Not Enough Buyers For What’s Built In California
The Press Enterprise reports from California. “Throughout Riverside and San Bernardino counties real estate agents say that since the first of the year they have seen multiple offers reminiscent on a small scale of the home-buying rush of a couple years ago. The real estate market now is fueled largely by young renters vying for modest homes, many in need of some repairs. The latest buyer frenzy, real estate agents say, is focused on lender repossessed houses priced below $300,000.”
“The buying process can be lengthy and frustrating, agents said. Lenders, who want each potential buyer approved for financing, often take several days to consider an initial offer and then report they have multiple offers and demand each competitor’s ‘best and final’ counter.”
“‘We didn’t think it would be such a task,’ said Radames Montes, of Riverside who with his wife is looking to buy a house for about $180,000. ‘If you see a home you like, you really have to run and put your offer in and go home and pray or cross your fingers.’”
“On Friday Melanie Roberts said she and her husband had learned that their offer for (a) house on Groven Lane had been rejected, leaving them waiting to hear the fate of an offer they made April 4 on another, older house. If the answer again is no, she said, they may sit out the market six months.”
“By then she said she expects prices may drop so much that they will be able to buy a nicer new house for the same price.”
“The crippled housing market pushed the Inland region deeper into a job market contraction last month, renewing fears of a broader local economic slowdown. The region has lost 21,700 jobs in the past 12 months, according to figures released Friday morning by the California Employment Development Department.”
“In overall numbers, the region has not had this many people unemployed since July 1995.”
“‘Companies are clearly in the mode to shut down employment,’ said Esmael Adibi, an economist at Chapman University in Orange. ‘It’s beyond construction and mortgage companies. It’s spilling over into other things.’”
“The region’s jobless count has been steadily rising since last summer. Adibi said the growing unemployment rate could be exacerbated by job losses in nearby counties. ‘Some those people losing jobs in Orange County are living in the Inland Empire,’ he said.”
“Redlands-based economist John Husing said the region is in its worst job market in four decades. ‘Each month seems to be getting worse,’ said Husing. ‘I think we’re at the bottom of the trough, but 2008 is going to be a miserable year.’”
The Union Tribune. “For the first time in 15 years, San Diego County suffered a year-to-year decline in jobs last month, as the regional economy continued to feel the effects of the declining housing market.”
“‘This is obviously not a good situation,’ said Alan Gin, economist at the University of San Diego. ‘I’ve been in the camp that’s said we’re not going to have an official recession, but this is moving us closer to that possibility. The question is whether (the job losses) will continue over the next couple months.’”
“‘This is worse than we’ve been expecting,’ said Erik Bruvold, who heads the San Diego Institute for Policy Research. ‘We have not expected to see year-over-year job declines. It really shows how much impact the decline in real estate has been having on the local economy.’”
The North County Times. “A slouching real estate market has left Southern Californians less able to borrow against home equity for big-ticket items such as cars, furniture and home-improvement projects. Several lenders have even frozen existing home equity lines of credit.”
“‘The problem is that people were spending way too much money over the last few years because they thought they were house-wealthy,’ said economist Christopher Thornberg. ‘Well, now that housing wealth is going away. The housing industry’s losses are starting to have an effect on the broader economy.’”
“Developers of a proposed 39-story hotel/condo project in downtown San Diego are counting on the chic Mondrian brand and a possible loan from a Chicago bank in hopes of salvaging the troubled project. Simplon Ballpark LLC is trying to fend off its largest creditor, which wants a bankruptcy judge to allow it to foreclose on the full-block site.”
“Cosmopolitan Square started out as a pure condo project, with ground-floor retail and a new fire station as part of the package. But the slumping condo market forced Simplon to juggle its plans. Now the company proposes building 210 hotel rooms and 113 expensive condos, as well as the fire station and retail.”
“For the 113 condos, Simplon wants to go upscale. It expects to price the units at $850 to $1,000 per square foot – well above current square-foot prices for downtown condos.”
“‘The condo market is pretty grim,’ noted Donald W. Wise, a Napa-based managing partner and investment banker with Johnson Capital’s hotel group. ‘For lenders, one of the last things they want is a hotel project that has a condo piece to it. It is not the flavor of the month, and I think San Diego has a pretty large inventory of standing condos.’”
“If North County’s overall housing market is limping, then its new condominium market is crawling with all its limbs broken.”
“New condominium sales dived 95 percent in North County during the first quarter compared with the same period last year, according to a report released by MarketPointe.”
“Builders in North County sold just 17 units in the first quarter, down from 343 a year ago. New house sales fared somewhat better, tumbling 52 percent.”
“Buyers have been distracted away from new condos and toward steeply discounted foreclosures, real estate agents said.”
“‘Why would you buy a new condo when you could buy a house for the same price?’ said Mark Connal, sales director for a builder in Escondido. ‘Boy, I’ve got to tell you, I am real happy I don’t have (to sell) any condos out there right now.’”
“In Escondido, new condos were so undesirable that sales went ‘negative,’ meaning that more buyers cancelled previously placed orders than signed new contracts.”
“‘Nobody did anything out there this quarter. So that’s not good,’ said Robert Martinez, director of research for MarketPointe. ‘It’s a work-through-the-inventory kind of environment right now. … But for a city of Escondido’s size, that’s pretty unusual to see no activity whatsoever in terms of sales.’”
“The average price for new condominiums in North County declined just 3 percent from the year before. But the average price per square foot, which accounts for the size of condos sold, fell 25 percent over the last year, from $459 per square foot in 2007 to $345 last quarter.”
“Contributing to halted sales is a glut of supply: It would take 15 months to sell off all unsold condos in the county at current sales rates. Further, many condos are overpriced, and a slowing economy has hurt cheaper condos more than high-end estates, Connal said.”
“‘If you’re buying a condo, it’s because you don’t have the money to buy a home. Last year, they weren’t spending four bucks a gallon for gas and food wasn’t … as expensive,’ he said. ‘Everything is tighter on their budget, and you know what? They don’t have the money right now.’”
The Modesto Bee. “Stanislaus County’s unemployment rate rose in March to the highest figure it has recorded in five years, according to statistics released Friday. The unemployment rate last month, at 11.3 percent, hasn’t been that high since February 2003.”
“It is above the February 2008 jobless rate of 10.8 percent, and 2.4 percentage points higher than the previous year. ‘That is up quite a bit from a year ago,’ said Liz Baker, a state Employment Development Department labor market analyst. ‘It is unusual.’”
“Job hunting in Stanislaus County in the past year had become ’scary,’ said Susan Hunt. The Ceres resident left her previous job at a glass plant because she planned to move out of the region and sell her house, but the housing market tanked.”
“Facing the possibility of foreclosure, she spent eight hours a day for several months searching for jobs online, sending out résumés and writing cover letters. Hunt said she applied for hundreds of jobs. Just two potential employers responded, and neither yielded a job. This month, she was rehired at the plant where she worked before putting her house up for sale.”
“‘I haven’t had an experience like the one in this county trying to find work,’ Hunt said. ‘I think it is partly there are so many people looking for work, so employers are getting tons of applications. Employers have all the power and they are not responding. Right now, they don’t have to respond. It has been the worst experience.’”
“Baker said counties across the state are suffering from job losses and rising unemployment rates, largely tied to the housing and credit crises. Those statewide trends adversely affect Stanislaus County’s unemployment rate, she said, because of the number of commuters who travel outside the county for work.”
“The overall number of unemployed people increased by 84,000 people since February, to 1.13 million. ‘We are not seeing relief at this point,’ Baker said.”
Bay Area Newsgroup. “The job market in the East Bay weakened sharply in March, a fresh indicator that the housing market’s collapse has eroded the regional economy, according to a labor report.”
“The Alameda County-Contra Costa County region now has fewer jobs than it did a year ago. The March 2008 totals fell below those of March 2007 by 8,600 jobs. ‘It’s hard to find work,’ said Nicole Rodgers, a Dublin resident. ‘Our economy is not so great right now. Everybody is going for the same jobs. If you don’t apply right away, you don’t get the position.’”
“‘Things are not going too well,’ said James Leonard, a Martinez resident who lost his job as a manager for residential building frame projects about four months ago. ‘It’s slow. There’s not much home construction going on right now.’”
The Santa Cruz Sentinel. “The real estate signs posted in yards all over town are one indication of the national housing debacle’s devastating impact here. City leaders hope to avoid another sign: Abandoned, neglected homes that could drive neighborhood property values down even further and pose health and safety risks.”
“The City Council will get its first look Tuesday at a proposed ordinance that would require banks or trustees of foreclosed properties to keep them maintained.”
“‘You need to protect the investment as well as the people around them that are not in that situation,’ said John Doughty, city community development director.”
“Watsonville has been hit particularly hard by the mortgage crisis. Though its unsold inventory index — the time it would take to sell a home based on current sales rates — dropped from 32.3 months to 23.4 months in March, that’s still above the county average of 16.1 months.”
“The proposed ordinance aims to address another facet of the problem, Doughty said. City officials had to go in and board up one on West Fifth Street after vagrants moved in, for example.”
The Press Democrat. “Of the homes sold in Sonoma County last month, 29 percent had been in foreclosure at some point in the past year, according to DataQuick. This increasingly large chunk of the county’s real estate sales is driving down the most widely watched measure of housing values, DataQuick analyst John Karevoll said.”
“For the seventh straight month, home sales remained at a record low. In March, 4,898 new and resale houses and condos sold across the nine-county region, down 41.1 percent from a year ago.”
“‘We are well below anything we have ever seen before,’ said Karevoll.”
“Buyers have found little relief even after federal mortgage agencies recently moved to pump more money into the housing market by agreeing to temporarily back loans up to $662,500 in Sonoma County and as high as $729,750 in pricier parts of the Bay Area.”
“For instance, buying a $500,000 home with a 20 percent down payment and a conforming loan would carry a $2,430 monthly mortgage.”
“Buyers for a $500,000 home who can only make a 10 percent down payment must take out a jumbo loan and would have a $2,956 monthly loan payment.”
The Appeal Democrat. “Yuba County home sale prices dropped below the $200,000 mark last month as foreclosures helped drive down prices statewide. Median home sales prices in Yuba County dipped to $199,000 in March on nearly a third fewer home sales than a year ago, DataQuick said. The sales price has declined $90,000, or 31 percent, from March 2007.”
“Realtor Jim Roby handles a number of foreclosure sales in Plumas Lake. He sees too many homes built there for the demand. When combined with adjustable rate mortgages that are resetting, the result is a drop in the sales price.”
“‘There are not enough buyers for what’s built,’ said Roby. ‘There’s a tremendous amount of homes that are vacant.’”
“Sutter County home prices dropped just over 19 percent from March 2007 to a median $227,250, DataQuick figures show.”
first?
Slashdot called. They want their idiot back.
So agree.
The number of those annoyingly posting “first” has been increasing on this blog.
Request: Could those of you who feel compelled to be “first” please go back to Perez Hilton? Thanks!
http://perezhilton.com/
~Misstrial
At the very least, have something to say. I can’t stand the “first” posts either. Are prizes given for being “first”? Aww, damn, Ben….you’re holdin’ out.
BayQT~
Don’t be such a grumpy bear!
Girlbear,
Only retards feel a need to tell others that they were the first poster on a given thread. We don’t play that game in here. Find some blog frequented by the pre-teen set, where they might actually be impressed with your “first” pronouncements.
I do it. I’m not a retard. I do it because it’s fun. You must be grumpy today and need of some sort of diet Coke.
What passes for “fun” in the group home isn’t necessarily my idea of kicks, but hey, whatever floats your boat, sweetie.
Can we refrain from the ‘retard’ moniker. It’s getting pretty frequent here lately. Seriously we work with people who have mental disabilities and most days they are far more pleasant to be around than the rest of us…thanks.
The medical definition is “retarded”, but I like to call them FEEBS. Short for (feable minded). I hate PC crap.
I prefer “tards”.
So I guess it’s fair to say you all don’t have any family members that have disabilties….it’s not about being “PC”, just respectful. Remember the golden rule….oh sorry that’s so old fashioned of me.
Or “gloids.”
I understand your desire to have some fun, but please show consideration for Ben and the rest of us by not wasting bandwidth by posting “first.” Some of the threads get very long, particularly in the bits Bucket and its tiresome to scroll past the “first” announcements.
~Misstrial
I guess it falls to me to point this out, since the press won’t. From the first link:
‘The extended escalation of Southern California home prices ended with middle-age baby boomers competing for the trophy house. The real estate market now is fueled largely by young renters vying for modest homes, many in need of some repairs.’
‘ The Multiregional Multiple Listing Service, which covers the Inland Empire and San Gabriel Valley, recorded 682 sales of single-family homes at or under $300,000 in March, an increase of 450 percent from a year earlier. Also at the beginning of April 1500 homes in that low price range were in escrow.’
‘ Karen White, an agent with Re/Max All Stars in Corona, said she spots houses reaching the first-time-buyer price threshold and then advises clients to hurry and try to close a deal before the multiple offers roll in. Last week she said she was about to show clients a three-bedroom house with a pool in Lake Elsinore that was listed for $227,000, but when she called ahead she learned it was already sold with two backup offers.’
‘advises clients to hurry and try to close a deal before the multiple offers roll in’
This small number of sales won’t put a dent in the massive foreclosure inventory in the IE, but it will create a new wave of FBs. Yet here we see the REIC sinking to a new low, creating an atmosphere of urgency and fear of ‘losing out’ to draw in a new wave of uninformed buyers. And at the same time there are report the economy is headed over the falls.
We’ll see if these ‘first time buyers’ are crying to the press in a year or so.
That’s why it’s good to follow this blog (and a few others), because there are more and more people who know that what they are hearing in the MSM and from their buddies isn’t right, but can’t quite put their finger on it. Even if they show up as “trolls” initially, it would be a shame to write them off if they are just trying to jibe what they are reading here with what they are being told by propagandists. Cognitive dissonance is not fun. Once they have a few of their treasured assumptions ground into dust by someone who can back up what s/he says, then the rebirth can begin.
We’ll see if these ‘first time buyers’ are crying to the press in a year or so.
Sadly, we’re going to see how many young buyers flee to more affordable markets. There are always fools out there. But the number that are ‘credit worthy’ are starting to become a non-significant fraction of the pool.
I’ve posted this for years. I’m a huge fan of increasing down payments. It stabilizes the housing market and eliminates stupid specuvestor competition.
Oh… Jon Corzine (Gov, NJ) is reporting the recession we’re in is much deeper than the markets reflect. “Consumers are pulling back and it shows up in revenue collection” (for our state is what I think he said…). This is on bloomberg TV.
They have up a graph of the NJ cost of funds. I’d love to see a comparable for CA, FL, VA, Maryland, and a few other states…
If governments actually start spending reasonably… this correction will be swift. But it will also be very efficient allowing a faster growing future economy.
Interesting times ahead.
Got Popcorn?
Neil
I agree that gov’t needs to cut back on taxation & spending… letting the Laffer curve work its magic will eventually and more quickly restore improved tax collections. Unfortunately, the only thing that really needs the funding NOW is our crumbling infrastructure.
“The City Council will get its first look Tuesday at a proposed ordinance that would require banks or trustees of foreclosed properties to keep them maintained.”
“‘You need to protect the investment as well as the people around them that are not in that situation,’ said John Doughty, city community development director
We must protected the banks and poor joe6p’s investments..Oh Heavens yes
…and after, all those over assessed, overpriced, POS houses are a big TAX INVESTMENTS to our local spendthrift politicans, our bloated city pensions and the other drunken sailors we carourse with:)
And that’s what is going down all over - multiple offers, but none worth a damn. We keep seeing the local foreclosures go in and out of escrow constantly. Humorous, actually….
Sadly, we’re going to see how many young buyers flee to more affordable markets.
I agree. Even at 50% peak prices, California is still horribly expensive. And since most of it looks more like Santa Ana than Mission Viejo, it ain’t worth it.
We knew it was comin’, Ben. It was inevitable. Actually, the line I’d be using if I were a sleazy realtor is hurry up and buy now while you still have a job to qualify with! I swear, this new wave of FB’s is far more pathetic than the has-beens. At least the old FB’s bought into it when the pseudo economy was still roaring. Now, the entire CA economy is grinding to a halt and they’re buying into the latest “buy now” crap. Hilarious!
Anyway, Phase 2 of the housing crash coming up soon. Kick back and enjoy.
Well, here in my new home of Danville, CA I just got a realtor card in the mail stating a local house sold in 3 days for $1.5 mil and had 3 offers!! Probably a lie, but it’s still SICK! Here in the land of fruits and nuts the prices are still crazy at least in the quiet areas like Danville, Alamo and nice parts of San Ramon. I am just hoping we can buy someday!
“local house sold in 3 days for $1.5 mil and had 3 offers!!”
It’s all relative. It could have been a $2.5 mil house, last year.
LARenter,
Don’t believe the hype. I’m down the road from you in Dublin and I can tell you that prices are indeed dropping. As vmaxer said, the price that it started at may have been much higher. I’m watching prices drop by as much as $100k and more for SFH, TH and condos. In fact, a condo conversion in Dublin (all units are identical in size…1070sf) that was completed in the spring of 2005 began at $440k, quickly rose to $560k, and have been listing units for sale in the mid to high $300s and low $400s. There have also been a few foreclosures.
D.R. Horton has a project at the Dublin Bart Station (Elan). Their prices have been dropping like crazy, and they keep announcing special offers every few months or so. The latest one is the “Almost Fully Furnished” offer….select 2bd units now come with living room and dining room furniture, a couple of pieces for the master, flat panel TV, art work…”all for the low, low price in the mid $400s.
If you really want to see how Danville is doing, pick an area with a few for sale signs and note their addresses and wishing prices on a spreadsheet and keep track. You’ll be surprised at what you learn.
BayQT~
LARenter, I am also down the road from you in Moraga. Some 2-3 BR Condos here are down 30% from peak (2005) prices. This is an affluent, quiet, beautiful neighborhood with great schools and recreational amenities (country club, horse trails, lakes, etc.) Just FYI.
Real estate, like the all of the luxury, splender and good music of the mighty Titanic doesn’t mean too much when she pitches her tail in the air for a dive into the deep 6.
My, even those humble little lifeboats named Thrift, Debt Free and Job are begining too look real good in these deep ICEY WATERS.
Stroke…stroke..stroke
The MSM’s contrived efforts, on behalf of their NAR ad-buyers, to generate a “buzz” over an illusury revival of home sales will have the same effect as the manufactured Internet buzz over “Snakes on a Plane.” The movie was a stinker, and tanked - and the massive wave of foreclosures and death-spiral of home prices will only continue, as the credit crunch has cut off the oxygen needed to sustain the Ponzi scheme.
“Buy Now or lose out” this is what I’m hearing from my daughter down in Vista, CA. The realtors are preying on the uninformed first time buyer who thinks they have to make a decision RIGHT NOW. My daughter has tried to tell these friends that there is plenty to choose from but they think they have to move NOW. BTW some agents are tyring to create ‘bidding wars’ for rentals in No County….no kidding! WTF?!
To see any form of dead cat bounce does not surprise me. What does surprise me is that people are still getting suckered by any line of bs REIC spews forth.
As this debacle progresses I am actually wondering if buying even near the low down the road may not incur some significant risk. That of being a captive tax payer. I wonder how much downside rick there is to property owners as the CA economy tanks hard and with it the revenue stream of the State. A State which seems completely incapable of reducing costs may be inclined to get revenue wherever it can. And that boils down to increased taxation. Is there an ice cubes chance in haides that they could weasel around Prop 13 and stick it to property owners in the future?
“Yet here we see the REIC sinking to a new low, creating an atmosphere of urgency and fear of ‘losing out’ to draw in a new wave of uninformed buyers.”
Desperate times breed desperate measures.
If I lived in California, there’s no possible way I’d be looking to buy before next year. The interesting thing which has played out is that California, particularly SoCal and the Central Valley from Bakersfield up to Sacramento, seems to have become ground zero for the housing crash. If you asked me two years ago, I would have said Phoenix or Florida, but it seems California has them beat.
My theory for this is simple: prices got way, WAY too high in California for Californians to afford to a much farther extent than places like Florida and Phoenix.
While the median in places like Phoenix and Tampa inflated to probably around 375k and 285k respectively, you have to consider that with a 25% drop in these markets, you begin to get in the realm of affordability again. Of course, median incomes in California are higher, but we’re not talking about 2x the median income, and a lot of the markets in California had 2x the median price. The bubble had been going on in California for so much longer and such a huge percentage of the loans being taken out were toxic, that the prices got much more out of whack there than almost every other locale by a fairly large margin.
With that being said, I somehow found this blog just over two years ago and it opened up my eyes. I had just completed grad school and had started working and this blog definitely made me hold off on buying.
Where I live, St. George, Utah, foreclosures and pre-foreclosures are abundant. Foreclosure homes come up that are about 1/3 off the price they would have been listed at two years ago. These homes get bought quickly because they are affordable and they have reached a point where they are cheaper than if you went out, bought a lot, and had a builder build it for you. In addition, many if not most of the foreclosures have never been lived in. Finally, the cost of rent of a similar house in many circumstances is the same cost as buying.
With that in mind, I went out and put an offer in on a foreclosure, custom-made, that would have appraised at approximately 410k just a year ago (before the credit crunch hit) but was listed at 285k. Could it sink another 20k-30k? Maybe. Will it sink anymore than that? I really doubt it. Am I saying that this is the same case in California- ABSOLUTELY NOT- California has much farther to fall because of the simple fact the price to income ratio was so much higher there.
But I’m really not going to worry about it because I plan on staying in this place for 5+ years, and I already bought it at a fairly steep discount. I’m under no illusions that this place will again reach 400k in 5 years, I don’t think the market is coming back to bubble price levels for quite a while.
A little more FYI: it’s a 2250 square foot place, brand new construction (small custom builder foreclosed on), .25 acre lot, lots and lots of upgrades, really nice neighborhood, and it’s definitely not a tract house in appearance or quality. Lot prices here have slid precipitously, and I know for an absolute fact that I could not go out and buy a lot (even at the lower prices) and hire a contractor to build this same house for this price. I also know that the comparable rent is not really cheaper than the cost of buying- though I will say they’re about equal right now.
I might be a knife catcher, but again, I don’t care about 20-30k in the long run. My priority was never trying to buy at the bottom, it was always to buy at a time that was affordable and not completely insane (though I freely admit the timing might be slightly insane, but I can live with it for five years, I have a solid job so I’m not worried about a problem in that area).
And, quite frankly, I have lived alternatively in Townhouse and a Duplex the last two years while trying to save up money for the right time to buy. When you live around a bunch of renters who are the type of people that will be renters their entire lives, it starts becoming unpleasant. I don’t count the renters on this board in this group, far from it, as your motivations are the same as I’ve had the last two years.
Thanks for your comments.
I felt compelled to add a comment to yours that the cost of buying a house compared to renting can also incorporate how much of a loan is taken out (if any) and the relative cost savings of no mortgage compared to renting which is indefinite and unstablely likely to increase. Additionally, renting in itself is an instable living condition, in that the owner can decide not to rent to the person. There are other factors in favor of the home “owner” over the renter. However, like you, I think that the prices in the parts of California that I have been reviewing seems to be still over priced. And in many parts of california, including the parts most glaringly over priced, we have a history of significant earthquackes and have not had a significan quacke since 1994, around the beginning of the last property value crash.
I just sold in the IE (Corona) I took a lowball cash offer and offended some neighbors. Since I closed in late Feb, there are now 2 new REO’s on the same street, a total of 10 in the track. Feeling better about the decision everyday……
Bring out the bubbly, and let’s toast to a new “bitter” renter….girlbear!
“I just sold in the IE (Corona) I took a lowball cash offer and offended some neighbors.”
Good move. Sell when you can, not when you have to.
I join in the congratulations. Selling in 2008 is better than selling in 2009, which is better than selling in 2010 etc.
lol
Girlbear, you were smart/lucky to get out when you did. Corona is one of the poster children of this bubble. OcRenter’s blog often has properties from Corona staring in his posts.
Got Popcorn?
Neil
said Husing. ‘I think we’re at the bottom of the trough…
BASED ON WHAT!!! Why don’t they ask these people to explain why we’re at the bottom, when lending is (finally) getting tougher (almost by the day), record inventory is on the market, probably record inventory is waiting to be put on market, huge costs outside of housing are hitting people, and jobs are now starting to disappear. So, BASED ON WHAT!!!…I ask again.
“…BASED ON WHAT!!!…I ask again.
Wishin’ and hopin’ and thinkin’ and prayin’…
Too many bulls plopping on the lawn to see the grass. One of my indicators of a bottom will be when bears clearly outnumber bulls, and the housing market is seen by the vast majority as a waste of money for investors.
So employment is at a low not reached since 1995 ? Guess what sports fans? ‘95 was at close to the bottom of the last one. Bottom was ‘96 or summer ‘97 (90-96 seven year cycle). But we’ve only been going 2 1/2 years from the high. If Paulson, Franks and Helicopter Ben would keep their hands off we could get this recession in housing over. My market has 15 mos supply.
Based on his “center of the universe” theory, of course.
Nobody is talking about what’s up with the LIBOR. THIS is going to cause some major heartache for these FBs!! I can’t wait until the rate goes to the sky and their ARMs adjust!! Hopefully, these smug Aholes here in Danville (we got a really sweet place to rent at a lower price than we were paying in LA - plus the guy bought in ‘98) will be screwed! We went into this “upscale” grocery last night in Blackhawk that looked like a cross between William Sonoma and a grocery store. I about GAGGED!! These smug boomers all walking around with their heads in the clouds. It was really sickening!
Tell me again, why are you renting in Danville?
“The buying process can be lengthy and frustrating, agents said. Lenders, who want each potential buyer approved for financing, often take several days to consider an initial offer and then report they have multiple offers and demand each competitor’s ‘best and final’ counter.”
Yeah good luck with that you RE pigs. The gig is up. No one is falling for that ploy.
Sounds like a TOTAL racket. You’d have to be more than dumb to fall for that one.
When I finally do start making offers on property, the written offer will include a clause to the effect that if the seller states there are “multiple offers,” my offer will automatically drop by 5%.
“‘This is worse than we’ve been expecting,’ said Erik Bruvold, who heads the San Diego Institute for Policy Research. ‘We have not expected to see year-over-year job declines. It really shows how much impact the decline in real estate has been having on the local economy.’”
What is striking in Ben’s post is the number of economists who are shocked that tanking RE is causing job losses. Truly, what criteria establishes these dolts are “economists”? You have RE –buying, selling, mortgaging, furnishing, maintaining and withdrawing equity–as the main drivers of your economy,and when that slows, you expect what to happen? Continued good times? You can call them economists or you can call them failed voodoo priests.
I think some call them economists because they studied economics. Unfortunately, they must not have studied hard enough. When I took my minor in econometrics I remember tests were graded on a curve (as they were, I am told, in every econ grad class), and if you got, say, a 60, that would be an A. Which explains a lot about those “economists,” I’d guess.
IAT
What about what’s up with LIBOR? I have not heard anyone except the WSJ talk about this. These FBs are all going to be screwed when their ARMs reset and can’t afford their payments! How long until the rates really start going up?
I read several of the WSJ articles but didn’t see much that would indicate massive increases in mortgage payments. The example they gave today was of a painter in Wisconsin whose adjustable mortgage looked likely to reset to $1446/month instead of $1408 under the old “liar” LIBOR.
So sure, there’s an effect, but not one that is going to make or break most borrowers.
The aspect that I found most disturbing was that banks apparently report their interbank rates on the “honor system” - hasn’t one lesson from this whole mess surely been that everyone across the board should start requiring verification?
Libor in biggest rise since credit crunch begun
By Michael Mackenzie in New York
Published: April 18 2008 03:00 | Last updated: April 18 2008 03:00
The benchmark floating rate for US corporate and mortgage debt yesterday saw its largest one-day increase since the credit crunch flared in early August.
The three-month dollar Libor, the rate at which banks lend to each other, hit 2.82 per cent yesterday, up from 2.74 per cent on Wednesday. After the regular late-morning fix in London trade, Tullett Prebon, the interdealer broker, forecast the benchmark would rise above 2.90 per cent today.
Hey, economist and fortune tellers. Repeat after me “The Trend is Your Friend” Start bac June 2006 and watch the trend lines thru March 2008. Forget the noise from CNBC and your main street media. Until the trend line breaks from it’s downward projector, nothing but negative reports should be forthcoming.
Don’t need no PHD to see nothing good is happening.
If I understand you correctly you are saying, “The trend will be what it is . . . until it changes.” Hmm. Okay. But, you know, it can always change back. That’s why it helps to know more than the visible trend; we want to know why it went the way it did, so we can anticipate major changes and act accordingly.
A trend changing, and then changing again . . . don’t we call that a dead cat bounce around here?
IAT
GDP goes up 3%. MEW and helocs are 1 1/2% of it. Accounting for 7% inflation GDP is negative. Get real sports fans. So solly.
“The real estate market now is fueled largely by young renters vying for modest homes, many in need of some repairs.’
The low end is selling briskly, but the buyers who qualify today are qualifying under (I hope) less toxic mortgage products and more prudent lending standards.
At some point, prices will reach an equilibrium between what people can afford and what lenders are willing to lend. Without knife-catchers, it will be hard to make any judgements about when this price point has been reached. I was impressed by the fact that in Florida they see some condos as being so cheap that it has fueled speculation again.
The combination of recession and commodity deflation is a tough one to figure out, but will we be able to even make a guess as to the bottom until after we’ve already passed it and the economy starts to improve again?
“In Escondido, new condos were so undesirable that sales went ‘negative,’ meaning that more buyers cancelled previously placed orders than signed new contracts. …
Contributing to halted sales is a glut of supply: It would take 15 months to sell off all unsold condos in the county at current sales rates. …”
Tme out! If the sales rate is negative, wouldn’t the months of inventory be infinite?
Probably counting two different things without clearly distinguishing: pending sales could be negative (cancellations > new contracts), but actual closings obviously can’t be negative. And very unlikely to actually be zero.
Does anyone remember very well when house prices just started to rise? I was living in the Sacramento area at the time. Around 1999-2000 developers were having a hard time selling in Elk Grove and were giving all sorts of incentives and upgrades to attract buyers. Even when the average home was moving up above $200k, my expectation was that a house priced above $300k better look like something out of a home design magazine. When the average home was going for $250k I thought to myself, “okay this has to be the top.” But a few years later, the only thing you could get for $250k was a dump by the railroad tracks. The average home was overinflated when they hit $250k around 2003-2004. And they’re still over inflated at $250k. We’ll be looking to buy in a few more years, when prices drop further. But looking around, I’m surprised by how many homes are still advertised for $350k and above. And typically there is nothing special about these homes. Browsing through realtor.com or movoto, it’s hard to find anything in the $500k - 700k range that looks like something out of Sunset magazine, which is what I would expect at those prices, if not acreage.
Oh, Karen, I hope my sister can’t hear you. She bought a tract home/McMansion in Elk Grove in 2004 for over 400K. Large home on tiny corner lot. At least she’d sold her larger Roseville home first.
Elk Grove is nestled between South Sacramento and Stockton. Nothing, not one thing, will ever make it a good place to raise a family. My sister bought there to be closer to the grandkids in Tracy, but she’s really kicking herself now.
We have some friends in Elk Grove. I don’t think it’s such a bad place now. When they first started building homes there I didn’t get it, since it was just a lot of homes out in the middle of nowhere. But I don’t think it’s so bad now.
I bought in Folsom in 2001. Put a deposit down on a 4/3. That model in the same development went from 218k in phase 1 to 250k in phase 4. Last unit sold in Summer 2002. 2001 is when prices started ramping up. 2004 is when they started to get silly.
“By then she said she expects prices may drop so much that they will be able to buy a nicer new house for the same price.”
Then WHY do you have two bids submitted for two different houses? Do you enjoy watching your money go bye-bye?
Why are people so damned impatient to get screwed over?
“‘The problem is that people were spending way too much money over the last few years because they thought they were house-wealthy,’ said economist Christopher Thornberg. ‘Well, now that housing wealth is going away. The housing industry’s losses are starting to have an effect on the broader economy.’”
Well, gee, thanks Captain OBVIOUS. Good thing we have an economist around here to tell us these things.
What? Thornberg is the one of the few economists that have been calling it right from day -1000. He’s pointing out the obvious to us, but most of his audience still can’t believe house prices go down.
Geez.
IAT
Thornberg is pointing out the obvious because he is one of the few to do so. Needs to keep it simple for J6P. The wrong one to bash.
After having the NAR liar brigade (led by David Liareah himself) lying for years and years about real estate always going up, it is quite refreshing to hear straight talk from an established economist who refuses to paint lipstick on pigs.
“During times of universal deceit, telling the truth becomes a revolutionary act.”
- George Orwell -
No shortage of knife-catchers out there. The American Dream!
“Facing the possibility of foreclosure, she spent eight hours a day for several months searching for jobs online, sending out résumés and writing cover letters. Hunt said she applied for hundreds of jobs
I haven’t looked for a job in 15 years, but even back then sitting on your ass, sending out resumes, fake cover letters and waiting for the phone to ring is a waste of time.
Actually Monster.com is the way to go for tech professionals. But then again, they can actually do something useful.
I prefer dice to monster, but generally work as a contract programmer, which dice seems to favor.
Every job I’ve ever had, I got through personal connections and referrals. Only sent a resume once I already had an “in.” If you have a solid reputation in your chosen vocation, you won’t be sending out resumes and waiting for the phone to ring.
Looking for a job is never easy in a down market, but the best advice I ever got was to id my strongest skills, condense them into 2 or 3 short sentences, and start talking. Network, let everyone know you’re looking and what you can bring to the job. Stay flexible, be mobile, and bring the same work ethic to looking that you’d bring to the job itself. Resumes are for after you’ve snagged the interview.
The layoffs at Lawrence Livermore National Lab should help the situation.
http://trivalley-properties.com/blog/2008/04/llnl-layoffs.html
Woah, when hard core scientists are getting the pink-slip, no one is safe!
I work at the lab (I’ve been contracting here since ‘04) and must say the mood around here is dismal ever since the lab changed from UC to LLNS (privatized). Since I was only ever meant to be here for 6mths the thought of buying was never really an option so it is very interesting to see all this play out. I moved from Vancouver (another bubblicious area) and just sold my place there a couple of months ago for 150% increase in 5yrs! Yet another place ready for a collapse (as the ever increasing inventory’s suggest) as there is simply no justification for the prices up there.
That particular lab has been in a lot of trouble lately.
What research does the lab do?
“What research does the lab do? ”
Comrade Houstonstan -
The research is a national secret - get bent.
Nuclear weapons research primarily, but not exclusively. Wikipedia has a list of projects and facilities associated with the lab.
This monster is still under construction.Nevermind there are a dozen or more just like it downtown.
Banner says from $300K to $1.3 mil….
I finally looked at the website and was surprised by the lender logo on the homepage.This stuff just keeps getting better all the time.
http://www.vantagepointesd.com/
Nice to see Countryfried is not dead.
Yet.
If they go under, well, let’s just say it wouldn’t be too good for da boyz on WS.
What’s with the e at the end of Point? Does that make it sound more appealing? Like something out of Fussell’s book, “Class”.
It’s a Francophile thing. Started shortly after 1066, the need to show your aristocratic connections by being unable to speak or write plain English. Got a bump via WWII, too, when German-style wordings became especially unfashionable. When I was a child, it was, “Don’t ‘lay’ your pencil on the table, ‘place’ it on the table.” (”Lay” is too much like German “legen.” “Place” is nicely Latinate.) Hence, “Pointe,” the French word for “point.”
There was also 18th/19th Century snobbishness in the UK, after the Grand Tour became de riguer for young wealthy English aristocrats. A lot of Latinisation (is that a word?) occurred then, due to a general fascination with Ancient Rome and Greece. The UK (incorrectly) saw itself as the first great Empire since the Romans.
A lot of the differences between UK and US spelling (colour/color, flavour/flavor encyclopaedia/encyclopedia etc.) are due to the ENGLISH making changes around that time so their words looked more like French/Latin.
My favorite quotation from this thread is: “‘Everything is tighter on their budget, and you know what? They don’t have the money right now.’”
WTF? They never had the money. For five years lenders were handing out buckets of cash to any a–hole that could sign on a dotted line. That didn’t mean that these clowns in California had money.
Forgive me for being too harsh on CA right now. I just got done watching an episode of Flip That House. The dumba$$es bought a fixer upper for $670,000. It was 1700 square feet. They didn’t sell at the end. They moved the family in and are planning to relist soon. California, even more so than this place, deserves the pain.
City officials had to go in and board up one on West Fifth Street after vagrants moved in, for example.”
Guess that’s one way to reduce your homeless population - board them up inside vacant houses. Seems kind of cruel, though.
Seems kind of cruel..
Seems kinda expensive if you ask me.. labor and lumber are not cheap. Why not just slop a couple gallons of adhesive on all the floors and walls?
Why not just slop a couple gallons of gasoline, ethenol blended of course, on it and give the squatters som cigs and matches. Kill two birds at the same time! hehehehehehe
Jas,
Thanks for the numbers yesterday. I got them this morning. Things are progressing nicely.
93552 had 20 sales and that seems to be shaping up as a bottom end monthly number. I guess there are a bare minimum of 20 idiots every month willing to sign on the dotted line. There were over 300 NODs in the same zip. At current rates that means about 16 foreclosures for every sale. Ouch.
Months of inventory also went up again for the zip just slightly to 20.5.
93551, the “nicer” side of town saw some goodly increases in sales and months of inventory went down to only 11. This is DCB if you ask me.
My numbers show 93552 median down 57% from the highest point. Median wishing prices are down 37% from the high point in Sep. ‘06 to $280K. Wishing prices are now 20% below Dec. ‘04 when we sold our home, so that’s a little victory for me. $60K goes a long way to pay the rent.
“On Friday Melanie Roberts said she and her husband had learned that their offer for (a) house on Groven Lane had been rejected, leaving them waiting to hear the fate of an offer they made April 4 on another, older house. If the answer again is no, she said, they may sit out the market six months.”
“By then she said she expects prices may drop so much that they will be able to buy a nicer new house for the same price.”
OK, maybe I’m too used to your typical clueless knifecatcher who thinks the bottom is in. But this ginch I don’t understand - her and hubby are submitting bids today, despite their full expectation that prices have further to fall. Misplaced optimism is one thing, but this fool has no excuse whatsoever.
I can kind of see it. One might be willing to make offers even in a declining market, for whatever reason. However one might not be willing to play stupid games with sellers in a declining market. Might say, “Fine. Be that way. See you next winter.”
I bought my own small place in what I knew was a very soft market–major points were a) the price was already off a sizable amount, b) really didn’t want to move from the neighborhood and there was very little choice in other rentals, and finally c) I was tired of the shenanigans of the apartment managers.
We all got our own stories…
Here are a couple more in downtown SD.
Both next to the ballpark and are very nice but just added to the glut of inventory.I notice the first is now offering Lease options.I was down at the ballaprk the other night and saw several “for rent ” signs on balconies.
The 2nd one I noticed has not updated its website and pics from the Legend are about a year old.
http://www.parkterracecondos.com/
http://www.thelegendsandiego.com/main.asp
“A slouching real estate market has left Southern Californians less able to borrow against home equity for big-ticket items such as cars, furniture and home-improvement projects. Several lenders have even frozen existing home equity lines of credit.”
And as a result of home equity going to cars, furniture and home improvement projects, its Bear Bong State for you kiddie, says the New York Times, in “Paying for College Without The Home Equity Option.”
http://www.nytimes.com/2008/04/19/business/19money.html
“Now, those parents and students have until May 1 to address what may be the toughest questions: Should they choose the most affordable school? Or should they pick the one with more prestige, even if it’s a financial stretch, even if it means going deep into debt?”
“While the questions are not new, they are particularly difficult to answer in this economically tumultuous year. Traditional and even nontraditional sources of college financing are suddenly in question. Dozens of companies that once provided billions of dollars in student loans have left the market. Other banks are tightening their standards, making student loans harder to get.”
“On top of which, the continued turmoil in real estate has meant that home equity — a source of security for many families and a fallback for college funds for some of them — is not as easy, or in some cases impossible, to tap.”
“As a result, many parents are being forced to reconsider what has become a $200,000 question: Is a higher-priced private education really worth what you pay for it?”
“Is a higher-priced private education really worth what you pay for it?” …it may be worth something later in life, it may not be worth much in the immediate future. It also might be worth more in a rural backwater than in one of the sophisticated urban areas towards which your classmates will gravitate. I did better with mine by taking it to Stuart, FL back when there were only five (5) traffic lights in Martin County. Stayed employed throughout the 1970’s, despite big recession mid-decade.
I went to San Diego State University. Tuition today: About $2k/semester. Prestige: Ranked #1 small research organization in the USA by Lipper and Frank. Sounds like a no-brainer to me. Oh, I forgot: You actually have to compete to get into that school. Oops, looks like little Joey 4-pack will be going to trade school.
I knew you must have gone to a high school with ashtrays like State. Only reason its first is that it offers so little and of the few programs that are offered they are joint programs with UCSD. Youre a retard that adds too much noise to the signal on this blog. I have a feeling that other retard Prof. Bear is somehow associated with State as well. You mouthbreathers figure out how the wheel and fire work yet?
That second sentence doesn’t add to your case against Big V.
I see from another article there are also joint programs with UCSB and Claremont, so if you’re ragging due to the lack of completeness, there you go. Otherwise your lack of specificity can kiss my ass. Which schools are better? SDSU is like the housing market from 2001-2005 - anyone with a pulse can get in. Of course to a mouthbreather going to state is a nobrainer - its not a requirement to admittance. Part of why San Diego has been trashed due to over development, fiscal mismanagement and corruption is that so many of the mouthbreathers have been running the city for the past 3-4 decades.
Godamm $200,000 for an undergrad degree! Jeez! If you’re thinking of grad school save the bucks and order the kid to go to the State U.
Depends. Many state schools have very large classes and thus students have very little contact with faculty. This may not show up in terms of learning, but it probably will. Teaching is a matter of attention, and if students receive productive attention, they learn more. It is harder to get that productive attention when the teacher has so many students they need readers and TAs for the course. I’m sure there are exceptions, but this is the general rule.
As for getting in to grad school, the faculty at elite schools all know each other–they went to the same colleges (which may have only been small liberal arts colleges, not big research universities designed to teach grad students). This means that when the professors at Elite School 1 read the letters of recommendation written by the professors at Elite School A (or from professors teaching at Top Small College X), they tend to give them great weight, because they know those professors. When some unknown at State U writes a letter, it probably won’t count as much, just because, well, the person is unknown. And that, my friends, is yet another way that the haves keep on having–and this one doesn’t even take mendacity to make it happen.
Just thought I’d pass that info along.
IAT
Also depends on how much financial assistance you’re getting from the school and what the reputation difference is. If it’s a choice between Podunk U. and MIT, yeah, geez, go for it. Just to jump up two notches on the pecking order? Not worth it.
Front page of Sunday edition LA Times - April 20th
“The Muted Market
The usually bustling spring home sales season is quite restrained this year, but some hardy souls are buying.”
They counter the abysmal IE numbers with impressive rises in the richest LA communities. No mention of volume though.
I spent a little time today culling the monthly county median price data from the Dataquick archives for SoCal and the Bay Area. The plan is to post these on my office door to help some of my more oblivious co-workers to recognize what I’ve been talking about lately with regard to price declines. It will also be a nice conversational ice breaker in general.
The problem is that Dataquick’s archives (in the monthly “news” section of their site) go back only to September 2005. I would like to extend these charts back to 1997 or earlier. Is there a convenient free source for such data?
Never mind that request - I just spotted the “archives” section which goes back to 1995!
P.S. While googling around, I found this great time-warp article from 1993, in the heart of the last L.A. housing bust:
http://findarticles.com/p/articles/mi_m5072/is_/ai_13927682
This is good reading for anyone who doubts that the high-end sections of LA (and elsewhere) will eventually fall, and fall hard. Enlightening excerpt:
“On the first point, high-priced homes are indeed on a much steeper downward slope than homes priced closer to the median.
According to Dataquick, a median-priced home in Beverly Hills (zip code 90210) hit a peak of $1,485,000 in November 1990. But as of February 1993, that figure has slid to $780,000, a 47.5 percent plummet.
In Brentwood, the price as of February 1993 had tumbled by 34.7 percent from its June 1990 peak, and in the Palos Verdes Peninsula, by 31 percent from its June 1990 peak.
Homeowners in higher-priced parts of Los Angeles are acutely aware of the changing real estate markets — which has led to the rash of anecdotal observations about plummeting home prices.
“I bought my home six years ago in Calabasas,” said Roger Pondel, nameplate partner at the public relations firm Pondel, Parsons & Wilkinson. “We saw it about double in value in the next three, but now it is worth just a little bit more than what we paid for it.”
Confirms publisher Karevoll, “The upper price ranges have been under severe pressure. Prices have fallen to below 1988 levels, and we still haven’t hit the bottom.”
But the higher-priced homes do not affect the reported median price for this reason: If large homes in better neighborhoods fall to, say, $350,000 from $650,000, they still are in the upper half of all home prices. The median is the point at which half of homes sell for less, and half for more.”
“‘We didn’t think it would be such a task,’ said Radames Montes, of Riverside who with his wife is looking to buy a house for about $180,000. ‘If you see a home you like, you really have to run and put your offer in and go home and pray or cross your fingers.’”
Meanwhile the lender is hoping and praying the statue of St. Joseph they buried in the foreclosed home’s backyard works its magic in generating a foreclosure sale.
I know this is somewhat OT, but it does relate to California (SF). I just saw this on Trulia.com, it’s so rad, they tied in the Google street view with the address of the home that’s for sale. They only have it in major cities right now (SF, NY etc).
http://www.trulia.com/property/1045734686-510-El-Camino-Del-Mar-San-Francisco-CA-94121
btw just signed my 14 month lease at our new apartment! 3 bedroom in Roseville (Sacramento) $1249 incl. washer & drier, two storage units and one parking spot.
“‘This is obviously not a good situation,’ said Alan Gin, economist at the University of San Diego. ‘I’ve been in the camp that’s said we’re not going to have an official recession, but this is moving us closer to that possibility. The question is whether (the job losses) will continue over the next couple months.’”
I hope Alan takes a good, hard, long look at that graph that accompanies the headline story in today’s SD Union Tribune and deeply ponders its possible implications, as graphs can tell a story if you think hard while viewing them. This graph shows that YOY changes in SD employment since 1991 have always been positive except for during the post-recession period from 1991 through late 1993, during which they were continuously negative, and that they just dipped to negative for the first time since. Unless it is different this time, we should not be surprised to see the labor market remain weak over the next couple of years, with the usual attendant effect on housing prices (they continue falling as would-be home buyers become precautious when facing the risk of losing their jobs just after making a costly big-ticket purchase).