“Waiting Patiently For Prices To Come Down” In California
The Victorville Daily Press reports from California. “High Desert sale prices for resale homes are experiencing a firm downward trend. Prices of resale homes in the High Desert went down by nearly 4 percent in January from the same time last year, not a big drop but the largest one in years.”
“The average home price is now $310,965, down from $327,609 in December, according to a MLS operated by Larry Trombley . Trombley does not count the community of Helendale in his listings.”
“And although the number of homes on the market went up by 78 percent since January 2006, it has dropped from where it was in December, when there were 3,455 homes for sale. In January there were only 3,073 for sale.”
“That could be because fewer homeowners are putting their houses on the market, not because of a rise in sales. Fewer homes sold in January, at 233, than in December, at 295.”
“It’s hard to say what the recent spike in foreclosures will do to the entire housing market, broker Caroll Yule said. The idea would be that bargains will edge out the competition from market-priced homes.”
The Reporter. “Sales at the state’s major new home communities fell by 29 percent to under 86,300 homes during 2006, the median asking price still rose by nearly 4 percent to $450,990, the California Building Industry Association reported.”
“Although builders have drastically curtailed pulling building permits during the last few months, unsold inventory continued to rise by about 53 percent to nearly 16,800 homes between the end of 2005 and 2006.”
“Wes Keusder, CBIA’s Chairman, said the fact new-home pricing remains strong, even with builder incentives being offered, demonstrates once again that California’s housing affordability crisis will only be solved by producing enough new homes and condos to meet the need.”
The Fresno Bee. “Major development projects in Madera County’s Rio Mesa area are nearing milestones with the county Board of Supervisors expected to cast votes on the fates of several within the next year.”
“The surge of activity comes 12 years after the county first approved conceptual plans for the area, where some 28,000 homes and 100,000 new residents ultimately are expected to line the northern bank of the San Joaquin River.”
“Madera County Planning Director RayburnBeach predicts that the developments will draw a majority of their residents from elsewhere in the state.”
“‘Most of our residents in our county the last few years have been from outside the Valley,’ he said. ‘They can come here, sell their home in San Diego for $800,000, buy twice the house for $360,000, and coast on the money.’”
The Press Telegram. “The biggest news in residential real estate seems to be foreclosures. The 130,511 new foreclosure filings last month were up 25 percent from 2006, according to RealtyTrac. With 14,430 foreclosures, California had the nation’s second most, which was a 14 percent increase from the previous month.”
“Charles Barger, president of the Southern Los Angeles County Chapter of the California Association of Mortgage Brokers, said one of the biggest contributors to the foreclosure buzz is the buzz itself, adding that the media has overblown the problem.”
“‘I think bad news sells better than good news,’ he said. ‘There’s going to be some foreclosures, and people are going to lose their homes, but the fact is we just went through the greatest four-year boom we’ve ever seen.’”
“While some of the loan programs that became popular during the residential boom may be leading to increasing foreclosures, many of those loans helped some people buy homes when they couldn’t have afforded property otherwise, Barger said. ‘The loan programs, some of them are risky, but they’ve helped many more times people than they’ve hurt,’ Barger said.”
The Santa Cruz Sentinel. “Nervous investors have predicted that a slowing housing market could affect the country’s economy. Now, the nonpartisan California Budget Project has joined in the concern, saying, ‘The recent slowdown in the housing market has begun to take its toll on the economy.’”
“The CBP quoted the Legislative Analyst’s Office as reporting the real estate slump ‘is having a major adverse impact on the incomes of Realtors, developers, contractors and real-estate lenders.’”
“We don’t see any sort of major collapse of the real estate market. True, there are more listings than there used to be. And, prices have leveled off — and have even dropped a bit at some price levels. A quick look at weekend housing advertisements reveals an increase in inventory.”
“Some who aren’t in the housing market are waiting patiently for prices to come down to an affordable price. But so far, we don’t see a collapse in prices coming. Nationwide, and even statewide, the story might be different. But when you’re talking about the coast of California, don’t expect real estate prices to bottom out.”
The Record Searchlight. “OK, just who’s talking down the local real estate market? Our stories documenting SLOWING Shasta County home sales over the past year have been derided by some for allegedly sinking the once robust north state real estate market. Most criticism has come from agents.”
“So it’s ironic to hear that a radio spot by former Redding Mayor Ken Murray, a licensed Realtor, has garnered less than favorable reviews from some area agents.”
“In the commercial, which has aired for months, Murray says we’re in the middle of a down cycle, a trend that will continue. He encourages people to call him for advice on how to buy or sell in these tough times.”
“A member of the Shasta Association of Realtors who didn’t want to be identified acknowledged that Murray’s advertisement has struck a sour note, adding that a number of members don’t think he represents their take on the market and market trends.”
“Agent Brad Garbutt, past president of the association, hasn’t heard the commercial but is dubious of anyone who makes predictions. ‘All kinds of people try to forecast the market,’ he said. ‘How often does it really come true?’”
‘I was working at a local open house a couple of weeks ago, pre-qualifying visitors when possible. In walked a gentleman whom we’ll call Jeff. Jeff was looking for another investment property because he was in a transaction that seemed to be failing. I made the mistake of asking why the transaction might fail.’
‘According to Jeff, he was attempting to purchase a duplex in Vallejo. Since he has a lovely home in another part of the county, he had no intention of living in the investment duplex. But his loan officer suggested that he apply for a mortgage as an owner-occupant. Owner occupant interest rates are lower than investor rates.’
‘To mislead the lender, his loan officer came up with this scheme: Jeff would have to file legal, marital separation paperwork. This paperwork would be used to ‘prove’ his intent to live in the duplex, presumably because he would be selling his actual home in a divorce, or giving it to his ‘estranged’ wife.’
‘I asked what would happen if Jeff actually got a mortgage based on his story. ‘That’s lender fraud. That’s a felony,’ said Jones. In fact, if either Fannie Mae or Freddie Mac insured such a loan, the borrower could be prosecuted in federal court.’
better convert 7-11’s into courts
there won’t be anything to collect
Multiply this story by about 1 million loans!
Crispy,
Two or three years ago a nephew in CA had a mortgage broker get on the phone with me to convince me that my co-signing a loan was “no problem”. I had to ask the guy three times what would happen in a default, why WOULDN’T I be liable for any deficiency. Finally he admitted I would.
Needless to say I didn’t co-sign. But if this was the level of crap going on back then, yes, its easy to see your “million loans” being understated if anything.
“its easy to see your “million loans” being understated if anything”
I am afraid you might be right!
Three out of four co-maker loans default leaving the co-maker holding the bag.
Why do you call them comaker instead of co-signer?
Only co-sign if you are both willing and able to pay for their damn thing. I am able, but not willing.
Weep for the country but let the chips fall where they may. Personal responsibility is a good thing. Are you sure those tears you are crying aren’t for yourself?
@Kenny baby
Gosh, chill out already. Life’s too short to blow your top at every “wah wah, I got mine so I’m not sharing” Libertarian. Sooner or later they’ll hit 60 end up in the hospital and wouldn’t ya know it, want Medicare to pay the bill. Whatever.
You are right, though. Whatever caused the disaster, we’re ALL going to pay, whether we personally made dumb decisions or not.
I’m sort of a “bear” by sentiment … but I’m also disgusted by the “genius of capitalism” attitude. Looking at the history of prior credit crunches, it’s clear that it’s not only the idiots and sleaze who see their ponzi-scheme financial artifices (hardly merits the term edifice) come down … plenty of perfectly honest, sound businesses and banks come down as well.
A rising tide may raise all boats, but a flash flood wipes away the brick house with the house of straw.
Watch out for people who go on about the Austrian school. They believe that if a business person gets caught unawares by an economic event (because they were working on their business, doing what they do best, like most business people) then they’re “retards” and deserve to go down.
What goes around, comes around … a lot of those banks who aggressively foreclosed on properties early in the Great Depression shuttered their doors soon thereafter.
I had a mortgage broker recommend the same thing to me.
I have been saying for a long time that the sub-prime front line loan agents were the clowns that were helping the people get these liar loans . The commissions were huge on some of these sub-prime loans .Can you imagine a loan agent suggesting to a borrower that they fake a divorse so they could cheat on a loan ? I wonder how many of these creep LO’s changed the paper work after the fact so the loan would pass underwriting .
If a loan officer made a suggestion like that to me to lie or make a false statement I would wonder what other false statements that loan agents was making to me .If a person lies about one thing they will lie about another thing ,yet people were so blinded by greed they thought that agent was their friend .
And yes I can say in truth that on any non-owner-occupy place I ever bought I paid the higher rate and fees and down payment requirements . If I have to cheat in order to get by in life it isn’t any fun for me ,plus who want to be worried about getting caught .
Wait until these FB’s start turning on the LO’s that helped them get into property under false pretense . It doesn’t cut it to say that it’s ok because everyone is doing it . That’s why if liar FB’s lose their home I don’t feel sorry for them .
I like your integrity, Wiz.
Too bad so many people are inclined to lie, cheat & steal. IMO, that’s exactly why we need regulations. Otherwise, those who lack honesty & integrity will be the ones who call the shots. It’s obvious (at least to me) that the honest appraisers, lenders, buyers, etc. have been the losers the past few years. We need to build and maintain a system where those who strive to do the right thing will always have the upper hand.
CA renter . I agree with you about the system needing a clean-up . Just look at what happened when lending didn’t have very much regulation . I guess people were just to tempted and everybody thought that real estate going up would bail them out . Also , It can disqualify a person for a BK if they lied on the loan application .
In addition to tighter and more effective regulation, there has to be far better oversight and enforcement mechanisms, and penalties with real teeth. The law should proceed from the sad but true premise that most members of the public are idiots who need to be protected from their own stupidity. Lending standards in particular need to be far more stringent, so would-be FBs have a much harder time taking on irresponsible levels of debt, and lenders are forced to buy back their non-performing loans.
The law should proceed from the sad but true premise that most members of the public are idiots who need to be protected from their own stupidity.
————————-
Agree. Even more than protecting idiots from their own foolishness, it’s important to protect the rest of us from the consequences of their stupidity.
BTW, I was in Office Depot today, and saw the sticky notes the lenders use on their docs. You know, the ones that say “sign here” with an arrow pointing to the signature line.
As I reflected on this, and how the notary tried to rush us through signing, telling us not to read all the docs because they were “just standard forms,” it struck me how the lenders totally relied on FBs not reading what they were signing. After all, why need a highlighted “sign here” arrow pointing to the (obvious) signature line if borrowers were expected to read the docs.
So much has gone so wrong since people started lending/originating loans with other people’s money — without any responsibility to the ultimate lenders.
IMO appraisers should be working for the ultimate lenders, NOT the originators. That’s one place where some regulatoin would do some good.
i was driving in la over the weekend and heard an advertisement on the radio from a lawyer. Essentially the ad was seeking people whose mortgage has ballooned or have been duped into these loans. anyway, the phone number was 1866-959-4law.
the class actions are brewing everywhere. i guess we need these lawyers to come in and clean up these liar loans.
Clean up the liar loans by suing on behalf of the liars?
crisrose …That’s just it ,how can the liar borrowers go after the loan agents when they were in on it together in most cases . The attorney from the other side will show that the borrower signed the liar loan application . I don’t know what borrowers defense will be or how these cases will turn out but it’s sure that the lawyers will make alot .
I don’t know who I hold in greater contempt, the FBs who lied on their loan applications, or the lenders, realtors, and appraisors who aided and abetted the fraud and deception. All I know is that watching them turn on each other is a thing of beauty.
Even without the lies - mortgage docs are very clear and spell out the downside of a neg am loan on a separate page, in large print and - at least the ones I’ve read - in bold. The FB’s initial each page.
Where is the deception? It’s there in black and white with their signature approving and agreeing to it.
I can hear it now -
‘I was confused’
‘I’m old and can’t see’
‘I’m young and this was my first ‘home”
‘I’m stupid/uneducated and they took advantage of me’
‘I’m ill and didn’t read before I signed’
Well I’ve spoken to some of the young, elderly, sick, confused and stupid who bought these houses and these greedy f$cks knew exactly what they were doing.
And by greed I don’t just mean those who necessarily planned on ‘cashing in’ on the real estate craze, but those who attempted to live a lifestyle they can’t afford. For god’s sake, live within your means! And if that means renting for decades until prices come down or your wages go up, shut your mouths, quit whining and rent.
Great post Wiz
I wonder how many of these creep LO’s changed the paper work after the fact so the loan would pass underwriting .
I knew a nest of vipers workin’ for an outfit called NorWest Mortgage who would brow-beat, harangue, and intimidate this little sole woman underwriter situated directly in their office complex into massagin’ the files and appraisal content to do their deals.
The system is beyond corruption.
Meanwhile, FB gets helping hand from SBsun:
“Recognizing the signs: Planning can help homeowners avoid foreclosure risk”
http://www.sbsun.com/business/ci_5256487
So what happens to the 20%? And what makes 80% not turn into the rest of 20%?
Right. Go right back to the crooks that got you into that mess to start with for a huge fee, so they can extract another fee and leave you in a deeper mess.
Would that be the recipe for Indentured Servitude?
Either that, or find a straw buyer that will take the lender to the cleaners.
And if they have second liens on these properties…good luck flipping them back, as the second trust owner gets nothing…this is going to get ugly
Since vallejo is mention, a house listed for 299K and valued by Zillow at 651K. Is this a mistake or what?
MLS =703816 at realtor.com just in case links does not work.
BS. No one is going to get one guy for fudging ,if he makes his payments. If you want to get a bunch of criminals just go to DC and pick up 435reps and 100 senators. Let me spring the trap you tye the knots.
Concerning foreclosures in California:
If Santa Barbara County is an example for the rest of the state, watch out. In January, there were 120 NOD’s in Santa Barbara County. There were 201 closed escrows. The ratio of closed escrows to NOD’s is 1.75 closed escrows to every NOD, with the number of defaults trending up and sales trending down.
and NOD’s are going to foreclosure at a high rate- I think we agreed a 2% default rate vs # of households was real bad
120-150 Per Week in Kern County! A few years ago - 10 per month. No bubble here, move along….
Try this one on for size. 93552 in AV had only 37 closed sales vs. 56 NOD. That’s .66 sales per NOD and both trends are headed the wrong direction.
Dude…..93552 is swimming upstream against a powerful current and a big water fall just around the downstream bend…..
OUCH, I just got a cramp!!
Bad time to get a cramp dude.
The department of fish and game just made a big mistake. They stocked the stream with piranah instead of trout. Oops. Oh… they get president’s day off too…
They’ll fix the problem manana.
My… are all of the banks of this river slick vertical algea covered granite with rattlesnakes and plague ridden rodents?
Got popcorn?
Neil
93552, that’s Palmdale right? The rental I punted from (left CA all together) went into foreclosure. The putz bought in late 04′, thought he was smart, but opps! Reality came crashing down and droped a turd in his punch bowl. Its sad to see the Antelope Valley turn into “Compton North”, but I guess Inglewood used to be a nice place too (in the 1950’s). So goes Lancaster and Palmdale.
Clearview, interesting you bring up Santa Barbara. Last week we took a day trip to SB and it’s amazing how many houses are for sale all the way from Ventura to SB. The other thing that struck me was that there are literally dozens of furniture warehouses all along the freeway. It seemed to be the only main commercial enterprise besides car dealers. I also noticed there is a big condo project going up just one block off State St. any idea how that is going?
Go along Main St. or Thompson Blvd. in Ventura and you see alot of the Furniture Businesses going out of business and there alot of vacant buildings for lease and have been for lease for many months. No comment on the Condos.
Was in a large furniture store last week. When I entered they informed the wife and I if your purchase is over $900 you will get a 2 round trip ticket along with 2 night stay in Vegas (from RI). There must be some serious profit in furniture.
This morning I heard another large store offering , “no payments for 5 years”. 5 years??
“There must be some serious profit in furniture.
First, there is good markup on the inventory, and second is the easy money made from discounting the financial paperwork.
Baker Furniture is having a 40% off list sale. They run the same sale every august but I’ve never seen it run in Feb. The store in NYC was pretty empty at 3pm on Sunday.
“This morning I heard another large store offering , “no payments for 5 years”. 5 years??”
Holy crap, what’s this financing thing coming to? Why not just say “No payments ’til you’re dead! We’ll just bill your estate”.
There are two condo projects on Chapala, one block west of State. The big one is Chapala and Gutierrez, next to the Salvation Army homeless shelter and 200 feet north of my shop. 44 condos and (I think) 30,000+ sq feet of retail. It has been under construction since May of 2005 and at the rate they’re going won’t be done until June, at the earliest. Condos in the complex were supposed to sell for $1,000 sq foot, but condos in Santa Barbara are now selling for $375 sq foot and dropping. The construction cost on this thing has got to be $200/sq foot+, with underground parking, massive concrete pilings driven into the ground and the largest above ground concrete pour in Santa Barbara history.
OMG, Clearview, that is going to be hard to watch, but you have front row center tickets from your shop. It did look a little out of scale with the area to me, but developers never ask for my advise. Do you know if any of the condos are sold?
I can see the project from my office window, and I am watching this thing go together as I type this. I do not know if any of the condos are sold, however the 44 condos in the unit represent about a 3 month sales supply in the city, since they’re only selling 14 a month in the city as it is. And they’re building another 6 3 blocks up the street, with ANOTHER project in the pipeline one block north of the big condo project.
Yea, well things may go bad in a crummy, third rate beach shanty town like lowly Santa Barbara… that’s to be expected, But the “Santa Cruz Sentinel” knows that such a thing can’t happen within the borders of the “crown jewel” of costal california…
the one, the only, the magnificent, Santa Cruz. How can it with a moniker like “Murder Capital of the World”?
the 44 condos in the unit represent about a 3 month sales supply in the city
Clearview, hold on to your seat. It’s going to be a bumpy ride.
construction cost on this thing has got to be $200/sq foot+,
+++….As soon as you go underground or above ground with parking the construction costs double at the very least….
Let’s not forget about all the tile and granite stores along any freeway in So Cal!
The industrial areas of Orange and Anaheim off the 57 freeway will be hurting badly. Tons of homebuilding and home improvement businesses in there (tile, flooring, paint, lumber, you name it).
Anyone want to start a pool on when the two lines (Notice of Default and closed escrows) are going to intersect?
When buying in AZ (Tempe) back in 2002, the mortgage broker flat out told me to claim it was a “2nd” home to get better financing. Being from NY he said no one would ever investigate, and I could always claim I changed my mind and was going to rent it out. Nonetheless I told him I am not a fraudster and I will get charged the extra 50 bps for an investment property.
Thank you BPLI. Is a person’s soul real worth 50 basis points? It just amazes me how low people will go to steal a buck. And what’s more amazing is how many people that see themselves as honest, decent people will do this. What’s worse is that everybody has an excuse for it.
It seems like its the little things that make this whole situation really bad. Its small things multiplied by thousands, tens of thousands, hundreds of thousands, maybe more. Things like we have read above, or have heard about.
In my line of work I get the: “hey, can you mark the (owner occupied) box on the report..or, “They need 205k to make the deal work”, even though the data all points to 200k. All the data says 200k, and your client “needs” 205k. And the slimeball starts in with: “hey buddy, its just 5k. I need this deal to work.” Or, “if you get me the extra 5k, I’ll send you more orders, and I’ll tell all my broker buddies to use you also.”
I would say that close to 90% of all deals done through mortgage brokers, where they have to hire an appraiser, are shady in some form or another. Its the little things.
These small instances of fraud are what made or broke a deal. It was because of these many types of deals that volume surged and prices rose. Remove this element and you have decreased transactions, which means less demand, which means, lower prices. It’s what is happening now.
” seems like its the little things that make this whole situation really bad. Its small things multiplied by thousands, tens of thousands, hundreds of thousands, maybe more. Things like we have read above, or have heard about”
The process of a deflating bubble collapse in Scal as viewed at street level daily observation is indeed a process of correlating thousands of events, occurrances all over Scal. I have been to three large industrial sites and a long-time neighborhood discount store which are now closed. A large gillette razer manufacturer in Santa monica at olympic/26th st was recently shuttered. A large facility at 18581 teller off Michelson/jamboree in S OC which was the site for linkseys/cisco is also shuttered. Third site is in Gardena. And a Target store in Long Beach just got shuttered.
I also see thousands of home-improvement businesses all over the IE, such as off the 10 fwy in redlands. Also see thousands of vacated commercial buildings available for lease, even as builders keep on building even more industrial buildings.
I have seen little hand-painted signs posted all over the LA inner city offering cash for homes, many of them in spanish. Lots of apts all over LA seeking renters.
Some decent middle class areas with abundant clean parks and good schools such as South Huntington Beach and garden grove zip 92845 are virtually empty of kids and young families as they cannot afford homes in these areas.
I think that the bubble deflation in LA metro will take the form of a thousand little cuts slowly bleeding the victim to death.
All those hedge fund boys want the world to think that MBS models are sound and incorporate conservative default rate assumptions. Well, we’re obviously seeing that’s not the case with the subprime issues, and we’ll soon see that those brilliant analysts never considered the “fraud factor”.
They can kiss those analytical models goodbye.
Don’t forget others like CDS [CDO].
This thread talks of others I didn’t know about:
http://www.wilmott.com/messageview.cfm?catid=19&threadid=19877
Talk about house of cards….
Who the heck wants to live in the desert? Victorville is a dump and your selling homes at over 300k? Is that crazy? I remember 6 years ago a home would go for 80k in Victorville….Where are the jobs? the community? entertainment?
I once had to drive to Victorville to sell a used car. The doctor that worked at the only hospital bought the car from me for his daugther. I asked the daughter what’s it like to live in Victorville. In a word “HELL”.
‘And although the number of homes on the market went up by 78 percent since January 2006, it has dropped from where it was in December, when there were 3,455 homes for sale. In January there were only 3,073 for sale. That could be because fewer homeowners are putting their houses on the market, not because of a rise in sales. Fewer homes sold in January, at 233′
Many jobs in the area are likely related to RE, so what do you suppose this kind of inventory to sales ratio will be doing to local incomes?
A coworker who owns in Victorville (you commute from WHERE?) had a neighbor forclosed upon. 4 bedroom homes were going for $420k at the peak. Now? Lucky to get $360k… and it will be below $300k before we celibrate the year of the “Earth rat.” (We just entered the year of the “fire pig.”)
Got popcorn?
Neil
“and it will be below $300k before we celibrate the year of the “Earth rat.” (We just entered the year of the “fire pig.”
Just off Jan dataquick;
Victorville 92392 64 $325 -1.5%
Victorville 92394 25 $297 -0.7%
Victorville 92395 31 $309 9.8%
Those fb’s out in the hi-desert are getting killed over current $3.00/gal gas prices. It is 230 mile round trip from victorville to OC. And foreclosures Have just barely scratched the surface. Wait till after the spring/summmerselling season is over and builders/speculators start unloading overbuilt inventory at deep discounts. Then prices will plunge to under $200,000, causing massive wave of defaults. Should see prices at under $100/sq ft all over the IE hi-desert outliers real soon.
BTW i would not touch Victorville even at under $200,000 for 5/4 3000 sq ft in the best part of the city, if the city has a best part. Lots of low-life scumbags out there.
“Who the heck wants to live in the desert?”
Home business owners in the meth production sector?
Ha…That’s the joke..Bakersfield,Stockton,Modesto…Homes interspersed between Meth. labs.
Ha…That’s the joke..Bakersfield,Stockton,Modesto…Homes interspersed between Meth. labs.
“Who the heck wants to live in the desert? Victorville is a dump and your selling homes at over 300k? Is that crazy? I remember 6 years ago a home would go for 80k in Victorville….Where are the jobs? the community? entertainment?”
This can be said for most of the areas on the outskirts of any bubble city. The garbage which used to sell for sub 100k is in the 300k+ range. I watched it happen in WA and OR. The gains are even less sustainable than those in the cities because of the lack of jobs. The flippers and specuvestors bought in these questionable locations for one reason only: it was cheap. A few were able to unload their “investments” to other unwitting speculators, and dense FB’s who had no business buying, but hopped on the easy money gravy train. But most are left holding the bag. The real winners were the longtime residents who just wanted the hell out and banked the bubble gains. Well, now these fringe communties are getting hammered, and won’t recover for years.
“Who the heck wants to live in the desert? Victorville is a dump and your selling homes at over 300k? Is that crazy? I remember 6 years ago a home would go for 80k in Victorville….Where are the jobs? the community? entertainment?”
Agreed. Ditto for Bakersville.
I always though of bakersfeild/Victorville/Hesperia as places you go to hide out from law enforcement… On the edge of the desolation.
Now you have to go all the way to slab city
I think you mean Barstow. Bakersfield, while a hell hole is along distance from the others.
Josh
Back in Biblical times they had cities designated as places of refuge for men who had committed manslaughter (as opposed to murder, which justifiably merited the death penalty). They were legally protected from the “avengers of blood” as long as they stayed in those restricted cities, but if caught outside, they were fair game. In the 21st Century version, maybe we could make the High Desert a place where realtors, lenders, and appraisers could hide out from revenge-seeking FBs.
Unfortunately, that’s where most of future development in California is going to be - the desert and the Central Valley - all other coastal regions have claimed “built-out.” By 2030, Victorville will have a population of 250,000 - Lancaster/Palmdale combined, 500,000. Bakersfield will likely hit 6 to 700,000 and will battle with Fresno for being CA’s fifth largest city, after San Francisco. Might seem absurd now, but it’s inevitable.
“It’s hard to say what the recent spike in foreclosures will do to the entire housing market, broker Caroll Yule said. The idea would be that bargains will edge out the competition from market-priced homes.”
Huh? Foreclosures ARE market-priced homes! Ms Yule is probably pretty close on the other remark. The “idea” isn’t that startling of a revelation. People would usually prefer to pay a lot less for the same thing when given the option.
“Sure people are dumping homes at bargan prices, but the “real” market price is what I think it’s worth, whether I can get it or not!”
It is amazing!
Really amazing. Amazing that reporters can’t find anyone with a clue to interview. Amazing that they print total nonsense quotes, coughed up by these numbskulls.
All I can figure is they’re subtly suggesting that real estate clerks are just plain dumb, and don’t bother listening to them unless you want useless drivel, without saying it out loud??
reporters are complete hairballs when it comes to the bubble. What’s more are the hairballs still searching high and low for appreciation… Housing price appreciation is the new Great Pumpkin.
Readers keep landing on my blog after doing a search for:
“house price appreciation in Sonoma County for 2006.”
about 100 a day use this to find the blog. :-/
So I responded…
House price appreciation in Sonoma County for 2006? There was none. Ok?
Click your heels. Tell yourself all you want: “housing prices never go down, never go down, never go down.” or “real estate only goes up, only goes up, only goes up, and you can’t lose, can’t lose, can’t lose…” It isn’t going to help.
In Sonoma County prices are down -10.6%
In Sonoma Valley prices are down -11.4%
This is just the beginning.
Carroll Yule is a local realtor and writes a weekly column that is total fanstasy. So wrote a column back in 2006 that said 2007 will bring 5 to 10 percent gain for the new homebuyers by the end of 2007 but now she says were in a “dip” . Just your basic NAR mouthpiece. Beer Me !!
“The surge of activity comes 12 years after the county first approved conceptual plans for the area, where some 28,000 homes and 100,000 new residents ultimately are expected to line the northern bank of the San Joaquin River.”
Does every Valley town have these 100,000 resident developments? LMFAO.
We have two of these in Bakersfield - Where the hell are these people going to come from??? Mars??
I don’t get it either. The only industry we have is building homes it seems. When you get off the plane in Fresno, the only billboards are for homebuilders and Pelco - a security firm. They have ads for the Clovis high tech park, but so far nothing has come to town. The only thing that has broken ground in the high tech park is a storage center - what’s high tech about that?? Everything revolves around homebuilding or prison building. Its not like there is a major company coming to town to drive this growth. Its more “build it and they will come”. Sooner or later there has to be some kind of economy. Sure, we have people from the coast with cash that have been dropping it in the valley but the deals aren’t so great anymore and most of them are retirees. I live next door to some people from San Diego who bought here and 1 year later they want to leave. I don’t see how the valley can sustain this growth w/o developing something else besides agriculture. And its a shame that we are paving over the most productive farmland on the planet. I think those Madera county developments will have a LOT of legal challenges with water rights. Currently its all rangeland. No water draw now. Who is going to give up their water alloltment for a new city. Especially when the Friant water users just lost 15% for envirnmental remediation. City of Fresno gets 40% of its water from the Friant. I don’t think they are going to look kindly on the competition.
Actually, there’s significant high tech - based on agriculture. For example, there’s a machine vision company (in Modesto IIRC) working on systems to sort fruit, and another company in Modesto does high speed label applicators.
There’s quite a bit of packaging related machinery built in the Central Valley - enough that some automation distributors (e.g. E&M) have offices there.
I am familiar with the packaging industry but its not big enough to spur the kind of development we have seen in the valley. At least in Fresno. My point is there has to be jobs to fill the houses. I don’t see commuting to the Bay Area from Fresno being too attractive with peak oil looming. Especially when its 150+ miles one way from Fresno. There were a lot of hopes for high speed rail but it looks like its going to be scaled back with Californias budget mess. I think the valley should support agriculture as it is what it does best due to its geography but they are doing everything they can to kill it. The water issues are going to be front and center going forward. Especially during a water year like we are having now. A lot of what has happened in the SJ valley was short sighted quick buck development.
perhaps Fresno offers a good place for Bay Area-based white collar jobs to be outsourced instead of offshored. Insurance, teleco, that sort of thing. NW Fresno & Clovis are certainly a nicer place to live than any equally affordable region of the BA (ie. the hood).
Outsourcing to Fresno????
I don’t think so. My finance company in SF is outsourcing tech … all the way to China. Our remaining low level white collar jobs are going to the midwest (where housing is 1/4 that of Fresno!). Fresno is a hot, boring sh@thole. nothing more.
“And its a shame that we are paving over the most productive farmland on the planet.”
That’s what worries me the most about this entire enterprise. I know this blog is about money, but there some facts which don’t go away with Lierah happy talk. You can print money out of thin air, but you can’t *poof* growing soil into existence. Take a look at a beg of frozen veggies. My organic broccoli was grown in China. it’s probably economic reasons now, but if this paveover goes on, it will become a necessity. Yeesh.
I am hoping — truly — that all those developers are scraping and storing or selling that topsoil, preferably keeping it in the US. It might be kinda shifty, considering that you’re taking soil from the homeowner, but at least the soil will be used for something somewhere rather be stuck under a concrete driveway.
Are you really sure its “organic if it comes from China. Has anyone thought about what the fallout from their factories is doing to the crops?
I _never_ buy food that has it’s origin in China. There is NO WAY to determine how the food was produced.
Walmarts in KY are now selling farm raised Tilapia fillets imported from China. I couldn’t believe it when I first saw that.
What comes around goes around.
1. We burn coal.
2. Heavy metals and other polutants deposit in the soil in low concentrations (polution dilution).
3. We grow grain, and process into fish food pellets.
4. We export pellets to Argentina.
5. They feed pellets to their farm raised fish, increasing concentration of polutants.
6. We import fish from Argentina, and eat it.
7. We get sick.
8. If insured, we get misdiagnosed with bad results from incompetent med labs.
9. If insured, we become income stream for pharmaceuticals that treat symptoms.
10. If not insured, we are better off.
8. If insured, we get misdiagnosed with bad results from incompetent med labs.
9. If insured, we become income stream for pharmaceuticals that treat symptoms.
10. If not insured, we are better off.
=====================
Worthy of a whole ‘nother blog (and I’m sure they already exist).
Privatized medical care. Nope…no conflict of interest there!
Good point. I read an article once on buying only name-brand soy sauce of all things in China. The reason? Some of the local “organic” soy sauce was being produced from human hair - apparently it had a similar taste and appearance and in a country with 1.4 billion people was much cheaper than soy beans. The problem was the chemicals used in the process were known carcinogins and were leeching into the organic soy sauce….yum yum…
What should worry you & everyone is what will happen when ALL users have to pay the true cost for water - even the agribusinesses. Agribusinesses get water subsized by communities that pay an inflated price for water. The products get sold out of area which benefits the agribusiness a lot more than those that actually paid for the water. The true cost of those tomatoes is paid by the communities, whether or not they eat them.
Everything in Ag is subsidized from the water infrastructure, the water itself, the electrical energy, the equipment loans, crop price supports, etc., and don’t forget the illegal labor force.
An argument COULD be made that agriculture gets subsidized fuel, but I disagree. In actuallity it is perfectly reasonable for vehicles that don’t operate on roads to be exempt from paying into the federal highway trust fund.
http://www.gazette.com/display.php?id=1330143&table=story_archive&sec=1
When will the new water wars begin in the west?
Does the San Joaquin River even have any water in it any more? It had salmon runs all the way to Fresno until the 1940s.
“They are not making land anymore” but “they are making people”
from southern border… . That is why immigration amnesty is coming for…
exactly
At the rate these illegals are swarming in to this country, Mexico’s population must be declining rapidly. During my brief stint in Northern NV, I have noticed a staggering increase in the hispanic population since I was last here. I stopped into an auto parts store for some wipers one day and I kid you not, there was not a single caucasian in the whole place. There were at least 20 hispanic men. The parts person was having a hard time helping a guy because he barely spoke any english. I am quite sure, too, that these hispanics are eating up the funny money loans. Two of the most recent home purchases in my area were by hispanic families. One boasts like 5 cars and two full families. Another appears to be just one family (but many kids). Both of these homes sold for well over $300k. The single family home has one vehicle, a 15 year old dented up minivan. These people just moved in a few months ago. The mom walks the neighborhood with the kids, one in a stroller. They appear as if they don’t have much money. I doubt they can afford that $325k house. These hispanics aren’t going to save the housing market. They will help destroy it.
I noticed that at least a third of the names on the notice of foreclosure in the Colorado Springs area are Hispanic-sounding. They’re not the most sophisticated buyers, and they are mercilesssly preyed on by Spanish-speaking realtors and lenders.
This country is run by big business and they want cheap labor…it is only gonna get worse for America.
Pretty soon the type of communities that most of us grew up in will be a faded memory.
On the other hand…most of the “illegals” that I have know are better people than the Trumps, Lays, Skillings, and Cheneys.
Maybe we have failed and it is their turn now….karma?
Same here in the V.C., Riverpark is a joke.
Where in the hell is the water going to come from when they get there!
I hope you guys in the Southwest aren’t counting on the generosity of the Midwest. We have 95% of the freshwater in the US and 20% of the freshwater in the entire world, and we aren’t sharing. Seriously, all the Great Lakes states got together with the Canadian provinces and put together some international water use regulations with teeth. Canada has already shut down an outfit that was sending drinking water to China, and a bottled water company in Michigan is about to suffer the same fate after it was discovered they were drawing more water than allowed. Unfortunately for suburban Chicago, the subcontinental divide runs almost right along the city limits and puts many suburbs into the Mississippi River watershed - the old suburbs are grandfathered in (but can’t increase their draw), but all new water draws can’t come from Lake Michigan. They have to drill wells or pull it out of the Fox or Des Plaines River, which has them REAL MAD but they are finding the courts unsympathetic to their plight.
Just imagine if the Colorado River were managed this tightly. Farmers in California would be dead!
CA grows rice in the desert. Folks water their lawns daily. There is ample room to conserve in the SW.
I grew up in Chicago on Addison St. and while I love the city, I don’t see how sitting at the edge of a lake is going to help that much.
Conservation is really about preventing an Aral Sea like disaster where addresses east of lake shore dr. become plusible.
“We have two of these in Bakersfield - Where the hell are these people going to come from??? Mars??”
And what are they going to do when they get there? Are there jobs for 100,000 new residents?
Barger said. ‘The loan programs, some of them are risky, but they’ve helped many more times people than they’ve hurt,’ Barger said.”
OPEN YOUR EYES you moron. We still have 2.5 trillion to reset, tell me how great these WERE in 2 years!
Right ,and how can it be good that all this false demand from the uqualified borrowers/speculators raised the prices and taxes in most areas .
When is the REIC going to admit that this bubble was a bad thing for most towns and its not a good thing for people to lose houses.
I would like to know who came up with the idea of giving these creepy loans to borrowers so that the REIC could keep the appreciation party going at least 4 years longer than it should of gone on . Something went very wrong here with this bubble and it can’t be explained simply by saying that excess cheap money funds for investment existed. The ratings were wrong on this junk paper and there wasn’t any underwriting and the front line loan agents were committing fraud with the borrowers on a massive level .
The fraud is only going to increase as people get desperate .
Amen!
When is the REIC going to admit that this bubble was a bad thing for most towns and its not a good thing for people to lose houses.
As soon as they sell all of their own property.
Crispy, I remember seeing some of the $X trillion reset stats coming from the MBA. Do you have a good source on current stats along these lines?
“Wes Keusder, CBIA’s Chairman, said the fact new-home pricing remains strong, even with builder incentives being offered, demonstrates once again that California’s housing affordability crisis will only be solved by producing enough new homes and condos to meet the need.”
You just keep on building, boys. We’ll just convert all those heavily discounted new units to rentals and fill them with the FBs that are about to get their walking papers from the court.
If there is ever an actual surplus of housing in California, we can knock down every other zero-lot-line McMansion so that familys can have yards with their houses
Charles Barger, president of the Southern Los Angeles County Chapter of the California Association of Mortgage Brokers, said one of the biggest contributors to the foreclosure buzz is the buzz itself, adding that the media has overblown the problem.”
Yeah Right, Media is responsible for these dolts buying more than they could afford using interest only loans.
What goofballs like Barger forget is that although bad stuff draws in people’s attention and gives a short-term bump in interest, it’s long-term warm fuzzies that the advertising-supported media depends on. The better people feel, the more they spend, the more advertising springs up to capture that spend.
The housing bubble for the last 5 or so years has added a lot of coin to the their advertising coffers. I’m sure the media publishing companies didn’t want it to end either. However, as much as some people here might dislike mainstream media, it’s still in its longer-term interest to give at least a nod to this thing called “reality.” They can only ignore it for so long (a trait apparently not shared by Barger)
Following the bubble has made me realize one sure fact. The moment somebody blames the media for something, that person has lost all credibility. The media is filled with a bunch of self-serving jerks, yes. But they are really dumb self-serving jerks. They never have an original thought. They are incapable of causing something. They are only capable of jumping on something once it’s already happening.
So sad and so true….
Charles Barger, president of the Southern Los Angeles County Chapter of the California Association of Mortgage Brokers, said one of the biggest contributors to the foreclosure buzz is the buzz itself, adding that the media has overblown the problem.”
Yes, and the trees waving make the wind blow.
Any relation to Sonny Barger?
Does anyone have any info on Palmdale Lancaster?I see inventory growing steadily but real fast.I will be paying cash as soon as thing implodes.Contrary to what alot of people say about Palmcaster,if you know the right areas it can be a good place to live.No smog blue skies, wide streets,new malls.All my friends live there and i owned 3 homes there that i sold at substantial profit.One went up 500% in 7 years.Victorville on the other hand is a dive as well as parts of palmcaster.
93552 showed only 37 sales in January, that’s 67% reduction YOY.
I’ve noticed in just the last couple of days that the median asking price is starting to fall. We may now start seeing some capitulation from sellers. I know anecdotally a number of friends with substantial equity who have had success selling by getting ahead of the market on the downside. The comps are falling off the chart, making zestimates more and more ridiculuois every day.
93552 currently has 13.2 months inventory at current sales.
93551 has 11.7 months currently. Both those numbers are trending up, as are NODs.
i buy in 93536 93534 zips,west side lancaster quartz hill area.I will buy 2 homes for cash ,rent one out and work 3 days a week at my new business.Retired by 50 aint so bad.
It’s still got a good deal to fall. I wouldn’t buy anything until it’s under $100/sq.ft.
I bought a house there for 37$ a sq ft in 97,my neighbor got one for 30$ a foot.It will be ugly for them FB out there.
i buy in 93536 93534 zips,west side lancaster quartz hill area.I will buy 2 homes for cash ,rent one out and work 3 days a week at my new business.Retired by 50 aint so bad.
____________________________________
I live in a cul-de-sac in the 93536 area of Palmcaster. I have two cops living at one end of the street and a C.H.P. at the other side of the street. I’ve lived here 30 years and I have seen the ups and downs. But ain’t nothing like what’s gonna happen this time around. Hey Neil pass the popcorn!
67% drop in sales YOY? Oh boy…
The comps are falling off the chart, making zestimates more and more ridiculuois every day.
ROTFL yea… zestimates only seem to be worth something in a rising market. I like how they’re trying to get +/- 10% as a “good estimate.” Whiskey Tango Foxtrot? I’d think they would need to be within +/- 7% to be any good. (I’m sorry… but 3%>= $30k in this market. You should be able to get within that…)
Don’t get me wrong, I really like Zillow and appreciate the fact that they are publishing information. Good for them.
But you cannot buy off of it, just look at sales, purchase price, etc.
Got popcorn?
Neil
bottomfeeder, give it 2 more years, but prices are declining now. Anecdotally, just from talking to friends, co-workers - nothing over 350K is moving, and few over 300K are. I’ve spotted a number of short sales: check out 45648 Knightsbridge, Lancaster on zillow/county assessor for sales history - sold for 336K in Nov 2005, just sold for 287K in Feb 2007. Was actually a decent starter with a pool in a good neighborhood. KB Homes now have homes with a 259K base price, this is a change from 2005 when they were in the mid 300s. However, even prices in the 200’s is still insane, especially given a 76K median for 1997. Job market is still weak, so there is still little growth to support the housing boom. Most newly created jobs are retail. Only decent jobs growing are health/medical related. Consider buying when median hits 150K, or less than $100/sq. ft.
“the median asking price still rose by nearly 4 percent to $450,990, the California Building Industry Association reported.”
Not if prices were reduced for the incentives given. However, those reductions are reflected in the profit margins of the builders.
Yep, just one more example of the REIC looking right into a microphone and lying.
“With 14,430 foreclosures, California had the nation’s second most, which was a 14 percent increase from the previous month. In January there was one new foreclosure filing for every 846 California households, according to RealtyTrac. ”
At $520K/house (~avg) and assuming a 20% loss to lenders for a foreclosure, January looks like a $1.5B write-off. And, we’re only just getting started! What’s Dec gonna look like, when Santa comes down the chiminey and sees all the fixtures gone, notices pasted up and windows boarded shut?
Speaking of homes boarded shut, here’s one that’s within walking distance of the Arizona Slim Headquarters (aka my house):
It had crummy, noisy tenants who will NOT be missed in this neighborhood.
This past Friday, I noticed that the front door area is now boarded up, and there’s a Writ of Restitution notice taped to one of the windows. In Arizona, you get such a document when you don’t pay your rent and the landlord repossesses it.
A friend of mine told me how a friend of his goes about evicting deadbeats. He simply removes the front door from its hinges and hauls it home with him. I don’t know how bad it can be for this RE investor legally, but he said so far it has been working like a charm.
Good idea! I’m going to remember that one.
How many people really feel that coastal California will be unaffected? OK, true prestige areas (e.g. Palo Alto, parts of SF) should do better than, say, Tracy. After all, there SHOULD be a huge discount to live in Tracy.
But I think there are way too many FBers (with I/O, ARM, or option ARM loans) around coastal California for prices to stay level. San Diego is my exhibit #1.
Some of the coast (down to just above Monterey(?)) is commutable to Silicon Valley. I don’t see Santa Cruz prices falling much, if any. Central Valley, though… that’s a miserable climate at least 6 months a year.
If they rose during the boom, they’ll fall during the bust — simple as that.
“If they rose during the boom, they’ll fall during the bust — simple as that.”
Perfectly stated.
I don’t understand why people still see the Housing Collapse as a local issue. The machine that built this madness was international. It worked differently in different areas but it has impacted every corner of this globe. Nobody gets out of this one without being hurt.
Wednesday Japan decides if it should raise interest rates. What happens if Japan cuts off the flow of free money to the world? This thing has gotten away from the big boys. They know it. But the little guys still spew, “it’s different here”.
“I don’t understand why people still see the Housing Collapse as a local issue.”
Yup–it is a remarkable coincidence that all of these local markets are collapsing at the same time.
Yep…
If you had told me a year ago it would be international, I would have snickered. Now that I know more (and was shocked by the bubble in Arkansas…)… its national.
If nothing else, this should be interesting.
Got popcorn?
Neil
“Wednesday Japan decides if it should raise interest rates. What happens if Japan cuts off the flow of free money to the world? ”
Those politicized prick hacks. The BoJ will cave in to the political pressure, just like they always do. Wouldn’t surprise me if Fukui is on some hedge fund’s payroll.
NYCityBoy…right (international scope of bubble) again. You are on a roll.
Well, think about it … Japan’s industry is having a hard time competing with Taiwan, Hong Kong, China, Thailand, South Korea, and Viet Nam. A weak yen serves their interests.
You’re kidding, right? They’re all gonna get clobbered. The higher the price, the more painful the fall, for everyone - especially the lender. And expect the credit crunch to really suffocate the higher priced areas.
“I don’t see Santa Cruz prices falling much, if any”
LMAO
“I don’t see Santa Cruz prices falling much, if any.”
Ho hum, another “special” place. The last time I was in Santa Cruz, the place was a total armpit. Has it really changed that much?
“I don’t see Santa Cruz prices falling much, if any.”
It’s the rose colored glasses.
No dude, it’s just residual orange sunshine, blotter, windowpane and the special mix of electric kool-aid from behind the Mystery Spot.
You’re right… all the “equity locusts” came from coastal California.
The newer the development or developed area, the worse it will be as the higher number of underwater buyers and competing supply in close proximity.
“Some who aren’t in the housing market are waiting patiently for prices to come down to an affordable price. But so far, we don’t see a collapse in prices coming. Nationwide, and even statewide, the story might be different. But when you’re talking about the coast of California, don’t expect real estate prices to bottom out.”
No, that could never happen!! Oh wait, it did happen just 10-15 years ago.
Last I checked San Diego was on the coast, and all hell is about to break loose there.
Isn’t all hell already breaking loose there?
Last I checked San Diego was on the coast, and all hell is about to break loose there.
Most of San Diego can’t come close to even finding a parking space to go to the beach, let alone even seeing it.
True. The closer we live to the beach, the less often we go there. Not a lot of easily-accessible beaches; either they’re blocked by private residences or you have to climb down a cliff to get to the narrow strip of sand down below. Too crowded these days. Not to mention the dirty, bacteria-infested — and cold! — water.
Maybe I’m just getting old.
The real estate world ANYWHERE will be begging for “equity locusts” from anywhere. Why are people with a fat equity to spend so hated?
Because a lot was based on Fraud, Opportunism, and Greed.
I am a proud equity locust who left San Diego in 2005 and bought a beautiful little farm in the Northwest. Are you telling me I should have stayed in the corrupt Enron by the sea and watched what equity I had disappear? Would I have slept better? Just who would have benefited by my family staying in a congested area with daily auto accidents by crammed freeways? Maybe you are right. I should have stayed and paid more in property taxes and helped San Diego avoid bankruptcy. Am feeling so guilty now I can’t sleep.
Jerry F,
If it helps you sleep any better, I believe most posters here would not classify you as an equity locust, as you are actually living in the home you purchased. The concern is more with the California flipper who bought “investment” homes in FL, PHX, LV, and Bentonville, Arkansas on the assumption that they would soon be a gazillionaire, since “real estate always goes up.”
Worse - they ‘infested’ in Fl, Phx, LV, et al, with a HELOC on their California property and/or a liar low/no money down ’second home’ mortgage - inflating the debt bubble and spreading the housing price bubble v.d. nationwide.
Nothing but low life/low class greedy Donald Trump easy money get rich quick seminar jackasses.
What happens when an inflationary debt bubble collapses? Debt deflation and economic depression. You think the depression of the 30’s was bad? You haven’t seen anything.
These bastards deserve the hell into which they are steadily descending. Unfortunately, they are taking us all down with them.
As one who frequently uses the term “equity locusts,” I make a distinction between CA residents who do not like what the future holds for them and (especially) their children, and wisely decide to seek a better quality of life elsewhere, and those who were very much caught up in the greedy, superficial, materialistic lifestyle personified by so many Californians. I would welcome any Californians who have their priorities in order, make an effort to adapt to their new homes and be good neighbors, and do not bring with them any of the plague and pestilence they are fleeing from. As far as the rests, “locusts” is an apt description, and I wish they would go elsewhere.
Interesting comments Sammy;….
To be honest Jerry, I am sure there are a lot of locals who resent you. You cannot change that. A lot of natives of WA and OR despise the locusts, and they let it be known. If they had it their way, things would remain unchanged until the end of time. If they could prohibit immigration from folks like you, they would. I am sure, if you have ventured out into the community, you have recognized this. It’s a fact. Small town folks don’t like the big city high rollers, especially from CA, moving in and buying up the priciest real estate.
If a whole bunch of well intentioned/nice/polite folks from CA descend all at once with the cash to outbid each other for prime properties (like a “little farm”) and in doing so…buy up inventory and drive up prices…you can bet your @ss it is gonna piss the locals off.
To add insult to injury many CA folks like to “Californicate” the neighborhood but creating palaces that would look more at home in Laguna than say in Kirkland.
I heard that something like 30,000 folks from CA moved to WA last year. Sorry, but any way you cut it, that IS an invasion. I don’t care how NICE the individuals are. And this happened all over the country over a very short time period. A mass outflow of wealth from CA was a BIG factor in this bubble.
Now throw in the CA “infestor”. This is the person who did not move here but bought houses up here to rent (thereby restricting supply and helping drive up prices…again) while continuing to live in LA. I run into the “infestor” all the time (a lot of them from China and mid-east) while looking at houses. Seattle is crawling with “infestors” who live in CA.
In the end people do what they have to do and mass migrations have occurred thruout history. Doesn’t mean the incoming folks are monsters but by the same token it does not mean that the locals like what is happening.
It is what it is.
Totally agree w/S-Moose. I could retire if given a nickel for each nasty little gripe I’ve fielded from CA folk who overran our valley. A firm believer in poetic justice, I relish hearing about no streetlights, etc., on the country roads, and not much in the way of visible law enforcement unless blood has actually spilled.
Um, people are entirely justified being against illegal immigration (rule of law you know) but the last I heard the US was “one nation indivisible”.
The State of Washington could stop the locusts dead in their tracks by imposing a 100% profits tax on RE flipping. Local governments could impose design controls to stop ugly houses. So why hasn’t it happened? Because the locals were on the gravy train too, of course.
It’s always the same. Blame the outsiders. Well folks, it’s you, the locals, who elect the state and local governments, and ultimately it’s you who are responsible for what is going on.
Where is “Our Valley” MaryLee ???
Guess. Equity locusts plan to get in, drive up the prices, and get out. Some get stuck in a busted flip - too bad - but the condition is worse for those that bought in the atrificial run-up that intend to live in the trap that got set by the locusts. They are accidental casualties.
For starters the boom inevitably gets followed by a painful bust and a general blight condition. You’re asking who wants blight in their neighborhood, where they expect to raise a family.
Well,
The “locust haters” include everyone who does not work in the RE business or otherwise profit from overpriced homes. Anyone whose ability to pay for a home is linked to their actual wage hates them. Many folks don’t want RE money that turns their town into a service community for semi-retired poseurs.
Firstly, people “from California” but who were not born here are NOT “Californians”. All too often, people get real Californians confused with all the people from other states and countries who INVADE California and drive the locals out of our state as well.
Nobody knows “invaders” better than native Californians. It’s because of the people from states like Oregon and Washington (and Montana, New York, Florida…), as well as people from other countries that our housing prices are so high. We are **forced** out of our state — and into your state — by those who “invade” California.
Keep your folks in your state, and we’ll keep ours here…deal?
CA renter;…….Could not be said any better…..
People with familys moving from one state to another….. I guess were as bad or breaking some law as our friends from the south. Yes I am a taxpayer of over 50 years and if I decide to move my family for a better quality life, so be it. Not once when I bought a home did my realtor or the seller know where I came from untel escrow. How was it that I was driving up a already asking price, which I did not pay, if they thought I was some nut California buyer? No one knew so don’t put “all” buyers into one crazy class of outside buyers driving up prices the locals have established as a fair price for their homes.
Jerry,
That was not against a private family making a decision to move. It’s about all the people complaining about “Californicators” who drive up their prices.
No one knew so don’t put “all” buyers into one crazy class of outside buyers driving up prices the locals have established as a fair price for their homes.
The CA locals did not establish those prices. We are **forced** to pay them if we want to live in our own state and hometowns. Yes, each family that moves here technically takes one home off the market that could be used for a local family. Ultimately, the law of supply and demand does exist, and Californians have been paying dearly for the influx of people — from all over — into this state.
Point I was trying to make is that people should not complain about Californians migrating to their state, when CA is receiving far more new residents that the vast majority (all?) of other states.
Prior to the last few years, there was a reason for today’s equivalent of the “no down payment” loan. Other than greed, that is.
“The Department of Veterans Affairs home loan programs serve a clientele which is diverse in many ways. The only common denominator of this clientele is service in the Armed Forces of the nation. Since the inception of these programs the objective has been to assist eligible veterans to become homeowners. Veterans are assisted by making it possible for them to compete in the market place for credit with persons who were not obliged to forgo the pursuit of gainful occupations by reason of service in the Armed Forces of the nation. The VA programs are intended to benefit men and women because of their service to the country, and they are not designed to serve as instruments of attaining general economic or social objectives.”
http://www.va-home-loans.com/history_VA_loan.htm
And, yes, some of us had “skin in the game”, so to speak.
I have never thought that VA loans were bad or not deserved .VA loans are no down loans but the veteran still had to qualify .VA loans never had higher foreclosure rates than regular loans in the past at least . If the government is going to back a loan I think it’s justified with the VA. Sorry I have a soft spot for people who serve the country . Many of these deadbeat sub-prime borrowers didn’t deserve a home loan at all .
Also, the VA program is 100% self supporting. They sell their own bonds, insure their own mortgage payments and have NEVER, EVER cost the taxpayer a nickel.
“…but they’ve helped many more times people than they’ve hurt,’ Barger said.”
———————————————-
Straight out of Communist China’s playbook.
The moron said:
“‘I think bad news sells better than good news,’ he said. ‘There’s going to be some foreclosures, and people are going to lose their homes, but the fact is we just went through the greatest four-year boom we’ve ever seen.’”
Re paraphrasing:
“‘I think bad news sells better than good news,’ he said. ‘There’s going to be some big headaches for people and a lot of people are going to be hurting, but the fact is we just went through the greatest four-year party we’ve ever seen.’”
Nice! And good discussion today. After sorting through 50+ post about Starbucks, I was afraid Ben’s Blog had “jumped the shark!”
Yea, the market is “good news” when a few propertied folks are making obscene money off the young and/or poor for doing nothing, “bad news” when affordability is on the rise.
I make $100k and work in the Miracle Mile. When this thing shakes out will I be able to buy a place within the 101/10/405/Hills perimeter or should I just forget about it altogether and move somewhere else?
I bet you will be able to buy.
A typical bungalow in most neighborhoods east of La Cienega would have set you back maybe $250k less than 10 years ago. (Less than $250k in Hollywood, much of mid-Wilshire, and especially anywhere south of Wilshire.) Extrapolate that with something like the historical appreciation trend, call it 4% per year, and the expected price should be about $350-375k today. I bet we’ll not only get back to that price, but we’ll overshoot on the way down. That will be the sweet spot for buying.
P.S. just about anywhere east of Western (East Hollywood, Koreatown, Echo Park, parts of Silverlake), it was easy to find places in the $150k to $200k range as recently as 1998 or 1999. I remember for the hell of it checking out a few places below $100k in the Rampart/eastern Koreatown districts. Yes they were crappy cottages in crappy hoods, but what would they cost today, $400k? This just shows how ludicrous today’s prices are, and how far of a drop we have ahead of us.
400k? I just talked to a lady who got a 890k offer on some shack in KoreaTown and it wasn’t two stories.
That’s flat out insane, you can still buy shacks in much better neighborhoods. Hell, you can even buy something halfway passable in San Francisco for that price.
For reference sake, in 1995 I was renting a gigantic but dilapidated 3-bedroom apartment “Hancock Park adjacent” (about 2 blocks west and 2 blocks north of Wilshire and Western) for $985/month. From what you are telling me, houses cost about 4-5x now what they did then. For that to be sustainable, rents would have to do the same. So does a 3-bedroom apartment currently rent in the $4k to $5k/month range on the fringe of Koreatown? If so, I swear I may give up and move to Oregon.
The valley averaged under $200K just prior to the boom.
You’ll need to wait at least three years to get something decent. Might as well wait for the next series of disasters (quake, riots, etc.) and buy a year after those events.
I agree. While things seem to be unfolding rapidly, it’s still going to be quite a while for prices to bottom. There were tons of funny money loans doled out just last year, and it takes time for those to adjust. We are just barely off the peak right now. In a few years time, things should really be cooking.
If you like your work and where you live, stay.
110 sorry!
“Agent Brad Garbutt, past president of the [Shasta Association of Realtors], hasn’t heard the commercial but is dubious of anyone who makes predictions. ‘All kinds of people try to forecast the market,’ he said. ‘How often does it really come true?’”
You mean like when you told people “RE only goes up” and “buy now or be priced out forever”?
Does anyone have any info on Riverside? The house next to us sold for $405,000 last month! It’s 1300 sq. ft and in the slightly cheaper end of a nice area (yes, there are nice areas here:). It sold, then the following weekend about 20 people came and cleaned it up and it’s now for rent. Things aren’t going down as quickly as I’d like.
I know of several families who are waiting it out, bbut this is so frustrating.
The local paper has a section called the “Homes sold Database”. It usually shows homes sold in the last 3 months, but I see it’s showing homes sold from October to now. Maybe 5 homes under $500,000 sold in January.
WIll it go down more quickly or are we going to play this game for years? I’m afraid our landlord is going to sell. He owns many homes and looks like he might be at the retirement age.
Anyway…any predictions for this area?
Years…Don’t forget that the FBs were refi’ing their toxic loans, over and over and over again.
That’s why it’s taking so long to unfold. If someone got into trouble on a 2003/2004 loan, they could likely refi in 2006 (again, into a toxic loan), and buy another 2-3 years+.
We needed to see it happen exacly like it’s happening.
First, we needed to hit the “affordability ceiling”, even using toxic loans. Check.
Next, we needed to see prices stagnate since nobody could push prices up any longer — the bottom of the barrel had been scraped with FBs and their NINA, neg-am loans. This would eliminate the opportunity to “get rid of the FB’s debt” by refinancing, again. Time to pay out of earned income (gasp! — no can do).
From this, sales would slow, and FBs get one last chance to refi and buy a couple more years.
As the FBs begin to feel the strain of their debt (not felt before, because “the house” was paying their bills for them), the weakest slowly begin to slip into foreclosure. This begins the slight downward trend in pricing, along with potential buyers now sensing that prices are not moving up, and the fear of being “priced out” begins to fade.
The mortgage buyers (MBS & related financial products) begin to see “stress” in the credit markets and SLOWLY back off from some of the more risky products. Less liquidity, fewer buyers, prices drop a bit further.
…which causes the lenders to get more nervous as more borrowers default, so lending standards tighten more…less liquidity, lower prices, tighter standards, etc, etc, etc…
It’s a long, long way down from here, IMHO.
Hopefully theres a bust in the Bay Area soon. I don’t see how people can keep up with these mortgage payments. My co worker just paid 30k in interest on a house last year!!!!
Yet somehow they say that it’s us renters who are throwing our money away!
That number sounds low to me. Is that a starter home your coworker “owns”?
It must be a starter home in the bay area. They just took a 100% interest only, 1% teaser rate loan on………$3 million! Wait until their first adjustment….6.25% fully amortized….hmmm, payment should be about $217,500/year……ROTFLMAO!!! Do they make 3 X’s that, ’cause we would not want them to have to stretch for an adjustment….
But he “gets all of that interest money back” from his taxes!
That is what homedebtors have always told me.
Somehow, I never believed it. But what do I know, I am just another renting fool.
But he “gets all of that interest money back” from his taxes!
Only if he’s in the 100% marginal bracket.
Your typical schmoe may be in the 28% federal, 9% state, for a total of 37%, so he gets back 37 cents on the dollar, assuming that his income isn’t high enough to start phasing out the interest deduction.
I may not be an investing genius, but spending a dollar just to make 37 cents doesn’t sound like a winning strategy to me.
Yeah, Santa Cruz won’t fall at all. The 1+ hour to commute San Jose means this crime ridden sketchy hippy town should have median prices of 1/2 a mill plus.
This is playing out a few doors down from me, the guy sold his home 2 years ago to “move up” to a 400G house in Apple Valley and guess who bought it ? The realtors who got the listing first. Then they got a juicy appraisal sucked every last dime out of it then stuck a For Sale sign in the front yard way over priced and it sat no takers. The guy who sold the house to “move up” had to move down (apartment) when it came time to pay the bills. About 4 months ago the owners (and I still don’t know who owns it) put a “no money down move in” sign and it still sat no takers then today when I drove by there it was a “For Rent” sign BINGO !! full circle. So my guess is the plan is to stick some renters in the house and collect some rent money before the cops knock on the door and throw the renters out. The For Sale signs are popping up like weeds around me in the High Desert. Beer Me !!
Hope the bay area prices fall soon. My co worker and his wife just paid 30k in interest last year for their home. Geezzzz.
People are talking, over at CR, about the MBS market and derivatives market. Lots of debate about how much prime and sub-prime is out there. I have this feeling that a lot of people doubled their bets in this market.
Everyone that sold a home bought in at a higher level with similar or larger debt. I think those people had large down payments and lots of HELOC money to keep the bills paid. If credit continues to tighten I’m guess the prime pool will turn out to be a heck of a lot weaker than they expect. So much is going to depend on cash savings and income. Much more so than WS is really expecting.
This is going to take just as long as the last cycle. Probably be far far more painful too.
Pass me some popcorn…
i guess this is for insiders only if you don’t know what CR or WS is.
Guessing game… Calculated Risk & Wall St?
If I win can I get an 80/20 loan with zero pts and a 1-1/2% intro rate for 30 years?
You win! Now just sign here, don’t worry about reading these documents as you will lose your home to this loan anyway…
http://calculatedrisk.blogspot.com/
“If credit continues to tighten I’m guess the prime pool will turn out to be a heck of a lot weaker than they expect.”
My guess as well. The prime pools will incur collateral damage as the subprime pools plunge into the depths. And it will become clear through the reflection in the rear view mirror that bad (or no) loan underwriting standards can turn a borrower with a good payment history into a subprime borrower.
I read that equity is the best indicator of whether someone will make their payments — not their FICO, income, etc. One sage individual also noted that price declines don’t discriminate between prime & sub-prime housing.
That’s a no-brainer. Houses with equity don’t get foreclosed because the owner can sell and walk away with cash and an intact credit rating. Unless the owner is a complete idiot - and yes there are some of those, but a lot fewer than those who bought with 0% down.
But if the price returns to the mean many will be motivated selllers with zero equity and fast. People bought in and increased their debt load
“Agent Brad Garbutt, past president of the association, hasn’t heard the commercial but is dubious of anyone who makes predictions. ‘All kinds of people try to forecast the market,’ he said. ‘How often does it really come true?’”
Does he mean like ‘real estate always goes up?’
“Some who aren’t in the housing market are waiting patiently for prices to come down to an affordable price. But so far, we don’t see a collapse in prices coming. Nationwide, and even statewide, the story might be different. But when you’re talking about the coast of California, don’t expect real estate prices to bottom out.”
Hey Neil, where’s that popcorn? I want to watch this cause if they don’t bottom out that means they just keep going down.
Battle of the Bubbles !!!!!
http://www.dailyreckoning.com.au/housing-revenue/2007/02/20/
Luvs, very interesting comment in this article…..
“And did you know, that more houses are generally sold between Superbowl Sunday and the middle of April than in any other period? We didn’t either. But that’s what the Financial Times says. Actually, two thirds of the sales for the entire year normally happen during this period. And if they don’t pick up a bit, the whole year’s housing revenues are in jeopardy.”
So we will know some interesting stats in about 80 days.
Ruh-roh
test
In the old days I was always able to predict the market by looking at the rental income and always knew when it had reached its peak .
Investors would back off once they couldn’t cash flow anymore and soon after that regular buyers would back off from prices going up more . I don’t know what happened with this market in the last 5 years ,but people went way beyond their normal back-off mechanisms. People usually back off when prices go to high .It’s really weird . Even people who have been around during prior downturns were taking risks they should of known were foolish .
I understand how the low interest rates would of raised the prices somewhat but after a certain point you start reaching the law of diminishing returns. Maybe it’s just that in prior cycles the lenders would back off and would not allow people to overpay or exceed what they qualified for, but in this cycle the lenders did . I think alot of it has to do with the no down payment requirements . People will take chances when they don’t have any skin in the game .
You know the answer… People went beyond their normal back-off limits because they were flat-out speculating. It had nothing to do with cash flow, except in the sense that people were betting that they could absorb negative cash flow long enough for the speculation to pay out.
To the extent that they thought it through that far, of course
‘I don’t know what happened with this market in the last 5 years ,but people went way beyond their normal back-off mechanisms.’
I think the number of real estate related snake oil salesmen had something to do with the speculative frenzy as did the unprecedented complete lack of lending standards, Flip This House type TV shows, and the real estate broker licenses that can be obtained essentially online. All you had to do was hold for a few months with zero down and you made a profit, or so the masses of specuvestors believed, and they bid up prices to absurd levels.
The 2005 rise was the speculative premium. That, neg-am option loans, stated-income, and such lax lending rules that a Casey Serin could end up with $2.1M in properties was the witches’ brew that got us to where we are now.
Going back down to saner levels is going to happen one REO at a time. I am quite proud of myself for finguring out this downside dynamic on my own ca. 5 years ago
It’s as simple as, “real estate always goes up.”
People only had/have their eyes on appreciation. Or they blindly bought because everyone knows “it’s a good investment” without really understanding what that meant.
I didn’t hear that 5 years ago. People didn’t really talk about real estate. I can’t wait for when that happens again.
Okay, I didn’t hear that 8 years ago. How silly of me….5 years ago….
I can’t wait either sleepless-in-seattle .
In a manner of speaking, the same thing has been happening in the stock market since before the tech bubble. People have foregone dividends in favor of pure equity gains. That’ll fix itself before too long, too.
Exactly. Already has, hasn’t it? Lots more companies paying dividends and much more emphasis from investors going toward “income paying” stocks, relative to 1999-2000.
Wizard:
That’s a very interesting comment, and it leads me to wonder if mortgage-backed securities even existed during earlier housing booms? Or are they a relatively recent phenomenon?
There was a secondary market of investors in the old days (1970’s -1995). Insurance companies would buy big blocks of loans along with other investors . I don’t know if they packaged them up later in the form of MB”S or not but there has always been a big secondary market for buying what use to be very low risk home back loans . I remember in the 70’s and early 80’s sometimes lenders would hold their notes longer (2 years ) until they became “seasoned loans”,with a pay history , before the secondary market would buy them .
I also remember how fickled the secondary market was at times . I remember one time the secondary market started complaining that the adjustables didn’t have a high enough profit margin in a 2% spread over the cost of funds index.
But the secondary market always expected decent underwriting in the prior lending cycles that I have witnessed .
“But the secondary market always expected decent underwriting in the prior lending cycles that I have witnessed.”
Then came Fannie and Freddie…
I’ll disagree with you this one time, GS. IMO, it’s not Fannie & Freddie that caused this mess — though their securitization process might have been the model that the private companies tried to emulate.
IMHO, it’s the private funding sources — hedge funds & their derivatives, largely — that caused the real damage. I say this because it’s the non-conforming (don’t conform to Fannie & Freddie standards) loans which are the most “toxic”.
Wall Street, the “financial wizards” of hedgefunds, and their lackey credit rating agencies, are the guilty parties, IMHO.
Clarification: F&F may have been involved in the beginning of the credit bubble, but I think the much-loved, private-market capitalists picked up where F&F left off.
IMHO, F&F have been a smaller and smaller part of this bubble since their 2003/2004 accounting issues came to light.
Subprime Blowup Wave #2?
http://bakersfieldbubble.blogspot.com/
(Comment found on C&C’s blog…)
Perfect Storm said…
If WMC goes down that will be huge. I hope the WMC guys and New Century Guys take turns servicing bubba in the big house.
Housing Wizard you are right on the money. Subprime needs to go away, as for hard money lenders they loan on equity and it will be nearly impossible for them to make any money from the down fall of subprime until equity is built up with people who have crappy credit.
Cheers to the fall of subprime.
“….it will be nearly impossible for them to make any money from the down fall of subprime until equity is built up with people who have crappy credit.”
Great point, even less $$ for investors to rely on…
Yea ,I hear ya. I got to tell you that the more I think about what the sub-prime lending did to this real estate market the more pissed I get . As far as I’m concerned the market correction is all about weeding out all the sub-prime purchases because those purchases weren’t worth a sh-t. Sure it’s always nice if a borderline buyer who really wants to occupy a home gets into a house and does everything possible to keep that house and has pride of ownership ,but this speculation or fear buying was just one big destructive hyped up con job to keep the party going .
“…was just one big destructive hyped up con job to keep the party going.”
AMEN!!
Crispy,
The implode-o-meter is hungry………looks like it could eat well in the coming weeks.
When homes in Victorville are selling for that much there is something seriously wrong with the economy! I had the pleasure of stopping there for gas last year on the way to vegas and couldn’t get out of there fast enough. It was hot as hell and swarming with SUVs with the ridiculously sized chrome “spinner” rims and obnoxious stereos, etc
“While some of the loan programs that became popular during the residential boom may be leading to increasing foreclosures, many of those loans helped some people buy homes when they couldn’t have afforded property otherwise, Barger said. ‘The loan programs, some of them are risky, but they’ve helped many more times people than they’ve hurt,’ Barger said.”
——————————–
Where is the benefit? How are people helped when they are duped into believing they can afford mortgages which will end up forcing them into foreclosure?
The difficulty used to be in buying (qualifying for a mortgage) a home. Now the difficulty is in keeping one. Sad…
The “people” who were helped were not the ones trying to buy the house. It was the “people” acting as agents, loan officers, etc. Those were the “people” who gained the most from this debacle. Maybe it’s time to bring back the practice of tarring and feathering and running em out of town on a rail?