Waiting For Prices To Come Down More In California
The Orange County Register reports from California. “After home shopping for seven months, Kane and Carrie Johnson found the first new home for sale that they like and can afford in Orange County. They’re not whipping out pens to sign sales contracts, however. They’re waiting to see if home prices soften further.”
“He and his wife are content to rent in Anaheim Hills and may not buy until next year. ‘With the market the way it is, we are not in a hurry,’ Carrie Johnson said.”
“Real estate agents say spring and summer months, which come to a close around Labor Day, are normally the busiest time of the year. However, this year the hot selling season never arrived.”
“In July, buyers closed on 2,391 homes, down 19.8 percent from July 2006, reported DataQuick. July marked the 22nd straight month that sales lagged a year ago. This year’s slump rivals a similar streak from June 1989 to March 1991.”
“Laura Rivera, a Tustin Ranch resident who toured Celadon on Labor Day, said she works in the mortgage industry and is just looking at homes right now. ‘I’m waiting for prices to come down more,’ she said.”
“Dick Lobin, a real estate agent in Huntington Beach, said home prices have dropped about 20 percent in some cities since the market peaked in summer 2005. He said cities such as Garden Grove, Santa Ana and Westminster are hardest hit because more home buyers have spotty credit or used creative financing to stretch into a home.”
“‘Those loan programs have either vanished entirely or been modified,’ he said.”
“Lobin said home shoppers can find some great deals. But he said prices might drop another five to ten percent. ‘It is miserable. You can’t deny it,’ Lobin said of the market. ‘But it’s not dead, on the other hand, either. It’s just that (agents) have to work for a living now. We did have quite a party, didn’t we?’”
The Herald. “The bursting of the housing bubble has translated into fewer construction jobs in California, but Monterey County appears to be bucking the trend.”
“In their annual Labor Day report, experts at the University of California-Berkeley found that…real wages for California workers fell and unemployment grew in the last 12 months. Between 2003 and 2006 California added 40,000 to 50,000 construction jobs annually, but in the last 12-month period the state has lost 12,000 of those jobs.”
“Statewide, the real estate market has created a slowdown in construction. ‘The housing bubble has had an effect,’ said Arindrajit Dube, a researcher with the university center. ‘In the last 12 months, there has been virtually no addition in construction jobs.’”
“‘Annual job growth has definitely not reached pre-recession levels in 1990s. In California, 200,000 jobs were added last year compared to 400,000 (annually) between 1997 and 2000. The 200,000 increase was unable to keep up with the state’s increasing population, with unemployment jumping to 5.2 percent in the last 12 months from 4.9 percent the previous year.”
“While earnings rose by 0.4 percent between 2006 and 2007 nationwide, the biggest increase in five years, in California real wages fell by 0.8 percent. Statewide, wages are 1 percent lower in 2007 than in 2003.”
The Recordnet. “In a rugged home-sales market, a number of spins are arising as agents and sellers try to adjust to keep the business of sales going.”
“Donna Kniess and a friend have their three-bedroom, two-bath home in Spanos Park West up for sale at $389,000 - and the for-sale-by-owner fliers specifically note to agents: ‘I am not interested in having my home listed with an agent. This allows me to offer a better price to the buyer.’”
“Thus far, the only response has been a deluge of printed information or phone calls from agents who want to list the house, Kniess said.”
“Kniess and her friend own another home in Merced and aren’t financially pressed to sell the Stockton house, she said. ‘It’s a shot,’ she said. ‘You never know.’”
“Her house, initially listed eight months ago at $425,000 and then lowered to $414,000, did garner two offers - one at $410,000 for the house and all its furnishings. Kniess said she wasn’t offended by that offer and should have accepted it. She and her friend also turned down another offer, sans furniture, at $395,000.”
“They turned down both offers at the urging of their real estate agent, who urged counteroffers to get the sales price up but instead ended up offending the would-be buyers enough that they went away, she said.”
“Longtime real estate agent Kevin Moran concentrates on foreclosure residential properties. ‘I saw the writing on the wall,’ he said.”
“Moran, who has worked in real estate a quarter-century, said he decided to specialize in foreclosure properties this past spring, when it became clear how much the market was slowing for traditional sales. ‘It’s just a bigger hit than anyone saw coming,’ he said.”
“He expected about a 30 percent drop in business. Instead, it’s down about 70 percent from its heyday in 2005. Moran estimated three out of 10 homes on the market these days are foreclosures and expects that will increase in coming months.”
“Moran said he has more than 30 foreclosure listings and is getting about five more each week. He also is making sales regularly, he said, because foreclosed properties are perceived by many buyers as the best deals.”
“‘It is a segment of the market that’s performing,’ he said. ‘I believe this will pay the bills for me and my family until this thing turns.’”
From MarketWatch. “I spent some time with an industry expert in one of the most distressed areas of northern California — the Stockton metropolitan area, which currently sports the highest foreclosure rate in the nation.”
“Clay Edwards, an area mortgage consultant, specializes in loans in an area known as Mountain House, an enormous master planned community in the grassy flatlands just across the pass from the San Francisco Bay Area and just southwest of Stockton itself.”
“It’s a huge area, scoped someday to include 48,000 homes, and is popular with folks willing to deal with a one- to two-hour Bay Area commute just to get a new family home: a home of perhaps 2,900 square feet on a 5000-square foot lot for $689,000.”
“The Stockton metro area has had more than 8,000 foreclosures so far this year, one for every 27 households in the area, according to data from RealtyTrac. Edwards says some 80% of the listed homes in the area are in some kind of financial distress.”
“Closer to Mountain House, the commuter community of Tracy, part of the official Stockton metro area, has some 1,000 listings out of 25,000 homes, with 45% of those in a ‘distress’ situation.”
“Are a lot of Mountain House residents ‘upside down,’ meaning they owe more on their mortgage than their home is worth? ‘You bet,’ says Edwards.”
“So what lender would lend in that kind of environment? Edwards recalls a recent $600,000 application with a sizzling 786 ‘FICO’ credit score, with an interest rate buy-down went through 40 banks before getting an offer. And in many more cases, you’ll get a loan, but it won’t be at the market rate.”
“Edwards continues: ‘I don’t think we’ve hit bottom yet, and it’ll probably take six to 12 months for this thing to work itself out. We had the biggest boom in 40 years, now we’re correcting, but most borrowers are doing fine. We’ll be stronger when it does come back.’”
“Asked what could derail the recovery: ‘A recession. A dip in jobs could screw everything up.’”
“Santa Ana-based title-insurer First American announced this morning that it plans to cut about 1,300 jobs this month. The job cuts are in addition to 600 jobs eliminated earlier this year.”
The Daily Herald. “Because home sales and moves stimulate purchases of appliances, electronics and furniture, the giant chains that catered to house flippers and renovators have reported recession like results.”
“Americans who were living high by taking out home-equity loans during the boom have watched their equity drop and are now faint of heart when it comes to big-ticket discretionary purchases. The nation’s biggest retailing sector — automobiles — is likewise feeling the effects.”
“John Crane, general sales manager at Ron Smith Buick Pontiac GMC Jeep in Merced, Calif., has seen a tremendous slowdown in the past six to eight months. ‘People don’t have the money to look at cars,’ he says. ‘They’re having a hard time paying house payments. Now their second mortgages and 1 percent loans are coming up.’”
“Her house, initially listed eight months ago at $425,000 and then lowered to $414,000, did garner two offers - one at $410,000 for the house and all its furnishings. Kniess said she wasn’t offended by that offer and should have accepted it. She and her friend also turned down another offer, sans furniture, at $395,000.”
“They turned down both offers at the urging of their real estate agent, who urged counteroffers to get the sales price up but instead ended up offending the would-be buyers enough that they went away, she said.”
What a bag full of chuckles. That made my day!
Raise your hand if you think Mr or Mrs Realtor has a few properties in the hood that need to be dumped, and keeping comps over 415K is key. It’s the only reason I can think of for talking yourself out of a commission.
That story smells…
I’ve got a one-word reason for Mr. Realtor’s behavior:
TERMITES
http://www.encinitascarlsbad.com/pics/common/termitetent.jpg
Probably an irresponsible single mother realtor who would only communicate with her clients via cell phones as she was weaving in and out of traffic on 5 through Stockton on her way to Starbucks in her “thank god for my HELOC” Hummer.
but instead ended up offending the would-be buyers enough that they went away
Nice! After 6+ years of being warned not to *offend* greedbag sellers with “unrealistic” lowball offers, now the “offense” is on the other foot. Payback’s a bitch, and she has a sister named Leverage.
but instead ended up offending the would-be buyers enough that they went away
Nice! After 6+ years of being warned not to *offend* greedbag sellers with “unrealistic” lowball offers, now the “offense” is on the other foot. Payback’s a bitch, and she has a sister named Leverage.
Sorry ’bout the double post (though some things might be worth repeating
).
Double posts do suck, having to read an apology about the double post sucks more, but having to read that the poster thinks it was worth reading twice…….I better not say.
then STFU.
Ok, so is desmo accusing me of committing a metaphysical or methodological solipsism?
sol·ip·sism (sŏl’ĭp-sĭz’əm, sō’lĭp-) - The theory that the self is the only thing that can be known and verified.
The theory or view that the self is the only reality.
Desmo can’t even SPELL solipsisem, so I wouldn’t worrey about it.
Now that made my day
Opps, wasn’t dissing on Harm above.
“Payback’s a bitch, and she has a sister named Leverage.”
Another HBB Bumper Sticker!
True story; a person met up with his parents about a month ago, as usual the parent’s inquired when this person would buy into the San Diego real estate market. This person kept his cool and pointed out that townhouses in his complex had depreciated 150-200K from the peak 2 years earlier, so one would be losing $6000/month depreciation in addition to the extra $2000 one would be paying on a half-million dollar mortage/taxes/mello roos vs renting, thereby effectively spending $10,000/month vs the current $2000 rent. Then this same person had a labor-day phone conversation with said parents, and again was asked when he would be buying a property.
That person?: me
You need to educate your parents how prices in San Diego dropped 40% back in the 1990s. Maybe they should read DQNEW.com and get some stats.
A lot of parents are more interested in telling their friends that their child is now a homeowner. Part of keeping up with the Jones, extends to the children.
That ‘homemoaner’ crap is sooo 2005, vmaxer. Today it’s all about how many foreclosures you’ve got. “I’m so proud of my son –he’s only 23 and already has SIX foreclosures under his belt. Just a chip off the old block (_sniff_)…”
That dynamic has been playing out across the street from me. Three years ago, and a few months before I moved into this house, Daddy bought a house for Darling Daughter to live in while she attended the University of Arizona.
Mom added her own touch by buying Darling Daughter a used Jaguar. Can’t have her taking the bus to school, doncha know…
Well, Darling Daughter totaled the Jag back in March ‘05. It was replaced by an SUV that seems underpowered for the rather hilly terrain in this part of Tucson. (No, this isn’t the toney Catalina Foothills, but it’s not flat around here.)
Any-hoo, the plan was for Darling Daughter to find roommates to, well, make money off of. (The mortgage is in Dad’s name.) This, she did, and for the most part, they’ve been pretty decent.
However, her dogs, which she got for protection, have been nothing but a barking nuisance. Periodically, they get out, and one of them almost got hit by a car a few weeks ago.
And did I mention that Darling Daughter no longer lives across the street? She moved out this past March. I suspect that she’s shacking up with a boyfriend at some other location, but I have no proof.
These days, the property has become yet another rundown rental. In fact, I recently heard a longtime resident referring to it as a slum. (Meanwhile, across the street, Slim’s landscaping is growing in nicely. It almost blots out the view across the street.)
And, as for Mom, the purchaser of the late-great Jaguar, I don’t think she’s going to be in a car-buying mood any time soon. She just lost her job at First Magnus, which is Tucson’s answer to Enron. Details at:
http://www.azstarnet.com/sn/firstmagnus/
Sounds like a soap opera almost.
Dude… I totally want to tune in.
Make sure you let us know when any of the following happen:
1. The parents move in (due to McMansion foreclosure)
2. Mom moves in solo as she and Daddy are not talking anymore.
3. Any of the above “soap opera stars” get into drugs
4. Vehicular damage to the house (e.g., drunk renters having parking issues)
5. Any party that totals the place. (Fire, flying couches, etc.)
6. If the daughter moves back in looking rather “used”
snicker…
Got popcorn?
Neil
Neil, you are in your usual form today. You add so much to this blog and keep me laughing. Thanks!
Har! Does Slim get a bonus if any two happen concurrently?
Yeah, my mom stopped asking me about that when I began badgering her about when she was gonna finally sell her overpriced house in Ramona. She would have made a killing if she had followed my advice in 2005.
“People are screwed.”
-Big V
My daughter tried to buy a townhouse about a year ago, ended up losing it to someone else. She was bummed, the only price she could even vaguely afford ($185k). Now she’s happy, in another year, she’ll be able to get 2 or 3 for that price.
My folks are very supportive.
My inlaws? Ugh… I’ve given up and just point out that I don’t like what I could afford.
Neil
Very familiar sounding story.
My parents still don’t get it either, and regularly ask when I’m going to buy a house in SD too. In the last conversation I had with them a few weeks ago, I hit them with current mounting inventory numbers in foreclosures and resale homes, cost of rent vs. cost of owning identical place (less than half) and the fact that everything around me has dropped by ~$70K so far.
Still didn’t get it. So I showed no mercy this time and they got an earful of exotic financing, ARMs resetting and securitization of all the toxic waste loans with a warning to take a look at their current investments. As a finishing move, I emailed pics of a map showing all the foreclosures and REOs in THEIR neighborhood with comps of houses around them purchased in 2005 that aren’t selling at $30K below what was paid for them.
I’d guess that they’ll be asking again sometime next week.
Ditto for me. To be fair, my parents aren’t really pressuring, but my wife and I do get asked once or twice a year, “So have you been out house hunting?”
I’ve gone through the numbers with them before. Now I just tell them that I’ll be looking to buy once prices return to fundamentals. Which hopefully is sooner than later!
What happened to the days when a young couple was asked by the parents when a baby would come along?
Current thinking is you can’t have a baby without a house, silly! (Says the guy with a 10 month old renting townhome in SD (UTC))
““They turned down both offers at the urging of their real estate agent, who urged counteroffers to get the sales price up but instead ended up offending the would-be buyers enough that they went away, she said.”
Counteroffer from what other buyer?
Oh the fake multiple offer trick, make the only buyer think there are other multiple offers from many buyers just itching to pay more?
BAHAHAHAHAHAH Get a load of that … I would be offended too!
I hope buyers start putting the term “firm and final” in their offers. I know, when it comes time for me to make an offer, those words will be in it. Basically, I’d be politely stating, “don’t @!#$ with me”. Also, I’ll ask to present my own offer.
Just like “Fill or Kill” when buying stocks or options. I plan to include just that in my offers. No counter-offers… take it or leave it!
That would take the fun out of a counter offer lower than the first when they try the “phantom buyer” game.
I too am rather pissed at how often the “phantom buyer” appears.
Firm and final… maybe, maybe not on the initial offer. But on the counter offer… Bwaaa ha ha!
Got popcorn?
Neil
Or Counter with a “Phantom Seller” down the street routine….
‘your house is nice but the a mile away is nicer and asking 10% below your prices…Can you go lower with your asking’ … Hold on … seems I have multiple lower askings from different sellers … can you go lower by 15%..
In Colorado, we were told that we only get to have one counter-offer to the original asking price. That if we counter and the seller counters, if we don’t take it the deal is effectively dead. RE Agent said it was a state law. Can anyone verify this?
I hope not, because I like the “lower than the first offer counter offer” game too! Works great when buying cars.
Until both the buyer and seller agree on a price, there is no deal . That is the general rule. Therefore no deal is dead, because none was ever alive.
Ask the RE Agent to cite the statue number. If it’s a state law, that should be easy to do.
I love how people use that excuse - nowadays, most states have their state laws posted on an easily searched website.
Its the counteroffer from the seller…..ahemmm….would be seller…
A counteroffer from a seller???
How meaningful is that?
Buyers don’t counter themselves. The buyer makes an offer, and the seller may counteroffer higher price or fewer contingencies or something.
I dont see the need to listen to any seller counters at this point since inventory is double over last year. I had a couple “phantom buyer” counters come up, at which I back out. The homes often didnt sell and remain on the market.
““While earnings rose by 0.4 percent between 2006 and 2007 nationwide, the biggest increase in five years, in California real wages fell by 0.8 percent. Statewide, wages are 1 percent lower in 2007 than in 2003.”
I don’t see why home prices in California shouldn’t start rising immediately. Wage growth is certainly there to support it.
High end jobs are leaving the state.
Why pay $100K for a programmer when you can hire one in say upstate New York + get Tax-Free treatment at $60K or even $5K overseas.
Much of the tech heavy California Economy is deflationary.
You dont pay $500 for a cellphone anymore, thats down to $50 or even free. PC/Laptops are a few hundred dollars down from three grand… You cant make a profit if the sales prices are falling due to global competition.
Besides how many high paid engineers does it take to screw in a light bulb? ~~ Fewer and fewer each passing year.
At least they can’t offshore those lucrative castmember jobs at Disneyland! Last I heard they start at something like $8/hr.
Its so true, high cost of living eventually hollows out the economy. We are moving at the end of this month to Colorado, and we are moving our software development group to be based out of the Denver Tech Center. We can pay people less and they will have a substantially higher standard of living than either Orange County or San Diego.
After living in the OC my whole life, I am taking our 150K+ household income OUT of CA.
They can then replace us with 10 more people who “do the jobs Americans won’t do” for low wages and enjoy the wonderful tax “benefits” that they bring. Oh yea, they pay sales tax, hehehehe.
CA will become increasingly polarized with super wealthy and poor and little inbetween.
I am very much looking forward to Colorado. I can buy a house there and my PITI will be less than my rent would be. At that point, don’t care if the house goes to zero, I can easily afford the payment, we are buying WELL BELOW our means and I can do what I want with the place. I am buying a home to live in it. I am very happy!
welcome to my home state, OCMetro. bring your coat and your camera - autumn’s here, the prettiest time of the year. you’ll have to leave denver to see much of it, though
Big congrats. I’m jealous actually. I wish my employer would move us all out of the state. As soon as another Univ. makes me a matching offer to what I make now, I’m out of here too.
Congrats, enjoy living out the American Dream. As for me, I’m stuck in so-cal due to a fairly luctrative job that’s hard to give up. Dont forget about us in the third world out here.
“CA will become increasingly polarized with super wealthy and poor and little inbetween.”
The real problem is the Land Sharks we have here. The high cost of goods is faily flat or down over the past 5 years. However services is what gets you. Everyone is after that extra dollar from your wallet, and if you dont have
a dollar, no problem they set you up for financing so they get their commission. Thats RE in California. What ever happens to you or your home the RE agent or mortgage broker walk away with their fees.
Not to worry we been down this street before back in the 90s. It was the rich that fell harder!
My former employer bought a company based out of San Diego in 2003. What a nightmare. Not only were the employees of that company a bunch of jerks but they also needed 3 people to do 1 person’s job and their salaries were easily 1/3 to 1/2 more than the rest of the company. On top of that were some goofy workmen’s comp laws that made California a joke in which to do business. The company was doing everything it could to not put another job in the San Diego office. They didn’t mind adding jobs in Kansas.
You’ll love Colorado. after living in orange county most of my life, i moved there in the early 90s. unfortunately, moved back here in mid 90s because wife missed her family here in southern cal.
lived in Ken Caryl Ranch in Littleton. nice area set up against the foothills.
We will soon be joining you as an emigration statistic of middle-class flight from CA. We’re twice above median and still can’t afford anything. I just don’t get it, nothing makes sense.
Can’t wait to get somewhere that I can actually afford something more than a cup of coffee.
Good for you Unknown. People need to be willing to vote with their feet. My wife and I have enjoyed our time here in New York. We make decent money. We have our health. We save money and still do what we want. This is a very interesting place so we will stay for the near future. Amazing things happen here. Last week I went to have lunch in Bryant Park with a co-worker. While finding a place to sit we noticed that the lead character from the HBO show Entourage (Adrian something, I think) was walking about two feet from us. That kind of stuff only happens in a few places. Today we went and ate lunch at a park by the U.N. where they filmed a scene from Scarface. For a kid from Minnesota this place is still pretty amazing. I think a lot of people feel the same about California.
But if it ever comes to a point where we can’t afford this place, and we are merely struggling to get by, we will be out of here like a bolt of lightning. Until then I will count my blessings and enjoy my life. You should, too.
People need to be willing to vote with their feet.
Oh they are… In California, in the “in areas,” many of the fleeing families were bought out by flippers. Now… they might have torn down the place and built bigger (or two on a lot a la Redondo Beach). Most? They were trying to live in the house for two years before putting it on the market.
It will be 1994 again pretty soon. People cannot afford, they’ll flee.
Got popcorn?
Neil
NYCity Boy:
I just want to point out that some people are actually from California. No offense, but voting with your feet is something that you do when you’re a customer, not when you’re a citizen.
Well rubbing shoulders with film industry types isn’t all that. As someone who grew up in OC and worked in film, it’s seriously overrated.
Thanks for all the warm wishes everyone. Actually this was a tremendous blessing for me and my family. Being a “bitter renter” these past couple of years has been great, lived in some of the nicest communities in America at a fraction of the cost to “own”. However, we are ready for a change, a bit tired of the usual SoCal rigamarole. The home we are buying is less than the cost of rent in CO for the same home. We were able to save money and will live in a very nice neighborhood but be well below our means, which means, we are actually living within our means.
Thanks to all who have helped my wife and I get through the dark years of 05 and 06, overcome OC shills like Gary “in the bag” Watts.
It’s a new day, there will be some hard economic times ahead for this country, but hopefully, the wisdom of those here will permeate and save many others. I know it helped my family!
Definitely a good choice. If my company was setting up in Denver, I’d head out.
Alas, we’re looking at Houston… Just a bit too far from family. If required, I’ll stay with the company; but I’d rather be a little further west and I’ve never had a bad time in Colorado. 
Good luck!
Neil
Neil - you’re in aerospace? There are opportunities in Phoenix and Denver. I know personally.
“However, we are ready for a change…”
CO = bicycle country; time for a pair of hi-end road bikes!
Best of luck, OC Metro!
Sounds like you know what you are doing & will enjoy your new home.
Congratulations!
“We can pay people less and they will have a substantially higher standard of living than either Orange County or San Diego.”
My spouse actually makes about $20k more per year here in Colorado than when we lived in the Bay area for a similar job. Plus, we parked our housing proceeds in a high-interest savings account that’s earning us another $15k/yr. Life is good! Best wishes on your move.
Hi redhead68,
Would you mind telling me who is giving you the high interest savings?
Thank you.
“Would you mind telling me who is giving you the high interest savings?”
Sure. We’re earning 5.2% through USAA. The minimum balance is $10k.
Redhead,
Thank you.
Take care
Not sure if you can get an account on-line or???
But San Diego National Bank had a 7-month CD at 5.77%, IIRC.
Also, just bought CDs with Morgan Stanley. They mature in December, I believe, but are at 5.45% or so (got them through Fidelity).
You should be able to get FDIC insured over 5% in most cases. That does seem to be changing, unfortunately, as rates on fixed-income are dropping **again**.
Google keywords: vanguard 0033.
The Vanguard fund #0033 is a taxable Federal money market fund paying about 5.16% compounded annual yield, minimum to open $3,000, minimum balance $10,000 for free slow mail statements (otherwise $20/yr for slow mail statements), minimum $250 check writing, no 12b-1 fees. Expense ratio is only 0.29%, so you are not getting ripped. Current fund size is about $8 billion, and date of inception is July 13,1981.
Full disclosure: No interest whatsoever in Vanguard family of mutual funds. Not an endorsement of any other Vanguard products.
Got 10% down?
Welcome! And bring me some In-N-Out!!
And anything from Trader Joe’s!
OK those are possibly the only two things I’d miss when leaving Ca. In turn, Mr. Gwynster has put down his foot. If move anywhere, there must be a White Castle nearby. I don’t get it.
White Castle? Ewwww!
We moved far away from socal and made the adjustment just fine. However, we dearly miss Trader Joe’s and a whole pile of the local burrito joints and Asian takeaway options. (Also cheap vitamins at Costco, but that won’t be a problem for you.)
‘I am very much looking forward to Colorado.’
I left CA 5 times, twice for Colorado where I lived during the depths of the last housing crash, in 1994 (Boulder) and 95-96 (Denver). I found that the locals blamed ALL their problems on Californians moving in. There was only one problem they couldn’t blame on Californians and it was the reason I left, the common cause of death: boredom.
“I found that the locals blamed ALL their problems on Californians moving in.
That hasn’t changed since your departure, but there are so many Californians moving here, locals will soon be in the minority and they will be easy to ignore. I’m only half-kidding. I’m getting a little tired of being demonized.
Sad to see you go. But I would in a heartbeat. Best wishes. From one native CA to another.
PC laptops down from three grand…you don’t pay $500 for a cellphone anymore. This is why the FED says there’s no inflation. You’ve saved $2500 grand on your laptop. That buys a lot more milk that now costs $1 more. Isn’t this the argument?
Speaking of voting with the feet: My wife and I have lived in NYC for 15 years. We sold our apartment at a huge profit, but still couldn’t afford to buy back in. We had a kid, and are sick of working all the time, so we’re moving to Japan. We found a much cheaper place, believe it or not.
“However, this year the hot selling season never arrived.”
..but the foreclosure season sure showed up..with bells on..
To jingle bells…
Jingle Mail, jingle mail,
Jingle all the way..
To winter wonderland..
Doorbells ring,
we’re foreclosin’
Twas the night before reset,
and all through the states,
no refis were written,
not even for Gates,
Yes folks, the hits just keep on a comin’, so order now, before its too late…
Only 112 shopping days left…
left till what? the GD of 2007?
lol
Is there really 112 shopping days left, it feels closer than that! Heck its 112 days and six hours! Yikes!
http://www.allcapecod.com/shoptillchristmas.cfm
I reiterate my prediction: Christmas 2007 is going to suck.
Neil
As I posted on an earlier thread:
“Federal Reserve officials got an earful from critics at a weekend retreat arguing they should use regulation and interest rates to prevent asset-price bubbles.”
Me thinks that these guru’s find themselves in a one horse race. Looking back after the fact, yes there was a stock market asset bubble. Looking back after the fact, yes there was a housing market asset bubble. Their horse in running at the back of the field with blinders on after the rest of the field has left the track. The Feds should be asking themselves right now ‘How many industries like the house and commercial construction business, the auto business, the big box businesses have borrowed from future sales with their perpetuation of the “How much’a month it a’gonna cost me plan”. The answers to this question are going to reveal the depth of the coming financial debacle not only on our economy but the world economy.
And now someone is starting to get it:“Americans who were living high by taking out home-equity loans during the boom have watched their equity drop and are now faint of heart when it comes to big-ticket discretionary purchases. The nation’s biggest retailing sector — automobiles — is likewise feeling the effects.”
“Because home sales and moves stimulate purchases of appliances, electronics and furniture, the giant chains that catered to house flippers and renovators have reported recession like results.”
Yep, I’ve noticed that the parking lots at the usually, until recently, very busy home improvement stores North of Boston, have been somewhat empty.
Also, I am hearing stories about the contractor types looking for work.
That speach Saturday where the Jr. Fed dude “reaffirms the stance of not deflating, or even leaning against the inflation of, asset bubbles since it is easier to clean up the mess” wasn’t a bit of showmanship.
The markets are DEMANDING a cut and constant drum beat starts to respnate with voters. So, the Fed comes out with a shocking assertion that bubbles are good to create outrage and give them room to not cut rates.
At least, part of me wants to believe that is what that was. Certainly they don’t actually BELIEVE it is easier to clean up than lean against these disasters…. right???
Although blame is being spread around, the FED is the primary cause of the problem. They lowered interest rates to 1%, which made investors seek higher yields in mortgage backed bonds. This created a flood of money chasing mortgages. Wall street and the credit rating agencies obliged with the necessary bonds and ratings.
Today, Larry Kudlow and his guests we’re saying that the FED should lower rates to ridiculous levels, to make T-Bills unattractive. That’s the real game that’s being played. Lower rates so that the private sector provides the funds, via chasing yields. However, at this point it’s more about preserving capital, than chasing yield. Can we really fool the European’s and Asian’s into buying more overpriced garbage bond’s? Maybe we can.
Chasing my yield by lending to the Federal Republic of Brazil, recently upgraded to BBB and paying 9.5% to maturity (10 yrs or 20 yrs, take your pick). There’s also the Republic of Iceland (rated AAA), similar yield but maybe a greater currency risk.
You got it, vmaxer.
A number of people on this blog have been “chasing yield” as well (raises hand).
I remember in 2004, trying to find a place to earn just a little interest. No can do. We were lucky to get anything over 1%, FDIC insured.
Seems like we’re heading in that direction again, and I’m getting pi$$ed. We need to see some real returns on investments, please!!!
BANKSTERS AND THEIR TRICKS!
“Wall Street hides impact of sub-prime mortgage meltdown.”
Gotta love this lot.
http://www.inteldaily.com/?c=139&a=3401
A little word of advice for those banksters: Don’t bend over to pick up the soap while you are in prison!
GO, APPALACHIAN STATE!!! YOU DA MAN!!
MICHIGAN WHO?
34-32!
Speaking as a Michigan alum, I am embarrassed. But, maybe-just-maybe this will be Lloyd Carr’s last year as our head coach.
We can only hope…
Hey, it’s only a game, right? It’s nice to know that the little guy just might have half a chance in the impending depression.
Hey, it’s only a kid’s game played with a spherical rubber ball, right? In the scheme of things, it’s kinda trivial, ain’t it? But it does give one hope that the little guy just might survive the impending depression.
Oops. I decided to expound. Sorry…
Sir, here in the colonies we do not play “football” with a spherical ball. And we make the ball from a pig, not from rubber. I suspect you have in mind another game, which shall go unmentioned, that many of us regard with no little suspicion. Because the players always seem to fall down and roll around holding their legs, for no apparent reason, after their opponents brush their jerseys.
The football theme is appropriate here. Something tells me that a lot of these bankers and mortgage brokers are currently on the roster as tight ends but will soon be playing wide receiver. Hike!!!
Scene from The Longest Yard (1974)
Samson: I think I broke his fuckin’ neck!
Announcer: I think he broke his fuckin’ neck!
Team doctor: Get the ambulance! I think he broke his fuckin’ neck.
Samson: See! I told you I broke his fuckin’ neck!
I believe they used the word “freakin’”, or a close facsimile, in the movie.
Hell, son. You must not even be old enough to have seen the original. I wasn’t even sure Ben was gonna post it, but it’s just too damn funny.
MICHIGAN WHO?
Saw a “Michigan who?” T-shirt at the ASU library today. Although I’m not an ASU alumni, I remember being just as excited when ECU (my alma mater) beat NC State a few years ago.
Pardon me, but what the hell are you doing in Boone if you’re not an ASU grad? That’s illegal, isn’t it?
“Pardon me, but what the hell are you doing in Boone if you’re not an ASU grad?”
Actually, I don’t live in Boone, but a little over seven miles away, near the BR Parkway. I have, though, taken some courses at ASU, so I guess that sort of qualifies me as a former ASU student.
Speaking of bubbles, I would like to thank ASU for popping the bubble that is Michigan fan arrogance. Amazingly, a guy at church said they could still go 11-1 and have a shot at the national championship. It was hard to speak the truth in love and tell him he was full of shit at the same time, but I managed.
I hope those similarly overrated Fighting Irish stomp them.
For every bust, you will find several layers of scandals.
No news here… Im still waiting for the NAR to get busted
for fake multiple bids hoax their members have been using on the the public at large for the past 8 years.
The sub-prime is the the symptom of the real issues!
You will all love this one. Make sure you have a box of Kleenex handy before you read it, if you haven’t seen it already. This one will bring a tear to your eye.
http://tinyurl.com/3b2omg
I saw the “Suzanne” commercial - man, that is really horrible.
http://www.youtube.com/watch?v=Ubsd-tWYmZw
I caught a interest program on CSPAN yesterday regarding Sub Prime mess. One of the panalist spoke about the fraud in home appraisals and realtors pressuring for higher values. Everyone was stunned for a minute.
Subprime Mortgages: America’s Latest Boom and Bust
Author: Edward Gramlich
About the Program
Panel members discuss the future of subprime mortgages using Edward Gramlich’s book “Subprime Mortgages: America’s Latest Boom and Bust” as the point of conversation. Panelists debate the pitfalls of subprime lending, as well as possible solutions to problems such as increased foreclosure rates and the use of variable rates on loans instead of fixed annual percentage rates. Panelists include Edward Gramlich, Robert Reischauer, Craig Torres, Kurt Pfotenhauer, Michael Calhoun and Sandra Brauntein.
http://www.booktv.org/program.aspx?ProgramId=8539&SectionName=&PlayMedia=No
“Nevertheless, home equity loan securitization remained unaffected. Why? There was one very immediate reason. Why would Wall Street executives take corrective action in November and put at risk the fat bonuses that they were all counting on for Christmas? And in spite of all these developments, Wall Street continued its warehouse business in anticipation of the issuance of new CDOs in 2007. This irresponsible behavior points to the grossly parasitic nature of today’s financial industry.”
LMAO! Sing it, brothah!
Thanks, luvs. Excellent! Well, not so excellent, come to think of it. It’s actually pretty scary…
Merrill is the largest underwriter of CDOs, or collateralized debt obligations—securitized debt instruments into which sub-prime mortgages are bundled together with other asset- and mortgage-backed securities. The global market in CDOs has soared from $160 billion in 2004 to half a trillion in 2006.
I sure hope Merrill has been eating copious amounts of their own cookin’.
Got 10% down?
He and his wife are content to rent in Anaheim Hills and may not buy until next year. ‘With the market the way it is, we are not in a hurry,’ Carrie Johnson said.”
WHAT? Californian’s now actually admitting they would rather wait so that prices can come down? Did LAY, Liar-rah, and In the BAG Gary lie through their teeth to us? No, say it ain’t so. It was only the major reason I left CA, and have no regrets about doing so (except Disneyland and my friends). So refreshing to now see in print what I was saying for a few years before leaving.
I’ll do you better than that. This Californian freely admits to being a bitter p!ssed off renter. I’ve been waiting for 4 years now, what’s a couple more?
>
Same here. Will be visiting in October.
Need to Leave CA
Us too, we are leaving CA (Orange County) at the end the end of the month and we said the only things we will miss will be our friends and Disneyland!!! How cool, what part of the country did you move to?
We are moving to Littleton, CO
OCMetro, Disneyland is fantasy, you can enjoy the real thing when you get out here (mountains, rivers, climbing, rafting, hiking, bears, thrills galore)
Lost, you are absolutely correct. My wife and I have visited CO about five times in the past year and we really love the people, the culture, and the environment.
We feel very blessed to have to opportunity to move out there. Really looking forward to it.
Choose your neighborhood carefully. There are pockets of people who are very angry about the California exodus. I often tell people I’m from Ohio (where I grew up) rather than invite an anti-Californian rant.
Long time lurker here, but I feel compelled to reply. I moved to Denver from California in 93 and can honestly say I’ve never had anyone react agrily when I tell them I moved here from SoCal. In my experience, the perception the Co. natives are anti-california to that degree is not accurate.
I’m glad you haven’t been on the receiving end of an anti-California rant. I wish I could say the same. Fortunately, I have a thick skin.
Also, change your license plates at the first opportunity.
However, this year the hot selling season never arrived.”
I am sure that the hoards will be there for that busy Halloween buying frenzy. Or that Turkey Day sale. Or those open houses staffed by Santa Claus. And surely, the hoards will be out as soon as the final punt is finished on the Super Bowl. And then again, maybe Santa will be bringing all of us $1M bonuses thanks to Uncle Ben and the helicopters to buy up the excess inventory. LOL.
I am happy to report that in my weekend BBQ conversations with smug west LA homeowners, cracks are forming in their ‘we’re immune from the bubble’ attitudes. The fear is palpable and long overdue. I LOVE IT! Not there isn’t plenty of denial out there, but it’s a start
Yea, it was interesting weekend, now people are saying things like well I bought in 2003/2004 so I won’t lose my equity what’s happening now in the market doesn’t effect me only people who purchased in 05/06. Riiiigggghhhtttt…
I did my best not too get sucked in, i was only marginally successful.
hmm..
what vintage buyer, assuming no cash out refi, is somewhat ok?
I’m thinking before ‘01. Anyone after that, should be feeling their grapes getting squeezed..no?
Here in Michigan it’s late “90’s pricing…what’s saving that group of buyers is it was pretty much 20% down to get a mortgage. So assuming a 20% down, we’re at the class of ‘01 as a “squeezee”. Anyone with a 0 down since 2000 is toast.
I’ve been kinda looking in Michigan - the Birmingham area.
Couple of offers got turned down, guess I’m too early. I’ve decided to wait until next year, look then. My offer is 25% of list price, got some angry realtors out there. I told them I’ll deal with them or the bank, take it or leave it.
They’ll deal next year. Or the year after. I’ve got plenty of time but they don’t.
Just beautiful. Remember what I have written before. Silence is the best insult. I will repeat my offer one more time. It is, “—-”.
25% of list price! That really is a lowball offer!
Maybe 2002?
Don’t forget that the bubble in many places goes back to 1997 or 1998. That is true of my hometown. Prices may have to party like it’s 1999.
Agreed. That is the story with Santa Clara County, CA.
Prices doubled in 2 years from 1998 to 2000, then doubled again to today.
Same here in San Diego. Priced doubled (or more, in some areas) between 1997/98 and 2001.
IMHO, we will see pre-2001 pricing, and may well see prices below the last bust. One can certainly make the argument that wages are lower than mid-late 1990s when taking into consideration the cost inflation in basic necessities (energy, healthcare, food, housing, etc.).
With the blessed “globalization” upon us, there’s plenty of room DOWN as far as wages & future prices go. We either experience deflation (and a spunky recession/depression, to boot) or very uncomfortable monetary inflation. Either way…things won’t be good, IMO.
We just have to see how strict lending standards get… Then go back in time to last time we had the equivalent standard, adjust for wage inflation, and discount for the change in houses/population ratio.
So we can’t know until we see how tight lending gets, when the population flux settles, how many new homes are built, and how wages are affected by the recession.
I suspect it will really get tight. If a lender demands skin in the game, say 10%, and the market drops 10% then the skin is gone and the buyer has an incentive to walk. This falling knife effect will work to slow lender’s incentive to lend and will cause the falling prices to feed on itself.
Only when there is a sign of a bottom will the lenders once again become confident to make their loans.
“sign of a bottom” = buying cheaper than renting. Long way to go
Agreed with alle except: “adjust for wage inflation”. I think you mean to say “then further discount for real wage deflation”. LOL
westside realtor pal says many high income earners are out of work and many others concerned about the economy. Appraiser buddy is not busy at all. Mortgage broker friend said the RE market was a “ticking time bomb” two years ago. And my old rental sold for 2.6 in summer ‘05 and is now asking 2.495, vacant and no action. The westside will slide too. no one is immune.
west side realtor tells me that hi end new construction and tear downs are all that moves right now. nothing in between.
In a few years, it won’t be possible to talk about westside prices in denominations of a million dollars without specifying that you are doing so! (2.6, 2.495, like that)
“smug west LA homeowners”
To bad I wasnt there.. I would make them cry for mommy in about 10 minutes flat. Its amazing how deluted these people are not knowing about the 3 major down turns in California RE… 1972, 1981 and 1991…. LOL! They all fell in a major way!
81 & 91 yes….But I believe the other 70’s downturn was 74-75 ??
End of Vietnam war ‘72 and cuts in Military spending in Aerospace and Electronics.
scdave is maybe thinking of the national economy, or the stock market. The latter bottomed in December of 1974 with the Dow Jones average below 600. (That’s right, not six thousand. Six HUNDRED.)
It’s just that (agents) have to work for a living now.
What a novel concept. They might actually have to do something more than sit on the fat a$$es and proactively try to find the vanishing buyers.
RE: It’s just that (agents) have to work for a living now.
We did have quite a party, didn’t we?’”
Reasons as to why I believe real estate agents to be the lowest of the low.
Hey HD…hope things are good with you…
Any thoughts on the North Shore market?
How far down do you think it has to go from here? Rowley G-town, Boxford, Ipswich, etc.
I am sorry to keep asking, but you seem to know the area pretty well. I know MAZZ is fooked, but I’m sure that I am staying here for a l-o-n-g time.
The Herald. “The bursting of the housing bubble has translated into fewer construction jobs in California, but Monterey County appears to be bucking the trend.”
Bucking the trend? I don’t buy it as they have been doing everything here to hide the truth. I’ve seen houses held ‘for sale’ until it’s obvious that they went into foreclosure now sitting empty for a month or two with a brown yard and weeds sprouting. If you want the truth then it will show up in defaults on property taxes and sale taxes collected. This past two weekends while shopping in Monterey I had several shop owners offer me serious discounts or ‘make an offer’ offers which says times are tough especially for artsy items. My wife and I did go into one jewelery store in Carmel last weekend advertising discounts and they tried to sell us the items at full price (I guess since it was a three day weekend they thought they’d be milking the tourists) even though they’ll be out of business by the second week of October.
Her house, initially listed eight months ago at $425,000 and then lowered to $414,000, did garner two offers - one at $410,000 for the house and all its furnishings. Kniess said she wasn’t offended by that offer and should have accepted it. She and her friend also turned down another offer, sans furniture, at $395,000.”
“They turned down both offers at the urging of their real estate agent, who urged counteroffers to get the sales price up but instead ended up offending the would-be buyers enough that they went away, she said.”
I thought it was the other way around. We didn’t want to lowball too much so that we offend those omnipotent sellers. So the realtwhore really did his/her job and killed a potential sale because they wanted a higher commission/trying to keep the market inflated. Well, boo hoo to them. Remember, Samson killed a 1000 people with the jawbone of an ass. A thousand home sales are killed each day with the same weapon.
“Remember, Samson killed a 1000 people with the jawbone of an ass. A thousand home sales are killed each day with the same weapon”
Nice!
“John Crane, general sales manager at Ron Smith Buick Pontiac GMC Jeep in Merced, Calif., has seen a tremendous slowdown in the past six to eight months. ‘People don’t have the money to look at cars,’ he says.”
Notice he says they don’t have the money to “look” meaning the gas money to drive to the lot….
He ain’t even talkin about “buying” something…..
As Michael J. Fox says in Doc Hollywood:
Shiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiit!
I used to live in an apartment near a bunch of car dealers. When I needed to run an errand, I’d go to the lot for a “test drive.” Free gas and car makes life cheaper.
Too bad you didn’t live near a brothel.
I know I shouldn’t laugh at that, but LOL.
Tee hee! We had a “brothel” down here in LaGrange until TV reporter Marvin Zindler of “The Best Little Whorehouse in Texas” fame had it shut down. I always figured that Marvin was either (1) laughed at during a session or (b) a closet homosexual. Either way, it’s a cryin’ shame it was shut down before I was of age (15).
The latest snapshot of Silicon Valley is now posted. Check out:
http://www.viewfromsiliconvalley.com/id356.html
& see the latest condition of seller’s in one of the highest-priced zip codes in the nation.
Thanks!
Good article… I would ask who and why would anyone pay over $1M on a 50 year old home which sold for under $160K less than 10 years ago? Mt View homes are not that great to begin with.
You wouldn’t believe the outright pieces of crap that sell for retarded amounts of money in Mountain View. Seriously. Houses that need to be torn down for 1 million. I expect a lot of fun to be had foreclosure shopping in MV in 2 years.
“Dick Lobin, a real estate agent in Huntington Beach, said home prices have dropped about 20 percent in some cities since the market peaked in summer 2005. He said cities such as Garden Grove, Santa Ana and Westminster are hardest hit because more home buyers have spotty credit or used creative financing to stretch into a home.”
At least the stock market is still going up like gangbusters!
My Landlord sold this condo and today the inspector came by to do The New Buyer Inspection. I got some great tips about what they do when they inspect from this blog. I was suprised that the father of the buyer was also a contractor. I had TWO inspectors and they were here THREE hours.
Also the inpector had a mobile office on my washing machine and dryer. Computerized Reports “On THE SPOT”
Dog Gonnit Pepina! - Grandpa on the Real McCoys!
OT - A rate cut in the bag…not so fast…
http://www.cnbc.com/id/20590804
Wages are stagnant, job losses are mounting, consumers are up to their eyeballs in debt, home prices are going to drop at least 20%, and we’ll be damn lucky if we don’t have a full blown depression.
The Fed is gonna cut the fed funds rate like there’s no tomorrow in order to lower the funding costs of the too-big-to-fail banks. This will slightly offset the billions in losses they are fixin’ to take with the impending housing collapse.
But, it will be like peeing on a wildfire.
But the stock market is up.
tee hee… Is this a great country or what?
“Asked what could derail the recovery: ‘A recession. A dip in jobs could screw everything up.’”
These folks still don’t get it. The old RE tag line was that prices only fall in a recession. But prices HAVE fallen already despite a “robust” economy. The housing collapse is CAUSING a recession, not visa versa.
It’s about affordability, stupid! Even if you have a job, if the house costs 20x income you won’t be buying.
Yeah, they know that. They’re going to use the recession as an excuse for the housing crash. It will be “When I predicted that house prices would only go up, I was not lying. How was I to know that this unpredictable recession would come along and muck everything up? I don’t have a crystal ball, after all.”
It’s so predictable.
“Longtime real estate agent Kevin Moran concentrates on foreclosure residential properties. ‘I saw the writing on the wall,’ he said.”
That’s written in chalk. A few years ago, real estate agents gazed at the wall and read, “We don’t need no education!”
Luv, Jen
Interesting to read how aware most people are on this blog as to what’s taking place in real estate and the economy.
I didn’t realize it until I spoke to two of my neighbors over the weekend and the conversation turned to the economy and real estate. First, both agreed that the inflation numbers coming out of government and the Fed are rubbish. They, like most people, think the inflation number is a joke and it sure ain’t 2%. One said 5% and the other figured 7% and I figure around 7% to 8%. I’m not interested in the “excluding food and energy” b.s. which simply helps government cook the books - in their favor. Then we touched on property and this is where I was shocked. Both own their houses. One free and clear and the other in the 15th year of a 30 year mortgage. BOTH think we are close to the bottom and next year prices will stop falling and level off and then start to move up but much more slowly. When I gave my opinion that prices would fall another 30% to 50% and there will be no recovery until 2011-2012 at the earliest but possibly later, they both smiled and said it will never happen. Makes you wonder just how many people are thinking along the same lines especially when you read the blog about that couple who might wait to buy until next year - as opposed to 2 or 3 years MINIMUM.
I think a lot of people, even those who are waiting to buy, think the bottom is near (ie Christmas), BUT they will be spooked out of buying then as the prices continue to slide…
All the people I know, are thinking that bottom is near or bottoming is at end, hence prices will start going up very soon. And many of them are buying now!!
well the bottom is near, as soon as prices fall off a cliff the bottoms comes fast.
chuckle…
You don’t know how many coworkers told me today the uptick was going to happen mid-2008. So why aren’t you buying now?
Sigh… sheeple.
Thank you Ben for this blog. I don’t always agree with my fellow posters, but at least we’re starting from reality!
Neil
“You don’t know how many coworkers told me today the uptick was going to happen mid-2008. So why aren’t you buying now? ”
A few idiot realtors told me the same thing this past weekend here in Scottsdale “buy on the dip”. A few quick stats from me and then silence…LOL
Remember just say NO, and Friends don’t let Friends buy houses now! hehehehehehe
Getting the same response in our circle of friends & family. Everyone thinks we are near the bottom. Some have said they can’t sell their homes because they are underwater. They are waiting 3-5 years to get 2005’s prices.
IMHO, we won’t see 2005 prices for decades, if that (barring hyperinflation, etc.).
Next few years will be interesting, indeed!
“Friends don’t let Friends buy houses.”
Another HBB Bumper Sticker.
People during the depression thought they were at the bottom all the way down. We won’t know this bottom until we are past it a ways and get some hindsight. It’s still a long way to the bottom from here and it’s going to seem like a slow ride to get there with all the head-fakes back upward. Keep your powder safe and dry.
People are coming around slowly, but they are coming around. I’m guessing that a year or two ago your two friends would have bet that prices were not going to go down. Now, they admit that they are, but feel the correction will end soon. Give them some more time, let them watch prices fall more and foreclosures increase, and their time frame for the bottom will keep creeping out into the distance. Same for those people who are thinking about buying in a year - this time next year, they’ll be saying one more year.
Your average Joe/Jane seem to hear the
5 second sound bites .
‘Sub-prime is contained ”
“5 to 7% correction and bottom will be reached ”
“Good Time to Buy ”
“The Feds will lower rates ”
“The market is different here ”
“The global economy is doing great ”
“Only a 30% chance of recession .”
‘Real estate is a cycle and we have reached the bottom of
the cycle .”
‘Tech stocks are doing good ”
‘ The government will offer low down bail-out financing .”
“Bubbles are for bath tubs “.
“The market will bounce back in 2008 ”
on and on
Your average Joe/Jane just doesn’t study the state of the economy to be able to decern the positive spin by the MSM or the NAR /Realtors or economists with a agenda . Sure the truth is out there now ,but that was only because of the Bear Stearns hedge fund blow-up that forced the sub-prime loss to the surface . But, people in general do not realize just how much money can get tight and more expensive now . How many people understand supply and demand when the Realtors have taught them that excess inventory just means you have more choices on houses to buy ? In fact , the commissioned salespeople from Wall Street to the mortgage agents to realtors have become the new age business concept news spinners .I have never seen commissioned salespeople have such a big voice in the news ,and their business concepts are self-serving and false to say the least .
The second some real estate sales agent said “real estate always goes up “, the reporters should of been all over them with a immediate counterview or a challenge to such a false notion.
For those of us who would actually like to buy (SOME time), it’s easier to think about buying in a year, at least being prepared to buy in a year should the opportunity arise. By opportunity, I mean finding a situation where the price/rent ratio makes sense. Well aware that it probably will NOT happen in year; so also prepared to wait a good deal longer.
Probably most people believe in ever-climbing RE prices. For those who own property, it helps them sleep at night. I can tell I offend/scare people when I talk about the housing crash.
I just met a lady today who is new to CA. She still owns her house in MA. She says she’s definitely not buying a house in San Jose right now because the prices are obviously too high. However, she’s not sure she wants to sell her house in MA. Everyone is telling her that prices THERE will just go right back up in a few months. Of course. RE in HER hood only goes up. RE in SOMEONE ELSE’S hood can easily crash, no problem. What she doesn’t realize is that, here in San Jose, everyone is saying that prices can’t go down HERE. Supposedly, the more expensive a house is, the more valuable it is. Only cheap houses can go down in value. Of course, the rest of the country holds the opposite view.
It seems it doesn’t matter what the conditions are, people always manage to convince themselves that their own house is a little pocket full of cash.
I can’t believe that are using the term “immune” in this situation. I’ve seen it come up on so many different articles, it almost seems like they’re tempting fate, doesn’t it? Like this article I saw this weekend when we were walking into Mel’s in Folsom:
“Folsom market seems immune to decline in home sales”
http://www.folsomtelegraph.com/articles/2007/08/29/news/top_stories/02house.txt
I think it’s come up in the past on other posts, but I saw it in the display case outside the restaurant and just shook my head.
correction
I can’t believe that people are using the term “immune”
“Folsom and El Dorado Hills seem somehow insulated from the recent shockwave of declining home sales reverberating through other parts of the Sacramento region. ”
El Dorado is a nightmare. Mostly new extremely overpriced homes built (1.5M +) to very low wind standards. Seems they are falling apart with lots of lawsuits going on. Tons of homes for sale all over that area, this article is trying to say that the cheaper area’s have bigger problems then the higher end homes, so what, they are all in trouble up in that area.
Wow I wasn’t even aware of the lawsuits, great info. My wife and I like Folsom alot (we’re currently renting in Orangevale, yuk), but not for the prices that are currently listed. There are several condo developments that were built recently (DR Horton, and some other builder), and I cannot believe how much they’re charging for a 2 bedroom, I saw one listed on craigslist for $400,000! And their selling point was something like, “has view of Intel building”. Nice, when they move out of the country that view’s going to be even more enticing I’m sure.
My favorite is this place called “Vessona” on a major street in Folsom called Iron Point Rd. The places are nice I guess, the architecture is different than the other places I’ve seen. Apparently they sold out pretty quickly when they were built. But there’s this one window that faces Iron Point that totally cracks me up. The owner scrawled this “For Sale” sign and stuck it in the 2nd story window. Like a “Help I’ve been kidnapped” sign. It looks so retarded, you just have to laugh. I’ll try to take a picture and post it on the photo section.
There’s one on day-glo green posterboard by me. Everytime I drive by I think “God, don’t they have some sort of covenant that prohibits that stuff?” Geeze I’m sick of looking at it. Can only imagine how their neighbors feel. Classes the place up no end.
Isn’t there a big 900+ Acre subdivision going up super fast in EDH east of Latrobe road? How many units is that?
That’s the Blackstone subdivision. Average Buyer blog mentioned it a couple months ago. Lennar is building super-energy-efficient/solar-powered homes there, but they’re still too expensive and the lots are still too small.
Plus, EDH and Folsom have a problem with indigenous asbestos (serpentine rock) that does just fine when you aren’t crushing it into powdery dust, but can cause mesothelioma when it’s inhaled. Construction activity liberates a lot of this.
“So what lender would lend in that kind of environment? Edwards recalls a recent $600,000 application with a sizzling 786 ‘FICO’ credit score, with an interest rate buy-down went through 40 banks before getting an offer.”
What about the loan to value percent and the borrowers income to debt ratio. Just because the example has a good FICO doesn’t mean they can afford a $600,000 loan. These jerks, that get quoted, never tell the whole story. They conveniently leave out details that don’t support their point.
Agreed. And the idiot writers never ask the right questions because most of them have no business acumen and don’t know squat about r.e.
LTV! you are so right. Not to mention the likely decline of “V”…
V for Vendetta
Moran said he has more than 30 foreclosure listings and is getting about five more each week. He also is making sales regularly, he said, because foreclosed properties are perceived by many buyers as the best deals.”
“‘It is a segment of the market that’s performing,’ he said. ‘I believe this will pay the bills for me and my family until this thing turns.’”
Well this idea that foreclosures are a good deal is going to leave a bad taste with quite a few investors me think. In Calif prices are completely off the wall and have been for a long long time. It makes no sense to buy any of this crap, 2 bedroom 1 bath shitbox for 435K in a gang area or one of those adorable 3 bed, 2bath completely redone for only 825K. When price/rent ratios come back then its time to buy otherwise just sit and watch.
“In July, buyers closed on 2,391 homes, down 19.8 percent from July 2006, reported DataQuick. July marked the 22nd straight month that sales lagged a year ago. This year’s slump rivals a similar streak from June 1989 to March 1991.”
The U.S. economy was in a recession from July 1990-March 1991, according to NBER. Thereafter, home prices in California kept falling for maybe 4-5 more years.
But I guess this time it’s different, since the stock market always goes up now…
http://www.nber.org/cycles.html/
Here in the SF Bay Area ( Im in South Bay) we had the peak in 1988. Affordability was near 10-11%. Then in 1989 to 1990 prices began to slide, we had the S&L scandal and high level of speculators. All this happened before the recession.
Thomas,
That’s my recollection in LA as well. The housing market was losing steam BEFORE the recession. IMO, housing often leads the economy, not the other way around — this due to the credit cycles, not necessarily housing itself.
Here is an article from 1989 showing declines before 1990-91 recession. Just do a search on “1989″ and “home price declines”… find a boat load of articles..
Decline Seen In Home Prices In New Jersey
http://query.nytimes.com/gst/fullpage.html?res=950DEEDF1F3EF937A25751C1A96F948260&sec=&pagewanted=print
Get this part….”Super Piggy Bank”
Although the high prices eventually shut out many people from the housing market, the authors warned that the end of the decade of rapid appreciation could strand those who bought at the peak between 1985 and 1988. Significant social shifts could also develop, among them an increase in traditional forms of savings and a decrease in the number of moves that people make. ‘A Super Piggy Bank’
”A house is not merely a home in America; it’s a super piggy bank,” said Professor Sternlieb, former director of the Rutgers Center for Urban Policy Research and now university professor at the school. ”We’re starting to see some cracks around the end, but it still may be the best piggy bank around, if people just hang on.”
“‘Those loan programs have either vanished entirely or been modified,’ he said.”
They must have gone the way of REALITY in this country.
And now they are going the way of realty….
Interesting article on Countrywide and the stealth $210 billion bailout of mortgage lenders using taxpayer funds:
http://www.cnbc.com/id/20586788
It looks like the government is buying the worthless subprime CDO’s from the banks. I wonder if they are pricing them using mark-to-myth or mark-to-market?
Since there is no market they can price only to myth.
Mark to market has been around 15-30 cents on the dollar for the hedge funds that had to liquidate.
It appears that only the AAA CDOs (aka CMOs) can be used as collateral, though mortgage backed securities (REMICs) look like they can be used at any rating, if I read the chart correctly. Note that they can borrow a percentage of par if the market value is unknown.
(warning… pdf. This is the collateral table from the FED)
http://www.frbdiscountwindow.org/discountmargins.pdf
let me help “shocked” out as some minor details were omitted…
All the people I know (I only know other realtors), are thinking that bottom is near or bottoming is at end (alright, not really near, more like nearly nearing what near may soon be approaching), hence prices will start going up very soon (after they go down for a bunch of years). And many of them are buying now!! (suckers)
Dr. Kurt Richebacher died today, he was one of the first to warn about the housing bubble back in 2001. They say his some of his last words warned that the housing bubble (as well as the stock and bond) bubble will drive the US into a long, deep recession. Scary stuff.
Sad
“ It’s ironic that he’s died just as many of his predictions about the abuse of credit are coming true. ”
http://www.dailyreckoning.com.au/dr-kurt-richebacher/2007/09/04/
Neil
Roseville (Sacramento area foothills) 26 listings today between $300,000 & $400,000 for 2,000-2700 sf homes, 4+ bd, 3 ba, 3 car. $130 to $199/sf.
A year ago, you rarely saw anything under $200/sf.
Stock market is betting emerging Asian economies will pull us out of this slump. They are also betting the emerging economies will eventually buy the discounted CDO’s.
Whatever happened to USA sneezes and 3rd world get pnuemonia?
The “Mission Accomplished” banner was clearly misplaced on the carrier, it should fly high at the stadium next year for the Olympic ceremonies in China.
Talking about China “talking heads” say we shouldn’t offend them by telling them they are poisoning us, they hold the IOU’s.
anyone out there buying puts or shorting shares in the stock markets. i did some on fannie mae( I STILL THINK THERE IS MORE OPPORTUNITY HERE SO FAR A QUICK TRADE FOR ME) and think this is the year to make a nice profit out of the housing excesses. any ideas?? I think that story of the banks brokerages hiding the mbs cdo losses is highly possible . but, the up $5 down $5 has me avoiding them for now. I know the losses are just starting.
I dumped my LEND puts a couple of weeks ago at a fairly tidy profit, but bought back some October 7.50s on Friday after that silly run-up on the Lone Star news. They nearly doubled today, so some beer money there. Other than that, January puts on WM, CFC, BZH, and have taken enough money off the table on all of them in the last couple of weeks to recoup my initial purchase price. Now it’s just a waiting game.
Lost in Utah. You are so right. UT has many pretty places to visit in the outdoors. Moab is spectacular (spelling doesn’t count). I miss many of the Wasatch Front outdoor stuff (Salt Lake area). New Mexico has great outdoor stuff closeby. So much easier to get to than either the metro parts of SF or LA. I have lived in all of them and done all of those things. And, I was a bitter renter in CA for many years.
Confidence is indeed in short supply. Robert Toll, founder and CEO of Horsham, Pa.-based home builder Toll Brothers, was one of the avatars of the boom. In 2005, Toll, whose company specializes in building high-end homes in the suburbs, prophesied in a New York Times Magazine cover story of a day when middle managers might pay $4 million for a home in the distant New Jersey burbs of Philadelphia or New York. But on a conference call with investors last week, Toll glumly declined to call a bottom. “This past week was the worst week for traffic in our history,” he said.
Take that Mr. Toll! He’s a real man of genius.
Now wait a second. Isn’t this the same guy who keeps blathering about how Americans are going to end up living the way Europeans live? With their parents and all? He should try to at least stay consistent. Sheesh.
OC METRO - congratulations on move to CO. Beautiful choice. I relocated to Albuquerque NM. Also a really nice place. Just miss having the water close. Not much here in the desert. But lots of mountains and amazing desert scenery.
On the previous thread, people were suggesting how an FB could come up with $406 to make up their new monthly nut. At least for me, that would be 2 extra visits to a local casino. Now I must explain that means I am going in there to evaluate them and then send in a report about the experience. It does not mean to go in and carte blanche gamble. I must do a small amount of that to do the evaluation. It is fun. It is profitable. It is real. It is also a lot of work. It would be akin to a 2nd job. Maybe the FBers could find such an assignment in their area (no, I don’t want to give away my secret sources). I can truly say that I am going into a casino and guarenteeing I will make money at it. Great gig - to get paid to eat and gamble. Doesn’t work for everyone.