The Continuing Correction In California
The LA Times reports from California. “Southern California home sales plunged to a 12-year low in May, falling by 34% from a year earlier, thanks to a sharp drop-off of buyers of lower-priced homes, data released today showed. DataQuick said the drop-off in sales has been especially pronounced among lower-priced homes. Indeed, the dearth of sales at the lower end has started to push prices down.”
“But because home sales are more robust among higher-priced homes, and prices in that category are flat or even increasing at the very top of the market, the overall median price appears to be gaining rising.”
“‘The median holding steady doesn’t equal a sure sign of stability,’ DataQuick analyst Andrew LePage said. ‘Fewer lower-priced homes are selling, and that puts upward pressure on the median.’”
“Last month, sales of homes priced $800,000 or lower plummeted 38%, while sales of homes priced above that amount saw no change from May 2006, DataQuick said.”
“In Riverside County, sales fell 45.4% to 3,307 year over year, while in neighboring San Bernardino County, sales plunged 46.5% to 2,220. Orange County’s sales declined 29%. In Ventura County, sales dropped 25% compared to with a year earlier. In San Diego County, sales fell 24.4%. Los Angeles County…sales fell 31% from a year earlier.”
The Orange County Register. “For the month of May, DataQuick reports this morning that 2,675 homes sold or 29 percent below a year ago. It’s the slowest-selling May in the 20 years DataQuick has tracked the market. The 13,336 homes of all types sold this year through May marks the slowest start of a year since 1995.”
“Looking at year-to-date sales, ‘07 so far has totaled 13,336 homes of all types sold, or 26.3% below historical pace. Twenty straight months of year-over-year sales drops can do that.”
“In Garden Grove, a 1,400-square-foot house on a quiet street is having trouble selling, even though the asking price is $15,000 less than the amount paid a year ago for a comparable home that is smaller with inferior construction and in a worse location.”
“Real estate agents in Cypress, Garden Grove, Tustin and Ladera Ranch said they’ve noticed a clear downward trend in prices, with current home values off between 5 and 10 percent.”
“‘I think prices have come down 8 or 9 percent,’ said Charles Folcke of North Hills Realty, an agent specializing in properties in the Tustin area.”
“Cypress agent Cary Hairabedian said Cypress home values are down about 6 to 8 percent in the last year. He noted that the median price doesn’t reflect the number of transactions in which sellers pick up a greater share of closing costs than they did a year ago.”
“‘You have a bigger gap than people realize,’ he said.”
“Chuck Pillsbury of Ladera Ranch Realty, who believes that Ladera prices are down by about 10 percent, added that buyers there used to pick up a 0.25 to 1 percent ‘lifestyle enhancement fee.’”
“‘Now, it’s negotiable,’ Pillsbury said. ‘The market’s changed quite a bit.’”
The Fresno Bee. “Year-over-year sales in the region have fallen for 20 consecutive months, which is leading to lower prices, said John Karevoll, a DataQuick analyst. ‘A year from now, the median is probably going to be anywhere from 4 (percent) to 6 percent from where it is,’ he said.”
“The Inland Empire counties of Riverside and San Bernardino are leading the sales and price declines in the region, Karevoll said. ‘The Inland Empire is now due for its drop-off,’ he said. ‘We’re seeing it certainly in sales and we’re seeing it more in prices.’”
The Press Enterprise. “The declining housing market continued in Inland Southern California in May, especially in Riverside County where the median price of a home fell by more than 3 percent.”
“Overall, sales of new and existing homes have slowed by almost half in the two Inland counties, according to a report released today by DataQuick.”
“With the cooling of the housing market compounded by a spike in mortgage failures, foreclosure activity is skyrocketing in California, according to a report.”
“Riverside County recorded 4,550 foreclosure filings last month, which was more than four times the 1,066 filings recorded in May 2006.”
“San Bernardino County was the seventh-ranked county in foreclosure activity, with a total of 3,633 filings, up more than seven-fold from a year earlier.”
“In California, a major propeller of foreclosures has been the failure of subprime loans, said DataQuick spokesman Daren Blomquist. ‘In California, people are getting into mortgages they just can’t afford,’ Blomquist said. ‘An analysis of our database shows about half of the foreclosures in the first quarter were from subprime loans.’”
“Most people who receive notices of default still are able to save their homes from going to foreclosure, even if it means having to sell them, Blomquist said.”
“But increasingly they are losing the battle. He said last month Riverside County recorded three notices of default for every notice of trustee sale, compared to five notices for every trustee sale a year earlier.”
“In San Bernardino County in the same time the number of default notices for every notice of foreclosure auction dropped from eight in May 2006, to four last month.”
The Daily Press. “As foreclosures add to the surplus of homes on the residential property market, auctions are rising in popularity. Hudson and Marshall on Thursday will put 2 homes under the gavel in Victorville ranging in price from $86,000 to about $350,000.”
“According to RealtyTrac, the state recorded 30,505 foreclosure filings in April, more than any other state for the fourth month in a row, while California’s foreclosure rate is nearly twice the national average.”
“‘Because of huge inventory and the continuing correction in housing prices, there will not be a quick turnaround in the market,’ said Carolyn McNamara, a real estate broker in Phelan.”
“Southern California home sales plunged to a 12-year low in May, falling by 34% from a year earlier, thanks to a sharp drop-off of buyers of lower-priced homes, data released today showed. DataQuick said the drop-off in sales has been especially pronounced among lower-priced homes. Indeed, the dearth of sales at the lower end has started to push prices down.”
Needless to say, this drop-off in sales to 1995 levels does not reflect the effect of the past week’s bond market crash on mortgage interest rates. I am guessing June sales will be lower still.
It’s ugly. I had to inform some folks today where the rates were, and their response was disbelief. (In case you guys didn’t know, I dropped my brokers license, but kept my agents license and hung it with a local broker. My intentions are to get out of the biz completely, but I’m not going to leave former clients high-and-dry in the meantime) Anyway, like stucco says, June and July are going to be nasty with where long-term rates are right now, and they’ll probably go higher still. Talk about adding insult to injury!
I understand what you are saying relative to your former clients and the prices at which they purchased and the loans they took out; but back in the 1980’s when I bought my house with 20% down (30yr) great credit score my loan was 7 1/4% (no points) and rates went up from there and no one complained about high rates because they couldn’t buy what they couldn’t afford.
exacalacily.
People actually, you know, planned for the future and worst possible scenarios, etc.,,
“Try not to pat yourself on the back so hard”…..
Desmo-
Well, salinasron’s not here, so I’ll try to reply for him. I really doubt his intention was to imply “I’m a rich genius who can buy smart in any market”.
What I’m pretty sure he was implying was “Back when it was POSSIBLE FOR JUST ABOUT ANYONE to put down 20% and pay off a 7.5% fixed loan…”
In answer to your question “What would you do now if you wanted to buy?” . Here’s my answer and it might be his too: I’d WAIT until it’s possible for people to put down large downpayments (20%) and simultaneously pay high interest rates again.
What will it take for us to get there? A MASSIVE price drop. Forget these stupid 10 and 20% off “values” you’re seeing now. The only way people can put down 20% on a 7.5% loan is when home prices are in line with incomes.
BTW, a home market like the one described above has remarkable stability, unlike the one we created the past 10 years in the US that is threatening to bring down the world’s economy.
but back in the 1980’s when I bought my house with 20% down (30yr) great………..
So what would you have done if you were the same age now as you were in the 80’s?
One more thing, 20% down in the 80’s was what, 25-30K? What is it today? 100-150k?
Try not to pat yourself on the back so hard.
Would have rented if I had the wisdom I do now. And regarding 20%, its all relative, adjusted for inflation 25-30K was about as hard to save as 100-150k is now.
“And regarding 20%, its all relative, adjusted for inflation 25-30K was about as hard to save as 100-150k is now.”
I don’t know what they’re teaching in Austrian School, but you’re way off on that statement. Salaries and inflation have not gone up that much.
According to govt figures, inflation 1983-2006 was just over a factor of 2. Keeping in mind that govt figures tend to understate true inflation, nevertheless I can think of certain jobs for which the wages now are just about double what they were then. So I would side with BanteringBear (and Robt Shiller, whose graph shows “real” house prices now way above 1980’s level).
“Would have rented if I had the wisdom I do now. And regarding 20%, its all relative, adjusted for inflation 25-30K was about as hard to save as 100-150k is now. ”
HAHAHAHAHAHAHAHAHA! BullSH*T. MAYBE that would be true if wages had increased proportionately over the years. But, 20% down now on house prices that are waaay out of whack with incomes, is MUCH more difficult to save the 20%. And for az_lenders post, even if it is true that “certain” jobs now pay double what they did then, you should double what you could save for a down. 50 to 70K. Not to mention all of the costs of living that we have now that we didn’t have then. Did someone say cell phone, cable, etc? Not that you “need” these, but try landing a decent job nowadays unless you can be contacted via these routes. You should change your name from Austrian School to something else. I don’t want to be mean, so I won’t make a suggestion.
Rant off.
wowsers that response to Desmo went to the wrong place.
signed,
someone who also bought with a 25% down/ 7.5% loan in the 80’s- back when any idiot could do so easily. We need to get back there. The quicker the better.
Well said, Seattle!
Until people learn that **buyers** determine price, I’ve little hope of that happening in the near term.
Waiting for it, though…
what are rate now?
http://www.bankrate.com/#
30 yr fixed mtg
Current = 6.36%
Last week = 6.09%
+27 bps increase in one week — ouch!
It is good to see brokers with honor.
Saw something today that I couldn’t help but bust up over. An icecream truck that was showing the same name for mortgage services on the back. Only in So Cal
Homebuilder’s new mantra: don’t talk to the media!!!
http://www.cnbc.com/id/19190820
Short the hell of the HBs. It is a no brainer of all time. good luck,
No brainer if it were solely up to market forces to determine their share prices.
I know what you mean. However, Market can not be on denial forever. Higher interest rate are final nails to the coffin of HB.
Ah, but “Markets can stay irrational longer than you can stay solvent.” John Maynard Keynes
I think that ship has already sailed.
http://www.doic.net/halfwit
what happens on a team of hallfwits?
halfwit X halfwit = 1/4 wit
be careful shorting.
many of the HBs may come “into play”. The LBO is still alive and strong, and is part of the reason these will stay bouyed.
They also all have a tremendous amount of short interest in them… so a short squeeze is not out of the question.
the HB play is too obvious IMO… that makes it dangerous.
Yep. And while the CEOs continue to cash out, they have every incentive to push the price up now in return for a bigger crash later via either strange accounting (pushing loans off book- you should see the shananigans HB perform to keep the loan money flowing, which dries up after loans get to be more than 4x equity- look at issues of Big Builder maganize for occasional articles on this) or else through stock buybacks using some of the cash built up during the fat times. In other words, it is dangerous betting against the craven greed of HB CEOs.
yep - a true nightmare unfolding and nothing we can do about it. not an easy time for control freaks - like me.
the greed is both astounding and appauling
Caution noted.
“Last month, sales of homes priced $800,000 or lower plummeted 38%, while sales of homes priced above that amount saw no change from May 2006, DataQuick said.”
This is puzzling, because I see a glut of high-end homes in SD (2000+ used SFRs priced over $1m each). And many of the high-end homes have been on the market since 2006.
Maybe the 800K + homeowners aren’t deep into the sub-prime or Alt-A mess. Those probably aren’t flipper homes. They can afford to hang on th them without panicking.
And a few of those may even be selling. If you see a person doesn’t have a reson to dump a house you are more likely to make an acceptable offer instead of a incoming LOW BALL offer.
“Maybe the 800K + homeowners aren’t deep into the sub-prime or Alt-A mess.”
Subprime, maybe not, but I’ll bet most of these are Alt-A. How many people bought these houses with a downpayment? No or negligible downpayment= non-conforming = Alt-A.
Subprime at one time went to 1.5 million, at one point you could get 100% to 1.5. The reason they are still rolling is because they still have access to the easy money.
As a non-coastal person, I’m floored that anything less than $800k is considered a “lower priced home”.
I just took a looksie at what 1,000,000 - 1,200,000 buys you in inland North San Diego County (Escondido).
You can get a comparable house in Fort Collins or Loveland for under 400K. Plus we have basements as well.
I guess I now fully understand why our California friends eyes pop out of their heads when they visit us. We have a “million dollar house” for the price of a 2 bedroom condo.
But it snows
To some people, that’s an advantage!
Yes, it’s called SEASONS!!!
Its relative. People from the great lakes area describe our winters as “mild”. Also, I think that Californians confuse places like Aspen or Vail with the Front Range. The mountain resorts are in the mountains, where its much higher, colder and it snows a lot more. Our Cali friends are surprised when they visit in the winter. They often ask “where’s the snow?”. Its not unusual to have highs in the 50’s or even 60’s in the winter.
…and tornados. Escondido is one of the armpits of SD, but its still nicer than the areas north of Denver. Hopefully my girlfriend, a Denver native isn’t reading Bens blog. Her parents just moved up to Berthoud, dear god is it desolate up there.
I would take Berthoud in a heartbeat over Escondildo any day.
BTW, tornados are very rare in Larimer county (and the front range in general), and when you get one (say once every 10 years) its a wussy one that causes no damage. To get the bad a$$ ones you have to go east into the plains.
“To get the bad a$$ ones you have to go east into the plains. ”
Damn straight! But even here in western Iowa they have been very small the last decade. Whereas when I was a kid they were NASTY. As an aside related OT, when my wife and I honeymooned in 2003, one of the places we stayed was Moab, Utah. There were extreme storms there that night, with tornadoes. Everyone kept saying that it didn’t happen 10 years ago. Looks like our trailer flatteners jumped the Rockies!
Especially since it would take about a $200k per year salary to “confortably” pay for it under a normal 30 year fixed, in normal times. A family swinging $200k a year, getting a “lower priced” home.
It’s a far cry from my Dad being able to buy a very nice house on a Navy Captain’s salary (w/ stay-at-home-wife) 35 years ago.
“Last month, sales of homes priced $800,000 or lower plummeted 38%, while sales of homes priced above that amount saw no change from May 2006, DataQuick said.”
$800K is a lower priced home…..unfriggingbelievable.
“‘In California, people are getting into mortgages they just can’t afford,’ Blomquist said. ‘An analysis of our database shows about half of the foreclosures in the first quarter were from subprime loans.’”
This is part of the Fed’s plan, right? To encourage the masses to buy homes they cannot afford using subprime loans with a future foreclosure almost assured, while continually insisting in MSM press releases that “subprime is contained.”
I cannot help but think this was a scheme by the fed to pump hundreds of billions of dollars into the economy and increase the gap between rich and poor. Tell me it was not obvious many of these loans would default?
Why would they want to gap the classes? The thinking was that as long as vaules kept increasing it made no difference whether or not they could afford the loans. Once you got in trouble you simply could sell at a profit and start again. Can you spell p-y-r-a-m-i-d.?
‘An analysis of our database shows about half of the foreclosures in the first quarter were from subprime loans.’
Half of the foreclosures in the first quarter were NOT SUBPRIME LOANS.
I reread that quote and shudder…
I expected Alt-A and prime to turn ugly…
But not for it to be HALF… yet.
As others have already noted, June and July are going to be ugly.
Got popcorn?
Neil
Good catch, and we should remember that subprime was never the majority of loans.
If a family with a lousy FICO popped 20% downpayment and had sufficient income, they would be subprime by definiation. If a family with a good FICO went 105% LTV and no-doc, they would be Alt-A. The subprime/Alt-A distinction comes from a world where the borrower characteristics are the main factor in whether borrowers pay or not. If it is really the LTV that is the killer, the subprime/Alt-A distinction is moot, as high LTV loans can as easily be Alt-A as subprime.
totally agree LTV is and always was the main predictor
Skin. In. The. Game.
FICO, schmiko. A FICO doens’t consider your income or bank balances.
Agreed Observer, nor does it consider the stability of your income (likelihood of it continuing) - only a human being, fully-trained underwriter can do that using reasoning skills that have long-since died out of the majority of our species…
But look at all the fees,etc the lenders made, paid from escrows . They all got theirs. Now the big cats will be chasing anything they can. Good old days are gone but the last few years were pig heaven. Hope they enjoyed their feast and are all fat for the winter months ahead. Good luck.
I have started to see the return of 2003 (2003!) prices in Sacramento. I guess the internet is making this go faster than normal.
‘I guess the internet is making this go faster than normal.’
Agreed. At some point truth filters out to the public. Even Red China can’t stop it completely .
That’s my explanation for the complete cessation of loan demand among my AZ trailer-park clientele. They got the message that RE is a Bad Play, and I have gotten nothing but absolute silence from the AZ desert since March. I admit that I forced my last actual borrower to read this blog for three days before I would agree to make the loan. A couple of recent inquiries from the state of WA, but that’s … different(ha ha).
Aaaarghh… AZlender, this is trully a brain-dead state.
Friends who ‘ve sold here in the past year have ALL had to reduce prices, every last one of them. But, it’s different here. Don’t confuse us with the facts please!
Funny, but China is actively doing everything they can to stop their bubble from getting out of control. They have been far more active than our government has been in this area.
The Chinese get it. Explains why they have been around as long as they have.
“The Chinese get it. Explains why they have been around as long as they have. ”
no fool like an old fool
Truth is, I think the rural Chinese are a lot more likely to lynch the local fat cats than we are. THAT is why they have to keep an eye on their bubble. If we were a bit more ‘feisty’, maybe the government would tread a bit more cautiously…
sh#t chineeese guvberment put a bullet in yur head just for imbezzment?
\What in the heck is the world coming to?
Boy are you right AKRon. We Americans are the most complacent people on the planet. Guess that initial Revolution just flat out wiped us out.
Chinese peasants have been responsible for overthrowing nearly every Chinese dynasty.
Frankly, I don’t believe it - based on the sales prices I’m seeing. Examples, please.
“Frankly, I don’t believe it - based on the sales prices I’m seeing. Examples, please.”
What sales comps are you looking at? Why don’t you provide some examples as well, hotshot?
Easy, BB - never have considered myself a hotshot, just an interested fence sitter, presently. Here’s one of many, many (from Redfin), all 90272:
14934 W SUNSET BLVD:
Purchase 4/5/04 $1,172,500 Sold 3/23/07 $1,375,000
1029 CHAUTAUQUA BLVD:
Purchase 06/04/2003 $1,000,000 Sold 03/22/07 $1,810,000
A long, long, long ways from ‘03 pricing…
How about some under $800K? After all, right now it’s the low end that’s getting hammered.
SMF specifically mentioned Sacramento, not Pacific Palisades.
Point(s) taken…
You are always going to be able to pull out an example of a positive sale right now. In fact you still might be able to 8 months from now, that would still not mitigate the fact that the surrounding areas are plummeting in prices. There is always going to be stupid people, we see examples of it everyday on here, however the masses will show the real trends….those would be an anomaly.
Right now it is condos and lower priced homes, then the value of the more expensive homes will eventually be tank as well. However, the people with cash and economic sense will probably sit on them and not sell, you can’t lose money if you are not selling. Only places we will see this happen in mass would be douche bag central places like Newport Beach where people like to look and act rich, but are up to their eyeballs in debt.
Go here and look at the graph. http://www.zillow.com/Charts.htm?chartDuration=1year&testAds=false&zpid=20540231
The first house reached a vaule of almost 2.2mil 3rd qt 06. 1.3m looks like a drop to me. What would you be saying if it had sold at that amount?
Here is about 1466 examples in Sacramento:
http://flippersintrouble.blogspot.com/
$72,000,000 washed down the tubes….before selling cost and excluding carrying costs.
Wow, the flippersintrouble site is amazing.
By the way, I decided to take a random property from that site and look it up on zillow.
http://www.zillow.com/HomeDetails.htm?zprop=25950788
The property is currently listed at $599,900 and is still not selling but zillow has the zestimate at $1.12 million. This just shows that zillow is not keeping up with what is truly going on on the ground.
And to think some people are wanted to sue zillow because their estimates are too low….
Bought our 2300 sq.ft. home in 7/2003 for $348K. Now a 2558 sq.ft. home within blocks is selling for $360K. The top for the 2558 model was $520K.
We sold at the same time, and a 1596 sq.ft. home in the same block sold around the same time 8/2003 for $300K. There is now a 1596 home selling for $299K.
Zip code 95827 if you want to check it out.
Wow, that is pretty bad. Is Roseville, Folsom holding up better?
Roseville: 3200 SF sold for $715,000 3/2006. Builder now offering at $520,000. They are sitting. He is competing against his own lenders. WF offering 3500 SF for $520,000. Sitting. Only sale in the area is 2600 SF for $370,000. Sold for $565,000 in 2005. And the party is just getting started
“Wow, that is pretty bad. Is Roseville, Folsom holding up better?”
Folsom has a growth industry with tremendous potential…
ask Johnny Cash
Wow, that is pretty bad. Is Roseville, Folsom holding up better?
This is like getting reports from “War of the worlds” where the truth is obtained through the grapevine.
4404 Bond St. 92109 (597 sqft condo)
Jan 2005 $285K
May 2007 $235K
My neighbors are all chasing the market down.
I noticed the bubble beginning in this ZIP code (95827) way back in 2000, when a house that normally sold (same model) for $110K (1999) sold for $167K. I have kept track of this ZIP code since then.
There are other ZIP codes that had the bubble beginning at a later date, and logic dictates that their down cycle should begin later.
If you look at Gold River (95670), the bubble seems to have started there a little later, but the prices there are going down as well.
What I wanted to bring to the bubble news was that I had seen the first indications of 2003 prices, nothing more and nothing less than that.
I’d have to say a nearly 20% drop is a decent start, especially since the top was what, help me out here folks, approximately March/April 2006? I keep hearing time and time again on this blog that this will be a relatively slow unwinding, not an overnight 40% drop. (Sadly for me as I keep waiting and waiting and waiting on the L.A. West side . . .)
It’s going to come faster than you and they think…
The top really peaked in June 2005. Some builders had big enough deposits to keep hooked up flippers on the line and still landed them in the boat in mid 2006. But resales really did not go higher after mid 2005. I say we are 2 years into this correction.
yuck, I still wouldn’t live on Bond for that much!
When the FED says the economy is picking up steam, do they mean inflation is picking up steam?
It is pretty sad when inflation is running at a higher rate than GDP growth.
Shouldn’t it be classified as a recession if GDP were to come in below inflation?
Inflation is factored into the GDP. I’m not sure if its the “core” rate or the “total” rate, both of which are understated using today’s metrics.
It is based on the GDP deflator, which is a measure of inflation in output, not in consumer goods. Consumer good price inflation is measured by the CPI, where “core” and “total” distinctions matter.
Interesting. I will need to look at this more closely.
Try this page (meth = methodologies, not methamphetamine).
http://bea.gov/methodologies/index.htm#national_meth
GS this fixation about meth you have is starting to concern me…
Yup, a lot of “meth” addicts here.
Hey there, any post with the 4 letters M E T and H is bound to get a chuckle or two.
Apparently in the inland empire area many are turning to meth to feed thier housing bubble monster
From Easy Money in RE to Easy Money in drugs …. do I detect a pattern?
Well, it’s certainly an explosive combination.
There’s a method to Stucco’s madness.
Strip out non essentials like energy, food and housing and everything will be fine in the morning.
Cypress agent Cary Hairabedian said Cypress home values are down about 6 to 8 percent in the last year. He noted that the median price doesn’t reflect the number of transactions in which sellers pick up a greater share of closing costs than they did a year ago.”
“‘You have a bigger gap than people realize,’ he said.”
Yes, that gap is the chicanery that is not reported or showing up for the media to get its teeth into. Regarding the Riverside / San Bernadino county areas - chicanery is the way chicanos were able to inflate the prices with their home purchases.
For those following the blog today, we learned of Millionaire Miami Agent Carlos Justo, now on the verge of bankruptcy. Check out the video clips at the top rights of the following link, they make the Bankersfield real estate mogul look down right respectable:
http://tlc.discovery.com/search/results.html?query=agents
I could only watch about a minute of that joker dressed up like Big Bird with the voice of Herve Villechaize. I have too much self respect to ever work for some POS like that. That guy needs a good old fashioned @$$ kicking.
LOL Then you missed his personal assistant. I think liberace had one of those too.
I can’t believe that serious people with actual millions looking for high end homes in the Miami area would actually use this guy. Seriously, some Wall Street power broker is really going to use this turd?
You’d be surprised
Found this online:
Said Justo:
“”I am considering filing personal bankruptcy. I’m fighting for my financial life”…He, along with some investors, lost $2.35 million in a deal at 3 Indian Creek Island, he says. He is in foreclosure on another property — at 40 Indian Creek Island, where he now lives. He bought it in ‘05 for $6.85 million. The debt is around $11 million with interest. (He’s trying to sell the house — for $14.9 million.)”
Yeah, good luck selling that alligator. He bought at the peak and thinks he’s going to make over 100% profit? This guy’s lost his mind. He’s truly “going down in flames”.
He reminds me of Ken Lay’s wife when she said that she and Ken were fighting for liquidity. An NPR commentator pointed out that the word just happens to rhyme with “stupidity.”
Maybe he can do what Ken Lay’s wife did and go on the Today show crying about how they’ll have to sell the house in Aspen.
I find it funny he is trying to make so much money in his situation instead of trying to break even. He may be trying to buy time by pursuading creditors he is selling a “$14.9 million dollar” house.
8-9% so because they are bottom dwelling RAs we can probably assume the real dips to be between 18%-24% conservatively?
If so, give me an example of a house that sold in 2003 or 2004 that has recently sold at or below its purchase price. Hard to find in SoCal, as of now. I believe the quicker we can publish actual data (using actual sales), the quicker this bubble will deflate.
1801 Diamond St #113 (Don’t have a picture, but it’s in the plaza)
San Diego, Ca. 92109
2 bdrm, 2 bath, 1032 sqft condo
Year Built: 1975
HOA: N/A (probably ~$325)
Purchase Price (12/03): $367,000
Sale Price (03/07): $363,000
Purchase Price $367,000.00
Sale Price $363,000.00
Association Dues $325.00
Holding Period(mo) 40
Mortgage Paid $79,516.67 (6.5% interest only)
Closing Costs $4,000.00
Property Tax $15,291.67
Estimated Monthly Rent $1,500.00
Estimated Monthly Loss $638.59 (if rented)
Estimated Monthly Tax Savings $556.62 (using 28% tax rate)
Sales Commission $21,780.00
Total Loss $55,323.67
That is just because I remember in PB in SD that they were back at 2002 prices a couple of months back. I am sure I can find it here in OC as well…but there is an example I suppose.
Patricio,
Good job…right back at ya, tbgpalisades…
This is close.
1411 N Hayworth Avenue #16, 90046 (WeHo). Purchased 8/2005 for $421,000
After three separate reductions, now listed at $479,000.
It’s been on the market for three months. Okay, so it’s not a loss…yet…but a lady in the building (this is a neighbor) tells me this guy’s open houses can’t draw flies, even at this price. And this is in a neighborhood that was on fire as little as six months ago.
Here’s the listing:
http://guests.themls.com/profile_page.cfm?mls=07-178697
The remodelled kitchen and bath would suggest that this guy had sunk some $$ into the place, so factoring in the closing costs…who knows?
good lord! I notice nothing in Sherman Oaks under 625. There is a long WAY TO GO…..
Hey Bubblewatcher, how about emailing that a$$hat listing agent to tell him that the seller must not be ready to sell because $479K FOR A 1/1 IS NOT AN ACCEPTABLE LIST PRICE!!!! (I would but all my darn email addresses are through work).
Actually, that lady in the building told me he’s going to pull it off the market if he can’t get this price, and it looks like he can’t. Didn’t somebody somewhere do a study once that showed that people are more averse to losses than they are to missing out on gains? Or something like that…I’m willing to bet this guy has zero equity and can’t stomach the thought of coming to the sale with a check in his hand.
This type of mortgage info is very useful…how do I find out mortgage data on houses that are for sale in my area. I’d like to know what the present owner owes.
Contact a title rep and he/she will set you up with access to the info online.
Oh god. “The Plaza” - what a pit. Used to live at 1633 Diamond…
Here’s a question:
I might be moving later this year (wife got a sweet job offer). I don’t want to rent my house. So in order to sell it, where should I set the price? I bought in 2001, so I figure I’d set it at a 2003 price and call it good. Or should I take the original price, add the improvements, and then factor in so many percent per year of reasonable appreciation? Any ideas?
Pull up the most recent sold comps and price it AT LEAST 10% lower. You’ll sell it immediately.
great minds think alike! We posted the same thing at the same time!
“great minds think alike! We posted the same thing at the same time!”
Cheers!
remember - what you paid or put into it has no real input in a market going down like now.
What IS selling in your area - take a similar sq ft price times .9 and hope for the best.
http://tinyurl.com/2ogdut
What’s wrong with people?, how do you even put this on the market at this price with a straight face? No shame…
A mobile home with a spectacular view, I would not mind the view! I would rather live in a yurt.
http://yurts.com/
I like the 30′.
Nice find
LOL there’s no view there at least one wasn’t mentioned. I like yurts but for day to day living in L.A. count me out unless I’m heavily armed. I think I got this from txchick57 but I really like these http://tinyurl.com/2kt7cc . Seriously considering getting one done. But the 300 per sqft is turning me off. But if I were to build a house this would be it.
“What’s wrong with people?, how do you even put this on the market at this price with a straight face? No shame… ”
mrincomestream, a word to the wise, it dosen’t pay to make fun of manson family peeps in their aging years
daylight basement
ROFL.
Hey, it has “parquet floors”, and is on stilts.
I also noticed on the last picture that it has a “For Rent” sign in the front window.
classic!
Chainsaw, anyone?
OMG, that’s just wrong. What, did that thing fall off a semi and land in the drainage ditch? You gotta be kidding me. Unbelievable. Nice, mrincomestream…
It looks like an ark on stilts…if the rains came and the river runs, you could just sit there for the ride!
That’s what you call a redneck highrise.
Wow I’m sure they spent tens of dollars when they put that there in 1980.
they spent tens of dollars
Funniest quote of the month!
Thanks Not Missing It!
Looks like a terrorist hang out using Chinese ship containers.
Wow, if that were in AZ I might lend them $25,000 on it (first, not second DoT). Mostly for the land.
What IS that?
ROFLMAO!!!
You guys are killing me!
LOL, the thing looks like a railroad car left on a bridge!
Lovely Riverside County:
“In Riverside County, sales fell 45.4% to 3,307 year over year”
“Riverside County recorded 4,550 foreclosure filings last month”
4550 foreclosure filing last month and 3307 sales
Almost 40% more foreclosure filings than sales? YIKES
Good catch!
Properties in South Riverside more than trippled since 1999. Given this data, on foreclosures, that is very grim news. There are not even sufficient buyers to support the foreclosures.
Well, I guess that answers the question about whether or not forclosures are counted in “sales”.
“Last month, sales of homes priced $800,000 or lower plummeted 38%, while sales of homes priced above that amount saw no change from May 2006, DataQuick said.”
Up to $800k is a decent neighborhood, middle to upper middle class home in el lay…
Or, most houses in the city of angles~
Timber!
I have a question: If the higher-end houses are still selling at the same rate as last year, but the lower-end ones aren’t - WHO is buying the higher-end ones? Are they just playing musical houses among higher-priced houses? I’d assume most have another house to sell. Or is there a real disaster building, due to people getting stuck with two houses?
How would one tell?
Sales were already falling in 06, so it isn’t showing that much strength. Local/regional examples of bubble hold-outs aren’t uncommon. Look at Seattle.
This is a fascinating question. Typically, move up buyers are selling their current home to someone lower on the “food chain”. So if those lower buyers disappear, then one would expect purchases by move up buyers to diminish. Except that doesn’t seem to be happening, at least not to the extent that the bottom is falling out of the bottom of the market. I’ve seen arguments that there will be a delayed reaction further up the market, but why would that be the case?
credit is still being provided for people with higher incomes (much more than they can afford). I know of people buying first homes around the 1mil price. give it a few months of higher rates, low sales and increasing forclosures.
“I know of people buying first homes around the 1mil price.”
Those we know in this category have lots of family wealth backing them up. Do you know of people buying 1mil “starter homes” based solely on their labor income?
I’m one who’s looking…
I’m one who’s looking…
Why? Do you enjoy catching falling knives?
Make sure you catch it by the handle…
“I’m one who’s looking… ”
Why? dude you need to spend some time on this blog and do a little research. I just had an appointment with a lady losing a 1.5 million dollar house on the Westside, Had another tell me today he went to file bankruptcy and was sitting there with wall to wall people SRO, Why in god’s name would anybody be considering buying in L.A. right now. The tsunami is coming quick. The information that Ben posts from the various newspapers while very good and on point is not the full story. Take it from someone on the frontline, it’s not pretty out there… It’s worse than being reported. There’s some very real pain coming.
I think someone said here that Option Arms are still being done for people that have good credit (not subprime). Alot of those aren’t resetting for another couple years.
I have a friend at work who’s thinking about “moving up” - he planned to pick the new house out first, figuring the old would sell quickly. He had no idea things were taking longer to sell (though not too much longer in Portland, OR just yet, if they are priced lower).
Moving up, and taking on more leverage in this environment is asinine. Downsizing, or better yet, selling and renting, would be much more prudent.
Somehow my d@mn assistant at work bought a $1 million home in Glendale, thanks to family money backing him up. Me and the wife collectively earn $150K and we still can’t even frackin’ afford a starter condo in West L.A. $@$&*!@#$@#$#@^&*&!!!!!
Unfortunately, you’re in one of the worst locations (price wise) in the country, and the wait may be quite a bit longer. It will certainly test your patience. Of course, you and the wife can count your money anytime you are feeling impatient.
“and we still can’t even frackin’ afford a starter condo in West L.A. $@$&*!@#$@#$#@^&*&!!!!”
I grew up here……. who wants it? it ain’t all that…… why bother? You’ll buy that condo someday on the west side and discover it’s still cr@p…. quit longing for cr@p….
“I grew up here……. who wants it? it ain’t all that…… why bother? You’ll buy that condo someday on the west side and discover it’s still cr@p…. quit longing for cr@p….”
I have noticed that a lot of the people who think LA is all that tend to be transplants who buy into how “special” the area is. My sister happens to be one of them…
In the mid 1990s, it seemed like NOBODY wanted to live in LA, and it certainly wasn’t viewed as “highly desirable.” When that mentality prevails, maybe it’s time to buy. However, I would be wary about applying that rule to somewhere like Detroit.
Problem in the mid 1990s was that many people thought LA was going to be on the decline for the long term. It takes balls of steel to buy in the midst of such pessimism, because that is the sort of prophecy that can self-fulfill if enough people move away. No one wants to be stuck holding the baby (or owning the house) when that happens.
Bond prices are fun to watch but how many have been watching all the flooding across the midwest? What’s the heat in your area (110 forecast for Sac today) and this is just about the middle of June? What about those utility bills or AC repair bills? How about those tornadoes last week? All of this an hurricanes haven’t arrived yet! Corn prices high because of ethanol production may get wiped out by the flooding or drought and have caused milk, dairy, meat pricing to inflate! This is going to be one hot summer for more reasons then one.
not sure about elsewhere, but this must be the hottest spring/summer I ever remember her in Mpls.
We’ve had countless 90+ degree days, and it’s only the first weeks of June.
even the winter was very short. It rained on New Year’s Eve here, and we only had a few weeks of snow on the ground.
In fact, we’re thus far very close to drought status in northern MN
We’ve had a beautiful June in southern California. The last couple of days it’s been warm, with temps into the 80’s, but it’s supposed to cool off back into the high 70’s for the weekend.
Just thought I’d let you know…
So far, it’s been a fairly cool summer in Tucson. But double-digit temps are about to return…
I would think that double digit temps in Tucson ARE the cool ones, relatively speaking?
have we even gotten 2″ of rain this year in southern calif??? i dont think so…
On the coast of Maine it has been rather cool and wet so far. We’ve had 1-2 days get to 90, a few get into the 80’s but most 70’s or lower. Right now it is 58 with a light mist (they were talking 40’s tonight). The lawn likes it but I want summer!
I often think I’d love Maine. I don’t like heat.
The same here on the east side of Penobscot Bay. You are SW I think. We had one day 90 degrees (freaky), but mainly 70’s as you said.
I often think I’d love Maine. I don’t like heat.
I moved to San Francisco (foggy side of town) in part because I hate heat. Even the summers here are cool and comfortable, often in the 60s while the rest of California is sweltering. I think it gets above 80 maybe once or twice per year.
we went from winter to summer here in CT. i know this is a housing blog, but weather, if seriously changing, will hgave a huge effect on housing values - both positive and negative.
Crazy Credit, I can’t believe you just said that! I’m here in Florida and I was amazed how we went from a dry spring to humid August/September weather in like ONE DAY, right after the tropical storm. Just now, I went to take the trash outside after a little front had just blown through with some rain and clouds and suddenly it was actually slightly chilly. If I was going to stay outside, I’d have to wear a jacket! WTF? Turned on the local weather and the weatherman just commented on it.
Yes, something weird happening with the weather.
Moab, Utah had 85 degree weather in march (usually 60s), and last week it was so cold (usually in the mid 80s), I was camping and had to stay in a friend’s house for two nights. It nearly froze. Fresh snow on the mtns. It blew so hard it nearly ripped my p/u door off, had to get it to a body shop asap, wouldn’t even close. There’s an old and very respected Navajo medicine man in Monument Valley nameed John Holliday who says the seasons will flip when the end is near… me, I’m a pragmatic type, but maybe he’s on to something.
Medicine men are certainly more in tune generally to the rhythms and the seasons…something is certainly screwy beyond statistical variances….
Yes, you’ve been warmer than the Great Lakes regions this spring that’s for sure…although we are gradually starting to heat up as well.
From NOAA drought conditions Northwest Wisconsin / Northeast Minnesota
BENEFICIAL RAINFALL AGAIN THE PAST WEEK CONTINUED TO PROVIDE
IMPROVEMENT IN THE EXTREME DROUGHT AREA OF NORTHEAST MINNESOTA. THE
EXTREME DROUGHT WAS SCALED BACK ALONG THE INTERNATIONAL BORDER TO A
PORTION OF NORTHERN KOOCHICHING COUNTY AND THE EASTERN HALF OF COOK
COUNTY. THERE WAS NO CHANGE TO THE SEVERE….MODERATE DROUGHT OR
ABNORMALLY DRY AREAS OF NORTHEAST MINNESOTA AND NORTHWEST WISCONSIN.
.CLIMATE SUMMARY…
PRECIPITATION FOR THE PERIOD JUNE 1 THROUGH JUNE 8 RANGED FROM 1 TO
3 INCHES IN NORTHEAST MINNESOTA. THIS IS 100 TO 400 PERCENT OF
NORMAL. OVER NORTHWEST WISCONSIN…FROM 1 TO 1.25 INCHES OF RAIN
FELL WHICH IS 70 TO 115 PERCENT OF NORMAL. TEMPERATURES WERE NEAR
NORMAL IN MINNESOTA AND ABOVE NORMAL IN NORTHWEST WISCONSIN DURING
THIS PERIOD.
.SOIL MOISTURE CONDITIONS…
TOPSOIL MOISTURE IS ADEQUATE.
.RIVER AND STREAMFLOW CONDITIONS…
RIVER FLOWS HAVE RECOVERED IN NORTHEAST MINNESOTA AND NORTHWEST
WISCONSIN. THE EXCEPTION BEING THE KAWISHIWI RIVER NEAR ELY…BOIS
BRULE RIVER AT BRULE AND THE ST. CROIX RIVER NEAR DANBURY HAVE BELOW
NORMAL FLOWS.
.FIRE DANGER IMPACTS…
THE FIRE DANGER RATING IS LOW AND BURNING PERMITS ARE REQUIRED.
.PRECIPITATION/TEMPERATURE OUTLOOKS…
ABOVE NORMAL TEMPERATURES AND PRECIPITATION ARE FORECAST FOR JUNE 14
THROUGH JUNE 22.
THE OUTLOOK FOR THE REMAINDER OF JUNE INDICATES EQUAL CHANCES OF
NEAR…BELOW OR ABOVE NORMAL TEMPERATURES AND PRECIPITATION…EXCEPT
THE MINNESOTA ARROWHEAD INTO NORTHWEST WISCONSIN WHERE ABOVE NORMAL
PRECIPITATION IS FORECAST. THE 90 DAY OUTLOOK FOR JUNE THROUGH
AUGUST CONTINUES THE EQUAL CHANCES OF ABOVE…NORMAL OR BELOW NORMAL
TEMPERATURES AND PRECIPITATION.
NOAA
http://tinyurl.com/35z9ye
We are in a drought - depends on the day and the field where the rain falls.
For those that are interested this is the National Drought Map provided weekly. It is not a pretty picture.
http://tinyurl.com/29wb7
There’s nothing strange about this weather at all. In many ways, the planet acts like a living organism. Living organisms, when attacked by infectious agents, have fever/chills in order to kill off the attacker — which usually can only survive in a rather narrow temperature range. Living organisms also try to maintain an equilibrium, or homeostasis, which can cause fluctuations in their metabolic functions as they attempt to “correct” the problem which is throwing them out of homeostasis.
On a more practical note, I love those modern homes that mrincomestream url’d above — but glass houses in a DESERT?? Personally, I think subterranean or earth-bermed homes are a much better option for areas that tend to temperature extremes on either end. Plus, they are more secure and defensible.
“Personally, I think subterranean or earth-bermed homes are a much better option for areas that tend to temperature extremes on either end. Plus, they are more secure and defensible.”
OT, and I know I tend to harp on this, but check subterranean homes for radon- the stuff really tends to pool in subterranean homes.
Good point. Thanks for that tip, AKron!
Let’s not fall into the pathetic fallacy here. Whatever the merits of Gaia theory, the biosphere is not literally an organism. Don’t take the metaphor for fact.
In my opinion, the “trend” towards homeostasis, if there is one, has more to do with physics than biology. Equilibrium states occur when it would take more energy to leave the state than stay in the state. Astable equilibrium is a state where a good enough blast of energy will take you out of a local minimum in the potential energy map into a lower state. (Example: a pea balanced on top of an overturned bowl. Shake the bowl, goodbye pea.)
What climate scientists tell me (and my father is one, so I’ve been close to this all my life) is that the best evidence we have from past climate changes (taken from core samples of glaciers, sediment cores, and so on) points to a very violent transition. Temperatures will oscillate rapidly (in geologic terms) until a new equilibrium is reached.
I think part of the reason for our “stability” is that the biomass and the atmosphere and oceans moderate temperatures. Why? Simple entropy. Stark differences in temperature bespeak lower entropy. Entropy–which physicists sometimes equate with the arrow of time–increases, and never decreases in a closed system. Moderate temperatures–the mix of high and low–indicate a state of higher entropy. Trees are thus entropic engines … and deciduous trees provide an excellent example of this. Look at the way a maple tree opens up leaves as the days lengthen and gradually grows the leaves until they absorb most incident sunlight, and drop their leaves when the skies are overcast and days shorten. Where trees are planted, surface temperatures are lower in the summer as the amount of radiant energy reaching the surface of the Earth is simply less. But during the winter, the deciduous tree does not make the surface cooler–it drops its leaves, exposing the surface to any radiation that might come.
Btw, if you’ve heard creationists blather about entropy, I think their argument is rather bogus. The more complex the system, the more entropy. On a planet like Mercury where you might have simple molecules like SiO2 and C2 and CO2 and lumps of Ni and Fe amalgam lying around you have less entropy than you find within your common mammal, with all its amino acids, trace minerals, hemoglobin factories inside CaCO3 deposits within protein strands, with complex hormone chemicals floating around.
I mean, how much more entropy can you get than an organism that keeps its internal temperature steady. Duh! Bacteria (so called “lower lifeform”–an unscientific term) don’t do this. So how can these chris-tards claim that evolution decreases entropy? Ha! Nonsense! Evolution increases entropy. More successful organisms (such as yours truly) are more entropic!
And consider “man” (humans) and all “his” works (yeah, sure, males do it all … seen a male give birth yet? other species don’t count, btw). Giant house farms on the countryside, abandoned construction waste, all this ridiculous activity? Damn, look at the mess…
We pretty much didn’t have a winter in Bavaria this year - a few minor snowfalls and several days in January and February with highs over 60. Overnight hard freezes were infrequent. It was like a standard Dallas-area winter. A bit more snowfall, maybe, but the temperatures were about the same. Hooray for minimal heating bills! Boo for brown grass in April and May!
Most telling: there were little daisies in bloom any given day in December and January and my neighbor’s trellised roses started blooming in February.
It seems we’re getting enough data from different cities at different times to plot the anatomy of a bubble pop. Help me out with this.
Month 0: Peak Sales Volume, median rising, sales increasing, low inventory.
Month 3: Median rising, sales off 5% (YOY), inventory up 10%
Month 6: Condos touted as “HOT!” Median rising, sales off 10%, inventory up 20%
Month 9: Foreclosures up 20%, Median up, sales off 20%, inventory up 30%
Month 12: “Buyer’s market!” Foreclosures up 30%, median leveling off, sales off 25%, inventory up 50%
Month 15: New Homes start cutting prices. Investors head for the exits. Cancellations jump.
Month 18: Inventory up 100% from peak, Sales down 50% from peak. Foreclosures up 50%, same-house sales prices down while median holds steady.
Is that about right? (obviously a few markets are crazier than this)
Certain fracturing events happen in all locales at a single point in time — subprime collapes/tightening credit, interest rates skyrocket, etc… But you see what I mean.
I smell a best-seller here. Know any commercial publishers?
For us in San Diego, the movement was much slower than this. We had rising sales (more-or-less) since 1997/1998. There was a fairly significant drop-off in sales and price increases in 2001 (which I think was the “natural” peak of the standard housing cycle…the rest was credit bubble).
Annual sales peaked in 2003, with the truly manic blow-off in early 2004. This was also when we had our lowest inventory levels.
By summer of 2004, So Cal started to look really bad as sales declined precipitously and inventory rose very significantly. For some reason, spring of 2005 brought many So Cal areas out of the doldrums (beyond the normal “seasonal” variations), and there were some price increases in some — but not all — areas.
Many parts (mostly the mid/higher-end) of SD have seen stagnant prices since mid-2004, with the lower end continuing up through summer/fall of 2005. By fall of 2005, SD inventory had reached very high levels, and sales were down YOY. Spring of 2006 had only a slight seasonal “bounce” with no real price appreciation in any location.
Since then, the mid/higher-end has held up (same price range from 2004-present), but the lower end (that continued appreciating through mid 2005) has seen a sharp slowdown. Prices in the lower-end areas are down to early 2004 and even mid 2003 prices…and are not selling.
I think many areas around the country saw bubbles because CA infestors spread out in search of easy flips in lower-cost areas (using HELOC money from their CA homes).
That’s why I think the timeline will be very different, depending on whether or not the area is at the front (cause) or back (effect) of the bubble.
Paging Incredulous. See my response in the Florida thread. I’m outing you, you’re a Florida fanatic, LMAO!
Apologies, west coast bloggers.
Could use some advice here. Live in Columbus, OH. In a funky contract to buy a very small bungalow out of an estate. The sales contract is contingent on two banks (one a primary mortgage holder, the other a HELOC) approving the sale because its a short sale and R.E. agent (who I don’t know) claims its a short sale with the only reason the house is not foreclosed is because Ohio statutes allow the estate attorney to hold off foreclosure. The house is cheap and in move-in condition (although not as cheap as a true foreclosure), but I’m wondering if I’m getting set up for a major hassle closing on this house since I’ve never dealt with an estate or a third party (the banks) before when buying a house…any feedback or advice would be much appreciated… thanks..
Knee-jerk reaction: not to worry too much about the immediate hassle, maybe to worry more about further deterioration in prices. Why do you think it’s a good buy?
sorry, I can’t help you…
but I would consider one of 2 things, especially the first.
1. Real Estate Attourney.
2. Title Insurance.
There are just too many scams out there now. Pay $500 or whatever the going rate is to have a lawyer review your contract, it may save you $50,000
House is correct. I wouldn’t even think about that type of transaction without a good r.e. attorney, and I know a little something about r.e….
Bah… scaredy cat.. those are fun transactions…
I live in Columbus and its a buyers market for sure. Tell that agent to clean up his legal mess before closing or walk. The spring selling season has been a bust. If you wait until August you will be the only buyer in town and deals will be even better. As a buyer, TIME IS ON YOUR SIDE!
How can the PPT be so reckless as to raise interest rates? And where are those helicopters everyone is so confident of?
How much money would it actually take if “PPT” decided to bring 10-year yields back down to 4.75% from 5.2%? It seems like it would be a lot.
I was just reading wiki about the Great Depression, and this was fascinating:
Macroeconomists, including the current chairman of the U.S. Federal Reserve Bank System Ben Bernanke, have revived the debt-deflation view of the Great Depression originated by Arthur Cecil Pigou and Irving Fisher. In the 1920s, in the U.S. the widespread use of purchases of businesses and factories on credit and the use of home mortgages and credit purchases of automobiles, furniture and even some stocks boosted spending but created consumer and commercial debt. People and businesses who were deeply in debt when a price deflation occurred or demand for their product decreased were often in serious trouble—even if they kept their jobs, they risked default. Many drastically cut current spending to keep up time payments, thus lowering demand for new products. Businesses began to fail as construction work and factory orders plunged.
Massive layoffs occurred, resulting in unemployment rates of over 25%. Banks which had financed a lot of this debt began to fail as debtors defaulted on debt and bank depositors became worried about their deposits and began massive withdrawals. Government guarantees and Federal Reserve banking regulations to prevent these types of panics were ineffective or not used. Bank failures led to the evaporation of billions of dollars in assets. Up to 40% of the available money supply normally used for purchases and bank payments was destroyed by all these bank failures.
Furthermore, the debt became heavier, because prices and incomes fell 20–50%, but the debts remained at the same dollar amount. After the panic of 1929, and during the first 10 months of 1930, 744 banks failed. In all, 9,000 banks failed during the decade of the 30s.
I’ve said this before:
the general economy can still be said to be good. Clearly there is a sickness within, but overall, it can be said to be good.
The Fed will wait as long as possible to do anything. They don’t want to jump too quick. THUS FAR they can say they have containment.
Besides, the Fed will have a hard time dropping when:
1. inflation is higher than they’d like
2. The other central banks are raising
3. the GDP is doing ok
4. there isn’t blood in the streets.
They will drop ONLY when their owners get into trouble. That would be the BIG BANKS and BIG CORPS. Not the little guy.
the fed will never save Joe 6, only the big boys, who are thus far doin ok.
carlos,
make sure your title agent is competent. A call to her/him prior to closing would be beneficial.
This fresh in……
Gary Watts says “we’re in neutral”.
http://www.impactre.com/Forecast.html
Let the feast begin.
He is a persistent little devil. Very convenient for those tables to all end in 2005 and there is that slight omission of the “15% is in the bag” prediction last year. Oh, and I almost forgot the now legendary prediction that 2006 was an “inverted year”. The saddest thing is that for all of the FBs who needed appreciation just to stay above water, “neutral” just ain’t gonna cut it now is it. I am eagerly waiting to see how Q3 turns out here against his “what MAY happen” forecast …
And, as a renter I am simply shaking in my boots cause Gary says rents are “going to soar”. It’ll take a lot of 5% years to even come close to the PITI on a comparable overpriced SFR.
What a Maroon!
AZlender, thanks for your feedback…The house is in a half way decent old neighborhood just off the busline about two miles from the state capital and a five minute walk from a neighborhood of mansions including that of the Ohio governor (of course, five minutes in the other direction and you are in the ghetto, but that’s living in the city…) In addition, its a couple of blocks from a major blighted 105 acre site that the city just got condemnation rights to and is planning to redevelop into the usual mixed use monstrosity (traffic shouln’t be a problem for me because of the street lay-out).
It is selling for about 15% less than comparables over the last two years. Its a very low end house–$87,000 is the contracted price (so about $100/sq ft) and I do need a place to live and this house is within my means.
But I get your point about the uncertainty of what’s a good price. The job market is lousy here, and there’s a ton of foreclosures, but most of them seem to be in the drek overbuilt sub-developments farther out from the city center.
If I did want to bail, would I ethically and legally be able to rescind the offer (its good for another 10 days per contract)? Have the usual contingencies; the contract is signed by myself and the estate attorney–his contingency is awaiting approval of the banks. I haven’t put down a deposit yet since the contract is still contingent on selling banks approval.
87k and within your means, 15% less than comps over 2 years, Why would you walk away?
Bexley, eh? Here is what you do. When the bank comes back with its “OK”, you tell them that the market has worsened and that you will have to lower your offer by $10K. If they balk, you walk. Then, go back in October and make the same offer. The bank will take it.
HURRY! Get in on the next boom in Miami!!
http://miami.craigslist.org/rfs/351206305.html
I asked what kind of boom that would be. The foreclosure boom maybe?
This could be the next hotspot in Miami, and you don’t want to miss it. The area has just been renamed the Health District, and is central to South Beach, the Gables, the Grove and the airport.
The units are brand new, and just beautiful. For $279k you get a 1BR/2BA plus den that can be used as a second bedroom. For $309k you get a bigger, true 2/2 on a higher floor. Units offer stainless steel appliances, granite countertops,and many more upgrades.
The developer is planning three more buildings down the street. Publix is building nearby, and so more shops are sure to follow. You know that increased building brings increased values, so don’t miss this chance!!
So….if you “rename” a section of the city and you build these hideous places in the yellowish glow of a Publix parking lot, you are the next big thing? I think I’ll pass.
Mr Income Stream: Only because I’m incredibly indecisive and the alternative–renting for a year or two a slick downtown condo (very overbuilt in Columbus as elsewhere) and stocking it with plenty of booze might help me professionally (I’m trying to get into lobbying and the people I know involved with this all drink like fishes).
A bit of local color–the 105 acre site that the city is re-developing used to be fondly referred to as “Uzi Alley” by the Columbus P.D. (well, maybe not so fondly). Mayor Coleman took a photo opportunity in the wrecking crane at the site a few days ago right before he checked his wife into an in-patient alcohol rehab center after she got hung out to dry for falsifying her time card at her $90,000/year make work job at the Ohio Department of Development….
But the feedback is good–if the house makes sense for me (looking at it mainly for broken-family reasons), its kind of a no-brainer–cheap, cheap taxes ($1100/yr) and close to the city center…do wish it had a second lav in the basement but there’s always the five gallon bucket in a pinch…
Is rent cheaper than ownership? If so rent. I have a friend that works the Ohio area. There will be plenty of time to score cheap property. If what he tells me is correct. It doesn’t sound like there’s really anything special about the property to stress about or any advantage that you’ll lose out on if you don’t buy.
Carlos, mrincome’s comment about “plenty of time to score cheap property” definitely seems accurate to me.
The next boom is going to be in dog houses. We are coming upon the dog days of summer. And for many, it will be the summer bummer when they are holding Gary’s bag. Is it just me, or does the grin on that a$$hole remind you of some scumbag swindler just laying in wait for a stream of suckers?
The house would rent for around $700/month, so my understanding is that a price of $87,000 is slightly high compared to the rent equivalent….what about walking away from a contract? How does one do that without getting sued?
“…so my understanding is that a price of $87,000 is slightly high compared to the rent equivalent….”
I wouldn’t think so, without working it up. Just figuring in my head I would say they are about even.
As far as getting out of the contract without knowing the terms it would be hard to tell you whether an escape is possible or not.
This is a first time post from long time lurker. Referring on apparent correction lag of the higher end of the market. Is this globalization at work: widening income gap as a result top 5-10% won’t feel as much pain as lower rings and so price falls will be uneven across the housing stock ?
More likely that “move-up” buyers tend to have (even relatively) bigger downpayments, so they can still get financing.
Gary Watts says “we’re in neutral”.
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Yeah, neutral heading off the cliff!
‘Because of huge inventory and the continuing correction in housing prices, there will not be a quick turnaround in the market,’ said Carolyn McNamara, a real estate broker in Phelan.”
Um,
I know Trona won the title of crappiest shthole in California a while back, but I don’t think we’ve ever seen a quote from a realtor in Trona. This quote, from Phelan, surely has to be the crappiest locale realtor quote. Am I wrong?
“Chuck Pillsbury of Ladera Ranch Realty, who believes that Ladera prices are down by about 10 percent, added that buyers there used to pick up a 0.25 to 1 percent ‘lifestyle enhancement fee.’”
What in the world is a “lifestyle enhancement fee”??? Is this a CA thing?
Its a way to explain away getting a tax deductable loan from the bank for uses other than buying the house. A way to allow the buyer to scrape all his available cash into a pile for the down, and then get some of it back at escrow to live on. In other words, fraud.