All The Momentum Is On The Down Side
The Appeal Democrat reports from California. “News about the housing-market downturn and the market’s future is of little relief to struggling sellers, but may bring some encouragement to bargain-hunting homebuyers. In Yuba and Sutter counties, the median home price for a single-family home had climbed from $99,000 in January 2000 to $300,750 in May 2006 before dropping to $268,000 in January, Realtor Lloyd Leighton said.”
“The median price rose to about $285,000 in April but drifted back to about $270,000 in May. The number of homes on the market is increasing, and Leighton said spring sales were ‘lackluster.’”
“‘My belief is the worst is behind us, but it’s still likely we will see some declines in price,’ he said.”
“Sellers are unhappy about the downturn, Leighton said. But some buyers are excited to find price drops not seen in years. ‘It’s like going to the 20-percent-off sale at Nordstrom’s,’ he said.”
“The market’s downturn is not abnormal, but intense national and regional attention makes it look that way, said David Burrow, president-elect of the Sutter-Yuba Association of Realtors. ‘It puts fear in the mind of the buyer,’ said Burrow. ‘They don’t want to be in the position of their friends who bought a home two years ago.’”
The Salinas Californian. “Inventory continued to rise as Monterey County’s median price for single-family homes fell by $70,000 in May, according to statistics compiled by the Monterey County Association of Realtors.”
“The overall county median price, the midpoint, with half of homes selling for more and half for less, was $695,000 in May, down from $765,000 in April, MCAR said. Total number of houses on the market increased from 2,493 in April to 2,707 in May.”
“The median price for single-family homes fell most dramatically in south Monterey County, from $480,000 in April to $394,000 in May, a nearly 18 percent drop. Ten south county houses sold, compared to six in April.”
“The price also dropped in east Salinas, from $560,000 to $519,000, down about 7 percent. Only one home sold in east Salinas in May, down from three in April.”
The Record Searchlight. “Meanwhile, the housing slowdown continues to plague residential building in Redding, where housing starts are down 30 percent in 2007 from 2006 and valuation is off 24 percent.”
“‘This is the slowest we have been since 2001,’ said Greg Moss of Moss Lumber & Hardware, which supplies about 60 percent of the homebuilders in Shasta County. ‘Part of the issue is that developers are sitting on high land costs and waiting out the economy to get a return on their investment on the land they paid for at the peak of the market.’”
“‘I know of one concrete contractor who moved to Idaho’ because there wasn’t enough work in Shasta County, said Brent Weaver of Hughes Discount Building Materials.”
The Sacramento Bee. “California’s economy will continue to struggle through late 2008 because of the impact of the soft housing market, UCLA forecasters say.”
“The latest quarterly UCLA Anderson Forecast, being released today, calls for ’sluggish economic growth in California through late 2008.’ It also sees ‘a continuation of the flat-to-slightly-falling prices and weak sales in the housing market through the entire forecast period.’”
“Economist Ryan Ratcliff said things are likely to get worse, with the unemployment rate ticking up to 5.5 percent sometime next year. This ‘will be the period when real estate weakness finally spills over into the job market,’ he wrote in his forecast.”
The Contra Costa Times. “A two-year-old bill is about to come due for the East Bay and the rest of California in the form of job losses triggered by the nose-dive in the housing market, a forecast being released today suggests.”
“Past experience points to a lag time of two years between a peak in home-building activity and a pronounced slowdown, or even job losses, for industries whose fortunes are linked to the housing market, according to researchers with the UCLA Anderson Forecast.”
“Somewhere around the summer of 2005, building permits in California hit a peak and then began to slump, said Ryan Ratcliff, an economist with UCLA Anderson. ‘Two years later is right now,’ Ratcliff said.”
“The East Bay alone suffered more than one-fourth, 27 percent, of all the construction jobs lost in California during that period, according to a Times analysis of state Employment Development Department figures.”
“About 1,200 East Bay jobs have vanished in the credit intermediation industry, which includes numerous jobs for loan officers and mortgage agents. Another 800 jobs have been erased in the East Bay real estate industry.”
“DataQuick said about 40 percent of California homeowners who found themselves in default last year actually lost their homes to foreclosure in the first quarter of 2007. That’s about four times as many as a year ago.”
“‘We are coming up on the peak buying and selling season,’ said Andrew LePage, analyst with DataQuick. ‘This is as good as it’s going to get for the year.’”
“‘There are three types of housing markets: abysmal, bottomed-out and booming,” economist Christopher Thornberg said. ‘We’re in abysmal.’ Thornberg predicts the housing market won’t stabilize until 2011.”
The LA Times. “The sluggish housing market is starting to drag down the rest of the economy, leading UCLA forecasters to conclude that although the U.S. is not actually in a recession, ‘it is certainly close.’”
“Randy Becker doesn’t need to read UCLA’s forecast to know the housing market is in a world of hurt. A Redlands-based subcontractor, Becker helps developers hook up their new homes to sewer lines. With the fall-off in new construction, Becker has laid off more than 40 workers, or about half his staff, since last fall.”
“‘Builders used to sell 14 homes a week; now it’s four a month,’ he said. ‘When I lay people off, I tell them it’s nothing personal, but I can’t make any promises.’”
“Last year, tKevin Panet was making close to $100,000 a year with benefits as a training manager for Ownit Mortgage Solutions Inc. of Agoura Hills. Then shortly before Christmas he was laid off.”
“Panet regrouped, obtained a real estate agent’s license and found another mortgage job six weeks ago. But this time he works as a loan salesman on commission. The big salary is gone, and he must pay for his own health insurance and marketing expenses.”
“‘Am I scared? Yes,’ he said. ‘But I got a great job for myself and I know that the real estate market goes in cycles.’”
The Press Enterprise. “Keitaro Matsuda, senior economist at Union Bank of California, said that many new home construction projects have continued around the state, serving to buoy construction jobs.”
“‘The developers are in a hurry to get those houses finished,’ he said. ‘They would rather have unsold inventory than an unfinished building.’”
“Though the Inland region has fared better than the state’s average job growth, the region has led the state in mortgage defaults and foreclosures. ‘The Inland Empire is holding up better that I would have thought,’ economist Ryan Ratcliff said. ‘Lots of people are still moving there. But the ‘glass is half empty’ perspective is that the mortgage industry looks kind of scary.’”
The Union Tribune. “Christopher Thornberg, a former Anderson Forecast economist, said the UCLA Anderson Forecast prediction was too rosy.”
“‘To think we’re going to get through this period with just a slight increase in unemployment is ludicrous,’ he said. ‘We have a situation in our economy which is absolutely unprecedented: rapidly rising rates of foreclosures when the economy is not already in a recession. This will take a toll on the U.S. economy. I don’t see how it cannot.’”
The North County Times. “‘The housing weakness is going to be contained,’ economist David Shulman said. ‘And part of the weakness in housing will be offest by an improvement in net exports.’”
“‘The rest of the world is growing faster than the United States, which wasn’t true three years ago,’ he said. ‘We were the locomotive of the world economy; now we’re the caboose.’”
“Not everyone agrees. ‘That’s pure guesswork,’ said Robert Campbell, an independent economist from San Diego who closely tracks the market and advises real estate investors. ‘I think that’s just wishful thinking. All the momentum is on the down side.’”
The Daily Sun. “Californians’ consumer confidence in the economy took a dive in the second quarter of 2007, plunging into the pool of pessimism by 19 index points.”
“Economist Esmael Adibi called the drop ‘astonishing,’ the steepest he’s seen since 2002 when Chapman University’s Gary Anderson Center for Economic Research of Orange County began sending surveys to California residents.”
“‘There could be even more of a slump in the next quarter,’ Adibi said.” “The 19-point drop, from 101.9 down to 82.8, is considered significant because the consumer confidence index hasn’t dropped this sharply since 2002 when the state budget was in flux.”
“Fred Bell, executive director of the Building Industry Association Desert Chapter, gasped a little at the news. The pinch on new housing starts for 2007, revised from 4,000 units down to a range of 2,500 to 3,000 units, has cut into construction jobs which account for 33 percent of the workforce, Bell added. And that affects the service sector, as well.”
“‘Real estate has been a way for many people in the valley to put bread on the table,’ agreed Adibi, director of the Anderson Center. ‘And it’s been difficult for those who want to sell, and can’t.’”
If any commentor gets a message about spam when attempting to post, please send me an email about it including your screen-name. Also if you are having unusual problems with the comments.
thehousingbubble@gmail.com
I am having problems Ben.
See below. Thank you for your patience.
OK Thanks!
What is wrong with Patrick.net? Did the get hijacked? I keep getting redirected to another site. Seems like a concerted effort by the cattle drivers to shut us down, and interfere with our freedom of speech.
PPT hard at work again….
Mike,
same thing happening when I try it…looks like a hijacking.
It’s still there… switched hosts and some DNS’s haven’t updated yet.
Still there for me too, but they had been having problems with spammers too.
Sounds like work of the under-employed REIC to me.
If that is the case, somebodies gotta fry these bastards.
patrick.net
72.52.88.94
looks good at 00:18 E.D.T.
Spammers have gone nuclear in the last few weeks. One of my mailservers is now getting over 50,000 dictionary attacks per day, my ftp boxes are regularly getting 5000 password attacks per day, and this is after I blocked all of Vietnam, Brazil, Romania, Russia, and 90% of China. If this keeps up, I’ll have to cut off all of eastern Europe and parts of western Europe, plus the rest of Asia. In western Europe, Italy will be the first to go as they as clearly not taking care of business - or maybe they are
Turkey is toast as well.
Can somebody explain to me how is it that these people make money?
I know I’ll get hamered for this - but it’s the Google model. If you can annoy 100 million people and get a 0.001% response rate, you’re making money. Actually, Google stole their model from the spammers and monitized it more traditionally.
The only difference is that Google tries to be subtle about spamming you, and the so-called “advertising networks” are about as subtle as a ton of bricks.
The spammers sell their services based on delivered email numbers, and they need more victims. So they spam. And they make money on delivered mail. Trouble is, guys like me don’t deliver their mail, we have systems to dump it on the floor. But it looks to them like some of it is delivered, so they claim to their customers that is was and colllect their take.
Short Answer: they make money by lying to their customers.
Sound familier?
I have noticed that for each post I make here, I get a spam email in my yahoo bulk box. Once in a while, one makes it through to the regular inbox. Frustrating.
“Randy Becker doesn’t need to read UCLA’s forecast to know the housing market is in a world of hurt. A Redlands-based subcontractor, Becker helps developers hook up their new homes to sewer lines. With the fall-off in new construction, Becker has laid off more than 40 workers, or about half his staff, since last fall.”
- The Anderson forecast lags behind the real world indicators. The man on the street is much more in touch with the everyday market condition.
“‘Builders used to sell 14 homes a week; now it’s four a month,’ he said. ‘When I lay people off, I tell them it’s nothing personal, but I can’t make any promises.’”
Real world numbers = 71% drop in sales…
57 per month to 4 per month is over 90%.
(14 per week x 4 weeks = 56, then add one for the extra 2 or 3 days that make up a month)
That’s ok. They’ll make it up in volume, so they need to keep building.
The Germans are net sellers in Florida…
The Japanese are net sellers on Oahu…
I remember being in NYC and all of the locals bragging about “Europeans” buying floors of new construction buildings…
I’m thinking we’re going to have a wee bit more inventory ahead.
Got popcorn? (Having some now, in fact)
Neil
If they were doing 14 per week, add two for each extra day, so, 4, conservatively, and the % drop is even greater!
Anderson’s forecasts are a piece of Sh-t (pos). Where is Thornberg when we need him for the correct slant.And another thing, that re shill Leighton should go to the can and stick his fingers down his throat.
Speed Freaks
“‘The developers are in a hurry to get those houses finished,’ he said. ‘They would rather have unsold inventory than an unfinished building.’”
I speculate that unfinished homes just invites theft or vandalism. Thus, more costly at the end of the day.
Realtor Lloyd Leighton said‘It’s like going to the 20-percent-off sale at Nordstrom’s.”
What the hell is wrong with these clowns? I know he’s a realtor. No it’s NOT like going to a 20% off sale at a department store A–hole. Homes jumped from $99,000.00 to $300,750.00 in six years. The correction is in it’s infancy and your little cutesy comments ain’t goning to change that. Bring on the correction, the toilets need to be flushed.
‘ 20-percent-off sale at Nordstrom’s’
-Years ago Nordstrom’s had a clearance outlet in Orange County called ‘Nordstrom’s Rack.’ The prices were about 70% off.
They are still around; there is one at Marina Square in San Leandro. It is worth visiting (unlike a normal Nordstrom’s IMHO).
I love that store. I live in Dublin but I drive out to the San Leandro store from time to time.
BayQT~
Which generally means that they were marked up 90% to begin with
Traditionally, clothing production is 1/3 material, 1/3 labor, 1/3 overhead. That’s from the manufacturer. What happens to the mark up as it moves through to the retail outlet is freakishly scary. Last I checked it was about a 400% mark up.
I do not know but often wondered do they need the large markup to make up for unsold inventory?
I worked at Nordstrom’s during their yearly summer sale. We pulled almost all the normal merchandise off the floor, then went into inventory and pulled out racks and racks of lower quality stuff. Sure was fun to see the mom’s fighting over the kids-wear when we opened the following morning.
gee…. maybe I feel like a sucker. I just spent $600 at Nordstrom’s on Saturday.
Maybe that happened at your store, but as a regular shopper, I would have noticed if the merchandise was suddenly different.
costa mesa -
they are still around here and there…shoe selection not what it usta be
Yup. More accurately, it’s like going to the “20 percent off the 400 percent we marked it up over wholesale” sale.
Actually this is a very good analogy. 20% off at Nordstrom’s is still overpriced, just like these houses.
The real reason to shop at Nordstrom’s is their incredible customer service. For many items, it’s worth the premium you pay (IE, paying full retail price).
For example, I bought a pair of shoes at Nordstrom’s and then took them to Europe for 2 months. I wore them every single day as I walked around doing the touristy stuff. I got back to the states and walked around in them for another two months. Then they ripped. Damn shoes. I took them back to Nordstrom’s - that shoe was no longer carried so instead of an exchange, they just gave me my money back. Those shoes smelled and looked terrible. But that is Nordstrom’s policy and why I prefer buying shoes from them.
Now, if I buy a house and throw parties in it every single weekend, is the homebuilder going to refund my money if the drywall in the living room gets a hole punched in it?
If not, this analogy is not good.
Good point but not the only one.
When I buy something at Nordys, I know I’m not getting schlock. Naive as I am, they have not screwed me yet. Unlike Costco, where I can buy some good clothes for low $$$, but a large percentage turn out out be labelled incorrectly, mis-sized, unfinished, or otherwise not ideal. For example, I would never buy a jacket at Costco, but I might buy underwear - because if it turns out to be sized incorrectly, I just throw it away. Not worth the effort and time to try to return it.
That’s their model.
I have been having problems posting, so I hope this goes through:
California Renters:
If you are concerned about ID theft of the info on a rental application, consider putting this statement in all caps at the top of the document:
“The personal and financial information provided on this form are to be used solely for the purpose intended and for no other purpose.”
Put your initials next to this clause.
~Misstrial
I like your thinking on this, but it is probably useless. Anyone who would steal your identity off of your rental application and open credit cards in your name or otherwise commit illegal acts isn’t going to worry about the legalities of a hand-written clause and your successful civil suit.
Hmmm, its a clause I have put on every rental app (for me). I have never had any probs, but then again, the LLs I choose would be unlikely to steal my ID.
However, some posters may want the peace of mind that comes with acting proactively re ID theft which is probably why there was a post a few days ago asking how to address this concern.
Hopefully, the above-posted clause may serve as a forewarning to prospective thieves to think twice re this particular applicant.
~Misstrial
Or, the clause might provide an incentive to your rental agent to keep your applicaiton in a safe place.
“‘To think we’re going to get through this period with just a slight increase in unemployment is ludicrous,’ he said. ‘We have a situation in our economy which is absolutely unprecedented: rapidly rising rates of foreclosures when the economy is not already in a recession. This will take a toll on the U.S. economy. I don’t see how it cannot.’”
And even without foreclosure, think of how many families are drowning in debt. Once they realize their “paper wealth” is rapidly vanishing, I can’t help but think consumer spending will start to dry up.
I’m in the Bay Area, and so many here are tapped out. I mean the works.
And if there’s no recovery in sight until 2010 or after, how many sheep will be lining up to have 50%+ of their take home pay go to paying the mortgage? Why bother?? And for all those folks who’ve already bought, why not just leave the keys on the granite countertops?
Mortgage equity withdraw (MEW) was $650 billion at the peek in 05. Today it’s running $150 billion. How is $500 billion less dollars to spend in the economy, not going to materially affect our economy. Add to that the millions of real estate related jobs lost, minus their pay checks, and we have one heck of a recession.
Theory: Lots of homeowners used MEW to pay down their credit card balances. Now that MEW is gone they’re running up their zero balance cards again, delaying the correction.
Umm….no. Not anyone in my universe. They all used their MEW for new pools, new granite, new plantation shutters, new Escalades, etc. etc.
People taking equity out of their homes generally aren’t smart enough to use it for debt consolidation.
This is my thinking as well. I think a leading indicator will be credit card balances. In any event, the inability to refinance consumer debt with lower cost home equity will certainly increase borrowing costs for many even if consumer spending is maintained at current levels. At some point, something will give.
Actually your numbers are low. Washington Post had an article about it a few weeks ago - they quoted a number of $1.4 trillion MEW during the peak.
http://www.washingtonpost.com/wp-dyn/content/article/2007/05/29/AR2007052902067.html
$500,000,000 represents approximately $1,667 per US citizen.
There are approximately 300,000 US citizen’s.
So… I am thinking that number doesn’t seem to critical or fatal to the economy.
I missed some zero’s….
It’s suppose to be $500,000,000,000 and 300,000,000. $1,667 remains correct.
You’re not looking at things properly. Examples:
1) A $500 bil cut in federal spending would be a large damper on the alleged “economy”. (Mind you - I think such a cut is needed anyway.)
2) $500 bil is enough to put us well into recessionary territory if annual spending is cut by that much. It’s 3-4% of our $13 tril annual GDP, which is growing by a measly 0.6% annualized this last quarter.
3) Half of your 300 million people figure are the young or old, folks who don’t work.
4) Of those left, only around half are homeowners.
5) $500 bil taken out of anything will make its presence felt for sure.
“‘Am I scared? Yes,’ he said. ‘But I got a great job for myself and I know that the real estate market goes in cycles.’”
Selling loans? Yeah, you got a great job. Good luck selling hundreds of loans to all those people who are no longer buying houses, which is why you’re out of work to begin with, you dope.
The best part is he jumped out of a wage based housing job into a commision based job. He doesn’t count as ‘unemployed’ by the numbers, but he’s for darn sure underemployed.
It’s like jumping out of an airplane without a parachute, but managing to grab a pigeon by the ankle on the way down and claiming you’re saved.
I feel sorry for the pigeon.
Pilot - BLS categorization for flippers jumping off unfinished condo towers, boosting employment statistics.
“It’s like jumping out of an airplane without a parachute, but managing to grab a pigeon by the ankle on the way down and claiming you’re saved.
I feel sorry for the pigeon. ”
Classic!! Images like that are why I visit this blog.
“I feel sorry for the pigeon. ”
Eh, who cares about the pigeon? It will just shake the retard loose anyway.
“‘Am I scared? Yes,’ he said. ‘But I got a great job for myself and I know that the real estate market goes in cycles.’”
Go get ‘em tiger!! (what an idiot)
Total moron, no doubt.
He’s in for a rude awakening…
“He’s in for a rude awakening… ”
If he didn’t wake up at the first alarm and hit the snooze, he may never wake up.
I actually have met Kevin before. This is probably his 5th job in the last 3 years. Nice guy, but totally clueless. Also, he has been quoted in the LA times three times in the last year. Wonder if he knows the author of these articles?
forward to my LL ,loan processor, creep:
“Selling loans? Yeah, you got a great job. Good luck selling hundreds of loans to all those people who are no longer buying houses, which is why you’re out of work to begin with, you dope”
test
The DQ numbers are out at dqnews.com
For the zips I track 93552 Palmdale had 30 sales for the month vs. 72 NODs. That makes 6 months in a row with more NODs than sales. There are currently 19.5 months of inventory, and price/sq.ft. is down 2% YOY.
The good side of town 93551? Only 49 sales with 22.4 MOI. Median sales price down 3.5% YOY. Interesting to see the supposedly “good” zips drop faster due to the greater degree of flipper insanity in these areas.
Burn baby burn.
Nice article on the front page of the LA Times yesterday about all the Section 8 people getting kicked off the rolls over there.
About time. The fraud is absolutely rampant.
Not for fraud, more due to drugs, extra tenants, anything the neighbors can use to rat on them and get rid of them.
Extra tenants IS fraud
M“Extra tenants IS fraud”
Morally, yes.
Technically, maybe.
Practically, it’s small claims material, hopeless. AGs will not prosecute small-time fraud unless you try to pass a bad check.
Link ?
http://www.latimes.com/news/local/la-me-antelope17jun17,1,7253908.story
Thanks for the post from the LA times on section.
Ditto…thanks. Wish I had known some of these counter-measures last year. I was in their face and complaining all the time, including pleading with the landlord who didn’t get rid of them until they had done thousand$ in damage to his house. All it got me was a vandalized car about a week after they were forced out. Now, I’ve noticed the new tenant’s boyfriend living there. Sigh.
You’d think they’d be model citizens considering the great deal they get on some pretty decent housing.
“You’d think they’d be model citizens considering the great deal they get on some pretty decent housing.”
I’m trying to think of a great quote to rebut, except I am laughing too hard!!!
Our experiences with Section 8 tenants as neighbors were pretty awful. Total trash. In fact, our experiences were so bad that the first thing we do when we are about to move to an area is find out where the Section 8 housing is and stay clear. My friends had similar experiences. Presumably, there are decent folks on Sec8, but I’m in no hurry to want to try it out again. Whatever selection criteria they use to pick Section 8 recipients, they need to toss it out and try again. Leave the trash in the garbage and try harder to find the diamonds in the rough.
As the supply of empty housing grows, section 8 housing will become more attractive to landlords which is why you couldn’t pay me enough to live in these McMansion ghost towns. Sorry, I’ll pay a good chunk more for an established neighborhood where folks have been there for a while and can show they can afford their house on their own.
One other thing I just noticed. April to May month over month sales were up 41% in 2006. The same month over month comparison this year only up 11% and sales were off 73% YOY.
There are no good sides to Palmdale. BTW that article about section 8 tenants was very funny. It’s back to Compton for them.
Just like the last time…
A comment from the Union Trib article:
“By Jefferyb on 06/19/2007
I bought a home in Aug 2005 (just 3 months before the high of Nov 2005) and I have been telling everyone that we need a lot of time to “digest” the 5 year run in home prices. I hope I’m wrong (as I have a vested interest in seeing prices rise again) but I think it will take at least 5-7 years before we get back to normal. My home was 529K and it will never be a 400K home (barring a major earthquake destroying San Diego) however it won’t be a 600K home anytime soon!”
Did you’all get that “it’ll never be a 400K,” statement. Jeff’s house is obviously located near that river in Eygypt. He may be right, it could be a 350K home.
Typical Kool Aider in Cali, that sentiment is very common I mean very…almost kind of spooky at times…you kinda wonder if you are in the Twilight Zone speaking to these people.
“Typical Kool Aider in Cali, that sentiment is very common I mean very…almost kind of spooky at times…you kinda wonder if you are in the Twilight Zone speaking to these people.”
Yes, but when you’re looking at a $500K purchase + interest over the course of 30 years, no one likes to consider they’re paying through the nose on an asset that won’t “pay out”.
I know we all keep waiting for the FB’s to start squealing, and I’m sure some of them, but I think some of them will just go quiet once it’s clear that $500K house will NEVER be a $600K house.
The sad part is that he’s the most realistic one in his crowd, trying his best just to convince the other FBs that the gravy train isn’t going to get back on track THIS year. I guess maybe that’s the difference between politely sipping versus chugging your Kool Aid. When you drink it slow, do the stomach cramps start before you’ve ingested a lethal dose? Hopefully he makes 200k/yr, has a fixed mortgage, and no other debt.
“It may be said with a degree of assurance that not everything that meets the eye is as it appears.”
Rod Serling
“My home was 529K and it will never be a 400K home…”
“Typical Kool Aider in Cali…”
These defiant proclamations aren’t limited to CA. An older relative of mine in WA loudly proclaims that “prices aren’t ever going down here”! I ask her why, and all she can come up with is “that’s just the way it is”. I just throw up in my mouth a little bit…
I dare him to auction it no reserve, no minimum. Do I hear $400K opening bid? Anyone? No, how about $350K, $350K opening bid? Come on people, they’re not making anymore land. $300K opening bid. $300K opening bid, anyone? Right here, the lady in front $300K…do I hear $325K? No? $300K going once, $300K going twice. $300K…sold to the lady in front. Congratulations.
House in Sacramento sold for $757,000 in April of 2006. Bank foreclosed 3 months ago. Just dropped the listing price to $499,000. 3550 SF. And $499,000 is the most the bank will take. Probably will sell for less as there are 4 more bank owned properties on the same block. We have not reached the bottom. Not even close.
Transitioning from denial to bargaining.
He Could be right. It is possible we will inflate our way out of the housing bubble. It might never be worth less than $400k, but $400k in 2012; might only be equivalent to $200k in 2007.
I have a realtor friend in Berkeley who has really drunk the coolade. She owns 3 houses and about 20 rental units all purchased in the last 5 years. She thinks prices will never come down in berkeley and san francisco, because we are so desireable. I pointed out that prices (in Euros) have allready come down about 35%; and she said inflation doenst matter, only dollars matter. We will see. She also had never heard of AMT and didnt know that property taxes are deductable.
I posted this (below) comment over there in response to “Jeffrey”…
I wouldn’t be so sure Jeffrey that your home will never be worth 400K, it may be worth 300K before you know it. The denial in San Diego is simply staggering. We have exponentially growing NOD’s which will turn into foreclosures in the coming months and people are still making predictions as if all is well.
Come to think of it, if I foolishly spent over a half a million dollars (529K) on a home two years ago, I might be making foolish predictions too.
It’s the weather stupied. San Diego is in the sunshine state. Don’t you undersatand. Price means nothing as everyone wants to move there.
I’ve been in a catfight on “Carlsbad Jim’s” blog the past couple of days. Seems a lot of people over there are convinced that the higher-end homes WILL NOT drop in price. Nope. Never gonna happen.
Of course, when you ask them why, they just claim that everyone is rich in SD, and they will always be clamoring to buy $700K homes near the barrio…because “it’s special here”.
He’s right, it will be a $250K-$300K home.
Thornberg tells it like it is.
yes. unfortunately, one of just a small crowd of clear-headed thinkers
“The median price rose to about $285,000 in April but drifted back to about $270,000 in May. The number of homes on the market is increasing, and Leighton said spring sales were ‘lackluster.’”
“‘My belief is the worst is behind us, but it’s still likely we will see some declines in price,’ he said.”
$15,000 price decline, but the worst is behind us. Isn’t that special.
“I’m your host the Church Lady and this is Church Chat. Now who was it that made our home prices go up so much recently? Could it be. . . SATAN?”
‘They don’t want to be in the position of their friends who bought a home two years ago.’
So, if they bought today, how would they *not* be in the same position as their friends…?
If they bought today, they would have bought at a LOWER starting point. hehehehehehehe
…but hardly low enuff to be more than a couple-a cheeseburgers… Wait another two years and it’ll be hundreds of “Ruth Chris’” meals!
‘The Inland Empire is holding up better that I would have thought,’ economist Ryan Ratcliff said.
Yep, record foreclosures, lowest sales on record since 1991, home prices down YOY in both Riverside and SB counties, overbuilding everywhere, a huge fraud ring uncovered in Murrietta & Temecula, commutes to LA and OC at 2 plus hrs each way…
It’s all good here in the IE. Damn, who pays this guys salary? I pray not me, the tax payer.
I believe the REIC pays a large part of his salary if he works for the Anderson School forecast.
“The East Bay alone suffered more than one-fourth, 27 percent, of all the construction jobs lost in California during that period, according to a Times analysis of state Employment Development Department figures.”
I am guessing the Southland employment figures might be missing relatively more layoffs of illegal immigrant construction workers than up in the East Bay, which is much farther from the border?
It doesn’t matter how much further we in the Bay Area are from the border…there are day laborers lined up on many street corners waiting for work.
I live in Pleasanton where $750,000 will buy you a really nice 3 bed, 2 bath 40 year-old house…how is that for a very expensive crackerbox?
Any local economy in which “construction jobs account for 33% of the work force” is a sick economy. “Real estate has been a way for many people in the valley to put bread on the table.” Nope, real estate does NOT put bread on the table, it puts granite on the counters. It doesn’t put gas in the tank, it doesn’t put pharmaceuticals in the medicine chest, it doesn’t put the three R’s into children’s heads, it doesn’t clean the environment. It was never fungible, was briefly almost liquid, but now appropriately has the (financial) viscosity of drying cement.
‘Any local economy in which “construction jobs account for 33% of the work force” is a sick economy.’
The California economy lived off of the housing boom. I work in the construction business here in So Ca and our work has shifted to about 70% direct relations with the customer. They frequently will hire the subcontractor and we interact directly with the customer - not the subcontractor. Unless the sub prime takes off again with another suicide approach - So Ca is going to feel real pain.
Global systemic crisis / Summer 2007 : Fed looses control on US interest rates.
http://www.newropeans-magazine.org/index.php?option=com_content&task=view&id=5904&Itemid=1
“Spring 2007 indeed appears as the tipping point of the global systemic crisis: the US economy went into recession, US interest rates were restored, the bond market is in crisis, the subprime crisis begins to hit large US financial institutions such as Bear Stearns (1), Goldman Sachs (2) and Freddie Mac (3), the US housing crisis is speeding up (4), the paralysis of Washington’s political power grows (5), the isolation of the US on the international arena increases, the security plan for Iraq proves to be a complete failure, the US is powerless against Iran, the relaunch of the Israelo-Arab peace process aborts, trade tensions between China and the US rise, a growing number of countries (Kuwait, Syria,…) flee from the US dollar, etc…”
Yikes!! Whither Goldilocks?
San Jose (no Bubble here) Mercury News slant.
http://www.mercurynews.com/business/ci_6175438
One must never bite the hand that feeds you…the REIC is probably the only thing propping up most the newspapers in the state with their suplementals every weekend.
I read (but haven’t verified) that the LA Times is running just under 50% revenue being REIC.
This cannot last forever. But sales are still ok… wait for Fall.
Got popcorn?
Neil
Yup, wrote about this a while agoo…,
“Newspaper circulation was declining sharply due to monopoly crushing web competition(Craigslist) precisely as the housing boom was ramping up. Perpetual home price appreciation was the light at the end of the tunnel for a lot of job-insecure, home-owning journalists. Ad revenue from home builders, furniture suppliers, and mortgage lenders was the only thing keeping a lot of these people employed.”
“…home-owning journalists…”
That’s why you’re not getting the real story in the MSM about whats going on in the streets. Everybody is trying to do their best to hold it all together and soft pedal the reality. A lot of unrealistic dreams are going down the toilet. Had two conversations in the past 2 days with family friends about real estate. It’s interesting to watch a person’s face contort when they realize they have been had and are trapped for the next 10 to 20 years at least. It doesnt get reported a lot about the folks who are in interest only loans for huge amounts of money that are going to reset in 5,7,and 10 years. This bomb is going to go off repeated for the next 10 years every 2 years. Pricing down rates up not a good mix for anyone that’s not in a 30 year fixed or can’t get one.
Agree completely, MIS. This will take many years, and I think we’ll be seeing waves of foreclosures for some time to come.
that the LA Times is running just under 50% revenue being REIC.
Donald Sterlings pictures every Sunday must account for half of that.
The Merc has a HUGE real estate section on Sundays and other sections during the week. Reading their articles (aka spin) is causing my knee to spasm upward hitting my dropping jaw resulting in severe headaches.
Smiles everyone SMILES!!
Damn I really wish we could put up some cool pictures on here, I would definitely have the Mr. Rourke pic for the NAR.
http://upload.wikimedia.org/wikipedia/en/1/14/Fantasy_Island.jpg
test
“Sellers are unhappy about the downturn, Leighton said. But some buyers are excited to find price drops not seen in years. ‘It’s like going to the 20-percent-off sale at Nordstrom’s,’ he said.”
Nordstrom’s is a bit on the pricy side, but get real! Unless you have a seven-figure annual income, then it is one thing to save $40 dollars off a $200 dress, and quite another thing entirely to save $120,000 off a home that was priced at $600,000 back in 2005.
“and quite another thing entirely to save $120,000 off a home that was priced at $600,000 back in 2005. ”
And priced $300K back in 2002.
And soon to be $300K again - provided someone can qualify for a loan.
Being “in escrow” can be a very long time for some people - when their sales keep falling out of escrow for one reason or another, getting approved financing being the main one.
“‘Builders used to sell 14 homes a week; now it’s four a month,’ he said. ‘When I lay people off, I tell them it’s nothing personal, but I can’t make any promises.’”
For a traditional subdivision, 4 sales per month was considered good. 5 was great, and 2 or 3 was underperforming.
I’ll feel sorry for him when this number is 1 per month…
‘When I lay people off, I tell them it’s nothing personal, but I can’t make any promises.’
What in the hell does that mean? I can’t make any promises that when I tell them it’s not personal is in fact is personal!
“‘The rest of the world is growing faster than the United States, which wasn’t true three years ago,’ he said. ‘We were the locomotive of the world economy; now we’re the caboose.’”
We can only hope that shifting from imports to exports will offset the loss of excess consumption. It could happen. But it means less consumption. Even the “soft landing” is going to hurt those whose value of life is tied to the consumption pattern of the recent past.
I’m not sure unemployment will soar, although there is a less likely global depression scenario. Wages falling behind inflation, lower asset prices, lower profits, higher taxes, cuts in government services — that’s a more likely scenario.
I hope you don’t imply that Spain is growing faster? Spain is in the midst of a real estate implosion. From what I’ve read lately the Spanish government is rushing to sell all its gold. In fact, the US real estate bubble is timid compared to prices in some other countries. Notably England…
Let me point something out;
If you buy a 500k mortgage and put 20% down, that’s 100k out of pocket and a payment of $2398+- at 6% for 30 years.
If that house [mortgage] drops to 400k, you put the same 20% down that’s 80k [a 20k savings] and rates are 8% payments are $2348 for 30 years
House values drop, rates go up, and you save 20k up front AND $50 per month. 1% taxes is another $1000 per year in savings, insurance is considerable less, all for the same home.
If you don’t have the downpayment it works the same [except I want you to get bent and never buy a home]
Since almost everyone is a payment buyer, how is higher rates a bad thing? Values will drop to keep the payment the same. If rates go to 11% you put 60k down and the house sells for 300k, with the same payment. Are you getting it yet?
except you miss a piece of the puzzle. If you buy for $300K at 11%, then interest rates head back to 7%, you fefi and get a huge drop in your payments. If you feel like moving up,out,across the country, no problems.
If you buy for $500K at 6%, then interest rates go to 8% or 11%you’re trapped. You can’t sell, cant’ refi, can’t move, can’t rent to cover your payments, etc.
Buying at low price with high interst rates means you can only be helped by falling rates. Buying at high price and low interest rates means you can only be forked by rising rates.
Excellent point Darrell. If you don’t repost it in the morning thread, I will !
‘It’s like going to the 20-percent-off sale at Nordstrom’s,’ he said.”
Yuba and Sutter county are not California’s RE equivalent of Norstrom’s… not even Nordstrom’s Rack. (read: RE WalMarts are going to get crushed.)
but trona is
“Economist Esmael Adibi called the drop ‘astonishing,’ the steepest he’s seen since 2002 when Chapman University’s Gary Anderson Center for Economic Research of Orange County began sending surveys to California residents.”
Named after the famed place kicker?
some googling and wiki..
It’s actually called the “A. Gary Anderson Center for Economic Research”
There’s also an A. Gary Anderson Graduate School of Management.
http://en.wikipedia.org/wiki/A._Gary_Anderson_Graduate_School_of_Management
“The A. Gary Anderson Foundation gave a generous endowment to the school and it was named after the founder of Director’s Mortgage.”
“Director’s Mortgage” might lead to http://www.directorsmortgage.com.. but then it may not.
Interestingly, a guy named Gary Anderson invented the official recycle-symbol while attending USC…
Was at home for lunch when a neighbor walked over and grabbed a flyer out of the box on the for sale sign in my front yard. He just wanted to see what I was selling for.
We chatted. I told him I was listed at $250k, but would probably accept any offer above $225K. We chatted a bit and he was SHOCKED to hear that I thought the price would fall to $150k or less over the next couple years.
So, I mention the house across the street they are still trying to rent for $1300. Look, if someone buys my house for $225k with 10% down, $200K loan at 6.75, they are still looking at $2000 a month PITI + PMI. If rent is $1300 a month, why buy?
Then I went into historic affordability, cost of construction, sagging economy once construction finally tanks after all the retail construction they are working on is finished….
By the time he walked off and I headed back to work, he seemed as convinced as me that prices were set for a 40%+ fall.
Hey, thay is what happens when they double in three years.
Way to make a sale, man! LOL
Sorry, but the guy that owns 3 doors down is NOT going to buy my house. He was just curious what I was listed at.
Maybe. . . but he might have had a friend whom he wanted to move in to the neighborhood.
“Californians’ consumer confidence in the economy took a dive in the second quarter of 2007, plunging into the pool of pessimism by 19 index points.”
Goldilocks just got kidnapped.
kudlow disgusts me.
“The Twin Debacles: How the housing collapse is like the Iraq war.”
http://www.slate.com/id/2168417/
Hey, that was a really good article. Liked the Talmudic-style reasoning, too.
I saw on the Fl thread, that a guy was renting for Condo fees and taxes. Nothing going to his landlord’s P&I. So I guess FL condos are worth nothing as we speak and can other bubble areas be far behind? 40% drop, I believe a whole lot more than that. The NASDAQ was down what? 80% from its high.
To be fair, you can’t live in the Pets.com sock puppet. In places where prices tripled I think it’s safe to assume a reversion to mean would bring them back to 2002 levels, the perception the RE is a bad investment and the return of sane lending standards will bring them back to 2000 levels, mix in the massive overbuilding and a recession and ‘97 sounds possible. And yeah, that would mean a 66% price drop in places like San Diego. Adjusting that for inflation could be negated by the fact that these things tend to over-correct.
Some Florida condos are selling at auction for $145,000. They were appraised at $300,000 at the peak so who’s to say it’s impossible.
http://www.winknews.com/news/local/7896352.html?video=YHI&t=a
300 to 145 is half off and I would be willing to bet that next year the 145 buyers will be kicking themselves for paying too much.
CREATE PROCEDURE HOUSING_ECONOMICS
RETURN REPORT
IS
REPORT := ‘NOW IS ALWAYS A GOOD TIME TO BUY’;
REPORT := REPORT || ‘ WE HAVE CLEARLY HIT BOTTOM’;
END;
/
All your money are belong to us………
Tom, I loved the PL/SQL. Thanks for the laugh.
put a non-terminating WHILE loop in there and what happens??? the housing economics program crashes!
while( $supply > $demand)
{
$price = $price * .9;
if ($Lereah == 'TRUE')
break;
}
echo "Now is a good time to buy";
darn geeks
#!/usr/bin/perl
while ( !foreclosed )
{
feed_alligator();
repost_craigslist_ad();
show_house();
bohica();
}
(Bend Over, Here it Comes Again)
HAHAHAHAHAHAHA
and CALIFORNIANS are tapped out,i work with small businesses i sell them things,i go into 15 to 20 businesses a day,its so slow in all areas of small business from auto repair to hairstylists,the consumer has no money left to spend after mortgage and gas…as a renter i am enjoying the show,do you think i can buy back my old house in north hollywood for 230k again..the price i paid in 1993…… zillow has it now at 780k i sold for 640k.i would nerve live in that shit hole area again.
NoHo’s a bit rough. Glad you got out.
Things look like they might **finally** be slowing down here, too (San Diego). Some restaurants that used to have lines out the door all night…now you can get in & there are empty tables all night long. Interesting. Just started noticing this in the past month or so.
Yes, people in Ca are tapped out. Some friends of ours had to refinance their mortgage to have cash to pay early redemption fees on a leased car that the husband wanted to turn in early. A friend of mine is a mortgage broker and he told me about a couple that stretched to buy a $700K house with an interest only loan. That loan is now resetting and they want to refi into a fixed but can’t afford the higher rates so they are going with another interest only loan. It is going to be bad out there when interest rates go higher and home prices come down. I talk to many friends about the upcoming crash and they look at me like I am crazy.
People being tapped out is just fine by me, at least they might stop looking at me with a combination of pity and loathing because I must be either too poor or too cheap to drive a 50 thousand dollar car, $2000 bathroom water faucets, Coach handbags and all the other crap people in my neighborhood and social circles seem to have that makes them feel superior to me. I’ll take being debt free over that stuff any day.
go ahead and show a little bling.. something subtle but powerful. It’s perfectly ok.
just for fun here’s a listing for a house in my ‘hood that dropped 100k in value in the last year…some GF is trying to flip it now for 200k more than he paid…good luck
http://www.redfin.com/stingray/do/printable-listing?listing-id=752903
That’s not even worth the $289k it sold for in 2002
That bathtub area is really creepy.
Art “decode,” my foot. The pictures all project “12 century European sentry post, complete with dungeon-inspired bathroom.”
I like the “art decode” interior. LOL!
I’m still not getting how if the payment is the same, a higher rate would not be better. Less down, less taxes, bigger tax deduction. I’d rather have a 300k home at 11% than the same home at 500k and 6%. extra equity payment goes farther, dump the added tax and insurance savings back into the equity and it’s paid off in 16 years instead 30. Your savings account gets the initial downpayment differential, and it makes 9%. Nine percent doubles your investment every nine years. You have a paid for home and 80k in the bank at the end of 18 years. The 500k example at 6% has nothing except 12 years left on the mortgage. Help me out here, how am I wrong?
Exactly. You’re not wrong.
The sheeple have been fleeced (brainwashed by the REIC) yet again.
4 signs of a rebound
http://money.cnn.com/2007/06/18/real_estate/foreclosures_hardest_hit_zips/index.htm?postversion=2007061915
LOL … the drop has just begun and people are already looking for signs of rebound … store this article for 5..10 years only, then it might be a little bit more useful.
Sorry, the wrong link, but this article above is funny too.
http://money.cnn.com/2007/06/19/real_estate/housing_rebound.moneymag/index.htm?postversion=2007061910
“’The market’s downturn is not abnormal, but intense national and regional attention makes it look that way’, said David Burrow, president-elect of the Sutter-Yuba Association of Realtors.”
“‘They don’t want to be in the position of their friends who bought a home two years ago.’”
Hm. So, intense attention makes it seem bad, but real people are actually getting really hurt… by the intense attention?
These words - I don’t think they mean what you think they mean, my friend.
#!/usr/bin/perl
#v 2.0
while ( !foreclosed && !sold )
{
feed_alligator();
repost_craigslist_ad();
open_house();
bohica();
}