Expect Further Weakness In California
The California realtors report on July sales. “Home sales decreased 22.7 percent in July in California compared with the same period a year ago, while the median price of an existing home increased 3.2 percent, CAR reported today. ‘The decline in sales we experienced in July continues to be driven by both tighter underwriting standards since the start of the year and the adverse psychological impact of news and information regarding increases in foreclosures and the subprime situation,’ said C.A.R. President Colleen Badagliacco.”
“‘Although the median price posted an increase statewide, there is a disparity between the lower-priced or entry-level markets where prices generally are soft at best and sales have declined sharply, and some higher priced markets that continue to experience price appreciation along with somewhat smaller decreases in sales,’ Badagliacco said.”
“‘With credit drying up in recent weeks, we expect further weakness in sales over the next few months,’ said C.A.R. Chief Economist Leslie Appleton-Young.”
“C.A.R.’s Unsold Inventory Index for existing, single-family detached homes in July 2007 was 10.7 months, compared with 7.3 months (revised) for the same period a year ago. In a separate report covering more localized statistics generated by C.A.R. and DataQuick, 29.6 percent, or 110 out of 371 cities and communities, showed an increase in their respective median home prices from a year ago.”
The Daily News. “Home sales were down 12.4 percent in the Los Angeles area in July, compared with the same period a year ago, while the median home price rose 1.9 percent, it was announced today. ”
“July home sales in the area fell 11.9 percent from the previous month, according to the Los Angeles-based CAR.”
From Reuters. “Bhaviesh and Varsha Shah bought their dream home in a new development east of Los Angeles two years ago. Today the view from their porch is a street pocked with boarded windows and dead lawns, homes now repossessed after buyers failed to make mounting mortgage payments.”
“The Shahs live on a street with 10 large homes of 3,000 square feet or more, four of them now in foreclosure. Although they are surviving the mortgage meltdown, their dream development, like many in this arid corner of Southern California known as the Inland Empire, is an early casualty.”
“Survivors of Towne Square find themselves not only with unsightly, empty properties next door, but also with home values plummeting amid the fire sales on foreclosed homes. Selling and moving to a better neighborhood is not much of an option because many owe more on their mortgage than they would get for the sale — what the industry calls ‘upside down.’”
“Joe and Mary Gordon bought an approximately 4,000 square-foot home on the street behind the Shahs for $741,000, thinking it would be their last home after moving from Orange County, just west of the Inland Empire.”
“Two homes on the Gordon’s street are going through foreclosure and one of them, comparable in size to theirs, is being offered by the bank for $550,000. ‘We have no recourse. We’ll have to live here eight to ten years before we get our equity back,’ said Joe.”
“Bob Taylor, president of the development’s homeowners association, said his family thought about moving…they didn’t think they would break even after the market turned south.”
“Despite the bad days spent in Towne Square, Bob Taylor said his family of six is here to stay and even optimistic that nice, responsible neighbors will eventually move into the foreclosed homes. ‘After what we’ve been through for the past two years — short of Charlie Manson moving in — it can’t be any worse,’ he said.”
The Modesto Bee. “Northern San Joaquin Valley home buyers these days have a staggering selection of homes in all sizes, prices and styles. Modesto newcomer Kevin Schinmann called the choices overwhelming: ‘It was like going to a restaurant with a menu that listed 14 pages of unbelievable food.’”
“A recent search of Realtor.com showed 2,273 single-family homes; 197 condos and town homes; and 131 mobile homes for sale in Modesto. More than 200 new homes are completed and waiting for buyers in about 77 subdivisions across Stanislaus County.”
“‘We ended up buying the very first house we had looked at online when we were back in Chicago,’ Schinmann said. But between the time he initially spotted that Bayview Drive house and the day he bought it, he said, ‘the price dropped $130,000.’”
“Prices for new and used homes have been dropping as inventory has soared. Median sales prices are down more than 13 percent since last summer and sales volume has plunged about 45 percent.”
“‘It used to be if someone called and wanted a home for under $300,000, it was hard to help them,’ agent Randy Feldhaus recalled. Now about 1,000 Modesto homes are priced at or below $300,000.”
“‘You’ve got to give buyers what they require to get them to even consider your houses,’ explained Joe Anfuso, who runs Florsheim Homes. So not only are prices coming down, but homes also are being built with more amenities. ‘You’re getting more house for your money,’ he said.”
“That’s a big switch from a few years ago when new home buyers had to camp out in line for the chance to buy a house — any house — from a builder. Back in 2003, for example, about 75 people lined up for the grand opening of Florsheim’s Rose Classics in Turlock.”
From CNN Money. “Being the CEO of one of the nation’s largest real estate firms didn’t stop Tom Kunz from becoming one of those homeowners who’s been hurt by the downturn in the housing market.”
“But not surprisingly, given his position as CEO of Century 21, Kunz thinks the investment he made in his former home in Tuscan Ranch, Calif., was still a good one, even if the value has tumbled about 15 percent over the last three years.”
“Kunz noted that he bought the home for $340,000 in 1998. When he moved to New Jersey from California in 2004 to become CEO of the firm, he had a $1.3 million cash offer for his home. But he turned it down and decided to rent the house instead.”
“This month a former neighbor who has an identical home in the same subdivision sold the house for $1.1 million, Kunz said.”
“‘I could sit here and say, ‘Oh I lost $200,000.’ But I’ve still made about a $700,000 profit,’ he said in the interview late last week about the problems facing the housing market.”
The San Francisco Chronicle. “Two brothers, Antonio and Pedro Sanchez, and Antonio’s wife, Isabel, bought a three-bedroom home in the East Oakland flatlands five years ago. They saved up a 3 percent down payments.”
“The house is now worth $425,000, $100,000 more than they owe on the mortgage. Now the Sanchezes want to (trade) up to a bigger house near their relatives in Woodland (Yolo County), in a better neighborhood. But the chances that they can sell their home, which has been on the market for four weeks, are slim.”
“‘Luckily, they have equity,’ said their Realtor, Mary Dresser. ‘But if they can’t sell, they don’t really have any equity, or at least they can’t gain access to their equity.’”
“Their house is in a real-estate dead zone, in terms of both location and price. Pricewise, entry-level buyers have dropped out of the market because they can’t get financing. ‘Everything below MacArthur (Boulevard) died when the subprime fiasco hit,’ Dresser said. ‘I could see (this house) plain not selling. The buyer pool has dried up.’”
“Even cutting the price wouldn’t help, Dresser said, unless it were a ‘fire-sale’ slashing of $100,000. ‘Then they’d have no house and no money,’ she said.”
“Dresser showed a printout of all the current listings within a half-mile radius. There are 18 homes for sale, and one in escrow. Since May, only two homes in the neighborhood have sold. By contrast, there have been 65 sales since May of Oakland homes priced above $1 million, she said.”
“Statistics across the Bay Area and California have borne out that dichotomy: More-expensive homes are still selling briskly, while affordable homes are in a stagnant market. That has caused the median prices to rise because the mix of homes sold has shifted to the higher end.”
“‘It’s frustrating,’ said Antonio Sanchez. Sanchez said he was robbed at gunpoint on the street last year. When the children want to play outside, the family drives to a park 20 minutes away where they feel safer.”
“The family, which refinanced one time, has an adjustable-rate mortgage on the home. It was $1,800 a month for two years, but three months ago it spiked to $2,800. They can manage that, but it’s a stretch. In nine more months, it is scheduled to rise again.”
“‘This is a postcard-perfect sweet family and a postcard-perfect sweet little house,’ Dresser said. ‘They are regular, hardworking people not able to achieve their goals.’”
Here is the Car/DQ table.
“Statistics across the Bay Area and California have borne out that dichotomy: More-expensive homes are still selling briskly, while affordable homes are in a stagnant market. That has caused the median prices to rise because the mix of homes sold has shifted to the higher end.”
This dichotomy is going to be hit. wait until oct/2007 and we will see the higher end house sale shrivels to a dribble.
“More-expensive homes are still selling briskly, while affordable homes are in a stagnant market.”
Just wait until Jumbo-the-elephant-loan’s hibernation starts to impact the upper end.
“Jumbo-the-elephant-loan’s hibernation”
Graph jumbo fixed vs. conforming fixed…jumbos are (nationally) *still* rising in rates:
http://www.bankrate.com/brm/graphs/graph_trend.asp?tf=360&ct=Line&prods=1,325&gs=275,250&st=zz&c3d=False&web=brm&cc=1&prodtype=M&bgcolor=&topgap=&bottomgap=&rightgap=&leftgap=&seriescolor=
“Graph jumbo fixed vs. conforming fixed”
Pick the 5-year view. Till this year, Jumbo and conforming moved in lockstep. With the subprime collapse, jumbo and conforming rates have diverged. Jumbo suddenly looks to be at severe risk of going extinct, at least for CA buyers.
I stopped at an open house on a golfcource in El Macero this weekend. Of the 4 condos in a tiny cluster that were all on the market, the best buy was a 3/1 (for the same or less then the other 2/1s listed). The reason it was so “reasonable” was because it fell out of escrow less then 10 days before close. I’m not sure about all the details but I was told that the buyers had the last contingency removed from the contract and because they now can’t get financing, they’ve lost their 35k earnest money.
Here is the lowdown on the Bankrate mortgage lending rate data. If you pick the 6 mo view of 30-yr fixed jumbo versus 30-yr fixed FHA, you will see that a 60bps spread has blasted a canyon-width gap between jumbo and FHA lending rates since 7/31/07.
This helps explain the politically popular idea of raising the conforming loan limits and letting the FHA start making zero-downpayment loans and FNM/FRE securitizing loans above $417,000. A guarantee which takes the default risk away from bankers and cedes it to the taxpayer could eliminate the problem of that ginormous jumbo lending rate risk premium overnight.
but getting financing is a contingency. right down to the rate ceiling a buyer is willing to accept. or at least a smart cookie would bake that into the agreement
and because they now can’t get financing, they’ve lost their 35k earnest money.
I doubt they were lose the 35K, when I sold my house I was told it was almost impossible to get the deposit or earnest money from the buyer, no matter what happened.
Yeah, I don’t buy that either. I’ve bought two houses and a couple cars, and my offer is always subject to financing at X%. Period, and exactly for this reason.
$35k earnest money? I put up $2k a few times on $200k houses.
That’s what I thought too. I asked the listing agent why anyone would sign a contract without a finance contingency and he said that just before they close, they strip out the last contingency or title won’t close. I smelled BS too. But apparently the sellers do need to close fast since they’ve already sold the furniture and can’t back out of moving now.
Yeah, I’ve never understood why people put so much earnest money on the table.
Our recent sale had a financing clause that expired if the buyers failed to obtain financing after a certain date. The idea was that the buyers are forced to get their financing in order in some reasonable time before close.
If they had financing and then the lender experienced a banrupcy or whatever after the expiration date I was pretty sure that the buyer walked away with the deposit anyway. At any rate, if it’s an escrow I’m sure the buyers aren’t going to just sign way $35K.
RE: AG and The prof’s comments on Jumbo divergence.
Would you wish to buy a $1B MBS (not a CDO) that had a 10% default rate 24 months down the road? The answer is Yes, but the terms are a lot different than 24 months ago. I want to be compensated for my risk. I would be better off buying junk S&P bonds from US companies that have been in business for 25 years that yield 12%.
Jumbo MBS are asset based risk. I want compensation for that risk.
“I want to be compensated for my risk.”
The sudden desire of MBS investors for risk compensation endogenously imposes a risk penalty on holders of existing MBS through the falling knife effect on the value of collateral. The sudden lurch upwards in the Jumbo risk premium translates into a San Andreas magnitude lurch to the left of the home purchase demand curve, with an implied concurrent lurch downwards in the forward price of homes for purchase. This is only one facet of the unraveling of the MBS food chain which is currently underway.
desmo,
My house fell out of escrow due to an unstable marriage. They signed everything and waived contingency after inspection was good, etc, but then declined to buy it.
In escrow was about $10K. I “settled” and got $7K. But you’re right, they do have to sign off on releasing the escrow and you’d probably have to go to court in the case where they wouldn’t release it. I decided I’d get $7K tomorrow or $10K in a year, most likely minus court costs, etc.
That is NOT true about the more expensive homes selling briskly, I was just in Sherman Oaks and the mcmansions are NOT moving, the open houses are vacant, totally pathetic. I can’t believe prices won’t eventually be affected.
It will be interesting to watch the combined effects of all those “unexpected” negative price changes and the credit crunch on future CA purchase demand.
Check out DQNEWs.com
for deep declines in the bay area.
Worth saying 2 or 3 homes are showing offer below asking..
“Home sales decreased 22.7 percent in July in California compared with the same period a year ago, while the median price of an existing home increased 3.2 percent, CAR reported today. ‘The decline in sales we experienced in July continues to be driven by both tighter underwriting standards since the start of the year and the adverse psychological impact of news and information regarding increases in foreclosures and the subprime situation,’ said C.A.R. President Colleen Badagliacco.”
But not impacted by the credit crunch — YET.
check this one out.
‘After what we’ve been through for the past two years — short of Charlie Manson moving in — it can’t be any worse,’ he said.”
Oh yes it can. just wait for the mexican gang from east LA to move in. Then you would wish you had Charlie Manson.
Like always there are optimists and pessimists:
Pessimists: It’s so bad and we’re so deep in s*** it cannot get any worst ever!!!
Optimists: Yes it can! Yes it can!
I always thought that Mr. Charlie Manson kept up his property.
True, but you don’t want to know what he uses for fertilizer.
That special 36-24-36 blend?
” ’short of Charlie Manson moving in — it can’t be any worse,’ he said.”
“It could be worse. It could be raining.” -Young Frankenstien
“the worst is not
so long as we can say, ‘This is the worst’ “
‘It was like going to a restaurant with a menu that listed 14 pages of unbelievable food.’”
No menu I know of offers 14 pages of Fake Stucco Boxes of unbelievably similar features.
Read this ‘article’ in the Bee. Pure, unadulterated RE puff piece. Exploding inventory was played as a bonus for buyers - just column after column of happy buyers and heldful builders.
Then e-mail the author and ask him how he feels about possibly rah-rahing some sheeple to their doom…
jnsbranti@modbee.com
“Northern San Joaquin Valley home buyers these days have a staggering selection of homes in all sizes, prices and styles. Modesto newcomer Kevin Schinmann called the choices overwhelming: ‘It was like going to a restaurant with a menu that listed 14 pages of unbelievable food.’”
I’ve never been to Modesto. Is it that awesome?
LOL hardly
“The house is now worth $425,000, $100,000 more than they owe on the mortgage. Now the Sanchezes want to (trade) up to a bigger house near their relatives in Woodland (Yolo County), in a better neighborhood. But the chances that they can sell their home, which has been on the market for four weeks, are slim.”
The good news: The house is now worth $425,000.
The bad news: The chance the house will sell for $425,000 is slim to none.
That makes no since at all. If you can’t sell the house at 425K, but you can at 325K, then the house is only worth that much. WTF! I hate these idiots that say how much a how is worth when they can’t sell it for that much.
Sense not since
Yeah, figured you were spinning angry when you wrote that.
“The house is now worth $425,000, $100,000 more than they owe on the mortgage…But the chances that they can sell their home, which has been on the market for four weeks, are slim.”
So, dear reporter, how can it be “worth” $425,000 if no one is willing to purchase it at that price?
Are there any reporters out there who want to comment on some of your brethren’s lack of analytical skills?
Looks like we had roughly the same thought only 13 seconds apart…
Easy mistake. The reporter just reversed the numbers that’s all.
How can a house “worth” 425K not be able to sell for 425K?
Easy: It’s the real estate uncertainty principle.
Damn you, Heisenberg!
Good one!
Enhhh….they haven’t seen anything yet just wait for the blood bath in OC. It will cripple banks and crush dreams, once people see the depth of greed and douchbaggery in this little county with the high prices.
oohhhh! ‘Douchbaggery’!! That is one fine creation.
I’m waiting for the OC to burn! Ohhhhh how I pray every night for this to happen. I have a co-worker who bought a house in 2003 for 370K and now says it worth 800K. Keeps telling how prices will NEVER go done. I want to slap the SH!T out of him.
And you know he/she probably doesn’t actually make $130K to afford the thing at $370 to begin with…
I’m in OC, Huntington Beach, to be exact. Home sales are very slow, even in extremely desirable areas. I remember when I told a little league acquaintance that we were moving into her neighborhood a few years ago, she said, “There aren’t any homes for sale around here!” But since we were just renting, we were able to afford to live where the schools were very good and crime was rare. My home, according to the landlord, was worth nearly $1 million at that time, (April 2004). A house down the street with the exact floor plan and square footage in comparable condition has been on the market for nearly four months and has come down $40K in price from $885K. If it’s all still original, as it appears, it needs new windows, HVAC, plumbing, electrical and exterior paint, for starters. I don’t know what other joys await on the inside. Any takers?
I’m waiting for the OC to burn! Ohhhhh how I pray every night for this to happen. I have a co-worker who bought a house in 2003 for 370K and now says it worth 800K. Keeps telling me how prices will NEVER go done. I want to slap the SH!T out of him.
Serious? “Dear GOD, please burn the OC, please send your angles down to stick pins in the eyes of all the greedy home buyers. Oh and lord if you can please infect all the realtors with the fleas of a thousand camels.
OC proved long ago there is no God.
I like Psalms 109:8-13 myself:
“Let his days be few; and let another take his office. Let his children be fatherless, and his wife a widow. Let his children be continually vagabonds, and beg: let them seek their bread also out of their desolate places. Let the extortioner catch all that he hath; and let the strangers spoil his labour. Let there be none to extend mercy unto him: neither let there be any to favour his fatherless children. Let his posterity be cut off; and in the generation following let their name be blotted out.”
Fill in your friendly neighborhood Realtor’s name wherever it fits, substituting “her” for “his” when appropriate.
The great thing about the Bible is you can find a reference for whatever mood you happen to be in. In a mood to love thy neighbor? They’ve got you covered. You prefer some serious kick-ass cursing? Got that, too.
Oh Lord, won’t you buy me a Mercedes Benz.
This should make you smile, then.
I’m waiting for the OC to burn! Ohhhhh how I pray every night for this to happen. I have a co-worker who bought a house in 2003 for 370K and now says it worth 800K. Keeps telling me how prices will NEVER go done. I want to slap the SH!T out of him.
I still have my copy of the front page of the Register framed on the wall proclaiming OC was bankrupt. Looks like I’ll be able to start a collection.
“But between the time he initially spotted that Bayview Drive house and the day he bought it, he said, ‘the price dropped $130,000.’”
I see the clue train pulled out of the station before Kevin could climb on board.
Falling knives become harder to catch when they are moving that fast.
It’s like the Heisenberg uncertainty principle of Real Estate. You can know the price or you can know the direction of the price change, but never both.
That is an intersesting analogy to what happens when liquidity dries up.
Gwynster,
You have hit onto something!
I’m going to weave that one into conversation some how…
Got popcorn?
Neil
Funny, before even reading your post, I made a similar comment about another article.
All this quantum talk… We really must be approaching the Housing Singularity.
Yes your quantum kung fu was no match for my quantum kung fu by 30 mins >; )
Update from the central coast…
Doctor #1, renting for two years, still renting, investing cash saved by renting.
Doctor #2, just arrived, renting, says will probably rent for a year or two, sees no hurry to buy right now, saving a lot of $$$ by renting to pay off school loans.
Doctor #3, just arrived, renting a condo in Pismo Beach, wants to buy, but renting a condo in Pismo beach is just so cheap compared to buying, just may wait awhile and see how things go.
Doctor #4, purchasing second house, $1.5M - $2M, was trying to use a jumbo fixed rate loan, but rates going up has him on the edge of backing out.
Doctor #5, building a new house, was going to sell old house, now thinking of renting old house out (house was bought when prices were 1/2 what they are now), but new house was going to go on a fixed jumbo, rate increases have them now looking at a 7/1 ARM instead, and they are not happy about it.
Interesting how some of the “middle-high end” buyers are responding to everything.
This causes me to think of you sitting on an exam table in your little backless gown, notepad and pen in hand, quizzing each doctor to enter your room about their RE situation.
Seriously, do you work at a residency program or something??
“Seriously, do you work at a residency program or something”
Even though I rent, I sometimes get invited to dinner parties.
“As hired help, or as a guest”
*Someone* has to clean up.
And the best place at a crowded party is always kitchen
Are you sure these are doctors? I think doctors don’t make nearly as much as they used to. Maybe we’d better talk about stock broker, lawyer , private fund manager etc.
“Are you sure these are doctors”
Yes, I’m completely sure.
“‘I could sit here and say, ‘Oh I lost $200,000.’ But I’ve still made about a $700,000 profit,’ he said in the interview late last week about the problems facing the housing market.”
No you haven’t. After paying off your mortgage, paying cap gains on a Rental Property plus depreciation payback plus commission you’re way less than $700K.
But I’ve still made about a $700,000 profit,’
How? He still has it, I only know of two ways to extract money from a house. Sell it or borrow against it. I would have asked him how he “made” the $700,000.00?
Technically, only the former method allows you to truly “extract” money from it (i.e., liquidating it). The latter method (borrowing) is just a method for increasing secured debt against the underlying asset. Of course in REIC-land, that’s “equity liberation”, and always a great idea, regardless of what the added debt is used for.
It’s kind of nice to see one of the REIC bigwigs ‘using his own product’ though, and experiencing similar consequences. Of course, unlike many of his clients, Kunz is unlikely to be upside-down, even in the event the correction period is extremely protracted and severe (bought in 1998 –almost the exact bottom of the last cycle). But, correct market timing is unimportant and always impossible to determine, right?
DO NOT TRY TO MARKET TIME!! Even if you are underwater for 15 years, you will eventually be above water on real estate. It is therefore a great investment. Whatever you do, DO NOT QUESTION THIS WISDOM!!
Plunge into the NASDAQ Q’s in March 2000. LOL
I can here this is in the voice of that baby from family guy.
Why wont dateline just fry these people already. its a sinking ship.
“‘I could sit here and say, ‘Oh I lost $200,000.’ But I’ve still made about a $700,000 profit,’ he said in the interview late last week about the problems facing the housing market.”
Neighbors reported loud screams and pounding on the walls and breaking glass at odd hours in the night….some heard words like “damn you Lereah” and “screw the NAR” and “It IS a fu**** bubble”
You have made ZERO until you find a buyer…..GOOD LUCK!!!
P.S. You better sell now, their not building any more suckers!!!
“Joe and Mary Gordon bought an approximately 4,000 square-foot home on the street behind the Shahs for $741,000, just west of the Inland Empire.”
“Two homes on the Gordon’s street are going through foreclosure and one of them, comparable in size to theirs, is being offered by the bank for $550,000.
“Bob Taylor, president of the development’s homeowners association, said his family thought about moving…they didn’t think they would break even after the market turned south.”
- For those of you not in So Cal, the Inland Empire is an absolute hell hole.
At some point very soon it will be Ground Zero for Ca forclosures. Orange county’s 100% financing was the life line to the Inland Empire. It has a huge mexican and illegal population and will suffer huge unemployment from the construction crash.
The Inland Smogpire will be 2nd behind the Central Valley. It’s got the same heat and the same bad air, but no real economy other than farming. It’s also been fully infested by speculators from the coast. All those get-rich-quick folks from SF and San Jose did the same thing between Sacramento and Bakersfield as the OC people to Vegas and the IE.
I was in San Bernardino last weekend to do some house work for my mother-in-law. I had to pick up some piping at the local Home Depot (around 10am on Saturday) and when I pulled up there must’ve been 35 to 45 guys sitting on the corners looking for work. I know they all couldn’t be legal. It was crazy! I felt so uncomfortable when a few of them came up to me as I pulled into a parking spot and started asking for work. I talked to the store manager about it and he said what do you want me to do, they’re just looking for work. I was stunned, just amazed at his response.
You should see the size of the “day workers” crowd at the HD in Campbell CA. Many complaints about it but no INS raids since that would be “wrong”, oddly enough the crime around these areas is mainly theft of expensive bicycles, from apartment and condo balconies, which is the main transportation of day workers.
Mo Money,
I was in Wash DC a few weeks ago, helping my daughter move back to college, went over to Home Depot in WASH, DC, ” day workers ( no way were these guys legal) outside of Home Depot when we drove into the parking lot to pick up some dorm room stuff ( strip cords, light bulbs, etc.). This is the HOME of the FEDERAL GOVT/INS etc. The irony of illegal workers outside a Home Depot within 3-5 miles of the Capitol and White House, I couldn’t decide whether to cry or laugh. Instead I just shook my head and went about my business.
I have yet to see any of the illegals/work-seekers at Tucson’s Home Depot at Tucson’s El Con Mall. Ditto for the Lowe’s on Oracle Road. I guess they look for work elsewhere.
I think that’s because of Arizona’s new laws, perceived to be tough, at least by the illegal community, from what I’ve read. Didn’t Ben have a post about a week ago on illegals leaving AZ? For those not returning to Mexico and points south, I would imagine many have gone to CA with hope in their hearts and probably where they have some friends or family connections. Others will go to other states that have more lenient laws or sanctuary areas. For those who don’t mind the cold, New Haven, Connecticut is a sanctuary city. Sanctuary Much, New Haven!! Except I don’t think much building is going on around there.
BTW and OT, but speaking of illegals, I was elated for about 5 minutes today on the news of gonzo’s resignation. And then deflated when I heard the DHS czar’s name bandied about as a replacement. Just when you think it can’t get any worse. Crikey. Be careful what you wish for, palmetto.
Yes, I don’t see them in Portland either. They do hang out at a place I drive by daily on my way to work. The crowd (if you can call it that - only 8-10 guys) is about 1/3 of last year’s crowd.
I heard something about people in Arizona picking up day laborers at the local HDs and dropping them off at the mexican border. Is it true?
I haven’t heard that one, but boy, does it sound like a good rumor.
They did that here in Orange County. The reason you probably are not seeing illegals in Arizona is because of the new law that goes into effect there Jan 1.
I remember when picking up a day laborer (sp?) was driving to the Safeway near Boyle Heights and all the mariachi players would be lined up outside the doughnut shop, dressed to the nines in black and silver and waiting for a job.
If I was swarmed like that walking across a parking lot, I’d have been completely freaked out.
“I was stunned, just amazed at his response”
As we were leaving CA almost 2 years ago, I thought there were reports going on that some Home Depots were actually going to be required to build Day Laborer “shelters” for these people where they would be covered from the heat and elements, have bathrooms, etc. Does anyone know if this ever happened? If it did, then the reaction doesn’t surprise me at all. They’re broken. Hence, one of the biggest reasons we left the God-forsaken state.
At least they are not begging and are willing to do hard work for their living. You will never EVER see these people ask for handouts.
No, it’s easier to just steal it. Least path of resistance
LOL, mis. That way, there’s no rejection.
If it was me, I’d say “hire them”…maybe even sponsor a few for citizenship. In fact, in my work I was fortunate enough to be able to.
I’ve been watching a gated development in Corona implode. 50 houses built in 2004-5, at least 6 have been foreclosed and 20 are on the market. The last sale of one model was for 1.8 — 9 months ago. Since then 3 more of that model have been for sale asking 1.9. The latest REO of the model is asking 1.2. That’s about 30% off, right?
Yep. When REOs are really marked to market the crap will really start flying.
“Even cutting the price wouldn’t help, Dresser said, unless it were a ‘fire-sale’ slashing of $100,000. ‘Then they’d have no house and no money,’ she said.”
“The family, which refinanced one time, has an adjustable-rate mortgage on the home. It was $1,800 a month for two years, but three months ago it spiked to $2,800. They can manage that, but it’s a stretch. In nine more months, it is scheduled to rise again.”
It seems to me that whether or not they cut it by $100,000 in a little over year there is a good chance they will have “no money and no house”.
…they can’t gain access to their equity.’”
If you can’t gain access to your equity I am afraid you don’t have any equity to begin with.
Man, the quotes are getting more and more ridiculous. I’m going to guess that’s a bad sign.
“The family, which refinanced one time, has an adjustable-rate mortgage on the home. It was $1,800 a month for two years, but three months ago it spiked to $2,800. They can manage that, but it’s a stretch. In nine more months, it is scheduled to rise again.”
Nine months is just about when the masses panic and sales prices experience “unprecedented” drops. If you’ve got no equity and life in an area where you are at risk, why not rent, save money, and be somewhere safe?
Watch this video especially near the end where the lady speaks on how the auction hurts her. She spent almost a half million dollars on a Beazer home. Does this person strike anyone as a half million dollar home buyer?
Jezz what a mess this will be.
http://video.msn.com/v/us/msnbc.htm?g=0961374f-410c-46f8-982b-57ad12e0402d&f=00&fg=email
She should have purchased a clue instead.
Couldn’t agree more. Her house will be coming on the block soon I’m sure.
Nobody is rushing to live in Beaumont! It’s white trash heaven and the houses are way over priced.
Just met one of the neighbors, I have been renting a 3 bed 2 bath house in the Kennesaw, GA area. I pay $1050 month- not bad not great.
The neighbor just moved in about a month ago, she told me they just got in and the went 100% finance. She said they could not have afforded otherwise. She said that they did not have the $37,000.00 to put down. I thought for about a billionth of a second (20% on a 150K home is $30K.
They just made the first mortgauge - she seemed relived! This will probably get interesting. The houses in this area are all fairly similar, its an ok neighborhood. The house range is 130K-160- 170 at the most. I know one thing they overpaid.
They overpaid on there house and the resets have yet to really start, therfore the value of the house will go down. Why would you buy now. “So I could get 100% financing” I wonder what type of lame AZZ rate they have.
I know one thing they overpaid.
Overpaid? Just how much did they actually pay? $0.00 That is not overpaying. From your decription of them they won’t be in the position to ever overpay.
Thank you, desmo.
This is one thing we have to ALWAYS keep in mind. These people who are “losing” their houses in many cases put no money down, or very, very little. So they really haven’t “lost” anything.
Yes, some of them just distorted the market so that their neighbor lost 10 or 20 years savings. What a market. Actually a “market” presumes some level of order, law, and fairness. Maybe housing racket.
However they could rent- save money and they wait for the prices to drop and then buy!
Now the Sanchezes want to (trade) up to a bigger house near their relatives in Woodland (Yolo County), in a better neighborhood.
Good god, if that’s a move “Up” I’d hate to see where they live now.
LOL, I thought the exact same thing. What, they only have to drive their kids 10 minutes away to play outside in Woodland??
One of the top 10 cities for murders in USA. Murders run into 100’s every year.
Uh, what? There were 2 murders there in 2003.
Think my post got eaten
I checked the FBI crime stats page to verify. Here are some interesting highlights from 2005.
City Pop. V.crime M/M per capita
Woodland 52036 142 1 0.00273
Chico 70670 253 3 0.00358
Yuba City 52470 188 3 0.00358
Davis 64145 232 0 0.00362
Auburn 12860 55 0 0.00428
Dixon 16821 81 2 0.00482
Grass Valley 12066 72 0 0.00597
Redding 89161 550 2 0.00617
Turlock 65919 411 2 0.00623
Modesto 208142 1316 8 0.00632
Marysville 12601 110 1 0.00873
Sacramento 457347 5265 52 0.01151
Red Bluff 14003 170 1 0.01214
Oakland 400619 5692 93 0.01421
Stockton 281747 4202 41 0.01491
bah it ran together
Woodland 5203, 6, 142, 1 , 0.00273
Chico 70670, 253, 3, 0.00358
Yuba City 52470, 188, 3, 0.00358
Davis 64145, 232, 0, 0.00362
Auburn 12860, 55, 0, 0.00428
Dixon 16821, 81, 2, 0.00482
Grass Valley 12066, 72, 0, 0.00597
So Woodland scores better then Davis, Grass Valley, Dixon, and Auburn. Very interesting.
Maybe it’s a safety in numbers thing for them? The larger the herd of relatives, the less likely they are of being the one getting hit?
“‘You’ve got to give buyers what they require…’ explained Joe Anfuso, who runs Florsheim Homes.”
My old lady wants to live in a shoe. Joe, do you have something in cordovan wingtip, size alt-A single-wide?
Jen, you are so funny. Thank you, I need it tonight.
I find this slow motion train wrect VERY fustrating. I just wish prices would fall ~40 - 50% so I could start the negotiating process for my dream house.
I have waited 5 years already for my dream house and I know the next 2 years is going to the toughest. But just thinking of BBQing in my backyard and telling my friends what a GREAT deal I got gives my some comfort for the waiting.
I find it frustrating that this bubble exists at all.
I mean come on, how did we get to a point where “legimate” organizations were lending $200K - $800K to people who couldn’t pay their bills on time without verfiable income? (and secured only by a large empty wooden box - with or without stucco)
I guarantee that if the same borrowers had gone to the bank for any sort of personal loan, if they got it at all, the interest rates would have been outragous. And the bank would have wanted verification of income, thank you very much.
So kudos to you for waiting. The only real issue I see with your plan is that your friends might think your insane for buying a house because by that point everyone will know that real estate only goes down.
Renting will be the new fad. Everyone who owns will be so “uncool.”
That’s why I chose to put “renter” in my username. Back when I started posting on bubble blogs/forums, nobody had the word “renter” in their usernames (OC renter has been posting a long time, too!). Figured that at some point, it would be cool to be a renter, and I could be one of the first to have used it in my name.
My husband used to ask why I wasn’t embarassed about being a renter. Think he’s starting to get it now.
I’ll know it’s time to seriously consider buying when my family starts telling me that I should continue to rent because “Buying is just throwing your money away.”
They’re the best contrary indicators that I’ve found.
I have in-laws like that. I can tell you where we are in the housing buble game because of what they do. (2nd inning - trying to getting rid of a couple of houses - worried and stressed but somewhat still convinced it will turn around.)
If they freak out because we decided to buy a house, I’ll have bought at the right time.
Inside Edition just had a story on about a foreclosure a guy bought for 2.6 million dollars (it was “worth” 3.0 million).
Apparently the place had been overrun with stray cats (adopted by the prior owner) to the point that the wood floors were buckling from the cat urin.
I wonder if this will become a growing problem (sight unseen purchases) as the number of homes sold by foreclosure increase!
“..buckling from the cat urin. ”
The smell of cat urin is very easy to get rid of..(with five gallons of gas and a match).
The local government condemed the building and it will likely have to be torn down. The new owner is planning on legal action.
Does anyone know what kind of case he could make?
He could plead insanity.
I think his action would be against the bank that sold the property. (not against the government that condemed it)
I doubt if he has any recourse against the bank. The government probably notified the bank it was going to take action, the bank probably disclosed the potential action and the new buyer chose in greed to ignore it.
The other action could be that he had 30 days from time of purchase to get building permits to update the facility and he did not have moneys to do it. I suspect this.
He could start with a case of vodka.
LOL I know have visions of a new Mythbusters episode where they test if vodka with remove the smell of cat urine.
I know = now have
I bought a manufactured home like that on five acres, several years ago. Cats had used a bedroom as a bathroom. Fortunately, the carpet pad was waterproof. We took the carpet out the window and to the dump, in a tarp, which - surprise! - I tossed into the dump as well.
nothing a good flipper and a house stager cant fix…..
BWAHAHAHAHHAHAHA
Rent a few pit bulls
Starting to see some PANIC in my Sonoma neighborhood. Somebody broke down and put a huge sign in front of their forsale sign/ $365K.
there is another 12-15 homes forsale all in the 485K to 535K range and none have sold, been on the market for months. Also noticed today that the craiglist ad’s had a large number of bank owned property forsale, all of it way overpriced but still, times they are changing.
PANIC?
Interesting, but too early. We should only be approaching desperation (for the mob). If one seller Panics and everyone else ignores it, than it isn’t a true comp.
I’m amazed at the zip codes with zero sales… just amazed.
Got popcorn?
Neil
Went to a new development in Valencia, CA and they are selling those houses, alright but at reduced prices compared to June 2007. The models we were interested in have been reduced by $30K. From $740K to $708K. Still, who are these buyers? I will wait another year or two and buy a house for 30-40% off at today’s prices.
valencia would be a decent place to live if you can get employment in the scv. my wife and i tried it for 4 months, but the drive to wLA was a killer.
Who are the idiots that are buying at that price in Valencia?
“Waiter, oh waiter! I’d like an order of hot weather with a long commute and no culture. Oh, and why don’t you bring me a massive, noose-like mortgage payment and the loss of financial independence to go with it.”
If I were to pay that much for a house, I’d at least want to feel like my prison had nice scenery.
As opposed to the coast, I’d like zero-movement traffic jams, hot weather, no rain, no seasons, and certainly no culture other than voyeuristic celebrity-worship.
Fair enough, particularly on the traffic. Pismo Beach then.
Valencia is dropping further than 40% off. Homes for almost 1 mill? In the heat?!? Look at all the developments still going in that area. When panic hits, then buy. But it will be better than 40% off. Bwaa haaa ha!
Yea, nice mall, some amenities. But they describe everything in terms of “1 hour to Santa Barbara or the south bay.” It will recover nicely in the next boom… but the tide has a long way to recede.
Got popcorn?
Neil
Do you think we will see these kinds of price declines?
I bought in Castaic in 2000 for 250 and sold in 2003 for 415 and moved to Vegas. Now those houses are selling for 600. We have sold a few homes here in Vegas and are just renting an waiting to move back to Santa Clarita area. I am hoping prices go down to 2003 levels or a little below.
What do you think?
Valencia and the entire Santa Clarita Valley is hot and the commute to better employment can be a drag; however, it is a safe and family-oriented community with excellent schools. Prices here will go down just by looking at the household income level (~$75K). By how much is speculation.
“The family, which refinanced one time, has an adjustable-rate mortgage on the home. It was $1,800 a month for two years, but three months ago it spiked to $2,800. They can manage that, but it’s a stretch. In nine more months, it is scheduled to rise again.”
“‘This is a postcard-perfect sweet family and a postcard-perfect sweet little house,’ Dresser said. ‘They are regular, hardworking people not able to achieve their goals.’”
I would be very interested to know the whole story…
Where they lied to by the mortgage person?
Did they take out equity?
Was the refi from a fixed or from another ARM?
Did they put money down?
It seems that none of these stories ever give the whole story.
Modesto newcomer Kevin Schinmann called the choices overwhelming: ‘It was like going to a restaurant with a menu that listed 14 pages of unbelievable food.’”
Sorry, Kevin… that’s “unaffordable food.”
It’s the only menu guaranteed to give you Montazumas Revenge both physically and financially.
OT…this just struck me…
A house in my area just sold for $650K. It had been on the market for at least 18 months and went through $200k in prices reductions over that time. I don’t think the house was ever worth $850k, but I am not so sure that wasn’t worth less than $700k. This is a nice, BIG, well built house, on a good lot, in a good area, etc.
Is it possible to buy a house for less than it is worth given an arms length transaction?
If the market sets the price, then that is the market value..right? BUT…what if, we are in a period such as now, where market is in a period between efficiency and inefficiency? (stalemate)
Is it possible to get a decent deal, before the market fully capitulates?
I am in no rush to buy, but at what point do you make the buy decision, based on an individual property, rather than waiting for the entire market to fit the image of a “right time to buy” picture.
Dear Pen, There are thousands of people that have posted on this blog about the same question. The general answer seems to be, buy if it is the same as renting a comparable piece of property. Another general answer is that this is going to take a long time to unwind so figure on 10 years in whatever you choose to buy.
Personally, I am of the opinion that it is going to get real ugly in 6 months. in a few days it will be Sept 1 and another 100,000 homeowners will be 30 days late. As a bubble market trader in everything but Real Estate, using the same calculations I use for trading stocks and commodities, I expect prices to drop to 1994 levels adjusted for cpi inflation minus 10%. In some areas in Florida, Nevada, Arizona and California this could be an 80% drop, in the midwest I am looking for a 45% drop. IMHO this will take 10 - 12 years still.
Remember there is a whole generation in Japan that had never seen price increases in RE. They had only seen prices go down for 17 years (until last year where Japanese RE appreciated by 0.7%).
Hi Hoz,
Thanks for the response. I appreciate the feedback/input.
I too think that areas of FLA, AZ, CA and NV are screwed and I am not saying that it is different here, but in Mass., we have not had the overbuilding that many other areas have had. That isn’t to say the we won’t have price drops. I am sure we will.
I just don’t see my target home (circa 1995+, 2800+ sq ft, 4 bed/2.5 bath/2 car garage, 20,0000+ sq ft lot, good neighborhood/town, well constructed, within 25 miles of Boston) going from today’s $650k kind of price to a $325k kind of price. Even $500k seems unrealistic. Not that I wouldn’t welcome it. My interest lies more in trying to figure the not-to-high price, rather than the rock bottom price.
Thanks again for your thoughts on the subject.
What in my wildest imaginations never could have happened 35 years ago are happening today. I can give you addresses in Tokyo were the houses went from US $1.5M (1987) to $280K. And you can buy today for $300K.
Massachusetts is getting crushed by the economy. It is sad to see the number of quality companies that have outsourced and abandoned the Boston - NY corridor. There will be other companies down the road, in what industries I have not the faintest clue, but for now there is a brain drain from the excellent schools in New England. In Finance, the market is either London or Hong Kong. In industry the markets have shifted to the BRICs and the research to Japan and Korea.
A fund manager in Hong Kong or London makes about 40% more than a similar position in New York. The truly exceptional individuals are already taking opportunities offered in these countries. There are profits to be made that cannot be made in the US (at this time).
Massachusetts is part of the rust belt syndrome and what looks reasonable today can seem very dear tomorrow. The Commonwealth’s advantage has been excellent outside consulting, unfortunately the first thing to go in a recession.
It’s true. I work with some Japanese companies. One guy I know bought a place several years ago in Osaka after almost a decade of price deflation, figuring the worst was over. He bought for $1M; as of two years ago he figured the place would go for $700K. Haven’t the heart to ask him what it’s worth now.
Pen -
Why not? If $325K matches the rental price of your dream price. then it very well may come down that far. Real estate crashed hard in the 80’s in New England. I see no reason why it can’t happen again.
I know there’s not massive strip building here that other places have seen but New England has it’s problems as far as RE goes.
I’d say the biggest one is that young people are leaving the New England area for cheaper places to live. I personally know of one couple that moved away from Boston, MA because they felt they would never afford a house. My sister is seriously thinking of moving to NC in part because houses are signficantly cheaper than here in relatively modest VT.
At some point all those little decisions add up. If there’s few young buyers then MA maybe significantly overbuilt even without massive amounts of recent construction.
Hoz, i totally agree with you in spades. The way the credit markets are working it seems that the lenders are running away faster and further from the (potential) borrowers and “great” property “deals”, and this is likely only the first or perhaps second inning in the game. The way liquidity is contracting everywhere i don’t think it will be very long before a real asset pricing dislocation event of significant proportion takes place in the real estate markets which, if true, may make it the beginning of the third inning in this game. Don’t think it will be too long before even Fannie and Freddie paper starts to get infected and called in to question and if that is the case, then this whole thing will get much much uglier in a fairly short time.
The Kool-Aid runs deep on the central coast:
The Central Coast Housing Bubble Blog
http://tinyurl.com/3aspvl
” Anonymous said…
i am SO sick of the BS on this blog…people whining and complaining about the real estate prices. True, all areas have been affected but the “nice” properties are still selling (and YES…APPRECIATING!!!). These are the homes what are close to the ocean, rare oceanfront or comannding ocean views. Areas like Paso and Nipomo ARE struggling. A house in Pismo recently sold for over $4M that sold only a year ago for $3.6M. Not bad in a “decreasing” market. Why? Because it was a nice home with a great view. Also, the people that buy in that price range are NOT so affected by the current mortgage industry as they DO often pay cash or finance just a little bit. STOP with the real estate bashing…STOP with the REALTOR bashing….REALTORS are people too (I’ve heard) and the media TOTALLY blows this out of proportion….as many people on this blog do as well. Just look at the 30 years of data we have for California….there will be up and down dips…we are in a down dip right now. History will repeat itself and the people who buy (or hang on) will see price appreciation again in 2008…..guaranteed!”
when i read crap like this i comfort myself with that old rolling stone spiritual: time is on my side, yes it is…
Housing Bubble Blues (Honky Tonk Blues)
gimme, gimme, the Housing Bubble Blues..
chuckle…
He should go back and look at his “30 years of data.” Dips usually last for a long time and then recover slowly.
Sadly, a coworker just bought. (Gasp!) A loft in Long Beach. Sigh… Sweetest person too… just trying to do the right thing. (You know, buy when you get married…). Sigh…
It hurts when friends are run over by this train wreck. Cest la vie.
Time to go back to schadenfreude.
Got popcorn?
Neil
Mmmm, dip. Think I’ll go grab some chips and salsa. I’m hungry now.
Hey Neil, where was that LB loft?
Also, to the anonymous poster from the other board, how do you “dip” up? Like you hold a Dairy Queen Blizzard upside down, and dip cookies in it that way?
Yes and in China the Realtors that lied like this would be summarily executed.
Doesn’t China have stock market & housing bubble?
I have invested in the China stock market, (I closed out my longs about 2 weeks ago because of a comment that a Chinese Finance minister made - it has rallied an additional 10% since then - LOL).
It may very well be in a bubble market, but the average YOY earnings growth is 45% and the current PE in China is 47% vs the US S&P500 (excluding financials) where the YOY earnings growth is 1.7% and current PE is 17. Which has better prospects for true gain?
As for China RE, it depends where you look. One of the big problems is the massive inflow of people into the cities. There is very little residential development because the resources are being used for infrastructure, commercial development and putting on a pretty face prior to the Olympics and to the Shanghai exhibition in 2010. This has resulted in an incredible shortage of housing for workers. China’s GDP is growing at 10.5% per year and will be the 2nd largest exporter in the World by the end of this year. China needs to create 5 Million new jobs every year just to stay even and 10 million to grow. As opposed to the US, they have the moneys to facilitate the growth.
China has serious social problems including housing, jobs, environment, water and infrastructure. They also have the moneys to work on fixing these problems. $1.3T goes a lot further in China than in the US, when the average worker is making less than $5000/yr.
Good thing we’re all in the market for million dollar homes with an ocean view in 2008.
Is that a money back guarantee, and can I have it in writing?
From CNN Money. “Being the CEO of one of the nation’s largest real estate firms didn’t stop Tom Kunz from becoming one of those homeowners who’s been hurt by the downturn in the housing market.”
BWAHAHHAHAHAHAHA
Couldn’t have happened to a more deserving shill/con-man/realtwhore!!
And to think the sheeple follow the “advice” given by monkeys like him and his ilk!!
Let ‘em burn! All of them!
Looks like the entire state of FL is going bankrupt.
WOW!
http://forum.brokeroutpost.com/loans/forum/2/158743.htm
The best part is the last post
“Stop joking around, these are people lives and homes were are talking about.”
I thought this was an interesting comment:
“It’s weird, since now the higher LTV deals may have been the better choice for many people in CA and FL since they could at least keep their savings/money and walk away from the home… could always claim to the judge that you lost everything at the track while it sits in a black box buried under a tree. This is sick.”
Thanks for sharing - very interesting thread. Amazing how the tone on these Broker Outpost threads has changed versus one year ago.
“..One thing we all fail to mention - however - is the fact that a lot of consumers in Florida (and Califronia for that matter) made out like bandits the last 2-5 years. Let’s face facts - many of them used their home’s equity like an ATM. They took out cash like there was no tomorrow and lived like kings. To feel sorry for them now is bordering on ridiculous in my opinion. Most will now simply WALK AWAY FROM THE UPSIDE DOWN HOME. They will have lived like kings - and never really paid the price….” sinc215
They will have lived like kings…
and died as paupers.
“They will have lived like kings… and died as paupers. ”
Rags to riches and land speculation are part of storied California tradition, Hoz. Case in point:
Samuel Brannan (March 2, 1819 – May 14, 1889), was the first publicist of the California Gold Rush and the first millionaire because of the rush. Brannan Street in San Francisco is named after him.
…
Forsaking the city he helped found, he drifted to San Diego, remarried and set up a small ranch near the Mexican border, where he engaged in land speculation with the Mexican government near Sonora. At the age of sixty-nine, he was paid the sum of forty-nine thousand dollars in interest from the government of Mexico. He quit drinking, paid all his debts and died penniless at the age of seventy near San Diego, California (specifically, in Escondido) on May 14, 1889…
http://en.wikipedia.org/wiki/Samuel_Brannan
Oops — meant to say “riches to rags”
It’s good to see that, much like the word “luxury,” the phrase “living like a king” has been degraded and commoditized to the point where it describes driving a high-end car and buying a plasma TV and eating out four nights a week.
Or living like an Emporer
http://en.wikipedia.org/wiki/Joshua_A._Norton
(think mortgage-backed paper)
“threads has changed versus one year ago”
A year ago, most of the threads were loan scenarios, with the usual reply of “I can do that loan ‘all day long’”.
I loved that “all day long” phrase…funny, I haven’t seen that phrase in recent months…
Yup, I can eat popcorn and read about greedy pigs crashing ‘n ‘burning all day long…
I guess California’s dreaming while Florida’s foreclosing
“well they need to call the last 276 people that i got off the phone with because only five where(sp.) not behind on the mtg.” Dana Point
No these last 5 will be late September 1, 2007, so get to work Dana Point and save these last 5 FBs.
“‘After what we’ve been through for the past two years — short of Charlie Manson moving in — it can’t be any worse,’ he said.””
Mr. Manson has had a steadier ‘employment’ history (30 some years making license plates) than many other FB’s who took out a loan.
I’m sure someone could get him into a no-interest, no down-payment loan. After all, he can not only FOG a mirror, he can bloody it as well.
It’s frustrating,’ said Antonio Sanchez. Sanchez said he was robbed at gunpoint on the street last year. When the children want to play outside, the family drives to a park 20 minutes away where they feel safer.
Dude could it be one FB robbing another FB. You will probably be robbed after 20 minute drive by a FB in a different neighborhood. This is what is known as “Contagion”
I like how that is followed up by:
“‘This is a postcard-perfect sweet family and a postcard-perfect sweet little house,’ Dresser said. ‘They are regular, hardworking people not able to achieve their goals.’”
Wow… the California postcard-perfect is a family living in a slum being robbed at gunpoint!
real Norman Rockwell
They should transport Vicks dogs which are in the Dawg # to Oakland Ca. I am sure they will find loving & caring families for them.
Question, btw long time fan of this site.
Would 6 months or so from now be a good time to buy? I know people who became extremely weathly buying in the 80’s they all tell me when everyone screams sell its time to buy…
Time magazine says get out, must be time to buy no?
Here in miami I think we average 200+ sqft at 05 price, I figure $150 is fair, $100 is cost to produce even if we sink below cost of replacement that can’t hold for very long no?
I would honestly love one of those waterfront condos at $150 think they are averaging $300 psf though
Appreciate any thoughts…
Wait….relax……nobody really knows how low prices will go………..but one things for sure, they certainly wont be rising anytime soon. I say this having been in Real Estate for 25 years.
The “trend is your friend” and the trend is down. Be patient and peaceful and in time it may well be that your opportunity to get a fair deal may end up much greater than what seems apparent now. Time is on your side.
Now here’s a stunner……………….
Housing Market Crisis May Already Have Passed: Kevin Hassett
“We may still see a meltdown because of widespread losses in the subprime market. And housing prices, as opposed to construction, might well see more declines.
If those two things happen, then the economy may still end up in a recession, as consumers cut spending once made possible by taking equity out of their homes, and stressed lenders increase the cost of capital for their corporate customers.
But the drag from the housing industry is mostly gone.
http://www.bloomberg.com:80/apps/news?pid=20601039&sid=a_dqu6AxIdIw&refer=home
Yup 100% Liar loans and super EZ credit are just around the corner. Interest rates are falling and prices are set to continue up. Com on Bak foks - parties on again and the wine is flowing again.
Get you free no repayment loan now. Investors want to give you their money and don’t care if you pay it back. Yeeess sir, prices they is a gonna rise soone!
Looks like the AP wants to do a story on the mortgage bailout. Anything you all think I should say or cover with them? They might end up quoting me in the article.
More troubles for David Crisp and Associates:
http://bakersfieldbubble.blogspot.com/
test
Anyone have any predictions for Valencia/Santa Clarita area?
I am thinking things need to come down about 30% to get me ready to move back. Think it will happen.
I’d like to know some predictions for south Riverside, Ca. Nothing is selling and not even renting. Prices have gone down maybe 15%. Anyone have opinions as to how much further and how soon?
Lots of koolaid drinkers in Riverside. I grew up there and knew there was a bubble when people were paying over $500K to $1mil for homes in South Riverside areas like Victoria, Lake Matthews, Mockingbird Canyon, etc. Most recently I noticed they have both Cheescake Factory and P.F. Chang’s at Tyler Mall. I don’t think the demographics exist to keep those both open through the next 60 months or so. I think Riverside is in trouble.
I’ve been looking at the homes in that area. The new homes are not selling nor are the resales. There has been some serious price reductions in the new homes. Bridgeport (KB) dropped from the low $700s to the High $500s. Stellan Ridge by Pulte has dropped some of the models by $240k (still in the mid $900s though). And Bridle Creek has some left overs from the last phase they have been trying to unload since January, those are about $100K off current prices. These homes are still WAY overpriced. I looked at new homes in these areas in 2003 and they were about 1/2 the price that they are trying to get for these. Now these homes are high end. Big homes with high end fixtures on big lots (over an acre). I don’t expect them to sell for $200k but I’m sure as hell not gonna pay $900k for something that was selling for $400k a little over 3 years ago. If they drop below $500k I’ll be very very tempeted. The last couple of times me and the wife stopped at the models we were the only ones there. Can you say ghost town!
Mid-$900s for freakin’ R-I-V-E-R-S-I-D-E ???
Good God! Can you say “Valley of the Dirt People?” And I thought seeing crack houses in South Central selling @half a mil was the peak of insanity.
Most of this stuff is not high end. High end is Beverly Hills, Hancock Park, etc. This is mostly stuff built with 2 X 6’s and just larger tract homes. Don’t pay more than what you can rent them out for. In other words, base you valuation model on rental income with a cash on cash profit of at least 15%. Whatever that value is - that is what I would pay. There will be plenty of repo’s there in about another 12-24 months. Don’t jump the gun. IMHO
How is a bank like Vineyard going to survive the Inland Empire collapse? Why hasn’t Vineyard (VNBC) fallen like Countrywide (CFC)? They’ve taken a hit similar to Wamu and other banks but their exposure to SoCal is huge. Perhaps they are too thinly traded for the big boys to notice.
OK here’s a prediction:
When the median prices tank in the August data due to the death of jumbo loans, the realtors and newspapers will point out all of the flaws in median price measurements that we’re all currently rambling about. Only then will they switch to Case-Shiller which won’t look quite as bad.
Good point. It is rather hard for a repeat sales index to capture a drop in the price of homes formerly financed with Jumbo loans if they suddenly stop selling. But the median would be expected to lurch downwards in this case (the mirror image from how it lurched up when subprime vanished earlier this year).
I think there is a chance Case Shiller will drop significantly as well (though not as much as the median) as all of those home priced 10% above the jumbo limit of $417k will have to slash their prices to accommodate conforming loans. In fact, as prime loans again become the norm it stands to reason that homes in that price range will be the only things selling, especially in places like San Diego where the median is $490k.
Then the poor reporters will have nothing left to spin with.
“the realtors and newspapers will point out all of the flaws in median price measurements”
That’s a given.
“Case-Shiller which won’t look quite as bad.”
Oh well, instead of “horrifying”, it will just look “really bad”.
However, there will be talk of “turning the corner, better buy now” with every little up tick or dead cat bounce.
HOZ, if you’re still about………….that thread I refered you to the other day is getting more interesting by the day. Apparently the bets are now in Europe……..USA………and Japan. (refer) p15.
http://www.tickerforum.org/cgi-ticker/akcs-www?post=4669&page=15
Folks in a society where you now have television programs such as flip this house presenting some ignorant idiot buying a house, doing little updating and making more money than most people make in a year. This is classic price bubble which has to deflate. Home prices have doubled over the past 5 years and are down about 20 percent, they are still up 80%. These prices have a long way to come down. They must and they will. As far as real estate people are concerned, I think most of them are lying snakes with the moral ethics of a dope dealing pimp.
Here we go again…. another conduit containing cdos. This time the body popped up in Singapore:
Aug. 28 (Bloomberg) — DBS Group Holdings Ltd., Singapore’s largest bank, said it has more at risk from collateralized debt obligations than it earlier revealed after market turmoil led a special-purpose vehicle to seek additional funds.
The bank has S$2.4 billion ($1.6 billion) of CDOs, packages of bonds and loans, up from a declaration of S$1.4 billion made Aug. 7. These include S$1.1 billion held by a so-called conduit, Red Orchid Secured Assets, or Rosa, DBS said in a statement to the Singapore Exchange late yesterday. The bank’s shares dropped 1.5 percent to S$20.10 at 9:31 a.m. Singapore time.
http://www.bloomberg.com/apps/news?pid=20601087&sid=apGlGROwEOZE&refer=home
“Luckily, they have equity,’ said their Realtor, Mary Dresser. ‘But if they can’t sell, they don’t really have any equity, or at least they can’t gain access to their equity.’”
There’s the rub, folks. And prices are goin down, down, down.
That’s the sickening “slap in the face” wake-up call for all the wanna-be RE speculators over the last few years. How It’s gonna hurt to sit back and watch their “fantasy equity” turn to vapor over time. And oh, what wonders it will do for the economy when they decide borrowing and shopping like drunken Sailors is no longer a god idea.
DOC
“Shopping like drunken sailors …”
Two more shoes will drop soon. Commercial loan defaults, and state revenue collections down significantly. State spending cutbacks to have a material impact on GDP.
Agree and am already short by buying SRS (double inverse short on commercial real estate) and likely will add to this position. With state revenue collections going down this ought to be a sign of the possible declining liquidity and quality of credit of a lot of muni type bonds. The fallout is expanding wider and wider as we see the great unwind developing. Starting to look like the beginning of a truly Intergenerational readjustment for down.
They had me until this comment:
“The family, which refinanced one time, has an adjustable-rate mortgage on the home. It was $1,800 a month for two years, but three months ago it spiked to $2,800. They can manage that, but it’s a stretch. In nine more months, it is scheduled to rise again.”
And then I REALLY lost it when I read this one:
“‘This is a postcard-perfect sweet family and a postcard-perfect sweet little house,’ Dresser said. ‘They are regular, hardworking people not able to achieve their goals.’”
They can’t afford the current house and I’m supposed to feel bad that they can’t achieve the goals of moving up into a better neighborhood (MORE expensive home)?
My goal was to be a millionaire by 30 (not really). Can I have a handout, too? Goals are not a given. That’s why they’re called “goals” and not “givens.” How many teams in the upcoming NFL season have as their goal, winning the Super Bowl?
AH…Another millionaire, eh?
Me??….I’m working on my second million!!!!! (The first one didn’t go so well).
TOM- re. the AP article:
If you agree and if it comes up, perhaps put in a word about lowering the Fannie limit. 417K is a pretty high mark for “affordable ” housing.
I’d be interested in what these politicians think about the “death of the mortgage burning parties”. Are they A-OK with the American middle class being permanently unable to ever again own their homes outright due to unpayable prices?
Has their definition of “the American Dream” changed ? Is it their (unstated) goal that the middle class be in the position of permanently renting from the bank?
I’m serious, do they really believe that these high home prices should be somehow defended into the next generation? Or even into next year?
Are they seriously unaware of how much money most Americans make each year/what the median incomes are? Is that why they seem to think that current RE prices should be defended?
Do they really not understand that what is causing the foreclosure problem is NOT the toxic loans but instead the sky-high asset price that CAUSED the toxic loans in the first place?
I’m very curious as to their real understanding of the situation, if they have a real understanding or if they do not.
Would you be more surprised if these politicians understood the situation or didn’t understand the situation? I think I know your answer.
Since we put them “there”, in essence hired them to do the job, I will be surprised if we leave them there to keep doing the job.
‘‘We have no recourse. We’ll have to live here eight to ten years before we get our equity back,’ said Joe.”’
At least a few people are allowed to be honest and also make it into print now. I wonder what the statistical chance of the average family experiencing a divorce, job change, or major illness in that 8-10 year window might be? 0.8 or more? Most of these people are going to walk.
In a separate report covering more localized statistics generated by C.A.R. and DataQuick, 29.6 percent, or 110 out of 371 cities and communities, showed an increase in their respective median home prices from a year ago.”
So is the glass one third full or two thirds empty?
Got 10% down?
3:30AM PHX time (so 6:30 east coast). Can’t sleep, so hop up to do some work-from-home. Flip on CNBC.
Greated by a moron that thinks if the Fed drops rates, we can prevent house prices from crashing. His flawed theory goes like this:
Prices are dropping because there are not enough buyers.
There are not enough buyers because there are not enough people that can get loans.
They can’t get loans because banks won’t lend them money because there is not enough spread between what they can borrow for, and what they can lend for.
Drop the rates, and banks will borrow the money more cheaply, make loans, and hold the loans on their books.
Flaws:
Prices are dropping for 3 reasons… Cost of Rent, Cost of Construction and Affordability.
With houses at the current price and interest rates at 6%, it is cheaper to rent, and houses are unaffordable… We’d have to not only drop Fed rates to the point that there is profit in it for the banks to lend at 6%, but so that the interest rate charged to the customer allowed payments to be cheaper than rent. So, interest to customers would need to be 4% or less to make houses affordable and in-line with rents, and that means there isn’t enough spread to make the risk profitable, even if we drop fed rates to 0%.
Cost of Construction: Dropping rates doesn’t directly alter cost of construction being less than homes on the existing market. This means that dropping rates does not prevent the builders from shoving inventory into the saturated markets and undercutting the existing home market.
Finally, $0 down creates too much risk of fraud. So, the 20% down to ensure the buyer has skin in the game is removing a sizeable number of borrowers. It is a bad idea to go back to $0 down, and dropping the Fed rate in no way would alter that being a bad idea.
Therefore, dropping the Fed rates will not stop house prices from dropping. That means the banks face substantial risk of equity loss. That means it is impossible to drop rates to the point to create enough spread to cover the loss risk potential.
All the Fed could do is ignight inflation to bring up wages to affordability levels, to bring up cost of construction, to bring up rents to be in-line with house prices. This rescues the lenders by stealing form savers.
I think the much better solution would be to give every citizen in the lower and middle classes that did not participate in the creation of, or profit from, the bubble, about 1 year of income. If you have debt in excess of income, the money goes directly to your lender to drop your debt load. If you do not have debt in excess of a year’s income, then money is handed to you.
We drop debt loads, we give renters a down payment, we stimulate the economy and get inflation, and people with cash in the bank are compensated for thier inflationary loss by a year’s income of cash.
I think this addresses all of the issues that are causing home prices to fall.
Fed rate cut is total nonsense, the fed is not suppose to be in the business of promoting the stock market to new highs and inflating already bad investments tech stocks. The mortage crisis arose from exactly what wall street and the fed already knew several years ago, that income wasn’t keeping up with the rate of house increases so of course since this meant that companies actually had to raise salaries to improve the sector they did nothing and let this all thing meltdown.
Now they want a bailout, they don’t want to pay more money to employees that is bad business and may lead to a way out of the problem pay the workers more money so they can pay these inflated prices. The CEO’s must still have their lifestyle of millions of dollars and at least 3 homes, that is the game, they don’t want to better anybody, just get a Gov’t back deal and let everybody bleed to death. Yes many were greedy and streetwise they knew what could happen, but also many people were made to believe this was a slam dunk , the worse that could happen was your arm may reset if it is to high we can then put you into refi your home to a 15 or 30 year sounds simple kids but the public didn’t realize that now nobody wants your 30 year loan. This whole thing is much worse then Enron this was a ponsi scheme, they tell the public we really don’t know how much money has been lost their is no paper trail, people their is always a paper trail, i think it leads to people we thought we could trust and now the whole thing is a secret that only throwing money into the pot will cure, i doubt it?