Waiting For The Market To Settle Out In California
The Sacramento Bee reports from California. “Here’s the forecast from two more experts on the housing market: The slump is likely to continue through the rest of this year and most of 2008. April sales numbers show little reason to doubt them. ‘I think we’re going to be dealing with this all the way through 2008,’ Countrywide Home Loans Executive VP Jack Haynes told Sacramento home-building industry representatives.”
“Sacramento County’s median price of $341,500 compared with $367,250 a year ago; Placer County’s median of $450,000 was down from $477,000 last year.”
“Timothy Sullivan of Sullivan Group Real Estate Advisors blamed the market slowdown on tighter lending rules as well as the lack of urgency among other buyers. ‘Right now there is fear about housing,’ he said. ‘There is fear you can’t win at housing.’”
The Sacramento Business Journal. “Brokers don’t know how long it will be before the tide of foreclosures recedes. Across the Sacramento area, the inventory of homes set for foreclosure sale stands at 2,175, with another 5,274 homes owned by banks or mortgage companies.”
“Another 7,000 homeowners are at least 60 days late with their mortgage payments.”
“‘It’s going to be a rough year and a half,’ said Michael Lyon, CEO of Lyon Real Estate. He predicted the effects might reach into 2009.”
“‘If you look at the listings, half of them are short sales,’ agent Karen Berkovitz said as she scrolled through a screen showing listings in the Elk Grove area. ‘That’s scary.’”
“‘You have to ask, what do these places have in common? These are areas that grew too fast. This is where the homes were selling in 2005 and 2006, just before the market changed. The buyers bought on impulse,’ said broker Carlos Kozlowski.”
“The upside, Kozlowski said, is that falling prices means there are people who can now afford to buy a home who couldn’t before.”
The Union. “Median house prices in Nevada County continued to slip in April compared to prices a year earlier. Real estate agents cited the local effects of a national tightening of credit requirements as part of the cause.”
“The county saw 141 house and condominium sales recorded at the county recorder’s office for the month, with a median price of $458,000, according to DataQuick. The median price a year ago was $500,000.”
“‘The prices are coming back to reality,’ Realtor John Gibson said. ‘I have a whole list of people who are waiting for (the) market to settle out. They’re hesitant right now because they don’t know if prices will drop.’”
The Valley Voice. “Real estate sources say the existing home resale market is slow this spring, just when it ought to be buzzing. ‘We saw a spurt of new loans in April but they have dropped off in May,’ says Greg Sherman with AG Mortgage of Visalia.”
“‘The high level of existing home inventory was last September when there were 2300 homes on the market. Things are really soft out there,’ says realtor Brad Maaske of Investors Realty in Visalia. He says that the Fresno market is worse off with 6400 homes available for sale.”
“Visalia realtor Ed Evans says he is aware of perhaps 75 homes in the Visalia marketplace that are going through foreclosure and will be sold—in turn likely driving down the market price here more.”
“One factor that has affected prices here is that ‘we don’t see the number of potential buyers coming from L.A. or the Bay Area looking to buy here because they too can’t sell their homes,’ says Maaske.”
The Daily News. “Housing affordability for first-time buyers improved slightly in Los Angeles County and across the state in the 2007 first quarter, although prices remained high despite tumbling sales, a trade association said Thursday.”
“Jonathan Weiss, senior investment associate at Marcus & Millichap Real Estate Investment Services, said renting is now less expensive than owning. ‘The average monthly payment differential between owning and renting is about $3,000,’ he said of the state average.”
“Andrew LaPage, an analyst at La Jolla-based DataQuick Information Systems, said that affordability is increasing in areas that have seen an erosion in the median price. This is expected to spread to other areas as the market slump continues.”
“‘I’m certainly open to the possibility you may see increased affordability in lower cost neighborhoods in the next six to 12 months,’ he said.”
The Union Tribune. “A record 525 San Diego County dwellings were reclaimed by lenders or sold at auction in April, surpassing the previous record of 433 properties in March.”
“There were 1,346 notices of default issued, the first step in the foreclosure process, DataQuick reported yesterday. That was more than double the 554 notices in April 2006.”
“Delores Conway, director of the USC Casden Real Estate Economics Forecast, said a rise in the use of adjustable loans during the housing boom has played a significant role in foreclosures today.”
“‘This is the wild card we were all wondering about,’ she said. ‘As adjustable mortgages are reset, the question is, ‘How many people can afford the payments?’”
“California ‘documented the largest foreclosure total of any state for the fourth month in a row,’ RealtyTrac said. ‘The state’s foreclosure activity…was up more than 200 percent from April 2006.’”
The Gilroy Dispatch. “A housing slump that’s erased millions in equity will mean lower property taxes for more than 10,000 Santa Clara County homeowners this year.”
“While that might strike cash-strapped Silicon Valley residents as good news, it also means school districts, cities and other agencies will lose millions of dollars in revenues.”
“‘It means less money for everyone,’ said David Ginsborg, deputy to the Santa Clara County Assessor. ‘And it’s not necessarily good news for homeowners. Nobody wants to be losing equity.’”
“‘It indicates a softening of the real estate market,’ said Santa Clara County Assessor Larry Stone. ‘Properties purchased in the last two or three years have declined in value.’”
“The economic downturn reflects a cooling period in 1995 when close to a third of the county’s residential properties were adjusted for lower taxes.”
“‘A timeline is difficult to do, but it’s definitely a cycle,’ said Peter Gallo, president of Gilroy-based Gallo & Gallo Real Estate Appraisals, Inc. ‘We’ve seen this before…it’s definitely a buyers’ market.’”
http://www.latimes.com/business/la-fi-caljobs19may19,0,7320529.story?coll=la-home-center
“California’s jobless rate jumped to 5.1% in April after holding steady at 4.8% for several months, California’s jobless rate jumped to 5.1% in April after holding steady at 4.8% for several months, a deterioration due in part to the ongoing slump in home construction, state figures released today show.”
“Five of 11 job categories reported shrinking payrolls in April, shedding a total of 11,400 jobs. The information category posted the biggest loss at 6,800 jobs, followed by construction, which shed 3,000. Financial activities employers cut 700 jobs. The category includes sub-prime mortgage lenders, several of which initiated layoffs in recent months.”
“A separate survey of households showed a 50,000 decline in the number of Californians holding jobs in April.”
“Financial activities employers cut 700 jobs.”
69+ subprime lenders are kaput so far this year, many of them formerly headquartered in SoCal. How can only 700 jobs have been lost in the financial sector?
Yes… seems a pair of zeroes are missing!
That would be 10 jobs each. I am thinking we are looking at the low tens of thousands, but how about related industries? Home Appraisers, Escrow & Title etc. First AM had a big round of layoffs a while back.
Probably some version of the b.s. birth/death model that always lowballs the Federal unemployment statistics.
Here’s the actual report. Note that the data is “seasonally adjusted”. Strange that both financing and construction are up from April 2006.
http://www.edd.ca.gov/urate200705.pdf
PS: What is “information”? CA has 470,000 people working in “information”. Is that Hollywood + TV + newspapers, or is it jobs in the “Ministry of Information Retrieval”?
In April…. 700 in that one month. Many more in March and May.
A lot of real estate folks are 1099s–independent contractors.
Are they counted in the unemployment statistics?
Nope
“followed by construction, which shed 3,000.”
I wonder how this will play out on the immigration debate…especially if we hit a recession.
It won’t be pretty!
AG,
Awesome pictures on the Website. Gets me to dreaming about a CA summer vacation.
Lip
Thanks!
The market in Socal is so insane inconsistent that it must be obviously correcting big time. On the same street and neighborhood along the coast, one can see price difference of 200-500 k for very similar houses and years built. The bottom line is that they are sitting around for months.
Sales prices are down that is for sure.
The assessor’s are LOWERING property taxes all over CA. Here is proof:
http://assessor.countyofventura.org/Decline%20in%20Value.htm?
Just in the past minute Greenlight Financial did a commercial on the History Channel for a “paperless” refinancing no-doc offer good for one week, no income tax verification, no nothing. 5.99% fixed 30 years.
When will this no-doc crap disappear for good?
Got 10% down?
When they can no longer pack it up and sell it off. Give it another couple months.
For the median-priced home in California, PITI on that loan winds up being $3500. Not a whole lot of people making $200k to afford that monthly bombshell on the bank account.
Yep… We make about that with no debt other than mortgage, and our $2k payment still pisses me off. Too many better places to put our money AFAIC, like retirement savings.
ca median household income as 48,9? in 2004. Pretty close to that.
Yeah… I’m seeing those again on CNBC also. They were done for about a week, but are now back with a vengence.
I think they must be now requiring pretty hefty down payment.
Hmmm. I played a bit with their rate calculator, and for refinances (no-doc) 90% LTV, 30-year fixed and no cash back, and was getting APR about 7.8%. To get down to the 5.9% you have to buy down the interest. They may be requiring mortgage insurance, too. Bet that offer won’t last long…
Timothy Sullivan of Sullivan Group Real Estate Advisors blamed the market slowdown on tighter lending rules as well as blah blah.
Could the market slowdown be because wages can not support the high prices?
Aw, SoBay, that’s MUCH too obvious. Remember, we’re dealing with real estate agents.
Maybe it’s because Realtor’s commission incomes can no longer support the speculation that *they* were engaged in. We all know that these guys were speculating with their own money and front-running hot new developments during the frenzy.
I would to here just one of these RE talking heads to admit that affrodability is the main reason for the downward trend in sales.
Exactly
‘There is fear you can’t win at housing.’
This statement sounds exactly like what it is. Nothing more than gambling - the shelter value is missing here.
That one caught my eye as well - we all know that a whole lot of people were playing around with real estate because they thought it was a no-lose free-money game. But now we have a “Real Estate Advisor” actually admitting (albeit indirectly) in a press interview that the whole runup was a game that you could win or lose at, and not at all about buying a house.
The articles and quotes that Ben posted in this thread comprise one of the best collections I can remember seeing. Suddenly it reads as though the Realtors have been been reading this blog and taking the lessons to heart. Quite a change from even a month ago. Of course, there are still plenty of attempts at spin, but the tone has really changed. Maybe the MSM and the Realtors are starting to move through the denial stage. Finally.
‘There is fear you can’t win at housing.’
There is more fear that you can lose BIG TIME!!!!
Huge downside, no upside. Not a gamble many will take… at least not if they have to bring real money or equity to the closing.
Gambling with someone else’s money was one thing. Gambling with your own is a whole other thing.
But don’t you think the Fed will do their best to respark housing price inflation at just the right moment to save the day? Or at least keep giving the impression that they will, even if it is not feasible to do so?
No. How’s that for an answer?
I don’t see how they can.
“But don’t you think the Fed will do their best to respark housing price inflation at just the right moment to save the day?”
Benny B. just gave a speech in Chi Town saying housing gonna be in the dumper next year…. guess he oughta know…
Yeah, I don’t see how they can either. I think it may be impossible for them to keep interest rates at such low levels forever.
The Fed has certainly kept its powder dry so far.
If they do an injection, it will not go into housing this time, somewhere else. It really has already happened.
there is more fear to come
“Here’s the forecast from two more experts on the housing market: The slump is likely to continue through the rest of this year and most of 2008. April sales numbers show little reason to doubt them. ‘I think we’re going to be dealing with this all the way through 2008,’ Countrywide Home Loans Executive VP Jack Haynes told Sacramento home-building industry representatives.”
“Timothy Sullivan of Sullivan Group Real Estate Advisors blamed the market slowdown on tighter lending rules as well as the lack of urgency among other buyers. ‘Right now there is fear about housing,’ he said. ‘There is fear you can’t win at housing.’”
I would say it’s less a fear than it is a fact. It’s interesting how they forecast that this will “continue through the rest of this year and most of 2008″. As if, after that, the old bubble market will return again. The subprime meltdown and all the foreclosures we are seeing is because of the fact that you can’t win at housing with prices at this level, at least for the average person/family. Buying at these levels is financial suicide for most of us. So I would say that, unless the prices miraculously drop to affordable levels, this slump will probably continue well past 2008.
“Curbs on subprime lending “are expected to be a source of some restraint on home purchases and residential investment in coming quarters,” Bernanke said. “We are likely to see further increases in delinquencies and foreclosures this year and next as many adjustable-rate loans face interest-rate resets.”
The Fed chairman maintained his forecast that the slump in housing won’t have a broader impact on the economy.”
Sounds like he’s telling people that there is pain now, and will there be “pain” next year and that’s “OK” as far as Fed is concerned.
“‘I’m certainly open to the possibility you may see increased affordability in lower cost neighborhoods in the next six to 12 months,’ he said.”
That’s hysterical. Euphamisms are being invented daily to soften the fear gripping the RE market. Summer will be interesting to watch…
Would increased affordability equal reduced prices and lowered property values? Don’t somehow think we will see lower interest rates anytime soon.
Long-term interest rates jumped by 0.2% today just on the news from China.
It’s even funnier when you see how he is implying the “increased affordability” will be resticted to “lower priced markets” A classic case of intentional suggestion. “Oh, since my home is a high end place I don’t need to worry about its value dropping. That’s only going to affect someone else, ya know, that contained subprime plague.”
Never mind that affordability is abysmal and at record lows EVERYWHERE in the price spectrum. BS Denial and price stability support campaign still intact. Just giving ground daily…
“‘I’m certainly open….”
Good, cause I think I see Auger-inn a commin….
It’s a tautology: yes, by definition, as neighborhoods become lower-cost, they will also become more affordable.
“Delores Conway, director of the USC Casden Real Estate Economics Forecast, said a rise in the use of adjustable loans during the housing boom has played a significant role in foreclosures today.”
“‘This is the wild card we were all wondering about,’ she said. ‘As adjustable mortgages are reset, the question is, ‘How many people can afford the payments?’”
Many who post here scooped the Casden Forecast on the reset / foreclosure story by a matter of years. Now it seems they want to claim credit for successfully forecasting the foreclosure boom through the rear view mirror.
DataQuick also seems to be rapidly backpeddling away from their formerly sanguine view of the San Diego real estate picture:
“Appreciation has disappeared across a huge part of San Diego County, and now we have declines,” he (DataQuick’s Andrew LePage) said. “It has left anyone who is struggling to make their (mortgage) payment in a difficult position if they have little or no equity.”
Wow, Delores. I wish I was as smart as you and had worked that out. That’s must be why you get the big bucks. Jeeez.
Slight rewording needed for Ms. Conway here:
“‘This is the wild card we were all
wondering aboutscared to death of,’ she said. ‘As adjustable mortgages are reset, the question is, ‘Howmany peoplecan these FBs possibly afford the payments?’”Sux being priced out of you loan…
I’ve been reading and commenting on these blogs for two years now and am happy to say that the CA meltdown is finally here. Spring has not sprung and auctions will be common across So Cal by July. In Agoura Hills, one condo that zillows at $354K is on the market as a foreclosure at $249K and this is only the first inning.
i want that one.
Wow!
I am looking to buy in Agoura Hills eventually, so that is music to my ears!
OT: We need a wall of shame with quotes from all the jerks that helped keep this BS bubble going. This way the comments made today by these same “experts” can be evaluated based on the comments they made in the past.
Maybe someone already has this in the works? A possible suggestion would be to have a link on the “expert’s” name and then when holding your mouse over the link it pops up a form with a list of previous comments and dates/citations. These would be links to the articles on the blog.
This would make sifting through the BS a lot simpler.
I think that will be a feature in Ben’s upcoming book on the housing bubble.
Ben’s archives are stuffed with those gems.
Oh god, try the David LereahWatch blog. What a hall of shame that is.
The Sacramento Centex 15-MONTH Sale continues…
$175,000 Off? Centex, Say It Isn’t So!
that must be filling a few investor trousers bottoms… a nice 175k negative profit… Centex says “nice doing business with ya”
And 175k off isn’t nearly enough in the Sacramento market.
Are those off $ 800K houses?
“California ‘documented the largest foreclosure total of any state for the fourth month in a row,’ RealtyTrac said. ‘The state’s foreclosure activity…was up more than 200 percent from April 2006.’”
But what about this?
“During the first four months of the year, DataQuick reported 1,707 foreclosures in the county (San Diego), compared with 238 during the same period last year, an increase of more than fivefold.”
So San Diego’s foreclosures were up by 617 percent for the first four months of 2007 versus the comparable period in 2006. I guess it truly is different here in San Diego.
93552 Palmdale was up 600% YOY in April
Apparently some parts of the country are still above water. I wonder for how long:
http://finance.yahoo.com/real-estate/article/103038/best-and-worst-u.s.-housing-markets&.pf=career-work
They are comparing 1st qtr 2006 to 1st qtr 2007. 16 month old data to 4 month old data.
Anything pre March is irrelivant. Since the tightening of credit and the end of $0 down, we’re now in a whole new world.
‘And it’s not necessarily good news for homeowners. Nobody wants to be losing equity.’”
Hold on there Sparky, thanks to ever increasing tax assessments on my “Equity” along with stagnate wages I could get forced out of my home eventually. I welcome a decline in values/equity, it actually keeps money in my pocket.
I’ll take that lost equity if it means my next house is more affordable.
I’d like to move into a house that is about 40% larger than my current house so every dollar in “lost” equity = 1.4 dollars I don’t have to spend if I upgrade. That’s pretty good ROI.
I’m reminded of a story my dad told me a decade and a half or so ago. SoCal had a long drought. So to make people conserve, water taxes were jacked up.
When the drought ended, the water rates did not go back down. Seems the govt had already taken the higher rate into consideration and expecitng an end to the drought, worked the increase tax revenues into the budget.
If the govt has plans for that property tax, expect them to try to get the money from somewhere.
Sure, and for potential move up buyers like myself, the bigger home fall farther.
For instance, my 2 br house in Ashland, OR now zillows for ~$291k. I have “lost” about $45k (14%) from its peak ($336k) in 2006.
However, the 3 br homes I have been looking at are also losing ~14% off a 2006 value of about $425k. That is about $57k or a relative gain for me of $12k. If the declines rise to 25% of peak prices, the relative numbers are
I lose $336 * .25= $84k
They lose $425 * .25 = $106
So, I gain ~$22k.
Up to a point, the more I lose, the more I gain. If things go over 50% declines, I am a bit hosed, but first time home buyers will be king. That would be nice for this overpriced, blue-haired town.
Just as inflation favors the rich, deflation favors the poor. It’s payback time.
uncle fester…2 bdrm ashland zillows at 291…..thats sounds pretty bubblicious to me…..it really is different in Ashland.
Absolutely. This market is ridiculous.
Deflation favors the CASH-rich. ( Us? )
I was struck in the above-quoted articles that Sacramento has so many more foreclosures than San Diego, despite the fact that San Diego sales and prices peaked earlier than Sacramento’s. It seems that things are bottoming out much faster in Sacramento, while San Diego’s problems are more drawn out. Very painful for people like Get Stucco to bear. Then there is Los Angeles, which is barely getting started.
No big surprise. SoCal has money, Sacramento does not.
“I was struck in the above-quoted articles that Sacramento has so many more foreclosures than San Diego”
I think that’s because those buyers in Sac were mostly bay area flippers while a lot in SD in the earlier stages actually occupied the units.
One thing to remember about Los Angeles - it is pretty much already built out, and has been for some time. Not the whole county, but the metro area. So there was very little new construction to speculate on other than condo conversions and teardown/rebuilds. Now contrast this with areas that saw huge new tracts developed, that attracted swarms of speculators, somce of whom probably used HELOC money from their principal residences to fund the speculation.
Obviously the speculators will let their stucco shack in Sacto go before they will lose their principal residence.
But I have no explanation for San Diego, except to note that a bunch of new construction happened inland along the 15 and the 8.
There was alot of upscale building in LA though.
Wonder if the builders of Playa Vista will end up twisting in the wind. Tons on “lofts” in the Marina district too. And the Azzura towers. How many “real” millionaires are really in LA? It’s gonna take plenty to buy all of this stuff, as credit continues to contract.
I was at the Playa Vista contruction site today. The Eastern unfinished portion has a long way to go. They are just now at the grading and environmental Testing/remediation phase. Plus the Old Howard Huges Hangers is getting a lot of attention from Hollywood Entertainment/Media Corps. It is still a big mess, with 50+ different contactors/Subs on site with their constuction Trailers and Trucks.
This will be a long drawn out contruction as remmnants of the Ballonia Wetlands are somehow preserved as much a possible. The site has to be thoroughly tested and cleaned up due to probable past contamination of the soft mucky wetland soil.
There is BTW more new contruction of residential units than anyone realizes. Even the dense over-built Westside has seen Developers cram new Multi-units as the Marina Azzura, Western portion of Playa Vista,the apts along redwood S of Washington just put up last year, lots of scattered new units all over Mar Vista/Palms area/ect. Any area which is part of the city of LA proper(E.G. Marina Del rey,Venice, Mar Vista, Palms, entire SFV,) is fair game for the developers, who have the LA hack politicians in their hip pockets.
Hi Imploder, you asked:
“How many “real” millionaires are really in LA? It’s gonna take plenty to buy all of this stuff, as credit continues to contract.”
Not many of us, if you measure net worth as assets minus liabilities. And we ain’t buying this shit at these prices.
What amuses me to no end is these wankers who manage to finance a property purchase at a price tag over one large, and then they call themselves millionaires when they’re actually in the hole by that much or more.
Very insightful…
Stucco Canyons, I call ‘em.
how do you know when to get off the inland 15, every other off ramp has the same street name, and you cant count on telling someone directions that its the 4th Chuck-E-Cheese on the West side of the Freeway……..boilerplate, stucco canyon hell-hole indeed.
In the local newspaper today (San Jose Mercury) there’s a advertising supplement titled “Central Valley Living”, and there’s a piece for KB Homes that starts out, “A growing number of Bay Area residents are beginning to recognize that new home prices might be as low as they are going to get.”
I wonder who’d be fool enough to buy right now?
Don’t worry, there are still a lot of GFs left. That “OK, you got lucky this time, but now we are at the bottom, so you’d better buy *NOW* or get priced out forever” stuff always seems to hook some fish. Fear is an effective marketing tactic.
Haynes knows his reins…
“Here’s the forecast from two more experts on the housing market: The slump is likely to continue through the rest of this year and most of 2008. April sales numbers show little reason to doubt them. ‘I think we’re going to be dealing with this all the way through 2008,’ Countrywide Home Loans Executive VP Jack Haynes told Sacramento home-building industry representatives.”
“The upside, Kozlowski said, is that falling prices means there are people who can now afford to buy a home who couldn’t before.”
There’s just that pesky little detail of having a good credit score and being able to bring 5% (let alone 10% or 20%) to the table at closing. Very few first-time home buyers in 2007 qualify for one, let alone both of those details.
“The upside, Kozlowski said, is that falling prices means there are people who can now afford to buy a home who couldn’t before.”
Unfortunately for you, Mr. Kozlowski, they are people who were too smart to buy into the frenzy, and they’re certainly not going to buy now while prices are falling.
“The upside, Kozlowski said, is that falling prices means there are people who can now afford to buy a home who couldn’t before.”
Not really. 3 months ago, anyone could buy, simply by lying on a liar loan. Price was never a concern anyway.
Linda Kozlowski: Is it dead?
Michael J. “Crocodile” Dundee: [Looks at the crocodile with his knife in its skull] Well, if it isn’t, we’ll gonna have a helluva job skinning the bastard.
I live in Fresno and the market is saturated with homes and sales are now down 40% in just the last 12 months. One of my friends works for a large local home builder and sales in April were real slow when I talked to her last week.
I have a serious question for you - why do you live in Fresno when you could live in Phoenix and pay half the taxes and half as much for a house if you decided to buy? Is there a certiain type of work opportunity that only Fresno offers?
I have a hard time understanding why anyone would pay to live in CA more than about 50 miles from the coast. Do you really get to enjoy any of the “California lifestyle” in Fresno, while you are surely paying the “California premium” cost of living? Aren’t you really just subsidizing the ones who do live near the ocean - you do pay the same income tax rates, right?
Not meant to be insulting - just a real curiosity of mine.
I’d love to live in CA - if I had about $5 mil in the bank and could live in the 1% of places where it would really be nice.
I have a hard time understanding why anyone would pay to live in CA more than about 50 miles from the coast.
My opinion only, the coast sucks. In the summer, when the temps begin to warm up, the fog forms more frequently, and if it wasn’t covering everything and making it cold, it would be just offshore, waiting to roll on in and chase away anything even remotely resembling warmth.
“the fog forms more frequently”
Love it. At daybreak it was 47 degrees and by 7 am I could set on the Patio sipping a quality cup of joe. By 10am the sun had poked through and I could spend time in the garden and have lunch on the patio albeit without a sweater. By 9pm I shall retire with all the windows open and get a great nights sleep. Contrast that to the SJV where I’d be drinking iced tea on the patio at 7am, eating lunch on the patio with misters spraying water and retiring at 9pm with the AC on all night and not getting a good nights sleep for fear the AC will breakdown and what my utility bill is goning to cost me.
Yes indeed, however, the fog forms when the air temp is higher than the water temp. Wait for January then return to the coast (particularly Santa Barbara through San Diego). You’ll have perfect weather and temps into the 70s. N. Cal is freezing in the summer (Monterey, San Francisco, all other parts but Santa Cruz) and you can have that.
As much as I hate CA politics, its broken budget, absurd RE prices, etc., you truly cannot beat coastal S. Cal weather–even in Hawaii. But as the previous post said, you need a really high budget to enjoy it.
I’ve only travelled to S. Cal and Hawaii but have to say Hawaii still beats you guys. 80s for high, mid 60s-70s for low every day, those ocean breezes, I can take that forever. A bit chilly for my tastes in san Diego.
Steve W from Chicago–WTF am I doing here?
Did I miss something this year or last but I thought I saw a news article or two about snow on the island?
I lived in SoCal for 22 years. I lived in Hawaii for 4 years. I’d take Hawaii’s weather.
Salinasron, the big island has a couple really tall islands, Moana Loa and Moana Kea that are close to 14K feet above sea level. They get snow just about every year. Not much, and it doesn’t stay long.
Moana Kea is only about 500 ft short of Pike’s Peak. If you count the hieght as being base 30K ft below sea level, to the top 14K above, Moana Loa is the world’s tallest mt. Not highest, but tallest.
I’ve only travelled to S. Cal and Hawaii but have to say Hawaii still beats you guys. 80s for high, mid 60s-70s for low every day, those ocean breezes, I can take that forever. A bit chilly for my tastes in san Diego.
Hawaii is very nice in the cooler months but it roasts in the summer. A/C is mandatory, there is intense daily rain, etc. Of course some micro climates in HI avoid some of the issues.
S. Cal has lower humidity, less sunburn intensity, and it rarely rains.
Being an ex-Fresnan with lots of family there whom I visit every month, I can help answer this (although not speak for Nathan of course). Anyone can certainly bag on it ad nauseum about the weather, the smog, lack of cultural attractions, or the utterly creepy midwestern “family values” ethic that pervades everything like some kind of village of the damned, but there are still some really good qualities to it. The place is relatively cheap, it’s reasonably close to lots of other very good places (like the mountains, Nor. Cal./So. Cal, or the coast), and you tend to run into familiar faces all the time, which pretty much never happens to me in L.A. In essence, in Fresno it’s a little easier to be a big fish since it seems like a small pond a lot of the time. Oh and more pertinent for this blog, if I were to somehow move back there and keep the salary I have now, I would live like a freakin’ king. Of course here in L.A. the wife and I rent a 2/1.
You can get to the High Sierra in an hour, and to the beach in three.
“Timothy Sullivan of Sullivan Group Real Estate Advisors blamed the market slowdown on tighter lending rules as well as the lack of urgency among other buyers. ‘Right now there is fear about housing,’ he said. ‘There is fear you can’t win at GAMBLING.’”
changed a word there, Timothy.
You nailed it, insane.
“Andrew LaPage, an analyst at La Jolla-based DataQuick Information Systems, said that affordability is increasing in areas that have seen an erosion in the median price.”
Psst, Andy. I think it would more accurate to say that unaffordability is decreasing, and it still has a loooong way to go in that direction.
Love it! When starter houses in LA go back under $200K, I’d say it’s affordable. Until then, I’ll just keep shaking my head in disbelief at the $500K “starter homes” all over the San Fernando Valley.
Our public savants are worth every Cent we pay them…
“‘It indicates a softening of the real estate market,’ said Santa Clara County Assessor Larry Stone. ‘Properties purchased in the last two or three years have declined in value.’”
‘The average monthly payment differential between owning and renting is about $3,000,’ he said of the state average.”
Gee, let’s see, if I started putting that $3K a month in the bank and some in a Roth IRA in three years I’d have over a $100K nest egg just when I might want to start looking for a house to buy.
“Gee, let’s see, if I started putting that $3K a month in the bank and some in a Roth IRA in three years I’d have over a $100K nest egg”
Oh that’s just great, now everyone knows. We are supposed to be keeping buyers in the dark, didn’t you get the the memo?
What?! and miss out on the great tax advantages?
I know, I hear the “I “made” x thousand on my house last year and I got the tax break” argument a lot.
I don’t have the heart to tell them that I REALLY made x thousand last year in cold, hard cash by renting and simply putting $ in the bank. Real, after tax equity, not wished-for equity.
Broker Carlos Koslowski: “The upside means that because of falling prices more people can afford to buy who couldn’t before.”
Dear Carlos,
Could you post me the phone number of your dope dealer? My guy is selling me real crap which smells like it’s been treated with parakeet. You are obviously smoking something which puts you in a twilight world where the sky is pink and drifts you off into cuckoo land on a puffy cloud.
WAKE UP, Moron! The majority of people who bought in the last 3 or 4 years used fake work documentation, fake IRS records concerning their income and were handed loans with no downpayment and with resets that are gonna bite them so hard in the ass they will cry out in pain.
Most probably had low FICO scores. We now know that if you had a pulse, could only see 10 feet ahead, had been banned (twice) from driving on a DUI were struggling to pay $900 a month rent, already had 2 mortgages which you bought property with hoping to flip them, were over 18 with a weak heart and your doctor told you not to run under any circumstances - you qualified for a BIG loan. Most of these people are now saddled with mortgages (and there are more lining up to join them) which are more than their gross income. Many costing several thousand dollars a month and that’s without taxes, insurance, repairs, etc.
Allow me gently draw you out of your hallucination and tell you when, “More people will be able to afford to buy.” When prices fall BELOW what they were in 1998. Then, and only then, will SOME (those who are still not in bankruptcy because they become fb’s) who have saved for at least a 10% and possibly a 20% deposit, can produce documentation that isn’t fake and have a FICO over 625 will be able to buy.
Here’s a news flash. If these people couldn’t buy at 1998 prices, what the f*ck makes you think they can afford 2005/6 prices. Get a job outside the real estate racket, moron. Future work for brokers and realtors is gonna be thin on the ground for the next 5 years.
Here’s yet another pointer so you can grasp the real story. The majority of these people could NOT afford to buy a $120,000 property in 1998. What makes you think they can buy a $400,000 property now OR even when that $400,000 property eventually drops to $275,000. They will buy when they can afford it and if, and only IF, their documentation is kosher. NOT before.
My advice to anyone thinking of buying. Ignore the realtos and brokers. 99.9% are shills. This mess is NOT going to go away for at least 2 or 3 years and possibly longer.
lol! Great post
~Misstrial
“A housing slump that’s erased millions in equity will mean lower property taxes for more than 10,000 Santa Clara County homeowners this year.”
“While that might strike cash-strapped Silicon Valley residents as good news, it also means school districts, cities and other agencies will lose millions of dollars in revenues.”
And that folks is what I call good news, good news. Let’s cut public employee salaries and maybe housing values will drop even faster!
“it also means school districts, cities and other agencies will lose millions of dollars in revenues.”
It’s funny…they got a bump in housing prices, which bumped up revenue, and now it’s returning back to what it was (actually still quite a bit more). In other words, the taxing agencies have gotten a windfall for the past few years, and now they are complaining that it isn’t going to be that way forever? How did they get along before housing prices doubled?
This is California, dontchaknow. Revenues always increase, so build mandatory spending into your budget…
Looking forward to have a Pennsylvania tax address in the near future. (Flat 3% income tax.)
This is SO funny… they so do not want to say the words “prices are decreasing” so instead they insert “Affordability is rising”….hahaahaha
Right, because (all together now): Real estate only goes up!
I’ve gotten a glimpse of the psychology change from dropped prices just this week. My wife and I are looking in suburban Portland Or. I know, I know - if it was me, I’d be waiting. My wife has waited 2 years as we moved and rented and I’m willing to make this sacrifice to make her happy.
Anyway - two houses we’ve been looking at and one we made a ~10% off offer that was rejected. Well this week the other house dropped their price 20K. I’m all over it when my wife tells me because that’s just the leverage we need to go back and make another offer.
But now she hesitates! She says maybe we need to wait if people are dropping their prices. Ha ha! Just like that. This is what the NAR fears and why they will not utter those words “Prices are dropping”.
wait, wait , and wait some more………do not buy into the spring bust….it will not feel good……we waited for over a year, and went FSBO….please, buy in the winter, and its tough in Oregon to move in the winter,but not impossible…
just wait.
I bought in PDX in Jan. Sold in April 1 yr later 25% gain.
Yep, even a housewife will curb her zealous consumption urge temporarily if she thinks there’s a big sale on the horizon.
People keep forgetting the reason we had population growth in the Central Valley: affordable home prices. Once you removed that factor, the only real growth that occurred was speculative house buying. I don’t think many people realize how crappy California’s Central Valley really is. The whole economy in the valley is mostly agriculture, not a typically high paying career option for those who pick it.
And a lot of the construction that was done around here was absolutely worse location. I mean, we saw a 3500 sq.ft. house built in a lot surrounded by 1500 sq. ft. homes. New developments located right next to really crappy areas.
Once I even had a chance to see a McMansion located right next (and I mean right next) to a busy freeway.
Housing in this area are already seeing the Walmart effect: ‘Watch out for falling prices’.
Once I even had a chance to see a McMansion located right next (and I mean right next) to a busy freeway.
Some people really don’t care about living next to freeways. I don’t get it. I guess they may happen to own the land and of course you know what it cost to run utilities a few hundred feet off the roads, Yikes!
What you said about agriculture is true somewhat. Sure picking grapes won’t get you into Harvard but then that’s how the big farms rake it in. Pay the laborer $3 and pocket $6 from the fruit. I used to work for J.G. Boswell Inc (Westside Cotton farmer) in Corcoran California and let me assure you Money was no object for that company.
I believe this was a $600K box located not 50′ from the freeway.
I once looked at a rental that was right next to the interstate and I can tell you the 18-wheelers have a most horrifying high pitched whine when the ground is wet. This would be considered cruel and unusual for prison inmates, yet here you have people voluntarily living like this. What morons! Ang good luck selling when only the “best” properties are moving.
Got 10% down?
“The upside, Kozlowski said, is that falling prices means there are people who can now afford to buy a home who couldn’t before.”
Wow, I didn’t know that Trump was looking to buy in Sacramento.
I rent in a gated community; we just had a house (2700 sf, 3/4 acre lot, somewhat upscale) close for $690,000 that was listed at $850,000 a little more than one year ago. I watched them chop the price $10k or so at a time until they hit $729k about six months ago, then they apparently dug in their heels. Apparently the digging in cost them a sale at only $5k less than their asking price, now they are bailing at $39k less. In the end, right at about a 20% reduction from original asking price. (I rent the same house, but in a nicer location within the development, for $2k including gardener. It gives me just a smidgen of schadenfreude to note that the rent I have paid over the last three years is half of the amount that the house I live in has gone down in value, and I don’t pay prop taxes or HOA)
This down the street observation (four other homes in the development remain for sale, with virtually zero activity), coupled with the news contained in the above thread, makes me hopeful that the inevitable conclusion is near. Waiting this out has been tiresome. The resolve of sellers who believe their house is “worth” a certain amount is amazing. All of this talk about defaults, subprime woes, distress sales, etc. - along with the spring selling season that never showed up - should push this market into the 2nd phase of the downturn.
I think the first phase was this slow bleed of 20% from the outrageous peaks of fall 2005. I think the 2nd phase is another 20%, but this time it will come faster, like by the end of this year as panic sets in. The final 10% (of the somewhat common 50% haircut projection) will play out over 2008 and 2009.
In the end, you can probably go back to 1998 prices + yearly inflation to get fair market value.
great story.
im becoming worn out waiting to buy. Its causing my ‘rent forever’ plan to look better and better.
Sellers will get a clue by next year that buyers are NOT EVER SHOWING UP at the crazy high prices.
2300 houses on the market in Visalia? who the hell would want to live in that shithole? same goes for Fresno. the whole valley is a giant polluted dusty smelly hot mess.
“…the whole valley is a giant polluted dusty smelly hot mess.”
But other than that it’s just wonderful…..
food grows where water flows
Visalia is much better than most of the neighboring communities, like Hanford, Delano, et al. But, I’m still very glad I got out (just in time…sold in late 2005).
“Andrew LaPage, an analyst at La Jolla-based DataQuick Information Systems, said that affordability is increasing in areas that have seen an erosion in the median price. This is expected to spread to other areas as the market slump continues.”
Do falling home prices really make homes more affordable, especially when there is a glut of vacant homes augmented by ongoing high rate of building into a bust? It seems like prices and rents are both going to trend down for a while, which makes renting more “affordable” than catching a falling knife.
‘Right now there is fear about housing,’ he said. ‘There is fear you can’t win at housing.
My, how the times have changed. 18 months ago you couldn’t get a word in edgewise in the conversations of all the RE geniuses on blogs and in person.
And we don’t hear the slur of “chicken little” anymore. Where are the likes of BeaconSt and LVlandlord now?
Chicken Little got the last cackle.
“Jonathan Weiss, senior investment associate at Marcus & Millichap Real Estate Investment Services, said renting is now less expensive than owning. ‘The average monthly payment differential between owning and renting is about $3,000,’ he said of the state average.”
I frankly think $3000 differential might be wrong, but if it is “now less expensive” where was he 2 years ago when the differential between renting and owning was worse.
I wonder if Weiss writes fairy tales like Johan Weiss. At least the Swiss Family Robinson got to live in a tree house and throw coconut hand grenades at the pirates.
I think he can’t differentiate between Weiss and Wrong…
Weis is a stand up guy, What I’m trying to figure out is why is he answering questions in regards to residential housing. That’s the question that should be asked.
OT but:”Lake Okeechobee, the region’s primary reservoir, is down to 9.3 feet above sea level - less than half a foot above its record low. Farmers and the area’s 600 golf courses must use 45 percent less water in the hardest-hit areas, and home sprinkler use is restricted to once a week.”
Now we have a direct attack on FL ag businesses like sugar cane. When it rains, it pours, and I don’t mean water. By next season they’ll be praying for a hurricane. Nature can be cruel so my guess any hurricanes this season will be off the east coast around the Carolinas and the Fl droughts will continue.
No biggie…
Just retreat up into the Florida Mountains.
Just saw a funny comment on another blog about how REOs are bringing comps down -
“When banks compete, you win”.
Priceless!
No wine-ing allowed…
“‘A timeline is difficult to do, but it’s definitely a cycle,’ said Peter Gallo, president of Gilroy-based Gallo & Gallo Real Estate Appraisals, Inc. ‘We’ve seen this before…it’s definitely a buyers’ market.’”
My wife ran across this Craigslist post, for an attached home in Willow Glen (San Jose, CA):
http://sfbay.craigslist.org/sby/rfs/333532828.html
Purchased on 12/22/2004 for $593k (per Redfin). The current Zillow estimate is $819k. For sale by owner (by auction?) for $450k on Craigslist.
The owner is taking a serious bath. This price looks to be quite a bit lower than other surrounding properties.
Willow Glen? Not quite.
I suspect that name is being used in order to justify as high a price as can be had for it. Nice development - I wouldn’t mind having a unit with a clear view of the Union Pacific tracks bounding the western edge of the tract, but not at what any of the current owners might ask.
For anyone following the auction from last weekend in San Diego, one of the houses that came up in discussion here (Morning Creek Dr.)has had most of the bushes ripped out in the yard and has sprouted a new FSBO sign within days. There is a lockbox on the door, and I wonder if the place actually sold at all. I had heard a price of $575K.
I like Texas, but I don’t think I’ve ever had good Mexican food there. I question Richard Fisher’s judgment.
‘The buyers bought on impulse,’ said broker Carlos Kozlowski
That describes pretty much ALL buyers the last several years. No rational person who spent 15 minutes analyzing the situation would have bought at these prices.
‘As adjustable mortgages are reset, the question is, ‘How many people can afford the payments?’
Even more importantly: how many people can justify making the payments?
“A housing slump that’s erased millions in equity will mean lower property taxes for more than 10,000 Santa Clara County homeowners this year.”
This must be the huge tax advantage that realtors are always going on about!