The Run’s Over In California
The Union Tribune reports from California. “DataQuick expects to report today that the six-county Southern California region saw defaults rise nearly 159 percent last month to more than 9,200, compared with 3,562 in April 2006, and that foreclosures skyrocketed from 311 to more than 2,800 over the same period. San Diego’s defaults rose from 554 to 1,346, and foreclosures increased from 85 to 525, April to April.”
“(Consultant) Peter Dennehy said only about 4.6 percent of sales involve foreclosures, far less than in the recessionary 1990s and a trend he called ’something to watch’ but still ‘manageable.’”
“A rise in resale inventories may represent good news for buyers, Dennehy said. Many sellers have to sell and will lower prices to do so, when a year ago, many were simply testing the market to see if they could get a high price and would not negotiate if someone offered to pay much less.”
“‘That probably will keep pushing prices down this year and next,’ he said.”
“One factor on buyers’ minds is gas prices, the speakers said. Imperial Valley expert Adam McAvee, said that market is ’struggling’ from affordability and commuting issues to the point where the typical new subdivision is only selling 1.3 homes per month.”
The North County Times. “The California Department of Real Estate is trying to bar a local broker from the industry, accusing him and his company of arranging inflated appraisals in order to pocket huge commissions.”
“Houses that Stonewood Consulting Inc. brokered were typically sold for $50,000 to $100,000 more than nearby comparable houses, according to the real estate database. Managers at local real estate offices noticed the unusual transactions in early 2005 and several warned their agents to steer clear, said Gene Wunderlich, a director at the Southwest Riverside County Association of Realtors.”
“The more immediate issue is the rising number of foreclosures, Wunderlich said, a trend that he attributed to lower lending standards, a marked slowdown in real estate markets and unusual investment arrangements, such as Stonewood’s, that have come to light in the last year.”
“‘It’s kind of a three-way whammy,’ Wunderlich said.”
The Mercury News. “Mention ’short sale’ in Silicon Valley in the past few years and people probably would have assumed you were talking about a technique for selling stocks. But it’s a real estate term that’s back in parlance in 2007.”
“‘It’s the hottest topic in the industry,’ said Rob Bates of Fidelity National Title.”
“It’s unclear just how many of the houses and condos on the market in Santa Clara County now are being offered by owners trying to do a short sale. Sometimes realty agents who are listing property for owners trying to do short sales make note of the situation in the ‘remarks’ portion of the listing.”
“In a sample of 461 houses and condos listed for sale in Santa Clara County on the MLS early this month, 18 listings, or about 4 percent, contained some mention of short sale or a sale requiring lender approval, said real estate broker Richard Calhoun in San Jose.”
“‘Not all agents will disclose a short sale in the remarks,’ Calhoun wrote in an e-mail, ‘So I think that 4 percent is likely low.’”
“Edgar Meneses, a real estate agent who works for the non-profit Neighborhood Housing Services Silicon Valley, said earlier this month that of the six first-time home buyers he was assisting, five had made offers on houses or condos being sold in short sales.”
The Press Enterprise. “Inland builders continue to struggle with a rising unsold inventory, despite lowering their prices and throwing in freebies such as swimming pools. Steve Johnson, a director in the Riverside office of consulting firm Metrostudy, said builders are still up against flagging consumer confidence.”
“‘They’re having a tough time shaking off the apathy that’s affecting the market,’ Johnson said of builders.”
“Johnson noted that as of the end of the first quarter, the Inland region’s unsold new-home inventory stood at 6,545 properties, a supply of 7.3 months. That’s 88 percent higher than the 3,473 properties, about 3.5 months of supply, that were unsold at the same point of 2005.”
“The 1,375 new homes sold in the Riverside-San Bernardino county area in March marked a 51.7 percent drop from March 2007. Johnson said the trend likely means that new-home prices will be dropping long term, but the size of homes built will also be going down to meet market demand.”
“Fred Bell, executive director of the California Building Industry Association’s Desert Chapter, said there are no signs of a new-home buyers surge kicking in. ‘I’m not optimistic that it’s going to improve really soon,’ Bell said. ‘The residential side continues to be very slow, and that will probably (continue) into 2008.’”
“Patrick Duffy, managing director in the Costa Mesa office of Hanley Wood Market Intelligence, said after several months of builders offering similar types of buyer incentives, like pools and amenity upgrades, new-home developers are turning more to straight price reductions.”
“‘The ones who are serious about selling are lowering their prices,’ Duffy said. ‘Builders are getting really serious about moving that inventory off the books.’”
The Desert Sun. “Lennar Corp., the Florida-based builder of several housing communities throughout the Coachella Valley, is closing the administrative office division serving Palm Springs desert resort communities.”
“‘It’s a challenging time for the home building industry,’ said Jeff Roos, regional president of the Southwest Region for Lennar.”
“Other Lennar offices affected by the consolidation include those located in San Diego, Orange and San Bernardino counties. CBIA director Fred Bell said this move is not surprising.”
“‘As the housing market slowed, they’ve been aggressively trimming their administrative overhead,’ Bell said. ‘Every one of the home builders is aggressively looking at managing their inventory,’ Bell added, citing the projected inventory of roughly 10,000 new and existing properties on the market in the Coachella Valley.”
“‘How do I feel?’ one worker bemoaned Thursday, as she headed into the attractive slate-studded building Lennar has leased at the corner of Cook Street and Country Club Drive in Palm Desert for several years. ‘I’m not happy.’”
The Merced Sun Star. “The housing market isn’t crashing. That’s the good news local Realtors heard Thursday when state Department of Real Estate Commissioner Jeff Davi visited Merced.”‘
“‘There’s no bubble in California real estate,’ Davi told a crowd of 140 at UC Merced’s Lakireddy Auditorium. ‘It’s been a soft landing and a subtle downturn.’”
“Davi gave a half-hour talk that first recapped the ‘euphoria’ of the five-year period between 2000 and 2005, when California’s real estate market saw huge growth. That upswing fueled speculation, contributed to the breakdown in subprime lending, and drove thousands of people to become real estate agents, Davi said.”
“One in 53 adults in California now holds a real estate license, which is twice the number of attorneys in the state.”
“Statewide home sales slumped 23 percent between 2005 and 2006, a ‘very significant drop’ that marked the beginning of the downturn, he said. ‘The run’s over, that’s all right,’ Davi said. ‘We’re transitioning from a seller’s market to a buyer’s market. We’ve been through this before in the ’90s.’”
“Davi also touched on other consequences of the housing downturn. His agency has seen a dramatic increase in the number of enforcement cases it handles. People are less likely to file complaints when their home values are rapidly appreciating, he said.”
“Recent press coverage of the real estate industry has been ‘weighted toward the negative,’ said Merced County Association of Realtors President Scott Oliver, and Merced is now in the process of returning to a ‘normal market’ after the boom years of 2004, 2005 and 2006.”
“The real estate research firm DQNews listed Merced’s median home price as $314,000 in April, down 16 percent from the April 2006 price of $375,000.”
“The California Department of Real Estate is trying to bar a local broker from the industry, accusing him and his company of arranging inflated appraisals in order to pocket huge commissions.”
So were most realtors and brokers, nothing new here.
why can’t they jail him ?
They might since he is an insider. They do not apparently prosecute borrowers commiting mortgage fraud.
Here is a quote from an agent :
But Kodak said the FBI tends to focus on financial insiders and not people who lie on loans: “We go after, normally, the fraud for profit, because even though it doesn’t make up the majority of the numbers out there, it certainly makes up the largest financial losses.”
Here is the full story:
http://news.com.com/Casey+Serin+The+worlds+most+hated+blogger+-+page+2/2100-1028_3-6183383-2.html?tag=st.num
You may ask how does a realtor inflate the price on the buyer???
Fake multiple bids, which are unconfirmable.
Buyers actually believes their bid is the legit and home must be worth that much more due to “frenzy biddings” from many others.
But there is no one else. The fake appraisals are after the fact event. You need to disclose the full process to see the folly of the market.
All Fake… thats how its done folks… and not a single piece of paper to prove in court… this is bigger than the S&L bust of the 80’s. Its all a fraud! They are still talking about multiple bidders in California with sales declining by 50% year over year.
When I eventually buy, I will tell the realtor that any competing bid will automatically lower my offer by $5K. That should put a stop to that nonsense.
Try 15K for start … 5k is 1% these days of total
prices are nearly 100% overvalued (inflated)…
It will take 50% cut off the top…
When I finall buy, any realtor who tells me there is a competing bid automatically loses my business. REO doesn’t give a damn about bidding wars, they’ll just take the first acceptable offer.
MBRenter-
You’d be wrong to make that assumption about R.E.O. Managers the experienced ones that know what they are doing are kings of creating situations that bring multiple bids.
I used to work for one who would purposely price it for just those types of scenarios. The only thing that won’t generate a multiple bid in L.A. County that’s an R.E.O. is something no one wants to buy. Even if you check the HUD list when they offer a property for sale and the release the bid results it’s not unusual to see 20 people bidding on the same property. It’s public record check it for yourself.
MBRenter-
You’d be wrong to make that assumption about R.E.O. Managers the experienced ones that know what they are doing are kings of creating situations that bring multiple bids.
I used to work for one who would purposely price it for just those types of scenarios. The only thing that won’t generate a multiple bid in L.A. County that’s an R.E.O. is something no one wants to buy. Even if you check the HUD list when they offer a property for sale and the release the bid results it’s not unusual to see 20 people bidding on the same property. It’s public record check it for yourself.
We did just that around April 1996 when our “buyer” agent asked us to bid 15K above the asking price of a house in Sunnyvale. Our “buyer” agent refused to write the offer we made for the asking price. He said “he didn’t want to waste his time to write such offer.” Gee, I thought we did sign the “buyer agent agreement, ” and we did interview him diligently to make sure his interest was in helping us buying a house. The housing market at the time was starting to pick up. However, we didn’t see any sign of frenzy buying. I did suspect he faked the multiple bids to raise the price. He did call us later to aplogize for not writing the offer but we never ask for his service again. Our first lesson, RE agents work for themselves or the sellers, period.
Our “buyer” agent refused to write the offer we made for the asking price. He said “he didn’t want to waste his time to write such offer.”
In california, i believe he could lose his license for “refusing” to submit your offer. that’s breach of fiduciary duty. as far as “multiples” go….that’s so 2005
Agree with Louie here,
My co-worker is looking to move from Milpitas to Cupertino, and he says still lots of over-bidding going on Cupertino, as per his realtor. Either it’s a fraud on realtor’s part OR very many crazy folks buying around in silly valley
“and he says still lots of over-bidding going on Cupertino,”
and he was told from whom ? A realtor thats who!
This has been going on too long…
I learned my lesson too, i made an offer nearly 10% above asking during the craze (media was humming the RE slogan with multiple offers everyday)…
But backed off mid way…
It turned out the home sold BELOW asking by 2%.
That was nearly $75K the realtor was going to fleece me for!
Santa Clara Clounty along with other local counties are showing declining sales volumn and increase in inventory…
Not to mention we have the highest level of ARM toxic loans anywhere around the nation.
Demand down with supply is up, exotic financing that fuels past purchases are dead. So where is this multiple bids comming from. It doesnt make sense.
“They are still talking about multiple bidders in California with sales declining by 50% year over year.”
I guess as long as the California market doesn’t run out of people with buckets of money and boxes of stupid, there will be no fallout.
The boxes of stupid are no problem - we have way more than we need or want of that in California. It’s the buckets of money that seem to be slowly disappearing as lenders tighten.
We had an odd experience selling our house one year ago. I had been reading this blog, and purposefully asked the agent to price it low to make sure that it would sell quickly. We were shocked to receive seven written offers the day after the first open house, two for $20K over the asking price. And four other agents were preparing written offers when we accepted one from the first batch. People are funny - they sensed a bargain and completely overreacted. We would have been happy with one offer.
“They are still talking about multiple bidders in California with sales declining by 50% year over year. ”
Because it’s still happening… It’s not as big a fraud as you think if the location and/or the price is right you will have multiple bids. When I liquidated foreclosures during the last downturn it was not unusual to get 15 bids per property. In Los Angeles it’s reality not fraud.
“‘There’s no bubble in California real estate,’ Davi told a crowd of 140 at UC Merced’s Lakireddy Auditorium. ‘It’s been a soft landing and a subtle downturn.’”
Who is this idiot? These so called experts as far as I can tell are worse than mattress sales people when it comes to BS.
We are just at the beginning of the downturn. And ask anyone who bought in 2005 - mid 2006 in any part of CA, if the loss of $50K - 100K in just one year seems like a “soft landing”
You are missing the point. The media contacted him for a quote. They probably contacted 5 more people and took the quotes their advertisers (RE complex) were happy with. I wouldn’t doubt it if the RE people approved them. It has been going on for years.
I think the real estate industry would do well to get prices down as far as possible. I know individual commissions would be a bit lower, but 100% of zero is pretty scant pickings, and all these morons are complaining buyers are not biting at current prices, particularly with credit tightening more by the day.
but 100% of zero is pretty scant pickings
It is a measure of organizational intelligence as to how quickly they recognize the need to change tactics.
Doesn’t look too good for NAR at the moment.
It does the RE industry no good to have this level of doom in the media. Even people that can afford these prices are spooked away. And that is the crowd they are trying to appeal to. Much better for them to write stories about how the bust came and is now over. It is BS but that is what they want.
You forget how many Realtors bought into this mania - they’d be shooting themselves in the foot (see Lareah for example).
Lets see from the past bust in California…
Mortgage Payments drop in California
January, 1996
La Jolla, CA.—(BW) Thanks to lower prices and lower mortgage interest rates, the monthly mortgage payment that a new California homeowner needs to make is far smaller than it was five years ago, bringing many potential homeowners into a market they used to be shut out of, a real estate information company reported. The typical monthly mortgage payment on a house bought during the last three months was $942. That was 28 percent lower than the $1,308 it was for the same period five years ago, according to DataQuick Information Systems
The numbers assume a 20 percent down payment on a median-priced house for this last August-to-October period and for 1990. The interest rate for a thirty-year fixed-rate mortgage was 10.15 percent five years ago, it was 7.4 percent for the most recent three-month period. DataQuick monitors real estate purchasing and financing activity nationwide and provides information to consumers, lending institutions, title companies and industry analysts.
Monthly Mortgage Payment
Median-priced homes
August-October
(Chart for Mortgage Payments drop in California)
County/Region 1990 1995 % Chg
Los Angeles $1,401 $919 -34.3
Orange County 1,628 1,113 -31.6
San Diego 1,265 942 -25.6
Riverside 931 665 -28.6
San Bernardino 889 654 -26.5
Ventura 1,607 $1,063 -33.8
So.Calif. Total $1,301 $903 -30.6
Alameda 1,538 $1,128 -26.7
Contra Costa $1,465 $1,196 -18.3
Marin $2,268 $1,846 -18.6
Napa $1,280 $944 -26.2
San Francisco $1,967 $1,440 -26.8
San Mateo $2,069 $1,683 -18.7
Santa Clara $1,844 $1,414 -23.3
Solano $1,024 $802 -21.6
Sonoma $1,319 $1,070 -18.9
Bay Area $1,626 $1,289 -20.7
Santa Cruz $1,799 $1,296 -27.9
Santa Barbara $1,258 $991 -21.2
San Luis Obispo $1,386 $903 -34.9
Monterey $1,244 $1,036 -16.7
Coast Total $1,429 $1,058 -26.0
Sacramento $1,031 $665 -35.5
San Joaquin $981 $654 -33.4
Placer $1,265 $853 -32.6
Kern $640 $454 -29.0
Fresno $668 $499 -25.4
Madera $626 $537 -14.1
Merced $746 $537 -28.0
Tulare $569 $471 -17.2
Yolo $1,031 $775 -24.8
El Dorado $988 $770 -22.1
Stanislaus $924 $593 -35.9
Inland Total $882 $604 -31.5
All California $1,308 $942 -28.0
“The numbers assume a 20 percent down payment on a median-priced house for this last August-to-October period and for 1990.”
20% down? what does that mean?
20%? We don’t have no 20%……we don’t need no stinking 20%!!
“The numbers assume a 20 percent down payment on a median-priced house for this last August-to-October period and for 1990.”
Please forgive my ignorance, but what is a downpayment?
“It does the RE industry no good to have this level of doom in the media. Even people that can afford these prices are spooked away. And that is the crowd they are trying to appeal to. Much better for them to write stories about how the bust came and is now over. It is BS but that is what they want.”
You mean write ” Fairy Tails”
As one who tries to qualify people every day, I can say that this claim that mortgage payments are less than 5 years ago is BS. Prices are at least double and down payments are double. Taxes, based on sale price are double. And guess what, it is twice as hard to qualify someone today as it was 5 years ago.
It’s not about writing Fairy Tails but the truth is that consumer confidence plays a huge role in market demand.
Take for example someone gets sick from eating spinach. The next thing you know the spinach farmers are in big trouble because no one is eating spinach, even though the problem was a small problem that is contained and traced.
Eventually however people return to purchase spinach and the demand grows back to what it should be. Same thing will happen with houses.
The bad press and low consumer confidence combined with other factors like mortgage programs changing (due to decreased investor confidence which is linked to depreciating values) can produce a downward spiral in prices that can continue until confidence in the market returns which given all the doom and gloom could be a very very long time. It’s just a cycle and we’ll be repeating it again in 10 to 15 years. If you can afford a monthly mortgage payment then buy the house. If you are a speculater than you assumed risk when you decided you wanted to step up to the plate and become an investor. But if you are a buying the home to live in, raise your family in, something to call your own and you can afford the payments. Just buy it and lock in a good fixed loan and ride it out. Prices will return to what they were in 2005 and then some in the future.
These numbers don’t look right at all!
The median home price in LA is at least $550K. $919 a month wouldn’t buy you a trailer in Hemet.
Middle class incomes can not keep up with all of the debt services, taxes, high utilities, high payments on up-side down houses and cars etc. California was the first with this expensive , keeping up with thy neighbors, and will be the “first” to fall of the cliffs of reality as the middle class will dispear with in ten years or less. The movie has been played before but the new players haven’t seen the end.
‘The forum was sponsored by the Merced County Association of Realtors.’
And never was heard a discouraging word, and the skies were not cloudly all day.
You always gotta watch your step when you’re walking “where the buffalo roam.”
Who is this idiot?.
LOL, he’s a state RE commissioner. My tax dollars at work. This guy reminds me of a porter on the Titanic “Go back to your staterooms, everything’s fine! FINE!”
That’s where the saying
comes from
“The Americans aren’t anywhere near Bagdad”
I read that, but figured a real “Real Estate Commissioner” could not be so out of touch.
Cronism…..They picked someone from inside of the RE industry. LOL! Like picking an insider executive from Drug Company and not A Doctor to run the State Health Board.
State Senator Jeff Denham (R-Merced) testified at the Senate Rules Committee confirmation hearing in favor of Monterey County Real Estate Broker Jeff Davi as the California Real Estate Commissioner today. He was approved by the committee 5-0.
Davi, who has been working in the real estate business for over 15 years, has served as a member of the California Association of Realtors Board of Directors, is a past president and has served as a board member of the Affordable Housing Corporation of Monterey County, and is a past board member of the Economic Development Corporation of Monterey .
Denham, who recommended Davi to Schwarzenegger in November of 2003, had praise for Commissioner Davi at the hearing.
“Jeff has the experience it takes to help manage California’s Real Estate ,” Denham said. “He is highly qualified and will provide first class service to California consumers and Realtors.”
Davi, who was appointed by the Governor in October of 2004, will manage the Department of Real Estate, which regulates real estate transactions and oversees the licensing of agents and brokers. The post pays $123,255 annually and requires full state Senate confirmation.
The post pays $123,255 annually and requires full state Senate confirmation.
At that salary, he will NEED an option loan to buy a house in CA, since he lacks sufficient income to afford all but the most modest condo.
No one should be surprised that the CA Department of Real Estate Commissioner is denying the existence of a bubble. The RE industry in the state is too powerful to antagonize, and the state has a vested interest in averting an all-out housing collapse. If it’s the truth you want, come to this blog instead.
I’ll say. Does anyone in government want to admit that their property tax income is about to fall off a cliff? Last time I checked, the state of CA was scooping up most of the property tax receipts and dribbling a bit back to the counties, but using the bulk of it to hide the budget imbalances.
And you just know that the pols will threaten to cut the most politically sensitive services first, then whine that they need a tax rate increase. This will probably turn into another “tax the rich” proposal, which will define “the rich” as anyone making an income more than 10% over the poverty line.
Man, I’m cynical. But does anyone want to take the other side of that bet?
I’m betting on your side by planning to change my legal residence to PA, where old money rules. (Ergo, low income tax. Minimize effect of War on Savers.)
The only thing worse than shills are lapdogs. I wonder why so many government workers are so quick to heel when they are paid to lead.
Califronia is killing itself with high RE prices. Young educated people are fleeing the state and will continue to flee as long as they cannot afford to live there. The brain drain will kill bubble areas. How many young educated Americans are moving to California and staying there to raise a family compared to those who are leaving? How many retirees are leaving California compared to those moving there? Once California’s major cities begin to look like Tijuana, there will be no more motivation for rich Asians to move there. All you will have are an aging white population surrounded by masses of non-English speaking uneducated immigrants.
My wife and I make over six figures in income here in California. We both have college degrees. We are leaving in three weeks to new jobs in Pittsburgh where our combined income will again be over six figures.
There are many great things about California, but in terms of the economics of raising a family in conjunction with the quality of the school system we have decided it is in our best interest to leave.
California’s best days are behind her. The good times may come again, but not in my lifetime so I must say adios!
pittsburgh gets unfairly trashed - it is a great place to live….if you don’t need to live near an ocean….
Pittsburgh is a great town. What part of the city do you plan to live in?
All you will have are an aging white population surrounded by masses of non-English speaking uneducated immigrants.
Will have? That description sounds pretty up to date to me!
I love this:
““‘There’s no bubble in California real estate,’ Davi told a crowd of 140 at UC Merced’s Lakireddy Auditorium. ‘It’s been a soft landing and a subtle downturn.’”
“Davi gave a half-hour talk that first recapped the ‘euphoria’ of the five-year period between 2000 and 2005, when California’s real estate market saw huge growth. That upswing fueled speculation, contributed to the breakdown in subprime lending, and drove thousands of people to become real estate agents, Davi said.””
Er…isn’t what you just described…a bubble?
“‘There’s no bubble in California real estate,’ Davi told a crowd of 140 at UC Merced’s Lakireddy Auditorium. ‘It’s been a soft landing and a subtle downturn.’”
———–
He reminds me of Baghdad Bob.
‘It’s been a soft landing and a subtle downturn.’”
thats what she said…..
SV is not that different after all. Short sales abound, so does the craislist.org on “reduced” prices.
That’s impossible. I’ve received regular assurances that it’s different in SV because of the google/dotcom/etc zillionaires.
Thats Bangalore, India you are thinking of. Not as many dot come millionaires as you might think, and very few new ones.
google/dotcom/etc zillionaires…
You mean to tell me when someone sold their $350/share Yahoo shares at the peak… it was all legit! I mean it really was worth that much!
Show me a legit zillionaire … they are rare to find.
all else was BS on a national scale…
What was even worst is that many even today in SV thing this was legit and will happen once again….. Oh lord!
For those of us who have been on here for years….stucco, az, c&c,mrincome,txchick and many more this one has it all…. everything we have been saying…
fraud
home size
lending standards
gas prices to commute to east bf
defaults
foreclosures
inventory glut
no more first time buyers
it took what … 2-3 years? I am keeping my eye out for an opportunity while jsp wakes up and freaks on RE… there will be opportunities
It is all gaining steam quickly.What really surprised me is how well the stock market has been doing.I sold all my retirement funds a little while back and missed out on the run.I feel I did the right thing and it is a matter of time when they cannot fudge the numbers anymore.The market will correct.China is in a major bubble waiting to implode.I guess they already forgot about our bust.
This housing bust is way worse than is being reported to the tin foil hat folks.The cheerleaders will keep it up forever I guess.
I stop short of trading my 401k…. but I must admit I too am tempted. All this private equity, hedge fund cash chacing any deal it can find just spells trouble to me. I can not figure out this equities market.
Money is moving into stocks because real estate is not a sure thing anymore. Once speculators realized that real price CAN go down, it’s time for the next sure thing, and that is the stock market. That too will correct but who knows when. Being too early means being wrong.
Unfortunately, that logic is what financial commentators say on financial shows. Folks berate the NAR, but fail to see the same thing with financial “brokers.”
Margin levels at very high levels. Do some research on Treasury debt, backing for Fed Reserve Notes, how more notes are created, and then see if that reasoning makes any sense. It doesn’t. It is credit. Debt is credit, and credit is money. Folks playing with fire sometimes get burned.
Being too early means being wrong.
Being too late means being broke.
Not saying that you are wrong, but how else can you explain the stock market? It is as irrational as the real estate market, maybe more looney. I’ve been following Bill Fleckenstein for several years and he has been calling for a market correction since 2005 maybe even earlier. What happened to the markets since 2005? I agree with his rationale calling for a sharp correction in the equities market but timing has to be relevant. Same with several folks here who have been calling for a correction in the real estate marker since 2004 (some as early as 2001). What happened to prices since then? Guesses, that’s what we all have, educated guesses.
Disclaimer: I sold my house in late 2005 thinking it has to be the top (early and wrong).
A stopped clock is correct two times a day. hehehehehehe
“…but how else can you explain the stock market?”
Well-timed liquidity blasts ensure that the stock market always goes up, and investors factor this knowledge into their portfolio allocation decisions.
Conversely, policymakers have lots of incentives to ensure that the stock market always goes up, as a major correction in the stock market at this stage would be the death knell for the bubble economy.
“hedge fund cash chasing any deal” - must account for the sudden surge of the Iceland krona (1.58 US cents to 1.62 US cents in a week when USD was not really sinking). My diagnosis: those Iceland bonds of 2013 I am always touting paid their annual coupon on the 17th. Within the next week, all the hedge fund guys borrowed a few more yen to buy a little more Iceland 9% yield. Unless it was YOU guys. Nah, I don’t have that much credibility here !
The stock market is only “semi-rational” and everyone with experience knows it. Short term traders can believe in doom coming next year but it has zero impact on their actions until then. Long term holders will see booms and busts but in the end they average out.
It is much more effective (for the large majority of investors) to take a blind index approach (Bogle/Vanguard) than try to guess the future or resort to emotional or frequent trades. Buy stock when the market has gone down (better deals), buy when it is rising, sell only if you need the money right now–short term funds should be in CDs, bonds, or the money market anyway.
I’m sorry, but I don’t buy this BS about taking a blind eye to equities anymore. The bubble we’ve had in stocks for the last 25 years is NOT typical. Ever taken a look at a linear graph of the Dow?
http://finance.yahoo.com/q/bc?s=%5EDJI&t=my&l=off&z=m&q=l&c=
See anything funny there? The bull market we’ve been in since the mid 80’s corresponds closely with the debt-financed economy we’ve lived in since the Reagan administration. Just like the housing bubble, those prices are going to crash back to earth at some point.
And I’m not even going to touch on the fact that only one company in the Dow today was in the original Dow Index. All the others are gone or were removed from the index to “better reflect the current economy”. Whatever. You can continue to believe that in the long run, stocks always go up (now where have I heard that before?). But like Keynes said, in the long run we’re all dead.
Anybody who took a blind eye to stock market invseting beginning in 1901, 1929 or 1966 soon had a black eye.
“‘It’s kind of a three-way whammy,’ Wunderlich said.”
I thought a three-way might be a good thing . . . but this doesn’t sound so great.
Auger??
“‘There’s no bubble in California real estate,’ Davi told a crowd of 140 at UC Merced’s Lakireddy Auditorium. ‘It’s been a soft landing and a subtle downturn.’”
Does this mean the helicopter landed then fell off the cliff ? Beer Me Rich
Beer Me Rich
I like the overall idea. This seems as likely as buying houses and getting rich.
great - need to put more Office references in this blog!
thats what she said…
“One in 53 adults in California now holds a real estate license, which is twice the number of attorneys in the state.”
Wow !…1 in 53 people in CA need to GET a REAL Job
Far more than that need to get a REAL job in Cali. When you factor in all the “life coaches,” “pet groomers,” “personal trainers,” et al, I think you’ll find probably 1 in 10 California jobs are bogus.
You forgot “Stylist”. Beer Me Rich
My favorite is “Generalist” could you be any more vague? Is that like Jack of all trades, master of none.
What, pray tell, does a life coach do? And who hires them?
Remember how in third grade you didn’t want to go into school ’cause you got a back hair cutter and your mom was your own personal cheerleader telling you that you can handle this and everything would turn out just fine. Fast forward twenty-five years and a life coach is the person you pay to be your mom.
Not even close. A life coach is someone paid to discuss important choices. Usually they are older and have some fairly obvious claim to wisdom. The idea that one might gain some insight from bouncing important possibilities off of another American who has been there before is of course foolish and of less value than your next run to Walmart for more junk from China.
Yes you’re right of course. A life coach is someone you pay to be your dad.
“Remember how in third grade you didn’t want to go into school ’cause you got a back hair cutter and your mom was your own personal cheerleader telling you that you can handle this and everything would turn out just fine. ”
Uhhhh.. no
Stager?
My Dad always said, “if there’s a way to make money, legal or illegal, someone is doing it.” That’s especially true here in CA. Every time I get invited to a nice home for a BBQ or whatever, I always ask people what they do for a living. Rarely is it “doctor” or “lawyer,” it’s bizarre stuff like “I haul debris from one demolition site to another” or the invariable “(insert low skill job here) and part-time realtor.” The CA economy is a house of cards.
You are obviously moving in a limited circle.
You and I are in no position to judge who moves in what kind of circle.
Yeah a limited circle. That’s why I see so many D-Bags running around all over SD with Realtor magnet signs on their leased C240s and lots of SUVs and minivans with some stupid home business ad on it.
The Heloc party is over dude. Get used to it.
That may be. But I know a lot of people, and other than my co-workers, not too many are professionals. Yet somehow most have McMansions and BMW’s.
Nah, you only notice the one’s with McMansions and Beamers. When you are driving down the freeway, what percentage of cars around you are luxury cars?
I have to agree with IE. Here in Ashland, OR we are swimming in boomersin beemers driving to and from their McMansions. I know there are very few jobs for such lifestyles in Ashland or anywhere in southern Oregon. Either equity nomads or heloc avengers, but I’d wager not many folks who earned it.
Not only that.
The “nice houses” we are referring to here in California is considered a dump in most of the rest of the country. They’re not really rich, just not as poor as us.
So true. Its fun to have Cali friends visit us and watch their minds boggle when they see our house and how “little” it costs.
Wow !…1 in 53 people in CA need to GET a REAL Job
My thoughts exactly. No wonder unemployment is supposed to be so low here.
“‘There’s no bubble in California real estate,’ Davi told a crowd of 140 at UC Merced’s Lakireddy Auditorium. ‘It’s been a soft landing and a subtle downturn.’”
Sort of like that drop through the trapdoor after the lever has been thrown and the noose is around your neck.
Why is it a crime to sell your homes for “$50k to $100k more than comparable homes”? That’s fundamental capitalism. Let the buyer beware. The only crime is one the appraisal side, but for a builder this is just a case of successful marketing.
It’s not OK, or legal, to lie to a buyer during a real estate transaction. Market conditions are material facts and sellers and broker/agents must tell the truth.
This is where I part ways with many on this blog. If someone is willing to fork over an additional $50K or $100K than they need to, tough luck for them. They should have done their homework. Buying a house is not like buying a tie at Wal-Mart then seeing the same tie at Target for half price. You don’t get a 90-day money back guarantee on a house. Caveat emptor.
Market conditions fluctuate all the time. No one can get in the head of every buyer and seller and know what the “fair” price for any good or service is. If a mutual transaction occurs between two parties, it’s because both of them believed they would benefit from it. Sometimes that happens, and sometimes someone gets burned. Sorry, but that’s life. A burnt hand is unlikely to play with fire again.
If you read the article, a broker used fraudulent appraisals to convince people to overpay for real estate. That is criminal fraud. I cannot understand how anyone accepts lying as a normal part of doing business.
Back in the old days, if one man lied to another in a business deal the liar very often ended up with a broken nose and a busted deal. It was better back then.
An appraisal is just someone’s opinion of what something is worth. It’s not a fact like the trading price of a stock. And if you pay the appraised price for something, the appraisal is correct - because a house is worth what someone is willing to pay for it.
I have my own opinion on what a house is worth, and it’s 150 times market rent, tops. I don’t give a hoot what anyone else thinks.
Yoy don’t get it. IT IS A CRIME TO PRESENT INFORMATION TO A BUYER THAT YOU KNOW IS FALSE FOR THE PURPOSE OF OBTAINING A HIGHER PRICE. That is the very definition of fraud.
Yoy don’t get it. IT IS A CRIME TO PRESENT INFORMATION TO A BUYER THAT YOU KNOW IS FALSE FOR THE PURPOSE OF OBTAINING A HIGHER PRICE. That is the very definition of fraud.
NAR Update: “The price correction we said wouldn’t occur is now over. Thank you.”
Fed update: “The housing bust we said would never occur is now contained.”
anyone know what these 2 numbers are in EU, Japan or ? I’m betting it’s alot lower
One in 53 adults in California now holds a real estate license, which is twice the number of attorneys in the state.”
Not everyone with a lic. is a practicing agent.
There are thousands of people who aquired their lic. so as to educate themselves to the market, and keep from being ripped off.
Thousands huh?
Don’t forget the one’s who quickly found out that they couldn’t hack it in the Real Estate game. Most of the licenses fall under that catergory.
Since I recall reading long ago in Forbes about the huge number of attorneys in the US relative to other developed nations, I have just done a little research. Looks like there are 15,000 practicing barristers in the UK. Population of UK is 60 million, so adult population would be at least 30 million, so no more than 1/200 are barristers. As opposed to, apparently, about 1/100 of Calif.
You really need to look at the combined number of barristers AND solicitors before making any comparisons.
Thanks, I don’t know this lingo.
You obviously didn’t catch the article in the LA Times the other day about the state of worker supply in CA. Apparently they are predicitng an extreme shortage of educated workers in coming years. CA colleges need to quadruple the amount of degrees they are churning out to meet future demand. There aren’t ENOUGH attorneys (or other educated employees) to keep up with demand apparently. That is why legalizing illegal immigrants won’t do squat to help the economy.
“There aren’t ENOUGH attorneys (or other educated employees) to keep up with demand apparently. That is why legalizing illegal immigrants won’t do squat to help the economy.”
BINGO, IE! Influx of illegal immigrants to an area = outflow of educated employee population, especially middle class folks who can’t afford to isulate themselves from the fallout.
As someone with some recent experience hiring in urban California my impression is that the labor market has simply shifted and as usual most people who run or analyze businesses have no idea what is going on around them. Good companies that are well run and doing things that matter have no trouble getting scads of well qualified applicants. The problem is that most companies are run by soulless suits who post open positions for awful makework crap that any worker qualified enough to do is smart enough to steer clear of. Corporate America just now feeling the bracing cool of the enema it has so sorely needed for so long.
15,000 per 30 million is one in 2,000 not one in 200.
The UK’s “loser pays” legal system is hell on plaintiff’s attorneys. Which is why the Land of Hope and Glory is spared that particular plague.
I took the LSAT and got a respectable 165 but never did anything with it. The only reason I wanted a JD was because I wanted to protect myself against people trying to jerk me and mine around. I did a cost/benefit analysis and decided the paper wasn’t worth it.
That I know quite a few unemployed (and unemployable)McGeorge attorneys.
Read about a couple of Realtors trying to flip their Mega McMansion for a $550,000 profit in today’s market. These guys just won’t quit! There’s also a follow up on the ex-NFL QB and his Super Mega Flop in Santa Luz here in SD.
BMIT
I am in Merced, and real estate is a very dead object. Oliver and Daavi are playing the shills - you are free to completely disregard any of their statements. Merced is absolutely loaded with new homes not selling, vacant lots unbuilt, and for-sale signs everywhere. Home construction has stopped - the most noticeable aspect of this is the current lack of pick-ups with racks. Oliver mentioned 76 sales in April - it probably slipped his mind that this is 33% of 2005, and 40% of 2006 numbers. Merced’s household income is around 45K, and without very creative financing 350K houses will not sell. Period.
I’m in Visalia and I can tell you it is absolutely incredible. Every so often I drive through this one particular neighborhood. This builder has 10 houses that he built all on one street. They were listing last fall for $699.000 with a “special” price of $649,000 around Xmas. 4 are owned and the other 6 sit empty with for sale sign in the window. I drove past there today on my lunch and one of the owned ones had a FSBO sign on it that said; Priced to sale $300,000. I’m no Einstein but my math tells me that is easily over a 50% haircut. I bet this guy had quite a bit of equity to put down and he is trying to stick it to that builder. I’ve got to find out what the other 6 are listed at now. Oh BTW one of the units is owned by a city police officer. I’m guessing his wife is a doctor?
Merced and Visalia are so much alike it’s scary. Same size town, same demographics, same size community college, same weather.
There’s a new house sitting all by itself in a portion of a much larger development just north of town. I’ve taken to calling it the ’shingle house’, as unused stacks of roofing sat on the roof until a big wind blew them off a week ago. Brown grass all around it and no other houses for a quarter mile. Not a likely sale in many a year - unless the bank finally dumps it as a future REO.
Doctor? LOL. Doctor’s don’t make squat anymore. They haven’t since 1988 or so…. Time to adjust the stereotype….
You must be a dentist
I just noticed that Countrywide has marked down a significant portion of its REO inventory in Florida anywhere from 3%-6%. Is this a new development?
http://tinyurl.com/26jn79
Click on your state and the CFC REO inventory will pop up.
Checked the listings. The city of Sacramento alone has 117. These 117 don’t include the Elk Grove, Roseville, Folsom, etc listings of which there are plenty.
I did see some Brentwood in there too.
‘We’re transitioning from a seller’s market to a buyer’s market. We’ve been through this before in the ’90s.’”
That’s right. And during this period, the few areas that experienced a speculative bubble like Santa Monica saw a 48% decrease in median home price. In the past five years, most areas of California have experienced this speculative bubble.
It will be a buyer’s market when the PRICES actually get reduced!
It won’t be long before Buyers will be placing ads like the last housing bust.
NEED to SEll ?
Live Cash Buyer HERE - WHAT DO you HAVE ?
No JUNK or Houses Purchased PRE 2002.
Email ALL Financials, Disclosures, Wish Price and a very Detailed Letter with Photographs of 1st Born Child explaining WHY I should consider RESCUING YOU.
DON’T send Cupcakes, Pet Squirrles or Suzanne.
Hugs mikey
DON’T send Cupcakes, Pet Squirrles or Suzanne.
Might re-consider that last line. In a depression, roast squirrel, desert and female companionship would mean a lot.
Good thinking turnouththelights…
Send cupcakes, squirrels - HOLD the Suzanne!
Sellers THAT DO enclose a 8×10 Glossy of Cute 1st Born college age Daughter in cheerleader outfit WILL get Top Priority !
Hmmm I always thought Suzanne just needed someone to make her bite the pillow as it were to wipe the attitude off her face.
So dinner, desert, a little schtooping and you could probably write the last part off on your taxes as a service to humanity.
I’d rather have the squirrel in my pants than that rabid harpy Suzanne.
Love it, mikey! You just made my day!
OT: Ben, this gem is in your inbox:
http://i117.photobucket.com/albums/o72/muggyFL/CallDon.jpg
I just don’t have the heart to call Don and explain the bubble.
That’s Pinellas County (St. Pete/Clearwater), FL.
“Working for You. Not for Profit.”
Right. Keep Don busy with FREE mortgages for everyone! Don will even pay YOU to keep him busy!
Reminds me of Bill Murray as a radio Jock on that album, National Lampoon That’s not funny that’s sick? He was trying to get people to call in and talk to him. it’s been awhile but I think he would say: “CALL ME DAMMIT!! COME ON!”
Muggy,
I saw the exact same billboard off University Parkway wed. I didn’t have my camera but thanks for getting this one….
Chris
Priceless muggy lol
I’m going to visit that sign some night with my spray can, and add: EVERY TIME YOU CALL DON, A LITTLE KITTEN DIES!
OK, right now I am having fits of hysterical laughter. I just received, in the mail, a “pre-qualification” from a major lender for a mortgage of “up to” almost half a mill. Fixed rate, no less! And they’ll even waive my appraisal, credit report and courier fees! How did I get so lucky?
The reason I am having hysterics is that while my credit is excellent, my income is nowhere near supporting the mortgage payment on half a mill. LMAO! Part of me is tempted to see how far I can take it. Whaddya wanna bet it’s some bait and switch option ARM/IO dealie?
While I was waiting for my car in the shop this morning I saw a Countrywide commercial advertising a no appraisal, fast track, no fees fixed rate refi.
“Patrick Duffy, managing director in the Costa Mesa office of Hanley Wood Market Intelligence, said after several months of builders offering similar types of buyer incentives, like pools and amenity upgrades, new-home developers are turning more to straight price reductions.”
“‘The ones who are serious about selling are lowering their prices,’ Duffy said. ‘Builders are getting really serious about moving that inventory off the books.’”
Well, IT’S ABOUT FREAKIN’ TIME!!!
What the hell does the Man from Atlantis know about California real estate?
I dunno, but if I was in California, I’d be danged happy that Lennar was returing to FLA. Being from FLA, I was kinda hoping they’d relocate to Cali.
“‘The ones who are serious about selling are lowering their prices,’
Wow, what a concept! Lowering their prices. I’m shocked, I tell you, shocked! Must be a new kind of scam.
You’re probably right, even though I think you were kidding. What do you want to bet that behind every price reduction, there’s a bait and switch lined up?
That’s what I thought. Damn but when did I get so cynical.
“One in 53 adults in California now holds a real estate license, which is twice the number of attorneys in the state.”
this is shocking - anyone know the national avg?
I have been watching the SoCA housing market for months now and house prices are coming down. It’s making a small difference, but not enough for buyers to buy. Houses in SoCA are so overpriced, that they need to come down much much more before it will stir the buyers. Buyers are willing to wait to drive the prices down more and they will come down, no doubt. You have to be foolish to buy now.