‘Only Debate Now Is How Hard A Landing There Will Be’
The UCLA Anderson School had a report out on the California housing bubble today. “Christopher Thornberg, senior economist for the forecast and author of the California forecast, said, ‘The only debate now is how hard a landing there will be and what will it mean for the general economy.’ In his report, Thornberg calls for a rise in the state’s unemployment rate. ”
“One impact, Thornberg forecasts, is that 200,000 jobs likely will be lost in the construction sector as residential construction and remodeling slow markedly.”
“Economist Daniel Blake, of Cal State Northridge, said, ‘The soft landing is good news. If the housing market really crashed and something else really crashed as well, that could lead to a recession,’ Blake said.”
“Senior UCLA economist David Shulman, who wrote the national outlook, said that in some parts of the country the real estate sector may slip into recession. ‘This is in line with what we had in the mid 1980s and mid 1990s,’ he said. ‘The primary risk to the forecast is that the slowdown we envision turns into something worse,’ Shulman cautioned.”
“Jack Kyser, chief economist for the Los Angeles County Economic Development Corp., has a slightly different perspective on the economy. ‘I think (the UCLA Anderson Forecast) is a little more pessimistic than a lot of the other,’ he said. ‘We do have some bubble markets around the state but the demand for new housing is still strong.’”
“Now, the trend is becoming clear: The housing boom that has driven the state economy has peaked and is starting to soften, Thornberg said. ‘There is no justification for the prices we’re seeing now,’ Thornberg said.”
“Jobs in real estate and mortgage banking also will start to dry up. Like construction, this sector has boomed in sync with the housing market. Financial jobs, particularly those in the mortgage industry, have been a strong source of job growth in recent years.”
“Financial activities have helped fuel a fast-growing sector UCLA Anderson calls ‘informal jobs,’ people who work for themselves, such as real estate agents and mortgage brokers. California now has 1.6 million informal workers, up 500,000 since 2000, the report said”
“The fallout for state government coffers will be serious as both sales tax and income tax receipts fall, the report said. ‘The government budget for ‘06-’07, already tight, looks to go under water by the early part of next year, and with it, much of the infrastructure dreams of the current administration,’ the report said.”
“It’s obvious the housing market is slowing in Sacramento and across the state. A new report from UCLA predicts it will dent the overall economy. A separate report from the University of the Pacific says otherwise. The university’s economic forecaster Sean Snaith said the construction sector will hold up well enough that it won’t be a drag on the rest of the economy.”
“‘I don’t see any reason for the housing sector to unravel,” Snaith said. ‘The housing soufflé reached its peak in 2005. As we look beyond 2006, the loftiness of the soufflé will begin to give way as mortgage rates rise, but barring any reversals in the ingredients..the talk of a bubble will just seem like a lot of hot air,’ the UOP report said.”
“It remains unclear how big a dip the housing market will take. The research firm DataQuick recently said Sacramento County median sale prices inched up 1 percent in February to $355,000, but that’s still well below the August peak of $372,000.”
Thanks to the readers who sent in these links.
All these stories are more academics who operate in a world with only a rear-view mirror and grants paid for by the industry they attempt to issue “independent” research on.
I went to the Kern County Economic Summit today. One of the presenters was our local State University Economics Chair - he stated home prices will appreciate 9-10% this year. All the while he presented chart after chart showing how unafforable our market has become. He showed our are wages the last 6 years are flat, HOWEVER, our home prices are up 218%! Do these guys see the disconnect from ECONOMIC realities or am I just all wet!??!?!
They must think the abandonment of lending standards is permanent…
STATE university…
lol
Could there be a tuition bubble too? I know college is getting more and more unaffordable while grade “inflation” is just as valid a concern as tuition inflation.
C&C, those guys from Cal State Bak have spent too many nights either at the Deja Vu or the Cristal Palace or both. They are also drinking Kool Aid from either Guthry’s or Trouts.
They are paid to lie local idiots
Economists don’t have the tools to anticipate trend changes. As a group, economists fail at anticipating economic crashes. I tend to think of economics as a pseudo science. Their mathematical models utterly fail to account for the waxing and waning of public mood which can can take us through booms and declines. The monthly data collected on CPI, employment, retail, etc, are also skewed, because they are calibrated for boom times and to exclude certain items. When times are booming and the job market is really good, the government economists can get away with doing something like adding in a small percentage of phantom jobs each month the government assumes were created by small businesses. But when trends change, such numbers hide what is really happening.
I once read that when put to the test, economists’ predictions fall below 50% in terms of accuracy on trend change. If you want any idea of what lies ahead, you are better off flipping a coin (50-50 chance) or doing some kind of technical analysis on trending data that reflects social mood (e.g., stock market prices).
There are a few outstanding economists who dig deeper behind economic numbers and see trouble ahead. But they are rare.
You are too tough on the science of economics. You cannot argue that because economics can’t predict the future, then economic theory is wrong. Nobody can predict the future, because it depends on so many variables, and it also depends on people’s expectations, which we cannot measure. For instance, in stocks, the only people who can CONSISTENTLY beat the market are those who are either very lucky, or have insider information.
Here are the big unknowns when it comes to the housing market: Will mortgage lending standards tighten, and by how much? Will the Fed continue to raise interest rates, and how will the bond market respond? How much can people weather the crunch of resetting ARMS? And, perhaps most importantly, when will people finally realize that housing is overpriced and do not want to be stuck holding the bag?
For all of you on this blog, I wonder how many thought that there would be a crash in 2005. Or 2004. Or 2003. Be honest. We STILL don’t know if we are in the midst of a crash or not.
So, if you disagree with a particular economist’s ideas, then that’s fair, but don’t knock economics as a science.
H and I had that discussion the other night. We were laughing as we remembered walking around a town we rented in wishing we had bought the year before. That year things were getting out of control….it was 1995.
Don’t know what town/state you’re talking about, but around my neck of the woods (So Cal), houses were very reasonably priced in 1995. You could easily find a nice place in just about any neighborhood where you could get neutral-to-positive cash flow. Prices were well balanced with rents and incomes –in other words, no bubble. Too bad I was just out of school & no money then, or I would have bought like crazy.
Then we will have to disagree. Economists make forecasts all the time and clain to know the future.
There are social sciences emerging that focus on exactly that - prediction. And YES, people’s expectations can be measured. Ever hear of Put/Call ratios? Ever hear of expectational analysis?
Economics is a false science because economics like those at the Federal Reserve think the economy acts like a physical machine, and all they have to do is apply the right torque to it and the right pressure to the correct lever and the economy will behave. But economics is about people and their decisions to buy and sell things, how goods and services are valued, what money is, and so forth. And that all depends on what is happening in synapses between the brain cells of the millions of people making those economic decisions. Human thoughts and emotions cannot be treated like mathematical equations and physical machines. In a machine model low interest rates are supposed to spur people to take out loans and stimulate the economy. That has certainly been true here for the last few years but it wasn’t true in Japan for many years.
A “science” uses the scientific method, which is to offer testable theories, and assess those theories against data. Economics does this. It’s a science.
If you claim that something isn’t scientific because it can’t predict the future, then I guess meteorologists, seismologists, astronomers, and physicists are also not scientists. Add to that medical researchers, who cannot predict how patients will react to all medicine. The list can grow.
If you want to claim that some economists are not presenting a balanced view (maybe because of who is paying the bills) then I’d have to agree. But I cannot condemn a whole discipline.
Santa Cruz may suck but you couldn’t pay me enough to live in Sac. Good lord $355,00 is way too much money to pay for the benefit of having your own piece of Oklahoma in California!
Damn funny! I’ve often said that Cal’s central valley harbors more authentic rednecks than the traditional sh*t-kickin’ areas.
The fallout for state government coffers will be serious as both sales tax and income tax receipts fall, the report said.
What about property taxes? In the last decline my County had to add a second assessment board of appeals to handle the increase.
‘The government budget for ‘06-’07, already tight, looks to go under water by the early part of next year, and with it, much of the infrastructure dreams of the current administration,’ the report said.”
Understand in California ‘tight’ means $6 billion deficit. “Underwater” means a lot more than $6 billion. This is why I’m watching the property tax bills (due April 10th) carefully. A leading indicator of the people tapped out.
robert, what are you tracking when you say you’re watching prop tax bills?
Nothing secret. The local paper publishes arears around the end of the month and the CA franchise tax board and the other dept report statewide revenues.
“Economist Daniel Blake, of Cal State Northridge, said, ‘The soft landing is good news. If the housing market really crashed and something else really crashed as well, that could lead to a recession,’ Blake said.”
That something else is the real-estate-dependent labor market, which will have to disgorge many a worker in order to keep pace with the landing of the balloon currently underway, whether it be soft, hard or whatever…
The employment in the real estate field for many is usually a desperation “job” of last resort.
With corporation America laying of thousands, and the illegals taking the lower rung, it will be interesting as to where everybody thinks they can run to.
I’m thinkin’ the big “D” in 2 years.
“It’s obvious the housing market is slowing in Sacramento and across the state. A new report from UCLA predicts it will dent the overall economy. A separate report from the University of the Pacific says otherwise. The university’s economic forecaster Sean Snaith said the construction sector will hold up well enough that it won’t be a drag on the rest of the economy.”
Well luckily it is only the state of California’s economy he is talking about. Oops! I forgot that if CA were a country, it would have the fifth-largest economy in the world…
Which source of information is more reliable — UOP or UCLA?
I would think UCLA is more credible. Because UCLA Anderson is known to be on target. It has been RE bear all along. The only thing is that it does not believe in hard landing.
I think we’ll have a soft crash.
funny
If I recall, in 2002 and 2003, from here in the Bay Area - I kept reading UCLA Anderson reports about how the economy locally was going to “bounce back” and not shed nearly as many tech jobs as the region eventually did due to the dotcom bomb and restrained corporate spending environment.
They were way too optimistic and “underpredicted” the dotcom fallout.
Dare I suggest they could end up doing the same with regard to the REAL ESTATE BUBBLE fallout?
Time will tell…
San Fran Jack,
I agree with you, I think these economists are paid a little sumpin sumpin on the side to keep their predictions “mild”.
In Santa Barbara, this same guy Thornberg and local Mark Schneipp forecasted 6 - 8% increases in South Coast prices… just a month later, numbers are coming out at LESS than 2005 prices. Go figure.
Neither the Pacific Forecasting Center nor the Regents of the University of the Pacific shall be held responsible for F–k ups in our forecasting.
“Housing soufflé”? Now I’ve seen everything.
Yeah, with that kind of “wordsmithing” you have to wonder how leveraged that guy at UOP is…
He could win an award or something in the “Serious Economist” category - I mean jeez, souffle is something the NAR dreamed up originally, is it not?
Culinary terms are used when one is cooking the books..
Yeah BottomFisherman!
Fast Forward a year from now, when things aren’t so “cutsie” in the assessment of the BUBBLE BURST. They will be resorting to the analogies of what animals eat.
(HINT: Dogs have been known to eat their own $h_t)
Hang in there jbunniii…………..you aint seen nothing yet.
What’s for lunch? ………something that’s devoid of hot air I hope.
I think he’ll have egg on his face and the yoke will be on him. Not to egg anyone on, but the shill’s credibility has been poached by the real estate industry who pays him to keep the sunny side up at all times. Either that or his brains are scrambled. One thing for sure about the souffle collapse - it won’t be over easy.
No matter what side of the debat these people are on, there is one thing everybody is watching, and there is one thing that will tell the tale, INVENTORY. Right now inventories are going up every single day.
I disagree. Every two weeks or so they appear to blip down before heading straight back up again…
YUP…..
Zip 92831 (North Orange County, CA) zoomed from its average of 90 in 2005 to 150 last Sunday, but it is down today to 137 with several pendings.
Ben…Sorry…Off topic….
Sean Snaith, UOP/Stockton Ca., is releasing a forcast today…Can you get it ???
Bob the Banker; I tried the link but could not retrive the forcast…Any other way ??
Here:
http://forecast.pacific.edu/
or direct pdf link here
Thanks Lander. Dumbing down the pdf:
Ouch for California….
Sean Snaith must not be following zprealty.
I’m seeing DOM into the six month range, price reductions, and new inventory coming online by the boatloads.
Everybody in Orange County thinks they’re going to get $900,000 for their house.
Come September…
They’ll be lucky to get $500,000.
Sean isn’t tracking the data.
He’s pipe dreaming.
ALL HELL BREAKS LOOSE IN SEPTEMBER.
It seems like Aliso Viejo Is the only city that there brokers are telling them to price right. I’m not saying they are low, but if you look at the homes there mostly townhome, there In the hi to low 600k well everybody else in the OC are at high 700k to hi 800k
“ALL HELL BREAKS LOOSE IN SEPTEMBER”
Not that I wouldn’t love if you were right and prices tank in 9/06 vs by 9/09, but what makes you think September?
By the end of August, every living breathing soul in Orange County will have heard about ‘The Housing Bubble’.
Their overpriced homes won’t have sold, and they know that still having their homes on sale in September will be like being told they have a ‘fat ass’.
It will be insulting, to say the least.
By September, the anger will come out, and we’ll see signs of absolute RAGE from homeowners.
At the same time, those around them will be telling them- “if you want to sell your house, you’re going to have to knock hundreds of thousands off the price- the one across the street- owned by a flipper, just sold for two hundred thousand less than you’re listing yours for.”
When the anger comes out, it won’t be pretty.
People will probably be coming to this board, calling us all sorts of horrible things in September.
But at the very same time- those same people will be lopping hundreds of thousands off their homes.
The new rage will be directed at us, Gary Watts, and any local realtor that’s been trying to help them.
And, as I’ve pointed out a million times, come September, their competition from thousands of other listings will be stifling.
The summer will be very quiet.
The spring is pretty much dead already- but for a few impatient fools.
The fall will be LOUD.
Get ready to be HARASSED.
Literally.
That’s my logic.
The arrogance is already gone- I can see it in their eyes. Now, it’s fear, then in the fall- RAGE.
They’ll feel they were mislead, and they’ll want to sue EVERYONE.
As soon it starts to get cold, it will get very, very HOT.
There’s a whole lotta FAT ASSES out there…
As soon it starts to get cold, it will get very, very HOT.
Yes-nothing like those cold fall winds of late September and October to rattle the complacency of summer fiddling grasshoppers.
“Their overpriced homes won’t have sold, and they know that still having their homes on sale in September will be like being told they have a ‘fat ass’.
OH AUCTION… please never leave the blog. You’re always good for a laugh- at least once a day.
Your secret admirer,
SB BB
I thought everyone was predicting a “bloodbath” this spring?
LA Investor Girl,
Tell us how you really feel…
Just keeping us honest.
That’s exactly what I fear. The rage. There was a guy who shot up his brokerage in 1999 and turned his rage against his family. If I were a realtor that’s what I’d be worried about.
Yeah, I’m expecting a spike in crime including assaults. Apologies to anyone this insults but we’re gonna see lots of people going “postal”. Divorces, increases in drug and alcohol abuse. Not gonna be pretty.
Just a reminder, DOM is not an accurate indicator.
Agents cancel listings and then re-list the same properties to make them appear “new.”
Inventory is a much more telling number.
That’s when football season starts…any thoughts on whether these mullet-heads will still have their plasma tv’s?
“Economist Daniel Blake, of Cal State Northridge, said, ‘The soft landing is good news. If the housing market really crashed and something else really crashed as well, that could lead to a recession,’ Blake said.”
It’s amazing to me that people make these statements. It really gets on my nerves. We have just come off the top. Sales are down and Inventories are beginning to balloon and its “Boy I’m glad thats over, I was a little worried there”.
Agree.
It’s hard to fathom how anyone can call it out as a “soft landing”, or anything else really, at this early point (post peak).
It’s just the beginning.
What is that line from the other day (by another economist)?
“Bubbles burst. They really do.”
What do you mean? Not only is it a soft landing already, but from most of what I read, it’s also a buyer’s market. Buy! buy! buy!!!
Actually what will happen is that they will be lucky to get anything, but those that do will probably get $700-$800K.
You’re assuming that based on today’s inventory…which is just below 12,000.
That number will probably be 16,000 by September, at the rate we’ve been adding homes.
With 16,000 homes on the market- why would anyone in their right mind pay $700,000?
From what I’m seeing, these greedy homeowners are only knocking $50,000 off their prices every two months.
They’re chasing the market down…but they aren’t chasing it fast enough.
In September, we’ll begin to see ABC7 doing stories on homeowners who are ‘angry’ at ‘greedy buyers’ for not buying their $900,000 homes.
After that…$100,000 price reductions will become the norm…
…and the question will be…
…is that enough?
I truly believe that whatever is listed at $900,000 now will be reduced to $575,000-$600,000 by the end of September.
Days on the market by then will be up in the 9 month range.
There’s gonna be a lot of very, very angry homeowners.
Actually Lansner’s blog at the OC Register. Which coincidntally isn’t accepting comments anymore says there is already over 10 months of supply on the market.
http://blogs.ocregister.com/lansner/archives/2006/03/selling_a_home_youre_not_alone.html#comments
Auction you need to adjust your numbers.
I saw that.
He actually got them to print that in the Sunday paper.
Can you imagine the looks at the Sunday breakfast table in Orange County?
“Um…honey…did you know that we have 10 months of homes on the market right now in Orange County?”
“No, dear, I didn’t. Is that a lot of homes?”
“Well, yes, I think. According to this, the record was 19 months of homes on the market, back in ‘96!”
“Oh God. I remember ‘96. That was horrible.”
I might have to send Lansner a cake for printing that. I’d thank him for it, but I guess they’re still having server-switching difficulties.
He even got them to put it in a big box of its’ own.
I wonder how many thousands of homes for sale equals how many months?
Anyone know?
I bet you we hit 14 or 15 months by September.
We might have a little dip here in the spring, getting all the last fools on the Titanic, but after that…in June…
It’s all downhill from there.
I think I’m gonna make this my new tag line…
ALL HELL BREAKS LOOSE IN SEPTEMBER.
BTW:
I don’t think the barring of comments at OCR’s housing blog is due to server difficulties.
I know that their IT department is incompetent but not that incompetent.
For a professional writer to use the poor phrasing of Yes we aren’t accepting comments says something is fishy.
Good Point Sunset Beach Guy…
Smells similar to the recent turn of events here in SB, where the Santa Barbara Association of Realtors now refuse to share housing stats to the SB News Press.
They now “inform” the public in carefully worded, written commentary in the ADVERTISING section of the Real Estate Section.
How can they get away with that .
Dunno. But Maria Zate, News Press writer enjoys bringing it up in each of her articles… which is fun.
auction - $50,000 every two months is progress. that’s a 9 yard gain.
hell, that’s a first down
True.
I’m amazed myself at the speed with which this is snowballing downhill.
I think all of us are.
But then, haven’t all of the fools already bought?
Might be a few left- but will they even be able to qualify?
Someone coined a phrase here a while ago that I really like.
“Exhaustion.”
They said, “The market has reached the point of exhaustion.”
I think that statement sums it up, and let’s us know why things are happening so very fast.
This entire Pyramid Scheme ran on the fuel of Greater Fools.
All that’s left now…is collapse.
Why shouldn’t it happen fast?
Can people really keep paying $5,000 a month to keep their homes on the market when they don’t sell?
$5,000 x 6 months = $30,000.
I don’t care who you are…out of pocket…$30,000 is no spare change.
April-May-June-July-August…
11 months x $5,000 = $55,000…
If you’ve blown $55,000 on carrying costs going into September because you got greedy, and wouldn’t lower your price enough to sell your house…
You’re going to be MAD.
Somebody better give AUCTION some prosac…Settle down Auction…Your going to have aneurism…
I’m amazed myself at the speed with which this is snowballing downhill. I think all of us are.
I’m not surprised, I kept saying this would happen; a sudden violent plunge, then nothing, no activity followed by steady 7% declines into the future. The “Silent Spring” is here even if the quarter doesn’t officially start until Friday. April Fool’s Day. How could it not be anything except breathtakingly rapid? There’s a few late to the party types and a few long planned deals finally closing and there’s contract new homes being forced to close but any potential buyer with two neurons or a lawyer has gone to ground.
This sounds amazingly like the “Global Warming” acceleration Time Magazine writes about this week. The author points out that even the strongest critics can no longer deny what’s happening….now that we’re at the point of no return.
$575K to 600K is very expensive, only 12% can afford a medium priced Calif home and that was with zero down 4% adj type loans.
I truly believe that whatever is listed at $900,000 now will be reduced to $575,000-$600,000 by the end of September.
I will be very surprised if this pans out. If equity positions are as weak as many suspect (especially for recent purchases), then reductions like this would mean the sellers are bringing several hundred thousand dollars to the table. Even if they wanted to, I don’t think they have, or can get it. Price drops like this, to me, imply bank foreclosure sales, and I don’t see it happening so fast.
Prices are set at the margins, and there may be a few long term owners who decide to cash out (better late than never) setting comps this low; but I don’t think we’ll be seeing a large volume of sales with these types of prices.
Time will tell-
Actually what will happen is that they will be lucky to get anything, but those that do will probably get $700-$800K.
That may be true in Sept, as prices will still be on their way down, but to find the true bottom, simply take the average annual rental for a similar property and multiply by 12. If you can rent a $900K place for $2500/mo, it will likely bottom out around $360,000. That sounds like an unrealistic drop, but if the place were worth more than that as a place to live, it would rent for more. Every dollar on top of that is speculative premium. This market’s got a long way to go to get to the bottom.
That would be the price in about 1990 —–1996. Do you really think it will plunge that far?
Do you really think it will plunge that far?
Why wouldn’t it? The region has lost 20% of it’s workforce since 2000, there is much less stock option “wealth” (even with Google), and rents and incomes haven’t risen much. The only thing that’s changed with the homes is they’ve suffered ten more years of deterioration. Why would the price be substantially higher?
Could happen but it would take a while .
Could happen but it would take a while .
I agree. And just to be clear, I’m not calling the number, I’m calling the ratio. I actually don’t know what a $900K house would rent for, I used $2500 as a hypothetical case. The actual rent may be higher or lower, but the point is that the fundamental value of the home will be about 12X the annual rent. That’s been the average over time. in general, the ratio has ranged between 10:1 and 14:1. In the place that we rent now, the ratio is 24:1, meaning that this property could drop by half. That would actually put it close to the original purchase price 3 years ago, so it’s very plausible (interestingly, the rent has not gone up a dime in the same period that the property “value” has nearly doubled).
Just as little blurb that the place I’m renting the ratio would be 34:1. Even though I’m getting a deal relative to the purchase price, it still feels like I’m being robbed. That’s why I won’t buy anywhere until that feeling of being violated by sellers/real estate agents/loan officers/appraisers/inpectors/insurance agents ends. Ain’t no feeling like a real estate gang rape!
Here is some advice SantaCruz….Find a Realtor that has at least 15 years experience in your market, who clearly does not need the money, who wears levi’s and tennis shoes to work, is willing to spend some time educating you to the market, does not offer you his/her business card and does not ask for your phone number….
I think UCLA is more optimistic. I believe it’s gonna be worse this time around. If the crash in the 90s was a hurricane, this is gonna be a super-hurricane. Laws of physics, the higher and faster something goes up, the faster and harder it falls.
‘We do have some bubble markets around the state but the demand for new housing is still strong.’”
This argument only makes sense until no one can afford a house any more. Demand for all luxury goods is high but sales of these items is capped by affordability. THE MATH JUST DOESN”T ADD UP!!!
re soufflé, bubble, balloon, soft landing et al:
These words do not clarify anything. However these words are extremely useful if one wants to mollify, placate, soothe, or manipulate an individual or a group. Which is why these words have become so over-used that they mean absolutely nothing.
“However these words are extremely useful if one wants to mollify, placate, soothe, or manipulate an individual or a group”.
Yes Mad Tiger… and there is an ointment for that-
but seriously, I’m starting to think these talking heads have put there minds together and agreed that this is the best way to slowly inform the public that “everything is going to be ok”.
Secretly, they all know it’s a Cluster F waiting to explode, but if they can ease the herd into the corral, there won’t be a STAMPEDE.
People get killed in stampedes and I think this is a way that they are trying to ease the casualties.
These University Pundits spend way too much time breathing rarified air. I think that in the next 9 months they’ll all be covering their asses with new doublespeak.
Gather round, gather round said the carnival clown,
Housing won’t unravel?
Then wait for the ring of the foreclosingman’s gavel?
Houses gone up like da spaceship shuttle, only d’ay not com’in down without a whole lotta trouble,
You see’s, Thornberg and me, well we’s disagree’s
That cat’s sitt’in fat while mak’in with the chat,
While I’s and my friends are seeing wages that never rise,
There ain’t no’a way we’ll get into a home I cries,
The signs go up, the house sits there,the price drops some but I don’t care,
But get close to rent’in and I’ll be there.
The only thing that has ever mattered was wages and affordable price. This puppy will not end until prices come down pre-1999 levels.
Comment on the LV market….High rise Condo NYC life style.
Well 2 more condo developments BLEW up this week…The Curve had to send the 10% depositors money back as they could not find enough buyers that would cover the costs so the banks would lend.. It had a 120 day deadline and missed. The 2nd deal was George Cluney’s project 1 block off the strip… Amazingly the condo investors quoted by the RJ (paper) told Curve developers they still wanted in and are willing to give them more time! even if the banks wont!
Lemmings
I always heard that Vegas had it’s share of FAT CATS but today’s deadline proves it “LAS VEGAS — A Las Vegas company is putting a new extra-large ambulance into service to handle extra-large patients.” Just in case they have any leapers due to the bubble bursting.
Yep, way too many FAT ASSES in America. Travel overseas and you’ll notice how fit and proper-weight most locals are. Come back home to the U.S.A. and then notice how FAT and OBESE many Americans are. Hopefully the bubble burst and expensive peak-oil gas will get those FAT ASSES moving again so I don’t have to pay for their healthcare tab.
For every Jennifer Lopez, there is a thousand….
I WISH it was unravelling here but it’s NOT!!! Damn!!! Not much inventory in my neighborhood and what is here sits for months. Then some MORON buys it, thus propping up this f-ing bubble. I would LOVE to see it fall in Valley Village! Everywhere else has more and more inventory…but not here!I wish I was wrong!
Jobs LA…Its all about Jobs…And, iterest rates….
Be patient. My realtor in Silver Lake says for every call he gets from a potential buyer, he gets 10 calls from potential sellers. Nine months ago he was as big a booster as you could imagine, predicting 20% increases for the next ten years. Now he’s talking about become a school teacher.
You are wrong–your market is not the only one! Unfortunately the San Francisco Peninsula also suffers from lack of inventory. Not like last spring’s madhouse but still homes are selling quickly. Very little net inventory build. Prices are a bit lower–perhaps 5-10%.
Mad tiger is correct….
Patience. The South Bay is flat, the peninsula will follow. Still haven’t sold either unit in my building - one was even relisted today as a “hot new listing” in order to cover up the DOM.
In the end, it all comes down to the fact that you can rent a place for half of what it costs to buy it (maybe less). Sure, we haven’t had the massive building that some cities have seen, but rent versus buy is still way out of whack. Interest rates are rising, people are slowly waking up, give it time.
There is some merit to what you are suggesting Lunar…
Inventory in the San Fernando Valley is the highest it’s been since at least 2000, for ANY month, including peak summer months. And sales are the lowest they have been since at least ‘98. The RE market is sssslllloooowwww. This thing will take time. The first stage is the build up of inventory and slowing sales. THEN the price reductions.
i’ve been monitoring sfv inventory for about 6 weeks now. it goes up every week. sure, things sell, but every week more we are seeing more actives. there’s definitely no “spring bounce” in the sfv. the only thing bouncing is the number of actives. i’m in agreement with the other posts here….i think we’ll have a “fall thud” when we finally have real price reductions. right now, when i see a 3/2 on a 6000 sq. ft. lot come on the market for 950k it warms my heart. these foolish new listings are only helping to inflate the bubble. patience.
The realtors are going to create a urgency factor with buyers by saying “get in now before the interest rates go up”.This might prolong the hard correction that I think is coming .The sellers could decide to just take the houses off the market but they are pressured into selling now also because the interest rates are rising .
Its such a pressure situation to force the housing market to correct .
I’m sort of watching the market in LA. Very sticky the last few months. I have an MLS notify for my neighborhood parameters, and since January I’ve gotten 2-3 new listings per week at the most. Today, in one email, I got 6. Not saying one day is a trend or proof, but it sure got my attention.
Will be looking forward to seeing tomorrow’s.
Good! Thanks for the feedback about LA> Let’s get this baby popped and done with!
I have seen houses go on and off the market. Also priced reduced signs, but no new ones. I can’t believe the POS that people buy around here! $925 for a 2 bdrm fixer??? That’s INSANE!
When I got divorced, I moved to the Fairfax district and rented an apartment. The plan was for my husband to buy my share in the house we owned which was going to allow me to buy something else, a duplex ideally. Fastforward three years later, remarried with three kids we are still living in our two bedroom apartment. When I moved three years ago, three bedroom houses around 1800 sf the needed a little work sold for around $450K. With our income and a substantial downpayment from my buyout, that’s what we could have afforded. Now a 1800 sf fixer up the road is on the market for $980K and a better kept place is listed @ $1,249,000. Down the road about 6 properties have been on and off the market listing between a million and $1,300,000 since September. Only one of these properties has sold.
Our rent is $1,500 for 1,200 sf. The building is lovely, my landlords are great. I can walk to the park in about one minute, a few minutes more get me to The Grove, there are lots of cafes, restaurants, you name it. All of our friends think we are crazy to live in such close quarters with three kids. Actually, we are from Europe where we grew up in apartments this size without a yard. People find it hard to believe that we are really quite happy. No maintenance costs, no yard work, no gardener to pay, etc. Instead, we have lots of time to take our kids to the park to play baseball,kick a soccer ball and ride bikes (all of which they couldn’t do in a little back yard anyway).
A source of constant amazement to me is that everyone I talk to tells me that this area is so attractive that it will never go back down. Basically, even if the rest of LA declines in price this area will hold its value as adding a popular shopping mall is a valid reason for house prices to double and triple in three years. And, these opinions do not only come from “lay” homeowners but amongst others the woman who is the head of aquisitions and development for the entire West at Prudential and my old professors one of whom is now director of the real estate program at USC while the other heads the USC real estate forecast. I think it just shows that it’s really hard for people who should know better to see this as a bubble if they themselves own a house. These people feel rich. They have spent years living on relatively meagre academic salaries and now own million dollar homes in nice parts of LA. How can anyone expect that these independent experts are going to publish reports announcing a huge housing crash? Who is willing not only to predict their own financial decline but basically cause it by announcing it?
Well, Im an academic and I saw the bubble and I sold in Summer 2005. When I told my dean about my home sale, he mused that my timing might be optimal. So not all academics are blinded. He lives in a University residence, and has no reason to move up or down in the local RE market. We will rent until the RE market resumes sanity in our area. $1500 per month sound just fine for now.
People find it hard to believe that we are really quite happy. No maintenance costs, no yard work, no gardener to pay, etc. Instead, we have lots of time to take our kids to the park to play baseball,kick a soccer ball and ride bikes (all of which they couldn’t do in a little back yard anyway).
Of course they do…MISERY LOVES COMPANY…Gonna be plenty of that to go around in the next 24 months.
That’s 925K (of course)
post fed fund rate os 4.75:
US market is up
Oil is up
Gold is mostly up
Japan (Nikkei) has crossed 17000
Indian Sensex has jumped 3-4 times from 2003 lows and in unprecedented zone(hype)
Now where is the fear or temperate behaviour that would cause fed-pause. Looking like a blow-off everyday.
Sounds like 6% CD rates coming in a few more months. (For people actually saving anything, not buried under I/O financing…)
There’s a credit union here in town that’s offering a special, 5 month CD at 6 percent. 5-50K limit. . So, they’re already around.
You buy a million dollar home with 30% down, within two years it’s now worth $700K: Your neighbor who bought with a 5% dn Wells Fargo loan and 5% 2nd, went BK two years ago: who takes the biggest lost?
San Diego County inventory just went up again, like it does every day, to 18,234:
http://www.ziprealty.com/registration/register.jsp?cKey=mg3g3746&metro=sandiego
Yeah!! Less than 800 listings to go and it will break the San Diego all-time high inventory of 19,000 that happened in the 90’s. Then it will be in all the papers, etc. Thus further spreading bubble fears to idiot, would be buyers! : )
This baby is falling fast. WOW!!! I estimated that the housing was going to start collapsing in early 2007. Man, I was wrong.
The housing collaspe is nothing, wait until 2007 , when all our employment is outsourced. Hey America guess what???? You have been sold out and too top that off, your poor citizens are bgurried in BK proof debt. Welcome to the NEW World Order…
Sometimes I think it would be great to be a renter right now with all that freedom . Its times like this that you feel like a slave to the house even if you bought for long term use .
Yeah, the Costa Mesa ziprealty listings just keep climbing. A couple years ago maybe 60-70 houses for sale, now 330 with about 1 in 4 Price Reduced. It is underway.
Well, I’ll be a hog’s penis…
Ben and friends…take a look at this little problem going on over at the San Diego Investors Club…
Mr. Robert Campbell, what do you think about this?
Did I hear someone mention a ‘lawsuit’?
Ben- this may be a developing story you may want to look into…
http://www.websitetoolbox.com/tool/post/sdcia/vpost?id=996313
And so it begins…
Auction Heaven,
What is happening in Arizona is going to be happening in bubble markets all over the United States … once the unsustainable, credit-driven housing bubble starts deflating, finger-pointing and lawsuits are going to go wild.
As you may know, I think this housing bubble is going to unwind in a big way. Once housing prices revert back to normal ratios based on incomes and rents, those individuals with cash and good credit will stand like towers of strength in the marketplace.
Investors/speculators who bought in near the peak only think they have problems right now. Wait until property values fall by 30 to 40% in the bubble markets and they are upside down on their mortgages, without cash, and facing foreclosure, debt relief W2’s from the IRS, and new BK laws that could possibly keep them in a financial hole for the rest of their lifes.
Reckless speculation - and that’s what this housing bubble is - never ends well.
Who is Robert Cambell ???
Market’s don’t just “revert back to normal”; they always overshoot. It’s human nature, peaks to troughs. I expect houses to go back to 1996 levels (at the very least) and home loans to require at least 30% down (plus low DTI and documented & verified income/assets). That is, of course, if you can find a surviving bank with money to lend.
In Santa Barbara, the only homes that are selling are the ones for the super rich. Someone just offered $100M to buy a SB home with all cash, but the offer was rejected because a “substantially higher” bid was received:
p.s…
This one’s kinda interesting, too…
http://www.websitetoolbox.com/tool/post/sdcia/vpost?id=1017281
Trouble in Toyland?
Unbelievable. These threads are full of people who have no idea what they are doing, yet they’re tossing around hundreds of thousands of dollars as if it were Monopoly money. Preconstruction in Idaho? I’ll bet the guy’s never even been there. What’s truly incredible is that banks are loaning these people money.
This is another interesting link of why everyone should buy real estate now before the world ends…
Are you a troll or are you really serious? Posting that here is either pissing in the wind or an attempt at dry humor.
Dry humor methinks.
looks like, smells like gov economist
they get to keep their jobs , no matter what they say
What is going to affect everyone is when all bubble shoppers have exhausted their spending money and the malls and local small businesses don’t have paying customers anymore! I tell everyone I know (property owners and renters alike) to put on their seatbelts and get ready for the ride, cause it aint gonna be fun…
Sorry to say, but that is already happening close to where I live. There are 2 malls within driving distance, and both have around 10 to 12 empty stores. One of them is a premium outlet that is generally mobed. The other had waiting lists of years to get a space. Now there are spaces in all 3 levels. First to go were the stores that cater to teenagers. Clothes, movies, and video games. Then Bombay closed. Now, a lot of booths that sold cellular plans, and cell phone accesories. Some big stores are relocating to smaller spaces. I will wait 6 months before starting with offers.
‘It (presale percentages) kept going up as the media got more negative,’
—negative press apparently is code for “the truth” in that inventory is skyrocketing and buying has slowed.
Hi everybody, I have not had time to do anything since I’ve come back from Colorado, but managed last night to update my housing bubble page with a nice series of housing bubble articles by iTulip. Eric Jantzen has been writing about the housing bubble since 2002. His Report From the Front, by a guest author, talks about what is happening in rural areas right now. Be sure to check them out!
Sweeeeet Site Bear…..Lots of work…Thanks…
Please see this link
http://realtytimes.com/rtapages/20060330_housingtemp.htm
Why real estate is the only safe place to put your money now, because the rest of the economy isn’t doing well, but RE is and will forever…up, up and away!!!
Nikki, Abres Los Ojos (Open Your Eyes). Your fellow RE agents that I’ve talked with aren’t saying that “real estate is the only safe place to put your money now”, if fact, they’re selling their investment properties, just as RE investors ALWAYS have during the early stages of a “correction”. They’re sweating right now, why aren’t you?
Sorry, I thought that would come across as a bit more tongue in cheek…I was being sarcastic.
oh, sorry…
Like real estate, stocks, and bonds, people tend to forget that cash is a strategic asset as well.
This is going to be a lesson that is re-learned (again) the hard way.
CASH-IS-KING……
“CASH-IS-KING……” unless it’s inflated away by Helicopter Ben… move into gold for awhile, IMHO.
I track inventory every Monday in my submarkets when I get back from lunch and have data going back 2 years. Not sure what’s going on anywhere else but in the North County Coastal Area of San Diego where I work detached inventory was 530 homes on Halloween and now stands at 521 homes. Pendings homes sales are down from 173 to 168. Attached Inventory has risen from 294 to 312 and pending attahced sales have risen from 68 to 73. Dettached prices feel like they are around 5% lower versus Fall (10% lower for attached) but we haven’t seen any dramatic Crash here yet. Still lots of homes being bought and sold every day. One thing we are definitely seeing less of are the zero down toxic loan buyers. Nothing controversial here…just reporting the facts.