“Sellers Accept The Reality Of Lower Prices”
The Camarillo Acorn reports from California. “The housing market softened in 2006 but professionals aren’t anticipating a long-lasting slump. The market is only normalizing itself, experts say. ‘The circumstances bringing the real estate market into balance are happening unusually quickly,’ said Glen Scalise, president of the Conejo Valley Real Estate Association.”
“‘The general trend is that sales of existing homes are down by 30 percent or more,’ said Bill Watkins, executive director for a research program of the University of California at Santa Barbara.”
“John Murray, a Realtor who sells homes throughout the area, said the housing market has definitely softened. ‘I have seen prices drop from 5 to 10 percent versus earlier this year in a number of areas,’ Murray said.”
“Because of the declining market, some homes are now valued at less than what the owners paid for them. Short pays, in which lenders forgive all or a portion of a debt to make up for loss of equity due to decreasing house values, are becoming more common, Murray said. ‘Part of the problem has been the prevalence of interest-only loans,’ he said.”
“Developers are making some concessions to sell homes quickly, but don’t appear overly worried about future demand. ‘The market goes up and down, but developers are used to this,’ said Dave Bobardt, planning manager for the city of Moorpark where several large tract housing developments are underway.”
“Prices also are leveling off in Simi Valley as properties stay on the market longer, said Linda Enderson, a director on the Simi Valley-Moorpark Association of Realtors. ‘It’s more like a normal market,’ Enderson said; lower priced homes sell more quickly. ‘A couple of years ago you couldn’t find a single-family home under $500,000, but now you can.’”
“In the Conejo Valley, the market is being driven by supply and demand basics, said Russ Watson, housing manager for Thousand Oaks. ‘Homes stay on the market a bit longer than they used to, and that causes pressure to reduce the price a little,’ Watson said.”
The New York Times. “The Napa Valley ranch house, built in the 1970s, wasn’t much of a looker. And with a price tag of nearly $1.4 million, it wasn’t cheap either. But its location on Highway 29, on an acre of land in St. Helena caught the attention of Jocelyn Singh.”
“‘We ended up getting it for $975,000,’ said Ms. Singh, noting that the seller’s final price wasn’t too far from her initial offer of $950,000.”
“Thirty percent price cuts in asking prices for homes aren’t the norm, but stories like this, with sellers willing to negotiate or even drop their asking prices, are increasingly popping up in suddenly cooling vacation home markets.”
“Since different factors motivate sellers of second homes, they simply might take their homes off the market or wait longer to reduce prices. ‘That’s one of the reasons the price effect can lag,’ said Cynthia Kroll, an economist at the University of California, Berkeley. ‘It can take awhile for the sellers to accept the reality of lower prices.’”
“The National Association of Realtors predicts that 30 percent of all home sales for 2006 will have been second homes, down from 40 percent last year, and attributes much of that drop to the exit of investors.”
“And the places that saw the biggest influx of investors and the most heated activity are likely to see the biggest price drops. ‘Areas that had the highest appreciation and that were the hottest can cool the most,’ said Edward E. Leamer, an economist at the University of California, Los Angeles.”
“In Northern California, ‘properties under $1 million have reverted back to last year’s prices,’ said Mike Silvas, the owner of a real estate agency with offices in wine country and in coastal areas of Northern California. ‘The Carmel market is the one that has really ground to a halt. Prices got to more than $1,000 a square foot and buyers finally balked.’”
“In Carmel, prices were off 5 percent this year through October, said Mark Wilson, an agent with Morgan Lane in Carmel. Properties in Monterey County, which includes Carmel, are sitting on the market for an average of 113 days, more than twice as long as a year ago.”
Goodbye 2006. Hello 2007. Going to have a staff meeting soon and one of the topics is going to be “effectively handling difficult and stressed out clients.” (as if we have not had our share of it over the last two quarters)
God Bless everyone. It’s been a great run.
Ben, what can I say? Best real estate consumer driven blog out there. Hat tip to you!
No they don’t. It’s just that they have no choice. What’s funny is the progaganda going on for real estate in medias like the crooks at Bloomberg. Listening at these liars, they are trying to convince you that a clear “rebound” is just around. I am not surprised that Bloomberg is mayor of New York today.
yes he runs the city like a corporation
since he has become mayor this city has gone from
expensive to downright unaffordable excpet of course
if you make 400k or more a year
a parking ticket will cost over $100 or more where
5 years ago it was $55 (thank god i have a garage)
nyc is for the rich the rest are just serfs plain and simple
“The National Association of Realtors predicts that 30 percent of all home sales for 2006 will have been second homes, down from 40 percent last year, and attributes much of that drop to the exit of investors.”
The NAR says 28% of homes sold in 2005 were to speculators, (about 2 million homes), leaving 12% as the percentage of homes bought as true second homes. Assuming that 12% for 2006, that leaves 18% bought by speculators, or just over 1 million homes.
The big question is: how many homes out of this combined 3 million are still in speculators’ hands?
true second home buyers = long term speculators
GS,
Exactly! Is this home “where” you were going to spend your retirement or IS this your retirement? I just HATE the way they try to insult your intelligence.
Some of us are seriously bicoastal/biseasonal and don’t really know any other way to live. However, that doesn’t mean we have to OWN a home at either end.
I think many of today’s owners are bi-polar.
Well if everyone’s buying two polar bears, it’s no wonder they’re going extinct!
Hey,
I like that idea. All the flippers who felt they needed to commute to work in a heloc- bought hummer, and turn the arctic into a Finnish sauna in the process, should get the pleasure of fostering two dispossessed polar bears.
The polar bears can play with the alligators!
I support the right to keep and arm bears.
Speaking of bi-polar… A lady (administrative assistant) I work with who was a HUGE real estate cheerleader for the last couple of years is now telling everyone to re-negotiate their tax valuations! Six months ago she said prices would never go down(especially in the San Gabriel Valley-everyone wants to live there! Duarte to be specific). Oh how times have changed! Now she has no problem acknowledging a $100k price reduction and plans on purchasing more investment property in about 6 months when all the foreclosures start taking place. When I told her it is basically impossible to have positive rental cash flow when buying at these prices she told me she is making a “whole” $200/mo. on a house she bought last year! I couldn’t believe what kind of risk she is taking to make a meesly $200/mo.! This kind of money is nothing. My husband and I spend $200 on a birthday dinner, but this is why we rent! What a fool!!!
with that $200 windfall every month she can pay for the gas in her suv what a genius
And how many months looking for a tennant would eat up ALL the profits that she’s had?
She claims there is a shortage of rental properties on the market and will be for some time. She says this based on the fact her daughter is having a hard time finding a place to rent. She’s a real piece of work!
Thank you thank you: bi-coastal/bi-polar/polar bears/keep and arm bears…. Embarassed myself socially, but couldn’t help howling… Happy New Year all….. and thanks again for all the great work, to Ben, and to the incredible posters who share and spar so generously.
“Of course, the decision whether to rent or own might require the assistance of a crystal ball. After all, is $250,000 for a summer rental in East Hampton ever a wise financial move? Buyers hoping to swoop in on Hamptons bargains will probably be disappointed.
“The sky is not falling,” said Cee Scott Brown, a senior vice president of the Corcoran Group in Sag Harbor, N.Y. “There really are no good deals.”
LIARS! Hopefully one day soon, realtors will get into major legal problems with such blatant lies.
The market in the Hamptons is in serious trouble and a ton of investors and stretching wanabees are going to lose their shirts.
What? He’s not lying.
The sky isn’t falling (physical impossibility) and there AREN’T any good deals out there. Wait till they’re 50% or more off, THEN maybe there will be some good deals.
Happy New Year everyone. Sorry to whoever I pissed off this year but you can’t please everyone. Let’s all drink to many price reductions next year!
CHEERS!!!
Heh heh…but pissing off people is fun!
Happy New Year!
You really don’t know someone until you’ve pissed them off. I’ll admit to a little needling on this blog from time to time to cut through the crap and get to the real objective.
And hopefully many many bankruptcies for Banks!
Amen, here’s to living in interesting times. *POP!* and this one’s for Saddam.
You just reminded me to turn on Cable Noose Network.
O.K, they was good. LOL!
Ha there is a lot Mister Rumsfeld and Jacques Chirac and King Saoud in Saddam. The bad guys in Washington and Paris got rid of an incriminating proof. Saddam was your boy.
Txchick, the states of Florida, California, Maryland, Arizona, New York, New Jersey, Arizona, Colorado, Alaska, Tennessee, oh hell, all 50 states, appreciate your apology.
Happy New Year to all!
Don’t forget the district, where this mess was planned out.
This mess was planned out by the private members of “Our Crowd”, the elite private family of bankers who own the (un)Federal (non)Reserve Bank. They made the decisions and Easy Al followed orders.
*raises glass & toasts Ben, TXchick, and all the great posters*
Thanks to all for your perspectives and sound advice!
~Misstrial
Tx Chick:
Keep the kettle of caustic boiling!
Cheers!
Second homes are some of the first things to get dumped when the economy goes south. Couple that with the snowless winters we’ve been having here in the northeast and I’d say some ski area bargains will present themselves over the next couple of years.
We live close to a ski area - I’ve always had a hard time getting around why in the world you’d want buy a condo at a resort unless you literally had money to burn. If you go skiing only so often, it’s much cheaper to rent. If you have the time and money to ski everyday, would you really want to spend it at one resort? All winter long?
I guess it’s one of those “lifestyle” choices I’ll never understand along with Hummers and McMansions squeezed onto postage sized lots.
hard time getting aroundhard time getting my head aroundGood point Vermonter,
As a married, pet-owning parent servitude with untold midlife crises looming, why would I want to ensure that I go to the same resort every year. Variety is the spice of life, but stray, says wife, and I lose my life. With all the fidelity on the domestic front, damn sure I would want to be a downright floozy on the vacation front.
So, I would venture to guess the condo buyers are just old fashioned specuvestors.
I was rather shocked when my sister bought a “cabin” (house) up above the snow line, but then it turned out her reasoning is actually pretty solid. See, with all of the small fry running around (hers and siblings’ and friends’), she figured it was a good place to stash some funds and make use of them at the same time. Not a whole lot of financial return but that’s not the point.
My husband and I have a standing invitation to go up and use the place on free weekends. In other words, she bought something for the whole family to use for fun.
I love my sister.
That is admirable. Why hide it if you can divide it.
“And the places that saw the biggest influx of investors and the most heated activity are likely to see the biggest price drops. ‘Areas that had the highest appreciation and that were the hottest can cool the most,’ said Edward E. Leamer, an economist at the University of California, Los Angeles.”
Ed — look out the window. Can you see any price drop tsunamis coming your way from out the PV direction?
“The Camarillo Acorn”?????
Wow Ben. You really do go far and wide to bring us the latest on the housing bubble!
Today was the first time I have ever even heard of the CA.
Well, they didn’t want to call it the Camarillo Nut because they might have offended someone at the local mental hospital.
ha ha….. The hospital is a CA University now I think..
The Acorn is a throw away dedicated to real estate advertising and a few local blurbs. If they’re printing stories about the crash, then the blinders are off. Great way to end 2006. And, yes, the former state hospital is the newest Calif State Univ now. They call it Calif State Univ Channel Islands, naming it after some islands 30 miles distant rather than Camarillo because they didn’t want the acronym pronounced (people say CSUN as [see-sun]).
The Hospital is now the California State University Channel Islands, C.S.U.C.I.
Darn it, broken block quote… was responding to:
“Prices also are leveling off in Simi Valley as properties stay on the market longer, said Linda Enderson, a director on the Simi Valley-Moorpark Association of Realtors. ‘It’s more like a normal market,’ Enderson said; lower priced homes sell more quickly. ‘A couple of years ago you couldn’t find a single-family home under $500,000, but now you can.’”
If you now can find houses below 500k, when you couldn’t before, isn’t that called prices going down instead of leveling off?
Data Quick says Simi Houses are down 8% or 2% per zip codes as well. Isn’t that called going down?
What percentage of RE agents will end up greeting us at Walmart? “Welcome to Walmart - it’s a great time to buy”.
Hey at least at Wal Mart the stuff is cheap and affordable. That’s what is needed in real estate. A Real Estate Wal Mart that sells real estate at an affordable price. Just an idea like that would make a lot of sense. Let’s hope Wal Mart goes in real estate in 2007!
They “roll back prices”
Sounds great. I think it’s already happening though. The Wal Mart of RE is condos. Rollbacks coming soon.
Wow Wal-Martians in RE. Soon we’ll have even more people using public assistance for housing, medical, etc., trying to make it on min. wage so we can all get cheap RE prices. Hell they’ll HAVE to be cheap since no one is making any kind of income…oh no, wait, what was I thinking, Wal-Mart workers are “just” renters.
When you buy a houses at stupid and ludicrous prices, you pay rent to a god…mn vampire called a banker. There is no difference. “You have a nice house. You like it? It’s not mine. I rent from the bank.” Ownership of a house today is a joke. It’s just a illusion of ownership like all the bull. “You are richer than you think.” (Scotia Bank) Yeah sure. The Wal Mart allusion was intended as a joke.
walmart can work with some asian mfr’s for a realtor robot and work on a 1% commission
program it to say the few things needed
it is a buyers market
interest rates are going up buy now
they are making no more land
i have another offer etc etc
How do we buy California property for a discount from China? -
“‘That’s one of the reasons the price effect can lag,’ said Cynthia Kroll, an economist at the University of California, Berkeley. ‘It can take awhile for the sellers to accept the reality of lower prices.’”
Another of the reasons the price effect can lag is that it takes a while for buyers to absorb the reality of falling prices, given years of REIC pimps insisting that “real estate always goes up.” Once the reality of falling prices sink in, then would-be buyers have to start look at PITI as the cost of owning a home, instead of the great benefits of double-digit appreciation forever. About this time, sellers start wondering where all the buyers went…
Which is why prices CAN’T simply stabilize and go sideways. Current prices are BASED on appreciation. Once the “buy now or rent forever” panic dissapates, there is simply no reason to pay the huge current premium to own. Yes, there is usually some premium, but not double.
I hate to say it, but I can’t wait ’till spring. I’m like a giddy schoolgirl waiting in anticipation. Maybe it’s schadenfreude uber alles, but I like to think it is simply anticipation of return to a normal RE market, which means reversion to the 2000-2001 price level.
Your are talking about a 50% correction, that would take a few years. Still I can’t til spring either!
I can’t wait for spring either…though it may come early this year. With prices holding up in my area ( North Hollywood) I can’t wait to see how it unfolds. Now that RE hyperinflation is history, the motivation to buy at all costs won’t drive as many GFs.
Happy New Year to Ben and all you bloggers. You guys have helped keep my sanity for the past year! THANK YOU EVERYONE!
Vis a vis Calif inventory: yesterday I incorrectly posted that the 39 SFR under $600K in Morro Bay are the SAME 39 that were on MLS ten days ago. Wrong. One $550K POS was replaced by a different $439 POS, which, however is MORE than 20% smaller (i.e., average $/sqft went up).
Bienvenue. Mais de rien.
If the pace of new listings on SD zip is any indication, then spring is arriving early around here this year. For instance, there were 129 new listings for Tuesday this week (sure, I know it was the day after Christmas and all, but is this normally a week when nearly 1% of current inventory shows up on one day?).
Nervous gazelles trying to be first to the waterhole.
yahoo story on renting
http://biz.yahoo.com/weekend/rentgloat_1.html
Good article.
Thanks for the link! Glad to read about Patrick & Leah
~Misstrial
“The housing market softened in 2006 but professionals aren’t anticipating a long-lasting slump. The market is only normalizing itself, experts say. ‘The circumstances bringing the real estate market into balance are happening unusually quickly,’ said Glen Scalise, president of the Conejo Valley Real Estate Association.”
This is their “Expert”? The most popular sales shill at the local real estate Lodge? Wow, I’m convinced!
“professionals aren’t anticipating” - of course they’re not, it would be the end of their so-called profession
No S&*t imploder!
Asking a realtor about when is a good time to buy is about as smart as asking Count Dracula when would be a good time to take a nap.
Expert my A$$!!!
‘The circumstances bringing the real estate market into balance are happening unusually quickly,’
bwahahaha! He has no idea.
Sorry son, the only way to get to the town of normal market from here is to go through the slum of precipitous decline. If you didn’t want to go through decline you never should turned off before you got to bubble heights. What were you thinking? Oh, Suzanne gave you directions. Well that explains everything.
This entire ’short pay’ phenomena amazes me. Stupid me! I’ve always figured when I sign the mortgage papers it meant I was agreeing to pay back the money. All of it.
But that just shows how hopelessly old fashioned I am. These days if luck isn’t smiling on you and the value of the house goes down, you just ask the bank to take less than you owe them. Amazing.
If it’s inconvenient to keep your word..well, you just don’t. No problem.
I only want ownership of the profits, not responsibility for the losses.
People have to keep in mind, short sales aren’t some sort of gift from the lender as pennance for their sins. They’re just trying to save themselves time and money on a foreclosure. If you actually HAVE other assets, they’re unlikely to agree.
Calabasas to Ventura might escape any big price drops but I wouldn’t bank on it. Here’s the good news. The corridor along the 101 Freeway from Calabasas to Ventura does have a lot of good paying tech jobs AND they are adding more all the time. My wife does some accounting work for a tech company and the average salary is $70,000 with top people making $150,000. The bad news is they are building along that corridor like there’s no tomorrow. I posted the other day about the complex off of Victoria with the fancy Italian Riviera name (threw out the invite card so I forget what it was called). There is another DH Horton development in Camarillo right next to the 101 Freeway. Maybe these developments will be snapped up by people who make good money in the tech industry BUT, at the moment, there are plenty of homes for sale in Thousand Oaks which are staying on the market. We shall see in 2007.
Prices are down from 05/06 already in this area. I can provide examples but anyway supposedly the CAR said ventura co. is down 8% median from Nov 06 to Nov 06 and that is just median - many examples of same home going for way less in last few months.
This is your Hood Cote…Maybe you can comment ??
Funny,
I am old-fashioned enough to think that $70-150k is a damn good salary, but even this bread would not carry a $800k house. Imagine how we feel up here in Oregon where $15/hour still sounds good and homes are $4-500k!!
These prices have become a very bad joke.
You can live quite comfortably as a renter on $100k to $150k even in the most expensive markets - San Francisco, Santa Monica, you name it.
Just don’t screw the pooch by buying at current prices!
Maybe these developments will be snapped up by people who make good money in the tech industry…
I’m sorry, but $70,000-$100,000 a year in SoCal - whoop-de-doo. You can’t buy anything on that.
My husband and I make over $200k and we sure as hell wouldn’t buy any of this over-priced real estate! The only thing we worry about is taxes. Thanks to our government’s subsidation of the housing industry we really get screwed at tax time! We’re Dinks, sorry…..
Mike what you say is true. Here is the but….I mean BUTT a really big Rotten BUTT…. Lets do the math?
70k per year x3 = 210k home price… let’s streach it 70k x 4= 280k home price….Ok Ok…. using the rule of .28% 1,600 per month payments… hey lets go nuts it LA…at .35% 2,450 per month PITI the whole bit 30 year fixed.
At 150k x’s 3=450k at 4x’s =600k house at rule of .28% $4,300 per month payment. at .35% = 5,050 per month payment.
For the bad news you cannot buy anything for 210k I doubt even after the crash. Same for 380k. Moving along up the food chain…. at 150k per year x’s 3 nothing period. At 150x’s 4 you have made it to dogtown. But with the low rates and 5k monthly payments and a 30 year fixed PITI by my own un- PRO reckoning you coul buy a house and support it at a price of no more than $625,000 US Bucks at this point one very small notch above “used starter home”
My advice marry another big hitter even if it means being a homo. It is your only chance. If you are not at the top of the food chain. save cardboard and build a house like imploder did.
“My advice marry another big hitter even if it means being a homo.”
Funniest thing I have read in the last year on this board!
Some of us homo’s also rent.
ugh.. all those houses along the 101 out toward Camarillo & Oxnard are atrocious. 600k+ for a home that overlooks the strawberry fields. you get to watch immigrant laborers all day and smell fertilizer all night. what a bargain.
‘ugh.. all those houses along the 101 out toward Camarillo & Oxnard are atrocious. 600k+ for a home that overlooks the strawberry fields. you get to watch immigrant laborers all day and smell fertilizer all night. what a bargain. ‘
I sold in Camarillo in 11/04 and moved to Westlake Village where I continue to rent. I never really understood why nonretired people want to live out there (I never bought into the Mayberry Myth). If one needs access to anything, the 101 is pretty much your lifeline and methyl bromide was everywhere. At one point housing was cheaper there (and everything else was 20% more expensive, no competition) if you didn’t factor in the commute, but not anymore. There are some good jobs along the 101, but those companies are having a hard time retaining people who can get similar jobs in other states where they can have a nice house and better schools on one paycheck per family.
dont screw the pouch…..keep on renting ,homes that you could never afford to buy,send your kids to the best public schools in the best neighborhoods and pay no property taxes,while getting the best of all city services….that is the american way……
kangaroo or dog?
Happy Holidays to all, and a big thanks to Ben for this great blog (and to all posters also). This has helped keep this nut sane. And, TXCHIK - you rock. Keep up the sarcasm. I LOVE IT, and usually would second it.
Oh yes they are accepting the reality that their house is down 5%. WTF, It went up 300% and down 5% is something they have to accept. Call me when they are begining to accept the reality of 75% lower prices compared to the 2005 or 04 peak not their fantasy asking price.
Cool.
Cow_tipping.
No it won’t happen specially with all the printing going around at the FED and other world central bandits. Even the pennies and the five cents because of their metallic content are dissapering from circulation ! Don’t worry they will continue printing the green stuff in even greater amount in 2007.
‘Part of the problem has been the prevalence of interest-only loans,’ he said.” I really don’t think this is a big part of the problem. With a conventional 30 year ammortizing loan one pays very little principal in the first few year anyway. The big culprets are high LTV(and of course pervasive appraisal fraud means that LTVs are higher than the loan paper work says that they are) and teaser rates. Option ARMs also play a part in California, where they have become common UNaffordability products.