“More To Chose From, & Lower Prices Are Being Offered”
The Santa Cruz Sentinel. “Patricia Beckwith couldn’t help whooping with joy when she heard the median price of single-family homes in Santa Cruz County dropped again. The median price in January was $702,250, the lowest for any month since December 2004 and down from a peak of $775,000 in July.”
“A month ago, she saw a ‘dinky’ home near the Polo Grounds reduced from $575,000 to $535,000 and thought it would be ridiculous to pay $3,000 a month for a mortgage on such a small house. Her best chance, she figured, would be to find a home that went into foreclosure when the owners couldn’t make the payments.”
“‘I’m taking my little $500,000 offer and looking at some properties,’ Beckwith said. For Beckwith, the good news is that more homes are being listed for less than the median price. Beckwith said she plans to look at listings priced over $500,000 and see if sellers will take her offer.”
“Sellers no longer have the advantage they had a year or two ago. For those ready to sell, they face a lot of competition. The number of homes on the market is the highest in 10 years for this time of year, 842 listings, 5 percent more than a year ago, and 97 percent more than two years ago. Sales are near a 10-year low for January.”
“The median price for condos was $489,444, a two-year low for the month of January. That’s based on 24 sales. Listings remain high, with 211 condos for sale, the most in 10 years for the month of January. That’s 15 percent more than a year ago and 189 percent more than two years ago.”
The North County Times. “In its monthly HomeDex report Friday, the North San Diego County Association of Realtors reported that the amount paid for single-family homes dropped 12.3 percent from a year ago, reflecting the 6.7 percent drop in the number of homes sold. Elsewhere, the median price slid from $543,000 a year ago to $516,900 last month.”
“North County condos sold for a median price of $378,000 in January, a 6.7 percent drop from $405,000 one year ago. In other parts of the county, sales prices slid an average of 6 percent, to $356,700 last month from $380,000 in January 2006.”
“Dan Maloney, a Vista real estate broker, said the relative instability of North County town-house prices was a reflection of last year’s influx of condo conversions, and comes down to simple supply and demand. ‘There’s just more to choose from, and lower prices are being offered,’ he said.”
“Sales are down in large part because ‘flippers’ who were buying up homes left and right and selling them for profit are no longer making offers, said Marc Zimmerman, a real estate agent in Encinitas. ‘A big portion of our market was investors, and investors are looking at other places than real estate to get a return on their investment now,’ he said.”
“Several dozen families are being asked to leave the houses they rent, a mass eviction that makes them the latest group of people touched by an alleged real estate scam centered in Murrieta.”
“The houses belong to about 20 plaintiffs who have signed on to a class action lawsuit that accuses three Murrieta men and their companies of running a vast pyramid scheme. According to the suit, the defendants suckered investors into buying overpriced houses with 100 percent financing.”
“But the loans went into default late last year after the defendants stopped making the payments, the suit alleges, with more than 100 homes set to be auctioned or seized by the lenders sometime this year.”
“Vicky Reiss alleges that she borrowed about $3 million to buy the houses. Eduardo and Soledad Carrillo bought seven houses. They borrowed about $4.4 million to finance the purchases.”
“In addition to Reiss and the Carrillos, 17 other plaintiffs own between 100 and 140 houses that are now going into foreclosure, attorney Richard Ackerman said.”
“In most cases, owners say they bought houses with little or no down payment. Depending on how the lawsuit and negotiations with the lenders turn out, those buyers could take the biggest hit in terms of wrecked credit instead of large cash losses, Ackerman said. But many investors were also duped into other bogus investments, the suit alleges.”
“Reiss said two of her tenants told her they would quit paying rent for their last few weeks in the houses. One explained his decision by saying that she had broken the lease and in any case wasn’t making mortgage payments, according to separate interviews with Reiss and the tenant.”
“‘I’m $3 million in debt,’ Reiss said. ‘What can I go after him for?’”
The Fresno Bee. “‘We’re hoping we found a bottom,’ said Steve Lutton, regional VP of Lennar Homes in Fresno. ‘We actually have a plan to raise prices in a couple communities — our first price rise in a year and a half.’ Lutton said the price hike will be limited and not across the board. ‘It’s just a nudge as a test,’ he said. ‘And just in certain areas.’”
“Prices, however, aren’t likely to increase appreciably until the glut of houses for sale drops more. On Friday, 5,223 homes were for sale in the Fresno area, which was a reduction from 5,843 in October. But that is more than four times what it was when the market was red hot in 2004 and 2005.”
“Zoltan Richter toured models at a Granville Homes tract in Fresno recently. The good news was that Richter said he was preparing for a possible purchase in the near term. The bad news was that he wasn’t compelled to act immediately. ‘We’re looking right now,’ he said. ‘We have time.’”
A letter to the editor:
‘Reporter Editor: Not to gloat, but “I told you so” - about two years ago, if I remember correctly. Today, nearly one in four mortgages (23.8 percent) in the Vallejo-Fairfield area are expected to be in foreclosure. That’s a 405 percent increase since the 1998-2001 rates of 4.7 percent and the highest in the nation. Ain’t it great to be Numero Uno?’
‘Thank you, Mr. Greenspan, for rescuing us from the ‘Internet bubble’ by creating a ‘housing bubble.’
–
Are there people out there who still don’t understand the evil nature of America’s bankers? The Housing Bubble was created from the very top – Federal Reserve, especially, Greenspan and Bernanke – and the bankers and financiers have profited enormously, personally, while transferring the risk to the rest.
Evil is what evil does. The fall out from the bankers’ evil will occur during the 2008-10 depression.
Jas
anyone interested in how screwed up the federal reserve is should read this article “Greenspans Cheap Money role in the US Housing Crash of 2007 / Housing-Market / Analysis & Strategy
Feb 07, 2007 - 06:00 AM
By: Mike_Whitney”
the analysis of this article is a bit conspiratorial, but still an eye-opening read.
Yeah … after they’ve stashed their moolah offshore and overseas. They aren’t planning to stick around for the recession.
Should we thank Greesnspan, or the BOJ and the big financial institutions?
Greenspan only contributed the cash.
The rest of the fraud was enabled not by the Fed (stop blaming them) but the insane greed and idiocy of liar’s loans, 100% financing, appraisal fraud and manipulation.
The Fed had some reasons to do what it did (it looked like we’d enter a Japan style deflation) so there are two sides to that story.
The idiotic underwriting, mortgage pushing brokers, and yes cluelessness and greed among the people?
Don’t blame Greenspan or the Fed for that. The real problem came straight from the real-estate-financial-complex. It is the loan hawkers who greedily inserted gullible marks into bad products along with those who bought these ugly loans who deserve the blame. Just plain unregulated laissez-faire hypercapitalism.
And no, it wasn’t Fannie and Freddie either! Thanks to that pesky thing known as “regulations” which our economic Talibanists loathe, Fan & Fred can only buy “conforming” loans, which generally means traditional, conservative underwriting. The toxic waste was enabled by purely free-market banks being greedy themselves.
In a way the capitalists f@cked themselves by buying packages of lousy loans with little to no risk premium, thus funding the fraud. A lot of them will lose a lot of money, as they should. Unfortunately, a lot of little guys (like people with pensions) will be carried away with them. Also, some politically-connected bagholders in this game will surely get gov’t bailouts.
If you’re against bailouts, you should be for regulation. Government is a social contract, and when a lot of people are hurting, they WILL call on the gov’t for help. Better to regulate away the risk of crash/bailout, I say, than defraud the taxpayers again, throw millions in the street, and enrich the fat cats who paid off the right pols.
Ben,
I have to say that you are having a stellar day with the “letter(s) to the editor” today!
The one above is even better than the Arlington, Massachusetts one from an earlier discussion…
********
I first fully realized the I-80 / Vacaville-Fairfield corridor would eventually be in trouble one morning in the spring (probably April) of 2005. It was a Saturday, probably around 7 am, and I had to stop for fuel somewhere in that area on my way from SF to Tahoe for a ski day.
I pulled into a combo gas-convenience store and went inside after filling up. Within seconds after stepping into the empty store, two plain looking vans pulled up outside and from them spilled about two dozen construction workers. In a matter of seconds, they filled the place, all chatting in a foreign language, buying snacks and soda for their work day.
It then occurred to me to look out beyond the store windows, past the freeway on/off ramps, and consider the area where fields had once been visible for miles. Instead, now, they were completely blighted with overpriced McShoeboxes as far as the eye could see.
Who was paying these prices to live 50 miles from SF and 40 miles from Sacto? Nobody who could probably afford them without some fancy financing, I thought.
Oh, the humanity….
Out here in rural upstate New York its the same story. Most of the laborers, if not all of them are paid under the table. That’s probably why there won’t be a dramatic rise in unemployment in the building sector. Few if any of them will be eligible to collect, much less understand what it means. The ‘folks’ who are buying these starter castles, looking from their paladium windows at their six other new neighbors looking out of their paladium windows are completely clueless. They are beginning to rile the town supervisor with questions like ‘How come my garbage hasn’t been picked up? (We have contract service that is not provided by the town), and ‘Where is the water main? (We have a thing called wells, out here)’.I reminisce about the days when the registered holsteins outnumbered the registered voters…And the builders are racing each other even today to get more of them slapped up. Didn’t realize there were soooo many idiots still thinking that RE is a bonanza. The exurbs still haven’t curbed their appetite for MM homes. But it looks like Toll Bros. have suspended one of their developments in a nearby town. All the lights are on, but nobody goes home there. They’ve even taken to setting up some big screen tvs inside the empty houses and turning them on for the evening to make it look like there is some life in the development.
As much as I agree with you, the local governments allowed this to happen. I grew up in a small town, to this day it gives out TWO building permits a year.
No housing developments, no McMansions, no housing bubble.
So as much as the banks financed this the locals helped it along by allowing it to be built. Plenty of blame to go round.
Were or what is happening to all the foreclosed property’s IN California???? I have been checking the Government site and two other auction sites and this is what I have been coming up with past few months.
Michigan, HUD-government site, 65 pages of listings of property’s, CA, same site 2 property’s in the whole state.
Auction sites, again Michigan 50 to 80 property’s per month, Same site in CA, 3 to 7 homes?
SO I have to ask if anyone here would know, what happens to foreclosed property’s in CA that prevents them from getting as far as on the pages of these sites?
Thanks.
Each California home in foreclosures, is equivalent to 3 homes in foreclosure, almost anywhere else in the country. This multiplier affect of California foreclosures alone, is enough to bring the entire nations banking system to it’s knees. This is why it is so important to keep California foreclosures hidden, as long as possible.
But who is it that is hiding this information? How is it that the other states get into the system but California does not? Is there any central tally for California foreclosures?
Additionally, I understand that the local Sonoma County banks have made a lot of risky financing loans, but have sold them and don’t keep them. What is the easiest way to find out how many of those loans they really made and sold? I would like to be able to find out if Exchange Bank and Sonoma Valley Bank are going to be eating some buybacks.
“‘We’re hoping we found a bottom,’ said Steve Lutton, regional VP of Lennar Homes in Fresno.”
Found a GF’s bottom to stick it to?
There is now way in hell they have found a bottom in fresno, give me a break.The whole valley from bakersfield to redding needs at least a 35% haircut.I wouldn’t live in frseno even if homes were 150k.
Amen to that!
Yes, the Lennar housing bulls will be riding down the *slope of hope* . That’s how you know it’s a bear mkt.
–
I took a drive to Fresno to visit friends last week. They live in a gated “xxxx Estates” and bought the home for $875K in 2005. It is a large home but no land (no front yard at all) that I would associate with an estate. There were 4-5 homes per acre. They live at the NE end of Fresno. The whole neighborhood is relatively new. There was so much building going on in the neighborhood that I expect the price of their home to fall well below $375K (minimum $500K loss).
There were so many billboards along HWY 99 advertising homes that I don’t ever recall seeing that many.
Jas
I was also in Fresno last weekend (see my handle). There is no F***’in way homes should be selling there for that much. People just don’t make much money there, or throughout the Central Valley for that matter. I know I’ve written about this before but you are talking about 300+ miles of low-wage service industry jobs with crappy *crappy* weather 10 out of 12 months of the year and little to no culture to speak of outside of Fresno’s Rogue Festival held in the spring.
Amen! I don’t think that people outside the area understand how stupid the prices are for the central valley. There was NEVER a good reason to live there, except for the ‘low housing costs’ of a few years ago. But that is gone for now.
“but you are talking about 300+ miles of low-wage service industry jobs”
Agreed. These reports of strong job growth give no follow up info on the ‘wages’ of these strong ‘jobs. Here in So Cal you can’t hardly exist on less than 60k per year.
Fresno, Inland Empire, High Desert, Palm-caster are toast. There will be ‘Armed Ghettos’ everywhere.
I live about 20 miles from where a ton of citrus is grown and my wife and I were driving to Visalia the other day and every orange tree, 10,000’s of them, is loaded with fruit, but not one of the trees has been picked…
I stop and ask my wife to go pick an orange off a tree and she comes back with it and we slice it in 2 when we get home. Sour as a lemon.
All the citrus was just left to die on the trees, why bother going to the effort of picking it, just to throw it away?
The effects of 5 days in a row of sub 25 degree temps @ night~
I live about 20 miles from where a ton of citrus is grown and my wife and I were driving to Visalia the other day and every orange tree, 10,000’s of them, is loaded with fruit, but not one of the trees has been picked…
I stop and ask my wife to go pick an orange off a tree and she comes back with it and we slice it in 2 when we get home. Sour as a lemon.
All the citrus was just left to die on the trees, why bother going to the effort of picking it, just to throw it away?
The effects of 5 days in a row of sub 25 degree temps @ night~
A lot of the citrus is sprayed to get it to ripen later so they can get a better price for it. You probably got one that wasn’t ripe. If it was freeze damaged it would be dried out in sections or have a mushy part. Right now a lot of growers are trying to assess the damage and see what they can do with the crop. If it does get labeled as a disaster area as in the 90 freeze, the growers will make more money from FEMA than from the crop. Don’t think FEMA has the funds this go around.
Also, freind of mine who works for Centex in Visalia said they lost $20M in the fresno bakersfield region in the last quarter and they are looking at another round of layoffs. I think Lennar is full of BS. Good thing for them the paper will print their spin. Never heard so many radio ads areound here for new houses. I don’t think its anywhere near over. This is the biggest build out I have ever seen around here and it WILL fall hard. Except for prison guard and county jobs, the only growth in jobs has been in real estate/construction. When reality hits those jobs will be reduced tremendously. There is not the economic base in the valley to support what they have done. Gated communities in Tulare??? Visalia thinks they are going to be the next Fresno. What a joke. Theres something to shoot for. NOT.
We live in Three Rivers and when we go into Visalia to shop, we always like to go a different way, to see what sort of 50 pack of new homes, they’ve squeezed into a formerly productive orchard, somewhere, in the endless flat area, all around town.
We see 50 packs of houses in every step of construction, from freshly graded, to 1/2 done, to finished and it doesn’t matter, the market is flooded with homes that aren’t selling.
I heard that DR Horton is sitting on 50 finished homes in Visalia alone. I don’t think McMillin is doing any better with their Rancho Santa Fe Subdivision. Looks like its stalled out 1/2 done. Only action I see is the sign twirlers.
Sheesh, would it be too much to ask for an actual correction before we hit “bottom”?!
I wouldn’t live in Fresno if houses were $50,000 :-/
Guess it’s all clear in Fresno, Lennar is raising prices “slightly” on a few homes…..good luck with that…..Reminds me of the guy who went to the bar and asked this attractive woman if she would have sex with him…..she slapped him across the face…..to which he responded…”I guess a blow#$% is out of the question?”
Right, raising prices. But then why are they walking away from $millions in deposits, etc.
Good point Ben….”raising prices”?…….good luck with that………bwhahaha
Why do I get the feeling that while they are “raising the prices” they’ll also be increasing the incentives and then crowing about how those houses sold at higher prices?
Garrisons2:
That was funny
““Vicky Reiss alleges that she borrowed about $3 million to buy the houses. Eduardo and Soledad Carrillo bought seven houses. They borrowed about $4.4 million to finance the purchases. “In most cases, owners say they bought houses with little or no down payment.
- Depending on how the lawsuit and negotiations with the lenders turn out, those buyers could take the biggest hit in terms of wrecked credit instead of large cash losses…
I am glad that Vicky, Eduardo and Soledad will only have to deal with ‘wrecked credit’…..there are many credit repair companys who are going to be real busy.
They probably had a straw buyer who got paid handsomely for takeing a hit to the credit.They will probably be buying more homes soon sad to say.They should have judgements against them for the losses they incured.
No, I read the article and although it wasn’t very detailed, it appears that each couple purchased a handful of homes in their own names. The investment copmany promised to take the money from additional loans against the homes and then invest the money in “low risk, high yeild investments” Whatever those are?
So I am unclear as to how these homeowners can say they were duped into buying the homes and renting them out. They might have a lawsuit agaisnt the investment co for failing to deliver on the investment (lack of fiduciary duty or something). But it appears they are screwed as far as being on the hook for the loans.
“low risk, high yeild investments”
No doubt 2nd trust deeds on other FB properties
“low risk, high yeild investments”
Those two terms don’t belong together and any one who falls for that line is soon seperated from their money.
Right , that’s the part that I don’t get . These investors were agreeing to get a now down loan and than the investment company was going to take money out and invest the money in low risk investments . Now tell me if I’m wrong ,didn’t these people agree to engage in a investment scheme in which they would put zero in ,yet pull money out, meaning the appraisal would need to be inflated . In other words ,isn’t this a case of the pot calling the kettle black ?
I heard my first class action lawsuit commercial. Was driving through Sonoma and listening to a bay area station and the ad was for a lawfirm appealing to loan owners who may have been taken advantage of by being given risky mortgages with terms they did not understand. :-/
It’s actually not that easy to buy RE in the name of a corporate entity, and even if you do for limited liability purposes, the bank will usually make you personally guarantee the loan.
I don’t think they bought it in the name of a corporate entity. I think the investment company just set up individual
purchases by these investors .In other words ,they used these individual investors to buy inflated property from a straw seller so to speak . So the straw seller took the excess funds .
‘We actually have a plan to raise prices in a couple communities — our first price rise in a year and a half.’ Lutton said the price hike will be limited and not across the board. ‘It’s just a nudge as a test,’ he said. ‘And just in certain areas.’”
If this isn’t the dumbest comment EVER on this board I don’t know what is. Sure, let’s try raising the prices a little when housing is heading down the crapper. Unfortunately, some FB will take the plunge and then wonder why he/she is $300K underwater next year with an ARM rest to 12% in 2009.
‘We actually have a plan to raise prices in a couple communities —
‘It’s just a nudge as a test,’ he said. ‘And just in certain areas.’”
LMAO! WTF!!
‘It’s just a nudge as a test,”
Another little test we will be doing is closing all the doors and windows to one of our model homes and turning on an unlit gas valve for 6 hours.
Then I will light a match and see what happens. just another little nudge as a test.
I like to think these little tests up. That’s why I’m the boss.
Actually, that “test” is going to turn into a viable course of action when those gators don’t sell and they’re eating them alive. By the way, all you sophisticated arsonist’s out there, your services will be in high demand soon. You guys might be elevated from one of the lower forms of humanity to hero overnight. Ah, the craziness of an imploading bubble.
Events may have already raced ahead of your forecast. From the NCTimes (Escondido; January 19, 2007):
Escondido fire called largest in history
By: DAVE DOWNEY - Staff Writer
ESCONDIDO —- The largest building fire in the city’s history destroyed four condominium buildings under construction in downtown Escondido on Thursday after forcing the evacuation of more than 500 schoolchildren, store employees and shoppers.
http://www.nctimes.com/articles/2007/01/19/news/top_stories/1_00_015_17_07.prt
Gosh, I wonder how that “test” will turn out.
Actually, this tactic may work with some people…..retail crooks have been doing this for years.
If a product doesn’t sell at lower prices, raise them….higher prices, in some people’s mind, equals quality and value. Then, if nobody buys, offer bigger incentives to move the inventory. As long as the incentive cost is lower than the price hike, they make money.
The “great unwashed” do NOT do their homework before making a purchase; evidenced in what has happened to date. Look at the other news item where the woman has her $500k price to spend. Buyers find a comfortable price and then go shop. If prices come down a bunch to her range, she’ll jump in and get a bigger and more expensive house…….and the median price is propped up.
“‘We actually have a plan to raise prices in a couple communities — our first price rise in a year and a half.’”
It’s a ploy to see if they can create some panic buying ( like the good old days).
I’m panicking already…… Yes, I believe my palms are becoming sweaty….. I think I better drink a beer.
imploder said…..
“I’m panicking already…… Yes, I believe my palms are becoming sweaty….. I think I better drink a beer.”
Sweaty palms are ok………just make sure there are no hairs growing there……None?
OK…..enjoy your beer
Lutton wants to score points with the bosses. He’ll stand out like a nail.
I don’t know what exactly your reference is, but your post reminded me of despair.com’s incompetence poster.
http://despair.com/incompetence.html
OR maybe this one.
http://despair.com/un.html
This is a marketing ploy….. upper management tells a few hundred on-site sales associates that they will be raising prices, the associates tell thousands of potential buyers, and maybe they get one sucker who falls for it…….
“The median price for condos was $489,444.”
Who in their right mind is paying half a million for a glorified apartment, anywhere? Reason number 1 million as to why this market is so oudda whack.
I too am amazed at this. I see these condos going up that are built like crap and it reminds me of the days of living in apartments with paper-thin walls. Why would anything be different in the condominium community? Especially when may are investment vehicles not to be owner occupied. And then you have the association fees on top of that. Amazing.
Why would anything be different in the condominium community?
Granite countertops and stainless appliances.
These people are on some sort of drugs.You certainly do not want to buy a condo in a falling market. A single family residence will hold up a lot better in a downturn.
I went to the gym this morning and there are open house signs everywhere. I even saw a sign twirler for an open house, ridiculous. I picked up a flyer at one house and they were asking 319k for 1720 sq. ft. Virtually right around the corner kb home is selling the same sq footage for 180k. These existing home sellers are just all screwed up in the head. About 3/4 of the sh@t on the market will never sell, wish prices.Builders have wised up and lowered prices why the rest of the people just look dazed and confused.
I agree. I have been frequenting open houses lately, just to get a gauge on the local Scottsdale market, or lack of it.
Arizona Dude, maybe you can answer a question for me. Meritage has built hundred’s of homes in Green Valley ,about 30 miles south of Tucson development called Canoa Ranch which you may be familar. These are SFH with minimal separartion between homes looks to be 7-8 feet. They are joined only by a common patio wall between homes.. Zillow had them all listed as condos and town houses which I figured was an error on their part, but alas no. Pima County tax records sow them as condos also, but realty outfits list as SFH. Any idea when the reason that Meritage or the County would want or get this designation ? They sit on .15 acres most are about 1800 sq ft., obtain greater density . I live as few miles away and zoning is 3.5 acres for a home. BTW saw two for sale one an open house with only one car there, the realtor I assume. Looked it up on MLS asking, $355K, bought in 2003 for $176K, The other asking $358K, no information on previous sale. figure Meritage must have some angle with cooperation of our great board of Supervisors as originally they were saying going to be homes on several acres. Right , not only that they put in a dmn lake for golf. Great for acquifier which we use out here.
Thanks
desertfox
Hey desertfox,
I am not familiar with the area you are talking about.As far as the condo designation the only thing I can see beneficial is cramming more units on less acreage.I can see no benefit to meritage to have a condo designation instead of a single family residence.I believe there is a difference between a townhome vs a condo.Maybe this is where they are getting mixed up in the searches. With a townhome you own the land below you and the unit. With a condo you own the airspace really.It sounds to me they are really townhomes if they are seperated units on acreage.Sounds to expensive to me though.
Pima County tax records sow them as condos also, but realty outfits list as SFH
Condominium (condo) is a legal term which means the title of a parcel of land is shared among owners. It has nothing to do with the physical form of the buildings. You can have condo apartments, condo townhouses, condo SFH, condo parking lots, condo horse stables, etc.
For whatever reason the development was titled as condominum rather than separate freehold lots.
Maybe I can add something here…..Condominium basically is a “Exclusive Right to Use” the space that you have purchased….In a PUD townhome, there may be “some” fee title that gives you more unilateral ability to modify your unit since you “Own IT”…Such as, remove and redesign the kitchen…Remove a interior wall, etc..
Just curious, where in AZ is this?
Green Valley is along the I-19 corridor about halway between Tucson and Nogales. Probably somwhere around 905 of development in past 15 years is age restricted. Last couple of years lots of Californians dropping big bucks for what is essentially tract housing.
Green Valley is along the I-19 corridor about halway between Tucson and Nogales. Probably somwhere around 90% of development in past 15 years is age restricted. Last couple of years lots of Californians dropping big bucks for what is essentially tract housing.
Those 100-140 forecosures will certainly help the numbers in murrietta all reported as sales for the loan amount and one day on the market by DATAQUICK.probably generate an artilcle in the paper about the “rebounding” market…wouldn’t it be lovely to have Gary Watts use that article as “proof” that the market is on course for further gains…..oooohh my stomach hurts
But many investors were also duped into other bogus investments ranging from overpriced Iraqi currency to short-term bank loans and cash advances on credit cards, the suit alleges.
What!
God bless America!
Riiiight… so… you’re suing… the entire real estate industry? No wait, I get it, this is a suit against Capitalism. Suing the free market? I know! Sue LIBERTY! Sue Casey Serin!
‘We actually have a plan to raise prices in a couple communities — our first price rise in a year and a half.’
Umm, good luck with that. In a market that is spiraling downward, as Fresno is, your best chance to snag a GF is to lower the price precipitously until it sells. This homebuilder will pull stakes in Fresno soon with nothing to show for it other than a bunch of expired land options and unfinished houses.
Question……..why is it that so many people can’t seem to grasp the dominant reason this bubble is tanking?……..Affordability!!!!!………..Affordability!!!!!!!
Surely the media can see this.
Ah, and a voice of reason appears from the crowd.
That’s why I laugh every time I hear those toxic mortgages characterized as “affordability products”.
“why is it that so many people can’t seem to grasp the dominant reason this bubble is tanking?”
It’s called denial and emotions. Hence the reason text book economics really is not a (completely) true picture because it’s based on rational decision making.
Forbes has just come out with a story telling us things are rosy:
You can see right through the housing crash story by looking at the prices of housing stocks. The market knows what the economic worrywarts do not, which is that the housing sector is already making a comeback. In the last six months housing stocks are up 24%, well ahead of the overall market. If housing were destined to fall apart in 2007 these stocks wouldn’t be so strong now.
“You can see right through the housing crash story by looking at the prices of housing stocks. The market knows what the economic worrywarts do not, which is that the housing sector is already making a comeback. In the last six months housing stocks are up 24%, well ahead of the overall market. If housing were destined to fall apart in 2007 these stocks wouldn’t be so strong now.
http://www.forbes.com/free_forbes/2007/0226/110.html
yeah, kind of like what Broadcom and JDSU shares did in 2002.
What people - including Forbes seem to forget, no matter what, is that RE is local. Some areas will have pain while others won’t. Everyting about RE is location.
Care to list some areas you think won’t have pain?
I would define pain here as 10% or more price declines based on comparables. Anything lower is part the normal ebb and flow which produces very little pain.
Rather than list places that won’t have pain, it is easier to list the places that WILL have pain. I would say they are:
South Florida, Washington,DC, Nassau-Suffolk, NY, Boston, San Diego, parts of LA, Santa Barbara, parts of the Bay area, Las Vegas and Phoenix.
What I think will also happen is that once these areas stabilize, there will be flatness for 2-3 years, maybe 3-4 years, as the recent runup is digested.
I would define pain here as 10% or more price declines”
That’s already happened in a lot of the places that you’ve mentioned. It’s just been masked by “median” statistics, builder incentives, and a complicit MSM. Real pain will be closer to 40 to 50% off the highs. Six monts to a year ago, I didn’t think it would really go that far, now that I’ve learned about how serious this credit bubble really is, I know it will go that far…it’s only a question of timing.
No doubt some areas will take a beating, particularly within certain price bands. 40-50% ain’t going to happen though.
If it starts getting even remotely near 40%, buyers will rush in for some quick kills and soon such deals will be long gone.
The trick to timing the market is fighting off one’s own greed. Nobody sends you an alert that prices are heading back north.
In most hurting markets, once prices have dropped say 15%, if you want to get on with your life, you will go in for the kill yourself. If you have a long time horizon you will do fine.
There’s no way I’d be buying at this point in 2007 unless I has a solid lowball offer accepted. But I also wouldn’t get complacent. Home buying is like vampirism. Some of the most outspoken renters will make home purchases due to changes in their own circumstances and the second they do, they will become “one of them”.
If they went up 40-50% why can’t they fall an equal amount ?
Check out: http://www.google.com/trends?q=%22housing+bubble%22
Interest in the housing bubble peaked in 3Q 2005. I believe in most markets, the psychological price crest was in 2004. Yes, prices went up some in 2005, but much of this had already been set in motion.
Also, check out where the interest comes from:
1. Arlington, VA, USA
2. Sunnyvale, CA, USA
3. Pleasanton, CA, USA
4. Santa Clara, CA, USA
5. Rancho Santa Margarita, CA, USA
6. Anaheim, CA, USA
7. San Francisco, CA, USA
8. San Jose, CA, USA
9. Santa Barbara, CA, USA
10. Irvine, CA, USA
So much of this is a California thing. Just look at how many people on this blog live in California.
Real estate is local.
In some areas the recovery will likely be in full swing in one year.
You need a serious in economics and inflation/deflation if you don’t see what’s on the horizon here my friend. When credit contraction happens in earnest (and it’s started by the way), the areas with the most appreciation will get hit the hardest. The trillion dollar train is coming and you better get out of it’s way.
“In most hurting markets, once prices have dropped say 15%, if you want to get on with your life, you will go in for the kill yourself. If you have a long time horizon you will do fine.”
No, it won’t be fine because credit standards will not be as loose as they are now. You will have to cash and extremely good credit when lenders really begin to tighten due reserve losses. It won’t be that easy.
I have to say I believe the top of the bubble was in the 3rd quarter of 2005.
Mo Money asked: “If they went up 40-50% why can’t they fall an equal amount ?”
Well, if prices went up 50%, then the homes would be valued at 150% of their starting value. If prices then went down 50%, then homes would be at 75 % percent of their starting value. [to fall back down to 100%, prices would have to be cut by 1/3rd. i.e. 2/3 * 150% = 100%].
If we assume that 2002 was the year of the starting value (100%), and 2005 was the peak (150%), then it’s highly unlikely that prices of homes will dip below 2002 prices. With inflation alone (i.e. no bubble), those 2002 homes should be worth 14% more today.
no the bubble is so big that all areas have to fall. 300-500k for a house in westchester 10 miles from Nyc that was built on farmland bought for perhaps 5k an acre or so is worthless.. 700k for condo’s in Brooklyn where houses used to cost 300-500 5years ago, they are sitting empty imagine 10 or 12 developments small scale with perhaps 6 to 12 condos a peace all about 80-90% empty. Location is good near subways, schools just noone can afford it.
All areas never fall.
I often laugh whenever someone says “It’s different here”.
The reality is it is different everywhere. Each market has its own conditions.
“All areas never fall.”
Yeah, maybe in a freaking corn field in the middle of Iowa or Nebraska, but not true in most of the populated areas of the US.
You need to spend time looking at the articles Ben posts. They are not all from the west coast.
>The reality is it is different everywhere. Each market has its own conditions.
Yes,
But the credit bubble is universal. Some areas will be hit harder than others, however.
Any place that has had 30% (or more) of the sales going to investors for 2 or 3 years or more is going to see 50% off peak prices by 2010. Many, many foreclosures in rolling waves as different waves of buyers give up and walk. 2005 buyers and ARM resets (and cannot refinance) go first. The the 2004 buyers cave. Then 2003 buyers. Some will try to hang on…but if the neighborhood is going down the tubes, even if the have 30% or 40% equity…it’s gone and they will most likely walk too.
Then, if the energy situation deteriorates (read supply for US motorists), some of these suburbs/exurbs w/o good jobs nearby will keep going down and become unusable or become slums (or sharecropper quarters).
Concur absolutely - that’s the most logical idea. That’s why I’m not *totally* convinced that prices here in Stamford, CT are going to crater that much. Too many hedge funds plus Royal Bank of Scotland moving their global HQ here. Good access to mass transit and the City; and this place is established enough that many people have plenty of equity in their homes.
What I do see cratering are the ghetto developments, of which we have a fair number here. $300,000 for a condo close to a 1970’s strip mall where day labor hangs out is totally unsustainable. But $280,000 for a 2 BR condo near the Metro North with views of the Sound… cut her down to 250 and we might be thinking.
I looked up what Chicago did in the early 30’s for price changes after the last credit deflation. Average was 50% loss in the CITY of Chicago. You would be hard pressed for better established or mass transit cities. The credit bubble is worse globablly this round. So, these people who say NEVER to 50% losses are going on a fancy argument with the same basis of “it’s different here.”
Huh.
What’s the market saying about subprime loans, then?
Ken Fischer is a total moron. Read any of his columns, his analysis is
pathetic. Hes right up there with Kudlow in stupidity.
Kudlow went to Princeton. And yourself?
Keep trolling pal, you will get your ass handed to here shortly.
JWM,
I suggest you read the following –
http://www.rickross.com/warningsigns.html
Why?
I suggest you read the following:
Mish Shedlock’s Global Economic Analysis Blog
Prof. Piggington Site
Maybe you’ll learn something.
In reply to Palisades Park:
I agree with you that comparing comps is the way to go. Here in Santa Barbara, using comps, properties are selling 10%-30% below their 2005 peak. Now, if you were buying in Santa Barbara, and you saw the slide in comps, would you buy now at the prevailing prices or wait, perhaps a year? Of course, if you saw a really good deal now, you might buy. But just remember, half of all homes sold in Santa Barbara County in the last 3 years or so that were financed used some kind of sub-prime loan, and Notice of Defaults are up 300% year over year and increasing. Now, if you could buy a foreclosed house in Goleta for $350,000 what would a similar home go for in Phoenix, maybe $125,000? And if Phoenix is $125,000 what is Cleveland worth? This thing is going to have a ripple effect, and the ripples will radiate from California.
I’m sorry. My reply was to Drentzel.
Bush went to Yale.
Gates did not go anywhere.
Watts, Lereah, Leslie: Baghdad Bob U.
And yourself?
I swear cocaine larry is getting paid by the bush administration to make an @ss out of himself daily on cnbc.
“Gates did not go anywhere.”
Except Harvard. College dropout made good…
BA Rochester, MA Princeton, No PHD
You do not have to be smart to go and finish college, any moron can do it. If you show up and put in the work you will pass. A college degree doesn’t mean you are smart or learned anything, it just means you made through. What you do and say in life determines how smart you.
i agree with you, however some people do not have the time nor the money to have it done. what you do yes what you say no.
W. Bush went to Harvard? Being in the right social circles doesn’t make you smart.
And Bush went to Yale, dumbass.
Listen up: Kudlow also snorted half of Bolivia up his nose in the ’80s. In fact, he wrote a drug-addled letter-to-the-editor that the Wall Street Journal actually published. Dig it up on-line, read it. Your hero Kudlow is not an angel now, and he certainly wasn’t an angel then.
My beef with Kudlow now is that he is a fool for politics and ‘freedom’ and bullshi7. Come on, Larry. Step outside what you want and take a look at what is really happening. Of course I like low taxes and less government. But that doesn’t mean that Bush gets a free pass. Americans have less than 10 days worth of cash in their bank accounts before they red-line. The consumer is a debt-addled disaster. And he, Kudlow, pimps credit and ‘freedom’ and buy-buy-buy. Oh, those tax cuts did wonders for the economy, Larry. I sure do like them. I really do. Ahem. But credit, Larry, what about global credit? Spare a quarter?
You also wrote: “If it starts getting even remotely near 40%, buyers will rush in for some quick kills and soon such deals will be long gone.”
Will you explain to me what they will rush in with? An empty head and a full ink pen are not going to do it again now. How many people are going to have the cash or the income to support the prices at a mere 15% reduction.
Graduated from Hopkins with a Ph.D. — and Kudlow is still a moron.
Listened to a Kudlow & Co. last week on attacking Iran, with the following intro: “…So how long would it take for us to crush the Iranian navy and airforce… 1/2 hr, 1 1/2 hours?….”
My recollection is that this was the timeframe for taking out the Iraqi airforce, and look where it got us.
His economic analyses are no more informed and prescient…what a hack!
Yeah. Right. Ken Fisher is first of all a salesman peddling investment management out of his perch at Woodside, CA. He will be the last one to tell me things are not looking good.
Kenny Boy is pumping the homebuilders. What’s the matter Ken ? Loaded your client’s (and your) portfolio with stocks of HBs ? Trying to counter-spin the news and fallout of the submerging sub-prime market ?
People also seem to be suckers for these investment schemes . Apparently people do not realize that the investment company is just trying to get the suckers name for idenity thief so they can take the money and run . WHenever a company promises you a big profit with no money invested ,other than your name or a John Handcock,or a small amount of money invested , you got to know its to good to be true .
The con men seem to know just what to say to get people to bite on these schemes . It’s always based on putting every little in and getting a whole lot out . Kinda like the whole housing market mania for the last 5 years .
‘We actually have a plan to raise prices in a couple communities — our first price rise in a year and a half.’ Lutton said the price hike will be limited and not across the board. ‘It’s just a nudge as a test,’ he said. ‘And just in certain areas.’”
just a test…wink, wink, nudge nudge…morons unlimited
Thought this was a good read.
http://www.marketoracle.co.uk/Article333.html
“According to appraisal firm Miller Samuel, which prepares a quarterly market report for brokerage Prudential Douglas Elliman, by the start of 2007 the average number of days it took to sell a condo shot up more than 60 percent from barely two years earlier. It now takes 162 days—or nearly half a year—from the last listing price to the signed sales contract”.
http://www.nyobserver.com/20070212/20070212_Tom_Acitelli_finance_thelab.asp
Looks like the disease is catching………..from here in Australia.
“DEVELOPERS have resorted to offering cash incentives and no-deposit finance as they struggle to sell newly built homes in Sydney’s outer suburbs.”
http://www.news.com.au/sundaytelegraph/story/0,22049,21205901-5006007,00.html
Australian market got wacked when goverment passed fines against realtors at auctions who were creating fake bidders. Oldest sin in the book, greed. Once the laws passed and in some cases fines were imposed on realtors and their firms demand died out. Only a few came to auctions and many started with low ball offers.
Fake Multiple bids were fiction in Australia and have been fiction in the US. Lots of dumb buyers got hosed in being tricked. Its only common sense that a prudent buyer should verify if they are signing on a 500K-1000K debt.
That was tried on me in 2001. Seller came back to me and said somebody outbid me and did I want to bid more. I said no and bought the same model down the street for $1,500 less than my orginal bid. It wasn’t even the money to me, it was the principle, they offered it at a price and then wanted to change it when I offered full price, it just pissed me off.
A realtor told me that another borrower put in a offer on a house I just wrote a offer on . I took my offer back and told the realtor to give it to the other guy . Now I don’t know if the realtors were lying to me or not but I noticed when I checked that property about a month later it was still on the market . I wondered what happened to the so-called borrower that put a bid on the property besides me the month before . I just won’t bid against other buyers because you end up overpaying IMO .
Wiz…bidding wars are so 21st century
crush
Agreed, crush. Once you’ve spent some time on eBay, you should know about auction psychology. The pool of auctioning suckers should be drying up. In an auction, you set a price, and if you don’t win, be glad you didn’t overpay. Someone else will be offering something else comparable soon.
very true…i’ve always wondered about those ebay bids…like do the people who are holding the auction have friends or pseudonyms that cast bids against yours…trying to get you to jack up your bid/overbid?
i wouldn’t doubt it
I just put in rental bids on a couple homes that have been sitting empyt for AT LEAST 9 months. Realtor says to me that she thinks there is some lease deal going down this weekend, but they are will ing to negotiate around price X. Whatever. These people have been bleeding for months on a double mortgage, but only a repo will wake them up to a declining market.
“it would be ridiculous to pay $3,000 a month for a mortgage on such a small house.”
Well consider that there are no big jobs that pay enough for you to even make payments of 3K. I dinky homes went for 125K back in 9 years ago. So it still doesnt make sense. And frankly there is not enough demand from Silicon Valley workers to warrant 500K price.
Nice area but again no real justification. Its just another wacky over-
priced area way hyped
In 1996, the median price of a single-family home in Santa Cruz (where I live) was about $250k. By 2001, it had risen to about $450k (which I already thought was a bubble). Five years later it topped out at $775k, over 300% higher than ten years before.
Now, six months later, it’s back down to $700k, which is where it was in January 2004 (eighteen months before the peak), which means it’s dropping three times faster then it rose from 2004 to 2006.
And that’s without the credit crunch that seems to be coming down the pike. So while the rest of the country may not see 40-50% drops in value, I can certainly imagine Santa Cruz seeing that kind of decline.
I guess we’re totally out of the woods now. Businessweek has declared that the flood of liquidity and the low low low low-rates that we’ve had the past several years are here to stay for the foreseeable future !
http://www.businessweek.com/magazine/content/07_08/b4022001.htm
For more amusement, check this out. Apparantly housing hasn’t hit the skids yet
http://www.businessweek.com/magazine/content/07_08/b4022004.htm
Why has the subprime space started cratering then, You morons ?
WTF will they come up with next ?
the amount of inventory built up is insane most of the prices are insane 700k for a condo in brooklyn is a joke anyone who can buy it will buy in manhattan. There are condos going up all over manhattan the price will go down, true the really nice parts will stay up those with easy access to subways and parks, entertainment etc… but not the newly built, near the bridge, close to traffic commutes towers in horrible neighborhoods.
yogurt,
the actual designation is condo/townhouse. some of the lots were(are ?) selling in the $150-$200K) range for “view lot”, the view being the Santa Rita Mountains and trucks/noise from I-19, lots are typically 0.15 ac., I would think they would own the land ? Though maybe not. The only explanation I can conjure up is maybe an exemtion to SFH zoning. Each section of the development has there own HOA and is responsible for desnigated areas.
OT- A freind of my wife lives there. A sinkhole has devloped on the street and have leaks around hte windows. For htis they paid $400K
desertfox