The Cooling-Off Is A Plus For Some In California
The Burbank Leader reports from California. “The average price for a single-family home in Burbank dropped almost 5% from August to September, and the number of residences listed on the open market in the same period increased almost 50%, according to the National Assn. of Realtors. ‘There’s a decline, no doubt about it,’ said Judy Graff, a broker in Burbank.”
“The average asking price for a single-family home in August was about $692,000 and about $658,000 in September, she said.”
“‘The housing boom [lasted] from 1998 to spring 2005,’ said Ken Fears, an economist with the National Assn. of Realtors. ‘The housing market has been slowing down since then and, since July 2007, home sale prices have sharply decreased.’”
“‘It used to be that if you could fog a mirror, you could get a loan,’ Graff said. ‘Now, lenders want to see a 10% down payment and excellent credit scores. If the median price of a single-family home is $700,000, you would need to have $70,000 sitting in the bank. How many young couples have that kind of money?’”
“The problem remains prevalent in Burbank but may not be an impediment to ownership for all, Burbank Assistant City Manager Mike Flad said. ‘Cost of housing is one of our largest obstacles,’ he said. ‘But the cooling-off is a plus for some who can enter the market with lower prices.’”
From Business Week. “One of the most rapidly appreciating real estate markets during the boom, this part of Southern California has been hit hard. Foreclosures are up, and builders are dumping inventory.”
“The median home price, which had more than doubled this decade, to a peak of $622,000 in May of last year, has settled back to a recent $595,000, according to the California Association of Realtors.”
“Some of the strongest growth came from what locals call the North County, an area just up Interstate 5 from the city of San Diego. In Carlsbad, Realtor Jim Klinge says he has been following a three-bedroom, Mediterranean-style villa purchased in January, 2006, for $950,000 and listed now at $849,000.”
The Sun Post. “Complaints from two developers that rising foreclosures and a large housing inventory have crippled sales led the City Council this week to postpone the fees developers owe for homebuilding reservations under the city’s growth cap.”
“Stockton attorney Mike Hakeem, lobbying on behalf of developers Raymus Homes and FCB Homes, (said) that no one else would be willing to pay for the reservations this year because the housing market was so bad.”
“‘Who is going to buy a $600,000 house when there’s brand new houses for $400,000 and $450,000?’ Hakeem said.”
“Mayor Willie Weatherford drove home Hakeem’s point, warning that ‘if no houses are built because of the economy, then the city gets nothing. There is a surplus in the housing market. Do we want to add to that problem?’”
“As foreclosures rise in Manteca, the growing number of dilapidated, empty homes has attracted vagrants and teen parties to otherwise quiet neighborhoods, police say. A new law will allow the city to clean up vacant, neglected houses and penalize the banks and absentee owners who allow their properties to go to pot.”
“On Monday, Oct. 15, the City Council voted unanimously to enact a law that will impose fines of as much as $1,000 a day on owners of abandoned homes, with a maximum penalty of $100,000.”
“The Manteca Police Department estimated that banks now own as many as 300 homes in the city, while another 800 properties are in some stage of foreclosure.”
“Council members roundly applauded the law at their meeting, though some worried that the heftier penalties could thwart banks’ attempts get buyers back into the homes. ‘All of a sudden you’ve got a $100,000 lien on your property,’ Councilman Steve DeBrum said. ‘What will that do to those houses that are for sale?’”
The LA Times. “The state unemployment rate ticked up in September, when more than 1 million Californians were looking for work, the first time that benchmark had been breached in nearly three years.”
“The housing slump and mortgage meltdown were behind the biggest job losses in the state last month. The construction sector got rid of 5,000 jobs, bringing the number lost over the last year to 28,600 for a 3% decline, the Employment Development Department said.”
The Union Tribune. “Job growth in San Diego County lagged behind the population growth rate in September, as the decline in the real estate industry continued to weigh down the local economy, according to the California Employment Development Department.”
“With home-building plans stalled and sales continuing to falter, construction and real estate firms shed 1,000 jobs last month. ‘If it weren’t for the declines in construction and real estate, San Diego would be having a better growth rate than we did last year,’ said Alan Gin, an economist at the University of San Diego.”
“‘We’ve been saying for a while that the housing market was going to have an impact on the economy, and that’s exactly what we’re seeing now,’ said Christopher Thornberg, a former UCLA economist. ‘We’re seeing the weaknesses spread from construction and real estate into retail and transportation and, most disturbingly, a lot of temporary jobs. Temporary workers are usually the first who get hired when the economy’s doing well and the first to go when it’s doing poorly.’”
The Modesto Bee. “Unemployment rates in Stanislaus, San Joaquin and Merced counties swelled above last year’s averages, the result of a shaky economy and deepening housing crisis.”
“‘It is indicative of the economy shifting,’ said Liz Baker, EDD labor market analyst for Stanislaus and San Joaquin counties.”
“The housing slowdown has taken an even larger toll on San Joaquin County. Its unemployment rate was 7.8 percent last month, up from 6.5 percent the previous year. The county saw huge declines in manufacturing, construction, professional business services and financial activities. Combined, those industries lost about 2,100 jobs.”
“‘All are definitely related to the housing crisis and mortgage credit issues,’ Baker said.”
The Mercury News. “The implosion of the mortgage and housing industries has caused the East Bay’s job market to stall. The East Bay economy, which as recently as a year ago was bolstered by the startling growth of the housing industry and its satellite sectors, now is struggling to produce jobs on a consistent basis, according to a state labor report released Friday.”
“‘We are in a housing recession in Northern California,’ said Scott Anderson, a senior economist with San Francisco-based Wells Fargo Bank. ‘I see the fingerprints of the housing slowdown in a number of industries.’”
“The Employment Development Department estimated that, adjusted for seasonal changes, the East Bay in September lost 800 jobs.”
“‘The East Bay is being hit very hard by the residential real estate downturn,’ said Jon Haveman, an economist and partner with Beacon Economic. ‘It has been hit hard for the last several months.’”
“Why the decline? The weakness in four key sectors tied directly to housing, residential construction, specialty trades construction, real estate, and credit intermediation, which consists largely of mortgage agents and loan officers, tells much of the tale. Over the yearlong period, those four industries shed 8,100 jobs.”
“But in 2006, the housing market produced a starkly different story. Those same four industries during the year that ended in September 2006 produced 5,500 jobs. That’s a swing of nearly 14,000 jobs from the positive to the negative column.”
“A survey of the four housing-related industries shows that California lost 33,000 of those types of jobs during the 12 months. The East Bay accounted for one-fourth of those losses. And 23 percent of all the construction jobs that were lost in California in the last year vanished in the East Bay.”
“‘Almost all of the job losses in September in California were in construction, finance and real estate,’ said said Dennis Meyers, an economist with the state Finance Department.”
“Some economists believe California and the East Bay won’t soon escape the housing nose dive.”
“‘We don’t think this will be over any time soon,’ Haveman said. ‘We expect home price declines in California to continue through 2009. Employment declines will continue into 2008. The real estate bubble has a long way to go before it completely bursts.’”
From KESQ.com. “The Coachella Valley is in a housing slump, but its underlying economy is strong due to the region’s population growth, according to a report released Wednesday.”
“According to the Coachella Valley Economic Partnership’s annual report, the median price of a new home in the area was $419,999 in the second quarter of 2007, down from $462,760 in the year-ago period.”
“‘Right now, existing residential prices are 20 percent too high and new home prices are 13 percent too high,’ said the report’s author, economist John Husing.”
“Volume across the valley fell 16.8 percent compared to the same month last year, according to the California Association of Realtors.”
The Pinnacle News. “Foreclosure rates in San Benito County have skyrocketed from last year. With four foreclosures this week and an additional 13 letters of default sent out to homeowners. To date, there have been 213 property foreclosures this year, according to an industry newsletter.”
“Pam Gibbs lives next door to an abandoned house, the result of a foreclosure. The grass is dying and the plants are unkempt, one of the windows upstairs is broken.”
“‘The house has been abandoned for several weeks,’ Gibbs said. ‘The family that lived there left in the middle of the night. It’s not uncommon. I think the bank was going to auction it off. I talked to several of my friends who have seen the exact same thing. I don’t know what it’s going to do to our property value.’”
“Down the street at 2611 Glenview Drive there is a sign for a live auction to be held Saturday. Lender Greg Dolan of Shamrock Funding said this situation is happening all over.”
“Business for lenders like Dolan dropped close to 90 percent because the majority of borrowers took 100 percent financing on their loans, he said. Then something happens and they can’t make the payments.”
“‘Anybody and everybody could get loans two years ago,’ Dolan said. ‘People were qualifying by moving their entire extended family into a house, then something happens and they can’t make the payments.’”
“Not everyone whose homes have been foreclosed on was the victim of a multi-rate mortgage suddenly going through the roof. Many of the borrowers got themselves into trouble by taking out a second or a third mortgage and then couldn’t make the payments.”
“Chuck and Mary Stetson didn’t want their street identified, but said that four of their neighbors have had houses for sale at one time or another during the last year.”
“‘Only one of them still has his house for sale, but the price has been dropped four times,’ Mary Stetson said. ‘It’s gotten to the point where I think most of them are renting the houses because they can’t get what they’re asking for them. We used to know everyone in the neighborhood. Now we don’t know anybody.’”
“Another problem people are seeing is short sales that are devaluing surrounding properties. According toa real estate Web site, there was a 25 percent decline in the average price of houses sold in Hollister during the past three years.”
“In 2005 the average sales price of a home in Hollister was $638,000; in 2006, the average sales price was $591,000 and in 2007 the average sales price is $547,000.”
“One person’s loss is another’s gain. There are more affordable homes out there priced for first-time homebuyers.”
“‘This is a good time to start analyzing the market and analyzing what you’re capable of financially,’ said Karl Skow of Pacific Finance Co. in Hollister. ‘If you’re asking me if it’s turning into a buyer’s market, I say absolutely. This is the start of a true buyer’s market. We might not be there yet, it might be the spring, but it’s a start. There are first-time homebuyer starter homes out there.’”
“That’s not to say that there is a home for every person, but people who want to legitimately own their own home and know the true value of their money can make it happen. They just need to inquire,’ Skow said.”
“‘Everybody that bought two to three years ago and paid too much is now calling back to re-finance their loans,’ Dolan said. ‘But they have no equity because their homes have depreciated $80,000, $90,000, even $100,000. Many people are just walking away. On the upside, it’s a great rental market.’”
‘in 2006, the housing market produced a starkly different story. Those same four industries during the year that ended in September 2006 produced 5,500 jobs. That’s a swing of nearly 14,000 jobs from the positive to the negative column.’
‘Haveman said…‘We expect home price declines in California to continue through 2009. Employment declines will continue into 2008. The real estate bubble has a long way to go before it completely bursts.’
One would think that with all these economists involved, and one directly calling it a bubble, that at least one might make this point: this mania was a terrible misallocation of resources that turned millions of lives upside down and must never be repeated.
Maybe next year….
‘Want a life of leisure? Be a renter’
Rent now or waste your free time doing yard work forever.
I rent now, and just finished mowing the grass.
Am i doing something wrong?
Only if you didn’t factor a discount in the rent for having to do lawn work.
Yes, you did. Renters should not have to mow lawns. My rental comes with a gardener. All renters should demand one. JK
I rent and do the gardening myself. I keep the yards (front & back) freakin’ MANICURED. End result, I’m STILL paying $1500 for a 3/2 while similar homes are renting for $2K & up. Never underestimate the greatful landlord!.
Exactly. I own 3 out of state rentals. All were bought before 1980. I tell my tenants if they keep the yard up I take 10% off the rent. That seems to work quite well. Then I take off another 10% because I value good and happy people. End result is I make less money but I have no turnover. Also when I do my yearly check up very little needs to be done. There are great tenants out there and I do my best to find them. 20% is a small price to pay for peace of mind.
Welllll… you make “less money” than you would if you were able to charge higher rents to relilable tenants, but when you factor in the down time you would have if you charged too much, as well as the repairs from unreliable types, AND the wear-n-tear on your nerves, I suspect you come out ahead anyway.
I want a landlord like you. (I’m in a great place but it’s an apartment complex— we’re ready for renting a house. With a garage.)
MUST READ!!! The American Southwest Future is Drying Up!!!
http://www.nytimes.com/2007/10/21/magazine/21water-t.html?_r=1&ref=magazine&oref=slogin
“As one prominent Western water official described the possible future to me, if some of the Southwest’s largest reservoirs empty out, the region would experience an apocalypse, “an Armageddon.”
“Last Nov. 19 an oral report of an investigation into the problem of “Water for Tucson” was given to the branch at its monthly meeting. This investigation was made by Douglas Lewis, engineer in charge of the surface water branch of the U.S. Geological Survey; Emmett M. Laursen, head of the Civil Engineering Dept. at the University of Arizona, and Arthur H. Beard Jr., consulting engineer.”
That quote is from the Arizona Daily Star… on April 8, 1962. The report indicated that Tucson had sufficient water for the present time, but that they were in deep trouble in the future, i.e., now, and provided several recommendations to improve matters. None of those were followed.
It seems people don’t listen very well. Didn’t then, and they won’t now.
You have to get your landlord to provide illegal immigrant yard care services as part of your rental agreement (possibly easier in SD than Colorado).
“(possibly easier in SD than Colorado). ”
Haven’t been to Colorado lately, have you?
I like gardening, I used to grow a lot of Veggies in the summer and the exercise can’t be beat. Living in a condo just means you have to join a gym !
Sorry, like golf (which i love), gardening is not exercise, just a wholesome activity.
My garden involves heavy exercise and you better have muscles. I have a 150 plants, about 8 in whiskey barrels, 80 large plants and trees 30 gallon pots and some smalller stuff. Damn near killed my husband and I when we moved it all last year.
“Sorry, like golf (which i love), gardening is not exercise, just a wholesome activity.”
You obviously know nothing about gardening.
Sorry, still not convinced.
45 minutes of weight training in the morning, followed by 5 mile run (not jog) that ends with 15 more leg burning minutes on the spin bike. That’s almost exercise.
Gardening?……….c’mon. It’s no wonder everyone’s so friggin’ out of shape. Go have another doughnut……
Try mowing an acre of grass followed by trimming bushes & trees then chipping the waste. Then put it all in the Compost bin and turn over. Don’t forget Weed Whacking, Raking, blowing. Minimum 2 hours labor and don’t get me started on how much it takes out of you to shovel a foot of snow off your driveway.
I have done heavy duty landscaping (like 8 hours a day, 5 days a week for a summer), personal gardening, shoveled out heavy snow drifts, and I currently weight train.
If you are doing landscaping/gardening for at least 2-4 hours a day for at least 3 days a week, then by all means, call it exercise. Occasionally moving a heavy pot from 1 side of the patio to the other or 2 hours of yard work on the weekend or when it snows twice a month is better than nothing but it tain’t a substitute for consistent exercise.
Yeah we rent and do the yard work. I do like to do yard work and grow stuff. Sorry but I’m not into some clown ‘landscaping’ company throwing fetilizers and herbicides all over willy nilly (particulary true in SoCal) without EVER reading the labels. I’m in the horticulture business and I know the problems with this kind of use. I avoid rentals that require a gardener (just like I avoid RE office managed rentals properties-but that’s another thread).
“Gardening?……….c’mon. It’s no wonder everyone’s so friggin’ out of shape. Go have another doughnut……”
You’ve always come across a tad myopic, but as a professional gardener, I am qualified to say you have absolutely no idea what you’re talking about. Try moving 10 yards of compost by wheelbarrow and shovel smartguy. I’d be willing to bet that a an ex-mortgage broker who is used to sitting on his @$$ for a living knows more about doughnuts than a gardener who works year round rain or shine in the PNW.
For exercise, try the pogo stick. It’s really fun!
And I thought *I* was a perpetual kid. You have me beat, hands down.
I catch you pogo-ing in my neighborhood and it’s go-time with one of my Joshua trees.
Jumping rope!! Yipee!! (not joking)
“Rent now or waste your free time doing yard work forever.”
Actually, one of the advantages of owning is that you don’t have to do yard work, unless you want to (the neighbors can bitch and complain all they want about your unkempt lawn, but they can’t kick you out of your house, unlike a landlord.)
True - but why, exactly, would you want to have a yard with waist high grass and the vermin and insects that go with that?
Yes they can if you are in a n HOA and the city can get involved also.
“Yes they can if you are in a n HOA and the city can get involved also.”
There’s no way in the world I would live in a place that would require me to belong to a HOA. And if any of the commissioners in the county where I live tried to pass laws like that, I can almost guarantee you that there would be such an outcry that they might as well kiss any chances of being re-relected goodbye!
Well, in FL, you would NEVER get away with having a lawn like that is almost all incorporated areas.
HOA, I think we all agree, no way!
And if you live in an incorporated area (read, lots of govt) they will have code enforcement. And yes, they will FINE you for not mowing your lawn. And yes, it is a significant amount of money.
You can be fined by code enforcement for pretty much anything; which, in FL, has been a boon during this property explosion. Code enf was used to repo homes in bad/poor neighborhoods and then tear them all down and sell the land (at 100X profit) to a developer.
And, if code enforcement is not enough, we also have some great eminent domain laws down here… Yes, they can take your home, and yes, they can do it just because they want to put a huge condo there (see, Riviera Beach).
FL, imho, has some of the most lax property rights in the entire country, if you anger the wrong people, you can most certainly lose your home, or, if not lose it, pay 1000’s in fines every year to keep it.
Which is why the following simple statement is true and no one wants to admit it:
No one in America owns their property.
Try not paying taxes on it. Try not mowing your lawn. Isn’t the definition of ownership (of anything) that you *own* it outright? If someone else: (a) charges you for it, and (b) tells you what you must do with it, then BY DEFINITION, you do not own it.
“Ownership”, as it has been redefined for you, is a scam.
Taxation of property *is* just another form of rent. All homeowners essentially rent their properties from the government. The government lets you live on your land because you pay your rent for it. What a terrible deal?
All other investments only tax you upon the dual instance of an increase in value PLUS a liquidity event.
Real property ownership has always been nothing more than a bundle of rights. The “bundle of rights” theory is taught extensively in real estate law classes, land use courses, and the like.
Try drilling for oil or mining for gold on your property. Oops…someone has already reserved the mineral rights to your chunk of land a long time ago. My guess is whoever holds said mineral rights could erect a rig in your yard and start pumping oil if they decided to. This is just one example.
Bottom line…..you never own land, just the right to use it in a certain way. Of course, use it per all restrictions govt’ and otherwise AND given you pay the mortgage, taxes, HOAs, Mello-Roos fees, etc.
Doug, in some cases, that is not true. I had codes, covenants, and restrictions that said I had to put a landscape in my front yard. At that time I bought more than I could afford. I could not afford to get a professional to do it. So I put an ugly landscape in - do it yourself style.
Made me giggle…thanks.
Leigh
I could have done better - just put a Folger’s coffee can in the middle of the dirt front yard and pronounce it done!
“this mania was a terrible misallocation of resources that turned millions of lives upside down and must never be repeated.”
Amen.
““this mania was a terrible misallocation of resources that turned millions of lives upside down and must never be repeated.””
How it should read…
““this mania was a terrible, orchestrated misallocation of resources that allowed millions to turn their lives upside down and must never be repeated.”
DOC
“‘It used to be that if you could fog a mirror, you could get a loan,’ Graff said. ‘Now, lenders want to see a 10% down payment and excellent credit scores. If the median price of a single-family home is $700,000, you would need to have $70,000 sitting in the bank. How many young couples have that kind of money?’”
I stand by my prediction we’ll be seeing 25% down payments as the norm in the darkest days of this downturn.
And in my theme for today:
[Dean Wormer's plotting to get rid of Delta House]
Greg Marmalard: But Delta’s already on probation.
Dean Vernon Wormer: They are? Well, as of this moment, they’re on DOUBLE SECRET PROBATION!
Got popcorn?
Neil
25% down would bring prices down in a really big way. I believe it would also restrict the market to foreclosures once banks are finally forced to start dumping them in large numbers. I doubt we will see 25% downpayments if you have good credit, but 25-50% down for those with lower credit scores or dicey incomes may rule, and I can certainly see a return to 20% down. Regardless, this market is cooked for sure.
Its not what people want on down payments. With the mortgage insurers choking and last I read on 8% of the volume of bank originated RMBS’s going (YOY)… I see a dramatic change required even for those with great credit to restart the market.
FHA/VA would be excluded. But I’m looking at markets FHA/VA will never tough. Well… I should hedge that. I just haven’t been bearish enough judging by recent trends.
Got popcorn?
Neil
Back in the 80’s & early 90’s 30% down payments were virtually required for “luxury” (i.e., jumbo) home loans. We’re only now seeing the first wave of the credit crunch, so we’ll definitely get there.
‘If the median price of a single-family home is $700,000, you would need to have $70,000 sitting in the bank. How many young couples have that kind of money?’”
How many young couples should be buying a 700K home?
How many old couples should be buying a 700K home?
Well… To buy a 700K home, you should be making about 250K a year (and that’s stretching it). We will call it household income (which further stretches it) of 250K..
So, how many couples (forget young) should be buying a 700K home in the US? About 1.5% of housholds in the US make over 250K, so, there’s your answer.. NO more then 1.5% of the ENTIRE population of this country should even consider purchasing a 700K home.
http://en.wikipedia.org/wiki/Household_income_in_the_United_States
If someone feels like it, figure out how many people (in the US) are in that 1.5%, and then compare that number to the number of new homes built with prices over 700K in the last few years. Let me just take a WILD guess and say that people are joining that 1.5% of the population at a rate of about 1/1000th of the number of homes that are built for people in that income bracket.
Even at 4x (high estimate) income, how could a couple making 175k/yr struggle with putting away 70k in 4 or 5 years?
I don’t agree with this. If people survive on 50K/yr and less, how could a couple making 175K/yr NOT put away 70K in 4 or 5 years? They are dopes if they can’t save a lousy 8% of their gross. Even in California.
Maybe I misread your comment, Lookin. Maybe you meant that putting away $70K should not be a struggle. I do agree with that.
It used to be that only doctors and executives could afford homes at $500K. The past few years, we’ve seen fast food workers and lettuce pickers buy $700K homes.
“It used to be that if you could fog a mirror, you could get a loan”
I wouldn’t be too surprised if quite a few dead people got loans as well.
Long-time readers here will recall the story of the homeless man in FL who had qualified for a number of loans he used to buy investment properties.
Even 20% down will hammer prices. It looks like it is coming if the banks keep losing money.
Even more importantly, how many young couples have 70K in the bank that DON’T ALREADY HAVE A HOME.
Now you are talking about an incredibly small portion of the population. Almost no younger couples are going to have that kind of cash, and, if they do, they are almost certainly already going to have a home.
And, I stand by my prediction (not saying that others are wrong about a return to 20% down, I hope every day that you/we are right) that a return to 20% down would be armagadeon for the most expensive markets (CA/FL/NY/etc). It will just crater the market; the pool of buyers who have:
80-100K in the bank (starter home in these areas)
Excellent credit
200K+ HH income
—-AND—–
DON’T ALREADY OWN…
Is so incredibly small that I could probably round them all up in Palm Beach County and put them in my garage. Shoot, I probably know half of them, I am sure that many are posters on this blog!
So, just saying, I stand by my prediction..
20% down w/excellent (even 700+ FICO) as entry level homebuyer = END GAME..
Welcome to the “end game”.
Hmm my mom is willing to give me $300k to help buy me something in Southern California. I don’t really want to take the money. But we tried to figure out if I could afford a $600k place since I was looking at $300-400k price range on what I make. With taxes and HOA I couldn’t afford the mortgage with her help. That was the first thing that really got to me a year ago. Seriously how many people have that opportunity and still realize they can’t afford a house. Its easy to save money, its hard to pay more a month than you make. Until that changes the market will just sit.
I went to Costco and Best Buy this morning in Los Feliz this morning. There was plenty of parking and very few people shopping. That was very odd. Since I work half days on Fridays and those places are normally packed. I guess the economy is finally bursting at the seems to fall apart. If movie stars shopped at these kinds of stores, this is the area where most of the really famous people live and would go to. Which is about 5 miles from Burbank.
80-100K in the bank (starter home in these areas)
Excellent credit
200K+ HH income
—-AND—–
DON’T ALREADY OWN…
Is so incredibly small that I could probably round them all up in Palm Beach County and put them in my garage.
You are right, Michael, and I would add another caveat. You might find a few people like that, but are they going to WANT to buy a house any time soon?
Even places like Texas and Kansas would be hurt by 20% requirements. A $150K house in Dallas would require $30K down. How many people have $30K sitting in the bank? People would have to empty their 401K’s and Roth IRA’s to put down on a house. At that point, buyers will be very careful not to overpay when they have so much skin in the game. It’s much easier to gamble with the bank’s money, but when you have so scratch and save for years for a down payment, every penny will count when it comes to pricing a home.
There is another category of potential buyer, not in the $200K income category: those who can buy the $500K+ house for cash. Think of it this way: a person with $2M getting a 6% return is making only $120K/yr, but could certainly buy a $500K house if he/she chose to do so. But, as with the buyers described by Michael Fink, “many are posters on this blog,” which is a very small population.
Not that it matters, but I’m one. Can I crash in your garage, Fink?
I absolutely agree. And for one very simple reason - Americans can’t pay back the money have borrowed. Financial institutions all around the world are going to be experiencing great pain for a single reason - they lent money to Americans who are stiffing them on the loans. They are going to be extremely reluctant to do so in the future.
‘Now, lenders want to see a 10% down payment and excellent credit scores. If the median price of a single-family home is $700,000, you would need to have $70,000 sitting in the bank. How many young couples have that kind of money?’”
Probably none, but they *might* be able to come up with $30K so your price have to drop to match or They will not sell. God forbid if we go to 20% down like the early 90’s
“On Monday, Oct. 15, the City Council voted unanimously to enact a law that will impose fines of as much as $1,000 a day on owners of abandoned homes, with a maximum penalty of $100,000.”
I REALLY like this idea. Why? Its going to force banks to take care of their homes. If it applies to the individual abandoning their home, they’ll be forced to hand it over earlier before they rack up 30 to 60 days worth of fines. My best SWAG is that the faster we purge people out of their toxic waste mortgages, the less pain the economy will see.
I really wish the article had more information on this fine.
Got popcorn?
Neil
You can’t get blood out of turnip, put a $100K fine on these properties and they well end up abandoned by the bank and pose an even bigger problem for the city.
How can the banks abandon the properites? They are the legal owners of record. If the banks did abandon the property, I am sure the City could lien or sell the properties or force a sale to recover unpaid fines.
Ever try contacting an out of state bank ? Get lawyers involved and I can promise you years of no sale.
eminent domain + bulldozer..
Right, but cities are long lasting and the bank loses the property. If it ever sells, it will still have to satisfy any liens which may be imposed. Banks are businesses and will do whatever will make them the most money, or in this case lose them the least. It is just good business for them to dump the properties rather than sit on them if these kinds of laws become commonplace.
Nope, eventually the city liens or fines have to be forgiven to get the property sold and back on the tax rolls. You guys need to live in a rust belt city to see what happens.
Property is impounded for unpaid fees or fines.. after some amount of time it is sold then at public auction.
A city could let it go for a dollar.. or lease it for a dollar on agreement that the property will then be redeveloped.
I have never heard of a city lien being forgiven. Also depending on your state, a lienholder can force the sale of a property at auction for as little as $1000. Sooner or later the bank will want their money back and will be forced in this case with mounting losses robbing vital cash, and will sell. I could not really imagine a case, at least in the world of $500K boxes here in CA where banks would walk on a property over $100K
Just because *you* have never heard of it doesn’t mean it hasn’t happened. You guys keep thinking a bank is a person who cares and it isn’t.
A bank is a business and will do whatever maximizes profit and minimizes losses.
So.. a bank reposesses a house and neglects it’s upkeep to the point where the house is a haven for vermin, crackheads and becomes a general menace to society.. and is fined to the tune of 10’s of thousands of dollars.. And, on top of that, this bank pays a bunch of lawyers to defend the impossible position, throwing lots of good money after bad in a battle against City Hall.
If it actually happens (which i doubt) I suggest the banks plea insanity.
“How can the banks abandon the properites? They are the legal owners of record. If the banks did abandon the property, I am sure the City could lien or sell the properties or force a sale to recover unpaid fines.”
In our area, the city can, after X amount of time (not sure exactly how long, I believe a year), sell the abandoned property “Deeded” for $1 plus the back taxes owed. Now the “ignitor” is that back taxes are owed, not that the property is abandoned. There are several houses that I know of specifically where one of my relatives tried to buy the house, but, as the city is required to send a notice to the property owner, they usually show up on the day the taxes are due.
My father (rest his soul) told me that in the Great Depression a Land Bank was established and banks were allowed to deposit their forclosed properties into this Land Bank and thus be free of paying property taxes on their holdings.
I don’t know what sort of property it was; it might have been limited to farmland like the Joads got tractored out of in The Grapes of Wrath.
I’m thinking that this will make the banks re-assess their strategy of holding REO’s off the market or pricing them unrealistically in order to save their balance sheet. Throwing good money (fines or upkeep $) after bad (loans) probably won’t appeal to the banks and will be more difficult to defend as a business practice as well. IMO
–
More pressure to sell AQAP! This could lead to a “crash” in the prices.
Jas
Who is Jas?
Not you : )
Not only will it encourage the banks to take care of their REO, and thereby prevent them from imposing negative external costs on the properties of surrounding owner occupants, but it will also help get them off the fence to start selling some of their vacant homes. It is wasteful to hold homes vacant and let them fall into a dilapidated state through desuetude, when by just lowering the price to an affordable level, they could find a willing owner occupant who would maintain the property and help keep the neighborhood from going to ruin.
HBB word of the day: “desuetude”
Desuetude:
N.
1) A primary indicator of thesaurusitus.
“desuetude,” Fictionary version:
A shortage of suet. Example–”Don’t let your bird-feeding apparatus suffer from desuetude; add a little of the white part of your breakfast bacon to it every day.”
The big problem here in Glendale, CA, is that a lot of the vacant homes are having lots of fraudulent activity. A lot of these houses have paperwork on every window saying that the house is being monitored and other sorts of nonsense.
It doesn’t surprise me that Burbank will take a much larger hit once the movie industry shuts down shortly.
I agree, this is a very good move. There is no reason other owners in a neighborhood should be blighted by these properties while the banks sit on them and let them rot. And yes, I predict it will encourage banks to move these properties quicker and at a lower selling point.
Banks don’t pay *Anything* until the property is sold, Taxes, HOA Fees, Fines, NOTHING. I’ve seen foreclosures sit for years, take away the incentive to sell by loading on onerous fines and the property *Will* remain unsold.
The taxes/fees/fines will accumulate for however long the properties are held by the bank. Even a dimwit banker will understand this. The incentive is to sell before the load of extra liens/debt from local govt piles up. And a govt bureaucracy isn’t going to just cancel the stuff out.
“…take away the incentive to sell by loading on onerous fines and the property *Will* remain unsold.”
The penalties would need to have sufficient teeth or you might be right, especially if banks don’t have to pay *anything* until the property sells.
It seems like it depends on the locality. If they were agressive in putting a tax lien on the property, banks might have as little as 24 months to get it sold. In theory if the government isn’t forced to wait for a individual owner to sell their property for back taxes, I don’t see why it would be forced to wait for a corporation, either.
What I meant by “teeth” is, for instance, the threat of jail time for bankers who do not see to it that their REO properties are well-maintained. After all, poorly-maintained properties can cost surrounding neighbors thousands of dollars in lost equity value.
How can you jail a banker? I would think that the threat of a civil suit would work better because it would be 10 years before any specific banker could be assessed as being accountable and he/she would find themselves outside the country with a sack of cash.
A lot of good , common sense reasons for the banks and FBs to do the right thing.
But what does common sense have to do with it? I can guarantee you that EVERYONE involved in this fiasco (banks, buyers, government)will make decisions that will make the problem worse.
You heard it here first.
Everyone is too occupied trying to avoid getting handed the s%*tbag at present.
Nah, all you need is is the tax lien. If the bank sells the house NOW, the bank gets some money out of the property, if it sits on it, the city ends up owning it and the bank gets zero. Now that’s a no-brainer.
Once cities start imposing 1K/day tax liens for neglect you’ll see banks unloading these properties so fast your head will spin. Who wants to hold a hot potato like that.
I love being told I’m wrong by so many people who have never bought foreclosed property or tried to locate the actual owner of a property when even the city can’t. Or get calls returned from a bank because no one knows who is in charge. Yep, you are all *such* incredible armchair experts I will have bow to your vast expertise.
. If the median price of a single-family home is $700,000, you would need to have $70,000 sitting in the bank. How many young couples have that kind of money?’”
- That 70k that he referenced is for ‘Reserves’ after you have closed escrow.
Then you should be living somewhere else in this great country where there is “affordable” housing…I don’t consider a first time homebuyer equal to a $700K house…
Ahem,
I see nothing wrong with jumping in at a $700k home.
But I want a home worth $700k!
Got popcorn?
Neil
Those are currently selling for around $2M. Patience!
Oh, I’m learning patience.
I’m also getting dang pissed at the idiots who torched our economy. Don’t worry, that too shall pass.
We’ll just have to have another dinner.
Got popcorn?
Neil
Around here, I consider the average first time home buyer one that would purchase a $70,000 house, not a $700,000 house. But hey, if you can afford $7,000 plus per month, do whatever the hell you want. What’s that? You CAN’T afford $7,000 a month? Quick this young couple needs creative financing, STAT!
–
“On the upside, it’s a great rental market.”
For how long? Recession would lower the demand and many of the empty units that can’t be sold would be back on the rental market. Also, all those failed condo conversions and new condos being converted back into apartments would flood the supply of rentals. Ultimately, it would the over supply of rentals that would lead to decline in rents which will further lead to housing price declines.
Jas
‘Recession’
- An analyst on CNBC who watches freight transportation says that we are 100% ALREADY in a recession.
The amount of rail and truck freight shipments has dropped off terribly.
Whenever this has happened historically, it is the indicator that leads.
- Funny how it is Joe truck driver, the slob on the street that has the real pulse of the economy.
Here in So CA the container traffic from the LA/Long Beach ports are down as well. This is a big deal since most of the freight from Asia to the U.S. come in through these ports.
The Grinch is gonna own this year’s Christmas. Maybe next Christmas as well.
And the next?
“Here in So CA the container traffic from the LA/Long Beach ports are down as well. This is a big deal since most of the freight from Asia to the U.S. come in through these ports.”
That would be fine with me as i live near the ports and less big rigs clogging the local Long beach/LA fwys =less snarled traffic,cleaner air,and easier commutes along the 710/91/605 fwys.
Come to think of it there seems to be less traffic nowadays on all the major arterial fwys in greater LAMetro basin region. This trend was evident even during the first half of 2007-i estimated traffic was down 10% on the 91 fwy through OC/Riverside most of 2007. I always thought high gas prices was the main culprit but now i have heard on this blog about reduced port shipments.
–
I have seen 15 different independent economic series (I juts e-mailed one to Ben) that say that the US is in recession if history of those series is any guide. We shall find out if it is different this time.
My working hypothesis, including my speculative positions, is that the US is in a recession, economists’ forecast notwithstanding. They are called dismal scientists for a very good reason.
Jas
So, the L.A Times reports that unemployment is increasing in California and 1 million Californians are out of work.
So, let me get this right. Unemployment is up, 1 millon people in Cali are out of work, and the Bush Administration is refusing to enforce immigration law and deport the estimated 10-12 million illegals in the U.S that are taking jobs from American citizens.
As a FORMER Republican I would like to say the Mr. Bush is an idiot.
uh, stating the obvious, clearview? That was even more apparent to many than the HB.
LOL! Yes, I recall when all the pundits were trying to claim one of GWs wari-mongering speeches was “Churchillian” back in 2002 or so. Like comparing Mr Ed to Secretariat, was the final assessment, I believe.
How weird. Maybe Tony Blair’s war-mongering speeches were Churchillian (slightly) — at least he had the accent right — and one had some sense that his words carried the weight of his own moral convictions — but the enterprise was botched whether justified or not. Vote Ron Paul…
Mr. Fester, are you Christopher Lloyd? Your writing style reminds me of the show Frasier, for which CL was a writer / producer.
To asuwest2,
Perhaps it is not so obvious. There are still millions of conservatives that give money to the RNC and vote Republican. The funny thing is the Dems are not smart enough to see this for the wedge issue it is. If they do see it in the next year Hillary will be President and the Dems will control both houses with super majorities.
The only silver lining that I can see to the quickly cheapening US dollar is that a few of our “immigrants” are now moving to Canada. Let’s see how they handle it.
Canada does not tolerate illegal immigration and they will be sent back to their country of citizenship.
Canada has a substantial legal immigrant population who can get citizenship in 3 years and are politically active, and they do not want illegals competing with them for jobs and social services, nor do native-born Canadians.
Canada enforces their border and their immigration policies.
Their tolerance for illegals, including Americans who overstay their welcome, is very small.
‘California and 1 million Californians are out of work.’
- Since I work in the construction industry here in SoCal, I can confidently say those figures are a lie. Over the years when I visit job sites, the majority of labors on the sites are illegal (at least 70-80%).
The real California unemployment should include the 500 - 700k illegals.
Ok, so you mean when the cost of new construction or renovation was spiraling up to $200-$400/sf it was all being done by illegals? I thought construction was the last bastion of the redneck with the PowerStroke V10. I am guessing those illegals are getting organized and driving up wages? Or is this yet another example of the recent trend in US industry of getting more for less (e.g., bottled water)?
Where I am at - Georgia - bottled water may be the only water that we have shortly?
The illegals weren’t getting the big money, the white guy who drops them off and picks them up at the end of the day does. Anyway, I do know some Mexicans who, before the bubble, would be called daylaborers, but who got up to charging 20-30 bucks an hour, some even started getting snobby airs about them (namely, hardwood floor installers, during the bubble they acted like they were the freaking elite of the construction class).
Did you notice all this immigration cr@! started when Walmart got busted for hiring a bunch? Bush does not represent us he represents special interest groups like every other “elected” official in our country. They don’t get elected if they don’t have the support of these special interest groups.
If it weren’t for the declines in construction and real estate, San Diego would be having a better growth rate than we did last year,’ said Alan Gin, an economist at the University of San Diego.”
And if it weren’t for aerodynamics, pigs could fly; and if it weren’t for testicles, grandma would be grandpa, etc., etc.
And if it weren’t for aerodynamics, pigs could fly;
Oh, the real estate market is much like a flying pig. It was catapulted into the sky with no assigned means for a soft landing. In both cases the end result is the same: pigs get slaughtered.
Got popcorn?
Neil
Free porkchops for everyone ..coming up!.
cayo_ron, I was going to make a similar comment about Alan Gin’s comical assertion, but yours is funnier
Other than that, Mrs. Lincoln, how did you like the play?
Somewhat OT, but a Fed Governor told Bloomberg that “core inflation” is a better measure that total inflation.
http://www.bloomberg.com/apps/news?pid=20601087&sid=aohaOKFSvu.I&refer=home
“If the monetary authorities react to headline inflation numbers, they run the risk of responding to merely temporary fluctuations.”
However, if they ignore food and energy completely, the risk ignoring a real long term price change. It’s almost like saying it is OK if prices rise as long as wages stay low.
At least falling housing prices will be “good for some,” as the blog says. The price rise, of course, was not in the inflation rate.
Who you going to believe on inflation, the Fed or your lying eyes?
Who you going to believe on inflation, the Fed or your lying eyes?
To take the other side of this (devil advocate)…
Hume buyers may have heard from educated/informed people that prices were too high and in a mania. Say in early 2003… but saw their friends doing their 3rd house move in 3 years and making big cash and getting a larger house. Their “eyes” saw everyone else driving a new car, when some egghead (smart person) said to save.
Question for ya WT, given that the TIPS are linked to “core inflation” and not a more encompassing figure which would you guess would be a stronger holding, TIPS or gold?
Yeah, TIPS are turned into a swindle by “core” inflation, as is the cost-of-living adjustment on Social Security etc. But that’s the whole point. They need to inflate their way out of trouble, and the “core” inflation thing gives them a cover.
…Realtor Jim Klinge says he has been following a three-bedroom, Mediterranean-style villa purchased in January, 2006, for $950,000 and listed now at $849,000.”…
As I understand it, Mediterranean villas have 8 or 9 bedrooms with 9 of 10 baths. Three bedroom houses are called “tract homes.”
I just sold my home here in Orange County after purchasing it in 1997 for $275,000. I sold it for $830,000 with no regrets that I could have/should have sold it 1 1/2 year ago gor $900,000. But I didn’t know about the Housing Bubble Blog site then. I have been reading this site now for over a year and have decided to take my equity and head out of town. Thaks for everyone on this site for reaffirming my belief that we are headed towards a major recession/depression over the next few years. The reason I sold was that Orange County, CA was never the place I wnated to retire. My job took me here. Later was laid off then went self employed. When everyone around was buying bigger and better houses than me, I admit I was jealous, but kept remembering that I wanted my house paid off before 50 and wanted to retire at 55 (or at least have the money to do so). Now with my huge equity from the sale of my home and savings, 401(k), IRA’s etc. and NO DEBT, I am on top of the world. Thank you to the commenters and to Ben Jones for this site and making me realize that it was the time to sell and take what I could for the house and move on. BTW, it took me only 6 weeks to sell, because I priced about $50,000 below the other 4 homes for sale in my neighborhood and there was no deferred maintenance. Again, learning from the posters on this site. I will always be eternally grateful to this “family” and “friends” of this site, thank you, thank you!
Sorry for the misspellings…
Congrats OC. You are one of the smart ones.
Thank you Big V, I only became one of “the smart ones” because of this Blog.
Be sure to take out your check book and show your gratitude to Ben. I did.
I absoulutely did! Thank you!
I feel the same way about this blog. I’m living where I want to live and the numbers are different but close to the same story. So glad to have cash in the bank and be out from under the house. (Sold the house in a week thanks to “it’s the price, dummy!” advise on this blog.)
I love stories with happy endings.
Now for those that bought your places. . .
Oh well.
Good for you! Congratulations!
This site too helped me from pulling the trigger and I’m so very grateful for coming here repeatedly to re-affirm my bubble suspitions and awareness over the last 5 years.
Enjoy your “unencumbered” future. Truly you can breathe easier as you (we) watch things unfold in the coming years.
DOC
http://www.slate.com/id/2175724/
The goal is to get yourself in a position to cause “systemic risk.”
BTW, in one of the WSJ articles last week a Treasury official said that in the discussions those trying to create the super-SIV asked for public money and the Treasury said no. “We’re only paying for the sandwiches” is the quote.
We’ll I’ve heard that the sandwiches in DC are awful if you are from NY. But I still want the taxpayers to paid back for them.
Wall Street Gangsters up to their same old tricks.
I’m reading the NY Times online and there, someone said it.
“If there is a possible benefit to the slump, it may be that we’ll emerge with a different understanding of the value of our homes, regarding them less as investments (perhaps burying the presumption, at least until the next boom, that they’re as reliable as stocks and bonds) and more as something all too ordinary. That is, as places to live.”
http://www.nytimes.com/2007/09/09/realestate/keymagazine/909LEDE-t.html?ref=keymagazine
Haven’t heard that since the mid-1990s.
Good news, HBBers! I had another one of my prophetic dreams last night. This is how it went:
I guess I had asked my husband to bring home some groceries, and one of the things on the list was linguini. When he handed me the pasta, I saw that it was one of those gourmand types that came in its own glass jar. I said “Hunnard, it’s a waste of money to buy the jar along with the pasta. We already have a spaghetti jar.” Then he said “We can afford it, and besides, you deserve to have two.”
So I opened up the jar and pulled out the pasta. It had been presliced into shorter strands so I wouldn’t have to waste my precious energy on breaking pasta. I turned the package around and read the label. That’s when I noticed the descriptor:
“Popcorn Flavored”
Kinda of funny but what does this mean ?
I’ve already analyzed it and this is what I think:
Back in 2003/4, before I became educated about the bubble, I thought of houses as being like these guormet treats. They were symbols of the good life. However, my view of them has changed dramatically. Far from being a gourmet treat, they are really a staple for our country and families. I now realize that they have simply been wrapped in fancy packaging and sold as “gourmet” (kinda like the smoked salmon pate with an expiration date 2 years out), but are really just “gourmand” (attractive only to the unsophisticated poser). They are the grain that provides us sustanance - important, but cheap.
It makes sense that I would have asked my husband to bring me some pasta if the pasta represets a house, since that’s traditionally what a wife wants her husband to do first, although in real life it was me who decided to hold off. The part about us affording it and deserving to have two refers to the impending 50% price drop, and popcorn flavoring is just pure subconcious humor.
A different dream analysis: you’re out of popcorn flavored pasta but have too much gourmand spagetti sauce, which leads us to the regretable conclusion from this dream that your husband will not follow lists when he’s out shopping. Also, you are probably taking the HBB waaaaay too seriously. Please, don’t thank me - my first analysis is free - all others require a contribution to the HBB.
Popcorn flavored pasta… they could be onto something there…
Got Popcorn? Popcorn flavored pasta?
Neil
Another free pseudo interpretation, just for the hell of it. The pasta is this blog: plain, simple, whole grain, nourishing, precut in handy, sensible comments that save you all the work of piecing the info together yourself. You like the pasta itself, not the fancy, unnecessarily expensive packaging, “the houses” that other people go for. You are more into the real thing, just like the folks here.
Re: Renting. The idea of turning unsold homes into rentals is just more fantasy / dreaming on the part of the housing industry. If the seller is desperate and can’t sell his house, he can turn it into a rental and wait out the storm.
There are several problems with this ‘theory’ and why it will not solve any problems for the homeowner.
a) Rents will probably not cover the mortgage. The homeowner will be faced to “subsidize” the rent but it will not cover things like property tax, other fees, maintenance, yard work, etc. I currently have a friend who is in this position. Her mortgage is $5,000 / month for a house that won’t sell in S. Diego. She’s decided to rent it. She can only get $2,000 / mo., so she needs to “kick in” the other $3,000 in order to make the mortgage payment. How long is she going to do that?
b) As property values start to drop, there will be more and more vacant houses sitting empty. Homeowners will be forced to lower the rent in order to attract a renter. = it will be an even slimmer chance that the rent will help cover the mortgage payment. In the meantime, where will the homeowner live? In a cardboard box? He’ll have rent of his own to pay.
c) Abandoned, unsightly neighborhoods will not attract renters. The home owner will be stuck holding the bag.
d) The home owner needs to realize that “waiting out the storm” could be years before their property value goes back to some kind of normalcy. Most probably, their home value will never go back to what it was when they bought it. Are they prepared for that? (to stay put on a sinking ship)
e) Making the leap from homeowner to Landlord is not easy. It requires a new set of skills, which can ruin the homeowner financially if they are not careful. Making mistakes about who they rent to, and so on.
You have to go to this Brokers website and read the posts and laugh. http://forum.brokeroutpost.com/loans/forum/2/176361.htm
These people are thinking of jumping from residential lending to commercial lending.
Uh, isn’t commercial RE the next market ready to take a hit?
Yes it is - about 30% of my clients are Commercial RE and they are PANICKING over the credit crunch and trying to get properties entitled ASAP.
LOL! Thanks for the link. I think this was one of my favorite quotes coming right after the woman’s post that reminded everyone brokers don’t need to make $200,000 every year.
“What I’m trying to say is that there are brokers who are being forced to leave the profession because they have NO money. (And please no arrogance from those who said “they should have saved.”)”
Gosh no! Perish the thought. Save money? On $200,000 per year - how would Bratleigh continue in private school? How could we make the Hummer payment and still manage to feed ourselves? Uggggggh!
Is she on drugs ?
“People will always need real estate no matter what the market does..they will all need to refinance for one reason or another, they pull helocs for one reason or another and they will always buy whether it be for investment or for their own enjoyment”.
Also the lack of room in her market worldview for RE as basic living space as a motivator is also telling….
“‘The housing boom [lasted] from 1998 to spring 2005,’ said Ken Fears, an economist with the National Assn. of Realtors. ‘The housing market has been slowing down since then and, since July 2007, home sale prices have sharply decreased.’”
Mr. Fears is not cut out to be an NAR spokesman, as he is clearly too honest.
Nah, not at all. It’s EASY to tell the truth once it’s already been out for MONTHS. That’s exactly the way these RE assh@les operate.
It is also part of the deal to pretend you have been foretelling the crash all along, no matter how extreme the level of denial a short while back.
“Some economists believe California and the East Bay won’t soon escape the housing nose dive.”
The East Bay job market and housing market both weathered the tech stock bust very well, thanks in part to the Fed’s rock bottom interest rates, plus home prices steadily rising off a relatively low base for the inner Bay Area. This time it’s different.
Cuntrywide will be bankrupt by Jan 2009 (Not rated) 20-Oct-07 05:51 pm
Good riddance!
I hope CFC’s greedy brokers and employees families STARVE TO DEATH for ruining people’s lives by giving them loans they cannot afford, then crying to the federal government for a taxpayer funded bailout.
Countrywide employees are unAmerican and no better than terrorists.
http://messages.finance.yahoo.com/Stocks_%28A_to_Z%29/Stocks_C/threadview?m=tm&bn=3223&tid=197295&mid=197295&tof=4&frt=2
Nice….
Speaking of terrorists, I’m hearing some talk about how the explosion of that big rig under a freeway tunnel on the 5 freeway last week (temperatures in the underpass soared to 1500 degrees) was terrorists trying out a dry run, wonder what attacks like that on all the freeway underpasses in a city would do to property values, wouldn’t be good.
More from Burbank:
The “Entourage” condos near the Warner Studios Ranch complex have had another price cut. First advertised in the mid $300K’s, later offered with $15K incentives, are now being heavily flippered at high $200K’s with $10K incentives.
Oh, and a complex of new townhomes over on Buena Vista are now being offered for lease after failing to sell.
The number of garage sales and cars with “for sale” signs along major thoroughfares appear to be increasing, too.
What are those new condos in N. Hollywood near Burbank, off Riverside and like Toluca or Colfax, that have that big flag that says “condos from the high 500’s”? That is such a plain, ugly building, at least from the Riverside Drive side, I can’t imagine anyone paying that.
Heck, forget the bubble… I’ve had a problem with L.A. prices ever since I moved here in ‘88.
LIES! Lies I tell you! This entire “housing bubble” is a hallucination brought by to many years of credit abuse! California is and always will be the place everyone who doesn’t live here wants to. So therefore no price is too high! No mortgage is too risky! And last but not least, no amount of debt is too much.
3 simple reasons why everything you read about the so called housing bubble is false, a lie, a bad rumor spread by the envious, the slackers and the general low lifes who grew up in mobile home parks in Oklahoma.
I will not be a party to any further erosion of our economy by all of this talk about subprime mortgages. There is no credit crisis! This is yet another rumor being spread by those tree hugging liberals trying to scare everyone into wearing hemp clothing and paying cash for everything, unless you’re an illegal alien that is. Why if there was credit crisis, is my wallet full of credit cards? Hmmmmmm? Answer that one for me you bubble believers!
Why is there this blame game going around saying people should have read their loan papers and understood the mortgage they were getting? Isn’t California the one place on Earth where everyone is a victim and no-one, except the corprations, Republicans and anyone who doesn’t live in California, is responible? Hmmmmm?
God gave us open space, we need to protect it! If we don’t what are all of those people going to look at while they sit in traffic driving to Mateca from their job in San Jose?
I guess I picked a bad week to quit sniffing glue.
Now that is funny.
Well, since you put it that way, I am inclined to agree. Will you be running for Governator soon?
“I guess I picked a bad week to quit sniffing glue.”
Don’t blame the glue, sir, it’s those lead paint chips.
“The Manteca Police Department estimated that banks now own as many as 300 homes in the city, while another 800 properties are in some stage of foreclosure.”
Geez, how many homes TOTAL are in Manteca? Youch!
Didn’t realize Manteca had 60K residents:
http://en.wikipedia.org/wiki/Manteca,_California
I thought it was much smaller. However, that’s still around 4-7% of all homes in some form of foreclosure.
It’s worse than that. I have a friend who got a job in Manteca— at a mobile home park. And I’m under the impression that such parks are plenty common in that area.
(It was the location, rather than the job, which sold her. I never did convince her that she had the skills to do better— such as becoming a publishing proofreader. Man, that girl could pick out typos like no one I’ve ever seen…)
Reckon mobile home parks could do pretty well the next few years.
“On Monday, Oct. 15, the City Council voted unanimously to enact a law that will impose fines of as much as $1,000 a day on owners of abandoned homes, with a maximum penalty of $100,000.”
This sounds like sheer stupidity. Can’t wait to see how it plays out in the court system. Note it says owners of abandoned homes which means the homeowner of record. Once he/she defaults the bank can go through foreclosure but the homeowner of record should be getting the bill and he/she has probably moved out of state, has nothing that can be attached or will file BK. In the meantime the property goes downhill and the bank drags its feet on the foreclosure to stall off taking possession of the property and the remaining homeowners keep running down to city hall to cry their tears of woe. If the homeowners want to make a real statement, each and every one in the development needs to send in their keys on the same day to the banks and move on with their lives, now that would get national media attention in a big way. On the other hand Manteca could always revert to a sanctuary city for illegal aliens wanting to work in SJ and SF area as they will soon find themselves with a lot of ‘affordable’ housing.
Cities better be careful about these fines, to the extent they do push banks into quickly unloading the properties, they could be looking at really steep price (and therefore property tax) declines.
Someone on this blog thought that the Lenders were holding off on foreclosing because they were waiting for a bail out of some kind .Another poster thought the lenders were so bogged down by foreclosures that they couldn’t process the foreclosures fast enough .
If lenders had any hope at all of government backed loans being able to be a bagholder they could pass a loan to ,that might explain the waiting game by bank. In the meantime the lenders are discovering that alot of the so-called owner occupied loans they made are really vacant houses .
The average price for a single-family home in Burbank dropped almost 5% from August to September, and the number of residences listed on the open market in the same period increased almost 50%, according to the National Assn. of Realtors.
Is this for real? The inventory in Burbank increased by 50% in a single MONTH?
I wondered that too. BTW jbunniii I was reading some other blog last month with a lot of idiotic comments; the only comments that made sense were made by one of US, that is to say, someone with a screen name “jbunniii,” thanks for doing that -
I’m not going to comment on the recent corrupt financial practices in the mortgage industry. I’ll leave that to the experts who created the mess.
But I would like to say a couple things about the houses themselves that have been pushed onto people with this money scheme. I would not want to live in one of those crapboxes.
I saw some of them being built. Blocks of cheap houses made of pasted together plywood and stapled together 2×4’s. Cheap materials that will decay quickly, assembled by people who don’t care. Huge profits for the builders, who don’t care and don’t live in their own houses or anywhere near them.
The houses I saw under construction were all identical or nearly so. They are separated by only about six feet. They are juxtaposed window to window. If you look to either your right or your left as you use the bathroom in the morning you can see through your window just six feet away your neighbor doing the same and looking at you.
I stood at the end of the block and looked through one of the side windows before the houses were sold and curtains were hung. I could see all the way through the house and out the window on the oposite side. I could see into the second house and out its window on the far side, and into the window of the third house. I could see all the way down the dang block and out to the next block, all through about forty window in twenty houses. The AMerican dream, eh?
The houses themselves are in motion. Walls crack and floors buckle as they slide on the loose earth below, only recently graded and piled. The counter tops are not level, the carpets are cheap and the walls are thin. There are no basements because taking time to build a basement might delay the builders’ profits.
I might buy one for my daughter in college if they marked it down about 80%.
This is a pet bugbear of mine also here in Australia.
I reckon it would be far better to have a GOOD party wall arrangement (full masonry both sides, sound/fire insulation in the middle) than these levels of “detachment”.
However, when I went and looked at some townhouses (= rowhomes?) actually being built, the hair rose at the back of my neck. I reckon you’d be able to hear a normal conversation through the party wall in a quiet time like the middle of the night.
The Bubble hits (close to) home! Just one street over, there’s a house (north Huntington Beach tract, built in 1963) that was a long-time rental (and looked it). Last year the renters went away and the owner refurbished the interior. I went to the open house and it looked rushed and slap-dash. He was asking $639k, which was the top of the local market. He ended up getting $625k according to Zillow.
Suddenly there were five cars in the driveway and loud parties many weekends. A couple of months ago I noticed the cars were gone. Yesterday I noticed the yard is overgrown and the lights don’t come on at night. According to RealtyTrac, the house (along with another one in the neighborhood that has been up for a short sale for months) is in pre-foreclosure.
I keep telling my wife to be patient; our time is coming.
You should see Costa Mesa. There’s a whole lot of that going on. People buying, holding on for a year or two while having big parties and lots of trucks parked on the street, then trying to sell, forfeiture of the property back to the bank. On top of all that, there are a large number of “For Rent” signs going up all over town. Even these signs tend to stay up for months.
One house ON our street was up for sale for a few months; later, a “for rent” sign went up. I’ll have to drive by to see whether it’s still up. There’s another down the street that’s been occupied for a couple of months by new “buyers.” I don’t think they’ll last long.
Apologies if someone has already put this article on the HBB:
California Falls Into the Sea: Housing Flameout
http://www.counterpunch.org/whitney10202007.html
It’s like a recap of many of the HBB threads. I wonder if Mike Whitney is reading here…
Alan Greenspan (aka bubble inflator). Check.
The infamous ARM reset chart. Check.
California Real Estate. Check.
Birth/Death BLS employment model. Check.
M-LEC. Yep.
Deflation vs Inflation.