A Nobody Market In California
The County Sun reports from California. “Real-estate professionals know the drill: If the house won’t sell, slap a fresh coat of paint on the walls and plant fresh grass in the front yard. But with the housing market hitting the skids over the past few months, that’s just not good enough. ‘It doesn’t seem the buyers care about granite countertops,’ said (realtor) Tim Adams of. ‘The buyers are looking for deals.’”
“Agents throughout San Bernardino and Riverside counties are making deals that just a couple of years ago, when the market was booming, would have been laughable.”
“Some of the home sellers Adams has worked with during the past year wound up dropping their asking prices as much as $30,000 to $100,000 before finding buyers.”
“San Bernardino-area Realtor Cheryl Ross thought $15,000 in upgrades would do the trick on a house she is trying to sell. But six months have passed since the property went on the market, and only one offer, for $70,000 less than the asking price, has been made on the home.”
“‘Why am I having a hard time selling it? Because the market is awful,’ she said. ‘Two or three years ago, I could’ve sold it in a couple of days.’”
“Josee Maclaughlin, a Realtor in Upland remembers when houses ‘were flying off the shelves’ a few years ago in places like San Dimas, La Verne, Claremont, Upland and Rancho Cucamonga. She said buyers are offering what seems like ridiculously low prices.”
“‘We just kind of laugh, because (buyers) really low-ball it,’ Maclaughlin said. ‘We’re talking about 30 to 40 grand below asking price.’”
The Daily Bulletin. “The news was worse for homeowners in the High Desert and the Inland Empire than anywhere else in California on Monday when the California Association of Realtors released its sales and price numbers for July 2007.”
“The median price of a home in the High Desert in July was $296,220, 11.1 percent less than a year ago. In addition, sales were off 50.1 percent from July 2006.”
“‘A lot of it is affordability and the subprime market,’ said economist Eduardo Martinez. ‘There is a big allotment of oversupply in those areas, and until demand increases, it’s not going to come down.’”
“‘The problem isn’t just that people who didn’t have 20 percent down payments financed 100 percent,’ he said. ‘Some of them borrowed more than they could afford to buy bigger houses. This situation has to sort itself out, and it could take quite a few months - if not years.’”
The Ventura County Star. “Ventura County’s sales fell 17.8 percent in July from the same month a year ago, CAR reported Monday.”
“While inventory remains high, the pool of buyers is shrinking, said Tony Deleo, a real estate broker in Ventura. Most people who have contacted Deleo haven’t qualified for loans.”
“Many sellers are still unrealistic, believing that their homes can fetch the same prices the could two or three years ago, Deleo said. He estimates most of the houses on the market are 10 percent to 20 percent overpriced.”
“Naiveté among sellers is a real obstacle, he says. ‘You’re the messenger, and you’re the one getting shot,’ Deleo said.”
“‘This is a terrible time to sell,’ said Bill Watkins, executive director of the UC Santa Barbara Economic Forecast Project.”
“Still, Rose Vicente says she isn’t worried. She and her husband, Manny, put their Simi Valley home on the market about two months ago, with plans to move to Texas by the end of the year.”
“The Vicentes recently reduced the price of their five-bedroom, 1,834-square-foot house by $50,000 to $599,900. They’ve since had plenty of calls, but mostly from investors offering much less than the asking price. ‘We’re not about to give it away,’ Manny said. ‘The house is almost paid for.’”
The News Press. “Home sales in Santa Barbara County contained both good news and bad news last month. Condos on the South Coast posted a median of $590,000 in July, which is 10 percent below a year ago. Lower prices for units on the market likely helped to boost sales.”
“‘The lowest (priced) segments of the market still have not reached their bottom. Although interest rates are remaining relatively stable, foreclosures are increasing, which will continue to have a negative effect on the entry-level housing market,’ said Dan Encell, director of the estates division for Prudential California Realty in Montecito.”
‘”July’s sales and prices did not show much change,’ said Mark Schniepp, director of the California Economic Forecast. ‘We expect to see more of a reaction to the credit crunch when we get all of the August numbers.’”
“Up in the North County, home sales and prices were mostly in negative territory. Santa Maria and Lompoc also report the majority of foreclosures that have spiked steeply for the county this year.”
“The Lompoc Valley took the biggest hit last month, with sales dropping by 47 percent. Lompoc’s median price of $350,000 was down 13 percent from a year ago. For the year-to-date, Lompoc home sales were off by 19 percent, but the median was only about 6 percent lower, to $395,000.”
“In Santa Maria, sales dipped by 33 percent in July and the median was down by 12 percent to $389,000. For the year so far, Santa Maria’s sales were 21 percent lower and the median was $400,000, or 11 percent below a year ago.”
The San Francisco Chronicle. “Celine Damonte and Warren Ganda are in contract to buy a five-bedroom house being built in Oakley, big enough to accommodate their entire brood. It will be ready in late October.”
“But before they can afford a new house, Damonte and Ganda need to sell their existing homes. Each already owns a three-bedroom home in Antioch, where there are 1,374 homes on the market, or 1 out of every 22 residences. At the current rate, it would take 21 months to sell all the homes in Antioch now on the market.”
“Her Realtor, Janice Spencer in Antioch, has marketed the house aggressively. Its $475,500 price (down from $495,500) is moderate for the area, especially considering that it has a pool. In seven weeks on the market, the house has been viewed by just one prospective buyer.”
“‘How can there be no buyers? None?’ Damonte asked. ‘It’s not even a buyer’s market; it’s a nobody market. We’re not flipping houses or trying to cash in. We just want to move on with our lives. We’re in a tough spot.’”
“Ganda, who lives a couple of miles away, said there are dozens of ‘For Sale’ signs in his immediate neighborhood, so he isn’t optimistic about the prospects for selling his house.”
“Earlier this year when they signed papers for their new, unbuilt home they assumed each of their homes would sell for about $510,000. That meant they could readily afford the $742,000 house. So far, they’ve put down $7,000 to hold it. But like most people, the rest of their money is tied up in their respective houses.”
“Pulte Homes, the developer, has been very understanding. ‘I called and asked, ‘Is it hopeless?’ Damonte said. ‘They said, ‘Oh, no, no, no, don’t run away.’”
“Pulte said it would accept a 15 percent down payment instead of 20 percent and is open to renegotiating once they get an offer on one of their houses, according to Damonte.”
The Press Democrat. “About 400 people jammed into a Rohnert Park hotel ballroom Sunday for an auction of 22 Santa Rosa condominiums, and all had buyers in about one hour.”
“It was the first time in more than 10 years new homes had gone on the auction block in Sonoma County. This effort, by builder Centennial Homes of Novato, was an attempt to get something out of the current home sales slump.”
“All of the Chanate Village condos went well above their minimum bid, which was about 40 percent below the original asking price. But the successful buyers got them at about 15 to 20 percent lower than the asking price.”
“Dan Morgan, Centennial’s CEO, called the sale bittersweet. ‘I’m happy that all the units are sold,’ Morgan said. ‘I’m happy to see some people got some really good deals.’ But the project still lost money, he said.”
“Auctioneer Dean Cullum worked up a sweat by the end of the hour, started with $5,000 bid raises. ‘I got within a thousand dollars,’ said Kathleen Pozzi, who admitted she went beyond her maximum price. ‘I don’t know whether I’m depressed or relieved,’ she said afterward.”
“Buyers were escorted out of the ballroom to a nearby side room where they opened escrow. But most of the crowd, like the Reineckes, left via the front door. But Michael Reinecke and his wife weren’t deterred.”
“‘We’ll just wait for the market to get crappier,’ Reinecke said.”
The Record Searchlight. “July home sales in Shasta County reached their lowest level in 12 years. DataQuick reported Monday that 169 homes closed escrow last month, the fewest since July 1995, when 165 homes sold, and down from 231 sales a year ago.”
“July was the fifth consecutive month the median sale price for all homes dropped on a year-over-year basis, DataQuick said.”
“Realtors and builders blame a glut of homes on the market and tighter loan underwriting requirements which has shrunk the pool of eligible buyers.”
“‘There’s still money available, but what it (stricter loan rules) will do is weed out some of the people with less-than-stellar credit,’ said Brad Garbutt, past president of the Shasta Association of Realtors, adding that even prime borrowers are getting scrutinized more.”
“The Shasta Association of Realtors reported 2,127 homes on the market Monday. The group reported 180 homes sold in July.”
“Greg Lloyd, incoming president of the Shasta Association of Realtors, said borrowers need to bring more income documentation to the table than they did a year ago.”
“‘During that refi and subprime craze, you could be a dead dog for four days and still get a loan,’ Lloyd said. ‘Now it’s coming back to where lenders want full or partially full documents before they make a loan.’”
“Michael Chord, regional vice president of Eagle Home Mortgage in Redding, said his industry has to re-educate the public on how to obtain a home loan. ‘For four or five years the industry did a great job of educating the public that you don’t need any money down, you don’t have to document your income,’ Chord said.”
“Rick Goates, a Redding real estate agent, said sellers need to realize they have competition. ‘The days are long gone of throwing a high number up on a home and hoping it sells,’ he noted.”
“Meanwhile, buyers can wait for prices to drop, but if they find the home they like, don’t be afraid to make an offer, Goates said. ‘What have you got to lose?’ Goates said. ‘It would be a shame to miss out… just to save a couple of thousand.’”
Anyone else see “The Closer” last night on TNT?
Murder victim was an auditor. Dude under investigation had overcharged police deparments… needed the money to complete their Hollywood Hills flip.
Turns out, the wife of the fraudster actually filled the auditor in hopes it would give them time to complete the flip and repay the money they’d embezeled….
Crying murderer… our contractor lied to us… realors lied to us… market turned against us… we’re on the verge of losing everything!
It has reach pop culture awarness level…. No going back now!!!!!!!!!!
I love it.
It’s one of my fav shows (don’t watch much TV) giggles. Pop culture awareness. Good one.
Make sure to watch “Flipping Out” on Bravo. It’s on tonight.
I hate that guy that is on there. I pray that he takes it in the …..oh wait, he would like that. I pray that he gets beat to death by his spiritual advisor.
I saw it. Great show.
I hope all “flippers” are as greedy as this guy. Whenever he makes any money, it goes right back into the business. He can’t even make payroll… I’ll buy one of his houses in a year, from the bank.
‘It doesn’t seem the buyers care about granite countertops,’ said (realtor) Tim Adams
That’s a quote for the history books right there.
Granite counter tops are great as long as your kitchen is never used for say COOKING !. Give me Corian any day.
One counter, not near the stove, should be marble in a gourmet kitchen or if your husband used to be a pastry chef >; )
Mo –
Why not granite? I have them in my rental (shining a turd IMHO) and I haven’t had a problem. I do cut on wood (or plastics for meat and fowl).
Gwynster –
Thanks for the great idea. I’ve just gotten into baking. Way different from cooking, I think.
Unsealed granite countertops are pourous and can be stained by fruit, grease, etc. When using a sealer, it usually needs to be redone within five to ten years (the sealer will have instructions detailing this.)
Granite is really more about status than functionality.
Thanks for the reply! Ideally, I think that I would like the whole counter-top to be a cutting board.
That much aged hardwood will get really expensive.
Just going “pie in the sky” here. And it looks good in my head.
A man’s got to dream!
Right up there with Admiral Beatty’s “There seems to be something wrong with our bloody ships today,” after two British battlecruisers blew up in the first few minutes of the Battle of Jutland, 1916.
I liked, “A few years ago, you could be a dead dog for four days and get a mortgage…”
“‘We just kind of laugh, because (buyers) really low-ball it,’ Maclaughlin said. ‘We’re talking about 30 to 40 grand below asking price.’”
Hey, just wait until they start making offers 150 grand below asking price—you guys will be doubled over in hysterics then!
Beat me too it
.
-too
+to
I liked the quote just above it too:
“‘Why am I having a hard time selling it? Because the market is awful,’
These clowns think that shaving a few measly % off peak bubble price is “awful”. Imagine how they’re going to react to 30-50% cumulative cuts in a few years (all but inevitable, barring hyperinflation). I suppose we’ll be seeing colorful new terms like “bloodbath” and “ass-rape”.
But if we have hyperinflation interest rates will soar, so prices will have to come down even more! Eventually a side of USDA Prime beef will cost more than a house!
Even better, she convinced the seller to pump $15k of upgrades into their house.
Wait until the offers just stop completely. How offended will these dipshots be then?
–
It is not the markey, buddy, you are falling behind the curve. Wisen up and beat the rest of the idiots in lowering the price.
Jas
No these idiots will just chase the market down until they hit NOD.
The RE angle of repose
Gwynster, I had to look that one up. You must be an engineering professor.
LOL nope, MFA from Cal Arts. I just read _a lot_.
You beat me to it!
I had written “Also a Wallace Stegner Pulitzer Prize winner…” while I waited for my pilfered web access to load the page.
I was actually referring to the engineering principle. A former boyfriend was studying to be a civil eng and I used to read his old text books while he studied. Why couldn’t I have dated an finance or econ major? I would have absorded more useful information.
Mr. Stegner was referring to the principle too in his “Angle of Repose.” LOVE that book.
It’s on my reading list now. It will have to wait for me to finish Mason & Dixon. >; )
This is what really irks me about realtors. The realtor representing the buyer should earnestly present the buyers case. Instead, I think they meet with the seller’s agent and discuss how much more they can get the buyer to go up. I’ve seen that firsthand with our agent 7 years ago - inflated valuations of homes that sold for a lot less months later. AND THAT WAS SEVEN YEARS AGO.
Realt-whores have NO incentive to work with a buyer on lowering the sales price. That is what is concerning me about the whole situation. The longer the sellers hold out (with encouragement of the realtors), the harder the fall will be. I think the same applies to the Fed and its approach to the mortgage debacle. The longer they put off market corrections, the harder the U.S. economy is going to be hit.
Realt-whores have NO incentive to work with a buyer on lowering the sales price.
Well, yeah. Their commission is based on the final sales price. Lower price equals lower commission. Both the buyer’s and seller’s agent have every incentive to maximize the sales price. The structure of the transaction has an inherent conflict of interest.
I wish we could stop tolerating this kabuki dance of “buyer’s agent.” It seems like it would be a lot better to pay the buyer’s agent based on how much they SAVE the buyer. Instead of a flat 3%, give them 1% of the initial asking price, and if they can close the deal for under asking, give them 20% of the difference. Make them actually WORK for the money.
From our own experience working with a Realtor to make an offer, the buyer’s agent is primarily concerned with making a sale. So the advice we constantly got was “if you can afford it and like the home, you shouldn’t let a few thousand dollars keep you from getting the house.” (In this case a “few thousand” was $20k on a $280k home.) Excuse me, but this house has been on the market for 6 months without a single offer. And you are advising me to bid against myself? Thanks for representing me Ms. Buyer’s agent.
give them 1% of the initial asking price, and if they can close the deal for under asking, give them 20% of the difference.
you just described hedge funds
I’ve always used the listing agent. They are much more motivated by 3% rather than 1.5%. Though in some states (maybe CA) dual agency is not allowed ?
Actually, it’s one of the very few states that DO allow it.
Hmmm so we just go dual agency and appeal to the listing agents baser requirements, i.e., closing a sale at any cost.
I’d like to propose a fairer commissions system; one that would address precisely the issue that you mention: the lack of incentive for the buyer’s agent to negotiate a lower selling price.
Here’s how it works. For simplicity, let’s assume that the 6% commission still holds (that really ought to evolve into a flat fee, but that’s a different twist). My system proposes that the 6% is split evenly ONLY if the property sells for asking price. If the property sells for over asking, the seller’s agent gets more than 3% and the buyer’s agent gets less than 3%. Vice-versa if the property sells for less than asking.
There could be a minimum commission (say, 1% or 0.5%) which ensures that neither agent’s commission goes to zero regardless of the eventual sales price (although that might not be a bad idea either as it would prevent both lowballing and phantom overbidding).
Think about what this system would do in the long term to original asking prices. The seller’s agents would actively encourage sellers to list prices as low as possible, thereby increasing the chances that they would get a big commission on the sale! On the other hand, the buyer’s agent wants to see as high an asking price as possible so they can negotiate lower for their buyer, thus increasing their commission. But since they have no control (I hope) over the setting of the asking price they are in direct competition with the sellers agent, and have nothing to gain by secretly meeting with them. Neither agent can gain without screwing the other, so it is a self-regulating system.
Agents shouldn’t have any reasonable objections to this new system because it doesn’t even take away from their 6% total commission like Help-U-Sell and FSBO options. What it will achieve, I believe, is firstly, a transformation of the buyer’s agent into a true champion for the buyer, and secondly, a realistic asking price for every property.
I’d like to get everyone’s feedback on this proposal, and see if there is any possible way to publicize the idea. I do believe it will help everyone involved in the process - buyers, sellers and realtors - by offering each party a fair deal.
Seems sound from the perspective of a home buyer, but there is one big problem - agents for both buyers & sellers have profited handsomely from the conflict of interest under the current system, so why would any of them want to change it in a way that tends to slow price growth and therefore commission growth?
They like the dishonesty & conflict, they don’t want a “fair deal“, they want bigger commission checks, and are willing to lie, cheat & steal to get them.
Well at the current rate of sales they are losing out, because big commissions x miniscule sales = not much profit. This system will walk the asking prices down pretty quickly to the optimum point where the supply and demand curves meet. Realtors on both sides will then get the maximum product of commissions x sales.
If they don’t see the long-term advantage to themselves in this deal, then let them all fry, I say.
I had the same idea, that the BUYERS agent gets a percentage of what he SAVED you, like 20% of the discount you get.
The problem is, the fees are paid by the seller, not by the buyer. At least the way the contracts I’ve seen are written.
Is there a reason you can’t have a side agreement with the agent that makes it worth his while to negotiate on your behalf?
Would that need to be disclosed?
If I pay 95% of asking or better, I make up the part of the 3% that you didn’t earn on the higher sales price. If you get it below 95%, I pay you 10% of everything additional that I save, in ADDITION to the 3% you are already earning.
There is no case in which the agent isn’t better off. And if the agent is good at negotiating, they’ll start low, and fight like hell for you.
If you read the fine print on their contracts, they state that they do not represent you.
Anyone know exactly where that nomrally shows up in the contract? Because the next time some realturd starts the “but I’ll be representing YOU…”, I’d like to make sure that section is left planly visable when I fold it into sharp corners and suggest they shove …
Gwynster - it is often a separate disclosure form, but it can be in the document itself. California Civil Code section 2079.16 states what has to be in the disclosure. (Obviously, other states will have their own rules, but IIRC you’re in Davis or Sacto, so this will apply). Of course, it really is a load of crap, since under the section for a dual agent it states that the agent has a fiduciary duty to both the seller and buyer; how can that work?
You should be able to do a search and find a sample contract for your state (CA) and then also see what typical terms are involved. The bigger issue IMHO is dual agency, where the listing agent goes for the whole 6% by representing both parties. Technically the listing agent can only represent the seller, since they were the first to enter into a fiduciary relationship with the agent. Thus if you as a buyer use the listing agent, you are basically screwing yourself because the listing agent has no duty to represent your interests. So if you are ever shopping for a home and the listing agent offers to represent you, this is a sign that he/she may not be very ethical because if he/she were ethical, then he/she would recommend you have your own agent.
As a dear friend of mine used to say “why knowing get yourself into a situation which requires an attorney to get out of?” From my point of view, just replace attorney with realtor and that about sums up my outlook.
If you don’t bring your own agent, you get screwed. If you do bring your own agent you get screwed. Why should they get both halves of the transaction when I have zero interest in them representing me? I can negotiate my own end just fine. I’d rather that 3% get taken off the price of the house. See what I mean?
I agree Gwynster that it’s desirable to represent yourself in the negotiation. I’m going to get a real estate license so that I can help my family members with their future house needs. There is some work and knowhow involved in completing the forms, but I don’t think you’d have any trouble mastering it by reading one introductory realtor book. And you certainly don’t need a license for your own house purchase.
I figure if I can negotiate technology transfers and pop out NIH grants, I should be able to survive a single RE transaction. I also have unrestricted access to a property law attorney. I can’t see why someone in my position would need a realtor. I’d be paying what, 3%, for someone to play secretary?
Actually, anyone who reads this board and comprehends even a third of the topics discussed here is better prepared then most realtors. Thanks y’all for a helluva 2 years of quality education.
Agreed. The best situation is you representing yourself and then also letting the listing agent get a point or so for his/her efforts.
Realtors act in their own self-interest (just like each of us do). They can be temporarily allies or temporarily adversaries, but their primary concern is NOT your welfare; they are just players in the game.
However, I think it’s too simplistic to assume that realtors will always conspire to drive up the price in any given deal. Realtors make their money from transactions, not from holding overpriced listing for months. In fact, I believe we will see more and more agents putting pressure on sellers to lower their asking prices, and thereby help the downward slide.
The point is not realtor self-interest vs a buyer’s welfare being the primary concern (a false dichotomy), but that the current system creates an inherent conflict of interest — what’s good for the buyer’s agent ISN’T good for the buyer. In most businesses the agent gets a cut of the money he earns for the client, not of the money he spends.
Which is exactly why the so-called “buyer’s agent” is not an agent of the buyer!
Anywho who is paid a commission on the sales price is working in the interests of the seller, period. That’s all there is to it.
Agreed, the “buyer’s agent” can hardly be trusted to represent the true interests of the buyer.
But once again, I would assert that realtors aren’t always going to work in the best interests of the seller, either: in the the final analysis, they are going to push for ANY sale, rather than no sale at all. And in many cases, the realtors will do better for themselves by selling quickly at a lower price, before they have spent money on advertising and time on open houses and showings (refer to the Freakonomics chapter on realtors.)
I disagree with folks on this part of the thread because of something that I read in Freakonomics (sp?) and something that I experienced as I sold. Realt-whores want to close the deal as fast as possible.
The seller agent is getting 1-1.5% in his or her pocket in the end, right? So the buyer and the seller agents get together to jam the buyer out of 10K, for example. That’s only $100 extra for each of them. Why would they bother? Or could someone explain why I am wrong?
Always Be Closing!
Makes sense to me.
If you assume that Realtors are always acting in their own self-interest, then you won’t feel angry, disappointed or betrayed when they do.
This is what really irks me about realtors. The realtor representing the buyer should earnestly present the buyers case. Instead, I think they meet with the seller’s agent and discuss how much more they can get the buyer to go up. I’ve seen that firsthand with our agent 7 years ago - inflated valuations of homes that sold for a lot less months later. AND THAT WAS SEVEN YEARS AGO.
Realtwhores have NO incentive to work with a buyer on lowering the sales price. That is what is concerning me about the whole situation. The longer the sellers hold out (with encouragement of the realtors), the harder the fall will be. I think the same applies to the Fed and its approach to the mortgage debacle. The longer they put off market corrections, the harder the U.S. economy is going to be hit.
Sorry for the duplicate entry. My entries sometimes take 5 minutes or more to show up and I am just not that patient.
My apologies.
Well, you just learn some sedateness, Mr. Man, because if there is anything those who post on this blog demand, it is a calm, mature, reasoned, non-crazy, and thoughtful response.
$30 to $40K under the asking price is not at ALL a LOWBALL offer!
“$30 to $40K under the asking price ” To evaluate the offer you need to know the % not the $ as well as the asking price and the square footage. All this talk of $$ is more misleading than informative.
“$30 to $40K under the asking price is not at ALL a LOWBALL offer!”
Agreed.
Now when I offer $200K on a $600K then I will leave a little room for seller to come back with say $50K higher, and if they balk then I walk, and go next door and repeat. That’s the beginning of lowballing.
I’m already doing just that and enjoying every minute of “insulting the sellers.”
Let ‘em rot.
At first my mind saw 30 to 40% with the word lowball, then I realized it said 30 to 40 grand - and I just kind of laughed.
My goal is to become a “predatory” buyer.
Well, most of us here feel that sellers were really high-balling it from 2003 to present with ridiculously high asking prices. And who’s getting the last laugh?
And then I kind of laugh back and make an offer on the next stucco box, maybe that Realtor hasn’t made a sale in a while and isn’t laughing any more.
“‘We just kind of laugh, because (buyers) really low-ball it,’ Maclaughlin said. ‘We’re talking about 30 to 40 grand below asking price.’”
Just like we tell the kids, laughter always comes before the tears when somebody gets hurt.
30..40% below asking price will be common, very soon …
No, 30% to 40% below peak price will be common. But prices have dropped by 10% to 20% in the past two years. By this time next year it will be 20% to 30%. In 2 years 30% to 40%.
Few sellers will take 30% off their list (unless they are still pricing at the peak ‘wishing’ price).
‘We’re not about to give it away,’ Manny said. ‘The house is almost paid for.’”
What does it being almost paid for matter to what it’s worth now? My 2003 Chevy is almost paid for (0% GMAC), but I don’t expect to get what I paid into it when I sell it. In fact, probably less than one-third.
Point is, they are in no hurry to sell. They are under the delusion that prices will come back in a year or two.
When my house was on the market, I was pushing for a big price cut to undercut the market and get a fast sell. Realt-ho kept saying to be patient. What a bunch of fools!
I don’t understand why you had to be “pushing” for a price cut. Why couldn’t you tell the realtor that the price WILL BE $X? Is that part of a NAR contract that they get to set and control the price?
My wife… I said cut the price, wife said no. Got mad at me for arguing with the realt-ho. Technically, my wife’s house since she bought it before we married, and she’s willing to take the $100K loss over the next 2 years.
Darrell,
I’m feeling your pain right now. I love my house, love the area (Anthem), and the wife hates it. I keep saying lower the price (we’re already the lowest) and telling her the same things about the market. She doesn’t want to loose the money. It’s just really hard for some people to understand that this is a sinking ship.
Lip
Sounds like both of your Betty’s could use a Joshua tree up the flamma-zammer. The only problem is the attitude adjustment will be a just a little too late, but go ahead and and do it on principle anyway.
“Still, Rose Vicente says she isn’t worried. She and her husband, Manny, put their Simi Valley home on the market about two months ago, with plans to move to Texas by the end of the year.”
They want to be in TX at the end of the year…yeah…good luck for them with that attitude. LOL
Hello, txchick57? Would you please give Rosie a Texas-style greeting with that 20-pound trout?
We have enough idiots here already. Tell her to shag her ass back to Clownifornia.
Just don’t send her my way.
Please don’t come to Texas and drive up housing prices. I’m trying to catch a distressed property in the 2008-2009 time period.
Dammit. Our average IQ is fixin’ to drop even further…
The state IQ did get a boost when dubya left for DC. Hopefully he moves to Mexico after his term is over.
I believe the plan is for him to escape legal action by retiting to Paraguay.
LOL! This thread made my day!
“They want to be in TX at the end of the year…yeah…good luck for them with that attitude. LOL”
Somehow I don’t believe them, but if they are telling the truth what’s the problemo? It’s essentially paid for so rent the bugger out and use the rent to pay rent down in Texas while the property goes down in value, that way you won’t be giving it away!
I’m betting they are planning on using some of the money from selling for a down on the new place. So many people banked on their homes that never saved anything. The house was always going to be there to rescue them.
This probably means they just made their first mortgage payment
Give it away = sell for less than peak bubble price + 20% “genius” premium + 15% “my house is special” premium.
How can there be no buyers? None?’ Damonte asked. ‘It’s not even a buyer’s market; it’s a nobody market.
This is a great new description for the RE market, a “nobody market.” Credit the seller with thinking of this one. As sales keep dropping, nobody buying and nobody selling. Nobody making a commission either.
It’s a nobody’s market precisely because sellers like this continue to overprice their properties.
He’s a real nowhere Man,
Sitting in his Nowhere Land,
Making all his nowhere plans
for nobody.
Doesn’t have a point of view,
Knows not where he’s going to,
Isn’t he a bit like you and me?
Nowhere Man, please listen,
You don’t know what you’re missing,
Nowhere Man, the world is at your command.
He’s as blind as he can be,
Just sees what he wants to see,
Nowhere Man can you see me at all?
Nowhere Man, don’t worry,
Take your time, don’t hurry,
Leave it all till somebody else
lends you a hand.
Doesn’t have a point of view,
Knows not where he’s going to,
Isn’t he a bit like you and me?
Nowhere Man, please listen,
You don’t know what you’re missing,
Nowhere Man, the world is at your command.
He’s a real Nowhere Man,
Sitting in his Nowhere Land,
Making all his nowhere plans
for nobody.
Making all his nowhere plans
for nobody.
Making all his nowhere plans
for nobody.
WTF? First I was a renter and now I’m a nobody? Going to hurt my feelings with talk like that.
As a renter you were already a nobody. D’uhhhh.
This is a great time to be a nobody!
Yes, they are not making any more nobodys. Be a nobody now or by nobodied out forever.
LOL!
NA - Nobody Anonymous. Come learn the 12-step plan for becoming a Nobody when you really think you are a Somebody.
‘A lot of it is affordability and the subprime market,’ said economist Eduardo Martinez. ‘There is a big allotment of oversupply in those areas, and until demand increases, it’s not going to come down.’”
What Eduardo fails to say is that when affordability returns demand will return.
The low “ballers” that the brokers and sellers are complaining about, are just people that don’t want to end up in the same position as all these people who now can’t sell their house or are getting foreclosed on. Instead they try to paint them as some evil people trying to steal a house from someone else.
More to the point, the “low-ballers” ARE the demand returning. They represent the only demand that is present in the market. The fact that the sellers won’t adjust the price curve to meet the demand curve simply means that the market won’t clear, and the inventory will continue to increase.
Exactly. And at some point the banks or secondary market bagholders will lower the prices to meet the demand curve.
But there is that possibility that the low-balling people are going to continue to low ball even though the asking is incrementally lowered, so the bid and asked prices keep getting lower but only few or no sales are happening. A moving price target, getting lower and lower, until market clearing price equilibrium is reached. In this scenario, the time to the bottom is controlled entirely by the supply side. How fast do the sellers want to (or have the ability to) follow the bidders down to market equilibrium?
Got 10% down?
When I think back to the 90’s I can remember a number of friends who kept waiting to buy until prices fell sufficiently. They weren’t lowballing - just waiting for years. Did people lowball back then? Or have blogs like this empowered people to take the initiative and demand lower prices? I’m impatient to see how quickly prices fall - will it be a repeat of the 90’s or will they fall more rapidly?
see, the uncertainity principle wins again
I’m starting to finally see some panicky signs in my neighborhood in the Bay Area. It seemed like that for awhile, all the market negativity going on in Sacramento and San Diego wasn’t really affecting the market in the Bay Area. Homes were still selling decently up until around February.
But just a few weeks ago, someone near my rented house put their home up for sale. The home quickly had a number of open houses ( of which nobody showed up) and within a week already had a “price reduced” sign. Yesterday I noticed that they were having an open house…. at 3:00 on a Monday afternoon. These people are desperate.
I’m starting to see some tell-tale signs around here and feel confident that prices will be going down rather dramatically. What I and many who sat on the sidelines assumed for years, which was that even in the Bay Area people were buying in over their necks seems to very much be coming true.
Jetson,
where are you located?
@Norcal Ray
Google “Cogswell Cogs”.
Luv,
Jen
A few sparse, sparse indicators here in Pacific Palisades…a house on Via “Help U Sell” or along those lines, way overpriced, shows up with an “in escrow sign”. Now, still for sale, with a “for lease” sign. Don’t know the details, however.
I’ve got another story in Dublin, too. 2 years ago, one of the rental communities (Cross Creek Apartments) converted to condos (new name, Village Park). 3 bd, 2 ba, 1070 sf….starting prices, $440k…eventually went up to $560k (possibly higher).
On a regular basis now there are a minimum 3-5 for sale signs on the main road (Amador Valley Blvd), and one of the signs has an added announcement…foreclosure. There may be some inside the development but I haven’t ventured through there yet to look.
Yep…Foreclosure. Realtor.com lists one of these 5 at $410,500. I believe this is the one in foreclosure. The highest asking of the other 4 is $499,950.
A lot of people are hurtin’ in Dublin, CA. There are 354 pre-foreclosures listed as of today.
BayQT~
What you’re describing has been going on here in San Jose since the spring - lots of open houses, almost nothing sells. In fact, the house next to the one we rent has been for sale since March. Price reduced a few times, now sits at $690K. In this particular cul-de-sac, houses were selling in mid-800’s two years ago.
I’m fascinated to see how it’s all going to play out, this is the first time in life I see things like these unfolding.
Max, I’m amazed at the way things are happening. This is the first time any of us had an internet window on a disaster of this magnitude.
I sold one home in 1992 - toward the end of the last housing drop. All I knew then was that there were a lot of homes on the market, and I wasn’t getting any offers. (My realtor conveniently forgot to tell me we were in a housing crunch.) I finally got an offer (and jumped on it).
Now we can read this blog of Ben’s and we’re introduced to news from all over. Fascinating. At least it is for me (sitting on an old 30 year fixed and not intending to move).
$690K. You would have to shell out 69,000 for 10% down or almost $140K for twenty to get a Jumbo loan these days. This comes with higher interests rates. chances of selling….0%. It’s gong to be a theme in BA. VERY SMALL % of people will have these kind of money. Yet, if they are smart enough, they will wait….
From the text of the article, re: the Vicentes who won’t “give their house away” –
“”We’re not in a big rush to sell,” Rose said. “If it takes one to two months, it’s OK. It’s just a matter of waiting for the right person to buy.”"
If it’s OK if it takes one to two months to sell, does that imply it’s something other than OK if it takes three or four? Or (as is more likely), twelve?
In twelve month it will have a 50% haircut.
I have given up thoughts of ever trying to explain the present value of moneys to morons. If they cannot grasp 2 months, they will not grasp 2 years. They will chase the market down and when they finally sell, it will be to a vulture - possibly someone from this blog. Being a vulture is a wonderful compliment. Hawks are beautiful to watch, but nothing soars as spectacularly as a vulture.
The nature of people is there is always hope and it will bounce back. Unfortunately this does not happen as frequently as people believe.
“it will be to a vulture - possibly someone from this blog”
did someone call me…LMAO
Yep, the bottomfisherman is circling his prey, waiting for the perfect time to launch a spectacular lowball offer that will decimate the greedy FB.
Let ‘em rot.
Bottomfisherman,
A really generally enjoy your comments but your “tag line”, “signature”, “autograph”, of “let them rot” is just plains lame. I’ve been a lurker for a couple years now and never posted on this blog but felt compelled to finally say something because I think your attempt to establish a tag-line in a similar vein to Neils “got popcorn” is just plain divisive and ignorant and will never catch on. I value this blog because more often then not contains a rational exchange of ideas and your “let them rot” makes me not think so much of housing and equity bubbles but rather the bait I use to go crabbing with on the Oregon coast. Please continue with your commentary but leave your “rotten” discourse out of this blog from now on. Ben am I totally off base here?
Plasma4money,
I don’t think you are off base on this at all. We can dislike individuals, but we really don’t want this to get as bad as it could. My particular tagline is only meant to put a little humor into what is a scary situation. There are reasons I drop it at times.
I also look at how those who would like to perpetuate this will look at things. (Yea… my schadenfreude probably doesn’t help.)
Bottomfisherman, I too enjoy your comments. You’ve had some great quips.
Naturally I live the editing to Ben. If someone has an issue with my comments (and I’m sure there have been times), do comment. I know I’m not the only one frustrated its gone to this point and I know a few times I regretted what I posted.
Neil
Clarification,
I’m not disliking anyone on this blog. I don’t want it to seem we’re fear mongering.
Neil
I like popcorn. Popcorn, popcorn, give me more popcorn.
I think this is a frustrating situation and a bit of venting is allowed. I mean, it’s not like we’re getting graded on good conduct. If I wanted to read a bunch of visual Germade, I’d go somewhere else.
Neii,
Hope I didnt offend and I hope I didnt offend Bottomfisherman. I love rockfish especially snapper. And I love this blog. I just really find that my reading of the comments gets derailed when I see comments that seems to be denominated by emotion rather then rational discourse. Your popcorn comment is awsome and will go down in the in the HBB history books. I love the idea of sitting from a safe distance and watching the action unfold but I am not comfortable cheering the carnage however badly people have behaved. We should leave that to the forum in Rome about 2000 years ago.
Do you know one and two months away are called? October and November. I guess you’re expecting a nice price bump when the Thanksgiving house-seekers rush out into the market! Yeah, it’ll be a mad rush, multiple-offers, bidding wars… that’s if you don’t want to hold out for the annual December Boom.
Oh, and after that, the Super Bowl! Yeah, just hold out for one-to-two more months… see that rainbow? Just keep chasing it down til you find the pot of gold.
People are smart
“I don’t want it to seem we’re fear mongering.”
Or fishmongering.
“Her Realtor, Janice Spencer in Antioch, has marketed the house aggressively. Its $475,500 price (down from $495,500) is moderate for the area, especially considering that it has a pool. In seven weeks on the market, the house has been viewed by just one prospective buyer.”
“‘How can there be no buyers? None?’ Celine Damonte asked. ‘It’s not even a buyer’s market; it’s a nobody market. We’re not flipping houses or trying to cash in. We just want to move on with our lives. We’re in a tough spot.’”
- Celine, first of all- fire Janice your realtor. She is a loser giving you bad service.
Secondly, it is a ‘Buyers’ market …. cut your price 30% and move on with your life.
The hardest thing to learn - take your losses.
“price is moderate for the area, especially considering it has a pool….”
Pool = attractive nuisance. Turns off a lot of people, including those with small children, those that don’t like doing a lot of maintenance, those who can’t sit out in the sun for long, and those who don’t like paying a pool man or woman.
But it’s great for those of us who have no kids, are addicted to tanning and like to swim naked
You and Mr. Angelo Mozilo - I be shocked!
“You and Mr. Angelo Mozilo - I be shocked!”
Do I want to know how you found out that Mozillo likes to swim naked?
I hope 57 is your favorite variety of ketchup and not your age, because I just got a frightening visual.
Not even close.
Not even close. I got carded at Whole Foods last night when I bought some beer for my husband.
I’m glad . . . I’m sure if you took a moment to visualize what I’m talking about, you’d be scared too!
“We’re not flipping houses or trying to cash in. We just want to move on with our lives. We’re in a tough spot.’”
ROCK…..>>>>…….HARD PLACE
Celine, clearly Janice hasn’t taught you the first lesson in real-estate : “Happy things to happy thinkers.” Your negativity is driving away buyers. Who would buy a house from Ms Grumples? She just keeps lowering her price– another negative.
Celine, you are doomed to wallow in your own misery for eternity if you don’t open your mind to optimism. Raise your price and it will Raise you… You can’t just give the house away!
Yes I too have watched “the secret” its like science
“Meanwhile, buyers can wait for prices to drop, but if they find the home they like, don’t be afraid to make an offer, Goates said. ‘What have you got to lose?”
Maybe lose a few hundred grand which means an effective loss of income of $1K-2K a month for the rest of my working life. Gee, no biggie.
Does Mr. Goatse want you to ’stretch’ a little if you find that dream home?
oh, the days of FC
Now THAT is funny!
It’s kind of like the union workers. They strike for more pay and the strike is usually coordinated by Union reps that are actually getting paid by union memberships. They strike for 1, 2, 6, 12 months. Lost income. Next thing you know they negotiate a 1-3% increase and $100 dollars more on benefits. What the hell is that? You just lost a huge chunk of income for a few thousand dollars spread out for a few years. Geeez
“Pulte Homes, the developer, has been very understanding. ‘I called and asked, ‘Is it hopeless?’ Damonte said. ‘They said, ‘Oh, no, no, no, don’t run away.’”
“Pulte said it would accept a 15 percent down payment instead of 20 percent and is open to renegotiating once they get an offer on one of their houses, according to Damonte.”
Say what you will but “WOW” that Pulte, above and beyond bending over backwards for those nice Damontes.
Pulte is bending over your correct but I don’t think is for a nice Damonte.
Pulte is bending over backwards to get that Vaseline ready.
Let ‘em rot.
Quit being a ‘Neil’ poser dude! Ditch your tag….you said it five times in this thread already!
“Let ‘em rot.”
This is exactly what a vulture would say, leaving the roadkill for later when it is a tad more delectable. Fits right into the HBB ethos
Anyone else notice that the MSM is now pointing out that accepting a mere 15 percent down payment is “very understanding?”
IIRC, 55 percent of Cali homes were going “pre-turmoil” with a 5% or less down payment. Are they trying to educate J6P that the days of zero down are over? (I know, a few loans, like cockroaches, persist. But I do not think for much longer. “Much longer” is Friday.)
Got popcorn?
Neil
I think September 1st is Saturday (not Friday), or am I missing yr point?
Do loans close Saturday? If so, my misunderstanding. Anyway, my only point is that every week seems to start with tighter rules and we seem to be at the end for 100% CLTV loans.
Neil
The hard money brokers are going under on the Central Coast.
http://centralcoasthousingbubble.blogspot.com/
It’s a combination of sadness and stupidity.
Never allow construction $$$ draws on milestones you haven’t personally verified. I thought that that was standard wisdom.
Its famous wisdom in account management!
For some programs, “starting” allows for a draw of funds. I’m going to use an industrial example (that was true!). The factory received funds for “starting” the purchase of machinery. So that part of the program went quickly. (Lots of credit was taken for “starting” machinery purchases, which has a few prerequisites.)
But one of the auditors noted that certain accounts were not being drawn upon… so he went out to the factory personally. There he saw hundreds of tape marks on the floor labeled “press”, “EDM” or “lathe” for the future home of the expensive equipment. But at this point, there should have been expensive equipment populating some of the factory floor. Turns out… none had been ordered. “Start” was when the factory floor space was allocated for the machine.
The auditor knew it meant not only figuring out where the machine was going (factory flow is just as important as traffic flow in a housing community) but it also including specifying the machine all the way to bidding for “start”. After bidding its a short hop to ordering… give six to twelve months its then receiving (when more funds would be released. But the factory was clever, the quickest release of funds was accelerating “starts.”
Instant termination of the contract with fines. Tape on the floor wasn’t considered due diligence. Just as “starting construction” won’t be for the builders. Expect some banks to report HUGE hits. I know one bank where the hit from Phoenix alone could be $5 billion for one bank! (Per dinner conversation from a worried banker friend, you determine if that’s worth anything.)
So its not just the little guys.
Don’t rush to buy. If you have a down payment, you’ll be able to buy easy in two years. Let all of the “but I deserve it” folks get washed out first.
Got popcorn?
Neil
Thanks for the update.
That’s as bad as that woman that lost both of her legs from ill-advised lyposuction. She was featured on the HBO documentary “Plastic Disasters”. She must have sued and gotten a huge settlement for her own stupidity.
About six months ago she appeared in a Florida newspaper. Her and her mullet-headed husband had been swindled in a Florida land scam. No doubt they took the settlement that was meant to provide for her future medical needs and used it to speculate in bubble-icious Florida real estate. I guess Medicare gets to pick up the cost for the rest of her stupid life. Yes, I have no sympathy for that blob of protoplasm and don’t expect me to feel guilty even if she did lose her legs.
“Pulte said it would accept a 15 percent down payment instead of 20 percent and is open to renegotiating once they get an offer on one of their houses, according to Damonte.”
I’m sorry, this made me laugh. We’ve gone from builders selling with nothing down, to acting generous because they’ll take “only” 15 percent down instead of 20. Whoda thunk??
http://finance.yahoo.com/q/bc?s=PHM&t=1y
I’m guessing that Pulte could really use the cash.
“The Vicentes recently reduced the price of their five-bedroom, 1,834-square-foot house by $50,000 to $599,900. They’ve since had plenty of calls, but mostly from investors offering much less than the asking price. ‘We’re not about to give it away,’ Manny said. ‘The house is almost paid for.’”
How many times have we already seen this qoute, for the seller to later get even LESS for their house.
Right around my in-laws house, there were two premium examples of this. In one, the agent told the seller to wait for a better offer than the $1.8 million offered. Final selling price, $1.5 million…
And next door, the agent once told us that the seller was not quite willing to go below $1 million. Final price, $875K.
And this was already 1 year ago, in a very nice area of Sacramento.
Those selling prices may seem high a few years from now.
Those prices will seem as crazy as what Cisco and Pets.com once went for. Does Sacramento really have that many high paying jobs? Note: Question pertains to *after* Realtors ™ and Mortgage brokers are excluded?
Got popcorn?
Neil
Just like after the tech bust when you no longer had day traders making fortunes or dot-commies rolling in options dough. They were wiped off the economic planet and left quite a gaping trader. Now we need to exclude bubbly realtors, mortgage brokers and flippers. They are all dinosaurs.
The latest batch of wage estimates came out today. I haven’t had a chance to digest them yet but I’m betting we’re going to see our MHI reducing slightly as those candyland jobs leave the market and are replace with jobs more inline with the rest of the community being surveyed.
Liked your blog. Let us know if you blog anything from the numbers.
Neil
Neil,
No we don’t. Welcome to our little affordability conundrum.
Thanks for all the information, you’re doing really a great work.
Heck, some of these “For Sale” signs even managed their way to Frankfurt, Germany. Probably the next “place to be”, manufacturing these signs. Or importing them from US consumers
“‘We just kind of laugh, because (buyers) really low-ball it,’ Maclaughlin said. ‘We’re talking about 30 to 40 grand below asking price.’”
Today’s lows will seem like mountain peaks tomorrow. I don’t give a crap what the asking price is, The asking price is a wish list. If I offer you 100K less that is the market unless somebody else has a better bid.
“‘We just kind of laugh, because (buyers) really low-ball it,’
Laughing implies some sort of power. As in “you fool, thou shalt be priced out forever as we already have better considerations for this castle of the realm.”
As Hoz noted… market price is the best offer. I think there will be denial in this market long after the trough…
Got popcorn?
Neil
“Today’s lows will seem like mountain peaks tomorrow. I don’t give a crap what the asking price is, The asking price is a wish list. If I offer you 100K less that is the market unless somebody else has a better bid.”"
No, that’s not the market until property TRADES at that level. Where someone is willing to sell and someone else is willing to BUY is the market; no more, no less. Low balls are nothing but lowballers’ wish prices until the market proves them right. Don’t get me wrong - low ball away. But those low offers are not the market…yet.
Fair enough point, but from a traders view the only thing one should care about is “where do I get out”. That is the market. If you need to buy a house (that you are short), where is it offered; if you need to sell, where is the bid.
That is all banks are concerned with, they don’t care if you are asking 600K and the bid is 450K. From the banks perspective the market is 450K.
i hear you. if you’re a forced seller, you have to live to live with prevailing bids. but not everone is a forced seller.
Obviously, you are correct but the market is going to be in stagnant waters for quite a while. As transactions dry up, the banks will look at comparable bids not offers. When there are not enough transactions to give adequate comps, for those individuals in Option Arms, this could cause massive adjustments to payments.
“‘We just kind of laugh, because (buyers) really low-ball it,’ Maclaughlin said. ‘We’re talking about 30 to 40 grand below asking price.’”
Geez….it’s laughable how the market has tanked because people like Maclaughlin haven’t quite figured out the grand experiment to see how high prices could be run has concluded. Now the new experiment is in process….how low can prices drop before they stabalize.
With sellers holding out for the higher prices they seem to think they deserve instead of the prices that the market can support the market is in a stand-off in some areas. Who will win? The buyer or the seller. Without money to keep funding the loans at the higher prices the sellers are the ones who will have to give in and drop their prices….how about by 30 or 40 grand….
So many good articles, so many stupid people. Where do you start?
“But with the housing market hitting the skids over the past few months, that’s just not good enough. ‘It doesn’t seem the buyers care about granite countertops,’ said (realtor) Tim Adams of. ‘The buyers are looking for deals.’”
Hint: LOWER THE PRICE!
Professor : Even if they did, they may not sell it. It may be greated with a big yawn.
Ride it down! Forget rationality. The forlorn calls in the emptying developments will echo for decades: Real estate only goes up, only goes up, only goes up.
‘Some of them borrowed more than they could afford to buy bigger houses. This situation has to sort itself out, and it could take quite a few months - if not years.’
Some of them borrowed more than they could afford to buy two or more bigger houses.
First the realtors said ,”Just give incentives and cash backs and pay for the buyers closing costs .”Second the realtors said ,”rent out your house until the big 2007 bounce comes “.
Than the real estate agents said ,”It’s a great time to buy or sell because the correction has reached bottom and there are so many choices .” This is when the realtors still had easy financing .
Now the RE agents are saying ,”The market will bottom in 2008 .”The realtors are saying thismarket projection in spite of the financing changes and even the talking heads on the business news today projected a possible 20% to 30% decrease in RE prices .
Can anyone say that the RE agents have been right about the market since Katrina hit?
I think you are to late the top was June 20, 2005
“she threw in an extra condition: If you want to buy my house, you have to feed the squirrels….’Yeah, what the hell, I’ll feed the squirrels,’” she said. She signed a contract in April, paying $815,000 — or $116,000 over the asking price. Will Ms. Butler actually feed her new furry friends? “Probably not,” says the college administrator. “I don’t want to encourage other rodents.”
WSJ
I wonder if MS. Butler wishes she had not bought the rat infested house now.
Hey, does anyone know what to do to get rid of BATS? There are various advertisements on line from extermination or removal services, but surely there must be a home remedy. I guess I could refrain from signing the 12-mo lease I have just been offered, but I wouldn’t mind dealing with the bats … if only I knew how.
Bats are good. Why do you want to rid yourself of them? Unless they’re in sky-darkening hordes and falling upon you and biting your neck and cackling evilly and stuff. They eat west-nile laden mosquitos, for one thing.
In fact, I made some cute little wooden bat houses from pallets and laboriously climbed up the giant fir trees and stuck them in there. I don’t know if I have bats in them, but I do know I can sit on the deck at night and not get eaten alive by mosquitos nowadays. And I am the freakin’ Holy Grail to mosquitos.
Crucifix, silver bullets, & holy water. I believe.
This may have been posted already, I’m not sure.
If it has, Sorry. but very interesting
http://blogs.wsj.com/economics/2007/08/28/mortgage-crisis-spreads-to-high-cost-real-estate/
Mortgage Crisis Spreads to High-Cost Real Estate
housing The subprime mortgage crisis is spreading to a somewhat unexpected place: high-cost real-estate markets.
As lending nationwide has rapidly gotten more restrictive for borrowers taking out large loans, expensive residential areas around the country have seen the pace of sales for homes above $500,000 fall off sharply during what should be one of the busiest seasons for buyers and sellers, mortgage bankers and realtors say.
Even in markets where it’s too soon to get a true measure of the effects of higher rates — there is, after all, a built-in lag time between when mortgage applications are accepted and when they close — a sudden drop in confidence has cast a pall on home sales activity.
And that, in turn, could put downward pressure on prices for higher-priced homes.
To some degree the change is due to difficulty getting financing, as borrowers are finding fewer lenders willing or able to fund “jumbo” mortgages, loans for amounts greater than $417,000. Such loans are too big to be guaranteed by government-sponsored housing finance agencies Fannie Mae, Freddie Mac or Ginnie Mae.
Given the troubles in the subprime sector, investor appetite for all types of mortgage loans not guaranteed by housing finance agencies has nose dived.
Another way of saying the buyers has no money for a down payment!
$500k is not high priced for Kali so it not that unexpected.
500k is a small 30-year-old townhouse in Northern Virginia.
Watching all these greedy sellers and clueless realtors splatter like insects against the onrushing windshield called “sanity imposing itself” is heartwarming, not to mention entertaining.
LOL - like the opening of “Men in Black”.
I guess there is a “nobody market” for SD new home construction as well?
Business
Last modified Monday, August 27, 2007 9:05 PM PDT
Local housing construction falls
By: BRADLEY J. FIKES - Staff Writer
Housing starts fell by more than 37 percent in San Diego County in July compared with last year, the California Building Industry Association reported Monday. Starts were down by nearly 35 percent for the year to date compared with the same period in 2006.
San Diego County’s drop in housing construction was even greater than the statewide fall of 22 percent from July of this year to July 2006, and 32 percent year-to-date from 2006.
Builders are scaling back construction because of the deteriorating housing market, Alan Nevin, chief economist of the building association, said Monday.
http://www.nctimes.com/articles/2007/08/28/business/news/9_01_158_27_07.txt
One thing we really have NOT yet begun to see is the impact of un/under-employment of the former mortgage/banking/real-estate whores and the self-employed home-flippers. ~100k layoffs have been announced in the last 6 months, but many of these people are still collecting UI, living off scant saving, etc. Some urban areas have 20% of the employment tied to real-estate.
I expect former real-estate whores to become a lot more reasonable with their own selling prices once they are down to their last mortgage payment left in the bank and all their credit cards maxed out.
“One thing we really have NOT yet begun to see is the impact of un/under-employment of the former mortgage/banking/real-estate whores and the self-employed home-flippers.”
A flipper who lives in my hood has gone into the adult entertainment industry since business slowed down.
Thank god I’m not an FB. I definitely don’t have the wang for that line of work.
As what? A purveyor…. director…. producer…. actor??? Details man, details!!
fluffer
I second michael’s question. We need details . . . and possibly the name . . . Annie Climatic?
How do you know…?
“ Some urban areas have 20% of the employment tied to real-estate. ”
Some have 40% of employment tied to real estate. (e.g., Phoenix, parts of Florida.) So this will have an interesting downside.
All of the REIC drank the coolaide. They not only lost their jobs, but they are in debt to their eyeballs on their flips, fancy cars, and luxury vacations of days yore.
“ I expect former real-estate whores to become a lot more reasonable with their own selling prices once they are down to their last mortgage payment left in the bank and all their credit cards maxed out. ”
Too much debt. Some agents whom do not have to sell will push sellers to drop prices to the market. Those that are leveraged on multiple flips will still try to talk the market up.
I’m really glad for this blog. I’ve learned so much over the last year. Wow! Time to get on Priceline for a little vacation.
Got popcorn?
Neil
neil,
what are your thoughts on the south bay?
The south bay is in a crisis.
Look at the 90277 zip code on homefair.com (city reports).
http://www.homefair.com/find_a_place/cityprofile/results.asp?Zip=90277
Median household income: $78,880
Average household income: $97,628
Now, there are a lot of apartments there… but if that was a factor, average and median income would have a larger spread.
50/50 homes owned/rented.
Median years in residence 2.79 years (that’s it!)
Average home price $865,500
Wait a second… even if buyer income is $50k/year better than the average, no way. Numbers are very similar for 90278, but home prices are almost $100k less. But wait, that’s overprice (relative to incomes) too…
I understand certain businesses pay really well (e.g., video games). But for most, totally priced out.
I predict a 45% drop in real prices… now what fraction is inflation and what fraction is price drops… That is what this blog is for.
I use one indicator for the south bay: Ferrari cars. Yes, people there can afford them. But its the number on the road. When your head snaps when a Ferrari goes by… you know homes are going to go up in prices. When your stuck behind two and have a third on your tail (happened to me) while wishing they’d get that overpriced sheet metal out of your way…, you know people are HELOCing themselves. This is the third time I’ve seen it in the south bay. (Note: Massarati=4 door Ferrari).
Neil
“‘We just kind of laugh, because (buyers) really low-ball it,’ Maclaughlin said. ‘We’re talking about 30 to 40 grand below asking price.’”
This quote is a keeper. It won’t be long before the sellers which it was ONLY 30 to 40 grand.
Think 30 to 40% percent. To actually sell.
Another SIV blows up. This time in London and it’s taking down a hedge fund:
A $6.6bn (£3.3bn) investment vehicle run by Cheyne Capital, a London hedge fund, on Tuesday became the latest victim of the crisis in short-term lending markets when it told investors it had breached funding restrictions, forcing an eventual wind down.
The breach of valuation conditions by Cheyne Finance, a two year-old structured investment vehicle (SIV), triggers limits on its ability to invest or raise new debt.
http://www.ft.com/cms/s/0/044813ba-5599-11dc-b971-0000779fd2ac.html
These things are falling like dominoes. More from Bloomberg:
Aug. 28 (Bloomberg) — A Cheyne Capital Management Ltd. commercial paper program with about $6 billion in assets, including real estate securities, may be forced to liquidate because of losses, Standard & Poor’s said today….
http://www.bloomberg.com/apps/news?pid=20601087&sid=a34bREP5iO.Y&refer=home
Well, with them being forced to sell, we should be able find out what the market price is and other HFs might be able to find out what the value of their securities are (not that they really want to - mark to model is much better for them at this point).
Mark to market would make me poor indeed. But I always mark to book value. Why: because my borrowers always pay. Still true today. I keep posting this fact month after month because (a) it makes me feel good, (b) it shows that antediluvian lending practices had some merit, (c) it’s a gauge of something or other about the low low low end RE market (single lots in trailer parks). I admit I also have a few clients with actual SFHs on actual public streets. No single loan over $135K though. Real people can pay these loans back.
“‘We just kind of laugh, because (buyers) really low-ball it,’ Maclaughlin said. ‘We’re talking about 30 to 40 grand below asking price.’”
Wait a few months til buyers start talking about 60-70 PERCENT below asking ..and then you’ll be able to REALLY crack-up.
Real Life Examples from my ‘hood: Silicon Valley Bay area
Example 1: neighbor, “owned” 1100 sqft 50yo shack since mid 90’s. Paid around 175k owes app. 500k. Paying over 5k a month for piti. Serial cash out refi. Never survive a layoff, illness, or any serious downturn. Place was app. at app. 700kearly this year, who knows what it would get now…
Exanple 3: Another neighbor, bought similar house with an added room a few years ago for 550k, announced he was buying a “new house” (1500sqft 50yo flip). When I asked him what he thought “old” house would bring he said “we are going to rent it out”. What kind of financing on the new house? Yep, no down 2yr fixed ARM. Gently suggested he might want to reduce his exposure to the downturn and he chuckled and blew me off like I had a mental problem.
Example 3 Another neighbor, another crappy 50yo 1100sqft shack. Bought 2003 for mid 400ks, bought a New Lennar home on a privatized military base east of San Fran for app. 700k. No, din’t want to sell and miss out on all the future equity growth, Yep, Zero down adj on the new one.
Finally the other “neighbors” about 8 adults and three sets of kids (not sure who belongs to which). Very nice, neat people, Paid 650k in July 2005, refied for 800K(!) July 2006, 6 new cars in front of the house.
These are the stories of people I know who live on one street within 200 feet of me. I think at best half will lose their homes and walk. The Winners will pay for years as the “equity” drops. THIS IS GOING TO BE REALLY REALLY F__+ING BAD.
Me, I rent because the last time it made sense to buy in Santa Clara County was around 1997. And in case you are wondering, I am not looking forward to the financial and personal misery my neighbors are headed into. Bay Area Californians will suffer a special kind of hell over the next few years.
“Gently suggested he might want to reduce his exposure to the downturn and he chuckled and blew me off like I had a mental problem….Me, I rent because the last time it made sense to buy in Santa Clara County was around 1997.”
I don’t see the problem, John; so I guess I’ll see you at the asylum.
Luv,
Jen
That better be a BIG asylum; there’s lots of folks here that apparently need to check in (myself included). Hope they serve good cocktails.
But the HBB asylum building will be dwarfed by the dip$hit asylum being built across the street that will house all of the morons that didn’t have a clue about this disaster. They serve only Kool-Aid to the dumba$$es.
Just watch out for stray bullets when the marital disputes start.
“Many sellers are still unrealistic, believing that their homes can fetch the same prices the could two or three years ago, Deleo said. He estimates most of the houses on the market are 10 percent to 20 percent overpriced.”
Only 10 to 20% ?????. Gimme a freakin’ break. I think Deleo left out a zero ..or two.
Now now, Dan. Only one zero. A thousand percent overpriced, I don’t think so. A hundred percent or two hundred percent, definitely. Lots of places you can rent at half or a third of what it would cost to “own.”
as dennis miller might say…
“watching these home prices lurch and stagger downward is like watching an aged, drunken, barefoot carny barker attempt a ‘controlled decent’ down a treacherous, steep cactus studded mountain side on a cloudy night in the middle of a rainstorm… he knows the next step isn’t safe but it’s just gotta be better than the last one.”
Was looking at a bank REO this morning, not a good deal, asking $479K in a semi-gang looking neighborhood, the house inside looked like somebody dropped a bomb. The Realtor told me with a straight face that I should use 2004 pricing as a bench mark, quote ” that’s were the market is now”, I told him that 93-95 sounded better.
Yeah, 1893 or 1895 would just about nail it.
LOL, Cred!
““Her Realtor, Janice Spencer in Antioch, has marketed the house aggressively. Its $475,500 price (down from $495,500) is moderate for the area, especially considering that it has a pool. In seven weeks on the market, the house has been viewed by just one prospective buyer.”
At best 10 years ago prices for Antioch homes were around 165-175K
at 30% increase due to inflation over that time would get adjust around $210K. So that $475K figure doesnt sound right…
a friend purchased a nice sized home in Antioch for $320K in 2002…
No Jack! this figure aint gonna cut it… we are look for a 50% hair cut…
The question is what was the house selling for in 1994? That was the year that eliminated bank reserves for mortgage loans of less than 1.4M. Do your calculations from 1994 adjust to CPI inflation and subtract 10%. That is bottom.
“Still, Rose Vicente says she isn’t worried. She and her husband, Manny, put their Simi Valley home on the market about two months ago, with plans to move to Texas by the end of the year.”
“The Vicentes recently reduced the price of their five-bedroom, 1,834-square-foot house by $50,000 to $599,900. They’ve since had plenty of calls, but mostly from investors offering much less than the asking price. ‘We’re not about to give it away,’ Manny said. ‘The house is almost paid for.’”
What a bunch of whine and cheese. No one cares if you paid $650K or $800K or $200K, the house is grossly overpriced. I might be nice and offer you 1999-2000 pricings on that place, and that’s if I like you. Otherwise, BOHICA, because unlike other bubblewatchers, I won’t hesitate on being sadistic. Try 1907 prices. Since we don’t make much in America anymore outside of finance scams, the housing stock should reflect that.
Unless, of course, you consider the derivatives/jive-finance markets to be “economic growth”.
“I won’t hesitate on being sadistic. Try 1907 prices. Since we don’t make much in America anymore outside of finance scams, the housing stock should reflect that.”
You’ve lowered the bar for Larry Flynt’s next attempt. Nice.
Luv,
Jen
I like you. I think you subscribe to kunstler.com
Great use of BOHICA. For those not in the know, it stands for “bend over, here it comes again”. We used to use a variation as passwords on a bunch of our computer equipment. It just felt right.
thx nycb, “bohica” looked familiar but i couldn’t quite recall
They’re doing comedy on LA talk radio in between segments, and it goes like this: first they put on a commercial for some kind of toxic loan from a mortgage company (yes, those ads are still on the air here — especially the “and we’re nice people too” company), and that is immediately followed by an ad regarding how debt can bring on depression, anxiety etc. and “our credit counsellors are standing by to help”. Someone in advertising at KFI am 640 has a great sense of humor.
By the way, the market in LA is DEAD. Realtor who works the Spanish speaking areas of the Valley told me. Also, saw open houses all over Studio City, Sherman Oaks, Van Nuys — no cars parked in front, no lookeeloos, no one. Empty. Agents looking bored. Everyone’s talking about it now, nothing’s moving. The word has even reached the SFV housewives’ idle chatter circuit.
“By the way, the market in LA is DEAD.”
Not surprising. What percent of recent LA purchases were Jumbo-financed? I am guessing SFR purchases were 95%+ Jumboed. As I noted in a late afternoon post yesterday, the Jumbo rate has diverged upwards to the tune of 60bps higher from the conforming loan rate since July 31 on a 30-yr fxd (50bps for 15-yr fxd). For an LA starter home attractively priced at $600K, an extra 60bps on the Jumbo loan rate translates into an additional $3600 of net worth thrown away on interest payments each year.
This will knock the wind out of the sails of high priced areas for sure…
CURRENT /1 MONTH PRIOR / 3 MONTH PRIOR / 6 MONTH PRIOR / 1 YEAR PRIOR
15-Year Fixed Jumbo 6.69 6.19 5.88 5.71 5.9
30-Year Fixed Jumbo 7.18 6.58 6.2 6 6.23
Some houses were selling for $1000/sqft in VENICE!!!
This kind of thing is probably going to bring the vengeance of a deity upon us.
Volume Precedes Price…Always….
Its still on life support over near the coast though.
Yeah, I can’t say the same about SM, WLA, Culver City, Beverlywood. But now that it’s affecting the SFV, it’s getting awfully close.
When do you think that Sellers will get this memo and price accordingly. I don’t even bother checking ZipRealty anymore because I’m so pissed off at the insanely high listing prices.
I know a few sellers of houses priced between 1.2 and 1.9 in the Sherman Oaks area. Some of them are not really motivated, they just put it up for sale because they see the market is weakening and don’t want to miss the boat. I know one who is motivated, is going through a divorce and needs the money, but is reluctant to drop the price because, she needs the money. Does that make sense? Anyway, she’s already reduced once, for 100K.
I grew up in ‘Valley Village’ and recently was in the area, and dropped in on an open house (1949 remodeled home) for $1M, by North Hollywood High School. It was worth $225K in a realistic market.
Some airhead in the entertainment biz would pay $1M, but then again, I hope they would reconcile the neighborhood to the price. The listing agent was an airhead.
North Hollywood is close to ‘the industry’ (pretenious over paid jobs) for those who don’t know the area.
Awaiting,
I also lived in No. Hollywood the first few years of my life & later worked there in the mid-late 90s.
No offense, but that area is bad, IMHO. Some nicer pockets, but you literally turn the corner and you’re in gang territory. Agree that prices in NoHo should be in the $200K range for the standard (older) 2/1 or smaller 3/1 homes.
The entire southeast SFV got on their high horses the last few years and think they’re a subset of Beverly Hills or something. Not sure why anyone would think that’s a good area (other than being close to entertainment work, I’ll agree). Crowded, busy, dirty & crime-infested.
Ca Renter-
Beverly Hills ‘adjacent’ type attitudes, in the slums of North Hollywood? What a joke. Studio City or Sherman Oaks for that matter isn’t what it was, when we were coming up. Talk about living in the past.
We live in Ventura County, and even Thousand Oaks is getting infested with illegals, crime, tagging, etc…
I was looking in NH, to get a feel for much older housing. I want a one-story next time, older, with charm. I am McMansioned out. I want trees that look like trees, not sticks, no HOA, and more formal rooms.
Late, but totally agree with what you’re looking for. I’m assuming you grew up in the SFV?
My DH and I were born & raised “Valley kids” & we miss the old ‘hoods & tree-lined streets — we now live in San Diego where people cut down trees that grow over 15 ft for some reason.
Really, really miss the “old” valley.
Glad I bought my home in 2000. got it for 175K (10K under asking, slight market slump) Waterfront property with pool, large lot etc.. in a very good neighborhood. 8 years left in the mortgage. My ass aint moving out of here.
OT. This is too funny:
http://www.politico.com/blogs/jonathanmartin/0807/Romney_throws_Craig_under_bus.html
I guess the poor guy has electile dysfunction.
Although interest rates are remaining relatively stable, foreclosures are increasing, which will continue to have a negative effect on the entry-level housing market,’ said Dan Encell, director of the estates division for Prudential California Realty in Montecito.
Funny, to me, falling prices seem like a positive effect. Ah, but never to a commission biased Realtor™.
New campaign idea: Smart Buyers Only Purchase FSBO. After all, at record & increasing inventories, there’s more than enough FSBO inventory to meet demand, so why pay a Realtor™ a five figure commission?
Realtors™ - Just don’t do it.
“Although interest rates are remaining relatively stable, foreclosures are increasing”
prophetic all-in-itself
–
Realtors do it with slime.
Jas
You wouldn’t think interest rates increasing by a point & 1/2 would be a big deal in Montecito. Got to be one of the wealthiest communities in the US. If bankruptcies are happening there, that’s bad news for upper end markets.
“Friends don’t let friends use realtors”
wonder what that married pair of Claremont Colleges economists who published a paper last year on why it made sense to pay nine hundred thousand for their Claremont house are saying this year. Anyone remember them?
“‘We just kind of laugh, because (buyers) really low-ball it,’ Maclaughlin said. ‘We’re talking about 30 to 40 grand below asking price.’”
Bwwaaahhhhaaaaa. For those that don’t know the above is not a low-ball offer. A lowball offer is the following: 500k-55%=Low-ball offer I’m sure that comes to more than 30-40k in the IE.
Ha ha, picked up a section of La Opinion today, it was dated Aug. 25, it was blowing through the street in Downtown LA today where I was walking (don’t ask). It was all about toxic loans, underwater mortgages, “subastas” (auctions), and how to fix up your house to get it to sell in a tough market. Mexicans around LA are so deeply invested in this, and I use that term loosely due to no down payments, there is going to be a lot of pain going around those parts in the coming year+.
“‘We’ll just wait for the market to get crappier,’ Reinecke said.”
You should wait about two years before you go to an auction. You are not as smart as you think.
I love the sound bite.
Is anybody shorting Wells Fargo that is still close to its all time high?
I’m not, but I am always looking for put oportunities on ones who have not dropped. BDK finally moved today. That is a stock that is still near it’s ATH. I’ve 80 put Jan 2009. Just wish CFC would take a dump.
Yeah, I got puts on WFC, various due in Jan 08. It’s risky to go that short term, since they might not get nailed by then, but a calculated risk. I really don’t like some bits of their accounting. To be honest, the bits I don’t like are a very small part of their total picture, but I still think they’ll take some big stock price hits even with a small blowup in their valuations of the various debt they’re holding. Overall, though, I haven’t seen evidence that it will implode like CFC.
I am not playing the banks either long or short. The banks are either incredibly cheap or extremely overpriced. The accounting rules for banks are different than for other companies. In the US this means complete opacity. I can not tell if any bank made moneys, lost moneys or is sitting with huge losing positions. We will learn in a few days what write downs are taken and from that determine future risk. But if you are short, You are with excellent company - Mr. Jim Rogers said he was short American banks and financial institutions. Certainly Wells Fargo’s use of FASB #157 suggests that the company took a loss and reported a profit. The risk/reward ratio is about 1:5 - which means for every dollar you risk you stand to earn 5 dollars. Should one choose to short I would recommend a 10% stop loss. Volatilities in the Financials are going to increase.
In summary, I do not assume this type of risk - if I do not know what is happening I do not get involved.
“if I do not know what is happening I do not get involved.”
I leave that for people far smarter and braver then moi.
shorting Wells Fargo
Previous reply was eaten.
Short answer: Yes. Some funky accounting there.
Longer answer included the risk that it might not end up bad enough for them to really implode like CFC or others, so it’s not a sure thing.
–
“…just to save a couple of thousand.”
How about couple of hundred thousand you dumbwit?
Jas
My post didn’t go through? Anyway, I picked up a section of La Opinion that was sort of blowing around the street in the wind, as I was walking through Downtown LA yesterday (don’t ask why I was doing that). It was dated August 25 and it was all about toxic loans, being underwater on mortgages, subastas (auctions), how to sell your house in a tough market, etc. Latinos are heavily invested in real estate around here, and I use the term “invested” loosely because most put nothing down, but still, this is going to hit those areas pretty hard, just at the time their construction jobs will be dwindling. Not happy or sad about it, just an observation.
Yes, LAIG, I think there’s a lot of Spanish in trouble, as well as any other.
OT: Isn’t downtown LA the most surreal place in the world? The first time down there I thought I saw every kind of human being in the world, the rich well dressed lawyers, the homeless, & every color and ethnicity you could ever imagine. Simply amazing.
True that, but they’re sweeping away the homeless steadily, or at least segregating them to the Skid Row area, even there the police have been arresting homeless and giving them, of all things, jaywalking tickets.
Hate to disagree but must - have worked downtown since ‘01 and been living here for two and half years now - the homeless are not getting perceptibly swept away or moved. Not even a little. I was at the new Ralph’s, which is walking distance from my place, with my wife last week, and there were multiple panhandlers right out front, including a creepy meth-addict looking fellow who was following women back to their cars, and lots of cops were showing up as we were leaving to handle something in the parking garage. Fun.
If you could compare downtown LA with the same 5, 10, and 15 years ago, there’s definitely progress…but you’ll never get rid of them completely.
Hmmm. I was working in the same building full time 5 years ago (Gas Company Tower, 5th and Grand), and I’ve seen no change since then - but if there has been any change, it’s gotten worse, not better. Since the cops cracked down on activity in skid row a little while ago, the real problem people have spread out, I’ve seen drug transactions in broad daylight right in front of nicer-area skyscrapers with security, and had someone attempt to mug me, literally, not panhandling but robbery, right on Grand Ave. in front of the Biltmore.
And that’s just the beginning. To say downtown L.A. is not ready for the middle class is an understatement, and at $500+/sq. ft., whoa Nellie, you’re running off the cliff…
Well I’m pretty happy about it….and I don’t think I’m the only one. I wish they would just pack up and go away! I grew up in Orange County, and have seen more than my fair share of blue-collar towns become blighted over the past decade or so as the illegals moved in. Costa Mesa is a great example of a once decent & affordable blue-collar town that new resembles a third-world dump (some areas of CM near Newport are still okay though).
Tell those OC people to clean their own houses and mow their own lawns. Problem solved.
Yeah, tell me about it. I grew up mowing our lawn every saturday as a kid….wasn’t really a big deal. I don’t understand how everyone in California all of a sudden became so lazy that we can’t mow our own lawns and wash our own cars anymore.
Costa Mesa has gone through a “tale of two cities.” Southeast of Newport Boulevard — on the Newport Beach side of the (removed) tracks, prices are insane — $1 million and up for virtually everything single-family. (This is doubly insane, because the place is, in fact, a former blue-collar and lower-middle class — i.e. my family — town, there are pockets of multi-family housing, and it’s certainly rougher than Newport Beach across Irvine Avenue.)
Northeast of Newport is heavily Hispanic, except for a little wedge between Newport and Harbor Blvd., and has its problems. Doesn’t stop prices from being insane, though. Seems Spanish speakers no habla “adjustable,” and got hosed by agents who sold them on low initial rates. Evidently they really did seem to think that the teaser rates were going to be the payments for the life of the loan. Doom looms.
Leher News Hour is doing a piece on hispanic migration into new Orleans. That explains why Home Depots in AZ have smaller day labor lines outside.
On another note: I’m looking for a good service that will let me monitor my 3 credit reports at any time or a year. Any suggestions?
Lifelock.
freecreditreport.com
Use freecreditreport.com and only monitor one agency. Four months later, monitor another one, etc. Each agency gives you a free report every 12 months.
I wish I’d done it that way, instead of getting all three reports in January. Doh!
Freecreditreport is “free” with “enrollment” in experian’s triple advantage program. Whatever that is…
My understanding is that annualcreditreport.com is the govt mandated free service.
Yep. 1907 prices. David Lereah will short circuit if that happens which means that we will have to buy him new AA batteries (Made In China) since that shock would mess up the economy a bit. But then again, since the stock market is fluff, the housing market is fluff, and pretty much everything else is fluff, who cares? Who gives a hoot if a bunch of weird Mcmansions drop down to four digits in value? No, I’m not a Peak oiler but I do agree with Kunstler that housing values will take a big and I mean BIG dump. Besides, would you rather have a mere 5% drop and listen to Lereah and Creamer and Kudlow and all of the other talking heads for another 5 years? Hey look on the bright side; you can play Monopoly with REAL property. If the housing market craps out to 19th century or early 20th century values, you could buy a property in CA for $300, one in FL for $200, and you might be able to get something on Long Island for $400. I would prefer to get a house on Long Island so I can give NY and the other Blue Staters gray hairs.
(I give plenty of gray hair to Red Staters, trust me)
If nothing else, who would give $400K for a starter home anywhere in the first place?
“If the housing market craps out to 19th century or early 20th century values, you could buy a property in CA for $300, one in FL for $200, and you might be able to get something on Long Island for $400.”
I’ll take Manhattan — not Bronx and Staten.
Luv,
Jen
A bit off topic but…fresh from CNN.
“The list of the 10 poorest cities was filled with mostly old, northeastern and mid-western industrial locales. Cleveland had the lowest median income of any city in the nation with more than 250,000 residents; households there earned just $26,535. Miami was the next poorest at $27,088, followed by Buffalo ($27,850), Detroit ($28,364), St. Louis ($30,936) and Cincinnati ($31,103).”
Yes, MIAMI is the second poorest city in the US. Sure couldn’t tell by the home prices. That’s gonna get interesting. With that $0.70 raise in minimum wage medium income will skyrocket and the housing crisis will blow over, NOT!
What do you make of this?
I have been tracking inventory for houses in a certain range and square footage, in Los Gatos, Saratoga, Cupertino, Los Altos, Mountain View, and Palo Alto. (because I’d like to move). Been doing it since summer. This peaked on 7/24, with 70 homes. Now, the same search brings up 48.
A similar kind of search for my San Jose neighborhood peaked on 7/18 at 83 homes. Now there’s 79.
Things may change as the impact of jumbo interest rates hits.
I have a feeling that the peak was around July, when a 1600 sqft 1950 original house sold in Los Altos. Asking $1.2m, sold for $1.55m. I have not seen anything like that since then. But not a precipitous decline either.
The SJ Merc publishes a weekly map showing median price % +- by zip. Basically anything east of 87 (through downtown) is down in price and sales. Anything west is still up in price y-o-y. Some zips are down in sales, some are up.
I personally wouldn’t mind an evenly distributed 50% price reduction - I’d lose on my existing house, but get close to what I want. But I wouldn’t bet on it unless there’s a 9/11 type event. Nonetheless I do find this blog pretty interesting, and a good counterpoint to excessive boosterism. The truth is out there, somewhere inbetween imminent death and destruction, and 20% y-o-y increases forever.
I went by a Centex homes neighborhood today, for they advertised homes starting at $399,000 here in Riverside Ca. There were a LOT of empty houses and new construction taking place.
I called the Centex number regarding a brand new house. The man said it was going for $450,000 which was a “steal” for just 4 wks ago, they were asking $570,000. He asked my name, but I said I was just looking and waiting for prices to go down. I don’t know why I said it, but I couldn’t help it! He then said that Centex sales were great (again, I saw 30 or more homes for sale in one neighborhood!) and then made up some lame reason for the prices being lowered.
I know it’s his job to be optimistic and make a sale, but, ugh, I don’t care for salespeople.
There’s some Ryland townhomes near where I live that have been empty for nearly two years. They dropped the prices from $280K to 190K already. I still don’t understand why a townhome in Texas should cost that much. I might look at it for $120K if it wasn’t 100 yards from a busy freight railroad line.
Update on our sales in San Diego County:
As mentioned before, we are trying to sell a SFH and mobile home in No. SD County. MH was listed the week of 7/27/07 and went pending the week of 8/14/07. The SFH was listed the week of 8/6/07 and just wend pending today, 8/28/07. We priced below comps (obviously, as they are already pending).
The MH went pending for about 10% below peak prices and the SFH went pending for about 30% below peak.
I’m happy to be getting out, even at these prices. Here’s hoping & praying the deals go through…
Sidenote: many people looked at and expressed interest in the SFH, a few tried to get financing, but failed. The buyers we’re in escrow with were the only qualified (by HBB standards) people out there. Very few qualified buyers in the market.
You just killed the comps! LOL
Somebody’s Uncle Vinnie is going to be looking for you. A small transaction that caused millions (billions?) of dollars to change hands. I like it!
That’s what my husband & I were just joking about.
Don’t think we’ll be invited to any neighborhood parties there.
When I was out last Sat., every realtor I spoke with was having issues with deals crumbling because financing wouldn’t go through. Lots coming back onto the market in Yolo because of this. The Davis sellers are especially pissed because it means they missed the pre-fall quarter renting season.
Frankly , I’m thrilled by this news
Some HBBers derided me in the past because I buy RE only for cash, never with borrowed money. One major advantage of REALLY owning the RE is that you can always be the lender yourself when you want to get out. American mentality being what it is, the buyer/borrower thinks you’re doing a favor.
I don’t blame anyone for buying with cash. I’m just jealous.
lol… yes… trading off immediate return for the considerable interest long-term. and if they foreclose you get the house back to sell again… quite clever, if you can afford to do it.
“The yen climbed to the strongest in a week against the euro and the dollar as speculation banks will report more credit-market losses pushed traders to sell higher- yielding assets funded by loans in Japan.”
and
“The U.S. economy is heading into recession as early as the fourth quarter, highly possibly in the first quarter,” said Kazuo Mizuno, chief economist in Tokyo at Mitsubishi UFJ Securities Co., a unit of Japan’s largest bank by assets. “Faltering housing markets are beginning to adversely affect consumption. The dollar will be further buffeted.”
Bloomberg
Que sera, sera
San Diegans Struggling to get by:
http://tinyurl.com/39dug7
This will end badly.
On Market Predictions in the Current Chaotic Environment.
by Richard C. Cook
Global Research, August 28, 2007
No one can predict how deep the decline in Western economies that is underway will go, because there is so little transparent information. Within the U.S., the government is hiding the severity of the crisis in order to prevent a collapse of consumer confidence.
Realize that the problem does not lie on the side of production. Global industry has the capacity to produce a huge quantity of goods and services. There is even a glut in some sectors, such as automobiles, textiles, IT, and other consumer products.
Rather the problem, as with the Great Depression, is that purchasing power at the consumer level is lacking. In the U.S., purchasing power, as measured by M1, is already in a recession-level decline. The causes are the high level of consumer debt, high cumulative levels of taxation on the dwindling middle class, and the tragic erosion of wages and salaries from job outsourcing.
In the absence of purchasing power, the Federal Reserve has chosen the strategy of trying to outrun collapse by creating inflation. This is the meaning of the bail-outs that are going on. It’s an attempt to devalue debt at the macro level. It’s a hidden tax on everyone but the super-rich. Everyone else is poorer today than they were yesterday.
How long this can go on is unpredictable. It’s another bubble following on the housing and asset bubbles that are already bursting on a daily basis before our eyes.
I don’t see any responsible analyst who foresees any better outcome than a recession that would see the DJIA at a level of 8000-8500 within a few months. Again, maybe the Fed’s printing presses can hold this level of decline at bay for a while longer, but I doubt it.
There are major players in the markets who see an even steeper decline coming even sooner. Some say as soon as a month.
There is also a real chance of an eventual depression-level contraction. How much of a chance, I don’t know. This conceivably could lead to a total collapse of consumer markets, economic paralysis, and widespread homelessness and starvation. Yes, even in the U.S. Agribusiness, bio-fuel conversion, seedless mega-farming, the disappearance of family farming, and the recent disastrous weather conditions place everyone at risk.
At some point, the federal government, at a minimum, has to step in with New Deal-type relief measures. Whether the Bush administration has that capability is doubtful. Look at New Orleans. They may even try to cover everything up by starting a war against Iran. Are they that crazy? Who can say?
There are also rumors going around that there are plans to allow the markets to be crashed by a terrorist event so as to divert blame. I have gotten no reliable confirmation of these rumors, though there are parties placing what people in the markets are calling “bin Laden”-type bets similar to, but bigger than, the “puts” that were placed before the original 9/11.
These types of bets have been placed in the U.S., European, and Japanese markets that assume a stock market crash of fifty percent within the next five weeks. A report was just carried, I’m told, on CNBC.
Some have said the culprit may be China, but it makes no sense for the Chinese to crash the markets while holding U.S. dollars. Others say it is hedge funds at work to try to drive down the markets in a self-fulfilling prophecy.
But a fifty percent market decline? That’s just not conceivable. Even the hedge funds do not have that much power. The federal plunge protection team—known as the “men in black” by floor traders—would never allow them to do something so disastrous. This has caused some to speculate that the “men in black” are parties to the bets.
These remarks probably give some indication of the chaos going on right now in the U.S. and world economies. The only real solution is a new world financial system based on the concept of credit as a public utility. This is what should be implemented to replace the present system of institutionalized usury.
Richard C. Cook is a retired federal analyst, whose career included service with the U.S. Civil Service Commission, the Food and Drug Administration, the Carter White House, and NASA, followed by twenty-one years with the U.S. Treasury Department. His articles on monetary reform, economics, and space policy have appeared on Global Research, Economy in Crisis, Dissident Voice, Atlantic Free Press, and elsewhere. He is the author of “Challenger Revealed: An Insider’s Account of How the Reagan Administration Caused the Greatest Tragedy of the Space Age.” His website is at http://www.richardccook.com.
Hmm, I’m not normally a tin-foil hat dude, but just about 20 minutes ago on CNBC they had a gentleman on satellite feed who started in with the comments “the FED is trying to manage a major crisis, first with the credit crunch, and second, with the pullback of the American consumer…”. On that last word, the feed abruptly stopped. Of course, just a coincidence…right??
I’m just glad this whole Housing Bubble won’t spread to the rest of the economy. Stock market sure looking good
Haha I don’t know why I’m laughing? I think we are all screwed Ben Bernake is going to blow out the stops to try and stop what looks like a stock market CRASH. Good luck with that Dr B. bailing out the banks and paying for a war plus supporting a society thats getting old. Some FED choices?
http://www.safehaven.com/article-8290.htm
My friend has heloc’d approx $85,000 out of one bedroom condo in Goleta,Ca. He just refi’d with another ARM loan and took out approx $12,000. I just bit my tongue when he told me the news. I just wanted to tell him can you breath through your ears?
Is he using the money to buy SRS?
I think it’s great that we have a record supply of houses. It means that the prices will come down sharply and more people will be able to afford a house. Lower prices are good. The increased minimum wage also helps a little. It’s supposed to keep going up over the next few years. This should drive all wages up. I think the real problem is that wages are too low. Lower home prices? I’m all for it.
http://tinyurl.com/2cp53v
In response to this article on the 8% drop in asking prices for O.C. homes.
# OC Realtor Says:
August 28th, 2007 at 6:02 pm
There are also MLS stats that reflect full price offers, homes that sell in less than 1 week and multi-million dollar homes selling — no problem.
Buy a home between now and the end of the year…or miss out all together and five years from now you’ll be talking about how you should have bought a home in the Fall of 2007!
The link on the comment goes back to Suki at Sea Cliff Realty. Suki has 36 houses listed out of her office, 17 of which are priced at over $1million. Rots o’ ruck, Sucki.