Much Of The Boom Has Turned Out To Be A Bubble
The Orange County Register reports from California. “Home sales fell to their lowest level in at least 20 years in September. Yet, even with many buyers on the sidelines waiting for the market to settle, some are finding homes and others are signing contracts for personal reasons. There also are a few who bought earlier this year only to see a decline in the value of their homes amid falling prices.”
“Some residents of Camden Place, a new home development at the former Tustin Marine base, are feeling buyer’s remorse. The three-story condos they bought are now selling for more than $100,000 less than they paid.”
“Erin Kerr said he doesn’t regret buying his Camden Place condo but does wish he had waited a little longer. They paid $577,000. Last week, the developer offered a similar unit for $464,000. ‘We love the community, we love our home, but part of me wishes we waited maybe a few more months. Maybe we would have gotten a better deal,’ said Kerr.”
“The Tiptons are fixing up their new Anaheim Hills home, getting it ready to move in. While they got a deal on the home they bought, they couldn’t find a buyer for their old home in Whittier. So after two months of trying to sell it, they took it off the market and plan to rent it out instead.”
“‘It’s just not selling for what it’s worth,’ said drywall contractor John Tipton.”
“Is now the time to for hesitant homebuyers to make a deal? Or will there be a better time down the road when prices are lower?”
“‘If you have a long horizon, this is a good time to buy,’ said Michael Caruso, president of the Orange County Association of Realtors. ‘You have plentiful inventory, you have willing sellers and you have agents in a problem-solving mode.’”
“But Chris Thornberg, principal at Beacon Economics and a former UCLA professor, countered that buying now is folly. ‘What’s the point of buying today when you can buy it for 10 percent less in a year?’ Thornberg said. ‘For the life of me, I can’t figure out that logic.’”
The Daily Bulletin. “When people talk about a cycle in prices, they imply that prices go up for a while, eventually get too high and then fall back some. It might be true in some areas of the business world, but it doesn’t apply to California home prices.”
“‘People want to be here, and people need places to live,’ said Jack Kyser, chief economist with L.A. County Economic Development Corp. ‘That’s why prices will always go up here - because it’s California.’”
“‘I can’t imagine the median in the High Desert ever being below $200,000 again,’ said High Desert builder Todd Tatum. ‘There is no price cycle. If you look at a graph, it would look like a stairstep, going up, flattening off, going up, flattening off.’”
The Press Enterprise. “Just north of Interstate 210 sits one of this city’s marquee developments — the ‘Beverly Hills of Fontana’ as one resident recently described it.”
“And like other areas with vast tracts of new development, Fontana and the Sierra Lakes community are now bearing the brunt of the slumping housing market. Thousands of foreclosures are recorded in the area each month.”
“‘Where there is boom there is now bust,’ Fontana Councilwoman Janice Rutherford said in an interview.”
“In Sierra Lakes, the southwest corner of the 700-acre development had the highest density of foreclosures and defaults in the city during the second quarter, according an analysis of foreclosure data by The Press-Enterprise. Property values are dropping by more than 10 percent in some parts of the development, the San Bernardino County tax assessor’s office reported.”
“A large plywood sign propped against the garage door of one Sierra Lakes home begs someone to come to the homeowner’s aid. ‘Help!’ reads the sign in orange-neon paint. ‘Going to foreclosure.’ The sign says the home is worth $530,000 but will sell for $440,000, scratched down from $450,000.’”
“‘We are barely holding on here,’ said Jean Beauford, who bought into Sierra Lakes three years ago and has seen her monthly mortgage payment jump from $1,641 to $2,500 because of an adjustable interest rate.”
“Kevin Parhm’s girlfriend bought into Sierra Lakes about a year ago. Parhm said the housing crisis will only get worse. ‘If you had a pulse, you could get a loan,’ Parhm said, pointing to house after house on the street that is now vacant.”
The Bakersfield. Californian. “In September, Bakersfield’s home sales were nearly half what they were a year ago, according to the Bakersfield Association of Realtors.”
“In addition to putting the brakes on brisk growth, the housing bust has left the state and local economy more vulnerable to systemic shocks, said Leslie Appleton-Young, chief economist with the California Association of Realtors. ‘It does mean we’re closer to the edge,’ Appleton-Young said. ‘There’s more risk to the downside because other things can always happen.’”
The Tracy Press. “About 20 of those prospective homebuyers turned up at the office of real estate brokerage Saturday morning to see what kinds of deals they could get on houses that have been through foreclosure. Real estate agent Joan Fallavena told potential buyers that banks own all 19 homes on Saturday’s tour.”
“Fallavena and three other real estate agents from the office led people on a caravan through Tracy neighborhoods to look at houses that are back on the market. Some of them are among Tracy’s newest homes.”
“The previous owners of a three-bedroom house in the Edgewood subdivision apparently didn’t live there long enough to put in any landscaping in the backyard. ‘They moved in long enough to put up a few pictures, then the mortgage adjusted and they were out of here,’ said real estate agent Claire Trinkle.”
“Peggy Stout of Calaveras County added that the advantage is with people like her daughter and son-in-law, who have a huge inventory to chose from. ‘The market is great,’ she said. ‘They’re in a perfect situation, because they don’t have to sell anything.’”
The San Francisco Chronicle. “The weight of defaults on real estate loans has forced the Bay Area-based Cal State 9 Credit Union into federal conservatorship.”
“The state Department of Financial Institutions announced late Friday that it was putting the National Credit Union Administration in charge of Cal State 9 operations.”
“The credit union has five branches in San Francisco, Berkeley, Oakland, Hayward and Pleasant Hill. Its headquarters is in Concord. The Cal State 9 Credit Union, which has been in operation for nearly 60 years, has more than 29,000 members and nearly $388 million in assets, said Carol Chesbrough, California’s interim commissioner of financial institutions.”
“‘The credit union, however, had impaired capital and had become insolvent,’ Chesbrough said. The state’s action ‘is related to the credit union’s defaults on mortgages,’ California Department of Financial Institutions spokeswoman Alana Golden said.”
“The credit union reported $54.5 million in loan and lease losses in its September quarterly report on file with the state; in the previous quarter the reported losses amounted to $17 million.”
The Modesto Bee. “Two years ago, economists, Realtors and others carried on a lively and unresolved debate about whether skyrocketing housing prices constituted a bubble, a bubble that was destined to burst.”
“Today, in Stanislaus, San Joaquin and Merced counties, to say the bubble has burst is an understatement.”
“Based on past experience, we anticipate that developers soon will be asking cities for major breaks in permit fees in order to jump-start home building. Elected leaders will be tempted to acquiesce in the name of improving an ailing economy.”
“That isn’t the best solution. It’s obvious now that the demand for valley housing was artificially inflated by speculation and subprime mortgages that put many people into houses they couldn’t really afford. And for all the new homes that were built, very few were truly affordable to those with typical valley incomes.”
“Now is the time for sanity. And when building begins to boom again, which it will, let’s remember the lessons we learned.”
The LA Times. “Downtown’s boosters hailed the cranes dotting the skies over Los Angeles as sure signs that the city’s building boom and economic good fortune were continuing. At the same time, ever-rising housing prices convinced homeowners across the region that their bet on Southern California was a prudent, maybe brilliant, one.”
“But now, as the housing market undergoes a painful correction…it’s time to look beyond the real estate hype and wishful thinking. On closer inspection, much of the ‘boom’ has turned out to be a ‘bubble,’ built not on rapid growth in personal income and new jobs in many industries, as in past regional booms, but mostly on a housing market gone mad.”
“Paradoxically, a weakening real estate market may be precisely what L.A. needs. Lower housing prices could keep businesses from leaving the region because their workers could afford to buy houses. Cheaper condos could make living downtown or in other high-density areas more affordable.”
“And the prospect of fewer buyers and lower home prices may persuade residential developers to sell their land, which could open it up for industrial, warehouse and other productive uses.”
“Far-fetched? Well, much of these scenarios played out after the collapse of the L.A. real estate market in the early 1990s. It could happen again, to the benefit of the region and the long-term sustainability of the real estate market.”
I’m so glad that Chris Thornburg is getting quoted in these articles utilizing “common sense”. Too funny. But no good response. “If you have a long horizon, it’s a great time to buy?” Are you f’ing kidding me. Why not just play russian rullette with your finances.
I’ve been reading a lot lately but with no time to post (newborn keeping me up a lot) but I have to say that the quality of this blog keeps getting better. (Maybe it’s just the shift in reality). Keep up the great work BEN!
Congrats on your new addition
From the Union Tribune, Best darn article to come out so far about the state of real estate in san diego,
http://www.signonsandiego.com/news/business/calbreath/20071104-9999-1b4dean.html
I was pleased to read this in the SD Onion this morning while sipping the home-brewed coffee. Noticed that the LA Times Sunday edition had nary a whiff of similiar news in either their Business or Real Estate section.
Maybe it’s just the shift in reality
Oh, the reality was always there. It’s just that the MSM is finally starting to report it.
‘What’s the point of buying today when you can buy it for 10 percent less in a year?’ Thornberg said. ‘For the life of me, I can’t figure out that logic.’”
10% decline today to end of 2007 wait and watch it dip further in 2008 and even deeper by end of 2009.
Thornberg is right, of course, but I think the issue is not timing so much as the good old price-to-rent ratio. When it will normalize, who the hell knows. The RE shills will continuously be saying it’s a great time to buy, but we all know it’s a great time to be a tenant.
Amen, lender. Amen!
Let’s not forget that rents have been rather high lately, as well. Certainly not in line with recessionary times in So Cal.
We need to wait for rents to stabilize. Then, when PITI payments are comparable to — or less than — the new, lower rents, it might be time to buy.
‘Let’s not forget that rents have been rather high lately, as well. Certainly not in line with recessionary times in So Cal.’
Rent increases were actually suppressed between 2002-2005 because ANY renter could get a temporarily low-payment mortgage. At the same time, construction shifted mostly to single family homes in exurban areas where renting is rare (i.e., high profit margin stucco boxes). When I sold my properties and had nearly half a million in liquid assets, I actually found that qualifying to rent a $1650 apartment in Ventura County, CA was more difficult than qualifying for a $500K mortgage! Now that most of the renters who chose the mortgage in 2004-2006 will will clearly be renters again soon, there may be some upward pressure on rents in California. However, the building boom sparked an oversupply of SFR inventory in exurbia and condo inventory in central city areas, rents for these type of properties may fall somewhat in the near term.
San Diego topped out earlier than LA. We got in just in time (mid-2004). In 2005, we saw rents rise about 30-40% in our area, largely because more people were bubble-sitting and/or simply deciding to continue renting instead of buying.
Fortunately, I saw this coming & locked us in with a good LL. By making some repairs on our own (some significant) and paying 6-12 months in advance, our rent is locked until mid-2009, at least (LL LOVES us).
We just found a “great” deal on a brand new 2700 sq. ft. home in the Santa Clarita valley - $599,000!! It has GE Monogram appliances, top of the line fixtures, etc. This home would have sold for over $800k - $900k in the “boom” times. We are actually considering it due to our tax situation. See with the existing FB’s they can’t afford to sell their newer homes for a lot less than what they paid, the builders can and are. We are new to California, will the banks start unloading the foreclosures and really drive down prices in the next year or two? We really hate our rental and want a real home - we just don’t want to get SCREWED! Where does everyone think this is going?? I know the answer is DOWN, but how far?
Why don’t you try the commute from Santa Clarita for a few months before you sign on the $600,000 line? It might not be such a deal if you hate your life and your three hour-a-day commute and you can’t get out from underneath your “steal.”
I think no one really knows how far. All anyone knows is prices are going to keep falling for at least a couple of years. They might drop more in real than in nominal terms, due to inflation.
LaRenter, that’s not a great deal.
As someone who lives in Santa Clarita…
Where in the valley is the house? Do you or SO have to commute out of the valley on the 5? If so, you might not want to be too far from the freeway. Do you have kids that will go to school? Also watch out for HOA fees. The newer developments might have higher fees (if they have it) and look at the tax bill. Some of the “fixed” fees are high…as in $3000/year on top of the 1% general tax levy.
You have a lot to choose from. From what we’ve found in trying to sell our house the last 5 months here in the SCV, the bank owned properties, if priced at what seems to be a deal, seem to go very quickly. Everything else…not so much.
Agree with tj. Offer $350K (still too high, IMHO) and see what they do.
Thanks for all your helpful replies!! I have lived in Valencia for over 3 years and my commute to Pasadena is not bad. It only takes me 45 minutes to an hour depending on the 5. I am somewhat skeptical of this home purchase since I do not want to catch a falling knife and it is mainly due to tax considerations. The AMT scares the hell out of us and we are looking for some shelter. It’s a crime how the government taxes us and the breaks given to the real estate industry! The new house payment would be a $1000/mo. higher than our rent after tax savings. Figuring a 2% appreciation factor we would break even on the purchase in about 11 years. We would definitely be going with a 30 yr. fixed with 5% down. I am considering saying no because it seems too risky in the current market. Thanks again for all your ideas!!
I’m offering $450k flat take it or leave it.
I’m not a tax expert by any means, but I thought if you were subject to the AMT, you would not get the full benefit of the tax write off for mortgage interest. Please get advice from a tax accountant re: the pros and cons of buying if you are trying to avoid AMT.
I am in AMT and got ZERO benefit for CA income or property taxes!
I have a lovely 4 bd/3 ba home for sale in Valencia.
Older neighborhoods are pretty sticky prices (for now)…newer neighborhoods are turning over much quicker and that is where the bulk of the bank/short sales are coming from. Good luck with whatever you decide.
No granite or GE Monogram appliances though.
With AMT you can deduct interest income on a primary residence up to $1m. There are restrictions on deductions for 2nd or HELOC but I can’t remember exactly what they are. You cannot deduct property tax with AMT.
So there is still a tax benefit, albeit not as good.
“said Jack Kyser, chief economist with L.A. County Economic Development Corp. ‘That’s why prices will always go up here - because it’s California.’”
________
Does this guy ever say anything else? Why do they always go to him? He has been WRONG over and over and over….
A study done by Kyser’s LAEDC this year reports that Los Angeles County is some 280,000 housing units short of meeting demand.
“There is always demand, and it is generally very tough to develop housing projects in California,” Kyser said. “You have water availability, traffic and other infrastructure concerns. The housing market is viewed as being in crisis.”
Robert Rivinius, president and CEO of the BIA, says the fact that affordability is still low after a downturn that has lasted all year is proof that prices aren’t likely to drop significantly.
___________________________________
The writer, err… note taker of this “news story”, er… press release is too dumb to realize he is just doing the work of these clowns PR departments. This looks like a good story to save and shove up someones back-side with some emails in the next 12 months…I have the patience of Job and the venom of a scorned woman!
“This looks like a good story to save”, pin to the tip of a Joshua tree, “and shove up someones backside with some e-mails in the next 12 months.”
Sorry, I just had to edit your post a little.
Home prices not likely to retreat
Fatal shooting may signal return of gangs
Man nabbed after chase
Pedestrian killed crossing freeway
Firefighters discover two burned bodies in Devore
Man killed while unloading truck
Wife charged with murder
Restaurant lags on upgrades ordered by city
Shooting victim’s father offers kind words to gunman
Engineering teams test robot vehicles
Just a few of the other stories in the “Daily Bulletin”. I guess home prices are the least of their concerns.
You missed the 100 car pile up North of Bakersfield because of the fog .
A update on my neighbor in foreclosure . The landscaper was looking to be paid today for taking care of their lawn ,and you can see he isn’t going to go much longer if he doesn’t get paid . I feel sorry for the guy because hes a hard worker and kept mowing their lawn in good faith that he would get paid and I think they are going to burn him . Oh well ,I guess there are thousands of cases like this .
The problem with “hard work” is that it no longer pays in a country bursting at the seams with illegal aliens and scam artist clients looking for contract errors to avoid making the payment.
RMS very well put.
Apparently, even the economists are either not aware of the severe credit crunch and/or do not understand the implications of it in the financial institutions! Most of the real estate brokers can be excused from this lack of understanding, as someone here suggested they probably have a high school education or less.
The shills will continue to trumpet the “california - no more land” theory till it dies of overexhaustion in this coming marathon of a downtrend. I suspect even two years from now is too early to buy!
On a different note, ever notice that the reporters/ journalists tend to quote the so called “experts” without any knowledge of the industry or state of the market? Like in all jobs in the recent past, seems like the reporters, being a gullible lot, have been likely hired based on the mirror test! Investigative journalism is dead.
No matter what the quality of reporting the reporter’s story has to get past the editor as censor.
The editor has to make sure the story won piss off the realtors and others who ultimately pay the media’s bills via their ads.
Having met some small town journalists - I suspect that editors don’t have much to censor.
Newspapers used to be a receptacle for cooked fish, after one was done reading them…
But now they are the smelly fish.
What a Stench!
Agreed. But what about journalists that were raised on the investigative journalism diet of “watergate” and the like? I’m sure there are a lot of them aspiring to win the Pulitzer in real estate.
There are 21 categories (14 directly in journalism) in all. How about public service, investigative reporting, national reporting or Criticism (of NAR, NAHB, MBA etc.)?
The cynic in me understands that the media is in an ideal position to shake down those with deep pockets.
A good investigative journalist can easily uncover a lot of dirt on people and organizations, dirt the readers/viewers will never see if the proper amount of money changes hands.
I had to cringe when Rupert Murdoch bought the Wall Street Journal.
The biggest biases in the media pertain to motivation. Some stories appeal to them, others don’t even occur to them. That’s why they always consider themselves balanced, because they don’t even *see* the stories that counter their world view.
That’s a really good point, tj. It is possible to report nothing but unvarnished facts, and yet present a highly biased picture.
The CEO of the nation’s largest bank is on his way out due to the Debt Bubble.
The CEO of one of the nation’s largest investment banks is already out due to the Debt Bubble.
The “Housing Mania” had nothing to do with houses. These California morons have no ability to comprehend this. My neighborhood is laughing at your neighborhoods.
There’s a term for people like Kyser: Nincompoop.
Somewhat OT: In today’s Chicago Tribune, there was a full page ad in the front page section of the paper from our friends, The Associations of Realtors. Chock full of great stuff like ‘It’s a great time to buy’; ‘Realtors are here to help’;etc…
Anybody else seeing these promo plugs in their local dailies?
LA Times had one… mmmm delicious Kool-Aide…
LA Times and the Chicago Tribune are the same company. No surprise, eh?
The Tribune Co. must be run by realtors - check out their Red Eye trash rag on the weekends for a good laugh - condoze galore.
Better yet - it will be (or is) owned by a real estate guy - Sam Zell bought Tribune this year. I think the sale isn’t final yet.
where in the LA Times? I want to put this up on my office wall.
where in the LA Times? I want to put this up on my office wall.
Page A16, full page add, “Buying a home is a great way to build long-term wealth”. Also, on A27 another full page add, “Make Money in Real Estate Foreclosures”. And I am not making this up.
wienerdog, due to a slip of the eye, I thought your description of these as “promo plugs” actually said “porno plugs,” a completely appropriate description of obscenity!
az, I think we’ve coined a new term for those ridiculous ads from the NAR: ‘porno plugs’!
any surprise…LA county…public trough…what is his incentive to speak the truth? He gets paid as a public cheerleader
“‘People want to be here, and people need places to live,’ said Jack Kyser, chief economist with L.A. County Economic Development Corp. ‘That’s why prices will always go up here - because it’s California.’”
“‘I can’t imagine the median in the High Desert ever being below $200,000 again,’ said High Desert builder Todd Tatum. ‘There is no price cycle. If you look at a graph, it would look like a stairstep, going up, flattening off, going up, flattening off.’”
Todd Tatum better open the ol’ eyes and the mind. Take a look at history while you are at it. Prices DO decline…even in CA. Saw it myself from 1990 to 1996.
Todd Tatum is probably on the verge of going broke and he is looking for some GF’s to help him…
“‘I can’t imagine the median in the High Desert ever being below $200,000 again,’ said High Desert builder Todd Tatum. ‘There is no price cycle.’”
AhHaHaHaHaHaHaaaa! And the Earth is flat, the Moon is made of Green Cheese, and there will be a Santa Clause rally in home prices.
Hey Todd, the Easter Bunny will be right over on his price-cycle to bring you a big, fat Easter Egg!
LOL I have to agree with that, the comedy never ends
No price cycle in the CA deserts? Wow. If what they’re smoking is legal, its time to share. Everyone who has lived in the CA deserts knows about the large price drop in the 1990’s.
Guess what… they’re back!!!
The sad thing is this comedy never ends.
Got popcorn?
Neil
“No price cycle in the CA deserts? Wow. If what they’re smoking is legal, its time to share. Everyone who has lived in the CA deserts knows about the large price drop in the 1990’s”
That Dailybulletin article is total crap! Bt the time the smokeclears there will be 1-10 acre tracts with 3000+sq ft homes avaiable all over the hi deserts for under 100,000.
Problem is who wants to pay 3.50=4.00 per gal to commute 100 miles to la/oc. This is why this RE estate downturn out in the outer desert fringes of LA/IE will be far worse than the 1989-1996 downturn. Probably half of the homes in the hi-deserts were purchased as investments or second retirement properties-the owners will dump these fast or abandon them to foreclosure rather than shell out $50-100 in gas just to make weekend trips to their ‘paradise’ desert properties. This RE bubble will really decimate prices all over the hi deserts-drops of 50-80% easily by 2008-2010.
This is why this RE estate downturn out in the outer desert fringes of LA/IE will be far worse than the 1989-1996 downturn.
Far worse. No doubt about that. Just how bad… depends on how far the economy tanks. I do agree… $100/bbl oil definitely will make those areas… uninhabitable.
Got popcorn?
Neil
Uninhabitable? So, you’re saying no real difference??
“‘I can’t imagine the median in the High Desert ever being below $200,000 again,’ said High Desert builder Todd Tatum. ‘There is no price cycle.’”
Know some folks in Palm-caster who were upside-down for twelve years after the Berlin Wall came down. With the size of this latest bubble slide will certainly be steeper and likely longer. Sorry Todd, I don’t buy it!
Toluca Lake house in 1985- 125k
1989- 390k couldn’t refi -my income,
wanted to buy home in CT total cash, CT /East was still in dumpster.
1996 - 210k same house. sold to renter.
2004- 600k+
NOW?
CA homes go up, CA homes go down, even in desirable areas.
Our old house in Woodland Hills (San Fernando Valley, LA) went from about $375K to $199K in the last downturn. Didn’t reach 1989 prices until about 2001 (about 11 years to **break even**). This was a good area, very nice 4/3 house on 1/3 acre with swimming pool.
Just sold my mom’s house in San Diego County this August (less than two months from list to COE). Peak price at least $525K-$535K, minimum. We sold it for $380K. That’s a 28%-29% drop right there…and it’s only the beginning.
Seeing prices in our old n’hood (where we sold in 2004 in No. San Diego county) about 40% from peak already. This are is “working class” but you can easily ride your bike the 6 miles or so to the beach.
Um, yeah, prices never fall in California.
‘I can’t imagine the median in the High Desert ever being below $200,000 again,’ said High Desert builder Todd Tatum
he also said that in the high desert….. nobody does drugs, there are no gangs, plenty of high paying jobs, everybody keeps their house and yards in ‘tiptop’ condition, only 1 or 2 at the most foreclosures, air is so pure, this is paradise.
Don’t forget the high desert’s abundant, never-ending water supply.
And it never gets scorching hot, and the wind never blows.
The good news is there’s plenty of Joshua Trees in the eastern Antelope Valley with which to render the appropriate treatment to this pollyanna bubble-blower.
How do people get any income in High Desert? There isn’t even a population to support any economic activity in I-15 & I-40 corridors in Mojave. There is, like, one radio station between Victorville & Las Vegas/AZ border.
The paper did a story about how many houses for sale under 100,000 in the high desert , yup a 900 sq ft house in a gang infested war zone. If you moved into one I’d give you a 50/50 chance of staying or living one week.
Who pays Kyser’s salary? They should be Joshua Treed as well. Fire this retard. He and Tod can get drunk together and reminisce.
“‘People want to be here, and people need places to live,’ said Jack Kyser, chief economist with L.A. County Economic Development Corp. ‘That’s why prices will always go up here - because it’s California:
That dailybulletin article is 100 BS Re propanda spin which would make Goebbels proud. Can’t even begin to know where to start rebutting this fantastic piece of fiction.
“There is always demand, and it is generally very tough to develop housing projects in California,” Kyser said. “You have water availability, traffic and other infrastructure concerns. The housing market is viewed as being in crisis.”
No actually there were no limits imposed on HB’ers in the IE-i know because i have seen them literally bulldoze entire valleys . hillsides, and vast squaremiles of acreage into miles upon endless miles of tracts. One lie!
‘Last year, that price topped $400,000 for the first time. Even in the High Desert, long regarded as the last bastion of affordable housing, the median was $330,380″
aanother big lie! Lancaster is now below 300,000 and rapidly dropping toward 200,000 :Victor Valley is now below 300,000 and many areas are close to 200,000. Check out lastest zillow sales and reo s instead of sellers wishing prices.
“Barriers to housing imposed by state and local governments need to be reduced for the industry to be able to build enough new homes to meet the demand,” he said. “Especially entry-level homes, which now simply cannot be built in most major metro areas due to the high costs of land, fees, and over-regulation”
Big Big lie here: all over the IE builders and deserts had carte blank to build without any restrictions. Maybe LA county Coastal areas but not the IE . This writer is a total ignoramous.
This is the most slanted one-sided Re pleading article i have seen -nothing but RE spin and prop . Things must be getting dseperate in the RE market for the Dailybullcrap to come out with this REIC prop sheet.
“‘People want to be here, and people need places to live,’ said Jack Kyser, chief economist with L.A. County Economic Development Corp. ‘That’s why prices will always go up here - because it’s California.’”
Its different here!
“‘I can’t imagine the median in the High Desert ever being below $200,000 again,’ said High Desert builder Todd Tatum.
I think he will be surprised at what actualy happens vs what his little mind is capable of projecting
Man this is going slow. I’m waiting but 2-3 years more… uhg
Yes, it will be slow. I’m predicting the greatest drop will be in 2009.
2007 has the curtain going up.
2008 is nothing more than a warm up act.
When will the fat lady sing? Good question, but not before 2010 or 2011. Maybe later.
Got popcorn?
Neil
technically this guy may be right. If you look at what the US$ is doing. The nominal price could be flat or even up for years, while a falling dollar takes away 60% or more of the true value.
I disagree, no matter how many dollars the print it will be impossible to inflate the prices of housing by lending money to scrubs. Wage inflation is the only sustainable path to RE inflation. Driving RE prices up by lending money to scrubs that don’t have the ability to repay it can give a short term pop (been there, done that), but is ultimatly pushing on a string. AT this poing the only inflation printing more money will create is on imports. As the lofty consumer is crushed under their mounting debt they will afford little more than the necessities. Until we (or they, foreigners willing to lend to us) fully understand that the “creation” of wealth through the sleight of hand performed money changers is just a ponzi scheme we will suffer falling living standards here in the US. This will be the case until the US starts producing things that foreign countries will import.
I agree with Rich. For prices to remain flat, wages would have to increase as credit became easy again. What we’re looking at is import inflation with domestic wage deflation (due to REIC/wallstreet layoffs and reduced auto production).
Some areas are so out of balance with incomes that nothing can save them from a sharp drop a la LA in the 1990’s. We have, unfortunately, quite a bit of pain ahead.
Got popcorn?
Neil
I also agree with Rich. Wage inflation is what matters, inflation without wage inflation doesn’t help RE.
It also seems improbable that rents will increase after this massive building (supply) boom.
This won’t take long, panic hits next Spring, we may even be back to normal by the end of 08 if we have a recession.
Third.
The only inflation that can drive prices are wages, interest rates, and loose lending standards.
The last two are what drove things the last 5 years, not wages, and the results of their demise are being felt now. The only thing that could save prices now would be wage inflation and I don’t see it happening. Well, not in my paycheck anyway…
Unless we see wage inflation, this will never happen. FB’s are not seeing pay raises, unable to pay their mortgages and will walk away. If anything, the drop will greater, in actual purchasing power.
Everyone seems to be quoting the 1990 RE crash in LA. I dont know the details. Can some one point me the details? Thanks
Yes, thanks, MNair, I’ve been curious about that, too. What constitutes a “crash” in LA? Anyone have an example of a pre-crash and after crash price?
Strictly anecdotal information regarding the 1990’s crash (I’m sure others are in a better position to explain the reasons and the % decline, which I understand was around 45% off the peak)
A friend of mine, already owning a place had a chance to buy a second condo (1 BR + 1 Ba) in downtown Long beach in 94. The price the owner asked was $25000. He offered $15k and was accepted. Surprised, he thought about putting it on his credit card. However another person outbid him at $17.5k.
Buy homes: when no one else wants to talk about them. Or think that buying a house is bad bad decison!
Thanks, shendi. Wow, that condo would be what, $150,000 these days?
i don’t want to give you cross-country whiplash, but in 1992 or so, there were co-op studio apts on riverside drive, in manhattan (NYC) selling for $25K, then $35K.
now the same apts are selling for $275K - $350K.
i could kick myself for not having grabbed one or two back then….
Ben Stein wrote an article regarding buying a Malibu beach house which he saw decline of 35%. Do a search…its about year old.
I was looking at Malibu homes during the last downturn, but certainly couldn’t afford them. Still, prices were significantly down all over LA — good and bad areas.
Here’s a real “crash” anecdote: I bought a condo in 1994 in Glendale (LA area). I paid the bank (REO) $95,000. A previous sale of the same apartment had been $260K. That’s unusual, I grant you. Most of those condos had never changed hands at $200K+ prices, but there had been a lot of transactions in the $150-$200K range. I don’t know if $95K was the lowest price ever paid for the 1300-s.f. model; it DID need some TLC, as the FB’s had ripped up half the kitchen floor when they stole the stove. Still, a new stove didn’t cost much, and I retiled the k. floor myself. For non-economic reasons, I sold the condo in 1996 (am I dumb, or what?!?). Got $104K, which paid for the commission and the repairs, nothing more. Suppose I should’ve kept it and rented it out.
wow 1300 s.f. condo in the ghetto parts of Glendale are still on zipreality at $400-600k. I can’t say you are dumb for ever selling because who knew that the prices could have gotten so out of hand. I just dont understand how i am seeing a Glendale house in the $1+million area go into escrow on Friday!!! What are people smoking??
Best friend’s father bought a condo at Mammoth in 1995 or 1996. Large 2bed and loft for $150k. Still the record low price in the complex.
A foreclosure that needed a new kitchen (which they would have put in anyway).
Better to be lucky than good.
Neil
I really wish one or more of my friends would go in on buying a small condo in mammoth or vegas with me. I guess not so much anymore, but hopefully one day. Seems better than buying a Porsche.
Seems better than buying a Porsche.
ROTFL.
Yea… but not at today’s prices. Now that I found this blog, I understand why three and four years ago those condos were packed with the tackiest SUV’s around. Now? Half empty. It will take two more winters to achieve capitulation.
Got popcorn?
Neil
Are you saying that the Redondo Beach tall and skinny’s were priced too high at over $1mil? And those hummers didn’t mean the “owner” was rich?
Strangely enough if you stockpiled aftermarket german Porsche parts you would actually be doing well, since Bilstein coilovers are much more expensive in the last couple months. Imagine that.
We bought mid-crash. Prices started falling in 1990. We bought our first house in Irvine (Orange County) in mid-1993 for $245K. Prices went lower, then stabilized. We sold the house in 1998 for $270K. Only 10% appreciation in over five years, and of course we only broke even after costs/commissions. That’s why I laugh when people say that prices will go up next year - try 5-10 more. Nobody should buy a house before 2010, and only if they’re planning on hanging onto it for at least five years.
When I was working as a contractor for RTC (Resolution Trust Corporation) in 1991, most of the SFRs in the bankrupt S&L portfolio were below $200K. About half were below $120K. There were some good deals even at $20K - $40K range.
The RTC was as corrupt a government organization as they come. The attorneys got all the money, most of the “settlements” were pennies on the dollar, yielding very little in payback in the debt, and there were widespread instances of the government buying off the federal judges to gain convictions. Hopefully this time around the organization will be more transparent, but I doubt it.
Entirely anecdotal, but I have a good friend who lost 400K in a matter of months when he bought the house next door to his in the Palisades (high-end part of West LA) before he had sold his own house. By the time the market turned, he was toast.
Ouch.
I hope your friend still talks to you.
Neil
I think the defense industry left California.
I work as a Civil Engr for large residential stuff. From what I understand a lot of the civil engr places closed shop when this happened as lots of foreclosures happened and no more need to develop like crazy. Looks like this will slowly happen again, only this time many other types of industries will be affected.
We only work with one large builder, Centex, and most of the other projects are more private developers. I figure if these guys bought land at low points and have money, building through this downturn is one of the smarter things to do. Because if you can build cheaply enough I am sure there will be plenty of people to buy.
“From what I understand a lot of the civil engr places closed shop when this happened as lots of foreclosures happened and no more need to develop like crazy.”
Mid Valley Engineering (civil, geotechnical, etc.) just gutted their staff by 50%; they’ll probably be history in a few months.
Here in nor cal as new agent, Stockton, one of the first REO homes I sold to actual occupants was for a purchase price of $85,000 in 92-93. I was shocked when I checked the tax records and found that the previous owners (before their foreclosure) paid $170,000 in 89′. I sold it for half of the previous owners purchase price. By the mid to late 90’s this class of property fell into the 60-70s as REO or at the courthouse steps. From all indications I have seen we are so much more expensive now as compared to 89′ that it is actually kinda scarry. If the gov tries to paper over this mess with more money and lower rates $100/barrel oil will seem cheap!
At the top here in 05′ rentals valued through tried and true methods (10 times rents) that should have been worth around $100-110k (900/mo rent) were selling for $360k+!!!
Virtually everyone here has tapped deeply into the magical pool of (non) home equity. New expensive autos have been the rule rather than the exception. Never before have such losers driven such nice cars!!!! The coming consumer credit crunch is going to devestate our bullshit “information” & “service” economy. When push comes to shove strapped people will cancel their cable tv and opt to buy gas and food. I am allways to early with my observations, but I can not see ignorant vanity companies (such as starbucks) doing much business in the coming years. When to short it? dunno… will it get pounded in the upcoming financial meltdown? positively.
There used to be a really cool document out there that was called “Real Estate Fire 1980s-1990s.” My link doesn’t work anymore. It used to take forever to load. It mapped Southern California year by year from like 1984 to 2002, and it showed by zip code the percentage price change in home prices, from 1985 to 1990 the colors would change from lighter shades of yellow to dark red (heat), and then from 1991 to 1995 it went to lighter and darker shades of blue (cold.) And for every year it had some commentary. The address I saved was http://www.firstamres.com/jsp/index.jsp
MNair, also see posts by desertdweller and CA_renter that appear further up than your question.
In summary, I remember hearing that LA prices declined 25% nominally and 40% inflation-adjusted, in the early 1990’s. I don’t know how accurate that is; it might be a good average or it might be an understatement of the debacle.
“…’it’s just not selling for what it’s worth’ said drywall contractor John Tipton”.
No, Mister drywall contractor, it will sell for exactly what it is worth. Your POS drywall and chicken wire shack is worth what someone will pay for it. And considering the house is in Whittier it ain’t worth much, at least to me.
Another example of some dazed homeowner who thinks that the world revolves around them and their overvalued crackerbox. I get a kick out of watching people like this drywall contractor take it in the shorts. God help me, I love it so.
What part of “Whittier” does this guy not understand?
Yes, the mouthbreathing stupidity is a bit much, I feel the same way every time I hear someone say “I’m not giving it away”. What they’re saying is “I don’t want to take a loss”. Well, that’s just dandy, then. Keep your house and STFU.
I like your anger, Palmetto.
Don’t worry John Tipton….it’ll sell for what is worth in a year or two….. after the renters ‘upgrade’ it for you for free.
By the way, were you named after the millionaire John Beresford Tipton the 3rd who gave away a million every week to a stranger in the 1960 tv series? I wrote a letter to the producers laying out my life’s misfortunes and asked to be put on the list……never got a reply…could you put in a good word for me?
This homeowner’s attitude is one of the things that is helping to prop up the median prices. Once people get realistic about the “worth” of their houses prices will drop. Prices are still way too high all over California. All the other B.S. is wishful thinking.
“No, Mister drywall contractor, it will sell for exactly what it is worth. Your POS drywall and chicken wire shack is worth what someone will pay for it. And considering the house is in Whittier it ain’t worth much, at least to me”
MR Tipton took his home off the market because he could not get what he felt it was worth and is now going to rent it!
Yeah, as if whittier is like some special region! Actually 90% of whittier is lower working class or recent immigrant hispanics residing in older pre-WWII construction older small homes in declining hoods. Values of these termite-infested older shacks are declining fast in similar LA older inner exurbs such as whittier, Van nuys, lawndale,East Torrance, Lakewood , 70% of long beach which is pre wwII built areas, much of east and northeast SF valley, all of Scentral , all of inglewood,gardena,bellflower, sgate, compton, ect.
100% positive Tipton rents to hispanic immigrant/ illegals-which is the rental market in whittier for old SFH’s in deteriorating LA areas. His rented home will get trashed with 4-6 cars parked on ther lawn, oil stains in driveway,unkept unwatered lawn,cracked peeling paint and stucco, ect. In 1-2 years he will have a trashed out dump not worth s*it when the illegal renterss leave or are evicted after not paying the rent for several months.
Then his old dump-I mean home- will need $10,000 ’s of repairs while he is underwater on his new property and cannot extract equity.
BTW, the only part of whittier which is halfway decent is the far north part 90601 zip. Specifically the area just north of the old downtown area as it rises into the hills. Some really nice classic victorian restored mansions there-the rest of whittier is as i described it-in the dumps.
That’s the quote that stuck out for me. That disconnect is so typical of the bubble. Clearview, you nailed it.
From the LATimes piece:
“Paradoxically, a weakening real estate market may be precisely what L.A. needs. Lower housing prices could keep businesses from leaving the region because their workers could afford to buy houses. Cheaper condos could make living downtown or in other high-density areas more affordable.”
Well, maybe. Prices will have to fall a loooong way before living downtown or in high density areas affordable, not to mention desirable. I think the high density stuff is going to get hammered unless gasoline goes to $8/gallon. Even then, who would want to live in downtown LA? The jobs will probably move to where the people are.
“And the prospect of fewer buyers and lower home prices may persuade residential developers to sell their land, which could open it up for industrial, warehouse and other productive uses.”
That might be a blessing. Mixed use is not nearly as oppressive if the density is low. Instead of cramming thousands of people into those obsolete vertical “file cabinets for people” in downtown, how about more satellite offices distributed near housing?
Just a thought.
“The jobs will probably move to where the people are.”
i.e. China & India
They move because cost of doing is too high in order to compete.
Yep, and anyone who played the first version of Sim City years back could’ve seen this coming. Seriously, that little game had the fundamentals straight - unaffordability = dying cities. You don’t need an Ivy League degree to figure that out.
I have a friend outsourcing jobs just so they can keep the higher wage ones in California. However, as outsourced labor gets pricier, that model won’t work as well. My company is looking to move 5% of the employees, mostly better paid ones, to another state. Why? People earning $100k or more a year expect to buy a nice home in a decent school district.
Eventually people will wake up and notice how poor California wages really are. At that point, it will be like the early 1990’s: it will be near impossible to get a moving truck out of the state.
Will I stay or will I go? Let’s say I’m keeping my options open.
Got popcorn?
Neil
“‘It’s just not selling for what it’s worth,’ said drywall contractor John Tipton.”
WRONG Johnny boy; IT’S NOT WORTH WHAT IT’S SELLING FOR!!!!!
well, I for one am glad he is in a stable profession. Can you imagine if he was holding one house, and just bought another, and he was in the real estate industry?
wow, he sure dodged a bullet!
haha, geez
That dude’s a guaranteed BK in the making.
Besides, plaster is better than drywall.
Drywall? What a joke! That stuff is so weak that I can stick my wang through it on a good day.
Here on the blog I rarely LOL but hey, NYCB, I am LOL.
Agreed, another part of the problem is that people have let these big numbers become so entrenched in their minds they think it’s normal. Folks are about to come into a very rude awakening. Everything points to California being at least 40% overvalued folks better get their minds around those facts quickly or the pain from the Joshua Tree are going to be severe and long lasting.
I like your version, dan. Often we comment that these places are worth “only” what they’re selling for — but on a basis of comparisons to rents, they are (still) mostly worth LESS than they are selling for.
Erin Kerr said he doesn’t regret buying his Camden Place condo but does wish he had waited a little longer. They paid $577,000. Last week, the developer offered a similar unit for $464,000. ‘We love the community, we love our home, but part of me wishes we waited maybe a few more months. Maybe we would have gotten a better deal,’ said Kerr
__________________________________________________
Hello Knife Catchers!
“Maybe we would have gotten a better deal,’ said Kerr”
Whatchoo mean “maybe”? You could have gotten a place for over $100,000 LESS! Ouchie! Now, how about some Neosporin for the cut on that hand?
You probably don’t want to put Neosporin on finger stumps.
“…but part of me wishes we waited maybe a few more months.”
palmetto, I don’t think it’s his hand he’s that got cut.
“he doesn’t regret” … “part of me wishes” … “Maybe”. LMAO.
$100,000 - ain’t no thang. Yeah, I regularly waste $100,000 now and then…just because I can.
you gotta love those 3 story condos! at least they’ll keep you in shape!
“But Chris Thornberg, principal at Beacon Economics and a former UCLA professor, countered that buying now is folly. ‘What’s the point of buying today when you can buy it for 10 percent less in a year?’ Thornberg said. ‘For the life of me, I can’t figure out that logic.’”
For that matter, GS is saying Californian homes are 35 to 40 percent overvalued. So why not wait a few years and get into a Californian home at a 25 percent to 30 percent markdown off the bubble peak, and save yourself a few hundred thousand dollars in home equity losses? You could rent a Californian home for the rest of your life off the amount you saved by not buying now.
Clarification:
GS = Goldman Sachs, though GetStucco would doubtless agree
GS=Get Stucco=Goldman Sachs…….ummm
Thanks, I was doing a double take thinking, what is he doing, talking about himself in the third person but forgetting which screen name he’s using today …
Some areas are well over 100% overvalued and a 50% decline would get back to fundemental valuations.. This is true in NorCal.
http://www.housingbubblebust.com/OFHEO/Major/NorCal.html
Textbook “Extraordinary Popular Delusions and the Madness of Crowds” stuff…
from the book:
“Of all the offspring of Time, Error is the most ancient, and is so old and familiar an acquaintance, that Truth, when discovered, comes upon most of us like an intruder, and meets the intruder’s welcome.”
http://en.wikipedia.org/wiki/Extraordinary_Popular_Delusions_and_the_Madness_of_Crowds
“But now, as the housing market undergoes a painful correction…it’s time to look beyond the real estate hype and wishful thinking. On closer inspection, much of the ‘boom’ has turned out to be a ‘bubble,’ built not on rapid growth in personal income and new jobs in many industries, as in past regional booms, but mostly on a housing market gone mad.”
“Is now the time to for hesitant homebuyers to make a deal?”
Not yet.
“Or will there be a better time down the road when prices are lower?”
Yes.
Any more stupid questions?
“Just north of Interstate 210 sits one of this city’s marquee developments — the ‘Beverly Hills of Fontana’ as one resident recently described it.”
Is this a joke? Didn’t someone on the blog say that Fontana is an armpit? I don’t know, I’ve never been there, but I thought a few people here didn’t have such nice things to say.
Beverly Hills-adjacent extends as far as you dare say.
I actually mentioned that while on Jury Duty for a really stupid broke trust fund baby. I kept arguing when making the decision if someone could show me the city called Beverly Hills Adjacent on a Thomas Guide. And started mentioning how anywhere could be considered that. I hate Jury Duty.
Regarding jury duty, Dennis Miller once said that “I would never want to be judged by 12 of my peers of who weren’t smart enough to get out of jury duty.”
In my 49 years, never been on it and will only do so when I’m retired and need something to do.
Its actually very hard to get off of it now. This was my first time going at the age of 28. There were a lot of people at my job who this was their first time being on jury duty as well. Something is very different about it, compared to the past I guess. My job happened to be a very good pick for what they wanted. I was going to lie about my job, but figured if someone found out I could be in some trouble.
It is harder to get out of JD now. You just need a little more imagination…
http://www.fontucky.com/
Wait! I went to college in eastern Kentucky and to equate Fontana with that beautiful area is a major insult to Kentuckians!
Its very very hot out there. The polution from West LA drifts tword the gap in the montains and get sucked through lovely Fontucky.
Its hotter than Florida but not as humid. Smog and dust. Long drive to work if you are near the coast. Lots and lots of illegals, gang members, exc.
You are also getting near the large inland deserts and it all pretty much runs together. Median income is in the 60K range (not bad).
A lot of people commute into LA from that evil place. I can’t imagine the gas bill on top of the rest of the bills living out there. One of my coworkers was telling me that he is going to be buying a house out in Fontucky in a few months. I have stopped talking too much about the housing mess since our HR manager said I made him really depressed talking about it. I dont think people want to hear any negative thing at all.
Did this loser really cry to H.R.? WTF?
No no, haha. We have much more stupid things that people cry about in the office. I was truly disgusted at some of the arguments going on in there.
I talk to most people in the office about housing since they know I was looking for a long time and always ask if I found anything yet. So since I realized that most people were priced out I became very cynical and upset about it. I actually can realistically afford a $400k place (not very much in the LA area, I know). But if most people can’t, that doesn’t make any sense to me. Kind of makes people depressed when you start backing up info with numbers.
I might be moving out of the state to work in the next bubble industry for Civil Engrs. =) :thumbsup:
Its really hard for me to get ahold of these guys because they are so busy.
yes fontana does get all of L.A. smog, so do the rest of the I.E. and SGV. I live in the High Desert and while we do get our smoggy days it is never as much as “down the hill”. We have many clear days here with a light breeze. I should know Fontana, I used to walk to school against the Santa Ana winds. If you want to whip your kids in shape and have them at 9% body fat as high school friends and I had. Even though we never stepped into a gym until college. Trust I know smoggy and windy. On a note because of that I even outgrew my asthma.
i do have to admit, Victimville and Hysteria (Victorville & Hesperia) do have cleaner air than the Fontucky area does.
You are correct. Fontana is an armpit and will continue to be. They can build as many overpriced houses there as can possibly be squeezed in, but that doesn’t change the fact that it is still a smog ridden armpit.
It’s like saying it’s the Malibu of Compton. Don’t expect much.
Malibu of Compton…
——————
LOL!
Quit making those comments, ‘ Malibu of Compton!’ LOL, I spilt my Two Buck Chuck on my keyboard. You guys could be writers for Graucho reruns.
“Who is the graucho, amigo?”
Fontana may be an armpit, but then so is the old-school LA that is eastwards of BH. “BH of Fontana” implies “foothill exclave of Fontana” to me, kinda like Laughlin, NV I guess.
“Just north of Interstate 210 sits one of this city’s marquee developments — the ‘Beverly Hills of Fontana’ as one resident recently described it.”
The area of Fontana north of the 210 is all spankin new, which i call north Fontana(the nasty older industrial-scarred big-rig overrun ‘fontucky’ part of fontana-south fontana- is mainly south of the 210). The name Sierra lakes for the described development is a real gas_there isn’t even one spittin pond anywhere in the dry barren foothills between the 210 and the 1-15. As for the developments, there is a ton of them in this new north fontana-northwestern rancho cucamonga region as far as the eye can see if one looks out west from the 1/15 going northbound as you pass the 10 fwy. All brand-new 3000-4000 sq ft cookie cutter standard mcstuccos, all overpriced and their fb’ers badly underwater.
San Berdoo county is a pit region, period.
The perfect FB song?
http://www.youtube.com/watch?v=irp8CNj9qBI
Thanks for the info, everyone. I especially liked the honking postcard on the Fontucky site. Wow, looks like a flat, arid, dusty landscape with a bunch of trucks rolling through. Gimme Florida any day, humidititty and all.
What’s worse?
A pile of unsold houses or a 100+ car pileup?
http://www.huffingtonpost.com/huff-wires/20071104/freeway-pileup/
Its probably about as close to hell as you can live in.
That or Atlantic City, NJ.
Fantasy Island meets Realty Reality
“‘If you have a long horizon, this is a good time to buy,’ said Michael Caruso, president of the Orange County Association of Realtors. ‘You have plentiful inventory, you have willing sellers and you have agents in a problem-solving mode.’”
“But Chris Thornberg, principal at Beacon Economics and a former UCLA professor, countered that buying now is folly. ‘What’s the point of buying today when you can buy it for 10 percent less in a year?’ Thornberg said. ‘For the life of me, I can’t figure out that logic.’”
“and you have agents in a problem-solving mode.’”
Now they’re deep thinkers! NAR think tank to the rescue!
The first problem that crowd needs to solve is how not to overcook Top Ramen.
They just need to solve the problem of sellers who aren’t willing to offer properties on a basis that would make sense relative to RENTS. (I’m a little bit monotone today.)
So Buffy gets out of her Lexus SUV, puts down her cell phone, rests her chins on her silicon-laden chest, farts a couple of times and then is ready to do some critical thinking? You might as well hire a chimpanzee. They are less likely to throw bull feces your way.
Hey Lad. Its time to cross the pickett lines for the writer’s strike!
Fantasy Island meets Realty Reality
“‘If you have a long horizon, this is a good time to buy,’ said Michael Caruso, president of the Orange County Association of Realtors. ‘You have plentiful inventory, you have willing sellers and you have agents in a problem-solving mode.’”
“But Chris Thornberg, principal at Beacon Economics and a former UCLA professor, countered that buying now is folly. ‘What’s the point of buying today when you can buy it for 10 percent less in a year?’ Thornberg said. ‘For the life of me, I can’t figure out that logic.’”
The Daily Bulletin. “When people talk about a cycle in prices, they imply that prices go up for a while, eventually get too high and then fall back some. It might be true in some areas of the business world, but it doesn’t apply to California home prices.”
This Clownfornian High Desert Rat of a builder isn’t JUST smoking the strange chaparral weeds…he’s nibbling on the friggin Joshua Trees and Oleander leaves.
Save a shack for me up there Todd Tatum, we’ll us get a burro, a grubstake and pan for Gold in the many cool, blue rivers during the RECESSION buddy
At Bakersfield’s Mid State Development Corp., which finances commercial real estate for small business owners, President Keith Brice said any diminished economic activity so far appears to be isolated to the residential real estate sector.
“As far as other service companies, it seems like things are still pretty good,” Brice said. “People are looking into buying and building buildings.”
i would like this guy to try to explain why there are alot of empty commercial buildings here, and they keep on building more? i cannot understand where these people think the business is going to come from? all the new business i have see pop up around here is related to the housing market!! and even those are folding at alarming rates!!! what a bunch of fools!!!! always reacting after the fact, and not seeing the writing on the wall.
Agree!!!
I spoke with Mr Brice in late 2005 and he told me that the local housing market and comerical market were going to crash, now he thinks commerical is ok? That seems odd.
I think he might be keeping his public opinion to himself?
*private
the realtors are resorting to putting fliers on windshields at restraunts around here!!!! hahahahaha!!!
They must run out to the parking lot between taking people’s orders - that kind of efficiency is most admirable.
LOL, edgewater!
They’re probably opening frozen yogurt franchises, next to the 8-track dubbing services. Racketball, anyone?
‘There is no price cycle. If you look at a graph, it would look like a stairstep, going up, flattening off, going up, flattening off.’”
This is true to a large extent when looking at the medians, but in the flat times buyers are getting better houses that sold for more (earlier in the cycle).
Exactly. Like buying homes for $250K that were originally selling for $400K at peak.
“‘People want to be here, and people need places to live,’ said Jack Kyser, chief economist with L.A. County Economic Development Corp. ‘That’s why prices will always go up here - because it’s California.’”
what closet has this guy been hiding in lately??
Maybe Jack can talk about the flat population growth in California. Fact is SoCal and especially LA is peppered with
goverment officials who were or still are in the RE business/Industry.
Exactly…
“Peggy Stout of Calaveras County added that the advantage is with people like her daughter and son-in-law, who have a huge inventory to chose from. ‘The market is great,’ she said. ‘They’re in a perfect situation, because they don’t have to sell anything.’”
well, well, peggy. i hate to burst your bubble, but you had better tell your daughter to wait or she will be moving back home when she ends upside down like the former did.
Denial ~ not just a river in Egypt.
I’m having a hard time understanding why these people can’t accept reality for what it is.
Fact.
The housing market is sliding down. It will keep sliding down for quite a while.
Ugly Fact.
Millions of homeowners are now facing foreclosure. In the next few months, more and more subprime mortgages will reset at higher rates, some as high as 14%. This will pull down ALL home prices, whether in Gnome Alaska, or Orlando Florida.
Shocking Fact.
It could get so bad that it actually craters our economy. And pulls in the world economy with it. The situation is so bad, we don’t know for sure what’s going to happen. The only ones who know are the bankers, and they are hiding most of their losses.
R.E. Investor?
You should have known better.
I have no sympathy for anyone who is a “flipper” or “real estate investor” or anyone who makes money off the real estate market to know this. It wasn’t a secret. People have been warning about this for years.
The biggest warning signs came in August of this year. At that point, everyone and anyone should have high-tailed it to the ‘EXIT’ sign fast.
But Denial runs deep don’t it?
Get over it & move on.
I just told my friend, who just lost his $1 million dollar home in San Diego. To Foreclosure. : get over it. Just cry your tears, don’t look back and move on. It’s all you can do.
But - this hanging on to an alternate reality is just - sick in my book.
Quick question. If I have to give a written offer should I do it after inspection? If so how should get hold of a inspector? sorry I am firsttime home buyer ..I gave an online offer on a home last evening and I am just getting ready in case the bank accepts my tentative offer.
No, there is no point to paying hundreds for an inspection on a house you may not even get.
Your purchase offer should ALWAYS have an inspection contingency, though (as well as one for an appriasal and a loan, if you haven’t been pre-approved).
No, you make a written offer contingent on inspection. Meaning, you submit the written offer first, with a clause that you will be doing an inspection within X number of days and reserve the right to withdraw within X number of days after inspection if the inspection turns up anything you can’t live with. It’s actually a little more involved than that, inspections can turn into a basis for further negotiation or total withdrawal. You should really see a lawyer or someone who can help you with the paperwork, it’s nothing you want to mess with if you are unsure of what you are doing.
I agree, it sounds like from reading his posts for the past 2 days he’s about to inherit a joshua tree.
The numbers looked good yesterday. I’ll admit I thought the “minor” details of contingencies were a given in this situation.
As one poster put it, “not enough information.”
Still think you’re too early, but… ALWAYS make offers “subject to inspection”. ALWAYS.
I have not heard anyone complain about this company.
http://www.laroccainspect.com/inspectors.php
However, with that being said I encourage you to do your due diligence and come to your own conclusions.
We used them on two different houses. They saved us from the first which had been flipped and “renovated” to cover massive problems. Can’t complain.
Thanks for your comments. Just curious how much do these inspections cost?
I used John LaRocca in the 90s. He showed up 2 hours late, did not even apologize, provided only a minimal inspection, and actually laughed at the area I was buying in (my first house purchase, I was 25 years old). I would never recommend that company to anyone.
Any offer you make should be contingent on your approval of a professional inspection report and specific financing. If you don’t like the report lower your offer or find another property, if you cannot finance the deal is off. In this market offer much less than the offered price. Best advice is wait 6 month to 1 year unless the property is especially unique in location.
i don’t wanna adopt you, but my fatherly advice is to get thy butt to Barnes and Noble or Borders.. real estate section .. spend time paging through appropriate selections before buying anything..
Be sure you conceptually understand what you’re reading. If not the book is too advanced.
Check out the ‘Dummies Guide’ books, which are not necessarily restricted to beginners topics and do include things like how to buy foreclosures… They are very good at laying a foundation and explaining concepts for further study. Something on the order of “make money buying foreclosures” will have a chapter on short sales, pre-foreclosures, etc. But if you don’t know squat, a “first time home-buyers guide” might be the place to start..
you’re throwing around big money .. this is serious business.
“In addition to putting the brakes on brisk growth, the housing bust has left the state and local economy more vulnerable to systemic shocks, said Leslie Appleton-Young, chief economist with the California Association of Realtors. ‘It does mean we’re closer to the edge,’ Appleton-Young said. ‘There’s more risk to the downside because other things can always happen.’”
Governator: Thank you Ms Leslier Applecart Youngster. I have to agree with some of this…. that….. and the other in your statements. But didn’t you mean ‘Seismic’ rather than ‘Systemic’ as we live in a state of faults…and the other. And you are scaring the crap out of Calyfornians with your ‘over the edge’ and other statements….more than my films ever did even. Please tone down your language Ms Applecore. Caly citizens are a little on edge now, what with all the smoke, forclosures, this….that….and the other.
“…and you have agents in a problem-solving mode.”
Since when?
Real estate agents always seem to be in the “…make me a big fat commission mode”. Most are no better than used car sales people that don’t even have their own lot.
This video is very amusing.
http://paul.kedrosky.com/archives/2007/10/31/the_truth_about.html
Thought everyone might like an interesting graphic
Haven’t read through all todays threads yet (getting harder and harder it seems – which is good, because I’ve greatly enjoyed what everyone here has directed me off towards…), so sorry if it’s been up in one of the other threads today. From the New York Times:
Subprime Mortgages Across the U.S.
http://www.nytimes.com/interactive/2007/11/03/weekinreview/20071103_SUBPRIME_GRAPHIC.html#
Gives you a county by county % of sub-prime VS. total mortgages.
that’s pretty cool. Didn’t the REIC used to say there is no national real estate market?
interesting article:
Most observers see retributory vandalism as a laceration on the already festering boil that is Las Vegas’ foreclosure problem. In addition to diminishing adjacent land values, vacant houses in disarray attract both vermin and criminals.
FORECLOSURE FALLOUT: Home Sour Home
http://www.lvrj.com/living/11006506.html
Wow, what a collection of moronic shill & knife-catcher quotes today. The REIC must be doing helicopter drops of koolaid.
Buy Today..Be in your Dream Home for Christmas !
Recieve your NOD’s for the New Year
Richard Kim bought his home in Garden Grove mainly out of need. His three children moved into his two-bedroom apartment after a divorce and they needed more space. Lower prices and an improvement in his financial situation allowed the single dad to afford a four-bedroom home with a den on Acacia Avenue.
The new one-story home is almost double the size of the apartment, and everyone now has a room of their own.
The house’s original price was $679,000. Kim, 41, a general contractor, got it for just under $620,000, a 9 percent savings.
The sellers accepted his original $640,000 offer, but cut their price by $20,000 more when escrow faltered over his loan terms. The seller stuck to the discount even after Kim was able to get the loan he wanted, he said. He never had a moment’s hesitation over the deal.
“I believe the market will continue to go down a little bit more, … but the margin that I cut with the seller will be enough if the price goes down 1 to 2 percent more,” Kim said. “So I said, ‘Why not?’ ”
Okay, I think he just called the bottom!
Boy! i was starting to get a little worried………….
“Richard Kim bought his home in Garden Grove mainly out of need. His three children moved into his two-bedroom apartment after a divorce and they needed more space. Lower prices and an improvement in his financial situation allowed the single dad to afford a four-bedroom home with a den on Acacia Avenue”
At least Kim bought in the best area of GG , zip 92845. Price still too high but at least he bought in a solid clean middle class part of GG with good schools,safe clean shopping centers,nice parks,and a watchful police presence . I know this area quite well and it is a small isolated clean middle class burg surrounded by the dumps of Stanton, Buena park and Westminister . Paying 620,000 at a 9% savings? Kim jumped the gun and could have waited less than a year and gotten a 20% discount in 2008 but i guess he just felt sorry for his kids in that cramped apt.
Emotion over logic and reason.
Charles Prince has resigned as Citi chairman and CEO. Robert Rubin to be named chairman. Sir Win Bischoff will be interim CEO.
WSJ
If they are naming aristocrats (Sir … …) to these positions, I think they should’ve named Prince Charles to succeed Charles Prince.
friend of mine, already owning a place had a chance to buy a second condo (1 BR + 1 Ba) in downtown Long beach in 94. The price the owner asked was $25000. He offered $15k and was accepted. Surprised, he thought about putting it on his credit card. However another person outbid him at $17.
You’ll see those numbers again. Not $17k, but the inflation adjusted equivalent. Any apartment equivalent unit is going to be in trouble (studios, 1 bedroom, and small 2 bedroom).
Even the non-aparment equivalent will be hard hit. (Just too much overbuilding.)
Got popcorn?
Neil
Citi 8 to 11 bil. more in writedowns
Whew! I was worried it might be a large amount of money lost.
Sadly, all of the I-banks need to come clean on a lot more.
Lightsaber
“friend of mine, already owning a place had a chance to buy a second condo (1 BR + 1 Ba) in downtown Long beach in 94. The price the owner asked was $25000. He offered $15k and was accepted. Surprised, he thought about putting it on his credit card. However another person outbid him at $17:
Sorry my post got cut off. breaking in a new computer. I almost got into a 1 bd=1 bth converted condo in 1993 or 94 for 18,000 in LB. Bad part of town so i turned it down. LB dwtn condo market is sinking -lots of riffraff all over LB dwtn central areas. In fact entire LB city just dropped 18% yoy last dataquick figures. Bad vibes here in the LB.
Citi to take $8 billion to $11 billion in additional writedowns.
WSJ
I have been tracking SFR prices in Ventura County, CA and will track them quarterly now that the foreclosures are starting to hit in significant, market-impacting, numbers. SFR prices for middle range homes have fallen about 10% in Westlake Village and Thousand Oaks since the peak in late 2005. Oxnard has fallen by at least 15% and Camarillo price drops are somewhere in between. You can now get a decent 3+2 in a fair part of Camarillo in the mid 4s and in TO in the mid 5s. The rate of price drops is accelerating and there is a palpable sense of panic among some sellers. I’m guessing the depreciation rate to be 1-2% per month for the next year. I think this will supplant Bush’s (thanks again Ralph Nader) war as the key election issue in 2008 and all the candidates will soon be unveiling their feel good bailout plans for the folks who bought between 2003 and 2006.
Hi all,
So the person that I work with who has the $4,000 a month house payment on a $60,000 salary is about to get married. Boyfriend has no degree so can’t be making even $60,000 himself. Since she can just barely afford the place with two roommates, should make for an interesting living situation for newlyweds. She has convinced herself that she could rent the house out for $4,000 a month and move into an apartment with the new hubby. I kept my mouth shut, but I’am seeing gorgeous new view homes around here going for $3,000 a month - which her 1970’s tract home doesn’t compare to. Not to mention her $500 property tax bill, insurance, and upkeep, which she’d have to eat even if she could get $4,000 a month. Sigh - what the hell does a girl in her twenties need a 5 bedroom house for?
Pick one:
a)To prove she’s “grown up”
b) As a great investment because houses only go up
c) So she can feel safe and secure
d) Any combination of all the above
I usually do feel a little bit of pity for the 20 somethings of the world (unless they are the “investors” like Casey Serin) They don’t know that when their parents bought their house and “stretched” to get it, that the “stretch” was limited to about 28% of their income with little or no debt other debt. The 20 and 30 somethings have no other frame of reference other the than HGTV obsessed current era where it appears everyone else is “easily” buying a house.
I don’t. She was pretty insuferable for a couple years bragging about her house. I notice that stopped over the past year when the ARM reset (she refinanced by the skin of her teeth….very cranky for those few weeks) and housing is going down. Her parents (who talked her into this) are in trouble on some investment properties in the middle of nowhere. Still think the whole getting married where do we live thing should be interesting, especially since the hubby to be works a good 1.5 hours from her house.
In many cases we see that parents talked their 20-somethings or 30-somethings into loading up on real estate. WTF and WHY? The parents were alive in the 80s bubble/90s burst. They forgot that real estate prices can be overinflated and one can get over their heads in payments?
GRRRRRR!
I have no idea why, other than parents saw a “sure thing” and wanted the kiddos on it. It also seems to have to do with the idea that your kid has “made it” (at least to middle class) if they buy a house.
And can you imagine being of those parents? Yikes! This Christmas will be the first of many with sullen looks on the kids faces at the very least. I’m thinking we’ll see a peak on the “I hate you” Christmas phenomenon in 2012.
The parents were alive in the 80s bubble/90s burst. They forgot that real estate prices can be overinflated and one can get over their heads in payments?
Parents for some reason want their children to be in the same boat with them. Perhaps it is a variant on the “empty nest syndrome.” My mother at one point wanted my two siblings to declare bankruptcy with her, because they had been unwise enough to allow her to add their names to her credit cards.
Okay, to clarify - I feel sorry for the 20 somethings that bought a house as place to live. I have no use for those who spend time bragging about the place where they store their junk - ooops, I mean stuff.
It sounds like she’s about to discover one of the many reasons why renting used to be at a premium to owning. Becha in a few months she’s going to be fantasizing about renting. (Asssuming of course that potential hubby relationship lasts that long..)
Funny thing, I’m 29, and I wanted to buy back in early 2004 in SD. Dad (a builder) told me he’d disown me if I did anything that stupid. Needless to say, I still rent-thank’s dad!
Same here! Hubby and I are in our early 30’s. We almost took a serious bullet buying a 1920’s hillside house in one of the canyons in Socal that recently burned. My dad took one look at the place, and said run, don’t walk away from this. We did and now I thank my lucky stars I have such a great dad. One of our relative’s new husband’s (my hubby calls these 2nd husbands “the weenie husbands”) was the realtor selling it to us. Didn’t realize how bad we were getting screwed being first time buyers and all, but he allowed use of the seller’s realtor’s appraiser since they “knew how to price things in the canyons”. All other realtors wouldn’t appraise it anywhere near asking price. Also had a retaining wall coming down in back and a huge house on the hill above it. We also would have “owned” the street in front of use with an easement over it. Man, could go on all night what a rip-off this place was. Cute house though.
I totally get the whole wanting your own house thing, but the place we were after was a 2 bedroom. I can’t even fathom thinking that I need 5 bedrooms and I need to take on roommates to make it happen. That kind of a loan would give me ulcers.
My parents, God bless ‘em, saved me (31yrs old) from my own stupidity by pointing me to this blog.
I think it would be fun if you divulged your parents’ screen names. We could have a whole HBB family tree. Like, pismo clam is the 3rd cousin of mrincomestream (I made that up, but you get the idea)
I was that girl in the early 80’s. West Hollywood 89K. 11% int.
Touchy subject.
“‘If you have a long horizon, this is a good time to buy,’ said Michael Caruso, president of the Orange County Association of Realtors. ‘You have plentiful inventory, you have willing sellers and you have agents in a problem-solving mode.
JUST ANOTHER SHILL REALTOR. YOU KNOW THE ONES SAYING BUY BUY BUY OR GET PRICED OUT. SORRREEEE….STARVE.
This post made me think back to Schiller’s graphs on the housing bubble and some of oftwominds.com stuff he had written.
What has changed between the past and now with a house? The utility of a 3/2 house is the same as it ever was. There is an increase in population but is land really that scarce? No, plenty of open spaces still left to build.
So what really changes? The only things happening are changes in credit and changes in inflation. The entire bubble is just a function of the credit markets going crazy.
The answer to how much of the boom was due to the bubble. 100%
Comment by Neil
2007-11-04 15:50:46
Yes, it will be slow. I’m predicting the greatest drop will be in 2009.
2007 has the curtain going up.
2008 is nothing more than a warm up act.
When will the fat lady sing? Good question, but not before 2010 or 2011.
2998 is going to be a bloodbath. the levrage is just enormous and is will be cascading down.. 2008 a real bad year for real esatte prices.
Prices in 2998? Damn you’re good.
; )
2998? Wow, you ARE expecting a long downturn. (yeah yeah, I know it was a typo, but it’s so funny)
burp….
Ben–Thank you for the info on Cal State 9. My wife and I have several accounts there. From looking at insurance info, I think we’re covered. We jointly own a checking and savings account. I think that gives us $200k of coverage. If anyone thinks otherwise, please let me know. I blew a gasket when I realized we had $125K in the accts–we usually keep everything below $100, but we both forgot to look the last few weeks.
Yeah, it pisses me off when I find more than 100K in my checking account
New Post out from Contrarian today!
This guy is good!
http://economicrot.blogspot.com/
No surprise, but it’s official….
Nov. 4 (Bloomberg) — Citigroup Inc. Chairman and Chief Executive Officer Charles Prince resigned after $6.5 billion of writedowns and losses from the credit markets and shares of the biggest U.S. bank slumped to a four-year low.
Sir Win Bischoff is interim chief executive until Prince’s replacement is found and former Treasury Secretary Robert E. Rubin has been named chairman, New York-based Citigroup said in a statement today.
“In a separate statement, Citi said it would take an additional $8 billion to $11 billion in writedowns. It has already said it was writing down $6.5 billion in assets.”
It is all contained.
I’ve been thinking about this a bit today, what with all the new upscale condos all over the state that have tiny and not-growing occupancy. Even if you take fairly aggressive marks, based on the crap being only worth 60-70% of budgeted prices/mortgage value, it just can’t possibly be enough.
The eventual cost of managing and trying to sell and dispose of this stuff is not going to decrease and is going to become a greater and greater percentage of the value of the property itself. It’s not just the values that have to be written down, but reserves probably need to be taken against holding costs.
The most rational strategy is to dump units now for 40-50% off, auction ‘em, take whatever you can get, but of course that won’t happen, at least for most bagholders. In the long run, even more money will be bled because hand-wringing involves serious variable costs. (Just ask those still holding CSCO from 2000, not to mention drkoop.com.)
No question that eventually some of this stuff is going to get dynamited and bulldozed - even some of the beachfront high-dollar stuff.
Why don’t we disassemble it and float it over to Cuba? They need housing & we gots way too much of it now
Nothing to see here. The Gov’t FED rate cut will never be passed on to the consumer. It’s all about bailing out Wall Street.
There also are a few who bought earlier this year only to see a decline in the value of their homes amid falling prices
“A few”? “Earlier this year”? It’s my understanding that most of Orange County has retreated to 2005 prices, so anyone who bought in the last two years is underwater or nearly so. That is more than “a few” - more like literally tens of thousands or even hundreds of thousands.
You always need to subtract another 6% for the transaction costs when selling a house. If you sold a house for what you paid, you’re out 6%.
Chuck Prince out at Citigroup.
NEW YORK (CNNMoney.com) — The meltdown in the housing market hit Citigroup, the nation’s No. 1 financial services company, Sunday as it announced the departure of chairman and chief executive Charles Prince and a possible $11 billion in additional subprime writedowns.
“‘People want to be here, and people need places to live,’ said Jack Kyser, chief economist with L.A. County Economic Development Corp. ‘That’s why prices will always go up here - because it’s California.’”
“‘I can’t imagine the median in the High Desert ever being below $200,000 again,’ said High Desert builder Todd Tatum. ‘There is no price cycle. If you look at a graph, it would look like a stairstep, going up, flattening off, going up, flattening off.’”
These people seem really stupid. Hasn’t that region ALREADY dropped 20% or more from the 2006 peak? Also, didn’t it drop 40% or more in the early 1990s?
“There is no price cycle. If you look at a graph, it would look like a stairstep, going up, flattening off, going up, flattening off,” said High Desert builder Todd Tatum.
Don’t hire this guy to build any stairs — the steps may slope downward by 20-40%…
‘Beverly Hills of Fontana’
Help! Cognitive dissonance!
Is that Oxymoron City?
Watch Peter Schiff tear into this Fox News analyst LOL.
http://www.europac.net/Schiff-FBN-10-31-07_lg.asp
I haven’t watched anything like that show in a while since CNBC made me sick the last time I watched. I do wonder what those guys are thinking to not laugh at what they are saying. Did that woman just say the fed cut would help with a HELOC and that housing was strong? Wasn’t CFC just asking for help from the govt because housing is going bad before this show? huh what. How is everyone going to spin C tomorrow morning? I bet it skyrockets because bad news means the worst is over. until we hit 15,000 this thing is not over.
I think she also mentioned something about it helping people by allowing them easier access to credit cards, as if that’s a good fiscal strategy. Sheesh.
I can only imagine how leveraged some of those analysts are such as “Mike.”
I wish they’d only have a few analysts on there or spend more time in those segments cuz Schiff’s messaged got muted big time, IMO.
God Peter was brilliant. I want to do a European Delivery of a BMW in 2009, think I’ll start buying FXE monthly as a hedge against price movements (mebbe throw in DBO as a hedge against pump prices too LOL).
“The Daily Bulletin. “When people talk about a cycle in prices, they imply that prices go up for a while, eventually get too high and then fall back some. It might be true in some areas of the business world, but it doesn’t apply to California home prices.”
“‘People want to be here, and people need places to live,’ said Jack Kyser, chief economist with L.A. County Economic Development Corp. ‘That’s why prices will always go up here - because it’s California.’”
“‘I can’t imagine the median in the High Desert ever being below $200,000 again,’ said High Desert builder Todd Tatum. ‘There is no price cycle. If you look at a graph, it would look like a stairstep, going up, flattening off, going up, flattening off.’””
Ok, … this is just fraudulent information. Has anyone called them out yet?
>”People want to be here, and people need places to live,’ said Jack Kyser, chief economist with L.A. County Economic Development Corp. ‘That’s why prices will always go up here - because it’s California.’””
People say that about New York too, but the funny thing is they keep changing the definition of what exactly “New York” actually *is*. Harlem (the northern third of Manhattan) was one of the nicest residential neighborhoods in the city, with thousands upon thousands of brownstone and limestone mansions. (All of them declined into multiple-family or single-room occupancy dwellings). The city whose real estate “always goes up” found itself with neighborhoods whose value plummeted *for generations*. If you bring that argument up with brokers , they’ll shrug and say “yeah, but that’s Harlem” — forgetting that Harlem was the crown jewel of New York residential real estate. When I grew up (in Manhattan) we’d call it “burn out city” because so many of the buildings had been torched. (The same scenario is true of Brooklyn too, which only came back in the last few years).
Urban real estate not only goes down. It goes down for generations at a time. Family fortunes are bled dry over the course of decades.
So when people say “New York always goes up” remind them of the neighborhoods that lost value for decades.
ot, but not really: just heard dean baker on the bbc news giving the most unvarnished prediction about the housing market and fallout yet — that “this is not limited to subprime … we are just seeing the tip of the iceberg … will certainly spill over into the rest of the economy … this is going to go on for a very long time … house prices are going to continue to fall … TRILLIONS of dollars will be lost … head of big C trashed his company but will walk a very rich man, etc.
lovely!
I saw something in the L.A. Times Real Estate section today that I hadn’t heard discussed here before: it was an article about FICO scores, and how the credit bureaus are supposed to be using a new formula as of September 2007 (but they’re not) because the old formula allowed piggybacking of people with bad credit onto credit reports of people with good credit, and those mortgages are NOT considered subprime. It just keeps getting worse and worse.
here’s the article
http://www.latimes.com/classified/realestate/news/la-re-harney4nov04,0,2835662.story?coll=la-class-realestate-news
MNair posted about the 1990s crash in SoCal. Does anyone have the link to that document that was called “Real Estate Fire 1980s-1990s” where it mapped all the zip codes in LA and OC by year, and it would show different colors for the change in prices, yellow/red for 1987-1990 and blue for 1991-1995?
“‘It’s just not selling for what it’s worth,’ said drywall contractor John Tipton.”
“You keep using that word, i dont think it means what you think it means” Inigo Montoya, Princess Bride
Wow, lots o’ red on the world market index page.
Hang Seng down 4.7% (1400 pts)
Dow, S+P futures down 93, 12
a little later: Hang Seng down 6.3%
Excellent!
Piggybacking, where does this madness end? We have alot of fake here in charlotte. I saw first hand what I think is fraud this summer at our marina where we had our boat. The marina would give the buyer “these are big boats 35-55 ft.” the rebate from the mfg. so it would look like a down payment. When I saw this I could not believe it. I have already seen a couple of repos this year. Crazy!
Lane
I hate to be part of any doom and gloom scenario because my nature is the glass is half full…BUT…every point made is seemingly quite valid and on target. The bottom line is that we have so much supply and it will take years to digest it…and in the Rust Bowl states? decades? centuries? Scary thought! All this portends lower housing prices…so to all of you renting…continue to follow your parent’s advice and sit with $ in the bank. A comfy place to be from most people’s vantage point.