“A Delicate Dance Between Sales And Prices” In California
The San Francisco Chronicle reports from California. “In California, the number of homes sold fell 9.6 percent in February compared with the same period a year earlier, while the median price of a home climbed 5.7 percent to $564,700, according to a separate report from the California Association of Realtors.”
“The declining sales and rising prices suggest sellers are unwilling to lower prices to get deals done, said economist Mark Zandi. ‘There’s a delicate dance between sales and prices now being played out and you can see it in the California data,’ Zandi said. ‘It argues for weaker pricing over the course of the year.’”
“While weather is less of a factor in real estate sales in the Bay Area and other parts of the state, economists say unusually high temperatures in December and January played a big role in boosting the number of deals that were closed in February in other parts of the country. That doesn’t mean the housing market is poised for a continued recovery, though, some experts said.”
“‘Sales cannot be sustained at this level, which is way above the pace implied by mortgage applications,’ said economist Ian Shepherdson.”
The SGV Tribune. “‘Your first-time buyer market is going to get hit hard because now their credit scores have to be higher in order to qualify (for a loan),’ said (broker) Marty Rodriguez, in Glendora. ‘For buyers with good credit, the market is still there.’”
“She recently sold multimillion-dollar homes in Glendora and San Dimas, Rodriguez said. People who have the money and good credit can still afford to buy. ‘That’s what’s driving the median price, not the entry levels,’ she said.”
“The decline in sales is a case of sellers not being realistic about the market, said (broker) James Joseph in Whittier.”
“‘They’re not succeeding in adjusting their price to meet the demands,’ he said. ‘Well-priced inventory always sells, and it’s just a matter of whether the Realtor is successful in explaining to the seller the current market situation.’”
The SB Sun. “Locally, sales in the San Bernardino/Riverside area were down nearly 38 percent from February 2006, although the median price of a home still climbed 4.4 percent to $409,020. ‘There is a definite weakness in the resale market,’ said regional economist John Husing of Redlands. ‘Right now it is definitely a pricing issue.’”
“‘Houses that are priced at market value are selling,’ said Bill Velto, manager of Tarbell Realtors in Upland. ‘We’re seeing a lot of homes selling for less than their appraised value. This is just a further step in our transition into a normal market.’”
The Desert Sun. “Data from the California Association of Realtors shows that that while most Coachella Valley prices have fallen from the superheated market of 2006, median prices in Palm Desert actually posted a 3.1 percent increase to $417,000.”
“Median home prices in Desert Hot Springs and Cathedral City posted the biggest drops, with 12.2 percent and 11.4 percent off last year.”
The Daily Breeze. “Turbulence from the sub-prime real estate market is starting to be felt in Southern California, but mostly in areas of the Inland Empire, which saw more home construction than in other areas, said Delores Conway, director of USC’s Casden Real Estate Economics Forecast.”
“The uptick in foreclosures for these riskier mortgages could eventually be felt in Los Angeles, she said. ‘I’m sure we’ll see it here, too,’ Conway said. ‘We are watching it closely as it unfolds.’”
“Despite CAR’s reported year-over-year price increases in most South Bay communities, it is still a buyer’s market now, Manhattan Beach Realtor Adolph James said. He said the South Bay housing market likely peaked in July or August of 2006.”
“‘Today, when you bring a buyer to a property, they’ll look at a property and say what else do you have?’ said James. ‘In the past, I’d show them three or four more homes and they’d make a decision. Now they want to see 15.’”
The Tribune. “The year-over-year figures for January and February show a decline in San Luis Obispo County’s median. In February, it dipped nearly 3.9 percent from the previous year, and in January, it was also down 4 percent from January 2006.”
“Home sales also slowed in the county this winter. In February, they declined 12.7 percent compared with the same period a year ago, although they remained flat from January.”
“‘We don’t have enough data to see if there’s a trend of whether prices are going up or down or staying consistent,’ said Lenny Jones, a Realtor in Arroyo Grande. ‘Unless the numbers make a drastic change, I’m going to say that the number of homes selling is going to match 2006 or be a little less than 2006, and the home values could decrease up to 5 percent this year.’”
“Data from the Central Coast Regional MLS, which include existing single-family homes and condos, show decreases in the median and sales for the North County, South County and the county as a whole, Jones said.”
“Leslie Appleton-Young, chief economist of the association, maintains that there’s no clear direction or trend as the housing market continues to adjust downward from a boom situation of the past few years when counties such as San Luis Obispo saw double-digit appreciation.”
“‘The kind of appreciation we experienced is not sustainable over the long run,’ she said.”
The Recordnet. “KB Home, which in October boosted its home sales with American Express gift cards, $10 to any lookers and $5,000 to buyers at five San Joaquin County projects, is trying another promotion to boost traffic at a Stockton project.”
“From noon to 3 p.m. Sunday, those coming out to look at models at KB Home’s Riverbend Community will get more than a taste of the Los Angeles-based company’s development. They’ll get free participation in a gourmet food-tasting event featuring local restaurants.”
“Chris Apostolopoulos, KB Home Central Valley division president, said his marketing team is looking for different ways to tap into potential buyers. ‘In the marketplace today, doing the same old thing isn’t going to get it done. Being creative is what it’s all about. It’s got to be outside the box,’ he said.”
“Greg Paquin, president of the Gregory Group, a real-estate information and consulting service in Folsom, said homebuilders still are offering buying incentives in a still-soft housing market.”
“The gourmet tasting seems an innovative way to get people at least out looking, he said, and it might spur other builders to try something innovative. He expects there probably will be a lot of builders there, too. Checking out the competition? ‘Yeah,’ Paquin said. ‘And to eat.’”
It almost sounds like these California realtors are trying to talk down the sellers.
A delicate dance? What I see on both sides are mostly wall-flowers
More and more buyers going to join the sellers as wall-flowers of circumstance. They simply won’t be able to dance.
Personally, I can dance at this party. But I won’t until I hear a tune I like.
“Personally, I can dance at this party. But I won’t until I hear a tune I like.”
The music player is stuck on repeat this year. Another season of fantasy listing prices. It’s a nice time though, to sit back and allow the sellers to marinate.
This “delicate dance” will be a mosh pit by September.
I agree. They have to get the market moving to make money for their realtors. Buyers are not buying (and fewer and fewer will be able to). Sellers are still expecting top dollar.
NAR also has to walk a fine line, too. I’m glad that they are hinting at the future of RE. But that does not excuse their self serving behavior as a prime bubble blower.
What else can they do?
California realtors have bills to pay. Those who want to survive the cull will have no time or patience for delusional sellers.
A bit late now, having talked up sellers for the last 7 years, leading them to expect enormous price gains in short time.
I think the Eagles had a song about these Realtors…
(dig, dig) Oh yes. Accompaniment:
Youtube video or Midi file
No buyers on the road
No buyers on the beach
I feel it in the air
The price is out of reach
Open house,
Empty streets
The Realtor sits alone
Im drivin’ by your house
Though I’m sure - no one’s home
But I can see you-
Your sale signs shinin’ in the sun
You got your hair combed back and your
Sign spinners on, baby
And I can tell you my need for you Will not be strong -
after the prices of summer have gone
I never will forget those heights
I wonder if it was a dream
Remember how the price was crazy?
Remember how it made me scream?
Now you don’t understand what’s happened
To your sales,
But babe, I’m gonna get you back
I’ll be watchin’ as the market fails…
I can see you-
Your sale signs shinin’ in the sun
I see you talkin’ real slow and you’re smilin at everyone
I can tell you my need for you will not be strong
After the prices of summer have gone
Out on the road today I saw a Realtor sittin’ on a stucco shack
A little voice inside my head said,
“Dont look back. you should never look back.”
You thought you knew what homes cost,
What did you know?
Those days are gone forever
You should just let them go but-
I can see you-
Your sale signs shinin in the sun
You got that price pulled down and
that push-up bra on baby
And I can tell you my need for you’s completely gone
Now that the prices of summer have gone
I can see you-
Your crab grass dying in the sun
You got that hair slicked back and
That smarmy smile on, baby
I can tell you my need for you’s completely gone
Now that the prices of summer have gone
Bravo !
fuggin’ you ARE Don Henley aren’t u? love your work, babe…
LOL. Great rewrite of the original! Dude, you rock!
Sweet as~
(a New Zealand term of endearment)
CAR numbers dont match DQNEWS numbers.
DQ shows deeper declines.
It’s safe to say that the NAR is blatantly lying. I don’t trust their numbers one bit. There needs to be a new system to track housing statistics. Relying upon the NAR is useless.
Agreed.
Why can’t price statistics be based upon average $ per sq. ft.? That would really tell the tale…
As has been mentioned before, median price is one of the poorest ways to really see what is happening. For instance, if sales in the lower price ranges (i.e., the places that middle-class and upper-middle-class people can afford) dry up, the median price will go *up*.
“CAR numbers dont match DQNEWS numbers”
Car is hyping up that $564.700 for Cal/ $616,230 LA county feb median price( for existing detached homes), a distortion which is being widely disseminated by all the local SCAL Media rags which Ben provides links to.
A more accurate figure is from DQNews CA monthly sales for each city and county, which combines new and existing SFH’s and condos and comes up with $527,000 feb median for LA county. DQ also shows median for LA county on their LA ZIP chart at $550,000 for SFH’s.
Looks like CAR is running interference(a football term)for their Members.
Realtors are scared. The General Counsel of the California Association of Realtors is warning them to recommend three appraisers and not to use lenders who have imaginative approaches to finding income and assets of borrowers. http://www.car.org/?id=MzY4OTc=
Great link bulwak.
Now CAR’s lawyers are out front.
They’re attempting pre-emptive damage control: vaccination against the mother of all class action suits.
those coming out to look at models at KB Home’s Riverbend Community will get more than a taste of the Los Angeles-based company’s development. They’ll get free participation in a gourmet food-tasting event featuring local restaurants.”
————————————————————–
good way to attract the live-above-your-means crowd
When I hear about crap like this, it really hits home how stupid the people they’re trying to attract are. At this point, they’ll bag any sucker they can, even through their stomach.
Sadly, if you wanted a free meal you’re probably better off going to Price Club / Costco and sampling the free goodies. And the membership only costs $50…
i prefer wholefoods… same atmospehere of being surrounded by overpriced crap and oblivious snobbishness as at a california open house
Those may end up being the most expensive meals they will ever eat.
In Soviet Santa Monica, house payment eat *you*.
people should be wary in case they get drugged and their signature is placed on the papers while they are out. And then they are congratulated as they come through in a car going back home. (just one plausable scenario)
Eat free gourmet food, plug a KBH toilet and go home. Now that sounds like a good Sunday.
Why settle for plugging a KBH terlet when you can upper-deck a Toll?
I don’t go to open houses unless they are serving Santa Maria barbeque with old vine zin.
MMM,Tri-tip
Aren’t they just following the lead of the “cupcake” lady from a few months ago?
Paul
“Locally, sales in the San Bernardino/Riverside area were down nearly 38 percent from February 2006, although the median price of a home still climbed 4.4 percent to $409,020.”
~~~~~~~~
It doesn’t take much to see the wage earners are increasingly priced out of the market as sales drop.
With regard to the rising median price, it’s amusing how they use this as an idicator that the market isn’t weakening. Statisitcs can be wonderful.
“Median price of a home still climbed 4.4 percent” it reminds me year 2000 when executives of Enron were reporting their revenues…
Yes the median has to be tied to other metrics. Size of home, location, condition etc. In other words, what would each individual home which did recently sell have sold for 1 to 2 yearsa ago. My wife’s folks sold a home in Encanto SD in 2005, and reported it is back on the market with an asking price 50K less just under two years later, and that is asking price not what they will get. (OUCH!!)
I think it’s great that they use this meaningless stat to further delude these FBs that their homes are going up in value. This just makes hopeful sellers even more entrenched in their ridiculous demands. This depresses sales of homes and decreases commissions to ever decreasing levels.
These genius realtors are making sure that they don’t get any sales. Keep up the good work. You’ll be back to McDonald’s soon enough.
“I think it’s great that they use this meaningless stat to further delude these FBs that their homes are going up in value. ”
Hmm. Good point.
Doesn’t one need a bullet proof vest for Encanto? Are they offering along free one with the 50K reduction?
Check dqnews for doesnt look like 4 % increase to me.
latest for county.
“Leslie Appleton-Young, chief economist of the association, maintains that there’s no clear direction or trend as the housing market continues to adjust downward from a boom situation of the past few years when counties such as San Luis Obispo saw double-digit appreciation.”
What is wrong with this woman? A poodle could see that the trendline is down… down and more down ….
She sees, she knows. The PR is an orchestrated effort. Zandi says one thing, LAY says another. People can choose who to believe (and quote).
All lies and jest,
still the man hears what he wants to hear
And disregards the rest
“Leslie Appleton-Young, chief economist of the association, maintains that there’s no clear direction or trend as the housing market CONTINUES to adjust downward”
Isn’t the word “continues” almost like–you know–a trend?
No clear direction or trend… oh, there’s a blindingly clear trend, you mucking foron. (Her, not you
)
“There is nothing in the Sub-Prime mortgage that a 10% increase in home prices wouldn’t fix.” Alan Greenspan.
The calamity that is the sub-prime mortgage market is “well- contained” Ben Bernacke…….
Clearly these 2, {mutt & Jeff} do not know what is going on!
If they hadn’t let WallStreet ceate $10,0000,000 dollars of nominal debt for every $250,000 mortgage, in the first place the GREED wouldn’t have gotten out of control?
“‘The kind of appreciation we experienced is not sustainable over the long run,’ she said.”
Okay, Leslie, than why would anyone pay these prices? Remove the psychology of “RE always goes up” and you’ve got a beast of a mortgage to feed and not much to show for it.
Remove the crutch of high risk loans and you would not have anyone willing and able to pay these prices.
Stucco, do you mean remove the crutch of low-risk loans? The loans the FBs have been taking out have almost no risk for the FBs. When you have nothing down there isn’t a lot of pressure. The FBs are going to be forced to take out loans that are higher risk to their well being.
It might be semantics but at least we have gotten to this point. We have been waiting on the turning of the tide for so long. Now it is here. Sweet!
Yep, as my daughter {age23} tells me of her friends view point!
Its FREE rent for four to eight months, and you get to keep the appliances, and anything else you can cart away!
“… and you get to keep the appliances, and anything else you can cart away.”
Don’t forget the Hammer Party.
‘That’s what’s driving the median price, not the entry levels,’ she said.”—referring to higher end homes.
Now there is an agent who understands what is driving the market forces and how the median sales price operates in a changing market—as opposed to cretins who continually point to the increases in median sales prices while sales continue to drop.
Of course, last year the median in an area such as San Diego where I live may have been 500K give or take a few. For that 500K it is doubtful buyers were getting much more than a 1500 sf 1970’s house in a mediocre part of town. Today, the median has gone down is most areas by a small percentage and even up in a few zip codes. What is not said is that the same median today is likely to get a much bigger and nicer home, perhaps one which would have sold a year or two back for $650K or more without any question. Folks are still buying at or near their credit limit and then running out and buying the biggest house they can get for a given price range, so while any particular home price will be substantially lower, the median remains high. I would love to see a statistic for the median square footage of home sold VS 2 years ago along with the Median price. Not a lot better, but at least a comparative metric to look at.
“buy the most house you can afford” is usually not a bad philosophy. Trouble is, when stuff is 30-40% overvalued, buying the most house you probably can’t afford but can still get a laon for is a very bad call.
I’m buying the most house I can afford - no house at all!
(until prices come down)
The rate of decline in prices (if we agree that such is inevitable) will be determined - in part at least- by the PR battle to influence buyers and sellers. The blogs, the RE industry, the MSM, stock investors, will all be part of the fray, and they each have their own agenda. If sellers can take courage from MSM cheerleaders, they might hold on to their high asking prices, and buyers might cave; if buyers perceive that they can save tens of thousand will waiting, they will hold out for price reductions.
I think it is telling that more and more RE agents are heard calling their own clients “[un]realistic.” Realtors, knowing that a lower-price sale is better than no sale at all, and having no real loyalties except to themselves, may soon be significant force in reducing prices. We can hope.
“… they might hold on to their high asking prices, and buyers might cave.”
But financing is the key as to whether buyers can/will cave, and the easy financing is no longer there to allow them to do so.
Yes, a good point, the pool of potential buyers will be smaller as sub-prime and “liar” loans become unavailable, and this should also help bring down prices.
But let’s not forget, there remains a sizable group of people who can legitimately afford to buy a house, if they so choose. The focus has been on the plight of the irresponsible in this bubble; but quietly, lots of folks bought before the spike in prices, didn’t take out HELOCs, and are not in bad shape.
This is true enough, but consider this pool still needs to sell in order to move up. What is removed is the bottom rungs of the ladder, so far fewer can jump onboard to replace them in line. If they cannot sell, they cannot buy, and if they cannot buy the next step up the rung cannot etiher and so on.
Yes, but not everyone is going UP the ladder -more and more boomers will be buying DOWN (or sideways): retiring to cheaper markets,to smaller houses. Even after some price declines, they can still make this work, and financing their next purchase will not be a problem for them.
A lot of people buying trade-up homes, who PREVIOUSLY had all this equity to enable them to buy another more expensive home with this equity, are watching all of this phantom equity go away. Without it, they can’t get the homes they want, no way, no how. The only way it will be possible for them is for the prices on the these McMansions to fall, 40-50% at least. The bottom rungs affect EVERYTHING.
There will always be entry level properties. The bottom rungs are in the bay area used to be a small home, then it was a town home and now it is a condo.
McMansions are the losers. They are large, uneconomical, oversized homes built for investment statistics (Bdrms and baths) and not for a family.
Also houses as “investments” have very high carrying costs. Especially with the current jacked-up “values” leading to higher property taxes. It’s entertaining to think of stuck flippers whose taxes go up while their “investment” values are going down. Buyers that are not subject to the mind tricks of the RE shills should be able to hold out indefinitely, while specuvestors will keep draining cash.
As more buyers realize prices will continue to drop, especially in a tightening credit environment, an increasing percentage of them will choose to postpone the purchase. This will drive prices lower at an accelerating rate. Markets have similar behavior patterns on the way up and down.
An increasing percentage of stuck flippers eating negative cashflow will also bail once it is clear that future capital gains are only foreseeable in the long run (after they are all dead…).
I thought my comment was rather bearish until I read yours.
Yes, tightening credit and foreclosures will drive down prices. The thoughts, feelings, hopes, wishes, steadfastness, fears etc. of sellers are irrelevant. Though interesting to read about.
The buyers won’t be able to cave. The prices in places like San Diego are too high and without the teaser loans they are simply unaffordable for most.
The water’s rising quickly, but until the floodgates open on REOs I would expect the homebuilders to really drive housing prices down.
Sort of like department store clearance sales; Drop the price to clear the unsold inventory.
The inventory carrying costs will force the homebuilders to do this.
this idiot gave his bullet points on housing with no mention of (record un)affordability.
I’d rather have 100 homes on the market that I can afford than 1,000 I can’t. watch the video.
http://www.cnbc.com/id/17759571
ya know, the more and more I watch/read the MSM, the more I want to vomit. What purpose do they serve? I might as well be watching American Idol.
Just sit tight, they’ll get to the Idol standings during the entertainment news coming up in a few mins.
Kunz must have graduated with Ken Lay .. what an idiot…
LOL… Everything is fine folks… no subprime mess here… move along.
Wow, I suppose he doesn’t read the myriad articles that we do showing how bad Boston is. Any Bostonites want to rip on this guy. Doing what he’s paid to do, but still a putz.
“…while the median price of a home climbed 5.7 percent to $564,700,…”
Wouldn’t you love to have information on what percentage of recent California buyers (with a median purchase price of $565K) could have afforded those homes without the crutch of subprime or other exotic loans to drive a wide gulf between their permanent incomes and what they paid for their houses? I am guessing the percentage who could afford their homes without “affordability” (aka “guaranteed future foreclosure”) loans is vanishingly small.
It was vanishlingly small until they changed how affordability statistics were measured… I think the LA County number was ~2-3% affordability until they changed the method of measurement.
Number is under 10% using prior method of 30 yr fixed 20 perc down based on CAR numbers. Now their using exotic fianacing getting 25%.
I haven’t heard any predictions as to what effect the collapsing sub-prime market, which typically finances “starter” (~$400K in CA) homes, will have on homes in the $600K to $1M price range.
the loans are tinted.
they should never been made..
they are collapsing.
without the first time buyer no
move up would have occured.
Predictions for California…
400K, 600K and 1M homes will deline by 50%.
Bear in mind prices have climbed from 200-400% in California in less
than 10 years. Histically over a decade prices would climb at max 100%.
Anything by 50% would correct this back to fundemental values.
Don’t say that in a room full of baby boomers: “What? Don’t say that! That’s our retirement money!” Think I’m kidding? You weren’t there when my wife said this to her parents. I just slowly slipped into another room because I’m the son-in-law who refused to buy a house after getting married in ‘05. I came real close to becoming one of the “greater fools” you guys joke about.
You’d better give’em some grandchildren, quick! That’ll get’em off your back. (Not.) Actually, it sounds like you and your wife are the kind of smart people who *should* have a bunch of kids to help offset the ever increasing number of idiots in the world.
It’s OK to say stuff like this to some baby boomers, even in California — those of us who retired early and stayed in the homes in which we raised our kids, didn’t refi to the max, or buy lots of toys.
You chose an apt screen name, Judicious; wait to buy…timing is everything.
“.. it sounds like you and your wife are the kind of smart people who *should* have a bunch of kids to help offset the ever increasing number of idiots in the world.”
Sadly, this is true, and it actually worries me. I work in a government job where I come in daily contact with what I would call the “lower class of society.” The average male client is severely stupid and has on average 3-6 kids from 2-3 different severely stupid baby-mama’s. I kid you not. I also recently got married, have no kids, and have been/will continue to wait to buy until prices are back to fundamentals. Start doing the exponential multiplication and Idiocracy will look like child’s play.
“Anything by 50% would correct this back to fundemental values. ”
I disagree. It will need to be more than that in many, many areas. Household income in many areas (like Long Beach) is roughly $45K? That means that a median home should be bought for $150K to $200K, tops. And inland, ooh, boy. It’s been said here before. It may be California, but it aint exactly California. . .
So, I’d say that declines of 60% or more in many areas to return to “fundamental” valuations. It needs to be remembered that incomes have not increased - well, at all really - in the last 5 or so years.
You’re partly right in your 50% estimate; this will occur in the areas with the highest concentration of monopoly money (i.e. $0 down which is almost and soon to be totally gone) - think Inland Empire, San Joaquin valley. However, the decrease will only be 1/2 nominal, and 1/2 from the roaring inflation of everyday life as housing drops 25% nominally over 5 years while everything else goes up 25%.
Got diversified assets?
Yeah, LL, you’re way too optimistic.
“…maintains that there’s no clear direction or trend as the housing market continues to adjust downward…”
Hint for LAY: Compare the two bold text passages in the above text and see if you can draw any conclusions about the direction…
Hint to LAY:
Your ass will be hauled up to Congress to exlain your past comments.
Checking DQnews prices are down for SF Bay Area.
WTF? is NAR fudging numbers again?
http://www.dqnews.com/ZIPSJMN.shtm
http://www.dqnews.com/ZIPSFC.shtm
Excuse me Mr Young (Queen of Whorealtors)
Your numbers didnt match DQnews.com results on SLO
County/City/Area # Sold Feb 2007 Feb 2006 % Change
ARROYO GRANDE 18 $490,000 $792,750 -38.19%
ATASCADERO 18 $376,250 $430,500 -12.60%
CAMBRIA 6 $724,500 $936,250 -22.62%
CAYUCOS 2 $674,500 $799,000 -15.58%
GROVER BEACH 7 $490,000 $482,500 1.55%
LOS OSOS 8 $487,500 $430,000 13.37%
MORRO BAY 8 $557,500 $722,500 -22.84%
NIPOMO 17 $751,500 $527,500 42.46%
OCEANO 3 $409,000 $385,000 6.23%
PASO ROBLES 33 $475,000 $479,000 -0.84%
PISMO BEACH 11 $750,000 $695,250 7.87%
SAN LUIS OBISPO 28 $635,000 $612,500 3.67%
SAN MIGUEL 3 $390,500 $221,250 76.50%
TEMPLETON 7 $475,000 $565,000 -15.93%
“People who have the money and good credit can still afford to buy.”
No, they can’t *afford* to buy, but they can still get the *credit* to buy.
Or are they saying that a bunch of really high wage earners (income: $600,000 or more a year) and people with net worth in the millions are now buying in San Dimas?
Raging Waters is nice, but I don’t think that will attract The Rich ™.
I cannot afford diddly squat here in San Diego on a senior software engineers salary… I estimate an income well north of $200K would be necessary to purchase anything decent here, even though prices have softened slightly in the last year.
As was true since the 80s a salary of an sw engineer would raise only so much. Only a few make managment position while the rest remain staff.
You may have layers of managers in larger company, but many smaller companies/start ups to mid-size companies have flat orginazations that employ very few managers. You have to be a CEO to get 200K… most engineers make only 100K or so. Its been flat. It has to …we are competing globally and SW purchases by customers over the past 5 years per Goldman Sachs has only go 5% YoY..
This is not true. I have friends who has about 5 years of experience already make $100K in Silicon Valley. Again it depends on the location in CA.
That would be surprising… We have vets with 15+ years exp. making 100K…VP makes 150K and he has 20 years of experience…
Must be overspending by management…that would not suprise me than.
100k in the bay area allows you to rent. Keep in mind, that if your family is bringing in above 200k/yr in income that places you roughly in the top 1 percent of incomes - world wide. It is easy to forget these things, but if you consider it, it is a loooooong drop before we’re even at a relative par with much of the world.
Paul
None of the recent buyers can afford to buy, even those whose salaries are quite high. Macroeconomically, we are simply not that rich to afford $500K+ homes.
The three of my friends who bought recently, all of the highly paid professionals (engineers), admitted it is not in their intentions to actually pay-off the mortgage, but to resell at a higher price. You don’t have to be an Einstein to see where all of this is going.
“Chris Apostolopoulos, KB Home Central Valley division president, said his marketing team is looking for different ways to tap
intopotential buyers. ‘In the marketplace today, doing the same old thing isn’t going to get it done. Being creative is what it’s all about. It’s got to be outside the shitbox,’ he said.”j. t. from Sherman Oaks, CA wrote an interesting explanation of why median is going up in Los Angeles in tomorrow’s LA Times Sunday Real Estate section. He didn’t say it in so many words but I will. No more 100% financing to housekeepers and costco finger food servers.
Oh, there will be more finger food in the years ahead. Who remembers season 3 of the Sopranos? There was the episode where they flashed back to Tony’s growing up. He remembered his father collecting on a gambling debt owed to him by Old Man Satriale. The gambler couldn’t pay so Johnny Soprano grabbed a meat cleaver and cut off his pinky to let him know where he stood.
Now that’s what I call finger food. FBs be warned.
yep. the low income buyers got the word that their loans would not be funded, after they were all ready to move in
Sales still strong for $400-500K ghetto shacks in South Central. What gives?
A 4 br 3 ba house in South Central with a dual-income family and two illegals renting rooms, *plus* a garage converted to a studio apt. has little risk of going into default as long as people along the coast are still reluctant to do their own landscaping.
I wonder about that. Our former housekeeper bought a 500K house in south LA. She rents out to many people, but I can’t believe her tenants will save her when the reset comes — I doubt she’s financially savy enough to even know it’s coming.
(When she quit housekeeping to become a real estate investor and asked why we were “still renting”, that was it — I knew for certain LA was headed off the cliff.)
the subprime implosion is less than 2 weeks old, so it’s effect is not yet in the sales figures.
You would not believe what people can charge illegals for a room, or even sharing a room. I have a relative in Idaho who found out her illegal cleaning lady and the cleaning lady’s illegal husband were paying $1400 a MONTH for a room in a 5 br house.
What!!!!!! Get out of town. In Idaho?!?!?! There is no possible way anyone, much less an illegal, would pay that kind of money!!!
Dude, you can rent a 2 bed apartment in Boise for, what, $500 a month?
Your relative has got to be wrong on that one. NO way, NO how any illegal is going to pay $1400 a month for ONE BEDROOM in Idaho.
I just checked. 2 bedroom apartments (900 square feet, which is a good-sized apartment) start at $550 a month with a $350 deposit in Boise.
Get real, man. Illegals are the cheapest people on earth. If you’re selling a used car they will grind you and grind you and grind you to drop the price from $1500 to $1300. They will go from one market to the next to the next all day long looking to save $20 on their grocery bill.
I live in California, so I know about illegals.
My cleaning lady owns two homes as well. I have no idea how she does it since I pay her $80.00 a day.
When she told me I should buy another house, that’s when I sold and now we rent in Santa Monica. You know it’s time to sell when the cleaning lady is telling you to buy.
This is not going to be good when the chorizo hits the fan.
“My cleaning lady owns two homes as well. I have no idea how she does it since I pay her $80.00 a day”
Ok, this is the kind of thing that threatens to raise my blood pressure. Freaking housekeepers with multiple homes when above average income families are priced out. Illegals just lining up to sign their name on any loan, then filling the stucco sh!tbox with a bunch of border jumpers to pay the mortgage. Nice country. The rogue politicians and corporations have totally sold us down the river. I thought Obama was looking good until he started talking about bailing these FB’s out. Of course, he would probably love to offer amnesty to all of the illegals as well. Too many fires, and not a hose in sight.
Look, this thing about illegals paying thousands of dollars a month to live 3 to a room is an urban legend.
I know of several homes and apartments that have multi illegal families living in them. The places rent for the same amount similar homes or apartments in the same neighborhoods go for.
A typical 3/2 home in the barrio area of Santa Barbara rents for maybe $2500 a month. 4 families will live in the house, one family (mom, dad, kids, grandma) living in each bedroom and one family living in the living room. The families split the rent 4 ways, or $625 a month.
Single men and women sleep at the homeless shelter for free.
Funny you should mention housekeepers. My mother in law’s former housekeeper also bought a house, somewhere in S. Central around 50-something street, it cost around 350K. She makes around 100.00 per day. Her current housekeeper also bought a house around the same time, like 2 years ago, also around that price. They speak no English but will happily tell you that it’s gone up in value 100K. Her current housekeeper’s sister, who sells stuff at a swapmeet “owns” three houses in that area, one to live in, the others to rent. I already told you guys last week about the neighbor’s housekeeper’s handyman husband, who’s up to about 7 houses that he’s rehabbing to flip. Say what you will about the bubble, it’s been an amazing thing for some immigrants who have just made more money (on paper, for now) than they probably will in their entire lifetimes.
What is with you people having housekeepers?
“When she quit housekeeping to become a real estate investor and asked why we were “still renting”, that was it — I knew for certain LA was headed off the cliff.”
Right up there with the shoe shine boy offering stock-pick tips!
What, you clean your own house?
Call me crazy.
How’s your “Tell Other People How to Spend Their Money Blog” coming?
Hummers, overpriced housing, $80/day to sweep the floors and load the dishwasher…
What’s the difference?
To start with I would never buy a hummer (environmental reasons) or an overpriced house (general principle). Do you have a job? a lawn? kids? A gardner, nanny or maid (in our case once every two weeks at most, depending on our work schedules) makes sense timewise and financially, as I can earn more than I pay her. Do you insist on growing your own food, sewing your own clothes, building your own electronics? If that makes sense for you, great. My time is often, but not always, worth more to me.
It took me 30 minutes once a week to clean a 2500 sf house. The saying “an ounce of prevention is worth a pound of cure” comes to mind.
I agree wholeheartedly that offloading some tasks makes sense for the reasons you mention, however, cleaning a house is not in the same league as “growing your own food, sewing your own clothes, building your own electronics.” Everybody buys those things. Face it, a housekeeper is a luxury.
I don’t get the “kids” comment. This makes me question having a housekeeper even more. If I had kids we would all be responsible for cleaning the house, as I did when I was a kid. But no, don’t have any.
I didn’t mean that you specifically own a Hummer. People are here on a daily basis suggesting that others shouldn’t buy a house, etc. If you think about it, “Telling Other People How to Spend Their Money” is what this blog is about.
free rent!
nothing down, no 1st month deposit, security nor cleaning deposits…
Just - Sign & move in!
Only in America!
Save up for future rental payments until you get locked out!
“Sales still strong for $400-500K ghetto shacks in South Central. What gives”
default rates running rather high in Scentral!
zip foreclosures NOD’s
90744 13 137
90011 10 100
90003 16 116
90002 18 98
90037 6 63
Compton-3zips 36 259
90280-sgate 19 98
Long Beach-slum areas
90805 34 151
90813 12 68
For comparison purposes:
AREA ZIP FCLOSURES nod’S
Venice 90291 0 11
WLA 90064 0 11
SMonica90405 0 16
AND THE SUBPRIME LENDING SQUEEZE HAS BARELY BEGUN. THE LOW FORECLOSURE/NOD RATIO, E.G. 90044 13/137, RAISES SOME ISSUES. EITHER THE DEFAULTERS ARE STRETCHING OUT THE FORECLOSURE PROCESS THRU LEGAL IMPEDIMENTS, OR THE BANKS ACTUALLY DUE NOT WANT TO RE-AQUIRE THESE PROPERTIES IN THE BOMBED-OUT INNER SLUMZONES,ESPECIALLY AFTER 10-20 ILLEGAL BOARDERS HAVING THOROUGHLY TRASHED THE PREMISES.
correction:the very first zip listed should be 90044. The first 5 zips are Scentral LA inner city districts astride the 110(Harbor)fwy from DWTN to the 105 fwy.
NOTE:There are differences, even sizable ones, among zip districts so i attempted to evenly match the CCentral and Westside zips at least by geographical area/size match. It is easily seen that the westside LA distrct has virtually no foreclosures(0-1 per zip)and only average 11 NOD’s per zip, at least at this stage of the bubble cycle.
IMOH we are just seeing the beginning/early stages of a massive wave of LA SCentral defaults/foreclosures which will devastate the inner-LA crapburgs like those repeated WWII allied bombing raids into Germany.
“‘Today, when you bring a buyer to a property, they’ll look at a property and say what else do you have?’ said (Adolph) James. ‘In the past, I’d show them three or four more homes and they’d make a decision. Now they want to see 15.’”
That’s HORRIBLE!!
Where are the unions when we need them??
This poor man has to take his client to 15 house (in a 5 square mile radius) to earn upwards of $15,000-$30,000.
Screw the 6y year olds sewing shoes in Bankok.. THIS is slavery!
J
“Despite CAR’s reported year-over-year price increases in most South Bay communities, it is still a buyer’s market now, Manhattan Beach Realtor Adolph James said. He said the South Bay housing market likely peaked in July or August of 2006.”
It’s “still” a buyer’s market? What a joke. Adolph, just wait, you haven’t even begun to see a buyer’s market. This is history in the making. You’ll be able to tell the grandkids about your front row seat to the great housing lead recession of 2008-2009.
–
“In California, the number of homes sold fell 9.6 percent in February compared with the same period a year earlier, while the median price of a home climbed 5.7 percent to $564,700, according to a separate report from the California Association of Realtors.”
California Single Family Existing Homes median Prices:
Feb-07 $564,700
Aug-05 $567,320
Therefore, the price is below where it was 18 months ago.
Jas
Dead cat bounce. We predicted these coming all along the bumpy path down.
I love the sopranos analogy! Great episode. Someone was asking about what % of californians could afford without “exotic” financing? Approximately 77% of loans in the Golden State in 2006 were adjustables. This will be interesting to say the least. The new buzzword is “recasting”. That is what happens when an Option ARM hits 115% LTV. All of the suddent people have to pay P&I with a P much higher than the value of the house and a high I based off of that P. These things will be worse than the subprime debacle, and cali will bear the brunt.
Take out the entry level buyer almost entirely, which cripples the moveup buyer and so on. Prices simply have to return to affordable levels. As more and more loans default, and the money supply dwindles to a mere drip, credit will continue to tighten and the cycle will feed.
“As more and more loans default, and the money supply dwindles to a mere drip, credit will continue to tighten and the cycle will feed.”
And this feeding won’t stop at real estate. The next market to fall is the stock market.
Have to agree with you on that one. It seems over the past several years since the 2002 market bottom that more and more “investment” has been made in less and less liquid and more risky “investments” chasing “return” for safety. As the RE market continues to implode and this starts to spread outwards to (for example) employment and retail sales, etc. one has to think that the unwind has to start gathering pace and affecting more and more things. Ever stop to think how many shares of a publicly traded company trade each day to “support” the current market cap of a company? Not uncommon at all to see a microfraction of the market cap trade. Just think what may happen when/if there is some kind of point of recognition of fundamental ugly or pricing dislocation in these share markets that brings on a surge of sellers over buyers. From what i can see, i think the first whack down in the Dow has about completed its recovery off the lows and we are about to get enough of a reality check (perhaps as in 1st quarter earnings or some such other fundamental thing) that MAY bring on the next wave of selling in the markets. I follow about 12 or so stocks that are of a spec nature (and therefore of a more risky nature) and for the most part they have not recovered from the first leg down off the top. If the next leg down starts close to here some of these would likely start looking like the FLA RE condo market and the other out of whack RE markets.
Take out the entry level buyer almost entirely, which cripples the moveup buyer and so on. Prices simply have to return to affordable levels. As more and more loans default, and the money supply dwindles to a mere drip, credit will continue to tighten and the cycle will feed.
Oh, there will still be an entry level. It’ll just comprise a different group of people, with different demographics and most importantly, at a much lower price.
BPLI,
I’d heard that the typical recast level was only 110% but that they could range as high as 125%. Any information on the average and/or distribution?
Also, ARMs have 5 or 10 year recast periods (regardless of the LTV cap). Do you have any data on the average and/or distribution of these two??
Not sure if this answers your question but this chart is insightful:
http://www.autodogmatic.com/forum/viewtopic.php?p=1226#1226
Nice chart, but that’s resets, not recasts.
“She recently sold multimillion-dollar homes in Glendora and San Dimas, Rodriguez said. People who have the money and good credit can still afford to buy. ‘That’s what’s driving the median price, not the entry levels,’ she said.”“She recently sold multimillion-dollar homes in Glendora and San Dimas, Rodriguez said. People who have the money and good credit can still afford to buy. ‘That’s what’s driving the median price, not the entry levels,’ she said.”
More low end buyers not buying, median goes up as a result. This concerns me. Not because it indicates a strong market, but because the REIC will market this big time and there will be a PERCEPTION that the market is strong.
My best guess is that it would be a short term thing and be another form of dead cat bounce, but I just don’t want to hear “see we told you to get in before prices go back up”, etc, etc.
This is just like “income growth” and “no inflation”. J6P hears it, but it just doesn’t ring true.
It is not a dead cat bounce. The fact that sales were up is only relative to the January’s terrible sales numbers. When you look YOY Feb-Feb, the sales are negative. Talk about total spin. Kind of like the CAR, which instead of talking about 68% of the CA markets which experienced price drops, they touted the 32% of markets that experienced price increases, and posited this all as a positive!!!
“More low end buyers not buying, median goes up as a result.”
Very few understand this concept.
It isn’t a simple concept to grasp (unless you understand how a median is derived).
I’d bet 60% couldn’t give you an adequate explanation of median. I agree with others here; the REIC isn’t doing themselves a favor by obfuscating the reality. Total demand has been eviscerated from the peak, clearly 30% less (if not more). It will only worsen as fewer qualify for loans and those who qualify will get less.
“Chris Apostolopoulos, KB Home Central Valley division president, said his marketing team is looking for different ways to tap into potential buyers.
If this guy was thinking outside the box he should’ve brought a Keg and tapped that to get some “potential buyers”. Beer Me !!
“I have three houses, and I’m going to buy another,” said Tom forebodingly.
(little touch of humor)
On March 15, the Chairman of the Mortgage Bankers Association (Robbins)testified before a Senate subcommittee, pushing for the FHA spigot to be opened to pickup the subprime slack. Here’s the pdf of his testimony:
http://tinyurl.com/2h6faz
I’m convinced the real bailout will come through Fannie/Freddie/FHA in an indirect manner (they will be pushed to lend on money-losing terms to subprime borrowers, with taxpayers picking up the tab down the road upon their insolvency. I thought this slipped under the radar with everything else going on the last few weeks. Here are some highlights of his testimony with my analysis (from my new blog at nohousingbailout.com :)):
Robbins-“I am here today because MBA believes Congress must act to make important changes to the National Housing Act if the Federal Housing Administration (FHA) is to continue to be a financially sound tool for lenders to use in serving the housing needs of American families who are unserved or underserved by conventional markets.”
1. Putting the FHA in the toxic loan business is the complete opposite of ensuring that the FHA is a “financially sound tool.” Classic doublespeak.
2. “American families who are unserved or underserved by conventional market” As of when? This is only true in the last few weeks. Most of these folks were served subprimes left and right and sideways for about four years, with everything grinding to a halt two weeks before this testimony. This should read “newly unserved and underserved.” Conventional markets wanted to serve these folks and did serve these folks for years, until they realized the error of their ways and properly priced risk.
Robbins-“statutory constraints prohibit FHA from adapting its relevance to consumer needs today.”
i.e., the zero down, liar loan, neg-am, nodoc, hybrid ARMS and other “inventions” that have proven so toxic.
Robbins-“homeownership remains the most effective wealth-building tool available to the average American family.”
An incredible statement in March 2007 when others are calling for foreclosure forbearance and a bailout of those previously given the very loans he is urging on the FHA.
Robbins-“FHA needs greater autonomy to make changes to their programs and to develop new products that will better serve those who are not being adequately served by others in the mortgage market.”
They were being adequately served until 2 weeks ago, when the easy money gravy train pulled to a halt. Not everyone should be given a mortgage loan!!
I have a sense that there will be a bailout…one that is engineered to tie all of the subprime borrowers into indefinite indentured servitude to the banks.
If this happens, it’ll be a while before we can buy homes, but at least we’ll still be free.
paul
FHA is mostly noise. This same bill passed the house last year but failed in the Senate. They would still have to follow new FDIC and Federal Reserve lending requirements. FHA also has strict lending rules so they are not a subprime lender for example a person borrowing the max amount of $417K would need a income of 130K. Also the GSE limit would have to be raised to which the Federal Reserve is on record as being againist since they want the GSE to only be a lower income secondary lender source. they also do not want the GSE to get any larger which with higher limits they would enter the higher priced markets in Calif.
My house turned into a beast of burden
Foreclosure’s always near, and man i’m hurtin’
All I wanted was a little equity
The home loan also has me bk flirting
I’ve hocked it via helocs, three times
Have ran out of hope, for that is certain
regarding the discussion on medium prices. We should see in the coming months a smaller affluent buyer pool that will be more location driven then price. They would be picking over the available inventory in the more desirable neighborhoods and leaving the rest to rot. Clearly this would increase the medium price in general but the flipside would be higher inventory levels and lower YOY sales turnover. Woun’t need as many RE agents, LO and associated RE food chain workers.
It’s always been about location which is why the better places come out relatively unaffected.
The rich get richer. Always.
It’s always been about location which is why the better places come out relatively unaffected.
What better places are those??? The best areas of LA, SF & NYC have all seen big drops before…
of course they have and will this time, the buyer pool if smaller and more affluent will tend to shop the better locations in the good and bad times.
The better school districts = high SAT’s - Wealthy Whites.
The better areas in Wetschester, NY and Fairfield County Ct. never see more than minus 10%. They are simply too desirable. As soon as prices drop, people who could never get in, get in.
PAGING JAMES BEDNAR,
Could you weigh in on this???
“The rich get richer. Always.”
Tell that to the Hunt brothers. Maybe you haven’t had much experience with “the rich”. Making money involves one skill set, keeping it involves another (along with a set of enduring values). You’d be surprised how many pretty rich people live very modest lives and how many apparently “rich” people (people who do have high incomes) never accumulate a dime…..they can’t stop spending and what they “invest” in are, invariably, incredibly speculative (and losing) ventures.
Anyone who wants to make a bet on Brittany Spears having over 50% over her wealth five years from know, let me know.
She’ll probably be lucky to avoid MC Hammer’s fate.
A lot of people have skills that allow them to accumulate wealth….for a period of time. Far fewer have the skills or the inclination to learn investment fundamentals or the luck to hire someone who does but who doesn’t take them to the cleaners in the process.
The “rich get richer” is an easily belied myth. Yes, some rich consistently make better choices than others. There’s probably a good reason for that. Some of the very, very rich (who have unusually good financial accumen) certainly do seem to “always” get richer. But that only stands to reason.
Trust me, there’s no dearth of data on fortunes lost. In fact, there have been a number of stories of lottery winners blowing everything, one way or another. Why? Many didn’t have the skills to acquire wealth, much less manage it. There’s no law of nature assuring continuing wealth.
Either interest rates need to drop back down to nothing or else incomes need to rise. Affordability is always the real question that has been getting compleely lost in the soothing music of massive asset appreciation. However, even if rates collapse, I am not sure that that would re-ignite the whole sub-prime industry. At some point, you need to either pay back the debt or else have such enormous inflation that the deby loses its meaning. A house as an “asset” only produces one thing “housing.” All these houses are not going to be converted into anything else. The deamnd for housing is utimately driven by income. Period. Any talk of “investment” is simply confusing the issue because tht is really a seperate dynamic. (or at least should be thought of that way). “investing” in housing for your retirmeny is probably as diverse an investment as only buying shares in the company you work for.
“The gourmet tasting seems an innovative way to get people at least out looking, he said, and it might spur other builders to try something innovative.
—————————————————————-
that’s why sales are down, people just aren’t “out looking.” Not because prices are too high. Get them out looking and they just might make that impulse buy. Just like in the supermarket when they put candy bars next to the checkout lane.
I can’t wait to see what their next “innovative” trick will be. Innovative lending is so “last bubble.”
Its been a while since I have posted here. I’ve been following this blog even when it was on blogspot. It is morbid fascination that keeps me coming back here. I sold out in the spring of ‘05. Now the chickens are really coming home to roost. The pain that is going to hit us (as a nation) in the next few years is going to be worse than the Great Depression, and I dread the future. I really hope that maybe there is some way to get out of this mess, but other than the utter destruction of the dollar, I can’t see a way out. So all of you who are gloating about being renters and waiting for the bottom, better realize that when this thing finally tanks, the pain is going to be so enormous and you may not have much of an apetite for popcorn or that “bargain” afterall.
c’est le vie
I can rent forever, no problem. My dad did it well past retirement. Every time he wanted to travel the world, he just locked the door and went. Very simple and happy life.
Willie,
A lot of that has been discussed and is pretty much a given, IMO. I think most of us hope for a softest landing. Hard landings ’suck’, believe me.
But please understand that we approach the subject with detachment at times.
Ben
I’ve tried to detach myself as well. But I still can’t ignore the pain and misery that is happening and in the future will be widespread. I’ve perhaps too much empathy for the “FB” and those who have been caught up in this mess because perhaps because it wasn’t greed, but merely they had families and needed to find them some reasonable place to live. It’s sad but with a blog-history like yours of recording this enormous bubble bursting, perhaps it can be avoided in the future. Thanks for your dedication to this effort. This is a “historic” site in the making, telling the truth for the benefit of all. The MSM has been, is currently and will remain our true enemy.
c’est le guerre
Oh well, forget about it.
Here’s to a very hard landing. We need a little tough love.
The problem is, I don’t think even the most cynical here know what a “hard landing” really is and how widespread it becomes.
The continuation of these massive bubbles built on debt has harsh consequences and threatens our very existence. The problem with reinflating these debt bubbles without ever eliminating the waste, is they get successively bigger without ever cleansing the system. Sadly, the current bubble is already huge. There are certainly degrees of “hard landings” and I don’t want civil war, widespread hunger or the dollar to collapse. Hopefully, a fairly severe recession will correct our problems. We need to get back to allowing the economy to cycle normally, eliminating built up waste in small amounts through more frequent periodic recessions. The sooner we take the bad medicine, the sooner we get back to a more normal state.
willie,
i agree with you. i cringe when i see predictions like “we’re going back to 1999″ prices or “50% haircut.” imo,
we’re heading into unchartered territory. similar to you, i sold in 2005 at an enormous profit. my concern about the unknown territory we are heading into has caused me to move all my cash into treasury notes. The FDIC system has never been put to test. I fear, as do you, we are headed into a very dark economic place that nobody has a historic reference for. It’s going to be every man for himself….forget about j6p….he’s toast. i’m talking about intelligent people that have planned well and lived prudently may get severely hurt as well.
In the spirit of “guessing” for the sake of the blog….i think we and the nation will have a much greater understanding about where we stand by Q3 ‘07.
we need to figure out collectively why the msm is our enemy, what we can do about this to stop them from proliferating the next hoax, the next 911 unexplainable WTC7 collapse, the next WMD fraud, the next bubble upon us….
i think we’ve already figured out collectively why the msm is our enemy….it’s not “our” msm. Fox news comes to mind. I mean come on, do you really think the average red state Joe has any idea that Rupert Murdoch, an Australian, owns and controls it?
Our existence and Ben’s neverending hard work is the prevention. After two years of coming on here, I’ve seen the numbers grow. I’ve seen the demographics here change. I would venture to say that anyone that’s posted on here at least once, has shared their stories with a non-believer/non-reader. One by one…we add new readers. Recently, I was listening to a podcast from “The Economist” detailing how blogs are setting the trends and uncovering the facts long before the msm. I think this blog is a fine example of that report.
AgentJMF -
Back to the dark ages ? No
Decline of 50% in limited certain cities ? Yes back to 7 year lows
in the San Jose Santa Clara region we did go back 6 year low and had 35% decline http://www.viewfromsiliconvalley.com/id315.html
I dont think many places will suffer like small number of very hot areas.
Willie,
Your French is really bad.
a 10 year correction/downturn or possible crash will not be pretty - and those renters looking for a good deal - often won’t have the stomach to buy as no one will actually know where the bottom is
My guess is 30% down in all major bubble areas within several years - and that’s a best-case scenario
You really don’t want to see anything worse - as anything further down will certainly take the entire economy with it
Well, I guess if you want to see the cup half full, you can. But the reality of the #’s should be a cause for optimism:
Annual Deaths Cause
435,000 Tobacco
365,000 Poor Diet and Physical Inactivity
85,000 Alcohol
75,000 Microbial Agents
55,000 Toxic Agents
32,000 Adverse Reactions to Prescription Drugs
30,622 Suicide
29,000 Incidents Involving Firearms
26,347 Motor Vehicle Crashes
20,308 Homicide
20,000 Sexual Behaviors
17,000 All Illicit Drug Use, Direct and Indirect
7,600 Non-Steroidal Anti-Inflammatory Drugs Such As Aspirin
822 War in Iraq (2006)
1,198,699 Grand Total
Other factors that we tend to forget: The US economy has been looted and bankrupted by an extreme trade deficit, Iraq/Iran/Palestine war funding, high energy prices and no wage inflation due to high paying jobs being lost or sold out to India or China.
Therfore:
Massive asset deflation ( due to RE crashing ) + massive inflation due to money supply explosion = the equivalent of thermo-nuclear war…
The only way out is to own gold or silver or other portable properties, yet I fear even these assets will take a hit.
Yes, for those aching for a “50% haircut” and a hard landing, think for a moment - will YOUR job still exist in that economy?
Okay- I did close out an IndyMac MM account (my wife thought I was being paranoid) but I’m still a long way from moving to the cellar with gold bars and canned peas. Let’s all take a deep breath.
Meanwhile in New England - the big denial continues with that real estate lawyer/talk host Rick Shaffer on 96.9 FM out of Boston - however a bit flustered today on the portion of the show I actually heard. Many many times in the past year or so he has stated that Boston Metro is incapable of being part of a bubble and that the early 90’s downturn occured because of tax law changes (1986 passive loss rules?) and that houses (particularly in New England where land is somewhat scarce) here will not really drop much, if at all. He’s basically has been adopting the Karl Case (Wellesley College) approach for houses being “sticky” on the downside, because buyers have discretion. Mr Case, an otherwise rational person, was very very late admitting there was a bubble occuring in Boston Metro. My guess is his consulting practice produce some conflicts for him - causing him to lose objectivity
Of course what Rick Shaffer has never sufficiently analyzed is the impact that weak lending standards have had on pushing prices up. On todays show, now he’s at least talking about sub-prime - but not making much sense in his analysis - and certainly not explaining it in the context of his earlier views
Lots of denial still in New England, sometimes even from the most educated and otherwise rational individuals
Another one of the msm toadies. Sorry if you want any objectivity from him, its not in his contract.
in terms of the recast being between 110 and 125% i have not seen any stats on that. My understanding is the majority are at 115%. What’s interesting is that this is based on the original appraisal, not this new paradigm where prices are dropping. This will end up kicking the real LTV much higher.
Not yet but will soon see more things change…
Fed Says Subprime Woes Aren’t Spreading to Other Markets
A senior staffer for the Federal Reserve said the Fed is not seeing signs that problems in the subprime mortgage market are spreading to other other market segments.
“At this time, we are not observing spillover effects from the problems in the subprime market to traditional mortgage portfolios or, more generally, to the safety and soundness of
the banking system,” Fed Division of Banking Supervision and Regulation Director Roger Cole told the Senate Banking Committee.
Cole said that the Fed is concerned about and is monitoring the mortgage market; that less than half of subprime loans came from federally regulated banks; and that housing credit
deterioration is focused on the narrow subprime sector.
i’ve been meaning to post something pointing out the tricky wording of the fed statement, what a CROCK:
1) “At this time,” — we are only very recently into the subprime woes, weasel qualifier #1;
2) “we are not observing” — weasel qualifier #2, just because you aren’t “observing” it doesn’t mean it ain’t happening;
3) “spillover effects from the problems in the subprime market to traditional mortgage portfolios” –weasel qualifier #3 and biggest con job, setting up the straw man of “spillover” allows the denying to go on, it ain’t spillover, it’s INDEPENDENT pain caused by the same reasons (affordibiity), it’s not that the subprimes are spilling over, it’s that the rast of the loans are also based on shaky foundations; and
4) “or, more generally, to the safety and soundness of
the banking system,” — weasel qualifier #4, what event would they see as fitting threatening this safety and soundness?? Likely nothing short of nuclear war.
Yet the MSM unquestioning, lead the sheeple down the chutes
You read between the lines SLO Good for you…
Maybe CA isnt that populated as we been told …
State, U.S. at odds over population
MONEY, POWER AT STAKE IN ESTIMATES’ DIFFERENCE
By Mike Swift
Mercury News
San Jose Mercury News
Article Launched:03/22/2007 01:38:02 AM PDT
The state and the federal government are arguing over a million Californians. The state says they exist. The U.S. Census Bureau says they don’t.
The Census Bureau released population estimates today that say California remains the nation’s most populous state with 36.5 million residents - including about 1.7 million in Santa Clara County and about 744,000 in the city and county of San Francisco.
But figures from the state Department of Finance say there are 987,000 more people in 2006 than estimated by the Census Bureau. And some of the largest estimate gaps are in the Bay Area, with the state saying San Francisco, Santa Clara and Alameda counties each have about 60,000 more people than the Census Bureau estimates. That’s roughly the population of Palo Alto for each county.
The growing disparity is not just an arcane debate between demographers but has potentially costly consequences to the regions involved. As much as $200 billion in annual federal aid to the states is parceled out based on population estimates. Local planners and corporations use the numbers to decide where to build new fire stations, hospitals and shopping malls.
San Francisco county had the largest percentage gap of any in California, about 8 percent. The state’s population estimate for San Francisco as of July 2006 is about 803,000 people, while the state estimate for Santa Clara was nearly 1.8 million people.
It’s simple. Illegals with Bank of America credit cards.
I watched the senate hearing on the sub prime issue and I was surprised at how informed the senators were. They in fact, seemed much smarter than the lenders, federal reserve and banking “witnesses” who were there.
They all seemed to be aware of the most salient issues we discuss on these housing bubble boards however, they seem to completely miss the issue of the bubble itself, the price increase and what that had to do with the problem. They only talked about the lending laxness, predatory lending and regulatory negligence. Some of the questioning was pretty aggressive.
They had on a lot of clueless losers who took out mortgages they didn’t understand. The Senators actually have the attitude that their job is to take care of their fellow citizens who don’t understand finances, who are just happy to get a house. I understand this because these “common citizens” who were talking were pretty dumb.
If this subprime catastrophe has scared them, what’s coming is going to hit like a bomb. When Southern California (the area I’m most familiar with, whose price escalation has been insane) prices start plummeting it’s going to cause a Depression. I don’t see any other choice of word to use.
It sure seems like there is going to be some kind of bailout. The congressmen all seem to feel responsible to help the people who got into mortgage trouble. One of the mortgagees testified that his loan agent filled out his income as 10,000/mo which was not true. This guy was a retired social security senior.
The NAR and CAR, as public relations organizations for the REIC seem to be following the tactics shown in this set of videos.
http://www.heyokamagazine.com/HEYOKA.7.PSYCH.HappinessMachines.1.htm
There is probably no good way out of this. A bailout = destruction of the dollar (it goes to worthless paper) and fury among the taxpayers when they see what is going on. The government may not care about the second issue, but the dollar becoming worthless is not all fun and games. Sure, it makes debt go away, but it also remove America from a position of any meaning in the world, and I don’t think they want that.
The better choice would be letting the system purge itself without bailouts. This could result in a Depression, crushing job losses, and other negative outcomes, but at least there would be some hope of recovery in the long run.
I just don’t see any way to make this into a “soft-landing.” If people can’t pay the debt off (because of insanely high prices and equally insane lending practices), there’s no easy way to fix the problem without a lot of “funny money” vanishing.