Out Of All Destruction Can Come Construction
The Ventura County Star reports from California. “With a sleeping bag wrapped snugly around his shoulders, Kamran Jabbari was spending the night camped in front of a new condominium complex in Oxnard, staking out his spot as No. 7 in line to buy a home. Jabbari was willing to rough it for a few days for a chance to buy a discounted luxury condominium at Port Marluna at Seabridge. Some had been in line for three days, waiting to sign papers when the sales promotion launched Saturday.”
“Camping out to buy a home is unheard of in today’s declining housing market. But price reductions of up to $320,000 drew eager buyers.”
“The price-slashing turned out to be a success for home builder D.R. Horton. The Fort Worth-based builder has been struggling, with reported losses of $128.8 million for its fiscal first quarter that ended Dec. 31.”
“Dubbed an ‘unauction sale,’ the company described it as ‘low auction level pricing’ without the hassle. The company’s goal was to reduce inventory at 23 of its communities throughout Southern California, including 11 homes at Port Marluna, said Chris Chambers, California regional president for D.R. Horton.”
“Buyers didn’t come in droves, but at least eight were waiting Friday night, armed with $5,000 cashier’s checks, food and warm clothes.”
“‘It’s a deal,’ Marjorie Cole, a Port Hueneme resident. ‘We watch the show Survivior,’ she said, bundled up in a poofy jacket and ski hat. ‘Well, this is going to be our Survivor.’”
‘The sale is more than just hype — homes are actually discounted — she said. The price on the home that she and her husband planned to purchase was reduced $250,000. The wait ended Saturday afternoon when Cole and her husband signed papers on the home of their choice. Escrow is scheduled to close March 21.”
“Although he didn’t get his first pick, Jabbari also purchased a ‘beautiful home.’”
“Jabbari said he trusts that the housing market will rebound. Promotional events such as the luxury condominium sale will help drive a recovery, he said. ‘You have to get over your fear of ‘What if I buy today and six months from now it’s down another $50,000?’ Jabbari said.”
“Realtor Maria Rios called these types of sales ‘bait’ because they generate hype and attract people who think that they cannot afford a home.”
“She said it was an ‘excellent idea for developers,’ who are competing with foreclosure prices. The traditional home seller is being left in the dust because they cannot compete with the developer, she said.”
“‘They are cheating the people who bought the homes from them at regular price,’ Rios said.”
The Bakersfield Californian. “Deeply discounted new homes go on sale Saturday in two northeast Bakersfield communities, an event that has inspired stakeout tactics in some would-be homeowners and a measure of concern among those who paid full price to live in the neighborhoods.”
“D.R. Horton Inc. is selling homes at up to a 50 percent discount in 23 Southern California developments starting this weekend. One home plan, formerly listed for $380,000, has been reduced 48 percent to $199,990, according to a company sales flier.”
“Industry observers said the sale is a drastic measure, and a sign of the impact large national builders have had on the local homebuilding market. ‘They do things that we’ve never seen before,’ custom homebuilder Phil Gaskill said of his national competitors. ‘They overproduce homes when the market’s hot. And then when it’s not, they slash prices to move (inventory).’”
“Jon Hess is betting on securing one of those bargains. He set up camp in front of the Contessa’s Vineyard II sales office Sunday, and was still in line Friday afternoon.”
“‘I think it’s a good value,’ Hess said of the model home he had in mind.”
“Still, he was realistic about what this kind of sale might say about the health of the real estate market. ‘Who knows?’ Hess said. ‘Maybe by this time a year from now it’s going to be worth half of what I paid for it.’”
“At least one Lavender Trails homeowner, Billy Abney was worried Friday that the sale might further depress the value of his home, which he estimates has fallen $60,000 to $70,000 since he bought in the summer of 2006.”
“The 2,600-square-foot home plan he bought for $371,000 is being offered for sale at $230,000 this weekend.”
“But Abney’s hopeful the sale might ultimately benefit the neighborhood by attracting stable homeowners to a neighborhood where foreclosures have started to pop up. ‘We still need our community to be full,’ Abney said, ‘to fill the community out and not have vacant homes.’”
“Abney owns a second Bakersfield home that has fallen out of escrow twice. He now rents the place to a relative, but the rent doesn’t even cover half of his mortgage payments. ‘If I was qualified, I’d probably be standing in line,’ Abney said. ‘But I’m already buried in two houses.’”
The Fresno Bee. “The latest in a string of auctions designed to sell dozens of foreclosed houses in the central San Joaquin Valley occurs at the Fresno Fairgrounds.”
“The auction company, Real Estate Disposition Corp., is trying to sell more than 80 houses between Merced and Porterville. The event is the third auction in Fresno in seven months.”
“About 12,330 houses in Fresno County started the foreclosure process in 2007, according to RealtyTrac. In addition, about 74% of the homes bought in Fresno County in 2006 and 55% purchased in 2007 have no equity, according to another market tracker.”
“‘It’s amazing how many people attend these things,’ said Michael Gavin, a Fresno real estate agent who sells foreclosured properties acquired by banks.”
“The feverish bidding generated at auctions can drive the price up. ‘Some people don’t even bother with the auction. They just call a Realtor the next day and ask if they have any REOs in the same price range,’ Gavin said, referring to the acronym for ‘real-estate owned.’”
“Fresno real estate agent Cliff Lloyd said he thinks banks are panic selling their foreclosures at prices that are so low they’re driving down property values in many neighborhoods. Those lowball prices then become the standard used for appraising other houses being sold.”
“‘The banks can write off the losses,’ he said. ‘They don’t care; they’re corporate. But it’s affecting middle-class people who might want to make a move.’”
The Press Democrat. “Lenders’ phones are ringing in Sonoma County with questions about the availability of cheaper mortgages envisioned in the housing stimulus plan signed last week by President Bush.”
“But buyers must have the income, credit and some money down to qualify for a loan because subprime and other riskier mortgages that helped stoke housing’s boom have largely disappeared during its downturn.”
“Refinancing is more difficult because Sonoma County home prices have fallen 19 percent since housing hit record highs in summer 2005. Homeowners can’t refinance if they owe more than a home is worth, a particular problem for those who bought around the peak.”
“‘I think it’s just going to stabilize the housing market, but it’s not going to turn it around. It will contribute to hitting the floor by getting some of these properties off the market,’ said said Joan Picard, who tracks the issue for the Redwood Empire Mortgage Lenders Association. ‘But one of the biggest problems in Sonoma County is we don’t have the job base for people to afford the homes. That hasn’t changed. That’s why this county is suffering so bad.’”
The Hollister Free Lance. “President Bush recently introduced new legislation aimed at stemming the rising tide of home foreclosures around the nation. Real estate experts in San Benito county, however, say Bush’s plan is merely a ‘quick fix’ and will do little for homeowners trapped in a stagnant economy and overwhelmed by housing costs.”
“The plan includes lenders from six of the nation’s largest financial companies and would offer the delinquent owners an extra 30 days to renegotiate with lenders and avoid a foreclosure. ‘If people can’t pay their mortgage for 90 days, 30 more is not going to help,’ said real estate agent Dee Brown.”
“The current national drought in housing is the worst crash in more than 20 years and comes after a recent five-year boom in which both housing costs and sales reached record levels.”
“‘This program is just a Band-Aid,’ said Marilyn Ferreira, associate broker in Hollister. ‘The bottom line is, how are they going to pay back the bank? Adding 30 days is just prolonging the inevitable.’”
“For many conservatives, Project Lifeline is seen as an important first step in solving a major issue sweeping the nation. San Benito County Supervisor Jaime De La Cruz said the plan works as excellent short-term relief, while the long-term solution rests in improving the overall economy.”
“‘Any time you can help a family keep their home for even one more day, it’s a step in the right direction,’ De La Cruz said. ‘But in order to solve the problem we simply need more jobs and more job security.’”
The Desert Sun. “The Riverside-San Bernardino metro area, one of the fastest-growing regions in the United States in recent years, now ranks fourth in the nation in foreclosures.”
“The Coachella Valley has not been immune: RealtyTrac reported 8,966 pre-foreclosure, auction and bank-owned properties in the valley as of Monday. Countrywide Financial Corp, a leading lender in the valley, auctioned 54 properties since Jan. 18 and has 100 more slated for auction through April 14.”
“Fred Bell, executive director of Building Industry Association Desert Chapter, said he is concerned with the county’s economy. ‘It appears that we’ve lost about $22 billion in Riverside County in (new) construction activity year over year,’ Bell said, citing the Construction Industry Research Board Report.”
“The economic impact of that, measured with a 2.5 percent multiplier, equates to about a $55 billion loss, he said. Housing starts have fallen from 8,800 at the market’s peak in 2006 to roughly 1,500 this year. Bell says the construction jobs that once constituted 33 percent of the valley’s workforce will plummet as a result.”
“‘We’re in the midst of a pretty substantial market correction,’ he said.”
“The real estate market today and the foreclosures are too familiar to real estate agent Janet Phelps. ‘I worked the repos out here in the 1990s,’ said Phelps, who specializes in bank-owned homes. ‘I think we’ll have many more this time.’”
“The situation was different back then, she said. There weren’t that many homes. Lending was conventional: It required a down payment. Buyers thought the meaning of ‘flip’ related to a hair-do from the 1960s.”
“‘I think during this year, we’ll have quite a few (foreclosures) come on the market,’ she said, noting agents are making a concerted effort to find buyers who had previously been squeezed out of the market because home prices were not affordable for them.”
“‘The silver lining is that California, a state with an abysmal affordability rate, will see the doors open for people who had once been locked out of the super hot market,’ said Greg Berkemer, executive vice president of California Desert Association of Realtors.”
“‘It can be a perfect opportunity for someone right now,’ Phelps said, recalling sales she made when foreclosures hit the valley in the 1990s. ‘Out of all destruction can come construction.’”
“Justin Burke’s corner of the world bears the telltale signs of foreclosure. A ‘No Trespassing’ sticker is slapped on the window of one home. Police escorted its occupant out one day, long after the power was shut off.”
“The Realtors’ sign no longer hangs from its white post, and the wooden fence surrounding the property is beginning to fall. ‘This has been going on for months,’ he said, pointing to one of the first of four homes in the neighborhood to fall into foreclosure or wind up abandoned.”
“But still, he has hope. ‘Once people start picking these up, my business will come back,’ said Burke, who runs a one-truck Extreme Clean business and has seen sales drop due to foreclosures by as much as 40 percent in the last year. ‘People are scared to put their money in a home right now,’ he said.”
“A renter, Burke’s hoping to catch a good deal for his family. He thinks this may be a time to buy.”
“‘It’s been tough. But we’ve been waiting on whether to stay in the desert or hold on,’ he said. For now, he’s holding on.”
City of Vallejo, CA going Bankrupt!:
http://www.nbc11.com/news/15345539/detail.html
The city of Vallejo is on the brink of becoming the first California city ever to declare bankruptcy, City Council members said Tuesday.
Vallejo may run out of cash as early as March, council member Stephanie Gomes said.
Vallejo is going broke, it just couldn’t happen to a nicer place.
Can’t they just refi? Issue more debt? You know, the usual?
The city of Vallejo is on the brink of becoming the first California city ever to declare bankruptcy, City Council members said Tuesday
Compton came Close. I think the school district was put in receivership some years ago. Compton was such a corrupted city and the major ,city council & teachers stole & looted from the city coffers. The Compton PD was so bad that the LA county sheriffs took over the policing.
SGate , Lynwood, Cudahy,Maywood,Vernon:that entire stringof third world ghettoburgs along the 710 alameda corridor are burgeoning nests of latin -american junta style coruption and civic looting, due mainly to their 95% immigrant populations not giving a rats ass about honest government.
What if the PTB are able to succesfully divide the bond insurers into seperate entities for the municipal bonds and the mortgage backed securities. And then they find out the local governments are just as insolvent as the homeowners.
And then they find out the local governments are just as insolvent as the homeowners.
——————–
I’ve been suggesting for some time that cities (and states and the federal govt) will be facing as much pressure as anyone else.
Nobody is immune to the problems, no matter how well prepared they are.
“Based upon the updated financial projections, the current estimate for insolvency is late April 2008,” Tanner said. “It may become necessary for staff to recommend that the City Council consider filing and pursuing Chapter 9 bankruptcy in the event the city is unable to meet its existing obligations with its existing revenues,” Tanner said in the report.
“Not only that, but now we have 20 police and fire employees retiring because they are afraid of not getting their payouts,” Gomes said. “That means we have another few million dollars in payouts that we had not expected. So the situation is quite dire.”
Interesting: to my knowledge (per Kern Co.) the retirement comes out of a different set of funds and the retirements are paid as an annuity. Any buy outs as sick leave or vacation can be done as per Kern Co., half this year and half next year or some variation thereof.
Thanks for the information on Kern County! I am going to look into this.
The City of Bakersfield is part of PERS.
“The city currently has a $135 million liability for the present value of retiree benefits already earned by active and retired employees and an additional $6 million a year as employees continue to vest and earn this future benefit, Tanner said.” I see a huge cut in benefits coming down the line, most of them are wildly bloated so the General Public won’t have a problem cutting them.
Wait, wait….nothing to see here, folks. Vallejo is part of the magical Bay Area, where we’re all luxury millionaires.
“the General Public won’t have a problem cutting them.” But when other entities and corporations do the same thing to them - change benefits after the fact when people have planned their lives based on the contracted benefits, by crying poor, then the general public won’t like it so much. Barn door’s already open on this one - employers have been changing terms, particularly on retiree health care, for a while.
most of them are wildly bloated so the General Public won’t have a problem cutting them.
——————–
The “General Public” is barking up the wrong tree.
The ONLY thing holding up the middle class in the U.S. is the govt entities. They provide bargaining leverage even to those who oppose unions — as they are in direct competition with private industry.
It is foolish for people to try to drag the public unions down. They should be trying to lift themselves up to their level instead. Very, very foolish…
Santa Barbera county is on the edge, too. Won’t be long now.
I predict we won’t get through 2009 without seeing a California county bankruptcy.
Got popcorn?
Neil
“Santa Barbera county is on the edge, too. Won’t be long now.”
Tell me more. I was in Santa Barbara last weekend, still thinking of relocating there permanently.
Is this sarcasm (off)?
I think that the tip of the iceberg is the lowering of salaries and this is wild as the game is early and after all the MSM tells us we aren’t in a recession. Wow, this article suggests we could fast forward into a depression rather quickly.
Very scary indeed!
And they are only talking 5% cuts, I had a 20% cut when i was working for a start-up and money was tight, and that was not untypical.
My wife works for one of the school districts in our area (Kings County). THey had a big meeting last week. They were told because the majority of thier district funds are federal, the budget in thier district for the rest of this year and the 08-09 school year was safe. The other districs are already laying off teachers and staff.
However they are not sure about the 09-10 school year. If things stay the same or get worse they are talking about lay offs and 20% pay cuts.
and this is wild as the game is early and after all the MSM tells us we aren’t in a recession.
——————————–
BINGO!!!
Many people in my family (including myself) have been employed in the public sector. To have pay cuts being discussed, even in existing contract periods, at this stage of the game is very telling. It even surprised me as I began hearing rumblings about it just a couple of months ago.
We are not “going into” a recession, we are knee-deep in one, IMHO.
“For use it’s not as much a debt problem. It’s more of a structural problem.”
Yeah, where’s Sam Kinision when you need him?
SK to Mayor Davis: “YOU’RE SPENDING MORE MONEY THAN YOU’RE COLLECTING IN TAXES AND YOU HAVE BEEN FOR TWENTY YEARS! WHAT EXACTLY DID YOU EXPECT TO HAPPEN? YOUR STRUCTURAL PROBLEM IS THAT YOU”RE BROKE *AND* IN DEBT *AND* STILL SPENDING MONEY!”
There should be a special HTML tag for shouting at idiots like that.
AhhhhhHHHHHHHHAAAAHHHHHHHHH!
“You live in a desert of course there’s no food.
See this… its sand… nothing grows in sand!”
I could hear Sam saying it again.
Get a u-haul and get the f— outta of there!
“She was a victim.” Sam was one of the funniest - for us crude humor types, of course.
Governator: Ha…..they think THEY got problemos…..velcome to da crowd..hehehehe….ve vill just ban fires and crime in Caly.
Now that the state prisons have discovered that they are spending unnecessary $millions by holding prisoners that are overdue for release, I’m sure that crime will drop quickly. Maybe all of those newly released ex-cons can become junior firefighters.
With Cal-Fire, they already contract much of their firefighting duties out to California Department of Corrections. Funny thing though, if you want to look at where to cut money, look no further than CDF. Many of the battalion chiefs/captains are making well into six figures. They get overtime from the time they are requested til when they get home…24 hours a day even while sleeping. I’m not just talking about the ground firefighters who actually risk their lives and deserve the $$, I’m talking about the fat cats that sit at the Incident Command Post all day and down lunches.
And some of them retire at age 50 on pension == last salary, at least in LA County FD. Friend of the family was a fire chief - he had a whole second career after he retired - while collecting fat pension. Nice work if you can get it.
As a fire “victim” myself, you will not begrudge one single dime if you got out alive, your family, and your pets from a full on fire.
Not one to ever be a victim, just saying.
Glad they were there in the middle of the night. Very glad.
All fire and police jobs are now like military - retire with a fat pension at age 50. Hey, you risked your life - so now you have a right to feed at the trough for the rest of your life and steal other people’s money. People used to retire at 65 and die at 70. Now they (at least many “protect and serve” government workers) retire at 50 and live to 85. That’ll work out real well. The number of NYC firefighters and cops retired in Fla. in their early 50s and collecting pensions greater than the average median income would shock many.
I am not going to say what I was thinking. I’ll just leave it at the military would have the people they have now if it wasn’t for the retirement. You definatley give up a good portion of your life in the military. It’s not the average 9-5.
Er, desertdweller,
How about your doctor/nurse? I suspect you need them more like average people do. Will you pay them to retire at 50?
Hey at least they are paid pretty well, will the soldiers get to be paid for the rest of their lives when they finish their service? Heck in some cases we don’t even pay for their healthcare!
Comment by Paul in Jax
2008-02-19 20:08:48
All fire and police jobs are now like military - retire with a fat pension at age 50.
Leigh: Um, maybe I live in another universe, 21 years Honorable USAF. Fat cat?? (We adopted a large kitten, a Hemingway!)
“Hey, you risked your life - so now you have a right to feed at the trough for the rest of your life and steal other people’s money.”
Leigh: I did risk my life - moreover - my families lives. I signed on the dotted line. Theft is the furthest thing from my mind. I sleep well every night, and pray for my brothers and sisters in uniform.
People used to retire at 65 and die at 70. Now they (at least many “protect and serve” government workers) retire at 50 and live to 85.
Leigh: Promise a link, I’m tired and you may outlive me. (and my brothers and sisters in uniform).
“That’ll work out real well. The number of NYC firefighters and cops retired in Fla. in their early 50s and collecting pensions greater than the average median income would shock many.”
Leigh: I agree, not all public servants are honorable. (Retired cops income!! Oh, where do I sign on the dotted line?)
Leigh: YOU might be collecting the BIG $$$$$$$. But no, you chose not to wear a uniform and risk your life.
Dang, I feel dumb! STFU!
Leigh
Leigh - Nice repartee.
My main gripe is: Why is it that government jobs provide the most generous retirement? The more highly-monopolized the business, the greater the perks.
As for “you chose not to wear a uniform and risk your life”:
This is getting to be a little like the old “if it saves one life it’s worth it” mantra. It goes something like: If you served in the military (even if it was your own choice) you are fundamentally superior to others and thus have extra rights, and anybody who questions it is obviously a coward who has no right to say anything, since they don’t know what it means to serve.
I lived in Vallejo for a few months, and it was awful. The City Council is totally corrupt and even the mail man is too drunk to deliver the mail half the time. I’m surprised that city hasn’t gone AWOL yet.
V, I was there in the 80’s and the “white trash” ran me out of town.
These city government officials have no clue that they are staring into the tax revenue abyss.
They think they have problems now? Wait ’til prop tax delinquencies get to 50% of the roll and they realize that sales tax receipts are in the toilet.
I love how these banks “lowball” bids are “hurting regular people” because then those valuations become the standard by which other properties are valued.
Funny how no one seemed to complain when someone “highballed” a property and priced other “regular people” who got priced out of the market…
I was a repo man back in the day, and I worked lots of Vallejo accounts. The area is one big Section-8 ghetto, IMHO.
“At least one Lavender Trails homeowner, Billy Abney was worried Friday that the sale might further depress the value of his home, which he estimates has fallen $60,000 to $70,000 since he bought in the summer of 2006.”
“The 2,600-square-foot home plan he bought for $371,000 is being offered for sale at $230,000 this weekend.”
Nope, the house’s value has dropped $141,000. And that’s assuming the home sells for the $230,000 knife-catcher price. If it stays on the market, he’s lost more value than that.
Yeah, you’d think basic math would be something people could handle nowadays. But maybe not.
No way. Most Americans can barely add - let alone balance a checkbook or calculate percentages. You ought to see the look of confusion if they have to calculate compound interest, like say on a mortage, absolutely no idea how it’s done. Gotta love public education.
full confession - I dont balance my checkbook (although I am pretty sure that I can). I scan the account briefly to see that it is roughly correct, then call it OK
(I read this in a time management book - it is essentially a waste of time, the banks are likely catch errors and big mistakes you tend to notice with a quick scan)
If you don’t balance it at least once in awhile - how do you keep track of your expenditures? I’m not trying to preach just curious. Knowing where the money goes is the very first step in living within your means. I know, I know - living within your means is a backward unsophisticated thing nowadays. Why save when you can just refinance?
Blush - er…I haven’t balanced mine in er…many years.
I do the scan thing, keep all receipts, rarely spend except for essentials, and a trip or two yearly.
But I would know in a New York minute if something is amiss, as I check daily!
Leigh
If you don’t balance it at least once in awhile - how do you keep track of your expenditures?
Quicken downloads every transaction. You just hit “return” to enter the transaction, so you can check to make sure that all the transactions are legit as you are entering it. You can then track your expenditures for every category of spending.
Well, I admit that I had to take college algebra twice. Yet, interestingly, I can calculate with astounding accuracy how many shoes, cases of beer, books and ribeye steaks I will permit myself to buy and their precise cost–down to the penny– at any moment, even if I’m fast asleep or even passed out under the table.
Olympiagal,
LOL
Sounds like we could have the beginnings of a beautiful friendship! Only in my world, it’s cases of vodka (the good stuff).
Trishyla
Comment by Olympiagal
2008-02-19 18:10:06
Well, I admit that I had to take college algebra twice. Yet, interestingly, I can calculate with astounding accuracy how many shoes, cases of beer, books and ribeye steaks I will permit myself to buy and their precise cost–down to the penny– at any moment, even if I’m fast asleep or even passed out under the table.
Woohooooo! (except for the algebra thingy).
Soul Sista!
Leigh
re- expenditures
yeah - I probably could do better but I am really cheap in general (my wife is too, we make a game of seeing how many coupons we can use at the store - it is really kinda sick, it dictates what we eat….)
Hope you are not buying Meat lately.
Er, I didn’t learn how continuous compound interest was computed until my fifth college math class–calculus 1-4 _preceded_ differential equations. Voodoo math, honestly, diffeq is.
http://planetmath.org/encyclopedia/CompoundedContinuously.html
The ONLY reason we have a calculator in the house that will do this calculation (an ordinary one will not do it) is my partner used to be biz school prof. In the age of the web, you can find one online, obviously, but the math behind it is higher than average-level stuff. That’s why, presumably, people were “hiring” an expert to help them. The experts just turned out to be crooks…
Actually, I know several successful accountants, whom when I told them that when the depreciation tables for our business didn’t go out enough years we computed are own, they were aghast and all admitted they could not do that themselves. It’s voodoo to them too.
But do you really need to compound continuously? If you’re willing to compound periodically, say daily, you don’t need the differential equations. All you need to do is to execute one step in the table at the beginning of the page you reference for each period. I seem to recall that a vintage 1985 HP-12C calculator would do this, and it’s also fairly easy to do this in a spreadsheet.
It blows my mind that an accountant would not be capable of using one of the depreciation templates in Excel, or just entering the stepwise calculation.
I guess this is why fraud seems to be so easy. I must have missed my calling.
C’mon, a little “lim” never hurt anyone. (Or you can just use the e^x button.)
I’ve heard diff eq called many things, but this is the first time I’ve heard it called “voodoo math”.
Differential equations is a beautiful aspect of math. One of my favorites in college. Then again I majored in math so what can I say?
You are assuming that the Developer is not commited to give those poor ppl that waited in line a better than market deal. Perhaps the Developer went insane and decided this year to just start giving the cht away. As one observer noted, the Developer gets to write it off anyway.
I think we’re moving from complete denial to partial denial. My sister the mortgage broker says that everyday she’s talks to seemingly educated intelligent people who still overestimate their equity by an average of $100,000 even when presented with solid evidence of a much more releastic but dire situation. If you lop off the realtor’s commission in this example Billy is just about $100,000 worse off then he would like to believe.
I’ve noticed Zillow is off by about $100,000 too. Sometimes it’s too low and sometimes it’s too high but, for some reason, it always seems to be off by about $100,000.
Examples? I’ve been watching Zillow pretty carefully and I haven’t seen anything like that. Mostly it just trails the market by some number of months. There was an interesting dip around my area after some houses changed hands for very small sums, apparently staying within the family or some such.
Hi Mole Man:
I’m not as good as you are about writing this stuff down; I’m just going based on casual observation. The house down the street from mine (Rose Garden, San Jose) is one good example. It was listed at $100k below the Zestimate and took about 3 months to sell. Zillow has been really slow about showing recent sales lately, so I don’t know what it sold for, but after 3 months on the market, I don’t think there’s any way the price could have been bid up by 100k. My landlord is also asking about $100k below the Zestimate, and has had no interest. I know there have been other examples, but I can’t remember them precisely.
In bank today, there is a standing partition that has flyers of REO homes available. Funny thing is that they were all for the OC not local housing.
Dude!
Gill, You caught a falling knife, and the only question is how far it penetrates your body. No matter what, that’s your house for the rest of your miserable puny life.
“You have to get over your fear of What if I buy today and six months from now it’s down another $50,000?’ Jabbari said.”
Sez who? Fear can be healthy you wage slave!
…and another winner!
‘Who knows?’ Hess said. ‘Maybe by this time a year from now it’s going to be worth half of what I paid for it.’
Nice ‘tude about your life’s labor dude. Does anyone work for their money anymore?
I hope I never get over the fear of losing $50K in six months, fear has saved me from many stupid investment decisions over the years.
I personally know of a billionaire who fights over $40K.
Wealthy people are like that in great part because they hate to part with money.
Maybe that’s why they’re wealthy?
“Wealthy people are like that in great part because they hate to part with money.”
Yep, it’s the poor and the rich that watch their pennies.
An Angel is Watching Over You
We all have angels looking over us,
no matter how young or old we might be.
So the next time you are feeling a little blue,
Maybe a penny you find laying on the ground,
Was tossed down from heaven by an angel,
Just for you . . .
© Copyright 2000
* Ziplo *
Although he didn’t get his first pick, Jabbari also purchased a “beautiful home” and said he couldn’t wait to move in. After signing papers, he and his wife stayed the weekend at a hotel to explore the surroundings of their new vacation home and shop for furniture. He described Oxnard and Channel Islands Harbor as a “well-kept secret.”
This guy is rich and a perfect example of the new costal Ca immigrant. Owns a sofware company in Irvine and probably has workers in India do most of the work. The state of CA can tax this guy and all his friends to pay for the retired CA Fire Capt.
He will soon learn to stay out of “Colonia” in Oxnard his new neighbors.
I drive through Colonia every day to get to work. He will probably stay on that side of town anyway.
I bet those places have HOAS and Mello Roos.
‘If I was qualified, I’d probably be standing in line,’ Abney said.
What will it take for this guy to learn a lesson?
The more I read about folks like this, the more I think that we are years and years away from people understanding that housing doesn’t keep up with the pace of inflation…
Yep, we are many years away from people getting it. What we have seen in the last 6-7 years is not going to get cured in 1-2 years.
Sanity can only be restored by the grinding crushing realization of debt repayment and/or default.
The fever will break eventually but not before it has exacted its toll.
What he is saying is, “If I could gamble with other peoples’ money again, I would.”
If he was putting up HIS OWN money, no way. But, if he could buy with $0 down and low teaser rates… Huge profits if it recovers and nothing but a credit hit to lose if it doesn’t.
This is why those lending standards CAN’T return. People were/would be too willing to gamble with $0 down and walk if they lose. Without those lending standards, the crash can not be slowed let alone stopped.
Good call Darrell.
Good point Darrell,
Now that people are going to be required to have some ‘meat in the game,’ they’ll think twice before being reckless.
Not to mention, there is so much inventory out there that buyers are finally being reprogramed to comparison shop again!
Never good to have a skeptical and hesitant customer base…
Got popcorn?
Neil
Housing price has kept up with inflation during the past 100 years up to 1997- owning a house gives you at real yield of zero percent. It’s not gonna makes you any money, but it is actually a better hedge against inflation than gold.
It is only the runups during the past 10 years that has screwed up this pattern. Time will tell if the housing market will go back to the traditional relationship with inflation….
“It is only the runups during the past 10 years that has screwed up this pattern.”
You bet it has! This is historic stuff. What unfolds from this will be like nothing this generation has ever seen.
Hard to believe that people are actually standing in line to buy houses. Don’t they know about auctions? I suspect this is some sort of marketing game–hire a bunch of stooges to stand around and make it seem like a good deal.
“Jabbari said he trusts that the housing market will rebound” I just don’t get the reasoning these people have, where do you expect it to rebound to and based on what economics ? People can’t afford overpriced condo’s, wages are stagnant or falling and these geniuses expect the housing market to go up like it did before just so thye can make a killing ? When does the wishful thinking end ?
It ends when they are bankrupt.
See above. Gambling with other peoples’ money. They wouldn’t use their own money if they actuallyhad to work for the money. No $0 down, no insane gambling!
absolutely agree
what’s to lose? a credit rating - probably not too good in the first place!
this sh&t stops when 20% down or more, no teaser rate and no one wants to lend anyway - its coming don’t worry!
Not only that, but when a very small percentage of the population ends up with an acceptable credit rating, the lending institutions will have to drop their criteria again or there won’t be anyone for them to do business with.
It always rebounds, may take 20 years, but it will rebound. So being a permenate pessimist is not really helpful. Hey if it’s a good deal, you can AFFORD it (novel concept) and you plan to actually live in it for longer than a year then maybe you do look at buying.
Actually this is not true. Lots of places in America have a effectively permanently decreasing housing market. Detroit is the shining example. And if your willing to do a bit of digging you can find places where the housing market never recovered.
In the short term this is true. But very few places ever permanately deflate, measured in decades. But if there was ever a candidate for that then the south side of Detroit would be it.
See Detroit, North Dakota, inner city Cleveland, Cincinnati (neighborhood where I grew up) etc. Permanently, deflated prices was possible, and I think it will happen again in many parts of the country.
I’m looking at a larger picture of population growth in this country and I can definitely see this! Without immigration in the last decade, our population had to struggle to be in the positive. All these houses built in the last decade needs to be occupied or bulldoze. In 2005, there are more than 1 million new houses built. I think we will never see this again. I’m looking to Japan and western Europe population trend as a guide to our own.
Cinch
And they built too many move up houses and not enough entry level houses. And how many more houses did they build out here in the desert with no solar - it’s just stupid not to use solar and/or wind out here. If nothing else, using solar for a pool means you can actually heat it year round and use it the 6 mos most people have it turned off.
Not to mention recycled water in CA & other desert states.
They built thousands upon thousands of homes in the desert, but no rain or grey water recycling — at least for irrigation.
Short-sighted, to say the least.
It always rebounds, may take 20 years, but it will rebound.
Not once you factor in inflation and carrying costs versus equivalent rent. We may in fact never again see inflation-adjusted house prices as high as they were in 2005.
Bingo.
Another example would be Harlem. People forget that it used to be the crown jewel of Manhattan real estate. Same goes for the South Side of Chicago.
Correct, jbunniii. The housing market is bound to “recover” to historically typical ratios, which means inflation-adjusted prices will never again be as high as they were in 2005, 2006, or 2007. I expect 2008, 2009, and 2010 to continue the trend.
I also post at the Motley Fool. A guy there yesterday claimed he got an appraisal 7% higher than one from 14 months ago, in central Montana. I could see holding steady, but going up? Of course, this assumes (a) he’s not a shill, and (b) the appraiser was on the up and up, of course. But still, go figure.
There was also a poster from South Dakota who didn’t offer a number, but figured his home was at least holding steady.
Mo Money, you’re a man after my own heart. “Based on what?” indeed! I wish more and more of the MSM would learn to throw those three simple words together in the form of a question every time they get some meaningless, rah-rah prediction from some idiot. Actually, not just the MSM, but everyone needs to start questioning stupidity when it presents itself as expertise.
The frustration with journalism is constant for me. I see better writing and analysis on this blog then most newspapers. “Based on what” is a great one. There’s others: “who said” “show it to me in writing” “did you refi” “did you read what you were signing” “did you say it’s your primary residence on your loan application”…..I’m sure others could add more.
‘If I was qualified, I’d probably be standing in line,’ Abney said. ‘But I’m already buried in two houses.’” This is the kind of guy you could sell rope to for his own hanging. One house underwater, one draining his wallet and he wants to buy more ?
It’s called “doubling down”, a very common thing to see in a casino.
However, what this idiot does not realize is that his chances of hitting blackjack are MUCH higher then his chances to making money on any home he buys in the next few years. Just kind of tough to get the bank to lend you a few 100K to go play blackjack, and hence, he plays with houses instead of cards.
‘Out of all destruction can come construction.’
Near converse: Out of excess construction can come much destruction.
‘Out of all destruction can come construction.’
Like a Phoenix rising?
Is Phoenix next for growth?
Scottsdale after all the 30k millionares go BK or move back in with their parents - probally. Maricopa and Queen Creek - no way. After the destruction they will plow everything under and plant cotton & citrus again. Houses out there have negative value.
I think me means he would be happy to buy now to save money compared to his older higher purchase price.
BUT, you have to balance that out with the question of have home prices stopped falling? If not, then mr. wishful for a 2nd chance would find himself underwater again in a year when prices continue to drop.
maybe this guy needs to stop following the herd for a change & take a long hard look at his financial plan. (stop chasing every fad, dumbazz) !!
nah, never happen. people are mostly stupid lemmngs.
“Fresno real estate agent Cliff Lloyd said he thinks banks are panic selling their foreclosures at prices that are so low they’re driving down property values in many neighborhoods. Those lowball prices then become the standard used for appraising other houses being sold.”
The horror
I bet Cliff can’t stand it when people buy a house so that have a place to live - what a quaint concept. Ruins the comps because people won’t flip the property every six months.
I’ll bet Cliff also hates it when people buy houses and then actually live in them. That’s so 20th century. It doesn’t help the comps, or commissions, if you don’t flip the house every six months.
Fresno real estate prices will return to their normal 0.5% annual appreciation in the blighted areas and 2% appreciation in the northwest areas and the bluffs after dropping another 30%.
“Fresno real estate agent Cliff Lloyd said he thinks banks are panic selling their foreclosures at prices that are so low they’re driving down property values in many neighborhoods. Those lowball prices then become the standard used for appraising other houses being sold.”
“‘The banks can write off the losses,’ he said. ‘They don’t care; they’re corporate. But it’s affecting middle-class people who might want to make a move.’”
Did he care about middle class people who couldn’t buy because housing prices had gotten too high or that might be able to buy if prices fall to historical rent/own ratios? Instead, it’s I’ve got mine so screw everybody else. Memo to Cliff: Maybe if you’d worked with some of the “owners” of those foreclosed properties to do short sales you would have at least possibly gotten a commission (subject to the lender as part of the short sale process). Now you have none. No sales, no commission. If prices come down enough, sales will return and so will your commissions. Don’t think about that too hard, though for you maybe thinking is hard.
So, banks are more prone to panic than individuals? Is that what you’re getting at, Cliff?
What Cliff fails to realize is that banks, as opposed to other sellers, actually have to sell in a shorter time period. Yes, banks may overshoot on the downside, but they can’t afford, in a neutral market containing 6 months of inventory, to wait around that long. Similar to a retail shop going out of business…yes they cut their prices heavily, but that is because creditors are calling and the lease ends at the end of the month. Welcome to capitalism 101, a$$ meets chair, sit down.
….
“Fresno real estate agent Cliff Lloyd said he thinks banks are panic selling their foreclosures at prices that are so low they’re driving down property values in many neighborhoods. Those lowball prices then become the standard used for appraising other houses being sold.”
“‘The banks can write off the losses,’ he said. ‘They don’t care; they’re corporate. But it’s affecting middle-class people who might want to make a move.’”
Buyers can ‘write off’ their losses too. Or should I say kiss their false profit goodbye. I feel bad for those that went in with a down payment (assuming said down payment wasn’t from bubble returns on real estate)…
Got Popcorn?
Neil
Neil, I’m disappointed in you. You used to be so gleefully callous toward all FB; now you are beginning to play favorites, offering pity to the FB with down payments.
I say F ‘em! If they were stupid enough to waste their own hard-earned $$ by buying into a pyramid scheme (because they’d rather think with their emotions than their brains), then they are a blight on our economy and they deserve to lose whatever they put down.
“You have to get over your fear of What if I buy today and six months from now it’s down another $50,000?’ Jabbari said.”
HAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHA!!
Maybe then I will offer him $100K less than he paid.
I really should send a shout out to DR Horton for working to get the comps down in that area, as I am thinking about buying something nearby in a few years.
almost as good as this one….
“Contessa’s Vineyard II”
buwuhuhahahahahahahaha!!!
A few of the current occupants might just walk away now and set even lower comps for that place.
“De La Cruz said. ‘But in order to solve the problem we simply need more jobs and more job security.”
Mr. DeLaCruz you want a job and job security for your FB’s, how about we convict them for fraud and they’ll have free housing and job security in the state pen. Mr. DLC, this is America, get a job or two if you have to and don’t buy what you can’t afford.
“we simply need more jobs and more job security.” Let my snap my fingers and make that a reality for you.
“we simply need more jobs and more job security.”
Read above on city government pay cuts and layoffs. I’m not 100% sure my job is secure; but I work hard and produce and thus, if required, I can switch companies (if there are jobs out there). Let’s put it this way. A friend is getting back into nuclear powerplant engineering; I’m not losing his contact info!
Got popcorn?
Neil
“A friend is getting back into nuclear powerplant engineering”
Another straw in the wind. I think I’ll go check on my uranium stocks.
Well while you’re at it, I’d like to get paid twice as much as I do now for doing the same amount of work. In fact, as long as you’re granting wishes, how about just hand over enough cash so I can retire comfortably right now, please.
“Promotional events such as the luxury condominium sale will help drive a recovery, he said.”
I’m thinking the opposite. Promotional events will just bring the prices down further as those who just bought will scream bloody murder and those that are thinking about buying will want a bettet deal than the last guy.
And promotional events will only temporarily reduce inventories. Once you put an even larger percent of homeowners upside-down, the foreclosures will increase and so will the inventories. Nice try, but no cigar!
Anybody notice that a few years ago the Fed couldn’t get long term rates to go up ( the famous conundrum ), now they can’t get long term rates to go down.
good point. Although the 10 year note is still below 4% and I assume you are aware of it. 4% is very low. I’ll keep holding my precious metals until the 10 year note yields go up above 6%.
Eventually the fed will realize that they only control short term rates.
The reason the fed is supposed to ‘take the punchbowl away just as the party gets interesting’ is to keep long term rates in a reasonable band. They didn’t take the punch bowl away and thus long term rates are the tail wagging the dog.
Got Popcorn?
Neil
“You have to get over your fear of What if I buy today and six months from now it’s down another $50,000?’ Jabbari said.”
Or one could look for credible evidence that their is something to support the price at that level. At least then you’ve got a fair shot.
In all fairness I think people have been fed alot of propaganda like “buy on the dips” that sounds good but is really dumb.
They seem to mean buy when the chart is dropping straight down into a freefall. Imagine if you traded stocks or forex that way.
Maybe they should tell people to look for a “round bottom” and buy then. It would probably work out a little bettter.
There is no need for fear when one has caution.
This is the beginning of the first dead cat bounce. I soon expect to see articles triumphing the “recovery” of the housing market.
And as far as dead cat bounces go, it pretty damn lame. If you can’t make that cat bounce any higher, well then it’s gonna be a worse summer than even we bears predicted.
I’m with ex-nnvmtgbrkr,
If you cannot question a little if there is life in the cat, its worse than we bears predicted. It doesn’t count if the cat bores a hole in the street and doesn’t bounce until its in the sewer pipe… I’m not so sure its the cat that bounced up and splashed the spectators…
Got popcorn?
Neil
Spoke with the pop’s up in Oregon last night. He told me in Bend the developers were selling the houses but Leasing the land they were on? Said it’s an easier way for buyers to afford to get into a house. Sounds a little trailer-parky to me? Anyone got the 411 on this?
Did you ask if he could smell the desperation?
or feel the Joshua tree?
What does the house owner do if the developer-landlord decides to raise the rent on the land? How much does it cost to move a house to a new site?
I googled for info, and while I’m not sure this is a typical land-
lease, it has a provision in it that makes the lease payment a yearly 5% of the tax assessor’s valuation divided into 12 monthly installments.
http://www.affordablehome.org/faq/index_assets/ground-lease-outline.pdf
I’m wondering if there is anything much stopping ordinary people from selling their homes this way?
I am not a fan of a single thing that President Bush has done - except this 30 day thing.
In essence, he is saying “I am not going to do a damn thing about this housing crisis cause we all know prices need to come way down… and then the problem will be fixed”
They just need to extend the “do nothing” program for 30 months and the problem will solve itself.
yes - the alternative (do something) is very frightening indeed
I’m a fan of his 2001 and 2003 tax cuts. I hope you are a fan of them. They are a boon for small investors. I am glad for all his response in Afghanistan. I hope you are glad for that. I disagree with just about everything else Bush has done and I guess the last straw was his promotion of having towel-heads run our ports. His push for amnesty for illegals clinched my opinion that he is an idiot.
I strongly feel that those who make the most in this country should pay the hightest percentage. Warren Buffet highlighted this recently with how his secretary pays a higher percentage than him. So no, I do not agree with his tax cuts - I feel that running up huge deficits and handing the bill to our kids is unfair. I do not agree with the Iraq war, but if we have decided to do it, I feel we have to pay for it, not pass the bill to our kids.
The expenditures of this administration with no way to pay for it is every bit as egregious as the fraud commited in the housing bubble (I thought the democrats were supposed to be “tax and spend”??? what is this called “no tax and spend”????
Nope. The percentage should be equal - and 0% taxes at that. Wealthy people invest in companies and create jobs so you could buy that computer and type the words like you did above.
Tax cuts? Oh please that would involve spending LESS money not more. I guess you’re happy he’s sticking our kids with the bill.
“Having towel heads run our ports” was the last straw for you, well how do you like the North American Union, the FEMA camps and HR1955? I really think he outdid himself there.
Don’t forget using the comptroller to block states’ regulating subprime lenders.
Tax cuts must be accompanied by spending reductions or they become mere tax deferments. Basic math errors like this are starting to build up to a level that threatens everything we hold dear.
Everything we hold dear? What in the world does that mean?
Actually, it depends on whether you’re to the left or right of t* on the Laffer curve, where t is the tax rate in percentage from 0-100 (x-axis), the y-axis is total tax revenue, and the curve is some ellipsis going from 0 at t=0 to some maximum at t* and returning to 0 at t=100.
Tax cuts what tax cuts
1. Inflation (brought to you by borrow and spend policies). Inflation is the worst tax of all.
2. AMT AMT AMT AMT - by the end of the decade 1 in 3 will pay AMT. I loose much more to AMT than I gain from dividend tax cut. 8x. The top 0.1% gain a lot more from the tax breaks than they loose from AMT.
3. Poor regulation - GW cut $ to the SEC, and fought state regulators that wanted to stop the mortgage abuses.
There were no tax breaks, there was wealth redistribution from people who work (and that includes most of those in the top 5%) to the top 0.1%.
You may have taken home some beads but you sold California.
Bill - The three things that did it for me with Bush were (1) the croneyism of nominating the absurdly-unqualified Harriet Miers to the Supreme Court, (2) the constant extension of the Patriot Act into more and more insidious and freedom-sapping avenues, and (3) the unchecked largesse toward the “victims” of Hurricane Katrina (i.e., exactly the opposite of the reason the MSM disliked Bush for Katrina).
I like the Mexican system of one six-year term. Presidents invariably come off badly in their second go-round. Carter and Bush Sr. were worse Presidents than Bush but didn’t get a chance to prove it in years 5-8.
Bill, you are evidently a very complicated person. This question is born of true curiosity… Would you be okay with foreign-born people not of your ethnicity living next to you if they had good manners and degrees from top-rated U.S. universities?
“Fresno real estate agent Cliff Lloyd said he thinks banks are panic selling their foreclosures at prices that are so low they’re driving down property values in many neighborhoods. Those lowball prices then become the standard used for appraising other houses being sold.”
“‘The banks can write off the losses,’ he said. ‘They don’t care; they’re corporate. But it’s affecting middle-class people who might want to make a move.’” Fresno real estate agent Cliff (Eyore) Lloyd
Nice pic. Looks like your mom the time she caught you with the Playboy in your room?
http://www.huffingtonpost.com/2008/02/19/clinton-obama-right-of_n_87442.html
Yikes… she gives me the heebie jeebies.
Being to the right of Bush on the mortgage crisis is a bad thing?
I refuse to let that ruin my evening..
TXC,
Hope your feeling better.
This is going to be one fun year. Oh God, please don’t let Hillary get her hands on the Presidency.
2008 US Presidential Odds (off some website)
Hillary Clinton 3-1
John McCain 3-2
Barack Obama 2-3
Mike Huckabee 30-1
It looks like it’s all coming down to TX on March 4.
Crisp Update:
http://people.bakersfield.com/home/Blog/bakosphere/21619
“At least one Lavender Trails homeowner, Billy Abney was worried Friday that the sale might further depress the value of his home, which he estimates has fallen $60,000 to $70,000 since he bought in the summer of 2006.”
“The 2,600-square-foot home plan he bought for $371,000 is being offered for sale at $230,000 this weekend.”
His arithmetic is bad. By my calculation, his house’s value has fallen by $141k since he bought it. That doesn’t include the depreciation - his is used, and the competing $230k house is new.
“‘They are cheating the people who bought the homes from them at regular price,’ Rios said.”
Bitter buyer.
Show where in the contract it says that the builder has to sell current homes at a higher price than the previous homes?
It’s not in the contract, it’s in the U.S. Constitution: Article 13, Section 69. It’s right under the part about “it never goes down”, and selling a house for less than you paid is a crime punishible by firing squad.
Rios is a used house saleswoman, so she firmly believes that “Real estate prices only go up.” Watching prices (and her commissions) fall must, in her mind, be cheating.
Screwing, yes. Cheating, no.
Let’s look at the rest of this gem of Realturd wisdom:
“Realtor Maria Rios called these types of sales ‘bait’ because they generate hype and attract people who think that they cannot afford a home.”
“bait” and “hype”? So, if I bid on one of these homes, I’m the “mark”? Really makes me want to rush out and start bidding.
“She said it was an ‘excellent idea for developers,’ who are competing with foreclosure prices. The traditional home seller is being left in the dust because they cannot compete with the developer, she said.”
Ok, now we’re talkin…
“‘They are cheating the people who bought the homes from them at regular price,’ Rios said.”
Huh?? How does offering to pay current fair market price equate to “cheating”? If I buy an IPod on sale today at 50% off peak prices, does that mean I’m “cheating” everyone who waited in line to buy one last year?
make that jealous bitter buyer.
Bitter Realtor.
“Realtor Maria Rios called these types of sales ‘bait’ because they generate hype and attract people who think that they cannot afford a home.”
…Um, lower prices are not a bait a switch! (they’re still not low enough).
“She said it was an ‘excellent idea for developers,’ who are competing with foreclosure prices. The traditional home seller is being left in the dust because they cannot compete with the developer, she said.”
…Um, PRICE.
“‘They are cheating the people who bought the homes from them at regular price,’ Rios said.”
…Um, inflated PRICE!
Jeez, ya just can’t make this stuff up!
Leigh
Is she saying it’s NOT a great time to buy? I’m sure she was telling people a year ago it’s a great time to buy.
“Camping out to buy a home is unheard of in today’s declining housing market. But price reductions of up to $320,000 drew eager buyers.”
I wonder if those people camping out in Ventura compared the cost of renting an equal place with what their PITI+M(aintenance) will be for those homes they buy? Could be another batch of knifecatchers.
Probably knifecatchers.
11 condos for 4.8 million still sounds pricy for a condo! That’s ~440k per condo. Boy, the idiots who paid $760k must be feeling extra stoopid. (Yes, the happy bunny spelling.)
Since the remaining home for sale was larger and more expensiv, at a whopping 1,720 ft^2! I’m sure these condos we are talking about aren’t rental comparisons. Oh wait… we’re renting 1,400 ft^2… hmmm….
Good lord! My rent is about $1,000 less than a 30 year mortgage payment on these places!?! That’s before HOA, mella-roos, other taxes, and insurance (which I buy on the apartment anyway). Not to mention my ROI on the saved down payment. Sheesh…
Got popcorn?
Neil
And they never seem to calculate maintenance and infrastructure improvements. And then there’s the remodeling even before you move in because there’s no such thing as buying a house that is adequate as is anymore. You must at least “decorate.” including paint, floors, and overpriced window coverings.
I know of a lady who arrived in Dana Point OC on super bowl sunday. She, her daughter and elderly mother are living in a motel waiting to find a rental. They have a dog and still have the U-haul. They came from Oklahoma with no plans, except to live on the coast again.
I want to rescue the dog and the senior.
Now back to housing.
I wonder if these people buying these homes actually live in the Oxnard area because I have lived in Oxnard. Believe me, even with discounts of 320k the prices stated in the article mentioned being something between 400-700k. This is Oxnard. If you have lived here you would know it is still WAY over-priced.
“Believe me, even with discounts of 320k the prices stated in the article mentioned being something between 400-700k. This is Oxnard”
Condos. Oxnard. What am I missing here? How is this a good deal?
Off topic but relevant - why do so many posters here still refer to housing as an investment? Houses are for living in - not get rich quick schemes (a la our little buddy Casey). Everyone is so pessimistic that housing will decline by xx% this year and next year - so what if it declines. We all have to live somewhere whether that somewhere is appreciating or depriciating. So, IF the house is a good deal, you like the community, it’s reasonably close to (work, school, family,…), you can afford it - then why not buy it? If it goes down (or up) another 10% or 20% - so what - I still have to live somewhere and I’d sure rather live in my own house where I like it than in someone else’s cramped stucco box ‘investment’ with the crazy property manager and even crazier neighbors. Is everyone here pretending they have a crystal ball and can time the housing market?
Is the idea living in the same home for 10 or 20 or 40 years a thing of the past?
What? You didn’t get your secret crystal ball yet? You must have put down a pseudonym on the application form. Tsk.
I agree that a house is for living in. The permanent renter crowd is just trying to make themselves feel better.
Permanent renter crowd.
LOL. You win stupid comment of the day.
If you are going to use labels you can label me with the didnt lose 350,000 in equity this year crowd.
Moron.
Houses are for living in - I agree with you on that. But it does matter if the price declines. Buying at a lower price is always better. I live in SoCal, so a 10% decline could mean a savings of $50-70K in principal, which over the life of a loan works out to about $150-210K. That’s a lot of money. Even if I could afford to pay that extra amount, I would prefer not to (and be able to save it towards my retirement). Also, if you buy and prices decline enough that you are underwater, then you are stuck if one of life’s unexpected events (job transfer, illness, divorce, etc.) occurs and you need to sell.
Do I have a crystal ball? Nope, but that doesn’t mean that I didn’t see housing was in a bubble (for me, I figured it out in late 2003 or early 2004). I didn’t know when the bubble would burst, but I knew it would. So, I waited to buy. I also know that prices will continue to drop. How far exactly, I don’t know. But I do know that inventory and sales will need to stabilize and come back into line before prices will stabilize. So, I will continue to wait and rent a home for far less than the cost of buying, waiting until prices once again make sense. Will I buy at the very bottom? Not likely. But, I think I’ll buy close to the bottom, and that’s good enough for me.
I agree with you. My wife and I are patiently waiting to buy our first home, we plan on living in it for quite some time.
“why do so many posters here still refer to housing as an investment? ”
Like it or not, when you buy a home you are making an investment. If you want shelter without having to invest then rent.
“Is everyone here pretending they have a crystal ball and can time the housing market?”
Yes, I have a crystal ball and can time the market. We’ll see in hindsight how good the reception on my crystal ball was.
“Is the idea living in the same home for 10 or 20 or 40 years a thing of the past?”
Yup, gotta hang loose and stay flexible and mobile in today’s economy.
If a house is an investment then what is the expected return on this investment (ROI)? Other than a good hedge on inflation (note that this exclude cost of upkeep, HOA, property tax etc.), what sort of return do you expect?
Didn’t Buffett said the intrinsic value of a house doesn’t increase over time i.e. it serve the same function as the day that it was built.
To me a house is similar to a car in that it has an important function. It just age slower, but requires upkeep, property tax, insurance etc same as a car.
That doesn’t mean we can’t look at a house/condo as an investment. Landlord do this off course albeit currently in an extremely tough environment.
Cinch
I guess the main value of buying a house is that the payment doesn’t go up (unlike rent), and you eventually pay it off (so you can retire more easily). In that way, whether one likes it or not, a house purchase is an investment toward one’s retirement. And, like any investment, if you decide foolishly, then you will have to work longer and you will have less stuff in the long run.
Preaching to the choir, I know.
Yeah, the payment doesn’t go up, but property taxes do!
Okay, I got a comparison for you. In the time it will take us to pay this house off, we will have bought and driven into the ground, the equivalent of three cars. (I’m the mechanic in the house and I like em virgin so I know their maintenance history. then we drive them 10-12 years.) That’s roughly $75,000 in cars. Our house was only 20k more than that. Funny, no one on here who is otherwise living in fear of losing 20k on a house complains that cars are a terrible rapidly depreciating asset and should be avoided at all costs. They are money thrown away, literally. Why aren’t people on here warning about the dangers of car ownership..? If you need a car and you probably like having a particular car that expresses who you are. The house is just like the car. If it meets your needs at a price that matches the value to you and is in your budget then what’s the problem in buying it? The house is just like the car except that when I am ready to move, I get a significant chunk of my money back.
Emmi:
Welcome to the blog; I see you’re new.
Would you like to buy a car from me for $750,000? Don’t think of it as an investment, just think of it as a thing to drive. Please set aside any fear you may have of wasting $730,000. It’s just money, and fear is rather unbecoming of you. You can just work for the rest of your life to make up the difference, then let your kids support you when you start to fall apart. Go ahead and make the check out to “Big V”.
If I had 750,000 there is a car in Germany I would buy, you better believe it. Actually, that’s not enough. I’d have to lease it.
I don’t have 750k; your point is moot.
I don’t have any kids; that point is also moot.
Fear IS unbecoming of me. We’ve covered all the bases we can , and worrying about the rest would just shorten our lifespans and since we are thinking of making a change, I’m trying to learn all I can to cover any new ones.
We intentionally live somewhere where the cost of living is very manageable. Why people live places it is not, is utterly beyond me.
“The house is just like the car except that when I am ready to move, I get a significant chunk of my money back.”
Wrong. Think of the money you put into the house while you live in it. Take the future sale price minus your PITI and upkeep, remodeling, balance owed on principle etc. then see what you get (adjusted for inflation off course).
In order for your argument to be correct someone has to pay you to live in his/her future house (exclude this mania off course, and the simple calculation above). Can you think of anytime in human history that this has occurred? Don’t let inflation fool you (food, fuel, wages etc.).
Cinch
Do you know how much upkeep goes into the cars? Damage on the bumper was $550 (I don’t do toxic patch and paint, thanks). Paint for the living room was only $60.
If I get the energy to pull the quicken numbers I will. Okay, I delegated that task, it’s being worked on.
Remodelling? Hang on a second, you are assuming zero pleasure value out of living in a space you enjoy? If that’s your starting point, I don’t know where to go. I like cooking. We put 15k into a full kitchen makeover in 1998. I expect we’ll get some of that back, if not, I have more than paid for it in personal entertainment. We don’t go to movies, we rarely eat out (because restaurants rarely are worth the cost); cooking is our entertainment, but you are claiming the 15k is total throwaway or is if I can’t add it to the sale price? We are on totally different wavelengths here.
All right I have the quicken numbers. There is probably a formal way of doing this, but I don’t know it. I have eight years of numbers for our household. I took the purchase price of the item adjusted by the number of years it was in service during that time frame. For the cars this is clear, for the house, less so.
The cars over 8 years cost 27,000 in purchase price. They required (not counting fuel) 11,500 in maintenance. that 42% of their purchase price. If you count insurance (both of us have spotless records) the total cost was 21,900, for a maintenance ratio of 81%. Which is higher than even my worst imaginings and reinforces that we should stay in the city for the new house, as I was hoping to do. We live by bike half the time, and should continue that if not increase it, obviously.
The house. Purchase price 95k. Over those eight years 28,700 in maintenance. (heating, electric, etc not included, a major 11k roofing job IS included) Taken against the whole purchase price, that 30%. With insurance (much cheaper than the cars) 35%. Clearly it shouldn’t be taken against the whole price, but I’m not sure what number to use.
But anyway, those are the numbers. Cars are expensive as h*ll.
But my dividing by the purchase price may not be valid. In which case just take the numbers: 2738 per year in pure upkeep to have the cars around, 4150 to have the house. Considering how much more we get out of the house, seems like a good deal.
” (I’m the mechanic in the house and I like em virgin so I know their maintenance history. then we drive them 10-12 years.) That’s roughly $75,000 in cars. Our house was only 20k more than that. Funny, no one on here who is otherwise living in fear of losing 20k on a house complains that cars are a terrible rapidly depreciating asset and should be avoided at all costs. They are money thrown away, literally. Why aren’t people on here warning about the dangers of car ownership..?”
Excuse me poster, but you said your home was 100,000 when you bought it, you are comparing apples to oranges here.
In this market a 100K home is some crack shack with outdoor plumbing.
A 20k car five years ago is still about the same price today.
Do you understand homes went up in price double/triple/quadruple in 5 years, cars didn’t.
Your comparison looks rather foolish.
All the comparison demonstrates is that not everyone’s situation is the same. Rent is more than a mortgage payment around here. Not everyone buying right now is messing themselves up for life. Homes did not go up five times in my area. They went up a mostly stead 2-3% per year with a little spike in 2005 that didn’t even last 3 months. One of the things I’d like to suss out by reading blogs like this is whether the market problems where the idiots live is going to bleed over into our quiet little area.
Above someone mocked a guy because he wants to live near his sick mum, which just seems just unsociable. After I post my numbers I’ll got back to lurking. No worries.
“The house is just like the car.
If it meets your needs at a price that matches the value to you and is in your budget then what’s the problem in buying it?
The house is just like the car except that when I am ready to move, I get a significant chunk of my money back.
READ those words.
WHEN you’re ready to move?
What sells faster - a car or a house? (I admit, location can be a factor).
OK…what is easier to sell - house or car?
Just asking!
Leigh
Like it or not, when you buy a home you are making an investment. If you want shelter without having to invest then rent.
Opportunity cost: can you earn more in alternate investments than you can in home price appreciation (factoring in taxes, fees, tax benefits, maintenance costs and whatnot)?
Almost definitely, for now and for some time to come.. Though it’s not as easy as waiting for another sucker GF to come along like you could until late 2005..
Apparently, the answer is Yes.
huh? explain…
RE: Comment by hdx57: thread link above. Please pay attention!
HDX57,
The idea of holding a home for a lot of years is exactly what I intend to do. However, I will not finance some Boomers’ retirement which is essentially what I’d be doing if I bought now. Expensive things should only be bought when they are on sale. The difference in monthly outlay from buying at the top as opposed to buying close to the bottom is tremendous. And, we are no where near the bottom.
The satisfaction I’m getting from not buying is great, too. Those at work who thought of me as being a wet blanket or on the fringe of society back in late 2005 when I refused to buy now see me as being credible and actually come to me for financial advice now. I also see a look of envy (or displeasure?) from those who bought toward the end of the bubble and see that I have enough free capital to go on trips, buy expensive food, etc, all because I am not chained to a grossly overpriced POS.
I think you are mistaken. Most here don’t view houses as positive cash flow “investment.” Although, I must admit people do use the word investment rather freely here (think strict financial meaning). With this in mind, I view a house as a liability (think a company car) not an asset (think worker in a company).
Most people view (not on this blog) that putting money into remodeling a house is an investment, but we know better i.e. just upkeep.
Cinch
Probably it’s because most of them are still ridiculously over leveraged. I wonder how many of these people with their 5k cashier’s checks can afford a 200k house, let alone a 400k house?
I somehow doubt that most of them will stay 5 years but they won’t be able to sell.
Gotcha
Is everyone here pretending they have a crystal ball and can time the housing market?
It’s not exactly rocket science. California has for many years had a boom-bust cycle that is actually quite predictable and easy to time. This one should bottom in around 2014 or so, and while we can’t predict precisely what the prices will be at the bottom, it’s easy enough to spot - look for a couple of years of flat prices after several years of declines. No crystal ball needed at all.
P.S. It helps to ignore the bipolar hysteria that you see in most newspapers and other “mass consumer” sources of news. Pay attention instead to The Economist, which warned for several years about the bubble building in US real estate, and which I believe called the top within a month or two - see the now-famous “falling house” cover from mid-2005. I would imagine that they should call the bottom with similar accuracy, because they use basic economic fundamentals instead of wishful thinking in their analysis.
Dear hdx57:
1. By definition, if you pay 2x for something than what it’s really worth, then it is NOT a “good deal”.
2. Your neighbors will be just as crazy if you buy a house as they would be if you rented it, although I agree that dealing with landlords can be quite a drain.
3. Prices are not poised to drop another 10-20%. They’re poised to drop another 40%. That’s 40% of a lot, which comes out to be a lot. It will make a huge difference to your standard of living if you simply WAIT and buy a house later.
We all have to live somewhere whether that somewhere is appreciating or depriciating.
And if I rent I spend about half of what I would to buy an equivalent place. You don’t need a crystal ball with those numbers.
So I’m not in any big hurry to pull the trigger. I’d rather have the landlord subsidize my lifestyle.
Well for one, I don’t want to have the property taxes I pay be a reflection of how much I have over paid for a house.
For two, why in the hell should I have to pay a pretend price?
You poster go ahead and buy a house and enjoy, myself and several thousand others will continue to wait this one out.
For three, you have no way of knowing whether you have crazy neighbors if you are buying or renting. A realtor and owner is certainly NOT going to tell you the truth.
For four, why are you on this site, trolling?? Go back to the cave please and leave us alone to bask in the glow of falling prices.
I had to bite on this one. Trolling, me - ??? If I’m a housing troll baiting you then I also have several introductory priced condos to sell you in Miami, cause you know they aren’t making any more land there and you’ll be priced out forever. I’ll even throw in a house or two from Queen Creek for you - cause heaven knows they aren’t making anymore land in Maricopa county. Of course Maricopa county is larger than the entire state of Mass.
Come on - I am trying to get everyone here to think about what is going on. Renting is NOT the same as owning a house. At least in modern times people have paid a premium for owning over renting. There is a reason for that but crazy neighbors and crazy landlords are two god places to start. 53% off peak prices is pretty good, it will still probally go down some more but how much (ok to zero if it’s in Queen Creek but good neighborhoods with good schools - no)?
So I still contend that a house is for living in and not some get rich scheme. It’s value as a home (place to hang your hat, raise your kids, grow old with your sweetheart) needs to be considered also. Everytime someone expresses a different viewpoint people flame them and throw out the ‘troll’ word. You end sounding like the crazed narrow minded realtors we all make fun of.
Hold your ground, hdx57.You’re bringing up the level of discussion here and I think the result is interesting
I’m late, but will take the bait…
Reasons to “time the market” and buy low rather than high:
1. property tax basis — why pay more when you don’t have to? The savings can be very significant.
2. if you find yourself in the position of needing to sell (lost job, illness, divorce, etc.), you might be able to break even or **maybe** make a small profit if you buy near the bottom.
3. It’s cheaper!!! Why pay more when you don’t have to? Would you rather pay $500 per month or $200 per month for the same car?
4. Both my spouse and I are native Californians. We’ve seen this movie before, and how destructive it can be. During market bottoms, you can easily find homes that can generate a postive cashflow from day one. Yes, even in California, and even near the beach!
(note: this is the best indicator of being near the bottom — when PITI payments, using a 20% down payment & 30 yr FRM, are less than or equal to rents)
As far as “quality of life”…we’ve lived in a rental for nearly four years, and couldn’t be happier. Of course, we’d like to buy a house, but will wait until prices reach historical price/rent and price/income ratios. It really is that simple.
So I still contend that a house is for living in and not some get rich scheme. It’s value as a home (place to hang your hat, raise your kids, grow old with your sweetheart) needs to be considered also. Everytime someone expresses a different viewpoint people flame them and throw out the ‘troll’ word. You end sounding like the crazed narrow minded realtors we all make fun of.
Actually your suggestion to ignore the financial picture (buying is more expensive compared with renting than ever before in history) and focus on the warm fuzzy emotional picture sounds EXACTLY like a realtor commercial. That is why you are being called a troll.
What do you think is this house worth today?
235 Falcon Place San Marcos CA 92078
Not sure, but I know Zillow sucks. Zillow’s Zestimate is $663,500, yet Zillow says it’s for sale for $554,900 (which, I assume is the wishing price - so Zillow is off by more than $100K, how much more will depend on what it finally sells for).
When I drive thru San Marcos I can’t believe how many gang bangers live there. The high school uniform is baggy pants and bandanas.
And that’s just the teachers.
See? That’s a good example for Mole Man. Off by about $100k.
Zillow dosen’t suck - but it’s by nature backward looking. I’ve been watching the value of my house drop over the last year - it’s now only 2.67x what I paid for it in 97, which is probably what I could have sold it for last spring/summer. So when using zillow mentally regress 9-12 months. As I’m not planning on going anywhere anytime soon and have a nice comfy 4.75 30 yr fixed we can easily afford on one income it dosent bother me. I have some younger co-workers who weht the flip route in 05 and now one of them has gtten himself into a pickle, bought a nice 3/2 for 315 and sold for 550 - then grabbed a McMansion, Bmw and Surburban and an 800K+ adjustable mtg which he can’t possible afford ( but he still has about 100K cash and potential family help) so he’s just a little jumpy now. I’m watching with interest (pardon the pun) on how it all will play out. His neighbors house is in the market for 600 and not getting any nibbles.
If I were buying that house, I’d offer no more than $450K, and expect to lose money even at that price.
I imagine there’d be pretty significant Mello-Roos & maybe an HOA there, which would make me discount the price even further. Mission is very busy and that area has a tendency to have gang problems — more than I’d be willing to deal with.
Wait. You’ll be able to find better.
condo. oxnard.
why not just taser yourself in the nuts til the battery runs dead?
LOL!
Thanks, I needed a good laugh!
But now that I’ve almost calmed down, I should note that the condo in question *is* located in probably the nicest part of Oxnard, overlooking the marina. So it’s probably worth about $200K. Trouble is, the list prices was something like $800K. So the buyer is a newly minted FB - just not quite as F’ed as his new neighbors who paid full price.
AHHH GAWD, ROTFLMAO…can’t breathe…gasp…pounding chest!!!
I about killed myself laughing, thanks!
LOL.
I almost died laughing too. Tears running, stomach hurting, trouble breathing.
This blog is the best.
I was trying to think of something to do tonight. Problem solved.
We’ll just call this the Oxnard Maneuvre.
LOL.
Ouch!
Has anyone noticed a sudden onslaught of trollish behavior lately? It seems the new trolls are less sophisticated than the old ones, and are unashamed of admitting that they “don’t care about money” because their house “works for them” and they “have no fear”.
OK trolls, if you don’t care about money, and your house works for you, then what are you doing on this blog? I think you’re angry and so you’re lashing out at us for being so stubbornly data-based and right. Just get over it, trolls. File your little BK petitions and go rent something for the next 7 years. Oh, and BTW, we told you so.
“File your little BK petitions and go rent something for the next 7 years….”
I agree with you except for this last point - I suspect with the sheer number of people losing houses, they will not really rent for 7 years, or even 3. (Plus, why should the banks care?, the gov will bail them out with your/our money anyway)
“the gov will bail them out with your/our money anyway”
I wonder? I think the government will be to busy bailing itself out to worry about upsidedown Joe home moaner. One example- I think the Government will let monoline insurers split in two so the Government can borrower money at a low interest rate, the Mortgage insurance part ? oh well when the going gets tough the government will protect itself.
It’s the three stages of an investment:
1. It’s a great investment.
2. I’m in it for the long-term.
3. Somebody, anybody please give me a bid.
Yeah, the whole permanent renter thing didn’t sit well with me too. As an dwelling owner for ten years I don’t think this is a good time to buy at all. Why? There are deep rooted structural problems with this economy. These problems need to be addressed (or at least acknowledged) as they may have forever altered hegemonic conceptions of “homeownership”.
Just as owning a car does not mean having more freedom when living in a traffic clogged city - will owning a dwelling (and all the accompanying responsibilities and costs) lead to financial stability and independence in a BK nation?
Hah, I don’t know if this comment was directed at me or not, but the reason I’m here is I want to build a house in the next two years, while builders are desperate. I can put the decision off indefinitely, but I want a few things (like a fireplace insert that will heat as back up to the furnace because we live in a cold cold place) that I don’t feel like installing in a house I’m moving out of. Shrugs.
If I’m the troll, you guys are way over the edge, running along in your own herd mentality. Just because someone doesn’t do exactly what you think they should doesn’t mean it’s a personal insult. If you’re goal is to chase off anyone with a balancing opinion, keep at it. You’ll get there.
If your irrational financial reasoning serves to “balance” out our opinions, then by all means stick around!
Cinch
Sure thing. All I know is the landlords I know and in the past had to deliver last minute checks to are all wealthy, very wealthy. If renting is such a great deal, how do these people make such a killing off you guys?
My landlord is on the brink of financial ruin. He’s extremely upset now because I’m moving out and no one wants to buy this house. I don’t know what planet you live on, but here on Earth, house prices are plummeting and rent doesn’t even come CLOSE to covering the interest portion of the mortgage payment.
BTW, you haven’t advanced any logical arguments here that have held water, just touchy-feely “opinions” about how a house that feels right must BE right. If you don’t mind losing $300k or so on a poorly thought-out purchase, then please be my guest and buy a house today. But I would appreciate it if you would stop trying to rationalize your decision as if it were wiser than the decision to wait.
I’m not buying a house, I want to build a house. Convince me that buying the property I have my eye on, currently valued at 17k on the tax rolls, and looking for a builder right now before they actually start laying off people and have less capacity, makes sense. You think the interest rates are going to fall? the rates passed on to lenders just went up, despite the feds not moving. Seems like a perfect storm for building, frankly. I don’t see the downside. Can’t sell our existing house perhaps? Time on market my area is 35 days. If I wait, the builders will have scaled back, and won’t as hungry, no? What am I missing here?
All I know is the landlords I know and in the past had to deliver last minute checks to are all wealthy, very wealthy. If renting is such a great deal, how do these people make such a killing off you guys?
I challenge you to buy a rental property NOW and rent it for a profit. It’s impossible without a 50%+ downpayment. THAT is why this blog contends that the fundamentals are totally out of line and unsustainable.
It would be interesting if someone took a survey of everyone who bought in the past 3 years and asked, given the state of the housing market at this point, if they regret their decision at all. I suspect that the 50% who are paying attention would regret it substantially, warm and fuzzies notwithstanding.
Emmi, your reasoning is entirely on-target. 17K for the land is negligible. Construction prices are already way down if you can negotiate. Owning makes perfect sense if the benefits are worth the additional costs. In your case it’s not even clear the cost will drop much if you wait, so if it’s affordable going for it is a reasonable choice.
The reason landlords tend to get rich is that PITI=rent ignores many of the benefits of owning on a mortgage. The mortgage holder is also building equity through principal payment and the inflationary depreciation of the mortgage. There’s a wide area where owning is cash-flow negative but asset growth positive and if you can afford the negative cash flow you come out very well in the end (basically, it’s forced savings into something with good return). Of course if prices are high enough, like with current SFRs, owning is asset growth negative but that’s actually a pretty rare situation. That said, with the way prices are falling now there’s no reason to buy until prices hit PITI-rent equivalence or at least flatten out for a good while. Your situation is different since you want to build rather than buy.
I like Emmi It’s not that her views are mine, it’s that she can weather negative response well. (So far.) I don’t consider her a troll.
I also noticed a bunch of trolls that have no business posting here. Several are admitting they have recently bought a house or are buying one. When the regulars tell them not to, the trolls blow them off with their deluded herd mentality and throw lame excuses. Don’t lose sleep worrying about them, they will learn soon how stupid they were when they are forced to walk away from the house.
I am buying a house but in the cheapest good, safe location and at under $50k, my downside is limited. It’s cheaper than renting anywhere and if I could find rent for under $300 a month(which is what my house will cost with all expenses combined) I would rent instead. I don’t care if the house depreciates, I would still lose less than rent accroding to my math. Once the market bottoms out then ill buy a nice big house for pennies on the dollar.
Hey bye!
Some who post here are home owners.
Many are kind ones - young, old, fat, thin, educated, average, savvy, (fill in the blank).
Ben has comfortable chairs for all - and is most tolerant IMO.
We are currently in the market for a home for all the right reasons. As I recall, you also have an eye roaming.
Ben is an honorable host - he has many chairs in the room!
Just saying!
Leigh
Comment by Bye FL
2008-02-19 20:59:20
“I also noticed a bunch of trolls that have no business posting here.”
Dang, thank Jeebus Ben runs the house!
“Several are admitting they have recently bought a house or are buying one.”
We’re not waiting this out for ten years, we’re retired, and have cash baaaaaaaaaaaaaaaby!
“When the regulars tell them not to, the trolls blow them off with their deluded herd mentality and throw lame excuses. Don’t lose sleep worrying about them, they will learn soon how stupid they were when they are forced to walk away from the house.”
Um…where to begin? WE’RE not stupid, cash baaaaaaaaaaaby!
“I am buying a house but in the cheapest good, safe location and at under $50k, my downside is limited. It’s cheaper than renting anywhere and if I could find rent for under $300 a month(which is what my house will cost with all expenses combined) I would rent instead. I don’t care if the house depreciates, I would still lose less than rent accroding to my math.”
$300.00? All expenses combined? Can you loan me your calculator!!!!!!
“Once the market bottoms out then ill buy a nice big house for pennies on the dollar.”
Ya, in what year? Some of us are renters and previous owners.
Sigh. Must be my young age (forty-ish).
Not a “One size fits all”.
But ya, (herd mentality) wait until 2015. Not a good plan for us.
Thanks for the input…er…Bubuy!
Leigh
Hi Bye - to the best of my knowledge, Ben allows many to post here.
Er…don’t buy a house ’cause the blog said so’, yet you’re going to buy a cheap one, and wait for pennies on the dollar for a bigger, better one?
Dang trolls.
Hnmm,
Leigh
An interesting observation,concerning ING. Just announced “No impairments on Alt-A RMBS, reflecting high intrinsic credit quality of ING’s portfolio”. There’s a new development in Palm Springs, with about a third of the lots with completed homes. Since its opening about 2005, only three of the homes have sold. All have been returned to the owner. I looked at their home page, and the main(and only listed) backer/financier, was ING. Oh well, I’m sure their other property investments are all solid…
The three homes reverted back to the lender, I meant to say.
That must be where Emmi lives.
Oh come on. Our area’s been economically crawling its way back for
117 years. I bet no place in Cal can top that. We went down right after the railroad was invented. We know not to expect anything from a bank, believe me.
But, I’ve got a scenario for you. It’s five years from now. You find the bottom of the market, the utter sweet spot. The house is–I don’t know my idea of a house price is skewed low–250k, let’s say (is that cheap? let’s say it is). Bonus for you. You are ecstatic. The house of your dreams at a price that can’t be beat. You run to the bank… Ah, but we have two things going on in the broader economy at this time, a razor’s edge of sorts. Will recession win out… or hyperinflation? Could go either way. If the first, you are all set, if the second, that mortgage could be at 15% or worse 20+% (it was just 30 short years ago). And you’ll think to yourself. Gosh, if I’d locked in even an oversized mortgage at 6% I’d think I was bee’s knees right now. My mortgage would be paying itself off.
See, there are multiple sweet spots. You need to find the perfect alignment of several to make this work. But, this is all just soft, irrational thinking on my part… so disregard.
Hi Emmi (my cat, Coco, is helping me type, grrr…)
A) I’m not a troll
B) Seeking to build/buy within 4-6 mo.
C) Have learned much on Ben’s blog (I type fast, when the cat doesn’t help)!
What I’ve learned in the last 2 yrs:
- Kuna is funny and creative
- Tx swings a heavy frozen trout to the head
- NYCboy is cynical AND loves his lady (Jack Daniels is good friend)
- mgnyc will write/protest an injustice
- reuven (sp?) walks tall, carries big stick (nice too)
- Exmortbrkr- see NYCboy (IIRC, will JT ya -JD)
- Olympiagal (avert eyes when tipping anything to face when reading blog, she’s funny and you will lose a keyboard or worse!)
- Gentlemen are abundant: Sir Hoz, Edge, Bill, jb, Tim…to name a few (there are so many!)
-Nice ladies too!
Did I mention Ben keeps an orderly house? AND condones civil conflict!
Leigh
Ha! BTW: I started off here as “Robert” way back when, and switched to “Reuven” because of other “Robert”. Reuven is my Hebrew name.
Also, I think as a (paid off!) homeowner + landowner, I’m in a tiny minority here! I welcome a burst bubble; I feel bubbles are bad for America. I never banked on “imagined value”
I will ignore the fact that you’ve just made a false dichotomy. (It is entirely possible that prices could fall to 250K, as per your scenario, without having either a recession or hyperinflation. What if lenders demanded a 20% downpayment with other factors broadly as today, for example? But I digress.)
The actual situation would be exactly the opposite of that which you describe. In a hyperinflationary scenario, buying the house at virtually any interest rate would be an absolute no-brainer, whereas in a recessionary scenario it would be a decision requiring careful calculation.
Exactly, ozajh.
OK Emmi.
Here I am at 10:35 AM responding to last night’s argument. That’s just the type of HBBer I am, I guess. I’ll try to make this point later today on the CA thread, if there is one.
What makes you seem so trollish is that you’re rehashing old arguments that have already been debunked on this blog, like, AGES ago. It makes more sense to buy at a low price and a high interest rate than it does to buy at a high price and a low interest rate. Why? If interest rates are high, then they will go down later, and you can refinance. If prices are high, then you’re stuck. You can never reprice. On the other hand, if interest rates are low, then they are likely to go up in the future. When that happens, you will have a difficult time selling for what you paid, since your future buyer will be hampered by his/her high rate.
You see, Emmi, your reasoning really is not sound. The argument holds no water.
Besides, you said earlier that a house is not investment, then switched to say that landlords are rich, and now you’re just building a house, but wait, you have to buy land to build a house, and land is overpriced. If you already own the land, then hopefully you bought it before the bubble hit. If not, then you messed up. You don’t have to defend your bad decision to us. That’s just life.
BTW, we are obviously getting a recession with high inflation. That is what Ben Bernanke and crew have decreed. However, house prices will continue to plummet, and the higher cost of food/energy/etc will only hasten the decline.
It would help us a lot if you would try more to understand how we have come to our point of view before you just hop on here and start posting debunked arguments as if they were brilliant new ideas.
My argument holds no water? Your argument holds no numbers. How hard are numbers? Let me give you some instead.
So, you go to the bank to by that 250k with your 20% down only to find that the monthy payments have gone from $1500 to $3560 and that is no problem at all? Tell me, did you get a 5.2% raise in 2007? Or better yet a couple extra % for that good-going-guy, career’s-on-track kind of boost, which would be 7% or so? If you did then perhaps you can count on your boss giving you a 19% raise when inflation hits 17%. But he’s going to have to be a great guy to give it to you at the begining of the cycle before it happens in order for you not to lose money on the increase in your personal costs by the time he/she gets around to it. But if you did not get a 7% raise, how can you count on getting a 19% one when you need to be approved for that $3500 payment?
If I am trying for risk averse, how can fixing my costs at a known amount prior to a period of uncertainty be a mistake? If I do it my way, I know what exactly my expenses are going to be for 15 years. A renter has to constantly wonder when the landlord will knock on the door and jack up the rent.
It would help newbies a lot if you would write an FAQ so that you can just point to it instead of going for the ad hominem attack; you know Usenet circa 1985. Newbies have to “help you”? That clarifies much about the discourse here. Make that item two on the FAQ. Item one the FAQ should be: “Contrary opinons to what was hashed out last year by the the people who live on this blog will be answered with the phrase: Irrational Irraation, Will Robinson. Troll. Troll.”
>If you already own the land, then hopefully you bought it before the bubble hit. If not, then you messed up.
Aye carumba! There is no bubble in the place where this future house sits. Go to Zillow. Type in Syracuse, NY. Click “city info.” Look at the graph. If it were a patient, we would be writing out the death certificate.
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several post gobbled by evil post gobbler!