Post Local Housing Market Observations Here!
What do you see in your housing market this weekend? Builder incentives? How about a related television program? “Real estate brokers and others looking for a deal gathered outside the Fresno County Courthouse for this home foreclosure auction. The number of foreclosed homes in the Valley has risen dramatically these past few months.”
“Foreclosure specialist Billy Richardson said, ‘Families got into these adjustable rates about 1-2 years ago. These interest rates are going up and now their mortgage rates are sometimes doubling. They’re not able to make these payments, so a lot more homes go over here to the auction downtown.’”
“California’s housing production plunged 47% last month as builders curtailed construction while working to whittle down their existing supplies of unsold homes, data released Friday showed.”
“Now they are trying to unload their so-called standing inventory of homes that are under construction or completed. ‘Last year we had a waiting list of buyers interested in our homes before they were even built,’ said Wes Keusder, a builder and chairman of the California Building Industry Assn. ‘This year, however, it seems as though we’re the ones who are waiting.’”
“The home builders’ association reported that 45 percent of builders and developers said they cut prices in September to maintain sales volume. The cost of incentives was not reflected in the new-home price data, which suggested that builders were making even less money from each sale than the shrinking official prices would indicate.”
“Cancellations were also left out of the new-home statistics. The Commerce Department records a new home as sold when the buyer and builder sign a contract. The home builders association said that cancellations had jumped by 50 percent in the last year.”
“‘The cancellation rate is really big,’ said Dave Seiders, chief economist of the association. ‘It’s exploded over the last year.’”
“Cancellations were also left out of the new-home statistics. The Commerce Department records a new home as sold when the buyer and builder sign a contract. The home builders association said that cancellations had jumped by 50 percent in the last year.”
“‘The cancellation rate is really big,’ said Dave Seiders, chief economist of the association. ‘It’s exploded over the last year.’”
In other words, new home inventory is much larger than is being reported.
some sales at early 2005 prices N VA
DC wapo paper just happy talkl to keep builders ad $
Buyers in Las Vegas have evaporated like a marks’ bet on a green felt table. An oasis of easy profit was, in fact, a mirage; the croupiers’ stick has swept clean the dreams of rubes and gamblers. Illiquidity has come to the desert.
Well put. Buyers have pretty much disappeared up here in the Puget Sound area as well. We offer much less affordability than Las Vegas. Contrary to what the realtors and builders want to believe, not many people can afford homes over $300k. Unfortunately for them, the majority of asking prices are much higher than that. There were nearly 450 posts on craigslist today.
I did consider buying a house when I first found out that we’d be moving to Vegas. Then I checked the local housing market. There is no way that salaries here support housing prices. I’m renting and have no intention of moving any time soon.
It’s just as much work to move into an apartment or rental home as it is to move into a purchased home. Sellers seem to forget that. Once a potential buyer has moved–whether it is into a rental or into a purchased home–that buyer is effectively out of the housing market. Houses have to be a really good value in order to entice buyers to make back-to-back moves. I have yet to meet a single renter here who thinks that housing prices are worth that hassle.
“It’s just as much work to move into an apartment or rental home as it is to move into a purchased home. Sellers seem to forget that. Once a potential buyer has moved–whether it is into a rental or into a purchased home–that buyer is effectively out of the housing market. Houses have to be a really good value in order to entice buyers to make back-to-back moves. I have yet to meet a single renter here who thinks that housing prices are worth that hassle.”
Peggy — that’s an excellent point and an original post as such. While I think there may be some DNA-deep gender differences in “survey says,” on that one, it is yet another obstacle that FB sellers will not have taken into account.
A couple of months ago a local homeowner made a big price cut and got an offer in a week. A couple weeks ago I posted about another motivated seller that cut the price by $100,000. As of two days ago, no offers, and the sweat is forming on the sellers now. This is in Village of Oak Creek, Arizona.
MSM at work- even LIErah is submitting to this blog
They fear this blog most of all. MSM, that is.
Ben, you must be proud.
Although no market is immune, I would have guessed that Sedona/Oak Creek are would be the last to succumb. Do you know of any reason why it’s falling faster there than in other parts of AZ.
Best guess is that there were more speculators than people thought. It isn’t falling as hard as Phoenix, but prices went up there more than any other place in Arizona, % wise. There is also no real jobs base and I suspect the economy is going to suffer, post bubble.
Flagstaff is cracking up too. Also many speculators.
Zillow is finallystarting to show some significant declines in Flagstaff. Not sure how reliable their estimates are, though…
Zillow is fun but I believe they overprice property value..more hits for Zillow more advertising dollars.
Let’s see. General contractor friend had three million dollar beach home type projects lined up in the summer and now only one of them is going to start building. The other two are in wait and see mode.
A customer of mine put his lake house up for sale in the 600K range and it sold for slightly less within a month or so but it was bought by a realtor with cash.
Subcontractors starting to grumble about slowdown of work.
Around here, Bozeman Mt., subcontractors are grumbling about not being paid. One general contractor has eleven leans on his two newly built houses, and is promising pay, next year, when he sells the seven houses he planning to build next summer.
Isn’t it much harder to sell with a lien against the home? I thought the title search & title insurance company would let the buyer know about this.
They would have to be cleared (paid) before the sale of these houses could close.
Dang, look what just popped up on Yahoo’s page:
http://news.yahoo.com/s/ap/20061028/ap_on_go_ot/america_the_bankrupt
Sound familiar?!?
- ‘You can’t solve a problem until the majority of the people believe you have a problem that needs to be solved,” Walker says.’
Polls suggest that Americans have only a vague sense of their government’s long-term fiscal prospects. When pollsters ask Americans to name the most important problem facing America today — as a CBS News/New York Times poll of 1,131 Americans did in September — issues such as the war in Iraq, terrorism, jobs and the economy are most frequently mentioned. The deficit doesn’t even crack the top 10.’
Great article!
I believe that Clinton did away with the 30 year Treasury note…it allowed the goverment to skate away and leave the mess behind to the following generations. Are they not going to begin offering the 30 year note again?
Sorry it was W who got rid of it in 2001. It was re-instated last year.
http://www.washingtonpost.com/wp-dyn/content/article/2005/08/03/AR2005080300492.html
Are you really trying to blame Clinton, who left us with a surplus. How apparent can it be that the bulk of the blame lies with the current White House and Congress?
(You can add Greenspan to the mix.)
I ask this sincerely. Why do people of both parties get so defensive for “their” candidate? From my vantage point, I see political candidates (in today’s day and age) as salespeople. They are selling you a script for your vote. They have staffs full of people to get the “pulse” of America. They only want to know what it is that people want. Once they have figured out what people “want”, now they can sell a story for a vote. What they are saying isn’t even their own thoughts. They are the thoughts of multiple staffs (who have studied pyschology, politics, sales, leadership, human behavior, etc). This is not true for all. I am sure there must be some who take their oath to the Constitution seriously.
My entire life I have heard about a deficit. I have heard politicians say it doesn’t matter. I have heard some say it does. I have never heard one (other than Ron Paul, and I am not advocating him as a political candidate, just stating what I have observed) be able to speak intelligently as to why it either does or it doesn’t matter. Until studying economics on my own, I would have been easily swayed by one of the other. It is easy to be swayed. If you aren’t knowledgable on the subject, the fancy terms that are used leave the average American totally confused. Who to believe?
Well, with just a basic knowledge, one can determine pretty quickly that almost 9 trillion in debt is a catastrophe. The argument that it is only X % of our total GDP is bogus to say the least.
To use an example I recently saw in print, have the gov. sell debt to the Fed. Have the Fed buy it and create money. Use the massive amount of debt to employ people to dig a monstrous hole in the middle of the US (or just employ them in the Dept of Homeland Sec). Voila. GDP just went up as these new dollars are circulated throughout the economy buying trinkets and doodads created in China and sold here at Wal-Mart. Wal-Mart makes big profits, GDP looks great, Stock booms. Only problem is we are more in debt, with a big hole to show for it. Sec Snow says it is OK. Foreigners still have an appetite for our debt. No, unfortunately, that is not a sound economy. And unfortunately, that is not what you hear on any discussion on any financial show in the MSM. The worst part is that it only took that long to explain.
So I would ask again why people feel so inclined to stick up for their candidate? They aren’t royalty, just someone you have allowed to take your money and use it responsibly. I don’t see how it is possible to move forward until we can get past which candidate was the lesser of two evils. Until a politician puts the interests of the country number one, whether he is Dem or Rep is a debate that accomplishes nothing.
Well said, Kerk. I totally agree and don’t understand why anyone would defend either party. They are different sides of the same coin. BTW, this country didn’t run a surplus under Clinton (he was spending the SS surplus). Bush is a dolt (just for balance).
Second that, kerk.
Political affiliations are familial. Our only hope is to form some more functional families somehow.
The American public are paying the price of past deficits and over population today. In 1973 it took 1 1/2 to 2 years of average income to pay for a house in America. Now it takes five times the time. It takes far more hours of work to pay for an ecuacation, auto or medical care. That represents a huge decline in our standard of living.
If our living standard is measured by non economic measures i.e. GDP or per capita income, how have we done since 1973? Oceans, forests and rivers with fewer animals. Greater crowding and polution. Suburban sprawl.
Economy runs best when the gov keeps its hands off. I submit that the Clinton years went by particularly well because there was an opposing party in control of the legislature. Neither side could get what they wanted done, so the economy chugged along nicely. Don’t think that’d fix us this time around, though.
Well said Kerk!
“…the borrower is a servant to the lender” Proverbs 22:7
A thirty was issued in Feb 2006. Thirties are scheduled for Feb, May, August, and Nov of 2007. Check out treasury direct for details.
http://www.treasurydirect.gov/indiv/products/prod_tbonds_glance.htm
“So I would ask again why people feel so inclined to stick up for their candidate?”
Because people (both parties) are not FREE THINKERS.
I am a social/economical (not religious) conservative and I believe in conservatives principles, I used to be liberal. I gave this administration the benefits of the doubt, but after three years of arrogance/lavish spending/thoughtless & reckless acting, I starting opposing current administration policies. In my work there are lots of conservatives who blindly support this administration and they are surprised of my views.
Peoples blind loyalty to either parties is sick.
I must nbe the mirror image of you from the other side. I tend toward liberal politics but the most important thing for me is FREE THINKERS. I’d rather have a conservative who could think for them self and be willing and able to craft a good compromise solution to a complex issue rather than a True Believer who I was OK 90% of the time with on the issues who couldn’t talk or compromise with others.
I believe they used to call this kind of politician a statesman. We have precious few of them around these days.
I think you guys, and Kerk in particular, have it right. What’s the difference between the Democrats and Republicans? Nothing. They are just two parties run at the extremes that squeeze all of us that think in the middle. We need a party that will bring together the 80% in the middle and lock out the 20% in the extremes.
I have even swung into the, “I’ll be glad when Bush is gone” camp. I have not swung all the way to the, “blame all of the world’s problems on George Bush” camp and I never will. He screwed up Iraq. He screwed up the economy with pressuring for Greenspan’s rate cuts. You know that had to be happening. His friends are corrupt. He spends every dollar he gets and even a bunch he doesn’t (since he won’t raise taxes on his buddies).
The parties need to stop spending and get this house in order. Until then, we should all go into opposition. Criticize ALL candidates at will until their ears finally listen.
I use to call myself a republican. Now I call my self a Constitutionalist (invented my own party). I’m interested in voting for people who will follow and uphold our Constitution. Unfortunately there are very few to be found among reps or dems these days. Instead of following our Constitution most are attempting to “interpret” it.
Adopt-a-Landlord,
Can I join your party?
Adopt-a-Landlord,
I too want to join the Constitutionalist Party
I will vote for any party that promises to publicly flog anyone who drives 50 mph or less in the passing lane.
All of you folks are great candidates for the Libertarian Party. Not jerking your chain. Less government, less spending, less intrusion into your lives. More of absolutely nothing but freedom. Though not registered as one, Ron Paul is the only true-blue libertarian in Congress.
Ron Paul speeches in Congress:
http://www.house.gov/paul/legis_congrec.htm
Bio:
http://www.house.gov/paul/bio.shtml
His commentary on Lew Rockwell.com:
http://www.lewrockwell.com/paul/paul-arch.html
edhopper “Are you really trying to blame Clinton, who left us with a surplus.”
I agree 100% Ed. Come on Prez Clinton did have his failings but by reconing he did very well by the budget, the facts speak for themselves…. they are what they are!
The GOP has cut taxes and spent like morons, a unfunded war is pretty hard to sweep under the rug. They run the show, Prez Clinton has been out for 6 years, these are the GWBush years and both houses GOP years.
You know old Trent Lott was an old line fiscal consertive and GW mashed his rear end real quick! The Debt is not even an issue…. it makes me want to puke!
Correction AE Newman:
Republicans did NOT cut taxes, You say how come!!!
When you cut taxes and reduce spending then you have tax cut.
When you cut taxes and increase spending then you have tax deferals.
Republicans are full of SH!!T saying that they have cut taxes. It is a farce.
wawawa posts ” Correction AE Newman:
Republicans are full of SH!!T saying that they have cut taxes. It is a farce.
Well when you put like that….I stand corrected! But you must admit they do blow thier horn about it given any chance!
Agree AE Newman.
Pretty civil for a political discussion.
I am hearing this more and more: people are fed up with ‘their’ party. Sure, there will be die-hards who love their party or hate the other, but a big swath in the middle find both to be distateful, if not corrupt.
Everyone with a brain knows, the Clinton surplus was created by the dot-com bubble.
Come on, folks… THERE NEVER WAS A BUDGET SURPLUS!!!
We had a temporary condition where the government did not spend all the surplus Social Security receipts that has covered up deficit spending for decades. It didn’t hurt that the tech bubble inflated general receipts while lower interest rates reduced debt services, either (see my post below).
Oh, and BTW, that “temporary condition” only happened due to a split government. Since neither party wanted to okay the other’s programs, spending was momentarily restrained. There is no credit that is deserved to be taken by either side here.
NYCityBoy, you’re wrong about extremes. On most issues, the two parties are virtually indistinguishable and totally useless.
I for one am hoping the coming Depression results in a thorough house-cleaning in DC.
Wow, is this fertile ground for recruiting! The reason you seldom see a Libertarian candidate for office is we dislike government and are not hypocrites. Those who run see it as a duty, not a ticket to the Big Purse in the Sky. As Lew Rockwell points out, a primary mission of the party, therefore, is to educate. If you care about the direction in which this country is headed, it will not take long to read the Ron Paul information I linked above.
Also recommend Charley Reese archives:
http://www.lewrockwell.com/reese/reese-arch.html
If you don’t warm up to Charley and nod your head “yes” wihile you read most of his stuff, then I recommend you should remain in one of the two “mainstream” parties. A fair caution is that Charley is very Southern and takes swipes at Yankees over the war, at any opportunity. He is an exceptionally entertaining political writer.
Posted ” the Clinton surplus was created by the dot-com bubble.”
I was trying to be kind and did say it was a moving target. But it was a damm site better than this biz of cutting taxes, then starting an unfunded war.
I really would like to know how much money we, the people of the USA or the Government has spent since GW took over? Ton’s my guess!
FTR…
1) Clinton’s administration did not eliminate the 30YT; however, they did roll expiring longer-term notes into shorter ones to capitalize on the early 90’s rate reduction. IOW, they sacrificed a chance to lock in low long term rates in favor of freeing up a few more dollars to make the budget look better in the short term.
2) The Bush administration eliminated the 30YT at the same time the Fed began dropping rates in 2001 in a coordinated effort to drive down mortgage rates. By eliminating the 30YT, all those customers were driven into 10YT paper. What happens when demand exceeds supply on a bond? The yield declines.
The Bush administration eliminated the 30YT at the same time the Fed began dropping rates in 2001 in a coordinated effort to drive down mortgage rates. By eliminating the 30YT, all those customers were driven into 10YT paper. What happens when demand exceeds supply on a bond? The yield declines.
—————————
BINGO!!! Add in all the “ownership society” speeches and the downpayment programs pushed on unqualified consumers these past few years, not to mention the regulators looking the other way when it was PAINFULLY OBVIOUS what lenders and borrowers were up to…automatic housing bubble! The RE/credit bubble was planned and executed by the PTB in order to “save” the economy from the stock market deflation. It was no mistake, IMHO.
“But that’s about to change, thanks to the country’s three big entitlement programs — Social Security, Medicaid and especially Medicare.”
I’m amazed at how many obese people are riding around on mobility scooters these days, all paid for by medicare. Anyone ever check the price of those mobility scooters?
Saw one motoring along on the beach here, in the wet part so that the salt water splashed up into the wheels and undercarriage. Wondered who was paying for the scooter and hoped it was that fella because he is really rich.
Here in Santa Barbara, a new condo development on Modoc Road, which is on the west side of SB, is advertising “$150,000 in incentives”. I don’t know what they’re asking, so I can’t gauge how much of a % $150,000 is. Some one bedroom condos in Goleta are selling in the $400,000’s, quite a drop from last year.
Things are moving downhill much faster that I thought they would in South Santa Barbara. SFR median is down 28% from last year, and a couple of SFR’s in the Cottage Hospital/Oak Park area, 6 blocks north from where I live, sold for 2004 prices.
Hard for me to believe, but I think in maybe in a year a $ 60,000/yr salary will buy a one bedroom condo using a fixed rate loan.
I don’t know how valid this is (forget the long term since it makes no sense with more inventory coming on-line) — rentals are *local* but mine hasn’t increased in three years.
http://biz.yahoo.com/ap/061026/bidding_on_apartments.html?.v=3
I’ve been wanting to rent a house here in San Diego for a while. There was one for rent near me, but when I called, they said the rent was 1000, but that they had rented it. Not six months later, they were evicting the tenants. I called to rent the thing, and offered to clear it out, dispose of the trash, clean up the yard, and they could rent it to me immediately, with very little turn-over cost (I just wanted pest control). It would have saved them $500-600.
They said sure - the rent is $1125. What!!! You just had to evict people at the 1k mark, the place is a dump, and you feel a raise of over 12% is appropriate!?!
I told ‘em to get bent. They’ve spent their money cleaning up the place now, but it is still for rent…
Well you know, I have a friend who wants to set his rent higher than anyone else in comparables. Why? He says that this ought to “get a better class of tenant”! Bwaahahahaha! Let’s put it this way: He’s not having to worry about his place getting torn apart anytime soon — because he can’t get any renters at all!
And another similar story: Another friend of mine pricing his place above market found the opposite. Instead of good renters, he got crap renters. The good ones with good references and good credit ratings got the cheap houses; he was left with nothing but the bad credit tenants. My guess is that they were turned down by other landlords. One after another, deadbeats trying to rent his place, while anyone he really wanted to rent to always called him back and said they found a cheaper place. His house, too, sits empty.
I have no sympathy for your greedy would-be landlord.
My parents were landlord of multiple properties for over 30 years. They **always** set the rate just BELOW market rents because that way they got to choose their tenants from a larger pool. The vast majority of their tenants were very long-term, paid on time, and really took care of the places. Our current LL did the same thing (underpriced for the market — also long-time LLs who know what they are doing). I’ve never met a successful LL who didn’t price under market. All the above-market rentals we’re seeing today are FBs trying to cover cost (ha ha!!) or greedy morons who will get what’s coming to them WRT tenants.
People with lots of money and good credit tend to be smart. They will not overpay for a rental.
I swear all the specuvestors have come to MY neighborhood in Studio City, CA!!!! There are 5 SFH within 2 blocks of me in various stages of teardown/build mcmansion! There are 4 new condo developments also(within 3 blocks)! WTF!
My neighborhood is CONVINCED that we are different and will never go down. We’re SPECIAL. It CAN’T happen here. Geeez!
Is this still happening in anyone elses neighborhood??? It seems so foolish…but then…what do I know? I’m just a lowly blogger!
“Is this still happening in anyone elses neighborhood??? It seems so foolish…but then…what do I know? I’m just a lowly blogger!”
You’re not alone. In the Puget Sound area, specuvestors and builders are still working. But, the word is out that real estate is going down. Flippers are starting to feel the heat and builders have to be starting to squirm. Properties are just languishing now. A barista I talk to every weekend told me her cousins are trying to flip a tract home in the Gig Harbor area. They are asking $600k, but everything else in the neighborhood is around $450k. They are getting no action whatsoever. She was telling me that they used all sorts of high end materials, but all of the other homes in the area look identical from the outside. A classic case tale of stupid flippers not knowing the market. And that wannabe investor flipper Seattle Eric has dropped the price on his West Seattle flip to $599,000. He started at $649,000. Now this $50k reduction may seem significant, but it isn’t considering the place was overpriced by at least $200k to start with. In due time, the market will weed out all of these fools.
“She was telling me that they used all sorts of high end materials, but all of the other homes in the area look identical from the outside. A classic case tale of stupid flippers not knowing the market.”
Never, NEVER buy a house in a neighborhood where they all look the same, improve it out of line and expect to get your money back. In a down market, these types of cookie-cutter commodity (!= cheap) houses do badly.
I think Studio City has got to be the biggest bubble joke of all. I couldn’t agree with you more. I was at my son’s fall carnival today in Sherman Oaks and overheard the wife of a flipper bragging on and on about how many houses they own that are getting ready to come on the market. No mention at all of a housing slowdown or increased inventory. She did, however, get her licks in about “those” flippers that build “mcmansions” and overbuild for the neighborhood. Ignorant, arrogant and greedy.
posted ” She did, however, get her licks in about “those” flippers that build “mcmansions” and overbuild for the neighborhood. Ignorant, arrogant and greedy.”
Now that is rich.
The projects you see in Studio City were no doubt planned and permitted prior to the recent layoffs in the entertainment industry. That area has been churning for years now as the economy of Burbank has grown. I remember seeing teardowns and conversions out there as long ago as the mid-1990s.
There is a lot of that still happening out here in Santa Monica and Brentwood as well.
I don’t think that entertainment is finished cutting back, so expect a lot of these McMansions and conversions to be on the market, and prices to fall accordingly. But it will take some time, as there is not enough pressure yet - LA seems to be in the rocketing inventory phase, but not the falling prices phase - yet.
sm landlord,
I’d like to hear more about the entertainment layoffs. I’ve been away from LA for a few years, so don’t know much about it these days, but…
Got a call yesterday from a friend who’s been in the entertainment industry since the mid-80s. Even owned his own business. Just got a new job…commercial RE agent!! He employed a number of our friends as well (and placed many more at various studios). I thought it just might be him, but sounds like it’s quite widespread. If that’s the case, sounds like LA will get hit HARD. We knew a number of engineers in the 80s/90s layoffs, but know many more in the entertainment industry…and they make a lot more money than the aerospace employees did. Now they know what to blame this RE downturn on in LA — entertainment layoffs!
There’s been a lot of talk about the studios combining the marketing plans , i.e. instead of marketing the movie, then the DVD and then the cable release, just release the product everywhere at once. This would end the pirating problem that is looming. (they are well aware of the net drastically eating into music profits Limewire etc. and with more and more people getting high speed connections and more sophistication the know movies are next.)
If, (more like when) they combine the budgets LOOK OUT. A lot of formerly well fed vendors will be HURTING! Not to mention the cuts they’ll make in house. A lot of people have been making a lot of money for decades. The marketing budgets are enormous and the cash flows like wine at a Roman party. They are very close to instituting these changes.
The entertainment industry is the backbone of LA, IMHO. Both my husband and I were born and raised there, and you wouldn’t believe how many are employed in “the industry” — have to think about everyone from the actors/actresses/extras, PAs, grips, electricians, props, makeup, location scouts, food service, **all the assistants to the assistants**, etc. It goes on and on. If entertainment takes a hit, LA goes under.
Not to mention that LA has the most games companies on the West Coast (husband and I both work in games). If Sony/EA/Activision have a bad year, there will be layoffs there too.
Incidentally - I’ve been away for three weeks on the in-law family holiday from hell - and came back to find many many places in Santa Monica/Cuver City and around, with about a 10% haircut on ZipRealty. Are Santa Monican sellers finally getting it?
Welcome to New York. All of what you said is right here. But hey, “it is different here”.
Excuse me while I go throw up. It makes me sick.
Studio city/N Hollywood seem to have become an LA Hot zone for new massive Condo/Apt construction. Here you have muliple demographic/economic crossroads:the nearby Burbank entertainment industries, a burgeoing immigrant population and lots of older residents all converge in this section of the SFV. Below Ventura blvd it it mostly hi-end:north of that it will be mostly mid-priced stuff. Apt/condo developers cannot lose: the demographics here indicate a rich supply of tenants or condo owners. Of course they can overbuild in multi-unit housing supply but LA Demographic trends in this part of the SFV indicate a large active population of tenants.
“Apt/condo developers cannot lose: the demographics here indicate a rich supply of tenants or condo owners.”
The supply of condo owners better be “rich” given current affordability.
peter,
You’re right. I hate to say “It’s different here,” but LA is truly different. A lot of money (internal and from immigrants — yes, they have rich ones there), and very little space to build in desirable areas. Almost no new (additional, not tear-downs) housing built during this bubble. LA will fall, but rents will likely stay relatively high, IMHO.
Peter,
I have a slightly different perspective. I live in the MDR area and we’ve got Xthousand new condos, townhouses, houses going up in playa del rey. hundreds of new “lofts” in the marina. Teardowns of homes with 10-20 unit condo buildings going up gangbuster up and down Washington and Venice Blvd north and south of the 405. Look a little closer, there are not tons of new SFRs, but a LOT of new housing units being built.
The Area you describe, west of the 405 along washington blvd all way to Marina Del rey, and from rose ave/venice blvd south all way to the 90 fwy/Jefferson blvd, is another hot spot for mult-unit housing. Not just Marina Dey Rey and playa vista, which do the hi-end stuff, but Mar Vista(which is area just east of Marina Del Rey/Venice)is springing up more multi-units. This Corner of West LA was already rich in apts/condos, but the developers are squeezing (infill development)even more units. E.G, Redwood ave in Mar vista immediately adjacent to Marina del rey(4000-4500 block south of washington is cramming at least 3 massive apt complexes(each 100+units)along that narrow street.
Also have seen new Condo/apt complexes( all hi-end) springing up along jefferson blvd bewtween the 405 west to Lincoln ave, intermixed with commercial/entertainment industries, which would be in either Playa Vista or Mar Vista, very close to the newfangled megaproject/ mixed use development called Playa Del Rey.
The tearng down of SFH lots to be replaced by 10-20 unit condo complexes is occurring in cities all over LA county: have noticed this trend in such places as Glendale Dwtn for instance.
Your two posts describe a massive increase in supply, yet somehow you come to the conclusion that “Apt/condo developers cannot lose”? Bizarre. And sorry, I don’t believe there are enough immigrants (rich or poor) looking for an ordinary 3/2 at 800k in Burbank to keep this hyper-inflated market afloat.
The name of the Mix use development that has thousands of units is Playa Vista, which is being built on the old Hughes airfield. Play Del Rey is a small area at the end of culver blvd. and in the bluffs above. There has been new Apt units built in Play Del Rey area up Manchester Blvd., but no condos that I know of.
I’m back. I was out and about so I drove by those Lofts on Redwood. Amazing, I hadn’t noticed them. Check it out, they had a sign spinner! and signs on trailers on washington blvd. There are defiantly at least a hundred units. That area has always been industrial, I don’t remember what they knocked down. probably auto repair shops. I don’t know about you, but I’m actually starting to think there too much inventory being built, in West LA. Well, I take that back, there’s to much “high priced inventory” being built. The way things are shaping up, if they want to move this stuff, they gonna have ta lower da prices, immhmm! When I look at Playa Vista an image keeps recurring in my head …… an expensive White Elephant.
On redwood ave, I believe that there were several commercial lots housing small entertainment mom and pop operations, and there may still be some remaining. I know Glenco and Beach aves have,or had, a potporri of small industrial establishments,auto repair/body shops,Startup Ent media operations,ect. The shops in that area always bustling and quite busy. Haven’t been thru there last several months but you say that the redwood units are already built. They were still only half-built skeltons last i checked but there was furious activity to complete those units.
Once went into Playa vista complex. There was a large Media Studio and other Businesses which were housed in same bldg as the hi-rent condos, and they all shared the same parking lot. Shopping centers and eateries all integrated into the same overall bldg design.
” don’t know about you, but I’m actually starting to think there too much inventory being built, in West LA. Well, I take that back, there’s to much “high priced inventory” being built.”
iT MAY well be that all the moneyed folks are squeezing into all available units on the narrow LA coastal strip communities of Santa Monica, Venice,Marina del Rey, Playa vista and playa del rey. It seems as if the only folks living in MDR are Lawyers and doctors(all with their own boat slips I imagine).
What may have to happen in these narrow coastal enclaves is to allow more tower condos to increase supply and get prices down. Fat chance. Except for MDR and long beach, all Cal coastal communities have a dread of putting up tower condos, which would block off their god-given right to unimpeded ocean views. I know that Santa Monica has repeatedly blocked proposals for oceanfront condo towers.
As an alternative You can in the near future get cheap oceanfront tower condo units in DWTN Long beach(Maybe under $300,000 in 2007-2008)but with distasteful views of the LB harbor complex
Yea, it’s different here. People are twice the bullsh#tters as everywhere else. Have half the money they say they do. And seem to be twice as willing to throw the dice and gamble. I to haven’t seen any real pain, other than people I know who aren’t getting any lookers at their houses for sale. Everyone is nervous, many are extended into “investment” properties in other states. My feeling about LA is all we can do is wait till the loans reset before we’ll know if the citadel collapses. If history is any guide, my hunch is it will.
San Francisco Midpeninsula is abuzz with construction noises everyday including weekends. It is different here, I am told. With a vengeance, I expect.
Related television programs? Yep, Robert Allen is at it again in this market (Tampa) and so is that Russ guy, infomercials touting their seminars. S**tbags, both of them.
I attended Allen’s seminar in San Diego in 1991. His seminar is nonsense and has many practical holes in it.
But, so many of these real estate “gurus” are brilliant promoters with extremely seductive pitches. My TV was on in the background when Allen’s infomercial came on. I swear to God, as much of a bear as I am and as much contempt as I have for these hucksters, I was momentarily sucked in by the family with the young boy who supposedly has done some deals of his own. He uses people who make the average loser think, “Hey, if they can do it, maybe I can, too”. You’ve got to hand it to them for sheer balls, here they are, peddling their smoke and mirrors in the middle of a RE fiasco.
Read John T. Reed’s RE guru ratings.
Pretty funny, John T. Reed is one cantakerous dude.
http://www.johntreed.com/Reedgururating.html
wawawa posts ” I attended Allen’s seminar in San Diego in 1991. His seminar is nonsense and has many practical holes in it.”
So does his head.
Teardown down the street, No. of Montana Ave Santa Monica listed in June for $2.2 million, Aug. reduced to $2 mil, Sept $1.9 mil, now $1.75 mil, no takers, no traffic, nada.
Is it one of the 7000 sq ft lots?
I can’t believe they had the cojones to ask that much for a scraper. The lot might be worth $750K, and that’s if the seller demos the old house and clears the lot for you.
someone wake up La Investor girl. She’ll be all over it with those heloc checkbooks.
The Part of Santa Monica North of Montana seems to have become a favored locale for teartowns/erections of MegaMcmansions. I don’t know how these supercastles in construction are faring with the recent downward yoy price drops in super-expensive LA coastal zips,but this part of SMonica must be more expensive/desirable than Beverly hills.
Saw one project in this part of SM not long ago which was in the phase where the owners had put up a deep underground parking garage, or was it a huge below ground-level basement? Can’t tell if this will be a SFH unit or a condo complex.
New Sacramento Region Flippers In Trouble listings:
flippersintrouble.blogspot.com
We just went over 400 in Sac County, and over 100 in Placer. Pretty tough out there for these guys…
- It looks like a lot of these homes are still only at the top of the downhill slope.
As they ‘roast’ through Thanksgiving and feel the freeze of Christmas … the New Year resolution might be to reduce pricing to actually sell sometime next Spring?
I don’t think these guys can go any lower. Many would have to bring thousands to the table. I think foreclosure is a better option for most.
I look at some of those properties and it just blows my mind that lenders would approve those loans. I mean c’mon, one of those places sold for $40k in 2001, and after being flipped a few more times, sold for like $450k within a few years! How did that appraise out? These lenders, appraisers, realtors and buyers are so corrupt it is sickening. I cannot believe this stuff was allowed to go on this long. Where is/was the regulation? How come nobody in the government was crying foul three years ago? This whole thing is a scam. I find it insulting on so many levels.
Holy bat @#$%^ Batman, great link. Makes it clear that statistical quotes (median, average, etc.) mislead much.
Your link shows great numbers of sellers with their homes listed 20% bellow what they paid. This apple to apple comparison will see many FB property devalue by 50% within the next 3-7 years. I think the RE market will hit the bottom fast, with the force of a huge meator stirke lifting a global 700ft high tsunami of economic destruction that will crush the global credit system (lenders).
Finally…I am seeing measurable price cuts at ‘one’ of DR Horton’s many jax communities, Eagles Hammock. Hooray! Hooray! The prices are falling. The prices are falling. Jubilation and despair will envelop the city… Link: http://tinyurl.com/y8679y
In the 3 towns that I am monitoring in Pennsylvania, not 1 of the 350 houses I have saved has sold…
In 5 weeks.
holy crap, batman! lets see, for months of inventory that would be 350 divided by 0= hmm. what was it my math teacher said about divide by 0? Oh yeah….THEY”RE SCREWED! (didn’t even get a kiss)
That would mean that they have how many years supply? Oh yeah, INFINITY!!! hehehehe
Steve — in a city that I follow in Alabama, almost no houses have sold in more than a year. What’s interesting, and you might notice this where you are, is that new listings are priced WAY below comparable listings that are rotting on the vine. Translation: new listers have gotten the word from their listing agents that they’d better price right (w/in the blog, still too high, but we’re headed in the right direction), or they’ll not sell.
A buyers agent writes a column in the local Sedona, AZ paper. Some of the stats:
“Inventory in every catagory is at an all time high. YTD sales, down 35%. Active, 409, up 135% from May 2005. Pending 55.’
The raw land is what is really coming apart:
‘YTD sold, 104, down 65%. Active, 355. Median list price $469,000, down 9% from 1st qtr 2006.
Pending, 9, down from 35 since 1st qtr 2006. Median list price $325,000, down 45% since 1st qtr 2006.’
Luxury homes ($1,000,000+) active 100, pending 10.’
Thanks for the land numbers Ben. I wish I could find that info for Washington/Oregon. What I am noticing, is that raw land is hopelessly overpriced up here. In certain areas, I have seen 5 acre parcels of raw land listed for $350k, when you could buy a home on 5 acres for $350k. There is no logic. Needless to say the overpriced land is not selling.
Here in Ashland, OR many 1/4 acre lots have been listed for $350-400k, when the median for a home on land was ~$170k in 2001. Most are not selling.
I read yesterday were Pulte is sitting on 7,700 spec homes.
at 400k each they have 3 billion in homes sitting, paying tax’s and insurance on also
SD Zip shows 200+ “new listings.” Is it “normal” to have 200+ new listings (1% addition to current inventory over a couple of days’ time) showing up on the market this close to the holiday season? Of course, some of these could be relistings at lower prices (44% are marked “price reduced”).
We are seeing about 2500 transactions a month, which is a little less than 100 properties a day, so yes, it’s pretty normal. Anecdotally it seems like there is always a little more activity around the end/beginning of the month, but i don’t have any data to support that.
GetStucco — great catch. It is late October, not early November. “New Listings” typically (used to be “always”) spike “on or after” the first of the month, particularly if it is the first month of a quarter. Any spike in late October, then, is an anomaly worth checking out, IMO.
This must be another place (that’s different).
http://www.kgw.com/business/stories/kgw_102806_biz_housing_bubble.8293a9ee.html
Latest DQNEws.com
http://www.dqnews.com/ZIPSJMN.shtm
Nice double digit declines in San Mateo and Santa clara Counties.
Just the begining. Much more to come.
SAN MATEO through 10/06/2006
Median Price Sales Volume
Community Zip Code Price % Chg* $/SqFt # Sold % Chg*
All homes $760,000 0.0% $561 613 -17.6%
Total resale houses $790,000 -1.9% $582 489 -9.9%
Total condominiums $539,000 1.9% $507 113 -38.9%
Total new homes $612,000 -35.4% 11 -31.3%
Ritzy Palo Alto taking a swing down down 48%
Palo Alto 94301 $975,000
Yoy -48.0%
Avg sq ft $690 7 -36.4%
Just wait it goes down to $300sq ft
it was only $150 sq ft back in 1998….
More like $300/sq ft in 1998. We could go into a lot of examples, but maybe I am talking about mid to upper end and you are finding the low end or something.
That is around the time the Palo Alto Almenac or whatever that rag is called ran an editorial by the title of “Just Don’t Buy It” with the brilliant idea of stopping the boom in its tracks by not participating. Optimism sometimes takes a beating from reality.
Hmmmm…I sold my house in Saratoga Oct ‘05 so I am watching the stats.
Saratoga 95070 $1,355,000 12.9% $601 23 -53.1%
Waaahhhh. I can’t believe prices went up nearly 13%! But of course volume sales have tanked. I got $790/sq ft. These numbers don’t make much sense. Saratoga has a mix of houses though from condos to incredibly ridiculous huge monster McMcMcMansions. Most houses though are 50s, 60s, 70s ranches.
Hey Guys,
Parents are trying to sell in Prescott Az. They say, but its different
here. Is it?? Anyone have annecdotal?
Thx, M
Back a few years, many in Palo Alto said the same Its different here. All of this always is coming from Realtors.
Lots of hype regarding Google effect… but that did not happen.
As we see, today prices are going down in PA and rest of Palo Alto. At $500-600 sq ft is way too much considering salaries have been flat for long time and tech spending growth (Similar to GDP)is very low around 4-5% for past few years…
W-O-W! Is anybody watching CNN? They are ALL OVER the real estate slide. Amazing. All kinds of doom.
The report I am watching makes this blog look tame.
Talking head just said “FIRE SALE” for homebuilders.
Now everybody in MSM is jumping on the band-wagon. This is going the accelerate change on psychology in the market.
I took a 14 mile walk with my dog this Saturday in Moreno Valley, CA. I went from the south side of the city all the way up Heacock to Reche Canyon, then all the way down Perris back to my in-laws. This city is toast. Sign flippers were on many corners for Young Homes, Beazer, KB, and DR Horton (America’s Builder!). Every strip mall had a mortgage broker and a realty office. I even passed up one Mexican family that was celebrating the opening of their realty office. Every (and I mean EVERY) intersection had almost an even mix of political (school board, congress, and state legislature) and real estate signs (yard sales, auctions, and open houses). Looking down the poorer side streets one could see every other run-down house for sale. Many of the posts were crooked and probably hadn’t been tended to in weeks. So many cars were for sale on the streets I lost count. And, finally, there was an unbelieveable amount of construction still going on–SFH, duplexes, and rentals–not to mention the ubiquitous strip malls this city is known for.
you sure brave to walk in moreno valley, even with a dog. i used to work at mo valley post office about 10 years ago. not safe there to many gang bangers.
I don’t know about the RE housing Market out there in MValley but traffic out there is as bad as LA(friday commute traffic thru there is a nightmare).The bottleneck at the 60/215/91 junction is horrendous.
Moreno valley seems to have similar demographics(lots of recent immigrants),inadequate road/fwy infrastructures, RE housing oversupply, lack of good-paying local jobs,nasty traffic, stiflingly hot smoggy weather, as you find in Riverside/SaN bernardino metro regions.
The eastern Vancouver suburbs are starting to see interesting declines.
e.g. 459K-429K-397K…SOLD at 389K
and…849K-799K-749K…SOLD for 730K
and…489K-449-429K-419K…Sold for 410K
Muggy, what show is that? I don’t usually turn on CNN but I would for that.
Sorry - I have no idea. I usually don’t watch CCN, I was just flipping and the ticker caught my attention. When I hit “info” it just said “Headline News.” It was a mini segment about 5-7 minutes long. It was a blond lady interviewing a nerdy dude and he was hammering away the fact that homebuilders can undercut private sellers. It was brutal. He also said “rush to the exits.” They also talked about $500billion in HELOCs being issued as well as IOs and ARMS.
It was by far the most throat slashing report of the real estate industry that I’ve watched. It did not end with, “it’s a good time to buy!!”
Maybe some of the “brighter” private sellers will get the idea and start cutting price to compete. The slaughter begins…..
I’m starting to understand that builders in my town have been making a subtle joke. They are building houses so big, extravagent and out of place, that everyone has been talking about the builders’ apparent stupidity. It is as though they have been competing to see who could spend more on these monuments. But the stupidity is at the local banks. The banks will be left holding the keys. Meanwhile, the builders have taken the opportunity to pay goodbye bonuses to all of their buddy subcontractors. “Have some fun. And see you for the next boom!”
I’m watching a new condo in Irvine, just to have sense of market activity in places with multiple sellers & no buyers, interesting story to follow:
ZP 92612 - 3131 Michelson Dr.
Condo name: Marquee Park Place
Three months ago cheapest resale was $630/sqft now lowest priced unit at $513/sqft, still VERY expensive $650K for 1265sqft property in OC airport area.
HOA about $1070/month, Taxes about $800/month, owners cannot find renters for $2700/month…price war going on.
kosiuko– don’t know if you’ve checked, but about 25% of those towers are on the MLS (55/232). One on the 16th floor was due to be auctioned yesterday (min $650k). Same unit # (1601) in the other tower on MLS @ 1.2M. Haven’t seen yet where the auction ended up.
Posted a month back about one of the larger units in the upper floors. Listed @ 1.3m…..or you could lease for $4300/mo. Who’s getting the deal there, eh? All this doesn’t bode well for the complex going in right across the street.
asuwest2, sorry missed your post one month ago…this bldg is great bubble-meter, heavily owned by “investors”, high HOA…no takers.
Q: where do you check final results on auctions? tia!
Just to add my 2 cents in. That area of OC(Michelson, Jamboree,Von Karmen south of 405) is going on a huge mid-rise/tower condo/commercial office bldg binge. Just go south from 405 about a mile on Jamboree and notice all the construction activity. That area has a lot of commercial office bldgs but a lot of that activty is RE Lending operations(New century Mortgage for instance). With the predicted RE slowdown/meltdown hitting S. OC lending operations hard,combined with all the new muli-unit Housing coming online,this should result in future lower prices for Condos in this area, unless the developers scale back on adding supply.
I’m in MO not NE but I sure hope this isn’t going to happen in the midwest. I waiting to buy expecting prices to be lower in 07/08.
NYTimes
Sweet Home Omaha
By RICHARD DOOLING
Published: October 29, 2006
Sweet Home Omaha
Unemployment’s down, inflation is inconsistent, the housing market is finally cooling off and consumer confidence blows with the wind. Just how are Americans doing? The Op-Ed page asked four writers from around the country to provide snapshots of their local economies over the course of the year. Here is their fourth round of dispatches.
HOUSING prices are falling on both coasts, and bubble panic is around the corner. The financial magazines are already grabbing their readers by the throat and taunting them with headlines like: “U.S. Housing Crash Continues!” “Where Will Housing Prices Fall the Most?” “Is It Time to Cash Out?”
What if it is time to cash out? Where do you go? If you sell on either coast, then you need to find real estate somewhere that the housing bubble missed. Guam? American Samoa? Wait, how about eastern Nebraska? Downright frothless when it comes to housing: the median home price here usually chugs along at the annual rate of inflation and never goes down (up 4 percent last year, up 22 percent over the last five years).
Before you recoil in horror at the thought of living in Omaha, a city of 414,000 souls, consider that this year Money magazine ranked it seventh of the nation’s 10 best big cities to live in, ahead of New York City, which ranked 10th. O.K., now you may recoil in horror.
These compelling statistics have Nebraskans preparing for the imminent arrival of several million New York refugees (victims of post-traumatic bubble anxiety disorder), who will need emergency real estate and housing triage services. The accompanying chart gives some facts and figures for Manhattan condo owners contemplating the big move to the Big O.
According to the cost of living comparison calculator at CNNMoney.com, if you were earning $229,000 in Manhattan, or $153,000 in Queens, you’ll be able to maintain the same standard of living in Omaha with a salary of $100,000 (and not because rodeos are cheaper than Broadway shows). Your money will go farther, and you’ll find less competition for jobs: Omaha’s unemployment rate (3.3 percent) is lower than New York’s (4.5 percent). While you are job hunting and living off your real-estate profits, groceries, utilities and health care will all cost roughly one-third less than you are paying in New York.
According to the Tax Foundation, the move to Omaha will save only about 1 percent in taxes. New York has the second highest average state-and-local tax burden in the country (at 12.9 percent of income); Nebraska has the sixth highest (at 11.6 percent). Why so high here? In part because Nebraska’s 1.7 million residents must pay for schools and roads spread out over 77,000 square miles, compared to more than 19 million New York State residents who occupy a mere 47,000 square miles.
Nebraskans also tolerate notoriously high property taxes because they go to the public schools, where rich and poor alike get a quality education. (A proposed state spending lid on the November ballot is widely expected to fail.)
So, why do people live in a state with high taxes, no mountains, no ocean beaches, no lakes to speak of, no major professional sports teams, no grand old museums or dazzling science centers? The three answers you hear most often from Nebraskans are: (1) quality of life; (2) good schools; (3) wouldn’t moving be kind of a bother?
Here are some other pros and cons to consider before cashing out and heading to flyover country.
Pros:
• Big yard (no more dog walkers and poop bags).
• Big sky (makes you look up, and out).
• Traffic (cars move around, at or near the speed limit).
• Cornhusker football (fall Saturdays with the family in the bleachers).
• Friendly people (perfectly sane strangers say, “Hi!”).
• Public schools (excellent, and “free”).
• The local news (high school sports instead of murders).
• The Berkshire Hathaway convention (you don’t have to fly in for it).
Cons:
• Big yard (lawn maintenance can be noisier than street maintenance).
• Big sky (makes even a New Yorker feel small).
• Traffic (sidewalks are optional, no more walking to the corner deli).
• Cornhusker football (the morbidly obese fellow next to you is wearing a Go Big Red cowboy hat, red Sansabelt slacks and white shoes).
• Friendly people (who love to visit … for hours).
• The local news (high school sports?).
• The Berkshire Hathaway convention (you don’t get to leave when it’s over).
Required reading: “The Quality of Life Report,” by Meghan Daum. In 1999, Ms. Daum moved from New York City to Lincoln, Neb., and wrote this hilarious novel. The heroine, Lucinda Trout, is a television journalist living in a rent-stabilized “one-windowed cell” at Broadway and 94th Street in Manhattan.
When the building changes hands, Lucinda’s rent soars to $2,100 per month. She learns of an assignment in Prairie City, where she can rent an entire farmhouse (and a farm) for $400 a month. She takes the plunge. Unexpected pleasures ensue: “Something about the blandness of the town and the flat land that surrounded it were making me feel alive and exotic. Almost like another person.”
Richard Dooling is a screenwriter and the author, most recently, of “Bet Your Life.”
Ozarkian — entertaining post. Guess I won’t see you there.
I grew up in Omaha, and yes it is a “nice” place to live. All the things stated about the place are true. The absolute rub is that the weather SUCKS. I don’t think that the average person who lives in Cali, FL or many other places for that matter would like what they would have in store for them. It is cold, bone chilling relentless north wind from end of Nov. to some time in March when it lets up. ON top of that you can add that the sky is gray almost that entire time, and when it is not you wish it was because those clear days are also the coldest days. It snows, and people actually go to work. In Omaha the weather is NEVER an excuse to close anything. When I went to school there it had to snow to the point where the school busses could not run to close school for a snow day. Also there is the possiability of the freezing rain that can occour in the fall. Yes Omaha is in Nebraska and most people think of the place as quite flat, but Omaha is a very hilly town. Imagine how driving is in the winter with these conditions. Couple this with the fact that it is EXPECTED that you will come to work on time reguardless of what the weather is doing. I left Omaha not because the town sucked, but because I could not take the cold weather any longer. Aslo to note is the opposite of this extreem…summer when it is 90% humidity with 100 degree temps. If you don’t know, the transition from winter to summer involves ALOT of wind. The fall is actually the best time to live there. It is the only time of the year that I miss living down here in FL. Add to the mix the fact that Omaha (most of Nebraska for that fact) has some extreemly conservitive social views and some truely wacky born again bible thump’in going on. I also think that you would find the local population not so nice if you decide to challenge those conservitive social views.
So move there if you like it is a nice place, BUT paradise? No.
Has anyone heard anything about the Colorado Springs/Denver market?
Also, I have another question….why do builders think if they build homes businesses will follow? Is that true? Or should home development follow growth/new businesses?
1) Ben has had numerous recent threads on the fact that Colorado urban areas have relatively high foreclosure rates, especially given its location in the heart of flyover country;
2) I was in The Springs two months ago, and was duly impressed with the vast tract home developments to the east. These make San Diego’s new housing developments seem small by comparison (and they aren’t).
This morning’s conversation w/ my reluctant landlord had him (finally) admitting that a sale (of the house I’m living in ) “won’t happen”. I am the benefactress here, advising him how to get his 20% Home Depot credit card paid off. In a summer resort area that attracts mostly retirees, he built this NY-style thing w/ incredible stairwells, looks like an Escher print and should have lots of little men in dunce caps prancing up and down the undersides of the stairs. I don’t see 70-year-olds choosing to buy it. $575,000 so-called waterfront but no waterview because the environmental police won’t let him take down any appreciable number of trees.
There is certainly a market here: when I advertised a room for rent for $375/mo I did get multiple genuine offers. The population of locals who can pay $375/mo is great than the population of fools who would spend 10x that to “own” this house.
To take the other side to the “environmental police” jab for a second, there are harbourside suburbs in Sydney Australia that have been clearfelled including the streets and public parks so that people can claim their “uninterrupted harbour views”. Many, many cases where “unknown vandals” have gone out at 3am for some quiet ringbarking.
You have a point, and this landlord has spoken of “notchdown” events. My point was mainly that nobody is going to pay this kind of money to see almost no water.
You’re right about that 3am business. It was sad, so sad, when I lived in Sydney and saw rows of trees succumbing to “unknown” vandals who drilled holes in them for herbicide. Just pathetic. I guess my view (no pun intended) is that if you buy a place with small trees in front of the view, you should fully expect to have big trees later. That’s how it is for me now, though the windstorms seem to clear the view as fast as the trees grow back!
Well, anyway, it wasn’t just the big trees that got it in Sydney. On my way back from the train station to my house there, I inevitably found smallish trees on public right of way snapped off, just for fun I guess. Idiot people.
And get this: Our neighbour would go out regularly at night and snap off the saplings that the city planted next to the street! He never admitted it, and I only spotted him circumstantially going back in his house right after saplings were snapped, but he was always happy that “the tree broke” because he liked sun and hated leaves on his car.
Well, after six months, the city stopped replanting. So I went out in evenings when he was gone and would replant new ones! Sure, it cost me $10 or so each time, but oh the enjoyment to see his aggravation as he cursed the city and plotted for weeks to get rid of the poor, doomed tree.
Anyway, when we left Australia, we decided that in Sydney at least, most people there really just hate trees and prefer that barren, sun-parched, glaring brightness that you see on those stupid California flipper TV shows.
IMO, San Diego suffers from the same “anti-tree” disorder. My husband and I grew up in LA (SFV) where there are lots of beautiful, old trees, so when we came to San Diego, it was weird to see just brown hills and pink rooftops. Quite frankly, I don’t get the whole “San Diego” thing. The weather is awesome, especially in fall and winter (but can be very foggy spring through summer), but the terrain is very hilly (some like that) and BROWN. There is very little shade or greenery. Whenever we ask people why they cut their trees down, they say they are too dirty — whatever that means. Guess they like the look of pink roofs all stuck together, surrounded by brown grass and dirt.
ever wondered why san diego import 90% of its water?
There’s nothing here for them to water!
Saw in the newspaper that Pulte is now giving big incentives or reducing the price on his new home tracts .
The houses in my neck of the woods are just sitting now . About a2 months ago they were selling at about a 10% discount from the peak of 2005 and taking a average time of 4 weeks to sell .Seems like the market is really dead now.
Do you want to be land lord?
http://money.cnn.com/2006/10/24/magazines/business2/newrules_redbrick.biz2/index.htm?postversion=2006102610
His formula is backwards. He needs to figure a target yeild, then work the price/rent formula.
His “4 year old company” will be hit hard when his money’s tied into homes bought in the last 4 years, and the flood of homes at fire sale prices lowers rents, and screws his recent purchases.
North County San Diego:
Just got back from a party. The hosts of the party were some of the most vociferous about our being “priced out of the market” if we didn’t buy (renting since 2004). Tonight, the husband asked us again if we were ready to buy. We braced ourselves for the usual “you guys are making a big mistake” lecture when we said we’d still be renting for quite a while. Oddly, the husband said, “Well, it looks like that gamble you took just might pay off. Prices are coming down, now.”
Just another anecdote showing how the psychology is slowly changing. In the past few months, ALL of the people who used to harass us about renting have either gone silent or actually told us we were right. Finally!!!
“Well, it looks like that gamble you took just might pay off. Prices are coming down, now.”
lol. odd on how using your brain and common sense is seen as a gamble.
Living in San Diego is a gamble, whether you rent or buy. I know owners who are losing money on the falling price of their homes, and renters who have been priced out since they started renting before prices went up by 100%+. The rent/own decision is very tricky here, and I feel for anyone who has to face it.
Oddly, the husband said, “Well, it looks like that gamble you took just might pay off. Prices are coming down, now.”
Pfft. Until recently, insane appreciation coupled with Death or Glory financing to be able to stretch into a home has been the rule for buyers here in San Diego, rather than the exception. As if THAT wasn’t gambling?
My rental at nearly 1/3 of the cost of owning something comparable looks like a very safe bet.
I also have to agree that the people who used to lecture me about deciding not to buy are no longer talking about RE. A few have even told me that I made a better decision by continuing to rent. The idea that the market has truly changed is finally starting to hit home.
some actual sales around me - just shows that we have a ton of GFs here!!!!
“Cancellations were also left out of the new-home statistics. … The home builders association said that cancellations had jumped by 50 percent in the last year.”
So do the Cramer viewers who are now buying homebuilder stocks realize this?
It doesn’t pay for would-be soothsayers of the future to be too specific. My guess is that Cramer is going down the same road of other financial gurus, including Joe Granville and Elaine Garzarelli.
It think it was Eliot Janeway, who when asked if the stock market was going up and down, replied: “Yes, but not necessarily right away.”
Chicago - theres a lot of different areas in Chicago, I live in the near west suburb of Berwyn. Houses there aren’t moving, its deader than a door knob. Prices have come down slightly. I would guess about 5 - 10%. I looked at a 3 flat a couple years ago, they were asking 305K, its now on the market for 405K. Good luck. Rents wouldn’t even cover the 305K price.
Mid Hudson Valley New York - 1950’s cape w/5 acres in nice area. Sold ~ 6 yrs ago for ~320K. Then ~ 1.5 yrs ago back on market for 450K. Hasn’t sold yet - currently asking 529K.
The inmates are running the asylum.
I went to an open house in the Briargate section of Colorado Springs. The realtor was about four years older than God, and tarted up in Tammy Faye Baker-style makeup — looked like she’d just come back from a casket fitting. The house, she told me, was “investor owned” which of course inspired a malicious smile on my part. I told her that on general principle I’ll never buy from a flipper, unless its a bankruptcy sale. In response to the hopeful “did you just move to this area?” querry, I responded, no, I’ve been here a couple of years and am bubble-sitting, waiting till things get REALLY ugly next year. She gave the hollow death-rattle chortle I’ve come to expect when I make that observation, followed by the standard breezy, “Oh, I don’t think that’s going to happen/it’s different here” NAR-speak. She didn’t sound very convinced, however.
I’m half-expecting the local realtors to clandestinely snap my picture and circulate a “blacklisted” poster with “DO NOT ALLOW ENTRY - BAD FOR MORALE!”
LOL. Good stuff Sammy!
Thanks for the laugh! I can see the old bird with a facelift permagrin like the riddler…
You will definitely be blacklisted, like AE Newman who likes to break wind at open houses…!!!
I’m half-expecting the local realtors to clandestinely snap my picture and circulate a “blacklisted” poster with “DO NOT ALLOW ENTRY - BAD FOR MORALE!”
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We’ve been following a Pulte development over the years, just to see what the market is doing (we follow many), and the last time, the sales guy recognized me. He gave me a very suspicious look and seemed to know what we were doing. Asked if we were still just looking around or were we ready to buy (insinuating he already knew the answer).
Also had this happen with a couple of Realtors who were holding open houses (and whose open houses we’ve been to in previous years in different locations). After 2 or 3 years, they probably figure we’re the dreaded “bubble-sitters” spying on them. We get a very cool reception from these folks.
I’ve thought about using disguises during our “market research” because some of them don’t seem to be open to us staying on top of the market.
Two areas to comment on:
First, Pacific Beach in San Diego. My dad just took his house off the market after dropping the price from $948K to $868K and getting *no* response. None. It’s a 4BR house in north PB, in a quiet area, but nothing special. He and his wife are moving out of their retirement community, which they haven’t liked as much as they thought they would, and back into the house. It’s a sensible decision.
Second, Boston area. We haven’t had quite the trouble with fraud and strange “loan products” that California has had, but nonetheless prices ran up pretty quickly through 2005. They are now dropping; 10-15% seems to be about average. Everything is staying on the market for a very long time, and foreclosures are starting to creep up. Sellers of older homes are discovering that buyers want deep discounts for required maintenance (e.g. deleading, replaching a roof) and even redecorating if the place hasn’t been touched in 40 or 50 years — which is very common when an older person has died or moved out of the area. Downtown Boston now has a serious oversupply of luxury condos, which were built when it looked like “empty nesters” could sell their suburban homes at a premium to afford a really nice condo downtown.
There are expensive McMansions on one-acre lots like crazy, but almost no SFH that a first-time buyer can afford. This is partly because towns in Massachusetts don’t want too many kids moving in, because of the cost of public schools. So higher-density projects, whether SFH or condos, are very hard to get approved. The state has a program to help builders get around these restrictions by designating a certain number of units in a project “affordable,” but as prices are falling, builders are finding they can’t make enough of a profit to do these projects.
A friend who knows a bit about home construction says he won’t buy anything built between 2000 and 2005, because there was such a boom that developers were cutting corners like crazy to get units up and on the market as quickly as possible.
Sammy, that was one funny post. Did the ‘realtor’ get fitted for her witch dress and broom? She needs a black cat too.