A Market That’s Still Rolling Downhill In California
The Whittier Daily News reports from California. “Yvonne Herrera’s blue-gray, two-bedroom family home on a quiet, dead-end road in Covina was astonishingly cheap when she and her husband bought it: only $129,000. Ten years later, after refinancing several times and borrowing money against the home, Herrera and her husband pay $3,300 a month on a $430,000 mortgage.”
“‘We used some of the money for home improvements and to put in a pool,’ Herrera said. ‘But also a lot for expenses when our kids were in high school.’”
“She has already defaulted on the mortgage after struggling to make her mortgage payments, and worse yet, her monthly payments are scheduled to increase to $4,000 in June. If she could sell her house to pay off the balance, she said, that would be a good solution, but the house is only valued at $400,000.”
“She said she expected to sell the house for below its value to her mother-in-law and pay rent to her for a year or two. ‘It’s the best solution we have because the bank won’t work with us,’ said Herrera. ‘We put a lot of work into this house and it would break my heart to lose it.’”
“Data indicate that from Pasadena to Pomona and south to the Whittier area, almost five times as many homes are at risk of foreclosure than in 2005.”
“‘I asked a colleague to set me up with some clients who are looking to sell their house for a loss in L.A. County,’ said says Jason Gailliot, an Inland Empire-based Realtor who specializes in quick home sales. ‘He told me he could get me as many people as I wanted.’”
“Though the popularized view of the housing market trouble is bad loans, dropping home prices are just as much to blame for people being at risk of losing their homes, said Phyllis Harb, a La Ca ada Flintridge-based Realtor.”
“‘It’s not just that people’s monthly payments are going up,’ said Harb. ‘They can’t get out of trouble because their house isn’t worth what they paid for it.’”
“A recent home buyer in West Covina, who preferred not to give her name, said she is trying to sell a $400,000 house she bought for her daughter and son-in-law about a year and a half ago. She listed the price at $335,000. She would take less.”
“‘I just want someone to buy it,’ said the resident, ‘even if it’s for a dollar.’”
The Orange County Register. “Paul Medina spent his lunch break at a housing forum Saturday among more than 400 homeowners, on the phone with his mortgage company, trying to find out if his three-bedroom home in Orange is still scheduled for a foreclosure sale on Monday.”
“After 40 minutes on hold, he hung up. ‘I know their number by heart,’ said Medina. ‘It’s pretty stressful. It’s exhausting emotionally.’”
“Medina fell behind on his $2,700 mortgage payment over the summer after his father became ill with stomach cancer. He quit a demanding job to work for himself in sports merchandise marketing, so he could spend time with his family. Medina’s father died on New Year’s Day.”
“‘I even told them I lost my father and I came to terms with that, but I can’t come to terms with losing my house as well,’ Medina said.”
“The Medinas tried selling, but over two months, only one person came to see their 1950 house. They owe $32,000 and are willing to tap retirement funds if they can strike a loan renegotiation.”
“Medina sought help from the Fair Housing Council of Orange County. He calls his lender six days a week, seeking updates and hoping his situation can be worked out.”
The Santa Cruz Sentinel. “Boone White is one of the local homeowners waiting to see if a bill signed by President Bush a week ago will give him a better mortgage deal.”
“There’s been little reaction from lenders. ‘They don’t know how to handle it yet,’ surmised Tai Boutell of Santa Cruz Home Finance. ‘There’s a higher risk to these loans.’”
“White, an attorney, and his wife, a physician, bought a four-bedroom house in the Seabright area of Santa Cruz near the height of the market in 2005. They have an $80,000 equity line of credit with an adjustable rate along with a 30-year loan for $620,000 fixed at 6.25 percent.”
“Those who will benefit most from the higher ceiling are those who can fully document their income and assets, said Sean O’Brien of California Mortgage Lending Group in Scotts Valley. Borrowers who take out large loans may have to pay a ‘risk premium,’ O’Brien added.”
“Borrowers must have equity in their home, so falling home prices may pose an obstacle for some who would like to take advantage of the higher loan ceiling. ‘I think it will be a stimulus, but it’s not going to be a grand fix-all,’ Boutell said.”
“Some lenders are responding to falling prices by freezing the homeowner’s equity line of credit. For example, White got a letter from USAA canceling his credit line because home prices have dropped in his ZIP code.”
The Sacramento Bee. “During the lunch hour at Mike Grondin’s kitchen table, real estate agent John Norris pulled out his records, just as he had a week earlier, and showed the NEC electronics technician what he’s up against.”
“Not that Grondin needed to be told again about the number of foreclosed homes in his Roseville neighborhood or the nearby builder who keeps cutting the prices on new homes. His house in Roseville’s upper-middle-class Diamond Creek area has awaited a buyer now for 15 months.”
“For the past 4 1/2 of those months Norris has tried every selling trick in the book. So far, no luck. It’s also a stark reminder of the serious questions confronting agents and individual sellers trying to shake free from the unrelenting housing market meltdown.”
“How does an individual seller compete when banks selling foreclosed homes at sharply reduced prices account for half the sales in the area and home builders offer below-market loans and tons of freebies? How do real estate agents keep persuading their anxious sellers to drop their prices again and again? What are the consequences for everyday, individual sellers when large and impersonal corporate forces gain near-control of a regional housing market?”
“In just a few months, banks and other lenders have almost cornered the market with their high number of repossessed homes for sale. In December, banks accounted for almost half of Sacramento County home sales.”
“‘You’ve got record high inventory,’ said Randy Dunham, a Gold River-based real estate agent who says the last two years have been his best. ‘I don’t care if you sell cars, houses or widgets. What do you have to do? You have to put your product on sale.’”
“Price declines can be seen vividly in one key statistic: Almost half the homes sold in Sacramento County in January were priced below $250,000, according to the Sacramento Association of Realtors. One year ago, in January 2007, only 8.9 percent were in that category.”
“Agents say their clients must cut the listing price and keep cutting it if necessary, sometimes every two weeks, to keep ahead of a market that’s still rolling downhill. ‘You can see them bleeding in the chair,’ said Dunham, recalling some of his sellers’ initial reactions.”
“Grondin, who at first tried to sell the house himself, then used another agent before eventually listing with Norris at $619,000 last fall, has since cut his price by $60,000.”
“‘You just have no control over it,’ said Grondin, who is selling after a divorce. ‘You just have to make do with how the market is treating you.’”
“Yet it always comes as a shock. ‘He’s way down below whatever he imagined,’ said Norris.”
“There are those who just can’t do it. Sellers who resist have been given a special name within the ranks of real estate agents: ‘fantasy sellers.’ And they are to be avoided.”
“‘I don’t have time to fool with them,’ said Tina Ledbetter, an agent who sells homes in Placer County.”
“So Grondin’s wait continues. At the kitchen table he hears the litany of what’s been sold and what’s newly listed in his neighborhood. Some have swimming pools, similar floor plans and are $30,000 under his price. He was asked what he’d advise others contemplating a putting a ‘For Sale’ sign in their front yard this year. Without a second’s hesitation he answered: ‘If you don’t need to sell, don’t.’”
“The big white bus rolled up to a dozen empty houses in Elk Grove, where last year something went badly wrong for those who lived inside them. The houses were the main attractions of a new phenomenon to rock this housing market: the foreclosure bus tour.”
“Seven of 12 had been built since 2002. In one, the air conditioner was gone and a 40-ounce bottle of malt liquor had been flung through an upstairs bedroom window, spilling glass across the floor.”
“The bank was selling that house, built in 1979, for $117 a square foot in a market where homes near downtown Sacramento can fetch more than $300. And the busload of tourists figured they could do even better if the bank gets impatient.”
“‘The name of the game is you make an offer and the worst they can tell you is ‘no,’ said Juan Pulido, a Walnut Creek real estate investor who came to take a look.”
“Last year saw more than 10,000 foreclosures in Amador, El Dorado, Nevada, Placer, Sacramento, Sutter and Yolo counties, according to DataQuick.”
“That’s the source of deals like some of these offered Saturday: $237,000 for a house that last sold in 2006 for $350,000. $384,900 for a house that sold in 2006 for $644,000. $249,000 for a house last sold in 2004 for $375,000. These were just asking prices.”
“‘We don’t know what to expect when we go into these homes,’ Keller William’s Lori Mode told riders. ‘Some are very clean, and some are going to be a mess. The banks don’t know what they’ve got. The banks have never seen these homes.’”
“The tours, which originated last year in Stockton and have spread to San Jose, San Diego, Phoenix and cities throughout Florida, Michigan and Massachusetts, have taken on names nationally like ‘parade of foreclosures’ and ‘magical misery tours.’ But they’re meant to unite buyers with banks that need to unload inventory.”
“The riders and their bus attracted lots of attention in neighborhoods. ‘Oh, so that’s what’s going on,’ said a surprised Dena Ruiz in her 1990s neighborhood. Ruiz, a state employee, said, ‘We’ve been here six years and we make our (mortgage) payments.’”
“She pointed toward several houses on the street in financial distress and lamented the collective effect on her home’s value. ‘Our house was worth $450,000 2 1/2 years ago, and now it’s worth $340,000, if not $240,000,’ she said. ‘They just keep dipping.’”
The Desert Sun. “Developers used to put signs outside their new homes and buyers flocked to the neighborhood before it was completely built. Those days are gone. Stuck with large tracks of new homes, developers are turning to auctions to sell off as much as one to two years worth of inventory in a single sitting.”
“‘In today’s economy, you’re out there almost a year to sell something at the going rate,’ said Dennis Freeman of DL Freeman Inc. in Palm Desert.”
“He’s got 42 new homes and condos in three neighborhoods - Palomino and Terra Vita in Palm Springs and Montana de Oro in Indio - up for auction on March 15. Minimum prices start at $210,000.”
“Local real estate and builder associations don’t track just how many new Coachella Valley homes are sold at auctions. Only 80 new homes were sold in the Coachella Valley last month, down 64 percent from January 2007, according to DataQuick.”
“As of Thursday, fewer than 50 of the 9,000-some homes on the Desert Area MLS used the word ‘auction’ in the marketing remarks, said Greg Berkemer, executive VP of the California Desert Association of Realtors.”
“Rhett Winchell, president of auction house Kennedy Wilson, and Freeman said this is the first new home auction in the valley. But almost everyone agrees: With the way the market is slumping along, next month’s auction won’t be the last.”
“‘We’ve got a lot of inventory out there,’ said Fred Bell, executive director of the Building Industry Association Desert Chapter. ‘As we see the turmoil in the market continue, we’re going to see it more, especially as projects change hands.’”
“It hasn’t been since the market downturns of the 1980s and 1990s that new home auctions were prevalent in the Coachella Valley. Essentially, auctions create new demand for a product by slashing prices. Starting bids are usually set at about 60 percent of the original listing price.”
“For a property such as Palomino in Palm Springs - where nine of the 14 built homes are up for auction - luxury condos once priced from $650,000 to $700,000 are now starting at $405,000.”
“That takes them from the ‘move-up’ segment of the desert market to the ‘entry-level’ price range.”
“And potential buyers are ’storming in there,’ says Gary Carlson, real estate agent with Moore-Carlson group. They worked the property for more than a year, but left several months ago when ’sales just stopped.’”
“Now he’s contacting old clients and encouraging them to go to the auction. ‘They have starting prices that are bargains,’ Carlson said. ‘But whether they sell for that or not, I don’t know.’”
“Paul Deese, of the Indian Wells-franchise of Pacific Auction Exchange, says he’s in talks with several developers looking to auction off new houses as well. ‘They’re sitting there with all this inventory that they can’t sell,’ Deese said. ‘They’re getting eaten alive. If they can get out of them what they owe the bank, they’ll do that. They’re given no choice. The banks are giving them no more money.’”
“Winchell of Kennedy Wilson says they hope to see 200-500 people show up for an auction and that ‘buyers will determine the price.’ ‘If everybody thinks it’s not worth (the price), they won’t buy at that price,’ Winchell said.”
‘Medina fell behind on his $2,700 mortgage payment over the summer after his father became ill with stomach cancer. He quit a demanding job to work for himself …so he could spend time with his family.’
Plenty of people have family get sick and pass away. I’m curious why the OCR didn’t ask him if, in retrospect, quiting the job was a bad idea?
Also:
‘We’ve got a lot of inventory out there,’ said Fred Bell, executive director of the Building Industry Association Desert Chapter. ‘As we see the turmoil in the market continue, we’re going to see it more, especially as projects change hands.’
See, the builders know how this game goes. ‘Change hands’ means a builder default or weak companies giving in. Then the new guys start off with an even lower basis and down we go.
Famed SoCal foreclosure expert Bruce Norris said it best way back in 2006. He said don’t even bother with the resale market, because the REOs will eventually dominate and set the comps all alone. And here we are.
Maybe I’m missing something, but speaking of foreclosures, where is the SF Chronicle (LNAA) with news that January foreclosures exceeded sales in California?
We’re so special, we don’t need to see that news?
[LNAA = Lamest major city Newspaper in All of America]
PS - I think some on the HBB were saying what Bruce said earlier than 2006. Or maybe it was he saying it earlier as well and “we” were commenting on such.
No matter, I suppose.
Maybe I’m missing something, but speaking of foreclosures, where is the SF Chronicle (LNAA) with news that January foreclosures exceeded sales in California?
Does anyone have a link handy for that?
I don’t have time to go through all of the posts, but it’s somewhere here in the HBB about two days back, IIRC.
I found it in Mercurynews.com, today. The numbers are are from ForeclosureRadar, sales from DataQuick.
I found it in Mercurynews.com, today. The numbers are are from ForeclosureRadar (foreclosures 19821,) and DataQuick (sales 19145.)
Thanks slb. If anyone else is interested, this is the link:
http://www.mercurynews.com//ci_8344134
I don’t know much about foreclosures but would like to buy one as a primary residence (not investment) after prices fall to a reasonable level. Anyone here have experience with Foreclosure Radar.com and is it worth the rather hefty subscription fee? Obviously, if it saved me lots of money, the fee is a pittance by comparison, but will they have competitive info I need to know vs. access to sales prices via the MLS?
My take on foreclosure sites is this: When the subscription fees disappear completely from every single foreclosure site — it means it’s time to buy.
Because when the banks get really desperate, they’ll make sure you’re looking at their offerings.
Didn’t anyone else catch this??
“‘I even told them I lost my father and I came to terms with that, but I can’t come to terms with losing my house as well,’ Medina said.”
Lose dad, can deal with it; lose house, can’t deal with it. WTF??
i think he meant:
he can deal with A.
or
he can deal with B.
but he can’t deal with A + B.
I see what you’re saying.
Also, you expect to lose your parents at some point in your life (though it’s tough no matter when it happens) — losing your house is not something most people expect
RE: WTF?
“Boone White is one of the local homeowners waiting to see if a bill signed by President Bush a week ago will give him a better mortgage deal.”
“There’s been little reaction from lenders. ‘They don’t know how to handle it yet,’ surmised Tai Boutell of Santa Cruz Home Finance. ‘There’s a higher risk to these loans.’”
“White, an attorney, and his wife, a physician, bought a four-bedroom house in the Seabright area of Santa Cruz near the height of the market in 2005. They have an $80,000 equity line of credit with an adjustable rate along with a 30-year loan for $620,000 fixed at 6.25 percent.”
An attorney and physican lookin’ for a govie bail-out?
Double, triple…WTF??????????????
We are doomed.
An attorney and physican lookin’ for a govie bail-out?
Double, triple…WTF??????????????
We are doomed.
ROTFL
Now add their school debt.
Triple FB.
Got Popcorn?
Neil
I’ve seen lots of people with cancer.
Eventually the people involved just come to terms with it and realize that there is nothing to be done. I think both losing the house and the father might have been a lot for the man in the story to adapt to. Also there was nothing he could do to save his father — eventually he’ll have to come to terms with the fact that there is no one to blame but himself for the house.
Amen, but will the real estate agents fess up to this reality? The rare good ones left will tell the true story and make a living while the majority left will go away with only memories of the good old days.
If the Register didn’t goof on the story, Medina has the dumbest real estate agent on the planet. You could get $32,000 for an outhouse here, even in the crash! Given his situation, an agent who hasn’t gotten his house sold should be disbarred.
Looking on the bright side of the situation, at least his lender is not out of business (yet)…
“She said she expected to sell the house for below its value to her mother-in-law and pay rent to her for a year or two. ‘It’s the best solution we have because the bank won’t work with us,’ said Herrera. ‘We put a lot of work into this house and it would break my heart to lose it.’”
Here she’s run up 300K of debt on a POS house, her old man’s mom is bailing her sorry a$$ out, and she’s still bitching about it, pretending that her MIL is getting some kind of deal, whining and moaning about the bank not working with her and not wanting to lose her house - as if she doesn’t know what the meaning of debt and mortgage are.
Trout (or JT), please.
And let’s fast forward to 2 years in the future when MIL feels screwed over and no longer speaks to DIL (which maybe isn’t a bad thing).
Ok, so she’s going to not pay her mortgage and let the bank foreclose in the worst market in history. She is then going to have her MIL buy the house, and since she’s probably going to be the only bidder it will sell for about 30-40% less. She’s then going to move back in ( or never even leave) and pay rent to MIL until her credit returns. If this isn’t fraud then what is?
Of course the bank “won’t work with her”. It’s not an arms-length transaction. They aren’t going to accept short sales where a family sells a house among themselves, reducing the mortgage each time. (Until it’s free?)
‘fantasy sellers.’ are to be avoided.”
BB wants people to stand firm on the asking price.
He likes fantasy prices so banks can earn commissions.
He’s counting on high home prices to save the economy.
Can he not see prices are going down anyway?
Stop the bailout.
Save the Saver.
Right on Ouro Verde!
I think BB knows what’s going on, but can’t say the sky’s falling lest he be accused of making things even worse. I think 90% of the latest “Save the Houses” plans are just so the gubmint appears to be at least doing something, especially during election year, and perhaps 10% of it is dumbasses who really think it will make a difference.
If the goal is to avoid having the sky fall, I am not so sure that futile measures to avoid home price deflation is the ticket. In particular, encouraging sellers to hold out for top value in the current credit market is a recipe for liquidity shut down in the housing market. I present some relevant numbers on the bits bucket today: There has been a 75 pct drop in SD home sales transaction volume since early 2004. Lower sales prices will result in higher liquidity, as buyers will come back to the market when affordability returns.
Similar comments could be made regarding futile attempts to avoid deflation in other asset classes (e.g., CDOs, MBS, CMOs, and so on).
“Agents say their clients must cut the listing price and keep cutting it if necessary, sometimes every two weeks, to keep ahead of a market that’s still rolling downhill. ‘You can see them bleeding in the chair,’ said Dunham, recalling some of his sellers’ initial reactions.”
What a super idea for a reality show! Show would-be sellers getting this sort of news from their realtor, with close-ups of the tears and hair-pulling. I imagine there’d be a lot of bleeping out of profanities. Man, I’d watch it religiously, while eating a big batch of Neils popcorn, heavily flavored with schadenfreude.
Another reality show I yearn to see would involve various developers, and they’d be captured with nets and dragged over to a staging area with lots of cameras and microphones and then have frogs–fake ones, of course, those freakishly colored lead-painted lumpy ones from China via the Dollar Store–jammed into all their orifices, lots and lots of frogs. Bags of ‘em, while a tape-recorded voice bellows ‘Wetlands are good! You are bad! Enjoy your frogs!’ over and over again, full volume.
In this case I don’t think we even need a story line, or contests or anything. Just the frog-jamming would totally do it for me. I even have a list of developers handy, if anyone wants to get going on this project.
I like the idea, but few frogs in my part of Utah, so what would we substitute? Lizards?
Do you have Horned Toads in Utah? .-
Yes, but only in certain regions, of course. Not the mountains.
I have an old college roomate that has never been good with money. Well to be honest, his whole family has never been good with money.
Anyhow, me and the other roomates would love to have a show with him and his financial situation played out in a reality TV show. It would be hilarious. The home phone line going to fax(for bill collector calls), upside down expensive late car loan payments, everything in the house no interest for X years financing(furniture, stereos, Flat Screen TVs), etc.
Like I said the whole family lives the same way, and every windfall is spent before the check gets there. As my one roomate says, “It will be one HUGE MULTI-FAMILY YARDSALE.”
These are people that could make 250k a year and still struggle. They are already making 2-3 times their local household median income and barely making it. This is in a 140k home, and at 100k household income. Sad, but all too common.
And one hell of a TV show, but I guess there could be better candidates out there.
Ken, same here. I think everyone knows someone as you described. I have a lot of friends in that same boat.
Lane
I have a few like that, but one in particular. He makes more money than anyone I know. On ave. $2000/day AFTER taxes. After rent for his store 2 house payments, 2 new rides, a boat, waverunners, $1000 weekend party habit ad nauseum… he is always broke. Any one of us would be retired after 3 years (forever living the “good life”) with that kind of income. Easy come, easy go. Ahhhh, the life of the head shop owner, eh?
Time to contact the Home channel for the slot next to “flip this house”! I’d watch this religiously.(grabbing popcorn)
Perhaps the biggest news here is that Ben just made an across the nation post…from FL to CA!
From sea to shining sea!
Giant bubble to Giant bubble!
What? I don’t get it. Looks like a Calif post to me. I see…it is mentioned that the “parade of foreclosures” concept has spread to other states. Actually one of the things I like best about Ben’s posts is there is a certain discipline in covering separate regions, Calif daily, usually Florida, sometimes the Northeast, sometimes the Midwest, etc etc.
“She said she expected to sell the house for below its value to her mother-in-law and pay rent to her for a year or two. ‘It’s the best solution we have because the bank won’t work with us,’ said Herrera.
It’s amazing how freely folks in Cali speak about fraud…In order to get that deal done massive amounts of bank fraud must take place…this lady has no clue, but as I’ve stated before if you think the fraud was bad before wait for the downturn. I wonder just how far below market value she’s selling to her inlaw…
Maybe mom can actually make a down payment. Still, the idea that it is below the value just because that is all the bank will loan is pretty funny.
“That takes them from the ‘move-up’ segment of the desert market to the ‘entry-level’ price range.”
No…..I see it as a pent up demand for a new ‘move down entry’ price range……which I am proud to be a part of….thank you….just has to get down a lot lower yet.
“How does an individual seller compete when banks selling foreclosed homes at sharply reduced prices account for half the sales in the area and home builders offer below-market loans and tons of freebies?”
“How does a seller compete”? You have to drop your price, dimwit! Your house was never worth what you thought. It was a fantasy during a mania.
“How does an individual seller compete when banks selling foreclosed homes at sharply reduced prices account for half the sales in the area and home builders offer below-market loans and tons of freebies?”
this kills me - these people think that others should pay them more for their house than a bank for a comparable house because why exactly?
Hovaninian is selling their inventory in Bakersfield, new mcMansions for $77 per ft. Tough luck resellers.
I wonder if they own that subdivision on the right as you start up the hill going towards the place with all the windmills where Jas lives (what ever became of Jas, anyway?). It’s out on the edge of a field, looks very out of place, big houses crammed together. Looked empty.
Hovanian’s project is to the left of 178 just before the turn off to Rio Bravo CC. I think McMillan also has a subdivision there. Keep going up the Kern River canyon. Great fishing at Lake Isabella.
I think there’s a segment of people that now realize if they had sold and rented in 2006 instead of refi or heloc, they’de have made out like bandits. Now they not only don’t have the magic money from the bubble, they are losing the house and have nothing to start over with.
You’re right, but you prompt me to comment that only a few people can make out like bandits in any case: i.e., if the speculative mania had ended sooner, it would’ve ended sooner! — the top is necessarily a brief moment.
There are plenty of folks still buying at close to bubble prices e.g. in Miami and Portland OR, sadly enough. Prices have dropped a little, but still plenty of stuff selling for over $200 per square foot. Nothing under $150 yet. Still a long way to go.
“For the past 4 1/2 of those months Norris has tried every selling trick in the book. So far, no luck. It’s also a stark reminder of the serious questions confronting agents and individual sellers trying to shake free from the unrelenting housing market meltdown.”
every trick in the book except…hmmmm..I dunno… lowering the price enough to attract a buyer..
Or a St. Joseph statue.
I saw someone dragging a st joseph statue by his balls, behind a chevy truck the other day in sacramento.I guess st joe didn’t work out for him.I think he was pissed at his realtor.He had a sign that said, never trust a realtor.
I read, perhaps on this blog, that ex-Guns ‘n Roses guitarist Slash is talking about suing the Realtor that sold him his $4 million pad in L.A. Can a realtor be sued? Or is it just a high-dollar instance of caveat emptor? I’ve also read here that a realtor owes no fiduciary duty to the customer, making the customer s.o.l.
I think anyone can be sued in this country.The real question is does slash have any standing in the mess.I guess a judge will have to determine that.
I’ve also read here that a realtor owes no fiduciary duty to the customer
Sure he does. What you seem to be unclear about is the the realtor’s customer is the seller. Only.
They make anatomically correct St. Joseph statues?
true story here… last year a woman I work with told me that since she had no luck selling her house, she was going to bury an upside down statue of St Joseph in the back yard. Myself, not being raised Catholic asked he why …she said it would help make the house sell. As I stared at her with a blank expression, I asked her “why not just lower the price?” She was so pissed at me she still hasn’t talked to me yet. YAY! Once less idiot to talk to.
Yeah, can’t think of lowering the price because: “by god, my realtor picked a listing price out of thin air and I’m sticking with it! No doubt, it has to be the correct value!
“every trick in the book except…lowering the price enough to attract a buyer”
…I think he used the word “trick” advisedly: lowering the price is not a “trick” but a legitimate way of improving the value offered. All these wannabe sellers have to rely on “tricks” because they haven’t gotten past the expectation of getting their asking price.
“Grondin, who at first tried to sell the house himself, then used another agent before eventually listing with Norris at $619,000 last fall, has since cut his price by $60,000.”
then he tried offering a cup of hot coffee and a bagel…….then two bagels
“‘I just want someone to buy it,’ said the resident, ‘even if it’s for a dollar.’”
Sounds like she’s past the acceptance phase.
At $1, will it cash flow?
i think she means $1 plus assumption of outstanding debt.
NOT
Hey, long time bubble peeps will acknowledge that this is close enough to “I’m giving it away” - lol
I want to know why the mom bought the house for the daughter’s family, and now that it dropped in price 65k she is unloading it underneath them. After only 1.5 years.
Specultor w/ a piss poor excuse?
RE: I just want someone to buy it,’ said the resident, ‘even if it’s for a dollar.’”
Property taxes and public utility assessments are probably @ triple digits.
You can never get out from under the payment nut.
“…may have to pay a ‘risk premium,’ O’Brien added.”
yet another nobel prize winning comment.
I have friends in the mortgage business who are now telling me that refi business is on fire again. I see houses going under contract again. I don’t know what the prices are, but activity is sure picking up. I understand that GSE’s loan amounts are heading up. Is this where I accept that my patience and saving skills are down the tube? DC- Metro Area
i live in northern va and i really do not see anything turning around.
knife catchers mostly.
What I’m seeing in W. Colo. now are tons of lease to own deals.
Lease to own deals are a really bad idea right now. Landlord in trouble entices pigeon to sign lease for high rent, part of which will become the down payment. Landlord then defaults on mortgage. Tenant must continue to pay the high rent until the foreclosure sale. Landlord pockets rent money. Tenant is then evicted by lender. These agreements are not usually written in such a way that the landlord’s default is grounds for termination, so the tenant is stuck.
Did they tell you that this is the best time to buy in years, too?
At best this is people shifting from ARMs with teasers to fixed rates, and that’s making the very generous assumption that they’re not just making this stuff up.
So, that one family turned a $129,000 house into a $430,000 house. They now appear to be paying about 8.5% and if they could have met the terms of their committments they would have paid almost $1.2M over 30 years…for a $129,000 house.
Awesome!
$129K????????? They had it made, and they blew it. Improvements I can see, but the children’s high school expenses is a total load of crap.
$430k is going to be a real burden on them or a total loss for the bank. My problem with the bank is the shareholders in the bank are going to get this problem and a lot of others just like it. Most of these shareholders don’t really know they own shares in this bank. They are part of a retirement plan or pension plan some place.
This is just total crap.
Roidy
Child’s HS expenses — WTF? Unless they are going to a private school, what the crap are child’s HS expenses?
Boob job? Abortion? Chevy truck with big wheels? Rehab?
Prom dresses, homecoming dresses, mid-winter break dance dresses, cars, graduation parties, hockey, winter break trips to Florida or Cancun, or Europe, etc. etc. etc. The necessities.
Yeah. I’m thinking one of those MTV “Sweet Sixteen” parties.
Probably is a private high school - can easily be $15k/year and up.
Glad I was advised from an early age to set no store by anyone’s promises of pension or retirement plans (that includes SS), and have always withdrawn my money from such plans at the earliest opportunity. Hence I have no bank stocks (I hope)
“Now he’s contacting old clients and encouraging them to go to the auction. ‘They have starting prices that are bargains,’ Carlson said. ‘But whether they sell for that or not, I don’t know.’”
Ah, get on your knee’s before you BEG !!
At the risk of being labelled a “troll” and having olympialgirl shove chinese frogs up me, I am starting to get the impression there is a lot of pent-up demand here in the OC. Several 30somethings I know, who grew up with the understanding they’d never be able to afford to live her, suddenly are buying as things fall into the upper end of their price range. Could be there are lots more of them than we thought? For every FB, how many more level-headed soldier-consumers hunkered down and held their fire during the run up? It’s kind of interesting. I have 26 yr old GF. When I was 26 we wanted to party and rock out. Her generation wants to work hard and buy a house. Hmmm…
I think a lot of people have commented on this blog that there will be a few dead cat bounces on the way to the bottom. People who think we are at or close to the bottom will now jump in, only to discover another leg down. Bottom line is that the speculators who constituted 40% of this market are gone and without them its impossible to absorb the inventory.
i think your 26 yr old GF and her friends want to work hard and buy a house. don’t generalize a generation on a few friends.
Not to worry. However many of these “dip-buyers” there may seem to be, chances are there will not be enough of them to stop this price correction. Prices are still completely out of whack vis a vis incomes and rental rates. Many of these knife-catchers will simply end up as the next crop of FBs (albeit slightly better situated FBs than those of ‘05-’06 vintage).
There is always a “pent up demand”. However, “pent up demand” and “buying at the right time”, are two very different animals.
As in stocks, when a property meltdown happens anyone who is thinking of buying starts get an itchy trigger finger. It always happens and something else always happens. Greater Fools pull the trigger waaaaay too soon.
For the 1,000th time, the TRUE bottom of this mess is NOWHERE in sight. Those who buy in the next 2 to 3 years are not buying at the bottom. They are buying at a fake/false bottom. The fundamentals which might indicate a bottom are still waaaaay out of whack. Waaaay out of whack.
As for the “pent up demand?” That phrase implies that suddenly, in a matter of a few weeks, those people who are part of a “pent up demand”, will rush in and start buying. Sorry, ain’t gonna happen that way because it NEVER happens that way after a bubble bursts.
Once the bottom is reached, in 2 to 5 years time after all the FB’s have been taken out and shot and the banks have healed their wounds and the builders have dumped their massive inventory - underline the word massive - at bargain basement prices which will trap FB’s and GF’s alike, prices will start to recover very, very sloooooowly.
The 1990 bust took until 1997 to start a slow recovery. Remember, the really outrageous bubble period from 2000 (where it started and really gathered speed in 2004) until 2005/6/7 where it burst (depending on Greater Fools who stepped in front of the freight train) was based of Mr. Magoo’s free money program and helped along by fraud and deception by realtors and mortgage brokers.
Before this property market can recover, it has to discount those fraudulent bubble years from 2000 to 2007. The best indication of a bottom? Give or take $25,000, 100X the cost of rents in the area. In my area, prices have dropped from $700,000 to $575,000 and are NOT selling. I pay $1,800 a month rent. Thus, the value of this property is $180,000. It will never drop to that but I can easily see $250,000. When that happens, I MIGHT step up to the plate but, frankly, I’m quite happy sitting on a pile of cash (investments).
Also, don’t think I’m a disgruntled wanna be buyer who rents. I could afford to buy this house, the one next door and the one next door to that even at these current prices but the reason I was able to be sitting on a pile of cash, was because the last 2 properties I bought and sold were bought at the right time (at or near the bottom) and sold at a nice profit BUT, I must admit, I didn’t sell at the top. However, only a complete fool would have thought this madness would have gone on for so long without SOMEBODY in a position of power stepping up to the plate and giving a very stern warning that this train was heading for disaster.
“It will never drop to that but I can easily see $250,000.”
Housing prices should drop to the value of 1994 adjusted for inflation minus 10%. If that calculated number is $180K, then that is the object price. If the calculated number is $90K, I would expect that to be the target bottom.
The year 1994 is not arbitrarily picked. The formula for bubble trading is well established for equities and for housing substitute inflation for PE ratios, the minus 10% is the overshoot on the sell side.
It is rarely wise to say “never”, in this case it makes you a bottom picker. ‘He who picks bottoms ends up with stinky fingers’. Hozfucious
Let’s not forget the “Pent-Up Supply” as well — all those asshats who took their houses off the market and put them up for rent last year waiting for the “market to come back.” As they continue to hemmorhage cash, many of them will throw in the towel.
Also, not to be contrary, Catspit, but I’m wondering about your statement that your thirty-something friends “grew up” in the OC with the understanding that they’d never be afford to live there as adults. To my recollection, much of the OC was reasonably affordable (at least by what you might call California standards — and certainly much more so that it is right now) until perhaps the last 7 or 8 years. Perhaps they have been “priced out” for what feels like an eternity, but in reality maybe it hasn’t been that long (certainly 90’s prices were much much lower, relatively speaking, than today’s).
In any event, OC was far more “affordable” when these people were growing up than it is today, so I don’t see how they now feel that they have the upper hand after a relatively small price correction. Sounds like they are basing their expectations on short-term (i.e. bubble) market behavior, rather than long-term trends. Look for those expectations to change.
I would have to agree here. In 1997 there was a home for sale a block from the cliffs in SunsetCliffs/Point Loma (SD) for $258000 (3bd 2ba w/ a yard and garage), I would have bought it if I wasn’t still in college. Flash forward to 2005…house sells for $850K+ with no improvements being done.
How much of a downpayment are they making?
Work hard doing What? Music reflects the trends, and during the Disco era there were songs “Ain’t no stoppin us now”, “Move on up”, “Makin in”, songs about achievement and getting out of poverty and the Ghetto….I’ll be damned if i can find any of that in todays music.
——————————-
I have 26 yr old GF. When I was 26 we wanted to party and rock out. Her generation wants to work hard and buy a house. Hmmm…
Yup, the lyrics of the day:
“They tried to make me go to rehab
I said no, no, no.”
You will know from reading here that the proper name for these 30-somethings is “knife catcher.”
Also, your comment about them buying at the “upper end of their price range” shows they probably aren’t factoring in contingencies, specifically if/when something goes wrong in their lives (job loss, illness, divorce, etc.)
If everything doesn’t go perfectly for them, they’ll be parts of newspaper articles themselves in a couple years.
We know you, catspit, and will not label you a troll. We are all lucky that there are enough people buying to prevent market chaos. If you just consider that item from yesterday, about the statewide number of new foreclosures in January being greater than the statewide total number of house and condo sales in January, I think you will come to agree with Tulpenwoerde and others that the presence of [some] buyers does not mean the slide has come to an end. The slow, sticky decline is good for banks, and [I hate to admit it] good for ME, even though I am impatient to buy for myself when I feel the price/rent ratio is reasonable. If I can get 9% on mortgages and 9% on Brazilian govt bonds, then even after income taxes I am getting about 6% on my money, so it makes good sense to pay a landlord an annual 5% or 4% or 3% of his likely asking price for the privilege of [my] living in his house, evading his property taxes, maintenance, and ins payments. If I could make only 3% or 4% on capital, I would still not be buying into a market that is clearly in a continuing decline.
I’d like some stats….
How many residences are there in this state, country, city….whatever?
How many of those are owned outright by the inhabitant?
How many of those are owned outright by a landlord and are rented out?
How many are owned with an outstanding mortgage or HELOC, but are lived in by the ‘owner’ and are not in danger of default?
How many are owned with an outstanding mortgage or HELOC, by a landlord, are rented (or not), and are not in danger of default?
How many houses are going to be vacated (by foreclosure or whatever), how many are currently vacant, and how many people are there who want to buy a house?
Then, the affordability question….out of all of the houses that are currently vacant, how do the prices of those compare with the numbers of people who can afford those prices?
Who is the actual target for any proposed bailout? What is the percentage of the population that is going to be supported by those of us who live within our means, (which I think is really the majority)? How much of my tax dollar will be used to pay someone else’s mortgage?
Tina Leadbetter, Realtor, talking about wanna-be sellers being unrealistic and asking too much: “I don’t have time to fool around with these people.” I suspect Tina was one of the realtorwhores who sold these way over-priced p.o.s with the NAR sales pitch, “Prices never go down.”
Now, she doesn’t have time to deal with those same people who are trying to get out and break even or, if they are lucky, take a small loss.
Yes, Tina is very busy. There’s the a trickle (a very SMALL trickle) of new suckers she has to deal with telling them, “Prices are not going to go lower,” who will end up being greater fools if they buy now. Then there’s the appointment at the nail parlor. Then, she has to take back that expensive potfit she bought at Nordstrom’s which she wore at last week’s office meeting. She’s hoping they won’t notice the small coffee stain.
Of course, if she hasn’t sold much lately (very likely) there’s the problem of dealing with the company who handles the lease on her BMW and keep calling her about the late payments and want to know what she’s going to do about it. Tina is suffering through this bust like everyone else.
Yup, Tina is a very busy lady. Too busy to go out and get a real job.
Ithink she said, “Buy now or be priced out forever.” If people didn’t make above asking bids, she didn’t have time for them.
Dang it.. we need more Tina’s out there serving as role models to our future generations… more life coaches while we’re at it.. Did I miss anything ? Oh yes, more RE related reality TV.. yea, that’s the ticket..
The way I see it, there will always be (some) pent up demand in the OC while shows like “Real Housewives of OC” are on TV… after all, envy is the driver and hallmark of the RE machine..
I think I saw Tina! No, seriously, at my local verizon store, she was pleading w/ the sales clerk to let her retrieve her cell phone messages. In the midst of this angst as the clerk explained that the $40 cash she just gave him went towards her balance of $1000+ and not to buy her ‘new’ time, she looked @ me and said “You look like a realtor, are you?”
SLB, she looked at you and said, “You look like a realtor, are you?” Not good. Maybe it’s time for some cosmetic surgery! Only kidding……
What happened to “fence-sitting” demand and “pent-up” demand? They suddenly got replaced by “new” demand. They skipped over “trumped up” demand, “clueless” demand and his ugly sister “I’ve researched this” demand. Oh Demand, why hast thou forsakenth me?
….
“…Essentially, auctions create new demand for a product by slashing prices. Starting bids are usually set at about 60 percent of the original listing price.”
they s/b set at $1.00. That would fix mkt price quickly.
Luckily, the faceless corporate entities have taken control of the housing market, displacing the individuals.
Good luck to them with that.
“‘The name of the game is you make an offer and the worst they can tell you is ‘no,’ said Juan Pulido, a Walnut Creek real estate investor who came to take a look.”
Actually, at this point in the cycle, the worst thing they can tell you is ‘yes.’
OT but it’s sunday and this made me laugh:
“You know, if I’m playing bridge and a naked woman walks by, I don’t ever see her,” he said, laughing, then added, “don’t test me on that!!” — Warren Buffet
http://tinyurl.com/2chq95
Hmmm, plays bridge, market savvy, Hoz, that you?
Nope, Mr. Buffets bridge partner is Mr. William Gates. A disproportionate number of active traders play bridge. At times I think it is 50%. Bridge trains the mind. Sharper, faster. The key to winning bridge is to get great cards! The key to a sharp mind is play what’s dealt.
to me, bridge is a game that requires a level of concentration and skill comparable to chess.
What are the consequences for everyday, individual sellers when large and impersonal corporate forces gain near-control of a regional housing market?”
More importantly, why didn’t reporters ask this question a few years ago: “What are the consequences for everyday, individual buyers when large and impersonal corporate forces gain near-control of a regional housing market?”
Once again, the personal interest story held up by the MSM as a “victim” looking for help is someone who went an extra $300,000 in debt over a decade by living on more than they earned.
Are they unable to find a naiive person who actually saved a downpayment, lived within their means, and got stampeded into buying at the peak with an exploding mortgage? I have yet to see a sympathetic victim.
So, that one family MEW allowed them to increase their consumption by $30k a year that is now removed from the consumer economy. Their rebate check won’t go very far. There’s gonna be a whole lotta candle shoppes closing down.
The total rebates — $140B, is basically what this economy was getting EVERY QUARTER via MEW, 2003-2007.
A house in my neighborhood that had a for sale sign in the yard for about a year went up in flames. I was suspicious but at the time I went and got marshmallows and headed over to the house. I was looking around for a stick to put my marshmallows on bu couldn’t find one since all the trees were bulldozed to make way for new homes. Then the fire department showed up and put out the bonfire.
Oh well.. no marshmallows
“Ten years later, after refinancing several times and borrowing money against the home, Herrera [a babysitter] and her husband pay $3,300 a month on a $430,000 mortgage. ‘We used some of the money for home improvements and to put in a pool,’ Herrera said. ‘But also a lot for expenses when our kids were in high school.’ She has already defaulted on the mortgage after struggling to make her mortgage payments, and worse yet, her monthly payments are scheduled to increase to $4,000 in June. If she could sell her house to pay off the balance, she said, that would be a good solution, but the house is only valued at $400,000.”
Another tale of an ugly minimum wage fat a$$ living the life of the ‘rich and beautiful.’
The US government should “bail her out” by reducing the amount she owes to the amount the house is now worth. She seems like a nice person, so why not?
send a check
The TSUNAMI OF INEPTITUDE is overwhelming.
“Data indicate that from Pasadena to Pomona and south to the Whittier area, almost five times as many homes are at risk of foreclosure than in 2005.”
What’s interesting about this, aside from Pasadena, Bradbury and San Marino, most of the people in east el lay don’t try nearly as hard to keep up with the joneses, as their westside counterparts do.
This would mean all of those too hip for their own good people on the westside, are in even more deep kimchee, percentage-wise.
Sounds like a Korean BBQ night tonight…all this kimchee talk is getting me hot and fermented.
When Ben starts mixing up Florida with California and nobody notices, they just might be in the same state of financial badness…
The Whittier Daily News reports from Florida. “Yvonne Herrera’s blue-gray, two-bedroom family home on a quiet, dead-end road in Covina was astonishingly cheap when she and her husband bought it: only $129,000. Ten years later, after refinancing several times and borrowing money against the home, Herrera and her husband pay $3,300 a month on a $430,000 mortgage.”
I noticed.
We are all Florida, now.
The Whittier Daily News reports from Florida. “Yvonne Herrera’s blue-gray, two-bedroom family home on a quiet, dead-end road in Covina was astonishingly cheap when she and her husband bought it: only $129,000. Ten years later, after refinancing several times and borrowing money against the home, Herrera and her husband pay $3,300 a month on a $430,000 mortgage.”
I’m considering making an offer on a REO in West Carson/Harbor area. I’m going to bid it cash flow positive levels. Its been sitting for 150days as a REO at a bubblicious 420K. I’m going to see how they react to 185K.
Just for the fun of it. Its a bank so you never know.
I can make most things “cash flow” with a Neg-Am loan…but that doesn’t mean it’s a good idea. What is the cap rate?
http://www.sun-sentinel.com/news/local/broward/sfl-flzforeclosurebr0224sbfeb24,0,7178295.story
“Though the popularized view of the housing market trouble is bad loans, dropping home prices are just as much to blame for people being at risk of losing their homes, said Phyllis Harb, a La Ca ada Flintridge-based Realtor.”
Can some one explain this to me, because it does not seem fit to print.
Simiwatch-
How is the housing market doing in Simi Valley?
I noticed our old home in Wood Ranch is down $350K (Zillow), which means it probably down even more.Wood Ranch isn’t our choice for lifestyle, housing, or people.
I have always liked the east to middle of Simi, where there are a lot of one-story average sized homes, no HOA, and nice people.
We moved to Ventura County in 1984 , when it was a great place to live. Things changed.
Awaiting wipeout:
Forget Zillow. Look at Craigslist to see what is going on. A lot of blood in the streets. It is quite before the storm. Know a lot of construction and mortage types. Business is off. Local business is off. Anyone who bought in the new areas is underwater and it just goes on!
you can email Boone at his worker’s compensation firm in Santa Cruz. pretty new attorney according to calbar.org. his wife is probably still an intern. guess all those student loans are impacting their ability to pay the mortgage. originally, i thought they were public interest type people. i’d feel better helping them out if that were the case. of course, they could always work together to scam the worker’s comp system if they dont get bailed out.
she and her husband bought it: only $129,000. Ten years later, after refinancing several times and borrowing money against the home, Herrera and her husband pay $3,300 a month on a $430,000 mortgage.”
“‘We used some of the money for home improvements and to put in a pool,’ Herrera said. ‘But also a lot for expenses when our kids were in high school.’”
Yvonne, boo hoo hoo hoo hoo. My parents did ‘borrow’ against the house to put in a pool. They didn’t borrow against the house for home improvements. They didn’t borrow against the house to buy crap for me (and siblings) when we were in grade, jr high, high school, or college. We either did it with money we had, or we just made do. You should have a paid for (or close to it) home and no problem. But you couldn’t keep your hand out of the cookie (um - HELOC) jar. And now you have the gall to act like a victim of your own greediness. So, tought $h!t. No sympathy from me for people that wasted 3 times what they paid for the house.
(sorry, if posted twice)
I thought Boone and his wife were public interest type professionals and a bail out wouldnt be so bad. But according to calbar.org, he’s a Worker’s Comp Attorney and you can email your sympathies to him. I bet his wife is still an intern and theyre saddled with student loans. if the bail out doesnt work, they could always do a Workers Comp scam together. She could sign off on some fake back injuries. good luck
on another subject, how bout that gold and silver? i had expected gold to at least run to $980 and maybe $1120. it’s getting close. and silver to head up over $20. i still feel better about silver in the short-term.
theyre sure are a lot of people shorting gold who know sh$% about the fundamentals. it could scream higher and enter a manic phase at any time. i look at my old invoices for my physical and cant believe i paid $310 to $380 not that long ago. and my last purchase at $640 which i was a bit nervous about. i think we’ll look back feew years from now and consider it amazing that gold couldve been purchased for under $1000. i still dont know anyone in my circle that has purchased gold. were are in the early innings.
You are speculating, plain and simple…unless there is some “fundamental” to gold valuation which I have never heard of (Try DCF on gold and you will find it is worth nothing). In the long run, gold will roughly hold its value (remember, its value is very hard to determine)…bad investment if you ask me.
Invest in something that creates profit. Anything else is just pure speculation and you will lose out when you factor in trading costs.
…a 40-ounce bottle of malt liquor had been flung through an upstairs bedroom window…
This may just be a trendy new ritual - a ‘christianing’ of the abandoned home’s journey through the dire straits of foreclosure.
“Sellers who resist have been given a special name within the ranks of real estate agents: ‘fantasy sellers.’ And they are to be avoided.”
Never truer words spoken. Fantasy buyers who now evolve into “fantasy sellers.”
DOC
“Santa Clara County prosecutors besieged by mortgage complaints”
The Santa Clara County District Attorney’s Office has been hit with a surge in complaints about home-loan fraud, even as funding to prosecute these cases is plunging.
The district attorney’s office opened 125 new investigations into mortgage scams last year, four times as many as in 2006, prompting one prosecutor to call 2007 “the year of lending dangerously.” The total loss to victims topped $40 million during the 2006-07 fiscal year, the office said.
Funding to prosecute these cases is tied in part to the real estate market, so the slowdown in home sales has led to a drop in the amount of money coming into the district attorney’s office.
The situation has led to grumbling in the legal community over the pace of prosecutions.
Ron Rossi, a San Jose real estate lawyer who said he is seeing more mortgage-fraud cases now than in his 39 years of practice, is “convinced the DA is probably overwhelmed with the number of cases. They are very hard to prosecute and are not normally what DAs do. DAs are normally involved in hard crime. The staffing is probably not enough to even get close to what’s going on in the industry.”
http://www.mercurynews.com/ci_8350965?nclick_check=1