“Too Soon To Say Market Has Bottomed”: CAR
The California realtors have this October report. “Home sales decreased 28.7 percent in October in California compared with the same period a year ago, while the median price of an existing home increased 2 percent. ‘While it appears that home sales have stabilized over the past three months, it’s too soon to say whether or not the market has bottomed out,’ said C.A.R. President Colleen Badagliacco.”
“The median price of an existing, single-family detached home in California during October 2006 was $548,680, a 2 percent increase over the revised $537,930 median for October 2005, C.A.R. reported. The October 2006 median price decreased 1.5 percent compared with September’s revised $556,920 median price.”
“‘The existing home market continues to be impacted by the inventory of new homes for sale, especially in areas where there has been excess capacity since the start of the year,’ said C.A.R. Chief Economist Leslie Appleton-Young. ‘The unsold inventory of existing homes is at 7.2 months, twice last year’s inventory. Higher inventory levels are a key factor in the moderation of home price appreciation.’”
“C.A.R.’s Unsold Inventory Index for existing, single-family detached homes in October 2006 was 7.2 months, compared with 3.4 months (revised) for the same period a year ago.”
“In a separate report covering more localized statistics generated by C.A.R. and DataQuick Information Systems, 195 out of 372 cities and communities, showed an increase in their respective median home prices from a year ago.”
“The median price of an existing single-family house in Orange County fell from last year’s level for the third month in a row, CAR reported today. The association reported that the midpoint of all O.C. house sales last month was $681,340, compared to $701,520 in October 2005.”
“That’s a decrease of 2.9 percent, and follows year-over-year price drops in August and September. Sales continued their slide too, falling 21.4 percent from October 2005 levels.”
The Orange County Register. “A homebuyer needed to make at least $123,800 in total household income to afford a typical starter home in Orange County this past summer, according to the California Association of Realtors’ latest housing affordability index.”
“An estimated 22 percent of Orange County households fall into that category, the association reported Monday. That’s a slightly greater percentage than during the spring, reflecting a period when Orange County prices began their four-month fall from the peak set in June. But it was a smaller number than a year ago.”
“The Realtors association created its new housing affordability index earlier this year as a rough guess of how many first-time buyers can afford homes at current prices. The group then recalculated historical affordability back to the start of 2003.”
“The index assumes that a starter home is 15 percent cheaper than the median-priced house and that buyers of such homes put 10 percent down and use adjustable-rate mortgages.”
The Daily News. “The association began its Housing Affordability Index in 1984, a time when fixed-rate mortgages were the prevailing financing vehicle, a 20 percent down payment was required and the mortgage payment was equal to 30 percent of a household’s income.”
“Since then the financial landscape has changed dramatically to include a wide range of mortgage products. The new index reflects this as well as the current underwriting criteria.”
“In the third quarter affordability fell from a year ago in 16 of 17 markets tracked and remained flat in Northern California at 33 percent.”
“In Los Angeles affordability remained flat from the second quarter and fell 4 percentage points from a year ago. To buy the entry level house priced at the median $494,690 a family would need a minimum income of $102,190 and the monthly payment would be $3,410.”
“In Ventura County 22 percent of families could afford that first home, down from 23 percent in the second quarter and 26 percent a year ago. The entry level house cost a median $596,120, the qualifying income level was $123,150 and the monthly payment $4,100.”
“Last week, the National Association of Home Builders/Wells Fargo Housing Opportunity Index showed that California had the lowest affordability in the nation.”
The Press Enterprise. “Despite a softening housing market, Inland residents are finding it tougher to buy their first house, CAR said. The association reported that in the third quarter of this year, 31 percent of households in Riverside and San Bernardino counties could afford the region’s median-priced, entry-level house, which costs $346,800. That was down from 33 percent in the second quarter and 38 percent a year earlier.”
“‘The first thing this tells us is even though the market has slowed we are still seeing erosion of affordability,’ said Robert Kleinhenz, the CAR’s deputy chief economist.”
“Steve Johnson, a director with MetroStudy, a Riverside consultant to builders, said, ‘What is sad for Southern California and California as a whole is that these very people often wind up so frustrated they move to other states.’”
The Lodi News Sentinel. “No money down and adjustable rate mortgages sounded like a good idea two years ago when the housing market was still a seller’s playground. But lenders say in today’s buyer’s market these loan programs are leading to more defaults and foreclosures.”
“‘Pick-a-pay’ loans are the worst possible on the market because they lure buyers who really can’t afford to purchase a home, said Dennis Peck, a Lodi lender. ‘They’re given an option to pay below interest and it sounds great to them at the time,’ he said. ‘The problem is nobody explains to them those low payments won’t last.’”
“Others blame the slowing housing market, which in some cases has depleted home prices by up to 15 percent, for increased foreclosures throughout the state. In California last month, more than 16,000 homes entered some stage of foreclosure, the most of any state for the second straight month. California foreclosure activity has more than tripled from a year ago.”
“‘It’s a result of people getting loans who probably should be saving money instead,’ Peck said. ‘People don’t see down the road; they just want a low monthly payment.’”
“He said people who received 100 percent financing don’t have many options because the market has eroded what little equity they may have stored and now they owe more than their home can sell for, making it impossible to refinance or sell.”
“In San Joaquin County 1,809 homes entered some stage of foreclosure last month. Last year’s numbers were unavailable for comparison.”
“The increased number of foreclosures could mean banks will work with homeowners rather than foreclosing immediately, said Duane Burg, manager of Guild Mortgage in Lodi. ‘It’s up to each individual lender,’ Burg said. ‘But it’s not profitable for lenders to foreclose on homes with no equity, so right now lenders seem to be more willing to work with borrowers.’”
“Burg said in the last six years he has only helped two people through foreclosure, and both were last month. He said foreclosures will probably continue to increase for at least two years while the housing market stabilizes.”
‘In a separate report covering more localized statistics generated by C.A.R. and DataQuick Information Systems, 195 out of 372 cities and communities, showed an increase in their respective median home prices from a year ago.’
They usually make this chart available on the press release. If anyone finds it, please post.
Is it safe to conclude that 177 out of 372 cities and communities either showed no change or a decrease in their respective median home prices from a year ago (mainly decreases, as exactly the same median is a low-probability event)?
And what if we measured the price change from the all-time high median price (probably not in October 2005 for most cases, I would guess). Can we say that a majority of California cities’ and communities’ median home prices are down from their recent all-time highs, despite the fact that real estate always goes up?
The Orange County Register. “A homebuyer needed to make at least $123,800 in total household income to afford a typical starter home in Orange County this past summer, according to the California Association of Realtors’ latest housing affordability index.”
This is why the market is sliding. and a starter house is like a crack house 1000 sq ft of misery.
“An estimated 22 percent of Orange County households fall into that category, the association reported Monday.
“The index assumes that a starter home is 15 percent cheaper than the median-priced house and that buyers of such homes put 10 percent down and use adjustable-rate mortgages.”
So the top 22% of the population can barely afford the cheapest 35% of houses, and then only with a suicide loan. Yeah, that’ll last forever.
ric-this is a market meltdown waiting to happen. their whole assumption hinges on ever rising values, and we all know that isn’t going to happen. I have come to despise CAR and their members. They should stop releasing these reports, as they are basically worthless. They have no more credibility than the tobacco lobby, IMO.
“So the top 22% of the population can barely afford the cheapest 35% of houses, and then only with a suicide loan.”
Ric, this is a brilliant observation. Thanks for the post.
I would estimate prices are off 25% from their highs in 2005 @ this point. There is room to fall further in certain markets and most noteably the higher end homes.
I thought of this: 500k loan to FB, stated income, pay option,30 yrs at 3% fixed, interest only. Should be able to qualify and sell more houses. Call that FB in Sacramento with all the houses to refi. hehehehehehehe
Good point, Getstucco.
Our high here (SLO county) was September 2005. We had a big decline in December 2005, and then small increases that brought us (briefly) back to the September 2005 peak in August of 2006. Now the median is down again. But given all this bouncing around of the median, I can see how it may be possible to present a “recovering” market for quite some time via careful selection of the month of comparison (other than myself, who is paying such close attention here? Not many, I’m afraid).
That’s true, there are probably still a few tricks left. They can compare to the 2005 median, they can compare the quarterly medians, shift to average prices…. whatever gives them a better number. But in 6 months they’ll need to resort to wrong data: “oh did I really type $500k for last years median? I meant $600k”.
Just got back from an exploratory trip to crestline in the san bernardino mountains.Saw lots of old cabins most built in the 40s on very small lots,prices range 140k and up.Only 30 minute drive to san bernardino so i was thinking of waiting till people sell there vacation homes in the hills to raise cash.prices have easily doubled up there according to zillow but they are way off on there zestimates mostly 30% over on what has been selling.anybody have feedback on living up there and commuting.
Have they reopened Santa’s Village yet?
Sorry, sold mine in April. I’ll be buying 3 or 4 at the bottom but that won’t be 2007.
Nice area, thought of doing the same, but job’s in the OC, & too long even by choo - choo. Fair number of people do it, and its a relatively short trip on the 18. You might wanna check the MARTA bus routes, they run Crestline down to the train/bus stations in SB.
And yup, it’s had a pretty significant pop up there. Gonna take a while to bleed off. 600 sqft places @ 140k that need to be bulldozed! Just as a side note, you may want to consider buying a lot or two & putting up your own. Dirt prices can still be reasonable.
I lived in Redlands from 2000 to 2005. I knew several coworkers that bought up there in 2004 because of good prices. They got snowed in a few times during the winter. The drive is OK if you have a Porshe and replace the tires every year. Many crazy drivers doing the commute. I mean “run you off the road” crazy. The forest is in terrible condition. All the trees are dead and the fire danger is severe. I would wait a few years and buy a home down below in the smog. Or forget the IE and move near the coast when it becomes affordable. I have lived in Newbury Park, Camarillo, Huntington Beach, Villa Park, Orange, San Luis Obispo, Long Beach, Garden Grove, Redlands, and back to San Luis Obispo. In my book any town south of Santa Barbara has gone to sh*t. Too many people and too much traffic. geeze.
Posted
“Too Soon To Say Market Has Bottomed”: CAR
I have always said it was simple. When too sell and when to buy again. The rest is Blabber…. Nobody can pick a top…. but many of us have been close enough. There remaines only a one more decision to make. When to buy? I think the point of the BLOG should be directed to the next “big” decision….in my case of wanting a home …. is when to BUY?…. The BLOG must move in advance as they did is when to sell!!!! BUT when do we BUY? we must not fight the LAST WAR…. we must fight the next one!
I bet my future by selling, when everybody said the stupit poop …. but I must buy again…. No two way about it my Biz requrier it and my life style… I will buy again no doubt! I would like to see some informed debate in this regard.
Ben Jones took a leap to even start this BLOG …. and I have given to support it….IT is worthy and will stand on it’s own merit totally earned.
We must take the next step…..WHEN TO BUY? I do not know?
Mr. Newman,
Like you say, picking the top is next to impossible. Are you trying to decide on a point in time to buy? Personally, I’m going to wait until the area we want is 40% off from present, assuming my wife and I still have jobs after the recession that is likely to happen! At that point in time, whenever it may be, we will be back to pricing where a home costs 3-4 times your annual salary. From my “studies” this has been the average except in the really prime spots which are always a bit higher.
CA has bottomed out at around six times median income in past cycles. For SD, we are talking around $390K. My spouse does not believe me when I tell her that prices will drop that far.
That was under a stricter affordability test. If that test was applied to current conditions in CA, the affordability rate would be around 2%.
Hmm… considering the average income is 58K that would be around 350K? You are completely within ‘reason” at 390K!
When the property is priced at 1997 price plus 3.5% appreciation annually. At least that’s my target and I have a nice fat down payment making 5% until I get my price.
Gwynster, i’ve heard other people pick a date and apply a certain annual appreciation to home values since that date in order to arrive at the “true value” of a home.
Why do you pick 1997? is this because it’s before this current bubble began? if so, i would counter that in 1997 we were still feeling the after-effects of the bursting of the previous bubble, expecially in certain markets such as LA.
Also, why 3.5%?
My understanding is that 3.5 is what the average appreciation before the bubble. 1997 when the tax change went into effect. After 1997, prices started to climb by crazy amounts in Sacramento because of everyone decided real estate was a way to get a 20% return on investment tax free. 1997 to 1999 (depending on the area) was also when the median income could buy the average house using a rational loan.
But that tax change has not been revoked, right?
Newman,
Good question…when to buy. I’m waiting for it to drop at least 30% here in San Diego(already dropped at least 10-15%) and then I will go aorund and bid 40% less than the asking prices AFTER that 30% drop.
Most will tell me to go fu*k myself but there will be 1 or 2 who will counter near my 40% off bid.
I will do this as a hobby and even give up watching football on Sundays in order to lowball.
renter,
that sounds like a good plan and it will work. however, i think you’re wasting your time until late Q2 or Q3 of 2007. i’m sick of real-a-spin that it’s a buyer’s market….not it’s f#$%@ing not!!
That’s a good approach, but I have to agree with the others in that we are way too early in the game. Unless you find someone who has equity (from long-term ownership) and who needs to sell; most people won’t be able to sell below what they owe plus selling costs. So the best bet is to wiat for the new and improved RTC. Maybe 2008 or later.
Sellers are much too hopeful at this point that they will eventually get their asking price. You have to wait until they “know” they aren’t going to get their asking price. You have to wait until everyone knows that real estate is the worst possible investment in the world because about 10 people they know lost money selling their houses.
At that point, it’s time to buy!
We must take the next step…..WHEN TO BUY? I do not know?
When it costs the same (or close to) renting.
If it drops further it’s not that big a deal.
Press release‘In a separate report covering more localized statistics generated by C.A.R. and DataQuick Information Systems, 195 out of 372 cities and communities, showed an increase in their respective median home prices from a year ago.’
http://home.businesswire.com/portal/site/google/index.jsp?ndmViewId=news_view&newsId=20061128006006&newsLang=en
Cash back acquisition financing is everywhere in Sacramento. Market value: $550,000. Financing: $765,000, 80/20 (100%) financing. The buyers are getting over $200,000 cash out at close of escrow. Five houses sold this way in one neighborhood in the last month. Will the FBI bust these people? Will the “lenders” call the loan. Will the DRE come down on the appraisors? We shall see. The ball is set in motion.
On that note, I gotta call bull$hit on the CAR’s notion that prices are slightly up and holding firm statewide. If 3 of 4 major population centers (Orange County, SF Bay area, Sacramento area) are down, how can the state as a whole be up? Is LA carrying us?
Maybe I’m becoming paranoid, but I’m starting to agree with some of the other posters that the NAR/CAR are doctoring the numbers to try and beat one last commission out of this dead horse.
These shady appraisers should be on a chain gang out in the middle of the sonroan desert. I just cannot believe this cr@p. So they get 200k back at closeing to pay their payments for a few years, cmon people.
send em to Iraq.
Why? So they can be greeted as liberators??
What makes you think they are going to make even one payment?
I bet they are long gone already.
Pointlines, I will track these houses over time, but I don’t think the buyers are skipping. I think they are like any good Ponzi specialist…making the payments to the initial suckers….so they can go out and get the same finanincing on the next deals. Think about it, they have 3 to 4 years worth of loan payments and are betting on a recovering RE market, with no economic risk, except eventually to their credit. I met one of these “buyers” yesterday by chance at the house he bought with $200,000 cash back. He is looking to rent it. And he was “high on life”, like he just one the lottery. Which in a way, he did. Until the FBI comes knocking on his door.
These shady appraisers should be on a chain gang out in the middle of the sonroan desert.
These dudes are the lynchpins which make it all happen.
Wouldn’t surprise me if some of these guys aren’t mob connected and protected.
True that about LA.
A relative works for a major mortgage lender in Sacramento. Said her company does a lot of business with Russians who purchase homes via companies they put together. Also mentioned that if/when the company goes belly-up, they put together a new one and come back to get new loans. I didn’t get any details, but it sounded very fishy. Makes me think a lot of phony baloney is still going on.
Bubbleviewer,
Interesting about Russians in Sac. My wife works for a bank here in Eureka, CA, and was visited by some young (20s) group of Russians who said they were from Sacramento and came into the bank looking for “personal” loans.
Something weird is going on here.
Lived in Sac for a couple of years and the Russkies are everywhere. I think it is pretty well known they are into alot of shady stuff there, so this mortgage fraud would not surprise me at all.
Isn’t Casey Serin from Uzbekistan?
The thing is, they probably don’t realize it’s illegal.
Yes he is. Looks like he is the fall guy.
The Russians are the most sophisticated criminal syndicates of all. A lot of them are actually from the Caucasus (Chechens, especially) and are brilliant when it comes to scamming unsuspecting Westerners and their financial institutions. They are also the most remorseless people on the planet. Thank you, Republicrats, for throwing open the doors of our country to these predators.
JR,
enjoy your postings at Sac Landing. They are informative and insightful. Agree Sac market will be hit hard next 2 years.
Wow.
How on earth can the lenders sell these turkeys to the MBS market? It will be interesting to track how many payments are made before foreclosure.
emcee, you are right on that one. The loan amount is 35% over the value. The $200,000 cash out equates to about 3 years of PITI, perhaps 4 years if they rent the homes out. Then the lender gets nailed if the market has not appreciated from this level and the owner bails. You and I know a typical housing downturn takes 4 years to bottom out, spends 3 years at the bottom, them may turn up slowly thereafter. By then, the borrower is on the lam. Bails on the loan. Does the taxable gain of $200,000 ever get reported? There are so many questions this all raises, but the biggest one is that housing price dysfuntion is perpetuated. The sale comps on this deal are recored at the loan amount, 35% over the market. I do not know where to start with this BS to stop it, but I will.
I doubt they will make even one payment. Take the 200K and disappear is what they are going to do.
Pointlines, see reply to your similar comment about 20 entries above.
“The Realtors association created its new housing affordability index earlier this year as a rough guess of how many first-time buyers can afford homes at current prices. The group then recalculated historical affordability back to the start of 2003.”
“The index assumes that a starter home is 15 percent cheaper than the median-priced house and that buyers of such homes put 10 percent down and use adjustable-rate mortgages.”
Ah, yes… the new affordability standard.
I received a “robo-call” today from a fine, upstanding mortgage company promising me 0.5% guaranteed for 5 years, and first 2 payments “on the house”! How long will it be ’til *this* is the standard of affordability?
How many first-time buyers have $40K sitting around to sink into a ten percent downpayment on a California starter home?
Well… maybe if you’ve been working a decent job for 8-10 years… you can borrow against your 401(k)…
But, then again, any 30-year-old who’s been smart enough to max out 401(k) contribs for 7-8 years is probably also smart enough to know that buying now is not a sound idea.
Not many people at all have 40k for a down payment. They are too busy pissing away money at walmart for cr@p they don’t need. Get home and throw the sh@t in the closet and do it again the next day. Oh, the $4 dollar frappacinos are also a hit w/ these folks. Hey , why save any money when you can heloc and get more free money? I’m glad that my lender told me that real estate only goes up. You know they really care about us folk.
Like flies over rotting meat, the exemptions are too thick to swat away:
1. How many ‘first time’ buyers earn the medium income?
2. Is an adjustable rate mortgage sustainable over the life of the loan?
3. Again, how many buyers of any income level have 50K to ‘invest’ in ahome?
4. If an affordibility index of +/- 20% is only low, just exactly what figure is too low?
“4. If an affordibility index of +/- 20% is only low, just exactly what figure is too low?”
The actual percentage of buyers looking for starter homes that can afford one.
I did a post on this latest CAR data last night…
When all else fails…change the standard.
SoCalMtgGuy
http://www.housingbubblecasualty.com
Hey SoCalMtgGuy-
Saw that Freddie and Fannie will not be upping the conforming loan amount this year for the first time in 10 years - it’ll stay at $417K throughout ‘07. Will this have any effect on prices, or are so many people financing with toxic loans that conforming doesn’t really mean anything anymore?
SoCalMtgGuy,
Not meaning to toot my own horn or anything, but…
Already beat ‘ya to it: http://patrick.net/wp/?p=285
“California foreclosure activity has more than tripled from a year ago.”
Does this strike anyone else as very significant? Is this a case of “burying the lead”?
Seems to me that tripling *anything* is a pretty significant event…
Yeah, I’m waiting for the DataQuick release on this. They always mention it in passing by saying something like “Foreclosures were up but are still below historical norms.” I’m waiting for history to be rewritten on this one….
They normally conclude with, “Signs of market stress are absent”. How long can they continue the charade? This is unraveling much faster than in 1991…
they went from saying “Indicators of market distress are largely absent” to “indicators of market distress are moderate” in the span of one month, without any mention of the change.
The default rate is still fairly low, though I expect it will get a lot higher. You had to really be doing something wrong to get foreclosed on when house prices were going up 20% per year, so it’s a case of the foreclosure rate going from near zero up to low/moderate.
‘The unsold inventory of existing homes is at 7.2 months, twice last year’s inventory. Higher inventory levels are a key factor in the moderation of home price appreciation.’
They are also a key factor in housing price declines like we are now seeing in the YOY data.
Stucco, don’t they also say ,’but six months inventory is normal.’ ?
I can’t wait to trip out on the upcoming inventory numbers for ‘07. When you look at where inventories are now in comparison to last year, you know it’s gonna be insane. The market should have shaken out a lot more inventory by now for the hgousing bulls to feel optimistic. A lot of them are feeling warm and fuzzy because there’s been decreases in inventory recently, but decreases are normal for this time of year. So when you take into account all the folks that fall in the “I’m taking it off the market and relisting in the spring” camp, the new wave of distressed homeowners, and the ARM resets, all I have to say is look out! The numbers are going to be awesome. It’ll be just like last year with the inventory swell began at the end of January and picked up steam from there. The only difference is where the numbers are at now in comparison to last year when the fun began for inventory numbers. I do believe ‘06 was childs paly in comparison to what we’re going to see. 2007 = The Great Unraveling.
“The numbers are going to be awesome.”
Yes indeed. I also can’t wait to hear all the experts muttering about how they never saw it coming; it’s much higher than expected, etc. Ah, the sweet smell of schadenfreude.
I alternate between shaking my head and schadenfreude.
People are so in denial…
Next emotion? Fear.
(I shake my head again…)
Neil
My benchmark number for the LA beaches is 35-40%, or about down to ‘01-02 levels. So far, I’m thinking that this will be bottom, and I’ll be ready.
Dude: I too am thinking a 40% haircut for most of CA’s coastal cities. That would put us more in line with a historic appreciation rate. The traditional NAHB affordability index someone posted on this thread says it all. CA is going to reach zero affordability before year’s end!
That would put us more in line with a historic appreciation rate.
The housing bust isn’t occurring in a vacuum, so expecting a reversion to a normal “historic” rate isn’t going to happen. If you buy at 35-40%, you’ll still be catching a falling knife.
Indeed. Reversion to the mean and then some more on top of that. I won’t try to catch the exact bottom, but beyond 40% I don’t think it will be much more. Of course I could very well be wrong. When that day arrives I will just have to consider the whole picture: current income, savings, loan terms, job prospects, etc. As long as I can make the payment without spending every cent and I’m paying down principal then I’ll be happy. If that is impossible at 40% then I will just wait longer. No rush. I will also use the old family test. There are a few in my “tree” that seem to be good contrarian indicators. If I tell them that I’m thinking of buying and they look at me like a madman then it will probably be a pretty safe bet to purchase. They are great family, but I wouldn’t want to be in business with them!
SFV RE appreciated 250-350%, so that would require a minimum decline of 60-70%. Are you telling me that Redondo is less desirable than the Valley? I don’t think so!
It’s amazing to think that liquidity can dry up that completely! I’d like to see statistics on spec purchases per area or zip code. How many suicide loans per geographic area. Maybe in the end, it won’t matter. Just as a rising tide floats all boats…
“The only difference is where the numbers are at now in comparison to last year when the fun began for inventory numbers. I do believe ‘06 was childs paly in comparison to what we’re going to see. 2007 = The Great Unraveling.”
Add to that the number of reo’s in any given neighborhood. I just started using realtytrac’s mapping system this weekend….you should see what the north and west valley looks like on a map….foreclosures everywhere. it’s going to be a mess by spring ‘07.
Getstucco - you are so right regarding the inventory. I’m simply stunned at how quickly in the inventory situation has flip-flopped in California, of all places, over the past year.
Why don’t they just say, “the October median was $x but that number will be revised at least three times over the next 12 months”?
Yeah, it amazes me that when they do the initial release the Oct. number makes things looks not too bad. Then they revise the number when no one is looking a month later and it is really an absolute disaster. By then no one in the MSM catches it. Then they do the same the following month(s).
Fuc*ing liars!!!!!
“A homebuyer needed to make at least $123,800 in total household income to afford a typical starter home in Orange County this past summer, according to the California Association of Realtors’ latest housing affordability index.”
“An estimated 22 percent of Orange County households fall into that category, the association reported Monday. That’s a slightly greater percentage than during the spring, reflecting a period when Orange County prices began their four-month fall from the peak set in June. But it was a smaller number than a year ago.”
Why don’t they change the name of their newfangled affordability measure to the mendacity index? Because I don’t see what the fact that 22 percent of all OC households can afford a starter home has much to do with anything. Shouldn’t the question be, “What percent of households looking for a starter home can afford to buy one?”
Since presumably most OC households which earn at least $123,800 / year in income are already homeowners, their index is meaningless, except as another way to cleverly lie with figures.
“Shouldn’t the question be, “What percent of households looking for a starter home can afford to buy one?””
Exactly! And the answer to that question is 21.4% less than last year…
Bingo! Give that man a cigar!
Is smoking allowed on this blog
Not allowed on many beaches and public place in California at least..
“Is smoking allowed on this blog.”
Yes, it is, and thank goodness for me. I’d hate to go outside every 45 minutes when reading this blog.
Exactly. I suspected as much when the CAR released their statewide “affordability” figures. They’re assuming the income distribution in the pool of first-time-buyers is the same as that of everyone in the county. And the vast majority of people making seven figures or more are established in their careers and already have houses.
And what about the 2nd or third time buyer who has maxed out his home equity and his home is depreciating? If he is underwater by $50,000, how long will it take him to pay off his debts, save $50,000 more for a down payment, and then buy a new house?
Only $50K? That’s just a 10% haircut on the median. Most FBs will be well into six figures underwater in California.
I posted this ealier, but it fits for this topic too. The data is correct. Affordability is at historic lows. “New” Home buyer - out of luck. What that does not stop is the buying and selling of property to the large population that both sides have large CA equity in their existing homes that were bought years ago (5+). Its a swap with a 6% transfer cost to the realtor cartel. Buying up? Trade your $800K home for a $1.2MM upgrade and take out $200K in aHE loan….affordable $1,200 a month payments. It is new home buyers without Grandpa’s or Mom and Dad’s inherited property that have no skin in the game that are cold and alone on the sidelines, but with their down payment money warm in the Bank. Buying “into” this CA market is insane. Rent don’t buy
Yes, but to make the upgrade work, you need to find someone to buy your $800K house… which is quickly headed toward “Starter Home” status in this market…
What you just described is essentially the inner workings of a Ponzi Scheme. Rest assured, it will run out gas. The weakest link in that chain is the first time buyer. Once they are priced out, the link breaks and the move up buyers are stuck because they can’t unload their POS to another GF.
JWM - I think Ponzi Scheme is the best descriptor of what is transpiring. You nailed it; and since the number of first time buyers able to afford a home is quickly approaching zero we can expect a big collapse considering how high prices went.
Sad to think that Real Estate in the US has become just one big Ponzi Scheme! Is this all America has left other than debt. We are royally F%^$ed!
…the large population that both sides have large CA equity in their existing homes that were bought years ago (5+)
WHAT large population? Remember…
#1 Homeowner’s equity as a percentage of value has actually declined throughout the boom.
#2 The percentage of homes owned outright has remained somewhat stable, therefore the equity in #1 is overstated.
#3 Half of all mortgages have been initiated since 2003.
Yes, there may be some equity out there now, but that’s disappearing by the moment. By later 2008 there will be little or no equity among mortgaged homeowners, only debt… lots of debt… and you can’t trade negative equity.
I would venture to guess that all of those OC Households which earn at least $123,800 / in income a year, are most likely HELOCKED to death in a $1Mil. plus, OC Housewive’s McMansion.
“Last week, the National Association of Home Builders/Wells Fargo Housing Opportunity Index showed that California had the lowest affordability in the nation.”
Is that why everyone wants to move to CA? Or is it the fact that they are taxed more, have lower quality schools, severe overcrowding, the worst air quality, alarmingly high crime rates.
Do you wonder what the median priced home in LA looks like? It’s a 1100sqft 60 year old dump in a slum.
What a joke. Everyone wants to leave CA.
No, not everyone.
CA is gonna get FLATTENED as a result of this bust. There will literally be TRILLIONS of dollars wiped out. Think about the $1M dumps that get liquidated for 30 cents on the dollar * X MILLION HOMES. Upwards of 75% of loans in CA were ARM, int-only or option ARM, probably all of them with 0-Down if you average in the cash-back-at-close or 125% loans.
It’ll be, “Anyone can move to CA” before you know it. Be interesting to see if anyone actually does.
The illegal aliens love it because they will own the state in 10 years.
Yes, and then they come over here to Arizona and whine about what they used to have in California. It’s as if we Zonie-hicks just aren’t as cool as they are. Or something like that.
Zonie-hicks…I like that
Anyone been following the SB market? I am wondering if the county data have typos. How can prices be up so much overall in SB when both north and south counties show declines? What is left in the county other than north (i.e. Santa Maria) vs. “the south coast”?
There have to be errors in the data. Anyone who lives in California has too much anecdotal evidence to the contrary.
This is what happens when you leave these clowns unregulated. Repeating myself here, but If Jane Sixpack and Joe Soccermom want to treat real estate like an investment, then buying real estate and its financing should be highly regulated, as are stocks, bonds, and funds. And there should be uniform standards for presentation of data.
But then the dummy realtors would actually have to learn something difficult.
JWM - again I must agree with you. If realtors had to take exams equivalent to Series 7 then 98% of them would be looking for employment elsewhere. And while I generally have libertarian leanings, I also agree that if people want to flip homes and sales contracts, using insane amounts of leverage when based upon their incomes, then yes make the RE industry accountable. We have realtors running around telling their clients to BUY, BUY, BUY!!! Prices only go up! You will make $100K on this place in the next year! It’s a no brainer, RE is ALWAYS your best investment choice! These words are coming from the lips of someone who was until just recently employed as a retail clerk or hairdresser. In other words, 98% of these clowns don’t know jack about finance, econ, etc. They clowns are only after the commissions, with no thought to the future, sustainability, etc. Screw them. (This is not directed at the 2% who are providing an honest and real service to their clients)
What scares me is these are the guys I trust with my deposits every week. Yeah, they are handing the bag off (sort of) but with everything that is about to hit the fan…. I can see banks getting pretty squeezed out of all this.
I guess I thought the banks would be a heck of a lot more carefull. The liability out there is just incredible.
Anyone have any ideas about banks that will remain solvent?
This is why the economy is headed for the crapper. When $10/hour hairdressers are giving you advice on million dollar homes, LOOK OUT! THIS IS WORSE THAN THE SHOESHINE BOY GIVING STOCK ADVICE RIGHT BEFORE THE DEPRESSION!
Wells Fargo refused to do subprime loans. I think they’re a pretty safe bet for your money.
On the other hand, Washington Mutual was holding the bag on a LOT of subprime loans. They’ve since sold some, but still have a lot of downside exposure. I’d avoid them.
I have read that Wells Fargo does subprime loans, and even came under fire for some of their lending practices. Has something changed?
don’t hairdressers have more stringent education requirements than realtors? (and i”m a realtor)
Well Fargo, doesn’t do subprime. Since when??
Slash,
You don’t know what you are talking about. I worked for Wells Fargo back when they first started venturing into sub-prime (about 8 yrs ago). All the amjor banks are going to go on about how they don’t do subprime loans. And yes technically, they may not currently have subprime in-house, but they do broker the paper out to others (First Franklin, Fremont, World Savings, New Century, etc.). Their hands are jsut as dirty as everyone else, including the local hole-in-the-wall mortgage broker scamming unsuspecting idiots with neg-am loans.
Sorry for the misspelling. I’m not sure where I got my learnin’ from.
“He said people who received 100 percent financing don’t have many options because the market has eroded what little equity they may have stored and now they owe more than their home can sell for, making it impossible to refinance or sell.”
Many of us long-time posters here own crystal balls which were 100% accurate in predicting this problem would be widespread long before the MSM picked up on it.
“The index assumes that a starter home is 15 percent cheaper than the median-priced house and that buyers of such homes put 10 percent down and use adjustable-rate mortgages.”
Funny, isn’t it, how every single change they made to arrive at the new affordability index from the old affordability index works to make the affordability percentage go up?
GetStucco,
This is merely a reflection of our marvelous new housing paradigm. Things are getting better and better, and we live in the best of all possible worlds.
Thanks for pointing that out, Dr. Pangloss…
OT……but calling all members of the PPT…..
All hands to the pumps……
http://business.guardian.co.uk/viewpoint/story/0,,1958706,00.html
Of course the NAR/CAR/FAR are saying “Damn the torpedos”
“Thirdly, the differential between US interest rates and those in the rest of the world is narrowing. Despite all its tough anti-inflationary rhetoric, the Federal Reserve will not raise rates again. The same could not be said of the European Central Bank, the Bank of England or the Bank of Japan; indeed, for the first time since the euro was launched in 1999 the foreign exchange markets are faced with a situation where the two big European banks are tightening but the next move in US rates will be downwards.”
That’s just it — the cheap talk from the Fed has not sufficed shake the Helicopter Ben label.
“to shake…”
Don’t Forget NAHB/Wells Fargo haven’t re-written their Affordability index.
http://www.nahb.org/fileUpload_details.aspx?contentID=537
LA is #1 at 1.8%
OC is #3 at 3.8%
Oops…looks like LAY forgot to include everyone “on the team” in the charade.
EXCELLENT find. If rates spike or we wind up going back to traditional underwriting, CA is royally effed with a capital F.
To my way of thinking, we were insanely stupid to let affordability levels reach so low. It is short-sighted in that we have borrowed too much from future demand and will spend years wandering the doldrums. This is akin to Ford and GM extending credit and employee pricing to any f-tard that walked in the door. Eventually you exhaust the pool of customers. This is what America has become in my lifetime of 32 years. A society that has wholly embraced the creed of get as much as you can, as fast as you can. “Screw everybody else, I got mine! Let the next guy pick up any debris falling from the wreck I have created. Yeah baby, I got mine! Suck on my Escalade exhaust, I’m going to Vegas to roll with the players!”
IMO, the sooner we take our economic medicine the better. The reason we had tight standards in the past is because they worked. Give all the johnny come lately, wannabe RE moguls the bitch slapping they so justly deserve, and get back to producing something of value other than stucco clad boxes in the middle of BFE.
While I don’t have too many more years than you do, my guess is that this “get rich quick” stage is part of a different type of cycle: excess greed then regulation. In CA, during the latter part of the 19th century, the railroad barons were so excessive in their greed that we (CA) developed a system of commissions to regulate them (the Public Utilities Commission was formerly known as the California Railroad Commission). It is called the Progressive Era and Gov Hiram Johnson was the lead person going after the excesses. Teddy Roosevelt and his Trust Busters did it on the national level. Same happened after the Roaring Twenties. In the 1980s we had the Savings and Loan Scandle. They all have the characteristic of a somewhat large (but related by business interest) group of people tacitly promoting lies to the general public to permit a period of rapid capital accumulation at the expense of a more gullible sector. I think in some people’s minds, that is what makes America great. Who knows, maybe they are right. Or maybe some day the people who get screwed by the greed cycle will quit forgetting history and pay some attention when the movers and shakers begin spewing BS. It actually makes me ill how we glorify those who pull this cr*p like Michael Milken.
You mean Michael Bilkin (them for all they are worth). I still want to know how the heck does a guy who bilks $2billion get to keep half of it. I rememeber this guy from my college days and how so many classmates thought he was some kind of hero. What rubbish!
Michael Milken & Ivan Boesky were both major contributers to the Democratic Party, and thus exempt from any serious punishment for their financial crimes.
I call Bull$hite
#1 Ronnie Raygun and the Repbulitards were in charge of the Exectutive branch….which controls the justice department so contributing to Dems would not have gotten anyone a free pass.
#2 I dont believe you…show me link that proves that Milken and Boesky gave money to Dems and NOT to Reps.
Never mind I can find it myself and you are a liar…..I expect nothing less from a Republican.
Milken gave a lot less and his distribution was different….the only presidenital candidate he gave to was Ronnie Raygun.
http://www.newsmeat.com/celebrity_political_donations/Ivan_Boesky.php
Ivan Boesky (bio)
financier, ex-con
$70,550 Republican
$21,000 Democrat
$25,500 special interest
total: $117,050
Greed and fear…
Greenspan allowed greed to get out of hand after 9/11 & dot com bomb. Once again he didn’t take the punch bowl away in time.
1987 after Stock market crash Greenspan allowed a minor housing bubble to develop. This was halted by Saddam Hussien’s invasion of Kuwait.
Greenspan remembered how well it had worked and knew something always trips up a bubble. This time it might well be the defecit created by the war we have no idea about ending without leaving increasing risk to our country.
It isn’t the deficit that ended the bubble. They have nearly run out of GF’s and have priced everyone else out of the market. The few remaining GF’s cannot sell their current home to upgrade. The only hope of the REIC is legalization of the 30 million illegal immigrants who will bring in another 60 million of their relatives and Fannie Mae who will give them all 125% LTV loans to buy $400K starter homes.
Amen Ca Guy ,agree 100% .
The quicker the better IMH for this needed correction . Trying to keep the party going by any means is getting on my nerves .
Ca Guy, AMEN BROTHER! What made America great for so long was that America was good, just as De Toqueville (SP) said. Of course you can interpret good anyway you want. However, I know greed when I see it and that last 25 years has been one BIG EFFIN pig fest. What happened to the greater good? I am not talking communism. Rather, am I leaving the world a better place for my kids, the neighbors, other humans? No more! As Ca Guy said, I am going to get mine and be damned with the rest of you. I realize that we can’t go back, nor should we. However, certain values should never change. We can argue politics. We can argue religion. We can argue about abortion. However, unchecked, unbalanced greed coupled with spend like there is no tomorrow and a “I don’t give a rat’s rear about anyone else” ideal is a sure fire way to wipe out any society. All the more one based on capitalism.
Look at all the numbers folks:
1. Personal, private, corporate, gov’t (all levels) debt completely unsustainable. BTW, these numbers continue to grow annually.
2. Annual budget and trade deficits that would make R. Reagan blush.
3. Negative personal savings.
4. Toxic mortgage loans.
5. Cost of living slowly killing middle class, even those of us who are thrifty.
6. Greedy, live for today attitude of too many Americans (This would include those in the REIC that are fradulent, etc.).
7. Too much spin doctoring by those who are either in charge or hold purse strings.
8. Too reactive in this country. Whatever happened to planning ahead, or saving for a “rainy day?” If I had a dollar for every time my stepdad give me that sermon, I would make Bill Gates look poor.
I know I will get flack for this, but that’s the way I see it. Put it this way, I am 39. My dad grew up and got his first real job during the depression. I also was a college student during the Reagan years and I have to admit I lived well beyond my means. However, that has changed. I have seen both sides of the fence and the era we are currently in is not good. I hate to say it, but a deep recession might be the best medicine for this country. Obviously, and I mean no disrespect here, 9/11 didn’t do the trick. Oh, that lasted for a few months and then what, Bush tells us all to keep shopping. What crap. How about sacrifice. Whether you agree with his beliefs or not, if we had more Pat Tillmans in this country, we might see a return to preeminance of this country. Alas, I just don’t see it happening unless there is a major recession, since all most people know and live for is their wallet.
OCDan,
IMO, you always have good posts. And I’m not saying that because you agreed with mine! I recently saw a great quote by the early 20th century Supreme Court Justice Oliver Wendall Holmes: “A hundred years after we are gone and forgotten, those who never heard of us will be living with the results of our actions.”
Similar to what you said! Yeah, we’ve had periods of excess greed before, but it didn’t seem to reach so far down the chain. There will always be greedy ba$tards at the top taking everything they can, but now the attitude seems prevalent amongst the average folks as well, especially when it revolves around housing.
CA Guy have you ever seen the movie Gladiator? I love the line when Russell Crowe tells his troops that what we do in life echoes in eternity. No matter your belief or unbelief we are all interconnected in some way. John Dunne summed it up when he said “No man is an island.” Unofrtunately, as you have pointed out too many, esp. at the bottom of the chain have this mentality. You know the appraiser who fudges on just ONE appraisal thinks it is no big deal. Just 1 more before I retire. Boost that last commission check. However, he has no clue what he has just set in motion. Also, I realize that we have had robber barons and all sorts of other trusts that had to be busted up, but at least someone like, oh I don’t know, Teddy Roosevelt and Taft where there to take them on. Not the last couple of presidents. Yeah, we went after Microsoft. Sure, go after the company that probably made more millionaires than any other company or product in the history of this country. Big deal. How about going after Halliburton or the oil companies. No, never in a million Bush presidencies.
To sum up OC Dan’s words, nothing in the universe goes unpunished or unrewarded.
It’s called Karma, sowing and reaping, cause & effect.
Right on OCDan. Are you sure you are from The OC? Cause your intelligence is definitely keeping the curve up for the entire county.
“…if we had more Pat Tillmans in this country, we might see a return to preeminance of this country.”
Not as long as this country is flooded with the lowlifes who used his dead body to beat the war drum and covered up for the a$$hole US soldiers who murdered him.
snip:
One investigator told the Tillmans that it hadn’t been ruled out that Tillman was shot by an American sniper or deliberately murdered by his own men though he also gave no indication the evidence pointed that way.
“I will not assume his death was accidental or ‘fog of war,’” said his father, Pat Tillman Sr. “I want to know what happened, and they’ve clouded that so badly we may never know.” ABC News
From the data:
Town A.I.
Madera, CA 4.8
Stockton, CA 4.8
Merced, CA 4.3
Modesto, CA 4.1
North to south about 80 miles of ag land and small towns, holding +/- 1 million people. Can’t leave, can’t stay, can’t buy, can’t sell. Toast. And I live here. Somebody tell me how bad this is gonna be.
Sunset Beach Guy,
Thanks for these numbers. I asked in another post what the affordability rate would be under the old standards. What a big difference. Unfortunately, only those of us that have been paying close attention know that they changed their method of calculating affordability. Most people probably just think that it has increased without really thinking about it.
What is the over/under on how long David Learah will keep his job before resigning? 5 Months? He’ll be looking like a real fool by mid-spring.
Well sure, but the next guy will look like a real fool as soon as he gives his first speech. What could any new NAR mouthpiece say? My guess is Lereah could be around for quite a while.
He looks like a total fool now. He is a fool. A shameless, lying, sack-o-sh1t fool. But… that’s what defines a NAR chief economist. So, even if they replace his worthless ass, the dolt that replaces him will be at least as foolish. It’s a job requirement to be a complete buffoon.
http://davidlereahwatch.blogspot.com
PSYCHOLOGICAL FACTORS is correct! You got to be carzy to buy right now.
Perfect bubble senarion: Fool hopeful sellers into waiting for rebound
Let me be the first to say:
ITS IN THE BAG!!!
I’ve said that a lot lately!
Heaven in 2007!!!
Great in 2008!!!
Fine in 2009!!!
Cruzin in 2010!!!
Sorry too much vino tonite
Deutsche Bank cuts U.S. growth estimate to 0%
By Rex Nutting
Last Update: 5:42 PM ET Nov 28, 2006
WASHINGTON (MarketWatch) — The U.S. economy has stalled, Deutsche Bank economists said Tuesday in a note to clients. “In light of continued weakness in the economic data, we are cutting our fourth quarter real GDP growth forecast to zero from the 1.0% that we were originally predicting,” wrote Joe LaVorgna and Carl Riccadonna. The economists made the forecast change following Tuesday’s weak durable-goods report, coupled with tepid reports from retailers. “Consumer spending is not getting the boost from falling gasoline prices that many analysts anticipated,” they wrote. Other economists aren’t so glum: The average forecast for growth in the fourth quarter is 2.3% following a 1.6% gain in the third quarter.
Ouch. At least mainstream people are admitting this now…
“The average forecast for growth in the fourth quarter is 2.3%”
Last week, the average forecast was for 2.7%. This will be written down at least several times in the coming weeks. And then the actual number will be far lower.
“Boss! Zeeeflation! Zeeflation”
As I posted in a previous thread.
GM layoffs at H2 plant. Ford buyouts popular with workers. Pfizer laying off 20% of US Sales force. Well they can always be real estate agents errrr wait… Housing is losing people too– between agents, brokers, appraisers, loan officers, and construction jobs combined with the slow start at Wal Mart and other retailers this is bound to get nasty. Look for unemplyment to take a huge leap and for foreclosures to continue to rise as inventory increases and prices decrease. My only question is “How does David Lereah ’spin’ this?”
As David Lereah says, “Housing Bust is over, we have hit bottom, prices will only go up, housing is a can’t lose investment are the words we hear from the NAR. Now is as good a time to buy or sell a home because if you dont, your realtors and mortgage agents will lose their houses that they wanted to flip and if things get really bad, they could lose the house they actually live in.”
“Now is as good a time to buy or sell a home”
I still can’t get over that shameless phrase - Totally indefensible. The only explanation is that the RE complex desperately needs the transactions, which is so transparently obvious that even someone with an IQ of 40 could figure it out. Looks like the NAR is now totally desperate… in PANIC mode.
“How does David Lereah ’spin’ this?”
He won’t have to the BLS will do it for him. They’ll hide the real unemployment numbers (just like they do now) deep behind some wonder inducing headline number…Unemployment is the second biggest lie coming out of the govt…NUmber one is inflation.
CNN Money has a list of places where, it advises, people should BUY property NOW! This isn’t a realtor handing out b.s. hype. This is CNN Money cheer leading. One such town they advise people to buy now is San Luis Obispo in Ventura County, Ca. Just listen to the numbers these moron financial “advisors” use to justify “BUY NOW!” Average cost of a house in San Luis Obispo is $440,000 (their number). They then quote the average income. $34,000! Are these CNN so-called financial advisors drinking their bath water! How the f*#k can people buy (and remember they suggest buying NOW!) $400,000 houses on $34,000 a year!
It seems we are in for a full blown propaganda season in an attempt to make everyone think times are just dandy. The latest hype merchant is Ben Bernake. He’s out cheer leading, saying the economy is great, property is at or near the bottom, we will see growth in 2007, etc. No mention of maxed out credit cards, foreclosures, toxic loan resets, massive deficit, the $ tanking, Iraq trapping us in a costly civil war and a President in charge who’s true vocation in life should have been a UPS driver. No mention of $12 an hour jobs replacing $50 an hour jobs. No mention of 40 million US citizens without health insurance….just sunshine and rose petal strewn highways as far as the eye can see. And, of course, all backed up by the inflation numbers which are still manageable (according to these lying bastards.) Amazing.
Dude you are on a roll. You have a lot of valid opinions for sure. Wouldn’t it be funny to see mr bush cruising a ups truck around a nascar track? All the “nascar dads” would love the dude forever.There is so much crooked stuff going on right now that everyone is in a trance going with the flow.
Mike, that is a great rant! As for your comment quoted below, I cannot tell you how angry I get when we hear the buffoons in D.C. announce the latest number of jobs created, economy is moving right along, etc. How hard is it to understand that 50K new jobs at Sears means squat when all the good paying ones are going bye bye! Who really gives a rat’s a$$, it equals out to be a decline in living standards. It’s as if we are perpetually taking three steps forward followed by two steps back.
Mike said: “No mention of $12 an hour jobs replacing $50 an hour jobs.”
P.S. Your GWB as a UPS driver comment was especially enjoyable. Man, I can really picture that in my mind because it is so true. There is nothing wrong with driving for UPS, but the way things are headed it could soon become a very sought after job held in high esteem. I’m embarassed to admit I voted for Bush in 2000, but never again. I don’t want to be in the camp of Fool me once, shame on you; Fool me twice, shame on me. Until someone capable comes along I am content to throw my vote away on random libertarian and independent candidates.
Bush as UPS driver — inspired!
UPS won’t let you drive for them with a DUI on your record–they have a professional risk management unit after all.
Bush has three known arrests actually: theft, disorderly conduct, & DUI.
Fool me once, shame on you; Fool me twice, shame on me.
Or as Bush himself famously said: “Fool me once, shame on…shame on you. Fool me…you can’t get fooled again.”
Video: http://tinyurl.com/8ur5z
They also predict 40% appreciation in SLO for a median of 612K in five years. But since the median was about 600K in September of 2005 (slightly lower now) rather than 440K as they claim, that would mean essentially no appreciation at all in 5 years.
Mike my kindred spirit brother. You have def. seen the light. What people don’t realize in this country is that so much of what we see is just BS public relations. What people don’t understand is that you have to keep brainwashing them into believing everything is fine or the masses would take up pitchforks and cauldrons. If people actually did their research they would see that the numbers that come out of d.c. and MSM are just half baked. OH the Dow was up today, anotehr new record. WHAT CRAP!!! Lets look at that kind of statement. First, when one takes into account inflation alone that number is a crock. Second, all that means is the dollar price of something. It is not the actual intrinsic worth of the item. It’s like RE. Hell, just because I pay 1M for a home doesn’t mean that is what it is worth. Thirdly, we know those stock markets prices aren’t cooked, don’t we? They are all legit. Sheesh. People just don’t get it. Sorry for the rants, but whenever Ben puts up something on Clownifornication, my blood really gets going. This state is in for such a beatch slap in the next 1-2 years, it isn’t even funny. If you think people and companies are leaving now, just you wait. By 2008 certain areas of the state are going to be overrun by the local animals. This state is in for a serious shock. The economics are unsustainable here and when the end comes it will be the Grapes of Wrath in reverse!
Wow, San Luis Obispo in Ventura County, CA. Who’d a thunk?
Just goes to show how much research they put into these “recommendations.”
the article my friend is worst than you imagine,san luis obispo county is huge,to live in the city the price would be 650k,the 440k encompasses the whole county..this article is so misleading,the only thing it has right is the salaries are so low compared to the housing prices,san luis obispo county number one employer….california mens colony…..not many jobs in paradise…….
‘While it appears that home sales have stabilized over the past three months, it’s too soon to say whether or not the market has bottomed out,’ said C.A.R. President Colleen Badagliacco.”
-Basically, more dramatically understated nonsense. Now I admit that I am far from being what one would call an economist. Hell- I don’t even comprehend everything that has to do with housing. Perhaps California will pull off a Houdini move and miraculously be a state where houses are permanently high and despite fingers pointing at all aspects of what is so horrifically wrong with this paradigm of expense,people will somehow STILL “buy” and continue riding off into the eternal debt-ridden sunset without a care in the world.
But frankly, I’m really tired of it. 550k for a house is unacceptable. So is 500k, 450k, 400k, 300k, 250k. All obscene prices that exist simply because people in this country have become as dumb as fattened cattle with their credit cards, cookie-cutter college degrees that land them cookie-cutter jobs, and have cookie-cutter brains that comprehend little in terms of finance.
Yes.. this madness could very well continue. Again- It is getting old and frankly, I suspect that most people my age ( 30) will come to a conclusion if California prices do not come down signifigantly in the next 2-3 years. They’ll leave. The kool-aid haze that makes people drunk in California will clear for these people and the truth of how insanely stupid this state is will become crystal.
Jeez, Jetson…. don’t sugar-coat it… tell us how you *really* feel…
I rather like California, with all its blemishes, and for my career and family, it’s where I need to be.
I hope there is a mass exodus - but it’s probably not likely. I choose instead to lay low, rent, let my pile of cash from my FL condo sale last year grow, and see how it goes.
No one said it’s mandatory to own a home. The Powers That Be *want* you to equate your self-worth with whether you “own” a home or not.
Ok, I’ll admit I was a little hot there… But as someone not from Cali originally, All I can say from my observations so far is that you guys who’ve never experienced anything except Cali, NY, or MA, ( and typically, most folks I’ve met from these areas fly over the rest of the country anyway), I don’t think you realize how much abuse you’re taking… and all for totally uneccesary reasons. I guess my advice is that life in general does not have to be this hard. Not even one iota close to being as difficult as it now is in this state. If you want to stay, then there’s no problem there.
I am bitching, but then again I DO know what life is like outside these borders… and it isn’t that bad at all.
“and typically, most folks I’ve met from these areas fly over the rest of the country anyway”
So true. Until my friends started moving out of state and I went to visit them, I considered much of the US as “fly over” states. But how my views changed when I actually visited all these places that I had previously scoffed at. I found tons of places that were really nice - they were different than Cali, but really nice.
There is a lot more to the US than Cali, and I think that people will realize it, maybe out of necessity.
Jetsonboy you are so right! I was one of those you speak of. I’ll admit it and this is why I hate debt. I had the 200K mortgage. I had another 40K on credit and store cards, a car note, student loans, and to top it off the dreaded HELOC (hard to believe when you hear me on this board and yes I got religion, you could say). My wife worked full time. I commuted 65 miles EACH WAY!. Well I did have some fine conversations with some very real people who cared about me and my family. We paid the bills and we made ends meet. However, I reached that point in my life where my value was not in my home. At 39, I realized that life was too short. My family needed to be debt free. They needed daddy home after work, not while they slept and I was commuting. They needed a mother at home, esp. my 3 year old daughter. That’s when I sold this last January. Well, we are debt free. My wife stays at home. My commute is 4 miles (I drive home for lunch), an we have a pile of cash in the bank. So what if I rent. I smell the fear in all these people. On top of all that (don’t get on me too much for saying this), praise God, no one of the 4 of us in the family has been sick since we moved. I think Jetsonboy made my point here. Less stress now, life is a lot easier. No more running around like a chicken with its head cut off. Sure, would me and the wifey like to own a home? I would be lying if I said no. BUT, I REFUSE TO SACRIFICE MY LIFE OR MY FAMILY FOR SOMETHING SO OVERPRICED HERE IN SOUTH ORANGE COUNTY! Am I looking out of state, you betcha. As soon as I get the “We would like to offer you a position” line, I am gone.
OCDan,
Thanks for the post. More and more people - admittedly, a small minority of the sheeple - are waking up and realizing they’ve been sold a bill of goods. Despite what Madison Avenue and the media spinmeisters would have them believe, a simple, uncluttered, debt free life based on timeless essentials of faith and family is far more conducive to true happiness and security than a barren and pointless existence of debt slavery and soulless materialism.
When I was a teenager I watched my parents go from a solid middle-class situation to near-bankruptcy. They kept going over the same old ground, year after year, willfully refusing to face facts and deal with their hopeless financial situation and the causes of it. Believe me, it made an impression. It also caused me to avoid a lot of mistakes, at least when it came to financial management. Fortunately my wife shares my aversion to debt, consumerism, or living beyond our means. We also believe strongly in raising our own kids and putting family first, rather than outsourcing that most important of duties to a Kiddie Kennel so we can live in a McMansion and accumulate more possessions we don’t need. We live modestly, but well, and are completely free of the financial stresses that afflict so many of our friends and acquaintances. We sold our first house in 2002 to go overseas, and upon our return in 2005 have been waiting patiently for reality to impose itself so we can buy again.
I’m always interested in how the other regular posters in here came to see the light.
OCDan:
Many congrats on getting out of the rat race! My commute is even shorter than yours, and I am loving it! With the exception of my Marine Corps service I have lived in CA since the day I was born, as does my father, my grandmother, and all the way back to her grandparents. I too would like to own but not at the present costs, both monetary and socially. CA will probably see a brain drain in the coming decades, and I may very well be one of them too. College educated, okay job, great wife, great family here. It’s not sufficient. I have seen quite a bit of this world, and I must say that the CA lifestyle is losing any remnants of appeal. It has changed dramatically in the last 20 years. I don’t have a specific date in mind, but if I’m still feeling this way in a couple of years then I’ll be headed out as well. My engineer cousin feels the same. This state is dying on the vine.
I’m actually not from CA originally - moved here last year from FL. I’ve lived in NH, MA, IL, FL and now here in SoCal. For what I do (film & TV), being in LA is helpful to my career, and I’d say my quality of life quotient is about equal to what it was in FL, but with much more potential upside.
That said, I *do* hope there’s a big beyatch-slap coming for CA, because the back-end of it will bring opportunity for those of us who’ve been thrifty and patient.
I already left brother. The sh@t aint worth 250k up there in sacramento where I’m from. It is the biggest scheme of all times and it is being led by local governments on their quest to extort you for as much as possible when owning a home.We need a major revolt to get this system fixed.
I’ve said it before and I still believe that there will be an exodus of young, college-educated people from CA. I think that many 25-30 year olds are realizing that CA isn’t an easy place to live, or at least, make a start in life.
As of now, about 1/2 of my friends from college have already left the state. They are finding jobs with similar pay, and with their living expenses being much less, are able to save more toward a house as well as spend a bit more on luxury items. The weather here is nice, but IMO, isn’t worth THAT much of a premium… just my $.02
Andyman,
I agree that young people are seeing the writing on the wall and bailing out of cali. It is hard to leave your hometown but there is life after california.
My wife is in that age range (alas I am bit older), and she is plenty happy to be moving to Western Pennsylvania this spring. She even felt single digit temperatures for a week straight and didn’t blink an eye! They were frozen shut of course , but I took it as a good sign.
LOL…good luck to you over there in PA…you can visit me at the beach when you get too cold
And the key to young folks surviving out here in Cali:
1) Live with your parents as long as you can and save $$$ for that downpayment (free food and beer!)
2) Don’t spend too much $$$ on stupid shit
3) Get a good job and marry a chick/guy with a good job too
4) Don’t set your sights too high as far as the type of place/location you want to buy
5) Wait until 2007/8 to buy
“is plenty happy to be moving to Western Pennsylvania”
If you can put up with the cold, this is a decent place to live. Wait until you see the home prices.
Most people in CA have a cost basis in their houses that is more in line with reality. The “current prices” were not paid by 80% of everyone living there. That’s a big reason you’re not seeing the mass exodus and probably won’t. The people in troulbe are the recent purchasers (mostly young families) and HELOC idiots. I don’t think they make up the majority, and they probably won’t leave either. After foreclosure/bankruptcy they’ll just find another way to hang on.
Climber,
You’re assuming that most pre-bubble homeowners have not “liberated” additional equity in the past few years (via cash-out refis and/or HELOCs). Big assumption. I don’t have the links handy, but news articles and polls Ben’s posted here before indicate that the large majority have already refi-d and that the majority of refis were of the cash-out variety.
Orange County alone in 2005, HELOC’ed the GDP of New Zealand and that was down from 2004, per OCR Jon Lansner.
Sunset that is one scary stat. When the rates on these debts raises there is going to be serious pain.
“”You’re assuming that most pre-bubble homeowners have not “liberated” additional equity in the past few years (via cash-out refis and/or HELOCs).”‘
If so he would be assuming wrong.
Maybe not a mass exodus taken from the entire population, but of young people, I definitely see it happening. This demographic contains the people who can move most easily - in their 1st or 2nd job out of college, likely unmarried or recently married but w/o kids. Not being saddled with a mortgage also helps make it even easier for this generation to relocate.
The choices are stay here, where everything costs more, or move elsewhere where you may make a bit less, but the cost of living is way less. Even forgetting buying a house, rents are even cheaper, so you can save for that down payment easier.
I generally agree. CA still has got a gold rush mentality which means people come to make a quick buck, they fail, but stay on.
As for home ownership rates: The 2nd largest city in CA and 10th in the nation, San Jose, has, for large cities, _the_ highest fraction of home owners in the nation. Ownership is in the 70%’s. It means this “expensive city” has had many owners. Most owners are not bubble buyers.
My guess is that most CA HELCO users have financed HDTV(s), an SUV/Truck/Camper or home upgrades but not to the degree that these payments would put most borrowers into default.
Biggest concern is that cash on hand is too low and live paycheck to paycheck.
You guys are all wrong. California is the Promised Land. There is *no* price too high to pay for living in Blue State Paradise.
–Perfect weather (inland temperatures 90-100+ degrees June-October, Stage 2 & 3 smog alerts)
–Perfect demographics (blessed with unlimited “diversity” from south of the border –Habla Aztlan usted?)
–Perfect commutes (who doesn’t like to be described as “heroic”?)
–Perfect housing affordability (er, well… it will be perfect, once we get the latest “new-and-improved” HAI index from LAY).
–Perfect public skools
–Perfect political climate (assuming you’re not a taxpayer, white, English-speaking, gainfully employed and/or a gun owner)
–No crazy, intolerant bigots or religious fanatics (Seriously –just hang around Berkeley or any barrio-area campus and soak up the “tolerance” for people with differing viewpoints).
One of the things that makes this silly is the coverage of the bubble. Inflated housing prices are a half million all over, so California is not really all that bad in relative terms.
As far as the culture goes, it seems quite friendly to me and I am a white guy speaking English and paying taxes. Some of the schools are better than others, but they all have challenges. Reactionaries abound, but I have a lot easier time getting by day to day in California than any of the other states where I have lived.
The housing bubble is absolutely not license to get fast and loose with facts, but the opposite. People need to stay real and remember the numbers. It has always been the case that high growth areas command a premium and generate competition. Places like Berkeley are for the people who really want to be there, and there are lots of other alternatives for people who simply want to avoid paying much for housing. It is the competitive nature of urban areas that makes them so much more dynamic and productive since people who don’t feel they need to be there will tend to be moved along by market and social forces.
Mole Man,
I was exaggerating CA’s (very real) problems for the sake of argument and perspective. It never ceases to amaze me how many long-time residents here –many of whom have never lived anywhere else– really believe the “Promised Land” B.S. They also tend to view the rest of the country (outside of NY & Boston) and some kind of Red State wilderness, to be avoided at all costs. As though Klansman and zealots await you on every corner, ready to pounce on the next hapless liberal who happens to wander by.
It has always been the case that high growth areas command a premium and generate competition. Places like Berkeley are for the people who really want to be there, and there are lots of other alternatives for people who simply want to avoid paying much for housing.
Ok, I have to call “bullshit” on this one. At today’s prices, the only real alternative for anyone wanting to buy a house on a working-class salary is to leave the state. Unless you want to roll the dice and take out an option-ARM, Serin-style. Easy-money lending and euphoria have everything to do with the bubble; CA’s “desirablility” vs. other locations not so much. Also, any perceived “lifestyle premium” was absorbed into prices here a long time ago. Nothing new.
As far as “high growth” goes, CA’s population growth would already be negative if it not for a certain “undocumented” demographic.
Ahhh… life in Liberal Paradise.
Again, that is sloppy reasoning. Housing prices are out of whack with respect to incomes almost everywhere, it is only a matter of degree. High growth is not only a California versus other places it is cities versus rural and so on.
Wherever people are making good bank housing starts to become precious and there is no counterexample for this in the entire history of civilization because the mechanisms are so basic. The high growth I was talking about was the gross product growth that matters, not population growth. Darfur has remarkable population growth, but the housing issues there are totally different.
As far as California being messed up, sure that is a completely obvious no brainer. Pretending that only liberals ever voted is typically spineless evasion, but of course taking responsibility for things is really old fashioned at this point.
Almost every time I travel outside of the bay area to visit family or do business I end up getting a lot of flack for being identifiably gay. That I chose to live in one of the few places people can be bothered to put up with me is to you some kind of grand conspiracy crime. Sure, good luck with that. All you have to do is move and suddenly incomes and housing prices will be perfectly in line and you will only have encounter people that look and talk and think like you.
I end up getting a lot of flack for being identifiably gay. That I chose to live in one of the few places people can be bothered to put up with me is to you some kind of grand conspiracy crime.
Odd… I re-read my statements above to try and find my homophobic gay-bashing remarks, but came up curiously empty-handed. Oh, wait, I remember now: I don’t hate gay people.
I also don’t recall stating that I agreed wholeheartedly with the BushCo neocon agenda (I don’t). Personally, I find mortgaging our country’s future and debasing the currency to fund current consumption while pursuing an interventionist war of choice to be markedly UN-conservative. Not that I’m what you consider “conservative” by today’s standards.
Gee… I must be one of those oddball Libertarians or socially liberal Independents who doesn’t take his talking points from Rush Limbaugh or Michael Moore.
But then again, making baseless and untrue assumptions about other people is a hallmark of what passes for either modern Liberalism or Conservatism these days, right?
Cheerio…
Again, that is sloppy reasoning. Housing prices are out of whack with respect to incomes almost everywhere, it is only a matter of degree.
To which I say the Devil is in the details:
http://www.businessweek.com/common_ssi/map_of_misery.htm
http://money.cnn.com/2006/09/26/real_estate/costliest_housing_cities_for_middle_managment/index.htm
It’s true that housing prices are “out of whack with respect to incomes almost everywhere”, but here in La-La-Land, it’s far further out of whack than anywhere else. Here, we’ve elevated irrational exuberance to an art form (along with “victimhood”/entitlement politics).
“One of the things that makes this silly is the coverage of the bubble. Inflated housing prices are a half million all over, so California is not really all that bad in relative terms.”
woah. First of all, that’s way far off the actual truth. Pull up the Atlanta,Nashville, Memphis, Asheville, Raleigh( and more) MLS and just take a look at the thousands and thousands of homes that come up at 150k and LESS. Yes- there is such a thing as a nice home, in a major metropolitan area, in a nice neighborhood with good schools for as little as 100k. In a way, I’m glad many here in Cali assume that the rest of the country is simply following Cali’s example of overinflated exuberance. Nope. The fact remains that to this day,the avg California city is 4-5 times more expensive than just about any other major metro area. Many of these other areas are even starting to see double-digit declines in pricing, so it is totally likely that there will be 5 figure prices on these same 100k houses in the next several years.That’s why I hate to see people who move to places like NC and almost piss on themselves over a 300k house. ” look- it’s sooo cheap!”- when in fact, 300k is more than double what the avg home in NC costs.
I guess what I am trying to say is that there indeed is a world that exists on another parallel compared to CA. Indeed Cali is in some ways considered another country. Many like to think of it as more European. But if you love Europe, do you want to live a European lifestyle with all the strings attached to it’s ancient classist ideals? that seems to be a direction we are heading here, and I for one like to think of myself as one who adheres to a more American middle class lifestyle.
Well said, jetsonboy –thanks for the reality check!
As far as the BA as a safe-haven for gays, other races, nationalities, and religious groups, All I can say to that respect is that from my experiences, just about all metropolitan areas are socially tolerant or even inviting to diverse ideals and lifestyles.
Perhaps if you were to take a trip to Redding CA and walk into a bar you’d get the same experience you would have in any other rural area.The fact that it i in CA, NY, SC, or CO makes no difference. Even that statement is outdated and unabashedly old fashioned. I have a fairly strong southern accent. Damned if I try to have a intelligent conversation with people at a party around SF and the remarks start to fly about it. You would not believe what I have heard people say about ” the other” parts of the country. Pick your poison. People are basically mean little bastards inside no matter who they are or how smart they claim to be. If it brings people comfort to assume that a given area has a magic carpet that covers them from harm, then more power to em’.
Very good post.
?? does anyone here live in a hood where prices have NOT gone down 10% since peak??
22151 off 10% and I’m a bus ride to the Pentagon
Eureka, CA has definitely not gone down 10%. But, only a few homes are selling. The most recent, publicized figures put the decline at 6% thus far, and that seems about right.
As far as incentives being offered to keep the numbers artificially high, there does seem to be more of sellers picking up the closing costs, but since this area has never been home to any medium or large sized home builders, the incentives are certainly not on the scale of other places in California.
I smell a RE Agent
Rentor,
Get real! I am the most bearish person on RE there is in my community, and have been a poster to this board far longer than you have. The fact is, as also explained by others in this region (far NW Cal, S Oregon), prices are only moving modestly down so far. I keep hoping that this will change soon!
My area has definitely gone down more than 10%. These numbers sound fishy to me. I’ll wait for $/sq foot data from Dataquick.
“‘But it’s not profitable for lenders to foreclose on homes with no equity, so right now lenders seem to be more willing to work with borrowers.’”
That’s hilarious. If you’ve got the equity, too bad. The bank takes it. But if it looks as if the bank will take the hit instead, suddenly the FB becomes almost like the bank’s independent contractor, charged with the job of keeping the house afloat for as long as possible.
That was pretty rich.
This is the tried-and-true Trump real estate business model.
It also works well for countries with large trade deficits.
Have any of you heard of ACN? The trumpster is now promoting this crooked pyramid scheme.Anything for a buck I guess.Hopefully he can get a makeover soon.
That is funny but true @ the same time. It is like hot potato. Great analysis on you part.
‘Gary Watts’ forecast for 2007 marks the 34th year of bringing to the real estate industry his outlook for the resale housing market. Since Gary speaks only to the real estate industry, his information is presented in a format that real estate agents can use to inform their clients.’
”What Went Wrong . . . something that has never happened before!’
1. Inventory of both homes and condos exploded upward when seasonally, they always declined.
2. A significant number (33% to 50%) of the listings were ‘un-motivated” sellers!’
How Will This Year End?
1. As mortgage rates continue to decline, buyers will get off the fence and purchase homes as soon as they believe housing prices have stabilize – which appears to be happening.
2. Sales of homes should start to rise (compared to usual fall sales) in the fall, while inventory goes into its seasonal decline.
3. Appreciation should continue to rise (although in small amounts)
4. We will end the year with positive appreciation in homes while condo prices produce a very small gain.’
‘Newspapers are losing subscribers and television is losing viewers. Viewers’ reactions to media presentations of past events have shown the media that if they want to hold their viewers’ or readers’ attention, they can do so by portraying fearful impending events and instilling anxiety in their audiences! This raw emotion will help to keep people tuning in, thus possibly preserving precious advertising dollars.
Remember this was going to be “an inverted year”!
What Gary said:
‘Newspapers are losing subscribers and television is losing viewers. Viewers’ reactions to media presentations of past events have shown the media that if they want to hold their viewers’ or readers’ attention, they can do so by portraying fearful impending events and instilling anxiety in their audiences! This raw emotion will help to keep people tuning in, thus possibly preserving precious advertising dollars.”
What he means:
‘Realtors are losing clients and homebuilders are losing margin. Buyers’ reactions to REIC presentations of past events have shown the REIC that if they want to hold their viewers’ or readers’ attention, they can do so by portraying overly optimistic events, unsustainable states, and instilling anxiety in their audiences with phrases like “Real estate never goes down!” “Buy now or be locked out forever!”, and “They’re not making any more land!” etc. This raw emotion will help to keep people tuning in and wasting money on bad financial decisions, thus possibly preserving precious commission dollars.”
If he is so positive about his “theory” of the blame the media - because its their fault - WHY DIDNT HE FACTOR THIS INTO HIS FORECAST!?!??!
“Newspapers are losing subscribers and television is losing viewers. Viewers’ reactions to media presentations of past events have shown the media that if they want to hold their viewers’ or readers’ attention, they can do so by portraying fearful impending events and instilling anxiety in their audiences! This raw emotion will help to keep people tuning in, thus possibly preserving precious advertising dollars. ”
Man, I knew they were going to start openly blaming the media for negative spin. I will go on record and predict that the REIC will begin publicly blaming US (bubble bloggers) for distributing gloom.
After Watts’ blamed the media Jon Lansner tore him a new one in a detailed article.
I don’t think Lansner or OCR will be getting any interviews with Watts anytime soon.
“Home price appreciation continued upward, although less than projected but still with no “Bubble” in site.”
I don’t think I’m going to take financial advice from someone who cannot distinguish “sight” from “site.” It’s forgivable in an email or a blog post, but if you’re going to publish grandiose economic forecasts and bill yourself as an expert, you should at least run your presentation through a spell-checker.
This is one of those “decline of civilization” milestones. When industry insiders don’t even publish accurate information to each other, a collapse of the industry can’t be far behind…
“I don’t think I’m going to take financial advice from someone who cannot distinguish “sight” from “site.””
Haha. Good philosophy!!
Heh heh. Nice catch…
you should at least run your presentation through a spell-checker
Oh I’m sure he did. But spell-checkers only catch spelling mistakes, not using the wrong word.
This whole article is a bunch of ‘horse crap’. Affordability index is what a sane person making a $123K per year willing to settle for and for most that’s $20K per year rent or mortgage payment.
I think prices are stable lies ing. Great article in the Boston Globe on Sunday. Same old, “Prices have gone down but now you better get in because they are probably going up” line of b.s. The agents never base their predictions on any data at all. Just stuff like, “It looks like … ” Well, it looks like the buyers might just sit on the sidelines a little bit longer now doesn’t it.
“Too Soon To Say Market Has Bottomed” ??
I doubt anyone should be using words like bottomed, since we are so close to last years peak. This will be a typical bell curve, and right now, we are still at or near the top as far as prices go. Give it 5 years, and we will start to talk about if the market has bottomed.
I love this Affordability index…it’s warm.here in sonoma county the index was at 7% last december,and now it’s SO MUCH BETTER,even with all the layoffs!!! these folks from the CAR really know how to make people FEEL GOOD about things.reminds me of an ex Mr Texas i worked for once,he’d piss on your leg and tell you it was raining.
“They usually make this chart available on the press release. If anyone finds it, please post.”
Actually, it’s in a table: http://www.car.org/index.php?id=MzY3OTU
So the top 22% of the population can barely afford the cheapest 35% of houses, and then only with a suicide loan. Yeah, that’ll last forever.
GREAT STATEMENT!!
When will the Arrogant RE Sheople quit the readjustment of the criteria required to buy a home and realize that a home is a place to live and raise a family and not make it your bank of convenience and your retirement fund at the expense of the next sucker willing to finance his life and his kids life on a shelter.
Dennis I agree with your statement. But don’t forget, and I am not saying this is even close to the majority, those people who just can’t keep up with inflation. Face it, I have no pity for those trying to buy the 10K TV, but when mom and dad make 75K combined and haven’t had a real raise when adjusted for inflation in 5 years, you turn to other options. A good book to read on this is the Two-Income Trap. Nice read. Didn’t agree with all their solutions, but they shed some light on those of us really hurting and struggling to make ends meet. If things don’t change, this book doesn’t paint a rosy picture of the future. It is only going to get worse.
It’s funny how the NAR/CAR/realtors stress urgency by buying now because interest rates might go up .What a joke in that everyone goes on a adjustable these days so your interest rate is going to go up regardless . There is no urgency at all to buy a house on a adjustable ,(which seems to be the only way people can get into homes these days ).
Yes but the real folly is that when interest rates go up house prices go down. So not only do you get higher payments, you’re underwater.
Bottomed?
The market will have bottomed when people are no longer even discussing real estate. The market will have bottomed when the word “Real Estate” sounds like a joke (the way “dot com” sounded in 2003). The market will have bottomed when Ben’s Money and Metals blog has 200 comments per post, and gold is at $2000.
This is the beginning of a decade-long slide. “Bottom”? Here? LOL.
So many great statements and posts. My $.02 worth.
1) I already left CA now - life is MUCH BETTER outside of CA for my family. Got a house, lot more to do, etc. Much lower cost to live. Tell people in CA that New Mexico is a terrible place to come. Don’t need anymore liberal tree-hugging, intolerant folks here.
2) Arnold will NOT save the state.
3) I agree with EVERY word that Jetson put down. Only I would rant even harder.
4) My wife and I combined (both hold masters and had professional jobs made about $123K combined. And I certainly did not feel like I wanted to take on a $500K plus mortgage there.
5) If I bought a starter home in BA or LA/OC/IE, I would need 6 German Shepards, iron fence around the postage side yard, assault rifles for defense, and a fund to pay an off-duty policeman to stand guard 24/7 of my 750 sq ft 90 yr old piece of paradise.
What did I give up CA for - less stress, much less traffic, beautiful mountain views, clean air, affordable cultural/family friendly entertainment, wife’s dream house, making friends with the neighbors, close by skiing, outdoor activities galore, etc.
This is the type of crap you still find in LA by the way.
Look at these rips and monstrosites…I know these guys….the contractors and agent are in bed with each other bigtime…all sorts of new math is invented like this.
http://www.thecondopeople.com/listings.htm
Hmmm…. thats interesting. Seems someone I’m familiar with has changed their mode of operandi.
What do you mean?
http://www.thecondopeople.com/Glendale/active/louise_St_531_535_Glendale_CA_91206/index.htm
These condo-cells are three blocks from my house.
The thought of washing my dishes with a view of the traffic on the stairs is very appealing, as is lying in bed and watching the activities in my neighbor’s house. The ceiling height (all of what - 7 feet?) is also attractive. But it is outdone by the unusual and rarely seen granite and stainless.
Crisrose…
We live alot closer than you think!
Oh I have stories to tell about these clowns…all sorts of good stuff…sq ft. exaggerations, shoddy build quality, crook loan agents partnered up with them and geared up to make a smooth transition as quickly as possible.
This guy has made a killing and has made millions an others misery..of course, he’d disagree.
“‘Pick-a-pay’ loans are the worst possible on the market because they lure buyers who really can’t afford to purchase a home, said Dennis Peck, a Lodi lender. ‘They’re given an option to pay below interest and it sounds great to them at the time,’ he said. ‘The problem is nobody explains to them those low payments won’t last.’”
Bubba, I’d a thought that was YOUR job.
Yeah SERIOUSLY….these bastards are now pretending that it had nothing to do with them. Who the hell did they think should explain it to them, my next door neighbor?
What I remember was lenders recommending these loans as if it was the next best invention since sliced bread. They couldn’t shove it down people’s throats fast enough.