Everything’s Pointing In The Same Direction In California
The Voice of San Diego reports from California. “When I was talking with Andrew LePage yesterday about these housing numbers, he sent me a breakdown of the median prices for homes sold in December as a function of the size of the homes. The size-adjusted, or price-per-square-foot median gives us a bit more clarity on one of the murkiest home price measures.”
“‘Even the relatively large declines in the median don’t tell the whole story,’ LePage said. ‘Everybody knows there’s a significant correction underway. Everything’s pointing in the same direction, a lot of what’s selling right now is where you have a really motivated seller, or a foreclosure.’”
“LePage looked at all of the sales in December to see what the last action on the property had been. For 31 percent of the sales in December, that last action was a foreclosure. (That’s compared to 4 percent in December 2006.)”
“For resale detached homes, the median price per square foot fell the sharpest in East and South County neighborhoods. In the last three months of the year, the price per square foot for East County homes was $268, a 15 percent drop from December 2006, and a 21 percent drop from that area’s peak.”
“In the South County, the median price per square foot for resale detached homes was $256, a year-over-year change of 21.5 percent and a drop from the peak of 23.5 percent.”
“Compared to that, the other three subsections of the county showed these drops: Central San Diego: 7.3 percent year-over-year, 12.4 percent off peak. North County coast: 6.8 percent year-over-year, 13.5 percent off peak. North County inland: 11.9 percent year-over-year, 17.2 percent off peak.”
The Union Tribune. “Los Angeles economist Christopher Thornberg, who in 2004 predicted the bursting of the real estate bubble, cautioned prospective buyers to hold off. Prices have a way to fall before hitting bottom, he said.”
“‘Sure, it’s a good time to buy if you don’t mind losing 10 to 15 percent of the sales price,’ said Thornberg. ‘There’s no recovery in 2008, no bottom in 2008. Prices are falling at a pretty rapid pace and will continue to fall through 2008 and into 2009, and that’s the most critical thing to keep in mind.’”
“Resale houses, representing 43.5 percent of all transactions in December, had a median price of $470,000, down $30,000 from November and $70,000 below December 2006. That was a record year-over-year drop on a dollar basis.”
The Orange County Register. “At the peak of the housing boom in 2004-04, the monthly sales pace was equal to 660,000 homes a year, Realtor figures show.”
“By the start of 2007, it had dropped to 450,000 homes a year, then fell again to 360,000-a-year pace after the subprime meltdown. At year’s end, California home sales had slipped below 300,000 a year for the first time since the 1980s.”
“Steve Thomas, president RE/MAX Real Estate Servicesin Aliso Viejo, estimated that prices in Orange County fell about 10 percent from the June 2006 peak, dropping to 2005 price levels. ‘And this year, the tree will shake a little bit more, and we’ll come down to 2004 levels,’ he said.”
“Pat Veling, president of a Brea consulting firm, believes that in many communities in Orange County – places like Yorba Linda, Tustin, Irvine and Huntington Beach – prices already dropped to late 2004 levels, wiping out three years of price appreciation.”
“Condos with less desirable floor plans, houses backing up to busy roads or power lines and homes in more depressed areas like Santa Ana, Anaheim and other north-central cities have seen price drops ranging from 15 to 30 percent, said Thomas.”
“Median home prices fell in 61 of Orange County’s 83 ZIP codes last year and increased in just 17. The biggest drop occurred in east Garden Grove’s 92840, where the median price fell 15.3 percent to $500,000.”
“But even some of the county’s most desirable neighborhoods saw prices falling, with ZIP codes showing double-digit declines in parts of Irvine, Huntington Beach, Yorba Linda and Newport Beach.”
“Veling’s data shows that just 55 percent of the county’s active real estate agents participated in at least one sale last year – half of them with just one or two sales apiece. The remaining 45 percent ‘had no income in 2007,’ he said.”
“Agent Sheri Maxwell said knows at least a dozen agents who have left the business. In one case, Maxwell said, a lender approved a loan with a 10 percent down payment for one of her clients. On the day escrow was supposed to close, however, the lender balked, demanding a 20 percent down payment.”
“‘Who has $130,000 just sitting around?’ Maxwell said. ‘We all felt it. It was probably one of my hardest years.’”
The Recordnet. “Existing-home sales are picking up momentum in San Joaquin County. Pending sales jumped from 392 in November to 459 last month countywide, a 17 percent increase, according to figures from the latest Coldwell Banker Grupe-TrendGraphix sales report.”
“Meanwhile, the median selling price continued to slip, falling to $293,000, the first time the countywide median has been less than $300,000 since April 2004, when the median selling price stood at $290,000.”
“‘Price is king,’ said Jerry Abbott, president and co-owner of Coldwell Banker Grupe, Stockton.”
“Foreclosures are accounting for about 70 percent of the monthly sales, he said, and investors are accounting for about half the buyers.”
“But unlike in the real estate boom years, these investors aren’t ‘flippers’ - buyers looking to resell in a year or two to cash in on fast-rising equity. Now they are looking for long-term investments, he said, and prices are low enough that monthly rental fees basically can cover the mortgage payments.”
The Santa Cruz Sentinel. “76 homes sold in December, the fewest sales for any month in 11 years, according to Gary Gangnes of Real Options Realty, who compiles the statistics. ‘It’s a lot slower for all of us,’ said Pam Spehar, a Boulder Creek agent.”
“First-time home buyers, seeing the median price drop a mere 1 percent, may have given up, not realizing changes in the market. ‘Buyers tend to wait until it’s a sellers’ market,’ said Spehar, noting 50 homes currently on the market in Santa Cruz County priced under $450,000.”
“One reason for lower prices: ‘Short sales.’ Case in point: 244 Redwood Road in Boulder Creek. The owners paid $296,000 for the two-bedroom home in 2004, listed it for $250,000 and sold it for $247,000.”
“Real estate agent Bob Bickers brokered December’s most expensive sale, a three-bedroom house at 63 Geoffroy Drive in Live Oak with ocean views near Privates Beach, to an out-of-county buyer for $3.6 million.”
“While high-end homes seem unaffected by changes in mortgage guidelines, even those prices are ‘not as good as they were,’ Bickers said.”
“The Geoffroy Drive home was initially listed for $4.95 million. When it didn’t get any offers, the price was cut by $1 million, and three potential buyers expressed interest.”
“‘It generated a sense of urgency,’ Bickers said.”
The Daily Press. “Local Realtors still see a slow market going into 2008 for the High Desert and say it is mostly due to a ‘wait and see’ attitude that permeates the current buyers market.”
“Agent Jill Lakin says most people are waiting to see how low prices will go. ‘They don’t want to buy now and see the price drop even more,’ she added.”
“Jack Fales of Ambassador Realty, estimates that about 30 percent of the people drive down the hill everyday for work. He says many of them sold their houses down the hill and came up here because they could afford a larger home and better lifestyle, but still have to make the commute.”
“Fales says even that dynamic has changed. ‘Now that the market has gone to zero, even the affordable homes aren’t going,’ Fales said.”
“Another problem occurring in today’s real estate market is that many new homeowners are ending up ‘house poor.’”
“‘When they get qualified for the maximum payment they don’t have any money left after driving up and down the hill. When gas goes to $3.15, now they can’t landscape, they can’t fence, a lot of them now are vacant,’ Fales added.”
“Lakin says it is definitely a buyers market, even for new homes. ‘For the first time in a long time, people are actually being able to make offers on new homes,’ Lakin said.”
“One Realtor says there is something else that homeowners and home buyers in the High Desert are waiting to see, especially the commuters: When are all the new jobs being touted by city officials actually going to get here?”
The Daily Bulletin. “When Federal Reserve Board Chairman Ben Bernanke said last week that the economy was in bad enough shape that further rate cuts would likely be needed, it was good news for some people. Unfortunately, though, those folks that rate cuts would help aren’t the ones who need it the most.”
“A consensus of local realtors commenting Monday agreed that while rate cuts will help those with home equity lines of credit, they’ll have little or no effect on people hoping to buy or sell homes.”
“‘This isn’t going to be any help to the average guy trying to qualify for a loan,’ said Kirk Stoffel of Century 21 Showcase in Highland. ‘The major issue right now is getting people qualified. All the 100 percent loans are gone. Rate cuts won’t help us at all.’”
“Upland Realtor Michael McCasland was even more blunt. ‘The last two rate cuts didn’t even cause a blip in the market,’ he said. ‘A half-point cut now will have no effect at all. The biggest problem is that because loan guidelines have been stiffened so much, the buyer pool has dried up completely.”
“‘Lenders are looking for different reasons not to make loans right now. They’re very afraid of making mistakes,’ he said.”
“Lender reluctance isn’t the only problem, said Bill Velto of Tarbell Realtors in Upland. ‘The only way a rate cut would have any effect is if it helps to build confidence,” he said. ‘People are very apprehensive right now. It’s almost as though they have lost faith in the system. I don’t think a half-point cut is enough.’”
The Tribune. “Style Gifts and Accents, a home furnishings and kitchenware store in San Luis Obispo’s Higuera Plaza, has closed after five years of doing business.”
“Tim Davis said the store’s five-year lease was ending, and he needed to decide whether he wanted to keep the retail operation going for another five years. After contemplating the future, he decided to let the store go.”
“‘Being an independent retailer, you’re sort of fighting the whole trend of retail going to the big-box stores, and with the general economy trending toward a recession, I decided the whole risk-reward of keeping the business open was just not worth it,’ Davis said.”
“Davis said he has seen a downturn in his business the past two years and, he said, ‘2008 doesn’t look like it’s going to be any prettier.’”
“Tony Flatos, a director with the building’s property manager, said he does not have a prospect for the spot. ‘Right now, it’s anybody’s guess,’ Flatos said. ‘The picture for small retailers is not really good right now, and it’s not just at that shopping center, it’s all over the county.’”
“Davis did not know what type of business would fill the now-empty, 1,650-square-foot space, which is between Trader Joe’s and Food 4 Less. ‘We just hope it’ll be something that’s recession-resistant,’ he said.”
The language has changed in the Dataquick report:
‘The typical monthly mortgage payment that Southland buyers committed themselves to paying was $1,985 last month, down from $2,049 the previous month, and down from $2,242 a year ago. Adjusted for inflation, the current payment is 6.9 percent lower than the spring of 1989, the peak of the prior real estate cycle. It is 21.2 percent below the current cycle’s peak in June 2006.’
‘Foreclosure activity is at record levels, financing with adjustable-rate mortgages or with multiple mortgages has dropped sharply.’
From the OCR article:
‘Don Readinger, the 2008 president of the Orange County Association of Realtors, conceded that 2007 ‘hasn’t been my most productive year.’ Readinger estimates that he talked about 15 or more clients out of selling their homes in the current market, urging them to wait unless they had to sell now.’
‘It’s not a great time to sell,’ he said.’
They’re gonna be real happy with you a year from now Don…
Also:
‘SACRAMENTO — State officials warn that distressed borrowers who sold their home in a “short sale” last year still must pay state income taxes on the mortgage debt forgiven by the lender.’
‘California does not automatically conform to the federal “Mortgage Forgiveness Debt Relief Act of 2007″ signed Dec. 20 by the president. State lawmakers must enact conforming legislation for this law to apply to California.’
“They’re gonna be real happy with you a year from now Don…”
A nomination for understatement of the year.
“talked about 15 or more clients out of selling their homes”
I see 15 Joshua trees coming his direction very soon.
Have they found a cure for 90 gunshot wounds yet? This guy better hope so. He’s going to have 15 pi$$ed off FBs emptying their 6-shooters in his worthless hide.
..oh no, they’ll reload.
Let’s just hope they don’t form a circular firing squad.
Although it wouldn’t surprise me.
WHy is LA county only down -10% YOY? 80% of LA county is either aging crappy declining slumburbs or third-world gang-infested hellholes. LA County is racing down to meet it’s Scal bretheren, the race to the bottom of the barrel.
Los Angeles 8,479 4,430 -47.8% $525,000 $470,000 -10.5%
Orange 2,985 1,731 -42.0% $630,000 $565,000 -10.3%
Riverside 4,542 2,503 -44.9% $432,000 $355,000 -17.8%
San Bernardino 3,357 1,518 -54.8% $370,000 $315,000 -14.9%
San Diego 3,823 2,468 -35.4% $495,000 $430,000 -13.1%
Ventura 1,023 590 -42.3% $590,000 $525,250 -11.0%
SoCal 24,209 13,240 -45.3% $490,000 $425,000 -13.3%
I’m happy that many FB’s are trying to weather the storm by renting out their houses now — I predict that 8-12 months from now when their leases expire, and a lot of them realize they just lost another $50,000 in equity, let alone their negative cash flow on the rentals, they will flood the market, right about the same time a whole new wave of ARMS are going to reset. And in San Diego, where something like 90% of the economic growth in the last 5 years has been RE related, those factors will be multiplied by everyone being cash-poor, esp. amid the tightening lending standards. I realize I’m not saying anything new here, but man, I feel like we are looking at a Category 5 hurricane ready to make landfall.
A lot of issues are going to rear their ugly head over the next year. In Idaho, much of the job growth and money pumping into the economy was RE related. We also have a big “shadow inventory” of investor homes being rented out.
As has been said here before, “pent-up supply.”
As is the case with NNV. You can feel folks moving into panic mode.
“You can feel folks moving into panic mode.”
Ditto for Dubya’s administration. “It’s contained” was soothing six months ago, but now I sense zero confidence when I hear them speak.
I wouldn’t want to move to San Diego anyway due to all the crime and illegals. It’s one reason im leaving south Florida. Theres still some good spots in far north CA and in the Sierra area. No way are those houses worth more than a third of those current wishing prices. I am also considering Oregon and Washington, the nice houses are $300k to $500k. Call me when those houses are $100k to $150k. Anyone think this will happen?
NYCityBoy has his hand raised.
Have you been watching Citigroup, Merrill Lynch, Bear Stearns and the rest of the Financial Masters of the Universe? The funny thing is that the real estate a$$hats still think they have control over pricing. They have never understood what allowed prices to go so high. They don’t understood what is going to cause prices to go so low.
Oregon and Washington will drop 20% tops. They never rose that much… it rains 250 days a year there. Not warm Florida rain… Steelhead rain. 35 degree post-nasal drip. There might be cheaper places in Bend, OR soon, but that place has a short summer.
“Oregon and Washington will drop 20% tops.”
Compare the rents v. mortgage payments. Bend, OR will see many “haircuts” this year!
Talk to Paul-doh about Bend…
Oregon and Washington will drop 20% tops. They never rose that much
Didn’t Seattle prices double or worse? And what about all the little towns like Ashland, Oregon which now boast prices nearly as high as those in SoCal but without any discernible job base? Those prices are sustained by Californians for the most part, and when the affluent parts of California finally start to crack, kiss the northwest’s housing market goodbye as well.
“‘This isn’t going to be any help to the average guy trying to qualify for a loan,’ said Kirk Stoffel of Century 21 Showcase in Highland. ‘The major issue right now is getting people qualified. All the 100 percent loans are gone. Rate cuts won’t help us at all.’”
“Upland Realtor Michael McCasland was even more blunt. ‘The last two rate cuts didn’t even cause a blip in the market,’ he said. ‘A half-point cut now will have no effect at all. The biggest problem is that because loan guidelines have been stiffened so much, the buyer pool has dried up completely.”
They are absolutley right. The only thing that will get people qualified to buy homes again is the price. On the other hand any cut in interest rates isn’t meant for J6P, it for wall street and it won’t help them either.
Edited for the north Tahoe region:
“Those prices are sustained by Alt-A Bay Area residents for the most part, and as many parts of the Alt-A Bay Area have already started to crack, kiss Tahoe’s housing market goodbye as well.”
Tahoe’s housing market is already gone…..
20% drop in the NW? My house doubled from June 2002 - January 2007. My prior house more than doubled from when I bought it in 2000.
If prices don’t drop 35% or more, it really IS different in Portland.
Ditto: a year from now we will be in a hard recession, desperation in the air, state and local expenditure (and job) cutbacks, nation layoffs, massive RE and construction job losses, negative household formation (shared housing, the new black)…
Great time to put that alligator back on the market!
My wife works for the county here in the IE and it’s already known that they are cutting 10% of their work force to deal with the cut backs that are going to happen in 2008. She said that a lot of people are worried because they are carrying so much debt that they couldn’t live off one income. The funny thing is that their husbands are almost always in the construction business, so, I think they will have to live off zero income.
Yep, it is very common for construction works to have a spouse in a job with nice benefits and (supposedly) more stability.
This is exactly why people should allocate only one spouse’s income toward living expenses.
The way people have been spending, they’ve made the false assumption that everybody will be gainfully employed and making the same (or more!) money going forward. Foolish assumptions…
The more people are willing to pay, the more prices go up, and we end up with the same problem seen in housing (more money spent = higher prices = more money spent = higher prices).
They will have to fix up the rentals before they list them for sale. Another expense.
‘SACRAMENTO — State officials warn that distressed borrowers who sold their home in a “short sale” last year still must pay state income taxes on the mortgage debt forgiven by the lender.’
Governator: Sorry, but I need funds for my EPA lawsuit and health plan and 14 zillion debt and next presidential campaign….and this, that and the other…..I vill send them a free CD pack of my action hero movies….. and they vill be happy
“‘This isn’t going to be any help to the average guy trying to qualify for a loan,’ said Kirk Stoffel of Century 21 Showcase in Highland. ‘The major issue right now is getting people qualified. All the 100 percent loans are gone. Rate cuts won’t help us at all.’”
- Didn’t Larry Y just say that ‘rates are low’ and you will look back in a few years and ‘regret’ not buying?
Boo hoo. All of the 100% loans are gone. They should have never existed in the first place.
agreed. 0% down was basically “free debt” and with no equity and no risk, they were renting from the bank and most walked away
0% down was asking for fraud. The curves show that down payments reduce default risk until 25% is put down (With defaults, they do not coorelate with down payments above 25% down.).
5% down? Too low. I accept we’re going to socialize the downside with FHA, but at least they require an insurance company to back the loan. (Yea… the insurance companies are going to fail… but soon they’ll price the risk right.) But for anything else? 15% down should be the minimum and 25% down for jumbos.
I still think 25% down will be the norm in the darkest days of this downturn. But the darkest days are late 2009/2010 or maybe even 2011. We have a ways to go…
Got popcorn?
Neil
Gee we had to have 20% down and we managed to save and scrape it up. Why should ppl be allowed to get 0% down loans. We need to get back to the old way of lending. There’s always been bankruptcy and foreclosure, but I never remember anything of this magnitude. This recession is going to be way worse than anything most of us living today can imagine. Kind of like a major hurricane season and nothing we can do will stop it.
“The major issue right now is getting people qualified…”
Correction- the major issue is getting home prices lower. It’s like saying “we are having a problem getting all the fat people into size 2 Lucky Jeans”.
The major problem right now is that financial institutions around the globe are reenacting a popular scene from the movie “Pulp Fiction”. The red ball is lodged in their mouth and they realize that their chances of rescue are slim to none and Slim is already posting on the HBB.
good one (Slim already HBB)
Bring out the gimp!
Why are rentals in the Bay Area so crappy? We’ve been looking for a month and a half. Thought we found a great place in Fremont, but there were too many screaming, unattended kids running the streets. Looked at one in Mission San Jose today. The electricity and water were off, the property manager “didn’t know” whether or not anything in it worked, he “didn’t have the key” to the garage, and there was a whole bunch of shady-looking wiring all over the dirty, unpainted house. All this, and he wouldn’t offer more than a 6-month lease, nor would he sign a lease until 7 days prior to move-in. I told him I had to give 30-days notice, and he said “There’s a always an overlap”. Yeah, there’s an overlap for YOU, you property-managing moron! Why is it like this here? What’s wrong with this horrible place? Why do all the property owners think that EVERYBODY wants to live in their awful crapshack?
Why? Because it’s northern California the place EVERYBODY wants to live here…
We have the same type of property owner, all they want to do is extract cash from the house without putting anything back into it. And if they do, they act as if they are doing us a favor instead of doing what they are supposed to do..maintain they’re asset.
The Bay Area has a cummupance on its way in the form of a major recession. Prices have gotten so out of line with the rest of the country companies will have no choice but to leave in order to remain competetive in the global market place. We live in a neighborhood where the cost of ownership at peak price is 3 times the monthly cost we pay in rent. This whole thing will fall over and not be able to get back up when gas hits $4.00 a gallon.
May the force of reality bludgeon those idiots back to earth…
for what it’s worth, cost of ownership is only that high if you bought in the last 10 years or so at inflated prices. I bought in Fremont in 1988 and my TCO is pretty much in line with local rents. Not everybody who owns is an FB.
You’re not figuring in opportunity costs on the cash value of your asset.
$1,000,000 at 5% yields $4167 in monthly coupon payments with no risk and no work. You must put that in the cost column to see if you are really doing as well as you think you are.
Good one!!
Oh, and another thing.
The below line says it all… the fact that 19 years after buying someone’s housing outlay is in line with local rents. If the market in northern California was sane in 1988 (it was not), the outlay would be much LESS than today’s rents.
“I bought in Fremont in 1988 and my TCO is pretty much in line with local rents.”
I was about to say that if it takes 19 years of inflation in housing prices and rentals for your payment to be in line with rents of comparables, then you paid way too much for your place.
I want my payment in line with rents the day I sign the mortgage app. So far I don’t see that happening…
Looking to buy 2009 earliest.
I agree totally. I moved to Nor Cal from So Cal in September. I had a total nightmare story. To sum it up. I asked the landlord to install smoke detectors and he told me my expectations were too high. I told him it was the law and he said “Hundreds of people go without those things every night”. I’m not even going to go into the mold and broken heater stories.
I moved back to So Cal in January. My new landlord will do anything - even replace my light bulb and I’m paying 15% less than I did in Nor Cal. I loved living in Nor Cal, but I hate the way landlords treat their tenants. It definitely felt like bizzaro world.
You should report that LL.
Rents in San Francisco have gone sky high in the past year. I posted on craigslist for a room to rent and we received 2 dozen responses within 24 hours (and that’s to live with 2 kids and 2 dogs and 2 cats).
Everyone we spoke with said that they had a really hard time finding a place, and that most rooms to rent in a shared house were at least $700 month.
You can’t find a studio here for less than $1200 month, and 2 bedrooms are running about $2,000.
Who can afford this?
Is the crazy rent increases because no one is buying?
We need a smallish earthquake to bring prices down a little. I moved to SF a few weeks after the 1989 Loma Prieta earthquake, and it did have an effect on rents.
Sad to say $2000 a month is cheap when that same apartment costs $500k+ to buy. You would need a gross income of $8000 a month to afford that rent, else you must leave California as are millions of others doing just that!
$2,000 for a 2 bedroom? I would have a stiffy if I could find that deal here.
I was paying $1550 for a two bdrm in the highlands of San Mateo. Deals can be found.
Exactly. And this is going to get worse before it gets better.
That situation also sounds EXACTLY like Washington DC.
Group housing is the norm downtown untill about your mid 30’s unless you have a GREAT job. The price you pay to be an urban hipster I guess.
heh, reminds me when I went looking for my girlfriend to find a place of her own, we found a place she could afford down near the SD “airport” (it hardly qualifies as an airport, one runway). Anyway, this place was OLD, and right in the flight path, the landlord said they stop flying at 10pm. Then I wanted to make sure the water pressure and facets worked, as soon as I went to turn it on “HEY STOP THAT, I JUST CLEANED THIS”. The guy snapped at me! I couldn’t believe it, like running water IN THE SINK, is going to ruin his fabulous cleaning job. I ripped the rental app out of my g/f’s hand, dragged her out of there, and the guy ahs the nerve to say “Hey is that YOUR Lexus?” as I left, no way in hell I was going to let her occupy that place.
Heh. I did once live under the flightpath of JWA in Costa Mesa CA. Man, when I moved there I thought those planes were the loudest things on the planet. Two months later, I didn’t even notice them anymore!
Once while living there I called a Sprint PCS customer service person. While talking to him I could over-hear an airplane in the background. I heard the same airplane over my own head, and said “Hey, you wouldn’t happen to be on Costa Mesa, would you?”. Sure enough he was! Right on Bristol on the south side of JWA!
Good times, good times.
Dude, its time you consider relocation. Why o why are you putting up with this? Theres far better out there. Look into Texas or Pennsylvania to name two of several states for you to choose!
Texas is full of ex-californians, and Penn is north of the 40th parallel.
Texas is better. Bahahahahahahahahahahaha
My parents are located in Mission San Jose. I just relocated to Pleasanton after 23 years. Fremont’s crime has escalated and Warm Srings area is getting hit hard. I just visited there over the holidays and they now have security guards patrolling the Safeway and there was a police car patrolling the B fo A parking lot. From what I have been told, gangs from East Palo Alto and Oakland have been flocking to Fremont. My mother was robbed at her neighborhood Safeway. She turns 70 years old today. I hear it from everyone, it is getting bad. Irvington High had a gang shooting, bullet casings foung in parking lot of Horner junior high, and at little James Leitch Elem. these youngsters were told to empty their pockets at knife point!!! The Fremont Bulletin lists some crimes. Be careful at night or stay home.
I thought Ca rental homes had to be inspected ? A new Law ,no?
No one is inspecting them. For some reason, codes in the Bay Area are completely ignored. I moved into a rental once where there was no phone, there was a gas leak, there was a severe water leak in the tub resulting in disgusting mold (disguised temporarily before I moved in), the refrigerator leaked, and the PG&E guy got shocked by the gas pipe to the oven when he was trying to find the leak. He told me that he had notified the landlord to fix the leak before renting out the house, but the landlord ignored him completely. I even called the county on him because he decided to dig a giant hole in my back yard one day and bury his construction waste in it. The lady came out, told me she would cite the LL for creating illegal landfill conditions, and then disappeared. I could never get in contact with her again. The only recourse it seems one has out here is to move, but where are you going to move? All the landlords are awful!!!
Big V: Rents will come down as house prices come down, but in the meantime it sounds like you are stuck. Do you have to move? Can you move further inland, or do jobs trap you in Fremont?
My job is near 1st street off the 237. Mr. works in Milpitas. I’m looking in Fremont because it’s the cheapest place within a reasonable commuting distance, but I’m also looking in Sunnyvale, Mountain View, and San Jose.
Oh, and yes, LL is selling the house.
In one answer, Prop 13 combined with NIMBYism in the best locations.
There is no incentive to keep up the property. In the best spots, there is little supply and given the price of homes, significant demand.
My one suggestion to CA legislature to raise some $. Amend prop 13 to apply ONLY to primary residences. Right now, those paying income tax here are giving a free ride to people who live out of state (pay no state income tax and are locked into low property tax rates), and have a second home in CA (Palm Springs, LA, etc.).
How about all the commercial that Prop 13 applies to. Big old office buildings and strip malls that they change hands through weird LLPs or corps so it’s not really shown as a sale and they can continue to pay pitiful amounts of property tax. That was not the intent of the law.
Old folks in Cali foam at the mouth when anyone suggests making Prop 13 fairer. Even commercial property changes freak them out. Why?
nose of the camel . . .
When Arnold took over he flew in Warren Buffet to figure out how to fix California’s economy. It was simple Buffet said, get rid of Prop 13 it is killing your states. May has well have told California’s the sky was falling, newspaper article after newspaper artice was publised “DONT YOU DARE TOUCH OUR PROP 13!”
http://www.sfgate.com/cgi-bin/article.cgi?file=/c/a/2003/08/16/MN263845.DTL
Why the hell would young people WANT to buy in to the current prices and taxes. Either you inherit the family’s home(s) or you move out of state.
It was simple Buffet said, get rid of Prop 13 it is killing your states.
———————-
NO!!!
Actually, since most property tax revenue is used for schools, let’s first eliminate “free” education for illegal immigrants.
My guess is that if we eliminated our illegal immigration problem, most of California’s budget problem would be self-correcting.
Only after proving that we are supporting citizens/legal residents, would I support a tax increase — but it would not be property taxes.
Amend prop 13 to apply ONLY to primary residences.
————————-
I’m a staunch advocate of Prop 13, but can definitely agree with this.
Mission San Jose is known for good school district. Attitude of the property mgr is if you don’t rent it, someone will. They don’t really care.
This is very true, Fremont and Milpitas area are still very high in demand for schools and cultural activities.
Big V — My wife and I moved to the Bay Area in 1996 and were similarly impressed with the lousy rental market. We ended up purchasing a condo since it was actually cheaper than renting a place of comparable quality. Unfortunately, the market there has not bottomed out yet (as it had by 1996). Good luck!
P.S. Are you playing in any orchestra(s) up there?
Playing in an orchestra? Ha! I suck like a hoover on my violin. My teacher, however, plays in the SF symphony.
““But unlike in the real estate boom years, these investors aren’t ‘flippers’ - buyers looking to resell in a year or two to cash in on fast-rising equity. Now they are looking for long-term investments, he said, and prices are low enough that monthly rental fees basically can cover the mortgage payments.””
Yeah, right. I’d like to see this new generation of landlords make any $ on their SFH’s. The only place where rents could come anywhere even close to prices would be in ghetto-ville. Good luck with that one.
My former landlady was pretty savvy about keeping debt away from her rental properties. She built one herself. (I lived there for 12.5 years. She did a good job on the construction.) She inherited two others. And then there were the two that she bought outright.
Even though she was quite handy with repairs, she still said that she wasn’t making a lot of money on her rentals. Why not? Well, here’s a shocker: When you’re dealing in rental real estate, you’re dealing with people who don’t have much money. So, there’s a limit to how much you can charge them.
Which makes me wonder about all this “get rich in rental houses” rhetoric. It isn’t THAT easy.
All the more so now with such high prices. A lot of people are landlords because they hope the property will appreciate, but again, good luck with that one right now.
I hope anyone that finds themselves renting from an FB drives a hard bargain on the rent. There should be a risk premium after all - because you’ll be renting from an amateur who likely can’t fix anything and will sell out from underneath you if they could.
“‘This isn’t going to be any help to the average guy trying to qualify for a loan,’ said Kirk Stoffel of Century 21 Showcase in Highland. ‘The major issue right now is getting people qualified. All the 100 percent loans are gone. Rate cuts won’t help us at all.’”
Why do they still want 100% loans? Haven’t they seen the mayhem that is occurring right now all because of such loans? Big banks are about to go under. That b&stard Bernanke is propping them up by proving them loans at below-market rates (I heard it is now
When people are in debt like this country is, even 0% ain’t gonna help.
What is frustrating is that banks like Citi are in big honking trouble and they still are giving out dividends.
Hell, they should be cutting to the bone.
So Bernake is giving them below inflation dollars and they send it to the stock holders (lucky guys).
Next step of course asking for another rate cut.
Meanwhile the real economy(all of us away from banking) choke on debt.
Japan style deflation here we come!
They cash back at closing so they can pay the Mortgage until its time to refinace.
When people are in debt like this country is, even 0% ain’t gonna help.
Amen. That says it all.
NeilT, the dumba$$es in the REIC equate the 100% financing with their gravy train. They think that all that needs to be done is to offer 100% financing once again and their easy money will just roll back in. When is the last time you met somebody attached to real estate that had any real brains or sense of reality?
This isn’t about new loans. It’s about stanching the deluge of defaults on existing HELOCs, ARMs, Option-ARMs, etc that are likely to damage Wall Street titans’ balance sheets.
Oops: This was supposed togo in the box, THEN Wow….“Veling’s data shows that just 55 percent of the county’s active real estate agents participated in at least one sale last year – half of them with just one or two sales apiece. The remaining 45 percent ‘had no income in 2007,’ he said.”
I’m 45% happier than I was 10 minutes ago.
“Local Realtors still see a slow market going into 2008 for the High Desert and say it is mostly due to a ‘wait and see’ attitude that permeates the current buyers market.”
And the sellers are all in “wait and hope” mode. (Alexandre Dumas)
Wait and tree. Joshua Tree.
I love cayo_ron’s comment, but was about to say it is WE who are in “wait and hope” mode. Me, anyway. Hope nominal prices in Calif do in fact decline some.
“Some”. az_lender? The Debt Machine has run out of oil and all of its gears have been stripped. There is nothing left to keep this ridiculous game going in California. In the immortal words of Pink Floyd, “all in all we’re just another brick in the wall.”
Last time I checked, the median CA house price was down 10% y-o-y. I think those were last month’s numbers, though.
(Alexandre Dumas)
or as in the movie Shawshank Redemption
Alexander Dumb Ass
Hoz,
Alexandre Dumas is one of my favorite classic action writers.
One of my favorites…and one of my favorite quotes from The Count of Monte Cristo. Two words that describe the human condition. I just reread last week. Wait and Hope. Many years of waiting to exact revenge.
The prices are going to fall a lot and in 3 years it will be close enough to bottom to buy, it won’t appreciate for 6 years though. There is no V bottom in housing.
“due to a ‘wait and see’ attitude”
—————————————————————
Yeah, us buyers are gonna wait and see if (when) the prices are 3x average household income. Nothing is gonna happen until then.
OT–
This week at the Santa Barbara Housing Bubble Blog: In the local rag sheet’s “House & Home” section, the new president of the Santa Barbara Association of Realtors introduces himself to the general pubic by invoking JFK and then, in the next sentence, articulating his own vision — i.e., that his association’s members “continue to remain at the center of the real estate transaction.” (I’m not making this up; how could I?)
Saint Barbara
“One of our duties as Realtors is to remain a source of information to the consumer and to ensure that our data and our systems are top notch and secure, so our members continue to remain at the center of the real estate transaction.”
Translation: We need to find a way to make house-transaction data a legal secret so that everyone will have to pay us for it. I think they’re gearing up to pull on Texas on Zillow.
Here in SD, the Board of Realtors is moving to make the MLS a secure system in a couple of months (with use of a hardware key) to protect their twisted data. My preciousssss!
Yes!!
Lack of transparency, the only way to go.
Just ask the geniuses at Countrywide, Citi, Merrill Lynch etc.
I think this will come back to bite them in the a$$. It will ultimately turn out to be a PR nightmare. All it will do is breed resentment among people who want to track the market with the ultimate intention of buying. Also it becomes a prisoners delimma where one realtor will be so tempted by the advantage of having MLS data on his site that he will create a mirror of the data to bring web traffic to his site, (or the county will start posting all of the real estate transactions as public records) and Zillow and Mapquest will do the rest.
the general pubic?
sorry, couldn’t resist.
This just in — IndyMac laying off additional 24% of staff.
http://www.theimbreport.com/
Interesting dynamic seems to be going on in market. Buyers still out there who would buy at current prices but can’t the funding. Guess we haven’t completely exhausted the supply of fools yet.
Just saw the NBC Nightly News. Grim stuff about the economy. They’re not sugar coating it, that’s for sure. That oughta raise the intelligence of a few fools.
Christopher Columbus died in 1506, a full 14 years after he had (re)discovered the New World, but was still convinced on his deathbed that he had discovered Asia. Kind of a roundabout way of saying I think many people could see the word “Depression” in 3 inch letters on their Sunday paper, and still not be convinced of it.
“Buyers still out there who would buy at current prices but can’t the funding. Guess we haven’t completely exhausted the supply of fools yet.”
And they’re probably pissed that they can’t get financed, thinking the market has suddenly become abnormal when the reality is we are working back to traditional standards.
Of course! It was lending that allowed the fools into the market to begin with. We have always said on this blog that a return to conventional lending would take the fools down and the market with them. My thing is that people have always been stupid, it’s just that they rarely get a chance to display their stupidity.
Any reports on the ground from Fresno, Visalia, Bakersfield areas? I can’t think of any other place in the country where home prices became so detached from income. I would ask my own family, but they never get a straight answer. I feel sorry for some of my family members because they bought in the Fresno/Clovis area in the last few years- they have to be seriously upside down as they spent $300k plus for starter homes.
Soon both sides of HWY 99 will be lined with Joshua tree crucifixions from Stocton to Bakersfield.
I see you have your Spartacus down, Ex. Are you bracing for the debt-slave uprising?
It could be worse. Think of the road to Tirgoviste during the reign of Vlad the Impaler and his brutal pre-Cristo installation known as the forest of the impaled. Now I bet THAT guy could come up with some new uses for a Joshua tree!
Ah but what Vlad did to Mehmed II ’s envoys when asked why they came into his presence wearing turbans should never be forgotten. Make sure the turbans don’t slip off, nail them in.
Thus the phrase “put a nail in it”
Reply to santacruszsux:
By the way, Vlad used his time well when he was imprisoned — he studied cockroaches after he impaled them, presumably with smaller stakes than those used on his human victims.
LOL - I’m glad you got it. I needed to share that visual with someone.
From one of our own:
http://bakersfieldbubble.blogspot.com/
Thanks!
Has anyone got some recent data on the East Bay and Sillicon Valley areas?
Thanks!
No - but west on the Central Coast I can confirm the $250/sqft pricing, which in some neighborhoods is down about 25% from 2 years ago.
http://centralcoasthousingbubble.blogspot.com/
Good news!
SLO Bear, I am waiting for this. In Morro Bay, the under-600K houses are still asking $399/sf. The 600K-700K houses are asking $375/sf. Do I have to pay a million to get $250/sf? or just wait. and wait. and wait!
You should be looking at around $150/foot in the most desirable parts of California and like $50/foot in the crappy parts(such as IE)
Just to give you a hard time:
So that’s ($150)($150) for a squared foot, then?
Bye FL,
in 1993 I rented a house in Silicon Valley, around 2160 sqft, worth around 350k. 167 per sq ft. This was in a fine but not opulent neighborhood. So your claim is that prices will go to pre 1993 levels? Even though we have 15 years of inflation and wage growth? (Certainly from 93 to 2000, maybe not so much from 00 to now).
This seems a little far fetched.
This $$$ per sq ft seems like comparing apples to tomatoes. Unless every property is identical as to lot size and improvements (same type of drive, out buildings etc) you simply can not compare them. A 1500 sq ft house on .11 acres is NOT the same thing as a 1500 sq ft house on 3- 5 acres.
For example:
1750 sq ft Sale price $189K = $108/sq ft
2250 sq ft Sale price $292k = $129+/sqft
1800 sq ft Sale price $500K = $277+/sq ft
All 3 houses are within 1/5th (.2) miles of each other - walk between them in 10 minutes.
Is the market off? Are the buyers nuts? Answer is No and No.
1st house is on .22 acres with a 2 car garage.
2nd house is on .43 acres with a 3 car garage.
3rd house is on 5 acres with a 2 car garage and a backyard that ends on the beach of a 300 acre lake with a dock and a boathouse for a 12-16 ft boat.
Running the comps and doing the adjustments for different lot sizes and improvements, all the numbers cross check and all are exactly where they should have been when they closed between July - Nov ‘07.
(Sellers weren’t happy - they all took a 36% hit off 2005-06 prices…)
That is exactly what I did for the Centex cookie cutter analysis on my blog. Apples for apples - down 25%.
Cookie cutter ones are pretty easy to comp out -all the lots are the same and the ‘amenities’ like the lake front I mentioned are nonexistent.
It does seem that a lot of posters on these threads toss around the price per sq ft thing without adjusting the comps for the amount of land or other things. And that is the apples to tomatoes which eludes me.
$$$ per sq ft is a great place to start. Of course you need to take into account the comps if the place is different or unique. With all the building in california in the last 5-6 years most everyone generalize and talk about the McMansion’s.
I know here where I live there was little if anything built that wasn’t tract homes or McMansions so going by $$$ per sqft is a great place to start. In 1999 it was around 60 per sqft and right now they are listing between 155-160 per sqft. There is no way in hell I would pay that much out here in the middle of nowhere
Patience lending grasshopper.
Morro Bay will be on its way down shortly. Things are imploding in Los Osos which will definitely affect the other side of the bay. Serious coastal growth restrictions are limiting new developments in the area but there are 16 months of inventory for the county - so rent a house for now.
“Any reports on the ground from Fresno, Visalia, Bakersfield areas? I can’t think of any other place in the country where home prices became so detached from income.”
I couldn’t agree with you more on the disconnect from reality in those areas. $30K incomes to buy very average starter homes for $300K. Yeah sure… that’ll end well.
I’ll toss in my 2 cents on Visalia since some of the other areas have been hit already. What I’m hearing and seeing there isn’t pretty. Construction jobs are drying up very quickly, builders are in trouble and foreclosures and vacant properties are piling up in Visalia. A couple of acquaintances have lost their jobs with lenders. The number of new housing permits dipped to 869 in 2007, down 34 percent from the 1,317 permits issued for new housing in 2006, and down 40 percent from the 1,450 permits issued in 2005. The number of new home permits issued last year was the lowest in six years in the city.
Prices were falling back to about 2005 levels when I looked a few months ago. Lots of speculative buyers are getting burned on their investments. I’ve heard lots of stories of HELOC and refi stupidity through friends there.
My mom’s in Fresno. Unit across the street sold at PEAK Aug ‘05 for $275,000 (to a slumlord naturally). Now same properties are listed for $180K and NOT moving. Baseline out here 1990-2002 was $80-90K.
VERY nice houses were listing $180K ~ $300K in late 2001/2002. They got up to $600K in 2005, but are also decending like the Challenger after the wayward SRB ignited the main fuel tank.
“‘Who has $130,000 just sitting around?’
I do. And I’m not the joker trying to buy a $1.3 million home.
Commie!
Go in debt over your head, its the American style.
No kidding. You must really be a dikk Groundhog. You are letting the terrorists win. I’m disgusted.
That house will drop to $500k
Yep, the ones with the cash got their legs kicked up and middle fingers raised high. We’re just kickin’ back letting the mayhem unfold.
My friend,
You said it right. We aren’t changing our lifestyles because we overbought.
There are deals out there in EVERYTHING. Cars, wines, and it doesn’t matter what information the NAR hides, homes are joining the bargain bin.
Got popcorn?
Neil
me too! me too! My 6 figures++ is not exactly lying around but locked up in govt insured certificate of EURO deposits (!).
My hard earned mulah is not going on a US house buying adventure for at least the next 5 years.
Thats the Deflation mindset the Government fears.
If the damn govt would stop artificially supressing the cost of money (interest rates), they might see some of us investing, lending & spending more.
Right now, the only thing to do is sit on cash and wait — for better prices or interest rates.
Me too!!
Groundhog, if he so wishes, will pay $130,000 cash for a nice house in California in 2010.
me too…thanks to this blog….sold my place just in time last spring
Ive got about half that that i had been planning on using for a down payment. Now im betting the whole thing on inverse index etfs and the like. If the economy tanks, I make money. If the economy gets better, I lose money, but what the hell, Ill have a job.
““‘Sure, it’s a good time to buy if you don’t mind losing 10 to 15 percent of the sales price,’ said Thornberg.”
Try 60-70% off those insane prices. That 1500 square feet starter 3/2 house is not worth $500k, try $200k if even that in San Diego. Do you think $200k is still too high compared to median salaries? Is San Diego “desirable” enough to fetch over $100/foot when most other locations will be under $50/foot?
Yeah, this remark (of Thornberg’s) reflects poorly on Thornberg. Heck, many of us right here on HBB have said we wouldn’t mind losing 10% if we thought that would bring us to the bottom. But no, when buying costs 50% or 100% more than renting, the price floor is nowhere to be seen.
And the stock market is no longer holding up. Intel is getting clobbered and that bodes poorly for tomorrow. I can’t wait to turn on Squawk Box in the morning. They will be whining for an emergency rate cut like a bunch of little girls. There are trillions of dollars just melting away.
Nikkei is at 13,775 as I type. It seems like only yesterday when it had climbed back up past 17,000. Phony wealth is melting away like the wicked witch at a waterpark.
Ahhhhhhhhhhh!!! You cursed brat! Look what you’ve done!! Wealth is melting, melting. Ohhhhh, what a world, what a world. Who would have thought that some little house like you could destroy my beautiful wealth. OHHHHHHH!!! NO!!! I’m going…ohhhhhhh..ohhhhhhhhhhhhh….
“All my beautiful wickedness,” cried the REIC as it melted down.
Moved everything in my 401K to bonds in Dec. Im up 1% for the year and everyone I work with who thought I was crasy is down and some are way down.
You need to take out the maximum loan allowed by your 401K plan and stick it in T-bills. Forget about rates. Your 401K investment, even if it is in a stable value fund, could take a big hit.
Bye FL: we bought our first house in Irvine, CA in 1993 for $245,000 (1700 sq ft, 3 bedrooms, two bathrooms.) Since 1993 was the bottom of the last cycle, I think it’s unrealistic to wait for prices to reach $200,000 in San Diego. Probably the best strategy is to wait until prices stop dropping - we can expect things to stabilize for a few years after they stop falling. If things fall to
Not sure if the same thing exists in Calif. but in NY the property taxes keep rising even though prices are falling. All that will serve to do is bring prices down even more.
Prop. 13 guarantees that taxes fall with prices, but you have to ask for a reassessment.
Yes and no…
if you bought in 2000, the tax goes up 3 or 4 % per year. So lets say you bought for $500k and comps are now $1m. You’re paying tax on ~$600k basis. Comps fall to 900k in 2009. You’ll pay tax on 620k in 09. Only if comps fall to less than purchase price + 3-4% per year do taxes go down.
having said that, if the tax went up 4%, and cpi (inc food and energy) went up 4%, then in real terms taxes were flat. If one believes the blogosphere cpi of 10% then taxes went down in real terms! yay!
IIRC, the downturn in OC started in 1990 peak and bottomed in 1996. And I don’t understand when people post that there’s no V-shaped recovery in real estate, most SoCal properties recovered peak prices by 1999 (in nominal terms, of course.)
From what I’ve seen, peak prices in So Cal were reached in about 1989 and didn’t reach those levels (nominally) until 2000/2001. Pretty flat from around 1995-1997, so you don’t have to rush into anything.
He clearly meant 10 to 15 percent per year for the next several years.
““‘Price is king,’ said Jerry Abbott, president and co-owner of Coldwell Banker Grupe, Stockton.””
Yay - my favorite quotable RE agent! Achtung mein herr! Let us blitz forward with the 22nd Realtor Panzer Grupe!
(Actually, he does appear to be seeing the light, given his quote…)
Price is king
Retreat to Victory!
Sales are down everywhere from the peak. When will Realtors ™ walking away from their office rents hit the economy? A reduced sales rate times a lower price…
ahh… This bubble has taught me patience.
Got popcorn?
Neil
A new time scale for when it will be safe to buy a house in California.
“A new 11-year cycle of heightened solar activity, bringing with it increased risks for power grids, critical military, civilian and airline communications, GPS signals and even cell phones and ATM transactions, showed signs it was on its way late yesterday when the cycle’s first sunspot appeared in the sun’s Northern Hemisphere, NOAA scientists said….”
http://tinyurl.com/23wzvd
NOAA
Buy when the sunspots end.
As a ham operator, I welcome our new
overlordssunspot cycle.Something else on my mind has been commercial RE. Anyone noticing a number of underleased commercial properties? Where I live near Boise, four “mini” strip malls have popped up on the main drag and they are empty- no leases. The smaller spaces around our new Kohls are also mostly empty. Professional spaces have also been built near a lot of new subdivisions and they are mostly empty (see a theme?)
Am I wrong, or is commercial RE now being overbuilt?
I am seeing the same here. You can’t make money with those crazy leases and recession. They are taking their business elsewhere, some even vitrual over the internet.
I have begun to notice this a little bit as well. Middle of Washington DC.
Same thing here in Pullman, WA. I drive by one brand new strip all the time and it is still completely vacant one year after completion. Ouch!
Same in LA. In the busy area where I live, a Blockbuster closed in a mini mall just off the 10 freeway and has been unoccupied for months except for a Haunted House on Halloween. I seem to notice many commercial spaces occupied with transitory things like Xmas trees or totally empty.
One more for the anecdote file. I sometimes take my kids for an afternoon treat to a Coffee Bean a couple blocks from where we rent. This is on Santa Monica and Beverly Glen (super, super busy heart of the Westside for those of you who don’t know LA). For the first time since I can remember, when we got there there was no line, there were at least four empty tables, but the strangest thing was that it looked as if they had not sold one pastry in the whole day. I know what I’m talking about because many times when we got there at 3:30 pm there were no more chocolate chip cookies (which would make my 6-year-old son very upset). Today, you had your pick of everything from coffee cake to cheese cake to scones, and there was plenty of all of it. It might mean something, it might not, but it did seem a little different from the usual.
The south bay area of LA is toast. Many of the mini-malls were flipped and now the new owners are raising rents. This is forcing out a lot of mom and pop businesses just as the Realtors ™ and mortgage brokers flee.
In Santa Clarita, there is also a huge surplus. Same in Palmcaster (but that’s nothing new). Look down in Irvine.
Then jump on a plane and travel. I’ve seen the same in many places.
This should be a weekend thread.
Got popcorn?
Neil
Same thing in Oxnard and Camarillo. Centers half empty, the oldest strips fairing the worst as usual. I was look at buying commercial up there about 10 years ago but the writing was already on the wall. Greedy local government too.
“…the oldest strips fairing the worst as usual.”
They’ll end up with Mandarin signs; Blade Runner-esque?
Wow, wow, wow - used to live on Manning just north of SM blvd and could never get in that coffee bean. A couple of weeks ago I got 1st chance to use the new SM blvd. Nice but what a waste of money for what it actually ended up being and why the hell they didn’t run light rail through the center or at least bus lanes.
Nice but what a waste of money for what it actually ended up being and why the hell they didn’t run light rail through the center or at least bus lanes.
Tell me about it. I spent two years dreading having to cross Santa Monica and fighting a constant (losing) battle against dust and noise and all I got and all I got was a one more lane, a retaining wall and no bloody T-shirt.
I tried out SM Blvd as a route to Hollywood after they finished the upgrade. It took over an hour to go 12 miles, same results at a couple of different times of day. I now avoid it like the plague. It’s actually faster to drive to Hollywood from SM on Sunset Blvd… despite the nutty traffic and having to run the Strip.
With all this talk of traffic, you guys are making me homesick.
Once in awhile i’ll tune into knx 1070, just to hear the freeways going nowhere fast, always.
sm landlord: Dad used to go from Veteran and Sunset to Sunset & Argyle in about 25 mins in the late 60s.
Yes lots of empties, old and new, office bldg, retail and industrial. There are plans for more but I noticed some suddenly going on hold and the properties for sale again. What are they thinking? is there some big tax break they get for building with no tenants lined up? It reminds me of all the glass towers they were building in Dallas in 1980.
In PHX we are doubling the mall space. In the last 14 months, they’ve opened 4 giant new malls.
Oh, and despite all this new retail space, sales tax receipts are up 0.7% in the face of 3-4% inflation.
Fewer in inflation adjusted sales, in TWICE the retail space. Yeah… that is overbuilt!
Go Thornberg, go Thornberg!
Woot woot!
Regarding unaffordable rentals, I keep telling people to vote with their feet. What makes a location so “desirable” if you can’t enjoy a middle class lifestyle in the first place? Whats the point if all you can afford is a shack or tiny studio? And why pay rents(even if they are “cheap” compared to buying) when one can relocate and buy elsewhere for much cheaper than rents? Here in south Florida, a decent house can’t be had for under $250k to buy or $1300 to rent. I can get the same house for $50k to $75k in Pennsylvania(no point renting as it’s cheaper to own up north)
I do read a large number of your pro-Penna comments for every one of them that I decide to answer. I have just left Penna for the winter. Thank God. I do love that 3% flat-rate PA income tax, but the AZ tax comes out about the same for me, without freezing my butt. One year-round climate? …alas, one must pick CA coast, or Hawaii. Even this motel in Abilene looks good when I consider today’s PA weather.
I could always relocate again if I ever get sick of Pennsylvania’s fairly mild winters. By then, ill be able to get a nice house for cheap on the west coast in OR or WA
Well I’m back in PA from CA and I’m enjoying it again so far. Winter cold never really bothered me. I’ve been through Santa Cruz winters that really suck. I think it was back in 1999 that it rained every single day in January. That was horrible.
I’ve been through Santa Cruz winters that really suck.
Winter in Santa Cruz isn’t the only thing about the place that sucks. The summers kind of suck too; more often than not there’s a persistent fog bank that’s either covering the area and keeping it cold, or is offshore, just waiting to roll in.
Pennsylvania’s winters mild?
Compared to what, Alaska?
Look I grew up in Pa - family went to western PA around 1793 and never left, and went to college there in Meadville. The winters are NOT mild - well, maybe compared to Maine! The snow gets deep. I remember the winters of 75-76 and 76-77 when we had somewhere around 15-25 feet. Normal is 10+ feet.
You will buy real sweaters - wool, not polyster or cotton. (Hint: thick lovely sweaters from Ireland are the BEST!)
You will buy down coats, thick leather glvoes with wool lining and a good heavy hat (not baseball cap.)
You will buy fleece lined boots that are leather - not plastic.
You will learn to use chains on tires and how to rock a car out of a snow bank.
You will lean what cold and damp mean when the tempature is 20 degrees and it is cloudy out.
Now, having said that, I LOVE IT. I wouldn’t live anywhere there are not 4 seasons. I would regard to having to live in Florida or California as a horrible fate. And Arizona? Suicide would be preferable to being stuck in the middle of a desert away from my beloved Great Lakes.
Fall is stunning with the rich colors, spring is promise of summer and renewal, summer is very pleasant (warm but not oppressive with the humidity) and winter is like seeing world washed clean by shimmering white. Trade it for boring Fl or CA ? Nope.
If you are thinking of moving to rural PA (Oil City etc) you better love hunting Bambi; burgers, fries, and gravy; fishing and snowmobiles. You will also be considered an ‘outlander’ by the local residents in those small towns - tolerated by not accepted for a long time. Better check to make sure the house you want in one of those places actually has broadband -many rural areas do not have it or only have it in some places in a town.
If you want to move there, stay near I-79 between Pittsburgh and Erie. You have less chance of getting stuck in a drift on a backroad on your way to the local diner for meatloaf.
Try Pittsburgh, Sharon, Meadville (home of top-ranked college), and Erie. All are on or near I-79 and give you access to Pittsburgh and Cleveland (great symphony and art museums and one of the top 3 medical facilities in the US)
Enormous plywood sign with orange paint in folks’ neighbor’s yard in PA:
No Flatlanders
The running gag for boys to ask public school girls in my PA middle school: “Are you a flatlander or a hillbilly?” One sharp girl (yet another distant cousin of mine) shot back “neither — I’m a ridgerunner!”
People always talk about how expensive living in HI is, but we found that to be untrue. We lived in Kona and found we didn’t need heat or air, could grow veggies & fruit year round, could buy seafood cheap and didn’t need to spend much on clothes. If I was really thinking about survival mode, I’d consider going back for those reasons.
One thing that impressed me about Hawaii was that you don’t even need a roof over your head.
Think it ate the first try, so…..
Look I grew up in Pa - family went to western PA around 1793 and never left, and went to college there in Meadville. The winters are NOT mild - well, maybe compared to Maine! The snow gets deep. I remember the winters of 75-76 and 76-77 when we had somewhere around 15-25 feet. Normal is 10+ feet.
You will buy real sweaters - wool, not polyster or cotton. (Hint: thick lovely sweaters from Ireland are the BEST!)
You will buy down coats, thick leather glvoes with wool lining and a good heavy hat (not baseball cap.)
You will buy fleece lined boots that are leather - not plastic.
You will learn to use chains on tires and how to rock a car out of a snow bank.
You will lean what cold and damp mean when the tempature is 20 degrees and it is cloudy out.
Now, having said that, I LOVE IT. I wouldn’t live anywhere there are not 4 seasons. I would regard to having to live in Florida or California as a horrible fate. And Arizona? Suicide would be preferable to being stuck in the middle of a desert away from my beloved Great Lakes.
Fall is stunning with the rich colors, spring is promise of summer and renewal, summer is very pleasant (warm but not oppressive with the humidity) and winter is like seeing world washed clean by shimmering white. Trade it for boring Fl or CA ? Nope.
If you are thinking of moving to rural PA (Oil City etc) you better love hunting Bambi; burgers, fries, and gravy; fishing and snowmobiles. You will also be considered an ‘outlander’ by the local residents in those small towns - tolerated by not accepted for a long time. Better check to make sure the house you want in one of those places actually has broadband -many rural areas do not have it or only have it in some places in a town.
If you want to move there, stay near I-79 between Pittsburgh and Erie. You have less chance of getting stuck in a drift on a backroad on your way to the local diner for meatloaf.
Try Pittsburgh, Sharon, Meadville (home of top-ranked college), and Erie. All are on or near I-79 and give you access to Pittsburgh and Cleveland (great symphony and art museums and one of the top 3 medical facilities in the US)
From Wikipedia:
Flatlander:
“In the Appalachian region, it refers to any outsider, sometimes negatively but often jokingly. The borough of Mansfield, Pennsylvania is home to an eatery called Frankie Flatlander’s Cafe, which does brisk business despite the proprietor’s joking self-advertisement as a non-native.
In northern central Pennsylvania, one is either a ridgerunner or a flatlander. Flatlanders are generally thought of as people from New Jersey or the south of Pennsylvania, particularly around Philadelphia. The common understanding, as represented in the book Flatlanders and Ridgerunners, is that the flatlanders lack the knowledge of the hills and the means of basic survival and should go home.”
Yeah they are real survivalists there… Snowmobiles, scoped high power rifles and quads.
So many of those people were a bunch of dang fools.
How fricking skilled do you have to be to shoot a deer with a scoped riffle or even a compound bow? It takes you like two or three days of practice.
Now farming… thats hard.
You forget that global warming has changed all that. Winters are milder in the last 10-20 years all across the globe….even where I live in Alaska. Even the glaciers have been melting for instance…Chicago has had some days with temperatures in the 50’s in mid-January, unheard of a few years ago.
Nicely said AnnScott.
For some of us, four seasons are a must. Here in rural Western New York, I miss the artsy foreign film houses and the broadband, but splitting wood to heat my small efficient house, walking dogs through miles of empty woods, and enjoying the seasons makes it all worthwhile.
The Crash is going full speed! Inventory is already building in 2008 and were are sitting on 24+ months right now. The recession is in also on big time.
I hope everyone is prepared - Cash is king!
The saying went “A recession is when your neighbor loses his job. A depression is when you lose yours.” Unfortunately, nothing will stop this recession from becoming the New Depression. The U.S. economy, right now, is like the train that has jumped the track and started to sail over the cliff. We circumspect passengers inside the train may realize a catastrophe is unfolding, but we are still alive, still have a little time, and a lot of hope. But make no mistake about it, for many, this will be the financial equivalent of bone crushing, life ending, horrifying crash. Housing and homes are but one part of it. Businesses, jobs, educations, careers, marriages, savings, investments, hopes and dreams are all going to crash HARD. Some passengers have been napping, not paying attention, and the first few wild shouts and screams are getting their attention, and FEAR is spreading fast. That is the stage we are at NOW.
so, do you think it’s going to get rough?
SACRAMENTO — State officials warn that distressed borrowers who sold their home in a “short sale” last year still must pay state income taxes on the mortgage debt forgiven by the lender.’
At least one thing right in Clownifornia. Don’t change it Arnie.
“LePage looked at all of the sales in December to see what the last action on the property had been. For 31 percent of the sales in December, that last action was a foreclosure. (That’s compared to 4 percent in December 2006.)”
San Diego is such a gawdawful mess, isn’t it?
Had an HHB moment today. Overheard support staff at one of my client’s offices discussing how someone they knew was going to have to take about a $30,000 loss on selling their house. The tone of their voices indicated shock and disbelief.
Guess the conversations here in LA are slowly turning from “Wow, I just made $$$$ on my house” to “Wow, I just lost $$$$ on my house”. This conversation was overheard in Santa Monica.
For every conversation you hear, there are 10 that will never take place because people are too ashamed to admit that they made a mistake. It heartens me to hear you pass this story along.
Have very young, pregnant receptionist at office. I overheard her talking about house hunting and the house they picked. I thought about warning her, but it’s just so exhausting. People in that mode generally don’t listen and try to debate you and the you have to explain the whole bubble idea, credit crunch, case schiller charts and in the end most still don’t listen. I just let it go because she wasn’t talking to me anyway and the person she was talking to also was from another planet.
Word still hasn’t gotten out in Austin. Found out one co-worker just bought their house in July. They revealed this fact proudly, without hint of shame, as they seemed glad to have purchased before getting priced out forever. I bit my tongue. Another (young hispanic dude whose caddy has big rims) is planning on going to “real estate school”. I suggested maybe that wasn’t such a good idea. Blank looks.
This still has a ways to go before the average bloke figures out that real estate isn’t where the money is anymore.
Which planet? Is housing affordable there? Thanks.
Lose money on a house? That’s unpossible!
I had to have a very frank conversation today with a friend. I discussed the fact that he needs to cut his losses, take a huge hit and get on with his life. It would have been more enjoyable to stick my wang in a light socket but I knew I was doing the right thing. Like I’ve said, kicking somebody in the teeth doesn’t mean you don’t love them.
Promise me you’ll always hate me.
“Compared to that, the other three subsections of the county showed these drops: Central San Diego: 7.3 percent year-over-year, 12.4 percent off peak. North County coast: 6.8 percent year-over-year, 13.5 percent off peak. North County inland: 11.9 percent year-over-year, 17.2 percent off peak.”
It would be interesting to see those numbers restated in terms of the nominal dollar price decline in the median. For instance, if a median of $800,000 fell 12 percent (a rough guestimate of North County inland’s picture), that would represent a nominal dollar decline in the amount of 12 percent of $800,000, or $84,000.
Isn’t $84,000 12% of $700,000. What do you teach Professor? It’s not math. Is it?
lol…i believe the professor is trying the say 12% of $800,000 is $96,000
Hey thanks — I don’t teach arithmetic, that’s for sure!
Knife catchers amid my marshland, it seems the bust has come to the funky edges of Bay Area prime:
843 14th Ave, Menlo Park (unincorporated)
Owned for a long time by a blue collar guy who fixed it up to be one of the finest homes with 2br/1ba in under 900 sq ft in the area, then sold to some guy in a top end black Mercedes who made more modifications.
Paid $592K April 2005, Asking $799K, Zestimate $596K
http://www.apr.com/DesktopDefault.aspx?pageid=17&pagealias=Detail&ListingID=59873064
http://www.zillow.com/HomeDetails.htm?zprop=15568725
871 14th Ave, Menlo Park (unincorporated)
Owned for a long time by an infamous party animal and ladies man who built it out quite nicely to a 4br/1.5ba configuration that uses the limited lot well, then owned by a series of families who found paying for this home long term to be an unreasonable challenge.
Paid $933K December 2007, Zestimate has fallen from $1,050K then to $950K now and still no bottom, nor offers on the other home they own.
http://www.zillow.com/search/RealEstateSearch.htm?dg=dg1&addrstrthood=871+14th+ave&citystatezip=94025&GOButton=
The rails in back are the Dumbarton Spur which is expected to eventually take commutiers and possibly high speed rail, but currently is used for cargo trains and storage of empty container cars. The land is reclaimed from the marsh that gave Marsh Road its name and flooded in a minor but frightening way as recently as December. It is actually a nice area, but not as nice as people have been banking on.
Excellent, Mole Man! Do you happen to know how long the small one has been on the market?
The two bedroom one just came on the market, possibly even just today. The price matches the reduced asking for a 3br/2ba house on 15th on the other side of the utility corridor. Several recent sales were on the market for a while before being reduced. With Zestimates continuing to trail the market it seems like properties will above that level will continue to be reduced in order to move.
“Existing-home sales are picking up momentum in San Joaquin County. Pending sales jumped from 392 in November to 459 last month countywide, a 17 percent increase, according to figures from the latest Coldwell Banker Grupe-TrendGraphix sales report.”
“Foreclosures are accounting for about 70 percent of the monthly sales, he said, and investors are accounting for about half the buyers.”
Gilding the lily, until a few paragraphs later, when the ugly truth is revealed…
70% of those 459 homes that “sold”, didn’t really.
My county in the Central Valley decided to use about $250k of their homeland security money, to buy a bomb-disposal robot…
There are many people in my county that are barely making it, and they blow a quarter million on something that will never get used.
What happened to you, America?
They could have bought the cops a Roomba for a lot less, and a Roomba will vacuum the floors.
Can a bomb disposal robot be reprogrammed for Joshua Tree harvesting and insertion?
Now THAT sounds like a job Americans won’t do.
Big V,
Where are you looking and how big a house/apartment do you need?
Ah, the perrenial late reply:
I’m looking at anything within a 30-minute commute from the corner of 1st street and the 237. I need a 2-bedroom house, like 1000-1200 square feet.
I guess under the coming system, 1000 Ameros will equal 1 ounce of gold:
http://tinyurl.com/2lm9qj
Hi there experts… I have some money in my company’s stock options and was wondering if it makes sense to cash out my options and pay the principal on my mortgage. My loan is for 245k at 6.5%. Does it make sense to take out the option money and pay on to the mortgage? It’s around 45,000 dollars that I can take out.
You need to give more information. What is your income tax bracket? What is the anticipated return on the stock options? My immediate impression: refinance that mortgage, you can probably find 5.75% out there today.
“Steve Thomas, president RE/MAX Real Estate Servicesin Aliso Viejo, estimated that prices in Orange County fell about 10 percent from the June 2006 peak, dropping to 2005 price levels. ‘And this year, the tree will shake a little bit more, and we’ll come down to 2004 levels,’ he said.”
One month ago, he wrote…
The prime time to buy will be in 2008, with many choices, a lot of pressure on pricing, the absolute best interest rates and the knowledge that in time, the market will appreciate beyond the highs reached in 2006.
So, which is it????
In fairness, he has a consistent forecast: this year’s price decline will bring prices down to 2004 levels, and then, IN TIME, the market will appreciate beyond the highs reached in 2006. (”In time” = in 2022 ?)
I just did the math on Citigroup’s implosion. These guys lost $10 Billion in the last quarter. Put another way, Citibank lost $4.6 million each and every hour for the last 90 days.
Unbelievable.
“Pat Veling, president of a Brea consulting firm, believes that in many communities in Orange County – places like Yorba Linda, Tustin, Irvine and Huntington Beach – prices already dropped to late 2004 levels, wiping out three years of price appreciation.”
Wow. so, like, prices increased from Fall 2004 to Fall 2007 and then just crashed in December?