The Mad Dash To Buy Houses Is Over
The Statesman reports from Oregon. “In a year’s time, the mad dash to buy houses is over. The Mid-Willamette Valley’s residential real estate market has cooled. The numbers show the area is not immune from the national housing slump. Sales have dropped 12 percent this year, according to June statistics from the Willamette Valley MLS. ‘The market has been so hot over the last few years, at some point it had to cool off,’ said Mike Erdman, executive VP of the Home Builders Association of Marion and Polk Counties.”
“‘A lot of people rushed into the market and bought, and that’s an extraordinary event,’ said Peter Rogers, the president of Coldwell Banker Mountain West Real Estate, of 2005 and 2006. Conditions today are similar to 2004, Rogers said, and it’s a return to a ‘good old-fashioned market.’”
“Booming sales had become almost routine for real estate agents and home builders. The area’s real estate industry hasn’t experienced a down year since 2000.”
“Real estate industry observers say it’s shifted from a seller’s to a buyer’s market. For June, about 6,325 houses were for sale in the Mid-Willamette Valley, or about 1,960 more than in June 2006.”
“‘The buyer has a big choice, and it’s taking a bit longer to get sales,’ said Gladys Blum, a real estate agent in Salem. ‘Last year, they could toss out a sign and it would sell.’”
“Dave Glocar, a Salem-area builder with three decades in the business, doesn’t think the market has hit bottom. His Dave Glocar Custom Homes began scaling-back its projects a couple years ago. ‘Most people thought I was a little premature, and maybe I was, but Oregon tends to go into things later and come out later,’ Glocar said.”
“The Portland metropolitan area is seeing a similar softening of the real estate market. Closed sales for June were down by more than 18 percent from a year ago, according to the RMLS.”
“Fewer speculators buying houses for investments, and lenders requiring more stringent standards for ’subprime’ borrowers, often are blamed for the real estate slump.”
The Oregonian. “The downturn in the housing market that roiled Wall Street this week is beginning to take a toll on the Oregon economy. The state’s construction business and its timber industry, still a major supplier of lumber for homes nationwide, are starting to suffer.”
“Across the state, construction of new subdivisions and condos has dropped sharply. Oregon, late to the national runup in housing prices, can plan on continued fallout from the national real estate bust.”
“‘At this point, the housing slump continues, and it seems there’s no end in sight,’ said Dae Baek, acting state economist.”
“The slowdown has builders idling their back hoes until demand increases. New housing construction in 2006 dropped 11 percent in Oregon from the previous year. Lumber production in mills across the West is down 16 percent this year for softwoods, which include 2-by-4s used in new homes. And in June, the state’s wood-products industry lost 2,900 jobs compared with a year earlier.”
“Weyerhaeuser’s first-quarter sales declined 14 percent from the same quarter the prior year and softwood lumber sales slumped 27 percent. In response, Weyerhaeuser has cut back operations at 70 percent of its operations in the Northwest and virtually all of its wood-products plants, which include mills in Lebanon, Warrenton and Dallas. Other mills are temporarily shutting down.”
“‘Our anticipation is housing will remain weak throughout the year,’ said Butch Bernhardt, director of information services for Western Wood Products Association, an industry group.”
“The number of brokers and bankers registered with Oregon’s Department of Consumer and Business Services peaked at more than 14,000 in 2005. That figure fell to about 11,000 by June, but most of those who left were out-of-state brokers who were registered to do business in Oregon.”
“Realtors report a recent shift to a buyers market. Billy Grippo, a real estate broker who specializes in Northeast Portland, said buyers now win more concessions from sellers. Homes tend to stay on the market longer, but Grippo says buyers still get close to their asking prices.”
“Baek, the state economist, says the housing market will fall further before it rises again. He expects housing to bottom out in late 2007 before making a rebound in mid-2008. ‘All things combined, it’s a terrible mess in housing,’ Baek said.”
“But he added: ‘We’re in a better position to get out of this housing slump than the nation as a whole.’”
The Seattle Times from Washington. “Shirley Rhodes prepared for the worst in April when she began her search for a three-bedroom home. But less than one month into her search Rhodes found a perfect match in Buckley, Pierce County, for $525,000 and she found half-a-dozen King County properties in her price range that fit her criteria.”
“In Southeast King County, stories like Rhodes’ are becoming more common. As in much of the county, slower home sales have given buyers like Rhodes an edge.”
“Pending sales…were down 24 percent in June compared with the same month last year, the Northwest MLS reported earlier this month. Active listings of single-family homes increased, too, from 960 last year to 1,005 this year.”
“Rhodes compared her experience to being a kid in a candy store. ‘You think, there’s got to be something better around the corner,’ she said.”
“Here’s where Rhodes experiences the downside of such a housing market: Five buyers have viewed the four-bedroom rambler she put on the market in April. She’s asking $449,000, for a 2,500-square-foot rambler on 5.5 acres in the Orting Valley in Pierce County.”
“Although she’s found several homes she’d like to buy, she needs to sell hers. ‘I’ve seen homes I’d like to take a leap on, but mine isn’t moving,’ Rhodes said.”
“If her property doesn’t sell before the holiday season, Rhodes said she’ll begin her search again next spring. ‘I’m in no great hurry,’ Rhodes said. ‘Being a buyer is really nice, but it’s the selling end that’s tough.’”
The Seattle PI from Washington. “When Seattle debated allowing taller downtown skyscrapers last year, some warned new costs that the city imposed for affordable housing could kill the building boom. So far, given the area’s strong real estate market, those dire predictions haven’t proved true.”
“Some planned high-rises may be scrapped if construction costs continue to soar and the market softens. But city officials and several downtown observers say the new requirements don’t appear to have undermined projects so far.”
“‘If it doesn’t make sense, people won’t build, and people are building downtown,’ said Ryan Bosa, president of Embassy Development Washington Inc., which is developing Insignia, which includes two 40-story condominium towers on Sixth Avenue.”
“‘If people are actually going for it, they see a market there. That’s what we’re banking on. Of course, in three years, I could be calling you from a cardboard box and singing a different tune,’ Bosa said.”
“‘We use market research as much as possible, but at some point one is making a prediction for where the market will be,’ said Adrienne Quinn, director of the Seattle Office of Housing. ‘In Seattle, we’ve been fortunate that the market is strong. Had the market turned the same way as it has in Miami or other parts of the country, it may have proved to be a disadvantage.’”
“In Seattle, we’ve been fortunate that the market is strong. Had the market turned the same way as it has in Miami or other parts of the country, it may have proved to be a disadvantage.”
It’s just a matter of time.
Yep, the Pacific NW will not escape unscathed. The denial is still strong all through the western US. Just look at the Oregon economist’s quote about how things are different there! Freaking morons.
“‘All things combined, it’s a terrible mess in housing,’ Baek said.”
“But he added: ‘We’re in a better position to get out of this housing slump than the nation as a whole.’”
All in all, though, it must suck being a bubble believer in Seattle, or in certain markets in the SF Bay area…at least LA is showing some signs of cracking.
It can be tough sometimes, seeing the rest of the country tanking and we’re just starting to turn. There’s still a huge amount of denial and “we’re special” in Seattle. Thanks to Seattle Bubble for giving us a home!
They are not special they will fall also, real simple test - take the median income and then the median house prices and check to see if they jive with the traditional owning formula. Now, take a look at economic problems, and then look at the problems with credit tightening and realizing that the buying pool has dried up….then look at inventory and use laws of supply and demand.
Last I checked there is no place in the US that has income to RE ratios that are rational.
Right . Even where they had decent prices in 2004 the traveling locust flippers came in and bought up alot of the home stock ,driving prices up ,making it hard on the locals .
Biggest mistake this RE market made was assuming that a never ending supply of buyers would qualify for increased prices and there would be financing for a ongoing boom .
All in all, though, it must suck being a bubble believer in Seattle, or in certain markets in the SF Bay area…at least LA is showing some signs of cracking.
Just a matter of time. And the Bay Area is starting to crack too - witness the series of nervous articles in the Chronicle lately, including one this weekend called “Living the American Nightmare” about the huge rise in foreclosures here. By next year there will be blood in the streets.
It might be a matter of time, but it is still very strong right now, where folks are more than willing to sign on the line to be house poor. Just had a friend ‘move up’ last week with $120K deposit, and 650K total mortgage.
“Fewer speculators buying houses for investments, and lenders requiring more stringent standards for ’subprime’ borrowers, often are blamed for the real estate slump.”
What about blaming them for the runup?
And they still don’t get the supply and demand issue. All those who purchased homes as ‘investments’ need a GF to relieve them of their financial burden. What if there are no more GFs left?
And what would happen if EVERYBODY bought homes for investment?
We see so many articles now lamenting the 10% or 20% or maybe even 30% decline in sales from a year ago. But stop for a moment and consider that this means what a vast number of people are still buying! Even with all the horror stories in the media, even with the mind-boggling level of inventory, even with great masses of recent buyers facing losses and bankruptcy, even with the increase in rates, we still see, in some places, 90% of the people who bought a year ago still buying today.
I can understand people getting caught up in the bubble frenzy and buying into the insanity of a couple of years ago. After all, most people are pretty clueless when it comes to finance and economics and are just happy to follow the mob. But anybody who buys now is a complete idiot, pure and simple.
how about FL at 40-50% off- is that idiotic ?
an absolute auction may work
That is why I am starting to understand why GS and others here have put forth that this may play out longer than we think. As new entrants “buy on the dip” (just like with stocks) and then prices go down further, those buyers will be the new FB’s. This may be a ruthless cycle on the way down to a true bottom, where ever that is.
It seems that every sale triggers another, and will all the way to the bottom. These prices are stubborn as hell. Very few people bank the proceeds, as renting is soooo beneath them. It’s much more prudent to throw money away.
Why do you think the big PR camgaign by the NAR of “It’s a Great Time To Buy “,came about ?These spinners of the industry are use to starting investment myths . For instance ,they now have convinced a certain % of the sheep that a huge inventory of homes means more buying choices ,but it really means there is more inventory than needed ,which should make prices fall .
All the salespeople in real estate get the same talking points to chant to the public . They try to create urgency by saying ,”Buy now before the interest rates go up “,”Buy now before it goes up next year because we have hit bottom “,”Buy now because the builder is going to raise the price next month “, on and on .
They try to create urgency by saying ,”Buy now before the interest rates go up “,”Buy now before it goes up next year because we have hit bottom “,”Buy now because the builder is going to raise the price next month “, on and on .
No worries - if they’re right I’ll still have saved a fortune by renting versus buying. If I’m right then I avoid financial suicide by not buying now. I like the odds in this game.
That is the key to being a patient bubble believer. What if housing doesn’t go down? Well I’ll still save $25,000 this year alone by renting rather than buying. It would take some monster appreciation for me to lose this game, and I don’t know of anyone who honestly believes that will be happening in Pullman, WA over the next couple of years.
Hey, remember it took the highly liquid stock market over TWO YEARS to hit bottom as a result of the dotcom bust! There’s no question this’ll take a very long time to play out.
Absolutely right on Binko. The insanity seems to be chronic for a high percentage of the population.
“‘If people are actually going for it, they see a market there. That’s what we’re banking on. Of course, in three years, I could be calling you from a cardboard box and singing a different tune,’ Bosa said.”
“‘We use market research as much as possible, but at some point one is making a prediction for where the market will be,’ said Adrienne Quinn, director of the Seattle Office of Housing.
- Isn’t “Market Research’ a trailing indicator?
imo, everything is a trailing indicator and that’s a real problem with playing the real estate market in general.. it takes months to gather ever changing, semi-accurate statistics and, even then, that info is never complete. Participants in some parts of this country may never know what has happened and/or what’s now going on in other parts .. inefficiency at it’s finest.
From the original post:
“Here’s where Rhodes experiences the downside of such a housing market: Five buyers have viewed the four-bedroom rambler she put on the market in April. She’s asking $449,000, for a 2,500-square-foot rambler on 5.5 acres in the Orting Valley in Pierce County.”
“Although she’s found several homes she’d like to buy, she needs to sell hers. ‘I’ve seen homes I’d like to take a leap on, but mine isn’t moving,’ Rhodes said.”
To which I say, “Ms. Rhodes, have you tried dropping the price?”
I would say to her “Why not stay in your current house?”…if she’s not having trouble with her current mortgage, take the house off the market and be satisfied with what sounds like a fairly nice piece of property.
The Briny Breeze deal was canceled today. No surprise, I guess.
The denial has prompted Ocean Land Investments to exercise its right to cancel the purchase contract with Briny Breezes since the company believes that it will be impossible to complete its due diligence prior to the September date.
This is Ocean Land Investments writing the underlined. A court will likely make the determination if they actually had such a right. And if they didn’t, some money may be transferred from Ocean Land to Briny Breeze plaintiffs’ lawyers, but the residents can go back to cultivating their melanoma in their trailer-park-by-the-sea.
Damn NOT EVEN ONE of those morons found a flipper to buy their million dollar trailer for half price……not even one!
Does the Oregon market follow California ?
It seems about 25% overpriced at least but looking at price/income it looks more like 50%. And a lot more like the California market in general just slightly cheaper by about 100k across the board. Same for Seattle/Washington. So is Oregon tied with California/Washington or both ? I actually am interested in moving to Oregon but the housing prices compared to income look almost as bad as California.
http://www.housingtracker.net/askingprices/Oregon/Portland-Vancouver-Beaverton/
When California catches a cold, Oregon gets the flue and so on….Watch the affluant area’s of California (Silicon Valley & Coastal Southern)…If they start having trouble Oregon will go into the tank IMO…
Oregons economy, as compared to Californias, is pathetic. I would argue that Oregon home prices are even more laughable than CA’s due to this fact. If CA is experiencing cold like symptoms, Oregon is in store for Ebola.
Totally agree - the house prices up there look kind of reasonable to Californians, UNTIL you look at how cheap it is to rent up there. To me, that is the most reliable indicator of the relative economic strength. The job market also looks quite pitiful in Seattle and Portland, at least for tech jobs. Too bad, because I think both cities are really nice and wouldn’t mind living in either one.
Yes, one takes part of their pay in scenery, here in Portland (less so in SEA, but houses are more expensive there). I would love it if this were better discovered. Perhaps a good long dark rainy winter with snow and ice will do the trick.
PS- prices got out of whack just in the last couple years. I bought my first house here in 1994 for $125K and sold it in 2000 for $156K. Prices last year (same house) were $280K and I bet they are still asking $270.
People are delirious in the Bay Area, If people think owning a $800,000 home is the norm over here, it isn’t. Yes people buy homes for 800K+ but are they way over their heads with the mortgage. YES! I know of MANY people that own these homes that shouldn’t. They are trying to stay afloat. They’ll lead you to believe that everything is fine but when it comes down to savings and money left over, there is none. Yes, they have a home but they can’t got out and enjoy the other things in life like travelling, going out to eat, spending something nice once in a while. They have to worry about the next mortgage payment, the next property tax, how their company(job) is doing so they don’t get layed off, going to the store and purchase goods and worry about their credit card being declined, etc… The houses here is so out of wack that it is crazy. I just talked to a guy who mentioned that they are spending 60% of their income on the mortgage. Now that is crazy!
There are a lot of California equity locusts in Portland, especially in the pricier areas. Many of them are even still looking for a viable source of income in Portland.
It is quite possible for Portland to get hit with a double whammy: First, the influx of equity locusts stops because Californians cannot sell their houses. Second, the locusts that are already here figure out that they won’t be able to find a job here (or that they can’t deal with our rainy winters) and actually move back to CA.
I was wondering about this. I’d like to be in Oregon for the long haul which would mean being able to deal with the lower wages. I’d suspect a lot of the equity locusts would probably try to move back to California as prices drop.
Has such a reverse migration happened during past housing busts ?
Btw I’m renting here so I don’t count as a equity locust just a prudent potential house buyer that hates the California “lifestyle”.
California might was once have been a nice place but now its sh@$thole. I just hope former residents don’t feel the same and will come back once the prices drop.
There was a lot of outmigration from Oregon during the recession of the early ’80’s. You couldn’t find an apartment building that didn’t have a vacancy sign then…
I’ve only lived in Portland since 2000, so I don’t know about previous downturns …
One indicator you could use is to ask how many Californians have lived in Portland for, say 20 years - these people clearly did not move back during the last downturn. My impression is that this is a fairly large group of people, so I’m betting that at least a significant portion of the CA equity locusts will stay.
Portland is a pretty laid-back city with a pretty strong anti-corporate, anti-materialistic vibe. Quite a lot of people settled here after making the tradeoff of lower income for better quality of life, and I expect that at least some percentage of the equity locusts will qualify.
Why are home prices so out of whack with rents in Oregon even if you exclude the recent 25% or so bubble its still a very expensive market compared to rental rates. I think its has more of a bubble then most people think. On a rent basis it seems as bad as California.
“…anti-materialistic vibe…”
Sorry, I strongly disagree. I don’t know where you get this notion, especially considering that you’ve only been here since 2000. Perhaps 15 years ago, not now.
I recently saw an article stating that Bridgeport Village gets over 4 Million visitors a year. All boutique shops in an outdoor mall-like setting. Blech!!
The increase in the number of luxury vehicles on the road is VERY noticeable to me.
I also don’t know what people mean when they say they come for the lifestyle. Proportionately, there are as many illegals, traffic problems, etc as anywhere. People are delusional if they think otherwise. They don’t want to improve where they live currently and rationalize moving by suggesting “it’s different” in Oregon.
(/rant off)
Bridgeport Village is near Lake Oswego (formerly Sucker Lake). That is a regional center of materialism. The city of Portland itself is less so, but as it fills with South Californians, this is changing. We need some nice cold rain.
Oh yeah, those luxury SUVs? Those belong to mortgage brokers and owners of “HELOCS on Wheels.”
It started with the increase in house prices… quad and boat sales jumped, too. Want a cheap one? Just wait.
Mac,
I don’t disagree per se, as I think that’s the case in most cities. i.e. - closer in areas seem less materialistic, more local flavor vs. outlying/suburban areas which have more corporate strip mall feel. On the other hand, look at the Pearl….
But yeah, rainy and cold in Portland is good. (I like to play on the mountain in winter.)
Also a renter and netting lots of interest $$ not buying. When we were house hunting in 2005, the hotels were full of Californians buying investment properties. I think a lot of the locusts never moved here. And some relocaters are commuting to the Bay, just as newbies in coastal Carolina have been commuting to DC - not very desirable longterm surely. A lot of people do live in PDX for lifestyle, as in other mountain communities - they are willing to work three part time jobs so that they can ski, windsurf, hike, bike, raft, participate in the arts, etc. Many of them can’t support themselves so there’s a constant flux of incoming and outgoing.
Comment by sleepless_near_seattle
2007-07-30 16:14:11
” “…anti-materialistic vibe…”
Sorry, I strongly disagree. I don’t know where you get this notion, especially considering that you’ve only been here since 2000. Perhaps 15 years ago, not now.”
Well, it depends on your frame of reference. I’m comparing it to present-day NYC, DC, SF and LA; you’re comparing it to Portland of 15 years ago…you may be right. I find people in Portland generally more well-balanced than other places I’ve lived. Put it this way, when my friends from the East Coast visit, their first comment is usually “don’t these people work?”
It’s funny that you should’ve singled out Bridgeport. I’ve always felt that Bridgeport was like a little bit of DC in the suburbs of Portland!
Got it. Thanks for your perspective.
LOL about your friends’ comments! Yeah, if hanging out at coffee joints were an occupation, Portland would have that industry cornered. I also wonder why it seems like so many people are on the road during the day now.
$500k for 3 bedrooms in Buckley! Oh man, I’ve seen it all now. That’s absolutely rediculous!
“But less than one month into her search Rhodes found a perfect match in Buckley, Pierce County, for $525,000″
$525k in Buckley?! That is just pure, unfettered insanity. The bubble has reached a new low, err, high. Wow.
Every idiot in the western U.S. that has a couple acres of land and a house thinks it is worth $500K. I live in Sandpoint, Idaho; the real whores have priced lake front at between $8,000 and $10K a foot. Tiny lots in nowhere subdivisions are priced at $150K. The boosters at the Chamber of Commerce think this burg is the next Aspen or Tahoe. Meanwhile, wages are low, low, low. But sh_t is has hit the fan. Not much is selling and a couple local hotshot developers and real estate brokers are teetering on bankruptcy. Money is drying up from California, but the local paper (the publisher is an idiot) keeps lying to the rubes about how all is well. “The perfect western resort town, a special place, etc, etc.”
Franko, thanks for posting. I love that area, and like to hear about what’s happening. Please keep us informed, especially as the developers go BK.
Ditto for me as well.
Also, it wasn’t that long ago when one could buy a $45k house in Kellogg.
$8,000 and $10K a foot.
There must be a typo here somewhere. A million dollars buys you 100 square feet? Or is this linear feet of actual lake-to-land contact? I’m unfamiliar with that measure.
It’s the number of actual shoreline feet, the lake-to-land contact as you say. Where I grew up, lakeshore property had gone through the same crazy appreciation. What was $1,000/ft ten years ago is now selling for $10,000 - $15,000/ft. Insane.
Yes, speak to us, Franko. I know I’m getting a major thrill from your words.
Develpers of Crossing at Willow Bay or maybe…the Dover Bay development? Perhaps the new Trappers Creek area on top of Schweitzer Mountain. I received emails from each of these developers recently wanting me to take a look. Heck no—Sandpoint real estate is overpriced!
Franko, good call on Sandpoint. I visited there last summer and had the same thoughts about the area. “Estate” homes on 5-20 acres in Eastern Washingon, Idaho panhandle and Western Montana are way overbuilt. These homes often are custom (high cost per sq. ft.), & have many outbuildings. They are often homes of empty nester, retired couples. There’s alot of additional expense to maintain these properties. When you hear comments (like I have) about “burning the woodstove instead of using the propane furnace” and complaints about traveling 80+ miles, each way, to a medical specialist; then you know reality is setting in -you own a remote and expensive home to maintain.
HA HA HA HA HA HA HA HA!
Sorry, but I couldn’t help myself. I couldn’t agree more–welcome to Buckley, located just on the other side of Hell, commute-wise.
Make sure to familiarize yourself with the Lahar warning sound too, eh? Nothing lowers property values overnight like a 70ft high wave of mud.
Orting? Um, yeah, some day Orting will be under 20′ of mud. Maybe not in your lifetime, maybe in your lifetime.
Pam and Bob Martocci, retirees from Arizona, recently paid about $489,000 for their house in West Salem. The couple chose Salem primarily for its lifestyle, not its real estate prices. They wanted to live in a small city and be within easy driving distance of Portland, the beach and the mountains.
“I think we got a great deal,” Pam Martocci said.
I’d be interested to know if ANY house in West Salem EVER sold for $489,000 up until five years ago.
Who are these idiots? It seems there is just no end to the GF’s willing to step up for a fleecing. Unreal.
“I think we got a great deal,” Pam Moron said.
Fixed
I agree. I see all these southern Californians still moving to the northwest California coast and throwing their money around. Everything still looks cheap to them, so they pay cash and live their recluse life on their 10 acres and complain about the weather.
Cut to the chase! What it means is that they could not find a patsy bank or Wall Street hedger to give them the 110 % financing they needed.
“Baek, the state economist, says the housing market will fall further before it rises again. He expects housing to bottom out in late 2007 before making a rebound in mid-2008. ‘All things combined, it’s a terrible mess in housing,’ Baek said.”
Judging from the Buckley and West Salem examples above, if this market is going to bottom in late 2007, we’re looking at some triple-digit annualized declines over the next several months.
Exactly Paul. This thing IS NOT bottoming any time soon. It’s going to take years.
The longer the tanking takes, the worse it will be, kinda like jumping into a cold pool or edging in…or band aids pull fast or slow…etc etc etc.
$489K in Salem? Wow, that’s rich.
And again with the “lifestyle” quote. For most people that means driving their luxury SUV around the mountain once a year.
They wanted to be close to the methamphetamine source. Seriously, Salem is Poverty USA in pockets. NOT a place I would personally choose to live (sorry!) Pretty redneck though! Great for people from AZ.
It has been a long time since I’ve posted on here…
Me and my wife live in Southern California.
We sold our home in 2005 for 492K.
Here are some stats
- 1600 sq ft.
- 0.5 acres
- It was built in the mid 80’s.
- no pool
- 3 bed, 2 baths
- no view
We have been renting since then…
I have been confident that we made the right decision. It took about a year to feel that way though - this blog helped with that.
I vowed that we wouldn’t get back into the market until we could get a much better house for less than the price we sold our place for in 2005.
That day has come.
We are in negotiations to buy a foreclosure in the same general neighbourhood that we initially sold.
We are hoping to settle at 470K.
Some stats on this ‘new’ house..
- built in the late 80’s
- set up on a hill with awesome views
- 2600 sq ft.
- pool in the back.
- 4 bedrooms, 3 full baths.
- 0.5 acres
I’ve been obsessed with following the market ever since we sold our place, and has been quite an addiction for me - as I’m sure it is for you.
If the deal goes through without a hitch (still need to get the inspection done) - then I will say one final goodbye to this blog, and the others like it. It has been extremely valuable to me as an informational tool, since the MSM had been so out of touch with what is really going on out there.
I figured I’d share my story with you all. I’m sure some of you might think I’m nuts for jumping back in…but I’ve just got a feeling that it is a good time to get back in the game, and I couldn’t pass up on the opportunity.
Hey, you traded up for a lower price! Not too shabby, in my estimation. Live your life and be happy, you did good!
Sounds like a good deal for you. You get a much bigger, better house for a lesser price which you can easily afford. Good luck!
Are you buying because of the capital gains tax that you’ll be paying after two years?
Where in So Cal are you buying? That doesn’t seem to be a Orange County price, at least not yet.
there is no longer a 2 yr capital gain rule or once in a lifetime exemption..
now the first $250,000 for single or $500,000 per couple/partner if co-owned of gain is exempt, if you have lived in the house for 2 out of the last five years.
Rdub could be exempt from Cap Gain…..
Beat me too it Pen….
“We are hoping to settle at 470K.”
Does this mean that you do not have an accepted offer? I find this curious as I’ve always made an offer subject to inspection. But, I’ve never purchased property in CA.
“..I’m sure some of you might think I’m nuts for jumping back in..”
It looks like a great deal and you seem well informed and don’t appear nutty on the surface
i’ll be honest and admit that i do start off thinking buyers into this stage of the market are nuts. At a party yesterday someone said “we just bought a house”. Several “Congratulations!” and “Nice going’s” and “Good luck with it” followed the announcement. Having made a prior decision to refrain from any financial topics, I sat there looking at my shoes along with 2 other people.. we later discussed the details in private and decided this buyer was, for the most part, sane but clueless.
What city and neighborhood did you buy in?
It’s got to be in the Corona valley or Ontario (and its surrounding area). Not a bad price for now but I think there’s going to be another 10% haircut in a year. Those cities already took a 20-25 haircut in from 2006-present.
To bad you did not buy a place in Oregon and move back
I think technically your probably loosing a little money but as long as you saved all the bubble money and put it back into what you want to buy I think its ok to buy now if you want. Its really a matter of what the loan is and what the real price should be. I’d guess you could be losing as much as 100k of bubble money over the long haul but if your loan is less than 200k or so your pretty insulated. Just recognize you may end up with a 300k house before long. I think the biggest issue is to not be underwater and have enough equity if you have to sell for a good down payment later. Loss of “bubble” money is not really that important.
Rdub: If this is the house of your dreams, so unique that you will probably never find another one like it, then go ahead and buy now. If there are others just as nice that will come on the market in the future, then wait at least one to two years. I talk with people every day who just cannot stand to wait, and it will cost them. We are just starting a bear market in SoCalif. They all last 4 to 6 years. While waiting for prices to drop you are earning interest on your cash, and paying rent half of the monthly cost of owning.
Well, you know what you are getting into and you know your own situation…and like I always say about RE…it aint local it’s personal. If it fits your needs and you are cool with it, and don’t mind the house next to you selling for 350k in REO deal etc,….then you are good to go. I think you know enough to make a good decision, and probably are going to die in that house and never sell it so who cares about what you could make etc.
Good luck!
Thanks for the kind words. If I would have posted that I was buying a house it would have been incredible how different the responses would have been
(I wrote a few of them myself - Ha!)
Yeah - we have yet to get the inspection, so who knows what will happen. It could turn out to be a total dump, but I’m hopeful.
Dude! Tell your wife to stop nagging you. We’ve just begun to see the price declines. You don’t even have to listen to me, you should watch the graph of prices and look for a “rounded bottom” before you buy.
This is kind of sad. You see, only the people who sold a bubble house, can afford the current prices which are still way too high. Because he had a windfall, he’s willing to waste it. It’s called, “easy come, easy go”. He’s going to lose at least 150k equity in the next few years. He’ll justify it with, “Oh well, we broke even”. If he’d waited, he’d be saying, “Hey, we have 150k more in equity!” but of course 150k up or down is now just a number. It doesn’t represent 2 years salary, hard work at 8 hours a day, it’s just a signature on paper so who cares if he loses it.
It is funny…my wife has been nagging me for 2 years. I’ve heald steady since then. It is extremely possible that prices will continue to fall. My and my wife just had our first child, so that is definitely playing a role in our decision to buy again. If this deal falls through, we will probably buy land and build.
Another part of this decision has to do with the Fed’s inactivity in raising rates. Inflation is extremely prevalent. You can see it everywhere. The value of the dollar is dropping…so this will have an effect on the decline in prices that we have been waiting for…although wages don’t currently appear to be rising. Tons of my friends (late 20’s early 30’s) are job hopping (including me) in order to get paid more to keep up with the cost of living. So it is only a matter of time before wages come up to meet inflation (which is what the Fed is trying to avoid, or so they claim.)
The Fed is attempting to do a delicate dance, and they are fumbling around like idiots. Just my personal opinion.
Calling the bottom is as tricky as calling the top…we’ll only know a year or two after the bottom that it was actually the bottom. If it is obvious to everyone that we have hit the bottom, then you’ve waited too long…
Study: Foreclosures still plague Texas
Austin Business Journal - 1:24 PM CDT Monday, July 30, 2007
Texas has the third-highest number of home foreclosures in the country, according to a new report by RealtyTrac Inc.
For the first six months of 2007, the Lone Star State reported 69,471 foreclosure filings, according to Irvine, Calif.-based RealtyTrac. That amounts to an average of one filing for every 130 homes. The company will release individual market data in about a week.
There were two other states that had a higher number of foreclosure filings than Texas.
For the first six months of 2007, RealtyTrac reports that California led the nation in the number of foreclosures, with a total of 189,560 filings — an average of one foreclosure filing for every 69 households. Florida took second place, with a total of 102,213 filings. That amounts to an average of one foreclosure for every 81 households.
The national picture isn’t looking too rosy either. The latest RealtyTrac report shows that over the first six months of the year, the United States recorded a total of 925,986 foreclosure filings. That amounts to an average of one filing for every 134 households.
“Foreclosure activity shows no sign of slowing down,” says James J. Saccacio, chief executive office of RealtyTrac. “Based on the rate of foreclosure activity in the first half of 2007, we could easily surpass 2 million foreclosure filings by the end of the year.”
RealtyTrac publishes one of the largest and most comprehensive national databases of foreclosure and bank-owned properties — with more than 1 million properties listed from nearly 2,500 counties across the country. The firm’s reports include documents filed in all three phases of foreclosure: default; auction; and real-estate owned properties that have been foreclosed on and repurchased by a bank.
A lot of the price support in the Pacific NW came from California buyers “cashing out” of California.
Yup.
Just talked to some distant relatives at a family reunion this last weekend who moved from San Diego to Spokane (to be near children/grandchildren) last December — they missed the top of the market down there (2005?), but still made a 100% profit on their original purchase in SD, and commented that it is a lot less expensive in Spokane. Still adjusting to the weather, heh heh!
And who is cashing them out? Where are their big bucks coming from?
Somewhat rhetorical, BTW. Here’s an answer:
http://tinyurl.com/yt62r5
I couldn’t follow your link, Bear.
It was a link to a new show called on Bravo called Flipping Out. It features mentally deranged flipper Jeff Lewis who buys overpriced SoCal real estate, remodels it, and attempts to sell at even more absurd prices. He’s the prototypical bubble buyer.
*…new show on Bravo called Flipping Out…*
Comment to rdub9000
if i bought a house this week, i would not stop reading the HBB.
i like knowing about the fraud cases, the yucky realtors, the bond fiasco and i’d want to read just to laugh. HBBers are hilarious.
but if i bought a house i was not sure about i would not want to find out if my home value was going down.
case in point. i don’t know the password to my stock portfolio, on purpose! i’ll check it when intel is up over 30 and msft is over 40!
I would just check zillow to feel better about my homes value….HAHAHAHAHA!!!
You’re right, I probably wouldn’t stop reading this blog. It has been highly informative and entertaining over the years. Maybe one of these days I’ll actually donate to Ben - he does a h*ll of a job with this thing.
I would just check zillow to feel better about my homes value….HAHAHAHAHA!!!
You’re right, I probably wouldn’t stop reading this blog. It has been highly informative and entertaining over the years. Maybe one of these days I’ll actually donate to Ben - he does a h*ll of a job with this thing.