“This Is Not Armageddon. It’s A Needed Correction”
The Oakland Tribune reports from California. “Bay Area home listings rose in March at one of the nation’s highest rates, according to a survey released this week. The number of homes for sale, both old and new listings, increased 12.2 percent in March from February. The only area that topped the Bay Area was Los Angeles, which had a 12.8 percent inventory increase.”
“Inventory levels also play a role in when people sell homes. ‘Where there is a great deal of inventory, (homeowners) think it takes a lot longer to sell … so they put it on the market (earlier),’ said David Kerr, a senior sales associate at ZipRealty.”
“Sellers in Antioch, Discovery Bay and Richmond, where many homes are for sale, are putting homes on the market now, he said. Of the 25,072 Bay Area homes for sale Friday, 1.7 percent were listed as short sales, according to ZipRealty.”
The Press Enterprise. “The hotel should’ve almost been built by now, but a cooling housing market has sent a barely touched 550-acre parcel in Desert Hot Springs into foreclosure.”
“Now the company no longer owns the project and is being sued by 52 homeowners at its other Desert Hot Springs development, Hacienda Heights, who complain of shoddy construction work.”
“‘The market up here…went from being one of the fastest-growing cities in the state to where sales have softened dramatically,’ said (developer) Walter Luce. ‘The Coachella Valley was really the last part of Southern California to feel the crunch. We thought that maybe we wouldn’t be affected by it,’ he said.”
“Three weeks ago, Irvine-based attorney Ken Kasdan sued the company, accusing it of construction defects at its Hacienda Heights development including stucco and concrete foundation cracks, window leaks and roof leaks.”
“‘Overall we’re alleging very poor quality and shoddy workmanship,’ Kasdan said. The homeowners will likely seek about $250,000 each, which they believe is the cost to repair their homes, he said.”
The Orange County Register. “Chriss Street thinks if you’ve got a mortgage from a subprime lender in deep financial trouble, and that’s a good-sized bunch, you may want to gulp.”
“The county’s tax collector is concerned that some ailing lenders may be unable to get borrowers’ payments to their rightful place, such as prepaid property tax payments.”
“‘This is a very serious issue,’ says Street, who adds the unsettling notion that property owners are still liable for a tax bill, even it goes unpaid due to a lender’s failure to forward your cash to the tax collector.”
“Street’s not yet seen evidence in his tax collecting efforts of such mistakes or misappropriations. Still, O.C.’s overall late tax payments are already running at an 11-year high.”
“But one company in the subprime game claims they’ve witnessed borrowers’ mortgage payments go awry. Wall Street banker UBS sued New Century Financial, the once subprime giant now mired in bankruptcy. The UBS beef? That the Irvine lender failed to forward $3.8 million in borrowers’ payments, plus $1.7 million in escrow payments for house expenses, to UBS-sponsored owners of certain mortgages.”
“‘I’m just being prepared that one, two or many of these lenders will have used the money that should have been set aside,’ says Street, who notes that New Century forwarded its borrowers’ tax payments to his office on Friday.”
The LA Times. “California is in the midst of a major boom in large-scale marijuana cultivation operations run from inside homes.”
“‘They have cropped up in neighborhoods like never before,’ said Gordon Taylor, who heads the DEA office in Sacramento. ‘I am talking about organized crime groups who are purchasing homes in our communities and creating marijuana factories.’”
“Local authorities have discovered at least six indoor suburban pot farms in just the last month, including two this week in Rowland Heights.”
The Union Tribune. “After a new neighbor moved in across the street from Betty Phillips, the block took on a distinctive odor. Inside her new neighbor’s $580,000, three-bedroom home, police found 1,886 marijuana plants.”
“A week earlier and a few miles across town, investigators discovered about 2,100 plants worth up to $12 million in a 3,000-square-foot, two-story home, which in January had sold for more than $800,000. On Wednesday, two more pot-growing homes were found in Rowland Heights.”
“In the past nine months in California, law enforcement agencies have found 50 grow houses, most in new housing developments ranging from the Sacramento area to the Central Valley. Almost all the Northern California homes were purchased using 100 percent financing, Gordon Taylor said. The homes were so heavily financed that there was nothing for the owners to forfeit to the government.”
“Having such a criminal enterprise in a neighborhood setting is ‘fraught with potential danger,’ said Dan Simmons, an agent in the U.S. Drug Enforcement Administration’s San Diego office.”
“It was opening day at Petco Park yesterday, which meant an adrenaline rush for the Padres, and another marketing opportunity for anxious developers.”
“‘New condos for sale’ announced a large banner hanging on Park Terrace. At 7th Avenue and K Street, an advertisement for The Legend, a still-under-construction residential tower – gushed about ‘condo living at the ballpark.’”
“A block over, at 7th and J, was a poster for a planned 36-story luxury high-rise called Condominium Tower. The ad offered the chance to buy into a building ‘overlooking Padres Petco Park.’”
“It’s no secret that the real estate market is flat in San Diego – especially in the downtown area, in part because so many buildings went up in such a hurry.”
“The downtown developers need every edge they can get. San Diego real estate consultant Gary London cites ‘a blanket slowdown’ in the downtown market, ‘probably the only over-built market in the entire San Diego region. There’s too much inventory under construction,’ London said.”
“Sal Rivera, a television journalist, and his wife, Rose, recently bought a condo with a balcony overlooking Petco’s center field. ‘If we were going to turn around and sell tomorrow, then we’d be in trouble,’ Rivera said. ‘But otherwise, we’re fine.’”
“Doug Wilson, developer of The Mark, a 244-unit residential building two blocks north of Petco, acknowledged that half of the units had yet to be sold, even though the building is scheduled to open early next month.”
“But he said he wouldn’t panic, even if it takes another two years to sell the remaining condos. ‘Hey, this is not Armageddon. It’s a needed correction,’ Wilson said.”
The North County Times. “The name says ipayOne, but the Carlsbad real estate company that bought the naming rights to San Diego’s Sports Arena two years ago is not paying any longer, the arena’s operator said Friday.”
“IpayOne is in default on its $2.5 million naming rights agreement, said Ernie Hahn II, who heads Arena Group 2000.”
“On Friday, ipayOne had only one notice on its Web site, saying that it would no longer accept new listings and asked buyers and mortgage customers to make contact by e-mail. It was signed by Michael Jackman, the company’s CEO.”
“Hahn said that ipayOne made initial installments on the $2.5 million it agreed to pay over five years, but then it stopped. ‘We’ve had to send letters, reminders,’ he said. ‘It’s been less than ideal.’”
“he LA Times. “California is in the midst of a major boom in large-scale marijuana cultivation operations run from inside homes.”
“‘They have cropped up in neighborhoods like never before,’ said Gordon Taylor, who heads the DEA office in Sacramento. ‘I am talking about organized crime groups who are purchasing homes in our communities and creating marijuana factories.’””
Ah yes, I can just see it now….the new LA RE mantra.
Better buy now before everybody discovers our smog is medicinal!!!
“Inside her new neighbor’s $580,000, three-bedroom home, police found 1,886 marijuana plants.”
I guess there’s more revenue per square foot growing marijuana than renting to tenants. The ideal borrower for a “stated income” loan.
Add another home to the foreclosure pile. And, given that the grow houses are rigged to cultivate marijuana instead of housing people, one has to wonder how low that formerly $580K house is going to sell.
Figure it out. Zero down loans so the place is free. Half the houses are empty in the neighborhood cause they’re owned by flippers. It don’t look weird that people just come around ill-regularly, another flipper minding his “investment”. Never make a house payment and by the time the Bank forecloses, they abandon the house with their multi-million dollar harvest.
I guess there’s always a new angle.
An old friend of mine that does concrete work now told me the contractors were going into homes as soon as escrow closed and rigging new homes to grow pot.
I’m talking about blowing out walls, installing new lino floors with drains, 220v fixtures for lighting, setting up all the lights and movers, etc..
Thats some balls (stupididty) to take the risk of complicity in this. How can you deny your knowledge about the owners intentions.
Late last year they busted about a dozen of these homes in new developments in stockton. Everyone that had anything to do with the pot houses was complicit. The builders put a price $50k above others for a kickback to the buyers on 100% stated income loans, they used one salesman, etc.
These guys were all asian gangsters around 24 yr old that had loans totaling over $5million. In most cases they never made a house payment.
Pretty sweet deal for a 24yr old hood, get $50k at closing, pay a contractor $15k to rig house to grow, move you clones in 1 week after closing and VOILLA!!! Six weeks later you have 50 pounds of killer green worth $150k!!!
Now this is pretty impressive stuff, but it gets downright insane when you multiply it by 12. It is must be getting into some real labor to get rid of 100 pounds of pot every month.
My only question is why it took the criminals soo long to do this. They must be losing their edge, if you can say $300k a month is losing the edge =)
This has been going on for a long time. It used to be that the criminals cooked meth though. Moving that much pot per month must be insane.
Here’s something to think about. If they catch 50 people running grow houses I’m willing to bet there’s 300 more getting away with it.
Yeah, but the Feds really inflate the value of the product. I knew a couple of guys who were growing in Seattle in the 1980’s and if they had been busted, the cops would have claimed a 250k operation. In reality they were doing maybe 5k a month. There is a lot of hype in the numbers that are published. Makes everyone involved in the bust look really good. To change the topic a bit, the ‘War on drugs’ has really driven the market. The US has created a huge criminal business, with astounding profits, by making drugs illegal, just as they did with prohibition. Maybe it’s time for some rational discussion about this stuff. Also, what about the huge electric bills? Dead give-away.
I agree with you on the “war on drugs”. Watched something on the forming of the DEA when they went after coke, it is generally accepted that if the politicians had any idea how it would have morfed into this clulster fuck of today they would have left coke alone. Shortly after passing it there was a huge outcry about turning addicts into criminals without help for their problem.
As far as the value, your right in regards to the cops, but wront to the values i posted. I know several people in Humbolt county that sell a pounds to the “medical marijuana” places in the city for $2-3k/pound!!!!!
I am talking 20-30 pounds at a time!!! Blew me away when I went into one of those places in SF. Tables all around a small place with all kinds of different smoke in big cardboard boxes. They had scoops like in the candy stores =)
Selling for $250-400/oz!!! Man that tripped me out, people paying more for smoke than gold.
You all forget how much MONEY Lawyers make off of drugs…..
If drugs were legalized,(decriminalized) there woyuld be no reason to keep most law schools open since we allready have way too many lawyers for the new reduced work loads.
Maybe they will become Real Estate agents?????????? LOL!
“Also, what about the huge electric bills? Dead give-away.”
That is how they will catch them all, unless the criminals figure out hot to power the operation “off-grid” The utility companies know exactly how much power is consumed and how much they expect to be consumed by “normal” living. Now, if they were Al Gore’s neightbors–the power company might not think anything of it.
go solar!!!!
More on the spike in Bay Area inventory :”Sue Walsh, a Realtor with the Burlingame office of Cashin Co. Realtors, said a significant increase in inventory in San Mateo County from February to March is not unusual. In fact, similar increases for new listings happened in 2004 and 2005, when the market was hot, she noted. The Bay Area’s good weather is another reason more homes are listed in March than in other parts of the country, observers said. ”
The question is how long will it take to move this spring inventory and how uneven will the sales rate happen both per county and within county.
–
What, Ms. Walsh, a realt-Whore, doesn’t talk about is that % increase from Feb to March is normal but from what levels? In Santa Clara Co. the listings are up 150-200% compared to March 2004. And demand is down 30%+ compared to 2005.
Jas
Jas;
SJ Mercury reported last weekend that *some* cities in Santa Clara like MtV had 25 days inventory. Demand in NW Santa Clara was ahead of 2005. Other places sales were ***way off** — like East San Jose.
It’s very uneven.
–
Hello JTZ,
I just sent the following to Sue McAllister. — Jas
-x-x-x-x-x-x-x-
“In Los Altos and Palo Alto, it would take just 23 days to exhaust the supply of houses on the market there this week, based on the sales pace of the previous few weeks.”
In Silicon Valley, real estate market has two faces
By Sue McAllister
Mercury News
Article Launched: 03/30/2007 04:05:11 PM PDT
http://www.mercurynews.com/realestatenews/ci_5558959?nclick_check=1
-x-x-x-x-x-x-x-x-
Dear Ms. McAllister:
I have heard from few people about your report sited above. I don’t know the source of your data (I wouldn’t be surprised if it is from a Realtor) but it appears patently false based on the following observations.
Data for Los Altos, Los Altos Hills (Zip Codes 90422 and 90424) and Palo Alto, combined:
Total MLS Listings of SFHs on 3/31/07 = 135
Total MLS resales of SFHs for 4 weeks ending 3/31/07 = 22
Total DataQuick sales of SFHs and condos, resales and New Homes, for 4 weeks ending 3/19/07 = 85
http://www.dqnews.com/ZIPSJMN.shtm
It must be noted that the sales of SFHs on MLS is 1/4th to 1/3rd of total sales reported by DataQuick. Please also note that supply of homes in months, or weeks, is total number of listings divided by the sales during the month, or the week, and Realtors use bad math to come with supply in days.
Doing the correct math, listings divided by sales during a period, we come up with close to 24 weeks of supply on MLS for SFH resales for Palo Alto and Los Altos combined.
I would very much appreciate if you would check the facts and correct the misreporting.
Sincerely,
Jas Jain
And your very delusional. Take comfort in the fact that your not alone. I’m sure your neighbor shares your convictions.
I was thinking to move and buy but sadly prices have not fallen and there is over bidding. If you can find a 1200 sq ft home say circa 1950 for 750k in Cupertino I’ll buy it.
–
“The question is how long will it take to move this spring inventory …”
Roughly 6 times compared to 2004 and 4 times compared to 2005 for Santa Clara Co. SFHs on MLS.
Jas
Try a home in Cupertino. Like I wrote above — slump in Bay Area is very uneven.
Basically near San Mateo/Sana Clara Border prices are at highs and demand exceeds 2005 levels.
Must be the 40,000 net loss from San Diego.
–
Cupertino SFHs on MLS:
Listings = 51
Pending Sales = 24
This implies a 7-9 weeks of inventory, which is far better than the rest of Santa Clara Co. where the supply is 5-6 months right now and getting worse by the week.
Jas
As I’ve said and has been reported in newspapers, the housing market in Santa Clara is very uneven.
Santa Clara as an aggregate is “red herring”. Noone looks to buy in “Santa Clara”. They look to buy in specific areas.
In Cupertino there are multiple over bids on desirable properties in select cities such as Cupertino which has some of the state’s best public school districts (determined by statistics).
Those select places where I was looking to buy and also make an offer on an extended family member’s home (they’re downsizing) seem to be very popular.
These areas are to high paying jobs and good schools.
I doubt many of the 51 listings are 7-9 weeks ol but there are amny looing to cash out and find a sucker.
I think it’s nuts BUT given the topic of this blog, important to show how uneven and still heated some areas are.
According to the Mercury, a 120k over-bid on a 4 brd Sunnyvale home FAILED - too little.
Cuppertino
That area (as well as Vancouver) is a focus point for asian money moving into the US. I have read stories about the school system that makes this clear. This is one of the arguments for domestic inflationary pressure. Two thirds of our money supply is outside the US, much of it in asia–where it chooses to land when it comes here to buy fixed assets will explode in price.
These folks may not need much financing–hence our credit contraction affects domestic buyer ability to borrow–but the foreign “cash people” will be competing with each other for localized assets. It’s odd, if they got together they could buy a whole state in the middle of the country for what they are paying for some houses in a Cali town (they could then hire excellent teachers for a school system they would control.)
In 2004 and 2005 Sue did not tell customers this was normal. She told them that this was an indication that things were going to the moon.
Now, of course, the best she can claim is that the increase does not really mean anything at all.
You know Sue?
The explanation is pretty consistent with two things 1) weather is warm and dry so the spring market should be active 2) reports hit the local papers that demand surged after the Superbowl. Sellers are responding.
My interest focuses on inventory and if it is consumed evenly or dis-proportionally city by city. Evidence is that some places are hot and in great demand and others cities are way off.
STFU!
Today MLS lists 9 SFR in the 94040 zip code, a code I lived in (rented for 6 years) and near my work place. It has high density Codos and Townhomes.
9 listings dude. Is this a crashed market? Not yet.
‘Founded by a group of mortgage and real estate brokers, ipayOne aimed to bring real estate commissions to a new low of 1 percent, compared with the typical 5 percent to 6 percent commission shared between buyers’ and sellers’ agents.’
‘According to Morris, a 21-year real estate veteran, discount brokers often pop up in hot markets where ‘you just put a sign up and you get multiple offers. You don’t have to be good marketers. You don’t have to be good negotiators.’
‘When home sales cool, though, sellers typically turn their backs on the discounters and return to more experienced sales people, he said. ‘It was a small window when the market is suited for that strategy,’ he said.’
Yeah, a 21-year real estate veteran would certainly be trying to make a case for continuing to charge exorbitant commissions. I’ve got an idea: how bout the agency gets 5% of the 1997 price.
How about a seller goes to each agency and identifies the 21-year real estate veterans. Then the seller invites each of those veterans to start bidding. Lowest accepted commission wins the listing.
Actually, I should have said ‘21-year real estate PROFESSIONAL.” The same way that posters around work notify us of the upcoming “Administrative Professionals Week.”
I note that lawyers are not called ‘legal professionals,’ and physicians are not called ‘health care professionals-’ those tags being used instead for people who are not lawyers or physicians.
I believe that in the new nomenclature calling someone’s job ‘professional’ is prima facie evidence that it is not.
I actually agree with this guy. The only buyers left now are the uninformed, who will go to one of the big realtor’s to look. The realtor they use will not even show them a property from a discounter. Help-u-sell is more like Help-it(inventory)-Swell.
I know most here hate RE agents and harped that the discounters would take over, but It will never happen. Every bubble they proliferate when it is hot and shut their doors when the market slows. There are at least 5 discounters that have allready shut their door in Stockton. I am taking about shops that opened less than 2 years ago.
When the market is hot all the buyers fell pressure to act now and see no value in a buyers agent. In a hot market the listing agent has plenty of opprotunity to sell their own listings. This is not the case in a dead market (observe the new builders now paying RE agents for buyers). In a dead market the inventory is such that your average buyer will have no idea what to buy, in a hot market the choices are so limited that it is easy.
In a down market a good RE agent is vital!!!
A good agent will look at property every day and know all the inventory in an area. If you are interested in that same area he will save you big bucks and get you a better house.
If you think im full of it you try to look at all the 300 homes available, they come and go. If you don’t look at many houses every day you will not have a clue as to what a good deal is. I can assure you that every listing agent you talk to will assure you that their listing is “the shit!”.
Having done this since 92′ I hate what is now going on. Dealing with buyers is just too slimey for me, I do have a conscience and don’t like helping people into finincial ruin. My only recent sales are listings of previous clients or referal listings.
F%&k what the stats say, we are dropping like a fricking rock now. The highest sales were some real crap hitting mid $300’s, now if your priced above $250k and not a real nice home your hosed.
I saw sales at the top that made me sick. $360k that wouldn’t fetch $250k today. Screw the realtor stats, $360-$230ish is HUGE and we just started. According to our old (prudent) rule of thumb for rentals (10x rents) the stuff selling today for $250k is only worth $150k.
My guestimat is that we will be close to the bottom after the summer or 08′, by this time the writing will be on every wall an the public will view RE as the most retarded invest available.
The only real question is how long we will go sideways after the bottom.
The last bubble here in Stockton topped in 89′ and was crushed by 92′ it still dropped a bit, but was mostly sideways till about 96′. At this top we were about 30-50% more unaffordable than 89′. I am guessing this excess will be taken more in the initial fall than in the sideways move (maybe wishful thinking), if it is backended to the long sideways move after the majority of the crash we may be in for a Japan type scenario.
According to zip there are now 58,183 homes in the Phoenix area. Unbelievable! I remember seeing ~5000 on zip in August of ‘05…
I kinda miss phuck the flippers extra long inventory growth posts. Oh well life goes on.
And I would venture to speculate that there would be many more than 58,000 if people thought they could get their “wishing” price. Since they know they can’t, they don’t even put their house on the market.
“It’s no secret that the real estate market is flat in San Diego” …
True, “flat” is the euphemism they’re using when the real estate market in San Diego is actually in decline.
The other “buzzword” real estate slicks use is “we have returned to a normal market”…yea right buddy.
“This is the Pilot speaking. Pay no attention to that sensation of G-force. We are returning to a Normal Market.”
Balance.
Give-and-take between buyers and sellers.
“Buyer’s market”. “More-normal appreciation.” “Balanced market.”
“Standing on the sidelines.” (My arse! They’re heading for the hills!)
Oh and did I mention “Balance”?
The NAR does a good job getting its members to focus on the talking points and key words.
And you get a city that doesn’t even know how much it owes on its pension debts of billions and billions with no repayment plan in place. Sounds like our government but sonner or later the fine people of San Diego will have to do somthing. A tragedy in the making.
Inventory from ZipRealty for San Francisco, Bay Area
02/08/07 Bay Area 24,400
02/19/07 Bay Area 24,800
03/14/07 Bay Area 26,612
03/22/07 Bay Area 27,728
04/02/07 Bay Area 28,688
04/06/07 Bay Area 29,381 ~=+20% in 2 months
The inventory is growing faster and faster. Last year we reached the 29,380 mark on June 12th. The top was in august/september with around 35,000 units. At that point the sellers withrawed their houses from the market hoping new fools will show up in the spring.
Now it’s time to sell, they are not making more fools
Inventory from ZipRealty for San Francisco, Bay Area
02/08/07 Bay Area 24,400
02/19/07 Bay Area 24,800
03/14/07 Bay Area 26,612
03/22/07 Bay Area 27,728
04/02/07 Bay Area 28,688
04/06/07 Bay Area 29,381 ~=+20% in 2 months
The inventory is growing faster and faster. Last year we reached the 29,380 mark on June 12th. The top was in august/september with around 35,000 units. At that point the sellers withrawed their houses from the market hoping new fools will show up in the spring.
Now it’s time to sell, they are not making more fools
Move along, this is different here!!
That’s a first. A double post within a single post!
In all seriousness, you certainly add value showing that this year is 2 months ahead of the previous inventory curve.
Double post to make sure the numbers get noticed
It was my bad.
Traditionally the inventory does not significantly grow before mid of May. This time SF and LA are ahead of the national curve. It seems unsuccessful sellers who did not want to lower their prices are trying to unload ahead of the crowd. One can only wonder how high will the inventory goes this year and if the sellers will make concessions or wait for spring 2008. There is still not enough fears and too much greed.
Anyhow it just a matter of time, the prices are unsustainable. When the mortgages will reset and foreclosures will hit the fan, the prices will drop and the panic will start. After that, it will get ugly. When will it happen 2007, 2008, 2009 and how long will it take? It doesn’t matter the result will be the same, we will be back to historical valuations. (probably even on the dowside for a little while).
I beg to differ.
Bay Area housing market beings in March, weather permitting, and it’s dry and sunny this year.
We began looking in Jan of 2001 to get ahead of the curve and we closed in March 2001.
According to the newspapers, this year’s market - aka buyers making offers - began to heat up the weekend after the Superbowl.
According to what?!! You’re new here, aren’t you.
No - I’ve been here on this blog for many months.
It happens I’ve looked to buy in this locality given the proximity to work and public transportation. Sell my large home, downsize and roll my car and gas costs into a mortgage.
While it looked promising in Jan, the local market started to heat in Feb. It’s insane and I’m not advocating buying in this local market but the fact is this market still has some over heated places.
I’ve been a resident since 1991. March is when the housing market heats up UNLESS it’s a wet or cold spring. I thought the spring would see a flood of property and it has for the aggregate area but not in desirable places (by my criteria).
I’m staying put.
double post in a post, lol
my fence has one of those;)
Compare and contrast:
Search MLS for 94040 - MtView Ca - produces 9 SFR.
Search MLS for 95020 - Gilroy CA - 325 SFR.
Same county, but vastly different inventory. 94040 is Google HQ with a city pop of 70,000 people while the other is the furthest end of the same county in a city of 50,000 people.
9 SFR advertised a zip code loaded with condos and townhomes! It’s a very uneven market.
You’ve managed to say a lot on this thread without actually uttering the famous words of the hopelessly hopeful, that of course being “it’s different here”. All the same, your words amount to the sum of those three words. Keep up the faith, JTZ. Word of caution, though. The “it’s different here” team is riding a serious O-for streak.
JTZ shows important differences. If I want a house in Mountain View, I have 9 houses to look at but if I want a house in Gilroy I have 325. The outskirts will fall before the centre, centres that produce goods and services that sell outside the local area will maintain their prices. Google produces services that sell outside the local area indeed outside the US. Software engineering is not going to save the US, but at the same time it is an area where 1% or 2% of the population can lead the world.
Thank you. I make no claim that the MtView market is justified. I’m very curious if this is a last gasp and new inventory will swamp demand OR if prices will continue to hold.
Yes, the outlying areas are dropping with inventory maxing out. So are selective areas closer in, e.g. East San Jose which is far from HW access & trains and have marginal schools.
Gilroy is more like the central valley. It has open land and many new developments so there is ample supply. It’s behaving like other markets. A more interesting place to monitor is Santa Clara the City which is on the edge of this high tech area.
thanks
Hey, this is not Armageddon. It’s a needed correction,’ Wilson said.”
When your neighbor loses his house, it’s a Recession.
When YOU lose your house, it’s a Depression.
Armageddon is in the the eyes of who’s “ARM’s-’A-Gettin’-It”
Excellent idea, I will never again type “Armageddon” but always “ARM-ageddon”, thanks imploder
They’ll talk about Armageddon when job relocations and displacements start impacting local economies.
Lereah has a new book out based on real estate being local… (Hat tip David’s blog). I don’t believe that’s true anymore. Our workforce is too mobile. I think we’ll see more workforce migration over the next three years than normal. WWII scale relocations… The post Civil war scale migrations…
Its going to be interesting.
Got popcorn?
Neil
From where to where?
Housing prices, while inflated, are pretty much tracking access to jobs with one exception, a reliance on cheap oil and the car for long commutes.
Cheap homes == low paying or no jobs.
The best chance for massive relocations is the changing environment impacting access to fresh water for industry and farming.
The IPCC says the water poor SW USA is most likely to have severe water shortages.
OK, I think I get it. You’re trying to be funny, right? My guess is your next joke is going to be “the economy is doing great because the newspaper said…..” . Fine, I’ll remember to laugh on your next post.
(God I miss guys like this showing up. It starts to get really boring sharing thoughts with the well informed)
Cheap homes == low paying or no jobs.
That must be a joke. Look at how price to income is distributed. e.g., New York makes the most money but LA has the highest price to income.
I have to agree with shaunt79… JTZ must have skin in the game that’s going to get burnt. OC flips?
Got popcorn?
Neil
I am sorry–but think for a minute; JTZ has got some interesting data. I think he may be witnessing the point of the spear as to the repatriation of US dollars from abroad. Where this money is invested in fixed assets we will be seeing serious inflation. Cuppertino is being taken over by upper class asian money. Look up stories about the tension in the schools there.
We need to look to where the contrarian situations will exist during this bust. Your standard clueless no money american is out of the market when the lending dries up. Wealthy asians do not need our subprime lenders–they are moving around with serious cash. They are bidding against each other now–with real money most americans will just be spectators to this game wherever it pops up. Our fiscal policy as a nation has set this up.
You can really tell JTZ has a lot of skin in the game, he’s the most active poster on this thread. He couldn’t be worried about something could he?
JTZ: you’ll need some thick skin to survive here, if you’re not in the norm either way (too bearish or too bullish). I was on the too bearish side 1+ year ago, but it seems I may end up being an optimist after all…. (grin)
“They’ll talk about Armageddon when job relocations and displacements start impacting local economies.”
No, they’ll find some way to spin 180,000 new fast food jobs created as the economic indicator. Want fries with that?
Wishful thinking, indeed!
According to the following article in todays ocregister: http://blogs.ocregister.com/lansner/,
“Insider Q&A hears prediction of 50% home-price drops”,
it is the Armageddon! Finally somebody out of this blog got it !
He accurately described the entire scenario and published it in summer of 2004. Where is he now?
Peter D. Schiff, President/Chief Global Strategist
Euro Pacific Capital, Inc.
“…Earlier this week a CNBC anchor asked a guest if the “economic baton” might now pass from housing to the consumer, much the same way it previously passed from the stock market to housing. I’m not exactly sure where the anchor believes that consumers will now be getting the money to lead us out of the economic morass. With adjustable rate mortgages now re-setting higher, home equity disappearing, credit card debt mounting, personal savings at record lows, and the cost of basic necessities continuing to rise, the consumer is all tapped out. In fact, consumer spending is not just going to slow down; it is going to fall off the edge of a cliff. …”
From a recent report from Mr.Schiff in FX Street
http://tinyurl.com/2zvgd4
Mr. Schiff has been on the bear side of the street for quite a while and IMHO rightly so.
Schiff’s posts appear regularly at SafeHaven.com, and I think he’s dead on. Excellent interview over at FinancialSense.com, too. Should have his new book in hand Monday… can’t wait.
if your go to http://www.europan.net and scroll dow a bit on the left you’ll see the link for his video interviews. great stuff. people are really rude.
sorry.
http://www.europac.net
I am not a fan of the realtors or the speculators but damn you have to give them credit for being optimistic in the face of the current market. Or do you think they are just spouting drivel they do not believe? Like a mantra past the graveyard. Cue Lyndon Johnson.
All my life I have been a positive person who could get it done. I got it from my Irish ancestors I guess and the Marine Corps only served to re-enforce it in me.
Viet Nam was a no win game. I can recall sitting on a bunker about 5 days after I arrived in country during the Tet Offensive and thinking, “we are all going to die here if we stay in the mode we are in which is holding on just to hold on.” I had just left the states and already I could see there was no way I was in the same place depicted by the media. I could not understand why we just ran around in circles and got our asses shot off when we were trained to take the offensive and crush the enemy. We always were fired on first and had to regroup to turn them back. I hated it, and in fact we continued the same dumb moves expecting a different outcome and in the end we had an 87% casualty rate in my company.
This is the same drill. We are going to be overrun. We know the numbers and we are completely screwed. No matter how you turn it we are going to have to deal with casualties. But if we are going to die lets charge the guns and go out like men.
Get the dying done and let’s get the hell out of here. Foreclose on the bullshitters, take the property, sell it, bulldoze it, rent it, do something with it. But get it. Wall street be damned. Investors be damned. We have a recovery to get going and the longer we run around in the valley of the shadow of death the more casualties we will take.
rant off…sorry guys I am just fed up with the rhetoric and BS
Great post. I like the Vietnam analogy, and agree with your premise that it is time to just flush the bullshit, plow it under and move on to a new and -sustainable- economy.
Testify, dime! I feel exactly the same way. And not just about the housing bubble, but that’s another story.
“We have recovery to get going with and the longer it takes the more casualties we’ll have”.
That’s *exactly* how I feel. We went through all of 2006 and half of 2007 just piling on more FB’s. How much longer are we going to keep piling them on? Enough with the piling on already.
We need that massive credit crunch NOW, not next week or next month. I really wonder when Alt A is going to freeze up. I also wonder when subprime’s going to disappear. And when they’ll quit advertising HELOCs everywhere you look. I can’t believe banks are still advertising HELOCs to all these people whose home values are dropping. When are the banks gonna say “We’ve manufactured enough FB’s to last a good long while?”
In DFW Texas, I hear on the radio: Get your Home equity loan here, we’re different. It’s different in Texas, they say, because you can only get home equity loan up to 80% loan-to-value by state law.
All I can say is: no wonder they have to do so much advertising.
dimedropped: great post! You have significant opposition: it’s in the interests of Wall Street and the mortgage lenders to deny the problem, they don’t have to take the write-downs and can go on milking the borrowers. They are aligned with Jesse Jackson, Senator Dodds who plead that they must limit the number of foreclosures. Let the lenders foreclose! Let them take the house and do what they want with it! Americans will adjust faster and better without false promises of refuge.
God bless America!
I do think that the harder the spanking for the lenders, loan packagers, PMI companies and MBS buyers (and I include in that spanking any CEOs and officials who bailed), the longer until the next bout of idiocy. I still believe that the S&L fiasco, where lots of CEO’s escaped with their riches intact, created the environment where pushing risk to insane levels was rational- after all you lose if you don’t participate, and if you do participate, you can ‘golden parachute’ away. If Neil Bush was still in an orange jumpsuit, the officials of big lenders would have done something to dampen the insane lending.
“Wall street be damned. Investors be damned”
I so agree with you, dimedropped, and enjoyed your Nam story.
Now if only we could figure out how to take the reins from Wall Street, investors. It appears they’re very firmly in the driver’s seat. I hate only being able to sit in the back seat and watch as we go off the road.
I know Zillow has never been particularly accurate in regards to the infamous Zestimates… but I do enjoy looking at them for entertainment sake… within the 6 months or so i’ve been interested I saw Zestimates and wishing prices just about peak and now starting to come back down…
In some cases these Zestimates are now 50-100k under the wishing prices… i know on some level Zestimates were able to be influenced by “user input”… which makes me wonder if there werent a whole bunch of “investors” inputting all their granite countertop costs and now have just given up on tweaking the Zillow numbers as well…
I have mixed feelings on the methodology of Zillow. In my neighborhood, two houses (that were real fixer-uppers) dragged down the value of all the Zestimates.
But being a relative outsider to R/E, I guess that’s how comps work.
Zestimates zuck, no question about it.
I’m not an expert, but I’ve tried looking at cyberhomes.com, and the prices seemed to me a lot more rational. That site includes lots more information in a handy format, and things like price graphs for the neighborhood.
Of course, I haven’t been able to use the zillow site for months because I only use Linux and all the Flash-based stuff on zillow stopped working for me at some point. But the cyberhomes site works great.
Thanks for that link. I just checked the site out and quite impressed. I know for a fact it’s not pricing accurately on a neighborhood here in MA. There’s a house estimated at 640k, of which I know today doesn’t go for more than 575k. It seems they are a lagging indicator of prices, just like zillow is.
Thanks for the link too. Zillow doesn’t work for our area so this was interesting. It’s way wrong though. I used our old house as an example and it priced slightly over what we got in 2005 and prices in this area have only gone down (about 15-20%). It was being pulled up by some strange financing going on next door. A mortgage broker bought it about the same time we sold and strangely enough the cyberhome price on that is about $100K over what he paid. I see a forclosure on the horizon.
Thanks. Good link, though quite inaccurate in my area.estimates are about 20%too high in Studio City.
The area I looked at on cyberhomes (90402) has not been updated since October 2006, and is missing a lot of stuff that was on the market at that point. They have a problem with some of their data, obviously.
What’s the problem? Zillow is great. Just look at the sales history of the house. Look at the sales history of comparable houses. Those numbers are factual as opposed to theoretical and you can make your decisions based on those. You don’t have to rely on the Zestimate. There is much more to Zillow than that.
In my area for example I see that any house that was bought in 2005 and sold in 2007 was sold for 15% less than the 2005 price. It’s a very uniform deciline so I know the facts are, house prices have gone down 15% from their high in 2005.
“The only area that topped the Bay Area was Los Angeles, which had a 12.8 percent inventory increase.”
What finally convinced me there was a bubble was hearing real estate was appreciating over 2% per month. That is a parabolic rise for that asset class, and I recall hearing the same comment in 1989 in Los Angeles, and real estate shortly crashed hard and long.
Now we are hearing the inventory rate is increasing at over 12% per month! That means crash city is coming!
Next weeks headlines
SPRING BUST
CONTINUED WOES IN HOUSING
HOUSING PUNDITS WORRY OVER IMPENDING RATE HIKE
Nice story about the indoor marijuana production. My tenant got busted last June with 94 plants. In a one bedroom apartment.
I hear those high intensity lamps can burn a place down right quick, if not properly attended to.
Oh sh!t.
In order to not get caught, they have to generate their own electricity or steal it.
The utilities report houses with 10x normal usage as they are almost always grow operations.
The utilities meter readers are paid for catching electric thieves, basically connecting loads upstream of the meter.
It’s separately metered, so I didn’t know the extent of it. I just knew the tenant was smoking pot all the time and had a few plants. I could barely breathe in there when I went to collect the rent, half the time he came to the door while sucking on a bong. Little did I know his entire bedroom was a growing room, that must have been why his mattress was on the living room floor. He still smokes a lot but apparently gets it from the medical marijuana club…however he will now be getting an inspection re heat lamps. I do learn a lot on this board.
By the way, he says he has no immune system due to some sort of cancer, but I suspect HIV, does anyone know anything about that?
If he had cancer, and a bone marrow transplant to treat it, he would have no immume system until the new marrow took and his immune system re-developed. I don’t know how long that takes, but ISTR it takes an extended period of time.
Did he hire LA’s “dopest” attorney: http://allisonmargolin.blogspot.com/
LOL.
“Doug Wilson, developer of The Mark, a 244-unit residential building two blocks north of Petco…”
“The Mark”? These developers really have a sense of humor. I guess his next projects are “The Dupe”, “The Patsy” and “The Sucker”.
LOL.
Yea, and his long dreamed masterpiece: “Chump Towers”
“The name says ipayOne, but the Carlsbad real estate company that bought the naming rights to San Diego’s Sports Arena two years ago is not paying any longer, the arena’s operator said Friday.”
Get ready for “Out of BK” Arena or “Credit Counseling” Stadium.
“Inside her new neighbor’s $580,000, three-bedroom home, police found 1,886 marijuana plants.”
—————————————–
That’s a lotta plants and a lotta work. Got Meth?
Apparently most of the Central valley had the same question.
“On Friday, ipayOne had only one notice on its Web site, saying that it would no longer accept new listings and asked buyers and mortgage customers to make contact by e-mail.”
———————————————
Thanks Ben, that’s good news for us Prudential California Realty stockholders.
“‘New condos for sale’ announced a large banner hanging on Park Terrace. At 7th Avenue and K Street, an advertisement for The Legend,”
————————————–
Bosa Development has been bragging in the local papers, I can’t wait til they go BK.
“This Is Not Armageddon. It’s A Needed Correction”
Just a correction? Is that like a “little flesh wound?”
Ignore the sucking chest wound; the patient’s fine!!!
“Petco Park yesterday, which meant an adrenaline rush for the Padres, and another marketing opportunity for anxious developers.”
—————————————-
better get a downtown condo now
they’re not making any more air
In keeping with the “This is not Armageddon, it’s a needed correction” theme: I met a guy at a party a couple weeks ago who was all over the Houing Bubble and the upcoming crash/correction.
He came to his conclusions through simply observing the market vs. wages, friends debt behavior, etc. over the past few years. He is also is a homeowner who understands how damaging this whole episode has been to individuals, communities and society.
We talked about the bubble for a long time then parted.
As I was leaving, he came over and said: “Hey, how do you feel about a big “Housing Crash Party/Celebration” when this thing finally implodes?
Now *that’s* the spirit!
At some point, those who believe this has been an outright fiasco and have been waiting patiently for the bubble burst will take center stage. Oh Happy Day! I have a feeling there are more of us than them out there. It’s just that they’ve had center stage for so long that the rest of us became invisible.
The next question is did you get his handle he uses on Ben’s blog?
“Now the company no longer owns the project and is being sued by 52 homeowners at its other Desert Hot Springs development, Hacienda Heights, who complain of shoddy construction work.”
Get ready to hear a lot more about shoddy construction work as the bust unfolds. Yessir, doing the crappy workmanship Americans won’t do.
“‘Overall we’re alleging very poor quality and shoddy workmanship,’ Kasdan said. The homeowners will likely seek about $250,000 each, which they believe is the cost to repair their homes, he said.”
And should they prevail, I wonder how much of that award goes toward those needed repairs, and how much to another BMW, vacation and toys, and assistance in making the payment on their savvy investment.
“‘Overall we’re alleging very poor quality and shoddy workmanship,’ Kasdan said. The homeowners will likely seek about $250,000 each, which they believe is the cost to repair their homes, he said.”
The price of an entire unit in this complex should not have exceeded the amount each palintiff is seeking…never, mess around with rich people….. deep pockets can make your life a mess if they are displeased with the outcome of a poor decision.
‘Hey, this is not Armageddon. It’s a needed correction,’ Wilson said.”
So, I guess all the FB’s who bought in 2005 or 2006 can just relax. They must be so glad the housing market is getting its needed correction, which I’m sure their realtor told them was coming sooner or later.
hey everyone casey serin on suze orman show right now
talking sweet deals
lmao
casey serin is talking about ethics?
suze is telling him to walk away
this is too funny
he works as a consultant for a financial advisor
rotflmao
I saw the Casey Serin/Suze Orman Lovefest tonight. Also laughed out loud when he said he was working as a financial consultant.
Casey wasn’t looking good. Sallow, sunken eyes. Monotone voice. He appeared sedated to me, as if he was just going through the motions. Defeated would be a good description.
Ms. Orman was like a doting mother. How many times did she call him “intelligent”? I will say that Casey is a the textbook example of someone who has some level of technical intelligence, and drive (eg he’s able to maintain a webpage and do a basic spreadsheet) but posesses little to no wisdom and questionable ethics (massive mortgage fraud). A scary combination. IMHO describes a large swath of the real estate industry.
We send Martha Stewart to Jail. And Casey walks. What a country.
I wondered if the rapid rate of building wouldn’t cause problems of its own. Apparently it has….
That Cyberhomes link is so much worse than zillow I can’t even begin to comprehend it.
The market graphs show (in the few homes in three different states I looked up) 100K drops, yet the home values were +50K.
A home I keep in my zillow favorites which is zestimated at 524K (and I would put it at significantly lower) is listed at 624K.
I’ll take the zillow and a few grains of salt, thanks.
Check out this link, a “roller coaster” of inflation-adjusted prices of homes from 1890 to the present. Notice the steep increase at the end!
http://www.youtube.com/watch?v=kUldGc06S3U
Damn… Had to watch twice before I realized the dates were in the lower right corner. Great way of visualizing it. Great “Oh sh!t,” moment.
“Hahn said that ipayOne made initial installments on the $2.5 million it agreed to pay over five years, but then it stopped. ‘We’ve had to send letters, reminders,’ he said. ‘It’s been less than ideal.’”
Make that ipayOnce
Percent Spanish speaking seems to correlate with the most bubbly areas. I wonder if this added population contributor tips demand to the point that prices skyrocket.
29% New Mexico
27% Texas
26% California
20% Arizona
16% Florida
16% Nevada
14% New York
12% New Jersey
11% Illinois
11% Colorado
9% District of Columbia
8% Connecticut
8% Rhode Island
7% Utah
7% Oregon
7% Idaho
6% Massachusetts
6% Washington
6% Georgia
5% Kansas
5% North Carolina
5% Nebraska
5% Virginia
5% Delaware
5% Maryland
4% Oklahoma
4% Wyoming
3% Wisconsin
3% Arkansas
3% Indiana
3% Pennsylvania
3% South Carolina
3% Iowa
3% Minnesota
3% Alaska
3% Michigan
3% Louisiana
3% Tennessee
2% Alabama
2% Missouri
2% Ohio
2% Mississippi
2% Kentucky
2% Hawaii
2% New Hampshire
2% Montana
1% South Dakota
1% North Dakota
1% West Virginia
1% Vermont
1% Maine
http://www.censusscope.org/us/rank_language_spanish.html
correlation is not causation
7% Oregon
7% Idaho
6% Washington
The Pacific Northwest is one of the most bubbly parts of the US, but as you can see it has a fairly small Hispanic population. Maybe they don’t like the rain
2% Hawaii
Speaks for itself.
27% Texas
2nd most Hispanic state, but non-bubbly due to abundance of land, high property taxes and lack of zoning regulations.
There is a general correlation because the non-bubble states, e.g. Midwest, are not attracting Hispanics due to weak economies and lack of job opportunities. That’s all.
In Texas, the Spanish speaking have been there for centuries. The Spanish influx rates would better tell this story.
Check MLS #: F1703882 . Down $70k within 1 month in Reseda ( So CA ).
Seattle Price drop talks above about bumping into a friend at a party and talking about the Housing Bubble and crash. I spoke this week with a college friend who is a musician. He was renting in Oakland and just moved to Santa Barbara with his wife. They are living in the house in which he grew up in Goleta. His dad has passed on and his mom has moved. He pleaded with her to sell the home. I’m like a full time lurker, former property buyer, obsessed with the crash. He is a musician and put it together himself, amazed at the behavior of his friends in the bay area. He says in 1999 or so he heard Robert Shiller speak. My friend had all these bay area buddies who were gonna retire off of their Oracle trades, etc. My friend figured it out then and sees it all in housing. He can’t believe how otherwise rational people behave, and keep believing it’s different this time. It was a very refreshing and unexpected talk. All right. Off to bed. You people are the best. keep the stock tips coming.
You guys were a little hard on JTZ. Where I live in Campbell (95008) a house down the street from me was on the market only two weeks before it was sold. Asking price was $898,000. This place is across the street from highway 17. Hardly an ideal spot. According to Zillow it sold for $918,500.00. Doesn’t look like much of a slowdown yet.
If someone knows how to get the terms of the loan the new owner has that would be cool. The address is 789 Almarida Way, Campbell, CA 95008.
I’m willing to be even money that $918K represents cash back to the seller over asking (or even more). That’s how we roll in Calif. Just ask Casey.