Prices Are Still Up From The ‘96 Low In California
Dataquick reports from California. “Home sales in Southern California plunged to the lowest level in more than two decades, as financing with ‘jumbo’ mortgages dropped by half. The median price paid for a home dropped sharply as a result. A total of 12,455 new and resale houses and condos sold in Los Angeles, Riverside, San Diego, Ventura, San Bernardino and Orange counties in September. That was down 29.9 percent from 17,755 for the previous month, and down 48.5 percent from 24,195 for September last year, according to DataQuick.”
“Last month’s sales were the slowest for any month in DataQuick’s statistics, which go back to 1988. The previous low was in February 1995 when 12,459 homes sold. The September sales average is 25,258.”
“The number of Soouthland homes purchased with jumbo mortgages dropped from 5,359 in August to 2,681 in September, a decline of 50.0 percent. A jumbo mortgage is a home loan for $417,000 or more. For loans below that threshold, the sales decline was 19.3 percent, from 9,237 in August to 7,459 in September. Historically, sales drop by about 10 percent from August to September.”
The Union Tribune. “San Diego County, as well as the rest of Southern California, experienced plunging home sales in September as lenders temporarily pulled the plug on jumbo loans for high-priced homes, DataQuick reported.”
“San Diego County’s overall home price median last month was $470,000, down $5,000 from August and off $15,000, or 3.1 percent, from September 2006.”
“Sales counts for San Diego were at their lowest monthly levels since January 1996, when the region was nearing the end of a long real estate recession. The total last month was 2,152, down 35.5 percent from September 2006.”
“Around Aug. 17, many lenders briefly stopped or severely cut back on jumbo loan financing as they reassessed the impact of the credit crunch caused by rapidly rising defaults and foreclosures nationwide.”
The Orange County Register. “Full-month housing data for September from DataQuick shows how big a bite the mid-summer credit crunch took out of the O.C. housing market: a one-for-the-record-books drop in pricing and sales volume.”
“According to DataQuick, last month’s median selling price was $570,000 — the lowest since March ‘05 — and down 9.5% from September ‘06, the biggest month-to-month percentage-point drop since August ‘95.”
“September’s price was also down $60,000 from a year ago. (Prices are still up $386,000 from the ‘96 low!)”
“September sales of O.C residences selling for $600,000 or less was off 29%. Above $600,000? Down 55%. September’s 1,643 sales marked the slowest month in DataQuick’s 20 years of tracking O.C. home-buying habits.”
The LA Times. “September proved to be the cruelest month yet for the sputtering Southern California housing market, as monthly home sales fell to their lowest point in nearly 20 years.”
“The median sales price for homes in the six-county area from San Diego to Ventura also fell in September, a shift from previous months in which sales of high-end properties had propped up the median price.”
From KCRA In Lincoln, CA. “Days after receiving her property tax bill, Annemarie Boyle still can’t believe it. Boyle said her bill was up $2,400 from last year and didn’t have the money in her escrow account to cover it.”
“Boyle couldn’t understand how her property could have increased in value when homes around her were selling for rock-bottom prices and going into foreclosure.”
“In a declining market, some homes may be worth less than that assessed value. Assessor Bruce Dear said his staff looked at more than 20,000 properties for this January and lowered the value on more than 18,000 properties.”
The Sonoma News. “The Hotel Chauvet, lingering in real estate purgatory since March, finally seems to be attracting buyer interest and one of the historic building’s six condominium units has already sold.”
“Rescued from oblivion by a group of investors 11 years ago, it took nearly $5 million and a painfully long time to turn it into luxury condominiums. Had the building been finished a year or two sooner at the height of the most recent real estate boom, it’s likely that all six units - originally priced between $1,195,000 and $1,395,000 - would have quickly sold.”
“But the bubble burst, interest rates rose, and when the luxurious condos were ready for prospective buyers in March, very few buyers appeared and none of them bought.”
“The absence of interest led investment partners Chris Hansson and Larry Paul to try selling the units at an upscale auction held at the Lodge at Sonoma in April. Despite a reserve 35 percent below the asking price, no bidders came forward and the auction was canceled.”
“Sue Paul said she took over the listing and was startled to discover it had not been previously placed on the MLS. Two prospective investors have offered to buy the whole building, said Paul, but not at a price that would cover the original investment.”
“Since she listed it, Paul said, ‘I’ve had probably 150 realtors come through.’ Paul holds open house every Sunday from 1 to 4 p.m. and said she’s had from 50 to 300 people come through each week. The renewed interest may be partly a product of a drop in price. The condos are now being offered at $995,000 and $1,025,000 for the two bottom-floor units, and $1,195,000 for the units on the upper two floors.”
“Total the numbers and, if all the remaining units sell for asking price, it looks like the Chauvet’s investors may actually make a small, perhaps very small, profit.”
The Recordnet. “It’s not a magic bus, just a vividly marked one - REPO HOME TOUR.COM - that real estate agent Cesar Dias hopes will work some magic for him in a bleak home-sales market.”
“Dias, an agent and loan officer, has launched a weekly Saturday bus tour to try to get buyers interested in looking at some of the area’s growing number of foreclosure properties.”
“Between a dozen and 20 people a week have taken the tour of 10 to 12 bank-repossessed homes the past few weeks, Dias said, and a few deals have been made. Not bad in a market where home sales in September dipped to the lowest level so far this decade.”
“‘Nobody’s talking about the prices that are really affordable now,’ he said. ‘There’s a lot out there under $200,000 - prices we haven’t seen for four or five years - and a lot of people don’t know that.’”
“One exception is D.J. Johal, a Repo Home Tour veteran. He’s been on three Saturday tours, bought one home and has a deal on a second that he hopes is near closing. He just closed a deal on an Eighth Street house that was listed at $219,000 four months ago and then was lowered to $110,000.”
“He bought it for $75,000.”
“‘I felt good,’ he said. ‘I figure if I put another $20,000 in it, if I have to sit on it until the market turns, it’s still going to turn almost $1,000 a month in rent.’”
“Most the foreclosed homes he saw on the bus tour need work, he said, but with, say, $20,000 or more to ‘freshen up’ the places with new flooring, paint and landscaping, he’ll have properties worth way more than he paid when the market picks up again.”
“Meanwhile, he figures he’ll be getting $1,000 and up a month in rent.”
“‘I learned that these banks already have been sitting on some of these properties for quite a long time, and they’re willing to play ball if you make a reasonable offer,’ he said.”
“The latest Coldwell Banker Grupe-TrendGraphix monthly sales report…indicates that sales and selling prices of existing homes in San Joaquin County have continued to drop as the market moves into its third consecutive year of decline.”
“The 228 sales countywide in September were the fewest this decade, as were the 289 pending sales last month. That compares with 796 sales and 716 pending sales in September 2005, just before the downturn hit.”
“And median selling prices have fallen sharply, from $370,000 in July to $325,000 last month, a 12.2 percent drop in two months.”
“‘It doesn’t matter if prices go down another 10 percent,’ said Ben Balsbaugh, residential sales manager for PMZ Real Estate in Stockton. ‘In the long run, they are going nowhere but up.’”
“Around Aug. 17, many lenders briefly stopped or severely cut back on jumbo loan financing as they reassessed the impact of the credit crunch caused by rapidly rising defaults and foreclosures nationwide.”
What happened to the plan to raise the jumbo loan limit above $417,000? Is it permanently tabled, or merely on hold?
One theory (of mine) on the real purpose of the Citi bailout fund: Give the big banks a place to warehouse their devalued subprime debt without actually selling it at current market prices, while a plan is cobbled together behind the scenes to increase the conforming loan limit above $417,000. With a higher conforming loan limit, the GSEs could be brought into play to gorge on loans above $417,000 made at subsidized (below market) interest rates and help shore up deflating home prices. Any reflation of the $417,000+ McMansion market would in turn help reflate the value of toxic subprime debt.
shades of the early 90’s japanese banking approach. hide the bad debt, don’t recognize it. that way you can extend the pain for many, many, many years.
lets call it the “Cooperative Credit Purchasing Company (CCPC)”
Hey Bear, you need to stop sweatin’ this one out. Prices are falling, they’re going to fall a whole bunch more, and there ain’t a dang thing any entity can do about it. So watch with amusement instead of paranoia.
Trust me, I am way too amused for my own good…
I share your cynism, Professor. But I am not amused. The true definition of capitalism is “The rich get richer.” Trust me, Wall Street will be bailed out to some degree.
It is just a matter of degree.
“I share you CYNICISM”, damn it… sorry. At least I spelled capitalism korrectly.
Agree. I send out 20 emails a day to REIC members with lots of the following attached to the email:
LMFAO
SCHADENFREUDE
BAHHAHAHAHAHA
(These will all go in my new book - How to lose friends and make enemies)
(These will all go in my new book - How to lose friends and make enemies)
You may need to pick a different title - that book has already been written (and is hilarious).
http://www.amazon.com/exec/obidos/tg/detail/-/0306812274/ref=lpr_g_1/102-2757341-0074532?v=glance&s=books
I think I love you, crispy.
I hope you’re female. Gwynster’s already married.
Hello!!!!
We are talking about the absolute masters of three card monty here!!!
They have been yanking our collective chain in regards to Social Security and Medicare for decades. You really think they can’t sweep housing bubbles under the rug???? They are going to burn the candle at both ends. They will do everything to hide the true extent of the failure and fund more knife catchers so that the perception of value is returned to the MSM. They will print ungodly amounts of paper money that they will give away to anyone who will willingly prop up the false plateau of home “values”. They will continue to rob Peters meager budget to pay for food and energy in order to let Paul into an overvalued home.
And how’s that working for them so far? Not so good, wouldn’t you say? Allow me to go back to the good ‘ol “monkeys humping the football” to give you the proper perspective on the whole bail-outs, prop-ups, keeping-prices-artificially-inflated thing. No question we’ll have inflation, and no question it’s gonna really screw our future up, but home prices will fall huge…..not even a question.
Where can I get some free money?!? I’ll prop up home values, I promise…
…
I am just waiting for somebody in charge to try to declare that housing shall be “worth” a certain amount - something like prices cannot fall more than 5% a year or something. You know, like how the stock market is rigged so it can go up infinitely in one day, but not go down more than some amount.
Gotta keep people in debt!
The BOJ took real rates to zero and Japanese real estate still lost a ton of value. I think this will be tough to reflate given that there are just too many loans backed by depreciating collateral - they’ll continue to go bad, and are doing so in increasing numbers.
Billions of fake paper wealth is being erased as we speak. Unfortunately it’s supported by hard $ debt which wants to get paid back. Question is….what will the balancing entry be? And who’s gonna pay it? Yes, us, the savers, but in what form?
re: Japan, which is a $%^#&@ island, so much for the theory of limited land supply limiting the downside of prices
These 300 people (this weeks deadbeats) missed the bailout…
http://fidelitykern.com/nod.pdf
(warning PDF)
I see a few names in there repeatedly… multiple stuck flippers. Oh well.
Hi ex-nnvmtgbrkr,
Please remember the Citi bailout represents about 3.75% of the total amount of sub-prime is 2 Trillion+ (75B / 2,000B = 0.0375).
Based on objective analysis to date, the Citi bailout is geared to unlock the commerical paper market and to by time for the inside perferred Tier 1 players to lay off the sub-prime risk currently on their books to less clever Tier 2 and Tier 3 investors.
Your comment of reflation of sub-prime loans could be a blue light special clue for the Tier 2 and Tier 3 less clever investors that it is safe to catch a falling knife. Only to realize that the knife is still to sharp after the fact (i.e. the poor risk of sub-prime is still a poor risk) meanwhile the Tier 1 investors have a clean balance sheet, poised for the next Ponzi scheme.
Beware of strangers bearing gifts!!!!!!
This SIV fund is a scam, pure and simple. It’s simply a way to create artificial pricing and liquidity so the banks can get some more suckers interested in their garbage. How do you price something when there is no market for it? Buy it from yourself.
IMHO, they won’t be able to keep the paper long enough for the GSE-limit change to take effect. Banks will be taking bigger and bigger losses on the mortgages they currently hold, so they will need to come up with some operating money, and will be forced to sell back their CP (crap paper) for less than what they paid.
In order for their plan to work long enough, the Fed would have to again increase the percentage of deposits allowed to be funneled into banks’ brokerage arms. Will they do it? It’s certainly possible given their current reckless behavior, but the eventual result would be bank failure, not house-price increases.
“… the eventual result would be bank failure, not house-price increases.”
No the eventual result will be tax payer bailout. Been there, seen it. Wash, rinse, repeat.
What I wonder is that given the rapidly crumbling job market in this nation and declining wages and benefits across the board, at what point are there simply no taxpayers left to bail anything out?
Increasing the agency loan limit in states such as California will enable permanent unaffordability. The politicians calling for this do not understand economics or the housing market. Increasing the loan limit will allow cheaper financing for jumbo loans, which will keep prices from falling as much. We should be glad that we have this limit. What is next?….raising the tax deductable limit of loans from $1 million to $2 million?
Oh… they “understand” what raising the loan limits means alright. Politicians hate lower housing prices almost as much as the REIC does, and for much the same reason: lower house prices = lower income (tax revenue). Not to mention some very pi$$ed off voters whose early retirement hinges on the price of their house rising double digits in perpetuity.
Right, but just because a person can technically borrow a vast quantity of money does not mean they can repay it. The level of defaults will sontinue to be staggering and the ploy will fall flat.
100% agreed of course (preaching to the choir), but just because something is stupid and won’t work in the long run doesn’t mean a panicky politician won’t try it in the short run.
I’m going to be a contrarian here and suggest that raising the FHA and agency loan limits will actually tend to prevent unaffordability, not the other way around.
The key thing is that FHA and conforming loans, as I understand it, have pretty hard-and-fast debt-to-income standards. You can’t go above 43% total DTI. That tends to keep prices pretty close to affordability levels: if your debt service is more than 43% of your income, you don’t get the loan.
The problem is that the FHA and GSE limits weren’t raised for a long time — so long that they ceased to be relevant for pretty much anybody. Even if prices had only increased by a sustainable amount, those loans’ limits would have been left behind.
So what happened? FHA and conforming loans were abandoned. People switched over to Alt-A and subprime, where the sky was the limit. In fact, I’d like to study whether price appreciation actually accelerated once median prices got substantially above the FHA and conforming loan limits. I suspect that they may have.
Raising FHA and conforming loan limits up to the level of where house prices *ought* to have landed, given a sustainable rate of appreciation, may have the tendency to reduce prices to that level, and help keep them from shooting up again.
I dunno, Thomas. In 2006, the median California family income was $64,563. If houses in CA tend to cost about 4x median income (As discovered by that one guy on this blog who used to argue against large price declines. What was his name?), then the median house price should have been $258,252. Still not even close to $417,000. Also, 43% DTI is dangerously high by traditional underwriting standards. Until recently, it was 33%, and before that, it was 25%. It seems to me that the GSE limits are actually way too loose, and probably contributed to the bubble.
V,
DTI is TOTAL debt to income ratioand includes car payments, cc debt payments, and all the revolving payments on the toys.
Typically a conservative ratio has been 36%.
The 25% number is Loan to Income ratio or the front end ratio.
Yep, total DTI was traditionally 36%, and max PITI was traditionally 28% (or 30% if you were a good boy).
Another point to consider:
- Ceiling on the GSE limits are raised. Everyone is happy and we think, “Well, hey, at least that means that people will have to get conforming loans.”
- All limits on the GSE loans are then removed, allowing anyone to buy a house on taxpayers’ money. This is done “to save the American Dream” or “for the children” or some other nonsense.
- The US becomes like the Netherlands where taxpayers pay for other peoples’ homes and nobody can afford anything ever.
P’Bear,
I believe they have pulled our toes, once again. (Learned not to say leg…nasty ones!)
No one is rallying to raise Fred or Fannie…Neil, pass the popcorn…they are blowing smoke up our collective…er…orifices.
BTW, I don’t believe the Superfund is a happening either! More smoke…(Jeesh, they must love the plumes!)
Buy this, no, buy that, no, er…nothing gets done! More of the same!
Dang, sure glad I don’t smoke (er…maybe I should to understand all these plumes of air moving about!)
Reaching for a…er…gin and tonic.
Best,
Leigh
I hope the super fund does not happen, but it is a quick way for the banks to transfer the debt to the public. So I suspect that it will occur.
For gold and silver bugs, the court has apparently ruled that “coinage” is at face value and not market value. So even though a $20 gold piece has a market value of $750 (more, I know) it is taxable at $20. A very nice way to move a large inheritance.
We are located in gawd’s country! I’ll bet you a case (er…not a betting gal) of Spotted Cow, it’s not happening!
Not a challenge, but if you dare a bet, I’m good for it luv : )
Let’s say by…er…Dec 1, 2007? barbluvsong@yahoo.com
Open the gates!
Tooooo funny.
Best to you!
Leigh
Leigh, How about a case of New Glarus? or Stone Cellar? or even Lienie’s Creamy Dark? Spotted Cow causes me to climb walls and think I am Tarzan.
And you are on! If I lose, I will be happier than you can imagine!
Just a few thoughts about the Superfund that disturb me. The ‘word usage’ in the press releases implies this action is to ease the commercial paper market. (This could be a valid reason, I own shares in a Canadian Company that was planning a US expansion this fall and next spring. They were sitting on $100M US to begin development, they parked their moneys in ABC paper and it has been frozen since August. So much for beginning development on their own cash).
Commercial paper is a nightmare market, there is no liquidity nor is there reason to invest in it at this time.
One side effect of relieving the congestion in the commercial paper market by creating this fund out of CDO paper is allowing the banks to get rid of crap. This is concerning, because like me, myself and I - you remember the RTC. The same BS that it will not cost the taxpayers anything. That was 20 years ago and we are still paying for it. Will the new superfund be transferring at a margin ratio so that the $80B is holding a face value $800B in notes. Of all AA or better CDOs it is estimated that 12% are going to become worthless and an additional 49% are going to lose 55% or more. Some 15% are thought to be fungible at maturity. This could be a lot larger than the RTC bailout. Who determines the value?
I find it bizarre that of all the industries in the country the only one that regulates itself is the banking industry. How would you feel if you were a coal miner and the coal mining industry regulated itself? That is the way I feel about the banking industry.
I have learned never to trust meetings between banks and Federal Reserve bank governors. Now you know why I will be happy should I lose. Or in other words, your lips to God’s ears.
Is this the case in Vegas including 17 defendants or so that were charged with tax evasion for getting paid in gold coin?
Wonder if the face value of the gold coin payment was enough to meet minimum wage requirments
its odd how raising the limit will make any difference. personally it looks to me like the economy is more than booming. i just went to target at lunch to pick up Transformers on HD-DVD and the store was packed. Everywhere I went was packed. I didn’t end up getting lunch because there were long lines at every eating place. The economy seems a lot stronger than this board makes it out to be. I am not seeing the worsening economy except where I work.
“I am not seeing the worsening economy except where I work.”
That is why the stores were crowded, they were out looking for work.
I supsect mostly credit card users.
Target is cheap. Food at Target is scary.
As long as we’r all ranting, here’s a little appropriately out of control rant: http://financialsense.com/fsu/editorials/shepherd/2007/1016.html
You go girl!
“Ceri Shepherd”, the author, is actually a man! So your “you go girl” is misplaced, or you know something about him that we don’t.
Anyway, it is a rant, but an accurate one.
Raising the conforming loan limit is the most idiotic thing I’ve ever heard! If people are having trouble making payments on their mortgage, how is making it easier to get BIGGER mortgages going to help? Of course, these will tend to be less “exotic”, but most of the people in trouble were only able to pay teaser interest.
So this is what it is like to be the first…(pat my own back)…okay (nuckle cracking) let’s see. I think I’m finally starting to feel the momentum of this cycle..it’s like being on a roller coaster and getting that first rush of accelleration. Thrilling barely describes it.
——————————————————————————–
Lasky: “Rusty, may I call you Rusty? I had a bad experience on this ride once.”
Rusty: “What happened? ”
Lasky: “I threw up.”
Vacation (1983)
Indeed. They may actually close Florida, as this catastrophe gets worse.
I am not sure if closing Florida would be a bad thing…
missed it by this much.
One of the negative side effects of having a “good job”. You don’t loose it until the bust is well underway. Then you sell your house in a down market. Then you get a job in the next boom and buy a house. The American Dream.
Now that there is just sad Mr. Ben!! How on gawd’s green earth can you miss the first on your first and only?!!!
Wink,
Leigh
“September’s price was also down $60,000 from a year ago. (Prices are still up $386,000 from the ‘96 low!)”
‘96 low, here we go! (I mean inflation adjusted, not nominal, of course…)
Wow!……big jump from “we’re still up YOY!” or “we’re still up from ‘05!”. Now they’re quoting ‘96? These guys may be more bearish than we think.
I’m not bearish enough to begin comparing to 1996, yet.
That’s desperation. Ok, not the overall emotion (yet). Fear is lingering. But oh boy, this is getting interesting.
Got popcorn?
Neil
Heck, I was suggesting a return to ‘96 prices before Ben had a blog. I’ve since turned more bearish.
Good to see y’all making progress!
Eagerly awaiting the Bay Area numbers, which are due out tomorrow.
People seems to miss a big difference between 96 and 2006. The average home size (sqft) has gone up quite a bit, especially with the new homes being built the last few years. Most are at a minimum of 3K sqft. You would have to be a millionaire or make mid 6 digits to afford a 3K sqft home in 96.
I’m not missing it. The baby boom demand for Supersized homes crested a few years ago, and it’s all downhill from here. I am not sure whether it will ultimately prove more cost effective to raze McMansion tract home developments or to just let them depreciate right through the baby boomer retirement years.
Yeah - I see only 3 possible ends for most oversized spec housing built in the last 3 years: subdivided into multiple family housing, left to rot, and/or actually bulldozed.
Even if you wanted and could afford a McMansion because prices bottomed, who want to heat and cool all that space? As energy prices go no where but up, McMansions will become less and less attractive.
Only 1 of the families my age I know live in what I would consider to be an “oversized house”. Even they, with their relative free spending ways, are at somewhat of a loss of what to do with all the space. It seems to be a very generational thing to want an oversized house. (Although in all fairness to my Dad, he’s pretty content in his mobile home…)
Energy prices will beat this attitude of having a big house out of Americans over the next decade. $88 oil today. Not reflected in gasoline or home heating, yet.
Perhaps we’ll see more extended families sharing these larger homes. That could be a good thing.
Or illegals sharing homes…
I’m certain they’ll start tearing down McMansions–sooner than you think!
There’s a good chance that kids graduating college today, with a “green” sensibility, will regard oversized housing as obscene. Combined with increased energy costs, 1500 sq/ft homes, or denser apartment living may become the stylish thing to do. Large homes will be an anachronism.
(Just a theory! From someone who would love a 6K sq/foot home, too.)
Home prices are NOT proportional to sqft of the house, but construction cost + speculative land price(which makes the biggest part of the price).
–
“(Prices are still up $386,000 from the ‘96 low!)”
Not for too long!
I say, below 1996 lows in nominal dollars, Prof.
Jas
$184,000 in OC?
I’ll have what you’re smoking. It’s shaping up to be one of those mornings.
That would work out to be about $1,000 a month in mortgage payment. That’s a good ways below the average rent on a 2-bedroom crap apartment in Anaheim.
Unless OC gets hit by a neutron bomb (kills the people, leaves the housing stock standing), or unless the economy collapses completely and we’re left trying to barter chickens and produce for houses, I think we can rule out a return to nominal 1996 prices.
Inflation-djusted prices, we can talk.
“He bought it for $75,000.”
“‘I felt good,’ he said. ‘I figure if I put another $20,000 in it, if I have to sit on it until the market turns, it’s still going to turn almost $1,000 a month in rent.’”
It needs to turn more than a $1,000.00 a month to break-even
Another “Investor” who didn’t discover that the 1st rule of rental properties is postive cash flow until too late.
Now I know what happened to all those people from high school who thought math was Icky. They became part of the REIC!
But don’t worry, they’ll make it up in volume.
Got popcorn?
Neil
Icky math…I sooooo wanted to reply to this post!!
(But I’m shy).
Here goes…I LOVE math! (dumb as a box of rocks, but love math).
Cutting to the chase, the numbers don’t add or subtract.
Area A = It IS different here.
Area B = $75K in the ‘hood will bring (bling) me a K ($1000.00 per month, oh but, Whiskey Tango Foxtrot, maybe not…er…taxes and insurance..what’s dat)
And!! Let us ride on the yellow submarine (er…REO bus).
Take my guns away!!
No, Big gun show on Saturday, thank you Jeesh.
rant off
Killing Me Softly…sigh.
Leigh
P.S. Thank Jeesh I’m not a realtor (or any invested in such said nonsense). Amen.
That is 75x rent…unless the taxes or insurance is ridiculous, he should be OK. Or unless the $1000 is a dream too.
It is, his purchase is in the ghetto. You can rent brand new McMansions on the better side of town for $1,350-1,500.
Wait till he has to cut the rental rate or they move out.
Let me preface this comment by saying that I don’t know the area, but $75,000 for a house in Stockton doesn’t sound too bad. Especially if he can rent it out for around $1,000/month.
I never experienced a bullet-proof window at the drive-up of a fast food joint until I stopped for a bite in Stockton. He’ll need to stock the place with an arsenal of weaponry if his tenants plan on surviving. Stockton itself is bad enough, but I can’t imagine the neighborhood this place is in.
Stockton rents:
http://stockton.craigslist.org/apa/
uh oh…those dang bullets are going up in price…thanks Jeesh I’ve a few of them!
I do NOT like bars on windows…er…does that make me…er…a liberal?
NOoooooooo. Help me Jeesh : )
Safe is…er…wanton?
Ya just can’t make this stuff up!
Leigh
Dont worry they have bulletproof windows in super expensive nice Pasadena. Even though most of the city is total junk. Somehow everyone I know only relates it to the mansion area. But $75,000 renting for $1000 in Stockton? Thats kind of hard to believe.
Never experienced a bullet-proof window at a drive up? I can name several places here in SD with them. One of the Subway’s in North Park has bullet proof glass.
Not to mention every place in City Heights.
Stockton… that’s where I first saw store fronts with roll-down metal barriers. The kind you see in food stalls in Hong Kong, or perhaps certain malls.
Except in Stockton, they were add-ons to what used to be downtown/main-street real estate. Lovely!
Right, like Screamer, I’m delighted with finally seeing CA coming down. On the other hand, the story of the Stockton investor who bought the $75000 place and is putting $20K into it and hoping to rent it out for $1000/month is the first story I’ve heard of a purchase that might actually make sense. “Might” because who knows if the rents will hold up there.
$75k is a great price… IMO
Unfortunately, this is the only one like that…However, one lender just capitulated and brought down an entire ‘hood…
Time to start a lookin! That’s not a bad number.
Not yet, unless you want to be a slumlord. Lainvestorgirl is the gal you want to talk to if that’s the case.
I’m sure it’s no coincedence that the journalist declined to include a picture of the house in question. I have a feeling Mr. Diaz may be overestimating his ability to collect rent on a house that may be uninhabitable.
NEVERMIND!!!
I just looked up what you get for $75k in the central valley. BAHAHHAHA.
–
He paid a good price for today’s market (100 times monthly rent, including improvements) but not the market in 2010 when the rent may be only $350 a month. So, he in all likelihood over paid.
Market wouldn’t bottom until people like him are cleared.
Jas
well true…rents will be going down in a lot of areas…
rents went down 20-30% in Austin from 1985-90…drove 3-2s to $35K-$45K.
Jas,
Let’s revvvvv up the bull dozzzers! Clear the catfish out!
Smiles,
Leigh
Jumbo the elephant loan just took a giant dump on the SoCal housing market.
Jumbo shortage takes 5% off SoCal home prices
October 16th, 2007 · 46 Comments · posted by Jon Lansner
DataQuick says today that difficulties in shoppers getting “jumbo” financing (mortgages bigger than $417,000) shaved 5% off the median sales price of all SoCal homes sold in September … “The median price paid for a Southland home was $462,000 last month, down 7.6% from $500,000 in August, and down 4% from $481,000 for September last year. If the jumbo-financed portion of the market had remained stable, last month’s median would have been $487,000.”
http://lansner.freedomblogging.com/2007/10/16/jumbo-shortage-takes-5-off-socal-home-prices/
To think, the criteria for jumbo loans keeps getting stricter.
No sales last quarter in my folks home owners association (small part of 90275). No sales last quarter in another HMO I wish to buy into (sorry, but I have no desire to live next to my folks).
To say the least, the realtor on the HMO wasn’t a happy camper. Notice I said Quarter. There are normally 40 to 50 sales a year, so 3Q2007 should have been 12 to 15 closings!
Got popcorn?
Neil
There is no shortage of Jumbo financing. There is a shortage of crazy Jumbo financing such as 100% with stated-income, on $1,000,000 houses. If you have a real down payment, some assets, a job, and decent credit, there is plenty of money for Jumbo and Super-Jumbo loans, and at good rates. But since this sensible lending is only a small portion of people buying in the last few years, it seems like there is a shortage. Crazy jumbo financing was used to keep a market overheated far longer than it should have.
That is important. Jumbo loans were not shut down. Loans require full documentation.
Who you going to sell to?
It’s a bitch when you actually have to qualify, isn’t it.
Not to mention bringing $100K+ cash to the table for a down payment.
Finally we are seeing Scal prices take a YOY decline(-4.0%) sept 06 to sept 07. LA county still showed a miniscule +1.2 % yoy but that will turn negative come october. Rest of Scal counties are taking a bath on YOY, lead by you guessed it the crapola countys of riverside/San berdoo-10.8 and -11 % resprctively. Ventura down 7-9% yoy. OC down big at -9.5% .
Everyone who has been following ben’s blog for any length of time-I have been on it close to two years-could see this coming. Kudos to Ben and all you faithful contributors-we are finally vindicated. The last big bastion of Rediculous RE prices-LA county-is about to take a nosedive.
I will celebrate with a glass of wine and toast the LA bubble collapse-it is here at last.
Speaking of Jumbo loans … what happened to all those ‘Ned Welsh - Jumbo Mortgage Specialist’ billboards that used to be all over Ventura County. I miss his shit-eating grin.
“Between a dozen and 20 people a week have taken the tour of 10 to 12 bank-repossessed homes the past few weeks, Dias said, and a few deals have been made.
A few deals ? you mean like “can we stop for ice cream”.
No, this is Stockton. We’re talking dime-bags, not ice cream cones.
Stockon is weird, their new waterfront condos and refurbished downtown is surrounded by a “escape from New York” landscape complete with corner churches and flophouses. Nasty.
Stockton gives me the willies…
I liked old Stockton. Some very beautiful Victorian houses. A nicer downtown. Alas time and distance, nevertheless Stockton is and has been one of my target areas to drop 80% in value.
Insufficient jobs and income as well as extremely long traveling distances.
I finished UOP last year, its an interesting place from what i learned about the locals is that there are places that are blacked out for police protection. One cop told me that some places they got in with 3 units cause if its just one car they take a shot at you.
Alot of people are gonna loss their shirt in stockton.
“They.”
It’s amazing how much you can not say with that word, and thereby miss the most important part.
Think of Stockton as Oakland-adjacent.
Hmmm, at those prices and the description of Stockton I’d bet they might find a lot of interest from folks living in NJ looking to retire on the cheap who’re wanting a step up in their living and life style.
No stop for “doughnuts” with sprinkles (wink wink )
more like Nice Dreams?
“‘It doesn’t matter if prices go down another 10 percent,’ said Ben Balsbaugh, residential sales manager for PMZ Real Estate in Stockton. ‘In the long run, they are going nowhere but up.’”
Yea, tell that to the flippers in Las Vegas man…..hahahaha.
…Manger of Rear View Real Estate where fundamentals don’t matter.
“In the long run, they are going nowhere but up.”
Yeah, and in the long run we’re all dead. What a typical a$$ clown realtor. Buying now would be akin to catching a falling chain saw.
Maybe a 10% price drop doesn’t matter.
Stockton will drop that much more before the superbowl; heck they might drop 20% by the superbowl. What the heck is this snake oil salesman going to say when prices are down another 30%? 40%?
Got popcorn?
Neil
He’ll say:
We’ve obviously hit bottom. Now is a great time to buy (or sell)!
Neil!!!!!!!!!!!!!!
Superbowl in London? What is this world coming to? grrr.
P.S. How does one market a Bud commercial in England?
Jeesh! The world is coming to an end.
Ya just can’t make this stuff up…pass the popcorn baby!
Leigh
Tell it to my friend Stuart Freeman whose father bought a house in St. Davids PA in 1926, whose apparent price declined every year until 1945.
$1000 a month off of a 95K house (75K+20K refubish) is a 12% return. That’s not a bad buy if you really can rent it off at $1000K. Even if you rent at $600 a month, the property is still giving you 7.5 return.
$1000/month seems like a 3BR house, given what is on the market at craigslist….
Oops, probably should factor in property tax. It looks like after you take the property tax expense, that 12.6% retuenm goes down to something like 8.6 percent, still above 5.5 LIBOR but not as nice….
Stockton….yeah…what happens to the return when your first tenant burns half the place down with their meth lab?
At what interest rate… non Owner Occupied, Small balance, Also did you incorporate a vacancy factor, and did you have zero cost for the 20k.
That property was more than likely a fixer didn’t see the picture, but with that being said 35k in at market rates and including a vacancy factor I doubt that turns a positive cash return.
I used 95K as the base cost so the 20K was factored in. I don’t really know what the vacancy rate is like in Stockton….
8-10% cost of money
5% vacancy factor
Taxes
10% of income for maint. & expenses which is low.
I doubt if it cash flows
What’s interesting about this deal is that we can at least have the argument about whether or not there’s a positive cash flow. Unlike practically anything else we’ve heard about lo these several years.
Good point! Unless you lie, your insurance and interest rate will be higher if it’s not your primary residence….
My friend lives in Stockton. We drove one mile from his nice neighborhood to a drug infested ghetto. He told me don’t go to the neighborhoods along the I-5. They come up to your car to see whose behind the wheel.
“‘It doesn’t matter if prices go down another 10 percent,’ said Ben Balsbaugh, residential sales manager for PMZ Real Estate in Stockton. ‘In the long run, they are going nowhere but up.’”
so are corn, beef, car, gasoline, clothing, furniture, insurance, tax, liquor, wine, beer and medicine.
“In the long run, we are all dead.” - Keynes
Ben Balsbaugh is clearly an idiot - of course it matters if the prices continue to go down (even if they do, at some point in the future, go up). Hasn’t he ever heard of buy low, sell high? Or, the “trend is your friend”? Instead, his advice is: buy now, at some point the nominal price will increase. Freaking moron.
Sorry, I quoted Keynes above because I didn’t have the patience to read any further down! That quote was so freaking stupid that I had to comment immediately. I’d like to see him say that to one of his clients when they are $100K underwater and need to sell for one reason or another. Reading quotes like the one from Ben Balsbaugh makes me want to walk into an open house and beat the crap out of the first Realtor I encounter.
Don’t do it, CA Guy.
Besides, most RE agents are women anyway. They just won’t go near a bus in Stockton is all.
Buy now, and catch yourself a falling knife!
Sept 07 Median Home Price in The O.C. = $570,000
$386,000 higher than median home price at the 96 low
96 low Median Home Price = $184,000
Personal Consumption Expenditure Price Index
2007-08 117.651
1996-08 93.674
Value of O.C. homes at 1996 median low in 2007 dollars:
$184,000 X (117.651/93.674) = $231,000
Froth remaining to leave bubble to return O.C. resale home prices to 1996 levels:
$570,000 - $231,000 = $339,000
Ok, ok, I admit it, at $231,000, I might be ready to buy.
Actually, I might be ready at considerably higher - methinks real inflation during this 11 year period was substantially higher than the 26% increase estimated here…
I would buy at $231,000 as well. Not much higher, though…
$231k requires an income of $60k to $80k/year. Yep… about right. But first the OC has to purge out those mortgages companies. That alone will take another two years to get through the system.
Got popcorn?
Neil
$231k requires an income of $60k to $80k/year.
Only if you assume a low downpayment. I bet a lot of us on this blog could afford to buy a $231k house for cash with all the money we’ve been saving by renting all these years!
Jim, Inflation of goods and services may be greater than 26%, but salaries and wages are down since 2000 when adjusted to CPI inflation.
Yeah, but they’re up more than 26% methinks. I did the math at one point, I think it was in the 30s from a point later than ‘96.
What neighborhoods would you find median priced houses in 1996 and are those areas better or worse today? I think you’re going to pay more than $231,000.
96 low Median Home Price = $184,000
What’s neat about 1996 is that OC’s median home price wasn’t that much higher than the NATIONAL median at the time. We may see that unusual situation again in a few years! Who says opportunities of a lifetime only occur once per lifetime?
“‘It doesn’t matter if prices go down another 10 percent,’ said Ben Balsbaugh, residential sales manager for PMZ Real Estate in Stockton. ‘In the long run, they are going nowhere but up.’”
In the “long run” we are all dead.
In the “long run” the dow will hit 100k.
In the “long run” we will evolve into worms.
In the “long run” the Sun will become a white dwarf.
See, I can say the same things as him. What it has to do with 5 or 10 years from now is another matter.
Is maria “big eyes” bartiromo questioning Alan greenspan, who admitted he did not see alt A or sub prime woes, about our economy anything like seeking counsel from a doctor who missed slow growing cancers or tumors in all of his dead patients?
Why does she bother?
And where did CNBC Larry Goldilocks Kuntlow show go? I don’t miss it.
ROTFLMAO, stanley.
Big eyes nothing, have you seen the pie-hole she’s sportin’? You could park a VW in that cavern.
have you seen the pie-hole she’s sportin’? You could park a VW in that cavern.
Well, I don’t usually like to brag…
Shoot, is this a G-rated blog?
I call him “Herbie.”
“Goldilocks” is back only at a different time. CNBC moved show from 2pm to 4pm PST.
Nothing has changed. Still story never told, full employment, high wages, no recession in horizon and everything is just wonderful.
Don’t you know higher oil prices is a positive sign of stronger economic growth? Demand for oil is growing because the economy is growing. What’s more, another rate cut will strengthen the dollar.
(Sarcasm off)
Got CDO-Risk-Transporter?
Demand for oil is growing in the exporting countries…bad news for USA all the way around. Don’t need to worry about peak oil…peak exports is the big problem for the USA. Unless we import some more countries like Iraq! Well not like Iraq.
Without sarcasm I think you are somehow right. Which has me so confused that I might not be confused about the economy anymore. no matter what. they are not going to let the stock market drop a lot. No matter what, they are going to somehow gives loans out again. no matter what, they are going to keep everything going for a long long time.
To be serious for just a moment (because there are bulls out there who think just that)… it is true that rising energy costs indicate a growing economy. But oil is traded on a global market, which by extension only means that the GLOBAL economy is growing. China’s superheating, which is driving oil, copper, etc. ever higher. Doesn’t necessarily mean that the US is growing, although there is obviously a symbiotic (or perhaps parasitic?) relationship between the world’s biggest manufacturer and greatest consumer.
China’s largest trade partner is not the US. It is the Euro nations.
Said largest copper mines..Arizona (now to get the permits!)
Really?? About the mines. I am actually scheduled to fly up for a final final interview sometime shortly for supposedly one of the bigger mining civil engineers in the US. I remember the guy telling me he was working in Arizona and Nevada. Very interesting. This job would be around for as long as they mine valuable metals.
so now what happens in October. Are buyers able to find mortgages, jumbos, more easily? do numbers increase from here?
–
We are entering the slow season, remember?
Jas
Snow season?
Need heat : )
Jas, you’re a hoot!
Best,
Leigh
Perhaps not. Notice the trouble Citi and the rest are having, in their effort to “prevent a meltdown,” whatever the heck that means. Nobody with any real money is going to throw it into this abyss. My phone is strangely quiet, though. No loan demand.
By floating this SuperConduit idea, they revealed more than they wished. Some of these lenders are in terrible shape.
Was at the bank today (So. Cal.)
2 painters were discussing how slow work was. One said: I was working nights, weekends and all day long for the last few years, now I dont have any work. The other guy said he is slow as well. Both were glad that each was slow. Misery likes company.
A roofer I know was withdrawing money. Then a guy I know who is in the mortage business came in and took out some money.
I felt a little strange, I was the only one depositing money in the bank!
Should I be worried? Are they smarter than me? One guy joked: Hey we need guys like you to put money in so we can take some out!
“Hey we need guys like you to put money in so we can take some out!”
Fractional reserve banking at its finest and the guy spoke the soothiest sooth.
–
By buddy in SFV, who relies on painting homes for good part of his income, has had no work for a while and was asking me if we are in depression already. I told him no, but we are in recession for sure. Poor guy can’t think of how bad it would get during the depression that I have been telling him we are going to have.
To make matters worse he bought a VW for $100, a total junk, and sinking money into it. He needs to do something but what he is doing is worse than charity.
Jas
Psssssssssssst…Jas (looking around the room…suuush).
Think in head, do NOT say outloud. Curtsey. (for the love of Jeesh).
Best Always,
Leigh
I have been back in CA for the past 10 days. Nice to return and visit. Made the drive to Mammoth Lakes (up 395) from Ontario. Lots of Joshua trees to see. Victorville and Adelanto had rows and rows of godforsaken McTinderboxes among the tumbleweeds. One banner was saying 8 bedrooms (I guess for future Sec
out in the sticks. As we drove from Ontario to Victorville, I was thinking who in their right mind would willingly commute that drive daily.
Mammoth was pretty, but snowy. Friend kept saying about new buildings that weren’t there last time he went (had been over 3 yrs) and that much was ruined by overbuilding.
Now, seeing many new homes built in floodplains. Guess who will be holding that future bag? Haven’t been out to drive through new home tracts to see the sea of for sale signs. The towns along 395 were delightful to visit, and very isolated. I saw a sign saying 28 miles to our favorite town of Trona. Wanted to drive by, but didn’t. And in the IE/OC, traffic on freeways still sucks.
Leave CA, you didn’t see anything. I was up there in V’ville last Saturday for a birthday party of a friend. My gawd! Every other house in Victorville is:
1) for sale
2) abandoned
3) repo’d
4) in arrears, in some form or another
I am NOT kiddin.
On top of that my buddy who owns a lovely home out there told me the gangs are starting to move in and he wants to get out. He worries about his kids and the neighbors’ kids playing outside. But he knows he is stuck until at least ‘09. He bought early so he has some room to wiggle, but still knows it will be awhile.
As to those 8 bedroom homes, I see you and raise to 10. On the way back I almost drove off the 10 freeway when I saw a sign advertising 10-bedroom homes. My son kidded me about 3 of us families moving in. I told the abuse on the plumbing would kill the house.
As for the OC, we are turning a slow grade of brown, as in toast, with the worst yet to come. I have been preachin’ fundamentals for 2 years, but no one would listen except the oldtimers.
If homes here in RSM come down to 231K, even with the HOAs, I think I would bite. Even if you took a full 100% loan out for 30 @ 6% you are talking about 1600/month for P&I. Then add another 350/month for taxes and Mello Roos and another 200/month for HOA and you have $2150. Actutally, not that bad considering where we are and where we have been the last several years. Of course, any down payment would bring that sucker all the more down. AND at 231K, you would only need about 45K down and another 25K for reserves. 70K would get you in. Those are fundamentals I like to see. Those are sustainable.
Of course, as Keynes and others have mentioned, “In the end we are all dead.” So does it really matter?
I’m in the same area, and for $231K I would buy. But I really don’t know if we’ll ever see that. $400K probably…
Do a little reading on “anchoring bias”…
Gotta love Trona. Those that know it are a special breed.
Tronans…
Klaatu barada niktu
“The towns along 395 were delightful to visit, and very isolated. I saw a sign saying 28 miles to our favorite town of Trona. Wanted to drive by, but didn’t. And in the IE/OC, traffic on freeways still sucks.”
That route 395 is one of my favorite drives, thru the eastside Sierra region. I love lone Pine. Independence OK-quite a quaint little isolated township. Bishop too commercialized with Motels, fastfood chains, and has some ragged outer indian hovel trailers. Still i love the eastside Sierra Region for its stark Geologic formations and that Awesome Sierra Mountain Wall rising 10,000 feet like a rampart above the Owens valley.
my friend the westside appraiser is so slow that he has registered his beautiful home with a service to get commercials filmed in his house for income.
very cool.. it’s only a matter of time before the home is a backdrop for porn flicks and you, as a friend, can hang..
Get a job as a light man or better yet as a fluffer for the gals. Hold your fire !
Cathcart, Sir George (1794-1854)
“I fear we are in a mess.”
Was that shortly before he was killed in battle in the Crimea?
interesting tidbit about the Crimean War: someone told me once the term “handicap” comes from this war. England modified its no begging laws so that veterans of this war could “hand” out their “cap” for assistance.
“Meanwhile, he figures he’ll be getting $1,000 and up a month in rent.”
He figures. Nice math. There is a deluge of these smart investors putting homes on the market to rent…not counting the FB who are trying the same. Or the builders. I can’t count the number of newly remodelled, granite counter topped, stainless steeled vacant houses are for rent in my area. A complete glut. Some of these rentals are million dollar homes, 5000 sq ft, blah, blah, blah, wanted to rent at $5K plus per month. Who rents stuff like that?
Who the hell is going to rent all these several zillion rentals?
Does a glut of rentals count as a bubble?
i moved to la years ago for biz and we rented while getting to know the area. paid over market cuz we got screwed by a realtor and didnt know any better. it happens. i got even though. she was assigned to me by the company relo folks. I dropped her after a while and she had to pay them their cut of my commissions as though I had used her anyway. HA HA HA HA
oh yeah - sounds like my own little private heaven: i’m gonna buy me a mcmansion at peak, pay massive property taxes/insurance/maintenance, then rent the place out at a loss, become a “property manager,” deal with tennants, repairs, gardeners, utilities, extra insurance, leases, the whole nine. all i gotta do is wait “a few years” for the market to turn the corner. then even if i’m lucky enough to sell the place for more than i owe, i get that awesome capital gains tax. where do i sign?
Don’t even get me started, Catherine. Some of the boneheads down here in south OC want 4-5K to move in. Like I am parting ways with my money so you can blow the deposit. Then when I leave I have to go to court to get it.
Unfortunately, I was cranky this morning and when I came home for lunch and saw the email photos of homes for rent I just ranted and my poor wife had to listen to it.
These are regular run-of-the-mill homes asking anywhere from 2-2.5K/month and to move in…YOU BETTER PONY UP 4.5-5.5K. Good Gawd! With all the numbers we have seen, just how many of these FB LL’s believe that anyone is even left with 5K to just hand over so you can pay the back taxes and take a nice vacay? Even those of us who have it aren’t going to part with that kind of money that easily.
http://losangeles.craigslist.org/ant/rew/450996938.html
$1700 4+3 or better single story pool 93551
Reply to: hous-450996938@craigslist.org
Date: 2007-10-16, 1:54PM PDT
I’m looking to move to a new rental. I’m in no hurry as I’ve got month to month with a good landlord.
I’d like to find a single story 4+3 in a good area of 93551 with a pool, preferably on a large lot.
I’m not looking to rescue a stuck flipper and will perform due diligence on offered property, so if you are facing foreclosure there is no need to apply.
Please respond with property address so I can take a look. No bashers please, you won’t be able to convince me that your property is “special”, and worth more than my offered $1700.
Prof. Bear,
OFHEO announced today that the 417K limit remains inplace for next year.
It will not be raised.
Is this announcement bailout-bill proof?
Jumbo me this, Batman?
Every home in suburban California is “worth” more than $417k, but are they really?
“Home sales in Southern California plunged to the lowest level in more than two decades, as financing with ‘jumbo’ mortgages dropped by half. The median price paid for a home dropped sharply as a result.”
Not for long…
Most SoCal households do not, I repeat, do not have the permanent income necessary to pay off a home loan in excess of $417,000. The only way they could get sufficient permanent income would be lots higher wage inflation that what seems to be in the cards.
Yup, time for all those undocumented strawberry pickers, PT manicurists and Walmart workers to march on Washington and demand a 600% raise immediately!
BWAHAHAHAHAHAHAHAHA!!!
Wage inflation is the one thing I don’t think we will see.
Damn skippy - ain’t gonna happen this time around.
Somehow someone is going to think up a way to push loans again. I have been thinking about it all this week on how I could start doing them. If you did them stupidly for a year, you get a ton of money and walk out on the company and for some reason nothing happens. You either get bailed out or just take your profits and let the company fall apart. No bad happens. Why not milk the systems yourselves?
“‘It doesn’t matter if prices go down another 10 percent,’ said Ben Balsbaugh, residential sales manager for PMZ Real Estate in Stockton. ‘In the long run, they are going nowhere but up.’”
There ya have it — real estate always goes up, in the long run.
but it’ll never go so high that it’s beyond a salesman’s pitch.
Oh look! a whole BUNCH of articles about why not to buy now!
http://articles.moneycentral.msn.com/Banking/HomebuyingGuide/HomebuyingGuide.aspx
How timely! By high, sell low. The mantra of the average j6p.
Oh the humanity!!
Ok, which of us has the new job at MSN?
I loved the article headline, “Why rent? To get richer!”
Munch munch munch. I’m popping the corn as fast as I can. Everyone into schadenfreude, click on MacAttack’s link.
Oh my, I’m saving those for the bulls. I cannot claim as long of a history on the housing blogs as others, but I’m past 18 months now. 18 months of wonder “when are we going to see clear evidence” is over. “The event” is here.
Got popcorn?
Neil
Neil, please ease up on the popcorn, you’re starting to drive up the price of butter…
Kill that elephant. We could use the lard so we don’t have to make a butter run.
I like the one called “3 bad reasons to buy,” which are:
“It’s a good investment”
“I’m tired of throwing away money on rent”
“I need the tax deduction”
We here can debunk these in our sleep, and are tired of doing so, but it’s great to see MSNBC catching up.
Oh look! Lending Tree, Quicken, Countrywide, and BofA at your service for your loan. My grandpa used to service the cow to make her have a calf and be fresh, is it the same thing? Seems to me - - - -
Wow … wow … wow … My 2004 / 2005 self is looking at this blog post in utter satisfaction.
Smugness does not begin to describe the feeling. I think that I may have tears in my eyes. This is starting to get fun!
Yep, this is becoming like a mudball rolling downhill, getting larger and larger as it picks up more mud on the way down. I love it. Everyday the news keeps getting better and better. I even like the fact that we’re having just a teensy sucker rally like Mish or Charles Hugh showed on the chart, when some folks start shopping. And it is all downhill from there. Get out those skis, folks, it’s time for some downhill. Slalom, anyone?
Yeah, and on top of that, the MSM is beginning to steal our lines at a steadily increasing clip. They started doing it like a year ago, but it’s getting better and better
Hey MSM, quote this: FB stink!
I would be feeling a lot more chipper if the dollar weren’ t crashing, if layoffs weren’t spreading quickly (intel-just canned 2,000), if everyone and their grandmother weren’t in debt,
if food prices weren’t skyrocketing, if the country’s infrastructure wasn’t in terrible condition, if thousands of American lives had not been lost in Iraq and Afghanistan, and tens of thousands more terribly injured, if there were some integrity in government on any level-local, state or federal, if anyone at the Fed or the Senate Banking committee were actually committed to doing the best for America and I could see some hopeful signs for the country’s future.
Unfortunately, I see fraud, waste, dishonesty, and a long road of more of the same. The fun of watching the bubble burst is gone for me…now it’s just discouraging.
Oh, don’t be like that. Revel in the suffering of your neighbor, Spike66. Chin up.
I would be feeling a lot more chipper if the dollar weren’ t crashing… if everyone and their grandmother weren’t in debt,
if food prices weren’t skyrocketing
Same here. I’m very much afraid that the solution to the current problem will be hyper-inflation. For a debt ridden society, is there really any other way out?
I lived through hyperinflation once - you can’t buy assets at any price, because money is worthless. Meanwhile, your salary remains the same for much longer. One can literally go from relative prosperity to hungry and homeless at times like those.
Do you think the elite will care? No, they will be alright when the dust settles. The rich will get richer, but the “middle class” will be completely impoverished.
I love how Dataquick blames the whole drop this month on the “credit crunch”. Although this must be partially true, they don’t provide any evidence. The funny thing is that “credit crunch” is just going to spark another larger credit crunch in a few months. I wish they would point that out. The “credit crunch” will soon become the norm.
Posted somewhere above, I don’t believe the “credit crunch” crap, because what I am seeing is … no loan demand.
“‘It doesn’t matter if prices go down another 10 percent,’ said Ben Balsbaugh, residential sales manager for PMZ Real Estate in Stockton. ‘In the long run, they are going nowhere but up.’
In the long run, living in Stockton means you have nowhere to go but up.
..in flames.
When you eventually decide to burn the POS for the insurance.
“From KCRA In Lincoln, CA. “Days after receiving her property tax bill, Annemarie Boyle still can’t believe it. Boyle said her bill was up $2,400 from last year and didn’t have the money in her escrow account to cover it.”
“Boyle couldn’t understand how her property could have increased in value when homes around her were selling for rock-bottom prices and going into foreclosure.”
Something is very wrong with this statement. California’s Prop 13 only allows a 2% increase year to year unless the property is sold, major improvements are done or you refinance. Want to bet she refinanced to the max and it’s caught up with her?
prop 13 doesn’t go up if you refinance.
–
Anyone here who thinks that SoCal is in recession?
SoCal Home Sales Down 65% From Jun’05 and Down 61% From Two Years Ago
This should be enough evidence, IMO.
Jas
I’m rather sure of it. Record foreclosures, retail establishments slowing down, commercial/retail for lease signs sprouting up like mushrooms, used cars with for-sale signs littering all the streets, boat lots clearing out and disappearing, abandoned housing developments that the developers apparently gave up on leaving half-finished projects, REOs being listed for months and months with mold growing on the signs…
The business I work for has been slowing down for 9 months. Vendors and customers of ours are saying the same thing almost universally - they’re orders are slowing down significantly, that’s fa shizzle dizzle.
FWIW, I also believe people are driving worse. But that could just be me.
Once the Zombies are all gone (which can take a while), continue. You’ll end
up in a storage room. Crawl your first way through (kill the Zombies) and find
the forktruck. Put a crate on the front, lift it up and use this new path to
reach the highest platform. Continue to find some toxic waste.
Haha. From http://faqs.ign.com/articles/827/827388p1.html
I really get the feeling, that the Golden State is gonna be a victim of the bigger they are, the harder they fall goings on.
People have made a sport out of spending money they don’t have, so very much of it to impress people not worth impressing.
The money well has run dry…
..people not worth impressing..
if i may misquote Twain:
Be yourself.. those who matter won’t mind and those who mind don’t matter.
“One exception is D.J. Johal, a Repo Home Tour veteran. He’s been on three Saturday tours, bought one home and has a deal on a second that he hopes is near closing. He just closed a deal on an Eighth Street house that was listed at $219,000 four months ago and then was lowered to $110,000.”
Key word in that quote is “veteran”, as though he has been doing it for years.
Why do people have such a short time horizon, either forward or back?
Bud: A repo man spends his life getting into tense situations.
Miller: The life of a repo man is always intense
One exception is D.J. Johal, a Lodi resident who owns two used-car lots in Stockton.
http://www.recordnet.com/apps/pbcs.dll/article?AID=/20071016/A_NEWS/710160320
I tried posting this a few minutes back, but I think it gotten eaten. Sorry it double posts…
How would you feel about having the jumbo loan amount be a multiple of W2 or other documented income or a fixed max % of W2 gross, rather than some number picked out of thin air, by some govt hack?
I’d rather lend 5x to someone with a large income, than lend 10x to someone with a smaller income.
P.S. a copy of the W2 and a photo of the borrower would have to be stapled to every page of the closing docs.
“P.S. a copy of the W2 and a photo of the borrower would have to be stapled to every page of the closing docs.”
Why ?
W2..proof of income..
Photos..I meant a photo of the borrower signing each page, so he can’t claim fraud by saying he didn’t sign that page..
What?. No mirror to fog?. You’d NEVER make it as a lender.
The GSEs were instituted to help low-income borrowers, not everyone. The W-2 multiple thing would be OK, but it would have to be restricted to those in like the 30th income percentile or less.
Screw that. There should be a category for *any* first-time buyer, regardless of income.
I’m getting a little tired of finding that every program intended to help “low-income” has an income cut-off exactly $500 lower than what I make. I’m starting to suspect some bureaucrat somewhere has made me into an index.
anybody else’s posts getting eaten?
I haven’t tried any that didn’t appear (if this one appears)
At certain times the server may be maxed out or near capacity due to too many viewers/posters being online simultaneously. That’s why some messages are slow to post too. When REALLY overloaded it may ‘eat’ the message, it’s happened to me a few times as well. Take note tho that some messages may not post until the next day leading you to think they were eaten.
For me it proves that this blog is one of the best on the topic. And it’s getting more & more hits as people become ‘enlightened’ regarding a RE bubble that the pundits denied even existed just a few months ago.
Did I miss the thread on the countrywide layoffs? 12,000!
http://www.bloomberg.com/apps/news?pid=20601087&sid=aF.tFOaHQV1U&refer=home
Got popcorn?
Neil
“Hearing nuns’ confessions is like being stoned to death with popcorn.”
Bishop Fulton J. Sheen
Hoz: I love it.
B. Fulton Sheen was a prize.
I shorted cfc when it was $40 / share. Too bad I covered around $28. I could still be holding. My Lend short treated me much better $70 -> $12. Very niiice.
I finished my 4th cycle short on CFC today. I’ve now made $30/share and I started at $33.
These banks have this game with 3 cups and 2 balls, and if I pick the right one with or without a ball under it, they let me become a slumlord.
“‘I learned that these banks already have been sitting on some of these properties for quite a long time, and they’re willing to play ball if you make a reasonable offer,’ he said.”
What makes a bank think that I would make a “reasonable” offer on a house that has been sitting for “quite a long time”. An unreasonable amount of time spent sitting should correlate to an unreasonable offer, no?
sounds reasonable to me ..
Countrywide may announce charge-offs for bad loans totaling $1 billion over the next two quarters, Goldman, Sachs & Co. analyst James Fotheringham wrote in a report today. Of that amount, he expects third-quarter writedowns of $500 million in mortgages and $350 million in “residuals,” or bonds backed by mortgages.
Hmm..Is this the first report that references a specific company and the “B”, as in billion, word?
Seems to me, that it very might well be the case.
i’m pretty sure i recall Wells Fargo and BofA writing off near $3 Billion each about a week ago.. but this is still small potatoes .. WF’s lending arm has assets of something like $500 billion.. or was it $750B… i forget
Seems like they are trying to let the air out as slowly as possible.
Citi took a $3.3 billion hit and Merrill Lynch..snip… a $5.5 billion charge…
John McDonald, an analyst at Bank of America, expects JPMorgan to take a $1 billion hit to write off 3% of its total loan financing commitments.
Sanford Bernstein’s Howard Mason predicts JPMorgan Chase will take a $2 billion hit.
..blurbs cut from this page from TheStreet..
http://tinyurl.com/yryesa
Finally, Los Angeles affected. Now how bout the beach areas.
Guess you are interested in beach areas near LA, but I will just report that the one Morro Bay house I am watching as a bellwether just posted its third price reduction. Down to a mere $525 per square foot (not a fixer, but a POS anyway). Big fat deal, she drops the price by about 4%-5% each time.
Lainverstorgirl:
“What about LA?”
“Finally LA.”
“Now how about the beach areas?”
“Finally the beach areas.”
“Now how about Palm Springs?”
“Finally Palm Springs.”
“Now how about…”
Sorry, couldn’t resist.
DOC
Well, according to, “My is Worth What?”…
Beachfront property is up from 2006 to 2007..
They had some chick and her BF, that were thinking of selling her condo on the beach. She paid something like $1.1 million in 2006, out in $20k in custom closets. The broker thought it would fetch $1.3 or something like that.
Admittedly, I don’t know Cali at all, but from what I have read here and elsewhere, there is no f’in way a small condo went up by 20% during the 06 - 07 period.
LA has been “affected” for years now, as house prices and sales have been decreasing across the board. LA Investor Girl: Please tell me your definition of affected.
SM and Venice still up, not down.
It’s a bit specious for you to say SM is still up. Last month there weren’t enough sales in most zips to really tell.
Don’t cite wishing prices to prove your point, they aren’t even nearly reasonable, and you know it.
That is simply not true. They are down, albeit marginally at this time. Plenty of wishing prices, of course.
You just get yourself that Hawaiian Tropic ready, young lady.
No wonder everyone wants to live there, it’s so trendy, so hip, it’s well worth paying double anywhere else to be in West L.A. Just remember, dress all in black, drive a silver BMW, and spike your hair, or they’ll think you’re a rube and point and snicker. Do not, I repeat, do not let a conversation go by without some casual entertainment biz name dropping, or they’ll think you’re a nobody. It’s all about what “they” think of you.
“September’s price was also down $60,000 from a year ago. (Prices are still up $386,000 from the ‘96 low!)”
That’s OK. Give it another year or two, I can wait.
Yes, but this year will still be the “11th best” on record!
What I want to know is this:
When did the credit crunch officially “end”? I thought it was still on. Are jumbos back en vogue?
There is still a credit crunch. People just accept you have to have some cash to get a jumbo. Hence, the low sales volumes.
Got popcorn?
Neil
Because they accept the fact but lack the cash, hence the low sales volume too.
Oh, Gary Watts … what do you have to say about these OC numbers?
It’s ‘in the bag’ alright … atleast Gary’s halfway there.
I prices keep dropping this quickly at 5%-10% each month, Gary may be right that we do hit bottom next year.
Which for him would be sheer dumb luck.
As far as I’m concerned Gary himself hit bottom this year.
“The absence of interest led investment partners Chris Hansson and Larry Paul to try selling the units at an upscale auction held at the Lodge at Sonoma in April. Despite a reserve 35 percent below the asking price, no bidders came forward and the auction was canceled.”
Ok, Chris & Larry, time for a quiz in Auctions 101.
Q: what is this result telling you about your reserve price?
“Sue Paul said she took over the listing and was startled to discover it had not been previously placed on the MLS. ..”
Is Ms. Sue Paul related to Mr. Larry Paul one of the investment partners? Have they sold any units? In a year does one believe they should have taken the bailout offer? If they are married what is the chance of divorce over this POS?
I thought this article was hysterical. 5 years for a minie construction project and riding it down. Are there any jobs in Sonoma?
Isn’t the whole concept of a reserve price contrary to the very principle of having an ‘open’ auction with an established ’starting bid’ ?. This crap needs to go away before LEGITIMATE auctions can happen.
““‘It doesn’t matter if prices go down another 10 percent,’ said Ben Balsbaugh, residential sales manager for PMZ Real Estate in Stockton. ‘In the long run, they are going nowhere but up.’” ”
Okay Jackass, let’s look at your illogical, idiotic statement.
So, at your urging, some dolt buys a $350k s**tbox and puts 10% down. Cash. that’s 35k. Based on the “FACTUAL 12 % pricedrop” just over the last two months, anyone with a child’s grasp of logic would expect AT LEAST another 10 percent drop in price in a couple more months–say by Jan 07′–WITH FURTHER DROPS TO FOLLOW…THIS IS STOCKTON YA MORON–YOU LIVE THERE AND KNOW–IT’S THE CRIME-RIDDEN BUTTHOLE OF CALIFORNIA!!
Based on your statement knifecatchers are supposed to think “it doesn’t matter” when they watch their $35k turn to vapor because “in the long run, their houses sare going nowhere but up?”
Would’ve been nice if the asshat reporter asked you what you meant by “long run?”
DOC
I went to our local library recently and found on microfish, that the 1996 median CA price was $196,200. It seems we are so far away from that now.
Does anyone think we will ever see that CA median price again?
I didn’t know fishes live 11 years, anyway, it’s probably not a micro any more , probably a mackeral
Garrison’s prolly just ficheing for compliments about his editing abilities.
Prices will eventually fall to the level of affordability, imo. For prices to drop further than that, median incomes themselves would have to decrease.. Given adequate time, prices would follow.
For that to happen the Calif’s economy would need to suffer an extended period of negative growth. I don’t think there’s enough solid evidence to reasonably predict such a thing.. yet.
LOWER.
Riddle me this:
If you take out a suicide loan and then default, can you sue the bank for wrongful debt?
Only after you’ve committed the suicide.
More Housing Hanky-Panky
I’m shocked. SHOCKED
What else do you expect from a former Goldman Sachs (NYSE: GS) honcho who’s presiding over an epic housing crash? Tough love? Free market economics? Please. It’s all about keeping people happy, no matter what the cost.
Today, at Georgetown’s law school, Treasury Secretary Hank Paulson made that plain. He followed up on yesterday’s Wall Street bailout debacle by telling the world, “Let me be clear, despite strong economic fundamentals, the housing decline is still unfolding, and I view it as the most significant current risk to our economy.”
You think, Hank?
http://www.fool.com/investing/general/2007/10/16/more-housing-hanky-panky.aspx
It is hard to think in such terms today, but I suspect that in 5 years everyone will look back on this popping of this real estate bubble as the trigger event for most significant economic event in the last 70 years. Today we can’t see it. But it will be crystal clear in 5 years to everyone. People will be talking about this long after all of us are gone.
Housing crash. Stock crash. No savings for most. Bubble Boomers retiring to the tune of 10,000 each and every day for the next 20 years. This will have devastating economic consequences.
This is just beginning. Wait 5 years for the clear view.
I’ve always been a sane, conservative investor. Didn’t lose a penny in the “dotcom” bubble, nor did I ever consider an ARM, a HELOC, etc. (Had a 15-year fixed mortgage.) Split my investments 50/50 between stocks and bonds (with 20% of stocks in foreign markets).
However, I’ve recently started to buy gold! I never thought I’d be one of those gold nuts, but after meeting some people from Argentina, I thought it would be a good idea to have enough $$$ in gold to subsist a few years, if needed. I started buying this month, and plan to dollar cost average over the next year until I hit my goal.
Nicely stated, joe momma.
Most people simply can’t or won’t think in such terms today, and they won’t be adequately prepared as a result. But we’ll keep trying…
http://mitpress.mit.edu/catalog/item/default.asp?ttype=2&tid=10055
The Coming Generational Storm
What You Need to Know about America’s Economic Future
Laurence J. Kotlikoff and Scott Burns
I thought this book was worth the read. 78M Baby Boomers retiring-how are they/we going to fund the entitlements and costs?
Home equity - Reverse Mortgages? doubt it.
Print money? yep
Tier system? absolutely
Kill us off with Chinese tainted products? here now.
Speaking of Chinese tainted products (Episode 1 discusses wood for building and steel) Episode 2 discusses clothing, pharm, and other facts-
UCI (Irvine) Grad School Profes. Peter Navarro
The China Effect Videos 3 & 5 minutes long only:
http://video.google.com/videosearch?q=the+china+effect
I’m holding on my ‘tickets’, its going to be a real rollercoaster ride. Yikes!