“Still In The Midst Of A Slowdown” In California
The Press Telegram reports from California. “If you want a consistent opinion about the real estate market, talk to Leslie Appleton-Young. The chief economist of the California Association of Realtors will often use one of her favorite words: ‘Cyclical.’”
“Foreclosures are up, sales are down, prices are stagnant. It happened before, it will happen again, Appleton-Young has often said, and continues to say. ‘We’re still in the midst of a slowdown,’ said the Wilson High School graduate, who for the last several years has had to battle the perception there was a real estate bubble about to burst.”
“In 2004 and 2005, home sales peaked, with roughly 625,000 homes sold each of those years. Then came a 23.6 percent drop to 477,400 sales in 2006. ‘We think we’re going to drop another 7 percent this year to 443,900,’ she said of 2007. ‘The last time we were at that level was 1997.’”
“Then, 446,500 units were sold, and that was the end of the last downturn.”
“In California there were 31,434 foreclosure filings reported for March, the most of any state and an increase of 36 percent from the previous month, according to RealtyTrac.”
“In the Inland area, San Bernardino and Riverside, where new construction took place at a blistering pace during the real estate boom, there’s now an overhang in demand, Appleton-Young said. Those buyers went in search of affordable prices, and many were low- to middle-income families taking advantage of adjustable rate and interest-only loans to get into a home, Appleton-Young said.”
“‘That’s where you had a lot of the subprime market, households that were facing affordability hurdles being forced inland, and a lot of speculative demand for housing,’ she said. ‘The supply is there, but the demand is not.’”
“In Los Angeles County, CAR’s housing inventory measurement for February was 7.7 months. In San Diego County, there was a 10.2-month supply, and in Orange County the supply was measured at 12.5 months. In the Riverside and San Bernardino areas there is a 17-month supply, according to CAR.”
The Recordnet. “San Joaquin County’s soaring foreclosure rate shows in no uncertain terms that the residential real estate slide we’ve read about, talked about and feared is here.”
“In the first quarter, 1,721 foreclosure notices arrived in the mailboxes of county homeowners. That’s the highest level in about 15 years.”
“Home sales have slowed as the market has turned from a sellers’ market, (remember multiple offers and soaring prices?), to a decidedly buyers’ market. We now have a market where sellers are abundant, buyers are fewer and prices are soft (or in some cases, sliding).”
“In the fourth quarter of 2006, only 26 percent of the households in San Joaquin County could afford the median priced home of $337,840. That’s a pretty good indication why the subprime mortgage market ballooned.”
“Indeed, more than 40 percent of mortgages originated last year in this county were subprime, according to First American LoanPerformance, the highest level of any of the markets surveyed.”
“Are you starting to get a feeling for the slope some homebuyers might be standing on? And growing mortgage defaults are one of the reasons mortgage lenders are getting out of the subprime business and tightening loan requirements.”
“Some people who could get loans 30 days ago can’t get them today, and likely it’s going to get worse for them before it gets better.”
“Home sales decreased 14 percent across the Bay Area, year-over-year, according to a first quarter report released today by Prudential California Realty. New listings continued to accumulate, growing by ten percent across the region, year-over-year.”
“‘The first quarter analysis shows the market is continuing to contract from the height of sales activity two years ago, however it still falls within a normal range,’ said Scott Kucirek, general manager.”
“The entry-level segment of the market was struggling in parts of the Bay Area, including Alameda and San Mateo counties where first-time buyers were approaching purchases with caution.”
“While overall home sales decreased in all counties, there were significant differences between areas. The sharpest downturn occurred in Solano County where unit sales fell 25 percent across all housing types.”
Roseville & Rocklin. “According to a story from DataQuick, the number of default notices sent to California homeowners in the first quarter increased to the highest level in almost ten years.”
“Looking at our local market reveals that with the exception of Placer County the foreclosure activity here is higher than the State levels. In Sacramento there was an increase of 184.7 percent in the first quarter compared to the same period last year with a total of 3,234 Notices of Default filed.”
“El Dorado County saw an increase of 305.6 percent with a 219 NoD’s filed. In Yuba County there was 151 Notices filed which amounted to a 214.6 percent increase from the first quarter of 2006. Placer County was below the State percentage increase of 148 percent with 518 notices filed compared to 239 a year ago or a 116.7 percent increase.”
The Orange County Register. “Where’s the spring home-buying rush? Not here yet, says the math of Steve Thomas at Re/Max Real Estate Services in Aliso Viejo.”
“It would take 7.75 months for buyers to gobble up all homes listed for sale at the current pace of deals vs. 6.57 months two weeks earlier and vs. 3.83 months a year ago.”
“And Thomas notes: ‘Demand, the number of new escrows within the prior 30 days, dropped by 208 homes in two weeks to 1,925. Last year at this time, demand was at 2,942 homes, 1,017 additional homes. That’s 35% less than last year. Two year ago demand was at 4,324 homes.”
The Sacramento Bee. “The red-hot housing market, both new construction and resales, was a major factor in California’s booming economy during the early years of the decade, offsetting the negative impact of the dot-com industry’s implosion.”
“The downturn began last year and in the first three months of this year, mortgage foreclosures reached nearly 47,000, up 23 percent from the previous quarter and up 148 percent from the first quarter of 2006, according to DataQuick.”
“At the same time, DataQuick reported, home sales in March were 31 percent lower than those in March 2006.”
“Upward of a million new single-family homes, condominiums and apartments were built during the early 2000s. But many of those homes were sold either to speculators seeking double-digit annual percentage gains or to marginal buyers lured by low- or no-down payment loans with artificially low payments.”
“Anyone who knew anything about fundamental economics knew that the housing bubble would eventually burst, just as the dot-com boom collapsed, or the tulip bulb mania in 17th century Holland, for that matter, ensnaring those on the wrong side of the feeding frenzy.”
‘In just three years, the enrollment in 19 Orange County school districts has dropped by a combined 17,725 students. That’s enough students to fill about 10 high schools, or 30 elementary schools.’
‘And some educators, who attribute the trend to young families escaping the county’s high housing prices, are predicting even sharper declines in years to come.’
–
It is amazing how short a memory Californians have. 1991-94 were brutal, especially, in Socal. Bursting of the housing bubble back then had quite a bit to do with it. 2007-2010 woudl be lot worse.
Jas
Yes, and by 1998 to 2000 you could easily pick up real estate in Hollywood, West Hollywood and anything “Beverly Hills-adjacent” (a term loosely applied in L.A. to mean virtually all of Southern California) for less than equivalent rent. I wonder how long it will take in this cycle to get back to that point.
I don’t know if this board caught the latest outrage, but two of our House Reps have proposed legislation that debts forgiven on upside down housing loans will not be taxable.
Still, many banks are not willing to set up payment plans. Instead, they will force sellers to tap into other assets, such as retirement savings or cars. And if the lenders do forgive the debt, the Internal Revenue Service will consider it taxable income. On Wednesday, Reps. Robert E. Andrews (D-N.J.) and Ron Lewis (R-Ky.) introduced a bill that would make such a forgiven debt non-taxable.
http://tinyurl.com/33yxv6
Disgusting.
Though this bailout would accelerate the bubble’s collapse insomuch as it provides extra incentive for hbs to abandon their homes.
Need to buy more PUTs on selected banks. There’s some benefit to some !
From the Senate Banking Committee:
“Fannie Mae and Freddie Mac should work with lenders to make credit available to borrowers who have trouble refinancing out of subprime loans, the document added.”
Overstate, overpay, free money coming your way.
Summary of the American stock market: a company slices and dices the numbers so they can have an IPO. Then they do secondaries, toxic convertibles, PIPEs, etc, all so they can take that money back out of each share by diluting it’s value.
Your government, when they tell Fannie to spend tens of billions of dollars to give to criminals, is doing the same thing. They are diluting your shares, printing more stock so all existing stock is worth ever less.
Just remember, the extra dollar/gallon of gas and extra $20 at the grocery is going directly to illegals and criminals who committed fraud. If you learn anything, it’s lie, cheat, steal…the American Way!
That would just accelerate the foreclosure trend. A check against letting the house go back to the bank would be removed.
Would the lender still be able to write off the loss from the forgiveness?
Imagine the banking hits to their profit line if this ‘idea’ came to pass. Thousands of FB’s demanding short sales and huge bucks being sliced off profits. Whee!
This would result in price correction very quickly. Because bankers would be licking wounds for awhile.
Best idea I have heard so far.
The law of Unintended Consequences once again. These politicians are all morons, regardless of their motive.
I have to agree… the law of unintend consequences would drive down prices while bankrupting banks.
Yes, it would, long term, create inflation. But short term the best thing to do is get the FB’s out of their homes and get people who can afford them into the houses.
Oh… if this bill passes it would have a HUGE impact on foreclosures. It wouldn’t surprise me to see NOD’s spike by another 4X and the “conversion rate” to foreclosures increase rapidly.
Sad side would be the bank runs…
Got popcorn?
Neil
Would there really be a run, though? Since the savings rate is so low maybe most will be able to wait for FDIC.
And then they would try another half-a$$ed fix that would just compound the mistake of the first stupid attempt at recovery. I have a mental picture of these idiots trying to clean up a mess on the floor by combining bleech and ammonia.
One of the listing agents I spoke with last weekend mentioned that the banks going after all assets as part of the reason why the % of REOs and SS were still low around Sacramento. The banks were looking for anything and everything they can grab for cashflow before agreeing and signing off. It also buys the market a little time to try to absorb what we have currently.
Now if you take into account that Sacramento is leading the nation (#6 I think), that’s pretty scary. I had totally forgotten about that until you mentioned it.
In Nevada.
I believe I read the banks can go for foreclosure or choose a persons assets through court. Method 2 means they may have to share! And they don;t get BOTH methods. Get their collateral or sue.
Not sure. It was just something the agent mentioned. Do we have any RE attorneys here? Maybe ex NV knows.
What banks can do depends on state law. Here is a short overview of the law in CA:
In a short sale, anything goes as it is basically a new contract so the parties are free to negotiate the terms. In that case, the lender will try to get all that it can.
In a foreclosure, the lender has to choose between non-judicial or judicial foreclosure. Non-judicial foreclosure (i.e., trustee’s sale) is quicker and cheaper than judicial foreclosure, but the lender is prohibited from getting a deficiency judgment. Typically, I think you’re looking at around 112 days after filing NOD before the trustee’s sale. Judicial foreclosure is timely (about a year if it has to go to trial) and expensive, but allows a deficiency judgment (if a deficiency judgment is allowed). Typically, a lender cannot get a deficiency judgment for a purchase-money loan for a principal residence (1-4 units); this prohibition does not apply to refis or HELOCs, only to the original purchase-money loan.
From a practical standpoint, a lender would only go through the time and expense of judicial foreclosure if the borrower had sufficient non-exempt assets to go after to justify the cost of the judicial foreclosure. Considering how many liar loans there were in recent years, I wonder how much good info lenders have regarding their borrowers’ assets.
Hope that helps.
“I wonder how much good info lenders have regarding their borrowers’ assets.”
typical assets: upside-down house, well used plasma screen and spinner rims on leased denali…
Thanks! It does.
I think what may be happening is that the houses bought with liar loans are being foreclosed and put back into the market fastest. The ones bought as investment properties using helocs (think BA investors) are the ones being held back while CWF trying to figure out if it can get a whole lot more then just the crappy Sacramento flipper.
Disgusting? Yes.
Good for bubble heads? Yes.
Think about how the banks would feel about lending money if there were the moral hazard applied to losses? It’ll tighten credit faster than you can say “Unintended Consequences”.
Talk about a housing market DOA.
I could pick up 2 or 3 homes then.
Chuck Ponzi
http://www.socalbubble.com
It’ll tighten credit faster than you can say “Unintended Consequences”.
Very tight. Expect to see 25%+ down payments required.
Talk about a housing market DOA.
The south bay part of LA had a famous “week without phone calls” in Real Estate in the 1990’s. This would create a dead quarter.
Prices would drop $5k/day.
Hmmm….
Got popcorn?
Neil
Very tight. Expect to see 25%+ down payments required.
impossible.
Agreed, that’s just not feasible. We have a NEGATIVE savings rate in America (’cept me and the wife, who are putting away $1000 a month for that golden day we get shackled with 30 years of payment serfdom).
WTH does feasibility have to do with anything? There’s no “feasibility law”; lenders don’t have to lend money they’re guaranteed to lose.
Too many people assume that housing has to change to suit people’s lousy finances. Wrong. If houses *have* to be sold, then it’s the price that’ll change, not the financing.
TJ,
I would take this one step further. Its not the lenders who must adapt to what the borrows want. If lenders are not willing to take risk, they will easily demand less risk (higher down payments).
Could this mean the market slows for a few years? Almost certainly. Impossible? Not at all. The down payment pendulum swung too far to zero down payments… markets always over-correct the other way.
Got popcorn?
Neil
Yes, Neil (”man of few posts”), I totally agree!
What’s the problem! tulips?
This is not income!
And only an IRS agent/ commando would think so.
And even IF it were income by some fluke of accounting,Debt forgivness is still not taxable to citizens born in the 50 states.
Let’s work through this. Say you owe $100k on a loan but you can’t pay it back. If I gave you $100k to pay off the loan and you didn’t have to pay me back, that would be income to you from me. When the bank writes off the loan, its the same as if they have given you the money.
When money ends up in your pocket, it is income. It doesn’t matter if you took the income and purchased a wildly-overinflated asset that quickly lost its value. You still get taxed on the amount of the original income you received. You have the freedome to spend your income on whatever you wish, but if you spend it foolishly other taxpayers shouldn’t have to pay for your mistakes.
By that reasoning, a seller should pay tax on the equity gain from selling his house. He did profit from it. Yet, from my understanding, a couple can sell a house and net a 500 K profit tax-free.
I can not see this law passing as it would only increase foreclosures. Imagine an investor who could cover the PITI but who would rather not do so on a decreasing asset. That he would have to pay tax on the debt forgiven from a short sale might prevent him from going this route but with this law…
Realistically these people have no assets to pay the IRS for their “gain”. The gain could be hundreds of thousands of dollars and taxes are about 1/3 of that.
I’m all for giving them every incentive to just walk away. Let the banks and other loan sharks lose money. They deserve it.
That was an ugly time in r.e. market, especially if you worked in the field.
Not really… I made a bundle.
Mr. Incomestream:
What do you think about this one (at a lower price, of course):
http://www.loopnet.com/xNet/MainSite/Listing/Profile/Profile.aspx?LID=14983778&RecentlyViewed=true&ItemIndex=9&PgCxtDir=Down
lainvestorgirl, that’s in a really high crime neighborhood, and the listing shows just how low the rent is. It is possibly also in a rent-controlled area.
LAIG-
For me personally I don’t like the area. The density of apartments are too thick and the riff raff content is too high. The density of the area is a problem because it tends to push down rents and actually makes the claim of upside fool’s gold at best, also only a certain type of clientele are going to venture in there. You’re sort of in a landlord hostage zone.
However, I did look at this property and others in the immediate area the reason, is because of the projected Redevelopment scheme that is being touted. One of the reasons why you see so many of the building in the area for sale. But for me the bad outweighs the good there and if I were going to buy that building or any other in that area waiting for the development upswing it would be for at the minimum half that price.
It is rent-controlled and the demographics leave a lot to be desired, it just caught my eye because the SF is so huge, there is upside in the rent despite the crummy area, the seller is motivated and it’s not that hard to get to from my other properties…However, the last time I got inspected by Code Enforcement I swore I would never buy anything in the City of LA again, so I doubt I’ll make a move anyway. The problem is, as over-priced as this is, non-LA areas (Ventura, OC, even Inglewood) are much more expensive, probably for the same reason (no rent control, SCEP inspections, etc.).
Any realtytrac subscribers here…care to share your experience with it?
SERIOUS riff-raffity. I drive very near this area all the time for work. I would avoid like the plague!
All my tenants are riff-raff, if it weren’t for me they’d be homeless, that’s not the part that bothers me, the numbers are the main problem, I can remember when buildings like this sold at 6 times gross, even 5.
I would not touch it! There might be some decent homes/apts in some of the elevated streets/areas, but down in the flats it’s gangland territory(Baldwin village, Crenshaw district,Leimert Park). Low rents indicates section 8/welfare types.
THink Inglewood! this area(Baldwin Hills)is an Inglewood Clone.
You mean RSO, not rent-controlled, right?
However, by the looks of the rents, some tenants may have been there long enough to still be under rent control.
I’m sure landlords hate RSO, but as someone who lives in
LA proper, in an RSO unit, I can assure that the landlord
still gets their pound of flesh.
Rent control in LA is now up to 5%, plus 1% for each utility paid by the landlord.
I never used to raise rent, until they started that inspection program and the nazi city inspectors would come in and give me a laundry list of 1000s of dollars of upgrades they were demanding.
Orange County, CA will be like Florida. An old people place. There is no way in hell, a young family can afford even the entry house here. The only place that even comes close to affordable is Santa Ana, where you have to speak Spanish to get around or to feel like you’re not a foreigner.
Nah, it just moves in cycles.
There are LOTS of OC and Nor SD boomers trying to cash out to retire in lower cost environs.
Frightening you say this. I was outside today, noticing how “gray” our SoCal neighborhood had become. 5 years ago, there were young couples everywhere. Now they’ve all been replaced with divorced old men!!
divorced and sexually repressed (or deprived). what a wonderful neighborhood it is.
Funny you mentioned it, I just drove by my mother’s house in west LA today…when I was a kid, there were at least 8-9 other kids on the block that I played with. Now, it is completely child-free, just singles or yuppies I guess with no interest in having a family. The street looks sad. But more feng-shui.
It’s the opposite in my neighborhood (Pacific Beach, a beach community in San Diego). PB has been a pretty big party/bar scene for the past 20 years, and the typical migration pattern was college student/20-something rents a condo, parties for a few years, settles down with a family and decides to move out to get away from the homeless, trash, noisy neighbors, etc.). Don’t get me wrong, it’s a fun and unique neighborhood, but it’s got subpar schools, it’s crowded, there is a fair amount of litter after the weekends, there is a decent-sized homeless population, etc. If you look at a graph showing the age, there’s a strong peak in 20-30 and a strong peak in 60+, but very flat in 0-20 and 30-60.
Anywho, my wife and I have lived here for six years now (we’re in our late 20s), and there’s a very noticeable increase in people walking with strollers and little ‘uns. There are even “little kid”-related businesses opening up! Like daycare places, “gyms” for young kids, etc., thing you didn’t see 5 years ago. What gives? My guess is that during the boom a lot of these past “renters” bought properties they could barely afford and are now “stuck,” unable to sell or afford a new property out in the more expensive suburbs. For us, this is great news. We love it here and would give anything to see the neighborhood gentrify into one with a lot of young families. Maybe replace some of the nightlife scene with family establishments. We’ll see.
As they say, it’s all cyclical. From what I’ve read, back in the 70s this neighborhood was very family-oriented. Very few bars/nightclubs, mostly family-related stores. Hopefully we’ll return to this type of neighborhood just as my wife and I are ready to start our family.
“Very few bars/nightclubs, mostly family-related stores.”
What isn’t family-oriented about a bar? Trust me. Once you become a parent, you will need regular drinks
“It is amazing how short a memory Californians have”
Actually many Natives do recall the deep declines in California regardless if you were in the busted Aerospace Industry of SoCal or the busted Semiconductor/Software Business of NorCal. Its all the recent Gaga Google Oogle Groupy out of staters who are really screwed up royally. Typical natives actually saw price declined in 1991 and 1982.
Right.
“… recent Gaga Google Oogle Groupy out of staters… ”
*********
Before the late 90’s, nobody moved to the SF Bay Area to “get rich.”
But that is what has occurred since then. First with dotcoms and now with Web 2.0 (sale of YouTube to Google probably made 500,000 recent college graduates nationwide rethink their plans)… and perhaps some in between thinking “real estate.”
It’s not what it used to be around here.
My inlaws have been in CA since the early 80s. My wife and I told them in 2005 we were looking at homes and considering moving up from our condo to a SFH. They strongly recommended that it would not be a wise time to buy and shared storied of colleagues who had to sell in the early 90s for far less than they bought. (That’s when I started researching more on this topic and found this blog…)
Ben, You’re really on it today - thanks for all the info - folks, don’t forget to contribute to this blog (unasked for advertisement for Ben).
Interesting. KPBS reported today that the San Diego School District is planning employee layoffs because of declining enrollment. Downtown is already a kids-free zone. And young families aren’t going to be moving into the new $500,000 highrise condos.
I live in Pacific Beach and I can’t even remember the last time I say a little kid walking around.
Says something…
Where in PB? My wife and I live near Lamont and Missouri and walk quite a bit. We see several women or couples with strollers each and every day. Granted, you’re not going to see a little kid walking around Garnet or on Mission, but get a few blocks off the main drags and you’ll see plenty of kids.
Hornblend and Cass
Oh my yes, you’re in the thick of things down there.
But there’s a lot of PB that’s outside of the Grand/Hornblend/Garnet corridor. For example, the walk along Beryl is very idyllic once you get east of Cass - SFHs, front yards, picket fences, etc.
Culver City has sold off some public school campuses to private schools…
–
Leslie Appleton-Young and David Lereah would be a marriage made in…
Jas
H-E-Double-Hockey-Stick!
Yeah! Wango Tango Foxtrot
Quit hinting Lereah and Appleton-Young were born in hell. You are pi$$ing Satan off.
Dukes:
You asked me last week if I had sent Emmet the letter I wrote to him in the blog.
http://thehousingbubbleblog.com/?p=2673
I have not and you are free to do anything you like with the material. I was hoping he’d see it on the blog but haven’t yet “come out of the real estate bear closet” enough to identify myself to reporters. And I do not think anonymous e-mails do any good. (I am known as a bear but for political reasons have to tone down the bearish predictions in public.)
Thanks!
You might be surprised by the political reaction you would get if you were bearish in public. People aren’t dumb…well, Ok…maybe you’re right…
Don’t worry - I am very bearish and anyone who has heard me speak knows it. But I have learned the hard way that reporters can take things I say out of context and I am simply unwilling to open myself up to that again.
All San Diegans:
Just a reminder that Bruce Norris will be presenting this Wednesday, the 25th at the SD CIA meeting at the Scottish Rite Center. It’s $15 for nonmembers and the meeting starts at 7 although it usually takes awhile to get into the heart of the main presentation.
http://www.sdcia.com/
Now before I am labeled (yet again) a troll, an RE cheerleader, or a closet optimist, please note that Bruce Norris is a well-documented BEAR who is extremely negative on real estate and has been for quite awhile. As are the founders of SD CIA. There are people who attend the meetings who post on the discussion board, but I promise you the tune of these meetings does not in anyway resemble the idiotic blind optimism you see in the discussions. The meetings, for the two years I have been going, have been on the coming RE crash, how to prepare and how to be ready to buy in a few years when the time comes. Bruce does investment lending but he is not telling people to buy now – he just wants to be in your thoughts when the time is right.
Anyway, this was a great presentation. Much of the info we know but he summarizes it in a way that leaves little to no room for the bulls to slip in their propaganda. He will be speaking on April 25th at the SDCIA meeting at the Scottish Rite Center. If you are in or close to the San Diego area I highly recommend you go to this event. A very well spent $15.
I can’t go but would be interested to hear your summary of it, if you care to post it.
SDRE Bear, have you ever seen Robert Campbell speak?
P.S. I didn’t send your thoughts to Emmet Pierce, but I have sent him a few links…
I have seen Robert Campbell - again through SD CIA and he is also an excellent speaker. If you get a chance to see him I highly recommend it!
“In California there were 31,434 foreclosure filings reported for March, the most of any state and an increase of 36 percent from the previous month, according to RealtyTrac.”
I think it has started. Increases of 36% month over month … This is setting up to be a blood bath like none in history.
Wow. An increase of 36 percent month over month at this stage and we still haven’t gotten into this mess:
http://www.autodogmatic.com/forum/viewtopic.php?p=1226#1226
That’s nothing - NOD’s in San Luis Obispo County were up 75% from February to March.
http://centralcoasthousingbubble.blogspot.com/
I wonder how long it will take for MSM “experts” to acknowledge that the bottom dropped out of CA residential housing demand when the subprime industry vaporized in the 1st quarter of 2007?
‘We think we’re going to drop another 7 percent this year to 443,900,’ she said of 2007. ‘The last time we were at that level was 1997.’”
“Then, 446,500 units were sold, and that was the end of the last downturn.”
See. Just hang on for another 12 months and everything will be fine.
Nothing to see here. Move along.
As if the dynamics of 1997 were anything like the current mess. LAY is playing a very cute, very disingenuous game
called ‘blending the data points’ - 1997 has little if any relevance to today’s sub-p, loose credit, specuvestor debacle. LAY - her relevance is zero.
Does anyone know the situation in Placerville? This is a personal request, as I have a offer on my home. The buyer has a contingency on the sale of land in Placerville.
From what I have read on the blog- Placerville and the surrounding area is as bad or worse than Sacramento. Much of the area has essentially become a suburb of Sac, so what happens in Sac will greatly affect Placerville.
Sac is doing poorly. Down at least 10 to 15% from the peak and Placerville may be affected more since it is further out.
All of Sac is having trouble. Try the folks over at
http://www.sacramentolanding.blogspot.com/
We were just talking about breakdowns on Placer. I’m only interested in Yolo so the details blew right past me.
My guess is the entire Hwy. 49 corridor clear down to Oakhurst will be the Inland Empire North - no jobs, mostly retirees stuck out in the boonies, and a long commute for all. Not the best of plans.
Does anyone know where to fine the no. of months of inventory for each city in CA? Thanks.
meant find the no. of months.
Not for each city in a convenient way, but if you search the MLS for a given city (i.e. Zip Realty, Realtor.com), you can divide the number of matching listings by the numbers from dataquick for closed sales:
http://www.dqnews.com/ZIPCAR.shtm
Also, BMIT has metro area stats that are together for mathemagical manipulation:
http://bubbletracking.blogspot.com/
Did anyone see the Foreclosure Home Sale ad in Sunday’s San Diego Union-Tribune? It took up almost half a page in the Home section! It included addresses, but I haven’t looked any of them up to see if the “Last Valued To” amounts were previous sales or just wishing prices to make the “Opening Bid” amounts seem like better deals. In any case, the Opening Bids were around half the price for the Last Values. What does this kind of thing do for the psychology of the FB? In the HOME section, no less!
my friend says her IB tenant is buying a foreclosure in eastlake. young couple. where is eastlake?
The cooper thieves have arrived in San Diego!
http://www.signonsandiego.com/news/metro/20070423-9999-1m23thefts.html
COPPER thieves!
LOL barrel stealing
This used to be common in places like Michigan, Ohio, and Wisconsin. They’d also find out cuircit boards and melt the metals off.
i’m not aware of time when copper thievery wasn’t a problem.
How about in the Stone Age?
“Anyone who knew anything about fundamental economics knew that the housing bubble would eventually burst”
Yes. Everyone knew this. Yet, we still have people like Leslie and Mr. Lereah and their $40 million advertising campaign telling us it is a great time to buy.
Funny we went from “buy now or be priced out forever!” to “we have some interest-rate sensitive housing out there” to “we need a bailout!” in only 18 months. This is getting better by the hour!
‘Funny we went from “buy now or be priced out forever!”…’
to the NAR forecasting price declines (but I guess it is still a good time to buy, right?).
You will be a lesser fool
minute…
should read, is getting better by the minute
Fundamental economics is sooo 19th century so of course only a few people would be aware of the problem. Now if we could throw this problem into one of linear regression black box models everything would have been just fine.
It’s all about the APT in the stock markets (IMHO), but it just doesn’t apply to housing. Behavioral Finance theory is a better fit, which can be boiled down to one simple line,”Sometimes a bunch of people can do really stupid shit with their money.”
For those lookers who think now is a great time to buy:
http://countrywide-foreclosures.blogspot.com/
Most of the regulars have already seen this, but I’ve certainly got it bookmarked on my laptop!
CFC has $1.4 billion in housing inventory on the balance sheet. Holy shiite! The HBs are writing off their inventory and the banks are loading up. Gotta hear what the Tan Man has to say about this when earnings are released this week.
That is not a tan. That looks like a skin condition related to too much inventory on the books. Stage two is very rapid hair loss.
Radioactive loans. Neutron bombs would also leave the houses standing and anybody nearby with a tan or worse.
Then he’d really look like a lizard.
HAAAAAAAAA!!!!!!!!!!!!!!!
Bronzillo, baby!
Anyone think it must suck to be them.
Holy shimole! $1.4b in CFC REO??? That looks like a big number, but I am not sure what to compare it to…
For CA, the numbers are telling:
State: CA
Count: 1196
Total Asking Price($): 469,578,000
(bumping up towards $1/2b)
Single Family, Median Asking Price($) $368,900
(That looks really low; you can’t touch anything in my hood for under $400K!)
Holy shimole! $1.4b in CFC REO??? That looks like a big number, but I am not sure what to compare it to…
Assuming $250K per loan, that’s about 5,600 homes. Total loans outstanding = $60b.
That was enlightening, it’s nice to see CFC is now firmly in the property management business. But did you notice the average sale PRICE of the REOs they carry even in seedy parts of LA is still inflated, wonder when that will change.
I checked zillow on one SFR in Beverly Hills.
309 N Doheny Dr, Beverly Hills, CA 90211
SOLD 12/22/2006: $1,317,473
REO at only 4 months later, but now asking $1,639,900.00,
20% more?
From the Sac Bee article:
“If those fiscal fixes are, in fact, dead on arrival and the erosion of revenue is more or less permanent, it could punch a $5 billion-plus hole in the governor’s spending plans, underscoring once again that the state has a structural imbalance that will not vanish by itself.”
I was wondering when CA was going to run out of money due to slowing economy and loss of construction jobs. It happened quicker than I expected.
“In 2004 and 2005, home sales peaked, with roughly 625,000 homes sold each of those years. Then came a 23.6 percent drop to 477,400 sales in 2006. ‘We think we’re going to drop another 7 percent this year to 443,900,’ she said of 2007. ‘The last time we were at that level was 1997.’”
“Then, 446,500 units were sold, and that was the end of the last downturn.”
What a coincidence! The number of homes selling at the beginning of this downturn closely resembles the number of homes selling at the end of the last downturn. 443,900 would, in fact, be 1/2 percent lower than the 446,500 units sold in 1997, but the population has gone up by a considerable amount since then, suggesting that homes are now selling at a lower population-adjusted rate. The comparison would also look far worse if you ratioed the number of homes currently selling to the size of the real estate industry now versus in 1997.
And in the next year it will be the fewest homes sold since 1994, the middle of the last down turn…
“Upward of a million new single-family homes, condominiums and apartments were built during the early 2000s. But many of those homes were sold either to speculators seeking double-digit annual percentage gains or to marginal buyers lured by low- or no-down payment loans with artificially low payments.”
Fancy that — over 1m new homes built in CA in only seven year’s time, and that despite the “fact” that we have run out of land. If you take a close look at what is currently on the market, I believe that you will find lots of homes in the $500K+ price range built from 2000 on (adjust the floor up by $200K if you live on the coast). This is what I see in 92127 — a massive flipper dump from the high end of recently built housing stock. Look out below.
News articles in Portland in 2005 suggested that there was no way Portland would have “the speculator problem.” Checks were put in place such that condos would only be sold to owner occupants, unlike those sold in San Diego and Florida.
All I know is every evening I drive past 6 condo towers here with 2 of them appearing about 30% lived in. The others? Let’s just say they appear 100% dark.
Look out below, indeed.
For many decades Refi-cash out was supposed to be only for house upgrades. Strongly governed by Banks and IRS tax codes. Nowdays its for buying cars, vacation, jewelry, plasma TV, and all kinds of junk. All the checks put in to place to prevent consumer spending failed.
The checks “failed”? No, they were intentionally removed. The past 6 years have been a giant “pump and dump” scheme, familiar to those of you who have seen Goodfellas.
“ditto” intentional….w/ fingers crossed.
It’s because the rules are difficult to police…especially if you don’t try. I’d support an IRS department strictly dedicated to finding cash-out refi’s used for something other than home improvements. For years now it seems they’ve been looking the other way.
Banks/lenders/re agents… all in the game for turning profits as fast as possible before the last switch is turned “off” and all seeking cover in the dark where ever that might be.
It seems to be a Portland truism, especially in the downtown condo market, that developers are restricting speculative purchases in their projects. But as you pointed out, the anecdotal evidence suggests otherwise. Typically, with any new Portland project, at least 20% of the units come on the market from individual sellers shortly after the move-in date.
I don’t think there’s any reasonable way to keep speculators out. After all, they do own the property, so they should be able to sell it whenever they want to. Not that the developers are motivated to keep the speculators out. It’s in their collective interest to do so (it would keep growth at a moderate rate instead of in boom-bust cycles), but private industry is notoriously bad at acting in its own collective interest.
How about a punitive capital gains tax targeted at speculators?
Are you suggesting that prices aren’t already falling fast enough without piling on punitive taxes?
GS, What I’m suggesting goes to the heart of this housing bubble problem. Take the speculation out and it would be very unlikely we would ever see another housing bubble anything like the current disaster. Of course the family home and the principal place of residence should be exempted from such a tax.
I don’t disagree with you in principle. But I guess I am somewhat concerned about the rate of equilibrium adjustment, which may already turn out to be rather quick in the wake of fifty subprime lenders recently turning out the lights. Suddenly taxing speculators would be akin to handing a lead anvil to a guy whose parachute just opened after he bailed out of the cockpit of his airplane.
EVERYONE who bought over the past few years was a speculator. At some point, they looked in the mirror and said “This is ridiculous. The house costs too much.” But they crossed their fingers and hoped that prices would continue to appreciate. All gambled, and now many have lost.
I certainly don’t want to give a break to a speculator just because they happened to inhabit the house. I also don’t want to waste time in a futile effort trying to differentiate between different types of mortgage holders. Instead, let them all crash, and let God sort them out!
The last thing we need are more regulations and bureaucracy. It’s a free market economy, if people want to gamble on real estate, stocks or in Vegas that’s their right. On the other hand if those “investments” turn sour we don’t need a bunch of politicians throwing tax dollars after those gamblers.
“The last thing we need are more regulations and bureaucracy. It’s a free market economy, if people want to gamble on real estate, stocks or in Vegas that’s their right. On the other hand if those “investments” turn sour we don’t need a bunch of politicians throwing tax dollars after those gamblers.”
Mike I know where you’re coming from, but do we really have to endure the boom bust cycle in housing every 10 years or so?
I just wonder how many innocent young American couples will have their financial and emotional lives ruined because of this current bust.
If owning ones own home is part of the American dream, then surely it’s worth protecting.
I hate more regulation as much as the next person, but I also believe a home and family life is a solid foundation for any society.
Just MHO
I don’t see where a tax is necessary, but strong enforceable regulation requiring lenders verify income and under no circumstances loan over 3X annual income. Then only if the borrower has no other debt and a solid credit history, along with at least 10% down. Under these circumstances the bubble would have stopped where it started and we would most likely be seeing slow stable growth.
GS, check the meter… we’re into the 60’s now!
Yep 62…….but who’s counting anymore?
Well, I , as a hard-working individual, do have a problem when passive wealth is taxed at a far lower rate than actual earned income. Since Bush was installed in office, the capital gains tax on house sales has been just 15%, with the first 250,000/500,000 profit free of tax depending on how long you lived in the house.
This is obscene at a time when the country is running huge deficits, but it is also a reason speculators turned to housing flips instead of investing in, say, actual businesses.
OT, but didn’t some RE “expert” claim the mortgage mess wouldn’t leak over to the general economy?
http://tinyurl.com/yocpyd
And oh yes, yes, yes I am so glad to be out of my long positions.
I guess that depends on whether you consider the top guys at the Fed and the Treasury “RE experts.” (Please take a close look at the Reuter’s URL below — something interesting there about the use of the word URGENT…)
http://today.reuters.com/news/articleinvesting.aspx?type=bondsNews&storyID=2007-04-20T165940Z_01_WBT006865_RTRIDST_0_USA-SUBPRIME-PAULSON-URGENT.XML
“Although the turmoil in the subprime mortgage market has created severe financial problems for many individuals and families, the implications of these developments for the housing market as a whole are less clear. The ongoing tightening of lending standards, although an appropriate market response, will reduce somewhat the effective demand for housing, and foreclosed properties will add to the inventories of unsold homes. At this juncture, however, the impact on the broader economy and financial markets of the problems in the subprime market seems likely to be contained. In particular, mortgages to prime borrowers and fixed-rate mortgages to all classes of borrowers continue to perform well, with low rates of delinquency. We will continue to monitor this situation closely.”
http://www.federalreserve.gov/boarddocs/testimony/2007/20070328/default.htm
From the first article………….
“”We’ve clearly had a big correction in the housing market. Retail housing was growing for some time at a level that was not sustainable,” Paulson said in a speech to The Committee of 100, a business group in New York promoting better Chinese relations.
“I don’t see (subprime mortgage market troubles) imposing a serious problem. I think it’s going to be largely contained,” he added.”
So we’ve come from “no bubble” to “largely contained”.
What does LARGELY contained mean?
“‘We’re still in the midst of a slowdown,’ said the Wilson High School graduate, who for the last several years has had to battle the perception there was a real estate bubble about to burst.”
Aside from her choice of monikers, most of what she is saying now makes it sound like she agrees the bubble has burst.
Funny, I read that line and all I saw was the “Wilson High School graduate” portion. I’d always wondered where LAY got her credentials as an economist.
“battle” the perception?
What is she, a gladiator?
Jeez, I can’t wait for the lexicon of bubble talk to cease.
The bubble has not burst yet. It is still in the early phases or bursting…
Bubble has burst, implies prices will start rising again now.
“Battling the perception”? How about misleading the public, lying for the real estate industry, defrauding buyers? Goebbels battled the perception Hitler was evil.
““In 2004 and 2005, home sales peaked, with roughly 625,000 homes sold each of those years. Then came a 23.6 percent drop to 477,400 sales in 2006.”
I don’t remember anyone from the RE side telling us of a drop in 2006. Remember their slogan ‘no better time to buy’!
“San Joaquin County’s soaring foreclosure rate shows in no uncertain terms that the residential real estate slide we’ve read about, talked about and feared is here.”
Nope no bubble here. That’s a bad, bad, bad connotation. Bubble has an air of fear as bubble don’t go quitely, they pop. Notice the new buzz word is ’slide’ which gives an air of serenity until you think of sliding off a clift.
“We’re still in the midst of a slowdown,’ said the Wilson High School graduate”.
Can anyone tell me the significance of telling us why Leslie is a Wilson High graduate?
To prove that yes she does, indeed, have some level of education?
To indicate just how bad California’s public schools are?
Ca’s public schools are about to start improving. Contrary to public opinion, as told by our trusty press, the more money they get, the more administrators are hired and the worse schools get. Want to save California’s public schools? Chop 50% off their budget and fire 3/4 of the administrative staff.
The article is from the LB Press Telegram and Wilson High School is in Long Beach.
http://www.ocregister.com/ocregister/homepage/abox/article_1666382.php
Sorry to find humor in this tragedy, and yet…
“We’re trying to figure out why they show up at a hotel with a handgun, extra ammunition and are acting strangely, running around nude,” Kravetz said. “It’s not typical.”
It’s not typical.
She looks like she would have been more dangerous wielding a fork and knife than she would have been wielding a handgun.
Thank you. That was the best laugh I’ve had all day.
Sorry, GS, this post got eaten:
‘GetStucco Date: April 23, 2007
I guess that depends on whether you consider the top guys at the Fed and the Treasury “RE experts.” (Please take a close look at the Reuter’s URL below — something interesting there about the use of the word URGENT…)
http://today.reuters.com/news/articleinvesting.aspx?type=bondsNews&storyID=2007-04-20T165940Z_01_WBT006865_RTRIDST_0_USA-SUBPRIME-PAULSON-URGENT.XML
“Although the turmoil in the subprime mortgage market has created severe financial problems for many individuals and families, the implications of these developments for the housing market as a whole are less clear. The ongoing tightening of lending standards, although an appropriate market response, will reduce somewhat the effective demand for housing, and foreclosed properties will add to the inventories of unsold homes. At this juncture, however, the impact on the broader economy and financial markets of the problems in the subprime market seems likely to be contained. In particular, mortgages to prime borrowers and fixed-rate mortgages to all classes of borrowers continue to perform well, with low rates of delinquency. We will continue to monitor this situation closely.”
http://www.federalreserve.gov/boarddocs/testimony/2007/20070328/default.htm
Ben — Thanks for your attention, but now it looks like it showed up twice. Please delete this one if you can, as it was intended as a response to sleepless_near_seattle’s post above.
“In denial” and “happy talk” widespread in D.C.
Can anyone confirm or deny that the enclosed is now part of mortgage applications? On Minyanville’s “5 Things You Need to Know” (#5 today) implies that the below notice is now to be initialed by borrowers…
Warning PDF
http://tinyurl.com/2u7g5g
And the original page:
http://tinyurl.com/2vxxml
We had Ms. A-Y speak to us at our company gathering a few weeks ago and she deals more specifically State-wide R.E. In reality, properties within the “better” areas, especially the beach communities, are full speed ahead. Prices rising, multiple offers at or above listing price, closings 30-45 days, many buyers at Open Houses, etc. The trouble arose because tens of thousands jumped into real estate because of the last insanely hot market. The knuckleheads out for a fast buck (greedy agents, clients and lenders) made mistakes and are now deservedly paying the price. They are now starting to blow up, and many of those same people are or will shortly be out of the business.
http://www.dqnews.com/ZIPCAR.shtm
This is the CA city chart for all the major CA counties showing price changes from March 2006-2007 for individual cities in each County. LA county showed 6967 homes/condos sold march 2007, median price change from $510,000 to $540,000, a 5.88% YOY increase for all cities in LA County.
LA City/County has so far bucked the trend throughout CA of negative YOY declines, which raises some questions. Looking at the Cities/areas I still notice outlandish Medians/YOY inceases in Marginal communities such as Hawthorne(577,000/15.55%),Inglewood($475,000/9.7%),Lynwood($500,000/9.65%),Maywood($500,000-19.05%), ect. Other marginal areas showing unusually high prices are Paramount,Panorama City,Huntingtom park,Compton,and the City of Los Angeles itself-$589,000/17.9% yoy, which includes such pristine slum areas as SCentral,E LA,Lincoln hts, EL Sereno,Rampart,Westlake,Jefferson park,ect.
What is evident is a large amt of Mortgage/appraisal fraud in these largely Minority/immigrant communities and/or a complete ignorance of housing RE bubble economics by said ignoramous buyers.
That said, there is evidence that many LA communities are indeed seeing moderate YOY % declines. SFV and South Bay have stagnated or declined 1-5% yoy average. Some large ‘middle class’ Markets such as Whittier,Van Nuys,Torrance, Lakewood, Pasadena, burbank, Santa Clarita, Redondo beach and East/NE Long Beach have either completely stagnated or declined average 5% yoy.
We are toward end of April,the middle of the supposed Spring Peak buying season, and All LA shows is 5.88 % YOY? LA is totally f*cked. Can’t wait for those ‘$450,000′ SCentral POS properties to be foreclosed/REO’ed and sit on the Bank Books till they are forced to dump their POS shacks at one-third price.
we have a lot of high end homes going up in some areas. Right across from where I work (and suspect Neil works) a complex is selling in the 500-750K range. Raises comps for Hawthorne. Saw some similar places down the street.
Guys in my feild will not get away clean. Lots of coworkers taking the plunge. Banks will be after those juicy paychecks for a while.
Hmmm…
Your deduction might be accurate.
And the same employer is talking about moving workers out of state from another division if we win a certain big contract in IIRC August. Yet another group of buildings to become townhomes (or is it courtyard homes this time?).
Don’t forget about the buildings getting ready, from same said employer, to be torn down in Hawthorne for more townhomes (condos too? I just can’t keep up!).
Lots of coworkers are taking the plunge. Cest la vie. I talk sense into a few.
Got popcorn?
Neil
Real estate is indeed cyclical. But real estate boosters, in trying to use that fact to argue that no extraordinary collapse is coming, are ignoring its biggest implication.
Simply put, in a cyclical market, an extraordinary boom will be followed by an extraordinary bust. The strokes of the cycle are roughly equivalent. In a growing economy, the down cycle may not wipe out *all* the gains of the boom, but it will wipe out an awful lot of them. A truly “cyclical” market does not follow 200% appreciation with only a 10% decrease.
The piston’s coming back down, and it’s not going to stop only a few inches below its apex. Just as an automotive piston, after it’s lifted by a firing cylinder, drops back down the cylinder until its fall is reversed by another expansive impulse, the real-estate piston will fall until it’s met on the way down by the next wave of fundamental economic energy. Appreciation will not resume until a sufficient number of people have the ability to pay all the amount coming due on their mortgages. In California, that point is still at least 30% worth of decline in the median price away.
“Appreciation will not resume until a sufficient number of people have the ability to pay all the amount coming due on their mortgages.”
That is certainly a part of the story. And then there is the reluctance amongst most knowledgable folks (the kind who did not step up and buy a home in order to avoid getting “priced out forever” in 2005-2006) to catch falling knives, and the fact that the bad credit risks are no longer able to qualify to buy homes they cannot afford. These factors imply a big negative demand shock which has blown a large gap between the bid and asked distributions, which is likely to resolved similarly to the filling of the gap in the atmosphere left behind by a lightning bolt.
“If you want a consistent opinion about the real estate market, talk to Leslie Appleton-Young. The chief economist of the California Association of Realtors will often use one of her favorite words: ‘Cyclical.’”
“Foreclosures are up, sales are down, prices are stagnant. It happened before, it will happen again, Appleton-Young has often said, and continues to say. ‘We’re still in the midst of a slowdown,’ said the Wilson High School graduate, who for the last several years has had to battle the perception there was a real estate bubble about to burst.”
This person is pathetic. Put up some of her past quotes. Not a peep about cyclicality. What a phoney BSer!
Since the Press Telegram in Long Beach quoted Simpleton-Young I thought a posting of some comps near the beach would be of interest
Address L/P S/p
340 Argonne $1,850,000 (03/09/06) $1,368,000 (08/08/06)
108 Roycroft $1,539,500 (02/25/06) $1,030,000 (01/17/07)
90 Giralda $1,895,000 (05/17/06) $1,495,000 (08/23/06)
287 Covina $1,265,000 (11/29/05) cancel $965,000 (04/02/07
When I see these numbers from $300000-$500000 off the list price
all I can think of is the listing agents did not have a FB in the wings
to double end a sale . They should ban dual agency in CA in order to get a true market value for listings. There were many sales with “Sold before Processing” during the boom time that never cam e on the market now these listing agents can kiss my a$$.
“Since the Press Telegram in Long Beach quoted Simpleton-Young I thought a posting of some comps near the beach would be of interest”
Greetings Toast. I am at opposite end in LB 90810. Am always Courious About LB press telegrams/general LB Folks ignorance of basic RE economics. I remember during last RE/Economic downturn that the newly-built Marina Pacifica Mall at PCH/2nd st became a hollow empty shell and went into receivership. LB in general, and even the hi-end 90803 zip, is particularly prone to calamitous RE meltdowns. Reasons: no hi-paying jobs in LB, Hi-crime large central ghetto area, Lackluster harbor-enclosed beach, Condo overbuilding in Dwtn, Grimy port and truck traffic next to dwtn, ect.
Long Beach will fall hard. Too many ugly apt ghetto areas. Lots of poverty and crime in the North/central Dwtn zone.
and in zip 90805. Dwtn condo market will go bust just like it did back in the 80’s. Even the stable middle-class NE LB areas are seeing price declines.
This thread is a doozy! I know Fl, CO, AZ give Ca a run, but CA has to be the worst. We are so over-inflated it isn’t even funny. Correction in most areas has to be 50%, probably more. The number of foreclosures is skyrocketing even faster than I though possible. And for the love of God, why are these builders still builing these crazy exec-type homes that go for a mil to 2 mil? How has this kind of money? Also, why do they keep building these crazy starter PoS homes for 1/2 a mil in the middle of nowhere? 10 years ago I bought in Fontucky Fried Chicken for 140K. Overpriced then, but still within fundamentals. THERE IS NO ONE LEFT, BUT A FEW WINGNUTS, WHO ARE BUYING STARTER HOMES FOR 600k IN THE MIDDLE OF THE CA DESERT. I realize the builders are going to squeeze every last drop of blood/water from the proverbial stone, but at the costs of these homes, ther will sink with all the inventory. Better to make 50K per house and move 100 homes, then try to make 400K per home and sell none. Who comes up with these business plans/models for these companies? Get rich quick snake oil salesmen?
Bottom line, after this article, what is left to say. Nothing against this blog. You guys know I love it. But, other than finally hitting bottom we have seen the worst of the entire REIC in this bubble/bust.
OCDan, I disagree with you that CA is the worst in terms of affordability. Not if you figure in median income.
Below are some assorted places around the country. Durham, NC is the reference case as “no bubble”. Below are various bubble scenarios.
Durham, NC
Population: 201,310
Median family income $56,579
Median home price $159,500 ratio: 2.82
Miami, FL
Population: 378,914
Median family income $30,058
Median home price $387,800 ratio: 12.90
Phoenix, AZ
Population: 1,441,718
Median family income $52,058
Median home price $205,000 ratio: 3.94
San Jose, CA
Population: 889,309
Median family income $84,857
Median home price $610,000 ratio: 7.19
Anaheim, CA
Population: 345,757
Median family income $56,875
Median home price $540,000 ratio: 9.49
Las Vegas, NV
Population: 560,775
Median family income $59,195
Median home price $260,000 ratio: 4.39
Looks to me like Miami is in particularly bad shape. Especially the socio-economic challenged neighborhoods where a 3/1, 1000 sqft shack goes for around $250K are in for some blood letting. Looks like the real estate pyramid scheme finally ran out of fools with
(borrowed) money. Now a bunch of fools are upside down with interest rates resetting and greedy lenders own more real estate than they know what to do with.
A hard lesson learned in greed and free market trade.
Miami less affordable than CA,
Below are some assorted places around the country. Durham, NC is the reference case as “no bubble”. Below are various bubble scenarios.
Durham, NC
Population: 201,310
Median family income $56,579
Median home price $159,500 ratio: 2.82
Miami, FL
Population: 378,914
Median family income $30,058
Median home price $387,800 ratio: 12.90
Phoenix, AZ
Population: 1,441,718
Median family income $52,058
Median home price $205,000 ratio: 3.94
San Jose, CA
Population: 889,309
Median family income $84,857
Median home price $610,000 ratio: 7.19
Anaheim, CA
Population: 345,757
Median family income $56,875
Median home price $540,000 ratio: 9.49
Las Vegas, NV
Population: 560,775
Median family income $59,195
Median home price $260,000 ratio: 4.39
Looks to me like Miami is in particularly bad shape. Especially the socio-economic
challenged neighborhoods where a 3/1, 1200 sqft shack goes for around $250K are in for
some blood letting. Looks like the real estate pyramid scheme finally ran out of fools with (borrowed) money. Now a bunch of fools are upside down with interest rates resetting and greedy lenders own a bunch of distressed real estate.
A hard lesson learned in greed and free market trade.
Tell me about it. When I tell people that I think it will decline 50% from the peak, they go apoplectic. The truth is and I don’t say, but I don’t see how it can’t decline at least 50% once one understands the real insidious nature of this credit bubble…yes, credit bubble, not housing bubble.
Speaking of overpriced desert homes, I spent the weekend in Coachella Valley. I drove back on the 74 through Hemet over Mt Jacinto (beautiful by the way). There was a whole tract of those overpriced 500k plus mcmansions there…in freaking Hemet. I still think there is a lot of denial going around in SoCal. People refuse to believe until it smacks them in the face: one of their friends or neighbors loses money and foreclosed on. That’s what it is going to take to really turn the corner: word of mouth.
Apoplectic? You bet. Wait’ll it actually *happens*. This “downturn” will blow past psychological boundaries not experienced in almost 80 years. People can withstand large losses, but when it becomes too much the orderly decline will deteriorate into a panicked rout.
As it stands, we haven’t even gotten started yet.
just a question for the folks esp those in OC, after talking with a few RE agents, and per people on this blog and elsewhere, the consensus is credit is tightening, so if people cant qualify for funny loans, what happens to prices 6 months from now esp homes in the OC in the 750 to 1 mil range.
something has to give, people will continue to need to sell but buyers will have difficulty qualifying, can anyone take a guess?
Hasn’t happened yet, still lots of liar loan commercials at least here on the radio in LA
Sales volume will fall further and foreclosures will continue increasing dramatically. Those who bought before 2001 and haven’t HELOCed can afford to lower the price; and some will if forced to. Prices are set at the margin, so these will be the new comps. OC is running about 12-15 months behind SD, so we’re ready to start seeing lower pricing show up in the statistics (anecdotal evidence already shows prices are at least a little lower) that SD has had for the last 12 months or so.
Montage shooting being called a double ’suicide by cop’
By Christopher Goffard and Garrett Therolf, Times Staff Writers
3:00 PM PDT, April 23, 2007
The shooting deaths of a married couple at one of the world’s most luxurious hotels Sunday is being investigated as a bizarre double “suicide by cop,” according to a law enforcement source involved in the inquiry.
The Parks, a Mission Viejo couple, had checked into a bungalow there in hopes of discussing a “business-type thing” that was vexing them, said their daughter, Christie Park, 23.
“They weren’t bad people,” Christie Park said of her parents. “They were just people that got pushed a little too far with things they couldn’t clear up legally and financially.”
Christie Park said her parents, who worked in real estate, enjoyed staying at nice hotels. At the Montage, which has spectacular views of the Pacific ocean, bungalows run $2,200 a night.
You can’t make this stuff up…
http://www.latimes.com/news/local/la-me-montage24apr24,0,3195165.story?coll=la-home-headlines
“It was like, why not be in a place of beauty when we’re all together?” said Christie Park, who described herself as a recent graduate of UC Berkeley who works in advertising.
Heaven help us. Really. This is just sick.
But probably just the first of many insane scenarios about to play out in $2000 per night hotels around the country.
Might as well go out in a “place of beauty”.
“But probably just the first of many insane scenarios about to play out in $2000 per night hotels around the country.
Might as well go out in a “place of beauty”.
Holy smokes– it’s the ’sleep center’ from Soylent Green.
OT - I’m short Fannie Mae and just received notice from my brokerage that I need to buyin or cover tomorrow by 1:30 p.m. CST. This is not a margin call, but only that they are no longer able to borrow the shares for me?!*? What’s this?
This happened to me in the August to October 1973 bear market advance. After I covered the short, I reshorted. In those days it took five business days to settle trades. With the low cost of commissions I would look into reshorting repeatedly. The fact that there is a squeeze in holding the stock of fannie indicates that it is being cleaned up prior to a big drop. Your information is very very bearish for fannie in my opinion.
Leslie Appleton-Young is Vice President and Chief Economist for the California Association of REALTORS® (C.A.R.), a statewide trade organization with over 195,000 members dedicated to the advancement of professionalism in real estate.
Mrs. Appleton-Young directs the activities of the Association’s Member Information Group. She oversees the analysis of housing market and brokerage industry trends, member communications, and membership development activities. She is also closely involved in the Association’s strategic planning efforts and is a well-known speaker in California’s real estate community.
Before joining C.A.R. in 1984, Leslie Appleton-Young was a consultant with Telesis Inc. in Rhode Island. She also spent several years working as a research associate at the Federal Reserve Bank of Philadelphia and as an instructor at the University of Pennsylvania.
Mrs. Appleton-Young earned a Bachelor of Arts degree in economics from the University of California, Berkeley, and her Masters from the University of Pennsylvania.
http://www.car.org/index.php?id=MzQzNTY=
Thats LAY’s bio, I’m just posting it, don’t shoot the messenger.
LAY - Federal Reserve, University of Pennsylvania,
Sorry, but don’t mind my tin-foil hat, but I still believe this whole debacle was engineered by the private investors behind the federal reserve for the sole purpose of extracting more cash out of the poor, middle class and the moderately rich and force them into life long debt.
No - it was engineered to delay the coming implosion of the debt pyramid - a last hurrah.
The lives of the poor, middle class and moderately rich will be considerably shortened via scapegoat event designed to take the blame for the debt implosion.
Might be better to die in the event - what will be left after will be mighty ugly.
“In California there were 31,434 foreclosure filings reported for March, the most of any state and an increase of 36 percent from the previous month, according to RealtyTrac.”
31,434 foreclosures in California, is like 94,302 foreclosures in almost any other state in the country. This is because one foreclosure in California, in dollar terms, is like three foreclosures almost any where else in the country.
http://tinyurl.com/28kq2z
I like Robert Toll’s euphamisms. I don’t think DC has come back, though. At least not the VA exurbs that I cover.
Perhaps “euphemism” is not the right word. Maybe “pithy” is more like it.
Ok, are you ready :
I posted this home on this blog for a laugh a year and a half ago. About 3 months ago, I posted about how it was for rent with like 4 signs in the yard.
It’s a 550 sq. ft. “gem” of a glorified living room with a roof. It sits on a 600 sq. ft. plot of land backed up into another house.
Asking price then $530k, asking price now : $699k!!!!!!!!!!!!!!!!
http://guests.themls.com/view_photo.cfm?mlsnum=07-179671
WTF!!!
Please join me in e-mailing the realtor encouraging commentary
That just leaves me speechless…….@ $99,000 it still seems too dear.
I have noticed this as well in the SFV. Properties that sat for months unsold last year, come on the market at even higher prices. In fact everything is higher! However, everything is still sitting!!! The houses that do sell seem to fall out of escrow in 60% of cases. Those houses are the ones that were priced lower. There are a lot of vacant houses as well.
You’ve got to wonder what the strategy is??? There is so much manipulation with the prices. Money goes back to the buyer, yet the sales price rises and then is itself used as justification to sell the next house for a higher price.
It will be interesting to see what happens in September. I’m also seeing that a lot of houses listed on Zip Realty are followed up a few weeks later on Realtytrac, listed in pre-foreclosure! So much money is owed on these houses.
Yes typical of Cal dreaming sellers. They still think that LA is the cat’s meow i hate to tell them that the cat has run away and the mice are all that’s left to play?
Bloomberg: Subprime Bondholders May Lose $75 Billion in U.S. Housing Slump
http://tinyurl.com/yt6o4c
Houston, we have a problem.
“5 lousy excuses for not buying a home”
http://realestate.msn.com/selling/Article2.aspx?cp-documentid=4706111>1=9323&wa=wsignin1.0
100 million people per day see this article adverised on msn. Who paid for this advertisement represented as news?
From the article: Francis also recommends that homebuyers have enough for a 25% down payment and a stable job. If you don’t, then “it may not be the time,” she says.
OK, so what percentage of buyers have a 25% down payment? Especially first time home buyers, which seems to be the focus of this “article”? The article is truly drivel, as it does not do a rent vs. buy cost comparison and does not recognize the possibility/probability of depreciation or the transaction costs. Just a fluff piece as you would typically find in a supermarket checkout stand magazine.