‘Buyers See The Realities Of Changing Market’ In CA
Another look at the California housing bubble, first in Santa Barbara. “Home prices cooled throughout Santa Barbara County in February. For the first two months so far this year, appreciation in all areas of the county has dropped to single digits or even gone negative.”
“On the South Coast, one of the most expensive markets in the nation, the February median for existing single-family homes slipped 3 percent, from $1.2 million last year to $1.16 million. Sales of South Coast homes tumbled by 16 percent both in February and for the year-to-date.”
“More homes and condos are available for sale these days, according to data published recently by the Santa Barbara Association of Realtors. Combined inventory of South Coast homes and condos has increased by 22 percent over the past month. Active listings for sale totaled 466. The most recent report, published March 12, showed current active listings at 570. The association refuses to provide sales and median price information to the News-Press.”
“Santa Maria’s home sales were down 37 percent last month and 20 percent so far this year. In the Lompoc Valley, the median price last month dropped by nearly 2 percent. Inventory of homes for sale has started to pile up in the Lompoc area. The Santa Ynez Valley median decreased 4 percent in February. For the year so far, the median dipped slightly from $832,500 to $810,000. Sales were down 25 percent last month.”
And from San Diego. “In San Diego County, the median price for newly built homes in February was $468,500, reported DataQuick. In December, the median for newly built homes in the county set a record of $539,500. DataQuick’s prices for new homes includes condo conversions, a segment of the new-home market that the national figures do not include.”
“Newly opened escrows in San Diego County during for the first two months of the year totaled 610 single-family houses, down 40.8 percent from the same period last year, according to Sharon Hanley. She said the inventory of new houses stood at 1,055 at the end of February, about double the rate at the peak of the recent boom. The inventory of unsold new condos stood at 4,967, or 36 weeks of supply. The overall inventory of new housing at the end of February was 6,022, up 34.6 percent from the same week a year ago.”
“As for potential buyer traffic visiting local housing tracts, the numbers were down 23.5 percent, according to Hanley. There were 99 sales cancellations that week out of 306 transactions, a 32.4 percent rate. The normal rate is about 20 percent.”
“To combat the market’s apparent lethargy, owners have cut prices and builders have begun offering extra upgrades and financing incentives.”
“Centex Homes reduced prices late last year by 20 percent, $100,000 off the $500,000 models, at its 65-unit Element project in downtown San Diego. ‘Buyers are getting a little bit nervous by all that they have read and are starting to see the realities that come with a changing market,’ Joseph Cuffaro, a longtime Coronado appraiser said. ‘There is more inventory. They’ve become more emboldened to negotiate harder with sellers.’”
“Building permits for the first two months of the year were down 24.4 percent to 1,801 houses and condos in the county. Single-family home permits were down 28.8 percent, and new condo permits were down 20.3 percent. ‘I’m so bullish on San Diego, still, though a lot say there is a real high risk right now,’ he said.”
Thanks to the readers who sent in these links.
But did everyone see this? Dead cat bounce?http://www.latimes.com/classified/realestate/news/la-fi-homes25mar25,0,6921819.story?coll=la-home-headlines
LA may well be the new Manhattan. The housing crash in the desert, however, will be so loud as to be heard from outer space.
I worked in the Compton-Willowbrook area in the ’90’s. When you see LATimes articles touting South-Central as the next boom region (and we have), you know that the fall is going to be hard.
This article is BS
San Diego Inventory
1/1: 13,916
1/10: 14,840
1/20: 15,643
1/30: 16,161___1/06 sold: 2,763___1/05 sold: 3,324
2/10: 16,601
2/20: 16,981
2/28: 17,262___2/06 sold: 2,865___2/05 sold: 3,442
3/10: 17,648
3/20: 18,003
3/23: 18,060
All-time low inventory: 2,301 homes, March 2004.
Record high inventory: 19,000 homes, July 1995
Los Angeles
1/2: 24,463
1/10: 25,894
1/20: 27,102
1/30: 27,732___1/06 sold: 6,761___1/05 sold: 7,633
2/10: 28,284
2/20: 28,875
2/28: 29,420___2/06 sold: 6,405__2/05 sold: 7,056
3/10: 29,988
3/20: 30,861
3/23: 31,153
San Diego is one year further into the cycle than LA or the OC. they are less than 1000 units from a record inventory ever recorded. Inventories will tell the tale. Right now they are ballooning. I really get sick of these candy reports.
According to ziprealty San Diego is now 18175. I wonder how they will report “San Diego hits all time housing inventory record”
Do your stats. include condos and new home tracts?
Good question. That does include condos I’m not sure about new home tracts. The info is from ziprealty. San Diego is getting ready to go onto meltdown.
adjusted for population change from 2.66 million to 3.06 million (1995 to 2006), new inventory height will be reached at 21,857.
currently inventory is at 18,175 (if we take all homes build pass 2006 out–presumed new homes), the number is 16,324, adding the 6,022 new homes = 22,346. this means we now have a new record high inventory.
You know it’s funny how that LA Times article kind of glanced over that. I have been looking at zip realty pretty much everyday and San Diego goes up everytime I look. I wonder how high this puppy is going to go. I am seeing realtor reports that indicate that price reductions are real and increasing. It is my understanding that this is ground zero for California housing. So goes San Diego, so goes the state.
Oh, we’re taking more than just the state down, baby!
That’s existing inventory, not builder inventory.
The only reason sales might be up is because of builders incentives.
When I told my neighbors in Somerset, NJ that I was moving to Santa Barbara 10 years ago, they all said they love Ca’s weather, but half of them will never move to CA because people around NJ/NY at that time still remembered the two big earthquakes that hit LA and SF not too long ago.
We all know there will be hundreds if not thousands of big ones coming that will eventually shake CA’s out of the continental US. Anyone who invests in CA’s RE has to take that into account.
Nevada foreclosures-here we go-Look out down below:
http://lasvegas.craigslist.org/rfs/145075065.html
$349000 - I need to sell my condo in glendale ASAP (glendale)
(Calif)-sounds like this person is desperate.
http://losangeles.craigslist.org/rfs/145258190.html
Santa Barbara will be the last to admit they have a bubble .
Do you mean we won’t see buyers buying mobile homes for over a million bucks?
20 yr old Mobil Homes with a share of the park are going for 420k in Pismo.
In Los Gatos (near San Jose, CA) a developer turned a former mobile home park into a manufactured home McMansion park with the lot sizes the same size as the mobile homes. I looked at these “homes” last summer. They are exactly what you can fit onto a double wide trailer lot with a second story. And guess what they were selling them for? $800K-$1.1M. These are manufactured home on double wide trailer lots!
Here’s some more info:
news article when the developer was getting started
Creekside Village in Los Gatos (formerly known as the Los Gatos Mobile Home Park)
My husband and I walked through the Creekside Village development a few months ago. He was trying to figure out how people manage to park their giant SUVs on the tiny driveways or even pull in and out. I had no idea it used to be a mobile home park. How fitting.
If I owned a house in Santa Barbara that I could afford no matter what, I wouldn’t give a rat’s patoot what prices did.
I have a lot of friends that live there that feel that way .
Well said Housing Wizard,
Hence my tag name of SB BubbleBeliever. I have chosen to take a stand in believing that Santa Barbara does indeed have a (huge) housing bubble!
No one seems to admit that we are indeed #1 on the charts at CNN Money for the most overpriced housing market in the country.
The local real estate business likes to pitch that we are a prestigious community that is immune to a price correction.
They say “everyone wants to live here, and the wealthy will continue to move here”.
I thought everyone wanted to live in San Diego. Or, was that Florida? No, wait, I remember now - it was Phoenix!
We Rent,
Indirectly (in my sarcasm)… that was one of my points. Seems like everywhere the individual markets are touting that babyboomers, retirees, etc want to move in to their special communities.
This furthers the myth that real estate never goes down, and solidifies the likelyhood that the bubble will be a hard landing.
Wealthy people are not stupid!!! They will not over pay!
Good point Dennis. In fact, in my experience with ‘em… some tend to be pretty stingy with the outlay of cash.
Some of the pro’s I know complain that the work on mansions etc can be the most difficult, because the owners are extremely picky AND Hawkful on where the outlay of cash is going.
On the other hand, I know some very wealthy people who are fantastic, like family and are generous!
One thing that really bothers me about Santa Barbara, hey have a total ban on outdoor advertising. Stores cant even put a sign on the street with their name. It seems like they cant even have a sign in front of the store. You can be in front of Home Depot and the only way to know its Home Depot is because the Shopping Carts are orange.
Housing Wizard, you are spot on . . . I live in Santa Barbara. For the last year, I’ve been trying fruitlessly to convince my friends that if they can’t make their housing payments now, they should sell. I have other friends who have dumped all of their equity into new houses they can’t afford. Everyone says, yeah, there might be a housing bubble in places like Las Vegas, but, you got it, Santa Barbara is different. People are buying falling-down 60’s tract houses for 1.2 million in very unglamorous neighborhoods (yes, there are many of them here) because they are convinced prices will continue skyward forever. Salaries here are a complete joke–little more than minimum wage for the vast majority of jobs. Professional jobs pay about 1/2 what they would fetch in LA or San Francisco. People are totally sacrificing their lives–kids in full time childcare, mom and dad with full time jobs–just to make their adjustable-rate mortgage payments. I asked one friend what she was going to do when her mortgage payment adjusted upward in five years and she said, well, this sounds bad, but I don’t think my mom is going to last much longer so we’ll probably sell her house. I asked another friend what she was going to do when her payment adjusted upward, at a time when the house she paid $900K for was worth $500K, and she said, with absolute certainty, that’ll never happen. It will though. She lives in a totally crappy neighborhood in a house that needs a lot of work. I’ve sent this blog to everyone I know. People won’t budge. It drives me crazy, what’s going on in this town.
Beautiful place , beautiful beaches , alot of old money , alot of wealthy retired people , limited land for building , limited water supply . Just far enough away from the nuts in L.A.
It’s often difficult for people whose whole reality is wrapped in their house to really see what’s going on. They will not admit it until it’s too late. They won’t admit it until this story starts to show up in their local media, or when one of their housing cohorts goes bankrupt.
In spite of how wonderful Santa Barbara is , it doesn’t mean they don’t have a bubble .
Housing Wizard,
Goodness Sakes, we’re on the same page… as usual. When I started investing in SB real estate back in 1990 or so, Santa Barbara was a wonderful place. It still is a wonderful place. But back in 90, everyone thought that prices were unaffordable!
Fast Forward 16 years, and things have REALLY GOTTEN OUT OF HAND! We in SB are just as susceptable to price corrections as any other town that was Jacked Up/HYPED UP on escalating housing prices.
Anytime you have cheap cheap money available to purchase property that is skyrocketing UP… your gonna have people that want to jump on the band wagon and ride their way to wealth too. It’s all about finding the greater fool, and up until now- the sky was the limit. Now the numbers are showing GAME OVER, and given the fact that we are #1 on CNN Money list of overpriced markets, I think we’re headed for a HARD FALL!
Some people here on the central coast tell me that it might be a good idea for my to buy right now as prices will probably double in the next 3-5 years. Why? “It’s the next Santa Barbara”.
Most here have probably read this, but I just gotta type it out for anyone else:
“The possibility that the so-called investment payoffs are in fact coming only from new money is typically raised repeatedly and publicly well before the collapse of these schemes, and the hoaxers must of course deny the claim publicly… The fact that many people continue to believe in the scheme afterward seems puzzling, and to outside observers the believer in the scheme may seem quite foolish. But this only shows the powerful effect on people’s thinking of seeing others having made substantial sums of money. That others have made a lot of money appears to many people as the most persuasive evidence in support of the investment story associated with the Ponzi scheme - evidence that outweights even the most carefully reasoned argument against the story.”
-Robert J. Shiller (from the second edition of his Irrational Exuberance)
Boy, if that don’t just spell it out PERFECTLY.
“according to data published recently by the Santa Barbara Association of Realtors. The association refuses to provide sales and median price information to the News-Press. Instead, it publishes a monthly report, written by an association member, in the paper’s Real Estate advertising section.”
HEY! My home town is finally OFFICIALLY RECORDING signs of a slowdown!
I might have to change my stage name of SB BubbleBeliever, now that real numbers are coming out and proving that we ARE in a Bubble.
I LOVE THE SB NEWS PRESS for standing up to the SB Assoc. of Realtors by POSTING the real numbers on the FRONT PAGE of the newspaper this morning.
Take note that the SBAR is trying to control the numbers by “publishing” articles in the PAID ADVERTISING section of the newspaper… rather than the historical technique of providing the numbers to the NEWS PRESS for data to be published in a REAL NEWS story.
Now that the numbers are unflattering to their trade, they continue to refuse the supply of numbers to the paper and have PASSED on the FREE PRESS on current market conditions and have instead, CHOSEN to elect a TALKING HEAD to write “articles” about what’s happening in the market…
BUT a SAAVY observer will note that they conveniently post this article in the PAID ADVERTISING section, therefore avoid all forms of Editing or Scrutiny by News Press Staff.
HATS OFF to Maria Zate, the News Press reporter that is bold enough to “tell it like it is”.
I’ve already used the quote in another thread, but it’s much more appropriate here.
“News is what someone, somewhere, is trying to suppress. Otherwise it’s Public Relations.”
AJH,
I Like it! Well said.
“On the South Coast, one of the most expensive markets in the nation, the February median for existing single-family homes slipped 3 percent, from $1.2 million last year to $1.16 million.”
SORRY TO HOG the blog space…
But the above data flies in the face of the recent SPIN by the Real Estate backed economist Mark Schniepp who touted 5 - 8 % price gains for this year!
Hey Marky Mark!… if the real numbers (above) for February ‘06 are showing that the market is trending downward- won’t that mean that we will have LOST THE ENTIRE 20% gains of 2005?
News Press should get a ‘Benedict Arnold’ who is a member of the MLS to provide numbers. That will be the next thing the SB Association does: Fine and expell the member who rings the bell.:-)
The local paper in Santa Barbara has long been nicknamed the Santa Barbara News Suppress. Maybe they are stepping up to the plate, finally.
Bookish Betty,
I have no doubt that you are right. You have to have alot of GUTS to stand up to the wealthy and powerful industry of Real Estate in SB. It wouldn’t surprise me if they get lots of hate mail for stepping up to the plate.
Wow, I just read the article… looks pretty grim.
They sure have a lot of rental ads in their classifieds. Hmmmm
Yep, and notice all the rather expensive PHOTO ads of realtor’s snapshots? In a fat market, one can afford to join the popularity contest… but when sales dry up, the photo ads of smiling realtors will shrivel down to one or two lines of print- hoping that SOMEONE will purchase their listing.
This is from one of my favorite columnists
“If you want something ELSE to worry about since you are already frightened by the monetary nightmare that is happening to your money and your economy, then consider the essay entitled “Our Worst Nightmare-The Bubble Has Burst!” by Dudley Baker & Lorimer Wilson. Seat belts on? Okay, abstracting slightly, let’s go! “Housing Starts Up 14.5%. Building Permits Up 6.8%. Applications for Purchase of New Homes Down 1.2%. Index of Pending Existing Home Re-sales Down 1.1%. New Home Sales Down 5%. Existing Home Sales Down 2.8%. Inventory of Unsold Existing Homes Up 2.4%. Inventory of Unsold New Homes Up 1.2%. Median Home Prices Down 2%. Affordability Down to 14 year Low. Foreclosures Up 27%. California Home Sales Down 24.1%. Massachusetts Home Sales Down 21%. Listings Up 41%. Florida Existing Home Sales Down 19%. Alabama Existing Home Sales Down 21.5%. Listings Up 17%. Pennsylvania Existing Home Sales Down 17%. Minnesota Home Sales Down 7%. Inventory Up 35%.”
Aliens took all the buyers ……..thats it !
They say “everyone wants to live here, and the wealthy will continue to move here”.
If your Tom Cruise… Warren Buffet Sold his SoCal pad last year. Another feather in the cap for the Oracle of Omaha.
yes, OPRAH lives here part-time… and the rumor that her COUCH JUMPER is also shopping for a home here. Ohhh Noooo! It’s loony enough here already!
not to worry SB BubbleBeliever .. the SF Bay Area had huge price swings in 80’s too. We can expect as mush as 50% off the top. There were lots of people caught off gaurd back then.
To Go Please,
Thanks for your written VALIUM! ‘preciate it
Wacko Jacko has left and closed now Neverland. He has fled to Bahrain. So the most famous has left. What else to say?
As for Bakersfield, Buck Owens passed away. Now their only celebrity is now gone. But Buck was certainly a gentleman.
Big time MC Hammer built then latter sold his home at a loss in Hayward. How the mighty have fallen. I have read lots of rockers have moved from Socal to Vegas. Better tax laws and such. Its hard being a has been.
On the block i use to live on-one agent had sold 3 houses in less than a total of 45 days while they were on the market.
Then he (or the owner) became greedy and priced one house about $75,000 more than what is worth.
The agent had the listing for 6 months and held an open house every
Sunday (with the excetion of Christmas & New Years’ day) and even on some Saturdays. this agent just lost the listing and now it is on the market again via Help-U-Sell ($30,000 price reduction)
These greedy fools are chasing the market down-It will be interesting to see if this house sells and for how much.
Well, here in Loudoun County, VA, the building is still proceeding at a furious pace. Even with all of the For Sale signs and a 300% increase in inventory over last year, new developments are underway everywhere, especially in Ashburn, which has got to be the poster child for suburban crappification. Nothing but a sprawling mishmash of poorly constructed townhouses interspersed with McMansions and strip malls. And the townhouses are so bland and homogenous, it looks like they were stamped out on a factory assembly line and wrapped in light-gray vinyl siding. I don’t think the Soviets could have produced more depressing housing. To amuse themselves, builders give these vinyl ghettos hoity-toity names like “The Landing at Sheffield Run” or “The Chase at Derwood Pointe” (everything has an “e” on the end because the association with England apparently triggers some Pavlovian response in status-conscious Americans). I think that up to 40% of the properties that were sold here in 04 and 05 were bought by speculators and they’re bailing out just as a ton of new inventory is about to come tumbling out of the pipeline.
I wonder if they could get away with calling one “The Sphinctres at Mei Butte”.
OK, I’m just posting because I’m bored again.
LOL. How about “The Money Pittes At Dumpwater Creeke”
“Smart Growth” is generally a foreign concept in NoVA, but Loudon County has got to be one of the worst counties. They let the builders build wherever they want, and don’t worry about infrastructure (roads, police/fire, schools, etc.) until it becomes a problem.
You’re right - I’ve never seen a total lack of planning like I’ve seen in Loudoun County. And the builders bulldoze everything when they put in a new subdivision and then plant 10-ft tall McTrees. It looks about as natural as Disneyland. The sad thing is, the western part of the county is still beautiful and rural, but the county is going to let this blight continue unconstrained.
The future jobs of these new McMansions will be the bulldozing of desolate neighborhoods and decaying properties.
in Newbury park, condo development i rent in has a listing today at 469K 3BR/2BA. lowestof 2006. beats other listings from 490(reduced to 484), 475 (reduced to 472.5). all similar sq ft divided diff (4 or 3BR).
race down the slope has just begun, we just getting started on spring 2006.
condo i rent was bought by a realtor for 466K in aug 05, i rent it for 1850.
What’s the point of reducing from $475 to $472.5? That’s pretty asinine.
OT, but I was reading through some of the posts on that real estate investor’s forum that cereal posted earlier…
Most of the people posting there seem to have level heads, but when you have people new to “real estate investing” coming in and EXPECTING prices to double in Phoenix in the next three to five years, you just have to shake your head in disbelief. Kinda makes you think that this could end REALLY BADLY if people like this have been pulling out equity to follow through on ideas like this…
http://tinyurl.com/nyc4s
“Hi. I really like this forum and how active it is.
It was refered by a friend. I have about 50k coming to me, I flew to PHoenix, Az (Glendale area) which is close to the new Football stadium, Hockey stadium, and indoor sport fishing.
I had a friends agent that showed me around and we found these brand new homes 4bd-2 bath, 1500 sq ft, for $220k. They want 3k right now to lock the contract. I pay in 4 months when the house is built. Is this a wise decision for me to get this and rent it out and hope that in 5 yrs, it has doubled at least?”
And in a later comment…
“Hi. Thanks for your comments. It helps a lot talking to knowledgable people. As for my 50k in shares coming to me, no i wasn’t planning to put 50k, actaully that house that i was mentioning i was planning only to put down 10% , which would be around 20k. I know that house will have negative cash flow ($200 to $400 max). I was hoping for that place to double in 3yrs to 5yrs from now.”
Read about Lies, Damn Lies, & MLS Statistics.
“We live in an era of manipulated numbers. Statistics, whether from corporations, trade associations, or even government agencies, are being cooked, spinned, explained, changed, sent sideways, backwards, or upsidedown in order to serve some darker purpose.”
Read about United States housing bubble.
Wow, Ben, pat yourself on the back. You’re number one on sources.
“Nationally, the seasonally adjusted annual sales rate of newly built houses and condominiums stood at 1.08 million homes, 10.5 percent below January’s downwardly revised rate of 1.21 million homes, and the biggest drop in nearly nine years.”
“In the Western states, the Commerce Department report placed the sales decline at 29.4 percent off the January rate, the sharpest drop in more than 24 years.”
(bold is mine)
__________________________
I didn’t see anyone bring this up, but were the downward revisions due to cancelled contracts?
Also, if the numbers were revised down in January, the drop from the original sales numbers would be **even higher** than they are reported here, no? In other words, it’s even worse than it looks. Is this correct?
It looks correct to me ca renter. Interesting.
Saturday was a good day to stay home — or at least off of the road, where everything from Donald Trump to sliding muck made driving a painfully slow slog.
As bursts of rain and gusting winds poured in from the Pacific in the morning and early afternoon, construction narrowed a major San Francisco artery at the same time thousands of would-be real estate tycoons and evangelical teens were flocking to separate downtown events.
3 years ago I was making $15k more then I am making today. Except quite a bit has changed. Houses back then were 1/2 what they are today, gas was a dollar less per gallon, I was paying 20% less for health insurance for me and my family. I guess everyone else got huge raises to afford these rip-off house prices.