponderance of people who see buying as a bad investment as well as the portion of the 30% of the population that can’t buy due to income/credit/ect… wouldn’t the expectation be that rents in many markets will hold if not increase? Especially in markets that haven’t had much in terms of affordable housing built… it seems anything built in Mass these on spec or in developments is pushing 3000sqft.
Also, for MrIncomeStream: Were you in the game last down cycle during the early nineties? How did rental property (i.e. multi family/commercial) do during the downturn in terms of value?
I think in the short term that there has been considerable transfer of supply from the rental => sale market, (condoization) thus reducing the supply of rental housing. Of course between empty flips and condo conversion in progress there is alot of housing that has been temporally removed from the supply side of the equation. In the very short term, supply of rental housing has been decreasing faster than supply. Depending on how long banks hold onto their REOs, there is alot of hidden housing supply that will come up in the next year or so.
Yes, In short they took a beating rents dropped in some area’s by 50%. If you’re not an experienced operator I wouldn’t suggest buying right now. I have 2 in escrow right now but they cashflow at pre-bubble rent and the upside is tremendous. Even if market takes a 50% cut worst case scenario I zero out.
“‘We haven’t seen the bottom yet, and we won’t see bottom until 2007,’ said econmist Christopher Thornberg.”
Group think really svcks when the media takes the opinion of every “expert” at face value. What information do these guys have on which to base their forecast of a bottom in 2007, if every other RE crash in history took at least four years to bottom out? And why is the press so quick to quote these “predictions” without making the slightest effort to scrutinize whether they are reasonable?
Much more eloquently said than my post above, just a little frustrated today.
If they can hurl insults at bubble bloggers, so can I.
sunset, go to Turq’s and have a beer buddy
“‘They bought with no money down and then today the houses are worth the same or less than when they purchased, and so there’s no room to refinance into a more favorable loan product. When the payment adjusts upwards there’s nowhere for them to go. The equity isn’t there. That’s where you are going to see the squeeze,’ he said.”
is there a way to find out how many people in cali are in this position before it gets to the forclosure figures?
Pete
Live in downtown L.A? I love the smell of urine soaked walls. Nothing like wandering around after you were dumb enough to open your wallet and reveal you had a $20 bill in there, then look back and see those friendly folks following you to make sure you were okay. What a thrill to drive to downtown Los Angeles and get a swarm of meter people watching you to see where you park so they can come back in in 29 minutes and give you a big parking ticket 2 seconds after the 30 minute runs out. I really love rubbing shoulders with the hordes of illegal aliens giving you filthy looks if you’re an anglo and having to watch out for the used diapers dumped in the gutter. C’mon! Who wouldn’t want to live in downtown Los Angeles.
I pulled into a alley behind the LA Athletic club on 7th one night. Scared the S**ht out of me. Thought I had landed on the Clock Work Orange set.
“Kyser said two factors were keeping California housing relatively strong. ‘Our economy is doing well and the population is still growing,’ he said. ‘Yes, it’s a shift to a buyer’s market where prices may flatten some, but anyone looking for a blowoff like the early ’90s, forget about it.’”
Anyone looking for an unbiased assessment of where we are headed from this guy, forget about it.
OT: Remember all the comments about torching your house for the insurance because it was the only way to get out of it? I think that has just happen in S. Cal.
link please
Is there a place I can go to lookup the listing price of a unit which just came on the market in my O.C. development?
Try ziprealty they hassle you the least.
Type in the address and you get all of the MLS listings.
That would be a friction fire… caused by the insurance policy rubbing against the mortgage.
Got that term from a grizzled old volunteer firefighter I used to work with…
LOL!
Most of Bay area first time buyers are asians and most (not all) of them have one aim - to buy a house / car bigger and better than other people they know. they’ll work like crazy and spend huge percentage of their income after this even if it means sacrifising life styles. Even though they are well educated they don’t realize they are just working to pay for someone elses retirement. The rate of immigration into bay area has definetely slowed so the pool of greater fools is shrinking. The wise ones will sell and can comfortably retire elsewhere.
Interesting point but what facts do you have to back this up? I’m curious as I sold my house in Saratoga in late ‘05 to an immigrant Asian couple. They weren’t first time buyers though…they already owned a home in Cupertino.
I think you should capitalize on this knowledge, leverage your self and purchase any homes these people might be interested in. “this is Not investment advice”
Cause I have a friend DESPERATE to get out of San
Fran. and at an excellent address. So I have trouble believing your antidote.
I just have to say: it’s been a kick-ass day for bear news. I’m loving it.
OT… Sorry we have a much bigger problem, brought to you by America’s favorite space kadet and father of the internet.
http://www.space.com/news/061026_gore_space.html
“i’m cereal. Beware Man Bear Pig!”
Oh yea this is so freaking controversial
Former U.S. Vice President Al Gore has called for better use of the “space resource” to battle Earth’s climate crisis, enlisting entrepreneurial muscle to help solve global issues that threaten the planet’s habitability.
Gore said he has long been a fan of faster, cheaper, better approaches that allow the private sector to exploit the space resource “in a responsible and creative, and cost-efficient way.”
Why arent you killing brown people in Iraq in support of your glorious leader, you coward.
SPF warns, down 4% after hours.
A builder’s share price drops on bad news? How perverse!
These are all great news stories, but I’m here in LA, day in and day out, and I’m not seeing any big increase in inventory, and very little in the way of price reductions. Yawn.
Great, then go buy something already.
Here in LA? Nah, no upside, crappy cash flow. But some of the outlying areas that are actually showing declines, are possibilities for 2007/2008…
Do you not get it from the last thread. This site is not about buying apartment buildings to cashflow. You are either a troll or you must have blinders on as to what is going on in SoCal.
JWM, just because you are hanging around here waiting for just a house, doesn’t mean that is the case for everyone here. I’ve seen SMLandlord, some slumlord guy, mrincomestream, and a few other multi-residential income investors. I’ve even had a guy e-mail off this board asking for advice. So, if you are not interested in this topic, that’s fine, but don’t tell me what I can and can’t post. And as for being a troll…hey, I call it like I see it. When I actually see price declines and/or lots of for sale signs here in LA, I’ll be the first to report it.
Fair enough lainvestorgirl, but I just don’t understand your angst about the returns generated by these apartment buildings. There are other investments out there besides commercial real estate that will yield reasonable returns without the same degree of risk or effort. The returns on the apartment building you cited below are abysmal. I earned better returns on monthly basis than what is cited annually in that listing when I was using conservative trading strategies (collar trades and covered call plays mostly) while looking for a job last year. The rates on T-Bills right now are better than that. You really ought to consider parking your money and just wait out the market…time is on your side not the sellers side.
I invest in RE, that’s what I do, so far it’s been good to me, even if there is a downturn or whatever, I make good a return on my properties so I don’t care. I have an open mind regarding other types of investments too, and I have some metals and stocks and all of that, but, I have a special talent for dealing with white trash deadbeats, mentally ill trust fund babies, large clans of illegal aliens, etc. Everyone has to be good at something, right. And, I like fixing up my properties, what’s wrong with that. So give me my space on this board, please.
She’s just a troll. The West Coast version of VA Investor. I doubt either one of them owns a thing. All BS. Nobody could be as dumb as those too and have any money.
She’s just a troll.
Agreed-Anyone who enjoys “dealing with white trash deadbeats, mental ill trust fund babies, large clans of illegal aliens” should be locked up in a mental institutuion.
Thank you, thank you. I finally figured it out. There are some here who are unable to handle the fact that, while they continue to rent, there are those who bought before the bubble and actually have income properties in addition to a house. What’s the big deal, that doesn’t make me a multimillionaire…but apparently it’s enough to create a whole lot of jealousy on this board. I don’t know why you find it more enjoyable to throw insults around rather than try to learn how to create this situation for yourselves, which may soon be possible to do, but I guess that’s the nature of perma-bears, perma-whiners, perma-complainers and, probably, perma-renters. Good luck, and good-bye.
wow… in reading all those posts backwards i have to agree with lainvestorgirl… you guys were out of line.
there are none so blind as those that…… WILL NOT LISTEN!!!!
I agree with JWM. Not that I don’t care. It’s just that you seem so bound and determine to “grab the double edged sword”. Right then. We will guide you through your financial hemorrhaging.
Hopefully the LA bankruptcy lawyer who posts here will grab her contact info.
That is, if she really does own anything.
I highly suspect that she doesn’t have actual cash to invest but rather only credit or other RE collateral. That would explain the aversion to equity investments in my mind.
You have got to be kidding me. You must live in Bel-Air and don’t venture past the gates much.
I would love to be wrong - if I am, go ahead, post some listings with significant price declines. I’m just not seeing it.
Define significant or maybe I should say define decline. Ghetto palaces in South Central at over 100k a door can be had for 85k a door now maybe less. Hell, awhile back I posted a Culver City piece for you that had a 10% cash on cash when was the last time you saw that. Or are you a true bottom feeder looking for 15-20k a door like in the good old days.
This is what I’m seeing:
http://www.loopnet.com/xNet/MainSite/Listing/Profile/Profile.aspx?LID=14857425&RecentlyViewed=true&ItemIndex=2&PgCxtDir=Down
Yea, that’s garbage. I saw one in the Hyde Park area that was interesting.
http://listing.loopnet.com/14815995
I was going to call this guy to see what the deal was there’s plenty of juice there. Good deal as it sits knock 85 to 100k off it’s an excellent play. I’ve got 2 similliar to this wrapped up now farther Northeast closer to the 110.
That one’s not bad. It’s a sad day when I have to say that about 10 times gross in that area, but those are better numbers than I’ve seen in a long time.
LOL stop it you’re making me pine for 15k a door master-metered brickers downtown. Yea, but I know what your saying I remember when stuff like that was going for 25k a door 5x 6x gross. But then again the money was more expensive then too. You can still buy in at 6.5 to 7.125%. Which is not bad. Considering when brickers were 15k a door at 10% on the money.
Plus on that deal you have at least a 30% bump on the gross. I would not sleep nights untill I had gotten at least a 15% bump.
I’ll take the 2nd one please but only if it comes with the low rider with Daytons (TM) pictured.
lainvesrorgirl posts ” These are all great news stories, but I’m here in LA, day in and day out, and I’m not seeing any big increase in inventory, and very little in the way of price reductions. Yawn.”
LA…. wait, wait just wait! Keep your power dry. Your time will come and very soon!
We have past the “tipping point” and are in fact in “free fall” I am not just talking out of my rear end. I am waiting too.
The worst part is the pure lack of inactitivety…. pure zero month after month…. the deadness, nonevents, the blackness… the slow month by month bleeding of wasted money on failed ventures…… the lenders beating you down on a lost cause.
Save your time and money and when these miserable are at there worst strike!!!! With a sub-human price!
Glad too help.
Alright, Newman, we’ll wait together. Thanks to this board, at least, waiting has actually become kind of fun.
girl…….don’t get high on your own supply.
I think need some more alzheimers medication.
comprehension not forth coming……
The median price last month for newly built houses and condos and condo conversions locally was $413,500, down 17 percent from a year earlier, with analysts speculating that much of this change was the result of an increase in lower-priced condo conversions.”
“On sales, DataQuick said San Diego County’s new-housing total was 885 transactions last month, 37.5 percent lower than in September 2005.”
It’s on like Donkey Kong beeyotch!
ben- can we get an evening bits bucket?
good idea
“The reason for the downturn is sellers refusing to lower prices”. That’s classic diabolical realtyspeak. People aren’t that dumb.
From a realtors perspective, the downturn is about declining prices, its about declining sales volume. So from their vantage point, the problem is that sellers are “refusing to lower prices.”
The thing to take away from comments like this isn’t that realtors are idiots or even deceptive. Just like most people, they primarily perceive the world as how it affects them. As such, potential buyers just need to keep in mind that the realtor’s primary focus is him/herself.
San Diego foreclosures have now passed the 1000-mark:
http://www.foreclosure.com/search.html?st=CA&cno=073&z=&tab=f
It was about 400 when I strated tracking it 6 months ago.
Now it’s 1009 and rising.
SD Zip shows 105 new listings on 10/26/06 (today!) and 200+ “newly listed” since yesterday. Is it normal to see so many new listings a few weeks before the holiday season? I am beginning to think this thing is going to crash land before the Super Bowl ever gets here.
P.S. Note that a 100-per-day rate of new listings per day = 3K new listings if sustained for a month.
PS….GS
don’t forget the drill……….-50% from the top.
You might recall I was telling you about a block of land I put an offer in on.
They came to the deal……..yeah.
They paid $300,000 for it………I got it for $150,000.
Of course I’m in Australia, but I expect you to advise me when you get your new home -50%. Now with your eloquent tongue you might even achieve -55%
What’s “footie” and why is it that you “luvs” it?
It’s because we’ve reached an emotional ‘consensus’.
USA Today had the Housing Bubble on the front page today, in the form of an artical about the shocking(?) change in the market.
All we need now is the cover of Time Magazine, and you’ll see them listings explode.
Anyone wanna guess about the arrival of the Time cover?
My guess is we’ll see it in December.
“‘People that are in foreclosure are generally people that shouldn’t have gotten a loan in the first place; they were approved for something they couldn’t qualify for. You have to really look at what you can afford,’ said Kevin O’Neill, branch sales manager, at Countrywide Home Loans.”
Good lord!!! Are you kidding me? This guy is from Sonoma, and this is the very same guy that literally tried to get a friend’s mother (retired) to buy a $950,000 chit box in the Montini development. She is retired and is caring for two aging parents, and told him that she couldn’t qualify for such a loan, and she could most definitely not qualify for it when the payment reset…and she said that he told her- that it was no problem…easy- she could always refinance or sell. You gotta love this guy… just get this handy dandy, take it in the butt negative -amortization loan. You can always refinance or sell. Everyone wants to live here.
He then went on to brag… BRAG…that over 85% of his customers use that form of financing!
They were approved for something they couldn’t qualify for?
Well, he would know. :-/
For traders, illiquid is a very scary term which is why this entry caught my eye. It reminds me of firms holding bonds that just throw out a price for a security out there to see if anyone will buy it because they can’t figure out how to price something.
Homeowners should realize that Amaranth happens.
lainvestorgirl,
look at the zip charts for Sept., ignore the median and pay close attention to the price per square foot. if you can’t see the declines, then i don’t know what to tell you.