“A Different Question: Where’s The Bottom?”
The Island Packet reports from South Carolina. “The area housing market saw a more than 20 percent drop in the number of single-home sales in 2006 compared to 2005. According to the MLS data, which tracks sales in southern Beaufort County and Jasper County, single-family home prices fell 9.3 percent in 2006 from 2005 levels when looking at median price, and 6.1 percent when looking at average price.”
“In real dollars, the median price fell from $430,000 to $390,000. Realtor James Wedgeworth said he’s glad 2006 is over. ‘It was a bad year,’ Wedgeworth said. ‘Especially the last four months were very bad.’”
“(Broker) Bob Clarkson, noting the housing market still has roughly three times the inventory compared to 2005, said he thinks prices could drop a bit more. In the area’s villa market, the number of sales dropped from 2,146 in 2005 to 857 in 2006, about a 60 percent drop. Villas were often the purchase of choice for investors buying for short-term gain during the booming market in 2005, Clarkson said.”
The Times Union from Florida. “For home buyers, the question is no longer ‘Will prices drop?’ During six months in 2006, they did drop almost 15 percent. Now, as the number of sales still hovers about 20 percent below that of last year, the slow market conjures a different question: ‘Where’s the bottom?’”
“University of North Florida real estate professor Sid Rosenberg arrives at a ‘fair value’ far below even the November figures. According to Rosenberg, the ‘fair median value’ of homes in Jacksonville should be about $165,000 based on what an earner with the local median income can afford.”
“‘Buyers know that they’ve got a buyers’ market, and if it were me, I’m going to sit there and negotiate very hard,’ he said. ‘Make lower offers than normal, and if they’re not accepted, just move on. Because right now, you can.’”
The Herald Tribune. “Mike Marcus is no newcomer to the game; his Sarasota Builders and Remodelers has been in business for years. A couple years ago, Marcus decided that building hurricane-resistant houses was the way to go. Then the boom went bust.”
“‘It took a year longer to build than we had planned,’ he said. ‘In doing that, we inadvertently missed the real estate bubble. I am very happy to lose some money on them,’ said Marcus, who said he would be happy to get $249,000. ‘It’s nobody’s fault. It was good, sound business decisions, but things changed.’”
“When construction of the $150 million Promenade at Riverwalk condominiums got under way on the Manatee River in late 2004, the development promised to eventually transform downtown Bradenton.”
“One of the project’s planned 15-story towers will now be scaled down to five stories to offer smaller and much less pricey condominiums. ‘It was a market-based decision,’ said Bob Hatfield, the Atlanta developer behind the project. ‘There’s a limit to what the market can absorb in terms of higher-cost condominiums.’”
“In November, sales of condos were down 33 percent in the Sarasota-Bradenton market compared with the previous year. Prices were down 7 percent over that same period.”
The Orlando Sentinel. “After the city hemmed, hawed and battled with developers of a downtown project for years, Mayor David Strong is now hoping the developers of The Carlisle will simply go away — if he gives them more than $5 million.”
“The money is the amount Strong wants to give the developers in exchange for not building the project, and for not suing the city, should commissioners vote to deny the project after giving an earlier thumbs-up.”
The Sun Sentinel. “Gary Posner and the Hollywood Community Redevelopment Agency became partners three years ago in an ambitious and, city leaders now admit, flawed plan to transform a chunk of downtown Hollywood.”
“Today, both sides want out of the deal, hopes for a theater, trendy galleries and chic condos are all but dead and the city is trying to explain why it loaned $5.2 million to a man who had never attempted a major urban project. Commissioners didn’t even ask for a credit check before approving the loans.”
“‘This is, without a doubt, the biggest mistake the City Commission has ever made,’ Commissioner Cathy Anderson said of the development project. ‘It’s been a fiasco from the very beginning, and we all voted for it.’”
“‘I never look back, and it was an experience,’ Posner said. ‘Let somebody else step in and worry about it now. I’ll make some money out of the deal, so that’s OK too.’”
The St Petersburg Times found one affordable housing program in an odd situation:
‘ A swath of vacant land the city owned in one of its poorest neighborhoods could be redeveloped into nearly 60 affordable townhomes, the city suggested. The Housing Authority’s response: Not interested.’
‘The refusal is even more baffling, council members say, given recent news that the housing authority must relocate 318 people living in the Graham-Rogall high rise. The building near Tropicana Field is being sold to a condominium developer, and its residents cannot stay.’
‘ Mayor Rick Baker, when asked about the Housing Authority’s decision last month, declined to comment. Deputy Mayor Goliath Davis, who oversees the programs in Midtown, did not return a call seeking comment. Housing Authority officials, meanwhile, say they intend to relocate those living in Graham-Rogall’s 486 one-bedroom and efficiency apartments into new housing across Pinellas County.’
‘ Mayor Rick Baker, when asked about the Housing Authority’s decision last month, declined to comment. Deputy Mayor Goliath Davis, who oversees the programs in Midtown, did not return a call seeking comment. Housing Authority officials, meanwhile, say they intend to relocate those living in Graham-Rogall’s 486 one-bedroom and efficiency apartments into new housing across Pinellas County.
One of the dirty little secrets about HUD housing is the decision that “projects” led to crime and inability of residents to “integrate”, so HUD has been buying up houses in residential neighborhoods for the past 15 years.
You may find that your middle-class neighborhood suddenly has a new class of welfare residents living right next door.
No one really talks about it. I’m not surprised the Mayor and the former Police Chief don’t want to discuss that fact they are moving the residents next door to citizens who have worked their entire lives to pay for their homes, only to have some welfare recipients move in right next door…………for free.
diogenes, I really enjoy your posts about our area. You seem to have your finger on the pulse of what is going on. I had no idea about the “resettlement” program. Scary. And, looks like another effort to destroy the middle class.
“Deputy Mayor Goliath Davis, who oversees the programs in Midtown, did not return a call seeking comment.”
Somebody really named their kid Goliath? Oh geez!
It’s a shame his last name is not David instead of Davis (brings to mind an old friend whose dad, a Mr. Hammer, decided to name his son Jack…).
In this instance, a more apt last name would be Down.
Or Davey, like the christian oriented Claymation series; “Davey and Goliath” in the 60’s. It was a Boy and his Dog….. It was kinda like Gumby for God.
Goliath Davis is black, and he was the former police Chief of St Petersburg. He did a very poor job of running the department. So The City decided to make him the deputy Mayor.
This should be some indicator of the inept florida governments we have. If you cant hack it as police chief we will reward you by giving you a high paying job and important title and make you in charge of the ghettos.
This is the truth. The truth is ugly. Many readers wont like the truth. Remember, the truth isnt PC.
What does it have to do with his race?
I don’t understand. The amount of ineptness among local politicians hasn’t led to accusations of whites or hispanics or asians being corrupt/asinine on account of their skin color.
“… so HUD has been buying up houses in residential neighborhoods for the past 15 years.”
Could HUD purchases explain Russ Winter’s report that unbelievably high numbers of December home sales in SD (51%) and PHX (47%) were sold vacant? I cannot get over the whopping magnitude of these numbers. I have a hard time imagining enough investers running around these days with a bucket of subprime and a box of stupid to accomplish this feat.
http://wallstreetexaminer.com/blogs/winter/?p=263
I don’t really think this is HUD, just the overall up-tick of speculator vacancies.
The HUD programs were a new emphasis started back in the 80’s by a bunch of do-gooders to eliminate “public housing” per se. The “PROJECTS” were a bad influence on the people who lived their. Bit-by-bit the projects have come down and new housing in residential neighborhoods has been purchased.
I first became aware of this when some low-lifes moved into my sister’s middle-class neighborhood in La Place, La.
They worked the flea markets, made “untaxable” money and paid about $124 per month for a 3/2 house that would sell at that time for 85k. They had a great life.
It’s been going on since then.
I read an article a few years back here in St. Pete where a house only had 3 bedrooms, but due to the size of the “family”, the needed 4. HUD paid to add the 4th to provide additional breeding stock for the city.
It’s always outraged me, but it’s kept under wraps to keep the people paying for all this from coming unglued.
The bulk of taxes in not Bush’s war, it’s “ENTITLEMENTS”
Welfare, housing, SS, food stamps, edu-ma-kashun, medicaid, medicare, re-settlement programs, and the like.
USSR just got a head start on the US of A. We are rapidly gaining ground.
diogenes (Tampa,Fl)
do you have a government job? or a outsource job that depends on government income?
No.
I did have a govt. job some 20 years ago.
It was then I first saw ineptitude and the reward of uselessness.
careful , some folks here like big gov
unintented consequences-= all gov programs
I really have to believe that this is the result, as one astute poster said earlier, that the HBs only sell vacant homes. Add to that the specuvestors that wanted to sell their flip with the cache of “never lived in”, and I think the answer is plausible. No? Oui?
Used homes are passe right now. How do I add the accent thing? -
I posted a comment earlier this morning about the same subject. The nice affordable duplex I was going to buy is going to have Section 8 housing in its backyard. There is just not gong to be one or two in the development - there is going to be a group of at least 25 homes clustered together.
I lived in below the poverty line once. People do need help but permanent low income housing is not the answer. If they would just stop the drug abuse and put an end to the gangs the “projects” would suddenly become ok places to live.
They need to focus on helping the working poor. The section 8 income guidelines are so low that even earning slightly above the minimum wage would exclude most families. Section 8 is not for low income people it’s for people who do not work. Why don’t they have more housing programs for people earning $25,000 to $40,000 a year?
“University of North Florida real estate professor Sid Rosenberg arrives at a ‘fair value’ far below even the November figures. According to Rosenberg, the ‘fair median value’ of homes in Jacksonville should be about $165,000 based on what an earner with the local median income can afford.”
What a concept - buying a house you can afford. Next this guy will say that a person should by a house based on the fact that they plan on living in it. Things are really going to go over the edge when he suggests that a person should take out a conventional mortgage based on actual income and monthly expenses.
Rosenberg sounds rather bearish when you consider the people living in and around Jacsksonville expect their home prices to increase another 5 to 10 pct next year from the current median of roughly 200k.
I came up with a saying for those bull riding RE cheerleaders who disagree…
LMFAO
you muggy
got any opinion on hogan homes in portland tx ?
looks like even the magic city of corpus may be dying
“‘…I am very happy to lose some money on them,’ said Marcus, who said he would be happy to get $249,000….”
You know people are getting the message when they are willing to accept a loss just to get the heck out of the housing market.
At one point I claimed this would be an indication of the market nearing a bottom and consequently a good time to buy. However, a lot of builders overpaid for land, labor, and materials and the costs of these building elements are decreasing. Therefore, that claim was false. Losses need to deepen and broaden across markets before we reach bottom. In other words, prices neeed to fall below today’s and possibly the near future’s building costs.
“‘This is, without a doubt, the biggest mistake the City Commission has ever made,’ Commissioner Cathy Anderson said of the development project. ‘It’s been a fiasco from the very beginning, and we all voted for it.’”
Oooh, this sounds like a familiar theme. Well, now, Cathy, not to worry. At least your little local governmental fiasco didn’t result in a war without end that bankrupted a country and has left thousands dead and maimed. Besides, you and your fellow commissioners can share the blame and say “oopsie” while the taxpayers share the loss.
The housing bubble is really just another symptom of the mass insanity that seems to have gripped this country at all levels.
Government bases their sucess on their intentions, not the
results.
Palmetto, you off your meds again?
This country is doing all right. You need to spend less time on blogs like this, where the only desired news is negative in nature. Good things are happening as well.
My wife and I went out to a local pizza place for dinner last night and watched several families with young kids at nearby tables. They were obviously enjoying life.
The majority of homeowners are not living on the edge, waiting for their mortgages to reset. The next economic downturn won’t be a 30’s style depression. There is no “mass insanity.”
Instead, there are instances and examples which blogs like this have sprung up to cover. But no blog publicized the fact that Billy Bob got home last night and announced to his wife he got a raise, and “let’s take the kids and go get pizza.”
Au contraire, Mr. Bill. The realtor and investor blogs are just full of happy talk.
True. But every blog has an agenda, and to get an accurate “big picture,” you need to synthesize ALL the information (and propaganda) that’s out there. That includes the MSM, the blogosphere, and your own experiences also.
Bill, will you please go back to Carolina and never return? You know nothing about the Hollywood story or its future impact, so stick to selling real estate in Tennessee or something. Thank you.
The next economic downturn won’t be a 30’s style depression.
No, it’ll be worse.
“The next economic downturn won’t be a 30’s style depression.
No, it’ll be worse.”
nonsense, daddy got a .25 raise. pizza for everyone…..
Yeah, some yutz went to the hut for some za, that should make us sleep better?
“‘This is, without a doubt, the biggest mistake the City Commission has ever made,’ Commissioner Cathy Anderson said of the development project. ‘It’s been a fiasco from the very beginning, and we all voted for it.’”
If you ever wondered why governments around the country did not stop or slow bubble development. There is your answer. Local governments are not immune from the lure of mania. They too bought the claim real estate always goes up.
Ugh, I would add to that as well.
The real reason no city government will ever truly “slow” development goes right back to the allmighty dollar.
Why on earth would they want to? Sure, lets add another 100M in taxable housing, why not? They simply have litte/no incentive not to allow the mania to continue; the mania directly funds their projects.
Kind of like having the fox watch the chick coop, imho (having worked for a local govt in a massive bubble area, I can tell you, they can’t spend it fast enough. Not that they are not good projects getting done, just far too much waste at the same time).
In my city in North Orange County, CA, some city officials want to bless a downtown building 9 stories high, where before the tallest was 3 to 5, depending on the source and what’s considered as “downtown.”
I voted accordingly, as we are in a preservation zone within walking distance. Others apparently voted the same way I did - the council is now reconsidering!
“In real dollars, the median price fell from $430,000 to $390,000. Realtor James Wedgeworth said he’s glad 2006 is over. ‘It was a bad year,’ Wedgeworth said. ‘Especially the last four months were very bad.’”
If he thinks 2006 was bad what will he have to say about 2007? Well maybe he will say it was great - because he decided to get a real job and stopped being a real estate agent.
Of course he may be screwed because if this gets as bad as the articles that I have seen in the past few days on this blog say it will - good jobs will be hard to find.
I’ve heard that the market is really going to pick up come springtime. With the first sounds of the robins the houses should be flying off the shelves. It will all work out well. The correction is over!
“(Broker) Bob Clarkson, noting the housing market still has roughly three times the inventory compared to 2005, said he thinks prices could drop a bit more….”
You know he gulped and looked down at his shoes when he said the words prices could drop a ‘bit’ more.
“According to the MLS data, which tracks sales in southern Beaufort County and Jasper County, single-family home prices fell 9.3 percent in 2006 from 2005 levels when looking at median price, and 6.1 percent when looking at average price.”
Translation for nongeeks: The median is the “middle value” (50% of homes fell for more, and the other 50% for less), while the “average” refers to what your college statistics book probably called the “arithmetic mean” — all the sale prices added up then divided by the number of sales.
The median falling by substantially more than the mean is rather peculiar — it suggests falling sale prices in the low end of the market had to be somehow offset by more high-end sales. My conjecture is the bottom end of the market subsided while the top held up, with subprime subsidence a “prime” factor, on the premise that most high-end purchase are not funded through subprime loans.
http://economist.com/finance/displaystory.cfm?story_id=8424086
So since 40% of the loans are subprime and 40 -50% are option arms that were originated in 2006 how does this not blow up and continue to blow up into 2010?
Please see my conjecture above about whether HUD might be purchasing vacant houses. This would be consistent with the strong bullish sentiment on the housing market which seems to be emanating from inside the beltway these days…
“‘I never look back, and it was an experience,’ Posner said. ‘Let somebody else step in and worry about it now. I’ll make some money out of the deal, so that’s OK too.’”
We need to bring back public hangings.
“We need to bring back public hangings.”
I couldn’t agree more.
Is there a video floating around of saddams hanging?People are fascinated by hangings for some reason.Hang em high!!!!!!
Absolutely! Just like the good old days, put on your best clothes, round up the family and watch the hanging down at the town square.
“We need to bring back public hangings.”
If your willing to put the noose on them, pull the leaver and then cut them down. This I guess I’d sat let him have is “public hanging”… None for me thanks. I watched that Saddam one and thought. More inhumanity for all of his inhumanity, how does this help.
imploder, your point is well taken.
However, asking for public hangings is a figurative metaphor for the burning frustation that decent people have with members of government at all levels right now. How would Cathy Anderson feel is someone she trusted emptied her bank account, lent the money to an idiot and it just disappeared? Probably she’d have some violent feelings.
Some of us, myself included, might only be half joking about public hangings. If members of government at all levels are going to continue to commit financial rape of citizens, there has to be some sort of stringent penalty to restrain such action.
If I were a member of government, I’d be taking the pulse of the citizens at this point and I’d be frightened. The mass frustration is fast reaching the boiling point. I kid you not. A relative of mine expressed to me the other day that they can understand the desire of some people to go berserk and just start spraying bullets in the street. This is a person who earns in the low six figures, owns a home, has no children and other than a mortgage, no debt. They are not at the brink of bankruptcy or anything like that. But when decent people find themselves surrounded by fraudsters and opportunists of all kinds f**king with their lives and profiting at their expense, something’s gotta give.
I wasn’t trying to discount the feeling of the rightfully frustrated. I’ve said the same things many times myself.
I understand, imploder, I agree with you, actually. My rant wasn’t aimed at you.
Can we agree with putting these people in stocks from 9 - 5 each day and allowing the townsfolk to throw rotted meat and vegetables at them all day long? At 5 they get brought back to their 8 x 8 cell. Those that ruin economies without remorse, and the lives of millions with them, deserve more than a 6 month sentence in a minimum security prison.
I saw the Saddam thing. No sympathy!
“Those that ruin economies without remorse, and the lives of millions with them, deserve more than a 6 month sentence in a minimum security prison.”
In that case, you’d be talking about much of Wall Street and the majority of hedge funds, along with folks like Greenspan. Hey, I’m in. I’ve got a bunch of tomatoes and meat sitting in the sun outside the back door.
My conclusions aren’t based on sympathy for Saddam in particular, but for humanity in general. We are the one’s that watched it and were affected by it…. He dead.
Did it help? Not in my mind.
Just a recently arrived opinion of mine, not based in any sense of moral high ground.
Imploder, my post isn’t showing up, but I do understand and I basically agree with you. Just venting, not aimed at your opinion which is quite valid.
“‘This is, without a doubt, the biggest mistake the City Commission has ever made,’ Commissioner Cathy Anderson said of the development project. ‘It’s been a fiasco from the very beginning, and we all voted for it.’”
And as soon as the mess is cleared up the entire Comission has promised to personally repay every dirty penny to the taxpayers and step down? Pardon while i don’t hold my breath.
It is so easy to spend someone elses money. The city commission should be forced to pay back every cent by garnishing their wages.
I request a favor from this board.
I need to research Ann Arbor, Mi. real estate with the focus on condo’s. Can anyone recommend websites (free or fee)?
Thanks
Nope. Some fundamentals though.
Michigan is crapiest in a crap market. Saw something here the otherday where Mi agents are no longer going to give market data.
Condo’s are also crap market especially as SFH is Michigan are generally affordable.
A perfect shit storm.
Real estate in Michigan has been down since 2003 because of weak economy. Ann Arbor was probably one of the few areas that had some legs into 2005 because of the University. Very little spec/investing in the past few years to create a bubble. Downturn has been is almost purely economic…Michigan is perhaps the canary in the mine for the rest of the country if a recession hits (on top the bubble).
‘This is, without a doubt, the biggest mistake the City Commission has ever made,’
Oh guys, don’t sell yourselves short. You have made many mistakes bigger then this one. And you will make many more just as big or bigger in the future. I really don’t like to see this lack of faith in your own stupidity. You can do much worse then this. Work to make Save our Homes portable, that will be a far bigger mistake, for example!
Its bad enough if you hear your surgeon say “ops”, but if your government says “ops” oh man, you better buckle up!
Hat tip: Bill Cosby
I’d rather hear the gubment say oops, than any surgeon working on me, thanks…..
“‘I never look back, and it was an experience,’ Posner said. ‘Let somebody else step in and worry about it now. I’ll make some money out of the deal, so that’s OK too.’”
Does anyone other than me want to take a 2×4 to the head of this jerk? He never looks back - good thing the City didn’t look back because they’d have discovered he was bankrupt in 1992 and had no track record in this kind of development. And he should not be making one dime on this endeavor. Sickening.
txchick, South Florida is full of dipsticks like Posner, whose name really ought to be HOSEner. But I think you should take a 2×4 to the heads of the commissioners instead.
“2×4 of certitude” is a frequent phrase on several other blogs. The huevos to admit he’s making money when taxpayers and others are losing their shirts. This is a case where the 2×4 of certitude should only beused to hold the trapdoor as we fasten the noose.
What happened to your trout??
Where is the Bottom ? The Real Estate Greed Dam hasn’t even Broke yet there are the RE Industry Cheerleaders with their Fingers trying to Plug the cracks caused from everything from outright Frauds to pure Gov’t sponsored greed speculation. There are a lot of fingers in this National Ponzi scheme DISASTER from Sellers to Mortgage Brokers with a LOT to protect. The House Dam will eventually Break and the Bottom will be on the floor of the Washout. Lookout BELOW !
‘Where’s the bottom?’
If you walk into the room and don’t know who the “Bottom” is… “Your the Bottom”….
We’re here:
http://www.geol.ucsb.edu/faculty/sylvester/Teton%20Dam/Teton%20Dam-Pages/Image0.html
This is where I think we’re headed:
http://www.geol.ucsb.edu/faculty/sylvester/Teton%20Dam/Teton%20Dam-Pages/Image13.html
What started this whole mess is that nobody knows what fair value is for a house.
A multiple of rent is a really good predictor of value because it takes housing demand into account.
Historically, a house is priced at 100 to 150x its monthly rent. When we get there its time to buy. Until then, we still have more to go. That and the market will probably overshoot the correction, so say 100x rent.
Most houses are selling for 250x rent or so these days. And rent is falling because the market is getting flooded by flippers putting their houses on the rental market.
People might think 100ishx rent is a really low number, but that is where the economics of owning make sense again.
“Historically, a house is priced at 100 to 150x its monthly rent.”
What about condos/coops? Since maintenance fees for similar properties can vary greatly, shouldn’t they be somehow included in the equation?
I’d really like to buy a condo in the city, but for now renting is so much cheaper, I just don’t see how buying would make sense…
I live in a condo in Los Angeles, rent is $2,200 month. Based on 100 - 150x rent, value should be: $220,000 - $330,000.
Units that sold in this building at the end of 2005 were in the $1M range (highest price was $1.7M).
GroundZero, my situation is almost exactly similar in LA. We pay 1,950 for renting a condo that cost the landlord 245K in 1994, which is withing the buy/rent ratio. In the past couple of years identical units have sold in the 900K range.
Cassiopeia,
So you too are in the Los Angeles epicenter of the bubble and know how maddening this situation is - rationally and logically you can see that this may be the biggest financial mania in human economic history:
1. Using rent to price ratios, the condo I rent should cost around $200k - $330k.
2. Using the average household incomes in my neighborhood at $75k, average home prices should be around the $220k-$330k.
3. Using historical norms of appreciation from a base of 1997-2000, these condos should be priced at $220k-$330k.
BUT condos in my building sold in 2005 in the $1 MILLION + range (top sales in 2005: $1.2 and $1.7M)!!!
Even though logically it must happen, it seems almost UNTHINKABLE that these condos would PLUNGE in price from $850K-$1.7M to $220k-$500k.
For those of you who live in other parts of the country and say it doesn’t matter to you because you don’t live in wacky California. When this many US consumers get into this kind of a bind, it doesn’t matter what state you live in… you will feel the impact! If, for some reason, you are lucky enough to be untouched by this then your sibling or child or friend will certainly not be so lucky.
Follow up regarding the building of condos that I live in: There were 4 units for sale in 2006 and ZERO sold. They sat all year and eventually the realtors stopped having open houses. Currently, 2 are still sitting (and are now offered for sale or rent) and 2 were pulled off for the holidays. Still priced at around $1M.
(I don’t want to attract trolls who might imply that I missed a great opportunity so I’ll explain that I did not live in Los Angeles back in 2000. I came here due to a job transfer and the first chance I could have possibly bought would have been 2004.)
NYChk — I would consider maintenance fees for a condo or co-op, but only relative to the cash flow of owning versus renting in that one condo.
Not needling you, but why do you want to own, if you can rent essentially the same place at a substantial saving every month? I agree that there is intangible value to the stability of ownership, but in the current environment renters have a really good thing going for them in most areas and it could get even better.
I sold and began renting, planning to buy or build in a year. That became two years. It’s becoming three years. Renting, for me here in Florida, is an absolute bargain.
Tweedle - I paid 50 times a month’s rent in the ’90’s, in a very good neighborhood to boot. I now rent in a more marginal neighborhood - my neighbors paid 375 my monthly rent at the peak. A long way to go, indeed.
To move back to the long term trend line (using the ‘eyeball method’), we need to see 30%-40% drops here on the central coast, and in SoCal.
To move close to equivilent rents, we need to see drops of 40%-50% (or even more in some instances)…or rents to go up by an even higher percentage.
To move in line with wage increases, I forget, but I think it’s in line with a 50% drop or so (or wages to double).
To move in line with sentiment and psychology, well, we’ll see where that goes…come spring.
110 to 120 times rent for starters
lower if hard money returns
anybody that knows hollywood well knows that most of the large developments done over the last 40 years involved corruption on a grand scale. there is a development currently under construction on the north end of the beach featuring “luxury villas priced from $2.5 million.” the surrounding area is a s#@%hole with cheezy crumbling french canadian motels. i wonder how much of hollywood’s money was involved in that one.
“Where is the bottom?”
In San Jose - Santa Clara, CA you ask?
Go back to 1997-98 prices which were a normal healthy market and add 5% or so appreciation year over year. We were around $86-$105 per sq ft on home. Use zillow for price history to help you out. Santa Clara County Property Tax look up is also helpful with past price history. Compare to current market and you see a 50% decline to needed to get back to normal prices in this market from the peak in 2006. It also fits well in to the rental vs ownship model and price to income ratios.
I did the same when we had the stock market meltdown. My bottom was around 770-820 on the S&P… Well it did bottom down to Mid 800 in Oct 2002. Needless to say it was a great return on my money.
We only saw a few places take a downward swing 5-10%… we will need additional 40-45% from today to get back to the norm.
San Jose /Santa Clara is one of the top toxic loan metros in the nation and the most suseptical to offshoring jobs. We been offshoring jobs since 1985. Fools that paid top dollar in 1988, got burned badly by the bottom of 1991 with declines of 25-35%. Prices fell back to 1983-84. Reversion to the mean my good man!
I should add. The stock option or stock opium craze that went around in late 90’s isnt going to happen again due to expensing of options and recent back dating scandels. So the future supply of greater fools has been cut in a major way. There wont be overnight millionairs that will pay $2M (free money) on that 1000 sq ft shack made in the 60’s. Thats not going to happen again!
While I agree with your general viepoint I take issue with your 2002 market call. If you acted on your prediction of 780-820 on the S&P 500 then you never bought during its fall to “the mid 800’s”. That comment is like someone that claims to have sold a stock on a prediction of a price of 30 and the stock only goes to 29 1/2 and tanks.
Concerning the market in stocks major bear markets have bottomed at yield in the Dow 30 of 6-10%. The current yield is around 2.4%. A decline in price to get to a 6% yield would be 5000 on the Dow. This may be conservative since dividends are often cut in bear markets/recessions and the yield may need to go higher.
While I agree with your general viepoint I take issue with your 2002 market call. If you acted on your prediction of 780-820 on the S&P 500 then you never bought during its fall to “the mid 800’s”. That comment is like someone that claims to have sold a stock on a prediction of a price of 30 and the stock only goes to 29 1/2 and tanks.
Concerning the market in stocks major bear markets have bottomed at yield in the Dow 30 of 6-10%. The current yield is around 2.4%. A decline in price to get to a 6% yield would be 5000 on the Dow. This may be conservative since dividends are often cut in bear markets/recessions and the yield may need to go higher.
While I agree with your general viepoint I take issue with your 2002 market call. If you acted on your prediction of 780-820 on the S&P 500 then you never bought during its fall to “the mid 800’s”. That comment is like someone that claims to have sold a stock on a prediction of a price of 30 and the stock only goes to 29 1/2 and tanks.
Concerning the market in stocks major bear markets have bottomed at yield in the Dow 30 of 6-10%. The current yield is around 2.4%. A decline in price to get to a 6% yield would be 5000 on the Dow. This may be conservative since dividends are often cut in bear markets/recessions and the yield may need to go higher.
Realtor James Wedgeworth said he’s glad 2006 is over. ‘It was a bad year,’
Flash forward, end of 2007.
“Oh gawd, 2007? It was a massacre! I remember the good old days in 2006… It was slow, but I was eating regular and everything. Excuse me, I gotta take this drive thru order I don’t wanna mess up. I’m still of my hiring probation.