“It’s Like A Memo Went Out And The World Changed”
The Press Democrat reports from California. “New home construction in the Bay Area, including Sonoma County, will stay flat in 2007, according to a forecast issued Thursday by the California Building Industry Association. ‘Last year, we said it’s time for a breather,’ said said Alan Nevin, an economist for the trade group. ‘We’re saying it again.’”
The San Francisco Chronicle. “In the Bay Area, where more than 30,000 condos are proposed or under construction, Nevin said he expects to see some projects tabled this year. There were about 1,200 new condos put up for sale in the city in 2006.”
“Steven Delva, president of the South Bay division of Standard Pacific Homes. said Standard Pacific dropped prices 10 to 20 percent at its Bay Area projects last year. Price reductions were greater in other parts of the state, such as Sacramento, where new homes have flooded the market.”
Inside Bay Area. “In 2004 and 2005 more than 200,000 homes were built each year to meet demand. That set the stage for a build-up of unsold inventory in the new home market, said Wes Keusder, a Southern California home builder and association chairman.”
“The demand for new homes started dropping in summer 2005 in response to rising prices. ‘The demand just cut off,’ Keusder said. ‘It was more like a stock market slump than a housing slump. That’s what gave us a large overhang of inventory that we’re burning off now. The decline was much more like a knife cut than in years past.’”
The LA Times. “The current rate of construction should be accepted as a ‘new mentality’ for builders, who pushed up the pace of building to near-record levels from 2003 to 2005, Nevin said.”
“‘That type of massive increase bent the industry out of shape,’ he said. ‘It caused lot and land prices to wildly accelerate, material and labor costs to skyrocket and trade contractors to throw away their standard profit-measurement tools.’”
The Union Tribune. “San Diego County’s home-building industry entered the new year in ’slowdown mode’ and will likely see the fewest building permits issued in a decade. The last time San Diego permits dipped below 10,000 was in 1996 at the tail end of the last major recession.”
“Wes Keusder said the construction slowdown here and around the state seemed to be tied to high prices and chronic affordability issues. ‘We have literally hit an affordability (constrained) market,’ Keusder said, ‘where even though we have low interest rates and (strong) demand and jobs, the prices got so high that it slowed down the market.’”
“Robert Rivinius, president of the building industry association, said the turnabout first showed up in August and September 2005. ‘The world just somehow changed,’ he said. ‘I don’t know why. It’s like a memo went out and that changed it.’”
“Builders reported rising cancellation rates as buyers found they couldn’t sell their current homes, Rivinius said. Then, new phases were delayed and options on building sites were canceled as builders walked away from planned projects.”
“Nevin said he flew over Riverside County recently and was ‘astounded’ by the lack of construction activity. ‘There are amazingly few new projects getting started,’ Nevin said. ‘We’re just not seeing anybody, particularly on the condominium side, that has shown a willingness to go ahead.’”
The North County Times. “Independent economists suggest that Nevin’s forecast is on the rosy side, and that fewer homes will be built. If the forecast is wrong, it won’t be the first time. Nevin said last year’s prediction was off by about 15,000 single-family homes statewide.”
“‘I think it’s just going to be a weak year all around for single-family construction in 2007,’ said economist Christopher Thornberg. ‘It’s not going to be until 2008 that we work through this inventory of single-family homes. I think we have massively overbuilt single-family homes, particularly in places like Riverside, San Bernardino, San Diego and Sacramento.’”
“Contrary to Thornberg, Inland Empire economist John Husing suggests that California has a housing shortage. ‘In this last go-round, price took off because of a shortage of housing,’ Husing said. ‘But it went higher than it probably should have because speculators got in and bought houses and restricted the supply; 2007 is a time to redress that imbalance.’”
From ABC 30. “Andrew Fiber, and his wife Tonya of Fresno, started looking for their first home six months ago and they’ve noticed housing prices have dropped considerably since their search began.”
“Andrew says, ‘I think the housing market is about as low as it’s going to be and it just seems like a really good time to buy.’”
“Fiber’s Real Estate Agent, Tye Faria says since buyers know there are many homes to choose from, they’re in no hurry to buy. ‘People are holding off a little bit, but only because they’re uncertain. No offense, but the media does hype up certain stuff and everybody says ‘the bubble’s gonna burst’ - there is no bubble.’”
“Perhaps no bubble, but there are a lot of houses. In 2005, an average of 1800 homes sat on the market in Fresno at one time. Last month, 4800 hundred homes had a for sale sign out front.”
This is dated a few days, but I don’t recall seeing it and it was on the Chronicles home page today:
‘ Back when my husband and I were shopping for an overpriced, under-renovated Victorian shack to call our own, these three letters seemed to convey a magic wisdom like some secret password into an occult society. ‘Days on market.’
‘Taken together, thousands of agents relisting properties to make them seem new obfuscates all sorts of important information — including price reductions, how many real estate agents have tried to sell a given house and how long the house has really been on the market.’
‘Ironically, DOM was exactly the opposite of what I thought it was. Not the holy grail of real estate meaning but just another unholy marketing strategy.’
‘Apartment and condominium construction is expected to drive up homebuilding levels in Orange County this year, even as residential development dwindles statewide, says a California housing forecast.’
‘In Orange County, several high-rise condo projects in Anaheim, Irvine and Santa Ana are going forward since firms like KB Homeand Lennar Corp. have made the commitment to build them and already have their financing, said Nevin and Wes Kuesder.’
‘But Burns, the Irvine consultant, noted that construction of three- to four-story condo complexes are by far the leading cause of the building uptick. Burns said that builders have plans to build about 50,000 condo units in the county, from Anaheim to Aliso Viejo.’
One thought on Carol Lloyd’s article about DOM shenanigans:
A very simple way to figure out the history of a house’s recent pricing is to simply Google the address. Stuff hangs around on Internet search engines for many months, even after a link to, say, a RE ad or listing has expired. Thanks to this old info floating around in cyberspace, I’ve witnessed much pricing comedy of late in my inner Bay Area ‘hood — houses relisted as new when they were asking 10% higher not a couple of weeks earlier. And it takes about two seconds to find this stuff out.
You mean criminal activities. Three shenanegans and you are out. NO. One shenanegan and you are out! Yeah I am a dreamer. If your rob a liquor shop it’s 25 years. But if you are a fu-ken WASP from methodist church or a damned sun of a rabbi from Connecticut in the Democratic party it’s a shennanegan. F-uc-en legal bastards ! Please stop usinf this expression. It means nothing except it’s legal.
Agree a lot of BS in the business world. Like you said, if someone steals $ 100 from 7-11, they will go to jail. But pull some white collar crime - backdating options, giving yourself a lot of options all this resulting in millions stolen and no one goes to jail. This is F__king BS and some of these greedy bastards need to go to jail.
They will never go to jail. They gave a lot of money to the Republican and Democrat party. Like you say. “In your dreams.”
lalaland,
Believe it or not, most of us are pretty busy. Why has the obligation shifted to us (the potential marketing victim) to have to “research” what should be in plain sight?!? Don’t we all have better things to do with our time than baby sit a bunch of NAR hoodlums? To me DOM “IS” the story! It “IS” the Holy Grail. It tells me everything I want to know.
Allowing these pukes to pull this off is simply a “free shot” at a dream asking price! Once we take this “mulligan” off the table we can begin to look at more honest home pricing out of the gate! Of all the things that hack me off about the bubble, manipulating DOM is about the worst.
Obviously realtors shouldn’t be allowed to manipulate DOM stats. It’s ridiculous, pathetic, and should be illegal. You’re ranting to the choir, my friend.
DinOr
I completely agree. DOM is very impt. to the potential buyer(victim) and should be completely transparent. I thought relisting was ‘against the rules”…or have they found a myriad of loopholes?
No, it did not.
Marc,
Did not what?
Change. They will with their fat stupid Saudis, and stupid Russian mobster rewrite the story. Look what is going down. It’s nor suppose to happen. These S.O.B. will be maintaining the bubble alive with their foreign mafiosis and crooks. Please don’t bet on a meltdown. The stupid russians and stupid saudis will come to the rescue.
I like conspiracy theories as much as the next guy, but why on God’s green earth would the Russians want to bail out the U.S. residential housing market. They don’t need us to buy their oil. They have Europe and China for that. Let’s face it, other than keeping some Muslim extremists off their back, the Russians really have no need for us or dependence on us.
It’s not a question of bailing you out. It’s just that fundementally the US is still a safe place to put your money. So what prevails in Africa, in India, in Russia, in China and most of these countries, is a mentality like.
“Take the money and run!”"Make my dough, as fast as I can, stash it away in Monaco or London and scram out of there as quick as possible.” Russia is the worst example in recent history. There is nothing more terrible for a country. It’s as bad as war.
That’s where you underestimate the interrelationships between everybody. Remember the asiatic crisis, the dramatic drying up of liquidity and then the bankruptcy of Russia and all the domino effects on emerging markets ? At the time even Saudi Aribia in 1999 was on the brink of bankruptcy. I have too much memory of bad events.
But it’s true at that time in the US you were having a ball with your bull sh-t internet bubbles and new economy religion and all that crap of a new paradigm with the Greenspan clown.
‘The demand just cut off’
The supply of greater fools ran out!
LOL! But they are still building up in San Francisco. No stopping the builders. I say~ go right ahead. Build more! Seems to be plenty of land. Heck what will they do with Candlestick park once 49ers get a new stadium. Lots of land more inventory but most jobs are shipped out to other states or overseas. Go figure.
The supply of GFs ran out at the end of Q305 here in Tucson. I noticed a dramatic increase in for sale signs during my summer ‘05 bike rides around town. Heck, some of those signs are STILL up!
Arizona Slim you are SO right. There are very many properties that have been for sale for what feels like forever. It is particularly easy to keep track of the ones that are visible from the streets I drive on a daily or weekly basis — Country Club, Grant, 5th/6th St, etc.
Anyone have any info or thoughts on Tucson rents? I am currently renting a single family home in central Tucson area for what seemed like a good price when we signed the lease in Sept., but I’m thinking I want to try to negotiate either lower rent or some incentive like free utilities when it comes time to renew. Already in my neighborhood on house that was for sale for a long time is now being offered for rent, and in other nearby neighborhoods I am starting to see “for sale or lease” signs. I figure that by the end of my lease (Sept. 07), there may be many speculator types trying to go the “rent it out until the market recovers” route, and I want to get a good deal until we are ready to buy when prices crater.
Of course, I don’t want to get in a situation where I’m renting from a FB who is strugling not to get foreclosed. I have joked w/ my wife that as prime renters (good credit/references and high income), we should be requiring the landlord to put a couple month’s mortgage payments in escrow to make sure they don’t get foreclosed during our lease. Our current landlord bought in Jan 06 and according to Zillow, has already lost about 6-7% of the value of the house. D’Oh!!
I think that if your FB landlord gets forclosed-on the bank can not automatically kick you out. But how much time would you get? I would also like to know because I am in the same situation. My landlord bought this property just two months ago. The guy is from the Seek religion(from India). I was wondering why the hell he would buy a place with the intention of losing money and basically subsidise me the renter?
A. He is an idiot
B. He cant do math
C. He thinks he is still in India
D. He got a boatload of cash back and is not planning on paying the mortgage wile keeping your rent.
I vote for D. sikh’s arent dumb.
Some large lenders will give you MONEY and let you leave at the end of a month. Its called “Cash to Vacate” (different name for different lenders). However, you will to sign a form and they will take pictures to make sure you don’t take the kitchen sink.
Hello crispy&cole and Crash Landers (and Arizona Slim) I’m excited to see you respond to my post. Crispy — your blog is excellent. Crash — love what you’re doing too. I’ve been lurking on the housing bubble blogs for about six months, and I’m always looking for info on Tucson. I’d like to do some flipper in trouble type posts, but I don’t really have time to do my own blog. We aren’t as big as Phoenix, but there is definitely a huge bubble here and I’d like to see more coverage of Tucson flippers in trouble, etc. Does anyone have suggestions where to best post Tucson stuff to get a good readership of folks interested in this region?
Try the the local newspaper. My town has a blog system on the newspapers website. Its drive local traffic (I have no ads on my site - BTW).
I don’t even know why I even post there (local newspapers blog). No one here cares. The level of intelligence in this town is equal to a box of rocks. If its not NeckCar or the NFL. They don’t give a $hit. If American Idol goes off the air, I predict that mass suicides will occur from our tallest building in town (13 stories). But I digress…
Tucson Guy, here’s a good resource for checking up on landlords:
http://www.dot.co.pima.az.us/gis/maps/landbase/parsrch.htm
It’s the Pima County Parcel Search, which shows you who owns a property, and how many properties the individual owns. (That’s a good way to spot possible FB landlords.)
Hope this helps!
I live in Hawaii, rented a house for 5 years in 1999 the rental owner went Bankrupt, the rental house was in limbo until the owner went through BR court, about 9 months, after BR court then the 1st and 2nd mortage holders went to court about the mortages another 8 months. I paid no rent for 1 1/2 years.
A bit of headsup, Hawaii assigned a “RE agent” to manage the property while the mortage companies went through the Hawaii Court system. The State assigned “RE Agent” wanted me to pay rent for the house, seemed reasonable and I agreed. I made out the 1st rent cheque to the Hawaii “Court”. The “RE Agent” returned the cheque and asked me to make out another cheque payable to the “RE Agent” for his first and last name and not the Hawaii “Court” .
I balked and we went back and forth over the next several months about the rent. I insisted that the Hawaii “Court” should be the receipant of the rent with the intent of the rent being applied to a possible purchase of the rental property.
Finally the actual forclourse date occured at the “Courthouse”. I showed up with 15% in cash and cashier cheques, the 2nd mortage holder eventually won the bid. Funny thing is the same Hawaii appointed “RE Agent” conducted the bidding process. After I refused to bid higher than the 2nd mortage holder, I offered to pay back rent with cash at the Courthouse provided I received a receipt for the cash from the “Court” the state appointed “RE Agent” said NO THANKS. Two weeks later he died from a heart attack while trying to collect rent from someone else. Needless to say he was unsuccessful in collecting rent from me.
For those folks reading this please be aware that “RE Agents” appointed by an official organization are just as greedy as anyone else and always keep a paper trail. Watch out!
Same situation, different city. Our lease is up in May. We’re doing our homework now on other rentals so that we have a strong position to negotiate lower rent if we choose to stay here. We’ve already seen a few larger (nicer) places at lower rent than we’re currently paying… homes that were previously for sale with no success. Really don’t want to move into another rental since moving is a major pain. Waiting for purchase prices to fall further before buying…
I just got back from Chicago for the holidays, and when asked what’s up, a family friend said “playing a lot of golf, just closed on a rental condo in Tucson”.
I just nodded my head and said “very nice, hope that works out OK”.
“restricted the supply”
This guys is nuts. Speculators did not restrict the supply of homes. Its the opposite.
I think he meant to say they restricted the supply of homes to actual families that actually wanted to live in them.
But the worldwide supply of morons is infinite.
More accurately, speculators create an artificial short-term restriction on supply by crowding out fundamental demand. But this drives up the market prices astronomically, which leads to a glut when developers respond with massive overbuilding of tract homes as far as the eye can see.
Well said GetStucco. But it’s fundementally all psychology 101.
The crowding out changes the perception. If people understood the game, they would wait it out and the speculator would go bust much more quickly. So would the greedy bank. Just the perception of potential restriction can start the ball.
The hording instinct is incredibly strong. Certainly it is not rational to horde homes, but when everyone is under the mistaken impression that there is a shortage, instinct takes over, and voila!, there is a shortage!
I”m sorry but speculators did and do restrict the supply of homes on the market. As a buy to be owner occupied the speculators reduced the number of available houses for me to be able to pick from which increased the competition and drove up the price.
I would like to see laws changed to take away the financial incentives to use residential single family homes as investment tools. They need to remain as primary residence intead of absentee own to rent investments.
I hope all the speculators who I competed against and lost get their clocks cleaned over the next few years.
Bitter renter…you bet your ass! I despise speculators as much as I loathe real estate agents and realtors.
There is a market mechanism that will take care of this: negative cashflow. When speculators pay too much and the rent doesn’t cover the payment, they bleed to death. When appreciation goes negative, they bail and take market prices down with them.
Correct. And there is money to be made on both sides … sell when speculators are buying, and buy when speculators are selling. Heck, the fewer regulations, the faster they get burned.
Cool.
Cow_tipping.
“Contrary to Thornberg, Inland Empire economist John Husing suggests that California has a housing shortage. ‘In this last go-round, price took off because of a shortage of housing,’ Husing said.”
There is a shortage, all right, when 50% or so of San Diego homes are getting snapped up vacant for speculative purposes (see Russ Winter’s post which, shows a supporting graph, in today’s bits buckets).
Yep, and I’m sure the price explosion had nothing to do with 100%, no-doc, stated income, 500 FICO loans that lenders churned out by the thousands. And like stucco says, if there is a shortage, what is with all the homes I see sitting vacant? Somebody needs to slap this John Husing clown.
John Husing = The Gary Watts of Inland Empire
Strictly Cheerleader
He is partially correct: there was not enough housing to accommodate all the people newly qualified for ownership. Since that includes anyone with a pulse, that makes for quite a shortage.
I don’t know about the Inland Empire, but homes in San Francisco have more than doubled in the past 4-5 years even though population has decreased. Same thing in metro Minneapolis, even though the area is growing at less than 1% a year and tons of condo towers have been built in the interim.
Claiming that housing prices have risen in response to some sort of housing shortage is pure nonsense, though par for the course for RE cheerleaders.
He’s right. Mexico is moving to California with the Chineese mafia.
…and are able to buy thanks to no-doc loans, while the lenders/greedy brokers look the other way…
“….the media does hype up certain stuff and everybody says ‘the bubble’s gonna burst’ - there is no bubble.”
Riiiiiight. Another lying sack realtor who will wind up costing his clients big $ by helping to push them into a home they likely cannot afford. Would this jackass please explain to me how prices are not going to go much lower with all the planned units under construction? And based on today’s job figures, it looks like the NAR’s hope of a rate cut is dwindling. People are like lambs to the slaughter, and these guys in the paper are so frigging lame, it makes me want to puke. Rant off.
“but the media does hype up certain stuff”
Like all of the “housing prices skyrocketing” and “flippers make a bundle” and “how to use home equity to buy stuff you want but can’t really afford” articles of the past 3 years?
The media reported her statement. Seems to me the media is showing both sides in fact we always read several quotes from agents and brokers who hype the housing market and down play the real economics of the situation.
“Sack to me baby. Sack to me baby!”
Fresno
This is too funny. That city is so bad 60 minutes did a story on Tarq the Shark when he was babysitting his badboys of FSU basketball. Lets see what other national records did Fresno hold recently? Teen pregnancy? Auto theft? Meth labs?
Keven Federline….hahahhahaha. Born and raised there.
Kevin Federline….hahahhahaha. Born and raised there.
Kevin Federline….hahahhahaha. Born and raised there.
Amber Frey
Maybe I am just a bit salty today, but I am going to recycle my post from last night.
You can give a realtor fire and they are warm for a night, OR you can set a realtor on fire and keep them warm for the rest of their life.
Hopefully, the class action lawyers are taking notes and going to ruin these peoples lives for years and they drop dead of a heart attack from all of the stress for their evil deeds.
Not salty at all. LOL!
“Fiber’s Real Estate Agent, Tye Faria says since buyers know there are many homes to choose from, they’re in no hurry to buy. ‘People are holding off a little bit, but only because they’re uncertain. No offense, but the media does hype up certain stuff and everybody says ‘the bubble’s gonna burst’ - there is no bubble.’”
LOL. I bet this realtor can’t find a fart in a chili cookoff either!
Seriously. I’d love to be the one to tell her in a few years, “No offense, but I told you so”.
I would love to be the one that delivers the up-kick.
lol on the chili cookoff comment
“Fiber’s Real Estate Agent, Tye Faria”
I read “fibbers” when I first saw this, and it made much more sense.
Hrmm, I read “Fibers” as in the substance used to induce defecation.
see, the chili cookoff joke goes full circle (or shall we call it full ‘cycle’?)
“Andrew says, ‘I think the housing market is about as low as it’s going to be and it just seems like a really good time to buy.’”
If I read the phrase ‘it’s a good time to buy’ one more time without some kind of caveat attached, I am going to puke. It’s a good time to buy and hold for 5, 10, 15 years if you don’t care about real returns. It’s a good time to buy if the bank or owner takes a 50 to 60 pct price cut. Otherwise, it’s a good time to pop some corn, grab a beer or martini, sit back, and try your best not to puke during the unfolding bloody massacre. Whatever you do, just stay the heck out of the bloody rough.
These statements are getting to me as well. I just want to grab this Andrew guy by the neck and give him a good shake. I don’t know if he has a bucket full of money with him, but he sure has a large box of stupid.
Its always a good time to buy if the price is right. There just happens to be alot of wrong prices out there.
“Come on down! The price is right!” Bob Barker rides again.
Slap him silly while you are at it.
I think it’s very simple.
If you want to be a homeowner, it is usually a good time to buy if with a fully amortizing fixed rate mortgage, you can purchase a home that you would be comfortable living in for 7-10 years and only increase what you are paying per month (including taxes, insurance, etc.) by 15% (or less) more than renting a comparable product.
Since rents vs. prices are so out of whack, this simply isn’t available, so forget it.
“… by 15% (or less) more than renting a comparable product.”
If I hated yard work and home maintenance, and also did not want to pay a home-maintenance-yardwork-challenged premium to somebody else to take care of these necessities, then why would I also want to pay 15% extra for the privilege of owning these headaches?
Then you wouldn’t be a buyer until the premium is less than 15% or perhaps even less than zero if you perceive no positive attributes to ownership at all vs. renting. Different opinions for different folks.
All else being equal, most people, for whatever reasons, psychological or otherwise (less restrictions on lifestyle–pets, renovations, whatever), prefer ownership over tenancy. Because of that, generally, in what I would consider a balanced market, there will generally be a premium to own over renting.
But there is a range of course. I, personally, would be willing to pay a modest premium to own–simply more freedom to do what I want with the house. Others would not. In any event, that premium to my understanding has historically been relatively small–when it is very large (like today), the only justification for purchasing is the belief that prices will be higher in the relatively near future–which today is a poor assumption indeed.
Strangely, the premium (small or maybe even negative in my youth) got bigger when high earners’ income tax rates went DOWN. Go figure.
I wonder how many Realtors are buying homes for themselves right now, ‘walking their talk’, as it were?
Remember - It’s both “A good time to buy and SELL”. They are busily taking half of the NAR’s advice.
“Andrew says, ‘I think the housing market is about as low as it’s going to be and it just seems like a really good time to buy.’
*****ZOMBIE ALERT!!!*****
imploder note spelling error:
“Andrew says, ‘I think the housing market is about as low as it’s going to be and it just seems like a really good time to
buy.’…CRY!
An admirably illustrative example of implosion there, bucko!
“Andrew says, ‘I think the housing market is about as low as it’s going to be and it just seems like a really good time to buy.’”
I wonder what advanced market metric he used to come up with this genius analysis:
* Astrology (by celestial bodies)
* Ailuromancy (by the behaviour of felines; see Felidomancy)
* Bibliomancy (by book, frequently but not always a religious text)
* Cartomancy (by cards, e.g., playing cards, tarot cards, and non-tarot oracle cards; see also Taromancy)
* Cheiromancy (by palms; see Palmistry)
* Crystallomancy/Scrying (by crystals or other reflecting objects)
* Dactylomancy (by means of finger movements)
* Extispicy (from the entrails of sacrificed animals)
* Geomancy (by earth), includes Feng Shui divination
* Graphology (by handwriting)
* I Ching divination (ancient Chinese divination using I Ching)
* Numerology (by numbers)
* Oneiromancy (by dreams)
* Onomancy (by names)
* Ouija board divination
* Podomancy (by the soles of one’s feet)
* Palmistry (by palm inspection)
* Phrenology (by the shape of one’s head)
* Pyromancy, or pyroscopy (by fire)
* Runecasting / Runic divination (by Runes)
* Scatomancy (by droppings, usually animal)
* Sternomancy (by markings or bumps on the chest)
* Taromancy (by specially designed cards: Tarot; see also Cartomancy)
* Aura-Soma, based on colors
I forgot realtor rectomancy: pulling a market analysis out of the a$$ of a realtor.
LMAO!!!! Nicely done!!
Pouah! You risk catching venerial diseases!
reictomancy
Ay yi yi. I have just received from a friend (??) a serious assertion that the google video “project redstar” depicts an actual city on Mars. I look at Mars Global Surveyor photos all the time, I am accustomed to low-resolution shots that make geological features look exceptionally angular. Anyway, my acquaintance who believes in this asinine video is also as poor as a churchmouse. Is it any wonder? I guess she could be worse off: some sub-prime lender will soon identify her as a GF, potential FB, etc. Probably can’t make the first payment but who cares, right?
Thornberg:
“I think we have massively overbuilt single-family homes, particularly in places like Riverside, San Bernardino, San Diego and Sacramento.’”
As long as speculators are happy to buy 50% of these as long-term investments, where is the problem?
Yep, dumping thousands of $ into a vacant stucco box each month is a no-brainer investment. These people profiled by the media are brilliant.
About Thornberg: “It’s not going to be until 2008 that we work through this inventory of single-family homes”
Either he doesn’t get it or he’s afaid he’ll be labeled a kook, but 2008 could easily be worse than 2007, depending on the rate of the downturn. There may be a flood of REOs and no buyers at all if liquidity vanishes by 2008, particularly for overprices new construction.
“Either he doesn’t get it or he’s afaid he’ll be labeled a kook, but 2008 could easily be worse than 2007, depending on the rate of the downturn. There may be a flood of REOs and no buyers at all if liquidity vanishes by 2008, particularly for overprices new construction.”
I think 2008 will be worse than 2007. And 2009 might even be worse. Remember, lots of funny money loans taken out in 2006. Resets will continue for years. I think things are just getting started. We are still close to the top really. A few properties selling for
A MEMO DID GO OUT TO THE WORLD…AND THIS IS THE MEMO PAD!
This reminds me of the pre-networked PC days when you’d get a hardcopy memo about a criticaly important meeting that was going to be held a month ago, and you could tell that it had sat for weeks in the inbox of somebody higher on the distribution list. Alot of FBs and flippers are discovering that the realtors, builders and bankers are first on the distribution list, and they get the SELL NOW! memo only after the everyone else has seen it.
LOL. I think I had a flashback. I am still laughing…
‘I don’t know why. It’s like a memo went out and that changed it.’”
Yeah. Another memo went out today about phony job numbers and guess what? The ten year note yield launched. The four year trendline up from the basement in 2003 remains intact. The true battleground is around 5.3% where the twenty year down trendline converges with it. That’s gonna be cool to watch. What would be even cooler is savings accounts paying 10% again like in 1990. I guess we’ll have to wait and see.
Everbank is paying 6% on checking. We’re getting there!
Want to add a small note : 6% is for first 3 month, afterwards they promise it will be within top 5% of those offered by all other banks. Pretty good still…
Yes, now many banks are offering 5% and more and even a big bank like Citibank offers 5% for savings account….
‘I think the housing market is about as low as it’s going to be and it just seems like a really good time to buy.’
Like I said, there are still plenty of greater fools out there, especially in California. Three homes that have been for sale in my neighborhood where I rent sold in the past couple of weeks. Does any one else in Eureka, Medford, Brookings, Ashland, Chico, et al notice this too? Prices have not come down and yet people are still buying–traffic at open houses is surprisingly strong.
If people think this is the bottom, they’re really in for a rude awakening. It hasn’t even started yet in far northern California.
Take a look at this:
http://www.humboldtcountymls.com/real-estate-property_12773_1.html
$589K for a 1BR/1BA 700 square foot condo in Eureka! Sad part is, three of these identical units are now Sale Pending.
Looks like Street Signs are about to run a story making out the housing slump has ended in CA and maybe the whole country - typical!
In Chico CA, prices are dropping. Yes we still have some FB trying to sell the homes the bought a few years ago for too much but…we are now seeing GF being told by the banks that there is no way they will recieve a home loan. Escrows are falling thru, vacancies are up. I have tracked homes in a certian neighborhoods. In the summer of 2005 a 1320 sf home in one neighborhood sold for $324,000. Now you can buy the same 1320 sf model (a few doors down the street) for less than $285,000. Prices have dropped 16% since the peak. 2007 is going to be murder for these FB also. Come summer we will have 500 new units completed and ready for sale and I predict hundreds of used homes will be put up for sale.
Big Bob;…I have considered moving to Chico…..Love the town….Close to my flyfishing spots…Have family in Paradise….I would not mind speaking with you sometime….
Wow. That is pure insanity. You can buy here in San Francisco for the same $/sq. ft. What drives the economy in Eureka?
The Eureka economy is primarily driven by Boomers cashing out their homes in LA and moving here. Of course, the lumber industry is in shambles as Pacific Lumber Co. prepares to sale its corporate town, Scotia.
The other primary industry is marijuana harvesting.
For $589K you too can live above a bar in a 700ft^2 apartment !
Holy guacamole! That takes Mr. Fester’s official bubble prize!
I should have known when some friends rolled into Ashland (OR) last fall and told me it seemed CHEAP compared to Arcata/Eureka. That is insanity. I think the same thing is going on in Ashland, Bend, Oregon Coast & Reno. Retiring boomers from the by the SF Bay & s. Cal. While I do think we do get an awful lot of those types, it will be interesting to see how much of it turns out to be specuflipping. I was amazed to learn yesterday that many houses in our latest, most gawdy development are headed straight for foreclosure. If there is any justice in the worlds, this overpriced crab pot should too.
Anthony I agree the denial is still strong in Humboldt and surrounding counties — it takes a long time for change (good or bad) to penetrate the Redwood Curtain. But there are signs of small changes. Check this one out in Ferndale, been on the MLS for months and slowly the price came down over $150k.
http://www.landmarkhumboldt.com/listings/216560bfer/
one realtor said her data is showing a 10% to 15% price reductions all over the county. Supply is huge but shrank some in Dec — watch out this spring. Sales are down but FB’s are still all decked out and shopping. One friend of mine is thinking of flipping!!! Trying to talk him out of it — he’s a comfortable business man but I hate to see him get caught in the down draft. Keep an eye on those condo’s on the Bay that might be a good barometer.
“Robert Rivinius, president of the building industry association, said the turnabout first showed up in August and September 2005. ‘The world just somehow changed,’ he said. ‘I don’t know why. It’s like a memo went out and that changed it.’”
After just touting the direction of housing, I got the memo from Bob Toll that said sell my f###$%% stock now. This housing thing is gonna blow. I sold Bob’s stock and Bob did, too.
“I got the memo from Bob Toll that said sell my f###$%% stock now.”
Yeah but Bob got the better deal, he got to backdate his stock options to maximize his profits. Though since backdating is illegal, I guess it’s a good thing he did not let you in on that part of the deal
Backdating is legal, if the board of directors is informed and agrees.
“Backdating is legal, if the board of directors is informed and agrees.”
But if you inform everyone then you don’t need to backdate since you can just increase the compensation in other ways. If you want the guy to get more money, just give him more money. Backdating is done to do things either without permission or to get some special break such as taxes which probably does have a legal issue.
‘It was more like a stock market slump than a housing slump. That’s what gave us a large overhang of inventory that we’re burning off now. The decline was much more like a knife cut than in years past.’
And now it looks like a great time to catch a falling knife.
Where do they go now?
WITH THEIR HOUSING OPTIONS LIMITED, RESIDENTS FIGHT PARK CLOSING
http://www.mercurynews.com/mld/mercurynews/16389534.htm
And the greed goes on………
Apparently builders plan to build 110,000 - 120,000 homes in CA this year (but fewer condos). Street Signs tout this as the housing slump is over and the builders are confident.
and pets.com and lucent stock will go to $50 by june as well
let the good times roll
“‘I think it’s just going to be a weak year all around for single-family construction in 2007,’ said economist Christopher Thornberg. ‘It’s not going to be until 2008 that we work through this inventory of single-family homes. I think we have massively overbuilt single-family homes, particularly in places like Riverside, San Bernardino, San Diego and Sacramento.’”
If (or when) Thornberg ever posted on Bubble Blog with “anonymous name”, I bet he would spew out a vision of doom and gloom that would make all of us here sound like optimistic school boys.
Here is a great idea from France on how to kill the housing bubble and solve the homeless problem. lol
Here is a real great idea to further kill the flippers and floppers that can’t sell. Let’s send them and their Mc$hitboxes to France.
http://www.nytimes.com/2007/01/05/world/europe/05briefs-segoleneroyal.html
Ségolène Royal, the Socialist Party’s presidential candidate, said owners of unoccupied residences should be fined and even pressured to sell the properties to local governments as a way to ease homelessness. She also said that every city should be forced to create emergency shelters for 1,000 people. France’s numerous vacant investment lodgings “will have to be rented,” Ms. Royal said in her New Year’s speech yesterday in Paris, which was broadcast on national television. “To do that, lodgings unoccupied for more than two years will be surcharged and local governments will be given the chance” to acquire or requisition them. The latest opinion poll shows Ms. Royal leading Nicolas Sarkozy, the interior minister who is expected to be the candidate of the governing UMP party in the spring election, by 52 percent to 48 percent
come on this isn’t too far from what posters have already reported - vacant unflippable properties converting to Section 8
oh yes we in the USA are ahead of the curve!
The homeless are already breaking into vacant flipper houses to rip out the copper plumbing for scrap. Let’s just let ‘em squat there! Isn’t socialism great?
Of course abandoned property like that often burns down in a cold winter. Homeless people get cold in an abandoned house with no heat. A small fire gets out of hand and voila! Of course if the insurance company finds out that the property was fraudulently insured as occupied…..
No, no government nothing.
They bleed and die. Simple. The tulip bubble also had the give-rnment buy the damn things back for 10 cents on the dollar, and it ended bankrupting the government cos WTF are you doing buying tulip bulbs for when you oughta be building roads and fighting plague. 10% of a unbelivably over priced and inherently worthless commodity is still too much. 1% is too much.
Cool.
Cow_tipping.
An important new phrase for realtorwhores to learn. “ESCHEW OBFUSCATION” - real meaning. avoid confusion.
Speaking of memos………………did anyone get this one wriitten in red?
http://finance.yahoo.com/
Here is the funny part (my editorial suggestions are offered in bold typeface):
Stocks End Lower
DespiteThanks to Upbeat Jobs ReportFriday January 5, 4:12 pm ET
By Madlen Read, AP Business Writer
Dow Closes Down 83 at 12,398, Nasdaq Finishes Down 19 at 2,434
DespiteDue to Lowered Fed Rate Cut Hopes on Surge in New JobsWhy is the US financial press so totally clueless? The Financial Times “gets it.”
———————————————————————————————–
Strong US job gains dash rate cut hopes
By Eoin Callan and Krishna Guha in Washington and Ed Crooks in London
Published: January 5 2007 14:24 | Last updated: January 6 2007 00:42
US companies hired workers at a blistering pace last month, according to fresh data, which dashed hopes of early US interest rate cuts and brightened prospects that the world’s biggest economy is heading for a soft landing.
The US Department of Labor said non-farm payrolls rose 167,000 in December, a figure far exceeding market expectations that prompted a sharp sell-off in the bond market. While equities fell back as the likelihood of a rate cut receded, the data sent the dollar higher, and halted an earlier slide in oil prices.
The December jobs gain was the biggest increase in 2006, defying economists’ predictions that the pace of hiring would slow. Wages also picked up, with a 4.2 per cent annual increase in average hourly earnings.
The report is a boost for the Fed in its tug-of-war with the bond market over the state of the US economy and the likely future path of interest rates. Strong job creation and healthy wage gains reinforce the Fed view that the US economy is on track for a soft landing, in spite of the drag from housing and some weakness in manufacturing.
http://www.ft.com/cms/s/22916402-9cc6-11db-8ec6-0000779e2340.html
Blistering bull sh-t from the Labour Department. Is it the same bunch of slimy bastards that calculate the CPI and the core inflation rate ? The hell with them.
The DOW is going down because investors, these morons, think that when the times are good for main street, it’s bad for Wall Street. Anyways it’s a big fat lie like every statistics produced by these liars at the Labour Department. What’s the name of the crook in charge ?
“‘That type of massive increase bent the industry out of shape,’ he said. ‘It caused lot and land prices to wildly accelerate, material and labor costs to skyrocket and trade contractors to throw away their standard profit-measurement tools.’”
Amen;…In the past couple of years I have spoken to friends that are in the trades that told me that they would estimate a job based on their normal formula and then “Hit the X two Key” and thats the bid they would offer….Soooooooo much work, they did not care if they got the job….The profits were Sooooo fat that they only needed a few…..Well, party is over boys & girls….Sharpen the pencil……
ot-sorry
just saw this on craigslist looks like we are reaching the anger stage
http://newyork.craigslist.org/brx/rfs/255517712.html
the bronx, oh yea
I dunno, the guy says he’s motovated - maybe he meant to post on Detroit CL?
“motovated” = semi-literate
Call him for a free consultation? Ha! Someone like him who knows neither spelling nor grammar is probably pretty poor at math as well.
my favorite typo in the ad:
“no co- broke please”
fine, keep the broke all for yourself
“5-there is no burst in bubble has your rent ever been lowered, then do you think the price for R.E. will, NO didn’t think so”
Yup, he’s motovated.
this is a ALL BRICK with driveway and Garage
New roof,boiler, ect
I would be deeply embarrassed to buy from an obvious illiterate like that one.
PS. WTF is a boiler?
Steam heat, hissing radiators, clanking pipes and so on.
The Real Estate Industry will be able to Hold a Roll Call of all poteniel Buyers in a frigging TELEPHONE BOOTH from Now to 2008 !
here’s a no spill over for ya
looks like containment to me
http://finance.yahoo.com/q?s=LNX
Yes, yes a memo. Right … the memo that said, yea fundamentals are what count … and yes it has been out a long time, try 100+ years, but you just ran out of people who couldn’t read …
Cool.
Cow_tipping.
Fund-a-mental like in mental case or mental disease.
“Standard Pacific dropped prices 10 to 20 percent at its Bay Area projects last year”
20% in the Bay Area would be around $150K driving the med. from around $750K down to $600K.. I dont recall seeing anything yet happening on that magnitude. Im hoping to see 2x more on that to drive prices around $300K which would be the norm.
that’s even bold
that’s enough bold!
one more try!
this should be normal
Back to that original comment regarding Days on Market… I would have to report that that figure is absolutely irrelevant in Southern California (specifically the San Fernando Valley). I have seen numerous instances where properties are relisted as “New” after failing to sell. I don’t know who gets fooled by such tactics, possibly people who are new to Zip Realty.
I would love to see a future where Realtors are excluded from the process totally. Your “Legal” obligations could be executed by a Lawyer for an absolute fraction of the 5-6% commission that Realtors charge. Lawyers, known as Solicitors in Australia, routinely handle this aspect of Real Estate. With sites like Zillow and Zip Realty I just don’t see any need for Realtors. In Australia, most people take their Architect to see a property and give their opinion as to the potential. Realtors know jack! They do not “Sell” the property… the “Market” dictates the movement.