For Buyers, Life Is Looking Better By The Day
The San Francisco Chronicle reports from California. “The Bay Area housing market showed no signs of recovery in November, as sales fell to a nearly two-decade low and buyers still struggled to find mortgages. There’s little to suggest that this month is shaping up any better than November. ‘Properties are just sitting on the market,’ said Barry Pilger, broker in Oakland. ‘My theory is that people are standing aside until jumbo loan rates come down.’”
“Mark Corrallo and his wife hope to move from their 2,500-square-foot, four-bedroom home in Oakland’s Montclair district to a quiet, cul-de-sac in Walnut Creek. The couple listed their home in October at $1,119,000 and quickly reduced it to $1,079,000. They haven’t had a single offer and plan to pull the listing on Monday.”
“‘It seems the market has simply died in Montclair,’ he said. ‘The big question is whether that’s an indication of a prolonged slump in the higher-end market that will continue into the new year, or if it’s simply a seasonal slowdown that will correct itself in the spring.’”
The Mercury News. “At first glance, Santa Clara County’s housing market might seem to have entered a kind of twilight zone. Just 750 existing detached houses were sold in November, down about 42 percent from November 2006, according to DataQuick. That’s the fewest sales for that month since the research outfit began tracking such statistics in 1988 and the lowest number for any month since February 1995.”
“Yet despite the apparent anemic demand for housing here, the median price of those 750 houses shot up 9.5 percent from a year ago to $799,000.”
“So what gives? The answer has a lot to do with the yawning disparity between Silicon Valley’s affluent and less-well-to-do areas, say some real estate experts.”
“‘Some of your most affordable neighborhoods aren’t contributing many sales,’ which boosts the median sale price, said DataQuick analyst Andrew LePage.”
“Richard Calhoun also sees evidence of that in the data he compiles as owner of Creekside Realty in San Jose. Although San Jose’s relatively inexpensive east, central and south areas accounted for 16 percent of existing single-family houses sold earlier this year, he said, that’s down to 7.5 percent now.”
“Over about the same period, the median price of houses in those areas also dropped from about $660,000 to about $580,000, he said.”
“Based on the current pace of transactions, Calhoun estimates, it would take 246 days to sell the houses on the market in Santa Clara County. But it would take 599 days in San Jose’s east, central and south areas, whereas only 46 days would be needed in Mountain View, Los Altos and Palo Alto.”
“Some new home developments also are dropping prices and offering discounts on such things as landscaping and granite countertops. Their builders typically owe substantial bank loans, LePage said, and they’re worried the houses ‘aren’t flying off the shelf.’”
The Contra Costa Times. “In Alameda, Contra Costa, San Joaquin and Solano counties, sales were the lowest since DataQuick began keeping statistics in 1988. San Mateo County sales reached the lowest November since 1991.”
“The percentage of all Bay Area home purchases financed with jumbo loans, or those exceeding $417,000, rose to 44.1 percent in November from 42.6 percent last month. In the first seven months of the year, before the credit crunch, 62 percent of all Bay Area purchases were jumbo-financed. Those with loans of more than $417,000 fell 58 percent from last year.”
“DataQuick reported that price declines might be spurring more sales in the new-home market. In Solano County, new-home sales rose nearly 19 percent from October to November. That may be bittersweet news, because the county’s sales dropped more than half from last year.”
“Thornberg was skeptical that some regions were faring better than others, saying that the greater Bay Area is intertwined.”
“‘While maybe (San Francisco or San Mateo counties) like to think they’re separate from the other areas, their economies are linked,’ he said. ‘There’s no way this eventually won’t have an impact on that area.’”
“Bryce Ellsworth, a real estate broker in Brentwood, said that he was showing 10 properties in the mid-$200,000s in Antioch and Oakley, with many of them receiving offers.” “‘Two years ago, we had nothing in the $400,000s,’ he said.”
From ABC 7 News. “‘Executives coming into hi level jobs in the Silicon Valley just want park someplace for about a year. They choose to rent,’ said South Bay housing specialist Warren Winsness.”
“Reza Sadeghi is one of them. The IT executive is living his dream in an Alum Rock rental. He pays $2,500 hundred a month for a four bedroom. Though he makes six figures a year, he refuses to buy.”
“‘It just doesn’t make sense to buy property right now because of the uncertainty with what’ going to happen with the market,’ Sadeghi.” “He can afford to wait and watch the market and when the bounce back does happen as predicted by analysts in about 18 months, only then will Reza Sadeghi buy.”
The Sacramento Bee. “As the toughest year yet in this slumping real estate market comes to a close, November’s housing numbers point to the same old story. This is a lousy time for sellers as home prices continue their steady decline. But for buyers, life is looking better by the day.”
“‘Pessimism for sellers is one of the greatest things for buyers,’ said Roseville real estate agent Bob Montuori, who steers buyers to homes repossessed by banks.”
“Median sales prices in much of the Sacramento region are at a 3 1/2-year low, according to DataQuick.”
“DataQuick reported that in November 2,503 homes closed escrow in Amador, El Dorado, Nevada, Placer, Sacramento, Sutter, Yolo and Yuba counties. That’s an 11-year low for a November. By comparison, sales in Southern California and the Bay Area are at 20-year lows.”
“In Sacramento County, the largest piece of the area’s real estate market, 13.4 percent of November sales were for homes priced below $200,000, the Sacramento Association of Realtors reported. That’s up from 9.5 percent in September.”
“Homes selling for less than $250,000 represented 30 percent of November’s closings, statistics indicated. ‘We never dreamed we’d see that again,’ said Mark Welch, executive manager of Connect Financial Services in Roseville.”
“The Realtors association and TrendGraphix, a Sacramento real estate firm, say the falling prices are likely behind a rise in pending sales that will be finalized this month and reported in January.”
“Many of these sales are for homes lost to foreclosures and repossessed by banks. Banks are becoming formidable competitors to home builders and individual sellers regionally and are desperate to unload homes, said Montuori, the Roseville agent.”
“‘I will tell you the banks are cannibalizing each other over the past several weeks,’ he said. ‘They are fighting each other to get their stuff off the books.’”
“Home builders like to clear inventory off their books before the year ends. Last year they reported a late surge of December sales. But ‘there’s no indication of an upward trend’ this year, said Jane Enger, analyst with a home builder consultant in Danville.”
The Fresno Bee. “Like a mini Gold Rush, the region a couple of years ago drew thousands of home buyers and construction workers taking advantage of the sizzling housing market. But as the home building slowed, so did the movement of people.”
“‘A lot of those people came for those jobs — and they’re gone,’ said Joseph Penbera, a Fresno-based economist who has long studied Valley growth.”
“Madera, like other counties, benefited from the housing boom in recent years, drawing transplants from the east Bay Area, said Walter Diamond, executive VP of the Fresno division of Beazer Homes, one of the first national builders to stake a claim in Madera.”
“But activity has slowed down. Beazer Homes sold its last Madera home lot in December 2006.”
“‘Right now, everybody’s just kind of holding tight,’ Diamond said.”
The LA Times. “Federal regulators are looking into allegations that mortgage lender Washington Mutual Inc. pressured First American Corp. of Santa Ana to inflate appraisals of homes nationwide.”
“The allegations were first raised by New York Atty. Gen. Andrew Cuomo in a fraud suit he filed Nov. 1 against First American, a giant real estate services company that operates a large home-appraisal unit.”
“Cuomo called the case ’symbolic of an industrywide problem and a long-term problem.’”
The Orange County Register. “Orange County employers shed 2,200 jobs in the 12 months through November, a drop of 0.1 percent, the state’s Employment Development Department reported today. On a year-over-year basis, the financial activities sector, which includes mortgage lenders and real estate, lost 6,900 jobs, while construction lost 3,700.”
The Daily Pilot. “At least two Costa Mesa mortgage companies have been evicted from their headquarters in the city’s upscale north end, a spokesman for the Orange County Sheriff’s Department confirmed Wednesday.”
“Sheriff’s spokesman Jim Amormino said Quick Loan Funding and Loyalty Funding, both owned by businessman Nazih Daniel Sadek, officially left their offices at 11:05 a.m. Tuesday.”
“The Harbor Justice Center in Newport Beach had ordered the eviction Dec. 11, Amormino said. The recent housing market rut, he said, had led to a rise in eviction notices.”
“‘Because of the slump in housing and loans being readjusted, there’s more now than there has been,’ Amormino said. ‘But it seems to be concentrated on mortgage companies.’”
“Ed Fawcett, the president of the Costa Mesa Chamber of Commerce, said none of Sadek’s four companies were members of the chamber and that he hadn’t personally heard of any of them. He added, though, that he wasn’t surprised to hear about another group of lenders going out of business.”
“‘There were some egregious violators of lending out there,’ Fawcett said. ‘Just on a personal basis, I’ve heard from brokers who were pretty much honest and up front, and there were some out there that were really working the system. This may have been one of those.’”
Another great week! I am going to save the desk clearing stuff for Christmas day. For those of you hitting the road, have a safe trip and take some HB pics for us. For those spending the holiday at home, I’ll be holding down the HBB fort and we’ll see what news is out there. Be sure and post your Xmas gift suggestion for Used House Salespeople or FBs in the weekend topics, or here, if you like. Thanks for the support and please check back this weekend.
Merry X-mas, I am going to send in some squatter photos this weekend…
Ok, just don’t get their faces.
They were thrown out by the police. Maybe it is a bad idea after I think about it, I might alert other criminals where an empyty house is with leftovers on the floor - sadly this is a nice neighborhood…
Gift for a Realtor? How about a nice knife rack…
For the 2005 thread I recommended an alarm clock. Now I’m thinking a refrigerater magnet with with the suicide hotline number on it.
I like the comedic Ben. He makes me laff.
A gift basket with a squeegee, a spray bottle, and a piece of cardboard.
Bullet-proof evening gown.
orange jumpsuit
For the used house salespeople I suggest a copy of M. Scott Peck’s “People of the Lie”.
Merry Christmas to you Ben and all of my fellow HBBers. Peace be with you.
How about a nice, “Don’t tase me Ben!” t-shirt?
Bwwwahhhhaaa I like that…
Who would give a realtor a gift?
Donald Trump cologne?
How’d you get the goat to piss in the bottle?
Thanks, Auger-inn. I had to buy a new keyboard…
A conscience?
http://tinyurl.com/yowy7s
Joshua Tree’s are the perfect gifts for realtors. In fact you should give them a few extra and ask them to share with their recent clients. Don’t need to tell them why. If I ever buy a house I plan to give out a few if I think they are needed.
MERRY CHRISTMAS!
Have a safe Holiday! Thanks to you Ben for these years of faithful updates, keeping us informed. You have done a great service!
Slim’s heading to the East Coast with camera…
I’m going to check out Sedona see if its anything like Santa Fe
Merry Xmas, Ben. All I want for a gift is an entire case of lotion.
Bear you get a new LapTop.
Happy holidays to you too!
FYI - I’m in South Bay LA.
Two guys in my small church got pink slips this week: one a sheet metal union guy with a company that did a lot of aerospace work and the other in a manufacturing company.
…ooops, I forgot. Socal’s different.
Gosh, that’s sad. Things must be truly awful if these businesses can’t wait a few weeks to send out pink slips.
Its not like there is a good time. Some employers think its better to lay people off before Christmas so they don’t overspend.
Not thinking there is a good way for this to happen.
Many companies lay off in q4 so they can show they are taking steps to alleviate the bleeding. A lot of things are based on 4th quarter and 1st quarter not on emotion. In fact my company just laid off a shit ton of people and those people will almost all be getting full severance paychecks for weeks after the new year, they just aren’t employed anymore.
My sis was bumming today. Her boss skipped out of the office after sending a smarmy group e-mail and there was no holiday bonus or gift this year. Nada. Zip. Not even a greeting card. My guess is that the boss took a personal financial hit this year on the McMansion (since the business is thriving) and is taking it out on the minions.
SaladSD, I would say not giving an employee an gift is not “taking it out on the minions” So much of what’s wrong with this country (THERE’S AN AWFUL LOT THAT IS RIGHT) is peoples’ sense of entitlement.
Sorry, I happen to disagree. You’re too eager to apply the “entitlement” tag in every instance. My comment was intended to point out that this year was a departure from previous years. Doesn’t sound like you’ve ever worked in a large office…or perhaps you feel only Wall Street traders and CEO’s should get year end bonuses?
I believe that every person employed by a company should expect pink slip and be prepared accordingly so that they can take care of themselves and their family if and when the event does happen. If people don’t take their jobs for granted, they will be better workers and they will have better fiscal discipline. J6Pack is so much in debt, on an average, that layoffs become quite traumatic, especially during this time of the year. But it doesn’t have to be like that.
Lots of businesses grant employees vacation time at the beginning of each year. Dump the employees before Jan 1 and they won’t have to pay them for a year’s vacation.
“‘Executives coming into hi level jobs in the Silicon Valley just want park someplace for about a year. They choose to rent,’ said South Bay housing specialist Warren Winsness.”
- I have lived in the Manhattan Beach area in the ‘South Bay’ LA (that’s why I’m SoBay) for about 30 years. I have never understood why the Frisco area calls itself the ‘South Bay’?
This area is the real ‘South Bay’.
Hey don’t forget the South Bay here in San Diego, which includes IB and Chula-Juana…
Sobay….respectfully, that shouldn’t be too hard to figure out. For the SAN FRANCISCO Bay Area, the Silicon Valley IS south of the San Francisco Bay, therefore, it’s in the South Bay. And for anyone not in the know, it gives them an idea of where the Silicon Valley is. That’s all. No one is trying to claim ownership of using “South Bay”. As Starve mentioned, there is a South Bay in S.D. area, as well.
http://en.wikipedia.org/wiki/Silicon_valley
http://en.wikipedia.org/wiki/South_Bay%2C_Los_Angeles
Now what REALLY sounds like fingernails grating on a blackboard is when people call San Francisco, “Frisco”.
You don’t want to do that. It’s like wearing a 49er jacket to a Raiders booster club meeting (or visa versa)….you will totally stand out.
BayQT~
Best wishes and many thanks to you, Ben. Hope everyone has a great Christmas holiday. Out here in the desert it’s windy and about 10 degrees colder than usual - only about 63 today. Off to clean and cook - I know, a real woman would be out shopping, but my family expects food, not gifts.
Merry Christmas All, and- keep warm -”aretheycrazy”.
It is so cold outside. Not usual for the desert in Dec.
Thanks Ben, and all for your humor,and informative
eye opening dialogues from all over the world.
“For Buyers, Life Is Looking Better By The Day”. Well… not for me anyway. The truth of the reality is that even with blaring negative headlines, huge drops in sales and a general feeling that the economy is soon to be tanking, prices in the Bay Area are still obscenely high.
I just noticed a tiny house for sale near the one I rent. It was less than 800 square feet, needed repair, had a tiny yard, and the kitchen was basically also the front room. Price: 445k. I figured that if we put down 100k, our payments would then be almost as cheap as our rent. But we would actually be downgrading from a newly renovated 4 bedroom rental into a tiny 2 bedroom shack. I have to admit the thought crossed my mind for about five minutes. But when you look at our situation, it becomes all the more ludicrous. Me and my wife make close to 200k, save heartily, and yet the only home we could comfortably afford is the crappiest, tiniest, ugliest house in the hood? Nope. Prices are STILL way the hell too high.
I guess it’s about time for a new year’s resolution. I’m tired of being pissed off. I’m tired of worrying about whether what I save will go anywhere. So I think I’m going to have to set a timeline. If things do not get better in the Bay Area say in two years, then I’m outta’ here. The BA can say bye-bye to yet one more highly skilled employee who got fed up.
Anyhow, Thanks Ben for this great blog. As you can see, living here is really frustrating and sometimes the ability to vent is quite helpful. Have a happy Holiday!
I feel the same way Jetson Boy. The Bay Area is not all that great. I could be perfectly happy living somewhere in Georgia or whatever.
Thiers No water there! I live in bayarea, it’s very nice but agree that prices are out of control. Lot’s of repo’s starting to show in area I live in Fremont. Colorado or Oregon look good now..
So, I’m curious.. I hear people say this “I would be happy living elsewhere” and yet they are still here. So what’s the story, why would someone say this and live in SJ? I can say I would be less happy living elsewhere, that’s why I live in a relatively small house in Silicon Valley instead of cashing out and buying a mcmansion in the midwest.
not an attack, which it may sound like on a blog. just curiousity.
btw have you seen the weather for Chicago this week? Vs the bone chilling 55 degrees we have in SJ?
Right there with you, same situation. Only difference: this new year is the end of our time line.
See you !IN( “the BayArea”).
AddRef that!
If you make 200k why look at cheapo homes? I know a guy that can get you a great rate on loan amount up to 1.5mill. Live it up baby. The window of opportunity is closing.
A single glance at the inventory numbers refutes that lie.
A Spring bounce is right around the corner. There were a few weather incidents that kept the Buyers away, and Buyers had other things on their minds during the holidays, but that will pass. Also Bush is all over fixing this foreclosure nonsense. He is a great man. Nowhere but up baby. I’m gonna get several homes at 5% off and rent them until i can gauge everyone in a year or two. Sure I’ll take a monthly ding, but its all about massive appreciation. Postive cash flow was like so 80’s, no one gives a damn about that anymore. At least not smart investors that watch HGTV and know their cht. I’m gonna buy fixer uppers and do major revovations. You know fill in the cracks with spackling, paint over the stains evidencing water damage, tape the leaky pipes, new granite countertops, you know, the works.
I’ve been tracking inventory of 1.5m homes in Los Gatos, Saratoga, Palo Alto, etc. In the summer, peaked at 70 for this particular search. Now, 35. Obviously low due to Christmas/New years, but hardly high either. And many of these have serious location flaws - freeway adjacent, under high voltage lines, etc. Basically the west half of Santa Clara County is still a reasonably good seller’s market (although not like in the summer), but the east half is really bad for sellers.
I hear you. I make a 6 figure income and work at an amazing company, but every single day I entertain the thought of packing up and leaving because I know the prices/cost of living are insane. What keeps us here now is simply the job and the luck of “low” rent. Should we be forced to move from our place - find another rental or have to consider buying, we’re most likely packing our bags. Bay Area’s nice, but it’s not worth the price.
My wife and did just that, we left beautiful south OC this past October for Colorado and we are loving it. Sure we gave up a few things, but we gained much as well. You know, for saving 600K on home, 1.2M over a 30 year loan, I can live with some snow
Elroy: the number of sticky-priced neighborhoods is slowly decreasing. Unfortunately, yours is one of them. Just remember, in the slowdown of the nineties, prices decreased even in the priciest bay area neighborhoods. This is no different, and will probably be worse. I would bet that you’ll either buy a house or pay much lower rent within two years. And have a great holiday.
Jetson_boy, Live where you like / can afford. I lived in SF for 10 years about 10 years ago. I cound not afford to buy. Did not bother me. Rent was way less exspensive. Look at your housing cost rationally, not emotionally. If you can afford the rental easily and like living there do so. Save and invest the difference from buying.
‘Properties are just sitting on the market,’ said Barry Pilger, broker in Oakland. ‘My theory is that people are standing aside until jumbo loan rates come down.’
Really, my theory is that people are waiting for PRICES to come down. Why are people in SF so dense?
I wish there were 48 hours in a day. I would spend the extra 24 visiting open houses, eating chocolate chip cookies at every stop, and getting agents’ hopes up — then low-balling them at 50 percent of the asking price. The looks on their faces would be priceless.
– Judge Smales
“You’ll get nothing and like it”
You know you had better cut that out. Next year they are going to start taking those offers.
I wonder when the banks get forced to dump stuff. Should be soon.
Also should be a flood of REO in the spring.
Judge Smails: “You know, you should play with Dr. Beeper and myself. I mean, he’s been club champion for three years running and I’m no slouch myself.”
Ty Webb: “Don’t sell yourself short Judge. You’re a tremendous slouch.”
While Mr Pilger’s statement may be self-serving rubbish, it does indirectly (and unintentionally, I am sure) point towards a valid aspect of price behaviour.
When my mother inherited her late sister’s house in the UK, we took a look at the RE market there. (She eventually took my advice to sell; it’s taken a couple of years, but that advice is starting to look good now.)
One thing we noticed was a significant gap in asking prices, with virtually nothing listed between 250K and about 280K GBP. On enquiry, we found that this was due to a tax step at 250K, so buyers would force a house listed in the gap down below the step limit.
In an environment of rising prices, this lead to considerable stickiness. Prices for commodity properties would stay just below 250K for a long time, then one comp would achieve 275K-280K. At that point there would be a flurry of repricing.
I can see the same thing happening here, but in reverse. If you;
1. Have serious pressure on sellers (maybe builders, or bank REO/short sales) in an area where prevailing prices are well over the complying loan limit but eroding, and
2. Have a significant financing differential between complying and jumbo, then
3. At some point someone is going to capitulate and cut to a price which can be financed with a compliant loan. Adding in a reasonable deposit I would guess around 450K. That then becomes the comp.
IMHO this may be one reason why there is pressure on to increase the complying loan limits.
“Mark Corrallo and his wife hope to move from their 2,500-square-foot, four-bedroom home in Oakland’s Montclair district to a quiet, cul-de-sac in Walnut Creek. The couple listed their home in October at $1,119,000 and quickly reduced it to $1,079,000. They haven’t had a single offer and plan to pull the listing on Monday.”
Yea , and if pulling the listing will increase the value of their home.What another dumb replay of the RE industry and their ill informed sellers. NEXT YEAR it is all down ,down,down!!
$1.12 MILLION for a modest house in “Oaktown” (even in a “tony” neighborhood)?? I want some of whatever he’s smoking.
Harm you are right. What is with these clowns? $1 million buys a nice place in SF. But guess they need the $1 million and change to pay off the mortgages / home equity loans. Never mind the market value.
The couple listed their home in October at $1,119,000 and quickly reduced it to $1,079,000. They haven’t had a single offer and plan to pull the listing on Monday.”
Your kidding. You mean you reduced the price by 3.5% even though only about 10 people in the entire city could ever dream of paying what you’re asking and you STILL haven’t got any offers. Better wait for that spring bounce, since that’s when all the multimillionaires come out to buy more houses for themselves to live in, I mean, FOR ME TO POOP ON.
Big V: you don’t expect them to just GIVE IT AWAY, do you? My realtor Suzanne told me that she researched it, and the market is going to make a big bounce back after the Super Bowl. It all comes down to location, location, location. Everyone wants to live here and they aren’t making anymore land. A 3.5% reduction is a great deal. It’s the biggest no-brainer in history!
Wait, I meant to say that those dip$hit sellers have no brains. Unless they get that house well under $1M then here’s to them riding this implosion all the way to the bottom.
Why are people anywhere in the U.S. so dense about affordability?
Maybe because of implicit encouragement from the top to think that $1 m homes are affordable to the average J6P buyer?
“Maybe because of implicit encouragement from the top to think that $1 m homes are affordable to the average J6P buyer?”
Yeah, like this ‘gem’ from Burbed.com:
“December 13, 2007
2 $100k salaries can buy a $1M-1.3M house”
” Why can’t you afford a house in the Bay Area? [Burbed.com]”
“In other words, $1M is the bench mark, but some people can do better.”
“How do you afford a $1M house? Not very hard. With 2 income earners each making $100K, you can easily qualify for a $800K loan. You put down 20%. Mortage at 6.3% is just under $5000 a month. One person’s salary will cover it. The other person’s salary can be used for living expenses.”
” If both persons make a bit more than $100K, then you can move into the $1M - $1.3M range. It’s very doable, and if you’re in that market, you’ll find plenty of company. How do I know? Been there, done that, and I’m just your typical Silicon Valley tech guy.”
http://www.burbed.com/2007/12/13/2-100k-salaries-can-buy-a-1m-13m-house/
This is so sad.
“A fool and his money are soon parted,” and
“Fools rush in where angels fear to tread.”
I had read that post a couple days ago and was stunned at that financial illiteracy.
Granted a 2-income household could stretch and cover a payment that was 100% of net from one of the incomes but….
(1) What if one person gets sick or injured and can’t work. All it takes is being in the wrong spot in your car driving along minding your own business or a diagnosis of a serious or chronic illnesss and you are done.
(2) There is a divorce
(3) One person dies - yeah, it happens even to those in their 20s, 30s, 40s….
(4) There is a corporate merger and a downsizing when staff are combined
(5) One of the couple’s jobs gets outsourced. After all, computer tech can be done anywhere and wages are cheaper in India…
If that nitwit is as shortsighted and unable to anticipate contingencies in their work as they are in their life, you can bet that he could easily be replaced by someone with more common sense and the ability to consider what happens if things don’t go according to plan.
you negative nelly.
1) I could win the lottery.
2) Gambling at nearby casinos is so popular, all the older rich people do it.
3) Next tech boom is already happening on wall-street, wages will double for everyone in the valley due to trickle-down.
To be sure, there are CA hh’s that earn over $200K/year, and there are CA hh’s with deep pools of accumulated wealth. There just are not nearly as many such hh’s currently looking for a new home to live in as there are vacant $1m+ homes for sale.
How about an enormous house just inches from your neighbor? This particular one was sold in 2005 for 1.6M, now it’s at the low, low, price of 1.5M. 102 days on the market and counting…
http://www.zillow.com/HomeDetails.htm?zprop=59308852
Yeah, almost anything is doable, but it doesn’t mean that it’s smart! Please see attached link for things that are doable but definitely not smart. Don’t worry it’s not dirty, just a medical page and I’m sure many have seen this list before. No Joshua trees on the list yet.
http://www.well.com/~cynsa/newbutt.html
Good lord that statement from the typical Silicon Valley tech guy is vomit inducing.
2 $100k salaries can buy a $1M-1.3M house
That’s insane. I wouldn’t dream of getting a $400-500k mortgage. Could I do it? Sure. Would I want to? NO, NO, and HECK NO.
It’s way too much. To sign up for debt slavery for 30 years, whatever for?
I want to buy at such a price, that even if my income drops three-fold, I’ll still be able to afford my home. That’s how I rent now - it’s extremely affordable, and even if I lose my job and have to take a brutal cut in pay, I’ll be fine.
NYchk,
You’re singing song. It’s a GOOD song.
singing MY song.
My song, as well. I was just talking to a friend the other day about this very thing as we were discussing how an acquaintance spends money like they had access to a self-replenishing money tree. Conversely, she and I have enough money saved to live off of for a year if we lost our jobs. THAT’S the BEST and the most stress-free financial situation to be in, in my opinion.
Watching the A&E tv program, Big Spender, makes me realize how oblivious people are about their spending habits. If ANY of the folks profiled on this show had an illness, divorce or an extenuating circumstance, they’d be toast. Burnt toast at that.
BayQT~
I didn’t say you couldn’t deep fry your shirt, I said you shouldn’t!
It’s all about howmuchamonth. (And only howmuchamonth for the first year!) People *STILL* aren’t getting it!
Thanks SFGal! It’s a nationwide epidemic. Not just SF area. I have a contractor friend over here in Fremont. He says he’s turning down work from Lenders because he has too many repo’s to fix already…Price stickiness is becoming unglued..Cant wait for 09!!!
“‘I will tell you the banks are cannibalizing each other over the past several weeks,’ he said. ‘They are fighting each other to get their stuff off the books.’”
Either they want to hide it for next year or fight each other to get it off the books. Which is it?
“‘It seems the market has simply died in Montclair,’ he said. ‘The big question is whether that’s an indication of a prolonged slump in the higher-end market that will continue into the new year, or if it’s simply a seasonal slowdown that will correct itself in the spring.’”
Montclaire is in Oakland. Oakland, CA. You know, rape and murder capital of California. The one where I had to pull over for gas and every man in the entire city just stopped whatever he was doing and outright stared at me right to my face? I think they can smell innocence, and I think it pisses them off.
Maybe these sellers should just run and forget the house alltogether.
And how about the Pulte Homes project located on 98th Ave next to the BART and railroad tracks? The property is also surrounded by storage yards for all those metal shipping containers from the port. Stacked 7 or 8 high they make for a lovely view. Another one of those Oakland neighborhoods where you don’t stop to get out of the car. And yet Pulte is building townhomes there (well, they haven’t actually started construction yet). Whose idea was that one? People here in the Bay Area are so delusional when it comes to the property market. It’s special here! Not. I don’t know what I’d do if Chris Thornberg did not exist:
“Thornberg was skeptical that some regions were faring better than others, saying that the greater Bay Area is intertwined.”
“‘While maybe (San Francisco or San Mateo counties) like to think they’re separate from the other areas, their economies are linked,’ he said. ‘There’s no way this eventually won’t have an impact on that area.’”
Industrial is in these days. Especially in hip Cali.
Talking about industrial, I wonder how those clowns who built Arrys Lofts in LIC are doing…
Million dollar condos in downridden industrial Long Island City, with floor-to-ceiling oversized windows facing a working railroad (!) and an abandoned warehouse.
Montclair is actually East of Piedmont, and although it’s part of the city of Oakland, it’s a very nice area with plenty of people who can afford $1m houses. I would have no problem living in the neighborhood East of 13, except I would examine real estate there closely for both fire and slide risk.
Please don’t forget that Highway 13 sits on top of the Hayward fault and there have been at least a dozen earthquakes in the 3.0 to 4.0 range in the last year or so…I wouldn’t buy a house up there for any amount of money…the ground doesn’t burn, shake or slip it’s been a good week.
Montclair is falling in price, but Piedmont is staying high. Must be the fact that Piedmont has its own school district, and Montclair is in Oakland. When Piedmont falls, we can pop the champagne corks.
Montclaire is in Oakland. Oakland, CA. You know, rape and murder capital of California.
Actually, Montclair is one of the nicest, if not THE nicest area of Oakland. The rape-and-murder areas are closer to the bay (West and East Oakland). Montclair is higher up in the hills, east of Piedmont which itself is east of East Oakland, so the ghetto is quite a ways off. Anyone who’s taken a drive up Warren Blvd (SR 13) has cut through the heart of the Montclair district.
“…I think they can smell innocence, and I think it pisses them off…”
LOL…damn it I wasted a perfectly good highball. No more drinking while reading this blog. You would think I knew better…
Best rule of thumb when reading HBB…avert eyes when tipping liquid to face!
Merry Christmas All!
Leigh
I note that the GoogleAds artificial intelligence hasn’t picked up that nuance yet, otherwise we’d be seeing listings for ruggedized monitors and keyboards every time we came here.
These numbers don’t add up. If mtg and realty alone lost 10,600, then OC employers shed way > 2,200. What am I missing here?
“Orange County employers shed 2,200 jobs in the 12 months through November, a drop of 0.1 percent, the state’s Employment Development Department reported today. On a year-over-year basis, the financial activities sector, which includes mortgage lenders and real estate, lost 6,900 jobs, while construction lost 3,700.”
Because only 2,200 of were payed above the table.
Heh! Ok that adds up then.
“So what gives? The answer has a lot to do with the yawning disparity between Silicon Valley’s affluent and less-well-to-do areas, say some real estate experts.”
There it goes again. The implication that the Bay Area rich are special, indestructible, ODORLESS. Just go ahead and gloss over the impending Alt-A destruction; just go ahead and obfuscate the very real price drops in the more priveledged areas; just go ahead and pretend that all those subprime slime balls won’t break into your house and take it from you once the police go on strike because they’re all getting foreclosed on and can’t afford their mortgages. The only thing preventing the rich from attaining the God-like status they apparently deserve is that little inconvenience called social diastrophism that history has been so kind to repeat continually.
“‘It just doesn’t make sense to buy property right now because of the uncertainty with what’ going to happen with the market,’ Sadeghi.” “He can afford to wait and watch the market and when the bounce back does happen as predicted by analysts in about 18 months, only then will Reza Sadeghi buy.”
I wonder why this reporter didn’t directly quote Sadeghi on his 18-month plan, the way she directly quoted him on everything else. Is it because he, um, DIDN’T REALLY SAY THAT?
For shame.
“The Bay Area housing market showed no signs of recovery in November, as sales fell to a nearly two-decade low and buyers still struggled to find mortgages. There’s little to suggest that this month is shaping up any better than November. ‘Properties are just sitting on the market,’ said Barry Pilger, broker in Oakland. ‘My theory is that people are standing aside until jumbo loan rates come down.’”
Maybe they are waiting for the resolution to this story. Lubricate refinancing opportunities now, inflate wages later?
Treasury Secretary Advocates GSE Assistance for High-End Borrowers
Treasury Secretary Henry Paulson announced Monday that he was in favor of temporarily lifting the dollar limit on loans purchased by Freddie Mac and Fannie Mae, allowing them to provide a market for so-called “jumbo mortgages.”
Under current rules, the two government sponsored enterprises (GSEs) cannot purchase loans that exceed $417,000. Paulson is advocating that this limit be lifted and appeared not to disagree with earlier suggestions by Federal Reserve Chairman Ben Bernanke that the new limit could be as much as $1 million. Paulson stressed, however, that he did not favor raising the loan limits forever, only until the current credit crunch eases.
http://www.mortgagenewsdaily.com/12202007_Jumbo_Loan_Limit.asp
This is a great way of bailing out the banks and delaying the crisis to the near future while it intensifies.
Merry Christmas to the scum on wall st.
I think my thought on future HBB headlines of “HOW WILL WE COPE WITHOUT FANNIE MAE AND FREDDIE MAC” just became far more probable.
Of course we will probably be in currency collapse at that point.
I am still hoping that Andrew Cuomo’s subpoenas bear fruit. It seems like policymakers would want to tread lightly with expanding the GSEs while a storm cloud of legal doubt is hanging over them — otherwise, taxpayer moneys might get inadvertently poured down a rat hole with a knee-jerk move to expand them.
Why don’t they think straight? Already it is clear that many people who took on huge debt load are in trouble. They can’t repay. So why encourage more of the same? Won’t the dreaded foreclosures continue to happen well into the next decade?
I feel that our country will be better off if we get rid of both Bernanke and Paulson.
First comes the drop in sales volume, then six months to a year later comes the drop in price.
On the outside chance this proposal to guarantee GSE debt up to $1m or $700,000 or whatever the number happens to be, how would the accountants in charge of putting together GSE financials treat the transfer of a massive unquantified actuarial liability for future loan defaults from the balance sheets of banks on to the balance sheet of taxpayers, er, I mean, GSE stock owners? Certainly this unfunded actuarial liability for future defaults would dwarf what has already been written down by the subprime gamblers on Wall Street?
Interesting.
I commented on one implication of the limit further up the thread before I read this.
OT….This came out today. The banks orchestrating a bailout of troubled investment vehicles that were hit by the subprime mortgage crisis are throwing in the towel after struggling to raise money for the planned fund, according to people familiar with the matter. At the behest of the Treasury Department, Bank of America, Citigroup and J.P. Morgan Chase have been working since September to set up the fund, which would buy assets from so-called structured investment vehicles. But lack of interest has led the banks to drop the plan, known as the Master-Enhanced Liquidity Conduit.
I’m trying to buy a foreclosed house in DC metro suburbs. The house is 2600 sq. ft., with unfinished basement in Jefferson county charlestown, WV, 75 miles from DC. The builder is building similar houses for 300K, without options. This house I think is owned by Countrywide and is listed for 315K. What should be the best I offer for it and I’m new to foreclosure homes. This house was built in 2006.
I tried buying 2 homes from countrywide REO and they were both in need of major renovations, and countrywide refused to budge on price. Thing is these things were priced along side houses that needed no work at all. I wonder how many homes the banks sell to people just because the people think they are getting a good deal because it’s a foreclosure.
I’d offer 252, which is a 20 percent discount, but apparently to real bargain hunters 20 percent really isn’t a great discount. I’ve heard people getting homes for 40 percent off, but those are also people who are in the business and have the time to wait for the once a year deal.
Why are you buying a foreclosure home, especially if you’re new to foreclosure homes? This strikes me as an odd move, especially when builders are steadily piling on inventory which could drive down the prices considerably from there current level.
The other thing is, with hints still floating about high in the air that GSEs might soon be authorized to buy loans of up to $1 m, what makes you think anyone wants to give you a steal of a deal right now in the $300,000 price range?
Professor Bear,
My wife and I are going to seriously consider a REO when this is all done. Partially as we expect to have to put in a custom kitchen (due to some features with both really want than most people cheap out on). So… We’ll do it so that we have the ~$70k left over. And yea… I’m expecting custom kitchens to get a lot cheaper in the next year…
Note: several of her friends bought foreclosures in the last downturn, so we’ll have people to turn to for advice. But for now, the banks aren’t dealing… so neither are we.
2008 is the warmup year. I don’t think it will be time to buy until 2010. Yea… I used to be in a different camp. But funny thing happens when you read…
Got popcorn?
Neil
“But for now, the banks aren’t dealing…”
I suspect the bankers are waiting with baited breath to see how the potential passage and future impact of various proposed bailout measures pan out:
- teaser-freezer (potential impact small)
-
Superfund SIV-
increase in GSE conforming loan limit above $417,000- temporary increase in GSE conforming loan limit above $417,000 (???)
- FHA reform (gonna pass, but potential impact looks small)
- guarantee of GSE loans up to $1m (Yegads! Big-time transfer of liability for bankers’ soured subprime bets on to the taxpayers’ laps)
- other not yet announced (???)
With all this policy uncertainty mucking up Mr. Market’s ability to discover prices, is there any surprise why very few homes are selling in areas formerly known as a bit frothy?
I would think that unless Martin is a trust fund baby with money to burn, it would be a very time for a novice foreclosure invester to get into the game right now.
very risky time
Neil: make sure that you don’t put in a granite countertop. And maybe you could find a stainless steel, built-in popcorn popper.
I look forward to 2010 and hearing about the wonderful deals everyone gets.
Merry Christmas to you.
Since when is 75 miles out a suburb? Prices in DC will continue to tank. Get something nice for your money in bethesda or chevy chase in 2010. Meanwhile, stay cash or no risk.
West Virginia is NOT in the metro D.C. suburbs. Obi-wan, use the force. Tell them they don’t want that house.
No offense, but since when is West Virginia the DC metro suburbs? It’s West Virginia for crying out loud; land of single-wides, pick up trucks, pitbulls and shotgun ravaged road signs. Offer no more $70 / sq ft.
Thanks all. I guess I’ll make an offer for 210K. This house I’ve seen and seems to be in good condition. I think the prices in this Eastern panhandle of WV have to drop by another 25% in 2008. This place is no way DC suburbs, but 70% of my neighbors commute to N. Va or DC or Bethesda area, and they call it as the next best location for DC suburbs. I’m buying because I work here only.
Martin, Can you rent for less than you could buy at $210K ? My guess is yes. Do you plan to live there about 10 years ? Is your employement relatively stable ? What is your potential income if your work dries up / job goes away ? Prices should fall quite a bit. What’s your rush to buy ?
Banks not going forward with ’super SIV’ plan: WSJ
SAN FRANCISCO (MarketWatch) — Banks planning on bailing out investment vehicles hurt in the subprime mortgage crisis, known as SIVs, will not proceed with the bailout plan, The Wall Street Journal reported Friday on its Web site, citing sources close to the matter.
The Journal said the banks and BlackRock will likely issue a statement on Monday.
Bwhahahahaha
http://www.marketwatch.com/news/story/us-banks-giving-up-bailout/story.aspx?guid=%7BCA476B20%2DF08D%2D4453%2D8D13%2DB1D098F27EFB%7D&siteid=bnb
My Xmas gift suggestion for Used Home Salespersons would be a gift card for a one-way Greyhound bus ticket to Needles, CA. (Would send them to Trona, but Trona is waaaay cool on this Board :)) The Xmas card would feature on the card’s front, a photo of a Joshua Tree with some seasonal snow.
FB gift suggestion would be a gift card for $19.95 - the day rate for a pick-up truck rental (presumably to move with).
Note to those in the Ventura county area: A close friend went shopping at the Banana Republic Outlet at the Camarillo Premium Outlets. Said to me that “the sales people were new - lot of grey-haired middle-age people which is unusual for BR.” This friend stated that he was surprised by the rude conduct of these salespersons - “condenscending and rude” - (My friend is a former six-year GAP employee).
Anyway, my guess is that these new rude sales staffpersons are former mortgage brokers or realtors. If any of you are at the Outlets, please feel free to drop in to Banana Republic and say “HI!” to them from me (lol).
~Misstrial
Camarillo Premium Outlets I remember that place. Probably old folks were working there because there are few young people left in Ventura County. When are they going to close all the public schools in Ojai ?
Usually there are only young adults working at BR. I’ve been to that particular BR outlet store about 10 times and they’ve only had twenty-somethings working there, so I am surprised at the new employee age group.
However, you may be on to something - young people and families having to pack up & move due to the housing mess & lessened opportunities - leaving older people who are left to work retail.
Good question about Ojai - I figured most of the students there attend private school and public is for the kids of the illegals.
~Misstrial
exactly
We have entire areas greying out. The young people don’t stay because the cost of living is too high due to housing costs. The grey wave can afford to stay and fill these jobs because they usually have lower fixed housing costs. But how long before these retail jobs leave as the scarce younger shoppers fail to appear at the store and shop? It’s an ugly death spiral.
Outlet Malls are gimmicks, imho. I started in the shopping center industry in 1986, just when the concept of outlet malls was being developed.
Miss,
Make sure the gift card for a one-way Greyhound bus ticket for Needles states “Only good for Summer Use”
LOL
~Misstrial
Or maybe they’re serial refinancers, trying to make some extra money to pay their HELOCs.
Yes, that too (heloc’d).
~Misstrial
Misstrial:I’ll be sure to ask them about their 6 % off sale.
Mark Corrallo and his wife hope to move from their 2,500-square-foot, four-bedroom home in Oakland’s Montclair district to a quiet, cul-de-sac in Walnut Creek. The couple listed their home in October at $1,119,000 and quickly reduced it to $1,079,000. They haven’t had a single offer and plan to pull the listing on Monday.”
This is a confirmation of what I kept saying about Bay area housing. My wife and I are both master’s level educated professionals. There is no way I was going to buy anything like that. I have said all along that the house I got in Albuquerque for $299K would have been $1.3M where we came from. Thank you for the confirmation and right decision to leave CA.
Albuquerque. My condolences.
“The allegations were first raised by New York Atty. Gen. Andrew Cuomo in a fraud suit he filed Nov. 1 against First American, a giant real estate services company that operates a large home-appraisal unit.”
“Cuomo called the case ’symbolic of an industrywide problem and a long-term problem.’”
Wow…what clarity, where has he been all this time. He must be getting ready for some sort of political run…
If a politician uses a crackdown on lending fraud as a vehicle to help him get elected to high office, then I wish him godspeed.
It’s the pols who line their pockets with bribes, er, I mean, campaign contributions to look the other way when REIC players commit fraud, then later on propose and support bailouts to keep bad actors in business, whom I intensely disdain.
Yes, mrincome. Pursuing high profile Wall Street fraud gained Elliott Spitzer the governorship. Young Andrew wants the same thing. God I hate these political dynasties!
http://www.dailypilot.com/articles/2007/12/21/business/dpt-sadek20.txt
“At least two Costa Mesa mortgage companies have been evicted from their headquarters in the city’s upscale north end, a spokesman for the Orange County Sheriff’s Department confirmed Wednesday”
Another Sleazebag Fly- by- nite Mort company bites the dust and is evicted from the Hi-rent commercial office tower they occupied on Anton ave near South coast plaza. These classless sleasebag mort con artists were not even members of the CM Chamber of commerce and dipped into escrow trust funds for Vegas gambling wims. Didn’t contribute one penny toward Local CM area , just made a ton of loans and extracted commissions during the run-up, then when SHTF they are evicted like some low-life bums from a restaurant. Probably tranferred all their loot into offshore funds or in names of immediate family members accts and /or fattened the coffers of the Vegas gaming dens .
‘My theory is that people are standing aside until jumbo loan rates come down.’”
Yep. Who gives a damn about the crazy asking prices. The bank pays that right?
Guess what showed up in our mailbox today? NOTICE OF DEFAULT. Our landlord never told us! It actually works out well because the bigger place next door just opened for rent! We pulled our landlord’s property report before moving in, now it looks like you gotta pull it every month.
Since he hasn’t been paying the mortgage and just pocketing our (rent), I’m wondering what we can do to him. I wonder how long I can string out not paying rent here! What is he going to do evict us!
First, get an attorney. NOW, before you need one. Not some clown like me.
Second, here is what you can think about discussing with the attorney.
I would send a nice note to him stating that it seems the ownership of the property is in question. State that you will deliver rent once the bank reassures you that the Notice of Default was a small mistake.
I’m not going to try and score free rent, but I do want my security deposit back. Fat chance, I know, but I will see what small claims court says about that if it gets to that stage.
Contact the owner of the property next door. If leasing it is possible, check up on his mortgage status.
Call your current landlord. Ask WTF is going on.
If you decide to move next door (or where ever) you may want to tell him that he gets the last month’s rent when you see the security deposit has been put in an escrow account at the bank.
You might be able to trade off the last rent payment for the sec.dep. That would work out evenly if the depoist was 1 month’s rent.
LongIslandLost gave you some good advice.
Please tell me why you would hire a $300/hr attorney to salvage a $1200 security deposit. What can they do that SD native can’t accomplish by arranging to put the monthly rent in an escrow account and writing the letter him/herself?
Please tell me why you would hire a $300/hr attorney
Attorney’s have spent centuries perfecting a language that only they (claim to) understand. And first thing you find about the law is they all advice to hire an attorney to sit down with another attorney.
Full employment act.
REhobbyist , just this am I refered a friend to a RE lawyer for a tax dispute with the city. A decent lawyer will talk on the the phone with you for 10 minutes, see whether they can help you at what cost.
What I’d do - start looking for another place ASAP. You’re probably OK not paying rent to that punk in the meantime. Realistically speaking, don’t try to get the money from the LL - it’s gone with the wind. Shizznit happens, move on.
This is sickening. I had to stand by FOR YEARS waiting for sanity to return to the RE market. It never did and probably never will. Now I see the insanity permeates every level of this society:
-Lenders broke their own rules and gave deadbeats loans. -The president broke our own rules -the Constitution- and does whatever he wants while dragging our economy into bankruptcy. -The Supreme Court broke its own rules and allows spying, summary detentions, torture and basically anything else the Shrub desires.
-Congress breaks its own promises by criticizing a stupid invasion that’s bleeding us to death yet spinlessly funding it.
-Home appraisers, RE agents and brokers and used car salesmen now compete for the title of SLEAZIEST INDUSTRY of them all.
-The Federal Reserve is purposely tanking our dollar to offset the economic NOSEDIVE created by all the aformentioned reasons.
Believe me, at this stage buying a home is now the LEAST of my worries and the way THIS is shaping up it’ll probably be OVERSEAS.
I’m tired of helping to fund this insanity.
I would love to see a string of realtors perched on top of Joshua Tree’s for Christmas, and sing the “Realtor In A Joshua Tree” song (instead of Partridge in a Pear Tree). I have the perfect place - on Sunport Blvd - road connecting freeway to Albuquerque airport. Lots of Joshua Trees in the median.
“The couple listed their home in October at $1,119,000 and quickly reduced it to $1,079,000. They haven’t had a single offer and plan to pull the listing on Monday.”
WTF?!
You lowered your price by a whopping 3.6% and no one nibbled?
Shocking!
Try a 10+% reduction in “asking” price.
A banner year of 07:
Realtors: business declining around 70% from peak. How satisfying.
Hard drops in RE valuations, how satisfying.
Mortgage lenders taking it in the shorts and issuing pink slips en masse. How satisfying!
Foreclosures piling up (it’s a tsunami, just like this board predicted a year ago!), how satisfying.
Stupid FBs who wouldn’t listen to the smart people, re-relegated back to renting, how satisfying.
The drying up of the HELOC spigot: how satisfying!
Tent city in suburbs is cost of home crisis
http://tinyurl.com/ywltfr
The noisy, dusty camp sprang up in July with 20 residents and now numbers 200 people, including several children, growing as this region east of Los Angeles has been hit by the U.S. housing crisis.
The unraveling of the region known as the Inland Empire reads like a 21st century version of “The Grapes of Wrath,” John Steinbeck’s novel about families driven from their lands by the Great Depression.
The pattern is cropping up in communities across the country, like Cleveland, Ohio, where Mark Wiseman, director of the Cuyahoga County Foreclosure Prevention Program, said there are entire blocks of homes in Cleveland where 60 or 70 percent of houses are boarded up.
“I don’t think there are enough police to go after criminals holed up in those houses, squatting or doing drug deals or whatever,” Wiseman said.
Maybe some of those Bear Stearns/Goldman/Merrill bonuses could be used to get some nice tents for the FBs.
Nice. They’re “receiving offers”, but it’s worth noticing that he didn’t say that any of them were SOLD.
I wonder, what were the range of those supposed offers? The mid-$100,000s? Bwaaahahahahahahaa!!!!!
Have you seen those shows where they decorate homes to get them sold? They used to report multiple offers the same week. Now they say there are several interested parties, and the Sellers expect an offer any day now.
What I enjoy about these shows is the emphasis on the decorating that “sold” the house…..I guess dropping the price $50K had nothing to do with the sale.