“Buyers Have All The Power” In California
The San Francisco Chronicle reports from California. “The average price of a home area has fallen by about $100,000 to the high $300,000-range at Centex Homes developments in Sacramento, said John Ochsner, Centex’s executive VP of the Northern California region. The decline in new- home sales in the Bay Area has been apparent in Contra Costa County, where the price of a new home fell 20.5 percent from $717,000 to $570,000 between October 2005 and October 2006, according to DataQuick.”
“‘Buyers over there are demanding price reductions and incentives and we’re responding to that,’ Ochsner said. ‘Buyers have all the power at the moment.’”
The Daily News. “Over the summer, John Toole put his Woodland Hills home on the market for $1,695,000 and waited for a rush of prospective buyers. And waited, and waited and waited.”
“He eventually slashed his asking price by $100,000. Nothing changed. ‘It didn’t bring anybody around. Nothing. The market is absolutely dead,’ Toole said. ‘I was amazed.’”
“The number of ‘For Sale’ signs across the San Fernando Valley soared earlier this year and many now feature ‘Price Reduced’ banners. So is this the 1990s all over again? ‘It feels exactly the same,’ said Realtor Raquel Magro. Magro has been selling Valley houses and condominiums for 24 years and has seen both bust and boom.”
The San Luis Obispo Tribune. “After significant speculation about when San Luis Obispo County home prices would decline, the year-over-year median home price recently registered its first drop in eight years, according to the California Association of Realtors.”
“But local real estate agents say they didn’t need an economist to tell them what they have been witnessing for the last several months. Price reductions have been commonplace throughout the county.”
“In nearby Pismo Beach, the median home price is slightly down. Several agents said that buyers are pushing back on the prices being asked for properties there. ‘In Pismo, what we may be seeing is that the views and proximity to the ocean are being overrated by sellers and buyers aren’t willing to pay for it,’ said David Skinner, manager of Prudential California Realty in Arroyo Grande.”
“‘I cannot believe that the median home price had not gone down sooner. We’ve been dealing with price reductions for the last year in North County,’ said Ed Steinbeck, a broker associate in Paso Robles. In fact, Paso Robles is seeing some of the sharpest declines in sales throughout the county.”
“Some of the price reductions are also because of the number of new home developments in the North County. ‘We constantly have new homes that are coming into the market. We don’t have the luxury to just sit on those homes. We have to figure out what it’s going to take to move those homes so we react more quickly,’ explained Chris Bowley, Central Coast division manager for Centex Homes.”
The Press Democrat. “Sonoma County lost jobs for the sixth straight month, shedding 3,100 over the past year, according to state employment numbers released Friday. The biggest job loss in Sonoma County occurred in construction, electronic instrument manufacturing and the service sector.”
“With the real estate market well down from its record high in August 2005, construction has slowed and the sector has shed about 400 jobs since a year ago.”
The Desert Sun. “The ranks of licensed real estate agents have ballooned to nearly 4,200 in the Coachella Valley. Some real estate professionals have trimmed their commissions, real estate agents said. At the same time, some homeowners (are) in a pinch to sell their residences quickly with a flood of some 8,000 homes on the market.”
“Clients need to know about changes in price appreciation and market conditions because ’seller expectations are rooted in a four-year boom that was not sustainable,’ said Leslie Appleton-Young, chief economist for the California Association of Realtors.”
The Union Tribune. “After two whirlwind years of million-dollar sales, professional accolades and hefty paydays, real estate agent John Leverson never expected to find himself selling power wheelchairs and scooters to make ends meet.”
“Leverson’s love affair with real estate began to sour in the fall of 2005, when San Diego County’s housing market reached its peak. Prices flattened and then began to slowly decline as the region’s inventory of unsold homes swelled.”
“Leverson soon found himself struggling to pay the costs of advertising, insurance, multiple listing services, lock box fees, membership dues and gasoline. About three months ago, he called it quits, taking a full-time job at The Scooter Store in Clairemont.”
“Although he still has one listing, he says he no longer can afford to chase the dream of a career in real estate. Without steady sales, ‘your cash flow goes out as fast as it comes in,’ he said. ‘I was forced to go out and find another job where I had a regular income.’”
“One of the most telling signs of a cooled real estate market is the large inventory of homes for sale. The Realtors trade group reports that San Diego County had a 9.8-month supply of unsold, resale single-family houses in September, compared with a 4.7-month supply a year earlier.”
“Word has gotten out that the days of fast money for agents is over, said Kathleen Monaco, director of (a) real estate school in San Diego. Enrollment in her classes ‘is down significantly.’ ‘I hate to see prices go down, but the idea that they could keep going up 30 percent a year was crazy,’ she said.”
“Back at The Scooter Store, Leverson hasn’t ruled out a return to real estate, but for now he plans to focus on his new job and rebuilding his finances. ‘The priority is paying bills and eating,’ he said.”
‘In L.A. Thornberg’s been warning people about the risks in housing for some time now. We figured we’d see what he’s thinking with the market in a cool-off mode. Q. How bad is it? Can you describe the state of the region’s housing market? A. It’s bad. Total sales continue to fall, prices have gone to zero growth, and permits for new units are falling rapidly. The spin is still swirling out there, with the (National Association of Realtors) embarking upon a $40 million campaign to promote the fact that they think this is a good time to buy or sell your house. More like it’s a good time to earn a commission for a lot of real estate agents wondering how they are going to make ends meet next year.’
‘Curt Cassingham’s Studio City house sat on the market for a month with no offers. To stimulate some interest, he announced that he would pay a $3,000 bonus to the realty agent who brought in a buyer. Four weeks later, he upped the bonus to $10,000 to the selling agent, to be paid on top of the commission. ‘I decided, instead of dropping the listing price, to entice the Realtors to bring someone in,’ Cassingham says. But does the practice have a downside for buyers? If the agent showing a listing stands to gain something extra for selling that particular home, as opposed to a property up the street, will the buyer even know?’
‘Whether it’s the autumn chill or a seismic real estate crack across the land, real estate publicists have been flooding my in-box with ideas for stories that reveal just how nervous the industry has become. Now that the market has changed, I asked him, don’t investors need to adopt different strategies? Dexter’s actual investing seems quite a bit more conservative than his advice for readers. ‘I haven’t bought anything for the last two years,’ he said.’
‘In the end, he had some dark things to say about the financial instrument his book seems to applaud. ‘There are two things that can kill you — one is disease and one is debt. I’ve been putting people in debt for 16 years. I’m a merchant of debt. It’s a tool to prosper (but it’s also) a sword that can cut you down.’ ‘Indeed, his next book gives a sense of just how he might profit from those who mistake his current book as an invitation to incur debt willy-nilly. Its working title? ‘How to Profit From the Coming Wave of Foreclosures.’
more from the sage Thornberg:
“Q. Do you have a firm projection of, say, 2007 price movements?
A. There is no such thing as firm projection. But all in all there are two scenarios. The first is that the rest of the economy keeps chugging ahead and the market is stabilized by job and income growth. Price growth remains at zero. This is the good scenario. The bad is that the rest of the economy also cools, and prices fall. But don’t expect that prices will collapse by, say, 30%. Housing markets aren’t that liquid. Declines will be moderate.”
So even with all of the ridiculous loans out there, record levels of consumer debt and price to income ratios, and little or no real wage growth, Thornberg can envision a soft landing scenario. And in the “worst case” scenario we will have only moderate price declines. What a joke.
“The only reason there are Economist, is to make the Astrologers look good” On the one hand, house prices might go down a little bit, on the other hand, prices might go down a lot. Pretty soon, Economist Thornberg, you might run out of hands. When I put money on the line for an investment, I look at the risk/reward ratio. The risk of housing prices for 2007 is far more than any rewards out there. That is my bottm line, and I do this with one hand
“The only reason there are Economist, is to make the Astrologers look good”
Awesome!
Amputation for all economists.
Actually, Dean Baker’s video presentation posted here was very interesting and it would cut the BS out of the economist trade.
He suggested that part of Europe’s competitive problems is that they cannot hold people accountable for their job performance and fire them. Economist like to point this out as a reason for Europe’s slower economic growth.
Baker extends that to economists, if they are wrong they should be held accoutanble and fired. He says the economists are incensed at the suggestion.
Sunsetbeachguy:
“suggested that part of Europe’s competitive problems is that they cannot hold people accountable for their job performance and fire them.”
And waht about stugies at “Big Three” ?
Who can fire them ?
Big 3 what?
Autos
Accounting
And what is a stugie?
Sunsetbeachguy:
“Big 3 what?
Autos
Accounting”
And what’s the diff ?
OK they all should be fired if they are incompetent.
Does anybody watch Deadwood? Remember the episode where Swearengen is talking to the Magistrate and says, “don’t give me any of this $hit about on this hand, and then on this hand. Just tell me what the number is.” It was something like that. Of course the Magistrate was still obtuse. And Swearengen had the Magistrate’s throat slit. I would like to think the Magistrate also dabbled in real estate.
Side question related to California (DiNoR answered this some time back on Patrick but I can’t find the post!) …..is there any risk to having your money in a California Municipal Money Market account due to the coming real estate crash in California? Or is this type of investment sheltered from the storm, meaning CA govt will just keep issuing debt no matter what? I’m beginning to think the slight tax advantage over standard money markets may not be worth it. Thanks for insight.
Generally, the muni’s will raise taxes to cover the existing debt.
If that ratio gets too high their credit rating tanks and they pay higher interest rates on future bond issues.
re: John Toole
once a toole, always a toole
LA and OC areas are still not realizing the affect of the bubble burst yet. Sellers are clinging to their outrageous high house prices and dreading lower any bit for a sale. Buyers are patience and waiting as they don’t want to buy a house today and then find out in a couple of month that another house in the tract sold for much less.
So we have the battle of the sellers vs the buyers. I for one have wait so long am willing to “watch and wait more”. The RE market is at a standstill right now, but after the holidays and coming spring — inventory will have grown to an alarming rate thus forcing house prices down if you want to seriously sell. If you’re not interested in lowering your price, then take your house off the market. The problem is that many, many houseowners today were sucked into the easy “interest only” and/or “no down payment” mortgage programs and many people bought homes they could never have afforded to buy — thus they bought too much house and the mortgage terms are coming due and the houseowners have no choice but sell to get out what equity they have. As prices were going thru the roof during the RE boom, now it’s going straight down and buyers who were locked out of the market are just “waiting” it out to spite the sellers. I say let the inventory grow and grow and then you will finally see some realistic house prices. There is no hurry to buy if you can get a much better price in a couple of months or half a year.
“The problem is that many, many home owners today were sucked into the easy “interest only” and/or “no down payment” mortgage programs”
I used to think that no one *I* knew would be in trouble due to the Housing Bubble, but I recently learned that *at least* two friends are hurting because of over extending themselves housing wise. They are both ‘professional’ couples (one with kids), and they both make a good salary at stable jobs.
However, one couple bought near the peak, and used an adjustable rate mortgage with a low initial rate in order to afford the house. They thought that when it was time for the loan to reset, they would just re-finance into another low-rate loan. With home valuations declining in the area, and short term rates double what they were, they are now sweating. They can afford the new payments, but just barely. Goodbye discretionary spending.
The other couple bought 5 years or so ago, but used equity extractions to spruce up the house and landscaping. They used equity extractions to fund the upgrades, thinking that they could keep refinancing to keep the alligator at bay. They finally decided that the worry wasn’t worth it, and refinanced into a higher fixed rate loan. They now have peace of mind, but they also now have a bigger payment than they had budgeted. Goodbye discretionary spending.
The common theme: Goodbye discretionary spending.
Good bye discretionary spending, hello recession.
Arroyogrande,
I still don’t know anyone personally who has been hurt by this, but I have noticed worrysome trend for entering CalPoly faculty, who have actually been MORE likely to buy houses in San Luis proper in the past couple years than before the prices went exponential. I don’t know how so many young faculty are able to purchase a home here just 1-2 years out of graduate school, sometimes on a single income and or with a spouse who teaches part time. My husband thinks that they all come from families with money. I sure hope that this is the case.
SLO,
It would be interesting to talk to some of them…I would assume that at least some of them had to resort to the more toxic varieties of loans. I’d bet a good chunk of change that a good many professors don’t know the risks/dangers of interest only or neg-am loans.
Arroyogrande:
I am curious, but I hate to bring up what could be a stressful subject. I think you are right on in that many profs don’t understand these types of loans. And people have been able to refinance for so long, that many expect to be able to do this indefinitely. In a discussion at work, when my husband expressed a preference for buying with a fixed rate loan, he was told by a colleague that it is always better to use an ARM, because the rate is lower so you can invest the difference. When my husband asked, “What happens if interest rates go up”, the colleague said, no problem, you can keep refinancing indefinitely. Clearly, most folks out there (even the bright ones) do not understand the basics of borrowing, as to say that one type of loan is ‘always’ the best choice just does not make sense.
I am an administrator at a public research university in CA and I find that new faculty think it is their birthright to be able to purchase a home. High home prices are frequently brought up as a negative for recruiting faculty. Whenever I suggest that faculty could rent I get an evil eye.
New faculty at the UC may have these programs, but at the CSU, it’s only the incoming administrators who can afford to buy.
At UC, depending on the position, the univ will “help’ them purchase something. If they don’t, they can’t recruit these people- period. We loose good potential faculty to other universities all the time.
I posted this on Lander’s blog but I’ll repost here too
It appears the Davis Equity Mafia haven’t stopped UCD from going ahead with Village West. I’m sure they’ll keep trying but in the meantime, here is the newest release-
http://www.news.ucdavis.edu/search/news_detail.lasso?id=7954
Highlights from the release include:
“The faculty-staff housing component is a key reason for the project, with university officials saying West Village will be key to recruiting and retaining top talent and making them part of the university community.”
“West Village will make this possible by adding to the Davis housing stock, and selling those homes at more affordable prices. The university’s Office of Resource Management and Planning estimates that the homes will be priced about 30 percent below market price for similar homes in Davis”.
“In the video, Pat Turner, former interim dean of the College of Letters and Science, said “the single biggest deterrent in attracting high-caliber faculty is the cost of housing.”
“Staff is not immune, either. Police Chief Annette Spicuzza described “sticker shock” when she started looking, unsuccessfully, for a home in Davis. She ended up buying in Sacramento.”
So UC is admitting they have a huge problem. The bad thing is that as a staffer, I just know that I’ll get into one of those homes. They will all be taken by upper management and faculty.
The new grand plan, by the way, in higher education in locations with pricy housing is to offer new faculty large sums of money for down-payment on homes (many CA colleges have done this for years, actually). The “catch” is that the faculty member is on the hook for that loan plus 5% a year until they sell the home, at which point they have to repay the loan from the college plus compounded interest. The money usually comes from the college’s endowment.
MOP (mortgage origination plan) loans. UC has had it forever. Plus some people get a housing allowance straight up–20, 30, 50k is possible.
Exactly. MOPs have been the norm. But these raise the price ceiling, further pricing out staff. This is an microeconomic example of what is happening in the major bubble markets.
This is an microeconomic example of what is happening in the major bubble markets.
———————
Exactly.
As much as the “free-market” types here might dislike it, by building faculty housing, everyone benefits (faculty and new buyers) because faculty buyers are not competing with the other, regular buyers in the nearby communities.
BTW, I’d like to address the issue often brought up here regarding people like teachers, firefighters and cops living near work. One of the most important reasons these people need to live near work is that, unlike other professions, you cannot just call in sick (or become sick at work) without another person to cover for you IMMEDIATELY.
I’m quite familiar with all of these professions, and it is not at all uncommon for an employee to call get sick or injured on the job or right before their shift starts. Someone is needed to replace them, and they are needed ASAP — no time for two-hour commutes.
Also, in case of emergencies (new fire starts up or some kind of riots, etc.), the departments need to man-up very quickly.
Just so those of you who claim these professionals have no “right” to live close to work understand why you’re wrong.
sorry for typos!!!
No, the difference is that they have strong unions, and have no qualms about screwing the public (esp CTA). If they want to live close to work, they can do the logical thing - rent.
Affordability is an issue for ALL workers. With affordability at 10% or less in California (down from 50% five years ago) things have gotten way out of hand. It is amazing to me that, when I ask them, so few current mortgage owners could actually buy their own houses at today’s prices.
The best solution? Stop restricting development with “smart growth” or “green belt” zoning which is simply NIMBY equity protection measures.
The affect of the bubble bursting is like and earthquake…. The areas that are hardest hit are those areas closet to the epicenter, where the highest speculation and overbuilding has taken place. But the shockwaves will still reverberate out and will eventually be felt in all areas. Where you might see price reductions of 50% or more in the areas of higher speculation and overbuilding, you might only see decreases of only 30% to 40% in the stronger communities.
To quote (or paraphrase) what I have heard more than once on this blog “The size of the reduction in prices will be commensurate with the magnitude of the bubble”.
That’s a nice way of explaining “reversion to the mean” that laypeople can understand, Rick. Mind if I borrow it for the holidays?
I SURE hope he that he had SUZANNE research the Scooter/Wheelchair Market in his New Chosen PROFESSION !
“Leverson soon found himself struggling to pay the costs of advertising, insurance, multiple listing services, lock box fees, membership dues and gasoline. About three months ago, he called it quits, taking a full-time job at The Scooter Store in Clairemont.”
This job and the flipper with the mattress sales position in the Florida post reveal something about the economy outside of the RE biz. If it was so great and justified these home prices, why are million dollar realtors selling scooters?
Obviously, You better buy a scooter now or be priced out forever!?!?
Also a PS3 now or get priced out forever…
Ben,
What I’m seeing is lots of people from RE related businesses applying to UC jobs lately in Sacramento - my informal analysis is that 1/5 of applicants for administration jobs coming from outside the UC system are former realty or mortgage people. I wonder what depts like facilities and maintence are seeing since they’d be getting the construction related applications.
Wow I see exactly the same thing at my UC. We’ve recruited for three positions in the last few months and between a quarter and a third for each position had their last job realty related. Mortgage brokers, realtors, tile and flooring, and one person in construction…I’d say even more of them at least somewhere on their application noted they had their agents license.
The funny thing is we didn’t decide to interview any of ours - no experience in the areas we stated. Most depts are hiring other UC staff looking to move up. I suspect the those “bubbled out” folks will have to start as AA 1s - $13.02/hr
And there is the whole cost of living issue anywhere near a UC (except maybe Merced). Wages here don’t come close to keeping up with the economy.
Hmm, you guys have the issue with people having to transfer to another department in order to move up and get a raise, too? I think maybe it’s UC wide.
Yep - staff got some cost of living increases in the last 7 yrs but no merits at all. No wonder we can’t keep the good people and morale is so low.
All the bright young talent is leaving for places like Penn State, Vanderbilt, etc. What we have left is a lot of staff doing as little as possible for 2 to 5 yrs until the retire.
I think BM and I could start our own blog on all the issues that UC is facing >; )
One more point, the more UC has to increase salaries to attract personnel, the more the state has to pay into the system and the more UC becomes dependant on research funds (I’m a grants analyst).
So the more Joe 6pack home owner expects to make on his home sale, the more expensive CA universities are going to get (that or really begin to function only as a research campus and teaching be damned). In CA, education is married to home prices in perpetuity.
No merits for 7 years because of budget cuts was one of the worst policy decisions UC could have made. Way to go and piss off the entire staff for nigh a decade.
Increasing contract and grant activity is a great way to infuse a campus with cash from the indirect cost recovery, but that takes time. Lots of campuses are too dependent on state funds for everything. I wish the mentality would be to become more entrepreneurial and create lots of revenue streams. UC will continue to be hampered as long as we rely so much on the Legislature. Larry Hershman can only do so much! This might have the positive consequence, too, of being able to grow programs or build buildings but not on the backs of enrollment growth, which stresses the campus in many ways. Of course, we are obligated to grow some to accommodate the top 12.5%.
Here’s the rub though - NIH is specically looking for younger PIs and yet it’s hard to attract young researchers to UC because cost of living is so high here. So what happens when all our established PIs retire and no one is around to apply for those lucrative NIH, USDA, NSF vehicles? I know UC is becoming addicted to those 52% indirect charges and they need to find a way to keep them coming.
At UCD, they are working on building homes on UCD property for faculty and staff housing. I can’t imagine this option is available for a urban campus like UCLA or UCB.
http://www.news.ucdavis.edu/search/news_detail.lasso?id=7954
“Increasing contract and grant activity is a great way to infuse a campus with cash from the indirect cost recovery, but that takes time. Lots of campuses are too dependent on state funds for everything.”
Watch out for the UC union here. Traditionally, unions don’t like to see faculty doing institutional grantwriting.
Generally, it is only in the Sciences where faculty can get development/research grants that include indirect costs.
I don’t see how any of the unions have any say over what faculty do with their time. But yes, I agree the sciences win the bulk of the grants. With the incentive to get ICR, it’s no wonder that universities are putting faculty lines in the sciences.
Faculty are a union.
UCLA built faculty/staff housing in the late 1980s after the bust they ended up selling the units off as no faculty and staff wanted to agree to the terms (profit sharing).
Many Universities are building faculty/staff housing that will only add to the oversupply and be less attractive after the bust.
He really doesn’t want to sell scooters. He’s looking for real estate GF prospects who happened to have blue hair.
Once you get em in that comfy scooter, they are a captive audience.
Scooters may not be a bad business with an aging demographic and Medicare/Medicaid picking up the tab.
“Scooters may not be a bad business with an aging demographic and Medicare/Medicaid picking up the tab.”
Ever price one of those “mobility” scooters?
“Buyers have all the power at the moment.”
Buyers always have the power to spend (or if you must, “invest”) as they choose. Speculative frenzies occur when buyers lose sight of this.
Renters have all the power at the moment.
Yeah, the move-up buyer is sorta stuck.
And the fresh concrete they stepped in is hardening as we speak.
that ain’t concrete…
I will never forget the line I first heard on this blog.
“If you have to wait in line to buy anything, you’re getting screwed.”
Now, sometimes I’m perfectly happy to “get screwed”, even when I realize it’s happening. I go to a ballgame or even to a crowded fast food place at lunch. Yeah, I’m getting screwed for 15 minutes of my time and an extra $4.
I just wouldn’t wait in line to pay thousands of extra dollars for 30 years.
“Buyers have all the power at the moment.”
Fence sitters have all the power, and the longer they wait, the more power they will have. T-bills, Savings Bonds, money market funds, and CDs are cool. With PM bullion coins sprinkled in. Those areas are where most of one’s non-retirement assets should be in for the next 5 years.
Bill, don’t forget foreign govt bonds in case our Fed decides to inflate its way out of disaster. I guess your bullion addresses that, but I like getting an interest coupon.
Just received a blind mailer from an RE agent yesterday trolling for listings. He predicts prices on the Westside of LA will decline -3%, -5% and -4% through the next three years and his forecasting stops there. He suggests that if you are planning to sell your home, by waiting now in the face of his projected declines, procrastinating to sell could cost a homeowner $2,000 per week on a $2.0 million dollar home. Sell now he says and win in the long haul. In light of his meekly projected declines, what does he tell a buyer?
Don’t buyers KNOW that realtors work for the seller? I never expected a realtor to give me financial advice, only to find and show me houses that met my criteria. In a way all of our pounding on realtors is somewhat unfair — if they attempt to dissuade a buyer they are not doing their PAID job for the seller. They have to be honest about their business relationship(s), and show all available houses but other than that I think it caveat emptor.
All true, but then why in god’s name do they deserve 5-6% commission on the transaction???
“Don’t buyers KNOW that realtors work for the seller?”
Uhhh… in case the latest NAR advertising blitz hasn’t convinced you, allow me to let you in on a poorly kept secret — Realtors ONLY WORK FOR THEMSELVES.
They may have a flimsy code of conduct but all that is is a thin veil to cloak their industry’s shameless pursuit of YOUR $$$$$$$$$$$$$$$$$$$.
Good point!!!
Actually, it’s a VITAL point. Anyone who engages in the services of a Realtor needs to be extremely skeptical and remember at ALL TIMES, THE REALTOR HAS HIS OWN AGENDA AND YOU CAN BET THAT WHAT’S IN HIS INTEREST IS WHAT COUNTS - PERIOD. If anyone else involved in a transaction feels they got what they wanted they can rest assured it was purely by coincidence.
LMAO what bullshit you spout.
I’m LMFAO at you — The Realtor that brings so much overhead to the transaction. Won’t be long now. Realtor irrelevance going the way of the Travel Agent and the typewriter — Mowed down by technology. Just watch.
I think brokers should have to post a disclaimer on any information (written or verbal) that they release to the public:
Warning: Real Estate Brokers have a material conflict of interest. I only get paid if you buy the house. Therefore, if you, in any way, rely on my advice you may be subject to losing larges sums of money, which may have an adverse impact on your (and your family’s) financial well being for the rest of your life.
This article is about FL but the price cut is huge (51%), I think the biggest I’ve seen in print. But the person who bought this “last house” then immediately flipped it!
———————–
Prices slashed as market cooled:
Last few to buy got incredible bargains from builder
By Eve Samples
Palm Beach Post Staff Writer
Sunday, November 19, 2006
From the trios of queen palms in the front yards to the unblemished Spanish tile roofs, the houses on Fleming Way are almost indistinguishable from each other.
They sit on a just-built Martin County block south of Stuart where children glide on scooters alongside stroller-pushing moms, and where residents occasionally greet each other as “neighbor.”
But the prices buyers paid for the brand-new homes on Fleming Way tell the tale of what happens when a market cools.
In a handful of deals during the last several months, Miami-based builder Lennar Homes slashed prices on the street by as much as 51 percent, unloading the last of its houses in the Martin’s Crossing development to select investors.
That means residents such as Mark and Kim Andersen, who locked in $506,400 when they signed a contract for their five-bedroom home in early 2005, are living just down the street from a nearly identical five-bedroom home that Lennar sold to another buyer for $250,000 in late October.
That buyer, Howard Fishman, flipped the home three days later, reselling it for $425,000, records show.
…skipping over some of the story….
Fishman, who bought the five-bedroom home for $250,000, declined to comment on that deal or two others he scored on Fleming Way.
For the other homes on Fleming Way, records show Fishman paid Lennar:
• $257,000 in August for a four-bedroom, 2,369-square-foot house at 921 Fleming Way. He resold it in September for $345,000. A comparable home on Fleming Way closed for $471,000 in May.
• $235,000 in October for a four-bedroom, 2,215-square-foot house at 945 Fleming Way. A comparable home on the block closed for $431,600 in February.
Another investor, Michael Abel, bought a three-bedroom, 1,900-square-foot house at 933 Fleming Way in September, paying $225,000 and quickly flipping it for $325,000.
Abel also did not want to comment for this story.
….more story follows….
rest of the article here…
Lennar is not f$&kiing around. For years they’ll be the scourge of FBs in Florida but in the game of “our a$$ or yours” they are making the rational management decision.
I guess the comps for the neighborhood were destroyed. What happens when someone in the track trys to refi? Probably no equity even with 20% down.
But…since they were able to flip these homes for such a profit, it sounds like the appraisers are not counting the very same homes as comps!!!! WTF????
Sounds fishy to me.
Side question related to California (DiNoR gave her opinion some time back on Patrick but I can’t find the post!) …..is there any risk to having your money in a California Municipal Money Market account with the coming real estate crash in California? Or is this type of investment sheltered from the storm, meaning CA govt will just keep issuing debt no matter what? I’m beginning to think the slight tax advantage over standard money markets may not be worth it. Thanks for insight.
In my opinion, there is significant risk in owning any municipal bonds, and that goes double for a state with terrible overspending like California.
Of course, they can indeed keep issuing debt. The question is whether they can find anyone to buy it, and if so, at what price?
this type of fund usually diversifies into a lot of local government debt. some of the county and city controllers arent very sophisticated. What GF and FBs do with their finances, these guys can do to local government. Remember the Orange County blow up, that was a controller who was runnning the county finances like an overextended homeowner with a spendy wife and an Option ARM. Also the state issues tobacco bonds, which could blow up if the deal with tobacco companies blows up, or the companies go bankrupt. California state debt is probably safer than most investments, but i wouldnt have more than 10% of my funds in something like this.
Received a blind mailer yesterday from a Westside RE agent trolling for listings. He projects that the next real estate slowdown could last 3 to 5 years and estimates prices will decline -4%, -3% and -5% through 2009. He says “If you are thinking of selling, now may be the best time. In real terms, delaying your decision could cost up to $2,000 per week for a home worth $2,000,000. This is not a market for hesitation.” Nice to see an agent not spin the NAR crap but it also makes me wonder….What does he tell a buyer?
“Clients need to know about changes in price appreciation and market conditions because ’seller expectations are rooted in a four-year boom that was not sustainable,’ said Leslie Appleton-Young, chief economist for the California Association of Realtors.”
Actually the expansion in residential construction as a % of GDP started back in 1991 and ended in 2005, which would make that a fourteen year boom. Maybe Leslie missed a digit when she subtracted.
I LMAO after reading her quote. The predicted effect of DL speak — some sellers will not capitulate if they are led to believe prices have stabilized and will start increasing again at the end of 2007. As a result, these ‘hopefool’ sellers improperly price the product. Only the fear of losing even more money in the future will make them capitulate but that’s not the NAR message. Meanwhile, homebuilders are slashing prices and taking away sales from handwringing resale realtors.
“The market is strongest in the South Bay, where developers say they are offering few, if any, price breaks…. “You have higher household income and not as much supply on the market in the South Bay,” Pulte’s Kalmbach said.”
Unfortunately these comments are dead-on. There is a dearth of inventory on the Peninsula, at least as far south as Palo Alto.
That was true during the dot com bust as well. Nothing was selling because buyers were unwilling to catch falling knives and would-be sellers were all dot-com millionaires with staying power. But I don’t expect that will be the case this time — too much easy money let speculators buy high-end houses, and they will not be able to ride out the downturn.
The dot com bust was over in an instant, too. The coming depression will take a few of those instant millionaires down, too, since they’re just GFs with bigger cash cushions.
Ooh… too many too’s.
Home prices are still high in PA and other Silly Valley markets, but rents remain below the highs reached during the dotcom boom. Serious disconnect.
San Mateo 4tw!
Second that. While annedotal, I drove 2-3 nearby communities in Cupertino the other day (Birdland, Ortega park area, etc), I was surprised to find only 3-4 homes for sale… total! This was less than 1% of the total homes driven past.
On the other hand… I also found 1 bank repo. Repos generally do not get the same signage (often just a small sign in the window or on the door), so perhaps there is more FBs than meets the eye.
I hate to say it but your not suppose to obtain listings by “panic selling”, based on projections of loss in the future .
The real estate industry crossed the line when they were making future predictions of gain during the mania and they are crossing the line with the panic selling projections of loss also .
Nobody follows the rules anymore . You can see why these rules were in place . The National rah rah cheerleading of the real estate industry just pushed the prices higher . The” buy now or you will be priced out forever”, was just despicable.
In fact ,any of you RE agents on this blog I challange you to look at the rules and find the sections on the rules regarding “panic buying and selling “. Just wait until the lawyers get wind of these violations . Turning real estate investing into a big National buying campaign supported the mania ,not to mention the lenders putting people into properties they really couldn’t qualify for .
Rules are so-o 20th century…
This is the NEW economy!
We all now it is different this time.
Sarcasm off.
know, not now, missed a key.
The next bubble will be in lawsuits against Realtors.
May it never burst.
there’s an expression “judgement proof” which I believe will prevent such a bubble.
Wiz-
The problem with that is most believe “panic selling” is based on race, creed or religion. I don’t know if you would have a case here. Interesting thought but will it feed the sharks (lawyers).
Yes that’s true ,but there is a section on inducing buying or selling based on projections of future loss or gain . You can give a person the history of a area ,but to promise a profit is pushing it . Likewise you have to be careful about promising a loss if the person doesn’t sell .
We all know prices are going down ,but this realtor / guy gave the exact % of price declines for years ahead in a attempt to get listings . Stupid to put that in writing .
Housing Wizard,
Very good points. I do see why various ‘experts’ are careful to present a ’soft landing’ scenario, but the cheerleading during the run-up was inexcusable.
“The average price of a home area has fallen by about $100,000 to the high $300,000-range at Centex Homes developments in Sacramento, said John Ochsner, Centex’s executive VP of the Northern California region.”
Luckily Centex is debt-free, or I would guess that the cost of leverage offset against a 20% drop in revenue per home sale would pretty much sink their margin to 0% or less…
But don’t expect that prices will collapse by, say, 30%. Housing markets aren’t that liquid. Declines will be moderate.
I think they were even less liquid in 1926. So how quickly did Florida collapse?
They are a lot more liquid in a crash than they are in a soft landing.
Its a very liquid market once FB start to mail in the keys.
We’ve seen it happen before on a regional scale. Be ready to have it happen on a national scale… Home prices dropped 40% here on the coast in Cali during the last bubble. They’ll drop again. Faster this time. Last time the typical homeowner had *years* of cash to ride out the recession. Now, people are struggling during the *good times.*
Folks, please open your history books to chapter 13, “start of the great depression.” We’ll begin the lesson by reading about the 1924 through 1926 Florida real estate speculation bubble. Who would like to start…
Neil
Last time those homeowner’s didn’t have out-of-state “investment properties” eating them alive, either.
The Florida market crashed so quickly in 1926 that it would scare you . You would of thought that it would of been a lesson ,but no it was followed by the big run-up in stocks leading to 1929 .Crazy
“For example, the Arroyo Grande median price is up 24 percent in 2006 year to date, compared to 2005.”
Funny, how The Tribune is now quoting the even more flawed Year-to-Date change instead of the (still flawed) Year-to-Year number, which shows Arroyo Grande DOWN 6.3%:
http://www.dqnews.com/ZIPCAR.shtm
“It’s different here”.
“For example, the Arroyo Grande median price is up 24 percent in 2006 year to date, compared to 2005.”
“Funny, how The Tribune is now quoting the even more flawed Year-to-Date change instead of the (still flawed) Year-to-Year number, which shows Arroyo Grande DOWN 6.3%:”
At this point buyers won’t feel their getting a deal till they start seeing some some negative numbers. So, the Tribune is probaly scareing buyers away, by making it look like there hasn’t been a correction yet.
Price-to-rent ratio in Arroyo Grande is absurd. Who in their right mind would buy.
Arroyogrande:
The dqnews link you provided showed the combined median SFH/condo price to be down more than 3% YOY. In contrast, the sales data published in the Tribune article shows a median YOY INCREASE in the combined median, based on local MLS data. In addition, while it is true that there were few properties listed in the 500-600K price range in the city of SLO a year ago, the main reason we have so many now is that sellers have pretty much had to cut 100K off the asking price. Increasing prices my a##.
I increasingly am impressed by the ability of those in the field to spin the data.
Speaking of California…
I’ve informally been tracking inventory in five California towns: Altadena (Los Angeles), Arroyo Grande and Pismo Beach (Central Coast), and Apple Valley and Joshua Tree (High Desert). I started in March and had been tracking numbers (using realtor.com) every week until September. In all of the above areas, inventory seemed to have gone up 50% to 100%, March to September.
However, I just did a check again (2 weeks later), and inventory has stayed the same (or even gone down a bit) since September.
I’ll keep tracking for the next few weeks to make sure it is not just a data ‘blip’.
I expect inventories to stabilize into the Spring Selling Season ™, after which inventory will balloon as sellers re-list en masse the houses that they had taken off the market. I expect buyers to help with the inventory increase by having the attitude of waiting “just six more months”. Time will tell.
I’ve noticed this decline in inventory too.
I am tracking Humboldt county (Eureka) California. Inventory now stands at 682 compared to 792 at the peak in July-August. Although I attribute a lot of this to sellers yanking their listings, there still seems to be plenty of interest in RE.
You know this thing is still going relatively strong when you hear people on cell phones talking to their agents, and open houses are still getting some action.
Hard to believe since the median HH income in these parts is around $36,000 and median home prices are running about $325,000 (which are mostly 900 foot dumps at this price). This area is withstanding the initial stages of this much better than I thought (and much better than the central valley). I’m still wondering what will happen next year when the FED is forced to cut rates: will this re-invigorate the housing market? Like I said, there are still plenty of people with hoards of cash from the Bay Area and elsewhere looking to buy–and still plenty of people stupid enough to buy.
“I just did a check again (2 weeks later), and inventory has stayed the same”
Sorry, that was supposed to be “2 MONTHS later, and inventory has stayed the same”.
I am very familiar with altadena, which I also track. The inventory has stabilized, but the price reduced have increased (now half of the for sale houses) and many are priced at or below last purchase.
“the price reduced have increased”
Yes, this is true.
Arroyo Grande:
I started informally tracking county-wide inventory in May of 2005. It stayed pretty stable until around July of 2006, at which point it increased by about 50% through September/October. It declined slightly through December (presumably as people took their houses off the market to try again in the spring) and then began increasing again in January 2006.
So far, the pattern this year seems pretty similar to least year, except (of course) that the inventory started increasing in January, and had increased by about 100% by September of 2006. Although the percentage decline in inventory so far has been a bit more than this time last year (10-12% down this year vs. more like 5-6% last year), the inventory remains nearly twice as high as a year ago (due to the greater increase in inventory until the past month or so).
I, too, am expecting the inventory to increase more in the spring.
Thanks for the update, SLO. I would be interested in updates on SLO area inventory as we get deeper into this mess. From things I am hearing, I’d expect to see a flood of houses hit the market at the start (or slightly before the start) of the “Spring Selling Season”, because people have been told to sit on their houses until then. I’ll probably start tracking week to week inventory at that time in order to capture the hilarity that will surely ensue.
Arroyogrande:
Centralcoastbear started posting MLS data in January of 2005 on his blog at slobubble.blogspot.com. He updates things every couple weeks or so. He does not break down the data by city, but he does post it on a nifty graph so the trends are apparent.
Another article from Press Democrat link above:
“Santa Rosa seeks extra tax on new homes”
People buying new homes in Santa Rosa could be charged hundreds of dollars in extra property taxes every year to help pay for city services, such as police and fire protection.
The proposed surcharge, which wouldn’t be paid by current residents, goes before the City Council on Tuesday.
Asked if that’s fair, considering the owners of the more than 62,000 existing homes, condo, apartments and mobile homes in the city won’t share in that burden, Regalia said, “Unfortunately, that’s the way it often goes. The future people pay.”
“Unfortunately, that’s the way it often goes. The future people pay.”
Yes, that is until they don’t want to pay anymore and decide to no longer participate. Sound familiar?
This is one of the methods used in the Bay Area to restrict supply. Current residents support this kind of thing because it helps keep their home prices higher.
“Open Space” initiatives are another method. A large portion of the San Francisco Bay Area is off limits to development. Less land available means that the cost of existing developed land will be more expensive.
Restrictions on buildings and taxes on buildings work differently. The former effects supply, the latter demand. Restrictions shift the supply curve down/out, resulting in lower quantity and higher price. Check. But taxes shift the (effective) demand curve left, lowering both quantity and price.
Minor correction: affect = verb, effect = noun. This stuff doesn’t get any easier with age.
There are serious linguistic arguments that this and other similar distinctions are being squeezed out of the English language as spoken. Specific to usage here perhaps OIF-ect would be good because it sounds like someone getting hit and also rhymes with perfect, as in based on relentless corrections.
Still, we lose when posters use the language too (not to) loosely. It even sounds different -
moleman, i like that. oiffect/poifect. as curly would say, “coitenly!”
The “future people pay”? What exactly is a future people? What kind of garbage is that? That’s NOT the “way it goes” - you’re being asked if it’s fair. No, it’s not “fair.” And it’s not a foregone conclusion. There’s going to be a vote.
But actually if it passes everybody in Snata Rosa pays. The extra tax will cause stagnation in the value of home prices. New development will have a greater tendency to take place just outside the city limits. And people all around the U.S. will have a worse opinion of Santa Rosa, because of the way Santa Rosa conducts its financial affairs.
Most people outside the CA Bay Area have never even heard of Santa Rosa, nor do they need to. There’s absolutely nothing special or noteworthy about the place.
Has the seediest downtown in NorCal - no wonder they need more money for cops.
I don’t know about the rest of downtown, but one of the best microbreweries in the world (Russian River Brewing Company) has a brewpub there, so Santa Rosa will always occupy a special place in my heart.
Not that I’d move there, let alone buy real estate there.
People of the future rent.
The same thing happened in Elk Grove, CA. Some of the homeowners in new developments were charged an extra assessment for services.
In my mind this is so damn third world, like airport taxes and the like in Latin American countries that are higher for visitors than residents. I wonder if Ben Franklin - one of the first advocates of local taxation to pay for street cleaning and gas lamps lighting in Phila. - suggested that new residents to Philadelphia be taxed at higher rates than old-timers?
Problem is that new homes does NOT equal new residents.
As a California resident, yes, we do resent all the newcomers (foreign and domestic) because it has greatly reduced the quality of life for native and long-term CA residents. Before anyone flames me for saying that, think about how everyone else views Californians coming to their hometowns and driving prices up while causing increased crime, congestion, pollution, etc., while placing a much greater burden on their infrastructure. Do you think the people of Portland, OR, for instance, want to pay extra taxes so Californians can come up there and ruin their scenic land and bring “California’s problems” to their beautiful city? No, they do not; and neither do CA residents want to pay extra so everyone else can come here and ruin what was once a very nice state.
Sorry for the rant, but any other long-time CA resident/native can vouch for this as well.
Ack! My rant got in the way of the point I was trying to make.
Just because a development is new does not mean the new owners are “outsiders”. It’s just as possible that a native local is buying the new house, instead. Levying taxes on the new developments is an emotional reaction to what CA residents feel is too many people trying to move to CA. Since we’re not allowed to levy taxes on the new reidents, we tax the new houses. Emotional, irrational, but there it is.
I seem to remember that when I moved to CA after finishing school in AZ, I did the right thing and immediately registered my car in CA. Of course, this meant a higher registration fee and higher insurance - I knew this was coming.
What I did not expect wast the $300.00 out-of-CA car import fee (loosely disguised as a CA emissions tax) that they tried to impose. Luckily, my AZ car had originally been purchased in CA, so I was grandfathered.
A couple of years later, there was a successful class-action suit against CA by out-of-state immigrants and it was ruled that the tax was unfair. The DMV had to refund all previously imposed out-of-state taxes!
Justice. And no, I am not a Libertarian.
I got one of those refunds on a car I had long before sold. Nice surprise.
The funniest thing I’ve seen in print for a while. From today’s San Francisco Chronicle, a letter from a realtor explaining why we should all be grateful for the existence of his illustrious profession (along with a priceless comment about how buyers have the most “confidence” in a seller’s market — doh!):
LETTERS TO REAL ESTATE
Selling is not just about commissions
Sunday, November 19, 2006
Editor — Reading the article by Carol Lloyd made me wonder what her motivation would be for trashing the real estate industry (”A buyer or seller be,” Surreal Estate, Nov. 12).
She claims that real estate trade associations are completely self-serving when they say that it’s a good time for both buyers and sellers. She claims it’s just about commissions.
My 28 years in the real estate business gives me this perspective: Traditionally, in a rising market, when it’s called a seller’s market, buyers have the most confidence. Why is that? Because lots of people are chasing the same commodity. This occurred several times between 1978 and 2000. When the dot-com bust occurred in 2000, real estate experts claimed that the party was over. Then, interest rates plummeted, sending the market even higher, until the present.
Very few people who bought or sold during this time suffered loss. Some, however, who bought last year may be looking at several years before they could sell, pay costs of sale and break even.
Yes, it’s true, the market is cyclical. But if a buyer asks me if it’s a good time to buy now, I will say, generally, yes, depending on their situation. If they are an investor hoping to buy a house, fix it up and flip it, I will say probably not. If they are a family hoping to get into a nice neighborhood, maybe negotiate the price or obtain some seller concessions and stay for five to seven years, then I will say most definitely yes.
Now, if a seller comes to me and asks is it a good time to sell, I will say the same thing: yes, depending on your personal circumstances. There is still quite a bit of demand for many homes, depending on how they are priced. If someone has owned their home for at least five years, they usually have no problem cashing in on their years of built-up equity. So, yes, it can be said, in the same market, it is both good for sellers and buyers.
Now, consider the following:
When brokers bring a buyer and seller together, suddenly many people are employed and generate revenue. Inspectors, loan and insurance brokers, painters, termite companies, stagers, plumbers, engineers, roofers, title companies, just to name a few. City and county transfer taxes are generated.
What’s my point? It’s not all about our commissions. We help stimulate an entire segment of the economy. We don’t want a medal, or even a pat on the back. We’d just like the public to know that our industry is not as self-serving as you are attempting to portray.
TIM Q. CANNON, broker
BerkeleyHome Real Estate
This is about the stupidest thing I’ve read in a long time. I guess the whole housing market would just sieze-up without our good friends the agents. Nobody would buy or sell a house anymore if not for agents. They are the enablers of an entire segment of the economy without whom we’d all just live in the houses in which we were born for fear of having to move. Personally, I do not begrudge them their profession … but DAMN … is 5-6% really necessary? And 5-6% of a really, really large number too. Cut the comission in half and overnight (or in a short time afterwards) you’ll find that there are half the number of realtors and that your income will be the same because you’ll have sold twice as many houses. 1 + 1 = ????
“But if a buyer asks me if it’s a good time to buy now, I will say, generally, yes, depending on their situation…If they are a family hoping to get into a nice neighborhood, maybe negotiate the price or obtain some seller concessions and stay for five to seven years, then I will say most definitely yes.”
Family: “We just want to live in a nice house in a nice neighborhood. We plan to stay until the kids are grown”.
RE Agent Tim: “Sellers are giving concessions, now’s the time to buy!”
Family: “However, with our household income of $90,000, and with childcare expenses, I don’t think we can afford anything nice if we use a 20% down, fully amortized 30 year loan. Oh, well, perhaps we’ll rent a house.”
RE Agent Tim: “No, no, no, there are *plenty* of loan programs that can make the cost of home ownership ‘affordable’. Let me put you in contact with a good loan agent, I’m *sure* we can work out something…”
And this scenario is why realtors, the loan officers, and the REIC have some reputation rebuilding to do.
How can you put a family into a home when you know they won’t be able to make it?
We’re going to see the foreclosures start up next year. Just think… whatever noise is being made about people suffering… hasn’t started.
I’m thinking all these articles about giving agents extra commision to move a home… its going to haunt them later on. People are going to wise up.
I have no problem with a sales based job. I have a problem when a saleman lies and cheats. It doesn’t matter if its a family or an individual ruined. It can be a bad car loan or in this case the far worse opton ARMs.
Anyone involved with an Option ARM sale doesn’t deserve *any* pity. They knew what they were doing to the person/family.
Neil
Not to mention the fact that we will likely be at the bottom (or still falling) in 5 or 7 years. No way out for this nice family the RE turd was trying to “help”. God forbid someone actually loses a job or something.
IMHO, when buying RE, the best bet is to wait for a time when appreciation is more likely than depreciation. After so many years of such dramatic price increases, bringing payment to their least affordable in history in many places, it is most definitely NOT a good time to buy — for anyone.
“He eventually slashed his asking price by $100,000. Nothing changed. ‘It didn’t bring anybody around. Nothing. The market is absolutely dead,’ Toole said. ‘I was amazed.’”
Well, I’m amazed that anyone would refer to a $100,000 price reduction from the $1.6 million starting price as “slashed”. Oh, boy he slashed his price by 1/2 of 1%. I’m shocked that no one has picked up this reasonably price POS after that incredible price reduction. What’s wrong with all of those people - not taking advantage of their new found buying power and leverage?
Actually, I believe that is about a 6% reduction.
6.25% to be precise.
Guess I better sober up after the Ohio State game yesterday. I thought I saw an additional 0 there - .00625.
So, I guess this guy has “slashed” 6.25 % off the price of the house. Buyers are finally in control in California.
Actually, technovleist was closer…it’s a 5.9% reduction using the $1,695,000 original asking price. (Calculation comes to $100,005.00…it would be 6.25% if you use $1.6m, which will give you $100,000)
BayQT~
An article on buyer incentives and house valuation in The Los Angeles Times:
http://tinyurl.com/yxfc75
Giveaways to buyers skew home values, affect loan and taxes
“Also, some sellers are fraudulently jacking up their prices and then returning the difference in cash to their buyers at closing. That is, they are selling a $200,000 house for $220,000 and handing the excess $20,000 to the buyer at closing. Those kinds of shenanigans could land both the buyer and seller in hot water.”
…
“It is incumbent upon the appraiser to read the sales contract and be familiar enough with what’s going on in the marketplace with regard to concessions to make the proper adjustments in his valuation.”
“The question appraisers have to ask is,” says DeAnna McCann, chief marketing officer of eAppraiseIT, a Poway, Calif.-based appraisal management company: ” ‘Is this condo really worth $250,000, or is it worth $250,000 because it comes with a new car in the driveway?’ “
What this article is saying is what I have been preaching all along . How many appraisers are given knowledge of the concessions in a deal . Its also up to the underwriter to get this information . Maybe the lenders should start calling the escrow officers to see what the real deals are .
Update from the #2 rated bubble area, Bend, OR.
http://www.ktvz.com/story.cfm?nav=news&storyID=17375
Sales declined 60% YOY but it is still a great time to buy! Go figure.
“Although he still has one listing, he says he no longer can afford to chase the dream of a career in real estate. Without steady sales, ‘your cash flow goes out as fast as it comes in,’ he said. ‘I was forced to go out and find another job where I had a regular income.’”
This is beautiful, and a seismic indicator of what is to come. Over the past four years the realtors have been in cahoots with greedy sellers and snarky mortage brokers. Now a simple truth is dawning on them: IF I DON’T SELL HOUSES, I DON’T EAT. The realtors who want to survive will simply refuse to accept listings based on seller greed rather than market realities. When a solid, credit-worthy buyer comes along, they’ll put the full-court press on sellers to make a deal.
A new day is dawning!
Also, the ‘newly minted’ realtors who have never seen a downturn were spending their commissions like drunken sailors on shore leave (or like the US government), instead of socking it away for a rainy day. Again, goodbye discretionary spending…
Exactly
The picture is priceless and should be added to the timeline of housing bubble. There is an even better quote in paper edition of the paper,”I’m in it for the long haul. Having a positive outlook helps. Everyone thinks the market is done around here. It is not. I have sold three homes in the last four months, which is pretty good compared to some others. I work 60 hours per weeek and then some.”
-John Young, real estate agent
http://www.signonsandiego.com/uniontrib/20061119/news_mz1h19realto.html
From the piehole of Vince “Spin Prince” Malta:
“The market remains strong compared with the slump of the mid-1990s, said Vince Malta, president of the California Association of Realtors.”
YOY numbers to difficult to spin NP lets just switch to decade over decade!
“But local real estate agents say they didn’t need an economist to tell them what they have been witnessing for the last several months. Price reductions have been commonplace throughout the county.”
Good. So get rid of Leslie Appleton-Young.