The Economics Of Housing In California No Longer Work
The North County Times reports from California. “San Diego County home prices took yet another beating in March, reaching the largest rate of decline yet, according to a report released Tuesday. Home prices in March were 20.5 percent below the same month a year earlier, the first time county home prices were more than 20 percent below price a year before, according to Standard & Poor’s Case-Shiller Home Price Index.”
“‘Almost all of the realized loss in the last year has occured in the last six months through March,’ said Maureen Maitland, VP of index and analysis for Standard & Poor’s. ‘So, no, we haven’t seen deceleration. If anything, we’ve seen an acceleration in price declines.’”
“Prices are 25.9 percent below a November 2005 peak.”
“San Diego County’s year-over-year decline puts it in the ‘Sun Belt’ club, a group of six cities that saw the largest appreciation during the housing boom and are now seeing the biggest drops, Maitland said.”
“The lower end saw a larger run-up during the housing boom, reaching a peak of almost triple 2000 levels, according to the report. Now, lower-end homes are less than double what they were in 2000.”
“Despite the heavy price drops over the last six months, the typical San Diego County home is priced 84 percent higher than in 2000 and currently at early 2004 levels, according to the data.”
The Voice of San Diego. “Here’s the tier breakdown: Lowest tier (Homes priced lower than $392,045): Prices fell 28.9 percent year-over-year and 33.9 percent from this tier’s peak in June 2006.”
“Middle tier (Homes priced between $392,045 and $588,222): Prices fell 21.5 percent compared to March 2007 and 27.8 percent from this tier’s peak in November 2005.”
“Highest tier (Over $588,222): Prices fell 13.3 percent year-over-year and 18 percent from this tier’s peak in June 2006. The index measures price changes on the same houses over the years. It doesn’t track condos or new homes.”
The Union Tribune. “The housing slump is downsizing San Diego County’s home-building industry, as many of the large firms that helped create suburban communities scale back or close local operations. Some of those that leave probably won’t return.”
“‘Centex, KB Home, K. Hovnanian, William Lyon, Richmond American, Pulte - all have closed local offices, and pretty much every other builder has reduced staff,’ said real estate analyst Peter Dennehy. ‘They don’t need the same number of staff as when the market was rockin’ and rollin.’”
“‘The industry is experiencing a paradigm shift,’ said Tryon, CEO of the Building Industry Association of San Diego County. ‘It really means we are seeing a shift to a smaller market with less greenfield (open land) development, an environment where large-scale development is difficult to achieve. That means a different kind of product in many cases.’”
“‘Banks have taken flight and left our industry,’ said Michael D. Pattinson, president of Carlsbad-based Barratt American. ‘The economics of housing in San Diego and California no longer work. The houses now that are selling are the foreclosures that have been taken back. We are selling assets to survive and doing what we can to keep our businesses going.’”
“Tony Pauker, former regional president of the Orange County-based Olson Co., lost his job when the firm closed its office here in January. ‘We went from a peak of 55 employees down to 20 and then to zero,’ Pauker said.”
“He recalls seeing a decline in traffic at new-home communities during summer 2004. By the end of 2005, some local builders were shedding staff. ‘The downsizing started as a trickle and became a flood,’ Pauker said.”
The LA Daily News. “Foreclosures have already pushed record numbers of homeowners into apartments, leaving a trail of brown lawns, overgrown hedges and cracked paint in suburbs from Palmdale to Pacoima.”
“Now, homeowners associations are feeling the pain of the bursting housing bubble, dealing with a huge spike in delinquent monthly fee payments.”
“And as operating budgets fall into deficit, associations across the nation are trimming fewer lawns and cutting more spending. ‘It’s the most serious challenge the boards have faced in a decade,’ said Glennon Gray, owner of Santa Clarita-based Euclid Management, which oversees 250 homeowners associations throughout Southern California.”
“Russ Hoffman, CEO of Santa Clarita-based Valencia Management Group…manages 32 homeowner associations in Southern California, including Valencia Summit, Bridgeport and Creekside in Santa Clarita.”
“It’s the newer developments built in the last six to seven years that are taking the hardest hit, Hoffman said. ‘It’s a tough situation for a certain group of people,’ he said. ‘It is all based on the timing when the loans were taken out.’”
“All this financial turmoil means that associations won’t be able to put money into reserves for pricey projects such as redoing roofs and streets. Eventually that would likely mean increased monthly fees, special assessments or reduced services.”
“‘If it continues, it will have a dramatic effect on assessments,’ Euclid Management’s Gray said. ‘We have to adjust for our losses. We are used to everybody paying.’”
From The Sun. “Stumped by depressing sales numbers, the Inland Empire’s market for new homes is forcing certain builders to fast-track inventory straight to the auction block. Some are even doing it over the Internet to cut costs.”
“Developer Mark Gardner made the choice to send 25 of his never-lived-in homes to a virtual auction block. ‘We overbuilt for the current market conditions,’ said Gardner, who owns Redlands-based Gardner Construction.”
“Over the past decade, Gardner’s company has developed more than 600 homes across San Bernardino and Riverside counties. The last auction the company held was a ‘live auction’ in the mid-1990s, and he’s predicting he’ll have to hold more auctions in the future.”
“‘You’re going to find that builders will be looking at all avenues to get rid of their product,’ he said about the current real-estate market. ‘It’s trying to get the perception out to buyers that, ‘Hey, these are great deals.’”
“‘Our average builder auction has 30 to 40 homes, while a lender auction is 100, 200, or more,’ said Rhett Winchell, president of Beverly Hills-based Kennedy Wilson Auction & Sales Group. ‘You won’t see 80 homes at a builder auction. Offering 80 of the same thing at one time isn’t good.’”
The Press Enterprise. “Rialto has 778 bank-owned properties and another 970 in the pre-foreclosure stage. City leaders say that’s a recipe for suburban blight, and they hope to stem the tide.”
“Rialto is the latest Inland city to go after lenders and financial institutions as a tactic to force someone to be responsible for the upkeep of abandoned houses after distressed homeowners have packed up and moved away.”
“‘We probably started seeing a big spike in foreclosures starting about the third quarter of 2007,’ John Dutrey, the city’s housing program manager, said. ‘In Rialto, we had about 480 foreclosures in 2007. In 2008, the way things are going, we’re going to have over 1,000 foreclosures.’”
“The problem is pervasive, he said. ‘It’s happening in areas where new homes are being built. It’s happening in the older neighborhoods,’ Dutrey said. ‘It’s happening in the high-cost neighborhoods. It’s happening in the low-cost neighborhoods.’”
“In a written report to the City Council last month, Dutrey said 25 percent of Rialto’s vacant homes are poorly maintained.”
“‘The presence of vacant buildings … can lead to neighborhood decline, create attractive nuisances, contribute to lower property values and discourage buyers from purchasing properties adjacent to abandoned buildings,’ Dutrey said in his report. ‘Many of the homes are owned by lenders who fail to adequately maintain and secure these vacant buildings.’”
“‘Usually the foreclosure process takes about four of five months, from the time the notice is filed to the time the foreclosure sale takes place,’ Dutrey said.”
“Homeowners often move out before the sale.”
“‘The problem is: Who’s responsible for the house during this interim period?’ Dutrey said. ‘The homeowner is gone. You can’t find that person.’”
The Bakersfield Californian. “These days Louie Gregorio hears home hunters repeating the same question. ‘All of them go, ‘You’re going to show me foreclosures, right?’ said Gregorio, a broker and co-owner of Bakersfield Premier Realty.”
“Bank-owned and ’short sale’ properties account for roughly 50 percent of homes for sale on the Bakersfield MLS, according to the Bakersfield Association of Realtors.”
“Agent Victor Vazquez (estimated) foreclosures need cosmetic work about 75 percent of the time.”
“‘The bank hasn’t lived in the property,’ agent Jon Vaughn said. ‘So they’re not going to tell you, ‘Oh, we’ve got this problem with the air conditioner,’ because they don’t know there’s a problem with the air conditioner.’ A home inspection is critical, he said.”
“With foreclosures - where a previous owner was either unable or unwilling to make mortgage payments - minor fixes were sometimes deferred and allowed to morph into major problems, home inspector Butch Boynton said.”
“He’s discovered leaky plumbing that gave rise to mold. In a neighborhood with homes selling in the $400,000 range, Boynton came across a backyard concrete job that had sealed over the mechanism meant to drain moisture from stucco walls.”
“‘We’re seeing a lot of oddball things,’ Boynton said.”
“Some banks will respond to offers within two days, while others drag their feet, said agent Susan Ferguson.”
“A slow response might not be so bad today. In this market, no one should feel rushed, Vaughn said. ‘Stick the offers out there,’ Vaughn said. ‘Stick to your guns.’”
“Southwest Bakersfield’s new high school wasn’t supposed to go up in the middle of nowhere. But dead and delayed development means Independence High School towers over a knee-high skyline of mostly row crops and empty lots instead of suburban tracts that surround it on paper.”
“Like the Kern High School District’s other new site opening this summer - Mira Monte High School in southeast Bakersfield - Independence was created as the city’s housing market roared in 2004 and 2005.”
“Both schools…show Kern’s dramatic real estate boom and bust is affecting more than homeowners, sellers and buyers. Large public projects that require years of planning are also nudged by unpredictable ripples of the fallout.”
“When the district asked voters to approve a $219 million bond measure in November 2004, they pointed to maps with tens of thousands of new homes choking planners’ desks in city and county offices.”
“Overcrowded schools would be swamped with an unprecedented enrollment surge, figures at the time showed.”
“Scott, the district’s assistant business superintendent, said the current bust is much like one that hit Kern after a previous boom. ‘It looks an awful lot like what happened in ‘93-’94 in this community,’ Scott said, when a dramatic slowdown hit after a growth spurt.”
The LA Times. “Although Malibu Colony may have been where everybody knew his name, ‘Cheers’ star Ted Danson is moving on, having sold his Cape Cod-style house for an undisclosed price, according to area real estate agents. It most recently had been listed at $16.75 million. It was originally listed at $18.5 million.”
“So much for celebrity cachet. Even Hollywood types with homes for sale are feeling the market’s slowdown and lowering their asking prices.”
“Real-estate-savvy Frankie Muniz, the Emmy-nominated star of the hit TV series ‘Malcolm in the Middle,’ has relisted his five-bedroom, four-bathroom Hollywood Hills home for $3,695,000, down from $3,875,000 last fall. Muniz purchased it in January 2006 for about $3.5 million.”
“Angela Bassett and her husband reduced the asking price on their Hancock Park mansion from $5,999,000 to $4.6 million.”
“Norm Waitt Jr., co-founder of Gateway computers, is selling his Montecito mansion in a sealed-bid auction. The house, his ex-wife’s pet project, had been listed for more than a year.”
“He even dropped the price from $24.8 million to an eventual $19.7 million, based on his agent’s advice that ‘below $20 million’ would attract a buyer. It didn’t.”
“A Beverly Hills house that actress Sharon Stone bought for just under $11 million in April 2006 and then promptly relisted at $12.5 million — to no takers — is now back on the market at $10 million.”
“Stone never moved in, and the 1991 gated estate, with seven bedrooms and eight bathrooms, was completely refurbished in 2004. The actress lives in another mansion not far from this one. So why’d she buy this house? Impulse, pure and simple, said the listing agent back in 2006.”
“And now, not unlike that Lycra minidress you bought because it just looked so dang adorable on the Size 2 mannequin, she probably wishes there were a more liberal return policy when it comes to Beverly Hills mansions.”
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“The Economics Of Housing In California” succumbed to Rogue Economics and Rogue Entrepreneurs, as per author Loretta Napoleoni (her treatment is general and not about CA housing). Mozilo is the perfect example of the latter.
Jas
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“Now, lower-end homes are less than double what they were in 2000.”
“Despite the heavy price drops over the last six months, the typical San Diego County home is priced 84 percent higher than in 2000 and currently at early 2004 levels, according to the data.”
Supports the view of some of us HBBers that we have a long ways to go, as in a further 30-50% decline. All the fundamentals are worse than in 2000.
Jas
That caught my eye, too, Jas. We’re quite a ways from the bottom, IMHO. I was just watching the NBC Nightly News and whoooeee, the MSM sure didn’t sugar coat it this time. The economy sucks and people are hurting, small business is in deep doo-doo. You can only expect the housing market to get far, far worse, as it combines with a radioactive economy.
And here’s CONgress holding their hands on their collective backsides, picking their cracks while they dither about what to do. Maybe they hope to find a solution in there somewhere. Or maybe they’re just trying to locate what’s left of their brains. They really JUST. DON’T. GET IT. Even without a subprime meltdown or whatever, the only glimmer of hope to even revive a shadow of the housing market lies in fixing the economy, eliminating the fed, basing the money on real value, encouraging real production and getting this country some good old common sense and law.
Let’s hope they sit around a little longer before they figure out a way to slow down the ride back to reality.
I don’t want them to DO anything about the housing market. There’s nothing they can do anyway. However, they CAN do something about the economy, about banking, about Wall Street swindlers and corporate crooks. Through smart policy, they could have done something long ago about energy independence. They could do it now, but what do they do instead? Make it worse with the whole corn ethanol boondoggle.
You know, all I wanted when I got on this blog was to see housing tank so I could buy low again. That’s all, really. I didn’t want this entire country to go in the crapper because of Washington and Wall Street criminals and stick-up artists like the Fed. I don’t know about anyone else, but I don’t exactly get any jollies out of seeing formerly middle-class folks lose their jobs and have to sleep in parking lots. It doesn’t bother me if Mario the “Mexican national” from the Florida thread loses his $280,000 mobile home. He can and will go back where he came from. But it burns my naked patootie to see him take a job that the US carpenter in the other Florida thread would have been happy to take, while renting a room for $150.00 a week.
I’m talking about the collateral damage from the housing bubble. People just trying to get by, not owning a home or anything, just losing their jobs, their pride, etc. While McCain snarls about “jobs that aren’t coming back”. Yeah. Because of nasty tempered old burn-outs like him.
I hear you. They should have regulated loans and Wall St. to at least ratchet down on the bubble, even though they couldn’t have prevented it. But now that the cow is out of the barn, they’ll still probably figure out a way to burn the barn down; i.e., the taxpayers subsidize all the FB’s.
good post, Palmy.
What about the person who employed the “Mexican national” and not the white carpenter? What about the white guy who sold the “Mexican national” the loan for the $280k mobile home? Where do these guys rank?
Let’s hope they don’t do anything, especially giving more bail outs to Wall Street or to the idiots who signed up for the stated income adjustable loans with nothing down and no credit verification. Let the market work. $5 gas, bring it on. Pelosi and the rest of the Dems are in charge since ‘06 and they were suppose to have an energy plan? DUH? When will the public–oh, wait a minute, they’re watching Oprah or Idol. “It’s not my fault mentality” is purvasive, bail me out.
“fixing the economy, eliminating the fed, basing the money on real value, encouraging real production and getting this country some good old common sense and law”
———————————–
Ha!
Everything you listed there would require a move towards LESS GOVERNMENT power, something the liberal party currently in control of congress could never imagine giving up.
As far as California’s decline - it does appear another 50% to 75% or more drop from today’s prices is in order. When the “lower tier” cutoff is still close to $400k there is long, long way down to go.
Not sure what you mean by the very slim– like one vote– “rule” of the liberal party which gets trumped by Cheney’s tie-breaking vote. We have more government since Bush & Co came to town, unless it applies to corporations.
Lowest tier (Homes priced lower than $392,045)
The “lowest tier” in San Diego includes everything up to nearly $400k. In a state with a median HH income (incl. 2 & 3 income HHs) of ~$55k. That should tell you all you need to know about “affordability” in Clownifornia, and how much further prices still have to fall.
“And here’s CONgress holding their hands on their collective backsides, picking their cracks while they dither about what to do. Maybe they hope to find a solution in there somewhere. Or maybe they’re just trying to locate what’s left of their brains. They really JUST. DON’T. GET IT.”
They’re paranoid because it is an election year. The electorate is divided between those wanting bailouts and those wanting a correction…those wanting change, and those trying to preserve the status quo.
Maybe it’s actually better if they just sit on their collective hands and don’t do anything at all.
Democracy is the art and science of running the circus from the monkey cage. ~H.L. Mencken
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I am a Mencken fan. A fellow critic.
Jas
“Maybe it’s actually better if they just sit on their collective hands”
Maybe it would be better if they’d sit on my hands, full of upright nine-inch nails.
Exactly!!! I wish they would do nothing instead of passing every spending bill that come to a vote, assuming it will get them re-elected. Unfortunatly the ones that need to leave the most will be there for a very long time.
” Even without a subprime meltdown or whatever, the only glimmer of hope to even revive a shadow of the housing market lies in fixing the economy, eliminating the fed, basing the money on real value, encouraging real production and getting this country some good old common sense and law.”
Eliminating the Fed. The more the average voter can study the reality of the Federal Reserve, how it got here, and what it does,
the closer we might get to a Government that actually works. The reason I say that is because it is the Federal Reserve that FUNDS the DEFICITS created by the POLITICIANS. Therefore, the politicians can always promise more to their constituents without actually having the constituents pay.
That way they can get elected and re-elected without having to talk about raising taxes. The Fed creates the inflationary environment which is an invisible tax on all of us, and earns fantastic interest in the process. Eliminating the Fed is like throwing the yoke of tyranny of your back. However, the tyrants won’t like it and will stop at nothing, including having us HBB’ers arrested for sedition, treason, and advocating the overthrow of the U.S. Govt. (I hear a knock at th
“‘Almost all of the realized loss in the last year has occured in the last six months through March,’ said Maureen Maitland, VP of index and analysis for Standard & Poor’s. ‘So, no, we haven’t seen deceleration. If anything, we’ve seen an acceleration in price declines.’”
deceleration
1. To decrease the velocity of.
2. To slow down the rate of advancement of velocity
acceleration
1. the act of increasing speed
2. the rate of increase of speed or the rate of change of velocity
Don’t ya just love double-speak?
OK…Maureen Maitland ~ go fast or stay home!
BTW - STFU!
GFY!
Leigh
–“Highest tier (Over $588,222): Prices fell 13.3 percent year-over-year and 18 percent from this tier’s peak in June 2006. The index measures price changes on the same houses over the years. It doesn’t track condos or new homes.”
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“Highest tier ” usually gets hit a year after the beginning of a recession.
Jas
The faster the bleeding happens, the quicker the recovery will come.
Amen, brother!
The faster the bleeding happens, the quicker the recovery will come.
Uhh..don’t people die from quick bleeding? Hemorrhaging is not on my top 10 lists of ways of making people recover.
Not that a slow bleed is good either, but in theory the body could recover in that event.
Just doing my part to keep up a high quality of analogy.
In this case the real estate leeches get to feed on the way up and the way down.
I want the financial bleeding to be slow to allow the draining blood to be replaced just as fast as it is being lost.
That means fresh capital needs to be constantly fed into the System to keep the System from collapsing due to blood loss.
The NAR and their MSM lackeys are the folks that will persuade gullible knifecatchers to commit their money - their financial blood - into the System.
That makes the NAR our friends.
All hemorrhaging, even housing, is controlable…EVENTUALLY !
Ooops!…The patient MOVED..he wiggled…NOT my FAULT!
Prep the next FB nurse
Those numbers out of San Diego are staggering. It must put every household that bought since 2004 deeply underwater. It is going to be interesting to if the outgoing tide will have the same effect on the markets that exploded from the influx of Clownifornian money (Utah, Colorado, pacific northwest).
Hardly anyone thinks they are underwater in SD. Most people there still think prices are rising. I am amazed no one pays any attention to the press reports. They cling to anecdotes about foreigners coming in and swooping up all the property creating shortages and price hikes.
I remember hearing similar anecdotes in 1991, two years after the 1989 peak. Japanese and Koreans seemed to be the only buyers, so they were quite visible. But there weren’t enough of them to turn the market around. Prices fell for five more years.
..builders will be looking at all avenues to get rid of their product,’ he said about the current real-estate market. ‘It’s trying to get the perception out to buyers that, ‘Hey, these are great deals.’”..
yeah.. the perception of a great deal is as good as the reality of a great deal. Them stupid buyers won’t notice a difference.
You builders are exactly on target and have nothing to worry about. Keep up the good work.
munch munch.. yum.. good popcorn.
Get the perception out… Is that the same as lying?
I thinks most of the stupid buyers already bought. Of course, we’ll have a lot of knife catchers too, but the builders already tapped out the stupid demographic, and now they’re wondering why no-one’s buying.
So why’d she buy this house? Impulse, pure and simple, said the listing agent back in 2006.”
So Sharon Stone is also a speculator. She could make millions by simply making another movie, but she chose housing mania?
Hey, movie starts are enviable and always make sound decisions based off of intense study. Just ask Leonardo Decaprio about global warming.
Didn’t she just say the earthquake in China was due to bad karma over Tibet? What’s her excuse over her house not selling?
Bad karma from pointing out somebody else’s bad karma.
(Ug, there goes my karma too.)
LOL!!! Good one.
Her ignorant comment further shows the utter contempt our elites/celebrities have for ordinary people. That quake didn’t hit the party fat cats in Beijing, it hit a bunch of provincial working schlubs just trying to get by themselves.
After years of litigation, Basic Instinct 2: Risk Addiction was released on March 31, 2006. After earning $3,200,000 in its debut weekend, the movie was declared a bomb.
(wikipedia-sharon stone)
What’s her cut likely to have been?
a couple more followed.. Alpha Dog (?).. When a Man Falls in the Forest (?) I’m no movie buff these movie blockbuster names are new to me..
“In 2007, she appeared in a television commercial demonstrating the symptoms of a stroke.”
There ya go..I hear commercials pay real good money.
So, RE speculation probably looked appealing.. but she takes a $1M hit on a house. That musta stung a little bit..
I shudder to think how much money she made on Japanese TV commercials during the 1990s. Sharon Stone, Harrison Ford, Charlie Sheen, Leo di Caprio, Arnold, they were all in Japan, hawking all sorts of products.
That reminds me of the greatest TV commercial tag line of all time: Charlie Sheen’s ad campaign for Tokyo Gas from the early 90s: “It’s my gas.”
Could not happen to a ‘nicer’ person with the karma talk.
What the ‘bad karma over Tibet’ has to anything to do with ordinary peasant/children got killed during earthquake? Yes, i can understand the ‘angry’ towards the Comm. party but peasant and kid. IMHO. That’s going a bit too far….
BTW, the feeds should be ready for re-subscription now.
“‘Banks have taken flight and left our industry,’ said Michael D. Pattinson, president of Carlsbad-based Barratt American. ‘The economics of housing in San Diego and California no longer work. The houses now that are selling are the foreclosures that have been taken back. We are selling assets to survive and doing what we can to keep our businesses going.’”
It’s not the economics of housing that no longer work, it’s your business model of building low-density, shoddy housing on overpriced, previously undeveloped land with illegal, low-skill labor that no longer works. Don’t let the door hit your a$$ on the way out.
One side benefit of the big builders going out of business would be to dry up a big source of campaign cash for local politicians controlled by the developers.
Oh, how I wish that campaign cash cow would dry up here! We’ve had more than our share of politicians controlled by developers.
I checked w some banks and leasing companies- they seem to have plenty of $ to lend for equipment……?
“It’s not the economics of housing that no longer work, it’s your business model of building low-density, shoddy housing on overpriced, previously undeveloped land with illegal, low-skill labor that no longer works. Don’t let the door hit your a$$ on the way out.”
Amen, brothah!
That ugly business model of building cheap cookie-cutter crapboxes stuffed into clumps of insufficient land was the last model that they could make work here in California, other than the “build stuff in a remote desert wasteland” model. Both have now failed. The builders need to close down and leave until the mess they made is sorted out - which could take many years.
And the politicians got plenty of the low-income housing they always wanted - if only they can figure out how to convert it from its present state into something they can put low-income people in.
“And the politicians got plenty of the low-income housing they always wanted - if only they can figure out how to convert it from its present state into something they can put low-income people in.”
Some, in the form of squatters, may end up there anyway regardless of any planning. The politicians are so far behind what’s happening in housing. They are also very out of touch with the lives of many of their constituents. They lead lives and travel in circles very different from those of many they claim to represent.
I’ve noticed the same thing. This whole thing is playing out and the politicians are unable to react quickly enough to do anything of substance other than rebate checks, flailing their fists and oil company checks and threatening to sue OPEC.
They’re still living in the land of 1973, completely. Not a useful idea among the leadership. I hear quotes from a congressman here or there that would indicate there are some junior reps that have an idea of what’s going on. But given the leadership’s response, better that they all just close up shop and go home and campaign until November.
Can anyone explain why San Diego is crashing so hard but San Francisco is not?
I don’t know SD that well, but it seems that folks had the same ideas about both places: “It’s different here” and “Everyone wants to live here”, etc.
The # of for sale signs has increased dramatically here in SF proper, but houses are selling and the price of homes has gone down ever so slightly.
New condos are still being built fast and furious.
New York City is also slowing, esp. in the boroughs, but will Manhattan ever see a real RE bust? I grew up there and wouldn’t want to live there again, but it sure would be great if regular people could afford to buy a place in Manhattan in this lifetime, without winning the lottery.
SD has lower incomes overall. Your median household income must be 70-80k and ours is about 60k. There is an old saying though that you may appreciate in the near future, “The bigger they are, the harder they fall.” SF is clearly dangling on the edge of a fall right now. In fact based on the Mortgage Reset Charts most of the Alt-A’s and NEG AM’s don’t reset until later. I suspect San Diego had more subrprime borrower in San Diego and more Alt A liars in SF.
I would love to see a constant update on that ARM reset chart! It could be a decieving chart to us because it always makes the peak look like it is a few month out. It could be people are refinancing and that the pattern on the chart is pretty normal (I doubt it) but I was thinking of contrarian viewpoints on the matter. I’d like to see it broken down by state, by month, etc. I doubt the data owners really want that public!
“I suspect San Diego had more subrprime borrower in San Diego and more Alt A liars in SF.”
That’s incorrect. In addition to a relatively low number of subprime mortgages, SF-proper also had a relatively small number of Alt-A mortgages (http://www.newyorkfed.org/mortgagemaps/). While California as a whole has about 48 Alt-As for every 1000 housing units, San Francisco proper has roughly half that number — the lowest of any bay area county.
From the original post:
“He recalls seeing a decline in traffic at new-home communities during summer 2004. By the end of 2005, some local builders were shedding staff. ‘The downsizing started as a trickle and became a flood,’ Pauker said.”
I can remember seeing the same thing here in Tucson. The indicator that got my attention was declining enrollment in the construction program I was in at the community college. The difference between the ‘05 and ‘06 enrollment was striking.
“So why’d she buy this house? Impulse, pure and simple, said the listing agent back in 2006.”
Paging Sharon Stone: Now I want a house too!
Actually, she was probably trying to make sure the money she made in movies was going to never go to the dogs, so she invested in real estate. Tax shelter, hedge holder, investment. What a mess.
Completely and wildly off-topic:
Sharon Stone. On yeah. I worked a party in one of her homes back in the go-go nineties.
Anyone else smile when they heard on the UP wire that President Bush was speaking today about the economy during a tour at the ‘Silverado’ Cable Company in Mesa, Arizona? I flashed back to Bush’s brother Neil and Silverado Savings & Loan.
Double your pleasure,
Double your fun,
It’s double Bush, double Bush,
Double Bush dumb (~:
Walkaway deadbeats jailed in California. Does anyone know if this is for real?
http://wallstreetexaminer.com/blogs/mantle/?p=41
Yeah, sure, Judge jed Clampbet and spokesman Snidely Wachovia. Although it would be a hoot if walkaways did get jailed.
Palm - seeing stuff in FL under $100 a square- seems like old times
Yep, tax, there are houses north of Tampa that are in my price range, but I’m waiting for that to drift down to these parts.
Yeah, never mind…too good to be true. Nice fantasy though
Judge Jed Clampbet - didn’t need to read past that one. Did it come from “The Onion?”
Declaration of Independence, 2008 style
“Southwest Bakersfield’s new high school wasn’t supposed to go up in the middle of nowhere. But dead and delayed development means Independence High School towers over a knee-high skyline of mostly row crops and empty lots instead of suburban tracts that surround it on paper.”
Lots of buffer from the neighbors for the first shooting.
If the houses haven’t been built and the illegals are going back to Mexico, where are the students for the school? Unless, or course, it’s the ones that were working and didn’t have kids here that are going back.
“Real-estate-savvy Frankie Muniz, the Emmy-nominated star of the hit TV series ‘Malcolm in the Middle,’ has relisted his five-bedroom, four-bathroom Hollywood Hills home for $3,695,000, down from $3,875,000 last fall. Muniz purchased it in January 2006 for about $3.5 million.”
I like Frankie’s acting, and I like his driving (he’s been working as a professional driver lately, and actually seems to have talent and the right attitude).
So who decided he was a RE expert? I’m hoping it wasn’t him. Usually people who actually *are* good at something don’t bother trying to pass themselves off as experts in the areas that they aren’t. Or maybe I’m wrong. I just usually see the people who suck at everything as the ones trying hardest to fool everyone.
I just saw on article in the Kiplinger Report on how to earn millions. The lawyer/broker sold one home in Bel Air for triple what he paid in 1996 and is now a so called expert. It also stated he purchased a home in Palm Springs in 2007 which is probably underwater.
One home does not an investor make!
I guess Frankie was trying to get a big enough profit to be a lifetime Clippers season ticket holder.
“Can anyone explain why San Diego is crashing so hard but San Francisco is not?”
Doesn’t it also matter where you are in each area? Some far inland areas that house commuters to the Bay Area have crashed hard and some coastal, pricier areas of San Diego have been slower to decline. Some of this difference between SD and SF may also be a matter of timing (some markets peaking, then declining sooner) as well as the location within a general area.
One factor that is different in San Diego is that wages are lower, little different from the national average. Also, didn’t SD peak at greater multiples of income than SF? If that’s the case, it wouldn’t surprise me at all if declines on a percentage basis end up being greater in SD than SF.
Though prices may be crashing hard in parts of SD, the word still hasn’t reached a lot of potential sellers (houses on market, but little potential to sell unless asking prices are lowered - a lot). There are still a lot of wishing prices out there.
San Diego has a renowned Under-The-Line tournament going on, currently…
Scoring guidelines:
Own one home: single
Own 2 homes: double
Own 3 homes: triple
Own 4 homes or more: home run
Most of the Padres must be homeless.
I know about the ‘Over the line Tournaments’ but this one is new.
Patent the board game and make your bazillions! Many stay at homes now need something to do.
Bubble in Car sales bursts along with Housing Bubble:
http://tinyurl.com/47onff
And didn’t we long suspect housing was carrying the rest of the economy ?
they had a realwhore on CNN that had to GET OUT of her gas sucking SUV. A highlander, gets same mileage as a car.
Time for another rant:
“Here’s the tier breakdown: Lowest tier (Homes priced lower than $392,045):
392K falls into “lowest”?? OMIGOD THAT’S INSANE.
I know. It’s only a lot of money if it’s not attached to a house somehow. I had a conversation here today in rural VT with 1 income families that were okay with “low ball” offers of $200K. (Same houses were under 100K a mere 7 years ago.)
I was suggesting that the person who was looking to buy wait because they want to start a family business and that prices would fall for the next several years. It was, of course, met with blank stares from the other owners.
Another problem for SUV drivers
http://news.yahoo.com/s/ap/20080527/ap_on_bi_ge/punctured_gas_tanks
I guess selling my Mustang and buying a Prius wasn’t such a bad idea. Also I don’t have to worry about setting myself on fire drilling for liquid gold.
Or worse they cut the catalytic converters off for the platinum.
Nice MSM article
http://biz.yahoo.com/ap/080527/economy.html
Did some HBB’r go and get famous on us? Greg are you out there?
Greg Johnson in San Diego is looking to buy a a four-bedroom house in the northern part of the county. The 38-year-old sold his condo two years ago at the peak of the market and has been renting a house ever since.
“I fully expect that pricing will continue to drop,” he said. “Some of my buddies speculate there will be a lot more product dropped on the market because of foreclosures. So I’m just waiting and watching how things go.”
Already, he can afford houses in areas that were once out of his reach, like in Carlsbad, Calif. He’s seen properties listed six months ago for $700,000 slashed to $450,000.
I liked this line
The consumer has no more money to spend,” said Dan Alpert, managing director at the investment bank Westwood Capital. “The only way the economy is not going to recede is if someone cooks the books.”
If someone cooks the books? Dan I think the books have gone beyond cooking, they are more of a plasma at this stage.
From today’s Bloomberg.com:
“Karl Case, co-founder of a home-price index that bears his name, said more auctions of foreclosed properties will hasten the reduction of inventories from record levels and may lead to a faster housing recovery.”
The operative word is ‘may’. Add pixie dust and the maybe factor doubles.
Karl Case is correct. More auctions of foreclosures will cut prices faster, making houses affordable sooner, increasing the number of potential buyers and hastening the recovery.
Drop prices in line with incomes and the inventory overhang will clear in a couple of years.
Your are missing a step. Foreclosures lead to quickly falling prices lead to BUILDERS finally STOP BUILDING, then 5 years after that there will finally be enough population growth to fillall the extra houses they have already overbuilt.
“Rialto has 778 bank-owned properties and another 970 in the pre-foreclosure stage. City leaders say that’s a recipe for suburban blight, and they hope to stem the tide.”
Stem the tide?
Rialto was the poster child for surburban blight long before the Housing Bubble.
Okay, the air has obviously blown out of the bubble in Bakersfield, the Valley, Palmcaster, Riverside/San Bernardino, South Central, and about a dozen other areas where I wouldn’t accept a property unless it was free (except maybe S. Central, I can roll there)…but what’s the deal with the Westside? I did a search for bank owned property on Redfin, and this area was empty, all those other areas were covered with dots (representing REO listings). Is this how it’s going to be, or is the fun going to spread here, too? I’m starting to think, this is it, I’ve waited all these years for deals in crap @ss areas
…On the other hand, I saw a chart somewhere that subprime resets happened last year, whereas option ARM resets happen in ‘09, aren’t those the kind that more upscale/middle class neighborhoods would have used? Thanks.
“…On the other hand, I saw a chart somewhere that subprime resets happened last year, whereas option ARM resets happen in ‘09, aren’t those the kind that more upscale/middle class neighborhoods would have used? Thanks.”
Day late and dollar short. Do you finally get it or what?
“… but what’s the deal on the Westside?”
This economic event is huge. Remain patient.
the real estate bubble financed four years of surfing and biking in pismo beach,now because of family reasons i have to move back to the east san fernando valley…THE ONLY SAVING GRACE IS I GET TO MOVE BACK INTO the same n-hood i sold from at the peak for way less than i sold my home from,even a nicer home.oh,i will still RENT in valley village calif 91602,and wait to pounce when i get a 200k discount…ps sold for 640k in 04, i figure if i can get back into my n-hood for 200k less that great business.
No one is more bearish on the housing market than I am, but my wife and I are looking at making an offer on a house here in Merced, CA
2000:90K
2005:278K
2008:90K , ahh back to reality.
OT
Many here called the commodities bubble 2+ years ago…anyone have a guess on the next one? Or when it crashes is that the final nail in the global coffin?