“No Area Of California Is Immune To Adjustments”
The San Bernardino Sun reports from California. “Home prices aren’t rising very fast, and in some cases, they’re even falling as inventories grow. Sellers are offering incentives and concessions to close deals. Should the would-be homeowner buy now or wait a little longer? The answer depends on who you ask.”
“Economist Chris Thornburg says ‘the market will be ugly for a couple of years. Prices will continue to soften for awhile with no major rebound.’ Thornburg believes home prices throughout Southern California are about 30 percent overvalued.”
“Real-estate types, however, remain upbeat. ‘In real estate, there is no bad time to buy a house if you need one and can afford one,’ said Bill Velto, broker in Upland.”
“Sales for new and existing homes in San Bernardino County tumbled 25.8 percent in September compared with September 2005, according to DataQuick. The number of San Bernardino County homeowners entering the first phase of the foreclosure process increased 100 percent in the three-month period ending in September.”
“Hanley Wood reported that the standing inventory of unsold new homes in San Bernardino County increased 336 percent from September 2005 to September 2006. To keep inventory from growing, especially toward the end of the year when housing markets slow, many home builders are offering incentives.”
“For example, Hesperia-based Frontier Homes is offering incentives of up to $14,000 in closing costs to help get people into houses before the end of the year. The median price of new homes sold in San Bernardino County decreased 4.1 percent between September 2005 and September 2006, DataQuick reported.”
The Orange County Register. “DataQuick’s latest O.C. home sales data, for the 22 business days ended Oct. 17, strongly hints that October was the eighth straight month where the sales pace was 20 percent or greater below the year-ago pace.”
“The last time we saw as deep a drop running for as long a time was in 1991. The most recent median price was a slim 1% above a year ago.”
The Union Tribune. “For the first time in six years, San Diego County’s economic growth is lagging the rest of the state and nation, according to a report. One of the chief culprits for the slowdown is the decline in home construction and growing softness in prices. In San Diego County, median home prices have dropped 4.4 percent since last year, according to DataQuick.”
“Economist Kelly Cunningham, who prepared the forecast, predicted that prices could decline an additional 5 percent over the next year. ‘The biggest declines will come in condominium prices,’ he said. ‘We’re really overbuilt in condos. And I’m concerned about the growth of condo conversion.’”
“James Hamilton, economist with the University of California San Diego, said there are signs that housing may be bottoming out. However, there are several factors that could keep prices declining, he said. A spike in loan defaults and foreclosures ‘could give us a much uglier scenario.’ And home buyers might be slow to enter the market, hoping that the longer they wait to buy a house, the cheaper it will get.”
“I think it’s a little more likely than not that we have reached the bottom (in housing prices),’ he said. ‘But there’s still a very significant possibility, maybe 30 or 40 percent, that things could get much more frightening.’”
The Desert Sun. “Leslie Appleton-Young, chief economist for the California Association of Realtors, told more than 500 real estate agents, mortgage brokers and other business people at a real estate forecast symposium Thursday in Palm Desert that home sales and median prices statewide are likely to decline slightly from the once ‘red-hot market,’ then level off over the next 18 months.”
“‘The housing market is going through an adjustment after a four-year boom that was not sustainable, but the (economic) fundamentals are still very positive for this region,’ Appleton-Young said. ‘But there’s no area of California that is immune to the adjustments,’ she said.”
“Her forecast that the drop in home sales and home-price appreciation should level off left attendee Robert Dennis, a real estate broker in La Quinta, ‘feeling a lot more upbeat’ than in recent months. Like many real estate agents across the valley, Dennis is working with sellers to adjust their expectations after several years of double-digit home-price appreciation.”
“Now, with more than 8,300 homes listed across the valley this week, competition has heated up and many sellers have begun ratcheting down asking prices.”
“One seller of a four-bedroom, three-bath home at in Rancho Mirage slashed the asking price by $125,000 to $770,000, for instance, said Tom Steffen, sales associate in Palm Desert.”
“Homebuilders in the valley are likely to get even more aggressive with incentives as their inventories climb, Appleton-Young said.”
The Sacramento Bee. “Aiming to move thousands of would-be homebuyers off the fence, the National Association of Realtors is launching a major advertising campaign today. The campaign begins as Sacramento-area analysts suggested this week that more buyers are entering the market, but that local sales prices may fall 10 percent before stabilizing in 2007.”
“Capital region real estate agents believe many would-be homebuyers are unnecessarily waiting for the market to bottom out, a situation aggravating record resale inventory, causing headaches for new-home builders and contributing to lower prices.”
“El Dorado, Placer, Sacramento and Yolo counties have a 7.4 month supply, with nearly 15,000 houses for sale. Though the number of sales are expected to rise about 7 percent next year in the four counties, the number of for-sale signs suggests ‘prices are going to decline in most areas,’ (broker) Mike Lyon told a North State Building Industry Association gathering Wednesday. ‘We’ve got another year of this, another 10 percent probably, in the next year, of value loss,’ he said. ‘We won’t see true price stabilization until 2007, and then we’ll slowly start ramping back up again.’”
“Folsom-based home-builder consultant Greg Paquin told the industry group that new houses won’t see ‘real increases in pricing until 2009 or 2010, and then it’s going to be more modest than we’ve seen in the past.’”
From USA Today. “Hear that steady hiss? That’s the air seeping out of the housing bubble. If you’re a struggling real estate agent, now’s a good time to consider a new line of work.”
“In California alone, the number of real estate agents and brokers increased from 303,351 in 2000 to 511,459 in August 2006. There are too many agents chasing too few sales. No wonder you’re struggling. Ever consider consulting?”
Rich Toscano has this today:
‘Last week, Scott Lewis SLOP’d about the San Diego County pension system’s sizable investment in D.E. Shaw, a hedge fund that is heavily involved in so-called ‘credit default swaps.’ At this point, several trillion dollars worth of credit is insured through CDSs, a number that has grown by leaps and bounds in just a few years. The CDSs are themselves often bundled up into complex financial instruments that are traded back and forth to the extent that it’s not even always clear, to the insurees, financial regulators, monetary authorities, or anyone else , who’s on the hook should a borrower go into default, let alone whether that party could actually come up with the money in a pinch.’
‘Long story short, we may see some blowups among CDS issuers. This would almost certainly have the effect of raising the cost of CDSs, the premiums, as insurers realized that CDS writing was not the license to print money that they once thought. The net effect being that they might not be so quick to snap up those ‘non-traditional’ mortgages that everyone loves so much. For high-flying housing markets like San Diego, that would be bad news.’
Hopefully someone can provide some background info on CDSs. Couple of general questions…
What, if any, US government agency is responsible for regulating them? SEC? FDIC?
How much aggregate debt globally has been reprocessed as a CDS? Who or what holds most of it? US pension funds? Asian banks? Jim Cramer’s inflated sense of self-importance?
I remember reading last year that the SEC was going to investigate the financial reporting of some of the big firms that traded CDSs. Did that ever happen?
Thanks in advance for any insights.
CDS’s are traded OTC. There is no direct oversight. Here is a recnt Bloomburg article that is pretty good.
http://www.bloomberg.com/apps/news?pid=20601103&sid=aAMb0.6cgOLs&refer=us
Traditionally this product was designed for commercial banks to hedge exposures to large corporate borrowers - essentially default insurance. But they’ve had a multiplier effect on lender liquidity and have no doubt helped fuel the inter-galactic credit bubble we’re riding through now.
Ain’t that the truth. Something tells me Lehman will come out of this without a scratch.
Great article.
As I understand the holder of the MBS pays an annual insurance premium to the issuer of the CDS. Doe anyone know how the premium mechanism works i.e. is the premium set and paid annually or is it a one time premium for the life of the MBS?
My point being just as insurance premiums sky rocketed in Florida after a couple of hurricanes the premiums for CDS if set annually will sky rocket when the default rate picks up and at some point the issuers in the CDS market may completely withdraw leaving the MBS bagholder naked without default insurance. Without insurance (CDS) funds for the MBS will dry up.
They don’t have to dry up completely; they could always go back to pricing the risk into the demanded return and exercising due diligence.
hahahahahah ok I made myself laugh
The SD County Pension fund seems to be aggressively seeking opportunities to lose money. Didn’t we just read a couple of weeks ago that they had invested $175 million in Amaranth, which recently blew to smithereens?
Yes, they probably though tthey were geniuses finding funds that historically paid 15%…. Guess what: money can only come from two things: hard work or taking risks. Didn’t the SD County Pension fund realize they are playing insurance company for companies that will pay to avoid risk?
“The CDSs are themselves often bundled up into complex financial instruments that are traded back and forth to the extent that it’s not even always clear, to the insurees, financial regulators, monetary authorities, or anyone else , who’s on the hook should a borrower go into default, let alone whether that party could actually come up with the money in a pinch.”
Sounds like mongrel crossbreed blend of hot potato and musical chairs, where whoever is holding the potato when the music stops gets burned.
With this particular potato, once someone has been burned it gets HOTTER and then MUST be passed onto the next victim.
Sounds like a real estate securities version of “The Ring”.
Yes
It also helps is if you can keep a net addition of players to the game.
Am I the only person that has played hot potato musical chairs style with music stopping instead of somebody just yelling stop?
Come to think of it, Ben needs a movie poster…replace the B with the G. No realtor can hide!
http://www.die-ritze.com/poster_2/original/blob.jpg
it’s bottoming out excet it could go lower”- gov worker economist, headed for a raise and a pension
‘In real estate, there is no bad time to buy a house if you need one and can afford one,’ said Bill Velto, broker in Upland.”
there’s a very small minority that recoils in horror at the thought of throwing away 100’s of 1,000’s of dollars in a down market.
but that of course is a small group of closed-minded fanatics
The thing is that I still see so many people, ones who I would otherwise classify as intelligent (scientists, engineers, teachers etc…), buying into this. They believe that if they have the money (or can get the money due to a sketchy loan) then it is a great investment to buy a house.
We now have this fallacy ingrained in our culture that in order to be viewed as successful, not only do we need the new humvees and benzes, but we need mcmansions as well.
‘In real estate, there is no bad time to buy a house if you need one and can afford one,’
Key words: if you can afford one. In this climate and with these prices, the vast majority of the people cannot afford a house.
6 months ago, some of these people said that there was no housing bubble. Now they said they knew 1 year ago but we are at the bottom. They have great credibility, dont they?
>> ‘In real estate, there is no bad time to buy a house if you need one and can afford one,’
> Key words: if you can afford one.
I wouldn’t even concede that much. We can afford to buy a small house now and throw some money away, but I don’t want to. Some times are simple bad times to buy a house, like last year and this year.
“I wouldn’t even concede that much. We can afford to buy a small house now and throw some money away, but I don’t want to. Some times are simple bad times to buy a house, like last year and this year.”
Exactly. Even if I have cash and can afford to buy outright, why would I? Waiting out the drop is money in the bank. A $500k house today, is less than $300k in the future. That is a huge chunk of change. The NAR is preying (and praying) upon fools. Unfortunately for them, J6P has wisened up.
I just think most people do not understand the term “depreciating asset”. And most people definitely do not understand the phrase “your home is a depreciating asset”. If you further explain to them that the 5%, 10%, whatever % down payment/equity they have in the home is now declining. And it may go negative. In other words, when you go to sell or refi your home in 2, 3 yrs, you will owe the bank $$. Aah damn, what’s the use of going over this concept here. I’m preaching to the choir.
I have noticed that among the affluent summer residents of my current resort town, I actually get some respect by identifying myself as a “bubble sitter”, which I explain is someone sitting out the deflation of the housing bubble. I do live in a McMansion, but have no intention of owning it. Not without a 50% discount on the asking price, anyway.
What’s a McMansion in Maine going for these days, rentwise?
This one (asking price $575K) is going for $1000/mo. Of course it’s winter, and I agreed to heat the place to at least 48F even if I go to Fla or whatever. Another part of the deal is, I will probably allow the builder’s family to use it for a month or so next July since there is a much better ocean view house I always rent then. However, I think they would’ve rented to almost anyone at $1000/mo.
I live in San Diego and was talking to a friend that owned a 900k+ 2 bedroom condo downtown (hoa’s were 700+ per month). I definitely got the feeling that they were looking for a way out. I would be to with an 8000k monthly payment. Imagine being on the hook for that much money and literally watching your equity evaporate on a daily basis. The entire time there’s nothing you can do about it.
I know you meant to say “purchasing” not owned. A fun conversation with your friend might go something like this:
“Hi friend, how are you and your condo doing? Say, I just read more dismal news regarding San Diego area condos. Yeah, they said that a 40% drop would be mild. Geez, that is quite a lot considering you paid $900k. I figured out that assuming the bottom is in the 4th quarter 2008, your place is losing over $15k per month good buddy! WOW! Well, I hope you make out OK. I’ve got to run now, drop my measly rent in the mail and then head out of town. The Mrs. and I are heading off to Hawaii for a few weeks of R & R. Have a good one!
I wonder how young Mr. “There’s no way I can loose on this” dentist from Tierrasanta is doing in his downtown condo these days?
Key phrase: “be viewed as successful.” Actaully, my view of success is “doesn’t need to get up and go to work any more.” And almost anything that helps get there is good, in my book. RE isn’t one of them, at this time.
I don’t agree. I fall in the category you mention, and have shifted investments in So Cal to very solid postitve cash flow (10 + cap rate) commercial real estate (NNN) investments that are generating more than enough cash for me to live on and save for buying things when the market tanks. Saying real estate isn’t a good investment at this time is too broad. You can get good ones and bad ones currently. I admit that finding a good real estate investment is a lot harder right now, but it can be done.
Hi lagunabeachinvestor,
You may want to consider hopping out of the way of the giant bus barreling down the street towards you….
http://calculatedrisk.blogspot.com/2006/10/residential-investment-leads-business.html
I’m on dr strangemoney’s side, but would be interested in hearing more from lagunabeachinvestor about what sort of RE project he/she thinks is likely to continue to generate safe cash flow.
I can’t remember the last ounce of bullshit that escaped Ben’s posters’ notice and quick, factual response. Awesome.
Dr Stangemoney & az_lender, I agree that business/commercial investment/spending will likely fall in the coming years, and depending on what you invest in you can get burned. But, that’s why strong positive cash flow in a property with a strong operating history and hard to duplicate location is all that more important to riding out potential storms in real estate investments.
In my specific situation, the NNN properties I own are national fast food operators. The locations have been operating as the same brand for almost 30 years and one is across the street from 2nd tier cities international airport and the other from a large regional mall in another 2nd tier city. Both cities are not in the rust belt (on is in TN and the other in IA).
If you can get a high enough return (10%-15%) on a property that meets the above criteria, then even during a downturn you are pretty safe. Noting is absolute, but I spent the time and effort and looked at tons of propeties before I pulled the trigger. It’s not easy or fast, but it can be done.
“I admit that finding a good real estate investment is a lot harder right now, but it can be done.”
How hard is it to find a GF on whom to unload an overpriced SoCal real estate investment these days?
Stucco, I don’t know why anyone would buy anything in So. Cal. these days.
I would not invest in So Cal right now with a 10 foot pole. No way to make any kind of decent return/cashflow even with a ton of dollars down on SFR, Apt Bldg, retail, office, whatever.
I don’t know what a “GF” is.
Being in the engineering field, I can rest assure you, we are not all money-savvy. Haven’t you ever met someone who is smart but lacks common sense? Greed blinds many. I’ve met too many engineers who were formerly from the Bay area reminisce about the glory-years of the dot-com boom when they had the chance to make millions only to see it disappear in front of them. They were willing to work for pennies on the dollar to get that chance.
‘In real estate, there is no bad time to buy a house if you need one and can afford one,’
“need one” — nobody needs more than one house, but lots of people have bought two or more
“can afford one” — in much of the country very few people can afford a 30-year fix with 20% down
‘In real estate, there is no bad time to buy a house if you need one and can afford one,’ said Bill Velto, broker in Upland.”
I don’t think this realtor comprehends the truth he doth speaketh. This bubble has been caused by two groups of people that rarely overlap.
1. investors/speculators can “afford” these houses…at least they have been able to afford betting on them up until now. But they don’t need them.
2. actual homeowners “need” these houses, but can’t afford them at all!
Low interest rates enabled both of these groups to inflate the prices, and now it’s going to be very hard to find people to buy them, because as the man said, they need to be able to BOTH need AND afford them. Good luck with that.
I purchased in 2003 when I thought I was throwing away about $50-$100K. But I was thinking long term (like 30 years long term) so it wasn’t that much of an issue.
And of course, I’ve made gobs of equity since then. Gobs!
Feeps-I don’t know where you live but here is Tierrasanta(SD), the prices are at 2004 and heading swiftly into 2003. I am curious where you made gobs of equity and you didn’t have it go back down yet?
I live in a house in North Park which has surprised even me in it’s ability to hold value. But I’m primarily kidding of course. If I had to guess I’d say I could probably make money if I was closing today, which obviously I’m not. I’m sure by next spring I’d be behind what I paid plus improvements, but like I said, I don’t care. I’m one of those two guys who put 20% down and could afford it.
I’m more looking forward to hearing about all the good deals all my friends get in a few years. And maybe picking up a cash-flow positive rental myself.
Do yourself a favor and never, EVER, look at the arjis crime map for North Park.
Too late. I try to keep my gunny sacks with the ‘$’ label facing inward when I walk around at 2:30am though.
Seriously, during the summer you hear the police choppers buzzing low 2-3x a week.
“I think it’s a little more likely than not that we have reached the bottom (in housing prices),’ he said. ‘But there’s still a very significant possibility, maybe 30 or 40 percent, that things could get much more frightening.’”
I think if you don’t know you should’nt speak b/c when you do you sound like a fool.
To academic economists like Hamilton, who view the world through the lense of probability theory, anyone who thinks the future can be predicted with certainty sounds like a fool.
The slowdown only started about a year ago. Has any past housing market correction finished in a year? I don’t think I’ve ever seen one. I’m a statistician too and I can say that 30 or 40 percent estimate is complete bullshit.
Funny that a guy who recently wrote an industry standard three-inch-thick tome on Time Series Analysis would ignore all historical housing downturns in his prediction, isn’t it?
My schooling introduced me to the risk/reward ratio. What are the risks to this investment? What are the rewards? With rewards of 50% return on housing appreciation in 2003, the risk/reward ratio said jump in with both feet. Today, I can’t project one scenario where the risk of my money can return any reward. Do I need an economics degree from a major university to figure this out? I would tell Mr Economics Professor that the numbers today tell me there is 100% chance this real estate market is in deep trouble for 2007, and there is no wayinterest rates will come down enought to change the direction. I do my research “real time” and can’t wait for fraudulent governement numbers, that get revised 2 months later. That’s my opinion, for whatever it is worth.
So it is 51% that we have reached the bottom. That leaves 10% of it-will-get-a-little-worse, and 40% of things-could-get-much-more-frightening. Since he doesn’t imply rising off the bottom, lets say the expected value of appreciation for 51% of outcomes is 0 => EV of 0. If we take it-will-get-a-little-worse to mean 10% depreciation, then we have 10% of outcomes at -.1 => EV of -.01. let’s take frightening to mean 40% depreciation, so 40% outcomes at -.4 => EV of -.16, added all together, he expects appreciation of -.17 or 17% depreciation.
I’ve taken the liberity to assume the more negative bounds of his ambiguity to account for the consistent undershoot bias (overly conservative) of economists’ GDP forecasting (as per an article on Angry Bear).
“To academic economists like Hamilton, who view the world through the lense of probability theory, anyone who thinks the future can be predicted with certainty sounds like a fool.”
Ha..Ha..Ha.. ROTFLMAO! Too funny GS.
The reason some of these economists believe future behavior cannot be predicted is b/c as a group they are terrible at it. They frequently make poor predictions; as a result, they think this ‘inability’ afflicts all other business disciplines.
Not true. To understand future market behavior you have to get up close and personal with it’s participants and you have to do a lot of real-time environmental sensing. You have to ask market participants questions, listen to their responses, and observe their behaviors. This kind of analysis cannot be determined solely by musing over historical data. Neither can it be done cheaply; it cost money to conduct this type of real-time research.
Furthermore, in order to perform this type of hands on research, you need to observe the market directly through focus group studies, population sampling, measured ‘test’ marketing programs and results, measured sales promotional responses, measured advertising responses, direct consumer product/service interaction, and so on.
Then and only then will you begin to get a sense of future market behavior and then and only then will you be able to look stakeholders in the eye and say with confidence: the market is growing you should invest OR the market is declining, competition is stiffening, as a result you might want to spend less or exit the market entirely OR this product/service (typewriter for example) will soon be displaced by other technologies such as PCs so you better prepare for the inevitable.
I will give you that they tend to stay in their ivory-walled offices too much, and substitute fancy mathematical algorithms for a realistic assessment of what is happening out there.
I like it.
Say:
~55% things will get better
~35% things will get “much more frightening”
That leaves ~20% for “get a little worse”. I.e. the odds of “frightening” are about twice as high as “a little worse”. Hmm.
100% - 55% - 35% leaves ~10% by my math.
But what do I know… my checkbook is balanced and my cars are paid off so my math skills are suspect in this new economy.
“I think it’s a little more likely than not that we have reached the bottom (in housing prices),’ he said. ‘But there’s still a very significant possibility, maybe 30 or 40 percent, that things could get much more frightening.’”
Simple arithmetic shows that that leaves something less than a 10 to 20 per cent chance of everything from a small to a moderate to a moderately frightening decline. Ergo, Hamilton is predicting at least a 2 to 3 X greater chance of a much more frightening decline to any of those even though a bottom-already-in is actually the most likely possibility.
I don’t think Hamilton should apply for any bookies’ jobs in Las Vegas after he loses this one.
He’s saying there is a greater than 50 pct chance that the market has hit bottom and there is less than 50 pct chance that it has not. In esence, he’s not sure whether the market has bottomed or not and that’s all he needs to say, ‘I don’t know.’
On the other hand, if through a combination of solid primary and secondary market research, he were 90 pct or more confident that the market bottomed or was nearing bottom or had bottomed and was begining to emerge from the trough then he should say so; otherwise, he should’nt waste the public’s time.
How would you like to have this guy in your office advising you whether or not your industry was growing or declining? There is a > 50 pct chance it’s growing and there is a
OK — if the market has hit bottom, and we all agree that the vast majority of potential buyers does not read housing bubble blogs, where are the contracts? Where are the lookers? Why is the NAR spending a fortune on this week’s ads?
One of the unkowns for the housing economists is multiple families living in a single family home. It has been commented buy some posters that our friends 15 MM from the south are buying single family homes and stuffing 2+ families and a couple of cousins into the. (two blocks from my parents home in Illinois there are 5 cars parked in the on the grass in the front yard) On the margin these home buyers may be the 50% probability that keep the market from adjusting straight down.
‘We’ve got another year of this, another 10 percent probably, in the next year, of value loss,’ he said. ‘We won’t see true price stabilization until 2007, and then we’ll slowly start ramping back up again.’”
Why do they think prices will start going in 2007? They never offer an explanation. “Last chance to get in before….” It’s sad when you marketing strategy is spreading fear.
Oh well, OUR marketing strategy is also spreading fear: we want prices to come down, and we cheerlead the decline. We do have a rational belief that the price-to-rent ratio is out of whack, but we also have a bit of an ax to grind. I think many of us are angry at the specuvestors et al for driving up prices.
“Though the number of sales are expected to rise about 7 percent next year in the four counties….”
These are the quotes that really annoy me. Just as the person above said, they never give any explanation! Why, dear Sir, do you believe demand will rise by 7% ? Since we’re just throwing out numbers here, why not 15% ? Imagine going to your boss and saying that sales will rise next year. Do you think they will just take your word for it, or would you be expected to justify? I guess you can get away with this kind of statement when you’re talking to a group of realtors however, where the only barrier to entry is a pulse and the ability to chatter mindlessly.
Imagine going to your boss and saying that sales will rise next year. Do you think they will just take your word for it, or would you be expected to justify?
In my experience the only time you have to justify a statement to your boss is when you say that sales will be going down and you will be lucky if you can keep revenues flat.
Point well taken. Tell the people what they want to hear and everything will be fine. Very true today. My only point was that these realtors are being way too optimistic in the face of contrary evidence, and the media is all too happy to oblige them with print space.
“price stabilization in 2007″? I seriously doubt it, as the economic situation will only worsen.
If RE prices stabilize=remain flat, then they drop 4% to 5% each year due to real inflation.
Compounded over years can be significant.
““Aiming to move thousands of would-be homebuyers off the fence, the National Association of Realtors is launching a major advertising campaign today.”
I believe the REIC can see the cheap money going away and is trying all they can to create sales right to the end. Just a theory of course, they could be as stupid as they sound.
You think NAR has a co-pay agreement with the other members of the REIC (builders, banksters, and brokers) to fund the advertising campaign? I don’t know what the annual budget is for NAR but for them to pull $40 million out of their butt at the 12th hour in the low part of the season seems fishy.
Have you seen the Ad? It reeks of desperation. This ad is going to backfire. They are spending 40 million dollars in an effort that will actually push people further from buying. One thing the American public can smell is fear and this ad reeks of it.
“I think it’s a little more likely than not that we have reached the bottom (in housing prices),’ he said. ‘But there’s still a very significant possibility, maybe 30 or 40 percent, that things could get much more frightening.’”
i’ve been adjusting my slide rule all morning and have to agree. it’s between 36 and 38 percent. i’ll try to refine it a little closer this afternoon
Well, the afternoon has worn on, how are you doing? I came up with 99 and 44 hundredths percent!
Wow — I remember having to do my math on a slide rule, until the IBM 360 was invented. Once they came out with Fortran-interactive golfball terminals, it was the equivalent of the Internet being created.
“‘the market will be ugly for a couple of years.”
Its going to rain this weekend… think I will rent out Clint Eastwood’s ..the Good the Bad and the Ugly!
At least “I” can! while those with mortgages about to reset cant do much in their lives except eat mac and cheese! I think I will rebalance my investments and 401k account during breaks …
Life is good… oh sorry… i heard owning a home is going to get ugly… no worries here!
To paraphase a line in the movie:
“If you are going to shoot, shoot! Don’t talk”
how about
“If you are going to sell, sell! Don’t chase the market down”
Well… only if you feel lucky, punk.
Sorry,wrong movie. But the FB-punk isn’t lucky either.
If you’re a struggling real estate agent, now’s a good time to consider a new line of work.”
Note to self…Cancel my Sally Struthers Realtor correspondence class.
‘We won’t see true price stabilization until 2007, and then we’ll slowly start ramping back up again.’”
What a crock, based on what? These jackasses pull a number out of their azz and expect some fool to buy into to it. These RE clowns have no idea what is headed their way and really think they can talk it back up. It’s this kind of blatent BS that has me hoping for a true crash, to flush the toilet and get it over with, so we can move on.
P.S. Please everyone vote Republodem so they can save us from ourselves.
BHAHAHAHA!
Only if they pass the “gay” issue in CO! Looks like there leader was dipping his own stick!
The meth made him do it. Oh wait, he “didn’t inhale!”
LMAO! These politicians say the dumbest crap. I don’t beleive either party.
I know this is not a political blog - but Vote out all incumbents and Vote against all news taxes/bonds!
“…Vote out all incumbents and Vote against all news taxes/bonds!”
Amen to that. I did, in fact — we have early voting (Florida). The touchpads were pretty cool — very fast.
I think he denied inhaling the meth. I don’t know if he’s denied inhaling the dude.
They keep forgetting that is not only that houses are overpriced, but that there is more houses than people need or want to buy. It is an oversupply of housing, and they dont go away too quickly. Plus, for those who want to move up to a bigger home, there is the part about selling our house first, which is difficult to do in this market.
Lots of houses, lots of people who would like a house, but they are on different ends of the see-saw. The part time preschool teacher and her grocery store clerk husband can’t afford a McMansion even at a 50% drop. Well, they could have until now with the creatively dishonest loans, but those will go away. The builders built profit, not housing.
The part time preschool teacher and her grocery store clerk husband can’t afford a McMansion even at a 50% drop. Well, they could have until now with the creatively dishonest loans, but those will go away.
Not only will they go away, the teacher and the clerk will be desparately trying to sell the one (or two, or three) they bought!
We got problems.
“California Dreamin’ on such a Winter’s Day” - my dreamin’ of watching CA come apart at the seams. What a beautiful site.
home prices throughout Southern California are about 30 percent overvalued.”
“Real-estate types, however, remain upbeat. ‘In real estate, there is no bad time to buy a house if you need one and can afford one,’ said Bill Velto, broker in Upland.” One seller of a four-bedroom, three-bath home at in Rancho Mirage slashed the asking price by $125,000 to $770,000 Capital region real estate agents believe many would-be homebuyers are unnecessarily waiting for the market to bottom out, a situation aggravating record resale inventory, causing headaches for new-home builders and contributing to lower prices.”
What kinds of clowns make these comments in the face of reality. Many would be ‘homebuyers’ are now waiting, so that they don’t become a big bagholder as the price continues to plummet. And yet, a few GF will become FBers by listening to some agent (only out for his pocket) tell them it is a great time, buy the new house now and we’ll get you a top offer by the end of next week for your current palace. How fun would it be to be a 2 mortgage bagholder on homes that fall several hundred thousand. How will the Governator come to their rescue (ha, ha).
You can still afford a 770k house? The mortgate must be close to 5k a month. Please raise your hand if you can afford that and still have money left over to buy food and gas.
Those upbeat real estate types are smoking something GOOD. Where can we get some?
Try the Federal Reserve building in Washington DC. They are printing tons of it.
I am observing this phenomanon. Real estate related jobs, such as construction and home loan processing to name a few, shred. But unemployment rate keeps going down as report in today’s news. Overall, jobs lost due to housing slow do not seem to have any net negative impact. Any thought.
The employment number keeps going down because everyone in the grandmother that sold and made 1000s of dollars on their home, don’t need to work for years and will not be filing for unemployment. The unemployment number is a bunch of misinterrupted BS. It only tracks people on unemployment. When it runs out, you are no longer on the stats. If you get a job that pays less or work part-time then you are no longer unemployed, but yet making hardly like before.
The true question is how many people have lowered their incomes after a job loss?
“It only tracks people on unemployment. When it runs out, you are no longer on the stats.”
This is incorrect. The BLS does telephone surveys, and counts as unemployed anyone who responds he does not have a job but is looking for one. Those who do not have a job and are NOT looking for one are not counted at all.
Good point. But whatever the method is, as long as they measure it using the same method throughout, the result does suggest a trend. If the gov’t were changing the method to make the numbers look good, that is bad. But that is not the case here. Thanks.
“The BLS does telephone surveys”
Check the facts:
http://www.shadowstats.com/cgi-bin/sgs/article/id=341
GOVERNMENT ECONOMIC REPORTS: THINGS YOU’VE
SUSPECTED BUT WERE AFRAID TO ASK!”
A Series Authored by Walter J. “John” Williams
“Employment and Unemployment Reporting”
(Part Two in a Series of Five)
My first guess would be that a sizable batch of unemployed people dropped off the numbers since they were unemployed for >6 months. Of course, I could just be cynical, but I bet the gov’t has enough leeway in their bookkeeping/reporting to fix the numbers in their favor when they need to.
Heh - stockmarketguru beat me to it.
I think the guru has it right. I also think that the numbers could still be good because people are indeed being employed, but the problem with the governments numbers is that they don’t tell you what kinds of jobs are being created. A former construction super. that takes a job at a hardware store is not the sign of a good economy.
There is another issue here besides underemployment:
Negative Wage pressure. We are going to see quite a few previously high wage earners, not all from the REIC, scrambling for any job. Thus, it will push down the wages of the less skilled jobs they scramble for.
This will be even more interesting with the previous “real estate” barons have to go out for a job.
Hence why this downturn is going to take a while. Now someone somewhere is creating jobs I don’t know about. So eventually there will be a rebound. I’m starting to think 2009.
Neil
I just had to weigh in on the whole “media blitz” NAR has underway? Firstly, notice how carefully crafted the ad piece is. While they mention that rates are at 40 year lows (can someone check into that for me) they don’t mention that they have been lobbying aggressively for even lower rates! This may not be good unless you like to re-fi every six months. Secondly, it’s a great time to buy OR sell a house? Rally? They already have more inventory than they can shake a stick at but they’re willing to take on MORE? Oh, I doubt that. The craftiness here is that the last thing they need is to leave the buying public w/the impression that they are up to their eyeballs in inventory they can’t move. Lastly this campaign of deception is being funded entirely with commission dollars paid for by GF’s and everyday folks. (I know that part is obvious but I had to say it anyway).
What the NAR is also selectively choosing to ignore is that if and when this “market” (I hate even calling it that) gets turned around the appetite for McAlbatrosses will have totally evaporated! Styles, tastes and priorities will have changed markedly and even those that can afford the taxes, maint. and utilities won’t be any less screwed than the are today!
i posted this in another thread but will repeat….
It is in the best interests for the NAR for prices to come down. The only people that can afford housing right now are trade-up buyers that are rolling over equity. So even if we all buy, we are all selling and the delta to the inventory is 0. Imagine if the lowest entry point on a vehicle was 80k.
And imagine if everyone who owned a car was expecting it to go up in value next year. Imagine if car owners got offended if you offered them less than the 2007 new car price for their 1998 car.
The whole concept of depreciation of structures has been lost in recent years due to artificial restrictions on construction coupled with inflation. This is why I’m all for seeing the homebuilders go ahead and build themselves into bankruptcy - we need a massive oversupply of housing to correct the imbalances accumulated over the last 15 years. I’ll know that we have enough housing when a “used” home sells for less than this year’s model - and that shows no sign of happening soon.
“I’ll know that we have enough housing when a “used” home sells for less than this year’s model - and that shows no sign of happening soon.”
Great point, and one never mentioned by any of the gurus, experts, and other suspects favored in MSM quotes: Is it reasonable to insist the market is close to bottoming out when liquidity in the used home market is frozen rock-solid and new home orders are getting cancelled at the same time new home prices are rapidly falling (especially if you properly adjust for the value of incentives)? I think not.
Yeah, we’re not there yet. I have a new line for the homebuilder’s mascot to lead the charge with.
Buzz Hacksaw: “To Bankruptcy, and Beyond!”
SM Landlord — I agree with GetStucco — great point and one that is rarely addressed, even here.
“Hear that steady hiss? That’s the air seeping out of the housing bubble. If you’re a struggling real estate agent, now’s a good time to consider a new line of work.”
Huh……….What’s this?
But………but………it’s always a good time to buy……….bwhahaha
• If you’re a struggling real estate agent, now’s a good time to consider a new line of work. In California alone, the number of real estate agents and brokers increased from 303,351 in 2000 to 511,459 in August 2006. There are too many agents chasing too few sales. No wonder you’re struggling. Ever consider consulting?
___________________________________________________
When did McDonalds rename their McFry Cooks Consultants!!!!!
Yea, when somebody gets laid off and is asked what they are doing they say, “Im Consulting”. Translation, unemployed and looking for work.
A lot of these realtors have been “consulting” for months.
Maybe I no speaka da english so good….somebody please explain this quote to me:
“Capital region real estate agents believe many would-be homebuyers are unnecessarily waiting for the market to bottom out, a situation aggravating record resale inventory, causing headaches for new-home builders and contributing to lower prices.”
UNNECESSARILY waiting buyers are causing prices to fall…MY GOD…they really should hurry up and buy before they can get it for 20% less! NAR should spend some of that $40MM on common sense courses for their agents.
SFer,
Yah, mine english no so good either. WTF? This ad is going to be the biggest waste of time and $’s in RE advertising history! When I first read it they just sounded more like beggars than sales people! Sheesh, have SOME dignity!
I seriously cannot wait to see what kind of horsesh$t the borderline retards at the NAR come up with for this campaign. I’m expecting something like a car ad:
“What are you waiting for [name of your town here]? There’s never been a better time to buy a new drywall box from your friendly neighborhood stucco dealer! Hurry now, because this offer won’t last. This weekend only, we’re discounting all ‘06 models to make way for the ’07s. Thousands below sticker, hundreds below cost! Bad credit? No credit? NO PROBLEM!! Everyone is approved. But you must act now! This stucco won’t last!”
Looking forward to the inevitable spoofs and satires of their campaign on YouTube and sites like this one.
Maybe they will have a timer countin down like the infomercials. Call now and we will double our offer! You can have a granite toilets to match your kitchen counter.
Wait a second…
My not buying is allowing my assets to appreciate *and* home prices are depreciating.
Awww… and I see yet another large condo/townhouse project starting up in the area.
Ok, I’d rather not buy a townhouse, but I’m seriously considering it as my 4th string option.
Neil
Yeah, that struck me as rather untactful too — insulting the buyer for not buying. Pretty soon they’ll wrestle the buyer to the floor and mug the poor sap. No. Wait. That’s what they’ve been doing all along. The problem these NAR creeps have and refuse to acknowledge is that there are no more fckng buyers. Those who wanted to buy already bought, some of them more than once.
Suddenly now, as the pricing winds have changed, everyone wants to sell. Selling momentum is building and pretty soon its going to overwhelm this entire market and price to the downside.
“Unnecessarily waiting” — Oh my God. Oh my freaking, farking, flicking God.
It’s their fault there’s too much inventory? It’s their fault they didn’t get into flipping like everyone else? It’s their fault they didn’t encourage overbuilding? It’s their fault they’re the only smart ones left? It’s their fault they see prices go down and extrapolate the trend, as people did on the way up? It’s their fault they won’t take out loans they can’t afford?
Those pooooooooooor homebuilders with their headaches. They’ve had such a rough last six or seven years, just scratching to make ends’ meet, and now those evil buyers WON’T BUY! Someone give them a couple Advil.
Blaming the potential buyers for not being greater fools. Well, at least it’s clear what side the idiots are on.
“unnecessarily waiting for the market to bottom out,”
Translation:
We at the NAR are unnecessarily starving, please stop this not buying stuff as we are getting hungry. (sob, sob, sniffle, sniffle) Please… help…. help me….. mommie….. mommie … (sniffle)
“Unnecessarily” implies to me that buyers are ready, willing, and able to buy, but they are reluctant to be the next GFs catching the proverbial knife.
What would “necessarily” waiting imply? Waiting for an inheritance? Anyone can still fog a mirror. There is currently no impediment, sadly, to no-doc/stated income, etc. (maybe now in some banks, we hope). If necessary for ego purposes, still possible.
“Waiting for the bottom” implies a crystal ball or precognition. I don’t have it, but I do have this blog. And the MSM is slowly catching on -
Can someone please define for me: “Real Estate Types”
Much thanks
Anyone trying to get you to buy a home when 1) it is a falling market 2) the buyer is overleveraged 3) the push the sale for their own personal gain and don’t worry about the harm it would do to the client and their family. Mortgage brokers and realtors will make attorneys look like saints.
you and me and everyone we know
“Real estate Types” Husband and wife both working at Wal Mart with 2 kids trying to buy a house
“Capital region real estate agents believe many would-be homebuyers are unnecessarily waiting for the market to bottom out…”
Unnecessary for who, LOL?? When the median price in my area is about $750K, and prices can skid at least 30%, I consider it VERY necessary to wait until that haircut happens. The only thing in this equation that isn’t necessary is for greedy buyers to hold on to ‘05 price dreams. THEY are the ones causing the glut of inventory, not buyers that demand a realistic price that they can afford.
Even if at a 30 percent hair cut off of $750 would translate to a median of $525k. Better yes, likely yes….anytime soon? Not likely. This bubble will take years to pop, probably not bottoming out until 2009-2010.
A median price of 525k still demands an income of between 131k and 175k to match a 3 to 4 X multiple. Hmm…where in the U.S. is that a median income? If you answer La-La land, you are correct.
Yes, this is for LA. And the area I am speaking of is the Westside, so that median isn’t off at all.
The median house value and the median income level to afford those overpriced houses don’t match…
Should we expect everyone will be getting a 100k pay raise in the next few years to match the house values?
The median income for the Westside is way over $75K and rightfully so. It is 5 minutes to the beach, centrally located, has no smog, is one of the last English-speaking parts of LA, and you never need heating or air conditioning.
I would pay $500K for a decent house here in a heartbeat. To ever think that you are going to buy a house in Santa Monica sans major earthquake for less than $400K is just fooling yourself. The great majority of people will never get to buy here, bubble or not. It’s capitalism at its finest.
To ever think that you are going to buy a house in Santa Monica sans major earthquake for less than $400K is just fooling yourself.
Yes, it’s different there… LOL!
jjinla - I spent two weeks on the west side of LA this spring, and i needed air conditioning at least a few hours a day - that is, the few hours a day i had to spend in the car getting from one traffic-clogged, not-very-attractive locale to another.
Median income “way over $75K” is a very interesting and useful statistic. However, i think you might find even more interesting statistics, oops, i mean, actual statistics, if you do a little research on the internet.
Wells Fargo issued a study in August, 2006 showing the median FAMILY income in LA was $56,200, versus a median home price of $521,000. While undoubtedly the “Westside” is higher, home prices are also much higher. Which is to say that home prices are grotesquely unaffordable throughout metro LA, air conditioning required or not.
I wasn’t sure if Tbone was implying that LA actually had median incomes of 131k and 175k. This is clearly not the case.
Say what you all want, but if you pull up zip codes 90405 or 90404 (along with several other coastal zip codes), I think you will find that housing prices have been at least 4-5x annual incomes for decades. SFH prices on the Westside weren’t below $400K even BEFORE 2002.
It has nothing to do with “it’s different here” denial. I’m a huge bear. But it is also a simple fact that the coast is one of the few “moneyed” parts of LA left. The median is much higher because anyone making below $75K can’t even comfortably rent a 1BR. And for those that do buy here, they are willing to stretch a bit more to live much better than on the other side of the 405 or 101. If my only choice was to live in the Valley or mid-city, I would sooner leave the state.
Here’s a terrible time to buy: 2005. Even if you needed a house and could afford it, you’ve lost a ton of money.
Agreed. That’s when I sold. I feel sorry for the buyers, who are super-nice people, but I didn’t go find them, much less convince them to buy the place.
Best entertainmenTht value around. Reading all of our hilarious comments. Unfortunately, at the expense of some big bagholders there in CA. The NAR (and Lereah) all ought to be jailed. I have a new idea for saving the gov’t money. Change the prison system (and place all of the unscrupulous realtors, mortgage scammers, etc) under a big airconditioned tent in the Mohave desert (the Amboy crater would be a great place, or Death Valley) in the summer. If they try to escape, well - unbearable heat and nothing for miles - well, no. And in winter, haul them someplace cold (Barrow AK) - same idea (or even somewhere in the Montana, Minnesota, or North Dakota wasteland (same idea) - only heat it. Comments - and Lereah his due.
Why waste money on air conditioning? The Phoenix sheriff who runs tent prisons in 110-degree heat doesn’t coddle his prisoners in that way.
I don’t get it . Isn’t it risky to have a add campaign that states a bottom and predicts a uptick for 2007 . Maybe these guys are falling on their swords to try to save the market psychology because they believe if they don’t it will tank even more and there will really be a 1929 type of free fall .
How can these guys call a bottom when its dependant on what the buyers do, and that’s a unknown . We know what the flippers and sellers and builders are going to do as time goes on . What are buyers going to do and what kind of buyers will be buying ?
(1) Buyers priced out of their local market -no help
(2) Buyers who are to smart to catch a falling knife -no help
(3) Criminal con artists looking to work a con would create sales ,but they would default quickly so actually no help
(4) Flippers buyers jumping back into the market -small percentage because most are bagholders already -small % help
(5) Entry level buyers just coming out of college -no help priced out of market .
(6) Baby Boomer Buyers -cant sell their current house -no help
(7) Immigrants -possible if they are rich and the real estate in their country is more expensive , but they usually aren’t dumb so they will be little help .
(8) Move up buyers -no help because they can’t sell their own POS .
Nothing here to spark a rally no matter how many adds you run .
Sorry ad not add , and ads not adds .
Are you off your medication for A.A.D.D.?
“Aiming to move thousands of would-be homebuyers off the fence, the National Association of Realtors is launching a major advertising campaign today. The campaign begins as Sacramento-area analysts suggested this week that more buyers are entering the market, but that local sales prices may fall 10 percent before stabilizing in 2007.”
OOOkay. I’m just gonna buy the house because I fell for your ad.
Sure - that’s why I have been crunching the numbers and sitting it out.
I’ll buy when the numbers make sense to me - who cares about the load of bull the NAR spews. The GFs who fall for such things are already in . All that are left out are hard core number crunchers. None of them’s going to buy based on NARspeak.
This spiel is not about pushing houses - it’s about NAR making sure that it’s membership dues keep coming in. After all NAR officeholders must be the “best of breed” of the realtors, and must perform superior most on the “qualities” needed for a realtor. They are the realtor’s realtor, the ultimate in personal character.
That’s correct! Somewhere on their site they claim that a NAR realtor is “the Mercedes of realtors”!
Anyway, here’s the ad (pretty lame in my opinion, I thought we were going to get something like “Got ******?”):
http://www.realtor.org/files/home_buyers___sellers/good_time_to_buy_ad.pdf
The Mercedes of realtors? So it overprices and underperforms and makes stupid acquisitions (Chrysler)?
I’d rather have the Prius of Realtors™, or perhaps the Corolla.
many would-be homebuyers are unnecessarily waiting for the market to bottom out, a situation aggravating record resale inventory, causing headaches for new-home builders and contributing to lower prices
quite possibly the stupidest statement to date.
Seriously stupid. If buyers simply waiting can force home prices down, isn’t that the right move?
In a bad housing market, conventional wisdom is–If you don’t need to buy, don’t. If you don’t need to sell, don’t.
Those that NEED to buy (not very many) and NEED to sell (increasing every day with ARM resets) will set the market–guess what happens when sellers outnumber buyers? Econ 101 test–prices fall.
I know; its truely pathetic.
Waiting is totally unnecessary. Don’t these renters know that if they buy now they can stop the price declines and take out a bigger mortgage?
Why would a person pass up a chance to pay more for the same house?
It reminds me of Chewbacca, an 8 foot tall Wookie, renting a treehouse next to 3 foot tall Ewoks.
I’m not making any sense.
None of this makes any sense.
And you may find yourself living in a shotgun shack
And you may find yourself in another part of the world
And you may find yourself behind the wheel of a large automobile
And you may find yourself in a beautiful house, with a beautiful
Wife
And you may ask yourself-well…how did I get here?
And you may ask yourself
How do I work this?
And you may ask yourself
Where is that large automobile?
And you may tell yourself
This is not my beautiful house!
And you may tell yourself
This is not my beautiful wife!
Water dissolving…and water removing
There is water at the bottom of the ocean
Carry the water at the bottom of the ocean
Remove the water at the bottom of the ocean!
And you may ask yourself
What is that beautiful house?
And you may ask yourself
Where does that highway go?
And you may ask yourself
Am I right? …am I wrong?
And you may tell yourself
My god!…what have I done?
Letting the days go by/let the water hold me down
Letting the days go by/water flowing underground
Into the blue again/in the silent water
Under the rocks and stones/there is water underground.
Same as it ever was…same as it ever was…same as it ever was…
Same as it ever was…same as it ever was…same as it ever was…
Same as it ever was…same as it ever was…
“Leslie Appleton-Young, chief economist for the California Association of Realtors, told more than 500 real estate agents, mortgage brokers and other business people at a real estate forecast symposium Thursday in Palm Desert that home sales and median prices statewide are likely to decline slightly from the once ‘red-hot market,’ then level off over the next 18 months.”
Did Leslie predict the prices would level off to a permanently high (though slightly lower than highest) plateau?
“‘The housing market is going through an adjustment after a four-year boom that was not sustainable, but the (economic) fundamentals are still very positive for this region,’ Appleton-Young said. ‘But there’s no area of California that is immune to the adjustments,’ she said.”
The boom started in 1998 and ended in 2005 — seven good years. The Bible says seven bad years will follow. Never trust an economist who cannot subtract.
If she had said level off over the next 18 YEARS, I’d believe her. (That’s pretty much what all of Germany has done.)
GS — thanks for another good point. These salespeople pay beaucoup bucks in dues and are entitled to expect realistic advice from their leaders. It does not look like they are getting it — not even close.
“No Area Of California Is Immune To Adjustments”
Obviously they haven’t heard from my in-Laws about San Francisco.
Try to keep up people, really.
Out of curiosity, has anyone noticed that MLS numbers in their local markets is declining?
Inventory in the Eureka, CA is down about 10% from the highs achieved over the summer.
Do people think frustrated sellers are simply throwing in the towel, thinking “next spring will bring plenty of buyers!” or are these homes actually selling? From my limited scope, it seems like there are still a few greater fools out there completing transactions, but the vast majority of de-listings are people taking their homes off the market. Any thoughts?
Kinda reminds me of when a little kid doesn’t get his way playing a game…then decides to take his stuff and go home. Poor sellers!!! It will be great next spring when the prices have dropped another $50K.
Yeah, I noticed that too. Inventory in LA County has been going down in the past 45 days. I think either Bubble Meter or Housing Tracker has those numbers. Two other counties are in similar trends. This perplexes me.
But you still see the empty homes.
And I still see homes from February still on the market in LA.
Two weeks ago I was in the valley and me and my fiance’ laughed hard seeing four for sale signs on one small condo building.
Not many homes sell in the winter anyway. This winter will be slow.
I’m wondering how many hummers will be up at Mammoth?
I still remember two years ago we drove up the only car in the condo! (The rest were Hummers and Suburbans.) Gad! By a mammoth condo in 5 years?
Neil
I am watching three areas, San Mateo, Orange County, Ventura County.
The price is coming down slowly. More slowly in Bay area and OC, as the people have more holding power I guess. I except sudden drop in price eventually for those area.
As people are not buying in as much number, and can not get as much funny money loan, price is bound to come down.
The inventory is not going up anymore. I remember the NAR advice to sellers, if they do not have to sell, take them out of market?
Some are waiting for next spring!
It is going to be a longer wait but sure kill.
Think I’ll take out a big ad telling sellers to Get Off The Fence and put their properties back on the market to promote quick price movement — thus generating actual transactions, and some income for Realtors ™. Don’t you think Lereah would thank me?!?!
It is a little irratating to see little news pertaining to the SF bay region. We’re seeing a lot of what the rest of the state is experiencing, which is that the inventory, even now, is continuing to build and very little is selling. There are even a lot of price reduced signs. the SF Bay is the most dramatic of the areas in the country that had the most exuberant price increases. It’d be nice to glean more info about this area, for I’m sure it is just as bad and could grow worse.
Apart from those area marked by mania like construction, southern california and IE I thought had more dramatic price gain.
% wise and no hard data here, it appears just so insane, and what can be more crazy than these….
I would love to hear about other areas.
There was not as much available land for the large developments in the Bay Area proper, so what you saw was infill housing and smaller, pricier developments, tho there are exceptions in some areas. For Sale and Price Reduced signs are sprouting but have not been overwhelming until you get into the outlying areas (I’m in the EAst Bay). The Real Estate section with open houses and houses for sale in the Sunday Chronicle is growing heavier every week, though. There are two houses that sprouted near me in the crosshairs of two very busy throughways, and the prices were immediately reduced $90k the first month. Not sure what they are now. They are the ugliest floor plans I have ever seen.
Nouriel Roubini
The Coming 2007 Recession Has Already Started in Many Sectors of the Economy…
http://www.rgemonitor.com/blog/roubini/
And the NAR want all of us to get off the fence and buy……..Huh
Not this little black duck!!!!!!!!!
Hold on to your pocketbooks, because next it will be the retailers/durable goods manufacturers/auto makers who will be taking out ads saying there is no better time to be a GOOD CITIZEN and support the economy, just spend money! Look for lackluster Christmas spending…I know I just spent my gift booty at the veterinarian’s. Stupid cat.
Talk about inflation. My last vet visit left me wondering if I will ever get another dog (well, not quite). Holy cow. Thirty minutes and nearly $300 later I was driving home thankful the pup didn’t have to spend any real time there. I don’t want to know what something significant would have cost.
Good thing the US stock market always goes up … er, except for the last six days.
http://www.marketwatch.com/tools/marketsummary/default.asp
P.S. Those T=bond yield movements were really ugly the last couple of days, suggesting the stock market has further to fall in order to re-equilibrate with treasury bonds.
Yegads — look at those gold prices since Oct 24. Isn’t the gold market a leading indicator of future inflation expectations?
http://www.marketwatch.com/tools/quotes/intchart.asp?symb=GC06Z&sid=999169&freq=1&time=1mo&siteid=mktw
Actually, the gold price is a leading indicator of currency destruction. That is, when the PPT aren’t “helping” it stay lower to make the dollar look better. The good news (for gold holders, anyway) is that they can’t do that forever with gold, because they can’t print it.
OK, I think “buyers unnecessarily waiting” is the blog’s official Meme of the Day.
Yesterday’s, in case you missed it, was the guy who’s foregoing new brakes on his car because he’s carrying two mortgages.
Here is a good view of the bond market crash over the last two days. Where will the stock market go on Monday? PPT better have those fire hoses on full blast at the opening bell…
http://tinyurl.com/um2ag
“James Hamilton, economist with the University of California San Diego, said there are signs that housing may be bottoming out.”
In other news Sea World San Diego fired their Dolphin Show trainer to hire James Hamilton. Patricia Parks of Sea World commented, “We want our dolphins to learn from the best, no one flip flops better than James”
LOL
Real estate is the only occupation I know of, in which you can lie, and not be held accountable.
More great advice from the realtorwhore gang who, of course, only have your interests at heart. “In real estate there is no bad time to buy if you need a house and can afford one.”
Oh, yeah? Well the BIG hole in that stupid used car salesman remark is…..”Do I want to buy now and pay $3,000 a month mortgage for 30 (very long) years for a VERY overpriced house OR do I want to wait a year or so and buy that same house and pay $2,000 (or less) a month mortgage for 30 (long) years when it’s finally at or around fair market value?”
I sometimes shake my head in wonder when these carpet bagger realtorwhores come out with this kind of crap. Not that they say it - because they will say ANYTHING to hook a sucker but that people actually believe them.
Again, and don’t concern yourself about being polite with these a**holes if your’re buying a house because they will stiff you for a BIG chunk of money over 30 years, just ask the realtorwhore, ” As a real estate professional, if you are so certain that now is the best time to buy and that this is the bottom of the boom and bust, will you sign a separate contract that guarantees the value will not drop more than 12% in the next few years and if it does, you will pay me the difference between the price of the property then and what it is now.”
Guess what their reaction will be…….
From the The Union Tribune…
“For the first time in six years, San Diego County’s economic growth is lagging the rest of the state and nation, according to a report. One of the chief culprits for the slowdown is the decline in home construction and growing softness in prices.”
So, this seems to be admitting that the slowing housing market has not been caused by a poor economic conditions, but rather it is the cause of a poor economic conditions.
Slightly OT, but I was at an office complex in Aliso Viejo, CA yesterday and saw a pre-eviction notice (for failure to pay rent) on the doors of “123 Loans.” And Coast Hills Financing in my building seems to be down to a staff of one gnomelike creature who I can occasionally see in one of the back offices — the one that’s not completely empty.
Dear RE/Industrial Complex Types: You Are All Doomed.
Think I mentioned a few days ago that one of the places for rent in Morro Bay is part of the Coldwell Banker office. Has been on the rental mkt for weeks at least.
And I bet the Travelocity gnome is more active !!! LOL
“If you’re a struggling real estate agent, now’s a good time to consider a new line of work…in California alone, the number of real estate agents and brokers increased from 303,351 in 2000 to 511,459 in August 2006.”
I have given up trying to explain to friends and “friend of friends” that quitting your good government job (or any good job) to become an RE agent is a disastrous move they will regret. I now know two ex cops (90k w/OT + retrirement/full benefits) and an ex social worker (45k + retirement/benefits) who have outright quit their jobs to beome RE agents. One is now essentially unemployed and living wuth her parents, one is moving to Arizona to see if things are any better there (it’s not) and one now wants to open a daycare. They ALL regret their decisions. This RE bubble/craze has affected more than just investors/flippers and overzealous 1st time buyers, it has created a new underclass out of once employed, productive people.