Spitting Into The Wind In California
The Recordnet reports from California. “Months have passed since the days when dozens of homes at a time were going up in any given subdivision in San Joaquin County. These days, the typical new-home development looks as if it’s nearly in hibernation as the housing market steps into the third straight year of decline. The latest new-home figures show that quarterly sales have fallen to the lowest of this decade, according to the Gregory Group in Folsom.”
“A total of 421 new homes were sold countywide in the third quarter, down by almost two-thirds from the third quarter of 2004, near the top of the housing boom. Divided among 89 projects, that translates to about one home sold on average every three weeks at each development.”
“The average selling price also has declined steadily from a high of nearly $554,000 two years ago to about $468,000.”
“‘They’re getting body-slammed right now, frankly,’ said Greg Paquin, president of the Gregory Group.”
“‘Valley new-home construction sites are ghost towns,’ said Shane Hart, VP for Stockton-based Grupe Co. Incentives have increased steadily since the beginning of the year, while traffic and sales have continued to slow, he said. Grupe has offered as much as $150,000 in incentives per home, yet sales have become so slow that construction was halted at three developments in Stockton, Waterford and Tulare.”
“Florsheim Homes has come up with a marketing strategy to try to move a few remaining ‘close-out’ homes in two longtime projects - three homes in Turlock and seven in Ceres. Through next weekend, the company is staging a ‘Name Your Price’ sale, hoping to attract the same type of bargain hunters who show up for auctions.”
“Joe Anfuso, CEO of Stockton-based Florsheim Homes, has been a critic of developers who continued building in the slow market as the resulting large supply of unsold houses forced all builders to slash prices.”
“But construction activity has been pared dramatically in the past few months, as it should have, leaving builders still with the challenge of selling off standing homes, he said.”
“Anfuso said there’s no minimum price set. ‘You get to the point of how long do you want this to last?’ he said.”
“KB Home is working on about 60 homes in its Riverbend development in Stockton, making it one of the company’s busiest projects, said Kevin Kimball, senior VP of the company’s Central Valley region.”
“‘KB’s sales strategy is to be extremely price competitive, he said, with pricing down probably between $80,000 and $100,000 from a year ago. (For example, a 1,600-square-foot, three-bedroom/two bath home there carried at a starting price of $269,418.)”
“Paquin said there’s more bad news on the horizon for new-home builders, who in recent months offered such low prices and incentives that they even drew buyers from the existing-home market.”
“The flood of foreclosures is attracting the attention of bargain hunters and forcing existing-home prices down so much that those homes are getting more attention from potential buyers, he said.”
The Daily News. “‘Hey, it’s Mr. Doom and Gloom,’ Robert shouted from his stool on Wednesday when I dropped by a local restaurant. ‘You’re killing me.’”
“He was referring to two stories I wrote for that morning’s paper, one that noted foreclosures were getting to be a relatively good deal in this sour real estate market and the other about home sales hitting a more than 20-year low.”
“Robert has an interest in a Chatsworth home he’s trying to sell, and the market isn’t cooperating.”
“When this month ends, it marks the two-year anniversary of the start of the current downturn, at least here in the San Fernando Valley. In October 2005, home sales in the Valley fell an annual 16.1 percent to their lowest level for that month in five years.”
“That month, 998 previously owned single-family homes changed owners, according to the Southland Regional Association of Realtors. And sales have been falling on an annual basis ever since. ‘For Sale’ signs have become yard ornaments.”
“‘Properties will sit on the market longer, and that’s not a bad thing (for buyers),’ said Tom Carnahan, owner of Carnahan & Associates in Woodland Hills.”
“Foreclosures are sprouting up across the Valley, and some are priced about 20 percent under their last selling price. There is also going to be a big foreclosure auction this weekend at the Los Angeles Convention Center. There are 135 properties on the block from Los Angeles and Orange counties and the Inland Empire.”
“Of those, 38 are from the San Fernando, Santa Clarita, Antelope, Simi and Conejo valleys.”
“Two years ago, Jim Ezell was president of the Realtors group and had been in the business for 30 years, so he’s seen up and down markets. ‘I would not write an obituary for the booming seller’s market just yet,’ he said at the time.”
“You can probably make the case now that the market has a terminal illness. That’s what the numbers that are already out for September suggest. This week will bring more proof.”
The Union Tribune. “Builder Michael Pattinson may be spitting into the wind. In an industry where price cutting of new homes is increasingly taking hold, he remains firmly against using the marketing tactic.”
“‘It is the large public home builders that have led the discounting program. I think it’s wrong,’ he said. ‘They’ve hurt markets across the whole country.’”
“By cutting prices, Pattinson said, ‘you wipe out the equity previous customers have put into their new homes they bought earlier. Consumer confidence is lost.’”
“In an interview, he was asked how the market will look next year. ‘I think it will be a lot like it is today because the public builder discounting will continue and I think it will leave consumers on the sidelines.’ he replied.”
“‘This is the big problem with discounting: You push more people out of the market than you bring into the market. There will be one or two people who will say, ‘Yeah, I’ll buy that deal.’ But there will be a lot of people who say to themselves, ‘If they are dropping it $50,000 today, what are they going to be dropping it to next month or next year?’ he said.”
“The fourth quarter of the year had hardly begun Oct. 1 when home builders and industry experts wrote it off as a disappointment and gloomily predicted 2008 won’t be much better.”
“Industry consultant Jeff Meyers, a veteran watcher of the building industry with offices in Orange County, said buyers will be able to get 10 percent to 15 percent discounts off asking prices at certain projects. But they must be ready to close escrow without contingencies to meet the end of builders’ fiscal years.”
“Meyers said the availability of deals also depends on whether it’s a private company – which can take its time to sell at target prices, and a public company, with shareholders and analysts demanding greater profits every quarter. Judging by recent sales campaigns, it’s the public companies that are desperate to sell, even at a loss.”
“‘You’ve got to go back to the early 1980s when it was that bad – and it took four years to work that off,’ securities analyst Jeffrey Laverty told the Builders Magazine. ‘I don’t agree that there’s a turnaround in sight. It’s ugly out there.’”
“In short, the rose-colored glasses so many builders wear in this risky business have been replaced by bifocals, as optimism gives way to realism and executives retrench.”
“Paul Tryon, CEO of the San Diego Building Industry Association, said local builders knew back in July and August, when the credit crunch spooked investors and buyers, that 2007 would end up as a bummer.”
“‘I think there was more optimism for 2008 until the latter part of the summer,’ he said. ‘Then, traffic was down, sales were down, cancellations were up and people who put deposits in were electing to stay on the sidelines.’”
“For Mike Railey, hope outweighed fear as he closed escrow early this month on a $1.4 million, 1,500-square-foot penthouse at The Legend, Bosa Development’s 180-unit condo tower next to Petco Park.”
“He and his wife and their two sons live in a modest home in Del Mar that carries a negative-amortization loan. As a mortgage broker, Railey knows the risks of a loan on which the balance grows if you don’t pay enough per month.”
“‘I’m scared right now; I’m struggling a bit,’ he said.”
“Now the family faces an additional $6,100 monthly payment for the mortgage, taxes and homeowner fees for the downtown unit. He briefly considered backing out of the purchase until Bosa told him he could risk losing his 15 percent down payment.”
“‘I barely make enough to survive, but with my real estate I can hang in there,’ he said.”
“He hopes to lease the unit out for the time being and bank on an invention he’s marketing.”
“Jim Abbott, whose downtown office is helping the Railey family deal with its high-priced penthouse, said so far most builders are reluctant to cut. ‘Do they become like Steve Jobs with the iPhone and go back and give everybody a credit? What do you do as a developer? They’re in a very tough situation,’ Abbott said. ‘You could almost feel sorry for one.’”
“Since hitting a peak of $518,000 in November 2005, the median price of a home sold in San Diego County has tumbled to $470,000 as of last month, according to DataQuick.”
“Over the past couple of years, sales of expensive homes in areas such as Rancho Santa Fe, Coronado and Del Mar have skewed the median price upward, disguising the sluggish sales and declining prices in much of the rest of the county.”
“The least-expensive neighborhoods have been particularly hard hit, because so many low-income borrowers are going into default.”
“Last month, the median prices of homes sold in National City, San Ysidro, Linda Vista and northern Chula Vista were all off by more than 25 percent from their prices in September 2006. Prices in Golden Hill were down 35 percent.”
“‘The high-end sales that were propping up the median were taken away in September,’ said Rich Toscano, a financial adviser with Pacific Capital Associates in Del Mar.”
“The Case-Shiller Index shows that San Diego home prices fell 7.8 percent between November 2005 and July 2007, the most recent data available. After adjusting for inflation, San Diego homes have lost roughly 13 percent of their value since July 2005, Toscano said.”
“San Diego real estate broker Robert Schwartz said the median is also overstated because it does not reflect the incentives that home sellers are giving buyers. A home in San Carlos sold for $480,000, but only after the owner gave $14,400 in concessions to the buyer. Another San Carlos home sold for $385,000, not including $10,000 in concessions. A $360,000 home in Mission Valley also included $10,000 in concessions.”
“‘Those are all homes that I personally know about,’ Schwartz said.”
I hope locals can let us know what this flippers condo will rent for in San Diego. And he has a neg am on his primary home!
‘The third quarter was the slowest three-month period for O.C. home buying since DataQuick started collecting housing data in 1988: a shocking 46 percent below the 20-year average.’
‘As the number of students attending most San Luis Obispo County schools continues to decline. There are at least 2,075 fewer students attending county schools today compared with six years ago, a decline of about 5.5 percent. And that number is expected to grow. At least half of the counties in the state are declining.’
‘The coastal regions of California, from Marin in the north to San Diego in the south, are by and large experiencing a decline because property values have risen beyond the reach of the average family,’ said James Gentilucci, a Cal Poly education professor who has studied enrollment trends in San Luis Obispo County schools. ‘When housing prices touch the $375,000 to $390,000 price range, most families begin to look elsewhere.’ Last month the county median price stood at $495,000.’
‘The jumbo market ‘has thawed a little bit.’ But ‘we’re not even close to being back to normal. We don’t have as many players in the market. Jumbos are still difficult to get for clients with low down payments and less-than-stellar credit. We’ve wiped out an entire subset of mortgages that was there before.’
‘Bank representatives are telling Jackson that the loans they are taking from him are for their own portfolios. ‘There are still no (jumbo) sales in the secondary market,’ he says.’
NEWS: GREENSPAN BLASTS HOUSING BAILOUT
http://investing.reuters.co.uk/news/articleinvesting.aspx?type=allBreakingNews&storyID=2007-10-19T194504Z_01_N19453144_RTRIDST_0_ECONOMY-CREDIT-WRAPUP-1.XML
There has never been a better time to be retired from a high profile post at the Fed!
Some local observations here in Mesa, AZ:
The term “Upside down” now tends to make people think of home equity or lack of it, rather than a type of cake.
Two years ago the local Walmarts, Targets, etc. would be packed with the families of obviously Hispanic construction workers and day laborers. These days there is just a fraction of what was. Many more stories of foreclosures, misery, and renters being forced out of foreclosed upon properties. Restaurants which were once very busy, now very quiet. The realtors I know are already in the recession/ depression mode. Car and truck dealers say their traffic is way down. The gathering dismal economic clouds portend a long gloomy winter in the Valley of the Sun.
“If you intervene in the system, the vultures stay away,” he said. “The vultures sometimes are very useful.”
Amen to that, fellow vultures.
Ben, this dude is toast. If you read the entire article at the UnionTrib online you can see his gambling mentality which is extremely prevalent down here. His “invention” is some kind of “motorized surfboard”…yeah…good luck with that one dude. Freaking incredible. He will be lucky to get $2500-$2800/month for that place.
“‘I barely make enough to survive, but with my real estate I can hang in there,’ he said.”
You know he didn’t invent some new form of common sense. He can hang in there with that negative amortization loan. Good for you. I like the optimism.
Ok……here comes a good swell…….pull the cord to start it up……hurry…..hurry…….dang!…..ran outa gas.
“‘I barely make enough to survive, but with my real estate I can hang in there,’”
Spoken like the social parasite he is.
It’s not even a new invention. If you go to Pizza My Heart in Santa Cruz you can see a motorized surf board from the 60’s hanging on the wall.
Damn. Now I’m hungry. They have the best pesto pizza…
Already ‘invented’ 15 years ago by at least two companies in the US, both bankrupt or absorbed and deleted. I had one - complete crap. Currently several products of that type available - not selling well and never had.
“I hope locals can let us know what this flippers condo will rent for in San Diego. And he has a neg am on his primary home!”
That dude has a perfect storm in his own personal financial picture!
He was worried about 15%? He’s going to lose at least 4x that! Well, not really, ‘cuz he’ll walk on the condo inside a year, guaranteed.
One of the absolute truisms of investing is that people are too quick to realize gains and too slow to cut losses. All he could think about was losing the $225K now instead of the $900K+ he’ll lose later.
“too quick to realize gains and too slow to cut losses.”
Yep
“‘Hey, it’s Mr. Doom and Gloom,’ Robert shouted from his stool on Wednesday when I dropped by a local restaurant. ‘You’re killing me.’”
Funny…I DON’T see blood in the streets yet….nary even a nosebleed. Talk to us when your hemorrhaging gets knee deep and you fell light headed
All of us will hear this crap soon. Some of these people will be dangerous. Be careful. They will never blame themselves, and in California where they stand to lose hundreds of thousands of dollars, they might really lash out. That will be more than hitting somebody with a flip-flop.
flip - flop —- hey, that’s a good one
Yes, NYCityboy - I so agree. In fact, I’m warning members of my family to watch out for drivers looking to intentionally become involved in an accident - perhaps to try to obtain insurance benefits or to become the Plaintiff in a civil suit. Road rage is another thing to watch out for. Scams, you name it….
~Misstrial
Accident scams were so prevalent here in SoCal — usually with a car full of illegals — that they had to set up special units to deal with them.
Given that the mortgage brokers all seemed to have Bimmers and the realtors all appeared to have Benzes, I wouldn’t want to be driving either one before too long.
I remember that, tj. They used to cut in front of trucks (18-wheelers) and then slam on the brakes, IIRC. The truck was always found at fault (law for rear-ending) and the slimeballs would collect insane amounts from these trucking companies.
Mis (and NYC),
Sooooooooooo true. No need for paranoia, er…always look for the exit.
In a car, croud, or cloud formations…be aware…be carefull out there!
Best,
Leigh
Interesting. Had a sportscar “engage” me on the NY Thruway today. Like they wanted an accident. I braked, they flipped me off. Never considered the FB factor.
Yeah, and what’s more, I expect that ARSON will increase as people want to collect insurance on a upsidedown falling knife rather they can’t sell for the price they “need”. This could get real ugly in certain dry locations ala Malibu.
“Some of these people will be dangerous. Be careful. They will never blame themselves, and in California where they stand to lose hundreds of thousands of dollars, they might really lash out. That will be more than hitting somebody with a flip-flop. ”
I was going to write a letter to the editor of our Central Cal paper with my “no bailout” rant, then thought better of it. Too many pissed-off, irrational and stupid FB’s in Central Cal to take that chance. Too bad Editorial Editors demand they have your name to print below your “letter to the editor.”
DOC
There are 7 downtown penthouses on Craig’s List that are asking between $2400 to $3300 and 3 other penthouses that are listed at $5000, $6490 (waterfront) and $6450. I’m guessing that the last 3 are wishing prices and the other 7 are closer to getting prices. Most places here rent for half the mortgage.
and…. a lot of new inventory is coming on line as more condo towers are under construction. many seem to be about 1/2 built, or about 10 floors of the typical 20 floor building, all within about a 15 square block area. Downtown San Diego is small and compact but rising vertically with residential.
If you go to http://www.sdlookup.com and browse downtown condo inventory you will be amazed at the price charged on HOA fees for these places. It is not uncommon to see upwards of $500/month just on an HOA fee…shit on that…
Out of curiosity I was checking out some condo prices near downtown PHX. In one building, built maybe twenty years ago, a 1600sf 2 bedroom condo was selling for around $400 with a $750 monthly condo fee. All that for what is essentially a perfectly ordinary two bedroom apartment. Insanity.
Don’t even get me started… in my neighborhood (lower manhattan) there are plenty of places for sale with monthly “maintenance fees” that I wouldn’t even pay as rent. The way I look at it is that these “for sale” apartments are really rental apartments with one hell of a rental-broker’s fee.
Some of these ‘penthouse’ apartments downtown can be pretty small. The floorplans I looked at on the top floors were about 1000-1500sq ft. Also, from what I can find, the building itself is less than half sold. That makes for a nice stable HOA, doesn’t it? Like Dukes mentioned, the fees are exorbitant already, assuming people are actually going to buy them all and not leave more than half of them sitting empty.
A little looking around turned up 6 other rentals in the same building at wishing prices.
3rd floor $2200/mo
unknown $3750/mo
5th floor $4000/mo
7th floor $4500/mo
13th floor $3500/mo
21st floor $5500/mo
The question is only how much a month this investment is bleeding. Other nearby condos with better views can be rented for less than most of these are listing for.
After adjusting for inflation, San Diego homes have lost roughly 13 percent of their value since July 2005
With much due respect to Mr. Toscano, does he mean the CPI-U or the real inflation rate that some pundits here on this blog regard as double or triple that? If the latter, then the price drop is much more than 13%.
And wow! the knife catcher buying that $1.4 million penthouse. What’s he been smoking?
The more you spend, the more you make. You must not be an “investor”.
Right. 20% per year on 1.4 million is a lot better than 20% per year on 700K. Of course, if prices went DOWN 20% per year, then, gee, that would be really bad. But since real estate always goes up, that could never happen.
Italics OFF.
I said italics OFF, dammit!
“And wow! the knife catcher buying that $1.4 million penthouse. What’s he been smoking?”
He couldn’t mentally deal with walking away from his deposit. He’ll end up losing the deposit plus the carrying costs, when the lender takes it from him. He probably borrowed from his primary residence, to top it off.
Go big or go home, right? From the sound of things, this guy was probably looking at bankrupcy if he lost the deposit, so why not swing for the fences… if a lender is stupid enough to take all the risk.
“…and a public company, with shareholders and analysts demanding greater profits every quarter.”
uhhhh, any shareholders that expect greater profits (or any profits) from builders is going to be in for a really rude awakening. The bigger question is why are they holding stocks?
“For Mike Railey, hope outweighed fear as he closed escrow early this month on a $1.4 million, 1,500-square-foot penthouse at The Legend, Bosa Development’s 180-unit condo tower next to Petco Park.”
You go, big boy. You show ‘em that you won’t tricked by us paranoid bloggers. Go get’m (and maybe pick up a BK lawyer along the way).
Sounds like a pretty expensive ‘business’ move for a struggling inventor. Is it possible that this is some type of mortgage “fraud” scheme with a colluding buider / developer? Surely this deal involves some time of creative financing and/or cash withdrawal, no?
http://www.portfolio.com/news-markets/national-news/portfolio/2007/10/15/Bear-Stearns-Troubles
Did you see the Buffett interview with Liz Clayman of FBN? He seemed like a really good guy. He didn’t seem like the evil wizards that now rule the financial realm. He spoke of his time with the Salomon mess. He mentioned how it was 9 months and 4 days of headaches for him. He seemed to remember every moment of that awful time in his life. Something tells me he won’t jump into this mess any time soon even though Berkshire is sitting on something like $42 billion in cash.
Why Bernanke Caved
http://www.portfolio.com/views/columns/2007/10/15/Bernanke-Changed-Course?TID=alsoin/whyhecaved
Nice article. It sure would be nice to end this ongoing boom bust cycle, but personally I’m guessing the Fed will do everything possible to reflate and consequently create a new bubble somewhere. THanks Everbank!
that was a good article. Volker as the bad guy, recalled as the greatest Federal Reserve Chairman…..
I continue to call for Bernanke to be a leader, but his fear is getting the best of him. I so desire for a strong, truth telling, free, and happy person to step forward, but they are letting me down.
I ask how can the world move forward? By stepping back, and getting back to basics. Step back.
Seems like commercial is immune to any sort of credit crunch, mortgage crisis or general economic slow down.
Bustling Commercial Real Estate Market Slows, but Avoids Housing Market Tumult
http://tinyurl.com/2mnam2
But on the other hand:
If the broader economy stumbles, the commercial real estate market would be vulnerable to “credit-risk contagion,” Wheaton said. Already, the credit crunch that started in mortgages has spread to other markets, including the commercial market, with some sellers asking for more capital upfront when mortgage-backed assets are financing a transaction.
Hit up a chart of the IYR or a few property REITs
Not a pretty picture TX. I guess they just keep building these commercial properties until the banks see the same kind of losses as the residential market. Must be just another bubble in the making.
“Already, the credit crunch that started in mortgages has spread to other markets, including the commercial market, with some sellers asking for more capital upfront when mortgage-backed assets are financing a transaction.”
What Wheaton means, in so many words, is that subprime is contained.
“Seems like commercial is immune to any sort of credit crunch, mortgage crisis or general economic slow down.”
What planet do you live on? Is it Planet Pump-’n-dump? Or Hump-a-chump?
More Business news - Off to a slow start
Year-old Chula Vista mall struggles to meet expectations; blame falls on high projections, toll road delay, housing slump
By David Washburn
UNION-TRIBUNE STAFF WRITER
October 21, 2007
While waiting for the Otay Ranch Town Center mall to open last year, Chula Vista officials were as giddy as schoolgirls waiting for, like, a mall to open.
PEGGY PEATTIE / Union-Tribune
A woman strolls through Chula Vista’s Otay Ranch Town Center. Chula Vista officials say they vastly overestimated the sales tax revenue that the mall, which opened last October, would generate in its first year of operation.
City leaders figured the new shopping center in the eastern part of the city not only would serve a growing population longing for nearby stores and restaurants but also provide a big boost in sales tax revenue – a category in which Chula Vista has lagged historically.
“The excitement is palpable,” Chula Vista spokeswoman Liz Purcell said in the weeks leading up to the mall’s opening last October.
Sales tax revenue for the city came in at an estimated $500,000 for the “lifestyle center’s” first eight months – less than one-third of the $1.8 million city officials had projected for that time period.
Blame is being directed at overblown city projections, a dampening of mall sales because of the delayed opening of a toll road adjacent to Otay Ranch Town Center and the continuing housing slowdown.
http://www.signonsandiego.com/news/business/20071021-9999-mz1b21slow.html
We visited this mall in late July. (We used to live in east Chula Vista.) It was a Sunday afternoon and while there were all kinds of activities going on: classic car display and kids’ fair with bounce houses etc. It was pretty dead. In fact the Discovery store was already going out of business. It’s are really nice mall, very beautiful and nice upscale stores. They are really counting on that toll road which starts at the Mexican boarder to bring up wealthy Mexican shoppers.
NEWS: GREENSPAN BLASTS HOUSING BAILOUT
http://tinyurl.com/2rajnx
“A home in San Carlos sold for $480,000, but only after the owner gave $14,400 in concessions to the buyer. Another San Carlos home sold for $385,000, not including $10,000 in concessions. A $360,000 home in Mission Valley also included $10,000 in concessions.”
And yet future appraisals will use these comps and mention nothing of concessions. It really is a jacked up system. I have now problem with seller concessions, but they need to be disclosed, documented, and somehow deducted from the recorded sales price. I mean, c’mon, the reason has become clear the reason it’s done in most cases is to keep prices artificially inflated. I say if someone really wants to step in and reform the system, start with the appraisal process which blatantly ignores this.
10 or 15 thousand dollars of concessions is nothing.There is a ring of realtors and their friends running 100k to 200k cash backs schemes here in Scam Diego.
http://tinyurl.com/35lrpx
the first 2 lines in the new 2005 appraisal forms in the sales grid say seller or financing concessions. the mls sheets from my area show seller concessions down at the bottom of the form.
“Jim Abbott, whose downtown office is helping the Railey family deal with its high-priced penthouse, said so far most builders are reluctant to cut. ‘Do they become like Steve Jobs with the iPhone and go back and give everybody a credit? What do you do as a developer? They’re in a very tough situation,’ Abbott said. ‘You could almost feel sorry for one.’”
Nope not here !
“‘I barely make enough to survive, but with my real estate I can hang in there,’ he said.”
“He hopes to lease the unit out for the time being and bank on an invention he’s marketing.”
Holy crap!
Holy Crap is right! What makes me so mad is that all this guy needs to do is mail in his keys, kick back for a few years, and all is well.
So sorry - I realize I’am new to the whole bankruptcy game, but do the banks just absorb these losses?
The “holy crap” reaction for me was in reference to the lenders. SOMEONE, quite recently, lent this bozo $1.4 million for a non-residence, cash-flow negative condo when he is struggling to get by as it is, and has a negative amortization loan on his residence.
Perhaps this should be the weekend topic for next weekend. Who the heck is still lending to people who can’t repay their loans? Is this because the banks haven’t yet acknowledged how much money they’ve lost, therefore policies haven’t sufficiently changed and they are continuing to lose money?
I second this… Ah… so you have an invention?
Oye… NegAm to stretch himself to the absolute limit and going further and further in debt.
From penthouse down to the streets in a couple of years.
Wow
Hey…you can live on your motorized surfboard, but you can’t surf on your $1.4MIL downtown condo
thank heaven for crazy inventors .. where would we be without them..
Hi,
We saw a house yesterday listed for 589k (accessed at 592k) in Masschussetts. It is 1998 built house sold for 298k. The current owner bought it for $579 in 2004. It is in a very good neighbourhood and nice schools. Surrounded houses are around 600 - 750 k prices range. We found in the disclosure that “3rd Party approval needed”. Does it mean it could be a short sale ? If yes, what should be the offer price ?
my plan might be to let someone else ’snatch it up’ now, wait a year or so.. and offer about $300K.
thanks, i am also thinking same but i want try with 350k see how it goes.
$350k might be worth the tax savings on the way down. Bid. When they say their insulted point out you’re a qualified buyer and not many others are. Be prepared for the realtor ™ and bank to be nasty.
Want to increase your chance of success?
1. Make it clear that the bank has only four weeks to respond (any less and they’ll throw away your offer).
2. Offer contingent on closing prior to 12/31/2007 (this will wake the bank up, they need to liquidate their bad debt by year end).
3. Write the offer to allow to allow $xxk of repairable work to be found (but I assume you’re bidding on that anyway).
In all other cases stand your ground.
Good luck. Don’t be disappointed if your offer is rejected. Be polite and say “better luck next time.”
Got popcorn?
Neil
thank neil for your valuable advice great points
Hi Neil, i did not understand your first point why does bank reject my offer if i give less than 4 wks to respond. can you please elobarate?
good summary, neil.
btw sam, 4 weeks allows the paperwork to work its way through the required maze of bank red tape.
rare for it to happen sooner
Aquis is 100% correct the process takes time. But you need a time limit to force it through the process. 4 weeks is what I’m hearing is the most likely to work.
Since you’re bidding before the end of the year, take advantage of that natural milestone!
Do come up with an upper bound of repair work you feel is ok. Don’t go below $5k (its too little to interest the bank) nor above a roof replacement cost (say $30k). Maybe even write in that if it is above $10k you’ll subtract the difference from your offer (but still put in an upper bound).
Good luck. Blog how it goes,
Neil
p.s. you may send 1/3 of the $200K - $300K savings joey and i just saved to ben as a commission. welcome to the blog!
ben deserves it we should send atleast 1% percent of our savings to ben.god bless ben. i am following this blog since 2005, sold our first house in 2006 may, since then we are renting and waiting for the right time. i will offer 305k for this house if the bank accepts its fine otherwise we will wait some time.
the house may be currently “accessed” at $589K, but i bet in 3 years it will be “assessed” at ~$400K.
Speaking of “spitting in the wind,” the Malibu fire is out of control. I wonder how many of these will be involved? What is the ramification of the fire for the bursting bubble?
Reportedly sparked by power lines downed by 80 mile per hour winds, the fire known as the “Canyon Fire” has burned more than 1,000 acres. It completely consumed “Castle Kashan” owned by Lilly Lawrence. Dr. Thomas Hodges built the 15,200 square foot castle, which sits atop bluff off Malibu Crest Road, near the Malibu Presbyterian Church.
Lawrence, the daughter of an Iranian oil minister, has offered her home for various charitable events for years and the castle was filled with irreplaceable artifacts, including a chandelier reportedly valued at $1 million, an extensive collection of Elvis Presley memorabilia, as well as memorabilia from the Dalai Lama and Princess Diana.
The castle, which was on the market for $17 million, sits just above the Malibu Civic Center, with it’s library, courthouse and labor exchange.
I was just watching the report on the news. Looks like Pepperdine U. could be in trouble. I hope none of our bloggers are affected. Stay safe, folks.
Thanks!
Just did a trip ‘over the hill ‘ from Westside and back to SFV - traffic not to bad that far east of the fire, but the sky in the west part of San Fernando Valley looks really ominous and smokey.
Fortunately, the wind has calmed a bit, but its expected to get going again come dusk.
Its going to be a long, smokey night for the firefighters. Godspeed to all concerned.
Orange County has some major fires going on now, too. I can’t precisely tell where they’re from, but it seems somewhere east or northeast of Costa Mesa. Could be the Santiago hills, Tustin, Irvine, or so. I see huge smoke clouds in the sky.
Today’s Santa Anas are unusually strong. Maybe one day like this every couple of years. Hopefully our power doesn’t go out.
“Orange County has some major fires going on now, too. I can’t precisely tell where they’re from”
The location of the OC fire appears to be in the hills along the 241 tollroad which runs jusrt east of Santiago canyon area and north of Irvine. The most threatened homes are the newly sprung Portola Community of new tract homes which is in the far north edge of Irvine right on the edge of the burning hills.
The canyon Country fire(Santa Clarita region), which appears to be the largest most serious so far, appears to be in the area between Soledand canyon-white canyon, north of Sierra highway in Canyon country. This fire will threaten and burn the most homes as there has been put up literally 1000’s of new tracts in CC, Castaic, Bouquet Canyon, ect. Plus the wind realy whips up big in this area.
The Malibu fire as reported at 8 pm PST appear to be contained-tentatively- as least as reported on channel 9 Kcal.
Sorry have very limited internet/mapping capabilty to do precise trackng of the fires raging all over Scal. In a few days i will have a new dell 531 with kick ass processing power to go bonkers on the net.
Rancho Bernardo is directly downwind from what is referred to as “The 78 Fire” (a reference to SR 78, along which the fire originated). The smoke is so thick outside that the sky overhead is white (despite a cloudless sky) and the normally bright San Diego sunlight is filtering through as a pale shade of yellow.
GS,
Not sure how close you are to the fire, but heard it might come down through RB and possibly RSF (your favorite area!). If you need any help, let us know.
Best of luck!
What a nutcase! Millions in debt, and hoping for an “invention” to save his ass.
First get the invention going, then spend the millions.
Maybe he’s invented Nuclear Fusion mini cells to power cars! Huzzah!
Speaking of the California wind (gulp!)…
More Metro news
Witch Creek Fire burns 3,000 acres near Ramona
UNION-TRIBUNE
3:17 p.m. October 21, 2007
RAMONA – The 78 Fire has burned 3,000 acres between Ramona and Santa Ysabel. Many homes near Witch Creek and San Diego Country Estates have been evacuated to Poway High School on Espola Road at Titan Way, county emergency said.
Cal Fire Battalion Chief Kelly Zombro said he’s notified the cities of Ramona, Escondido, Poway and San Diego that the fire is headed their way.
“It’s just like the Cedar fire. It was just like the Cedar fire right off the bat,” he said.
Zombro said the fire is burning in a swathe of land untouched by the Cedar and Paradise fires of 2003. It is north of where the Cedar burned and south of where Paradise burned and headed toward Ramona.
“We’re right in-between the two,” he said.
http://www.signonsandiego.com/news/metro/20071021-1517-witchfire.html
See above, GS…
From the NYTimes magazine, The Future is Drying UP…water problems in Cali, Arizona, New Mexico, Nevada…long, well-researched and interesting. Meanwhile, the drought is SE Georgia continues.
http://www.nytimes.com/2007/10/21/magazine/21water-t.html?_r=1&ref=magazine&oref=slogin
meanwhile, the immediacy of the historically unprecedented atlanta drought goes unmentioned in the nytimes article about the potential for droughts in western states! what could be more telling that water shortages are going to a problem in many localities in the u.s. bigtime!
i’d say there’s more than a good chance that water shortages may coincide with buyer shortages before this real estate bust is over, in 5, or 10 … or who knows how many years???
Big share falls feared on Monday.
The last line in this article could well be the FB’s lament.
“I’d like to laugh except it hurts,”
http://news.bbc.co.uk/1/hi/business/7055161.stm
I sold half my puts on Friday at the close so I’d be a bit annoyed to see a huge flush tomorrow but I guess some chips are better than none.
Nasdaq futures down another 9. Damn, I should have held that position for sure.
I would guess your selling puts Friday is a bad signal for tomorrow’s DJIA action…
You’re bluffing, right?
“Big share falls feared on Monday.”
I predict shares will be up 100 pts at the opening bell, and maybe 300 pts by day’s end. Everyone on the planet knows this is the optimal time to buy the dip, so go for it! Only fools would stay out of the market when a rally is in the bag…
Black Monday (Oct 19, 1987) was preceded by a Friday, Oct 16 selloff to the tune of 2.39 percent, but RELAX!!!– it is common knowledge that lightning never strikes twice.
NEWS SUMMARY: FRIDAY, OCTOBER 16, 1987
Published: October 16, 1987
…
Stock prices fell broadly after a new prime rate increase and a spate of program selling in the last half hour of trading. The Dow Jones industrial average plummeted 57.61 points, or 2.39 percent, to 2,355.09. D6
http://query.nytimes.com/gst/fullpage.html?res=9B0DE5DA1031F935A25753C1A961948260
Nikkei Index starting off down 500 points Monday morning.
NIKKEI 225 (Osaka:^N225)
Index Value: 16,312.05
Trade Time: 8:20PM ET
Change: 502.32 (2.99%)
Prev Close: 16,814.37
Open: 16,563.57
Day’s Range: 16264.70 - 16563.57
52wk Range: 15,262.10 - 18,300.40
Really bouncy market in all the Asian markets. All that are open are in the red (although some are doing better than others):
http://finance.yahoo.com/intlindices?e=asia
Its going to be another bearish week. Tomorrow? We’ll see. I’m working late tomorrow, so I’ll stay up and watch. (must shift schedule)
Got popcorn?
Neil
Sovereign funds buying?
good thing the discount window is open.
Gold to the moon?
http://goldprice.org/
The real crash in housing prices will be in terms of gold.
If you followed Chris Laird’s articles on Kitco.com the last 3 months and Peter Grandich’s columns before that, you will see that Grandich became a bull on precious metals in mid-summer while Laird is in the middle (was bearish on metals). Laird says now to hold cash - get out of stocks, and is in favor of gold as an alternative currency. He does think, however, that gold may pass $850 ($400 in 1980 valuation) before the end of 2007. He even thinks gold may go to $2000 in 2008. But I still call him mildly bullish since he promotes holding cash (probably he means T-bills).
I think gold will top out at $1500, but I cannot say how long it will take to get there. It could be the next 5 years or the next 3 years. Then watch out below!
Gold to the moon?
yes… buy gold now or be priced out forever.
Got gold bubble?
Smiles,
Leigh
Gold is up $8 allready in Asian trading. It keeps getting knocked down in US trading by the cartel, but one gets the sense that physical demand is overwhelming the cartel. Bernanke essentially had to make a choice between saving the bankers and saving the dollar/controlling gold price.
What’s in it for BB to save the bankers? Wouldn’t it behoove him to save *the bank* (central, that is), and let the bankers stew in the savory broth they cooked?
I still fervently believe he (with the tacit approval of Big Hank) will ultimately play this card, visible indications notwithstanding to the contrary. The alternative is institutional suicide for the Fed.
three anecdotals on Precious metals:
1. High school buddy tells me his dad has amassed 1.5M in silver…I think of him as the idiot savant on how to find money.
2. German national playing disk golf says, half my money is in gold… terrible disk golf player.
3. Uncle money bags says, I sold too early.
might be something to the precious.
FED is printing, and buying gold.
who else is up to the task.
Australia? Japan? Germany? UK? Saudis?
Im throwing in Italy, and China.
Last week I was reading about Chinese stock market in WSJ , here are some things got my attension
1. Average PE is 71
2. Most of the companies get 40% of revenues from the investments in stock market ( only 60% of their revenues comes from their operations)
3. There are around 70 million individual investors participate in trading only a fraction of investements are controlled by institutes.
“1. Average PE is 71″
That is not particularly high by irrational exuberance standards.
Let’s see… if we drop to “normal growth” that’s only a 75% drop or so. Whew! Thankfully its nothing like 1929.
2. Most of the companies get 40% of revenues from the investments in stock market ( only 60% of their revenues comes from their operations)
What?!? Do you have a link?
I found a link showing a 60:1 P/E
http://online.wsj.com/article/SB119265033975962331.html
When the Chinese stock market sneezes, we’ll be in trouble. Probably on 4/4/2008.
Got popcorn?
Neil
had two people ask me this week, should I move my 401k money?
both have half in “emerging markets”…
ready for fall down go boom?
http://www.cfo.com/article.cfm/9859557/c_9891771?f=magazine_special_reports
“why do half of New York City’s 2.9 million office workers go outside at 12:30 P.M. every day and wait in line to buy sandwiches?”
Yeah, somebody tell those f—ers to take lunch at a different time. I’m sick of waiting for them as they search for that debit card to pay for their $8.28 meal at the deli counter.
Where’d you find such a cheap deli?
I think, just tell em, to take a lunch.
lets get back to basics.
Nice stuff Chic….
the company is staging a ‘Name Your Price’ sale, hoping to attract the same type of bargain hunters who show up for auction
Sounds like a great game show. Similar to Drew Carey’s new gig? I name $1.99. That might even be too much in some of these new ghost towns. A home may become a liability if the cities want to fine owners for non-maintenance, and you live next door to one.
Two years ago, Jim Ezell was president of the Realtors group and had been in the business for 30 years, so he’s seen up and down markets. ‘I would not write an obituary for the booming seller’s market just yet,’ he said at the time.”
Jim, you may not be ready to. But I am. Dearly beloved, we are gathered here today …
Jim, you may not be ready to. But I am. Dearly beloved, we are gathered here today …
To pay respects to the deceased who imploded under his own weight…
Robert has an interest in a Chatsworth home he’s trying to sell, and the market isn’t cooperating
Bad market. Bad market. Produce a GF to rescue poor Robert.
A new fire taking out a lot of homes in Malibu, and parts of San Diego. I would say the market there in So Cal is on fire. Literally, not rising price wise.
http://news.yahoo.com/s/ap/20071021/ap_on_re_us/california_wildfires
“new fire taking out a lot of homes in Malibu, and parts of San Diego. I would say the market there in So Cal is on fire. Literally, not rising price wise.”
At last report at 10 pm PST on channel 9Kcal and 4 NBC-take it with a grain of salt-the malibu fire seemed contained. The two biggest fires with the most media attention besides the Malibu fire here in LA are the Canyon Country fire and the Irvine fire. A third potential biggie was popping up in Ontario.
I still say that the Canyon Country Fire in Santa Clarita region looks the most serious, with largest no of evacuations and the largest amt of homes/properties threatened. Too many new tracts put up there last several year at the height of bubblemania right into the fireprone hills in St Clarita outback regions such as canyon country , saugus,bouquet canyon,mint canyon.
This fire appears to have originated in the Aqua Dulce-Vasquex rocks area and raced at blazing speed southbound down the canyons, covering 4-5 miles in less than 2 hrs, and quickly reaching white canyon rd about a mile short of soledad canyon near sierra hwyway. 4000+ evacuations reported in this CC fire.
This is going to be a bad one. I once went to a new tract development in Castaic where they had built the homes smack against the dry brush hills. THis pattern probably repeats itself for thousands of new homes put up over last several years at peak of housing development bubble all over the dry scrubbrush hills in the Santa clarita region.
This is the first series of large fires to occur in SACal since the homebuilding spasm of the RE bubble mania got underway early this decade-the largest new-tract homebuilding spasm Scal has ever witnessed.
The IE also will get it bad as 1000’s of homes/tracts were put up in similar fashion smack up against the dry scrubby chapparell-covered hills all over the IE.
At the end of this week when normal offshore marine layer returns we might witness several thousand homes burned to the ground.
What do you do as a developer? They’re in a very tough situation,’ Abbott said. ‘You could almost feel sorry for one.’”
Hmmm. Let me see.
Nope. Nope. Nopetynopenopenope. I couldn’t.
I hear you Olympiagal . The Developers were the cats that put more unqualified people into homes than anyone as far as I’m concerned . In addition ,the seminar groups were tied into the developers who were pushing the flip a house investment scheme .The builders knew they were selling to investors and stupid speculators and they over built because they thought that faulty demand would continue . I would like to know when builders are going to be busted for shady loan dealing and cash back incentives ,or if they get a pass because they are a American Corporation .
Listen all the bs from these re pimps. Just lower your damn price to sane levels and people will buy again, but othwerwisw F&*^!
Wonder if some FB in San Francisco can help this guy out:
http://dallas.craigslist.org/wan/455793718.html
Holy smokes. NQ down 20, ES trading under 1500. All the post-Fed meeting gains are gone.
that was a short trip on a full point at the window.
and a half point for the “smart money”
get ready for the race to cash……
I expect the FED to cut rates again while talking tough on Inflation. Commodities may have had their day if this US slow down gets global ? I’ve been reading that many foriegn economies don’t link as tight to the US as they used too? I guess we might find out?
http://biz.yahoo.com/ap/071021/finance_meetings.html
S. CA burns as the santa ana winds blow through the passes and canyons. It will burn right to the Sea I expect.
Seriously. We’re fairly near the coast in NCSD, and the wind is still blowing furiously at 12:47 a.m. It’s very rarely windy here, even in the daytime.
DH works in emergency services, and they’re really scrambling. Everyone’s being called in. Gonna get ugly.
There is a possibility this could come through RSF to Del Mar, technically speaking.
Update re: the Irvine fire, as of 8:22 a.m. local — The wind seems to have shifted and looks like it’s blowing the fire back onto itself — onto the area it’s already burned. It went from ugly red skies here in Newport to blue and clear in about ten minutes.
I am suprised that not only are we exporting inflation through every means possible, but also, no outrage.
its good to be the king.
chances of motorized surfboard success: about 1.4M to one in paying off big enough to pay off the penthouse.
LOL
FIRE UPDATE:
Just got a call that there’s a new fire in North County San Diego around the San Elijo Hills area. This is near south Carlsbad/San Marcos/Elfin Forest region. This fire could easily threaten hundreds (thousands?) of homes nearby.
We live close enough that we’ve been instructed to pack our bags and be ready for evacuation.
In 2003 we were evacuated from Chula Vista east due to the fires. Don’t mess around. Got any of those large plastic storage totes? Fill ‘em up and load the car. You want to be ready.
Wind’s blowing out of the ENE at Rancho Santa Fe. Not to be alarmist, but there’s really not any good reason the fire couldn’t burn from Lake Hodges all the way to the ocean. Really, really bad.