‘Tumbling Prices Erase Months Of Drastic Increases’ In CA
Even television stations in California are reporting on the housing bubble. Palm Springs, “The Valley’s real estate market is cooling off. Depending on who you listen to, it’s already in the deep freeze. That’s bad news for people trying to sell their homes. It may be good news for people who’ve had trouble buying.”
“While valley home prices have gone up, there are still over 7,000 homes on the market right now. That’s about 4,000 more than last year. And homes that sold in 58 days just a year ago are now taking more than two months to sell.”
“At least one local realtor says many people believe they can’t afford to live here, when they really can. ‘If they would really look into the financing options available, including 100% financing programs, they might find that they do have an opportunity to buy.’”
“So if you’re still looking to buy a home, but can’t afford it Coldwell Banker tells us you might have to move further away from the center of the desert to find something cheaper.”
And from Fresno. “The Valley housing boom is over, with home prices in some neighborhoods dropping $50,000 in just the past two months. When Action News broke down the numbers, we found that in the past couple months, the bubble appears to be bursting. To realtors, it’s a market adjustment. But to some analysts, it’s a full-on correction.”
“Local housing prices have come tumbling down over the last two months, erasing months of drastic increases. Just two months ago, the median sale price for homes in Clovis’ 93611 zip code was $439,000. But in just 60 days, those homes plummeted $51,000, to $388,000.”
“Over the same time frame, Fresno homes were unchanged, while homes in Merced lost a little more than $4,000 in value. The correction hurts worst for people who flip homes, buying them and selling them again within a matter of months. ‘You can drive through any brand new subdivision. You will see just as many for sale signs and for rent signs as you see people living in the homes,’ said Joan Jolly, from the Fresno Association of Realtors.”
“Realtors say the adjustment is great news for buyers, who are all of the sudden paying a lot less for the same homes. Sanger homes are in the top 10 in the entire state for appreciation over the last year. They’re up 54%. But for the last two months, they’ve been on the way down too, by almost $17,000.”
California Housing Price Index
Updated with yesterday’s data from the OFHEO.
just want to be sure you noticed that the OFHEO report:
1. doesn’t include condos and multifamily units
2. doesn’t include properties bought with non-conforming loans
3. includes refinancing in its appreciation measure
That price appreciation graph tells a clear story (esp. w/Q/Q on an annualized basis): The down cycles went from 1977-1984, 1990-1995, and 2005-???, with the worst runup in prices of the three big spikes ending late last year…
Getstucco, it really does tell the story. I just looked at the graphs and it almost a perfect 10 year period (5 up, 5 down) for the last two cycles. This cycle looks like it’s going to be 10 years up. If you take the previous cycle patterns, you could make a pretty good argument that it’s going to take 10 years to hit bottom.
Too bad they didn’t use”real” inflation adjusted appreaciation instead of nominal appreciation. The 1977-1984 down cycle would have been much more extreme because inflation was running between 8 to 13 percent during the time frame.
An “opportunity to buy” is different from being able to “afford to live there.” This guy unwittingly summed up the entire problem with the housing market in one easy to remember quote.
Exactly. Being able to “afford” has come to mean exactly the same thing as “qualifying” for a loan–no matter how questionable the loan process, how many hours you’ll spend commuting, and how many extra jobs you and your spouse will need to crack the monthly nut.
If they would really look into the implications of the financing options available, including 100% financing programs, they might find that they
do have an opportunitydon’t want to buy.‘If they would really look into the financing options available, including 100% financing programs, they might find that they do have an opportunity to buy.’”
Yeah, right. buy now while prices are going down
This suggestion is to halt the decline in house prices. These realtors are so stupid to figure out that the serious buyers who wanted to live in their houses decided not to participate in the madness by using these creative financing options and not to compete with stupid soon to be be toasted flippers/investors.
When the house prices get to a level that can be afforded with traditional way of 30 yr 20% down and the payments not to exceed 28% of their monthly income they will start buying.
I’d prefer a 15-year loan.
“At least one local realtor says many people believe they can’t afford to live here, when they really can. ‘If they would really look into the financing options available, including 100% financing programs, they might find that they do have an opportunity to buy.’”
It is this type of advice that makes my blood boil. I sincerely hope that the RE/Mortgage industries sets up their own version of the SEC and NASD when this impending disater is over. I work in the securities industry and if I said the equivalent of that, I’m in big trouble. If a client took my advice and lost, I could be on my way to jail. 100% financing is like buying your house on margin. Who in their right mind leverages themselves like that, especially with an asset that is tradionally illiquid?
As a mortgage broker, as much as it would suck, I’d welcome regulation at this point. That being said, I think, as it’s been said so many times on this blog, that the realtors are the ones that really need the regulating. With comments like the one mentioned, by the time the potential buyers get to me they are already “sold” to throw caution to the wind. These guys know that buying a home is one the most emotional thing a person can do and play on that accordingly. And, as the situation is now getting desperate, the things coming out of there mouths recently is nothing short of criminal.
My industry has gone to hell…..
I second that whole heartedly. It is indeed true that, by the time the potential borrower starts looking for financing the realtor (who, in most cases know absolutley NOTHING about mortgages) has filled their head with the most non-sensicle garbage regarding what the borrower can “afford”. Add to that the little adage: “Nobody puts 20% down any more, everybody is buyng with an interest only/neg-am loan…. That’s how the real players handle their money” and you have the recipe for what has contributed, in great part, to this unprecedented mess.
Ditto - Thirty years in finance and realtors telling their customers my business. I have used “toxic loans” for many people instead of bridge loans - now neg ams are 1 paycheck from homeless.
The CRAZY things buyers were doing at the height of the bubble like purchase contracts without home inspections and regardless of appraisal, shows that these buyers were brainwashed and not thinking rationally.
Gamblers and speculators use that type of leveraging (not investors).
What the h*ll, I don’t know if you guys are sucking up to the the people on this blog for business or what. But since when does a realtor affect what type of loan a person gets. Example: When I was selling houses and in the middle of tweedle dee (buyer) and tweedle dum (seller). Before I would even work with a client or show him one house I would have him sit in front of a mortgage broker so he could ascertain what type of financing was in his best interest. Why? Because I didn’t know all the financing options, didn’t have access to his credit report nor did I have the ability or desire to analyze his financials. My line to the mortgage brokers you stay out of my house I’ll stay out of yours. Talk to this guy tell me what he can do as far as financing and I’ll find what he needs. It’s the Realtors fault, put down the pipe crack kills.
These idiots on this blog blaming realtors/mortgage brokers for the housing industry are way off the block. Most of these talking heads you see in the papers or on T.V. haven’t sold a friggin house in 20 yrs and when they did they weren’t that good at it and if they still are in the business if they have time to write articles and talk to reprters they are still not that good at it.
Please spare me this higher than thou crap. If you want business go write an ad or do some cold calling. Don’t fish for it here your comments are disgusting me.
Most of the people who are in this FB situation are in there because of there own f*ck up’s and greed not because some realtor or mortgage broker sweet talked them. It was there greed and stupity of not doing research and having the ability to say no. It was their watching of MTV Cribs, and HGTV and wanting more than they could afford. It was there desire of wanting it now and not wanting to sweat for it. If someone is telling you that your mortgage note is going to increase by 700 to 800 bucks in 2 yrs on an adjustable mortgage how do you figure your going to pay it if your barely paying it now. What except hitting the lottery is going to change in your life that quick to make you be able to afford that. Why would a stock boy sign up for 2000.00 note when all he makes is 2500.00 dollars. It was his greed and stupidity. People need to take responsibility for their own actions.
Wah Wah regulate the industry, those realt-whore’s tricked me, blah blah blah. Please grow up and take responsibility, If you can’t afford it sit on the fence like everyone else, rent, h*ll get a camper and camp on the beach. But quit blaming the Realtors ya losers, the Realtors didn’t drop the interest rate to 40 yr lows to distract you from 9/11 and a few other things that were perculating at the time. The Realtors were responding to the demand just like everyone else.
If your stupid enough after doing your research to fall for the carnival act of some idiot who’s on the border of losing his license for some dumb a$$ statement he made or last week was selling shoes at payless then so be it suck it up and take it like a man.
Mr. Income Stream,
please tell us how you really feel…
Not exactly poetic, but I do agree that people need to quit throwing blame and look in the mirror.
I am impressed by your sincerity. It sound like you real care for the dumb s#%t rubes that you sell houses for. Biggest purchase of their life. Perhaps they just want to live in a good school district? And you could care less about their financial situation? You will sell them whatever they say they need, take your cut and move on to the next sucker. You post does a tremendous service to the Realtor profession by propping up it sullied credibility.
Maybe you need to read the whole thread a lot closer. I think you missed a lot.
Your right…no one forces you to do anything.
None of the Real Estate agents I ever dealt with tried to talk me into a house I couldn’t buy.
When newspapers publish stupid comments made by RE agents about telling people to buy at the top of the market with questionable loans, they do look pretty stupid though. I would think it gives the integrety of the industry a bad image.
They’re still in denial on CL, particularly the California forums. We all joke about the “But it’s still up year-over-year!” defenses, but the fact is they will not see a problem until a y-o-y decline has been seen. Even then many will not believe it.
You’re right. We’ll begin to see the 2YoY comparisons, then 3 and so on. But it hardly matters. Once the slide begins and the house ATMs stop working and homeowners have to use regular income to fund their lifestyles (PAY CREDIT CARDS), we’ll see some jaw-dropping declines and housing psychology turn on its ASS. There’s a whole generation of homeowners that really don’t believe housing prices can actually drop.
I see a major wipeout coming simply because of the dimensions of this bubble and the lending practices that enabled it…
You better go tell Nina at Sitting Pretty that she’s sitting ugly right now on that flip in Palm Springs. She is so smug and self-congratulatory, I can’t stand to even read the crap.
I have’nt seen an update on her PS place, did it sell ?
No, it hasn’t sold. MLS #: 21238109
She relisted it for $649K. Took it off the market and re-listed to show a “fresh” days on market number.
standard procedure these days…
Urggh. I thought I was the only one who noted the smugness. She is sitting in a chair, holding a copy of Business 2.0. She is smiling for the camera. Sitting Pretty Financially. Get it? Isn’t that clever?
Sorry.
I tried asking her about the property (I promise I was polite!) but she deleted it from the board.
Me too. She doesn’t want to spoil her image of perfect, all-knowing wisdom. But nobody reads her blog anyway except us vultures and a couple of her gurrlllllfriends.
There was never a reason for Palm Springs to have a housing bubble in the first place. There are acres and acres and acres of vacant land there, and new homes are being put up very cheaply every day. There are no limited supply pressures like on the coast. The only reason prices have gone up is homos’ deep pockets.
There’s no reason for it anywhere, girlie. There’s no land shortage, no housing shortage, in any of these places. I must say though, with all the finger pointing going on, that is the first I’ve heard that this all the “homos” fault.
There’s no reason for it anywhere, girlie. There’s no land shortage, no housing shortage, in any of these places. I must say though, with all the finger pointing going on, that is the first I’ve heard that this all the “homos” fault. Thanks for enlightening us.
It sure looks to me like there’s a land shortage in Venice Beach when you see people spending 100K for legal approval to build on a 3,000 SF lot. I even saw a guy build a house, on STILTS, so he’d have parking underneath, in an alley, on a lot that I would estimate to be about 800 SF, just to be near the beach. I’ve never seen anyone do that in the desert!
Hey hey hey! some of the most talented designers I know in the desert are a little light in the shorts. don’t knock ‘em.
“The only reason prices have gone up is homos’ deep pockets.”
I’m straight (and married), but can I suggest that we keep the ignorant trailer trash comments down to a minimum? It doesn’t really add anything to the board.
i blame it on the irish………
I WILL NOT TOLERATE YOUR INTOLERANCE OF THE INTOLERANT!
Hey, now Mr. Amazing - your inability to tolerate the intolerance of the intolerant is intolerable.
“homos” maybe they mean homeowner.
I’m impressed that despite your obvious ignorance, you’ve managed to get the plural-possessive of “homo” correct. Good job!
Firt time I read that I thought it was an abbreviation of homeowners’ which makes a bit more sense than the other interpretation.
‘Taint the “homos,” that’s just trash talk. The germ of truth is Palm Springs has unusual demographics. Lots of part time residents, few children, many retirees, lots of investors in the last few years as well. Palm Springs is not going to be the choice of permanent residence when people are forced to give up an extra home.
“Germ of truth?” Robert, for goodness sake. I’m not a Californian, but I’ve heard that San Fransisco’s demographics are “unusual,” too. And what about Miami? On second thought, let’s blame the whole enchilada on the shriveled up up retirees in Arizona. No offense, Ben, it is officially YOUR fault.
Heck, I ain’t a native Califorinian neither, I don’t been here but a quarter century. My children are 3rd generation natives as these things are reckoned so I have some standing. No, I was serious, Palm Springs stands out for the reasons I mention.
My wife and I went to Palm Springs over Presidents’ weekend. Steakhouse was swell. Mountains had snow (big deal for us San Diegans). Commenting on people’s livestyles in such a manner shows a marked lack of intelligence or care.
Oh, and I hate smokers.
BTW, I think I’m replying to the investorgirl:?:
Hey, can you clarify this for me? I thought it was because of all the Mexicans moving to SoCal who were buying the houses. Now you come along and say the housing bubble is due to gay people. What if they are gay Mexican people?
People, I love the gays, they’re fun to watch when we go to Palm Springs, I’m not blaming them for anything, but I see them cashing out equity on their million plus dollar homes here in the Studio City area and buying big mansions over there. If they had a wife and kids to support, they wouldn’t be able to have that lifestyle, in all likelihood. So their gayness is related to their ability to pay these outrageous prices. Hold on, my gay tenant is calling me. Bye.
“If they had a wife and kids to support, they wouldn’t be able to have that lifestyle.” So by that logic, all of the nicer estates in Bel Air, Portola Valley, Atherton (name your favorite) are owned by gay men who don’t have to support wives and children.
“They’re fun to watch …” You might pause to wonder how many people like to watch bigots when they go to Palm Springs.
You can recognize us by our tight tank tops and short shorts.
You sound like the older-generation relative who thinks they’re not a biggot because they think “them coloreds sure can sing.”
Good think you think they’re fun to watch, cause with your attitude that’s probably the most you get.
I sure love them negras. They sure can dance, have rthymn, like to eat collards and corn pone, black eyed peas and hog jowls,catfish and hush puppies, every one should have one. Can shine shoes better than white folk I know. What else can I say.They love Jessie Jerkson.
The increasing influence of the “pink” dollar.
i’ve decided to come out of the closet:
Ben -
“I WISH I COULD QUIT YOU!”
time for me to come out of the closet:
Ben,
“I WISH I COULD QUIT YOU!!!!!!”
What’s ChiliDoggg trying to say here… anyone know??
Even though I don’t freely admit it, I am actually from the Fresno area originally and my parents still live in the house I grew up in for most of the year. They live in Utah over the summer. Their house was built in 1980 (consequently by my Dad who was custom home builder until the recession in the late 70s and early 80s). My Dad was able to scrape the funds together to buy a 2.5 acre lot and build a 2900 sq ft home on it. The house obviously looks dated at this point, but I was looking at zillow and they appraised it at roughly 560k. I then looked at the history of appreciation and around 2003 it shot up from just over 200k to the level it’s at now.
Comparable prices paid in the general area were higher than what Zillow suggested. Some people were taken to the cleaners, though I could see why someone would want to get their hands on 2.5 acres. I told my Dad a month ago to sell NOW. They owe nothing on the place and I think they could still certainly get what Zillow appraises it at judging by the comparables.
Unfortunately, my uncle got to him first and told him something to the effect that no one can get their hands on 2+ acre lots anymore. That may possibly be true, but nevertheless the top of the bubble is here and people are going to begin to realize that 2.5 acres in the San Joaquin Valley isn’t such a hot commodity.
My parents are also very slow in making a decision such as this, as I’m sure a lot of people in their early to mid-60s would be. My Dad works in Utah most the year, and my mother is about to retire shortly, and they already own a townhouse outright in Utah in an infinitely nicer area than Fresno. Unfortunately, I think the lot and the house in Fresno will adjust back to before the boom there started occuring (late 2002, early 2003) plus maybe an additional 50k. All in all, I could see them losing 250k by not acting.
There has to be a better term than “losing” when it is an unrealized loss like this (they aren’t really losing 250K). Does anyone know the correct term for this type of “loss”?
I call them “paper losses,” but “unrealized” pretty much sums it up. Fantasy loss? Hang on, let me warm up the Spininator… I got it.
Unrealized potential gains.
OK…Lets lighten up on the Realtors…The bar for entry is quite low you know…18 years old + $295. and a month or two of study and you can take your exam and get your license…
When you only require peanuts you get monkey’s…
Why would or should we lighten up on Realtors because it’s easy to become one. Many of these comments come from seasoned professionals as well as the run of the mill newbie.
Point being Rudeeeee, You don’t want to make the biggest investment of your life with the guidance of a Monkey.
Exactally rudekarl! Like I said yesterday in my rant to realtors, the dubious actions of realtors like the one quoted above will tarnish the whole proffesion by association. I would love to see oversight enforced on this group.
….and the same applies to loan agents and mortage borkers, I’ll be the first to admit.
Yet, they suck the money out of the pockets of all of us educated ‘fools’!
I often wonder the adage “a fool and his money …”; how did they get the money to begin with?
Borrowed it…
Inheritance.
You forgot the background check
In CA the first geographic area to undergo a pop/meltdown is the central valley, from Redding up North all the way down I5 and Highway 99 through Yuba City, Sacramento, Stockton, Modesto, Merced, Fresno, Bakersfield, and the High Desert Area. There is already mounting evidence that it is happening. I know many people that bought for 125-200K 5 years ago and feel very wealthy. Sorry folks. The wave will move soon move the coastal regions and we will be in full bubble meltdown purgatory. What do readers think will remain after the cleansing?
as long as you’re mentioning the high desert area, that’s when it spills down into the city.
the big city.
the really big city - los angeles
I’d say housing prices based on fundamentals and the end of speculating in RE at least untill human nature takes over again. Or a world like MadMax where we’ll all drive around in suped up dune buggies, get mohawks and have bloody fights over fuel.
Well, at least theCentral Valley has a long history of low education levels, high unemployment, and a boom/bust mentality to begin with. When the bubble detonates here (I live in Merced) we won’t so much be losing wealth as just going home.
Eloquent post despite the depressing topic.
There is already mounting evidence that it is happening.
Here is more evidence:
Inventory Explosion in Bakersfield, Prices Down 4.8% in One Month
Lander
Sacramento Land(ing) blog
can you just close italics in the next post?
I bet if I asked a realtor in MA, they would say that it is just normal for prices to drop in the winter, and that the .1% drop in YOY prices is just an anomaly…. It will get better in the spring!
After all MA just posted the first YOY decline in 10 years!
Ben, congrats on posting topic #200! Quite an achievement.
Ben is quite the reasearch guy ins’t he…
Ben’s blog is going to be in the top 100,000 sites soon!
Great job Ben!!
Actually, he is already nearing the top 30,000. That 100,000 stat is based on 3 months and Ben switched to this domain in early February. (View under traffic detail.) CONGRATS.
Yes– 35,665. Cool!
Show’s over- Time for the sh$tkickers in Fresno, Sanger, Clovis, Merced etc. to turn in the keys to their fancy BMWs & MBZs.
‘Ouch, it’s expensive to heat our new McMansion! Cancel that trip to Europe, dear, we can’t afford it this year.’
‘Maybe we can make some money by planting some prunes?’
I never thought I would hear Fresno and housing bubble mentioned in the same sentence.
MSN is on board. It’s turning into a regular media Frenzy.
http://moneycentral.msn.com/content/Banking/Homebuyingguide/P85323.asp?GT1=7925
OT: In Katrina’s Ruins, a Land of Opportunity
Residents, new buyers and real estate agents await a neighborhood’s rebirth. From the LA Times.
http://tinyurl.com/n94wc
“When Action News broke down the numbers, we found that in the past couple months, the bubble appears to be bursting. To realtors, it’s a market adjustment. But to some analysts, it’s a full-on correction.”
I want to hear the media say that phrase over and over.
“The bubble is bursting”
“you might have to move further away from the center of the desert to find something cheaper.”
From the “center of the desert” to where–the less fashionable “desert outskirts”? Give me a break, LOL!
Oh, my goodness. You mean people might have to move away from the center to places where it’s hot as hades, dry as dust, and barren as a desert?
Oh, wait…….
“you might have to move further away from the center of the desert to find something cheaper.”
From the “center of the desert” to where–the less fashionable “desert outskirts”? Give me a break, LOL!
My heart yearns to leave the hustle and bustle of the center of the desert and to experience the desolation and solitude that is Death Valley.’
Let us make no mistake about this news. As this information hits the TV waves multitudes of people will be hearing about what we have known and been reading about for months.
It amazes me how few people in our society are actually INFORMED on matters, especially matters dealing with their future financial security. Well, now the cat is out of the bag. Media outlets all over will monitor the ratings on these stories, which are sure to be good. They will then replicate them, this is the belated beginning of the end…
Odd predicament for the newsies. Banner ads are all real estate in San Diego right now but the people are reading bubble articles. They make more money from ads than subscriptions so what do they do? Depends on if they want money in the short or long run.
Most people are informed about nothing but American Idol.
who got kicked off? Just kidding -
Someone needs to inform the NAR that YoY numbers are severely lagging indicators that are meaningless in an age where a year can easily represent a price swing of $200 or more given the dimensions of the bubble. If you are in a pinch and need to sell, the YoY numbers have absolutely no bearing on anything. All they do is provide a false sense of security to those that can least afford to wait. The NAR seems to be in the business of screwing people every way they can.
clarifying… $200,ooo OR MORE!
Hurricanes hitting Florida RE, earthquakes shaking up CA, perhaps the day of judgment is at hand?
Yeah, it’s called renting.
It is about time to hear the central valley crashing. As I was driving from ABQ to SF Bay (all in one day, 19 hrs) - it really dawned on me how far some people live way out from their jobs to live in a poorly built, cookie cutter McMansion in places like Tracy, Patterson, Newman, Stockton, etc and drive at least one hour to jobs in the Bay. Those people will be screwed. Houses in Bakersfield, and such all looked the same. The smell of bovine fecal matter (or equestrian fecal) exudes all the way from Bakersfield to Tracy. People there need the deep hip waders, and will need more when blood starts running when the McMansions price fall, and the peoples payments go up. Boarded up buildings everywhere (like Palmdale, Lancaster in 1991) - and that area will be the same thing again.
You couldn’t pay me to live in Palm Springs in the summer. Or worse, El Centro or any of the bovine fecal areas down there - hotter than hades
The valley (there is really only one) is AG - if you farm, if grew up on a farm, if a rural lifestyle is what you really want, then the valley smells just about right. And frankly, if city boys and girls can’t handle the fact that the Valley ain’t pristine suburbia, tough.
“Realtors say the adjustment is great news for buyers, who are all of the sudden paying a lot less for the same homes.”
Great news for buyers: Last year you could have bought an unaffordable house under the delusion that its price would continuously appreciate at double-digit rates from now to Kingdom Come. This year, you can buy a slightly less unaffordable house under the reality check that says prices will fall, and knock a huge hole into your net worth.
I wish they had called you for a comment on the article and printed your thoughts next to the realtor’s comments. Everyone reading the article would have collectively nodded in agreement with you. Everyone, except a couple of morons that still think they can get rich buying over-priced real estate w/ no money down.
“I must say though, with all the finger pointing going on, that is the first I’ve heard that this all the “homos” fault.”
When you’re done hating the homos, don’t forget to blame the Jews. Moron.
Naw, it was the Japos.
(I’m a Japo - so it’s okay for me to say that)
Jappo?
Gay here
but fully aware of the demographics at work in Palm Sprgs
nonetheless- it bothers me that bigotry exists here-
Bigotry exists everywhere. Most people are just careful enough to keep it hidden.
Is it being careful or smart.
“At least one local realtor says many people believe they can’t afford to live here, when they really can. ‘If they would really look into the financing options available, including 100% financing programs, they might find that they do have an opportunity to buy.’”
These are the types of comments, and come ons, by Realtors that have destroyed any integrity they may have had in the past.
This may seem lucrative to desperate families and first time buyers, however, for any us who have purchased homes in the past and have some understanding about the volatility of these products, it is nothing more than an invitation to stress, heartache and financial ruin.
[trying to close the open italics]
Sheesh, twice in one thread.
If you use italics, close the tag!
I’ve been tracking Santa Clara County, SF Bay area inventory via Zip Realty. There is a discrepancy between Zip Realty and MLS, however I found something interesting trying to estimate net gain (inflow-outflow) If you search for houses listed within the last N days, here are the results:
Total Inventory: 2922
Last 1 day: 1
Last 3 days: 1
Last week: 214
Last Month: 1515
Looks like listings happen in waves, and there seem to be significant relistings. People still seem to be buying, which confirms my view of Silly Valley, Idiot savants in technology who don’t know arithmetic or economics.
Got to live somewhere or leave…
Rent or Buy..Pick your medicine…
/i>
There is a problem with ziprealty…it hasn’t updated in a few days.
“And homes that sold in 58 days just a year ago are now taking more than two months to sell.”
From 58 days to 2 months? This is shocking. Those two days must be the tipping point.
You beat me to it! ; -)
Remember Donald Trump, Sam Zell, the Toll brothers and many other RE tycoons kept saying there is no RE bubble. Well like the tech boom, everyone needs to do their own research and learn what is the reality of the matter. Can trust these guys at all just like you could not trust the insiders selling out at the top of the tech boom. Poor Joe Sixpack only follows the mainstream media and they want to sell him homes and cars mainly, look at all the ads.
I know I keep mentioning CL, but it’s a lot of fun. Here we preach to the choir, on CL there is more heat.
I had a guy in CA who didn’t think Bakersfield prices were unusual. I asked him why he thought prices were so high there? He gave me this explanation:
“Location. Bakersfield is close to LA.”
Now when I look at a map, it seems to me that Bakersfield is a pretty damn long way for a commute to LA. That would be like me commuting to Beaumont. I drove that freeway through Bakersfield once (weekend) and I can’t imagine driving that during a commute twice a day.
Is that REALLY the answer? All these people who are buying in Bakersfield drive 120 miles to work every day? All of them?
Is that REALLY the answer? All these people who are buying in Bakersfield drive 120 miles to work every day? All of them?
Absolutely not. I have a friend that lives in Ventura County that purchased a second home in one of the new developments there purely on speculation. I saw him 2 weeks ago, and he was concerned about it.
Is that 120 miles one way?
bake to LA is maybe 90 miles. the first 60 are fine, the next 30 are bump and grind all the way.
and you get to chug up and down the grapevine (steep grade) sucking up truck diesel and burning through clutches/brakes
I live in ventura county….I would think it is One way distance.
The road from bakersfield to LA is such that you can not drive on them everyday, you climb on top to drive on top of mountain ranges!
Along that toute, the farthest from LA from where one can commute for work is Valencia. Somewhere in the middle.
Nobody buys at bakersfield to commute to LA. The riverside (another semi desert area) is much better located on the east side for that purpose.
I do not what Industry is there in Bakersfield ( some big distriubution centre for the big retailers are located there). Does anybody here can enlighten on bakersfield and it future.
Thank you.
Many commute in from Palmdale which is in between LA and Valencia.
Sorry, meant between Bakersfield and Valencia.
“Is that REALLY the answer? All these people who are buying in Bakersfield drive 120 miles to work every day? All of them?”
People living in Modesto and Merced battle the commute to the Silicon Valley every day because they can enjoy home ownership. But you add up the depreciation, the fixed and variable expenses, the fatigue, and it doesn’t make much sense, IMHO.
I think she meant “homeowner’s”
“homos’”
Laura
NO she meant HOMOS. Blogs are littered with her stupid posts.
I think you are correct, but it was a rather poor choice of abbreviation to use in a public forum!
Remember Donald Trump, Sam Zell, the Toll brothers and many other RE tycoons kept saying there is no RE bubble? Well like the tech boom, everyone needs to do their own research and learn what is the reality of the situation. Cannot trust these guys at all just like you could not trust the insiders selling out at the top of the tech boom. Poor Joe Sixpack only follows the mainstream media and they just want to sell him homes and cars mainly, look at all the ads.
Keeps Joe in debt and he loses money on hot investments too. No wonder the rich get richer.
And the ignorant get…uh, ignoranter. Ain’t nobody responsible for Joe but Joe.
I draw my commute line at 40 mile tops. I live in Riverside and the worst commute I had was last year to Pasadena. Its not the distance but the TRAFFIC that makes you go crazy. I got lucky last year and was approached by a company 15 minutes away.
Odd, why are all comments showing up in italics? Did someonce forget to close a tag? ..
Yes…it was poster iknowso.
BayQT~
I live in Bako. The place is friggin exploding with new housing developments. I have *no idea* where the jobs are that are going to pay for these new mortgages. Certainly not the grubby dudes who drive trucks around in the oil patch or the undocumented farm workers. State farm closed an office in the LA area and headquartered here ~ 500 new jobs/families. But there have been *thousands* of new homes built in the past few years… and they’re still hard at it.
These builders are like a plague of locusts.
While I’m here, I need help with explaining the 70’s and 80’s busts to someone. I am aware that house prices went up and subsequently tanked in both periods, but I don’t know where to find specific examples. Some time ago (on this blog) several people gave personal examples, as well as information they kept track of of particular houses and their prices.
The issue is that the person I am talking with is considering buying in about 4 years and they don’t believe that there will be anything around in the $250K price range. I disagreed with them, but I need to show them what the past has proven.
Thanks!
BayQT~
The 70’s bust was a lot less dramatic in nominal terms, because inflation was so high, but I bought a house (from the mortgagor) for 26,500 in 1979 that had sold for 32,000 in 1975. That was after it had run up from 14,000 in 1971.
bayqt,
My parents’ home was sold in 1989 for $378,500 (basically the top of the mkt). In 1993, it sold for $290,000. That was a 23% drop. But, it gets worse.
Our next-door neighbor sold theirs for around $225,000 (same model). That’s a 41% drop. I just checked the public records, and it sold again in March 1999 for $320,000. TEN YEARS LATER, they still would have lost 15% from 1989 prices.
According to my mother, who was a RE broker, another similar home sold for $199,000 in foreclosure. That’s a 47% loss. (Although I’m not sure what kind of shape it was in.)
BTW, as others have mentioned, this was when the standard was 20% down, 28-32% DTI ratio (on VERYIFIED income), and 3-6 months reserves in the bank **after** the purchase.
FWIW, my father lost his condo to foreclosure in 1994. He’s never had debt in his life except for a mortgage (Great Depression baby). He never over-extended himself financially. Just had a problem with the HOA (tens of thousands of dollars in special assessments for things which didn’t need to be done), and couldn’t sell out.
Imagine what it will be like this time. Best of luck with your friend!
Dick Cheney just asked me to save more money on CNN…I knew I was doing something wrong.
Think about it…
The RE complex has already shaken every single nut out of the trees with all the creative financing schemes. Those that are unable to manage financially with ARMs restting in a declining market will need to sell — BUT TO WHO?
First-time buyers have no $$$$ and liquidity will be long gone. Marginal credit buyers already bought and will be net sellers. Those that stood on the sidelines watching the already upside-down investments continue to escalate for years? I don’t think they’ll be buyers until the prices support managable investment returns (speculators will be out of the game) which means prices will have to decline 40-50% in CA.
Gonna get very very ugly for would-be sellers. Bears will rule the game for years…
How soon do you believe this will become common knowledge?
Aready is! Countrywide Financial CEO Mozilo, a guy who, to put it mildly, doesn’t stand to gain from a collapse, sums it up nicely…
[“How would you characterize the housing market right now?
MOZILO: The market has turned. The psychology of the buyers for single-family homes has clearly changed. We are seeing it from the flow of loan applications. If I had to pick a time, I would have to say it turned in January.”
“SHILLER: The real question is: Will it be a soft landing, or will prices come down substantially? It’s hard to say because this is the biggest housing boom that this nation has ever seen, so we are in uncharted territory. I worry about a big fall because prices today are being supported by a speculative fever.”
“How severe are the price declines you are expecting?
MOZILO: I would expect a general decline of 5% to 10% throughout the country, some areas 20%. And in areas where you have had heavy speculation, you could have 30%. We will see…sellers back off from the prices they have been demanding. A year or a year and half from now, you will have seen a slow deterioration of home values and a substantial deterioration in those areas where there has been speculative excess.”
“SHILLER: In Los Angeles in the last cycle, prices peaked in 1989 and bottomed out in 1997. In that interval, L.A. lost 40% of its real value. I can see that happening there again or in any of the cities that have had tremendous price increases, and there are quite a number of them in this country. I think a pullback of as much as 40% is plausible in many places.”
“KARATZ: I don’t see a fundamental slowdown other than in the hottest markets. Things don’t continue through the roof forever. In some markets, 10% to 15% of buyers were speculators. You take them out, and the market drops 10% to 15%, and it takes three to four months for whatever overhang there was to be sold.”
“Where are the most vulnerable areas?
MOZILO: Miami and Fort Lauderdale. Las Vegas is another area where there is heavy speculation. That means people were buying three, four, five condos at a time and thinking they can flip them. Those are the spots we have identified where… we will only make loans when we know the person will live [in the housing].”
“SHILLER: The most spectacular cases are Phoenix and Las Vegas. They soared so suddenly. But others [are vulnerable, too,] such as San Francisco, San Diego, L.A., really much of California.”
]
Comment by REskeptic
2006-03-02 08:51:43
“you might have to move further away from the center of the desert to find something cheaper.”
From the “center of the desert” to where–the less fashionable “desert outskirts”? Give me a break, LOL!
Reply to this comment
Comment by bottomfisherman
2006-03-02 09:37:18
My heart yearns to leave the hustle and bustle of the center of the desert and to experience the desolation and solitude that is Death Valley.’
My heart yearns to leave the dusty, dry allergy aggravating desert to someplace more moist, preferably with a steady supply of water. Yeesh, everytime I hear someone say “move out to X desert community to buy an affordable house and commute” I want to slap them for being ignorant. Gas and energy prices are skyrocketing (with a good possiblity of these increases being permanent), less and less water is available, and people want to move out to the desert? Duh.
Anybody that moves to these isolated desert communities and becomes a long time resident there automatically deserves a “get out of hell free pass” when they die just for managing to put up with living in conditions approximate to Hades itself.
Perhaps I should have put a
after my post.
Comment by bottomfisherman
2006-03-02 19:13:00
Perhaps I should have put a after my post.
No need to. I assumed you were being sarcastic/joking, and the thought of living in Death Valley as being rediculous. Sorry if my post came off as ranting against you, when it wasn’t. I meant it for every person who is *serious* about moving way out into the middle of a desert somewhere hours away from their work, all so they can “afford” an overpriced home.
This CA thing is going to be too much. Bakersfield has a nickname of Bakers Pit. Too far to go to LA. It has boomed to the mountains going up to Tehachapi.
Hey Ben,
Could you please post a refresher on html tags needed to open (and more importantly, CLOSE) italisized type?
Thanks,
Sammy
Better yet, any open tags should be automatically closed at the end of each post.
Oh what the hell, let’s keep going
BROKEBACK HOUSING MOUNTAIN:
“1% negam loan resetting to 8%”
“6 condos to flip”
“record inventory before spring starts”
I WISH I COULD QUIT YOU!
btw, i’m ok, you’re ok.
test
gay here too, wow, fun to watch? Now thats funny. All that money I have stocked away, where no man can get his paws on it, or me for that matter, just sitting waiting for me to buy in another year or two. Hey, Investorgirl, wanna go out sometime?
test
test 2
test3???