A Whole New Era In California
The Press Enterprise reports from California. “After hitting bottom in 2007, home building in California and the Inland Empire will rebound modestly this year with smaller and less expensive homes affordable to first-time buyers, according to a forecast released Thursday by the housing industry. Alan Nevin, chief economist for the California Building Industry Association, predicted the mountain of foreclosures will shrink this year in Riverside and San Bernardino counties.”
“California has ‘weathered the subprime market storm of 2007′ and the correction is almost over, he predicted.”
“Sharply lower lot values combined with a trend toward building smaller homes by the third quarter will deliver new houses priced below $300,000, Nevin said. ‘Builders will be able to offer better values and people will recognize that and they will come out and buy. It will just be a whole new era,’ Nevin said.”
” Nevin’s forecast was challenged by Chapman University economist Esmael Adibi and economist Chris Thornberg, both of whom say the housing bubble is still deflating.”
“‘This is a feel good forecast, but unfortunately it is not going to happen. There is absolutely no rebound in 2008,’ Thornberg said.”
The North County Times. “The building association’s forecast estimates that permits issued for new home and condominium construction statewide will increase 10.5 percent to 128,400 in 2008.”
“The building association’s sunny outlook has not held up in past years.”
“Over the last two years, Nevin’s forecasts have overestimated the number of actual building permits by about 40,000. For example, Nevin predicted between 155,000 and 170,000 permits in 2007. The building association estimates permits for 2007 to hit about 116,250.”
“‘There is an amazing amount of money sitting out there waiting to buy lots that drop in value,’ said Nevin, who is also the director of economic research for San Diego-based MarketPointe Realty Advisors.”
“The economists expect falling land prices in Riverside County to encourage builders to construct smaller homes that will sell for as little as $100,000. Those homes will likely be built east of Temecula and Murrieta, Nevin said.”
“It may not need to wait much longer, according to The Hoffman Co. In the French Valley area east of Murrieta, where development boomed in 2004 and 2005, the average price of finished 7,200-square-foot lots fell to an estimated $115,000 last month from $240,000 in December 2005, according to a report the company published in mid-December.”
“Lot prices elsewhere in southwest Riverside County fell 39 to 45 percent in the same two-year period, Hoffman reported. Existing single-family homes sold for an average $375,000 in that area in November, down 22 percent from a year earlier, according to the North County Times’ analysis.”
The Santa Cruz Sentinel. “Here is an edited version of the association’s teleconference Thursday, Q ‘We’re seeing builders slash prices because of foreclosures flooding the resale market. How does that impact your forecast?’”
“A Nevin: ‘The subprime market won’t play out until the end of 2008 but foreclosures are less than 1 percent of market and those are homes of lesser quality.’”
“Q ‘Don’t you have a vested interest in saying things are looking up? A Nevin: ‘I didn’t take an optimistic position for 2007. For 2008, I’m predicting modest increases.’”
From ABC 7 News. “While some economists don’t dismiss the prediction, they note the industry did not give much weight to the current foreclosure crisis which has flooded the market with existing homes for sale.”
“‘If this report had taken into account some of the features of the sub-prime mortgage crisis and the resulting credit crunch that is likely to still persist in 2008, it probably wouldn’t have been as optimistic,’ said Prof. Jessica Howell, Ph.D. from Sacramento State Economic Department.”
The San Francisco Chronicle. “In the Bay Area, permits for 10,000 single-family units will be issued in 2008, up from about 9,000 last year, the group forecast. The increase should begin in the second half of the year, influenced by population growth, declining interest rates and a strengthening national economy, Nevin said.”
“Several observers strenuously disputed the conclusions.”
“‘We have enormous inventory that is sitting out there,’ said economist Christopher Thornberg. ‘Until that inventory is burned off, there’s not much reason to build in the state.’”
“The building group’s report echoed a similarly rosy forecast from the National Association of Realtors last month, which drew equally incredulous responses. The report predicted existing home sales will rise to 5.7 million this year, following a 12.5 percent decline to 5.67 million in 2007.”
“Thornberg said organizations that represent Realtors and builders generally can’t be relied upon for accurate predictions about their industry.”
“‘I understand that they’re hopeful, that their constituency is looking for some sort of bright light in the distance,’ Thornberg said. ‘The reality is that’s just not realistic.’”
The Sacramento Bee. “Not so long ago, Sacramento-area home prices were miracles to behold in the eyes of Bay Area and Los Angeles residents. Oh, the wonders here of a sprawling, three-bedroom home for the same price as a tiny, one-bedroom condo there.”
“The allure of lower-priced homes drew plenty of transplants to the Sacramento region earlier this decade. But as housing values began soaring, that affordability began disappearing.”
“Well, look again. Those days are coming back.”
“According to the most recent statistics, the median selling price of a Sacramento County home is now $388,000 below that of Santa Clara County. Just three years ago, that median gap was $225,000, according to a review of November sales data from DataQuick.”
“Likewise, Placer County’s median sales price in November was $178,000 less than in Alameda County. The gap three years ago: only $49,000.”
“Many real estate agents say they aren’t seeing any rush of would-be buyers from San Jose or Los Angeles. Henry Ung, an Elk Grove real estate agent who specializes in foreclosed homes, said, ‘There has been some, but not a lot of (Bay Area) people checking out prices here.’”
“Nevin, chief economist for the statewide builders’ trade group, says long-term mortgage rates will go as low as 5.5 percent this year. He also believes the government will ‘take all steps necessary’ to ease the subprime lending crisis.”
“Finally, he predicts a ‘major change in the home building mentality’ in Sacramento, the Central Valley and Southern California’s Inland Empire. Because of shrinking land values, Nevin says builders will offer ’substantially smaller homes and sell them for substantially lower prices.’ In the Sacramento region, that means more prices below $300,000, he says.”
“Effective Jan. 15, Fannie Mae wants bigger down payments on loans made in ‘declining markets’ like Sacramento. It means even if a national lender can get you a loan with no money down, Fannie Mae is now demanding a 5 percent down payment for loans in this market.”
“If your loan requires 10 percent down, Fannie Mae will wants 15 percent from the borrower. Similarly, government-sponsored loan buyer Freddie Mac, is also tightening rules on loans in ‘declining markets.’”
“The bottom line: Borrowers of loans up to $417,000 will need to bring more money to the table, which could further shrink the pool of qualified buyers.”
“But it’s beneficial for the long haul, says Brent Wilson, a mortgage strategist with Sacramento-based Comstock Mortgage. ‘I think it’s going to provide better long-term stability to our market.’”
“That’s a nice way of saying that borrowers under these rules are more likely to make their payments and keep their homes.”
The Modesto Bee. “The Northern San Joaquin Valley’s housing market will be one of the very last to turn around in California, a building industry economist predicted Thursday. Alan Nevin said prospects for builders in Stanislaus, San Joaquin and Merced counties are not so rosy.”
“Several of the region’s remaining builders agreed with Nevin. They are bracing for another difficult year.”
“‘2008 will not be very good for home builders,’ said Pam Franco, the new president of the Building Industry Association of Central California. She said there are so many resale homes on the market that builders have had to cut prices to compete, which has dramati-cally lowered profits.”
“Steve Mothersell, owner of SCM Homes in Modesto, said small starter houses he had been selling for $220,000 at Park Villas at Sherman Ranch in Newman have been reduced to $190,000. He has approval to build similar floor plans in Riverbank, with prices starting in the $170,000 to $190,000 range.”
“‘Prices are back to where they should be in the Central Valley,’ Mothersell said. Homes being built now ‘cater to the local buyer and the local demographics,’ unlike the much bigger, high-priced homes sold a few years ago.”
“Mothersell said buyers should take advantage of the big cost cuts now, rather than waiting for home buying to regain popularity: ‘These opportunities will dry up in short order when the herd starts to move.’”
“Local builders agree with Nevin about land prices dropping in the valley, which could lower the cost of future subdivision lots.”
“Builders who purchased raw land for development in 2005 were paying as much as $300,000 per acre in the Northern San Joaquin Valley, recalled Franco. She said the record-high land prices pushed up home costs, but land now is being offered for substantially less.”
“Franco’s Heirloom Collection semicustom houses on one-acre lots near Atwater had sold for as much as $850,000, but a new model will have a starting price of $449,500. She said that model will be ‘our loss leader, and its profit margin is substantially lower.’”
I nominate Alan Nevin as Lawrence Yun’s replacement.
He has made the decision to lie for food. Now that he has lost all of his credibility, it may be one of his only means of advancement.
‘Thornberg said organizations that represent Realtors and builders generally can’t be relied upon for accurate predictions about their industry.’
‘But it’s beneficial for the long haul, says Brent Wilson, a mortgage strategist with Sacramento-based Comstock Mortgage. ‘I think it’s going to provide better long-term stability to our market.’ That’s a nice way of saying that borrowers under these rules are more likely to make their payments and keep their homes.’
IMO, the ‘new era’ is that most of the California press is rejecting these guys outright!
Heck, note that everyone is citing The Warren Group, Case-Shiller, DataQuick, etc. — anyone but the NAR.
They’ll report the NAR numbers when they come out as a story on the NAR numbers. But when putting in background housing data in some other story, they quote someone else now.
Better late than never. But the media should apologize for its role in inflating the bubble.
I think the debate is wide open on whether painting lipstick on pigs and other forms of lying about economic reality are ‘beneficial for the long haul.’ Disinformation lays the groundwork for malinvestment, and all of us except for pigmen who profit from the lies get to pay the price ‘for the long haul.’
who are these numnuts? IE is rebounding after the 07 slump? Builders are again rebuilding more modest homes?
I don’t see anyone building out here in IE land. Just some finish ups. The Comm RE that is almost finished is slowlyslowly being finished. But residential? one or two guys per day per developement if That, is all I am seeing.
What koolaid are they drinking?
And not just the CA press. Nationwide we are seeing more and more MSM criticism of REIC press releases.
Poor guy. He has to lie or he loses his job but he will lose his job anyway in less than a year, because his lies won’t come true and he all knows that. Can you expect from someone in such a desperate situation, that he plays fair ?
If only my parents had raised me to think that lying is perfectly acceptable, I could be more sympathetic.
That’s right a lie is a lie, and a person can say anything they like but that does not make it so. We live in a Country with millions of delusional people! Reality is not something they can comprehend.
“Sharply lower lot values combined with a trend toward building smaller homes by the third quarter will deliver new houses priced below $300,000, Nevin said.”
I have a better idea. How about dropping the wishing prices of existing houses under $300,000? And you don’t have to wait to the third quarter. Do it now.
So basically he’s saying that all the hundreds of thousands of people working in the service industry will never ever be able to afford a home.
bingo…
I think he’s saying they built too many overpriced McMansions and now it’s time to go back to building basic houses that used to be the norm. I think they will also stop pumping up the prices by not using all the faux luxury finishes. I’m not sure I see what is wrong with this.
I am more disturbed by the price than by what has been described as catering too much to a “luxury” market. The McMansions I see are chit boxes - synthetic stucco, cheap doors and windows, etc. I think the point is that the problem lies more in price and not in the fact they were too geared towards a luxury market. When I look at them, the first thing that pops into my mind is not we are not worthy of such luxury and they need to scale back, it’s more who would pay $800k for that piece of crap.
The problem is that so far, they refuse to admit that builders simply need to builders need to build for less. I want a smaller house with less bling AND I don’t plan on paying what a smaller house with less bling would have cost during the bubble. The plumber makes less money for his time/expertise, the framer makes less money for his time/expertise, the roofer, etc…
I dont disagree. Higher quality, better workmanship, and better architecture in smaller homes for at least 50% less per square foot than bubble prices. That’s what I want.
This is the big opporitunity for the builders to build over priced smaller homes. The 300K price tag is still way too high. They really need to be putting out under 150K starter homes.
They will drag in a few more people and create more pain in the McMansion market though.
Probably they will look at those price level houses in 2010 to further undercut the next smaller wave of knife catchers.
“They really need to be putting out under 150K starter homes.
They will drag in a few more people and create more pain in the McMansion market though.”
If the $150K starter market gets rolling, that will really kick the pulp out of the $400K+ starter home market of 1998-2005.
–
There will be 99K builders all over Cauliflowernia! Fifty different designs all for 99K. What a concept. Haven’t we heard of it somewhere?
Jas
> She said that model will be ‘our loss leader, and its profit margin is substantially lower.’”
Amazing - a “loss leader” doesn’t have a profit margin. That comment just shows that there is still lots of room for price declines.
In this brave new world of smaller, more economical homes, the features offered in today’s McMansions seem downright silly. A friend bought a 4100 SF in Eastvale this year that featured, of all things, a “Butler’s Pantry.” Like they would actually have Jeeves serving tea while trying to make payments on their toxic ARM. Other models in the same area offered options like coffee bars, gift-wrapping rooms, game room casitas…
Just what I’ve always wanted, a smaller shitter place than an apartment with a mortgage attached.
‘Builders will be able to offer better values and people will recognize that and they will come out and buy. It will just be a whole new era,’ Nevin said.”
Nevin went on to gush about the 2 Unicorns in every garage.
Yes. The answer to the debt problem is a sea of cheaper, crappier houses. Welcome to Utopia. Talk about side stepping the affordability issue. If widgets are priced beyond reach, give them half a widget for 50% less than the cost of a whole widget. Brilliant. How can that plan fail?
No one is suggesting crappy houses. I would like a well designed and built house without all the phony luxury stuff (Please, please, please no granite of stainless steel appliances). Also, I don’t want a house built to the lot line and filled with useless rooms to heat, cool and clean. Most people don’t really need 3 - 4 K houses and would be perfectly comfortable with 1500 - 2K. Smaller doesn’t mean crappier.
I would like the definition of a “smaller” home. We live in a funky, 1950s San Diego County house that is 1,348 square feet. That’s plenty of room for the two of us, and even the three of us when the kid comes home from college for the summer. Of course, it helps that we have a MASSIVE, high-ceiling garage, half of which we use for storage, so there’s no need for our third bedroom to be the “junk room.” I just heard a story about a couple who spent nine years building a house in La Jolla for more than 20 million who now want to sell because IT IS TOO BIG.
Doesnt have to, but that is what they are promoting. My last house was a 1300 sq foot 1920’s bungalow that I would take over that new crap anyday.
Speaking of building all the way to the lot line, MBK homes in Corona is building beautiful executive homes that go as high as 4800 SF–some on lots just over 6000 SF.
What executive would want to live in Corona?
You haven’t seen crap until you see what DHI and BZH will crank out for under $150K. I’m thinking stackable concrete boxes like in old Soviet Russia. Except with substandard concrete.
“California has ‘weathered the subprime market storm of 2007′ and the correction is almost over, he predicted.”
What about the stock market and labor market storms of 2008?
http://www.marketwatch.com/quotes/quotes.aspx?symb=tol+kbh+len+ctx+dhi+fnm+aapl+goog+bzh+phm+sbux+peet
It is fascinating to me that the DJIA sold off by a mere -1.96% on the day when my screenful of nonrandomly selected individual bubble-related stocks sold off between -3% (PEET) to -10% (DHI). I guess I am not bad at putting together a short list?
What about DSL (Downey ), down over 5%. They have the most ARMs of any S&L except Countrywide. Plus a bunch of ninja loans made in ‘05 and early ‘06.
Monday should be a good day to buy the dip.
really? Or should expect further dips over the 1H - and keep the powder dry
I think one of the principle roles of the PPT (which was organized in the wake of Black Monday Oct 19, 1987) is to make sure Black Monday never happens again. I hence expect Monday to be a “dead cat bounce” day on all the headline U.S. stock market indexes.
the word rattle indicates to me another shoe ready to fall. unless some on air “talent” thinks up something good over the weekend to say sunday or monday.
Bob, PB is often sarcastic.
No, only the dips will be buying…
Buy it, dip.
“Builders who purchased raw land for development in 2005 were paying as much as $300,000 per acre in the Northern San Joaquin Valley, recalled Franco. She said the record-high land prices pushed up home costs, but land now is being offered for substantially less.”
Generalissimo Franco says the market is still dead.
$850,000 for a house in Atwater. For those in other regions who know nothing of the Central Valley, and of Atwater, this is insane. Merced (7 miles to the east) has for years called itself ‘the Gateway to Yosemite’ - which says alot when your point of pride is 70 miles away.
The local joke is ‘Atwater - Gateway to Winton’. Winton - a gangbanging, low income driveby north of the tracks from Atwater. Beyond belief.
Gotta start somewhere…
I just had to find these “Heirloom” homes to see what all the hubbub was about. http://www.1acrehome.com/default.asp
I’m biased because I don’t like the look of hip roof, but these all look cookie cutter to me. I couldn’t get to the floor plans, but I would bet they are all plain-jane and identical inside.
What, exactly, is ’semicustom’?
‘Heirloom’ homes, my aunt Fannie ….
SemiCustom means a tract home that falls apart in random places, such as: leak roof, faulty wiring, dead spots in lawn, sink holes, etc.
No 2 have the exact same shody build.
One of them roulette houses. Which part falls off first?
Those homes look like an updated version of the “Mansionette” homes built in the 70s and 80s in the San Joaquin Valley. Mansionette was actually the name of the builder- I guess they had a jump on the McMansion craze.
Did you see how happy that couple looked in the picture? I love how they paired a 55 yr old guy grinning ear to ear with a 32 year old women. Sweet.
I particular like that when you go to the finance page the default loan amount is $200,000 and the default downpayment is $20,000. If you are only putting down 20K and financing 180K, where is the other 400K coming from?
It appears to be an oversight of when these houses were selling for $200K and someone forgot to set the defaults to 600K.
Also, I bet they think there is a New Year rush with all the hits their site is now getting.
Oh, also, I see that whites and blacks are represented in the pictures, and I know Atwater as a high population of Hispanics, but apparently they never expected them to move in.
Looks like typical Castle&Cooke in Bakersfield.
When I was a kid, 850k would have bought a whole neighborhood in Atwater.
I think it bought the whole TOWN.
Exactly right, Turnout. My family is from Merced - grandmother still lives there. I’ve been going there all my life. I remember driving up there a couple of Thanksgivings ago from LA and seeing a sign for new homes in Chowchilla “from the low $800s” . I almost spit coffee from my nose. Who the f would pay 800 large to live in Chowchilla I thought to myself. Not only that but I could see the neighborhood being built from the 99. Some of these place are literally a 5-iron from the highway which as you know is not a lightly travelled road. I relayed what I saw to my family when I got to Merced and my brother, always the smartass, said well, when you see a sign for new homes in Planada from the low $1 millions you’ll know we’re in a bubble!
I worked at Camp Winton, but it is nowhere near Winton. (Nearest largish population center is Jackson.)
Emergency
Mandatory Housing Bubble meeting.
This weekend!
Every city every state.
Name the time and place. I will try to get there.
Governator: Can I come? I love emergency meetings….come to mine next veek…..free ballons for the kids and such
What are you serving?
BBQ FB on Joshua tree skewers.
Governator: Apple Strudel……mmmmmmmmm yum.
BlackVader wishes he was back in the world of make believe, where even if the movie you are in bombs, you still get a check for millions…
Ouro, can’t you wait a couple of weeks till I am actually back in California where I apparently belong? (Can’t deal with the weather in this Penna county where Az_Slim was brought up.)
” These opportunities will dry up in short order when the herd starts to move.’”
THE HERD ?! Geez, what an insulting comment. What an azzhole … stupid of him also to open deride yer .. ahem .. FUTURE CUSTOMERS.
The herd has moved, but not in the direction that makes opportunities dry up in short order.
It’s perversely honest, to him potential house buyers are just a bunch of cud chewing bovines.
Heck, we call them “sheeple,” what’s the difference between one artiodactyl and another?
Er, we’re not trying to sell them stuff…
“Finally, he predicts a ‘major change in the home building mentality’ in Sacramento, the Central Valley and Southern California’s Inland Empire. Because of shrinking land values, Nevin says builders will offer ’substantially smaller homes and sell them for substantially lower prices.’ In the Sacramento region, that means more prices below $300,000, he says.”
There are brand new homes for sale @ $169k, here in the Central Valley…
And they aren’t selling.
SMaller homes on smaller lots with NO LOT LINE oh goody, now I can ask my neighbor for more toilet paper WHILE sitting on the throne.. oh goody. How small do these homes/lots have to be for petesake. No landscaping, no trees, no interesting exteriors etc. Oh and careful when you back out of your small garage as you might be RIGHT next to the guy next door as he is pulling out.
How about just lowering the prices on the existing homes NOW.
Oh, did I read that somewhere else? lol
not for me..i will take the smaller home…smaller heat bills, smaller cooling bills.. smaller tax bills. 2008=smaller is better
And that’s why Slim’s ranch house is under 1,000 square feet.
Small spaces concentrate the mind. Large spaces make you scatter-brained.
How ’bout just putting 25 story condos in the middle of the desert instead? Oh wait, they already did that in Vegas.
Very sad- a few years ago, 169K bought you a home in one of the best neighborhoods in your typical Central Valley town. Now, people act like the lower prices are a real sacrifice. Historically, these places have been cheap for a reason: hot in the summer, fog in the winter, some of the worst smog in the country, limited jobs in the smaller towns, plus a host of socioeconomic issues. Plus around Stockton and Sac, a lot of land is in a flood plain.
“Plus around Stockton and Sac, a lot of land is in a flood plain.”
If you want to get technical, California’s Great CV *is* a flood plain.
700k homes are now selling for 400k so it is getting better, really that is what the public wants lower prices more bang for the buck they are in the drivers seat. Pretty much across the board prices for everything is totaly out of hand, a nice sit down lunch cost to much,energy is way out of line,insurance etc, people want to enjoy some life not just sit on a freeeway and then go home and get bills they can’t afford this country needs to sit back and realize that the American worker’s check goes just so far very few people are in the ” i can just about afford anything i want zone”?
“The bottom line: Borrowers of loans up to $417,000 will need to bring more money to the table, which could further shrink the pool of qualified buyers.”
“But it’s beneficial for the long haul, says Brent Wilson, a mortgage strategist with Sacramento-based Comstock Mortgage. ‘I think it’s going to provide better long-term stability to our market.’”
-Considering that JoeJuan Sixpack would have to decide between ’saving for a downpayment’ and drinking beer - well, I just don’t see him going for the savings.
The result is ‘no jumbo loan’ and no home sale at all.
You’re right, but it’s mainly because JJ6P can actually drink beer AND pay the rent. I.e., the key to all this is, it’s still cheaper to rent.
Beer also has a better ROI than a house lately.
Especially if you buy BUD. Better than Coors/Molson unless you’re a Canuck watching hockey.
The Central Valley is going to continue to hit hard. Take a look at Fresno. According to city-data.com, estimated median income in 2000 was $32,236. In 2005, the estimate was $37,800- an increase of 17% in 5 years. In the same period, the median home price increased from $97,300 to $242,500- a whopping 149% increase in price.
How on earth can an economy where agriculture, the school district, and local governments are the largest employers support any median home price above $120k?
It can’t.
Ditto that. I spent a week at Christmas time in Fresno. My BIL was telling me how he would fire any financial manager who told him RE was not a good investment. I know, where’s the punch line? The Kool-Aide is still being put down like a pony keg at a frat party. Everyone in my family and my wife’s family thinks we’re crazy for not having bought a house yet in L.A. Funny enough, we’re the only ones not up to our eyeballs in debt.
Those are exactly the types you need to keep a sharp eye on, because when they fianlly tell you RE sucks, you’ll know it’s buying time. (but don’t tell ‘em where you buy, because they’ll probably need a place to live)
Funny you should mention needing a place to live. Place across the street from me is owned by a big muckety-muck in county government. He bought it for his daughter to live in while she attends the University of Arizona. Mom (from who Mr. M-M was divorced) gave Darling Daughter a used Jaguar for her 1.5-mile commute to school.
That was back in ‘04.
This past summer, Mom lost her job at First Magnus, which is #122 on the Mortgage Lender Implode-o-Meter. AFAIK, the now-former FM employees are still owed their final paychecks. That must explain why Mr. M-M and Mom are once again sharing the same address, which is about 2.5 miles east of here.
That’s the best feel good story I’ve heard in weeks.
I think it’s great to see how the housing bust is reuniting families.
“Mothersell said buyers should take advantage of the big cost cuts now, rather than waiting for home buying to regain popularity: ‘These opportunities will dry up in short order when the herd starts to move.’”
Fear only works on the lemmings, and the lemmings can’t get financing anymore. So quit wasting your breath.
Steve Mothersell?
‘These opportunities will dry up in short order when the herd starts to move.’
What? The opportunity to lose 50%?
The real estate industry is rapidly looking more and more like those one-hit wonder bands that strut about living off their fading glory of past venues. Their heyday ran for 5 0r 6 years and ended 18 months ago - they just won’t admit it. Maybe a Betty Ford Clinic for Real Estate Detox is the next step.
What an appropriate name. He would sell his mother for the right price.
Yesterday I wanted to make some joke about Lying Larry Gasinski’s name (”Gas”-something), but couldn’t think of a good one. Any of you guys?
Larry “Last” Gaspinski?
Larry “SBD” Gasstinky?
[Insert another beer for further insulting names]
Monica Gasinki ?
I think this whole housing thing is silly. I am in my mid 30s. Some of my friends, according to the median incomes charts, are in the top 1% of wage earners. And their wife/husband works too.
They have jobs at top law firms, bankers, etc.
Guess what? THEY can’t afford a house! Or, if they can, it’s in a junk part of town. And that’s the ‘top 1%’!
What about the other 99%?
LOL, do baby boomers really think my gen. or gen Y. are gonna pay them $500K for a stucco house 2 hrs outside the city?
LOLOLLOLOLLL. Yeah, even if we wanted to, we couldn’t! We just don’t have the means.
Amazing.
Testify Richard! Keep spreading the good word about the insanity, along with the rest of us, and it might finally start sinking in to all the chuds out there.
for shizzle. esp. when cool 2BR apts quality built in the 50s 2 blocks from the beach go for 1500 bucks…
Quite right. My furnished 2BR ocean-view vacation rental in Morro Bay is $1400/mo w/ all utilities paid. I grant you, far from urban centers.
Baby boomers think that other baby boomers will fund home purchases for their kids, i.e. our generation.
Yet I’ve met to meet a single boomer who thinks it’s in any way reasonable for them to assist their own children with a house purchase, educational funding, car purchase, or ANYTHING!
Boomers. The “I deserve more” generation.
Hello?
I have.
Income property, tuition, vehicle, long-term investment account, travel….
Most of my friends have as well. What ELSE are we going to spend it on ultimately? Some of us actually LIKE our offspring.
Kid might even reciprocate someday. He knows I’ll track him down and dispatch him forthwith if he tries to hustle me off to anyplace with a duck-watching pond. And the tax advantages of putting property in trust for him works out for both of us.
You can break the cycle of stinginess if you try. It’s a lot more fun for everyone, I think.
Just to give you hope, Big V, I’m a 50+ boomer who put my kids through school and plan to help them buy houses (if they ever want them and can afford the mortgage payment.) I’m the daughter of parents who sacrificed to help me with college. That’s the whole point of family - children receive preparation for life from their parents, and pay back comes 50-60 years later when the elderly parents need help.
Thornberg is going to have to buy a remote starter for a car and get a food taster to test his food. NAR must really hate seeing him get interviewed.
He is the best thing that ever happened to CA used home sales people, IMO. The faster the gaping hole between bid and asked prices is bridged, the sooner used home sales people can start working again. The NAR’s efforts to help keep home prices propped up on a permanently high, unaffordably-priced plateau are misguided.
Hey Ben,
Maybe you can ask Mr. Thornberg to visit your blog for some discussion?
s
Wow, that would be a big attraction. (No sarcasm.)
If needed he can be persuaded by a Token fee, we can all pool a fund to do that. How much does it take? I would commit 50 bucks.
Telling people what they want to hear is what this guy does for a living. I’m not sure what paying him an appearance fee to answer questions here would accomplish, except the comedic value of his 180-reversal and agreement with everything Ben’s been saying forever.
“But it’s beneficial for the long haul, says Brent Wilson, a mortgage strategist with Sacramento-based Comstock Mortgage. ‘I think it’s going to provide better long-term stability to our market.’”
“That’s a nice way of saying that borrowers under these rules are more likely to make their payments and keep their homes.”
That’s a nice way of saying that prices have a lot farther to correct before California homes are once again affordable.
“The economists expect falling land prices in Riverside County to encourage builders to construct smaller homes that will sell for as little as $100,000. Those homes will likely be built east of Temecula and Murrieta, Nevin said.”
Now that the subprime sector has died violently, the building industry is finally starting to take a square look at what future buyers can actually afford. Too bad there is a massive herd of white elephants dotting California’s urban landscape which are priced to sell to an army of nonexistent McMillionaires.
Ah, do I hear the chorttle of a bulldozer’s CAT diesel in the distance?
Employing workers to bulldoze unneeded McMansions would be a good employment of the broken window school of employment stimulus.
$100,000 for homes in Menifee and Perris????
Who is going to buy this stuff? let’s take a look.
Lower income/FICO scores with $10,000 cash in hand. Steady paychecks from a non-consumer dependant business in Corona and W-2’s for the last few years. You can count these on one hand.
Wow what a giant pool of potential. Too bad they sucked this well dry last year.
She said that model will be ‘our loss leader, and its profit margin is substantially lower.’”
Uh Honey, if you’re making a profit its not a “loss Leader”.
Real Estate: Employing the morons you wouldn’t hire for Taco Bell.
Just shows you that not only were they making a huge profit before, but they can still break even at the lower prices to come.
What’s funny/horrible/surprising is, why doesn’t the reporter call this person out on an obvious logical fallacy? Because they are paid by their advertisers to print the REIC story.
It just goes to show that you really can’t believe anything at all you read in the MSM - it’s basically all bought and paid for, and if you doubt it, you have only to look to article after article for years now filled with unquestioning parroting of transparent REIC spin, even printing obvious falsehoods and logical impossibilities without question. Sad. 1984 is closer every day.
“‘2008 will not be very good for home builders,’ said Pam Franco, the new president of the Building Industry Association of Central California. She said there are so many resale homes on the market that builders have had to cut prices to compete, which has dramati-cally lowered profits.”
Cool! Sellers against builders. I’ll just sit up here with my talons wrapped firmly around this branch and wait for the dust to settle.
just a little off topic but who gets laid off first.. the genius who got the firm into the toxic mess or the clerk who makes 25-35 k a year…anyone?
the clerk, of course. The genius knows where the bodies are buried.
OT…. So Old Sallie is gonna cut back.
http://biz.yahoo.com/ap/080104/sallie_mae.html
“Defaults are rising on student loans, and credit-market tremors similar to those linked to the mortgage crisis have recently started to surface in the $85B student-loan market.”
(What else is new.)
“Sharply lower lot values combined with a trend toward building smaller homes by the third quarter will deliver new houses priced below $300,000, Nevin said. ‘Builders will be able to offer better values and people will recognize that and they will come out and buy. It will just be a whole new era,’ Nevin said.”
Here’s the problem with this wide-sweeping statement: It doesn’t really mean anything to most of the major metros in the state. What I mean by this is that in the Bay Area, anywhere remotely removed from crime infested neighborhoods are still pushing the 600k+ price tag. Of course nothing is selling, but I’ve lived here long enough to know that those who own in these pricier areas will fight tooth and nail over ANY form of new development that even suggests ‘affordable housing”
They’ve been trying to build lower income housing out on the old navy base I live near for years now. The area around it is full of Victorian homes occupied by primarily white upper income families.Every time the hint of a new development gets brought up, out come the “Density equals congestion” yard signs. In other words- nothing that will threaten their home values.
To suggest that lo and behold- builders will start plopping out 300k houses in any of the major metros like SF, LA, San Diego, or maybe even Sac is sort of ludicrous. Stockton and other areas removed from industry- sure. But 300k might as well be 600k there anyway, so what’s the point?
> I’ve lived here long enough to know that those who own in these pricier areas will fight tooth and nail over ANY form of new development that even suggests ‘affordable housing”
Absolutely! It’s the “I’ve got mine but you getting yours is harmful to the environment” attitude.
lay off..sorry guys im tired today and was thinking about something else. its almost 6 ya know.
“‘It will just be a whole new era,’ Nevin said.”
Wow, haven’t heard “it’s different this time” in awhile. Apparently Nevin is drinking some of the old Kool Aid.
‘Thornberg said organizations that represent Realtors and builders generally can’t be relied upon for accurate predictions about their industry.’
——————————————————————————-
My God it’s so refreshing to finally hear some SANITY again! I’m anxiously waiting for the big 60 Minutes expose on the NAR (I can dream can’t I?).
There was a significant increase this week of listing in my zip 93552.
At the end of December listing were up 32% YOY. Today they are up 51% YOY.
Also, NODs for the same zip have not only set a new record in December, but the MOM increase is the highest since August at 20%.
Also interesting is that NODs (170) are coming dangerously close to ecclipsing listings (201).
“Effective Jan. 15, Fannie Mae wants bigger down payments on loans made in ‘declining markets’ like Sacramento. It means even if a national lender can get you a loan with no money down, Fannie Mae is now demanding a 5 percent down payment for loans in this market.”
My guy at Wells Fargo told me about this back in December. Counties in California are being labeled as either “soft”, “declining”, or “rapidly declining” and their ltv guidlines are being adjusted by 5, 10, and 15 percent accordingly.
Not sure about Sac, but Contra Costa and Alameda Counties were designated as “declining”, meaning it’s now an additional 10% down.
If 10% became the new zero-down back in August, 20% becomes the new 10% right now.
Good luck to anyone with an adjustable loan looking to refinance.
Long, long time reader, fan, and realtor (who tells his clients to read this blog).
Do you have a URL for that? Is that WFB or Fannie Mae?
Wonder how that affects HELOCs, totally aside from refinancing. For example, existing mortgage with WFB is $20K above water; unutilized HELOC with WFB is $30K; will WFB revoke the HELOC now because the value is pegged as “declining” or “rapidly declining”?
Supposedly fannie and freddie… all conforming loans.
I don’t think they’ll revoke any existing loans. But if there was some kind of clause in the original loan contract that allowed the bank to review the terms (like there is on an option-arm loan), then I’m sure they would try.
For jumbo loans, this is a wells fargo policy so far…but of course they say the other banks will be following suit.
I can’t find anything on the internet yet. Wells adopted the policy end of dec and fannie and freddie were supposed to adopt Jan 15, though my wells guy said they’ve already started.
This is huge news…give it a week or two for people to catch on and we’ll be hearing a lot more about this.
And now to put some numbers in perspective: Burt Reynolds reduced the asking price of his mansion in Hobe Sound, Fl to $10.5M from $12.9M wishing price. Note that Mr. Reynolds has owned since buying it in 1980 for $700,000. (12,538 sq.ft. on 3 acres). He started by asking $15M.
(www.bergproperties.com/blog/burt-reynolds-reduces-the-asking-price-of-his-mansion-in-hobe-sound-fl-to-105m/2779/celebrities). Now what was the price for housing in Modesto in 1980 and what could you have purchased it for? What could you have purchased for $700K in 1980 and sold for today for $10M? Answer is raw land in a good location and sold off at the top of the boom.
The Nevin interview in the Santa Cruz paper has a specially delicious lie in it.
“Q Don’t you have a vested interest in saying things are looking up?
A Nevin: I didn’t take an optimistic position for 2007.”
Google turns up Nevin’s 2007 housing forecast pretty easily.
Jan 4, 2007 - “CBIA Chief Economist Alan Nevin forecasts that housing starts for single-family homes, condominiums, and apartments should total between 155,000 and 170,000 this year, about the same or slightly lower than in 2006.”
Meanwhile, in other news, …
Dec 21, 2007 - “In November, permits were pulled for just 3,151 single-family homes statewide, down 50 percent from November 2006 and down 21 percent from the previous month, while multifamily housing starts — condos and apartments — totaled 2,347, down 36 percent from November 2006 while dropping 41 percent from the previous month. According to CIRB statistics, the single-family production level last month was the lowest recorded during November since 1981, when just 2,452 permits were pulled across the state.
During the first 11 months of the year, production began on 105,002 homes and apartments, down 31 percent from the same period last year.”
Wouldn’t it be nice if a reporter did his job for once?
“According to the most recent statistics, the median selling price of a Sacramento County home is now $388,000 below that of Santa Clara County. Just three years ago, that median gap was $225,000, according to a review of November sales data from DataQuick.”
What’s neat is that the dollar gap should actually be SMALLER now if the prices in those two regions remained at the same ratio to one another. Of course, Santa Clara County hasn’t started dropping yet, but this calculation indicates that when it does, it will leave an impact crater that makes Sacramento look like a stable market in comparison.
Of course, Santa Clara County hasn’t started dropping yet, but this calculation indicates that when it does, it will leave an impact crater that makes Sacramento look like a stable market in comparison.
If that day ever arrives, I will be one happy camper.
This just in….Gary Watts eyes pent up housing demand in the OC!!
(Most all of the comments to his interview with Lansner were decidedly harsh against poor Gary).
http://lansner.freedomblogging.com/2008/01/04/realtor-watts-eyes-pent-up-housing-demand/#comments
A great set of comments indeed. Amazing how few of the commenters there are known to us over here. Only “sunsetbeachguy” and “crispy&cole” were recognizable to me.
The other interesting thing is that Lansner still has a good crop of bulls at his blog; there are some pretty wild “discussions” on occasion.
“….Henry Ung, an Elk Grove real estate agent who specializes in foreclosed homes, said….”
I think Mr. Ung now specializes in foreclosed homes because he sold overpriced homes to bay area speculators in 2005 & 2006 is investments. I have seen his listing on a new, vacant home he tried to flip for his client at $890,000 in 2006. Now foreclosed and listed in the high $400,000’s by the lender!
JJ6pack = J squared?
The Bay Area has so far dodged the worst of this, but not for long. I’m seeing more listings like this one in a nice area of Oakland:
http://redfin.com/stingray/do/printable-listing?listing-id=1116639
The numbers tell the story: long time owner (on the tax rolls for $120K), refi-ed to the hilt ($750K+), got into financial trouble, on the market for 6 months, dropped the price $100K, still not selling, trying to work a short sale before foreclosure.
Or like this one:
http://www.redfin.com/stingray/do/printable-listing?listing-id=1260939
purchased in 2005 for $750K, now on the market for $650K.