A New Trend Is Emerging In California
A report from the Bakersfield Californian. “Home shoppers will likely find a few bargains this summer. Prices have dropped and the selection of available homes has grown, local realty pros said. Those searching in the northeast, where a four-bedroom home (on) Loch Fern Court is selling for $275,000, will find ‘gobs of choices’ in the same price range, said agent Mike Saba.”
“‘Between $225,000 and $300,000 right now, you’d have about 65 choices of a four-bedroom,’ Saba said after doing a search on Bakersfield’s MLD. The Loch Fern Court house might be a tad overpriced, he said.”
“Buyers can also get more house for their money than they could in the past two years, said agent Jeanne Radsick. The homes Radsick has listed at $500,000 or higher start at about 2,700 square feet. And sellers may strike a deal. ‘People who up to this point might not have entertained offers, are now entertaining offers,’ Radsick said.”
“Luxury homes have been discounted as well, said agent Gail Malouf of Coldwell Banker America West. ‘You’re getting a better deal on all houses than you were a year ago,” Malouf said.”
The Ventura County Star. “After months of waiting for someone to purchase her Spanish Hills home, Cheryl Conroy decided she couldn’t hold out any longer. She and her husband have put a deposit down on a lakefront property in Missouri. But they might lose the money if their Camarillo home doesn’t sell soon.”
“Conroy enlisted the help of Dennis Gottlieb, director of a Las firm that provides relocation services for corporate executives. He purchased a share of the home and will reap some of the profit when it sells.”
“Given the time constraint, Gottlieb decided the fastest way to raise interest in the house is to let buyers set the price. Gottlieb placed an advertisement in The Star to announce the home must be sold by Sunday night for the ‘best reasonable offer’ over $594,837.”
“The house hasn’t sold because it was priced too high, said Bob Doughtery, who was Conroy’s Realtor until July, when Gottlieb stepped in. ‘If she had gotten the price below the $800,000 mark, we would have probably been able to sell,’ he said.”
The Orange County Register. “Maria Cordova was thinking about tapping into her home equity to add a fourth bedroom and second bathroom to her Santa Ana home. But that plan evaporated when Cordova watched local home sales slow to a crawl.”
“Brian Glabman owns Glabman Furniture, a 108-year-old, four-store chain based in Costa Mesa that sells high-end pieces. He will soon close his 42,000-square-foot Costa Mesa store, the only Orange County location.”
“He believes that because the slowdown in the high-end housing market (the segment Glabman sells to) happened quickly, his customers turned wary of spending on their homes. ‘The buying habits of consumers are changing,’ Glabman said. ‘What we’re doing here in Orange County no longer makes sense.’”
“Cordova is skittish as she watches home sales and prices fall. ‘We’re spending less,’ she said. ‘We’re buying just want we need.’”
The Recordnet. “Affordable housing, considered an oxymoron during San Joaquin County’s unprecedented real estate boom in recent years, is making a comeback. The playing field is leveling because of the unprecedented number of area defaults, foreclosures and price reductions in the past year, observers say.”
“But just as nonprofit developers begin placing ‘for sale’ signs on newly affordable properties, a new trend is emerging: Many people who can now afford homes are afraid to buy.”
“‘They see their friends and family losing their houses,’ said Larry Johnson of one of the area’s affordable housing builders. ‘They’re scared to death right now.’”
The Union. “Financial woes for the DarkHorse luxury housing project in southern Nevada County deepened Friday, with a lender planning to foreclose on 72 lots and the nationally recognized 18-hole golf course, according to the lender’s agent and a legal notice.”
“Owens Mortgage Investment Fund, based in Walnut Creek, said Friday it would sell the land to the highest bidder on Aug. 17 at the front entrance to the Nevada County courthouse if the owners fail to come current with payments on the loan.”
“In June, DarkHorse sales director Terry Williams said the luxury development on Combie Road had experienced a slowdown in sales that reflected the slump in real estate around the county.”
“Statewide, sales have slowed to the lowest point in more than a decade, DataQuick has reported. ‘It’s a slow market, but it hasn’t stopped,’ Williams said previously.”
The Advance Register. “Michelle and Dennis Kogler moved to Visalia in September 2005 from Colorado. It was the height of the real estate boom and the Koglers bought a new home for $376,000.”
“Six months later, as they noticed that similar homes in the neighborhood were selling for $125,000 less, plus incentives, Dennis Kogler decided to accept another job in northern California.”
“That’s when the Koglers got into trouble. They tried for 18 months to sell the home while Michelle Kogler remained in Visalia. They had two sets of living expenses.”
“‘We bought the home at an inflated price and it dropped to the point where we were immediately losing money,’ Michelle Kogler said. ‘It was a disaster.’”
“The Koglers aren’t alone. As the real estate market in Tulare County keeps tumbling, the number of default notices has skyrocketed, from 623 in 2005 to 1,165 in 2006 and 864 in the first half of this year.” ”
“‘We just came off the biggest market we’ve ever experienced in real estate,’ said Visalia real estate broker Brad Maaske. ‘What’s stupid is we had the lowest interest rates in 40 years and people took a variable rate loan because they thought it would get lower.’”
“If all else fails, the lender ultimately repossesses the property and resells it to recoup the loan. That’s what happened to the Koglers. ‘We couldn’t get rid of that home to save our lives,’ Michelle Kogler said.”
“Finally, she said, she got homesick, left Visalia and rejoined her husband. ‘It financially ruined us,’ Kogler said. ‘It will take us years to recover.’”
“At the steps of Tulare City Hall Monday, the Koglers’ home was put up at public auction. It didn’t sell, and the lender took it, adding to a portfolio that will eventually have to be placed on an already depressed housing market, where, according to DataQuick, home prices have fallen at the rate of 1 percent a month.”
“Carlos Lopez of Visalia had his sights set for months on a defaulted home on West Dorothea Avenue. It had last sold for $130,000 in 2002. He and his mother drove to the neighborhood a few times to see if the home had investment potential. ‘We just thought it was a good time to look for property,’ Lopez said.”
“He and his mother bought the house Monday at the auction, after a bid war with another potential buyer, for $25,000.”
The Press Enterprise. “Mortgage default notices in the Inland region have almost tripled since last year. Home foreclosures have increased almost eightfold. And home sales last month were the worst in a decade.”
“Real-estate experts and economists say today’s housing woes might be just the beginning of trouble.”
“In the past six months, almost 22,000 Inland homeowners received notices of default, the first step a lender takes to foreclose on a property. During those same months, 6,367 homes were taken through foreclosure.”
“Christopher L. Cagan, director of research and analytics for Santa Ana-based First American Corelogic, said he expects at least another 60,000 foreclosures in the Inland region in the next four to six years. He identified about 221,700 adjustable-rate mortgages sold in Riverside and San Bernardino counties from 2004 through the first half of 2006.”
“‘It’s sort of like watching the snake swallow the mouse,’ said John Karevoll, an analyst for DataQuick. ‘We have this huge amount of loans sort of moving through the pipeline.’”
“The median home sales price in Riverside County was $400,000 last month, down from $432,000 in December. In San Bernardino County, the median price dropped to $365,000 from $372,000 in the same time period.”
“The falling home prices largely have been caused by more houses being put on the market, either by builders or homeowners listing a house they can’t afford.”
“‘First they try to refinance, and then they’ll list their property, putting more downward pressure on the prices,’ said Esmael Adibi, an economist at Chapman University in Orange. ‘This is really what is adding to the resale inventory in the marketplace, but demand has dried up. That’s why you are seeing notices of defaults going up.’”
“‘Some of these people were just caught up in the incredible appreciation going on,’ said Steve Johnson, of MetroStudy. ‘They thought it was sort of a fail-safe scenario.’”
“Many bought when prices were their highest, and when prices fell were left trying to sell a house at a loss. ‘People who were investors were very comfortable in the economy, and leveraged the value of their own home to buy other houses and flip them,’ Johnson said. ‘So we have another wave of these coming through, some of them subprime.’”
“Anthony Banks, a construction contractor in Riverside, said he received three calls late last week to renovate foreclosed homes. Banks has in the past bought homes himself and rehabilitated them for sale, but now says that business is poor. ‘You can buy them, but you can’t sell them,’ he said.”
“Brossie Cerniglia, who owns and operates The Pool Doctor in Corona, said he sees a lot of possibilities for his business in a foreclosure market. His company whitens plaster and cleans pool tiles. Cerniglia estimates that on about 70 percent of the homes he works on, the owners are preparing for sale. In just the past week, traffic to his Web site has doubled. He also has been trying to contract with banks that hold foreclosed homes. ‘Then I’d be working for a long time out here,’ he said.”
“Home sales last month were the worst in a decade in Riverside County and the worst on record in San Bernardino County, which is sort of a downer because I was going to sell my house, pocket the cash and sleep in an elaborate tree fort.”
“My house lost an estimated $70,000 in equity this year, slightly less than it might have, had it been haunted by poltergeists. I’ve never lost $70,000 before, but I always imagined it would feel more … well … fun.”
“I may live in the Inland Empire but I really don’t see how this real estate slump could possibly be my fault. The real blame here falls on the rest of you.”
“Step it up, Inland Empire, and start beautifying your residences! Get a garden gnome or politically correct lawn jockey. And when you take out the trash, for gosh sakes, put a shirt on.”
“A few decorative patterns in the front yard, say a seahorse or snow leopard, or a seahorse mauling a snow leopard, could really increase your home’s resale value. Even triple it.”
“We’re a team, Inland Empire. And we have to start acting like a team. (Corona, you bring the sliced oranges). And together, we’ll systematically re-inflate the real estate bubble so that this time, we’ll be smart enough to sell our homes, take the profit and buy mansions in Oregon, Colorado or Texas.”
Buyers want to buy, but not at the prices Sellers “think” their houses are worth. The California housing market world has changed and buyers are wise, they can see what’s happening to the boom buyers that bought too much house and are desperate to sell now to minimize their losses. Buyers are indeed holding off and waiting on the side lines until the Sellers get realistic or when counter offers are accepted. House prices have to go down or many sellers are going to be hurting in more than one way. Too many houses are “too improved” and their sellers want return of their money, but it’s going to be a rude awakening that sellers are not going to get their improvement cost back and buyers will get themselves very good deals if they wait long enough. FOCUS on the houses you’re interested in and just watch the market….plenty of inventory everywhere so you can make many target choices and just sit back and wait and wait until the sellers give in….remember it’s a buyers market and you have the upper hand. Wait and be patient and you will be rewarded.
Exactly Cheryl. That’s how I arrived at my housing bear credo: I have cash and time on my side. What do homedebtors have besides a mountain of debt and a big stucco box???
Stress.
Irate letters in the mail?
One imagines they’re fresh out of alcohol.
Is Tickled Pink still avilable?
Only a real fool would buy now if money is important as it is for most normal buyers who work hard for a living. Why buy in a falling market when it looks like this will last for several years. Of course there seems to be plenty buyers regardless what Wall St. does.One can only wonder as a fool and his money are soon departed.
One question remains. How did a fool and his money ever hook up in the first place? 100% financing maybe?
Mike, you called that correctly. The saying should be: “A fool, and the money he wished he had, are soon parted”.
Actually the fool did not part with any money, only the lender …
In this case, the lender’s the fool.
Reminds me of the old joke, circa 2007: How do you make a million? Start with a billion…
Only a real fool would buy now…
Absolutely. Once J6P realized that the statement “RE only goes up” was bogus then reality sets in. Things like the cost of renting vs. buying, true cost of construction, and other historical truisms suddenly become important again. That’s when J6P decides to wait until prices truly make sense, which is still a helluva long ways from where the market is now.
Those that are out trying to score bargains now are without question total fools that are still drunk on Koolaid.
“‘We bought the home at an inflated price and it dropped to the point where we were immediately losing money,’ Michelle Kogler said. ‘It was a disaster.’”
Welcome to the FB club my friends.
“We’re spending less,’ she said. ‘We’re buying just want we need.’”
Do you realize what a chill that message will be sending through the economy shortly?
What about buying less than you think you need since most people over estimate their needs anyway?
C’mon, that’s the American way!
That attitude will cool the entire economy.
Keeping cars years longer.
Eating out less (there is such a surge of restaurants).
Keeping that TV, couch, whatever longer.
Lower spending on fancy clothes.
Cheaper booze (but more of it is my prediction).
Yea… the chill in the economy will be a cold one.
Got popcorn? and cash?
Neil
I suspect most HBBers already live that way.
I have been liveing on the cheap for awhile.Beleive me finding things to do without spending money can be challengeing.
Any predictions for the stock market monday anyone?
Got tinfoil?
“I have been liveing on the cheap for awhile.Beleive me finding things to do without spending money can be challengeing.”
Not for me. I find that the best things in life are cheap, or even free. But I prefer the outdoors and don’t do a lot of the sheeple stuff like restaurants, movies, malls (materialism in general), wine bars, etc. Sure, I’ll do it from time to time, but I am much happier exploring the outdoors, working in the yard, or playing the guitar which is by and large inexpensive to free.
“Any predictions for stock market Monday?”
Up for a couple of hours Monday via the PPT boys and soothing admonitions of the Talking Heads at CNBC/WSJ/Bloomberg….then straight down for the rest of the week….10%-20% “correction” in the next month with occasional upticks.
Just wonder maybe they will all head for the exits Monday?
Anyone else getting any “vibes” for the lack of a better word?
“Any predictions for the stock market monday anyone?”
No need to predict — the S&P futures open every Sunday at 5.30.
http://www.cme.com/trading/dta/del/globex.html
Up 1½ as of this writing.
I heard Bob Brinker rate the S&P 500 Index a buy in the low to mid 1400s. Just thought it was interesting to mention.
People still own cars?
Dude,
This is LA. You are defined by your car!
Oops…how does my 19-yr-old Plymouth Horizon define me? (I heard on the radio once that engineers, in general, keep their cars 7 yrs more than non-engrs.)
Poor job, probably BA, at most, from second tier school.
neil - they are all leased - not owned! after all, they must be shiny and new
Sally OMaley,
I didn’t know a Plymouth Horizon could last 19 years! It means your a good but busy mechanic.
It looks like people are going to “buy the dip” at the start of trade per passthebubbly’s link. I just don’t get the market at times…
Got popcorn?
Neil
Well, actually, I was in high tech for a couple decades. I have 5 college degrees from Big Ten schools - 2 Master’s and one A.B.D. Maybe - if I care what people think about me - I should get a better car during the dip?
Yeah, I am kind of proud of not making any payments for a decade and a half!! But I really love my car…it’s very comfortable and truly reliable.
Credit Crazy,
You are so right, cars are leased here in LA! Now what are people going to do when the lease on the SUV expires?
Getting interesting.
Neil
NYCB, you gotta come out of those closets you call homes!
I already see this happening out west. A lot of people are cleaning out closets, selling off antiques and other luxury goods. I was able to buy new Christine Louboutin mary jane pumps for $167 with shipping. The person hadn’t even worn them. They were just sitting in her closet- amazing. These would have sold for 400 on ebay last Feb.
$167? Used?? Shoes?!?!?
LOL not used. This person bought $800 shoes and never wore them! Normally, even used shoes by this marker would sell for 400 on ebay.
Everyone has a vice. Mine is shoes. I just look for bargins instead of marching into Needless Markup every season.
But shoes??? Shoes?? I just don’t get it….Geez I bet you have the feet to go with this obsession…at least wine can be shared!
I’m sorry, but “$800″ and “shoes” do not belong in the same sentence.
And wine is over too fast, same with drugs. But great shoes are around much longer >; )
I have my MFA but I worked in fashion and film 88 to 96. I can make _anything_ but shoes and land.
I’m with the wine club here. I have three cases in the wine fridge and about 2.5 more in a closet. Of course best with friends.
However, that said, I’ve spent quite a bit on hiking boots over the years.
Generally could only resole them twice…
Got wine?
Neil
Er,..can you clarify? Do you mean Christian? Or is there some new line of shoes I haven’t heard about? (I would be VERY suprosed if there was!)
Stars End
(AND founding member of shoe-aholics anonymous!)
Er,..%$^* it! I meant “suprised!” (Not sure WHAT suporsed is…)
You’re right. This my first pair. They had been out of my price range until recently. I think I’m in love.
i consider it lucky to simply find something that makes one happy .. to be able to purchase such a thing is a bonus.
Ok so women love chocolate, wine and dress shoes. Am I missing anything? Flowers? Balloons? Stuffed animals? Cuddling?
-this guy loves coins and digital scales
kayaks and cameras. and wilderness for both.
I am so tired of sob stories where the would be seller tries to “beautify” their home and thinks of every possible gimmick to try and sell it to some sucker. Lower the price!!! $300K for a 3/2 home in the central valley is insane. My wife and I make just under 100K/year and i feel like it would be crazy to pay that much for a house. We are looking to move (rent) in Merced right now, its a bloodbath there everyother house is for sale with a wide spread of prices.
Something I have noticed recently, is a large amount of newer homes listed for rent with high rates. Dozens of new 4/2 houses listed for $1500/$1400 month, good luck with that suckers.
I am so tired of sob stories where the would be seller tries to “beautify” their home and thinks of every possible gimmick to try and sell it to some sucker.
You mean like these suggestions? (from the Inland Empire article) -
Nobody’s saying you folks in Hemet have to get rid of your rock gardens.
That’s just crazy talk.
But maybe mix in a few other stone colors besides green.
Purple’s nice.
Its funny . I saw on one of those home shows that the realtor was suggesting that the seller paint their older furniture in order to sell their house .
While I have observed in the past that spruced up houses do sell faster in a down market , I have never seen buyers be very willing to pay the borrower for the upgrades . In other words ,in down markets the lowest cost house listings tend to establish the price levels that houses go out at .
I’m just saying that if you think you are going to get your 50K back for the new kichen you installed ,you won’t . In a down market buyers might give you 50% or less on the dollar you spent and your house might sell quicker .Only in a up market can you make money on costly upgrades .
For as long as I can remember the general rule has always been that you can’t make back the money you spend on home improvements. Did this change as part of the general RE insanity of the last 5+ years?
This is part of the flipping movement. If you read the HGTV boards, you’ll find a variety of FBs asking what color to paint their house to sell faster or what position to bury their St Joseph, etc. Once they post the link to their listing, it’s pretty much always to a seller wanting 10% or more then the local comp. When someone points out that they’ll need to lower the price, they start screaming that they won’t give the house away.
It’s a regular temple of schadenfreud.
fix stuff that’s broken .. if it aint broke let them fix it.
You’re obviously not in L.A. They try that here, too, only it’s $2500 a month for a WWII era 2+1.
You must be on the west side TJ, in the valley $2500 will get you a pretty sweet and very large pad… don’t believe the wishing rental prices on CL either…
Hollywood Hills, actually. The Studio City / Toluca Lake / Burbank corridor is rife with overpriced rentals.
Does seem much more reasonable towards the northwestern end of the valley, though.
Curious how many of them actually rent out at those prices though…
When I was in Granada Hills before moving downtown, I was paying $1800/mo for a large 3br place with a two car garage plus RV parking, large yard, big deck, separate shower and jacuzzi tub in a bedroom-sized master bath, etc. I saw similar (not quite as big, but still nice) places south of the Blvd in Encino and Tarzana in that price range too.
Nice! I’d love to find a similarly equipped 3+2 with pool south of the boulevard, but everything I’ve seen is priced outrageously.
jim - you found a decent place downtown? how’s the security?
Ummmm… let’s just say I would call downtown “early gentrification.” I had someone attempt to mug me - not panhandling mind you, but mugging - last month. It’s not the first threatening incident I’ve had down here either. Fortunately since moving here I’ve learned to always carry a knife and pepper spray. Lots of other indignities down here as well - stolen packages, broken into cars, aggressive panhandling, etc.
I deal with it ok because I’m a 4 1/2 block walk to the office in the better section, and I’m a not-entirely-unthreatening-looking adult male, but it’s not for the faint of heart. Before anyone moves down here, I’d strongly recommend staying in a hotel for a couple of weeks and walking around at lot, at the very least.
a lot… where is that darned USB/brain interface when I need it…
Dear Jim
don’t bother applying for marketing job at downtown LA loft builder model office……
squat in a new Tol or HOv home- it’s the coming thing
LOL, flatff, that’s what I’m talkin’ about.
“squat in a new Tol or HOv home-”
yea… squat and leave it….
Check out the David Crisp editorial here:
http://people.bakersfield.com/home/Blog/editorials/12543
The Californian is late to the party, but the sharks are swimming and I think they smell blood.
http://centralcoasthousingbubble.blogspot.com/
Was anybody bitching when this crook was causing the “value” of their home to skyrocket?
IE house flipper now says: “You can buy them, but you can’t sell them”
I think we may be in a recession and we dont even know it yet.
The Inland Empire will soon come out of the closet and reveal itself as ‘Little Mexico Central’. It is implossible that it could survive the loan resets… gardners and painters never could afford the loans.
And even still today there are people drinking the koolaid, and in commercial construction no doubt. Just left a b-day party where some people in construction did not seem the least worried. Also, others in industries based upon disposable income - talking about buying more stuff for home. But give it another 6 months, just after Christmas maybe. Then commercial will probably be on its last leg as well, as will the rest of the consumer-based industries.
Heck, we’ve been in a recession since 2004. The GDP is “deflated” by the CPI, so by lying about inflation TPTB kill two birds with one stone. Go check out the alternate data series at shadowstats.com for the gruesome truth.
I did a rant on this (see URL link)
If the rates of defalut keep going like they are, those big box retailers will start closing underperforming locations all over the IE. And when they board up the doors the little guys in the same mall will die off also. Corporate chain retaliers will abandon the IE to avoid damaging their stock prices further. And that will compound the damage to the IE economy.
I was not expecting things to get this bad based on the articles I had read in the main stream media. According to the chart from Businessweek, a huge number of I/O loans are going to reset in early 2008. If things seem bad now, wait till mid 2008.
On a related note, I saw that some European Headge Fund lost all its value due to exposure to sub-prime loans in the US. So, bad decisions by buyers here are affecting investors all over the world. Does this mean that the rest of the world (who buy equities which contain sub-prime loans) are subsidizing the crash in housing market here?
Prices are beginnign to come down in South Beach. I am looking for a condo there for many years now and I am beginning to see $700K condos selling for mid to high 500K range. They were in the 300K range just a few years ago. I can see the new houses/condos going for fire sale prices, but I am wondering if we will ever see super low prices in good areas like South Beach. I own a townhouse and looking to buy a condo if there are good deals to be had.
“If things seem bad now, wait till mid 2008.”
I agree. In mid 2008 there will be blood on the streets.
That just might be the time to start looking if your in the market.
“I agree. In mid 2008 there will be blood on the streets.
That just might be the time to start looking if your in the market.”
If you still have a job, if you haven’t burned through all your cash, if you haven’t been taken out by the scapegoat event that will be deployed to eliminate those who can no longer fund the cost of their own existence…
And I thought I was cynical…
i prefer to call it ‘realist’
2008 seems to be the concensus year for when things actually start to get BAD. What we see today, is just a wakeup call. I am going to go out on a limb, and speculate 2009 will be the year when we see the greatest price declines though.
A few months ago I also thought 2009 would have the biggest declines, but things are happening so fast…like a snowball, that I am not so sure now.
Yeah I think things are speeding up toward sharper price declines. I was expecting 7% per year price declines over the next 5 years.
Yeah I think things are speeding up toward sharper price declines. I was expecting 7% per year price declines over the next 5 years.
oops - trigger happy
better than not being able to pull the trigger!
Wait in 2008
Sellers Crying in 2009
We have a long ways to go.
If you can keep a job and cash on hand… a buying opportunity approaches.
Got popcorn?
Neil
I think the biggest 6-month decline in prices is coming as of right now, right here in the second half of 2007. Maybe not in OFHEO data, because of the lag, but in terms of the real market. Spring of 2008 won’t be the bottom, but some sellers (including banks) will be so desperate by then that prices will be way cheaper than now.
Whoa! Wait a minute now mister (vincent). Just the other day the state economist in Oregon said good times will be back in 2008. Phew! I’m sure glad I live HERE.
(Sorry just playing a little late night devil’s advocate!)
…but I am wondering if we will ever see super low prices in good areas like South Beach.
Stop wondering. By the time all the construction stops there’ll be a 20 year supply of condos in Southern Florida. They’ll be giving them away.
I can remember when when South Miami Beach was not considered such a great area. You only have to go back about 20 years. My guess is that will happen again, sooner rather than later. Nothing against South Beach, but the latest heyday is already old in the tooth - SoBe’s appeal and hipness has been narrowing since about ‘03. And the beaches are becoming more menacing, a very bad sign.
One of my all-time favorite TV shows is Miami Vice. Remember all those bombed-out, bum-infested beach hotels they used to shoot in (pun intended)?
Yep, TJ, I loved South Florida during the Miami Vice years. I had a ball. I even got to go on set. Talk about charisma, Don Johnson had a ton of it. When he entered a room, it electrified. Bum-infested hotels and all, that’s when Miami was fun and interesting.
“Given the time constraint, Gottlieb decided the fastest way to raise interest in the house is to let buyers set the price. Gottlieb placed an advertisement in The Star to announce the home must be sold by Sunday night for the ‘best reasonable offer’ over $594,837.”
- Darn it! If the minimum was only $594,835 - I was interested.
and how is setting a minimum allowing the buyer to set the price? I guess they need at least this much to pay off the loans and make a tidy profit …
LOL… I’d love to see follow-up on this one… will he get an offer over his so-called minimum? Someone, quick, call them up and offer $300k contingent on 100% financing at 6%…
WELL LETS ALL CALL HER TOMORROW!!!!!!!
Jenni Mintz
Staff Writer / Business
Contact Jenni via e-mail
Call Jenni at 805-437-0239.
Oh please, let me pay more than your lowest asking price!!!!
“He and his mother bought the house Monday at the auction, after a bid war with another potential buyer, for $25,000.”
That’s a typo, right?
There has to be a zero missing from this number. Else, sign me up.
Exactly… though if it went for $130k in ‘02, and was already overpriced by 40% by then, and we expect overcorrection…
it’s Visalia, dude. $25k sounds about right for that polluted dirtbag town.
Polluted dirtbag town? But what about their famous onions?
That’s Vidalia. Another result of pub screwel education.Actually a ‘nice’ town with old town shops. Love it when the temp is under 80 F. Now 105.
i went to Visalia once in my life a long time ago.. it was summertime.. the Harley dealership had a manual i needed.. the memory has faded.. “hot and dusty” is all i recall.
you’re right,42. Went thru there on the way to big trees in Sequoia. All I can say is you get what you pay for, and they may have paid too much. Must be the market price for a slice of hell…
$25,000.00. Now that’s what I’m talkin’ about.
roger that.
I can get nice houses for $50k in NW Pennnsylvania. Maybe ill get lucky for $25k in 2010 at a foreclosure auction or lowball some desperate seller. My friend said nice houses were going for $20k in east Ohio back in 2000 so maybe that state will be cheaper than Pennsylvania by 2010?
I still see plenty of fools from Southern California taking their equity gains and moving to Eureka, California and its environs. Sure, market prices are down slightly, but a lot of the sellers here are frustrated with the market and refuse to concede; they pull their house off the market thinking that 2005 prices will return next spring.
I continue to bide my time; renting a 2BR/2BA for $1,250/mo, or about half what it would cost to own it. Let the greedy flippers flop!
Update to yesterday’s post regarding the neighbor attempting to sell a/c, fixtures, etc. out of the house he’s abandoning: We talked to a lawyer neighbor and a realtor and they both recommended we stay out of it. I don’t think the house has been trashed. Perhaps local people are good enough and smart enough to not participate in any dismantling.
Note that he’s a moving van driver, another segment of our workforce severely impacted by this “contained” bubble burst.
I appreciated all advice and comments. With plenty of land available, Johnson county Kansas homes were built big and had been reasonably priced. However, that didn’t stop people here from participating in the bubble. My understanding from a recent Forbes article is that KC area homeowners currently have the lowest equity on average in their homes of any US metro area, making our housing market precarious. Local press is silent on this, of course.
I would go with what the lawyer neighbor said. But it seems as though your neighbor violated the lender’s property rights in some way. Not an admirable thing to do, in my libertarian philosophy.
Lenexa,
I live in Olathe. In the past 6 months, activity on my dead end street of 25 houses. 5 reo’s, 1 pending attempt to a short sale. What are you seeing in Lenexa?
I’m in a very established area (79th and Acuff) and I haven’t noticed excessive for sale nearby. But, they are just now completing a half dozen more huge new homes on little lots made out of a patch of pet horse pasture. I guess Mr. Ed moved.
Lenexa, Here is that article.
Riskiest U.S. Housing Markets
http://tinyurl.com/3cs47g
Note that he’s a moving van driver, another segment of our workforce severely impacted by this “contained” bubble burst.
??? I thought the moving vans were hauling every hour they could! Did I miss something?
However, you put up as collateral the house as a whole when you take a loan. Grrr…
Got popcorn?
Neil
“Christopher L. Cagan, director of research and analytics for Santa Ana-based First American Corelogic, said he expects at least another 60,000 foreclosures in the Inland region in the next four to six years. He identified about 221,700 adjustable-rate mortgages sold in Riverside and San Bernardino counties from 2004 through the first half of 2006.”
Is this implying only the adjustable rate mortgages are at risk? I would direct Mr. Cagan to the Kogler’s story. Doesn’t appear a mortgage reset that is now unaffordable was their issue, but simply that the home has lost 33% of it’s value in 6 months. That would make any of us homesick.
60k foreclosures?
I’ll bet 50% of the loans over the last 3 years which were “no or low down” + ARM’s + income liars, will result in foreclosure, and that figure is a lot more than 60k. Cagan can add another 50% of the knife-catchers over the next 4-6 years to the pile as well.
The sooner someone yells avalanche, the greater probability more financial lives will be saved further down the mountain.
you are too low - fully 80+% will default. most of the should have been denied. these ppl can’t swing it. period.
“Christopher L. Cagan, director of research and analytics for Santa Ana-based First American Corelogic, said he expects at least another 60,000 foreclosures in the Inland region in the next four to six years.”
60,000 foreclosures
………and what will that do to prices?
………and what will that do to prices?
Median, no doubt, will go up!
With the gap between rich and poor ever larger and the increasing difficulties getting home loans, I would not be surprised to see just a few hundred high end sales a year at some point. The press will have a field day pronouncing massive median price increases.
Almost did a spurter
LOL!
ROTFL
Sad but possible scenario…
“‘What we’re doing here in Orange County no longer makes sense.’”
Does he mean that there was actually a time when it made sense?
1998 prices in OC made sense. It’s not out of the question that we’ll see those prices again by the time the dust settles this time around.
Wish I could lay claim to the origin of these, but I thought they were a pretty good summation of loose monetary and lending policies:
1. Wages continue to fall due to outsourcing, mergers, and global wage arbitrage
2.Home prices level off then fall sharply
3.Home equity loans stagnate as result of stagnating home prices
4.Home building stalls because affordability finally starts to matter
5.Trade jobs fall with falling home starts
6.Expansion of Walmarts, Home Depots, ect. stops with the slowdown of new home subdivisions
7.Retail expansion peaks and stalls
8.Consumer sales slow with the slowing economy
9.Bankruptcies increase
10.Consumer lending based on rising home prices falls flat
11.Credit growth declines
12.The US goes into a recession
13.Layoffs in the financial sector increase
14.Layoffs in the real estate sector increase
15.Credit is destroyed in more bankruptcies
16.Deflation is finally recognized in hindsight
…and that’s only the first round. In later rounds it starts to get REAL ugly!
Oh no tj - don’t you know? The carnage will end with the real estate market (realtors, builders and, at most, perhaps a Home Depot, Lowes and a pizza parlor or two that catered to those employed in the industry). Everyone else will keep jobs, their investments, their cash on hand.
Soon, it will be cheap houses for everyone! As long as you’ve got 20% down, you’ll be king!
Yep, no way this monster is going to rumble through the entire economy and ruin everyone.
‘I can’t wait until people are out of work, starving to death, bodies lying in the streets - all so I can buy a house for a price I think reasonable.’
The ignorance on this board is appalling at times. Whether you realize it or not, we are watching life as we know it go down the toilet. Things will NEVER be the same in our lifetime. Our descendants will despise us for what we have done…
Crisrose, you have somewhat in a nutshell nailed it down!! In my travels, I see a nation dying…not transforming. A green and verdant Earth has been sundered under drought and unsold housing tracts in unknowable and unreachable locales that will never be paid for. With 3-4-5-6 dollar gallon fuel and our large vehicles, most of the nation will resemble the abandoned SoDak, NoDak, Nebr. and Wyo. towns I saw. With little rail in the way of branch lines that were abandoned in the 60-90’s by the major railroad companies in favor of over the road trucking (they are still abandoning rail in northern Nebraska), most of these towns will die and the people will have to leave or die. There will be no way to service and their stores/industry/Walmarts with 200 dollar a barrel oil.
Sad to say I totally agree.
We all enjoy the sarcasm & schadenfreude that permeate this blog’s comments, but you can’t help but think it has sort of a M*A*S*H feel to it.
No No tj, if her Hillaryness gets in in ‘08 all will be well, and the idiots who believed Greenberg in ‘04 will be saved.60,000 hmm, 50% hmm.
could you explain to us what that greenberg thingy is? thanks.
“Things will NEVER be the same ..”
Things will never be the same regardless.. Things change. If your cup is always half full, things always change for the better.
Ah, but Congress will soon be advancing legislation to further enslave the populace along the lines of the so-called Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 by simultaneously eliminating all personal bankruptcy and allowing a limited corporate “reorganization” in which unsecured debts by a corporation worth over $1M to persons with a net worth of less than $1M are eliminated. This will be for your own protection, of course…
{/RANT}
Sorry if this is a repost, but Charles Hugh Smith has a great read on where we are and where we’re heading with the housing market:
http://oftwominds.com/blog.html
What kind of a groupie is he?
As retirement looms, even healthy Baby Boomers start realizing their retirement dreams are fading as housing drops. Just as in the stock market, you can watch profits vanish for only so long, and then you sell to retain what little is left. This panic selling by soon-to-retire Boomers will trigger the final Third Black Swan decline.
The notion that 76 million Baby Boomers can all sell their primary residences to the following generation of 40 million at sky-high prices… do you see a wee disconnect here? If you examine U.S. demographics in the broadest terms, it becomes abundantly clear that housing will be in over-supply for decades to come.
Boomers will be the key to this bust, just like they were the key to the booms. 30+ years of reckless housing speculation is now going into reverse. And it will take stocks and other assets right with it.
This bust will last decades.
Hear hear…yes, that dawned on me a few months back and I thought. What are these boomers thinking?
5. Prices are dropping much faster than statistics reflect. Another case described in the S.F. Chronicle piece describes a property which was appraised for $630,000 in January that now has a “real time” market value of about $455,000.
This sounds like a realistic price drop vs the NAR .1% drop they keep spouting off.
That guy is a bit on the bearish side.
“That guy is a bit on the bearish side.”
dole it out, but can’t take it, eh?
In todays san francisco chronicle front page:
American Nightmare. Foreclosures on the Rise
http://www.sfgate.com/cgi-bin/article.cgi?file=/c/a/2007/07/29/MNGRVR91S21.DTL
Man oh man, that’s just carzy. Everytime you read one of those articles you just shake your head in amazement. What were people thinking, I mean really…
They all thought they were going to get richer and richer. There would be no end to the money spigot that had been hooked up to the home. The sympathy spigot has run dry. They made their beds…
I disagree, this is the fallout from moving the dot-com excesses by the powers that be onto the lower & middle class. I am not saying it was done deliberately but as an outcome of their actions.
“…I am not saying it was done deliberately…”
-MIS grabs tin-foil hat-
You know after reading today’s slew of articles and spending a few minutes watching an auction infomercial on a local channel. It kind of makes you wonder if it wasn’t done on purpose. I mean think about it, if you were a banker when the rates dropped to 4% you had to have a “oh sh**” moment would you have wanted to be stuck with all those low yield notes for the next 30 years. Makes you wonder if nothing else…
-MIS removes tinfoil hat-
Ouch…. that hurt
“It kind of makes you wonder if it wasn’t done on purpose.”
Why?
The Federal Reserve Board Meeting of Mar 22, 1994 discussed the new monetary policy and a question was specifically asked if this new policy would lead to asset bubbles. Yes was the boards reply.
Federal Reserve Minutes March 22 1994
http://tinyurl.com/ptw3d
There are no surprises here, this was the inevitable action after the Feds actions of Oct 1987. There was no outrage that the Fed adjusted the markets by flooding the system with ZIRP. There should have been market outrage.
Melvin, thanks for the heads up on the article. The article had lots of good comments as well.
Anyone see the sadly ironic picture of the little girl making bubbles on the front porch of the home her grandfather is losing to foreclosure? The look on the grandfather’s face says it all.
exactly…
Why don’t we put a picture of the mushroom cloud in the background so that we can blame Bushnick.
I think there needs to be a small edit to the article changing the line “Aggressive mortgage brokers, voracious lenders and naive consumers combined to create an unstable situation.” to “Aggressive and greedy mortgage brokers, voracious and greedy lenders and naive and greedy consumers combined to create an unstable situation
“After refinancing more than a dozen times over the years to pull out money, the Gardners now owe $454,500 on the house. She thinks it is probably worth about $350,000.
Gardner said her lack of financial knowledge and the need for funds to fix up the house and pay off bills kept inducing her to refinance. Public records show that the home was refinanced four times in the past two years. ”
“lack of financial knowledge and the need for funds to fix up the house”
*Need* of funds to fix up the house?
Are we talking a roof repair (’need’), or granite countertops and a jaccuzzi tub (’want’). I wish that articles would dig a little deeper on what all of that money was actually spent on. The house was originally purchased for $11,500, and they ended up owing $454,500. Assuming that the parents had never paid off the original amount (doubtful), that leaves almost HALF A MILLION DOLLARS in loans they took out ($443,000 to be exact). Let’s assume that the bank ’stole’ 1/3 of that money on fees, etc…that leaves $300,000 of money they received over that time span. Where did it all go?
With four (4!) refinances with cash out, it seems that they were addicted to cashing out ‘equity’ and spending it. Sorry, not a lot of sympathy from me (unless they had $300,000 in medical bills or something like that).
“And, as a newly self-employed person, he had to produce extra documentation on his income. All that slowed down the “refi” process for several months, during which the couple scrimped and borrowed to make the larger payments. Several loans fells through for various technicalities.”
OK, thanks for glossing over this part, Carolyn Said, Chronicle Staff Writer. What were the “various technicalities”? Would these “various technicalities”, if enumerated, make this couple look less like victims?
“Jeff Hahn bought the house…for $495,000…Several loans fells through for various technicalities…Jeff had borrowed against the home’s equity to pay off some bills and start his business…He also took out money to cover closing costs for the new $570,000 loan. ”
No money down when he bought it, then took even more money out to pay bills and start a business.
“The Hahns have not made any payments on the loan since it was funded in March. “Honestly, I gave up once (monthly payments) hit $5,000,” Jeff Hahn said. “I said I can’t do this.”"
And now they are living rent free.
No sympathy.
“I’ve probably wasted $90,000 over the past three years and have nothing to show for it,” he said. ”
WHAT! NOTHING TO SHOW? You paid $2500 a month to live in a FOUR BEDROOM, ‘NICELY LAID OUT DECADE-OLD COLONIAL”! That’s CHEAP! You got to live in said 4-bedroom house (why did you need 4 bedrooms, you have no kids?) for 3 years at $2500 a month rent, and now you are living in it RENT FREE!!!
WHAT DO YOU MEAN “NOTHING TO SHOW FOR IT”??!!!!!
Carolyn Said, Chronicle Staff Writer, why didn’t you call this fool on this point? Do we only write “victim” articles? What about some investigation while reporting?
(arroyogrande yet again shakes his head)
Banks has in the past bought homes himself and rehabilitated them for sale, but now says that business is poor. ‘You can buy them, but you can’t sell them,’ he said.”
The trap has snapped shut. Now the slaughter begins.
Which is why none of us here have started talking about arbitraging the market and buying low and selling high. No one is quite sure how bad this will really get…
“‘We bought the home at an inflated price and it dropped to the point where we were immediately losing money,’ Michelle Kogler said. ‘It was a disaster.’”
I’m guessing Michelle was among the “I refuse to sell at a loss!” crowd.
Ben, I find it difficult to come to grips with the huge numbers of foreclosures taking place in America. Being from Australia with a very much smaller population, these numbers are mind bending. The financial losses that are occuring are frightning. With the numbers of foreclosures still set to rise further it’s becoming terrifying where this will all end up. I get the feeling we are seeing an historic event playing out right in front of our eyes.
The posters at my original HBB came to that conclusion about this being history in the making one night in the spring of 2005. I’ll never forget that night.
That’s when you realized you had the blog equivalent of “lightning in a bottle”, right?
I miss those early days of the HBB. That was when the housing bubble was roaring along at its peak (though danger signals were all around) and the “voices in the wilderness” that crystalized on this blog were not morose gloom & doomers, but were smart, saavy, and funny as hell. Plus we had the resident Kool-Aid imbibers like LVLandlord (RIP), or irrasible characters like the Lingus, who always caused a feeding frenzy every time they ventured into a thread. Those were the days!
Get the Joshua Tree for the Lingus!!!
Ben, sometimes I bicker with others on this blog (or vice versa), but we have all in common a unique situation where we saw through this bubble way back in those days. Some of us saw it in 2004. We all saw what most people refused to see. It’s a frightening situation. It’s like all the buyers were equivalent to Germans at Hitler’s famous stadium rally in the 1930s. They believed such nonsense because authorities were in favor of the nonsense. Such gullible people could make it possible for an era of stormtrooping again. I don’t want that kind of world.
“Some of us saw it in 2004.”
In 2003 I thought real estate was in a bubble. Its crazy what has happened since then - prices double since 2003. Unreal!
I saw people buying homes with nothing down and I said to myself, “This must be the top. It can’t get any worse than this.”
Then I heard about people buying homes with I/O teaser rate loans and I said, “This must be the top. It can’t get any crazier than this.”
Then I heard about people buying homes with neg-am teaser rate loans and I said, “This must be a sign of the apocalypse. How can it get any crazier than this?”
Then I heard that lenders had started to just take people’s word for how much money they made, I said, “I give up. Obviously I’m lacking in imagination as to how bad it can get. What’s next? Banks sending out teams to mug people? Hold a knife to their throat while screaming, You will take two million dollars from us and buy a house. NOW!!!”
Never again will I underestimate the power of mass insanity.
LOL. I almost thought I was dreaming when they started to pay people to buy houses by cash backs and incentives like car , trips ,pools , and you name it . How about when the industry actually got poor dumb buyers to overbid on houses by as much as 100k or even more .
I hear you.
Yep, by 2004 prices were already laughably insane in California. I believe OC houses had topped $600k by then, after being at $300k all of five years earlier. I actually thought this thing would pop a lot earlier than it did, but it was always clear that it had to pop eventually. I’m savoring every single day now that it’s here.
But who’s losing the money? The majority of people being foreclosed on are losing little or nothing, except moving costs and having to pay higher interest for everything for the next few years. Some bought with 100% financing. No skin in the game there. Others refinanced/HELOCed all the equity out of their homes to pay for other stuff. The banks didn’t “take” their equity. This second group may think they’re losing big time, but they’re not. And there’s a third group that was out to commit fraud. For the most part, these folks will come out ahead.
So are you going to shed a tear for the banks? The Countrywides? The hedge funds? Foreign investors?
“So are you going to shed a tear for the banks? The Countrywides? The hedge funds? Foreign investors?”
The pension funds? The insurance companies (life, home, auto)? The mutual funds? The banks where your savings are parked?
And, as it really starts to unravel - What about your job? Your income, if you’re lucky enough to stay employed? Your children, who will soon starve?
Any tears for them?
Cris, where do you get this extremely negative outlook?! Most of the country has already forgotten about the stock market crash after the last stock bubble. In 10 years the crash resulting from this housing bubble will be a distant memory as well.
Your posts remind me of friends of ours who swallowed the whole Y2K disaster scenario hook, line and sinker. They paid off their mortgage and converted all their assets to cash which they took out of the bank. They bought survival food, firearms, a generator, fuel storage tanks, the whole works. We were always afraid to ask whether they were pleased or disappointed that our society didn’t crater on 1/1/2000.
I don’t know what Cris thinks but how did we shed aftereffects of previous bubbles so fast? (BTW I did not take any precautions for Y2k.) I believe globally we are borrowing from the future with our current monetary systems. In the future will this generation remembered as as the generation that consumed ten generations of resources?
“In 10 years the crash resulting from this housing bubble will be a distant memory as well.”
If this were a ‘normal’ bubble, then you would be correct. Unfortunately, with $350 trillion dollars (last I read) in worldwide debt, this will be a worldwide depression not seen on a scale since the Venice banking system imploded in 1345 - which you will note was followed by what is commonly referred to as the DARK AGES.
Y2K was a scam that anyone with half a brain could see through. But it sure put a lot of money in the coffers of the tech companies that were hired to ‘prepare’ for it.
2+2=4
Money doesn’t exist until it is borrowed into existence. Debt [money] must be serviced. How? By creating additional debt. Eventually, the numbers can’t be rigged any longer (fake statistics, off-shoring, slave labor, the mentally retarded qualifying for mortgages) and the whole thing blows.
Which is right about now…
“They bought survival food, firearms, a generator, fuel storage tanks, the whole works. We were always afraid to ask whether they were pleased or disappointed that our society didn’t crater on 1/1/2000.”
It’s interesting you mention this specifically, Bill, as I have been pretty much doing the same thing for the past several months. Perhaps I am just some lunatic eccentric (and you would get no argument from my roomate on that point) but when I look at the total, complete crazyness that has manfisted itself in the very serious political, economic and environmental problems that have been building on this planet and in this country, as well as the total cluelessness of my fellow citizens ( manifesting in such sacred cathechisms as “Real Estate always goes up,” Free Markets are the answer,” Technology will save us,” George W. Bush is a great leader…”), the only conlusion I can draw is that we up for some very seriously bad times ahead. No one can predict the future, and I make no attempt to do so, but when the magical thinking of millions of my fellow citizens causes them to so completely disregard such a fundamental concept as “thinking for yourself” while instead allowing A) some sleazy real estate agent or mortgage broker B) some fundamentalist religious zealot (of whatever faith) or C) some slick politician (of either party) to do their thinking for them, I have to tell you;
Stocking up on shotgun ammunition and gasoline may not be a bad idea at all. I like to think of it as my own, personal “hedge fund.”
SubKommander Dred
If tears are to be shed they should be shed for investors that bought paper annointed with an AAA rating from Moodys and Standard&Poors.
An AAA rating from these guys used to mean something; often the DD stopped when paper with these ratings were uncovered. Now these ratings don’t mean diddily.
“But who’s losing the money? The majority of people being foreclosed on are losing little or nothing, except moving costs and having to pay higher interest for everything for the next few years. ”
Actually… In Mass, the Gov is trying to get the lenders to pay moving costs!
http://www.boston.com/realestate/news/articles/2007/07/25/foreclosure_plan_would_make_lenders_pay/
Housing was clearly a mania.
Just like stocks in 1999.
I wish I knew what the upcoming third and final mania will be during this current hundred years’ three-parter (historically, it takes three manias and crashes before people at a given moment in time finally come to their senses).
There’s lots of money to be made somewhere during the next decade. It’s time to start thinking ahead.
what team do you barrack for????
that comment was directed to luvs_footie
I have no crystal ball, but the over all economy , things like job creation, cost of money will also be drivers for the housing market. We tend to focus on foreclosures, inventory and affordability issues which are critcal but a slow and declining job market, tight credit markets will give these issues even greater weight in the coming years. Many on this blog look for good buying ops in the near future (24 months) that may happen but what exactly will be a good buying op if the RE market continues to decline for the next 10 years? or 15 years?
The point where rent costs so much more than a mortgage that it becomes a bigger factor than the foreseeable worst-case losses if the property declines further in value?
“The point where rent costs so much more than a mortgage that it becomes a bigger factor than the foreseeable worst-case losses if the property declines further in value?”
I agree. We will be at or near the bottom by then anyway.
The one thing you can bet your life on all the way through this economic collapse is that the numbers coming from the government will be total bullshit.
I just loved the timing of that GDP report. Priceless.
Yesterday, I decided I would go look at some of the houses for sale in Rancho Cucamonga (Calif) to see how prices were doing. There were several places that had two or three houses for sale on the same block, some already empty. Anyway, as I was driving by grabbing the sales flyers, I heard someone screaming, “Hey, would you like to buy a house?” I looked around and saw a guy parking nearby who was yelling that he could give us a better deal than what the houses we were looking at were selling. He seemed to be pretty desperate. I told him that I would not buy at the current prices because we were expecting prices to drop by 200K to 300K (or more) from there current prices of 850K to over 1M in the area. He left saying that he would give us a good deal and showed us his house on the corner. His asking prices: ~620K where others are listed between 700 and 800 K in that block. Prices are dropping and people are bleeding green on a monthly basis.
That sounds like ground zero stuff, there. I still think inland suburban and exurban SoCal is the biggest toast of all, worse than south FL, Phoenix, and Las Vegas. Certainly in absolute $ if not % but also in $ loss relative to per capita wealth.
Paul,
Phx & LV ARE exurban SoCal.
There is very little in R. C. worth over $375,000 on a good day. Lots of future murder-suicides coming to that town, unfortunately due to job loss and foreclosures, etc.
Anecdotal…
There’s a small mortgage shop that moved into a nearby Burbank building a year or so ago. Every Saturday morning the entire staff (20 or so) would all pile in for a short weekend thing. Well, not this Saturday — 80% of them seem to have disappeared.
“Maria Cordova was thinking about tapping into her home equity to add a fourth bedroom and second bathroom to her Santa Ana home. But that plan evaporated when Cordova watched local home sales slow to a crawl.”
The economy in a nutshell.
It’s all psychology, and that’s why the downside will be every bit as breathtaking as the upside.
$620K, $700K, $800K homes in rancho cucamonga? wow I didn’t even know there were such homes there.
These people are crazed, they’re doing long, long commutes… Coming in on the 10 is hurtful, you used to buy out there because it was cheaper than the west side or Hollywood, but now it’s just dumb. I’d buy a crappy condo in Silverlake long before spending $5000/mo to commute 2+ hours a day in stopped traffic…
Spot on, JimAtLaw spot on…
“I’d buy a crappy condo in Silverlake long before spending $5000/mo to commute 2+ hours a day in stopped traffic… ”
Oh boy, I mean, Silverlake’s so great and all…..
cause it’s so close to Echo Park and Rampart…
plus Chile Peppers used to live there’….
I mean till they moved to Palisades…
Awww, I like Silverlake! Outrageous prices of late, and some less than totally appealing areas, but lots of places to eat with dog-friendly outside seating. It’s not the Palisades, but that’d be an hour or more to work for me…
Postage stamp lots, too. Un-friggin-believable.
Last week here in san diego I saw 2 houses lower their wishing price $50K probably to about 2004 prices (hard to tell for sure since these are in relatively stable areas, not much volume even back then). Mostly I’ve seen delusional San Diegans lower their price 5-15K at most. The only ones that sell start at more reasonable prices, those who start high never quite catch up.
I see sellers FOLLOW the market down everywhere. Its really stupid.
If I wanted to sell my place right now, I would set a price that is well below the comps.
at this point, youd need 15-20% below comps. Some are at 10% below comps and yet their houses still sit as no one can afford.
Yeah, the 5K and 10K reductions are kinda funny. Who are they kidding?
Here’s a place over in Scripps Ranch selling for 60K under the price they paid for it back in 2004 before it was even remodeled with all the usual stuff to ‘improve’ its value.
http://sandiego.craigslist.org/rfs/384602170.html
2003 pricing. Coming soon to a neighborhood near you.
We should start a Y2K countdown! How long will it be before we hit 2000 prices again? I predict 2009 for most of California.
“This posting has been deleted by its author.”
When I first started posting to the HBB howeverlongago, I vaguely wondered what it would feel like to see all the things we discussed actually play out, especially when I discovered that I was living in one of the worst markets.
The possible magnitude of it all seemed unreal and so far away sometimes as prices continued to climb for awhile yet. The media and involved industries downplayed any possibility of the gains being any less than invincible and permanent until just recently. And now, here we are on the other side of things with the containment of the containment becoming less contained every day. It’s getting hard just keeping up with all the news about the many aspects of this!
I have to say that my stomach is dropping much further than I thought it might at news of some of the recent events. My eyes open wide at the scope of some of the losses as they have happened so far — and we’re just warming up right now!
Ditto, well stated.
From Forbes.com
Bear Market Warning Flags
James B. Stack 07.27.07, 6:20 PM ET
….As a consequence, we are moving to a full bear market defensive mode. Let me tell you what that means for our already conservative portfolio and reveal which warning flags to watch closely in the coming weeks.
First, my outlook on housing is that things are going from dismal to dire. The freefall in our Housing Bubble Bellwether Index confirms that national headlines will get much worse in the months ahead. Inventories of unsold homes remain at record levels; and this week both New Home Sales and Existing Home Sales were reported sharply lower, with no bottom yet in sight. Even conservative mortgage stalwart Countrywide Financial (nyse: CFC - news - people ) has admitted their lending battleship is taking on water, as their stock drops to new three-year lows.
Even conservative mortgage stalwart Countrywide Financial (nyse: CFC - news - people ) has admitted their lending battleship is taking on water, as their stock drops to new three-year lows.
The Titanic?
A battleship… interesting comparison. Battleships were considered invincible, until the unexpected - air power - proved just how easy they were to send to the bottom: from the attack at Pearl Harbor to the sinking of the super-battleship Yamato, many of those magnificent ships just were not able to function well in a changed world, a world where air power and aircraft carriers were the main method of force concentration.
These lumbering, doomed lending companies are much like the Yamato after taking several bomb and torpedo hits. Really, the problem is contained! It’s just the bow, and the stern.. and the foward magazines… the aft magazines… oh, and now we’re listing… oops…
Interesting. Found that link and then clicked through to a story from April on the “manic-depressive market” and found this quote:
“John Hussman, of Hussman Funds, put it perfectly: “The economy has its head in the freezer and its feet in the oven, and Wall Street wants to call the temperature ‘just right.’ ”
The housing sector is what’s in the freezer, and the oven refers to the overheating in core inflation. These do not equally offset each other.”
I for one am really enjoying how fast the mainstream media have gone from largely denying that there even was a problem (early 2007) to “dismal to dire” predictions, literally in the space of six months. It’s like someone opened the floodgates at some point, probably right around March when the subprime collapse made international headlines.
Yeah, but they’re still quoting REIC shills far more often than real economists whenever they’re not trotting out victim stories… thus the recovery will be “just around the corner” until it actually happens, if ever…
Just an observation but houses here in the east bay of sf bay (berkeley,albany, el cerrito, oakland) are still flying off the market at very high prices (600k+ for a starter home fixer upper). these are homes in the ‘good’ neighborhoods. the article above in the SF Chronicle shows people foreclosing are for the most part people in poorer sections of town.
Give it time Melvin. I think a large part of the Bay Area’s economy is based upon Silicon Valley. As the economy slows, less people will need to upgrade things like computers, cell phones, etc. As well, companies don’t really need the 2008 version of SAP etc., they’ll “just get by” with what they already have…
Let’s have a reality check here. There are economies within our larger economy that will emerge relatively unscathed (note the word “relatively”). San Fransisco is likely one of them — as is New York. High valuations for properties in major global cities, or cities which are home to cutting edge forward-thinking industries are nothing new. New York has always been expensive. It *has* (contrary to many misconceptions) crashed in the past, but its crashes have been small blips on the richter scale compared to crashes in South Florida and other high volatility areas.
As the US economy hits rough waters — there will still be growth industries across the nation. Real estate in those towns will suffer less. (I know everyone here is eager to see real estate crash nationally — and it will — but much less in some places and much more in others). My bet is SF is one of those places that crashes less. Arizona, SoCal and Florida are toast.
“My bet is SF is one of those places that crashes less.”
Define “less”. Going by historic values, RE is due for a 50% correction in the *good* parts of SF Bay. And the crummy areas are already figuring out they’re doomed. If you think we’re getting out with less, you really need to look at the historic numbers.
Reality check:
A British friend of mine was buying investment properties in central London at 4x annual rents in the early 1990s.
Reality check: A friend of mine tried to sell his Gramercy Park (central Manhattan) studio for $50K in 1995…it was on the market for a year.
Reality check: Central Tokyo apartments were going for 9x annual rents two years ago — and you could finance it at 2.5%!
Rents are higher in capital cities due to higher paying jobs, etc., but price/rent ratios are set by cashflow realities.
Another point…even engineers working in “hi-tech” make what, $80K - $120K a year? A two income family (assuming both engineers/software/management) would bring in, what, $160K to $240K a year?
So are people supposed to afford $800K - $1.2M houses with these incomes? What is the median income in the bay area? Not everyone is a high-paid engineer? And if a couple has both people working, how much does child care cost in the bay area?
$80K-$120K might be a bit low. Not hard for salaries to get to $200K quickly for the best employees. Not the norm of course, but not the elite either.
Child care is insanely expensive, of course.
But the answer to how people afford these homes? Either they make gobs and gobs of money, they had great stock options at the right companies, or they bought a $220K home in 1991, sell it for $700K and then buy the $1.2M upgrade to get the kids in the right High School district or whatever. They might have equity and money to cover the $650K of the new purchase price, and they pull in $250K a year.
I grew up there (Cupertino)and that’s what the boomers did and what my peers have been doing. It worked fine…until now.
many send their kids to private school as well. we do. at a tune of 15k per year. we bought our house 2 yrs ago for the ‘bargain’ price of 700k. we put down a huge downpayment and could pay it off tomorrow if we wanted to. wife and i don’t believe in debt. We ‘ve saved our money over the years. this house today would sell for 800k. who cares, i live here and could die here and just might.who knows. as for a bubble, yes perhaps this house will lose value in case of an economic crash. so it goes. life goes on and then it ends. we have no debt, we make about 200k per year between us with all benefits. that could change. i could drop dead as i write this too. my pal bought his house for 600k and had to refinance with a hefty mortgage and has to outlay 4k plus per month. He lives paycheck to paycheck. A very good friend of mine, an old timer told me that the Depression was the best time for him, it was a time here in America where people really took care of each other. who knows, we might have to look out for each other instead of flipping houses. That part would be a welcome change.
Melvin,
I like the scenario of you and the “old timer”, but the other friend ….. not so much.
That is why so many are waiting (all 50 posters here). Like me, you could afford a 30% drop in value because you were able to comfortably afford the price when you bought regardless of the impending decline. I chose to get out at about the time you bought, because I wasn’t sure I would stay in this area (Chico), I saw the bubble, and I have no problem being a renter…. starting to like it actually.
Agree with your C’est la vie attitude, now that you’re on the hook, but I think I’d rather join many of the first time ‘future buyers’ here and wait for the bottom feeding in 2010.
I teach my kids the basics for around $300/year(public and private schools are a bit Marxist for us.). Being inherently intelligent they will teach themselves the rest.
If anyone wants to chat housing bubble chat, I’m at mrhousingbubble on AIM
I was just thinking that Ben ought to moderate a chat room once in a while. So many bright, witty people here… I’m sure it would be highly entertaining and insightful
here here.
So you’re Mrhousingbubble… Hmm… is your tagline “when I pop, you’re screwed?”
I think things are going to happen *really* quick this time. It will self reinforce far faster than anyone can slow it down.
Got popcorn?
Neil
Totally agreed… The depth of the conversation here far surpasses that of most other forums I’ve seen… this might actually get me into a chat room again, almost 20 years after I stopped showing up on CompuServe…
“mrhousingbubble”
I am bioxio33 please add me to buddy list(everyone add me)
one added note. my pal, the one who has to pay off 4k a month. he believes he will never really own his home. It will always be owned by the bank. he lives with debt as a full time preoccupation. I think a lot of folks live that way here in the Bay Area. I couldn’t stomach it.
(begin rant)
Well, here in Shangri La (LA) Everything’s just fine. Just for laughs, went to an OH for a “fixer” on Crescent Heights (really busy street). “reduced” to 1.25 mil. It was, and could be again, a really cool old spanish place. Not a total teardown, but it would need at least 300k (conservatively) to restore it.
About 10 people had been by, and a group was out front talking seriously in hushed tones as I arrived. Realtor said some flippers had been by and showed interest. He then told me of another listing he had nearby. A “great value’ at 1.4 million, because they’d been selling places for 2 million in the same area.
Complete BS! I checked recent sales, and, while people are *still* paying insane prices here, 1.8 was the highest I found. Most were between 1.1 and 1.4. No wonder people are still buying here…. they *listen* to these guys, and believe it. Really makes me want to puke.
I don’t understand why anyone who has a brain would pay even half what these places are selling for.WTF is gonna stop this train in LA? Anything?!?!
(end rant)
crescent heights? constant traffic 24/7. why not buy along the 405. same difference
Agreed, I wouldn’t buy there for any price. My point is… somebody *will*. And that… is the problem here. People… flippers, real people, whoever… They are still buying this crap.
J6P in LA has no clue that anything is different. A “little correction”, that’s all they see. Maddening, cuz i’d like to buy a house, for a reasonable price to, ya know… live in. weird huh?
I hear ya! Here in Studio City a 2+2 little 1400 sq ft house went up for sale on my street a few days ago for $859. No way, I said. I was wrong. Sold sign is up and the people moved out. Now I’m just waiting to see if its ANOTHER tear down or if real people will move in. Everybody on this blog says that the flippers have gon. Well, THATS BECAUSE THEYVE ALL COME TO MY NEIGHBORHOOD! I am still constantly suprised to see yet another house being torn dow n in my hood to build a mcmonster. Will it ever end????
BTW, I sold in 2005, have been renting for 2 years and my landlord is now upping my rent 25%. It Sucks.I may never buy in LA again.
Too many people here use their house for an ATM t okeep up with the Joneses. you could tell them it will be worth 5x as much next year even with all the recent bad news and people would be cheering you like the second coming.
The only reality will come from the banks.
Yep, that’s my area too plysat. Just continuing to rent, and laugh in disbelief.
but it would need at least 300k (conservatively) to restore it.
The house itself probably would have cost $300k less than ten years ago.
I have been tracking this place in oceanside since last year.
Here is a classic example of 20% haircut, but polished as cash incentive. Whats the difference, incentive or price cut same.. same.. same…
——————————————————————————-
LOSE THE BLUES & END THE WAIT AT
PIAZZA D’ORO
THIS SALE IS ALL ABOUT YOU!
$50,000 INCENTIVE*
Incentives This Big Won’t Last Forever…Act Now!
—————————————————————————
At the steps of Tulare City Hall Monday, the Koglers’ home was put up at public auction.
Are they saying that these auctions literally take place on the courthouse steps? I’ve been to a number of courts that don’t even have steps. What happens in those cases? What if the weather is inclement?
It is a legal term. The Auctions are usually held in the main lobby of the county courthouse. Makes it difficult sometime because they usuallly start at 9:00 AM. The same time that people are queuing for Jury duty, traffic and other activities.
“‘Some of these people were just caught up in the incredible appreciation going on,’ said Steve Johnson, of MetroStudy. ‘They thought it was sort of a fail-safe scenario.’”
I guess now they know who the greatest fool is!
“Luxury homes have been discounted as well, said agent Gail Malouf of Coldwell Banker America West. ‘You’re getting a better deal on all houses than you were a year ago,” Malouf said.”
Cracked me up when I saw the RE’s name. Good looking chick in her youth. I first met her at an open house (1800 sq.ft) in 1983 in the Oaks. She was baking chocolate chip cookies and had a pot of hot apple cider with cinnamon sticks cooking on the stove. I must admit that it smelled great and the house was great but overpriced. I went over to the NE and purchased a 2260 sq.ft. house on a larger lot for 40K less.
we have a real estate company here (a big one) called GRUBB and Ellis
Southern California, and especially the City of Los Angeles is unsustainable in its current form. Due to socio-economic and demographic pressures, it will without question be a vastly different landscape societally the the next 25 to 50 years. No one can predict the future with exactitude, but, I do know this; that the cost of living and housing will result in an even sharper dichotomy between those that can afford a normal lifestyle(the very rich) and those that will be scraping just to get by(everyone else). I know this because I see it play out before me with every new day here… Instead of building new infrastructure, people focused on spending god-awful amounts of money on homes and land not worth a third of what they paid. Where will it all end? Probably with Schwarzenegger as President of the new country “Union of Southwestern States” or somesuch…which I guess is cool, since I do like schnitzel…
I can 100% guarantee that that is the first post in HBB history to ever end in the word schnitzel.
Heh heh
jbunniii,
In 2005, my wife tried to buy a an “Ocwen” repo in some little podunk town in North Carolina- sight unseen. Bid was $4000. She paid an agent $500 to buy it for less than $6000.
First, there were no steps, second he said there was a lively action and it sold for $13K- but five minutes later it really poured and if the auction was only held 10 minutes later he could have gotten her price because no one was left. My opinion - thank god for clear skies.
Not sure where to post this so I thought I would try it here.
There has been a lot of discussion about buying and holding gold. While I am not interested in converting most of my cash to PM, I think it is a good diversification strategy. Anyone have any recommendations on how to best go about it. Bullion vs Coins.. Best places to purchase etc.
Any insights are appreciated.
Gold. Give Monex a call.http://tinyurl.com/2l8fdv
monex is way to pricy. try dillon gage in YX.
We’ve been in the process of figuring out how to purchase gold ourselves. We’ve gotten a good education and access to a friendly staff at usagold.com. The disclaimer here is that we just made first purchase of gold so I know there are others who have more experience.
I buy gold coins. something about having the real thing, not stocks but real coins. mostly american eagles ozs with a few smaller denominations.
an honest dealer on the web is
http://www.onlygold.com/
Repost this on another thread early in the day and someone will tell you how to buy and from whom.
LOL….or refresh once in awhile when it takes you most of the day to get through an entire thread because you are busy at work!
Any decent coin shop will walk you through the process of buying coins. It’s pretty hard to mess up. In CA, no sales tax on purchases greater than $1000, and no gov’t reporting for amounts less than $10k, so you can draw your own conclusions about taxes.
OT - Asian Stocks Decline to One-Month Low on U.S. Housing Concerns
http://tinyurl.com/38xcc3
“The housing-market problems may have a bigger-than-expected damping effect on the U.S. economy,” said Kim Han Jin, vice president of Fides Investment Management in Seoul, which manages $1 billion in equities. “People want to cut their holdings of riskier assets.”
Geez sooooo much tied to your housing market. Good thing were immune up here in Canada.
Of course I jest!
“’Buyers can also get more house for their money than they could in the past two years’, said agent Jeanne Radsick.”
that’s great Jeanne .. but buyers know that they can also get more house for their money if they wait ’till tomorrow.. or next week.. or next year.
Bullion dealer of my choice is:
http://www.dillongage.com/Contact/tabid/48/Default.aspx
Do not talk to anyone unless his name is Sid Reichenburger. Or just ask for Sid.