The Process Is Now In The Buyer’s Hands In California
The San Francisco Chronicle reports from California. “Bay Area home sales nosedived to a 20-year low and median prices dropped nearly 10 percent last month. A total of 3,586 new and resale houses and condos traded hands in the nine-county Bay Area in January, down 41.9 percent from a year ago and 29.2 percent from December, according to DataQuick. It’s the first time regional sales have dipped below 4,000 in the 20 years that the La Jolla research firm has tracked the region and the 36th straight month of declines.”
The Sacramento Bee. “In the most ominous indicator yet of the Sacramento region’s struggling housing market, January saw nearly as many people lose their homes as buy them.”
“January’s 1,815 closed escrows in Amador, El Dorado, Nevada, Placer, Sacramento, Yolo and Yuba counties was only 33 more than the 1,782 foreclosures recorded in the same counties that month, DataQuick.”
“Median sales prices for all new and existing homes combined have returned to June 2003 levels in Sacramento and to December 2003 levels in Placer County, according to DataQuick. Sacramento County’s median sales prices for all new and existing homes are down a record 26.8 percent from January 2007, the firm reported.”
“The county’s $253,000 median sales price is down now 34.6 percent from an August 2005 high of $387,000. Sales typically rise in February and March, but foreclosures are rising, too, experts say.”
“‘We could see that number continue to go up,’ said Fred Arnold, president-elect of the California Association of Mortgage Brokers. He ascribes the continued increases to ‘the enormous run-up of (home) values and the enormous number of loans that went out where many people weren’t giving thought to whether they could afford the home.’”
Bay Area Newsgroup. “Anyone looking for a housing auction has two to choose from in the East Bay this weekend. Hudson and Marshall will be auctioning more than 300 bank-owned properties running from San Jose to Vallejo on both Saturday and Sunday.”
“Another auction by Kennedy Wilson, selling 46 newly renovated Fairfield condominiums, is set for Sunday. The 46 Raintree Terrace condos range from a one-bedroom, one-bath, 669-square-foot model to a two-bedroom, two-bath, 867-square-foot plan. Starting bids on five of the one-bedroom models are $120,000 and homeowners association fees are $316 a month.”
“Kennedy Wilson auction group president Rhett Winchell said the original prices ranged from about $220,000 to $332,900.”
“‘Right now, the price is set at about 60 percent of its original asking price and the process is now in the buyer’s hands,’ Winchell said. ‘This isn’t a place that has an unpublished reserve where the seller is not obligated to sell. If you bid $125,000, and it’s the only bid, then you get it.’”
“Studies have shown that loans diminished as Bay Area home prices soared and lenders heaped less desirable mortgages on an eager market. Bernie Kellman needs no reminder. He finally shed his bike messenger life in San Francisco and moved across the Bay, got a good job and bought a house in Richmond in late 2004.”
“Now he’s stuck with payments from a loan that rose sharply after three years. Kellman says he was duped. Hoping to stave off foreclosure, he pays two-thirds of his mortgage each month while he struggles to reach his lender. He says he gets 20 calls a month, reminding him he’s behind.”
“‘I was swept up in the idea I could own a home. I was so excited to see I could do it,’ said the psychiatric social worker. ‘We’re Bay Area people. We expect to pay more. Take 50 percent. That leaves me a lot for food, drink and toys for the kid. But I’ve made such a mess, got in such a deep hole. I’m not getting anywhere.’”
From KGO TV. “According to RealtyTrac, Stockton had 22,000 foreclosure filings in 2007, in a city of just over 280,000 people. That’s up 271 percent compared with 2006.”
“The misfortune of others has been a boon of sorts for realtor Glenn Woodard, who has 25 foreclosure listings right now. ‘When the market shifted to foreclosures, that’s when I shifted from the regular business to foreclosures. 85 percent of my business right now is foreclosure properties,’ says Woodard.”
“Even in Westin Ranch, some families are finding opportunity in the tough times. Jeff Barnes, his wife, and six children are moving in where so many others have moved out.”
“‘There’s a lot of signs, a lot of foreclosures, but we’re moving in. For some people, it’s a bad thing. And for some people it’s a good thing. Now some people can get into a house that they couldn’t get into before,’ says Barnes.”
The Ventura County Star. “Ventura County recorded 423 sales last month, a 38.6 percent decline from 689 in January 2007. The number of transactions was a record low for any month in DataQuick’s records, dating back to January 1988.”
“The county’s median sales price for new and existing homes and condominiums was $477,750 in January, a 15.4 percent drop from $565,000 a year ago.”
“‘Clearly, this doesn’t look good,’ said Bill Watkins, executive director of the UC Santa Barbara Economic Forecast Project. ‘It’s still reflecting the deflationary expectations people have. When you expect prices to go down, there’s no reason to buy today.’”
The North County Times. “The only thing slower than molasses in January, it seems, is Riverside County’s home-sales market.”
“Buyers closed escrow on 1,939 new and existing houses and condominiums last month, the lowest number since January 1997, when the county’s population was roughly half as large as it is now, a research company reported.”
“Prices continued to plummet across Southern California, with Riverside County’s median sale falling to $331,500, its lowest level since July 2004, according to the monthly report by DataQuick.”
“The 20 percent decline in that figure since January 2007 — when the median was $415,000 — was the steepest in Southern California.”
“Banks seized as many as 2,800 of the underlying properties last month in Riverside County, according to a California tracking service. That number looms ominously over the 1,939 sales figure.”
“The result is that the number of homes for sale has continued to grow at an alarming pace. ‘As long as we keep inventory up and banks keep shoveling them in, we’re going to see a little more depreciation,’ said Gene Wunderlich, a longtime real estate agent in Wildomar.”
The Union Tribune. “So far, said DataQuick analyst John Karevoll, home selling has involved a great deal of distressed properties, nearly 50 percent of all San Diego sales in January involved foreclosures and defaulted homes.”
“‘Bad as it is for those involved, it is something that can work its way through the system,’ he said. ‘But if we add in a recession, then prices could go back to where they were in 2004.’”
“The current San Diego median is already back to those levels, he acknowledged, but that’s because distressed properties are selling at a sizable discount. In a recession, values of all properties would drop.”
“‘If we do start to see that, then things are going to be grim, to put it mildly,’ he said.”
The Ramona Sentinel. “A skyrocketing real estate boom that made fortunes on paper for some and sent prices soaring for all is having a bumpy return to Earth, affecting Ramona with as many as 237 homes in either foreclosures, auction, or pre-foreclosure, show records from ForeclosureRadar.”
“With 300 homes in the local MLS inventory, the 237 distressed properties spell the potential of a significant impact on the local real estate market.”
“Twenty-four homes sold in Ramona in December, reports Ramona Real Estate Association president Lisa Schmidt, reflecting a 32 percent drop in the median price.”
“‘They are in a great position now to buy if they can qualify for a loan,’ she said.”
The Thousand Oaks Acorn. “The slumping Conejo Valley housing market can expect little relief in 2008, a stark contrast to the area’s retail business environment which continues to see signs of growth and prosperity, experts said.”
“John Paglia, Pepperdine assistant professor of finance, warned that even though the area’s unemployment rate remains well below the countywide level of 5.7 percent, recession is still a concern.”
“The biggest worry locally is the steady decline in home values. The Conejo Valley’s drop of 15-19 percent in single family median prices exceeded the county’s decline of 13 percent in 2007, a report from Pepperdine’s Graziadio School of Business and Management shows.”
“At what point the prices will stabilize is anybody’s guess. ‘It seems like a bottom is called month after month,’ Paglia said.”
From Marketplace. “Scott Jagow: ‘There is another side to all these new foreclosures — it’s keeping people who buy foreclosed homes very busy.’”
“Sean O’Toole runs a website called ForeclosureRadar. Jagow: ‘Anything else that strikes you about what’s going on right now? The environment, with so many foreclosures happening?’”
“O’Toole: ‘Well you know, probably the biggest thing I see is everybody talks about this being a subprime issue…but something that’s not really talked about a lot that I’ve seen when I’ve tried to sell my inventory is that I’m really competing with the new homebuilders, and the new homebuilders have really lead prices down.’”
“‘You know, in Mantica, California, there were homes selling for $670,000, Anderson homes. They recently held an auction, and that same subdivision, that same $670,000 property was sold for $380,000. You know, if you paid 670 two years ago, and you can now buy that same house for 380, it’s awfully hard to find the will to keep making the payment.’”
You know, if these were CARS, and the story is about how there are so many CARS on the market that the price is going down, and salespeople were standing around saying, why don’t more people come out and buy CARS, well, we would be able to say “why the hell did you build so many CARS in the first place? Who did you think you were going to sell them all to?” — and it would make sense to people. Why doesn’t it make sense when CARS = HOUSES? You can only build so much of anything before you have more than you can sell. Duh.
eggman, you’re not thinking about the illegals. they can certainly take up all the inventories.
anyhow, there are so many houses on sale now that were purchased in 2005/2006 and are listed at the same price. and they are not selling. hello, you got to cut 20% to move these houses now. can someone tell the realtors not to list these idiotic asking prices. it’s just dumb to take no these listings.
Prices went up 300% since 2000 in some areas and wages have not gone up at all, so in order for homes to become affordable for enough people to buy in, wouldn’t they have to come down at least 200%? And that doesn’t even take into consideration the tightening of credit and going back to sane loan requirements like down payments, LTV ratios, DTI ratios, income verification, etc.
Uh, no. It is impossible for prices to come down more than 100% (which would result in a price of $0). How about some basic math? If a house went up by 300%, that would mean a 200K house is now 800K. To go back to 200K would be a 75% decrease, not a 200% decrease.
“To go back to 200K would be a 75% decrease, not a 200% decrease.”
That is exactley what we need to see to get the homes moving again.
Big old whopping oops! I was thinking $ and writing %. Just want the prices to go back down to where they make any sense at all, even if I don’t.
But there are still people who are homeless, so we must still have a housing shortage. McMansions for Everyone! No Child left Behind! It’s for the Children! It’s the American Dream!
I also hear that some folks in New York are carless, so surely we must send aid to New York as well. A car in every garage! A three car garage in every flat in New York! We’ll use skyhooks to raise the cars up the sides of the buildings - no, wait, we’ll send Spinners, just like in Blade Runner! Then New Yorkers can land on top of their buildings, and we’ll build garages on the rooftops!
Oh, wait. Does anyone know what Spinners use for fuel? I never saw on fill up in the movie, so they must run on air. I know it will work, cuz I saw it in the movie.
[cynical rant off]
Does this really make sense? Sure, buyers should beware, but this was a huge bubble. We went from homes in some areas being expensive to everything everywhere being overpriced to some degree practically overnight. The idea that toxic mortgages were legal probably didn’t even occur to most people. Buyers should have known better, but at the same time there was no good reason for anyone to have encountered a buying environment so utterly rife with bad appraisals and worse loans. People that in the past would have bought a house without much problem had to go without. That is a significant social shift that many were not ready for. Does overpaying to the point of implosion really imply people wanted a free lunch or a handout? Manias have always been with us, so this one doesn’t really indicate that our culture is any more or less sick than it has been.
But there IS a market for getting rid of old cars. And most car buyers don’t depend on selling their old car before buying a new one. And car owners EXPECT to get less for their cars than what they originally paid for them. Plus we usually purchase more cars than homes. And there aren’t many cars that cost over $100K.
Not to say that your analogy is incorrect, but a housing excess has worse consequences.
Cars have an enormous advantage over houses–they can be moved to where a buyer wants them, including shipping them to a distant country. Our friends in Germany sold their 10 year old Volkswagen for a good price (I thought) to a gentleman who hopped in it and drove it to Albania. His key question for our friend was whether the car would make it there without any repairs.
If we had real metro planning, with development tied to public transit, walkable shopping, and other inherently valuable features, the average mcmansion wouldn’t revert to so much softwood and chipboard as soon as the first owner walks away.
I don’t think we have too many houses, even if 1.5 million or whatever are vacant. We have homeless, we have adults living with parents, multiple families living in one house, etc.
They are doing so because prices have not fallen far enough yet. We have powerful forces - banks, government, people with large mortgages - who are doing everything they can to try and keep prices up.
They’ll fail eventually, but they are holding the process up, and the result is houses at prices that can’t sell and people who could use a house and can’t afford one.
Did anyone really think the Bay Area was different?
I bet they wished they would have never fed the squirrels!
You’ve got to read the story about the bike messenger who got a “good job” and bought a house in 2004. He’s 50, with a 3 year old daughter. So he was a bike messenger until he was what, 47, then got married, bought a house, had a kid, and became a psych social worker?? That means this guy is now a therapist, able to accept insurance payments, as well as gov’t med payments for helping patients with their mental and emotional problems.
As he says “we’re Bay People”. Man, you have got to be kidding me.
hey!….enough messenger cracks!…I was an S.F. bike messenger myself (a LONG time ago)
As was I in London, for 5 years, back when god was a small boy…
I suspect that he was doing the messenger thing while doing the “get more training, get retrained’ thing after his computer tech job bit the dust around 2000-01.
There is no other way that he could go from messenger to licensed CSW or LPC. He had to be going to school (probably grad school) while doing the messenger service.
Well, according to NAR this morning, San Jose prices actually went up 11.2%!
A few years ago people were buying “because everyone was”. Very soon it seems people will be walking for the very same reason. This could really start to snowball quickly as the politicians work hard to lessen the impact and stigma of foreclosure. I’m starting to get chills just thinking about it.
Nah, I don’t think anyone ever thought the Bay Area was different. People up here are far to HUMBLE and LEVEL-HEADED for that type of thing.
Two years ago I distinctly recall reading an article in one of the local East Bay “alternative” newspapers. The story was about young couples buying into “transitioning” neighborhoods. The story was very much tilted to indicate that these were the ONLY places young couples could afford. A few of these couples ( most actually) had borrowed heavily from mom and dad. I distinctly remember a quote from one of those couples. The guy said” In 5 more years, prices could be 2 million at the rate that homes are appreciating, so we figured this was our way in.
These places included outright nasty areas like Richmond( like our friend the bike messenger) West and East Oakland, and so forth. I write a letter to the editor about how stupid this was and that it was ridiculous to assume that prices would go up any further.
I was totally correct and I know for a fact that most of those hipster 20-30somethings want to get the hell out of those homes.
“transitioning” neighborhoods
Nice euphemism for Crackton & Gangland. Once the bottom falls out completely, they will “transition” right back to being inexpensive, dangerous ghettos.
Transitioning runs in both directions (like leverage).
I have a cousin who bought in Oakland several years back after he got married. They lasted a few years before the crime and filth got to them and they decided to sell. They were lucky to be able to sell the place. They had two or three buyers fall out of escrow, but succeeded last spring. Transitional neighborhoods may be ok for some, but not for many.
The problem with those transitional neighborhoods is you are never going to get rid of all the poor people or the low lives.
God knows we can’t have poor people living among us
Some of them are unfortunate, but most poor people are poor for a reason. What kinds of people do you think live in the ghettos, trailer parks, and barrios?
Oakland has some great, safe areas. My wife and I bought in a nice family neighborhood in July 2003 for $487K and sold by word of mouth without listing in July of 2005 for $620k, tax free. Schools in Oakland are the real barrier to staying, otherwise we would have. Now we are renting in Marin.
I didn’t mean Oakland or any city in particular. I was writing about certain areas of cities.
Wife and I bought into a “transitional” area in DC in 2004 (moving from another “transitional area” and thought it was great. Fun to diversify a neighbood. Yes, a little sketchy, but getting better (i.e. safer, with more renovated houses and young profesisonal types) all the time. Prices have stabilized/dropped a bit since we left, especially for the unrenovated houses, but we keep up with the news and the place keeps improving. Location is just too good, and houses too nice, for it to stay ghetto. It is returning to being a middle class area, which it was prior to the block busting in the 50s-60s. Neigbors were all nice, even the crack dealing family which managed to wipe itself out with internecince violence. Ok, the dead guy on the cross street sucked, but it was only 1 in 2 years! The real threat to the neighborhood were the crack dealers who were being released after 7-10 years in prison who were coming back and needed to be chased away–things had changed for the better in their absence.
There are good poor people with excellent ethics. The problem are those with ghetto values…ie. loud, disrespectful, bad citizens, drugs, etc. That is the problem. I have personally known some beautiful/intelligent souls who were poor but exemplary people.
Same thing happened in East Palo Alto…
that same $670,000 property was sold for $380,000. You know, if you paid 670 two years ago, and you can now buy that same house for 380, it’s awfully hard to find the will to keep making the payment.’”
DR Horton just dropped select homes in Bakersfield 50%. A whole new set of FB’s was just created….
Wow, is this on their web site?
http://drhortonunauction.com/
At up to 50% off, don’t just buy 1 house, buy 2 (!)
It seems they cannot pay even the water bill, so the water company is threatening to shut off water supply to that development.
This may be a desperate attempt to raise some cash, they are only selling part of the inventory.
Sounds like a margin call.
Sad for those who are living there. Their problem might not just be lower housing prices.
This may be a desperate attempt to raise some cash, they are only selling part of the inventory.
Oh, I’m sure next month buyers will be happy to pay $500k+ for the same house… yep…
Got popcorn?
Neil
DR.Horton is running a weekend make your best ‘reasonable’ offer sale here in South Carolina. Wonder why? Just last month they said they were selling fast!
“You know, if you paid 670 two years ago, and you can now buy that same house for 380, it’s awfully hard to find the will to keep making the payment.”
————–
When this sentiment becomes widely accepted and understood, the process of house buying will be permanently changed. I can almost imagine a future where there simply will not be loans made at more than 50 or 60% of conservative appraised value, on any property. If you want to live in a big, fancy $400k house, bring $200k of your own money to the table, Rockefeller.
What it everyone in this country got together and stopped paying mortgages all at once? It could be orchestrated through a mass-spam type email similar to the one everyone has seen telling people not to buy gas on a given day. It would be great. What would Hank Paulson do? What would be the look on Larry Kudlow’s face? Cramer’s head would explode. Dr Evil couldn’t do any better. We could hold the whole country hostage. Make them give us ipods and flatscreens and hummers… wait, we did that already…
you are not compasionette, just an evil genius.
Our corportate e-mail network was brought to a standstill by a chain e-mail! So this could work. It wasn’t a virus, it was a mass mailing to the entire company on an upgrade to the time recording and paycheck system. One guy hit ‘reply to all’ and suddenly tens of thousands of people became involved. Since it wasn’t spam, it took the company three days to shut down the e-mail fun and upgrade the filters.
Now if we could only get an e-mail list for homebuyers from 2003 through 2007. Hmmmm…. We send out one ‘walk away from your mortgage’ e-mail and when the first guy hits ‘reply to all’ we’d all be in the news!
Got Popcorn?
Neil
OMG, if only people would get a friggin clue about using “bcc” when sending a mass email. Yeesh!
I am bummed that my landlord is a buddy of mine. I would feel bad if i quit paying the rent. Aw, what the hell, screw him let’s party…
It would be enough to push those on the brink to go from paying 2/3rds of their mortgage (like the guy in the article) to paying zero.
People though who have a historically reasonable basis, and are not overlevered, will keep making their payments, since they don’t want to risk their house for someone else’s cause.
It would certainly speed up the pain though…
Bumper stickers:
“Walk, don’t run”
I would only sign one that lowers rents. Period.
az, excellent post !!
just shrug yer shoulders with outstretched hands like that guy on the monopoly game in the top hand & say: who coulda known?!
if the bankers/govt / real estate industry can say it, why cant us mortgage payin’ hoi poloi say it too !??! count me in. (no mortgage but I’ll swear off Lowes for awhile & take one for the team.)
This is not fanciful. When the standard LTV in the US was 80% it was under 50% in western Europe. A Frenchman I knew in the 1980s, who was in banking in France, was amazed to find out that US bankers would lend 80% of the purchase price of a home. He though US bankers were reckless.
This also goes to show that European banking standards changed even more radically than US banking standards changed. I also remember when the big-time, German-language Swiss bankers were ultra prudent, the mid-sized French-language Swiss bankers were simply prudent and secretive, and the small-time, Italian-language Swiss bankers were fraudsters and money-launderers. Swiss banking ain’t what it used to be.
Ahoy, globalization, Maties. The pirate’s life for thee.
Looks like the sellers in the Bay Area are getting a first hand lesson at being “pirated” as we speak!
What language do they speak at UBS?
Also, how to say “The biggest banking loss in the history of mankind” in German, French, and Italian?
Reported loss. Losses still loom.
“Die grosste bankenverlorenkaputgeschichte…” oh, hell, my German’s rusted to crap.
Try French: “Le plus grand pain perdu des bancs d’histoire des homos…” No, that’s not quite right either.
Italian? Fuggetaboutit.
Arrrrrrrrrrrr
I know some folks in Italy (friends of the family). They have a small business and do quite well. Anyway, they keep 2 sets of books. One for the gov’t and the 2nd for themselves. They live on the 2nd, pay taxes on the 1st. From what they say this is standard procedure for everyone in Italy.
Thought it was that way in the US too.
In the US… only 1 set of books… & that’s the ol’ POCKET =)
“In the most ominous indicator yet of the Sacramento region’s struggling housing market, January saw nearly as many people lose their homes as buy them.”
A little late to the party, eh, Sacramento? San Bernardino & Riverside passed that point several months ago. Pikers…
I think the REIC assumed after we elected W for 2nd time, that we really were stupid enough to swallow just about anything. Hence, 110% LTV loans and things. They felt a little omnipotent. Hubris will get you every dang time, it’s not just in the old plays.
Jingle mail……..Banking style
http://www.ft.com/cms/s/0/5becb572-db30-11dc-9fdd-0000779fd2ac.html?nclick_check=1
Wonder if B of A is thinking along this line of thinking?
Is BoA thinking what I’m thinking?
BofA is on the hook, they loaned the money and could not get anybody to buy paper. All the major banks total unsold paper is $160B. Bank of America sold most of their unfunded at a 10% discount. The first smart move they did in the last 5 years.
Would you like to own paper in the new revitalized Chrysler?
Ok, I’m OT, but the international bits bucket is gone, so NZ is southwestern California again. A big commercial REIT just collapsed here, and the Mum and Dad MEW investors are so screwed.
It’s their funeral (money)
http://www.nzherald.co.nz/section/3/story.cfm?c_id=3&objectid=10492541
so NZ is southwestern California again.
I wish.
I’m kind of confused by this article. Is the author trying to say that the property management company collected rent from the tenants, but failed to pay the owners? Are the owners now planning to collect rent directly from the tenants? Or are the units empty? Is this related to a downturn in house prices?
It is a management model not seen in the US. The foolish Mum and Dad investors are using a “Blue Chip” investment management service. The units are occupied by tenants who are paying rent faithfully to Blue Chip’s general fund. Blue Chip is supposed to collect their management fee and pay the remaining rent to the investors.
Blue Chip stopped doing this and in fact may have lost or stolen a large fraction of investors assets under their control. (Blue Chip’s losses seem to be partly related to the housing downturn and partly due to criminal fraud). Eventually the investors might be able to arrange for the tenants to pay them directly. But the courts move slowly, so Mum and Dad will probably be foreclosed by the mortgagees of their two rental properties. They will be left with bad credit and a much larger mortgage on their primary residence. They will have to work until they die.
Again, these people, a laborer and a part time office worker, who had just 10k savings approaching retirement should have never qualified to borrow $430k in investment properties. They are obviously not brilliant people. They were used as straw investors in some manner by Blue Chip. Probably bought properties from Blue Chip associates with inflated valuations. Didn’t even get to have fun with HELOC money. Not the sharpest tools in the shed, just sheep that got sheared.
They rode the Real estate gold rush, but instead are busted.
Awww….
Got popcorn?
Neil
“… prices could go back to where they were in 2004.” The current San Diego median is already back to those levels, he acknowledged, but that’s because “distressed properties are selling at a sizable discount. In a recession, values of all properties would drop.” So said the DataQuick “analyst.”
Now I understand. The value of distressed properties that were listed and sold has returned to 2004 levels. The value of non-distressed properties, houses that are listed but not sold, remain at their peak levels. I guess the owners of the non-distressed properties are pleased that their properties haven’t lost any value. They only have to worry about a recession because then their unsold, non-distressed properties will also lose value.
I wonder how prices rolling back to the 1997 level is going to grab him?
I think it’ll be him grabbing his ankles (along with the rest of the FBs).
It has to be 1994 prices for incomes realisticy for paying on fix mortgages, otherwise more the same. Not many “fools” left interested in buying “overprice” houses today, let a lone qualifying! Reality has finally set in.
More stupidity from Karevoll:
Some housing industry leaders hope the economic stimulus package, signed by President Bush Wednesday, will aid financing of home purchases because it includes a temporary increase in the so-called conforming loan limit from $417,000 to a predicted $630,000 for San Diego.
Now, I could have sworn that the stimulus package only allowed the GSEs to loan $$ for houses priced up to the median in an “area” (whatever an area is). If the median in the greater San Diego metropolitan area is only $415,000 (less than the current limit of $417,000), then linking GSE maximums to the median will not change the current maximum. Am I correct?
Besides 1800 for a family of 4 will not make a down payment on a house at these prices.
V…Its my understanding that the new conforming limits will be 125% of median…
“…Around this person will gather four or five typically season investors, and the seasoned investors maybe have a million dollars each in their pockets.”
Jagow: Uh, literally?”
I remember when I used to trust interviewers to have done their homework.
What a load of crap! MSM is worthless. The NYTimes canned a bunched of staff today, others will soon follow
The NYT is cutting staff for the same reason that Massachusetts is losing population (from an earlier thread today…)
I listened to this report on NPR this morning. They didn’t have it in cash, it was in cashier’s checks. I’m pretty sure Jagow knew this, his response was more for effect so that the person could elaborate.
Regarding the NY Times, it may be that some MSM are more worthless than others.
“This isn’t a place that has an unpublished reserve where the seller is not obligated to sell. If you bid $125,000, and it’s the only bid, then you get it.’”
Nice marketing…except that the shill will not let you get away with such an underbid…and if the shill wins the house…the shill will conveniently “not qualify” for financing…leaving the bank to try for a higher price.
Uh, call me cynical, but my thoughts exactly.
Yep. The FBI needs to make an example.
Got popcorn?
Neil
I live a few blocks from this thing. It use to be an apartment complex. It was nearly 100% occupied as such. Then last year the owning company got greedy and decided to turn it into condos. They booted everyone out, slapped some new paint on them, replaced the carpeting and maybe upgraded the stove units. They put them on the market and nothing. Took them months to sell just a dozen or so. They’re sandwiched between two other apartement complexes - one a “luxury” one, the other a fair one that’s now advertising single rooms for $750/mo, no gimmicks. The kicker is there’s going to be a new 185,000 sq. ft. “Super” Walmart that no one wants built about 300 feet away from these “new” condos.
Lake Havasu City News
Building Permits in Jan ‘08 (as heard on the radio)
Residential - 4
Commercial - 0
What are they doing, turning the permits back in for a refund? LOL!
Disregard, I read the - 4 as a minus sign. Damn, I liked the idea of a builder returning the permit!
Lake Havasu - isnt that where you send your kids to swim and they die from amoeba up the nose (sorry, no disrespect to anyone who may have lost a family member this way)
Looks like a baseball score to me.
I live in Encino (San Fernando Valley). They built an upscale 24 unit condo project across the street from me. It went on the market Oct/Nov 07. Not a single unit sold. It went up for acution, still not a single unit sold. Each unit is now up for lease. Lowest price (one unit $2,650 the most expensive unit $3,550 most units leasing for around $3,000. Wonder if they will lease them out?
I see houses that have been for sale in my neighborhood for over a year with the same price tag… they’re not selling. Why in the world aren’t they lowering the prices faster?
This is going to end very bad.
“Why in the world aren’t they lowering the prices faster?”
Probably because their bankers won’t let them. They must have eventually converted the construction loan to an apartment loan or something. In order to get the second loan, they probably lied about the equivalent rents in the area. Expect to see “One Month Free” offers soon, followed by padlocks on the doors and fences around the property. The bank will probably end up owning it, unless the units can actually draw rents like what they are asking.
What was the starting and last wishing price?
They aren’t lowering their price faster either because banks won’t let them (like sm landlord suggests), or because they are holding on for dear life, or still in the pre-reset stage of their Option ARM. No one told them to panic early if they are going to panic at all…
That’s why some women with investmets in California/Florida can say “none of my houses have lost value”.
Debt Fire Sale Is Imminent……………..
Over the next few days, traders of CDO securities expect to see debt once worth approximately $1.8 billion hit the markets. Bids on the individual debt components likely will be sold for values equivalent to 5 cents to 20 cents on the dollar or less. “Sellers are saying, ‘I don’t care if we make money on this, I just want to finally reduce my exposures,’” one hedge fund trader told TheStreet.com.
http://www.thestreet.com/s/debt-fire-sale-is-imminent/newsanalysis/financial-services/10403004.html?puc=_googlen?cm_ven=GOOGLEN&cm_cat=FREE&cm_ite=NA
“‘Bad as it is for those involved, it is something that can work its way through the system,’ he said. ‘But if we add in a recession, then prices could go back to where they were in 2004.’”
“The current San Diego median is already back to those levels, he acknowledged, but that’s because distressed properties are selling at a sizable discount. In a recession, values of all properties would drop.”
Let’s get this all straight:
1) If we get a recession, then prices will go back to 2004 levels.
2) The median sale price at the moment is already at 2004 levels.
3) In a recession, the value of all properties will drop, not just the ones that are currently selling, and then (presumably) all the homes will be at 2004 levels once the recession plays out.
Why would one assume that homes that are not selling have somehow declined in value by relatively less than have the ones that are selling? I would guess that owners would be less likely to sell a home whose value is perceived to have dropped, suggesting the homes not selling may actually have declined by larger percentage of previous market values than the “distressed” properties that are currently resetting the comps.
LOL
I think it is to try to keep more people from walking away. If they don’t think their house has dropped in value maybe they won’t bolt. Why try to get another overpriced listing? It just costs the agent a couple of bills and they get nothing.
“‘Right now, the price is set at about 60 percent of its original asking price and the process is now in the buyer’s hands,’ Winchell said. ‘This isn’t a place that has an unpublished reserve where the seller is not obligated to sell. If you bid $125,000, and it’s the only bid, then you get it.’”
Let’s see if I understand this correctly. He tells us there is a reserve price that equates to 60% of the former price. The very next sentence he tells us this auction isn’t one of THOSE auctions. You know the ones where they have reserve prices and won’t sell the house for a low bid.
These guys STILL don’t get it do they?
Dude, you left out “ass-pounding.” C’moooon.
Sorry Cat.
These unsuccessful fake auctions are just going to prolong their extremely painful Ass-pounding!
““According to RealtyTrac, Stockton had 22,000 foreclosure filings in 2007, in a city of just over 280,000 people.”
Considering that the town probably has around 50,000 houses (if that), this would imply that nearly 1 in every 2 houses had some type of foreclosure filing.
As bad as things are (and are getting), that sounds just a bit too high (at this point).
I wouldn’t be surprised if some houses had multiple foreclosure filings. If the FB were stubborn enough to actually save the house from the first foreclosure, but couldn’t swing a second big-time drug deal the following month, then he/she would receive a second foreclosure filing. Alternately, there could have been 2 FB in one year on the same house.
Secondary mortgage and Heloc. We will probably see the fraud and other fun with all the houses with multiple loans.
Three per household even without fraud.
A little over a year ago, when I started reading this blog, I said I would bring champagne when things started to unravel in my fancy hood. Sometime in September I put the champagne in the fridge. I think the time has come to uncork. Check this.
SFH in the 90024 zip (Manning btw Olympic and Pico for the locals)
The flyer reads:
LAST OPPORTUNITY - LAST OPEN HOUSE ON 02/17 BEFORE WITHDRAWAL FROM THE MARKET. GREAT OPEN (”SEE-THRU”) FLOOR PLAN WITH HUGE CENTRALLY-LOCATED LIVING ROOM (32′ LONG), SPACIOUS BEDROOMS, EAT-IN KITCHEN, PANTRY AND LAUNDRY ROOM. HARDWOOD FLOORS THROUGHOUT, CROWN MOLDINGS, RECESSED LIGHTING, MARBLE IN BATHROOMS AND GRANITE IN KITCHEN. LARGE EXTREMELY PRIVATE GRASSY BACKYARD WITH PATIO AND LUSH, MATURE VEGETATION. SELLER IS LICENSED REAL ESTATE AGENT IN THE STATE OF CALIFORNIA. NO SIGN ON PROPERTY.
Listed on 1/23/08 (I don’t believe it, but that’s what the flyer says)
Original listing price: $1,199,000
Current listing price: $888,888 (some Kabalah master must have suggested this odd number)
More than 20% off the asking price in such a short time? Mmm. Smells like desperation to me. What do y’all think? Should we uncork or wait another couple of weeks?
I would keep it corked until the price reaches $450K. At that point, open the bottle, drink a toast, and offer $398K.
The $398K-$450K is just off base. Did you even see the house or know the details? A colleague (transplant surgeon) bought a 2,100 sq ft house in Bel-Air (90049) in 1997, before all this craziness started for ~$700,000. And it needed some repairs. Do you think houses in the Westside will go down 40% from 1997 prices?
off base? unless I am mistaken this place is not bel-air and 888k is still way off base - I’ll split you the difference and guess 600k just for fun (I think that neither of us have an idea of precisely what we are talking about - however, it is clear that anyone who buys now is tossing away a ton of money, remember, this is 9k in taxes alone)
Fred, read my comments again. Suggesting a $398K for a property you have no idea about is like somebody buying a property site unseen. 90024 includes Westwood/UCLA and some properties there are more expensive than Bel-Air. I agree with your final statement, buying right now is jumping the gun.
This house sold in 2003, just as the bubble was taking off big time, for $680K. I cannot be certain, but I’ve been around this hood for a long time I my guess is in 97, before it was remodeled, it would have gone for somewhere around $400K. Don’t worry about me. I’m not thinking of buying, I’m just itching to uncork that bottle. By the way, this part of Westwood is nowhere near as fancy as Bel-Air. It’s just a regular SFH in the “cheaper” part of Westwood, but the zip code means your kids can go to a good school.
90024 includes Westwood/UCLA and some properties there are more expensive than Bel-Air.
The original post said “Manning between Olympic and Pico” which last I checked is Rancho Park, which is hardly Bel Air - just a bunch of mediocre mid-century crap which probably sold for $250k or so in 1998.
What Cass and JBunniii said.
Manning between Olympic and Pico is small houses on small lots. It is not Westwood by any stretch. A typical house was built in 1930-1950 and sold for well under $400K in 1998. These houses were about 1000 to 1500 ft^2 when built. The lots are about 5000-6000 ft^2. Some of them could be had for $300K in 1997.
That’s all I need to know.
Better get some wine that ages well - this disaster will take years to unravel.
“I think the time has come to uncork.”
Enjoy!!
Then go out and get another bottle or case. It never hurts to have a bottle or two on hand.
Smells like fleein’ spirit.
Hey, that’s my current Zip code! Still, I say keep the champagne on ice. Nearly 900K for what sounds like a garden-variety house is too much. I just don’t know anyone making 300K a year to afford it. I’m gonna check the MLS on this baby. Can’t be too many cabalistically-priced homes around here.
The price is astounding to me. I grew up north of Wilshire and can remember when the area you are talking about was considered the cheap flatlands. I still don’t believe there are enough people in LA that can afford a nearly $900K house or can qualify for a loan that size or have a 20% down payment.
manning between olympic and pico is 90025 - westwood charter area. I’m seeing more and more in that area dropping below 1 mil. and won;t be surprised to see that area in the 600s and 700s in 18 months or so. Let’s be honest if you are making $300+ you probably already own in Bev hills, pac pal, etc. This area has a ways to go.
oops, actually it’s 90064 (my own zip). 90025 starts at olympic and goes north.
SFH in the 90024 zip (Manning btw Olympic and Pico for the locals)
That neighborhood(Rancho Park) is strictly an ordinary middle-upper middle class hood like beverlywood, Cheviot hills, Sawtelle, bev hills 90212/90211, Santa Monica 90405, Grove, or Mar Vista. Nothing fancy there. Of course the average Westside middle- class hood is somewhat above your average dull mid-class LA hood but still a middle class hood with upper class pretentions . Brentwood or bel aire it is not.
The really super upscale homes & hoods start above Sunset Blvd-and U can justify million $+ price tags in such areas as Brentwood Bel Aire estates, 90077, bev hills 90210, Trousdale estates, Mt Olympus, as these are homes of the hollywood Elite/rich & famous . Everything else down on the WS flats is liable to 30-40% declines . I am wrong only if everyone on the WS makes the $$$ of a Century City lawyer Or BevHills plastic Surgeon.
The number 8 is lucky to the ethnic Chinese, so you often see it in prices.
In honor of Valentine’s Day, a song from the builders to the American public a la Hank Williams (sung in key of A on Noble steel guitar):
Why don’t cha love me like ya used to do?
Why don’t cha love me like ya used to do?
My hair’s still curly and my eyes still blue.
Why don’t cha love me like ya used to do?
On the next track is:
I can hear that lonesome whippoorwill,
“cause my hammer’s not making a sound
I can even hear the midnight train a-whining low.
I’m so lonesome I could cry!
“The biggest worry locally is the steady decline in home values. The Conejo Valley’s drop of 15-19 percent in single family median prices exceeded the county’s decline of 13 percent in 2007, a report from Pepperdine’s Graziadio School of Business and Management shows.”
Where are all of these price declines in the Conejo Valley that I am reading about. I see the same crap listed month after month. Price per square foot in TO is still around $325-$350!
I agree with you - the Canejo Valley has hung in there mighty strong. I just dont get it… Countrywide, Amgen tanking, no income to support, huge amounts of speculation and fraud, lotsa rednecks (no offense)… and million dollar houses EVERYWHERE! (the bigger they are the harder they fall?
Don’t worry about listing prices. It’s selling prices that matter.
That article in “The Acorn” is interesting but confusing. I live in that area and I’m seeing plenty of stores closing and NOT being rented. Added to that, for several miles around, they are still building masses of commercial property. In my area (Thousand Oaks) I’ve noticed the realtors are not dropping flyers outside the doors these days and I’ve also noticed many of the For Lease signs which replaced the For Sale signs (FB’s trying to hold on by renting) are back with For Sale signs. Also, there are a LOT of lower prices (blue collar) properties For Sale and more are appearing all the time. Mostly in the latino areas. I figure they got burned badly in the sub prime scams and have either stopped paying their mortgage or have been forclosed. On the other hand, Westlake Village (bordering Thousand Oaks and Agoura) seems to be pretty much un-touched by the real estate fall out. Plenty of lawyers, accountants live there who, I suspect, didn’t buy into the sub-prime scams. Adding up all the various elements, I would say this is just another example of America becoming MexAmerica. Eventually, two classes will survive as the middle class gets decimated. There will be the rich and the lower class. Property values showing the boundries.
You are right on. Look at the foreclosure web sites. Lots of stuff in TO north of Janns and near the 23. Nothing in the desireable areas. Too Bad…..
We rent in Thousand Oaks, after selling our 4,000 st ft pos Wood Ranch Garage Mahal.
All these foreclosures will open doors for the middle class. Also, I seriously doubt that lawyers and accountants tend to cluster all in the same neighborhood. They share their community with doctors, politicians, CEOs, and the like. The froo-froo hoods will be the next to fall.
‘On the other hand, Westlake Village (bordering Thousand Oaks and Agoura) seems to be pretty much un-touched by the real estate fall out. ‘
I sold in Nov, 04 and have rented in Westlake Village since then. I am starting to see a noticible increase in inventory here and prices of the smaller SFRs in the upscale Village Homes where I live have fallen into the high 6s for the first time since late 03. Additionally, there has been a huge spike in the number of WLV houses for rent, at least eightfold, in the past four months. Although there were not too many subprime loans in this area in the last few years, this collapse is by no means limited to subprimes. (The MSM insistance on calling it the ’subprime crisis’ will change by midyear to something more general). The ARM resets, which peak in 2008, will decimate this area and even more couples with one income will relocate out of state. I also see a lot of retail businesses closing along TO Blvd and not being rapidly replaced so I really don’t know what’s up with those comments by the author. I used to do a ’starbucks test’ to see how many people were standing in line for some $5 coffee drink at 9am on Monday mornings but got too nauseated by the Westlake crowd so don’t do it anymore. However, I bet that line has dwindled somewhat in the past year.
Thanks for the advice everyone, I contacted youwalkaway.com, they were real nice and it will only cost me 10000 to take care of things.
You guys are the best!
God Bless!!
Is it just me, or does this look like advertising blog-spam? I haven’t seen anyone on this blog recommending any particular jingle-mail service… Seems more financially beneficial to save the $1K and just mail in the keys yourself.
Seems like SPAM to me, and they said $10K!
I mean 1000,
Sorry.. God Bless!
Why don’t you lie to me the way you used to do?
Why don’t you hide from me the way you used to do?
Can’t you tell I’m crying to be spanked?
Can’t you tell I’m sick of being yanked?
From KGO TV. “According to RealtyTrac, Stockton had 22,000 foreclosure filings in 2007, in a city of just over 280,000 people. That’s up 271 percent compared with 2006.
NOW, THAT NUMBER IS STAGGERING. WHAT IS THIS? 1 IN 4 HOMES THERE IN FORECLOSURE? UN F’N BELIEVEABLE.
The US Census Gazeteer (packaged for Debian GNU/Linux) shows 82,042 housing units in 2000. City-Data shows roughly 15,347 units added 2000 - 2006 (probably partial data for 2006), or about 2500 units/year. So yes, we’re talking 22,000 foreclosures on roughly 99,900 units, or 22% of all housing in foreclosure. Unless, say, foreclosures are for San Joaquin County (seated in Stockton), in which case the base stock would be more. Staggering all the same.
There could me more than 1 foreclosure filing on a single house, though.
know, if you paid 670 two years ago, and you can now buy that same house for 380, it’s awfully hard to find the will to keep making the payment.’”
I wouldn’t walk. I would RUN so fast that my coat would have to catch up with me. This would really SUCK.
See, this is odd to me. If you thought the value of the house was 670k when you bought it, then why did that change? If it wasn’t worth that much TO YOU, why would you have paid that? If you are incapable of tracking the market for some reason, buy on inherent value to YOU and live in it for >10 years. How about this… get a 15 year mortgage, so that after 10 years, half will be paid off and you will be unlikely to be underwater when you sell.
If you love the house you’re buying and plan to live in it long-term, treat it like your iras and ignore what’s happening around you. Seems really simple to me. Your house is not your e-trade account… it’s shelter and a place to make your own.
‘It’s still reflecting the deflationary expectations people have. When you expect prices to go down, there’s no reason to buy today.’”
Prices go down on computers and TVs every day, but people still buy. But they aren’t deluded into believing that it’s an investment, and they usually won’t pay a ridiculous premium to own if there’s a perfectly good cheaper alternative, in this case renting.
The US Census Gazeteer (packaged for
Debian GNU/Linux) shows 82,042 housing units in 2000. City-Data
shows roughly 15,347 units added 2000 - 2006 (probably partial data for
2006), or about 2500 units/year. So yes, we’re talking 22,000
foreclosures on roughly 99,900 units, or 22% of all housing in
foreclosure. Unless, say, foreclosures are for San Joaquin County
(seated in Stockton), in which case the base stock would be more.
Staggering all the same.
I would like to give you some scoop at what’s happening at the
Internationl Builder Show in Orlando. The foot traffic is slow
compared to last year. I heard that the show organizers were expecting 90,000 attendees. It looks like the actual attendees are around 70,000 ~ 90,000. Last year, we had over 100,000 people that
visited the show.
Also, I was talking to a developer from New Jersey. They build condos and apartments. He said they have virtually stopped building
just holding on to the land. Their investors are holding back and they are not buying into all of the artificial economic stimulus by the government. They are waiting for all the dust to settle and reassess the situation in early 2009. He said American economy has been running on fume and the country needs new enterprenuers like
Bill Gates to put this country back in line.
That’s cool, but Bill Gates is a traitor. We need him like we need trichinosis.
Huh?
A traitor? How do you figure? Through his charity donations alone he’s more of a net positive to this country than most of us will ever be.
Thanks for the report. It’s good to hear something from feet on the ground. I dunno about that builder’s Bill Gates remark. Sure ‘twould be nice to have a bunch of new megabillionaires around, right? And pigs will fly.
Anyway, keep your eyes and ears open, and give us more reporting if you get back there tomorrow and Saturday, and talk to as many people as you can — avoiding, if you can, the ones blowing smoke.
I have been to the IHBS about a half dozen times…Realy neat if you are into that kind of thing…
I would volunteer to have the amount of money Bill Gates has. However, I don’t know if I could come up with the type of idea that would produce the number of jobs or such related income.
In other news, the US will shoot down a malfunctioning spy satellite loaded with toxic liquids. So, watch your step tomorrow. Stay alert.
http://www.nytimes.com/2008/02/15/us/15satellite.html?_r=1&hp&oref=slogin
The county’s $253,000 median sales price is down now 34.6 percent from an August 2005 high of $387,000.
The previously posted CNN article,
http://money.cnn.com/2008/02/14/real_estate/home_prices_fall_for_year/?postversion=2008021411
says that Sacramento prices have fallen to $197,600. Surely that’s a typo??
“‘You know, in Manteca, California, there were homes selling for $670,000, Anderson homes.
I wouldn’t pay $670k for the entire town of ‘Lard’.
Isn’t tomorrow a deadline for Centro the mall operator?
“most poor people are poor for a reason.”
I’d rather deal with poor people than rich people any day. They can do you less damage. The poor are more likely to just hurt themselves while the rich mostly get where they are by harming other people.