There Are Bad Apples On Every Farm In California
The San Francisco Chronicle reports from California. “The housing crisis showed no signs of abating during the traditional start of the spring selling season, as Bay Area home sales clocked another record low month in March. In the nine-county area, 4,898 new and resale homes and condos changed hands, down 41.1 percent from 8,317 in March 2006, according to DataQuick. One-quarter of the sold homes previously had been repossessed in foreclosures.”
“The Bay Area median price for all homes tumbled 16.1 percent to $536,000 from last year’s $639,000. The median is now 19.4 percent off its peak of $665,000 which was reached last June and July.”
“DataQuick said this was the slowest March since it began tracking statistics in 1988, and the seventh consecutive month of record lows.”
The Contra Costa Times. “Valerie Guerra’s Livermore home has lost $100,000 in value through no fault of her own. Foreclosures in her neighborhood and on her street have erased much of the equity in their house. ‘I certainly believe my house is worth less than what we paid,’ she said. ‘But we’re here for the long haul.’”
“The Guerras are far from alone. ‘Our values have dropped dramatically,’ said Kareen Bell, a Brentwood resident. She and her husband bought their home a few years ago for $865,000. Now, the house is worth slightly more than $600,000.”
“‘It’s scary to see people moving out all the time,’ Bell said. ‘The house across the street from us is foreclosed. So is the one behind our home. So is the one down the street. At least six houses near us have been foreclosed.’”
“Several foreclosures have jolted the Antioch neighborhood where Emissa Hutchings owns a house. Homes in her vicinity that a year or two ago were selling for $600,000 to $700,000 now are on the market for $300,000 to $400,000.”
“‘I’m almost to the point where I don’t want to stay in Antioch,’ she said. ‘I’m raising my grandkids. I wish I could move. But I’m stuck.’”
“‘This is the tech bubble all over,’ said Guy Schwartz, manager of the Walnut Creek branch of San Ramon-based CMG Financial Services.”
“Rafael Ayala bought a house in Brentwood in 2006 for nearly $700,000. He and his wife also obtained $630,000 in financing. The house is now worth about $450,000. ‘It’s hard to sell,’ he said. ‘People don’t want to buy my house.’”
“Guerra realizes that the current nose dive for housing simply marks the reverse side of what had until recently been a remarkable surge in prices and sales. ‘This is my third home and up to now I had experienced only skyrocketing values,’ she said. ‘I’m not pleased. But I’m also not crushed.’”
The Sacramento Bee. “Sacramento County’s 1,501 March closings on new and existing homes combined were the fewest since March 1997, according to DataQuick. The tally was down 14 percent from the same time last year.”
“Median sales prices also dipped to $247,000, a level not seen in the county since May 2003. Median prices are now 36 percent below August 2005 highs of $387,000.”
“Placer County’s 464 new and existing home sales were the lowest since March 1996, and were down nearly one-third from the same time last year. The county’s March median sales price of $355,000 is 19 percent below a year ago and off one-third from the August 2005 high of $525,000, DataQuick reported.”
“Yuba County saw median sales prices dip below $200,000 for the first time since January 2004.”
“Closings on new homes showed the weakest March numbers as many buyers shop for bank-owned bargains. DataQuick reported that year-over-year sales of new homes were down 35.6 percent in Sacramento County, down 42 percent in Placer County and down more than 70 percent in Sutter and Yuba counties.”
“In 2007, lenders repossessed 10,049 homes in Amador, El Dorado, Nevada, Placer, Sacramento, Sutter, Yolo and Yuba counties, according to DataQuick. Lenders also filed 24,787 notices of default, typically issued after a homeowner misses two or three monthly payments.”
“Gold River bankruptcy attorney Wendy Dezzani estimated that half of her clients have used home equity to hedge against debt. ‘For years, people were carrying a lot of credit card debt, but when housing values are dipping, you can’t make the credit card payment or the house payments,’ Dezzani said. ‘From what I hear, people are using their credit cards for their house payments, and now they have problems with credit-card debt.’”
“Just as it became easier to buy a new home, finding relief from financial troubles became more difficult. Swallowed up by growing mortgage payments, many still chose the bankruptcy route.”
“In total, 17,397 people and businesses sought bankruptcy protection in a district that largely encompasses the Central Valley. The number of cases filed in the first quarter is up 82 percent from the same period last year.”
The Tracy Press. “Stephanie, 32, and Brian MacDonald, 30, never thought they’d own a home so soon. The couple had rented a $900-per-month duplex for three years before they looked to buy. And a few weeks ago, they bought their ‘dream home’ for $187,000 below its asking price.”
“Late last year, the four-bedroom tract home in western Tracy was listed at $525,000. The MacDonalds made an offer in February for $338,000. To their surprise, the bank accepted.”
“‘We are like the poster child of today’s market,’ Brian MacDonald said, describing his wife and himself.”
“‘It’s still clearly a buyer’s market, but sellers are getting more realistic, and buyers realize that there’s going to be a point in the near future that the market will see its bottom. And people are jumping on the chance to get in on it,’ local real estate agent Karl Enzmann said.”
“The near future still looks bleak for sellers, stressed Alex Alvarez, a Tracy lender. But with the average home price falling by a couple hundred-thousand dollars within a few short months, he said, people have begun to realize that things can’t get much worse.”
“‘The flip side to this dark cloud is that we now have families that can afford to buy for a reasonable price,’ Enzmann said. ‘The same home they would have competed (for) against dozens of buyers in 2004 and 2005, they’re getting to bid several hundred-thousand below the asking price.’”
“By the time their home closed escrow, the two had $5,000 to pay out of pocket. With the down payment financed at a good rate, the MacDonalds said prospects look bright, and they can easily make their $2,000 monthly mortgage payments.”
“”Despite the number of countywide foreclosures averaging about 2,400 for the month, buyers are making more offers than ever since the market took a nosedive.”
The Merced Sun. “With home prices continuing their downward slide, buyers who were waiting for Merced’s real estate to hit bottom are leaving the sidelines and getting back into the real estate game, local real estate agents say.”
“Among all homes in Merced County, both new and existing, the median price fell to $225,500 in February, down 29.5 percent from last year’s price of $320,000, according to DataQuick. In February 2006, the median home price was $372,750.”
“Sales volume during the first two months of this year — 336 houses sold — is a far cry from the same periods during 2007 and 2006. In January and February of last year, 425 houses were sold in Merced County. In 2006, 730 homes changed hands.”
“Broker Loren Gonella says plummeting price tags are getting the attention of buyers who’ve been watching the market for signs of hitting bottom. His office has closed escrow on 240 houses since the first of the year, he said — a sign that business is picking up. ‘You’ve got a perfect storm for buyers,’ said Gonella. ‘Great prices, very good interest rates and willing sellers.’”
“For sellers, the picture is less rosy, said broker Kay Flanagan. A few years ago, homeowners looking to sell faced their biggest competition from new subdivisions.”
“Now there’s another player in Merced’s market — banks dumping foreclosed properties, said Flanagan. They can sell newer houses for less than $100 a square foot; at the height of Merced’s boom such homes were selling for $200 per square foot, she said.”
“Gonella cautioned against comparing this year’s real estate picture to the red-hot market of two years ago. ‘People that are buying today, five to seven years from now are going to have a smile on their face from ear to ear,’ said Gonella. ‘They’re going to say, ‘My God what a deal we made’ — and they’re going to be right.’”
The Visalia Times Delta. “Jahan Farhang has seen it all since 1987, when he first became a licensed Realtor. At the time the market was in a slump. It’s slumping again, but the downturn has been recent and on the heels of a spectacular high.”
“He was named Realtor of the Year in 2005 by the Tulare County Association of Realtors, and now is president of the association.”
“Q: How dire is the foreclosure situation in Tulare County? What kind of shape is the real estate market here in today? Farhang: ‘Not as bad as the rest of the state. We have approximately 12 percent foreclosures compared with other areas, [where it's] as high as 30 [percent to] 50 percent.’”
“‘We have always had foreclosures. There hasn’t been a year that I haven’t done evaluations for the banks because of foreclosures in the past 20 years, even in a good year. These are people who pull the equity out of their homes, and they don’t care what kind of loan they’re getting and they just go out and have a good time with their equity. Then they can’t afford to make their payments.’”
“‘Unfortunately, there are a lot of sad stories out there.’”
“‘With the interest rates still so low, that helps us a lot. It’s the best time for the first-time buyer or the investor to buy a home right now.’”
“Q: What’s your take on the role real estate professionals played in today’s rising foreclosure situation? Did they serve their clients well?”
“Farhang: ‘About six years ago I put an ad in the Times-Delta asking for listings, because I felt the market was going to go up between 16 [percent] and 20 percent. Everyone thought I was crazy, but three months later the market started kicking up.’”
“‘When you have builders and developers, they follow the trend. They are going to buy all the available property and try to get the city to annex it so they can develop it. There were also many people on waiting lists to buy homes, so prices went up.’”
“‘We didn’t have any choice but to raise prices. Then, lenders are going to come in creating all these loans, because they want to make money. I put most of the problem on the lenders when they were lending these monies with variable-rate loans, and people getting loans with no credit, or income that wasn’t true.’”
“‘I don’t think the Realtors really had much to do with this. It was the high demand for homes and it was the last chance for people to buy homes.’”
“‘We sell properties. If you come to us and want to buy a piece of property, we do our best to sell you a piece of property that’s good for you and for your budget. We don’t get into all the details of what kind of income you have, that’s all lenders. I wouldn’t blame the Realtors, but there are bad apples in every farm you go to.’”
“Q: What are your goals as president of the Tulare County Association of Realtors for 2008?”
“Farhang: ”My goal is for our agents to be ethical, just like we have been in the past several years.”
“Valerie Guerra’s Livermore home has lost $100,000 in value through no fault of her own.”
Did she buy the house or not?
Amen bruthah! FB’s aren’t born that way.
And yet, when the value of her used house was rising, she claimed to be a genius.
was this posted already? i missed it if so, it is a good one:
http://www.slate.com/id/2188982
Yes, I posted it yesterday in the Bits Bucket. Great article!
The Bay Area median price for all homes tumbled 16.1 percent to $536,000 from last year’s $639,000. The median is now 19.4 percent off its peak of $665,000 which was reached last June and July.”
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19.4% down, 40.6% to go. That’s only about 18 more months at the current pace…
What about the overshoot?
Fast and furious, just like the doctor ordered.
On the bright side, I know a bunch of knifecatchers who just bought a place in Campbell, CA for $755K, and got featured in the NYTimes for their trouble.
BWAHAHHAHAHAHHAHAHHHHHHHHHHHHH!!!
I think that includes overshoot, since it adds up to 60%.
I like your optimism. You must live on the West Coast.
The bay area may see as much as 75% off peak prices. Thus an $800k shack is “worth” $200k
In the Great Depression, a Connecticut mansion that sold for $1m in 1928 was resold for $75k in 1933.
Apartments in the luxurious River House building on east 53rd Street in Manhattan that changed hands for $50k a decade earlier, sold for $500.
Now *that’s* a housing decline.
“19.4% down, 40.6% to go. That’s only about 18 more months at the current pace…”
For comparison purposes here are LA County March figures from dataquick zip chart:
2,990 $450 -20.4% $375 -13.8% $315
LA county SFh’’s down -20.4% YOY. This is march 07 to march 08
so YOY decline off peak maybe 25% or more.
Race to the bottom.
“‘We are like the poster child of today’s market,’ Brian MacDonald said, describing his wife and himself.”
Keep patting yourself on the back, young Brian. But when tomorrow’s market rolls around, you and your wife are going to be poster children for the embittered knife-catchers who will have to watch as your saavier, more patient betters swoop in to grab the REAL deals in 2009-2011.
I’d bet they are already underwater!
‘They’re going to say, ‘My God what a deal we made’ — and they’re going to be right.’
LOL
And you may ask yourself
What is that beautiful house?
And you may ask yourself
Where does that highway go?
And you may ask yourself
Am I right?…Am I wrong?
And you may tell yourself
MY GOD!…WHAT HAVE I DONE?
Into the blue again/after the moneys gone
Once in a lifetime/water flowing underground.
I hope I never, ever live through another housing bubble. It would be cool to tell my grandkids someday about this one and have them say “You’re making this up, aren’t you?”
As long as the Fed exists, you can bet there will be another, and another….
I’d like to believe you, but the Great Depression happened without the Fed, and it was the worst one…
Not true.
the fed cemented the depression by raising rates 300 basis points just as things got gloomy
You won’t get any argument from me that Greenspan and Bernanke suck(ed), but I thought Volcker did a pretty good job. The Fed did nothing during the Great Depression, but now the general consensus on that was that it was a big mistake.
There was a different Fed back then. I have a feeling that America’s next bubble will be blown by its next Fed.
During the Great Depression, Germany did something akin to what we’re doing now. They were burning cash for firewood then.
These two paying $900 for rent and now at least $2000+ for ownership, while housing prices nosediving, in a not so desirable area.
Yeah thank God for that, just don’t curse later.
And 2,400 foreclosures a month!
If this trend becomes the new cool, don’t expect the economy or housing to pick up anytime soon. Could a new era of frugality be upon us?
http://biz.yahoo.com/ap/080417/teen_recession.html
Pardon me while I reach for the Kleenex. (Not.)
I can remember back in the Jurassic Period of my teen years. Back when pizza was a very rare treat at the family dinner table. As for driving to the mall? Forget it. I wasn’t allowed to go to the mall unless I was with one of my parents.
And buying the hottest new jeans? Well, my mother would have taken one look at the price tag and said N-O. Quite frankly, I would have said the same thing. I was a pretty frugal kid.
These are teens who work and use their own money to buy stuff for themselves. Their jobs are drying up.
In my house, I would have gotten the third degree about not saving the money for my education. The idea of having a job just so I could drive to the mall and buy pricey jeans was a non-starter.
I guess I was a strong-minded teen. The old third-degree routine never did have a very good influence on me.
No more paper routes— with declining newspaper subscriptions, most routes advertise “car required.”
Less babysitting— I could watch toddlers when I was 13, these days it might get you called in for child neglect.
I did odd jobs for the neighbors, cleaning houses, doing laundry, even filing for one neighbor who had an in-home office. I can’t but help think that somebody would scream about that today. Of course, that would also assume you *know* the neighbors.
Mowing lawns, maybe?
I was a teen in the early 90’s… aka the grunge era. There was very little money in the family at the time as pops was a laid off denfense contractor. I was ecstatic when I got my first job making 5 bucks an hour in 93. Flanel shirts and torn jeans are going to make a huge comeback.
Frugality is definitely the new black…
http://www.theroot.com/id/45671
It’s dumb to get a job as a teen if you are just gonna waste it on shopping. Forget a job, study instead, finish school then get a real job, not flipping hamburgers!
What’s your real job?
I raised a family whilst flipping burgers through my first two years of college. Not a real job? It paid for the trailer space. $500/month. It paid for the propane. $90/month in Colorado winters. It paid for the generic black-and-white canned food we ate back then. $100/month. And now, decades later? I respect the folks around me who deign to take less than a “real job”. That’s 90% of our populace. Move out of your parents basement. Go experience the world. Criminy.
Sorry, but I disagree. I don’t think teens can learn to save, plan and budget if they never spend anything. The people saving now for long periods of time learned that from saving for smaller things years ago and these teens need to do the same and learn the value of delayed gratification.
I never would have learned to save $24,000 for a car if I didn’t first learn to save $100 for a disc man. And I never would have learned the value of researching a product, understanding guarantees and buying quality instead of flash if that $100+ Sony didn’t die, Best Buy didn’t screw me on the return and if the older $50 Panasonic I bought on reviews later didn’t work perfectly for 9 years.
I hope teen jobs don’t dry up and I hope they teach these kids to value, save and plan.
For most people, I agree with ByeFL. Answers probably break down by parental education. Kids of college grads will likely find that job at the mall completely useless. The key is opportunity cost. When my kids turn 16, I hope that their software and science skills are good enough to land each of them a job paying $20-$40/an hour. If not interested, then I would rather they take math or stat classes or go overseas to improve their Spanish or Chinese. That said, getting that $3.35/hour job in high school did teach me one thing: life at the minimum wag sucks.
“‘I don’t think the Realtors really had much to do with this. It was the high demand for homes and it was the last chance for people to buy homes.’”
Is being a pathological liar a pre-requisite for getting a real estate license? The “high demand” for homes was an artificial creation of the NAR’s “buy now or be priced out forever mantra” repeated endlessly to their clueless and gullible clients. That, and Easy Al Greenspan’s reckless lavishing of created-out-of-thin-air credit on the manifestly undeserving.
Not to mention that each realtor was also buying 5-10 houses for their own empire.
Is this real estate person serious ? The real estate sales people sold the leverage game along with the toxic liar loans . Is this real estate sale person trying to say that the commissioned sales people didn’t know anything about the income of the buyers they were taking out ? How does a sales person know what price range to show property in if they don’t know the income information ? Who were the parties that referred the sheep to the sleaze loan agents that they knew would cram the liar loan through ?Who were the parties that threatened the appraisers with no business if they didn’t hit the mark, along with the long agents .
Any body that would say that the commissioned sales people didn’t have a hand in promoting this faulty lending and people over-buying is just lying. The whole industry was selling the investment concept of appreciation and that easy money real estate always goes up .Do you think that the sales agents didn’t promote the fact that the FB could just refinance after they made a bundle .What group promoted the concept that you better get in now or be priced out forever ?
If the public knew how many real estate sales people got kickbacks from lenders or how many real estate agents double escrowed property to push up prices, they would be shocked . It’s always a real estate person that usually sets up a cash back fraud deal .
No offense to honest real estate agents ,but so much of the industry was just plain greedy and corrupt .Lenders always in the past were the watch dogs over the real estate people ,so when the lenders turned corrupt the real estate sales people went wild. Can you imagine selling houses with no regard to income qualifying or the appraisals hitting ? Just find a body that you can put in a house, sell them on some hair-brain ponzi scheme and a toxic loan ,and collect the commissions .
The lenders turned corrupt by being able to sell mortgages to Wall Street, effectively erasing any practical barriers between commercial and investment banks. I think it was the rating agencies and ‘financial wizard’ CEOs with their magical 30:1 leverage deals that were most corrupt.
Greenspan asleep at the wheel didn’t help either, but I don’t know if I would call him corrupt.
Greenspan fought for the repeal of Glass-Steagall (the Banking Act 1935) which separated the activities of commercial and investment banks.
The repeal was signed off in November 1999 by Clinton I, and this set the stage for the debacle now unravelling.
Google it, and see if you can ascertain any corrupt intentions here….
The tax reform act passed by the Dems in 1993 included provisions for the Fed to regulate sub-prime mortgages, but Easy Al Your Bubble-Blowing Pal never bothered to do so.
We should still reinstate the Glass-Steagall Act.
“Greenspan asleep at the wheel didn’t help either, but I don’t know if I would call him corrupt.”
Please don’t: it would corrupt the word “corrupt.”
I agree that Wall Street provided the easy loan funds to the lenders for most part ,but that is no excuse for the lenders to just have a field day and not exercise any front line underwriting duties just because they were passing on the risk .
Lenders always sold loans to Wall Street for decades and decades ,so why were the lenders allowed to breach their duty to prevent fraud or underwrite loans ? Why didn’t Wall Street investment firms exercise some quality control on the junk loans that were being passed on ,rather than just selling these bundles of CDO trenches to the secondary market ?
I agree that Wall Street had faulty models for the loan risk to begin with ,as well as defective loan programs,but the front line lenders allowed liar loans and fraud and many helped the borrowers commit fraud .
The corruption got so extreme as the boom continued that anybody could get a loan of any amount to gamble with .
I really don’t think Greenspan knew about how widespread the fraud was ,but he should of know that something was wrong.
Greenspan could of raised the rates sooner to stop the mania that was developing .You can’t tell me that higher rates wouldn’t of cooled the bubble a lot sooner .
“Lenders always sold loans to Wall Street for decades and decades”
Is that so? I had the impression that decades and decades ago, your local bank that wrote your mortgage note usually kept the note and received your mtg payment. Are my lending practices really 60 years out of date, not just 25?
“No offense to honest real estate agents”
I don’t think you’re offending anyone.
“Gold River bankruptcy attorney Wendy Dezzani estimated that half of her clients have used home equity to hedge against debt. ‘For years, people were carrying a lot of credit card debt, but when housing values are dipping, you can’t make the credit card payment or the house payments,’ Dezzani said. ‘From what I hear, people are using their credit cards for their house payments, and now they have problems with credit-card debt.’”
——————————–
This reminds me, in relation to the thread earlier about HELOCs being capped and credit offers withdrawn, does anyone have any anecdotal stories about credit card limits being lowered, even for good credit risks? I have one card (a former MBNA Visa, now BofA) that I consider the “canary in the coal mine” - if they begin to reduce the limit on that one I’ll know the “great CC tightning” has really begun. I’m an 820+ FICO that pays it all off every month - I can’t imagine the squeeze being put on the jugglers.
Folks who pay off their credit card bills each month are known as “dead beats” in the industry. Kinda ironic, eh?
Well, count me as a deadbeat. And proud of it.
The appeal of the dead beat is on the rise, however, as the servicing fee is beginning to yield higher profits than the unpaid interest earned from debtors.
> half of her clients have used home equity to hedge against debt
Unhhh, the “equity” loan is also debt.
On the contrary: we’ve recently had both our HELOCs increased and our credit card maximums raised. Like you, we are high FICO and pay everything off every month. I figure they are just trying to tempt us. “Get thee behind me Satan.”
“does anyone have any anecdotal stories about credit card limits being lowered, even for good credit risks?”
Using your credit card to pay your house payment is flippin’ crazy. Our friend’s wife was doing that sort of thing with her credit cards, borrowing money on her credit cards to pay her credit card bills. She ran up a 100k on her cards before hubby found out.
“Farhang: ‘’My goal is for our agents to be ethical, just like we have been in the past several years.”
Ummmm, aren’t goals supposed to be things you aspire to, try to reach, not that which you already do?…something tells me he knows his agents have been far from ethical.
He forgot to add…”and sell as many ice makers to the Eskimos as possible.”…LOL
This Farhang is really a piece of work, even more unbelievable than those NRA talking heads. He constantly spins and avoids answering questions. Ask him how is the market doing? Tell you the several years prices skyrocketing.
Let me share a story about “insulting” the sellers. One house in Laguna Hills (4BD, 2700sft) listed in December 2007 for $750k. Maintained the asking price until 03/08 when they reduced it to 725k and then to 699k. Saw the home with my realtor and decided to make an offer for $600k. The realtor started to whine, “you are insulting the sellers, you’ll never find their bottom line…, blah, blah.” Wrote the offer anyway. Sellers wanted to counter with $670k, but after pleading from my realtor, they counter with $646k. Realtor called me overly excited, “you got a great price, well below comps, ….”. Told him bluntly that $600k was my offer and not a penny more. Realtor lost it, told me that I want to “steal” the house, I am “unrealistic”, etc. Told him that if he could not handle realistic prices. maybe it was better to part way. We left it there. A week passed, no phone calls or e-mails from the realtor. In the mean time, the house was re-listed for $657k. Couple of days ago, got a lengthy phone message from the realtor, apologizing about calling me “unrealistic”, “the offer was in line with the market”, “lets go out and insult sellers”, etc.
Honestly, they did me a huge favor. $600k was probably too much, anyway. Probably after June, I can get it for $550k, or so, anyway. The guys paid $520k in 2003.
Great Story!
The sellers did do you a favor. Way to early to make bid, hold your fire and watch those prices fall.
Remember that an offer in real estate is a legally binding comitment to buy. Be careful making low ball offers when you have no intention of buying. IN theory a buyer could accept your offer and if you then dont follow thru, (the realtor) could sue you for breach of contract (to get their comission). In california, offers are accompanied with a good faith deposit for 1% or more of the purchase price.
Of course in a rising market, the seller could offer the property for less than he wanted expecting to get multiple offers and a bidding war. Of course if they had one offer at the offer price they probably could get out of taking it.
What a psycho. I predict he’d repeat the whole rage-to-groveling process if you lowball again.
Next time record it and post it on youtube…
I would agree to house shop w/the groveling realtor, but first we stop at a local eatery for some enjoyable payback;
I’d sneak back to the kitchen, bribe the cook to burn a chicken black, then have it sent out to the realtor with a note saying ” here’s yer crow, better eat up fast as I just saw the chef chasing a flying pig”!
. . . then slip out the back door.
dont forget to change the cell #.
Bombo, I hope you use another used house salesperson to make your next offer
He is back in the “bullpen”. I’ve been using him because he brings good information when viewing properties (title reports, mortgage deeds). Also he is proactive in talking to the sellers agents, finding out the dirt, etc. However his performance is poor when it is time to score. He is apologetic. He is very leveraged in RE, his house lost $150k or so and he feels the need to be the torch bearer for the OC real estate. Love to e-mail him links to destrous news in RE or employment in OC.
It is a long battle, I am doing my bit of spreading the message.
I love hearing “insulting lowball bid” stories. My own well-practiced routine is to walk into an open house with the flier in my hand, then walk around with a look of barely concealed disbelief. When the realtor asks what I think, I just shake my head with disdain and say, “You’re asking the 2005 price. I’m waiting on the 2009 price.” The look on their face is always priceless.
“You’re asking the 2005 price. I’m waiting on the 2009 price.” The look on their face is always priceless.
Nice. Might have to borrow that line in the future. =)
At 15% inflation rate, your $1.00 today will be woth .06 in 20 years. The lowest 30 year fixed mortgage ever was 5.83% in 2003, and ith has been only lower than the current 6.25% in 3 of the last 35 years. There is extraordinary risk to the dollar.
With very low current insterest rates and high inflationary expectations, if you like the house and can get a fixed rate 30 year morgage, and plan to live there for 20 years, I’d jump on this deal.
Inflation won’t continue like this forever. Even if it did, that would only cause house prices to drop even more, since people would have less $$ left over after buying food to pay for a house. The only way that inflation could cause house prices to increase is if we get higher wages, which is not likely given the nature of today’s inflationary pressures.
I personally think we are headed for a deflationary spiral, but unfortunately energy and food costs will get to be disproportionately larger parts of our budget compared to what they are today. The cost of everything else that can’t be rented, borrowed, depreciated or made to last will drop like a stone. I bet Intangible things like significant ‘home equity’ will be a thing of the past.
Remember the heirarchy of survival.
First, air. Second, water. Third, food. Fourth, shelter.
House is a distant fourth place if confronting inflation that threatens survival. Why do you think people squat in mud huts in the 3rd world?
What inflation?
If there is really inflation (snip, snip) wouldn’t interest rate be way higher?
Bob Brinker just lost my trust when he use the inflation figure and bond prices as the proof that there is no inflation worries.
I do wonder why treasury and bond prices stay this low though. Maybe the risk with other investments are so high that investors are contempt with high treasury/bond prices?
Brinker hasn’t been “real” (objective) for a long time. We stopped listening in 2002. Peter Schiff, Jim Puplava, Jim Rogers, Marc Faber, Bill Fleckenstein…these guys are smart and aware.
Sorry big guy. You are full of it. I got a mortgage in 2004 a 30 year fixed rate one for LESS than 5.83%.
LOL!! Three of our four houses are well below 5.83%. 5.5% (30yrFRM); 5.57% (30yrFRM); 5.253% (15 yr FRM). The latter two are investment homes. I believe the record low in 2003 was about 4.75%. My sis-in-law bought her Manhattan flat during that time and got something like 5.1%.
These are great times for those who did their due diligence.
Someone needs to bring reality back to this planet. Just be careful that you don’t actually buy - things have a long way to go.
My new hobby is emailing the owners of empty and expensive homes on Craigslist and offering to rent while the house is on the market (FSBOs). For a low price. And with pets. Then I include a link to this blog.
good, very very good. Keep at it.
I may poach your strategy….a brand-new house near me has a new and improved price–hey, it’s just 2 M! instead of 2.4! The RE ad says, “every room is a WOW!” That’s a good thing, because as our 83-year-old neighbor put it, “the damn thing looks like a fire station.”
as our 83-year-old neighbor put it, “the damn thing looks like a fire station.”
because there’s no yard and the house fills the lot and garage doors and driveway predominate the view from the street?
You are evil, ha ha. Did you get any responses? Care to share?
You lucked out big time.
I agree. He almost caught a falling knife by paying $600k on a house that is worth $300k. I hope he reads this HBB blog daily and learns that the bottom isn’t due anytime soon, certainly not in 2009!
As for 15% inflation, I hope it doesn’t last or there will be riots demanding a 15% annual hike in salary because everything costs so much that a middle class wage is poverty at some point.
Thus creating an inflationary death spiral? No thanks.
“Honestly, they did me a huge favor. $600k was probably too much, anyway. Probably after June, I can get it for $550k, or so, anyway. The guys paid $520k in 2003.”
by end of 2008 it will be down to $500,000. All hi-end coastal areas of LA & OC will be seeing big drops at end of 2008 or early 2009. Why? Because unemployment rate will be up to 7-8% in Cal and lots of upside down hold-out sellers will panic in the high areas due to resets on Alt A. Plus they cannot borrow anymore to keep up with those resetting mortgage pmts .
Big bloodbath in prime CA coastal areas by end of 2008 and into 2009. So far the bloodbath has been in the inland crapped out areas but it will hit the fancy-pants coast within a year.
“will hit fancy-pants coast within a year”
Just now, was having a conversation with FB Morro Bay friend who is “thinking” of selling house “next year” …I said, you could live in the house till you die (friend is 72), but if you’re thinking of selling it, this year is better than next year, which is probably better than the year after that. This time — for a CHANGE — the friend did not respond rudely, but inquisitively.
Best line of the day: “let’s go out and insult sellers!” I love it.
Poor bastard…
““‘We didn’t have any choice but to raise prices. Then, lenders are going to come in creating all these loans, because they want to make money…”
He is just another victim of this housing crash… Poor, poor victim. He had NO CHOICE!!
And here he is again:
“Farhang: ‘’My goal is for our agents to be ethical, just like we have been in the past several years.”
And I hope you go to prison and enjoy your ass-rape.
Ethical, you keep using that word but I dunna think it means what you think it means
And here he is again:
“Farhang: ‘’My goal is for our agents to be ethical, just like we have been in the past several years.”
He sounds like Bush/Cheney saying, “My goal is to be honest to the American people like we have been in the past several years…”
I bet RE Agent Jahan Farhang has ants and ticks living in his bellybutton from slithering upon the ground for so long
I love diet Coke.
I love beer and whisky. Wine too.
What does that have to do with the HBB?
tequila
Ben, you keep using that word but I don’t think it means what you think it means.
Titos Vodka - Yumee
Titos. Good Texas vodka!
Coppola Claret.
Cheap but yummie Cabernet.
Bombay Sapphire
Daresbury’s Quintessential. Best gin on the market.
got my tall can of Bud right now. who the hell buys six-packs anymore?
I bought a six-pack of Oaked Arrogant Bastard last night! You could call me Joe Six-Pack but the name is taken and my name ain’t Joe.
I was almost certain the j stood for Joe.
That’s one of the most annoying things about the housing bubble. While some dimwits used their equity to support a ritzy lifestyle while mom stayed home with the kids, the more responsible folk actually sent both parents off to work (because they had to just to pay the mortgage), but stuck grandma/grandpa with the child-rearing duties. It really wasn’t fair. Of course, the smartest decision would have been to rent a house for mom and kids to live in, but still.
If you saw the decision making process of the people on the two coasts and everyone in between as well, your head would explode.
It’s just freakin’ unreal.
It could be other reasons…there was an article in SF chronicle a couple of months ago about an entire generation of kids being raised by grandparents in oakland because of crack epedemic in 80’s. The parents were either dead or gone.
Lesson to you: heroin, meth, coke(especially crack) is baaaaaaaaaad for you!
While we are at it, tattoos, lasik, cosmetic surgery, recreational mating, cheating, stealing is baaaaaaaad!
I am sure the kids being raised in this fashion find your comments quite funny. Keep it up.
More exciting news from downtown San Diego:
Seems like the entire 350 West Ash building just went up for sale. Haircuts for all!
350 Ash #604
Price: $699,000
Beds/Baths: 2 / 2
Square Feet: 1,264 sf
PPSF: $553
Sales History
Date Price Held Return Annual
11/09/2006 $1,020,000 n/a - -
350 Ash #801
Price: $299,000
Beds/Baths: 1 / 1
Square Feet: 866 sf
PPSF: $345
Sales History
Date Price Held Return Annual
08/31/2006 $590,000 n/a - -
350 W Ash #905
Price: $525,000
Beds/Baths: 2 / 2
Square Feet: 1,148 sf
PPSF: $457
Sales History
Date Price Held Return Annual
09/29/2006 $900,000 n/a - -
350 Ash #1201 (Penthouse baby!)
Price: $800,000
Beds/Baths: 1 / 2
Square Feet: 1,216 sf
PPSF: $658
Sales History
Date Price Held Return Annual
08/30/2006 $1,098,000 n/a - -
350 Ash #1102
Price: $399,000
Beds/Baths: 0 / 1.5
Square Feet: 839 sf
PPSF: $476
Sales History
Date Price Held Return Annual
09/25/2006 $590,000 n/a - -
and the list goes on and on…these are investor places too. They still need to go down another 40% to get within the sanity range.
I lived near downtown San Diego for 8 years (near Quince and India, right in the flight pattern of Lindbergh Field and I-5 Freeway), moving away in 1996. I can’t wait to go back sometime soon and see how much it has changed since then to justify these prices!
You won’t believe your eyes, I used to work in Little Italy and now, 5 years later, I can hardly remember all the older buildings & houses that have been torn down to accommodate the 3 story condo blocks erupting everywhere.
Quince and India? It’s not even safe.
Oh stop it! Just because of the cheaper rentals because of the airplane noise, mafia wannabes hanging out at Filippi’s, and general ambivalence, doesn’t mean it isn’t safe.
If you drive up Quince from India all the way til it ends and see a house overlooking a canyon to your right (about 3 blocks or so), that is where I rented. It used to be a pretty nice area, just loud because of the flight path and the freeway.
I wouldn’t be so sure of that. A few years ago, I would regularly be laughed at and ostracized for telling people that house prices would go down. Today, when I hear people say “Prices won’t go down any further.”, and I respond with “They still have a long way to go.”, they actually look at me and listen like they think I might have something. Recent buyers are scared, long-time owners are interested, and renters are relieved.
Had the same thought when I read this one. Wasn’t it just yesterday when the company line was “Real Estate prices never go down?” Now it’s “They can’t go down much further.”
I love diet coke too. Could never do Survivor.
It’s the eye of the tiger, it’s the cream of the fight
Risin’ up to the challenge of our rival
And the last known survivor stalks his prey in the night
And he’s watchin’ us all in the eye of the tiger
” … things can’t get much worse.”
I will forever remember houses for sale in Cleveland with asking prices of one-dollar.
Things can indeed get much worse (and most likely will).
It will get much worse. Wait until the mass migrations start. Many are already planned. People will go where the jobs fund the housing.
Or else become squatters.
Either or… things will indeed get worse. Sad. I do not look forward to the coming economic… malase. But it appears a recession is needed to teach the sheeple certain practical life lessons (like don’t get so deep in debt you loose the house).
Got Popcorn?
Neil
We are maybe a third of the way to the bottom….
Thornberg claimed that about 6 weeks ago (if I recall correctly).
So we’re that much further along.
Got Popcorn?
Neil
Why bother with one size fits all forecasts? The central valley is probably in inning 7 or 8. Dallas is probably in inning 2. Idaho? Probably in inning 5…Were someone able to actually call “the” bottom, one would see a line-up of multiple bids and queues…driving prices up above list. As always, one must study the heck out of their local market. I bought houses in 2005, 2006 and 2007 and am not only in the black on price for all of them, 2 have LTV
I will let this one speak for itself.
http://bigpicture.typepad.com/comments/2008/04/us-dollar-euro.html
I got emailed that earlier today.
That was the best, the best, the best. LOL.
It’s gonna reverse IMO. That, ladies and gentlemen, is referrred to as flip-flopping.
Yeah but right now the Euro isn’t even granting a reach around.
They need to pan back slightly. Then you’d see a long line of currencies waiting for their shot at the USD. “Strong” Ben and Hank are so easy.
Cheney to U.S. - “Reagan proved deficits don’t matter.”
Market response - “Bend over, bitch.”
Worst American VP in history?
Not if you are a defense oil or energy company. Anyone want to guess what Cheney’s next job will be and how much he will make in his first year out of office.
He’ll probably do little while sitting on the Boards of Directors of a set of companies that will be of little surprise with compensation many times that of the average plebe. Nothing surprising there, entirely wrong but not surprising.
As for W, I’d expect speaking fee income will be a tad less than for Clinton (said with an appropriate amount of sarcasm).
I’ll vote for that.
“Gonella cautioned against comparing this year’s real estate picture to the red-hot market of two years ago. ‘People that are buying today, five to seven years from now are going to have a smile on their face from ear to ear,’ said Gonella. ‘They’re going to say, ‘My God what a deal we made’ — and they’re going to be right.’”
Groundhog’s Day! Realtors are trying to relive their perfect day - and just as Phil Conners’ found out, Rita will always be just out of reach. At least until learn to play the piano.
So when do they toss the toaster in the bathtub?
Those are some pretty bold statements from Gonella. What’s backing them up? Intuition? Feelings? Hunches? Hopes? Wishes? Faith? Or some other rock solid fundamental?
You mean the microwave? I read that Merced still has one of the top five worst foreclosure rates in the USA. The Merced Sun Star is trying to get that RE ad revenue coming in again.
“With the down payment financed at a good rate, the MacDonalds said prospects look bright … ”
If you’re “financing the down payment ” then you’re not making a down payment.
“‘We sell properties. If you come to us and want to buy a piece of property, we do our best to sell you a piece of property that’s good for you and for your budget. We don’t get into all the details of what kind of income you have, that’s all lenders. I wouldn’t blame the Realtors, but there are bad apples in every farm you go to.’”
Doublespeak.
“we sell a property that’s good for your budget”
vs.
We don’t get into all the details of what kind of income you have, that’s all lenders.
So which is it? Do you care or not?
I know, I know, I know. It’s always the commission.
“‘I don’t think the Realtors really had much to do with this. It was the high demand for homes and it was the last chance for people to buy homes.’”
_______________________________________________________
Last chance
Last chance for debt
Yes, its my last chance
For mortgages tonight
I need realtors, by me,
Beside me, to lie to me,
To screw me, to mold me,
cause when I’m along for the fad
I’m so, so sad
So look askance, the last chance
Look askance, the last chance
Look askance, last chance for a financial reaming tonight
http://www.youtube.com/watch?v=7cPIT_T3mYU
The Merced Sun. “With home prices continuing their downward slide, buyers who were waiting for Merced’s real estate to hit bottom are leaving the sidelines and getting back into the real estate game, local real estate agents say.”
“Sales volume during the first two months of this year — 336 houses sold — is a far cry from the same periods during 2007 and 2006. In January and February of last year, 425 houses were sold in Merced County. In 2006, 730 homes changed hands.”
So this is the nonesense they’re resorting to now? 730 to 425 to 336 in March qualifies as ‘people leaving the sidelines and getting back in the game’? Would 100 have been the necessary number for them clearly not re-entering the game?
The stupid statements just keep coming faster than Paris Hilton can knock back cosmo’s.
Would 100 have been the necessary number for them clearly not re-entering the game?
Hey, that’s a pretty large football team at 100 anyway.
They’re starving. Realitors are near panic… but we won’t hit that investment emotion state for a bit. But just in case… don’t stand by the exits for your own safety.
Got Popcorn?
Neil
Comment by WestCoP
2008-04-17 13:44:45
I have a question for all you smart people on this site. Yes, it’s natural for the housing price to come back down to Earth after what we’ve seen in the last 10 years. The question is how much further can it go down? We are currently renting a townhouse in West Covina, CA (In LA County). A unit with an identical floorplan sold just this past month. I did some calculations and I figured that if I were the one to purchase that unit for the selling price, with about 10% down, my mortgage + Assoc. Fee would be almost identical to the rent that I am paying. And I assure you I am not overpaying for my rent…it’s just that in LA at least, the rents have skyrocketed in the last few years trying to catch up with real estate prices. Granted this is a single example… but this brings up an interesting aspect that is not talked about too often. How much further can real estate prices drop if comparable rents are close to mortgage prices? unless rents are also flexible…do rent prices also go down ever? I thought rents were fairly stable and the home price vs rent calculations were good indicators of how the market is overvalued.
My comments: If rents are getting bubbly that local wages can’t afford to even rent, you will need to relocate. Don’t bail out the landlords by paying his mortgage, let him lose the house and buy it from the bank for way cheaper. Rents need to be at fundamentals.
Hi Bye:
I know, I’m a day late. If I were you, I would wait until inventory stops increasing before making a lowball offer. If people can’t get a mortgage, then they can’t get a house, and they will be forced to rent for a higher monthly payment than they could get if they had bought.
““The Bay Area median price for all homes tumbled 16.1 percent to $536,000 from last year’s $639,000. The median is now 19.4 percent off its peak of $665,000 which was reached last June and July.””
But……but……but it’s different here!
““By the time their home closed escrow, the two had $5,000 to pay out of pocket. With the down payment financed at a good rate, the MacDonalds said prospects look bright, and they can easily make their $2,000 monthly mortgage payments.””
Ummmmmmm if they only put $5k down, that city is maybe in the 2nd of 9 innings.
““Broker Loren Gonella says plummeting price tags are getting the attention of buyers who’ve been watching the market for signs of hitting bottom. His office has closed escrow on 240 houses since the first of the year, he said — a sign that business is picking up. ‘You’ve got a perfect storm for buyers,’ said Gonella. ‘Great prices, very good interest rates and willing sellers.’””
Let me guess, the low interest rates and 5% down payment is causing a second wave of knife catchers. Just wait till 20% down is mandatory and interest rates go up a few percent.
“The Guerras are far from alone. ‘Our values have dropped dramatically,’ said Kareen Bell, a Brentwood resident. She and her husband bought their home a few years ago for $865,000. Now, the house is worth slightly more than $600,000.”
Boy, I bet they feel stupid.
http://cgi.ebay.com/Gorgeous-California-House-w-4-82-Acres-Solar-System_W0QQitemZ190213671088QQihZ009QQcategoryZ12605QQtcZphotoQQssPageNameZWDVWQQrdZ1QQcmdZViewItem
$1,250,000. CA home near Manteca or S of Stockton. 4.82 acres.
Or you could buy a $529,000 840 ‘ bungalow on 121 Washington Av in Santa Cruz…
Which would you buy… you could hardly turn around in the one, and the other.. Manteca???
Take some commas out and …never mind.
Yeah, Manteca. You can’t go wrong in a town named “Lard”.
And that is just a weird looking house. Indoor pools are creepy anyway, but those bathrooms are just…strange. It must have been built for eccentric old people.
And asking over a million for that place, well, someone needs to cut his or her dose of whatever.
The USD is worthless. Might as well burn your “cash” for heat. America in the 2010s will make 1920s Germany seem like a paradise.
Yeah, cool, I’ll take them… if they are so worthless, give yours to me!
Yeah dont start going nut cake on us.