Buyers Have All The Strength In California
The Los Angeles Business Journal reports from California. “California’s housing market, suffering from a slump in single-family home and condominium sales, will ’stay tough for quite some time,’ KB Home CEO Jeffrey Mezger said, Bloomberg News reports. ‘I think it’s going to take quite some time for the inventory to clear,’ said Mezger, whose Los Angeles-based company is the fifth largest U.S. homebuilder by sales.”
From CNBC. “The CEO of U.S. home builder KB Home said home prices in California could fall another 10 percent to 15 percent in the next 18 months.”
“CEO Jeffrey Mezger was speaking on a panel with Countrywide Financial CEO Angelo Mozilo and California State Treasurer Bill Lockyer. Lockyer said they all expected about 10 percent or more.”
“Mezger saw a 10 percent to 15 percent drop, Lockyer told Reuters after the panel ended, which Mezger later confirmed.”
“‘The others were all 10, maybe 10 plus. The north side of 10,’ Lockyer added. ‘I’m probably the least able to forecast, but that seemed like a reasonable trend.’
The Orange County Business Journal. “Orange County’s growth will be stunted by the downturn in the area’s real estate market, economists from the UCLA Anderson School of Management said on Monday.”
“‘We’re floating dangerously close to a recession,’ economist Ryan Ratcliff said.”
“As for the housing sector, speakers at the event expect to see home prices fall by nearly 15%, and for sales to remain slow until at least 2009.”
“‘It will seem like a recession (here) if you are related to residential real estate,’ said Mark Schniepp, director of the economic forecast.”
The LA Times. “Attention, you picky buyers who think you have all the time in the world to house hunt before you ink an offer. Listen up: Agents are mad as hell and aren’t going to take you anymore.”
“And sellers, those of you who don’t believe that your palace won’t fetch what the shack up the street sold for a year ago, you aren’t making any agent’s short list of whom to call back today.”
“Walter Sanford, a top-producing realty sales agent for more than 20 years and today a sales-coaching guru, is brutally blunt on the topic. In a down market like this, he tells agents, dump the buyers and spend your time and budget cultivating more listings of motivated sellers and only motivated sellers. It’s a way for agents to avoid financial ruin.”
“Sellers too, at least the unrealistic ones, are getting the same tough-love treatment. ‘You can’t waste time with cement-head sellers,’ is how Sanford puts it.”
“Lonnie Maples, who has been selling real estate for 29 years in inventory-saturated Riverside, had a listing appointment with a seller whose property had been in the MLS for more than a year. The owner had made several price reductions from it’s original $1,095,000, and he was now ready to list at $895,000.”
“‘I knew it wouldn’t sell for even that,’ Maples says. ‘That house, in this market…$750,000 was more like it. I declined the listing because I didn’t want to waste my time and money.’”
“And then there are those who say they never walk away from a potential listing. Anthony Marguleas, broker in Pacific Palisades, says he and his agents never turn down listings. Period.”
“The onus, he says, is on the agent to educate the client. ‘If all the comps show a house is worth $1 million and the seller wants $2 million for it, it’s the agent’s job to explain to him why that’s not possible. We won’t give up. We show the seller market analysis, comps of recent sales; we show him what else is currently on the market. It’s our job to not let him make a mistake.’”
“As for agents who sideline buyers if the buyers don’t want to commit, Marguleas says that behavior is just plain ‘lazy.’”
“‘It’s actually more than lazy; it’s insulting,’ he says. ‘Buying a home is the largest investment of someone’s life, and an agent doesn’t have the patience or time to show them homes anymore? That’s not right.’”
“A salesman at Irvine mortgage brokerage Sunwest Lending Group said everyone at the brokerage took pains to carefully explain to borrowers the risks as well as the benefits of option ARMs.”
“The salesman acknowledged many borrowers at all income levels are attracted to the option ARM because they have let their personal spending get so out of control that the low payment is the only one they can afford.”
“‘Newport Beach, where everyone is driving a Mercedes and the homes start at $1 million, is like an old western movie set,’ he said, describing the finances of many wealthy homeowners as precarious. ‘It’s all just a front, with stilts holding it up.’”
The Daily News. “Sales of single-family houses in the San Fernando Valley plunged an annual 55.5 percent to a record low 362 transactions in September.”
“In the third quarter, there were 854 home foreclosures in the Greater San Fernando Valley, from Burbank to Calabasas.”
“Jack Kyser, chief economist at the Los Angeles County Economic Development Corp., credits the high end with propping up the median. ‘High-end homes have been selling, and people at that end of the market don’t have to worry about funding.’”
“Andrew LePage, an analyst at DataQuick, said jumbo loan originations fell by 50 percent in Southern California from August to September.”
The Sacramento Bee. “The nation’s housing crisis has hit Sacramento’s economy like a sledgehammer, prompting a city government hiring freeze this month and an urgent examination into how millions can be trimmed from the budget.”
“‘We were hoping for a soft landing from the housing market problems, but it didn’t turn out that way,’ Russell Fehr, the city’s finance director, said on Sunday. ‘We have a widening gap that will grow and grow if we don’t do something about it.’”
“Sacramento’s financial picture has worsened rapidly, to the extent that city officials said they had not foreseen.”
“Home foreclosures have escalated at an astonishing pace in Sacramento. There have been far fewer sales of both new and existing residences than were anticipated in the city’s budget, according to the report. Development activity in the city will be 60 percent less than prior years, the report states.”
“‘Current staffing and service levels are not sustainable, given the current weakness in revenue growth,’ the report finds.”
The Modesto Bee. “The valley’s housing woes have triggered an employment collapse in some industries closely tied to the market. Mortgage companies and title insurance firms are closing branch offices and shedding employees by the dozens. Some real estate agents have walked away from the business.”
“For real estate agents in particular, he said, times are extremely tough. ‘A lot are going hungry,’ said Terry Harwell, division president of Alliance Title Co. in Stanislaus County.”
“Oscar Dominguez was one of them. The former agent for PMZ Real Estate got into the business in 2005. Dominguez thought it would free up more time to spend with his family, but instead found himself racing around to houses on the weekends and putting in 60-hour weeks. Then the slowdown hit.”
“‘My timing couldn’t have been worse,’ said Dominguez, who sold two houses during his tenure and now is training to become an electrician at Modesto Junior College.”
“‘It was tough. I was fortunate enough,’ Dominguez said. ‘There’s some agents who didn’t even sell two houses, like I did. Even established agents right now are struggling.’”
“Realtors are stymied by sellers who refuse to lower their prices, Dominguez said. Most people can’t or won’t accept less than what their house was valued at a few years ago, he said, meaning only the very best houses at the very lowest prices will sell. And those are few and far between.”
“‘Just about all of my co-workers are struggling and will tell you it’s a tough market,’ he said. ‘The buyers have all the strength. They can basically just name their price.’”
What buyers?
Who’s buying?
Real strength is perhaps years away.
If you ask this question, you are often told that the upper end market is still good and isolated from the general turmoil. i often wonder who the upper enders are. if they have that much money, how come they are so stupid. why would they buy now and overpay? Just because you’re rich, doesn’t mean you have to be stupid.
Yeah, I’ve wondered, too, what the demographic looks like that’s keeping that upper end moving. The smart money bailed on real estate ages ago. I wonder if it’s the makes $200K+ a year but couldn’t write a check for $10k (or $50K or whatever they should been easily able to accumulate) if they had to club.
One of my clients is quite wealthy. He and his wife just sold their house, and it’s in a neighborhood where houses routinely sell for $1 million and up.
Reason for the sale: He and the wife are getting on in years, and the house is just too big and too expensive for the two of them. They’re moving to another part of their city, and, get this, they’re going to rent.
“I often wonder who the upper enders are.”
The upper enders are the ones bending over the lower enders.
You can recognize them by the kevin spacey smile on their faces.
Hey Slim, you could sum it up neatly like this:
One of my clients is quite wealthy [...] and, get this, they’re going to rent.
And the man obviously intends to stay wealthy. Spending a fortune on buying another house right now is not the way to do that.
No home is valued in a vacuum. ALL PRICES ARE RELATIVE.
If there used to be a price differential of 10% between two cities in roughly the same geography, but one city crashed for whatever reason, so the difference in price is now 20%, it will take time, but that differential will come back down to that ~10% level (either by a recovery in the crashed market, or a move down in the other).
I’ve been renting in an EXCELLENT area for a few years, and would like to buy here. BUT, prices are crazy, and sticking (for now). People look at me sideways when I say that the neighboring city that is VERY GOOD is coming down in price, so perhaps I’ll buy there instead if the prices here don’t drop.
It is worth some premium to live in many great spots, but that premium is not infinite…
RW, you are making a great point. All the San Francisco people came up to Sacramento and saw all the 5,000 sf McMansions for $1,500,000 and thought they were a sweet deal at $300/sf. Now they are reverting to $150/sf. Countrywide just sold a 5600 sf house for $850,000. They are going beggging as rentals for $2500/month! No one wants to rent that kind of house in Sacramento, when you can get a 2,000 sf house for $1650/month and be very comfortable with and extra $10,200 in your pocket each year.
RE: RW, you are making a great point. All the San Francisco people came up to Sacramento and saw all the 5,000 sf McMansions for $1,500,000 and thought they were a sweet deal at $300/sf
I read an article somewhere in an appraisal journal which noted that the maximum amount of square footage a couple could maintain, without hiring outside help, was around 3,000SF.
So on top of the property taxes, sewer, water, heat, insurance, routine maintenance, and depreciation you can add the costs of a maid and gardener.
But with a crack down on illegals so, much for the,off the books, no FICA tax, dusting and floor cleaning help.
McMansion Ownership = Slave to the Grind.
That is what I always wonder in Montecito. Obviously the “upper end” of Montecito is the upper end of the country, but still, even if you have money to burn, why burn it?
Montecito is indeed one of the wealthier parts of the US like Atherton, Gross Point or The Hamptons. There are many homes for sale in the area ranging from $30 million estates to $1.5 million condo’s overlooking the Polo Field. We are in the construction business mainly serving Santa Barbara and Montecito. Presently we are fine with many spec homes going up. The future is a little fuzzy as usually the wealthy are the first to jump ship on a dying investment. The new homes under construction in these areas are in-fact boom time homes. From the initial purchase of the land, through concept, hiring an architect, plan, permits and financing approval, three years can easily pass. Most of the present construction was initiated in 2004 when the market was completely different from what it is today. The owners will not get asking price especially from the very wealthy.
The upper-enders are easy to spot. In the area you care about:
1. Are the top 1% of homes qualitatively different from a home in the top 10%? If no, you have no upper-enders in your neighbourhood.
2. Are people buying those top 1% homes paying cash? If no, see above.
The “rich” aren’t buying — $2-5M near me are sitting for months and months.
They — finally — got the memo about 6 months ago, and apparently started to ignore Parasite Realtors about “it’s different here.”
I think they are BARNICLES that attach themselves to the sale, but are not really needed.
parasites,barnicles - same thing
You have to wonder what the “upper end” market is. If 700K is only a step above starter home, where is the upper end. My guess is the upper didn’t experience the same run up that the lower and middle portions of the market did. 2.5 M homes didn’t go to 9 M did they? They went to 3 - 3.5 M.
The truly upper end buyers aren’t likely to spook over some housing increases. They buy what they want. You want to quadruple the price of your mansion — fine I’ll just stay in mine. Speculators didn’t speculate at the very top ends.
a few people are buying.. most probably out of necessity..
the rest wait patiently.. munching popcorn while watching sellers and their agents crackle and smoke on the grill. They are nowhere near done yet.
But if you talk to realtors, they’ll tell you there’s this massive build-up of potential buyers that has got to give. Oh really? Loose lending of the past 5 years has made just about everyone an owner (temporarily). Sorry, the buyer pool has been milked and milked again. All that’s left are us vultures, and we ain’t ready to dine just yet.
(circling overhead, with just one carrion bag)
nice
…two vultures sitting in a Joshua tree. One turns to the other and says, “Patience my ass, I’m gonna kill something.”
No doubt and what is so funny is not only have we been eating better and sleeping better than the typical FB. We know the party hasn’t even started. Panic selling has not set in yet and when it does I will get on my knees and thank God that he had not forsaken me. I was questioning my sanity last year and if the bubble would have lasted another year I would have been forced to take the little blue pills.
Necessity? When one can rent a house for 1/3rd to 1/2 cost of PITI? Perhaps it’s more like impatience, innumeracy, nagging Century-21 “Suzanne”-style spouse/in-laws, foolhardiness, FUD, slavish devotion to Bubblevision, etc.
Less than 2 years residency, need to roll the money to avoid capital gains necessity. (1031 or whatever they call it?)
sure, minimizing monthly cost is important.. the wife, kids, cars and truck, the boat and dogs need a place, asap. Save money and rent a place? I guess howmuchamonth can apply to buying or renting..
Growing up, we rented with 8 of us (Catholics). We had 4 cars at one time and a van. We didn’t have a dog or a boat, but a boat can be store away for cheap. How much is your dog worth? $50K? $100K? $200K?
Be creative man!
“Marky, Ricky, Danny, Terry, Mikey, Davey, Timmy, Tommy, Joey, Robby, Johnny, and Brian.”
Good night, John Boy…
and will.
Cinch, is the Catholic referance due to the church’s ban on contraception, thus 8 of you?
There were 6 of us and one bathroom. Dad never closed the door when using the facilities. Sorry for painting that picture for you.
We had 3 BR and the girls had to double up and I actually got my own room, probably 8 x 8. The baby slept in Mom and Dads room.
I never considered us overcrowded. We did fine. Why does each kid have to have their own suite, cellphone and vehicle?
For that matter, why have kids. I seem to everyones daddy, eight grandkids and counting.
I reccomend the Stealth condoms, “They never see you coming!”
Could someone explain how these overpaid, over educated nitwits pick a number out of the air, that 10% is the further decline in housing prices, and nobody asks “Where Did You Get That Figure” Give me your information that leads to that conclusion. And, by the way Mr. CEO, what were your predictions in Oct 2006? The Spin stops here!
“‘We were hoping for a soft landing from the housing market problems, but it didn’t turn out that way,’ Russell Fehr, the city’s finance director, said on Sunday.”
I guarantee this dude was predicting a “soft landing” 12 months ago. Now we find out he was really “hoping”. Goes to show ya that finger-crossing just don’t work.
Hi Ex!
Goes to show ya that finger-crossing just don’t work.
Pixy dust?
Cracking up!
Leigh
Wishing will not make it so.
In early 2006 in BW the former CEO of KB homes said - 6 months and this thing will be ok. Then he was fired and took millions with him. This moron is his replacement - just another joker pulling numbers out of his ass!
KARATZ: I don’t see a fundamental slowdown other than in the hottest markets. Things don’t continue through the roof forever. This is a breather in prices, and that takes some steam out of the market. In some markets, 10% to 15% of buyers were speculators. You take them out, and the market drops 10% to 15%, and it takes three to four months for whatever overhang there was to be sold, and then the market stabilizes. That’s where I think we will be three to four months from now.
http://www.businessweek.com/magazine/content/06_10/b3974141.htm?chan=search
“breather in prices”
bwahahahaha!
“In some markets, 10% to 15% of buyers were speculators. You take them out, and the market drops 10% to 15%,”
Ummmm…not if those 10 - 15% had interests in 30 -40% of the market.
I don’t remember a formula like that in Economics. Excess buyers can run up prices more than that.
Mozilo: “…we will survey the field and see if we can acquire things on an opportunistic basis.”
Famous last words.
10% is what they expect from now until Jan 01, 2008. They’ll be right, and everyone will they they are brilliant. Then they’ll predict another 10% drop over the next quarter.
lets not leave out .. the softlanding and flat prices at least for a couple years.
“Who’s buying?”
Hedge funds?
Foreign investors?
Other gamblers with deep pockets of wealth who think a bottom may be at hand, especially with ongoing behind the scenes efforts to reflate the bubble?
Just my guesses here; I frankly cannot see why any end user would think now would be a good time to buy, given prevalent information that prices are already falling and projected to fall further.
“For real estate agents in particular, he said, times are extremely tough. ‘A lot are going hungry
____________________________________________________
Eat dog food then you scum bags!
Crispy:
Bad advice. A can of Alpo is about 50 cents. You can get store brand on sale for 40 cents.
You should recommend our old standby: Top Ramen. This can be had for 8/1.00. Sometimes 12/1.00 on sale.
Hey now, don’t be tempted to feed the realtors with that melamine-contaminated dog food (Menu Foods et al.). Make sure it’s real stuff with home-grown non-imported ingredients. The cow hooves, snouts, asses, and eyeballs must all have American origins. (FWIW, my pooch gets Canidae and made-in-USA rawhide. If I’m feeling generous I may get a separate bowl for the local realtors.)
“‘My timing couldn’t have been worse,’ said Dominguez, who sold two houses during his tenure and now is training to become an electrician at Modesto Junior College.”
__________________________________________________
Someone sell this a$$ clown a bridge! From realtor to a real estate trade - good luck with that…
> Yea, I found that kind of funny… but then again someone has to repair all the shoddy crap that has been put in the last few years.
Eminent domain?
May be our saving grace…I don’t know.
Ya just can’t make this stuff up…sigh.
Leigh
Hey, most of California’s electricians and plumbers are boomers that will retire in 5-10 years.
There are very few younger demographics that are poised to backfill those positions.
How close to Folsum is Modesto. Maybe he can get a job as assistant electrician for the guy who throws the switch at the prison. There is plenty of work I’ve been told. hehehehehehe
I’ve taken the intro course in a community college electrical curriculum, and trust me, it’s no cakewalk. This guy better have some smarts in his cranium if he wants to get to the finish. Not to mention good study skills.
No worries… In LA, CRE will save the day!
http://tinyurl.com/yuodkh
“Jack Kyser, chief economist at the Los Angeles County Economic Development Corp.,
_________________________________________________
Has this PERMA-Bull been right even one time???
As California goes, so goes the nation (in this case).
“‘It will seem like a recession (here) if you are related to residential real estate,’
What isn’t related to real estate? C’mon, it’s the only thing the nation has produced in the last 10 years.
Hey we make really nifty weapons and stuff like that.
I am sure they will come in handy soon.
and war weaponry.another total waste.
Yea, but the war is going better or so the lack of negative news seems to say. Blame the press if you disagree not me. That means less spending on war. We can’t keep it up forever at this rate anyway unless we want to conquer the entire Middle East. The housing recession is probably why the President wants to goose war spending.
–
The Daily News. “Sales of single-family houses in the San Fernando Valley plunged an annual 55.5 percent to a record low 362 transactions in September.”
That campares to 1182 in sep’05 and 1316 in Aug’03.
Jas
Got any good price data on Sherman Oaks, Studio City and Van Nuys?
“Agents are mad as hell and aren’t going to take you anymore.”
Okay, bye-bye then.
If, as has been suggested, RE agents are going the way of travel agents, can that PLEASE happen soon?
It’s in the official NAR handbook..
treat buyers like crap on the way up.. treat buyers like crap on the way down.
you’ll get nothing and like it!
Another classic from ‘Caddy Shack’. by Der Judge
What will knock out NRA for good is a database that most of the nation checks on a regular basis. It will probably need to be free at first, and then a modest fee to sellers and free to buyers. The end will be when Realtors are forced to list in that database because MLS won’t work for them anymore. They all be advertising that they “list in the MLS and the xxx database” to get sellers and buyers. We’re not there yet - craigslist and other sites chip away at it but no dice yet. You’d someone who has enough capital to last 5-10 years before the thing would make a profit. They’d need a big enough budget to heavily advertise and for a legal team to fend off the unavoidable zombie Realtor legal attacks.
pipe dream…
Yeah, probably. Although considering all the other stupid business ideas that people are willing to throw considerable sums of money at, that one would at least be worth the risk. If you could displace the MLS with a public system you’d have a gold mine at your fingertips. Income streams from sellers, potential for steady advertising revenue, and even the chance to sell “premium” services to buyers above and beyond listings.
All I know for sure is I don’t have pockets quite that deep.
Your system would work if there was a federalization of the industry. However, I don’t see that happening… If anything I see more fragmentization. Which means things are going to get worse before they get better.
Zillow is getting pretty user friendly and you can list your house for sale on it. Something GIS based like Zillow would cream the MLS. Most folks really want to see where the house is before they want to see what’s in it. The biggest advantage MLS has is that most properties for sale are on it. Once another database gets traction the cronyism of the MLS system will doom it.
I laughed out loud when I read that. Seriously, the NAR must have paid BIG $$ for the LAT to run that story.
Agents in my area (WLA) will take ANYTHING or ANYONE that even has a pulse nowadays. The same houses have been on the market for over 6 months in my area, with paltry 2% reductions every few months and open houses every weekend.
I had a friend begging to show us houses and I refused because I told them unless they could only show me houses that were confirmed listed or would accept 40% or more off comps, I wasn’t going to waste my time and theirs.
Awww, I would have thought that “mad as hell” quote would have been good enough for a 400+ post CA thread. I’m dissappointed.
Well, I just want to say that realtors have alot of nerve to be “mad as hell”. Sales agents helped hype the market up and now they wonder why they can’t be order takers anymore .I say ,don’t take listings if you don’t want to and don’t work with buyers if you don’t want to ,who cares . These spoiled brat agents just want it easy . I remember one time in a real bad market in the 70’s I had to sell a house 5 or 6 times because the interest rates were changing daily .
We sold out house in Seattle three and a half years ago. The selling agent was this California airhead who did absolutely nothing. The buyers found the house, liked it, went to her and put in an offer. This was her first sale. She was unreachable by phone, never returned calls, etc. We were moving to New Zealand two days after the scheduled closing date and needed things to go well. Everything worked out, but WTF. She didn’t earn one bit of that $18000 she got from the commission. What a f–king rip. My agent was good and did his job, but she was a BMW driving little whore. Pissed me off (obviously). Hope she’s having to do a bit of leg work now.
RE: She was unreachable by phone, never returned calls, etc.
Your story precisely describes the circumstance as to why
bazillions poured into the RE sales industry during the last 5 years.
It’s the new American paradigm…what me work?
Just gimme the 18 large-I got out of my car and took a cell phone call. WTF do you want?
His whole statement was:
The LA Times. “Attention, you picky buyers who think you have all the time in the world to house hunt before you ink an offer. Listen up: Agents are mad as hell and aren’t going to take you anymore.”
If you are a qualified buyer, with a good down payment and credit score, you can get a nice 30 year fixed in this market. Realtors will be on you like a Dingo in a maternity ward.
If there is a surplus of inventory, why in h**l would the inimitable Walter Sanford tell you to focus on Sellers? Get qualified buyers, look at houses, than offer what you would pay. I bet you get, at the least, 1 out of 10.
I’ve got news for you, Wally. If we have 2 plus years of inventory available, with it going up each month and the peak of foreclosures is expected in Mid 2008, buyers have a lot of time.
Getting Sellers to price their house at a reasonable, present day selling price is a no brainer when taking listings. There are more and more of those everyday. We are all waiting for the inevitable serious price crash, which is likely to happen suddenly and soon. At that point a Realtor who has spent the last few months focused on Sellers will realize that he/she was wasting time.
“Attention, you picky buyers who think you have all the time in the world to house hunt before you ink an offer. Listen up: Agents are mad as hell and aren’t going to take you anymore.”
Like Realtors have any leverage whatsoever. If you are a real buyer, any realtor should consider him/herself lucky to have your business.
I’ve heard that stamping your feet and holding your breath until you turn blue is also making a comeback. Good luck with both tactics.
FYI: here’s a few more gems from the LA Times “Agents Mad as Hell” article:
“Sanford has a multi-step process to help realty agents separate the serious buyers from the looky-loos. Only he doesn’t call them “steps;” he prefers “hoops” — and he expects buyers to jump through them.
The first hoop is a 35-question form that begins with a version of “How long have you been looking and why haven’t you bought yet?” He builds up to requiring that buyers get pre-qualified for a loan — not pre-approved, which he says is just a meaningless letter from a mortgage broker saying everything looks rosy — but actually pre-qualified with a lender’s commitment. If a buyer’s credit is in need of repair, Sanford enrolls him or her in a budgeting or credit repair program with his lender. And somewhere along the way, he insists on a loyalty agreement, restricting the buyer from agent-hopping.“
Ok, all you worthless bubble-sitters out there: listen up! Walter Sanford’s not gonna take any more of your lazy fence-sitting crap any more. Better shape up, or… or… he might not open his lockbox!!
“He builds up to requiring that buyers get pre-qualified for a loan — not pre-approved, which he says is just a meaningless letter from a mortgage broker saying everything looks rosy — but actually pre-qualified with a lender’s commitment.”
Actually, pre-approval is a far higher level of commitment than pre-qualification. Pre-approval means that a credit check has been done and assets/income verified (or at least, that is what it meant pre-bubble). Pre-qualification is just putting in (unverified) data into a loan calculator.
Dumba$$.
Exactly. I sure hope it was the journalist who got that reversed and not Sanford. Still, it begs the question, who on earth would sign on with such an agent.
I give it 2 weeks before his brilliant business plan gets tossed in the garbage..
Walter Sanford sounds like he takes the importance of his job a bit too serious. Alternatively, the buyers can do a home study on the difference between a bathroom and closet. That way they can cut the Sanford’s of the world out of the buying process.
This is priceless. Someone forgot to tell him that it’s a buyer’s market. Or maybe he thinks that if he refuses to believe it then it just ain’t so.
“Walter Sanford, a top-producing realty sales agent for more than 20 years and today a sales-coaching guru”
Translation :When realtwhores no longer have any viable buyers or sellers, and they turn cannibal.
OMG!
We made a serious mistake. Real estate shopping (we ARE serious, and not out to get the agent; looking for well over a year) is a hazardous to your health!
One agent asked, “Are you prequalified?” (Doy…try looking at homes without said paperwork).
Show said agent paperwork, and wants “Fifty” questionaire filled out!
Guess how that ended…we have the means. Jeesh.
Who on heaven’s earth would fall for these bully tactics?
The realtors are getting meaner and they are scarey!
Ya just can’t make this stuff up! (Be careful out there!)
Amen.
Leigh
This Walter guy reminds me of some dumb Java or HTML coder in 2001 who didn’t get the memo that the tide had turned and his kind were in gross oversupply, demanding a 20% raise and a 50% signing bonus and “oh yeah, I want to bring my parrot to work!” Good luck with that.
Here Here. They sound like spoiled toddlers getting ready to have a tantrum. Like they’re doing the public a favor. I don’t know why people still use them. They are not worth the 6% commission.
Crazy,
Have you met the spoiled toddler of today?
Uh oh, very scary! (laughing)
Hey! We have a new Mausberg 12g combo and a Banelli! (sp?) Pump and pull!
P.S. I don’t shoot people. (and I like spiders and snakes…actually had several snake pets).
Thanks for the smile!
Leigh
I have met the toddlers of today and they come in all sizes. I made the mistake of trying to go to Target this weekend. Kids running wild everywhere and clueless parents. Had friend who worked at Pottery Barn for kids. Kid drawing all over a table so she gave her paper and asked her not to draw on furniture. Mother pulled her aside and said “1st, don’t talk directly to my child, and 2nd I don’t appreciate you stifling my child’s creativity. Parents want to be able to go wherever they want whenever they want and take their children with them and if you even give a dirty look (particularly in restaurants), you are the bad guy. I’m betting NYC guy can clue you in on the struggles going on in NY. I truly fear for all of us when this next generation grows up.
Funny, the realtors would not qualify people during the boom ,but now they are going to ? Way to bad if they have to spend a longer time with buyers ,it’s the market .
Hi Wiz,
Cash IS king baby…psst…just don’t let them know it
*chortle*
Leigh
Crazy,
OMG!
“Mother pulled her aside and said “1st, don’t talk directly to my child, and 2nd I don’t appreciate you stifling my child’s creativity.”
Maybe I’m crazy?
I’d give my life for my son, but let me tell you, I’d slap him into YESTERDAY if he even thought of acting out (BTW…he’s 22yo and a nice person).
If I did not get to him first, rest assured my hubby would! (We do NOT believe in violence).
Good night…what has this world…er…
Our idea of disipline is to buy a shovel and have him dig holes to plant trees! (tree hugger)
And I’m the mean one…Jeesh. (and I’ve many trees!)
BTW, I’m not for the GAP crap (who buys that sh*t anyway?)
Good night Irene!
Leigh
RE: I made the mistake of trying to go to Target this weekend.
My, my, you are a brave one (laugh).
I try to do all my errands on a Thursday.
Today, Fridays & weekends, anywhere, are insanity.
Best to stay home with a cold one watchin’ football.
“Attention, you picky buyers who think you have all the time in the world to house hunt before you ink an offer. Listen up: Agents are mad as hell and aren’t going to take you anymore.”
Good, then the feeling is mutual because I’m not going to put up with you any longer either. IMHO, Realtors have proven themselves (not all, but most) to be wholly inept at providing a service to buyers. The entire RE scheme is a setup to benefit the middlemen. All of the verbiage and psychobabble used to lure buyers into thinking that agents and brokers are there to help them is a complete falsehood. Good riddance! ESAD (http://www.urbandictionary.com/define.php?term=ESAD)
As a RE Broker, I have to agree with you. How can you go to classes for a month, pass a 100 question test and be imminently qualified to help the public make one of the most important decisions of their lives?
I do invest in but I don’t list or sell residential. I’m in a very specialized commercial segment that does require lots of experience and knowledge. I get residential realtors all the time begging me to “teach me what you do”. For most of them it would take several generations. There are very good, ethical residential people, but how is the general public supposed to differentiate them from any Realtor?
You can buy a house without a Realtor, with a little preparation. It’s not rocket science.
My little specialty is beginning to feel the effects of the residential implosion, as will most businesses. An earlier poster made the comment that basically every segment of the economy is housing related. It is one of the biggest industries in our country. Its demise has to affect everything to a degree.
Really, who gives a s**t about the residential Realtors, most of whom were changing oil at Jiffy Lube or dispensing trans fats at Dunkin Doughnuts (chocolate glazed are my favorite). No offense to the Jiffy or Dunkin workers, especially you Dunkin workers. Keep makin’ them little chocolate rings of delight!
The concept of a Realtor, a knowledgeable professional helping the poor, dumb public, is the States attempt at “protecting” the public. If you take the multiple choice real estate examine and one of the answers to any questions has “protecting the public” in it, that’s most likely the correct one. Especially in Florida, where we are still living down the “swampland” scams of the 50’s.
As for this “Realtor Coach” d**khead, his aggressive, take no prisoners approach works when the customer has no alternative and when a Realtor has some market advantage. That would not be in this market.
These are desperate times in the RE market and it warms my heart to know that guys like this will rise to the occasion and offer a completely useless service, all the while taking money from those dedicated realtors at a time when most can least afford it.
Oh by the way, realtors, I also like the apple cinnamon.
“Hey, but don’t take any crap from those picky buyers! You’ll have the powdered suger cruller, and like it!!!”
OT: In my neighborhood 95119 I see zillow.com updated zestimates and reduced bloated prices by 3,000 dollars. As long as zillow and other similar sites are serving up the kool-aid it will be different in your neighborhood.
Regarding Zillow: I actually JUST looked up a house that recently sold (yes, someone is still buying) because I was curious as to the selling price. My wife had looked the house and liked it. Don’t worry, we are not in any danger of falling in to the RE trap (though it gets more difficult as my wife notices all the “sales” going on). Anyway, the selling price has not posted yet but I did notice a pretty large decline in Zillow’s estimate of the house. Last week when checked, the estimated worth of the house was 560k. Today, it is estimated at 511k. I know it’s all monopoly money at this point but I’m curious as to what could have caused such a stepp dropoff in the estimate. Would the sell of a neighboring house have such a big effect? Perhaps they are giving an early cue to what the home actually sold for (I noticed the sold sign about 5 weeks ago).
Zillow thought the house we sold in 2006 was worth 165K more than we sold it for, a month after it closed. Still does, over a year later.
Zillow claims the house I sold in 04 for 188 is worth 204. The current owners tried to sell it in 07 for 188 — couldn’t. Lowered to 168 — couldn’t. Sherrif is going to auction it off in January.
What market are you in? I’m having trouble wrapping my brain around a house priced that low in California.
Same in Ventura. A 1598 sqf town home on zillow for 570,000 had been 640,000 until last week. Two homes connected to same unit listed at 1850 sqf with remax are on the market asking 450,000. These sold new 2002 for 250,000 so zillow don’t know sh!t and Ventura is dropping and still has a long way to go.
That was the Chicago market.
Here’s one thing I noticed:
1) If a home sells for more than zillow thought it was worth at the time, then the zillow figure jumps up to reflect the new sales price.
2) OTOH, if a home sells for less than zillow thought at the time, the zillow figure remains unaffected.
How to reconcile #s 1 and 2? Rocket up, sticky down? Anyhoo, don’t take zillow too seriously.
For Dominguez, the RE agent now training to be an electrician…there must be dozens of now-unemployed or underemployed electricians in his area. His new field, though honorable and useful, is still RE related.
I’d say that’s nonsense. It’s no more dependent on the RE market than nearly any other occupation one could name…
Really ? Can you tell me what else an electrician would be working on besides a building of some type ?
“For Dominguez, the RE agent now training to be an electrician…”
Probably he isn’t training to be an electrician. I’ll bet he is in an electronic tech program. Most electricians go through apprenticeship instead of community college.
Also, my father was an electrician, and he only had about 10% of his time in residential construction (though I’ll bet that varies alot by region)- he mainly fixed cranes, generators, machinery, etc. And a fair bit of commercial and industrial wiring. Many of his friends were ‘narrowbacks’, who worked mostly on electrical transmission. So I don’t think electricians are nearly as bound to residential construction as are, say, carpenters, framers, sheet rockers, etc.
I was a Building Trades Laborer for many years and the only time I worked on houses were the side jobs the company sent us to. We worked commercial in the season and then the company would keep a core group working through the winter so they wouldn’t lose us to another contractor. If there was nothing commercial indoors we ended up helping refinish the owners friend’s homes. So I’d have to agree with the others here who say that sparky’s new profession may not be too tightly coupled to residential housing.
“Jack Kyser, chief economist at the Los Angeles County Economic Development Corp., credits the high end with propping up the median. ‘High-end homes have been selling, and people at that end of the market don’t have to worry about funding.’”
Permashill eCONomists are the only thing that is transparent, in this housing bubble.
“Realtors are stymied by sellers who refuse to lower their prices”
Didn’t cha RealtWhores turned sellers into obedient zombies for the past yaers w/ crapp like “you’re not gonna give it away” “it only goes up & up & up”
“‘Newport Beach, where everyone is driving a Mercedes and the homes start at $1 million, is like an old western movie set,’ he said, describing the finances of many wealthy homeowners as precarious. ‘It’s all just a front, with stilts holding it up.’”
Ahhh, the OC lifestyle. All that matters is that you look bitchin’!!
The expensive SUVs I see are all at my kid’s public school in NB. Would be curious to stake out the private skools to see what the other half is driving? Probly old Volvo wagons and Buicks huh? Naaaaah…
Personally, I go reverse snob in `95 Ranger truck. My 13-yr old boy ducks when he sees people we know.
Ensign or CdM?
Private Schools at least the one my kids attend Maseratti’s and Mercedes, Hummer’s or any other SUV you can name and BMW’s 7 Series of course…
What’s up with the Hummer craze, anyway?
Unless you’re preparing for military warfare, wtf?
And I still wanna giggle every time I hear about someone gettin’ a hummer…:)
I know what you mean about hummer owners. I instantly think that he must have a very insignificant package in the briefs or that she has massive inferitory complex. Egos, apparently. are built on poorly constructed para-military cars without the cool factor of bullet stopping plates, actual weapons, or those rims that go around backward as you drive. They could at least throw in fuzzy dice.
A photo tribute to Hummers:
http://www.fuh2.com/submissions.php
the fuh2 site is hilarious
I personally am waiting to buy one of those Stealth bombers, once they transition it into an automobile.
My parents live in an area where luxury cars and SUVs rule the roads. My mother takes special pride in whipping her VW into parking spaces that the SUVs can’t touch, then singing, “Volkswagen does it AH-GAIN!”
Someday in the not-so-distant future, Hummers will make lovely lo-income housing I bet.
Check out this candidate for Mayor in San Francisco:
Name: Grass- hopper Alec Kaplan
Age (birthplace): 37 (Moscow)
Occupation: Vegan taxicab driver
Residence: Homeless
Quote: “The issue is housing, not homelessness. I want to alter the terms of the debate.”
Notes: Kaplan, who lives in his vehicle, wants to see the city ease the housing crunch by making it legal to live in commercial units.
You can see all the candidates at http://www.sfgate.com/cgi-bin/article.cgi?file=/c/a/2007/10/22/MN1FSFN93.DTL
” Vegan taxicab ”
must be one of those new fangles 5th Element type taxis… the one ya feed corn too.
“Kaplan, who lives in his vehicle…”
“Now, as your father probably told you, my name is Matt Foley, and I am a Motivational Speaker! Now, let’s get started by me giving you a little bit of a scenario of what my life is all about! First off, I am 35 years old.. I am divorced.. and I live in a van down by the river!”
Would any HBB’er get one of these ? http://www.smartusa.com/index.aspx
A friend of mine actually has one! It was one of the very few tentatively imported here specially and ended up in northern VA. He’s had it a bit over a year and likes it, though the ride is a bit choppy, and to me it’s unnerving being in such a tiny box. (We didn’t even hit the Beltway; just a few 45 mph roads were enough.) Naturally, he’s a single guy with no kids — it’s hard to imagine even having an wife *and* groceries in that thing! Sure is fun to park though, and the stares you get…
Test drive one of this in Bozeman, MT. The guy was asking for $27K. A Toyota Corrolla or Honda Civic is much better in terms of cost, probably reliability, practicality, and safety. The Smart Car gets better mileage, but not by much.
BTW, the guy do not recommend I go above 90 mph during the test drive.
Cinch
I like the concept but the size scares the $hit out of me.
Sure wouldn’t want to see the consequences of a collision with a full size truck in that thing…
There is a crash test video on youtube. I think safety is comparable to a Corolla or a Civic, but it is the price that I have issue with. And of course the track record of this car.
Slim: We’ve taken to pointing and laughing at them. The guys I sort of get, but what’s with the women? Rarely see middle aged folks driving these hulks. It’s the LAST car I would ever pick.
“Personally, I go reverse snob in `95 Ranger truck. My 13-yr old boy ducks when he sees people we know.”
Really? He would pull that once with me, ’cause I’d strap him to the hood in a pink bunny-suit the next time he did it.
I see you’ve read Parenting 101 1950 ed. Everyone should get a copy.
Thankfully I was eating peanut butter or my computer would never have forgiven me. My wife even entered the room to see why I was laughing so hard.
Man… I have to buy that book.
Lol
Got popcorn?
Neil
catspit.
My mom drove me to school in a 67′ MB. It was the 70’s and I would make her park it way down the street. I didn’t want to be seen in it. She still has that classic car.
Private school my kid used to go to in WLA was French. Used to be blacked out SUV’s, limos or Mercedes - many with armed body guards. Lots of international and diplomatic folks. She used to laugh about 12 year old girls with $600 purses. Funny thing was all the kids wanted to hang out at our 2 bedroom apartment.
“Sacramento’s financial picture has worsened rapidly, to the extent that city officials said they had not foreseen.”
“Home foreclosures have escalated at an astonishing pace in Sacramento. There have been far fewer sales of both new and existing residences than were anticipated in the city’s budget, according to the report. Development activity in the city will be 60 percent less than prior years, the report states.”
“‘Current staffing and service levels are not sustainable, given the current weakness in revenue growth,’ the report finds.”
Another Mark to Malarkey eCONomic downfall to report…
“We’re floating dangerously close to a recession,” economist Ryan Ratcliff said.
Eureka!
Another no-shit-sherlock moment…
hahaha
“The nation’s housing crisis has hit Sacramento’s economy like a sledgehammer, prompting a city government hiring freeze this month and an urgent examination into how millions can be trimmed from the budget.”
This is just the beginning of the next wave. States, counties and municipalities all over the country will be facing budget shortfall and cutbacks. Gotta love those negative feedback loops.
“…how millions can be trimmed from the budget.”
Yes, a million here, a million there, pretty soon you’re talkin’ about real money.
Only one question: how many million has the budget increased over the last 5 years due to the mother of all ponzi schemes?
Now we have to “trim”!?
boo-frickin’-hoo.
This is such a good point. Where has all the windfall tax money gone? In most cases, we’ll never really know.
Responding to anonymous coward - the windfall tax money has, for the most part, gone to cops and firefighters. At least it has in the city I work in. When the good times roll, politicians love to hand out money to “public safety.” Big pay increase, 3% at 50 retirment packages, gold leaf on the fire trucks, etc.
Oh, and big buildings. You know, the “edifice complex.” Just like they’re talking in Sackamenna…
“Attention, you picky buyers who think you have all the time in the world to house hunt before you ink an offer. Listen up: Agents are mad as hell and aren’t going to take you anymore.”
If an Agent gets tired of me before I find the right place I can jump over to next ex-shoe salesman with MLS access, no big loss for me.
After a few hours with one of these ass clowns I’m ready for a switch anyways.
“If an Agent gets tired of me before I find the right place I can jump over to next ex-shoe salesman with MLS access, no big loss for me.”
LMAO! Well stated!
No offense, but why did a person with less than junior college education think he was qualified to spew financial advice? I can’t believe that for the last four years, uneducated, dim-witted real estate agents felt they could tell me how I should spend my money. Last time I checked, I was the one who worked himself through a master’s program, rather than work behind the counter at Chuck E. Cheese for twenty years.
I am truly dumbfounded.
I’m glad for you that you have a master’s degree. However, I’ve met people with just barely a high school education (and barely able to to do elemantary math at that) who that have more financial sense than people with PhDs.
Education does not confer good sense and all to often it does not bestow expertise, either. At least the guy is getting training in something useful which is more than I can say for many holders of higher degrees.
I agree with your POV that an education does not guarantee that a person is financially prudent. My grandfather had no more than a high school education, yet he retired with seven figures in the bank.
I’m just bent out of shape when people with no training, education or financial savvy, posing as real estate agents, do not hesitate to spew their Dixie-cup version of financial wisdom at me when it’s painfully evident that they are deeply in debt, don’t know when they’re going to get their next paycheck, and are trying to cajole me into buying one of the several houses they are close to running into foreclosure.
I agree. And what’s sad is that people never seem to ask the obvious: If it’s such a great money maker, why aren’t you buying it? or the other obvious: If you know so much about money, why are working as a realtor?
Ha ha ha! That is exactly what happened to my girlfriend the other day. A real estate agent was trying to talk my girlfriend into buying one of her client’s houses, saying how good a deal it was, $80,000 off the appraised value, instant equity, yada, yada, yada, and my girlfriend asked, “If it’s such a great deal, then why aren’t you buying it?”
Stone silence.
The one bit of advice I always lean on is: never trust someone who makes money off your decision. For instance, I’m not going to let a Best Buy clerk talk me into an extended warranty on a laptop (I’ve heard they don’t make money on the extended warranty sales, but I don’t believe it).
One of my favorite phrases came from a friend I was having dinner with. The waitress was very gaunt, but not all that eye-catching. My friend observed, in all seriousness, “If she were cute, she could be a model!”
Well heck, if I had a billion dollars, I could be a billiionare!
Steve Martin on how to be a millionaire:
“First, get yourself a million dollars. Then, …”
With respect to the extended warranty sales, my mother runs the office in a small private school where the rich send their kids. She knows the owner of these warranty companies and he donates hundreds of thousands to the school. They make tons of money off those things or they wouldn’t sell them.
Haha, and where’ the guy going to work as an electrician if the construction industry is tits up? All the good journeymen will take whatever jobs are left.
All I can say is that the housing crash is going to be a disaster for California. Simply put, even with this so-called crash, the prices are still unrealistically high, and so high that even with huge markdowns, there will still be an enormous amount of buyers who will be turned off simply because even with 400k drops in prices, homes will STILL be heavily overpriced.Those kinds of drops will spell economic disaster. All those high-priced homes ( which is most of the state really) are essentially on another planet. Realism has been so far removed that I don’t think any economist has a clue of how to tag it. A 10% drop is wishful thinking.
Yep, prices are so high even if they dropped 15% a lot people still can’t afford them.
There’s significant evidence that prices ALREADY dropped at least 10% in the San Fernando Valley. Here’s one current example:
According to Zillow and ziprealty:
14712 Killion St VAN NUYS CA 91411
2 beds, 2.0 baths, 1,339 sq ft;
Purchased on 06/16/2005 for $545,000
Purchased on 01/25/2006 for $750,000
Purchased on 08/13/2007 for $594,000 by the bank
On sale today (bank-owned) for $549,900. That’s over 10% and the house hasn’t sold yet.
The more prices drop the fewer the number of people who can afford, due to changes in expectations and credit conditions. That’s why inventory is building at lower prices. Once prices drop another 15% perhaps even fewer people will be able to afford them. I imagine more people in the U.S. could “afford” a $10,000 house in 1929 than a $5000 house in 1937. Peaks in percentage home ownership concide with high prices and troughs with low prices. (The percentage has just recently begun to decline again.) Ability to afford and the price are two sides of the same coin.
I think it will have the effect of chasing the middle class out even faster. Before they were pushed out by high prices, now they’ll be pushed out by collapsing economy and the fact that after 5, 10, 15, or 20 years of “California Livin” they have a net worth of zero or less. I’d expect to see a lot of 45+ year olds slumping back to the midwest or maybe “half-back” to the mountain states, to work some $30K service job. California will be left for the millionaires and the destitute.
Why, we Arizonans are just THRILLED to have their company.
California will be left for the
millionaires and thedestitute.What I find most interesting, is the people probably most self-sufficient in California overall, would be Hispanic immigrants…
I’d stack em’ up in tough times, against a cordwood of Orange County Stepford State type phonies that have fallen by the wayside, and they’ll do much better.
On the current path, all California has to do is look south (Mexico) to see its future. It will definately be a land of just the rich (movie industry, recreation business, etc.)and the working poor. It will be just like Acapulco, Puerto Vallarta, etc. There will always be room for young folks to “camp out” 3 or 4 to a two br apt and enjoy the beach until they grow up and leave the coast to raise a family somewhere.
It’s a quality of life issue. We decided we want to retire someday and in the meantime, don’t want to work as hard or as much as we would have to just for the privilege of living in CA. Once we got to the point where we stopped taking advantage of all the cultural events or even going to the beach because of the nightmare traffic, we decided to hightail it out of there. I don’t know ages or how many have lived in CA, but it was an absolute paradise to grow up there in the 50s and 60s for us.
Hi Crazy,
…just for the privilege of living in CA…
Sometimes I feel like the entire world centers on CA…
(disclaimer: love to shop in CA!)
Then I wake up from a dream state and realise…it’s just a dream…then, I thank heavens that the USofA is fluid.
This country is by far, the largest. And, I hope, the most prosperous.
I want to believe serving my nation for 21 years…
Sigh. I want US to be OK.
Amen.
Leigh
I want to believe serving my nation for 21 years….
I think about that every day and wonder….
Actually im still doing the same thing I did in the millitary. Im making 3x the median for the dust hole im living in. I still dont understand how these people afford these homes. I checked around this weekend and the prices still haven’t gone down. Everywhere I went they kept saying the base is keeping the values up. One of the places I went to told me they have a special for first time buyers who dont make to much. Should have seen the look on her face when I started laughing at her. 350k homes and they are offering a assistance if you make less than 4800 a month.
Ahhhh. But the rich cannot live without the backs of the willing. Lest one is enslaved?
Sigh.
Leigh
I think they felt if they went into double figures, that would suffice…
I agree. Even a 50% drop would leave CA out of my range. Whenever I get calls from recruiters the first question I ask is “Is it in the Bay area?”. If they say yes, I tell them I’m not interested. Why move my family into poverty?
Hey mrincomestream, good to see ya! Any insider anecdotes to pass along. Are people scared yet, or still deep in denial? I’m still astounded by the prices new listings are coming on with… Though a lot of ‘em were purchased in the last couple years and/or have been remodeled “sparing no expense”. :-/
Denial runs deep here in SoCal…people are starting to get a little frantic. Industry guys are starting to get really concerned. In short no one’s laughing at the bubble bloggers anymore..
‘Though a lot of ‘em were purchased in the last couple years and/or have been remodeled “sparing no expense”’
Hey I think I saw that ad, too. Isn’t it the one that is “richly appointed”? And “great for entertaining”? LOL
Buyers want smaller houses:
http://www.pe.com/business/local/stories/PE_Biz_D_shrinkinghouse28.20811e6.html
It’s called living within your means. It used to be popular in the past and hopefully will catch on in the future after this debacle runs its course.
The problem for builders is that many of those buyers/renters won’t be moving into new smaller houses, they’ll be moving into subdivided McMansions.
Put this above your computer screen: “SINCE 2005 99% OF THE EXPERTS SAID THAT PROPERTY WAS GOING TO HAVE A SOFT LANDING.” So much for the so-called “experts”. The most knowledgeable “experts” I know about are on this blog and they are not even getting paid!
I would love to meet you! (seriously).
“The voice of reason”
Best Always,
Leigh
Buyers?
Strong like Bull($hit)
If you didn’t buy a house in the past 5 years, you are not going to buy one now, are you?
“‘Just about all of my co-workers are struggling and will tell you it’s a tough market,’ he said. ‘The buyers have all the strength. They can basically just name their price.’”
I asked this question in a previous thread, but got no answer. It really interests me.
What in dollar terms do these losses add up to?
http://www.markit.com/information/products/abx.html
Uhm, a lot. I ran out of fingers.
Look at ABX-HE-BBB- 07-1 7 1 389 0A08AOAC1 17.94 97.47 17.94.
Going for 17cents on the dollar. That if there is a buyer !
So at $0.17 in the dollar…….why buy a single house when you can buy a share in many for $0.17 in the dollar.
Here’s a very quick and dirty summary of what the ABX index really means. In a nutshell, you’re not buying a security - rather, it’s the cost of protection. It works more like a Credit Default Swap, and at $0.17, that protection is unbelievably expensive.
From Accrued Interest:
“These ABX indices are a bit complicated and I don’t want to get into the nitty gritty of them here. But consider the following: unlike normal CDS, which trade on a spread basis, these trade with a dollar price. So if you see a dollar price of $81.61, that means that in order to buy protection on this pool of home equity deals, not only must you pay the fixed spread over time, (242 bps on this deal) but you must make an up-front payment of 18.39% of the notional value you are buying!”
What this is saying is that you’re paying over 85 points to insure 100 points of risk. IOW, the risk of default is rather large…
Some of those ABX indexes are down by 80 percent. Good thing those indexes are completely uncorrelated with the value of any other assets, such as, say, share prices of U.S. financial firms with lots of subprime investments. OR ARE THEY?
I don’t know.
Perhaps?
Asset Backed Securities Index?
Not an easy read.
http://tinyurl.com/2q4sdw
Best,
Leigh
Rent hasn’t gone up much at all while all this has played out, in fact it may be going down a little. And there are other investment vehicles besides real estate. I am not planning on returning to Missouri anytime soon.
“Man’s life, as required by his nature, is not the life of a mindless brute, of a looting thug or a mooching mystic, but the life of a thinking being—not life by means of force or fraud, but life by means of achievement—not survival at any price, since there’s only one price that pays for man’s survival: reason.”
John Galt
” Regulators and various big institutions are trying to stabilize things to avoid what we can call “SIVilis.” That’s a financially transmitted disease that could infect the world’s financial markets, leading to cascading failures and other consequences too dire to even think about.
Citi won’t talk to us about SIVs. The only player who would go on the record is Treasury Secretary Hank Paulson, whose department is in charge of maintaining orderly financial markets.”
Yeah, I bet they won’t talk about it since they are figuring out another Ponzi scheme to unload their newly acquired financial “disease” onto the public. Hank Paulson will since he has been “innoculated.”
Paulson thinks there is a pony under the pile of SIV.
http://money.cnn.com/2007/10/26/magazines/fortune/citishelter.fortune/index.htm?postversion=2007102910
Amusing:
http://www.sfgate.com/columnists/asmussen/
I was told by a few relatives who lives in the Inland Empire area that it’s gotten pretty bad the last few months with riff raff around the neighborhood. These houses are spanking brand new and about 3500+ sw ft. They sold their cozy houses and upgraded. They told me that they don’t walk around the neighborhood at night anymore. Cars are broken into and they keep all their gates locked and their outside furniture inside the garage.
Holy cow. They spent $550,000 - $700,000 on a house and they are trapped in a prison.
and it’s only going to get worse…
All the scumbags from LA and OC got pushed into the IE during this ponsi scheme. So now you have the old scumbags combined with the newly aquired from LA and OC scumbags. Tell your relatives the migration of scum has slowed and pray they return to Lennox and Santa Ana where the came from.
“CEO Jeffrey Mezger was speaking on a panel with Countrywide Financial CEO Angelo Mozilo and California State Treasurer Bill Lockyer. Lockyer said they all expected about 10 percent or more.”
Don’t they mean an additional 10 percent or more? Because I already saw a pre-fires 10 percent decline in the resale list price in my zip code (Rancho Bernardo 92127) so far this year, and the drop in new home sales price is definitely larger than that. And of course, the buyers have all the bargaining power now, which suggests that sale prices are going to be lower than list price for the foreseeable future.
Jim Rogers says Bernanke is a Madman
Bloomberg: http://tinyurl.com/352sjg
Youch! Looks like this link goes to some kind of video. It would be good to warn people first. I don’t have the kind of extra bandwidth to waste on that, I don’t load the code that does video this way, and the whole idea of needing video to communicate basic analysis seems way off to me. The reason video is used is to get people into an obedient semi-hypnotized state so that they can be manipulated and force fed advertisements that cannot be easily filtered.
And it can be dangerous to watch/listen to video from one’s cubicle.
Wow, I agree with Mole Man. Video links with time forced to be spent viewing advertising should be noted as such.
Sorry, Mole Man. It’s Bloomberg audio.
Thanks mrktMaven FL,
But the link doesn’t work for me
Sorry. Try this: http://tinyurl.com/2uslj5
I have to confess that I am very fond of Sacramento. I raised two kids there, and we always enjoyed a very wholesome life.
However, there were alway two verities that every Sacramentan knew by heart:
1) State government was a huge employer. When the state cuts back, employees get vouchers instead of paychecks, and the economy suffers. It happens with great regularity, like wildfires.
2) Housing prices were beholden to Bay Area buyers, flush with six figures from selling their 800 square foot shack in Palo Alto.
I made a very good income when I lived in Sacramento, yet housing prices were so over the top that when I put my own home on the market in 2005, I realized I could never afford to buy any of the other homes on my own street! People that made half my income were paying twice my house payment.
For Russell Fehr, the city’s finance director, to claim that city officials had not foreseen the city’s current plight is truly disengenuous.
It will be a shame if the fabric of the community unravels with one too many foreclosures, or “abandoned hemp houses”.
Sometimes I just shake my head and wonder, “what hath these morons wrought?” [you have to use Biblical conjugations when pondering the housing bubble]
Who wants a Bay Area bubble dinner on November 17? It will be fun. I promise not to make any snide remarks about people’s blog comments. We can order popcorn shrimp and stuff.
“People are screwed.”
-Big V
OT: I have a question…
Everyone says “Who is buying? Who is crazy enough to buy now?”
But let’s assume that someone buys a house right now. But the catch is, they can afford it, it is within their means, they have a good down payment and they can use a convention 30-year fixed mortgage (15 year if they are willing to pay a little more per month).
What would the drawback(s) be (if any) to purchasing now? (Other than obviously they may save some more down the line). But other than paying a bit more money, what else might be bad about buying now?
The drawback is people assume they won’t leave. What if you want to? You can be upside down on your home. Also, you know prices are going to drop and so are rates so why not wait until the market hits bottom?
What would the drawback(s) be (if any) to purchasing now?
Losing your job/needing a different house because of a lifestyle change
High (and rising) property taxes
Possibility neighborhood may decline, which means it is not just unpleasant to live in, but also a threat to your health
Complete *inability* to sell because demand is nonexistant at pretty much any price. Places such as Buffalo, Pittsburgh and Detroit are like this. That house may only cost $30K, but you buy it and it’s YOURS.
Who wants a house that is so last year. It was fun when you could salivate about how savvy you were and how foolish the people who waited were. It isn’t cool to admit you have an upside down mortgage and live next to foreclosures. People might not want to associate.
Oh, and assuming (barring any catastrophe) that they plan to stay in the home for the next 20 years or so.
Hailey, the problem is that we can’t bar any catastrophes! Just a few of life’s little “catastrophes” can force you to sell your home:
1) divorce
2) job loss
3) long-term illness
4) job relocation
5) nasty neighbors
6) babies
7) parents needing care
Note that #6 isn’t a catastrophe, of course!
You really can’t plan for any of these things to happen, since they are almost by definition “unplanned”. On the other hand, you can’t plan for them “not to happen”, either.
If we were back in the pre-bubble days, and you bought a house, then you might be able to sell the house in a reasonable length of time, and for a small transactional loss, should a catastrophe strike. However, given our current bubble environment, your house could be on the market for 6-12 months, and you could be forced to take a huge loss that could eat up most of your down payment, or leave you in the uncomfortable position of having to bring cash to the closing to make the lender whole.
In the early nineties, there was a housing downturn in California. I purchased a house in 1992. Three years later, I got a once-in-a-lifetime chance to work overseas, which I did for almost four years. During that entire time, I was not able to sell the house for what I paid for it. In fact, it wasn’t until 2001 that I was able to sell it for close to the price I paid in 1992! Nine years is a long time to wait for housing prices to recover! (I plowed the proceeds back into another house, so at least I was able to capture some of the bubble increase, but that was just luck).
It’s all about risk. You might think you have risk “managed” now, but that’s the scary thing about risk - it is deceptive. You can never make risk go away, but you can improve your odds of sidestepping any disasters. You can’t just consider whether you (or our hypothetical buyer) can afford the house; you also must consider whether someone else can afford the house if you’re forced to sell it. How many other people can afford to buy a house right now? Of that number, how many are crazy enough to do it?
I hope this helps!
A severe hailstorm/windstorm is going to rip through Fresno in less than an hour…
60 mile an hour winds and large hail, going northeast from Kingsburg-Selma
“LOS ANGELES, Oct 29 (Reuters) - California faces a double-digit fall in housing prices over the next year and a half, a major builder, a lender and the state treasurer said on Monday in a discussion of how long the subprime mortgage crisis would drag on the Golden State.”
the rout is on, in ernest.
Ive changed my tune on the FED cut, its now a full point. (50 at the window, and 50 on main street) or a full point on main street.
From CNBC. “The CEO of U.S. home builder KB Home said home prices in California could fall another 10 percent to 15 percent in the next 18 months.”
Keep going buddy keep going the ballgame is just starting as Vin Scully would “Well hi everybody…….”
Ok, here’s one you haven’t heard before:
Couple dead serious about selling house
WEXFORD, Pa. (AP) — It could be the deal of a lifetime. A Pittsburgh-area couple, Bob and Ricki Husick, are offering anyone who buys their home full cash-back upon their death and even their full inheritance, currently worth at least $500,000.
The Husicks have been trying to sell their home for almost a year, but have failed to do so in the current shaky market.
Bob Husick said he’s asking $399,900 for the four-bedroom, three and a half bath home about 20 miles north of Pittsburgh.
According to the Husicks’ offer, the buyer would get the money back when the couple dies. And if the buyer agrees to care for them in old age, they could also inherit their retirement home in Arizona, bringing the estate’s current value to about $500,000.
Wow, I’m going to have to remember that when I get old. We aren’t having kids, so we’ll need someone to take care of us! LOL
Just hope you don’t get dementia or alzheimer’s. It’s hard enough to be staying with your children when you are old an helpless. Lord help you when you stay at the home for the aged and strangers take care of you.
Like what I said above. Parts of the Pittsburgh market are such that you buy a house there and you’ll end up dying in it. Although Wexford is kind of OK. Wouldn’t pay $400k to live there tho, no way.
now that’s a new one…WOW!
Dang girl!
Born in Homestead!
This is shocking to me! My grams (90 yo) lives in Rankin.
Half a mil in Wexford?
Lawd!
Ya just can’t make this stuff up! (Shut up!)
Holy Jeesh.
Oy,
Leigh
This American Life, a PRI/NPR radio show did a story awhile back about a man who sold his house to a couple at a discount. The condition was that he gets to live in it until he dies. No surprise, the couple has mixed feelings. On-one-hand, they are sympathetic to the old man, but on-the-other-hand, they secretly wish he kicks the bucket.
Cinch
My step granny married Grandpa when he was 85 and she was in her late 60’s. The lecherous old coot got his money’s worth. He lived to be a few months shy of 100.
For Sale: Four-bedroom, 3.5 bath house in Pittsburgh. Buyer must agree to feed the elderly couple that comes with the house.
If i were the buyer OR seller, i’d consult about 5 attorneys before trying something like that..
A few years ago you could buy in Santa Monica for $400k, and a few years from now you’ll be able to do so again. Why screw the pooch and blow it on a house “20 miles north of Pittsburgh”??
Many in here have wondered when the bottom will be in. My guess is, it will be around the time that the surviving realtors become our staunchest allies. The current shakeout is going to decimate the NAR herd, but the ones that emerge will likely be the more professional and competent veteran hands. The ones that want to eat, will reject unrealistic greedhead sellers and latch on like remora fish to serious, creditworthy buyers.
Attention Agents: There sure are a lot of you to choose from. If you make the mistake of being impatient, I’ll be leaving you for the infinite pool of agents out there who are desperate for a phone call. Don’t think for a nanosecond that you are: (a) necessary (b) somehow beyond replacement (c) someone with a real job.
‘It’s all just a front, with stilts holding it up.’
Excellent metaphor for our “healthy” economy, as well!
With the “stilts” representing temporary foreign investments (and now the PPT with freshly printed money) and the “front” representing the NAR’s flimsily produced Ponzi scheme…
“Though there appears to be no let-up to the current housing downswing, economists participating in the NAHB Construction Forecast Conference in Washington, D.C. on Oct. 24 said they expect the industry to bottom out and to start turning around in 2008.”
“Acknowledging that there is definitely downward momentum in the market at this time — with starts, sales, prices and permits off and problems persisting in the subprime and Alt-A mortgage markets — NAHB Chief Economist David Seiders said that housing should nevertheless begin a modest recovery next year.”
“Despite the present market contraction, Seiders said that housing should begin to turn around next year for a number of reasons — the overall economy and job growth continue to move ahead at a decent pace, core inflation is under control, the late-summer credit crunch in mortgage markets is showing signs of easing since the Federal Reserve cut short-term interest rates on Sept. 18, and the supply-demand equation will be better balanced as builders begin to whittle down excess inventories.”
“He also noted that the evolving inflation picture gives the Fed latitude to enact more monetary stimulus to support the economy, if conditions warrant. Seiders is predicting that the Fed will cut short-term interest rates by another quarter of a percentage point when members of the Federal Open Market Committee meet on Oct. 31 and will enact a similar rate cut by year-end, bringing the federal funds rate down from the current 4.75% to 4.25%.”
http://www.nbnnews.com/NBN/issues/2007-10-29/Front+Page/index.html
“Realtors are stymied by sellers who refuse to lower their prices, Dominguez said. Most people can’t or won’t accept less than what their house was valued at a few years ago, he said”
Duh. You Realtors were telling sellers for the past two years “we are in for a soft landing”, “the market won’t go down much”, and (recently) “sure it’s down, but a turn-around is just around the corner”. Of COURSE sellers are holding out on price, it was YOU who told them that things will get better, and *soon*. “If I can just stick it out another year, prices will return to what they were.”
From the LA Times Land Blog:
http://latimesblogs.latimes.com/laland/
“Micromarket Snapshot: Reseda
From Realtor Mary Burak: “It’s a terrible market…On buyers right now: “They’re so picky that they don’t know when they’re getting a deal.”"
Translation: “BUY, damnit!”
“They’re so picky that they don’t know it when they’re getting a deal .’”
That’s the way it is in a down market Mary Burak,it’s called fear of a catching a falling knife . Even the news outlets are predicting further declines . I guess the realtors had fools for clients for so long that they can’t take the new mindset . What do they expect out of people ? Guess you have to spend 100 hours on a deal instead of three these days .Still good money . Also ,I don’t believe that the realtors are spending that much on advertising right now .
they don’t know when they’re getting a deal.”
buyers know, but it’s so much fun torturing agents and sellers, who wants it to end?
i got your squirrel right here, Mary.
You real estate clowns like to talk about the wonders of leverage, right? Try this on for size.
Every month I wait, the price I will have to pay for a house goes down. As such, I am earning money every single month. And my leverage is infinite, because I don’t have to put down even one penny to achieve these gains.
Also, I don’t have to mow any lawns or pay any property taxes. I understand now why people love leverage so much!
Holly cow! Buyers are worse than renters!
I have to share my story here.
My colleague and I got into discussing investing, and I suggest to cautiously invest in stocks assessing the risk/reward. He said it is too risky and everyone looses money in stocks. I gave couple of examples and estimated rewards and risks as well.
At the end of conversation he said you wont be satisfied or enjoy the life if you want to take risk by investing in stocks and make money. (implying I’m greedy)
The amount I was talking about $20K max diversified with no debt and decent cash on hand.
Him sitting on $500K Heloc’d condo with NO washer/dryer and NO A/C.
Sign this petition to support America and its currency against devaluation by the Central Bank!
Tell him that he too can be a hedge fund manager for a day (or a lot more), by marking his condo to market should he decide to move for whatever reason.
From Wall Street tycoons to J6Ps, everyone who brought real estate related products in the last few years will eventually have to mark their product to market be it CDO or a condo.
Cinch
I am sure many of you have heard about the fraud being perpetrated upon us by the Federal Reserve by reducing interest rates to save a few sorry banks who can manage money well. Well in the petition link, has all the reasons why things need to change. I have signed it and urge everyone else to sign it. Thanks.
When he opens his mouth he lies
http://news.yahoo.com/s/nm/20071030/bs_nm/india_paulson_dc;_ylt=Am1LsG0aByJcMtoyBZjg7aqs0NUE
Paulson is out trying to fool foreign investors, my guess from the collapse of the dollar is. They aren’t buying it.
“CEO Jeffrey Mezger was speaking on a panel with Countrywide Financial CEO Angelo Mozilo and California State Treasurer Bill Lockyer. Lockyer said they all expected about 10 percent or more.”
Based on past predictions made by these very same douchebags, any number they offer needs to be multiplied by 2 at minimum to approach reality. This is going to be good, I mean bad ..whatever. I’m happy.
I was working out in a Gym yesterday in DC and could not help but overhear this 50+ YO woman who was very excitied about getting this sweet deal on Waterfront property in Anapolis (w/ dock) for a Million. It was a divorce deal, the property was originally 1.5 mill or something. She had to convince her husband to get it while they carry their mortgage in Vienna for probably another 300k. I so wanted to tell her what a bad idea this is in the current and forseeable market, but she at the end of her story said, “I have researched the real estate market, it is great investment”. Another knife catcher…
Lonnie Maples, who has been selling real estate for 29 years in inventory-saturated Riverside, had a listing appointment with a seller whose property had been in the MLS for more than a year. The owner had made several price reductions from it’s original $1,095,000, and he was now ready to list at $895,000.
‘I knew it wouldn’t sell for even that,’ Maples says. ‘That house, in this market…$750,000 was more like it. I declined the listing because I didn’t want to waste my time and money.’
Attaboy, decline them all. You better have a lot of money saved up….