Post Local Market Observations Here!
What do you see in your housing market this weekend? Foreclosures? “More people are losing their homes to foreclosure in Lake County. According to one source, there were a total of 457 total foreclosures in April, 80 more than the previous month. The Illinois foreclosure rate has escalated 23 percent since last April, according to RealtyTrac.”
“‘Our foreclosure workload and files have increased this year from last year almost 100 percent,’ said Alex Attiah, broker in Grayslake. ‘We’re experiencing that in all of the counties in Chicagoland.’”
“He also said that due to the excess supply of properties especially at the entry level market, sellers need to be more aggressive and realistic about their sale prices.”
“‘Lenders are selling at a very discounted price,’ he said.”
Legal changes? “Massachusetts Attorney General Martha Coakley on Friday banned so-called ‘rescue’ schemes that entice homeowners facing foreclosure to sign over their property to a temporary purchaser, under the false hope it will help them keep the home over the long run.”
“Kevin Cuff, executive director of the Massachusetts Mortgage Bankers Association, said his organization welcomed Coakley’s move. ‘There is no reputable mortgage lender that would approve any kind of rescue scheme,’ Cuff said.”
See speculation? “Old records for the number of homes sold and the dollar value of sales were smashed last month, as Regina’s sizzling housing market remained red hot.”
“One house, just sold, was priced initially in the $400,000 range but was sold ultimately for $160,000 above the initial asking price, said Gord Archibald, the executive officer of the realtors’ association.”
“‘It’s probably a seller’s market,’ Archibald said. ‘It’s the Alberta effect.’”
“Construction of increased numbers of new homes would appear to be one potential way to meet the high demand for homes. But Archibald said that is easier said than done because home builders are already working at full capacity to construct as many homes as they can.”
High Inventory? “A record-shattering number of homes were listed for sale last month in the Pikes Peak region, while home construction continued its slump — fresh signs the struggling local housing market isn’t getting better. In May, 6,567 homes were listed for sale in the area, a one-fourth increase over the same month last year and breaking the record of 6,200 set in June 1988, according to numbers released Friday by the Pikes Peak Association of Realtors.”
“‘Wow,’ said Harry Salzman, broker in Colorado Springs. ‘The numbers, those are just crazy.’”
“Too many homes for sale raises fears that prices could plummet. Last month’s home sales, meanwhile, fell 18.4 percent compared with the same time last year. Some possible reasons for too much supply and reduced demand: Too many foreclosed homes on the market, while the buyer pool was drained by low mortgage rates that prematurely attracted buyers a few years ago.”
“‘Competition is fierce,’ Salzman said. ‘That’s why sellers better price their house right if they want a sale.’”
Economic comparisons? “What happens when the American housing industry enters a downturn? It can last a long time.”
“One measure is the Standard & Poor’s/Case-Shiller home price index, which measures house prices by comparing the price of a house with what it sold for before. Its composite of 10 major geographic areas shows that in March prices were, on average, down 1.9 percent from a year earlier, and 3 percent from the peak reached last June.”
“That index also hit a peak in October 1989, and went into a decline that lasted a long time. It was not until January 1998, 99 months later, that the index climbed above the 1989 peak.”
“Prices are falling more rapidly this time, just as they rose more rapidly coming into the 2006 peak than they had a generation earlier, in 1989. In the first couple of months after the peak, sales did not slip as much in 1989, but by the ninth month they were off about as much as they are now, with new-home sales particularly hard hit.”
“One thing that was very different at the 1989 peak from the one in 2006 was the trend in the number of homes being offered for sale. When prices peaked in 1989, the number of homes for sale was already declining, and it continued to fall for some months.”
“In 2006, however, the number of homes for sale rose as the peak neared, and the latest report shows that more than 4.1 million homes were for sale at the end of April, the largest number ever. That included almost 3.6 million existing homes, also a record high.”
Ih honor of weird al greedspankovic
Here’s a better role model for you, that always spoke his mind and never waivered from the truth (or something with a snappy rhyme)
http://www.weirdal.com/
Back to you, Miserable Turncoat, i’ve prepared another diddy for you.
greenie talks warily down wall street
With his brim filled way up low
Ain’t no sound, but his sound of defeat
Bags packed and ready to go
Are you ready, are you ready for this
Are you hanging on the edge of your seat?
Out of the beltway, the Lies and Confidence Game get’s tripped up
To the sound of the beat
Another one rides the BUST
Another one rides the BUST
And another one gone to a non extradition country of their choosing
Another one rides the BUST
Hey, don’t worry, you’ll get yours TOO
Another one rides the BUST…
These are just stupid…sorry…
I second that opinion.
We’re having as spam attack this morning that is causing things to run slowly. Working on it.
bored realtors at empty open houses probably.
Spam attack? I think it’s just NYCityBoy and Jbunniii debating womyn in the workplace. Lol.
I think it’s casey, he’s bored with no more website
This is Casey this is Casey
Fix & Flip, fix and flip F…ix and FLLLLIP…..
Itsallgood
I had previously posted this on SLO Bear’s “The Central Coast Housing Bubble Blog”:
Using the April 2007 DQ numbers for # of SFHs sold, Arroyo Grande, CA (on the Cali central coast) had a 9 month supply of homes last month. Pismo Beach (same area of Cali), by contrast, had a 21 months supply.
No, that is not a misprint. Assuming that the DQ numbers for # sold in April 2007 are correct:
Avg. Pismo Inventory April 2007 (per realtor.com listings): 359
# Pismo SFH sales April 2007: 17
359 houses / 17 sales = 21.1 months supply.
WOW.
arroyogrande:
I’m wondering if Pismo’s stats are skewed by the townhomes built that overlook the 101/Pacific (in Shell Beach???). I think that there are a lot of spec-owned there.
~Misstrial
And not a whole lot of jobs
Tourism, retirement, and services (waiter, waitress, Realtor, mortgage broker).
This was using inventory EXCLUDING townhouses and condos. This was JUST single family homes.
However, you are right, there are quite a few spec homes overlooking the 101, and a good deal of them are $1.5M-$2.5M homes. The carrying costs on those babies has got to hurt!
Driving through a slightly low-rent district in the DC suburbs (Nyack in Arlington), I noticed the cardboard sign proclaiming:
“5.5% 30-year fixed mortgage” from “U.S. Mortgage” (motto: “where you come first”)
I didn’t catch what the three bullet points below that on the sign said, although I’ll bet they promised loans even with sub-par credit, minimal documentation, and low fees.
It just pisses me off seeing a sign like that, just knowing that there is 100% no way that sign is accurate, and that there are no actual 5.5% 30-year fixed loan to be had by calling that number. And it pisses me off that folks in this slightly downtrodden area, home to an above-average black and hispanice population, are no doubt who they are definitely trying to target — the kind of folks who are not as skeptical about roadside mortgage loan advertising.
Just another entry from our nation of The United States of SubPrimerica!
No problem to get that rate. 40% down and 8 pts.
“5.5% 30-year fixed mortgage” from “U.S. Mortgage” (motto: “where you come first”)
I think that’s the motto of another profession that’s a lot older than “mortgage broker”.
What do you mean no 5.5% 30 year fixed rate? That kind of loan is widely available if one pays the lender 4 points to but it down.
Reasonably clever ploy by builders to keep the comps up a bit longer — plow the big price discount into a buydown of the rate, instead.
Look at the text of the NY Times article, then look at the graphic. I’d say that the twit who wrote the article doesn’t understand the difference between a level and a rate of change.
Totally. Never did I think my eyes would utterly glaze over at an article titled “The Long Life Span of a Housing Downturn”
NYT doesn’t really bring their A game on Saturdays.
If only we had the other Massa Martha working things out for us?
“Massachusetts Attorney General Martha Coakley on Friday banned so-called ‘rescue’ schemes that entice homeowners facing foreclosure to sign over their property to a temporary purchaser, under the false hope it will help them keep the home over the long run.”
HBB’ers:
Your challenge?
What Would Martha Stewart Do (WWMSD)
If we put her in charge of saving us from ourselves, in the housing bubble?
Such As…
I took this loan document and shredded it and have left the contents out for the birds to make nests out of, I got rid of a problem and created goodness, in it’s place.
Whadya got?
We need WWMSD thinking. My ideas:
Publicly funded home staging training for FBs.
And upgraded cookie recipes.
The only thing that can stave off the inventory balloon.
LA - KNX Money News 101 had a ‘Expert’ explaining that forclosures would be noted as ‘Distressed Sales’ by appraisers when they did the comps and this would not adversely affect the home values! WTF!
I like our brand better…
Axperts, that’s what we are.
Cutting down lies of all size.
I like our brand better…
Axperts, that’s what we are.
Cutting down lies of all size.
No one can stop the fact that foreclosures compete with non-foreclosures.
If a buyer walks into an open house and is the only potential buyer, then the seller is going to look for a long time at whatever number is put in front of him.
You just can’t engineer supply and demand: Eventually the market speaks. Until then, pour yourself a glass of your favorite beverage and find a good book.
Where did you read that? That has got to be about the most idiotic thing I have ever heard an appraiser say. It absolutely defies logic.
I think it made sense to ignore foreclusres when foreclosures were outliers. But now that they are the norm — look out!
Novawatcher,
You’ve got it right. Foreclosures are typically looked at as “distressed sales” by appraisers if they are atypical. However, when they become the norm, they no longer are atypical and cannot be ignored. Then they are used as comps and will drive values down. I’ve never seen a foreclosure that didn’t sell for pennies on the dollar. Not a good sign if this becomes the norm. Look out below, prices are falling, hang on.
Keep in mind that the LENDERS are the ones that use the appraisal.
So this all makes perfect sense now
I enjoy seeing all the buzz phrase changes:
Subprime = Non Prime
Foreclosure = Distressed
What next:
Short Sale = Financially challenged?
REO = Expert owned?
Flipper = Prudent Speculator?
Pikes Peak Went Bust
“A record-shattering number of homes were listed for sale last month in the Pikes Peak region, while home construction continued its slump — fresh signs the struggling local housing market isn’t getting better. In May, 6,567 homes were listed for sale in the area, a one-fourth increase over the same month last year and breaking the record of 6,200 set in June 1988, according to numbers released Friday by the Pikes Peak Association of Realtors.”
Yep. And from my roost, this particular housing bubble vulture is opening up one gimlet eye, scanning the landscape, sizing up the future carrion, and going back into hibernation mode until the Fall. At that point, if things are ugly enough, I might rouse myself and start spiraling in ascending cones over the distress sellers and panicking [former] greedheads. Don’t plan on buying till 2008 - just want them to feel a cold chill as that big black shadow keeps circling leisurely overhead.
lol - what a visual!
Sammy - LOL - thank you for that post! So picturesque!
~Misstrial
Well, if you can stomach it, today and tomorrow is propaganda weekend shows for RAs and their paid lackeys on 97.1 FM in LA/OC in Southern Cal. I think you can listen to their blatant lies and sales pitches for their seminars streamed on the web as well.
I can’t wait until next Summer…even in downtown Huntington Beach you have to yell at a person standing 5 feet away from you, to be heard over all the flapping of plastic flags at open houses. No WAY these inventories can be bought up, and no way with the programs going away and existing housing sliding the traditional people will step in to save the day. I suspect maybe of the population of previous buyers, maybe less than 2% would be appropriate now….how will 2% buy out all this inventory at historic highs still? Simple answer is they wont, and prices are going to slide if not crash even in historic places that would never go down in the past, God help us all beach housing is pressured to move down.
Southern Oregon:
“CENTRAL POINT — A well-intentioned attempt to cash in on a red-hot real estate market has turned sour as the unsold home’s mortgage now gobbles up a big chunk of the regional Boy Scout council’s budget.
The “Scout house” at 1653 Kentucky Court was built to raise funds for the organization’s Crater Lake Council, headquartered in Central Point. But rather than selling quickly for a profit, the house has sat vacant for about a year. If it doesn’t sell soon, Boy Scout officials fear the project may end up costing them money, said Scout Executive Rick Burr.
“I don’t think there’s going to be anything left over after we pay the Realtors,” Burr said. “It could potentially put us into debt.”
Read the whole sad story here:
http://www.mailtribune.com/apps/pbcs.dll/article?AID=/20070602/NEWS/706020313
They need a gay decorator to save the day. Oops. I forgot . . .
Teaching the boys early how to become FB’s. The new American way. Maybe they can take a HELOC on their bicycles.
$499K for that? Are they insane?
Yes.
Good post AshlandRenter,
I just stumbled over that this evening. Sheesh, everyone was trying to make a buck. $499 in Central Point? What are people smoking?!!!
LOL
It seems like the construction cost was >$100/sq ft even though (some?) labor was donated and $125k in materials were donated. Something does not add up here…
Ashland, Oregon:
Median selling price in Ashland down over 20% YOY from $512,000 in May of 2006 to $400,000 in May 2007. Transactions slightly up.
Other parts of Jackson county show medians slightly up, with declining sales. I think the market has finally started to turn here. It’s very early yet, but the signs are encouraging.
http://www.jacstats.com
What is the income level in that area? Will it support 400k houses? Is there enough people to actually handle the inventory and be able to put up 40k out of pocket and pay 7%+ on 400k a month? Considering that many So Cal communities don’t qualify I am going to predict that one wont either and has a long way to go. It is encouraging that people are trying to purchase now, but that is a band aid on a bullet wound.
It would be exciting to see a huge surge in “low price” home sales to destroy the median myth. How would it be spun?
Ashland Renter:
Thrilled to hear that! I’m hoping to buy in Ashland late next year or early 2008.
We’re looking at a similar time frame as well. I accept that if we buy something in a year or two it will depreciate for most likely another 5 years, but we’ll at least have saved quite a bundle by not buying at the peak. We moved here in 2005, and things were completely insane then. We just refused to take part.
We’re keeping our powder dry and if things keep heading in the right direction we’ll start aggressively lowballing (like, 20% off asking price) next year.
I visit Ashland every year. I sold my CA house in 2004, saw that people were throwing money at houses up there and, like you, just refused to participate. It just felt too out of control to me.
The people in Ashland are a bunch of snobs who drink Opus 1 with their little finger stuck out. Wait til the next wave of illegals hit. I’ll show you a deteriorating town and lower prices for quarters.
Ashland will not be a deteriorating town as you say. University towns always do well. Thats not to say that prices will not fall.
LA Times RE section seems even bigger, but not a lot of change in prices.
Abosolutely stunned at the unbelievably ugly McMansions selling in Westchester for 1.6 or so. Wow. They’re truly hideous.
pix?
I love the smell of jet fuel, all the time.
Westchester was one of the last run-down areas to get a shot of amphetamine to the heart from the free money boom. The junk they’re building just down the hill at Playa Vista probably helps by making Westchester look relatively attractive. What the suckers may not be aware of is that LAX is going to expand the north runways toward Westchester, so the big jets (747s and A-380s) can make their approaches right over their heads. And for the month or so per year when the prevailing winds reverse and come from inland, there will be takeoffs over their heads as well.
Westchester is the new Inglewood/Lennox.
Lennox zip 90304 is an absolute crapped out ilegal-alien overrun LA S*thole. Lots of older properties being quick-fixed/rehabbed/torn down to be replaced by unsightly multi-units to be quick-flipped and /or rented out. This area completely laisse-faire builders free-for-all: anything goes. Ditto for parts of east Torrance/harbor gateway 90501, where the rule is to stuff as many multi-units into the gang-invested crapburgs as space allows, and stuff as many illegals/poor hispanics into these downzoned r-3 crapzones.
Just for fun i went thru the East Torrance t-flats hood, hdqtrs for the imfamous 205th st gangtas. The LAPD did a massive crackdown recently in this bullet-ridden Black-vs-Latino racial warzone and things do look quiet fpr the moment but this area is another third-world LA dumpzone, a clone of Lennox.
Looking at Things from The ground-level i am seeing lots of for-sale signs everywhere on the WEEKDAYS lately. Especially in the lower-end hoods the owners seem desperate to unload That 800-1200 SQ ft, 2/1-3/2 60-80 yr old POS at last years peak prices of $400-500,000. Lots of owners of these POS’s in the LA crapburgs did quick cheap cosmetic fixes/slapped=on additions and expect the ignoramous FB’ers to come out of the woodwork.
Good luck! there are no more qualified buyers(unqualified to begin with) left to buy your POS’s in the LA Barrios: the Subprime market just went KAPUT!
Foreclosures are about explode in the LA ghettos: they are indeed exploding now. E.G Compton is at 100+ foreclosures/336 nod’s. Ghettoized N LOng beach 90805
at close to 100 fC’s-entire Long beach at 264 fC’s/668 nod’s. The LA county FC’s are indeed mushrooming in the fringe outbacks/inner ghettos but the westside LA /coastal beach zips still holding(knock on wood).
LA County is subdividable into about 15 distinct regions. Out of those 15, at least 12 will be in the RE crapper/already are. Only Westside, Pasadena-Glendale, and Beach Cities have avoided the collateral damage SO FAR. Long beach, East and West SFV, Palmcaster, SClarita Valley, Southbay are already stagnant or declining.
South Central, Central City- LA dwtn, San Gabriel River Communities, Alameda-710 corridor cities, San Gabriel Valley, City of industry region: all will soon crash in flames.
LA, the ‘City of Angels’ will soon be the City of ‘EL Diablo’ as far as RE values.
I posted this in the bits bucket, but find it interesting enough to repost, it’s a sign of the times (interview with retired couple RVing it):
“We’ve met a lot of people who are going full time because the taxes [on their homes] are so high,” he said.”
http://tinyurl.com/2ar46h
Not to criticize those who want a nomad-style existence, but there are drawbacks to mobile-living, such as:
1. Distance from medical care.
2. Driving under the influence of prescription drugs - DUI (where there are warnings on the label not to drive/operate machinery due to drowsiness).
3. Sitting in the same position for mile after mile.
4. Motor homes are not insulated as homes are. High costs for a/c.
5. High costs for gasoline consumption. Motor homes get about ..what…8mpg?
6. Death or severe illness of spouse or partner in an out-of-the-way location far from family and established friends.
7. Listening to the incessant rattling noise of items in the cabin shaking around as you’re driving down the road.
8. Other drivers who are impatient to get around your slower-moving vehicle.
In my area, snowbirds come down from the northern states during the winter. Some of them have 2 homes - a summer home and a winter home. But that is not the same as living out of a motor home.
~Misstrial
So true. But some RVers don’t really travel much, they settle down in one place (Quartzite, AZ in this example) sometimes for months (usually following the seasons so insulation’s not as critical). Not all live in big rigs, some have small campers. But there’s no substitute for a home, especially if you get sick. I’ll take a house any day.
I have several retirement-age patients who have sold off everything and are living the RV/nomad existence. They’re thrilled about it - I don’t get it at all. To each his own.
No.6 - Death of a spouse. Just put her on the roof like they did to the aunt in ‘Vacation’. I’ve got some relatives that I would do that to in a heart beat. hehehehehehehhe
After a while, they won’t be able to drive anymore. They’ll need to sell the RV and reside in a home. What happens when all the boomers try to sell their RVs at once?
Man this board is totally slow, and some posts going up some not, damn spammers!
Anyway, I don’t know if you can stream these but worth listening to…kinda like Tokyo Rose etc.
http://www.971freefm.com/pages/1245.php
Well off to Julian to uncles cabin to have a family reunion!
Almost everything I see coming on the market here (LA grove/HP area) lately is “newly renovated”, bought in the last 1-4 years and priced really high. The ones that were sold more recently are generally 500k over price paid. Folks want their “tax free” gains dammit!
People here are morons. When this dam breaks (who knows when that’ll be…) a lot of people are gonna be *very* surprised. Prices stable or rising is the gospel here, as sure as the sun rises each morning.
same here in the Aspen vortex…all’s well in fantasy land
Hey Ben !!! Grayslake is a sleepy little town within walking distance of here. Whoa, this is really getting close to home, (gulp, thoughts of abandoned homes, weedy lots, rusting for sale signs … ). Grayslake did not have the rip-roaring appreciation like LA, SAC, FLA. My SFH in the burb next door is up ~ 25% in 14 YEARS) If +100% here forebodes what ahead for the rest of the nation, may god bless America.
“‘Our foreclosure workload and files have increased this year from last year almost 100 percent,’ said Alex Attiah, broker in Grayslake. ‘We’re experiencing that in all of the counties in Chicagoland.’”
http://sandiego.craigslist.org/rfs/340894745.html
my old landlord has had his condo for sale since we vacated in early February 2006. That’s 1.4 years!
He’s a realtor and also offering:
Instant Equity!!!
1 Year HOA Fees Paid ($6,000)
$8000 toward closing costs
Why doesn’t he just drop the price?
At least he should drop the “WILL NOT LAST LONG” remark from his Craigslist ad.
That refers to the landlord.
LOL. Good one.
How’d you like high-rise condo living?
I like the part about free valet parking 24/7. Did you have to tip them, though?
For $250K-$300K, he’d sell it rather quickly. Time to drop the price!
My wife and I enjoyed it but ultimately I think a better investment once we buy will be a house, not a condo.
God knows we’ll have a lot to choose from?
No tipping the valets! One weird thing we noticed, I’d say that about 20% of the people living there were 30 year old eurotrash driving 6 series Beemers.
This is a very flawed and quick estimate of housing related issues for Fairfax County, VA, a suburb of Washington DC.
Bubble Period = 2003 to 2006
Income = 90,000 (family)
Price of SFH (averaged) $500,000 (2005)
County Population = 1,077,000
Number of New Units Built = 12,000
My translation:
The average family in Fairfax County is living in a house/townhouse with at 1/3 currently at 5:1 ratio for income/mortgage.
17% are employed in construction, retail, finance with 10% in retail
Current Foreclosures has probably tripled this year. As of today: 423
Guestimate of ARM purchases this period (avg) 33%
Current number of houses for sale 9,306
Last Year: 9,190
2005: 4,671
Do SFH include townhouses? The reason I ask is that $500k is awefully low for a stand-alone SFH in Fairfax county; I would have thought it would have been closer to $625k.
Also, when you say the “average Faifax family is living in a house…”, well you can’t say that. You have the average income, and the average price, but that doesn’t tell you the average income of homeowners (i.e. not all workers own where they live). So, in all likelihood, the average income of home owning households is higher than that (not that it really matters, as places are still outrageously overpriced).
But, before you think I’m being too rosey, you forgot to mention this stat: the percent of home purchases that were second homes. They look like this:
2000 7%
2001 5.5%
2002 -
2003 4%
2004 36%
2005 40%
2006 36%
(actually, that might be DC metro, but close enough)..
Pretty damned frightening.
Mostly that was a quick exercise for my head. Just trying to comprehend the “Big Picture” here. I believe it’s median income instead of average. The house/townhouse data was 2004 averaged together.
I think the avarage is 1:5 for salary v. income which dosen’t include retirement, college, healthcare so I guess what I am trying to say is a lot of overextended people.
The 2nd house numbers are amazing. Conclusions? Flippers?
Other than for flipping/”investment,” why would anyone buy a second home in Fairfax County? Those are scary-looking percentages.
I went to an open house in Warrenton today (50 miles SW of D.C.). I was told the owner also had a house in Hilton Head and in Dominion Valley (a Toll Brothers’ development in PW County). Apparently, the owners decided to move because they “liked to play golf”.
It was a 6000 sq. ft. McMansion - the owners were empty-nesters.
One couple and three gigantic houses. The house I viewed was glamorous enough I suppose, but totally impractical for kids. It had only one extra bathroom upstairs (besides the owner’s suite) with one sink. In a 6000 sq. ft. house, that’s just silly.
I was the only one there of course . . .
Nice suburb of Tucson: This was put on the market last year at 489k. It’s just been languishing and is now exactly 100k cheaper!
http://www.longrealty.com/Listing/ListingDetail.aspx?Search=9fcd3430-dc20-4343-b7b3-cb15d68ae313&Listing=20890526&IRPAgentID=9302132&Image=1&First=1&Last=7&pagesize=10&SearchType=&ListingDistrictTypeID=&FirstLetter=&Sort=6&Cookies=
Bought in 2005 for 340K. That’s definitely progress. Most of the listings I see in Tucson were purchased in 2004-2006 and are now asking 100-150K more. Still, I have to wonder what it’ll be worth in 3 years. Think we’ll continue to wait a bit longer.
Yes, I think just a wee bit longer. The same model just down the street went for 250k in 2004, and the one across the street for 225k in 2003. That’s probably the neighborhood of what they are worth.
“That index also hit a peak in October 1989, and went into a decline that lasted a long time. It was not until January 1998, 99 months later, that the index climbed above the 1989 peak.”
The economy went into a recession in summer 1991 — about two years after the 1989 peak. If it is not different this time, should we anticipate a recession by 2008?
“Prices are falling more rapidly this time, just as they rose more rapidly coming into the 2006 peak than they had a generation earlier, in 1989. In the first couple of months after the peak, sales did not slip as much in 1989, but by the ninth month they were off about as much as they are now, with new-home sales particularly hard hit.”
And then it took until 1996 for the market to bottom out, at least in California. So if it is not different this time, that would take us out to 2013 (= 2006 + 7) before the market bottoms out. And if it is different, it is likely to be worse, due to the bigger price runup of longer duration followed by a faster rate of price decline going in to the bust.
19911990 — sorry, talking to your wife while blogging is hazardous to your posts!So maybe 2007 is recession year?
Yes.
“So maybe 2007 is recession year?”
I was pretty convinced it would start this year. I was convinced that Castro would croak, too, so maybe I’ll be 0-and-2 on those.
At work this morning one of the nurse anesthetists was telling me about his good friend/neighbor who just walked away from his house after he went under water due to excessive refinancing. He is a golf course manager whose mortgage recently rose to $6000/month. They are now renting an even nicer house in the same area. It’s finally happening.
> who just walked away from his house after he went under water due to excessive refinancing
I understand that many purchase mortgages are non-recourse, from which the homedebtor could walk away. Refinancing, however, should always be recourse, and the creditors could go after the debtor’s income and/or other assets; in other words, the debtor has no option to walk. Or do I misunderstand something here?
Sorry, Peter, I probably misunderstood the story, which was second-hand. I don’t know any of the details, other than the fact that he bought the house in 2002 for a much lower price than what he eventually owed in 2007. But his friend did walk away from his house. It made it real to me.
Number of houses on the market actually dropping in Maricopa county. Down about 700 houses in the last week. However, in my zip code, up 9% in the last week. Most in the $200-300K range.
A few local observations from SD 92127:
1) Seeing lots of flight of white middle class families out of San Diego to other states this summer. The middle class just cannot cut it with home prices that are stuck at unaffordable levels plus gas threatening to cross the $4/gal threshold plus weak job prospects against the background of a crumbling real estate sector (lending / building / home sales).
2) Saw lots of open house signs and myriad human directionals out working hard for the money on this first Saturday in June. The signs are showing definite signs of wear and tear — visibly tattered around the edges.
3) Median used home list price in 92127 shows no signs of coming down from its high perch — in fact, it has gone up the past few days (back up to $1,395,000), due to new listings in the $1m+ range, against a backdrop of last week’s news that S&P/CS repeat sales index for San Diego fell by 6% from 2006Q1-2007Q1. Is anyone interested in a $1m alligator?
4) Took my sons to one of our favorite restaurants for lunch today and noticed a striking similarity between the situation on the restaurant floor and some nearby subdivisions — too many vacancies! The number of vacant tables (80%?) during a period when the restaurant would have been full a year ago leads me to suspect a lack of home equity cashout financing is taking a bite out of the area’s restaurant customer base. It is tough on a restaurant if they have a high-cost lease to cover based on 2005 pricing and suddenly cannot find any customers who can pay enough for food to enable them to pay the bills.
it is tough on a restaurant if they have a high-cost lease to cover based on 2005 pricing and suddenly cannot find any customers who can pay enough for food to enable them to pay the bills.
It’s hard to extrapolate anything out of these things, but last night (Friday) I took my kids to Westwood Village to see Pirates of the Caribbean (awful, awful movie, sadly, because my son adores Jack Sparrow and the first one was sooo nice). But anyway, we got there around 6 to catch the 7pm show and there was PLENTY of room at California Pizza Kitchen and all the restaurants around. I was a little taken aback, actually. It could have been a fluke, but who knows, I’m hearing a lot of things about really fretful merchants in expensive parts of town.
cass, why CA Pizza Kitchen instead of Tommy’s in Westwood? (I’m assuming Tommy’s is still there.)
Implosion, I don’t think I know any Tommy’s in Westwood. Where was it?
“cass, why CA Pizza Kitchen instead of Tommy’s in Westwood? (I’m assuming Tommy’s is still there.) ‘
THERE IS A TOMMYS I THINK ON CORNER OF SAWTELLE AND OLYMPIC, CLOSE ENOUGH TO WESTWOOD. NEVER EATEN THERE BUT HAVE EATEN AT TOMMYS ON LINCOLN BLVD IN SANTA MONICA AND ONE IN CANOGA PARK. THEIR CHILIBURGERS OK BUT NOT IMPRESSIVE.
NOTE: I HAVE OWNED AND OPERATED A GREEK-TYPE CHAR-BURGER OPERATION AND KNOW THE INSIDE SECRETS OF THESE OPERATIONS(THE CONCEPT ORIGINATED FROM GREEK IMMIGRANTS). STILL HAVE ALL THE RECIPE SECRETS FROM THAT OPERATION, INCLUDING PASTRAMI DIP, SECRET SAUSE,CHILI, ECT.
i THINK THE ORIGINAL TOMMYS IS STILL AT RAMPART/BEVERLY IN THAT TONEY PICTURESQE POSTCARD MILLIONAIRES DISTRICT CALLED RAMPART, ABOUT A HALF- MILE NORTH OF THAT EQUALLY TONEY DISTRICT KNOWN AS MAC ARTHUR PARK, WITH WORLD-FAMOUS POSTCARD VIEWS OF THE LAKE EQUAL TO THE MAGNIFICENT HI-SIERRA LAKES.
SARCASM OFF!
Can’t say the same just west of you, GS. As much as I’m really looking for it, our restaurants and stores have been very busy.
It seemed to slow in late 2004 or early 2005, IIRC (time is getting messy as the years of bubble watching go on), but picked up again & things are as busy as ever.
Still watching & waiting. Imagine it has to hit sometime…maybe?
“It is tough on a restaurant if they have a high-cost lease to cover based on 2005 pricing and suddenly cannot find any customers who can pay enough for food to enable them to pay the bills. ”
GS,
Profit margins in the restaurant.Fast food business are very tight. The two biggests costs are Labor and food costs, which normally eat up 50-60% of your gross revenues.
Other costs are utilities, sales taxes, equipment leasing, repairs, advertising, and the monthly lease/rent, ect.
Restaurants do require that constant inflow of revenue from customers, especially weekends. Dropoffs in customer volume will quickly BK a food service operation, expecially small mom and pop operations unless they have only family members running the business and can eliminate/reduce labor costs.
This why you see lots of independent operators go out of business/ownership changes ect. The large chain/franchise operations can withstand tough times better as they have deeper financial resources and access to credit.
The restaurant/fast food business can be extremely profitable in flush times(especially the pizza business; I was formerly a top=notch business manager for Dominos),
But bad in lean times.
Nice post. This is exactly why I am so concerned about what I saw on the floor of one of our favorite area restaurants yesterday. My hunch is that only the strong in the SD restaurant sector will survive over the next five years.
Local Politics:
City Council place 3:
I get to choose between:
1) the “Contractor-Builder”, or
2) the candidate endorsed by The Board of Realtors & Home Builders Association. “The only candidate with the qualifications and experience to protect home property values”. (This one is FOR the big highway construction project here. I wonder if the car washes they are eminent domain-ing are the ones she owns ;))
And now for something different:
39 Houses Up For Auction On June 16; Most In East Lake
Thirty nine houses are up for auction by the Crye-Leike auction team on Saturday, June 16, at 11 a.m. The sale will be at the main Crye-Leike office at 1510 Gunbarrel Road. John Sanders of the auction team said it is a court-ordered sale as part of a divorce case. He said, “There are some little modest homes, but there are some good ones as well.” All but seven of the homes are in East …
Is anyone interested in a SD SFR available below $100K? The only problem: From the photo on ziprealty.com, it appears to have no walls…
———————————————————————————
10767 JAMACHA BOULEVARD, Spring Valley, CA 91978**
List Price: $89,000 - $100,000
ZipRealty will give you up to $250 cash back.*
Bedrooms: 3
Full Baths: 2
Partial Baths: 0
Square Feet: 1,662
Lot Size: N/A
Year Built: 2002
Listing Date: 02/24/07
On Market: 98 days
Type: SFR
Status: ACTIVE
MLS #: 076015549
Looked at it on the Coldwell Banker site. Manufactured home & doesn’t look bad. Of course, you don’t own the land, though.
“…doesn’t look bad.”
The photo on ziprealty.com is just strange — makes it look like a house w/o walls.
Do you have to rent the land?
Yes, from what I could tell, you have to rent the land.
Stucco, I will be possibly returning to California in the very near future. I grew up in LA, but have been looking to purchase a house/land in north San Diego County. What is your opinion of say, Pauma Valley, Pala, Escondido or even Temecula area for the quality of life for a simi retired couple.
there is a big 250+ foreclosed house auction this month in Northern CA too, details at http://www.ushomeauction.com/calendar.php
Check out the reserve bidding rules under the terms and conditions section. Nothing there will be reasonable. The opening bid is low but the reserve will be high.
What’s with the: MUST BE SOLD! banner while having starting bid prices?
“One house, just sold, was priced initially in the $400,000 range but was sold ultimately for $160,000 above the initial asking price, said Gord Archibald, the executive officer of the realtors’ association.”
This is the absolute living end. Over 500K for a house in Regina? A no-account city of two hundred thousand people, with polar winters, surrounded by an endless expanse of prairie.
“‘It’s probably a seller’s market,’ Archibald said. ‘It’s the Alberta effect.’”
What exactly does that mean? If you pay an Alberta price for your house oil will be discovered under it or something?
Here in Westlake Village, CA steadily rising inventory. Very little moving, some price reductions from stratosphere 2005 prices, mostly 10% or less and the realtors are the new Maytag repairman.
In my neighborhood, only the low priced homes sold this spring (Worthington, Ohio - northern suburb of Columbus). Last year and the year before, homes were selling just over $200,000 for 3br 2ba 1942 built. This year, none have sold for over $168K. I follow my home’s value on ZILLOW, and last year it was $178K and just checked and its $155K! Also, we have some short sales. One guy bought a house down the street for $140K, put $30K into renovating it, and it has been on the market for 2 years now. First at $199K, now its down to $145K and still sitting. House has no garage and only one bathroom, should sell in the low $130’s. Too many people watch “flip that house” and don’t realize that it is a fantasy show - in the real world labor and cost of materials is too high to make money buying and repairing houses, especially in a negative job-growth state like Ohio. Also, inventory in Central Ohio is 18,300 which is a record, and we are losing jobs in Central Ohio at about the rate of 10,000 per year. Another problem - low wages. An experienced IT systems engineer or programmer can earn in the mid $50K. Its rare to find a family where both the husband and wife can earn at that level since Ohio has the lowest percentage of the population (in the 20’s) with a college degree in the nation. Most guys I know are married to a woman who is going to top out in the $30K range. Ohio, Indiana and Michigan are in a race to the bottom to see who can be the 21st century equivalent of Mississippi or Alabama. Ohio and its citizens simply aren’t made to compete in the world economy. Once those brain-dead auto assembly jobs go away, those people are not going to reinvent themselves and start inventing IPODS - Ohio is NOT a state of innovators, and has a very low regard for the value of education.
There is nothing like an on-the-ground report. Many thanks.
Ditto. Thanks for all the details. Sounds grim up there.
Ditto from Fort Wayne….Median housing prices in April was 94K. I have hired two experienced (3 to 5 years++) in IT systems admin and only had to pay 42K for each. Times are tough here. I think Indiana is heading towards becoming the Mexico of the Midwest…
North Phoenix New Home Market
1) A friend just bought this home for $404,000. With the third garage being made into an office, it’s got to be around 4,000 sq ft, which means she paid about $100/sq ft!
Hear that SoCal?
I know the prices are going lower, tried to talk her out of it, but — well you all know the story.
http://www.meritagehomes-phx.com/find/homes.php?community=178&home=898#
It’s an awesome house, when you consider what you get in SoCal for $400,000.
2) I have an account that does grading of land and paving roads for new home construction. Their work for grading the land has dropped off dramatically but the paving has picked up! All I can think is they have their money tied up in the land and by God they’re going to build homes on them.
3) I heard this weekend that new home builders are now taking resale homes on a trade in, kind of like a new car dealer.
This is going to be one crazy ride for the next decade.
Lip
“I have an account that does grading of land and paving roads for new home construction. Their work for grading the land has dropped off dramatically but the paving has picked up! All I can think is they have their money tied up in the land and by God they’re going to build homes on them.”
Wonder if alternatively the developer wants to pave the streets in the acreage he’s stuck with, and begin selling the lots instead of building on them.
That’s possible, they’re just glad to get the work.
Oh yeah, the Meritage house included a pool.
We’ve finally agree to rent an apartment in Huntington Beach (Orange County, Calif) and we got a whole month’s rent off [but since we are renting our current home in San Bernardino County and an apartment room at the same time, it turns into a wash].
Another apartment in Huntington Beach had only 4 bedroom available but nothing in 2 or 3 bedrooms so we’ve passed on that one.
Another place we checked had only 2 bedroom and one bad available, so we passed on that too.
So, the supply isn’t huge, but they can vacate and result in a good deal for apartment hunters. (Last weekend May 27, the place we’ll be renting, had only $500 off special which got rented a day or two before we showed up again on Friday, June 1.)
“2 bedroom and one bad” — I meant 2 bedroom and 1 bath.
South Carolina still has rising home prices and a huge influx of new residents. Southern attitudes here are going away with the new residents. On Friday 6/1/07, the sales tax on goods rose from 5% to 6%, and taxes on restaraunt meals rose from 5% TO 8%!!! That’s a big jump on top of inflating prices. Now we have high car taxes, high state income taxes, and high sales taxes. Warn your friends who want to move here!!
My wife’s childhood buddy and her family just moved back to Florida from SC — said that overall, the taxes there were much higher than they had anticipated.
BMW is the big employer in Greenville/Spartanburg counties in SC. They may be helping push up prices. In downtown Greer a house has been on the market for over a year at around $113,000. Probably built in the late 1930’s. It’s a nice house, but I don’t see it considering that one house on the same street sold for 70,000 last year.
I saw a sign in today’s SD Union-Tribune which leads me to believe capitulation cannot be far off. The weekend paper features a regular used home advertising section called “sdhomes BUYING GUIDE” which customarily includes a shill piece from some local realtor explaining why there has never been a better time to buy than right now. THIS WEEK IT’S DIFFERENT:
—————————————————————————–
Loan options are changing
by Isabel Hall
General Manager and Senior Vice President, McMillin Realty, Mortgage and Escrow
The world of lending is undergoing a significant change for homebuyers. For several years now, many homebuyers have enjoyed the benefits of purchasing a home using conventional, easy-qualifying financing with zero down payment. The advantage is obvious; relatively little cash is required to close the transaction, allowing first-time buyers with limited savings to enter the homebuying market. Today’s significant change is that these “sub-prime” loans are fast disappearing.
What does this mean to a buyer currently in the market for a home?
…
I BELIEVE I CAN ANSWER THAT QUESTION. WHAT IT MEANS IS, “BUY NOW, AND BE PRICED IN FOREVER.”
I’m finally seeing panic beginning to set in, in the areas I’ve been following in Alabama and Georgia. The $50,000/10% cuts by homoaners are starting. That will just trigger more aggressive cutting by the builders, so hopefully we’re off to the races.
I suppose it’s all logical enough — it is now June and the expected wave of buyers, who are relocating in time for the Fall school term, didn’t materialize or decided to rent. The alligator is gnawing and the smarter of these moaners realize they don’t have the wherewithal to hold out another year, so they’d better start cutting now, before the Fall weather buries them in much more than leaves. 2008 will be better, for sure, but at least it is starting to look good and only the most dense can still believe there is any way out but through the door of drastically lower prices.
The Kool-aid continues to be tasty here in Maryland, though slow signs of “difficulties” are showing up. We still have 3 bed/1 bath Post-War shoeboxes in Glen Burnie going for $300,000 when they’d barely hit $100,000 back in 2002. Saw a 4 bed, 2.5 bath house in the same area posted at work for $425,000. Right. The median household income for that area is $55K a year. So, 8+ times median income is just fine, right? Madness…
On the way to a friend’ house yesterday in Columbia, I was driving along Route 100 and I literally lost track of all the signs all over the place pointing to new housing developments. Many were “affordable’” as in $400,000+ townhomes, $600,000+ single family homes, etc. Exactly WHO can afford these?
While at my friend’s place, he told me an insane thing he heard on the radio or may have read in the Sun about how Maryland is going to become unaffordable for all (and apparently this was said almost with a sense of pride by the original source) and how in 15 years the average house here would cost $14 million and if you didn’t inherit a house or live in a cramped shack, you wouldn’t be able to live anywhere in the area.
Well, I certainly hope that their nightmarish vision of the future is wrong, and I’d love to know who comes up with this crud?! And why is it that debt still seems to equal wealth and that unaffordable housing is a GOOD thing for the nuts?!
Check the press releases from the Washington Business Journal… they are quoting some idot from George Mason U. who hasn’t factored in all the data. I have always wondered about the intellectual rigor of GM, but now I’m pretty convinced that the university’s namesake (or is it namegiver) is turning over in his grave. DC media is notorious for not providing comprehensive information on what, where, who, when… it’s all happy little soundbites. For example, they don’t tell you that the often cited OFEHO index bandied about because it shows price gains in MD and DC does not include homes over 417K and does not include VA loans. You should check out the OFEHO website for more info and make your own decision about how well it represents information in your area.
A local observation from Tucson: Was out running errands today. Had to pick up some groceries, and who should I see at the checkout stand but a former neighbor. She was bagging groceries.
Last summer, she and her husband decided to move to another, more expensive neighborhood than this one. And the real estate agent assured them that they’d have no problem selling their existing house, as it was on a double lot. So they bought the second house.
Long story short: Existing house sat on the market for 8 months. It recently sold, but I’d heard through the grapevine that my grocery-bagging neighbor had gone out and gotten a job.
Now I know what she’s doing, and let me tell you, I did my shopping and checkout in record time. Why? Because I didn’t want to get into a conversation with her and have The Troublemaker (aka my mouth) say something that I’d later regret.
I didn’t think much of her (and her husband’s) decision to take on two mortgages in this housing market. And I still don’t.
Here in Pasadena (near Old Town, if anyone is familiar), the market still seems to be in la-la land, however there are signs that this could change soon.
We looked in 2005 and decided to sit and rent (a decision I very much *not* regret!!). And watch (as friends looked on as if we were crazy NOT to buy). Prices seemed to go up in 2005-2006, but by 2006 the market had slowed. Things still sold at insane prices (think $475k for a tiny 600sqft cottage/condo) but at a much slower pace. Inventory tripled.
Today we went to a few open houses and were a bit surprised. Prices indeed have dropped a bit from 2006 levels but and were about the same as when we had looked in 2005. I had expected the prices to have dropped more (as in the surrounding areas), however it seems that foreign investment may have softened the fall in the area, as evidenced by the very large percentage of Chinese-language realty agencies representing properties (particularly new condo developments). The area is highly desired and has seen quite a few ‘knock-down’ townhouse developments, particularly near the Gold Line light rail stations.
Still, I don’t see how the area could avoid a sizable price drop in the next few years. There is a lot of selection - particularly of what appears to be investor inventory. For example, *all* six condos we visited today were complete empty (save for the rented ’staging furniture’). Another common theme was the ‘motivated, flexible seller’ strategy. Such was different from a few years ago where the mantra was ‘you better bid high if you want to stand a chance on this place’. Sellers are starting to realize that people have choices.
But that still doesn’t stop them for asking for their dream price, at least for now…..