A Post-Frenzy Rebalancing Act In California
The Associated Press reports on California. “Home sales in a six-county region of Southern California dipped to a 12-year low for July as a growing percentage of homes went on the market as a result of foreclosures, a research firm said Tuesday. Foreclosure resales accounted for 8.3 percent of sales activity in July, up from 7.7 percent in June, according to DataQuick.”
“In all, 17,867 homes and condominiums were sold last month in Los Angeles, Riverside, San Bernardino, San Diego, Orange and Ventura counties. The total represents a 27.4 percent drop from July 2006, the firm reported.”
“DataQuick President Marshall Prentice said the region was experiencing a recession and people were leaving the area the last time Southern California saw home sales this slow.”
“‘These are interesting times because the slowdown in home sales isn’t part of a broader economic slowdown, it’s a post-frenzy rebalancing act,’ Prentice said.”
The Ventura County Star. “July marked the 12th straight month that the median price for new and existing homes and condominiums declined year over year in Ventura County. The median was $582,500, down 5.1 percent from $614,000 a year ago, DataQuick reported Tuesday.”
“Sales also fell significantly, from 941 units in July 2006 to 784 last month, a 16.7 percent decline. ‘Given the huge drop last year, this is a surprising drop on top of that,’ said Bill Watkins, executive director of the UC Santa Barbara Economic Forecast Project.”
The Voice of San Diego. “Last month, fewer homes sold in San Diego County than in any July since 1995, DataQuick reported Monday. The median price, the midpoint among prices for the 3,106 homes sold, was $489,000 in July. That was a 2.2 decrease from July 2006 and a 5.5 percent decrease from the peak in November 2005.”
“Lenders have spiked their rates on loans for more than $417,000. ‘That’s not going to show up in the numbers until next month,” said Andrew LePage, DataQuick analyst. ‘I would anticipate a very weak August. Even if things loosen, there will have been a long pause.’”
“The unconventional lending that swung the gate open for buyers who wouldn’t have normally been able to enter the housing market has swung nearly shut. ‘Those deals are gone, gone, gone,’ said Mark Goldman, a real estate financing consultant. Now, the affected loans include 30-year fixed mortgages, a synonym for stability among mortgage professionals.”
“‘You know, these are standard, bedrock, conservative loans,’ Goldman said. ‘And they’ve been hammered.’”
“‘There is still a tremendous resistance by sellers to price aggressively,’ said Adam Rappoport, a local Realtor. ‘It’s unfortunate. They’re going to learn the hard way.’”
The Union Tribune. “Although consumers in pricey California often complain that the low-conforming limit makes it more expensive to buy a house, lifting it has yet to gain traction in the federal government.”
“‘People in the heartland don’t have much sympathy for California home buyers,’ said Keitaro Matsuda, senior economist of Union Bank of California.”
“In the first half of 2007, 35.6 percent of all primary mortgage loans in San Diego County were jumbo loans, said DataQuick’s John Karevoll. That compares with Los Angeles County at 46 percent, Orange County at 59.5 percent and the San Francisco Bay Area at 77 percent.”
“Some investors have thrown in the towel and backed out of their real estate gambits, lifting the sold-at-a-loss percentage sixfold from a year ago, according to DataQuick. Steve Shaffer, a real estate agent and mortgage broker in University City, handled one such case, a home on Governor Drive that was bought for $659,000 in May 2005 and sold last month for $575,500, a 12.7 percent loss.”
“‘They bought it as investment,’ Shaffer said of the sellers. ‘They realized that in this market, it wasn’t a good investment.’”
“In South Bay, where all communities but Imperial Beach saw price drops in July, short sales are preferable to foreclosures, but banks have to be willing to take less than the outstanding loan balance to allow a short sale to proceed, said Scott Vinson of Coldwell Banker-Royal Realty.”
The LA Times. “Last month, the more affordable Inland Empire counties of Riverside and San Bernardino saw prices decline more than 3% from a year ago while sales tumbled more than 40%. Los Angeles County’s median price rose 5.3%, to $547,000, and sales slid 23%, and Orange County’s median was flat at $640,000, as sales fell 19.8%.”
“‘A decline in prices, like increases, tends to be self-fulling,’ said Michael Carney, head of Cal Poly Pomona’s Real Estate Research Council. ‘If buyers see prices falling, they hold off and don’t buy and cause prices to fall even further. But it takes a while.’”
The San Francisco Chronicle. “The flood of mortgage money into expensive Bay Area real estate has slowed to a trickle - even for those buyers with strong credit scores and substantial down payments.”
“‘There just isn’t much loan product out there for jumbos,’ said Leon Huntting, a San Francisco mortgage broker. ‘There’s just an echo out there. And if we do find anything, it’s at a much higher interest rate.’”
“Some people are finding that they can’t refinance out of unfavorable loans or that home purchases that appeared affordable a month ago are now beyond their means.”
“‘Some people will back away from buying altogether,’ said Pete Ogilvie, a Santa Cruz mortgage broker and president of the California Association of Mortgage Brokers. ‘For some people, that might be the wise thing to do if they’re just starting to shop. They might want to wait a little while when sanity will be restored.’”
From USA Today. “For evidence of what is spooking Wall Street and wreaking havoc on the mortgage industry, one need only look at the housing market in Stockton, Calif., 40 miles south of Sacramento.”
“During the real estate boom, Stockton was a hotbed of speculation, bidding wars, and rocketing prices. Now, foreclosures are soaring, sales are plummeting, and there is more than a year’s supply of homes and condos on the market.”
“The housing market ‘is still sliding,” said Larry Underhill, president of the Lodi Association of Realtors, which covers Stockton. ‘The buzz is there is just a ton of foreclosures, and banks are going to own a lot more property before it’s over.’”
“The bulk of the foreclosures, Underhill said, are homes purchased with subprime, adjustable-rate mortgages or exotic loans.”
“Underhill says he’s seeing homes go under contract two or three times, and each time, the deal falls apart because ‘buyers can’t qualify, or buyers are understandably cautious. They see property values sliding and are saying, ‘Why am I doing this?’”
The Sacramento Bee. “With a cool and steely patience over the past year, John and Toni Daniels have waited out a capital-area housing market buffeted by oversupply and price depreciation. They’ve resisted every call from a real estate establishment that says this is the time to buy.”
“Now comes a new factor to reward their patience: the growing fallout in Sacramento from subprime lending.”
“As more homeowners with risky subprime loans default or lose their houses this summer, Sacramento-area home builders and sellers are absorbing another hard punch, and folks like the Danielses are reaping the benefits.”
“Asked how subprime loan problems have changed the environment, Jeff Johnson, Citrus Heights branch manager for Florida-based Pinnacle Financial Corp., a mortgage lender, has a short answer: ‘It’s driven the (home) values down,’ he says.”
“Subprime loans (were) 22 percent of all home loans last year in El Dorado, Placer, Sacramento and Yolo counties. In 2004, 2005 and 2006, these high-interest loans put thousands of Sacramento-area buyers into homes they couldn’t otherwise have afforded.”
“For some in the real estate industry, there’s a sense that changes wrought by a so-called subprime ‘meltdown’ may be good for the long run.”
“Most acknowledge that much of the capital’s housing boom, and much of the nation’s as well, was a product of rampant investor speculation and loosened lending standards. Fraud and predatory lending also played roles in moving people into houses they couldn’t afford.”
“‘It’s bringing quite a bit of sensibility back to mortgage lending,’ says Patrick D’Arcangelo, vice president of marketing at the Sacramento division of Dallas-based Centex Homes.”
“‘I think any return to rationality is a good thing,’ adds Amy Crews Cutts, deputy chief economist at mortgage giant Freddie Mac. ‘When subprime went from 10 to 25 percent of the annual market, about a third of the growth was buyers who shouldn’t have been homeowners at this point in their life.’”
“John Daniels says he’s heard the subprime ‘horror stories.’ ‘We’re watching prices of houses that we’ve seen on the market for a year,’ he says. ‘They’ve gone from $350,000 to $275,000 to $260,000.’”
“The Danielses have waited a year through record oversupply and now the spreading local fallout of subprime lending. They can wait a little longer. They have both the money to buy and the upper hand in negotiating.”
“‘It makes no sense for us to jump into something while prices are falling like this,’ John Daniels says. ‘Everybody wants the best deal possible. That’s what it is.’”
“Last month, fewer homes sold in San Diego County than in any July since 1995, DataQuick reported Monday. The median price, the midpoint among prices for the 3,106 homes sold, was $489,000 in July. That was a 2.2 decrease from July 2006 and a 5.5 percent decrease from the peak in November 2005.”
- About a year ago I would of predicted that San Diego would lead the crash down….but it just does not seem to of cracked very much?
Medians (like all statistics) lie.
Someone who bought in SD in July ‘05 would have a tough time selling the same place in July ‘07 for only 5% less.
No, statistics are like fig leaves; what they reveal is interesting; what they conceal is vital.
Bill Gates and I have an average net worth of about $53 billion. I won’t mention what I add to that. Bill Gates, Warren Buffett & NYCityBoy have a median net worth of about $46 billion. That makes me feel so rich. Welcome to Subprimeifornia.
Correction: Average should be $26.5 billion.
talking about warren Buffett reminds me of the following comparison:
1929: Joseph Kennedy got out of the stock market after the guy who shined his shoes gave him stock tips.
2005: Warren Buffett sold his Newport Beach house for $3.5 million (can’t remember exactly) for a profit.
Notice any similarity? anyone? any realtors out there care to speculate?
That would be a “weighted” mean, since you do not count.
The point is absolutely valid, since the median price can go up while prices go down. It is only reflective of the distribution of sales, which in this case is tending towards the higher end market. Price per square foot is better, but still weighted towards the high end. best look at what houses which sold in 2004 - 2005 are going for today and see the enormous price drops. that said, San Diego is still way too overpriced to even consider buying into today.
pretty much all the numbers are coming from realtors.
none are audited or confirmed by third party.
yea.. that industry is infested with fraud from one end to the other. just wait till confidence in the profession hits rock bottom. taking to realtor will feel like talking to a some crack addict.
First liquidity leaves the market, then prices fall - slowly. Real estate doesn’t crash like the stock market; it’s more like slow-motion death of a thousand cuts.
Correction: Real estate doesn’t *usually* crash like the stock market. During the Mississipi land bubble, it crashed *just* like the stock market. Over a hundred years ago, but still… This is an unusual confluence of events.
I agree. All it takes is one really expensive palace to sell and the whole metric is skewed upward. I sold in SD last year and I would estimate that we are about 20% off. Good luck selling a place here for 5.5% below the 11/05 price.
“All it takes is one really expensive palace to sell and the whole metric is skewed upward.”
Especially, with the the lower number of sales, a few high end home sales skew everything. Once the high end starts to tank, median values will plunge and people will will be stunned. With Jumbo mortgage availability dried up, we should see this in the next few months, as the summer stats come in.
The real plunge will come when there is capitulation in the lower segment of the market. Foreclosures flood in, prices drop and sales increase. A pickup in sales in the lower end will sink the median even if upper-end homes continue selling at their current rates and prices.
I’m thinking the biggest plunge will show up in a couple of months now that Jumbo loans (417k+) have been vanquished. Subprime is also freezing up but I think jumbo will have a bigger effect on the median because subprime wasn’t exclusively covering low priced homes.
One sale would skew the mean (average) but have a negligible impact on the median. Thats why medians are better for skewed distributions. Whats happened lately however, is that the mix of houses being sold has changed distinctly. The median from July 2007 is a different set of houses than the median from July 2005. The percentage of houses from the richer neighborhoods is higher. So the overall median goes up even though the rich neighborhoods are also seeing price declines. In fact every single neighborhood could have a median price decline, but the combined data set could still show a median price increase. There was evidence of this in the Dataquick numbers from June.
what do you say to realtors that say the sales are up for the year? I am hearing that in NE ohio. My first rebuttal is ok perhaps your office of your company is but surely not all agencies (ie remax/realty one etc)
Is there a way to ask them to prove it?
Sales are “up” this year in the Northern VA area as well, because 2006 was so, so horrible. Now some people think they are getting bargains and jumping back in. It’s the RE version of the dead cat bounce.
“All it takes is one really expensive palace to sell and the whole metric is skewed upward.”
That’d be the MEAN.
Correct.
I’ll stick to social commentary.
I will say this - having just looked up the exact definition - using the median to to describe home values seems less than useful at the best of times.
Remember.
Median pirce says what was paid, it does not say what was bought !
Grammar police:
“About a year ago I would HAVE predicted that San Diego would lead the crash down…but it just does not seem to HAVE cracked very much?
it drives me crazy….
I now live in SD and I am amazed at the lack of understanding amongst the people here of the problems that lie ahead. It is sort of funny to have all of this knowledge about what is around the bend and to still see the blind masses go on about their daily lives as if nothing is wrong. This is going to be a doozy…
Maybe I need to clarify that statement about people going about their daily lives. I don’t expect people to be jumping out of buildings or anything, but amongst the people I know and associate with, housing problems are not really on the radar yet.
A few of us are battling out in the comments beneath UT housing stories but it’s a huge leap from this forum. For instance, you can write 500 words explaining the situation and you get a rebuttal like this:
“”If you morons think housing prices are going to fall that much, you are mistaken.”
Grammar police, swing shift:
“I now live in SD and I am amazed at the lack HAVE understanding amongst the people here HAVE the problems that lie ahead. It is sort HAVE funny….”
It makes me all nutso.
Luv,
Jen
Don’t quite get what you wrote, but ok…
(Of) course
Jen,
I get it.
(”would of, could of, should of”, for example?)
Oh, I feel the grammar pain –
My first job out of college was proofreading nearly all day at the Bureau of National Affairs, Inc. Towards the close of the day two women were walking to the elevator. One was complaining about a terrible pain in her eyes and the other was sympathizing. Then the first woman said clearly, “It must be that conjunctionitis.”
It’s a good thing the elevator doors closed so they couldn’t see me doubled over my keyboard laughing.
Quiet desperation.
- Sorry for the incorrect grammar.
My wife and I were out late last night. We had dinner at The Avenune Restaurant in Manhattan Beach on Manhattan Ave. The wine is half off on Mondays. I had the Kobe and several glasses of wine. My head is still thick.
Don’t have Kobe unless you’re IN Kobe. Everything else might as well be chuck.
“Don’t have Kobe unless you’re IN Kobe. Everything else might as well be chuck.”
That’s what Kobe kept telling that girl in Colorado…
For some reason some of my posts aren’t showing. Any advice?
I heard the CEO of Thornburg mortgage on Larry Kudlows show, today. He keep talking about the great credit quality of their mortgage portfolio. the problem their having is that no one wants to take any of them off their hands.
I think the market is basically saying that the assets behind those mortgages are worth a lot less or anticipates them them being worth a lot less in the future. If a lender has a billion dollars in mortgages, but the market thinks the houses behind the mortgages will be worth $700 million in the future, there isn’t much incentive to pay a billion dollars for them. The value of the underlying property is the security.
We’ve gone through an accumulation phase in real estate, now where going to go through a distribution phase in real estate, it will take many years to absorb the mess. When prices make sense, relative to rent’s, people will feel the risk is low and slowly begin buying again. Even after prices bottom, it will take years for confidence to return.
I’m sorry if this is a duplicate post. Some of my comments aren’t appearing. Any advice?
I heard the CEO of Thornburg mortgage on Larry Kudlows show, today. He keep talking about the great credit quality of their mortgage portfolio. the problem their having is that no one wants to take any of them off their hands.
I think the market is basically saying that the assets behind those mortgages are worth a lot less or anticipates them them being worth a lot less in the future. If a lender has a billion dollars in mortgages, but the market thinks the houses behind the mortgages will be worth $700 million in the future, there isn’t much incentive to pay a billion dollars for them. The value of the underlying property is the security.
We’ve gone through an accumulation phase in real estate, now where going to go through a distribution phase in real estate, it will take many years to absorb the mess. When prices make sense, relative to rent’s, people will feel the risk is low and slowly begin buying again. Even after prices bottom, it will take years for confidence to return.
Just watch the number of months of inventory, divide the number of homes listed by that miniscule number of homes sold that month to come up with the increasing double digit number - when that baby approaches 3 digits! Hooyah! With dumb lending gone our moment of triumph is getting closer - I think 3 years now. People under tremendous pressure to make their mortgage while working overtime, nites, weekends, marriages suffering…only ones I feel sorry for are the kids.
Got diversified assets?
“‘I think any return to rationality is a good thing,’ adds Amy Crews Cutts, deputy chief economist at mortgage giant Freddie Mac. ‘When subprime went from 10 to 25 percent of the annual market, about a third of the growth was buyers who shouldn’t have been homeowners at this point in their life.’”
Amy Crews Cutts is predicting these folks will take a crew cut on their investments. Can’t make this stuff up.
> ‘I think any return to rationality is a good thing,’
So, the irrational deals are not going to survive - i.e. just about everything that sold in 2004+
Impairments and market to markets are just around the corner. Lots of talk on CNBC .. or should I say demand that m2m is realized as soon as posible. OUCH that will hurt like a mother….
“Amy Crews Cutts is predicting these folks will take a crew cut on their investments. Can’t make this stuff up.”
And how many of these people are going to stick around for the next 30 years making their mortgage payments? I have to believe a lot of folks are going to be leaving the keys on the proverbial granite countertops.
“Amy Crews Cutts .. .”
Alright, is that REALLY a person or is it a running inside gag here on the blog …. cause that is just about the most hilarious thing I have ever seen here!!
Awww, you haven’t been here long enough. She’s mentioned a lot.
So why is Fannie so eager to buy these things up.
It’s a win-win for Fannie. They have a taxpayer bailout as backup. At least they think they do.
“The housing market ‘is still sliding,” said Larry Underhill, president of the Lodi Association of Realtors, which covers Stockton. ‘The buzz is there is just a ton of foreclosures, and banks are going to own a lot more property before it’s over.’”
There’s a perfectly good reason Creedence wrote a less than uplifting song about Lodi…
I spent a week there, one afternoon~
Come on now.. Lodi is a great place to live and raise a family.. I’m one of them and Larry is a friend of mine.. That being said.. the market is at a standstill (Duh - from the Kia commercial) and we’re situated in between two markets that are getting hammered (Stockton to the south and Sacramento to the north).. Hey, Neil.. anymore popcorn.. I can’t wait for the market to open tomorrow, CNBC will be like watching the Katrina coverage from a news helicopter with all of the subprime borrowers waiving “HELP” flags on their rooftops..
Could have just as easily have been…
“Oh lord, stuck in Manteca again”
Who en el nombre de Pedro chose to name that town “lard”?
İEs mas mejor qué “Los Baños”!
I’m very curious how the market opens. This volatility is scaring away investors. My old boss was making good money playing the volatility. Last Friday… too much. He sold out and has parked his funds.
It concerns me if it does drop too much before September (I blogged this a while ago). Basically, I expect the market to fall, but there is a seasonality to this. Pre-labor day breaks the trend and implies things are even worse than I think they are!
And yes, I’ve got popcorn. Here, try this batch cooked in olive oil with a light sprinkling of seasoning salt. Perfect for watching the subprime meltdown.
Neil
Neil, try a little Parmesan Cheese on your Popcorn!! Great taste and should add to the duration of long lasting flavor and this long melt down.
If that doesn’t work, try a little Fumunda Cheese. That should do just dandy!
Ummm….
Gourmet cheese… can never go wrong with that.
I have a block of some nice Parmesan here… alas, no Fumunda. So I just will have to pull out the grater and try it.
Got cheese?
Neil
No Fumunda Cheese? Pronounced fuhm-unda…..as in fuhm-unda my balls.
ex-
LOL!
more for a gourmand than a gourmet i’d wager….
Nothing like a little VIX to soothe the pains of a stuffy credit market and runny investors…
Ah, the good old days when it was in the mid-teens.
These 1-2% swings is mickey mouse stuff by historical standards. October 19, 1987 was -508 (-22%). That equates to a one-day 3,000 point drop from current DOW levels. Think big. At least lets get some 1,000 point swings going.
“It concerns me if it does drop too much before September”
Me too, Neil. Like we’ve both been mentioning for a couple of months now. . . October!
And yes, if it does break the trend, then it IS much worse than we think.
bad-a bing?
from wiki:
The Bada Bing, is a fictional go-go bar from the HBO drama television series The Sopranos. All interior and exterior shots of the Bada Bing are filmed on location at Satin Dolls, an actual go-go bar in Lodi on Route 17.
Actually, a dude opened a bar here in Council Bluffs, IA in 2002 (maybe started planning in ‘01?) and named it Bada Bing.
Apologies to George Cohan
Underhill, Underhill
Send the word, send the word Underhill
That the Banks are coming, the Banks are coming,
Foreclosing owners ev’rywhere
So prepare, say a pray’r
Spread the word, spread the word please impel
It’ll be lower, a whole lot lower,
And we won’t come back till it’s lower Underhill!
Classic.
Over Hill and Under Hill, and There and Back Again.
What about Hank Hill?
Countrywide is now carrying 1.03B in REO in California alone. With current market cap of 14.03B, that’s 8% of market capitalization in REO of 1 state, albeit a big one.
Throw in the additional facts that REOs are growing month to month and that these properties have yet to be marked to market and you have a recipe for insolvency.
I heard someone joking today that our company should probably plan on moving to Agoura since Countrywide and Amgen are both on the verge of going belly up. Kind of like a Wall street shoe shine boy moment.
It will be fun to watch onece the REO increases, the value of the houses go down and the market cap going south.
–
The mkt cap will be below the REO before 2008 is out if not in 2007.
Jas
>>I heard someone joking today that our company should probably plan >>on moving to Agoura since Countrywide and Amgen are both on the >>verge of going belly up.
Is Amgen having trouble ? Can you please elaborate ?
Amgen really only has 2 drugs that make the big money, they are getting big competition from generics and are getting stale.
About half of the employees who leave our R&D section end up at Amgen, so we hear quite a bit of scuttlebutt from over there. They are scaling back expansion plans and tightening the belt for rougher times ahead. My experience is that when companies do this, it’s almost always “too little, too late”.
http://www.pacbiztimes.com/index.cfm?go2=articles/wk_081307a
‘Countrywide is now carrying 1.03B in REO in California alone.’
Dude, where did you get this number? I look at the CW REO site regularly and I suppose I could sit there with an adding machine, but I assume you found some way of extracting the data to get a running sum….
Countrywide Foreclosure Blog
It’s a good site.
At an average of $500,000 per house in California, that would be over 2000 houses they are sitting on. WoW!
“John Daniels says he’s heard the subprime ‘horror stories.’ ‘We’re watching prices of houses that we’ve seen on the market for a year,’ he says. ‘They’ve gone from $350,000 to $275,000 to $260,000.’”
Don’t stop there…
$260,000 to $230,000 to $200,000
I heard the CEO of Thornburg mortgage on Larry Kudlows show, today. He keep talking about the great credit quality of their mortgage portfolio. the problem their having is that no one wants to take any of them off their hands.
I think the market is basically saying that the assets behind those mortgages are worth a lot less or anticipates them them being worth a lot less in the future. If a lender has a billion dollars in mortgages, but the market thinks the houses behind the mortgages will be worth $700 million in the future, there isn’t much incentive to pay a billion dollars for them. The value of the underlying property is the security.
We’ve gone through an accumulation phase in real estate, now where going to go through a distribution phase in real estate, it will take many years to absorb the mess. When prices make sense, relative to rent’s, people will feel the risk is low and slowly begin buying again. Even after prices bottom, it will take years for confidence to return.
And don’t forget a lot of these hedge funds were using 10 times leverage on massive bets - AND they were using the assets as collateral for loans.
Unbelievable.
John Daniels could not be reached for further comment…
He was in private week long “conference” with his brother, Jack….
Who would want to cover debt on decreasing assets collateralizing that?
I also am wondering if the “trust” factor in Americans paying their bills is beginning to faulter.
“In all, 17,867 homes and condominiums were sold last month in Los Angeles, Riverside, San Bernardino, San Diego, Orange and Ventura counties. The total represents a 27.4 percent drop from July 2006, the firm reported.”
Who are these people buying at not the “best time” as the RA would want you to believe but one of the worst times in reality?
There are simply lots of populus that don’t know and can be convinced of anything. I bought my first house in 1991 and it is only now that I understand why the builder was bending over backwards to please me on the amenities. He kept saying “Since you paid full price…” I was lucky to get out of that place and have a buck or two in my pocket to play another day.
This presumably includes current owners buying and selling to other current owners. If you are already in the market, trading one devaluing asset for another probably isn’t that big a deal.
17,867 is a vanishingly tiny fraction of the population of SoCal (plus San Diego, which the LA Times loves to insist is part of the greater LA region) - contrast it with the probably million or so people who believe in astrology and moon crystals. Name any totally preposterous thing, from the Easter Bunny to Jehovah to Oscar the Grouch to “real estate only goes up,” and yes, you will easily find 17k people in SoCal who believe it.
“‘There is still a tremendous resistance by sellers to price aggressively,’ said Adam Rappoport, a local Realtor. ‘It’s unfortunate. They’re going to learn the hard way.’”
…and many already have. Days On Market is very high.
I sold my primary res two years ago and it was a stressfull two weeks. Can you imagine the stress of having a home on the market for 6 months?
If my place did not sell in three weeks, I would drop the price to undercut everyone else in the area. That is what you have to do now if you really want to sell. Things are certainly not going to get any better.
Its going to get interesting in Orange County. With the latest moves to tighten lending and I’m sure a lot more coming over the next few month basically no one will be able to buy a home here.
Silent Spring.
What’s funny, is that there is actually a street named “Silent Spring” in Rancho Santa Margarita.
By chance, the welfare office is/was on Easy Street…
In El Monte, Ca.
What’s funny, is that there is actually a street named “Silent Spring” in Rancho Santa Margarita.
Brilliant! Given that Silent Spring is almost universally synonymous with toxic waste, I guess RSM is reaping one of the many windfalls of the militantly anti-intellectual, anti-literate culture that prevails in so much of OC.
There’s blood in the water and desperation among the brokers in my neck of the woods, West Hollywood. Last weekend my husband and I walked past this development a few blocks from where we live. It’s not quite finished being built — there’s a chain-link fence around the whole development, the walls are covered in black, the driveway is unfinished and half of it is crumbled, construction signs everywhere advising the wearing of hard hats…and in the midst of this site, they were having an open house! One single apartment with a big window in the front of the building was clearly staged, completely with crystal chandelier and nervous broker handing out leaflets.
I think it’s “sell now or go broke”, at this point.
Condos “from the low $900s”, and only blocks from the seediness of Santa Monica Blvd. Who could resist that?
That’s half a block from me! I’ve watched them throw that place up. What gyp-jive construction. I wouldn’t have figured they were 900k condos, but I suppose that’s what they wish they would go for. It seems really elite from that website, but it doesn’t look that great from the street with construction and all.
My favorite part of the website is where they try to pre-qualify you for “pre sale” prices. Good luck with that. I wonder what kind of rate they’re getting on a jumbo loan these days?
LABR — you must have watched the whole, sad battle over the really nice rental building that used to be there, too. If ever a condo development had “bad karma”, this is it.
Yes, actually, I’d gone there once to help someone move. It was a really neat place that didn’t deserve to be turned into a sh*tbox condo, but c’est la vie. It’s a shame. I’m waiting for the place down the street on laurel 1 blk north of SM to the right of the traffic circle facing south. It’s been boarded up for months, it seems, awaiting its fate.
)
I live right across the street from that big ol’ house on Laurel, I can’t remember what it’s called but it’s an old mansion that they’ve successfully been able to convert into a retirement center, for better or worse. Construction has yet to start.
When I moved in 7 years ago I coulda bought a 2 bdrm condo for 170k down the street from the DGA but I thought that was crazy california money. Guess I’ll have to stay in my large 2 bdrm rent controlled apt for a while longer (at $700 a month for my half
A fool and his money…900k geez.
I always think, it was a fool and her moneys. Suzanne said so.
My wife and I went to a development called Creekside Terrace (Fidelity Homes) (http://www.fidelityhomesinc.com/about.html) in Riverside, Ca over the weekend. My wife loves these houses because of the size, it’s gated, great school in the area, and good area. When we first looked at these homes that were selling from 399K (1650sq ft) to 519K (2900sq ft) the realtor said the 1st phase would be finished in June 07 and the 2nd phase would start selling in August. I told my wife that they were asking for way to much for the area and they would come down in price sooner or later and asked her to just wait. To make a long story short the models are completed, but nothing else (empty shells everywhere). They have signs in front of the development that say they are liens on the homes and the line to the sales office has been disconnected. I’m loving 2008!
Who is the developer ?
Fidelity homes, I put the website in the post
believe it or not they sold ALL of them…..
UCR bought the whole development for use as faculty housing.
http://go.sosd.com/servlet/nrp?cmd=sty&cid=RIM&pgn=1&ino=1243070&cat=California&lno=1
Nice to see where my tax’s and kids college tuition go. Glad I left California, but there planing this type of thing here in St George, UT.
Was it Harvard that said sorry we lost your money?
It turns out that the “College Retirement Equities Fund” is the major stock holder of many mortgage companies that are tanking. Feel so bad for them.
It really says a lot about the market. When a UC school in the Inland Empire has to buy homes so the faculty can have affordable housing. You mean a UC proffessor can’t afford to buy a home in the freakin IE????
Yup, something definitely changed this last weekend here in San Diego. I’ve never seen so many open house signs, balloons, and goofy looking flags. Last summer was pretty bad but these things were on all four corners of the street and making it difficult for pedestrians.
” sold my primary res two years ago and it was a stressfull two weeks. Can you imagine the stress of having a home on the market for 6 months?”
To me this is the great, uncalculated, problem facing the economy. Even people who aren’t in dire straights with subprime loans and such are going to get a major headache waiting to sell their property.
The horror stories are only now being disseminated. It will be take a miracle to avoid a recession with so many people affected (indirectly as much as directly) by the debacle in real estate.
Ivory tower “experts” and stock touts, IMHO, don’t get the stress mentioned above and how it permeates conversations and, eventually, behavior. I’ll bet its getting increasingly hard for most people to read and hear these stories and remain dismissive about its POSSIBLE impact on them somewhere, somehow.
“Subprime loans (were) 22 percent of all home loans last year in El Dorado, Placer, Sacramento and Yolo counties. In 2004, 2005 and 2006, these high-interest loans put thousands of Sacramento-area buyers into homes they couldn’t otherwise have afforded.”
You mean “they couldn’t have otherwise purchased,” don’t you? They never could, and still can’t, afford them.
At the end of the SF Chronicle article posted above by Ben is this comment by a reader:
“When are the rules on jumbo loans going to be relaxed to reflect the actual cost of houses? It’s ridiculous that it takes a ‘jumbo’ loan to buy a house in the Bayview. Something just ain’t right here.”
Posted 8/14/2007 10:35:39 AM
This commenter has it all wrong.
Jumbos (+$417,000) shouldn’t be required to buy houses in the Bayview section of SF… (as it can be a battle zone).
The culprit is crazy financing which drove up prices there and nearly everywhere else in the first place.
“Real estate may be local… but financing is international.”
When I think of post-frenzy rebalancing acts, Cirque de Soleil comes to mind…
They’d fit in well, in this circus act of an economy~
“‘These are interesting times because the slowdown in home sales isn’t part of a broader economic slowdown, it’s a post-frenzy rebalancing act,’ Prentice said.”
It reminds me of
Cirque du Freak
Vampires all of them.
http://tinyurl.com/3ay62x
Hey Hoz, do you still have the prof’s plume?
Tickling his fancy with it, are we?
LOL
Where is Prof. G. Stucco Barely?
Probably playing with Goldman’s models. Wheee
Pain killers finally kicked in.
When I read the quote (“‘These are interesting times because the slowdown in home sales isn’t part of a broader economic slowdown, it’s a post-frenzy rebalancing act,’ Prentice said.”) I thought of data from the OC Reg Blog that said in the last downturn sales slowed down from 89 to 91, before the price slide even began (91-95). Everyone says this is unprecedented (RE meltdown w/out recession). Is it possible that the sales slowdown last time was the straw that caused the recession then?
I just got off the phone with a friend in LA. For the last three years a mortgage broker acquaintance of his has been yelling at him NOT to buy a home, that the prices were insanely out of whack with fundementals. His acquaintance is aware of me and my views on housing. Today my buddy runs into the broker and he asks if I’m losing my mind over what’s happening in the mortgage industry. Goes on to say that this is just the beginning, that the credit crunch is going to eat SoCal alive. He told my buddy that he anticipates a 60% decline in prices over the next three-four years. He’s sold all his property and is positioning his business to sell REOs for banks.
He said something interesting besides: banks routinely gave him a bad time about having documented income loans, because it took extra time to process all of the documents. In fact they loved no-doc loans, because they conversely were so easy to shoot through the pipeline.
He added that he is abosolutely astounded at the reversal that has occurred in the last few weeks: numerous clients who would have easily qualified a few weeks ago have been shut out completely.
60%. Music to my ears.
–
“60%. Music to my ears.”
Can you handle 85%! Don’t buy at 40% of the peak prices. Wait until prices are up 15-20% YoY. That could take 5, 10, 15, even 20 years.
Jas
I’ll go out on a limb and say that before this is over that certain condo units in Fla will go down by 100% - they’ll be given away - signed over for $1 to get out from under insurance, taxes, and condo fees and away from the crime and hassles.
“…numerous clients who would have easily qualified a few weeks ago have been shut out completely.”
“…and then it went dark.”
When I first predicted 60%, everyone was saying no, but if the jumbo rates stay at 8-9 percent it’s going to come sooner than later. L.A. has never been a 2 to 3 times income place but even at the traditional 4 to 6 percent on a median of 55k you do the math as to where houses have to slide in price for this place to be reasonable again. Ghettos will go back to being ghetto’s and middle income neighborhoods will go back to being middle class neighborhoods sooner than later.
At that level, financial armageddon would be in sight.
‘ “A house would have to sell for less than 40% of the face value of the mortgage for a money fund to get hurt,” Bent said. “Everything else is subordinated to them.” ‘
http://articles.moneycentral.msn.com/Investing/MutualFunds/WhyCashMayNotBeSafe.aspx
I never said “no”.
In fact I gave a formula to calculate the anticipated price in any area. I recall California was -75% before bottom. (that was average). At which time I was “it will never get there, by this blog maybe it won’t go that low. I have no idea how much inflation current events are going to cause, so we could inflate out of the mess.
55k, where is such median income? Sounds way too high, even in the rich SF Bay Area, for instance, in Sunnyvale the median is about 50k, but the rest of Cali (especially SoCal) can’t compare. In San Jose, the median is only 35k.
http://www.census.gov/hhes/www/income/medincsizeandstate.html
You’re lowballing median income. Look to working families, median includes a very high level of retirees. If you’re in the for-profit sector, have an education and some experience, who is working for less than $75,000, minimum?
“You’re lowballing median income. Look to working families, median includes a very high level of retirees. If you’re in the for-profit sector, have an education and some experience, who is working for less than $75,000, minimum? ”
Plenty. My wife and I considered SoCal for a bit, and we have a few years’ experience, plus I have my MBA, and my wife is a certified Radiology Tech. She’d make about 60-65K, and I might make 60K in financial analysis or treasury. We’d get to 75 each, but probably not for at least 5 years.
Up until the last few months, I figured maybe a 40% nominal drop in LA, OC, and the Bay Area, and that it would take 5-6 years to get there. With the way things are going now, I think 60% is very possible, and it might be more like 3-4 years. I’ve been very bearish about housing since at least 2004, but recent events are turning out even gloomier than I expected!
“‘They bought it as investment,’ Shaffer said of the sellers. ‘They realized that in this market, it wasn’t a good investment.’”
Wait until interest rates climb to 14%………then we’ll see what’s a good $650,000 investment babeeeeeeeeeeeeee.
–
“Wait until interest rates climb to 14%………then we’ll see what’s a good $650,000 investment…”
Wait until short-term and long-term rates fall below 3% and then below 2%. Then the $650K invesuckment would be more like $150K.
Deflationary depresion is staring the US economy. It is very bad for the wicked and bad for most of the rest.
Jas
Excellent point, Jas. Who in their right mond would pay even 1 month at 14% on a 650K note? Sheer insanity. Then again we saw this bubble reach heights we never thought possible. All I have to say is that if 14% on 650K is ever the norm, I’ll rent forever!
‘There’s just an echo out there. And if we do find anything, it’s at a much higher interest rate.’”
The echo I hear is: 14%…” …and then it went dark.”
“Most acknowledge that much of the capital’s housing boom, and much of the nation’s as well, was a product of rampant investor speculation and loosened lending standards.”
Now…comes the “enlightenment”…just in time!
Bring on the Doo Dah parade…I’ll be ready!
Seems like we are past the denial phase, and into acceptance.
It still seems to me that “our house is different” is the mantra du jour.
In the acceptance phase wouldn’t zillow reflect reality instead of absorb
TIME for the my hood price decrease round up
I’ll strart
22151 S of DC in N VA
off 12% since 5/05 with all of that by mid 06
Can someone help a brother understand just what the hay is going on in Riverside?
cnnmoney report stated that Riverside, CA has upwards of 40K foreclosures.
As per Wiki:
“As of the census of 2005, there were:
* 294,059 people (305,255 per 2006 estimates)
* 98,016 households, of which 93,405 were occupied
There were 85,974 housing units at an average density of 425.0/km²”
Does this mean that 50% of housing units are in some form of foreclosure?? Surely this can’t be right. Interesting they point out that 5K households are not occupied.
The wikipedia data you mention is for the city of Riverside, which is a small part of Riverside County.
The statistics you quoted was for the MSA region that includes Riverside and San Bernardino counties.
There is Riverside County and then the City of Riverside. The population estimate seems like that of the city. The County is huge and includes towns way out in the Coachella valley like Palm Springs and Indio. The foreclosure data is probably for the county and would include places like Perris, Moreno Valley, Murrietta — all of which have been featured on bubble blogs for some time now.
California’s troubles are only beginning …………..
Worst to come in 16 months, according to this MSNBC news story.
Some good charts here as well
http://www.californiahousingforecast.com/
RE: California’s trouble’s are only beginning.
Yup, sure are….
>> I don’t think that Americans want to believe this but maybe it is time we
>> take a look at what is happening to OUR country.
>>
>> For more information, see
>> http://www.snopes.com/politics/quotes/hispanic.asp
——————————————————————————–
Hmmm will be intersting to see their comments when and if Bush and Co. step up their enforcement on businesses. I.C.E. should setup a hotline so that can fax in businesses where folks are not confirming to the rules.
GE, and the pols in washington, repub and dem, are just so surprised that American citizens are outraged at illegal immigration.
Wash Post had an interesting editorial a few days ago, that the game plan from Bush now was to institute some heavy-duty enforcement of the law for a short while, to scare small-business folks into capitulating on “guest” worker programs. The idea being that cheap, illegal labor will be hard to replace.
It’s why nimrods like Kyl and Lindsey Graham have signed on to the “get tough for 10 minutes” white house initiative…they think they will be vindicated.
However, since they seem to have no clue as to the ramifications of the housing bust, including the drying up of illegal construction jobs–residential, and soon commercial–and the almost-certain recession in the cards, I am willing to bet they are the ones who may be surprised.
Already, remittances to Mexico (cash illegally earned and untaxed, drained from the US economy) are down significantly from this time last year.
Here is a blurb from Grassfire:
#1–Amnesty bills back after Labor Day.
Like those dreaded villains in the Terminator movies, it looks like the Bush-Kennedy amnesty bill is coming back after Labor Day — this time in sections that the amnesty Congressmen think they can sneak by us. We are closely watching two bills: the AG Jobs bill that would give amnesty to millions of illegals in agriculture; and the so-called “Dream Act” that is really an “Anchor Child” program giving amnesty to over a million illegals under 18. Grassfire will be spearheading efforts to defeat these amnesty bills while we expand our “Where’s The Fence?” campaign.
“The idea being that cheap, illegal labor will be hard to replace.”
Yep, painful stuff in all those quotes. Very revealing as to who and what we are dealing with.
The recent years have brought a flood of cheap stuff, too, cheaply made homes, products and how about that Mattel recall? How’s that working out for their bottom line, I wonder? In the long run, cheap products and cheap, illegal labor will turn out to have a very heavy price attached.
Given a choice employers would rather keep a cheap illegal employee than pay all taxes and higher for a legal employee.
With the slowdown in the economy the government revenue is threatened if illegals are kept at the expense of legals. Lower pay, less if any taxes collected. On top of this Unemployment benefits.
Could it be the party is over and its time for gate crashers to leave?
This is silly huff-puffery. Mexican immigration is a response to our own labor demands. Mexicans in the US have been normalizing their reproductive rate faster than any other such group in history, and that turns out to actually be a problem for us. Soccer games don’t have much relevance, and a range of causes of resent should be obvious. There is no serious evidence of Mexicans being favored by corporations or the justice system. This is just the usual fearful nastiness which can be countered using a variety of reasoned arguments such as those on tolerance.org.
They were direct quotes. Go ‘head, splain that, Ricky.
Mexicans in the US have been normalizing their reproductive rate faster than any other such group in history….”
In fact, Mexican women in the US display greater fertility than Mexican women in Mexico, with a TFR of 2.4 in Mexico and a 2.9 TFR in the U.S. See http://www.demographic-research.org/volumes/vol12/4/12-4.pdf
The Wall Street Journal thesis that falling Mexican birth rates will reduce the Hispanicization of America ignores the fact that Mexican fertility rates are falling precisely because the high-fertility socioeconmic components of Mexico’s population are already here.
Demographics show this will happen in CA and the southwest. European countries have the same problem with Islamic people. Mark Steyn wrote a book about it. “America Alone: The End Of The World As We Know It” And all of the politicians don’t understand why we want our borders fenced.
OT: Not as exciting as COD meltdown but still !
This site allows you to list on MLS for free (at least in metro Denver)
http://iggyshouse.com/
They say that houses listed using their free service will be listed on realtor.com as well.
I hope this (and similar services) is beginning of the end of 6% ‘ er mafia.
I hate going out. I mean I really hate it. With typical family in-tow, retailers of all persuasion look at me like a wolf looks at a lamb.
Every establishment starts licking their lips the moment I step foot on or in their door, from car dealers to restaraunts to banks; you name it.
Ironic really, that I value independence & privacy when so many are trying so hard for attention with shiny rims, blue-tooth loud convos, and more of
” LOOK AT ME !!! “.
Hell, I dont WANT you to look at me. I’m ok & secure, I dont need your approval or validation.
Humorous how the schools went from pissy annoyance to azz-kissing now that enrollment is way down and my well behaved meal tickets arrive.
To be honest, my ideal life is minimal consumerism & waste, appreciation of art, science, sports … not immersion in pop /poser / ghetto bling bling culture. Told the spouse plenty times if I wasnt yoked I’d be off in hiking in Tibet.
In short, I am a marketers worst nightmare !!!! Especially a Realtor’s . .
From one marketer’s nightmare to another, good on ya, Aqius! Actually, I find that playing poormouth can be a real gas. My car offends illegal immigrants, and I kind of get a kick out of it. But as a matter of survival, I predict that looking and acting poor, even if you aren’t, will become the thing to do. In the tough times to come, only an idiot would want to call attention to themselves through flash and over-consumption. Hey, we’ve got another bubble coming up: The “poverty bubble”.
Yes, especially in the cities, palmetto. Woke up to what sounded like gunshots this morning - high speed pursuit along LSD in Chicago - loud irregular popping sounds followed by sirens.
“My car offends illegal immigrants, and I kind of get a kick out of it.” Awesome - loved that one!
Aquis,
you have like-minded souls on this blog.
OT, but am visiting my mom, and her 8 year old Buick seems to have fried its’ computer. Any suggestions for a 4 car sedan worth buying?…I live in NY and know jack about cars. Should I just rely on JD Powers’ advice, or Consumer Reports? Sorry for the OT question.
Lexus or Toyota Avalon, 2 to 3 yrs old you can’t go wrong. Have a mechanic make sure it hasn’t been in an accident and your Mom should be good to go for a long time… Especially if you can get one with less than 45k miles on it. Honda Accords are good ones too.
If you have to have new Lexus Toyota or a Cadillac in that order.
Also that it was not from flood damaged Katrina territory.
Good point…
Many thanks, I have to buy something for her in the next few days before I head back to NY.
I’d say Toyota or Honda, no matter the model, and of course Acura and Lexus are their more expensive brethren (is that the word?). I’d skip Cadillac, you’ll have nothing but problems with them, and they don’t hold resale, not that it may matter. If all wheel drive might be important in NY state, then Subaru is a very good one. The Legacy and Impreza of the early 2000’s are actually very good cars.
you’ll get more car for your money if you pick a common rental-fleet brand/model vehicle.
What happens is tons of some popular ones, like certain Lincolns or Toyotas are bought new by all the rental agencies and then flood the market when sold a couple years later, creating an excess inventory which drives down bluebook value..
I wouldn’t recommend an actual used rental, even though they are probably the best maintained, because people drive them too hard.
I actually agree with most of what you say, but I do have one niggling little question–when you tell your spouse many times ‘if I wasn’t yoked I’d be off hiking in Tibet’–how’s that go over? Does she clasp her hands with gratitude that you somehow manage to tough it out, or does she quickly offer to pack your bags and find you a nice no-frills ticket to Tibet?
Bwwwaaahhhhhaaaa
Heh heh - good one O-Gal !!
About the cars question: you cant go wrong with the big three ( as I call em ) japanese brands of Toyota, Honda or Nissan, or their luxury divisions Lexus, Acura and Infiniti. Anything used vs new you also save big bucks and the reliability is still very strong.
Now, I’m a muscle car / exotic car fan like any other red-blooded guy but for grocery gettin around town and stayin out of the mechanic shop, ease of maint. & best value, I gotta go with a Corolla, Civic, Sentra, etc for basic best reliability. Of course you move up in price & features by model like Camry, Accord, Maxima, and so on.
VW’s Jetta is a hot seller & the diesel version seems to be tough as nails, but I myself own a 95′ salvaged Corolla that has been accross county & back 3 times doing 85mph full A/C no problemos.
And whats also cool as hell is they look so PLAIN JANE the cops just ignore em. Seriously !!! Let the flashy BMW’s or Mustangs get the attn (and speeding tickets) while I meld into the background.
Hope that gives you some worthwhile insight. Naturally people have their own preferences . . I just figure to own the most common & reliable car in a long production run so parts are ez to find, cheap, and mechanics can work on em anywhere I go.
Ok I do admit to watching Craigslist for a cherry Porsche 928 for an affordable dream car. I just like the styling.
Maybe some FB will have to sell one cheap & not abused.
As far as Tibet …. well, I guess as long as the trash was somehow taken out she would would be happy not hear me yammerin about Housing Bubble posters/comments/industry for awhile . . . !!!
BTW - appreciate the latitude re topics, Ben.
You are WRONG! You are NOT the marketer’s worst nightmare. That nightmare person will feign some curiosity, hear the spiel, ask some questions, nod disappointedly at the answers and move on politely. The less quickly you defeat the salesperson, the more they hate you.
If you have family in tow, it’s an excellent opportunity to expose them to salesmen! You can’t protect them from it… so they might as well learn how to deal with it. Personally, I got taken for about $200 by a con man, and it taught me all I need to know in the universe about how people that need money treat people that have it.
It seems that lately, the con men are more formal (mortgage brokers) and ambitious (life savings) and you’ve either learned that or you will. (Not you, but your family.)
Ajas
You make some pretty good points fer sure. I agree that tire kickers annoy me also as I value time well spent, not wasted on people who have no intention of respecting a commission based job.
It’s just sad that the sharks led a feeding frenzy into the housing buyer masses who, for the most part, just desperately wanted to buy a home for their family in the escalating market, hoping against hope that somehow they could pull it off. Some did, many did not, and now comes the backlash against the low-life industry scumbags.
Realtors & other housing industry people will never have the same degree of trust.
Getting scammed sure enough sucks, amigo, I can grok that !
As you mentioned, the school of hard knocks either chews you up or toughens you, and the professors wear suit & ties. Smiles optional.
“Told the spouse plenty times if I wasnt yoked I’d be off in hiking in Tibet.”
I have told my wife the same thing. Though she doesn’t appreciate it, she does understand. So many points that I can see eye to eye with you on here. I’ll just keep it short to, “I agree”.
“‘It makes no sense for us to jump into something while prices are falling like this,’ John Daniels says. ‘Everybody wants the best deal possible. That’s what it is.’”
But, but, but …you’d better hurry…because the agent has… x5 offers in the pipeline.
“In all, 17,867 homes and condominiums were sold last month in Los Angeles, Riverside, San Bernardino, San Diego, Orange and Ventura counties. The total represents a 27.4 percent drop from July 2006, the firm reported.”
I’ve noticed that in most articles lately citing homesales, they usually compare to last year. What would that 27.4 be if it was compared with July 2005? As I recall, last summer inventory was steeply rising and homesales were falling.
s
“Sales also fell significantly, from 941 units in July 2006 to 784 last month, a 16.7 percent decline. ‘Given the huge drop last year, this is a surprising drop on top of that,’ said Bill Watkins, executive director of the UC Santa Barbara Economic Forecast Project.”
Isn’t it amazing that most economists are PERPETUALLY suprised by the facts??? Every time the news is bad they claim they didn’t see it coming.
What the f*ck are these clowns good for?? And why do people pay attention to their estimates/predictions if they never get it right?
Just like cooky Cramer losing 90% of his $$$ in the last bubble; and now he’s the booyah! prophet of “The Street” –unbelievable.
Oh… wait, wait, wait.
Here’s another economist, a “chief economist” no less:
“I just don’t think we have what it takes to prick the bubble… I don’t think prices are going to fall, and I don’t think they’re even going to be flat.”
Diane C. Swonk, chief economist at Mesirow Financial in Chicago
New York Times, “Trading Places: Real Estate Instead of Dot-Coms”, 3/25/05
“In all, 17,867 homes and condominiums were sold last month in Los Angeles, Riverside, San Bernardino, San Diego, Orange and Ventura counties. The total represents a 27.4 percent drop from July 2006, the firm reported.”
It seems like most articles written recently cite yoy figures from last year. What is the percent decline in home sales from July ‘05? The numbers would be far more frightening.
s
Don’t post much, but thought this might be a good anecdotal story:
Took the acela express (Amtrak) to Delaware for a business trip today. On the return, sat behind a guy yapping away on his cellphone. What about? Yup, real estate developement. He was talking about his company’s partnership with some eccentric developer to build a residential tower (luxury condos) facing capital hill. It’s just on the drawing board and apparently there are zoning issues that they have to overcome, but the confidence to keep planning more condos is amazing to me.
The optimism pool is deep, so a long way to go before this debacle is over….
peace
“The optimism pool is deep, so a long way to go before this debacle is over….”
Maybe…tomorrow, will cause some folks to…re-think things.
In about 25 minutes you will know. Asia markets open.
Japan and Australia both off about 2%.
2-year Tr down to 4.34; 10-yr. at 4.72.
Fed funds at 4 1/2 within 2 weeks?
It is ugly in Asian markets Paul, some stocks still have not opened. China is up.
20 years of irresponsible behaviors by the fed and all of us will be feeling the pain if Mr. Bernanke’s et al plans do not stop this world wide slide. Personally I expected a bounce in the US tomorrow. Not sure any longer.
No more rallies - either MMs are going to fail or Fed will have to reinflate - Bush will come back from vacation - there will be an economic summit - and that’s just this week.
I bought Sun pm and chickened out last night, made 1.4% but it’s heading south now. When you go from HK to Europe time zones…you wonder if everyone is bothering to check that or not. It’s all right there for anyone to see.
A residential tower in DC? I thought they have some pretty strict height requirements there. I believe the height limit is some percentage of the height of the Capitol dome.
Buildings in DC cant be higher than the little statue on top of the capitol dome. Which is why eveyonr builds across the river in alexandria.
Ben,
I’m a little cornfused.. how…with Global Warming going on and all…rain is suddenly turning to hail?
“They” better have the booster shots ready tomorrow.
“We do not see an alternative and we don’t believe it is in anyone’s best interest if a run on Sentinel took place and we were in a forced liquidation mode,” the letter said.
“We are concerned that we cannot meet any significant redemption requests without selling securities at deep discounts to their fair value and therefore causing unnecessary losses to our clients.”
“Today it’s Canada, but other countries, including the U.S., could have similar issues.”
Late on Tuesday afternoon, a CFTC official who requested anonymity said U.S. futures exchanges were trying to get other futures companies to step in and ease Sentinel’s concerns about client redemptions.
“The (companies) who have money with Sentinel are members of the various exchanges. So the exchanges have an interest to make sure there is no spillover which will effect them,” the official said. “They’re not doing this purely for charity.”
Sentinel’s refusal to make redemptions appears to violate federal commodities laws, the official said. “If a client asks for money back … you’ve got to give it back.”
Sentinel warns of losses if clients panic
http://www.reuters.com/article/ousiv/idUSN1445919620070814?sp=true
“‘Some people will back away from buying altogether,’ said Pete Ogilvie, a Santa Cruz mortgage broker and president of the California Association of Mortgage Brokers. ‘For some people, that might be the wise thing to do if they’re just starting to shop. They might want to wait a little while when sanity will be restored.’”
********
Sanity in a “little while”? In Santa Cruz?
As far as affordability, good luck with that - try “years” on for size.
SuperWealthy Stock Market created by NASDAQ
http://www.washingtonpost.com/wp-dyn/content/article/2007/08/13/AR2007081301170.html
Seems to me that this is just making an existing market more efficient, and I have no problem with that.
ah.. Washington Post.. thought it was Pravda for a sec.
This is where China can buy.
“‘Some people will back away from buying altogether,’ said Pete Ogilvie, a Santa Cruz mortgage broker and president of the California Association of Mortgage Brokers”.
What buyers do these guys think will be able to be purchasing in the future? With the easy money, anyone who wanted a house, bought one. (Except those who knew better) So as this BK / forclosure market unravels who’s going to qualify with all the BK on their Cr reports? The wait for the return to normal is going to take alot longer.
there’s another element besides credit.. price. How many can afford a $90,000 home?
In order for the economy to continue sucking air, prices must eventually fall to the level of affordability, regardless of how tight credit is.
http://tinyurl.com/2z6mmg
Change in FICO Scoring System Could Affect Mortgage Loan Availability
Aug 13, 2007 — Fair Isaac Corp. will be making major changes to the FICO scoring system. Those who are in the know say that the overhaul is a very big deal, and is likely to result in plummeting credit scores.
FICO Facts
The scheduled changes to the FICO system will affect 60 million consumers (30 percent of the credit report population).
The FICO overhaul is most likely to impact the scores of young adults, women, and individuals trying to re-establish credit by piggybacking off another’s card.
Out of the 50 top mortgage lenders in the U.S., 40 use FICO scores to determine loan eligibility and interest rates.
Fair Isaac is changing the system in lieu of complaints about abuses from the lending industry.
Why the Change?
The change Fair Isaac will be making to the model is largely a result of complaints from the lending industry and trade groups like the National Association of Mortgage Brokers (NAMB ) who say that authorized users are undermining the system.
“The FICO overhaul is most likely to impact the scores of young adults, women, and individuals trying to re-establish credit by piggybacking off another’s card”
It’s about time. Now if lenders would just stop trusting FICO as an and all be all single point of failure and start requiring income documentation, down payments, impounds, …oh wait, we’re already there.
Got eligible buyers?
http://tinyurl.com/2lul48
Mortgage Industry Spends $210 Million to Woo Congress
In an effort to determine why mortgage foreclosure rates are so high, advocacy group Common Cause recently completed a study, and in turn a shocking report. According to the group’s findings, a large portion of the blame may lie with the mortgage industry, which spent a total of $210 million on lobbying and campaign contributions in an effort to deter new lending laws.
Deja vu all over again. The airlines had spent something around 42M year-to-date before 9-11 to deter any security measures that kept planes on the ground. They only make money in the air. But if you were a distributor, i.e. put bodies on their planes at a dramatically lower cost than their own res operations, Congress didn’t even vote for extended unemployment in time for to get a check before Christmas. Nice. While UA got loan guarantees.
More news coming out about Sentinel - . Regulators (CFTC) said the firm never made … request.
” Sentinel Management Group Inc., the Illinois-based cash- management firm that oversees $1.6 billion, froze client withdrawals after saying that credit-market turmoil made it impossible to trade.
Sentinel, based in the Chicago suburb of Northbrook, said it contacted the Commodity Futures Trading Commission for approval to halt redemptions “until we can honor them in an orderly fashion,” according to an Aug. 13 client letter posted on TheStreet.com Web site. Regulators said the firm never made such a request.
CME Group Inc., the world’s largest futures exchange, said Sentinel told the CFTC the firm would stop accepting redemptions.
Eric Bloom, Sentinel’s president and chief executive officer, didn’t return phone calls seeking comment.
this was supposed to be posted under Hwy50’s - sorry
addtl news:
“The European Central Bank said it will offer cash to banks for a fourth trading day, extending efforts by the Federal Reserve and other central banks to avert a crisis of confidence.”
Asia is getting whacked.
Emerging markets are looking vulnerable. Crazy overvalued housing in California triggering debacle world wide.
Ahhhh. The smell of overextended (can we say debt extended) banks. Geez, like no one saw this debt bubble coming on full steam and world wide!
Bankrate.com graph of 20% down 30 year fixed rate loans shows jumbo rates still going up (national average past 7%, last night E*Trade Bank quoted me 8% with a point )…
Just a wacky prediction. I think the DOW jumps 200-300 points tomorrow.
Why?
Because the CNBC guys talked about how the Yahoo lady bought a ton of Yahoo. How Eddie Lampert and Warren Buffet bought more stocks. How all the rich people were buying now.
I guess that means it must be good to jump in? What people forget is that they probably bought earlier this week and are just announcing it. When the people start jumping in, these guys will start getting out.
Volatility is what these hedge funds and Investment Banks need to make money.
My opinion (not really worth much) is:
Stocks bounce around a while (3, 6, 9 months) before they really get whacked…due to consumer spending tightening finally hitting the numbers. Downward from there, and there they stay until we as consumers get all of this “spend more than you make” business out of our system. As I said, I could be wrong, I’m just Joe average index fund investor…I have no idea how the “global economy” (non-US consumers, etc.) will impact the outcome.
Another not Einsteinian investor. However, if you look at the last month you can see a downward trend. The market goes down, bounces up, then down again. I use the CNN money chart and click on the 10-day or 1-month composite.
Again, I am no genius. However, my point, other than on my head, is that even with a bounce tomorrow, the trend has been downward. Even if the market recovers 200-300 points, I fully expect it to lose all of that and more by week’s end. People are getting scared. Also, keep this in mind. SInce it went slightly over 14K, the market has lost a sliver under 1K or roughly 7%, which leads to my second point. Trees do not grow into outer space. Infinite growth using debt is impossible.
Expect the market to continue its slide. Many are gonna lose everything, not just homes. Cash or cash flow will be very important for several years. All these fancy pants 20 somethings out of college and in WS have never seen the storm that is brewing.
Once again, can we say DEPRESSION!
Totally. 2 weeks tops.
I agree the first phase down is the loss of irrational gains made recently also driven by continued losses. But the ATOMIC BOMB is later probably even January as the real landslide of foreclosures become obvious from ARM resets and we have a weak Christmas. Plus I’m betting oil will be high.
Right now the pigs ( These are not even bulls) are whining because of the loss of bubble gains. Wait till the real economy starts tanking. Then we will see who is really swimming naked.
Forget about the 1990’s the only thing close is the Florida 1920’s crash that proceeded the Great Depression. Remember we also have the Asian Canadian Australian European housing bubbles popping. How is that going to effect the US Economy ?
So we are looking at the very beginning of the end.
Now this is not the end. It is not even the beginning of the end. But it is, perhaps, the end of the beginning.
Sir Winston Churchill
Volatility is cossting them moneys, they rely on no volatility.
LOL, These are reports that had to be filed for stock purchased prior to June 30, 2007.
That would make a heck of a lot more sense. So, 14k was their signal to sell - gee whoould’ve thunk?
It looks so gamed it makes me sick to my stomach to pull up the candles and EMAs.
TMA and LEND are way up after hours.
“Not time for panic, but for medicine”
The rich people may be buying up a storm right now, but they weren’t the ones working the sales floor down at the local loan originating facility.
Underwriting guidelines were so god-awful it makes me wonder how any loans actually sold on the secondary market. Oh yeah, because home prices were appreciating so it didn’t matter.
Trust me, things will get WORSE before they get better. I would sell your stocks and buy them back for 25% less in a month.
Asian stocks drop sharply.
Japanese, Australian indexes movie lower in wake of Dow’s triple-digit dup in U.S. overnight, renewed global credit-market concerns after warning from Switzerland’s largest bank.
http://www.marketwatch.com/
“Most acknowledge that much of the capital’s housing boom, and much of the nation’s as well, was a product of rampant investor speculation and loosened lending standards. Fraud and predatory lending also played roles in moving people into houses they couldn’t afford.”
Well now, we did not hear California Ass. Realtors complaining about
frauds, speculators, or liar loans during the boom year.
They were all in it together, bankers, realtors, brokers, appraisers, earning big fees while enabling this mess.
Good thing is we American got the money from the suckers French, Brits, German, Australian, Chinese ….
What would happen if China stopped buying our bonds and demanded/sold all their currnet holds? Armagedon?
China has the tiger by the tail as much as the US does. If China pushes US into recession/depression, where does China sell its exports?
i suppose it’s possible China might cut off it’s nose to spite it’s face because they are upset about something.
If they sell, the price of whatever they sell falls, making that thing more attractive, whereupon investors buy it and the price rises again.
Meanwhile China is sitting there with a ton of cash earning exactly zero.. some $$ Trillion or so is possible. And, it’s not gonna be easy to reinvest that much. What will they do with all that money?
Losses spark hedge fund redemption concerns.
SAN FRANCISCO (MarketWatch) — Recent losses suffered by some hedge funds have raised concern that managers in the $1.5 trillion industry could get big redemption requests from investors this week.
http://www.marketwatch.com/news/story/recent-losses-hedge-fund-industry/story.aspx?guid=%7B84C04FFD%2D1C25%2D4A6A%2D846C%2D1585042546A3%7D&dist=hplatest
I’d appreciate a little help. The housing crisis has come uncomfortably close to me (I’m fine with 30 yr fixed at 6.125%) Prices reached as high as $600K at the height, and have probably dropped 15%.
A Mexican family bought at the end of 04, for $500K. Very nice people, seemingly stable, although then a whole bunch of other people started showing up. I got the feeling that they were renting out in order to make ends meet.
A week ago–no lights on. I assumed they had all gone to the Motherland for some holiday. One junky car, with garbage and spare parts, left in front. Tonight, I shined a flashlight in and the house was bare. Nothing. Nada.
I mean: this is a stereotype. The Mexican family buys in, draws a lot of additional people in as renters, leaves a junk car in front, and then apparently vanishes during the night. And now the lawn looks crappy, and that POS car……
Any bets that they took an ARM in late 04, maybe IO, and it recently reset?
So: what I need help on: how do I find out the lender and more about the original sale? Sure, there’s a Deed of Trust on file with the County Recorder, but I’m sure the mortgage was resold. Is a new Deed of Trust recorded each time the mortgage is sold?
Just thinking off the top, but you could probably call the Trustee listed on file and determine the current status, no?
“Is a new Deed of Trust recorded each time the mortgage is sold”
I believe so…I think that’s part of the title chain when you do a title search. County recorder’s office.
I wish you all in CA best of luck since it sounds like the whole housing market will go south……is it just me or do we have more than just a 40% decline in housing all over America? I would think that if you live in an area where everyone moves out, the businesses all close, and there aren’t anymore public services, wouldn’t that make the price of housing crater down to maybe less than 5 digit figures???
Me thinks some parts of the Southwest might be looking like Buffalo, NY in a few years…
I’ll never understand this type of doom and gloom.
Who would want this?
Nikkei off 1.8%, Hang Seng off 2%, DJIA futures down -60 pts.
Looks like another day of fun on Wednesday.
Saw a cool sign on the median strip of Manhattan Beach Blvd both saturday and Sunday this past weekend. Cardboard, handwritten: “165,000$, Beach Front Condo in Costa Rica For Sale”. Sounds like a winner.
Amy Crews Cutts
You’ve gotta be kidding me.
County stops taking Countrywide checks
Posted by rroguski August 14, 2007 14:42PM
Categories: Breaking News
The Cuyahoga County Recorder’s Office has stopped taking checks from Countrywide Financial Corp., the nation’s largest mortgage lender, because of the California company’s warning last week of possible financial problems.
Countrywide traditionally would pay the county by check for mortgage filings it makes by mail, but the recorder’s office now will accept only money orders or certified checks for payment of those fees, said Thomas Roche, the recorder’s chief of staff.
Countrywide hasn’t bounced any checks, Roche said. The decision is purely preventative as scores of mortgage lenders have gone out of business or warned of financial woes.
“This is the one that has the major problem right now,” Roche said. “We’re just trying to protect the assets of the county.” The county has refused checks from a company one other time in recent years, he said, in the case of a title company that was going out of business.
Countrywide’s filing payments to the county are modest, perhaps amounting to hundreds of dollars a week. Other companies could be added to the “no checks” list if the county believes they may have trouble covering expenses.
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