It’s A Buyer-Seller Standoff In California
The North County Times reports from California. “Illustrating the area’s topsy-turvy real estate market, the median price of single-family homes sold last month hit a record high of $667,000, even as industry experts bemoaned what they saw as a declining market. The 807 North County single-family detached homes sold in June was off 32 percent from June 2005, according to the report.”
“‘It’s a buyer-seller standoff,’ said Michele Williams, a real estate broker, as she sought to reconcile higher prices with lower sales numbers. ‘Nothing’s really selling.’”
“Williams said that buyers are waiting for prices to fall, while sellers are convinced that they won’t. ‘If sellers would drop their price a bit more, we’d see a lot more activity,’ she said.”
“Her analysis of aggressive pricing seems to explain one of the trends in the report. The median price per square foot, another way of measuring price, was $305 in June, down from $330 in June 2006. So those homes that do sell are selling for less than they might have a year ago.”
“Another way to explain the disconnect between higher prices and slower sales is that higher-priced homes are moving more briskly than lower-priced homes.”
The Selma Enterprise. “The recent real estate bubble has burst, but with lower home prices, there’s opportunity for the discriminating buyer.”
“‘Inventory is pretty heavy now,’ said Larry Lungren, owner of Kingsburg Realty and Selma Properties. ‘I think we’re in a buyer’s market now. There’s no competition for buyers, it seems like they can probably negotiate a pretty good deal.’”
“One trend has been increasing foreclosures due to loan officers making it easy for just about anyone to get a home loan during the housing boom.”
“‘The loan officers got very creative,’ said Lungren. ‘Very little down, adjustable mortgages, interest only payments. There’s going to be some short sales going up, and there’s going to be some foreclosures.’”
“‘The problem with existing homes is that they’re competing with brand-new homes that are in even lower price ranges,’ said real estate broker George Uribe. ‘So when you’re a new home buyer and you’re looking to buy a house, the choice is very obvious. A lot of people would want to buy a new house.’”
From MSNBC. “How do you deal with excessive supply? Add more supply! Sounds like a head scratcher, but that’s exactly what home builders are doing.”
“California’s Central Valley is once the hottest housing pocket of the country, counting for one in every 25 homes built nationwide. Now it’s going through a painful contraction after the tremendous growth busted. Yet Standard Pacific Homes is piling up Spec homes in the town of Manteca.”
“In the Standard Pacific development here in Manteca, we only found one ’sold’ sign.”
“You might wonder why home builders would dig larger holes for themselves. Standard Pacific won’t comment for the story, saying the company is in the quiet period before posting earnings.”
“But Ara Hovnanian, CEO of home builder Hovnanian Enterprise said recently that building Spec homes is about the only way to liquidate land these days. ‘It’s easier to sell land by popping a house on it than it is to just sell land because there are just not many buyers out there,’ he said.”
“When no one buys the homes, home builders slash prices. Joe Anfuso, president of a private smaller rival in Manteca’s local market, says the build-and-slash cycle has happened three times since October.”
“‘At some point, some executive has got to stand up in the boardroom say, maybe we should just stop prostituting our best asset, and wait for the market to come back to us,’ Anfuso said. ‘We know California land always pays off, and by giving it away, we’re not doing the market or ourselves any good.’”
“Anfuso said intensified local competition has also forced him to slash prices several times. And that’s about the outcome of this spec home buildup: The big guys squeeze out the little guys in a price war.”
From ABC 30. “The real estate slump has led Merced County to give thousands of homeowners tax breaks this year. About 6,500 Merced County homeowners have received letters letting them know they will receive tax breaks this year. But, the bad news is it’s because their property values have fallen.”
“California showed a jump of 30% in May and an amazing 350% jump in foreclosures compared to last year, according to the most recent ‘Realty-Trac’ survey.”
“Amelia Peterson was surprised to receive a letter from the county assessor over the weekend, but she wasn’t surprised by what it said. Peterson says, ‘My house has taken a drop approximately $50K.’”
“Peterson…bought her house just as the real estate boom began about two years ago. At that time, people were lining up to buy homes. Peterson says, ‘It was interesting because then, every month homes were going up $5 to $10K, so if you wanted to get a house, you had to get in there and get it.’”
“More than 300 Merced County homeowners have foreclosed so far this year, and property values are still slipping.”
“Real estate agent Gail McCullough says, ‘It’s a wonderful time for buyer’s because the rates have come down, the interest rates are excellent, and of course the market values have come down.’”
The Orange County Register. “Home shoppers in Orange County and other parts of Southern California will no longer know how long a residence has been on the market unless they ask. The Southern California MLS has stopped providing ‘days-on-market’ data in client reports.”
“The Anaheim-based MLS, the nation’s second-largest listing cooperative, maintains that the days-on-market data has been inaccurate and abused. The information can’t be understood without some explanation, MLS leaders said.”
“Agents still will have access to that information and can provide it to consumers if they wish. ‘The listing history record is complex and requires some interpretation,’ said Russ Bergeron, CEO of SoCal MLS.”
“‘There has been much discussion, contention and even litigation over days-on-market and cumulative days-on-market figures,’ the MLS said in a statement recently posted on its Web site and e-mailed to members. ‘One view is that it hurts sellers, another is that it helps buyers.’”
The Fresno Bee. “Rotten leaves and insect corpses float on pea-soup colored water in a Mickey Mouse-shaped pool at an abandoned house in west-central Fresno.”
“It’s just one of 827 swimming pools in Fresno and Clovis that district workers have treated this year, far more than in any recent year, officials say. District officials are monitoring 1,000 more pools, and they say there are hundreds more they don’t even know about.”
“‘It’s a nice neighborhood. You would never guess a pool like this would be here,’ said Roy Benavides, an area supervisor with the Fresno Mosquito and Vector Control District.”
“Foreclosures appear to be a huge factor in the proliferation of neglected pools, said Steve Mulligan, manager of the Consolidated Mosquito Abatement District, whose district covers Clovis and north and east Fresno.”
“‘People who can’t afford to pay for their homes will neglect their pools, they’re the first thing to go,’ said Mulligan. ‘Then they move out, and there’s really no one to maintain them.’”
“Home foreclosures have been on the rise in the Fresno and Clovis area. The number of foreclosure notices sent to homeowners in Fresno County has more than doubled between the first quarter of 2006 and this year’s first quarter, from 540 to 1,116, according to DataQuick.”
“Real-estate agents estimate that 4,000 to 6,000 unsold Fresno and Clovis homes are on the market.”
‘Builders now have 84,368 new residential units on the drawing boards for Orange County, MarketPointe Realty Advisors recently reported.’
+ how many in foreclosure
+ how many in resales
+ the new “guidance” on lenders to sub-prime borrowers
+ the bus drives are on strike…so,
the new strawberry pickers can’t get to the loan office…so,
as Bugs says: “eh, I don’t think so”
Daffy: “Hey if you can’t sell it…can you rent it to me and my pal Taz?”
I’d love to know where they are putting them.
Strawberry fields aren’t forever.
Testify
I grew up with orange groves and and strawberry fields. I miss that era in OC.
“Forty-three percent of the proposed housing would be in the Anaheim-Tustin “submarket,” the firm reports”
I’m watching former industrial buildings get demolished (we waved bye-bye Don Miguel’s Mexican Food months ago) to make room for new residential buildings over in the “Platimun Triangle”. There are also still empty lots here and there in other parts of Anaheim.
Free OC residential units for everyone!
You think it’ll all be income properties? Interesting. I still wonder where in OC they’ll put that many units.
Okay, as a card-carrying member of South OC, there is no way in he11 this is going to work. If this many new units are built you can forget about any Goldilocks or soft landing for the “OC!”
If these are more 750K-million dollar cookie-cutter type estates, I have to wonder what these builders are thinking.
Dammit! Just when I was impressed with the references to OC, someone has to jump in and call it “THE” OC. What are you going to do next, say you live in “Cali?” LOL!
“What are you going to do next, say you live in “Cali?” LOL!
we call is cali because we hate writing the whole word out. cali is a godsend for lazy spellers!
I agree, Dialm. “Cali” makes me cringe. Please, “CA” for short!
OCDan, as a former RSM’er and now Ladera Ranch renter, I sure hope they put in EVERY proposed home and more. There are plenty planned for Rancho Mission Viejo and all more homes do is help us prudent people out!
More more more more more more more homes, build build build build build!!!
ROTFL.
OC Metro… nothing like overbuilding to correct prices.
What struck me is how many industrial/commercial sites are now housing. Got Jobs?
California in general will take it hard. The OC is going to get hammered.
Got popcorn?
Neil
It’s about time Neil. Hell, the way people talk here in Irvine you would think we are immune to lower home prices.
I sold my home here in 05 and have watched many a owner squirm when I spoke about a market drop.
But, but, but…it’s different here!
It’s about time Neil. Hell, the way people talk here in Irvine you would think we are immune to lower home prices.
Even if prices merely stay flat, they’re losing money every month compared with renting, and this will remain true unless rents rise to match mortgage payments (extremely unlikely in the next 10-20 years).
With the builders still building, the foreclosures mounting, the bankers holding REO to avoid loss, the hedgies sweating the MBS and CDO downgrades, it certainly looks like a very ugly fall will be coming this Fall.
At least he MSM seems to have caught on to the Median Price Per Square Foot being a more useful measure than Median Price.
The bank have to be still making construction loans, these guys will be building untill the money gets cut off. I am willing to bet this will go on intill the FDIC shuts down a local bank.
What’s annoying is that banks will loan money for construction projects but if you’re looking to start a nonconstuction company they won’t touch you.
“Williams said that buyers are waiting for prices to fall, while sellers are convinced that they won’t. ‘If sellers would drop their price a bit more, we’d see a lot more activity,’ she said.”
Keep dreaming you dopey realtor. when you are begging for bids on a street corner with an empty tin then i’ll remind you that rela esatte always goes up and tell you to wait longer for another drop in prices so you get dry crusty bread and luke warm water.
If sellers would drop their price a bit more, we’d see a lot more rapid rate of price decline.
Someone will blink soon .. one price will go down, and then they will climb all over each other trying to be a bit lower.
I think the useful idiots that I love the best are those in
Wonderland who think that they’ll just hold on because prices will be higher in the next few years.
Buyers have time on our side. I will not buy until home prices and incomes realign, even if I never own a home again. Home debtors with resetting ARMs will not be able to endure cash burn forever, similar to the demise of the dot bombs in 2000-.
plus while you delay your purchase, not only are homes depreciating, you’re collecting interest on your money and/or your investments.
GetStucco,
same here. I won’t buy as long as it’s cheaper to rent. Period.
Ditto. We’ve come to enjoy the renter lifestyle.
Our landlord has spent at least $15,000 on maintenance & repairs in the past three years. I remember those days of “homeowership” & glad we’re not doing it anymore.
Nothing like being a “bitter, jealous renter” with interest/investment income and no debts!
No shit -
For many of us, our interest income pays for our rent!!
“‘The problem with existing homes is that they’re competing with brand-new homes that are in even lower price ranges,’ said real estate broker George Uribe. ‘So when you’re a new home buyer and you’re looking to buy a house, the choice is very obvious. A lot of people would want to buy a new house.’
They are also offering bigger houses for the same prices as existing smaller homes.
Bingo! That is what is happening all over the Sacramento area and yet Joe existing home seller is still convinced his home is going to sell for 50K more then the house next door.
The mls is loaded up with a plethora of long time owners fishing for fantasy prices. Many of these people have no time frame in which they need to complete a sale, because they’re not entirely serious. It’s simply a “this is what it’ll take to get me out of my house” mentality. This works against the people who need to sell because the inventories are so exaggerated. It can also be beneficial to certain realistic sellers, because their lower prices shine like a beacon in a sea of greed.
BB,
I watched that happen here but lately what’s happening is 1 home will reduce drastically and that will get an offer. Then more at just about the same price point will come on the MLS and they all sit while the homes already existing on the MLS start with the 1% to 3% reductions every month.
If you look at what is closing, it looks like there is 1 buyer in a given month and he’s going with the lowest price. The trick is to make sure you are next lowest price when that 1 buyer shows up next month.
I also did a little checking on properties I know that sold since Jan 07 nothing is selling at asking. Ave. reduction from asking on a 300k existing home is about 25K.
I love this quote:
“Williams said that buyers are waiting for prices to fall, while sellers are convinced that they won’t.”
I wonder how long it will take until sellers accept that their sh!tbox is not worth what they perceived it to be? I suppose it will require a “World News Tonight” piece detailing home price destruction before they’re willing to get past the denial stage. Of course, a lot of sellers literally cannot budge on their prices, as they were the buyers at the peak. Meanwhile, the foreclosures and short sales skyrocket.
gwyn,
The lowest price is allways the easiest way to spot value. When I started in RE in the early 90’s it took me years to understand the value of anything other than the lowest priced home in a given area. Sure, I knew there were nicer homes, but it really is not easy to “best buy” when you leave the lowest priced properties. Once you leave the bottom of the bucke pricewise values become very very subjective. In a down (crashing) market the subjectively valued homes are the ones that will suffer. If your not priced to be the next one to sell price wise (lowest) you won’t sell.
In the mid 90’s I saw all neighborhood priemums dissapear. In ordet to sell the nicer areas had to match the lowest prices of the crappy areas, much like at the top when the crappy areas sold for similiar prices like the better hoods.
As the wheat is being separated from the chaff all these wishing prices will just look foolish in the eyes of buyers. It won’t matter that you have $175k in “upgrades”, the real buyers will never even look at your home because it isn’t one of the 20 cheapest. This is the huge downfall of fixing up a fixer.
My broker makes me laugh, he says the only differance between now and the 90’s is that this time the foreclosures will be all fixed up.
…he says the only differance between now and the 90’s is that this time the foreclosures will be all fixed up.
You have a very sharp broker!
Italics OFF!
OFF, I say!!!
“… this time the foreclosures will be all fixed up”
it will be more like recently fixed up before it was trashed.
The advice I give to the 50% or so of Cali’s that own their home outright is to sell for whatever they can get for it (figure 2 to 3x’s as much as the median of the USA), buy a home in the fly-over states for less than $200,000 cash. Put your $250,000 tax break into CD’s and ride out the fall to the bottom. If California is still here, buy back your house at half price.
Unless you live in an area with expansive soils and a history of problematic construction techniques. Sometimes it’s best to wait for 5- 10 years and make sure the house is still level and the foundation isn’t falling in.
I agree. A well-seasoned house can be worth considering when you compare it with the shoddy workmanship of McSh*tboxes. Floorplans and materials are often (not always) superior. Major flaws will be apparent after 5 years (make sure you get a good inspector).
When housing was going up like a rocket it made sense to buy the new house over the used house. Why? Because you were usually maintenance free for the first five years, could pick color scheme, etc, and could put it back on the market in the new part of town where you had a greater turnover of buyers.As for me, I have only bought where I was going to be long term so I’m more interested in what the neighborhood will be like in 20yrs, location of the property to amenities, and what types of neighbors I will have (professional vs. elderly vs. young with lots of kids).
shoddy workmanship of McSh*tboxes
Absolutely. No way in the world would I buy a house built during this bubble or any of the previous ones.
That’s exactly what I was thinking. I’m sure there are still more stories to float to the surface, but there *have* been some really bad stories in some recent topics regarding construction fiascos. New is not necessarily the best way to go in my book. As it’s been mentioned here before, buying anything built during this boom/bust would be a mistake.
BayQT~
The whole new/existing thing needs to take location into account. In Arizona an existing house in Tempe is worth a heck of a lot more than a new house in Queen Creek, all else being equal.
I wonder why the realtor have given up on the location, location, location mantra - mabye because most new house developments are in awful, nearly worthless locations? When the lot is worth 5% of the materials in the house on top of it, you’ve got a problem.
New versus old often pits ammeneties against location. Now whats that old RE saying? Was it ammeneties, ammeneties ammeneties? No, that’s not it….
I would not touch a new home unless:
1) the house is in a nice established neighborhood and the builder did not attract too many investors.
2) the builder has a reputation of building good quality house.
The last thing I want to do is to buy in an area where all the houses will be empty/rented and figure out 3 years later the roof is leaking or the walls can’t stand the wind.
Buying used houses has advantages.
I always love the Manteca housing stories. For old time Californicators like myself, who remember Manteca when there wasn’t a new home built there but once a decade, the “boom” there is unimaginable.
They always make me remember and old joke about Manteca and the aroma that used to permeate the place. I can’t tell it here cuz’ this is a family blog, but I never fail to laugh when I think about it.
… cuz’ this is a family blog somehow, nobody seems to have informed auger-in…
Family blog?!! That’s it, I’m outta here!
I miss Auger-in’s ribald remarks. He always cracked me up.
Where is he? Isn’t he camping in MN or something?
Ah yes, the old Spreckels Sugar plant. Broke down on 99 just east of the plant many years ago…damn near died before I hitched a ride.
Forget the sugar plant, it’s the dairy industry in area that produces aromas that’ll kill you. The west season there is so nasty and smell seeps through the walls.
west = wet
kiss me where it..
Smells funny!!
go a bit further south.
That and the Pig story on another thread reminds me of something that Happened in Florida during the last Boom.
They Built a Big ” Luxury Housing Development ” on some re-zoned farm land about 10 Mi outside of town. Some guy owned some farm land across the street that hadn’t been used in Years. He thought well there’s not a Gas station or convenience store for miles . Right across the street from the entrance to this Community would be a Dandy place to Put in a Gas/ convenience store.
Well the Snobs in this Development would have no part of it, and since Money runs the Commissioners here they said ” No Way will We change Your Zoning. The People here Don’t want their Property cheapened by having a Gas station next door.
So the Vacant Farm owner got PO and Painted the old Farm House in God awful colors and Painted in Bright Pink Letters about 3 feet Tall on the High Pitched Roof……. NOAH’S ARK. The He proceeded to put a Couple Hundred Stinky Pigs along with a few hundred other Misc. farm Animals on His “Agriculture Zoned land” right a the Entrance to this ” Lovely Luxury Homes”.
I got to say I LMAO!
It always amazes me when whiners complain about where they’ve moved. “The manaure from that farm stinks.” “They should close the airport, it’s too noisy.” “OMG, there might be bears in those woods.” Well all of those things were there before your house was built, maybe you should have investigated where you were moving BEFORE you bought.
Too hard. Takes too much effort for the boomer generaton and the pepsi generation is too busy with video games to do any due dilligence.
This is a true anecdote; A guy bought a condo in a project that wasn’t finished yet. After some waiting, the condo project was finished and he closed on the condo and started living there.
Sure enough, there was one problem he immediately noticed; The parking situation is a wee bit difficult for his over-sized SUV/Truck hybrid! Apparently the condo complex designed their parking lot structure on the smallish side (all legal, I’m sure) and is causing him some consternation.
Now, that’s something that will not ordinarily pop up after some due diligence, unless one’s a genius at reading architectural blueprints of parking lots.
So, his whine about parking can be understandable and seem legitimate.
I’ve seen that alot in apartment communities where they make the “free” parking spaces tiny, so you’ll pay extra for the “reserved/covered” spaces.
Here’s a more recent version of the relatively similar issue. From: http://tinyurl.com/2×6zr5
“Disgruntled owner keeps home gaudy
‘Swamp of Dunwoody’ flies colors in face of Sandy Springs
house first disgusted its neighbors, the Swamp of Dunwoody lives on.
The animals — Spurrier the rooster, goats Donovan and the Gatorettes, and the pigs, Spottie, Dottie and Sausage Patty — have since found a new home near Carrollton. But the old ranch house, which sits next to three new homes selling for $1.5 million on Dunwoody Club Drive, still has its brightly colored Gator decor.”
…
Definitely wrong link…sounds like a fun story.
Weird. I’ve never had tinyurl.com do that. I have absolutely no idea where that link came from — certainly nothing of mine.
Here’s the correct link (hopefully it works this time): http://tinyurl.com/2×6zr5
It still didn’t work and I ended up getting the same url again. Here’s the actual link:
http://www.ajc.com/services/content/metro/northfulton/stories/2007/06/19/0620metswamp.html
Anfuso said intensified local competition has also forced him to slash prices several times. And that’s about the outcome of this spec home buildup: The big guys squeeze out the little guys in a price war.”
How does it feel to suck dry air now bozo? You are just some dumb idiot builder that made alot money now it will take some effort to lose money. HA!@
“‘At some point, some executive has got to stand up in the boardroom say, maybe we should just stop prostituting our best asset, and wait for the market to come back to us,’ Anfuso said. ‘We know California land always pays off, and by giving it away, we’re not doing the market or ourselves any good.’”
Well in that case Joe, why don’t you just take it off the hands of the big guys so they won’t build any more houses to compete with you? If you think it’s more profitable just to sit on the land, put your money where your mouth is.
I’m guessing Mr. Anfuso is hasn’t been in CA very long or seen a RE downturn before. Mr. “RE always goes up” is about to learn a painful lesson.
“Real estate agent Gail McCullough says, ‘It’s a wonderful time for buyer’s because the rates have come down, the interest rates are excellent, and of course the market values have come down.’”
when prices drop 50% in Callillafronia and you beg with a smile then I will throw you a milk bone.
“Real estate agent Gail McCullough says, ‘It’s a wonderful time for buyer’s because the rates have come down, the interest rates are excellent, and of course the market values have come down.’”
Hedley Lamarr :You said rates twice….
Gail: I like Interest rates………
Hedley: Kinky……..
Count Da Money…
Demonet….
I see no one is getting my Blazing Saddles reference, sigh….
Oh I got them!
2nd best Mel Brookes movie ever. Young Frankstien being first and History of the World pt 1 being 3rd.
I’ll give you a HARUMPH!!!!!!
And I’ll give you a laurel and a hearty handshake.
“Peterson…bought her house just as the real estate boom began (emphasis added) about two years ago. Anybody else find this funny? Is this supposed to imply that prices can only retreat to 2005 levels?
Bold off…
Sorry about that chief…
I’m seeing it even here on this blog when people think 2003 prices will mark “the bottom”. In San Diego, there are a number of places already seeing 2003 prices…and this is just the beginning.
I’ll say it again, WAIT until PITI payments (with 20% down) and rents are roughly equivalent AND that rents are stable (not falling, which might indicate a still slumping economy).
PITI payments will be below rent payments when we see “the bottom” of this cycle, IMHO.
Keep your powder dry…
“The Anaheim-based MLS, the nation’s second-largest listing cooperative, maintains that the days-on-market data has been inaccurate and abused. The information can’t be understood without some explanation, MLS leaders said.”
—————————————————————————-
Inaccurate and abused by Realtors! …and easily understood and explained!
This chapped my ass too.
So basically the MLS is a tool for sellers. Screw the buyers.
The Orange County Register. “Home shoppers in Orange County and other parts of Southern California will no longer know how long a residence has been on the market unless they ask. The Southern California MLS has stopped providing ‘days-on-market’ data in client reports.”
- Hey, It’s none of your Damn Business how long the POS has been on the market! It’s special and different!
Yeah, just keeping changing the way the game is played.
Reminds of the oft-quoted line from the North Dallas Forty movie.
Everytime I call this a game, you call it a business. Then when I call it a business, you call it a game.
It doesn’t matter how long its been on the market. Just make an offer and I guarantee you the agent will return telling your there are multiple offers in, you’ll have to raise your bid and HURRY!
EXACTLY! Ever watch those TV shows like “My First Place”? The home is on the market for 6 months and as soon as they put in an offer, what do you know, there’s another offer on the table. The realtwhore convinces the first time buyer to put in a bid over asking. It works every time.
That’s a wonderful thing. Allows you to lower your counter offer by 5%
I think its good. Anything that gets people to realize the realtor isn’t your buddy or there to help you.
What’s funny and horrifying is the reporter’s implicit assumption that you could get accurate information by asking… It’s too bad that Realtors have been shown again and again to lie, lie, and lie some more due to inherently very strong conflict of interest combined with total lack of oversight.
Question to those of you who have actually bought in the past (I’ve been a lifetime renter so far) - are the buyer and seller the only parties to the agreement, or are the agents of either also bound? I think I’d like to get reps and warranties from both my own (if I used one) and the seller’s agent if I were buying… for example, that all factual representations (e.g., DOM) made to me during the offering process by the seller, agents, and in the MLS are correct and not misleading…
nope, agent and/or brokers are not a party to the sale. There is a fiduciary but its real tenuous!!!
You mean a real, actionable fiduciary duty? As in, you can be sued for breaching it, like an attorney or doctor, or an officer of a corporation, can be sued for breaching duty to a client?
When the affordability index reached record levels they changed the way it was calculated. Same old game–hide the truth.
Apologies if these have been posted NAR radio Ads ? This is the $40 million “Public awareness campaign”. Almost as if they are providing a PSA. Unbelieveable. http://www.realtor.org/pac.nsf/pages/radio
“California’s Central Valley is once the hottest housing pocket of the country, counting for one in every 25 homes built nationwide. Now it’s going through a painful contraction after the tremendous growth busted. Yet Standard Pacific Homes is piling up Spec homes in the town of Manteca.”
And it’s the same in every town from Huron to Chowchilla to French Camp. Any place where land was cheap, labor was cheap and the politicians compliant the building exploded. And hasn’t stopped yet. The major builders have sunk millions on millions in land and infastructure costs in dozens of half-built ‘master planned communities’ and unless they plan on eating up profits in development/construction interest, they will built out til they go belly-up. Others may guess that home in their area will drop 20, 30 percent, but 50% is baked in for the central valley.
But then with the 50% price cut, I would not move there. I was born and raised in Fresno. I won’t ever move back until the air is clean. And I otherwise miss the Valley. The Valley is a region that has the dirtiest or second dirtiest air in the United States.
Yes, I saw a Forbes or Money article that had the 10 most polluted cities in U.S. At least 5 were in central valley - Sacramento, Fresno, Visalia, Stockton, Modesto, etc.
Hwy 99 and Hwy 5 can’t help matters.
“Hwy 99 and Hwy 5 can’t help matters.”
They can’t make much difference, either. The big problem is LA, SD and SF. These are all big cities with massive traffic congestion which daily spews tons of auto exhaust into the atmosphere. SD and SF rely on trade winds and low coastal ranges to allow their dirty air to blow out over the Central Valley. Thanks to the San Gabriel range, LA gets to wallow in the toxins spewed by its auto fleet sitting in parking-lot traffic before it spreads into the Central Valley.
right on about the foul winds blowing in from the bay area..
The central valley was stuck with “Smog Check 2″ (much stricter auto smog laws) years before S.F area. Why? Because SF and the wealthy bay area get that ocean breeze that blows their foul air into the valley, where it sits.
Another thing is the qualification of “dust” as yet another evil pollutant, along with cow farts.. Well, the farmers plow and turn over the soil and there’s lots of dust, yup.
The diagnosis: “valley fever,” or coccidioidomycosis, a dust-borne disease caused by the microscopic spores of a fungus, Coccidioides immitis.
The fungus multiplies dramatically whenever the soil becomes damp after a protracted dry spell.
More serious cases are often mistaken for pneumonia, since the fungus flourishes in the moist, warm environment of the lungs. In about 1% of victims, the disease spreads beyond the lungs through the bloodstream — typically to the skin, bones and the membranes surrounding the brain, causing meningitis.
http://www.time.com/time/magazine/article/0,9171,1101930201-160923,00.html
Hey Bill, what high school in Fresno did you go to? My stepdad graduated from Roosevelt (I went to Clovis High, my wife went to Clovis West.)
“Another way to explain the disconnect between higher prices and slower sales is that higher-priced homes are moving more briskly than lower-priced homes.”
And the way to explain slower lower-priced-home sales is that subprime has cratered.
Bold off?
Interesting juxtaposition ahead: “pop a house” and “prostituting”.
“But Ara Hovnanian, CEO of home builder Hovnanian Enterprise said recently that building Spec homes is about the only way to liquidate land these days. ‘It’s easier to sell land by popping a house on it than it is to just sell land because there are just not many buyers out there,’ he said.”
“When no one buys the homes, home builders slash prices. Joe Anfuso, president of a private smaller rival in Manteca’s local market, says the build-and-slash cycle has happened three times since October.”
“‘At some point, some executive has got to stand up in the boardroom say, maybe we should just stop prostituting our best asset, and wait for the market to come back to us,’ Anfuso said. ‘We know California land always pays off, and by giving it away, we’re not doing the market or ourselves any good.’”
You know you are screwed (love the tie in/pun I just made) when you are comparing the current situation with prostitution!
LOL!
As a prosepective buyer, using the same type of terms, I would say,
“Stop standing around jerking-off and just lower your prices!”
“But Ara Hovnanian, CEO of home builder Hovnanian Enterprise said recently that building Spec homes is about the only way to liquidate land these days. ‘It’s easier to sell land by popping a house on it than it is to just sell land because there are just not many buyers out there,’ he said.”
I’m guessing that Fannie Mae has no means of purchasing toxic paper used to finance land purchases?
” ‘It’s a buyer-seller standoff,’ said Michele Williams, a real estate broker, as she sought to reconcile higher prices with lower sales numbers…”
not a standoff at all.. the outcome is inevitable. Michele would be wise to side with the stronger force.
““The Anaheim-based MLS, the nation’s second-largest listing cooperative, maintains that the days-on-market data has been inaccurate and abused. The information can’t be understood without some explanation, MLS leaders said.””
Keep those markets opaque…information is power!
You wouldn’t want those outside of the Realtor community (especially silly, skinflint, penny-pinching, cheap-@ss buyers)seeing that information without filtering/spinning/refuting the actual days-on-the-market numbers.
I honestly don’t see why they aren’t lobbying to keep the “comp” (”comparables”) numbers secret…the comp numbers just confuse prospective buyers with silly ideas like “market price”, when they should just be offering what the listing agent TELLS them they should be offering.
Just to clarify the days-on-market situation…the MLS software allows us to re-enter a listing whenever we want to, setting the days on market back to zero and the listing appears as “new.”
Crazy abuse. Rarely did an active listing show more than 60 DOM. Some were re-entered every week. It’s called “churning.”
By removing the DOM field from this particular report, it removes the misleading data. Buyers will longer see a false DOM number and assume that is true. Maybe more of them will ask their agents to pull property history reports (of course the agents should have been doing this anyway). Point is, the headline looks bad but the change is a good idea.
Our real estate board is trying to stop churning and is starting to fine agents $100 for first time offenses and $1,000 after that.
Side note…every once in a while there will be a report on the news saying something like “prices are softening and more inventory is on the market, but homes are still selling in just 31 days on the market.” It will be interesting to see how drastically those numbers change.
“Maybe more of them will ask their agents to pull property history reports”
So…couldn’t the MLS compile the *accurate* DOM number FROM property history reports? And if the DOM number wasn’t helpful to someone, why would an RE board start fining agents for “churning”? And if they *do* fine for churning, and it reduces churning, wouldn’t that *then* make the DOM number a useful metric for the buyer (all buyers) again?
I’ve talked with our board about it. Looking at how muddled property history reports can be, I doubt there can be a computer fomulation that can accurately come up with the right number. But, you’re right, in time agents will stop churning and the DOM numbers will start to become more reliable…but never always perfect.
So, you put a house on the market on March 1st and now its July 11th. The house has been on the market for over 4 months. Personally, don’t find this confusing.
What astounds me is that the MLS leaders would think the time on the market information needs some explanation.
I suppose the piece of information that does need explaining is why this POS hasn’t sold in over 4 months.
Somebody, file a lawsuit, please.
I really don’t care about days on the market. If the house is priced right, located right, constructed right,then I’m interested in easements, assessments, CC&R’s, available insurance (no flood plain,etc) and what the previous owner paid for the property.
I purchased my first house in 1973. The owners were going through a divorce and I got it for a steal. I bought my second house in 1983 and the couple had split up with one in their new house in Medesto and one in BK. They had been split for 6months so I got a steal on this house too.
“I really don’t care about days on the market”
I do…it’s just one more datapoint for me to use to decide my first offer. Sorting by DOM can sometimes be a very productive strategy.
That’s pretty funny.
Hahahah, one of the MSM cable news channels today had the head broker of keller williams in texas arguing that the sales prices of homes should be secret!?!?! He said it’s nobodies business what a home has sold for.
As an agent, I don’t like it when the MLS information that I have to produce and pay for is given away to the public for free, but eliminating the sales prices for buyers is some nazi sounding crap to me.
You’re right. Agents shouldn’t have to pay for MLS access…nobody should, IMHO.
It would be best is a listing service could generate income by charging sellers to list & businesses to advertise. All information should be public & free, IMO.
“California’s Central Valley is once the hottest housing pocket of the country,
Should have read:
“California’s Central Valley is
oncethe hottesthousingpocket of the country,The Fresno Bee. “Rotten leaves and insect corpses float on pea-soup colored water in a Mickey Mouse-shaped pool at an abandoned house in west-central Fresno.”
“It’s just one of 827 swimming pools in Fresno and Clovis that district workers have treated this year, far more than in any recent year, officials say. District officials are monitoring 1,000 more pools, and they say there are hundreds more they don’t even know about.”
“‘It’s a nice neighborhood. You would never guess a pool like this would be here,’ said Roy Benavides, an area supervisor with the Fresno Mosquito and Vector Control District.”
“Foreclosures appear to be a huge factor in the proliferation of neglected pools, said Steve Mulligan, manager of the Consolidated Mosquito Abatement District, whose district covers Clovis and north and east Fresno.”
“‘People who can’t afford to pay for their homes will neglect their pools, they’re the first thing to go,’ said Mulligan. ‘Then they move out, and there’s really no one to maintain them.’”
“Home foreclosures have been on the rise in the Fresno and Clovis area. The number of foreclosure notices sent to homeowners in Fresno County has more than doubled between the first quarter of 2006 and this year’s first quarter, from 540 to 1,116, according to DataQuick.”
“Real-estate agents estimate that 4,000 to 6,000 unsold Fresno and Clovis homes are on the market.”
Threat of Diseases Due to the Housing Bubble?
The real housing bubble was in over-building, which was fed by bubble in prices.
There are many areas in CA, e.g., Central Valley, Antelope Valley, Imperial Valley, Coachella Valley, etc., that are disasters waiting to happen once the recession begins. Valleys of the infested vacant homes?
Hot and humid areas are going to be particularly vulnerable to spread of diseases.
On a separate note, according to environmentalists there are many natural disasters waiting to happen in CA due to very poor planning and upkeep of water related infrastructure.
Jas
On a separate note, according to environmentalists there are many natural disasters waiting to happen in CA due to very poor planning and upkeep of water related infrastructure.
LOL “According to environmentalist”
I don’t think the NRDC is crying a river (NPI) over California’s waterway infrasturcture.
Interesting story in a little local paper here in South Hillsborough County (Tampa Bay) Florida. I won’t have a link until tomorrow, the print version is out on the streets but the web site is not updated yet. Anyhoo, it is about the demolition of a rather nice house that had been neglected by a local developer that just filed BK. Code Enforcement and the Sheriff’s Office had to demolish the house because it had been abandoned and become a haven for gangs, drug dealers and vagrants. Nice place, too. The company owns 20 properties of different kinds in the area.
Anyway, I recall some of the Californians on the blog talking about people moving into properties like this and turning on the utilities, paying the taxes and eventually getting the deed to the place. I’m thinking of paying a call on the Sheriff and asking about some of the other properties the developer may have in the area and just move in. They may welcome it, if I keep the place up. I suppose I could even contact a local RE attorney and do a consultation on the feasiblity of such an action.
http://en.wikipedia.org/wiki/Adverse_possession
Disclaimer: Not legal advice.
“‘There has been much discussion, contention and even litigation over days-on-market and cumulative days-on-market figures,’ the MLS said in a statement recently posted on its Web site and e-mailed to members. ‘One view is that it hurts sellers, another is that it helps buyers.’”
Well, the Realtors certainly wouldn’t want to help the buyers, now would they? Even those Realtors who represent buyers. I’m sure there must be something in their Code of Ethics that says that they can’t help buyers, but only sellers, regardless of who they represent. The Realtors (as a group) are just so slimy it’s disgusting.
Sad but true. As an agent I really do care about my buyers (haven’t sold to a buyer in 2 years), but the seller is the one that pays to commission. The silver lining is that next year the buyers will once again become gold.
Allway irks me when I hear buyers market at this point. It will be a buyers market only as all this foreclosure blood hits the streets. I mean when the foreclosures are sold to real RE investors, fixed and priced to sell to real RE buyers (ie. people that want to and can afford to live there). Until this is in full swing now any buyers are dead men walking!
The Consequences of Reckless Lending:
http://www.moneyandmarkets.com/press.asp?rls_id=844&cat_id=6
“Agents still will have access to that information and can provide it to consumers if they wish. ‘The listing history record is complex and requires some interpretation,’ said Russ Bergeron, CEO of SoCal MLS.”
Yeah ! like looking up a oil filter in Autozone.
This is one of the things that really irks me about Realtors. They proclaim that the information they’re guarding is so arcane that we ordinary people just couldn’t understand it without their help.
News flash to REIC: We’re capable of figuring things out without you.
Yep, I feel almost as insulted by this patent bit of manipulation, as sellers do when they get a lowball offer.
Oh, the scandal!!
Reminds me of those frickin Century 21 Commercials, where they say, “The computer can’t do what I can. Like, read the expression on your face when you fall in love with a house.” More like, “i know how much I can screw you on the deal to get as much commission as possible when I see that look on your face.” Hmm, if I “fall in love” with it, I still don’t need a realtor. They think this advertising is effective? “I have a gold jacket. You should listen to me! BLAH BLAH BLAH.”
Lookie, lookie! You could live right next to the railroad tracks in Downtown Tucson!
http://www.tucsoncitizen.com/daily/local/57162.php
“‘People who can’t afford to pay for their homes will neglect their pools, they’re the first thing to go,’ said Mulligan.
Pool maintenance and gardener are the first to go when a house owner gets pinched in the pocketbook. Newspaper gets cancelled. Cars don’t get washed.
Are pools THAT hard to maintain? I can recall growing up where some of my neighbors had pools. I don’t remember any of them hiring help for their pool chores. They had kids to do such things.
Likewise, the garden and yard chores. Another thing that we kids did.
No one mows their own yard or maintains their own pools, at least up until this year. I was the only one in the neighborhood to mow my own yard because I liked planting flowers and mowing the grass. Commercial mowers brought in weed seed from other jobs. My neighbors pool were brown and dirty until spring when the pool maintenance man was rehired. They also had the bug man coming once a month. You didn’t want to be outside for two days after bug spraying day. This was in Bakersfield, CA.
Pools are actually less work than the lawns the replace… as long as you don’t let them get out of hand.
When I was thirteen, I maintained the family pool. It was easy. I had to sometimes take the filter assembly apart and clean it out. I kept the acid / chlorine ph balance to tolerable levels. I had a good incentive to be the one to do it: my father would go out of the country on business trips. I could not swim if the pool was not maintained well. It was good disicpline. I loved swimming. I still do: Started lap swimming in 1985 on the navy base, joined masters in 1993 in southern Cal and in 1997 in Arizona, and I usually swim ten miles per week to this day. I’m 48 years old and I’m told that I look as if I’m in my early 30s.
don’t forget, these are mainly ABANDONED or EMPTY homes.
Pools are not hard to take care of, but you do have to get out there and do a minimal amount of work once every 2 weeks or so…
if the house sits for 6 months, you’ll see problems.
Hey! I can afford my house easily but I still don’t wash my car!
OT- Need help from all you experts
Do I renew my CD with AMTrust Bank at a higher rate (6%) for one more year or just cash it out?? I purchased the CD last year online and I am concerned about them because they have so many Mortgage Loans.
Thanks for your advice in advance!!!!
It hurts me to think about earning interest on a declining dollar. Every time I think its too late to diversify into other currency and the dollar is due for a bounce — it keeps going lower. Still in greenbacks, and regretting it. Most ‘mericans seem oblivious. I *do* blame the republicans, not so much for the deed, but because all the right-leaning financial pundits would be screaming and pounding the table if a Democratic President had presided over the trashing of the dollar.
Suzanne (two of my buddies have that name
) Thank you for your advice but, as usual, it’s way over my head. Not really sure what you are saying. No disrespect intended (because I do respect your input)
I am just a little state worker who knows a housing bubble when I see one but, I don’t know stocks and the dollar all that well.
check out everbank.com… As far as i know they are the only place to offer cds denominated in foreign currancies (fdic insured!). I bought some australian cds a few years ago and have smoked in the face of the collapsing dollar. Aussie cds now pay between 4.97 and 5.13%. In 03′ it took 1.85 aussies to buy a dollar, it now takes 1.2 =). Had you been rolling over 10k US in aussie cds since 03 it would now be worth over $18kUS.
Thank you Rich, I will look into that. I have until the 1st of August to decide.
6% CD? Declining Dollar? The dollar is declining, but probably lower than 6% per year. I would renew the CD. I’m in a similar situation. Have maturity dates on the 16th and 20th. I’m going for a modest 5.1% yield over 8 months on $11,400 principle. It’s enough for me.
Bill, your example helps me out a lot. If it’s enough for you then mine is enough for me. lol
My principle is more so that is why I can get a higher rate and I have it for at least a year. When I sold my home I put half of the gain in this account and the other half in a credit union account (3yr). Both cd’s have been over 5.5% for the past year. After reading what you all say about FDIC, I did check into that to make sure I was covered and I am. However, some of you say that if things do fall as far as we think, it could be awhile to get that $$ back so, that is a concern also.
“I purchased the CD last year online and I am concerned about them because they have so many Mortgage Loans.”
You are supposed to not have to worry if AMTrust Bank is FDIC insured (up to $100k per account holder or $200k for a joint account). FDIC says an AMTrust Bank based in Clevelend is insured.
6% on a CD is relatively a very good rate. If you don’t want to buy some other assets, I’d stick with that. However, you may want to diversify into some assets to hedge against inflation. That’s what I’ve done. I have cash (in the form of CDs 1 year or less), some ETFs, domestic large-caps, and international mid-caps with high dividends.
Incidentally, I was thinking of buying into the ProShares Ultrashort ETF called SRS. This is a real estate short/bear play ETF that goes up roughly when the Dow Jones Real Estate Index goes down, by about twice the amount. I’ve never really “invested” in short positions before, but it seems like a year or two of SRS could pay off handsomely (that’s “could” as in “might” - no crystal ball here).
I was even thinking going SCC as well - a consumer services short. I realize short plays are quite risky and almost universally tend to lose in the long run, so certainly I would balance these with appropriate bullish positions. Anyone with an opinion on that?
Home, what is “ETF” (I could take a guess but, don’t want to look a fool)
yes, my amount is less than 100k in both accounts so I should be ok.
I don’t know the stock market well enough yet to play that game, however I have learned a lot from Ben’s blog (thanks to all!). I also don’t have the time or patients for that. I am just not that big of a risk taker
Sounds like I might keep it in there one more year and then both will expire 08/08 so, I will decide at that time if I buy a new home or keep it in until 08/09.
Thanks for your advice!
Oh God it’s happening just like I predicted a year ago!
“The Man gave me too much money. My civil rights got violated”.
http://tinyurl.com/2hx9r3
At best they targeted vulnerable people with toxic products, and at worst they changed the loan applications around after getting applicant signatures as has been common of late. Why shouldn’t they be responsible for that? Oh, right. The rich mortgage folks should be suspected last while the people who got suckered into their toxic junk get punished first. Newsflash! The money is gone and laws still matter. It is really sad that this chance to try to clean things up degenerates into finger pointing. So and so got a loan that is way too big. Don’t you dare investigate the broker! After all, the customer had visibly dark skin or whatever. Lame!
This is a capitalistic society, and the first rule is always, caveat emptor. If people wish to be taken seriously, as adults, and go into the marketplace and purchase a home, then they are responsible for their financial decisions. Public libraries have a wealth of information, freely available, on buying a home and selecting a mortgage. The onus is on the buyers to do their due diligence. Failure to do so is not a result of skin melanin, but of a failure of personal financial responsibility. Do your research, ask questions, compare offers, inform yourself of all the costs of home ownership, review your finances and your employment prospects, and read any and all documents before you sign anything. Failure to do so is going to cost you,big time. However, as Oprah would say, the good news is that it is all a learning experience.
Spike66,
Thank you! Excellant post! I shed no tears for the FBs.
Remember how Bank of America was reaching out to illegals to give them credit? Look at the banks stock now.
http://finance.yahoo.com/q?s=bac
It’s at 52 week low.
Good luck as they return to Mexico with past dues balances on their cards. Perhaps there is a way Bank of America can right off these balances.
bank of america got out of the subprime loan business in 2003.
‘One view is that it hurts sellers, another is that it helps buyers.’”
Wow, two distinct views.
How about a third view: “The Realtors are full of non-sense”.
Sales people may portray products in an unrealistically positive manner. Thanks for sharing that brilliant insight. I knew there had to be some kind of reason for this housing bubble.
“At some point, some executive has got to stand up in the boardroom say, maybe we should just stop prostituting our best asset, and wait for the market to come back to us”
cricket noise….
wow i thought it was bus driver convention here in costa mesa, but actually 3! buses full of people looking at this awful crap 1923 shack that’s around the corner from me. Been on the market like over a year it says, with ad saying Feel Free to have a look, it is Vacant! Looked like a bunch of Asian and Indian “investors”. Never seen that around here before. Seriously, not one bus, THREE buses!
I am familiar with Costa Mesa. I am suspicious: Why would three buses come to look at one sh!tbox here, when there are so many around. I see lots of foreclosures, short sales, REOs. If one person drove around and stopped for only 5 minutes at each For-Sale sign they see around town, they’ll be here for many days.
I suppose these Asian and Indian investors plan on renting the place out? Ha! There are for-rent signs EVERYWHERE and rents are nowhere near carrying costs.
Eh, I guess this is the way we plan on recovering some of those dollars sent overseas for cheap goods and services. Them dollars gotta find their way back somehow!
“Real estate agent Gail McCullough says, ‘It’s a wonderful time for buyer’s because the rates have come down, the interest rates are excellent, and of course the market values have come down.’”
Today’s lesson in English: when you want to pull the wool over someone’s eyes, use the present perfect tense instead of the present continuous to make an unfolding drama look like it’s over. Remember, the present perfect comes across more like the past tense than the present tense. For example:
Past perfect:
— “…and of course the market values have come down.”
Present continuous:
— “…and of course the market values are tanking big time; housing prices are getting hammered. Sales are falling off a cliff. Foreclosures are skyrocketing.”
‘It was interesting because then, every month homes were going up $5 to $10K, so if you wanted to get a house, you had to get in there and get it.’
————————
This is exactly what I saw, but my reaction was the opposite of this potential buyer’s.
As prices were going up $10K per month, it became obvious that things were NOT normal & something rather dramatic would happen to correct that.
Why buy in a “seller’s” market? Isn’t it obvious that a buyer should wait until it’s a “buyer’s” market (not using realtor hype, but referring to a **real** buyer’s market).
Buy when NOBODY is paying attention to real estate because it’s just too depressing.