A Lot Of Stressed-Out Sellers In California
The News Sentinel reports from California. “Scott McClarrinon says he was duped. The Galt native thought he was buying into a dream when he and his wife purchased their home at The Villas of Lodi in November 2005. Yet as soon as McClarrinon moved in, his dream and his neighborhood began to crumble.”
“The homes that had been snatched up so quickly at the peak of the housing boom sat empty for months at a time, with their owners nowhere to be found. ‘For sale’ signs popped up throughout the neighborhood, replaced later by ‘for rent’ signs. Green lawns turned to brown, left unkempt in the hot spring and summer months. Tall weeds began to sprout in place of neatly landscaped front gardens.”
“‘There’s just not a lot of homeowners here,’ he said this week, noting that his neighbors now consist of renters, from a trio of exotic dancers next door to a group of five young men nearby who throw loud parties late into the night.”
“McClarrinon and a few of his neighbors acknowledge that they bought their homes at the worst time possible. (Home prices have slumped since 2005).”
“But they also contend that KB Home misled them about what kind of community they were moving into, a now blighted neighborhood they say threatens to drag their home values even further down. They say the home-building giant promised to not sell to out-of-town investors.”
“The company did have buyers sign an agreement requiring them to occupy their homes for at least the first year, said spokesman Craig LeMessurier. ‘It’s our policy to not sell to investors,’ LeMessurier said. ‘But we can’t always guarantee that that’s not going to happen.’”
“He noted the company can’t strictly enforce the one-year occupancy rule either.”
“‘For sale’ signs dot many Lodi and Stockton neighborhoods. And foreclosure rates in San Joaquin County are the highest in the nation, according to RealtyTrac.”
“As of this week, there were 1,952 homes in foreclosure in the county, according to Web site.”
“‘It’s an issue that is really going to take off,’ said Joseph Wood, the city’s top code enforcement officer, noting his Stockton neighborhood has seen signs of the same problem. ‘It already has increased…and will progressively get worse because of the way the market is.’”
“The experience has frustrated McClarrinon along with neighbors Christine and Darin Parvin to no end. The three feel stuck in the neighborhood, unable to make a return on their homes because of the slumping market, but also because any potential buyer would be turned off by the blighted homes that surround them.”
“‘I’m so mad. I’m just mad,’ McClarrinon said.”
The Davis Enterprise. “Davis homeowners have been largely spared from the rising numbers of foreclosures this year. But it’s a whole different story on the other side of the Yolo Causeway, in West Sacramento.”
“Those numbers are still rising, week by week, as cooling home prices, rising mortgage interest rates and competition from home builders take their toll. In other words, there are a lot of stressed-out sellers.”
“‘Right now, we have 273 houses for sale in West Sacramento,’ said Lean Hertel, a Realtor in West Sacramento. ‘Of those 273 homes, 102 are being advertised as ’short sales.’ And 34 are already owned by the bank.’”
“‘Foreclosures seem to be predominant in areas of new construction, where builders have encouraged buyers to come in with no down payment, and they have qualified them (for a mortgage) on marginal income,’ said Herb Cross, VP of Lyon Real Estate.”
“Hundreds of home buyers took the plunge and bought new homes in West Sacramento around the time of the housing market’s peak in 2005. ‘A lot of those people are now finding that the terms and conditions of their loan are changing,’ Cross said.”
“‘Because they got 100 percent financing when they purchased the home, when prices were higher, they find they can no longer obtain 100 percent financing to replace their existing loans, because the price of their property has declined,’ Cross said.”
“‘The developers are hurting, too,’ Hertel said, and some builders are offering $100,000 in upgrades at no charge, if you use their financing. But that can make things even tougher for the individual homeowner trying to move on.’”
“‘You’re competing with the developer’ for the buyer’s attention, Hertel said. ‘And the developer has 15 homes to sell, while you’ve got one.’”
“‘The banks have so many of these short-sale contracts to negotiate and process, we’re struggling to get them through,’ Hertel said.”
“For buyers, it’s a favorable market, Hertel added. ‘Two years ago, I was telling buyers, ‘Here are three houses, pick one, and we’ll do the best that we can do for you.’ Now, it’s ‘Which one of these 20 homes do you like, and what would you like to pay for it?’ Hertel said.”
The North County. “A mortgage broker whose clients are losing more than 100 local houses to foreclosure has agreed to surrender his real estate license, according to filings by a state agency.”
“Real estate agents described Stonewood’s operations from 2004 to 2006 as highly unusual. Stonewood would typically seek out agents whose listed houses had remained on the market for a month or more, agents said.”
“Without arranging for clients to see the houses, Stonewood would then offer as much as $120,000 above list prices, agents said, with fine print later specifying that 10 percent to 20 percent of the sale price would go back to the company as commission.”
“The arrangement seemed to target sellers who might be eager to move on without asking too many questions, agents and neighbors said, noting that a historic boom in local real estate values had just begun to ebb.”
“At least two neighborhoods where the company focused its operations have been hollowed out: On several streets in the Copper Canyon area of western Murrieta and several others in eastern Murrieta, notices of ‘bank-owned property’ are displayed in front-facing windows and alongside ‘for sale’ signs.”
“Between 100 and 150 houses appear to be involved, based on interviews with former owners and a semi-public real estate database.”
“It isn’t clear to what extent the foreclosures could have on home prices in particular neighborhoods, though median prices in Murrieta have fallen about 15 percent since peaking above $500,000 in May 2006, compared to one-year declines of 3 percent to 10 percent in most parts of Lake Elsinore, Menifee and Temecula, according to DataQuick.”
The Record Searchlight. “With more than 2,000 homes up for sale in Shasta County, it’s a market where buyers have the upper hand when negotiating a price.”
“‘We are not seeing too many full-priced offers,’ said Mike Neves, president of the California Association of Mortgage Brokers Greater Northstate Chapter. Home sales in Shasta County this year have been down every month compared with last year.”
“The subprime mortgage market meltdown means 100 percent financing is more difficult to obtain as lenders have tightened underwriting requirements. The tougher rules have shrunk the pool of buyers, said Nicole Dutell, branch manager at The Prime Financial Group in Redding.”
“‘A lot of people who were discouraged when the market was so red hot have not tried again, they have given up,’ Dutell said.”
“‘The developers are hurting, too,’ Hertel said, and some builders are offering $100,000 in upgrades at no charge, if you use their financing. But that can make things even tougher for the individual homeowner trying to move on.’”
Just get them to give the 100k upgrades and then talk them down to 100k for the house. Should solve the problem.
Exactly what I was thinking. If they are willing to give $100k in upgrades, I’d rather they just knock that amount of the price of the house. Since *I* would be buying the house to live in it (a novel idea!), I would just plan on upgrading a little at a time, *IF* it was really needed.
“The experience has frustrated McClarrinon along with neighbors Christine and Darin Parvin to no end. The three feel stuck in the neighborhood, unable to make a return on their homes because of the slumping market, but also because any potential buyer would be turned off by the blighted homes that surround them.”
“‘I’m so mad. I’m just mad,’ McClarrinon said.”
Here ya go….this is what I’m talking about. If he bought the house to LIVE in, what difference would it make what the return on the house is? They’ve only been there for, what, less than 2 years? Obviously a flipper. They were not “duped”….they are just realizing that their “bright idea” to make a boat load of money in a flash was not so bright after all. I do not feel sorry for them.
BayQT~
“but also because any potential buyer would be turned off by the blighted homes that surround them.”
No problemo, none at all! Just reduce the price to twice the average income for the area, qualify the buyers and you’ll have great neighbors. Unfortunately you’ll be upside down for many, many years to come.
exotic dancers moved in nextdoor.. in a couple months their tricks will be parking in his driveway.
Is there any work in Lodi? Besides dancing?
“Is there any work in Lodi? Besides dancing?”
LOL
I live in Lodi and saw this BS coming back in 03′. No way the employment/income base here is near enough to stave the implosion. Every time I drive by the house I was raised in–I cringe…5 or six cars parked out front, people milling in and out. I’ve been happily renting in a good, safe neighborhood just watching this whole thing unfold.
DOC
as of the last census, pop 61k, median household income near 39K.
Job market, culture center on the grape vine and here’s some good news. Lodi has 21 wineries.. so lots of free tastings.. during which an upset homeowner might drown his sorrows.
“Oh Lord, stuck in Lodi again”. Creedence Clearwater Revival.
All hail, CCR!
“The Villas of Lodi”
That name, alone, encapsulates the insanity that was the housing bubble.
Hear hear AKron.
When I saw the Villas being built I told my wife it was a future slum. Little did I know it would happen so soon! We toured them for grins, and were amused to find that as a result of a sweetheart deal between KB and the city of Lodi, homeowners were require to pay an annual fee for street maintenance, even though the streets are not private. This is, of course, in addition to regular property tax and the array of bonds property owners must pay for! I almost feel sorry for the fools who bought.
Kind of like what happened to Palmdale?
http://apnews.myway.com/article/20070630/D8Q30V000.html
PALMDALE, Calif. (AP) - A mother faces firearms charges after she allegedly drove her son’s friends to a rival gang member’s house to take part in a shooting, authorities said.
Michelle Wright, 37, pleaded not guilty Thursday to three counts of assault with a firearm and one count of shooting a firearm at a dwelling, said Los Angeles County sheriff’s Detective Robert Gillis on Friday. She was held on $250,000 bail.
Wright drove her son’s two friends to a rival gang member’s house in Palmdale early Tuesday, authorities said. One of the son’s friends got out and fired at a bedroom window before the three drove away.
omg
but i am not surprised at anything anymore.
palmdale sucks and has increasing gang activity and overall decay.
Definitely NOT a Jew!
“‘There’s just not a lot of homeowners here,’ he said this week, noting that his neighbors now consist of renters, from a trio of exotic dancers next door to a group of five young men nearby who throw loud parties late into the night.”
Wow! I wonder if the 5 guys are partying late into the night with the 3 exotic dancers??? There soon will be a new term…JBH(jealous bitter homedebtor) instead of JBR cause it looks like the renters are having all the fun!!!! Property values??? Who the heck gives a $hit!
I know this sounds terrible, but many here have commented on the fact that they weren’t even thinking about buying a house when they were in their early-mid 20s.
That is the natural order of things, IMO.
The kids (strippers & 5 single guys) in this article are having the time of their lives — not worrying about home maintenance, property taxes & rate resets.
Someday, we’ll get back to a time when homes were meant to live in, and neighborhoods can become stable again (instead of the constant churning by flippers & co.).
http://tinyurl.com/3chkou
Interesting article from Saint Louis. Builders report bad times, may have layoffs. They don’t understand why, as “they haven’t had to run-up like the boom areas”.
Hasn’t Saint Louis been emptying for decades? I would think that merely flat, let alone rising, real estate values would indicate a speculative hysteria in those circumstances.
Don’t confuse the $100K of upgrades for $100K of real money. The $100K of upgrades are priced in “builder list prices” for these upgrades. I am highly confident that any homeowner who has the ability to do the after the closing would probably be saving half the money. Not to mention that not reducing the price helps the comps too…
“But they also contend that KB Home misled them about what kind of community they were moving into, a now blighted neighborhood they say threatens to drag their home values even further down. They say the home-building giant promised to not sell to out-of-town investors.”
Bring on all of those lawsuits. The major builders are in a world of hurt. it doesn’t matter what their stock prices do, they have some big headaches coming in the near future. Not all of them will survive. KBH seems to be a pretty good candidate for not being able to survive all of their self-inflicted wounds.
Just wondering, would these FB’s have a legal leg to stand on? I’m not a lawyer, but it seems they just might (even though the idea of them litigating themselves out of this mess turns my stomach).
Since their purchase was predicated on the clause that investors wouldn’t be allowed, then technically KB didn’t live up to its end of the deal. In addition, KB admits in the article that it’s difficult to enforce the no-investors clause. Difficult or not, it’s their legal responsibility to do so, isn’t it?
If the FB could prove that KB’s failure to enforce its part of the contract caused their home value to decrease under the purchase price, it seems like a court might rule in their favor. Now, proving that causation probably would be a big problem, and without them actually selling their home and taking a $ loss, it would be hard for them to prove that they’ve been materially harmed by KB’s negligence.
As I said, I’m not a lawyer or a judge (despite my handle). It just seems like some “enterprising” law firm might try to come up with a blueprint or template to prove that homebuilders didn’t live up the deal, making it null and void. Such a template could be used in cases against any number of homebuilders, most of whom work off the same business models (that is, screw the customer as much as possible). Wouldn’t be easy, but it would sure tie up all parties in court for a good long while.
Anyone have any thoughts?
– Judge Smales
“You’ll get nothing and like it!”
Oh, they could enforce the rules but that would mean taking the house back and that isn’t going to happen is it ?
Since their purchase was predicated on the clause that investors wouldn’t be allowed, then technically KB didn’t live up to its end of the deal. In addition, KB admits in the article that it’s difficult to enforce the no-investors clause. Difficult or not, it’s their legal responsibility to do so, isn’t it?
No. Contracts between two parties can be renegotiated at will. Third parties have no input.
Note IANAL but this is pretty much common sense.
True, but wasn’t there a contract between KBH and the FB that stipulated that they wouldn’t sell to out-of-town investors?
Only if KBH wrote that into the contract (or made it a central part of their sales pitch, perhaps.)
I can’t deny smiling from ear to ear watching KB and Beazer get kicked the last couple of weeks.
Speaking of KB…..I read a few articles that said KB had started to build smaller (read: less expensive) homes that would, hopefully, draw in buyers. My take on this is that they are hoping that this will slow down or stop the drowning process that they are experiencing.
Here are a couple of those articles:
http://www.chron.com/disp/story.mpl/ap/fn/4934023.html
http://www.forbes.com/feeds/ap/2007/06/29/ap3873578.html
“In recent months, the company has rolled out a new line of smaller, more affordable homes that it hopes will jump-start sagging sales.
The move by one of the nation’s largest homebuilders comes amid a worsening housing slump that analysts now say could last for several more years.
“Smaller homes generate lower revenues, but they sell faster, therefore the cash returns are better,” said KB Home’s chief executive, Jeffrey Mezger.”
BayQT~
There are two KB developments near me in Davis. The just reduced the price of plan we liked by 10k this morning for a 50k reduction since mid April.
there goes the median price…lol
I always knew that the homebuilders had been building larger than average needed home so it can continue to prop the median price up…making the average joe sixpack to think that their house has gone up in value.
Beazer didn’t get kicked. Remember that scene in the movie Airplane where they beat the heck out of the girl that was freaking out? That is what Beazer had done to it. I think there is still a waiting line and more to come.
I’ll bring the numchucks.
“He noted the company can’t strictly enforce the one-year occupancy rule either.”
Ah, the moment when the homeowner realizes the promise was a sales pitch.
There’s just not a lot of homeowners here,’ he said this week, noting that his neighbors now consist of renters, from a trio of exotic dancers next door
He’s bitchin?
How a next door neighborhood who owns a set of Iditarod dogs
who howl for more supper day and night.
If it were me, I’d run right over, introduce myself to the ladies and offer my services as a “handyman”, if ever needed-PRONTO!
Might as well make the best of a bad situation.
LOL! I was thinking the same thing!
Lemonade from lemons, as they say…someone has to do it.
Actually I think he has a situation where he has crap rather than lemons and the best he can do is a crap sandwich.
He’s bitchin?
How a next door neighborhood who owns a set of Iditarod dogs
who howl for more supper day and night.
That would certainly be bitchin’, haha!
oh(LOL)..according to the NAR and the Mortgage Brokers Assoc things are looking better..the bottom is here already…
They better get ready to put their McMansions and BMW’s on the market..oh..but first hope for a buyer!
Let’s see. November 2005 was about my 18 month anniversary of when I realized California RE was in a bubble. I noticed the Fresno area prices were bubbly. All the long commutes to the Bay area - bubbly. Wasn’t Ben’s blog operating in November 2005? The McClarrinon’s were certainly duped - by themselves. They are blaming the marketing. Let the buyer beware. I don’t care whatever it is one sells, the product will always be overhyped. Particularly if there are commissions involved.
I shed no tear for the McClarrinons.
“Wasn’t Ben’s blog operating in November 2005? ”
Yep. I think I discovered Ben’s blog earlier that year. Some of the other regulars were here a few months before me.
BayQT~
I live in fresno, renting a house in NE near maple/shepherd. According to Zillow (a dubious source I know) the value of the house as of Sep 1 (when the lease was signed) was 340k. Today the value is 308k. The housing market is sailing head long into the crapper in Fresno and not a minute too soon.
Thats Sep 1 2006
Maple and Shepherd is (maybe was?) a good area. When I was in my early 20s in 1982 I would ride my bicycle in that area on the way to Friant Dam. I lived near the FAT. So that was lots of bike mileage. Did that every other morning in the summer and very early!
August 2005 my friend calls and tells me she had seen an article somewhere that we were in a real estate bubble, and all of a sudden it all made sense. I had stopped looking for a house - and continued to rent - because something seemed rotten in the state of Denmark.
2005 is the year when 99.9% people would not listen for a nano-second if one mentioned that this might be a bubble. They just ignored you as you as if you were crazy.
2006 was the year when they heard bubble they went ballistic. So one did not mention it.
2007, well, people seem divided between “but of course, we knew all along” or “oh, yeah, it’s here but it’s temporary”
2008 ??? thoughts?
As an HP fan, what you describe sounds like 2005: euphoria, 2006: anxiety, 2007: denial. So, 2008: fear; 2009: depression. Of course “all markets are local” so Seattle is just approaching anxiety/denial and Florida is closer to capitulation/desperation.
–
I am sorry but there are stupid sellers in CA and stupid people manage to stress themselves on many counts not just selling their homes.
At least there is one seller I know who didn’t stress out at all. He could have sold in 2005 for $239K but kept delaying due to being very busy. Finally, he improved his home and put on mkt for $217.5, lowered the price to $209 after a week and to $198K week later. Two days ago he accepted an offer for $194K. He understood what was going on and acted swiftly. Those who are stressed out are out of touch with reality.
Jas
Initials JJ, by chance?
KB”The move by one of the nation’s largest homebuilders comes amid a worsening housing slump that analysts now say could last for several more years.
My wife’s Japanese newspaper said that San Diego County vacancies are up 2%, with rents down 8%, compared to 6 months ago.
“‘I’m so mad. I’m just mad,’ McClarrinon said.”
remember the black guy that killed a bunch of co workers in CA in the 90’s
the jury let him walk
I see dead developers
Seriously… if I were in the sales office of one of these developments trying to force people to honor their contracts (not that I shed many tears for them), I would definitely be carrying a Taser…
For some reason, I see McClarrinion looking an awful lot like Michael Douglas with a shotgun.
LOL.
ya know… There’s at least one screen play and movie contract in here someplace.. probably many book deals.
Murder by Mortgage
House of Pain
Fliped and Flipped Out
I just finished having lunch with the wife, and then it was spoiled when I decided to turn on the radio to 97.1 FM here in So Cal. Once again I was bombarded by the ubber douche bag RE people on there doing their best to sell TIME SHARES! Not only that but on the Carolina coast! Holy crap, I about puked in my mouth when I heard them say “There isn’t much coast line left people”, then I wondered was that because the hurricanes are taking it away? I wonder if that sales tactic works in Hawaii where the island keeps growing due to the flows? It was pretty bad I had to punch myself in the jaw for turning that on like a moth to the flame….I can not wait to see these low life scum bags be put out of business. Shame on 97.1 for putting these paid shills to try and sell their crap programs…I even heard them mention Detroit…unreal…this is almost worse than the swamp lands in Florida!
What is wrong with the 3 exotic dancers living next door? They are keeping up with the mortgage payment and it is an honest profession. They are not duping anyone and they provide service.
I wish they were next door to me!.
See?!?!
once you have exotic dancers, next thing you know bill in Phoenix wants to move in too!
Then there goes the neighborhood! Led Zepellin loud at midnight, etc….
one good thing tho is the house could be very well kept. They will have no problem getting local guys to do their yard work for them… a little paint touchup, etc.
It is not productive to society, just offers cheap entertainment/thrills to perverts with no respect for women. I have respect for doctors, teachers, cops, firemen, lawyers(yes even them) and other productive jobs that benefit the nation as a whole.
“‘A lot of people who were discouraged when the market was so red hot have not tried again, they have given up,’ Dutell said.”
Discouraged? No, we are pissed. One can spend five minutes on zillow and figure out what flippers expect us to pay for granite counters and wolf ranges. This is a boycott.
We are discouraged by the current level of overpricing in the market. Once sellers reach a sufficient level of stress, perhaps we will be “encouraged”
McClarrion complaining about the dancers? The post above was the right idea - be their handyman, and maybe get some ‘perks’. “I’m so mad”. Well, all of us here saw this bubble coming years ago from a mile away. It was as obvious as the nose on your face. You were a greedy flipper expecting to get rich by gambling on a house going up forever. You lost. Get over it. You bought a house to live in. Not be a piggybank. Start some kind of association to clean up your neighborhood. Get involved in the city to make them go after the vacant house owners to clean them up. Whatever. Do something, or just stop whining. Rant off.
I do not think most people were greedy flippers who were buying. I think flippers are in the minority.Many were trying to save for a down payment and saw housing prices run away from them. This was more of a case of devaluation of peoples savings in comparison to housing. With negative real interest rates people were making a rational choice. It does not pay to hoard money (save) if money is losing its value in comparison to what you want to buy.
Wow…
exactly, wow
Yeah, wow.
So, if understand correctly, it’s not that the price of houses became ridiculous, it’s just that cash was becoming worthless. It’s so clear now.
Not exactly but close, more of us would be savers if the pay was better. Once a speculative boom starts it can go on long enough to make most people feel stupid for not jumping in.
“..people feel stupid for not jumping in..”
Bingo.. give that man a seegar..
jumping into what looks like a .. ?
comeon.. finish it for me.
what looks like a sure thing based on a lifetime of watching their money devalue in comparison to housing
i’m not in the mood to press this..
Welcome to the HBB. Hang around and get up to speed. This blog will teach more in a few weeks than you’d learn in a “lifetime”.
I am a slow learner this is my third housing boom since I bought my first house.
Then you know that long term, real estate is far outpaced by things as mundane as the SP500..
and you know real estate booms are short term..
and you know that real estate is not liquid while any gains are pure fantasy until it is sold.
Despite this, you claim most buyers into this bubble were “investing” in high returns, innocently protecting themselves from inflation.. and had no intentions of flipping.
But I don’t think the majority of this current crop of buyers, caught with their pants down, were quite that ignorant, although they might like us to think so.
Joe by the way thanks for inviting me to the HBB that ’s cute. I did not claim most people were investing in high returns. I said they were feeling that they were getting priced out because housing was running away from their efforts to save for one. I would argue in reality the absolute value of housing has not moved but our currency has devalued. I am a housing bear. Probably somewhere between Jas Jain and Jim Kunstler. I also know very pratical normal middle class people who are still buying because they feel it is the only prudent way to save for their future. I think they are going to get their southern orifice handed to them on a platter because we have not been able to save effectively in our currency. It pisses me off that a lot of good people are going to get hurt.
I hope this is not a double post so I will make it short. I am an extreme housing bear.I feel many good people will get hurt and it pisses me off.
so am I, for the time being.. but i will not project my bearishness into the unknown motives of others.
While there’s no point us quibbling about the percentage of unsavory flippers, all troubled “investors” do have good reason for claiming ignorance or coercion or whatnot:
Since nobody gives a rat’s ass about someone else’s gambling loss, they must be seen as innocent victims before someone will bail them out.. and if they succeed that someone is ultimately you and me.
Many people will get hurt but i’m not into sharing their pain.
I understand what tg is trying to say…
There are many people who were not officially “flippers” but who were in their mid-20s to mid-30s and felt it was time to buy a house. As they looked, prices were going up $10K/month — and this went on, more or less, for at least a couple of years. Add to that a Realtor (and friends, family, news anchors, financial advisors, etc.) who tells them “buy before you are priced out forever…they aren’t making any more land…RE always goes up,” and you get impulsive buyers who feel panicked and jump into it head-first.
As anyone who’s rented over the past few years can tell you, it was VERY difficult to stay out. Those of us who did were harassed endlessly — and I mean endlessly — for being sooo “stupid” for renting & not “building equity.”
tg is right, “flippers” were part of the problem, but the biggest problem (those who bought from said flippers) were the naive who were led to believe that $500K starter homes would soon become $1M starter homes.
Everybody was doing it…
I wonder how he knows they are exotic dancers?
huh? I didn’t order these boa constrictors.. lemme see that clipboard.. yup.. You want girls next door.
Sadly, Joe Sixpack still thinks its smart to buy. I’ve had barbers, store clerks, and others outside of the know asking me why my wife and I aren’t buying a home. The mindset hasn’t sank in.
It doesn’t matter how many bond deals have failed… how credit has tightened… its going to take a shock to the market before anything happens.
In other words, until we hit desperation (acheived in Florida, not in California, except maybe Sacramento), the long standoff continues. The longer the standoff continues… the more jobs flee out of state.
Cest la vie.
“‘A lot of people who were discouraged when the market was so red hot have not tried again, they have given up,’ Dutell said.”
I see this a lot at work. Sadly, some of the best and brightest are departing for fairer priced housing in other states. Others have just accepted they’ll rent until they can get a better job.
The “Sue-me state” is going to get hit far harder than the 89-94 downturn. Far harder…
Got popcorn?
Neil
I know, even a lot of smart people don’t get it yet. A friend’s partner who’s a lawyer just bought a house here in the LA area yesterday.
I don’t see that many jobs fleeing out of state yet, though. Some, certainly, but nothing really big. Maybe I’m just not looking in the right places. There are still a lot of the “best and brightest” around here, making lots of money. Some people are still paying up to live in the best areas, properties are still moving around here.
And I agree that it hasn’t filtered down to J6P in general, although I see a lot of younger people renting - but this may be attributable to the fact that buying is completely out of the question until prices come down.
Jobs aren’t fleeing in numbers yet… its bright people.
So far most have been replaced by the next kid waiting in line. (There will always be some of that…)
But I see more and more transfers… a job moved by ones or small teams doesn’t show up on any statistic… but man is there a lot of office space for lease… so something is out of balance. There is a little disconnect in the stats…
Got popcorn?
Neil
I’m not so sure about the extent of job loss in So Cal.
The Feds don’t keep track at all of global outsourcing of jobs, but my guess it is hitting our area hard. There was an article recently in the LATimes, on the outsourcing move by a San Diego Biotech to move its research and design to China. The puff piece praised the CEO’s creativity in reducing costs, but only buried in the article were the stark facts the the entire San Diego R & D team was being axed.
So, it’s been well known that biotech manufacturing has been moved out of the U.S. for some time. If you also outsource your R & D, what exactly are you left in the U.S.? The CEO and the companies capital? And how long before the Chinese, or Indians, or whatever, decided to do it all on their own?
And biotech was suppose to be one of the jewel in the crowns to maintain U.S. productivity in the 21st century.
Multiply that by other ‘outsourced’ professions, and we may be in for a long downhill slide.
Enhh…I talked to my wife’s co-worker and told her the truth today, and she was shocked. Like we can’t have a price drop in OC, I told her just look at 91′ if you don’t believe me. So, I did my good dead of the day and helped out one person. Not near enough considering the weekend propaganda on the radio….sick.
Ah yes, the ‘good dead’. The killing off of the wife’s dopey co-worker so as not to negatively affect the gene pool. You helped us all.
Neil, have you been reading that billboard on Sunset?
Sacramento is in desperate straits, and prices have come down, but not enough. I think maybe by this time next year, prices will be dropping faster. Nothing to base this on but a gut feeling.
I’ve been tracking Streng Bros. homes in Sacto for months now. I’ve seen some dubious moves — sellers dropping prices at 1k per month (and most of these homes are between 350K and 450K) then pulling the house off the market and relisting it at the original price. Homes on the market for over a year. A home in Elk Grove purchased for 350K in April, remodeled by someone who obviously didn’t understand the selling points of a Streng atrium home because the TOOK OUT THE ATRIUM PLANTERS and then put on the market for 450K in May.
Most of the owners bought since 2003, and I strongly suspect every time one of these homes goes inactive on MLS that it is being foreclosed on, but so far only one has come up REO.
These homes were selling for around 125K to 250k before 2001. The neighborhoods are middle-class, for the most part. (The folks who live and own Strengs in the Wilhaggin area, which is pretty upscale, don’t put them on the market often. One in that area, which is identical in design to Strengs in other neighborhoods less trendy, is around 650K asking.)
Everyone is “ready to move”, “motivated”, etc. but no one seems able to lower the price.
WOW! Just did a count on Countrywide REO’S. As of today. 9,945
nationwide. California leads with 1,812.
We want more REO’s fast and in a wagon.
REO SpeedWagon!
BILL MOYERS: So who’s responsible for this fiasco?
GRETCHEN MORGENSON: Wall Street is responsible. Investors, to some degree, are responsible. They were clamoring for yield. They wanted more return on their investments. Regulators were asleep at the switch. Bond rating agencies were asleep at the switch. They’re supposed to be out there telling people this is a solid company or this is a solid loan or this is not. There were a lot, a lot of fail safes that failed.
I believe this is exactly what I have been saying all along.Wall Street is mainly responsible.
Shut the slimeballs down.
alan greenspan is responsible first. he lowered rates and sparked the free credit boom. lower rates meant pension funds and etc were “desperate for yield” and now we have our crisis.
Yeah. Alan Greenspan, ex CEO Federal Reserve Subprime Loan Co. Get the suckers in with low teaser rates to keep the economy from tanking and then jack em up later. Nice script, bad ending. (Sorry I meant lending).
failsafes fail? like the FDIC? i hope not….
Greedy buyers and loan companies and NAR are responsible. It’s not Capitalism that is responsible. It’s pure stupidity and lack of knowledge of contract law. Isn’t that “torts?”
It always amazes me to see people who blame others for their losses but are quick to take credit for their gains, which are fewer than their losses!
I think I’ll have the answer to the bubble, when I can break this code from the article:
“…..by the time it comes a cropper…..”
testing
I have been coming to Ben’s blog since it started. Ben and Patrick (and SoCalMtgGuy) were way out front of this debacle. These people that are ‘mad’ are some now ‘bitter buyers’ who lost at the U CAN’T LOSE poker table.
OOOOOH,Lodi!,and west sac! The california dream in action…..I would sooner buy in west oakland than either of these metropoli.at least after the next quake you would have a decent plot of land.
This duped (dope) Scott McClarrinon has been apparently crying for special dispensation for some time to make up for his choice to become a GF and FB. This public doc email is dated a few months after his November 2005 closing.
—–Original Message—–
From: scottmcclarrinon@comcast.net
Sent: Wednesday, March 01, 2006 4:12 PM
To: Susan Hitchcock; Susan Hitchcock; Susan Blackston; Susan Hitchcock; Bob Johnson; JoAnne Mounce; John Beckman; Larry Hansen
Subject: URGENT Miller Ranch Project
Dear Mayor,
I wanted to let you know how deeply disapointed I am in your ruling regarding the proposed Miller Ranch
subdivision. Point in case:
1. You mentioned affordable houseing was a factor in your decision (or at least you mnetioned it sevral times).
What is affordable? $400,000. That was the average home price for the KB Villas (in the proposal Tokay
Development mentioned homes will be sold at “Market Prices”). So I guess your opinion of affordable differs
from mine.
2. Your meeting was held before any of the property owners had even moved into the KB development (they
deserved to be heard, they would be the ones effected). If this is how you represent the citizens of this city, I am
truely disapointed.
3. Parking is going to be a nightmare. Who parks in their garage these days? I think you would agree that most
families use thier garages as storage. There are no major thurofares in this community. Can they truely be
serviced in case of a fire or 91 1 emergency? Will support services be able to reach them? There is only 1 road in
and 1 road out. Not a good design. I can see the lawsuits now.
4. Did you or your staff even visit this community? R-MD is great, but 65 home sites, with very few access
streets, is going to be a problem.
5. When a citizen asked about school overcrowding, the clerk responded that the study would not effect the
community (they could easily take on new kids). Are you kidding me. Drive by Brodchart Elm. School and look
at the portables, maybe the study was right, adding 3-4 kids per class won’t hurt a thing (ya right, you of all
people should know that!)
6. Having recently moved to Lodi, I do not subscribe to the LNS. Maybe that my fault, because I would have
voiced these concerns at the council meeting, but then again I see it as the council letting a good old boy builder
pull the wool over your eyes (and heck the city gets risiduals in the meantime!)
7. It is scary how many homes in my community KB Villas are unihabited. I tell my family and friends I live on
investors row. What R-MD really does is give investors an opportuinity to buy up homes, and rent them out.
That should do wonders for my home value. Maybe next time you make one of these decisions you should
consider putting in a clause that the homes can only be sold to first time buyers. Otherwise I say build
apartments, because at the end of the day its all renters!
8. In the Villas community there are 80 units. Approx. 60 could be inhibbited, well only 30 are. In fact 2 are for
sale, and 6 are for rent. What you are doing is allowing a builder to create an investors paradise. Is that what
you really want? That definatley will not lead to affordable houseing.
9. This is not what I imagined when moving to Lodi.
I guess I can summize your decision like this:
If you truely had the citizens in mind, you would have let them voice their opinions, but then again how could
they, if they were not even moved in. I am deeply disapointed, and I am asking you to table the approval of the ordinace tonight for the Miller Ranch Sub Div.
Scott McClarrinon
455 Tuscolana Way
Lodi CA 95240
http://publicdocs.lodi.gov/Docs/COUNCIL_COMM/2007/03-01-06%20L-01.pdf
He doesn’t like to use. Those things called long sentences.
Didn’t take long for buyers remorse to set in, did it? Given how damn expensive it is here in Cali you’d think people would put a wit bit more thought into buying a house.
he put as much thought into buying a home as he puts into his spelling.
Gosh, I think my IQ dropped 40 points just reading his letter.
Come on, he made an excellent “Point in case” about “houseing” and he eloquently “summized” his positions.
(‘It’s our policy to not sell to investors,’ LeMessurier said. ‘But we can’t always guarantee that that’s not going to happen.’”
“He noted the company can’t strictly enforce the one-year occupancy rule either.”)
my god, remember how many articles we read about how the builders didn’t sell to speculators? that was basically just marketing if they can’t enforce it.
of course they can’t! this was pure fabrication. stupid people might comply because they signed, but it isn’t legally enforceable.
“The tougher rules have shrunk the pool of buyers, said Nicole Dutell, branch manager at The Prime Financial Group in Redding.”
Why is it nobody ever says: the sky-high prices have shrunk the pool of buyers???
AMEN!
Let me guess, our FB friend Scott McClarrinon must be an English and spelling teacher after reading that well written and well spellproofed letter? He deserves to be an FBer
“‘Right now, we have 273 houses for sale in West Sacramento,’ said Lean Hertel, a Realtor in West Sacramento. ‘Of those 273 homes, 102 are being advertised as ’short sales.’ And 34 are already owned by the bank.’”
This means that half (136/273 = 49.8%) of the homes are bank-owned or short-sale. And if you assume that the bank owned properties are being offered at less than the mortgage values, then at least half of the homes is West Sac are being OFFERED for less than the mortgage value. Oh West Sac, you’re certainly doing your part in helping California beat Florida in the race to the bottom.
West Sacramento has so many issues.
The old part of town had a no gangs ordinance until recently. A few months ago, some of the local youth set up a blockade on the Amtrak rails going through town. When the conductors stopped the train and tried to clear the debris, one was beaten almost to death. Theft wasn’t the motivation as they didn’t take anything. They were just bored.
Wow.
Almost like a scene out of the 1980 cult movie “The Warriors”.
The RE roadkill in CA will pile up so deep that you’ll need a 2 1/2 ton truck with a huge plow hitting the gate at 98 just to drive from SD to LA this time next year!
Fan-frickin’-tastic blog.
So. Cal. is still in denial (in HB - Surf City - FU Santa Clara :). Houses sit for months and months and get no offers and not even many look-e-loos. Prices are sticky but drop eventually as sellers get desperate. Typical house was up for 1.85 a year or so ago, now sits at 1.29 mil. Good luck. Maybe 2010 will be a good time to buy.
Can’t wait for the sh9t to hit the fan in LA, Glendale, Burbank, Pasadena, etc….alot of REAAALLLL arrogant people living there.
how much of a drop are you guys forcasting? I have seen houses(more like shacks) in crime infested LA neighboors with asking prices of $400k to $700k at the peak of insanity. Do I stand correct when I say those houses will be $100 to $250k? Were talking 60-75% drop(off), me thinks. Hoards of people are leaving CA, FL, AZ, NJ and a few other states for cheaper states that didnt see much of a bubble.
35-50%, in general around So Cal. Some areas, like the ones you mention, will be harder hit.
There was one noteworthy photo about a year ago on the front page of either the San Diego Union or LA Times, showing a tiny house in Compton (South Central LA) being offered for ~$500K….as a feature it had security bars on all windows.
As I had worked in South Central for ~10 years, I personally declared that as the day the RE market had topped. I wouldn’t sentence my worst enemy to live there, let alone charge them $500K for the privilege.
If history (think early ’90s) repeats, I would imagine “homes” like these will end up abandoned in a recession-ravaged areas. They certainly were after the ‘92 LA riots.
If Compton gets abandoned, the developers can come in, demolish all those prision-like homes and build nice middle class houses or condos and sell to decent law abriding citizens. Complete overhaul of the neighboorhood. You think Compton will lose so much value that no one will want to live there?