Surviving The Downturn In California
The North County Times reports from California. “Martin Kolkey’s family has been building homes for more than 50 years. If income doesn’t improve soon, he says the family business will fold within eight months. ‘Every night I worry about it,’ he says. The only other worker on a recent Thursday morning was his father, Aaron, who mans the phones and is the company’s chief financial officer.”
“‘You see all these gray hairs on my head?’Kolkey said. ‘It’s a struggle every month for me to make payroll.’”
“New home permits in San Diego County for November fell 35 percent from the same month in 2006 to 170, according to data from Burbank-based Construction Industry Research Board. The housing recession appears to have shrunk small builders’ revenues even more. Kolkey, who used to average 40 homes a year that sold for a total of about $24 million, said his revenues are down 70 percent.”
“He has downsized his staff from eight to just three and still struggles to break even.”
“Kolkey, as with other builders in trouble, has an inventory of new homes that he is struggling to sell in a market flooded by a meteoric jump in foreclosures. He has two homes in the San Diego area and about 20 lots ready to be built in Arizona.”
“He said he has slashed prices to below the cost of building and cannot cut prices any more because of bank loan obligations.”
“Many lending institutions have cut off loans altogether, creating a ‘credit crunch,’ said Ben Bartolotto, research director for the construction research board. ‘Working capital is hard for a lot of businesses to come by, and that’s because of the credit crunch,’ Bartolotto said. ‘That’s becoming more and more of a problem.’”
“‘I’ve been doing this for 26 years, and it’s never been this bad,’ Kolkey said. ‘The difference is, in (the housing downturn during) the early 1990s, we at least had people looking. … I don’t have a soul going through my models now. Nobody’s looking.’”
“Mario Landini said he expects his 3-year-old business, which builds single custom homes, to go under by the end of February. ‘I cannot survive this any longer,’ said Landini. ‘I’m very worried. I don’t sleep at night. It’s not easy when you have kids and a family. I’m already looking at other work to help feed my family.’”
“Bob Booker, president of Encinitas-based Venture Pacific Development, said he hopes to have the capital to take advantage of cheap bank-owned properties this year, as he did in 1995 toward the end of the previous housing recession.”
“‘Make no mistake, the market will come back, and it will come back sooner than we think,’ Booker said.”
“Kolkey is also struggling to stay afloat: He is worried about being able to pay off bank loans. He won’t build a home without a signed contract, a change from past speculative building,- and will consider offers up to $150,000 below the original listing on his remaining new homes.”
“‘There’s no profit left,’ he says, shaking his head. ‘Surviving the downturn … that’s the business model right now.’”
The Bakersfield Californian. “Homeowners aren’t the only ones defaulting on property loans these days. Developers, too, are popping up on Kern County’s roster of delinquent borrowers. Some properties have even foreclosed.”
“Troubled loans dog large projects, such as SunCal Cos.’ $74 million default to Lennar Corp. for a planned housing development in Shafter, as well as small plans with less than $1 million at stake, county records show.”
“While not unprecedented in California, the sudden crop of developer defaults are apparently a first for the metro area.”
“In the early 1990s, Bakersfield appraiser Gary Crabtree said, the Palmdale-Lancaster real estate market cratered because of layoffs in the aerospace industry. Pinched developers there let ’street upon street’ of partially constructed homes go back to banks, he said.”
“In the northeast, signs of the building bust are everywhere, even impacting developments that haven’t defaulted. New homes in the Four Seasons at Bakersfield retirement community, for example, sit amid a sea of delinquent dirt.”
“Glenn Shellcross, a 72-year-old retiree, knew the housing market had slowed when he bought a $365,000 home in the budding neighborhood last summer. The builder, K. Hovnanian, threw in lots of extras. But last week, K. Hovnanian stopped heating the swimming pool to save money, he said.”
“‘I understand only three people were using it,’ Shellcross said.”
“Tom Cook, general manager of Bakersfield paving and grading firm Burtch Construction, said Burtch is owed money by Dunmore Diamond Ridge LLC for work at a southwest Bakersfield project touched by a complicated November bankruptcy filing. ‘We haven’t been paid anything at all,’ Cook said about a $900,000 bill submitted in mid-May.”
Inside Bay Area. “City leaders are poised to allow another developer to slow down the assembly line of new homes being built. During Monday nights Manteca City Council meeting, Anderson Homes will ask for an extension on sewer allocations for buildout of its Paseo West Development.”
“In October 2007, the City Council authorized staff to negotiate amendments to development agreements, while amending the amount of time allotted for sewer allocations from three to five years.”
“Andersons Paseo West subdivision garnered national attention when 34 unsold homes were part of a large-scale public auction to reduce standing inventory.”
“‘Were trying to make Paseo West, like all of our other developments, all it can be and were trying to take every step to see that happen,’ said Craig Barton, Anderson Homes chief financial officer.. ‘The way the market is now, it makes sense to wait.’”
“At the time the council voted for the extension, an attorney representing local developers estimated somewhere between 1,000 and 1,200 empty homes or a three-year cumulative inventory of foreclosures, resale homes and brand-new homes exist in Manteca.”
“However, other developers arent exactly banging on the door to build with the housing markets current state, Assistant City Manager Karen McLaughlin said.” “This just gives those who had planned to complete buildout of subdivisions more time, so they dont sit there empty. Because of where the market is, it makes sense, she said.”
The Ventura County Star. “It’s the ideal living situation, planners say — working, shopping and dining within a short distance of your front doorstep. As Ventura County cities run out of developable land, mixed-use development is a model city leaders are eager to implement.”
“The Marketplace, under construction on a portion of Tapo Street, is the city’s first example of ‘village-style’ living. City leaders are looking to similar developments as a way to rev up the city’s economic engine.”
“The 6.16 acres between Tapo and Winifred streets, is in an area long in need of revitalization. The property has sat vacant and fenced since the Northridge earthquake in 1994.”
“The Marketplace is meant to attract young professionals as well as seniors.”
“Right now, a ‘no down payment, no closing costs, no kidding’ banner hangs outside the development. But like most of the surrounding area in this slow market, the units have not been selling well. The model townhome units were completed in November and the builder is looking to sell them from the low $400,000s to the mid-$500,000s.”
The LA Times. “Last month, the Bush administration won voluntary agreement from lenders on a five-year freeze on interest rate hikes for borrowers who are current with payments, live in the mortgage property, face loan increases between now and July 2010 and meet other criteria.”
“Kevin Stein, associate director of the California Reinvestment Coalition, said an October survey of 33 nonprofit groups that counsel borrowers showed that they were having a tough time getting the responses and results from lenders they need for their clients.”
“‘There’s a lot of chaos,’ Stein said. ‘There’s a lot of lost faxes, unreturned phone calls, service representatives changing in the middle.’”
“He said lenders’ responses seem to be: We’ll have someone get back to you.”
“Is any institution doing a fair job of working with customers? ‘From where we stand, it doesn’t look like it,’ Stein said. ‘It’s a morass: People face incredible hold times when they call, the lenders don’t have enough people servicing loans and there’s no public information that drives accountability.’”
“L.A. attorney John Torjesen, who represents people in litigation over such loans and foreclosures, says to start by digging out escrow documents and actually reading them.”
“The most important terms of the loan, the frequency and size of increases, possible prepayment penalties or balloon payments, should be all within the note itself.”
“‘Most people are surprised by their adjustables,’ Torjeson said. ‘Between mobile notaries who brought them the documents at closing and the ease and speed of getting the loans, most people didn’t entirely understand what they were getting into.’”
“‘I’ve seen loan documents that say no prepayment penalty on the first page and on page 8 it establishes a prepayment penalty. Most mortgages require that the property have insurance, but I’ve seen documents that ultimately force the borrower to pay for very expensive insurance selected by the lender,’ he said. ‘People didn’t know what happened until it was too late.’”
“Lawyers such as Torjeson and Dorothy Herrera, senior attorney with the Legal Aid Foundation of Los Angeles, can help some people, those who can show they were misled by a broker or ended up with a loan containing a clear violation of the Truth in Lending Act, including the failure to disclose key information.”
“But many of the consumers contacting Legal Aid don’t qualify for those protections, Herrera said, and are just in over their heads financially.”
“Other borrowers, who have little or no equity, may look at short sales, where the lender allows the borrower to sell the house for less than the debt, as a strategy to protect their credit rating so they can buy another home later.”
“‘We call it a soft landing,’ said Lori Gay, president of a national network of nonprofits that deals with homeownership issues. ‘Sometimes it’s the best we can do.’”
The County Sun. “The sky isn’t falling just yet in San Bernardino County. But the housing meltdown is expected to push several cities into financial balancing acts as they rake in millions less in residential property-tax revenues.”
“‘We’re now looking at growth rates in property-tax revenue statewide going down 4 or 5 percent each year for the next few years,’ said Michael Coleman, fiscal policy adviser for the League of California Cities. ‘For most cities, that’s the top source of revenue these days.’”
“The Inland Empire continues to suffer from record foreclosure rates and a sour housing market, which is pushing home values drastically lower. In turn, property assessments by the county are clocking in at values far less than in previous years.”
“‘There are definitely more (taxpayers) who were delinquent by Dec. 20, 2007, than there were in 2005 or 2006,’ said Annette Kerber, assistant treasurer-tax collector/public administrator. About half the amount of property taxes owed for fiscal year 2007 have been paid. Taxpayers have until April to ante up the rest.”
“‘The caution flags are flying,’ said Mel Drown, finance manager for Fontana.”
The LA Daily News. “It’s a new year, how about a new job? Before dusting off that resume, it pays to find out who is hiring and which industries are hot. To answer those questions, the Daily News interviewed professional labor market analysts throughout Southern California.”
“(A) big industry that experienced massive layoffs last year, real estate professionals, shouldn’t expect to see any interest from employers for at least four to six months.”
“Overall, job seekers can expect a mixed bag in terms of job prospects. After all, ‘We’re on recession watch,’ said Jack Kyser, chief economist at the Los Angeles County Economic Development Corp.”
“The banking industry is hobbled by fear amid the mortgage credit meltdown. ‘Everybody is being ultra-cautious,’ Kyser said. ‘One of our people was in an auto accident and went to Enterprise Rent-A-Car, and the clerk had been working at Countrywide.’”
‘L.A. attorney John Torjesen, who represents people in litigation over such loans and foreclosures, says to start by digging out escrow documents and actually reading them.’
Ya know, for a state that holds itself out as so great and advanced, you have to wonder with public statements like this.
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Any state that has elected two actors as Governors has lot of clowns.
Jas
What about countries that elect and later revere actor-presidents?
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A bunch of drunken clowns. Let the Kool Aid keep flowing.
Jas
If not these actors turned governors than who?
I dont see any good demos out there…
It was a great decade when Regan became president.
Or may be you prefer Mondale… yea now that is a Clown!
Don’t forget, one country reelected the actor-president
Much to the dismay of the FORMER Soviet Union and San Francisco.
Yet Congress keeps inviting people like Julia Roberts and and Bono waste the government’s time with their idiotic blather. I guess it’s good for a photo-op and attracts cameras.
Oh yeah, damn that actor-president for ending the Cold War and getting our hostages back from Iran. Carter did waaay more for this country….
The peanut farmer was awesome.
If you like peanuts……….
Governator: Make that one actor and one actor/action figure……zank u
Make that 3 actors, Remember George Murphy.
The city of angles is all about:
see me-dig me
Details have always gotten in the way of things, in el lay.
Sweet my work are the engineers for Tapo/Winifred.
“‘I’ve been doing this for 26 years, and it’s never been this bad,’ Kolkey said. ‘The difference is, in (the housing downturn during) the early 1990s, we at least had people looking. … I don’t have a soul going through my models now. Nobody’s looking.’”
If nobody is looking, who is buying? ‘Tis a puzzlement.
The new home sales #’s are based on signed contracts, wtih cancelation rates over 50% only the true idiots are buying.
The idiots think that the price plummet will stop, on the day that they buy.
I remember the early 90s very well. I owned three homes at the time. If this is going to be worse than that time, then I would be worried.
That is, I would be worried if I was in debt and did not follow this blogs advice over the last few years.
It already is worse than the 90s. I lost 20% on my home sale in 1996. Many people are losing more than 20% now when they sell.
For those that bought last month, this is a kick in the pants,
http://www.pacificunionhomes.com/claremont_crossing/index.php/featured_home.html
Still overpriced! Manteca!? Pleeeze
If you paid THIS price in Modesto you DESERVE a kick in the pants!300k+ in Modesto?
Sorry- Oakdale, not Modesto. Don’t even have the Hershey factory anymore- who can afford this there?
Yup, the closed the Hershey factory and moved it to Mexico.
Ahh, but Oakdale is on the way to Yosemite.
Who knows Oakdale could be called the “2-1/2 Hours Still to Go Gateway City of Yosemite”
the=they.
Dang it, typing to fast and not reading before I click on the “Add comment” button.
Yup, the closed the Hershey factory and moved it to Mexico.
Hardly. Most of Hershey chocolate made for the U.S. is still made in plants in Pennsylvania and Virginia. When companies close plants in the U.S., why doesn’t anyone ever consider the role of the productivity of the local workers? Everybody except those local workers benefits when management finds cheaper ways of producing a product. I love it when management is not afraid to take aggressive action.
Thanks Paul. My beef with much of US press is that everything is cast in terms of Workers vs Management, without ever putting the consumer into the equation.
When companies close plants in the U.S., why doesn’t anyone ever consider the role of the productivity of the local workers?
Because those local workers were the ones actually *producing* the wealth. We all can’t be managers, salespeople, and stockholders in a pure tertiary economy.
Somebody’s got to still *create* the wealth, here, or we’ll see the standard of living of J6P fall to that of a the 3rd world.
Yeah, I love saving a penny per candy, screw those overpaid AMERICAN workers !
Pay so much to see it eventually bulldozed. Manteca will eventually return to its true intrinsic value — lard
Notice the orange mesh fence in the background. Wonder why they don’t include any background in the picture? Because it’s in MANTECA!!!
‘One of our people was in an auto accident and went to Enterprise Rent-A-Car, and the clerk had been working at Countrywide.’”
__________________________________
Probably making 20% of previous salary also. At least person has a more respectable job now.
I can top that. We had a visit to our IT department from a Microsoft technician a couple of weeks ago whose previous job was with New Century Financial. He joined them after jumping out of tech when that bubble went bust. Lucky for him, he still had tech skills and was able to jump right back into tech after NC went belly-up.
When he mentioned New Century, I said, “Wow. I hear there was a whole lot of bad behavior over there.” To which he agreed, and said, “And there’s a lot of pain coming, too. A whole lot of pain.”
Here in West Hollywood, so far what I’m seeing is a lot of denial. There was a precipitous drop in the number of condos for sale in December — from 225 to about 170 — and I expect a lot of these are either looking for leases or going back on the market in a few months. People are still very, very slow to lower prices in any kind of significant way — it would appear they’re expecting some kind of miraculous market comeback in the Spring.
Oh. Dear.
Maybe he can be promoted to fleet manager and split illegal cash-back at signing from the auto dealers when they lease new cars.
From the SD story of builders going bust - What happened to all the profits?
Also in 2005 on this blog all we kept reading was “WE LEARNED FROM THE LAST” - I gues that was BS!
lol
Builders are unable to learn. We have the greatest overhang of inventory ever.
Not to mention, the high prices are scaring away employees and thus employers. I see thousands of units going up on land that used to be industrial or industrial/commercial zoning. Once the structure is built, its going to be too expensive to reverse the process.
In your neighborhood do you see as many ‘for lease’ signs at commercial centers as I see? Every center has a for lease sign up! Partially due to new commercial construction (e.g., a local mom and pop ‘hot spot’ restaurant is moving to a much more prime location… with a discounted lease as the new center needed the foot traffic. The old center… is on the downhill anyway. Win-win for the restaurant owners!)
Then I shiver when I extrapolate to the Florida markets… ouch. There aren’t enough Canadians in this world to buy up their surplus condos…
Got popcorn?
Neil
And when the hot spot restaurant moves to a big shiny new place the food is never as good.
Speaking of hot spot restaurants and good food, the rat infested Taco Bell in the Village reopened as a T-Mobile store. Those poor rats. They have probably all relocated to The Pleasure Chest. They are left with only the edible undies to sustain them. It isn’t fair.
Chilis or Applebees buys them out. Chalk up another win for corporate amerika.
Seeing the for lease signs on commerical buildings here in San Mateo County.
Lots of for lease signs here too, new and old CRE, warehouse, retail, offices. what was the deal, anyway - big tax break to build or just EZ money?
Irvine,Ca has lots of new buildings off the I5 between Jamboree and Jeffery Rd. All for sale or lease. OUCH!
Lots of condos for sale there too (Irvine Spectrum)
Lots of For Lease signs up all over the valley in ‘oldlocations’
Locations where I wouldn’t think they would ever have ForLease signs because of constant visibility/traffic.
Guess new locations must offer great “incentives”.
Not only did they learn from the last night, but it was also different this time. Different but the same outcome.
Oh yea LOL it was BS alright… will they ever learn…
No problem in Nocal … builders still think their insulated
even when sales are going down 30-50 down in many areas.
*LAST BUST
“Glenn Shellcross, a 72-year-old retiree, knew the housing market had slowed when he bought a $365,000 home in the budding neighborhood last summer. The builder, K. Hovnanian, threw in lots of extras. But last week, K. Hovnanian stopped heating the swimming pool to save money, he said.”
“‘I understand only three people were using it,’ Shellcross said.”
The heat is only on Hovananian, as they burn through money…
“Glenn ShellShocked said last week, K. Hovnanian stopped heating the swimming pool to save money, he said.”
….then they removed the Cardiac Defibrillators, the hand soap and toilet, and then filled the pool with Piranha.
Ara and company have a lot more to worry about than a heated pool.
http://finance.yahoo.com/q/bc?s=HOV&t=2y
Farewell, it’s been good to know ‘ye.
But did you see that blip at the very end of the graph? The stock went up by .01 when they stopped heating the pool.
That was funny !!
“real estate professionals, shouldn’t expect to see any interest from employers for at least four to six months”
I was hoping it would say four to six years!
now now…
You’re interfering with the NAR’s ability to collect dues! If the recovery is six months away, its worth signing up for the new year. If the recovery is more than 12 months away…
ROTFL
Got popcorn?
Neil
Maybe the NAR should consider serving its constituency by talking sellers into lowering their wishing prices to levels where homes will start selling again. As I posted on another thread today, trying to convince buyers to “buy now or get priced out forever” at this point is like kicking a dead horse in the hopes that it will stand up and let you ride it.
Yes - absolutely, but telling sellers that their twenty percent per annum wasn’t in the bag after all…might result in some “altercations”.
or lawsuits.
Probably both.
munch munch munch…
Oh… Let the games begin!
Got popcorn?
Neil
This recovery will have a longer gestation period than an elephant.
Well, fellow HBBers, I just got my California real estate sales agent license this week. Please don’t call me a realtwhore!
Egad hobbyist, why did you do that? Are you planning to buy something yourself? Or do you think you will find clientele?
No, no. I have the best job in the world, but it’s very demanding and I’m thinking of retiring. I really enjoy reading about real estate, and I’d like to start dabbling in it in the future. I don’t think I’d be a good salesman - I’m too outspoken and frank. But I’d like to get a brokers license and help family buy and sell their houses in a few years. Plus it only cost $300 for the three on-line courses, exam and license fee.
Congratulations. Having access to MLS is the absolute best way to find bargain rentals.
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“He said he has slashed prices to below the cost of building and cannot cut prices any more because of bank loan obligations.”
He should gladly let the bank assume the obligation of the homes. Let the bank sell at a lower price that market will bear.
Jas
and also added
“‘Make no mistake, the market will come back, and it will come back sooner than we think,’ Booker said.”
Sooner than we think? Based on what? Ahh yes, wishful thinking strikes again. What an investment strategy. Where do i sign up?
The Market will come back sooner than we think?
If we think the market will come back sooner than we think, and it comes back sooner than we think, didn’t it come back exactly when we think?
Sorry, I love the stupid quotes from these idiots.
If they want the RE market to come back, perhaps they should try burying a WHOLE LOT of RE agents upside down in their gardens like those St. Joseph statues
That’s what I don’t understand - why does everything think it’s going to come back and become 2005 again? Those people said the same thing in 2001 only to see the market hit bottom again in October 2002, and that was a mini-bubble compared to this one.
I spoke with a friend tonight, a perennial housing bull. He mentioned that the market will return quickly because Europe is so expensive, so it will certainly spread over here. He said that will happen because either Americans will start paying more for houses or foreigners will buy up everything. Basically, the argument made no sense but it’s possible he was trying to comfort himself having just seen the neighbors’ house sell for $60,000 less than he bougbht his for in 2005.
“Many lending institutions have cut off loans altogether, creating a ‘credit crunch,’ said Ben Bartolotto, research director for the construction research board. ‘Working capital is hard for a lot of businesses to come by, and that’s because of the credit crunch,’ Bartolotto said. ‘That’s becoming more and more of a problem.’”
When I read quotes like this, it makes me wonder if we’re being misled by terminology again, as in the case of the MSM using “subprime” as shorthand for a much bigger, broader problem.
I keep hearing it called a “credit crunch,” but isn’t it really a “debt crunch?” It seems to me, in most cases if banks are closing off lines of credit, it’s because the borrower is already up to his neck in debt (possibly behind on payments) and the bank has little confidence it will be paid back.
I guess what I’m saying is, just because lenders have finally been forced to return to prudent underwriting, that doesn’t make it a credit crunch. All they’ve done is close off the spigot on stupid lending, but since that’s the only way many borrowers could get credit for the last couple of years, suddenly the evil banks are putting on a “credit crunch.” I’m entitled to free, easy credit, and it’s the bank’s fault that they’re “crunching” me and withholding it!!!
– Judge Smales
“You’ll get nothing and like it”
It is a “bad credit crunch”. If I walked into a bank and told them I wanted to take out a loan for, let’s say, $25,000 at 7%, they would be all over themselves to give me that loan. If I asked for a loan for $750,000 at 5% they would tell me to go farg myself. One is a lender’s dream. One is a future write-off. These REIC morons just can’t understand that lenders would still be very willing to make the first but will no longer make the second. That has them perplexed.
Just remember that the REIC is not very bright and it has no integrity. That should explain the situation.
For years and years, the banks have been totally uninterested in making $25000 loans at 8% or 9% or 10%. They were too busy making $750K loans at 5%. I think the small loans cost them too much in processing, relative to the actual amount of interest earned over the life of the loan. The banks never provided me with any effective competition at all. Other loan originators would “do” these smaller loans, but always wanted huge fees that my clientele didn’t feel like paying. Hence, my business.
I’m so sick of the subprime boogeyman. What a convenient term for what is just the tip of the iceberg.
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“I don’t have a soul going through my models now. Nobody’s looking.’”
Looks like they are scared of the ghost inside (the price tag)!
Jas
After reading the newspaper article, they can just wait until the bank owns the property and get the real discount
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“Mario Landini said he expects his 3-year-old business, which builds single custom homes, to go under by the end of February. ‘I cannot survive this any longer,’ said Landini. ‘I’m very worried. I don’t sleep at night. It’s not easy when you have kids and a family. I’m already looking at other work to help feed my family.’”
At least we have a sane guy. His timing to start the business couldn’t have been any worse.
Jas
“expects his 3-year-old business,”
- Here is a young guy who probably had construction experience and took the ‘plunge’ to the big time.
In SoCal this was exacerbated by the ‘Home Flipper’ shows. I work in the beach area and saw many folks becoming their own ‘contractor’ trying to remodel homes.
This guy had no ‘business model’ except ‘let the good times roll’.
If he had business sense, he would have got into the market in 2002 when it was picking up, not jumping in at the top of the bubble. Reminds me of the internet startups of 1999/2000.
“Bob Booker, president of Encinitas-based Venture Pacific Development”
http://www.venturepacifichomes.com/
I took a peek at this local builder’s site.
Its just more of the same crap that made housing unaffordable.
It gives me “house envy” just scrolling thru
When these stupid mansions are in the high 300’s, maybe.
For a cool couple million you think they could come up with something better than fugly. One of these McMansions looks like it ate a couple smaller McMansions.
“It gives me “house envy” just scrolling thru”
Not me — those homes make me tremble. I couldn’t imagine being on the hook for something like that, and I wouldn’t want to raise my kids in something like that either. I imagine that someone who lives that lifestyle has to take advantage of a lot of people a lot of the time. I’m satisfied with my lifestyle, but I would really appreciate the warmer weather of a lower latitude.
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“Bob Booker, president of Encinitas-based Venture Pacific Development, said he hopes to have the capital to take advantage of cheap bank-owned properties this year, as he did in 1995 toward the end of the previous housing recession.”
1995 is years away, Bob. Shouldn’t you wait at least 4 more years?
Jas
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Am hoping that Bob is a lurker on HBB. Otherwise, he would be walking blindly into bad deals at the wrong time.
Jas
Make no mistake, the market will come back, and it will come back sooner than we think,sooner than we think, sooner than we think………….Daddy….this stupid windup man is broken.
As soon as someone from the REIC starts a quote with “Make no mistake …”, you just know it’s going to be a mistake.
“sooner than we think.” Hmmm. He might be right about that one. I’ve been thinking housing wouldn’t turn around until, say, 2014. But it might be June or July of 2013, a little “sooner than I think.”
Those REIC crystal-ball guys … bunch of geniuses!
— Judge Smales
“You’ll get nothing and like it!”
I believe the “crystal-ball” had developed some large cracks.
I think most of these ” fortune tellers” have been smoking a large amount of crack.
“As soon as someone from the REIC starts a quote with “Make no mistake …”, you just know it’s going to be a mistake.”
++++++++++++++++++
Sort of like when someone says…
“trust me…”
I immediately do the opposite in listening to their story.
Accounts Unreceivable
“Tom Cook, general manager of Bakersfield paving and grading firm Burtch Construction, said Burtch is owed money by Dunmore Diamond Ridge LLC for work at a southwest Bakersfield project touched by a complicated November bankruptcy filing. ‘We haven’t been paid anything at all,’ Cook said about a $900,000 bill submitted in mid-May.”
General forecast: shitstorm on its way. Seek shelter.
Right now, a “no down payment, no closing costs, no kidding” banner hangs outside the development. But like most of the surrounding area in this slow market, the units have not been selling well. The model townhome units were completed in November and the builder is looking to sell them from the low $400,000s to the mid-$500,000s.
Lower prices for workers
And
“Those people that are workers, once they are qualified for loans, will have a much better chance to get into homes,” Tapking said.
In 2006, the average annual income for an employee in the education and health services field in Simi Valley was $43,458, according to a Ventura County Economic Forecast report by UC Santa Barbara. That’s up from $33,703 in 1999
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10X income to get a condo in east Simi Valley ? City better pay more if it wants its workers to live in Ventura County.
No buyers, no interest, no kidding.
Hi all,
I’m trying to determine if I should stay in Santa Barbara CA, and my concern is that prices won’t drop enough here to afford a SFH for my family on my income (~120K, 100K+ ready for downpayment). Could I get your take on what prices may come down to? For example, this is a 3BR house in an area I’d like to buy in eventually:
1210 Del Oro Ave Santa Barbara CA 93109
May be a bad example, as current ridiculous wishing price is $1.3M, but here’s sale history from Zillow:
08/12/2003: $927,000
07/30/1999: $433,500
Any ideas on what a place like this should bottom out at? Thanks for your assistance.
$433,500 (inflation-adjusted to 1999 dollars)
“inflation-adjusted to 1999 dollars”
Is that “wage inflation” adjusted, or “cost of food and gasoline” adjusted?
Actually both. The need to buy food and gasoline subtracts from labor market income available for a home purchase.
(Also income effect come to think of it…)
At first glance, it might appear that the income effect of higher food and energy prices (inflating more rapidly than labor market income) would work in favor of reduced home purchase demand, while declining home prices would work in favor of increased purchase demand. This shallow-headed analysis is flawed for at least two reasons:
1) Lending market constraints
Most buyers don’t think the price of a home is the sticker price, but rather the monthly payment. Payment option ARMs with teaser rates gave otherwise-unqualified buyers a means of purchasing homes they could not afford by offering them an “affordable” initial monthly payment (which has been frozen in place by the govt for a select few) — never mind potential net worth implications! To the extent these deals are no longer available, the monthly payment, and hence the effective price for a FB to purchase a home they cannot afford, has increased, even as home prices have declined.
2) Risk of catching a falling knife
News that real estate prices some times go down by $50,000 or more in one year has presumably made at least some prospective buyers a bit gun shy.
This is something I have been wondering about as well- food and fuel through the roof,wage increases pathetic, taxes up-the other big variable is a reduced pool of truly qualified buyers- lots of bodies out there but who actually has any cash? I think this house will drop to under $375,000 at the bottom…
“inflation-adjusted”
If you figure 3% inflation from 1999, you get a price in the mid 5’s.
However, if you extrapolate the 10 year trend line from Zillow on that particular property, you get somewhere in the neighborhood of $1M.
Just rent a comparable house for a few more years, save the amount you are saving on ‘not throwing your money away on mortgage interest’, and see what happens.
“Just rent a comparable house for a few more years, save the amount you are saving on ‘not throwing your money away on mortgage interest’, and see what happens.”
That’s basically what I’ve been doing for 7 years, but am getting tired of renting and moving around… Just wondering if it’ll be worth bothering to wait and stay in SB.
What industry are you in? Some of the sites there are being shut down due to the difficulty of recruiting. If you’re in a stable industry and position, you’ll do fine. But its going to take a long time. Expect 3 or 4 more years. Are you willing to wait that long?
Got popcorn?
Neil
Software - No guarantees in this industry, but skills are portable enough and current position is fairly stable. (Yes, recruiting is definitely tough here.)
3-4 is just fine if I can settle in to someplace I like! I.e. not waiting for a condo or ‘urban infill’ that’s for sure.
You’re on the right track by asking good questions and doing your research. You are further ahead than 99% of the Koolaid drinkers who thought that song would never in musical chairs (Houses?).
Good luck in your decision.
East Beach, I had a variant of this conversation here a couple of days ago — I’m itching to buy a house, tired of renting, and wondering when I can jump in. I think we’ve just crested the hill, and there are some steep drops ahead. At this point, I’m primed to wait at least a year, but perhaps longer depending on what it looks like a year from now.
“07/30/1999: $433,500″
Man that really takes me back to the good old days.
I’m getting nostalgic looking at 433k.
IMO I would look elsewhere. Santa Barbara will never change. Moved to CA in 1973, looked around So Cal, loved SB, but quickly discovered the rich love it also. Employers were kept out and prices were higher than anywhere due to strong building restrictions. The rich locals only wanted other rich people to live there…..so I moved on. let em have it. Life is too short.
“Santa Barbara will never change. Moved to CA in 1973, looked around So Cal, loved SB, but quickly discovered the rich love it also. Employers were kept out and prices were higher than anywhere due to strong building restrictions. The rich locals only wanted other rich people to live there…..so I moved on. let em have it. Life is too short. ”
I was in SB wednesday to visit a friend at a hospital there. Took a short walk down state street and walked around the area just to the north of central historical dwtn SB. There was a surprising number of immigrant hispanics in that area, and yes they live in that area, in the low-income apts abounding there. Someone has to do the bottom rung service and labor jobs in SB. A rich city like SB with so many well-kept homes requires a plebian class to keep up those maniured lawns and gardens.
SB residents also tend to keep up their homes thru remodels and restoration instead of doing complete teardowns. Saw lots of nicely kept up clapboards and craftmens.
SB is indeed a suberbly walkable community with gorgeous weather and some nice parks, gardens and historical bldgs/ musuems, but there are a few ragged edges if U poke around the outskirts of old dwtntown.
Prices will drop to 50% from peak. Once it starts, it will go more quickly than you had hoped.
“Just wondering if it’ll be worth bothering to wait and stay in SB.”
I left there in 1991 and never looked back. I miss the beach a little (spent many a day on east beach), but that’s about it.
>“Troubled loans dog large projects, such as SunCal Cos.’ $74 million >default to Lennar Corp. for a planned housing development in Shafter
Chuckle.. they should be able to remember where that happened
“…went to Enterprise Rent-A-Car, and the clerk had been working at Countrywide”
Remember when the subprime mess hit early in 2007? Countrywide said - “There are no problems here, in fact we are hiring!”
The burning question is…did the clerk keep their CFC wristband?
“‘I’ve been doing this for 26 years, and it’s never been this bad,’ Kolkey said. ‘The difference is, in (the housing downturn during) the early 1990s, we at least had people looking. … I don’t have a soul going through my models now. Nobody’s looking.’”
$oul Rapture
Ron Paul fans: there will be a webcast 5 pm EST of a NH town meeting with Dr Paul answering questions. (Eight minutes from now.)
Missed it. However on Cavuto, on FBC, the worry was that both Iowa winners were being populists and against capitalism. Charles Payne and Neil and some other guests were agreeing that it could drive down stocks. Jonathon Hoenig smartly brought up the fact that there is only one capitalist in the Republican side and Fox did not allow him to participate in tonight’s debate. Smug remark by Hoenig. Neil Cavuto jokingly said something that that’s the last time Hoenig will be on Fox. We Ron Paul fans knew that FNC was doing something wrong. But even Neil Cavuto seems to agree. We’ll see how Ron Paul does in New Hampshire. Pundits expect 8%.
One of the main rules of making a presentation is know your audience.
Town hall in Iowa, cameras rolling = talk populist and against big corporations.
Private Pharma boardroom in Jersey with other CEOs = talk business
Quick story from the Cali central coast market…
Real estate still pops up its head in dinner conversation, but now it’s almost all negative. I tend to still keep my mouth shut, and smile and nod compassionately.
However, it’s hard to bite my tongue when smart, well educated people tell me (as one did at a dinner out recently) that he still doesn’t want to rent, becasue he needs the mortgage interest deduction…and this coming from a guy that had his mortgage reset up $1000 (!!!) recently. *Sigh* I guess with that $1000 increase in interest, he can deduct even more interest expense from his taxes.
Just smile and wave boys, just smile and wave…
When I hear people say things like that, I cease to think of them as being “smart”.
I thought you were smarter than to call someone smart who buys to take a tax deduction.
Okay ya’ll. You are warned. Remove comestibles from the area of the keyboard before reading.
http://darwinawards.com/darwin/darwin2007.html
They can keep the Academy and Emmy Awards, give me the Darwin Awards any day.
Too bad they can’t televise the Darwin Awards
Oh, those poor bears.
‘The Zoo director said of the incident,
“Only an idiot would jump into the bear cage.”‘
Lucky bears. Had they been impounded in a California zoo, they would probably have been shot for summarily meting Darwinian justice.
“Okay ya’ll. You are warned. Remove comestibles from the area of the keyboard before reading.
Speaking of darwinism and the theory of evolution. Reading accts on Bens blog about all those folks buying half- million $ homes on $60,000 family income or illegal strawberry pickers getting $700,000 homes or lenders approving $500.000-$700,000 loans for properties in LA SCentral bombed out gang- infested zips I have come to the conclusion that Home Sapiens Sapiens( the american variant), has barely evolved above the intelligence level of Australopithecus Africanus(one of the early man-apes from which we supposedly evolved) .
On the other hand i have encountered plenty of LA criminal predators who never evolved out of the Neanderthal stage.
Just how did those hedge funds lose all that money in August?
http://www.cfo.com/article.cfm/10317274/c_10346944?f=magazine_alsoinside
What lost money? If it was not reported in the MSM, then it didn’t happen.
Here’s the money quote for you, Stucco
Although Lo predicts further hedge-fund losses stemming from the subprime mess, with more costly unwinding of long/short positions, he maintains an optimistic outlook for the industry and financial markets. “We have an enormous set of resources to draw on to deal with these issues,” he explains. “I have a great deal of confidence in the President’s Working Group on Financial Markets, in Fed chairman [Ben] Bernanke, and Treasury Secretary [Henry] Paulson.”
Perhaps Lo is contemplating a possible future career in govt?
Or in stand-up comedy!
“We have an enormous set of resources to draw on to deal with these issues,”
What? Granny’s savings?
The presentation for that article is at:
http://econ-www.mit.edu/files/2103
More of the smelly stuff hitting the air circulating device.
http://www.huliq.com/46547/missouri-homeowners-receive-99-million-mortgage-lenders
“Kenneth C. Ketner of Newport Beach, California, the former chief executive, is serving 57 months in prison and has been ordered to pay $9.27 million to banks he fraudulently swindled last year.”
What I want to know is when The Carrot is gonna get it.
Mission acCOMPlished
“Right now, a ‘no down payment, no closing costs, no kidding’ banner hangs outside the development. But like most of the surrounding area in this slow market, the units have not been selling well. The model townhome units were completed in November and the builder is looking to sell them from the low $400,000s to the mid-$500,000s.”
Good looking people get more and better loans.
http://papers.ssrn.com/sol3/papers.cfm?abstract_id=972801
What about stupid thinking people?
Is this a joke? The abstract states that the study was based on an internet lender. How do internet lenders get to see what a loan applicant looks like?
I think they have to send in a picture, but I agree with you, it sounds a little fishy. She says “beautiful” people are 3x more likely to default on the loan. BS. Beautiful people have an easier time finding someone else to pay their bills when needed. I’d like to see all the data and where she got it from, but I couldn’t find a link to it.
Oh, never mind, I guess I didn’t give the page enough time to load. I see the data at the end of the paper. There are quite a few. Maybe if I get bored enough I’ll try to figure out where she went wrong in coming to that 3x number. Social scientists are notorious for using statistics incorrectly. Unfortunately, nobody cares enough about their findings to actually check their work.
Many studies show that the physically attractive receive preferential treatment throughout life. If this extends to lending (reasonable assumption), then credit is being extended to attractive people more often than to their unattractive peers, all other factors being equal, meaning that ‘purty’ marginally-creditworth people are more often getting loans. Once the loan is made, the payment schedule doesn’t care how they look. Whereas in the workplace an error or indiscretion can be overlooked based on attractiveness bias.
Of course, there could be some other factor that is correlated with the attractiveness rating (e.g. attractive folks in the study were foreign models, and all returned home and defaulted after deciding they didn’t want to earn worthless dollars anymore). Three times does seem high - there is likely some problem with the methodology, but the finding is somewhat expected.
Hmm, of my three defaulted borrowers in the past 13 years, two were below-average in their physical appearance, and the third was someone I never did see. Hence, anecdotally, I am suspicious of the assertion that beaufiful people are more likely to default.
Wonderful, more static for the MSM to feed upon. That’s right, ignore the wider causes of what’s happening and go for the emotional touchstones - real constructive.
I’ve been wishing for homes to drop big time in the Bay Area, CA (Not central Valley) so that I can at least start looking at areas where I want to purchase but it’s not happening yet. Now I’m more worried about the the credit crisis and how it will contract ou local ecomony. I’m starting to think to start to increase my savings every month before the “storm” hits. (unemployment, rising cost of food and energy). I’ve been at my current job for almost 15 years but you never know.
I remember ack in the mid 80’s when there was that huge Tech downturn. Major layoffs. It was ugly. My dad was laid off at National Semi. Luckily he saved and saved before he was laid off and we got by for 12 months. Actually, I remember we took more vacations that year because he had more time.
When people say, the Bay Area will not be affected by the slowing economy, they must not have lived here too long. It’s a domino effect.
No money > less spending> Less revenues > Lay-offs.
Or Specific to Silicon Valley
Funds losing or not making their returns > Less VC money to go around > less investments to emerging companies > low hiring opportunities.
FP,
I remember the 70s, 80s, and 90s. The Bay Area was affected during those down turns and it will be impacted during this down turn. It is not different here. Just be patient.
Good advice. Here in Chicago the local sentiment is actually quite similar to what it appears to be in the Bay Area: “our economy is too diverse”, “we are too hardworking to fail”, “everyone wants to move here to work”, and on and on…
Patience indeed.
Everyone wants to move to CHICAGO???
The Tribune thinks so at least…go figure.
I lived there for eight years.
I have just one word for you : February.
The east bay has been taking its hits recently. Im sure the peninsula will be soon.
“The banking industry is hobbled by fear amid the mortgage credit meltdown. ‘Everybody is being ultra-cautious,’ Kyser said. ‘One of our people was in an auto accident and went to Enterprise Rent-A-Car, and the clerk had been working at Countrywide.’”
Hollywood has been at a standstill because of the strike, the defense industry is ramping down, as next year will see our departure from Iraq, surely.
Every job real estate related is in the toilet, on top of all of the above job losses.
The city of angles will need some, soon…
“Call from the fore top lookout Captain!” Came a call from the duty watch officer of the Titanic. “He reports iceberg ahead!”
The Captain gave a steely look out to sea. Convinced his ship was unsinkable his reply was “steady as she goes helmsman steady as she goes”.
He said he has slashed prices to below the cost of building and cannot cut prices any more because of bank loan obligations.”
Mr Kolkey, I wouldn’t care what your bank regulations are. I would only buy if the price makes sense to me. Your losses, bank regulations, the fact you have a 50 yr old business and didn’t save anything for a ‘rainy’ day is of no relevance to me. A screwup on a builder’s part does not constitute an emergency for me. I would not be willing to be your knife catcher. Good luck on finding 24 people willing to take the knife for you.
“I own a Chevy Suburban that I owe $52,000, and regardless of low demand and the average price being about $19,000, I cannot cut the price due to the loan.”
Typical Craigslist ad…..sounds like Mr. Kolkey. He needs to realize that the market sets the prices, not the sellers.
$52,000 . . . my parents bought a house — in California — in the 80s for that . . .
“I own a Chevy Suburban that I owe $52,000, and regardless of low demand and the average price being about $19,000, I cannot cut the price due to the loan.”
Detroit depreciation — nobody else does it better!
City starting to foreclose in North Country San Diego for unpaid taxes:
http://www.signonsandiego.com/uniontrib/20080106/news_1mc6marcos.html
“In October, the council approved a similar resolution, which applied to 68 owners. Since then, 32 people have paid and six have arranged payment plans”
Funny how so many of these “victims” are turning out be liars and cheats, huh? If they truly couldn’t AFFORD the taxes, and that’s why they didn’t pay them, then how did they finally come up with the $$ in the end (but only after threats of law enforcement)? And for the rest of them, if they can’t pay their taxes, then they have no business driving up property values in San Marcos.
The caution flags are flying,’ said Mel Drown, finance manager for Fontana.”
Didn’t some clown a couple of days ago say Fontucky was different, and that everyone was moving there and they were all rich? Maybe those two need to talk. And all apologies to anyone who has chosen to be a professional clown and really makes people laugh by doing funny things.
clowns suck and are not funny….
RE: ‘The difference is, in (the housing downturn during) the early 1990s, we at least had people looking. …
Yeah-back then the US still had some semblance of a manufacturing base and legitimate private job market.
Want to see new-age jobs? Go trudge into a Verizon WireLess center and atke a look around.
Ugh…
Minimal meat left on the bones of the carcass now.
What? The kids I see working the cell phone kiosks at my local mall won’t be able to buy a 3/2 on a half with their salary? Perish the thought! Maybe I don’t have enough cell phones?
“it pays to find out who is hiring and which industries are hot.” and then the article goes onto the list the No. 1 growth area of jobs in the San Fernando Valley as RETAIL!!
Wow - all those $7, 8 and 10 an hourjobs will sure help prop up the housing market!
8 dollars an hour and up as of Jan 1 2008 in Cali
Better buy now
“it pays to find out who is hiring and which industries are hot.” and then the article goes onto the list the No. 1 growth area of jobs in the San Fernando Valley as RETAIL!!”
Yeah, there is a booming retail business in SFV, in Taco roach coachs, check cashing shops dealing in remittances to Mexico, burrito shops, tommies burgers, del tacos, CVS drugstores, smoke shops, liquor stores,ect. I wonder If the east/central SFV has the same % of off the books retailing as South Central LA, where the black market accts for 30-40% of economic transactions. I would say close as the east SFV does have striking similarities to Scentral, mainly a trend toward increasing tijuanization and some rather seedy apt slum districts.
Has anyone seen any action on the “writers strike dividend” yet? You know someone out there is going to fold, drop their price and call “UNCLE!”
Here you go:
http://www.bloomberg.com/apps/news?pid=20601088&sid=aZVkFvjdKnQ4&refer=home
http://www.orlandosentinel.com/business/orl-ymmakeover0608jan06,0,3675871.story
Family looks to stay afloat during real estate slump
Lurker here.. thought you guys would enjoy this story from my local paper, The Orlando Sentinel
“She suggested they go back to their mortgage broker and search for a lender who will give them as much cash out as possible to refinance their main home, then use that money to help pay down debt.
That may involve taking out an interest-only mortgage for 10 years, a move that most planners advise against. But Lapin recommended it as a way to get them out of their current predicament.”
This is the best advice they can get from a “financial planner”? Take out more debt and use it to pay off your current debt? She also suggests that the mom get a job and pass off responsibility for her babies onto her teenage daughters. Ridiculous! Why doesn’t the husband just apply for a job somewhere? If he knows a lot about business (being self-employed and all), maybe he can get into upper management. I should get a job as a financial planner, right after I get done running for President.
“it pays to find out who is hiring and which industries are hot.”
And the article goes on to say that the No. 1 growth area of jobs in the San Fernando Valley as RETAIL!!
Wow - all those $7, 8 and 10 an hourjobs will sure help prop up the housing market! Get 10 retail employees on 1 mortgage with 1 having inherited $50,000 and they can afford a $500,000 mortgage on a $550,000 house. Now that is the ticket!
Reading the story about the Orlando family. No sympathy from me for the adults. They need to grow up. Husband needs to ditch boat. Wifey needs to get off of her arse and get a job. Feel sorry for the kids getting such great examples of financial mismanagement to learn from.
Typical Florida family - didn’t you know a boat is a requirement for living here. Also, to pull the boat you need a large SUV, and to go up ramps you need a 4×4, and since you have the large SUV you need a camper. You then need a yard to store the camper, a storage shed to store the boat, and a road to park the SUV since the garage is full of junk. Oh wait, you can’t park trucks on the roads here in some subdivisions. Anyone recall what the court rules on that?
Those Orlando teenagers could also get afterschool/weekend jobs to help the family with expenses. Gees, in my high school days that was normal. I started a job at 14 yrs old. They can do something and kick in a few hundred to the family each month.
I think it’s best for everyone if kids focus on their education. Besides, the law says you have to be at least 15 1/2 to get a worker’s permit. Let’s not start acting like India and making our kids support the families that their parents can’t handle.
If kids want to focus on their education, then they should definitely be working some while they are in school. Also, I don’t think the average Indian-American kid I see helping his parents out in a hotel (and I see a lot of them) is unhappy doing it OR suffering in school. There’s not a thing wrong with teenagers working.
I worked part time jobs going back to junior high school through college, but it was to pay for incidental expenses and to save for college, not to bail out deadbeat parents. These jobs were also at times that didn’t conflict with school, weekends when school was in session and full time during summers.
These were also jobs that are totally done by illegals in California, jobs that supposedly Americans won’t do. I found nothing wrong with those jobs. They paid slightly better than minimum wage and were decent work. I wouldn’t want to do those jobs for my entire life, but they were sufficient for then. There’s no reason Americans can’t or won’t do those jobs except for greedy American businesses trying to undercut increasingly meager wages.
I started working at 15 to help cover spending money, future car costs, and to save for a year in Germany. Helped out my family (who was broke, as usual.) Still somehow managed to get into a great UC, go to grad school on scholarship, and now pull in 6 figures at 35. Also played 2 varsity sports, was on the debate team, etc. etc. 15-20 hours a week will not kill any semi-together kid and can help ( I think) a family in a tight spot quite a bit.
HI Big V. The teens can work 10 hours a week somewhere, or babysit, whatever without detracting from education. I do agree that should be the first focus. But when a family needs to band together, all can help out as they can.
True. I had a part-time job starting when I was 15. However, it should be the kid’s money to spend if the kid earns it. They can use it to buy their own cars, etc., but the parents ought to take responsibility for the mortgage, food, clothes, and electricity, IMHO. Mr. Husband needs to get a J-O-B, methinks.
Economists now pronounce a recession inevitable in 2008.
http://tinyurl.com/2n278p
Baker said he supports the idea of a stimulus package but added that it has to be big — over $100 billion — and it has to be fast.
maybe a Katrina 2
“Princeton economist and New York Times columnist Paul Krugman was skeptical that Congress would put aside partisan politics over tax policy in order to pass such measures.”
“One side will not accept tax cuts for rich people, and the other side won’t take fiscal action without tax cuts for the rich,” he said.
I think this is the crux of the matter. The odds aren’t great of approving measures that could be helpful in reducing the severity of a recession. However, it might also reduce the possibility of approving measures that would do more damage than good.
Nothing wrong with the kid saving some for school as well. In fact, I think a parent needs to do a little arm twisting there - kid should have a taste of budgeting and real life beyond the actual job so that they don’t see the cash as play money.
But then I was a working teen when there were more retail unions, etc. By today’s standards, I guess I made something like $20/hour - not bad for part-time & under 18!
Real wages have deflated plenty, real cost of living continues to climb, so I don’t quite see how reversion to norm(inflation adjusted late ’90s prices) can work out. Don’t know about other areas, but I’m already seeing a lot of retail price deflation in the stores, and not just jacking up the price to set up the sales. Doesn’t stagflation require some continuing ability of the worker/consumer to spend, maybe with a little belt tightening or dipping into savings they actually have (yah, right), but still at a level that can support rising prices on “stuff”?
don’t know what stores you are talikng about….i see inflation on almost everything with the exception of items like lcd tvs and the like
First year this millenium that I’ve seen fairly expensive giftwrap languishing still on the shelves going into 2nd week Jan, at some places cut to from $10 or so $0.25/for a pack of rolls.
Locally, I’m seeing more and better grocery specials on beef, chicken breasts & the like, and in the “regular” (non discount or warehouse) supers. (Kroeger, Schnucks)
Not like there is anything yet to balance out health care inflation, fuel inflation and the rest, but it certainly appears to me that retail is making more price concessions. Even if it just means a favorite New Year’s bubbly being $15 at my local wine shop instead of $17 like last year, I’m noticing a more significant downward retail price pressure than anything since the dotcom crash had a lot of etailers holding fire sales, and have noticed some weird aberrations as well. My local Target always clearances out the Thanksgiving Candles before new year, however much they have to discount. This year, that clearance section is holding stubbornly (and not selling) at 30% off, even as Xmas has gone to 90% off.
Or, the same local Kroger (fairly upscale area) with the great sales, is stubbornly leaving expired crap on the shelves, more than ever. “Manager’s Special” shrimp trays that you can really smell before you get to them; and now you would think they would dumpster that so as not to drive away business? I’m guessing that some managers are already a little over the edge, pressure to deliver the #s…
I know retail is just one part of the pic. And I can’t much compare to out-of-state — dunno about others, but when I call friends long distance, I ask “So how’s your job/kids”, not “So how much is milk/gas/sirloin going for there?”
Gotta love Texas. We don’t just kill ‘em here, we eat ‘em!
http://news.yahoo.com/s/ap/20080107/ap_on_re_us/texas_slaying
I’ve got a good one for the bits bucket tomorrow. I can’t tell you now. I’m weeping uncontrollably.
just kidding
we’re looking forward to it …
when will it turn in Santa Clara Cty?
427 Alicia Way, Los Altos. Asked 1.45, sold for 1.575. 1510 sq ft, but remodeled, and a nice nhood. but still…
10628 Lonna Ln, Cupertino (Monta Vista). A 3/1, 1558 sq ft. Listed at 1.098, sold for 1.259, within December.
Here’s a hint: SFHs within bicycling distance of Google, the current Apple campus, or the new Apple campus that’s going to be built closer to Santa Clara are NEVER going down.
THOUSANDS of ISO millionaires, ZERO new supply. Prop-13 protecting everyone who bought 1850-2000.
“‘You see all these gray hairs on my head?’Kolkey said. ‘It’s a struggle every month for me to make payroll.’”
This is EXACTLY why I don’t get into the “real estate landlord and investment” business…because I don’t want to bear the burden of tenants, etc. I don’t care who says what about RE being the best way to develop wealth and cash flow for the future…I don’t want to waste my “GOOD YEARS” (i.e.30-60) worrying to death about how I’m going to make it next month or next year.
While working on a W2 is by no means a way of getting rich, at least I can come home and forget about work when I’m not there. I’d still like to own my own business but RE is something I’d truly hate to do. I think t here’s far too much luck involved in that field to make it worthwhile. Why do I say this? Because a few people I know who have made it big in RE couldn’t have found their own b&ngholes with both hands if they tried. But now they are passing hot gas to everyone telling telling people it’s necessary to take big risks and how smart they were in retrospect. Nevermind that they had money to burn and picked the cup with the marble under it.
I heard alot of people say that the early 90s would never happen again. I waited and saved alot sitting pretty good, no worries, may buy in a year.