Who Wants To Be The Greater Fool In California?
The Press Enterprise reports from California. “The shrinking mortgage market is also shattering the dreams of potential homebuyers and sellers and creating what Riverside real-estate consultant Steve Johnson called a housing industry ‘gridlock.’ There are too few mortgage options to fuel the resale market or to clear a glut of newly built housing developments, said Johnson.”
“Mary Baldwin moved from Riverside to take a new job in the Bay Area a year ago. Baldwin said buyers entered escrow in March to pay $410,000 for her Riverside house that had been standing vacant. But she said each time they met the qualifications for a mortgage, the rules had changed.”
“Baldwin, who bought a new house in the Bay Area, said she can’t afford to wait much longer to sell her Riverside property. ‘I have two mortgages, two gas bills, two water bills and two property taxes. On a salary of one person, it doesn’t cut it,’ she said.”
“Scott Chappell, Baldwin’s real-estate agent, said if she puts the house back on the market, she will probably have to cut the price by $50,000 because the market has continued to decline.”
“Dan Herrera, manager of the Riverside office of American Union Financial Corp., said in the past 45 days he has turned away 30 to 45 people about to lose their homes. He could not help them, he said, because the new financing he could offer would cost them more than their existing mortgages, which had spiked beyond their means.”
“‘A lot of people leave the office in tears,’ Herrera said. ‘It is sad. I don’t think people realize how tough it is. My advice is I would rather see them rent than destroy their family because they are trying so hard to make their mortgage payments.’”
The Union Democrat. “Even real estate agents, some of the best sales people around, aren’t trying to put a spin on the state of the home sales market in Tuolumne and Calaveras counties.”
“‘This is definitely the slowest I’ve seen it,’ said Coy Knapp, president of the Tuolumne County Association of Realtors.”
“In territory covered by the Tuolumne County Association of Realtors, 715 houses and mobile homes were on the market as of Thursday. The median listing price for the houses was $391,950.”
“In July, 31 homes sold at a median price of $363,000. In contrast, 43 home sales within the association area were recorded in July 2006 and 81 were recorded in July 2005.”
“Real estate agents say these figures emphasize that it’s currently a buyer’s market, as opposed to the market of five years ago, when there were so few homes on the market that buyer bidding wars and selling prices above the asking prices were common.”
“Fallout now hitting is in the form of foreclosures because of so-called sub-prime loans given to buyers who wouldn’t have qualified otherwise. The result is a spike in the number of homes back on the market and extra-cautious buyers.”
“‘Clearly, we see inventory at a higher level than we’ve ever seen before,’ said Jim Hildreth, a Sonora-based real estate agent who been the business for 31 years.”
“On one day alone last week, the Tuolumne County association recorded 18 price changes. Hildreth noted too that there were 61 price changes for all of last week. Also within that seven days, 43 new listings were put on the association MLS compared to 16 pieces of property sold in the same time frame.”
The Orange County Register. “Lenders foreclosed on just two Lake Forest homes in the spring of 2006. But this spring, the number jumped to 37, making the city’s 92630 ZIP code No. 1 in foreclosures in Orange County.”
“All but four of Orange County’s 84 ZIP codes had at least one foreclosure in the three months ending on June 30, with an average of 10 foreclosures per area, according to First American CoreLogic. A year before, 29 ZIP codes – more than one-third – were foreclosure-free, with an average of just over one foreclosure per area.”
“‘I have a property in every city,’ said Patrick Bartolic, a Real Estate agent in Newport Beach who specializes in selling properties repossessed by lenders. ‘Garden Grove, Anaheim and Santa Ana obviously have been hit hard,’ Bartolic said. ‘But I think every community is having difficulty.’”
“Because lenders are repossessing homes faster than they’re being sold, foreclosures could start dragging down home prices in the Inland Empire and other heavily affected areas later this year or sometime next year, said Christopher Cagan, First American’s director of research and analytics.”
“In 2005, 75 percent of the home loans in the census tract surrounding Camile Street were subprime. At least 40 to 50 percent of the home purchase mortgages were subprime loans in the six Santa Ana and Anaheim ZIP codes with high foreclosure rates.”
“Most of the buyers who ended up in foreclosure only owned their homes for about two years, buying at the peak of the market and hoping to refinance out of risky loans using price gains that never materialized, agents said.”
“Staci Treloggen of Prudential California Realty in Laguna Niguel noted that many who ended up in foreclosure used ‘their houses as credit cards.’ They drew on equity lines of credit, only to see values fall below what they owed as the market cooled.”
“In the 1990s when Treloggen worked in the San Fernando Valley, she saw people lose their homes because of the downturn in the aerospace industry or because they couldn’t afford repairs from the Northridge earthquake.”
“‘This time around, it’s like people couldn’t keep up with the Joneses,’ she said. ‘They fixed up their houses. Now they look very nice. They just couldn’t afford to keep them.’”
“We asked Richard Gollis, co-founder of real estate consultants Concord Group from Newport Beach, what he was hearing from his developer and financial clients.”
“Us: What’s your view on the current state of the O.C. new-home market? Richard: ‘Clearly the short-term market is weak, at best…The O.C. market for new homes is deflated to the core demand for sales. Today, as sales are at volumes under 50 percent of peak, we are seeing predominantly shelter transactions. We are starting to see recalibration in home prices, size and mix.’”
“Us: Any idea when this market malaise may end? Richard: ‘It’s more than malaise. It’s a serious correction compounded in last 10 days by credit contraction of global scale. If we were an isolated market area, the price/affordability/demand /product adjustment would require 18 months at the outside.’”
“‘As over 30 percent of our housing market (or more?) has been built by public homebuilders in the peak of the cycle, we are caught up in the national problems. There’s a pervasive though that ’smart money is on the sidelines.’ Who wants to be the greater fool? We could be in this scenario for 24 to 36 months.’”
The Wall Street Journal. “For the nation’s real-estate lenders, the other shoe may be about to drop: condominiums. Already plagued by rising home-loan defaults and foreclosures among overstretched consumers, major markets across the country, including parts of Florida, California and Washington, D.C., are seeing rising foreclosures and bankruptcies of entire condo projects.”
“The percentage of bank construction loans overall that are in default has risen to 2.3% in the second quarter of 2007 from 1.0% at the end of 2005.”
“‘Condos are a significant share of defaults and delinquencies going on,’ says Matthew Anderson of Foresight Analytics, an Oakland, Calif., research firm. His analysis shows condo lending ballooned to $31.3 billion in 2006 from $8.4 billion in 2003. These figures don’t include the large amounts flowing into condos from hedge funds and investment banks.”
“Downtown San Diego can expect 2,900 new units to arrive on the market in the next year, according to real-estate investment brokerage Marcus & Millichap. Hessam Nadji, a managing director at the Encino, Calif., firm, estimates it will take as long as 18 to 24 months for the most-saturated markets to buy up the glut of condo inventory, if the economy overall stays strong.”
“‘More of the iceberg is being revealed, but we haven’t seen it all yet,’ says Norman Radow, a real-estate investor who works with lenders to rescue distressed condo complexes.”
“Mary Baldwin moved from Riverside to take a new job in the Bay Area a year ago. Baldwin said buyers entered escrow in March to pay $410,000 for her Riverside house that had been standing vacant. But she said each time they met the qualifications for a mortgage, the rules had changed.”
“Scott Chappell, Baldwin’s real-estate agent, said if she puts the house back on the market, she will probably have to cut the price by $50,000 because the market has continued to decline.”
- Mary will soon have a new problem, Squatters.
During the downturn of 1990 the desert areas had huge problems with homesteaders moving in and changing the locks, turning on the utilities etc.
$50,000 / $410,000 = 12.2% — a pretty drastic haircut for a short five months’ time (March 2007 through August 2007).
That is what jumped out at me, too. If it keeps up, we will have the 50-60% corrections by 2009-10. This is all playing out as expected. The script was written, all we have to do is plug in the names of the Mary Baldwins.
While 50-60 percent real declines are needed to realign home prices with incomes in former bubble markets, you can expect the Fed liquidity pump to reduce nominal declines to maybe 30 percent (with maybe 20 to 30 percent inflation making up the difference). They will stay the course in the War on Savers to avoid the Bernanke bugaboo of unmitigated deflation.
Well, I’d sure like to know the plan for putting that 20-30% into the hands of the buyers? I don’t doubt that they can print the 30% but I’d like to know the mechanism for that printing to show up in the pockets of the buyers in order for the buyer ratio (3X gross income for instance) to work and housing to become affordable? With a recession, etc., I don’t see this happening. What am I missing?
I agree… Fed-stimulated inflation hasn’t really resulted in pay inflation so far, so this won’t make homes more affordable. If pay is going up by 3% or so annually, that is the figure to use in adjusting home prices for inflation. Then again, if we fall into a recession and see layoffs, etc… pay might actually decline nationally (on average).
We could also extend this analysis to look at pay rates in specific market segments (geographic and price).
Riverside and other IE/high desert areas will see these drops of $50,000 per $400,000 supposed home values for every home in the IE.
12.2% /$50,000 is just the first stage drop” :i expect values all over the IE to drop easily %40-%70 depending on distance from coast. High deserts such as vivtorville, adelanto, apple valley hesperia(Hysteria!), palmcaster will be smashed/sheared by 60-80%, and there will be a ton of opportunites for squatters/meth lab operators in the remote desert wastes.
Already i have seen ton’s of virtually empty shopping centers/malls all over riverside/ie-the consumer meltdown is in full effect in the IE. The sheer no of foreclosures/repos/unsold new developments will only get worse with the disapprance of subprime, O down, toxic loans.
Note: There appears to be a re-opening of the credit spigot by banks and CC’s as far my own situation after a one-month lull. Of course i am one of the very very few in CA with low debt ratios and ample home equity: the average Joe6pac probably has very hi debt and has vitually no savings and has completely wiped out their home equity.
Those places will be unliveable with $10 per gallon gas and electricity prices in the stratosphere.
Ashes to ashes… what was a barren desert will be a barren desert, and people will understand why those areas were never populated to begin with. Only the cheap oil/energy bubble created this degeneration.
who owns the majority of commercial retail space? Is it REITs, or other companies? With “virtually empty” comment, retailers will have a hard time paying rent. Where do we first see 30, 60, 90 days late on rent
Another iceberg, it seems to me, is the one where we only see the people who have defaulted on their payments. There must be a much larger number of people who are making their payments each month, at great personal cost, and may be putting money toward their equity that, in the future, may be for nought.
That money being spent on bigger mortgage payments are no longer being spent on the rest of the economy. It’s bad either way
Jerry, I was trying to explain this simple point to someone today whom I accosted in a cafe in Seattle. He labled me a pessimist for believing housing prices would come down. I explained that I’m an optimist, believing that prices must come down in order for an economy to function efficiently. I asked him what happens to Seattle if people start taking fewer vacations and buying less software because they put too much of their money in housing? What happens to Boeing and Microsoft? He got my point. (And his buddy really took interest in what I was saying, as he was considering buying right now.)
Same argument I’ve had with my coastal friends for years. They bought expensive houses in bubble cities, while I bought cheap in flyover land. They work 14 hour days and/or multiple jobs, have no play money and little free time while I go on several vacations a year, hardly work and have a huge savings account. Of course, they’re all convinced that everybody wants to live in their particular elite enclave, and that makes all the sacrifice worth it. It’s like a mental disorder.
Well, I hope you smacked him around right good with your prety white mug, splashing your Frappucino around liberally.
Coffee is precious, but a good point is a good point, and no effort should ever be shirked to fully express a good point.
I believe the iceberg analogy is correct. But this is like an antartic iceberg that floats just above the bottom of the ocean. Well… they’re in a lake, and the lake level is dropping. More ice exposed to the sun… and icebergs are hitting bottom.
We’re still in fear. Pretty soon it will be desperation.
Panic and capitulation are a long way away. In a rational society, we’d get their faster. But sanity is not the normal in mobs… So be patient and relax.
Top article in my blog is my August update of what I think the timescale will be. Everything takes time. We were all frustrated how long this took to go up; I certainly was wrong in my assumptions. But its probably that I’m not the only one who took the time to get a better understanding of the future.
J6P? Party on.
Got popcorn?
Neil
I’ve been using my MIL as an indication of where J6P is with the housing bubble. My in-laws put a lot of retirement money into high tech/Enron type stocks. When those tanked they used their remaining money to buy no less than 6 houses (with mortgages) for rental purposes in Colorado Springs.
Right now she is selling off two of the less profitable houses. (They had actually a 1/2 decent formula for buying properties and these two didn’t fit the criteria.) She’s worried but not panicked yet. She’s convinced that all it will take is a Fed rate cut to turn things around.
Unfortunately, I realized there’s a good chance that if they don’t sell soon (and it may already be too late) that the 20% down they invested in the houses (they took out commercial loans) will be wiped out by a slight movement downward. If they hang on for 20 or so years, they might be okay. I’m not sure she’d hang on for that long, though.
Sure sounds like they rolled craps again. On a lighter note, you will have an easy time finding that perfect Christmas gift for them! Although you had better get your order in for those “I’m a Dolt” vanity plates before they get snatched up by a realtor.
FWIW, Japan had mortgage rates in the vicinity of 2% and yet housing as fallen steadily for a decade and a half.
House prices in Tokyo are still 60% down from their peak in 1990.
capitulation just 90 days away…here’s why? The credit crunch occurred around Aug 15. Buyer’s can’t qualify for No Doc loans with 100% down, mortgages are being reset with higher payments, leaving desperate owners to live off their equity lines and their Visa and AMEX. When they can no longer make their credit card payments and get cut off from any more creidt
IT’s OVER, IT’s ALL OVER!!!! Nov 15 will be the start of capitulation day.
Yes it’s true there is an iceberg just under the surface. There are folks who are just making the payments until the reset..hell it’s cheaper than moving right now. We know of three couples in No. San Diego Co who are just waiting until the reset happens in Oct/Nov/Dec. respectively. Then the plan is not to pay the higher payment and save the money to move and rent something. Stay until they kick you out. The mindset is, what the hell else are we gonna do? Can’t sell the house for what we owe……….
I have just been working with property management to find a decent rental. They want a lot more than stated income to rent.
THAT is a point I would like to see addressed: those people who are killing themselves to make their increasing payments, and at what cost? I bet they are not the entitlement assh*ats, either. I bet they are pinching every single last penny, and not bitching to the media at all, because they are too proud, and also probly working too hard to pause and whine.
Let’s hear what is happening from THEM; not these whining would-be ‘investors’/flippers who got caught and have no pride and don’t mind sniffling and gumming after a hand-out from the rest of us, yawping and cringing and whimpering away.
Some positive signs in parts of LA:
There was a realtor at the dinner I attended last night. She’s low end, caters to the immigrant crowd. Says prices are down in Panorama City from around 500K to 400K. That’s a big haircut for someone earning $100 a day. On the other hand, 400K still seems pretty steep for a small house in one of the lousier parts of the Valley. Others were talking about how “nothing is moving anymore”.
A friend of mine in Studio City has had her house on the market for 3 months now, has done one price reduction (1.9 down to 1.8), the house is just sitting.
A family member had an open house the past few Sundays, no one showed up (asking 1.2 in Sherman Oaks for a 1970s 2 story tract home). He’s starting to sweat because he already bought a new house in Newport Beach, where he wants to move.
A friend who didn’t believe in the bubble idea until about a month ago reports there are 12 houses for sale on Fulton Avenue, between Magnolia and Burbank, about a mile or so stretch.
My high flying contractor’s buddy, a MX immigrant who was bragging as recently as 6 months ago about how he owned 7 houses in S. Central, is now flat broke and trying to sell his latest house he built there for over 800K. No offers so far. He can’t even afford to pay his experienced construction workers anymore, so he’s slumming using the recent migrant workers from the Home Depot parking lot who will give him 12 hours for 60 bucks.
Santa Monica/Venice/WLA still holding up pretty well, although there are a few 2-plexes and 3-plexes for sale for months now. Not selling, but prices not dropping.
Over and out.
I have no sympathy for sheeple who bought without selling. Optimism is great, but must be tempered by reality. What’s Plan B? Were they just so sure that the home would sell that there was no possibility that the house wouldn’t sell?
We are in the great unknown: Sellers are betting on yesterday’s news, and buyers are gambling on tomorrows. The REIC is just going along for the ride.
and also no symphathy for stupid lenders who finance new homes for borrowers who haven’t sold their old home.
We owned a home in ‘94 in VA. We bought in CA on a great deal that would not ally for a sales contingency. We had rented the VA house (nice positive cash flow). In ‘94 the lender wanted documentation and credit reports on the renters, a 2 year lease, and extra money in the bank to cover potential non-rented time.
My oh my…how times have changed. I can own two overpriced homes on a single salary?
If they had to foreclose on 1, which one would it be?
A lot of people have no patience, so they feel they _must_ buy immediately when they move area. Personally, when I have moved to a location I don’t know well, I have preferred to rent short-term so that I can get to know areas better, see what commutes are like etc. Plus it’s always seemed like the financially prudent thing to do, whatever the state of the market. If the market is hot, your house will sell quickly anyway; if the market is cold then you really probably don’t want to be buying immediately anyway, as this person is finding out to her cost.
I NEVER understood this stupid action. Unless you are also Buying a business or the owner of one, and need to be as close to it as possible and this house is about the best you can get.
But it seems very common today with the FB’s.
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A lot of people have no patience, so they feel they _must_ buy immediately when they move to a new area
Of course, these people have tons of stuff that must cost a lot to move twice. All part of the same mentality.
Every house will sell, it’s just a matter of how much it will sell for. There are times when owning two homes makes sense. Years ago in Seattle my wife and I and our new baby came across a house that was perfect for us. Out of the Seattle school district, big yard, a block from Lake Washington, swim club membership available, lots of room, etc. The house had been sitting on the market, as the owners started too high. We went in with a low balled like you wouldn’t believe, had a great agent who talked them into our offer (I refused to raise it) and we owned two houses. We had 15% down in the bank, and low payments on the current house. We put it on the market immediately and sold it in two weeks, probably for too little. But the point was, if it hadn’t sold we could have rented for profit. With what happened in Seattle not too much later, wish we had kept it. When it sold we refinanced and paid down the mortgage on our new house by another $100,000. Win-win for us, but we thought it through and it made sense.
“Every house will sell, it’s just a matter of how much it will sell for…”
Don’t be so sure. My friends in the loan industry are teling me people who WANT to buy at a particular price simply can’t get loans anymore. Unless prices drop drastically or easy money returns, most houses in a growing inventory environment will just languish.
The next scandal will be creative financing deals. Seller carry back 2nds on anything over $417k. The lack of Jumbos will add pressure on the sellers to get real. Remember the HBB saying, I don’t remember who, that ‘If you’re not ashamed to make the offer (low ball) then your offer is too high’.
I think that’s what Steve H meant –drop the price low enough and you WILL find a buyer, cash on the barrel if need be. Thing is, reality and true panic have yet to set in.
I hear tell nothing has closed in Manhatten Beach in three weeks. A little flurry at the begining of the month. Then nothing.
I doubt its “nothing,” there are cash buyers there; will be no matter how bad the market is. Don’t worry, I’m a bear…
But how bad is it. Is nothing closing “nothing for certain areas?” “Nothing for certain realtors” (Ok, that one is obvious…), “Nothing for an agency?” (Awww… Gee that won’t do anything for commercial rents as they close the doors…)
I’m so glad the MSM is emphasizing we’re past the worst. That will make it so their assurances are so effective in 2008… For even the sheeple will stop believing the talking heads.
August is a traditionally strong sales month (here in the South bay, June or August compete to be the best sales month of the year); how will they spin September and October when the inventory peaks?
Me? I’m predicting a peak inventory later than the norm. Bwaa haa ha!
Got popcorn?
Neil
I don’t hear the MSM saying we are past the worst. I hear them holding their breaths and waiting for the next shoe to drop. I hear them being very cautious. I see the reporters being judicious while the columnists and op-ed are flipflopping.
It’s mass confusion hidden behind the mask of bravado and ‘professionalism.’
‘Manhatten Beach’
- SB / Manhattan Beach
I work in the beach area and the custom cabinet business is still very strong, but it is not the spec homes that giving us the most business. Mostly seasoned homeowners remodeling or owners building a personal home. I am working on a home on Paseo la Cresta in Palos Verdes Estates that must be a 3-4 million dollar remodel of an existing home.
A lot of people seem to be remodelling because they can’t afford to move, they’re stuck where they are so spending 100K fixing it up sounds like a relative bargain.
“lot of people seem to be remodelling because they can’t afford to move, they’re stuck where they are so spending 100K fixing it up sounds like a relative bargain. ”
This is also true of the auto repair business: during down recessionary times the auto parts repair business prospers as folks are forced into hanging onto their vehicles longer and there is a guaranteed steady stream of repairs jobs for dealers/mechanics/shops even during bad times. Folks may crab. pinch pennies and stop going out to expensibve restuarants and movies during a recession but they absolutey need to keep their worn-out jalopies running. This is probaly the second biggest onetime expenditure after medical bills, and forces comsumers to max out thir cc,s
More so since auto repair shops generally screw the consumer into doing unnecessary unneeded work and the average joe6 consumer has little auto knowledge to make informed auto repair decisions or to do the work themselves and save a bundle.
I know a few people doing radical remodels as the normal process of upgrading is broken. Its far cheaper to add space than to move. Not to mention prop 13 here in California.
Got popcorn?
Neil
thing about prop 13 is you can get reassessed if you do certain things, like room additions.. change the value of the property.
And they won’t mess around with pro-rating per square foot added, or that sort of thing. They hit you between the eyes as if the property were sold.
wikipedia has a page on it.
great report! Thanks for sharing your observations!
Hey LAIG, we were out today looking (I know it’s Saturday but the desperate ones hang the flags out today, right?!). I saw a new set of townhomes on Colby between Olympic and Santa Monica Boulevard. They were nice with all the modern amenities but it’s kind of a crap neighborhood. AND they are asking about $900K. For two- and three-bedroom condos!!
Here’s the kicker though: We walked into the model unit (the only one open) and the master bedroom had floor to ceiling two-story windows which allowed the neighbors a few feet away to stare directly into the bedroom! I told the realtor that it was a great place for exhibitionists. (She agreed.)
I’m betting that condos get hammered harder than SFHs. That was what happened in the last downturn here, and it makes sense to me that history will at least rhyme in this case. But it’s harder to time the market on the west side, because the bottoms seem to be shorter than other areas. Of course, that depends on how bad things get this time.
The southern part of Westwood is a bit run down due to historically lower prices, redevelopment starting later, and proximity to the race course streets such as Olympic. Also, that area has some of the worst traffic on the west side. I would not buy there unless I got a screaming bargain on something that I could rent out at positive cash flow from day one. Also, that area will see a lot of teardowns and construction in the next upturn, whenever that happens, so it will not be a pleasant place to live for many years.
If you want to buy a condo on the west side, stay as far away from the major east/west streets as possible.
Central Valley Guy, I don’t think you should settle for a condo or townhome, unless that’s what you really want. There are free standing houses now in Mar Vista for under 900K, even under 800K. Small, but at least it’s your own, no shared walls or HOA fees.
Colby’s okay, it’s conveniently located, but on the downside really crowded and hard to find parking. But, I’d say, try to hold out for a house. Good luck!
$900K, thats $450K in non-bubble prices, right? LOL!
You’re right, we saw a few on the MLS but still, I don’t think we’d get approved for a $700K loan right now, even with stellar credit. Um, not that I want to! My plan is to go tomorrow to every open house and ask right away when the sellers will be lowering the price to $417. I don’t care how laughable it is, I have no shame. I intend to instill it in the realtors though.
Oh and I will NOT take my shoes off and wear their little plastic booties, thank you! I’m a buyer, I hold the cards now!
You can already find prices getting close to that in Reseda and Valley Glen, but those areas are less desirable. For WLA, I think that price will be tough to find at least for this year, but then you already know that if you’ve been househunting here…
Oh yeah! I lived in the crowded apartment complexes of Brentwood when I was in my 20s. The things I saw through the windows. Every night was a show.
“I saw a new set of townhomes on Colby between Olympic and Santa Monica Boulevard. They were nice with all the modern amenities but it’s kind of a crap neighborhood. AND they are asking about $900K. For two- and three-bedroom condos!!”
TO CVG and LAinvestorG: I was recently in the general area of olympic and federal, close to the above condos. I also saw a 3-5 unit townhome developent with a common driveway just north of olympic on federal ave. These are hi-end and were priced to sell at around a mil apiece. That area od the westside whch is just west of the 405 and between olympic and SM blvd is seeing qute a few teardowns, remodels, conversions od older homes into either: 1.apts 2,condos 3.larger mega mcmansion 4.townhomes. This part of federal ave features a row of crummy old decayed bungaloo units across from the new townhomes.
Also close to this area I saw an older apt unit being completely demolished. you could still see the insides of the units as the contractors had just stripped off the outer walls, and the entire 2-story apt was tilted and it’s outer walls strippied, sort of like those apts which collapsed during the northridge quake.
The developers and homebuilders in the westside are still in full=tilt teardown/building mode as the entire Scal RE edifice is slowly-or rapidly-crumbling.
” Says prices are down in Panorama City from around 500K to 400K. That’s a big haircut for someone earning $100 a day. On the other hand, 400K still seems pretty steep for a small house in one of the lousier parts of the valley:
La investor girl:
I had a priceless opportunity to be out in the Pacoima/City of Sanfernando area where the 118 intersects the 5. This is the Far northeast ass-end section of the San fernando valley. Was cruising thru hoods along the 118 between the 5 and the 210 and you will not believe the shattered rundown decrepit homes and hoods in the aera. These mostly sfh hoods are simply trashed out illegal alien squat zones, complete with sounds of roosters and gargage strewn all over the streets, similar to LA Zip 90011 and parts of Pomona/la puente/large parts of Scentral LA, and wide swathes of the NE SaN Fernando valley.
The exact zip is 91331 pacoima and 91340 San fernando. As recenty as early 2007 i commented upon the astounding amt of fraudulent sales in pacoima for homes selling at $500,000-600,000, which is exactly the area i was just describing. This is a microcosm of what has been going on all over LA bombed-out zones(Multiply Pacoima section i was describing by 200-300+ and you get an idea of the vast amt of fraudulent overappraisals; mort fraud which has overinflated home prices all over the LA marginal hood areas.
Compared to what i saw in Pacoima, Panorama city is the magic kingdom.
That’s one way to make Panorama City look beautiful, drive there after going to Pacoima, LOL. That’s probably the ONLY way, too.
“Herrera said when one of her clients started house hunting in February, he pre-qualified for financing with nothing down and a rate fixed for 50 years in the mid 7 percent range, even though he had a recent bankruptcy and could not easily document his income because he is a self-employed carpenter.”
This is one of Herrera crying client?
Testing
““Baldwin, who bought a new house in the Bay Area, said she can’t afford to wait much longer to sell her Riverside property. ‘I have two mortgages, two gas bills, two water bills and two property taxes. On a salary of one person, it doesn’t cut it,’ she said.”
Well that was a pretty retarded situation to get yourself into. You’ve just ruined yourself financially, Mary. Get used to that concept and stop praying for a miracle.
Get used to that concept and stop praying for a miracle.
We read about this again and again. How many people are maxing out the credit cards trying to stay afloat right now? Not just idiots with two or more homes…
As I’ve predicted before, Christmas 2007 is going to suck. Try to buy the neices and nephews toys while paying down 17% interest cards… not going to happen.
Got popcorn?
Neil
Rumors about banks dropping credit card limits to current balances… THIS is what will cause mayhem with this crowd.
That would destroy the economy…..
i think it’ll destroy a lot of fake, personal excuses for an “economy” but strengthen the general economy.
Credit costs a lot of money.. money wasted. I just bought some gasoline.. paid 5 cents extra per gallon to use a credit card.. I bought gasoline and I also bought some pure “convenience”.
Without credit, all that non-wasted money will then be available to purchase actual stuff.
I think the the CC companies are paying very close attention to changes in credit and payments. They have known all along that this thing was going to blow up (hence the ‘revised’ bankruptcy laws). When the pattern changes you are going to get the boom lowered on you.
Keep up with payments, and you be OK.
This is really going to suck for the folks who are overextended. No HELOC and no CC to fall back on. It will make the whole BK or jingle mail thing look pretty good.
i dunno for sure if they actually foresaw anything.. easy to see it that way in hindsight.
I remember i liked the idea of stricter bankruptcy laws at the time.. i know a couple of people who took advantage of the old system.
Then there was that other (unconnected?) change a year or two back.. remember when minimum CC payments went up all at once? Something like 1% of outstanding balance was the newly prescribed minimum..
The banks are calling me up asking if I want my credit line increased.
‘I have two mortgages, two gas bills, two water bills and two property taxes. On a salary of one person, it doesn’t cut it,’ she said.”
And it’s not your fault at all — you were *forced* at gunpoint to buy another house in the Bay Area when your previous one was still sitting on the market for quite a while.
Your crummy financial habits do not elicit sympathy.
Well, I would like to see downtown SD condo sales crater and prices drop drastically. This guy tracks downtown condo sales and prices: http://92101.blogspot.com/ - apparently prices are still high and some condos are still selling, the buying mindset will have to be beaten out of these people.
@lainvestorgirl
I live in Encino. We rent. We pay $1,240 for a HUGE apt. 1,350 sq.ft. We rented a small house in the same zip before but in 2005 (the peak of the market) owner sold the house for a fortune and we decided to rent.
I am paying very close attention to the market in my part of town.
On White Oak and Burbank (1 block north of Burbank) they’ve built a townhouse complex by the post office. It’s actually a nice building and the units are really nice BUT…. only 1,200 sq.t. they want around $600,000 + for each unit. Guess what, with the exception of two units, it’s been sitting empty since February. I drive by there every week. Amazing.
On the south side of Ventura Blvd…. tons of houses for sale there too. No major price drops, some reduced signs are up but guess what, nothing is selling. All of the houses have been on the market for months now.
There is an occasional millionaire mansion which is being built but other than that, nothing is selling.
A friend of mine livs in Santa Monica, close to Montana, you know the area… he says there is a little more inventory but nothing is selling either.
The following may sound irrelevant but I went to Ikea yesterday… they are now charging 5 cents for plastic shopping bags.
The 5c Ikea bags are a good idea. It’s too discourage waste. There’s way too much packaging in the US.
Use corrugated boxes and paper bags!! 100% recyclable!!
Don’t buy cat litter in plastic buckets buy it in corrugated boxes!!
I sell recyclable packaging for a living! and I feel good about it.
“Use corrugated boxes and paper bags!! 100% recyclable!!”
I always ask for brown paper bags, not plastic. I have a 100 uses for those bags from garbage liners to clothing disposal to newspaper racks,old clothes and boot-shoe storage, camping stuff holders, discarded junk mail holders, yard- poop containers,ect. Plastic bags are also handy in limited roles but not as versatle as paper grocery bags.
Hey now–I make packaging and I say one can never have too much of it
Pretty soon everyone will be charging you for a bag. I’m going to make my own shopping bags.
They’ve been doing that in Ireland for a while now - they had a huge problem with plastic bag litter, so decided to charge people per bag at shops, supermarkets etc.
And, apparently, its working - its amazing how much you can cram into one plastic shopping bag.
You should see those plastic bags, thick and sturdy, can use may times, the pictures and ads on bags quit before the bags do.
If you’ve got Trader Joe’s in your area, they sell canvas bags for $3 a pop. They also sell other styles of reusable bags at varying price points, but I like the canvas. You can fill them up with heavy stuff like cans or juice and they don’t tear, and they fit over your shoulder too.
Our local grocery store, Pathmark, sells their reusable logo bags for only .99 cents. And it’s huge. I only need two for my family of four.
Markets in the Netherlands charge for bags at least since 1993. Also in Europe you pay for ketchup at McDs. In SF you pay for parking at a hotel. Pay for things by end users, which is best way to allocate scarce resources.
ACCREDITED UPDATE - I work in the building in Orange housing one of 5 retail service centers of ACCREDITED. I stopped by their floor Thursday, they have the whole floor, and 1 of 2 doors was shut, parking lot was 1/3 empty outside compared to normally full. Friday, both doors shut. SHUTTERED. Beautiful sight! Almost makes up for SNAPPED UP we had to put up with all these years.
Got diversified assets?
this is mainly due to environmental concerns. in pilot programs in europe they reduced plastic bag use by something like 80-90% by charging a nominal fee for them. i think it’s a great idea. plastic bags are killing us. they can’t really be broken down by mother nature, so every one of the trillions of bags out there is going to be around a lot longer than we are.
Plastic bags recycle just fine.
The plastic is photsensitive (like most plastics) and breaks down in nature after 10 years.
While I agree that conservation is a good idea you should at least be tangentialy connected to reality.
As someone who has collected thousands of plastic bags and other trash out of the Santa Ana River and Newport, Huntington, and Corona Del Mar beaches, I have to agree that a connection to reality is important. That reality is that we are grossly polluting our waterways, oceans, and wild areas. If we polluted our own lawns, parks, offices, streets, etc with the amount of garbage that flows down our rivers and creeks into our oceans and wetlands, then there’d be outrage amongst the people, people crying for blood from their police and politicians. But few people live near or on the water, so there’s little outrage to be had. The dead sea lions, pelicans, otters, cormorants, and countless other species don’t vote, and have no rights, so there is no outrage. As for myself, a longtime river resident and beach-goer, as well as wildlife enthusiast, I am disgusted.
Talk about disgusting, and sort of heart breaking because of the short sighted stupidity, my brother took a contract data base job on Kwajalein Atoll, (the missile test islands) some years ago. The only recreation was scuba diving. The native population had adopted some of our habits, thanks to a generous US government. He said the most disgusting thing was diving on a reef and seeing all the diaper fish. Yeah, plastic disposable baby diapers that just got tossed into the ocean, totally blocking the reefs. He also told me everyone had pickup trucks, with no place to drive to. Could go on, but you get the picture. Time we got a bit smarter. Wouldn’t hurt if there were fewer of us, too.
Didn’t mean it was heart breaking that he took the job, although that’s another story, but rather what he ran into there was heartbraking, in a way.
You want to hear about disgusting, do a google search for “north pacific gyre” or “pacific vortex” - it’s a region of the Pacific where a lot of ocean currents meet, leading to a region the size of TEXAS that is covered with floating trash. It’s also informally called The Great Pacific Garbage Patch. I had no idea such a thing existed until the LA Times did a series of articles about it a couple of years ago.
Worse, it’s only one of FIVE such patches worldwide.
The one off Ecuador apparently collects sharks
it’s a region of the Pacific where a lot of ocean currents meet, leading to a region the size of TEXAS that is covered with floating trash
Who says they’re not making any more land?
Only a tiny fraction of plastic bags produced are recycled, well under ten percent. As to breaking down in nature, where did you dig that up? Read about the Pacific Gyre, where a hundred mile wide swirling mass of plastic chruns away in the Pacific Ocean where sea mammals and birds choke on plastic. And when plastic does break down, it does dreadful things to the ecosystem. It’s not biodegradable. There’s also strong evidence that it has strong mimetic qualities to female hormones, which does all kinds of bad things to sea creatures and us.
now charging 5 cents for plastic shopping bags
i believe san francisco passed a 13 (16?) cent tax per plastic bag law a couple years ago… all retail stores.
There was a proposed 17 cent tax a couple of years ago, but it was shelved after an agreement was reached in which grocery stores promised to reduce the number of bags they issued.
I guess this met with limited success, so in March of this year the city passed an outright ban on petroleum-based (nonbiodegradable) plastic bags, applicable to large grocery stores starting later this year, and large pharmacy chains starting next year.
“Even real estate agents, some of the best sales people around, aren’t trying to put a spin on the state of the home sales market in Tuolumne and Calaveras counties.”
Are real estate agents really good sales people?! Some are, I suppose. Most don’t exhibit much grasp of economic fundamentals or knowledge of the industry they’re a part of - not to mention intelligence. Their wording in MLS ads either assumes that we’re all stupid sheep - or they truly have a limited vocabulary. Charmer! Granite Countertops! Entertain guests! Does anyone with half a brain really need such exclamations? Houses pretty much sell themselves, and with the right tools, anybody can find a property. Its an incredible racket.
Yep. I’m thinking commissions will be squeezed. Now, Realtors ™ will hold on. Not what I want… but those cockroaches will survive.
But anyone who thinks salespeople know squat about a market are deluding themselves. They know last week’s sales. That is it.
Got popcorn?
Neil
Yeah, Neil! Now that you mention it I have noticed that at open houses, realtors like to hang out in the kitchen, just like cockroaches do.
Coincidence?…..I dunno.
Don’t worry, as buyers and sellers realize things are falling apart, the internet will be more appealing.
Heck, my company now has a “buyers assist” program that only uses realtors ™ who do a 1/2 percent kickback. Bwaaa haa ha!
Got popcorn?
Neil
that’s so funny. I think the same thing every day when I’m reading these insane ads. I just got back from the Pulte Denby Square Park (whatever the hell it’s called) in West Roseville. They were having this huge “Release” party or something. It was advertised in the Sacramento Bee New Homes section. They had this awesome live 80’s cover band playing in direct sunlight in between a set of townhomes, and a set of townhome-ish detached homes. In front of an empty dirt lot. It was like Mad Max meets Pottery Barn. Everybody was running around, gushing over a bunch of $300,000 homes in the middle of freaking nowhere.
The incentives? Well, a surround sound system, a security system, granite counter tops, hardwood floors, washer & dryer and pretty much all of the appliances I would assume (in for a penny in for a pound no?). Plus you get to live in a place called “The Briley” or “The Nevers” or any of their other ridiculously named floor plans.
This is the best part. I went up to one of the Pulte reps (who was sweating through his shirt from standing in the sun) and asked him about any HOA’s and/or Mello-Roos. And guess what? Of course there are! $180 for the townhomes and $120 for the detached. Mello-Roos is $1600 annually. Sweet, where do I sign.
As we’re pulling away from madmax villa park, I said to my wife “who in their right minds would buy right now if they didn’t have to?” Can anyone tell me?
Stupid people, that’s who.
“People are screwed.”
-Big V
“Everybody was running around, gushing over a bunch of $300,000 homes in the middle of freaking nowhere. ”
The Placer County Wastewater Treatment Plant is about a mile away .
That isn’t in the brochures .
Most [realtors] don’t exhibit much grasp of economic fundamentals or knowledge of the industry they’re a part of - not to mention intelligence.
Most industries and companies do not reward intelligence — they reward conformity.
“It is difficult to make a man understand something when his paycheck depends on him not understanding it”.
I pity the Greater Fool
“You gonna lose a deal over $35? Thats chump change! My lunch cost $35! I pity the fool, thug, or soul who tries to take over the world.”
Mr. T
“I got no time for the jibba-jabba.”
Mr T
It is passing strange to me, how much true wisdom Mr. T encompasses.
“‘A lot of people leave the office in tears,’
must suck when just a few months ago a lot of these people thought they were rich and now they figure out they run an expensive alligator farm.
So let’s do the math. A few million fb’s. Mostly sub-prime but also the usual good credit borrowers who go bust for one reason or another every year. In fairness to them it’s sometimes not their fault (massive medical bills for instance). Then we have a building boom which is still going on. Then there’s an 80% + chance of a recession in the next 6 to 12 months. That 30% chance of a recession yada-yadad by Washington hacks like Bernanke is b.s. 80% + is a given. That prediction is as bad as his, “We don’t see sub-prime problems spreading”, prediction. (lol) Then we have inflation. That government number of a 2% inflation rate when factoring in food and energy (unless you don’t drive, don’t use electricity and don’t eat) quoted by Washington hacks like Bernanke is b.s. It’s probably closer to 7%. Then we have higher medical insurance even if you can afford it! Throw in gas prices. (Oooooh….gas prices are dropping. Oh, yeah. Back to what year? 2006.) A $2.50 gallon is about as low as we can go IF that. Then we have the moron, or should I say that INCREDIBLE moron in the White House, pouring money into illegal wars (but his pals in the defence industry who keep their kids out of the war are getting rich.) Then we have a currency which is fast approaching the credibility of the Rawanda currency which is cheaper than toilet paper.
Summary of the math? Not good. Prospects for housing. Really, really, not good. Really, really lousy. If you are a fb, don’t ruin your health with worry by trying to fight to keep that sh*tbox you over-paid for. WALK AWAY FAST. Especially if you are young. You will be in good company.
Pretty depressing.
I agree with much of the above, except for the advice to walk away from one’s debt obligations. Yes, it may be the economically rational thing to do, but so is robbing a bank, if you can get away with it. Both are extremely unethical.
Yes, but so is handing out NINJAs like candy to people you know are going to default. As long as the pain stays with the fraud perpetrators/players and doesn’t get spread to the truly “innocent” (people like us who refused to participate), I’m ok with it. Of course, with all the Cramer/Bill Gross bailout whining and hand-wringing, as wellas proposals by our brilliant leaders to have Fannie/Freddie up their limits and start buying Alt-A, that may not turn out to be the case.
Not sure why you think that walking away from a loan that you are paying interest on is unethical. The bank should have priced in the risk of that happening. Is it unethical for a bank to give you a loan and increase the payment beyound your capacity to repay? I think ethics went out the window when loan agents and brokers and the rest of the chain of command stopped doing due diligence and gave loans to unqualified buyers just to get a commission.
i have to agree in probably 99% of the cases..
Prior to prices falling, both borrower and lender thought everything was A-OK… no income? No problem.. nods and winks and sign the contracts, fill in the blanks later, here’s the keys to your dream home, and we’ll all make money..
At that point, ethics was officially declared a non-issue… there is no
honorethics among thieves.Maybe it’s also ethical to rob the bank at gunpoint, since the risk is already factored in.
What if the bank begs you to rob them? ie sign you up for a loan they know you damn well won’t be able to repay.
I’d say we are already in a recession. The question is how likely is a depression - I would say 15% chance.
You’re optimistic.
Mike: There is a 100% chance that we are alread in a recession. How do I know? Politicians are starting to debate whether or not there will be one.
“Today, as sales are at volumes under 50 percent of peak, we are seeing predominantly shelter transactions.”
Does anybody read this the same way I do? Is this guy insulted or flabbergasted that people are purchasing homes ONLY for the fact that they want to LIVE in them? Is he on another planet where houses are still going up 25% a year and flippers are still kings?
Some a-holes will never, ever get it.
oh.. that’s what the term meant.. i didn’t get it for some reason.. “shelter” transactions, as in a place to live.
hard to say what his attitude is .. maybe he’s the guy in the firm who handles investment properties only.. it’s not unusual to have agents who specialize.
It never made much sense to buy single units (whether detached houses or condos) as investments. The economics just don’t work out that well. The situation of the last few years, in which a bunch of hobbyists decided to try it anyway, was anomalous, so to return to “core” or “shelter” transactions is to return to historical normalcy.
Reminds me of a quote from about a year ago from some REIC assclown calling people who actually bought to *live* in the house as “owner-occupiers”, as though this type of distinction was necessary.
The big TURDS said the RE prices will NEVER drop on a nationwide bases?
Oops! it will, this year.
From the NYT: Drop Foreseen in Median Price of U.S. Homes
The median price of American homes is expected to fall this year for the first time since federal housing agencies began keeping statistics in 1950.
It does, however, contradict the widely held notion that there is no such thing as a nationwide housing slump. A 2004 report jointly written by the top economists at five organizations — the industry groups for real estate agents, home builders and community bankers, as well as Fannie Mae and Freddie Mac, the large government-sponsored backers of home mortgages — was typical. It said that “there is little possibility of a widespread national decline since there is no national housing market.”
Top government officials were more circumspect but still doubted that the prices would decline nationally. Alan Greenspan, the former Fed chairman, said the housing market was not susceptible to bubbles, in part because every local market is different.
In 2005, Ben S. Bernanke, then an adviser to President Bush and now the Fed chairman, said “strong fundamentals” were the main force behind the rise in prices. “We’ve never had a decline in housing prices on a nationwide basis,” he added.
The reversal is particularly striking because many government officials and housing-industry executives had said that a nationwide decline would never happen, even though prices had fallen in some coastal areas as recently as the early 1990s.
http://www.nytimes.com/2007/08/26/business/26housing.html?hp
Hats off the NYT for dredging up this old and ridiculous quotes and rubbing it in their faces! That’s the sort of thing we do all the time here on this blog, but you don’t see nearly enough of it in the mainstream press, where dumb predictions are usually allowed to be quietly forgotten.
By the way, check out the interactive “year-over-year growth in home prices” charts linked from that article. The statements in the article itself notwithstanding, the chart clearly shows a nationwide year-over-year decline in the nominal median national house price in 1991, and if you click on “inflation-adjusted rate”, the real price declined nationwide in from 1990 all the way through 1994.
Why didn’t the NYT produce these charts a few years ago, when they could have been used to directly rebut the nonsense that passed for truth in those days?
‘In 2005, Ben S. Bernanke, then an adviser to President Bush and now the Fed chairman, said “strong fundamentals” were the main force behind the rise in prices. “We’ve never had a decline in housing prices on a nationwide basis,” he added.’
Ben, meet Mr. Black Swan. Mr. Black Swan, meet Ben.
We’ve never given $500k+ to anyone who can sign their name on the loan papers, either.
What’s even more absurd about this quote is that housing prices obviously declined nationwide during the Great Depression, which Bernanke is supposedly an expert on.
Sacramento: High end housing update for Placer County (bubblicious suburb east of Sac along I-80)
About 350 homes are for sale at asking prices above $1,000,000. Maybe 15-20 are selling in each month, in the height of the season. There is an 18 month supply.
Here is the interesting part: There are very few price reductions. Most of the home sellers have 100% financing in place, so the seller can not lower the price!! Many are going into default now, with about 20 NODs filed in the last few weeks. Countrywide and Deutsche both foreclosed on homes with $1,000,000 loans over a year ago. They both listed at above $1,000,000 and kept dropping prices every few weeks. Sales were closed in the last 30 days on both houses. Prices: $740,000 and $850,000 (both homes were about 5500sf for $135-140/sf). The 2005 acquisition prices were $960,000 & $1,105,000 respectively.
There are still more FB’s with listings next door to both of these houses asking $1,100,000 to $1,700,000. Upwards of $300/sf. It is pathetic. Many of the homes have never been lived in since they were built in 2005. Now with the jumbo loan rates pushing up, they may go vacant until 2009. What a waste of time, money and effort.
All that shabby work by illegal aliens for nothing. Maybe we can pay them to knock those houses down.
When the truth is found to be lies
And all the joy within you dies
Don’t you want somebody to loan
Don’t you need somebody to loan
Wouldn’t you love somebody to loan
You better find somebody to loan
When the bubble’s over, baby it’s dead
Yes, and your mind, your mind is so full of dread
Realtor, you’d better find somebody to loan…
http://www.youtube.com/watch?v=5Jj3wZVc7nw
Thanks! I’ve been waiting for that one. I’ve been listening a lot to the Jefferson Airplane lately. The first two lines are as appropriate today as they were in 1967.
“No band, anywhere, had two singers as good as Grace Slick and Marty Balin.” - Bill Thompson, manager of Jefferson Airplane
Grace Slick has a counterpart in the late great Eva Cassidy…
Check her out~
Aladin, how about some lyrics that ex-mortgage brokers may now be singing as they drown their sorrows. The song? “Those were the days (my friend).”
Go ask Leslie:
The Video and The Lyrics
I prefer the Jim Carey / Cable Guy version of “Want Somebody to Love”. The soundtrack has the full song in better quality than the movie had.
I’m reading HBB for the Lad Songs.
Thats a Rap!
Hey guys……………….if you’ve got a tin-foil hat and a few minutes to spare, go to this site and read the whole thread……..pages 1-12.
http://www.tickerforum.org/cgi-ticker/akcs-www?post=4669
I’ve been trolling that thread the past couple days…looks like someone is betting hard on a crash in the third week of Sept….someone on the inside definitely knows it’s all about to hit the fan.
Yeah, so is TX Chick and so are we.
I read the whole thing. I’m confused and tired. Is Genesis the same person as TX Chick? I think it’s CFC doing it, either to borrow their $2 billion, or to recover from their own demise, or both. I’m going to bed now.
“People are screwed.”
-Big V
Guy at work with is planning on retiring in 2009 and had a house in Redmond, WA. Apparently his wife begged him to buy a place on the remotest part of Vashon Island, which is totally reliant on the ferry to get to the mainland, to spend their retirement in.
They moved into the place on Vashon last month, however the Redmond place still hasn’t sold … and his commute has gone from 1/2 hour each way to almost 2 hours each way. I don’t think the retirement is going to happen as planned.
I used to visit friends in two houses on Vashon. One was about as far from Seattle as you could get. Your associate may be sitting on the deck I helped build.
It made a nice 20 minute drive from the ferry. If I had to choose a 4 hour daily commute it would sure be Redmond from Vashon rather than to LA from somewhere in the CA desert.
I knew a Boeing manager who commuted from his Whidbey island mansion to Kent in a red Corvette at about 4 hours daily. Quality of life decisions have a very wide range between people.
I commute to my job (3 times a month) in Bakersfield from Pismo Beach. Of course I carry my 4wt sage 71/2′ for a little nymphing on the Kern River. You have to look out for those bikini hatches however.
I knew a Boeing manager who commuted from his Whidbey island mansion to Kent in a red Corvette at about 4 hours daily. Quality of life decisions have a very wide range between people.
He probably worked at Everett when he bought it.
Another reason not to buy — the instabilty of corporate jobs.
Wow. From “real estate genius” to “the greater fool” in California. In what, a year? Bring it on.
California’s RE Golden Parachute ride is becoming a Total Malfunction !
Few people have a reserve.
Nobody is sure where the bottom is but they all KNOW in the back of their minds that the Sudden Stop will be a real KILLER
More popcorn…and be prepared to MOVE QUICKLY !
be prepared to MOVE QUICKLY !
What, you think house prices are going to start rising immediately again once they hit bottom? I beg to differ.
Last time around in the 1990s, prices were flat for several years before they started rising, and when they did rising it was arguably due to the dot-com bringing the economy back to life (though obviously in an unsustainable way). They may well stay flat for many years once they hit bottom this time. I don’t think we will have to move quickly at all.
I’m with you. I expect an accelerating period of decline before the bottoming out, followed by a protracted “dust settling” period when prices reach a permanently low plateau — analogous to the aftermath of an avalanche.
many people go no idea. Everything about real estate is slow..
Which gets me thinking..
Take some really fast stuff.. like stocks and bonds.. and add a bunch of really slow stuff, like houses.. mix it up in a blender (puree setting), and whadaya get? A real headache.
click, click, click
I keep clicking on my McMansion for sale on ZipRealty but it won’t sell.
When I clicked sell on my pets.com stock it sold right away even though I lost a fortune, at least it sold.
Why won’t my McMansion sell when I click on it? Oh, the humanity!
Has anyone noticed any price movement on RE in Valencia/Castaic area? I saw where median prices are down 10% July 06-07, but looking at list prices and zillow closing prices, I am not noticing any downward movement.
I saw some houses in Canyon Country that were short sales for $100k less than value. Also, I have seen MANY houses in 91355 & 91354 which are selling for less than the purchase price. I have 3 houses which are forclosures and 5 houses for sale in my small gated neighborhood in 91355. I RENT and laugh at these idiots! The people who have the 5 houses for sale are still asking wishing prices! One is upside down! A local realtor told me to wait 2 years before buying in Santa Clarita valley.
test
Until we meet again…
http://www.youtube.com/watch?v=jCvz8y_DUSY
See you at the Burn, Lad lah!
Drop by Wolf + Lamb if you have the time - 245 and Grassland.
Well this is all rather amuzing. I grew up in Bakersfield, in 2001 I saw 80,000-120,000 go up and up. at the same time my grandmother bought over in arryo grande for about three times that much. Part of my family`s work is rentals. Its a hard job taking alot of work and the name of the game is cash flow. We knew two years ago that you can cash flow homes at the current bank loans. The though of all these failed flippers trying to be land lords is really laughble.
My cousin flipped about three homes and unlike that stupid filp that house show. The correct recipe is not one part needless upgrade two parts inflated appraisal, plus toxic morage done up be crooked morgage companies, then sold to forgeiners.
The correct recipe is that first the home must be under the current market. It must be a bargin, their can be several causes. Such as the owners needing to sell quickly, maybe a bank foclosure,
Hell I even watch a family sell their grandfathers home for pennys on the dollars cause his great granddaughter being the well fair queen that she was managed to get her name on the will, so they sold it low to lower her take.
But the most common reason for lower than market value is damage, so instead of doing crappy upgrades you fix whats broken. If you do it your self you save on labor. and you can then sell for market vaule.
They flipped three houses then decided the market got too tight. they were working with a realator who wanted to keep going so he forged my uncles name and my uncle had to go to court, the realtor lost his license in california and has since moved to texis to try his hand there. All this was in 2005.
wonder when the next season of flip the house will be fallowed by Forclose that house.
COMPARING THE 1988 HOUSING BUBBLE TO THE 2005 HOUSING BUBBLE…
1985-1986: Housing is booming, inventory is low.
1987: Housing still booming, prices increasing, inventories low.
1988: People start to question the boom. Realtors assure us the boom will continue. Houses aren’t like stocks afterall.
1989: Prices are very expensive; affordability an issue. Sales slow and prices drop. Mention of risky loan types.
1990: Prices take a serious plunge. One article claims that housing booms are a bad thing and we should hope prices stay low. Increasing mortgage rates are blamed for the bust. The word “recession” is mentioned. Gloom and doom.
1991: A “dead cat bounce”? Some folks wondering if the bust has bottomed out or not. Sales are abysmal (e.g., -42%). Other parts of the country showing some signs of recovery.
1992: No one is buying; housing is an investment that no one will touch. Desperate political efforts being made to encourage house buying. Rock bottom prices and lower mortgage rates encourage some purchasing. The year ends with some buying. Another “dead cat bounce”? It’s not clear.
1993: It’s definitely a buyer’s market. Some people are saddened by the fact that current prices are 50% of what they were in the 1980’s. The housing bust in Southern California is clearly negatively impacting the California economy and the national economy at large. Sellers are desperate to sell (and some people taking extreme measures like putting huge “for sale” signs on their lawns for passing planes to see). Folks who waited out the boom to buy at the bottom are being handsomely rewarded for their patience. Proof-positive of the contrarian investing style — be greedy when everyone is fearful and fearful when everyone is greedy. The “slump” may be ending.
1994: Housing begins its comeback. People who had the intelligence to wait for the bottom are buying now at great values. Even rising mortgage rates are not shaking the recovery.
1995: Some parts of the Southland are recovering others are not. People with “negative equity” are in despair.
1996: A tentative recovery is still in the making.
1997: Finally, housing has recovered.
Sound familiar? The only difference with the 2005 bubble is it’s going to a lot nastier! I took 9 years for 1997 home prices to climb back up to the 1988 highs. We are looking at declining home prices for an absolute minimum of 9 years. That is if history is our teacher.
Right now, we are into about 2 years of declines. Prices will decline until at least 2014. But I wonder how $7.5 trillion in comsumer debt will factor into this housing dorrection?
“Never before have so many Americans gone so deeply into debt so willingly . . . In the odd logic of the real estate bubble, debt has come to equal wealth. “And not only wealth but freedom–an even stranger paradox. After all, debt throughout most of history has been little more than a slight variation on slavery. Debtors were medieval peons or Indians bonded to Spanish plantations or the sharecropping children of slaves in the postbellum South. Few Americans today would volunteer for such an arrangement, and therefore would-be lords and barons have been forced to develop more sophisticated enticements.”
Michael Hudson, “The New Road to Serfdom,”