January 14, 2007

“The Bubble Could Lose More Air” In California

The North County Times reports from California. “In 2004, Temecula resident Vicky Reiss, looked at skyrocketing real estate values and saw a second or third home as an investment that would eventually yield a profit. So when a co-worker told Reiss that she could use equity from rising values to generate cash for still other lucrative investments, it sounded plausible, Reiss recalled in interviews last week.”

“The co-worker’s son and business associates would make it all happen, Reiss said she was promised. She agreed to buy a $506,000 house on Falkirk Drive in Murrieta Hot Springs. ‘I thought real-estate was a good investment,’ she said. ‘It was going up at the time.’”

“But two years later, Reiss faces foreclosure on that house and four others that she bought in the following months. And she has brought a lawsuit against a Murrieta mortgage brokerage and several other companies and individuals. The lawsuit claims that the network included as many as 412 investors. Earl Bonawitz, who manages a real-estate office in Temecula, said such a large number could very well have been involved.”

“Many had expected the strong market to create home equity, allowing them to refinance. Now many are under pressure to sell their way out of the situation, and have flooded the market with homes for sale. ‘When you’re at the tail end of a market that’s been going up, people think it’s going to go up forever,’ Bonawitz said.”

The San Francisco Chronicle. “Q: Like many renters in the Bay Area, I thought the rise in home prices in recent years meant that I would never be able to buy. But now that prices are declining, there seem to be a huge number of houses on the market, and sales even at reduced prices are sluggish or non-existent. Is this the time to buy?”

“A: I wouldn’t dare offer a one-word answer to that question. However, it appears that the real estate bubble could lose more air.”

“In many Bay Area communities, prices have fallen to where they were nearly two years ago. However, to get back down to the long-term trend line, they would need to fall considerably more, perhaps as much as 10 or 15 percent.”

“Many sellers seem to be in denial, pricing their houses as though the market were still at the top. They remind me of the Nasdaq diehards who refused to believe that their market was collapsing, and stuck with Cisco Systems stock all the way from $80 to $9.”

“Fence-sitters are more than a group salivating for a weakening in the market: they’re home buyers who are taking advantage of this balanced market to take their time and really consider whether they’re getting what they want in a home.”

“‘A lot of people are chit-chatting with friends and the general consensus is that they should wait,’ said Mary Ellen Dudum of the Alain Pinel office in Walnut Creek. ‘I’d say maybe as many as 40 percent of buyers are waiting right now. But while people are waiting, real estate is happening.’”

“Dudum is helping her brother buy his first house, and said she has teased her brother when he hedges toward waiting. ‘He told me, ‘My friends say I should wait,’ she recalled. ‘I asked, ‘Who are these people? Other people who are renting? Get on the bandwagon!’”

“Serafina Palandech found the house of her dreams in 2005: A little two-bedroom fixer-upper in Daly Cityr. But she lost the house to someone who paid $75,000 over asking. Heartbroken, Palandech got caught in the market frenzy and started looking at condos, not what she wanted, but she’d take whatever she could get, she said. Then, she went away for a few months for work. And when she came back the market had changed.”

“‘It became clear really rapidly how weird the market had gotten,’ she said. ‘In April, we would see these houses on the same block, one listed for $850,000 and another listed for $620,000. I felt like, ‘What’s going on? Something doesn’t make sense.’”

“Then, interest rates changed. Suddenly, the interest-only adjustable-rate mortgage for which she’d qualified became ‘ridiculous’ and unaffordable. She heaved a sigh of relief that she’d dodged that financial bullet.”

“‘I got caught up in the panic of having to get a house before they were all gone. Now it’s more of a buyer’s market and I feel more in control of the situation,’ she said.”

“While she works on improving her credit and qualifying for a better mortgage, she’s also enjoying her two-bedroom rental in San Francisco’s Excelsior district. There, she has room for her home office. There’s a garage. And there’s a backyard for her two dogs to tromp around.”

“She’ll continue watching the market, but she’s not going to get caught in the frenzy again, she said. ‘Thank god I didn’t buy something I didn’t really want,’ she says with a sigh.”

“Freddie Niem lives in a loft in San Francisco’s trendy SoMa district. After moving in, he realized that the downtown, high-tech neighborhood wasn’t right for him. Still, after looking with an agent for a single-family home last year, Niem is again on the sidelines, figuring he’ll wait another three years to buy again. He’s waiting, he says, because he ‘doesn’t trust the kind of market build-up’ that’s marked the past several years.”

“‘They say San Francisco is an area where prices never go down, but I’ve seen with my own eyes how sales in our own building have gone down,’ he said. ‘Prices went up because people kept bidding, bidding, bidding. It’s not like the value itself went up. It’s just bidding.’”

“Then, after his home being appraised for $700,000 in summer, its value dropped to $649,000 this year. That doesn’t seem right to Niem, and he’s suspicious. He calls the quick and meteoric increase ‘insane.’”

“‘I think San Francisco is drawn too high, way too high,’ he said. ‘They’re out of their minds. If you see a loft increase in value that much in just a few years, it’s not because the property itself has increased that much in value. I’ll wait for it to go down again.’”

“Tom Hehir grew up in San Francisco but never thought he could afford a home there. ‘I’d lost the faith,’ he said, jokingly. ‘But now I feel really driven.’”

“It’s the expected drop in home prices that has Hehir hopeful. If prices fall the way he expects them to, he’s expecting to see record foreclosures. One of those, he’s sure, is the Sunset bungalow that he and his partner see in their dreams.”

“He doesn’t wish foreclosure on anyone, but should it happen, he wants to be prepared. ‘Our plan is to wait a year to get something more affordable…with a high expectation that people will default on loans. Based on that, there’s a possibility for fire sale real estate. That would be the most optimal situation for us,’ he said.”

“‘It’s unfortunate, but something drastically needs to happen to the real estate market in order for many of us to buy. And I think it’s happening because of these funky loans,’ he said.”




RSS feed | Trackback URI

178 Comments »

Comment by Ben Jones
2007-01-14 12:15:45

‘SIMI VALLEY - In a sign that the city is winding down its booming housing development phase, the number of building permits for new homes and apartment units dropped more than 80 percent in 2006 compared with the year before.’

The Orange County Register:

‘ANAHEIM – A Disney employee, a college student and an engaged couple are the first to embark on the city’s experiment in urban living. Rebecca Greenberg said she likes the proximity to Disneyland, where she has an annual pass. She doesn’t mind the construction because she knows what’s coming. ‘I’m only 19. By the time I’m 21, the bars will be built and I’ll be able to have fun,’ Greenberg said.’

‘Clarence Barker, overseer of the largest collection of buildings in Orange County, plans a gentle fade from his top post at the Irvine Co. Barker, a 20-year veteran with the company, discussed his transition, his thoughts on a changing real estate landscape. Q. The county’s supply of vacant land is dwindling. How is that going to affect future development?’

‘A. (Barker says some developers have responded to a tight land supply by building high-rise condo towers, but he’s not sure if there’s a lot of demand for that style of home. He said the county may not be ready for that yet)

Comment by imploder
2007-01-14 15:01:58

“‘SIMI VALLEY - In a sign that the city is winding down its booming housing development phase, the number of building permits for new homes and apartment units dropped more than 80 percent in 2006 compared with the year before.’”

Winding Down? 80% in one year is more like dropping off a cliff!

Comment by AE Newman
2007-01-14 18:41:24

imploder posts “Winding Down? 80% in one year is more like dropping off a cliff!”

I have been an homeowner in Simi for over 30 years and seen 3 complete realestate cycles…. ups and downs and please do not forget the long periods of “sideways” or pure nothingness no activity, no buy, no sell it is numbing.
Like “wiley and the roadrunner…. the Acme safe is sure to follow to smash poor wiley.
Simi Valley is a classic place for all of the worst in over priceing and toxic loans to play out. My guess it will be very bad but not the DUNG HOLE Chino and the IE will be.

 
 
Comment by peter m
2007-01-14 15:44:31

“ANAHEIM – A Disney employee, a college student and an engaged couple are the first to embark on the city’s experiment in urban living. Rebecca Greenberg said she likes the proximity to Disneyland, where she has an annual pass. She doesn’t mind the construction because she knows what’s coming. ‘I’m only 19. By the time I’m 21, the bars will be built and I’ll be able to have fun,’ Greenberg said.”

This quote from the oC register regarding the Stadium Lofts near Anaheim stadium needs further scrutiny. The Stadium Lofts are the 1st massive condo complex to be completed in the Platinum triangle. The rest of the proposed develpments are simply leveled dirt lots, and will take years to go up.That entire area is rather dismal,mostly large empty parking lots and leveled construction zones:the entire surrounding area is zoned for warehouse/light industrial/commercial. The lofts themselves are simply the ugliest sited residential condo block units i’ve seen anywhere in scal: they are stacked in one massive block long X wide complex and look out over two wide unattractive busy thoroughfares, katella and state college blvd. The entire area is singularly unattractive as a walkable zone. If City of Anaheim envisions the future Platinum Triangle area as being a major DwTn walkable district of swanky shops, residentials,walkable commercial plazas, that vision faces some major hurdles.

Comment by lefantome
2007-01-14 17:55:58

If sales don’t go well, sounds like the place could have use for our growing prison population. Maybe this isn’t the bars Rebecca was referring to ……

Comment by peter m
2007-01-14 18:52:25

“The entire area is singularly unattractive as a walkable zone.”

I would expand that statement to say that the four cities of NW OC which the proposed platinum triangle is acessible have no walkable major dwtn distrcts. Orange, Santa Ana, Garbage Grove and Anaheim have no central city dwtn districts-they are simply a collection of overcrowded heavily immigrant apt districts,aging sfh burgs, and shopping centers scattered all over the map. The city drive/block of orange/orange crush fwy area is the closest there is to a central civic center,urban core district for the 4 NW OC cities. The platinum triangle is to be built just north of the orange crush fwy intersection area , which itself creates problems for developing a new spazzy OC/dwtn walkable district. It will be a massive redevelopment boondoogle pork project essentially built out of thin air (or a paved empty lot) in a forlorn former industral district. There is demand for affordably-priced condos and apts in the crowded NW OC but simply shoving massive residential projects into a stark industrial mixed area such as the triangle-shaped acreage bwtween the 5 and 57 fwys is mind- boogling dumbnuts.

each of the four NW OC cities which the Platinum triangle

(Comments wont nest below this level)
 
 
Comment by Stockman123333
2007-01-14 18:45:04

Even with all of the crap in Anaheim…the lofts still almost sold out…..just too many fools keep buying in the OC.

Comment by cayo_ron
2007-01-14 20:50:45

If OC does prove to be somewhat more resilient to falling prices, I think it’s due in large part to the Irvine Company, which controls so much of the land.

(Comments wont nest below this level)
Comment by dougie944
2007-01-15 07:58:54

It won’t.

 
 
 
 
 
Comment by Sammy Schadenfreude
2007-01-14 13:44:26

“Dudum is helping her brother buy his first house, and said she has teased her brother when he hedges toward waiting. ‘He told me, ‘My friends say I should wait,’ she recalled. ‘I asked, ‘Who are these people? Other people who are renting? Get on the bandwagon!’”

Call me Nostradamus - I predict many icy silences between these two siblings for many, many Thanksgiving dinners to come.

Comment by peterbob
2007-01-14 13:50:26

With a sister like that, who needs enemies?

Comment by M.B.A.
2007-01-14 14:21:27

why did he listen to an obvious bimbo?

Comment by imploder
2007-01-14 15:03:40

“Come on Everybody, Let’s get on the Dumbwagon!”

(Comments wont nest below this level)
 
Comment by James
2007-01-14 19:57:04

Considering they are from the same gene pool I’d have to say it was highly likely that he’d listen.

(Comments wont nest below this level)
 
 
Comment by oc-ed
2007-01-14 15:59:47

with a sister like that, who needs enemas ;-)

2007-01-14 18:54:25

Sounds like the whole family needs an enema

(Comments wont nest below this level)
Comment by imploder
2007-01-14 19:45:17

Wonder what generation dropped the “m” that use to follow the first “u” in their last name…

 
Comment by RobInSunnyvale
2007-01-14 23:36:42

LMAO!

Another great imploder-ism. Man, I really love this web site.

I’d misread her name as duodenum, which is likely what her brain calls home. Definitely a rectal-cranial inversion story.

rob

 
Comment by Louie Louie
2007-01-15 10:10:53

“‘They say San Francisco is an area where prices never go down, but I’ve seen with my own eyes how sales in our own building have gone down,’ he said. ‘Prices went up because people kept bidding, bidding, bidding. It’s not like the value itself went up. It’s just bidding.’”

LOL! What a friggin moron… idiot ! prices have gone down …40%….

 
 
 
 
Comment by Pismobear
2007-01-14 13:59:53

Mary Ellen is a vulture going to pick over the bones of her brother. Another typical REIC member. I hope she enjoys Thanksgiving and Xmas across the table after he gets foreclosed on.

Comment by AZ_BubblePopper
2007-01-14 21:05:00

Wonder what she says when he asks her for $$$$$ at Thanksgiving to get his foreclosure notice rescinded?

 
 
Comment by Pismobear
2007-01-14 14:02:32

I can’t believe that I’m blogging when the Charger-Patriot game just started and I got the Pats and 4 1/2 pts. Better than options on a Bakersfield condo.

Comment by oc-ed
2007-01-14 16:01:30

ROTFFLMFAO!

 
Comment by GetStucco
2007-01-14 17:44:50

You are lucky the PPT can’t intervene in playoff games…

Comment by Joe Momma
2007-01-14 18:37:16

Oh really? You might want to rethink that statement.

(Comments wont nest below this level)
Comment by GetStucco
2007-01-14 18:40:02

Please explain. Did you have some kind of Pete Rose or Cinderella Man deal in mind?

 
Comment by Joe Momma
2007-01-14 19:27:47

Exactly. Sports is without a doubt the most corrupt business going.

 
 
 
 
Comment by Peter T
2007-01-14 20:51:38

> Get on the bandwagon!

… and ride all the way down. As soon as you’re on, you’ve lost control about its direction (except by trying to sell, too, to bring it further down).

 
Comment by cayo_ron
2007-01-14 20:52:23

Dudum (if he shares his sister’s last name) = Dumb Dude.

 
Comment by Betamax
2007-01-14 21:47:46

Get on the bandwagon!

Typical shill tactic: prey on the individual’s fear of being left out rather than presenting a financial argument for buying.

 
 
Comment by Sammy Schadenfreude
2007-01-14 13:46:39

‘When you’re at the tail end of a market that’s been going up, people think it’s going to go up forever,’ Bonawitz said.”

No, Earl. Stupid and uninformed people think it’s going up forever.

Comment by Marc Authier
2007-01-14 14:25:33

Ans most people are stupid. Intelligence is a rare commodity down here. It’s rarer than platinum or diamonds.

Comment by LARenter
2007-01-15 07:14:59

Someone told me that 66% of the population are outright morons and 34% have it on the ball. I think the moron number is a bit low at 66% - especially here in LA!!

 
 
 
Comment by Rally
2007-01-14 13:47:19

“I’d say maybe as many as 40 percent of buyers are waiting right now.”

That just seems wrong. For all the talk of a slow real estate year, sales are only down what, 10-15% from the peak? And that’s without so many speculators.

Seems like the people who can buy are still buying. Readers of this blog are a tiny fraction compared to the population of sheeple. I can’t wait until 40% of buyers really are waiting. It will be a bloodbath. I’m thinking mid - 2008.

Comment by Marc Authier
2007-01-14 14:35:54

Sad but true.

 
Comment by glorgau
2007-01-14 15:25:42

2009 for bottom feeding. I’m in!

 
Comment by plysat
2007-01-14 20:55:16

The fact that people are still buying “just to get in” because “there are some great deals out there” drives me nuts! (I’m in L.A., the force is strong here… hehe) but ya know, I just sorta realized that these people have to buy now… So that I will have no competition when I look for a place TO LIVE IN when the market comes to me, which I think it will. So all you fence sitters in L.A., Buy a house! Quick! There’s never been a better time to buy! :-)

Comment by Shendi
2007-01-14 21:24:09

Agree with your comment. I’m waiting in LA for the bottom feeding in 2009. For the benefit of my friends I noramlly present the facts on how housing is super over priced and that a correction has already started and implore them to wait for a couple of years to get the huge correction (positive cash flow). However I no longer try to persuade those that have itchy fingers. As you rightly pointed out it bodes well for us if these “fence sitters” buy now and contribute to the sellout expected in 2 -3 years. My philosophy is to buy when no one is buying. Here’s to waiting.

 
Comment by LARenter
2007-01-15 07:12:44

I know what you mean!! The pressure from “friends” is almost unbearable at times! I get so frustrated that I tell them when they are willing to make the $5k monthly payment for me I will buy! Then I ask them if they would be or know people who would be willing to make such a ridiculous payment and they shut-up pretty quickly. I absolutely refuse to make someone’s retirement or make someone rich on my back!! These people are NUTS!!

 
 
 
Comment by boulderbo
2007-01-14 13:47:58

‘Our plan is to wait a year to get something more affordable…with a high expectation that people will default on loans. Based on that, there’s a possibility for fire sale real estate. That would be the most optimal situation for us,’ he said.”

the change in psychology is set in stone now.

Comment by CA Guy
2007-01-14 17:19:54

This is a smart man. He almost got himself caught up in the scam, but now he sees this for what it is: a financial death trap. Good for him. Critical thinking skills seem to be a rare commodity in SF. And yes, bo, I too believe that the psychological change is setting in. In the condos where I live there were literally dozens of open house signs out this weekend. The best part? Builders are still going here, so good luck competing against them. I’m with this SF dude, waiting for the fire sales. Yee-haw!

 
 
Comment by Sammy Schadenfreude
2007-01-14 13:48:32

How does the NAR expect its $40 million dollar propaganda/disinformation blitz to succeed, when people can see with their own eyes what’s going on all around them?

Comment by arizonadude
2007-01-14 13:55:56

You have so many droids out there that odds are they will influence some of them.Joe sixpack doesn’t have time or effort to do any research and justs follows the herd.I do not trust a word they say, write, speal or dream up.

Comment by GetStucco
2007-01-14 18:47:43

The main challenge will be to continue qualifying droids for subprime loans when the money guys are getting cold feet and the subprime sector is consequently in crash mode. Give droids koolaide and they will drink it.

Comment by rally monkey
2007-01-16 07:39:55

We’re giving out mortgage loans to droids now?

I guess it was inevitable after the kitty condo boom. Stupid lenders. Giving out 30-40 year loans to animals with 15 year lifespans.

(Comments wont nest below this level)
 
 
 
Comment by pressboardbox
2007-01-14 13:58:03

Hey, when the NAR says its time2buy I start buying. I don’t question, I just act. You should all should too if you want to be successful investors.

Comment by arizonadude
2007-01-14 14:01:16

The NAR is full of white collar criminals w/ a line of bullsh@t even g.w bush has trouble keeping track of them.

Comment by Jerry from Richardson
2007-01-14 14:29:18

Big surprise. He has trouble completing a simple sentence.

(Comments wont nest below this level)
 
 
Comment by BubbleWatcher
2007-01-14 15:09:40

That would be great, but now they say it is a good time to buy AND sell. So, I am confused now; what should I do? Should I sell one house and buy another? Or maybe I could sell my house and immediately buy it back. Is it a good investment strategy?

Comment by imploder
2007-01-14 15:15:17

“Why, Yes, Yes it is an excellent strategy”, says Mary Ellen Dudum “Here’s My card!”

(Comments wont nest below this level)
 
Comment by irvinerenter
2007-01-14 16:13:13

Anything that generates a commission is a good investment strategy.

(Comments wont nest below this level)
 
Comment by winjr
2007-01-14 20:11:33

“Or maybe I could sell my house and immediately buy it back.”

LOL!! Best laugh I’ve had all day!

(Comments wont nest below this level)
 
 
 
Comment by Joe Momma
2007-01-14 18:41:11

Who you gonna believe? The NAR or your lying eyes?

 
 
Comment by Jas Jain
2007-01-14 13:49:06

“In 2004, Temecula resident Vicky Reiss, looked at skyrocketing real estate values and saw a second or third home as an investment that would eventually yield a profit. So when a co-worker told Reiss that she could use equity from rising values to generate cash for still other lucrative investments, it sounded plausible, Reiss recalled in interviews last week.”

I hope that no one offended, lot of women, single as well as married, go into the game of speculating on homes. That was the X Factor in this bubble. Purchases by single women was the highest ever for the period for which we have data. I think that they were buyers of condos towards the end, 2004-05.

Jas

Comment by arizonadude
2007-01-14 13:58:30

My ex is one of the fine ladies who got caught with her panties down. She is underwater 50k on her brilliant investment so far. I will laugh in her face if I see her again.I refused to buy a condo for close to 400k near sacramento.

Comment by irvinerenter
2007-01-14 16:14:46

An X wife FB, priceless.

 
 
Comment by optionedunarmed
2007-01-14 14:02:50

Young singles in general have been buying condos like crazy the past few years, some right out of college or earlier. Young folks used to wait to get a little more established before buying anything. What happens when these folks start to marry each other?

Comment by M.B.A.
2007-01-14 14:23:28

they will never get to a first date - they have no money to go out….

 
Comment by arizonadude
2007-01-14 15:26:33

Buy now and ask questions later is the new mantra. Put it on the credit card please.

 
Comment by irvinerenter
2007-01-14 16:16:11

“Young folks used to wait to get a little more established before buying anything.”

When down payments used to be required, young folks had to wait.

Comment by NYCityBoy
2007-01-14 16:40:12

I think a lot of them had family pushing them to buy as soon as they could. Friday I had a co-worker that was talking about her 21-year old son. He lives at home. He may move out in the near future. She looked sad and said she wanted him to buy not rent because….drum roll please….renting is throwing your money away. She said that.

I told her that my wife and I planned to “rent ourselves to wealth” and walked away.

If you want to see why these kids are so stupid get a DNA sample. I bet you can trace the “dip$hit gene” right back to good old mom & dad.

(Comments wont nest below this level)
Comment by irvinerenter
2007-01-14 17:13:07

Now they can spend the rest of their lives throwing their money away on interest, property taxes and HOA fees. I don’t get why people can’t understand that.

 
Comment by jakobscalpel
2007-01-14 21:56:27

Interest, property tax, and HOA fees is money throw away, no doubt, but they also will save more money compared to renting if they own for more than five years or so, assuming historic appreciation rates. Of course, that is an extremely unlikely assumption for people who buy now. Also, they would have to have some sensible mortgage, not one of the monetary catastrophes so many first time buyers are saddled with. But buying in general is not a stupid idea. Buying right now is the stupid idea.

 
Comment by M.B.A.
2007-01-15 16:04:12

at the moment it is stupid to buy so the 5 year window does not hold….if you want to live in the house for 20 years, then maybe it makes sense. however, that said, I would STILL wait for 3-4 years, then buy

 
 
Comment by ChrisinBirminghamMI
2007-01-15 05:27:00

I remember the good ole’ days when young people right out of college bought and drove used cars. Those days are long gone. Is it really any surprise they dig a deeper credit hole by buying a condo? I’m sure their idiot parents are telling them real estate is great investment!

(Comments wont nest below this level)
 
 
Comment by achtungpv
2007-01-14 18:50:43

I hope I’m never back in the dating market, but I think, nowadays, I’d ask for a potential girlfriend’s SS# so I could run a credit check.

 
 
Comment by Jas Jain
2007-01-14 14:34:32

Excerpts from the past:

Homebuyers looking nationwide to invest
Equity earned in hot markets being used to buy in more affordable areas

Updated: 7:46 p.m. ET Oct. 14, 2005
LOS ANGELES - While many would-be homebuyers have been scared off by dire housing market predictions, Debbie Harris has taken out mortgages on five homes in the past 18 months. She’s among a growing number of fledgling real estate investors around the country using equity earned in overheated housing markets to stake their claims to rental property in more affordable areas.

The investors say there’s no reason to fear the housing market will collapse — although each purchase increases their risks of losing money if prices do take a dive.

“My husband believes there is,” said Harris, who runs two cell phone stores. “He’s thinking five houses is enough. I’m thinking, no, it’s not

Indeed, investors like Harris believe their investments are secure because people will always need places to rent — especially as homes become less affordable. But some observers say their zeal to scoop up property in emerging areas is helping drive prices there even higher.

Thus far, Harris has bought all her homes in Victorville, a booming desert area about 90 miles east of Los Angeles.

[You should have seen the picture of this fat Harris woman gloating. – Jas]

-x-x-x-x-x-x-x-x-x-x-x-x-x-

http://www.usatoday.com/money/2006-02-14-women-houses-usat_x.htm

Posted 2/14/2006 11:46 PM Updated 2/15/2006 8:53 AM

Dream house, sans spouse: More women buy homes
By Noelle Knox, USA TODAY

Karen Phelan remembers how scared she was when she bought her first home 10 years ago. Newly divorced and broke, she’d saved for a year for a down payment on a modest house.

“I just got tired of waiting for Mr. Right to come along and start the American dream,” says Phelan, who owns her own company, which resells time-shares. Last year, she sold that house and bought a larger one in a gated golf-course community in Reno.

“They’re kind of like emotional trophies,” says Phelan, 43. “It’s symbolic of success — of getting out there and doing it on my own and saying, ‘I’m just as capable of doing it as the next person and doing it on my own and making it.’ ”

A lot of other women seem to feel the same way. Last year, single women snapped up one of every five homes sold. That’s nearly 1.5 million, if you’re counting — more than twice as many as single men bought, according to the National Association of Realtors.

Comment by Marc Authier
2007-01-14 14:41:02

You mean women can also be stupid ? Impossible! Women are supposed to be soo perfect, contrary to us badboys. Very amusing! Stupidity “enfin!” has no sex!

Comment by Marc Authier
2007-01-14 14:42:08

No gender.

(Comments wont nest below this level)
Comment by Jas Jain
2007-01-14 16:08:05

“And women are the ones who are stupid???? ”

LARenter,

Of course not. Percentage-wise I would guess that more men are stupid. It is ego, or “I know” problem, you know.

I hope that your 401-K is not in Scams, aka stocks, or Scam Mutual Frauds, aka mutual funds. In Scams, the 401-K would turn into 41-K! That is if you are lucky.

Jas

 
Comment by AZ_BubblePopper
2007-01-14 21:14:57

Women clearly have the edge when it comes to impulse buying. They call it shopping - The X-Factor.

“Look honey, look at what I bought today!”

 
 
Comment by LARenter
2007-01-14 15:10:55

And here I am a mid-thirties professional woman begging my husband not to push us into buying!! He is sick of renting and wants to buy in the next 1 - 2 years! We are currently putting away a ton of $$ in 401k and paying off bills. I told him we are better off sinking our $$ in 401k (we can max out a solo 401k due to my husband contracting $41k/yr) and put $15k in my 457. This is a whole hell of a lot more than the money we would be supposidly gaining (more like losing) if we bought a house! Hell, we get a larger tax write-off from the 401k’s than we would from the interest tax deduction. He just says that he doesn’t want to rent forever. I say that I don’t want to make someone’s retirement for them!!! And women are the ones who are stupid????

(Comments wont nest below this level)
Comment by fafhrd
2007-01-14 15:32:38

401k sounds pretty risky right now as well.

 
Comment by NYCityBoy
2007-01-14 16:47:50

Why would a 401k be risky? You can move it into a money-market fund. No more risk! You don’t have to put your 401k into high-risk stocks. I think 2007 is the year of “wealth preservation”. The stock market scares the heck out of me. I see the losers in my neighborhood that run that mess and get even more scared.

 
Comment by GetStucco
2007-01-14 18:06:34

“Why would a 401k be risky?”

1) Constraints on investment choices (show me a 401K which allows investing in gold or foreign currencies, for instance).

2) Principle-agent problem: The fund manager does not lose nearly as much as participants if all the $US-denominated investment choices in the 401(K) menu turn south at the same time, and may stand to gain greatly near term for “fooled-by-randomness” investment choices which trade a higher current return for increased risk of future blow-up.

(Read the book for clarification:

http://www.fooledbyrandomness.com/ )

3) Time bombs buried in the fine-print list of assets comprising fund choices (e.g., my sister read the fine print and discovered that the “conservative” choice on her menu of 401(K) alternatives was chock-full of MBS).

 
Comment by Auger-inn
2007-01-14 19:09:34

My 401K allows for a brokerage account. One can own CEF or MERKX or any number of ETF’s that have foreign currency or gold exposure. Not the same as holding physical or currency offshore but a hell of a lot better than nothing. As an aside, I don’t think it should come as a surprise to anyone that it is becoming VERY difficult to hold U.S. dollars and NOT be exposed to MBS’s. I was rolling over my wife’s 401K to an IRA and the default holding is a money market account that garners it’s return from MBS’s. I was informed that principal is not guaranteed when instructed that all funds needed to be placed into the money market prior to a check being cut for the roll-over. My guess is that anyone with a bank CD or brokerage account may be in the same position with regard to unwanted exposure. Hold a short term treasury fund if you want to be out of the MBS game.

 
Comment by A Texan in Bavaria
2007-01-15 00:29:11

My US-based 401k offers something that is pretty much a European index fund, which basically means I’m buying EUR (along with some GBP and CHF). Since I live over here and plan to do so for at least the next few years, I try to divide my currency risk evenly.

Best performer this past year? European research and development fund, mostly invested in very large European tech and pharma concerns.

 
Comment by Pelegirl
2007-01-15 12:32:52

So just a little advice from the smart people here for someone with little stock market experience. Move my 401k out of stocks and into the money market this year?

 
 
Comment by LARenter
2007-01-14 15:12:49

Think of our friend Casey…. This is no woman….

(Comments wont nest below this level)
Comment by NYCityBoy
2007-01-14 16:52:05

Prove it!

 
 
 
Comment by optionedunarmed
2007-01-14 15:06:50

Homebuyers looking nationwide to invest
Equity earned in hot markets being used to buy in more affordable areas

And they almost invariably overpay in these away-from-home markets. All they know is that the prices are cheaper than in their home city, and therefore the homes must be a great bargain… The local realtors love it when they get these out-of-town uninformed investors walking into their offices.

Comment by Jas Jain
2007-01-14 16:29:24

You should see the overbuilding in Victorville where this Harris woman bought. On my trips to San Diego and Indian Wells I drove thru Victorville 4-5 times in the past year. It is going to be a disaster for Harisses.

Lure of easy money…

Jas

(Comments wont nest below this level)
Comment by irvinerenter
2007-01-14 17:21:21

In the last downturn in California, the fringe markets of the high desert saw nominal prices drop 50% or more. Lots of jingle mail out there.

 
 
 
Comment by GetStucco
2007-01-14 17:43:35

[You should have seen the picture of this fat Harris woman gloating. – Jas]

http://www.youtube.com/watch?v=QG8WUpHdpVA

(Caution: Viewing may induce death by laughter…)

 
Comment by peter m
2007-01-14 18:12:13

“Thus far, Harris has bought all her homes in Victorville, a booming desert area about 90 miles east of Los Angeles.”

Victorville is a classic Boom and bust hi-desert community. They talk about lancaster being compton in the desert: Victorville also gets the Scentral LA welfare/section 8 dregs. As Soon as gas goes over $3.00 a gal the IE/ hi-desert will collapse like a box of matchsticks. As this thread also deals with The Temecula RE market let me add that Temecula/entire SW Riverside region has been erupting/overflowing with new home tracts and spankin-new planned communities, which will inevitibly result in falling Median prices. No, there won’t be massive waves of retiring boomers, massive illegal alien waves nor humongous throngs of retired folks swallowing up the huge batches of new inventory in the SW riverside region, coachella, nor the victorville hi-desert, as the REIC shills would have you believe.

 
 
Comment by az_lender
2007-01-14 15:09:02

I suppose some people asked you yesterday, but where have you been, Jas Jain?

Comment by Jas Jain
2007-01-14 16:01:54

Doing the research and some trading (though retired, I am a professional speculator in financial markets, a hobby, you might say).

Jas

Comment by John
2007-01-14 22:11:38

Decided to give up your amateur status, did you?

(Comments wont nest below this level)
 
 
 
 
Comment by SeattleMoose
2007-01-14 13:57:00

CA is indeed the “bellweather” state.

For us bears it is only going to get sweeter from here…the decrease in prices between now and summer is going to be a train wreck for infestors, FBs, and GFs.

And the FED is powerless to lower rates as world banks raise their rates and foreign investors watch the dollar to see if they should bail. Given the choice between letting RE crash and letting the dollar crash is a no brainer for the FED….it boils down to the lesser of two evils.

It is a GREAT time to be a renter.

Comment by pressboardbox
2007-01-14 13:59:53

Time2Rent

 
Comment by irvinerenter
2007-01-14 16:21:02

Renting Rules!

 
Comment by tg
2007-01-14 18:46:38

You may be right about the dollar but other countries buy our dollars because we buy their stuff. What happens when we cannot afford to buy their stuff?

 
 
Comment by Blackbox
2007-01-14 14:03:06

Wow, if your sister is willing to throw you under the bus for her 6% comm. “Join the Bandwagon”, can you imagine what an agent you don’t even know will do for you GFs.. geez

Comment by M.B.A.
2007-01-14 14:24:16

yes - it is fairly criminal - or else that family has something wrong with their chromosomes.

Comment by optionedunarmed
2007-01-14 15:12:08

A lot of these realtors still believe the lies… And think they’re doing their relatives a favor. Hard to know whether they’re trying to mess up their relatives’ lives (for the sake of personal profit), or whether they actually think they’re doing good for their relatives (for the sake of personal profit).

Comment by Sunsetbeachguy
2007-01-14 15:55:37

A con man truly believes his spew, otherwise he would be an ex-con man.

(Comments wont nest below this level)
 
Comment by Blackbox
2007-01-14 16:05:26

How nice to apply peer pressure on her sibling “Join the bandwagon”. At least she should say that she explained the risk, and he may still have a decent risk/reward ratio, but “C’mon join the team” . There is not excuse for that! This is the biggest purchase most people may make in their lives. Okay sis, I’ll take one for the home team…you are such a pest sis…ok, ok, where are the suicide mortgage papers! Double Geez….

(Comments wont nest below this level)
 
Comment by irvinerenter
2007-01-14 16:24:03

I think a lot of realtors really believe their own hype. A friend of my wife’s is being pressured by her realtor mother to buy a new house and rent their existing one because this dip is a great time to buy. I have a hard time imagining a mother knowingly doing this to her own daughter unless she believed it (I know, anything is possible for a realtwhore).

(Comments wont nest below this level)
 
Comment by awaiting bubble rubble
2007-01-14 18:23:01

‘A lot of these realtors still believe the lies… And think they’re doing their relatives a favor.’

From what I’ve seen lately, I’m beginning to think that Realtors(tm) and those in their inner circle are the ONLY ones who have not only drunk the koolaid, but have still not awakened from its deadly spell.

(Comments wont nest below this level)
 
Comment by A Texan in Bavaria
2007-01-15 00:37:03

My co-worker’s daughter sincerely believes that my co-worker’s condo back in FL will *appreciate* another $30k over the next year. My co-worker’s gut instinct is to take one of the very attractive offers she’s been given for this unit that currently has negative cash flow until the mortgage is paid off next year (then it will be slightly positive - unless there’s another big-ass hurricane).

I’m trying to convince her to go with her gut, take the capital gain, pay the tax and walk away a winner. She’d promised the condo to her daughter as an inheritance since she’d helped her son out when he was struggling and the daughter was doing fine, but c’mon, she’s spending money she should be using to finish building her house here in Germany where she’s going to retire.

I told her to offer the daughter two choices: pay her (my co-worker) some agreed amount and take it now, or let her go ahead and sell it, and will the value to her.

She went back to FL for vacation, so here’s hoping she does what’s right for her (and probably ultimately right for the daughter)

The daughter, btw, is in the flipping business and has done quite well. Of course, she’s only been in the flipping business for the past three years, so might be unable to fully comprehend “housing cycle.”

(even though I can, at the tender age of 26)

(Comments wont nest below this level)
 
 
 
Comment by NYCityBoy
2007-01-14 16:56:45

Slow down there, Blackbox. She didn’t throw him under the bus for a 6% commission. My understanding is that the 6% is split between the buyer’s and seller’s agent. They each get 3%. But that 3% is not turned over to the agent. It is turned over to the agency. The agency then takes its cut before turning over the Realtor’s share. The used $hitbox saleslady then ends up with about 1.85% of the sale price.

She is willing to enslave her brother for 1.85%. I bet she has a closet full of leather, whips and power tools.

Comment by San Diego RE Bear
2007-01-15 17:46:26

“She is willing to enslave her brother for 1.85%. I bet she has a closet full of leather, whips and power tools.”

Heck, than she is already well-equipped for her next profession. :D

 
 
Comment by Betamax
2007-01-14 22:36:37

My sister, a newly minted realtor, has chugged the Koolaid and keeps trying to get me to buy because she thinks I’m missing out on appreciation and will have to pay more later.

She believes what she is told by the ‘experts’ at work, and what is parroted by all her colleagues, not what her academic brother thinks.

I recently told her that I’d buy in late ‘07 to get her to stop pestering me right now - I figure the market will obviously be toast by that time and even she’ll understand why I’m not buying.

 
 
Comment by Anthony
2007-01-14 14:32:20

“rising construction costs.”

Why do I keep hearing that? Lumber is off some 40% from highs, copper is down almost as much, and crude oil fell almost 20% this week. Seems like everybody has an answer to explain why housing prices should stay as high as they are…even those most of these answers are nothing more than lies. Among them:

1. Everyone wants to live in (insert city name here).
2. RE always goes up (although last year defied that jewel the RE industry always loves to latch on to).
3. Houses in good school districts always go up.
4. Materials costs keep going up (again, a lie).
5. Illegal immigration will cause prices to keep going up (without toxic loans or using someone else’s SSN, none of these cowards will be able to get a $500K loan).

Despite all the RE industry lies, people really seem to be chomping at the bit to get a house…and people are still very shocked when I tell them I won’t buy until prices drop 40% from where they are currently. People definitely think I’m off my nut for even suggesting as such; then again, these were the very same dumba$$es that told me “buy now or be priced out forever!” last year. This bubble needs to deflate faster.

Comment by Ben Jones
2007-01-14 14:39:09

Yeah, we first noticed this line when the LV condo towers started to fail. In fact, the failed condo project that I posted today used that same tired excuse.

Comment by imploder
2007-01-14 15:31:53

Guess it sounds better than; “We messed up, if we build these we’ll never be able to sell them and we’ll lose our shirts.”

 
 
Comment by Rental Watch
2007-01-15 09:09:34

At the heart of it, it’s not materials costs. It’s that the contractors were so busy that they could just name their price. As a developer over the past few years, you could choose to sign the contract, or not build your project (and miss out on a great market).

I had a construction manager tell me a few months ago that they bid a job to a contractor who’s price was something like 20% higher than the next guy. The high bidding contractor was surprised when he didn’t get the job, because for the past few years he was simply able to name his price, regardless of what his costs were. Next time he bids a job with that construction manager, I’m guessing he’ll actually do some math.

Generally, as construction activity slows, and contractors get hungry, they will sharpen their pencils, and that 20% extra margin will go away. Construction costs will fall more in line with what we all would expect given materials cost decreases.

 
 
Comment by JP
2007-01-14 14:44:27

They remind me of the Nasdaq diehards who refused to believe that their market was collapsing, and stuck with Cisco Systems stock all the way from $80 to $9.”

Amazing to see this quote in the MSM. The collection of Bay area articles in this posting makes it sounds like a turning point is here. (It’s about time.)

Comment by Betamax
2007-01-14 22:39:38

I know a guy who bought Nortel at $100+ and never sold, still owns it today at $2. In his mind, I think selling would mean facing his loss, while hanging on forever somehow means it never happened. Weird.

Comment by Rental Watch
2007-01-15 09:11:34

And the same loss-aversion psychology will play itself out in housing too. People who can hold on, will hold on, even though it is a stupid financial decision.

 
 
 
Comment by imploder
2007-01-14 15:10:55

“‘Who are these people? Other people who are renting?”

Meaning “renters” are subhuman moron losers who’s opinions should be dismissed automatically. I mean they’re renters for gawd sakes!

Comment by optionedunarmed
2007-01-14 15:20:26

I guess this mean that all current homeowners were financial morons up until the moment they bought their first house.

 
Comment by irvinerenter
2007-01-14 17:19:12

It’s almost like religious devotion. Once you have been baptized into home ownership you understand; otherwise, you are just a heathen or infidel. Jim Jones: pass the kool-aid.

 
Comment by GetStucco
2007-01-14 18:42:01

Renters = smart

Buyers = socially insecure losers

 
Comment by DaniW
2007-01-15 09:37:58

Well come on, after all I rent for one third the cost of owning and the apartment is far nicer than any of those condos. What a jerk I am, not willing to pay my fair share.

 
 
Comment by az_lender
2007-01-14 15:12:08

I lost some money buying tech stocks in 01-02 (but nothing like people who were in at the top). Very likely to make the same error in RE, so must discipline self to stick with the bears for as long as it takes.

Comment by Joe Momma
2007-01-14 18:51:23

That is a great observation. I am in the same boat. I need to stick with the bears as long as possible. You could be a little early and still get creamed. And this is the 1st of 2nd inning of this nasty ballgame.

My income will need to be solid, and WAY MORE than is needed to make the payments, before I even think of jumping back in.

Serious risk in this market.

 
Comment by San Diego RE Bear
2007-01-15 17:51:51

I lost some money in tech in 2000/2001 also. Thank God!!!! What a great lesson in how mania’s can affect one’s clear thinking. I am so glad I learned that lesson early and not too painfully. If I had learn via a house in San Diego I think it might have been more painful and far moer expensive!

How many people are thankful for the small lessons that help them make better decisions in the future? My guess is that lots and lots of these FB’s will look everywhere but inward and will just lose money on the next mania convinced they are brilliant enough to make wealth without work, time or sacrifice.

 
 
Comment by David
2007-01-14 15:32:46

Here is my observation: if history is any guide, the 5th year is usually much better time to buy than the 1st or 2nd year after a major peak. This is especially true if the inflation is factored in.

Comment by GetStucco
2007-01-14 17:51:28

Mathematical proof:

(100% - 10%) = 90% (10% discount)

(100% - 10%)^5 = 59% (41% discount)

 
 
Comment by luvs_footie
2007-01-14 15:38:47

From the article……….

“They say San Francisco is an area where prices never go down”

Who are “they”?…..and where is their evidence?

Comment by jbunniii
2007-01-14 17:03:04

I’ve heard a hell of a lot of San Franciscans make this assertion over the past few years.

It’s all good though, everyone loves surprises!

Comment by Tbone
2007-01-15 11:28:40

“Everyone” in the bay area makes this claim…even the people you thought were smart. This is why so many have jumped on the bandwagon…they are getting this crap from even people they respect.

Either they are all idiots and I am a super genius, or I am a moron for listening to you guys. :)

 
 
 
Comment by calex
2007-01-14 15:41:10

“But two years later, Reiss faces foreclosure on that house and four others that she bought in the following months. And she has brought a lawsuit against a Murrieta mortgage brokerage and several other companies and individuals. The lawsuit claims that the network included as many as 412 investors.

F@ck all 412 of them. Anybody that stupid deserves it. They have personnaly been involved in making housing unaffordable for family’s with their greed and deserve to lose their own houses.

 
Comment by BPLI
2007-01-14 15:54:53

Phenomenal article on mortgage fraud today:

http://www.kansascity.com/mld/kansascity/16455689.htm

Comment by JWM in SD
2007-01-14 16:27:50

Mortgage Fraud and the Closure of SubPrime lenders will be the big stories of 2007. The MSM will be all over this in the coming months, meanwhile, they will ignore the attendent effects on the housing prices like a red-headed step child.

 
Comment by oc-ed
2007-01-14 16:59:50

So now we can see who will be the targets and have to fall on the knives as this unravels. I wonder, as tax revenues chase the prices and assesments down, would it be a good play by the State govs to backfill the lost revenues with fraud prosecution and very large fines? Paladin, have you seen anyone get convicted and fined yet?

Comment by Paladin
2007-01-14 18:47:43

There are convictions happening, yes. However, you would not believe the number of cases the FL’s (new term = F@’d Lenders!!! hahahaha) have to wade thru.

New Century lent 100% LTV on 5 houses to a convict. He got the loan on two of them while he was STILL IN PRISON. He is back in prison now for another 5 years. Claims he did not know anything about RE.

The interesting thing about this is that you can not hide the paperwork. All these fraudsters have escrow instructions and checking accounts. The actions are traceable. It is just going to take a year or two to work through the cases.

That being said, you would not believe how hard it is to get the lenders and enforcement agencies attention. But I press on. Setting up a web site to list “over financed houses” would be a great step, if we could get the rating agencies to compare the list to the houses in the MBS pools. That is where my next work will be directed. I just don’t have enough hours in the day anymore.

Comment by oc-ed
2007-01-14 19:11:13

Are you thinking of something with pictures like the flipper site (darn I can’t find it now) that was posted here this week? Or just a list of properties with the fact that support it as over financed? I am trying to figure out how I could help, but like you have little time. I know there are others out there who want to help as well. Let’s see how we can pool our resources to make this a reality (pun intended). Describe in just a wee bit more detail what it is you imagine the site would look like, the source(s) for the site data, who the “customers” would be and how they would use the data they acquire there. That will help me get an idea of the scope of effort to build it and feed it.

(Comments wont nest below this level)
Comment by paladin
2007-01-15 09:54:08

oc-ed,

I envision an Excel template for each reported fraud. Address, buyer, seller, broker, and market comps. As much or little info as each of you can supply. The one thing Ben’s blog has taught me is there are a great many p!ssed off people who will contribute. However, it has taken me 60 hours of work just to get where I am on the Lincoln mortgage fraud cases. I have an appointment with the FBI on Thursday and during the meeting, I am going to ask them for the resources to set up the web site. The FBI would be fools not to do this. It would make their jobs so much simpler and once a deal is reported, the fraudsters will probably be frightened off. Most of them are mainstream, being told “everyone is doing it” by the brokers and homebuilders.

Additionally, if we can share the data with Fitch, S&P & Moodys, smart RMBS buyers will demand the pools be crossed checked to toss the bad loans back to the originators IMMEDIATELY. That will STOP FRAUD DEAD IN ITS TRACKS. The pool buyers do not need a reason to reject a specific loan, they can just refuse to take it in the pool. When that happens, you will see the brokers tighten up and quit F’ing us all.

If the FBI agrees to fund it, I will be looking for a web master to take it on. I hope it happens.

 
 
 
 
Comment by ICU
2007-01-14 17:16:24

The documents purportedly showed that the $475,000 house they purchased in 1999 somehow was worth a $1.2 million mortgage in 2006.

A puffed-up appraisal?

 
Comment by Ken Wells
2007-01-14 19:05:18

This is incredible! I googled Rachel Dollar’s blog, referred to in the article;
http://www.mortgagefraudblog.com/
Had no idea this was so widespread.

Comment by robin
2007-01-14 20:38:56

All the usual suspects and flyover country as well. Wow! Paladin and OC-Ed may need to narrow their scope if they want to have lives outside of tracking mortgage fraud.

 
 
 
Comment by Jerry from Richardson
2007-01-14 15:56:27

Financial Times: The BoE is often a trend-setter for other central banks. Their action should tell the markets that there is still an international central bank consensus in favour of tightening policy.

http://tinyurl.com/yywuc8

In other words, the Fed is f&cked.

Comment by GetStucco
2007-01-14 18:45:49

“But oil was the focus of attention, raising speculation that the five-year bull run in commodities may be nearing an end. There was a small bounce in oil prices on Friday with West Texas Intermediate rising 33 cents to $52.21 a barrel by late London time.”

It sounds as though the oil bubble has popped. Consequently, the Peak Oil crowd can go into hiding for another 25 years.

Comment by Mike
2007-01-15 01:02:41

Being a big peak oiler. Housing and oil prices react the same way in a lot of ways its the comps that set the price or the margin. A slight glut or a scarcity can have a dramatic effect on prices.

Peak oil is about the amount of oil not the price.

Their is a good chance we are at peak housing if we are are or close to peak oil in the sense we will never build as many houses again per year as the last few years. Which means we probably will never have another bull housing market again. The combination of peak oil and the passing of the baby boomer’s pretty much ensures this.

The combination of warm weather and the collapsing housing market are playing a big role in our mini glut. It will pass.

They are not making any more oil at least not on a timescale useful for us.

Comment by Bill in Phoenix
2007-01-15 06:19:10

Ah, there’s something I agree with from you. We both know oil will never run out. But we will run out of oil priced below $7 per gallon. “Twilight in the Desert.” Documented evidence with extensive references to Society of Petroleum Engineers documents. In 2008 there will be greater signs of supply disruptions than what happened during Hurricane Katrina. It will go downhill from there. Those of us in large metro areas with light rail will still not be immune from the effects of “over the peak” oil. A large variety of products that we use are oil based. The keys under my fingers as I type this, for example. The pesticides for the crops growing the food I eat, and so on. If this all isn’t a strong signal for zero population growth, I don’t know what is.

(Comments wont nest below this level)
 
 
 
 
Comment by SusieQ
2007-01-14 16:44:08

My brother and his wife bought their condo in Lower Pacific Heights in San Francisco in late 2000 after the dot com bust and couldn’t be happier. They got “in” at a price they could afford. If you know you’re going to stay put in a hot area, buy what you think is priced right. If you wait too long in a desirable area, you may miss your chance.

Comment by jbunniii
2007-01-14 17:04:20

Luckily, desirable areas are one thing that they ARE making more of! It’s called gentrification.

 
Comment by Jas Jain
2007-01-14 17:08:32

Yes, Susie, timing of the purchase has a lot to do with whether one feels happy of miserable. Once the bubble fully bursts they may not feel as lucky as they have felt the past few years. Prices should get back to where they were in 1994-95, if not lower.

Jas

 
Comment by JWM in SD
2007-01-14 17:34:23

Miss your chance??? News Flash Susie…there will be lots of chances in the next several years. There is no need to be in a hurry…not even in SF.

 
Comment by GetStucco
2007-01-14 17:57:17

“If you know you’re going to stay put in a hot area, buy what you think is priced right.”

Bad advice, thank you. Much better to wait until homes pencil out again as investments, than to jump in too soon during a bust (unless you want to try and catch a falling knife).

Comment by sf jack
2007-01-14 21:19:29

And that’s just the problem - nothing _is_ priced right around here.

So what defines “hot” anymore? SF real estate is not “hot” - unless you talk to one of the locals who considers RE a religion.

Perhaps Susie’s error is that she thinks that next six or more years will be just like the last six years around here… or just the opposite view of the those in Chronicle article.

LOL!

 
 
 
Comment by RJ
2007-01-14 16:56:59

‘Who are these people? Other people who are renting? Get on the bandwagon!’”

Chucked under the bandwagon and talked into renting from the bank by your own sister. I’d set her barbie doll collection on fire.

 
Comment by GetStucco
2007-01-14 17:36:32

The Chargers are out of the running.

http://sportsillustrated.cnn.com/football/nfl/boxscores/2007/01/14/2414_boxscore.html

The Souper Bowl is now moot — SD real estate is toast.

Comment by Portland Mainer
2007-01-14 17:45:16

I say the San Diego Chargers should change their name to the San Diego Savers.

 
Comment by Diggs
2007-01-14 18:22:02

The prices of SD real estate will fall harder than Marty Schottenheimer in the playoffs :)

 
Comment by peter m
2007-01-14 19:52:37

“The Chargers are out of the running.”

I could dissect this game till doomday but my condolences to two great SD players, LaDanian Tomlinson and Antonio Gates, who were let down by some really stupid mistakes made by their teammates, and which cost SD a chance at a super bowl. SD was the better team top to bottom except at the critical QB position, where the experienced 3-time superbowl winnerT Brady gave the Pats that narrow margin of victory.

 
Comment by cayo_ron
2007-01-14 21:09:48

Going for a first down on the 31, 4th and 11, instead of a field goal. How appropriate that they lost by . . .3. Kinda like splitting 10’s in blackjack, or buying a house right now.

 
 
Comment by GetStucco
2007-01-14 17:39:03

“Many had expected the strong market to create home equity, allowing them to refinance. Now many are under pressure to sell their way out of the situation, and have flooded the market with homes for sale. ‘When you’re at the tail end of a market that’s been going up, people think it’s going to go up forever,’ Bonawitz said.”

So there you have it — trees don’t actually grow to the sky. And sometimes, even Sequoyah forests burn to the ground. Within three years, the refrain that “real estate is the best investment” will morph into “real estate is the riskiest investment.”

Comment by uptown
2007-01-14 21:44:50

And it will be time to buy again.

 
 
Comment by stoutmaster
2007-01-14 17:42:13

Economists upgrade US outlook after surprisingly strong data

http://tinyurl.com/w6xvf

Comment by GetStucco
2007-01-14 17:54:46

Helicopter drops will be indefinitely postponed as long as the US economic outlook is rosy.

Comment by stoutmaster
2007-01-14 18:39:17

I’m just hoping the stock market can turn in a decent year.

Comment by GetStucco
2007-01-14 18:43:06

Once the Wall Street cargo cult gives up on the hoped-for helicopter drops, look out below…

(Comments wont nest below this level)
 
 
 
Comment by Marc Authier
2007-01-14 18:55:59

Yeah sure. Economists are such a bunch of experts in bullsh-t. Read this instead. Now that’s interesting news. And it’s not good for US bonds and US capital markets or real estate.
Economists? Pouahhh! I prefer my astrologer !
*******************************************************************
Euro displaces dollar in bond markets
By David Oakley and Gillian Tett in London

Published: January 14 2007 22:08 | Last updated: January 14 2007 22:08

The euro has displaced the US dollar as the world’s pre-eminent currency in international bond markets, having outstripped the dollar-denominated market for the second year in a row.

The data consolidate news last month that the value of euro notes in circulation had overtaken the dollar for the first time. Outstanding debt issued in the euro was worth the equivalent of $4,836bn at the end of 2006 compared with $3,892bn for the dollar, according to International Capital Market Association data.

Outstanding euro-denominated debt accounts for 45 per cent of the global market, compared with 37 per cent for the dollar. New issuance last year accounted for 49 per cent of the global total.

That represents a startling turnabout from the pattern seen in recent decades, when the US bond market dwarfed its European rival: as recently as 2002, outstanding euro-denominated issuance represented just 27 per cent of the global pie, compared with 51 per cent for the dollar.

The rising role of the euro comes amid growing issuance by debt-laden European governments. However, the main factor is a rise in euro-denominated issuance by companies and financial institutions.

One factor driving this is that European companies are moving away from their traditional reliance on bank loans – and embracing the capital markets to a greater degree.

Another is that the creation of the single currency in 1999 has permitted development of a deeper and more liquid market, consolidated by a growing eurozone.

This has made it more attractive for issuers around the world to raise funds in the euro market. And, more recently, the trend among some Asian and Middle Eastern countries to diversify their assets away from the dollar has further boosted this trend.

René Karsenti, executive president of ICMA, said: “It is the stable interest rates in Europe that have helped and the fact that [the euro] has strengthened and shown resilience.”

Since the start of 2003, the European Central Bank’s main interest rate has fluctuated only 1.5 percentage points, ranging from a low of 2 per cent in the middle of that year to 3.5 per cent, its rate today.

In comparison, the Fed funds rate, the main US interest rate, has fluctuated 4.25 percentage points, ranging from 1 per cent in the middle of 2003 to 5.25 per cent, its level today. The euro has also risen to trade around $1.30 against the dollar, from around parity three years ago. Sterling issuance has grown in the past three years, reinforcing its attraction as a niche currency among some investors. The yen, in comparison, has fallen out of favour.

Overall, international capital markets have doubled in size in terms of bond issuance during the past six years.

Comment by GetStucco
2007-01-14 18:59:36

“The euro has displaced the US dollar as the world’s pre-eminent currency in international bond markets, having outstripped the dollar-denominated market for the second year in a row.”

Think this might have something to do with earlier comments about helicopter drops and printing presses standing ready in the wings to supply liquidity at the first sign of economic weakness? Nah…

 
 
 
Comment by ws
2007-01-14 17:45:52

if Vicky Reiss wins this lawsuit about purchasing the properties in Murrieta then nothing in the world is right. i checked public records and she purchased a couple of properties there in 2004 with Suntrust Mortgage as the lender. She then purchased 2 properties on 10-25-05 38537 Clearbrook for $605,000 with a 95% loan and 29336 Gandolf for $645,000 with a 95% loan. Loans on both properties were through Community First Bank, so how could Community First not know that they were loaning her money and that she already owned 2 non owner occupied properties.

finallhy, she bought 23876 Cloverleaf on 3/23/06 for $700,000 with 100% financing. guess who the lender was??? Suntrust Mortgage who already had loans on 2 of her properties.

i hope she and the lenders lose their ass.s on these deals. she and the lenders have no one to blame but themselves!!!!!!

 
Comment by Terence
2007-01-14 18:11:41

SF housing prices fell in the late 80s early 90s–it wasn’t an Austin firesale but prices fell.

 
Comment by Nozferatu
2007-01-14 18:23:52

I have no remorse for people who by real estate to make a profit on it. I truly hope the good majority of them, or all of them if possible, to get hurt real badly.

Housing is something that should be off-limits to profiteers and bastards like flippers. It’s a shame anyone made the blood money they did these last few years…it’s disgusting and pathetic at best.

Comment by Troy
2007-01-14 22:44:23

I thought the same, but didn’t have a theoretical/philosophical framework to separate real estate from the “good” capitalism — until I discovered Georgism/Geolibertarianism.

(Now I’m a happy camper, philosophically speaking)

 
Comment by Mr. Fester
2007-01-14 22:53:46

I hear you Nozferatu,

At the risk of seeming a pinko, I agree that “flipping” housing is slimy on many levels. And many levels of slimers supported it.

Great handle, by the way!

Comment by Nozferatu
2007-01-15 01:02:02

Cheers!

 
 
 
Comment by flat
2007-01-14 18:34:34

wow, even w corn at 10 year highs
IOWA down
http://www.inman.com/inmannews.aspx?ID=61162

Comment by Marc Authier
2007-01-14 19:01:33

Corny market.

 
 
Comment by GetStucco
2007-01-14 18:38:01

“In 2004, Temecula resident Vicky Reiss, looked at skyrocketing real estate values and saw a second or third home as an investment that would eventually yield a profit. So when a co-worker told Reiss that she could use equity from rising values to generate cash for still other lucrative investments, it sounded plausible, Reiss recalled in interviews last week.
The co-worker’s son and business associates would make it all happen, Reiss said she was promised. She agreed to buy a $506,000 house on Falkirk Drive in Murrieta Hot Springs. ‘I thought real-estate was a good investment,’ she said. ‘It was going up at the time.’”

Are there any figures on what percent of San Diegans succumbed to this logic? I am guessing upwards of 30%, but unlike the NAR, I admit outright that I am pulling this number out of my behind…

 
Comment by GetStucco
2007-01-14 18:56:21

“‘It’s unfortunate, but something drastically needs to happen to the real estate market in order for many of us to buy. And I think it’s happening because of these funky loans,’ he said.”

Word is out: Liar loans and suicide loans are risky. Anyone who buys from this point out and goes into future foreclosure has fallen on their own sword.

 
Comment by jjinla
2007-01-14 19:32:02

OT, but could someone explain to me why a house would be sold for insanely LESS than it is worth?? http://www.zillow.com/HomeDetails.htm?zprop=20548370

I’m seeing this a bit around the LA area for higher-end properties, and no, the bottom hasn’t finally fallen out.

Comment by plysat
2007-01-14 21:06:21

look it up in property shark… something odd going on, seems to be 2 sales, to 2 different people, on the same day. ???

 
 
Comment by winjr
2007-01-14 19:56:25

“‘SIMI VALLEY - In a sign that the city is winding down its booming housing development phase, the number of building permits for new homes and apartment units dropped more than 80 percent in 2006 compared with the year before.”

A “SIGN”? LOL! An 80% drop in permits is “Getting clubbed over the head with the obvious”.

 
Comment by Ken Best
2007-01-14 19:57:16

Here’s some data I got from a conversation with a RE broker:
-One guy bought 5 new houses in Sacramento. He was trying to unload
them last year, still have the same 5 houses now, will try again this Spring.
-One of his agent bought 28 new homes. Yes, 28, probably the whole
tract. Don’t know if this guy was able to unload any.

This thing is going to crash big.

Comment by imploder
2007-01-14 20:27:18

“One of his agent bought 28 new homes.”

Oh , I sorry, but this made me laugh out loud. What the Fu@k was this guy thinking?

Comment by uptown
2007-01-14 21:48:53

That they were like trading cards, and you need to collect the whole set??

 
 
Comment by AE Newman
2007-01-14 21:25:44

posted “-One of his agent bought 28 new homes. Yes, 28, probably the whole
tract.”

He could rent all of them and lose $2,000.00 on each per month. That is only $56,000 per month. Or $680,000.00 per year. I bet the guy sell’s a ton of RE and needs the write off. Did you ever think about that? I bet the last 12 months have been really good to this person and his tax guy will say you done good …. really good!

 
 
Comment by Eastofwest
2007-01-14 20:12:20

Forget about about Ca. Apparently there are deals to be had in Iowa..

http://sfbay.craigslist.org/pen/rfs/262721425.html

Comment by fiat lux
2007-01-14 23:45:23

flagged down.

 
 
Comment by Jasunnyoutlook
2007-01-14 22:54:09

Dum DUM DUM another subprime bites the dust. And Banco Popular stopped making us subprime loans to boot

http://www.clearchoicefinancial.com/

Comment by Jasunnyoutlook
2007-01-14 22:56:19

its ok though the site will be back up verry soon BWHAHAHAA. So whos next

NovaStar maybe????

 
 
Name (required)
E-mail (required - never shown publicly)
URI
Your Comment (smaller size | larger size)
You may use <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong> in your comment.

Trackback responses to this post