Finding The Post-Boom Equilibrium In California
The Sacramento Bee reports from California. “Among a crowd of 1,200 people attending a colorful, fast-paced auction of 107 foreclosed homes, Bill Weldon outbid a competitor and won the house in Galt for $300,000. He leapt past his intentions of spending $275,000, but it was the house he really wanted. ‘I figure instead of saving $100,000, I saved $75,000. It’s still a good deal,’ he said.”
“Weldon signed his escrow papers about 1:15 p.m. Saturday, then quickly returned to the boisterous adrenaline-loaded spectacle where an Irvine foreclosure liquidator sold the bank-repossessed homes.”
“Tuxedo-clad runners worked the large crowd and attractive young women staffers heartily applauded opening bids as homes, condominiums and mountain cabins from eight area counties went on the auction block. Many of the houses sold at the rate of one per minute.”
“The firm and its affiliates had 150 staffers on the scene and spent ‘hundreds of thousands of dollars’ promoting a three-day auction of 242 Northern California bank-repossessed houses. Auctions are scheduled today in San Mateo and Monday in Modesto.”
“Saturday’s auction, where winning bids ranged from $105,000 for a dwelling in Sacramento to $810,000 for a house in El Dorado Hills, showed a housing market in distress as foreclosure activity mounts.”
“Banks and mortgage lenders last month repossessed 969 homes in Amador, El Dorado, Nevada, Placer, Sacramento, Sutter, Yolo and Yuba counties, according to Foreclosures.com.”
“Bob Somal and his real estate broker father, Narinder Somal, bought two houses, paying $240,000 for one in Stockton and $400,000 for another in Elk Grove.”
“‘We were going to go to $350,000,’ said Bob Somal. ‘We decided to go to $380,000. And our winning bid was $400,000.’”
“But that was $20,000 less than the 2,460-square-foot house brought the first time it was sold Saturday. Several times during the day, houses returned to the auction block when buyers had financial issues. The Somals plan to resell both houses.”
“Most buyers proclaimed themselves pleased with their savings, which ranged from about 5 percent to perhaps 30 percent below previous asking prices. But some overpaid, said watchful real estate agents. Seeing one Stockton house sell for $460,000, veteran Stockton agent J. Richard Sabbatini shook his head and said the house was not worth that much.”
“Some came to watch for practice, assuming there will be more auctions and better prices later this year or next. Others said they decided not to bid after seeing heavy traffic at open houses and such a large crowd.”
“‘I just figured it was going to be prices higher than I’d like to pay,’ said Mesut Koch of Rocklin. Watching the frenzy, Koch said: ‘I don’t think I would do well here. I’m not coming back.’”
“He said it looked easy for people to lose themselves and go $10,000 too far.”
From News 10. “Many homes valued at nearly $500,000 opened to bidders at just $250,000. But it didn’t take long for the hot homebuyer competition to quickly drive many of those prices up.”
“‘I haven’t heard of that many steals here,’ said Andy Adams, who drove to the auction from South Lake Tahoe.”
“But there were some bargains to be found. Pat and Satya Chaterjee won their bidding war for a Roseville home, paying about $15,000 under market value.”
“The Sacramento region has some of the highest home foreclosure rates in the nation. Nearly 3,400 homes were foreclosed upon in the first quarter of 2007.”
The Orange County Register. “UCLA forecasters call for continued economic sluggishness through next year, due in large part to housing weakness. We wanted to get the scoop on what’s in the details, so we checked in with UCLA economist Ryan Ratcliff.”
“Us: Where are state home prices headed? Ryan:…’Now that the across-the-board interest rate stimulus and the consequent speculative frenzy have gone, each market is left to find its own post-boom equilibrium, and some have further to go than others.’”
“‘We’ve definitely seen the foreclosure spike in the past nine months, but it hasn’t translated into significant resale price weakness, yet. The discounts associated with foreclosure sales are one of the things I’ll be watching closely.’”
“Us: Hard numbers? Ryan: ‘Across the state, I expect to see a 5-7% total decrease in home prices over the next 2-3 years, which to me falls into the category of ‘flat to slightly falling’…..Since O.C. is mostly a resale market with a slower-growing population, I don’t expect to see much price weakness in OC. IE is a harder call: continuing migration inland and a favorable price differential with the coast provide good fundamentals, which are somewhat offset by increased importance of builders who are willing to cut prices to make sales and the extremely high foreclosure rates.’”
“Us: How long until we hit bottom? Ryan: ‘All I can say at this point is that the data on ARM resets suggest that we’re going to see high foreclosure rates through 2008, and it’s hard to see the market getting back to normal before we work through that mess. So I don’t expect to see substantial improvement until late 2008/early 2009, and that’s optimistic.’”
“Sales of single family homes in California will slow by 14 percent on an annual basis this year, while the state’s median home price will rise just short of 2 percent, a real estate trade group said.”
“Statewide sales for the year will total 410,000, compared to 477,460 last year, according to the California Association of Realtors’ midyear forecast.”
“While sales have slowed statewide, they have been weakest in areas that saw heavy building of new houses and condos. Prices have also slipped the most in those areas, said Leslie Appleton-Young, the association’s chief economist.”
“‘This pattern is likely to continue throughout the rest of the year, particularly in areas that were popular among first-time home buyers, which experienced the greatest run-up in prices,’ Appleton-Young said.”
‘After decades of increasing enrollment, most school districts throughout the county have started losing students in the last few years, according to a North County Times analysis of state figures. As parents leave costly areas near the coast for newer, cheaper neighborhoods in inland locales such as Riverside and San Bernardino counties, about three-quarters of the districts in the county are feeling the crunch.’
‘The declining enrollment in San Diego County is being caused by a variety of factors, including a lower birth rate, decreasing immigration rates and the high cost of housing, the county’s report states. As a whole, the schools in the county lost 1,227 students between the 2005-06 and 2006-07 school years.’
‘Across the state, many parents are moving their school-age children to newer neighborhoods with less expensive housing, leaving the coast for the inland deserts, McFadden said. ‘You go up along the coast all the way up to Eureka, you’re going to see declining enrollment,’ he said.’
Regarding enrollment drop along the coastal cities: Bigger houses, smaller families, makes a lot of sense (sarcasm intended) to me.
In the 1950s families were larger than now, but houses were in the 1100 square foot range.
Amazing what a more wasteful society we’ve become.
Everyone *needs* at least 2500 sq. feet. Can you imagine if the kids had to share a room?
2500sq feet is a farmhouse in Iowa.
Us folks in flyover country laugh at your puny houses!
“2500sq feet is a farmhouse in Iowa.”
This includes me. Though I am in a city, not actually on a farm.
We also have tiny crackerboxes that are 1,100 sf, but at least they are 50-100K.
A life long friend regretfully bought a home about a year ago in Gerogia. I asked about vacancies and sadly he told me 1/2 the finished homes in his developmnet are vacant, that foreshadows bad things.
That was off topic, but on topic. He grew up in an 800ft condo with his mom and sister and was gripping about his 2,200fr home being to small. Granted they do have 3 kids, but how soon we forget and start living the lie. He grew up with 266ft per occupant and now gripes about 440ft. He now raises his family in twice the space he had. Makes me wonder if his kids will grow up to be better citizens than him. How can this more-more-more outlook ever satisfy? Will his kids grow up and feel crapmed with more personal (800ft)space than his family as a whole had?
Seems that the American dream has been distilled down to MORE. If the goal is allways more we are doomed to less happiness and fullfillment, more despair and hate. Kinda scarry that we spend more on military crap than the rest of the world combined and were on self fullfilling downward spiral into apathy and contempt. For the most part this MORE consumerism crap is a zero sum game, for us to have more others go with less. At what point are we willing to use our nukes in order to limit world demand for consumer crap by eliminating other customers for the stuff we want?
Seems like every generation wants to give their kids “the life they couldn’t have.”
Well, IMO it’s ironic that the better thing to do would be to condition your kids to do with less.
“At what point are we willing to use our nukes in order to limit world demand for consumer crap by eliminating other customers for the stuff we want?”
China, India, and oil come to mind…..
Seems that the American dream has been distilled down to MORE.
Interesting. In some part, post-war materialism and conformity in the 1950’s was an impetus for the famous “beat generation” writers of the time - Kerouac, Burroughs, Ginsberg.
Who are the writers today railing against the current madness?
“He grew up with 266ft per occupant and now gripes about 440ft. ”
Not to be a devils advocate, but when I was a kid I spent a lot more time wandering around outside than kids do now. Ah, yes, how we wild youngsters survived is beyond me. All of us used to be an amorphous crowd, wandering everywhere and getting into minor mischief. Now I think parents are afraid to let their tykes get out of sight… plus the video games were cr@p
Capitalism is built on MORE.
There is one thing I like about “more,” and that is more freedom. I am a pure capitalist, but not very materialistic. My bewilderment is toward people who “require” so much space but are slaves to it. My 1,000 square foot apartment takes a huge amount of time to clean. I work 60 hour weeks and work out 5 to 7 days a week, go to out on the town a couple nights a week and cannot imagine how people have time to clean 2,000 square feet monsters. I expect multimillionaires to have over 2,000 square foot mansions. They have enough money to buy themselves time to clean it or to hire professional cleaners. But for the middle class, it bewilders me, especially since families are smaller these days compared to 40 years ago when I was a kid.
2000 sq ft is a monster? That’s a modest 4br house in the MidWest or South. Once you include the basement, those places are really 3000 sq ft.
Do any of you really think that these are monstrous McMansions?
http://tinyurl.com/yppdph
http://tinyurl.com/2g22kw (this is roughly 2400 sqft above ground, or 3600 sqft total).
[friggin' east and west coasters and their puny houses...]
I remember my family of 6 living in a 2/1 apartment when I was a child. Today each kids needs their own room plus a game room or else you’re abusing them.
‘The declining enrollment in San Diego County is being caused by a variety of factors, including a lower birth rate, decreasing immigration rates and blah blah.
Those illegals are heading to the Inland Empire.
Many are going MUCH further inland that that.
Declining native English-speaking enrollment, but I think in terms of students for whom English is a second language, the enrollments in the core areas are increasing. Once the school enrollment tips to where immigrants are over 50% then the neighborhood attracts very few American families willing to buy a home there.
The bubble is affecting ethnic settlement patterns in California. Even if many families that moved out to the suburbs lose their homes, I’m guessing that few will move back to their old neighborhoods.
Yep, same here in South Hillsborough, Florida. Some illegals have moved on to greener fields, so to speak, in the Carolinas and Georgia, though. But the Section 8 relocations and the entrenched illegal families, they’re going nowhere.
I agree to a limit. Even in Mexico the wealthy live in exclusive spots for generations: ocean view places, for example. The same for California, which will be the real Nuevo Mexico in a few generations. I’m a world citizen and would not care one bit which flag flies overhead as long as I’m free to roam from country to country with my wealth.
And what kind of passport do you as a “world citizen” carry? If you get arrested overseas, does the UN come visit?
Of course, I would carry the passport of my native country. You don’t get my point. I just don’t care which rag flies from a pole as long as I’m free to choose.
This is no auction…
If it were a baseball game, the batter would get 6 or 9 strikes instead of the customary 3.
“But that was $20,000 less than the 2,460-square-foot house brought the first time it was sold Saturday. Several times during the day, houses returned to the auction block when buyers had financial issues. The Somals plan to resell both houses.”
Yep, that’s the first thing that caught my eye - the MSM reporter is not representing that there are shills, but instead saying that re-auctions are caused by ‘buyers … financial issues”.
This seems actively disingenuous by not only the auction house but the reporter - someone should write a letter to the editor about how deceptive this article was about how the so-called auction really worked.
Exactly what I was thinking. Cripes, people are stupid.
“Bob Somal and his real estate broker father, Narinder Somal, bought two houses, paying $240,000 for one in Stockton and $400,000 for another in Elk Grove.”
“‘We were going to go to $350,000,’ said Bob Somal. ‘We decided to go to $380,000. And our winning bid was $400,000.’”
These guys got hosed. LOL.
But everything’s a-okay because they plan to resell them!
yeah I thought that was great. They won’t resell them..but hteir bank will at another auction in 6 months.
I think it’s so funny to read about all these “savvy real estate investors” who are just wheelin’ and dealin’ and feeling like the cock of the walk for buying homes at auction. Once they’ve bought all that their credit will allow and there are still millions to be auctioned off, THEN is the time to go an auction.
Nothing like trying to profit from a dead-cat bounce.
Dolts.
“But that was $20,000 less than the 2,460-square-foot house brought the first time it was sold Saturday. Several times during the day, houses returned to the auction block when buyers had financial issues. The Somals plan to resell both houses.”
You would think that they should no better! These houses probably were owned by flippers and now they are again. Will they be back at auction in a year or two?
These auction guys are SLICK! First off….sell houses out of the area that are not worth 400k but 400k is 200k off the median in Orange County. So, regardless this looks like a steal, 400k in California, why I will buy 2! Then play inspirational music and have people dress up in tuxedos even the people parking the cars, and have planted cheerleaders cheering each bid.
I said it once I will say it again, if you see plastic smiles, fake cheers, music trying to make you feel good…run don’t walk back to your car and get the hell out of there. It is either a deadly cult trying to get converts or a RE auction.
This my friends is the new bubble scam, and REMEMBER there is an auction fee!
Argh! Don’t these fools know that there is exactly one way to make money in auctions (my father used to buy antiques, scrap metal, pin ball machines etc at auctions, repair them if needed and resell them, quite profitably)- you have to know exactly how much you can sell them for (i.e. you must be a very levelheaded, conservative bidder with a lot of expertise) and you, of course, do not bid a cent over the value you set for it. If you do not have special skills at marketing (and repairing…) and pricing, and/or you bid over your mark, you WILL lose money. Sigh. I’ll bet serious investors don’t even bother with these loony RE auctions…
I was thinking the same thing. And “The Somals plan to resell both houses.” There is a reason why there is an auction in the first place. These houses are foreclosed! Previous owners couldn’t afford it! They couldn’t sell it! These houses should be discuounted another 50%!
These guys are screwed! LOL!
What are the additional costs owed to the auction house? The old adage: a sucker and his money are soon parted has never been truer!
For RE- 5% if you have good Karma, 10% if not, paid by the buyer. Sometimes the seller will pay a marketing fee, too, whether or not the place sells. I really think 10% fees are a ripoff, but they are not rare enough.
BTW auctions don’t even give you a chance to be saved by having your bank turn you down for the mortgage- most auctions want you to have a certified check with you or else you talk to their finance dept immediately. They don’t let the fish out of the net…
The only real auction is the one at the courthouse where the bank guys shows up, a few bid, winning bidder gives bank non-refundable cashiers check for $15k (prolly be $30k now) and a few weeks to square up the rest with the bank or it goes back to the steps. It ain’t sold till it’s sold. The real auctions are when the property SELLS, not this “sells and comes back in 2 days because of….whatever crap”. This is nothing more than minimum bid auction. The real auctions are the ones that let the homes go without reguard for price.
“Sales of single family homes in California will slow by 14 percent on an annual basis this year, while the state’s median home price will rise just short of 2 percent, a real estate trade group said.”
Here we go again! Real Estate groups trying to control the price levels by saying prices will rise. I just hope the remaining optimistic RE groups get this handed to them as no one can afford to buy in the median to lower levels as wages and salaries do no warrant it. According to the L.A Times today the median house hold income in the U.S is $62,024 for those in the 30 to 39 year old brakets and $61,576 over all. That equates to around $185,000 afordablity for single family with 20% down.
What happens:
“Among a crowd of 1,200 people attending a colorful, fast-paced auction of 107 foreclosed homes, Bill Weldon outbid a competitor and won the house in Galt for $300,000. He leapt past his intentions of spending $275,000, but it was the house he really wanted. ‘I figure instead of saving $100,000, I saved $75,000. It’s still a good deal,’ he said.”
When you use a little shock and awe:
“Tuxedo-clad runners worked the large crowd and attractive young women staffers heartily applauded opening bids as homes, condominiums and mountain cabins from eight area counties went on the auction block.
As the pool of GF’s dwindles, I predict a tactical shift to attractive young women staffers mudwrestling.
Not sure if a woody while thinking about bidding on real estate is a great idea.I guess they want you to fantasize about the ladies and forget about your bids.Sounds like a bunch of crooks in the industry at it again.
Real Estate is a hard business at the moment……….so maybe “woody” is an appropriate term………
Anytime guys in tuxedos and attractive young women are paired up to sell something HIDE YOUR WALLET!
C’mon seriously, that’s the most telling part of the whole article to me. If there were any great deals to be had you wouldn’t even need a sign out front.
They’ve spent some bucks.. hyped it to the max for the last few weeks on all the N.Calif TV stations with a blizzard of infomercial spots. Tomorrow it’s here in Modesto.
They got the cute babes.. but no booze? I’ve gotta guess their request for a temporary liquor license was denied.
I’d guess they would be trying to prevent rescission litigation - you gave me 10 drinks and then I signed what?!
Rarely have I seen one of my buddies refuse to buy “todays special”, calender, or promotional crap from a hooter’s girl. ofcourse, i never say yes. I get the classic pout, and i still say no. nice to get the pout, nevertheless ..The point is……..once you see very attractive young girls in skimpy outfits, in any investment presentation(auction, hotel seminar, and so on) , just get the hell out!
“Rarely have I seen one of my buddies refuse to buy “todays special”, calender, or promotional crap from a hooter’s girlofcourse, i never say yes.”
You cheap SOB. Buy the beer already!
“Among a crowd of 1,200 people attending a colorful, fast-paced auction of 107 foreclosed homes, Bill Weldon outbid a competitor and won the house in Galt for $300,000. He leapt past his intentions of spending $275,000, but it was the house he really wanted. ‘I figure instead of saving $100,000, I saved $75,000. It’s still a good deal,’ he said.”
$300,000 in Galt?! Weldon is a complete idiot. Still a lot of blood to be spilled.
http://bigpicture.typepad.com/comments/2007/06/how-might-subpr.html
Good article.
More “subprime shivers”
From the link, leverage at 20 to 1.
The mentality at the Sacramento auction suggests we are still a long way from capitulation. There are too many people who are still on the RE bandwagon — they see price weakness as a buying opportunity for the short term. The optimism (greed?) is going to be have to beaten out them.
I agree. How smart is it to ‘bid up’ houses at a foreclosure auction? And because there are (paid) attractive women and guys running around in tuxedos? More like a knife-catchers convention.
Kewl to watch a new round of FBs riding the home value roller coaster down. Saving $75,000 off of yesterday’s price is nothing. Maybe in two years this house he bought will sell for $100,000 less than yesterday.
Talk about a mugs convention. 1200 bidders chasing 107 homes sounds like July 2005 to me. BTW did they camp outside overnight?
yeah, I’d love to get a mailing list of the people that attended this auction. It would be worth gold, Jerry! I’d probably start by selling them ocean view parcels on the moon.
You can see the ocean from the moon
“Talk about a mugs convention”
Why wasn’t I invited??????
“a mugs convention”
Really great line…thanks, lazarus.
Where are the knife catchers getting their loans?
Probably some crooked, in the basement mortgage ponzi scheme.I would not even have wasted the gas money to go to this auction.Bunch of dipsh@ts who are going to learn the hard way about investing in real estate.
yep, a one stop boiler room!
Any idea what is required right now to qualify for an oversized loan? I know the 600 fico loans are byebye, but what about the average joe with a 60K job and a fico of 720? Can this guy still get a 400K ALT-A loan?
Go to broker universe and see what they will offer you.
Impac Lending was on site.
More like a knife-catchers convention.
Peddled by professional blade sharpeners at that!
Ben, my experience with RTC auctions in the 1998 foreclosure mess, was any really good deals, were done from the auctioneer to his sister, uncle, brother-in-law, lover, before they ever made it to the auction block. The very, very small print said any property could be cancelled prior to the auction date. I was on staff for a major bank selling REO’s and every propertry I knew was a deal, that I couldn’t buy directly as an employee NEVER, EVER made it to the auction.
Please, Ben’s Blogger’s, don’t even think for 1 second there is anything to learn from going or reporting on what happens at these auctions. Total Fraud!!!
“Tuxedo-clad runners worked the large crowd and attractive young women staffers heartily applauded opening bids
Well, these “staged” auctions ARE a notch above the old venison sausage, cheap beer and the Daniel Boone musket raffle and raw land auctions that these fools are used to.
They’re bound to enjoy spending a few dollars MORE
WE can see/talk about the optimism/greed on this blog. Why can’t THEY see what is going on and boycott these auctions until prices really have tumbled? Auctions are what stage in the bubble deflating?
“Auctions are at what stage in the bubble deflating?”
Pretty much sounds like the denial stage to me. These auction buyers sound like Carlton Sheets zombies. Good luck with that “plan” to resell those properties, fella.
In a way, this could be good for serious, smart RE investors in the future. Will shake out a lot of ignorant, greed driven amateurs and bust them for many years so they can’t even think about a mortgage. So much the better. Let ‘em go to these auctions and spend their money. Thins the herd even more.
I’ve been to at least 5 probate auctions in LA, each time it’s the same thing, properties sell for pretty much fair market value. And that was before the RE boom, too.
Hahah, I know. They auction off 100 and in the same area there are 1900 foreclosures! wonder how many bidders there would have been if there were 19 of these POS hoople head get togethers on the same day? This shill rally represents only 5% of the currant forcloaures.
Just like in the 90’s, the banks will soon get tired listing these REOs with the RE brokers and just dump them. They will be so burried in REO that getting them off the books will be the objective, not trying to save (or make) money. The fastest was is to send your guy to the courthouse and dump all that hit your inbox every week. Just the ones that don’t close will be more headache than the banks will be able to deal with.
I went to a auction held by a major auctioneer of office equipment. It was totally weak compared to gov’t auctions. All I could think about is the fact that they were using a wireless PA system, and if I could get hold of a wireless mic compatible (on the same frequency/ channel) I could inject some advice to the other guests.
I went to a auction held by a major auctioneer of office equipment. It was totally weak compared to gov’t auctions. All I could think about is the fact that they were using a wireless PA system, and if I could get hold of a wireless mic compatible (on the same frequency/ channel) I could inject some advice to the other guests.
I’ve grown really tired of comments like the real estate trade group above suggesting a 2% growth in median price, my friends’ insistence that prices won’t decrease based on nothing other than 10 years of history, and the fact that people are still falling for the “money-saving” auctions.
I realize that my comment here will fall under the catagory of “be careful what you wish for” but things like this sometimes make me want a harsh recession to reset the stage.
‘To Lisa Katzman, it was like a Christmas miracle. The old house next door, long dark and neglected, had new owners — and new life. The young couple who had bought the tear-down could be seen sitting inside the 1910 cottage with no curtains and little furniture, but with a small, decorated Christmas tree.’
‘Today, Katzman sees the miracle as more of a carefully constructed mirage. ‘I bought into the whole young-couple-buys-dream-house idea,’ she said last week. ‘But now I feel like they were taking the cheap way out and neighbors be damned.’
‘Five months later, as Zhou attempted to lay a new foundation, the house slid 15 feet down a hill and crashed into the home next door — owned by Katzman and her husband Bill Wycko. Ben Coleman, the Century 21 broker who sold Lam the house, later distributed a flyer with a photo of the cottage. It read, ‘We just sold this dump for $125,000 over asking price! Imagine what your property is worth!’
Truly heart-warming.
Here’s Coleman’s bio. He looks like an an aging Dracula. Send him a love letter.
http://www.hartfordproperties.com/resources/agent_details.asp?AgentID=932213
LOL!!!!!!!!!!!!!!!!!!!!!!
Thanks, Ben. You owe me a keyboard.
LOL! My ribs hurt from that one.
this story…………. wow….
i thought stuff like this only happened in los angeles
Hi Neighbor,
Can I borrow a cup of lawsuit?
‘Five months later, as Zhou attempted to lay a new foundation, the house slid 15 feet down a hill and crashed into the home next door — owned by Katzman and her husband Bill Wycko. Ben Coleman, the Century 21 broker who sold Lam the house, later distributed a flyer with a photo of the cottage. It read, ‘We just sold this dump for $125,000 over asking price! Imagine what your property is worth!’
Los Angeles is still completely mad. Here’s a symptom:
http://www.youragenthana.com/
The typos are almost as hilarious as her two active listings:
449 N Ogden
Asking $1.7 million
Last sold 3/10/05 $849k
530 N Curson
Asking $1.9 million
Last sold 6/7/06 $1 million
The sooner we can flush these idiots out the sooner we can return to sanity.
Thank you for proving my general point about LA.
Click on “About Hana”. That made my day.
Hana’s busy selling houses. She has no time to proofread.
Wow, either she created that on her cell phone using text message short cuts or illegals are now scripting web pages.
Feel to brose the Mls
This fragment just made me giggle. I get the impression she let her six-year-old sit at the computer and write her bio since she had nothing else to do with the tyke during teacher conference day.
Excellence is caring. this is probably Hanas strongest atrribute.
It certainly isn’t her command of the English language.
“By listening carefully i can always anticipate my clients’ needs,” Hana says.
What if her clients’ need someone to help draft contracts who can actually write.
I have a hard time believing that she enjoys reading for pleasure.
It’s written in East European English. The lack/improper use of the definite article is the giveaway since EE languages don’t have a word for “the”.
I believe she is Israeli…. and her native tongue is Hebrew.
“Hana highle motivated work eith has become the standard aginast which other agnest dtrive and follow.”
lol - glad to see that she’s the cream of the crop
All we need is another illiterate realtor. I had a realtor in one of my classes last year. She was as bright as a bag of hammers.
Yes, she failed the class.
ya know.. I sold real estate for a while.. decades ago.. was pretty good at it too..
But I quit, because I came face to face with my predilection to become a “Ben Coleman”.. and I don’t want my soul to be cast into the Lake of Fire.
‘Across the state, I expect to see a 5-7% total decrease in home prices over the next 2-3 years, which to me falls into the category of ‘flat to slightly falling’
Where does Ratcliff expect the price support to come from to justify only a 5% - 7% decline. We have already had a 6% price decline in San Diego; is he just predicting while looking out the rear view mirror?
He is on some good drugs.Everyone wants to talk about the small declines but in reality some markets are already off 30%, while the NAR reports 1% declines in the median.When we are 50% off the peak then we should talk about buying.
5-7% decrease over 3 years + inflation + taxes = 17-19 % decrease …flat to slightly falling ? hmmm….
Does this guy honestly think the drop of home prices will ONLY BE 5-7%? I don’t understand….where are these people pulling their numbers from? Their asses?
And how does a loss of 25 - 35k qualify as flat to slightly falling?
Oh, they are just making up predictions based on wishul thinking based on nothing . Wait until money becomes tigher and tigher and see what the predictions are .
“Statewide sales for the year will total 410,000, compared to 477,460 last year, according to the California Association of Realtors’ midyear forecast.”
So sales are still effectively cranking right now. Without doing anything but some 15% off last years figures and 35% off the peak in 2005. 2005 was a stellar year and even 2006 was a good year for sales. Who are buying all these homes, and why is everyone in RE singing the blues. Every realtor I hear is talking dead - not slow.
May 2007 home price tables in the SD Tribune show how the overall median price can increase even if all or almost all neighborhoods have price declines.
North County Coast shows 9 of 12 neighborhoods with drops in the median price (versus May 2006), and overall sales volume declining from 409 to 364 (SFR Resale). Yet the overall median for these 12 neighborhoods is up 8.1%.
Only one neighborhood (Cardiff) had the median go up more than 8% and its volume was minuscule - only 9 homes sold. Two of the top four richest neighborhoods had median drops of -11% (Carmel Valley) and -27% (Del Mar).
The volume dropped sharply in the cheaper hoods while it dropped less or increased slightly in the wealthier areas. So even with significant price declines in half the richest areas, and only one area with low sales volume reporting a median increase over 8%, the overall median goes up 8.1%.
You all need to read this Realty Times column. This poor lady, being rat-*** by a rediculous ‘real estate expert’. Not only did she make a horrible decision, but this guy is compounding the problem by asserting that everything will be fine in a few years. Her current mortgagepmt/rent ratio is 2x!!!!!! Didn’t a realtwhore get you into this mess in the first place? Why go back to one for advice? Hmmm… this is a real shame. It really makes me cringe.
http://realtytimes.com/rtcpages/20070622_monthlygain.htm
most will tell you that you want to have a monthly cash flow — not cash negative (such a non-positive term)
For starters, I’m not sure what he’s trying to say here, non-positive ??
If that $550,000 property would grow by 5 percent per year over the next couple of years, it would result in a capital growth of $56,375 in two years. Now how does that $1000 “loss” look per month, especially when you may be doubling that money in just two years?
Well it looks like I lost half that amount ($24k) in covering the difference between the mortgage and the rent, and it looks like I lost the rest of it (and then some) in taxes, maintenance, and paying the realtor commissions when I sell, so I guess that it doesn’t look that good to me.
Why not make it 15%? She’ll really be “rich”. Nevermind the fact that all homes in the area will up by that amount, and to actually gain that “wealth” she’ll have to pack up and move somewhere else.
This Anthony Carr guy looks like a total hack. Check out his description of himself at his website:
Real estate columnist/writer for 16 years
Agent, investor for 10 years.
Trainer/coach for 8 years.
Lover of all mankind for 40-plus years
http://www.anthonycarronline.com/
What a cheeseball. And it looks like he hasn’t updated his blog since October 2006. http://commonsenserealestate.blogspot.com/
Suze Orman had a caller last night who owns a home in a neighborhood that has had numerous foreclosures. The caller said that investors have been buying the homes at auction and placing tenants in them. Needless to say, the neighborhood is rapidly going downhill and she wants to get out. Suze suggested that she rent out her home and go find a rental for herself in a better location, until the neighborhood gets better. I’d like to hear the opinions of the good folk here on this blog. Would you have advised her to sell at this point?
Sell at this point? There are over 5 million homes for sale in the US right now, and the waiting list is probably negative 10 months.
Selling is a pipe dream, but renting is doable!
next reset this year on $1 trillion will impact additional 3 million homes
Yes. Life is too short to become a landlord of circumstance.
I saw that, and IMO that was terrible advice. The woman claimed she had a lot of equity, so I’d say “sell and rent”, not “rent and rent”.
“… until the neighborhood gets better.”
It could be 20 years until the next neighborhood “renaissance.” Sell and move to a neighborhood with a better trendline.
That’s one of the consequences of Greenspan’s housing f@ckup. Joe blows with no money/credit/status getting lier loans and moving into finer neighborhoods and ruining them. Thanks Mr. Greenfart.
This auction article is full of gems…my personal favorite:
““But there were some bargains to be found. Pat and Satya Chaterjee won their bidding war for a Roseville home, paying about $15,000 under market value.”
I always thought that the person who ended up as the buyer in any bidding war was the loser…I guess this time it must be different.
I wonder if that savings includes fee to the auction company?
Fee? What fee? Nobody told me about a fee!
experience is expensive.
And this time, stupid WILL hurt!
Well. I’m sure LAinvestor girl will be along any minute to tell us how good things are going. Please feel free to double down again.
Its way to early to think about equlibrium. Basically there was some early rush to the exits and still considerable activity.
However the second derivative (ARM resets) is going upward along with interest rates.
Last thread was about the bond fall out and that will really undercut things. Basically sounds like a lot of hedge funds will be whiped clean. The ability to unload CDO/MBS products will be severely undermined in short order. Banks will end up holding on to things again so lending will severly tighten. Not to mention the banks will want substantial down payments. Going to be a triple whammy about how to afford stuff.
Meanwhile the extreme debt loading will start to break more and more people.
Seems like a deflationary spiral is going.
The bond action might really spiral into a lot of margin calls really soon .
Bond Yields Jump,
But Fed Can Sit Tight
By GREG IP
June 24, 2007
While bond yields have recently jumped, investors shouldn’t expect the Federal Reserve to change its 5.25% short-term interest rate at its meeting this week — or at any time soon.
Fed policy makers gather Wednesday and Thursday amid a very different bond-market environment than at the time of their last meeting, in early May: Long-term Treasury bond yields have shot up from 4.7% to 5.1%.
Those bond yields partly reflect stronger-than-expected economic growth, which has erased expectations that the Fed would soon trim its short-term interest rate. Technically, the Fed sets a target for the fed funds rate, charged on overnight loans between banks.
With higher bond yields, the Fed now also has less reason to raise its target rate. That’s because businesses and consumers face higher borrowing costs, which are likely to produce slower growth ahead. In effect, the bond market is doing some of the Fed’s job of keeping total spending in the economy, and thus inflation pressure, within the economy’s normal capacity.
http://online.wsj.com/article/SB118263942273946091.html?mod=googlenews_wsj
What the heck does all this subprime hedge fund crap have to do with the price of a house in prime markets? None, as far as I can see.
Do you understand the plankton theory? If the first rung (subprime borrowers) of the Ponzi gets taken out even more, there will be less trade-up buyers. This will occur if there is less demand for subprime notes as there will be a corresponding decrease in the amount of subprime borrowers.
Think increased mortgage and bond yields (because of increased risk).
Also, the hedge fund problem may be systemic due to the amounts of leverage involved. If this is the case, you won’t be worrying about housing prices for long.
Sorry, I mixed theories (Plankton, Ponzi). They have a similar concept though
This opinion from back in March mixes and relates plankton, ponzi, hedges etc. to overvalued Real Estate quite well, imo.
http://www.pimco.com/LeftNav/Featured+Market+Commentary/FF/2007/GCBF-+March+2007.htm
“……….For, unless the current homeowner has someone to sell his house to, he’ll be unable to afford the house with the view or that extra bedroom, and the process would continue into the echelons of Beverly Hills and Shaker Heights. In the end, the entire market would wither on the investment vine and home prices would stop increasing……”
I see your point. Could work, but I view LA as more like Brazil: it has two parallel real estate markets, the dirt poor and the wealthy. If the end of subprime lending knocks out the low end markets in south central, that won’t affect the American areas at all, there is no reliance on those trade up or entry level buyers in the expensive parts of town. Oh well, time will tell. All I know is, three associates at my brother’s downtown LA lawfirm just bought houses in the $1M price range, mostly around Silverlake.
You seem awfully bullish on LA but a simple check of sales histories over the last 15 years or so shows it’s really not different here. Sorry, but there’s historically been a significant middle class market in LA that’s completely evaporated in the current bubble. The city is going to get hammered over the next few years, and your brother’s friends are going to get hosed.
what middle class. they’re all in AZ
“What the heck does all this subprime hedge fund crap have to do with the price of a house in prime markets? None, as far as I can see.”
You can’t see very far. This is why lots of investors like you will lose your @ss soon.
There’s also such a thing as worrying too much about the future, it paralyzes you from finding a decent house and just buying it.
You are talking about it like its an investment and we are analyzing it INVESTORgirl.
Its also a huge investment of most peoples resources so looking at affordability and what value this provides vs renting is a sharp thing to do.
“What the heck does all this subprime hedge fund crap have to do with the price of a house in prime markets? None, as far as I can see.”
dear investor girl, this statement, from my observations, sums up your opinion
To be fair about it, it’s not exactly intuitive how the outcome of some obscure Wall Street shenanigans could change the value of a luxury home.
The plankton analogy fits. Big fish do rely on smaller fish, who rely on even smaller fish for their survival.
Once the smallest fish have been scratched off the menu, the big fish will feel the pain… eventually.
“However the second derivative (ARM resets) is going upward along with interest rates.”
Another second derivative to watch is the rate of price acceleration on page 6 of 12 in this report (caution: .pdf file). In short, double-digit deceleration rates quickly lead to falling knife price action.
———————————————————————————
Economic and Real Estate Trends (ERET)
6/19/07 Summer 2007 Economic and Real Estate Trends Report
http://phx.corporate-ir.net/phoenix.zhtml?c=63356&p=irol-Publications
Is “goldilocks now naked?
Gretchen Morgenson in the New York Times:
First, marking illiquid securities to a model that makes certain assumptions about their future behavior is not the same thing as marking to an honest-to-goodness market of buyers and sellers…
In worst-case scenarios, such models may reflect the fantasy that a firm’s principals prefer, not the reality of a security’s likely value. And yet, investors and financial firms everywhere are relying heavily on these models and building their balance sheets accordingly — a very dangerous game, especially when it comes to complex pools of securities backed by assets like home loans.
What does this mean in cold, hard cash? On a conference call with clients on Thursday, a Credit Suisse analyst estimated that the markdowns would likely be in the billions of dollars.
That brings us to our second lesson, which is another blinding glimpse of the obvious emerging from this debacle: the rating agencies, which investors rely on to be prescient cops on the beat, are stunningly behind on downgrading mortgage-backed securities and the pools that own them. Do the math: Bear Stearns is paying $3.2 billion to shore up a fund that once had $10 billion in value, according to one investor. That’s 32 cents on the dollar.
THE portfolio wasn’t just made up of toxic stuff, either. While 60 percent of the fund was invested in residential mortgages, 40 percent was in commercial loans. Moreover, 90 percent of the fund consisted of securities with AA or AAA ratings, according to the investor.
Officials at ratings agencies have said in the past that their ratings reflect their estimates of future performance, not market pricing. So the agencies are also marking to model. And that keeps people playing the fantasy game about values, especially in hard-to-analyze collateralized debt obligations that are essentially pools of other asset-backed securities. Some $1 trillion of C.D.O.’s have been issued. (Yep, C.D.O.’s were in the troubled Bear funds.)
“The C.D.O. sector is still extremely rich versus where the underlying collateral is trading,” said Albert Sohn of Credit Suisse on the conference call. “Either subprime has to get richer or C.D.O.’s have to get cheaper.”
….
Officials at ratings agencies have said in the past that their ratings reflect their estimates of future performance, not market pricing. So the agencies are also marking to model.
….
Bear Stearns is paying $3.2 billion to shore up a fund that once had $10 billion in value, according to one investor. That’s 32 cents on the dollar.
…
The portfolio wasn’t just made up of toxic stuff, either. While 60 percent of the fund was invested in residential mortgages, 40 percent was in commercial loans. Moreover, 90 percent of the fund consisted of securities with AA or AAA ratings, according to the investor
“Bear Stearns is paying $3.2 billion to shore up a fund that once had $10 billion in value, according to one investor. That’s 32 cents on the dollar.”
and as the article says, this WASN’T THE TOXIC STUFF! what happens if the toxic stuff is basically wroth 10-15 cents?
“First, marking illiquid securities to a model that makes certain assumptions about their future behavior is not the same thing as marking to an honest-to-goodness market of buyers and sellers…”
She misses the point. For a brief and glorious moment, CDOs WERE liquid. That is why it was profitable to create CDO tranches from mortgage pools (and other ABS) in the first place- by being pitched as ‘rated’ and default-free (due to tranching and servicer guarantees, not to mention the fact that RE always goes up), they traded like corporate bonds (ok, they did have essentially a variable maturity date due to prepayment, but the interest rate was high). It is now that these bonds are becoming illiquid, giving the (bag)holders the choice of either selling at a steep discount or holding and hoping the income stream and principal payments continue… The buyers of CDOs (and REMICs) did not want to have illiquid and difficult to price investments- if they did, they would have just bought the mortgage pools directly and cut out the middleman…
Asian markets opening, not great so far but it’s early.
“Japan’s market cannot escape from the plunge in U.S. stocks triggered by concerns over subprime loans,” said Norihiro Fujito, strategist at Mitsubishi UFJ Securities Co. in Tokyo. “The Nikkei may drop below the 18,000 level.”
Scott peterson property (www.modbee.com/local/story/13720383p-14306100c.html)
“On steep courthouse steps partially shaded by towering elms, a public auction crier called for bids Friday on Laci and Scott Peterson’s former home.
No one but The Bee showed up.”
“So Julie Grimm, a foreclosure auctioneer with Dual Arch International, closed the bidding, closed her binder and walked away. And Modesto’s most notorious piece of real estate became the property of a Simi Valley bank.”
“The lender is owed more than the house is worth, documents suggest.
What a change from July 2005, when Gerry Roberts proudly announced to the world his triumph in steep competition for the rather humble cottage-bungalow.”
“Four months later, Roberts, a single father and real estate agent, bid $10,000 more than the asking price of $380,000, declared he had just purchased “probably the most controversial home in the world” and moved in.”
This speculating RE Idiot Agent won’t be the last one to WATCH his DREAM INVESTMENT go on the block in the next few years…just ONE in many.
I suppose the message we should glean from this is that one should be cautious when bidding on the murder value of a property.
Marge can sell the murder house. But stay away from the West Side.
A true entrepreneur would get creative.. have guided tours through the place .. $35 a pop sounds fair.
lets see.. he’s 340 large in the hole.. need about 10,000 ghouls and it’s free and clear.
Bill Weldon outbid a competitor and won the house in Galt for $300,000. He leapt past his intentions of spending $275,000, but it was the house he really wanted. ‘I figure instead of saving $100,000, I saved $75,000. It’s still a good deal,’ he said.”
And in a year he is going to be saying “OH $HIT! WHY DID I OVERPAY $200,000 INSTEAD OF ONLY $175K FOR THIS POS MC$HITBOX (GARAGE MAHAL). IT HAS BECOME MY TOMBSTONE (the Taj Mahal is really a tombstone, so fitting analogy).”
“But there were some bargains to be found. Pat and Satya Chaterjee won their bidding war for a Roseville home, paying about $15,000 under market value.”
“The Sacramento region has some of the highest home foreclosure rates in the nation. Nearly 3,400 homes were foreclosed upon in the first quarter of 2007.”
This is just so pathetic. This couple got $15k off on a house (para 1) that is going to go on sliding in value (para 2), and it’s called a “bargain” (para 1)
It’s painfully obvious to me, from little vignettes like this, that not everyone has an internet connection or, if they do, they are not making the best use of it.
hmm.. big fire in Meyers CA ( little community next to the Lake Tahoe airport). Evacuations, highway 50 is closed, etc..
Winds 35mph, 50 homes confirmed destroyed so far, as of.. about 7pm Sunday… seems to have split into 3 fires. I was there last week and it’s pretty much a tinderbox.
A close friend owns a little 2/1 house in Meyers (bout a mile away from the fire at the moment), purchased around 1977 for $17,000 if i recall. Last appraisal in January was $350K.
The market has really cooled up there in the last year or so, (No, Lake Tahoe is not “special” ) with tons of homes for sale. Prices fell significantly, like 20%, in the last 18 months.
..only reason i post this is they say human activity started it, and it got me thinkin’..
OT (except for the fact that I read Alaska Airline magazine on the way to a conference in UC Irvine aka the belly of the beast), but Alaska Airline magazine seems to have gone almost 100% overpriced RE advertising. They used to have a lot of hotel advertisements and other travel related items (as well they should), but now there are but a couple of hotel ads, a couple of oil company PR puff ads and dozens of desperate RE condo (mostly not even timeshare) and lot ads. Some of them were mind boggling. Of course there were the usual $1 million to $4 million luxury condos (some to open- maybe- in 2009) in Portland and Seattle. But some of the ads were almost hallucinogenic.
For instance, there were lots (smallish) in Gearhart, Oregon, which is ‘only’ about 75 difficult-to-travel miles from Portland, and is on the proverbially rainy and dreary Oregon coast. They were going for $300k.
To top that, there were $800k, under 2000 sq ft, condos (!) in Westport, which is just east of Aberdeen, Washington. I spent one of the longest days of my life in that town. It is rainy and also an impossible commute from anywhere. Kurt Cobain hailed from there, which has been offered as explanation for his depressed, suicidal personality.
I got the general impression that if I bought a condo in Vancouver, Seattle or Portland, I would become a stud of James Bondesque stature (but dressed entirely in black…) with a very well dressed fashion model at my side, gathering from these ads. Hmm, most of the travelers I have seen in Ak Airlines coach section don’t exactly fit that demographic if appearances are any indication.
So, who gets dibs on the condo in Westport! Get them before the price goes up!
I just returned from the San Mateo Auction.
There were at least 10 homes (maybe more, I left) from Sacramento… Homes that auctioned off in Sacramento the prior auction day but where the “buyers” could not qualify for financing.
The home I was interested in drew about 6 bidders. It appraised for $497, my limit was $470 (w/ 5% auction fees, a modest ‘deal’), it sold to a guy who placed bids on multiple homes for $500K, $525K with auction fees. I wonder how he is going to react, when his bank tells him they will not finance the house because he paid more than it’s worth?
The people next to me, ‘investors’, were out at $450K.
I asked my loan broker about this before auction. I was told I would have to pay the difference in cash from my own pocket.
San Mateo Auction - a sample:
322 Stuart Dr, Petaluma, CA 94954
Auction: 335K (not including 5% auction fee/ sold price)
Zillow: 460K
Bank paid: 406K
1186 Ciello Ct. Rohnert Park CA 94928
Auction: 500K
Zillow: 617K
Bank paid: 518K
738 Nacional Ct, Salinas, CA 93901
Auction: 475K
Zillow: 650K
Bank paid: 548K
403 Lansing Cir, Benicia, CA 94510
Auction: 775K
Zillow: 1.235Million
Zillow for sale listing: 1.25Million
607 Arrigoni Ct, Santa Rosa, CA 95409
Auction sold: 1.15million
zillow: 1.478million
1833 Cherokee Dr UNIT 4, Salinas, CA 93906
Sold: 220K
Zillow: 363K
Bank: 283K
3280 Apricot Ln, Santa Rosa, CA 95407
Sold: 370K
Zillow: 508K
Bank: 365K
3461 Loes Way, San Jose, CA 95127
Auction: 810K
Zillow: 1.22million
Bank: 998K
Aren’t Zillow estimates an absolute joke?? Personally, I wouldn’t put much if any faith in zillow estimates especially if I was a buyer. I have seen homes that sold for $720K in Jan ‘07 - estimated by zillow to be worth $1M six months later! I don’t think so.