Inventory Driven Up By Sales Decline: CAR
The California realtors report on January sales. “Home sales decreased 12.6 percent in January in California compared with the same period a year ago, while the median price of an existing home increased 1.9 percent, CAR reported today. ‘On a regional basis, sales fell an average of 13 percent, while median prices declined in all areas except Los Angeles, the San Francisco Bay Area, and Riverside/San Bernardino,’ said C.A.R. President Colleen Badagliacco.”
“‘The unsold inventory of existing homes jumped to 9.1 months in January, after hovering around the long-run average of 7 months since mid-2006,’ said C.A.R. Chief Economist Leslie Appleton-Young. ‘There was a slight increase in statewide listings last month. The increase in the unsold inventory index was driven primarily by the sales decline.’”
The Record Searchlight. “After a spike in December sales that punctuated a late-year run on homes, Shasta County buyers backed off last month. The lull in transactions resulted in the slowest January in the 13 years DataQuick has tracked Shasta County…a 27 percent drop from January 2006.”
“Home values are down about 12 percent from a year ago. The median sales price paid for a Shasta County home in January, according to DataQuick, was $256,750, down from $293,000 in January 2006.”
“‘I think the sheer volume of buyers is not there,’ said (realtor) Ron Largent in Redding.”
“The decrease in sales in Shasta County in January played out across the state. DataQuick reported six counties in Southern California had their slowest January since 1998. In the San Francisco Bay area, home sales fell for the 24th straight month.”
“Those numbers don’t bode well for a market that has largely depended on Bay Area and Southern California equity refugees and investors. They helped revive Shasta County’s real estate market at the turn of the century, which sent home values rocketing through 2005.”
“The median sales price of a home in Shasta County in 2002 was $152,000. It shot up to $285,000 in 2005, Largent said. ‘We don’t have the investors we had in 2005,’ Largent said.”
The Orange County Register. “California Realtors says Orange County’s median sales price for a detached, single-family homes was $688,610 in January, off 0.6% from December and down 1.5% in a year. Realtors say sales volume is down 14% from a year ago.”
The Record.net. “The number of building permits for the construction of single-family homes in San Joaquin County was down from the previous January, according to the latest figures from the Construction Industry Research Board.”
“The number of permits pulled last month in the county totaled 159, the board reported. That’s the lowest number of single-family home permits pulled in any month as far back as 2000.”
“Rick Baldonado, director of Hanley Wood’s Northern California and Northern Nevada region, said the market slowdown is a correction. ‘Everybody knew you just cannot sustain that kind of growth,’ he said. ‘We’re getting back to the real home buyers now versus speculators, investors.’”
“Baldonado said final numbers aren’t in statewide yet for January, but it looks as if building permit numbers for single-family homes will be up slightly statewide.”
“Most of the January permits pulled, more than 90 percent, were for Stockton, Manteca, Lathrop and unincorporated parts of San Joaquin County, according to the report.”
The Merced Sun Star. “Local housing prices dipped in the last quarter of 2006, but Merced remains one of the least affordable markets nationwide, according to new figures. Merced’s median home price fell to $325,000, down from $363,000 during the same period in 2005. The median price peaked at $376,000 in the second quarter of 2006, according to NAHB statistics.”
“Merced County Association of Realtors President Scott Oliver called the price drop a sign that sellers of older houses are becoming more realistic about the competition they face from new housing inventory.”
“‘The sellers have gotten the message now that they have prices a little high,’ Oliver said. ‘(They) fought reducing their prices for about four to six months.’”
“As new subdivisions remain flooded with empty inventory, builders are offering more and more incentives to sell houses, Oliver said. Price cuts, discounts on landscaping, even free swimming pools are among the perks he’s seen lately, Oliver said.”
“In response, sellers of ‘resale units’ are finally lowering their asking prices, he said. Last month the average sales price for a house within the city of Merced was $310,209, Oliver said. In January 2006, the average sales price for the same area was $379,561.”
There are metro tables at the bottom of the CAR link. Here is the combined Dataquick/CAR page.
‘Compton has continued to experience double-digit percentage gains in home prices from last year despite the market slowdown. The median home price in the city was $407,000 as of December. That’s 13 percent above the $360,000 a year ago, according to the California Association of Realtors.’
‘People are coming back into the core of Los Angeles County looking at older communities,’ Kyser said. ‘Cities like Compton, their reputation may be pretty smudged, but the bones are pretty good. He added, ‘Inglewood, Compton, Huntington Park, Paramount, they’re holding up in what is generally a down market.’
Rich Toscano has a great reply to a recent forum:
‘I thought I’d share a recent hilarious news item from the San Diego Daily Transcript called Forum to explore real estate market. A number of questions spring to mind. Can it really be considered a ’roundtable discussion’ when there are only two participants, both from the same real estate consulting firm, who appear, from their frequent media appearances, to have identically bullish opinions on the housing market?’
‘Does anyone attend this panel, which is paid for by a homebuilder, consists of what may be San Diego’s three highest-profile housing optimists, and is called ‘Why Buy 2007,’ and expect to hear anything other than how much of an idiot they’d be not to buy a home? Is this actually helpful to anyone?’
‘Finally, if Chamberlin wants to spend his weekends hosting sham panels for local homebuilders, I suppose that’s his business — but do the folks at the Transcript truly consider this a legitimately newsworthy event?’
I strongly suspect that George Chamberhead’s recent hissyfit in the NC Times was not really directed at bubble blogs in general but rather specifically at Toscano himself.
George Chamberlin is an idiot. If people actually followed his advise they’d be broke.
I agree. I think his comments were direct and personal. I think Chamberlin is used to being an unquestioned authority who has been able to BS his way around troubles in the past. Toscano is a direct threat to his credibility because Toscano calls Chamberlin on his BS.
It’s harder to peddle BS in the blog era than it used to be…
link please I always enjoy reading perma-bulls hissyfits.
George Chamberlin being a wuss.
http://www.nctimes.com/articles/2005/12/11/business/chamberlin/19_31_2212_10_05.txt
This guy is such a cheerleader for real estate if you hear him on KOGO in the mornings. I also think he is a poor go to guy for Money in the Morning. I wake up today and before the US market opened not one single peep that the China stock market was melting down. It wasn’t until I was on my way to work listening to KPBS did I even hear about it. Had this clown mentioned a 9% drop in China I would have adjusted my portfolio BEFORE going to work, some source of money news.
I want to know the bone head making the programming decisions at KOGO 600? They bring in a sports guy that was run out of town in San Diego long ago Hacksaw Hamilton aka Paul Mahan, then they dump the best part of their morning lineup Paul Harvey news snippet, and then they have this hack George Chambermaid as their money reporter. That whole station is a joke, tune to KPBS if you want legitimate news without some reporter scream “Fuck You, Fuck You, Fuck You” and some female anchor who has to share her personal feelings on each news bit. That station needs some new management and some desk clearing.
What a beating this article got. Just over a year ago. I liked this post from:
Charlie wrote on December 12, 2005 11:27 AM:”The boom is pricing out a generation. Tell someone that is 24 years old that they “should have invested sooner.” And what is the prudent advice now? A reasonable buyer is bringing a knife to a gunfight. How can that person compete for a home against a field of investors and caution-to-the-wind buyers ARM’ed with the latest weapon from the mortgage industry? I understand that homeowners range from amused to egotistical about the values their homes have gained, but perhaps they could sympathize with the plight of their own children.”
I think that pretty much sums up how I feel. And I hope Charlie’s 2005 knife, which just turned into a 2007 saber, will be noticed by the property owners armed with rubber bullets.
Well, the weapon we are bringing to the fight is hunger. Lets see who has money to eat longer.
We don’t have to engage in the gun fight.
Just wait till they starve.
Would you buy real estate advice from this guy?
http://www.kogo.com/cc-common/mlib/670/03/670_1141248230.jpg
Huh, yeah, sure! I would buy real estate from him. He sort of looks like an old Cramer. You can trust him. I feel it.
Roidy
Ben,
I know this is not a stock blog, but lots of us equate the housing market to the stock market. Any possibility of us getting a topic to talk about the market today. I know lots of us would like to ask some questions, as well as get ready for the trading tommorow.
TX, I know you’re having a good day.
The Dow computers were clogged by the rate of sales today. That’s why we saw the prices fall off the cliff at 3PM (in case anyone cares).
Market, Shmarket. I couln’t even find an update on Anna Nicole Smith’s remains today because all of this crap about a recession and a plunging stock market, and subprime meltdown etc. Doesn’t anyone care about the real news anymore?
Did you see that the clowns who own the ANS Bahamas love shack (bought in Oct. for 950K apparently) are listing it now for $10M?
Good luck with that. Maybe the real Howard Stern will buy it. He’s about the only person who can afford it.
Not even Stern can walk into a open house and talk to a realtor. Big No No! Once your that rich and well known, your easy target, especially by realtors. If realtor saw Howard walk in … he say to himself… “Oh I got a rich one, and i will get him for everything he has… im going to use every trick in the book!” And trust me they do!
Best thing the ‘uber rich’ can do is use some undercover agent who has to be super trusted.
That said in my neck of the woods its been said that is what recent Google Millionaires did.
They went in stealth mode ~ Didnt give out names/ contact numbers/ business cards/ employer name.
We should all learn from this in our quest for our own home!
You know Wall Street had a bad day when Anna Nicole Smith’s funeral is not headline news…
I shorted the market today, and I am going to spend the evening picking my targets for tomorrow. I don’t think it likely that today was a head-fake. A 3% drop in a single day generally signals a much larger decline is coming. The next support level is the 200-day moving average, and it is way down there.
I agree, I really doubt it was a headfake. I just heard that the futures for tommorow are sharply down, and that there are tons of trades that did not get executed that are likely going to be traded tommorow.
I don’t know enough about the market to comment really intelligently, and I really don’t care about the stock market imploding as much as housing; but the 2 are linked. Everything is linked to housing, when you come back to it. It’s such a huge driver of so many things in our economy; as it goes (and we all agree it’s going) I expect this kind of behavior from the market.
300 points down tommorow? What’s your guess?
I have to concurr on not caring as much about the stock market except as how its linked to housing.
How much stock was margined to buy investment property? Enough to matter?
300 points tomorrow is reasonable… but once the margin calls start… watch out.
If the market does severely correct, that will impact the price point of the homes just above the level I’m looking at. Bwahaha!
Got popcorn?
Neil
Don’t look now ,but the Nikkei is down 650 as we speak,…Bill Gross on CNBC saying liquidity will be drying up quick…which is why we’re in this housing mess……
Is this the POP in the Bubble ?
Nah…It’s the sound of BB doing it in his shorts.
I shorted this a.m. too for my daily bread and covered. Sold most (75%) of my index puts into that panic down move and will dump the rest of them in the morning if things gap down again. I’m as bearish as the rest of you but today was extreme. Holding the reits and utilities shorts.
I got hit by the friendly driver of the lucky bus today. Bought calls on the VIX last week. It was unreal. Once in a lifetime trade.
Sometimes being a bear is pretty fun.
what’s your take on HBs and Lenders? just curious.
They suck but to me, there are easier shorts out there.
I don’t know… FMT just dropped a bomb after the close that it is delaying its report scheduled for tomorrow and won’t make the Mar1 deadline. Luckily I am short FMT…
Interesting gyrations on Shanghai… + 1.3 % in the red. (In the red is up on the chinese yahoo site
) Would like to see if the recovery continues, but if I don’t cut away from this terminal I’m going to stay up all night with it…
Was it txchick that wanted volitility? You got it. Hey and congrats to Bonk above too. Hope it was a nice big fish and that you’re buying the first round…
Yeah, same here. I almost coughed up some precious pale ale when I saw they weren’t going to report on time:)
TX, why the utilities?
Cramer is an idiot. He is giving out a message that this was a machine failure, not a market problem.
Oh come on. The only thing that the machine failure did was prevent the orders from being executed. He is truly an idiot. Does this guy ever tell us to sell; or that the stock market is, in general, awash in crazy liqudity, overpriced?
What’s up with Gold?
My favorite line was how the Fed needs to slash the interest rates so all those underpriviledged and poor people can get loans……….WTF!!!!!!!
Poor people aren’t suppose to get loans…duh, THEY’RE POOR!!!!!!!!!!!
IMO, Gold will get a big bump tomorrow. GLD.
I disagree. I’m going on a buying spree for the next few days. MO, AMD, GG, DO, and JPM are dirt cheap right now.
Selling all my RSH to finance it.
I just got back from Wall St. I expected to see some bodies but there weren’t any. Hey, you New York guys, what do you know about the Bull Run? It looks nice but expensive.
Sorry for the O.T. but I thought the body report was important.
DOW 20,000 by 2010.
I thought it was 30,000?
36000. Glassman & Hassett already wrote a book about it a few years ago. drentzel is late to the party, I’m afraid.
“‘Cities like Compton, their reputation may be pretty smudged, but the bones are pretty good. He added, ‘Inglewood, Compton, Huntington Park, Paramount, they’re holding up in what is generally a down market.’”
This is a repetition of what has happened in all bubble markets. As the starter home market disappeared in the more desirable locations, the first time buyers, as well as speculators, flocked to the poorest areas, hoping to grab anything before they were “priced out forever”. This contributes greatly to the price compression many areas are seeing right now. A complete POS sells easily for $300k, while the $500k+ market is dead in the water. When this whole thing shakes out, those paying $400k+ in areas like Compton are going to realize they made the worst real estate decision imaginable. Location, location, location, cannot be emphasized enough.
Does anyone else here think that the “anomily” of a COMPTON going up, while a Merced is going down REEKS of fraud?
I shudder to think of how many of the unlicensed mortgage originators are operating in those areas.
You can put Oakland, CA next to Compton. Median income is 40K & houses selling for 500K. Which GF will buy from current bag holder.
Compton up 13% YOY because it has “good bones?!?!?” Right! The taxpayer is getting boned by these areas that are rife with cash back mortgage fraud. I wonder if mortgage fraud in scummy areas has become so widespread that it can explain the statewide price appreciation. Nice areas, where lending standards might apply, are dropping like a rock.
Compton is good because it has good bones and good Bloods
The appraisers are afraid of the area, so they rubber stamp any deal.
test
Compton will win this downhill marathon in the end - count on it.
What was interesting about today was everything plunged - Dollar, Equities & Gold along with all the other metals. Gold got clobbered. I’m not a gold bug, thankfully.
no flight to quality, just flight…
careuful, where you “put” your money tomorrow…
the cat bounces, and shakes out the bottom feeders
I think that’s likely too but we’ll see.
Gold is perhaps the most manipulated and illogical of short-term markets. I would never try to time gold. If you want to buy gold, you need to think of it as a long-term insurance policy against paper currencies that lose their purchasing power over time.
Question: Which has performed better since the Oct 2002 stock market lows, gold or the S&P 500
Answer: Gold by a large margin.
“Does anyone else here think that the “anomily” of a COMPTON going up, while a Merced is going down REEKS of fraud”
Simple explanation;Hispanic immigrant buyers overpaying on fraudulently overappraised POS crackshacks using toxic loans to pay the lowest min pmt to obtain the largest house for the money, or any size home. The Valuation-in many cases fraudulent- placed on aging 60-80 yr old pre-WWII 800 sq ft outhouses in crummy gang-infested hood areas of LA is mind-boogling. Plenty of examples all over LA of 2/1′, 700-800 sq fts on 3000 lots going for $450,000-$500,000 especially last two years.
I origially thought there was massive fraud in the inner LA hoods but after closely scrutinizing freclosure.com and sales in LA hood areas on zillow i have concluded that the majority of immigrant mostly hispanic buyers simply overpaid on LA POS properties using no down, min pay otion teaser loans, and many of these will default in 2007-2008 with the subprime meltdown/ARM resets.
BY late spring/summer 2007 expect dataquck to show real negYOY % of -10 % or more in these inner LA hood zips along with record default/foreclosures.
“Cities like Compton, their reputation may be pretty smudged, but the bones are pretty good. He added, ‘Inglewood, Compton, Huntington Park, Paramount, they’re holding up in what is generally a down market.’”
I have closely tracked foreclosures and defaults in some of the inner city areas of LA. What pops out are the huge numbers of hispanic immigrants who have been paying $400,000-$600,000 for 40-60 yr old aging sfh’s in such aging declining burgs as the above mentioned areas plus such places as Pacoima,Central/north Long Beach,Norwalk, Whittier,Wilmington,Belflower, Southgate,Bell, ect.
These recent entrants to the LA bubble brought into the REIC spin and are as ignorant of fundamental RE economic cycles as your average Joe6citizen. What is happening now is that many of these immigrant hispanic purchasers quickly got in over their heads with the toxic loans enabling them to buy all those 1/2’s/2/2’s’3/2’s or larger homes, and are going into default.
The default loan amts are staggering: average $400,000 in the compton/Scentral LA zips and $500-600,000 in the slightly better outlying burgs such as Long Beach, east SFValley,ect. And virtually all the names on the defaults are Hispanic.
Also, quite a few of the defaults are on duplexes, tri’s, quads for loans of average $700,000. And these are 60-100 yr old decaying multi-unit motel shacks in crummy LA Hood zones.
Projection:there will be a veritable flood of foreclosures upcoming in the inner LA burgs from defaulting Hispanic as well as other folks. Not a few of these defaults were outright mort fraud. Already seen a few which pop out, EG the $900.000 default on a 3/2 1200 sq ft POS in LB 90810 or a $650,000 on a 2/1 550 sqft in Pacoima, which seems to be a hot spot for Mort overappraisal Fraud.
I see someone has his ear to the ground
And then watch them all backover the border when there are no manu or contracting jobs. So the lenders will be left holding the bag on that one.
“And then watch them all backover the border when there are no manu or contracting jobs. So the lenders will be left holding the bag on that one”
Who gets screwed over more ? The immigrant Hispanic who walks out or the Bagholder? Ever try to mail a 1099 to an immigrant who frequently shifts addresses and /or can simply take an extended’vacation’back to his home country. And come back across with changed iD and doc’s. And having a ruined credit record for a few years? that is a big joke! These folks almost never use credit cards, and can get by well in a cash-only economy such as flourishes in the LA underground economy. They can feed a family on $10.00 worth of beans and tortillas for a week, and can buy and fix up junk salvage autos for several hundred dollars.
No, the Lenders and bagholders will eat this crap, the immmigrant simply walks away scott free. Muy Malo(very bad!).
As they should.
I can assure you people paying 2-3M in Palo Alto is no better.
LOL! some people dont recall homes went from 300K to 400K in 1988 and then down and up then google to 2-3M…
But its the same home… nothing fancy… 60 year old mold…
YOU ARE SO RIGHT…. My Hubby and I were just talking about that last night. I use to live in Downey…. Now I am in Folsom. For the life of me… I can’t get over people moving into HOOD! This is just crazy…. no matter how cheap you can get a home there or how expensive things get…. I would not live in the HOOD with the HOOD RATS. Pull out of your drive-way in the morning to go to work, get car-jacked, punched & thrown into your drive-way strewn with needles and used condoms…. Hell NO! I rather rent in a good neighborhood the rest of my life….
“‘Cities like Compton, their reputation may be pretty smudged, but the bones are pretty good.”
Heres some quotes from the LB press telegram article, which i must counter:
” COMPTON - Thanks to rising home prices Compton is getting its first Best Buy, and its first Jamba Juice, MarsIn referring to Compton’s “bones” Kyser meant easy access and good location, as well as space to build.”
Rising Home prices has nothing to do with it! Willowbrook district put a shopping ctr up 15 yrs ago at alameda and Compton blvd and included circuit city among its tenants. Didn’t alter the hood one bit: the same gang bangers just had more affluent tenants to rob.
Another shopping ctr has been in existence in the really gang-crime infested corner of Wilmington blvd and imperial blvd(willowbrook/watts) since the 80’s. No difference.
“Compton is surrounded by five freeways, which outline the city’s general boundaries. The city is also located on the Alameda Corridor, a transportation hub for moving goods from the ports…”
Actally 4 freeways: the 110, 710,91, and 105 which enclose some of the nastiest gang-infested slums in america. To concede a point: Alameda railway corridor has seen some revitalization as warehouse/light industrial corporations have located there to take advantage of the rail line and abundant cheap labor. That may be a small factor in the supposed compton housing bubble, but the jobs pay sweatshop wages and will not support Compton $400,000 prices.
I could blow more holes in that article but the hour grows late and It is not worth the effort expended to dismantle an article from someone who does not know s*it about Compton nor the real reasons Housing has gone up so much in Compton, and why it will come down equally hard.
Probably already posted, but here’s a Freddie Mac article from the Wa Post:
http://www.washingtonpost.com/wp-dyn/content/article/2007/02/27/AR2007022700593.html
From today’s Daily Reckoning:
—————————–
“U.S. mortgage crisis goes into meltdown”, screams a headline in the
London Telegraph.
“Panic has begun to sweep the sub-prime mortgage sector in the United
States after the bankruptcy of 22 lenders over the past two months,
setting off mass liquidation of housing loans packaged as securities.
“The rapid deterioration could not come at a worse time for British bank
HSBC, which has set aside $10.5bn (£5.4bn) to cover bad loans in the
[United States].
“The cost of insuring against default on these loans has rocketed in
recent weeks, from 50 basis points over Libor to 1,200, raising fears that
a credit crunch could spread to the rest of the property market.”
The Telegraph went on to quote Peter Schiff, head of Euro Pacific Capital,
who said that the mortgage industry is in an “unstoppable meltdown.”
“‘It’s a self-perpetuating spiral: As sub-prime companies tighten lending
they create even more defaults,’ he said.”
And from Ohio comes news of an “epidemic” of foreclosures.
So far, 20 companies in the sub-prime lending business have melted down.
ResMAE, for example, turned into a blob last week. It filed for bankruptcy
less than a year after management cut the ribbon on its new headquarters.
The company was making so much money, and expecting to make so much more,
that it built a lavish building, fit for a staff twice or thrice as large
as the 497 employees it had.
Those were flush times for the lending business. There seemed to be no
credit risk not worth taking. But what happened?
Our Law of Stupidity tells us that useful information declines by the
square of the distance from the source. As the lending business became
more and more “sophisticated”, lenders and borrowers took leave of each
other. Finally, they forgot they’d ever met. The Economist explains:
“Banks are traditionally supposed to know a bit about the borrowers on
their books. But in many cases, their loans did not stay on their books
long enough for them to care. Mortgages were written for a fee, sold to
investment banks for a fee, then packaged and floated for another fee. At
each link in the chain, the fees mattered more than the quality of the
loans, which could always be passed on.”
“For now, though, the Federal Reserve believes the damage can be
contained,” reports the Telegraph…so not to worry, dear reader. “‘I
don’t think there’ll be a large impact on prime mortgages from the
sub-prime market,’ said [Fed] governor Susan Schmidt Bies.”
But, she did admit that there was a “hidden” problem - sellers were
pulling their property off the market, and leaving behind a lot of empty
houses…and very soft property prices for a very long time.
Meanwhile, Nouriel Roubini (a professor of economics at NYU), thinks all
this softness will push the whole nation into recession. As many as
600,000 jobs are being lost…as former real estate agents and
ex-nail-bangers look for work. But what are they going to do? Get a job in
Detroit? Go down to Nicaragua? Well, actually…but, more on that later.
[Ed. Note: How exactly the bursting of the real estate bubble will effect
the American economy is still unclear - but we’re willing to bet the
outlook is not too good. To find out what you can do to protect yourself
And they said it would not be or could not be ….
” Blood on the streets of Paris tonite ”
OH MY! First blood! This is just a trickle my friends!
Imagine someone paying $407k to live in bullet riddled Compton. I can’t wait to see how this price changes when the new rules are imposed for subprimes, although it won’t be until September (spineless wimps). No, let’s let thousands of people continue to set themselves up for financial ruin in the meantime.
“they’re holding up in what is generally a down market.’
Other things they are holding up….
the super market, the liquer store, the cab driver…
This thing is now unwinding so fast it’s almost scary. The real estate market will surely be in a severe crash by this summer. This poses a real serious question. What are all of us losers going to do when we no longer need Ben and his blog? Am I supposed to pay attention to my work or actually talk to my wife? Ben, please help.
Ben has a Metals blog and a Foreclosure Blog. The Foreclosure Blog should keep one busy for quite some time.
Ben will have a Blog…. Who got the best deal in housing Blog…. it will be a blog to see who got the best per SQ FT price…. who screwed the lender the best in a foreclosure(the difference amount in the orginal loan & your new loan)hehehe.
I think Ben ought to continue this as a financial blog — indefinitely. There’s a tremendous wealth of knowledge and experience on this blog, and real estate is just one of the interesting topics discussed here.
Cities like Compton, their reputation may be pretty smudged, but the bones are pretty good.
“Pretty smudged”! Hahahahahahahaha, you must be kidding. Compton has one of the worst reputations on planet earth! $407k, for f*ck’s sake, just a few years ago you could have bought in West LA for that price.
“‘I think the sheer volume of buyers is not there,’ said (realtor) Ron Largent in Redding.”
cutting-edge thinking here.
I think the sheer volume of funny-money is not there,
I said to my cousin in Malibu yesterday. She and her husband have done well for a decade in their rehab/flip modus operandi. I was horrified last summer when they bought another house before selling the previous one. They were lucky, and the closing on the old house went through. However, to make it all work, they’d taken a bridge loan from her mother-in-law, a wealthy celebrity. Now, they’d like to get the mother-in-law’s name off the new mortgage so that they can re-finance and spend more $$$ on the remodeling. She says the money they have will enable them to hang onto this $2M POS for about two years. I told her I thought the market would stabilize within two years. What I didn’t say was, that it might stabilize at a much lower price level. In the meantime, good luck getting Mrs. Gotrocks’s name off of the mortgage !
I know a couple of neighbors who bought another house before selling the previous one. The previous house was listed last September. Yesterday, I noticed that the For Sale sign was still posted out front.
I’m now thinking that this particular house will be on the rental market by April 1 - no fooling. Reasoning: My now-former neighbors will become landlords “until the market improves.”
However, this house is in mid-Tucson near the University of Arizona. And, come April, the students are preparing to leave town for the summer. Which means that those now-former neighbors will be hard-pressed to find a tenant before August.
Ouch.
” median prices declined in all areas except Los Angeles, the San Francisco Bay Area, and Riverside/San Bernardino,’ said C.A.R. President Colleen Badagliacco.
This sucks.
It is a good sign that it is much quicker to list the areas that didn’t fall, IMO.
Unless you happen to live in one of them!
Yeah, but it doesn’t help those of us that have been waiting in those areas. It’s a joke.
I’ve even been looking at renting a house to hunker down a while and the open houses for rentals rival those for sales a few years ago. Over 12 people were stuffed in this place in just the 5 minutes I was there. People were filling out applications on the wall. And mind you this was an OK $2500 house that was only 1100 sq. ft…in an OK area. $30K a year for rent seems really high for a POS house, but nobody there was even blinking.
Hmmm…$30k is 20% of $150k annual gross income. Since not too many people earn that much in the US, I’m curious to know how renters, with such high ratios, manage to have money left for everything else (i.e., emergency fund, save for 20% downpayment, max retirement accounts, buy cars, have children, pay for skyrocketing tuition, afford health care insurance for the entire family, pay down revolving credit accounts, etc). It surprises me when renters don’t take into consideration the percentage of annual rent X annual gross income. I never rented anything above 20% annual gross income.
Both the DH and I are actually able to max out our 401k contributions thanks to renting. We have some savings and money staggered in CDs as well. Thanks to all the advice from people here, investments have been moved out of stocks and into bonds and T bills - phew.
Most renters in L.A. County spend close to half their income in rent, if the L.A. Times is to be believed. So they don’t save for retirement or anything else. I had a friend making 120k per year who lost his job and went bk; he had zilch savings as he spent his money on rent and car payment and lived on credit cards to keep up his image at work. People here do that all the time - half the BMW’s are leased by people making less than what the car cost.
I never rented anything above 20% annual gross income.
Really so someone making $50k per year should only rent in the $800 per month range? Yeah right
Exactly my point. Once people start paying attention to ratios and stop jumping on any rental that could be accommodated in their already stretched salary, rents would get a lot cheaper. Especially now when the realtwhores are trying to make money with rentals, since nothing is selling. I’m also a renter by choice, but I always keep those guidelines in check.
If you want to get ahead financially, yes.
About the BMWs in LA. I heard from a consultant friend who had an automotive related gig that more than 75% of BMW “sales” in the LA market are actually leases. Not surprising at all. Am I the only person who actually purchased their car?
I’m in Sacramento so my mileage varies but we only rent at 24% of net (not counting the 401k money we stick away each month).
I wouldn’t be caught dead in LA, even if you paid me to live there again. It’s not worth the cost - hell most of CA isn’t worth it.
11.9% of gross
TO: Not Missing It
Have you never heard of sharing space? True enough it’s hard to find rents in the $800 range. But even grown-ups can share apts or houses, no?
Me = 11 or 12% of gross, maybe 15% of net
Me and wife = 12% of gross
Me and spouse…6% of gross, which is why we are looking to step it up a bit. If we are going to wait out the market, we need to at least live closer to our means, which increased exponentially over the past few years.
We’re contributing the max $30K a year to 401K, front loaded our child’s 529 and already have the 20% saved. We are ready whenever the POS sellers get a clue.
Some FPs suggest 25% of gross, but I shoot lower because rent is not tax deductible. To compensate, renters following this guideline can invest the extra 5% to lower AGI, thus increasing tax-savings.
Got most of you beat in this regard:
spending 4% of Gross, 6% of Net Household income (not including bonuses) on housing. One of the few benefits of owner-occupied mulitfamilies…
The good areas will fall. It will just take a little longer. The arbitrage effect will drag them down as surrounding markets implode. As fringe markets drop, people will stop buying homes in good areas and head for the bargains. Eventually some people in the good areas will have to sell, and the market will then head down. Foreclosures will make this all happen faster than last time.
Right. The old saying is that, “the weakest fall first.” But all will fall, to be sure.
IrvineRenter, I guess you could also make the case that those who can buy will start nosing around in the pricier markets. I am beginning to look at better zipcodes and wrinkle my nose at some areas that I would have considered last year.
That too would be a natural reaction.
” median prices declined in all areas except Los Angeles, the San Francisco Bay Area, and Riverside/San Bernardino,’ said C.A.R. President Colleen Badagliacco”
Lets look at some of the cities in LA according to CAR Data which showed positive yoy:
Carson $532,000.00 $471,000.00 13.0%
Mostly middle class prosperous racially diversified community,close to south bay, LA dwtn and westside. Carson has had a longtime policy of excluding affordable housing units so that majority of units are Large SFH’s. Scattered
rough pockets here and there: Longtime corruption in city administration.
Lynwood $462,500.00 $412,000.00 12.3%
80% recent hispanic Immigrant population:deteriorated older suburb, lots of 60-80 yr old clapshacks, right off the grimy gritty 710(long beach) fwy corridor. Heavy immigrant-impacted area bordering Compton.
South Gate $472,000.00 $422,000.00 11.8%
Exactly like Lynwood, maybe worse.
Sun Valley $565,500.00 $515,000.00 9.8%
Illegal -alien impacted area next to Pacoima;gritty older industrial area, lots of sweatshops, a real LA nasty pit.
South LA $430,000.00 $400,000.00 7.5%
Take the test: go south from LADWTN along 110(harbor)fwy, exit slauson or florence and go any direction about 2=3 miles. Looks a lot like tijuana! Ay-ay-ay!
Actually the Car list shows that some LA slimeburbs such as Baldwin Park, bellflower,azuza,el monte,Hawthorne,inglewood, Norwalk, Pomona and San fernando are finally showing their true colors with negative or only miniscue 1-3% yoy’s. The LA ghetto is rearing it’s ugly head as the RE bubble pops.
Dow off over 400 points. Do you think Wall Street finally got the memo on the economy?
Anyone else short the market today?
We are entering a bear market. Housing correct in California is going to happen in end of 07′ all the way to 2010. Greenspan final wakes up…….Recession is going to be on it’s way….CASH will be king….
Try, GOLD will be king, cash is losing it’s relative value - REALLY FAST.
Gold went down today while my cash got 5%
Cash was king today at least
If they are paying 5% it’s probably not cash.
Gold and other commodities may or may not do well. I suspect not. All asset classes are inflated right now. Cash and its equivalents will outperform in the medium term.
Where do you think this money that is vanishing is going? It is credit, and it was your money in the bank that was lent out. It is no more complicated then that, but apparently people have a very difficult time understanding fractional reserve lending. They are paying you interest, because they loaned most of it out. If they didn’t, they couldn’t pay you any interest. They’d be charging you to store it. Think about it.
Cash will be king, if you have it in a bank that stays solvent.
The problem you described is why they came up with the FDIC. Bank money is safe.
FDIC operates on the same principal. Do you think they just sit on trillions of dollars earning no interest? Do you think any insurance company sits on all your premiums? No, they do not. They LOAN “your” premiums out, to the same non-credit worthy people buying these homes that you “know” are overpriced.
This thing has gotten so out of control, the insurance companies in the Gulf Coast will look solid compared to the FDIC. For your own good, I hope you haven’t based your entire financial future on the FDIC bailout. If the rest of the world even gets a hint that the FDIC debt is being monetized by the Fed or gov’t, the Federal Reserve’s Notes, our national currency, will be taken to the woodshed.
The most important thing you need to know about Federal Reserve Notes is that the IRS will always accept them on 4/15.
That is their alpha & omega of existence. Everything else is commentary.
FDIC puts away cash into the T’s and other benchmark securities, not giving credit cards and ARMs. Doing otherwise would not make any sense at all in hedging risks.
Gold is down $20 or 3 % in asia this afternoon . Check kitco .com
You meant to say PAPER gold is down in NY access market.
Shorting paper gold is the habbit of the PPT while elevating the DOW back from -515 to -370..
cash is losing it’s relative value - REALLY FAST
If things (i.e. stocks, housing) are getting cheaper then cash is gaining value.
What does “value” mean to you anyway?
Shouldn’t that be Greenscam??
Very nice, very nice. Dow off 416 at the close. Cash may not keep up with gold, but as long as cash beats RE and stocks, we all have some chance at owning a house in the future.
Watch the NAR use the markets today as an example of why real property is such a great investment…..
“Better buy now before all that money that flowed out of RE in 2006, heads back in search of the safe haven of real property - driving prices up once again”.
“‘Compton has continued to experience double-digit percentage gains in home prices from last year despite the market slowdown. The median home price in the city was $407,000 as of December. That’s 13 percent above the $360,000 a year ago, according to the California Association of Realtors.’
‘People are coming back into the core of Los Angeles County looking at older communities,’ Kyser said. ‘Cities like Compton, their reputation may be pretty smudged, but the bones are pretty good. He added, ‘Inglewood, Compton, Huntington Park, Paramount, they’re holding up in what is generally a down market.’”
The gangs stopped selling drugs long enough to commit some mortgage fraud. Must be easier money.
You can flip a house for 50k - 100k or scam a bank for 100k-200k in less than a month. How much drugs must you sell to get that kind of dough?
I saw an episode of flip this or that house or whatever, and it documented a south central LA flip. It was a hispanic mortgage broker who did a cheap remodel, then shoehorned some hispanic FB’s into the place. I wish I had the address to check it out because the place is probably bank owned already.
ROTFL, I saw that one too. It was a POS box, full of bars on the windows.
I think I saw that one too. Was that the one where the flipper kept saying that he did it all to “help” people become “owners”. Oh, how altruistic of him…
He bought the POS for $265,000 and slapped a $425,000 price tag on it. He joked about how it was in Watts. Then the prick tried to act like he was Mother Theresa.
People forget that the people that look most like them are most likely to screw them. That goes for all races.
You are right about that one…
No self-respecting crack dealer would ever stoop so low as to become a realtor.
LOL!
“Cities like Compton, their reputation may be pretty smudged, but the bones are pretty good.”
There is a saying “the fish Stinks from the head”. I once went inside Compton City hall on business. No Guard or security inside lobby, no receptionists desk nor security screen. I was able to walk upstairs directly into the city attorneys office.
Compton has long had the most corrupt city and police dept in all of Cal. They finally disbanded the compton PD and had the county sheriffs take over. The former mayor Omar Bradley was an out and out crook and con man, and the compton school district went into receivership and was taken over by the state.
A city and community is only as good as the city administration. You can spot a well-run community by the quality and effectiveness of it’s city bureaus and PD. Some well run city administrations include Pasadena,Glendale,Huntington Beach,ManHatten Beach,Tustin, Irvine,Cerritos,La Mirada,Placentia, Culver city and Beverly hills, which is by no means an inclusive list.
I don’t know if this got buried under the stock market news, but Freddie announced that it will not buy subprime loans unless the borrower would otherwise qualify for conventional financing - in which case, why would they be subprime? I think it’s big news.
http://www.housingwire.com/2007/02/27/freddie-to-tighten-belt-on-subprime-loan-purchases/
yeah, I am interested in learning more about this too. Can anyone better explain what the impact of this new guideline may be on subprimes and housing market in general.
But… but… but! I thought Freddie was NOT SUPPOSED to buy subprime loans in the first place.
At least that’s what we were told, wink wink
That’s how it used to be. You used to have to qualify for the full payment to get the benefit of the lesser payment. It’s old school and as it should be….but I don’t believe they’ll enforce it for a second. It’d be great…but they won’t do it IMO. It’d be the deciding factor of the housing market entering a death spiral.
Oregon in recession?
Housing malaise infects other sectors
Oregon jobs - Joblessness drops slightly, but a six-month economic slowdown is expected to continue
http://www.oregonlive.com/business/oregonian/index.ssf?/base/business/1172550307133770.xml&coll=7
“…the department’s reports offered evidence that the state’s once-sizzling economy is in a now six-month-old cooling period that economists expect to last for a while.”
“Oregon employment officials said Monday that nonfarm employment grew last month by 500 jobs when adjusted to account for seasonal variation, with weaknesses continuing in housing-dependent manufacturing, construction, banking and real-estate sectors.”
“The most consistent declines occurred in manufacturing, which lost 400 jobs last month and has lost 5,000 since August. The sector’s biggest cuts have come in wood-products manufacturing, where total employment fell to 30,200, its lowest level in decades…”
Have a friend who is a lawyer in Portland, Oregon area. He said he is getting a lot of sob stories about why his clients cannot pay their bills.
I told him to say it like a rapper would:
“My mind is on my money and my money is on my mind. Now where is my damn money”
“…once-sizzling economy…”
The only economy that was sizzling was real-estate. Uh-oh.
You guys got any openings down there? I’m real good with numbers.
I love that Pearl District in Portland. Wish that would get real.
I assume that you mean you “love” the Pearl District?
Too bad the rest of us in PDX subsidize that area through tax abatements. Lots of wannabes in 3-series BMWs. Oh, and Boomers in 7-series…
No, I like those condos there. Very nice. Too bad I can’t afford one.
Txchick - sure you can. The property tax is less than 1%. But I’d wait… we seem to be running about 6 mo behind the rest of the country. There are many other nice areas of PDX besides the Pearl. I live on five acres 45 min. from downtown, myself.
Portland’s never been a place to get rich unless you are extremely inventive or can do business nationwide.
Fear not, txchick. There are currently over 800 condos for sale in Portland’s core right now, with more coming online.
Heck, out of the three towers called “The Strand”, two are pitch black and the third has maybe 10% of lights on when I drive past it at night.
An interesting side note: rumor has it that the whole Pearl vs. waterfront development was planned all along such that the “inland” Pearl District would be developed first and then the waterfront. Thinking was, that if they developed the waterfront first, no one would want to buy in the Pearl. So you see, you might be able to afford the Pearl soon enough!
tha economyz in sizzle
now for shizzle
don’t be a shisty bitch
and gimme some scrizzle
or I’ll hit my chrome
and the cap will whizzle
so yo punk ass be smoked
for that mortgage bizniz
I suddenly feel very old.
I don’t see a lot of freaking out. The wood products biz has been down for some time now. FIRE is flat because the refi booms are done. But outside of Bend and Ashland/Medford, we haven’t had the big boom the rest of the nation had. Our economy runs late - we go down farther, then rebound higher.
We had high-tech to supplant wood products during the last down cycle.
Are all the new Linux developers gonna save us this time?
I don’t see a lot of freaking out. The wood products biz has been down for some time now. FIRE is flat because the refi booms are done. But outside of Bend and Ashland/Medford, we haven’t had the big boom the rest of the nation had. Our economy runs late - we go down farther, then rebound higher.
I heard that Californians are invading Bend and changing everything. The city had to build a bunch of new schools to support the crazy inflow. There goes the neighborhood.
Interesting. Bend must be getting the young and and fertile. We keep getting the old and childless here in Ashland. Had to close two out of our five schools because the families were squeezed out by geriatric Californians.
“‘The unsold inventory of existing homes jumped to 9.1 months in January, after hovering around the long-run average of 7 months since mid-2006,’ said C.A.R. Chief Economist Leslie Appleton-Young.”
Massive inventory buildup is a real problem. How do you spin that?
“‘There was a slight increase in statewide listings last month. The increase in the unsold inventory index was driven primarily by the sales decline.’”
Oh, I feel better now…
Watch this weekend and the following week for inventory blow-up. Last year March 1st was big, and I expect that this March will dwarf it. With most inventory numbers hovering around last years highs, it should get out of hand real fast. At that point there will be no way to put a positive spin on the market.
I am SO seeing that.
I’ve been tracking the “withdrawn” listings since January…
a tremendous amount…and they are starting to re-list in rapidly increasing numbers. IMO, they thought or were told in in the fall/early winter to take their house off the market until spring, but the alarms are going off and it’s a rush to re-list.
“IMO, they thought or were told in in the fall/early winter to take their house off the market until spring, but the alarms are going off and it’s a rush to re-list.”
I believe this. My realtor friend has confirmed several properties I’ve been watching in my old ‘hood have done this.
Thanks for that concrete prediction, nnv. We’ll try to remember to congratulate you if it plays out.
nnvmtgbrkr: my feeling too. March, April, May feelings will shift from hope, to disappointment to anger!
Actually, LAY did try to spin the numbers. Since when does Mid-2006 constitute a “long-term average”? That is not even one full year! Had she used a longer period of time (like the past few years) that unsold inventory average of 7 months is lots lower! Then that jump to 9.1 months in January really stands out!
What happens tomorrow when revised GDP comes out? If it comes in worse than expected, look out below.
I think this will be a roller-coaster week no matter what.
There was a lot of talk today on CNBC about the subprime mess, so I think they are starting to face the elephant in the room.
Re: Shasta:”Those numbers don’t bode well for a market that has largely depended on Bay Area and Southern California equity refugees and investors.
I’m assuming this statement also covers most of AZ, FL, NV, parts of Idaho, Oregon, etc. And it sure didn’t take long for Shasta to crater. They must not be “different” though.
Shasta is not “special”.
Sure it is. Redding is the hottest place in the West U.S. outside of low deserts of CA and AZ. I recall sending a some workers down there a few years back and the temp. was over 115 f for the whole work week! Hotter than a Siamese Brothel!
Mt. Shasta City is special, but you’d have to commute to Redding - and do what, exactly? Work at the Wal*Mart distribution center?
What about Weed?
I love that name!! Cave Junction, Oregon should change their name to that.
As the selloff gets underway watch how the pollyanna outlook changes in a hurry. Suddenly everyone will focus on all the negatives: sub-prime is melting down and it may spill over into the housing market, GDP growth is slowing, Greenspan warns of a recession, the market hasn’t had a 10% correction in more than 4 years, etc. These guys go with whatever trend is at hand. If it is good, it will be good forever; if it is bad, it will get worse. Since markets trend most of the time, they are right most of the time. They just miss all the important reversals.
Is a 12% drop after a 100% run up cratering? I am waiting for 30%+ haircut. We’ll see.
Im at 50% drop! We had a 300-400% run up in less than 10 years. Thats in the most priciest part of California…
From Menlo Park to Gilroy… I think SF City will get equally hit.
Never in the history or RE of California did North California become more expensive than Southern California. Yes Santa Barbara, Malibu, etc is far better place to live if you can burn $1M. It never made sense for someone to blow $1M on a 50yr 1500 sq rancher in Cupertino.
Never in the history or RE of California did North California become more expensive than Southern California.
What? Hasn’t the Bay Area been far more expensive than SoCal since at least 1990, probably longer?
LOL! Beverly Hills Malibu Santa Barbara Newport Hollywood Hills where movie tv rock stars ex ex are spent big bucks in the past.
It should be no brainer…not even in 1990 it was more recent since 2001-02.
The Bay Area has always been the most expensive place in Cali since I can remember…
I think Louie picked the wrong week to stop sniffing glue…(sorry, old “Airplane” line)
LOL! Come on … Hollywood hot shots were making mansion in Bel Aire and rest of SoCal from the 1920′ to the present. You go to Palo Alto which sell for 1-2M that are dinky 50 years old shacks. Look at any RE site for that. No brainer!
The mansions in Bel-Air are no more representative of SoCal than those in Pacific Heights are of the Bay Area.
Compare the median house in SoCal with the median house in the Bay Area, and I would be surprised if the former has ever cost more than the latter during my 38 year lifetime.
Anyone care to take a guess on when the Salt Lake market will start to decline. Gee maybe it really is different here..
In the past 15 years or so, from what I have been told and seen myself, greater SLC market has appearted to be countercyclical to California.
It went screaming up in the early-mid 90’s (dead in CA) and flat in the mid ’00’s (I don’t have to tell what CA was doing then, do I?).
Maybe the downturn in CA will come faster and bigger than ever before and that will halt SLC price growth sooner, rather than later?
Just a guess.
I’m interested in seeing when the market there will start turning, mostly because a couple of friends are drinking lots of koolaid and buying soon. I think two big differences between this run up and the last would be the increase of HELOC opportunities there and the increased level of speculation going on, locally and from the coastal markets.
Inventory is up, but foreclosures are down lately. It’s going to be awhile, imho, before people realize that the market isn’t immune. Just my 2 cents.
“After a spike in December sales that punctuated a late-year run on homes, Shasta County buyers backed off last month. The lull in transactions resulted in the slowest January in the 13 years DataQuick has tracked Shasta County…a 27 percent drop from January 2006.”
I traveled through there in November, staying the night, and perused the listings over breakfast one morning. The prices were simply mind blowing. An area with a greater disconnect from local wages would be hard to find. Pain is on the horizon for that place.
BB how did your low-ball on the 5 acres work out?
Looks like a no go.
On a side note, had a lengthy, detailed conversation with my lender yesterday. Bottom line, bad news for sellers. She said they are really cranking down tight now. Appraisals are getting way more stingy. It’s curtains for this market.
That’s what the mortgage broker told me last week too. He expects it to tighten up, for instance, a subprime no-doc loan will need a 640 FICO and 5% down shortly.
“for instance, a subprime no-doc loan will need a 640 FICO and 5% down shortly.”
These terms would still be loose lunacy.
Well, I guess that’ll be a start.
These terms would still be loose lunacy.
No kidding, in this market a house can drop 5% in a month or two. And a 640 FICO is pretty poor IMHO. I wouldn’t want to rent to such a person, let alone hand them a $600k mortgage.
5% is still 30k cash. How many buyers have any cash to bring to the table ?
Yeah, BB…..inquiring minds want to know!
No pleasure, my friend, pleasure..
These prices have been sickening for all who live in the area. Once the infestors dry up and blow away and prices relax to some sane ratio with wages, we can have our towns back…
We traveled this summer pretty much all around the country, and prices were being driven up by investors/second home buyers. From Silver City, NM all the way up to Saranac Lake, NY the story was the same. Poor saps being forced to move elsewhere, but unfortunately, much of ‘elsewhere’ was also horribly overpriced.
Call me a cynic, but I look forward to the correction - in both RE and equity - to more realistic levels. The greater the better.
BB, i wanted to test your assertion about Shasta County’s showing the greatest disconnect from local wages. In SLO county, the recent median house price is 14.5 times the annual wage. I was able to find $35K the annual wage in Shasta County (about 8% below SLO Cty), but was frustrated to look through dqnews CA city chart without finding Shasta County at all . ???
I should have been more specific, as I meant Lake Shasta City. Redding prices are obviously much cheaper than say SLO, but up in the mountains of Shasta Co., boy. It’s one of those second home specuvesto markets mixed with low income locals. But it’s no Tahoe, or Almanor, or Shaver, etc. Stupid prices for what you get.
Isn’t Mt. Shasta a freaking volcano?
Yep, same with Mt. Rainier is Washington.
There’s something odd about the January Realtor Sales results. It shows Woodland Hills (an area I know very well) as increasing by 35%. This is not the case. Inventory is piling up and nothing is moving unless it is heavily discounted. Also there are some other extreme movements that seem very odd for the SFV.
How many sales were there this January, and how many sales were there last January? The median price means nothing if there are only a few sales.
You are correct. My sister lives in WHills and watches this market very closely via ZipRealty. She says the inventory is at a record high since she has been watching (2 yrs plus). That rpt does sounds like BS.
there goes the stock market crash heh.
FWIW.
http://blogs.wsj.com/marketbeat/2007/02/27/tabulation-trouble/
Man, a lot of room temperature IQs over there.
what do you mean by that my brooklyn compatriot?
you think its all peachy with the yen going up 3% in a day and the BOJ saying it might raise sooner than expected (which was never) think if the liquidity dries up the 15 p/e will go to 30 ??? or do you believe Kudlow the Moron bull who keeps saying goldclocks are in his slacks? hopefully stuck up his … The macro situation is revised from soft to hard landing in all stock participants imaginations… thats what happened.
Hey guys, occasional poster; more than likely lurker.
Nice day in the stock market today, tonight in Asia and tomorrow should be interesting.
I have a question: On Zillow, when you check comps for a house and sort according to price you see homes that sold for 300K 2 years ago being sold recently for 100k or even at 50K. Are those refi’s incorrectly interpreted as sales or are some fire sales?
Please excuse my ignorance in advance if my question is repetitive.
-J
Cubicle, don’t know what that is. I noticed something similar when I checked other units in the condo building where I rent. Zillow shows the unit across the hallway from me sold twice in the past couple of years, but the person who lived there never changed. Same thing with another upstairs. Twice sold, the family never moved. The price variation was not as big as the ones you looked at. Go figure, maybe it’s just another Zillow glitch.
More than likely yes
“Local housing prices dipped in the last quarter of 2006, but Merced remains one of the least affordable markets nationwide, according to new figures. Merced’s median home price fell to $325,000, down from $363,000 during the same period in 2005. The median price peaked at $376,000 in the second quarter of 2006, according to NAHB statistics.”
That’s my kind of dip.
$325k is still obscenely high for Merced. I doubt that fundamentals would justify anything more than $200k, if that.
Yep, median household income in Merced County was $35,532 in 2000. Generously assuming that is $40k today, even a $200k median house price would be 5x income. I see what they mean about “least affordable”!
By comparison, OC with a $61,899 median household income could conceivably support a median house price of over $300k if they stretch to 5x income.
Oh wait.
Agreed. Obviously the runup wasn’t based on fundamentals. There’s been speculation in Merced for some time, incited by the opening of a UC campus there. I looked at prices there ~2 years ago and decided they were already too high.
O.k.
Go look at the CNBC video of market coverage on Drudge.
Next, go look at the link to Pete Townsend’s blog (also on Drudge). I know I’m getting old when I can’t believe that Pete Townsend has a blog. And…. he talks about dedicating a song to Brittany Spears.
This has been a weird day.
Aus market off 3-4% at open
wow even Cramer is bearish
Well now. Casey thought some “fans” might show up at his first auction. What a tool.
http://www.iamfacingforeclosure.com/
I notice he said this house was his largest cash-back at close. Doubt he returned any of that money to the bank.
“fans” …. LMAO! When you read the comments on his blog 9 out of 10 of his “fans” eviscerate him.
like all the people watching a public bull whipping are “fans”…..
Whitehouse put out a statement about stock market “bump in the road” after market close. I expect them to put out something about the great housing bubble deflator.
A question for all you experts: I currently have the majority of my savings for downpayment in an ING savings account and a couple of small CD’s. Is this a safe place if the market tanks and the country falls into recession? Suggestions are welcome…
I think you should just keep watching what will happen or not.
In the mean time you can look up what is the insured (by http://www.fdic.gov/)
amount for such accounts in case of bankfaillure. Although ING is a big worldplayer.
In Europe,ING or INGDirect accounts are only insured under the Dutch law for 20.000 euros per person.
In the US, I think they have to play by US rules.
By the time this one would tank, I think we will already be eating grass or eachother.
But never say never, as like ‘real estate always goes up’.
That sounds as safe as FDIC insurance, unless inflation takes off. I hedge for inflation with physical gold and GLD shares. I have 10% of my “safe” money in physical gold which I hold long term and another 25% in and out of the gold etf, working the cycle. The rest is FDIC insured CD and depository accounts.
That’s what I’m doing with the money I can’t afford to lose. My spec. account doesn’t have any security at all, but it makes a hellacious return.
ING uses your deposits to make home loans, so there is a risk of collapse.
ING is FDIC insured, for whatever that’s worth… I am hoping that John is right, though… “By the time this one would tank, I think we will already be eating grass or each other.”
Still, I like to know what my (more viable) options are, should it come to this.
FDIC covers the first $100k per deposit account. You can have multiple names on a second account to cover the second $100k. I don’t think you can go past $200k on FDIC coverage, but I’m not sure..check with your bank.
My bank has FDIC and DIF. DIF covers everything FDIC doesn’t (up to $500k, I think). The bank has to buy the DIF policy on its own.
I use a relatively small privately owned bank.
What most people who are worried about this kind of thing do is spread their cash around several banks.
The last bank failure (and the only federally-chartered one in decades) was Superior Bank here in Chicago. I knew people who had money there… they paid better rates than anyone, we all found out why. They got $100K back, just like the signs say, but it took the better part of a year.
Yeah, FDIC has no raise the capital to pay their obligations. That is after one bank default. The question should be, do you think they can raise the capital for multiple banks? Not a chance is the answer. If you think the Fed, or the gov’t, will bail them out, ask yourself with what? More Fed Reserve Notes or T-Bills? Better ask the foreigners holding the debt about that.
I’m wondered if the ATMs and electronic banking will allow a lot of transactions and withdrawls before a bank can close down and draw resources from multiple banks.
i.e. there is a run on wells fargo… wells fargo customer goes to ATM from BOA and gives out whatever the person can withdraw.
Don’t knwo what the systemic risk from that would be. Probably not huge though.
I have a couple of different accounts. Probably stick a few K in a secure safe by the end of the month.
Get your money into the big boys FAST Citi, Chase, Wells, BofA
Everything else is at risk
check, check, check, & check. LOL.
Also have HSBC. . . . oh wait. . .
My town clobbered the rest of San Diego County in median price drop from Jan ‘06 to Jan ‘07….I’m so proud! (sniff sniff, wipes tear)
Encinitas $682,800.00 $875,000.00 -22.0%
Rainman!
Nice to see you around…
And good to see your community on top of the standings.
sf jack, nice to see you as well! I still read this blog every day, just post a bit less.
“WASHINGTON (AP) - Forecasters warned Tuesday that a La Nina weather pattern - the nasty flip side of El Nino - is brewing, bringing with it the threat of more hurricanes for the Atlantic.
Officials at the National Oceanic and Atmospheric Administration announced the official end of a brief and mild El Nino that started last year. That El Nino was credited with partially shutting down last summer’s Atlantic hurricane activity in the midst of what was supposed to be a busy season.
“We’re seeing a shift to the La Nina, it’s clearly in the data,” NOAA Administrator Conrad Lautenbacher said. La Nina, a cooling of the mid-Pacific equatorial region, has not officially begun because it’s a process with several months with specific temperature thresholds, but the trend is obvious based on satellite and ocean measurement data, he said.
“It certainly won’t be welcome news for those living off the coast right now,” Lautenbacher said. But he said that doesn’t mean Atlantic seaboard residents should sell their homes.
Forecasters don’t know how strong this La Nina will be. However, it typically means more hurricanes in the Atlantic, fewer in the Pacific, less rain and more heat for the already drought-stricken South, and a milder spring and summer in the north, Lautenbacher said. The central plains of the United States tend be drier in the fall during La Ninas, while the Pacific Northwest tends to be wetter in the late fall and early winter.”
Better grab those low ball bids as quick as you can!
If hurricanes come this year oil prices will explode, gold will follow. Housing will deflate from a deflated state. Try breathing life into that ballon.
One good thing will be Bush will be given chance to take that the Katrina test again.
I’m sorry, I had an image there of a person trying to inflate a rubber that had been torn up by an entire regiment. Couldn’t not share that image.
These forecasters make it up as they go along. They were ALL wrong last year, so why pay attention now? If La Nina is the flip side of El Nino, it should have the exact same effect: zilch.
Just in the the past two weeks, the weather forecasters here in Florida (and nationally, with regard to Florida) have been wrong about 90% of the time. In other words, they’re been as accurate as usual.
Remind anyone of 1999 US markets? Stupid is as stupid does! Link below.
http://www.nytimes.com/2007/02/28/business/worldbusiness/28shanghai.html?ex=1173243600&en=f0432e05e93dc291&ei=5065&partner=MYWAY
Does anyone have an opinion on bear mutual funds? And please explain as if you were explaining to a monkey, not a smart talking monkey like on Planet of the Apes, but just an ordinary escaped zoo monkey.
I already owe all the bears here, having sold my mutual funds and equities on Friday. Thanks.
From the article:
“‘There’s just too much liquidity out there, too much,’ says Chang Chun, a financial reform expert at the China Europe International Business School in Shanghai. ‘This is a psychological thing.’”
*********
Not to worry Chang, as all our central bankers have made sure that it’s a global phenomena, too.
From the article………
Perhaps the most remarkable sign of the recent irrational exuberance underpinning China’s stock markets is that during the past year, when a company has announced bad news, its stock price has been shooting through the roof.
Does this in any way remind you of the HB stocks
Another gem from the article -
Just to find names of stocks to buy is a task for new investors. So if they see even a mention in the news, positive or negative, they start buying.
If alert investors are lucky, they might get a tip. If state television mentions a company, it must be worth something, and if they don’t catch the full story, they at least have a name.
“If I hear a stock mentioned on the TV news I will pay attention to it,” says Xu Xiaochen, a 55-year-old retiree.
LOL
SRS
QID
TWM
short on MTG
You need to better explain how you’d invest in them : Via a retirement fund or private. A retirement fund may have lesser entry barriers than buying than privately. I remember Rydex would require min $25K if buying privately but you could enter in multiples of $1k if in a retirement fund. Funds like BEARX have low entry requirements but can dillute their performance as they go long gold.
I’ve not had much luck in getting a Bear fund that goes selectively short - across industries and targeting absolute dogs - I thought GRZZX would do this but it has dissapointed for the term I held it. (after I sold it, it still lost money.)
If you can, do ETF’s instead as they are like stocks and you can set stop losses on them if the market is going against you. Funds on the other hand, can only be traded at end of the day and may have loads on them.
FYI: bear fund info http://bearmarketcentral.com/
Another tip: Don’t bother with ElliottWave International. Prechter is a quack.
For those who don’t like concept of shorting, John Hussman has a fund that is long but buys put options.
My wife just returned from a trip to China and she said that there is some type of exotic fish that everybody’s become crazy for and are paying ridiculous sums to own. Tulips all over again.
I heard it was ants.
They executed the guy.
“‘The unsold inventory of existing homes jumped to 9.1 months in January, after hovering around the long-run average of 7 months since mid-2006,’ said C.A.R. Chief Economist Leslie Appleton-Young. ‘There was a slight increase in statewide listings last month. The increase in the unsold inventory index was driven primarily by the sales decline.’”
That’s 9.1 mos of inventory before factoring in the effects of the vanishing subprime lending sector.
——————————————————————————————-
Subprime sickness
Published: February 23 2007 02:00 | Last updated: February 23 2007 02:00
The US subprime mortgage market is suffering from a serious malaise. The range of symptoms is extensive. The latest came yesterday with HSBC’s announcement of the departure of Bobby Mehta, head of its North American arm. The bank warned recently that its bad debt provisions would be $1.75bn higher than expected, mainly because of problems in subprime lending and other risky loans.
HSBC is just one casualty. Some specialist lenders have seen share prices fall. From the filing for bankruptcy of California-based ResMAE Mortgage, to the near-record levels for the derivative index that tracks the credit risk of high-risk mortgage bonds, the message could scarcely be more downbeat. In spite of this, there are plenty of reasons to believe that the fallout can largely be confined to the sector.
Please do tell!
http://www.ft.com/cms/s/779692b8-c2e3-11db-9e1c-000b5df10621.html
http://www.marketwatch.com/news/story/asian-stocks-continue-slide/story.aspx?guid=%7B1C834AED%2DF048%2D4F06%2D9BD6%2DF66008655113%7D
I wonder how all the hedge funds are doing ?
I’ve watched a few of the episodes of Bravo’s Housewives of the O/C. The guy who is with the J-Lo wanna be is either a lender or title rep. There goes her Benz and Jewels. He better get some while he can. he’s not with her because of her housekeeping skills. The other housewife is a realtor in Coto. There goes the river doublewide and all the toys. Couldn’t happen to a nicer group of people.
Didn’t that broad that goes to the river move to Chicago due to a divorce or something? Haven’t kept up with the show as much as I like
“Couldn’t happen to a nicer group of people”
I agree.
while the median price of an existing home increased 1.9 percent, CAR reported today. ‘On a regional basis, sales fell an average of 13 percent, while median prices declined in all areas except Los Angeles, the San Francisco Bay Area, and Riverside/San Bernardino,’ said C.A.R. President Colleen Badagliacco.”
WTFlip!!!! Scratching head over this one.
Just the begining
Not sure this is legal but I know someone bought a house in Las Vegas priced at 580K at discount (480K). this means she has to pay taxes on 580k. developer told her reason for doing this is others may sue if price listed as 480K.
does this make any sense?
This is a federal crime punishable by up to 10 years in prison. Read prior postings about Arizona mortgage brokers that are jail for the exact same thing.
Maybe you need to explain this one better. Was the asking price 580k but she closed on /got mortgage for 480K or was it one where the loan for for 580k but she paid 480K and got 100k cash back?
The latter is illegal. The former is good business.
latter
MY understanding is that she paid 480k but will be listed as 580K , she will get 100K back.
problem is it will show on paper, house was sold at asking price but in reality it was about 18% discount.
From Home and Garden Message Board:
“My house has been on market for 6 months, no offers. We had been with our first agent for 4 months with 3-4 showings. Our second agent has brought in A LOT more people. Most like it but nothing. We have lowered the price again, but as other Wisconsin people know, the weather here has been awful.
I’m closing on my new house tomorrow so in one month will be paying 2 mortgages. I do have help so am not too desperate. I just want this over because I broke up with my boyfriend 6 months ago and would like to not live with him any more!
This has been the most stressful thing I have ever gone though. This is worse than writing my dissertation, passing my licensing exam, and getting through graduate school. I specialize in working with suicidal people and selling my house is more stressful even than that!!!”
Suicide prevention, stress, broken relationship, two mortgages……
If she’s hot, she”ll not have no problem paying that mortgage.
“I just want this over because I broke up with my boyfriend 6 months ago and would like to not live with him any more!”
Just like a divorce but without the papers.
If she has a new house, she is moving out anyhow so hey Presto, problem solved, she will not live with “him”.
This is a federal crime punishable by up to 10 years in prison.
test
Get a LoKal Mortgage LOL!
http://youtube.com/watch?v=oouQbcXdyH0
Tommorrows disaster - FMT down 18% after hours:
http://www.marketwatch.com/news/story/fremont-general-corporation-postpone-release/story.aspx?guid=%7B18132738%2D1E07%2D4703%2DA526%2D0F84538E81DA%7D
test
Again, those Realtor numbers mean nothing. There’s some serious manipulation going on.
FMT down 18% after hours!
TIMBERRRRRRRRRRRRRRRRRRRRRRRRRRRrrrr
Set your sights.
WTH is “the median price of an existing home”???
An inarticulate way of saying “the median used house sale price.” You usually have to read between the lines to discern whether they mean all residences (attached and detached) or only “single family” (detached).
yeah, I know; my point being that the market median doesn’t really give any information about what any one house’s price movement is doing. Plus, a single home has *one* price at any given time, not a series of prices that can be statistically analyzed.
Most newspapers are written at the 4th grade reading level. Such subtleties are beyond the capacity of the average reader. This explains why, for example, authors feel the need in every article to remind us what “median” means.
What is becoming interesting about all this is that things are getting noticeable worse for Joe Sixpack in a hurry:
1. subprime I/O neg-amort ARM payments doubling.
2. stock values dropping
3. little or no cash in the bank
4. inflation, reported or not, is sending prices of most things (other than housing) up: my utilities bills–phone, cable, etc. have all gone up 6% or more this year.
5. Gas prices going up. In Eureka, CA (typically the most expensive in the nation), reg Unleaded is up to $3.08/gal. I don’t know what it is, but when gas prices go up, people get scared/angry/depressed. This should undoubtedly help people feel less secure about the economy.
6. Housing values falling. No more home equity money for Benzes, eating out, vacations to Europe.
Things are looking better all the time!
Unbeknownst to J2P, there are sharks in the deep waters:
http://housingderivatives.typepad.com/housing_derivatives/2007/02/index.html#entry-30978394
http://www.ft.com/cms/s/8540516c-c5a2-11db-9fae-000b5df10621,_i_email=y.html
i.e., some of the tools used by various pension funds.
Which will hit him directly [if he's retired and is counting on his pensions] or indirectly [his parents or grand parents getting kicked off of their pensions and they start looking for handouts from their (grand)children].
Best (worst?) case, his tax bill will rise since his city and/or county and/or state find that their retirees are under-funded and have to jack up the pension funds via increased tax dollars.
[Boston Tea Party, anyone?]
You know. I just wonder if Greenspan looks out there and says “wow, I may have destroyed the entire world economy; I’ll be famous forever”
The sellers have gotten the message now that they have prices a little high,’ Oliver said. ‘(They) fought reducing their prices for about four to six months.’”
A LITTLE HIGH! It won’t be long before they know how high a little high is . Is is a little word but it IS going to be very large soon!!