The Middle Of The Madness In California
Sonoma News reports from California. “During the most recent real estate bubble, speculation drove home prices up as inventory tightened. But according to Sonoma Valley real estate professionals, home ownership is becoming viable again in a market that, at times, has seemed almost dormant. ‘During the past three months, we have seen a lot of activity,’ said Mike Caselli, president of the Sonoma Valley Board of Realtors. ‘If someone is thinking of making a purchase in Sonoma Valley, now is the time to buy. They don’t want to sit on the sidelines until they get caught in an escalating market again.’”
“‘Some people got into a fix because they had adjustable loans with teaser rates that eventually went up,’ said Jim Duncan, an owner/partner in Coldwell Banker de Anza. Duncan agreed that people should not be looking at real estate in the short term. ‘Short term speculation isn’t working right now,’ he said.”
“‘Very sadly there has been great pain inflicted on some people who were (whether they understood it that way or not), effectively speculators, speculating that the market would always go up a double digit percentage a year,’ said Herb Heil, a long-time Valley Realtor. ‘However, there appears to be greater realization that there are no sure things and that there is always an element of risk.’”
The Bay Area Newsgroup. “Josefa Ramirez and her husband, Juan Carlos, both 43, spent 10 years moving in and out of San Francisco apartments before buying their two-bedroom, one-bath Antioch home in 2006 for $375,000.”
“Paying $2,700 a month for their ‘fixer’ required a new roof, wiring and landscaping. Their loan adjusted in June to more than $3,200 a month.”
“Ramirez, a hair stylist, said business has been slow and Juan Carlos was laid off from his construction job with a local contractor. Recent houses in their north Antioch neighborhood are now selling for around $150,000. They stopped paying in February.”
“In Pittsburg, Jose Reyes said he had no choice. He and his partner paid $900,000 for their Highland Ranch home, more than 4,000 square feet and six bedrooms. When his partner died in early 2007, Reyes used the insurance money to keep paying the option-payment adjustable-rate mortgage while he tried for a year to sell it.”
“‘When the real estate agent did the comps around the place, it was about half of what we paid,’ Reyes, a bank executive, said. His $3,500 monthly mortgage payment wasn’t even touching interest and a principal payment was more than $6,000 a month.”
“‘When in March, I came to the full realization of the value of the house, there wasn’t a question of ‘Should I continue making a payment?’ Reyes said. Instead, he went to live in the 1800-square-foot house he and his partner had been renting out to help pay for the new home.”
“In Antioch, the Ramirez family await word that their lender is willing to modify their loan. The cable has been shut off, karate lessons canceled, belt-tightening is a way of life.”
The Guardian. “With a sun-drenched boardwalk just a short ferry ride across the bay from San Francisco, the former shipyard community of Vallejo ought to be buzzing. But it isn’t - the city has officially gone bust.”
“For years, taxes and fees rolled in as developers speckled the city’s scorched hills with immaculate estates. The sub-prime mortgage crisis in the United States was a jolt. Homes in many estates lie empty because their owners could not afford loan repayments and, with lots of vacant homes, construction has halted.”
“‘There aren’t many housing starts so we aren’t getting the fees,’ says council spokeswoman JoAnn West.”
“John Quigley, a professor of economics at the University of California, says: ‘Vallejo may be extreme but other cities exhibit the same symptoms.’ In some parts of the state, he says, property prices doubled over 15 months in 2003 and 2004. The extent of the boom has made the downturn more dramatic.”
“‘I don’t see any evidence that we’ve hit the bottom in California,’ he says. ‘You’re talking several years of decline.’”
“In Hyde Park, a gated community in the hilly suburbs of Vallejo. But the estate is peppered with for sale signs, many of which bear two giveaway words - ‘bank owned.’”
“At the peak of the market two years ago, a typical Hyde Park home of four or five bedrooms went for $1m and the estate was sold out. Buyers can pick up a house now for as little as $400,000 (£205,600).”
“‘The banks are competing with themselves to drop prices,’ says Ron Lee, a broker at a north Californian estate agency. And lenders have become more circumspect. ‘At least you have to prove your income now,’ Lee says. ‘They’re not just taking your word for it.’”
The Morgan Hill Times. “Developer Dick Oliver, addressing the council at an April meeting, said his company alone has built more than 100 below market rate homes during the past 10 years and he’s been pleased to do so. ‘The problem now is that we’ve been caught in a financial crisis,’ he said, adding that he wants to bring in some fairness to the way the state-mandated affordable housing program is administered by the city.”
“South County Realty Broker Chris, a third-generation Morgan Hill native, agreed. ‘It doesn’t pencil anymore,’ he said. ‘The requirements are so stringent, the number is so tough - it just doesn’t work.’”
“Borello said city services, which are straining for cash in the weak economy as well, are missing out on property tax prices thanks to below market rate homes. After crunching numbers on his desk calculator, Borello said almost $700,000 in city revenue is lost when a property is sold at an ‘affordable’ price, rather than the market-rate price.”
“Borello said regular home buyers are paying the price since the developer is forced to pass on the building cost for low-income homes to the market-rate home prices.”
“‘Buying a home isn’t necessarily a right, it’s a privilege,’ he said. ‘You have to budget yourself to make it work. You just reevaluate things, reprioritize things. People shouldn’t feel entitled.’”
The Lodi News Sentinel. “Roughly 50,000 homeowners throughout San Joaquin County - one third of the total - will receive notices next month showing what they likely already know: That their home values are in a free fall.”
“Ken Blakemore, the county’s assistant assessor, said the notices should arrive July 10. They’re the largest number to show declining values in a generation, if not ever, the longtime county official said. Blakemore noted values, on average, have declined 30 percent across the county for homes sold since January 2004.”
“Paul Mertz, a Lodi real estate agent, said there’s no doubt many of the notices will be sent to Lodi. But because the city had fewer new homes built during the housing bubble, fewer are subject to the ‘price slaughtering’ that neighboring cities are seeing, Mertz said.”
“The county sent out 20,000 notices showing a decline in home values last year, Blakemore said. Tens of thousands of reassessments were made during a mid-1990s recession as well as during the early 1980s, he added. This year’s levels are the largest Blakemore has ever seen.”
“As for next year’s assessments, Blakemore said it’s hard to say at this point whether the housing market will stabilize. ‘We’ve got our fingers crossed that values will be flat,’ Blakemore said.”
The Fresno Bee. “The housing market is so sluggish that some developers are offering to rent their houses to prospective buyers. Leonel Alvarado, president of Century Builders in Fresno, said he will rent houses at two developments with the goal of selling them a few months later to the tenants.”
“‘We’re trying different things other than reducing prices,’ he said. ‘We’re trying to get a little action going.’”
“The price of a single-family home is usually too high for the practice to work well for a developer, said Alan Nevin, economist for the California Building Industry Association.”
“‘The numbers don’t make a lot of sense except on modestly priced single-family homes,’ Nevin said. ‘You’re supposed to get rent equal to 1% of the value of the house. That’s difficult to do with detached homes, even in Fresno.’”
“Such rental programs are more likely to be with a local builder than a nationwide or public company. The big builders with stockholders are more likely to slash prices to get the properties off their books.”
“‘They don’t want to do some complicated rent-to-own program and still own the houses. It doesn’t help,’ said Jonathan Dienhart, an analyst with Hanley Wood Market Intelligence.”
The Lompoc Record. “Nearly 800 homes have been foreclosed and 15,000 have been reassessed at significantly lower values since January in Santa Barbara County, but officials are concerned the data doesn’t indicate that the area’s real estate crisis has hit bottom yet.”
“From the first of the year to Thursday, 780 homes have been foreclosed in the county and nearly nine homes are foreclosed a day, according to Clerk-Recorder-Assessor Joe Holland.”
“A lower assessed value means lower property taxes, because they are 1 percent of the assessed value, according to Prop. 13, but many people owe much more than their house is worth because of the drop in market and assessed values.”
The LA Downtown News. “For the developer of a just-opened $30 million housing complex, Mark Farzan has an unlikely emotion: disappointment.”
“From the beginning, they expected to bring the 168-unit development at Broadway and Eighth Street online as condominiums. They outfitted the residences with high-end appliances and distinct hardware, hoping the effort would pay off with buyers who value attention to detail and top-notch accessories.”
“They also planned units smaller than the norm, which in 2006 was a strategic decision to attract buyers priced out of the quickly escalating for-sale market.”
“But like many other developers across the nation, Farzan and Afari were hit hard by the credit-squeezed real estate market. Last month, they announced that the building would still open, but that it would arrive as apartments instead of for-sale residences.”
“Ironically, it was not the developers who were having trouble with money. When banks began to tighten lending standards and home prices were slipping, it was the buyers at the Chapman - some of whom had reserved units as much as a year ago - who slowly started to peel away, unable to secure loans, said Farzan.”
“‘We have all our financing in place,’ he said. ‘It was the buyers who couldn’t get the loans.’”
“After originally listing the units for $300,000-$600,000, as apartments, the Chapman Flats are leasing for $1,500-$2,200 per month. Most units have one bedroom and one bathroom.”
“Tyler Wilson, one of the first residents in the Chapman, searched extensively for a Downtown apartment with his fiance before settling on a one-bedroom unit, which he said is about 900 square feet and costs $1,850 per month.”
“‘I looked everywhere and thought this place was relatively well priced for what you’re getting,’ he said. ‘I wanted to buy here, but I couldn’t. I didn’t have the money.’”
The North County Times. “A report showed home prices and sales figures picking up slightly last month in North County, but it isn’t totally clear whether the market will stand up to a continuing wave of foreclosures, an economist said Thursday.”
“Robert Brown, the Cal State San Marcos economics professor who prepares the monthly HomeDex report for the North San Diego County Association of Realtors, said he’d hesitate to predict when a seller’s market might return because foreclosures continue to pop up.”
“Including condominiums and townhouses, 1,001 homes were sold last month, up from 875 in April, according to the Realtor group. Last month, a total of 673 houses and condominiums were auctioned or seized from homeowners who had fallen behind on their mortgage payments, up from 580 in April, according to Foreclosureradar.”
“The median sale price was 21 percent below year-ago levels in May; April prices were about 20 percent under year-earlier levels and March prices were 23 percent lower, according to the report.”
“Lenders have been aggressively cutting prices on the homes they seize from delinquent borrowers, and owner-occupants aren’t usually eager to compete, said real estate agent Gloria Gelet.”
“A couple Gelet is representing moved to Austin, Texas, last year after the husband was offered a job he couldn’t refuse. They’ve cut the price on their 1,700-square-foot house near Guajome County Park in Oceanside to $505,000 and again to $455,000, but it still hasn’t sold. Bank-owned houses in the neighborhood are going for closer to $400,000, she said.”
“‘The foreclosures and bank sales right around there are just killing them,’ Gelet said. ‘They got caught right in the middle of the madness.’”
“Those foreclosures bring the area’s total number of lender-owned homes to more than 2,000, according to the service, and an additional 5,000 are in earlier stages of the foreclosure process. As of May 31, a total of 7,700 North County homes were listed for sale on the service that most local real estate agents use, up from 7,300 at the end of April.”
“‘The real question to me is the presence of these foreclosures, these short sales, that are still on the market,’ Brown said.”
“‘The real question to me is the presence of these foreclosures, these short sales, that are still on the market,’ Brown said.”
Gee, seems pretty clear to me. Any market with one out of five houses for sale a foreclosure isn’t recovering any time soon. The downward pressure on prices will be enormous moving forward.
The best thing about foreclosures is that they must be sold, and won’t sell except according to the buyer-determined market…more downward pressure comes because it is typically a cash market.
Will having so many foreclosures on the market lead to political pressure to turn California (and others) into non-disclosure states?
“‘The foreclosures and bank sales right around there are just killing them,’ Gelet said. ‘They got caught right in the middle of the madness.’”
The “madness” was what was happening with the increases in prices a few years ago. Adjusting back to historic pricing levels isn’t madness at all, but necessary and predictable.
What I’d like to see are two things:
1) Swift, attention-getting penalties on lenders and FBs who let their vacant properties fall into disrepair.
2) Severe criminal and civil penalties for enraged, infantile FBs who trash “their” homes pre-foreclosure. This is malicious vandalism, pure and simple. I would make them pay the full cost of repairs, plus double those costs in punitive damages. Can’t pay? Throw their sorry ass in jail, and bar them from ANY future homebuying or borrowing until they pay full restitution for the damages they’ve done, as well as all associated enforcement and legal costs.
These measures would force FBs to behave semi-responsibly during the foreclosure process. They would also force banks to bear the consequences of their horrific judgement in loaning money to fools and deadbeats who were unable or disinclined to pay it back. Mindful of the consequences, they might show a little more prudence with future borrowers, while at the same time the mass unloading of foreclosures onto the market - at realistic market prices - would enable numerous first-time buyers to own “The American Dream” (retch) without becoming lifetime debt slaves.
Sammy,
No offense but that’s too utopian. It didn’t work that way in past RE bubbles, and it won’t work that way this time.
There will eventually be capitulation by the banks because they’ll be forced to mark them down or get them off the books, and the houses will be sold for what they’re worth, discounted according to degree of “trashed”.
Happened that way in the early 90’s. It will happen that way this time too.
No offense taken. What I’d like to see, and what I can reasonably expect to see, usually aren’t in the same galaxy.
Read this morning in my local rag, the Tribune that, ‘there are programs available now that actually allow a buyer to buy with a zero down payment’. Here we go again. No first time buyer requirements, no location restrictions, or income limits.They will be back on the market in two or three years when the loans reset.One way to get rid of inventory and keep the market proped up! hehehehehehehe
“‘The real question to me is the presence of these foreclosures, these short sales, that are still on the market,’ Brown said.”
The real question to me is the absence of myriad vacant homes that are not yet on the market. What will become of them? Will they stay vacant forever, representing a pure wastage of American labor, materials and energy resources, or will they eventually come to the market at prices the demand side will bear?
I would love to see public policy based firmly on the words of
H.L. Menchken: “A home is not a mere transient shelter: its essence lies in the personalities of the people who live in it.”
Such a policy would recognize the desirability of affordable (but non-subsidized or socialized) housing for deserving, creditworthy individuals, couples and families.
Vacant speculator- or lender-owned houses that become eyesores due to lack of care and maintenance would be seized after 180 days, then sold for $1 to anyone who would agree to make that property their primary residence for at least five years, and fully rehabilitate the property within the first year of occupancy (and the outside within 30 days). Also, speculator-owned vacant properties would be taxed at double the rate of owner-occupied housing. Trust me, the “housing shortage” would resolve itself in no time, and the blight brought on by FB walkaways and greed-driven speculation would rapidly be remediated in most neighborhoods and communities.
Sammy,
Your proposals, if i’m reading them correctly, imply a larger government prescence.
Mike
Retail housing already has huge govt presence (think federal mtg deductions, local property taxes, and even HOA rules.)
America is pretty socialist when it comes to housing. Sure, you can buy anything you want if you have the money, but try to use it as you want (paint your house red, turn your backyard into a nature preserve,) and you’ll quickly see the power of collective action.
As a Ron Paul supporter, I’m generally a smaller-government guy. However, given the prevalance of so much personal irresponsibility in today’s society, it is not remiss for LOCAL governments to act, within reason, in the best interests of the community. I see nothing wrong with local governments acting to protect their citizens, neighborhoods, and communities by imposing stiff penalties and sanctions on speculators or FBs who blithely walk away from their obligations, or lenders who drag their feet on dealing with the consquences of their own irresponsible lending practices. By doing so, they would show that irresponsibility carries unacceptable costs, and would deter many more FBs, speculators, and lenders from contributing to suburban blight through their willful negligence.
More to the point, they would also encourage an end to the rampant speculation we’ve witnessed in recent years, which would benefit many lower-income people who have been priced out of the market.
Well, if the 80s are any guide…
Some will get bulldozed. This is close to happening now - local govts are realizing some empty housing is not an asset, it’s a liability.
Some will just rot. I’m seeing this here and there in more established neighborhoods. It’s amazing how fast a 75% complete $2M house will fall apart.
Most, though, will eventually sell low or go rental, assuming they are in viable locations. Takes a few years to fire the current gaggle of bankers and replace them with a cohort that realizes that that $800K condo is really worth only $250K.
I was visiting someone in Ojai yesterday, who commented on the peculiarity of open houses on a Friday. They had several in town yesterday, and he had never seen it before over twenty-five years of residence there.
P.S. Ojai is just up the road from Santa Barbara.
Cute little spa town. Been there a few times.
“Ojai is just up the road from Santa Barbara.”
Well, more accurate to say that it’s up the road from Ventura, which is quite a different thing. And it’s hot as blazes in the summer. Once a sleepy rural town, then a haven to counter-culture types, now “upscale” and overpriced.
I imagine more than a few late-to-the-party flippers got caught holding the bag up there.
Ojai reminds me of Sedona not the land but the feel of the place. Alternative and wealthly. Sedona maybe worse with the bus tours and pink jeeps.
I think they found a gimmick that may actually work for buyers in the 750k plus range - free hotdogs
http://santabarbara.craigslist.org/rfs/680564019.html
Wowwww ! Free hotdogs or no, in Michigan, you could get that “lay-out” on a whole 1/3 acre lot ( minus the fancy-ass pergola - that would cost ya about another $ 10,000 ) for about, say $ 90,000 in today’s market. Last year, it would have been $ 150,000, and the year before that, $ 225,000 in a nice area. But $ 775,000 ? Never. I called my husband out of the bedroom to see the pictures of that. You’d have to give me an awful lot of wine to taste before I would ever pay 1/5th of that price for that 20-year old ranch with the real cool green garbage can on the side. Doesn’t look like $ 775,000 to me…..or even a “bargain” $ 500,000…..
From the listing:
“This is the HEART of Wine Country”.
Yeah, I’m drooling over that…NOT.
“‘I don’t see any evidence that we’ve hit the bottom in California,’ he says. ‘You’re talking several years of decline.’”
Taken straight from the mouth of one of California’s most prominent housing economists…
“They don’t want to sit on the sidelines until they get caught in an escalating market again.’”
Why wouldn’t one want to sit on the sidelines until prices stop dropping at a record rate of decline, in order for the chance to get in an escalating market at the price trough? Not many folks will do this, as they will make the mistake of listening to knife-catcher encouragement specialists like this guy and buy too soon (and I am talking about numerous friends and relatives here…).
Mike Caselli, president of the Sonoma Valley Board of Realtors: “If someone is thinking of making a purchase in Sonoma Valley, now is the time to buy. They don’t want to sit on the sidelines until they get caught in an escalating market again.”
This guy is just like a barker in front of a con game. Did the reporter ever ask Mr. Caselli if he and his Realtor (TM) colleagues are buying any of those bargain beauties? It is always a great time to buy or sell a home if you are a Realtor (TM).
The median household income of Sonoma county is…drum roll please…$53K! When the median house price comes down to $175K–it was $438K in April–Mr. Caselli can give me a call, and maybe I’ll come and look at some of those great deals.
Keep the popcorn popping,
Red Baron
Right on, Red Barron. The same NAR shills that led FBs to the slaughter with their 2004-2006 mantra of “buy now or be priced out forever!” are once again trying to conjure up a contrived sense of urgency - that tactic of pitchmen since time immemorial. However, the stupidity quotient of today’s creditworthy homebuyers is considerably lower than we saw in the herd creatures who the NAR hucksters and their media border collies stampeded into “The American Dream.” The herd has been culled, and the remnants are generally wiser and more saavy than the lemmings of recent years.
“They don’t want to sit on the sidelines until they get caught in an escalating market again.’”
Pete and Repete were sitting on a fence. Pete fell off, who was left?
As a matter of practice, banks should refuse to lend to couples who both work in one of the following occupations: realtor, builder, construction worker, landscaper, hair stylist, doggie day spa, human day spa, etc. These jobs are extremely recession-prone. When both spouses lose their jobs and are mortgaged to the hilt with no savings, foreclosure is inevitable.
How do you expect hair stylists who invest in real estate as a sideline to fare?
Ya forgot something—-congressmen(women), senators, and strawberry pickers. My most sincere apologies to the strawberry pickers for being on this list.
You have definitely besmirched the strawberry pickers’ reputation.
Oh, and banker pickers too. Whoever hired these guys is sure to lose his job sometime soon.
Joe, as a matter of practice banks should also make sure that at a minimum, the borrower actually has enough income to make their monthly mortgage payment.
It boggles my mind to think that many financial institutions didn’t even bother to leap this hurdle when lending out hundreds of thousands of dollars.
Joe,
With all due respect, I work in the construction industry. Without getting into the overall specifics, I design mechanical systems in a 3D enviroment. MANY years of experience to be where I am today.
Easy with the brush your painting the industry with. You may be thinking of illegal labor framing a house or something else but believe me some great minds reside in this industry.
Mike
I don’t think anyone here is lumping civil engineers in with the schmucks who build crap shacks.
“The median sale price was 21 percent below year-ago levels in May; April prices were about 20 percent under year-earlier levels and March prices were 23 percent lower, according to the report.”
It sounds like North County San Diego prices are persistently falling at between a 20 and 23 percent annual rate.
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“‘The real question to me is the presence of these foreclosures, these short sales, that are still on the market,’ Brown said.”
The more important question is: Falling prices and how long they would continue falling. Aren’t the foreclosures and short-sales exponential function of the decline in prices in any given area?
Jas
Well, we do need knifecatchers or the whole thing will seize up and we’ll have worse problems.
We may have them, anyway.
If everything goes well, perhaps Sonoma Valley will have sustained “rapidly escalating prices” again sometime late in the next decade.
Wrong place for the above - see Jas’ next post…
“Well, we do need knifecatchers or the whole thing will seize up and we’ll have worse problems.”
Praise and blessings to the NAR for encouraging the knifecatchers to sacrifice their money to the System.
–
If someone is thinking of making a purchase in Sonoma Valley, now is the time to buy. They don’t want to sit on the sidelines until they get caught in an escalating market again.’
This guy looks like a schemer in search of “dreamers,” aka suckers.
Jas
Dr. Jekyll turned into Hyde Park…
“In Hyde Park, a gated community in the hilly suburbs of Vallejo. But the estate is peppered with for sale signs, many of which bear two giveaway words - ‘bank owned.’”
‘If someone is thinking of making a purchase in Sonoma Valley, now is the time to buy. They don’t want to sit on the sidelines until they get caught in an escalating market again.’”
Ah yes, the old V shaped bottom argument. My Realtor friend calls it his “fear of loss package”. He has used it with great success selling cars, water beds, with bedding women, and with selling real estate.
Fact is, in the last two downturns in California (early 80’s and early 90’s), after brutal downturns, real estate just scraped along the bottom for several years. Very easy to pick the bottom….and not at all like a “V” shaped recovery (that you might see on a stock chart for example) this Realtor is alluding to.
Always take the words of a commissioned salesperson with great suspicion. And shame on the newspaper for interviewing these self serving A holes.
OWP
Who are the ‘Regular’ buyers ? Are they the ones with a down payment? We need a certain amount of funny loans to wash out some of the excess. They won’t come back on the market for two or three years which is acceptable. What say the bretheren? Satisfactory?
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“‘The problem now is that we’ve been caught in a financial crisis,’ he said, adding that he wants to bring in some fairness to the way the state-mandated affordable housing program is administered by the city.”
Guess what is the median listing price of SFH in Morgan Hill? $850K! For the county (Santa Clara) as a whole it is only $599K (it peaked at $898K in March 2006). The affordability will come when prices drop 50%+ and the median listing price is $400K, or lower.
Jas
I live directly in the craphole called San Jose. My wife and I have a decent household income ($120k+) and a median price of $400k is still crazy here. We make a lot more than most people we know- especially the ones that are currently losing their homes.
That’s because a ‘median’ house here is a piece of junk anywhere else. All of the houses I see around here are going for around $600k now but if you transplanted them in Ohio, they wouldn’t break $75k.
So let’s say that houses in this area really do demand a premium, a $150-200k median listing price is more reasonable.
So while I completely agree with you that prices need to drop a ton, I think they need to drop a lot more than 50%. I for one wouldn’t buy anything out here for $400k.
–
BTW, many of these homes are monstrosities, 2500-3500 sqft, built in 1990s, 6-9 per acre. Some lucky former farmers got really rich. A friend bought one of those and I talked him into selling in August of 2005. He was very unhappy because the prices went up in 2006. He should have tried selling now.
Jas
Is he still friends with you? He should thank you! He sold about as close to the top as anyone could have hoped.
–
He is back to being friends! How times change.
Jas
The median price in Humboldt county peaked at about $330,000 and is still at $297,000. Even with regular gas selling for $4.799 and everyone well aware of food price inflation, people to me still seem anxious to buy. The only problem with their plan is that most banks won’t lend them the money. If they could get a noose to hang themselves financially with, they would.
They keep saying the market will drop about 30% and that should “get it back to a reasonable level.” In the coastal areas, prices went up 500%+ in the last few years. 30% ain’t even a drop in the bucket. In those areas, a 75% is more realistic.
In the rest of the country, prices went up maybe 85%. Even there, 30% is nothing. 45% is getting it back to previous levels.
In my eyes, housing prices shouldn’t ended up above 1998-2000 levels. At a 30% drop, housing still making money. Housing is NOT an investment and never should be.
“After cruching the numbers on his desk calculator, Borello said almost $700,000 in city revenue is lost when a property is sold at an ‘affordable price’, rather than the market rate price.”
The article mentions that the “affordable” housing sells for $225K, but it costs the developer $600,000 to build it.
I think the desk calculators in Cali must be different than the ones used in flyover country.
OK, so “city revenue” is more important than “people being able to live in the city”? Borello must have been born with the city council gene.
‘They keep saying the market will drop about 30% and that should “get it back to a reasonable level.”’
These guys are just blasting wishful BS through their MSM propaganda megaphones. Show me one convincing analysis that says 30% off a 100%+ mania price increase is a reasonable level — I bet there is no such analysis.
“Robert Brown, the Cal State San Marcos economics professor who prepares the monthly HomeDex report for the North San Diego County Association of Realtors, said he’d hesitate to predict when a seller’s market might return because foreclosures continue to pop up.”
First we have to evolve from a knifecatcher’s market, where prices are dropping at over 20 pct per year, into a buyer’s market, where a small handful of qualified buyers will have a once-in-a-lifetime opportunity to buy a California home at an affordable price. If the Japanese real estate experience 1990-2008 is any guide, the opportunity may linger for a few years, as many folks are heard repeating the warning, “Real estate is the worst possible investment.”
“We had all our financing in place. It was the buyers who couldn’t get the loans.”
Read as: “We had no problem borrowing the money to build these undersized, overpriced condos……..It was those rat-bast##d customers who dropped the ball.”
Another facet of California madness… How much gas do these fooks burn driving across the border and back?
Drivers head into Mexico for fill-ups
Prices $2 lower than in U.S. lead to 25% jump in fuel sales
By Omar Millán González
June 14, 2008
TIJUANA – At the Pemex gas station on Boulevard Bellas Artes, just a few blocks from the Otay Mesa border crossing, a gallon of Magna gasoline costs $2.54. Or slightly less, if you pay in pesos.
A comparable gallon of unleaded regular gasoline is selling in San Diego County at an average price of $4.61, according to the Utility Consumers’ Action Network.
Both Mexico and Venezuela are two of our biggest oil suppliers. Mexico can deliver oil via pipeline to U.S.
Imports from Mexico and Venezuela combined are down about 32% yoy. Refineries on gulf coast are having to compete to get shipments from Africa, Middle East, etc. to replace the oil that’s not coming anymore from Mexico or Venezuela.
Why? A combination of falling production and rising domestic use in each of those two countries. The government-run oil companies are inefficient, and then they subsidize domestic consumption, which compounds the (our) problem.
While you are down there you can also get your prescriptions refilled for pennies on the dollar as well.
“Drivers head into Mexico for fill-ups”
That’s fine if you live in Mexico and work in the U.S. By all means fill-up in Mexico. However, your U.S. auto insurance policy doesn’t cover you in Mexico. If you factor in the cost of insurance coverage to go into Mexico, time involved, extra gas burned to make the trip plus waiting for the border crossings, is it really cheaper to fill-up in Mexico?
This gas thing has a powerful effect on people’s brains. It triggers some ancient, primal survival instinct.
is it really cheaper to fill-up in Mexico?
Maybe if you live in Chula Vista, San Ysidro or IB, where driving to the border is only a few miles away.
Had a very interesting conversation last night with the father of one of my daughter’s friends. This guy works for a company that ships gasoline all over the country, and abroad. He tells me that they have not been delivering as much gasoline in the USA in part because…South American companies are paying almost double what they can charge locally. They are also in talks with the Chinese, who are willing to pay a lot more as well.
He also said that gas consumption is down substantially in So Cal. They are getting less frequent orders for gasoline from stations, as people are cutting back.
Basically what he said was that the increase in price has nothing to do with increased demand or a lack of supply. I asked what he thought the reason for the big increase was. He said speculators on Wall Street, using money from the Fed, where the reason.
I just about died laughing. I suspected this for a while, and even posted it here once or twice. But until now I have not heard an industry insider say it.
“He also said that gas consumption is down substantially in So Cal.”
I believe it. Freeway traffic today was very light for a summer Saturday. I don’t think I’ve seen it this light on a summer Saturday in about 10 years.
Commuter traffic on the weekdays is also much lighter than usual especially on the 15.
I agree greg. It’s like the old days here.
Thank goodness for those “creative” debt monetizations of the Fed.
If I read you right, the lack of demand here in the states is being offset by more demand from South America and China.
I do believe the speculation is driving prices up, but so is more demand. We (the states) are fuuked from both sides on this one. As you say, other countries are willing to pay more for gas. But they will also continue to subsidize the price so the end user will continue to consume more as it doesn’t hurt fj6pk’s wallet.
–
“‘We’re trying different things other than reducing prices,’ he said. ‘We’re trying to get a little action going.’”
Where do we get these people? There must be some machine churning out schemers. If you don’t know what business you are in and what business you shouldn’t be in how do you get to be president of the business?
Never a dull moment.
Jas
‘We’re trying to get a little action going.’”
Me, too. Been tryin’ for years.
“‘We’re trying to get a little action going.’”
Isn’t that what was happening in some Florida rentals?
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I think you might have missed palmetto’s hint.
Jas
LOL palmetto.
Me too.
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‘I wanted to buy here, but I couldn’t. I didn’t have the money.’
You lucky son of a gun.
Jas
The group Citizens for a Balanced Community … is hoping to drastically lower the amount of affordable housing units built by developers in the city … group member South County Realty Broker Chris Borello: … “It doesn’t pencil anymore,” he said. “The requirements are so stringent, the number is so tough - it just doesn’t work.” … “Buying a home isn’t necessarily a right, it’s a privilege,” he said. “You have to budget yourself to make it work. You just reevaluate things, reprioritize things. People shouldn’t feel entitled.”
Requiring below market rate units is problematic. The people in this story appear to agree that there is an issue that should be addressed, but how to do that is unclear. The statement “It doesn’t pencil anymore” is an important one as it appears to be verifyable and indicate that short of an out of control boom the law prevents profitable development.
However, instead of keeping the focus on the complications or offering an alternative solution to the housing problems out comes a statement about entitlement. How is expecting housing in what was recently a cow town to include some cheap units entitlement? How is $200k fixed or representative of entitlement? More troubling is the motivation. Since when are developers entitled to fat profits for building large lot McMansions? And what about the issue that everyone agreed is putting terrible strain on their community? We obviously are not entitled to walk around on the moon, and yet we did that. Is providing a mix of housing units so complex a problem that we are forced to restructure the government so this developer can go back to making big money building the same kind of thing in the same way?
Oddly enough California has faced these issues in a big way before. The most cogent response was Henry George’s proposal for a tax on land which we had in place until Prop. 13 swept it away. If we spent a fraction of the time and energy that goes into arguing about who should be entitled into actually solving problems then a lot of this would just go away.
–
It has been a very long time since I have read anyone mentioning old Henry. I learned a lot about Henry George from an Aussie e-friend who is a big fan. I am guilty of not reading two books that I purchased with the intention of reading. Time to dust them off.
Jas
Working people are not entitled to affordable shelter, but the city is entitled to collected outlandish fees on preposterously priced buildings?
Duncan agreed that people should not be looking at real estate in the short term. ‘Short term speculation isn’t working right now,’ he said.”
Few people, even complete idiots, would put their money in any other investment that had 2.5%/year expenses (property taxes, HOA fees, insurance, upkeep) and 6% sales fee. Short term or long term, it’s hard to win at this game….
In fact the only reason millions of people did take these “investments” is there was nothing to lose! Take the risk and hand it back to the bank if it doesn’t work out. I wonder how many of them were counting on a bailout, too! (And there wishes are coming true.)
With a sun-drenched boardwalk just a short ferry ride across the bay from San Francisco
Uh, “short ferry ride”? It’s like an hour. On the fast Baylink ferry, even.
That’s true, but it’s a fun ride. When I lived in Vallejo (by mistake, I assure you), I used to love taking the ferry over to SF. I’d get a wine (I’m a lush, you know), and by the time we touched land, we’d be ready to hit the scene. I used to strike up conversations with the fishermen at the pier, who would occasionally let me buy some fresh fish from them. That’s acually illegal because the restaurants want it all. Well, my point is that Vallejo could make itself into a very nice little tourist town if their officials weren’t so corrupt and short-sighted. All the focus on building riduculules was really, really dumb.
I also lived there, by mistake.
“People shouldn’t feel entitled.”
I nominate this as the official slogan of the new housing paradigm.
This sums up our fellow citizens: Americans feel entitled to __________(fill in the blank).
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The entitlement mentality is directly linked to democracy. Someone or something must have enabled it, no?
Jas
People voting themselves benefits that other people will have to pay for isn’t democracy - it’s mobocracy.
Excuse, but I would like to make a counter argument if I may-
When a society’s rules breaks down that the majority were willing to accept, you have anarchy. So, in order to have ca civil society, you either get the majority to follow the rules of the game, with the possibility of anyone having a chance of winning or you have a dictatorship/monarch (power of the state to force the monarch’s rules).
In the US we had rules that the majority accepted. It was the Horatio Alger myth and the Protestant Ethic(think Ben Franklin).
In truth, the only way to succeed was by theft, or clerverness, or whatever. Success was not by working hard and playing by the rules. What we have now is a break down of the rules. It has been every dog for themselves. If the elites do not follow the rules, then we will not. That is why you have seen the petty fraud in the mortgages. The non-elites listened to the talkers that SS amd Med care was bankrupt. Companies were reneging on their health insurance and pensions. So what do you thinkpeople are going to do? Roll over and die?
That’s thank to our honourable Republican President and his (now deceased) Republican Congress. Do not fret so, for Obama is a Democrat.
–
There seems to be a majority admittance that something has gone very wrong along the way. Disagreements are about what and who. I don’t buy the partisan blame game (sometimes, having been a partisan dope is cathartic).
Jas
My dad often mentioned that, when he was a kid, an education was a true privilege.. the alternative was working full time to help support the family.
These days that education, as well as many other things previously considered out of reach for most, is virtually guaranteed… entitlements.
We’ve enjoyed success to the degree that we can afford to spoil our kids and ourselves. How is this inherently bad? Does any thoughtful person really prefer that society should devolve?
No matter what the system, some people will abuse it for their personal advantage. That’s why the system includes laws. Enforce the law..
“‘The foreclosures and bank sales right around there are just killing them,’ Gelet said. ‘They got caught right in the middle of the madness.’”
No, Gelet. They got caught right at the beginning of the return to sanity.
The entire Bay Area has been ruined with ugly, cramped, stupidly designed housing. I just came back from the Don Edwards wildlife reserve (a sliver of land along the eastern edge of the bay), and read all about how there used to be flocks of geese by the millions, formidable herds of elk and buffalo, and wild oats enough for all. What do we have now? Shack after shack after road after bridge. I don’t get it. What do people like about this ugly-ass place?
Big V,
One of my frat bros is Larry Orman from my Berkeley days. I is involved in environmental issues in the Bay Area. He Has started non-profit institute that you mightwant to get in touch with at GreenInfo Network.
Website: http://www.greeninfo.org/html/boardstaff.html
Its been about 30 years since I have talked to him, but if the past is indication of the present, he is serious about environmental issues in the Bay Area.
If its of any value, mention Pi Kappa Alpha in your message and 1973 class of UC Berkeley.
I am sorry, but this is the best that I can offer.
Big V,
One of my frat bros is Larry Orman from my Berkeley days. He is involved in environmental issues in the Bay Area. He has started a non-profit institute that you might want to get in touch with at GreenInfo Network.
Website: http://www.greeninfo.org/html/boardstaff.html
Its been about 30 years since I have talked to him, but if the past is indication of the present, he is serious about environmental issues in the Bay Area.
If its of any value, mention Pi Kappa Alpha in your message and 1973 class of UC Berkeley. Fellow Frat Bro.
I am sorry, but this is the best that I can offer.
Let me know how it works out!!!
Big V,
One of my frat bros is Larry Orman from my Berkeley days. He is involved in environmental issues in the Bay Area. He Has started non-profit institute that you might want to get in touch with at GreenInfo Network.
Website: http://www.greeninfo.org/html/boardstaff.html
Its been about 30 years since I have talked to him, but if the past is indication of the present, he is serious about environmental issues in the Bay Area.
If its of any value, mention Pi Kappa Alpha in your message and 1973 class of UC Berkeley. Big V,
One of my frat bros is Larry Orman from my Berkeley days. I is involved in environmental issues in the Bay Area. He Has started non-profit institute that you mightwant to get in touch with at GreenInfo Network.
Website: http://www.greeninfo.org/html/boardstaff.html
Its been about 30 years since I have talked to him, but if the past is indication of the present, he is serious about environmental issues in the Bay Area.
If its of any value, mention Pi Kappa Alpha in your message and 1973 class of UC Berkeley. Mention his Frat Bros-Mike Marsden, Mike Rood, Steve Singer and David Jones.
I am sorry, but this is the best that I can offer.
Big V,
One of my frat bros is Larry Orman from my Berkeley days. I is involved in environmental issues in the Bay Area. He Has started non-profit institute that you mightwant to get in touch with at GreenInfo Network.
Website: http://www.greeninfo.org/html/boardstaff.html
Its been about 30 years since I have talked to him, but if the past is indication of the present, he is serious about environmental issues in the Bay Area.
If its of any value, mention Pi Kappa Alpha in your message and 1973 class of UC Berkeley. You might mention is fellow frat bros-Mike Mardsen, Mike Rood, Marty Greer, Mike Murphy and Dive Jones. If that doesn’t work, you could mention that our Frat house inducted female pledges against the wishes of the national chapter. (that should give you enough ammo to attract his attention. (also mention the monkey, spike, if I recall)
I am sorry, but this is the best that I can offer.
My third attempt to post-Ben,If you areading this, let it pass through, I am not a terrorist.
Big V,
One of my frat bros is Larry Orman from my Berkeley days. I is involved in environmental issues in the Bay Area. He Has started non-profit institute that you mightwant to get in touch with at GreenInfo Network.
Website: http://www.greeninfo.org/html/boardstaff.html
Its been about 30 years since I have talked to him, but if the past is indication of the present, he is serious about environmental issues in the Bay Area.
If its of any value, mention Pi Kappa Alpha in your message and 1973 class of UC Berkeley. You might mention is fellow frat bros-Mike Mardsen, Mike Rood, Marty Greer, Mike Murphy and Dive Jones. If that doesn’t work, you could mention that our Frat house inducted female pledges against the wishes of the national chapter. (that should give you enough ammo to attract his attention. (also mention the monkey, spike, if I recall)
I am sorry, but this is the best that I can offer.
My third attempt to post-Ben,If you areading this, let it pass through, I am not a terrorist.
My forth attempt to post-Ben are you listening?
I’m rotissering a chicken right now. You guys should try it. Here’s my secret method, which I am divulging in a fit of culinary generosity:
8 oz plain, whole-fat yogurt
1 lime
2 cloves garlic
Some ground sage
Squeze the lime and mix it with the yogurt.
Chop the garlic and mix it with the yogurt.
Mix in the sage.
Baste the chicken in the yogurt sauce and let sit for at least 2 hours in the fridge. Rotisserie on your grill with alder wood chips.
Big V,
you need more garlic and some onions and lemons. We must remember the Vamps. This should cover our bases.
Sounds like a great recipe. Thanks.
Can you bake that chicken in the oven? I will try it out and re-confirm that your culinary experiment is reproducible in a different environment. Would non-fat yogurt be acceptable too?
Oops, I forgot a really important reagent in my yogurt sauce for rotisserie chicken:
Some ground ginger
Mix the ginger along with everything else into the yogurt before basting the chicken.
Oh, and one more thing that’s good to add too, but I didn’t use any today because I wasn’t in the mood (they can be a little strong if you’re not into it):
Some celery seeds
You know the drill by now.
Why your menu sounds fantastic, I will heat up some left over chili with tons of catsup (love vinegar). Little cheese on top with sour dough bread and a big glass of milk.
Hey, it’s not cold pizza and beer.
lol
I was following you until you got to the milk part. I like milk, but never drink it with chili and sourdough. To each his own, though. Bon apetit.
BTW, the chicken was oversmoked, but generally delicious.
I have two drinks for the last 60 years. Milk came first and I still think of it like water, its the universal drink. And there is whiskey and bourbon.
Wine is only for cooking, not drinking.
lol
Big V,
well you are crossed off my list. No one, and I mean no one dis’s my milk!!!
LOL, LOL, LOL…
Ah, bourbon. I have a bottle of the best bourbon of my life, right now, in my house. Distilled by what was once Willett brewery, then aged in white oak barrel number 8 (a fateful barrel) for 25 years before being bottled and sold to me through BevMo for a high price. It’s like caramel in a bottle.
I mean “Willet distillery”. It must be the Beaujolais.
Hey, I just killed a bottle of Martinelli’s Gold Medal Sparkling Apple Grape juice - the bottle looks like wine. Not bad for Utah.
Big V,
unless you drink alcohol, whether bourbon, whiskey, vodka and etc. straight(it’s not worth buying the brand names), do not waste your money.
I personally can not stand alcohol straight. It must have some other mixer, 7-Up, apple juice, orange juice or V-8. I my case the cheaper, the better. It doesn’t make economic sense to buy good booze, if you do not enjoy it straight!!!
And I still say wine is only good for cooking!!!!!
I did see at the park, however, several cute birds, one giant unidentified mammal, and one vestigial phone booth (with dial tone).
Big V, that mammal is what we call a realtor (TM). They’re going to become a rare species someday. LOL!!
For a little light humor for a serious situation, I offer Chris Rock…
http://www.chrisrock.com/
lol
That lottery ticket one is pretty funny.
said Mike Caselli, president of the Sonoma Valley Board of Realtors.
forgot to mention that 40% of the May sales were investors or non occuplied SFR, and that’s only those that were honest on their mortgage app’s. Plenty of newbe investors in the Santa Rosa foreclosure bubble right now, going to be fun to watch all these rentals come to market!!!
Looked at a home listed for 304K, built in 1951 never updated, orginal everything except mold on the bedroom walls, trashed yard etc.
The so called investors were bidding up the place and it went for $319K. They must think they can just put up some new sheet rock and rent the place out, at best they might get $1400 a month.
“‘Very sadly there has been great pain inflicted on some people who were (whether they understood it that way or not), effectively speculators, speculating that the market would always go up a double digit percentage a year,’ said Herb Heil, a long-time Valley Realtor. ‘However, there appears to be greater realization that there are no sure things and that there is always an element of risk.’”
Herb, you are slim bucket.
Visited several open houses in the San Jose West/Saratoga area. It looks like there is still lot of demand for affordable housing in the south bay area. The prices are still sky high and the lower priced ‘upgraded’ shacks are attracting lot of crowd. It looks like homes are selling very well in these parts of the valley. So, my questions for bay area watchers are 1. Why are prices so high? 2. How are people able to afford these kind of prices? 3. Who are buying these homes?
I’m seeing the same thing you describe. Houses are still ridiculously overpriced in San Jose and elsewhere. Meanwhile our rent is still low. I’m starting to think there are just too many people and too few houses.
If that were the case, your rent would be high.
But I don’t rent a house. I rent a condo - those don’t seem to be doing as well. Still waiting…