The Whole Industry Is Falling Down In California
The Lompoc Record reports from California. “The number of homeowners in Santa Barbara County who have fallen behind in their house payments has quadrupled over the past two years. In Santa Barbara County between 2005 and 2006, notices of default more than doubled, increasing by 110 percent, from 400 to 841, according to officials in the county clerk-recorder-assessor’s office.”
“For 2007, default notices more than doubled again, from 841 to 1,978. ‘Almost every neighborhood has one home in trouble,’ said Wendy Teixeira, president of the Santa Maria Association of Realtors.”
“Santa Barbara County officials estimate that 1,978 homes will go into default this year and 765 properties will be taken by lenders. Officials also estimate that 885 properties will be sold by lending institutions.”
“According to county officials, April 2007 made the top 10 list of highest-volume months since 1989 for notices of default and trustees’ deeds - when a lender forecloses and takes ownership.”
“The increase in defaults and foreclosures may cause lenders to tighten their standards, making it harder for people to get loans, said Dan Hamilton, with the UCSB forecast. If that is the case, the slow-down may last longer than the usual two-year real estate cycle, he said.”
“Mark Schniepp with the California Economic Forecast added that part of the problem is that the recent lending environment has made it ‘too easy for people to get in over their heads,’ alluding to the popularity of sub-prime and other ‘exotic’ adjustable loans.”
The Santa Maria. Times. “When the real estate market began cooling in 2005, it was like a pebble thrown into a pond, spreading through the Central Coast economy. The slow-down since then is almost a textbook example of how the sputter and cough of an economic engine can put the brakes on all the businesses it’s pulling behind it.”
“The economic ripples spread, first to businesses tied directly to real estate. ‘When sales of existing homes start falling, the Realtors, title companies, there are lots of people involved, their income slows,’ explained Bill Watkins, executive director of the Economic Forecast Project.”
“‘It used to be a lot easier,’ said Wendy Teixeira, president of the Santa Maria Valley Association of Realtors. ‘You’d show two houses and write an offer on the hood of your car. Now, it takes two or three months to sell a house. It’s challenging for beginning agents.’”
“‘As an association, we’ve not seen a rapid decrease in members,’ she added. ‘But definitely, when you have 500 agents and 90 closings last month, a lot of people are not going to get paychecks.’”
“Beyond lenders, escrow companies and termite inspectors, homeowners spent fewer dollars fixing up houses to make them more attractive to buyers, who would then fix them up more. ‘The big hardware companies, the national ones, are seeing a sales decline. Their income is down, and they’re laying off workers - or not replacing them,’ Watkins said.”
“‘In the market that we had, which ended about 18 months ago and was abnormal, superheated, builders didn’t start construction on units until they were sold,’ explained Jerry Bunin, government affairs director for the Home Builders Association of the Central Coast.”
“‘Now we’re in a normal market,’ he continued. ‘A lot of units that were built are not selling, which creates a standing inventory, and that’s slowing construction.’”
“‘The whole industry is falling down, and you can see some (contractors) are a little panicky about what’s coming,’ said Robin Hayhurst, executive director of the Santa Maria Valley Contractors Association.”
“‘This (downturn) is not as easy as the last one,’ she said. ‘We had a pretty good 10-year ride.’”
The Eureka Reporter. “In the March Humboldt Economic Index released by Humboldt State University, data reveal dropping home prices have contributed to a spike in foreclosures nationwide.”
“HSU economics professor and Humboldt Economic Index Director Erick Eschker said Humboldt County is experiencing a similar increase in the number of foreclosures, which can be attributed to a drop in home prices in coastal areas of the United States.”
“Locally, foreclosures are up 150 percent from this time last year. Citing online foreclosure marketplace RealtyTrac, HSU reported an increase in foreclosures by more than 30 percent in March and 150 percent over the course of the past year.”
“A high of 185 homes in Humboldt County were in some state of foreclosure compared to the 67 in foreclosure in May 2006, Eschker said.”
“The spike in the foreclosure rate is not specific to Humboldt County, though,communities around the state and country are experiencing the same trend.”
“‘The major metropolitan markets around us are suffering from very high foreclosures, drops in sales and prices coming down slowly,’ Eschker said. Sacramento, he added, has one of the highest foreclosure rates in the nation because people bought homes they couldn’t afford.”
The Voice of San Diego. “The city of San Diego hit the real estate market with full force Monday, placing 17 properties worth an appraised $37 million up for sale.”
“The bundle of properties, which includes downtown high-rises, million-dollar La Jolla homes and vacant dirt lots, represents the first large-scale land sale in recent memory for a city with vast real estate holdings.”
“The properties for sale include a three-bedroom, two-bathroom home with a pool blocks away from Windansea Beach on Beaumont Avenue that was purchased for $35,000 in 1965. It is appraised at $1.7 million. The home is currently being rented for $1,900 a month.”
The North County Times. “The Escondido Planning Commission tonight will consider a proposal to raze and replace Enchanted Gardens at 328 S. Escondido Blvd. with a four-story apartment building that would also include office and retail space.”
“John Winn, who with his wife owns the business, said the project would feature ‘upscale luxury apartments for rent.’”
“San Diego developer Nathan Adler, who has worked with the Winns on the project, said Monday they decided to create rental apartments rather than condominiums both in spite of and because of the trend in recent years of building condominiums in the city’s center.”
“‘Our approach has been to provide the downtown revitalization zone with some diversification,’ Adler said. ‘Not everything needs to be for-sale housing.’”
‘Hamilton Coatings, which bought several stores from San Luis Paints two years ago, is closing its San Luis Obispo location. The closure will take effect June 15, said Roger Emens, general manager. ‘We’re closing due to lack of business,’ Emens said. The store locations included San Luis Obispo, Atascadero, Lompoc and Santa Maria. Hamilton eventually sold the Lompoc store and closed the shop in Santa Maria.’
‘ Despite the alarming news on the housing front, economists predict the Empire will rebound fairly quickly. This optimism confounded me when I read that April home sales in the Empire had plunged by nearly 50 percent from a year ago.’
‘Then I met a housing expert who explained why things really aren’t so bad. ‘You’re making the same mistake most people make,’ he smiled kindly. ‘You’re focusing on the wrong sales figures. You should be tracking marijuana sales. They’re way up.’
‘It’s happening everywhere. Chino, Yucaipa, Corona, Norco, even Riverside. It’s the latest thing in creative financing.’
‘You’re talking about pot houses!’
‘We in the housing industry prefer to call them marijuana conversions.’
“the Empire” what an Empire…
to quote NIN
“and you can have it all, my Empire of dirt,
I will let you down, I will make you hurt…”
Done best by the ‘Man in Black’.
Once Johnny does a song, it’s no longer yours, its his!
San Luis Obispo is supposed to be the home of “California slow growth/no growth initiatives”, ostensibly to “keep the rural charm of the county”, which will “keep housing prices high here forever”.
Wow, there sure are a lot of spec houses and developments around here…with no buyers.
Got alligators?
Well, if SLO is going to keep it rural and charming and prohibit growth, then no businesses and money-earning population will move there, negating the RE price growth.
You can’t have it both ways - have a cake and eat it too.
“Wow, there sure are a lot of spec houses and developments around here…with no buyers.”
I’ll be ready to buy…at the bottom!
Me too! Ocean View. Preference is Cayucos / Cambria / San Simeon!
“marijuana conversions.”
There’s a government bail-out plan that might work. Legalize pot and the farming of it and watch the foreclosures receed. In addition, tax it hard and you can start workin’ on that deficit.
And it makes good biodiesel. Remember, the pot laws got on the books because of fiber competition.
Nah, that would just kill the market due to excess supply.
“marijuana conversions.”
Here are more Barbs to throw at the IE:
It is not at all surprising that the IE areas of Diamond Bar,Chino, Yucaipa, Corona, Norco, Riverside, Roland hts, ect would be favored sites for Indoor Marijuana Cultivation. These areas have had large numbers of Newer large SFH tracts put up, many of them large 4/3’s or 5/4’s. Many of these homes tracts are situated in off-the beaten-tract lightly policed areas which were recently converted rural ranch acreages. This makes them ideal cover areas for turning that albatross Monster Money-eating McMansion into a profitable Marijuana indoor farm.
The IE is pretty wide open and rather thinly populated, with many unincorporated ‘fontucky’type rural/semi-urban rickety areas. Not only can Marijuana,meth, or other illicit activities be conducted out of sight but the iE is perfect for turning that ragged rural ranch plot or spankin-new McMansion in the middle of nowhere into a truck yard terminal, auto junk yard, or illegal alien holding pen.
Correction: Diamond bar and Rowland Hts are not part of the IE but in LA County, specifically the City of Industry/valley blvd region, which has seen seen an epidemic of pot growth. Diamond Bar and Walnut are actually mostly upscale areas with a large population of well-off Asians but beyond that the rest of the ‘Valley’ is pretty dismal and seedy , especially the eastern sections comprising the City of industry and LA Puente. Entire valley from the 605 east all way to Nogales pretty ‘hispanized’ and generally rundown.
“City Of Industry” where meth and pot industry rule. Welcome to the future!
Diamond Bar and Walnut are actually mostly upscale areas with a large population of well-off Asians but
I prefer “Show-off” Asians.
Well, look at it this way. With U.S. manufacturing in the dumpster, and offshoring of pretty much everything else, we must have something to sell to the Chinese and elsewhere. Think about the opium trade, gunboat diplomacy and the Boxer rebellion in the early 20th century (e.g., the Sand Pebbles).
He he he he he…
WTF…
I expect a tough hurricane season better build more houses in CA.
‘…marijuana conversions.’
Preferrable to THC conversions or meth conversions…
“Preferrable to THC conversions…”
Marijuana has that ethnic sound.
This was from the Onion, not a real paper, right?
Someone please tell me that I didn’t read this.
what other strong Domstic industry do we have ?
dopositing tanks in the desert isn’t an industry
lending each other money
entertainment
You mean strip clubs, possibly? I wonder how many FBs are going to wind up doing $20 lap dances in order to pay the mortgage.
~Misstrial
Just a note. There is definitely a proliferation of strip clubs going up all over LA and NW Orange Counties. Not just in such ‘established’ generally seedy commercialized parts of LA such as LAX, city of Industry,City Of Commerce, Hawthorne, Inglewood, ect. I see more and more ’storefront’ joints situated in suburban shopping corner malls in such primarily suburban areas as Stanton, Westminister, Anaheim, Fullerton, Gardena, Buena park, ect. They have such titles as ;’showgirls’, ‘Dancing girls’,'exotic dancing’, ‘gentlemens club’, ect.
These are primarily located along rather seedy thoroughfares in formerly tidy middle class burgs which have started to decline and often are in process of becoming inundated with illegals. Along with these storefront strip joints one sees the Mexican Market,check-cashing, Pink Motels,cheap Apts,Liquor stores,Thrift shops, Mexican tire shop,ect, all indications of another former middle class burb transforming into another LA ‘Hispanized’ slumburg.
I’ll do it. I’m 47 and male, but my female friends who’ve “seen me” say I got the “package deal” to do it.
LOL!
Selling tanks to demented strippers?
Selling tanks to other countries engaged in arms races…
Gee, a friend of mine has a ferret, http://en.wikipedia.org/wiki/Ferret_armoured_car , but it’s imported.
long-term care facilities for the demented
Hmmm. Septic tanks are a big industry in the desert.
“The properties for sale include a three-bedroom, two-bathroom home with a pool blocks away from Windansea Beach on Beaumont Avenue that was purchased for $35,000 in 1965. It is appraised at $1.7 million. The home is currently being rented for $1,900 a month.”
UNBELIEVEABLE! I see people in Dallas trying to get $1,700/month for a house that would sell for $165K!
The San Diego City property records are so bad that they often forget to charge rent for their properties. They were probably charging that much back in the ’80s and forgot to raise the rent because that seems ridiculously low for the area.
Thank god Jerry was elected and has started cleaning things up.
Ha! He’ll probably sell that house to a developer for a nominal $1 in exchange for a promise that the deveoper will fix up the house really nicely and share the profit. The developer will sell the house to himself for $2 and the city of San Diego will get $0.50….
bahahahahahaha, Yeah that’s just about right.
yea he’s a genius, he just wasted $900,000 on the cross! They were given a chance to settle for ZERO by moving it one block away to a church, imagine that, a cross at a church. I mean, pick your battles, seperation of church and state isn’t getting over turned, I could care less if the cross goes or stays, but wasting millions of San Diego taxpayers money on this legal fight is a joke.
The fight over the cross on city land on Mt. Soledad is just an extension of the old covenants that existed in San Diego before the ’60’s. In those days, Jews and other minorities were prevented from owning property in ‘restricted’ areas, such as La Jolla.
My father was a Jewish veteran of WWII, and could not understand San Diego’s case that the cross on Mt. Soledad was intended to honor him…and, of course, that was not the real intention.
I’m currently renting a $1M house in Los Angeles with an ocean view for $1100/mo - utilities included
Where in LA? Let me know if you move. Do you have 3 bedrooms?
Redondo - only 2 bedrooms since we only live in the top half of the house (better view). In a way I guess we’ve been “house sitters” for the property owner but it’s been great. I don’t know if he would rent it out if we were to move, but we’re not planning to any time soon!
Sheesh, I pay 1700 for a 3 bedroom house in Serra Mesa.
The Whole Industry Is Falling Down…
Great headline, Ben.
hope no one goes Michael Douglas over it…
http://en.wikipedia.org/wiki/Falling_Down
Heh heh, I watched the movie again for the first time in ten or so years. It’s really a great movie.
from the movie:
Bill Foster: Doctor? What kind of doctor lives here?
Dad at Back Yard: Plastic surgeon.
Bill Foster: Plastic surgery bought this?!
When I saw that movie, I had short hair, wore nerdy glasses, was an engineer, and wore short sleeved shirts. I was like, “egad! Looks like me!” I changed my style for awhile.
You beat me to it.
“‘The whole industry is falling down, and you can see some (contractors) are a little panicky about what’s coming,’ said Robin Hayhurst”
Tell us what you really think. Panic, isn’t that one of the stages of acceptance right before the helicopters take off? Maybe they should rain Prozac down at the angst ridden populace along with cash.
“The increase in defaults and foreclosures may cause lenders to tighten their standards, making it harder for people to get loans, said Dan Hamilton
How about when price and affordability come close together? Might that work?
If lenders tightened their standards would that push prices down yet more?
It is appraised at $1.7 million. The home is currently being rented for $1,900 a month.”
This pretty much says it all.
Would $1900 even cover the new property tax bill if the place sold for 1.7m?
yes i think so… but that would be about it
Barely. I get around $1650 PT a month, 20K a year. Doing their part for City Hall.
1700000 x .0125=21250, 21250/12= 1770.80
approx 1770.80 a month….. that’s brisk baby
12 X $1900 / $1,700,000 X 100% = 1.34%.
Looks like the rent might cover property taxes at best…
I live in San Diego and I see situations like that all over the place.
Here’s an example…
I live in PB and rent around my area is around 1100-1600 for a 2 bedroom. Thre is a new condo development going up and they’re looking to charge 550-600k for a 2 bedroom. Do you see the disconnect?
Diego de Los Angeles deserves a downturn, drastically…
PB dweller myself
The guy down the street (on Grand) is trying to sell two pink monstrosities for $700k+ each and he told me he can’t understand why they’re not selling. I’m pretty certain he’s financially ruined based on his abject outlook on life. They had a Lamborghini parked in front for a while but that didn’t work. The thing even has solar panels on the roof, reminds me of a tercel with a giant hood scoop and wing.
“They had a Lamborghini parked in front for a while but that didn’t work”
LOL! What, were they hoping that someone would steal the Lamborghini and crash it into the house, starting a fire, and allowing him to collect on insurance?
arroyogrande,
“I like your… train… of thought”
Speaking of fires, here is video of the Las Vegas condo complex that just got torched on May 9. No doubt a harbinger of things to come.
“Nearby residents said the building, at the corner of Maryland Parkway and Silverado Ranch Boulevard in the city’s southeast, was to be a condominium project called Murano Condos.”
an apt name, Morono Condos.
Oh, yeah. That was completely accidental. Here are some other things going up in flames in Vegas:
Vegas car owners set fires to end payments they can’t afford
Interesting article. Another thing that’s going on is auto mechanics issuing liens against car owners who are not able to pay the repair bill. Private auto dealers are then selling the cars.
~Misstrial
Funny quote from the car fire article:
“It’s the high payments that make them spontaneously combust.”
Hmmm, funny one of the cars mentioned was a Hummer H2.
Many of these cars end up being dumped in Mexico etc… Be fun to track many of these shmuks to the location by their cell phone GPS, but I doubt any resources are available to launch major investigations.
Are the solar panels on the house or the Lamborghini?
The house, no hybrid Lambos have been released just yet.
“the solar panels”
oh attached to the house…
I thought the “solar panels” were attached to the girl in the Lamborghini… some sort of new PB slang
Living on Grand isn’t so grand, and those ginger-bread houses you are referring to are ugly, traffic sucks there on the weekend when everyone is coming home from the beach sitting at the stop lights blaring their music, shouting at the people walking by.
The 550-600k places are a huge disconnect, I was paying $925 a month until last weekend all utilities paid for, granted only a 1 bdroom not 2, but why the hell would anyone want to buy at these prices. Not only the cost to buy, but factor in the property taxes on that, HOA (usually rare in PB), and up keep, I’ll gladly pay the rent thank you very much.
In Bay Area it’s no different we rent a cheesy townhouse for 1250 a month. Units for sale are for 400K. BTW, HOA fee is 200/month.
That rent hasn’t gone up more than 30% in the 14 years since I left the Bay Area.
Yup, Pasadena house we rented in 1998 is now rented out for 17% more.
Isn’t a good rule of thumb that a place should rent for ~1.0% of the purchase price? Not ~0.1%. Somebody’s cixelsid…
Yup, it used to be monthly rent = 1% of price. I am living in a shore house for 0.19% of “reduced” price. Rotsaruck selling, builder. His major bank loan is only 2/3 of current asking price, but he ran up zillions in CC debt at Home Depot.
“The increase in defaults and foreclosures may cause lenders to tighten their standards, making it harder for people to get loans, said Dan Hamilton, with the UCSB forecast. If that is the case, the slow-down may last longer than the usual two-year real estate cycle, he said.”
TWO Year real estate cycle! WTF. I am lost for words……
Try 5 year min. for a downturn. Either these guys don’t know anything or they are trying to BS the public.
Those were my thoughts exactly when I read that. Yes, that well-known “as the sun will rise in the morning” two-year real estate cycle. Is this guy really that uninformed or is he lying through his teeth.
A little of both
These guys might have seen a localized SoCal graph that I once saw. It showed 1989 peaking high and then hitting a bottom in 1991. Prices did not get back to 1989 levels until over 10 years later. The graph was probably localized to one zip code, but people need to see the bigger picture this time.
Plotting the real (inflation adjusted) price instead of the nominal one paints a starkly different picture.
In 1989-1991, that was pretty close to the “peak-to-trough” in my neighborhood (Castro Valley, CA). It did only take 2 years for the prices to fall about 30%. They stayed at this level through 1997.
But there’s the kicker…… they fell 30%! No holding your breath, living off credit cards, borrowing from the in-laws, serial refinancing…… they lowered the price until it sold. Somehow today, loanowners feel they only need to wait out that two years and the price magically returns.
I guess they forgot about it being 1989 – 1997, in addition to the 30% decline.
“Drop now, or forever hold your price”.
“The economic ripples spread, first to businesses tied directly to real estate. ‘When sales of existing homes start falling, the Realtors, title companies, there are lots of people involved, their income slows,’ explained Bill Watkins, executive director of the Economic Forecast Project.”
No worries…as long as they can… bend over…and pick strawberries for $12,000 USD a year…they can be “put into” a $720,000 mortgage…oh baby, that’s a nice flop house in the central valley.
Also -’The slow-down since then is almost a textbook example of how the sputter and cough of an economic engine can put the brakes on all the businesses it’s pulling behind it.”
Even strawberry pickers will have to cut back on trips to McDonald’s.
I would recomend that everyone read the Santa Maria times article refered to above.
http://www.santamariatimes.com/articles/2007/05/22/news/featurednews/news01.txt
It’s a perfect example of reporting that makes no sense what-so-ever, filled with almost random quotes from RE ‘professionals’ tied together with logic that that, well, defies logic! There is even a portion that states that “builders didn’t start construction on units until they were sold”, just before it says “A lot of units that were built are not selling, which creates a standing inventory”.
*Sigh*.
I’m truly sorry I took your advise and read that mess. I work at a college, and that ‘column’ reminds me of the lousy, hacky writing styles of campus papers. Disjointed, disigenuious and basically ditzy. Altogether a perfect RE promo piece.
I had to email the Economics Director to find out where he got the “2 year real estate cycle” data. I’ll let you know what he said. I’m about to torch my UCSB Economics degree.
Check out the sponsors of that project, lots of real estate associations, lenders, and developers:
http://www.ucsb-efp.com/sponsors.htm
Looks like USC, UCLA, and now UCSB can be bought.
Here is my favorite, which illustrates (or at least suggests) the economic principle that if you reduce [slow the increase in] supply, it leads to reduced demand resulting lower prices. Maybe I’m just reading too much into the sequence of “facts.”
“But slow-growth policies and attitudes in San Luis Obispo and Santa Barbara somewhat stagnated those economies, according to analysts with the UC Santa Barbara Economic Forecast Project.
That led to fewer people buying homes in northern Santa Barbara County, and sales slowed. Prices leveled off and, in some cases, dropped.”
“Santa Barbara County officials estimate that 1,978 homes will go into default this year and 765 properties will be taken by lenders. Officials also estimate that 885 properties will be sold by lending institutions.”
And that number (885) is just about 25% of LAST YEAR’S sales (3334), and pushing 33% of this year’s sales in the county. Ben’s ‘Falling Down’ line is dead on.
I think the biggest stat in the SB foreclosure number is the “conversion” rate. 39% of the homes that go to NOD end up being taken back by the lender. That is a very high rate, even when compared to the mid 90’s RE bust.
Basically what this is telling me is more and more people are not trying to save foreclosure but leaving the keys on the kitchen counter or sending off their “jingle mail” to the lender.
And as everyone here knows, we haven’t even begun the “rest season” yet. Ouch it’s gonna hurt.
It’s all over but the foreclosin’.
“‘As an association, we’ve not seen a rapid decrease in members,’ she added. ‘But definitely, when you have 500 agents and 90 closings last month, a lot of people are not going to get paychecks.’”
Bugs: “eh, where exactly is Wiley E. Coyote?”
Daffy: “Wiley’s at ACME’s… “home-school-real estate-correspondence-school-of-self-improvement for future sales-in-America-for-the-improvement-of-sub-prime-borrows-who-cannot-get-a-loan.”
Daffy: “Porky the Pig paid his tuition…Elmer Fudd will is the guest lecturer.”
“‘It used to be a lot easier,’ said Wendy Teixeira, president of the Santa Maria Valley Association of Realtors. ‘You’d show two houses and write an offer on the hood of your car. Now, it takes two or three months to sell a house. It’s challenging for beginning agents.’”
Oh, cry me a freakin’ river, Wendy!
She obviously hasn’t been an RE agent long. Two or three months was “normal” back, oh, what, 4 years ago, way back when dinosaurs walked the earth.
I really want reporters to rely more on “newly minted” RE agents for quotes…they tend to be the funniest.
I read that as her attempt to persuade “new” agents to get out of the business and remove some of the competition for those dwindling closings.
California is toast, even the coyotes are looking for U-Hauls and leaving with the mortgage brokers.
To funny……bwhahahaha
That’s because the coyotes are competing with the FB’s, realtors, and loan agents for cat meat. They don’t stand a chance.
lol ex-nnvmtgbrkr…
That one made my day
CAT meat in CA is from China and prices are coming down portions are going up
Cat food is cheap in China. They make it from coal renderings.
Does anyone here believe official reports?
“The new data revealed a seasonally adjusted third-quarter private payroll gain of only 19,000, in sharp contrast to the BLS’ published monthly payroll increase of 498,000 for the quarter,” Stone said.
For the 2006 second and third quarters together, the BED data show a payroll increase of 485,000, compared to 808,000 for the regular payroll figures. For the six months, that’s the difference between monthly payroll gains of 80,000 versus 135,000, Stone said.
Read on………
http://www.bloomberg.com/apps/news?pid=20601039&refer=columnist_berry&sid=a0jvfQesFpp8
Part of the question as to how can the GDP drop as employment numbers rise. It suggests that hundreds of thousands of laid-off illegal alien construction workers previously earning $20 an hour are finding ‘official’ work at $10 an hour - so their now counted but have less to spend.
“Housing starts have plummeted and the number of units under construction has fallen 15 percent in the year ended in April. However, the BLS’s monthly survey of business establishments showed 3.3 million people still at work on residences last month, only a 4 percent drop from a year ago.”
Seems like residential investment is off by 40% or so. And judging from this story, there has not been a commensurate 40% drop in construction employment. In fact, a couple of days ago, the SD Union Tribune reported a surprising increase in construction employment for SD County, despite the obvious housing bust. Not sure to what extent these descrepencies are explained by bad statistics versus systematic undercounting of illegal immigrant job losses (which I guess amounts to a special case of bad statistics)…
“by 40% or so”
Clarification: If measured from the peak level (2005?), I believe there is roughly a 40% drop in residential construction…
“‘Our approach has been to provide the downtown revitalization zone with some diversification,’ Adler said. ‘Not everything needs to be for-sale housing.’”
Ben,
Since I’ll be gone this weekend …here’s a weekend topic: How about Home Depot and everyone else…suddenly thinking about… “renters”
“The properties for sale include a three-bedroom, two-bathroom home with a pool blocks away from Windansea Beach on Beaumont Avenue that was purchased for $35,000 in 1965. It is appraised at $1.7 million. The home is currently being rented for $1,900 a month.”
At Ben’s HBB: “…it gets better everyday”
The HD commercial with the lady who rents and re-plants the garden in the community area to make friends. Touching, yet easy to see where they were going after years of bludgeoning us with home improvement commercials. Buy a plant, any plant, just buy a plant…..
Yeah, “renters will improve their “bottom line” …damn they must have good accountants.
I just saw some good deals on plants at HD. If their prices remain the same, I may just make a purchase…
All-
does anyone here think replacement roofs or windows, etc. for existing homes will go down in price??? Interested on your takes…..thanks
in a word, yes
Yes, and eventually I will be able to hire qualified construction workers for less than $100/hr. Not yet, but it’s coming.
“The spike in the foreclosure rate is not specific to Humboldt County, though,communities around the state and country are experiencing the same trend.”
But, I thought that all real estate was local? Of course, the crazy credit was nationwide.
Crazy credit!!!!!
Creative Chronic Capitalism…
‘It’s happening everywhere. Chino, Yucaipa, Corona, Norco, even Riverside. It’s the latest thing in creative financing.’
I thought the latest trend was Group Low-Balling, where one person offers a 40% discount, then his friends offer a 50% discount to make the first offer look sane. Now that’s creative.
Oh, I like that!
Realtor killed after cart plunges 75 feet from cliff
Tuesday, May 22, 2007
(05-22) 13:44 PDT Fallbrook, Calif. (AP) —
A 65-year-old golfer died Tuesday after his golf cart plunged 75 feet off a cliff and crashed into a road below, authorities said.
The man teed off with three friends on the second hole of the Pala Mesa Resort Golf Course in northern San Diego County at around 10 a.m. and then got into his cart.
The vehicle veered off the concrete pathway, traveled down a 25-foot embankment and went over the edge of the cliff, said California Highway Patrol spokesman Tom Kerns said.
The victim, a recently retired real estate agent from Irvine, was ejected shortly before the cart hit the road beneath the cliff and died on impact, Kerns said. His name was not immediately released.
No one else was involved in the crash.
Investigators will inspect the golf cart for mechanical failures, Kerns said. Drugs or alcohol were not thought to have been factors in the crash.
He’s golfing with three buddies, but he’s driving in the cart alone? Seems a little odd to me. I understand that one or more of his buddies could have been walking the course, but considering he’s 65 it seems likely that his buddies were of similar age. Not too many guys that age are walking the course (in fact, not many people walk the courses at all in So Cal).
worth more dead than alive - i guarantee he has a decent life ins. policy and kids in college or something like that… oh, and 4 upside down mortgages.
I’ve played that course, and that drop on the second hole is knarly. My thinking is his three “friends” were former clients that recieved his real-estate-only-goes-up sales pitch. Now that they’re all sitting on several gators a piece, they figured it was time to invite their realtor “pal” golfing. Pay back can really suck.
Maybe they had him “fetch” a lost golf ball?
I can just hear them: “Let’s see if realtors always go up…”
LOL!
~Misstrial
LOL!
LOL! Oh man, now I have to clean off my screen!
OB_Tom, May I use this one in a cartoon? It is sad the guy died, but your take on it is comical.
Sure…
So who is the Scott Adams (i.e. Dilbert cartoonist) of the REIC?
Maybe this is a weekend discussion topic. Someone needs to fill that role.
He probably got a “Buy Now or Die ” text messages from NAR, hit the gate at 98 and missed the curve.
Could have been the right side of number eight.
“The victim, a recently retired real estate agent from Irvine,”
See my post in the “bits bucket about bankers…”
I tell ya…when that shooting happened to the Amish chidren…I tell ya…no more “Medium” for me…Like Yogi…”it’s Déjà vu all over again”
“Must avoid Hwy 50 this summer”
This is straight out of the movie Jackass, sad but funny .
I like all of the tie-ins: “The whole industry is falling down in California,” “…cart plunges off cliff,” and the story’s from “Fallbrook.” You couldn’t have planned it better.
A 65-year-old golfer died Tuesday after his golf cart plunged 75 feet off a cliff and crashed into a road below, authorities said.
KARMA…
Dude sure musta screwed a lot of people in his time.
Dead cat bounce is finally here.
Dairy Quee…I mean Data Quick (DQ) numbers for select California cities and counties for April 2007:
http://www.dqnews.com/ZIPCAR.shtm
And LA Times/DQ numbers for SoCal:
http://www.dqnews.com/ZIPLAT.shtm
Wowwee, AG, they show Arroyo Grande with a 14% yoy increase in median price. Aren’t you afraid of being priced out forever? hee hee hee
Yeah, AG had been NEGATIVE 15%-25% YOY median for the past 6 months or so. With our low sales #s, the mix can change the median quite easily. I wish I had $/sq. ft. for the area (like the LATimes chart does).
“Dairy Quee…I mean Data Quick (DQ) numbers for select California cities and counties for April 2007:”
These are some of the so-called solidly middle class large LA Markets which are predominantly SHF tracts. They Show consistent YOY declines. Will elaborate later.
BURBANK 92 $634,000 $600,000 5.67%
LAKEWOOD 57 $516,000 $550,000 -6.18%
LANCASTER 201 $333,000 $350,000 -4.86
LONG BEACH 271 $510,000 $512,500 -0.49%
NORTHRIDGE 83 $700,000 $722,500 -3.11%
PASADENA 124 $633,500 $632,000 0.24
SANTA CLARITA 58 $506,000 $615,000 -17.72
REDONDO BEACH 103 $789,000 $780,000 1.15%
VALENCIA 117 $535,000 $582,250 -8.12%
WHITTIER 104 $497,500 $493,500 0.81%
WOODLAND HILLS 88 $670,000 $724,500 -7.52
TORRANCE 155 $620,000 $600,000 3.33%
“These are some of the so-called solidly middle class large LA Markets which are predominantly SHF tracts. They Show consistent YOY declines. Will elaborate later”
Correction: They show either declines or miniscule tiny increases. I know my labeling Pasadena as middle class does not apply to all Pasadena as it has a varied range of housing and demograhics/incomes classes but overall it is neither super rich nor one vast slum area so my labeling stands. Ditto for LOng Beach.
Note:Whittier may be already sliding down toward lower predominantly working class, at least the large South and east Portions. Might have included Van Nuys as another Large so-called Mid-LA Market,but it may already have backslided toward lower class heavily immigrant in large parts so i choose to exclude it. Have excluded many smaller mid-markets as the sample might be too small to draw conclusions regarding the trend of RE prices for LA county.
And here are some hellhole LA crapburgs. Notice the rather astonishing YOY increases for these generally rundown extremely immigrant-overrun slumburgs/ghettos. Bet you bottom dollar tons of Mort fraud going on.
BELL 16 $520,000 $395,000 31.65%
MAYWOOD 5 $485,000 $425,000 14.12%
HUNTINGTON PARK 12 $503,000 $420,000 19.76%
SAN FERNANDO 14 $497,500 $433,000 14.90%
COMPTON 57 $419,000 $385,000 8.83%
Downtown LA/Central City 343 $729,000 $662,500 10.04%
South LA 237 $452,000 $405,000 11.60%
Note: LA DWTN condo market is just a small fraction of the entire DWTN housing market. The areas immediately surrounding DWTN are some of the most rundown slummy districts of LA City/county and are certainly rife with fraudulent RE price markups. Ditto for South LA.
Well the market is either soft or frozen depending on who you ask…
Here’s a detailed CA employment report for April from Beacon Economics (Christopher Thornberg’s new employer):
http://www.beaconecon.com/products/Employment_Reports/Beacon_CAEmploymentReportApr07.pdf
A lot of data, but it’s interesting to look at the graphs for unempoyment. The overall CA index went up sharply from March to April, and so did pretty much every county. In other words, this is not just some statistical noise, but a statewide pattern.
Have a look at Bakersfield. Back to normal in ONE MONTH.
on Tustin Ave in newport beach: $1.4 mil or $3k a month? very nice area on bluff above beach. I am tempted, but i like my $1400 house 1/2 mile away well enough. From the looks of the Tustin place it is a seriously FB, but great bones `40s house i would guess.
Hey catspit1, I’m close by there too. You have deal at $1400, my rent is $2100. Still a bargain compared to buying here.
In Santa Barbara County between 2005 and 2006, notices of default more than doubled, increasing by 110 percent, from 400 to 841, according to officials in the county clerk-recorder-assessor’s office.
For 2007, default notices more than doubled again, from 841 to 1,978. ‘Almost every neighborhood has one home in trouble,’ said Wendy Teixeira, president of the Santa Maria Association of Realtors.”
A near-perfect log-linear regression model fit to three data points!
(R-sqd = 0.998 in the regression ln(NODs) = a + b*Year + error )
Forgive me to indulge in a bit of prediction, but if the recent growth rate in NODs continues for a few more years…
Year NODs
2005 400
2006 841
2007 1,978
2008 4,317*
2009 9,600*
2010 21,348*
* Predicted NODs
Coincidentally, 1978 is the number of Trustee’s Deeds recorded in San Diego County in the first four months of 2007. How about a prediction of the number Trustee’s Deeds for SD County:
Year TDs
2006 2050
2007 7175
2008 25060
2009 87710
2010 308000 (hmm, that does strain the imagination)
It strains the imagination, but is very entertaining nonetheless.
Eventually the rate of increase in foreclosures will taper off and then go negative — kind of like the way that prices recently did
Yes, but when?
I inherently like anyone who decides to go do a log-linear regression for the hell of it. But that extrapolation is quite an indulgence - I might not say anything but you have to realize that similar baseless empiricism was indulged during the run-up. How many dumbasses out there looked at y-o-y trailing returns in 2004 for the last three years and extrapolated out similar returns into this year, ignoring the fundamental driving forces and mechanisms for price movements? They’re now getting what they so richly deserve for that indulgence. On the other hand, that brand of dumbass, if they ever actually read the term “log-linear” somewhere (they wouldn’t), would probably think the term was lumber-related. So I’ll take your empiricism over theirs. Cheers.
With respect to fundamentals, we can go back to the Credit Suisse ARM reset chart for evidence that the NODs/TDs are unlikely to let up before 2011. I believe the 2008 dip in ARM resets will just allow time for the lenders to catch up with the repo’s from this year’s defaults.
“The city of San Diego hit the real estate market with full force Monday, placing 17 properties worth an appraised $37 million up for sale.”
That is a mere drop in the bucket for San Diego County. As Sandicor data shows, April 2007 used home sales were $1.1b, and new listings (valued by list price) were $3.4b. And I imagine that at least a few new homes sold as well, given the 130 “new home communities” in San Diego County.
(Caution: pdf file)
http://www.sandicor.com/statistics/stats2007/04-2007/sfd-407-stats.pdf
Full Force? That’s nothing more than a butterfly’s wings flapping in the Amazon. But in a chaotic system… Let’s just say that this could be meaningful.
“‘The whole industry is falling down, and you can see some (contractors) are a little panicky about what’s coming,’ said Robin Hayhurst, executive director of the Santa Maria Valley Contractors Association.”
Got popcorn (Neil…)?
GS, let the poor guy enjoy his honeymoon.
He’ll be back soon enough.
“In Santa Barbara County between 2005 and 2006, notices of default more than doubled, increasing by 110 percent, from 400 to 841, according to officials in the county clerk-recorder-assessor’s office.”
This story was not even reported today by the Santa Barbara News Press. They had a related story (can’t quote because they charge for online access) about the Fair Isaac’s announcement that their FICO scores will henceforth be more accurate, which could lead to some people in the county (not the city) being unable to buy houses. But they promised this would not happen in Santa Barbara proper…
I wonder what they mean more accurate? My understanding is that credit scoring models have gradually improved over the years supposedly becomming more accurate.
“‘As an association, we’ve not seen a rapid decrease in members,’ she added. ‘But definitely, when you have 500 agents and 90 closings last month, a lot of people are not going to get paychecks.’”
“Beyond lenders, escrow companies and termite inspectors, homeowners spent fewer dollars fixing up houses to make them more attractive to buyers, who would then fix them up more. ‘The big hardware companies, the national ones, are seeing a sales decline. Their income is down, and they’re laying off workers - or not replacing them,’ Watkins said.”
SO WHAT. These greedy people are responsible for driving up the costs to employ American workers and so many employers went “offshore.”
I am glad that “what goes around comes around” came around for them!
~Misstrial
Pot calling the kettle black?
‘You’re talking about pot houses!’
We will be seeing more of this I am afraid.
http://www.capegazette.com/storiescurrent/200705/connor052207.html
Be sure to read both on the page
exposed for what he really is
Casey does Texas:
http://dallas.craigslist.org/rfs/336421575.html
they are fos - those are no FIRE SALE prices!
He has some sort of fund-raiser for himself going on his blog. Trying to raise $1k by week’s end.
~Misstrial
Whoop-dee-doo. Big fat 15% discounts vs “appraised” values. bfd
More like Texas does Casey, if you know what I mean.
“For 2007, default notices more than doubled again, from 841 to 1,978.
When are people going to stop spending like there’s no tomorrow? Stores overflowing near me
Helicopter drops must be landing on target…
yeah and those bailout checks…
Desperation. Gotta get on with life. I just paid over $8.00 for a box of 48 count Sudafed at a pharmacy on Montana Ave in SM. Fscking highway robbery, but I have a cold, and I need the drugs. The bogus substitutes do not work. Inflation running at about 30% YOY around here, I am looking forward to an $80 dry cleaning bill tomorrow for two weeks worth of clothes. Gasoline is $3.85 for premium. The train has left the station, inflation is kicking in big time. I am setting up a VPN so I can cut back on commuting to three days per week.
I’m in Woodland Hills, CA. I’ve been saying the same thing about inflation for absolute ages. The governtment just cooks the books. Real people absolutely know what REAL inflation is.
AH! Inflation….. We are all experiencing it but the Damb Government keeps telling us not to worry tha core inflation is only 2.5% per year. They are saying that to keep COLA down for SS indexing. What they think the public is stupid…..
If they don’t get that WAGE inflation going, and pretty soon, and in a pretty big way, they are going to get the opposite effect as people cut back on consumption. What do we get with increasing money supply but decreasing consumer spending. The “big S”, stagflation.
Yep.
Back in 1929, they got a whole lot more…