There Isn’t Permission For People To Buy In California
The Sacramento Business Journal reports from California. “Rather than drop prices to entice buyers in less time, John Leonard slashed prices on 22 new homes he built in West Sacramento to sell them in a day — he hopes in less than an hour. He’s hired a public auction company to sell homes in his River’s Side at Washington Square project quickly.”
“‘There isn’t permission for people to buy a house. People’s peers, parents and family won’t let them feel good about buying. Everyone says, ‘Wait a little longer and the prices will come down,’ Leonard said. ‘The housing market turning put me in a tight spot. I’m proud of the project. I just wish I wasn’t where I am in it.’”
“‘The market is very difficult right now. People’s inclination to buy is diminishing,’ said David Mogavero, architect on River’s Side. This is the first project Mogavero has done that hasn’t sold out during construction.”
“‘The market was way overheated, and it was driving demand’ several years ago, he said. Now, the market is still in a period of adjustment.”
The Sacramento Bee. “Sacramento city leaders have pulled back their offer to loan $10 million to fund construction of a downtown condominium high-rise.”
“Craig Nassi, the Denver-based developer behind the 39-story Aura tower, lost the city’s commitment after he failed to secure all of his private financing by the end of last month.”
“Sacramento Assistant City Manager John Dangberg said the city still supports Aura, but that it ‘has no further commitments at this time’ to the project. ‘We understand that it’s a very challenged market right now,’ Dangberg said.”
“Nassi said in an e-mail…he blamed the delay on ‘capital markets (that) have been paralyzed by the subprime fallout and the unknown of secondary market pricing.’”
“A rivalry began more than two years ago when Nassi proposed Aura three blocks from a project local developer John Saca wanted to build on Capitol Mall between Third and Fourth streets. That plan called for twin 53-story buildings featuring about 800 condominiums.”
“Each developer went all out for prospective buyers with dueling showrooms, sales parties and publicity stunts. In the end, Saca’s project busted its budget and collapsed earlier this year.”
“Irvine-based Real Estate Disposition Group, which auctioned 107 bank-repossessed houses in Sacramento on June 24, is returning to town Saturday, Sept. 22. It’s putting 22 new houses in West Sacramento on the auction block.”
“Being auctioned are three-story homes in an urban infill project called the River’s Side at Washington Square. Sales prices have been in the high $300,000s to lower $400,000s. Opening bids start at $249,000. The 25-home project opened models late last year, and also got nice reviews, but sales have been slower there, according to data from Hanley Wood.”
From Roseville & Rocklin Today. “According to the California Association of Realtors the number of households who can afford to buy and entry level home in the State increased to 24 percent at the end of the second quarter this year. Considering what has been happening in our Sacramento market the increase of only 1 percent from a year ago was surprising.”
“I checked the latest inventory of available homes and was not surprised to see there are still more homes coming on the market. As of the week ending August 27th, inventory stood at 18,844, up 185 from a week ago and 2.1 percent in the last month. In the past six months inventory has increased a staggering 40.9 percent.”
“This week alone I have had three inquiries from potential clients asking me to help them with a ’short sale.’ All three are homeowners who would like to stay in their houses but can’t afford to make the payments on homes that are worth less than what they owe.”
“At the same time, I met with a prospective buyer yesterday who has decided to sit on the fence a bit longer because he believes he can buy cheaper next year.”
The Press Telegram. “The first phase of CityPlace Lofts at Fourth Street and Elm Avenue is complete and more new downtown residents are already moved in. The lofts, between Long Beach Boulevard and Elm, offer prices starting from $399,990 up to about $700,000 and sizes from 1,092 square feet to 2,085 square feet.”
“The developer dropped the asking prices on the lofts by about 10 percent off the original price. ‘They took into consideration the market, and the fact that Long Beach is very competitive,’ said Debbie Tucker, superintendent of the project.”
The Union Tribune. “Declining consumer confidence and a deteriorating job market pushed San Diego County’s economic outlook lower for the fourth month in a row, according to a report released yesterday by the Burnham-Moores Center for Real Estate at the University of San Diego.”
“‘The slow housing market remains the main influence, with fewer home sales, more foreclosures, job losses in real estate-related sectors, and lower spending as home equity declines,’ said USD economist Alan Gin, who compiles the index.”
“The index slid from 137.3 in June to 136.9 in July, its lowest point since January 2004. The county’s index fell in July for the 15th time in 16 months, a string of declines broken only by a slight uptick in March.”
“There were 37 percent fewer residential units authorized by building permits last month than in July 2006, according to the Construction Industry Research Board.”
“‘Residential construction has really been in a slump since August 2005,’ Gin said.”
From Scripps Howard News Service. “Similar to the down market of the late 1980s, home sellers must now compete not only with builders, but with foreclosures, thanks to all those subprime loans you’ve been hearing about.”
“”Earle Gibson, a real estate broker in California wine country likens her high-priced turf, which includes Napa, Sonoma and Marin counties, to a high noon stare-down between home sellers and prospective buyers, each of whom can afford to wait for the other to blink.”
“Now the power meetings are between listing agents and their anxious sellers on how to flag the attention of agents representing qualified buyers.”
“Gibson says foreclosure trustee sale notices run three full pages a day in the local newspaper. ‘In Vallejo right now, there is an inventory of well over 1,000 single-family homes and maybe 10 closings per week, while each week we add probably 20 new listings to the market,’ she says. ‘Everybody’s hurting. It’s like, who’s the lucky agent this week?’”
“People’s peers, parents and family won’t let them feel good about buying.”
As opposed to three years ago when peers, parents and family wouldn’t let us feel good about renting. Bout time.
Friends don’t let friends try to catch falling knives.
oh well!! Herds run in both directions as people are now finding out.
Got some insight on the speeches this morning and some good video as well.
SoCalMtgGuy
http://www.housingbubblecasualty.com
OK, so seriously, where will the extra $300b come from to pay for the cleanup costs? Will it be something like the $200b Katrina cleanup bill — paid for with money created out of thin air?
Seriously. I got a lot about “when am I going to get a house” and I told them bluntly I had no kids, my wife and I had no adoption plans, the market was overvalued, the return was low (or negative) and I wasn’t sure it’d be good for my career.
Surprise, people.
i still got some peer pressures here,, although not as much as couple of years ago
comments like ‘overall price is down and there are a lot of inventories’, ‘you are throwing money away on rent’..
i wonder what if i believed in all the BS they said back in 2005 and bought.. would i still be friends with them..
Houses will always sell. If you build it they will come!!!
Just put on the auction block with no reserve… and you can sell a 500 houses development in no time.
Geez this is Capitalismus 101 and it has been like that throughout the ages.
I bet you the best locations where to hunt mammoth were auctioned off between prehistoric tribes 100,000 years ago!
Okies real estate and realtor clowns. Maybe it’s time to go back to BASICS??? ™.
Houses will always sell. If you build it they will come!!!
Just put on the auction block with no reserve… and you can sell a 500 houses development in no time.
Geez this is Capitalismus 101 and it has been like that throughout the ages.
I bet you the best locations where to hunt mammoth were auctioned off between prehistoric tribes 100,000 years ago!
Why are you bashing Oakies? My grandparents were Oakies, Grapes of Wrath and all that. They were hard working Americans. My great uncle landed in Normandy on D-Day and he was an Oakie. Be careful what you say about ” Oakies”.
Oakies=Okies= Poor people who fled Oklahoma during the dust bowl.
I was using it as an expression:
Okies everyone! realtor and ….
Didn’t know Oakies or okies meant peeps from Oklahoma…
okie dokie !
I would bet that they used violence, threats, and intimidation to secure their hunting grounds from other tribes. In a completely unregulated market, there is no reason to use auctions
“to prove title to land one must trace it back to the man who stole it” — David Lloyd-George
From ft.com:
The move is targeted at borrowers on modest incomes and will impact only Americans with mortgages worth up to $362,000. A bill that will be taken up in the Senate this month would increase the limit to $462,000.
“Time is of the essence. Tens of thousands of Americans are falling behind on their mortgages each month and risk losing their homes as their interest rates re-set,” said Mr Fishbein, estimating 2m Americans were already delinquent and facing foreclosure.
Credit markets initially rallied as investors anticipated Mr Bush’s initiative would reduce the number of loan portfolios going bad.
Rising non-payments on high-risk subprime mortgages has triggered a crisis in confidence in credit markets in recent weeks, resulting in extreme volatility in financial markets and causing liquidity in some asset classes to freeze up.
The securitisation of US subprime mortgages has spread exposure to the American housing market throughout the global financial system.
Several economists said Mr Bush’s initiative would only have a minor impact on the outlook for the overall housing market.
I don’t think this will have any impact on CA.
From ft.com:
The move is targeted at borrowers on modest incomes and will impact only Americans with mortgages worth up to $362,000.
Ok, Someone please splain to me how a person with a “modest?” income has a $362,00.00 Mortgage! I am in a total disconnect, by the time some fool bill gets past/if it can, it will be way to late. Total waste of time.
Kudlow is discussing the Bush plan right now. The party line today is to say, “Ronald Reagan believed in a free market with a social safety net.” I have heard that bulls–t at least 6 times in the past 45 minutes. Kudlow should be taken into the town square and beaten with a stick.
They showed a Barney Frank clip earlier. He was spouting about how badly we need to up the limits on Fannie & Freddie.
I want to puke. Kudlow is now praising the New Deal. And this $hithead is a “market capitalist”? The system is broken.
Socialize the common ills, privatize the elite privilege…
I believe this is the (practical) definition of COMMUNISM…
I know what you mean. We have an income that places us in the top 10th percentile, and we wouldnt dare borrow much more than that. So how is Joe 50th percentile supposed to afford that?
USA = Union of American Soviets???
Just like the rubble in the USSR, the $US has become a diluted number meaningless of the actual value of something.
In the commecon, the USSR would force the satellites to accept rubbles for actual good sucked from those countries. Of course only the Nomenklatura would actively profit from it.
In NAFTA and “globalism” the same pretty much happens but the working class is now into serviture through indebtment, not through fear or physical constraint.
Works better!
The UAS led by Georgi Bushnev
A $362K mortgage is modest? That tells you how much prices are out of wack.
Where I live people with “modest” incomes don’t have $300k + mortgages. That’s the realm of “rich” for the vast majority of the country.
You got that right climber. Where I grew up the average guy can’t afford to buy a $300k home but oddly they can afford to rent a $300k home.
“‘There isn’t permission for people to buy a house. People’s peers, parents and family won’t let them feel good about buying.
WTF? There isn’t permission? I’m sorry I do not understand that statement, this dolt lost me. I do know that any auction with a reserve price is not a true action IMHO. BTW does he not understand that one does need permission to buy from the lender, unless someone is paying in full up front. We live in a Country of spoiled assed brats!
Wait, wait! Here come the permission slips! Teacher’s passing them out right now!
Sounds like Lenny is throwing a bit of a tantrum.
Though he doesn’t realize this, Johnny has pegged the mass psychology of a deflating bubble. On the way up mass psychology encouraged people to buy even when it made no financial sense. On the way down, people will be discouraged from buying due to that same mass psychology operating in reverse. At the bottom, people won’t buy even if it makes perfect sense to do so and the market will over correct.
So did Johnny complain about the “buy now or be priced out forever” hysteria on the way up?
It’s called the Deflation Enhancement Effect. Or, you dumb sh-t.
Three pages, that’s all?? There were 173 notices in Wayne County yesterday alone. That’s a typical day, give or take a few and doesn’t count the other counties surrounding us.
173? I knew it was bad, and knew it was going to get worse, but this is beyond my wildest imagination here in Metro Detroit. I have said this before - if we have a nationwide recession, the really bubbly markets of the last few years can look for a real free fall. We were mild bubble, followed by a local recession. It would be interesting to see what a big bubble followed by a recession would bring.
“This week alone I have had three inquiries from potential clients asking me to help them with a ’short sale.’ All three are homeowners who would like to stay in their houses but can’t afford to make the payments on homes that are worth less than what they owe.”
“At the same time, I met with a prospective buyer yesterday who has decided to sit on the fence a bit longer because he believes he can buy cheaper next year.”
So let me see…you’ve got three FBs who can’t afford to stay in their houses versus one potential buyer who has money. I’m not seeing the flaw in the potential buyer’s logic…
I think it’s more likely even at this point that two out of every three potential buyers are lagging FB specuvestors who will be turned down for mortgages, meaning there are really nine FBs who can’t afford to stay in their houses versus one potential buyer who actually can purchase a house.
Whatever the actual numbers, this will be an epic bubble correction.
“Now the power meetings are between listing agents and their anxious sellers on how to flag the attention of agents representing qualified buyers.”
Here’s a novel idea - REDUCE THE PRICE!!
The idiocy astounds me.
Here’s a novel idea - REDUCE THE PRICE!!
The idiocy astounds me.
You don’t want them to give it away, do you?
Amazing, isn’t it? The term ‘giving it away’ now means selling at a reasonable, affordable price. The English language - yet another casuality of the housing bubble.
“Not only does the English Language borrow words from other languages, it sometimes chases them down dark alleys, hits them over the head, and goes through their pockets”
-Eddy Peters
Nice one. Quote gems like that are a real reason to read this blog.
Yeah, kinda like when townhouses became “townhomes”.
Oh you mean like how not many people know that a townhouse is a condo? How many have read their CC&R’s and notice they only own the airspace in their detached condo?????
“Here’s a novel idea - REDUCE THE PRICE!!”
Bravo!!!! Why should people bail out other FB’s by taking on ridiculously high mortgages? Anyway, reduce the listing price significantly and perhaps there will be more sales.
“According to the California Association of Realtors the number of households who can afford to buy and entry level home in the State increased to 24 percent at the end of the second quarter this year. Considering what has been happening in our Sacramento market the increase of only 1 percent from a year ago was surprising.”
The way they figure out the affordability uses versions of Sub-Prime lending that isn’t even truly available anymore. True affordability is probablly negative, but not for much longer.
The new Real Estate mantra…
How Low can you Go!!!!!!
“How Low can you Go!!!!!!”
Yeah…Its LIMBO time for housing prices…..follow the bouncing ball and sing along…..daa daa da da da da da….daa daa da da da da da The winning sold house price that went under its 1998 price is declared the WINNER!
I hate how the press and Realtors continue to misuse the affordability index.
A 24 affordability index does NOT mean that 24% of the people can afford a house. $600K median house price. They want us to believe that 24% of households make more than $200K? I think nationally, it is only 20% of households that make more than $100K.
An affordability index of 24 means the medain household makes 24% the amount needed to reasonably afford the medain house. So, median income is $50K-ish.
Darrell,
See my comments on CAR’s new-and-improved “HAI” (below).
Darrell:
Thanks for clarifying that. I’ve been following this thing for years (because morons like me take that long to get it), and I was totally under the wrong impression. That’s the great thing about this blog. The quotes and the information.
“People are screwed.”
-Big V
OCBear,
Don’t know if you’re aware of this, but CAR actually stopped reporting their “HAI” index in December 2005 (when it was about to drop to single digits). Then they screwed with the ratios & calculation methods for six months and re-issued a “new-and-improved” HAI that magically doubled the “affordability” number overnight.
If you don’t like what the data is telling you, torture it until it confesses what you want to hear.
But did they subsequently report the historical trend for their new index, which would show affordability at 100% circa 1997 and plummeting to 20% in 2005?
24 percent is the phony calculations used by LAY using adjustable 2-28 or 3-27 loans. Let’s see 20% down and a 30 fixed. Probably 5 or 6 percent affordable at that! Get real CAR and NAR. I’ll probably see the 24% number quoted by the shills in my local rag tomorrow.
pismoclam is right .. under traditional 20% down and 30 yr fixed the affordability is well around 6-7%.
So only 6-7 housholds out of 100 can afford their own home.
Back in 1996-97 the figure was around 75%. Beat that LAY!
Of course, that 24%, youll find that 60% are already homeowners, and 10% are FBers, leaving a whopping 30% of 24%, or 7%.
From the R&R “$101,550, based on an adjustable interest rate of 6.29 percent and assuming a 10 percent down payment”
How many people in this area have 50k to plop down, much less a $100k MHI.
El Dorado County MHI was $63,147 in 2005.
Median Gross rent $1001
Homeowner vacancy rate 2.8%
Rental vacancy rate 8.6%
USCensus’ ACS http://tinyurl.com/2hyryu
See my comment above. They are wrong about what the affordability index maens.
Median income ~$55K and minimum needed to buy an entry level house is over ~$100K, so a 44 affordability index.
I found the stats for 2006. 20% of American households make > $92K. 5% make > $167K.
There is NO WAY that 44% of Sacramento huoseholds make more than $100K.
When looking at Sacramento, you need to account for the four counties. It’s almost impossible to find consistant data for Yolo and El Dorado county until you go to CADoF which I trust even less then USC.
They say the same about Silicon Valley as if everyone makes $100K salary.. yet med avg is only 74K… yet prices have gone
up 300-400%. To my shock that pool of people making +$100k is only 150K in a total population of +2M in the south bay.
Hi Darrell:
I went online to get the following formulas for the HAI, just to help you illustrate your point:
Formulas used to calculate the Housing Affordability Index (HAI)
Median Price Existing Single-Family Home – Comes from the existing home sales monthly
survey conducted by the National Association of Realtors
Monthly Mortgage Rate – NAR uses the “effective mortgage rate” for preoccupied homes in the
HAI calculations. The effective mortgage rate is reported by the Federal Housing Finance Board
on a monthly basis. The effective mortgage rate reflects the amortization of initial fees and
charges.
Principle & Interest Payment – Monthly Payment
Formula: MEDPRICE*.8 * (IR/12)/(1-(1/(1+IR/12)^360))
Median as % of Income = Necessary monthly income
Formula: ((PMT*12)/MEDINC)*100
Median Family Income – NAR uses Income data from the Census Bureau Decennial Survey.
Census income data is not available for the upcoming year. Thus, NAR analysts project income
levels for the upcoming year that are used in HAI calculations. Annual revisions are made to the
HAI series when “actual” income data is released.
Qualifying Income – Income necessary to qualify for a loan for the median priced home
Formula: PMT * 4 * 12
Housing Affordability Index(Composite)- Measures the degree to which a typical family can
afford the monthly mortgage payments on a typical home.
Formula: (MEDINC/QINC)*100
Key:
IR = Interest Rate
MEDPRICE = Median price of existing single-family home sale
PMT= Monthly payment
MEDINC = Median Family Income
MINC = Necessary Monthly Income
QINC = Qualifying Income
“Earle Gibson, a real estate broker in California wine country likens her high-priced turf, which includes Napa, Sonoma and Marin counties, to a high noon stare-down between home sellers and prospective buyers, each of whom can afford to wait for the other to blink.”
Psst, Earle… I bet a lot of your FBs can’t afford to wait much longer. And WTF kind of chick name is Earle?
By the way, I love these predictable Fed-inspired sheeple expectations management rally opportunities. Ka-frickin’-ching, baby!
I’m sick of the “high noon stare down” reference….each waiting for the other to blink.
Sellers are desperete. Buyers are waiting or are locked out by tighter standards.
Prices will come down when adjusted to wage growth. There is no doubt who will win this.
As long as the government doesn’t “redistribute” wealth to the FBs.
“I’m sick of the “high noon stare down” reference….each waiting for the other to blink.”
The “sellers” are out in the street with their hands on their pistols. The “buyers” are in the saloon taking a dump.
Hate to tell you this but there is not Wage Growth anymore…
We dont have unions in many new industries or even old ones. States like California have at will labor termination laws. Meaning for what ever reason you can be fired. As many will point out jobs are shipped overseas ot cheaper states.
With a name like Earle she has to be from my neck of the woods (the land of cotton). Who knows she may be her own Granpaw some how that works out sometimes. Someone wrote a song about it.
My dear dad used to sing that song and crack us up.
http://users.cis.net/sammy/grandpa.htm
would you like a glass with that whine?
These people in ‘wine country’ just ‘whine’ too much….if you ask me!
“And WTF kind of chick name is Earle?”
I guess there are two. And they are both realtors.
http://www.earlehomes.com/
Boy named Sue……woman named Earle & her dog named Andy……..what’s this world comin to?
Oh yeah? Then why are prices in some “wine country” neighborhoods dropping like one of Mike Tyson’s girlfriends? Yes, some of the richest (and greatest) fools have been hoodwinked into overpaying for houses in the most affluent communities, but the big secret is that rich people who spend all their money on houses immediately cease to be rich. It is a historical inevitability (HI) that the rich people will beging hurting sometime after the poor people begin hurting. If they are still holding out, then they are DUMB!
Marin County
Belvedere Tiburon -9.4%
Corte Madera -1.8%
Fairfax 21.4%
Greenbrae 15.4%
Inverness -28.2%
Larkspur 35.2%
Mill Valley -10.8%
Novato -1.6%
Novato -5.0%
Novato 108.6%
Ross 119.8%
San Anselmo -7.0%
San Rafael 24.6%
San Rafael -6.3%
Sausalito 18.7%
Stinson Beach 94970 n/a
Napa County
American Canyon -10.7%
Calistoga 49.7%
Napa 1.5%
Napa 12.6%
Saint Helena 11.3%
Yountville -16.5%
“Now the power meetings are between listing agents and their anxious sellers on how to flag the attention of agents representing qualified buyers.”
Here’s a novel idea - REDUCE THE PRICE!!
That would violate the number one rule of real estate. Real estate only goes up. Break this rule and the NAR will hunt you down like a dog.
But a microscopic price drop means that it’s a GREAT time to buy in Tucson!
http://www.azstarnet.com/metro/199070
But the readers of the above article don’t quite agree:
http://regulus2.azstarnet.com/comments/index.php?id=199070
The inset photo has this pure gem: ‘Experts say the drop in housing prices gives house hunters a better chance at affording them; A $200,000 home three months ago might now go for $199,420.’
This must have been written by a closet HBB’er slipping in stupid datapoints to see if anyone catches them. If not, this country is in real, real trouble..
“A $200,000 home three months ago might now go for $199,420.”
Oh yes, a whole $580 is all that was keeping from affording my first house… that is just funny.
The headline implies things will turn around in Tucson soon. Not likely.
This is a nice house in a nice neighborhood; same model sold in 2005 for $460k; seller is asking $325k which IMO is getting close to reasonable, but aside from a few nibbles, it’s still sitting there after two very rapid price reductions. The same model across the street, not nearly as nice, is going for $389k (started at $489k about 18 months ago). Fascinating to watch this unfold…
http://www.longrealty.com/Listing/ListingDetail.aspx?Search=7b57220c-59f0-4516-8832-bdd5b66a47c7&Listing=23326036&IRPAgentID=9302309&Image=1&First=1&Last=8&pagesize=10&SearchType=&ListingDistrictTypeID=&FirstLetter=&Sort=6&Cookies=&UseColorBar=false
….“There isn’t permission for people to buy a house. People’s peers, parents and family won’t let them feel good about buying. Everyone says, ‘Wait a little longer and the prices will come down,’ Leonard said….”
Sacramento housing prices are declining by $10,000/mon. The REO inventory is increasing by 4% a week. Until those two factors change, no one who reads this blog has permission to buy, unless it is at 2002 prices.
It is unfortunate about John Leonard because he built a cutting edge in-fill project with excellent design features. John is a very genuine, well-meaning soul. I hope he sells out at a break even or better and the buyers get great deals. It is about time eveyone had a win-win, or at least a par-par oportunity. Until now, all buyers have been losers, hence the birth of the FB name.
01-02 , that’s my threshold. Can I have a cookie? >; )
Gwynster, I will personally bake you a whole batch of chocolate chip cookies. You the wo-man!
I’ll know houses are close to bottom when Median Income/Median Price = 3 nationally. 2.5 for Phoenix. If we get near 2, might be worth trying to become a landlord.
I believe you mean Median Price/Median Income , not the reciprocal.
I had to go look at that project: http://www.riverssidehomes.com/
This is the place my kid and I drove by a few months’ back and I loved it and she hated it.
“Now the power meetings are between listing agents and their anxious sellers on how to flag the attention of agents representing qualified buyers”
“power meetings” - like those between Thatcher and Reagan in the 1980s to determine the fate of the free world.
Also notice how it’s about getting the attention of the AGENT, not the buyer themselves - maybe an extra commison for anyone who brings in a live one?
Any buyer would be attracted to a property that might be cheaper to buy than to rent. Sales Tactics are needed only when the price is in fact unfair (relative to renting).
“A rivalry began more than two years ago when Nassi proposed Aura three blocks from a project local developer John Saca wanted to build on Capitol Mall between Third and Fourth streets. That plan called for twin 53-story buildings featuring about 800 condominiums.”
“Each developer went all out for prospective buyers with dueling showrooms, sales parties and publicity stunts. In the end, Saca’s project busted its budget and collapsed earlier this year.”
- When I read this I pictured ‘Masked Mexican Wrestlers’ stalking each other in the ring for the Championship Title. WTF!
John should be sending flowers to his competitor for the whipping he gave him.
Initially, I read the headline as:
City kills condo loan officer
I had no idea the market was that bad in Sacramento!
No but we can dream >; )
I thought the same thing when I saw the Sac Bee website this morning.
“Gibson [a real estate broker in California wine country] says…‘In Vallejo right now, there is an inventory of well over 1,000 single-family homes and maybe 10 closings per week…‘Everybody’s hurting. It’s like, who’s the lucky agent this week?’”
MACDONALD:
Ms. Gibson, recent reports show that there are well over 1,000 homes for sale in Vallejo but that there were only 10 closings last week. Why do you think this is?
GIBSON:
I personally believe that Vallejo sellers are unable to do so because, uh, some people out there in our state don’t have maps to find these houses and I believe that our real estate market like such as LA and the OC everywhere like such as and I believe that they should our REIC over here in Napa County should help the Vallejo should help LA and should help the OC and the Beazer houses so we will be able to build up our future home ownership for our children.
Mrs Gibson, do you happen to have a niece who is blonde, in a beauty pagent, and lives in South Carolina?
LOL!
Poor girl, she’ll learn good looks only last so long.
Govenator: Ms Gibson…..I agree…..let me say this….about that….and the other.
GOVENATOR:
MS GIBSON …SORRY…I HIT THE ADD COMMENT KEY TOO SOON….OOPS…ok…this is better than the other NOW…SORRY…ok now…got the caps off i think…. I find you attractive and such….by your words and things…and think I grasp what you say about maps and such…..problem is… i sometimes HAVE A little trouble understanding CA women and such. MayBE WE could talk over a glASSof wine and things?
All three are homeowners who would like to stay in their houses but can’t afford to make the payments on homes that are worth less than what they owe.”
This is the psychology that will give the market that last little push over the edge. People that can pay, but can’t bring themselves to make payments on something they over payed for.
Methinks it’s all part of the flipper mentality: If I can’t make bank in 6 months, I’ll just drop it and run - whether by short sale or the midnight jingle drop. I have always expected that a fair number of ‘distressed’ homeowners are mostly distressed at the unfairness of uneasy money, of slow money, as in actually working for it.
Fellow Bloggers, stop telling seller’s to drop the price- they have zero skin in the game like zip, nada.
Hence they CANNOT drop the price.
This is exactly why the house appreciation implosion is occurring.
Sellers have no wiggle room what so ever.
It’s a “buy at their price or they will go into foreclosure” scenario.
So lay off please.
Not always. There are still a some homeowners out there who bought and actually didn’t HELOC for toys and thus have some equity. They just want to make $100K profit instead of $50K profit.
But not many.
You’re right; the vast majority are specuflippers who don’t have money to bring to the table so they can’t drop the price. I don’t think that real estate is going to be sticky on the way down this time. You’ll have a long standoff as FB’s milk their CC’s until it’s too late. Then when the keys starts arriving at the bank, there will be a preciptous drop as banks unload what’s left because they are deserate for the liquidity. That’s when the vultures will swoop in.
We might have a brisk selling season after all. Just with major buzzcuts.
I mean a brisk SPRING selling season.
Let’s say I have $100K equity. However, I really don’t want to sell, rent for 2-3 years, then buy again.
So, let’s say I was selling because I wanted to move up. Sell for $230K, take my $100K equity as a down on a $400K house? I don’t think so.
Better to stay where I am, let my house fall to $150K, take $20K equity and go buy the $400K house when it is $280K.
You are saying that you wouldn’t move twice for 80K? How many hours would you spend moving? 1 week to move out and 1 week to move back in. A total of MAYBE 80 hours of work plus some piece of mind at $1000/hr. Heck, you could PAY someone to move you twice and still earn 70K.
And how can you be sure that you will not lose 120K in equity?
FYI - this is MY exact situation and I am having some intense discussions with my wife who doesn’t want to move frequently.
I’m with you, VT Dan … if in fact you can still sell your house, you should do so. Better to become a renter than to risk losing ALL your equity. The only way this is a losing strategy is if house prices fail to fall more than a few percent. How likely is that? NOT very.
That’s right, Darrel.
It’s better to upsize in a down market and downsize in an up market. That way, you save money on the bigger house and get money out of the smaller house. But why does no one see this? Because they are FOOLS! FOOLS I TELL YOU!
And they will never see the error of their ways, even when they are in rags leaning against a light post and spitting into the gutter screaming the tune “Do you love me now that I can dance” at the top of their raspy lungs in a desperate attempt to regain the lost romance of their lives that slipped through their fingers the minute the money stopped rolling in and they know that they will never, ever, ever be the Romeos they once thought they were.
never
Otto: It is simple really, a buyer looks up what the seller is into the house for if for example a flipper bought for 500k and they want 800k lots of room for a chit chat i think you will agree. Hence if that seller paid 500k and wants 595k then a reasonble deal can get the seller out of the house and the buyer into the house. If buyers think that a 500k house is going to sell for 250k i think both you and i realize that the buyer is another flipper who needs to be tossed out in the ally amd waved goodbye to that is not going to happen.
Bottom line if you have to sell then expect little to no profit in these times and move on in life, if you don’t have to sell and want to test the market very bad idea and get off the MLS you are creating havoic and log jamming a recovery for everybody.
“If buyers think that a 500k house is going to sell for 250k i think both you and i realize that the buyer is another flipper who needs to be tossed out in the ally amd waved goodbye to that is not going to happen.”
Let’s reword this. “If buyers think that a house a borrower PAID $500k for will sell at $250K, they are probably right.” Just give it time. The seller will sell at the market price or the bank will after it forecloses.
Drop your card with the price on the back where the FB can see it when they get home. Don’t let the listing agent see it. Do you really care if the FB is upside down?
“if you don’t have to sell and want to test the market very bad idea and get off the MLS you are creating havoic and log jamming a recovery for everybody.”
1) People that don’t HAVE to sell don’t get to lock in their gains? They HAVE to ride the market down? OHHHH, I don’t think so. Someone with equity has EVERY right to try to sell for whatever they think they moght be able to get.
2) You can’t really believe that the problem is too many houses in MLS… can you?
Prices went above what people could afford, so lenders changed the rules of afforadability, allowing people to qualify on teaser rates. Eventually, prices got so high, that people couldn’t even make payments based on the teaser rates. Prices couldn’t go higher.
People that had teaser rates expiring couldn’t refi becuase houses had stopped going up. So, they defaulted. Defaults lead to tighter lending standards, this rapidly escalated defaults…. losses… tighter lending standards.. price drops…more defaults.. tighter standards….
It has EVERYTHING to do with prices being too high.
It has NOTHING to do with the media(they didn’t start reoprting the turn until 9 months after it happened) or too many people testing the market
Ponzi schemes go great until you run out of people to join. Then it rapibly implodes.
If the listing is a house that sold after 02, I look for the words “Bank Owned”. If it’s a FB, I don’t bother and wait for the bank. The seller bought before 02, there is room for me to go to work on them, assuming they didn’t HELOC themselves to death.
I also only look at homes that are vacant. People still living in the house while it’s for sale aren’t hungry enough IMO.
gwynster> Look in the fridge, if their is no food in it they are hungry for a sale?
So, just walk away then!
It’s true, Otto, that many are under water. But there are plenty of greedheads out there who own outright and are convinced that prices will go up again. I know several. They drank the Koolaid and will live to regret it.
Who ever said I was telling Sellers to lower their prices? I don’t need to talk to Sellers for the next few years.
I’m telling the Banks and Lenders to drop the prices on their REOs.
That’s cool. Foreclosures are cool.
“People are screwed.”
-Big V
Spent some extra time talking to a woman at the cash register today, she says her friend is a process server and has been serving a ton of NOD notices lately, especially around Jefferson and Washington (Playa Vista), he tells her this is going to get a lot worse, we’re nowhere near the bottom and no one has any idea how bad this really is going to get, he sees it months ahead of time because of his job.
Oh, I believe it. Playa Vista is that archology they built on the wetlands down the hill from LMU. I was interested in it long ago when I was moving up here from Orange County, but the prices are outrageous (700k for a 2 BR condo), and the HOA dues are like $800/mo. I mean $800 for the HOA alone? That’s 1/3 of my rent! That whole place is going down like a hooker at Mardi Gras.
And there’s nowhere to walk to for miles, they could have just as easily put some retail on the ground floor. But anyway this guy’s been serving NODs all over the place, not just there, this is going to get ugly.
Try HOA dues of $1200 for a 3BR with a lovely view of the Home Depot. All of that, plus the condo’s are filled with college students (that place is like fraternity row on a Saturday night) that had mom & dad buy the place for an “investment”. The apartments are all Section 8. Good riddance!
There are Section 8 tenants at Playa Vista??
At Fountain Grove, the apartments, yes. Nice to know that our low-income friends now have a right to live in such luxury. It’s a requirement in any new development in LA. I think it has to be at least 15%.
My neighbor’s friends lived there and ran as soon as their lease was up to get away from the riff-raff.
Who is going to benefit from the implosion of real estate?
Process servers? Auctioneers? Bankruptcy lawyers?
Any public companies to invest in (or is that too crass a question)?
UHaul??
I want to find a new business to start that will provide some service that will be in high demand. Perhaps something new/innovative. Anyone here have any ideas?
I have been thinking about new ways to connect buyer/seller. New services for those who need to find ways to live cheaper. There has to be many new innovative business plans for this market/recession.
You may have just informed me of why my mortgage clients are paying so promptly right now. Ninety percent of my clients live in trailer parks. Bad economy => people downsizing => robust demand for trailer lots.
We’ve better not be anywhere near the bottom in LA, since prices have barely moved at all. This staring match is going to be a long one.
Good stuff LAIG. Thx for the insight. Living here in the Marina I hope the Westside goes down hard - and I think it will. Too much show and not enough dough. Just signed another 1 yr lease so I’m sitting tight. Plus the NFL starts next week :).
From 8/14/2007 to 8/28/2007, there were 13 homes sold in ZIP code 90274 for an average price of $1,790,462.
1) $1,401,000 on Addison Rd
$1,520,000 on Palos Verdes W Dr
2) $805,000 on Cottonwood Cir
3) $975,000 on Cottonwood Cir
4) $930,000 on Crest E Rd
5) $1,375,000 on Dapplegray Ln
6) $1,400,000 on Espinosa Cir
7) $1,350,000 on Palos Verdes N Dr
9) $1,015,000 on Rockbluff Dr
10) $3,600,000 on Rocky Point Rd
11) $2,080,000 on Shady Vista Rd
12) $2,325,000 on Via Valmonte
13) $4,500,000 on Via Victoria
Homes are still selling big time in 90274. Hello.
Pulling 13 Beverly Hills-type stats to justify a ‘resurgent’ RE market is like showing me a slingshot and telling me it’s part of Saddams WMD’s. 90274 is Palos Verdes, a millionaires haven. Why don’t you post the sales stats for Anaheim, Orange, Fullerton, Yorba linda, Garbage Grove, Costa Mesa or Westminster?.
That’s right, you CAN’T …because they’re NOT selling.
Are you the Stan Johnson in Walnut Creek or Victor Valley? What are the sales stats for your area, Stan?
Get outta here, you troll.
One zipcode with 13 houses can’t refute the tsunami of foreclosures, decreased consumer spending, stock price reductions, commercial paper defaults, layoffs, more foreclosures, and so on that will be occuring over the next few years. Rich folk will rue the day they ever spent all their $$ on some stupid $4,500,000 house. Trust me on this one. The worker is the basis of our economy.
“People are screwed.”
-Big V
In the 92508 there was only ONE for all of August (I’m told)
Lord, sometimes I wonder if these real estate people have an ounce of logic and reasoning capability in their brains! To show a small list of homes somehere in the wealthy addresses constitues the reason to belive that real estate is in good shape?!! I’m flabergasted. I had heard from others that many real estate people are low in IQ, but this just mind boggling …
how many homes are listed for sale in that zip code??? if there are a couple of hundred listed, homes aren’t selling that well or that fast.
how many homes in that zip code sold during the same 8/14 to 8/28 time period in 2006? in 2005?
Friend was talking to a realtor who told her that in Riverside in one of its zipcodes in the OrangeCrest area there was only ONE house in escrow for all of August. That zipcode is fairly nice for Riv and pretty big. This is gonna get real ugly
“‘The market is very difficult right now. People’s inclination to buy is diminishing,…”
Actually, people’s inclination is to tell sellers to “stick it up your a@@ ..I’ll get your house at auction in a few months”.
For half the price.
This is my favorite comment tonight. Ok, ONE of my favorites. I love this blog.
I, Big V, hereby expressly forbid all of you to touch, poke, or even THINK about buying a house. Do you hear me?
“People are screwed.”
-Big V
I am trying to think of how I will break it to the loverly missus that we will likely never own a home again. Or maybe I will just keep stringing her along until I keel over and die.
Jeez, how old ARE you? I believe it will be quite safe to buy a house in 2012. Maybe not very profitable, but quite safe.
PB/GS: Don’t be down about one zipcode’s high selling prices. You will own a house in 2-3 years, when prices have completed their 50% downward slide. You will pay for it with cash, watch it inflate over the next thirty years, and leave it to your grandchildren.
I looked online listings for Merced ,Calif. A town that Ben has covered in previous threads. I used to live there. The banks are pricing their homes 190 k- 220k in areas that were going for over 300k in Summer 2006.
190 k- 220k
yes back to its long term trend ….how about that.
I love the layouts of CityLofts Long Beach. But 10% will not get me there with homes with no views or closets. Since redevelopment money help build them, why can’t the builder lower the price. 17 out of 72 homes sold and they have been selling for at least 10 months. Affordability will get lenders and realtors back into business. Other than that, they need to look for new jobs.
I was just talking to one of my friends at work about “The Towers” in downtown Sacramento. Not surprised to see it in the news again, Every time that place is mentioned, it’s facing some new financial problem. Bankruptcy or something, who the hell knows. Besides, if I was going to spend that much money to live in downtown, I would buy one of those awesome victorian houses down by the park, not some stupid condo. Weak!
What happens to the people that put down deposits on that place? The builder is obligated to deliver within a certain amount of time right? I remember hearing something about The Towers “already being sold out!” Like it’s some vaccine that we all need desperately. I just learned what FB meant this week thanks to Big V, I think those people qualify as that. Most def.
As I was writing my last post, my blackberry was going off because of my trulia property status alerts. 2 Roseville homes dropped 5-10k, 1 Folsom home dropped 10k. And then oddly enough, one Folsom home price increase? Ruh? From 319,000 to 355,000. That’s a little weird. That’s the second time I’ve seen that too.
Actually, autechre, there were two competing luxury highrises, Aura and the Towers. Towers went bankrupt several months ago after the owner, John Saca, was unable to get financing. Aura is owned by a guy from Denver named Nassi, who is now admitting that he’s unable to get financing. These two idiots started pushing these projects in 2005, when everyone on the HBB knew that real estate was toast. I argued with several people who thought these projects were “can’t miss.” I wish I had made hard money wagers. Who the hell wants a view of Sacramento?