No One Wants To Make A Bad Decision In California
The Contra Costa Times reports from California. “Bay Area home sales sank to their lowest point in about 20 years in September and jumbo mortgages fell by almost 50 percent, DataQuick reported Thursday. Homes purchased with jumbo mortgages, or those over $417,000, dropped from 3,762 in August to 1,935 last month, a decline of 48.6 percent.”
“A total of 5,014 new and resale houses and condos were sold in the nine-county Bay Area in September. That was down 31.3 percent from 7,299 in August, and down 40.1 percent from 8,374 for September a year ago.”
“Contra Costa County also dropped 48.7 percent from 1,784 to 916 while Solano County also dropped 47 percent year-over-year from 606 to 321.”
The San Francisco Chronicle. “A total of 5,014 new and resale homes and condos were sold last month in nine San Francisco Bay area counties — a 40.1 percent decrease from the same period a year ago, according to DataQuick. Last month was the slowest September since the firm began keeping records in 1988.”
“‘A lot of escrows just didn’t close in September because the buyers couldn’t get financing,’ DataQuick president Marshall Prentice said. ‘Some of those sales might close this month or next, but many of the deals are going to be put on hold or die on the vine.’”
“As Marcus Ison moved his belongings into his new townhouse in San Pablo’s Devon Square development last week, he had mixed feelings.”
“His excitement about buying his first home was tempered by a sobering reality: Outside, bright red signs announced that two dozen homes in the development would be sold at auction within days, with starting bids of $250,000, far below the $415,000 he had just paid for his three-bedroom-plus-den unit.”
“‘For the sake of my property values, I’m fairly anxious about the upcoming auction,’ said Ison. ‘I’ll cross my fingers and hope there will be numerous bidders to drive the price up. As a first-time home buyer, this has definitely been a bittersweet experience.’”
“Jeff Lawrence, Northern California regional manager for Watt Communities, which will auction 25 Rohnert Park townhomes Nov. 4, said that while some homeowners are disappointed, many realize it’s to their advantage for the community to be fully sold.”
“‘It’s difficult for homeowners to compete with the builder if they want to sell their home,’ he said.”
The Mercury News. “Sales of newly built homes in California fell nearly 45 percent in August compared with a year earlier, a home building trade group said Wednesday. In Santa Clara County, sales of new homes…declined 38.5 percent from August 2006, according to the California Building Industry.”
“‘Just when we had started to see signs of stability in some markets, the difficulty in gaining access to credit has made purchasing a new home unattainable for many prospective buyers,’ said Jonathan Dienhart of Hanley Wood Market Intelligence.”
“Many prospective buyers are shying away from purchasing now while they watch prices. In many parts of California, including many Silicon Valley neighborhoods, prices are falling. Fewer people are willing to buy when they believe they could get a similar home for less money a few months later.”
“In the Stockton area, for example, just 67 new homes sold in August this year, compared with 202 in August 2006, a decline of 66.8 percent. Statewide, a total of 3,420 new homes of all types sold in August, down 44.7 percent. Of the different housing types, condominium sales were hardest hit, dropping 54.7 percent from August 2006.”
The Press Democrat. “In Sonoma County, home sales plunged 40.8 percent in September, compared to a year ago. Buyers purchased 218 homes last month — about half the number of sales during a typical September and the worst showing for the month since 1991.”
“More buyers are sitting on the sidelines in Sonoma County, wary of purchasing homes as prices continue to fall.”
“‘It’s been very slow all over the place,’ said Joan Picard, president of the Redwood Empire Mortgage Lenders Association. ‘What’s happening is the buyers are waiting for the bottom.’”
“The number for sale in the county has climbed, reaching 2,786 in September. At the current sales pace, there is a nearly 13-month supply of homes for sale, the highest level for the month since 1991.”
“No buyers have made an offer to buy Geoff and Theresa Purcell’s two-bedroom home in northwest Santa Rosa since they put the house up for sale in November. The couple wants to move up to a larger home but must sell first.”
“‘We’ve seen plenty of houses we like. It’s gotten to a point where we don’t even look any more,’ Geoff Purcell said. ‘We’re stuck. It’s gotten pretty disheartening.’”
“The Purcells have lowered their price twice, a total of $34,000. The couple won’t go lower than the $425,000 they now seek because it would be more difficult to afford a larger house. ‘It’s a very tough market,’ Theresa Purcell said.”
“If they can’t sell soon, the Purcells said they likely would take their home off the market.”
The Sacramento Bee. “The summer seizure that gripped the nation’s mortgage markets and made it harder for buyers to find home loans delivered a nasty blow to Sacramento-area home sales during September.”
“Escrow closings for new and existing homes hit a new 2007 low with 2,371 homes changing hands in the eight-county region, according to DataQuick… 603 fewer sales than August’s anemic tally. That compared to 3,558 sales in September 2006 in Amador, El Dorado, Nevada, Placer, Sacramento, Sutter, Yolo and Yuba counties.”
“Sacramento real estate agent Rosanna Garcia attributed the dive to new lender standards that are blocking many would-be buyers. She said a fear of falling prices - ‘how much more are they going to drop?’ - is also keeping many from buying.”
“But the region’s falling prices have opened up a new segment of the market, according to Trend Graphix, a division of Lyon Real Estate. That’s homes priced below $200,000. The Sacramento Association of Realtors reported 9.5 percent of existing home sales in September were priced under $200,000.”
“Sacramento County’s median price for existing homes was $310,000 in September, down 17 percent from an Aug. 2005 high of $374,000. Placer County’s median price for existing homes was $405,000 in September. That’s 20.7 percent lower than the county’s Aug. 2005 price peak of $505,000.”
“The 1,234 escrow closings for new and existing homes in Sacramento County were the lowest since DataQuick began keeping records in 1989.”
The Victorville Daily Press. “In a sign that local developers and homeowners alike are feeling the financial pinch, Hesperia is considering foreclosing on 143 parcels in the Mission Crest development, where some property owners have not paid special taxes.”
“About 50 percent of the parcels facing foreclosure are dirt lots, some with concrete pads, owned by developers Prestige Homes, Beazer Homes and Empire Land.”
“‘The national issue is basically on our doorstep,’ said Brian Johnson, Hesperia’s director of management services in reference to declines in the national housing market.”
The Press Enterprise. “More than 8,100 homes changed hands in Riverside and San Bernardino counties in September 2006, according to DataQuick. A year later, only 3,717 homes were sold, prices are 11 percent lower, and one economist who watches the Inland area said he expects the slump to last into 2009.”
“‘The big problem, of course, is that buyers have no sense of urgency,’ said Steve Johnson, director of Metro Study. ‘No one wants to make a bad decision.’”
“Randall Lewis, executive VP of Upland-based Lewis Group of Cos., which develops new-home communities, said Eastvale developers have been taking more than $50,000 off the prices in some cases.”
“Esmael Adibi, chief economist for Chapman University, said he thinks the slump could last into 2009 and beyond. ‘Two things have to happen for this to be fixed,’ Adibi said. ‘Home prices have to come down more and incomes have to come up, and I don’t see that happening in one year.’”
The Wall Street Journal. “Walking away from a mortgage is almost always a bad idea. You can lose your ability to take out future loans, and you might find the lender coming after your personal assets, such as your principal residence, depending on your state’s laws and the terms of your loan.”
“In some cases, lenders can go after an investor’s other assets to satisfy a loan if the borrower defaults. But that often depends on the loan agreement. Most loans are recourse loans, which means that the borrower’s other assets may be at risk.”
“Partnerships and LLCs are good to ‘protect you against slips and falls on your property,’ adds Jay Adkisson, a Newport Beach, Calif., lawyer, but they offer little protection if a lender requires you to sign a personal guarantee.”
“Mr. Adkisson says he has received about 30 calls a week in recent months from real-estate investors seeking to shield their assets, just as lenders are beginning to chase after them. ‘There’s just an absolute flood of people seeking asset protection, and it’s all after the fact. It’s like buying auto insurance after the car wreck.’”
Here is the Dataquick link.
Ben-
Warren Buffet just said what I said last week (wow!!):
“I don’t see any way that pooling a bunch of mortgages, changing the ownership, is going to change the viability of the mortgage instrument itself — whether people can make the payments,” he said. “It would be better to have them on the balance sheets so everyone would know what’s going on”
http://www.bloomberg.com/apps/news?pid=20601087&sid=ad0OvQgcATwI&refer=home
If a moron like me can figure this out…
“Buffett identified the Brazilian real as the unnamed currency he said in May that he owned, noting it has doubled against the U.S. dollar in the past five years.
“During much of that time, the Brazilian government has in effect been supporting the U.S. dollar,” Buffett said. “They have been buying dollars in the market, they have been building up their own reserves. Their current account has turned into a good surplus,” while the U.S. is behaving like “the Brazilians or the Argentinians 10 or 20 years ago.” .
“…the U.S. is behaving like “the Brazilians or the Argentinians 10 or 20 years ago.”
sad but true, it wasn’t a pretty picture in Brazil in the late ’80s. If we go the way of Argentina, I’m going on vacation far away.
Buffet saying that is… scary.
Got popcorn?
Neil
Buffett has been down on housing for some time. Philosophically, he’s an excellent fit for this site. (Who knows, maybe he’s chimed-in a few times!) I’m happy to see that he’s critical of Citi’s M-LEC and showing it for the shell-game that it is.
Also, Buffet is not buying CountryScam, HOVnanian or Bear Stearns - All rumors that were not true:
Wait a second … is Ben Jones really … WARREN BUFFET?
Yes
Well, certainly I’ve never seen them in the same place at the same time. How about you?
No wonder he can afford to do this.
With a post title of “No one wants to make a bad decision in California” you know that both Ben and the chat gods have a mean sense of humor
I expect CountryScam’s stock to drop significantly tommorow on this news…
CountryFried will be CountrySlide
I attended a San Diego Bankrupty conference the other night with 4 mortgage/loan specialists with about 150 years of experience in residential/commercial mortgages. The general concensus was that the real problems have not even begun to emerge. However, the experts also indicated that borrowers should not ask for work-outs unless they can demonstrate an ability to fufill their future obligations notwithstanding the fact that they fell behind. I was astounded by the lenders arrogance and disdain and disregard for the mortgage fraud that put borrowers (yes, I know, they signed the docs, etc blah, blah. . . ) in a “no-win” situation. It was a lender-friendly audience but I appreciated observing the obtuse position of lenders who will be “eating wood” through foreclosures for many years to come. Save those quarters you find in your couch b/c they will come in handy in about 7 years. . .
The Bay Area is not leaking air any more, as it just exploded.
Agreed…and loving every minute of it..
GS!!! missed you. Welcome back .. will be looking for your postings, they were an important guiding light that lead me to sell early. Thanks!
He’s been here. He also posts as Professor Bear.
how does someone become a first time home buyer of a $415,000 home? This is still insane
The operative word is “insane.” Only insane people are buying houses right now because only irrational people cannot see that real estate has a long way to go before reaching bottom.
He has the income and had the down payment. If closing was last week he bought in August. Some of the bad news was out. He was a bottom picker.
he just got instant de-equity.
Haha, he only bought a home worth 275k though! It isn’t like it is worth 415k!
I don’t think you can become a first time home buyer for anything less than $415,000 in the Bay Area unless you are bidding on foreclosures in a crappy outlying area like San Pablo. You can’t even get a studio apartment in SF for $415,000.
“You can’t even get a studio apartment in SF for $415,000.”
Which begs the question: “Why buy anything in SF?”
Exactly. Just got home from a training in Oakland, CA. Saw a big sign advertizing the Eight Orchid condo tower. Urban, smart,etc. 1br condos from high 300s. Why pay nearly 400k for a 900 sf condo in a crime ridden hood? Just say no I say.
“I’ll cross my fingers”
The investment strategy of todays “investor”.
Having read many posts and comments on blogs such as this over the past few years, it won’t surprise me to see first time buyers purchasing even more expensive homes than this in 2009 or 2010….for cash.
It would surprise me a lot, given that the average American spends 2% more than they earn each year. Show me the household that has $500,000 cash and wants to buy a house, and I will show you a fool about to be parted from his, well, never mind.
Psychology has definitely changed over the past 5-7 years. I remember a starter home in Portland was about $150K in ‘99-’00. When I bought my first home at $165K in 2000, I thought I paid too much. It was still a starter home in 2006, but sold for $330K.
speaking of home psychology … caught myself today thinking of a $139,000 house as affordable, ( wow its ONLY 139K !) when looking at some fixers in the area . .. when back in 1999 I remember hoping to not go above 100,000 when looking for a nice new home.
talk about perspective; wow! I mean I actually was thinking its about time housing became affordable & happy to see houses drop from the 300,00 range min to 139 ish. But then you have to put it in perspective & really think back to howmuch ( or little ) it should really cost. $75,000 and up was, and is, STILL a lot of money in my book for a house.
So . . . the relief to see it drop in half is nice but I still need to keep a grip on reality .. keep perspective in check / not be too blinded with happiness over the long overdue price drop.
They need to drop more.
300K to 139K?
Where is this?
I’m pretty sure Aquis is in Sacramento. I just watched a 74k overnight drop on a bank-owned house. Start 329 and off the market at 219. I’m guessing the bank settled at 195-200.
Blessed are the comp providers for they shall inherit a mortgage larger then me.
Some time ago I came up with another pricing method for houses - the average house should cost 10x the average car. Think about what cars cost in the sixties, seventies, & eighties and what houses cost then.
The Wall Street Journal. “Walking away from a mortgage is almost always a bad idea. You can lose your ability to take out future loans, and you might find the lender coming after your personal assets, such as your principal residence, depending on your state’s laws and the terms of your loan.”
Hey if you don’t have the money or cashflow, what else are you going to do? You have a life to live, not work three jobs to try to make payments. Let the bank take it back.
IMHO the WSJ article was paid for by banks. It is a joke.
I read it this morning and laughed. No real info in it…
If the banks did pay for it then they paid the wrong paper! Pay to put it in US Today, not the WSJ.
Not any more. Remember that the WSJ is now a branch of Faux (Fox) News. When Rupie bought it its credibility went buh-bye.
Do you think banks are getting truly nervous about this possibility? If everyone starts thinking rationally, they may see a huge deluge.
As a society, there was a time not so long ago, when the horrible social stain of bankruptcy was a great persuader to get people to stick it out, when financial travails happened…
Nowadays, bankruptcy is a badge of courage for many.
My great grandpop had a store. When the 1929 crash came nearly all the credit customers could not pay. Store closed. But he and his sons worked all through the depression to pay their vendors. Did not want to disgrace the family name.
My grandfather built a lot of commercial buildings in Los Angeles and they always did it with a handshake. No contracts needed.
He got out of this business 20 years ago because he couldn’t trust anyone anymore.
This country has turned to complete shit.
Y
Yes, banks are nervous and scared and will use any resources real or bogus to try to keep people in houses. Future economic historians will look at the last 15 years and write dissertations in a futile attempt to explain what these financial wizards were thinking.
headlines in The Guardian Financial “tonight”
Wall Street Bank of America hit by crisis
Mr. Kenneth Lewis Chairman B of A “I’ve had all the fun I can stand in investment banking at the moment.”
Wall Street Bank of America hit by crisis
“Mr. Kenneth Lewis Chairman B of A “I’ve had all the fun I can stand in investment banking at the moment.”
Nuf said
“Mr. Kenneth Lewis Chairman B of A “I’ve had all the fun I can stand in investment banking at the moment.”
He’s become sick of his own game.
Ken, couldja tell me why it is my IRS payment went to the Bank of America? Just asking.
huh? You didn’t send it to Kansas City or wherever?
I sent it to Atlanta, Georgia. However, the return receipt is stamped “Received Bank of America, College Park, Georgia, Agent for Internal Revenue Service.” I assume the IRS account is with BofA. Must be a nice piece of business.
“Future economic historians will look at the last 15 years and write dissertations in a futile attempt to explain what these financial wizards were thinking.”
They flipped out. They went mad with greed. In a way, what we are sometimes trying to do on this blog is make sense of insanity, which is impossible. The question is, what made so many people, from top to bottom, go mad all at once? Or, more to the point, what enabled many of us to retain our sanity? If I were a philosopher who had the best interests of the people at heart, I’d like to know what is the factor that enables some people to retain sanity in the face of mob insanity, isolate that factor and try to restore that factor in those who went insane.
I can speak for myself. I am naturally suspicious of motives and do not follow herds in any part of my life. Very individualistic
Yes, I don’t follow the herd either. Individualistic as well.
As for myself, I am not too suspicious. If I had been, I would have realized what was going on much sooner than I did. For me it’s more a question of things making sense. I know zip about financing or real estate, but the appreciation just didn’t seem to make sense and none of the explanations made it sound right to me. Then I got to this blog and everything started falling into place. It made sense.
I’ve learn to question everything. This makes me a very unpopular person in many circles because I tend to dampen exuberent enthusiam when ever I find it, and I find it everywhere.
People like myself tend to poke holes in other people’s dreams and illusions by pointing out stark realities, thus are rarely invited to join social fanfairs.
Last week at a coffe shop hangout I was introduced to a young real estate/mortgage broker who had a line of bull about helping the homebuyer by not charging his end of the sales commission IF the used him for financing, bla, bla, bla. I asked him if it was on the back-end of the loan was where he made his money.
He hesitated for a moment, then said yes. This is when his whole demenor changed; by my asking the question he recognized me as a credibility threat the BS he was laying out to everyone else.
I have no doubt he trashed me as soon as I went home; it was a necessary action for him to nullify my credibility.
Such is life.
For me, it was my friend Jen (who’s probably reading this) who helped me understand the problem by showing me Patrick.net. Like Casseopia, I could not figure out what was going wrong. People around me seemed perturbed by my constant probing. I was often told not to try to figure out “why” things are the way they are, but to simply accept that they are. A few explanations were floated, but none of them were satisfactory.
I was constantly burdened with this impending sense of “buy now or be priced out forever”. Luckily, Jen had taken a real estate class and her teacher implied the bubble. She was good enough to make sure that I understood the fundamentals. From there, it was up to me to absorb it and understand that a full explanation had been made. It was up to me to identify the point at which logic had been reached. Jen has had similar conversations with a lot of other people, but most of them were unable to recognize the completeness of the bubble logic. There was something missing in their brains that should have allowed them to see that it had been dark, but now was light. I call it “intelligence”.
So, in my case, it was a combination of altruistic teaching and intrinsic intelligence that saved me from the great housing bubble of the second millenium.
“I’ve learn to question everything. This makes me a very unpopular person in many circles because I tend to dampen exuberent enthusiam when ever I find it, and I find it everywhere.
People like myself tend to poke holes in other people’s dreams and illusions by pointing out stark realities…”
We must have been separated at birth.
I wonder if BAC will their the dividend?
Seems like Kenneth Lewis is just like the monkey effing the skunk……… ” I think i’ve enjoyed about enough of this as i can stand”……. What a revelation and another notch for the lenders on the point of recognition for the coming implosion. It sure is getting real ugly out there and time to buy and put away more physical gold as every day that goes by it seems that the banks are getting closer and closer to oblivion and one really has to wonder whether his cash is safe in the bank for much longer…….
“Walking away from a mortgage is almost always a bad idea.”
What about walking away from fourteen mortgages, all underwater?
wink ~~
Hey GS………ya back
It’s a once in a life time chance to take million from the banks.
And with just a pen.
The big drop of 48.6% in sales is good news for buyers. Credit markets tightening, more good news. Buyers take a break and starting looking late 2008 at the earliest.
Homes purchased with jumbo mortgages, or those over $417,000, dropped from 3,762 in August to 1,935 last month, a decline of 48.6 percent.”
The better half of this story is that all sales dropped 31.8% august to September. Simpy put, the higher priced homes sold at a much less rate than those below the 417K level. This is where median prices drops of the larger variety are borne. No more hiding behind ‘Prices are still rising!’ bull as sales tank. Sales AND prices are tanking. So comes the winter of their discontent.
Yeehaw!
“As Marcus Ison moved his belongings into his new townhouse in San Pablo’s Devon Square development last week, he had mixed feelings.”
“His excitement about buying his first home was tempered by a sobering reality: Outside, bright red signs announced that two dozen homes in the development would be sold at auction within days, with starting bids of $250,000, far below the $415,000 he had just paid for his three-bedroom-plus-den unit.”
My father used to work for a contractor (JT Thorpe) in Emeryville near San Pablo Ave. He would carry a gun if he had to go in at night to pick up a load for delivery in the morning.
The article refers to San Pablo, not San Pablo Ave. Emeryville and San Pablo aren’t right next to each other.
What year was it when your dad used to carry a gun? San Pablo Ave isn’t great, but it isn’t horrible anymore.
Emeryville is more expensive than San Pablo and there’s no way you could buy a three-bedroom-plus-den unit for $415,000, even right on San Pablo Ave.
This might relate to one specific housing complex which was public housing, but was later bought by UC Berkeley and now houses a high concentration of students instead of hard luck types. The overal vibe of this place which is adjacent a significant stretch of San Pablo is extremely unpleasant and makes some want to roll up the windows and lock their doors as they drive by even now.
Ha, you got me. That was back in the late 70s, early 80s, which come to think of it, was exactly like the times we are heading into now. High inflation, energy crisis, etc.
A young woman I used to work with in Emeryville lived in Richmond, CA for a while. The complex looked nice and was next to some expensive new developments. One Saturday morning, while unloading groceries from the car, she was kidnapped at gun point and forced to drive to a deserted lot. Thankfully, she wasn’t assaulted and only lost her wallet and mobile phone.
Richmond, San Pablo, El Cerrito, Oakland, even Berkeley……rough areas unless you live in 1M plus homes way up on the hills.
i live in el cerrito in the flats. no problems with crime since i’ve been here 4 yrs ago. used it live in Oakland for 15 before that. no problems although one has to watch ones back in some parts. berkeley the same, i go there every day for workout. yes there are some rough parts of these small cities,but i think it is untrue to say that these cities are all unsafe unless one lives in the hills.
That entire East Bay corridor along Hwy 80 (Richmond, San Pablo, El Cerrito, even Berkeley) is rough. 400K gets you nothing. It’s hard to imagine anyone being happy about forking over that kind of $$$ to live in fear.
“Rough” is being polite..Richmond is the kind of city where a 14 year-old with a gun killed an 18 year-old execution style because the 18 year-old supposedly disrespected his older brother.
The area is a haven for hoodlums, you have to “pay” me to live there.
Then it sounds like Stockton is the place to be.
At least Stockton has the San Jaquin County Fair…you can go the fair and pay to much for a cheap carnival ride and the go home to ride the price your home down too!
There are segments of San Pablo Ave. in Berkeley, Albany, El Cerrito that are not dangerous.
Richmond, San Pablo, Emeryville, Oakland, that’s another matter.
“Walking away from a mortgage is almost always a bad idea. You can lose your ability to take out future loans”
Until the next boom when they will throw money at you AGAIN.
Brokers were signing up people 6 months out of BK this time around.
1 day out of BK was possible.
Yep.
You mean I sweated over a single 60 del on an old account that was paid and closed 5 yrs ago and these people were handing out loans to people 1 day out of BK?
Maybe crime of the financial kind does pay.
No you were great risk coming out of BK, but not good if you had bad credit from 5 yrs ago. you were high risk.
So was currently in BK if you tried hard enough…
Bankruptcy Filings
Today’s news from California made me curious about bankruptcy filings, so I did a little research here: http://www.uscourts.gov/bnkrpctystats/bankruptcystats.htm. In the 9th District (which includes pretty much the whole west coast) recorded 31,124 business and non-business filings for BK in April, May, and June of 2007. For the same period in 2006, 20,404 filings were recorded. This is a 53% jump! I’ll be curious to see how the next quarter shapes up as the housing market has got to be killing a lot of people.
Great work, Brandon. Very nice catch. Thanks for the data, it is quite an eye opener.
Excellent post, Brandon.
I know nothing about stock markets, but I’ve heard people talk about double tops……………..
Is this what they mean?
http://finance.yahoo.com/q/bc?s=%5EGSPC&t=my&l=off&z=m&q=l&c=
You will only know in retrospect.
It’s a slight throwover as anticipated but it hasn’t turned down yet so the jury is still out. After October is over, unfortunately, we roll into the silly season (bonus time!)
What would that chart look like if it was adjusted for for inflation based on the dollar in 1955?
““‘The big problem, of course, is that buyers have no sense of urgency,’ said Steve Johnson, director of Metro Study. ‘No one wants to make a bad decision.’”
A “sense of urgency” caused a lot of people to make bad decisions, the last few years. So I’d say it’s a good thing.
from the Victorville article
“…San Bernardino County must wait for property owners to be delinquent on their taxes for five years in a row before proceeding to a tax sale, said Annette Kerber, assistant treasurer-tax collector for the county. Hesperia can proceed more rapidly because bonds are involved, Johnson said.
Among the developers who are delinquent on the special taxes, Empire Land LLC owns 18 vacant parcels, Beazer Homes Holding Corp. owns 18 and Prestige Homes LP owns 37, according to the San Bernardino County Assessor’s Property Information Management System.
The city of Hesperia does not want to foreclose on anyone, Johnson said, but it is responsible for monitoring the special tax collections and could face a lawsuit from bond holders if it does not follow through….”
So much for thinking 5 years on not paying property taxes. Another bullet in the FB. How many other California towns financed with bonds in similar manner.
Quite a few new developments were financed by CFD’s. The cities didn’t have the money to finance infrastructure building, parks, storm drains, etc. So they used CFD financing.
Hesperia, there’s a brand new high dollar housing tract around the corner form me with prices starting in the low $400,000. I laugh at it everytime I drive by it because it looks mighty slow there. On a funny note this housing tract has very nice signs to get you there but the gangbangers have been tagging them and a local builder put his sign over one of the high dollar signs. There is a sea of houses for sale in Hesperia with more being added everyday.
A special good morning to Hoz, ex-nnvmtgbrkr(Joshua), and Professor GS Bear.
Just so you guys know, I changed my screen name from luvs_footie to this new handle.
And Professor GS Bear I thought your quip in yesterdays thread was very clever.
We need a roster so I can keep track… I am thinking of changing my name as well.
We need a roster so I can keep track
Then we would not get the great posts like the one from the new housing yanky on panky
How about, “Bubba’s New Boyfriend”
LOL
LMAO!!
I thought about changing change my handle to “People are old enough to know better, they don’t know anything at all”.
And Aladin sane is emperor Norton and Gs is prof Bear and Nnvmrtbrkr becomes ex’d. I get very confused in my dotage and now Luvs_footie is changing the handle to wants to play “hanky panky”.
I am just hoz. It has been with me for decades.
I’m only Emperor on Wednesdays…
grrr…I like alad…Emp…grrr.
I didn’t know Aladinsane was Emporor Norton. Hmph. You learn something every day.
Just so everyone knows, the footie that was referred to in the old handle was Australian rules football.
Hey Slim…………..you must have spent some time down under
A past love (now deceased) spent quite a bit of time Down Under. Haven’t gone there yet myself.
Thank you, I always wondered about that . . .especially after Larry Craig. Not that there’s anything wrong with that.
Maybe I’ll change mine to ForexFumbler, now that I am trying not to make any more mortgage loans. Glad to know though, that in my BRL bond ownership I have Warren B for company.
az_lender,
Forex, written XXXX is a top beer here where I am.
So you see, I’ve seen a few forexFumblers in my time
hanky — are you a Motley Fool when not posting here?
Spot on GS
Prof Bear ………now I’m having the same problem as Hoz. 
GS…er…P’Bear…we met in another…er…blog eons ago.
OK. no. more. name. changes. for. the. luv. of. jeesh.
Pretty Please? (with sugar on top?!)
Just me,
Leigh
The FBI & the IRS seem to be cracking down in Sacramento. A guy I work with rents a house in Elk Grove from an acquaintance. We often speculated on how his landlord bought 3 new homes all in one month last year. Well, on Saturday morning the co-worker gets a knock on the door. It is two special agents, one with the FBI and one with the IRS. They wanted to know about his relationship with the property owner (lease to own, below market rent, blood relative, etc). The relationship is arms length, so the agents leave after about 45 minutes.
The co-worker tried to call his landlord multiple times, but never got an answer. He went to his house Tuesday night and the landlord was acting like a deer caught in the headlights. It turns out the landlord bought the $485,000 house using 100% financing from New Century. He got $125,000 cash back, by using this shady mortgage broker to obtain a $630,000 loan. It turns out proceeds from mortgage fraud are taxable as ordinary income in the year you receive it. Plus, interest paid on illegal proceeds is not a deductible expense. This guy bought 3 houses this way (thank you First Franklin & WAMU). He will owe income tax on over $310,000 of income for 2006, plus interest, penalties and disallowed mortgage interest deductions. Plus, he will be tossed into the AMT bracket which will really goose his regular income, since it will disallow $100,000 of deductions he claims from the equipment leased to his business.
The market value of the houses has dropped to under $400,000 each and his other real fear is if he walks from the loans, he will get another tax bill, this time for mortgage debt forgiveness, in 2008. Yet he can not hold on to the homes after the sub prime rates reset in March and April of 2008.
Add to this the fact the FBI will be booking him for multiple felonies. It is a very wild predicament. He is ready to deal and turn states evidence to stay out of prison. It is likely he will serve some serious time either way. My coworker was wondering if he could buy the guy’s Porsche, but it is leased!
Cheating creates a lot of unintended consequences….
“…My coworker was wondering if he could buy the guy’s Porsche, but it is leased!…”
Bwwwaaahhhhaaa ya gotta love your co-worker…
As far as the rest of your story expect to see more of that scenario…over and over again
its about DAMN TIME the FEDS got off their AZZES & took action !!
If this story appears on the Bee or the Mercury, and the TV stations,
there is going to be a lot of crying .. or flying.
You keep thinking, surely there can’t be this many stories like this, but they keep coming, one after another. Unbelievable. What kind of mind-control hypnosis must people be under to sign their name to over $1.5 million in debt.
I really like that the cash back from over-priced fraud purchases is taxed as income. I never really though about this. I was recently doing some searching in my area and noticed several of these, such as a home bought for $720,000 in Feb07 (100% financing), and now vacant and short sale, asking $649,000 and probably worth $620,000. Hey, don’t you get part of the take from the IRS when you rat on someone…… could be a good way of making some money….
He will owe income tax on over $310,000 of income for 2006, plus interest, penalties and disallowed mortgage interest deductions. Plus, he will be tossed into the AMT bracket which will really goose his regular income, since it will disallow $100,000 of deductions he claims from the equipment leased to his business.
Some justice. But I admit I won’t be happy until Bubba complains his new friend is broken. These people ruined the economy. (Buyers, Realtors, and brokers.)
Got popcorn?
Neil
“…These people ruined the economy. (Buyers, Realtors, and brokers.)…”
Granted they did their part but all the economy ills were not caused by the three groups mentioned.
No just 99.9%..he he
Rentiers . . . people inserting themselves between productive members of society and extracting their rents of various sorts . . . are The Problem.
Hey Jingle!
The IRS rocks! They ALWAYS win, no matter…don’t fook with the IRS!!
On a more serious note, these ones are small fries.
Except if the IRS have them in their scope…haaaaaaaaaaaaar!
Ya just can’t make this stuff up!
Leigh : )
“Mr. Adkisson says he has received about 30 calls a week in recent months from real-estate investors seeking to shield their assets, just as lenders are beginning to chase after them. ‘There’s just an absolute flood of people seeking asset protection, and it’s all after the fact. It’s like buying auto insurance after the car wreck.’”
When lawyers laugh at you trying to save your ass-ets, because you are so deep 6′d, real estate-wise…
You’ve got problems~
Hopefully, those that committed willful fraud (vs. just being stupid), will have to shield their other assets from Bubba. Not that I expect them to do time, though.
“‘The big problem, of course, is that buyers have no sense of urgency,’ said Steve Johnson, director of Metro Study. ‘No one wants to make a bad decision.’”
how long did this guy go to school to figure this out?
A long while back, I ranted about junk research and got a bit torched for it.
This is exactly the kind of “research” that I was referring to. This “study” probably cost a few hundred grand.
This guy probably has a PhD in something like, quantumsocioeconomicparaphilosophicpschology and obviously a minor in commonf’insense.
Hello Wave!
(gonna get the tree for this one).
The johnson with er…urgency.
Ya just can’t make this stuff up!
Leigh : )
The Wall Street Journal. “Walking away from a mortgage is almost always a bad idea. You can lose your ability to take out future loans, and you might find the lender coming after your personal assets, such as your principal residence, depending on your state’s laws and the terms of your loan.”
Well, well, well. Since most of the FB have absolutely no choice but to walk away (since they don’t have any $$), I guess the number of foreclosures will be even bigger than “expected”. There will be 2-3 foreclosures for the multiple investment properties owned by each FB, then 1 for the FB’s “home”.
Remember the scene in Scarface, when Pacino and his crew were walking into the bank with the duffel bags full of money.
Well, pretty soon, the US Post Office mighthave to start giving mail carriers hernia belts, because of bags of keys they’ll be carrying.
Got Schlage!
Here in the Bay Area people still stick by the “but everyone wants to live here” and the “The Bay Area is immune because of the high wages” retorts to any discussion of the housing bubble. There is a 4 bedroom 1500 sq.ft. house in Livermore we looked at when it was priced $625,000. It has been for sale since May and the seller, who is the original owner, has only dropped the price to $595,000. Which is still about $75,000 or more over-priced. Now that the jumbo market has collapsed nobody is loaning money to buy a house that 3 short years ago was only worth about $475,000. Livermore is not an upscale city with a median family income in the $70,000’s so the median based on real numbers should only ge in the mid to low 300’s.
All these articles do is point out the obvious, the grand experiment to see how high prices could be pushed in California has concluded. Now the only thing left is to see is for how long and how far prices will fall.
I have been validated but not yet vindicated. When the house I referred to is priced below $500,000 I will then be vindicated.
The other interesting article in the paper this morning was about the Hayward fault and how based on historical data it is due for a major earthquake. The last major quake on the fault was in 1868 and registered 6.8 to 7.0 on the Richter Scale…..with that kind of quake the Bay Area will go from having alot of overpriced sh*tboxes to having alot of overpriced sh*tpiles.
Californians…
Read “A Dangerous Place, California’s Unsettling Fate” by Marc Reisner
We do have our Faults~
LOL and Sacramento is heading into another warm, rainy La Nina season. This is when were get our major floods. FEMA to the rescue? **rolls her eyes**
I think the warm, rainy part of the cycle is the El Nino. The normal, dry, cool part is the La Nina.
No the La Nina is more volitile than El Nino. We get days of placid winter weather followed by massive dumps. El Nino is a constant rain, but not so much imbalanced downpours that break levys.
**rolls her eyes**
Like this you mean?
For smileys just go here……..
http://codex.wordpress.org/Using_Smilies#How_Can_I_Have_Different_Smiley_Images_Appear.3F
If median income is in the 70k range (assuming household income) then median home price should run in the low 200k range, right? A median home price of $300k requires a median household income of $100k/year and there aren’t many (if any) places in the country with those sorts of median incomes.
Come to West LA - I doubt you’ll find many household incomes under $225,000 in the 45-50 and under crowd that have chosen to live here over the last 5 - 7 years.
Yeah, but ya know. . . even with that kinda income houses here are not affordable using “normal” DTI ratios and prudent underwriting. At 3.5 - 4x income, 225k gets you a 780 -900k house. That doesn’t buy you anything worthwhile on the west side. There are people here making 225k living paycheck to paycheck. That’s gotta suck.
I’m not sure if I would really include Livermore as part of the Bay Area because it’s not a reasonable commuting distance to the bay. I actually don’t really consider San Jose to be Bay Area either. While I disagree that “everyone wants to live in the Bay Area”, I have to double disagree that “everyone wants to live in Livermore, San Jose, etc.”
Santa clara, San mateo, San francisco county’s are centainly part of the bay area,normally the term refers to the 9 counties around the bay which includes the Richardson Bay.
I know one person that wants to live in San Jose. But that’s mostly because he currently lives in Gilroy.
Uhh, last time I looked San Jose was situated right next to the Bay (ok, admittedly mostly salt flats, but up for restoration.) I grew up in SJ/CUpertino, and it has always been part of the Bay Area.
Have you ever been to West San Jose?
That house is really worth closer to 200K maybe less. Think about it from a price/rent ratio. Check how much property is renting for monthly and X that by 125, which will give you a pretty good idea. I have lots of home forsale around me over 500K and the highest rents is around $1450 per month (Sonoma). Believe me prices have a long long way to fall.
Sorry all the bad decisions have mostly already been made. The good decisions will be in 2009-2011.
There will be lots of fair to middlin decisions in 2007 & 2008.
The Wall Street Journal. “Walking away from a mortgage is almost always a bad idea. You can lose your ability to take out future loans, and you might find the lender coming after your personal assets, such as your principal residence, depending on your state’s laws and the terms of your loan.”
What happened to “people will do anything to not lose their house”?
While that might have been true 40 or 50 years ago, now FBs will just look to hit the BK Easy Button and just wait a year to head back to “GO”.
The best night of sleep they’ll ever get, will be the night of their bankruptcy decree.
“What happened to “people will do anything to not lose their house”?
Pen, I think that this idea was probably behind a lot of the bogus mortgage tactics, that people would do whatever they could to keep their homes, even if they got squeezed. I think DaBoyz banked on this, with their sliced and diced securities. I think they actually discovered a new flavor of Kool Aid and drank it. No fancy computer models. Just a fond old myth that might once have applied. So much for financial genius.
yep..but, c’mon..
giving out $500 large to as many fools as they did..
It’s one thing to have to moonlight to come up with a few Gs here and there, but when we’re taking about 100s of Gs, fuggetaboutit…
What da Boyz didn’t bank on was the new paradigm that the 30 and 40 somethings use.
Now, before you all get uppity at me for flaming another generational war, I confess I am 40. Anyway, da Boyz didn’t bank on my age bracket to say screw it. What they forgot was how spoiled many of us while were growing up. They also forgot how many had such an easy life.
Did they really think the Justins and Marcis of my generation were really going to make the 5K payment on that depreciating money pit that they put nothing down on for the next 360 months? Get real. I could have predicted this 5 years ago and charged them a couple of hundred K for the trouble. Would have saved them a lot more in the long run.
Dan, I dunno. This seems to cut across all age brackets, gender, occupations (except for Wall Streeters and investment bankers, fundies, folks like that), income levels, races and ethnicities, at least from the posts Ben has put up over time. I can tell you right now, as an arse end boomer, had I been caught in this, I would have tried to sell or refi and if that hadn’t worked, I would have sought legal counsel and walked away with a plan of some sort.
OC: I’m a bit older, but I think you’re right. We expected to struggle when we went out on our own - we knew we would not live the lifestyle our parents did until we got to be closer to their age - we knew it took years to build up a lifestyle. It seems since your age group came up, kids expect to duplicate their childhood lifestyles (Obviously I’m speaking of middle class and up) immediately, starting with college and it seems there are many parents willing to indulge them.
Of course, in the past, you’d require a 20% downpayment. So someone wouldn’t be so quick to just walk away from it.
Today’s mortgages are painless to walk away from. As a matter of fact, you “win!” You get to say you’re a “victim” and cry about all the money you “lost” (even if you lost nothing, and got a free HELOC’d car that you don’t have to pay for.)
I prefer to believe that people have seen all the slicing and dicing, swindling, cheating, gaming the system, whatever you want to call it coming from the Wall Street types for the past 20 years, and are thinking “If I’m going down, I’m taking these a-holes with me….”
Not that it means much, but as long as we are changing blog names, I need to change mine. I am now “Gulfstream-sitter”…..:)
Of course, in the past, you’d require a 20% downpayment. So someone wouldn’t be so quick to just walk away from it.
I completely agree. Age/generation/upbringing has nothing to do with it (this generation is far from unique).
It is all about incentive structure. 20% up front is a really good incentive to make sure people don’t walk unless they have to. And those that do, well, the bank has already covered the first 20% of the loss.
The mortgage market will return when downpayments become fashionable again.
Apropos of not much but the California location, I’ve been watching Ladera Ranch 92694. Sales in the past month = 25. New listings in the past 8 days = 19.
That rate of listing doesn’t seem unusual, from what I’ve seen over the past few weeks. It translates out to a monthly new-listing number of about 74.
In other words, for each sold house that drops out of the inventory, three more come on. Ouch.
Anyone who thinks we’re anywhere close to a bottom is innumerate. Downward price pressure can’t be relieved until inventory at least stabilizes — and inventory can’t stabilize until there’s at least one sale for each new listing.
There’s gold in them thar hills.
http://goldprice.org/
Knowing pretty much nothing about CA, other then the obvious (Beverly Hils, etc.), is it safe to say that if a particular location is mentioned in a Chili Peppers or Sublime song, then it is safe to say, “avoid that area”?
go rent “Training Day” and you get a fairly accurate portrait.
To be honest, you need to avoid most areas of LA. If you are a middle-class person — even a lower-middle-class person — you really don’t want to raise a family in 80% of the city’s neighborhoods.
The people who live in those neighborhoods would rather not raise their families there either, but they cannot afford to live in a nicer area.
Is this guy insane? Doesn’t he want the lower property taxes, and the lower insurance rates that a $250K property value assessment will get him? If he already bought the house, the goal now is to get the county assessor to value it as low as possible.
I just saw the Dataquick numbers for Orange County for September, median home sold $570k, down from $630k a year ago: This has to be some sort of record, down $60k in one year - I gotta believe median household income is less than $60k.
And also as a multiple of equivalent median rent: median rent for a house is probably less than 24,000 a year, approximately 2.5 times rent value lost in one year! The masses cannot wrap their heads around how bad these numbers really are.
Median family income in OC is around $80k. Median household income is around $65k I think. But there are some cities with much higher medians in the OC. Anaheim hills for instance is around $120k
I just caught my local MLS sales database (SacBee) showing a transfer of title (from owner in default back to the lender) as a resale. Does DQ, like the OFEHO, record all DTs as sales?
If this is so, those numbers are far worse then they are letting on.
And what was the resale price? which has implications for the median calculations too.
Chili: It’s better and worse than you portray.
From the article in yesterday’s OC Register: “That price was down $75,000, or nearly 12 percent, from the peak price of $645,000 reached in June. In the last down cycle, the drop from the peak to bottom was 16.3 percent from July 1991 to January 1996, according to DataQuick.” That peak price of $645K is referring to June 2007. Also, “Down 11.2% from August marking the biggest one-month drop in DataQuick’s 20 years of tracking O.C. home-buying habits. (Previous worst: -7.1% in year ended January ‘95.)” So, we’ve seen -11.2% in one month, or -12% in 3 months, depending on how you want to look at it. Granted, this is referring to the median, which was skewed as sales slowed, so I don’t take this huge decline in median at face value (just as I don’t take the rising median over the past year thru June ‘07 at face value).
Median HHI in OC is around $75K. Rents for SFRs are sort of all over the place, depending on area. I’m renting a SFR in a decent area in OC (92630) - 3 bed/2 bath approx. 1,500 s.f., with a pool - rent is $2400.
Understand that the $570K number they’re using as the median for OC is for all houses (SFRs, condos, and new [includes both SFRs and condos]). Median price for resale SFR in OC in September was $655K (about 8.7 times median HHI).
We’ve got a long ways to go, but at least we’re on the right path now. SD, Sacto, Stockton, LV, and most of FL have led the way on declines, but we’re intent on catching up. And, with all of the I/O and neg am loans used here in the past several years, I have no doubt we’ll catch and pass at least a few of those frontrunners.
“just saw the Dataquick numbers for Orange County for September, median home sold $570k, down from $630k a year ago: This has to be some sort of record, down $60k in one year - I gotta believe median household income is less than $60k. ”
There are two OC’s:, the northwest half which is swamped with low-income/working class immigrants abiding in mostly apts or rented housing, and the southern half OC below the 55 fwy which is largely hi-income professional whitecollar whos median income exceed $80-$100,000 per household.
The housing units in the northern deteriotrating OC half which includes Anaheim,Westmonster, Garbage Grove, Santa”little tijuana” Ana, Orange, Fullerton,Buena Park Stanton,La palma.,cypress, are now over 50% mulit-units crowded with immigrants and other working class/blue collar households making less than $60,000 a year. It is this half of OC which is pulling YOY median in all OC county down a big negative -9.5% sep 06 to sept 07.
The south OC is another country, with expensive gated planned communities and classic bedroom MCmansions nestled in the rolling Laguna Hills/Irvine Ranch/Cleveland mt foothills. With far fewer homes and folks than N OC, this south parklike lush section of OC will fall about the same rate as the more desirable LA areas such as the Westside-slowly but steadily-a sticky crawl to the bottem but drop it will. Just not at the same rate nor as steep as the North OC.
I’m familiar with OC, and south OC includes San Clemente, San Juan Capistrano, Dana Point, Lake Forest, perhaps Tustin and Costa Mesa. It ain’t all Laguna Beach and Monarch Bay. (I’m also old enough to remember when “North OC” was desirable, which means I’m older than 20.) My point is that we’re just getting started, and the actual DOLLARS vanishing is already surpassing the decline of the early 1990s.
I live in South OC and prices ARE coming down. Dont fool yourself if you think it is different here. There are plenty of people I know that bought speculative properties and are in construction and RE related businesses and lending that are toast here. Prices are already accelerating to the downside.
Santa Ana has to win the prize for the hardest hit area so far in Orange County. There are around 1,623 houses and condos listed for sale in the mls and over the past month about 36 closed escrow. at this sales rate it would take about 45 months to sell all the homes on the market.
Garden Grove (aka Garbage Grove) was nice at one time and was a great place to grow up in. Go Argos!
“The Purcells have lowered their price twice, a total of $34,000. The couple won’t go lower than the $425,000 they now seek because it would be more difficult to afford a larger house. ‘It’s a very tough market,’ Theresa Purcell said.”
God forbid these greedy pieces of shi– nice people not get enough money to trade up! Wll, at least they’ve been doing their homework –they know that what the seller “needs” always determines the market price of any asset.
“If they can’t sell soon, the Purcells said they likely would take their home off the market.”
Two more soon-to-be “accidental landlords” to add to the pile.
“Two more soon-to-be “accidental landlords” to add to the pile.”
I think they mean that they will just stay put (I don’t think that they have bought the ‘move up’ house quite yet).
The government should do something, it is a travesty when nice people can’t do a move-up house transaction, and are stuck in a house that is obviously beneath them. Maybe we should start a government backed fund to help move-up homeowners, the poor dears.
“A total of 5,014 new and resale houses and condos were sold in the nine-county Bay Area in September.”
“As Marcus Ison moved his belongings into his new townhouse in San Pablo’s Devon Square development last week, he had mixed feelings.”
“His excitement about buying his first home was tempered by a sobering reality: Outside, bright red signs announced that two dozen homes in the development would be sold at auction within days, with starting bids of $250,000, far below the $415,000 he had just paid for his three-bedroom-plus-den unit.”
Mr. Marcus was probably one of the 5014 new buyers. This just goes to show how the game would continue if the credit markets hadn’t seized up. The Mr. Marcus’s of the world have no common sense or impulse control and therefore need to be controlled by forces external to their environment. Before moving in he probably boasted that he scored an instant equity of $50K to $100K. A change in market psychology is going to require more ‘victims’ but we are on an exponential path to nirvana.
“This just goes to show how the game would continue if the credit markets hadn’t seized up.”
If buyers want to bring 100% of the purchase price in cash, there would be no problem. It’s just that house prices have gotten, well, a little out of whack with what money people actually have.
Leverage is like fire…it can be your best friend or your worst enemy…
“‘The big problem, of course, is that buyers have no sense of urgency,’ said Steve Johnson, director of Metro Study. ‘No one wants to make a bad decision.’”
eeeennnnnnnnnnn!!!
Sorry Stevie, the problem is that for several years lemmings were “snapping” up half million + houses like they were at a weekday Starbucks driverthru…making a bad decision that they would be more than happy to compund if someone would buy their house for 100% over what they bought it for 3 years ago and another one of them funny sounding loan companies would take their 500K nut plus their 150K recent Heloc and consolidate it to a 2% no doc (with a 84K combined income)interest only 3 week teaser for 750K on a 3,000 sq ft cracker box house on 6.500 sq ft of dirt….with granite counter tops….of course
“‘The big problem, of course, is that buyers have no sense of urgency,’ said Steve Johnson, director of Metro Study. ‘No one wants to make a bad decision.’”
No one will make a bad decission if they use 3 time annual income as a guage to purchase.
Buy now or be priced out forever!!! doesn’t work anymore?
It may not be a bad decision, but when you lose your job afterwards bc of recession….you start to regret that decision. Better to wait for an economy with strong fundamentals.
I’ve heard on the radio three times in the last 2 days hows rents are “skyrocketing” in California due to all the foreclosed families competing for limited rental stock. However, they also say that last year’s increase in SoCal (5%) is less than the previous 2 years (6%, 7%) Firstly, it’s curious the obvious propaganda quality of the reporting. Secondly, if rents are increasing 5+% for the last three years, how are these figures reflected in CPI?
nah! the vacany rate is still unchanged…
No way. Rents were FLAT from 2001-2005 (after decreasing 20% from 1999-2001). They went up 5% from 2005-2006. And, even though I”ve been hearing it on the radio too, they appear to be the same this year as they were last year.
Where are these radio reporters getting their data? I wish I could remember where I got my data when I first moved here. It was a good, reliable source. As a matter of fact, I think it was the Mercury News. I remember last year the Mercury News ran an article saying that rents had gone up for the first time in 5 years.
I just realized that they might be talking about commercial rents. Reporters are easily fooled by press releases with “mistakes” like that in them. I wish these people would disclose their sources. Sheesh.
The SF Chronicle got their data from some place called RealFacts. I just found their website, and I’m going to investigate them. They may be the enemy.
Interesting. In 2004, RealFacts said that San Jose - Sunnyvale rents were down 2.8% for the year, down 27.1% over 4 years. So there’s no way that the 2006 increase could have been less than an increase in 2004.
here she is and you know she wants to hear from you about her forcasts.
http://www.car.org/index.php?id=MzQzNTY=
Hi Stanley!
Special is as special does~~ Leslie Appleton-Young
She also spent several years working as a research associate at the Federal Reserve Bank of Philadelphia.
Uh oh.
I’ve finally figured out why the real estate “game” has become such a disaster. And why it’s very difficult for some people to be investors which it involves their home.
Real estate agents know that home buying is basically an emotional affair. It’s not really objective.
That’s why realtors throw those soggy cinnamon rolls in the oven when it’s Open House time, and leave them there for the next 4 hours. Turn on the lights, throw some logs in the fireplace.
It’s done to appeal to the buyers’ emotions. It’s also why realtors are trained to not give their buyers more than about 3 properties to choose from at one time. It’s because logic might interfere with the emotional investment in the homes they are touring.
So now you have people who started investing in a field which is fraught with emotional ties. Add to the mix a lack of understanding of bad mortgages which have been available, and an unwillngness to see that the market is about to collapse.
That would explain why so many people refuse to lower the prices of their homes, even in the face of losing them to foreclosure. This is an emotional deal.
And they should not have been investors.
You have to ask the question of how many houses does the average person buy and sell in their life. Compare that to the realtor. Who do you think knows how to work the buyer and/or seller?
“’ve heard on the radio three times in the last 2 days hows rents are “skyrocketing” in California due to all the foreclosed families competing for limited rental stock. However, they also say that last year’s increase in SoCal (5%) is less than the previous 2 years (6%, 7%) Firstly, it’s curious the obvious propaganda quality of the reporting. Secondly, if rents are increasing 5+% for the last three years, how are these figures reflected in CPI?”
I can only speak for LA but rents here have, if anything, come down somewhat in the past year. Just noticing trends in my area. Perhaps the 100,000 or so now unemployed RE-related workers in the area have something to do with this…who knows? But there’s been no big jump in rents, nor is there likely to be.
Thousands of new housing units in LA created in the last 5 years for a speculative frenzy. That means new rentals coming right up, with higher unemployment in the mix. Not a recipe for rent rises.
As for commercial…a friend of mine has been shopping for office space in mid-Wilshire and Hollywood. Prices are still high but dealing is being done. They’re sure as shite not going up, unlike the new office buildings coming online around the city…right into the maw of an economic slowdown. Not a recipe for increasing commercial rents.
Nothing skyrocketing here but the credit card balances of West side yuppies.
As for CPI…every knowledgeable person I talk to says that CPI and core inflation are cooked numbers. Yet, they still get quoted all the time in the media without qualification. Go figure.
“The couple wants to move up to a larger home but must sell first.
‘We’ve seen plenty of houses we like. It’s gotten to a point where we don’t even look any more,’ Geoff Purcell said. ‘We’re stuck. It’s gotten pretty disheartening.’”
Now you know how buyers have felt FOR YEARS you POS.