“The Listed Price Is Just An Asking Price” In California
The North County Times reports from California. “As Riverside County’s real estate boom fades in the rearview mirror, signs of housing hangover are everywhere. Just ask a real-estate agent who hasn’t closed a sale this year. Or representatives of Fox & Jacobs Homes, who are having to offer $10,000 incentives to move the last few houses off their books in in Lake Elsinore. Or homeowners who have reduced their asking price several times.”
“The oversupply of new houses and new real-estate agents suggests that the faster downturn of the last six months has taken builders, agents and buyers by surprise. The number of Southwest County homebuyers who defaulted on their mortgages nearly tripled in the July-September period from a year ago, to about 800.”
“Diane Holl, a Fallbrook agent who brokers sales in Riverside and San Diego counties, said she has seen several agents go all year without selling a single house. Many have recently invested in new suits of clothes, extensive advertising, and sometimes even a new car to ferry clients around. In a down market, those kinds of expenses make for a lot of angry husbands and wives, she added.”
“The Southwest Riverside County Association of Realtors membership has risen since then, even as the markets have slowed further. The group now counts 5,099 active members who are registered to use its listing service. ‘You do the math,’ said (realtor) Gene Wunderlich. ‘It doesn’t take long for the people to figure out they’re not making anything.’”
The Union Tribune. “For the sixth month in a row, San Diego’s index of leading economic indicators declined in September, dragged down by declines in home construction and a rise in unemployment filings, according to a report.”
“To economist Alan Gin, the weak housing market was the most significant indicator for where the economy is heading. New residential units authorized for construction through the end of September were 32 percent lower than during the same period in 2005.”
“Single-family homes were down more than 40 percent, while multi-family units, such as apartment buildings or condominium projects, were down 22 percent.”
“One reason for the slowdown is that there is currently a glut on the market. A study reported a 12-month supply of condominiums and attached homes in San Diego County, a surplus that has pushed the average price of an attached home 9 percent lower than last year.”
“Researcher Kelly Cunningham warned that the weakness in the housing market also would have an effect on retail sales.”
“‘During the housing boom, home refinancing really freed up a lot of money for consumers to spend,’ he said. ‘You’re not going to see that next year. Retail sales have already flattened out, and they may go down as people try to pay off their bills.’”
The Press Democrat. “Prices have dropped the past three months to $567,500, down from last year’s record of $619,000 for a median-priced home in Sonoma County, the first such decline in 12 years. The number of homes for sale is at a nine-year high.”
“‘Today the listed price is just a suggested asking price,’ said Belinda Andrews, an agent in Santa Rosa.”
“Neil Pacheco just about gave up hope after five months of shopping for a home. The monthly payments seemed prohibitive on the $484,000 house he was eyeing in Windsor. But then the slowing housing market turned in his favor. The seller, who had lowered the price by almost $6,000, knocked another $8,500 off the price tag, and then agreed to pay $10,000 toward closing costs.”
“Add in some creative lending help, and Pacheco and his wife got the house off Los Amigos Road. With the median home price dropping in Windsor three months in a row, their timing seemed right. Slightly more than half of their combined income will go toward their $3,100-per-month house payment. And that doesn’t cover insurance or property taxes.”
“But Pacheco believes he got a bargain by paying $475,500 for the house, which was listed for $489,900 when it went on the market in mid-September. Pacheco feels he did well on the 1,300-square-foot, three-bedroom house built in 1993, because it was appraised for $505,000.”
“In the end, their loan, actually a first and second mortgage combined, had a zero down payment and the Pachecos had to come up with only $700 out of pocket for some paperwork costs. Their monthly payment is more than three times the $1,000 rent they were paying for a two-bedroom apartment.”
“‘We know that we can do it,’ said Pacheco of the relatively steep house payments. ‘We want to work hard for this. We were working hard before.’”
The Sacramento Bee. “Alison Munro of Vacaville is among those who believe prices have further to fall. Others who bought late last year and lost equity, or who find themselves with a mortgage that allows too few other pleasures, are looking for help. Munro says she has friends in Benicia who took on roommates to help make payments.”
“‘It’s not that they couldn’t make the mortgage payment,’ Munro says. ‘But they couldn’t go on vacations in the summer.’”
“Growing numbers of financially troubled properties also represent new discount possibilities for buyers, real estate agents say. Foreclosures and short sales, where banks accept lower prices to avoid repossessing the house, are up. So is the number of bank-owned properties.”
“‘I know there’s at least 200 in our four-county area,’ says broker Carey Covey.”
The LA Times. “Welcome to a twilight open house, one more way to make a listing stand out in a market glutted with them. ‘With the market the way it is right now, you have to be a little more creative,’ said Priscilla Gonzales, who shares the Silver Lake listing with her daughter, Bautista.”
“The agents represent Joseph Lopez, who owns the two-bedroom, one-bathroom Spanish bungalow, listed at $660,000 for two months now. This is their second attempt at selling his 861-square-foot house. He asked $749,000 in January. After receiving no nibbles in eight months, he took it off the market, then listed it at the reduced asking price.”
“As the sky darkened, Bautista turned on tiny lights threaded through the leaves of potted trees. The sunset was not visible from the deck. ‘You can see the sunrise,” she said, pausing as her mind worked. ‘We should have a breakfast open house.’”
The PD is serving up a big batch of kool-aide today:
‘As she shops for a condominium, Kris Jackson is finding plenty of choices and prices lower than what she expected to pay. Sales of both condominiums and houses have plummeted from last year’s peak and prices are dropping. ‘I do have more leverage. Obviously I’m going to use it to my advantage. Especially right now, people are screaming for buyers,’ Jackson said.’
The Santa Cruz Sentinel:
‘In October, the median sales price for condos was $497,000, down from $542,000. October sales totaled 141, down 19 percent from last year and down 44 percent from two years ago. Some of the same situations exist in the condo market. Only 37 condos were sold, close to a 10-year low for October. Buyers had their pick of 267 listings, 49 percent more compared to last year at this time and a whopping 184 percent more than two years ago.’
‘For single family homes, the number of listings, at 1,172, arethe highest in 10 years for this time of year. There are 31 percent more listings than last year and 81 percent more than two years ago. Prices are up more than $100,000 compared to two years ago.’
‘Ballantyne’s advice: Don’t give up. ‘It’s an excellent time to be looking,’ she said. ‘The 18-month miracle is gone but California real estate is bulletproof if you can stay five years.’
‘In 2000, when Oceanside voters passed a $125 million bond measure to build schools and rehabilitate older ones, school district administrators thought that student enrollment would increase for at least a decade. But the predictions turned out to be wrong. The district began losing students four years ago. ‘No one expected the decline in our enrollment would be as severe as it was,’ Sullivan said. ‘The biggest thing that changed here is housing becoming so unaffordable, and that wasn’t in the projections that SANDAG or anyone had.’
‘The number of houses in foreclosure in Shasta County jumped 68 percent in the third quarter from the same period of 2005, according to numbers released Friday.’
“The agents represent Joseph Lopez, who owns the two-bedroom, one-bathroom Spanish bungalow, listed at $660,000 for two months now. This is their second attempt at selling his 861-square-foot house.”
861 square foot for 660 K. Hahahahahahahahahahahhahahahahahahahahahahahahahahahah!!
someone stop me from laughing before I hurt myself.
Hahahahahahahahahahahahahahahaha!!!
$766/sqft. BABY!!!!
That person has got some balls the size of China. Even in SF Bay Area you don’t see such prices.
If the twilight open house doesn’t bring ‘em in, then surely the breakfast open house will. Too funny.
You guys are such gloom and doomers ….
Here’s a 832sqft for 925K in cupertino, CA
http://beta.mlslistings.com/Reports/Main.aspx?propertyId=719672
“Lopez, a retired psychologist, went along with the idea of a twilight open house to call attention to the 500-square-foot deck that he added to the home.
“It really enhances the property,” he said, “and provides access to the view. …”We really wanted to showcase the deck,” Bautista said. ”
Yeah, I’d want to emphasize my 500 SqFt deck too if it was 2/3 the size of my house. Sure, why not put the plasma out on the deck since there’s no room in the f’ing house!! My god, my old apartment was bigger than that.
I would love to go there and just laugh in the face of both Lopez and the idiot RE agent. Excuse me? The asking price is what? Bwahahahahahahhahahha. Good luck with that douche bags.
Yea given that Bay Area is a deflationary ecconomy… its a totally loony …
“But Pacheco believes he got a bargain”
No Its Pacheco who has just caught the falling knife…
not that long ago a condo of around 800 sq ft was going for around 90K… lots of those single story 70s condos peppered in the valley. And that was with nornal employment back in 1997…
The $800K is way off. We have more than 60% decline on these puppies.
Yea I’ll never get this. It just goes to show people put very little thought into what they are doing. He could have built a house in a far better neighborhood for half that. I know of a lot right now for 100k which is probably the same size of what he has even if he paid 200.00 per sqft to build he still would have come out a lot better and if structured proberly put very little down. The guy in Silverlake at over 700.00 per sqft is of his rocker. The same example applies there. WTF are these people thinking
wtf, indeed…
800-900/sq ft and a closet at that. i never cease to be amazed at all thr FBs and GFs you show us all on this blog.
why don’t we start posting the names of the fools involved in these transactions. the HBB hall of shame, if you will.
:LOL
“The agents represent Joseph Lopez, who owns the two-bedroom, one-bathroom Spanish bungalow, listed at $660,000 for two months now. This is their second attempt at selling his 861-square-foot house. He asked $749,000 in January”
Did you see the shot of Silverlake hills in that LA times article?(second photo). I guess having a home perched on some small LA hills makes a pre-WWII built midget 2/1 bungalow worth 660,000. There might be a bit of a problem selling at that price due to one locational problem: down in the flats immediately below the rarified silverlake air are some nasty, traffic clogged third-world stinkholes
Emenating from the fiery regions of Rampart and westlake and spilling over the 101 into the Gentry land of Silverlake.
Which Have crashed the barrier of the 101 fwy from the
Price crashing in San Diego actually had the biggest drop last month! Check this out:
San Diego home price plunge gets more severe!
Median price crashes $21,000 last month, now down $25K, year over year!!
“The median-priced single-family detached home in San Diego County declined in October to $550,000, declining from $571,000 in September, and from $575,000 in October 2005.”
…article at http://www.realestatedecline.com
I’ll take 5…5sqft that is
right. enough sq footage to place your lazyboy with the built in beer can holder - hey, it is all anyone needs
JWM
“Yeah, I’d want to emphasize my 500 SqFt deck too if it was 2/3 the size of my house. ”
LMAO
Yea, All the hipster F*ckartds I have worked with all bought shacks in Silverlake and Echo Park and attached huge decks onto them, so they can bong to their hearts content, while checking their lovely views of the homies womping on somebody. (if their eyes aren’t stinging to badly from pollution that is) At least they’re “cool” for living in the same neighborhood The Chili Peppers (use) live in! I will laugh my ass of when this area reverts back to the smog shrouded dung heap it truly is! 310 over 323 forever!
Where can I sign up for this incredible deal?
Is there room for my big screen? Where do I park the Rolls?
You guys are slaying me tonight.
Just saw a new cedar fence going up on one of the tiniest, trashiest houses here in Ashland,OR today with a hummer parked right in the middle of the miniscule front yard! Me thinks the flippers are getting desparate.
You know those port a potties you see on construction sites? You could just attach it to to the outside of that 800sf house and say, look, it comes with a bonus 1/2 bath.
LOL!!
And the appraisers would probably approve it too..!
“California real estate is bulletproof”
Oh really? Are the jobs bulletproof? What’s stopping India, China and Eastern Europe from taking your finance, technology and even medicine-oriented jobs?
California and the USA: Keep the cost of living up and price yourselves out of jobs.
You’ll want a bullet handy to put yourself out of your misery if you think California real estate is bulletproof. Again I look in the weekend Mercury News and see a very thin employment section full of jobs that pay below median ($70K).
Very few jobs are listed in papers these days; even our Seattle papers have a small employment section in the paper, but a very large website.
can’t we get rid of the precious gov workers ? ever
You got that 100% right. Im shocked how many just dont get this!!!
This has an equal impact on homeowners as much as renters.
Lots of people talk about China and India… but I am glad someone mentionning that Poland and Hungary and Romania are taking over accounting services for like 1/10th the price. All the companies in Europe and now from the US are importing their services.
Globalization baby!!!
“Add in some creative lending help”
NO NO NO ! You can’t afford that house if you need “Creative” financing you poor fool.
“Slightly more than half of their combined income will go toward their $3,100-per-month house payment. And that doesn’t cover insurance or property taxes.”
You have just joined the “House Poor” crowd. You can now no longer afford ANYTHING.
“‘We know that we can do it,’ said Pacheco of the relatively steep house payments. ‘We want to work hard for this. We were working hard before.’”
And now welcome to debt slavery, I give you 2 years max before you are divorced and have to sell that stupid house. Why couldn’t you JUST WAIT for prices to drop more ?
http://www.ocregister.com/ocregister/money/housing/article_1348037.php
“ECC lost $16 million when it resold the returned loans at much lower prices.”
I have an acquaintance who is a mortgage auditor for a firm that purchases debt. Mentioned an instance in which he found almost 100 loans under different names using the same docs, such as bank statements, employers, etc. Needless to say, those loans were rejected by his company.
It’s pretty scary to think how many of ther doc loans such as those are out there. I suppose it’s possible that most of such borrowers will make good on their loans and the problems won’t surface. Unfortunately, it’s starting to sound like the S&L debacle all over again.
“Lending to folks with dubious credit histories is a tricky craft. People in financial hot water often lack borrowing experience and are vulnerable to the hard sell. And certain subprime lenders have been too aggressive in pushing their loans.”
I can’t believe what I’m about to say, but I’m going to say it anyway. There are definitely some “sheeple” who were taken advantage of. Sometimes we forget that not everyone is financially savvy. Nor do they want to be.
Win-win situation for everyone, except the MBS holders.
Pacheco only risked $700, and get to enjoy their dream for a couple
of months.
No, he and his wife risked $700 plus their credit history. If they were able to get the prime rate of 6% or whatever, then I assume that they’ve been financially responsible for most of their adult lives. At some point they’ll want to borrow for a new car, for their kid’s braces or education, etc. At that point, if they fall behind on their mortgage or other bills because of an unbearable house payment (as many households across the country do), they’ll find themselves possibly paying hundreds of dollars more because of subprime interest rates. That’s going to be the most financially painful legacy of this housing bubble, I suspect.
…they’ll find themselves possibly paying hundreds of dollars more because of subprime interest rates.
That’s a best case scenario. Worst (and most likely IMO) case is that they simply cannot get credit, period.
They can always turn to Mafia loansharks.
“….I give you 2 years max before you are divorced and have to sell that stupid house…”
Why didn’t they just buy a house on “Adios Amigos Road” so it fit their situation….
The extra bad news for them is, with the no down, I/O loan, in 2 years they’ll have to bring about 100k to the table to “sell” it. Unless of course, they can quickly get a refi appraisal bumping the value from 505k to about 600k, take the 125k “equity” out ….. maybe Neil can keep the little misses happy for a while.
Sorry,
That is too generous. This deal and the Pachecos’ marriage is going down faster than the good Reverend Haggard.
No friggin way! I nominate these guys for both the Darwin Award and housing bubble hall of shame.
Embarrasing.
Unbelieveable. 5 degrees in my house, mid 6 figure income and we feel we can’t afford a 500K house but this idiot can
from the story
Pacheco works as a food server at River Rock Casino and runs his own landscaping business. Graciela works full time as a cook.
TX -
Well, with that kind of income you should be able to pay the gas bill. C’mon, turn up the heater…5 degrees is just too cold.
The same qualities that make you a solid investor are not helpful in making fiscal decision that include your emotions. You just can’t apply the same qualifications to a home as you do a stock. Unlike what the Realtors tell you, it’s not an investment.
I’m just the opposite. I had to unlearn the bad habits that got me into investing trouble early on.
But I have owned several homes that have done very well (thank you, Mr. Bubble). I now have a pile of cash for a downpayment when the time comes.
“C’mon, turn up the heater…5 degrees is just too cold.”
I pray to God you already know this but she meant 5 ‘academic’ degrees.
Dude, duh.
4Q!
Degrees aren’t really that relevant to making money, anyhow.
imploder “Degrees aren’t really that relevant to making money, anyhow.’
She said 5 Degrees…. not five finger discount, like they did where you grew-up.
Kinda figgered it out. The temp in Dallas has reached 5 (F) degrees and below 11 times in the past 100 years. It has been never been less than 10 degrees, and less than 20 degrees only 3 times during November in the past 100 years.
Lighten up.
..scared me 4a2nd.
In Silicon Valley if your Income is Mid 6 digits then your ready to have your job exported to another part of the country or overseas.
Back in 85-91 When manufacturing jobs got to rich for the corporate spending. They moved it to Asia. Now its highly expensive engineers.
“Now its highly expensive engineers.”
Engineers aren’t highly expensive.
An engineer is a person who has an actual engineering degree. there are a big chunk of these jobs that can’t just be shipped off to another country. I know a lot of people like to categorize themselves as engineers without an form of engineer degree or even in that profession. such as the janitor at our work is called an engineer. Well thats what the sign says when he is fixing the toilets.
I am a civil engr. and there are a lot of things that cant be done without being somewhat close to the working cities/counties.
I am an engineer and I agree folks without engineering degrees should not be able to title themselves as one.
however I did leave the elect engr profession for IT some years ago because it really doesn’t pay very well…
mina
Here is the deal - from my experience, many, especially young, people, have too high expectations once they get married. I’ve seen it over and over again - a couple of young douchebags get married, and get sucked into the “common wisdom”, of course, readily peddled by their parents, relatives, and friends - Hey, you gotta buy a big nice house for yourself!
So, the two fools jump through the hoops to get the house they “need”, only to realize in a year or two, that their marriage - from the stupid, lavish wedding, to the stupid, overpriced monster of a house, with five empty rooms - is not what they dreamed. At the same time, they see, that their respective spouse is an uninteresting person - either a nagging bitch, or a lazy TV-sports-obsessed idiot. It all ends when they finally can’t stand each other, and it all ends in a bitter divorce.
I couldn’t believe at first that people commit so much of their finances on a relationship that has a great risk of failing, but that’s what the people do. And I tend to blame parents for that - the parents are the biggest idiots out there.
When I first moved to Seattle in 2000, I read a sob letter in the paper about a young couple who were pissed they couldn’t afford a home…they were both in college and had two kids.
Should have bought a box of condoms..
Yeah, you’ve heard of how nice economically it can be to be a DINK (double income, no kids). I’m a SINK (single income, numerous kids) and believe you me, the acronym fits.
LOL
I must concur: SINK is FUNNY!
great post…I loved every word!!
This strikes me as one of the most bilious, negative, gratuitously insulting posts I have read on this blog.
Funny thing is I kind of agree…
And they have a two year old.
Hey Ben,
I know most of the terminology but I forget what FB means. Foolish buyer? Thanks.
FB = “F**ked buyer”, for fools who drank the NAR kool-aid and overstretched themselves financially to get into houses far beyond what they could reasonably afford.
Thanx Sammy.
They both work for me, but the more spicy version seems most fitting for catastrophically boneheaded folks like the Pachecos.
For those just tuning in, a brief glossary of bubble-ese:
(Feel free to add more)
Exotic Mortgage:
Anything other than a fully amortized loan. Some would argue that this would also include anything other than a 20% down payment as well, but hey, Californians have to buy houses too.
Flipper:
A speculator who purchases properties with the intention of reselling or “flipping” the property for a quick profit (by selling to a GF), usually in less than a year. Flippers typically use the most exotic of suicide loans and are increasingly becoming FBs as their ARMs reset.
FB = F**ked Buyer
A buyer who purchased real estate in the recent boom expecting prices to 20%/yr forever and who now find himself unable to make the payments and/or unable to sell. FBs might also be flippers or GFs.
GF = Greater Fool
Someone who bought an asset at a higher price than you did.
Greenspan, Alan
AKA “Mr. Bubble”, AKA “AG”, AKA “Greenie”. The Chairman of the Board of Governors of the Federal Reserve of the United States from 1987 to 2006. Considered on this blog as the principal architect of the dot-com and housing bubbles. Noted for using cryptic or understated language to describe market conditions e.g., “irrational exuberance” for tech stocks and “froth” to describe RE markets which had gone up 150% in five years.
I/O = Interest Only Loan:
A loan in which only the interest on the loan is paid. Principal is never reduced. The amortization horizon for such a loan is infinite.
LTV, High LTV = Loan-to-value:
Loan to value is a measure of how much is being borrowed compared to the appraised value of the asset which secures the loan. a $90K loan on a $100K property has an LTV of 90%.
Option ARM:
an adjustable rate mortgage with an option to pay a less than amortizing amount each month, or to skip payments altogether.
Neg-Am = negative-amortizing loan:
A loan in which the buyer pays a lower amount than is necessary to cover the accumulating interest. This leads to an ever larger principal amount which the buyer is unlikely to ever be able to repay, because if they could, why would they need a neg-am in the first place?
NAR = National Association of Realtors:
Black is white, war is peace, etc. Home of David Lereah, chief economist.
Reset:
An adjustable rate mortgage whose introductory rate has expired, exposing the FB to higher interest rates. In some cases this can lead to a doubling of payments causing the FB to seek exotic/suicide loans to buy time.
Short Sale:
A sale in which the bank agrees to accept less than 100% of the owed amount on a loan that is in default.
Suicide Loan:
SE: Neg-Am, I/O, Option-ARM, Exotic Loan
Underwater:
Owing more on a loan than the underlying asset is worth.
Wishing Price:
A ridiculously high asking price that is far out of line with recent comps. Usually based on an owner’s inflated sense of entitlement or on outdated information. “The joneses sold theirs for X last year so I deserve X too. I’m not going to just give it away.”
(Robert Cote coined this term, I believe.)
Now that’s child abuse ….. turn the damn heater on !!!!
TX
gotta live it up a little. I am thrifty but have to turn on the heat with a family. I drive an old car and with no car payments, invest the difference. But as long you enjoy life, it is ok not to turn on the heat.
You guys are kidding, right? I was referring to college degrees.
Yeah, I got that, but I would since getting degrees is my hobby/addiction.
LOL, dumbf**ks
TexChick have you seen those gas heaters at SuperWalmart. Imploder finds them very useful. Imploder already burnt up diplomas trying to keep warm.
I got that too. I only have two but we have an almost college-aged son and we’re working on lining up our ducks.
There are a lot of wealthy people out there that live relatively ordinary lives.
Or are even very cheap. I recall Ken
Olsen, Chairman of Digital Equipment
Corporation driving an old Ford Ranger
Pickup truck.
It was a point of pride here in Bay Area a few years ago - all the rich tech people, who lived in Woodside in multi-million dollar “modest” homes, driving Chevy pick-up trucks. I still kinda like to visit that area - you know that every person on the street over there is swimming in gold, and then you see him/her getting into a Toyota Prius.
Still, you ought to turn the heat up. Was that Celsius or Fahrenheit?
LOL AGAIN @ moqui!
hot forced air dries out your nasal passages and helps you get colds.
Keep it at a comfy 62-64!!!
The sad thing is, these soon-to-be FBs are so busy working, they probably haven’t had the time to do their own due dilligence and instead listened to “expert advice” from their realtor.
You don’t really believe that do you? Come on.
TXchick,
You sounded more credible in the past but lately your comments are about being a renter for the past 16 years as well as this latest comment really highlight your inadequacies. You live in TX and with a household income of $150k/yr (if that’s what you are implying) and you stay a renter? Come on! There is no housing bubble in TX, at least in Houston. I have a friend who bought a 2600sf lakeside home there for $220k 3 years ago and he would break even if he is selling it today. Have a sense of pride and stop calling someone else your landlord.
I read mid-6 figure to be $400-600k, but that’s me.
That’s just my bonus this year.
If she meant 400K+ then it makes even less sense. There are deals to be had all over this town. I don’t make anything close to 400k, but I live on acreage in a beautiful home for less than I was paying to rent a place half the size back in college. Prices would have to drop 30% for renting to have been a better financial choice.
What does pride have to do with it? If you have been following her posts she does own real estate just none she calls her personal residence. LOL someone who pays storage on a 25k stove for a future home purchase lack of pride isn’t exactly the first thing that comes to mind.
“…Have a sense of pride and stop calling someone else your landlord….”
Them there got’s to be fightin’ words in Texas ……
Wait a minute! Thems fightin’ words on the HousingBubbleBlog!
I am a Dispatcher for a Global Oil co.
I get good wages for what I do, but 3K a month is nothing in California, and I work 60 hrs a week to get it.
So this guy is a food server, and he can buy a 500K house?
I don’t get it.
I think I’ll keep renting. (Like I have a choice right now)
$475.5K for a 1,300 SF house? A reduction of just $15.4K?
“Pacheco” must be the word for “idiot” in some language.
This fool caught a falling knife - right in the back!
If this is what California has come to, it won’t be long. 27 yo waiters buying $470k houses?
Where’s a 470K house???
One word. Compton… the bad part!
Bow-wow-wow yippy-yo-yippy-yey! Snoop Dogg’s in tha mothaf***king houzeee!
“Compton… the bad part!”
Ok, I’ll bite just where exactly is the good part.
My contractor came over and told me a great story about his last job in Compton. While he was tiling a bathroom, he saw a black guy with a gun coming toward him through some bushes (saw him through the window). At first he thought the guy was going to rob him, then he saw that the black guy was hiding from a car load of other black guys who were looking for him, they also had guns and apparently wanted to shoot him, and the guy was trying to hide from them. Then, out of the blue, a car load of Mexicans comes driving up the street, the driver being drunk, rams into a white pick up truck that was stopped at the stop sign out front, flips up in the air, and lands upside down on the pick up truck, which contained a pregnant Mexican lady in the passenger seat. She survived and so did her baby, just a few scratches and bloodied face. But during all the commotion, the first black guy used the opportunity to sneak away.
No, I don’t own in Compton, I’m not that ghetto.
“Ok, I’ll bite just where exactly is the good part.”
The “good” part is the block “your” gang hails from, of course!
posted “Ok, I’ll bite just where exactly is the good part.”
The good part is any part you can see while you are driving away in your rear- view mirror.
Make that $14.4K. Still can’t do math in my head.
“We want to work hard for this. We were working hard before.”
Pacheco and his wife worked probably worked 8 hours to pay $1,000 rent for their apartment. Now, they both have to work round the clock to make $3,100 mortgage payment. Forget about real estate taxes, incurance, etc. Based on what they are making, not much tax saving either. What’s the point buying a house if you are not going to use as much. I don’t understand their stupidity.
These people are too optimistic, they believe they can work harder to afford that place, when in truth, one can work harder only this much, otherwise you burn out from all the work and stress. They’ll hate everything in a year or two.
Totally true. One of my co-worker bought a condo in Sherman Oaks, CA last summer with 100% financing. She thought it was cheaper to own than rent. We did the math and sure enough rent was 50% what it was costing her to own. I advised her to sell. Instead, she chose to work hard. She had the most hours among all employees. Also, she decided to get marry after I suggested her she would have more tax savings if she got married as her fiancee was making twice as much as her. Still, she wants to keep the house even though she spends lot less time in the house she owns versus the apartment she used to rent.
I learned a long time ago; working smart makes you money, working hard makes you tired. Evidently these fools haven’t figured that out yet.
Good advice!
Yeah. Keeping your nose to the grindstone and your shoulder to the wheel gets you a pointy nose and a round shoulder.
We keep blaming agents for this situation in real estate, but the truth is it’s the idiots like Pacheco who f**cked this market.
There have always been idiots like Pacheco though, just no one willing to lend them this much money.
Who lent this clown the money to buy that house? The idiots ye shall always have with you, the easy global credit not so much.
Literary bunch here. I love the allusions.
Town squire:
“Here-ye, here-ye! Let any man who so choseth, and wishing to take thy turn, please step forward and attempt to snatch the knife from the mortgage lenders stone ….”
Neil:
“We can do this Graciela, we were working hard before…..”
Wish I had Pacheco’s email address. I’d let him know what he could buy for a couple hunderd thou less in another part of the country. And the local restaurant is advertising for help!
http://www.weberco.biz/reslisting_connot.htm
that is so true. with most people, their jobs are non-transferable ….so moving out of So-Cal is a bit more difficult to engineer….but if you’re two friggin waiters you could live anywhere else and double your standard of living.
Nice place. Think they’ll take $230K? I’m not offering anybody within 20% of their asking price in this market.
That’s so sick.
you can’t blame someone someone for wanting to buy a home, that’s the american dream, right?
but what i find absolutely disgusting is how can ANY lender qualify someone making around $6,000 per month for a 100% LTV loan on a $475,500 house? based on 6% interest rate, if they got a 30 year loan their PITI would be around $3,300 per month (or 55% front end ratio).
how can they pay this house payment and also pay federal, state and social security taxes ( maybe they don’t pay taxes).
but don’t forget they only put $700 of their own money into the deal. the seller paid $10,000 in loan costs for them and the lender loaned 100%.
so who’s more stupid in this transaction. the buyers with no money in the deal or the lender who just made a 102%+ LTV loan on the house in a declining market.
unbelievable
My favorite quote in the story was “…With the median home price dropping in Windsor three months in a row, their timing seemed right.”
Right for what?!?! Getting ripped off??
Oh, but we’re near the bottom, don’t you know. Seven years up, three months down — isn’t that how it’s always worked?
I mean, if we were getting biblical here, the RE boosters’ scenario works out to seven fat cows on the upside and one slightly lean round steak on the down side.
it’s in the bag
My thinking is Pacheco will soon start renting out rooms to fellow immigrants. There will be cars all over the place, on the grass, on neighbors’ side, and blaring music days and nights, beer cans and trash … Until the house is foreclosed in a year or two. Feel bad for the neighbors who built the neigborhood and community.
Read the comments on the Pacheco article in the Press Democrat…seems half of the people are questioning the safety of the whole area due to illegals, and gang activity.
million like these two out there in the landscape and still people deny this will effect the larger economy. All this soft landing crap Pacheco has just joined the legions of suicide loan re-sets that will plague california for years.
The apartment probably had the water and garbage paid, free cable, laundry room, very low energy bill ……. No way this dynamic duo sat down and did a total cost analysis of buying. They are going from 1200/mo to 5000/mo.
Even hard work won’t make this happen …..
Never mind the 3100 house payment but how about up keep. Dont these poor idiots know that they are going to have to fix the house at some point. After all houses dont repair or maintain themselves.
My apartment does.
Touche!
great comment!
Yeah, neither does my rental home..nice.
How much you want to bet they won’t be able to afford furniture for
this new palace ? .
I’m a bettin your gonna win that bet.
Just find a furniture store with no payments for a year.
“‘We know that we can do it,’ said Pacheco of the relatively steep house payments. ‘We want to work hard for this. We were working hard before.’”
You ain’t seen nuthin yet.
If they only were able to put $700 into the deal I’m not impressed with their saving ability .This is not the couple that you do a 55% debt ratio on ,especially on a no down loan .
Maybe someone making 150k a year with a nice juicy down payment could handle a higher debt ratio,but my real feeling is that a borrower should keep it at 25%,or no more than 30%regardless . Lenders aren’t underwriting loans these days ,they are just sitting people up for a foreclosure .To much!
“‘Today the listed price is just a suggested asking price,’ said Belinda Andrews, an agent in Santa Rosa.”
Belinda, for heavens sake girl wake up………now is not the time to be suggestive………this is a falling housing market………not a romantic interlude……….Agh……..why do I bother to respond to these idiots and their comments.
Okay ….. I have a suggestion for the brokers:
Since you know the current “suggested” asking price is irrelevant and most likely not even close to it’s true worth, why don’t you all hold hands in one big ceremony and agree to not take listings unless they are aggressively priced (you know, kind of like you did when prices were going up). Where else will they go? FSBO? Good luck …..
Why on earth would an RE broker agree to market a home that has no chance in hell of selling at anywhere near the suggested price? Everyone could identify 100’s or k’s of these in their area. Why spend the money? As this market implodes, it has got to be painfully obvious to them that this is throwing their hard earned money away
chasing the impossible future gains. Let them twist in the wind until they want to play ball.
Listing overpriced property is the act of a rookie or a subpar agent.
Yes, and we know that there’s no shortage of those out there don’t we.
Considering each and every listing in every bubble market is overpriced, it appears then, that there are entire cities lacking even one experienced, qualified agent.
Oh the experienced one’s are out there. There was a posting yesterday from a guy who had run into one in Orange County. His message was and I’m paraphrasing “You’re a renter with cash hold your horses the party is jest getting started”
Looks like we are seeing the true worth/value of realtors to society. That is, not a “profession” but a part-time job for stay at home mom’s to maker pin-money for xmas or to send Tyler and Tiffany to summer camp. They can only show houses through school hours though.
I could NEVER understand why these over rated tour guides made 6% commission on sales when, in truth, all they deserved was a few grand AT MOST. Underline AT MOST by which I mean $1,000 per sale and maybe a bonus for the one who sells the most in a month.
Actually, with the internet and other sales outlets for property appearing on the scene, we can (hopefully) look forward to seeing real estate brokers and and the NAR employees with their used car salesmen mentality work force go the way of the do-do bird. Extinct. That means they will have to go back to selling scam oil leases over the phone…oh, wait! We now have a “Do Not Call” system in place so that will not work. Well, there’s always WalMart or maybe that waitress job at Mimi’s Cafe is still open……
Today, I took a drive to the marina in Ventura, ca. Actually, the Channel Islands marina to be more exact. I drove around the streets which are little way back from the main marina. These are beach front properties. Most are used for holiday rentals. Most are detached but you can hardly see a sliver of light between each house. No gardens. Bad parking. Of the three streets I toured, I counted about 20 properties for sale. Only one had a SOLD sign. At one house with a For Sale sign, I stopped to take a ‘flyer’ out of the box put there for anyone interested in buying. Price, $1,495,000. That’s right folks. You read it correctly the first time, $1,495,00! Are these people f**king nuts! Just how many executives does Exxon have who can afford these kind of crappy properties. If the price was $495,000 I might have been mildly interested but only if they agreed to some upgrades and paid all the closing costs. People, this economy is in for a tsunami size shock………Don’t ask me when but it’s coming.
Sounds like Pismo Beach prices. $1.5 million+ prices and no jobs except retail and fast food. Very few young families can afford these homes.
Nipomo, a town with one supermarket, $700k.
Santa Maria $500K
KB Homes is f#cked in Bakersfield. Their development south of Panama Lane is mostly complete with home after home empty AND numerous resale (realtor and FSBO) properties on the market. If this is representative of the rest of CA. LOOK OUT BELOW!
Posted ” AND numerous resale (realtor and FSBO) ”
Help-u-Sell and FSBO are the kiss of death, or desperation, IMHO…. I do not know the stats but I think it is a form of denial. I doubt few work out. All of this has to be done before the price is lowered and the bullet is bitten.
FSBO priced right with broker coop has worked for me.
I paid 1.5% to the buyer’s agent.
LOL Sunset before or after the bubble.
post bubble. fsbo? forget about it. It’s sick, but you need a realtor much more on the downside to get something sold.
Only dopes will be looking to buy and dopes use realtors. With so much inventory to show, no realtor will show a help you sell or fsbo, even if commission is offered. Why take the risk? Keep it in the “family” where they can depend on the “rules” being followed and no hitches coming from the other side of the deal.
http://money.cnn.com/2006/11/12/news/companies/bc.leisure.kbhome.reut/index.htm?postversion=2006111221
KB homes just lost their CEO over “Options timing”
Sounds like someone has been gaming the system illegally…..
Nice. I have a feeling it’s just beginning. Thanks, Git!
Awww.. And they were so close to the correct headline. It should have read:
The Listed Price is Just a Wishing Price
“KB Home CEO resigns after backdating probe
By MarketWatch
Last Update: 9:05 PM ET Nov 12, 2006
SAN FRANCISCO (MarketWatch) — KB Home CEO, President and Chairman Bruce Karatz has resigned after an internal investigation found that he backdated his own stock-option grants to increase his pay and will forfeit about $13 million in gains from the backdating, according to a media report Sunday”
http://tinyurl.com/y2dn45
And Team Wall Street pumped up KBH almost 5% on Friday. The perp walks for home builders are coming — and I hope some of their co-conspirators on the Street of Scams get to take a stroll along with them. Thanks for spotting this, Conrad.
The 5% pump job is not the most disturbing feature of KBH’s share price dynamics, IMO. Rather it is the amazing inexplicable propensity for the share price to remain stuck in a narrow volatility range ($38 to $48 and back down again) ever since the May 2006 swoon, in the face of a never-ending barrage of worse-than-expected news and results, and the fact that all the major Wall Street-listed builders’ share prices have behaved essentially the same way over this time frame. This is despite the fact that, as Paul in Jax has assured us, there are very substantial differences between the builder firms.
http://tinyurl.com/yxuvnr
Wow! Maybe he can afford that piece of overpriced crap I saw in the Channel Islands Marina……..or maybe he can lend one of the 70% + workers who make $10 to $20 an hour in Ventura County, $1.5 million. After all, it’s just a dent in the “compensation” he’s been picking up over the years. Yep, Get ready for the “perp” walk for these big builder CEO’s…..
WOW!
I hope they prosecute this clowns for securities fraud!
Is Bob TROLL next??
So have any of the other homebuilder CEOs besides Karatz been implicated in the backdating scandal yet? It is hard to imagine that only one builder CEO was backdating, given the other remarkable similarities between the companies who play the homebuilding oligopoly game.
These guys all have the same YES men on their boards. I would guess they all “approved” of this fraud!
The Pacheco story reminds me of something I would read off the theonion.com
To bad for that family, they have just screwed themselves.
Check out the link below.
http://www.theonion.com/content/node/28647
That red onion salemanship story was a hoot, thanks.
“‘It’s not that they couldn’t make the mortgage payment,’ Munro says. ‘But they couldn’t go on vacations in the summer.’”
The California homeowner’s life style:
You have the home, but no life!
The Trillion dollar train is coming and you better not be in its way when it passes through OC. First stop, San Diego. Choo Choo.
All aboard FB’s and GFs
Oh no…
They don’t have enough money to actually *ride* the train…
You’ve heard of the running of the bulls… In this case you have to run on the tracks. Don’t trip. Miss too many tax payments, mortgage, and that train will catch up.
I don’t understand how a newspaper can look at the Pacheco’s and see a Horatio Alger story. Two immigrants in low-wage jobs deciding to struggle to cover the mortgage on a nearly $500,000 home they purchased with only $700 down?
I hear you. If this example doesn’t illustrate the absurdity of competing in the residential RE market with the likes of those who are truly unqualified to buy, I don’t know what is.
I agree entirely. Maybe another potential “indicator” of when the market has hit bottom is when we stop seeing news stories that include an “idiot buys overpriced home, feels elated” component. I look at this and think: “Until these morons stop propping up the market by committing financial suicide, I’m sitting out.”
I hear you, however, there are a lot of people still out there who would not see the issue with Pacheco having bought that house. I know my wife would read that story and think “…oh, that’s nice. They’re trying to establish roots for their family.” Meanwhile, I’d crawling out of my skin going “…WTF ar they doing!!!!”
WOW! I am still shocked that KB CEO got canned. Who is next? This will be huge news. This is clearly securties fraud unless I am missing something??
Wow — I would have thought the backdating scandal was too widespread to stick to any individual CEO…
I guess KBH’s stock price will go up tomorrow for sure, as they are showing resolve to put their problems behind them (whatever those were…).
This is why the 10K is still no filed.
I hope they prosecute this clown.
He changed his tune in the last few weeks from “give it a few months and everything will be ok” to “this will take some time to unwind”
DONT DROP THE SOAP KARATZ!
In bakersfield a cold chill seems to have set in. friends who had paid up the downpayment for a toll brothers complex are backing out of the a 1M+ deal. they claim the market is down 25% and all toll is doing is giving them upgrades. guess they lose the advance but save their skin.
on another note a condo complex with avg listed price of 600k in SF sold out in a a day.. ofcourse everyone pays the token downpayment for now.
Ok, I give up. Just put up a Money Depo on every corner and be done with it. The new paradigm substution for the money tree. Charge a $25/ year membership fee, to extract all the money you can spend. At least this would level the playing field.
substution = substitution.
Read about KB Home CEO Canned Over Option Scandal.
“KB Home, a Los Angeles-based home-construction leviathan once known as Kaufman & Broad, said Mr. Karatz would immediately leave his posts as president, CEO and chairman. He will forfeit about $13 million in gains from the back-dating.
Also departing is Richard B. Hirst, executive vice president and chief legal officer, and Gary A. Ray, the head of human resources. Mr. Hirst resigned and Mr. Ray was terminated, the company said. A person familiar with the investigation said both Mr. Karatz and Mr. Hirst cooperated with the internal investigation.
Messrs. Karatz, Hirst and Ray couldn’t be reached for comment.”
Read about New Math On the Old Commission.
“Sellers went to the settlement table and said: ‘What? I paid $30,000 for an effort that took a few days worth of work?”
Read about Home Staging 101: Fake It ‘Til You Make It.
Fake it til you make it? That’s all a realtor is…. a big fake.
There ya go…………bubble proof cities.
Lets check these 5 in a years time
http://money.cnn.com/popups/2006/biz2/newrules_bubbleproof/index.html
Actually, these numbers support the fact that we are currently in bubble conditions. If a market increases 135% in 6 years, how many years worth of appreciation would that amount to?
Umm, a lot. From story:
Los Angeles
Average annual home price appreciation (1949-2006):
3.7%
Their monthly payment is more than three times the $1,000 rent they were paying for a two-bedroom apartment.”
“‘We know that we can do it,’ said Pacheco of the relatively steep house payments. ‘We want to work hard for this. We were working hard before.’”
—————————-
I’m just speechless right now.
It’s unfortunate, but immigrants are really going to get hurt in this housing bust. Because of the language barrier, they are a disproportionately large section of the greater fools that are still snapping up houses. It’s sad that they’re aren’t bubble blogs en espanol. I actually think this will have a very negative effect on loan origination, because once the government see that how many bad loans immigrants have been signing, the liquidity spigots are going to be tightened a bit in the creative financing realm.