The List Price Is Negotiable In California
The San Francisco Chronicle reports from California. “The sluggish housing market hasn’t stalled the overall California economy so far, but researchers at the UCLA Anderson Forecast expect lower construction employment to drag growth lower next year. The UCLA report stresses construction and real estate jobs, but may not give enough weight to other areas affected by the languishing home market, said Esmael Adibi, director of the Anderson Center of Economic Research at Chapman University (not related to the Anderson Report at UCLA).”
“‘In the stock market, corrections are very quick,’ Adibi said. ‘But in the real economy, the adjustments and corrections are very lengthy. This is going to linger because I think home prices are going to continue to decline and sales will stay in the doldrums.’”
The Contra Costa Times. “Some potholes have surfaced for the East Bay’s labor market, causing a loss of hundreds of jobs at four employers in the region. WMC-GEMB Mortgage eliminated 103 jobs in San Ramon.”
“WMC-GEMB Mortgage said the slump in the residential real estate market and the meltdown for certain kinds of loans serving that sector triggered its job cuts.”
“‘WMC is a business that caters to the subprime market,’ said spokesman Gene Ullrich. ‘The action was a reflection of the current environment in subprime lending.’”
“Besides the 103 workers in San Ramon, WMC dismissed 255 workers in Burbank and 59 in Costa Mesa, state records show.”
The Record Searchlight. “Shasta County’s jobless rate last month was higher than May 2006’s 6 percent. As home sales in Shasta County continue to lag from a year ago, the real estate sector has taken a job hit. State statistics show that 900 people were working in real estate last month, down from 1,100 in May 2006.”
“There also were 200 fewer people working in finance and insurance, from 2,200 in May 2006 to 2,000 in May 2007.”
The Record.net. “Sean Snaith, consultant to University of the Pacific’s Business Forecasting Center, said there’s no doubt that the weight of the ‘housing adjustment’ is bearing down on the national and California economies.”
“But Snaith still stands behind his well-known description of the housing market as a soufflé that deflates but doesn’t collapse. The collapse of the subprime market hit the housing market hard, pulling the economies down more than expected, he said.”
“‘I think the housing hangover is going to last a little longer than we thought,’ he said.”
“Brian Catalde, an El Segundo home builder who is president of the NAHB, said builders continue to report that tighter lending standards are hurting home sales and resulting in some cancellations. Builders are still cutting prices and offering a variety of sales incentives to try to sell off excess inventories of homes.”
“‘It’s not just California. It’s broad-based,’ said Joe Anfuso, president of Stockton-based Florsheim Homes. ‘It’s affecting everybody; the entry-level market and the first-time move-up market. And there are no signs that expect me to believe we’re going to have a quick fix to this.’”
The Union Tribune. “Some real estate agents say it is a buyer’s market, with housing inventories high and interest rates still near historical lows. A quarter-point interest increase is not expected to scare consumers away, they hold.”
“That was true at an open house in Rancho Peñasquitos last weekend, where shoppers were calm and unhurried.”
“‘Our time is flexible because we’re renting,’ said Iwan Thomas of University City. He and his girlfriend are searching for their first home. ‘We’re hoping to find something in the next two or three months, but we can wait that much or longer.’”
“University of San Diego economist Alan Gin said he has given up hope that the Federal Reserve will come to the housing industry’s rescue by cutting interest rates this year.”
“Laguna Beach-based mortgage broker Steve Dexter agrees. Government concerns about inflation outweigh fears about how a slowing housing market will harm the economy, he said. ‘The Fed will throw the housing market under the bus in order to stay ahead of the inflationary curve,’ Dexter said.”
“Sue Olivier, president of the Pacific Southwest Association of Realtors, said things could be worse. ‘We are seeing the market starting to improve a little bit, but not a great deal,’ she said. ‘Our market right now is where it used to be six years ago.’”
“In San Diego County, a record 532 dwellings were reclaimed by lenders or sold at auction in May, according to DataQuick. That was a slight gain over the previous record of 525 in April. Foreclosures for the first five months of 2007 totaled 2,239, compared with 336 for the same period in 2006.”
The Daily News. “The San Fernando Valley had the most foreclosure activity in the city during April, according to a report released Tuesday.”
“In California, foreclosure activity jumped an annual 131percent in 2006. And the Los Angeles/Long Beach area had the 56th-highest foreclosure rate in the country last year, the report said.”
“Daren Blomquist, a spokesman for RealtyTrac.com, and John Karevoll, an analyst at DataQuick, agree that trouble is going to increase in the Palmdale-Lancaster area as well as the Inland Empire. Karevoll noted that housing is newer in those areas and that homeowners typically encounter trouble during the first three years of ownership.”
“Castaic resident Jose Mejia and his wife, who are a month and a half behind on their mortgage and face losing their first house. He said he took a mortgage that was supposed to have a fixed 1 percent interest rate. But his loan was split and sold to other mortgage lenders who hiked the interest rates to 9 percent and 12 percent.”
“‘They misled us,’ he said. ‘How am I going to make the payments? Maybe work 24 hours a day. I’m ready to lose my house.’”
The Daily Press. “Foreclosures are on the rise across the Victor Valley, as are inventories of unsold homes, offering prospective buyers the chance to pursue bargains.”
“‘Real estate is not Wal-Mart. The list price is negotiable, as is everything in real estate,’ said Dana Gordon, a broker in Hesperia. ‘Especially in this market, it’s important for people to know that they may be very pleasantly surprised at the price a seller might take,’ he said.”
“Short sales of homes offer opportunities to find bargains. ‘The clock is running on a short sale,’ Gordon said. ‘The lender may approve an offer that is less than what is owed on the property.’”
The Press Enterprise. “Area housing experts said the Inland region is experiencing trends seen throughout California and the nation.”
“‘The correction is not just a correction in price,’ said Patrick Duffy, of Hanley Wood Market Intelligence. Much of the pullback in new home building, he said, can be attributed to rising mortgage rates and more stringent lending policies brought about by a rise in defaults on subprime loans.”
“The Building Industry Association in May sharply revised its 2007 projections for new Inland building permits downward in San Bernardino County. ‘It’s a tough time for the whole industry,’ said Steve Johnson, a director in the Riverside office of consulting firm Metrostudy.”
“(In) the second quarter, there were 5,568 homes started, down considerably from 9,295 started in the first quarter of 2006.”
The Desert Sun. “A group of investors who’ve poured their money into the upscale Legacy Villas at La Quinta development are suing Centex Homes alleging securities violations and fraud.”
“The homeowners are asking for a cancellation of their purchase agreements to recoup $20 million to $25 million.”
“Because of construction delays and a long list of other ‘misrepresentations’ and problems, investors claim they were stuck with charming Spanish-style villas that they weren’t able to rent out.”
“Investors who were relying on rental income to cover all or part of their mortgage expenses and debt service were left holding the bag, the lawsuit contends.”
“Some three-bedroom, four-bath, 2,200-square-foot luxury villas originally sold for more than $940,000, while others have sold for $800,000 to more than $1 million. To the chagrin of investors, however, prices have since plummeted despite guarantees from Centex that such price-slashing wouldn’t occur, the lawsuit alleges.”
“Some investors who purchased in the first phases claim they can’t refinance now because property values have plummeted. Villas that once sold for $775,000 have recently been selling for about $555,000.”
This is a fun link: http://tinyurl.com/2pv6aw
Lists homeprices changes in the Eureka area in the past 72 hours.
The more rural, the slower to drop, and rarely some owners in very rural regions raising asking price by 150K after 6 months on the market. Reverse psychology?
Reverse psychology?
Ha! no, more like straight-up dumbassedness.
Yes, prices have quite an adjustment in the next 3 years. Until they get under $120/SF, there is no reason to even look. Most of what I see here, even with reductions, is over $200/SF. They will sit or a while.
That woman and her dog scare me.
That’s not surprising. Living in Eureka, there is an endless supply of washed-up LA refugees moving here and the prevailing thought is that they are all rich, all want to live here, and will pay anything to do it. So far, that has actually proven true.
Alas, I wait in my rental for more sane prices. It may be a long wait, but I have far more staying power than the idiots burning cash with their precious real estate.
Incidentally, I was at COSTCO in Eureka yesterday, and overheard some Boomer talking about the investment property she bought two years ago (at the peak). She told her friend that the mortgage was $1200/mo but the rent generated was only $1000/mo. Her friend responded “that’s not bad!” Sure, no investment tied to real estate is ever bad when you’re only bleeding $200/mo! Chumps!
Throw in taxes, homeower insurance, etc and she’s bleeding more than $200/month.
Humboldt County median prices are down YOY 10 of the last 11 months. Prices ARE coming down, anywhere from 5-10% so far.
Oh, and median prices are off 14% from the March ‘06 peak in Humboldt County.
Peterbob,
Where did you find this information? I want stats so that I can tell other, would-be buyers here. Many are on the fence now, thinking that interest rates are going up and they better “buy now or be priced out forever.” It is a dangerous combination: greater fools who have seen prices dip by a little combined with the threat of rising rates.
They will send you the info:
http://www.humboldt.edu/~indexhum/realestate/
“Some investors who purchased in the first phases claim they can’t refinance now because property values have plummeted. Villas that once sold for $775,000 have recently been selling for about $555,000.”
Just wait till they sell for $350,000 !!!
I would not want to be one of the $775K buyers. That has to REALLY hurt. 2 years from now we will be saying the same of the $550K buyers. These prices are still looney toons as far as I am concerned.
I know that area pretty well. I’ve been going down to Palm Springs/Desert since 1985 when our family had a condo in one of the country clubs. It’s a great place to get away for the weekend if you live in LA, OC or SD - especially from Oct-May.
That being said, the Coachella Valley has and always will be boom and bust. Some sh*t happened in the late 80s. The 90s were a disaster there. Retail and construction/real estate dominate the job market. Now for some reason people are paying $700, 800, 900k for homes there. It’s been speculator central over the past 2 yrs and will be foreclosure central real soon.
Oh well, just history repeating itself…again.
Whenever I get too carried with the daily happenings in the RE market and start fearing that the crash is going to take forever, I try to remember this:
Three years from the now when the $hit has completely hit the fan and splattered all over the place, those of us who cashed out at/near the top and sat on our money in the meantime will have the market almost to ourselves.
So many F’d buyers and sellers are being created as we speak, and their financial hangovers aren’t going to disappear quickly, either psychologically, on their credit reports and in their bank accounts. So many of them won’t be able to get a loan after the market has bottomed, and banks will be dying to loan to people like many of us on this board.
Bottom line: be patient, keep your powder dry and don’t get caught up in the daily rollercoaster ride. Cash will be king, and we’ll be ready.
“‘In the stock market, corrections are very quick,’ Adibi said. ‘But in the real economy, the adjustments and corrections are very lengthy. This is going to linger because I think home prices are going to continue to decline and sales will stay in the doldrums.’”
Just wait until the FB’s really digest this fact. No quick turnaround. Not by Labor Day. Not by SuperBowl or Spring 2008. Some of these houses will never again be worth what people paid for them. And they’ve got decades of mortgage payments to prove it.
What’s the tipping point for foreclosures?
Tipping point for forclosures… excellent question I have been pondering as well. I do not have the years or experience to judge, but I’m sure others on this blog do. Perhaps a weekend topic?
Tipping point for foreclosures is when the lenders are forced to sell REOs instead of holding onto them at above market wishing prices so as not to damage the bottom line.
When you start seeing a reduction of inventory on REO list that means we’re getting there.
I think the question related to the tipping point for the GF/FB. And the answer is when the pain gets too great to go on. Many people will sit in their homes at 110% LTV or even 120% LTV. But when the two income couple loses one job, and they can rent next door or 50% of their house payment, it is a no brainer to send out the jingle mail.
When does “very lengthy” end? I guess not until 2012 or later. Year end 2007? Fuggetaboutit.
Personally, I do not care if the prices are goping up or down. If I can afford to buy and prices are in line with rents that is good enough for me. Here in San Diego prices need to fall almost exactly 50% to meet that criteria (either)
Prices will fall 50% or more. Don’t worry. It’s just a matter of time. No new buyers now with the credit markets crashing.
Interesting to notice the divergence between my personal rational reaction and my gut-level reaction to your comment. My rational side agrees with you 100% — in fact, I cannot fathom where near-term demand will come from with the subprime collapse, the bond market crash, documented price declines (S&P 500 / Case-Shiller index down 6% for San Diego from Q1.2006 - Q1.2007), a growing buyer awareness of risks involved in purchasing a home when prices are falling and tightening of lending standards. But on a gut level, I find myself succumbing to the collective denial — perhaps housing prices have indeed attained a permanently high plateau?
“permanently high plateau”
i had that same dreadful feeling all last week. san diego will never be affordable. these coastal homes will go “malibu” around here and only famous people will be able to live here.
That’s what El Cajon is for
“But on a gut level, I find myself succumbing to the collective denial — perhaps housing prices have indeed attained a permanently high plateau?”
It’s easy to feel that way when the median is so stubborn to budge. However, the money is simply not there. People do not earn enough for this to carry on indefinitely. The disappearance of the easy credit coupled with foreclosures will be the death knell of this bubble. It can’t happen overnight, but it’s brewing right now. I think the whole bottom is falling out.
Can’t be. Relative to incomes you could conceivably make an argument that there has been a sudden upward adjustment in the amount people are willing to spend on housing, due to changes in demand for privacy, entertainment at home vs. public, convenience of online communication, etc.
But relative to rents, the argument is just not tenable. In the bubbled areas (West Coast, Arizona, most of Florida, parts of the mid-Atlantic, and various mountain hip areas) rents would have to rise around 100% to make housing prices rational.
Don’t worry - the more house prices fall, the more overvalued they will appear, and the further they will go. But, yes, I’ve reluctantly come around to the view that it’s going to take a lot longer for houses than stocks.
Having said that, I recognize that there are some areas of the country that are are fairly valued to only slightly overvalued.
A couple good hedge fund whacks and even housing will fall fast. The first headline in the New York Times that reads, “Manhattan Housing Market Teetering on the Brink” will send a shock wave like a 9.0 earthquake in the middle of the ocean.
Do I smell smaller bonuses on Wall Street? I pass that f—ing street every day. Yes, oh yes, I can smell it. Once people hear that Wall Street bonuses have dropped off a cliff there will be fear in their eyes. This City is built on the thought that everybody is rich because of those bonuses. New York has sold its soul to hedge funds, just check out comments from the likes of Bloomberg and Giuliani. The devil has a smile and is ready and waiting. Californians will feel it through their hardwoods and granite when it happens.
Stucco, I get the same gut feeling that prices may be prem. stuck at 600K. However, if that is the case inventory, which is at 4.2 million, nationwide, is going to skyrocket past 7.5 million in the near future. Credit is drying up. There a re a few foold still out there. However, most people on the sidelines realize that this stratospheric cost of a home is not sustainable, nor will they sell their soul for a home.
Once again….
If you buy a 600K home, you will pay roughly once for the house and twice for the interest. Throwing in taxes, insurance, maintenance, and a conservative HOA, if you have one, you will pay 2 million for the PoS in Fontucky. Considering where wages have been for 30 years, please raise your hand if you think the middle class will afford this nonsensical 2 million home in the year 2037? Puhleaz, these prices have to fall.
I am a pretty strong believer that house prices have to get in line with fundamentals (salaries, rents, etc.) in order for them to be sustainable. However, the recent release of the most expensive cities, which does not include any west coast city in the top 20, is giving me cause for concern. Maybe prices don’t have to be in line with all or most of the fundamentals. I mean, do people in Moscow have salaries that allow them to rent at $4000/month? It could be that their economy is different than ours in the sense that their salaries come from many sources besides the offical company check.
Yes, but I for one refuse to let my wife turn tricks.
Peter, I think what will begin to happen, en masse, which has already occurred among the lower socioeconomic groups, is 15 people to a house. Let’s be honest, with 4 bedrooms, you could conceivably have 4 families, i.e. mom and dad, grandma, grandpa, and sonny and daughter. That’s 6 checks right there. If they each take home 2 grand a month, on average, that is 12 large. If the whole pot for the house is 6K, that still leaves 6K in their wallets for other expenses. Of course with that many in a house, I hope no one is claustrophobic.
I would also like to add that if prices don’t come people will move to places like South Carolina in droves. I know you guys, esp. in Carolina, will hate me for this, but I have been looking at Spartanburg. Decent paying jobs in the sector I work in, esp. relative to homes. I for one would like to purchase a nice home for 125-175k W/30% down and a year’s cushion in the bank. Well, if prices don’t budge you will see a lot of mass migration among the middle class. Heck, if enough sane people move we might rejuvinate or jump start some of these places. I know you like the slow pace. We will keep that, I just mean we might bring more opportunity, that is the sane ones, who don’t try to make SC/NC another LA or FLA.
“Let’s be honest, with 4 bedrooms, you could conceivably have 4 families, i.e. mom and dad, grandma, grandpa, and sonny and daughter. ”
Good point. In fact, a weekend or two ago I went to a high school graduation party in Cucamonga (CA). The house (a pretty large one) has something like 5 bedrooms, and you are right, grandpa, grandma, father and mother, and three adult kids live there! Unfortunately for their kids, I think they are being pressed to carry their own weight by paying rent. This will not go well with their attempts at trying to get a university degree.
Peter & OC, what you are describing is housing “elasticity”. In tough times, the kids move back home after school and the grand parents move back from the elderly apartment! Think about all the empty bedrooms in YOUR neighborhood. I think we could accommodate 50% more occupants in my community. And that is what happens when housing costs get so out of balance. This creates VACANCY. Dead, vacant housing. So 3-4 generations living together today is a good thing. It lowers the individual cost for housing. And it leaves 4 million vacant units, which no one will occupy until it is worth it to the children to pay for their own house. It is supply and demand at work. It is no reason for despair, it is reason for rejoicing. People are say F-U to the HB until the price comes into proper adjustment.
BTW, to all of you wondering if prices are coming down, I must tell you I see substantial discounts for bank owned properties in Sacramento. There is a Shill Auction by USHomesAction.com this weekend (auctioneer can bid up to undisclosed reserve price), but there is a REAL auction the week after. Patience HBB’rs. Patience.
There is no doubt things are going to move very slowly. I wonder though if there will be a trigger event at some point? I think San Diego is a big time ALT-A place, in which case give it another two to three years before the action begins. And Technically, yes I can “afford” a $600K home in San Diego, but I hate top ramen every day. Worse, I hate the idea of losing several hundred thousand in a waning market when rents are so much more reasonable.
Yea,
I sympathize with the gloom Stucco. This process is glacial. But I think the process will occur much like the calving of an iceberg from a glacier. Long weeks of melting, cracked forming and spreading, then something as gentle as a breeze unleashes all that potential energy.
All the wishing in the world cannot defy gravity for long.
“This process is glacial.”
It has been for sure. On the other hand look how far we’ve come since 2004, when most of the long timers on this blog started posting. Just about everything has happened as discussed and 2004 seems like yesterday to me. 2009 and it’s ugliness will be upon us before we know it.
Fortunately, most of my friends are now saying things like “it’s a terrible time to sell.” All except for one in Seattle. They do, however, seem to think this thing will turn around soon.
I chalk it all up to noone under say, 35, remembering the bad times. We’ve had it “so good” for so long we don’t realize how things could change.
“… Maybe prices don’t have to be in line with all or most of the fundamentals. I mean, do people in Moscow have salaries that allow them to rent at $4000/month?….”
Real estate in Moscow is fully controlled by the Russian mafia. If you want to own RE there and want to have western standard and do not belong to the mafia or to the Kreml, you have to pay that price. Those $4000 apartments are probably 3% of the market. The majority of people make est. $100/month and don’t live in $4000 apartments. They live in run-down apartment silos. A trailer park in LA is a paradise compared to that.
NO QUESTION IN MY MIND that housing will “mean revert” — none. In fact, I expect prices to overshoot to the downside.
Every factor at work in pushing prices into the stratosphere will be just as effective in forcing them down. Those sheer magnitude of the bubble’s burst will also negate those factors that usually mitigate housing downturns, too.
Patience. The show’s not even out of the first act. Neil, pass the popcorn!
I mean, do people in Moscow have salaries that allow them to rent at $4000/month?
The average person in Moscow makes only about $1000/month. There are plenty of rentals in Moscow for $1000/month or less (it is rare for an apartment to house only one wage earner).
All the stuff you read about costs in Moscow for housing, or anything else for that matter, is for the luxury market. It has nothing to do with the cost of living for the ordinary person, which is lower than in the US, which it obviously has to be.
I can basically ‘afford’ to buy in SD at current prices - but choose to rent a house for almost exactly 50% of the cost of owning same house.
To me it’s just a matter of time before the first-time buyers (the most critical part of the market IMO) balk at the massive price differential they have to make when they make the jump to homeowner.
I did some quick math and with the rent I am paying (2 bed 3 bath detached house with garage in OK/good n’hood),prices should be circa 240-250K…….
It’s going to be sooner than you think. Here’s a few of the ones I looked up and visited last weekend. Currently, there are over 3500 homes in Corona alone. I only picked a few REOs to see last weekend. There are so many REOs that’s unbelievable. There are actually 3 on MacBeth and one of them is by a homeowner who’s actually trying to sell it $50 more than the bank. Go figure!
2994 VERANDA LN, Corona, CA 92882 List Price: $600,000
Sale History
09/13/2006: $769,000
08/16/2002: $470,000
2340 MACBETH AV, Corona, CA 92882 List Price: $564,800
Sale History
05/29/2007: $690,340
07/26/2006: $790,000
05/13/2005: $720,000
2592 MACBETH AV, Corona, CA 92882 List Price: $569,900
Sale History
11/13/2006: $576,750
01/24/2006: $765,000
05/19/2005: $643,000
2452 MACBETH AV, Corona, CA 92882 List Price: $649,900 (Still trapped in the twilight zone given the above)
Sale History
08/29/2005: $660,000
477 SNOWBIRD LN, Corona, CA 92882 List Price: $569,900
Sale History
05/24/2007: $657,000
02/17/2006: $800,000
06/07/2005: $745,000
1055 HORATIO AV, Corona, CA 92882 List Price: $529,900
Sale History & Tax Info
Sale History
01/29/2007: $611,090
02/07/2006: $725,000
03/03/2005: $585,000
3275 LIMERICK LN, Corona, CA 92882 List Price: $675,900
Sale History
11/13/2006: $751,410
08/31/2005: $850,000
I don’t really understand the listings where the last apparent sale was less than a month ago and the new asking price is about a hundred thousand less than what the house fetched in May of 2007. Does this mean the May 07 price was the bank’s bid in the trustee’s auction (i.e., probably what they were owed) ??
yup, I think you’re right there. Based on some other listings I’ve seen on the Williams Auction site for past sales, it looks like it’s often about 6 months or so from the lender foreclosure auction till the lender REO auction. Some major spankings out there.
Housing Slump or Housing Bust?
Placer County: -21% from peak
Easy, it is a Housing Bust. For those of you who do not think housing is going to correct in a major way, take a look at Placer County. Then consider the fact that pricing will seek its own new level across the state. People thinking about buying a $600,000 house in San Diego, will see they can by the same property in Placer County for $300,000. Some will take it, particularly the skier who likes a 50 minute drive to Sugar Bowl, and viola, San Diego will adjust for on lost buyer. No one really knows where this bust is headed, but I put 3 offers out a month ago and thank heaven none of them were accepted, because 34 days later, better deals are on the market.
Good for you, Jingle. Offer what is reasonable. Next year, those three idiots who rejected your offers will be kicking themselves and accepting lesser offers. You, in the meantime, will be checking out nicer houses for less.
Castaic resident Jose Mejia and his wife, who are a month and a half behind on their mortgage and face losing their first house. He said he took a mortgage that was supposed to have a fixed 1 percent interest rate.
…and just after I signed the papers the mortgage lender stood up and said “always after me lucky charms” then poof he was gone.
That 1% loan was a perfect match for his last 1% IQ test results.
1% FIXED? Where?!!!!
Since the FB didn’t read the contract anyway, perhaps it should have read:
For your first year, the 1% rate is fixed. Then, the next year, YOU will be fixed so that you don’t reproduce.
lmao - oh, if that were only true!
“For your first year, the 1% rate is fixed. Then, the next year, YOU will be fixed so that you don’t reproduce.”
One generation too late.
“Castaic resident Jose Mejia and his wife, who are a month and a half behind on their mortgage and face losing their first house. He said he took a mortgage that was supposed to have a fixed 1 percent interest rate.”
What a j@ck@ss. Let me guess, he’s also an illegal alien. It was recently reported that close to 80% of the illegals don’t even have a high school education. Yet, they’re setting the sales comps for the honest people in this country. This stuff is unreal.
They’re not setting up sales comps for any place you’d want to live, so don’t worry about it.
Great point, investor girl.
Seemed obvious from the first reading that Jose Mejia does not read English, and allowed the mortgage salesman to tell him orally what the interest rate would be.
“The list price is negotiable…. it’s important for people to know that they may be very pleasantly surprised at the price a seller might take,’ he said.”
What happened to “offending the seller” with a lowball offer?
What happened to “offending the seller” with a lowball offer?
Its now ok.
Got popcorn? Lots of it… we have a long time ahead until the market is rational again.
Neil
Pleasantly surprised my ass, thats just a tactic to get you involved in the process of making an offer. Get you all emotional about the task and then stick you into something 10% below list on something that here in L.A. is 52.1% overvalued in a market that has a 50-60% chance of declining further in the next 2 years. Yea, sign me up for 2 of those.
That’s exactly what happens. The realtor I was working with until recently kept being upbeat about us offering a lowball offer until we got to the point of driving over to write the offer we had discussed several times (We wanted to offer 500k on a 870k asking price house) and she said she refused to write an offer that low. I hung up on her and turned the car around.
Any bets on to how long before she calls back and starts asking if I’m still looking? (I’m not, I just signed a lease for about 1/3 of the monthly cost of buying the same house.)
When she starts her new job as a fluff girl on the set of “Snow White and the Seven Cowboys”, your phone will be ringing off the hook.
If you’re starting a pool, I’m betting on Sept 10th. School has started and she’s looking at the winter without a sale.
“(We wanted to offer 500k on a 870k asking price house) and she said she refused to write an offer that low. I hung up on her and turned the car around.”
I thought agents were required to submit all offers. Of course, she probably looks good but doesn’t know a damn thing about her legal responsibilities.
All of this crap has made me want to get into the field (I won’t use profession). Yeah, that’s right, I want to be a realtor. But for different reasons than the rest. I want to start lowballing the hell out of people. I want to advertise my services as the lowball king. “Tired of paying stupid prices for houses, come to me”! I’m not scared to submit the most ridiculous offers imaginable. And, I’ll back them up with dialogue and statistics. The sellers would hate me, but the buyers would love me. I want to bring reality back to these greedheads. I want to write up lowball offers which will make them weep. It’s about time.
I’ve been thinking about the same thing here in LA… wanna start a franchise? Love the slogan!
Of course, I’d never sell anything (in the current market anyway) but since I don’t care if I make money at it, it might be kinda fun!
Oh, I’m not anti-realtor BTW… I’m actually anti stupid buyers!
If you’re not embarassed about your (low ball) offer, then it’s still to high. hehehehehehehe
real estate is like a souffle??? oh please. When your souffle falls your net worth is not damaged.
I have heard souffle’s can really cave in. Personally I like the rock thrown in the air analogy. Look at that rock climb. It is different this time it will go up forever. Rock reaches it’s highest point and levels out. Don’t worry folks it has reached a high plateau ..starts to fall… Has it bottomed out yet? Don’t worry folks this will just be a short adjustment and it is getting bad press… Well, that is about where we are today. Tune in later to find out what happens to the rock as it continues to feel the effect of gravity. And keep an eye on real estate prices as well, since they seem to be acting like a flying rock right now too!
LOL, Ben we need a new page!, a place to store the worst analogies! or combine bad analogies with the worst realtor excuses…
The market is like a souffle that’s been hit by a falling rock after it toppled off a high plateau.
Enough with the analogies! Are we children?
Just give me the numbers, I have a brain capable of comprehending them.
OK, here are some numbers for the Stockton area “souffle,” where University of the Pacific (UOP) is located:
$/SF (from peak): -14%
Median (from peak): -13%
That’s still not “good enough” for UOP:
“Current worst case scenarios for some areas put declines in the range of 10-20%. A bubble bursting? Hardly. If NASDAQ had fallen 10-20% in 2001 from its high point, would we still refer to it as the dot-com bubble?”
Sean Snaith “Was Wrong”
I’ll give you numbers. But first I need to hedonically and seasonally adjust them, throw out volatile outliers and reindex them at my whim.
hee hee
real estate is like a souffle??? oh please.
paging sfbayqt…
You rang?
BayQT~
I think you’re the poster who is always amused by the souffle analogy…
Some three-bedroom, four-bath, 2,200-square-foot luxury villas originally sold for more than $940,000, while others have sold for $800,000 to more than $1 million. To the chagrin of investors, however, prices have since plummeted despite guarantees from Centex that such price-slashing wouldn’t occur, the lawsuit alleges.”
Way overpriced. This is how much some townhouses cost in the Bay Area. The investors should of used common sense. How can it be a good deal for something in the desert?
Castaic resident Jose Mejia and his wife, who are a month and a half behind on their mortgage and face losing their first house. He said he took a mortgage that was supposed to have a fixed 1 percent interest rate.
…then I swear right after I signed the last paper the mortgage broker stood up and said “there they go, always after me lucky charms” and *poof* he was gone.
“Your honor, I was so f—ing stoned when I signed that contract. Can I really be held responsible for my own actions? This was hydroponic ganja grown in a Centex grow-house.”
“Case dismissed,” wailed the judge as he pounded his gavel. After the court had adjourned he sought directions to the grow house from Mr. Mejia. “I need to do some evidence collecting,” stated the judge.
“1% fixed” was in a bolded 24pt font, then after that, “for the first 3 months” in an itty bitty 6pt italicized grayscale font.
Wheere, oh wheere, are you tonight?
Why did you leave me with an ARM?
I searched the world over for a 1% fixed rate,
But then you adjusted, and (poof) you wuz gowne…..
Had a “Hee-Haw” flashback when I saw “poof, he was gone”
I love the part where he says it was “sold and split” … in other words, he had a first and a second … basically put 0% down. What an idiot.
ANECDOTALLY… I been watching Costa Mesa, in the OC, for a few years on ziprealty. I look at total listings, then Price Reduceds. For first time, today Price Reduceds exceed 50% of total listings. Quite a little spike last couple days. Last week of public school. O it is happening…
Nice. I’m renting in Costa Mesa, so always good to hear local info.
Last week of public school. O it is happening…
Just wait until the kiddies are back in school… then the market will react!
Got popcorn?
Neil
and now people are lopping off $50k instead of 5k—and still not selling. same houses for months on there…
I have a close friend who bought in Costa Mesa in July of 05. Ever since I try not to talk about real estate around him because I don’t want to make him feel bad that he bought at the top. I think he’ll be fine since he bought a small condo he could afford with a regular mortgage, but no one likes to hear that their starter home isn’t going to appreciate enough to help them move up anytime soon.
I have a friend who bought a huge place with a pool in a remote area of San Diego County in June of 2005. She was gloating at her housewarming party, “We got such a good deal! We stole it!”
She overpaid by about $100K in my estimation and the carrying costs are huge with an insanely large yard, many high-water-demanding fruit trees and that big honkin’ pool.
Fast forward and the only thing that has been stolen is the smirk off her face. Thankfully!
My realtor friend in the SF valley is now recommending $50k cuts for home in North Hills, Northridge, etc. Still nothing is moving. He has 6 listings and spends his weekends working for free during “open houses”. What a joke. Still no bites…traffic is sloooow. He’s a newbie (yeah, I know, great timing) so he’s only needs to keep at it for another 4-5 yrs before he makes any $$. where do I sign up for that?
50k is that all in a market that is 52.1% overvalued in a declining market with +/- one years worth of inventory. Bwwwaahhhhaaa. I just told a broker friend of mine now might be a time to revisit that Caymen Island vacation idea. With all the whiners and ambulance chasing lawyers out there right now, Your newbie friend might want too look for a new career.
Thanks for the info catspit1, I’m renting here in CM as well.
Ding Ding Ding!!!! We have a winner!
“Castaic resident Jose Mejia and his wife, who are a month and a half behind on their mortgage and face losing their first house. He said he took a mortgage that was supposed to have a fixed 1 percent interest rate. But his loan was split and sold to other mortgage lenders who hiked the interest rates to 9 percent and 12 percent.”
“‘They misled us,’ he said. ‘How am I going to make the payments? Maybe work 24 hours a day. I’m ready to lose my house.’”
Dumbest man in America?
I don’t understand how they can report this as if it were a fact that the mortgage had a FIXED 1% and then split blah blah. That whole statement should have quotation marks around it to show how retarded this guy is.
“He said he took a mortgage that was supposed to have a fixed 1 percent interest rate.”
ROTFLMAO!
I wasn’t aware that such mortgages existed on this planet.
Exactly - if they did exist, we certainly would know about them….
“I wasn’t aware that such mortgages existed on this planet.”
The reality is that they only exist on Uranus.
And Japan.
Maybe the smartest. Think about how low those payments would have been if he was only paying 1% interest (maybe I/O payments as well??? — WOW!).
Seriously, he probably saved a lot compared to what he’d pay to rent by doing this. Now, he loses the house — probably after he sits there for a few months not paying anything at all.
Nice gig if you can get it…
No, probably can’t read - and didn’t realize that LO’s are sharks. I’d bet it was a 1% teaser for a month or two, then ARM of some sort with fixed payments(neg am) not fixed rate.
Selling a loan does not give the buyer the right to change the original loan contract.
Yup, I just love the media fact-checking on stories like this. Accept dubious quote from some clueless dumbf@ck and report at face value without challenge, verification or context.
“media fact-checking”
is now an oxymoron. Was laid to rest after 9/11.
Long before 9/11 - those of us with beliefs running contrary to the MSM designated correct viewpoint (on things like gun control, Israeli issues, etc.) learned 20 years ago that there is not only no fact checking, but as far as they are concerned, few if any “facts” - it’s really ALL viewpoint in the eyes of much of the MSM, so once they’ve picked one, they tend to report mostly “facts”/distortions and quotes to support it, ignoring any inconvenient evidence to the contrary.
Here, on the bubble, there’s a little confusion because while crashes and greedy bankers make great headlines, a slowing economy will not help the Democratic congress push through big tax hikes, nor increase advertising dollars…
“…those of us with beliefs running contrary to the MSM designated correct viewpoint (on things like gun control, Israeli issues, etc.) learned 20 years ago that there is not only no fact checking..”
Agreed.
However, don’t you think the volume of ludicrous has been turned up - way up? We have truly dumbed-down in every way and the media swill is indicative of this non-disputable fact.
waiter: what would you like to order?
loanee: i’d like a Snaith souffle’, can you mix in a little subprime?
waiter: We are doing a delightful subprime reduction sauce.
loanee: bring it on.
“But Snaith still stands behind his well-known description of the housing market as a soufflé that deflates but doesn’t collapse. The collapse of the subprime market hit the housing market hard, pulling the economies down more than expected, he said.”
“Government concerns about inflation outweigh fears about how a slowing housing market will harm the economy, he said. ‘The Fed will throw the housing market under the bus in order to stay ahead of the inflationary curve,’ Dexter said.”
The money quote.
If the Fed doesn’t throw the housing market under the bus, bond traders will have to do the dirty work.
http://www.bloomberg.com/markets/rates/index.html
Not inverted anymore. Did we have a soft landing ?
No………and ones not expected.
Yes. Unfortunately it was right into the deepest part of the Pacific Ocean.
Stagflation…you heard it here first.
“Stagflation”
The worst. Like Chinese water torture.
This statement sounds sooo good to me ….
‘The Fed will throw the housing market under the bus in order to stay ahead of the inflationary curve,’ Dexter said.”
‘Relax folks…just sit back and relax. There’s nothing to see…just a minor BUMP in the Road and another greasy RE SPOT !”
“despite guarantees from Centex that such price-slashing wouldn’t occur”
Hard to believe Centex or any other builder would ever make such a guarantee. The market sets the price, not the seller/builder. Face it folks, you gambled and lost.
is this liek the garuntee the condo buyer in Flordia got. The developer promised not to sell “bellow market value”?
And they didn’t. They sold and then said, “well, that’s the new market value.” I love when mindless statements backfire on those that say them or believe them.
okay, I’ll buy from you mister homebuilder, but you have to promise me that the price I paid will be the lowest you will ever charge for a home in this county!
Geez
thanks for the link to those home price changes, uptick…wish there somebody would track LA county
“‘I think the housing hangover is going to last a little longer than we thought,’ he said.”
Longer than the “experts” thought, but we here on the HBB knew better and our predictions are working out much better than those from most of the “experts.”
I had heard a phrase many years ago that applies I believe to housing and other investments. Don’t watch wall street, watch whats happening on main street. The best leading indicator.
We’re in for a rough ride.
I got two FB stories at work today. One in the Outer Banks of North Carolina and one in Florida. They are precious. I will post in Bits Buckets this weekend. Main Street is bleeding.
Please do post those stories … I’m particularly interested in hearing the Outer Banks one…
How can anyone - capable of finding their way to the escrow office to sign - believe in a 1% fixed rate? It defies logic.
I use to get a lot of junk fax for “1% fixed rate*”. That * basically said it was “fixed” for a very short period of time — normally just the first month. There are a lot of dolts who don’t understand where the money is coming from and the motivations to lend it to you.
He is certainly a moron. If he could get a 1% fixed, he should have taken out a trillion dollars and invested it in t-bills for risk-free arbitrage.
But you have to know that Mr. Burns would end up suckering this buffoon out of his trillion dollar bill. You can bet on that.
Lots of Americans have been conditioned by various govt programs over the last fifty years to fervently believe in free stuff.
Lots of Americans? Dang, GS, lots of furriners, too!
And lots of big companies too. Who are the biggest recipients of federal “farm aid” subsidies? A: huge corporate farms. And then of course there are the auto makers & airlines, which seem to be either perpetually in bankruptcy or begging for taxpayer bailouts.
“Who are the biggest recipients of federal “farm aid” subsidies? A: huge corporate farms.”
Ain’t it da trute!!! And I don’t know if this happens in Cali, but here in Fla, the Farm Bureau builds farmworkers subsidized apartment complexes (up to 4 bedrooms, you know, so they can reproduce comfortably) complete with pools, clubhouses and tot lots. Oh, and van service to th local clinic. If you are regular taxpaying jamoke OR a vet, you get to rent a dump from a private landlord, no pool, tot lot or clubhouse.
So, here’s the kicker now: gone are those little wooden boxes the farms used to house the illegals and migrants in. Now, the taxpayer pays for the housing.
Pathetic. Basically, we’ve created a slave class for the plutocrats, and to add insult to injury, the government pays for the slave quarters and rations.
But migrants “do jobs Americans won’t do.” You know, if there are jobs Americans won’t do, maybe they shouldn’t be done here at all.
There is, of course, no job that an American won’t do if the clearing price is high enough, just like there’s no house that won’t sell if the clearing price is low enough.
Hey Palmetto,
do you have any idea under what law, or what authority, these condoplexes are being constructed and maintained?
is it some part of the Farm Subsidies bill that passed in 2001/2–that was one of the biggest boondoggles of all time-possibly bigger than the prescripion drug bill? Are these illegals working in the sugar biz by any chance?
Actually, spike, I’m trying to look into it. I’ve got some inquiries into HUD, etc. I know this for a fact because we already had TWO of these complexes in Ruskin already and NOW have a brand new one. WTF? A lot of farm land around here has been sold off, so why do we need ANOTHER one of these? No, these illegals don’t work in the sugar biz, sugar is southeast of us. Tomatoes, strawberries, ornamental shrubbery, that’s mainly what we’ve got. Also fish farms. Used to have oranges, still have a little of that, but most of that got socked by citrus canker and ended up falling to developers. Oh, we also have a big Chinese grower here who does lots of herbs.
We don’t need illegals here, really, for the small amount of agriculture we’ve got left. But the builders like them and they’re still building.
I was at a friend ’s place and they just bought their house. He was telling another friend that house prices would not go down because the goverment would not allow it. The gov’t would lose a lot of revenue according to him. I was tempted to join in and tell him otherwise but i’ve given up. I don’t know what else to tell them, they know me by now as the “don’t buy a house right now guy”. By the way he was talking to a friend who is trying to sell his condo in Ontario, CA, but could not so he rented it out. This is in IE where it’s diffrent. hahahahhaah
Yeah… it is different in IE… You’re #1 riskiest market for a big price drop, so sayith PMI.
Here in PHX, we’re only #2, a full1% behind IE.
house prices would not go down because the goverment would not allow it
REIC POLICE: “Hold it right there, buster!”
SELLER: “Huh??”
REIC POLICE: “Were you just trying to sell your house for less than your neighbors paid?”
SELLER: “Well, yes, but I don’t see what that has to do with…”
REIC POLICE: “Ah-HAH! You’re in direct violation of the FB Equity Preservation Act. You’re coming with me!”
the PPT is in charge of house prices and homebuilder daily stock price movements
Homebuilder stocks have been getting hammered. Check out the 3-month charts. If the PPT is protecting them then the PPT sure sucks at what they do.
No, the PPT just has higher-end clients.
The JP Morgan auction of those subprime mortgage bonds was mysteriously called off. Guess the Powerful People won’t be “marking to market” those millions of junk bonds any more, and they’ll stay “AAA” rated, like a virgin, traded for the very first time.
Who exactly got paid off for that?
It appears the PPT has lost their PIN to the Govt ATM.
When does this spill over into Texas? Here in Austin the fan is still clean.
But the asses are lining up.
Texas will not be hit like Nevada, California, Florida and Arizona. It has appreciated slowly over the past few years as has most of fly over America. The retail value of the homes are reasonable relative to the cost to build a new home. I am a review appraiser with information from all over the U.S.. Texas will have a softer market, fewer new homes will be built, but the selling prices will remain close to 0% appreciation or if you prefer 0% depreciation over at least the next year. This cycle was predicable, We knew it was coming, and we know when it will end. The worse will be over about 2 years from now when all the 2/28 loans have their payments increased from the 2 year entry rate. The next level will be when the 3/27 mortgages have all had their entry rates raised. There will be a remaining 4 years with all the idiot loans like interest only, pay option loans where the borrower selects his/ her payment types. Much of that is in California and they will take it in the shorts. The rest of the country excluding Florida will be recovering. Florida is going to have a condo blood bath later this year. Something like a 10 year supply of homes will be on the market as the new units under construction hit the market. It won’t be a pretty sight.
California Cow Crisis
http://www.centralvalleybusinesstimes.com/stories/001/?ID=5468
It’s OK, last night the TV told me the cows are happy in California. All is well.
Horse stables around here (Eastern Kansas) are paying double/triple for hay bales, compared to the price last year (Assuming you can find someone who wants to sell)
Do wa have a “Hay Bubble”? ……or “Peak Hay”?
If real estate was Wal-Mart, then our houses would be built in China with plastic and cost a fraction of the price. Don’t give them ideas.
make that plastic and lead….
As opposed to the quality construction the HBs have been turning out for the last 5 years?
University of San Diego economist Alan Gin said he has given up hope that the Federal Reserve will come to the housing industry’s rescue by cutting interest rates this year.
Is HOPE one of the courses they teach in economics graduate schools?
I know Alan Gin is a closeted shill but this kind of statement is ridiculous.
As a USD alum I am shamed by this!
Yesterday, the UF alums were mortified. Today is Cali’s day in the barrel for higher education punditry.
As a USD alum I am shamed by this!
How do you think I feel? I went to U.O.P.
Now this is just crazy talk….
javascript:ol(’http://www.chron.com/disp/story.mpl/ap/politics/4906738.html’);
From the article……..
“Paulson refused to comment specifically on the market impact of troubles confronting two large Bear Stearns hedge funds that invested heavily in subprime mortgages — loans made to borrowers with spotty credit histories.
“We have had a major housing correction in this country,” Paulson said in an interview with a small group of reporters at the Treasury Department. “I do believe we are at or near the bottom.”
Paulson said he realized there would be losses along the way but said he believed those losses have been “largely contained.”
Well there ya go………..”Goldilocks” lives on.
Gotta love old cueball Hank. Shuffling off to China for a little dollar diplomacy. If I were him, I’d stay the snot out of China. They execute financial crooks and manipulators. I think the guy who was ultimately responsible (but not directly, just a gov’t department head) for that melamine fracas got a death sentence. And he’s one of their own. Now, can you imagine what they might want to do to old Cueball, seeing as how he is head of US Treas, if they find themselves holding devalued US investments? Not outside the realm of possibility that Cueball could find himself “detained”. Now that’s what I’d call “global justice”. I might even agree to globalization just to see that. For sure, they’d look at the US and say “What’re you gonna do about it?” And I, for one, would say “Keep him and thanks for taking him off our hands”. LMAO! How would that be for a response? Hey, now THERE’s a job we could outsource to China: punishment of American financial fraud and manipulation. Government fraud and manipulation, too. ‘Cause those are jobs Americans don’t want to do, apparently. How ’bout it, China? I’d pay GOOD money for that. Right out of my own pocket.
“outsource to China: punishment of American financial fraud and manipulation. Government fraud and manipulation, too. ‘Cause those are jobs Americans don’t want to do, apparently. How ’bout it, China? I’d pay GOOD money for that. Right out of my own pocket.”
Oh, chrissakes, even though I’d like to see it for Da Boyz, I’m not wishing for this, no way. Not outside the realm of possibility, since so many INSIST on globalization, that you might find yourself in an Indian or Chinese prison, right here in the US. Scary thought, really scary.
I want the drug that he must be taking to see through those rose-colored glasses.
“We have had a major housing correction in this country,” Paulson said in an interview with a small group of reporters at the Treasury Department. “I do believe we are at or near the bottom.”
Maybe Ivy Zelman could explain the reset chart to dumbazz Hank.
Though at this point, the Chinese must be convinced that democracy in America means that every word spoken by our gov’t leaders is a lie, a big lie, or a lie so huge, so transparently false, that just having to listen to it is an insult.
‘He said he took a mortgage that was supposed to have a fixed 1 percent interest rate’
Headline is something like ‘People who have not devoted 5 minutes to research the biggest purchase of their lives are victims’
‘He said he took a mortgage that was supposed to have a fixed 1 percent interest rate’
Headline is something like ‘People who have not devoted 5 minutes to research the biggest purchase of their lives are victims’
“That was true at an open house in Rancho Peñasquitos last weekend, where shoppers were calm and unhurried.”
Hhhmmm…..after yesterday’s fire, maybe they’ll wait even a little bit longer. Like, until the next time it rains?
Yeah, that fire got pretty close to those houses overlooking the canyon. I live just south of there off Black Mountain Rd.
Indian rupee is getting stronger which means companies will push hard and get more H1b’s into CA.
Locals can expect smaller pay raises. H1b will be 3 or 4 per apartment and landlords will be happy.
Castaic resident Jose Mejia and his wife, who are a month and a half behind on their mortgage and face losing their first house. He said he took a mortgage that was supposed to have a fixed 1 percent interest rate. But his loan was split and sold to other mortgage lenders who hiked the interest rates to 9 percent and 12 percent.”
“‘They misled us,’ he said. ‘How am I going to make the payments? Maybe work 24 hours a day. I’m ready to lose my house.’
Gee, I saw people that were told this crap. Not to excuse lenders that tell them this (slow torture death is too kind), but common sense should tell these sheeple that this isn’t possible.
Hearing stories about CA going down is so nice. The average folks like myself have left in droves. Case in point - my prior church congregation was either the young newlyweds in apartments or the old timers that lived there for 50 yrs. All the young people were moving (mostly out of state) because cost was too high. This was in Castro Valley (East Bay area next to Hayward).
No quick turnaround. Not by Labor Day. Not by SuperBowl or Spring 2008
You mean that there won’t be a hoard of people beating down the open houses, realtor offices, condo ghost towns, boarded up ‘new homes’ etc, on Super Monday (right after the winning QB says he is going to Disneyland?)? Who would have thought? I thought Liah-rah said they would?
The Median Home Price Does Not Matter At All
Everyone knows that the median home price in San Diego is well above $500,000. The high median home price is often cited as being the main reason that San Diego is unaffordable for first time home buyers. Taken at face value, the statement appears to make sense. Upon further examination however, that statement proves to be incorrect and very misleading. The major reason that the statement misses the mark is that first time home buyers almost never buy homes near the median price. The median price does not apply to them at all. First time home buyers are buying homes priced much lower than the median. Typical San Diego first time home buyers purchase condos in the range of $200K to the low $300Ks. Houses bought by San Diego’s first time home buyers are normally priced in the low $400Ks. It is rare for a first-time home buyer in San Diego County to purchase a home near $500,000. An important point to remember is that first time home buyers are purchasing starter homes, not their dream homes.
The median price is defined as the price point at which half of the homes are sold above and half are sold below. First time home buyers normally purchase nowhere near the median price. A price point that is much more indicative of affordability for first time home buyers would be the median price of home in the overall lower half of home prices.
Other factors that make homes considerably more affordable than many renters think are the tax advantages of owning and the increased availability of first time home buyer assistance programs. The tax advantage can typically put an extra $200 to $400 of additional after-tax money into a new home owner’s pocket every month. First time home buyer financial assistance programs enable nearly any renter with reasonable income, responsible use of credit, and a little money saved up to become a home owner.
The real concern for the first time home buyer should not be the median home price but what overall payment would the buyer feel comfortable with and whether any acceptable homes are available in that price range.
by Mark Harmon
http://www.1866SwiftSource.com
Uh.. dude… I’m a first time home buyer. I can afford a fairly high payment. There is currently nothing acceptable in my price range. Even in crappy areas. But thanks for the info!
Mark, this is not the place for you to advertise your “services”. There are no suckers on this blog to buy a cheaply-built, overpriced San Diego condo. And by the way, you know that the real concern for first-time house buyers is the fact that any San Diego condo they buy now will be worth 50% less in two years.
Aww man… I was trying to be nice. I suggest a visit to his site to peruse the “tax benefits” section. Summary:
50k income
Buy cheap condo w no money down using a mythical 35 yr 5.75 fixed IO, plus…. 3 OTHER LOANS! (WTF?!?!)
There’s more… kinda sad/funny, and easy to see why non-savvy buyers can get sucked into this kinda thing.
Joe buyer has $100 more to spend than if he was renting!!!
(oh, and he’s a quarter million in debt, and not paying principle… nevermind that…) :-/
“Typical San Diego first time home buyers purchase condos in the range of $200K to the low $300Ks”
What kind of salary is needed for, say a $325K house based on a fix 6% interest rate. Including property taxes, what would be the monthly payment? I would guess that, even with a 10% downpayment, you need a salary around 80K or maybe even near 100K to afford a $325K house.
In the past banks recommended about 2 incomes for the loan.
“The real concern for the first time home buyer should not be the median home price but what overall payment would the buyer feel comfortable with and whether any acceptable homes are available in that price range.
by Mark Harmon”
… and what if you can rent the same home for half the payments?
… and what if your purchase price is based on comps that were bought by the criminal avant-garde, truly insane, and just plain stupid? Using 100+% no-docs or exploding option-arms? In some cases cash-back fraud?
… and what if that “comfortable payment” is based on a suicide loan?
… and what if there are dozens of NODs in the neighborhood, and nearly as many REOs that aren’t selling? And lots of Realtors(tm) in the neighborhood trying to unload?
Then, should I still buy that crap?
I want what this guy is smoking…
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aN64WudO99kM
The worst U.S. housing slump in 16 years will begin to ease in the next month or two, and job growth will lift home prices and spur construction early next year, Bank of America Corp. Chief Executive Officer Kenneth Lewis said.
“The drag stops in the next few months,” Lewis said in an interview yesterday in New York. “It’s just about to be over. We’re seeing the worst of it.”
“We do not see a recession,” Lewis said. “Because that drag stops, you’ll see the economy begin to pick up in the third and fourth quarters.”
“It’s just about to be over. We’re seeing the worst of it”
And that is because…why?
Oh wait, he doesn’t say WHY. He just says what it WILL BE.
C’mon, reporters, let’s at least drill down one level and question people’s “out-of-the-butt” comments.
“We have heard that lenders have already reduced the amount that they are willing to lend against C.D.O.s,” said Timothy Rowe, a portfolio manager at Smith Breeden Associates.
Still, analysts note that credit remains easy by historical standards and the market seems to be weathering the current storm well.
“Yes, there was too much leverage in the market. Yes, there was too much appetite for risk and yes, that risk was underpriced,” said Mark Adelson, a senior analyst at Nomura Securities in New York. “But there has not been a lick of spillover of this situation in the corporate bond market or stock markets so I don’t think people need to start hoarding food, water and ammunition because the end is coming.”
Sure
“Adibi said. ‘But in the real economy, the adjustments and corrections are very lengthy.”
When the CC debt implodes the corrections and the adjustments will be fast and furious. You ain’t seen noth’in yet!
“Some potholes have surfaced for the East Bay’s labor market, causing a loss of hundreds of jobs at four employers in the region. WMC-GEMB Mortgage eliminated 103 jobs in San Ramon.”
Ah yes, high paying jobs, not just minimum wage. Potholes today, ditches tomorrow.
“Shasta:State statistics show that 900 people were working in real estate last month, down from 1,100 in May 2006.”
The statement 900 people working in RE just means they are warming a chair in an office it doesn’t say they are earning a living. MSM, please tell me what their median income was in 2004, 2005, 2006 and compare that to 2007. Now that will give me the type of info that would be useful.
“Some real estate agents say it is a buyer’s market, with housing inventories high and interest rates still near historical lows. A quarter-point interest increase is not expected to scare consumers away”
Bet me!! High housing prices mean high property taxes and high HOA fees. Only when the property is priced right for location, environmental contingencies (heat, cold, hurricanes, flooding, etc), taxes, insurance, HOA’s, etc will it be time to buy and not until.
FB whiners go to capital hill:
http://www.latimes.com/business/la-fi-bernanke21jun21,1,5545314.story?coll=la-headlines-business
So here’s a solution to the problem of upside-down FBs and potential foreclosure “victims”….why not let those with lots of equity heloc and give to those poor victims.
…The Robin Hood Equity Release Plan…
“Some real estate agents say it is a buyer’s market, with housing inventories high and interest rates still near historical lows. A quarter-point interest increase is not expected to scare consumers away, they hold.”
Whether a quarter-point increase matters depends on prices. For example, on a “mid-tier” San Diego SFR, priced at $800K, and assuming the 15% tax bracket, a quarter-point increase in interest rates has the effect of adding
0.85 X 0.0025 X $800,000 = $1700/year
or $133/month to the net worth drain of a mortgage. That is a significant hit to the median San Diego household earning under $70K/year.