The Housing Industry Is On Its Knees In California
The San Mateo County Times reports from California. “Sales of single-family homes in San Mateo County plummeted in October, falling 32 percent as the housing slump deepened on the Peninsula, according to a new report. Median prices slipped by 10 percent or more compared to October 2006 in many working-class neighborhoods of the North County cities and East Palo Alto.”
“For example, the median price fell 14 percent in Daly City to $639,000. It dropped more than 20 percent to $475,000 in East Palo Alto and dipped 10 percent to $687,500 in San Bruno.”
“‘Homes have to be priced right, or they’re not going to sell,’ said John Gieseker, real estate broker in San Bruno. ‘We don’t see sales picking up anytime soon.’”
The Sacramento Bee. “On a perfect Saturday in June the lemonade flowed, cookies abounded and cheerful crowds flowed through Pardee Homes’ eight model homes in Natomas. It was a memorable opening day in Natomas for a Los Angeles builder launching the first of its 660 houses near downtown.”
“Now, just five months later, Pardee has closed the project. Building crews have been laid off and deals made with only four buyers canceled. Three other regional builders have done the same in recent weeks.”
“For companies like Pardee that arrived at the height of the boom, bought land at inflated 2004 prices and started sales in a slumping market, it’s especially tough. ‘We have the eight models and poured eight foundations,’ said David Ragland, chief of Pardee’s Sacramento division. ‘Sales were slow, and we never started any houses.’”
“‘Pricing has continued to erode through specials and incentives,’ said Ragland. ‘It probably makes more sense to wait while KB Home, K. Hovnanian and Lennar slug it out” in Natomas.’”
“Milwaukee-based Homes by Towne also has mothballed its 145-home project in Natomas called Sky Park at Natomas Field and a 50-home project in Elk Grove called Spring Gardens. The builder has stopped construction at its 227-home Yuba County project called River Landing at Plumas Lakes.”
“Rocklin-based Nouveau Homes has taken similar action with a 51-home project in Lincoln called Crystalwood. ‘They can’t compete with the likes of the public builders out there who are slashing prices and taking whatever losses they need to hit their corporate numbers,’ said Ron Mancuso, with the Sacramento-based Advantage Group, which markets Crystalwood for Nouveau.”
“For KB Home, one of the nation’s largest home builders, the plan is simple. ‘The strongest and most capable operators are going to be the ones left at the end of the day,’ said the Sacramento territory president, Barry Grant. ‘As public home builders we’ve shown a willingness to sharpen our pencils. It’s unfortunate that it’s to the demise of smaller builders.’”
“‘All these builders, they aren’t making any money on any of these homes,’ said Kathryn Boyce, analyst for Hanley Wood Market Intelligence. ‘They’re losing money on all the homes they’re selling right now.’”
“Ironically, Boyce said, it’s the aggressive price cuts and deals that builders are using to woo buyers that are making more buyers leery. She said many fear their houses will be worth less a week after they unpack.”
The Modesto Bee. “It’s been a tough year for builders, and those who attended Thursday’s Central California Housing Summit heard little cheery news about the near future.”
“New-home sales have plummeted 62 percent in Stanislaus, San Joaquin and Merced counties since their 2004 peak, said Rick Baldonado, regional director of Hanley Wood Market Intelligence. He said sales in the region’s 248 subdivisions are so slow that, at the current pace, it would take nearly four years to fill all the empty lots.”
“This fall, subdivisions on average have been selling only one home per month, compared with about six per month in 2005. What’s worse, Baldonado said, is that more than 650 finished new homes are sitting vacant, waiting for buyers.”
“He asked audience members to tell him when they thought the market would turn around, and the majority there predicted 2010.”
“To increase sales, the speakers agreed homes need to cost less.”
“‘Improved lot prices got up so ridiculously high that the only way you could make it work was to build McMansions,’ said Alan Nevin, the California Building Industry Association’s chief economist. Such homes, however, were too expensive for most Northern San Joaquin Valley residents.”
“Nevin predicted that empty lots in many large-home subdivisions will be sold at significantly reduced prices to other builders, who then may be able to build houses priced below $250,000. ‘There’s a whole new wave of people sitting waiting to buy…homes that are smaller and cost less,’ Nevin said.”
The Daily Press. “Assessor Bill Postmus said San Bernardino County is seeing between 30 to 40 foreclosures a day. About 77,000 homes in California have started the foreclosure process and half of those are in the Inland Empire, the assessor said.”
“Postmus said in conversations in his office his professional staff expects the current housing slump to continue and likely to end up being one of the worst in recent years.”
“Housing prices have dropped almost 20 percent in the past year.”
The Press Enterprise. “Due to slowing enrollment, more middle school-aged students will attend Lisa J. Mails Elementary next year. Murrieta, like many other districts in the Inland area and throughout California, is feeling the financial effects of a slowing housing market.”
“‘We have a significant amount of people who are upside down in mortgages and have left our area,’ said Chuck Jones, facilities planning director for the district.”
“For many years, Murrieta showed strong and steady growth. ‘Then all of a sudden, bam. Everything stopped,’ said Stacy Coleman, assistant superintendent of business services. ‘It’s very dramatic.’”
The Associated Press. “Residential homebuilder Dunmore Homes Inc. filed for Chapter 11 protection in New York, the latest victim of the faltering U.S. housing market.”
“The privately owned builder, based Granite Bay, Calif., near Sacramento, listed assets and debts each of more than $100 million in its bankruptcy petition filed Thursday with the U.S. Bankruptcy Court in Manhattan.”
“Dunmore Homes, founded in 1953, built more than 22,000 homes throughout California and Nevada.”
“Michael A. Kane of Granite Bay, the sole owner of Dunmore, according to the bankruptcy filing, said in court papers that the Chapter 11 filing was in the ‘best interests’ of the company, its employees and its creditors.”
The Press Democrat. “Christopherson Homes is selling its Santa Rosa headquarters and has laid off a third of its work force in recent months as Sonoma County’s largest home builder struggles to downsize its business in the face of the stagnant housing market.”
“The company has shed 35 percent of its workforce since the summer, cut its Roseville operations and recently put its Santa Rosa headquarters on the market for $5.4 million.”
“The company that two years ago employed 204 people now has just 47, a 77 percent reduction in staff.”
“‘Obviously, we didn’t have a crystal ball, and no one would have had any idea that this would turn into the circus that it has,’ said said Brenda Christopherson, who founded the company with her husband, Keith.”
“‘The housing industry right now is just really on its knees,’ said Charlie Carson, executive director of the Home Builders Association of Northern California.”
I remember in the summer of 2005, having long debates on the phone with a certain California reporter (hi there!) about how the builders wouldn’t be able to ‘hold land and take market share when the market rebounded,’ as we were told at the time. I pointed out the bloated inventories and that they were financed and not owned. I told this person the land would hang around their necks like an albatross. I knew this from what I saw in the 80’s. These cycles take too long to hold the debt and the land. Of course, we were told, they had all learned their lesson in the last bust.
As we saw in the W&W post today, now these guys are being forced to dump land for pennies on the dollar. That puts in a new, lower basis for thenew holder, who will eventually build or also be forced to dump, all the way down. And that’s how these things play out, time after time. And by the way, California Building Industry Association, there is a Paypal icon in the sidebar, if you want to dump some of these economists and save some money.
now these guys are being forced to dump land for pennies on the dollar. That puts in a new, lower basis for the new holder, who will eventually build or also be forced to dump, all the way down. And that’s how these things play out, time after time.
And people wonder why I’m confident its better to wait to buy.
Got popcorn?
Neil
When gold was $250/ ounce people were confident that it would go even lower because a commodity shouldn’t cost much more than it’s cost of production. Well, land is one commodity whose cost of production is zero - you just find it laying all around. Sure, they’re not making anymore, but it was pretty cheap to make.
There are a lot of ways to rationalize a wrong prediction.
right with you ben. we had same in NJ. insane prices. However-interest rates were 14% back then, ARMS were 9.0%….todays market is going to take even a longer time to wind down to the bottom. there is no hope for it to rebound with any type of promise of low interest rates. they are already low!
simplesimon,
Actually I think because the rates are so low it may go faster – especially as the $$’s devalue – people are already looking for where to drop cash to if not gain, at least hold even. That becomes very difficult when the inflation really starts raging. Holding on to anything “non producing” becomes even less desirable. The money’s already moving into the mining stocks (all that cash *has* to go somewhere…). Part of what we are seeing is the thing is unwinding faster than anyone thought it would. I’ve read several economist (real type – not industry type) papers this past week who have commented that the speed of it is surprising, not the event itself.
Everyone catch all the “Europeans are gonna save us” on the CNBC and other MSM? No they aren’t – why buy into the whole, with all the debt waiting to drop out of the woodwork when you can wait for the fire sale when they have to start liquidating to shore up their capital reserves? Not all of them are stupid – and I’d be thinking after the serious bruises and concussions they are suffering from our mess already are going to make them a tad bit more careful about what they invest in here for quite awhile to come… They’ll cherry pick the fire sale and take all the unencumbered pieces.
So when do the bulldozers come out? 2009?
This is going to force the builders in NJ to build real “affordable housing” and not call them condo’s as they have done in the past.
Hi all,
I received this message today from a friend of a friend. I would love any advice you can give on what rights if any he has in this situation.
“Tell me if you’ve ever heard of this happening….
You know we moved about three months ago, right? We signed a year lease. (I am out at MMR, by the way) When Karen got home on Wednesday, there was a foreclosure notice taped to the door. They are selling our house at auction on the 27th…. The original notice was served about a month before we moved in. So that means that the owner leased us the house even though she knew it was in foreclosure.
Why must God poop on me?”
Any thoughts? Advice? Action? Does he have to keep paying rent? And if so, to who?
Athena
God poops?
Hey, that explains Bernanke!
watch out bob, it upsets mole man when anyone makes toilet jokes.
sorry mole man, i couldent pass that one up.
Damn good one, Bob! And as for Mole Man, that monumental puss can kiss my greasy turd! Since his whimpering complaint about toilet humor I’ve stepped it up notch. I have a strong aversion to puckerbutts.
LOL, God must have taken some hardcore laxative that day.
yeh, but it don’t stink.
State law varies. In some states the tenant has some rights. But mostly not. She needs to get some local advice, many places there’s some agency responsible for landlord/tenant situations, or just do some research online or at the library.
Most likely they are going to be evicted by the new owner. In that evernt, I would expect that they could sue their landlord, if he/she has any assets, for entering into the lease contract fraudulently. But I’m not a lawyer and they need professional advice from someone familiar with their local laws ASAP.
You need a lawyer. Don’t get your legal advice from the Internet.
Exactly Reuven, and get one who knows this area of law – never use an attorney for an area they don’t practice in regularly (We constantly have refer people we know away from my wife as she doesn’t practice the area they need – most just think any decent attorney will do… though any decent one will refer you to someone they know who practices that area whom they feel is proficient in it…)
The answer to your friends’ problem varies by state. In Connecticut, the tenants get a notice of ejectment once the title passes to the forecloser. If the building has 4 or more units and the tenant is elderly or physically disabled then there is a possibility of remaining in the rental unit otherwise there is no legal right for the tenant to be able to stay.
The laws in another state may be a lot different.
The legal services office in your friends’ location probably has a self-help booklet about this topic. Talking with the forecloser’s attorney couldn’t hurt.
Call me cheap, but I hate consulting attorneys. Your friend should get his deposit back from the person who no longer owns the house and get the hell out of there. The other option is to stick it out until the place sells, and then move.
That’s the reason I started buying houses to live in. I hated getting kicked out.
You are cheap.
Thanks dude, I take that as a compliment.
Tear out all the appliances, fixtures, and copper. Sell those to make up for the security deposit they won’t get back.
Better find a new rental, and a lawyer.
“tear out the appliances …. ” AHahhhhhhaa
funny as hell, but you know what, sometimes street justice is the only effective, swift remedy for the wronged. What, you don’t think the SYSTEM wont stop the process & not kick the RENTER out in a heartbeat, then say :
” nothing personal, its just business. ” ?!?!
If heard that stupid phrase once, I heard it a thousand times.
Make sure you say “We were replacing them with better appliances out of our own pocket, but then we got evicted!” if they try and give you grief about it.
If the property is being foreclosure, tell your friends to enjoy the free ride to the bottom… The reality is, who’s going to pay an attorney potentially more money that is owed in unpaid rent… if a property owner being foreclosed on, they’ve got bigger things to worry about… but, maybe your friends should speak to a lawyer, job security at least for someone
I would say stay as long as possible, ignore all the notices. If you have a legit rental contract you can be a real pain in the ass. This same thing happened to my friends neighbor in the IE. They just squated on the property until Coldwell Banker finally paid them to move out. He said they made a couple grand on the deal!
Why must God poop on me?
If God gives you lemons, make lemonade. If he gives you poop, it means he doesn’t like you. Maybe because you were greedy and gluttonous like all the other FB’s!
No, j, athena’s friend rented - he’s the opposite of an FB. Though I think he is whiny. God pooping on people happens when someone they love dies or gets cancer. Getting evicted is just a pain and inconvenience.
I love it Ben. You are full of piss and vinegar these last few months. I have been reading and occasionally posting since spring of ‘05 and you were so mild mannered back then, just presenting the facts and letting us spew the venom. It’s time for housing bears everywhere to stand up and yell “I TOLD YOU SO!!!! YOU REIC SCAMMERS CAN KISS MY ASS!!!”
You know, it feels GREAT these days. After 3 years of basically watching people behave like morons, buying overpriced houses in the Bay Area, etc etc.
What gives me the greatest satisfaction is that here in this area, people are so full of it and outright arrogant. They’re all soooo freakin’ smart, and the fact that homes were (and still are) 650k was worth every penny simply because we’re in the Bay Area, which must surely mean everyone is smart, liberal, and lastly- loaded.
I got so tired of this endless monologue. It was the worst during the last year and a half when things started to crack a bit because even with headlines of declining sales, people here were STILL convinced that nothing bad would EVER happen here because again- we’re special, full of smart people, and better than everywhere else.
These last two weeks the market has really taken a huge change. It is blaringly obvious as to how many “smart” people in the BA got themselves into serious financial messes. It is also obvious that nothing- and I mean nothing is selling in my neighborhood, or even in some of the really ‘rich’ neighborhoods around me.
It is hilarious actually because I almost feel bad for them. They’ve pretty much all shut up now. Any mention of housing and the subject quickly changes. Either that or there’s this silence.
By any count, not to toot my own horn, but I stuck to my guns and looked only at the unemotional side of the financials when it came to housing. Sure- there were some days when I did feel a little bit like that perhaps the US was turning into a country where ordinary people coul no longer afford. But eventually I started making above-average salaries and it was then after my realization that even with a good income, housing was out of reach that I knew without a doubt that this thing was a huge stink bomb.
Yes- very much” I TOLD YOU SO!
What’s your data that the SF Bay Area is tanking? I was just talking to someone today who said a dump in Mt. View sold for $1.5M 2 weeks ago.
Did you read Ben’s post?
Naw Motor, he’s just sssssssssssasy! And I love it!
I love it Ben. You are full of piss and vinegar these last few months.
Only when he is really, really mad. I heard him on the radio last week and he sounded like a true professor. No tin foil hat, no attitude. Tip of the hat, Ben. How do you manage not to gloat?
“That men do not learn very much from the lessons of history is the most important of all the lessons of history.”
Aldous Huxley
Those who do not know history are doomed to repeat it. Those who do know it will find new ways to make mistakes.
The most valuable trait to have in the upcoming meltdown:
1. Patience. Be willing to wait until the market has reached the bottom.
2. Self Discipline. There will be a lot of hysterics as the market starts to sink. Lots of sob stories, “Sale of the Millenium”, 5 houses for the price of 1, type of thing. Stay away from the Soap Opera melodrama Cuz it’s coming.
3. Money in reserve. Start setting aside money, while you get ready for the right time. Cash will be king.
4. Nerviness - you should be gutsy enough to go to a banker, when the maximum bloodletting is going on. Your hunch + informed opinion (from this web site) tells you now is the time to buy. Go to the banker and say, “I need 5 million Cuz I’m going to buy 20 houses”. Chances are you’ll get it.
“Patience. Be willing to wait until the market has reached the bottom.”
or as Jesse Livermore put it:
“The big money is made by the sittin’ and the waitin’ — not the thinking. Wait until all the factors are in your favor before making the trade.”
The way things are being handled by HeliBuffoon, I think we’ll soon be saying something more along the lines of “I need 5 million US$ because I’d like to trade it for a Euro.”
Good going RMTM Bob ! You own me a new keyboard !
About 77,000 homes in California have started the foreclosure process and half of those are in the Inland Empire, the assessor said.
I thought I had seen the height of stupidity up here in Stockton, Modesto and Sacramento, but looks like the Inland Empire takes the cake.
At least the bulldozers and wrecking balls can all be centrally located in one particularly hellish spot.
Was biking around Tucson this morning. Had some errands to run. In one six-mile stretch, I counted 20 houses for sale, including one REO.
I’ve seen you post similarly in the past. How have the numbers changed, Slim?
I have said for an entire year that the Inland Empire WILL lead the nation in forclosures.
There were so many illegals allowed to buy homes there, the only possible result can be a bad one.
you think the Inland Empire is bad, check out Santa Ana in Orange County. Per the MLS there are approx. 1,627 SFRs and condos listed. There have been 36 closed sales in the last 30 days. Of those 36 sales, 17 were lender owned properties and 3 were shortsales.
At the current rate of sales there’s an approx. 45 month supply of homes available for sale.
Those stats look worse than many areas of FL!
We told you Floridians last year that nobody does “stupid poser” better than a Californicator.
“I have said for an entire year that the Inland Empire WILL lead the nation in forclosures. There were so many illegals allowed to buy homes there, the only possible result can be a bad one. “……
“you think the Inland Empire is bad, check out Santa Ana in Orange County”
I will comment on both areas. There was a massive migration of first time hispanic homebuyers from LA/oc into the IE this decade and they were the predominant subprime buyers. Thats one problem with the IE. Also homebuiiders built like crazy out there-lots of formerly good open pasture land and picturesque rustic ranchette acreage has been bulldozed forever, and the IE is now a vast wasteland of crappy stucco tracts and virtually empty shopping plazas.
My estimate is that over 300,000 sfh’s were put up from 2004-2007 and 100,000 more home plots in process of development-half of which will never be built or be stalled indefinitely.
Overbuilding by Hb’ers is a key factor in why the IE leads CA and maybe the US in foreclosures. One fact: the amt of open land available to built on is mind-boggling. Just one area of the IE-SW riverside county west of the mts- is three times larger than the entire city of LA. And no environmental /gov’t restrictions to slow down the HB’ers.
As for Santa Ana, much of the city SFH residential sections was flooded with recent Hispanic immigrants who made up almost the entire subprime market. They brought at peak, and are now in trouble with the foreclosures altough they can stuff 10+ illegals and stall out the process. This really leads to serious degeneration of SA neighborhhods, and further YOY % declines. By next year SA will be a foreclosure-ravaged cesspool similar to the LA inner city dump zones or large parts of the IE.
If you’ve been saying it for only a year, then I’ve got ya beat. I remeber telling my bro-in-law (lives in Orangecrest) back in ‘04 that the IE was gonna be ground-zero for the bubble pop. He didn’t disagree.
Dunno, I still think LV will be the epicenter for the big one. The IE at least has a reason to exist (i.e., SoCal’s doormat).
OK dumb question - I thought Stockton, Modesto, and Sacramento were the “Inland Empire”, or at least a large part of it. Are they not? If not, can someone tell me what Inland Empire refers to - I just assumed it was another word for the central valley.
That’s a question for Emperor Norton II, it’s his turf…
Do we have to wait until Wed ?
It’s all mine, from Anza Borgeo up to Downieville…
I’m in the heart of it, here in Perris. Also Sun City, Menifee, Hemet, Moreno Valley, San Bernadino, Murietta, Lake Elsinore, area.
One (of dozens like it) development near me off of Ethanac and Goetz Road, 92570, must have **at least** 25 REO’s in an area of maybe 200 homes, all built since 2005. Oh and they broke ground on more models last summer, still not being built.
“I’m in the heart of it, here in Perris. Also Sun City, Menifee, Hemet, Moreno Valley, San Bernadino, Murietta, Lake Elsinore, area.
One (of dozens like it) development near me off of Ethanac and Goetz”
That area of SW Riverside County is wide open mostly empty scorched,barren/brown,rolling or flatlands scrub acreage,with scattered rocky outcrops and scattered decrepit rustic ranch plots. I have driven down the 15 ,exited at 74 and gone east along that very unscenic route all way to hemet, taking in LE, Perris, Menifee.Romoland,Homeland,Sun city,San Jacinto,ect.
This area has probably seen more new home tracts put up than any region in CA : Menifee, romoland, Sun city virtually sprang up overnight with spankin new communities complete wuth artificial lakes, shopping plazas, new green golf courses , ect. Problem is they are plunked down in middle of nowhere, 2-4 hrs commute from LA/OC and are generally dry barren regions without any redeeming features. This area is one of the IE foreclosure hot spots and is seeing drastic declines in prices - i think that almost brand new REO large mcmansions can now be had for around $200,000 now in parts of menifee, perris, homeland, hemet, and even LE .
Classic case of massive HB overbuilding with concomitant drastic price reductions to move inventory resulting in lots of Fb’ers throwing in the keys in this classic IE outback boonie region .
The celebration for Emperor Norton is coming up at Molloys in Colma. Satisfactory?
http://en.wikipedia.org/wiki/Inland_Empire_(California)
Inland Empire is the section of Southern California that’s inland from the greater LA metro area. Think Riverside/San Bernardino area. I-10 east on the way to Phoenix, about an hour from central LA.
One is the butt and the other is the armpit of Cali. Don’t feel too confused. It’s an easy mistake. And, yes, I live in SoCal, have been to both locals and can personally attest to the characterizations.
I’d say the Inland Empire is barren wasteland desert and the Central valley is very nice productive agricultural areas.
Central valley has been overbuilt with large homes but its not otherwise a bad place.
Central Valley is a productive agricultural area only if it has a plentiful supply of irrigation water. The day that’s not the case, it will be an arid desert wasteland once again.
We call it the I.V. (The Inland Vampire)
LOL
:One is the butt and the other is the armpit of Cali. Don’t feel too confused. It’s an easy mistake.”
All i know is The IE is Vast and wide open mostly barren scrub pasture acreage. Or was before the crazy home building mania this decade. The term Itself is so all-inconclusive and broad as to be subject to any and all definitions. What exactly is this IE which we all read so much about as this RE disaster zone which is having a catastrophic meltdown. Does it include Telecula /murrieta which are at the southernmost extremity of Riverside county close to San Diego cty. Should we lump Coachella Valley, including palms springs, with the term. It not then where does banning/ beaumont fall? They are exactly halfway between PSprings and Moreno Valley, which IS AN IE MELTDOWN ZONE.
And should the entire hi-desert exurbs beyond the San Berdoo mts which comprises the Victor Valley Region, be included in the IE. No, the hi-desert has it’s own category-victor valley(Victorvillm, hesperia(Hysteria), adelanto, Phelan, Barstow, Apple valley, Mohave,- which should be also called the Re valley of fire-all RE there will go up in smoke .
That’s the central valley, Ca’s bread basket. The inland empire makes the CV look attractive- and that’s pretty tough to do.
My friends in S. Cal call it “El Inland Empire” the northernmost state of Mexico…
I think the Inland Empire is East of the greater LA metro area, whereas the central valley is east of the greater San Francsiso metro area. Someone tell me if I’m wrong.
Inland Empire is everything seaward of the San Bernardinos/San Jacintos, east of the San Gabriel River, northeast of the Santa Ana Mountains, and north of…what? Hemet?
Stockton, Merced,Modesto,Sacramento and Fresno are cities in the Central San Joaquin valley. I used to own a house a 2 minute drive from UC Merced. I sold it in spring 2006.
The Inland Empire is the eastern part of LA/ San Bernardino maybe Riverside
Also, the Central Valley is otherwise known as the San Joaquin Valley - it’s base is the Grapevine which separates the the central valley from the LA metropolitan area
ICEBERG DEAD AHEAD !!!!!!!!!!!
New jobs for LAY and Yew. Deck chair re-arrangers.
“For KB Home, one of the nation’s largest home builders, the plan is simple. ‘The strongest and most capable operators are going to be the ones left at the end of the day,’ said the Sacramento territory president, Barry Grant. ‘As public home builders we’ve shown a willingness to sharpen our pencils. It’s unfortunate that it’s to the demise of smaller builders.’”
The smaller builders may fold, but once this is all over and housing becomes profitable again the small builders will sprout like mushrooms after a hard rain. There is just very little barrier to entry in the home building business. All you need is a lot and a hammer.
So, it’s not much of a victory for those who do survive.
“For KB Home, one of the nation’s largest home builders, the plan is simple”
Were good enough, were strong enough, and, dawgonit, people like our POS homes.
KB builds crap homes. I used to work for consulting company that specialized in inspecting mold contaminated homes due to construction defects. KB made us a ton of money. I remember one house where the windows were installed so crooked you could tell from down the street.
And some good hard money! No bank is going to open up lines of credit to a builder to build a spec house for 10 or more years. The money that is being lost by the small builders will ruin their credit rating. Did you not see that article in todays NY Times?
‘The strongest and most capable operators are going to be the ones left at the end of the day.’
This from a builder who went bankrupt and changed it’s name last time down.
“All you need is a lot and a hammer.”
And some flashings. Don’t forget the flashings. Otherwise, construction lawyers will come out of the (moldy) woodwork and eat you alive.
If I never hear the word “flashings” again in my lifetime and the next sixteen incarnations, that will be too soon.
Shit is hitting the fans in CA !! lol !!
Question: What is more attractive? a.) To keep the price of a house has high as possible until one goes into forclosure and send the keys back to the bank. b.) Lower the price to actual market value and take a financial hit, then pay off the remaining due on the loan.
I know B makes the most sense in a financially sane world… but I have this feeling A is what makes sense given all the special laws, government interventions, etc…
Many recent buyers put 0% down because that’s about all they had. They can’t do option B, they are financially unable (and a lot are mentally marginal as well). The recent housing activity certainly counts as a popular delusion. It was certainly popular, and it was most certainly a delusion. Even now most folks don’t want to give up the dream. All you need is to “hold on”, “don’t sell if you don’t have to”…
Absolutely right. Why choose debt slavery when you can walk away with a credit hit that doesn’t really affect you much for more than a year or two anyway? Unless the shortfall is small, you’re better off walking away, for most people.
To Serf Man…
http://www.youtube.com/watch?v=5×0BSgLKnSk
It was all Cooked Books
And what does is matter to take a credit hit if you were subprime to begin with?
Lower the price to actutal market value? Where will all of these fool buyers get the tens of thousand to bring to closing?
That is why prices have not dropped.
A is preferrable. Better to ruin your credit than to waste maybe $350,000 of your own money trying to hold on to something that will never be worth what you paid for it.
On its knees, eh? Now all it needs to do is tie its hair back out of the way and then we can put something in its mouth TO GET IT TO SHUT UP!
I’ll leave the $5 with Paypal on my way out. That the thing with (industry) cheerleaders: they’re easy.
Bada bing!
“‘The housing industry right now is just really on its knees,’ said Charlie Carson, executive director of the Home Builders Association of Northern California.”
Ben, Ben, Ben….you’ve been dying to have that particular phrase as a headline, haven’t you??? LOL. Unfortunately for the home builders, they’ll have to stay in that position for a long time before they get paid. Unlike other professions.
unless they’re servicing the senior set ;0
BOFA FUCKED !!
BofA: “Market Dislocations” to Impact 4Q
http://biz.yahoo.com/ap/071109/bank_of_america_outlook.html
But Bank of America stock was up today! It might be a buy. Lot’s of stocks that took a beating might be a buy. Why? Because as soon as they admit the bad news it pops.
A simple trading rule that keeps one from ending up in horrible positions:
Which would you rather be ‘long’ in a stock that has fallen 20% in the last month or ’short’ the stock?
Which would you rather be ’short’ a stock that is up 20% in the last month or ‘Long’ the stock?
I will always be short at the bottom, I will always be long at the top. I never pick tops or bottoms.
A minor short covering rally into a 3-day weekend does not a bull market make.
I bought some bank stocks this morning to take some profits and shorted again in the last hour before the close and was very grateful that some mope was willing to buy!
BOFA takes it in the rear !!
Bank of America Says Market Dislocations Will Hurt Its 4Q Results, but Offers No Estimate
CHARLOTTE, N.C. (AP) — Bank of America Corp. said Friday that continued “market dislocations,” including those related to the value of securities it owns that are backed by loans, will hurt its fourth quarter results.
http://biz.yahoo.com/ap/071109/bank_of_america_outlook.html?.v=5
That explains why the stock’s up 2.57% (3:37PM ET)
All this negative news from BofA, Wachovia, etc. can’t be good for real estate values in…Charlotte.
Here come the mass layoffs!
Good… Loveland and Fort Collins could use a few less banks. The damn things have been popping up like crazy over the past couple of years.
Is there any major bank that actually made prudent decisions and isn’t going to tank in the next (at least) few quarters?
Yes.
northern trust i believe.
My thoughts exactly.
I think Wells Fargo will do better than most.
An appropriate name
Heloc-Jack
Wells has a large amount of HELOCs that are primarily in CA. How much are they worth?
WFC is the 2nd largest generator of HEL in the country.
Sure, but a ton of those HELOCs are still at a healthy CLTV level. Not everyone with a HELOC bought their home in 2004-2005.
Besides, Mortgage & Home Equity is just 19% of their earnings.
https://www.wellsfargo.com/pdf/invest_relations/presents/nov2007/BAAB.pdf
and Slide 12: “Minimal exposure to Capital Market Problem Areas”
USAA will probably be fine.
Heloc -Jack,
I think you should reread Wells Q3 earnings report.
“Total nonperforming assets were $3.18 billion as of Sept. 30, up from $2.72 billion at the end of the second quarter and $2.1 billion at the end of the third quarter, 2006, Wells Fargo reported.”
Wells Fargo is the nation’s second-largest mortgage lender. (right behind Countrywide). I trust their Q reports more than investment relations reports.
USAA
(but it’s a private club)
piggy banks
Man, I love the term “market dislocation”. What a crock. This is much closer to a market amputation. The financial sector will be crawling around like a one-legged man with no crutches when this thing finally plays out in five or six years and beyond.
Obviously, we didn’t have a crystal ball, and no one would have had any idea that this would turn into the circus that it has
all they needed was some common sense
What’s with the crystal ball? I mean dang, if they need one, I’ll rent them mine for a few days.
How was the house hunting Leigh?
Hi Hoz!
Ya know, I can’t believe I can’t find a house I like in nearly two years of searching in this beautiful state!
Pictures are so decieving. Many ’sconcinites are in over their heads, so it makes the search all the more challenging.
I’m thinking of hiring an attorney to find us one with our criteria.
To my fellow posters, it’s not that uncommon here. (They’re cheaper than RE and we want to transfer our trust–two for one).
It won’t be long until you meet me and the my beloved! One of us will win that bet! (for the record, I hope it’s you).
Best Always,
Leigh
P.S. did not mean to hijack the Cali post
SHHH! Its is an ugly state, honest, you’d hate it here, its cold and miserable. 14 inches of snow on Monday. Keep out. No californicators wanted. No FIBs wanted.
Err…yeah…go away!
Curtsey,
Leigh
P.S. Back off! We don’t want you here!!
My cats know how to shoot! and they bite! JK
Hey Leigh:
Your cats sound cute. Send them a treat for me.
The beauty of America:
One can choose any of the 50 as domicile
Each one is unique: within each state, often exist many cultures
America has regions…with different cultures (East/West coast; South; Rust belt; etc)
OMG!
Honestly, sounds like SIVs within CDOs within ABSs…
Bless my Soul! Oh I did not connect those…oh frack.
See, it’s ALL the same!
grr…Leigh
A former co-worker of mine used to say common sense is not common.
From MSN
The selling was started when Wachovia (WB, news, msgs) announced a $1.1 billion loss from subprime mortgages. But as financial stocks recovered, Wachovia moved up from a 5.5% loss to a 2.6% gain at $41.34.
What am I missing here? An 8% recovery?
Funny that WE saw this stuff coming and nobody else did. Maybe they need to come here and read a bit ! sheesh !
when bad news is not as bad as was feared, it is good news.
In Wachovia’s case there is a lot more bad news a-comin.
O-ho the Wachovia Option Arms is a-comin’ down the street,
Oh please keep it away from me!
O-ho the Wachovia Option Arms is a-comin’ down the street,
I wish, I wish I knew how big the loss will be!
I had Wachovia picked as one of the safer banks long term. If they are having serious problems I may as well plan on a barter economy.
“On a perfect Saturday in June the lemonade flowed, cookies abounded and cheerful crowds flowed through Pardee Homes’ eight model homes in Natomas. It was a memorable opening day in Natomas for a Los Angeles builder launching the first of its 660 houses near downtown.”
Kool-Aid brand lemonade?
Natomas is ghetto, and dangerous. If you’re not dodging bullets your dodging traffic.
“obviously we didn’t have a crystal ball”
is that what it takes to see the obvious? Fffeeewww can you buy those wholesale from China? A whole lot of people are going to be needing one!
“On a perfect Saturday in June the lemonade flowed, cookies abounded and cheerful crowds flowed through Pardee Homes’ eight model homes in Natomas. It was a memorable opening day in Natomas for a Los Angeles builder launching the first of its 660 houses near downtown.”
“For companies like Pardee that arrived at the height of the boom, bought land at inflated 2004 prices and started sales in a slumping market, it’s especially tough. ‘We have the eight models and poured eight foundations,’ said David Ragland, chief of Pardee’s Sacramento division. ‘Sales were slow, and we never started any houses.’”
Just 652 houses short of completion…
All I can say is I’m sooo glad the building McMansions on postage size lots carved out of former productive farmland craze has finally stopped here in the central valley CA, gives me hope there’ll be some farmland left to grow food. Then again, maybe when the inland empire is done w/ ‘em we can use their bulldozers to reclaim the land.
Wow. The late rally really took it in the keister! Dow 1300 is within reach!
When 1300 is within reach, it’ll be time for food & ammo hoarding…
Clear a space in your garage/basement/whatever…13,042.74…how’s that for “withing reach”? ;0>
Still a long ways from 1300, which was the point of Jim’s joshin’ on SFB’s typo.
And I mis-read it as 13000! ::eyeroll:: Must be Friday. ;0>
Friday for me, too!
Although, with 10-1 fractional lending, DOW 1300 kinda DOES make sense!
what is it with 100:1 fractional lending?
Wait, is that 99:100 fractional lending?
Dip buyers got hammered when the PPT didn’t show up at 3 pm. That’s gotta hurt.
“Nevin predicted that empty lots in many large-home subdivisions will be sold at significantly reduced prices to other builders, who then may be able to build houses priced below $250,000. ‘There’s a whole new wave of people sitting waiting to buy…homes that are smaller and cost less,’ Nevin said.”
somehow i have a feeling that the 250k number, will be much less than that.
For a quick chuckle, go to Drudge Report and look at the Dow chart to the right, then the quote underneath it….”Dow drops hard…fights back.”
Left off: “then takes a beating.”
Dang!! He already moved it and dropped the “fights back” part.
Sorry.
“Michael A. Kane of Granite Bay, the sole owner of Dunmore, according to the bankruptcy filing, said in court papers that the Chapter 11 filing was in the ‘best interests’ of the company, its employees and its creditors.”
Quote the craven, nevermore Dunmore…
These guys say, “McDonald’s will tell us what is going on with the economy. If they have a good quarter then maybe the economy isn’t so bad.”
So, if more people are eating at McDonald’s the economy is good? I didn’t know that cutting back on eating out was the same thing as cutting back on eating at McDonald’s? Who are these analysts? How do I get a job?
McDonalds=McMansion
Both offer heaping quantities of too much
I can not believe that people actually eat at those fast food places. Oh, I know they do but it really isn’t food just processed chemicals and who knows what else.
Confession: I love McDonalds french fries, but I have stay at the gym an extra 30 minutes to lose them.
Processed chemicals taste better than unprocessed chemicals at least. If you can’t enjoy a greasy burger and 32oz non-diet coke every once in a while life isn’t worth living.
I can recall a day during high school when I was with my mother and a neighbor at McDonald’s. Having gotten a job at Mickey Dee’s, I was eager to show off. Especially the hamburgers. I thought they were just out of this world.
The neighbor put an end to that line of thinking when she declared that better burgers could be made at home.
Why don’t these pseudo forecasters try Tea leaves or Entrails ? , just as reliable and Scientific as following fast food sales.
what they mean by how well Mcdonald’s is doing is by using it as a yard stick to measure how bad the economy is getting. The more business Micky-Dee’s gets, the worse the economy is.
“Just as reliable and Scientific as following fast food sales.”
Thank you! I was sitting in my car listening to mucus-throat Jim Cramer on sirius and he was going on and on about how McDonalds french fries are awesome and how he loves the stock. That guy needs to take his meds, and clear his throat.
Try to take solace in the fact that, with any luck, most of these idiots will eventually be flipping burgers at McDonalds. Then will see how good of a sign they think McD’s growth is for the economy.
I’ve have a fair amount of my portfolio sitting in a Schwab CA tax free muni money market fund (SWKXX). With the stuff hitting the fan in California, any thoughts on the risk of the NAV dropping below $1? Seems like if large numbers of FB stop paying their property taxes, there might be a problem.
Second question, are there any really safe alternative investments right now? My exposure to gold and foreign currencies is about as high as I feel comfortable with at the moment.
Check out the Proshares’ ETFs that allow you to make a short play against a sector. SKF and SRS have been mentioned a few times on this blog.
US short term treasuries fund is probably as safe as anything if you want to stay with US dollar exposure.
Seems if less people are eating at the PF Changs and Cheescake Factory restraunts and are hitting the McDonalds, thats a good sign?
what happened to brown bagging it?
I take my lunch to work everyday that Im not traveling. Saves a lot of money.
That means they have more money to BUY BUY BUY. The mortgage payments might get made.
OK, I’m getting hungry. I’ll make dinner now.
“‘Obviously, we didn’t have a crystal ball, and no one would have had any idea that this would turn into the circus that it has,’ said said Brenda Christopherson, who founded the company with her husband, Keith.”
This is funny. I actually know both of them personally. I WARNED THEM!! They even offered me a job years back that I declined because I knew which direction the market was heading when Sacramento became the new “hip place to live for 30-somethings”.
Good people, though. I hope they do OK in the end.
Great, now San Mateo County is collapsing. Add that to Marin, Contra Costa, Alameda… surrounded on all sides, San Francisco stands as the last spot on earth where It Is Different.
I own a house 40 miles south of SF, in Sunnyvale CA, and rarely visit SF. It’s one of the few cities that I think has been declining in terms of cleanliness, safety, and security in the past 10 years. They coddle their bums (aka “homeless people”) and are overrun with them. Property theft (burglary, car theft) is rampant, etc. I think it can decline pretty fast.
i’m intimately familiar with SF.. it’s a dump.
although it will be the last of the Bay Area cities to deflate, i think it will be the first in the nation to declare Martial law.
agreed
Havent traveled the 90 easy miles to SF from Sacramento in years. I really miss playing the tourist because there is/was alot of cool things to do in the city but as mentioned above the bums are just out of control. You cannot walk anywhere without smelling urine, dodging crazy impatient SAAB’s, or paying through the nose for a morsel of food or entertainment. San Fran is nice but not worth the hassle. (SF officials reading this are popping tums. and they ought to. I have a family of 5, typical middle class, 3 kids, etc, and will NOT step one foot in downtown unless required. Even then you better have a subpoena or gun in my back)
It’s a damm shame what has happened to that city.
I’ve lived in San Francisco for 25 years. I’m sure that the real estate here can go down just as it does anywhere else, but the comment regarding the supposed decline in “cleanliness, safety and security” declining in the last 10 years is something I hear from people who live in suburbs (and “rarely visit SF”), but I don’t hear from anyone who lives here. Go South of Market and tell me whether there are truly more homeless people there now than ten years ago (i.e., before the ballpark and China Basin were built). Go to Fisherman’s Wharf where a public housing project was torn down and replaced with a much nicer, and much safer, project. I could name many other places that are safer and cleaner now (Hayes Valley, Bernal Heights, etc.)
There’s lots of crime in your suburbs, and lots of homeless people, and lots of other socially unpleasant things. You just don’t seem them as much because you’re passing them at 40 mph in your car.
I’m pretty sure you don’t go out at night.
So, it’s not 25 years.. you’ve been allowed to live there only during daylight hours, so it’s 12.5 years.
I worked in SF for 3 years. I’m originally from Nashville and have lived in Boston as well. SF is about the dirtiest, homeless person-infested place I’ve been in. You just about trip on the homeless people. I walked from my car to work for 2.5 miles every day. I can’t say it was my favorite experience. I live in the East Bay now and SF to me looks best from a measurable vantage point.
yes.. to gain perspective, live there and then live somewhere else.
great transit system. I think they’ve got cops on almost every bus now.
Being a 2nd generation native, i do not like pounding the city.. it just pisses me off what’s happened to it. To be fair, the City is still great in a lot of ways. I’d recommend it as a sightseeing destination if you’ve got a reliable guide.
I’m a native New Yorker. I’ve lived in Manhattan during good times and bad. The bums in NY were never as aggressive or in-your-face as the “homeless people” in SF. They are political pawns, being used by the Liberals.
I also don’t drive much at home so your comments about me not seeing the “homeless people” from my car aren’t true. I take a walk every day I’m working from my Sunnyvale office at lunchtime. I can walk to a variety of grocery stores, coffee shops, restaurants, dry cleaners, etc. from my house. Never do I feel for my safety.
SF is a beautiful city from across the bridge.
When we were younger and living in SF, we loved it, even though we had no money. There was so much to do there, and it’s beautiful. I wouldn’t mind retiring there and renting a place. But I don’t like the idea of buying in an earthquake zone.
You’ve got to be kidding me. I live down the peninsula and used to work frequently in SF - it really is a dump! You need to go see some other cities if you don’t realize this. I agree with the comments about homeless people, you practically have to walk over them in some places, and some of them are quite obnoxious and downright insane. There are also a lot of seedy people on the streets & petty crimes occur frequently, not to mention much of san francisco is just dilapidated and run down.
I have lived in lots of major cities and traveled to many others and SF really does have a far worse homeless problem than other cities. You really can’t go ten feet without being harassed, that’s no exaggeration. They stay out of the Financial District and the truly residential areas but the places that tourists frequent, like Fisherman’s Wharf, the Mission, Union Square, etc. have tons of homeless.
Also, the homeless in SF are very badly behaved. For example, the last time our family vacationed in SF we were riding the streetcar downtown. My two children, then aged 3 and 1, were sitting next to me. Two homeless men got on and sat down in the seat directly in front of us. They were encrusted with grease and dirt and reeked — reeked — of urine and booze. They immediately started kissing one another! And I don’t mean a perfunctory greeting, it was a passionate embrace that went on for like 5 minutes, until one of the men got off the streetcar.
That sort of thing goes on all the time in SF. I lived in dodgy neighborhoods in NYC for four years and never saw anything even remotely similar to that. Ditto Chicago, Los Angeles, etc. I don’t mean to pick on SF but the homeless problem is just a fact. It’s not just “better hidden” in the “privileged” suburbs — it’s a real problem.
I went to medical school and did a six-year residency in San Francisco. I got to know every homeless person, alcoholic, and drug addict in town - San Francisco General Hospital was an amazing place. You’re right - the homeless have it better there than other places. They have the run of the place. Other places we’ve lived keep them more contained. That area in downtown LA that’s full of the homeless is the most frightening place I’ve ever seen (drove through one night by mistake.)
Since it was light early with the time change this past Sunday I went for a random run from my house (in Pacific Heights) and ended up heading down Jones (below Russian Hill) toward Market Street and I have never seen more homeless/bums in my life (I’ve lived in the city for a long time).
the homeless flock there in winter for the mild Mediterranean weather.. rarely drops much below 45 F or so at night, and it’s possible to sleep comfortably on the street or in the parks.
only 30% of the voters own property.. they pretty much have no say. Add the liberal social atmosphere, and i do not foresee any changes for the better.
Be careful when running on the sidewalks… i’ve seen a trail of glass from the broken passenger-side windows extending the whole length of a city block.. Do not leave a pack of cigarettes.. or anything in view in a parked car.
.. see if i can re-block the “bold” error up here.
bold off
I LOVE SF! I live in San Jose because I prefer the weather………however, prices are already beginning to drop there too — its not immune.
What I see down in the south bay is tons of sale pending signs. Then they are gone. Just like that! House is back on the market.
The replies are funny.
I don’t live in SF.
Once walked into my friend’s house in SF together just in time when a thief was running out of their back window. Now it is rented for $3000+ a month, to two sisters and their family.
The other time I was walking pass a crime scene with my wife and kid and didn’t realize it. A burn has broken into a car and poking around, while people were walking by!
Like burbed said, the Bay Area is just special.
i may have screwed up.. the suspected post is in limbo for the time being..
bold off and italics off
we’ve got santa monica holed up in a trench down here
According the Case-Shiller index, SF is taking its lumps as well. Who are these bozos who keep insisting that SF is merely “flattening”?
Sotheby’s just had a auction loaded with the kinds of art that usually sold to the Brobdingnagians in the past, but they didn’t show up for some reason or another, this time…
Beware the collectibles market~
I live northeast of Sacramento in the foothills towards Tahoe. In this area (Auburn) people are trying to hold on to unrealistic prices. Just 15 minutes down the hill in Rocklin and Lincoln they are getting hosed. Cant wait till the “gotta sell at all costs” mentality hits more of the foothills.
Thanks for the tip Mobin. I rent in Orangevale and I value these local tid bits mucho. I’m waiting for the nice established areas to start cutting too.
Ben,
Another school closure though they won’t come out and say why the area is experiencing declining enrollments. Knowing the Bee, they may re-release this later with more info.
http://www.sacbee.com/101/story/481669.html
I live northeast of Sacramento (Auburn). Foothill prices are barely budging in the 300K range. Most of the overpriced houses above 500K had to come down and are just sitting. Ive been told its different above Auburn, prices will sustain. Uhm, the commute sucks, no paying jobs in the Auburn area and you go to far up your in the snow. Not to many people can handle that. Family’s are moving our of the area in search for cheaper housing and a result is one of the local schools shut down (K-6). I’m hoping things change in the next 2 years in this area.
Me and my wife visit Auburn a lot. I actually really like that town. But as you said, there’s absolutely no jobs there that pay any kind of money. We go there around 4 times a year and honestly- I’ve seen the same homes for sale for over a year. The last time we visited was about a month ago. Some of the homes were for rent by then.
Lovely area, but 500k is unreasonable.
It is doubtful things will get any better up anytime soon up there.
It seemed to me that the last time I went up North, past Auburn and into the mountains, that every other piece of property was for sale. Two years earlier I recall stopping in a lot of these small towns up there and they ALL had numerous RE offices per town. In fact, Nevada City was one of the worst. There were over 10 RE offices the last time we had gone. We also went up there a month ago. Nobody was actually in the RE offices, and there were maybe 5 that were actually still open.
Likewise, there were not any of the Bay Area looky-loos looking at the properties in the windows. It very much feels like an all-you-can-eat buffet that suddenly ran out of customers.
I love the area, if I dont buy in the Auburn area or above its because I left the state. The only reason I stay in Cali is because I love where I’m at. I travel a lot and have seen a major part of our coutry and I still like here best.
I like it up there as well. It feels like the California that probably existed decades ago. Lots of actual local Californians with roots in the area. We went to the fair there last time and there was the pioneers of the golden west there. We actually know the area so well that we eat at all the joints by name: Awful Annies, The Auburn brewhouse, and that Mongolian Wok place.
I’m from a really rural backwoods area of NC and Auburn feels so much more comfortable to me over the Bay Area. Even so, the prices there would need to be way the heck lower before I’d even consider it because of the job situation.
The worst part is that about a year ago, we went up there and stayed in this hotel. My wife goes to pay for the room and the guy behind her overheard her giving our address. He outright said that he: ” Hated all of us people from the Bay Area, ruining the area.” she told them that we rented and thought the prices were equally ridiculous. It just gave you an idea of how resentful people were towards even people in their own state moving in.
Without sales, prices do not rise or fall.
Price is only one sales criteria.. there’s location and condition and inventory .. weather.. and lots of others.
From sellers’ point of view, a reason other than price could be the problem, so why be anxious to lower the price?
Essentially, the lack of sales causes a continuing lack of sales.
This area didnt have a lack of investors and second or third homes. This area is no better off than any other. Price declines will hit it.
as in most areas, i think we’ll have to wait for foreclosures to force prices down…
auburn is so nice.. not too much snow.. big enough to have all the necessities and most of the luxuries of life.. centrally located if you like Reno and the Lake.
PPT proves to be an urban legend once again….
Followers of the Church of PPT will not be so easily dissuaded.
All hail the PPT, masters of the cosmos.
‘As public home builders we’ve shown a willingness to sharpen our pencils…”
Insert… thinking but not saying:
“And we are willing and ready to take these new pointy pencils and gleefully…stick them in your eyes!”
Got Comps?
Thats really funny.
San Diego Downtown Condo Update -
Bosa has only sold 60 units out of 220 in the new Bayside at the Embarcadero. Most were sold in the opening weekend, presumably to friends and family to boost sales figures
Bosa still hasn’t sold out the Legend and had only 8 sales all of last year with 80 units to go.
Bosa will open the Electra officially in a few months. It will be VERY interesting to see how many cancellations that have. I think they sold most of them in early 2005 with 5-10% deposits. I’m sure the market has dropped 5-10% since then so people will be losing money if they come to close on the units.
The Breeza is 1/3 sold out and hasn’t had any appreciable number of sales in a year.
thanks for the update
How many of these people can now get a mortgage? The days of 20% down are getting closer and closer.
“Residential homebuilder Dunmore Homes Inc. filed for Chapter 11 protection in New York, the latest victim of the faltering U.S. housing market.”
As previously noted:
Comment by hwy50ina49dodge
2007-09-27 16:28:38
http://thehousingbubbleblog.com/?p=3483
“Dunmore Homes announced Wednesday that it sold its assets…”
Ah, come on guys…laying down your hammers? Well I guess you’ll be remembered as: Dun-more-or-less Homes
You go 15 minutes down the hill to Rocklin and Lincoln and you can get into way more house for less. Its a no-brainer why family’s are fleeing the hills to the low ground, it’s the opposite of how it used to be though.
Everything is just wonderful in the city of San Francisco. Haven’t you heard? Overbidding still going on. Hundreds of people showing up to open houses. Million dollar 700 square foot condos selling within days.
Party on!
San Francisco Chronicle
The bigger they are…
“The federal, state and regional numbers paint an altogether different picture. Two weeks ago Dataquick released its Bay Area report under the headline “Bay Area home sales plummet amid mortgage woes.” The release noted that Bay Area sales hadn’t been so low in two decades and had declined 40 percent since last year, mostly because buyers were finding it increasingly difficult to obtain jumbo loans. (Jumbo loans have since become more available.)
The median price paid for a Bay Area home in September also dropped 4.6 percent to $625,000, compared with $655,000 in August 2007. A week later, Dataquick announced that California was experiencing “record” foreclosure rates — jumping 166 percent for the third quarter over the same quarter of 2006. Some of these homes are on the auction block: Next week 200 homes from a range of cities — from nearby Oakland and Richmond to farther-flung Tracy and Antioch — will be sold to the highest bidder.”
Based on the above snippet, and on the Case-Shiller index (which reported a 4 to 5% decline in SF), I’m not sure I believe these reports of a “sellers market” in SF.
It looks like Mr. Kane bought Dunmore Homes all of six weeks ago and then “reincorporated” in New York in order to be able to file a bankruptcy case on the other side of the country, where none of the creditors are located.
http://www.sacbee.com/103/story/481729.html
The New York Sun. “Much has been said about Manhattan’s perceived real estate invincibility in the aftermath of the subprime meltdown, but lawyers representing dozens of condominium boards in some of the city’s wealthiest neighborhoods say they are seeing these default cases increase as much as 25% this year.”
The New York Sun put a smile on my face, FALL MANHATTAN FALL!!! Also nice was to see that even though Manhattan has only 5% of subprimes, every county around it has 30% or more of subprimes. That map is in NYT, it’s pretty cool.
http://www.nytimes.com/interactive/2007/11/03/weekinreview/20071103_SUBPRIME_GRAPHIC.html
Thanks for the NYT link.
Look at the subprime mtg concentration in the south and flyover country. No bubble there!
“For example, the median price fell 14 percent in Daly City to $639,000. It dropped more than 20 percent to $475,000 in East Palo Alto and dipped 10 percent to $687,500 in San Bruno.”
Still way unaffordable for people who live in those places…
Yep, but this is great news, because the ‘crappy’ areas of San Mateo are now acting like Vallejo was a few months ago. Back when San Mateo was a fortress, and who cares what happens to Vallejo.
Then the nicer suburbs started getting hammered, but who cared because we’re in San Mateo!
This is the wave coming back in. San Mateo County is going to get just as big a bath as any other county, it’s just a little further up the beach, so it gets to watch the other counties drowing first.
hard to believe .. 600K in daly city??
Daly city, the result of a misguided suburban house building frenzy of the early ’60s, was the inspiration for the song Little Boxes.
http://ingeb.org/songs/littlebo.html
There’s a green one and a pink one
And a blue one and a yellow one
And they’re all made out of ticky-tacky
And they all look just the same.
Ten years ago you could buy in Hillsborough or Atherton for $700K. Homes are going to start going back up and down the Peninsula when all these loans reset in the next couple years.
It is different now. We have google standing on top of all the dot-com dead bodies.
I used to watch in amusement everytime I passed by those shitboxes in Daly city. I was dang wrong, there are just so many wealthy, cultured, and smart people living in there.
Hi Joey,
Who would believe San Bruno could have homes for $1,000,000? I grew up in San Bruno/Millbrae. San Bruno is not called Thge Airport City for nothing. Most of the city is under the pathway of planes taking off from SFO.
and another one goes down………
Does anyone know where to look for prices of a house that sold in 1970s.
CHICAGO, Nov 9 (Reuters) - Levitt & Sons (LEV.N: Quote, Profile, Research), the U.S. residential builder that created a template for the modern American suburb, said on Friday that it had filed for bankruptcy protection.
wow
Hi, all. New poster. Just checking to see if my message posts.
Median prices slipped by 10 percent or more compared to October 2006 in many working-class neighborhoods of the North County cities and East Palo Alto.
At first I was going to correct this apparent blunder - surely East Palo Alto, like Palo Alto, is in Santa Clara County? But no - I looked it up and sure enough, East Palo Alto is across the border in San Mateo County. This blog is as educational as always!
For example, the median price fell 14 percent in Daly City to $639,000. It dropped more than 20 percent to $475,000 in East Palo Alto and dipped 10 percent to $687,500 in San Bruno.
I don’t understand, I’ve been hearing for years that the Peninsula is immune to price declines?!
OK, which of you snivelling housing doomers wants to spend some of your worthless US dollars at the HBB party on November 17th?
Chevy’s
2907 El Camino Real
Redwood City
6 PM
We have 8 confirmed and 1 tentative so far.
-Big V
Dianne Feinstein just wrote me this letter. I say vote the bimbo out of office!
“Thank you for writing to me to express your support for raising conforming loan limits. I value your correspondence and welcome this opportunity to respond.
In recent years, real estate values have skyrocketed, especially in California. In California, the median cost of a home is approaching $600,000, putting homeownership out of reach for many working families. I believe that all Americans should have access to safe and affordable housing opportunities, and that Federal, State and local governments have a responsibility to help make such opportunities available.
Conforming loan limits are determined by a survey of the average house price in the United States from year to year. In this past year, there was a 0.16% or $500 decline in this nationwide average. Therefore, the conforming loan limit has been determined to remain at $417,000 for single family mortgages in 2007. Hawaii, Alaska, the Virgin Islands, and Guam have a limit that is 50 percent higher since these are considered high cost of living areas.
The “Federal Housing Finance Reform Act of 2007″ (H.R. 1427), introduced by Representative Barney Frank (D-MA) passed the House of Representatives on May 22nd by a vote of 313 to 104. This bill would raise the conforming loan limit by 50 percent in high-cost metropolitan areas in the continental United States, including many areas in California. H.R. 1427 is currently pending before the Senate Committee on Banking, Housing, and Urban Affairs, of which I am not a member. Please know that I am well aware of how the high cost of housing impacts our State and support increasing the conforming loan limits. Be assured that I will keep your thoughts in mind should H.R. 1427 come before the full Senate for a vote.
Again, thank you for contacting me. If you have any additional comments or questions, please feel free to contact my Washington, D.C. office at (202) 224-3841. Best regards.
Sincerely yours,
Dianne Feinstein
United States Senator”
raise it.. dont raise it.. it won’t make a difference, imo.
Home prices will drop to affordability. There will be no resurrection in three days.. or in three years.. perhaps not for a decade.
Nobody will need jumbo-conforming loans.
Oh Hell. This is the big fear. The shitheads in washington will do something like this and allow the banks to dump crap on to the gse (the freddies) so lots of bad paper to the taxpayers. It might keep the debt spiral going a little bit worse. Hopefully Bush vetos this or it dies in the senate.
It would be another “market support” that will drag things out for considerably longer. Seems like the debt card is almost played out. Bernake lowered rates twice and the market is still falling and losing money. Its here there and everywhere that people are taking their dollars overseas to protect themselves.
We are in a hell of a mess. I think this move would put a lot more debt on the working class and it will drag things out for another year or two. Not more than that.
Its what I figure to see from a half a blip from a socialist like Diane. She doesn’t want to see anyone work their way out of poverty.
Also, wait for the “comp value destruction” in years to come as buyers of these lots at vastly reduced prices are no longer restricted to buildng a large sq footage home to recover their land component cost and build smaller and cheaper and less fancy 200 to 250 K homes in neighbourhoods of 500 to 650 K homes.
Ouch!
CAPITOL REPORT
Could California be in recession?
Rise in unemployment shows downturn, one economist says
By Rex Nutting, MarketWatch
Last Update: 3:57 PM ET Nov 9, 2007
WASHINGTON (MarketWatch) — California is on the edge of recession, economists say. Or perhaps the nation’s most populous state is already in one.
“California seems to be sliding into recession,” wrote Jan Hatzius, chief economist for Goldman Sachs, in a research note earlier this week. Hatzius based his appraisal on the sharp increase in the unemployment rate in the state from 4.7% in November 2006 to 5.6% in September 2007.
While a 5.6% jobless rate may seem low, the important thing is how much it’s risen. Hatzius said any increase of more than 0.6 percentage points in California’s unemployment rate has always been associated with a national recession.
While a national recession is determined by looking at broad indicators such as employment, income, spending and industrial output, there’s no officially accepted definition of a statewide recession.
Actually, a big jump in unemployment has been a virtually-perfect indicator of a national recession soon to follow ever since GDP statistics were compiled — quite like the beginning of an avalanche when a large mass of snow breaks loose near the top of a mountain. It is not very hard to predict what will occur soon thereafter farther down the slope.
Another good analogy is when the water suddenly vanishes from the beach. Only those ignorant of science would fail to anticipate the tsunami which was soon to follow.
And when the California economy sneezes, the national economy is at risk of catching pneumonia (even Manhattan).
http://www.marketwatch.com/news/story/could-california-recession/story.aspx?guid=%7B663B7DEA-A93C-42C3-8180-F7CE099373DC%7D
Thornberg was on the radio on KPCC this week opining that California will enter a recession in 2008 if it hasn’t already.
This post is equivalent to Calvin cleaning the part of the room he’s going to photograph to show how clean his room is. Is there no extent to which someone will prevaricate to push a biased point of view?
Here is the rest of the article that was conveniently left out:
Inside Bay Area - Countywide, median price of homes hits record high
Sales of single-family homes in San Mateo County plummeted in October, falling 32 percent as the housing slump deepened on the Peninsula, according to a new report.Despite weak sales, the median price of a home countywide hit a new record high: $1,026,282, according to the County Association of Realtors.Real estate agents cautioned that the soaring median price does not reflect growing home appreciation across the county. It’s more a product of solid sales of high-priced homes, which skews the median price upward.
Even though sales are down, prices are actually holding up in a lot of places,” said Marianne Rush, manager of the Redwood City and San Carlos office of Coldwell Banker. “There’s still money out there to buy.