“An Unprecedented Supply Of Homes On The Market”
The Times Herald reports from California. “If you’re looking to buy a house in Solano County, now may be the best time, a home-building industry spokesman said Friday. The California Building Association’s Charlie Carson said the first part of 2007 will be much like 2006, with building starts down and the prices of existing homes modestly ‘correcting,’ downward.”
“Part of the reason building starts are down, Carson said, is that home builders are still working on selling their existing inventories. ‘Also,’ he added, ‘There is an unprecedented supply of resale homes on the market,’ right now.”
From the Signal. “Although a dropping real estate market has been troubling, 2007 could be the year where the housing market in Santa Clarita bounces back from what became a major slump. Last year, housing inventory increased dramatically in the Santa Clarita Valley, and although there were sales, there was a 25 percent to 40 percent drop from the surge of sales in 2005.”
“‘We’ll have pockets of negativity happening during the year,’ Larry Mankin, executive director of the Santa Clarita Valley Chamber of Commerce, said of 2007.”
The Appeal Democrat. “Home construction in Yuba-Sutter was down but not out last year. The building fever of a few years ago has turned into a chill as the number of building permits pulled in 2006 dropped sharply. ‘It’s definitely dropped,’ said Aaron Busch, Community Development director for Yuba City. ‘But you see reports that everyone else is experiencing the same slump.’”
“Building departments in both areas issued fewer building permits in 2006 from the previous year. Yuba City was down 71 percent. Yuba County, not including Wheatland, dropped 42 percent.”
“The area’s homes have to be priced right in order to make it worth the commute to jobs in Sacramento. ‘As Sacramento drops, Yuba City has to drop too,’ said Darin Gale, legislative advocate for the North State Building Industry Association.”
The North County Times. “A network of scam artists convinced unwitting investors to buy houses using questionable loans and then backed out, leaving the investors on the hook for as much as $5 million apiece, according to a lawsuit filed Friday in Riverside County Superior Court.”
“Temecula attorney Richard Ackerman filed the suit on behalf of an anonymous client, who he said was duped into buying five houses in and around Murrieta in early 2005.”
“According to the suit, the anonymous plaintiff is stuck with 10 loans and payment obligations of more than $20,000 a month, far beyond her ability to pay. All told, the alleged scheme involved as many as 400 investors and an estimated $1.2 billion of property, Ackerman alleged in the complaint.”
“The cash from each new round of loans was used to cover the regular mortgage and tax payments on the last round, giving the arrangement the form of a classic ‘pyramid’ scam, Ackerman said.”
“A San Diego financial adviser said three of her own clients were involved in the operation. Including investors known to the adviser, to Ackerman and to attorney Ashley Abano, the alleged scam took in at least a dozen investors with two to three dozen properties.”
“‘The total number of loans affected is likely in the hundreds, if not thousands, within the Temecula/Murrieta area,’ the complaint filed Friday alleges.”
“The alleged scam could levy a big blow to local real estate values, according to Ackerman and one prominent real-estate agent. Large numbers of empty, foreclosed homes in a neighborhood can make it difficult for the banks to sell them for close to the amount of the mortgages they issued. The empty homes for sale can also force other sellers to slash their prices.”
“Ackerman estimated that renters occupied half or more of the investment properties, but said they were not paying nearly enough to cover the mortgage payments.”
“Rising numbers of foreclosures last year have already begun to undercut the market, economists, analysts and real estate agents have said.”
The Merced Sun Star. “In the summer of 2005, a four- bedroom house at 3812 Avocet Drive in North Merced enjoyed the peak of its real estate career when it sold for $425,000 to buyers from Tracy. This week, 3812 Avocet Drive fell back to earth. The city put a lien on the property because its owners, who apparently never moved into the house, failed to maintain it.”
“The house’s rise and fall illustrates a problem that city code enforcement officers say is becoming more common: Houses that out-of-town investors bought during the real estate boom now stand empty, racking up complaints from neighbors.”
“‘We’re seeing a lot more of that and we will probably see more with the foreclosures that are going on,’ said Code Enforcement Specialist Roberta Medina.”
“‘It’s increasingly common to get calls about ‘beautiful brand new homes that have never been lived in,’ said Code Enforcement Specialist Kelly Roseman. ‘And good luck trying to find an owner,’ she added.”
“In the case of the Avocet Drive house, neighbors say they never saw anyone live in the house after it sold in July 2005. The previous owners bought the house new in 1997 for $119,000 according to public records (and) kept a tidy lawn, said neighbor Nancy Walker. After the original owners left, Walker watched as the grass grew taller and the flowers died.”
“Code Enforcement Specialist Greg McSwain said the new houses standing empty remind him of Los Banos, which attracted its own building boom in the 1960s when the San Luis Reservoir dam was built. Speculators built houses that stood empty for 10 or 12 years, McSwain said.”
“‘Many years later, I’m seeing the same type of thing in Merced,’ he said.”
“Last summer, he responded to complaints about nine separate houses in the new Dunmore Homes subdivision in North Merced. Today the situation doesn’t seem to have changed much. While some of the houses in the neighborhood are clearly occupied and others have for sale signs in the yards, many show no signs of life.”
“Dark windows without curtains watch over empty driveways. ‘It’s surprising to see a property in that type of a neighborhood slide that fast,’ McSwain said.”
“Empty houses also can lead to more serious problems, Medina said. A house on Cormorant Drive that sold for $440,000 in 2005 became a hangout for teenagers after it fell into foreclosure and the owners left, Medina said.”
“‘When a home gets into the condition that the one on Avocet Drive is in, that can really start a downward slide that we don’t want to have happen here,’ said City Councilman Jim Sanders. ‘What happens next is that if that isn’t taken care of, people break into the homes, the crime rates go up.’”
That’s just what the bank needs to sell the house teenage kids using it as a place to do drugs and drink beer no doubt. That will sure make prices rise in the old “hood”.
Don’t forget the old matress thrown in a corner and surrounded by used condems.
Fraud.
And more Fraud.
That’s all it ever was.
““If you’re looking to buy a house in Solano County, now may be the best time, a home-building industry spokesman said Friday.”
When has the Real Estate industry ever said it was not the best time to buy a house? Prices go up, buy a house, prices go down buy a house, if you already have a house buy a second house. Spring is the best time to buy a house, unless its Summer, or Winter or Fall and then is the time to buy a house. Good credit, Bad Credit, No Credit, its always a good time to buy a house. If you are young its time to buy a house, if you are old its time to buy a house, if you are middle aged its time to buy two houses. If you have a job its time to buy a house, if you don’t have a job its time to buy a house, if you are rich, poor or middle class its time to buy a house.
LDBL (Long deep belly laugh)
It is always a good time to buy since they are not making any more land prices will keep going up.
Especially on the Florida Keys. http://globaleconomicanalysis.blogspot.com/
Nature tends to have a way of making more land via Hurricanes that wype out beach front property and scrape them of anything but sand.
VOILA! More land to build on.
The best time to buy a house is at the bottom of a deep downturn. We’re only slightly below the peak of a huge upswing. This is very nearly the worst possible time to buy a house - don’t be insane. Wake me up in 5-7 years and we’ll talk.
Like when you’re on a roller coaster, cresting the peak and looking down at the tiny people and trees down below. The front of the coaster is heading down while the back is still going uphill. We’ve not even gained momentum, yet.
I imagine things will be in full swing by the end of summer. That’s when the SHTF. Of course, it will take a long time before all the FBs are shaken from the market. Let’s not give them the opportunity to “ride it out” (talking about specuvestors, not decent families who were trying to do the right thing).
We’ve been waiting for this for a long time.
Actually, I’d argue that the best time is shortly before bottom. The selection is better and your bargaining position is also better.
I have been arguing this too.
However, history shows us the fastest prices declines are as we approach the bottom, so it is a bit of damned if you do, damned if you don’t.
Since we’re no where near the bottom, a bit academic in 2007.
Neil
Spending the year dead for tax purposes ? No Problem ! Thats a good time to buy a house !
And exactly what kind of salesman do you expect to go around saying “don’t buy”?
Sounds like a Dr. Seuss rhyme.
I can easily see the Santa Clarita Valley is booming! So much so that within my small allotment of about 25 houses there was already 1 foreclosure and 1 house that has been on the market over 6 months! The price on my rental house has went down over $100k in one year! Yeah, it’s really booming! I look at forclosure.com and see just how many pre-forclosures, forclosures and tax liens are in my area and I can tell just how things are going to take off if the spring!! I have gotten at least 6 - 8 new listings a day from Ziprealty for houses coming on the market (91355). Spring is going to bring a crapload of these sh*tboxes! I wouldn’t have the house I am renting. It is only 6 years old and cabinet doors in the kitchen are falling off the hinges, the door sensor for the alarm goes off all the time with no reason, the doorstop to the garage door does not work, the electrical outlets always need to be reset, the water for the shower takes forever to heat up and many other small details. This house is a real piece of crap and it would sell right now for around $600k. CRAZY!! I refuse to buy just because some nut will risk their financial future and get a nutty, fruadulent loan!! Hopefully, this crap will be ending sooner rather than later!!!
My douchebag landlord is raising our rent by 14%. Thanks to a law Pataki enancted in 2003, he can get away with this (it’s rent-stabilized with a preferential rent, for those NYers who know). However, even after raising the rent (and we may be moving as a result, now that the price isn’t so favorable) it is still less than half of what it would cost us to buy.
It’s slow going here in NY, but there is a lot of room to fall. My wife and I are far from well-to-do, but we’re early 30s and make a combined income in low six figures.
We cannot conceive of buying in our neighborhood at the moment. But in two years, mamma mia!
Hope you are right. New Yorkers keep telling me “it’s different here”, and I ALMOST believe them, given that NYC’s economy is probably less dependent on real estate per se, than many other local economies. The mere fact that your d*****bag landlord felt the market would bear a higher rent says something bullish about your area. Out here on the Pac coast (I’m not in AZ just now), if away from cities, one sees rental properties sitting on the market many weeks, just like houses offered for sale. Not enough tenants who can pay even $1200-$1500/mo, never mind a NYC-type rent.
“it’s different here”
They are absolutely right. And the next time the stock market seriously corrects, everyone will learn exactly why.
I went to Jersey City today. Building anywhere they can. We took the PATH from World Trade. That hole in the ground should be a reminder that we are still Terrorism Target #1. Another huge terrorist act and say bye-bye to real estate market. Of course, at World Trade there were some d@ckheads with their little “9-11 was an inside job” thing going.
They are building the heck out of Manhattan, Brooklyn, Queens and the Bronx. Riverdale, for god’s sake, has a dozen new condo projects going up. They are all luxury.
In 2004 building a luxury condo tower in the New York area was a great idea. Too bad 100 different groups all had the same idea.
yes but rumor is derek jeter has bought in that new riverdale luxury tower
yet another selling point for the shills
sure once my boss gives me 18m a year il buy too
He bought the penthouse for his parents for $4 million is what I heard. It is in the 230s in Riverdale. I forget if it was the Solaria or not. I think it might be.
Rent control is a root cause of higher rents. You NY’er will suffer forever because of socialist policies. Look at the large cities of Europe - highest priced rents anywhere and a ‘landed gentry’ are only ones to afford to own. Now look at Texas - no controls of any kind on building or nothing - very very very affordable. Its not simply a land availability issue. There are lots of places to build high rise apartments in NY but it doesnt make sense to build them DUE TO RENT CONTROL will ruin the investment immediately - banks wont fund project.
Anyway its hopeless once renters outnumber owners they always will pass those laws.
“There are lots of places to build high rise apartments in NY but it doesnt make sense to build them DUE TO RENT CONTROL will ruin the investment immediately - banks wont fund project.”
This is simply not correct.
Rent-Regulated Housing includes both “rent-controlled” and “rent-stabilized” apartments. Newcomers need not concern themselves with rent control since rent controlled apartments either “go to market” or fall under rent stabilization upon vacancy. Thus, there is no such thing as a vacant rent controlled apartment. About half of all the two million apartments in the city fall under rent stabilization. Over 100,000 of these units become vacant each year. If the lawful rent exceeds $2,000 per month, upon vacancy rent stabilized apartments are deregulated. If the rent is below $2,000, the vacant unit remains under stabilization. As a rule of thumb, if you are searching for a rent stabilized apartment, the building must have been built before 1974, have six or more apartments, and the new rent must be below $2,000 per month. Some rehabilitated and newly constructed buildings also fall under rent stabilization if the owner has received a tax abatement.
http://www.housingnyc.com/html/guide/basics.html#stabilized
I don’t know why out of towners continue to post false info about the NY rental market, but it’s tedious to have to correct posts again and again. Luxury rentals continue to be built in the Manhattan–if it looks profitable, it will get backing.
Rent control and crime drove the middle class out of NYC. Of course, luxury buildings will still be built, but no middle income apartments can get funded, or would make any economic sense because of rent control.
The thugs who want men with badges and guns to run the housing market are so anti-freedom they cannot conceive anything but control of other people.
Does anyone have any concept of private property anymore, as protected by our Constitution? Rent control deprives property owners of the full value of their properties. It is a taking without compensation.
If the tenants want limited rent increases, they need to negotiate that into their lease.
We’ll give up rent control if you’ll give up prop 13.
We’ll give up Prop. 13 if you give up public schools and have parents pay for their own children’s needs and wants.
Sounds good to me. Also let’s get rid of the reproduction tax credit. Let the parents clean up their own messes!
If I give up Prop 13, I’m passing the cost of the increased taxes right along to the tenants.
Reproduction tax credit? What a joke, you mean the measly $500 or so per year that phases out if you make over six figures? Big whoop.
it might be small - individually, but I am sick of subsidizing someone else’s snot nosed, ill behaved future “do nothing”.
It does’t take a village - it takes responsible, future thinking couples to think about how they will actually care for kids BEFORE they have them. And if they do, follow through appropriately.
“If I give up Prop 13, I’m passing the cost of the increased taxes right along to the tenants.”
You’re not passing the cost of increased taxes right along to the tenants, if the rental market will not support your increased rent. I have rental property in NY and when my property taxes increase by double-digit percentages, there’s no way I can pass this entire added expense, dollar-for-dollar, to my tenants and expect to keep the place rented.
“We’ll give up rent control if you’ll give up prop 13.”
I agree with jbunniii on this one… I used to live in San Francisco in a rent controlled apartment for 8 years, and by the end was paying about half the market rate for my apartment. It was a great deal. All the landlords in S.F. whined and complained about rent control, but god forbid you even mention touching Prop 13!! My “poor” landlady owned our building for over 30 years … Yes she had to put up with rent control, but courtesy of Prop 13 she paid (and continues to pay) next to nothing in property taxes on a 5-unit building in central San Francisco that was/is worth millions.
Spike66, the cure for your sloganeering is to read Nobel prize winner Douglass Cecil North’s “The Economics of Public Issues.”
He puts to rest all you do-gooder busy body big government types who parrot the leader’s memes on issues such as prostitution, drug criminalization, minimum wage, rent control, and the like. I wish people had better things to do than to control free voluntary exchanges between each other. What a bunch of busy bodies!
You mistake correcting a poster’s misinformation for “sloganeering”. If you wish to oppose a particular issue, you might find it helpful to have the facts at hand. The substance of my post was taken from the NYC gov. website, which you might have noticed if you had read for comprehension.
I don’t know what is in the water in Phoenix, but what prostitution has to do with the distinctions between rent control and rent stabilization is something you can enjoy discussing with the other out of towners.
When you regulate the amount of money a property owner can charge a tenant, you are butting into a private transaction, no different than telling a prostitute that she can’t consensually sell her services to a customer. Maybe if the gov’t would stick to criminalizing only murder, rape, fraud and theft, our prisons wouldn’t be overcrowded and our freedoms wouldn’t be under constant assault. But that’s a subject for a different blog.
No “butting into a private transactions”… what a brilliant political philosophy, bravo. Is saving Chrismas part of your program? Your freedoms are under assault from things like the patriot act, presidential signing statements, warrentless wiretapping, not the clean water act, kyoto, minimum wage laws or rent stabilization. It’s mind-boggling to hear middle class idiots rail against the busy body goverment “regulations” they owe their rise from poverty and continued cushy existence to. Laisser-faire capitalism will solve everything — unless you want to breath clean air, get a public education, live in a safe building, earn a decent living or retire before you die. Take a trip to South or Cental America if doubt it.
Right, South and Central America are excellent examples of laissez-faire capitalism.
And I am Marie of Roumania.
A little encouraging news on Manhattan prices: 4th Q median apartment price down 6% from 3rd Q.
http://money.cnn.com/2007/01/02/real_estate/Manhattan_housing_market_drops/index.htm?postversion=2007010300
Of course no good news gets left unspun…
“Even the quarter-to-quarter downturn can be interpreted as good news.”
hang in there brooklynite you are far from alone in your situation
although 14% is a major increase the cost of moving and the stress as well must be factored in. if you like the area and can swing it and still save cash stay put
either way good luck
agreed - I would pay 15% not to have to put everything in boxes again….
the soviet union had rent control
- not here
Actually there was no rent. You signed up and were assigned an apartment.
As a result of rent increases the FED will notice inflation picking up (Rent Component of CPI). Thus they will shortly increase rates to stem inflation. That in turn will further drive home prices lower.
I would say…
Mission Control … we are right on target … everything is go go go…
“The area’s homes [in Yuba City] have to be priced right to make it worth the commute to jobs in Sacramento.”
Sure, especially when Sacramento itself has 1 listing for every 178 persons! Even SD has fewer listings per population (1/189), according to the bubble markets inventory tracking blog.
Sounds like the blame is trying to be pointed to just the investors. That was not the only guilty party in the prices driven up.
Boy, the news attitude sure did change Jan 1, didn’t it? Sounds like things were kept quiet until the close of 2006. Not just by chance. Pass the popcorn….
This is from ITulip yesterday, reiterating their outlook for the housing dump - recession to begin late ‘07 and run through ‘08. That would jibe well with the Market Semiotics thing I put up here the other day.
The next couple of years might be just what the discerning bear dreams about.
oops:
AntiSpin: So there you have it, the 2007 trading year in a nutshell. The markets are waiting for the Fed to cut, fearing that the Fed might drive the U.S. economy into a recession cycle. The Fed is waiting for an event that gives them a reason to cut rates, so they can do so without spooking the bond market. For example, Y2K in Q4 1999 was a good excuse. A few million dot com shareholders marking their post-crash technology stock portfolios to market Q3 2000 was another. But as I explain in my Recession 2007 prediction, housing bubbles don’t deflate all at once. A home owner only marks his or her home to market when trying to get money out of it, by selling or refinancing. That happens over several years. Then there’s the lag time between the awareness of a decline in home value and change in consumer behavior, usually about a year lag. That puts the housing decline-based recession in the latter part of 2007, and accelerating into 2008, an election year. Then there’s the recession in what I call the OPM Sector, the hundreds of thousands professionals who are employed in the business of managing Other People’s Money, especially Private Equity and Hedge Funds. Their ranks have grown faster than Federal government payrolls since 2001.
There’s a school of thought that the Fed won’t allow the economy to tank in an election year. Well, tell that to George Bush I while considering that with large obligations to Japan, China, and the UK, the Fed cannot cut rates without an event that is a clear and present forcing function, an event that lends urgency to the decision to change course. A few negative bits of economic news aren’t going to do it, especially with cross-currents of good news coming in at the same time. Paradoxically, said urgent event is likely to be a market crash of some sort. I hope it’s merely a stock not a bond market crash, although a hedge fund manager I talked to today seemed to think distress in some areas of the bond market, similar to the kind of pain we saw in the corporate bond market a few years ago, is inevitable. In fact, he has a large fund structured to make money off the event.
I think the bond market will have a long decline in subprime bonds because they converged too much with prime bonds.
Ergo risk premium on AAA and lower bonds is just not realistic. Its so low for junk bonds in comparison to AAA that sooner or later it should again rise up.
The thing I love about these “experts” is they denied there even was a slowdown and then immediately flipped to it was a major correction that is now over.
I will never use a realtor again, to buy or sell.
selling yourself is easy
looking for a date?
LOL!
http://tinyurl.com/ymuvq6
oh my god! that is a marketing pic for a house? What are these people thinking! $560k for this 1950’s era home that appears to be in semi-disrepair… probably has old wiring… and not modernized at all! omg!
It’s probably for the land. Carmel Valley is wonderful but buildable lots are dear. Lots of water supply issues.
That’s actually very typical for the housing stock in the area. The broader Monterey Bay area is stuck in time–with incredible building restrictions since the mid 1970s.
The only stuff that gets built today are multimillion dollar estates and a few “affordable” cookie cutter subdivisions that start around $800K. A 1700 sq. ft. 3br/2ba tract house built in 1965-1970 goes for around $700K (asking, but not moving) these days. A 1200 sq. ft. place built in the 1950s or before, in “not so nice” areas, goes for $600K.
(Carmel Valley is a very nice zip code.)
Soho, where are you at? We are in the financial district and are looking to move back up at the end of May. We are thinking Village, Chelsea, Soho, maybe even Murray Hill. With jobs in Midtown, Murray Hill wouldn’t be so bad. Any advice on finding a new place? Thanks.
(Sorry about the OT post)
that listing leaves me speechless
I just looked at a property just like that in ft myers. It was 60,000. I offered 30,000.
I know this looks ridiculous, but the price probably reflects a discount from the land value for tearing down the shack in the picture. Carmel Valley lots are valuable as this is just inland from Pebble Beach and the Monterey Peninsula.
Nice country estate, how about a house in town to go with it:
http://tinyurl.com/ygqm9a
So is that yucca on the curb the “mature garden”?
My 1bdr apartment is larger than this 2bdr house at 780 sq feet. One of the nicest neighborhoods in San Diego, so it’s a relatively expensive $1140/mo.
The payment is 3k.
* (Based on a 30-year fixed rate of 6.5% with 20% down.)
UMMM YEAH!!! NOT!
“In the summer of 2005, a four- bedroom house at 3812 Avocet Drive in North Merced enjoyed the peak of its real estate career when it sold for $425,000 to buyers from Tracy. This week, 3812 Avocet Drive fell back to earth.
Define “earth”.
When that house is down under $200,000, then it has officially hit earth. Until then, it’s still miserably overpriced
Merced LOL Mer-dead!!!! Hope you enjoy your overpriced home there
there isnt much else.
I wonder if there shouldn’t be some kind of recourse for an HOA to deal with an empty house.
I suppose not, but we have an empty McMansion here in VA and it just bugs me. It looks so lonely.
“‘We’ll have pockets of negativity happening during the year,’ Larry Mankin,
Those pockets are called Florida, California, Phoenix, Las Vegas, Brooklyn, Bronk, Washington D.C., Chicago, Seattle, Minnesota, Tennessee, oh well, the entire United States and maybe even Europe.
every county except where they’re drilling gas and even that looks shaky at $6.20………
http://www.SuperJumboReverseMortgage.com
“For example, a single person who is 82 will receive $5,100,000.00 in tax free cash from their $10,000,000.00 home”
If they are 82 and have a $10M home, why would they give a crap about a reverse mortgage?
it might appeal to a HNW homeowner who wants to stick it to his heirs.
Comment by LARenter
2007-01-06 14:06:23
Spring is going to bring a crapload of these sh*tboxes! I wouldn’t have the house I am renting. It is only 6 years old and cabinet doors in the kitchen are falling off the hinges, the door sensor for the alarm goes off all the time with no reason, the doorstop to the garage door does not work, the electrical outlets always need to be reset, the water for the shower takes forever to heat up and many other small details. This house is a real piece of crap and it would sell right now for around $600k. CRAZY!!
I’m in agreement here. The next time I buy a house, I may not even bother with the resale market…most resales built within the past 10 years have been the biggest pieces of shit. Poor construction, already falling apart, and most on tiny lots with HOAs attached. I wouldn’t buy the current home I’m renting either…its only 3 years old and its having the same issues…poor construction, things falling apart already, and my husband the plumber said one of the bathrooms is probably already developing a mold problem (its beginning to smell funny in there, despite our continous attempts to clean it).
I wonder how many people that have bought lemons (or soon to be lemons) within the past 10 years will say, “screw it, never again!” and either just rent or just buy custom homes without HOAs not associated with any major builders. Hell, I know I am. If I have the choice of only buying homes that are pieces of shit that will start falling apart in 5 years or less from a major builder, screw it, I’ll rent forever. Or buy custom from a reputable small builder.
And uh, yeah, as for this in one of the articles:
“Code Enforcement Specialist Greg McSwain said the new houses standing empty remind him of Los Banos, which attracted its own building boom in the 1960s when the San Luis Reservoir dam was built. Speculators built houses that stood empty for 10 or 12 years, McSwain said.”
Isn’t “los banos” spanish for “the bathrooms”??? Who in thier right mind would even buy or invest in such a development, much less live in an area named for a literally, a toilet???? But whatever, it looks like history is repeating itself once again. (Just make sure you don’t buy into a development named Los Banos Grande Estates or something).
literally “the baths”, but yeah… I agree
Are all the houses here in S. Cal built within the last 10 years or so POS? My husband and I are thinking of buying a piece of land in Castaic (last place where you can find any land not owned by builders) and contracting a builder to build us a custom home. We’re just not sure what type of issues we would get into? My father-in-law built his own home in Ohio in the late ’70’s, but this isn’t Ohio. I am just so dissatisified with the build quality here in the Santa Clarita Valley!! These homes are AWFUL!! Any thoughts or suggestions would be greatly appreciated! How difficult is it to build a house here in So. Cal? I figure it would be cheaper to build a house than to buy one at this point in time! I just don’t want to wait 3-5 years to buy a house due to the greed of the past few years!! I’m very frustrated!!
Most houses in So. Cal. under $2M are crap, I can’t afford to be here either but I’m used to it so I stay. If you don’t want to live in a 1950s ranch stucco sh!tbox or a newly built Homedepot Mediterranean stucco sh!tbox then you shouldn’t be here, no offense.
Thanks for the heads-up! I have a really good job and I guess I will just have to adjust my standards down! How sad! Money just doesn’t have any value here!
Also, what’s up with Zillow?? For awhile prices were going down now for some mysterious reason all of the prices seem to be adjusting upwards?? Am I starting to go crazy or what?
I don’t know about Zillow, but prices don’t go up or down consistently even in a correction. All I know is, if you are waiting for prices to come down in So. Cal., take a number, because most of us on this board are waiting for the same thing and so far, prices have barely budged. As for the expensive crap houses here, you have to really like the weather, the beach, the mountains, the job opportunities, which are the things most people here in So. Cal. sacrifice their housing situation for, otherwise, if you’re not impressed with all of that, you might as well go to Ohio or somewhere like that and get a mansion for 100K.
Well I can think of several possible explanations:
In the great buyer/seller showdown most recent sale may represent a seller who capitulated and sold at a low price, an elusive greatest fool buying at the tippy top of the market, or mortgage fraud. With lower sales volume like we’re seeing now, which one will have a disproportionate effect on Zillow.
Zillow is a pretty new tool, and their algorithm may need and or be in the process of being adjusting to deal with this unsettled/falling market. They simply don’t have a track record.
“According to the suit, the anonymous plaintiff is stuck with 10 loans and payment obligations of more than $20,000 a month, far beyond her ability to pay. All told, the alleged scheme involved as many as 400 investors and an estimated $1.2 billion of property, Ackerman alleged in the complaint.”
Memo to “investors”: houses should be long-term abodes occupied by singles, couples, and families, in decent neighborhoods where people can raise their children and develop long-term friendships with their neighbors. You greedy bastards and your ilk fed a speculative bubble that turned the “American dream” of home ownership into a grotesque parody of what it once was. I am going to watch your financial ruin with pure undisguised glee, and use you as a cautionary tale when I instill values and wisdom in my children.
Isn’t “los banos” spanish for “the bathrooms”??? Who in thier right mind would even buy or invest in such a development, much less live in an area named for a literally, a toilet???? But whatever, it looks like history is repeating itself once again. (Just make sure you don’t buy into a development named Los Banos Grande Estates or something).
It’s worse than that Los Banos means “the baths” yes. I think it came from natural warm/hot springs. The town itself is a dusty nothing farm down in the middle of nowhere, but Interstate 5 and California Highway 152 go by. This means it’s a REMOTE commuting destination to San Jose and the greater SF Bay area. Without traffic the drive is 1.5+ hours. Back in the 1960s I’m sure the houses were built for an imagined local economy change rather than the desperate commuter market that developed in the 1980s.
The town slogan might be: “Bakersfield, without the sophistication.”
inventory saturation ? what do you think is the magic # ?
40,000 in phx a metro area of 2 million
My friends just bought a house in FL in BFE. They paid 270 for a 2200 SF home. It’s nice, but their yard is small and the neighbors house is about 6 feet away on each side. Talk about being squeezed!
They said the house appraised at 300k so they already have instant equity in it. What they fail to realize is that when it goes through, their buy will screw the comps and it wont be 300k anymore unless someone fudges the numbers and gives them 30k back at closing.
I wonder how many other FB’s will keep their 2006 appraisals and convince themselves they have “equity” even while comparable prices are crashing around them.
They did a lease option to buy to. Had to give 10k so they hold the price for a year why their credit improves.
But hey, they now “OWN” a house!
Really, how stupid do you have to be to believe this “instant equity” crap? Good god, are these the same idiots who invest in “zero point energy” perpetual motion machines and money repatriation schemes? The only way to have “instant equity” when you buy a house is to bring a down payment check.
Strange timing of the article.
Against everything I have been reading, I was actually going to buy a suburban Chicago cheap duplex (158,000 after incentives). The rental/mortgage comparison was almost the same. I knew I would probably lose money but I was willing just to have my own home.
However, before I signed the contract I did a little checking. I found out that the townhouses in back were being converted to subsidized low income rentals. This is from a developer who insists that they don’t sell to investors. I sent my sister in the office and they are still insisting that they would never sell to investors. How could they blatantly lie like that?
This scared me enough to sign a rental lease. I still believe there is no shortage of buyers just a shortage of affordable housing in safe neighborhoods.
you’ll get a better deal later
section 8?
wow, run far away
And for Los Banos. If anyone else has also driven through there, did you notice that the stink of the cowshit is so strong that I have a hard time driving through with the windows up. It is absolutely horrid in the summer heat (100 F+). An outhouse in the mountains doesn’t smell as bad as this toilet. Ditto for most of the other towns around too.
The odor travels up to South San Jose in the morning.
Wiff!
I am shocked that no one is commenting on the $1.2B fraud.
WTF????????????
It is maybe the bottom of the 2nd inning in the housing bust and we have a San Diego County fraud for a billion plus.
Man, I gotta build that bunker and buy some more ammo.
Pass me some popcorn!
Who was that lady who chewed me out for saying “There will be blood in the streets” - OHHH I found it:
Comment by crispy&cole
2006-03-18 07:30:37
There will be blood in the streets of Phoenix. They will change the name to: Bubble City, AZ!
Reply to this comment
Comment by mtnrunner2
2006-03-18 08:20:30
I might have to stop coming to this board. Too many stupid comments. What does it mean, “blood in the streets”? It’s such a gross phrase.
I wish people would be a little more grown-up. Avoid using words like blood bath, greedy sellers. That will elevate this site to its proper level. The articles that Ben posts are informative, well chosen. Then people come here with such stupid comments. Just add something educational, funny, interesting.
Here was the follow up. Looks like we were right. Let the carnage begin:
Comment by viral smile
2006-03-18 14:53:52
right on, crispy!
Reply here
Comment by txchick57
2006-03-18 08:59:53
People who are trying to obtain prices 100% and more above what they paid merely because they were “early” and who have done nothing to enhance the value of said properties are greedy and trying to exploit the stupidity of later people who might actually want a place to live. If you find that insulting perhaps the SDCIA is more your speed. You want stupid comments in droves, take a look there.
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Comment by mtnrunner2
2006-03-18 09:03:13
Texaschick57 - what would be your asking price for that house?
Comment by homepop
2006-03-18 09:12:25
Look, I don’t like the price inflation of houses any more than anyone else on this blog.
However, the people who were “early” took a risk with their money. The market could have gone down as well as up. As it is, it went up, and they profitted by their luck and/or skill. They now have a right to list their houses for whatever they think they can get. It’s the buyer’s who have to send them the message. This is known as capitalism.
Comment by OutofSanDiego
2006-03-18 09:37:11
They can list at whatever they want…but they show their greedy side by publicly complaining that they are only making 100% after 16 months (actually probably more like 1600% since the guy probably only put max 10K down. He is basically complaining that no one is stupid enough to GIVE him what he wants.
Comment by foobeca
2006-03-18 09:42:37
Buying a house you and most people can afford is not a risk. If you can afford the mortgage and plan to live there for awhile, whatever prices do is kinda irrelevent. If you don’t plan to live there for awhile, then you shouldn’t be buying it.
Taking out a suicide loan (option ARM) for a $500k house when you earn $50k/year is not risky, but suicidal.
Let’s face it, we’re all human and we all want to get as much money as possible. When was the last time any of us went to our employer and offered a pay cut? Are we being greedy?
If I bought a $150k house 5 years ago in a bubble market, then I’d unload it ASAP. People who are unrealistically pricing their houses are killing themselves with their own greed. So what if your neighbor got $500k for their house last summer, list it for $400k and get it sold. It’s better to get it sold now at a slight discount than to sell at a bigger discount later because you rejected offers and waited for the “right” buyer.
Comment by txchick57
2006-03-18 10:54:50
I wouldn’t have bought the junker in the first place. But that said, I’d look at the lowest price they’ve sold at consistently lately and then take another 10-15% off. Why? Cause I’d want OUTTA THERE!
Reply here
Comment by GetStucco
2006-03-18 11:23:26
Too bad it is so on target (blood on the streets)! Gross situations warrant vulgar language…
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Reply here
Comment by Betamax
2006-03-18 12:58:44
mtnrunner2: it’s hypocricitcal to judge others for being judgmental. Stop coming or STFU.
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Comment by cripy&cole
2006-03-18 16:07:36
lol
Reply here
Comment by OutofSanDiego
2006-03-18 16:11:29
Blood bath is a metaphor…often used when someone take sa big financial loss on a speculative venture. “Blood Bath” is a description of a bigger/dumber loss than taking a simple “Bath” on a speculative investment. Let the blood flow for all these speculative flippers (metaphorically speaking of course!)
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Reply here
Comment by maddog80
2006-03-18 19:09:08
“blood in the streets” is a well worn phrase in financial discussion. As B.C. Forbes related in December, 1929:
“Rothschild was buying stocks right and left when an acquaintance rushed up to him and excitedly asked, “Don’t you know that the streets of Paris are running with blood?” Without stopping his buying operations for a moment, the astute financier quietly replied, “If the streets of Paris were not running with blood, I wouldn’t be able to buy securities at these prices.”
Hence, buy when “blood is running in the streets”. Verbal shorthand from the history of finance.
SBG,
No, even when such news is found, many posters would rather engage in bickering about regional bias, etc.
I know, sad to say, but the hbb may have jumped the shark (for me).
Wow, thanks for the words of encouragement…
Ben,
Should this Temecula story have it’s own thread? This is a big deal and is emblematic of yet another “premium layer” this is built into housing values. $1.2B in an area as small as Temecula / Murrieta is a big deal. They said they are investigating 19 other fraud cases in Riverside alone.
Ben:
Once that post made it to the screen it has harsher than I intended.
Your posts and the content you control directly is stellar.
There was a time when the peanut gallery really added to the discussion.
The quality of the peanut gallery has gone down.
Your blog is worth reading and supporting with donations as I have done in the past and I will continue to read and support your efforts until RE is in revulsion stage.
Thanks for all of your efforts
SBG a long-time reader and poster.
Wake me up when 60 minutes has a special 1 hour long on RE fraud expose’ or better yet we have Senate hearing televised on CSPN. Otherwise too many are already glossing over all this as daily chatter and watching American Idol tonite.
Sunsetbeachguy…………
I think we are all stunned.
Being from Australia, I find when we talk in thousands, you guys talk in millions…………when we talk in millions, Americans talk in billions even trillions.
This property bust and the stock market crash that will follow will make 1929 look like a walk in the park.
Wall street will become the “Jurassic Park” of the finance world as a Chinese banker friend told me recently.
Buckle up, we are in for one hell of a ride.
“Times they are a changing”
If you have not clicked on the link and read about the Temecula (North County) fraud, you should. This is an important case.
Some comments:
The “annonymous client” is suing because he was “duped” into buying 5 houses at the same time? He was committing fraud by concealing his actions. This is greed. He knew what he was doing.
They were getting loans for over the appraised value? Attorney Ackerman will have a hard time convincing the court that his client is innocent. I wonder if he can also defend his client in a criminal fraud case?
Ackerman said “The lenders are the biggest victims of all.” I do not agree, because the lenders also knew what they were doing when they threw out sensible standards for high volume.
I do agree that with potentially hundreds of houses in the Temecula/Murrieta areas going into foreclosure, values can be affected.
Holy $hit! How many other scams are going on? Where are the banks getting their money? Can banks survive this massive scam? This has got to just kill home values.
I just don’t understand how the permabulls can ignore this stuff anymore…might be why we don’t see too many of them anymore.
They are too busy thinking about early retirement….
You know… “just one more than Im out!”
Is there anywhere we can go to report suspected mortgage fraud? I’ve been watching my old neighborhood, and recently saw a unit sell twice in two months, once for a very low (10s of 1000s) price, then a second time for $50k more than we sold ours for a year ago. Both times, the same seller was listed, but two different buyers. It struck us as… odd. Is there any recourse at this time, or will we have to wait until MF becomes more of a front-page story?
Ackerman said “The lenders are the biggest victims of all.”
The same scam has been happening in Tampa, property values in the whole neighborhood go up because of the sales prices are artificially inflated. The ONLY victims are families who have been priced out and cannot buy homes because of this fraud. These scammers need to go to prison.