“Many Sellers Throwing In The Towel”: California
The Fresno Bee reports from California. “Anthony Gamber assumes presidency of the Fresno Association of Realtors during a housing slowdown, but the veteran agent says he isn’t worried. He called the 5.3% drop in median price in Fresno County over the last year a stable reduction, and noted it was expected after a five-year run-up that tripled home values in some areas.”
“‘It’s not real drastic,’ said Gamber, a real estate agent for 27 years. ‘It’s not the bubble bursting.’”
“Still, at least half of the 4,344 members in the association have three years or less of experience, so they have not been through a slow market. Gamber said he expects many of those to exit the profession.”
“He thinks that is the year that agents and sellers come together on market conditions, and set more realistic price expectations. ‘You cannot price according to the last [property] sold and put on appreciation,’ he said.”
“Whether 2007 proves to be the year the market hits bottom remains to be seen, and may not be obvious for some time afterward. ‘You don’t know when you’re there,’ Gamber said.”
The Orange County Register. “O.C. home inventory tracker Steve Thomas says ‘in the past two weeks, the active inventory shed another 593 homes, dropping to 13,572 homes. The drop in the active inventory is due to so many sellers throwing in the towel as we move further into the Holiday market.’”
“‘With more and more sellers realizing the weakness in both the Fall and Holiday markets, the active inventory has descended to 2,434 homes since reaching its peak for 2006 on August 24th, 16,006 homes.” That 15% drop from the cyclical peak is more a seasonal switch than a sea change.’”
“Thomas notes: ‘The active inventory may drop down to 12,000 homes. HOWEVER, last year we started the year with 8,098 homes on the market. That’s almost 4,000 fewer homes than what is expected to begin 2007. With so many sellers pulling their homes off the market now only to place them right back on the market in the Spring, coupled with a number of new sellers who did not market their homes in 2006, the active inventory could climb to nearly 20,000 homes.’”
The Tahoe Daily Tribune. “With a cooling housing market entering the winter season, patience and timing may be the key words that bring buyers and sellers together on the South Shore. The National Association of Realtors, supported by California’s version, predicts existing home prices will fall by about 9 percent this year.”
“‘But take heart - the worst may be over,’ David Lareah, NAR chief economist, said.”
“A full correction will take getting the sellers’ prices to meet the buyers’ demands. The current median of homes listed is about $75,000 higher than the average of homes sold. It’s still a buyer’s market, if those seeking America’s biggest dream seize a good opportunity, the sellers become more realistic in their pricing and agents work smarter and harder.”
“‘We’re hoping to see things rebound. Now’s the time for the first-time home buyer. Otherwise, when prices go up, they may not be able to afford (another surge),’ said real estate agent Michelle Keck.”
The Daily Breeze. “It’s been nearly six months since Donald Trump held a lavish unveiling of the first model home at The Estates at Trump National Golf Club in Rancho Palos Verdes. At the time the real estate mogul boasted he had already sold five of the first 36 homes for prices ranging from $5.5 million to $10.5 million.”
“Yet today, property records show only one home in the subdivision has actually sold, to a Trump pal and business partner, amid a slowing housing market.”
“Andy Lemke, VP of real estate sales at the development, says seven additional sales are pending. However, only three are in actual escrow, said real estate agent Clara Duran Reed. Records indicate one of those has been in escrow for two entire years, an inordinately long time, she said.”
“‘The entire Peninsula has only 12 properties available that are over the $5 million price range and only about seven properties have actually sold, since the start of the year,’ said Duran Reed.”
“‘He’s going to have to do a lot of marketing, I think,’ said Duran Reed. ‘We have not seen the bottom line yet on these homes. There are beautiful homes that don’t cost anywhere near that amount on the Peninsula that have lots of land and beautiful views.’”
“And Trump’s homes are quite close together, overlook what one potential buyer in June called a San Pedro trailer park and seemed to some a little ordinary for the price.”
“City officials said the interiors of four homes remain incomplete, while Trump is about to start building two others and has submitted plans for two more. The last time The Hill saw a collection of very expensive homes come on the market the developer pulled out after sales failed to meet expectations.”
in 1992 or 1993 a neighborhood of about 30 halfway done houses in Palmdale, all framed up, with no place to go, the HB having gone bankrupt, were sold as a set for a hollywood movie, in which they were blown up.
Anybody remember what movie they were in?
And more important, is this a possibile “growth industry?”
Leathal Weapon 2, or was it 3?
Number 3
I remember it. Fun flick.
lol
Didn’t they blow up an old decrepit airfield and hanger out in the Mohave/palmcaster area in ‘con air’.
So are you supposed to throw in the towel before you hit the panic button, or after?
More seriously, on the subject of Trump: The fancy Trump thingie on the river in downtown Chicago — you know, the thing the first Apprentice won — is going up real, r e a l s l o w l y. It’s been about three years now and the structural steel is up to only about the 20th floor, with all the windows and stuff up to only about the 10th. In the same period of time the entire Empire State Building was built.
How can you tell when a Realtor is lying? You know this one… It’s quite apparent.
How can you tell when a liar is a realtor?
When they shake your hand.
I still say that Trump thing won’t be built. For a while, they only had the parking floors done. I thought, ok, it’s going to wind up being a parking garage. Then, they put some more floors on. Maybe it will wind up a normal height office building (like we need any more of those!).
It’s supposed to be 90 stories. I think there’s a very fair chance it’ll top out at only 40 or 50.
The Empire State Building was built in under 14 months (3/17/30 to 5/1/31). Our Trump building started 3/17/05, 75 years to the day after the ESB; we’re at 20 stories out of 90 after 20+ months.
They’re going real slow, and for a reason.
It’s interesting that they were able/willing to build the Empire State Building during the Great Depression. You’d think they would have had plenty of office space at that time. Or was it a big NRA public works project??
These big projects have a sort of momentum that can often get them finished years after the demand for them has evaporated. ISTR that the ESB was mostly empty for YEARS.
Could Trump’s ego possibly have outgrown his ability to keep growing his real estate empire in a post-bubble universe?
Wouldn’t be the first time. Heck, we should expect it by now.
I thought periodically going bankrupt was part of his magic formula.
I suspect it will turn out to be part of the newfangled business models for more builders than just Kara before this real estate typhoon is a fading memory…
See the United States Football League. He was the owner of the New Jersey Generals. And after he didn’t make a profit one year, he was the architect behind the league suing the NFL: a disastrous decision if there ever was one.
I think the most frustrating part of this whole bubble is the fact that you hear all this optimism from the industry despite the fact the numbers and common sense dictate otherwise. It really surprises me how many people are actually fooled by it.
I can’t recall who said it, but I think it most certainly applies here.
“It is difficult to get a man to understand something when his livelihood depends upon his not understanding.”
Not only to those directly employed in the industry, but also to the millions of people who have leveraged themselves to the hilt with the belief that RE always goes up.
The Internet seems to think it was Upton Sinclair. Exact quotation, according to Wikiquote:
It is difficult to get a man to understand something when his salary depends upon his not understanding it.
I, Candidate for Governor: And How I Got Licked (1935), ISBN 0-520-08198-6
Thank you! That sounds correct, I was just too lazy to look it up! It’s just hard for me to break away from the blog when we get such moronic realtor quotes posted by Ben.
No prob. It’s not always easy finding an exact, trustable source of a quote even on the Internet. I don’t have 100% faith in Wiki-anything, but this time it seemed to check out.
“And Trump’s homes are quite close together, overlook what one potential buyer in June called a San Pedro trailer park and seemed to some a little ordinary for the price.”
Ah yes, the Donald’s latest gem. I hate to say it, but this guy is an ass and deserves to lose big here. This guy is like the P.T. Barnum of development. In other words, all hype aimed at rich suckers. My guess is that his one buyer will have years of peace and quiet there as this project fails further. Trump is a good representation of everything I dislike about present day American business and society in general.
It gets even better…
“Yet today, property records show only one home in the subdivision has actually sold, to a Trump pal and business partner, amid a slowing housing market.”
He couldn’t find any GF on the open market, so he breaches trust and rips off his friend! I can not believe this guy. Shame on him.
Yeah, I saw that detail as well. When all else fails, peddle your crap to friends and family. Make it happen!
Anyone here want to buy some Amway products? Just kidding.
Rancho Palos Verdes has a history of grand overpriced projects… not selling except for a few starter samples. Then the smart money moves in and buys at a discount. Its just that market…
Neil
His biggest problem is going to be justifying those ridiculous prices. You could buy a lot and build for a quarter of what he is asking and not have golf balls zinging through the windows in that area.
“Rancho Palos Verdes has a history of grand overpriced projects… not selling except for a few starter samples. Then the smart money moves in and buys at a discount. Its just that market”
That project and trump golf club is at the southernmost tip of the PV Peninsula just west of pt fermin, within hailing distance of San Pedro.
Trump dosen’t know squat about the PV area. I wonder how he will market this turkey? The Grand views of the bluffs and ocean? For those prices you can get comparable properties in Malibu.pacific palisades/ santa monica, which are far superior as far as access to hi-paying jobs, outdoor recreational parks, entertainment/shopping, ect. PV is the dullest place to have a multi-milion dollar home. There is absolutely nothing to do up there. It is somewhat isolated and off the beaten path. If your thing is horse riding and golf, then it may be ok for some.
This narrow southern sliver-tip of PV pennisula admittedly has some really upscale homes and views, but as a whole PV is rather overrated.
I lived in RPV for 5 years and kinda liked the dullness factor and yes, every non Asian tended to be 66 years old and was tucked in bed by 8 pm.
Interesting part about the golf course which hasn’t been mentioned yet, the 18th hole collapsed in a sinkhole, years ago, as the area not too far from the course (Portugese Bend) has incredibly unstable earth, so much so, that all pipes have to be aboveground and the road has an uneveness you’d just have to drive on to see for yourself…
“as the area not too far from the course (Portugese Bend) has incredibly unstable earth, so much so, that all pipes have to be aboveground and the road has an uneveness you’d just have to drive on to see for yourself… ”
I remember some years back i rode my bike along that stretch of road and know about the uneven rather broken aspect of that road going thru portugese bend. Eons ago Abalone cove/pt fermin used to be good places for rocky shoreline adventures/tidepools ect.
D Trump really has overhyped his development:read his link. 5 to 12 million apiece for these estates? geez! the world has gone mad! That would be about right for a shoreline property in Malibu beach, which is 100 times superior to PV as far as hiking, nature, beach recreational activities. PV would be a little easier access to dwtn LA but thats about it.
I agree with mrincomestream,
To justify these prices you must be closer to high end income. PV has a lot of disadvantages. So many, no one would want to live there….
Seriously though, homes on the back side of the hill, where Trump is building, have always been a hard sell. The comute time from PV is tough. Plus side? Very low crime. Although I do know an elderly couple there who was kidnapped from their home (for ransom), beaten, etc. (They rebuilt a literal fortress on the same site.) Joy Joy, the Mexico City gangs have made it to LA…
Areas near San Pedro though… Oh…
And the road is fun. There is also a large hiking/horetrail area nearby. But nothing like Malibu.
Nitpick: it was the 15th hole, the signature hole on all the advertisements, that fell off a cliff into the ocean. But that shouldn’t suprise anyone who knows the area. Its been sliding into the ocean ever since they took TNT to the bedrock (for a road) and undermined the structure.
Trump has a history of going bankrupt. There is a reason he gets new investors every cycle…
Neil
One thing about the pennisula that I miss, is it had the absolute best weather, consistently. It was literally 71 degrees every day.
Well, what he did is use his business partner as a shill. Note that the $12.5 million “price” is greater than any other property offered for sale.
I agree. The guy is a dirtbag.
The most awful urban legend in existence is that Donald Trump is a self-made man. If not for his slumlord father and his billions of dollars Trump’s a$$ would have been in a federal penitentiary. Unlike Hyman Roth, “Donald Trump does not always make money for his partners.” I wonder who Trump’s Sicilian Messenger Boy is. It surely ain’t Uncle Junior Soprano.
Trump’s father was no slumlord. He was a great developer and a good man.
From Wikipedia - “He was a real estate developer who became rich by building and operating affordable rental housing in the New York City boroughs of Brooklyn, Queens and Staten Island.”
I have heard from a lot of people that were familiar with Trump’s buildings in this area. Your characterization of him does not jibe with any of them. Are they all wrong? If so, please explain.
I don’t know that the Donald’s father ever was a billionaire, but yes he has made interest payments on his son’s loans that have kept the highly leveraged ship from sinking.
The Donald’s MO is to do real estate deals with borrowed money. When SHTF the Donald does not lose anything while the lenders take the hit, but if it works out then the Donald uses it to self promote himself even more so and takes his cut from the profits.
What I cannot understand is how the Donald managed to get into Steinbrenner’s good graces. I though Steinbrenner was a smart guy himself and able to tell a con man when he sees one. But there they are sitting next to each other at Yankee stadium at times.
Don’t you know? Steinbrenner has gone senile. Why else would you pay XXX million dollars for Carl Pavano and Jared Wright??
I was in Ft.Lauderdale over the weekend and I noticed the Trump Condo/fractional unit deal next to Bahia-Mar is sitting dead in the water. I hope antother one bites the dust.
“‘We’re hoping to see things rebound. Now’s the time for the first-time home buyer. Otherwise, when prices go up, they may not be able to afford (another surge),’ said real estate agent Michelle Keck.”
- Nope- you’re wrong. There won’t be anyone left to buy because if prices don’t come down in the next few years, there won’t be any young first time buyers left in the state.They’ll all be somewhere else that makes sense for them. Only retired baby boomers with no more suckers to sell their homes to so they can ( sniff sniff) buy that precious 2nd home will be left. Screw you, stupid RE agent.
Jetsonboy (& Arwen U as well):
Re: “Screw you, stupid RE agent.” Well put Sir! How stupid are these people that they cannot connect the dots? How stupid do you have to be to believe that prices can rise indefinitely? What do these jerk-offs think, that current owners can just keep selling back and forth to each other with no influx of new first timers? Makes me want to just slap these fools across the face. Maybe they should start sterilizing RE agents as soon as they register their licenses. I don’t know if the country can handle further procreation of these f-tard genes.
Yea, ugh I vote no on the sterilization thing. I’d rather you stick to the ugh more regulation chant if you will. Thanks
Sorry MrIncome, no offense intended. If I remember correctly, you hold a license? The fact that you are on this blog and make good points means that you are one of the few. I will qualify my above statement to say “most RE agents.”
No offense taken, yes I hold a license and actively practice. The sterilization comment just struck a nerve in the wrong place. Thought I’d speak up on that one just in case it took hold. I would like to hold on to all my body parts if at all possible. Thank You. LOL
I say a good stiff kick to the crotch would do any realtor some good. Give ‘em something to whine about other than neg comments about housing.
mrincomestream: In all seriousness, if we start allowing government to further regulate personal decisions involving our bodies, well then I am gone; cancel my citizenship.
I just want this bubble to unwind so that all the idiot realtors quoted by the press can go back to where they came from. Then those with intelligence can continue their RE careers without battling the aforementioned idiots. You might have seen the earlier article and thread with the lady who owned three condos and loses money on each one every month. She wasn’t worried though because she knew things would go back up! Well, duh. Eventually they will, but how long will it be before the millions of fools like her break even? That is assuming they don’t have any financial hiccups along the way. Carrying three money losing condos for several years? Good luck with that one.
Why would you have to sterilize the male real estate agents? Aren’t they all gay?
Somebody had to say it. I couldn’t resist. I will proceed directly to P.C. detention.
OHHHHH, Now, that just wasn’t right. What do you do for a living NYCCityBoy
I’m sure as heck not involved in peddling real estate.
I.T. - a great field to go in to if you can write a complete sentence, have an open mind and have a personality. In I.T. you are competing against some of the most anti-social and myopic personalities on the planet. It’s wonderful.
And actually communicate and have two-way, mutually understandable conversations with people. And look and smell like someone others don’t mind being around for a few minutes.
“And actually communicate and have two-way, mutually understandable conversations with people. And look and smell like someone others don’t mind being around for a few minutes.”
I thought we were talking about IT guys. Who are you referring too?
I realize you’re tongue-in-cheek, but I was agreeing with NYCboy that IT people with such skills stand out and therefore do well.
“Real estate agents are people, too” is the equivalent of “the peaceful religion of Islam”.
I just knew that NYCityBoy was going to have a comment to this post related to homosexuality. In the past few days he’s called TXChick a lesbian, talked about ball-gags and handcuffs, and now this.
NYCityBoy, I’ve seen this kind of behavior before. It came from my cousin right before he stepped out of the closet. He told me the hardest part was admitting it to himself…have you done that yet?
What the nick didn’t tell you all you needed to know?
“Real estate agents are people, too” is the equivalent of “the peaceful religion of Islam”
As opposed to the “peaceful religion” that wiped out millions of Native Americans, enslaved millions of Africans, killed tens of millions of each other in countless wars, and murdered six million Jews.
Post your asinine remarks on another blog, “yogurt.”
Horse-man, I never said anybody was a lesbian. The thought didn’t even cross my mind. I never referred to a ball-gag. I wrote a blowtorch and handcuffs. The implication was not in the least of some sort of sexual nature. I think maybe you are watching me too closely and reading too much into things.
So far I’ve only skimmed the comments and the article Ben posted, but something tells me I’m going to have to put on my Dumbass Hat before I read the Realtors’ choice pearls of wisdom.
(putting on hat…)
OK I’m ready
You guys are so negative. Didn’t you get Liarreah’s memo? Everyone can afford a 750K PoS on 50K salary.
Sarcasm off!
Rep. Barney Frank, the distinguished Congressman from Mazzholeland said today in a public forum, that more federal mortgage guarantee programs with subsidized interest rates are needed to help people cope with the run-up in RE values.
It’s starting…
How the hell is the US gov’t going to afford this brilliant idea? Print more fiat money and that’s the death knell. You might as well forget about at that point and buy overseas or invest in metals.
Where is the money going to come from? The Dems are going to get destroyed if they push up the deficit. They campaigned on being the fiscally conservative party (it is hard to believe). This is just so much hot air from somebody that is a master of hot air. They can talk about this all they want. All of the money for housing subsidies is now in Baghdad.
“Where is the money going to come from?”
Wikipedia has a theory –
‘In 2002, when the word “deflation” began appearing in the business news, Bernanke gave a speech about deflation. In that speech, he mentioned that the government in a fiat money system owns the physical means of creating money. Control of the means of production for money implies that the government can always avoid deflation by simply issuing more money. (He referred to a statement made by Milton Friedman about using a “helicopter drop” of money into the economy to fight deflation.) Bernanke’s critics have since referred to him as “Helicopter Ben” or to his “helicopter printing press”. In a footnote to his speech, Bernanke noted that “people know that inflation erodes the real value of the government’s debt and, therefore, that it is in the interest of the government to create some inflation.”‘
http://en.wikipedia.org/wiki/Ben_Bernanke
NYCityBoy, I have to call you one thing. The Dems ran (and won) on “Anything but Bush” It worked, but they will keep no promise that does not DIRECTLY help keep them in power. Any damage to the economy or country is just the price we pay for dumping Bush.
Beware of what you wish for. We (the voters) want the Republican majority gone. Well, we got it. Now the real “fun” starts.
Now there will be a house for every illegal as millions more will be streaming into the border states with the promise of amisty!
Barney’s boy toy was running a male prostitution ring out of Rep. Frank’s basement. Frank’s was fixing parking tickets for his boyfriend and his “pals.” He’s a sleazeball. Not surprising he’d champion the FBs cause if he can pick up a few ill-gotten votes and NAR bribes, er, contributions.
He was my congressman for about 10 years.
Every other election some poor GOP sap ran against him. I enjoyed voting against the cretin but about 70% of the electorate genuflected and voted for him. He is the number one supporter of the Fannie Mae travesty. I think he probably owns inflated real estate in DC and Newton so he has personal interest in supporting the cause.
Does Barney’s promise mean I can stop paying my mortgage and the government will “guarantee” it to my bank?? Whoppee.
No kidding, buckle up! I’m sure a lot of folks on here have had a queasy feeling for quite a while, knowing it was only a matter of time before some politicians hand the bill for this mess to the American taxpayer.
My prediction for the 2008 campaign season: Get ready for a lot of “we have to save the American dream” or “we have to save the American home for the American family” crap.
Never in 2008 will it occur to anyone that common sense, a little humility, and some personal accountability would have avoided this whole mess.
Otherwise, when prices go up, they may not be able to afford (another surge),’ said real estate agent Michelle Keck.”
Then who will be paying into the ponzi scheme, praytell?
housing… going up… without… any buyers… does… not… compute… world… spinning… head… exploding… *kablooey*
LMFAO!
That what I was thinking! Seriously…I think most any current Californian you ask on the street right now is really sick of the housing situation. The reason homes stopped selling is because people finally realized something was horribly stupid about shelling out 650k for a brady-bunch house.
The last thing the RE industry needs is another surge.Proverbially speaking, if it did, that would be the last straw and everyone would simply leave. Realistically - it won’t happen. People want changes and now.The game is up and people want severely reduced prices. No crappy econo-cars, granite countertops, or ghetto-cottage. They want lower prices and somehow this concept is beyond the scope of their understanding. The real concern the RE industry may very well have is a massive surplus of devaluing property that has a dwindling pool of buyers as more and more leave the state and leave the investment properties to collect dust. You cannot sell to people that do not exist.
Now to play devil’s advocate, RE agents are simply salespeople. They are no different than anyone else peddling wares. But putting them into this light makes me want them to at least be more original than simply rehashing old scare tactics of ” you’ll be priced out forever if you don’t buy!” - get real- we already are priced out, so how could things get worse? if you want to sell, get your clients to lower prices. Then we’ll talk… maybe.
…..”people finally realized something was horribly stupid about shelling out 650k for a brady-bunch house.”
Hey! Compared to what the merchant builders are throwing up around here, the Brady home was a gem! I wonder where the real house is that they used for the beginning of an episode, or the intro to a new scene? Some bubble boy has probably purchased it for a tear down with plans for yet another stucco box.
11222 Dilling Street in North Hollywood, according to Zillow. They’re estimating it’s value around $990,000, which means it would probably sell for about $800K.
http://www.davidbrady.com/times/latbrady.html
LA Times article from 1994 detailing the history of the real Brady Bunch house, built in 1959. Evidently it is only a split-level in real life, so the producers installed a fake window towards the roof line in order to provide a “second-story” since they had already constructed the set for a two story interior. Also, the Brady Bunch has never been off the air in the 37 years since it first began! Man, you really can find just about anything on the internet!
Jetsonboy,
I mean this question seriously.
How much would a Brady Bunch type late 60s house go for out there in California. One day when this crash is at bottom I might actually consider leaving Florida to move out there. I wonder how much the typical brady bunch house should be priced at in 1998 pre- bubble prices? I’m a big Dodgers fan.
Oops. Someone just answered my question. Thanks.
Seriously- a typical 1960’s suburban rancher with the original appliances, carpet, and generic landscaping goes for over 600k as far away as Vacaville, which is almost an hour outside of the BA. I am NOT kidding. People here aren’t just making up this stuff in respects to California RE being overpriced. That’s just an understatment. I think most of us here are just simply dumbstruck into unrealistic expectation that any house at all is overpriced. In my neighborhood in the East Bay, houses are over 700k.
So my question to you is why in hell would you want to leave Florida for CA? Your most logical move would certainly be NC, SC, TN, or AL. NOT California. Trust me- if you move here- you WILL be disappointed.
I’ll second that.
I trawl most of the SFRs in the Westside of L.A on ZipRealty, and the only properties that are less than 400K are mobile homes on the Pacific Coast Highway and in Malibu.
As for the Brady Bunch house - at this point I’d consider it…..if it was at 1960’s prices…;-)
Hurricanes and floods rock!
Jetsonboy,
OK. Youv’e convinced me. I don’t want to be disappointed. .
Your advice is good, and I will take it. Thank you.
Jetsonboy I almost pray that another runup occurs. This is really what the fools here need. They need to realize that life doesn’t comprise the “supposed” paper value of your home. Also, maybe when the finally see 1M starter homes, they will finally get it.
There are plenty of $1 million starter sh**boxes in SF.
Many are just condos.
Same in the good areas in LA. I rent in a condo complex in the Westside (2bd, about 1600 sqft). Our landlord bought in 94 for 250K. I checked in Zillow and the last units that sold went for 1M. We are talking young families with newborn kids. This IS true.
Jack — In early 2005 in SF a 4-unit rental on 48th Avenue off Judah went condo and the crappy 2-BR apartments in it were offered starting at $770K.
I moved away not long after so I don’t know what happened, but I suspect that the GFs who bought those units are regretting it now.
Well, you could buy a $1M condo too with a no-doc, pay-option ARM. You could put the mortgage payment on your credit cards for a few months until Barney Frank’s new programs kick in. Seriously, just because young couples are doing it doesn’t mean they can afford it. The number of people that can realistically afford a $1M condo is very, very small. The rest are just pretenders, which works for a little while.
Thanks for the Cali info everyone. You’v convinced me to stay in southwest FL. And you’ve convinced me that if I moved to go to NC, Texas, AL, or GA.
I guess if i want to go to a dodgers game or a Giants game I will simply take a quick trip, and stay in a hotel. Obviously It would save me a ton of cash rather than buying out there.
I hope Trump takes it in the shorts….I grew up in PV…what a joke that place has become….glad my mom sold exactly two years ago today!!!
I drove by the Trump PV (Palos Verdes) Estates about a month ago and I can tell you for a fact that it looks as cheeazy as the “dumbass/donald’s” comb over.
It’s to bad Trump was able to get involved in PV it’s such a special place. All he’s going to do is turn it into a stripmall.
“All he’s going to do is turn it into a stripmall.”
Doubtful and not in this lifetime
I wasn’t being literal.
I am in the area of this development. They are not very impressive from the street. The views are OK, but there are much better ones nearby. Many of the homes do not overlook the golf course, but the Shoreline park area, which is a natural area. The prices appear to be way over market.
If the prices appear to be way over market, could it be that they’re “Trumped Up”?
“‘ . . . it’s a GREAT time for the first-time home buyer. Otherwise, when prices go up, they may not be able to afford …. ” said real estate agent (insert any agent name here__________).”
Jesus H Christ in a handbasket, they just will NOT stop with the happy bullshit hype.
No matter what circumstance, no matter what condition, no matter WHAT, the real estate agents just HAVE TO SPIN IT TO A BUY NOW SCENARIO !!!
real estate agents are fast replacing car salesmen as my most despised occupation.
bar none
Be careful. You might offend mrincomestream and then have to retract.
Mrincomestream can take it . Anyway , I think it’s really low to now try to get first time home buyers to buy based on the” buy now it’s going to go up in 2007″. The RE industry knows that prices are crashing in alot of areas and yet they are stressing urgency to buy .
Why can’t agents just show houses without the con game .I wouldn’t want to put someone into a house based on fear and urgency ,(I use to do alot of business without resorting to any of those urgency ploys or other con jobs ).Really , a agent shouldn’t make future predictions about prices with their clients . Can’t agents just say they don’t know whats going to happen rather than the false cheerleading ?
Never mind him Wiz, He’s trying to impress someone with his brilliance. Who has yet to be determined. What he doesn’t know is that most who are regulars here know that I’m a broker and know where I stand. Plus if I was thin-skinned they would have run me off a long time ago.
But this is an interesting point here.
“Can’t agents just say they don’t know whats going to happen rather than the false cheerleading ?”
Most salespeople nevermind Realtors have the fear that people won’t respect or purchase if they present less than a positive picture. You as have I have had those types of questions asked a million times. I always operate from the position that no one is stupider or smarter than I. So an honest answer is always better than BS. But a lot don’t operate that way. Early early in my career I got called on BS and lost a lot of money. So I learned the hard way.
What about mortgage brokers?
What a load. The Fresno realtor, like all realtors are in denial. I have no respect for realtors and thanks to the MLS direct listings there is absolutely no reason to use a realtor.
Does this realtor not see the trend? He can call a 5% YOY decline whatever he wants, we all know were this is headed. I forgot, RE always goes up, so the realtor will always put a poitive spin on this. After we have 5 straight years of a 5-10% decline each year they will still be talking about how it is a great time to buy and the YOY was only a 5% decline.
re agents get 1% or so in UK
less after the internet and DOJ really loosens up the mls
Please explain how that works. Thanks in advance!
http://www.trumpgolf.com/trumplosangeles/html/frameset.asp
Link to the list and prices of lots as of July 2006. Several say pending, the rest are all available or To Be Determined. I have never been there, but the aerial shots of the coast look quite nice. Trump bills the golf course as “the most expensive ever built.” This is one of the reasons I despise the guy. It’s all about $, and not about quality. There have not been too many “great” courses built in the last 50 years, and I would be incredibly surprised if Trump’s could be counted amongst them. I bet Trump could spend a billion dollars and still not hold a candle to such mentionables like St. Andrews (and just about any old links course in Scotland and Ireland), Olympic Club, Augusta National, Pinehurst, etc. I’m sorry, but if you want to play a course just because it’s “the most expensive ever built”, then you do not understand what the game is about.
Ha ha, anyone who’s ever belonged to a genuine exclusive club knows it’s not about money, it’s about letting in and out who you please. Bill Gates has been trying to get into Augusta pretty much his entire adult life.
If you can get in by simply writing a big enough check it is *not* an exclusive club.
Correct. I’m sure no such exclusivity exists at Trump National. When the world’s richest person gets the cold shoulder at Augusta, that is saying something!
It only says that the stufffed shirts in the membership comittee got dry orgasms saying no to Bill Gates at least once.
i think that gates got into Augusta in 2002. i’d double check this though…
OK, Wikipedia says he’s in. But it did take him a long time if it was 2002, and they definitely stonewalled the dot-com guys.
IMHO its mostly about keeping jews and other riff-raff out.
One of my fondest memories of Wisconsin, was explaining to someone who tried to impress me with a story about his playing a round of golf at Augusta National.
I quickly ran him through the whole story of jews, country clubs and golf. And I further and economic history of golf. (Golf ties up huge amounts of productive arible land, and dedicates it to raising wool/playing golf). Thus golf is a sport of the land owning aristocracy. In turn, the envious and insecure bourgeoisie takes it up to be associated with the landed gentry.
This is also why golf is so damn popular in the south, because it is associated with land ownership and denial of productive land to others.
At the end of this, he didn’t like me very much. But I have never cared for the opinions of golfers.
Is Trump saying the golf course was the most expensive to build, or that it will be the most expensive to play?
If the latter, then Trump continues to be the perfect illustration of what Thorstein Veblen was talking about. Sadly enough, there’s always money to be made in catering to idiots who spend lots of money simply to be seen spending lots of money — like the medieval lord who had dinner for a few hundred guests cooked over candles (an expensive luxury) rather than wood.
If the former — well, why should I care how much the golf course cost to put together? I get absolutely *zero* benefit from knowing how much it cost, especially considering the bulk of those costs resulted from something as prosaic as stabilizing the Portuguese Bend landslides.
I mean, I’m supposed to think of geofabric and cut-and-fill and densification and subdrains — and get excited about it?
Well, the Trump brand to me symbolizes the zenith not of luxury or quality or status, but of consumption. At least with a Tiffany this or a Bentley that or a Prada whatever, there is some sort of assurance of actually getting a impeccable product in return. Or maybe that’s the victim-of-marketing in me speaking. But I sure don’t sense it with Trump.
The Trump brand to me symbolizes the zenith not of luxury or quality or status, but of consumption.
Passthebubbly, I get the same vibe from him. What’s with that stupid coat of arms type thing going on the website? I swear those things really drive me nuts, like calling a crappy condo complex “Westholme Villas”. I don’t know why those things throw me off so much. Maybe it’s because you get the sense that they are just selling a name or an image, and that many people are paying money to buy into that, instead of buying quality. The Pradas and Tiffanys of this world have a lot riding on their names, but they do deliver outstanding products. Of course, as a careful consumer you can pass on them.
Yeah, everything with Trump is so… trumped up, pun quite obviously intended.
There’s something two-sided about buying into the Trump brand. It’s not just you trying to buy status; he is, too. Marshall McCluhan said you don’t buy a product, you buy its advertising. That’s Trump to a T (gotta quit these puns).
Given my username I should have thrown Kristal in there too. But anything above Moet White Star is lost on me.
like the medieval lord who had dinner for a few hundred guests cooked over candles (an expensive luxury) rather than wood.
ahhh… the sweet flavor
of another man’s labor
Selected Short Works from A Bankers Companion
Whenever a stranger calls me “friend” I run like hell !
Sorry for the OT; but I posted this on another blog and I thought you guys might like to read it for comments:
I think the reason we are seeing falling enrollments in the school system is because families cannot afford to live here anymore. It’s just way too expensive; even with my HH income (which is a multiple of the median), I would not feel comfortable having kids. I have no idea how anyone does it on under 100K a year in this area. When you see the median income is ~55K a year, my jaw just dropped. I have no clue how you can provide for a family down here with 55K a year of HH income. It’s just crazy.
All that said, I love S. FL, and for people like me it makes a wonderful area to live. The problem is, people like me are not the majority, and if housing prices continue, we are going to have to become the majority. With prices like this, retirees are out of the question, families are almost out of the question (certainly downtown areas anyway). So, who’s left? Yuppies. Unfortunately, this area does not really cater to that population; they are still stuck in the “retirees” mindset.
No way retirees are saving this market. Not enough money, little desire to live in what is becoming the biggest urban sprawl this side of LA (WPB to Miami along I95 corridor), crazy traffic, crime, very high carrying costs, etc. Just not going to happen. The only kind of people you can have save a market like this is Yuppies. Urban professionals have lots of money, tolerance for the problems of urban living, and the facilities to enjoy living in an area like this. I love that there are 15 places to eat and 10 bars right outside my door. My grandfather (who lives in Pompono; in an old retirement community) can’t walk. What in the hell is he going to want to live in the middle of a city for?? I also can’t picture my parents paying a huge premium to live in a city so that they can walk to all the trendy clubs.
S. FL is in a big transition; one that I think is ultimately going to fail. They have built tens of thousands of homes/condos that are really targeted towards younger (25-55), highly paid professionals. However, those people are not here, nor are the jobs. All the McMansions and downtown condos; guess what, retirees don’t want them! They can smaller (perhaps beachfront) condos that have good parking, good elevators, and a nice pace of life. Not drunken college kids, and not people like me who have friends over to 1AM at the pool.:)
Can it be saved? Yes, it will be OK, it’s just going to take a combination of factors. Home prices are going to drop, being the most significant problem right now. Insurance will follow the home price drops, as will taxes (as they are both based, either entirely, or derived from, purchase price). Salaries will rise at the same time, perhaps a bit faster then inflation. If we continue at our current pace (10% drop in home price per year, 5-7% wage increase), we will be all well again in 2-4 years. Then the market will get back to it’s normal appreciation. That’s assuming we don’t have a major crash in the market; but a “air letting” from a balloon. Right now we are just letting air. We have massive inventory, but 10% off prices are nothing to be happy about. Prices are up over 100% in 4 years. We need to get to 30-40% price drops before we are back in the ballpark with historic home price appreciation.
http://www.topix.net/forum/source/south-florida-sun-sentinel/TV0MINKLPMNF44H4U/p3
Michael,
You make excellent points. Lots of the most bubblicious areas are seeing big declines in school enrollment. My wife and I make above the median for our region, and there is no way we can afford to buy, even if we had the 20% down. We don’t even have kids, so I just cannot comprehend how families make do. And I also agree with you in that the urban living craze that accompanied this bubble will prove to be a massive failure. Unless someone grew up in the city, the vast majority of people want nothing to do with the whole mixed-use, hip urban scene. If anything, retiring boomers will either want to remain in their current home, or find a way to reduce expenses and be near their families. And guess what? If they have grandkids then the chances are slim they live in some urban center. Besides, even if a retiree could sell their current house, why would they want to turn around and plow the majority of their profits into a grossly overpriced condo?
The same thing is happening in CA too. And not just in the big cities –even many suburbs are losing families with children, thanks primarily to the bubble. Aside from the born-on-third-base trustfund crowd, The only people with children still hanging around in large numbers are… (take a wild guess, amigo).
Also, CA’s median HH income not much larger than FL’s, while housing prices are about double, so the problem here is far worse.
Part of the problem of declining school enrollment is the decline of younger people. It sounds like an old yarn, but it’s a fact. This is going to affect America-centric businesses, so I would not buy stock in such companies. Here’s a neat statistical site that shows not only the average Adjusted gross income of any particular zip code you enter, but the number of people in different age groups over various years who file income taxes. It shows the number of people in their 20s and 30s are declining markedly, while the ones in their mid 40s to 60s are increasing: http://www.melissadata.com/lookups/taxzip.asp
The disturbing thing about this is that immigration is not having any effect on the number of people filing taxes. Taxpayers are declining in numbers. Who will pay for all of these socialist programs that the American public is demanding? China?
The American Great Depression is more likely going to happen. A new baby boom is too late but will eventually bring us out of a depression, unless those babies do not get a proper education. Look to the birth dearth as partial cause for declining enrollment. Harry Browne’s books (Roaring 2000s) has some interesting stats on nations that have large numbers of people in their 20s and 30s relative to 40s and 50s. The booming nations have a combination of that and long life expectancy (over age 70).
“Urban professionals have lots of money, tolerance for the problems of urban living, and the facilities to enjoy living in an area like this. I love that there are 15 places to eat and 10 bars right outside my door.”
But in another year or two, who’s going to be cooking the meals, pouring the drinks, serving the food, and busing the tables? The yuppies themselves?
“who’s going to be cooking the meals, pouring the drinks, serving the food, and busing the tables?”
Another reason that many of these urban revitalizations will fail.
And then they have kids and can’t afford to eat out, don’t want their kids in the “local” schools and find that the bus/subway isn’t nearly as convient as they thought.
I was in Rome this fall - I saw no one with children except the tourists and even then it was a very low percentage. Dense urban centers are not kid friendly.
Do any families with kids live in San Francisco? Other than the Hispanics stuffed three and four families to a 2BR apartment. I’ve never seen any.
Yes. In fact, San Francisco is experiencing a baby boom right now according to the papers. Also inadvertantly due to the bubble, but lots of yuppies in their late 20s/early 30s, who were saving for that down payment, said screw it. You’d have to save for 100 years. So many I know are happy having kids and renting for a fraction of the cost. Or they move.
But to augment everyone’s point, most people do in fact leave the city for Marin or the east bay once those kids need to start school. I’m a San Franciscan with a lot of acquaintances. I know dozens of people with babies in the city. I know no one with school-aged kids in the city.
I work in socioeconomics projects for the UC. I watch demographic trends all the time. The 2005 US census estimates still had SF with a very low birth rate. Equally interesting is the outmigration occurring in much of the BA. I’m awaiting the 2006 estimates to see if we get the birth increase you are seeing.
What’s interesting is that you often hear about the “white flight” of families with children into the interior of the US. More and more we are seeing our hispanic population moving into the midwest in larger numbers. There they are finding the cost of living is meeting their wages in these areas, making it easier for their families to suceed.
Excellent point! And one that I typically make when people tell me that S. FL has entered a new paradigm where only those making 200K+ a year can afford to live here (or retirees).
One thing to remember, you can have areas that are very expensive to live. If there was a job base, these “urban centers” could take off (a job base to support the housing costs) and have a high price per sq/ft indefinately (think 5th Ave NYC). However, the problem with the equation now is that the cheap place to live…. Well, its in Georgia.
And you can’t commute from GA to Miami every day. You need a place where the “support” staff of people can live to service the upper middle/high income people. And that’s where the math totally falls apart. If you had a hip, safe, fun urban center with high prices and the surrounding areas were reasonably priced… Well, that’s just the price you pay to live in that area. However, when you have an entire region (or state) that has gone off the rocker with prices…. Well, that’s just never going to work!
Of course every area needs a mix of people you dumba** homebuilders/REwhores, etc. Priced out forever is the dumbest thing that I have ever, in my life, heard come out of someone’s mouth that is supposedly “trained” in the RE market.
And the final problem (in my area) is that the yuppies who live here.. They don’t make enough to live this lifestyle. So, even those who can marginally afford to buy/rent here can’t afford to enjoy all the amenaties aimed for that target audience..
I predict a total failure of these efforts; perhaps with a few select developments pulling through. For people who do not live in S. FL, all up and down the coast, about every 10 miles or so, there is another urban revitalization project going on. Total insanity, especially when you see all these stores going in that are targeted at the insanely rich (not just the comfortably wealthly).
Don’t worry. Interest rates must rise, otherwise the US dollar will collapse, leaving a financial crisis in its wake. Here in LA, the number of coastal homes with an adjustable rate mortgage is higher than 60%! This does not include sub-prime, teaser and the absolutely awful negative amortization loan. I fear the bankruptcy courts will soon be filled to the brim with folks who had no business buying into this market in the first place. I suggest renting and watch the carnage begin. The thing that is so interesting that most outwardly prosperour people when their real estate holdings are discounted HAVE ALMOST ZERO NET WORTH! Credit cards are maxed to the hilt, almost zero in savings. Those who do hold stocks are risking what they do have on an overheated market that has been manipulated by the Fed’s Plunge Protection Team and Wall Streets crap merchants with suits and ties. With over $260 trillion in derivatives worldwide, now is not the time to gamble on oversize and overpriced “properties”. Hard assets and premium foreign currencies are the only places to shelter wealth from hyper-inflation and US govt. monkey-business. The whole debt-based financial system is at risk. The societal impact could well be beyond belief. It’s pretty scary stuff. Wise folks are preparing for hard times by shedding debt, becoming liquid and reevaluating their situation. IMHO, LA and Orange County real estate will fall between 40 - 55% by the time it’s all over. The “value” of these homes, falling below the initial support level, will be devastating to the tax base and impact local government’s ability to levy property taxes. In California, we are being overwhelmed by illegal aliens and their children costing us well over $10 billion per year and rising! Bottom line: Carefully protect what you have and hold on for dear life. This thing is going to hit bottom and when it does the least thing one needs to own is illiquid and overpriced real estate.
Exactly. Real cities are: crowded, noisy, expensive, dirty, hard to find a parking space in, full of people not like you and probably possess high crime, intractible politics and/or similar unpleasantries.
Now these things make cities fun in your 20s and you may tolerate them in your 30s. But eventually, most people want out. (And for the umpteenth time, I live in downtown Chicago, so no need to sell the virtues of urban living to me.)
Some older folks might like “urban living”, but never too much of it, thank you. And since the age of the automobile, the trend has been overwhelmingly for people to move AWAY from cities as they age, not towards them. No condo bubble ain’t gonna change this. (Nor will high gas prices, as this practice is observable in Europe, too.)
Two points:
Philadelphia’s last RE bust coincided with all the yuppies selling their townhomes when their children reached school age. In case anyone hasn’t heard, the Philadelphia public school system is a travesty, and a tragedy for those who have no choice but to endure it.
The retiring boomers in my area are flocking to the 55+ communities that are sprouting like toadstools after an autumn rain. They are not relocating en masse to the city.
Anyone seeking drama and fine dining can take the train in (from the burbs) for dinner and a show.
Oh, how could I have left out “crappy schools” in my list of things describing cities. Thanks. Really all the US’s cities are the same, just the street layouts, demographics, weather and touristy things are different. Maybe accents, too.
“The retiring boomers in my area are flocking to the 55+ communities that are sprouting like toadstools after an autumn rain. They are not relocating en masse to the city.”
In my department (UCD) I have 3 faculty retiring in the spring. One already had a home built in rural Michigan, another is moving to Maine, and a third is moving back to China. All have cashed out here in Davis and are taking their equity windfall elsewhere.
It’s been at least a few years, but I remember a map in Forbes magazine ranking the states by what fraction of their population was over 65. Calif ranked 47th or 48th.
The “market makers”, just made up all that stuff about baby boomers buying . The developers were selling a concept to speculators, never mind that it was a fairytale .
Trump is also a “market maker” type who sells a concept ,never mind if your getting value for the dollar .
Why would Lenders want to deal with Trump after he backed them into a corner when he should of gone belly-up years ago ?
I loved living at 9th and State in the South Loop. Until I was married with three kids. We moved to Oak Park for the schools.
We do talk sometimes about moving back after the youngest is out of high school. There were many older retired couples in the South Loop in the early 90’s
Jay …I’m sure there are many people who want that lifestyle in retirement but not to the degree the market makers were pumping it .
Personally, I do plan to retire in an urban area. I’m painfully aware that elderly people are lousy drivers and are very vulnerable to becoming homebound if they live somewhere without decent mass transit.
At least in a city you have public transportation options and more plentiful taxis if you’re not able to drive safely anymore.
I have two kids and I can tell you that there are two reasons kids are expensive - health care and education. Now, if you are getting state-sponsored or emergency room healthcare and if you make no plans to send your kids to college, kids really aren’t that expensive. There are plenty of garage sales to buy clothes and second-hand toys. You can buy relatively cheap food (rice, pasta, beans, etc) in bulk. That is how poor people with kids do it - by lowering their expectations and by basically doing nothing to give their kids a chance to rise above their parents’ station. It’s Dickensian to be sure but I’m afraid that is the future of most of CA and other overblown RE markets.
OT, but I want to know which one of you did it:
http://www.youtube.com/watch?v=pLjo7-J1qho
hehe.
I see your Great Depression Comparison Piece and raise you one
YouTube Realtor Ad
http://www.youtube.com/watch?v=nPUcEPeaUqU
$337K in Boise, Idaho for a 1200 square foot early 1900’s bungalow? You’ve got to be kidding me.
http://money.cnn.com/2006/12/01/magazines/moneymag/8395182.moneymag/index.htm?postversion=2006120413
And, it says that the GF was a “cash” buyer. Sounds like another equity locust from Clownifornia.
When (where) will this madness end?
Whoa, thats crazy. CNN Money should be ashamed of themselves for printing that story and giving people false hope. That’s unreal.
A shade under $300/Sq. Ft. and in Boise. What are those people smoking there?
Potatoes?
That’s even above Portland. Someone not yet in the loop… or with inside info on a commercial rezone?
Unfortunately, that quote from agent Michelle Keck just reflects the reality that there will not be anything like a strongly resolute buyers’ strike on the way to market correction. I keep seeing predictions here that sentiment will soon be very much against owning, but there will ALWAYS be a strong and exploitable sentiment to the contrary, especially for those with young families, so the NAR will continue to be able to spin all sorts of nonsense prognostications while staying on the shy side of fraud as it is legally defined.
Well if those people want a life free from debt then that is their choice. If they are going to live with the hope that after 30 years they can sell that 750K PoS to my kids for 1.5Mil, then good luck to them. However, I see endentured slave to the mortgage houses for many of these people.
It is so sad to see the once great US economy slowly become a rich class, a very small real middle class, a poor class , and then the debtor class.
The economic future of this country does not bode well, esp. with all the debt. I still believe that we are in the beginnings of what can only be termed the perpetual debt cycle and the only way out is to stay out and save.
For some people death will be the only way out of this economy. They will never know what it really means to own something, let alone save anything they ever made.
I meant to say, they don’t want a life free from debt…
Michelle Keck is just another property porno star.
The real test comes next year. Let’s see if she is still pedalling her wares come December 2007.
I googled her. She is not in an porn I would ever watch!
Then you obviously haven’t seen her in
“SheMax: Hermaphrodite Realtor”
Inventory won’t be the only thing going up.
LOL!
Hey, Rainman, haven’t seen you in a while. Been out of town?
Time for BTC to pay a visit!
Rainman 18 …I figured you went on a vacation around the world …LOl . Glad to see you .
“‘We’re hoping to see things rebound. Now’s the time for the first-time home buyer. Otherwise, when prices go up, they may not be able to afford (another surge),’ said real estate agent Michelle Keck.”
Another female. It seems a lot of female in real estate. I am not gender discriminational. I just want to say male and female have strength in different areas. But from my experience, Most women are weak in math and logic. This lady seems don’t know what is wrong with her logic.
… moving as far away from this as I can get…
Yea, I’m with you
I’m having a “Schadenfreude moment” at Joe’s expense. Thanks Joe.
And do women be better then men in the grammer department?
Like you couldn’t see this comment coming. Too funny….
How many times has it been discussed on this blog:
Most home sales are driven by the wife’s emotional need to nest, and of course, compete with her sister-in-law.
(remember the Suzanne researched this $h!t commercial? That advertisement would never have seen the light of day if focus groups hadn’t indicated that women, the target audience, responded favorably to the clip.
And the hapless husbands go along with the wife because, hey, a guy just can’t envision a sex-free future for his own damn self.)
Isn’t this just another way of saying women are weak in logic?
so no need to open a can of whoopass on poor old Nb_Joe
I think it’s true that many women, myself included, feel an emotional need for a home. That doesn’t mean that we want our husband dying of a heart attack at 45 while trying to make the mortgage. That REALLY ruins your lifestyle.
I think a “home” is made by the people who live in the dwelling. Where there is love, nurturing, and family, there is a home. It matters not whether the dwelling itself is rented or owned. The dwelling is nothing but the place where the home is made. I think the emotional need many women (and men too, mind you)have to own the dwelling is based on a want for stability, but I think for a large part in our society is also consumerism, status, and peer pressure, maybe even unconsciously so. And that last part is really a shame.
On an emotional level, women (and many men) want the stability that comes with the ownership, the feeling of permanence. Under the current conditions, men (and many women) completely freak out at the unbelievable burden that provision of same will entail.
I own my home. Well, almost; the bank still owns a bunch of it. I started thinking about this whole bubble thing about 5 years ago because I have a 12 year old daughter, and in 10 years, she should be able to do the same thing I did. Build a home, buy a house, and be stable in it. And I thought, if this nonsense continues, my house will be worth over $10 million. How can that be? It will correct one way or the other. It has to. There is simply no other answer.
I have to partially disagree with this idea. Here’s my take: 99% of the real estate buying populace are idiots. It’s not that they’re stupid, it’s just that they haven’t taken the time to really understand the thingie they are buying. The real estate industry refers to these idiots as “customers.”
50% of the
idiotscustomers are women. So you should expect that there will be commercials tugging on whatever available thread of impulse-buying is available in that 50% — and a different set of commercials will try to get an impulse buy out of the other 50%. You should also expect to hear about actual female customers who fell for this nonsense.Men traditionally deal with the finance side of things. So they’re the ones more likely to be following the half-thought out ideas like “prices always go up” or “I can always sell if I can’t afford the payments,” or “I can refinance to a fixed if the variable rate goes up.”
So let’s not pretend a nationwide bubble is the fault of a single sex. There are stupid reasons everywhere — and plenty of realtor ready to take advantage of every stupid reason the fools fall for.
So yes, the ridiculous “emotional need” really does exist. And equally ridiculous reasons are available to men too. What were we all expecting out of a generation of McDonald’s employees who think they can afford $3 coffee at Starbuck’s?
cj, you have a point. Stupidity is gender blind. I remember, a couple of years ago, when my husband and I still thought about buying a home, we drove around our neighborhood and figured out that all the decent houses were over 1M. Then we sat down and did the math considering the expenses of living in LA with two kids, two cars, health insurance and all that, taxes, etc., and we found out that there were only two options:
1. Everybody around us had bought their homes 20 years ago (not plausible)
2. Everybody around had a monthly income of about $25,000 (a little hard to believe, even in LA).
3. We were poor (not according to Mr. Tax Man, though)
Needless to say, we chose to keep living with renter’s shame, but who knows what we would have done if one of us, the male or the female side of the couple had been hell bent on it. Married people have a way of making life hell for each other, so sometimes it may seem like a good idea to solve the cause of so much grief and just go the hell ahead and buy the damn house…
If I may intercede for some mercy upon the stupid…
American middle-class culture, even pre-bubble, was wrapped up in owning house. That’s a huge factor that can’t be ignored when looking at young families buying houses.
Here’s the housing related stories I heard going up in a nutshell: We (pick a set of older relatives) bought a house for ($x ridiculous low dollars). It was a stretch at the time, but now our house is worth ($x ridiculous high dollars). Especially from my boomer age relatives, I got the impression that it wasn’t all that difficult to buy a new house. All of my older family members owned their own house.I think it’s safe to say that a young family would assume that their story would be the same.
The sad part is I’m good with math and have some idea of what kind of disconnect the run up was causing before the finding this blog. However, I might have been still tempted to buy a house at ridiculous prices on the thought that I’d stretch now and it would all work out. (We bought right before the bubble.) It wasn’t until I found this blog that I had my eyes open to the idea that renting a long term home might be a smart, cost-saving, time-saving, and therefore adult idea.
Most young families have no idea, I think, that the rules have changed. Older generations didn’t use toxic loans to get their houses. If you aren’t good with math, as most people aren’t, it’s not going to occur to that you will never quite literally never be able to pay off $1 M (or $700K or $500K or whatever) home on a middle-class income.
Does it absolve of young families of responsibility? No. But I’m not sure I’m entirely inclined to chalk it off young families buying to 100% stupidity… (maybe 99?)
People are not stupid. They are, however, currently completely trapped between the two arguments you make. 1) the experience of their parents, and 2) the reality of today.
Trapped people do things that defy logic.
Ric, a blogger in another thread wrote about the education system’s utter failure to instill in kids the most basic elements of economics. I would refer you to it, but I have absolutely no idea who wrote it or where.
Anyway, if you start thinking in a really mean and conspirational vein, you could even believe that it is not in the interest of the powers that be that kids get the hang of basic economics. Then they would realize that they can’t afford IPods AND expensive running shoes AND a brand new car. Oh, boy, wouldn’t many big companies be in trouble if they figured that out? This “have it all” mentality has spread like a disease, to the point that everyone thinks they can and should have the thing they want, and feel utterly dejected when they can’t. I sometimes ponder what is going to happen to these people’s sense of self when everything that held their selves together (all outside stuff, of course) is no longer there. In the long run, I think we should be prepared to see some traits of ugly radicalism in American politics.
Ummm sure I want to nest but hell if I’m going to hang myself financially to do it. Not all women are nuts.
http://www.youtube.com/watch?v=Ubsd-tWYmZw
Ah yes, the infamous “Suzanne Researched This” commerical. Century 21 inadvertently encapsulated just about everything sleazy and distasteful with the realtor “profession” (cough), and with FBs and the nagging harpies they let push them into financial insolvency, with that little gem.
Discussed this with my wife. I see our house as a pile of lumber and bricks–in other words, a shelter. She sees it as a “home” and from talking with her, that entails some sort of emotional “I raised my kids in it, filled it with decorations” sort of thing. Her view was way more complicated. I figure that is why it is difficult for men to figure out women.
grammar
If that’s the only error you found in my sentence, your local community college is waiting to help.
But from my experience, Most women are weak in math and logic.
Then maybe you should get out of the trailer park more often.
I always said I’d never own the stock of a company with a female CEO
(ducks flying brickbats)
no brickbats here…
guess you didn’t own any HP when Carly was in charge:
http://tinyurl.com/yn8sp3
Widen your horizons. Introduce yourself to a woman who is a high school graduate.
Holy sh-t. Do you represent a Middle Eastern country by any chance? I have an MBA from a top-tier school and graduated at the top of my class. And, I have also grasped the fundamental rules of written English. Unlike you. Imagine that.
(1) Am female; taught differential equations, fluid mechanics, thermodynamics [but NOT quantum mechanics or like that]
(2) Larry Summers was right.
(3) One can perfectly well build a nest in a rental property if it seems to be permanently for rent.
Quick, what’s the Navier-Stokes equation. No Googling.
I know, I know. Ask me. Ask me. How do you know about the N-S equations passthebubbly? And it should read “equations” (plural).
azl, were you living with some Techers in Pasadena?
Stereotypes are easy and allow one to sprout gross distortions without factual data. In my office I see men and women making financial mistakes, both sexes buying into illogical thinking when it comes to spending and “investing.” I will agree that women have a stronger nesting urge. But with home purchases this is balanced by men’s willingness to gamble more on a big payoff. If we really want to settle this debate let’s look at who the speculators are in real estate. Are the 40% who bought hoping to flip more or less responsible for the bubble than the rest who overpaid for homes? My guess is that the Casey’s outweigh the Michelle’s.
BTW, when you claim you are not discriminating against a group that you then proceed to make grotesque and simplified assumptions about, the odds are high you have a deep seated hatred of that group. And reducing anything to a stereotype shows an inability to present a logical, articulate and intelligent argument. (Although at least your misogyny is aimed towards a group different from you. Somehow it is more pathetic when a member of the discriminated group spews hatred towards themselves.)
The women who contribute to this blog are, for the most part, smart, well-educated and logical contributors who saw the coming train crash and found it unbelievable. And if you will not call us Michelle we will agree not to call you Casey. Or David. Or Alan. Or Donald. Or Gary.
I think many posters & lurkers are not aware that many (I assume approximately half) of the posters here are women. Many of us have been on RE bubble sites for years, now. Many of us have had to drag our husbands, kicking and screaming, into rentals to wait out the crash.
From what I have witnessed, the bubble mania spans all generations (it is NOT just Boomers or X-ers, etc.), races, intelligence levels, genders, SES standards, etc. I’ve been watching this for quite a while and have seen no real definitive pattern WRT any particular type of buyer (thought I have seen the trend toward immigrant buyers more recently, and I believe they are being exploited because of their lack of knowledge in the US mortgage market and historical pricing trends — but that is another topic).
San Diego Bear,
I’m late in replying so you may not even see this post.
I worked in the REIC during the hottest part of the boom. I was presented with factual data every day about who makes the home-buying decision. It was something like 80% of the time, when a couple purchases a home, it is the wife who ultimately makes the call.
This is why our marketing materials were primarily oriented to appeal to women. The sales managers routinely did customer surveys and focus groups, and polls, and whatever it took to get a bead on who their typical customer was.
That job experience taught me a lot: I left there with the idea that many on this blog have expressed, that REaltors are maybe a step above used car salesmen.
The other eye-opener was witnessing what was happenning to Jane Q. Public, in her quest to have the best home in her circle of pals. It was something akin to House Lust.
I’m female: do I have an emotional need to nest? Heck yes! But I’m not going to consign myself to a life of indentured servitude in order to attain that goal. Unfortunately, I saw many FBs take the plunge just so they could live in the right development, boast the correct zip code, have the granite counters, the his and her bathrooms (which BTW I think is a great idea), the butler’s pantries, etc. ad nauseum.
You are right on point about men being lured in by the promise of a windfall, and yes that attitude played a big part in contributing to the inflated prices.
FWIW I’m not a REaltor, I was in graphics end of the marketing dept.
Single Mom: You might miss an important word “MOST”. I was not saying “Every”. If you believe you are excellent, it’s OK. I am not challenging you. Actually, one of the smartest person I ever met is a Chinese girl in my lab when I was in University of Illinois at Champaign. She got her PhD degree in 3 years. She is much smarter than me. But not most others. My wife had a GPA of 4.0 in her Accountancy PhD program. But I don’t think she was excellent in math. She just had a good memory and excellent ability in understanding others’ intensions. She could guess 70%-80% of all questions in every exam. When she faced tons of data and had to draw a conclusion, she always asked me for help. She is smart but not in math and logic. I admit I am not good in grammar. I am just a programmer. But I have a PhD degree in Computer from UIUC. I didn’t stole it.
Please. Stop. You’re making programmers look bad. In so very many ways…
“Still, at least half of the 4,344 members in the association have three years or less of experience, so they have not been through a slow market. Gamber said he expects many of those to exit the profession.”
Just like Wal Mart driving out the mom & pops! The “deep pockets” established realtors ™ don’t want the newbies sticking around to spoil the racket. Trade groups have a conflict of interest.
I don’t know to what extent it’s still the case, but a lot of the crap students in law & med school go through is merely to protect the salaries of their predecessors and has no benefit to the care received by their future clients/patients. I wonder if we’ll see things like this creep into the real estate “profession”.
The CFA exam and certification process is like that too. But you sure love it when you’re on the other side of it.
I want my kid to take the cfa= cool bean
I’ve always been fascinated about with song and dance reasoning that goes into making newly minted doctors work 48 hour+ shifts at hospitals. Who wouldn’t want to have life or death decisions made for them by an inexperienced doctor barely able to think??
After all, it’s all about “learning the medicine” - nudge, nudge, wink, wink. (Oh, please ignore that, relatively speaking we can pay them like crap and make them work all the hours that their more experienced brethren don’t want to..)
You bring up a good point, Vermonter. I’ve often wondered about the doctors’ schedules and thought rectifying the schedules might be a better way to fix the malpractice/lawsuit problem, rather than trying to cap payouts.
As usual, they’re always trying to fix the symptom rather than the (possible) cause.
Dissecting what the impact of seller’s pulling their houses off the market, doesn’t such a state of affairs translate into the move-up market being further impaired because if you take your house off the market, it means you are not going to moving up.
Spring is going to be U-G-L-Y!
“”With so many sellers pulling their homes off the market now only to place them right back on the market in the Spring,”
….. I am having 2nd thoughts about the rebound of listings in the spring because a lot of owners that had dreams of that McMansion in the right part of town, will realize the upward mobility cycle is OVER!
….Just keeping their employment in a slowing economy will be more important that any “dream” home they couldn’t afford anyway.
…Suddenly, the old homestead will start looking a whole lot more
desirable, especially when they can afford it. The banks will tighten lending standards, and the comps will be much lower that they had in mind during the fall selling season. I think reality will smack them over the head, and stop the madness. The only market left in the spring will be smaller homes at affordable prices for first time homebuyers, and the major real estate companies and the penniless realtors will stop taken listings they can not see selling.. Remember, all these guys making predictions for the spring listing onlaught, missed the 2006 run up. Everybody is a genius NOW! What were they saying Jan 1 , 2006??
“With so many sellers pulling their homes off the market now only to place them right back on the market in the Spring, coupled with a number of new sellers who did not market their homes in 2006, the active inventory could climb to nearly 20,000 homes.”
I want a front row seat for the ‘07 spring selling season…it should be very, *ahem*, ‘interesting’.
Can someone bring the popcorn if I spring for the hot dogs and beers?
I’d love to hear this from realtors here. Even the ones I see as pretty honest do not seem to be able to connect these dots.
You can count on me for popcorn, arroyogrande.
And I’ll be happy to replenish that popcorn supply.
If I see things moving in my neck of the woods, i’ll bring champagne…
And I’ll drink it!
I propose a post-Super Bowl tailgate party for bubble viewers…
where and when?
Any takers for a SoCal bubblehead meet-up in Irvine?
Yes. After many moons of driving up and down the east coast, I expect to reach Calif within a couple of weeks. I especially want to meet Central Coast people, but delighted to attend in So Cal anyway.
I’m in to represent boring North Orange County’s pathetic last-ditch infill.
GS,
Did you ever get together with Carlsbad Jim, or did your wife scare you out of it?
And yes, I think late spring 2007 will be high time for the bubble bloggers here to finally get together.
Snippet from a newsletter I got:
Greenspan Wrong:
Housing Crisis Is Here
Former Federal Reserve Chairman Alan Greenspan is “out of his mind” to say that the housing slump has already bottomed out, a leading financial expert tells Barron’s.
Two months ago Greenspan cited a stabilization in mortgage application rates to support his view that the housing bust was over.
But Barron’s Jonathan Laing reports that Jeffrey Gundlach, chief investment officer and fixed-income expert at money-management firm TCW Group, told the respected business publication:
“This is the kind of silly optimism that one would expect from somebody who’d just passed his real-estate brokerage exam and was hoping to drum up some business.
“Greenspan is out of his mind to declare a bottom in the housing market after just a six-month slide.”
On the contrary, Gundlach predicts that the housing market won’t bottom out until at least 2008, and will see no meaningful recovery until at least 2010.
And due in large part to the housing downturn, he sees about a 60 percent probability of a recession by the middle of next year.
“Consumers are less likely to spend freely when their biggest asset is getting drilled,” Laing writes in Barron’s.
“Nor with home prices stable or falling will as many U.S. consumers be able to avail themselves of cash-out refinancing to underwrite their lifestyles, says Gundlach.”
Gundlach notes that what he calls “shoe-horn financing” — shoddy home-lending practices — intensified the housing bubble, with borrowers allowed to qualify for mortgages that were in fact beyond their financial means.
“Teaser” interest rates in the first two to three years of a mortgage kept monthly payments low before the rates were adjusted. With those adjusted rates now climbing, and with the Fed raising interest rates, it’s no longer easy to refinance that adjustable mortgage to stay at a teaser rate, Gundlach points out.
And Laing notes: “Few know the residential mortgage market as intimately as Gundlach,” who during his two decades at Trust Co. of the West, “chalked up an enviable record running fixed-income portfolios, particularly for mortgage-backed securities.”
Finally, someone points out that the emperor isn’t wearing any clothes…
Good for Jeff, we should all send him a thank-you note.
‘Former Federal Reserve Chairman Alan Greenspan is “out of his mind” to say that the housing slump has already bottomed out, a leading financial expert tells Barron’s.’
That is hard to judge without knowing who is paying his post-retirement consulting fees…
“Consumers are less likely to spend freely when their biggest asset is getting drilled…”
I’ll bet they don’t walk with the same arrogant flair as they did before either. I hear it’s painful emotionally, financially and ….. physically.
“On the contrary, Gundlach predicts that the housing market won’t bottom out until at least 2008, and will see no meaningful recovery until at least 2010.”
Gundlach obviously doesn’t follow demographic trends.
I agree with Gundlach. I see the housing chart following the NASDAQ chart of March 2000. The crash will be much harder and faster than the increase came. A bubble inflates slowly, but deflates or pops very quickly. After the bottom, housing will be flat and increase every so slowly, and only due to raging inflation.
The world is getting sick of buying American debt. If we didn’t owe them so much, they would have cut off our credit long ago. Owe the bank $100K and they own you. Owe the bank $100M and you own them.
More FUD from NAR.
The bell clangs hollow on deaf ears.
Nice metaphor….way too dreamy for this gang.
“Whether 2007 proves to be the year the market hits bottom remains to be seen, and may not be obvious for some time afterward. ‘You don’t know when you’re there,’ Gamber said.”
A Realtor with 27 years of experience claims that one can not even contemporaneously know at what point the market has bottomed out, but David Lereah and Alan Greenspan have both offered their predictions that the bottom will be reached next year or sooner. Hummm…
“At the time the real estate mogul boasted he had already sold five of the first 36 homes for prices ranging from $5.5 million to $10.5 million. Yet today, property records show only one home in the subdivision has actually sold, to a Trump pal and business partner, amid a slowing housing market.”
This story demonstrates a little-known sales tactic to try when nothing is selling. Lie and tell everyone they are selling like hot cakes.
“The National Association of Realtors, supported by California’s version, predicts existing home prices will fall by about 9 percent this year.”
The most accurate of all predictions are those which predict events which have already occurred.
He called the 5.3% drop in median price in Fresno County over the last year a stable reduction, and noted it was expected after a five-year run-up that tripled home values in some areas.”
Why is it these RE Agents see a 5% or so reduction and act like it is the bottom or a stable level? They haven’t seen anything YET! When you RUN the price of anything up like the housing market it just stands to reason that the correction will be more than just 5%%%%%%!!!!!!!!!
Dennis, all you need is to put on your Dumbass Hat and this will all make sense to you.
You can borrow mine if you don’t have one.
I figured it was about time I got one for myself, so I stopped at Macy’s on the way home from work. It cost $1,500, but it was a perfect fit, so I didn’t mind.
Next year, it will be 20% more. You should be happy you bought now, so you won’t be priced out forever.
A Realtor with 27 years of experience claims that one can not even contemporaneously know at what point the market has bottomed out, but David Lereah and Alan Greenspan have both offered their predictions that the bottom will be reached next year or sooner. Hummm…
Geeeeeeeeez If that is true then we will have a 50% plus correction to the DOWN side NEXT YEAR> OUCH!!!!!!!!
“‘We’re hoping to see things rebound. Now’s the time for the first-time home buyer. Otherwise, when prices go up, they may not be able to afford (another surge),’ said real estate agent Michelle Keck.”
Susan Jacobson, where art thou? Aren’t you going to tell us (with great indignation) that you never once heard one of your realtor colleagues tell a “client” they couldn’t lose money in real estate?
Right . But you better buy now rather than risk the great “surge” of 2007….LOL Can a realtor really use that sales pitch and not look like a moron when the housing prices are crashing all around us ?
WSJ from 12-5-06
More Borrowers With Risky Loans Are Falling Behind
Subprime Mortgages Surged As Housing Market Soared; Now, Delinquencies Mount
Some choice quotes:
“Based on current performance, 2006 is on track to be one of the worst ever for subprime loans, according to UBS AG. “We are a bit surprised by how fast this has unraveled,” says Thomas Zimmerman, head of asset-backed securities research at UBS.”
“In October, borrowers were 60 days or more behind in payments on 3.9% of the subprime home loans packaged into mortgage securities this year, UBS says. That’s nearly twice the delinquency rate on new subprime loans recorded a year earlier.”
Not so sure I agree with this one though:
“Though delinquency rates on subprime mortgages originated in the past year have soared to the highest levels in a decade, economists don’t expect any significant harm to the nation’s economy or financial systems. But if late payments and foreclosures continue to rise at a faster-than-expected pace, the pain could extend beyond homeowners and lenders to the investors who buy mortgage-backed securities.”
“a stable reduction”
Anthony Gamber is in reality a very brave soul. This quote will be in print, in the arichives, FOREVER, till the end of time. Can you imagine what it will be like for this man’s, or even worse, his children who google their father’s name in five years? There’s dear old Dad calling the biggest r/e crash in history a “stable reduction”.
Hey did anyone ever hear of the survey of shopkeepers and taxi drivers done years ago asking if it was easier to rip off a man or a woman. Don’t know numbers, but vast majority said they would be more reluctant to rip off a woman. Men are easy to rip off apparently. Maybe its the superiority complex! Guy here btw
high end update
http://bakersfieldbubble.blogspot.com