For A Seller, It’s All Doom And Gloom In California
The Daily Bulletin reports from California. “There are exceptions, but for the most part, housing prices are falling in the Inland Empire. That’s the word from the California Association of Realtors. Sales in Riverside/San Bernardino were down 43 percent from a year ago. ‘Sales are very weak in the low end of the market,’ said Bill Velto, manager of Tarbell Realtors in Upland. ‘They’re stronger in the high end, but in the rest of the market, inventory is way up. People are still fearful that if they don’t sell, they’re going to lose out.’”
“Redlands-based regional economist John Husing has been watching the increase in long-term rates around the world, and he’s concerned. ‘I had been saying the market would sort itself out by early next year,’ he said. ‘Now I’m not sure. Depending on what happens with rates, it could take longer.’”
“Velto agrees. ‘I think a transition will come next year,’ he said. ‘But right now, no one can say what we will be transitioning into. Nobody knows.’”
“The hardest-hit areas locally were San Dimas (prices down 9.1 percent), Mira Loma (down 11 percent), Twentynine Palms (down 13.5 percent), Hesperia (down 13.9 percent) and Big Bear Lake (down 28.6 percent).”
The Orange County Register. “May was a disappointing month for home sales in Orange County and around the country, according to real estate sales data released by the California Association of Realtors. Sales of existing single-family homes locally fell 21.1 percent when compared with a year ago.”
“‘We’ve seen sales over the past three months quite a bit weaker than we anticipated,’ said Robert Kleinhenz, deputy chief economist for the California Realtors association.”
“The state group estimates that in Orange County it would take 19.8 months to sell all the homes currently listed for sale. Last month, the inventory of homes for sale in Orange County was the sixth biggest since 1992. The all-time peak for local inventory was April 1995, when the backlog was 26.2 months.”
“‘We are going through some troubling circumstances. I’m suspecting it’s not going to be as severe as in the 1990s,’ Kleinhenz said. ‘(But) I don’t see the trough bottoming out just yet.’”
“The S&P/Case-Shiller home price index for L.A. and Orange counties fell in April on a yearly basis for the third consecutive month. April’s drop (2.62% in a year) was the worst performance since February ‘96.”
The Ventura County Star. “The waiting game. Prospective buyers worried about falling real estate prices are staying away, which is the real reason that there’s been a big drop in sales activity, said Bill Watkins, director of the UC Santa Barbara Economic Forecast Project.”
“In a year-over-year comparison, home sales in May continued to slide in double-digit percentages, extending a cooling off period that began in late 2005.”
“The county median increased 1.6 percent from $688,440 in May 2006, the California Association of Realtors reported Monday. It doesn’t mean that prices are rising across the board in the county, CAR Vice President Leslie Appleton-Young said.”
“‘Prices have plateaued in Southern California,’ Appleton-Young said. ‘Prices are reflecting a change in the composition of what’s selling.’”
“Deborah Poole, a Realtor in Oxnard, says now is a great time to buy. She describes Ventura County’s housing market as realistic and priced fairly. Ventura County’s median sales price for an existing single-family home was $699,480 in May, the fourth-highest mark since January 1990.”
“The next highest medians were posted last year in June, July and August, when the record of $710,906 was set.”
“Poole predicts a gradual increase in activity for the rest of the year, a pattern that echoes the first half of 2007. ‘It’s not the mad frenzy you had a few years ago, where buyers had to make a decision in two hours, and sometimes there were 20 counteroffers,’ she said. ‘It was crazy.’”
The Merced Sun Star. “The freshly painted interior of Mike and Sharon Southern’s Atwater house looks like something you’d see on the ‘after’ segment of a home makeover show.”
“But the Southerns don’t want flattery, they want buyers for their house, and the stylish colors aren’t doing the trick. ‘Everyone that looks at it loves it, it just doesn’t seem to ever pan out,’ said Sharon Southern.”
“After almost nine months on the market and two price reductions, the Southerns are still struggling to sell their house on Sextant Drive.”
“They’re not alone. In fact, they’ve got lots of company enduring a moment in Merced real estate history they’d rather not have to go through, the market correction that follows a boom. Moreover, it’s likely that falling prices haven’t yet bottomed out.”
“Although prices have tumbled in the last year, Merced still has one of the most overvalued real estate markets in the country, with the median price about 63 percent above where it should be, according to a new study by National City and Global Insight.”
“The Southerns think $329,900 is a fair price for their three-bedroom, three-and-a-half bath house, which was built about 15 years ago. But they’re having a tough time competing against brand new subdivisions offering deep discounts to move inventory. Plus, low prices on foreclosed properties are turning buyers’ heads.”
“In fact, it’s a prime time to buy, said 30-year veteran broker Loren Gonella. ‘(Interest)rates are down, inventory is up and sellers are willing to deal. What’s not to love?’ asked Gonella.”
“‘Our market is adjusting and our market has a little further to go to adjust, but sales have been improving,’ said Gonella. Gonella predicts prices will continue to fall through the end of the year, remain flat in 2008 and start to climb up again in 2009.”
“The Southerns say they’ve stopped following news about the real estate market because it’s too depressing, said Mike Southern. ‘Especially for a seller, it’s all doom and gloom,’ he said.”
“They know plenty about the recent history of Merced’s real estate scene, and say they wished they’d sold in 2005, when prices were soaring. Then, they figure, then could have sold their house for $425,000 in a month.”
“But that was before the Southerns decided to move to Alabama so they could live closer to extended family. They also say they can’t wait to experience a more affordable housing market. Sharon Southern figures housing runs about $85 per square foot in Alabama, compared to $225 in Merced. ‘The cost of living here is outrageous,’ said Sharon Southern.”
“The couple is simply following that age-old real estate mantra: location, location, location. Except it’s not in Merced.”
‘ATWATER — A vacant home was destroyed Monday afternoon in a fire of undetermined origin, according to Atwater Fire Chief Ed Banks. Banks said the home, which was for sale, was valued at about $200,000.’
‘While the rest of Santa Clarita may be expanding by leaps and bounds, elementary school enrollment numbers have actually been going down - and that could mean significant drops in future funding. The price of homes in the valley may be a factor.’
‘In March, the median price of a three-bedroom home in the schools’ boundaries was $690,000, a four-bedroom home was $883,000 and a five-bedroom was more than $1 million, according to real estate data. And that may be far too much for a family just starting out with young kids to afford, Winger said.’
bet arson and foreclosures give you a straightline graph
$690,000 for a 3 bedroom house…it takes a household income of about $140,000 a year to afford that with a 20% down. So going in if you don’t have $138,000 your dead in the water…how many people have that kind of money to buy into the median point of the market?
The market became unsustainable in 2004 and peaked in the summer of 2005. Now just like the rollercoasters at Magic Mountian…there’s a beg drop on the other side of the rise….hold on it’s going to be one hell of a ride!
They were gonna off Magic Mountain and pave it over with suburbia, but it survived the final cut…
Glad to see Magic Mountain survive, it is a fun place. Good thing the market peaked and it will be around until the next RE boom at least.
Magic Mountain is infested with gangs, I used to go there but no more.
Rich is right… Magic Mountain isn’t the park it was even 5 years ago. The bathrooms are covered in graffiti, bangers cover the place…
I’m a roller coaster junkie… but I won’t go there anymore. I used to love it. Now it would have been better if it had become townhomes.
Got popcorn?
Neil
What’s funny about that is back in the 70s, when KISS used to play there all the time, Magic Mountain was known for being a druggie hangout. Got so bad, Six Flags bought it out & made it more of a “family” place. Guess it’s happening all over again. Sad.
Glad to see Magic Mountain survive, it is a fun place. Good thing the market peaked and it will be around until the next RE boom at least.
I enjoyed Magic Mountain when I lived in SoCal. Much more fun for grownups than Disneyland or Knott’s Berry Farm.
“rollercoasters at Magic Mountian”
That’s the problem with ‘rollercoasters’, good for a moments diversion but your problems that existed before you got on are still there when you get off, except you may be more nauseated.
Come on. Didn’t you know that EVERYONE here in Soclownifornia makes 150K a year? So households with 2 incomes actually make 300K and if you have grandpa you are making a cool 450K a year. Come on now, don’t doubt us. Only the rich and shameless live here. Paupers and welfare recipients not welcome.
Didn’t you know that EVERYONE here in Soclownifornia makes 150K a year?
Hey OC
You know that most all Californian’s make 150k .. but we spend $187,994.00 per year. Ipods, Hollywood Tans etc.
Sure BS Salary in California is 150K a year… thats after you worked 25-30 years… and your in your late 40s early 50s. Most actually make less than half and have 10 years of experience.
Try $184,000 w/20% down and traditional ratios of income to purchase price. That’s a down payment of $138,000
My wife and I both work full-time with decent salaries and buying a $700,000 house in Valencia is going to be a stretch. We always tell each other that two professionals are considered poor in Valencia because we can only afford to rent.
Oh, but a guy in my office with a family income of about $120K just bought one of these $700K Newhall houses…nothing down…HOA and property taxes alone tally out to about a grand a month. And his mortgage payment — a 5 year, interest only ARM — is negatively amortizing as we speak, which means that he’ll have to refinance in a few years for even more than that $700K…which is okay, so long as that pesky downward trend (29% year over year) in prices suddenly, magically turns upward.
Argh. I actually like the guy. Sad.
The walking dead. That is quite sad.
He *just* bought it? He might be a nice guy and all but damn is he stupid - I really can’t see anyone actually bankrupting themselves like that on purpose this year now that the risks are somewhere beyond obvious
As a senior software engineer, I earn somewhat over 100K. There is absolutely NO WAY I would borrow over 3X my income, and frankly in reality I have given this serious consideration and believe I would be losing sleep at night at over $250K. So at the $300K price point, I could put 20% down without emptying the bank and leaving none for emergencies and could afford the payments. At $690K - put me out of my misery! I would not think 690K at 140K would be much fun, I would think rather at close to 170K a year salary, and precious few earn close to that.
How many years in the buz to you have? Just curiouse.
12 years.
GH,
Glad I’m not the only one thinking that. We also earn between 100K-$120K, and I wouldn’t even think about taking on a $600K house. No way in He11.
Your numbers come out right about where mine do. I’d prefer taking a mortgage of no more than $250K, and it would be even better if we could get it lower than that.
People who think $100K-$150K earners should buy $600K homes shows how many knife-catchers are out there. The recent (totally unrealistic & surreal) prices are the psychological anchor points for so, so many folks.
Guys, the days of $500K starter shacks are over. Starter homes — yes, even in California — should be, and will be, in the $80K-$250K range (including condos). Anchor that.
A million dollars should buy you a custom home (NOT a Toll Bros tract house) on a 1/3-1/2 acre lot (min.) in a very nice part of town.
Please re-adjust your price points unless you intend to lose everything you’ve worked for.
“elementary school enrollment numbers have actually been going down - and that could mean significant drops in future funding.”
No ‘could’ here, it will drop future funding and drop the teaching staff which translates into more higher paying jobs removed from the market place.
no, it means more subdivided McMansions with 30 Salvadoran children.
Hey Ben
I heard you on the radio last night.
I thought you always spoke through a burning bush?
Quite a few of those up Tahoe way.
Deranged Realtor’s Poole, Deborah?
“Deborah Poole, a Realtor in Oxnard, says now is a great time to buy. She describes Ventura County’s housing market as realistic and priced fairly.
Yes, somehow realistic and priced fairly doesn’t mesh with median sales price for an existing single-family home at $699,480 and median incomes of $70K
Here we go again
“It’s a geat time to buy”, “It’s a geat time to buy”.
Ya, if you’re an imbecile.
Deborah Poole “realistic and priced fairly”
No I don’t think so. Ol Deborah must be a liar or an idiot to say this.
If the name fits, move there.
“But that was before the Southerns decided to move to Alabama so they could live closer to extended family. They also say they can’t wait to experience a more affordable housing market. Sharon Southern figures housing runs about $85 per square foot in Alabama, compared to $225 in Merced. ‘The cost of living here is outrageous,’ said Sharon Southern.”
‘The cost of living here is outrageous,’ said Sharon Southern.”
“The couple is simply following that age-old real estate mantra: location, location, location. Except it’s not in Merced.”
LMAO.
These folks are dumbass’s. Merced is a cesspool.
What’s the problem, people? Forget what you could have gotten last year and slash your asking price to something approaching reasonable, and you’ll be on your way. Who cares if the neighbors hate you for lowering the comps? You’re moving to Alabama.
Every city in CA i’ve heard about has declining school enrollment.
Part of this is that almost everyone I know who has elementary aged kids put them into private schools due to the crummy public schools.
Anyone know where we can get actual numbers on out of State migrations?
My wife works for the San Bernardino School District and says that enrollment is dropping left and right in every city in the Inland Empire. There is also a lot of talk about cutting teachers and administration the last few months because of enrollment, which looks like, will happen sooner then later for budgetary reasons. Weird thing is that Riverside County is some what the opposite. When we went to look at a brand new home next to an elementary school (across the street) the realtor said that they couldn’t guarantee that our future children would attend that school.
staff is growing 8 times faster than enrollment in our county- parent surrogates
And why would you believe anything a realtor told you?
I have heard of new schools opening in districts and old schools (that are perfectly good) being shut down do to declining enrollment. Govt spending has never made any sense, except for the simple axiom they always need more regardless of what is going on in the world.
And why would you believe anything a realtor told you?
Got that one right, good buddy.
I used to teach in San Bernardino. At an inner city high risk school. One of my friends who is still an elementary school teacher there emailed me yesterday and said they all got a 9 % raise. They already have excellent pay and benefits. Now a 9 percent raise. Believe me, the school district isn’t hurting if it could do that.
You need to try Santa Ana, I can guarantee you the schools are blowing up, tax dollars are probably going down also.
Wow! All this bad news… Good thing I’m in LA, an island of wealth and happiness which will be completely unaffected by anything negative.
The city of angles is copycatism, at the very source…
You’d think the 2,378th car chase driver getting caught out of say 2,378 drivers, would dissuade # 2,379, but no.
LOL… I see you’ve taken up the proffession of comedy writing now.
Comedy? Of course not. I just came from an open house where they served me some delicious Kool-Aid. Now, for some reason, I realize I’ve been wrong all along. RE prices in LA will never fall, no matter what happens in the rest of the state, the country, or the world.
Everyone wants to live here, and everyone who lives here is rich. Poor people, and by poor I mean anyone who makes less than 150k per year, will just have to leave.
Yea, just spoke to a good buddy of mine. He says he’s throwing in the towel. He cashed out on everything he had in “04″. He’s had a come to Jesus moment and according to him even if the prices drop 50 to 60% L.A. is still not worth the price of admission. He was raised here but he’s contemplating NM or NV. He says if he misses the ocean he’ll charter a plane and visit. LOL funny guy.
Poor guy sold out too soon. Probably why it is a good idea to sell your portfolio over time and not all at once.
Some of the central valley is back to 2004 prices.
“…Poor guy sold out too soon…”
Well… I wouldn’t exactly go that far. He made out like a bandit. His point is that the house he sold he paid $300k back in the 80’s why would he come back and pay 700 or 800k for that same house when he could go to NV or NM spend 300k live like a king and do absolutely nothing for the rest of his years living off interest. Knowing what he made off his properties I kind of have to agree.
I could see how someone who bought then would feel that way, especially after realizing a nice gain. For me, a 6-700k price on a house bought in the 80’s for 300k sounds reasonable. For what he paid then, I’m guessing it was a pretty nice crib.
We’re a long way from that… But looking at what’s starting to happen in the financial sector, we might get there eventually…
“He was raised here but he’s contemplating NM or NV.”
if he’s go the money to retire, NM or NV are great choices. If he’s looking for a high payng job, forget it. But NNV is gettin’ worked price wise. I’d say we’re 20% from top and picking up downhill speed like a soap-box racer.
no. He can commute to LA to work. Get a small studio like I did and fly back to his inexpensive palace on Friday afternoons. I’ve done that for 3 years between LA and Phoenix. Well worth it. Money in LA is good. The tax writeoff is great! I will do that again in the future.
If I had the money to buy some place out of CA and live of the interest of what was left in my acounts, I’d be off like a prom dress.
How much does one need to live off interest for ever? I cant tell. Is 1m enough?
“Deborah Poole, a Realtor in Oxnard, says now is a great time to buy. She describes Ventura County’s housing market as realistic and priced fairly.”
Yeah right.
Never ask an insurance salesman if you need more insurance.
Welcome to my hell I have to live here through this type of Disney like foolishness…you will find no place more deep in fantasy believing bull crap then the OC….it is a fantasy world like no other.
Oh, there’s another… The city of LA, then maybe on up to the bay area…
“you will find no place more deep in fantasy believing bull crap then the OC….it is a fantasy world like no other.”
I live 3 blocks from the New York Stock Exchange. Do you want to make a wager on this one?
Three blocks from greed central is nice, now imagine what you have except stretch it over a whole county and you get the idea of OC.
I was born in Anahiem. I remember being told to be home before the fireworks during summer evenings. NY and LA have certain style of delusion and plenty of it but I have to agree, OC really is a whole other freaky freaky planet.
After reading the article in the ‘OC Register, I have to conclude that there is a lot of kool aid being drunk around there. The level of ineptitude displayed by the bloggers at the end of the article makes me happy that we have this blog. Thanks Ben.
I dunno, but with all the bad news on Housing/RE lately, I think all these trendy spas should try to cash in by offering kool-aide detox treatments….
Try talking to Joe average here, like clapping with one hand. That blog is the tip of the proverbial iceberg to how deep the kool aid runs here.
Kool aid only goes so far… when no one qualifies for a mortgage.
Merrill Lynch was quoted as having their CMBS business drop from $20bill/month to $3bill…
Yea… Its a $2 trillion a year market… I mean $1.8 Trillion, oh wait… Goldman Sachs has business down too… Same with Citi… and… Ok, $1.5 Trillion… ummm… $1.0 Trillion…
Someone thought pushing the “credit crunch” button would serve breakfast cereal…
Got popcorn?
Neil
Now if the Southerns just drop their wishing price 75-100 k to the 2002 price I’m sure (NOT) they can find a victim!!!
Contrasting:
“They know plenty about the recent history of Merced’s real estate scene, and say they wished they’d sold in 2005, when prices were soaring. Then, they figure, then could have sold their house for $425,000 in a month.”
with:
“Sharon Southern figures housing runs about $85 per square foot in Alabama, compared to $225 in Merced. ‘The cost of living here is outrageous,’ said Sharon Southern.”
Gee, you think a little disconnect here? Who, me worry?
THEY CANT JUST GIVE THE HOUSE AWAY, CMON!
Something strange going on in the Inland Empire…I mean, there are at least 200 listings that come up when you type in “motivated”, “short sale”, or “reduced”, but when you click on the photo attachment, it’s all the same stucco, beige colored, Spanish tile roof house, sort of like this:
http://inlandempire.craigslist.org/rfs/352072766.html
The Stepford Empire
I take it you haven’t been to the IE lately a ton of them look like that. Cookie Cutter H.O.A. fee’d crap.
Was joking, should have thrown in a “LOL”.
What’s so strange. 99% of the SoCal houses built since 1990 look like this.
Boooooring.
That’s one fugly house.
The Ventura County Star. “The waiting game. Prospective buyers worried about falling real estate prices are staying away, which is the real reason that there’s been a big drop in sales activity, said Bill Watkins, director of the UC Santa Barbara Economic Forecast Project.”
Well that’s a big improvement in buyers woun’t you say! Give them a A+ Watkins.
Bill Watkins another idiot, are all the RE people in S. Ca this bad?
Maybe they can’t get a Home loan anymore? Dumbass.
“The next highest medians were posted last year in June, July and August, when the record of $710,906 was set.”
$711k median….Holy Fook!
Unless the discover jobs or OIL in the IE, it’s going to look like the Empty Quarter of Saudi Arabia (with shacks) before this is all over
http://tinyurl.com/2othgz
LOS ANGELES, June 26 (Reuters) - Three former Countrywide Financial Corp. (CFC.N: Quote, Profile , Research) executives have agreed to plead guilty to insider trading, the U.S. Attorney’s Office in Los Angeles said on Tuesday.
In plea agreements filed in U.S. District Court in Los Angeles, the three defendants admitted to using confidential financial data about the company to make stock transactions that brought each man tens of thousands of dollars in profits.
Prosecutors said Alan Cao, Quan Zhu and Jun Shi sold their shares in Countrywide after learning the company would not meet Wall Street earnings forecasts for the third quarter of 2004. The men used the proceeds of the share sale to purchase put options and short-sell the company’s stock, prosecutors said.
that brought each man tens of thousands of dollars in profits.
Only “ten of thousands”?
As financial thieves go, these guys are a bunch of pikers!
C’mon boyz, make it worth your while for those 10 years in the can.
“The men used the proceeds of the share sale to purchase put options and short-sell the company’s stock, prosecutors said.”
Oh yes, the SEC will never catch something that subtle. Heh.
I’ve never understood why executives would put themselves in this sort of situation for such meager returns. I suppose the funniest example is Martha Stewart trying to save maybe $40K which was barely a rounding error for her net worth at the time ($500M+). I’m sure jail time and watching her net worth fall by $150M+ during the circus was worth it.
It probably never occurred to them that they’d even be suspected, let alone prosecuted.
Receiving massive entitlements for an extended period can do funny things to the psyche; many people come to think they can get away with anything. Particularly when it comes to relatively small (to their way of thinking) matters. Remember the “only little people pay taxes” quote from Mrs Helmsley.
Haha three smart guys so much smarter than all the others.
Countrywide executives no less. Deborah Poole should be their lawyer.
“the Southerns decided to move to Alabama so they could live closer to extended family. They also say they can’t wait to experience a more affordable housing market. Sharon Southern figures housing runs about $85 per square foot in Alabama ”
Hmmm, depends on where you want to live. I live in Mobile, you won’t get much of a house for that price in the better neighborhoods here. Increase that by 50%-100% for those places. Move to the beaches and it might cost $300-400 per square foot.
But, in the rural areas of the state? Sure, you’ll find some nice homes for that price. Life style might drive you out very shortly though.
Hazard,
I once dated a gal from Op (Opportunity), AL and one day I called her at home. Her daddy answered and yelled, “Honey, there’s a foreigner on the phone wishing to talk to ya”
Yankess and blacks just were not welcomed down there.
“Although prices have tumbled in the last year, Merced still has one of the most overvalued real estate markets in the country, with the median price about 63 percent above where it should be, according to a new study by National City and Global Insight.”
I totally agree with the 63%. Take any current house and divide the price by 3 to get the real price of affordability for the average working joe.
Yeah, that figure estimates an average price at +/-$172,000. Merced household incomes run about 50K, so their numbers are very close. But 172K from the June ‘06 high of 345K is damn close to 50%. Ohhhh mama!
63%, I’m having trouble keeping ahead of these discounts. Wake me up when they’re paying people to go live in BFE.
(Heading out the door to drive back home to BFE)
I’m not sure that’s what they mean. I think they mean a $163k house should be $100k. What you’re saying would mean the house was 200% overpriced.
They’re talking current pricing. I’m talking the high from last year.
Commercial real estate is getting hammered in Placer County, which was the first California county to go negative back in January 2006 (now down 21% from peak).
Sacramento Bee:
In the up-and-down world of office leasing, Roseville and Rocklin for years have been the closest thing around to a sure bet. Until now.
Demand for new leases is down. Office vacancies are up. And a lot more space is under construction. “After many years, South Placer County is changing from a landlord’s market to a tenant’s market,” said developer Abe Alizadeh….”Incentives (for tenants) will be going up. Lease rates will be coming down.”
…
“It’s frightening,” said Elaine Hartin, a broker with 17 years of experience in the Roseville office of Cornish & Carey Commercial.
…
[W]ith 868,508 square feet of office space sitting empty — and another 868,000 square feet under construction — it’s unlikely the market will turn around in the short term, said Grubb & Ellis’ Walker. “I’m not preaching doom and gloom, but you’ve got to be realistic,” he said. “We’ve got a lot of questions to answer.”
“Roseville and Rocklin could potentially see 40 percent vacancies,” [Chris] Strain [executive director of brokerage Cushman & Wakefield's Sacramento office] said. “And things won’t come back to a reasonable level — I’m talking about 15 percent vacancy — for three years. And that’s if the economy doesn’t go south on us.”
Just a few years ago they were pitching that area like it was the second coming… Once a hole always a hole.
Jobs gone by the millions oversea, what are they thinking?
Build in China, India, not here.
“‘We are going through some troubling circumstances. I’m suspecting it’s not going to be as severe as in the 1990s,’ Kleinhenz said. ‘(But) I don’t see the trough bottoming out just yet.’”
Right there Kleinhenz you D…A$$ it’s not going to be anything like the 90’s. You’ll wish it was the 90’s, it will be far worse over the long haul.
Lately I am thinking it might be better idea to build the wall not betw. US and Mexico, but betw. Inland Empire and the OC to keep those people from flooding back in again. Lovely to bike to beach from rented hovel, temp. 72 degrees… not a bad idea to wall off Phoenix also.
Great. Then we on this side of this wall will finally contain you locusts.
Where’s our wall in Vegas to keep out the Californians?
FINALLY some truth from the industry.
“‘We are going through some troubling circumstances. I’m suspecting it’s not going to be as severe as in the 1990s,’ Kleinhenz said. ‘(But) I don’t see the trough bottoming out just yet.’”
He is correct it is not going to be as severe it is going to be way worse, and for a myriad of reasons that just make simple economic sense that any moron could figure out, the gig is up the hand has been called.
Hesperia, California has to be the most desolate, hot, dry - desert dustbowls anywhere in existance yet while visiting the Adelanto dry lake bed this last weekend, I was astounded at the amount of new construction going on out there. It’s no surprise that Hesperia is experiencing RE price declines, but then again that’s like saying I’m surprised that the median for homes in Antartica are declining!
You couldn’t sell a house in Hesperia, Apple Valley or Victorville today if you loaded a shotgun with gold dust and “salted” all 4 walls with it
The high desert of California is about to go into the meth cycle. The ones who stay behind or move in during the next 6 years will mostly be meth manufacturers. Lots of nooks and crannies for them to hide in. Abandoned homes that specuvestors leave behind are good places for the meth makers. It’s been done in the 90s.
My only memory of Hesperia was pulling up to a motel looking for a place to stay overnight. The front desk was in a shack like structure out front, and when I walked up to the counter I saw the room rates posted by the hour. It was a surreal experience and I turned around and got the he** out of Hesperia.
“Prospective buyers worried about falling real estate prices are staying away, which is the real reason that there’s been a big drop in sales activity”
Worried about falling prices?? Are they nuts? Worried about them not falling enough is more the case!!
BTW - the Poole woman should be fired!
“Deborah Poole, a Realtor in Oxnard, says now is a great time to buy. She describes Ventura County’s housing market as realistic and priced fairly. Ventura County’s median sales price for an existing single-family home was $699,480 in May, the fourth-highest mark since January 1990.”
Poole’s 2% cut on the sale of a 700K SFH is $14,000. I’d say she has every reason (14,000 of them to be exact) to trumpet ‘Now is a great time to buy!’ Finding a buyer that stupid is getting more difficult by the day, though.
You would be surprised, the stupid here are still everywhere….for the moment but even the largest lakes have a bottom somewhere.
Kismet?
I had just seen the following on another blog:
Stan I can’t find the deepest lake in SD, but here’s the deepest ones in the world. alldeepbluedotcom
Baikal Siberia, Russia 5,369 ft (1,637 m)
Tanganyika Africa (Tanzania, Zaire & Zambia) 4,708 ft (1,435 m)
Caspian Sea Iran and Russia 3,104 ft (946 m)
Nyasa Africa (Mozambique, Tanzania & Malawi) 2,316 ft (706 m)
Issyk Kul Kyrgizstan, Central Asia 2,297 ft (700 m)
Great Slave Northwest Territories, Canada 2,015 ft (614 m)
Crater Lake Oregon, U.S.A. 1,943 ft (592 m)
Lake Tahoe California & Nevada, U.S.A. 1,685 ft (514 m)
Lake Chelan Washington, U.S.A. 1,419 ft (433 m)
Great Bear Northwest Territories, Canda 1,356 ft (413 m)
Lake Superior Canada & U.S.A. 1,333 ft (406 m)
Titicaca Peru 1,214 ft (370 m)
Pend Oreille Idaho, U.S.A. 1,150 ft (351 m)
They always forget this one. The prettiest place I’ve ever seen.
http://en.wikipedia.org/wiki/Nahuel_Huapi_Lake
Ok - dinner Saturday night with some new friends - we happen to have kids in the same class. Come to find out, the wife is a realtor, actually seems to be very level headed, not a spinner. Of course RE came up…she states, well, we’re up 5% this past year. I could not help but resist bringing up the Case-Shiller numbers showing ~6% yoy decline for LA…got the ‘no comment’, non response…typical, throw out a totally bogus ‘median’ to reel them in, feign ignorance when the reality differs. I let the conversation drift off, didn’t want anyone to be embarrassed. Unfortunately, my wife is tuned in to me, was not real happy I brought up CS, but weathered that ok.
Anyone who brings up Case-Shiller at the dinner table is a true friend of mine. We’d be talking the entire night away.
Warning: Do not get Slim started on economics at the dinner table. Just don’t.
I have these same BS episodes all the time. A week ago I sorta lost it and openly stated my glee at falling house prices. Went over like a belch in church. When angerly challenged, I said simply that for every seller losing money, a buyer is saving money - and my kids are currently looking to buy. The response? ‘That’s my retirement your talking about!’ My reply was - ‘you oughta earn your retirement, not expect my kids to pay for it.’ Needless to say, end of party.
Sounds like my kind o’ party, Lights. Heck, I’d help you keep it going, me and my Case-Shiller.
Ah yes. It’s good to be the one to gloat now. My friends have realized that I keep up on the news and that I’ve put my money where my mouth is.
The strange, pained looks are becoming less frequent. Even my former realtors have stopped feeding me the BS.
Of course, at the end of all this everyone will agree with me but act as if they’ve been on the bandwagon with me all along. That’s when they’ll all say RE is a horrible investment. That will also be my cue to buy.
“My reply was - ‘you oughta earn your retirement, not expect my kids to pay for it.’ Needless to say, end of party.”
That’s funny… very funny
Enhh…just tell the wife to check out the income of the average realtor and she will get a kick out of that. Those people who act like they are all that and then some more are normally broke worse than me! HA!
Why, praise the Lord! I think I found a home!
should have bet her aS*
that shuts em up
she states, well, we’re up 5% this past year.
Forget the CS, next say, “Wow up 5%, with home sales dropping like they are that must make it even harder to make a buck.” Make sure your wife is powdering.
“sometimes there were 20 counteroffers,’ she said. ‘It was crazy.”
The biggest CON put on the buying public was there were multiple bidders… Even today they are talking about multiple bids… Sales Down 50% Inventory up 100% and realtors always talk up multiple bids… I ask them what the other bids are… All I get is “Sorry, the bids are sealed”.. “Its Confidential” …”This and that run around… but be sure to give your best bid?”
The whole thing is so fake and full of fraud.
Prices will drop like a brick… mind my words.
After these overpriced POS sit rotting in the desert SUN for another year or two, perhaps these Realtywhores will QUIT putting “Hurry”, “Won’t last long” and ” Last chance” in their stupid ads for their clients DREAM prices.
Nah! I think they will still do that.
Today on the conservative talk radio station there was a commercial from some huckster pushing the idea that you can retire in five years in real estate. Just attend his stupid seminar - sucker! Ha! Make himrich, is all that you would do, besides becoming trapped in a declining asset.
Ben, sent you some contribution using PAYPAL. Like me, I guess not many KNOWS that this blog is supported by donation to a good instant. Thought Google was taking care of it.
Anyway THANK YOU.
COMMERCIAL RE thread
is you hood cracking yet ?
here in DC area it’s ever so slight 18 months after residential peak
Not enough to really guage it yet, but think I might smell a little slowdown in the commercial sector. Just waiting to be sure & see if it’s just a blip or not.
ummm…meant “gauge”. Sorry
Have any of the former Tower Records locations in the DC area found new tenants yet? I don’t think so. That’s some very good commercial space. Also, the Tysons Corner CompUSA is one of the ones being liquidated. Wonder if anything else pops up quickly in that space.
“People are still fearful that if they don’t sell, they’re going to lose out.”
Only flippers and the stupid few.
The flippers have to get out to salvage something, if even possible now.
For those who already own a house (bought in 2003), lower price for my home means that my move up house will also cost me less. So I am waiting till I feel some/all conditions are met:
1. We are reasonably close to the bottom
2. An actual ’special’ house that we can afford comes up for sale
3. There is a house that meets our requirements that we can afford
Of course, there is another reason to try to get out now. Get out, hoard your money, and wait for house prices to go down further. Unfortunately, we like our house too much to do that now.
What happened to “people are fearful that if they don’t buy, they’re going to lose out”??
‘Prices have plateaued in Southern California,’ Appleton-Young said.
Really? I thought plateaus were fairly level at the top. I think the word you’re looking for is “peaked.”
“Stock prices have reached what looks like a permanently high plateau. …”
Irving Fisher, leading U.S. economist , New York Times, Sept. 5, 1929.
And didn’t it take 25 years for the stock market to climb back to the lofty level it attained in pre-Crash 1929?
Right you are! But how long did it take for the stock market to climb to the 1924 level? Probably far fewer years. That is a testament for dollar costs averaging in stocks. Of course we’re talking real estate. Can’t dollar cost average into a house.
Big deal. The revaluation of Gold from $20 to $35 certainly made it easier to regain past highs — nominally.
What happened next was the draft of all time!!!! Could see it this time ………
It won’t be respected. Americans these days are not unified, less educated, much less ethical and much more violent than the Americans in the 1930s.
“The state group estimates that in Orange County it would take 19.8 months to sell all the homes currently listed for sale.”
Wow the market is headed for a big crash their is simply no doubt about it. The numbers speak volumes and just wait until Orange County has over 30 months worth of standing inventory.
“‘Prices have plateaued in Southern California,’ Appleton-Young said. ‘Prices are reflecting a change in the composition of what’s selling.’”
I wonder if the plateau is permanently high in Leslie’s seasoned judgment?
Although prices have tumbled in the last year, Merced still has one of the most overvalued real estate markets in the country, with the median price about 63 percent above where it should be
And one of my friends bought an investment house there despite my strong warning it was overvalued. He admitted he could be one of the FBers there. Hate to see him lose because he is a good guy and friend. But, still no excuse for buying in at the peak.
Darwin’s law doesn’t give a crap whether he’s a good guy or not
The Southerns think $329,900 is a fair price for their three-bedroom, three-and-a-half bath house, which was built about 15 years ago.
And I think the price somewhere south (pun intended) of $100K would be a fair price in my opinion (where it was at the time it was built, plus 3% per yr for inflation).
The Southerns think $329,900 is a fair price for their three-bedroom, three-and-a-half bath house, which was built about 15 years ago.
And I think the price somewhere south (pun intended) of $100K would be a fair price in my opinion (where it was at the time it was built, plus 3% per yr for inflation).
News at Countrywide
http://money.cnn.com/2007/06/26/news/newsmakers/bc.countrywide.reut/index.htm?source=yahoo_quote
“…just wait until Orange County has over 30 months worth of standing inventory”
You infer: 30 months of $650,000+ standing inventory?
…eating “Neil’s Buttered Popcorn” while listening to James Taylor signing: “…Let it fall down, let it fall down, let it ALL fall down.”
Oh, when OC breaks its previous record, it will be a schadenfreude moment…
Yet my best friend has a place down there since 2004… (ouch).
The mortgage companies still have large “transition” staffs. If that ends soon… we’ll see 30 months of inventory.
Anyone else notice how much retail and small business space is vacant in Southern California? Everywhere I drive I see vacant retail. Two blocks from Rodeo drive on Wilshire blvd (the Crate and Barrel had nice dishes for $2 to $4… We drove the wife’s 1993 Accord and parked next to a Massaratti in the $2 garage.
Torrance? Tons of vacant buildings. Everywhere.
Got popcorn?
Neil
Commercial Owners haven’t grasped reality yet asking 3-6 bucks a sqft not too many retail shops can handle that consistently. You are going to see a lot more vacancies it’s only just begun. Componding the problem is that most of the inventory you see vacant was brought a 3-6 Cap Rates. Not many are going to be able to hold on once the Commercial market starts fading.
Check Kunstler’s latest missive — great chart on per capital retail space.
‘She describes Ventura County’s housing market as realistic and priced fairly. Ventura County’s median sales price for an existing single-family home was $699,480 in May, the fourth-highest mark since January 1990.”
I’m watching the market implode in Westlake Village, 91361. If the average income (about $70K) in Ventura County triples then the market will be ‘fairly priced’. I suspect in an agricultural place where the major non fruit picking jobs are at (gulp) Countrywide, (Colorado bound) Amgen, and military/government jobs paying $55K, the market will continue its free fall for another year or two.
Deborah Toole RE broker to the stars. I used to walk up behind the abandoned Kmart off hampshire Rd, funky little old homes up there with a view of 101 fwy for only 600-700K. Westlake is a very wealthy area. You know they built many of thoses homes with Aluminum wiring? Had a few fires due to oxidation back in the day 1970’s. Now thoses homes are what 1 million dollars? Nice
Newly constructed 4200sf SFH was only $600K in 1990.
W.V. 33.7% drop Y.O.Y
I’d say “implode” sounds about right. A friend of mine has reduced his house from $2,225,000 to $1.5m over the last year. That’s right in line with the -33%. I wish him luck.
“Standard & Poor’s Sees Dramatic Rise in Alt-A Delinquencies”
http://www.inman.com/inmannews.aspx?ID=63661
The Alt-A financed owners must be looking up the road to the peak of the reset schedule. This is very forward looking of them, given that Alt-A resets are not scheduled to peak until 2011 or so.
This is heavy reading………but good info.
Where Did the Risk Go? How Misapplied Bond Ratings Cause Mortgage Backed Securities and Collateralized Debt Obligation Market Disruptions.
Warning…….pdf file
http://hudson.org/files/publications/Hudson_Mortgage_Paper5_3_07.pdf
Wow, that is some detail. That will keep me busy for some time
I made it to page 3 before I ran into the phrase “swaption volatility” and had to take a break.
Is Temecula part of the IE? Can anyone tell me about it’s status?
I have a family member living there who is getting their RE license. Her husband is a general contractor and of course they are going to ‘get rich flipping houses’.
Just wanted to know how RE is in that city.
Temecula is a big commute to just about anywhere there are jobs, so no, it’s not different there. In fact, based on the current overhang of inventory they will probably go bankrupt with this particular business plan.
With the collapse of SD RE you will see people leaving Temecula and heading into the city to rent and save gas money.I knew some people that sold in SD and then moved to Temecula, sold in Temecula and moved onto LV. I haven’t talked to them of late but I’ll bet they’ve spent all their winnings and will be working the rest of their lives working for a casino.
Yes part of IE. Say a prayer for them, they’ll need higher power as hopes on their own part won’t cut it.
Do they always go to the local bar a 1:58 am to have a drink of Kaliforica kool-aide?
“A Temecula real estate agent walks into a bar with a parrot on his…”
Temecula is part of the IE and it is tanking BIG TIME! There was a ton of RE fraud down there and there are loads of foreclosures on the market. New home prices are dropping faster than a hookers shorts. It’s still overpriced even with a gazillion homes on the market. Anyone thinking of flipping in Temecula is nutz.
“…dropping faster than a hookers shorts.”
I never knew real estate could be that stimulating.
Now come on GS………you love it
Sad to hear about Temecula. The developers were ripping up all the vineyards and paving it for cheap speculators. Temecula use to be known for its whine.
Not to mention the crap indian casinos.
Did a little research there and concluded I just needed to get completely out of Clownifornia.
I lived in Temecula and still have family there. No Vineyards were ripped or are being ripped. Too much cheap vacant land available.
Is Temecula part of the IE? Can anyone tell me about it’s status?
No, but it is as bad as the IE. Go to piggington.com lots of info on the outbreak of “brown grass” in Temecula.
“a permanently high plateau”…….. and…… “it’s all contained”
Well ok Goldilocks……..
The definition of Plateau
“A plateau is a large highland area of fairly level land separated from surrounding land by steep slopes”
There is a steep slope surrounding this plateau too! On the bright side, it’s all downhill from here……
“Fear gauge” up as subprime woes dog stock market……….
http://yahoo.reuters.com/news/articlehybrid.aspx?storyID=urn:newsml:reuters.com:20070626:MTFH98271_2007-06-26_21-50-37_N26356755&type=comktNews&rpc=44
Nikkei appears to have some heartburn at the start: down 123.
Does Japan have a PPT? Because maybe they need to get one…
http://www.marketwatch.com/quotes/jp/1804610
Hmmm, Wonder if anyone here knows,is that a foreclosure or eviction notice on this house.
http://www.propertynut.com/_FILES/ad_photos/124419_1126_Y449.jpg
http://phoenix.craigslist.org/rfs/357966891.html
I’ll give you 250K for that house in the desert. My gawd, the AC bill for that monster has to be several hundred a month.
My guess 800-900 a month to heat and cool. Next year that house will probably be priced at 750k
it’s the gardener’s bill for running a blower over the 120* gravel….
I guess they don’t cut the grass in Tuscany!
http://sandiego.craigslist.org/rfs/360123269.html
(Hurry, wont last!!)
How about 250K and swift kick in the rear. Come on now. That is just too much. Love that one picture. What is that the green room?
Looks like the kitchen ceiling has been painted green, yellow and blue? Like a parrot.
250K?? bwwwaaahhhhhaaa
How about 50k and you thank me for being generous. 250k are you kidding me… sheesh
Lordy, that is a hideous house. What’s up with those stupid wide pictures? Looks like a house for short, fat trolls.
“I guess they don’t cut the grass in Tuscany!”
You call that grass? Yuck!
Not Tuscan? At least the backyard is steep enough to be terraced.
But what I’m concerned about, it looks like that house doesn’t have any garage! Can anyone find the garage? It must be cleverly hidden from view.
S&P Case/Shiller price changes shown on Lansner’s blog are hard to digest because they compare YOY changes to MOM changes. Though annualized monthly rates of change are noisy, they at least get the order of magnitude right in the comparison. I add these below to give Mr. Lansner a bit of help…
Trend LA/OC San Diego U.S.A.
Vs. year ago -2.62% -6.70% -1.86%
Vs. month ago -0.46% -0.27% -0.37%
Annualized monthly -5.38% -3.19% -4.35%
-4.35% annualized rate of change for the U.S. as a whole is huge, IMO. And the LA/OC rate of price decline is nothing to sneeze at, especially when you note that it is accelerating and you factor in the tendency of the typical La-La Land resident to live in a permanent state of denial.
I’m not sure you should extrapolate the MOM changes to YOY–as you say MOM is noisy. The YOY changes are bad enough, especially if you think about it in terms of real (inflated) dollars, which means the San Diego homeowner, e.g., is losing about 10%/year. Compared to a 5% money market you are ~12% behind the curve. And with leverage you may be in a world of hurt.
“…as you say MOM is noisy.”
I couldn’t care less if other people get the point. IMO, it is better to compare annualized rates of change, with a mental allowance for the fact that one of the measures is more volatile than the other.
I have never been one to shy away from a statistic just because it is volatile; in fact, I prefer statistics which are less biased and more volatile to one which has lower volatility and known bias (e.g., the core CPI).
Wow.
Not just the fact that that house is anything but “Tuscan”, is the side bars SCREAMING about 100% loans, 0% down that come with the listing.
I smell desperate people.
The Southern’s are greedy and unrealistic.
Zillow says they bought their home for $173,000 in 2002. I don’t care if they spent money to remodel. Unless they’re flippers, or the house was a bombed-out wreck, they made a lifestyle choice. New owners shouldn’t be expected to pay top dollar for previous owners’ decorating selections.
If they really wanted to sell, they could sell for far less than $360,000 and still not lose. But they want to gross $150,000 for 4 years of ownership.
See house here:
http://tinyurl.com/29o2zj
Bad, there are ZERO windows on the “living” side of the house. I didn’t know that builders built for the Dracula demographic.
Looking at the Zillow data, including comps from their neighborhood, it looks like they should price at $299K and call it a day. $299K now or $?? next spring.
lol Zestimate at 317,000. Ouch
The great thing about this bubble is it is just like holding a mirror up to our society. This bubble shows, in vivid color:
1. How greedy the average Joe is.
2. How stupid the average Joe is.
3. How corrupt our corporations are.
4. How corrupt and useless our politicians are.
5. How totally worthless our news media is.
6. How easily we slit each other’s throat for a buck.
7. What horrible shape our education system is in.
8. How inadequate our regulations are.
9. How despicable Wall Street is.
This bubble really shows our country for what it is. The only thing missing is the implosion and I will not be crying when it comes.
IT IS LONG OVERDUE.
As Bush would say…Bring em on!
Hey were getting better slowly over time.
Remember this country was founded by people who:
1. Stole land
2. Bought or ‘grabbed’ slaves to work stolen land to raise tobbacco/rum.
3. Dont forget second industry of subdividing land and selling it to next chump.
.
.
.repeat
yeah…Don’t you just hate the Enlightenment and age of Reason? Let’s go back to the Inquisition and Augustine!
Which part of hellokitty’s post has to do with the Enlightenment or the Age of Reason?
It’s funny when simple, undeniable facts make folks blow a gasket.
Don’t worry … Bill’s gaskets were cracked to begin with.
That said, I think we need a second Enlightenment. With all the slavery and human rights abuses around the world, with all the ignorance and poor education, with all the tyranny and corruption growing like arterial plaque in the halls of democracy, with religious leaders calling for their flocks to kill infidels, it’s time for a return to skepticism, rationality, and even optimism for humanity’s future.
New Housing Numbers: Sales, Prices and Lennar
http://www.cnbc.com:80/id/19437929
Haven’t seen this posted yet, sorry if it’s a re-post.
Last week,in San Diego, we heard a radio commercial for a web site, sponsored by a non-profit organization.
Just checked it out, and man…what a bunch of shills. Of course, it’s really backed by the REIC. Here is a survey I thought was interesting:
http://preview.tinyurl.com/yr4nyz
Here’s the link to the homepage:
(Campaign for California Homeownership)
http://www.sandiegohomeownership.com/
“Sales are very weak in the low end of the market”
You can polish a turd all you want and it is still a turd…….all those “low end places” in “da hood” have suddenly been exposed for what they are….low end places in da hood.
Oh how could we have been so blind?……..
Countrywide falls on rumors of subprime probe
Tue Jun 26, 2007 4:03PM EDT
Market News
Stocks dip again as subprime fears weigh
NEW YORK, June 26 (Reuters) - Countrywide Financial Corp. (CFC.N: Quote, Profile, Research) shares fell while the cost to insure its debt rose on speculation Tuesday that the largest U.S. mortgage lender may be involved in a government investigation related to subprime loans.
Rick Simon, a Countrywide spokesman, declined immediate comment.
We are all ears, Godzilla.
http://www.reuters.com/article/bankingfinancial-SP/idUSN2638040520070626
I showed a picture of the Tuscany house in SD to my 5 yr old daughter. I asked if she wanted to live in that house. She said a strong NO - it is too ugly. Out of the mouth of children, … (sometime some real wisdom the greedy SOBs can’t picture).
‘Sales are very weak in the low end of the market,’ said Bill Velto, manager of Tarbell Realtors in Upland. ‘They’re stronger in the high end, but in the rest of the market, inventory is way up.”
THIS IS WHY MEDIAN HOME PRICES IS NOT AN ACCURATE INDICATOR OF HOME PRICES. PRICES TO SQ FT MORE ACCURATE.
Price to lot size isn’t a bad measure either but nobody cares about lots… yet. They will when the zero-lot houses decay and the whole area turns to complete crap, I think
(not to mention in about 10-15 years trying to get the gas money to go to the shopping center 2+ miles away)
“‘We are going through some troubling circumstances. I’m suspecting it’s not going to be as severe as in the 1990s,’ Kleinhenz said. ‘(But) I don’t see the trough bottoming out just yet.’”
This might be the first time during this bubble that I’ve seen a realtor acknowledge that there has EVER been a previous downturn in real estate, let alone one just last decade!
“In fact, it’s a prime time to buy, said 30-year veteran broker Loren Gonella. ‘(Interest)rates are down, inventory is up and sellers are willing to deal. What’s not to love?’ asked Gonella.”
Um, the prices?
“For A Seller, It’s All Doom And Gloom In California”
Can we please get the phraseology correct? Gloom always comes before Doom.