The Urgency Has Definitely Dissipated In California
The LA Times reports from California. “The bottom line: The bottom isn’t here yet, some experts say. ‘The urgency that characterized the boom has definitely dissipated,’ said economist Leslie Appleton-Young of the California Assn. of Realtors. ‘For the first time in the last 10 years, we forecast a softening in the median home price.’”
“Economist Christopher Thornberg said he was suspicious of reports that (prices) were still going up in some areas. ‘The numbers keep getting worse and worse,’ he said. ‘Housing has no more ‘up’ in it. Prices have to start coming down or the market will stall.’”
“In Orange County the inventory of housing for sale is growing, with the number of homes in escrow at half the level of the year-earlier period, said Steven Thomas, president of Re/Max Real Estate Services.”
“‘We were trucking along nicely in February and then sub-prime [mortgage woes] hit in March,’ he said. Inventory will rise through the spring and summer, Thomas predicted, before ‘frustrated unsuccessful sellers throw in the towel’ and cut their prices.”
The San Francisco Chronicle. “The for an existing single-family home rose to $580,090, up from $562,130 a year ago. While that 3.2 percent median price increase slightly outpaced the rate of inflation, Kleinhenz and others said that the increase is misleading, as prices fell in many geographic areas.”
“Christopher Thornberg put it bluntly. ‘The median price is a bunch of hogwash,’ he said. ‘You can have prices looking like they’re up when they’re down, because it is incredibly subject to where slowdowns are occurring. You could show the median price going up just because there is a shift in the type of product being sold.’”
The North County Times. “Sales of existing single-family homes plummeted last month in San Diego and Riverside counties, and in nearly every other California market, amid growing anxiety over the collapse of the subprime market, real estate officials said Tuesday.”
“According to the California Association of Realtors, values declined significantly in (the) neighborhoods of Oceanside, Escondido and Ramona. Prices also declined in Temecula, Murrieta, Lake Elsinore and Wildomar.”
“With declining prices and sales, and many getting behind on mortgages, some homeowners are going to lose their homes, said John Husing, an Inland Empire economist. That’s not all bad, he said.”
“‘To some extent, this is about investors who made bad bets,’ Husing said. ‘Frankly, I could care less about that group because, frankly, they have caused part of our problem (of a constrained supply and inflated prices).’”
The Tribune. “The median price of an existing, single-family home in San Luis Obispo County fell to $550,400 in March, declining 5.2 percent from the same period a year ago.”
“The declines, said Robert Kleinhenz, deputy chief economist for the California Association of Realtors, could be attributed in part to news related to the subprime fallout, sellers becoming more realistic about pricing their homes and a slowdown in the secondhome market.”
“‘The (second-home) market in 2007 is not what it was in 2006 or 2005,’ he said. ‘That can contribute to greater softness.’”
The Ventura County Star. “In the Thousand Oaks area, the stock of unsold homes is increasing while the number of would-be buyers who qualify for mortgages is on the decline, said Allen Reznick, president of the Conejo Valley Association of Realtors.”
“‘We’re not worried about foreclosure sales driving down prices,’ economist Bill Watkins said. ‘The bigger risk, and perhaps part of the current slowdown, is the changing lending standards.’”
The County Sun. “Home prices in the San Bernardino-Riverside area suffered a year-over-year decline in March. ‘It’s nothing we haven’t been expecting,’ said Redlands-based regional economist John Husing.”
“Research by Zip Realty for Southern California shows that roughly a third of the homes sold so far this year have involved some sort of price concession by the seller.”
“‘We have moved into a buyer’s market, particularly in the Inland Empire,’ said Tracy Malone, district manager for Zip Realty. ‘Buyers have become very well educated about the market and with more inventory available, they have more choices.’”
“In general, prices are slipping. Husing says there are three factors that will continue that trend through the rest of 2007.”
“‘New home builders are downsizing to try and reach particular price points,’ he said. ‘There are also lots of speculators trying to sell, and some of them will sell for less than they paid just to get out. Then there are the people with the creative financing who are going to find themselves needing to sell.’”
The Daily Breeze. “Jack Kyser, chief economist at the Los Angeles County Economic Development Corp., said that trouble will be greatest in the Inland Empire and central part of the state because those areas saw a surge of new home construction in the past several years.”
“He agrees that buyers no longer feel a sense of urgency to jump into the market.”
“‘The pendulum has definitely swung in their favor. If you qualify you can go out armed and dangerous and find out how motivated the seller really is,’ he said.”
The Press Enterprise. “The number of homes on the market in the Inland region is at its highest level in eight years, according to Multi-Regional MLS, which tracks resale homes in western Riverside and San Bernardino counties and eastern Los Angeles County. The service reports that more than 34,700 homes are listed for sale in the region.”
“The month’s supply of listings, or how long it would take for this supply of homes to be sold at the current pace, is at 13.2 months, up from 6.9 months a year ago.”
“‘That’s a pretty significant leap,’ said Steve Johnson, director of a Riverside real estate consulting firm. ‘We’re just not coming out of the gate as fast as most of us in the real estate industry thought.’”
“Johnson said he expects the number of homes listed to go up for at least the next six months. ‘We have a lot of people listing their houses in fear that they won’t be able to refinance, because they can’t really jump into another subprime loan,’ he said.”
“According to the report, the number of properties sold in the first quarter of 2007 also dropped by about 20 percent compared with the same period a year ago. ‘In many respects it is bad news for the sellers because the market will become more competitive,’ Johnson said.”
“Riverside County homeowners suffering from a recent plunge in the housing market might see some relief on their property tax bills, but experts say it won’t be enough to stave off looming foreclosures.”
“The move comes at the request of Supervisor Jeff Stone, who said property taxes should be based on present-day home values and not the values of an overheated market. ‘Predatory lending practices have created a housing debacle in our county,’ said Stone, whose Southwestern county district has been roiled by the tumultuous market.”
“Foreclosures in Riverside County have spiraled from 522 in January 2005 to 3,514 foreclosures last month, according to RealtyTrac. The sagging market, Stone said, has particularly affected the cities of Temecula, Murrieta, Moreno Valley, Hemet, San Jacinto and Desert Hot Springs.”
The Desert Sun. “With property values falling throughout the county and Coachella Valley, the taxes could drop and save homeowners money, Supervisor Jeff Stone said.”
“Among the few who may benefit from falling values: People who bought recently at the market peak, only to see prices drop.’To get a tax cut, you have to buy a home at the peak and have it lose value quickly,’ Assessor Dan Goodwin said. ‘You can’t enjoy double-digit increases in your home value and then expect a tax cut when the market dips.’”
From CBS 2. “California reported 80,595 first-quarter foreclosure filings, about 18 percent of the national total and numerically more than any other state, according to RealtyTrac.”
“‘It’s not just low-end homes that are going into foreclosure; we’re seeing a rising percentage of foreclosures with an estimated market value of more than $750,000,’ said RealtyTrac CEO James J. Saccacio.”
“Among the few who may benefit from falling values: People who bought recently at the market peak, only to see prices drop”
So now people will BENEFIT by having the value of their houses drop? Really? Why can’t they just admit that these buyers are screwed.
Among the few who may benefit from falling values: People who bought recently at the market peak
That doens’t even make sense. If you’re going to make something up at least spend the time to make it make sensical.
People need relief in the order of 1k a month because of adjusting mortgages, not 1k per year lower taxes. That doesn’t make any sense.
No no no. That guy’s a tax assessor, not a NAR spinner. He’s just pouring cold water on the folks who get all chipmunk-chattery when they hear about property taxes going down.
A NAR guy would be more like “Quick, use the brief downturn to get your reappraisal before prices go UpUpUp!”
See?
Was this a misprint?
“Among the few who may benefit from falling values: People who bought recently at the market peak, only to see prices drop.’To get a tax cut, you have to buy a home at the peak and have it lose value quickly,’ Assessor Dan Goodwin said. ‘You can’t enjoy double-digit increases in your home value and then expect a tax cut when the market dips.’”
Peter you left out the most important part of that quote. It’s the TAX CUT man. Are you blind can’t you see what a tremendous advantage these FB’s have now!! Damn Lucky Fb’s
This is hilarious. I have to restrain from laughing too loud.
Quit making me laugh! This is supposed to be serious stuff, but I can’t get serious because trout season kicks off in the Eastern Sierras on Saturday and I’m not thinking about the bust in housing.Thornburg got his act together since he left Anderson. eh?
So let me get this straight:
- I overpay for a house by, oh let’s say $100,000.
- The market drops so that my $100,000 becomes zero.
- I benefit because I can fight the tax assessor to lower my assessment so that I pay $2k less per year.
That tax assessor either has a wickedly dry sense of humor or a warped, myopic vision or the world.
After 50 years it pays for itself. Not a bad deal.
I think you are missing a nuance of what he is saying. Longtime owners havent had their taxes go up because of prop 13. Recent buyers have a much higher appraisal and taxes, and this gives recent buyers some relief RELATIVE to longtime owners.
I think you have nailed it…on the face, it looks like an absurd quote, but the tax assessor was probably only speaking in this very narrow context.
There is no such thing as tax cut. The tax relief is temporary and the assesment goes back to historical value at purchase
after a 12-18 months.
“Among the few who may benefit from falling values…recent buyers.”
It would make sense if the “may” was removed to read: “Among the few who benefit are those who bought recently.” In other words, many others are/will benefit from falling values, just not the recent FBs.
But I doubt it’s a misprint. God are these cheeleaders screwed up. They are so into their own spin that they cannot even bring themselves to admit the most obvious: that recent FBs are totally f@cked.
Today 4/25/07 LeslieAppple -Young is forecasting a softening (lower home prices)
Earth to Leslie: This no LONGER A FORECAST.
I wonder what she makes, heck my 17 year old can forecast yesterday’s weather!
But isn’t that what economics is all about? I’ve often it called:
‘The art of predicting the past’
said economist Leslie Appleton-Young of the California Assn. of Realtors. ‘For the first time in the last 10 years, we forecast a softening in the median home price.’”
——————————————————————————–
We’ll it looks like hell has finally frozen over….you’ve got Leslie finally admitting that prices can come down in California! Notice though she still can’t quite bring herself to mutter the words “price decline”.
LAY is programed to use the word ’soft’ in any description of a housing market correction or decline, I think it’s in her contract.
She could rub 60 grit sandpaper on her face and call it soft.
Yeah but she forgot to add “as expected” to the end of the sentence which is a violation of her contract.
yeah, 6 mos after the obvious….i would be impressed if she said this 12+ mos. ago…
You’re right about Hell.
http://tinyurl.com/334dmv
SOFTENING???????
Where has this dope been for the last 3-5 years?
Pricing are/will be cratering.
Keep up the spin It ain’t working no MO bitch.
Amen. I was just thinking how quiet it’s been recently from LAY and Lereah. I figure Lereah is busy writing his next book: “Why the Real Estate Boom Turned to a Bust and How You Can Profit From It”.
“Christopher Thornberg put it bluntly. ‘The median price is a bunch of hogwash,’ he said. ‘You can have prices looking like they’re up when they’re down, because it is incredibly subject to where slowdowns are occurring. You could show the median price going up just because there is a shift in the type of product being sold.’”
Someone actually telling it like it is. I cannot beleive it.
Oh Thornberg’s been testifying to the good word for quite some time. He seems to be one of the only articulate (let alone accurate) economists out there.
Yup. And now that he’s no longer shackled by those UCLA Anderson restraints, he’s free to say whatever he pleases.
Trust me… he’s no stranger to this blog
He wasn’t always convinced of a drastic housing meltdown. He changed his tune and joined the dark side not too long ago.
He said over a year ago that “The OC’s gonna get hammered.”
Watch all three parts, it is good.
http://www.youtube.com/watch?v=uyOWuczlJCA
Watch all three parts, it is good.
http://www.youtube.com/watch?v=uyOWuczlJCA
I thought it was Nancy Sinatra again.
Oh crap Thornberg…you let the cat out of the bag.
OT. From http://www.cutimes.com New “affordability” product announcement. Nice timing!
PINE BROOK, N.J. — CU National Mortgage launched its new Flex-Plus 103 Loan this week from Fannie Mae.
The program provides borrowers up to 103% financing of their homes to roll in closing costs and other pre-paid charges that can intimidate first time buyers. The product in only offered as a Fannie Mae pilot program solely for Prime Alliance clients.
Energy Federal Credit Union in Rockville, Md. is rolling out the loans as well as Jersey Trades FCU, LOMTO FCU, Miami Firefighters FCU, Penn East FCU, Rutgers FCU, Sperry Associates FCU, Suffolk FCU, and Delta Community CU.
“We are pleased to offer this package to our clients, as it will help their members achieve the dream of owning a home. As a result, this process will greatly foster the value of credit unions toward those members, achieving the goal of being their primary financial institution,” CU National Mortgage President Michael McGrath said. -
Doh! Stucco’s gonna blow. Wonder how long this program will be around for? Next thing we’ll hear is that we are buying the payment, not the home.
“closing costs and other pre-paid charges that can intimidate first time buyers.”
Forget Stucco (no offense, Stucco), this should infuriate everyone. So now the goal is to not “intimidate” first time buyers. WTF?? How about saving for a downpayment and closing costs??
Since my taxes are soon to be violated anyway, why don’t we just forget the concept of first time buyers and give these people homes.
One step further - Taking out a home loan (103% financing of course) should be MANDATORY for all persons upon reaching a certain age. After all, everyone deserves/needs/should be forced into a home, and this would certainly help the economy, right?
Also, manditory Right to Carry in your home town or project. Only Glocks, Rugers or S&Ws.Crime will be guaranteed to go down. I like wad cutters and a 150 lb German Police Dog named Bobby for my home defence system. Make sure that you drag them over the thresh hold after you pop them.
This is exactly the type of bailout that I have been envisioning — pile up Fannie Mae’s black hole of a balance sheet with a bvttload of systemic risk and let some future generation of taxpayers pick up the tab when Fannie finally explodes.
Yep. It pisses me off too.
“‘Housing has no more ‘up’ in it.”
Sounds like that missing ED link.
It’s bad for the CU too. They typically buy the GSE bonds to meet capital requirements. The flakier the GSE bonds get the more banks and CUs are going to go under. At least most of the subprime trash was sold to pensions, foreigners and hedge funds.
“At least most of the subprime trash was sold to pensions, foreigners and hedge funds.”
Granpa is going to be pissed.
WTF, I MEAN W-T-F? This more than pi$$es me off - my BP just went up to 180/100….
Haven’t you heard, the term “systemic risk” has been surgicaly removed from their lexicon. They got rid of it when they fired Armando Falcon. There isn’t any. It’s a myth. Nothing to see here. Move along.
WooHoo! Fannie Mae issuing non-conforming mortgages. I’ll have to go back to the parts in the securities textbooks where there is one chapter on the ‘excellent’ agency MBS and another chapter on the benighted ‘non-agency’ MBS and write ‘Fannie Mae, too’ in the non-agency chapter. Who the heck is Fannie Mae going to sell these mortgages to?
OOH, OOH, Let me answer this one! The FED?
With Congress comping at the bit to bail out lying loan losers, is there any doubt that “Too Big To Fail” Fannie will indeed be guaranteed by any means the United States Taxpayer. We new a new name for “Moral Hazard” — since almost every transaction that occurs in the US is now one.
Five year prediction: webpage dedicated to Fannie Mae REOs.
It already exists:
http://www.mortgagecontent.net/reoSearchApplication/fanniemae/reoSearch.jsp?p=Fannie+Mae-Owned+Property+Search
How much does this help? I’m missing something here. Unless this is an interest-only ARM it doesn’t seem to me that it would help much. If this is a fully amortizing mortgage, right off the bat, then it will still not be feasible for most of the homes, or potential home slaves, out there.
Is this thing an exotic loan and will they be lowering the credit standards for this POS?
It helps those 23 yr olds who find saving for a down payment and closing costs too burdensome, but don’t want to throw money away on rent. Have you checked the savings rate recently?
It also helps distort the true costs of owning a home and props up sales prices. I guarantee you that the idiots buying homes at listing price right now have very litte skin in the game. There is little incentive to nickle and dime when it’s not your nickle and dime (not currently anyway). And a $1000-2000 price difference is what? $5-10 a month.
It infuriates me to no end that the weakest hands are keeping this market afloat. Without 100% financing, housing prices would fall quickly.
I know it’s been mentioned on this blog before, but its worth bringing up again. How many people will actually want to pay for their homes now that they are not going to become HELOC millionaries from doing so? I would bet not too many. Similar programs in MD and OH have gotten hardly any takers.
The best revenge might actually have these FBs pay for their homes (which most had no intention of doing). This is assuming that these loans aren’t some toxic BS.
I would take the 103% loan, if the asking price was 50% off.
Your name is realy Casey, isn’t it?
http://bigpicture.typepad.com/comments/2007/04/go_fico_yoursel.html
Sell your credit lines! Buy a bump in FICO points!
Does anybody play by the rules anymore?
No. That’s so twentieth century.
Playing by the rules meant I was never able to buy a house. Of course, now there is going to be a bailout I know better.
I’m thinking of buying a four bedroom in Chappaqua. There is no way I can afford it, but I don’t intend to pay anyway. I fully expect to be refied into an affordable mortgage six months after I take possession.
I fully expect a property tax amnesty too.
Property tax amnesty in Westchester NY! Now your talkin’!
While you’re at it, I was thinking you might want to sell it to me for a few hundred thou’ over market value. The appraisal is no problem, I know a guy. I can just sell it back to you, for another few hundred over market, of course. Needless to say, the financing won’t be a problem.
Excellent idea. Using this method we can reach a sustained plateau of permanent prosperity.
And those wicked ’savers’ can pay for it.
Question: Why do they hate our freedom?
lol
You guys crack my up! =o)
Shadash and everyone else,
A few points:
1. As this housing market unwinds more and more, you will see even more ingeniuous schemes. This one is just the tip of the iceberg.
2. The banksters and powers that be realize people who have bad credit are the only left to buy, but alas, they have sh*11y credit for a reason and they probably don’t have any money to buy with.
3. The banksters have to keep the credit wheel spinning. Look at the total debt in this country and that 13K dow wouldn’t seem so grand today. Problem is people in #2 above have no money and the housing ATM is wiped out, so, keep the “creative” products coming to keep the debt-zombies flowing.
Bottom lines is I think we have now gone past peak debt in this credit bubble. There is no question after seeing this and credit card mortgage rebate two weeks ago we are at the bottom of the credit barrel. These fraudsters will do anything to keep the debt payments and interest flowing in. These guys are so greedy it has become like a drug. This can only end one way and it won’t be anything but a severe recession at best, depression at worst. I know I keep screming in at least once a week, but there are only so many fools left and the pyramid will tip or the house of cards will fall sooner or later. The only question is when, not if, anymore.
i have mentioned the d word several times in the past year here too…..i was thinking the same thing yesterday: how are we at dow 13k when i know the fundamentals are all sh!t? i really don’t believe ANYTHING anymore. cynical - and wish i were not.
i say d within 2 years…..
Yeah, I don’t really even know where to put my investments these days. I am out of the market, and yes I missed the recent rally, but just like 2000 there is nothing propping it up. I have done well in precious metals, but these can and are manipulated. Cash is devaluing fast…
And real estate … Want to make a small fortune there? Bring a big one! Yeah, 2 years sounds right. By 2008 the trend will be clear and by the end of 2008 I suspect we will see much higher inflation, unemployment, and most likely the beginning of a hummer of a recesson.
does any one know how we can find out if our credit scores are being mollested, does it show on your credit score.
if I find out someone is adding some a**hole as an authorized user, I will find some sleazy attorney who will help me sue the shit out of whom ever is responsible?
anyone here know more about this?
test
re putting authorized users, does anyone know how that will affect the person with higher score, and how can they add an authorized user with out my damn permission.
if some knows more please let me know. that would be one hell of a law suit.
Class action filed against Toll
BENSALEM, Pa., Apr 25, 2007 (PrimeNewswire via COMTEX) — Law Offices of Howard G. Smith announces that a securities class action lawsuit has been filed on behalf of persons who purchased or otherwise acquired the common stock of Toll Brothers, Inc. (”Toll Brothers” or the “Company”) between December 9, 2004 and November 8, 2005 (the “Class Period”). The class action lawsuit was filed in the United States District Court for the Eastern District of Pennsylvania.
The Complaint alleges that defendants violated federal securities laws by issuing material misrepresentations to the market concerning the Company’s business and prospects, thereby artificially inflating the price of Toll Brothers securities.
http://tinyurl.com/2dhw66
As predicted - the bubble collapses in a sea of lawsuits,bankruptcies, and a few prison terms.
There are STILL CEO’s from 2001 shenanigans who are JUST NOW being sentenced!! We are going to be reading about this stuff for 10 years.
Anybody catch the PBS special “The Smartest Guys in the Room”, based on the book on Enron by Bethany McLean and Peter Elkind?
If you like to be disturbed in your entertainment (and your ADD won’t allow you to read the book, like me), check it out.
I will see if I cant download that via bit torrent. (best way to watch TV - tivo is old technology now)
Perhaps people involved with the previous incarnation will be in the white house? Again..
“‘It’s not just low-end homes that are going into foreclosure; we’re seeing a rising percentage of foreclosures with an estimated market value of more than $750,000,’ said RealtyTrac CEO James J. Saccacio.”
Heh, heh. This is what I want to see. When there are problems in both above-median and below-median ranges, a falling median price will be the result.
Think of how many saps that had low mortgage balances only to run that sucker up the HELOC flag-pole. No more cat bird seat. Sub-prime contained my arse.
It also hurts me to hear about people that had sweet 5% fixed 30s and refied into suicide loans. I’m thinking “You IDIOT!” People were smart enough to get the deal of a lifetime, then give it away for the opportunity to light fire to a big pile of crisp new benjamins.
I guess now they go and light fire to the house itself too! Kids these days…
Kids these days…
are, for the most part, stupid
It’s a direct and early inheritance from their parents…
If you are going to commit fraud I’d imagine its a lot easier to suck 100k out of a 700k “transaction” than a 400k transaction.
Sure, alot of these may be dumb buyers and heloc losers but, at this level, I’d bet just as many will turn out to be outright fraud.
I’m not sure the majority is fraud. I think there’s a lot of middle class families that had an image of what kind of house they wanted to live in, and where. In San Diego that would most likely mean a house in the 700k+ range in the last couple of years.
I had a perfect visual of what I wanted to live in and where. I guess I just couldn’t work myself up to feeling entitled to it. Some days I feel like I should get a medal for being the last person in Sacramento that didn’t commit financial suicide.
me too. my vision was a central park penthouse. i guess i am a loser cuz i didn’t go for it!
FRaud -You must check
Bubblemarketstracking@BLOGSPOT
Mr Bagetti was busy accumulating $6.2 million in mortgage debt in 2006 {after the top}, using a whopping $32,000 down payment and never made a monthly payment….now being or has been foreclosed…none of the properties are on MLS currently.
Amazing.
In my neck of the woods, 750 k was LESS than the median during the height of the boom. Now it’s about the median. The average size of these homes 2/1 homes? Probably 1300 sq ft. I’m in Santa Cruz.
Using median price as a gauge is hogwash alright. Thornberg is right.
Different product could have shifted or kept the median price to remain high because if that months’ sales consists of larger homes than normal, then the median price will go up.
they should also post the median price per square feet. That’s more accurate measure.
No wonder the builders only want to build bigger and bigger homes. Most new developments have a minimum of 3000 sf homes and upward.
Not really. Every area has a different rules about what you can count as square footage. I rented an apartment where the jerks included a covered porch in the square footage (and then wouldn’t let you even keep patio furnature on it).
In some places like Colorado even unfinished basement space is counted (egress legal or not). Other places won’t allow you to count basement space even if it’s finished and has legal egress.
This is where I call horse$hit. 2+2 = 4 , pick a damn method and stick with it.
Geez I’m cranky today. Too bad I’m happily married or I could go out trolling for that angry broker sex ExNV was talking about.
He was talking about angry sex with his spouse, so no reason you can’t have angry sex with your spouse. ExNv thought his wife was missing it, so maybe your hubby would enjoy it.
Same here, not sure why. I even got really good sleep last night.
Who has the phone number for angry broker sex (the female version, not the ex-NV version)?
Testifah, as Palmetto would say. In but a few places, accounting has become a joke. Sometimes I think my wife is the only honest one left. She used to work for a church. They never did anyting illegal, but they would push Christian integrity to the finest line seen. Also, 2+2=4, but then again so does the square root of 16. However, I know what you mean Gwynster. It’s all about the Benjamins. Integrity be damned. It is ingrained in America. Besides, as my father used to say, “Honesty is your best poverty.” He said this in the 80s, no less.
square root of 16 is actually (+/-)4.
j/k
Actually, square root of 16 is +4 by definition. Just like square root of 2 is 1.414… and square root of 1 is 1.
Not to be confused with the solution to x^2 = 16, which is x = +/-sqrt(16) = +/-4
Don’t go and make this complex.
Dan,
Can’t wait to see the new world that is emerging from all of this. Integrity might be one of the only things people have to stand on.
I think We Rent! was showing that -4 x 2 = 16, as the negatives cancel out. See, two wrongs do make a right. Aint math wonderful?
“they should also post the median price per square feet. That’s more accurate measure.”
Though I agree, it could easily be manipulated (showing fewer sf by the appraiser, or realtor, or whomever had a vested interest in keeping the median high). And the NAR would simply say it’s a cya measure - “Class, when measuring, err on the low side, so as not to overstate it to a potential buyer. That way, we can show them we are on their side, helping sales!! Life will be good again!”
See how easy that is?
I know, I’m warped.
“The number of homes on the market in the Inland region is at its highest level in eight years, according to Multi-Regional MLS… The service reports that more than 34,700 homes are listed for sale in the region.”
Anyone who has traveled throughout the IE last several years could see this S*it coming. The amt of new Tracts/HB developments being put up in such IE spots as Banning.Beaumont.ST Jacinto, Menifee,perris Moreno Valley,L elsinore,Telecula,s corona, Norco, ect is staggering. And this just in the SW Riverside County portion of the IE.
I once went out to a Construction site off the 10 in Banning where they were grading a large field for 600-1000 homes(early 2006). This was a simple level, grade and build on a level plain, and throw up hundreds and hundreds of cookie-cutter 2-story, brown-tiled, stuccoed units, all stamped alike.
This is just one of hundreds of large-scale planned communities, some measuring several sqare miles, going up ALL OVER THE IE last 4-5 yrs. And there have been thousands of small -scale tracts from 10 to 100 units- apts, townhomes, SFh’s-scatterd all over the large IE region, which is bigger than the state of West virginia and 4 times the size of LA.
Most of this area is flat, featureless scrub grass or gently rolling country, quite dry and scorched by 90% heat 8 months of the year and generally useless grazing/idle land, a boon for developers who had few barriers, environmental or otherwise, in mass-developing huge housing tracts on cheap, pock=marked terrain inhabited by scattered decrepit horse ranchettes and fontucky crack shacks.
Now the major/local newservices are catching on to the IE inventory overhang and the inevitable foreclosure waves. Time for the HB’er to start dumping IE inventory at 50% off, and even at that i would not touch 90% of the new homes in the IE.
You forgot to mention that the IE also has horrendous traffic, so it is a nightmare to try to get to or from it. The 91 east in the evening has got to be the worst traffic in all of So Cal.
yes, i was in beaumont last month - could not believe what i was viewing. scrub land now a sea of cheesy developments, probably 70-85% vacant….
“Economist Christopher Thornberg said he was suspicious of reports that (prices) were still going up in some areas.”
Ditto. I see lots of such comments to articles in my local paper. No hard evidence or explanations given though.
I think Titanic takes long time to slow down.
But fast to sink.
“The Press Enterprise. “The number of homes on the market in the Inland region is at its highest level in eight years…
- No kidding! There ihas been some funny reporting about the real numbers in the Inland Empire. There were so many illegals and under qualified buyers out there - that it is doomed.
Hate to say so, but I called this disaster early last year. In the 10 years I lived out there I could not believe the increas of inventory and the cost. 750K for 4/3 in the IE is a joke, esp. with what they look like.
Love how the broker in SouthBay LA area says his buyers are immune from the economy. So El Lay.
“Economist Christopher Thornberg said he was suspicious of reports that (prices) were still going up in some areas. ‘The numbers keep getting worse and worse,’ he said. ‘Housing has no more ‘up’ in it. Prices have to start coming down or the market will stall.’”
Housing just can’t get it up any more. No wonder the consummation is not there.
lol….
But but but…
He told us OC was going to get ‘hammered.’
ROTFL
Got popcorn?
Neil
That was before prices went ’soft.’
Call the fluffers! (Somebody had to say it…)
Except Leslie,and David ain’t making it happen anymore..even the viagra won’t help.
As an aside..I know I’m repeating myself,but holy crikey..ziprealtry seems to be rising 10k a day…I watched it for 6 month hold below 950k..then pop ,it ticks up another 8-10k every day I check..
http://tinyurl.com/2jcads
“…it ticks up another 8-10k every day I check.”
SD is doing its part — ziprealty inventory up over 200 homes a week on average since Feb 1 (over 17% increase since then to 17,591 at last check). Contrast that to spring 2004, when the number of homes listed was around 3000 or so.
Eastofwest,
It definately is ticking up faster.
For a while it was 2500/day. Now it does seem to be at about 8k/day… crikey!
I have a trendline now showing 1.5M peak in late August… however, the last week has broken to the upside… The new trend peak earlier and higher, but I hesitate to estimate off such a short trendline. Yes… I’m well aware of tightening credit and as this thread notes, the urgency is GONE!
Definately a high rick of premature inventory.
Where is auger-inn when you need him
“SD is doing its part — ziprealty inventory up over 200 homes a week on average since Feb 1 (over 17% increase since then to 17,591 at last check). Contrast that to spring 2004, when the number of homes listed was around 3000 or so.”
LOL, from 3k to 17.5k, or, a more than 500% increase in inventory. Now that’s ugly!
Over on Hardtack I was thinking we would break 1.8M single family by the end of the month. We broke it several days ago, and the slope of the inventory graph is not yet leveling off.
As of right now
Single Family Total Properties: 1,811,170
Condo Total Properties: 502,650
On a more local level, I think that in a few weeks, both neighbors and the elderly lady across the street will all be on the market. The sad news is that the construction guy (his sale sign is already up) bought when I did, he is pricing below what the hard working immigrant family paid for theirs a few years back. Sadly, I know the immigrants also HELOC’d some cash out. The elderly lady across the street is an original owner in this area, purchased some 23 years ago. Lord only knows where she is going to price. This will be one ugly summer.
” I know the immigrants also HELOC’d some cash out.”
Aha! The hard working immigrants are in for a hard lesson in credit, investment and consumerism….better sooner than never.
AKRon, i would have bet augerinn would have brought in the fluffers, but thanks for beating him to the punch!
Okay, call me naive, but what’s a “fluffer”, I’m afraid to ask?
Somebody who’s sole job is to “fluff things up”, if ya know what I mean. They usually exit the set right before the director yells “action”.
I ummmm uhhhhh… read that somewhere or something
Theme (1): naughtiness concerning “up”.
Theme (2): housing inventory departs trendline.
Theme (3): humble education for laig.
Well here goes:
It looks like the housing inventory has gone erexponential, which is what the sweet young fluffer helps the jaded star with on the movie set of “Blue Blew”.
Oh by the way,
fluffers are used in real estate too! They can be hired to make your house look more appealing with a little cosmetic work. One common psychological tactic they use is to bake cookies while the home is being shown. Note to bloggers: if Toll House is wafting… time to lowball.
Fluffers…riii-ight…I’d recommend you guys spend more time addicted to this website as opposed to your other…avenues of entertainment…much more potential here for eventual explosive upside…LOL
“The urgency has definitely dissipated”
fluffers attempt to “push” this from happening…
“down” time costs a lot of money…
Meantime, prices definitely going limp…
‘Okay, call me naive, but what’s a “fluffer”, I’m afraid to ask?’
I saw a show on the boob tube last night about the LA porn industry; the narrator claimed that 90 percent of all porn films are shot in LA county. So I am disappointed you don’t know what a fluffer is…
My understanding that the porn industry was based in the SF valley for years. I lived in Reseda for about 2 months before finding my loft in downtown LA in 1991. I can believe it.
The problem is no little blue “savior of the middle aged man” is going to save this performance.
The inventory is on the market, but no one to service it.
ROTFL
Neil
laig, here you go:
http://www.urbandictionary.com/define.php?term=fluffer
…and thanks for the info yesterday.
implosion:
OMG, didn’t realize what fluffer meant before, I thought they were talking about fluffing up the pillows, LOL, I am really naive! Thanks, we’ll call it an even trade.
Bakersfield #8 in foreclosures
http://www.bakersfieldbubble.blogspot.com/
Hey, you’d better do better than that soon! LA county is really starting to ramp up. Once the big boys get onto the field, we’ll take over.
Oh… your post is RATE. Hmmm… Ok, you can still beat us there.
Got popcorn?
Neil
Soon 3 out of every 2 homes will be in foreclosure!!
THere will be 4 foreclosures for every 1 resident that lives here.
From LA Times:
‘However, those who are less sensitive to prices are still spending freely, said Michael Collins, general manager of Shorewood Realtors in Manhattan Beach. Gross sales at his brokerage were up to $432 million in the first quarter from $425 million a year earlier, Collins said.
“Generally speaking, it’s great here in our area and [it] continues to get better,” he said. “A lot of our buyers are immune from the economy.”
The average South Bay home sale handled by his brokerage is $1.25 million, Collins said. Buyers are typically in such businesses as investment banking, entertainment and law.’
Another eternal optimist…
The average South Bay home sale handled by his brokerage is $1.25 million, Collins said. Buyers are typically in such businesses as investment banking, entertainment and law.’
In other words, people who are really bad with money are the last GF’s. I’m sure a few Doctors are in there too.
Getting better? Oh… its obvious that South Bay $/sqft are down YOY by quite a bit. Not quite 10% yet… but down quite a bit.
Look at the large number of $2.5M+ homes under construction that haven’t sold yet. They won’t either. (Well… not at current prices.) Once those hit the market and sit… and sit… Let’s see how optimistic this guy is.
The “week without a phone call” from the 1990’s recession is still famous (amoung those Realtors ™ with a memory). Guess what, it will happen again. I think in late 2007. (Maybe October?)
Until then, live it up Mr. Collins. I won’t pity you when your income dries up. Are you ready for the two year dry spell that always happens at the end of every boom?
But patience… news like this is good. It is driving my company to transfer more and more people out of state. People who want to go. A slow steady quiet release.
Got popcorn?
Neil
The image you create of the transfers out of state erminded me of those who got on the Titanic lifeboats. For some reason we often use the Titanic analogy about this bubble. However, it is so apros pos (sp?). This thing is slowly sinking, but the masses see don’t see anything wrong. When they finally wake up it will be too late.
No offense to any doctors here, but doctors are notorious for making poor investments. Always last to the party and first to get screwed - in a bad way.
I have to agree with you, Chris, and I’m a doctor. I think that my colleagues spend so much time working and have good salaries so they let the financial management go. They are also fairly trusting and idealistic. I have a 65-year-old associate who recently asked me what is the difference between a stock and a bond! Luckily he loves his work and plans to work until he drops dead. I plan a much earlier exit - the eyes don’t work as well and the hands get a little unsteady with age.
Those living at the top will be the last to feel the foundation crumbling. What he’s saying is accurate, for now. Just remember that everyone here in the SoBay has experienced a 50% increase in prices since 2002. In Redondo, $450 becomes $900 to $1M. Manhattan and Hermosa flew even higher. What’s to support this when the surrounding areas fall? The top will fall faster, and further, percentage wise.
“‘To some extent, this is about investors who made bad bets,’ Husing said. ‘Frankly, I could care less about that group because, frankly, they have caused part of our problem (of a constrained supply and inflated prices).’”
Go John! This is exactly what I have to say — let the investors crash and burn until the day that prices match end-user willingness and ability to pay. We are talking about 50% haircuts off the peak in much of Coastal California.
Frankly I agree but I think he uses the word “frankly” too often.
Frankly, you have a point.
Frankly my dear, I don’t give a damn.
“‘To some extent, this is about investors who made bad bets,’ Husing said.
So investor=gambler? I thought that investors made investments, not bets.
Depends on how you invest.
“California reported 80,595 first-quarter foreclosure filings, about 18 percent of the national total and numerically more than any other state, according to RealtyTrac.”
California’s share of the national population is 35m/300m = 11.7 percent. That means that our foreclosure rate (18 percent of the total) is running more than 50 percent above the national average rate. I wonder if that might have anything to do with the often-stated fact that 40 percent of subprime loans went to hispanic buyers?
Doubt it. It has to do with affordability and the liberal use of “affordability products” and a belief in the RE always goes up slogan. The products that go by the name of suicide loans. CA will have 50% of the nation’s foreclosures before you know it.
I was thinking there may have been a few liar loans made to CA hispanics, but maybe I am off base here.
We also had a clusterf*ck of subprime mortgage companies out here (New Cent, Fremont, Ameriquest, Countrywide, etc.).
I think those were “no comprende” loans.
YEP…………..
There are also a whole bunch of non-illegals who also bought into the hype - just check out the I.E. - particularly Temecula and Murrietta.
look, l.a. is the land of image-strivers…it doesn’t take much to think that illegals, actors, doctors, coffee jockeys, etc ALL went for it.
not just illegals…!
—
LA the land of
the newlywed,
the half dead,
and
the crazy in the head.
I used to work for equifax and the majority of those loans would go to hispanics and everytime I would look at the mortgage reports I always wonder how did they verify it. Well this is how it goes- the person that is applying would not have strong enough credit- so the loan officer would request the applicant to get a letter of reference to verify their address and come up with a list (of so-called business they associate with) stating they have credit at a small store. We(Trade Verifyer) would call the trade(business) and verify, but most of the time the small business men/women would say I don’t know who this person is. So we would call the loan officer and tell them that the trade does not exist or the trade could not identify the applicant. Rings later we would get a phone call from the trade stating they know who the applicant is.
Now this is the kind of data reporting I like:
April 25 (Bloomberg) — Purchases of new homes in the U.S. rose for the first time in three months in March as unusually warm weather and sales incentives brought out more buyers. Purchases rose 2.6 percent to an annual pace of 858,000 last month from a 836,000 rate in February that was lower than previously reported, the Commerce Department said today in Washington.
Amazing. Over-estimate February’s sales (originally 848,000) so it looks higher than it is. Under cover of darkness drop it to 836,000. Compare that new number to an over-estimate for March of 858,000, for a 2.6% gain. Wash and repeat.
They touted a great rise in sales based on weather-related factors. It was 1% in reality, during this great weather. Maroons
The reporting was overall even-handed. On CNBC they called the new home sales figures disappointing.
I’m fascinated by the analysis of the stock market record - touting how globalization of American companies sends earnings higher despite the softening US economy. Has there ever in our history been such a disconnect between the markets and the economy? How long can this persist?
Markets can stay irrational longer than you can stay solvent.
“They touted a great rise in sales based on weather-related factors. It was 1% in reality, during this great weather.”
But a couple of days ago they blamed slow re-sales on poor weather. MAJOR A-HOLES!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
Here’s the monthly CS index for San Diego (resale, same house) from Jan ‘05 to Feb ‘07. Jan 2000 was = 100.
233.78
235.64
236.56
239.58
242.00
245.35
247.33
248.45
249.03
249.79
250.34
248.55
247.46
247.89
248.09
249.35
249.15
249.60
249.05
247.30
246.60
244.04
242.11
238.07
237.16
235.54
Feb ‘07 was down 6% from the peak of 250.34 (on Nov ‘05).
Two features of those numbers show up beautifully if you graph them:
1) San Diego prices had a double peak in Nov-05 (250.34) and Jun-06 (249.6).
2) Prices have been on a steady downtrend from Jun-06 to the present, and have retreated to below their level of two years ago (Feb-05 = 235.64, Feb-07 = 235.54).
Here is a site where you can get OFHEO price index changes back to the 1970s. They use a CSW-style repeat sales index (controls for quality by only comparing homes which sold twice). If you choose the greater-SD MSA and graph the data, it is pretty clear we are in price crash mode, and the data only goes through Q4-2006 (before subprime blew up). The last time the index turned negative before Q4-2006 was in the early nineties, and it stayed negative for over 1/2 the decade.
http://www.ofheo.gov/HPIMSA.asp
The only flaw in the OFHEO index is that they allow refi appraisals into the database. They had a paragraph in one of their quarterly reports that showed the amount of bias introduced by the refi data. It was on the order of 2% if I recall correctly. Even so it beats the realtor data, and it’s more applicable to regular folks since the jumbo and non conforming stuff is not included.
But excluding the jumbo loans makes it a lot less useful for expensive areas such as OC and most of So Cal. I agree that the refi appraisals, especially over the past few years, will skew the prices higher as appraisers were simply rubber stamping whatever values they were asked for. So, while that 2% might be historically accurate, I think the bias is much greater during the last few years because of bogus appraisals and many more people refinancing than in prior periods.
The sample is highly biased by excluding jumbo loans. Thus the small drop seen in SD for Q4.2006 is likely an understatement, as it potentially omits some big drops on some really big houses and even some small but drastically overpriced homes which nobody wants to own in a falling-price environment. (Case in point: Some condos in my zip code 92127 which sold for $650K in Summer 2005 now sell under $500K).
To make my point, I just checked ziprealty.com to see what share of SD SFRs are priced above $400,000 (near the conforming loan limit of $417,000). 72 percent of current SFRs on ziprealty.com for SD county are listed at $400K+.
“‘It’s not just low-end homes that are going into foreclosure; we’re seeing a rising percentage of foreclosures with an estimated market value of more than $750,000,’ said RealtyTrac CEO James J. Saccacio.”
—————————————
deflation on the way
Got Cash??
Inflation in the way. Got stocks?
http://www.marketwatch.com/tools/quotes/intchart.asp?symb=INDU&sid=1643&dist=TQP_chart_date&freq=1&time=9
Now, now, stop quibbling. You both know that both are coming.
I have a letter from US Senator Barbara Boxer (D-CA) regarding subprime loans:
http://centralcoasthousingbubble.blogspot.com/
Notice no mention of fraud and unscrupulous borrowers.
Yep, her letter is all about predatory lenders abusing the “victim” borrowers. While she claims to be monitoring the situation, it is clear from her tone that she favors bailing out the “victims.”
I got the same cheesey letter when I wrote her this week, urging no ‘bailout.’ It’s like asking a flea not to bite, I fear.
The country is bankrupt, I’m afraid. We are bankrupt in terms of our finances, our common sense, sense of responsibility and bankrupt when it comes to the vision and wisdom of our “leaders” such as Ms. Boxer. This is so depressing.
Testify, NYCityBoy! Wow, we must be chanelling the same cynic today.
I think it’s great, the people of CA will get exactly what they deserve for voting in Boxer and all the rest of her kind, unfortunately innocent bystanders like me will go down on the same ship.
“Christopher Thornberg put it bluntly. ‘The median price is a bunch of hogwash,’ he said. ‘You can have prices looking like they’re up when they’re down, because it is incredibly subject to where slowdowns are occurring. You could show the median price going up just because there is a shift in the type of product being sold.’”
I suspect that current upshifts in the median will be seen retrospectively as having been due to the cratering of the subprime slice of demand. With no more marginally qualified buyers, relatively fewer marginal homes will sell, as people of means don’t want to live in a dump.
yes, your comment is a very valid observation
Bleeding heart liberals all over CA. Where did it say that everyone with a pulse is ‘entitled’ to own some McShitbox out in the inland area of what was once farmland. It seems nobody worried about paying for it because it would keep magically going up, and the party would never end. Wasn’t this whole mess also fueled by baby boomers that were going to buy 2nd and 3rd, etc homes. Most of the older people I know want something smaller or to just stay put where they are. My parents, uncles, etc have all stayed put near where they lived forever. I myself never want to move again.
What would you tell my friend here, a 60 yr old woman. 2 yrs ago, had a completely paid for 2700 sq ft home ($280K value) in Albuquerque (her, husband, son-in-law, daughter, grand-daughter). They would have been my neighbors, one street over. They decide need to move to better school district. So they move and buy a $450K home. 6 mo later, it isn’t big enough, they buy a $600K 6 bd room. She already failed at 2 gas stations, and a smoke shop. She ‘needed’ a business so she became someone’s ultimate FB - she paid $200K for a no name doughtnut shop (just after Krispy Kreme pulled out of ABQ). She paid her ‘rent’ as sublease. The leaseholder never paid the owner. Now the owner wants ‘rent’ from her. Business is now worthless and she will be deep in the hole. She didn’t bother to ask anyone that has some knowledge to read the paperwork and give a second look. I am sure that she is now also big time upside down on the house and in danger of losing it. Any thoughts of what to tell my friend?
Thanks - happy to be out of Arnold’s Clownifornia.
Instead of doing all that, why didn’t she send the the student to Alb Academy or Sandia Prep (private schools)? Sounds like it would have been cheaper than what’s going to happen. Maybe they can rent in that good school district after the house is gone?
My RE contacts tell me inventory in Alb climbing, especially in areas that had a large number of investors from out of state.
She needs to contact a very good CPA and an attorney. She also needs to consult with them next time before she makes any business moves, because she has no business sense, nor does she pay attention to what is happening in her surroundings.
OT: Saw wonderful program “independent lens” on Ch 9 KQED in SF Bay Area it was about the rise and fall of Enron.
They managed to get SEC to approve “earnings” for potential sales. Which meant you had to have an idea and get it rolling and estimate future earnings & book them as current earnings. For example, in 2000/2001 Enron & Blockbuster had a Video on Demand service planned they booked those earnings. The big investment banks went along for the ride, anyone who pointed out this was POTENTIALLY a house of cards was fired by investment house because of “No more Enron buisness threats” from Enron.
Bush family closely tied to Enron, even to the point of allowing them to rape Caifornians.
Question: Whats changed?
I’ve got a good one. Here is a story from a friend who lives in Las Vegas. We were chatting in email on Monday this week.
She says:
“This one guy I know had a 5 bedroom, gated, dual staircase mansion paid $600K. Said he was downsizing to a condo but made $300K on the house. Ha, Vegas has all that stuff on the internet and this guy had foreclosed. House is back at the bank. I feel like busting some of these people and say quit lying but I can imagine how they feel.”
I told her that the guy who’s in foreclosure probably doesn’t know or care if the information was publicly available. Probably too embarrassed to think about it. She came back with this:
“You are right, my friend in the McMansion didn’t know or care about the outcome. Just living the high life, even bought a Hummer to showcase. I knew something was up when he had us come get this couch he no longer wanted (he says he was getting all new furniture) and then bragging that he sold it for $900K, making $300K, all this in 2 year’s time. He then asked my brother if he could come help him the next day ’cause he HAD to be out of the house come Monday…the new people were moving in………..I kept thinking this doesn’t sound right but the killer was when he sold me the little patio bench for $30. I had no money but I got home at 1pm and he was at my door at 2pm for the $30. Anybody driving a Hummer, just sold a house for $900K and you need my $30 today!? Hell to the Naw something ain’t right!
After that I said I am going to look your butt up online about this and there it was FORECLOSED, my mouth dropped. You doggone right YOU HAD TO BE OUT BY MONDAY!!!!!!!”
OMG!!! I’m sure the stories get better (or worse…however you want to look at it.) It is a sad state of affairs.
BayQT~
Your friend should show up at the mansion on Monday to watch the eviction. The look on the guy’s face and his explanation would be priceless.
Is that a story, or what? And the guy thinks he can hide. She should ask him if he’s going to throw a party when he moves into his condo. Dang, wait a minute. Dude is probably not even moving into a condo….probably the best he could do is find a place to rent or move back in with Mom and Dad.
Wow. What a mess. I wonder if he got the Hummer with a “money back at closing” deal when he bought the McMansion?
Crazy. The things people do to themselves.
BayQT~
“The things people do to themselves.”
That’s insecurity for ya. What the hell do I care what others think of my material “worth”?
They know I’m an engineer, they know I don’t kick animals.
As long as they don’t think I’m a serial killer, it’s all good.
Sheesh, how shallow can a person be?
Crap, well, I’m an engineer and not a serial killer.
Two out of three ain’t bad.
I should find out what that guy does for a living. I’ll get back to you on that.
BayQT~
That’s gonna hurt. Loans in NV are with recourse. None of that mailing the keys back and walking away stuff like in CA. He is either going to have a $400,000 deficiency judgment (OR) possibly have to claim $400,000 in income due to forgiveness of debt. If he has a job, he is going to get a rude awakening from either the IRS or the bank (by way of wage garnishment).
If he has a job, he is going to get a rude awakening from either the IRS or the bank (by way of wage garnishment).
Bwaaa haaa haaa!
Oops… that was out loud, wasn’t it.
Got popcorn?
Neil
Just like with Hummers, all I could think of when I read this was “big house, small dick”. With all the posturing from the sounds of it, we’re talking Vienna sausage territory.
Sounds like a candidate for emigration. If anyone will take him that is.
“Hell to the Naw”
LOL, I can’t wait to use that one.
Great story, too!
LOL! Yeah, that’s a good one.
BayQT~
http://people.bakersfield.com/home/Blog/schuster80/8470
i shot some photos around carlsbad yesterday and found so much more construction. check out the second page for business construction photos.
the garage photo is a drive thru garage, and i put a photo of a pretty golf course home for sale.
comments and web suggestions welcome
http://buildingfrenzy.smugmug.com/gallery/2725172#146890111
Wow, what insight from the California Assn. of Realtors. thier prediction is tanamount to a weather forcaster looking out the window at a rain storm and predicting 50% chance of rain!!
Thornberg gets an A PLUS in my grade scale. He is truly a Breath of Fresh Air in this jungle of NAR BS.
Jeff’s latest post on the SDCIA site (websitetoolbox) titled Sick Over Possible Foreclosure:
Well…as many of you know I own three terrible houses in Cape Coral Florida. Through a series of misjudgments and being taken advantage of (and lied to), I am losing ~$1000 on month on each of these houses when they are rented. I am just sick about them and often cannot sleep–like now.
Anyway, what should I do?
I have been hitting my personal residence HELOC for the negatives, but can only take that so far. I would just like to “walk away” from these homes but of course I am too embarrassed to do that (so far) and I suspect it is not an option anyway…
What are my options? These houses appraised at ~315k (closed in last year) but might only sell for 230k right now. I owe 264k.
I have done some preliminary research and it seems like one option goes like this:
1. Put the house on the market
2. After a certain amount of time on the market (60 days? 90 days?) the bank will entertain short sale offers
3. After a much longer time, the bank will consider deed in lieu.
I go round and round with what to do on these properties…at first I say hold until the market returns and keep borrowing on my HELOC, then I say no way that is too expensive, sell. But when I think about selling I think about the ~45k loss for each house! I will have to make payments on that ~135k loss for 30 years! So I think about “walking away,” but then I think about the credit score hit I will take and how many years that will follow me–so I go back to the hold until the market turns solution. Around and around…I am dizzy thinking of it.
A short sale option seems a good compromise. The problem is I don’t know how to do it. If I understand correctly, I am the one that needs to come up with a
buyer and offer. How do I do that? In the meantime do I keep my loan current? Do I shop for a Realtor in the area that specializes in short sales? Do I contact investors in the area?
Can anyone tell me if the short sale is my best solution? Can anyone walk me through the short sale process?
Please help me! What should I do!?
Additional questions:
1. Should I keep the loans current no matter what to avoid hurting my credit more than I have to?
2. How will a short sale impact my credit?
3. Should I not pay my loans to give me more “leverage” with the lender?
4. Maybe I should “tough it out” and keep these houses until the market returns (I always keep coming back to this one…)?
5. Will someone even consider a short sale if they could buy another house without the hassle? Does that mean a short sale will be considerably less than market?
Brad, hate it for you buddy.
I’d sctrach #4 of your list. There’re plenty more foreclosures in the pipeline the next 2.5 years. No chance prices will come back. They probably drop another 20+% before it’s all over. After that real estate will be seen as a “risky investment” for some time to come, so no quick rebound.
Don’t know what your personal situation is but I’d rather be in credit purgatory for 7 years than dealing with $135 debt in short sales. Did you talk to the lender to see what they have to say? Last thing you want is them handing you a 1099 and the IRS punishing you for “foregiveness of debt” as taxable income.
Hi Mike,
It’s Jeff’s post from the SDCIA board that I pasted in it’s entirety. You can read the whole thread here. Jeff is a bigshot on that board, on his way to becoming a smallshot it seems:
http://www.websitetoolbox.com/tool/post/sdcia/vpost?id=1854186&trail=30
If I recall Jeff was pretty cocky in his posts about 6+ months ago. Looks like the tables have turned. Schadenfreude in full effect.
The thing is, if you read down the thread he could, if he wanted to, try and sell his SLC houses for approx $200,000 total gain (his assumption) and offset the losses from selling his Cape Coral money pits.
The gambler just can’t walk away…SOS
Unless Brad and Jeff are the same guy ( and I don’t think he is, according to the first line of his post), here is Jeff, as well as comments from others:
http://www.websitetoolbox.com/tool/post/sdcia/vpost?id=1854186
Although there were a lot of points of view and recommendations, the best suggestions to him were the ones who referred him to a lawyer. He needs one…yesterday.
BayQT~
OMFG, this is the guy who was so sure of his “strategy” just a few months ago!
It’s like Casey, Part Deux. What a maroon! Sucks to be him. No sympathy here.
Oy, I just read the thread.
1. Several months ago, everything was great. Now, of course, he was “lied to.”
2. Also, he speculates in multiple states and yet he doesn’t know the rules regarding foreclosure in the areas where he speculates.
3. Lastly, he has 2 properties in SLC. In spite of the suggestions to sell at least one of them, he doesn’t want to let go of one of his “winners.” I bet he never thought he’d have trouble with his “winners” in FL when the market was strong there either.
This guy has no strategy.
Another wanna-be Trump has his wheels fall off. I wonder if this guy is married and has children. Did he stop to think about his role as a husband and father was to provide for his family? I hope I am wrong, but I suspect this will happen a great number of times over the next decade. This is going to suck in so many ways.
Yup, married with 4 kids, and quit his job to be a real estate mogul…
Jeff’s tag line is “The first million is the hardest…”
Does that also mean it’s the hardest to pay back?
The average South Bay home sale handled by his brokerage is $1.25 million, Collins said. Buyers are typically in such businesses as investment banking, entertainment and law.’
OH YEAAAAAA! Some of the worst investors and RE buyers are Doctors,Attorneys, and other so called professionals. Just wait! Their 10 ton Gorilla will soon visit their neighborhood.
Got POP CORN!!!
my dream is Del Amo Blvd., walking distance to Del Taco…i’ll pay up to $1.25 million and i am ok if it is 1,200 sq ft. too!!!
and a short walk to trader joes, office depot and K mart. Heaven on earth!
Good Lord,
There aint that many so called Millionairs in South Bay. It must be the delusional realtor talking that way. Everyone walking into their office is a Google Employee ready to spend like a drunken sailor.
Please know that I am monitoring this situation closely and will keep your views in mind should pertinent legislation come before the Senate.
Again thank you for writing to me.
Barbara Boxer
United States Senator
Where in the hell was this so called Senitor two years or more ago?
This issue did not all of a sudden just pop up. Anyone with any business acumen whould have cought this problem a long time ago.
It just proves you don’t have to be smart to get elected, just have the sheep follow you.
Finally.
Daddy, when are we gonna get there?
Can we stop and get a tasty freeze?
I have to pee!!
Tell Tommy to stop punching me!
When are we gonna get there?
Very cute, and what are your hobbies Brad, watching paint dry?
actually I like to put a pot of water on the stove and wait for it to boil. seems to take forever….
On Kudlow today:
A dumb a$$ tried to tell housing correction is over get over it , to one of the other participants. And unexpectedly a second guest jumped all ver the dumb A$$. Explaining how the Japanese land prices had spiralled out of control in the 80’s. And we have had spiralling land prices here, HBs are frantically building on the land they own and sell as fast as they can.
LAND PRICES STILL TOO HIGH.
In Milpitas CA, a lot of 3 story townhomes being built by Toll Bros & KBH.
Sunnyvale housing market is still humming along. No sign of prices coming down. Townhomes I looked at 6 months ago are now up $150K and the rents are also going up. I am desperately looking for a new place as the rent on my current place is going up $300. Not much luck so far.
The bay area has been perminently insane for a while. I gave up and left about 10 years ago. Feel free to do the same. I miss my friends and the “nerd” culture a lot, but I think it was for the best.
Now, I have to get out of San Diego….
TH were $150K in 1997 and now its nearly $660K
Any fundemental reasoning behind this? Its not salaries
I been a tech worker since 1989. Its not Google effect.
Its all just another bubble.
When the tech bubble imploded, it wiped out 80% of investment wealth now it will wip out 50% of house wealth. Hope prices will fall at least by 50%. Sunnyvale is not Manhatten or Beverly Hills.
“‘Buyers have become very well educated about the market and with more inventory available, they have more choices.’”
Now buyers - get the next lesson: Never catch a falling knife!
This was in the L.A. Times today, the Blog section called LA Land:
——————————————
“Free and clear of the UCLA Anderson Forecast (which sees “no recession imminent”), economist Christopher Thornberg is now predicting the hardest of hard landings for California real estate: a housing-induced recession.
He laughs at the notion that the subprime mortgage meltdown is to blame for continued weakness in the housing market. “That’s ridiculous — subprime credit CREATED this bubble,” Thorberg told LA Land this afternoon. “How could prices get so high in relation to income? Prices can only get this high when people have available to them ‘crazy credit.’ It allows them to gamble. It’s crazy credit!”
The foreclosure crisis now surfacing in the Inland Empire and the Antelope Valley will make its way to the San Fernando Valley and South Central LA, he says. “Absolutely. There’s no doubt about it. It isn’t going to hit Beverly Hills, it isn’t going to hit Bel Air, it probably isn’t even going to hit the Westside. But any place where you have a lot of first-time buyers, this is going to come home to roost.”
Overall, he sees two more economic shocks coming on top of the subprime mortgage crisis. “There’s two other shoes to drop,” predicted Thornberg, now with the consulting firm Beacon Economics. “First, this mortgage problem has not played out.” He noted that investors continue to price mortgages as if the housing market will stablize, not deteriorate. “There is still an astonishing amount of either sheer stupidity or head-in-the-sand mentality when it comes to these mortgages. There’s a shockingly low amount of risk being placed on these assets.”
Shoe number two (number three, actually — the subprime meltdown was the first): Consumers. “The money they’ve been spending is money they’ve yanked out of their homes. This is one of those weird little vicious cycles. Prices are going down, and the consumer is eventually going to say, ‘Holy crap, I’ve got to pull back on spending.’”
“You have an entire U.S. economy right now that’s completely driven by consumer spending,” he told me. “And consumer spending is driven by the housing market.”
Link:
http://latimesblogs.latimes.com/laland/
It’s crazy credit!
I like it, it’s catchy. IT’S CRAZY CREDIT! Wooohahahahhooooohahahahooooo
Largest loan in your life, value of which likely compares with all the money you’ll ever make. IT’S CWAZY CWEDIT! WoooooooooooooooooooWowowowowowo Waaaaaaaaa Buddaddaddaddaddaaaaa! Bleeeeeeebbeee!
Duhhh!!!!!!
anyone hear Ben Stein’s commentary on NPR today, he was relating a story of how this week Alan Greenspan spoke to school children the evils of credit. Ben thought that was ironic after the “easy credit” Greenspan was partly responsible for.
“Ironic” or two-faced, lying, egomanical.
greensperm is a toad
I distinctly remember Alan Greenspan telling consumers that rather than getting a fixed 30 yr mortgage w/ rates at historical lows, they could be saving lots of money by getting an ARM.
Does he remember that?
Didn’t hear it, but I DO remember Ben Stein a couple of months (or less) ago talking about subprime being contained and that there was no way housing could possibly go down, nor the rest of the economy, as subprime was in his words, “less that 20% of the total market”.
I used to think that he was smart.
I wish you could find a link to that. I saw Ben speak at a conference in February and he had nothing good to say about housing or the economy in general, although he was pretty political and didn’t say much bad either. Had to sit on my hands not to ask him about the home sale jumps after the Super Bowl.
testing 123