Post Local Market Observations Here!
What do you see in your housing market this weekend? Price reductions? “Vermonters selling their homes are having to wait a little longer and price their homes more competitively as the residential real estate market settles into a steadier pace. This return to reality was bound to happen, real estate observers said, after a period of several years in which sales and prices took gazelle-like strides.”
“‘The prices reached a point where they didn’t make sense,’ said Steve Allen of Allen & Brooks, which analyzes Vermont’s real estate market.”
“That scenario is playing out on the streets, according to some real estate agents. ‘If you have sellers hanging on to ‘05 prices and refusing to give up, they’re not selling,’ said Hank Gintof, owner of Signature Properties of Vermont in Essex.”
Or foreclosures? “Northwest Arkansas counties are still at the top of the list when it comes to percentage change in foreclosures from May last year compared to May this year, as well as year-to-date.”
“Benton County had 127 foreclosures last month, up 119 percent compared to 58 in May 2006.”
“Logan County, along with Sequoyah and LeFlore counties in Oklahoma, have been impacted less than surrounded areas.”
Mortgage fraud? “Is Enid, Oklahoma a hotbed of mortgage fraud? A new report ranked Enid No. 2 in the nation among ‘potential breeding grounds’ of mortgage fraud involving subprime loans. Enid was second only to Jackson, Mich., according to the study, which tracked loans originated in 2006.”
“The ranking was based on an index of early payment defaults, loans 90 days late within 90 days of origination, the borrowers never made a payment.” “Enid also ranked high in potential fraud involving prime loans, according to the Mortgage Bankers Association, which commissioned the report.”
“If many loans are going bad in Enid, said Enid banker Bob Emery, who also is a property appraiser, ‘local banks aren’t making the loans. It’s probably from the Internet — quote, unquote — banks.’”
New legal action? “Sparked by the suspension of a Pueblo real estate appraiser, the state agency that oversees the practice plans to examine all recent real estate appraisals in the southern part of the state in the next few weeks, its director said.”
“Erin Toll, director of the Colorado Division of Real Estate, told The Pueblo Chieftain that her office will launch a full-blown probe of real estate appraisals in the Pueblo area because of the high incidence of foreclosures in recent years.”
“‘We’re just going to be taking a much closer look at real estate activities in the southern part of the state because the mortgage fraud and the mortgage foreclosure rate is so high in Pueblo,’ she said.”
“It all began when a Pueblo real estate appraiser, James Esters, voluntarily surrendered his license to the board after allegations surfaced that he overvalued eight Pueblo properties.”
“Toll said the board took the actions it did because it takes overvaluations seriously because they contribute to the state’s rising foreclosure rate. She said there appears to be additional incidents of overvaluations in Pueblo, but Toll couldn’t say how pervasive the practice is.”
Living on the edge of Boston, it seemed only a few weeks ago that the number of houses on the market was markedly fewer than in recent months as well as compared to last May when the bubble began to burst around here.
But in the last two weeks the for sale and for rent signs are back with a vengence. I don’t have a clue why they subsided in May but now it should be obvious that the market is dead in Boston. The Boston Herald on Friday had about 10 pages of RE ads…..I can’t remember EVER seeing something like that in this city’s secondary newspaper.
And it JUNE for crying out loud! Last year I thought it would be worse than in the 90’s around here but the recent abscence of increasing for sale signs caused me to question that assumption.
Now I’ll be surprised if there isn’t a major admission of problems here very shortly.
Call in the barbers - it’s time for a good old fashioned 50% haircut.
The Boston Globe Magazine reglarly features multi-million dolllar hmes. Today’s magazine had an interesting perspective on the foreclosure boom.
Of course there is going to be mortgage fraud when you have loans over the internets, it just removes another set of checks and balances to keep everyone honest.
I live in SW Ohio. Yesterday I saw a RE sale sign that I have not seen in decades.
“Assume Mortgage”
Of course I have not idea if there is any equity left in the place.
I’ve been wondering if that practice would make a comeback. Makes sense for lenders, I’d think, assuming there is a fool willing to take over the loan balance. Maybe they can get a better short-sale price by making the mortgage transfer and closing easier and cheap. Am also wondering if seller financing will return after rates rise another point or two.
Already seen a few “seller will finance/owner may carry” listings here in San Diego.
That’s a little strange. I think that practice was more common during the days of high interest rates.
I suppose it has to do with the inability for people to qualify for a conventional loan. This is a means for a larger pool of buyers to participate, similar to lease options for those with bad credit.
If you assume a loan it still needs to be approved by the Lender and it usually has a small assumption fee ,(at least alot of loan notes have that clause in the contract ). With how easy the lending as been it’s likely that the lender will approve a new buyer taking over a note ,but they have the right to call the note if they didn’t approve it or get their assumption fee ,and sometimes they just let it slide if they are getting a good pay .
I’m focused on this Hawk’s Point Centex development going up like gangbusters south of Tampa in Ruskin. Priced from the “100,000s”. Sitting right across the street from a moribund KB development. Mind-boggling, when developers can’t even sell off the inventory they’ve got. I seriously wonder what will happen to Centex as the mortgage re-sets occur and money tightens. I also wonder what will happen to Centex’s lenders.
Palmetto — is the KB Home subdivision off 24th street? All I remember from my trips to Ruskin is that there’s a great gunsmith and a number of car dealers. I suppose it would be a good place for budget homes for folks who need the lowest prices.
There are a couple of KB home developments in Ruskin, but the one I’m referring to fronts on Rte. 41 and 19th Ave. But that’s not budget, it’s a Toll/KB collaboration. The Centex development is on 19th, off 41 where the McDonald’s is.
SD ziprealty.com’s SFR+condo inventory continues on its glacial march towards the 20,000 mark…
“Your search has returned the first 200 of 19401 homes”
Getstucco could you help me with this:
I was talking to my better half on our morning walk about this mess and I have a few questions that I hope someone can answer. I know that a CDO is hundreds of mortgages tied together in order to obtain a certain yield for an investor. One question I have is: are the individual mortgages sliced up? In other words is my triple A rated mortgage sliced up into to ten segments that go into a tranch? And what happens if one of these mortgages in a tranch is foreclosed on? Does the whole tranch fail?
Thanks
I am not a Wall Street CDO slicer and dicer. Like yourself, I have a vague notion of how CDOs work, but the details are someone else’s business. I can say that no matter how you slice or dice it, subprime is toast.
Center of a Storm: How CDOs Work
By DAVID REILLY
June 23, 2007; Page B1
Mortgages are among the most widespread and simplest forms of financing. So how is it that a bunch of home loans caused the crisis that has gripped Wall Street for more than a week?
http://online.wsj.com/article/SB118255822369045404.html?mod=googlenews_wsj
Each tranche represents an undivided interest in all of the loans with specific claims to the cash flow from the loan pool. Interest gets allocated to the tranches by interest rate. Loan principal repayments get assigned to specific tranches pursuant to the CDO trust indenture. Repayments due to foreclosure/REO sale, and prepayments go first to the lowest rated tranche until it’s liquidated.
Your specific loan is actually owned by the trustee for the CDO, who holds equitible title. Tranches just represent cash flow allocation, not ownership.
Hmm, my link to ZIP aready shows over 21,000:
http://tinyurl.com/yopsn5
Select SFR+condos (you are including land and multifamily housing in your search)
Maplewood, MN (suburban St. Paul)- Our highly-touted new city rowhouse/condo development won’t be completed - at least, not by the original developer. They’ve put the final two parcels in the development back up for sale. Unsurprising, since the development is full of unsold new homes.
Also, a former golf course that had been intended for another new housing development just a few blocks from the aformentioned development has had its planned use changed again. Instead of new homes, a Costco will be built on the site. We sure as heck don’t need any more new housing stock, and the Costco is guaranteed to be a big draw, since it’ll be only the second Costco in the Twin Cities area.
Established neighborhoods-wise: I have *never* seen so many “house for rent” signs around here in my life - and I’ve lived in this community my whole life.
Auction tonight in Hoboken, NJ…
http://www.velocityhoboken.com/auction.html
I’ve never heard of a pre-auction practice auction the night before. Interesting psychological technique - on first thought it would seem to make sense. (You’d still have to screen or get deposits from the pre-auction clientele to make it useful.)
Started at 1 here is the latest:
http://www.curbed.com/archives/2007/06/05/hoboken_auction_open_house_top_notch.php
http://hobokenhero.blogspot.com/
“Minimum selling price from $295,000.”
“40 Select 1, 1 + Den, 2 and 3 bedroom residences will be offered at published release prices.”
Not my kind of auction. I like the kind where the auctioneer starts with, “What’ll you give me for this fine (whatever)?” — rather than “Who’ll get this started with our minimum price of $295,000?”
Recent Rental Adventures in Lost Causes, NM Involving
A FB/Specuvestor Landlord from California
As some of you know, I am rental shopping here in LC. Three days ago, I had the opportunity to have a FB/prospective LL call me from California (Northern).
The conversation goes like this:
(phone rings)
Misstrial: Hello
FB: Yes, I’m calling to return your call regarding my rental home. Can we talk about it?
Misstrial: Yes.
FB: Well, the house is 4 bedrooms and 2 baths and a DR Horton (HUGE RED FLAG GOES UP) built home. Its very nice. I bought it before construction (ANOTHER RED FLAG).
Misstrial: Where is it located?
FB: Over by Mayfield HS.
Misstrial: Well then, I wouldn’t be interested. That is a bad area – low-income, crime-infested neighborhoods with vacant dirt lots interspersed. Just not good at all.
FB: Well, my realtor told me (RED FLAG) that it was a great area! She wouldn’t steer me wrong since she knows that I depended upon her for a great property.
Misstrial: Well, not to criticize her or anything, but your realtor is going to have her best interests in mind and not yours regarding a deal. That is a bad area – did you take a look at the area before you bought?
FB: No. I thought my realtor would lead me in the right direction.
Misstrial: You mean to tell me that you bought a house without even seeing it or where it was to be located???
FB: Actually I bought 2 houses in Las Cruces, one is For Sale on the other side of town and the other is the Mayfield rental. Also, I bought 2 houses in Kentucky, and a couple more houses in Florida. I’m trying to sell one of my LC homes and all my Florida homes. The ones in Kentucky I’ve had to fire 5 realtors because they’re not managing my properties properly.
Misstrial: When did you buy these homes 1995? ’96???
FB: Last year. Listen could you just go by and take a look at it – please give it a chance.
Misstrial: Are you aware that there are 500 properties For Rent in LC right now? Are you aware that there are 1600 homes For Sale right now too? But OK, for you, I will drive by and call you and give you my honest, on-the-ground impressions of your Mayfield property. (Misstrial goes out to the property and the neighborhood is bad and then there is the DR Horton development – one neighbor has CA license plates)
Misstrial: (calls FB from FB’s Mayfield rental’s driveway) Well, here I am in the driveway of your rental and I have several concerns: 1) the house is built to 1970 apartment standards – everything looks cheap from the carpeting to the appliances to the light fixtures. This place won’t last five years. 2) there are no rain gutters so after about 2 years of rains the exterior paint is going to be grossly discolored and will probably need to be repainted. 3) there is a large storm drainage basin [unlined, btw] over the wall in the backyard. The foundation may not have been properly leveled because recent rains have created erosion ditches in your backyard and go out through the back wall into the basin.
FB: OK, thank you. Click.
~Misstrial (who thinks the FB just doesn’t want to know the truth)
Lost Causes, that’s good. Just like Lost Almost.
What sort of prices are you seeing for rentals there? Say 3-4 bdrm houses, decent size (over 2K square feet)
OK looking a list of rentals from Steinborn Realty:
2248 Calais, LC
3/2 - 2012 sq/ft = $1400/mo
4083 Pepper Post
4/2 - 2053 sq/ft = $1300/mo
2479 Gila Bend Loop
4/2+ - 2998 sq/ft = $1600/mo
2522 Gila Bend Loop
3/2+ - 2191 sq/ft = $1395/mo
One flyer had the rental price scratched out and the new rental price was $100/mo less.
We are driving the market down in that we are walking away from rentals that we think are spec homes. We Can afford $2500/mo but are only willing to pay $1100 or less. We even looked at mobile homes yesterday (off Hwy 70 as you go out to White Sands). Asking waaay too much something with no garage. We figured the m/homes were 1980’s construction (based on the exterior materials used) and they were asking $675 (2) and $700 (1).
We may stay where we are at: $1050/mo. Good landlords, city view & view of Rio Grande Valley w/ pecan groves everywhere. We are not in the flood plain. 1995 construction. Landlords want to renew the lease but we are looking everywhere anyways. May go for a 3/2 for $900 off Roadrunner. Not sure yet.
~Misstrial
Well, t-chick I had a really nice post for you but it did not go through, so I will edit it some more leaving out street numbers/realty names:
2 on Gila Bend Loop (2191 sq/ft and 2998 sq ft) for $1395 and $1400 respectively.
1 on Pepper Post - 2053 sq ft for $1300.
1 on Calais Ave - 2012 sq/ft for $1400.
Generally, homes with about 1500 sq ft are going for $800/mo. Also depends on the location. Picacho Hills is the most expensive. We are renting for $300 below market. Rentals on certain streets known for flooding are not moving at all.
(like Fairway)
~Misstrial
Are you kidding about this? This person really bought the house site unseen?
hmm…i would even take a guess that the guy is not “subprime” either.
hehe…this is gonna get unbefugly.
Yeah. Incredible. She’s older too. Said she had to grab her grandson, so that age group. Not in any position to lose money at this point in her life, for sure.
~Misstrial
When you’ve got a hot IPO, you’ve got to trust your broker.
This doesn’t look bad, for instance. Overpriced for such a small town I would think. What’s this area like?
http://lascruces.craigslist.org/rfs/358257665.html
If that house were in Pullman, WA at that price we would buy it in an instant.
omg, that is awful. I have an idea where its at - streets with brick homes in LC are almost always flooded. Severely. Older homes like this one generally have swamp coolers but some owners have changed out to A/C.
Equity for homes like this are dropping. Too many newer homes for sale. However, many of those built with substandard labor. Best are custom built or pre-2000 construction.
~Misstrial
Yes, I can believe that fools are buying houses sight unseen.
Just last week I was in Albuquerque on business. Sitting next to me was a 50-something couple from California. They were going to NM to take a look at an investment property they had bought sight unseen in Clovis, NM. Clovis - while it isn’t true that Clovis sits on the edge of the world, on a clear day you can see it from there.
That would be Muleshoe, TX. Somebody I know spent a night in jail there in the early 70s, and there’s no one more closely related to that person than me.
LOL
~Misstrial
Pullman, WA: In a word, dead. Very few new pending sales, pending sales never close, rising inventory at the low end of the market (there has been a lot of vacant inventory at the high end since last year).
One new development (Meadow Creek, 30-40 homes, big for this town) appears headed for bankrupcy as they have no pre-sales, no builders, and the lot preparation work came to a standstill a month ago. Another development just over the hill, “Paradise Hills phase ##” is languishing as 30% of the lots released 1.5 years ago still haven’t sold and even among the lots sold there are only a couple of active construction sites. A builder we have been negotiating with has stopped construction on two spec homes in this development–one almost finished and one framed with OSB sheathing. This development was a beehive of activity in early spring but everything has come to a standstill.
I guess the only real job in town is a university professor? No wonder houses are not selling. WSU is growing in Richland not in Pullman I guess. I know they are growing in Richland since I live there.
WSU is growing a little bit, but not by leaps and bounds. Most new jobs are being generated by Schweitzer Engineering, but these are primarily low paying manufacturing positions.
Actually there is a need for more housing in Pullman (30-40% of WSU employees commute from surrounding towns), but not many can afford current new home prices (new homes start at low $300’s).
The kicker is that many existing homes, even 40 year old ranches, are priced above what it would cost to buy a lot and build an identical new home today! So if builders are overpriced, existing home owners are absurdly overpriced.
Could you give me an idea of construction costs in Richland. Rule of thumb here is $115/sf for above ground, $85/sf for finished basement, $20/sf for garage–or roughly $125/sf . Lots start in high 40’s.
Opinions? Has the latest CMO / Bear Stearns meltdown finally kicked the legs out of the Real Estate beast ?
Foreclosures rising at a exponential rate
Is this just another scare that will be ignored in a month or two & the investment bankers, stock traders, bankers, etc … will shrug it off like they did after the subprime lender implosion last February ?
With the REIC burdened with at least:
1) CMO meltdown
2) Subprime implosion
3) Rising mortgage rates
4) Historically high inventory levels
5) Falling sales & prices
6) HB reporting GRIM future prospects
7) RE “Investors” no longer buying & morphing into FBs
9) ARM resets occurring & more queued up
Methinks the downward slope now approaching 45 degree
A well-fed fellow on Bloomberg TV this morning said that the ML sale could force a remarking of most everyone else’s similar assets. Winder if the folks in New York are figuring out ways to re-write the rules, or taking their auditors and raters to very nice dinners with drop-dead tablemates.
Last Saturday I was visiting kin and went with my son-in-law to the Home Depot in Buckhead (Atlanta) — about 10:00 a.m., good weather. The parking lot was pretty crowded, so I thought the store would be, too. There were very, very few customers in the store. Couldn’t figure out why I had seen so so many cars until, when we were departing, I saw that the HD adjoined a Costco that wasn’t visibly obvious to me when we had pulled in. The HD lot was filled with overflow from Costco. Maybe I’m assuming incorrectly that Saturdays should be busy at Home Depot; if not, in the store’s home city, things didn’t look good at all on the home improvement front.
That sounds like Sandy Springs (by the Perimeter Mall), not the Buckhead HD, which is by Lindberg/Piedmont and quite new. HD has slowed out there (I go to Costco there too on occasion). HD in MidTown seems to be doing OK and the same with Buckhead. But not like a couple of years ago.
Southwest Portland, OR: All quiet on the southwest front. I’ve been watching Arbor Custom Homes (local tract builder) do site prep on their latest townhouse development - about 75-100 units, priced 240-270K so they say. Site prep took two months, the first foundation took another month - and that’s it - just one foundation, so I am guessing they are only building sold houses now. Traffic? One car - the sales person. And today’s a really nice day, too.
I think Portland is six months behind, as typical.
The question is, will tightening credit accelerate the fall in the Pacific Northwest? I sure hope so…
I remember reading that PDX’s worst one year % price decline (1970-71 I believe) was a year or two ahead of most of the US. This time, since PDX was late to the appreciation party, and the prices have not yet fallen (the reported median price for May was up 8% YOY), potential shocks like higher interest rates and tighter lending standards could mean sharp % declines more quickly than other regions.
Speaking of markets, the CDO market almost blew up up last, as many of you know. In today’s WSJ, David Reilly writes a fairly lucid explanation of “How CDOs Work.”
A nice overview for anyone who not already clear on this topic.
Selected Quotes:
‘But some investors think CDOs are an example of financial engineering gone haywire. CDOs are “more sleight of hand” than a sound way to generate diversified returns, said Brad Alford, founder of Alpha Capital Management, an Atlanta-based investment advisory firm that caters to wealthy families. “They’re a method for Wall Street to repackage securities as a way to make more money.”‘
‘The CDO manager sells portions of the package to other investors. In some cases, other CDOs are the buyers. There are even CDOs comprised of CDOs that have invested in CDOs.’
Yikes!
I’d like to read it but that link/article appears to be available to subscribers only ..
For those who missed it, here’s a link posted earlier.. a fairly good description of how to cook up a batch of tasty CDOs.
Some will come out of the oven as “Toxic Waste”, but don’t be alarmed.. that’s how it’s supposed to happen.
http://www.safehaven.com/article-7812.htm
LEHIGH VALLEY, ALLENTOWN, BETHLEHEM, EASTON area of PA is nose diving hard and fast. The funny part is you read nothing but lies in the Morning Call (LOCAL RAG). They act as if prices haven’t drop. The only thing selling is home priced around 140k and under and even them aren’t worth it. Our prices went up 100% in 5 years and nobody want’s to admit THAT’S INSANE! I can’t wait until 2009-2010 when homes purchased during the bubble years of 01-06 are selling for 1/2 of what they paid at the time. Row homes that sold for 65-85k before 2001 were selling for 175-190k, nothing is moving now. They still try and say average time on the market is up to 52 days from 31 last year. No way because I see more homes sitting for 6 months to 1 year than every in our local history.
The fallout has begun but the paper won’t print it, I wonder why? Realtors won’t let them, it’s crazy because every article is based soley on realtors and the figures they use are taken from the local realtors. How about some non-biased opinion?
The Morning Call ran an article a few months ago about how commuters stopped moving here from NYC & NJ in 2006 and barely anyone is moving this year, yet the still try and act like it’s a normal thing to commute 3-5 hours a day with all the traffic. Who in their right mind would want that? I always so this, I could work here in the Lehigh Valley and buy a home in north central PA. Up there you can get a all brick home with 3-4 bedrooms on a few acres for under 100k so why not do that like the NYC & NJ commuters do? I know because what’s the use of owning a home if you can’t enjoy it? How these people think it’s a good thing to own a home but never be able to do anything after work with the kids like activities or anything is remarkable. They work 8-11 hours then commute 3-5 hours. That’s crazy eat, sleep, “MAYBE HAVE TIME TO POOP” THEN BACK TO COMMUTING.
INSANE IN THE MEMBRAIN!
I live in Brooklyn, NY and am completely confused as to why the bubble has burst everywhere else (including in NY suburbs and Boston). Is NYC really special? That’s what I keep hearing from people who don’t think it’s a bubble, but there must be a lag effect, right? Please?
In NYC, particularly Manhattan, there is very little listed property for sale, relative to the number of homeowners and renters. Heck even vacancy rates on rentals are sub 1% so that market is tight too. If an investor/flipper can’t afford the mortgage, the forclosure process in NY takes a long while, which allows for a sale/listing at a full asking price.
I disagree -what there is little of here is open data sharing by the RE industry so we can get a real reading of how high inventory is. There have been a number of stories in the past year of inventory spikes in Long Island / Queens -and I suspect the inventory #s are about the same in Brooklyn-though again, data for NYC specifically is hard to obtain. Daily News just had great story on spiking foreclosures from subprime loans in nyc neighborhoods - bed stuy/bushwick etc. The bubble hasn’t burst in every neighborhoods, but it has in some.
There is somewhat of a lag in pricier neighborhoods, although remember, in 2004-05 it was all about bidding wars, and that just isn’t happening anymore -even in yuppietowns.
It’s going to take some time for credit to get tight here and house prices to come down low enough to become affordable, but NYC is not immune -hasn’t been in the past and won’t be now.
My comments about inventory relate to “particularly Manhattan” which is a far different market than Bedford-Stuyvesant or Bushwick Brooklyn. When the prime Manhattan market falters, it will happen at a substantial lag from price corrections in less prosperous NYC neighborhoods. If your point is that there is less knowledge about overall inventory levels, that is true. But my point is that inventory levels are modest in Manhattan, relative to housing demand. It is only prices that are sky high, but Manhattan has never been considered affordable. And demand for housing here is higher than ever.
Ha! We Okies screw over the big bankers again. If you didn’t see my earlier posts on the Enid, OK real estate market, here’s a link to some hot shot RE shill calling Enid one of the hottest markets in the country:
http://abcnews.go.com/GMA/story?id=1493575
Okies have been screwing over everybody since the land rush. I think it has to do with Texas envy. I was wondering when the bubble-fraud news from OK would break. Do you remember Penn Square National Bank, that multi-S&L development joint venture (I forgot its name), and a host of banks and S&Ls that went belly-up in the 1980s?
In Northern VA exurbs:
Our neighborhood got its first contract since a sale 18 months ago. The price was 20% off that last sale (identical houses).
There are still 8 others on the market, though.
We went to a Ryan homes “special” sale today. We got attacked by 6 salespeople offering us food. Very aggressive. But that development is doing better than I thought. Only a few more to go. New builders have been deeply discounting over the rest.
We think we’ll rent for one more year. It’s $1,000 less per month than the mortgage would be, and it includes free houskeeping and lawn care.
I am a temporary landlord. In my inbox this morning:
Nice people, good tenants. We wish them well. My guess is that the numbers aren’t quite as pragmatic as they think if the RE market doesn’t resume its upward march - the PITI and opportunity cost of the down payment have to be at least 160% of the rent they’ve been paying, even taking into account the tax advantages and leaving aside the hinted-at renovation costs, but we didn’t buy our house for purely pragmatic reasons either. I know the there’s the issue of timing the decline, but as a professional two-income family with rock solid jobs, they’ll be fine.
North County San Diego:
Continuing the trend, the lower end is getting hammered. Prices on some homes are already down 25-30% (based on current *list* prices). They still have to drop an additional 40% from current prices before they are priced “correctly”, IMHO.
The lower end areas appreciated well into 2005/early 2006 while the higher end remained basically flat since 2004. Now, the lower end is priced at around late 2003 levels, but still need to go to pre-2001 (inflation adjusted) before they make sense. For those not in San Diego, we’ve been ahead of most markets and have seen tremendous appreciation since about 1998.
The middle-high end has been fairly stable since 2004 and sales were actually quite brisk this spring. I think the momentum has begun to slow, though; and homes are beginning to sit again, based on what I’m seeing.
The new home developers are offering some incentives & discounts — like Pulte’s 10/10/10 sale this weekend (hurry, before it’s too late!).
Still too high & have a long way to go…
From Massachusetts
Bought 900+ sq ft condo in 2 unit association in 98 for 100K. Close to beach and ocean. Well water which was not drinkable and questionable for cooking.
Wanted to sell in 05 but chose to hang in for personal reasons.
Put house on market 6/06 for 349K. No offers. Took off market 12/06.
Back on market 03/07 for 339K. Two offers, settled for 323K. Close to $350 per sg ft.
Now renting beautiful townhouse in gated community with 98% owner occupied close to work.
Stats below for Wife and I
+200 month (hoa)
+250 month (taxes)
+300 month (gas)
+??? Month (wear and tear on autos)
+40 hours month (not driving)
+20 hours month (not working on home)
Just not sure what to with all my new found time and money
How about speculate in RE?
Yep, In about 2012
Notes on Palo Alto and Saratoga, both in Silicon Valley, CA
Took a walk in mid-town Palo Alto this morning on the west side of Middlefield and Colorado. Did not see a single for sale sign in a one hour walk. Every block has a house either being remodeled or relandscaped. Most houses (these are neighborhoods built in the 40s, 50s, 60s) have been remodeled. Several houses in each block were simply torn down and a brand new very large very fancy mostly tastefully done mansion replaced the original. Fake French Chateau, Berkeley Brown Shingle, and Green Gabled Craftsman are popular styles. These new houses appear to be 3000+ square feet, some even have basements. I was surprised to not see anything for sale and also to see all of the incredibly expensive remodeling that is going on. This is not the top area of Palo Alto by any means — it’s the rank and file worker homes from the WWII era. By the way, many of the yards are quite beautiful, no grass, mediterranean climate plants.
Also met a friend last night who sold her house in Los Gatos same time that I sold my house in Saratoga. She doesn’t regret selling her house but she does not believe prices here will ever go down. She’s planning to buy again in Silicon Valley in the next few months.
A house on the street where I used to live in the “golden triangle” in Saratoga was torn down a couple years ago and a very, very expensive although not particularly large spec house was built on the large lot (1/2 acre). Recently sold on the first day it was put on the market, 3 offers, over $2M (builder was asking $2.5M but supposedly didn’t get it). Rumor mill says buyers are a couple one who works at Google, one who works at Apple, and they made a huge cash downpayment (nearly $1M). All rumor, not to be taken as fact.
That is just lunacy. I used to work in Palo Alto in the late 90s. In fact, I remember when Google was a tiny little shop on University Avenue — with a handful of employees and a plastic banner. Should’ve gone and applied for a job there then!
Anyway, Palo Alto was loony back then already. I can only imagine how bad it is now. What folks in the Bay Area cannot possibly imagine is that Silicon Valley communities are pretty darn sleepy. Even “downtown” PA and University Avenue is mostly chain restaurants and stores now and dies down by 11PM on most nights. Compare PA to any similar communities in wealth and size in SoCal such as Pasadena or Santa Monica and you find a massive disconnect. Pasadena is hugely vibrant by comparison.
I understand that PA has excellent public schools — but come on — private school isn’t that expensive compared to overpaying by $250K or more for a PA home.
Well, I’ve done this math as we are looking around in Silicon Valley. Saratoga’s a good experiment - parts of it are Saratoga or Cupertino schools, parts are Moreland or Campbell, but you can find equivalent houses and neighborhoods differentiated only by school. The difference is about $250k right now. 8 years of private elem school = 8*12 = 96. 4 years of private HS = 8*25 = 100. 196k. Plus there will be inflation. Plus most people believe that prices will be at worst flat, so you’ll get the $250k back eventually. There is some additional property tax cost and also the foregone investment of the $250k, so it’s not quite as simple as I just said. (I know that this blog has folks hoping for 100% decline in prices
but most people don’t think it will come to that.) So, with one kid, you can make the argument that private school is cheaper, but with two public is cheaper. Plus more convenient, there’s only a couple of secular private high schools in the county so you can end up with a 30 minute commute.
wrt the sleepiness - when I was 25 I liked going to bars, now at 35 with a family, some sleepiness is ok!
I went to open houses in Saratoga (Cpt schools), Cupertino, and Los Altos on Sunday. All in the $1.45 to 1.5 range. All crowded, all have offer days this week, and I’ll bet they all go for over asking and higher than equiv houses last year.
otoh a house in Los Gatos (and LG schools) had little activity in the OH. and another LG house (union schools) has been on the market for a few weeks now. Very school-district driven around here.
wrt the $1m cash down, I can believe it. If they have saved for some time, didn’t splurge the options, and have a heloc on a starter house (to do the buy then sell strategy) then there’s lots of people who can plunk down $1m around here. Now, maybe they’ll have a problem selling the starter house if it’s in east SJ. or maybe they can just drop the price by $50k for quick sale.
Costa Mesa, CA 92627
Zillow For sale count:283 (SFR:217, Condo:53, MultiFam:9, Mfg:4)
Redfin For Sale count :200 (SFR, DOM > 45, avg price $928k, avg $/sqft 563, avg DOM 113 ) note had to zoom in as whole zip had > 500! Not sure why the difference yet.
Plenty of signage, numerous open houses, one development looks like they have dropped the contract spinners and replaced them with more mature in house spinners with little sign tripods so they don’t have to hold em and spin em. (LOL)
Wishing prices are still far too high by 40% - 50%. More rental and lease signs popping up. (gee you mean you couldn’t sell it?) New weekly RE glossies with high end properties and lots of glamour shots.
Being a CM resident myself, say the tri pod non spinners myself. Thought that maybe one was hit with a RSI suit. I enjoy bothering “open house” real turds. Not as much fun when they agree with you. It’s like they’re in prison waiting for a jail break.
Here is my report from Norfolk, Virginia, Ocean View area, near where I live where there is part of a city block that two years ago the city redevelopment corporation split up into seven lots and sold to developers. Of those seven lots, five now have houses on them
One is occupied since it was built
One is occupied since it was built but has been for sale for six months
One was briefly occupied and has been for sale for more then a year
Two have never been occupied and are for sale.
So four out of the five houses are for sale with no buyer in sight, yet a developer is building a sixth house.
The big problem is that all of the houses were in the $700,000 plus price range and they are not even waterfront and you have to cross the street and go through a 7-eleven parking lot to get to a so-so beach. Yet the area while not depressed , does not have the income to buy a lot of such houses especially since most people who have such an income already have a house. There is also no one who will rent these places at anywhere near break even point except maybe for a few months during the summer and that won’t cover the whole years mortgage
And these six houses are just the tip of the iceberg, there are three more houses for sale across the street which are waterside and they have built a lot of such houses all up and down the road for several miles each way including some which have stopped construction without being completed. I suspect that a lot of these McMansions will be subdivided into apartments, if they are lucky they will get military or retirees to rent them, if not they will get section 8 which will just drop the property values even more.
Its not that the economy here is bad, its just that they simply built a lot of RE which outpriced the local wages and income by a wide margin.
Reno, NV:
Well, it’s finally happening. Pulte Homes is offering fire sale pricing in Somersett. $122 per square foot for a new home w/ upgrades. That is unbelievable pricing for this early in the game. In fact, those are pre-bubble prices. They unloaded 10 homes in 3 days. Flippers and re-sellers just took a shot below the belt. Things ought to really get interesting when other builders follow suit. My oh my!
Bantering: Just returned to Reno 3 days ago and have started to look up at Somersett. Which homes where those? Also went to Honda dealership yesterday. 10am Sat. morning, beautiful day. Totally dead. One salesman told me, “people are afraid of the economy.” He says more than he knows.
They are at The Vue at Somersett. They are “cluster homes” so they are on small lots, but still, $122 per square foot for a detached home (they have an attached townhome model as well) is phenomenal at this point in time. They say it is this weekend only, but I have a sneaking suspicion this is a sign of things to come. I look for other builders to start liquidating. The carrying costs have to be eating these guys alive. It’s either unload the houses, or die on the vine.
$183,000 for 1500 square feet appears reasonable to me. I paid $67 per square foot in California (high desert) in 1991, which is 16 years ago. That is a little more than $119 per square foot with 3.7% annual appreciation.
Thank you, Bantering. I just viewed the Vue and boy were they stunned when I told them congratulations on the sale of 10 homes at 122.00 a sq. ft. The bouncy sales rep. just stopped in her tracks and asked me, “how do you know that?” Her boss came over, smiling and shaking my hand saying that was quite amazing that I knew about these sales. He then went on to tell me I could buy one of the phase II models about to start construction; I told him I didn’t think Pulte would be building anymore. “Why, what do you know?” he asked, with a little fear in his voice. Bwahaaa.
Probably 10 new “investor” or “speculator” purchased homes…
Another cover story on mortgage fraud in the Diario San Diego.
Crecen Fraudes
http://www.diariosandiego.com
Prestamistas depredadores = predatory lenders (mortgage brokers). The lady in the story was cheated by “First Latino Advantage”. She refinanced to lower payments from $2K/month to $900/month but somehow she ended up with $3,700/month and the prestamista depredador is no longer taking her calls; foreclosure looms.
Just one more outcome of the alliance between the Great Bankers of Wall St. and mortgage broker street hustlers.
No se habla espanol.
A partial translation (via babelfish):
Study demonstrates that in zones of high Latin population more houses in ‘ foreclosuré are located or embargoes due mainly to bad loans and abuses of real estate agents
Joaquina Abrego, a woman of 60 years, fears to lose its house, since the familiar patrimony could be obstructed if she does not manage to solve her problem of mortgage payments.
“it deceived a moneylender to Me who made the refinancing of my house, she was going to help to lower the payments to me up to 900 dollars, I I paid two thousands and was much, I believed and I signed the papers to him that did not explain to me, and my payment raised three thousand seven hundred dollars, that I cannot confront”, says sad Doña Joaquina.
After it was deceived by moneylender Tony Balistrieri, of Latin First Advantage, that harmed it and never more it returned the calls to him, but if him control one: the collection by its services.
“When I got to sign papers I saw that he increased the payment and I said to him that he was not going to be able to pay, but he said to me: ‘ I do not worry, I go to fix that, you sign now ‘, and she never became to appear.