Condo Flippers Face A Loss Or Take ‘The Slow Bleed’
The Union Tribune reports on San Diegos condo bust. “During San Diego’s six-year housing boom, few neighborhoods have been more exuberant than downtown. Construction of sleek condo towers tripled the housing stock. A few buyers, meanwhile, have begun to negotiate good deals. A 15th-floor unit in Discovery on Cortez Hill purchased for $725,000 in 2004 sold a year later for $681,000.”
“Downtown ‘is probably one of the only places in Southern California where you can buy a house for less than you could a year ago,’ said (broker) Jim Abbott. Abbott said, ‘we’ve got a huge amount of inventory in a segment between $550,000 and $900,000 that is very tough to move.’”
“In the fall of 2004, George Hadjis of Carlsbad purchased a 1,027-square-foot condo in Little Italy’s Palermo for $504,000 as an investment. Hadjis. Today, he’s asking $489,900. The unit lacks a spectacular view. It has been listed for about six months with no offers. If it doesn’t sell in the next three months, Hadjis may take it off the market and rent it, likely at a rate that would not cover his mortgage payment.”
“Hadjis calls the experience frustrating. ‘I ask myself should I have dropped the price another $10,000 six months ago?’ he said. ‘Do I really drop it right now or do I take the slow bleed (by renting.) That’s what I’m struggling with.’”
“Carol Cavanaugh bought a condo in The Grande south tower for $623,000 in late 2004. She thought she would like the convenience of being close to the office, but she doesn’t like high-rise living. She put the unit on the market for $570,000 to $599,000. She has received two low-ball offers, both from real estate brokers. But Cavanaugh is going to stick it out until she gets what she wants, even if it is a loss.”
“Already, a handful of proposed projects have been put up for sale. Developers of The Elle, an 179-unit condo tower planned in Little Italy, are selling the site and development plans. The asking price is $17.5 million. It is now a parking lot.”
And in Orange County. “High-rises for residential living, which were barely whispered about a few years ago, are now the hottest development trend in Orange County. Orange County, on paper at least, is getting 44 such towers, including two already built. That could translate into 5,000 new condos.”
“Bosa Development, an outsider from Vancouver, Canada, built and sold two towers in Irvine. Other developers are scrambling to be next, he said. That rush could flood the market with a niche product. ‘They all jump in at once and sink the boat,’ Walter Hahn, a longtime county real estate economist said.”
“Developers with projects under way are skeptical their competitors will follow through. ‘I’d be shocked if 50 percent of planned projects actually happen,’ said Matt Montgomery, an executive in the Irvine (firm) that is constructing two towers in Irvine and plans a third.”
Lew Breeze, care to comment? Or how about letting us have a one-day free online pass to your 92101 condo graph, so we can see how badly inventory has crashed?
Most of the condo developers are probably hoping they can sell a lot of them to Asians are used to condo living in their home countries. But it’s going to be a huge mistake for them to put any money in the US RE market. Even if home prices only drop 50%, the dollar will likely fall 50% against Chinese yuan in 3 to 5 years and that will give Asian investors over 80% loss when all commissions and fees are factored in. Personally I think SoCal will drop at least 75% and that will mean at least 90% loss for Asian investors.
Japanese investors accidently fell on their swords by buying US RE at the end of the 1980s. It is hard to imagine Asian investors making the same mistake so soon, but I would not assume it is impossible given all the high level of mass stupidity which is driving the housing market.
I notice that Asians like to buy golf course property .In Valencia I saw Asians camping out to get the choice golf course lots .
Boy do I agree!!!! They follow each other around so close that they are afraid they will not get in on the next development phase. Sheeple in mass movement…..
I say: “San Diego condos for everyone!”
George and Carol - Next you “invest” do your homework.
*time (I never proof read anything)
1501 FRONT STREET #516, CA 92101
List Price: $489,900
Price Reduced: 11/19/05 — $499,000 to $489,900
Listing Date: 09/13/05, On Market: 201 days
Square Feet: 1,027, 2 bed/2bath
HOA Dues: 300
Purchase price: $504,000
Purchase Date: 11/2004
I guess some homes are taking slightly longer than the 66 or so days realtors keep telling us is the average time on the SD market…
What can I say. 500K for a shoebox? I don’t think so. Let’s try about 150-175K
I’m probably way out of line here but I think a lot of these condos should be going for $50K - $100k. There’s no fundamental value in these units. Why would someone pay all that money ($400K - $1MM)in a declining market? I think it’s going to get really ugly downtown. We haven’t seen anything yet. I went down there the other day and a lot of those towers looked like ghost towns, no lights on at all. Maybe people are buying them as vacation homes, etc. but it’s bad. Then look at all the condos for rent downtown on Craigslist. It’s crazy!
The SD Union Tribune is on an unprecedented roll today. I am starting to wonder if their pension fund asset manager has shorted Shiller’s new SD housing market futures, with the intent to cash in after the crash they are precipitating.
The lead article in the weekend Home section is linked in below. As I read it, I imagined that I was hearing a loud popping sound.
“This owed house
For many, a house isn’t just shelter; it’s a portfolio riding the waves of an unsettled market
By Walter Kirn
April 2, 2006
Knight Ridder / Tribune
http://tinyurl.com/o6g7v
Even in the bubbliest local markets, like those on both coasts and in certain favored ZIP codes, it’s hard to know if the four walls around you are standing firm or closing in. It all depends, and on so many things. Every night, like millions of other homeowners, I lock the doors, turn off the lights, peer out the windows to check for burglars and go to bed inside my money. It’s all around me, in the walls and ceilings, under the floors and spread across the yard.
Some nights, when I’m lying very still, I imagine that I can even feel it growing. That faint vibration in the foundation? That subtle rumbling in the Sheetrock? It’s not a small earthquake; it’s equity accumulating in the cozy three-bedroom portfolio I call home.
Or maybe it’s equity vanishing? I can’t tell. I’m not a banker or a broker.
When I bought my house several years ago, paying the asking price without a fuss after selling another house at its asking price, I didn’t regard it as an investment but as a dwelling place that suited my needs.
It reminded me of the house that I grew up in, whose value I never once thought to ask my parents about because it wasn’t expressible in dollars. I loved that old house for its feeling of security, its reassuring wooden solidity, and that feeling was what I hoped to duplicate when I moved into this one decades later.
But things had changed, I realized, as time went on and my book of mortgage coupons grew thinner. The physical structure in which I hung my clothes and arranged my furniture was also a financial structure, and the security it seemed to offer fluctuated with the market – not only the local housing market but the national and international credit markets.
A refuge? A castle? It didn’t quite feel that way. Once I had remodeled the place, refinanced it and borrowed against its appreciating value to buy a depreciating car, I discovered – as so many of us do these days – that I was living in a bond with bathrooms, a stock certificate with a front porch.
I know I’m not alone in my mixed feelings about the economic and cultural shifts that have turned what we once called “houses” and “apartments” into what we now refer to as “residential real estate.”
It’s a chilly, bureaucratic term that reflects an unsentimental fact: Americans have far more than their emotions tied up in their homes these days. They’re our chief economic assets, in many cases – our sleep-in piggy banks and even our slot machines – and we’re spending more and risking more in order to acquire them and hang on to them.”
“Carol Cavanaugh bought a condo in The Grande south tower for $623,000 in late 2004. She thought she would like the convenience of being close to the office, but she doesn’t like high-rise living. She put the unit on the market for $570,000 to $599,000. She has received two low-ball offers, both from real estate brokers. But Cavanaugh is going to stick it out until she gets what she wants, even if it is a loss.”
I think The Grande is one of the nicer developments Downtown, but the HOA is $650+/pm….dream on! Most of the units in The Grande with a reasonable view are $750K+…even with 20% down the monthly cost is $5K/pm after adding HOA, PT and Mortgage. For that I can have a nice SFH somewhere that there is at least some parking when people visit. Carol, when you get to $250K I’ll be interested!
“luxury condominium” will soon be added as an official entry in the Dictionary of Oxymorons.
In the early 1980s, I was invited to a housewarming for a couple who had purchased a new condo on Wilshire Blvd. As it turned out, this was a “luxury condo.” They had purchased the entire top floor and maid’s quarters down on a different floor. I can’t remember offhand how much it cost, but it was a lot, even in those days.
So, yeah, there are some luxury condos, just not as many as people think there are.
I’m interested when she pays ME $599. Plus the $650/mo HOA.
‘I ask myself should I have dropped the price another $10,000 six months ago?’ he said. ‘Do I really drop it right now or do I take the slow bleed (by renting.) That’s what I’m struggling with.’”
From a purely selfish/entertainment perspective, may I suggest that you take the slow bleed? Along that line, I think that the lesson will be drummed into your head much more effectively by getting stoned to death by the steady arrival of bills you struggle to pay, as opposed to the quick shot to the back of the head by an underwater sale. Which ever you choose, please keep repeating the mantra “I promise to work for my money” or “I am the greatest fool” until your urge to speculate on borrowed money is gone forever.
made me spill my coffee!
LMAO!
10K wouldn’t have done it so it’s a moot point.
‘I ask myself should I have dropped the price another $10,000 six months ago?’ he said. ‘Do I really drop it right now or do I take the slow bleed (by renting.) That’s what I’m struggling with.’”
This greedy fool might recoup some of her soon-to-be massive losses by setting up a Bagholder webcam. It would be worth paying to watch, real-time, as greed turns to doubt, then fear, denial, panic, and finally, resignation as the lowball offers get lower and lower.
awesome idea..better than even watching porn.
“until your urge to speculate on borrowed money is gone forever.”
Should the US government have done more to protect people from themselves? Conversely, when we have a gov that allows interest deductions on a first AND SECOND home and then allows each spouse to deduct 250 K gains from a home sale, how could I even think such a thought. The US gov has discovered that home ownership fosters consumer activity and blindly assumes all home ownership is good.
Should the US government have done more to protect people from themselves?
To a limited extent, yes. Humans did not evolve in an environment where they had to stake themselves to the ground for 30 years and hope that sufficient supplies of food continued to wander by. Humans are not, as a whole, qualified to make those decisions because A) hostile trusted elements attempt to lure them into it and B) they don’t recognize it for what it is: a man-eating venus fly-trap.
In the past, these protections were known as “lending standards” and “sound banking practices.” They assured that only a more limited number of people fell victim.
Two months until complete panic in CA. March sales should be in the toilet and ready to be flushed. This month long rainstorm here in NorCal will be what they blame the poor sales on monst likely, and they will spin it so that when the sun comes out tomorrow the buyers will return. Sometimes I think the concept of “coincidence” is lost on people.
A quick blurb on Santa Cruz is that we only have one condo conversion and that is the North Bay Apartments now becoming condos selling in the $500s. These are places that were rented to college students and other low income folks that wanted nicer apts for around $1600/mo. Oops too bad, you gotta move now! I really don’t know how well they are selling or have sold, but to pay that much for a highway frontage apartment, I mean condo, is just kooky. I bet they didn’t even put in granite countertops the cheap bastards!
http://www.davidlyng.com/property/property.asp?PRM_MLSNumber=610102&PRM_MlsName=reinfolink&VAR_isRegularDisplay=#
Cut and paste if you wanna see what you get. And it does look like granite countertops for all!
“Carol Cavanaugh bought a condo in The Grande south tower for $623,000 in late 2004. She thought she would like the convenience of being close to the office, but she doesn’t like high-rise living. She put the unit on the market for $570,000 to $599,000. She has received two low-ball offers, both from real estate brokers. But Cavanaugh is going to stick it out until she gets what she wants, even if it is a loss.”
Ok…what do you think she considers *low-ball*? $550K? $500K? She SO knows she overpaid but, poor thing, she is trying her best to get as much as she can. (HA! Sorry, Carol…you came to the party too late. ) But she doesn’t like where she lives…..the longer she stays there, the more anxious she’ll get and some of those low-ball offers will start to look good to her. She may wind up calling those brokers back.
Makes me wonder, though, why she bought the high-rise spot in the first place. (ok…money) I KNOW I couldn’t live in one of those things on a continual basis. I get nervous just staying on the 8th floor in a hotel for a few days….fire truck ladders only go so high and in case of fire or other problems, emergency rescue becomes more difficult.
And another thing….low-ball offers from real estate BROKERS? I wonder what their angle is.
BayQT~
By the time she calls them back, they’ll be offering $400K instead of $500K.
The San Diego Union Tribune is great today. Another article in the Home section titled “This Owed House.”
“Every night, like millions of other homeowners, I lock the door,turn off the lights, peer out the windows to check for burglars and go to bed inside my money.”
“Some nights, when I’m lying very still, I imagine that I can even feel it growing. That faint vibration in the foundation? That subtle rumbling in the sheetrock? It’s not a small earthquake; it’s equity accumulating in the cozy three-bedroom portfolio I call home.
Or maybe it’s equity vanishing? I can’t tell. I’m not a banker or broker.”
Also the SDUT paid for some nice bubble ‘artwork’.
Listening to those trying to cash-out of their ‘million’ dollar homes, it’s hard not to think of all those ‘millionaire’ dot-comers. Wonder what happened to them.
I think it is hillarious that in the same paper today, Home section, real estate mailbag, a homeowner is asking about his ARM he just took out a year ago at 1.95 percent. It just jumped to 4.95 percent. “that was quite a jump in our monthly payment, but we handled it.” But the catch was when the lender sent the IRS form 1098 year - end report, their mortgage balance went up about $7,800. These fools actually had to ask the lender why…can you say “negative amortization?” Duh, so many stupid people. Good thing they don’t use their real names in the column! That just proves it is not the price or the costs, just the monthly payment that matters to most sheeple, and if this is any indication of the stupidity of the average buyer/mortgage holder, this economy is in real trouble here in San Diego.
The big question is: How many are in this situation? Or similar? This one says he handled the increase, but what happens if his income is cut back? Or he loses his job? Of his marriage breaks up? Or he gets sick?
So many Americans who are unbelievably vulnerable. No savings to bridge difficult times. As home prices drop, they have less and less borrowing power. Lenders are tightening. Employers are laying off and cutting pay.
This will be ugly beyond belief.
True story.
Friend of mine asked me a year ago about whther or not he should HELOC about 150K out of his house to help by a place for his mother-in-law. Told him it was a bad idea.. gave him ample evidence why, won’t get into it all here.
Fast forward 1 year: His wife told him she can’t remmber the last time she was happy for 24 hours straight. They are finished.
With the bubble crashing in Phoenix they can’t sell the house for what they owe and neither can afford it by themselves. They don’t have much in savings so they can’t afford to sell the house at a lost. He is desperate and despondent.
Might as well BK and divorce at the same time (if he was a shit he could BK after the divorce) and start everything all over.
Bottom line: People may be stupid, and god knows we try and help’em out, but this bubble is going to f@ck up a lot of peoples lives. Whether they deserve it or not is not for me to judge.
I was thinking the same thing. Lending documents in California clearly spell out what the actual annual percentage rate owed is going to be. Did the idiot borrowers think they were special and someone was just giving them free money with the low interest rate? They obviously didn’t bother to read the fine print. They didn’t need to since we all know real estate only goes up! The biggest financial committement of their lives, and they didn’t bother reading the contract! Guess they were in too big of a hurry. They probably relied on their Realt-whore to explain it to them (the TV commercials says it’s so!). It just amazes me how stupid some people are.
Stupid is what stupid does!!!! A crash will appear sooooon!
I think part of this “lack of understanding” is due to the various State Bar Associations allowing “non-lawyers” to conduct real estate closings. When, as a lawyer, I closed loans I clearly exlpained all espects of the Note to the borrowers including negative am. Non-lawyers can’t legally explain anything.
And no, I don’t practice anymore and am not attempting to protect my income. I can remember some very “heated” phone calls from borrowers to loan officers mid=closing and also borrowers “walking” in some cases.
“I think part of this “lack of understanding” is due to the various State Bar Associations allowing “non-lawyers” to conduct real estate closings. When, as a lawyer, I closed loans I clearly exlpained all espects of the Note to the borrowers including negative am. Non-lawyers can’t legally explain anything.”
That has got to be the funniest thing I have read since I have been on this blog
Not everyone sees storm clouds on the horizon. Here is an article about a well-known homebuilder CEO who foresees nothing but growth ahead. McMansions for everyone!
“Toll Bros. CEO sees housing growth ahead
By Deborah Yao
ASSOCIATED PRESS
April 2, 2006
http://tinyurl.com/kk8t7
PHILADELPHIA – Predictions of doom and gloom in the housing market are overblown and there is still room for real estate to grow as long as mortgage rates stay near historical lows, according to the head of Toll Bros., the nation’s largest luxury home builder.
“Last time I saw 6 percent was 1966, except for the last couple of years,” Robert Toll, the company’s chairman and chief executive, said recently. “If rates go to 7.5 percent, we’ll take it. We can still do a whole lot of business.”’
P.S. For those who think the bubble money which recently left the stock market to drive the housing market through the roof is soon going to slosh back into the stock market, I need to remind you that 1966 was a similar point in interest rate history to 2006, when rates were rising up from historically low levels. It was also the start of a long correction in the US stock market which did not bottom out until 1982.
He’s got more stock to sell.
Toll is also cautiously optimistic about his plan to boost market share in the company’s SD division. I guess he realizes that the stories about an inventory crash underway in SD county are nothing more than overblown rumors.
I love the “cautious optimism” terminology — it brings to mind the oxymoron “bold caution” used to ridicule corporate managers in the musical “How to Succeed in Business Without Really Trying.”
By the way, I don’t think Toll will have much trouble finding unbuilt land around Carlsbad. Last time I drove through the area, I saw acres and acres of freshly bulldozed land waiting to be transformed into McMansion tracts.
—————————————————————————————–
‘Cautious optimism’ rules local Toll Bros. projects
By Carl Larsen
HOME EDITOR
April 2, 2006
http://tinyurl.com/fwa9z
Toll Bros., which opened operations in San Diego County in 1999, has been a missing player in the marketplace of late, with only two local new-home developments under its belt.
But that’s about to end, said new division President Dave Lopez, who is based in Carlsbad.
Lopez said company chief executive Robert Toll has instructed him to boost market share in the builder’s San Diego division, which includes part of southern Riverside County.
Over the past few weeks, company executives have been scouting land on which to build luxury homes in the $1 million to $2 million price range.
Industrial zoned land south of Irvine bordering Laguna Woods, Lake Forest in OC just got rezoned to commerical - bringing another 750 new units to the area, and they haven’t even touched the thousands of acres availabe at El Tora airbase. Anybody that believes the “no more land to build on” talk is a victim of sensationalism.
he doesn’t fear higher rates, but just wait till people realize inventory is exploding. after that, just wait till lender tighten their standards.
weren’t interest rates above 10% in the late 70’s?
Yes, went as high as 18% for a while.
Yep. I bought in Berkeley, CA..1979 (sold in ‘89/’90). I believe the rate was 15 or 16%…somewhere around there.
BayQT~
Assumed a VA mortgage at 13.5% in spring 1981. And that was a good rate–which is why we assumed it. Hadda get in while we still could, y’know…otherwise we’d be priced out forever.
Were lucky to sell the place in ‘86 for what we paid for it.
Before the S&L meltdown, most banking was intrastate, and some banks were having problems because their mortgage rates were bumping up against the interest rate limits set by state usary laws. Of course those laws are why credit card companies are all located in South Dakota or Delaware, states without usary laws.
Here is some great educational information for would-be FBs from the SD Union Tribune:
REAL ESTATE MAILBAG ROBERT J. BRUSS
How can a mortgage balance increase instead of decline?
April 2, 2006
http://tinyurl.com/fwhqq
QUESTION: About a year ago, we bought our home with the help of an adjustable rate mortgage (ARM) at 1.95 percent interest. We knew it would adjust after six months to 4.95 percent interest. That was quite a jump in our monthly payment, but we handled it.
However, when we received the lender’s Internal Revenue Service 1098 year-end report, we learned our mortgage balance has grown by about $7,800. When I called the lender, I was told the increase was “unpaid interest.” What’s that?
What’s that?
It’s called an option arm, you retard! Oh, and by the way, get ready for another interest rate bump soon.
This loan is still in neg amort mode numbnutz! You’re packing on more principal every month. Soon the interest rate will be over 7%. Handle that you big idiot!
Just wait until it starts to amoritize. Then he’ll be really screwed.
Get out of that loan now before the money market gets tight ! Hope the guy has enough equity to do it .Its hard for me to believe that these people did not know the potential negative of their loan . Maybe it true that alot of lenders were lying about the loan features .Alot of escrow officers sign up people on the final loan documents and you would of thought they would of told them if questioned.
Wizard,
You make some good points. I’ve owned 4 properties in my time, and the one thing that sticks out in my real life real estate education is that you have to ask the right questions. I learned something with each purchase, and it was ONLY because I asked the agent the right questions. Oftentimes, as a novice buyer, if you don’t know which questions to ask, you won’t have all of the information you need to be an informed buyer. Yes, I could have dug around for more info but you recall that during the time of my first purchase (’79) the internet was a wee wee babe…the *internet* was not a household word…I didn’t even have an email account until the late 80s (on Prodigy). All of your information was through word of mouth or from your real estate agent, whom you trusted because you didn’t know any better.
People nowadays have MUCH better resources than buyers from “back in the day”. Resources like Ben’s blog, and others just to name a few. But as ironic as it may seem there are a lot of people who are still computer and internet illiterate. They still get their information via word of mouth, or their local news. So, as someone has mentioned before, it is so very irresponsible of the media to keep people in the dark about the goings-on in the market. Stories are just rising to the top now when they should have been “out there” a long time ago to help save some poor real estate ignorant souls.
And it definitely does not help if lenders, escrow officers and agents are not truthful or do not disclose all that the buyer needs to know regarding what they are getting into. While there are surely honest RE professional around, there are many who are not being as responsible as they should be in helping to educate their client. It’s all such a shame and a disgrace.
(stepping off the soapbox :-))
BayQT~
Nice piece in the LATimes today on First Federal, who specializes in option arms.
http://www.latimes.com/business/printedition/la-fi-firstfed2apr02,1,2797703.story?coll=la-headlines-pe-business
Here’s a chart of pending foreclosures in San Diego county. Based on this, the sentiment today should mirror that of the market in 1991. People are just starting to “get it” and realize there is a problem. It will take YEARS to work these imbalances out, just like last time.
SD Pending Foreclosures
url is http://tinyurl.com/zlvc2
Dollar to yen exchange rate since 1971. The dollar lost over 66% against yen from 1971 to 2001. It’s going to happen again against Chinese yen.
I wish I could find the chart that goes all the way back to the JPY introduction. At that point it was 1USD=1JPY, up to WWII when it was fixed at 360 to 1.
So with today’s USDJPY at117.75, we’re still doing okay, in my opinion.
I remember in the early 80’s when it dropped below 200 and was presented as the end of the world. It wasn’t.
And in late 2004, with the Yen at 103 or so, everyone, and I mean everyone was predicting it was shortly headed for 90 or 80.
If you’d bought yen at that point, you’d be 1500pips in the red collecting negative interest.
I might do some buying if USDJPY gets to around 124, though.
If you take the extra interest you made keeping us dollar tbills instead of yen tbills yen went down against dollar!
These last five years the current interest rate has been published right up there with todays temperature. However, this guy thinks he trump’d everyone with his 1.95% rate. See ‘ya on the front steps of the county courthouse!
Just wait til rates on these ARM’s hits 8% in next couple years. These suckers will be screaming like stuck pigs. Then these morons will roll over like cheap hookers!
now that’s an insult to pigs and hookers
and morons.
I don’t understand, with so much inventory of unsold homes and increasing everyday, still the mediun price still going up in Riverside county — 393000….395000…396000 and 397000 latest. Can any one explain ? I want to see otherway round.
The market value is hidden in that growing pile of unsold used home inventory. It will be revealed over the next three years as those who need to sell find they are only able to do so at the market price, which is lower than they are currently offering as a sale price.
All these comments show just how uneducated people in this country really are. They do not have a clue.
Check out bubbleinfor.com, an intformative post from Jim the realtor in Carlsbad, his latest post in most interesting.
A few topics ago, a blogger explained that the increase in median prices mostly reflects that there are many higher-end properties being sold and that’s what moves that number up.
“The median price is the price that is midway between the least expensive and most expensive home sold in an area during a given period of time.
The median price indicates which price range is most active. Not all price ranges experience the same market activity at any given time.”
http://doityourself.com/houseselling/medianhomeprice.htm
BayQT~
#3 measures of central tendancy, mean, median , mode. The mean and median are often confused. Mean= avg, median = middle point of data, and mode = most often occurs. In your case the median still going up is probably because there are a lot more higher priced sales in your area.
Tried to post this before, but it does not show up. This article on the front page of the Homes section is yet another nail the SD Union Tribune has driven into the real estate bubble market on this first day in April 2006:
——————————————————————————————-
This owed house
For many, a house isn’t just shelter; it’s a portfolio riding the waves of an unsettled market
By Walter Kirn
April 2, 2006
Knight Ridder / Tribune
http://tinyurl.com/o6g7v
Even in the bubbliest local markets, like those on both coasts and in certain favored ZIP codes, it’s hard to know if the four walls around you are standing firm or closing in. It all depends, and on so many things. Every night, like millions of other homeowners, I lock the doors, turn off the lights, peer out the windows to check for burglars and go to bed inside my money. It’s all around me, in the walls and ceilings, under the floors and spread across the yard.
Some nights, when I’m lying very still, I imagine that I can even feel it growing. That faint vibration in the foundation? That subtle rumbling in the Sheetrock? It’s not a small earthquake; it’s equity accumulating in the cozy three-bedroom portfolio I call home.
Ben,
Please feel free to delete this post, as it is redundant with one above.
GS
$5.00 fine, stucco…..
http://tinyurl.com/fys35
After all said and done, as this NYT atricle points out in , how many people will end up experiencing this….
Very sad.
BayQT~
You can tell the govt’s affordable housing policy is seriously out of whack when homeless folks living in their cars are juxtaposed against “investors” spending hundreds of thousands to carry empty luxury condos.
Well said GetStucco
That letter to the SD tribune was awesome.
Marina del Rey observation:
On side notes, Ive been sorta following the newly coined ‘loft district’ in marina del rey. It seems that the ‘apartment turned condo complex’ next door now has realtor ‘for lease signs’ in front of it PLUS, there is still the sign ‘for sale’ for the unsold units. They claimed that it was 82% sold out…hmmm, wonder who bought…investors, ya think.
Anyway, I also noted a bunch of craigslist posts regarding these apts. First they call them condos, which they definitely are not, then one realtor posts a 2/2 for $3175 per month. Ummm, I had to reply to this b/c the next door apts on the same street go for 2200-2400 for a 2/2(with free first couple months rent). Classic. These 2/2 units were going for 650K in July 2005. It was something like 400-500 HOA/month. Now who’s slowly bleeding…Bwwwahahaha. I’ll let you know w/ a response, if I even hear one…JF
They can ask whatevery prices or rents they want and end up getting nothing. They will go broke faster this way. I’m getting more confident every day that SoCal will fall by 75% or more.
the high rise condo project referenced is the Marquee Park Place near Jamboree and the 405 freeway in orange county. there are about 232 units in the project and the developer just started closing escrows in Jan 2006 and is probably pretty close to being closed out by now. Of the 232 units, as of this morning 62(of the 232) are available for resale in the local MLS and 28 are available for rent. Asking prices are in the range of $700,000 to well over $1,500,000 for 1,200sf to 2,100sf units.
doesn’t look like people who bought there want to live there. don’t know why though, the association fee is only around $1,100 per month, you get to listen to the freeway sitting on your deck and if you want to live here you aren’t allowed to have any pets.
a whole lot of people trying to flip!
“and if you want to live here you aren’t allowed to have any pets.”
My understanding is you can’t even have a BBQ! (something about
that smell of sizzling steak wafting into your neighbors front room)
I pass those towers every day going to work (about 5am). As
of this morning, I still don’t see any lights on in both towers
except for a few that look like work lights. (Maybe trying
to save some money on the electric bills?)
With the San Diego Union Tribune’s headline “Downtown Downturn?” I can predict the flopper’s responses: “the media caused the crash!”
Kill the messenger effect…
Its already being broadcast. On money in the morning on AM600 last sunday, the host george chamberlin asked the guest, Alan Nevin (either a realtor or RE shill) why the media was attacking RE. His response was two fold:
1) It is resentment based out of the east coast, because they are envious of our prosperity
2) Most reporters are leftists/socialists who dislike capitalism and wealth creation that isn’t evenly distributed.
I’m paraphrasing, but those were his 2 main points. George didnt
even challenge him, because hes a shill himself. Truly pathetic.
Alan Nevin = California Building Industry Association’s chief economist
http://www.cbia.org/index.cfm?pageid=937
I don’t know how many of you tracking OC RE market, but I am subscribe to the OC register newspaper and I recall we had here Q&A by Jonathan Lasner telling us how things are completely separated between advertising (marketing) and “news material”. So here is an interesting observation that I have seen:
1. This newspaper has already 2 official sections for real-estate, one Home buy and one Rent
2. In the main page they tell us a story about a guy who sells a city in the north of CA on ebay, they give him a link in the main page and then following it with TWO pages describing everything, how much he spend, how much he invest and who are his potential buyers and what price he looks to get. What wrong with this story?! if it was SOLD I could see the “news” part of it. But as it in a process of selling this is just plain advertising. Is that a coincident? Is it a newspaper or real estate magazine?
3. As we approaching the hot season of RE, the past few weekends the front and back page on the Your Money section was about RE. I guess if they writing about it so much its not just a negligent part of the OC economy as they trying to pretended. Especially as thing in RE slowing down, don’t you think there are other economic topics they could interest people besides the RE market for a non RE dominant area? Is not it more clear that there are “other” people who has interest to keep publish and spin the RE market?
4. In RE report page in the Your Money section, they give an example about people who bought their house in 1950 (you read right) and sold it in 2005 for 10 times. Who that is interested to buy a house in today market conditions care about how people bought a house 50-60 years ago??? And on the bottom of the page they give dry statistics about a zip code median household income of 45,000 and what his options to buy the median house of 650,000-700,000 house. They show that required income is 140,000 for the most flexible financial arrangement (ARMS and options etc.) to close to 200,000 for 30 years fixed. They do not show “LIVE” example of how this people buying this housing at today market conditions. (From time to time they print a really glory story about young couples in the late 20’s buying 600,000 house, he is a lawyer she is manager and they are able to pay it), this is NOT the typical OC resident! Or they encourage the one that are not like the previous example to do as our first immigrants did, rent 3-4 families together a condo and save save save. How long will it take to people who make median income that save 30% of their income a year for X years in a RE market were median house appreciating 20% year to save enough to have 20% down with 30 year fixed mortgage to buy the median house? Let me give you a hint NEVER!!! So is this RE part of this section is for buyers or sellers I really could not understand this.
5. Last week they changed their financial section from Your Money to Market Place. This change is made just as we about to begin the RE season. Is that a coincident?
6. After the change in that section the main page on the new Market Place last week The day theme:” was (as you can guess) REAL ESTATE in red ink explaining how the prices in OC are supported by fundamentals etc. the RE part of this section become 4 pages (used to 1 page) including the main story and the statistics. What happen? No more economic\financial news to write about?
7. They used to have in the Your Money (the old format) on the right side of second page a big table or zip code and price\sales statistics and next to them BIG arrows showing trends. In the NEW format this table pushed to the 3rd page on the LEFT side and the arrows shrink down at located at the bottom of the same page. Are they trying to HIDE something??? This is the more important information to the buyers they have in the RE part of this 4 pages, but that part they chose to hide. Is that coincident or it is does not follow the RE market interest?
8. This weekend the Market place main page “The day Theme is:” you can guess. REAL ESTATE again! What a shock!? And again 4 pages about RE and the back page is no more or less an advertisement for houses for sale.
9. Summary: this newspaper lost its value to me, because it turned from being a newspaper to be advertisement real estate magazine. They have now main page about RE, two separate RE section (Home buy, and Rent style) and a “new” Market place section dedicated for RE too. I got more things financial topics that interest me besides the OC RE. I canceled my subscription. I got no reason to pay for RE information that I do not care about and that I can get free on every street corner.
Have a wonderful week!
Latest coldwell banker magazine for San Diego is out, and prices are down on same homes about 3-5%. They are also publishing less, probably every other month now. I imagine at the bottom it will be quarterly, if at all.
Also, I noticed the coast news paper, which added a second section devoted to real estate about 2 years ago, has recently replaced the front page of the 2nd section with unrelated articles. This weeks issue
is about harmonicas!
Lots of open houses around town yesterday and today. I’ve seen a few sold signs and 1 in escrow. We’ll get a little spring uptick in sales numbers as we always do, but it will be marginal and only a faded memory in the flippers minds by early summer.