Post Local Housing Market Observations Here!
What do you see in your local housing market this weekend? Have a home link? “It is roughly the same size as a prison cell. But a Chelsea bolthole, which needs rewiring, refurbishing and totally redecorating, is the latest home conversion to go on the market and is expected to fetch a minimum of £170,000.”
A business development? “Wachovia Corp. has closed its subprime mortgage lending division, EquiBanc Mortgage. Wachovia decided to close the business after ‘an intensive strategic review of its mortgage business, which has altered the company’s approach to the origination of nonconforming loans.’”
“Battered by the slowest housing market in years, Pulte Homes yesterday announced that it would shut down a three-year-old manufacturing plant in Manassas where it once hoped to build many of its Washington area homes.”
“‘Overall costs were higher and that was something that Pulte Homes could not pass on to homebuyers,’ said Melanie Hearsch, a Pulte spokeswoman.”
How about sales? “Home sales slumped in Maine for the second year in a row in 2006, according to statistics released Friday by the Maine Association of Realtors. ‘It’s all good for buyers, as they have a good number of homes from which to choose and sellers are more motivated than they have been in the past,’ said Alan Peoples, president of Home Sellers of Maine.”
“For years, a shortage of houses for sale in Greater Hartford helped create a frenzied housing market. Last year the opposite was true as the inventory of single-family homes for sale inched toward record-high levels. ‘But there is still six months of inventory on the market, which is a buyer’s market. And come spring, those inventory levels could pop up again,’ said Ron Van Winkle, a West Hartford economist.”
Signs of speculation? “Local statistics show Houston is different from other markets, which have been facing slumps in home sales and prices. Those coming from pricier markets like California, with ‘truckloads of money, look at Houston as an absolute bargain,’ said Rob Cook, chairman of the Houston Association of Realtors.”
“Sugar Land resident Henry Rothschild bought one condominium in Galveston last year and has put down deposits on two others. His three-bedroom unit in Ocean Grove is on the market for $380,000. He paid $260,000 for it in 2006. ‘Demand is so great,’ he said of Galveston. ‘Everyone wants to go there.’”
Or falling prices? “‘Let’s say, for example, there were 200 people in the (higher-priced) market two years ago,’ said said Colin Mullane, an agent in Ashland and a member of the Statistics Committee of the Rogue Valley Association of Realtors. ‘If there were 200 in the lower-priced market, about 100 of those went away.’”
“Total home sales in Jackson County dropped by 32.5 percent, from 4,159 in 2005 to 2,805 in 2006. Median prices fell from $295,000 to $275,000. Mullane suggested falling prices on the low end might have hurt some sellers who didn’t have a great deal of equity in the house even after a year or two. If a home was bought for $210,000, Mullane said, the seller wasn’t necessarily in a position to sell it for much less than $190,000.”
St. Louis City - many houses sitting for months and months with wishing prices mostly still intact. The occasional 5-10k drop which doesn’t seem to help. Inventory +20% yoy (for the metro area, city inventory probably up more in line with the price runup)
Californians don’t do humidity all that well and Houston is a 3 showers and 3 changes of clothing a day, sort of adventure, in the summer months…
Visting the In-laws in Orange CA,
the “For Sale” signs are popping up like spring buds on a sycamore.
When rain turns to hail…
“Signs of speculation? “Local statistics show Houston is different from other markets, which have been facing slumps in home sales and prices. Those coming from pricier markets like California, with ‘truckloads of money, look at Houston as an absolute bargain,’ said Rob Cook, chairman of the Houston Association of Realtors.”
My big hope here in Houston is the Sub-Primes will finish their collaspe (and loans will again be based on ability to repay - how quaint) before the speculators get a chance to descend here (as much as I’d like to be have my house be worth $1M, I don’t have nearly the income for those taxes). Things seem to be moving pretty fast regarding the subs, so maybe we’ll be ok.
“Those coming from pricier markets like California, with ‘truckloads of money, look at Houston as an absolute bargain,’”
Stupid speculators will get their a**es handed to them. There is no appreciation here. There never will be big appreciation here because there are no barriers to development.
As for decent people who are simply fleeing exhorbitant housing prices and cashing out, why don’t you just stay in California and RENT a house for a few years? I don’t understand this need and desire to buy buy buy anywhere. If you like California then stay in California and rent. If you like the San Diego climate, why the hell would you move to Phoenix or Houston or Austin? Makes no sense. Just rent.
Because people in Ca are becoming increasing aware of how expensive it is to live there in general for so little benefit. Housing is just a symptom of a larger issue.
California schools are second from the last for achievement. We have a very high prison population because we believe in punishment rather than preventing recidivism. We sit in traffic for hours, many times just stopped like a giant parking lot. California priorities are all phucked up. When I retire in several years, I am out of here for a state that has high enough taxes for a good infrastructure and knows how to take care of its people.
I’ll move to a state w no services and low taxes- eacg his own
Flat will be in Oregon or South Dakota. I won’t be welcoming.
CA has the highest income taxes in the country!
I don’t understand, we have a state income tax and a state income tax? What do you want? Blood?
Taxes are a major reason people are leaving CA.
I can’t wait until most cities face what San Diego faces as far as funding their bureaucrats’ retirements. They will raise taxes without any limit or regard. Its a protection racket. I won’t pay.
California does not have the highest personal income taxes in the country.
It is # 2.
Unfortunately, it’s the Socialist Paradise of Vermont that holds down # 1.
How do you figure that. A Vermonter told me that they piggy-back Federal taxes by 25%. So the CA marginal tax peaks at 9.5%. Hmmm….. there is no 38% bracket anymore, eh?
Or is it more than 25% now?
Do these people have jobs when they move? Or do they just buy a house and live off of the rest of the cash they got for their CA house? Does Texas have the number/quality of jobs to support this kind of migration?
I agree Gwynster. For quite some time, living in these super expensive areas was worth the premium. But the negatives now outweigh the positives. Quality of life has really deteriorated (illegal immigration?). When you add in the cost of housing, it becomes a no-brainer to leave for greener pastures. Unless you already own, or are wealthy, forget about buying a house for several years. Affordability is NOT going to return quickly. It is several years out. And most people (families) do hope to purchase a house, but don’t want to put their life on hold. So they are making decisions to move elsewhere. The United Van Lines report shows just how many people are fleeing these overpriced areas. And the FB’s are really getting hammered as there are no replacement buyers for their flips. There is a heavy price to be payed for turning housing into a get rich quick scam. We are starting to see the unraveling just as the many insightful people on this board suggested, but am afraid it is going to take a long, long time to play out.
I think it’s funny how everyone just wants to jump ship. How about sticking around and trying to make things better?
The grass is always greener…..
They vote for propositions and politicians that have systematically destroyed the quality of life California was famous for. They turned the gun on themselves by trying to create a utopian society that provides everything to everyone. Now that the grand social experiment has become and abject failure, they figure they can move to another unsuspecting community and give it another try.
It’s impossible to make things better because “you can’t fight city hall (but you can blow it up).”
“They turned the gun on themselves by trying to create a utopian society that provides everything to everyone. Now that the grand social experiment has become and abject failure…”
—————————
True to an extent…however, a “socialist” system works better with a fairly fixed, homogeneous population, IMHO. In CA, there is too much movement (immigration, esp. illegal immigration — as well as out-migration of the educated middle-class) for the system to work.
Why can’t people rent in a place they like instead of moving to a place they don’t like where they can buy ?
Because I think people are STUPID, have forgotten basic arithmetic learned in school, have forgotten the basics of Economics learned in high school, have their greed stoked by the Real Estate Lobby.
San Diego (for example) is a lovely place. One can rent a very nice home in an area with excellent schools (eg North County), minutes from the ocean for less than 2500/month. This home will cost you about 800K to buy.
Why would anyone buy this home ? Prop taxes will run you > 10K/year !
To question why people want to buy a house, is futile. I think most people, at some point in their lives, would like to purchase their own home. Maybe some people HAVE been renting for 15-20 years, and were poised to make a purchase, only to watch housing skyrocket. Now, faced with the decision of renting for the foreseeable future, or moving, they are choosing to move.
BanteringBear wrote :
“I think most people, at some point in their lives, would like to purchase their own home”.
I think that is one of the great triumphs in the History of Modern Advertizing - the peddling of homeownership as the “Great American Dream”, even if it comes at the cost of dining on Alpo and Whiskas.
Let’s review the purported “investment” benefits of residential real estate. Outside the current Mega-Bubble and a period shortly after WWII, residential real estate has not kept up with overall inflation. Those 2 bubbles have helped residential RE catch up (and slightly exceed) inflation over the last 100 years.
Clearly most people are not capable of putting together a simple spreadsheet model comparing renting vs home ownership, investing the difference between the two in a portfolio of broad, globally diversified market indexes - which has returned about 7% in real (after inflation) terms over the last 40 years. From current levels, equity market real returns for the next decade will certainly be lower than 7%, but they still compare very favorably with real returns for residential RE (which is very likely to be negative in nominal terms).
I still stand by the “Stupidity + Greed” argument.
You are missing the tax benefits and leverage offered by financing.
Not that I disagree with your point… homes are expensive, but those two things have distorted the picture for most people.
Are you insinuating there are never benefits to purchasing a home? There most certainly are. I am as big a real estate bear as anyone, and believe that purchasing right now, in many markets, is extremely foolish. However there are many positives to purchasing. And, a home is a home first, not an investment as you try to portray. It is a consumable. Certainly one should do a cost analysis of renting vs. purchasing in their respective area, but to make blanket statements that purchasing a house is invariably stupid or greedy, is, well, just plain stupid!
No, I am not insinuating that there are no benefits to purchasing a home.
Purchasing a home makes great sense when the costs of ownership are in line with the cost of renting. As was the case for most of the past century, except in certain pockets.
If I were to move to (say) Dallas or Houston or Austin, I would buy a home in an instant, because carrying costs are still mostly in line with renting.
I live in Sillycon valley, so maybe my perspectives are very colored.
mohan srinivasan,
Do you eat wiskas and Alpo too. I really like the liver flavored Alpo mmmm mmm gooood!
It is amazing how uneducated people purchasing homes that that are 1M on a buget that they should only buy a $200k or $300K home.
Maby the pet food market is the place to be! : )
The appeal of being a Californian equity refugee, is quite obvious…
It’s not about your new house in Houston going up in value, so much, as the fact that you sold your house in Downey for $600k and “only” paid $289k for a better house in a safer area, with real neighborhoods, slower pace of life, etc. And the extra moolah you have left over? it was all tax free earning.
Our friends like to kid that “we hit the lottery” selling our house in RPV in Aug 05′ and moving away and it was actually better than hitting the lottery, let me explain:
About 10 years ago, I walked into my BofA in Glendale, Ca. and BofA hires people to hang out in the parking lot, dressed in a uniform, mostly to ward off bank robbers (el lay is the bank robbery capitol of the world) and this guy was drunk as a skunk @ 10 am, and I walked into my bank and the bank manager told me, that 18 employees had won $17 Million in the Ca. Lottery, the payments being over 26 years, or $944k per person. The most anybody could get for immediate payment, was around $225k and you’d get taxed on it, so figure you end up with $150K, winning the lottery.
I like our angle of making $500k, tax free, so much more~
“If you like California then stay in California and rent”
Because there is a stigma to renting:
1. Your friends will not visit you or invite you to dinner parties if you rent.
2. The neighbors will whisper about you if you rent.
3. Your parents and siblings will think that you are a failure or are not mature if you rent.
4. You are throwing money away on rent if you rent.
5. You are missing out on tax savings if you rent.
Frankly, I’m starting to get a kick out of being someone who “could buy if he wants to, but chooses to rent instead”. It really pisses some people off, almost to the point of anger. It’s almost as if they are thinking, “why don’t you fools validate our decision to buy? How dare you rent by choice!” Oh well.
I don’t live anywhere, I rent where I want.
…why don’t you fools validate our decision to buy?
Yeah, you nailed it. All those GFs want validation for their own stupid actions, and talking you into getting an adjoining cabin on the Titanic is the way!
Misery loves company.
Too true arroyogrande.
Personally, I can’t even count the number of negative comments that I have received about my decision to continue renting. Most of them revolve around the idea that a renter is financially irresponsible or they wouldn’t be renting, right?
‘Frankly, I’m starting to get a kick out of being someone who “could buy if he wants to, but chooses to rent instead”. It really pisses some people off, almost to the point of anger. It’s almost as if they are thinking, “why don’t you fools validate our decision to buy? How dare you rent by choice!” Oh well.’
I had this exact conversation with a friend 2 weeks ago. Friend bought at the height of the insanity and is mortgage-stretched to the edge with all credit cards maxed out. He came to visit and check out the place I rent. After congratulating himself that the price of his house had not declined very much, despite lots of places for sale around his house, he asked once again if I was going to buy now that the market has slowed down. After a few seconds, he looked at me strangely and said, “Wait a minute… YOU’RE not going to buy anything, are YOU…!” It dawned on him that I had no intention of considering of a home purchase for years to come, by my own choice. He knows I follow the RE market here in SoCal and became visibly nervous after this, considering his own situation. I only commented that I enjoy living below my means.
*shrugs*
WRONG WRONG WRONG
All my friends want to come to my rented house because I can afford to rent a much much nicer house than they can afford to buy. In the SF Bay Area, I am the only one of my friends with a big enough rented house to accomodate visits by all my friends. No one wants to visit “the homeowners” in tiny boxes in areas where your car get vandalized durinmg the visit. Plus after they pay thier 900k mortgage they can only afford the cheapest beer
Not to condemn those who choose marriage and kids, but I’ve got a friend who says the same thing about those.
Ever notice when you and your girlfriend/boyfriend go through the receiving line after the wedding. The bride and groom ALWAYS ask, “When are you two, gonna get married?” Then, when you get married, it’s “so, when are you going to have kids?”
A simple case of misery loves company.
To all you Californians, please, please, PLEASE stay put. You won’t be happy anywhere else.
I lived in Salt Lake City in the mid 90s. At the time, Cali was tanking, and we had hoardes of California refugees flooding Utah and the intermountain region. What a bunch of self-absorbed whiners. Once they settled in, they started complaining about how boring and conservative Salt Lake City was. Of course, this really endeared them to the locals.
SLC is drastically different from CA, so the culture shock is to be expected. Californians can be plenty happy elsewhere though and can contribute a lot to other areas.
I (a non-mormon) interned in Salt Lake City and I was very pleasantly surprised. I have lived all around this country and SLC is still at the top of my list. Clean, cheap, and the immediate (literally minutes) access to world-class recreation was absolutely incredible. It is a stunning place. Let the snobs in Seattle, Portland, San Fran, and SoCal have their crowds and absurdly overpriced “quality” of life. In my mind there is no comparison which area has the better lifestyle.
As far as I’m concerned I hope SLC stays a very well kept secret. In conversation I find that most people regard Utah akin to Taliban Afghanistan. Quite amusing really.
Don’t go to SLC, it sucks, just think of the mormons that would try to brainwash you! Ha ha.
Stay away, especially the coast $ locusts. I hope they don’t ruin one of the last nice cities in the US. it pains me to see what’s going on in Utah these days. If there is justice the flippers will have their a$$e$ handed to them and a kick in the butt on the way out of town.
SLC has quite a progressive mayor in Rocky Anderson - SLC is also very involved in “smart-growth” planning efforts. For the most part, amen to Lex’ comment.
You’re kidding, right?
I’ve been a regular visitor to SLC for over 15 years and there’s certainly been a lot of growth there. And actually, just about none of it has been “smart” as far as I can tell (if compared to Portland, it’s not even close).
In fact, the ongoing temperature inversion is making the place look like the LA Basin of 1970 (in other words, you can’t see more than a few hundred feet because of the smog/fog combination). So much for that view of the Wasatch… and this has been going on for three weeks.
I agree with Lex with regard to SLC’s recreational access - I’ve nearly moved there for that reason on several occasions. But there are other obvious issues that most urban-coastal Californians have to overcome: lack of high paying jobs/innovation, overwhelming influence of one culture and the fact it is hotter than a frying pan in the summer.
To protect the locals from investor driven housing increases Lenders should make a emergency rule that they won’t lend anymore than 8% more than prior years appreciation .
No reason for the lenders to take the risk in a specuation market that will crash if the locals can’t afford housing. Let the sellers take they extra risk or the buyers by putting down more or the sellers taking back more .
it’s about time that the lenders stop catering to the locust that have ruined many markets .
Wiz,
I’ve seen you mention this idea before, and I think it is brilliant!
If it were **my** money being loaned to these buyers (especially if I couldn’t verify their income, and was loaning 100% of the price) you bet I’d cap the loan by a certain % over time.
As you’ve mentioned before, the mortgage **brokers** have taken very little risk for very large rewards. Good to finally see the subprimes going down. Hope to see many more, and perhaps a few of the prime lenders, so risk will be appropriately priced.
It’s only when the credit bubble bursts that we will fianally be able to see housing prices where they belong.
I thought about that. Got in a legal fight with one house I signed the lease but couldn’t move into because my Townhouse fell out of escrow. Of Course I made it clear my moving in the lease was contingent on my selling my Townhome. The realtor property manager “didn’t see it that way and tried to get me to pay what I thought was fair or go to court” But since he was a stupid realtor and didn’t even deliever the signed lease back to me I told him to pound sand. Of course then he leaves it on my doorstep. What an ass. Should have used confirmed delivery if he wanted any chance in court. never saw it, the wind must have blown it away your honor……Anyway thats Cali for you, everyone is out to rip you off it seems, very competative.
here in Phoenix the property managment is kinda stupid and makes mistakes but has so far not tried to rip me off. Probably because there are so many rentals around?
Cali is like a once great company that has downsized for many years and the survivors are a hardened bunch. Instead of outsourcing like a company Cali insources rich buyers and bid up the cost of living. Sure the old timmers can say the company was great to them, it was a strech at first but now look at me, low property taxs, great weather, house is worth 10X what I bought it for, etc. But for the workers, unless you make big bucks or decide you don’t want kids you are finding it hard. And like many big companies that have hacked the work force the ones left are not a friendly bunch. I was in The Areospace downturn in the 1990’s in Cali. Saw alot of good companies turn ugly. I think of living in Cali as the same thing, surviving a multitude of layoffs and being surrounded with the most skilled ( the good ) and the best toadies ( the bad) and alot of mental illness ( the ugly) .
“Those coming from pricier markets like California, with ‘truckloads of money, look at Houston as an absolute bargain,’”
So is it now “a truckload of money and a trainload of stupid”? Seems like the stupidity is increasing.
No Bubble in Houston… Yuk! Yuk! Yuk!
…..The Houston-Baytown-Sugar Land region was ranked 18th, with a foreclosure rate of one filing for every 43 households. A total of 41,763 foreclosures were filed in the region in 2006….
Yup! Houston is different.
“Sugar Land resident Henry Rothschild bought one condominium in Galveston last year and has put down deposits on two others. His three-bedroom unit in Ocean Grove is on the market for $380,000. He paid $260,000 for it in 2006. ‘Demand is so great,’ he said of Galveston. ‘Everyone wants to go there.’”
Obviously this dude isn’t one of “the” Rothschilds, lol.
Lou, do you find this as amusing as I do?
My way out there prediction is this is the year Galveston gets “the big one” (hurricane). It’s been way way too long. Then we’ll see what those condos are “worth.”
and yeah, I understand “everyone” wants to go swim in dirty brown polluted water with nasty beaches full of questionable folk and the ever present oil tankers visible in the distance. Who needs Hawaii or Baja California when you have the Galveston Seawall
So, txchick, you’re not a fan of getting a rash of questionable origin. I went swimming in the ocean in Galveston 15 years ago, and I’m still wondering if I’ll get some rare cancer after the requisite latency period of say 20-25 years.
Yeah, everybody wants to go there.
Swimmers itch is a bacterial infection. My wife and our dog got infections swimming in a lake near here in the California foot hills. Also, we have polluted ocean beaches. CA may be ahead of TX on pollution. I was talking with a fellow from Idaho about money spent on pollution and Idaho spends three times what we spend per facility regulated.
Ewww, I tend to stay out of the lakes and streams in the middle part of Cali…too much agricultural run-off.
I’m even questioning going to Avila Beach too much, what with the stream that empties into the bay on the north side.
The Gulf of Mexico isn’t as bad as it used to be, but is still terribly polluted. Even down where the water is clearer, like South Padre Island, it is well known by locals to keep any cuts out of the water or you may end up in the emergency room.
It socal, don’t go surfing for three days after a rainstorm unless you dig paddling around in sewage.
how long do you wait to surf after it snows?
“sewage”
I think it’s less sewage, and more motor oil and other toxins that get washed off the city streets after a rain…at least that’s what I’ve read.
There’s plenty of sewage in our ocean…
http://www.healthebay.org/news/2006/09_26_tmdlvictory/default.asp
http://www.surfrider.org/malibu/
IN THE NEWS: Sewage Spill - Closes two LA Beaches
Sunday, January 20, 2007
A 1-mile stretch of Will Rogers State Beach was closed Friday after 10,000 gallons of raw sewage spilled into the ocean through Santa Monica Mountain Creek, authorities said.
The sewage was believed to have originated from the nearby Riviera Country Club, Edwards said. The beach is expected to remain closed until at least Sunday.
IN THE NEWS: Tapia Discharge Alternatives
Thursday, January 4, 2007
The Las Virgenes Municipal Water District and Triunfo Sanitation District have launched a study that will look at ways the two agencies can limit the amount of reclaimed sewer water that is released into Malibu Creek.
The study initially reviewed 150 projects, but the number was whittled down to four alternatives - Expansion of the water district’s recycling program ranked next on the viability index at 3.4, and included construction of a reservoir at Donnell Ranch. Currently Tapia recycles 60 percent of its treated wastewater. The water is used to irrigate public and private land, including golf courses and freeway landscaping.
I read this yesterday in the Barnacle and was gonna mention it. His wish price may be met if the last wave of dumb California specuvestors washes ashore on Galveston. He could very well make $120k in one year, and I feel no sympathy for the bagholder.
I was watching a video on Youtube taken in Biloxi during Katrina. The guy (one of those hurricane geeks) camped out in his car in a parking garage at one of the casinos. I don’t think people in Galveston or Texas City understand that a direct hit would bury those cities. The seawall won’t do much for protection, and these new condos are built IN FRONT OF the seawall.
I have no idea how the market is on GI, but have seen some ads advertising price cuts on existing condos. What we don’t know is where the Von F**ckedbudgets are from. What *apprears* to be cheap when you relocate doesn’t mean it’s not overpriced. I sold my house in a higher market so the houses I’m looking at seem like a steal….until I remind myself they are still overpriced. Maybe something they should have considered.
Next, they jacked the price up to resell….but will it actually close escrow at those prices? Dunno….only time will tell.
Lastly, GI really is like Baja to anyone who lives in Houston. LOL Not a fact….just an opinion
NNV can basically be summed up as “waiting for the Spring Recovery”. Realtors, mortgage brokers, title agents, appraisers, contractors, sub-contractors, flippers, upside-down-taking-it-in-the-shorts homeowners, furniture stores, and the like are all following DL’s example of crossing fingers and toes, holding their breath, and all the while kneeling to the Housing Baal (a golden image of Gary Watts). My feeling is that somewhere in May the realization will set in that, not only will there be no recovery, but we’ve only seen the beginning of the Great Housing Bust. Full blown panic to follow…….
“My feeling is that somewhere in May” I’m betting the first weekend in Feb, after Super Bowl will be the HIT ME factor. Lot’s of spring time listings, higher interest rates, tighter lending standards, and very few quality buyers. Once the traffic at the open houses is reported as “slow”, the real estate world will be ready to crumble.
In the meantime, the more subprime lenders going under the better.
As someone pointed out on a local realtor’s blog yesterday, there is about 1 realtor for EVERY home for sale in the Reno area. http://dianecohn.blogs.com/reno/2007/01/pendings_watch.html#comments
And with all the non-home construction that is going on, it was only a matter of time before the other areas started taking a hit as well. Housing slowdown impacts area’s office market - from yesterday’s Reno Gazette Jounal http://news.rgj.com/apps/pbcs.dll/article?AID=2007701260457
I was surprised to see that there were 351 pending sales in Reno yesterday. If I had to guess, I would think it was mostly higher end stuff selling at reduced prices. And, I would love to know how many of these pendings actually close escrow.
351 is way skinny compared to yester-year. And yes, some have figured out the coming blood-bath, cut their prices accordingly, and got the interest needed to move the home. Smart folks, ’cause those offers won’t be there in 6 months.
“Or falling prices?”
I figured out a cool new way to estimate the median wishing price for an area based on limited info. My estimate is that the SD median wishing price dropped by $1300 from 1/25/07 to 1/26/07, but I have not tracked it long enough to know how noisy the estimate is. While we have often pointed out here that the median is a noisy measure of market prices, because changes confound quality with comparable price changes, in another sense it is a very good guage of how purchase demand is lining up with available supply. In the short term, housing supply is effectively fixed, and a falling median suggests that the typical buyer is consuming lower on the price-quality scale over time. As long as one does not mistakenly interpret this as a measure of change in the price for which any particular home would sell, this seems like a useful guage of market activity.
“As long as one does not mistakenly interpret this as a measure of change in the price for which any particular home would sell”
Correct, but I would argue that as the “headline” measure (the one that most newspapers blaze accros their front page or business section), it is the measure the public is most familiar with, and as such, the greatest driver for buyer sentiment. In other words, in the psychology /emotion/sentiment game (and that’s what bubbles are all about), YOY median change is a very big player.
I agree with you, and would argue that the median helps liquidity seize up, providing a misleading indicator of current market value of comparable housing. For instance, if there is a slowdown at the high end (like there is in my zip) and continued action on the low end, the median will fall due to a drop in the quality of homes that are selling, but buyers will falsely infer a drop of this magnitude in the comp price. The result is a gap as wide as the Grand Canyon between bids and wishing prices.
GetStucco:
I figured out a cool new way to estimate the median wishing price for an area based on limited info.
How?
If I explained, I am afraid my data source might get corrupted. So you will have to figure it out for yourself — sorry…
Here in Sarasota-Bradenton, we are at a record level of inventory and our sales numbers are still in the toilet yet Realtor’s are yet again claiming the worst is over and prices are ready to shoot upwards. Ummm, keep in mind we have a 2-1/2 year supply of houses on the market. There was a Realtor quote in the local paper yesterday where she basically said prices are going no lower and it will soon be too late for buyers. LMAO!! A client of mine who is a Realtor stopped in yesterday and said although he has had a few lookers, no one is that serious about buying now and there is no urgency on their part. He’s one of the few Realtor’s down here that agree it is a dire situation…
I’m in Sarasota and have noticed the number of “For Rent” signs increasing rapidly just in the last couple weeks. “For Sale” are EVERYWHERE.
“Wachovia decided to close the business after ‘an intensive strategic review of its mortgage business, which has altered the company’s approach to the origination of nonconforming loans.’”
Let me guess at the findings of their intensive strategic review:
Subprime is toast.
GetStucco,
Oh, I bet the strategic review was more along the lines of:
subprime is a hungry alligator that will bring us down if we do not distance ourselves from it yesterday!
I’m in morning, no new fodder on the implode-o-meter yesterday. Sigh…
Got popcorn?
Neil
That’s really a pity about the Pulte plant. Those houses are made with structural insulated panels. It really was a decent idea.
I remember thinking a couple of years ago when reading about it in the WaPo that this was a huge fixed cost that was likely to bite them in the ass when the real estate bust came.
I have been following an older development called “Pacific Serena” here in Encinitas, Ca (No. San Diego Co.) for two years now. It was developed in 1971 and it has all the charm of a shanty town. Single story pairs of tiny 800 square ft. condos, two by two one after the other. Some are in good shape and some look absolutely dreadful but overall they all look like naval family housing from a bygone era that has been scheduled for demolition.
They could be had for under 200K before the boom and the only reason they got that is because they are 3 miles or so from the beach. But at the peak of the bubble some had asking prices of 650K!!! Well, I have seen real price reductions of over 100k on some of these pos’s and still no sale. Then I came across these two listings for two condos in Pacific Serena that are actually attached! The entertainment I derived from these two listings almost defies description.
#1. http://tinyurl.com/2q6mqu
Listing date:
09/21/06
Original asking price:
$649,000…..LOL!!!
Reduced: 01/04/07
$649,000 to $555,000
Home Description:
This property has a tranquil setting..It offers a very private yard and lots of upgrades..Owner must sell a.S.A.P. Please bring offers. Seller needs to sell…Minutes to the beach and shopping centers.. Price reduction!!!!!!Price reduction!!!!!!!Price reduction!!!!!!!!
#2 http://tinyurl.com/2kfy37
Listing Date:
01/26/07
Asking Price:
$449,900
Home Description:
Lender owned….Not a short sale. Good location at the end of a cul-de-sac. Open floor plan makes for a spacious interior. Enclosed patio room. Good size and private backyard. Thanks for showing!!!
So you have some clown listing his pos condo for 650K well after the peak and after being ignored repeatedly for three months, lowers the price almost 100K about three weeks ago. Then this week a lender swoops in who owns the attached condo exactly like his and puts it up for 449K over a 100K less than his reduced price! Oh, the humanity! I’m considering getting a lawn chair and a cooler and spending my days just sitting across the street just looking at these two condos and occasionally giggling. Pacific Serena is crumbling but this story is not over by a long shot.
Then this week a lender swoops in who owns the attached condo exactly like his and puts it up for 449K over a 100K less than his reduced price!
Its almost like watching a dutch auction that was never meant to be a dutch auction!
Hey bidder bidder, for this fine swine do I hear $650, lets start the bidding at $650.
Folks, a most excellent example of pork. You won’t taste finner.. no sirrrreeeee. Do I hear $550.
Hey, ignore that many over there selling his for $449! F%^&!
“Pacific Serena is crumbling but this story is not over by a long shot.”
Yep… you could say that nationally.
Don’t forget:
Got popcorn?
Neil
LMAO! It’s a race to the bottom!
Oh man. I remember seeing little war-era 3BR-1’s in Oceasnside and Carlsbad going for $89k in 1999. I remember thinking at the time, that if you “just get away from LA or OC that prices begin to look like normal America”.
Even adjusting for inflation, I see no reason such junkboxes should sell over $130k now.
Mozo,
I was looking at some of those houses in 1997/1998. You are absolutely right. You could buy a small house in a marginal area **very** close to the beach for around $100K-$150K at the time. No reason for price to be any higher now.
—————————
Rainman,
Good to see you back. Some of us were wondering where you’ve been. We miss Bubbles!
Just got my assessment here in Brooklyn.
Market value up to $1.05 million for a 92-year-old, 17-foot-wide 1,500-square-foot (plus semi-finished basement) rowhouse with no off street parking, in a neighborhood occupied by cops, teachers, nurses, construction tradesmen, firemen and small business owners since it was built. Up from $887,000 the year before, and $660,000 the year before that.
When I bought it for $209,000 in 1994, the estimated market value was $208,000.
Of course the assessed value is $22,394. That is up 5.9% — almost the most allowed in NYC — and that’s what my taxes will be doing. Here in NYC, we have a big local income tax, in addition to the state and federal income taxes, so the property tax will be about $3,000. Not bad for a house worth $500,000 — or about half what someone evidently paid for a similar one.
Let me understand this……You have LOCAL income tax on top of state and fed???!!
Yes! And, if you are self-employed, there is an unincorporated business income tax on top of that! And we have a local corporate income tax, on top of the state and federal.
Just in case anyone is confused how NYC is a high tax place with low property taxes on homeowners.
Why don’t the employers just send the check to the state and let them hand back to the employees what they don’t feel like keeping. A lot less money would be changing hands that way and it would be simpler.
Why should the government send any cash? They can just send government cheese and boxes to live in.
You’re right, that makes more sense.
Some North Jersey Lowball! sales:
http://njrereport.com/index.php/2007/01/27/lowball-january-2007/
MLS# Town OLP LP SP % off OLP $ off OLP
2302695 West Milford Twp. $172,000 $160,000 $100,000 41.9% $72,000
2238966 Newark City (1614) $122,500 $114,900 $72,000 41.2% $50,500
2258527 Harding Twp. (2313) $1,460,000 $899,000 $881,500 39.6% $578,500
2311282 Hoboken City* (1805) $894,999 $775,000 $600,000 33.0% $294,999
2301653 Roxbury Twp.* (2336) $217,000 $173,600 $145,600 32.9% $71,400
2305193 Readington Twp. $339,900 $259,900 $229,000 32.6% $110,900
2268892 Flemington Boro $515,000 $490,000 $350,000 32.0% $165,000
2291343 Chatham Twp. (2305) $379,000 $339,000 $257,665 32.0% $121,335
2311678 Maplewood Twp. $250,000 $250,000 $170,000 32.0% $80,000
2255174 Delaware Twp. (1907) $975,000 $789,900 $675,000 30.8% $300,000
2325138 Mahwah Twp.* (1133) $455,000 $410,000 $320,000 29.7% $135,000
2275066 East Orange City $219,900 $209,900 $155,000 29.5% $64,900
2280914 Bridgewater Twp. $329,900 $269,900 $235,000 28.8% $94,900
2303646 Mendham Twp. (2320) $1,685,000 $1,385,000 $1,204,973 28.5% $480,027
2305545 Bridgewater Twp. $549,900 $499,900 $397,500 27.7% $152,400
2106433 West Caldwell Twp. $1,100,000 $849,000 $800,000 27.3% $300,000
Caveat Emptor!
grim
Those price cuts are pretty good competition for the Sacramento Flippers in Trouble blog…
the news is great, the worse it gets. There is blood in the streets, you just gotta find the street.
find your own local BK builder, you know the one Im talking about. Couple of spec houses half finished, sign falling down, lots and lots of lots for sale…. ask em “how much for the half finished house?”
You WILL get a response, it will sound good, but HE WILL TAKE HALF of whatever might spill out of his mouth.
Ya see, Im one of those who could have afforded to buy the whole time, but it didnt feel right. However, right now, paying 25 cents on the dollar, makes it right.
and its no longer about 1999 prices, its about financial destruction, and what an over bought, over built, under capitalized group human beings will do to just keep roof over his families head.
coffee is for closers
N VA stuff is selling at 2005 prices
pay go means spend more after all
Driving into work several days ago listening to the radio, there was an add from the Merced District Attorney’s Office stating that if you know of some illegal real estate transactions, contact them.
Maybe he should hire some sign flippers to point people to his office
Thankfully we see a DA waking up!
Thank Paladin for helping raise awareness of the fraud. Hopefully the site is fully functional soon:
http://www.paladinreports.com/
Got popcorn?
Neil
Market observation from the Cali central coast:
One of the reasons that the realtor I had been looking at houses with wanted to talk me out of making an offer at 30% off asking price was that “the land itself is worth that much”. To which I asked “well, how much was similar land 3-5 years ago”. Turns out, he didn’t know, but he assumed that similar land back then was GOING FOR THE SAME PRICE. This in a area where house+land prices DOUBLED IN JUST TWO TO THREE YEARS (in some areas). I had had the same argumen…err…’dsicussion’ with another Realtor a year ago. Whe was stating that houses here could not possibly go down because the replacement costs (price of land + price of building) was equivilent to what a new house was going for then (the peak). I tried to argue then that land prices go down as well as up, and that construction costs (both materials and labor) can go down as well, especially in a tanking market. She disagreed. (Side note, one year later, she is no longer actively doing real estate, and she has turned into a medium-term RE ‘bear’).
Anyways, my point is that even in the declining market here, there is the mindset of “yes, prices are going down, but they can’t fall too far, because land costs so much here, and it costs a lot to build a house”.
A visible manifistation of this is that many of the people that were congratulating us on renting are now telling us that we should buy now, before the spring buying season, because price appreciation is going to come back. After all, prices can’t fall much more or farther, right?
Rrrriiiiiiiggggghhhhhhtttttt.
A visible manifistation of this is that many of the people that were congratulating us on renting are now telling us that we should buy now, before the spring buying season, because price appreciation is going to come back.
———————–
We’ve been hearing this as well, especially from family members (*sigh*). They seem to think that if prices go down 20% from peak, we ought to rush right in and buy.
Personally, I expect a 40%+ drop from peak. That would bring prices back to historical price/income and price/rent ratios. It’s very possible a major recession/depression will take things down even more.
Seems people are still delusional about the housing market.
Whew! Thank goodness we are past that nasty downturn. Now, prices can start going back up again with the “spring selling season”…NOT!
getting flooded with unsold homes here in Southrn NH. COndos seem okay due to an old population. NH is almost as bad as south florida, except the older folks here have less money, can’t escape the cold, and are more bitter.
Oregon
Medford/Ashland, Bend/Redmond, and Portland are gonna keep falling. Unfortunately, in the County I live the equity locusts are just arriving. Washington, Texas, California, and Arizona plates arrive on a daily basis. I see ads at the local Uhaul for $99 any truck to SoCal… Same truck here from Cali, aint $99
Sad really, lot of hard working types here who will rent for the remainder of their days….waiting for the folks to leave em the family house.
I prefer to not mention the town, as its like advertising. All you have to do is find the new HOME DEPOT, LOWES, SUPER WAL MART, and COSTCO….all being buit within 3 years of each other. Catagory killer big boxes are gonna screw any type of hometown appeal right outa here.
5 acre river frontage for 150k comes out about one every three months, sells in less than a week. Raze the DBLWD MFGHS, brand new McMansion waits lonely all winter.
So, if your into school shootings, drugs, and unemployment… by all means keep on coming.
jaded homeowner
the_voz,
I live in Portland. What county are you in? (I know you don’t want to name the town)
Portland is somewhat similar. Hard to tell if WA plates are refugees from Seattle or just here from Vancouver, but I’ve gotten better at looking at car dealer license plate frames and I’m noticing more from Seattle suburbs.
Houses (not so sure about the glut of condos downtown) are still moving although it’s certainly taking longer and inventory is obviously on the rise. Still people paying laughable prices, even $500K+ in N. Portland. I really don’t get it. Those houses were $180K just 4 years ago.
I mean, what do these people do for a living? My guess is they don’t do anything. They move here, put $200K down on a house overvalued by $200K, take a low-paying job, and live off the proceeds from the market they left.
around here, you can by the 3/2 1500 sqr ft 2 car garage, cookie cutter shat box for a buck fifty-two.
So, its already impossible to over pay by 200, after you write the check for 152k for your brand new house.
its interesting that I have been reading this blog for about a year now, and was convinced to actully buy a house during that time. i think the comment was, “how bad can you really f@k up 150k, as long as you make 50.
on a positive note, I have been seen two purchases from now BK builders.
Good friend of mine picked up 1800 sqr ft Craftsman 2 car garage, for a tidy 130k
the other was a .20 lot for 15k, in town..
Early numbers for Jan 07 show the price per square foot back to Summer 2005 levels:
http://bakersfieldbubble.blogspot.com
“…price per square foot back to Summer 2005 levels”
As in back to the peak?
Our peak was a little later than other Ca markets, the peak price per sq foot was June 2006.
-”A business development? “Wachovia Corp. has closed its subprime mortgage lending division, EquiBanc Mortgage. Wachovia decided to close the business after
-‘an intensive strategic review of its …..
This sounds like the beginning of a Colonoscopy….
Inventory, from Zip Realty:
TAMPA
01/21/07 59,865
01/27/07 60,665
MIAMI/FTL
01/21/07 103,131
01/27/07 104,442
ORLANDO
01/21/07 32,341
01/27/07 33,030
PHILA
01/21/07 32,698
01/27/07 32,494
ATLANTA
01/21/07 57,620
01/27/07 59,127
BOSTON
01/21/07 42,170
01/27/07 44,434
BALT.
01/21/07 46,025
01/27/07 46,178
Here’s two comments about the SF East Bay:
#1: I live in Concord, in a nice development that feeds into Walnut Creek schools. Local real estate person is offering a chance at a $5000 lottery prize - out of her personal checking - if you give her a lead that ends up in a closed escrow. Give her the name, she follows up, and if it’s successful your name goes in the pot with all the other fools and at the end of 2007 you have a shot at the big prize. Depending on her year, you could be the only one in the pot. I would rather take half her commission. And get this, she only distributed this to her ‘closest’ 2500 friends and acquaintences. LOL Do I sense desperation?
#2: my husband has back problems, was looking for one of those pricy Herman Miller chairs on Craigslist. We found one almost brand new in San Jose for less than half price. When we drove up to the house, I told him (in my best Housing Bubble Blog voice) “I’ll bet they’re upside down on their mortgage”. Sure enough, young 30-something, grabbed the cash, said they needed the money, then hopped in his new Toyota. We’re going to keep an eye on Craiglist and see what other deals are out there by desperate FBs.
Where are the California Dept of Real Estate peeps?! Are they all asleep at the wheel or what? This is a “bird dog fee”, “finders fee”, — whatever name you wanna call it. Strictly a no-no in the real estate biz. An agent can NOT give compensation to anyone but another broker for a referral–period!
Seems like things are getting so dicey out there that many of the RE peeps are “forgetting” their ethics classes and the accompanying penalties/fines/jail time that go with it.
This agent is committing career suicide.
Just picked up a Panasonic 50″ plasma TV for $1400. Slight cosmetic damage (not really noticeable); great picture. Same TV is selling at Best Buy for $1999+tax. And the person selling it on craigslist? Oh, he just bought a house in Livermore and the plasma “wouldn’t fit.” I feel sorry for him. FB and had to give up a beautiful TV. But it looks great in my living room!
Major bloodbath recorded on EBay; results from today’s FL SuperAuction !!
http://search.liveauctions.ebay.com/ws/search/LiveAuctionSearch?ahid=14714&ccn=Real+Estate&fis=2&frts=50&getresult=&isl=0&lc=1&sacti=20951
Yeah, I think we saw some discounts here…
http://cgi.liveauctions.ebay.com/ws/eBayISAPI.dll?ViewItem&category=28309&item=260079117702
Estmate: $175,000.00 - US $255,000.00
Winning Bid $75,000
$37.5 per square foot. That’s gotta be 1995 prices. Anybody familiar with the area?
Think “Hurricane Charley”.
This property is located in Punta Gorda, where Cat V Hurricane Charley landed in mid-August 2004. It was the first of three major hurricanes to cross Central Florida that year.
Punta Gorda got wiped out. I mean wiped out. Charlotte County took it bad as did parts of Hardee, Highlands and Polk counties.
The eye of Charley passed about three miles south of me in Lake Wales. My good friend lost his home on Lake Starr when the roof blew off. My coworker lost his roof on his home in Aurburndale. Both homes were a complete loss.
Anyhow…
Here’s a description from the auction website:
“DESCRIPTION : With nearly 3000 square feet of space, this 3 bedroom/ 2 bath single-family home is located in on a quiet Cul-De-Sac in Punta Gorda Isles. Home features include wood cabinets with granite countertops, stainless steel appliances, large tile floors, and an enormous glassed in lanai for entertaining. See your new home today! ”
Here’s a link to a Word doc with pics: http://www.flsuperauction.com/images/prop/2451_Odessa_Lane_Punta_Gorda.doc
And those are 1998-2000 prices on that house. I wonder if the “renovations” aren’t from hurricane repairs
Here’s the Charlotte County tax record for our little $ 75,000 bargain house :
http://www.ccappraiser.com/Show_parcel.asp?acct=00952623485608&gen=T&tax=T&bld=T&oth=T&sal=T&lnd=T&leg=T
LOL!
Ahwatukee/Foothills Arizona: Santa Rosa Apartment Community turned to Condominiums and opened their sales office late summer early fall 2006. They now have a big sign on the front of the place saying “Not Going Condo…Now Leasing” At least they came into the game late enough to put on the breaks and throw it into reverse, some of the other conversions in the area do not appear to be so lucky.
The Seattle market is fascinating now in it’s whackiness. In the zip I’ve been paying attention to for the past year and a half (98105) here’s what happened this week:
MLS listings: 47……Foreclosure.com listings: 295 (!)
Fall ‘05 there were around 40 foreclosure listings in that zip.
Two homes were just put on the market that caught my eye:
Home 1) Was on the MLS for over a year at 680K, taken off for several months, now back for 470K.
Home 2, right around the corner from Home 1, sold about a year ago for 520K, now on the market for 900K.
Looks like maybe the would-be seller of home 2 had his head in the sand this past year!
Can’t wait to see what happens with these 2 properties as the sellers are moving in completely opposite directions.
Am astounded by the amount of foreclosure listings. Went through about 150 of them and most were for unpaid taxes. Lots of shadow inventory there!
Are you looking at pre-foreclosures and not foreclosures? Because most of those tax liens will not result in the house being sold on the courthouse steps.
Yeah, I just checked it out. Those tax liens are nothing to get excited about. They don’t even list one foreclosure in that zip code.
Thanks BB…but isn’t that usual..so many listings at once? Last year there were never more than 45, taxes or no. Isn’t this but the first step towards actual foreclosure?
Whoops, it’s official. Foreclosures up 25% this year in the greater Seattle area. Article today in the Times (or was it the PI?) business section. the link’s on the SeattleBubbleblog.
Yup, it’s ramp-up time here in Seattle.
Have you noticed the amount of for rent signs popping up everywhere? I am not seeing to many sales around either, even though inventory is still low. We have already peaked and are starting the slide in my opinion.
North County San Diego:
For the zips that I follow, inventory peaked in August 06, and continued to decline right through the middle of January (fairly significant declines around Dec. 31 — probably expired listings, etc.).
The inventory started creeping up very slowly, but this past week, the numbers are increasing more rapidly. Also seeing a number of homes which were on the market last year (cancelled/expired listings) being renovated. Assuming they will be put back on the market just in time for the “spring selling season”.
The foreclosures are really starting to hit, and I anticipate they will begin leading the market some time this summer (need a critical mass, IMHO).
Rents still look tight, from what I’m seeing. Hope we start to see the glut that many have talked about from around the country.
i just drove thru la costa carlsbad and saw 5 sale signs on every intersection. i almost rolled right thru the red light i was so excited about the sign glut.
Here’s an article about condos in downtown Billings (Montana). Most of them aren’t selling (as first reported in my documentary in September).
Downtown Renovations Hit and Miss
$400,000+ condos in Billings not selling. I’m shocked! Of course, developers say that these are popular in big cities, they just need time to catch on here, have faith, etc.
I live in Merced (enough said for serious followers of the bubble) and have refused to buy our local insanely priced real estate for going on 3 years now….The local paper had some “expert” quoted saying our local avg home price would dip by about 35%…Double that percentage and you’ll be closer to where they’re actually going to sink to here:)
—-
The Silicon Valley Housing Report:
http://safehaven.com/article-6795.htm
Enjoy!
Jas
Jas,
I don’t believe your post got as much attention as it deserves since you posted it up late on a Sunday afternoon. Repost to the the Bits Bucket on Monday for a wider audience. Not that you need any advice or encouragement about posting. LOL!!
went thru the Ladera ranch area today (South OC). WOW… Open house signs EVERYWHERE. Even saw a sandwich board sign on Crown Valley offering maps to all of the O/H’s….available in the Albertsons.
Drove around in a couple of spots, including the famed “Platinum Circle” (http://tinyurl.com/2zr5ee — thanks OCRENTER). Unfriggin believable. About 3 streets over (Eco Circle) — One side of the street– 3 out of 6 had 4sale signs, 1 had 4lease.
AND NOT ONE OF THEM SHOW UP IN THE MLS. If that’s at all representative, HOLY CRAP BATMAN.
Ok boys and girls…
Greed is still the mantra here in WeHo.
The house at the South end of my street (Westmount Dr.) in the 90048, sold for $850,000 last February. It was a 2/1 fixer on a 4500 sq. ft. lot, lodged between a duplex and a parking lot with a noisy car wash right behind it (immediately on La Cienega Blvd.) I know about this house so well, because I considered buying it (at a lower price).
Two months ago, a crew ripped it down to the studs and re-framed it in it’s entirety, adding a taller roof and a bathroom which hangs over the driveway. What little backyard it had has been covered up by another addition in the back. The janky-a$$ garage with 4 layers of rotting shingles still stands at the moment.
Today, when I was coming back from my run, I decided to walk by and check on the house. There was two trash bins filled to the brim out front and, lo and behold, a for sale by owner sign in the front yard.
I thought, well, they must be throwing in the towel. Fat chance. I called the number and got a happy LA realtor who said, “Are you a broker or looking for a home”. I said, “looking for a home”. He immidiately perked up and inscreased the speed of his speech. “Weeellll, let me tell you the story of the house. I am a broker, my father is an investor, and my brother is a contractor. We bought the house as a family project. (The truth is, it was their grandmother’s house - but he didn’t know that I knew that). It was a 2/1, but we added a bedroom and a bath. It is now 1800 sq. ft. It is currently scheduled to be done in 60 days. We are not sure what it will be listed at, but we are currrently thinking 1.7 million.
I busted out laughing - purely naturally reaction. I said “Are you kidding?”
We said, “Whaaat … that’s what the comps say it’s worth (sheepishly) … I mean, it will be fully furnished … flat screen tvs throughout … and a jacuzzi.
I said “Good luck with that”, and hung up to his silence.
1.7 ??? !!!
btw :
The property is 432 Westmount Dr. and the broker’s number is 818.497.6676 if you care to give him a call yourself and ask some questions.
I think, last I checked, the house zillows around $800k.
Forgot to add. After “are you kidding?”, I said :
“What about the lot - what are you going to do about the car wash?”
He replied, “Well … we can’t move it…”
exactly.
http://www.marketoracle.co.uk/Article275.html
Simply amazing!!!