“Bay Area Home Prices Continue Downward Spiral”
More November numbers from Dataquick in California. “Bay Area home prices dipped below year-ago levels in November for the second time in three months as sales held steady at a five-year low. The median price paid for a home in the nine-county Bay Area was $616,000, down 1.4 percent from $625,000 in November last year, according to DataQuick. Last month’s median was 4.3 percent below the $644,000 June peak.”
“A total of 7,204 new and resale houses and condos sold in the Bay Area last month. That was down 25.9 percent from 9,717 in November last year.”
The Contra Costa Times. “Bay Area home prices continued their downward spiral while home sales reached a five-year low. Nowhere was that drop felt more keenly than in Solano County, where the median sales price dropped 9 percent, or from $490,000 to $446,000, from November 2005 and homes sales fell 27 percent, according to DataQuick.”
“In Contra Costa County sales fell 28.3 percent from last year while values dropped from $589,000 to $562,000, a 4.6 percent drop. In Alameda County sales also fell 28.3 percent and prices dropped from $587,000 to $581,000, a 1 percent dip.”
The San Francisco Chronicle. “‘Absolutely, the bubble has popped,’ said economist Christopher Thornberg. ‘When a real estate bubble pops, it’s a slow-motion train wreck. Things don’t happen overnight.’”
“New home builders are slashing prices. As builders cut prices to move inventory and keep their shareholders satisfied, the resale market is feeling a spillover effect, said Keitaro Matsuda, senior economist at Union Bank of California.”
“Builders sold 1,128 new homes in November, down 21 percent from 1,433 a year earlier. The median price for a new home fell 10.1 percent to $602,00 from $670,000 last month in the nine-county region.”
“‘As lenders, we deal with many home builders and home builders are aware of what’s happening and they’re taking measure to adjust inventories quite quickly,’ Matsuda said. ‘That downward adjustment starts to influence the resale market as well.’”
The Monterey Herald. “Monterey County planning commissioners Wednesday gave preliminary approval to plans by Standard Pacific Homes to develop the lots on 16 acres in Spreckels. Project manager Peter Dunne said…no prices have been set. Initially, the thought was the homes would be priced between ‘the high $600,000s and $800,000,’ he said.”
“‘But the market has changed substantially since we first started,’ Dunne said.”
The Union Tribune. “San Diego County housing prices dropped by nearly 7 percent last month, the largest year-over-year decline on record. The association said 18,245 homes were on the market as of yesterday, up 29 percent from one year ago.”
“Robert Brown, an economist at Cal State San Marcos, said he was not so certain that prices will settle rather than continue to drop in the next few months. ‘I think a lot of that depends on people’s expectations,’ Brown said. ‘If they expect that (decline) is likely to happen, there’s a greater likelihood that they’ll stay out of the market and wait and see.’”
The Orange County Register. “Beverly Ann Huffman couldn’t sell her home even after doing something she vowed not to do: dropping the price by $20,000. So the San Juan Capistrano woman decided that she really didn’t need to sell it after all and took it off the market.”
“‘There’s a lot of places in the area for sale. A lot that aren’t going anywhere,’ said Huffman. ‘I think it’s that way everywhere. I think it’s indicative of the market.’”
“Data released Wednesday somewhat bolster Huffman’s conclusion, showing that Orange County home prices failed to post an annual gain for the first time in 9 ½ years. Sales volume continued to be below year-ago levels for a 13th straight month, with 2,475 homes sold, DataQuick reported. That’s the slowest November since 1992 and the third-lowest number of sales for the month in DataQuick’s records.”
“November was the fifth straight month that prices dropped from the month before since hitting the record price of $646,000 in June. It’s the longest monthly losing streak in the 19 years since DataQuick began tracking O.C. real estate transactions.”
“The median price for resale houses, which make up nearly two-thirds of the market, actually dropped from year-ago levels for the first time since February 1997, DataQuick figures show. Last month’s single-family home median was $660,000, or 1.5 percent below the November 2005 median.”
“Resale condominium prices likewise showed negative appreciation, falling 2.4 percent from last year to a median of $439,000.”
“‘Prices are trickling down,’ said real estate consultant John Burns. ‘There’s so many homes that are listed for more than they can sell for.’”
“Wally Welter, a home shopper from Irvine, said there are huge disparities between the amounts that homeowners are asking for their properties. Identical homes could have a $100,000 difference, he said. ‘It’s the reluctance of the sellers to face reality.’”
“Orange County homeowners are missing mortgage payments and losing their homes to foreclosure in rapidly increasing numbers, as the housing market slumps.”
“Banks sent owners 665 notices of default in November, a 125 percent increase from a year ago and an 11 percent rise from October, DataQuick reported. It’s the highest monthly total in more than seven years.”
“Last month’s total of 102 foreclosures is 900 percent higher than a year ago. October’s foreclosure total was the highest in more than six years. Andrew LePage, a DataQuick analyst, said defaults are approaching a normal level. ‘We don’t think it’s time to sound the alarm,’ LePage said.”
‘ Last month, the median home price hit $426,000 in Riverside County, up more than 5 percent from a year ago, and $380,000 in San Bernardino County, up almost 9 percent. In the same time, home sales dropped almost 36 percent in Riverside County to a total of 3,794, and almost 27 percent in San Bernardino County to 2,926.’
‘ Esmael Adibi at Chapman University in Orange, said he believes median home prices in the two counties are being propped up by sales of new homes, which generally cost more than resale homes. He said builders struggling to sell completed homes have been trying to avoid lowering prices by offering other incentives, including free upgrades and below-market financing. Adibi said the value of a typical house probably has not increased when the incentives are factored out.’
‘Orange County residents have become so accustomed to rapidly escalating property values that many have come to believe that it’s a law of nature – sort of like gravity – that homes will be worth more next year than they are today. Unfortunately, some people are learning painful lessons. On Wednesday, the Register reported on some families who purchased homes in the Heritage subdivision in Garden Grove who are angry at their builder, Brandywine Homes, for lowering prices on the newest models by about $140,000. It’s miserable to all of a sudden learn that your $850,000 home is now worth $710,000. But this is how markets work.’
‘A hot topic in the Conejo Valley Unified School District and throughout other parts of the state has been the threat of declining enrollment. And for the first time, the numbers show that a significant drop is coming. ‘For the first time in many years, they are predicting a pretty steep (drop) over the next five years,’ Jeff Baarstad, assistant superintendent said.’
“the Register reported on some families who purchased homes in the Heritage subdivision in Garden Grove who are angry at their builder, Brandywine Homes, for lowering prices on the newest models by about $140,000. It’s miserable to all of a sudden learn that your $850,000 home is now worth $710,000.”
I’ll bet that those families are not to worried. After all, they weren’t speculators, they just bought a house they can comfortably afford on a fixed interest rate, and they plan to live there until they die. They were all making $280,000 a year or so, and all had saved up a $170,000 down payment, so they really don’t have much to worry about. Right? RIGHT? RRRIIIIIIIGGGGGGGGHHHHHHHHHT!
Well said, arroyo. There are no laws saying you must own a house, and no one held a gun to their head. By stretching their finances and agreeing to an absurd price, people like this only contribute to the problem. If more potential buyers had used common sense and held off then we wouldn’t be facing such a huge drop. I have no more sympathy for this jerk than I do for someone whose stock value declines. Past performance is no guarantee of future results. Caveat emptor, jackass!
But I think one of the jerks buyers in that project ,Mr Dunn, admitted that he couldn’t afford the loan he got approved on that would go up to 6k a month. With the price of this expensive property going down 140K in that short of time the Dunns can’t even bail from the loan by refinance or selling .
This borrower Mr. Dunn was stuck and he knew it. Mr. Dunn also had issues with the original appraisal being inflated and claims of builders bad faith .
People wonder why builders hate to lower prices on tracts ,but it’s because the prior buyers and sold contract people will have a fit of course .
This incentive thing was a way for the builders to try to get around the prior purchasers/pending contract discontent with prices falling .
I have seen people go into foreclosure because they lost their job ,or some emergency exhausted their reserves ,but people going into foreclosure because they didn’t really qualify for the payment to begin with is a big new factor in the new age foreclosures .
I blame those bastards at KPMG
From Suzanne, I researched this!
2006-12-14 18:04:05
“I blame those bastards at KPMG”
Too funny - good one!
rob
380k to live in San Bernardino is freckin NUTS! I would love to know what person who works in the Inland Empire especially San Bernardino that could afford a home at $3800 a month (assuming fixed and very little down). The average househould inocme is 60K. EFFING CRAZY!
I drove up to crestline,lake arrowhead a few weeks ago and had to stop in san bernardoo for gas.that town is gang banger heaven,grafitti everywhere.it looked as bad as compton ,east la.
60k in San Bernie yea if drug dealing is your occupation
I have to point out, San Bernardino County includes places like Claremont, Redlands and Running Springs, not just City of San B. The $380K median price given in Ben’s post above is for the County.
You are correct, but the bad areas of SB County outweigh the good ones…
P.S. Claremont is in LA County…
“380k to live in San Bernardino is freckin NUTS! I would love to know what person who works in the Inland Empire especially San Bernardino that could afford a home at $3800 a month (assuming fixed and very little down). The average househould inocme is 60K. EFFING CRAZY!”
Just a little side note on SB Commercial RE: Corporations are setting up their operations in tucked out-of-the-way barren stretchs of SB county. Industrial operations,warehouses,truck yards,trucking firms,construction yards love to have operations in SB because of lack of strict controls by the local gov’t agencies. Such dismal places as south Fontana, roubidoux,colton, parts of redlands,moreno valley,ect, are seeing uncontrolled industrial sprawl which leads to environmental degradation and probable raw industrial dumping and strippage/tear-outs of assorted cracker-shanty plots(the fontucky effect). That is why trucking firms love fontana/Sb metro region-they can manuever their monster diesels pretty freely and without gov’t hinderances/restrictions.
All this is creating an environmental toxic nightmare in many industrial pockets throughout the greater SB metro region and fontana: this should erode homes values in SB county as soon as the easy toxic loans to illegals dries up and/or foreclosures skyrocket.
Ben Posts ” ‘ Last month, the median home price hit $426,000 in Riverside County, up more than 5 percent from a year ago, and $380,000 in San Bernardino County, up almost 9 percent. In the same time, home sales dropped almost 36 percent in Riverside County to a total of 3,794, and almost 27 percent in San Bernardino County to 2,926.’
Wow! I can understand the decline in sales but? Up 5% and 9% in the IE right now? This I do not understand how this could be? Even in the MSM Chino Ca. and a 25 mile circle have been labled ground zero for a massive decline.
We are really behind the curve here in the So. Cal. area! AZ and Floridia might as well be Mars.
If you believe that, you fell for the snowjob. Prices are down, appraisal fraud UP. This time the appraisal fraud is being committed by the builders, the buyers and the banks in broad daylight. A $30-50,000 in ‘upgrades’ or kickbacks should be reflected in the median and it isn’t.
I estimate that there would of been a additional 10% decline had the incentives/kickbacks been included in the price decline tally .I am also sure that the loan amount/appraisal was not reduced accordingly to adjust for the incentives .
“Ben Posts ” ‘ Last month, the median home price hit $426,000 in Riverside County, up more than 5 percent from a year ago, and $380,000 in San Bernardino County, up almost 9 percent. In the same time, home sales dropped almost 36 percent in Riverside County to a total of 3,794, and almost 27 percent in San Bernardino County to 2,926.’”
The explanation for the yoy%increases in a slowing sales volume is a combination of causes: the already mentioned builder incentives,the fact that all new contruction in IE has been exclusively 4 bd/3 bt monster mcmansions, which would cost way more than the older smaller existing home sales of past several yrs. Remember, smaller older sfh’s in SB metro region were averaging less than $300,000 as late as mid- 2006, so naturally there would be yoy% increases as virtually all of the recent sales have been for the brand new 4/3’s on 5-6000 lot. Probably there is still even now the pushing of toxic now-down/IO/neg am/option arm loan products, enabling even average income/multiple income immigrant families to qualify for $400,000-450,000 ’starter’ sfh’s in the brand-new tract developments. The real popping of the IE bubble will start as soon as the waves of foreclosures skyrocket, due to FB’s ditching their mortgages upon the first re-sets, which will occur over next 1-2 yrs all over the IE.
If gas prices start climbing again, as i suspect they will early next year, then the IE bubble will collapse faster. But pop it will.
Thanks PeterM….I see… but still a “Perfect Storm” is comming like you say!
Yes the perfect storm is coming!
ETA: Spring/Summer ‘07
note: this will not be short then it’s over storm.
“Robert Brown, an economist at Cal State San Marcos, said he was not so certain that prices will settle rather than continue to drop in the next few months. ‘I think a lot of that depends on people’s expectations,’ Brown said. ‘If they expect that (decline) is likely to happen, there’s a greater likelihood that they’ll stay out of the market and wait and see.’”
Geeeeeeeeeeeeezzzzzz It takes a senior economist to say such platitudes of common sense???
Notice how that “expert” puts an apple at the end of a set of oranges to save his ass from a direct interpretation.
And “expectation” is what drives the true comps and prices. The Oracle has spoken.
I guess seller’s expectations to get a lot of nothing don’t materialize? How come you idiot? Heck my expectation is to be rich and not working since I was 5 and somehow I still have a 9-5 job to make ends meet.
“I guess seller’s expectations to get a lot FOR nothing”
My bad
“Geeeeeeeeeeeeezzzzzz It takes a senior economist to say such platitudes of common sense???”
Yep, just like it takes a $10,000,000 tax payer funded study to determine that it’s cold in Alaska and water there freezes.
I am convinced that virtually all non-private research is a joke. These guys exist to spew whatever it takes to keep the funding alive.
“all non-private research is a joke”
So you put your faith in what comes out of, say, DataQuack instead?
..good point..
I meant scientific research.
For example, the I think the guys researching Cow Beetle Dung are much different than the guys researching cancer drugs at Merck..
Now, there are always exceptions, but I think a lot of the research that goes on in the public domain is junk science.
You saw a couple of studies that made you mad and now the government is foolish to spend on research. Oddly enough, networked computers count among the benefits of gov’t science, so maybe you should try to understand a little bit more about that tube you are on and where it has been. With all due respect, when you conservative loonies get off the subject of housing the value of your words quickly goes to zero. Have a nice stem cell.
“you conservative loonies get off the subject of housing the value of your words quickly goes to zero”
…..and Liberal Loonies are any better?
i think dataquick is pretty accurate.they do show losses which the realtors fail to do.
No they are not. I just got word from the street that they are fluffing the numbers it’s worst than they say. Way worse.
“i think dataquick is pretty accurate.”
On what basis can you assess this? I really don’t believe it is possible for somebody without (monopoly) access to their data to make and objective determination as to the accuracy of their reports. And it may be important for purposes of maintaining good relations with REIC constituents who provide their data for them to shade their estimates in a direction that downplays the seriousness of the real estate bust.
“it may be important for purposes of maintaining good relations with REIC constituents who provide their data for them to shade their estimates in a direction that downplays the seriousness of the real estate bust”
From what I hear that would be a pretty accurate assesment.
Well, I guess there can be differing opinions on this… Especially since there is a huge difference between economic, medical, and scientific research …
After working in government labs and then moving to private industry, I am of the opinion that “research” in private industry is highly suspect. There’s too much conflict of interest in private industry to make the attainment of true knowledge possible.
The interest in creating a sellable product on a fixed schedule motivates private labs to ignore inconvenient details. Meanwhile, the “meritocracy” compensation system motivates individual researchers to hide their mistakes and overstate their successes. It is no secret that virtually all advancements in science are primarily the results of investigating inconvenient details and unplanned failures. When everything goes exactly as planned, there is no need to conduct research.
I am also of the opinion that the majority of junk science comes from private research. Private research generally lacks the checks and balances system that makes science work. Research needs to be validated by people who are antagonistic to your cause, not by people who are “aligned” with you. Real validation is impossible to do when the result (not the quality) of your research influences your paycheck.
Agree. There is some value in peer-reviewed journals. Referees may not be antagonistic, but they usually don’t want to “give the house away” so to speak.
Yeah. Just ask a ‘thalidomide’ baby.
I worked for a very small aerospace company. We received almost all of our funding through government research contrats. The company actually came up with quite a few new technologies which addressed US military concerns. Unfortunately, there is a very real political element to moving your new technologies from science experiment to fielded system. One systetm I worked on was far superior in cost, utility, and ease of implementation compared to the competing systems. Unfortunately, the program managers in the goverment had spent substantially more treasure developing a competing system which did not deliver the same results as the system I worked on. In the end, the government found a way to cut my system out of additional development dollars for political reasons. They procurers of the technology were more worried about CYA for spending a ton of money on a system that didn’t work very well instead of developing the system which showed the most promise.
There are political motivations for all members of the bueracracy,and they frequently stiffle advancements in favor of being “right”.
You think this does not happen at large private industries? The bureaucracy is a function of size; it’s not a private vs. public issue.
Frankly, these kinds of things are happening more and more in public technology decisions these days because the public sector has adopted some of the private industry’s bad habits, like the idea that a good manager is a good manager, regardless of his technical expertise. This idea was unthinkable twenty or thirty years ago, but recently it has permeated even organizations like NASA. I was quite relieved when the new NASA chief turned that around and fired most of the management staff with the justification that “you do actually have to be a rocket scientist to do this job.”
” These guys exist to spew whatever it takes to keep the funding alive.”
At most points in our lives, don’t we all……
impoder ,where have you been lately ? No, you don’t have to answer that …….
Anyway , ” At most points in our lives ,don’t we all ….”
Was go on vacation the answer ?..he he …
I am convinced that virtually all non-private research is a joke. ”
Having been in both the public and private sector, I can tell you the data in the private sector is skewed to the point of view of whoever is paying for the study. In the public sector the data is skewed to cover the bureacrats (and politicians) asses!
The Oracle has spoken……..is that a typo?
Didn’t you mean orifice?
Being a Bay Area resident and someone who became disenchanted because the last place I made an offer on and didn’t get ended up the rental list of the property management company we rent from, I say ahhhhh too bad. Cry me a river!
It couldn’t happen to a better bunch of greedy bastards than the NIMBY’s who won’t even let’em build a cemetery in their city because population growth is bad whether the new residents are dead or alive
When a 40 year-old 3 bed, 1 bath rundown next the railroad tracks POS in Livermore CA somehow seems to be worth $500,000 then the recession and ass kicking coming is well deserved. Why in the world would a family making the $100,000 plus a year it takes to buy one of these dumps want to live in something like that anyway?
This is the joke of California…people expect gold for garbage. And they wonder why these sh*tboxes sit on the market rotting with not a foolish buyers in sight.
Ha ha…right there with you. And most REFUSE to believe that real estate ever goes down, even those who were here through the last recession. Many are finally getting it and seeing the bigger picture (national/global credit bubble, prices disconnected from incomes, etc.).
But I agree that it couldn’t happen to a better group of people. I know people who bought in late ‘05 and this year. All took out toxic loans. None thought they’d ever need to pay them back because they’d sell for gazillions more than what they paid. Whoops. Jingle mail is starting, just in time for the holidays.
“I know people who bought in late ‘05 and this year. All took out toxic loans.”
http://tinyurl.com/vhb8l
Sounds like the situation’s going global.
Asian Central Banks May Spook Investors in 2007:
By Andy Mukherjee
Dec. 15 (Bloomberg)
“In Korea, the reserve requirement on demand deposits is going up by 2 percentage points after Dec. 23 to deflate a housing bubble. The decision, announced by Bank of Korea last month, is the first increase in reserves in almost 17 years.
Fragile Korean Consumer
The question in Korea is whether monetary policy will achieve a soft landing in the housing market or cause it to crash.
According to Samsung Economic Research Institute in Seoul, housing prices nationwide rose more than 11 percent in the first 11 months of 2006, compared with less than 6 percent last year. In overheated pockets, price escalation is even more rapid.
With floating-rate mortgages accounting for 98 percent of the total, a sudden drop in home prices may further depress consumer sentiment, which has yet to recover from a credit-card bubble that burst in 2003.”
What state is this korea in?
““In Korea, the reserve requirement on demand deposits is going up by 2 percentage points after Dec. 23 to deflate a housing bubble. The decision, announced by Bank of Korea last month, is the first increase in reserves in almost 17 years.”
Holy cow. Can you imagine what would happen if the Federal Reserve pushed this down the collective throat of the U.S. banks? It would be catastrophic.
The reserve requirement for demand deposits in the US is 10%. The effective reserve requirement is about 6% because banks optimise their operations to reduce reserves.
Now if the fed were to require reserves on savings accounts and time deposits, that would be a disaster, due the sudden loss of loanable funds in the system.
“The reserve requirement for demand deposits in the US is 10%.”
It used to be. Very quietly was changed to almost zero.
Even 10% is a joke of massive liquidity hitting in the form of credit creation. While the FED preaches tough on inflation. Just another scam!
Because this is essentially creating money out of nothing. Think about it. You deposit $10 the bank loans out $9. Then you apply for a loan. You deposit your loan money in your bank and the bank loans out 90% of that! It doesn’t take very long to have fractions chasing fractions in regards to the bank deposits and the loans supposedly backed by them. In reality the fractions just keep getting smaller and smaller. This is how money is created out of thin air.
This is why the dollar is worth 20 cents of what it was in 1972!
And the FED acts like their not responsible for inflation. Like it happens to be part of a normal business cycle.
It is a BIG SCAM! Just another way to steal from the working people.
For more information on the FED see this movie”
http://video.google.com/videoplay?docid=-4312730277175242198&q=America%3A+From+Freedom+to+Fascism&hl=en
For more info on the FED watch this movie:
http://video.google.com/videoplay?docid=-4312730277175242198&q=America%3A+From+Freedom+to+Fascism&hl=en
sounds just like areas in Mass…
I hear you Ray. Sounds like my stomping grounds are just west of you. It is absolutely a freaking joke out in east Alameda County, and yes we will get our asses kicked. I know a young couple that works part-time in the grocery business and they paid something like $465K for an old POS in Livermore in ‘04. Even two full-time grocery workers can’t pull in $100K, in fact not even close, more like $80K. How toxic can that loan be? With all the units still being built around here, we should have some spectacular fire sales.
Huge price drops coming from the East in Mountain House moving slowly West towards Pleasanton. I just hope Pleasanton (my town) hits rock bottom soon, then I can call that POS real estate agent who harassed me about why I was stupid to pass on the overpriced house I looked at with him and use his shady loan guy. Glad I came to my senses.
Mountain House is a joke. TONS of speculators there. I too will be happy if big declines hit Pleasanton as it is the nicest place in the tri valley, IMO. Lame politics and lots of pretension there, but a nice community within reasonable distance to the peninsula, San Jose, Oakland, etc.
I agree with you. That’s why I bailed 13 years ago, after growing up in Palo Alto and Santa Cruz. I could never buy a house.
Wasn’t 13 years ago before the internet was invented? Santa Cruz was just a big post quake hole in the ground at the time.
The internet was not only “invented” more than 13 years ago, I was using it myself at that time.
Actually the Internet was not “invented”, it was “developed”. It is a more modern version of a network call Arparnet, which had been around since the 1970’s.
And the mouse, e-mail, and GUI interface all came from Xerox’ Palo Alto Research Center - products of the ’70s as well.
“Last month’s total of 102 foreclosures is 900 percent higher than a year ago. October’s foreclosure total was the highest in more than six years. Andrew LePage, a DataQuick analyst, said defaults are approaching a normal level. ‘We don’t think it’s time to sound the alarm,’ LePage said.”
“defaults are approaching a normal level”
Given the amount of time that must pass before a bank can actually foreclose, shouldn’t someone in trouble be able to sell before default/foreclosure becomes an issue. It would seem to me that if the market/house was fairly priced and the market was truly efficient, then the “owner” could sell before things got out of hand. True, there will always be a few exceptions, but I think either or both the absolute numbers of foreclosures taking place or the rate of increase in foreclosures is very telling. If nothing else, it should be interpretted as a signal that the market is not and has not been fairly priced for a long time. Other-wise, those facing foreclosure would be able to extricate themselves from the bad situation, by simply selling and being upside would not be an issue. I would define fairly priced as “affordable”…where 10% - 20% down, 28% of gross and some reserves on the bank would be the norm. I think the fact that people are so stretched and on such a precarious position to begin with is evidence of a bubble.
Looks like DataQuick has changed their language again:
“October 17, 2006:
“Foreclosure rates are coming up from last year’s low point, but are still below normal levels.”
http://www.dqnews.com/RRBay1006.shtm
November 15, 2006:
“Foreclosure activity is rising but is still below average.”
http://www.dqnews.com/RRBay1106.shtm
December 14, 2006:
“Foreclosure activity is rising but is still within the normal range.”
http://www.dqnews.com/RRBay1206.shtm
January
“Foreclosure activity is rising but some economist says its normal.”
Febuary
“Foreclosure activity is rising but those who can afford their mortgage will be fine.”
March
“Foreclosure activity is still rising but it is not a sign of the coming of the antichrist.”
April
“Hail Satan.”
May
“Foreclosure activity has been temporary frozen by the NewBank™ of the Federal Reserve pending new rules and a national clearing house.”
RFLMAO! Thanks, I needed a real good laugh tonight!
Forclosure activity waived hi to normal levels and then passed on to heights not seen since the great depression.
Bingo. It cracks me up when real estate apologists talk about various indicators becoming “normal” or “average.” Yeah, they’ve fallen from excessive levels to average levels — via a trendline that looks like a Wile E. Coyote cliff-plummet. When the graph looks like that, it tends not to bonk into a concrete floor at “normal”. It keeps going.
shouldn’t someone in trouble be able to sell before default/foreclosure becomes an issue.
You’re missing the obvious - houses are being foreclosed because people owe more on them than they are worth. Of course any rational owner would rather sell than be foreclosed, and leave with some cash and a good credit rating. While the market was rising, owners in trouble could do just that.
This disturbs me, because the Bay Area is different, and special, and everyone wants to live there.
and Google will save them all.
Furthermore, it’s a new paradigm here. The market will recover by spring and by 2008 there will be no real estate left to buy. None. Those of us who miss the window will be forever relegated to being bitter renters….at 25% of the cost of owning.
LOL! I love this blog! =)
Remember when Yahoo and AOL were giants to rule the world?
A better Google will come one day soon, probably started by Google veterans.
Yahoo? Is that still a company or is it finally back to being a race of beings from a classic satirical tome? Oh the irony, the bitter, bitter irony.
They have changed their name to Yee-Haw, and the new logo is and enormous bomb falling with Slim Pickens aboard, waving his hat like there’s no tomorrow.
:-/ Disruption, Destruction, Creation, Innovation is the cycle of the internet. It’s not for everyone. Most can’t take the disrupting sensation of having their monotony disrupted. Destruction of the comfort zone lays out those who aspire to retirement on the job. But those who readily embrace it know the passion and amazing excitement that comes from getting to the other side of it. Nobody in the internet space should even be hoping for a nice comfortable perpetual hockeystick skyward. Those who do must be the same people who thought housing prices would only go up forever and ever and ever… out of the ashes baby.
All companies wax and wane but it’s really getting far ahead of the curve to suggest it’s going to happen in the foreseable future.
Why Google veterans? Why would they sh&t on their own stock options?
Ask.com is interesting but they don’t have the ad technology.
“Why Google veterans? Why would they sh&t on their own stock options?”
Exercise them, *then* s**t on them, and use the proceeds to fund their start-up.
there are no bag holders!
But many “nut sack” holders….
Har Har That’s even funnier since this kick-ass blog uses Google’s serivce.
There’s a gold rush mentality in SV. People come to SV to make a killing. Most fail but YouTube happened in a SV Denny’s.
remember when Boston was the High Tech competitor to SV? I do.
Cool foreclosures in “desirable” Berkeley showing up on Zip Realty:
http://tinyurl.com/yzlu5d
799,900 is a listed price though they are asking you to “submit all offers”. I grew up two blocks away from this house, when all is said and done 50% off seems like the right price to me. Still tough to afford with a “real” mortgage for most folks… make that 60% off!
Bummer dude!
“More homeowners fall behind in payments Californians better than U.S. average meeting obligations”
Marni Leff Kottle, Chronicle Staff Writer
12/14/06
“The delinquency rate was highest in the South, where homeowners in Louisiana and Mississippi are still struggling to recover from Hurricane Katrina, and in the north central states, which have been hit by a significant loss of manufacturing jobs. California’s delinquency rate was much lower than the national average because of the state’s strong job growth.”
CA is holding better than national average and the Bay Area is doing better than other parts of CA.
For places such as San Diego and Sacramento, where home prices rose more rapidly during the boom market than they did in the Bay Area, Rosen expects a bigger jump in delinquency rates and foreclosures.
“The Bay Area is going to do better,” he said. “Housing prices went up, but they didn’t explode like we saw in San Diego or Sacramento.”
Real estate is over priced and people have used toxic loans _but_ the data seem to indicate other places are doing worse and within CA, so far, the Bay Area is still a better market.
I just dont get the allure of san fran,cloudy crowded drizzly overcrowded bums everywhere politics too liberal for me.
Same here. Have spent a lot of time in LA. A friend in Berkeley questioned me about why I preferred So Cal, and after about 15 min of explanation, she said, “I get it! You’re tired of Good Taste.” I said yeh
Just tell her you like the warmer winters in SoCal
warning: berkeley public nudity ( but prepare to laugh)
http://zombietime.com/how_berkeley_can_you_be/
LOL - thanks for the link! Well worth the time.
Great link!
I guess it’s the draw of the liberal politics, and the fact most people don’t hang out in the Sunset.
Last year my hairstylist who owns a home in Cupertino said: “home prices never decline here”, you are waiting for lower prices that will never come. My hairstylist truly likes me and this was her honest caring advice.
This year my hairstlytist says: “ok, some bay area home prices are declining, but never in THIS particular area”
With respect to the inevitable housing crash (even here), life has become way too predictable to be any fun.
As a buyer my expectation is to get a free house, therefore based on Robert Brown’s logic I shall get it if I stay out of the market
In practice no one wants to catch a falling knife so the trend will be exponential.
“I’m bringing renting back;
them other boys don’t know how to spend.
I think it’s special, what’s in your checking account?
so turn around and I’ll pick up the slack.”
“Why in the world would a family making the $100,000 plus a year it takes to buy one of these dumps want to live in something like that anyway?”
You know what’s really sad ( or really stupid depending on how you look at it) is that I’m one of those guys making 100k, plus what my wife makes and we STILL can’t really afford anything here. I mean… let’s say we bought a 500k POS. The payments would eat up ALL of our income, and as noted, homes are still around 100k above that. So the irony here is that without fancy exotic loans, lower income people can’t afford… middle income people can’t either… and neither can upper middle income. What’s more is that after working my ass off to get to where I am, I have NO desire to blow my hard earned cash on some overpriced piece of garbage just to say I “own” when it would simply make me a work-zombie.
I wake up every day wondering when this insanity is going to stop. But hey- It’s California. it probably won’t.
I think this is a reasonable question - Why not move to some where that is more affordable? Where you could own a home and still have money left over? I spent a lot of time in the BA in the early 90’s and could never reconcile making a full commitment to settle there - they jobs paid great, the opportunities were “endless” the prospect of owing something would always be “just a few years away”.
Trust me. I’m well aware of that. Therfore I rent, save, and invest wisely. I would never buy here unless it made economic sense. Hopefully most everyone else on this board is also aware of other ‘options’.
I have a younger brother (10 years) who is off to Seattle, he decided that he could not achieve the “American Dream” in LA.
Good luck with affordability there.
I am sure you are correct. But on a relative basis…
Relatively speaking, yes. If he is bringing wealth with him, then it is a non issue. But as far as median price vs. median income, the Seattle area is one of the worst in the country. And affordability goes beyond housing. The cost of living period is absurd.
Yes everyone please move out of CA to wherever the H you came from.
Apparently in 1994 360,000 people moved out of CA. It can happen again!
Yes everyone please move out of CA to wherever the H you came from.
where are you going to move to, since at some point, you or your relatives moved here?
On that note, 2006 was the first year in a long time that our fair state had more people moving out than moving in. That may explain why attendance at open houses is down.
OK, ship my relatives out, but I was born here.
Everyone else please leave.
Yes were all immigrants I was just kidding. Maybe in 500 years my future descendents will be granted monopoly access to open casinos by the majority hispanic population as reparations for what they are about to do to us whites over the next 500 years sorry for run on sentence.
I thought about that, maybe I’ll move back home to Cambridge, MA …. wait, it’s even more expensive than California and it’s freezing and gloomy and people dress bad. Hmmm, New York where I was born. Oops- worse. Well, I guess I’m stuck in LA with other immigrants from everywhere on planet Earth.
Yeah! I lived in Camb Mass for many years, ugh. The TRAFFIC in Boston absolutely makes LA look orderly and sane. Freezing yes. Dirty, too. SOME streets in LA get cleaned regularly.
people moved out because of the Northridge quake - you are mistaken….. Jan 1994…. people had enough and just left.
360.000 ? I’d say that many come across the border a month….In New Orleans the city hospitals are in crisis as the illegal birth rate is increasing exponentially in a city already in crisis….Of course I guess that is the grand plan, import the slave labor ,as business’s cash out ,and let the tax payers to clean up the mess. Being that sub-prime and illegal buyers are the hot market now I am sure ….
“Why not move to some where that is more affordable?”
My answer to the question: Replicating my current live/work situation in a less expensive market would be just this side of impossible (strong salary relative to high cost of living, very short commute, walk to a nice downtown, tremendous weather). And I really don’t have a problem with renting while this mess works itself out. I’ll continue to rent a place I want to live in, so regardless, I’ll have the living situation I want, and the disposable income.
Replicating my current live/work situation in a less expensive market would be just this side of impossible (strong salary relative to high cost of living, very short commute…
Of course everyone’s situation is different, but in some cases the cost of living differences from region to region can be the difference between night and day. For example, I know that homes in Nashville and Atlanta can be had for as little as 75k. Let’s say you made 60-100k in the BA where homes cost 600k+.if you worked for 10 years or less- maybe even 5- and saved your money wisely, you could buy one of these homes in another region outright, have money leftover, and basically have all of your major living expenses paid for before you are 30. In essence, everything else you would be saving for would go to retirement. Thefore you will be anywhere from 20-30 years ahead of the same person who stayed behind and decided to shell out 50+% of their income on housing, and only after they turned 40. Housing prices will go down in CA, but they will never be cheap. By the way- the temp in Nashville yesterday was 64 degrees and sunny.
I hear ya on different situations and would agree whole-heartedly if my situation was as described above.
“Robert Brown, an economist at Cal State San Marcos, said he was not so certain that prices will settle rather than continue to drop in the next few months. ‘I think a lot of that depends on people’s expectations,’ Brown said. ‘If they expect that (decline) is likely to happen, there’s a greater likelihood that they’ll stay out of the market and wait and see.’”
Judging from what I know of SD-area residents’ religious belief that real estate always goes up, I am guessing the SD Union Tribune report that area home prices just registered their largest ever YOY decline has struck many readers like a lightening bolt out of the clear blue sky. This kind of expectations shock may affect the market for more than just a few months going forward, given the magnitude of risk involved when (at least in some cases) million dollar properties have dropped by 25% in value over one year’s time. It is great fun to be a SD homeowner when you are getting an extra $60K+ in annual spending money through your home equity gains, but nobody wants to try to catch a falling knife.
But there is a silver lining for area residents, which is (according to Torto Wheaton) that SD homes are renting at $0.38 to the dollar of ownership costs, providing an affordable alternative to buying an overpriced home. This also suggests that a big price correction will be needed to bring home prices back in line with rents.
“I’m bringing renting back;
them other boys don’t know how to spend.
I think it’s special, what’s in your checking account?
so turn around and I’ll pick up the slack.”
Ithought Like LA, San Diego took a big hit in home prices late 80’s and to mid 90’s. If so, those in shock now can only be people who where not in the home-owner crowd back then.
‘Orange County residents have become so accustomed to rapidly escalating property values that many have come to believe that it’s a law of nature – sort of like gravity – that homes will be worth more next year than they are today. Unfortunately, some people are learning painful lessons.”
Unfortunately, the law of gravity often translates into a familiar saying: “What goes up, must come down…”
My negative am loan creates negative gravity.
All the negative am loans in California could propel the next space shuttle launch.
the actual houses themselves could have the potential to take flight, were it not for all of the granite weighing them down.
That shouldn’t be a problem. After all, houses only go up.
On one of yesterday’s threads I posted something about my counting builders’ billboards on the WB I-10 from Palm Springs in to Fontana. Forgot to mention the one that made me LMAO. With my newfound bubble consciousness you can imagine my reaction to a billboard advertising some installer of … GRANITE COUNTERTOPS.
“That shouldn’t be a problem. After all, houses only go up.”
Indeed. We know this from the front cover of Lereah’s books.
Splat!
“‘There’s a lot of places in the area for sale. A lot that aren’t going anywhere,’ said Huffman. ‘I think it’s that way everywhere. I think it’s indicative of the market.’”
You think you’ve seen the worst of it, Beverly, but just wait until next spring. The pile up at the starting gate for the “pulling it off the market and waiting ’til next spring” crowd is starting to look like the start of the New York Marathon.
All the “Catches Falling Knives” had better beware!
[I should credit the person who came up with that version of the term, but cannot recall such presently]
Here he is.
The great Chief Catches Falling Knife
Hehe. Maybe we get the Bingo Indians to buy up abandoned tracts in AZ for tribal housing. “Queens Creek Indian Reservation” has a nice ring to it.
“The pile up at the starting gate for the “pulling it off the market and waiting ’til next spring” crowd is starting to look like the start of the New York Marathon. ”
That is a great way of putting it. I am seeing (and sensing) the same thing. The MLS is going to go nuts! I think they actually might break the MLS with all the listings. Five or six times the current inventory level is not unrealistic. And the builders…, talk about a fire sale! And just remember spring is starting early this time - probably any time after yesterday.
I am not looking forward to that pent up supply of houses coming on the market in 2007 because it will be so excessive that it will not be attractive . It will look like the whole world is for sale .Can you imagine how thick the newspapers are going to be with real estate ads . The paper boys are going ask for a raise.
Funny how some people do not correctly perceive the meaning of this. Friends in Santa Fe I was with over the weekend were telling me how much RE “activity” they were seeing in Santa Fe. When I asked them to elaborate, they pointed to the big thick magazine full of builders’ ads, that came with their newspaper. I said it was evidence of an impending collapse, and it took a while for me to explain my meaning.
From the update:
‘The San Francisco Chronicle. ‘Absolutely, the bubble has popped,’ said economist Christopher Thornberg. ‘When a real estate bubble pops, it’s a slow-motion train wreck. Things don’t happen overnight.’
‘New home builders are slashing prices. As builders cut prices to move inventory and keep their shareholders satisfied, the resale market is feeling a spillover effect, said Keitaro Matsuda, senior economist at Union Bank of California.’
‘Builders sold 1,128 new homes in November, down 21 percent from 1,433 a year earlier. The median price for a new home fell 10.1 percent to $602,00 from $670,000 last month in the nine-county region.’
‘As lenders, we deal with many home builders and home builders are aware of what’s happening and they’re taking measure to adjust inventories quite quickly,’ Matsuda said. ‘That downward adjustment starts to influence the resale market as well.’
From the CoCo article: (re: Bay Area)
“Adjusted for inflation, mortgage payments are 12.9 percent higher than they were at the peak of the prior cycle in early 1990”.
So then, instead of debating how big this crash will be, can we just add 12.9% to the 1990 BA decline and call that the trough? I’d be okay with that. (not sure if directly additive or vector sum ….?)
2012, 2012, 2012, 2012, 2012, 2012, 2012, 2012, 2012, 2012, 2012
And that’s before inflation.
What we here have been saying for a LONG TIME is the best part of what Thorburg said (SF Chronicle):
“‘There are two ways a bubble can pop — one way is for prices to go down and then come back up again, and the other way would be for prices level off until the fundamentals catch up,’ Thornberg said. ‘Either way, the price that your house is now is the same as it will be in 2012.’”
I should add that I mean this specifically for the “inner” Bay Area - as an at best performance.
Farther flung areas? Worse, probably - but I will leave that to others.
2012 sounds a bit early considering the peak was in 2005 and this was the biggest ever bubble in US real estate history. Last time the round trip lasted from about 1990 to 2000; I am guessing 2015 would be the earliest (nominal) prices will get back to 2005 levels.
I would tend to agree with you.
I’m “stuck” on 2012 because I’ve been saying it since early 2005, even though my thoughts have evolved.
And again, my thoughts pertain to “inner” Bay Area only.
As for the “outer” Bay Area?
“Nowhere was that drop felt more keenly than in Solano County, where the median sales price dropped 9 percent, or from $490,000 to $446,000, from November 2005 and homes sales fell 27 percent, according to DataQuick.”
OUCH! Aaggh! OUCH!
I’d say, from here for now, that… there’s going to be a longer downturn up there in Fairfield and Vacaville and evirons.
Did you hear it? I definitely heard it. What you ask?
What a DAY in Bay Area bubble history, it ranks right up there for me.
After the hissing started in SF and the East Bay, as reported right here, in early October of 2005… I also heard the Fat Lady singing from the top of Mt. Tam in Marin, probably starting in the spring of 2006 if I recall (see the Marin Bubble Blog).
And then we have today.
Thornburg’s even saying it for us - the obvious!
“POP”!
“Thornburg’s even saying it for us - the obvious!
“POP”!”
Unfortunately, his definition of a bubble bursting and what that entails varies by the day.
And GS -
“Last time the round trip lasted from about 1990 to 2000…”
The “roundtrip” last time in the Bay Area was not as long as 10 years. In some neighborhoods, it turned around in only five years.
Why?
The earlier tech bubble.
So I wonder, which or what kind of bubble could bail the housing market out sooner this time?
“In some neighborhoods, it turned around in only five years.”
SF Jack –
Maybe we are saying the same thing, only in different ways. 1996 was a good time to buy in the Bay Area, because that is when prices started trending up again. But if you bought in 1990, you were not above water again until 2000 or so. If you mean that 2012 is a reasonable estimate of when the trough will be reached for the current bust, then I concur…
We’ll see Nasdaq 5000 again before some places in California get back to late 2005 levels. In nominal terms for both.
And I’m giving Nasdaq 5000 about 25-30 years.
Naz 5000 depends on how much air escapes from RE bubble and how fast. Bernanke may want to try for a third bubble to save the 2nd bubble from causing depression.
Damn, I may be dead before this fascinating question is answered. My guess for 2005 RE prices to return nominally would be 2022. jack says 2012, Stucco says 2015, passtb says after 2030. Anybody young enough to run a betting pool on this?
I think the problem with the 2011-2015 time frame is the Baby Boomers will be heading on to better things and there will be a lot of property on the market. Any stat guys know if we expect to have a population decrease?
I should clarify my prediction (RE vs. Nasdaq) is for the parts of California where prices have gone most out of whack with fundamentals, such as Stockton, Salinas, the ghettoes of LA, Barstow etc. Nationally it’ll be closer to 2015-16.
The LA ghettoes may never come back unless they’re completely bulldozed over, a la Cabrini Green.
I made that Nadsaq prediction back at the end of 2000, and was telling people it would be 30-40 years back then.
Wow. Thornberg has really joined the bear camp since leaving UCLA. Wonder if he’s started reading this blog?
Thornberg brought tears of joy to my eyes today. I think Anderson really had him by the short ones and now that he’s independent he can speak his mind, albeit cautiously at times. The UCLA forecast is bought and paid for by the REIC, as has been discussed and proven here many times. The bay area is not Mecca. Gravity still applies here, no matter what Gavin Newsom and his lame crew seem to believe.
“Thornberg brought tears of joy to my eyes today.”
Yes. Exactly.
Do you hear his description? Oh, I do.
Screeching steel, crunching metal, splintering wood ties, steam explosions, cars decoupling… and the sense of it over time…
“‘Absolutely, the bubble has popped,’ said economist Christopher Thornberg. ‘When a real estate bubble pops, it’s a slow-motion train wreck. Things don’t happen overnight.’”
I bet there are many confused and angry recent homebuyers around here. This train wreck caught them by surprise!
In any case, I didn’t know our Mayor Wonderboy was a housing cheerleader…. though perhaps as it applies to housing the homeless.
[His "Care not Cash" program really works, according to what I read today in the Examiner (Ken Garcia)]
Are they letting SF-area homeless people buy homes with 0% downpayment I/O Option ARMs these days?
No. They’re demanding that developers devote an obscene percentage of new construction to below market housing. Basically, they want to rest of us to pay more for housing to subsidize the people who can’t afford to live here. Which we already do through $8 beers, $40 entrees, and $20 cab rides for 4 miles. But it’s not enough. The San Francisco Board of Supervisors has decided that the best way to lower the price of housing here is to make it unfeasible for developers to build any more. Morons.
And I don’t believe Wonderboy is a cheerleader…he just dates them.
Re: SF Mayor. I just can’t stand his snotty, SF is the greatest attitude. I hope the Niners leave just to piss him off. I don’t know what his position is on housing, but the whole below market unit thing is very prevalent now. Oakland is demanding the owner of the old naval hosiptal build 15% affordable because the hills shouldn’t be just for the rich people. WTF is that? I’d like to live in Malibu, but guess what, that isn’t going to happen. Oh well. Bay area governments are the worst.
I can’t wait.
‘DataQuick analyst John Karevoll said it is unlikely that the local housing downturn will accelerate.
“It looks to me like prices in San Diego have probably found the level they’re going to be at for a while, a median around $480,000 to $485,000,” he said.’
It looks to me like last year, Karevoll was assuring everyone that “real estate always goes up.” Since he missed predicting the all-time largest ever San Diego price decline, should we nonetheless assume his “prediction” that the market has hit a permanently high plateau at $485K will turn out to be on target?
Oooooh, whoever is saving all though other delicious housing bubble quotes, you NEED to add this one.
Sure, he was wrong, but I don’t necessarily think of him as an industry shill. Doesn’t DataQuick’s business model mean they don’t have a vested interest in what the market is doing? Market up, market down, so what….. collect the data, clean the data, report the data, sell the data.
“sell the data”
I think you have put your finger on it. DataQuick can sell more data when the REIC is swimming in cash. It is hard to make money in real estate when home prices are in a deflationary spiral.
If that’s all they are doing, what makes Karevoll qualified to make a statement like that? Maybe he’s not a shill, but it still remains to be seen whether he knows what he’s talking about.
“Maybe he’s not a shill, but it still remains to be seen whether he knows what he’s talking about.”
All you have to do to figure this out is see what he was predicting for 2006 at this time last year.
Somebody’s planning ahead. Stock Regulator, check this out.
http://dallas.craigslist.org/acc/249009973.html
“When is this insanity going to stop?”
It’s going to stop soon, real soon.
Next year is already being dubbed “debt repayment year”.
Once credit dries up watchout below. It’s going to get ugly (or pretty).
“The median price for resale houses, which make up nearly two-thirds of the market, actually dropped from year-ago levels for the first time since February 1997, DataQuick figures show. Last month’s single-family home median was $660,000, or 1.5 percent below the November 2005 median.”
Too bad we don’t have figures on the net value of new homes after subtracting $50K-$100K worth of incentives from the sale price. Because I am guessing those adjusted new home prices are considerably lower YOY…
“The median price for resale houses [in the OC], which make up nearly two-thirds of the market, actually dropped from year-ago levels for the first time since February 1997, DataQuick figures show. Last month’s single-family home median was $660,000, or 1.5 percent below the November 2005 median.”
I am 100% confident that Gary Watts will pull a Xmas miracle out of his hat and singlehandedly save the OC. 100%.
I was looking for that CNN link where they list SF-RE as a bullet-proof investment. I can’t find it. But I found this beauty:
“http://money.cnn.com/2006/12/13/real_estate/refi_upswing/index.htm?postversion=2006121409
NEW YORK (CNNMoney.com) —
Rarely has there been such an advantageous time to refinance into a 30-year fixed-rate mortgage if you have an adjustable-rate loan. But homeowners’ love affair with riskier ARMs is still strong.
The average rate on the 30-year loan has fallen more than three-quarters of a percentage point since July, and it is near its lowest level since October 2005. Rates on ARMs, meanwhile, haven’t fallen nearly as far.
According to financial information publisher HSH Associates, a one-year ARM, at 5.8 percent on average, now costs only a third of a percentage point less than a 30-year fixed-rate mortgage, at 6.2 percent. And ARM holders still face the risk of paying a higher interest rate down the road.
But while there’s a new refi boom in swing, not all borrowers are rushing for the security of fixed loans. One in three homeowners refinancing today is choosing the financially riskier interest-only and payment-option ARMs, according to data from Loan Performance.”
Question: Will they ever learn?
Answer: No.
The problem is all the people on the virtual-reality loans can’t afford to pay principal in the first place.
Actually, they can’t even afford to pay the interest, much less the interest + principal.
Here’s the link you’re looking for:
http://money.cnn.com/popups/2006/biz2/newrules_bubbleproof/index.html
I love their rationale for L.A. being bubbleproof- all of the developable land was filled up in the 60s and 70s. I guess we’ve been bubbleproof ever since then!!
By that criterion, Tokyo was bubbleproof through the entire deflationary spiral that lasted from 1990-200? .
And Hong Kong post-1997. And Manhattan all the times it’s crashed. And… you get the idea, the real reason LA is bubbleproof is it’s different, and special, and everyone wants to live there.
Hong Kong RE is in recovery mode. Quality RE is about US $2000/sqare foot.
Interest only is all they can afford,once they miss a few payments or their equity is negative fat chance they will be able to re fi out of their equity draining investment.
“Keeping up with Ben Jones’” = conservative and frugal appearance on the outside. Some real wealth, peace of mind on the inside. “Keeping up with the Jones” = things look really great from the outside (McMansion, Hummer, vacations, lots of crap around, etc) and Oh $HIT, we are F&CKED on the inside when the piper shows up for his due.
I like that.
(#of sales using toxic loans that will be foreclosed/# of specuvestors who bought houses) X (# of bathrooms in your house/square inches of granite in a 3600sq foot McMansion) is inversely proportional to the likelihood that Joe Sixpack will sell his house this spring.
Okay, lets see…..
(# of sales using toxic loans that will be foreclosed) / (# of specuvestors who bought houses) = 1 (x/x =1)
(# of bathrooms in your house) / (square inches of granite) = 3/300sqft = 3/43200sqin = .000069
so;
1 x .000069 = .000069
so the probability Joe puts his house on the MLS is 99.9931%….?
Sounds about right.
Oops, inversely proportional to the probability he will SELL ….
.0069%
“One in three homeowners refinancing today is choosing the financially riskier interest-only and payment-option ARMs, according to data from Loan Performance.”
In SoCal it’s more like 9 out of 10. I’m going through this with a friend right now. She’s not even as f’kd as most, having bought before things went truly crazy. But no way can she qualify for, or afford, the best rate on a fixed 30.
Like so many, she was encouraged to take the “affordability product”, since west LA real estate only goes up. And not just by the broker; her wise investor friends told her to do that.
National stats are mostly useless when talking about Cali. Things are orders of magnitude worse here. When I’m sitting with a woman who makes six figures, bought at 60% of 2005 prices and is throwing up her hands in despair…
Let’s just say there’s going to be a severe reckoning. Glad I rent and have zero debt. Of course, with a bad recession I may end up with zero job, lol.
The 9 out of 10 SoCal going for high risk loans suggests a problem of what economists call “adverse selection” — only those who are completely ignorant of risk or have nothing to lose are going to gladly throw caution to the wind and extend themselves into a loan they will never be able to repay.
“woman who makes six figures, bought at 60% of 2005 prices and is throwing up her hands in despair…”
Why is she in despair? I don’t exactly understand how a six-figure income and 60% of today’s prices equates to despair. Did she buy a $Million house on $150K income? For example, if she made $150K, she could afford a $4000 monthly payment based on a traditional 30% income-to-mortgage ratio. That’s about a $500K mortgage, and assuming she put the standard 20% down, that’s a $600K house. If that’s 60%, then we’re talking a $1Mil house in peak time price. That’s a decent house and totally affordable at her income. What am I missing?
Probably the cellphone, Mercedes lease, Botox treatments, yoga classes, etc etc…
Yup. $150k doesn’t last long if you’re not careful with your money…
Don’t worry, Gary Watts is on the case and will be providing us all an explanation for his missed “inverted year” theory. I’m looking forward to his 2007 Economic Analysis (NOT!).
-15% is in the bag!
“Keeping up with Ben Jones’” = conservative and frugal appearance on the outside. Some real wealth, peace of mind on the inside. “Keeping up with the Jones” = things look really great from the outside (McMansion, Hummer, vacations, lots of crap around, etc) and Oh $HIT, we are F&CKED on the inside when the piper shows up for his due.
Gary, Gary, Gary? Where are you? What about our 15% in the bag?
Count myself and family as 3 that left the Bay area. Glad to be gone. Anyone still there, you can have it. I spent 17 yrs in CA. Long enough. No sympathy for the F$CKED Homedebtors. And I don’t want to compare those people to a jackass. A jackass is smart enough to know when to stay put and wouldn’t put himself into such a state of prison. Now about these folks, not fair to a jackass to compare.
Hey need 2 leave, where did u go?
I would like to hear from someone who move to NZ now thats extreme. It seems nice there based on what Ive seen in Lord Of the rings and the TV xena - both filmed there. But I think Lucy Lawless lives in LA now?
NZ and Oz have their own an enormous property bubbles, almost as large as CA’s on a per capita basis. 100-200% increases over the last 5 years in the most desiarable areas. I was there on vacation last year and spent some time speaking with locals & RE agents. Quite an eye-opener to how large (and global) this mega-bubble really is.
“…how large (and global) this mega-bubble really is…”
LOL. Mega-bubble. I like it. I like it a lot! Hey David “no bubble” Lereah, do you like the sound of that too?
By the way, I have noticed that many call him David Liareah. From now on, can we just refer to him as Diarrhea? I think it is quite fitting.
Not only that; I understand it’s pretty hard to get permission to stay in NZ other than as a 30-day tourist.
I just had a friend get permanently residency there. Unfortunately, I will not be headed to NZ for a visit until next November. (Free miles the only way to fly.) NZ is in quite a bubble, but like the others areas it will come down.
It is fairly hard to get residency in NZ unless you have needed skills. My two master’s seemed to let me in under the online test but I haven’t applied for anything yet so it may be a false hope. Also, they want you to be under a certain age - 55 maybe? Lots of medical skills needed, film industry skills, farming and construction, all sorts of IT, boatbuilders, and plumbers to name a few. http://tinyurl.com/y688p8 for more info.
On a personal note - I have been all over four continents and NZ is my favorite place on earth. It is a beautiful country with huge eco diversity. There are problems, not the least of which is some degree of “island fever” as it is two main islands. I hope they remain very careful and restrictive in allowing immigration as I would hate it to be destroyed by human overpopulation. (Too late to avoid sheep overpopulation.
) But even if you can’t move there - visit! Where else can you visit a desert, rain forest, glacier, underground cave, and the hotsprings from the opening shots of Hercules within a couple of hours of each other?
My mothers long term partner was a Kiwi. He left New Zealand in his late 20’s for the US do to “Island Fever” and his quest for more opportunity. While it is truly a beautiful place, a lot of natives like to head for greener pastures.
“Resale condominium prices likewise showed negative appreciation, falling 2.4 percent from last year to a median of $439,000.”
It’s called depreciation, not negative appreciation. When real estate was on its bubble run, I bet DataQuick didn’t call it positive depreciation. Word spinning punks.
at least the msm aren’t saying slowing appreceation anymore
Welcome to Orwellian Realtwhorespeak. I prefer “inverse appreciation” or “retrograde price momentum” myself.
“Resale condominium prices likewise showed negative appreciation, falling 2.4 percent from last year to a median of $439,000.”
Sheeshh. People still like to use the word appreciation so much for RE, they put ‘negative’ in front of it to convey ‘depreciation’. I guess it’s a mental state that they can’t break up RE and appreciation. Kind of like they expect it to become positive soon.
When I see all articles using ‘depreciation’ across the board then I know it’s almost time to buy again.
Hearing that Gary is on the case really eases my mind. NOT.
SF has its share of idiots too… they just think they’re smart, that’s the difference. Happy bridge loan! I wish I could watch to see what their old place actually sells for.
“For house-hunters like Ian Goldstein, who closed this week on a two-bedroom condo in Corona Heights, the weaker market means that there is much less competition than when he last bought 2Â 1/2 years ago. To win his one-bedroom unit in Duboce Triangle then, Goldstein had to go above the asking price and pay $569,000.
This time around, Goldstein and his partner were the only bidders on the Corona Heights condo. They paid $1.045 million, below the $1.1 million asking price.
“I was able to be a little more deliberate this time,” Goldstein said. “There wasn’t that pressure that if I didn’t get an offer in within the next two hours, I was going to lose the place.”
Now, Goldstein faces the task of selling his Duboce Triangle apartment. He is working with his agent, Tom Baumgartner at Zephyr Real Estate, to put it on the market next month and plans price it in the low-to-mid $600,000s. ”
Memo to self: 1) Sell old house. 2) Buy new house. 3) In that order.
OK, we jumped on a place six years ago (at one point we had three houses and wanted two). But the market wasn’t doing THIS.
Oh my . . . . maybe Casey could use this
http://sacramento.craigslist.org/fns/248668991.html
I’m pretty good at Microsoft Word, I can write that letter and I’ll only charge $25,000.
Txchick ,what is that all about ?That looks like a scam to me .You know with this identity theft going on you wonder what the angle is .
Good God ! They’re going to need that $30K fee to pay for lawyers when they get their asses sued off.
Thirty one exclamation points. Loans like that don’t just sell themselves, you know.
“The median price paid for a home in the nine-county Bay Area was $616,000.”
Does somebody know the median salary in this area ?
$70K median for San Jose and our freaking 2/2 condos are about $500K right now for older complexs and zip up to $800K for new construction before you can even think about a 100 year old SFH starting at $800K that needs to be torn down. Does not compute and the signs of cracking are just now showing IMHO.
Looks like the baby boom won’t be retiring anytime soon. Everyone get ready for a more age stratified workplace and continued competition for jobs. “Beyond the macroeconomics, there’s the human factor. I’ve talked to lots of laid-off professionals in their 50s and 60s, and they complain that its hard to get younger managers to take them seriously.
http://money.cnn.com/blogs/generationrisk/
Yeah, I wasn’t even laid off, I just got tired of the Attitude, that’s why I took refuge in my own biz with retail clientele.
The first time homebuyers in Bay area will end up working to pay for the retirement of the folks who happened to be there earlier. wise folks are already moving out where price to rents are more sane. fundamentals matter in the long run and long run is finally here where people can see the foolishness in renting money to buy house.
“Monterey County planning commissioners Wednesday gave preliminary approval to plans by Standard Pacific Homes to develop the lots on 16 acres in Spreckels. Project manager Peter Dunne said…no prices have been set. Initially, the thought was the homes would be priced between ‘the high $600,000s and $800,000,’ he said.”
In Spreckels? Ahem. Try this: “Initially it was thought we could get away with Seaside or Sand City prices in Spreckels. We later learned that the Pacific Ocean is some ways *west* of Salinas, not in that crappy industrial district just to the south. What were we smoking when we overpaid for the development rights on that parcel? Maybe we can build another truck stop on that property, and sell it as Carmel-adjacent!”
lol
Andrew LePage, a DataQuick analyst, said defaults are approaching a normal level. ‘We don’t think it’s time to sound the alarm,’ LePage said.”
Thats like saying the prisoners only have the key to the front gate of the prison. If he wants to precieve this as normal, so be it. In a few months I wonder what he will say. It appears we are just a little above normal, nothing to worry about, all is well.
Here’s a good one about the greater fool…
This guy I used to hang with just bought a $850k place in Hermosa Beach (right off Prospect) with his girlfriend. He got this sales job selling surgical supplies and I guess he thinks he’s big pimpin’ with his “entrepreneur” girlfriend that sells caffeinated mints to stores. Nice people and who knows maybe they have more $$$ than I think but what kind of loan did they get? Of course, an IO with no money down. Sad thing is that he talked to my finance guru buddy who told him to wait to buy…some people just don’t want to listen!
And they bought just in time for prices to come down…yesterday’s LA Times article mentioned several South Bay cities with YOY price declines…DOH!
Oh, and this other guy I know thought he was all sporty in timing the market when he sold his Redondo Beach residence about a year ago for some huge place in South Torrance…I told him over the summer there would be YOY price declines soon (I was a dick, I was drunk) and guess what! Yesterday’s article had zip 90505 with a decent YOY price decline! DOH! And no, I actually like the guy so I won’t rub it in his face
“Crash alert”………………….
http://www.dailyreckoning.co.uk/article/14122006.html
Stock market in an elliptic topping action – long-term bear market is near…………….
http://www.indiadaily.com/editorial/14754.asp
All the components are in place for a worldwide stock market bear moves down that can last twenty to thirty years and can cause pain like never seen before in the last two thousand years
Umm, I’m fairly certain life was a lot more painful only a few hundred years ago what with the black plaugue and all.
On the other hand, they didn’t have network TV so it couldn’t be that bad.
“1 BR hovel, REO, new thatch roof, Viking appliances (e.g. spear, axe, etc.), VRP 50-100 florins. Seller will credit for removal of previous owner’s pustulent rat-gnawed corpse.”
In the San Francisco Examiner this week: “Bay Area home prices slip.”
“[S]ales at lowest rate in five years….”
See page 24: http://sfpaper.examiner.com/edition/san_francisco/?haspdf=1