“It Seems Like The Whole World Is For Sale”
The Marin Independent Journal reports from California. “Hundreds of buyers, sellers and brokers are trying to figure out where Marin’s fabled real estate market is headed. The answer: No one knows for sure. Corina Rollins, a Greenbrae appraiser and real-estate instructor at College of Marin, is, if not quite bearish, then certainly concerned about current market conditions.”
“Rollins now sees ‘a significant and growing backlog of inventory.’ There was 20 months of available detached-home inventory in the year ending Feb. 1, versus 15 months the previous year. For condos and townhomes, there were 21 months of potential sales on the market in the year ending Feb. 1, versus 14 months the previous year.”
“Scott Hunt in San Rafael said business has dried up recently for him and other housing inspectors. Hunt said he usually gets six or seven jobs a week, but lately he has gone for more than a week at a time without an assignment.”
“‘I just lost a huge chunk of the market, so I don’t know what’s going on,’ he said. ‘I called myself yesterday to see if my phone was still working. My phone hasn’t rung in two weeks. It seems like the whole world’s for sale, and there’s no buyers. It’s been dead as a mackerel.’”
“Bill Powell, a flooring and carpet specialist who works closely with real estate agents, said the existing inventory is growing, so sellers are starting to realize their homes must be in top condition to be competitive.”
“‘It’s not a time to put a fixer-upper on the market,’ said Powell. ‘You’re going to have to discount deeply or let it sit on the market for a while.’”
“Knox Lundgren bought (an) aging three-bedroom home in 2004 for a little over $900,000 and planned to tear it down, build a new home and resell it. With the approval process in limbo, Lundgren decided to place the home on the market to see if a seller emerged. He originally listed it for $999,000 before reducing it to $899,000, meaning he will lose money in an otherwise torrid Larkspur market.”
“‘My wife wants a bigger house and she wants it now, and she’s not willing for me to wait or build a new house,’ said Lundgren. ‘She wants to get going.’”
The San Francisco Chronicle. “As home prices in the Bay Area stagnate and sales volume plunges, the next blow to the region’s housing market could come from defaults among high-risk borrowers, some experts say.”
“Until recently, the Bay Area’s booming housing market kept such marginal borrowers out of trouble. But no more. ‘The stunning erosion in mortgage credit quality is quickly becoming another very heavy weight on the Bay Area’s housing market,’ said economist Mark Zandi.”
“The percentage of Bay Area subprime borrowers who fell behind on payments jumped to 23 percent from 11 percent in that same period. About a quarter of the mortgages issued in 2005 and 2006 in California fell into the subprime category, compared with 20 percent nationwide, according to Economy.com.”
“‘Most people are stretching pretty far to get into that loan to begin with,’ said the Center for Responsible Lending’s Paul Leonard. ‘Many of these loans were underwritten only based on initial payment, not on a fully indexed rate.’”
“Some borrowers will simply be unable to afford the higher payments, said economist Christopher Thornberg. ‘Money is money, and the first rule of financial markets is that there is no such thing as getting money in a cheaper way,’ Thornberg said. ‘You can’t reduce the cost — you’re only shifting when the costs occur.’”
“Many loans, especially subprime loans, are packaged into complex pools called mortgage-backed securities and sold to investors.”
“Mortgage companies have always been willing to work with tardy borrowers. ‘The servicer is often given latitude,’ says Brad Blackwell, national sales manager for Wells Fargo. ‘If it’s sold to Fannie (Mae) or Freddie (Mac), we have predetermined ranges we can take. If it’s sold to a private investor, our hands are a little more tied,’ says Blackwell.”
The Union Tribune. “It is one of San Diego’s newest neighborhoods, 349 addresses in a waterfront community envisioned by the late local developer Corky McMillin as a place that would be home to Middle America.”
“But the compact enclave at the former Naval Training Center, public property the city turned over to The Corky McMillin Cos. in 2000, has block after block of million-dollar homes far out of the financial reach of most San Diegans.”
“A four-month analysis by The San Diego Union-Tribune of residential properties at what now is called Liberty Station has found a community of investments where unoccupied homes are the norm on some streets.”
“At least one in three households, 40 percent of condo owners, have not declared their homes as a primary residence for tax purposes, despite a sales contract that required owners to live in the homes for a year before selling or leasing.”
“Among the buyers were many of McMillin’s top executives, some current and former city officials and dozens of real estate professionals.”
“Dominic Carnevale and his mother, Alissa Davey, who is a Realtor, had been showing up at McMillin’s headquarters every weekend when Carnevale finally heard his name called one Saturday in 2004.”
“Carnevale, who works for a brokerage firm, had his heart set on a particular house. But then, he said, a McMillin salesperson told him it was ‘already taken by a VIP’ who wasn’t even there. Carnevale complained. He said McMillin offered to put him on the top of the list for the next phase of houses, but he declined because the purchase price could go up.”
“‘Technically, to us, they cheated,’ Davey said. ‘Rules are rules, and they broke them. I don’t care who they are; if you make a rule you keep it.’”
The LA Times. “If buyers have felt lonely making the sole bids on houses these days, it might be because home flippers, those who buy property with the intention of renovating and reselling quickly, haven’t been as active in the last year.”
“‘The market where you could just go in, tidy something up and make a lot of money is gone,’ said Jad Najjar, a longtime flipper and real estate broker in Beverly Hills.”
“The number of his clients looking for houses to flip has declined 75% in the last year, he said, in part because it’s become a more rigorous and less profitable business right now and less experienced buyers fear a potential drop in the market. Najjar himself has had a 50% drop in profits from flipping since 2005.”
“Although buyers can find lower prices in transitional neighborhoods, said Michael Richards, an agent in Los Feliz who specializes in finding flip properties, they shouldn’t jump into new and unfamiliar territory too quickly in a softening market.”
“‘Transitional markets can lag behind the better markets, and they are usually the areas that decline first’ if the market goes down, he said.”
“Toby Donnelly also has become a lot pickier about what he will buy. ‘All your profit is determined by how well you buy the property,’ he said. He won’t purchase a house now unless he feels like he’s ’stealing’ it.”
“To hedge her bets, Debra Klein always makes sure a property is rentable in the event it doesn’t resell quickly. ‘You have to make sure the rent you could get would cover your costs,’ she said.”
“Many rental agencies and real estate brokers will provide free estimates and surveys of comparable homes for potential clients, services Klein used last year before she bought condominiums in Palm Desert and Indio. She is currently renting out those condos in addition to a house in Encino that she bought last year.”
“Although she’s covering her costs and making a profit on renting, she still plans to put all of the properties on the market in the next 12 months.”
‘Many rental agencies and real estate brokers will provide free estimates and surveys of comparable homes for potential clients, services Klein used last year before she bought condominiums in Palm Desert and Indio. She is currently renting out those condos in addition to a house in Encino that she bought last year.’
‘Although she’s covering her costs and making a profit on renting, she still plans to put all of the properties on the market in the next 12 months.’
The LA Times may want the readers to believe this, but I’m calling BS on this lady. There ain’t no way she’s covering her costs on 2006 condos in the Coachella valley. This article is basically a feel-good piece for flippers; disgraceful!
Toss it on the pile, Ben. You better have a good arm, since that pile is so high, you will have to make one hell of a throw.
Well… in her deluded mind, she is covering her “costs”. It’s all how you define it.
When you’ve got an option arm at 1%, then yeah, you can cover your cash flow on these properties. When it recasts, aint no way, no how.
Chuck Ponzi
http://www.socalbubble.com
“‘My wife wants a bigger house and she wants it now, and she’s not willing for me to wait or build a new house,’ said Lundgren. ‘She wants to get going.’”
Tell that ragged bitch to buy her own friggin house…and leave you off the loan docs! What a demanding POS she must be.
My sentiments exactly!
I can hardly wait for this entitlement attitude to get bitch slapped by reality, starting right about now if this week’s subprime meltdown is any indicator.
Glad I’m not that guy on so many levels.
Get the divorce papers ready. She sounds like a gold-digging spoiled scumbag.
” demanding POS, gold-digging spoiled scumbag”.
Geez, you guys are harsh…what is it to you if she wants a house now or not? How is she gold-digging?
“Knox Lundgren bought (an) aging three-bedroom home in 2004 for a little over $900,000 and planned to tear it down, build a new home”
This guy obviously has money to burn so let him.
You people sound very abusive, I have to wonder how you speak to your own wives when things do not go your way.
SKB
No, what he is really doing is coming up with a (sort of) reasonable explanation of why he is selling, because he doesn’t want to tell the truth - that he is in way over his head and has realized it. It’s not REALLY his wife making him sell, it’s the market and his overblown mortgage.
That’s what I thought, he’s blaming it on his wife.
Male or female, the sport of “keeping up with” is certainly a major pastime in Marin.
““‘My wife wants a bigger house and she wants it now,”
This could be the defining quote of this bubble. He’s not alone. There are millions like him.
I’m glad I’m not her. I have my dream house….a house with no mortgage and no granite!
This bubble is going to stress out and break many marriages.
True story !
I met a stripper off Broadway that bought at peak 2005.
Made a little equity and cashed out to pay off 50K in credit card bills. Now she rec’d a property tax bill she is unable to pay off. She is now stripping on the side to make the payments. Not to mention she has some family members living in with here. Nice Hootie ! But I was busting inside when she gave me her sad story. Here is another 5er keep if going honey! Your doing fine! LOL
tell her to brush up on pole-dancing if she wants to pay off that tax bill…betting she’ll rack those credit cards back up to 50K. classic american bimbo slunkmeat
..now guys, what has she got to make Mr. Flipper crazy?
You know men don’t have enough blood to work our brain and our d**ks at the same time.
I’d have to see a photo before I really piled on this guy. …of her, not him.
slunkmeat? thats a new one
What does she think? That she’s Scarlet Johanson or something to be demanding a home to be bought right now? What an idiot husband. She will bankrupt him real quick.
Comment by awaiting bubble rubble
2007-03-04 18:24:48
““‘My wife wants a bigger house and she wants it now,”
This could be the defining quote of this bubble. He’s not alone. There are millions like him.
———————————
Okay, I’m pretty tolerant, and support everyone’s right to an opinion, but getting sick & tired of the misogyny here.
Firstly, there are as many men involved in this RE bubble as there are women. In over 3 years of watching this bubble, I’d say at least 60% of the flippers I’ve seen are men.
Said it before, but I’d also guess that at least 40% (if not 50%) of the posters here are female — many of the original posters (aware of the bubble in early 2005, if not before) are/were female. Many of us have had to endure the painful process of convincing our husbands to stay out of the purchase market for many years.
Women should not be referred to as “bitches”, whores, hags, nags, scum, gold-diggers or any other demeaning term. Women are not object or “meat” to be used at your disposal — on your terms, as you see fit.
It’s amusing to me that saying, “I don’t like illegal immigration” will often prompt vicious attacks; and yet…the constant, and far more hateful & demeaning, attacks on women go largely unchecked.
Get a clue. Don’t like marriage? Do yourself (and any potential partner) a favor and stay single. Hate women? Date men, instead.
Learn how to take responsibility for yourselves and your attitude about the opposite sex. If someone burned you in the past, ask what you might have done to contribute to it, and fix yourself already.
….you’re beautiful when you’re angry….
Oh, I don’t like illegal immigration.
However, I think all hot women should be allowed to immigrate, not questions asked.
Thank you CA Renter!
…hey It looks like I stumbled onto the “angry femnist” blog…..I thought this was a housing blog.
Very well said, CA Renter.
Is every chick on this blog on they’re period?
Geeez
The article is delusional and typical of the LA Times, especially since it was bought by Chicago Tribune.
Any would be investor that contacts one of these rental agencies would be laughed out of the office, or dragged onto a bus, driven to the middle of the US and shown some property in Kansas that MIGHT cost out.
This kind of outright garbage reporting turns my stomach. Classic El Lay.
If she bought it last year, then the teaser rate on her 2/28 option-ARM hasn’t adjusted yet. When her mortgage jumps from $1250 to $3500 next spring, she will be drowning
I agree, it was a totally disingenuous piece. Even burned out flippers will see it for what it is. A shame.
The Ventura County Star published a CAR puff piece last week at http://www.venturacountystar.com/vcs/business/article/0,1375,VCS_128_5382833,00.html (my two comments attributed to DL).
I expect more in the coming weeks. I think the REIC is putting their spin machine into full gear for the spring “selling” season.
“During 2006, Donnelly had five properties on the market in Silver Lake in the $675,000 to-$700,000 range, none of which were selling. When he finally lowered the prices by about $15,000 to $20,000, he sold four of the five in a week.”
This is BS as well. Five houses, all nearly the same price, all reduced by nearly the same meager percentage, nearly all selling on nearly the same day?
And this so called journalist couldn’t be bothered to find and quote a single flipper who’s lost money, just those with an obvious interest in pumping. LA times: best used on windows, under puppies and in fireplaces.
We have had anywhere from 150% to 300% appreciation up here since 2002. So let’s say in 2002 the house was 200K and now it is listed at 500K. After a 250% runup knocking 15K off the inflated price works out to 3% off…..yep its definitely now a buyers market!
The new math!!!
Seattle Moose, you should at least check the OFHEO stats on the Seattle/King County housing appreciation numbers, you are way high in regards to the appreciation since 2002–like a factor of 4!! check out the most recent stats from OFHEO on resales of the same homes over the last 5 years in Seattle Everett
http://www.ofheo.gov/media/pdf/4q06hpi.pdf
AS you will see on page 24 of the report on the top 20 markets for appreciation for the year ending 12/31/2006 Seattle is 18th in the most recent year for appreciation, and the last five year appreciation is 64.62%–it helps to stay focused on the facts very the smoke!
Is it possible she got some of those “We’ll make your first year’s payments and then you get another year of 1-2% payments” deals? She might consider the rents to be profit for her during these times and she plans to sell in the next 12 months to try to avoid the “real” payments. That’s when the pain will begin for Klein IMO.
The unpaid portion will have been tacked on to her principal, so it’s hard to see how she can sell without a fairly big loss, even if prices only stay flat instead of declining.
“it’s hard to see how she can sell without a fairly big loss”
No. It’s almost IMPOSSIBLE for her to sell at a fairly big loss. The only way that happens is if her lenders - 1st, 2nd… and HELOC all decide it’s in their collective best interest. NOT!
Well, she can always bring a check to the closing, in which case the lenders don’t really have a say in the matter. She’s a rich real estate investor, so surely she has a cash buffer for such purposes, right?
I’ve heard some people say they’re making a profit because their rent income exceeds their payment (let’s go ahead and assume this includes the total cost of ownership). When I ask them how this was possible, they’ll point down to a very large down payment and then cackle that the renter is the one making the bank payment for the next 30 years.
Some people don’t get the concept of “opportunity cost” or “nominal vs. real” when calculating profit.
LA Times real estate…Another black eye for the main stream media. Why does the a great paper allow this kind of crap reporting bring it down to the National Enquirer level. The reporter should be fired if she can’t back up her facts, and the editor should say NO to this BS. If you can’t say anyhting good about real estate right now, LA Times, don’t say nothing..and keep your integrity
The operant words here are: “…Why does…a great paper allow this kind of crap reporting….”
The LATimes use to be great under the stewardship of the Chandler family, but all was lost with the takeover by the Tribune corporation. From the glitzy advertisements on the front pages of sections, vastly diminished space allocated to news, severely truncated staffs (i.e., reporters/editors), the LATimes is little more than a shell of its former self.
Now, the Tribune is desperately trying to sell off its assets, including the LATimes, but there are few serious takers. I would imagine the Real Estate division is under orders not to have real news pieces that might impact ad revenues.
Ben wrote: The LA Times may want the readers to believe this, but I’m calling BS on this lady. There ain’t no way she’s covering her costs on 2006 condos in the Coachella valley. This article is basically a feel-good piece for flippers; disgraceful!
That was exactly my thought as well upon reading that. Let me get this straight; she’s covering her expenses but wants to sell into a declining market?!? Yeah, right!
“‘It’s not a time to put a fixer-upper on the market,’ said Powell. ‘You’re going to have to discount deeply or let it sit on the market for a while.’”
What he meant to say was, “You’re going to have to discount deeply, or let it sit on the market and end up discounting it even more deeply.”
“discount deeply or let it sit on the mkt 15-20 yrs”
“Rollins now sees ‘a significant and growing backlog of inventory.’ There was 20 months of available detached-home inventory in the year ending Feb. 1, versus 15 months the previous year. For condos and townhomes, there were 21 months of potential sales on the market in the year ending Feb. 1, versus 14 months the previous year.”
Just wait until the vaporization of subprime lending which has played out over the past 2 1/2 months kicks this inventory growth into overdrive. We have only seen the tip of the iceberg thus far, IMO.
All these guys with names like “Jad Najjar” have no idea what’s about to hit them.
GetStucco… i really hope you are right about this. How long can households with combined incomes of about 70k buy 500-600k houses with 10k annual taxes? Especially when 3-5 years ago these homes were only 300k? such b.s. I cannot wait until the pain hits long island!
That’s what I’m waiting for, the vaporization of subprime lending, because there’s still a whole lotta flipping going on south of the 10, I hear people who barely speak English tell me they’re flipping a house or a duplex for 600K + like it’s no big thing, without those loans there’s no way those prices are holding up.
You won’t be waiting much longer. It’s already starting to hit Alt-A, according to the rumors and asides. The Silent Spring thesis is looking pretty good right now.
well… subprime pretty much vaporized over the weekend. It may take a while for folks to realize it, but it’s toast. People still won’t lower their prices though… this is L.A.! Real Estate never goes down!
They will not willingly lower their prices, but the weak hands in every neighborhood will end up driving all prices down. The folks who are in over their head and will end up foreclosing or in a short sale will be the ones that will start the declines and once this ball starts rolling downhill it will cause a cascade as lower comps drag marginal FBs out of the refi zone and resets start to play havoc with household budgets. IMHO, ths will not be a rapid process. The Banks will try to get top dollar on their foreclosures …. for a while. But once foreclosed inventory rises the Banksters will start unloading. Plus we will always have the completely clueless FB who relies on and believes the spew issued forth by the REIC. These poor souls will continue to prop up the market on shaky legs until they can no longer get the money to buy that charming garage with a bathroom for 500k. Sub-Prime’s current demise is going to remove a large segment of that funding. So sit back, get some popcorn from Neil, and watch the show.
” hear people who barely speak English tell me they’re flipping a house or a duplex for 600K + like it’s no big thing, without those loans there’s no way those prices are holding up. ”
A lot of those flips are showing up in foreclosure.com. See plenty of dup/tri’s/quad properties listed around $700-800,000 ave price going into defaults with spanish names on the lists. The immigrants were using the same toxic 100% financing, no doc, stated, neg am products to buy up ‘investment’properties all over the marginal districts of LA,with wild dreams of becoming landlords or doing as you say flips.
Do you think that the idiot lenders were actually checking whether that $800,000 loan package made on a decaying flea-sized 3000 sq ft triplex in a gang-infested SCentral LA S*itzone was economically viable or posed an investment risk? Answer: they did not care because this S*it was passed to the SBA bagholders.
Not to mention all the unlisted inventory of REOs and foreclosures. I wonder what the REAL backlog is?
I believe that the N CA economy has been a Ponzi scheme for some time, probably dating back to the mid-90’s when I last lived there. First it was the dot-com bubble and all of the billions in stock option “wealth”. Following that, however, I was astounded to see that home prices didn’t decline, even as the region lost 20% of it’s workforce (according to the Bureau of Labor Statistics). Driving through Sunnyvale, Santa Clara, and other former boomtowns during the middle of the day, you’d see one empty office building parking lot after another. “For Lease” signs everywhere. Real wages declined over a long period. Yet housing prices still went up. Astronomically, in fact. I can’t think of any example in history where a region’s housing prices doubled during a time that 20% of the workforce left, and company after company imploded. You’ve got to wonder what’s going to happen now that they’ve run out of serial bubbles.
I can’t think of any example in history where a region’s housing prices doubled during a time that 20% of the workforce left
Housing prices were flat 2001-2004. 2005 was the boom year, fueled by no-down neg-am loose lending and flipper infestors trying to make easy arbitrage money off of actual productive members of the community.
Where exactly have you been, and where do you live? I beg to differ with you on the flat housing price calendar. Here in specific areas of the SF Bay Area, I watched prices escalate from the late 90s through ‘05. During the dot com boom, I distinctly recall housing prices AND rental prices going through the roof because landlords were banking on the incoming engineers (for the dot coms) scooping up property AND rentals, price be damned. Notices of rent increases were absolutely ridiculous (some increases up to and I’m sure above $300). I know because I was in the middle of that mess.
I rented at the same apartment complex from 1996 until 2002. Rent started out at $895 (2/2). I saw the first increase of $55 in Jan. 1998. In NOVEMBER of 1998, another increase of $85. The reason? Improvements and operating costs rising throughout the year. So now it was up to $1035. Somewhere between the end of 1998 and 2000, there was an increase of $110. Rent was then $1145. Rage does not begin to describe what I felt when my next door neighbor and I compared notices in September 2000….both of us (and others) had an increase of $350, and this time it came with a chart with Current Market Rent, rent for a 6 month lease or 12 month lease, and a month-to-month option. My rent was increasing to $1495. Needless to say, I was not prepared to pay the higher rent nor was I interested in looking for new apartment (which would mean deposit, etc). Luckily, a lower cost unit ($1250) was going to be available in another month, and I could transfer my deposit to that one, so I opted to make a lateral move instead of hitting the sidewalk to look for something else.
If you Google the dot com for stories around that time, you will definitely find stories of landlords jumping on the bandwagon, catering to the folks who they thought could pay the higher rents. It wasn’t about being grateful for long-term tenants, it was ALL about the money. When I finally moved to Dublin, CA, (2002), I noticed the same ridiculous pricing in both rentals and housing purchase prices.
So, please….don’t tell me about flat housing prices during 2001-2004. Perhaps it was so in your area, but most definitely not in the Bay Area or Silicon Valley.
Rant off. (for now)
BayQT~
You are right sf, even here in OC, prices started really taking off in the summer of ‘02. I bought my condo in early ‘02, and then watched subsequent sales in my tract…by the end of the year similar units to mine were up $50k…and that was just the start…
All you have to do is follow the money the Fed poured into the system post 9/11 to track this most recent bubble. Most prone areas took off in ‘02. Now, the end of the last downcycle concluded somewhere around ‘98, but bubblemania began around ‘02.
I’m talking the Bay Area. I’ve been here (or in Fresno) since May 2000. The main run-up for my price range (condos under $400k) occurred 1998-2000 when the dotcom money started juicing the market.
Extortionate rents (too many worker bees not enough apts)made buying a no-brainer in 1999-2000, until rents started backing off in mid-late 2001. By 2002 rents were really falling and I was a looky-lou for this year since buying didn’t pencil out.
I can’t post html here (or I go to the spamtrap) but any zillow 10-year graph history of the condo market from MV to SJ bears this out.
Here’s a graph of a MV unit that’s on the market for $565 now:
http://img251.imageshack.us/img251/5198/picture2jg1.png
(the blue line)
I expect prices to drift back down toward the 2003-2004 plateau (+ inflation) over the rest of this decade.
You’re expecting the 2003/2004 plateau because, I’m assuming, you weren’t in CA prior to 2000.
In SoCal, prices had already doubled between 1997/1998 and 2001 — it already looked like a top, as affordabilty was stretched using traditional financing. The credit bubble took off in 2001/2002, and the price increases, post-2001, were almost entirely attributable to the credit bubble, IMHO.
We will likely see pre-2001 (+/- inflation/deflation) prices by the time this hits bottom — quite a few years from now.
Best to get comfortable with wherever you are for now, as we will likely experience a wild ride between now & then.
My experience matches BayQT’s. Rent for the same apt went from $910/mo in 1996 to $1425 in 2001. It was housing madness - I remember trying to find a co-worker an affordable apartment in 1999 - he ended up in Concord, even Hayward was too pricey! Many apartments had 99% occupancy.
Housing prices definitely did take a pause after 2001 - I saw some price reduced signs in Fremont - and there were some signficant reductions in the exurbs (e.g. Los Banos). But things took off well before 2005.
The price rise until 2001 was expected based on increasing rents, incomes, and number of jobs. The prices increases since have been pure bubble.
I’m tired of bubbles.
Price hsitory of TH im tracking… 2000 sw ft. built in 1980
1997 price was 200K
2000 price was 500K
2003 price was 575K
2005 price was 660K
2006 price was 700K
Off Winchester and Hacienda in Cambell. Zillow it.
Not flat at all!
Property values dropped like a rock in the Bay Area between March of 2001 and the summer of 2002. In the entire state of California there was a similar but lesser trend. In the summer of 2002 prices began to trend upward, and in 2003 they began to skyrocket. This upward trend closely tracked with decreasing interest rates and increasing use of “exotic” loans.
Now, interest only ARM mortgages are resetting, property values are dropping and subprime lenders are blowing out like head gaskets on a Ford Taurus.
Sorry, but I saw something different in El Sobrante during that period. I understand what both of you are saying but there is evidence of what I say, as well. (I’ve Googled a little info and posted below.)
According to what I have found, there was a run-up in the 70s, 80s, but even with the drops in prices in the 90s, I’m not so sure about the prices dropping like a rock during the period you state. And not all of the Bay Area housing “map out flat” in zillow during that period either as Troy’s does in his link.
That being said, it’s obvious that different things were happening in different parts of the Bay Area. I don’t really want to argue any of these points any further than this….we’re on the same team. We each had our own experiences and can find information to back them up.
San Francisco Metropolitan Area Housing Prices from 1975-Present
http://mysite.verizon.net/vodkajim/housingbubble/san_francisco.html
Anecdote for Redwood City
http://randolfe.typepad.com/randolfe/2007/02/riding_the_bubb.html#more
Bay Area Housing Bubble - Excerpt
http://tinyurl.com/2ueecw
“Yet Bay Area real estate weathered the dot-com meltdown — this region’s version of the aerospace industry bust — remarkably well, considering the area lost about 450,000 jobs in three years.
According to research by the federal government, price appreciation for most of the region dropped from above 20 percent in 2000 to between 5 and 10 percent in 2002 and 2003. The only metropolitan area to dip into negative territory was Santa Clara County, where prices fell by several percentage points in 2001 and 2002.”
The above excerpt does account for the drop in price *appreciation* between 2000 and 2003, BUT you have to remember that any drop was just prices coming back down where they should have been in the first place. Even with the miniscule drops, they escalated once again with the speculative buying.
BayQT~
Santa Clara and Bay area home values DROPPED,I repeat, DROPPED between early 2001 and early 2002. Here are the statistics from the California Association of Realtors, http://www.car.org:
San Fran Bay January 2001 Median $483,000
San Fran Bay January 2002 median $462,000
San Fran Bay February 2001 median $485,980
San Fran Bay February 2002 median $477,130
Santa Clara County January 2001 median $530,000
Santa Clara County January 2002 median $493,500
Santa Clara County February 2001 median $555,000
Santa Clara County February 2002 median $525,000
Keep this in mind: Interest rates had dropped from 8.21% in January of 2000 to 7.03% in January of 2001 to 7% in January of 2002 to 5.93% in January of 2003. At the same time the use of interest only ARM loans increased to the point where half of all home loans made in California were IO ARM’s or some form of that kind of loan.
And don’t blame the drop in the median on 9/11. The downward trend was clearly established before then.
Bay area property values are going to drop to 2001 prices. The same with the state of California. Potential home buyers had better get that fact through their thick skulls or they are going to wreck their lives by buying an overpriced property that WILL drop in value.
We are all in violent agreement. My general impression is that the dotcom core area appreciated first, then this price inflation radiated out like ripples on a pond as the rest of the market in 2003-2004 caught up to SV’s ealier appreciation of 1998-2001. 2005 was the year the market launched to the stratosphere everywhere.
In 2000 we had too much IPO money …
Once realtors figured you worked for company x with stock price at 300 per share your *ss was cooked.
They cranked the phony bidders and thus created price hikes
because these people had the money to burn. And many did burn cash like crazy. Plenty of stories about that. 2000-01 was a wake up call for many.
Here, in a nutshell, is my take on what happened between 1995 and 2005:
In 1995 people began to shovel vast amounts of money into California, the beginning of the dotcom boom.
Between 1995 and 2000 everyone and their mother bought high tech stock. The bay area and most of coastal California absorbed every computer geek in the country who could make it to the state. Home prices went through the roof as nuevo rich yuppies bought with abandon. Rents went up 10% or more every year.
In the middle of 2000 people began to realize that the dotcom companies didn’t produce anything. They began to sell their stock. Stock prices went down, and Greenspan, in order to prevent a recession, began to drop interest rates. The drop in interest rates caused property values to skyrocket in 2000.
In March of 2001 the dotcom fraud collapsed. The neuvo rich computer geeks went bankrupt. Coastal California home values dropped, but inland values continued to go up because of low interest rates.
In 2002 Greenspan continues to drop interest rates and does nothing as lending institutions begin to crank out interest only ARM home loans.
By the summer of 2002 property values are climbing towards the moon, thanks to low interest rates and IO ARM’s. Greenspan calls IO ARM’s a good thing for the economy (he’s been quoted saying this on this blog site).
The bubble peaks in the summer of 2005. Interest rates go up in 2006 and time bomb ARM’s begin to go off.
Today, the bottom has dropped out of the boat. Prices are down, sales are down, Notice of Defaults are up, trillions of dollars of IO ARM loans are up for reset and subprime lenders are going down in flames like Stukas over London and if anyone disagrees with my analysis please explain where I’m wrong.
if anyone disagrees with my analysis please explain where I’m wrong.
Stukas were pulled from the Luftwaffe air offensive before Hitler shifted to the Blitz
In a nutshell your right. I saw all this first hand.
I would add all that early demand in 1995-2000 disapeared
with jobs. We wont see new job and demand for additional housing spike anytime soon or later.
Post 2002-03 Jobs increases by BA employers were outside the state and will continue.
clearview,
What you laid out there is exactly what I saw in So Cal. The recession was taking it’s toll in 2000/2001, and barring a credit bubble, housing prices would have DROPPED from their 2001 levels. Even before 9/11, if you look at various charts, you’ll see the housing market in CA started to slow in 2001 — slower sales, stagnant/dropping prices — but “magically” picked up after that.
You are 100% correct in your observations, IMHO.
LOL ! Got that right. Check with viewfromsiliconvalley.com
SVstats….you will find labor force is the same as back in 1990.
850K 1990 and 2005… it peaked in 2000 at 1.1M… LOL!
There is a glut of commerical property. As such can easily be rezoned to residential. Some of this already happening.
all around my apt the office blocks are being torn down and fugly high-density townhomes are being erected. 98% concrete coverage. Window to Window. Driveways down the middle. God what a disaster, and going for $600K+ too! I wouldn’t pay more than half that, if that.
Got that right Troy! Not even worth 600… will drop 50% or more.
“‘My wife wants a bigger house and she wants it now, and she’s not willing for me to wait or build a new house,’ said Lundgren. ‘She wants to get going.’”
I wonder what this greedy, short-sighted harpy is going to feel like when the “friends” and neighbors she tried so hard to impress, find out she’s being foreclosed on. No sympathy here - I hope she ends up working the drive-up window at Taco Bell. Note to dickless husbands everywhere: Try learning the word “NO!”
I think she’s the bi^ch in the “Suzanne researched it” commercial. Does he get to use his balls on the weekend or has she taken permanent possession?
http://www.youtube.com/watch?v=Ubsd-tWYmZw
LOL. I’ll take any excuse to trot out the infamous “Suzanne Researched This” Century 21 TV commercial. When all these cringing wimps who cave in to hectoring sucubuses discover the magnitude of their fiscal blunder, they may finally discover their long-lost spines and put these she-creatures back in their box.
You just had to, didn’t you?
There is so much about that commercial that makes my skin crawl.
…if you’ll pardon me, I need a shower.
There’s only one Jones you should want to keep up with and his name is Ben.
No….gotta write that down so I can maybe use it someday….
No? What’s that mean?
No Speaka English
You’re right. A man who says NO keeps his johnson, and keeps his woman happy every night (unless she has a “headache”).
“Leave the gun. Take the canoli.”
Leave the wife. Take the mortgage.
I loved the Godfather.
Huh…..really? I would’ve never guessed by the name you chose.
Yeah, I just figured you were a big “Uncle Floyd” fan.
Mugsy is a moniker that is a result of a dysfunctional upbringing in Queens. Uncle Floyd Rules!
3 years of life in Sicily will make you appreciate the Godfather alot more
Fremont sleeps wit da fishes.
If a husband and wife cannot sit down and talk rationally about their financial future then they have no real relationship.
If my wife begged me to do something that I knew was stupid, I would divorce her before I would do it. Better one suicide than two.
Luckily for me, even though “nesting urges” sometimes pop up and create tension, my wife realizes that I have studied the market and she has not, and as such begrudingly defers to my judgement.
The poor guy in this article needs to muzzle the wench or get a divorce….
The Moose doth speak wisdom. Far too many couples have completely opposite ideas when it comes to finances and they are miserable to be around.
Ahhh, the old “Wife made me do it” excuse. I’d bet if they asked his wife, she’d respond “Funny thing - I don’t remember it that way.”
Snicker….yeah, the wife’s the fall guy cuz he doesn’t want to admit he f*cked up.
My husband instructed me to make him the fall guy the other day when I had to call a friend because I lost something. He said what do I care if your friends think I did something stupid…every wife thinks all men are asses anyway so why not use it to your advantage.
I actually think badmouthing your spouse isn’t “classy” but I sure found it interesting how quickly he embraced the war of the sexes for our individual advantage. C’mon ya know the buds will buy the stupid spouse excuse hook, line, and sinker!
Bingo, Bonk.
Then again, what I’m waiting for is the stories of the “RE Stud” husband to come home and tell his wife how he’s losing their money on all his investments that he assured her he had under control.
You need look no further than the poster child for this bubble; Casey Serin.
When I read statments like this I realize how good I have it with my wife.
Amen
Somewhat OT, but it’s interesting how the UT is digging into the Corky McMillin NTC-giveaway scandal. This might be a new Duke Cunningham story? Is the UT turning into a real newspaper? There’s plenty of dirt to dig up in San Diego, especially the City/Mayor/RE-Developer symbiosis.
McMillin Company has been giving money to city officials campaign funds for years and received because it was a San Diego company the only one to “bid” on many special, cherry projects with camouflage kickbacks that are only coming to light. After living in San Diego for many years , some tried to warn our city council members, myself included, by writing/calling to no avail. No response! A clerk would send a standard letter back thanking me for my concerns etc. Few,if any phone calls returned and “now” Americas finest city is finally going to go bankrupt because of years of corrupted government. The kicker is both federal and state trials for corrupt city billion pension funds has been post poned indefinitely. What a system. Saved myself by moving in 2005 but really feel for the many hard working folks who will needlessly suffer because of the few “insiders greed”.
Hey, I never heard of Corky, but it sounds like it’s good he’s dead.
Yet housing prices still went up. Astronomically, in fact. I can’t think of any example in history where a region’s housing prices doubled during a time that 20% of the workforce left, and company after company imploded. You’ve got to wonder what’s going to happen now that they’ve run out of serial bubbles.
Actually the 2001-2003 bust resulted in a flat / mildly declining market. The rate drops and flipper mania fueled by no-down money @ 2/28, along with a (somewhat) recovering job market, pushed the bubble appreciation of 2004-2005 (with most of the areas appreciation occuring in 2005).
Here’s a zillow price tracking of a condo I’ve been looking at in N SJ:
http://a7.vox.com/6a00c114132bd822bd00c22529aaff604a-500pi
(it sold again for $475 recently)
The San Francisco Chronicle. “As home prices in the Bay Area stagnate and sales volume plunges, the next blow to the region’s housing market could come from defaults among high-risk borrowers, some experts say.”
Wait a minute…you mean to tell me that all of the buyers in the Bay area from 2003-Now weren’t using 20% down 30 year fixed mortgages????????? (Marlon Brando voice): The horror! The horror!
“as a place that would be home to Middle America.”
Bingo! Right here is the problem with nearly everything from the way I see it. These are million dollar homes. That is not Middle America. That is for the ultra-wealthy.
The root of all the bull$hit we hear is that corporate America, the media and politicians don’t have the first clue about Middle America. CNBC, CNN, Fox News, etc. are all clueless as to who and what an average American is. The average American is not a political or religious zealot. The average American can’t afford a million dollar home. The average American just wants to go to work, earn a buck, come home and live a decent life. The average American does not live in Beverly Hills or Westchester Country.
That is what we have been losing over the past 30 years. The ability to be an average American is being stripped away by the liars and crooks.
Hear hear!
“The average American can’t afford a million dollar home. The average American just wants to go to work, earn a buck, come home and live a decent life.”
I resemble that remark….
NYCBoy:
I just read the above to my husband and I’d like to send it to my senator (and yours…Hillary) if I would have your permission.
You couldn’t have nailed the sentiment of the middle class any better.
That sounds fine with me CarrieAnn.
“The average American just wants to go to work, earn a buck, come home and …”
You left out “drink a 6 pack, bottle of wine, or mixed libations of their choosing”
“You left out “drink a 6 pack, bottle of wine, or mixed libations of their choosing”
A requirement to dumb my wits enough to digest MSM dribble.
I hope that some day Americans can make the connection between our dishonest, immoral, and blatantly unconstitutional monetary system and the destruction of our communities and lifestyles.
Then why did you do this to yourselves, and apparantly the rest of the world. Grow up America. This mess is yours. You wanted it all, but you didn’t want to ever pay for it.
“But the compact enclave at the former Naval Training Center, public property the city turned over to The Corky McMillin Cos. in 2000, has block after block of million-dollar homes far out of the financial reach of most San Diegans.”
Isn’t everybody in the 619 making 6 figures? No? Peasants! Off with their heads!
“At least one in three households, 40 percent of condo owners, have not declared their homes as a primary residence for tax purposes, despite a sales contract that required owners to live in the homes for a year before selling or leasing. Among the buyers were many of McMillin’s top executives, some current and former city officials and dozens of real estate professionals.”
Nice! So now they get to cook in their own pot of stew!
If you were one of the owner occupies what is to stop you from suing the developer? It was their responsibility to ensure that the rules were enforced. I predict a lawsuit bubble coming to America.
I got a 157 on the LSAT. No genius but I could be out and ready for the bar when all of this collapses :>
Me thinks you will be quite busy if you go into BK law.
We are already a more litigous unit than ancient Rome. Can you see the conclusion that I am leading you to?
We might be converting all these condos into jail in order to have enough room to lock up all the crooks from this ponzi-scheme.
“trying to figure out where Marin’s fabled real estate market is headed. The answer: No one knows for sure”
Ha! When people here say they don’t know which way the Marin market is going, then you know it’s bad.
Here’s a clue.
Yeah, I was thinking the same thing. I know for sure!
I love that graph, marinite.
Very well done. And it really tells the tale….
… of coming woe - at least for some people.
The Marin market might retain its “fabled” status, but for some new reasons this time.
To me, the word “fable” in that quote simply means that the Marin IJ in collusion with local RE agents have been able to propagate certain myths on people which only have a grain of truth to them.
I agree that the IJ is a fable producer. On the other hand, they actually printed some non-positive items in this article.
Maybe it’s a new beginning for them.
beautiful site. now if we could tip the graph upside down to show the prices of homes falling in marin county.
Here’s the best thing ever written about Marin (courtesy of Wikipedia):
Moon Over Marin is the final track on the Dead Kennedys’ album, Plastic Surgery Disasters. The song is about pollution in the Marin area of California. The song is a fine example of guitarist East Bay Ray’s ability to blend surf music with punk rock. It is arguably one of the earliest examples of “surf punk”, not to be confused with the late-1970s-early 1980s cabaret act Surf Punks.
That’s my husband’s favorite song, he walks around the house singing it all the time.
Congratulate yourself. You’ve married a mad genius!
I love punk.
“All I wanted was a Pepsi…”
that is not the best thing ever written about Marin
it is #46,172 on the list of the best things ever written about Marin
my favorite song by the Cobain Suicides is “Punk Windshield Splatter”
Very OT.
I have just had a watershed moment. Chanel 13 on the satellite is suppose to be running “Real Estate Now” infomertial, but instead it’s “Hip Hop Ab’s”. The program screen guide does not match the program. It could be an error, but somehow I doubt it. Looks like it was cheaper to re-sell the time slot for a loss than to sell no properties. Some return is better than none. Looks like were over the cliff and picking up steam.
So you get to choose between the housing bull$hit or hip-hop? Can’t you just choose death? Better yet, just turn the damn thing off and read a book.
Here’s a good one:
http://www.amazon.com/Irrational-Exuberance-Robert-J-Shiller/dp/0691123357/ref=pd_bbs_2/104-0837982-3793567?ie=UTF8&s=books&qid=1173039803&sr=8-2
that was so funny about your infomercial moment!
Anyone post this:
From MoneyCentral.com
No End To Housing Slump In Sight
http://tinyurl.com/37ttoc
Excerpt….
“New statistics show the nation’s housing slump continued in the fourth quarter, and some market analysts are warning of another year — or even several years — of flat or falling home prices in many U.S. markets.
Figures released Thursday by the Office of Federal Housing Enterprise Oversight indicate that while home prices grew nearly 6% nationally last year, national numbers masked the drama in local markets, where some cities boomed, some saw prices recover and others experienced dropping prices. ”
“Analysts point to a spate of recent bad news in the real-estate industry:
* New-home construction starts dropped 14.3% from December to January, putting them 37.8% below the same time a year earlier, the U.S. Department of Commerce reported. Building permits dropped 28.6% from a year ago.
* Last month’s sales of existing homes were down 4.3% from January 2006. There are about 1 million homes on the market, though the oversupply peaked in October.
* Sales of new homes dropped, according to the Commerce Department, by 20% between January 2006 and January 2007. In the High Frequency Economics newsletter, analyst Ian Shepherdson calls January’s 16.6% plunge in new-home sales “unexpected” and the biggest one-month drop in 13 years. But he blamed weather patterns for some of the trouble.
* The National Association of Realtors predicts the cost of a 30-year fixed mortgage will jump to about 6.6% by the end of the year.”
Davis, the University of Wisconsin-Madison assistant professor, says that if you are thinking of buying a home, consider this:
* Don’t buy a condo right now. Because of an oversupply in many regions, prices may keep dropping for some time.
* Vacation property prices are inflated in many areas and may be due for a slide.
* Should you remodel? That depends on your motive. Upgrading in order to stay in a house 10 more years makes sense in today’s market, Davis says. But remodeling to turn the house for a bigger profit may not be good strategy at the moment.
* If you want to buy because you hope the price will increase and create wealth for you, hold off. Wait until values stop dropping.
* If you are happy renting and don’t need to own, patience is a virtue right now.
* If your motive is not financial but to put down roots, sink your teeth into a renovation project or acquire room for a growing family, Davis advises buying an inexpensive home where, if prices drop, you’ve won’t lose much.
* Any bargains to be had at the moment are in the high-end markets in regions where prices went sky-high. If you want to trade up, this could be a good time for that — though, of course, a lot depends on your local market and on the homes you’d sell and buy. ”
BayQT~
New statistics show the nation’s housing slump continued in the fourth quarter, and some market analysts are warning of another year — or even several years — of flat or falling home prices in many U.S. markets.
This is optimistic if anything. There is no fundamental reason why house prices could not decline for the next 5-10 years in California. Even longer if you look at real prices instead of nominal. This hangover is going to last a long time, and there’s certainly no reason to expect another dot-com type of stimulus to reverse the decline like last time.
Actually many are doing that in Silicon Valley. There is this hope it will come back again. Many of these people dont have the history of the valley and the failure rate. For every 1 IPO in 1999, 5-6 failed to get off ground. Thats a high failure rate.
““‘I just lost a huge chunk of the market, so I don’t know what’s going on,’ he said.
- ‘I called myself yesterday to see if my phone was still working.
- My phone hasn’t rung in two weeks.
To call yourself like that is called ‘Priming the Pump’…maybe the cosmos will ignite your incoming calls.
He’ll really be in trouble when he starts refusing to take his own calls.
LMAO
I’ll bet it won’t be too much longer until a lot of cellphones are not working due to nonpayment!
I can’t speak about the whole bay area. But I was seriously looking to buy in the east bay, to clarify, I mean the east BAY, where the water laps the shores of the small cities of Berkeley and Oakland (that is, not Walnut Creek, Orinda, or other locales on the other side of the tunnel, down 880, or up 80), between Spring 2002 and Fall 2002, and decided not to do so because in any good neighborhood with low to moderate crime and urban amenities you had to bid at least 10 percent over asking to even have a chance. I recall one two bedroom, poor layout (bathroom between the two bedrooms, for example), cramped craftsman on the market for 450K and I knew it would take at least half a million to take it. And, I was right. I decided to wait for sanity to return to the market–even if it takes a decade (i.e., until 2012). So, I can’t speak for the whole bay area, but the east bay sizzled all the way from 1998 to 2006.
So, I, too, don’t know what people are saying suggesting that prices somehow moderated in 2001-2002. Remember, the same weaknesses in the statistics (e.g., median house prices) we see now were present them. So, its a little tough to look back five years and accurately capture that market using only the flawed statistics that were recorded. In the moment, though, every one I knew who was in the market had a similar experience–even substandard houses they could not even compete for because the prices were going through the roof.
Hence, my name, IAT, Itsabouttime the (real) prices came down.
IAT
He originally listed it for $999,000 before reducing it to $899,000, meaning he will lose money in an otherwise torrid Larkspur market.”
“‘My wife wants a bigger house and she wants it now, and she’s not willing for me to wait or build a new house,’ said Lundgren. ‘She wants to get going.’”
Translation: I need to sell this sorry flip before my wife divorces me and takes the rest of my money. I just don’t understand it, one minute I was Donald Trump apprentice material and now you’d think I had a case of leprosy.
implode-o-meter now at 31.
This dam thing sure is hungry.
LOL. Reminds me of that insatiable, bloodthirsty, montrously-growing plant in LITTLE SHOP OF HORRORS.
“Rollins now sees ‘a significant and growing backlog of inventory.’ There was 20 months of available detached-home inventory in the year ending Feb. 1, versus 15 months the previous year. For condos and townhomes, there were 21 months of potential sales on the market in the year ending Feb. 1, versus 14 months the previous year.”
I’m shocked Marin’s inventory is this high. And I say shocked because the local press NEVER mentions inventory. I knew it was higher, but this is a stunner. How there can be any “confusion” about the market’s direction is beyond me.
“Scott Hunt in San Rafael said business has dried up recently for him and other housing inspectors. Hunt said he usually gets six or seven jobs a week, but lately he has gone for more than a week at a time without an assignment.”
“‘I just lost a huge chunk of the market, so I don’t know what’s going on,’ he said. ‘I called myself yesterday to see if my phone was still working. My phone hasn’t rung in two weeks. It seems like the whole world’s for sale, and there’s no buyers. It’s been dead as a mackerel.’”
Sounds like the market that Scott is in may be in the condition called “selling into a vacuum”. >>not good
I really liked San Rafael when I was there in 1990. Something tells me it’s a lot different. I like Marin County (hate L.A.). It seemed so clean. If this thing really crashes maybe I’ll look to move out there.
“With great responsibility will come great power.”
You might not like Marin.
You would be too real for them; and most of the people not real enough for you.
This will take an entire housing cycle to correct as long as bailouts continue. Gee, that couldn’t be the plan now would it? Another article from the SF Chronicle today:
http://sfgate.com/cgi-bin/article.cgi?f=/c/a/2007/03/04/BUG1NODSKN1.DTL
“As delinquencies rise, many mortgage companies are reaching out and urging stressed borrowers to contact their lenders before they reach the point of no return. Many will cut borrowers more slack than they would the last time the housing industry suffered a downturn, in the early to mid-1990s. “It’s almost night and day,” says Rick Harper, director of housing with the Consumer Credit Counseling Service of San Francisco”.
“In the 1990s, lenders might let strained borrowers make partial payments for three to six months if it looked like they could get back on their feet. “Now (some) will go out 12 to 18 months if we can show valid reasons why it will work,” Harper says”.
Yes, you can try to make them caretakers of the property to keep it off the books, however, this time is different as prices will continue to go south. With no possible equity in the property, why should they try to maintain it? How many will let insurance lapse? How many will stop paying and house sit until evicted after you make things easier? How many making partial payments will buy large ticket items on time because you left some spendable income on the table? And this time word of mouth helped this firestrom ignite and it will also help the firestorm of foreclosure ignite. BTW, any guesses on who is going to host the first seminars for foreclosed and BK homeowners telling them how to reenter the housing market (you know: sue everyone, deny responsibility, deny understanding of English,blame it on global warming, etc).
In the 90’s, the market went from peak in 1989, to trough in 1991. Prices in my Bay Area neighborhood took a 30% hit in this 2 year span, and good ol’ Rick Harper hit it right on the head; no one gave a rat’s azz.
Just a tad bit frustrating to watch this time around. Sort of like being a Titanic passenger (2005 homeowner), and you recognize the impending collision with the iceberg. You and several others with sense, slip into a lifeboat in search of safety while others laugh and sip champagne from the deck of the ship. Sure enough, the collision occurs, but this time, the Carpathia motors right past you, arriving just in time to bring the fools more caviar, blankets and extra lifeboats.
Yea but even in 1989-91 rates went down and so did prices. That didnt happen this time around. I expect a much bigger correction this time around. The 1991 prices were down to prior 1985-86 prices.
“‘My wife wants a bigger house and she wants it now, and she’s not willing for me to wait or build a new house,’ said Lundgren. ‘She wants to get going.’”
Isn’t it just like a woman with no sense to start driving the markts! I hope this woman takes a big hit for forcing a husband to buy in a potential market that is heading lower.
I hope this woman takes a big hit for forcing a husband to buy in a potential market that is heading lower.
Any man who allows his wife to “force” him to do something that stupid deserves what he gets. Is he completely emasculated or what?
That flipper and his wife need to get a brain “NOW”
they should get two if possible.
someone needs to walk up to her and punch her right in the mouth, knock out half a dozen teeth
I guess that’s a joke for those blogging from prision.
Can we PLEASE leave he mysogyny for another board. Lots of smart bubble-sitting women here would love not to have the conversation de-volve like this.
Hardly a “conversation”. I guess you didn’t get my point. There was one misogynist post and it wasn’t from me. (ps you might look up the spelling of misogyny before claiming how smart you are.)
I don’t think she was referring to your post, manraygun, but the one(s) before it.
I posted a similar sentiment above. The misogyny runs thick around here, in many ways & many threads. The women here (and there a many of us) are EXTREMELY tolerant about it, but it gets old, to say the least.
Here’s Knox’s company. When he’s not flipping houses.
http://www.mypoints.com/emp/u/index.vm
A freaking web site? What year does he think it is, 1999?
“‘My wife wants a bigger house and she wants it now, and she’s not willing for me to wait or build a new house,’ said Lundgren. ‘She wants to get going.’”
More evidence, unfortunately, of the near total breakdown in the Western family. No wife (or husband) should ever make demands of their partner that are not conservative, cautious, and good for the family as a whole.
You don’t need that $890,000 home, folks; and you don’t need the mercedes or the boat. Live not only within your means; but within your means in a way that if tragedy strikes, you’ll be able to get through it.
When budgeting, *plan* for the sudden and unexpected loss of a job, or even of your spouse. Plan for at least one major career change in your life, and realize that it could happen in your late 40s, or even your late 50s.
Honestly separate your needs from your wants. Don’t presume to take your spouse for granted, not even in the smallest things: Make sure, in other words, that it is O.K. with your spouse if you buy lunch while at work, or if you buy a soda now and then.
Save your money, live frugally. And when you are well off because you planned well and you have extra money, THEN think about doing something nice, or buying something expensive. But since you only live once, try giving that money to the poor, or the homeless, or to senior citizens that suffer because they are uncared for and don’t have anyone to look after themselves.
After all — that might be you someday.
I greatly appreciated all your paragraphs above except the last two.
My sister is poor, but that is by her choice. Many others are like that. They do not take opportunities and pull themselves out. It’s laziness. I absolutely do not donate to the poor. I donate to red cross disaster relief, American Heart Association and American Cancer Society. I refuse to encourage laziness. I am fully insured and I put myself in my financial position. Thank goodness I listened to my parents in the 70s when I was a teenager and did not take any drugs. To this day I have to take drug tests for my job and I am perfectly fine with that. If I got into the drugs, I would be like those who you donate to. To use drugs is a choice. Let poverty be the punishment for taking the wrong choice.
That’s pretty cold, man.
The kids of poor people and drug addicts didn’t make that choice, and they’re the ones hurt most, and they’re the ones I feel for.
As for Austin’s comment below, I’ve been perusing some threads over at BO . . . there’s one classic thread starting Friday where all the scumbag brokers are shouting down the rumors, and the tone gradually changes as news comes out in dribs and drabs. Good stuff!
The one called “Nico” is one of few free of cranial-rectal conjunctivitis. He could be one of ours.
Read that on Friday — totally hillarious!
You could actually watch things transpire with Freemont & New Century by their exchanges.
My favorite post was from rude??? who kept blasting Nico for spreading rumors & asking for links. After a few failed attempts to link by Nico, one link finally worked & rude??? said something like, “that one worked. Wish it didn’t. Crapping my pants” or something to that effect. Too funny!
“Thank goodness I listened to my parents in the 70s when I was a teenager and did not take any drugs. ”
That’s the wonderful thing about America. Anybody can use drugs and grow up to be President — ask clinton or bush.
Maybe we should go ahead an require all future Presidents to use drugs. The DC press corps will gasp when they find out a candidate didn’t use drugs.
what’s taking drugs have to do with success? I took drugs ma….
what was i saying?
You’ve assumed character defects in people you don’t even know.
I see the suffering, and I choose to help. Anyone can be down on their luck, and need a helping hand one day. It doesn’t cost a lot to help those who suffer. With five dollars, I fed a man today who wouldn’t have eaten otherwise.
Mother Theresa noted that the spiritual poverty in America is greater than the material poverty in India.
I’ve been to India, and I tend to agree with that observation.
So, if we’re ever going to get past the point where wives and husbands demand brand new homes from each other; and if we’re going to get past the point where we stop assuming those who are in need are either lazy or addicted to illegal drugs (or both); then we’re going to have to start learning how to be more charitable to each other. And we’re going to have to start learning how to be better wives, and be better husbands.
Excellent posts, livin’ in QC!
Bill’s smart in many ways, but fails to see how vulnerable he is. He assumes having $700K + insurance (and excercising to the point of being narcisistic - sp?) will protect him from life’s tribulations.
EVERYONE is vulnerable to financial failures and horrific health problems. Absolutely EVERYONE.
See how long Bill would survive if he should suddenly become disabled. While $700K is a nice chunck of change, it’s nothing when one has a significant health setback.
chunk…typos & spelling errors…
…but the President says to go out and spend money. Everything is fine. Everyone go out and buy a plasma TV to save the economy.
I apologize if this has already been posted. If this email appearing on some stock and mortgage broker message boards is to be believed, Fremont (#5 subprime lender) is closing its doors. The news on Friday was that the company was exiting subprime but staying in the commercial real-estate loan business, which it said “continues to perform well and remains profitable.”
From: Brian Daily
Sent: Sun 3/4/2007 4:22 AM
To: *Tampa 2 Office; *Tampa 1 Office; *ResRe Tampa 1 AE
Subject: Fremont ceasing doing business.
Teams,
It is with great regret that I must inform you that Fremont Investment and Loan will cease funding loans and doing business.
At 12:35 (pst) Saturday, Fremont General received notice from the FDIC that they are not permitting any more loans to be funded by Fremont. In short, our funding available was terminated by the Federal Home bank.
The suddenness of the change and the shift from our communication literally less then 24 hours previously simply perplexes me. However, this simply validates the volatility on our business. None of us in Hawaii realized or appreciated the gravity of the situation we were facing.
There are many questions that many of you have. There is a conference call that will be conducted on Monday that will answer many of these questions that you will have.
Jerry Casanova will be able to communicate with you more specifics on Monday morning. Please show up for work to receive these instructions. I will be leaving the meeting here in Hawaii early and attempting to return to the office sometime on Monday.
In order to assist our clients with some instructions- I have listed some Q and A’s to assist you in your communications:
Q: Do I continue to solicit loans?
A: No. As of the 3rd, we are no longer sourcing new business.
Q: Will I close what is in the pipeline?
A: This will be clarified on Monday. I would suggest to sent back all loans to the broker
Q: What do I tell the brokers?
A: Fremont Investment and loan is no longer conducting business. Any files that are pending or have been submitted will be returned to you.
Q: Will I get paid for the loans closed?
A: Yes.
Q: Does termination take effect immediately?
A: Clarification on this item will be determined on Monday.
Q: What about benefits and severance?
A: This will all be clarified on Monday or the early part of the week.
Everyone, I cannot tell you how sadly I am disappointed this industry has trended so deeply in this direction. You all have accepted me so warmly upon my arrival at Fremont and I will always cherish those relationships forever. At this point, I wish I had more information to share with all of you but I simply do not. My travel logistics are extremely complicated right now and hopefully I will have more information in the next 24 hours.
So I do not lose valuable contact with any of you, please forward to Jo Haynes your cell phone, home phone and home address. I would like to keep this information as we begin to search for alternative strategies to consider.
I’m in Hawaii, you’re fired. Jerry Casanova will explain everything on Monday. What comic book is this?
Dr. Drake Remora will be on hand to prescribe anxiety medication.
Brock Landers and Chest Rockwell will be in the lobby collecting applications for the adult entertainment industry.
Chest Studwell
Their residential mortgage service got a Cease & Desist order from the FDIC. They are no longer allowed to make residential mortgage loans. Fremont is now trying to sell off that portion of their business. They might want to go to Watts and see if Sanford & Son are still around.
Yes, Fremont has shut down their subprime ops and laid people off on Friday (first hand source). More people will hear this Monday. Nobody saw it coming….
“You all have accepted me so warmly upon my arrival at Fremont and I will always cherish those relationships forever.”
What a load of cr*p. Translation: boy am I lucky that myself and the other execs still have our jobs.
I was a single mom working for a company when it was purchased by another company. The head of our division held a meeting for all of his ‘people’, to let us know that he was leaving and to reassure us that he was financially secure…..I wanted to barf in his lap, then ask him if he REALLY thought I cared.
(If this thing really crashes maybe I’ll look to move out there. )
Here’s a question. Coastal California, like NYC, is a place people want to be, and where new construction hasn’t met the demand. The problem is the price. The question is, will buyers step in when prices return to reasoanble levels relative to income? Or will the bust scare people so much that prices will fall past reasonable value?
Well, last time around (early ’90s), prices fell to just above what I considered reasonable at the time. What will happen this time? It depends on the depth of the recession. As you say, new construction has not met demand in the coastal areas. I know that I will buying more coastal property, if and when the prices pencil out, and assuming that my income doesn’t take too big a hit.
From Newsmax:
Prices for credit-default swaps linked to Goldman Sachs, Merrill Lynch, and Morgan Stanley bonds are trading at levels equal to debt ratings of Baa2, according to Moody’s Investors Service. That’s five levels below their official Aa3 ratings on senior unsecured notes and two rungs above non-investment grade or junk status, points out Bloomberg.
Credit-default swap prices tied to Lehman Brothers and Bear Stearns equate to debt ratings four levels below their official A1 ratings, also two levels above junk.
Credit-default swaps act like insurance on bonds. Traders buy them to hedge against a default. When prices for the credit-default swaps go up, it means that the underlying bonds have become riskier.Morgan Stanley and Goldman Sachs were among the top five traders of credit-default swaps in 2005, according to a report by Fitch Ratings. The top five traders represent 86 percent of the market. Lehman Brothers, Merrill Lynch, and Bear Stearns were in the top 12. So, in effect, as the price of credit-default swaps rises, it’s actually the investment banks’ traders that are valuing the banks at close to junk status.
The slump in the housing market and the precarious subprime lending market are upping the risk of credit defaults, according to Bloomberg.
Since 2005, Merrill Lynch has financed two mortgage lenders that have since failed and purchased a third, First Franklin Financial Corp., for $1.3 billion.
In an instance of “pot meet kettle,” Merrill’s equity analysts recently cut their recommendations on Goldman, Lehman, and Bear Stearns, Deutsche Bank, and Credit Suisse Group to “neutral” from “buy” because they anticipate earnings weakness tied to the housing sector.
Bear Stearns holds about 13 percent of the firm’s “tangible” equity in non-investment grade mortgage securities, according to CreditSights. Lehman holds 11 percent. Goldman, Merrill, and Morgan Stanley don’t disclose the level of junk mortgage securities that they hold, but CreditSights estimates it’s in “the low- to mid-teens.”
Anyone else watching the futures tonight? They opened down about 2, now down 6. Nikkei down about 350 (2%) in early trading. Tomorrow is shaping up to be a doozy.
http://www.cme.com/trading/dta/del/globex.html
looks like there is pretty solid support at about 1350 on the S&P. Perhaps it may take a breather there?
Its down now over 400 points. The thing is, I think it will be worse in the US markets.
I’m not so sure. The yen is surging, which will be good for US exports & force the trade imbalance down a bit.
Nikkei is down because a stronger Yen will hurt exports. Australia is tied to China due to commodities. China and India are going thru some political changes and the markets there are in panic. I would be more concerned with the European markets.
A stronger yen is awful for carry trade. US markets should be fun tomorrow
I believe you are correct, let’s see in about 10 hours.
Yep Asia markets down 2-3%.
What is it down now? 600 points? Over 3%?
Yeah, should be fun tomorrow.
Hang Seng down 4%, Nikkei down 3.34%.
Gonna be another fun week on WS — at least for us HBB’ers.
O.T. Where do you put your money? If all hell is about to break loose, what do the learned members of this illustrious blog suggest. I only ask this as it seems possible that your prognostications seem to be unfolding in an alarming manner. I, a poor and lowly cog, have little recourse but defer to your esteemed advice on future market activity. What would Jesus do?
Cash and bonds with maturities of 5 years or less.
The long bonds could do anything. If China and OPEC slow down their buying of US debt, the long end will go into the crapper.
Actually I don’t think the stock market will get killed too badly by the end of the year, but it’s gonna be a wild ride in the meantime.
Thanks
If you want to buy a stock, buy Pfizer. Can’t go much lower, nice fat steady dividend, and we’re gonna need a lot of medication to get therough the next few years.
Do they make lots of good anti-depressants and Prozac?
Blood pressure meds and Viagra. Both will be necessary due to mortgage-induced hypertension and the fact that it’s hard to get it up when you’ve just realized that your financial future is in the toilet with your fresh vomit.
No one will have insurance to buy the meds after either being laid off or having their benefits cut.
Where Pfizer goes depends on where their new management takes them. They made a lot of bad decisions, as did many pharmaceuticals. I wouldn’t buy any pharmaceutical stocks now, except diversified ones like Johnson and Johnson.
Jesus saves . . . but he’d do better if he invested!
(An oldie but a goodie)
Actually, He’s the one who told a good story about the guy who buried his master’s money in the ground instead of investing it. The master was not pleased!
I’m shorting everything and my Roth and 401K are in ETF’s that are short :
QID
SBB
SKF
SRS
TWM
SDD
thanks for the info - didn’t know they had ETFs out there like this. I’ve been using Rydex funds to short
Does FIDO have a Bear Fund?
Be careful with the bear funds like BEARX. They own equities like of commodities companies and precious metals. If there is deflation, the bear funds also lose.
In deflation, everything loses, but what loses least loses best.
In a deflationary market, stocks are generally flat, so you invest in stocks that pay a good dividend.
Sorry, I was thinking about stagflation. In deflation, cash is king of course
Me too. Can’t believe that on a housing bear site, you didn’t mention “SRS” !!
For those who want to find out some other ETF’s check out http:\\www.bearmarketcentral.com.
I agree about the below comments on BEARX. It’s trying to be too clever for it’s own underpants.
Whoops
I’ll take that (or perhaps type that) back.
You did mention “SRS”. It is 60% of my portfolio. I’m mulling over making it 80%. Perhaps I am being greedy…
Goldilocks is alive and well.
Stock openings Monday 5th March Japan and Australia.
^AORD(Australia) - 60.40 (-1.05%)
NIKKEI 225(Japan) -328.23 (-1.91%)
Nikkei down 331 in first 1/2 hour….not looking good for our team tomorrow….do they have a PPT or might they borrow ours?
7:36 pm EDT
Word has it Heli Ben is refueling the choppers right at this moment.
Their PPT has to unwind their yen carry trades first cuz all their money is in US bonds.
(See kids, this is the problem with the PPT conspiracy theory. This makes our bonds go down, so now what?)
Print more money and get rid of M1 and M2
Down over 400 points in Japan now.
HSBC’s record write-off to ruin results
By David Prosser
Published: 05 March 2007
HSBC, Britain’s biggest bank, is today expected to stun the stock market by warning that misadventures in the US mortgage market have forced to it to write off up to $11bn (£5.7bn). [US$11 Billion]
http://news.independent.co.uk/business/news/article2328846.ece
So much for their $14 Billion purchase 4 years ago of Household….
Make that a 25 billion purchase if they write it off.
Nikkei taking a dump big time, down 2.1%, Yen up almost 1%
http://money.cnn.com/data/markets/index.html
Holy $hit, this is huge!!!
I think maybe a lot of people in the US don’t take in the full meaning of ‘Britain’s biggest bank’. We are NOT talking about a small operation. I myself have relatives who bank there.
It’s also the biggest bank in HongKong (or at least it used to be).
‘The Independent’ is not the biggest UK newspaper, but nonetheless it’s a quality national daily.
I don’t know the precise US equivalents, but I would guess this is maybe like the LA Times stating that Citi is about to take a big hit.
my stupid FY06 IRS payment is sitting in HSBC @ 6% right now. I better be able to pull it out next month or I’ll be right skrewed.
Reading some posts at calculatedrisk, maybe I’ve jumped the gun here.
I was comparing the headline $11B number with the previous headline $1.75B. Looks like it could have been apples and oranges, with a ‘HSBC Stuns Market’ headline sending the bad vibes.
This 11B write down is OLD news. They announced it way back on February 8. It’s already been dealt with.
The only difference is that this weekend they actually TOOK the writedown, but it was a known writedown for a month.
here’s the original story:
http://in.us.biz.yahoo.com/rb/070208/hsbc_shares.html?.v=5
Brittain doesn’t get it.
Many Americans don’t give a crap about their credit.
Leave the keys in the kitchen, head over to the friends house, sit on the couch and crack open a beer. No worries.
haha
I’m going for the throat. I’m taking out March195 puts on Goldman.
Boz man, be sure invite me to your yacht party because you are one serious bear about to be paid in full!
I’ve been short GS, BSC as well as WM and WB — since last fall. I was too early (as always). Knew it was a risky bet & been getting killed. Maybe things are about to turn around.
Bring it on!!!
more PPT conspiracy theories
falls under the definition of superstition- inventing causes for what we cannot see
The PPT does exist. Their real name is the President’s Working Group on Financial Markets. Nobody knows what they do because they are not accountable to Congress nor the US Courts. Their sole job is to stabilize the markets in case of a panic. There was even a White House spokeman who was quoted by MarketWatch saying that they were going to meet on the night of the 500 point DOW drop. Call it what you want, but it does exist. It’s like saying the Mafia does not exist. It’s really called Cosa Nostra. Same crap, different name.
How come the Nasdaq dropped 80% in the early 2000’s? Were the PPT on holiday?
That wasn’t a panic. It was a recession that lasted 3 years. The PPT is for stabilizing the market when it is in panic. They do what they can, but when everyone is selling, it’s like pissing in the ocean.
How come the Nasdaq dropped 80% in the early 2000’s? Were the PPT on holiday?
The PPT exists. It’s power, however, is not omnipotent. In fact, given global imbalances in general, and American imbalances in particular, I’d postulate their effectiveness has pretty well been rendered impotent.
As for the 2000 meltdown? It was a transitional election year. The ox needed to be gored (npi).
There’s your answer. The PPT works, except when it doesn’t. Got it?
Tell the PPT to quit messing with my gold!
“Their sole job is to stabilize the markets in case of a panic.”
———————————————————————–
Stabilizing markets has nothing to do with ultimate prices, it is about the orderly flow of those prices. The market lost a lot of value, as I recall over 2000 points, after 9/11, and that was after reopening from being closed over a week. A panic was avoided, but lower prices were not avoided. There is no evidence that a PPT is trying to maintain any set price levels.
Correct. I stated that their job is to stabilize the markets, not set prices.
I don’t know if you read about it, but during the early stages of the Great Depression, all of the major bankers got together and tried to prop up the market by buying stocks. The “PPT” includes the heads of the major Wall St firms.
The main job of the PPT is to keep the price of gold down. Nothing else. Gold got it?
“The main job of the PPT is to keep the price of gold down. Nothing else. Gold got it?”
—————————————-
some people should leave their investment decisions to others
Leave it to our British friends to do the snooping…
They were able to find out some interesting facts about the PPT.
http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2006/10/30/ccview30.xml
“Carnevale, who works for a brokerage firm, had his heart set on a particular house. But then, he said, a McMillin salesperson told him it was ‘already taken by a VIP’ who wasn’t even there.
Ah, yes. The Corky McMillin companies, the very same company that came to places like Visalia and threw their weight around, bullying and bribing city officials to give them ever more land at low rates.
The area behind my old house in Visalia was beautiful farmland–located south of Caldwell Avenue. McMillin brought bulldozers and illegals to turn that land into hundreds of McMansions, many of which are now the subject of short-sales. They built a four lane expressway directly behind my house, and the city was in bed with them through the whole thing. I’m glad to see the financial hardships of such companies; I can’t wait to see their bankrupt a$$es.
278 Million Fraud Has Exec Sentenced to 20 Years Former HomeGold chief executive Ronald Sheppard will spend the next 20 years of his life in prison for his role in defrauding 8,000 investors out of roughly $278 million dollars, many of whom lost their life savings as the mortgage company presented the illusion that all was well – when, in fact, the business was collapsing around them. After less than two hours of deliberation following a three-week trial, the jury found Sheppard guilty of securities fraud, conspiracy, and obtaining a signature or property by false pretences.Circuit Judge James W. Johnson Jr. then sentenced him to 20 years in prison, the stiffest penalty yet for HomeGold executives charged in the massive investor fraud involving Pickens, south Carolina-based Carolina Investors Inc., a subsidiary of HomeGold.HomeGold originated, sold and serviced subprime residential mortgage loan products.Former Carolina Investors chairman and former Lt. Gov. Earle Morris was convicted 22 counts of securities fraud and sentenced to 44 months in prison. Morris has been released on bond pending appeal. Former Carolina Investors president Larry Owen pled guilty to 22 counts of securities fraud and is currently serving an eight-year sentence.His wife and former Carolina Investors vice president Anne Owen, also pled guilty and was sentenced to 10 years in prison. Her incarceration was ultimately reduced to 90 days with five years probation, home detention, and electronic monitoring for 18 months. Former HomeGold chief financial officer Karen Miller pled guilty to one count of conspiracy. Her sentencing has been deferred while she cooperates with the on-going investigation. Meanwhile, former HomeGold chairman and chief executive John “Jack” Sterling Jr. has pled guilty to three criminal counts, including securities fraud and conspiracy, and faces 25 years in prison and up to $105,000 in fines.Prior to beginning his career in the mortgage industry, Sheppard had been a high school dropout.In May 2000, Sheppard merged his private mortgage company, HomeSense, with publicly-held HomeGold, going on to become the company CEO and a member on the boards of both HomeGold and Carolina Investors.Under his watch, HomeGold gave Sheppard $5.7 million listed as loans, but were never expected to be reimbursed. Another $8.4 million of company funds were shifted to a new company he formed in exchange for a worthless IOU. He spent $102,000 on a fitness trainer, $885,000 on a personal motor home, and even tried to get back $17,380 for office wallpaper purchased years earlier.Sheppard still faces additional charges - including bank fraud and forgery - in cases that remain pending, according to prosecutors.Sheppard had no visible reaction when the sentence was handed down, but his family members immediately burst into tears.Posted on Thursday, February 08, 2007 by staff, Mortgage Ledger
Related Links
Most Read Story For Industry Scandals:Flashy Gangster Faces 30 Years for Mortgage Fraud
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You don’t get to join the elite of fraudsters until you spend $15000 on an umbrella holder
http://washtimes.com/business/20040402-105612-8912r.htm
As I said for every Bust you will find Frued…
Its been true for so long.
Im still waiting for expose on Fake Multiple Bidders.
That will be the Enron of this Bust.
I am planning on fake multiple lowball bids to make the FB more desperate
Make it an open auction requirement and this will kill the market in California. There will be plenty of lowballs … all seen public and on the media. Transparency!
“It Seems Like The Whole World Is For Sale”
LOL. Funniest thread headline thus far (because it’s true). Epitomizes a hard landing - a rush for the exits if you will.
“It Seems Like The Whole World Is For Sale”
Yes it is and the price is dropping rapidly.
NIKKEI 225 down -419.90 (-2.44%)
HANG SENG INDEX - 393.82 (-2.03%)
Australia -111.00 (-1.92%)
Can’t wait to see the Wall Street numbers tonight.
Maybe not the whole world - but certainly the equity markets within it, as well as the US$. Tomorrow - ugly gets a new meaning. I feel like a genius having sold ALL of my emerging market stock and bond funds last week after the 1 day rout. Really nothing more than fear of giving back those gains.
dd
Aha! It was YOU who crashed the planetary stock markets!
“On Feb. 7, HSBC said it’s setting aside 20 percent more than analysts estimated for loan losses last year because its U.S. mortgage business is deteriorating”
——————————————————————————
Alot of Brits are sweating bullets these days on their “Florida Investments”!
Reminds me of the Japanese who lost mega million on prime golf resort in Monterey CA. New investors purchased it for 50 cents on the dollar.
(repost since the original post thread is 4 threads down..)
We went to look at some model homes in Ardenwood this weekend. The townhomes range from 600k for 2/2.5/2CG/1300sqft to 680k for 3/3.5//2CG/1600sqft. The SFHs range from 1.13M for 4/4/3CG/2743sqft to 1.3M for 4/4/3CG/3009sqft.
The builder is John Laing Homes. Their website is http://www.johnlainghomes.com where you can get all the details.
So I asked the sales lady there whether they have incentives. She gave me this look and said no, except that if you go with their “preferred” lender you get $7500 towards closing costs. In fact these prices are $20k higher than the first release, which was last week.
WTF is going on? In new homes in San Ramon, for example, they are giving incentives galore, well into five figures worth and sometimes approaching six. Ardenwood maybe much closer to the Peninsula (being just across the Dumbarton bridge), but they’re treating it like it’s as special as Palo Alto. In fact, this sales lady was comparing these homes to condos being built in Palo Alto at the same price point and noting how much more you’re getting for your money in Ardenwood.
To be fair, these are very nice homes on the inside in terms of quality and fittings (as far as I could tell). Slab granite, upgraded appliances, porcelain tile flooring in baths, and nice fixtures. However, in general all these “upgrades” in my view add up to no more than $50k. The existing houses across the street are selling in the $800k range and these guys are asking 1.2 million?
The worst thing is that last week’s release was all sold (5 houses). They then proceeded to sell the 3 model homes (1 sold, 2 under contract as of today) and are selling another 5 next weekend at the prices quoted. The sales lady said they have 250 people on their “interest” list, which was formed before the pricing was determined. We went at 5pm yesterday, by which time all the brochures were gone and so were the coffee cups. Tons of Indians and Chinese folks looking, plus the token White and Black family. For those of you who know Fremont, in particular Ardenwood, this is a familiar scenario.
We lived in Ardenwood for four years. It is nothing but a sea of houses and some commercial concerns, built on former farmland. Can someone explain to me how a builder can be asking such elevated prices, getting them, and then proceeding to up them $20k every week? It is supposed to have the best elementary school in Fremont after the Mission San Jose schools (Forest Park), but these houses don’t even go to that school. They go to Ardenwood Elementary, which is pretty average for Fremont, from what I hear.
Not only that, but these houses are very close to Union City, and the gangs that come from there. When we lived in Ardenwood (on the “better side”, mind you) our car was broken into, allegedly by Union City gang members. The rich Indians and Chinese who will end up buying these new houses are going to be sitting ducks.
Can someone explain to me how this can be happening in Fremont, let alone the peninsula? I’ve heard anecdotally that SELLING prices are still rising in Mountain View, Palo Alto and Menlo Park, in multiple-offer situations with one to two-week listing periods. Do buyers in these places not know that there is a bubble?
Is there, in fact, a bubble in the peninsula and Fremont? We sold in 2003 thinking the price was too high and missed out on 2 years of gains, about 50%. It is extremely frustrating now to see asking prices still being accepted as if nothing was out of order. Sometimes I think there are enough dual-income families, highly-paid software engineers and executives to keep the “hot” areas priced high indefinitely.
And this whole school thing is insane. The best school districts are said to be Palo Alto, Cupertino and Mission San Jose (Fremont). Just because the rest are crappy, does that mean that all the rich people flock to these districts and keep the house prices sky-high there? These areas all doubled (or more) over the last five years but don’t look like losing any significant portion of that gain even as the outlying areas burn ..
No the rich dont flock to these areas. Rich areas are Los Altos Hills Los Gatos and Woodside. Buyers in PA Cupertino are flushing their cash down their toliet. I been here in south bay since 1971. There will lots of pain coming in months ahead.
Palo Alto realtors are just looking for deep pocket Google employees which there are few. Many like their Yahoo brothers/sisters got rich and moved out of the area.
Many buyers just like you have similar salaries but are delusional in thinking we will have another boom in the valley. So what ever price they paid they expect even higher returns due to another boom.
However, due to high cost of compliance SOX and recent stock option scandels will not allow new IPOs to hit the market like back in 1999.
The tech boom is over and some who missed it are in denial. I see this every day. Do you expect another 100 google like companies coming on-line?
The $600K townhomes are for first-time buyers. The $1M+ plus places are for move-up buyers with $400K+ equity.
Here’s how a $600K place pencils out:
$30 (5%) down leaves a $570K mortgage.
IO @ 5.75% is $2800. PMI, Prop Tax, HOA washes out the mortgage interest deduction basically. $2800 would be easily doable for me even on my average SV salary. . . . but I prefer my $1320 rent right now. . . nice, clean, quiet, safe 2B apt runs $2000+ right now.
Sorry but a 700sq selling for 400K and 2000sq selling for 600-800K …. IS NOT DOABLE… Thats insane. We infact are at the same jobmarket today as we have been back in 1990 at 850K jobs.
Why would you even consider paying 600K for something that was well under 200K less than 10 years ago. At best appreciation has been 4-5% yoy. Thus it would be worth around 300K and not even 600K. All the factors that drove prices from 200K to 600K are gone!
I totaly disagree with your statement. There is no justification for these prices. There is no shortage of housing in SV.
Corrected………WOW…….look out below
NIKKEI 225 down -419.90 (-2.44%)….-481.23 (-2.79%)
HANG SENG INDEX - 393.82 (-2.03%)..-606.09 (-3.12%)
Australia -111.00 (-1.92%)…….-132.80 (2.30%)
As Crispy would say……TIMBRRRRRRRRRRRR
Sacramento note
Drove through the Sacramento suburbs of Roseville and Lincoln yesterday.
I had been reading about this area on the blog but seeing it really shocked me! Literally miles of stucco boxes on tiny lots… miles of it. The required shopping centers were in place with lots of parking available. Driving out I got to view miles of totally dark neighborhoods.
Like I said reading is one thing seeing is anouther.
WOW Things will get real bad
Wow - Nikkei down almost 600 points - Yen up further, I wonder if/how many banks/hedge funds are going to close their carry trades. Nasdaq is going to get murdered.
Anyone else Nikkei Watching? Down -672. Wow
im watching it.
Good to know I’m not the only sadist!
Alas, I would follow it more closely, but I do not have real time quotes! How frustrating!
It’s sadism only if you’re a bull in this market!
Nope - a bear who loves to watch bulls suffer!
this is going to create a huge bull market in toilet paper and underwear stocks. Every single major world index is down big.
Don’t forget adult diapers.
I stayed up all night watching Nikkei and Hang Seng!
It’s not going to be pretty today. Figures, I’ve got things scheduled all day and well into the evening and won’t be online for what’s going to be important reading.
Closed -621
That’s gotta leave some skidmarks
good day being 100% cash. I pulled the 401K out of equities in Nov, largely thanks to reading this particular blog and seeing the writing on the wall. The US market is already back to my exit point.
Which will lose more tommorow (%) - NEW, FMT or DRL??
don’t forget NFI - always good for a laugh.
It ain’t just stocks that are for sale ! The Nikkei just closed down 575 points, just shy of 4%. The carry trade is collapsing. The yen is rising. There will be a big sell off in New York tomorrow. I expect an open 500 points down.
‘it seems like the whole world is for sale’
well, actually just most of the US and Oz; in the rest of the anglosaxon world real estate still ‘only goes up’ and people are totally ignoring what is going on there (probably 99% doesn’t even know). If anything, this is just the start of a very long downward slide of worldwide property markets (and even that I’m still doubting, it may depend on the actions of the FED and other central banks over the coming months).
nhz ……
IMHO………if this financial bubble implodes as I think it will……….nowhere on this earth will not feel the effects……..do you think if real estate deflates in America that Europe will not go the same way…….of course it will……..think globalization.
yes, the credit market is globalized - but there is NO real sign of stress outside the US credit/mortgage markets (yet). To me it still looks like what happened in Europe in 2001: a small bump on the RE road, some speculators got scared; but with more central bank pumping the housing bubble got a second life and is surging again. As long as prices keep climbing in Europe I don’t think this is really over.
On another note, the Dutch stockindex is now down 9% over the last week but the TV news has not mentioned anything yet - while they cheer every small gain of the markets. So even if we get a housing bust in Europe, I wouldn’t be surprised if the official news ignores it for many months just like they have been ignoring the problems in the US housing market. Ignoring won’t help if the bubble bursts, but it will certainly make the downturn longer and more painful for the taxpayers (and of course give speculators and FB’s a better chance to get out in time).
nhz,
the stories there are simply incredible about the housing appreciation.
Here, more appreciation is simply not possible. It is hard to describe how overleveraged people are in RE here. There is simply nobody else who can buy. We will thus fall.
At some point the Dutch govt will have to let housing plateau or fall. It will eat up too much of your budget, since it looks like Dutch RE is propped up by huge govt subsidies. Faced with keeping housing expensive or giving medical insurance or keeping roads maintained, or keeping the Netherlands above the North Sea, eventually housing will fall off the “must do” list of your govt.
Here, the story was the same as it was there… until it wasn’t. It took many by surprise (nobody on this board). The same will happen there.
Regardless if it is reported or not, the sales will just stop, the prices will come down. Our media didn’t report a drop in home prices or a stoppage of home sales until well after the trend reversed. (probably a year). Which shows that you don’t need the media to stop a mania. Your own country had a tulip collapse essentially without media as well.
hang in there…
sure, it will happen - it is just taking way longer than anyone expected. For Dutch government spending, housing (including HMD, subsidies etc.) is already the second largest item - way above education and healthcare. I wouldn’t be surprised if it gets the top spot in the next years, because the big parties see housing subsidies as some kind of social security and it still works like magic for the election results.
When it comes to choosing between investment in keeping the Netherlands above water and in rising home prices, all the big political parties know what to choose - the latter option. At least as long as massive flooding is more than 4 years in the future
The plunge protection team will prevent things from crashing.
The PPT decides markets need intervention, a decline needs to be stopped, or the risks associated with political events that could be perceived by markets as highly negative and cause a decline, need to be prevented by a rally already in flight. To get that rally, the PPT’s key component — the Fed — lends money to surrogates who will take that fresh electronically printed cash and buy markets through some large unknown buyer’s account. That buying comes out of the blue at a time when short interest is high. The unexpected rally strikes blood, and fear overcomes those who were betting the market would drop. These shorts need to cover, need to buy the very stocks they had agreed to sell (without owning them) at today’s prices in anticipation they could buy them in the future at much lower prices and pocket the difference. Seeing those stocks rally above their committed selling price, the shorts are forced to buy — and buy they do. Thus, those most pessimistic about the equity market end up buying equities like mad, fueling the rally that the PPT started. Bingo, a huge turnaround rally is well underway, and sidelines money from Hedge Funds, Mutual funds and individuals’ rushes in to join in the buying madness for several days and weeks as the rally gathers a life of its own. (Robert McHugh, Ph.D., “The Plunge Protection Team Indicator”)
The Working Group on Financial Markets, also know as the Plunge Protection Team, was created by Ronald Reagan to prevent a repeat of the Wall Street meltdown of October 1987. Its members include the Secretary of the Treasury, the Chairman of the Federal Reserve, the Chairman of the SEC and the Chairman of the Commodity Futures Trading Commission. Recently, the team has been on high alert given the increased volatility of the markets and what Hank Paulson calls “the systemic risk posed by hedge funds and derivatives.”
Last Tuesday’s 416-point drop in the stock market has sent tremors through the global system. An 8% freefall on the Chinese stock exchange triggered a massive equities sell-off that continued sporadically throughout the week. The sudden shift in sentiment, from Bull to Bear, has drawn more attention to deeply rooted “systemic” problems in the US economy. US manufacturing is already in recession, the dollar continues to weaken, consumer spending is flat, and the sub-prime market in real estate has begun to nosedive. These have all contributed to the markets’ erratic behavior and created the likelihood that the Plunge Protection Team may be stealthily intervening behind the scenes.
According to John Crudele of the New York Post, the Plunge Protection Team’s (PPT) modus operandi was revealed by a former member of the Federal Reserve Board, Robert Heller. Heller said that disasters could be mitigated by “buying market averages in the futures market, thus stabilizing the market as a whole.” This appears to be the strategy that has been used.
Former Clinton advisor George Stephanopoulos verified the existence of The Plunge Protection Team (as well as its methods) in an appearance on Good Morning America on Sept 17, 2000. Stephanopoulos said:
Well, what I wanted to talk about for a few minutes is the various efforts that are going on in public and behind the scenes by the Fed and other government officials to guard against a free-fall in the markets . . . perhaps the most important the Fed in 1989 created what is called the Plunge Protection Team, which is the Federal Reserve, big major banks, representatives of the New York Stock Exchange and the other exchanges and they have been meeting informally so far, and they have a kind of an informal agreement among major banks to come in and start to buy stock if there appears to be a problem. They have in the past acted more formally . . . I don’t know if you remember but in 1998, there was a crisis called the Long term Capital Crisis. It was a major currency trader and there was a global currency crisis. And they, with the guidance of the Fed, all of the banks got together when it started to collapse and propped up the currency markets. And, they have plans in place to consider that if the markets start to fall.
Stephanopoulos’ comments have never been officially denied. In fact, as Ambrose Evans-Pritchard of the UK Telegraph notes, Secretary of the Treasury Hank Paulson has called for the PPT to meet with greater frequency and set up “a command centre at the US Treasury that will track global markets and serve as an operations base in the next crisis. The top brass will meet every six weeks, combining the heads of Treasury, Federal Reserve, Securities and Exchange Commission (SEC), and key exchanges.”
This suggests that the PPT may have been deeply involved in last Wednesday’s “miraculous” stock market rebound from Tuesday’s losses. There was no apparent reason for the market to suddenly “go positive” following a ruinous day that shook investor confidence around the world. The editors of the New York Times summarized the feelings of many market-watchers who were baffled by this odd recovery:
“The torrent of bad news on housing is only worsening, with a report yesterday that new home sales for January had their steepest slide in 13 years . . . Manufacturing has already slipped into a recession, with activity contracting in two of the last three months. How is it then that investors took Mr. Bernanke’s words as a ‘buy’ signal?”
How indeed, unless other forces were operating secretly behind the scenes?
Market Rigging
For more, see this link
http://www.dissidentvoice.org/Mar07/Whitney04.htm
I’ve said this before:
there is no law that says that govt cannot participate in the various markets.
The PPT exists. So what. Take that information and use it for your investment decisions. The PPT is no different than Goldman Sachs or Carl Icahn or any other “big player”.
And the PPT is not omnipotent. If they were, they would have reversed things much better after last Tuesday.
They likely will try to achieve SLOW correction as opposed to FAST correction of the markets. In the end, the markets will go where they will. The PPT cannot stop that. But they might be able to alter the duration. (example, maybe lose 15% over 4 weeks as opposed to 15% over 4 days).
The PPT is part of “the market”. Just like Chinese foreign banks are part of the Treasury Market, and The various Federal Banks are part of the Gold market (they own more gold than anybody), the PPT is intermittently part of the equities market.
quit whining.
The PPT will try to stop a super fast correction. Ok. so now what do you do with that information?
Too many people here:
-know there is a ppt
-know the ppt will try to keep the markets from falling quickly
-then make stupid trades betting the market will fall quickly
-then whine about it.
Take the info about the PPT and incorporate it into your investment decisions. I know I do.
I sure believe there is a PPT, but relieve rallies like the wednesday rebound - just like crashes - often come out of the blue. In hindsight it is easy to look for causes, but that isn’t the way the markets work. The US stock market had been ripe for a plunge for months (or maybe I should say years) but nothing happened - until it did.
on another note, the dollar is not falling at all! Over the last week, it gained 1% against the euro. The yen is having a bounce but it remains to be seen how long this can continue.
HSBC…
Chairman Stephen Green has fired U.S. managers, tightened loan requirements and made purchases in faster-growing economies in Latin America. U.S. defaults accounted for 64 percent of the company’s total of $10.6 billion, HSBC said today. Depending on the housing market and availability of credit, the bank may need two or three years to stem loan losses.
“Without the U.S., these would have been very good results,” said Ed Collins, a London-based fund manager for New Star Asset Management Group Plc, which oversees about $34 billion including HSBC shares. “The Asia businesses are very high quality,” he said.
just shows that HSBC has not learned their lesson. They fired some US managers, but continue their reckless lending practices in Europe and Asia. Of course the results in Europe will be stellar, until out of the blue the same happens as in the US.