Just About Everybody Is Selling For Less In California
The North County Times reports from California. “The area’s housing market reached a record-high median price of $655,000 for single-family houses last month, even as sales continued to tumble, according to a new report. As encouraging as the new price record is for some, it does not suggest the North County real estate market has rebounded, analysts said.”
“On the contrary, the median is artificially high, they said, because sales have fallen sharply in the lower price ranges in response to the meltdown of the subprime loan market.”
“The median price per square foot of home sold came in at $312, down 4 percent from $325 per square foot price the year before, the report shows. The May number was down 5.5 percent from the $330 per square foot peak of June 2006, when the previous record median was set.”
“‘Overall, just about everybody is selling for less,’ said Dennis Smith, a real estate agent in Carlsbad who follows market trends.”
“When it came to single-family homes, sellers sold 725 in May; 13 percent fewer than in May 2006 and 32 percent fewer than in May 2005, the report shows.”
“Single-family sales were off by 13 percent when it came to the amount of money that changed hands.Condo sales were much weaker than they were this time last year as well. The sales total of 262 condos represented a 29 percent decline from May 2006.”
“The decline was slightly steeper when it came to the amount of money changing hands. Sales volume fell by 32 percent from May 2006, the report showed.”
“When it came to single-family homes…in neighborhoods reporting approximately 30 or more sales last month, prices were down 15 percent in Carlsbad’s 92009; 13 percent in Carmel Valley (92130); 10 percent in Oceanside’s 92057; 8 percent in Carlsbad’s 92011, San Marcos’ 92078 and Vista’s 92081; 7 percent in Encinitas (92024); and 5 percent in Escondido’s 92026.”
“Regional economists say it is typical for prices to remain stubbornly high well after sales decline, marking the beginning of a down cycle. Ed Leamer, director of the closely followed UCLA Anderson Forecast, said in an interview last week that the 1990s trend was a classic example. Los Angeles-area sales totals fell by half from November 1988 to March 1991, while home prices continued to rise until June 1992, when prices began a long decline.”
“‘The most dramatic price declines come at the end, not at the start,’ said Robert Campbell, an independent San Diego economist. ‘That’s when the panic sets in.’”
The Los Angeles Business Journal. “The median home price in Los Angeles County rose for the fourth consecutive month in May. But the increase may reflect a lopsided market where higher-priced homes are selling faster than cheaper properties, which have been hurt by the implosion of the subprime loan sector.”
“The number of homes sold continues to swoon. In May, 5,666 homes changed hands in Los Angeles County. That was down 37 percent from May of last year, which itself was down 17 percent from May of the previous year. Likewise, April had seen a 29 percent fall in year-over-year sales. The figures are from HomeData Corp.”
“The California Association of Realtors data indicates that while every segment of the market has seen significant slowing, there is a greater inventory buildup of homes in the sub-$500,000 price range than in the higher-end of the market.”
“As of April, there was 14.6 months of unsold inventory in the county in the under-$500,000 price range. Meanwhile, there was 12.1 months of total unsold inventory for April, relatively better but still up sharply from 5.6 months a year earlier.”
“‘In essence, the low end of the market is falling out with a steeper drop in sales and greater price softness. The higher end is seeing a drop in volume, though not as severe, and some price gains,’ said Robert Kleinhenz, deputy chief economist for the state association.”
The Union Tribune. “The implosion of the subprime mortgage market is likely to prolong the national housing slump, Harvard University researchers said yesterday.”
“‘At a minimum it will slow any recovery,’ said Nicolas P. Retsinas, director of Harvard’s Joint Center for Housing Studies, which issued the report. ‘Add to that the overbuilding and the inventory correction and you can see why it appears, particularly for the new-home market, that this slump will last well into 2008.’”
“University of San Diego economist Alan Gin said he expected home prices to ‘ease downward some, possibly into 2008.’ However, Gin agreed that local wages have not kept pace with home prices.”
“A record 525 San Diego County dwellings were reclaimed by lenders or sold at auction in April, exceeding a previous record of 433 properties in March, according to DataQuick.”
“Some analysts blame Wall Street for the subprime crisis. Because of rising defaults, investors have lost their appetite for securities backed by subprime mortgages, said economist Edward Leamer, director of the UCLA Anderson Forecast. That means the subprime market ‘isn’t going to come back anytime soon,’ Leamer said.”
The Press Telegram. “It was the best of times, and with the housing market turning down, some communities may see worse times.”
“Where it concerns housing, Long Beach is a veritable tale of two cities. And unfortunately for sellers who want to move their homes quickly, the stories for both the upper and lower class portions of the city may have similar outcomes.”
“Homes are sitting longer on the market, and price appreciation has slowed to a crawl.”
“‘There’s definitely a wide variety of price ranges in Long Beach,’ said Richard Daskam, of Keller Williams Los Alamitos. ‘Definitely the highest is going to get hit. And anywhere where they used the shaky mortgages, you’re going to see a lot of foreclosures come up.’”
“The problem is, ‘nobody can buy,’ Daskam added.”
“In North Long Beach, the Wrigley area and Central Long Beach, many families got into affordable communities with specialty mortgages that are beginning to reset to much higher rates, Daskam said.”
“Then there are areas of Long Beach like Belmont Heights, Belmont Shore and Virginia Country Club, where foreclosures aren’t the issue. It’s sluggish sales, ‘because there’s just not enough buyers who can move into these properties,’ Daskam said.”
“A 4-bedroom, 3-bathroom, 3,646-square-foot home (on) Pacific Ave. in the Virginia Country Club community has a ‘for sale’ sign in the spacious front yard on the 12,790-square-foot lot with ‘Reduced Price’ on top of the sign.”
“The $1.24 million asking price for the home, which has been on the market 121 days, was dropped from an original asking price of $1.39 million.”
The Record Searchlight. “Pulte Homes, parent of Del Webb Corp., continues to take its licks from the housing slowdown. The company announced late last month that it will cut 16 percent of its work force.”
“So do fewer jobs mean curtains for Sun City Tehama, the 3,700-home ‘active adult’ community Del Webb wants to build on 3,400 acres west of Interstate 5 about eight miles north of Red Bluff?”
“No, Del Webb spokeswoman Judy Bennett said last week. Sun City is still ’sort of in hibernation,’ Bennett said last week. ‘The market really isn’t conducive to us starting the project right now.’”
The Sacramento Bee. “The California Public Employees’ Retirement System has announced it is taking over the debt-ridden Towers high rise project on Capitol Mall. That means the 53-story luxury condo and hotel that local developer John Saca envisioned for the site near the Tower Bridge is dead.”
“The Towers was the first of a rash of high-rise condo plans put forward for Sacramento’s downtown when Saca proposed it nearly three years ago.”
“Saca broke ground last summer, but the project was $70 million to $80 million over budget by the fall and condo sales slowed to a trickle as the region’s housing market went soft. The site now is little more than a hole in the ground the size of a city block.”
“The median price per square foot of home sold came in at $312, down 4 percent from $325 per square foot price the year before, the report shows. The May number was down 5.5 percent from the $330 per square foot peak of June 2006, when the previous record median was set.”
Though price per square foot is a crude measure of the quality-adjusted price, the 5.5 percent YOY aligns closely with the 6 percent YOY drop reported in the S&P 500 / Case-Shiller index for San Diego (Q1.2006 - Q1.2007).
Even Art Laffer is extremely bearish on the California housing market.
That’s pretty much “Game Over” IMO.
“The number of homes sold continues to swoon. In May, 5,666 homes changed hands in Los Angeles County. That was down 37 percent from May of last year, which itself was down 17 percent from May of the previous year. Likewise, April had seen a 29 percent fall in year-over-year sales. The figures are from HomeData Corp.”
I think 70% decline in sale volume will be a reality in oct/2007.
“The implosion of the subprime mortgage market is likely to prolong the national housing slump, Harvard University researchers said yesterday.”
…Hey ‘Harvard University Researchers’! That’s some amazing science there! However do you DYOO it?
781 Old Orchard Rd, Campbell, CA 95008
Asking…$1.7M
Zillow history
10/13/2005: $1,535,000
03/22/2002: $550,000
03/30/1994: $295,000
Is it even worth that much… LOL
Fools Paradise. Not worth more than 400K
109 Peach Willow Ct, Los Gatos, CA 95032
Sale History
12/05/2006: $748,000
09/10/2002: $495,000
02/19/1997: $279,500
Nothing but a 50% plus decline would get this back to normal historical trend.
“‘The most dramatic price declines come at the end, not at the start,’ said Robert Campbell, an independent San Diego economist. ‘That’s when the panic sets in.’”
Yep…munch, munch, munch…gotta agree with that statement…munch munch, munch…I see a train a comin’…a comin’ round the bend…it’s loaded with Neil’s Buttered Popcorn…
I’m not sure if you know, but Robert is a frequent reader of this blog. Way to go Robert!
Man I missed the party, but it was great to read all the posts.
‘come at the end, not at the start,’
‘That’s when the panic sets in.’
- Finally, a sane voice in a sea of insanity! Buckle up for the long run.
‘That’s when the panic sets in.’ ….or, if you prefer, the “Oh Sh*t stage” of the housing bust.
it’s loaded with Neil’s Buttered Popcorn…
We should start production&sales of Neil’s Buttered “POP” Corn… Neil could be the “Orville Redenbacker” popcorn king of the great housing bust!
They could serve it at “open houses”
Oh… this train is overloaded with my special buttered popcorn.
Hollywood special effect teams have been hired to trigger the poppers just as it goes under a crowded freeway intersection.
Gotta love doing the spects that start with:
“Blower shall be an LM6000″
FYI, that’s a good size gas turbine…
I loved his comment… if that doesn’t push us towards panic a year early… I don’t know what will. And at this point, the quicker the correction, the better it will be for the economy as a whole.
Despite my popcorn signature, I really just want to see the economy balanced again. Sadly… its not going to finish getting in balance before the calender hits 2009…
But as a future home buyer… that gives me home.
Oh… I’m hearing very interesting things about the South Bay and a certain aerospace company. As soon as I can track down the source of the rumor for confirmation, I shall share. (Another company has purchased buildings in Colorado and they didn’t wasn’t a day before announcing relocations… but it isn’t public yet and I want to hear it from my normal channels.)
Got popcorn?
Neil
Hughes relo’ing to CO?
“Oh… I’m hearing very interesting things about the South Bay and a certain aerospace company. ”
I’m all ears. I’m in that industry.
ROTFL
Ok, I replied once already… so if this duplicates, its because the “Popcorn Express” overloaded the server.
That quote is priceless… expect the price drops at the end… SO TRUE! Until we hit Panic and Capitulation, we’re just watching this train build speed.
But when it wrecks… my will it be… interesting.
All I want is an economy in balance. I’ve never seen it this out of balance.
Got popcorn?
Neil
Cheddar Flavored Orville Schadenfreude could be sold at the cage match - Campbell & Toscano vs. Lereah & Gin. Losers have to buy a house.
Sorry Robert, Panic is only one more step in the dramatic fall of real estate. We are headed for Capitulation. Sellers sell at any price to the few buyers qualified to buy. We are looking for CAPITULATION.
All this talk of capitulation is making me start jonesing for a good game of Civilization Warlords… I can also just picture Vicky or Monty saying, “Buy our house… or else!”
right-o
whether stock market or housing or whatever… capitulation is what we are looking for to say we see the light at the end of the tunnel (and it is not a train)…
LOL…I got a mental of that train comin!
Check out what’s on the home page of Yahooooooooo:
Pulse - What Yahoos Are Into
Bargain Homes: Top Foreclosure Searches
Los Angeles Foreclosures
1. Los Angeles, California
2. Riverside, California
3. Fort Worth, Texas
4. Phoenix, Arizona
5. Portland, Oregon
6. Raleigh, North Carolina
Brought to you by: Neil’s Butter Popcorn…Get your’s today!
I guess those are still desirable areas, so people are starting to bargain-hunt. Probably too early in the game. I’m thinking the New Year ought to start bringing some real bargains.
Long term rates are going up at a very fast clip, so you could be right. The bottom could be Fall. But careful. It could level off and values could stay flat for several years after that. Could be a 25% RE price drop by New Year for the average U.S. home?
My mother just sold her house FINALLY in Bellflower she inherited. Thanks to this blogs and others, she bought into the BS for a little bit and I told her to cut and run as fast as possible. She will finally get her money Friday, and best part she sold it to a flipper on an ARM….hahaaha!!! He thinks he got a steal…HAHAHAHAAH!!!
That’s great, Patricio. Congratulations to her and congratulations to you for getting through to her. Sometimes parents either can’t or don’t want to listen to their grown children.
Jeeezz.. There are still flippers around?
of course. think of how many stupid people you see (as a % of the population) while many have walked away from the game or got caught (ala Casey), some are idiots are actually STARTING to flip. Seasoned flippers should know the game os over.
A man I know just bought a TH. He boasted to me he got a good deal with low interest rate (5.8%) and he wants to flip it in five years. I think he will be upside down in five years.
Not sure that I get why Portland is on there. I assume it’s CA specuvesters who think Portland is cheap in general??
I thought the same thing about JDSU a few times…..but then it kept going down….
Yeah. Portland is not cheap any more.
JDSU, ha ha. Like me with Nokia and EMC.
“Brought to you by: Neil’s Butter Popcorn…Get your’s today!”
Oh… that brings up a picture of a buttered pig or something when talking about sponsoring foreclosure searches…
Maybe that is what’s happening to early knife catches.
(Que start of Deliverance music…)
Munch munch munch…
There is a long way to go.
Got popcorn?
Neil
Raleigh has too much influx to be considered a highly speculative market. North Raleigh is certainly bubblicious as well as Cary. However, NE Raleigh and Knightdale are definitely well priced. Not that *everyone* wants to live there, but there’s certainly a disproportionate amount of relocated yankees headed to the triangle area of NC, mostly funded by biotech and the massive amount of academic funding from NCSU, UNC, and Duke.
Could somebody explain Long Beach to a clueless Floridian?
Long beach is a trippy place, imagine great islands of wealth and million dollar + homes, surrounded by some of the most ghetto tough neighborhoods in America. It is a real weird mix for sure, what is true for one street is completely different for the next street over. It is a fun town, however a place you definitely should be careful in as well.
Sounds like Miami.
Having been to both cities - I would say that’s a good comparison. Except maybe that Miami is a beach city that has a port, and Long Beach is a port city that has a beach.
I think that every year Long Beach host a ‘Kick Ass’ Gay Parade.
Kick or Lick?
Grand Prix is a good time, the Chili Cook Off is kick ass as well…there are some good things about he LBC.
Long B!tch Parade~!
“It is a fun town, however a place you definitely should be careful in as well.”
Not if you’re walking down through Belmonte Shores. My parents used to live on the peninsula about 10 years ago. I remember that whenever I saw African Americans on the peninsula, it was usually because the police were all over them. No kidding. You can fire a pistol in the air and empty the clip most places in Long Beach and it’s business as usual. But, do anything to look suspicious on the peninsula and half the force will be all over you like flies on stink.
Belmont Shores is….Belmont Shores and so is Naples and Sunset Beach, etc. LBC is what I was talking about not down there in Belmont Shores, which is a beautiful area and a fun place to be.
still, get too far off 2nd street and it gets gross rather quickly, imho
What get me is that 1.2M price…
here in South Bay in SF Bay Area would get you a smaller home. I seen 1700 sq ft homes 60 years old go for that price.. they were only 160K 10 years ago…beat that.
Yea cupertino is gonna hurt…
LOL Burn Baby Burn
Or 60 yr. old 500 sq ft homes in Cupertino for 850K. BIG DEAL it’s just Cupertino surrounded by the rest of “Silicon Valley”…Ohh yeah the schools, the schooools…get a grip already
A house down the street from my mom’s house in Cupertino just sold for over $1 million. Smaller than our 3/2 starter home I grew up in, purchased by an Asian family. I do hope prices go down, but at least in our neighborhood (Rainbow Dr. , walking to three fabulous schools), I wonder how much of the price is supported by overseas money? Every now and then the Merc discusses Korean families and HK Chinese families who buy houses for their kids etc. I know a buddy of mine bought in Saratoga, his dad is a Taiwanese entrpreneur. I want to believe prices will come down, but I wonder how many extended families have sunk enough wealth in to sustain? It would be great to be able to move home, but I have no realistic plans.
Patricio,
God that brings back memories from 15 years ago. North Long Beach,Bellflower Blvd and large caliber weapons to defend the house. I was one of those dividing line houses. My friend lived one block over and was in a decent area. I truly believed the only reason we never had problems was the three of us that lived in the house/owned it were all just outta the Marines,we all worked different shifts/days off all the time and i am pretty sure word got around the hood to leave us the eff alone. I talked to my old roommate 3 months ago and he said the area is getting worse slowly but steadily.
He is the last lone holdout of 15 plus people i ran with who still lives in Kalifornia. All of us had good technical jobs with all the o.t. we wanted but none of wanted to live just for the house payment so we all left….
Chris
P.S.- I can’t ever return…Something about unpaid vehicle registrations…Kali actually tried coming after my employer in Ohio for these and we had to get the company lawyer involved. Needless to say they didn’t get a dime outta me. After that i never want to go back….
” I can’t ever return…Something about unpaid vehicle registrations…Kali actually tried coming after my employer in Ohio for these and we had to get the company lawyer involved. Needless to say they didn’t get a dime outta me. After that i never want to go back….”
Wow, Chris, that sounds Orwellian. And mind-blowing. Here they are, coming after a Marine who defended the country, while giving a free pass to illegals, gangbangers, etc. You should have been GIVEN vehicle registrations. But then, I’m a little weird that way. I think vets ought to be cared for, cradle to grave. If they want to work, fine. If they want to go fishing for the rest of their lives, they should be able to without ever having to worry about bills, mortgages, etc. Cut off ALL benefits to illegals AND their children, give that money to vets.
I guess our homeless vets are one a special program. I remember being in Ireland and at a house party in Belfast and 2 guys coming up to me and talking and then they asked me this question. “Is it true that your veterans sleep on the street?” I can honestly say that was a moment I didn’t have a good answer and I was truly ashamed of my Country.
Testify, Patricio. I would have been mortified. You’d think the staff at your Congressional rep’s office would be thrilled if you called and offered some help. In a pig’s eye. They don’t give a plop.
A lot of us feel that way. I am DISGUSTED and EMBARASSED at what we do for our vets.
The Walter Reed debacle was just another pimple for everyone to see. Boy do I get pissed at our pols. The fact that we open up our wallets for illegals is salt in the wound, so to speak. I certainly do NOT give permission to spend my tax $$$ on illegals.
Yet another heap on the mountain of reasons why I think we are nearer to revolt than people think…
Governments always go after the law-abiding first. They’d rather go after a solid citizen for a vehicle registration than for a low-life for burglary — because they figure they can get something out of the solid citizen, while the low-life will just cost money to process, jail, etc.
They focus inordinate attention on trivial violations by responsible people because, as John Dellinger said of the banks he robbed, that’s where the money is.
It brings back memories for me to. My Mom, God rest her soul, taught music and dance at the Napes School of Music in Belomont Shores for close to 25 years next to Cole’s Market on second street. All that was gone by 1975 or so.
That should be Naples. Geez, now it sounds really cheezzee.
“Long beach is a trippy place, imagine great islands of wealth and million dollar + homes, surrounded by some of the most ghetto tough neighborhoods in America. ”
Long beach has always been a tale of two cities. Basically you can split the good eastern half and bad western half along Lakewood blvd/ redondo ave/Xemino.
Long beach really has a skanky beach, except for the last eastern stretch along the Belmont pennisula. Being enclosed by the port harbor brakewater makes for poor water and waves.
Lots of bad parts in Central section immediately around the dwtn area. If you can survive the journey thru the ghetto ring the dwtn Harborwalk/new pike funzone/convention center/shoreline village.Pine ave/queen mary/marina jetty are really quite good walks and a good pleasant outing on a hot summer day. Problem is very few tourists and out of town folks: it is 95 % locals, heavily minority/hispanic/Asian, who form a significant poertion of the long beach population.
Parking sucks: city of long beach make you pay dearly for the privilege of a half-day outing in the LB urban Harborwalk zone($1.00 or $2.00/hr).
IF Anyone likes dock/boat/harbor cruises LB has them, though things must be really slow lately: the mississippi paddlewheeler was not operating 2 saturdays ago. Looks like the folks are opting for the cheap boat rides at $10.00 a pop.
LB will get slammed really bad during this RE bubble meltdown. Bad areas all over, heavly subprime buying,lots of teartowns in the ghetto areas. North LB 90805(ghetto) probably has the most foreclosures of any LA ZIP, nearing 100.
Zip 90807 bixby(where virginia country club is)is having a meltdown, and this is a small tidy middle class pocket). 90803 belmont shores is too close to the slumpocket zip 90804 not to be affected by crime. drugs,riff-faff, which in turn affect property values.
What a trip. I lived in a Spanish craftsman on 8th and Loma a couple years ago (flipped and got out in late 05) …. we had rainbow flags on almost every house accept ours (no joke) and one street over (Redondo Avenue) had gun shots pretty regularly. I actually recall telling my wife that if she was home and someone started shooting near the house to grab our son and jump in the tub because it was a cast iron tub and the only thing that would stop a bullet… then I re-considered living there at all.
I love long beach
Hi. I live in Long Beach. It’s not quite so stark as the poster above mentioned…however we do have disparities in neighborhoods. I live in a historical area of Long Beach. It is neither the most expensive but it is not ghetto by any means either. Small, older homes sell for $500,000 to $700,000. There are “medium” priced neighborhoods, not all is black and white by any means.
My sister bought a small 1/1 condo in Long Beach pre-bubble for about $100k. The unit above her was sold a year or two ago to an “investor” who rented it out to a series of scumbags who didn’t pay rent and tore up the place.
Now the kicker: the place is vacant and the flipper is apparently walking away from his losses. But his plumbing is broken and the trickle of water went through the floor and caused my sister’s ceiling to fall in. The association is now going through various legal proceedings to get the leak fixed and bill the owner, but since he stopped paying dues a while back there isn’t a whole lot they can do. And since a lot of folks are behind on their dues, the HOA is broke.
THere will be a lot of innocent bystanders hurt by this bubble collapse.
Its too late but there is a rule in real estate.
DON’T BUY IN THE HOOD
EVER.
Sorry but even realtors tend to tell you that.
Since mrincomestream hasn’t jumped in yet, I’ll do so. You can buy in the ‘hood AS LONG AS YOU BUY THE WHOLE BUILDING. Buying a condo in the the ‘hood is a sucker’s game - you are just a tenant with a mortgage.
Yea, I always laugh at people when they take that stance especially when I’m enroute to the bank.
But something has to be said about that and it might be hypocritical for me to say because I reside far from the hood.
You have to ask yourself however whether flight is worth it. I had a phone conversation with a Riverside County gentleman today. About 10 maybe 15 years ago he left Los Angeles and commutes to Downtown L.A. on a daily basis. He left because in his words his neighborhood had become infested with minority lowlife and gangbangers who were terrorizing the neighborhood. He’s currently behind on his mortgage, he spends roughly IIRC anywhere between 800 to 1200 a month in gas to get back and forth to work. He can’t quit his job because he’s vested in. He can’t get a part-time job because he’s now old and tired in his words.
You have to ask yourself wouldn’t it have been cheaper to just pick up the phone and harrass the police to keep the riff raff inline. I don’t get it. But like I said I don’t live in the hood. But I wonder what my approach would be if I had to start all over again. 4 hours in traffic everday, 800-1200 a month in gas, insane utility bills. I’d rather have the police earn their money.
But I wonder what my approach would be if I had to start all over again. 4 hours in traffic everday, 800-1200 a month in gas, insane utility bills. I’d rather have the police earn their money.
I for one would choose to rent in a nice neighborhood near where I need to be for work, versus living in a ‘hood or buying something hours away. I would do this even if it cost more to rent, but of course as we all know, in these times it costs way less - A WIN-WIN SITUATION!
DON’T BUY IN THE HOOD
EVER.
The other, often less recognized lesson that this reminds us of:
DON’T BUY A CONDO, EVER.
Well, since your in Florida…this won’t be much use to you…
It’s just like Bakersfried…except sitting on the pacific’s oceans edge looking at oil derrick islands and passing container ships.
I sort of get the idea of that. Can you swim in the ocean there without getting huge doses of pollutants and PCBs and such? If you can’t, then what good is the beach? Sounds sort of like a nightmare, similar to Tampa Bay, except without the oil derricks.
When did it ever come to this, where businesses and commerce take precedence over people and their quality of life? Really, nothing frustrates me more than to stand on a beach, knowing I don’t dare set foot in the water because of what’s in it. Why can’t quality of life co-exist with trade and commerce? It really wouldn’t be that hard for these corporations NOT to poison people, with all their resources, would it? Its like the mangement, directors and shareholders HAVE to be rabid about it.
I work at the ports (LA/LB). From PV down to Seal Beach, you couldn’t pay me to get in the water.
“When did it ever come to this, where businesses and commerce take precedence over people and their quality of life?”
Well, because historically, commerce is the engine that got people what quality of life they do have. We could go back to a preindustrial economy and avoid oil spills — but then we didn’t have sewage treatment plants, either. It’s PCBs or people-and-horse crap. Pick your poison.
Now ideally, business and commerce make us so rich we can afford to impose environmental restrictions on them without rendering them unprofitable. Which we do. The problem is that we’ve picked most of the low-hanging fruit. Cleaning up the last 10% or so of an environmental problem is the hardest part.
I’m actually not that familiar with water quality in the Long Beach area. Can’t imagine it’s all that great, mostly because of the lack of circulation because of the WWII-vintage breakwater. I don’t know whether there are major spillage problems with the offshore oil platforms.
Ever see a Snopp Dogg video ? he’s from Long Beach.
Never seen a Dogg video, but I get the idea. Surely not all of Long Beach is like that, though?
“Surely not all of Long Beach is like that, though?”
As someone pointed out above, it’s two different cities really. The downtown area near the ocean is highly patrolled, all glitz and glamour, trendy restaurants, nightclubs, nice hotels, and one of the most sought-after convention centers in the country. Any trouble is squelched asap.
Go down the road a few blocks and it is “the LBC” (hood). These two areas don’t really overlap too much. Long Beach has too much economic incentive to let that happen. I take the wife there every once in a while for a nice dinner and some dancing. Then for kicks I will drive her thru the hood to show her how lucky she has it.
“‘The most dramatic price declines come at the end, not at the start,’ said Robert Campbell, an independent San Diego economist. ‘That’s when the panic sets in.’”
Campbell is correct, these other mopes “that this slump will last well into 2008″ are clueless. This slump is just starting, from where are these prospective buyers going to come? China, India, Mexico? Not a chance.
And in California how many potential buyers are going to qualify for a full doc purchase at 7+% 30 yr fixed? Not as many as there are houses for sale.
IMHO we are 7 years from panic.
7 years is a bit far out… I’d say that we should be able to smell fear in the air by this fall, and the full panic will set in Fall of 2008. Then we will start to see serious price declines.
The crazy credit that facilitated this bubble will lead to an accelerated crash.
I would tend to agree. Information travels much faster so this mess will unravel faster. Once summer passes and FB’s understand that this phase isn’t going to pass, they will take their financial exlax and it will hit the fan. No depends for many
In 2007 prices have to drop by more than 66% or prices will stay flat until 2027. The truth is somewhere in between.
7 years??? I don’t see it taking nearly that long! All the ARMs will be resseting in 2, and no one can afford the homes are current prices when that happens. I think 2 years or less from now we’ll be in the midst of a serious price correction…. prices will be dropping by the day, not the month.
I don’t see how anyone that bought in the last 3 years can make it 7 years without total panic! Heck, I don’t think most can make it 7 months.
7 years is a very likely scenario. You forget the psychological factor. Prices going down and fewer will invest in real estate, which sends prices down and fewer will invest in real estate, which sends prices down and fewer will invest in real estate, …
And the reason the declines come at the end is because of the morons spouting off about a recovery around the corner. If everyone would get on the same page and just say the market is hosed, we’d be well into panic stage right now. But folks will hang on by their finger nails with every glimmer of hope that comes forth from the “false prophets” of housing predictions. Pathetic, don’t ya think?
This slump is just starting, from where are these prospective buyers going to come? China, India, Mexico? Not a chance.
My sentiments, exactly, but when I try to tell my friends to expect price cuts a la 1993 in West Los Angeles (e.g., 48% in Santa Monica), they keep insisting that there are “tons” of rich people here to keep buying all these million dollar bungalows and condos. And then there was my gay neighbor, who the other day explained to me that the gay population of West Hollywood is dwindling because “the gays have been priced out of the market here”. We’re talking double-income, both males, no kids, skilled professionals, if not management…if that’s the case, then who can afford it here?
If the gay population can not afford West Hollywood that is truly a bad sign.
Yeah, I had almost exactly the same conversation last week with some friends in Sherman Oaks - I believe they managed to squeeze in all 10 from the “Top 10 Realtor Untruths” - ie prices can’t go down, too many rich people here, why throw money way on rent, blahdee, blahdee, blah.
They kept on referring to a house that sold recently on Stone Canyon Ave that went for above asking, and took exception to my saying that, countywide, sales have stopped and prices droped.
“But…But…L.A is a BIG county!, Ontario and Riverside are completly different to Sherman Oaks!!
I gave up after a while - especially after I’d pointed out that many of the $1million dollar homes were about $400K 7 years ago. My friend nodded his head and said “well, 250% appreciation, that’s not too shabby”.
Anyway, its not worth losing friendships over. I know I’ll be right. Eventually.
Same here, don’t even try when I said 50% depreciation in prices, my friend just scoffed and said no way not in OC…maybe in Riverside never here. Because I guess it can’t happen again, like way back in the 90’s?! Is it really that long a go?
We changed subjects as well, as we just didn’t agree and he and I talked about other things.
“Anyway, its not worth losing friendships over. I know I’ll be right. Eventually.”
That’s funny. But for me, I have already made knowledge of the bubbles (r.e., stock market, art, etc.) and the deflation of the dollar my litmus test. If the person can understand any of this, or is willing to listen with an open mind, then I count that person a friend, everyone else, I can take or leave em. Life’s too short to deal with idiots. For those of you with children, like me, its family first and soon to be survival of the fittest. If things really do hit the fan, do you want people on your support team who are idiots, not me. Keep your powder dry.
But…But…L.A is a BIG county!, Ontario and Riverside are completly different to Sherman Oaks!!
What’s amusing about this statement is that neither Ontario nor Riverside is in L.A. County.
I bought a TH on Colorado Ave, SM in 1986 - 139K. Sold in 1989 - $290k. Same size unit/same development sold for $125K in 1996. I would say that prices can go down 50% on the westside/SM.
“This slump is just starting, from where are these prospective buyers going to come? China, India, Mexico? Not a chance.”
How about Ireland and the UK, or the rest of the euro zone, who are seeing their currency skyrocket vs ours?
When the Euro goes up in rates, the US follows. I predict 5% increase on current rates.
Yes, and if they buy now they can watch their investment shrivel as the dollar shrinks further against their currency and housing tanks, a double wammo. Smooth move.
They can be the same bagholders as the Japanese were in, was it the 80’s?
As foreign currencies appreciate against ours, our prices get cheaper in their money. The trouble is, as long as that appreciation continues, our prices keep getting cheaper.
No matter how cheap something is, if you expect it to keep getting cheaper, it’s a bad investment. The time for foreigners to invest in US assets is when the dollar is getting stronger against their currencies, not the other way around.
Sadly, with the 4 year seasonal change in adminstrations the real price floor might never arrive in the DC metro area… no matter who wins tons of politcos and lobbyists spending other people’s money will migrate to the area and buy at whatever price is being asked.
See, it’s DC. Different there.
The vast, vast majority of those living in the DC area are career gov’t-types. The 4-year turnover (2-year, really) you speak of is insignificant in comparison to the whole.
Besides, wouldn’t there be just as many needing to move out as there are moving in? In my experience the type that just buys a house for his political stay isn’t the type to fret about much of a loss in his real-estate purchase.
I left DC in ‘00, but considering a job there right now.
FYI Implode-o-meter at 82!
Anyone want to start a pool on when it hits 100?
“Implode-o-meter at 82″ … “when it hits 100″
I’m betting on Monday, August 6, 2007.
July 27, 2007.
Labor Day, 2007…or the day after, September 4th
The subprime IPO by Bear & Stearns:
Taking a chapter from Enron cookbook, Bear-Stearns is now creating
a dummy company to dump its subprime mortgage holding to.
This new company will buy Bear Stearns junks at a premium, giving
BS a profit. Where does it get the money to buy these junks? Bear-Stearns
plan to IPO the new company (selling shares to the public). Who in the
public will buy this new IPO ? BS and its Wall Street brokerage friends (Goldman Sach, Merrill …), using their managed mutual funds.
So now when the newly IPOed company take the loss, it is the public
(mutual fund investors/401K) that taking the loss.
So in one stroke, BS has transferred all its subprime loss to the public.
http://www.businessweek.com/bwdaily/dnflash/content/may2007/db20070511_093244.htm
Will anyone buy this IPO? At this point are there any mutual fund managers that HAVEN”T heard about the mortgage meltdown?
I think Ken is saying the mutual funds that will buy this trash are managed by people who have a vested interest in helping Bear Strearns get the trash off its own books.
They will put it into a 401(k) plan. They will provide unsuspecting companies 3 choices of managed funds, all will this junk scattered into about 20% of the fund. Fidelity did it to me. Fidelity Managed Income Portfolio. I thought it was T-bills. Yes, 80% T-bills, the other 20% was BBB- RMBS and other cr@p. I was not happy they charged .53% management fee give me a 2% return. I rolled it out of there into an IRA in Vanguard with T-bills. .10% fee and a 5%+ return. Wall street is hosing everybody for $100/year. All 30,000,000 of us and they get $3,000,000,000. Plus the profit from selling us the tranched up RMBS junk.
From a comment to the SD Union-Tribune article:
By realist on 06/12/2007
Alapaki:
Do the community a service and tell them how right now they too can prepare for the inevitable market crash……………I’ll tell them because I don’t like to get great deals by myself, I like to inform the public of the truth and I like to see everyone who listened to those of us who were willing to tell the truth, also get ahead…………….
SAVE YOUR MONEY, WORK ON YOUR CREDIT………don’t worry about the interest rates as they will NOT skyrocket………the prices will fall as the lenders let go of their REO properties………..Find an honest real estate agent, mortgage broker and wait til the right time to buy………Don’t refi for more than an 80/20 loan to value and definitely not for a boat, hummer, vacation, etc……………
Sorry to say, but it looks to me like rates are skyrocketing already, which will potentially accelerate the crash and shorten the duration until the panic phase Robert Campbell mentioned.
http://tinyurl.com/3b4zsz
Eyeballing those T-bond yields makes me think stocks have farther to fall to restore equilibrium. Here is an estimate based on a very lazy and disinterested analyst’s rule-of-thumb calculation…
30 yr T-bond yields
1/1/07 4.60
6/12/07 5.36
Implied drop in 30-yr bond price is about (4.60/5.36 - 1) X 100% = 14%
This is roughly the amount an infinitely-lived stock price w/ no earnings change would have to adjust to restore equilibrium. Based on the recent DJIA high level of 13,757, it looks like the DJIA would have to drop by roughly 1950 to 11,807 to restore equilibrium. Let’s see whether it goes that far down in the next half year…
That’s interesting. My bet would be for DJIA below 11000 by year end. (More rises in long-term rates, plus my supposition that 13750 wasn’t “equilibrium” in the first place.) But my bets are often wrong.
Gotta luv the upbeat ending to the SD Union-Tribune piece:
‘“I do feel that the worst is yet to come,” as more subprime loans move into default, Opperman said.
Some analysts blame Wall Street for the subprime crisis. Because of rising defaults, investors have lost their appetite for securities backed by subprime mortgages, said economist Edward Leamer, director of the UCLA Anderson Forecast. That means the subprime market “isn’t going to come back anytime soon,” Leamer said.’
Abandon hope, all ye who enter here.
“C.A.R. data indicate … a greater inventory buildup of homes in the sub-$500,000 price range”
Right. Have posted several times my monitoring of sub-$600K in Morro Bay. From last fall’s number (consistently 35-40 homes), the number fell throughout the spring, into the high 20’s. Now it’s turned upward. And the number of foreclosures in MB has quintupled…admittedly from 1 foreclosure to 5 foreclosures. Sorry, it’s a data point connected with my sometimes thinking I’ll buy there.
az_lender:
SLO county foreclosures have increased steadily from 4-5 to the current 89-93 since May of 2005 when I started tracking (nearly a 20 times increase). Even if Morro Bay foreclosures remain relatively low, I don’t see how prices can hold in Morro Bay (or in San Luis, either) if they fall in the more vulnerable areas of SLO and SB counties (e.g. Santa Maria, Nipomo, Atascadero, and Paso). I do think our time will come. It may just take quite a while.
I have also seen a increase in Cambria & Cayucos….I monitor them a little….
I saw a huge spike in Cayucos prices on DQ. Of course, there were very few sales counted. I like that little town, but it’s way over the top now.
You might watch the prices for Rancho Salinas just a little north of the town of SLO for me.
Can’t make the payments
Can’t refi
Can’t sell
Empty houses
No Buyers
Ho hum..WHO would have ever Imagined all THAT ?
munch..munch
Mikey,
At Ben’s HBB…”It gets better every day”
Are WE evil ?…I think NOT !
“The median price per square foot of home sold came in at $312, down 4 percent from $325 per square foot price the year before, the report shows. The May number was down 5.5 percent from the $330 per square foot peak of June 2006, when the previous record median was set.”
This is exactly what I like to see-info on price per square foot. Forget the median, people are getting way more house for the money. I try to articulate this to non bubbleheads but they just look at me, slackjawed. The median will plummet, too, but it will take some time. I looked at the sold comps in an area of western WA recently, and they paint a grim picture. Prices are NOT what they seem to be. The wishing prices on the mls are an illusion. And, get out there and lowball I say. It’s working. Seller psychology is changing.
same thing here in eastern WA
tide has finally turned
Do you have specifics that you can share? Thanks
Email from the director of the WSU real estate research center stated that May sales are down dramatically across the state. Prices starting to fall, but median rising due to composition of sales (low end falling out).
Here in Pullman, there are at least a dozen new homes that have been on the market since last year ($350k and up). New “premium” development doesn’t have any builder pre-sales. Leading local builder (RB Olson) is walking away from land options. Another custom home builder (who currently has 3 unsold spec homes) offered to knock 5% off his overhead charge and build a custom home at his spec home rate ($115/sq ft vs. $140/sq ft). Another builder who attends our church doesn’t have a single job and is hiring out as a framer with other projects.
We low-balled a $300k list home (offered $265k) that has been on the market for 5 months and got them down to $278k. Still too rich, but it is still on the market and if they come back to us later in the summer we might counter at $260k. Another home we tracked started at $245k in early spring, dropped to $220k and last week accepted an offer at around $200k. (We were conversing with the owner.)
At this point, existing home sellers are still wildly overpriced, with FSBO particularly absurd. (E.g. 40 year old ranch homes that sold last year for $215k and rent for $1000/mo now have wishing prices of $260k.) Quite often you will see 15 year old homes priced in line or even above comparable new homes. (Of course, they don’t sell.) Like a lot of other markets, it looks like the builders will lead the charge down.
THis is all anecdotal, but psychologically everyone you meet in Pullman thinks the market is heading down. THe only people still buying are newcomers from more expensive markets. And there just aren’t enough of those folks to float this market.
“…We low-balled a $300k list home (offered $265k)…”
FYI that is not a lowball offer a lowball offer would have started at 210k or less.
I think the only people who would consider that a low-ball would be the seller and his agent. I’m surprised they didn’t actually take it, I guess they thought if you were willing to come in that close to list price, they could probably get a few extra thousand from you.
I’ve been going on zillow panning back to see an area I’m interested in(San Fernando Valley) I click on each ‘recently sold’ flag…and by God! They ALL sold for 50-100K less than asking price! So when I look at the red ‘for sale’ flags…I just figure they will take lower than the previous solds. Our friends the knife catchers are setting new comps!
Cheers to the knife catchers!
I’ll wait about a year and a half, thank you! I know it won’t be the bottom, but for me, Tthere is utility value in owning. And I do mean owning…not debting!
Which A$$’ole turned the CA ATM machine off in the middle of the summer heatwave?
It’s a great time to rent a home near the coast, where free ocean breezes come with the deal.
Testify.
We don’t have an air conditioner in our fairly spacious apartment. Energy costs in August are about $40. There are about 3 days when it would be nice to have a little air conditioning, but those are as a result of the Santa Anas. On those days, a trip to the movies and we’re all set.
Yes, I’ve only been to CA three times, but all three times I was fortunate to be near the coast (Santa Monica, Oceanside, San Diego). No need for AC, unlike Florida, where we are right now having the same heat/humidity level normally seen in August.
Yup, we suffered through another perfect day here. High about 73, Low about 63, RH about 55%, sunny, nice. There was a little fog this morning, though, ruined my entire day…
Now that summer is almost upon us, I had to have the attic fans serviced. Heaven help us if the temperature hits 80 and the attic fans aren’t working!
Yup, we really do battle with the elements here
That’s funny. In Newport Beach, I’ve come to absolutely hate May and June, spoiled great-weather consumer that I am. This year it’s not bad, but a couple of years ago there were weeks at a time where the sun never burned through the fog. Depressed the hell out of me, that did.
bwaaa haaa haaaa
oops… I have got to stop saying that out loud.
Got popcorn?
Neil
Not a good idea to laugh when your mouth is full of popcorn! You’ll make a mess on your computer screen.
We all say hi to your new wife.
“Because of rising defaults, investors have lost their appetite for securities backed by subprime mortgages,”
Let’s hope they are going to lose a lot more than their appetite.
Hard to feed yourself when holding both cheeks to try and stop the pain from taking it.
“Regional economists say it is typical for prices to remain stubbornly high well after sales decline, marking the beginning of a down cycle. Ed Leamer, director of the closely followed UCLA Anderson Forecast, said in an interview last week that the 1990s trend was a classic example. Los Angeles-area sales totals fell by half from November 1988 to March 1991, while home prices continued to rise until June 1992, when prices began a long decline.”
I believe they bottomed out around 1996 — four years after the long decline began. If the timing were the same this go-round, I guess that would take us out to 2010 or so for the bottom (assuming prices started dropping last year).
1995 was max number of NODs, 1996 was max number of TDs (Trustees Deeds) in California during the last property burp; or should I say throw up.PERS has lost a bunch of money for the Teachers, probably in subprime MBS paper. The tax payers are on the hook to pay off the loses. They ought to perp walk the Terminator and the trustees for agreeing to that deal.Now they are taking over the Sacramento white elephant! Sh-t.
Nah - decline began in 1990 (see Case/Shiller and OFHEO stats). Thus it took six years to bottom out.
Thus if the trend follows - it will be 2012 before this one bottoms.
Personally I think it’ll be probably 2015 - sad to say. Main reasons are:
- The general economic downturn this time will be *much* worse, and more widespread across the U.S. (last downturn was concentrated mostly in CA and CO)
- The scale of this bubble is so much greater - it will just take that much longer for prices to reach equilibrium
- Since is the first time *ever* that home prices have officially been acknowledged by the REIC to be going down, real estate will not be seen as an investment vehicle for a long, long time - like 20-30 years IMO. This alone will take away a portion of the demand. At least after the 90’s downturn places like CA could be considered a temporary anomoly - not anymore.
I don’t know, I think with everyone getting information so quickly due to the internet, this might unravel faster than you’d expect. And RE will go up again, no class of investment stays down forever, it’s just a swinging pendulum.
Not forever, but consider Shiller graph for 1892-1942 (50 count ‘em 50 years).
Perhaps, but the people who have been buying the last couple of years are for the most part not exactly well-informed, so the information sort of flies over their heads, regardless of how fast it travels.
“When it came to single-family homes…in neighborhoods reporting approximately 30 or more sales last month, prices were down 15 percent in Carlsbad’s 92009; 13 percent in Carmel Valley (92130); 10 percent in Oceanside’s 92057; 8 percent in Carlsbad’s 92011, San Marcos’ 92078 and Vista’s 92081; 7 percent in Encinitas (92024); and 5 percent in Escondido’s 92026.”
“Regional economists say it is typical for prices to remain stubbornly high well after sales decline, marking the beginning of a down cycle.”
SFR prices in many SD zip codes are already reportedly off by 5-15 percent, and yet remain stubbornly high. How much will they be off by when the stubborn phase gives way to the panic phase of the correction?
“The California Public Employees’ Retirement System has announced it is taking over the debt-ridden Towers high rise project on Capitol Mall. That means the 53-story luxury condo and hotel that local developer John Saca envisioned for the site near the Tower Bridge is dead.”
The project is dead, so they are dumping it onto CalPers? This sounds like a brilliant move from a fiduciary perspective.
CalPers real estate strategy puzzles me, I would be scared of my mind if my retirement depended on them.
it’s not a large portion of their fund.
I read a article some time ago about CalPers chasing higher yelds albeit with more risk…I think they need a delta of about 8% - 9% to keep from going backwards….
About right. The public employees of CALPers demand a rather thick retirement cushion - 8% at least.
I’d be scared of your mind if I were you too.
(Sorry, couldn’t let that one slip by, too funny.)
That is the only thing I hate about this blog no “edit” button
I have no idea whether or not its a good investment for CalSTRS (where my wife has her retirement money), but this development is great for my company. We did the electrical work on CIM’s Plaza Loft project in downtown Sacramento that completed last year (~$3M electrical contract) and we’re currently working on the new 400,000 square foot CalSTRS headquarters (~$6M electrical contract). We have too much work going on right now (why we passed on bidding the original Towers project), but we will be to start a new major project in 18-24 months, I would imagine.
Not sure if its great for my wife’s retirement, but it’s good news for my job security if my company were to land this project. And given the success we had on the Plaza Lofts and smooth sailing so far on CalSTRS itself, it would seem to be a strong possibility. It will be interesting to see which general contractor lands the new project (that would ultimately determine how aggressively we go after it).
Speaking of electrical work, anyone recall the Mike Morgan (Morgan Florida) report over on Mish’s blog about the Lennar home in Clermont, Florida, where the appliance installer got electrocuted AFTER shutting off the main power to the house? Because a wire had been nailed through into the steel frame, which ran a current through the walls? Turns out, this sort of thing is more common than you’d think.
I was sitting out on the back patio today and heard one of the guys from the condo association (I rent here) talking to an electrician about some outside wiring. From what I could gather, the electrician was telling him he had discovered a similar situation, something about a screw had been put through the wiring. The guy from the association nearly fainted. Recently, there have been crews of illegals (well, they don’t speak English, one of them yelled at my friend for stepping on some tile they had just laid down without informing us they were going to block the front door for hours) doing various types of work here. This complex was built during the 1970s, the work has been mainly maintenance, some exterior upgrades, etc. But even so, I wouldn’t let illegal unskilled labor near anything that involves wiring, hammers, nails or screws. They’re lucky they caught the situation here before someone got hurt. They must’ve let the cheap labor do the job and then they had to get an experienced old codger to tell them what the problem was.
Very true. I think that a lot of McMansion homeowners are in for a nasty surprise when they want to add an outlet or install a ceiling fan. We’re seeing a lot more service calls to residences built in the last five years (we’re mostly commercial, but will do a service call where ever, whenever). Not cheap: $77 an hour for service calls (more on nights or weekends). But for nearly 50 years, my company has operated in the Sacramento area.
We’re still union. Among the various issues that I have had with my employer, I can honestly say that the quality of our workmanship is not one of them. Electrical work is definitely not something to try to save a few bucks on, IMHO.
“Some analysts blame Wall Street for the subprime crisis. Because of rising defaults, investors have lost their appetite for securities backed by subprime mortgages, said economist Edward Leamer”
time for the Rolaids..
f-o-r-e-c-l-o-s-u-r-e spells relief…
First come the sales declines, then the price declines.
Theory: lag between the two is inversely related to normal inventory turnover of product.
Groceries: sales decline, prices decline roughly a week later.
Clothing: one to two months.
Consumer tech: two to three months.
Cars: two to four months.
Jewelry: six months.
New houses: less than a year.
Existing houses: several years.
Very rough and tumble, but in all instances price decreases following sales declines appear to be closely related to the time of one normal inventory turn. Or (new thought) maybe the functional relationship is perishability.
Perishability and emotional connection. A new house is a commodity, while an existing home is where the kids grew up and how many plan to retire. But it’s also a form of inventory build-up, as retirement and other life issues won’t wait forever. At some point the holders will panic ( last lifeboat on the Titanic?)and then the prices will implode.
“Or (new thought) maybe the functional relationship is perishability.”
I am guessing persihability of vacant homes is fairly high, and particularly for new homes, where the ‘new’ label loses a bit of its luster after the completed home sits unoccupied for over six months.
All I can say is misleading rising median sales prices when values is falling, because the low end of the market won’t sell, is the usual pattern. Deja Vu all over again.
The question is how long until enough of the average homeowners HAVE TO sell at what the market already is. A recession may not have much affect on prices, but it will have an effect on their visibility.
“A 4-bedroom, 3-bathroom, 3,646-square-foot home (on) Pacific Ave. in the Virginia Country Club community has a ‘for sale’ sign in the spacious front yard on the 12,790-square-foot lot with ‘Reduced Price’ on top of the sign.”
“The $1.24 million asking price for the home, which has been on the market 121 days, was dropped from an original asking price of $1.39 million.”
The zillow history looks like family transfers.
07/06/2006: $185,000
10/28/1994: $356,000
06/24/1994: $485,232
It’s got an elevator, and I like the pink bathroom.
http://img79.imageshack.us/my.php?image=3903pacificsg4.jpg
It appears vacant in the photos and the seller is a broker.
Ok- maybe this is a dumb question but when you say “the zillow history looks like family transfers” how does that work? Why was it sold for only $185,000 in 2006?
“In North Long Beach, the Wrigley area and Central Long Beach, many families got into affordable communities with specialty mortgages that are beginning to reset to much higher rates, Daskam said.”
“Erroneous! Erroneous!” If they were “affordable,” why were they purchased with “specialty mortgages?”
because specialty mortgages are superior products to the plain ole’ 30 yr fixed..why go for the vanilla cone, when you have the banana split? (just a little sarcasm)
Did anyone read the Los Angeles Magazine latest issue on uber realtors. The “Grey tornado ” of Long Beach sold her people a home in December for $1.1 mil noncontingent on the sale of their condo. I did a little research and the condo still has not sold in the Heights and they are carrying a $hit load of mortages on the 2 properties. I guess the “Tornado” really blew these clients budget. Double payments will eat you alive! Thats what you get with an agent who has not been through a down cycle and would encourage a non-contingent offer so late in the game.
And they want us to believe that part of the reason for paying 6% is because you are getting great help/advice from RE experts/professionals.
With friends like that who needs enemies?
Got 10% down?
“into affordable communities with specialty mortgages that are beginning to reset to much higher rates, Daskam said.”
They were never “affordable communities” if you couldn’t buy one on a conventional mortgage (20% down and a 15 or 30 fixed).
What the–? I just tried to post practically the same comment, and the site accused me of duplication. Guess you beat me to it.
Congrats. SalinasRon by a nose.
Sorry but whenever I see the term “Affordable housing” my BP shoots up 50 points. Up my way it means put someone making $30K into a $500K to $700K house at tax payer expense.
Even with zero down with a 30 year fixed would be a huge step towards affordability vs. what went on in the last five years.
Here in MA we have something called 40B. Basically, if a town doesn’t have enough affordable housing, the state will over-ride the town’s permitting process, if the builder allocates 25% of the units to “affordable housing”.
I was discussing this with a builder a few years back and I noted that this just means that the other 75% pick up his opportunity cost on the affordable units, to which he replied, “Exactly!”.
It’s just smoke and mirrors, folks. Pay no attention to the man behind the curtain.
It’s interesting when homeowners who bought their houses before the boom complain about the houses in their neighborhoods selling for thousand of dollars less than the “appraised or Zillow” value.
I heard a few people, who fit this profile, bitching about the prices and how it devalues their homes Did they take out a HELOC? And now getting screwed. Did they think they can retire early with this virtual wealth? It seems like they were handed this pot of gold and were told to use it now but held off and it was gone. Did they feel cheated?
here in MA, Zillow is all over the place when it comes to values…
it’s either way too high, way too low or spot on…so you don’t really know which it is at any given time…
I’ve seen the same house go up and down by tens of thousands from one day to the next. I don’t see any value in that.
Exactly. We sold last year after months on the market, zillow then proceeded to insanely inflate its zestimate over the next few months. The zestimate is now almost the same as the listing price (last year) of another house near us, and that house was vastly nicer than ours with a major view, not comparable at all.
Have been watching one trashy little within a few blocks of the Pacific Ocean. It’s been on the market about two years. The most recent price is about 6 months old and is maybe 5% below the Zillow estimate. Dream on, seller.
These people don’t get it. You can’t compare the 1990’s to today. In 1990’s we didn’t have everyone working, an abundance of houses available in all 50 states, an abundance of houses priced out of the reach of buyers, lack of savings, huge debt to income levels, and the possibility of lending institutions going broke.
“In 1990’s we didn’t have everyone working”
And interest rates this low. Good point — outside the housing market, things can only get worse not better. And on rates, it is starting to happen. There is no upside.
..there is an upside..which is exactly where rates are heading,..to the upside..
Very different credit market behind this bubble compared to the late 1980’s. This will be MUCH uglier.
Nor did we have 69-70% homeownership. Hard to tell if that additional 4-5% increase in loanowners are able to handle the financial stress (like…. Cal PERS).
The lack of future buyers (you know, that group sucked up in 2002-2005) should be an enormous drain from the buying pool in the next decade. This crowd WAS the group that should have been buying the trough (like 1992-1997), but this time will be moonlighting at Burger King to make the monthly nut.
I honestly don’t see a buyer pool in our future…. from this country.
“The lack of future buyers (you know, that group sucked up in 2002-2005) should be an enormous drain from the buying pool in the next decade.”
Yup. Didn’t take the bait. Didn’t get married in 2000, didn’t father any children. “N” everything about America is on the way to downsizing. The baby boomers (my contemporaries) were idiots to think the years from 2000 to 2023 would be growth years. Growth years will probably come later.
Perhaps the natural percentage of home ownership should be 60% (adjusted for lack of Gen-y people and younger). If so, homeowners who expect to use their residences as part of their retirement portfolio are “scru-ed!”
Also there was no price bubble in the late 80’s comparable to the 2003-2005 insanity. We bought a house in 86, had to sell it in 90, and just about broke even. There was no real nationwide buying mania during this period, no massive infestation of flippers, no complete abandonment of responsible lending standards and use of toxic loans, no securitization of credit via financial engineering products meant to obfuscate the risk, and I believe much less extensive use of home equity credit and serial re-financing.
Um, there was a bubble here. Maybe the loans weren’t as toxic, and the lending standards weren’t as loose, but we had a crazy run-up in prices, and a crash to prove it. And speaking of cetaceans, we practically invented flipping here - no kidding. What happened here in the ’80s was frightening - I watched almost an entire zip code get torn down and flipped just in time for the 1990’s wipeout.
Where is “here”? “sm” is so ambiguous. My wild guess, Santa Monica, but it could be anything from Sierra Madre to Spanish Morocco, not to mention sadomasochism. You may have told us before, sorry if I just missed it.
“you can’t compare the 1990’s to today”
absolutely right. i got into the l.a. market in december of ‘96. the precipitous to that bubble paled in comparison to what’s going on now. furthermore, as i recall, the bubble areas were somewhat localized to los angeles and boston. this is a huge national housing bubble. we’re watching the national credit bubble deflate rapidly in the last couple of weeks which will cause this thing to implode and take our economy with it….imho.
to compare this to the 1990’s is irrelevant.
The other things that makes it worse now are:
global economy
job outsourcing
illegals competing for low wage jobs (who are willing to take below market wages)
further deflation of our dollar
an either inept or just plain crooked Congress
negative approeciation of real wages (now I sound like CNBC)
Salinasron, what’s going on in your area as far as NODs, specifically Greenfield? K&B built a good sized tract and jammed a bunch of people in who had no concept of home ownership,insurance, and property taxes. They signed loan docs that they couldn’t read. I think they had token interpreters however. The loans should be resetting now.
As if the housing demand picture were not sufficiently dire already, rising l-t T-bond yields will translate into much higher mortgage rates, and lower home purchase budget constraints (for given hh income / wealth) among those using 30-yr fixed mortgages. And I am guessing ARM resets are closely tied to the 30-yr T-bond, though I have not checked this out carefully. Resets are long-term commitments (unless the FB can’t make the payment hike) — bye-bye, teaser rates…
BTW, for California investers thinking about buying a $1.5m investment home, a 50 bps correction in bond yields like we have seen over the past couple of weeks will add maybe $5000/yr to your alligator’s carrying cost, and that is before the future capital loss which normally comes with higher rates is considered.
——————————————————————————–
US Treasury yields at highest for over five years
By Michael Mackenzie in New York
Published: June 12 2007 13:52 | Last updated: June 12 2007 20:15
The yield on the 10-year bond rose above 5.25 per cent on Tuesday, its highest level in more than five years.
The yield reached 5.27 per cent - the highest since hitting 5.28 per cent in May 2002. The 10-year is also above the Fed funds rate of 5.25 per cent for the first time since the Federal Reserve tightened policy to that level in June 2006.
Wall Street stocks turned lower after a brief rebound earlier on Tuesday, as bond yields cast a bearish pall during the afternoon.
http://www.ft.com/cms/s/0f6a2d46-1863-11dc-b736-000b5df10621.html
$1.5m investment home, a 50 bps correction in bond yields like we have seen over the past couple of weeks will add maybe $7500/yr…
the funny thing is that for someone who can truly afford 1.5 mill is that the $7,500 shouldn’t be that big of a deal (like in the old days)..but for the pizza dude being the 1.5 mill home, that $7,500 is a killer..
What about the pizza dude who bought 10 homes on leverage?
He threw himself in the oven. Baked.
The difference between a 30yr-fixed $1.5mm mortgage at 6.25% and 6.75% is almost $6,000/yr. ($116,747.66 vs. $110,829.10)
Aren’t ARMs often tied to the LIBOR?
Have read ARM contracts for a couple of FB friends. Their rates will be LIBOR-plus-two-percent after a certain date.
dumb question….but do teaser rate loans readjust prematurely if the libor index hits a certain point?
Depends on the loan but usually the loan contract states exactly when the interest rate (based on the index plus the spread )readjusts after the teaser period .
Anything good to invest in considering inflated RE, metals and stock prices, and rising interest rates, other than the normal CDs or whatever.
Uh, I meant that as a question.
In the immortal words of Art Cashen: “Always have enough gold to bribe the border guards!”
you might want to consider parking some of your money in u.s. treasuries
LA-
I’d look to mutual funds that have historically beat the S&P 500. Gold is stagnant, and the yield on bonds is hardly better than an online savings account. This correction should end in a relatively short time frame.
Stocks, metals, and real estate are sensitive to inflation. In some circumstances, one of them will overshoot and fall down before the others - example: Real Estate. On the other hand you have the unsexy gubment bonds (a libertarian does not know how to spell that word preceding “bonds”), and notes, as well as corporate bonds. CDs are minor league in comparison to gubment bonds. Reason is that gubment bonds almost always are not taxed at the state and local level.
To make it more complicated, it’s far easier to dollar cost average into metals than to real estate, although they are in the similar category - “tangibles.” So I think precious metals are a safer investment than real estate.
In 2001, series I savings bonds were a great thing to invest in. Probably one of the best investments that year. The 2000 year was even better for Series I bonds.
For the near future I think the best deal will be to be like a steam engine, start slow and then increasingly put more and more into notes, bonds, and dividend stocks. Keep an eye on yields of large caps, as well as how close they are to their 52 week lows.
Foreign bond funds (not dollar denominated bonds) if you think (ahem) the dollar is going to continue tanking. Or find a broker who will buy you foreign bonds directly.
Nothing looks really appealing right now. The least worst option, I think, is a 50/50 mix of short-term US treasuries and an internationally-diversified mutual fund of ’safe and cheap’ stocks, like TAVFX.
Nothing looks really appealing right now. The least worst option, I think, is a 50/50 mix of short-term US treasuries and an internationally-diversified mutual fund of ’safe and cheap’ stocks, like TAVFX.
Remember the razzle dazzle hot Real Estate Agents with the lines,
” Let US tell YOU How MUCH house can you afford?” and “We can”t SHOW you the house until you are Pre Approved” ?
Well, ALL the FBs and GFs TOLD these RE Vultures what they were WORTH and GOT TAKEN for every DIME !
All I know is that our mortgage broker was willing to approve us for twice our absolutely maximum ceiling. Until that lending spigot turns off we won’t see any real change in the market.
All I know is I have a little bit of money stached away BUT I’m not wealthy enough to unnecessarily piss away MY hard earned money to anyone.
I also know that it’s nobody’s frigging business HOW MUCH I am worth other than my banks, my accountant, my RE attorney and the frigging IRS.
I also know that if I wish to look at an RE Property that is listed “FOR SALE” on the open market and that IF a listing Agent/Agency, gives me some pre approval/net worth BS, that I will drag him, his Broker and his Agency in a State Court after 1 Fair Warning.
That’s beside the automatic formal complaint from us to the State Board of Licensing and BBB and a DETAILED LETTER to the Current Owner advising them of the Agencey’s hinderance of a possible “ATTEMPT to Purchase”
You’d be wasting your time…
Good point, Mikey. This is so classic.
Prospective Buyer: “How much is that house?”
Realtor: “How much have you got?”
Prospective Buyer: “Duh, well I guess I can get a loan for $500,000″
Realtor: “Then the price is $750,000 and I’ll get you a “better” loan”
What’s wrong with this picture?
Do you tell a used car salesman that you have a net worth of $1,000,000 and expect to get a good deal? If so, you’re probably the same guy that tips 100% at restaurants in order to impress your friends. You’re probably the same guy who walks into a Compton 7-11 at 1:00 AM and flashes a wad of hundreds, then acts all surprised when you get jacked on the way out. You’re probably the kind of guy who who marries a coke wh0re and then freaks out when she cheats on you.
Someone needs to write a top-ten list here. You know you’re a dufus when you…
Oh wait, we already did that with FBs a few weeks back
Bwwaahhaaahaa
The prices at the top are high for now but they will cave too. And when they do median prices will come down hard. If the bottom end goes it is only a matter of time before the top goes too.
The great think about this bubble is that it’s like holding a mirror up to our society. You rarely get this clear a view of the country.
This country is loaded with…
1. Greedy, selfish people
2. People willing to rip each other off in a second
3. People looking to blame everyone else when things go south
4. News people and politicians that don’t give a damn
Like holding a mirror up. Durant really did nail it when he said:
“A great civilization is not conquered from without until it has destroyed itself from within.”
And we are well on our way.
Nicely said Joe and unfortunately true.
why aren’t prices dropping in 90274 and 90275?
Is it different here? both zips are in Palos Verdes Peninsula, CA for those of you in Kansas
Add to that 90272 (Pacific Palisades). Inventory is clearly up (based on the number of for sale signs), but prices are holding steadily/even strong for good houses. Nothing here under $1.5MM (2BR). Who are these endless buyers w/ incomes $450M and up??
My parents still live in 90272. They bought their 3 bedroom 1 bath house in 1960 for $29,000.
Then expanded it in the late 60s to a 4 bedroom 3 bath house to make room for us kids.
Anyone who has bought a house on the street in the last 10 years has either been a Doctor,a Lawyer,or someone in the film industry.
No one else has been able to afford it.
Here’s a question would you pay what these people are paying for your parents house? If so or if not why?
What information are you looking at?, I’ve seen quite a few drops some noticeable some not. The fact you can buy for less than a million there now is a significant change from last year.
None of us on this blog want to piss away our hard earned money. But, everyone is ‘entitled’ to a big house. Especially strawberry pickers buying $720K homes. Takes a lot of pickin to pay that nut. Or the dude on disability ‘timing’ his double down when some a$$hat broker calls him on the phone and talks him into getting foreclosed on both his primary residence and his ‘investment’ alligator. Hollywood couldn’t dream up better stories than these real ones.
There is a store in the mall here in Albuquerque promoting “Surf Hollister CA”. I am figuring it thinks most people don’t know where Hollister is, and that it is a dump where they sell overpriced McCrackerboxes to the strawberry folks. And the ocean is no where near it, as well as it being a $hithole of a place.
The latest from Greenspan, a real doozy this time IMO:
http://www.reuters.com/article/ousiv/idUSN1228045520070612
He says the Chinese won’t be dumping our bonds because…wait for it…there’s nobody to sell them to (!)
Then he ends by saying, about the stock market: “have fun while it lasts”..
Correction to above: the “Have fun while it lasts” comment is in reference to the Global Liquidity Boom, not the stock market in particular. Which I guess is even worse.
Just above, lainvestorgirl was asking about good investments other than CDs. Hey, if the Chinese want to sell her a few US Treasury bonds on a basis that yields 15% or 20%, she should definitely consider buying them! They have nobody else to sell them to, right?
One thing I have had confirmed over the last few years, somebody is always willing to buy, depends on the price and risk. Scary that this is an almost challenge to someone that hold our economy in their hands.
On the “Who’s goin’ to Crash First” front…..
Is it:
“….the increase may reflect a lopsided market where higher-priced homes are selling faster than cheaper properties, which have been hurt by the implosion of the subprime loan sector.”
or:
“There’s definitely a wide variety of price ranges in Long Beach,’ said Richard Daskam, of Keller Williams Los Alamitos. ‘Definitely the highest is going to get hit…..”
And then finally:
“‘In essence, the low end of the market is falling out with a steeper drop in sales and greater price softness. The higher end is seeing a drop in volume, though not as severe, and some price gains,’ said Robert Kleinhenz, deputy chief economist for the state association.”
Even though RE is local, it’s two against one…. I guess I’ll go with….
the high end = okay, low end = toast.
Whoops. Someone just put their house on the market, same block and practically identical house as friends who were planning on listing later this month. The other house is 75K below what friends were going to list at.
The chasing down begins.
ooch! (combo of oof and ouch) How did the friends react?
Let me guess—-> Oh f@ck, we just lost $75K.
OMG. Laugh amongst yourselves. This is not a joke.
http://www.foreclosurecode.com/
Un-friggin-believable…..
The bubble is over. The truth is hitting the morning national news.
http://abcnews.go.com/Business/IndustryInfo/story?id=3270561&Business=true
There is is, right after the Paris Hilton watch, and right before the recipes for low-fat cookies.
On buying a reo. I have found the banks often list extremely high (the appraiser told me the list price reflected the price the bank needed to get their money back) but then for buyers the good news….slowly the price comes down…down all the way to investor levels as no buyer shows up and the low ball offers keep coming in.