All The Different Reports Are Supporting The Same Story
The North County Times reports from California. “North County housing deepened its slump in June as foreclosures dictated the market and high-end housing prices begin to show weakness. The median price for a home sold in June tumbled 26.5 percent from a year ago to $490,000, according to the North San Diego County Association of Realtors’ monthly report.”
“‘It just seems all the different indices and all the different reports are supporting the same story,’ said Robert Brown, a professor at Cal State San Marcos who prepares HomeDex. ‘You’re seeing more and more foreclosed homes and prices are falling even more to sell them.’”
“For the first time since the start of the housing downturn in late 2005, expensive homes began to feel the effects of a weak market. Sales of North County homes priced $1.5 million or more crashed by 50 percent in June from the same month a year earlier.”
“‘Ultimately, I don’t think anybody is going to be immune to the declining market,’ said Kris Berg, a real estate agent based in Scripps Ranch.”
“Fannie Mae instituted guidelines June 25 that limit the loans a homeonwer can secure when purchasing a second home. As home prices plummet in San Diego County, local real estate agents say more homeowners are looking to purchase similar homes for hundreds of thousands less and then let their original home fall into foreclosure.”
“‘It’s the duck and weave,’ said Christopher Thornberg, an economist with Beacon Economics. ‘You’re looking at (a similar house) down the block listed at half of what you bought (your house) for, so obviously the best move financially is to move from your house to that one.’”
“‘It’s definitely tightening the market because these same people pretty much need to come up with 20 percent down,’ said Dave Hopkins, a mortgage broker a brokerage firm in Rancho Bernardo. ‘And then, if they don’t have another $20,000 laying around, they’re just knocked out of the picture, so it’s definitely slowing a lot of really qualified buyers from coming into the market.’”
From Military.com. “The Marine Corps gunnery sergeant and his wife felt they’d found a little bit of paradise in the San Diego area in 2003 when they bought their $304,000 house and went to work transforming it into the home of their dreams.”
“That the 15-year-Marine could receive orders for a move didn’t trouble them. They would just rent out the home they loved — and, if absolutely necessary, they’d just sell and make a healthy profit. But it didn’t work out that way.”
“The Marine wife now trying to offload her San Diego house says that what is ‘most disturbing throughout the process [of dealing with their crisis] is I felt there was no one who could help us. Our lender treated us as if we were going into foreclosure … as if we owed back payments or something.’”
“‘All the advice we heard was ‘talk to your lender,’ she said, ‘and I’m trying to talk to the lender. They never take my phone calls, so I always leave a message, or [they] ask if I would like to speak to another person. And when I do talk to someone, it’s always, ‘it’s not our problem. There’s nothing we can do to help you until you’re behind two months [in mortgage payments].’”
The Daily Bulletin. “The owners of the home at 9140 Highland Ave. don’t have to sell their property. The Alta Loma home was built in the 1970s and has been on the market for about 90 days.”
“But they want to move to Arizona, and the ailing market has made it next to impossible for them to sell the house for the amount they believe it’s worth. So, they’re going to be here awhile.”
“‘They’re victims of a market that is dominated by a number of distress sales,’ said Craig Flint, real estate agent for the property. ‘If they don’t drop their price, their decision not to will create a situation where they’re going to stay where they are until the market heals.’”
“Flint is the third real estate agent the owners have brought on to sell the house. There have been no offers on the one-story, four bedroom home, despite it’s location in one of the most well-established neighborhoods the region.’
“The owners want to sell for $475,000. Flint said it just won’t sell unless it’s priced under $400,000.”
“‘I’ve been trying to convince them, but they’re an older couple, and they’re looking at their home as their nest egg,’ he said of the owners who are in their 60s.”
“The house is a block away from Beryl Park, Flint said, and is just over a mile from a Starbucks, Vons and Washington Mutual. On the downside, the home’s proximity to the freeway. ‘The only way a buyer would come to this home is if it has a lot of upgrades or if it’s priced reasonably well, and neither of those are happening now,’ he said.”
The Californian. “A few years back, Rosa Sanchez could enjoy gazing at the corner lot across the street. In 2005, the Laurel Heights property was sold to a family that couldn’t keep up with the monthly payments. Now, a bank owns the home. Because of the foreclosure crisis, empty, neglected homes are becoming more common in the Salinas area, according to city code enforcement.”
“‘It’s the first house people see when they come into the neighborhood,’ Sanchez said. ‘That used to be a good thing. Now look at it; it’s really bad.’”
“In the week of June 24 alone, Monterey County saw 126 foreclosures, the majority in Salinas and Seaside. So far this year, the county has had 2,032 foreclosures, up from 510 in the same period in 2007, said Carol Crandall, a real estate broker in Salinas, who has 67 bank-owned homes on the market.”
“‘We have never had this situation before,’ said Cliff Hylton, the city’s weed abatement officer. ‘Every day I go out, I’m seeing new properties with overgrown lawns.’”
“During a one-week period last month, Hylton had to contact more than 30 homeowners for fire code violations, most of them were banks. ‘I used to send these letters to people, but now I’m mostly sending them to banks in Pennsylvania and Florida,’ Hylton said.”
“‘Kids are having parties in vacant houses,’ Crandall said. Teenagers often find a vacant house to throw parties in for a few days, after which they leave the interior of the house in shambles, she said.”
The Contra Costa Times. “Without exception in the Bay Area, the number of foreclosures in June exceeded the totals for the same month the year before. For example, Alameda County and the Bay Area reported twice as many foreclosures in June 2008 compared with June 2007.”
“Contra Costa County had 50 percent more foreclosures on a year-to-year basis. The nationwide foreclosures were running 53 percent higher than the prior year. San Mateo County foreclosures totaled about 600 - nearly quadruple the levels of the year before and the biggest annual percent increase in foreclosures in the Bay Area.”
“The East Bay and the surrounding counties remained the worst of the worst in terms of foreclosure problems, the RealtyTrac report showed.”
“Jeff Michael, director of the Stockton-based Business Forecasting Center at University of the Pacific, said he has not witnessed much indication that the horrid housing market in that part of California has begun to improve.”
“‘The rapid decrease in home prices is still working its way through the system,’ Michael said. ‘I haven’t seen a real slowdown in banks taking back homes.’”
“Even worse, the marketing efforts by the banks have created a new downward spiral for residential values. ‘Banks have no such attachment to the home,’ Michael said. ‘They want to get rid of them. They are aggressively selling those homes.’”
The Riverbank News. “Foreclosures have hit Riverbank hard like every other place. Driving around town, you cannot help but notice the forlorn signs, the empty homes sometimes located several in a row, the once green lawns turning brown in the heat.”
“Estimating the numbers of foreclosures within the city is difficult. But the City of Riverbank has a map compiled from title company reports that attempts to show the number and approximate location of foreclosures.”
“‘We have 191 dots on this map. It needs updating. This is a figure from three weeks ago. There are more coming in every day,’ said City Clerk Linda Abid-Cummings.”
“While they appear to be clustered in the newest and most expensive area of residential development, foreclosures are scattered all over town. Some of the dots even lie in the long established River Cove subdivision and the oldest parts of the city to the northeast between the Stanislaus River and Patterson Road.”
“Estimating 3.5 people per household, that means 700 people or a sizeable chunk of the city’s 20,000 residents are looking for a new home, Abid-Cummings added.”
“Police Chief Tim Beck acknowledged some investment owners and property management companies have called about burglars and squatters and the police ‘deal with reports’ as they come in.”
“‘But there are so many foreclosed homes around, some have signs and some don’t, there are too many for us to patrol,’ Beck said. ‘We can’t be trying all the doorknobs. We tell them it’s their property and their responsibility.’”
“Paying a mortgage and preventing foreclosure also came up at a June 26 money management clinic sponsored by the City. The bank or other financial lender, they said, is as reluctant as the homeowner to foreclose and take the house back. There are so many houses on the market, prices are depressed and they will lose a lot of money on the sale.”
“‘They don’t want your house back. They cannot sell it. They are more than willing to negotiate,’ said one speaker.”
“The city has no ordinance requiring a lawn be kept green, noted Neighborhood Improvement Officer Michelle Garcia, only that weed and grass be no taller than six inches for fire safety reasons. ‘So, if they mowed just before they left, it will stay short and just turn brown,’ she said of neglected lawns.”
“And then, if they don’t have another $20,000 laying around, they’re just knocked out of the picture, so it’s definitely slowing a lot of really qualified buyers from coming into the market.”
Come again? If they don’t have even a 5% downpayment, how are they a “really qualified buyer”?
My bad. They’re looking for an additional 5%, up to 20% total. Not as unreasonable a statement, but them’s the new circumstances.
It’s called a “reserve” requirement. It’s the money the lender likes to see you have sitting in the bank after the deal is done. The idea is if something happens to you you’ll still be able to make the payment for a few months until you get back on your feet. Back in the day it used to be 6 x PITI, maybe 3 if you were solid gold. Then it went to two months, one month, then nothing. Looks like we’re back to the ‘ol 6 month requirement.
Yeah, but they’re still not requiring you to have more than 20% total between the down payment and the reserves, so we haven’t gotten back to truly “strict” lending yet.
That’s not likely to happen, at least not for any prolonged period of time. The number of people that can afford 20% down payments is quite a bit smaller than the number of people that can afford the homes through some affordability product. That is where the subprime thing started in the mid 1990s when it worked. There is always pressure to expand markets as far as they will go without breaking, so that point will be reached in time. Subprime didn’t become a mess until bad appraisals and screwy lending entered in to the picture.
“The number of people that can afford 20% down payments is quite a bit smaller than the number of people that can afford the homes through some affordability product.”
Maybe I’m not hearing you correctly but if lenders would stick to the 20% requirement, homes would come down in price to such a level that we wouldn’t NEED affordability products.
These “products” created competition that drove prices up.
Memories are so short, aren’t they?
The other 20 grand is in addition to the down payment of 20%.
Isn’t that sad? It just breaks my itsy-bitsy little black heart. Me and my 20% are happy not to have to compete with these dopes.
Read the whole article carefully. What they’re trying to do is belatedly reduce potentially fraudulent activity. The mortgage broker comment conveniently overlooks that many of these second house purchases may be fraudulent, hardly my definition of “qualified” buyers.
“It’s the duck and weave,” said Christopher Thornberg, an economist with Beacon Economics. “You’re looking at (a similar house) down the block listed at half of what you bought (your house) for, so obviously the best move financially is to move from your house to that one.”
“Purchasing a new home knowing that the primary residence will fall into foreclosure raises legal and ethical questions, real estate agents said.”
“It is a federal crime to lie on a mortgage application with a federally insured lender, such as Fannie Mae.”
“Fannie Mae’s new guidelines require borrowers looking to purchase a second home to have at least 30 percent equity in the original residence, or plenty of cash reserves.”
Damn, I sold Fannie Mae short around 47 (years ago) but got scared and bought it back around 43. Oh well, life is full of missed opportunities.
stick a fork in fnm, its done
“It is a federal crime to lie on a mortgage application with a federally insured lender, such as Fannie Mae.”
OK, where are the prosecutions?
Short on Sympathy
http://time-blog.com/real_clear_politics/2008/07/short_on_sympathy.html
okay, confess. . . . how many of you got all beared up this morning?
Many hedge funds will fail. Why would anyone treat this kind of business as an emotional thing?
I live in San Mateo County. So far this place seems to defy gravity. Good to hear it’s finally succumb to pressure.
Also good to hear the next time I visit I won’t be out hotel charges. I’ll just look for the house with the tallest weeds.
Ha!
San Mateo Co is where I live as well. I track this stuff every week. I see that this past Jan there were about 850 pre-foreclosures and now there are about 1540. Here on the coast there now about 45 homes in pre-foreclosure. That’s jumped up from the five or six back in Jan. Now we are starting to see the abandoned homes in neighborhoods here and there.
It’s a small market for sure. So small that I frequently run across people I know who are “on the list” on Foreclosure.com. Many were just trying to get into the market before, well you know the line, “priced out forever”. But there are a few that are this list due the ‘regular’ bad crap that happens to people, divorce, illness and job loss. For most of these people, even the ones who made stupid financial decisions, it’ll never be the same for them. They are losing the house and have to move and start over. And no one can believe it’s happening to them.
But in general, the denial is still very strong here…. even as Rome burns.
“‘It’s the first house people see when they come into the neighborhood,’ Sanchez said. ‘That used to be a good thing. Now look at it; it’s really bad.’”
I went for a 5 mile walk on Tuesday through a neighborhood I hadn’t been through in at least 3 months. Before all the lawns were green and the houses maintained, now lots of browning yards. Best were the ones where the lawn was brown but a new Benz or BMW was parked in the driveway. Bet the car is leased while no mortgage payments are being made. The worst part here in Salinas and Seaside is the affordable house issue. Who wants to live in a mixed neighborhood with those who purchase property and move two families in, keep toys and other things in the yard all the time, have lots of kids throwing things around in the street scratching your auto, don’t water the yard, etc. No, if I’m paying full load then I want my neighbors doing the same.
I’m glad the lawns aren’t getting watered. It’s a waste of water.
Hear, hear! No lawn here — just a xeriscape.
I think many CA HOA’s do not let you xeriscape
even in phoenix some areas no cactus.
Zeroscape?
I was there when she made that comment. For some reason the reporter did not print the entire response so here it is,
“‘It’s the first house people see when they come into the neighborhood,’ Sanchez said. ‘That used to be a good thing. Now look at it; it’s really bad.’”
She went on to say,
” And I am a lazy fat pig that will only complain and complain and never do anything about it because it is always somebody else’s problem and I expect to be taken care of.”
Then she got political and said,
“Vote for Obama, he is all about change and I need me some free money”
I was asked to leave when I told her to move back to El Salvador. They didn’t think my comment appropriate even when I pointed out her bumper sticker that said “I love El Salvador”
She sounds like some of MY neighbors. Does she have clones here in Tucson?
calex sounds like he/she’s channeling for az_owner. No offense, just sayin.
No offense taken. It might not have been her car. There were 4 cars on the lawn and 5 in the driveway. Her car might have been in the garage if it fit through the sliding glass door they put in the garage. I guess I should be more PC until I know all the facts.
Ya think? AZ bashes Obama at every possible opportunity. Must be a member of the Cindy– date ‘em when they’re still married– clan.
All the lawns are brown
All the lawns are brown
And the pool is green
And the pool is green
I’ve been for a walk
I’ve been for a walk
On a winter’s day
On a winter’s day
I’d be safe and warm
I’d be safe and warm
If I was Ken Lay
If I was Ken Lay
California scammin’
Califronia scammin’
On such a winter’s day
Stopped into a bank
I passed along the way
Well, I got down on my knees
Got down on my knees
And I pretend to pray
I pretend to pray…
LOL! Good one!
“The owners want to sell for $475,000. Flint said it just won’t sell unless it’s priced under $400,000. . . . I’ve been trying to convince them, but they’re an older couple, and they’re looking at their home as their nest egg,’ he said of the owners who are in their 60s.”
I always thought that the concept of a home as a nest egg meant that if they planned responsibly their house would be paid off by the time they retire. The concept has become so perverted in the last decade. No other generation had such unrealistic expectations about profits from the sale of their home. Why do they think they are so special and better than those that came before them and will come after them.
Ask them what they think they can get for their kidneys…
Same logic applies.
This is the part that stuck with me.
‘The only way a buyer would come to this home is if it has a lot of upgrades or if it’s priced reasonably well, and neither of those are happening now,’ he said.”
The realtor is still thinking upgrades would make a difference. The other grim reality they will sone be facing is how bad people eat in on over improved homes. Granite and stainless have zero utility. Banks will soon see it that way as well.
Eat it on over improved homes.
I’ve been checking the value of my “starter” home ala tile counters against my sister’s fancy granite upgrade (with 800 more sf) and according to Zillow, what used to be a 300K spread has now dropped to below 100K. Very interesting….
I imagine there are a lot of people in this situation, who thought in the last few years “Whoa, I don’t need to save so much money for retirement. My house is worth so much it doesn’t matter.” Well, they could hold on to the house for another 20 years. Might be worth close to what they’re asking by then.
Really, though, I wonder how many sellers are in this situation. I think the next year or two is going to be a big mental readjustment period for these people when they realize that housing prices are not shooting back up, and they mourn the loss of the $350,000 they could have made on the house in 2008, but have no better offer than $225,000 in 2009.
I made the comment a couple weeks ago about the “mental adjustment” process, and I agree with you. We’re solid into the acceptance phase of konowing house prices can decline. The next phase has to do with accepting that they’re not coming back any time soon.
Can you say wave after wave of new foreclosures? The REO Speedwagon is going to be with us a while, so get used to it.
We had to go through our own mental adjustment when we sold a house in April. Seriously it was like going through all the stages of grief. But I saw that things were only going to get worse so we took what we could get. And I’m glad we did. I’m convinced that if we tried to hold out for more we would have ended up getting much less. Judging by the still high prices and the trashed foreclosures, we’re in the denial and anger phase. Should be interesting when we get to the bargaining and depression stage.
Coincidentally, we lived close to Riverbank, which is mentioned in the last article. That whole area had a bunch of new homes. I suspect our landlords from Riverbank ended up foreclosing. Our landlord was a tortilla distributor, and I never could figure out how they could afford three homes.
Hey, my new landlords own a restaurant called The Tortilla Factory. I should check that place out. Show up and be like “Can I have the tenant discount?”
Saving for retirement isn’t as easy as it’s often made out to be.
I understand the financial ruin that unexpected job loss or disease and/or disability to yourself or a loved one can cause. Other than those exceptions, however, I cant really feel sympathy for poor planning and not living within one’s means. This whole concept of funding your retirement by passing it on to the next generation in the form of debt seems very selfish. It just puts the next generation into an even worse situation than the one you were in. I just couldn’t find it in myself, much less feel entitled to, create bigger burdens for others than I had to endure.
I think it’s okay for people to spend their retirement any way they please. Yes, it is very thoughtful to take care of your children, but shouldn’t be viewed as an expectation.
To my knowledge, debt is never transferred to one’s children, but is a lien against your estate. If the estate’s value is zero, then it might even be to your advantage to maximize debt if you knew you were dying soon.
I think Tim was referring to the massive mortgages that Boomers expected Gen Xers to take on.
True. I was referring to the sellers’ feeling of entitlement to a higher than historic rate of return on the sale of their home funded by debt of the next generation in the form of the mortgage taken out by the potential buyer they are seeking. I understand funding retirement can be difficult, but they dont seem to care about how difficult it will be for such potential buyers to fund their own future retirement because of the massive amount of indebtedness the sellers are asking them to take on at this stage of life.
I guess I read too quickly…but I agree completely. Especially after they fought so hard not to be taxed for their entitlements…the costs just got passed along to the next generation.
Tim: Well stated!
~Misstrial
“The house is a block away from Beryl Park, Flint said, and is just over a mile from a Starbucks, Vons and Washington Mutual.
Don’t count on that Starbucks could be bye bye with all the closings.
Because they’ve been convinced they are “the greatest generation.”
I think the greatest generation were the WWII folk. They are in their 80s now; maybe dead. What generation does a 60-something belong to? A bit too old to be Boomers. They’re one of those generations that has fallen through the cracks. I guess I feel sorry for them in a way. They don’t fit in anywhere, like orphans.
They’re called the Silent Generation. They came after the Greatest Generation, but they were born before the Baby Boom cranked up.
Here’s some backgrounder on the Silents.
Hm, interesing. According to that site, us Gen Xers are likely raising kids who will turn out to be much like our grandparents, who were GGers. Yet another data point backing up my theory that my generation is really the best one ever.
Another thumbs up to Big V for throwing us Gen Xers a bone. Perspective is never lost on Big V, or her generation for that matter, and I for one appreciate it whenever someone toots their own horn. Silly sally, you are one sassy lass! May I have another!
The Silents were good folk. I’m married to one. But one thing I notice about any generation getting into their sixties is the tendency of some stubbornly self-serving notions to take root in their minds. I’m 59 and hoping to fight this off as long as I can.
I thought I should add: one thing that may really bite in this recession is that there may be larger numbers of older people who haven’t saved enough, or maybe lost money in the tech bubble or housing bubble, who are going to be forced to work for more years than they hoped.
I can just see in the new few years more and more old people standing on street corners waving those signs around “Mattress Blowout” “Subway Sandwiches: $4.50 for 12″ “Pulte Homes at 2000 prices!” …. Well, at least the elderly can probably hold the signs still enough so people can read them.
That was the point I was starting to make up above. Instead of getting a defined benefit pension from an employer, workers have been steered into 401(k) and 403(b) accounts. Quite often, these are very heavily weighted toward the stock market, which, as we know, doesn’t keep going up, up, and up. It can go the other way, and for a long time.
Add this to real wage growth being flat for many years, and tremendous increases in the costs of housing, education, transportation, insurance (particularly health insurance), and health care, and you have a tough situation. There are a lot of hard working, responsible people who just don’t have much left over for retirement savings.
I’ve recently been thinking about health care costs. Do you think that the availability of easy credit may have contributed to the increase in health care costs, just like everything else? If there’s one thing that people are willing to borrow for, it’s their health.
Since insurance is what governs reimbursement for most people, doctors set their rates based on that market force primarily. For the ones that don’t take insurance, then the limitation is what people can afford to pay out of pocket.
The same applies, to varying degrees, to hospitals, pharma, and outpatient services…but boutique clinics for elective procedures make the most money in all of medicine (ie beauty related surgery).
The money flows everywhere. When ben talks about deflation I try to think about Japan.
They described it as 20 years of price destruction. So, salaries drift down even in medicine. Slower but downwards.
Also think about this in school costs. The universities are money pigs so if you can heloc the cost, it goes up. Bush of course signed that misguided legislation to increase student loans. The schools will just increase costs to eat that money. Salaries, new buildings like sports stadiums or some small amount will do something useful.
Yeah, I expect that as well. And sorry about yesterday.
On Oprah an infertile couple heloced their home to pay for fertility stuff. 30k a month!
I was at an Xray place for med tests this week and three spanish speakers had interpretors with them.
It was a premium hospital.
Actually, student loans are getting hard to come by. The rates that could be charged on SL’s are low enough that lenders just decided to forego them altogether. Too much risk chasing little reward.
Think about how that reduction in lending coupled with the death of helocs is going to impact the availablity of college educations.
I’m now at a private university. It’s very different then working for a UC. For one thing, if I call extramural accounting or gifts, they answer that phone promptly. Same with the Dean’s office >; )
Quite often, these are very heavily weighted toward the stock market, which, as we know, doesn’t keep going up, up, and up.
Bbbut..but…stocks always go up! Just like houses! It’s my birthright as a low-information American to blindly believe these things and not have to pay attention or do research. Don’t interrupt me with that boring financial stuff while I’m watching Access Hollywood.
Or had serious health issues deplete their funds, or bad divorces or other such natural catastrophes.
It isn’t *all * about being bad with money.
Some got the carpet pulled out from under.
Repeating some of my usual drivel here: there is no such thing as “enough” savings, when we start talking about retiring a generation whose sheer numbers overwhelmed both its predecessors and its successors. Too many boomers trying to retire, not enough other people to provide the goods and services. I grant you, some were particularly stupid in not saving much at all, but those who did save are now just part of the big casino game where everyone is trying to chase work-free money. I am still OK, none of my mortgage clients is in default blah blah blah, but not everyone can sit around and clip coupons (or cash mortgage checks, as the case may be)
They are now asking 429,900 according to redfin. The agent is right about what the ask should be.
I know the area well, and I would not touch that place now that the freeway is right next to it.
http://www.redfin.com/CA/Alta-Loma/9140-Highland-Ave-91701/home/3276701
Anything more than $150K for that POS is outrageous. One of the most upsetting facets of this housing bubble are the elderly who paid virtually nothing expecting young families to come along and finance their retirements. Really can you imagine taking on a $4,000 mortgage payment to live in that dump?
In older neighborhoods you will probably see this kind of stalemate for a few years. That is what I am seeing in my area.
The people that bought more than 7-8 years ago can hold out for a long time - absent a severe financial reversal - because they bought at probably 1/3 the current asking prices.
Even in older neighborhoods though, most of the residents have not been there for a really long time. Of those that have, many have HELOC’d or cash-out refied. For instance, in Willow Glen (an old San Jose hood that is considered desirable), the median years in residency is only 3.8. Also, only 38% of Willow Glen residents have been there more than 5 years. I have found similar numbers for every Bay Area neighborhood that I have checked. So much for the argument that Prop 13 keeps property values permanently high by discouraging people to move.
That analysis is overly simplistic. Just to point out an obvious problem, what you say suggests that 62% are long term residents holding on strictly because of Prop 13.
I’ve lived in my Silicon Valley home for more than a decade, and most of my neighbors were around for decades before me. Every street varies, but the impression I have is that there are a lot of easygoing folks here who never would have avoided being squeezed out by the emerging tech hegemony without Prop 13. It really breeds resent, too. I got a great deal relative to this bubble situation, but back in the mid 1990s I still payed way too much because of Prop 13 and pay roughly and order of magnitude more tax than my neighbors, except for the recent ones who pay and order of magnitude more than me. The whole Prop 13 system is sucks and is severely, visibly corrupting.
I lived in NJ and the high property taxes on old people sucked as well. Not sure there is a happy median.
Prop 13 is unfair but NJ… oh that is a mess.
“The whole Prop 13 system is sucks and is severely, visibly corrupting.”
But on the other hand, it might work out very nicely for CA renters waiting for the chance to buy at fire sale prices, as the Prop 13 basis is locked in at purchase and capped at 2 pct annual increases. This explains why some long-term owners in the Berkeley hills pay lower property taxes on million dollar homes than do Richmond condo owners living on the edge of the slum.
All told, I agree with you that Prop 13 is a sucky law that only Californians could love, but you may as well make it work for you if you have to live with it.
No, only 38% are long-term residents.
The people that bought more than 7-8 years ago can hold out for a long time
It doesn’t matter - the market price is set by those sales that DO occur, so their house value drops whether or not they act.
No, I can hold out for a long time. I bought in 96. Paid $307 w/pool all new construction. Mortgage $1695.00 (That’s 5.25% fixed on $307K. Looks like a good rental amount for a 5 bedroom 3000 sg/ft house w/Pool in San Diego? (with realtard pickaboo ocean view) I owe $281 and even if it drops to $200 which would be 1985 prices would I walk away? Not. My home as much as I like it is just a place to live.
Now if we start talking rents at a $1000 per month for the same thing and it appears that they will persist for an extended period I might think twice.
Interesting, for the first time I thought “Would I walk away” maybe, it depends if I still have a job or not and what it paid and how much the house was worth as I could pay off the house tomorrow if I so choose.
Hi cfoofmofo:
You are in the minority. As I mentioned above, only about 30-40% of Bay Area residents are “long-term” (lived in their neighborhood for more than 5 years). Of those, some of them are renters, some of them are owners who have HELOCed themselves to the bone, and some of them are people like you who just didn’t get involved in the bubble. The value of your house probably will not go below the price at which you bought, but it will go way below it’s current bubble price.
Somehow for people $475000 became normal as a price of house. Nobody cares that it is almost half a million, and pay that much money for a house in Salinas, or some city in Arizona, or even in San Bernardino? I think normal human should consider those places as “goolag” where Stalin was sending inteligencia to die in Russia…
Even living in Los Angeles should be considered punishment itself and paying $4000 per month for mortgage to live in a jail ?
Off topic here.
I’ve noticed NYCityBoy hasn’t posted recently. Is he on vacation? Is he okay? Does any of the fellow NY bloggers know?
I have no clue but it just isn’t the same without him, sniff sniff. exnnvmortgagebroker hasn’t been around much either. Now I’ll really be sad if Olympiagal goes on vacation.
Wicked,
I feel like I’m going through withdrawl. One of my daily addictions was to read what pithy comment he had made. NYCityBoy, please come back. I need my fix
My stuffing vegetation up peoples a$$es wasn’t pithy?
I know. What about my comments? I guess mine are too compelling for simple “pithy”. Now where’s my Pullitzer?
I’m sorry if I didn’t sniff, sniff after I said you weren’t around much. You do have a rather piggish charm.
And no I am NOT flirting with you. I am not about to anger Mrs exnnvmortagagebroker who has a whole closet full of joshua trees at her disposal.
Maybe nycboy had to relocate. He will return.
Hate the break the news to you, but Olympiagal is on vacation. In Utarrr.
I chatted with him a few weeks ago. We both allowed as to how bored we are getting with the whole thing. He said he didn’t care if he ever bought another house.
Hmm….people getting bored with it…Sounds like a buy signal to me.
“‘They’re victims of a market that is dominated by a number of distress sales,’ said Craig Flint, real estate agent for the property. ‘If they don’t drop their price, their decision not to will create a situation where they’re going to stay where they are until the market heals.’”
There’s that ‘victim’ word for the millionth time, I wonder if one of my favorite words… ’splat’ can be far behind.
“For the first time since the start of the housing downturn in late 2005, expensive homes began to feel the effects of a weak market. Sales of North County homes priced $1.5 million or more crashed by 50 percent in June from the same month a year earlier.”
This is where the lower end of the San Diego market will really get crushed. Low end housing will not sell for more than higher end housing, and falling prices at the high end will bear down on the low end like snowpack on the top level of a glacier compacting the ice at the bottom into beautiful blue crystal.
It’s already getting crushed. My former neighborhood is already down to (asking) 2003 prices and nothing is selling. Chula Vista, City Heights, Encanto, Spring Valley, Southeast, Rolando, Golden Hills and all the no so great SD neighborhoods are toast. Stick a fork in them, done. Houses that were selling for a half mil in 05 are down to $299k asking and NOT selling.
Unfortunately my Mom houses are going on the market. Not my idea, I would rent them. My sister is about to get a rude awakening as to how much those properties are worth.
Getting crushed in Boston, too. All the action is at the bottom of the market, according to Redfin. avg./median selling price is up to 50% lower than avg./median list price.
Realtors confirm. The top end is constipated.
Methinks someone’s been reading National Geographic.
eh?
The glacier thing. I think that was in NG recently.
right, nice simile
The glaciers on Mt. Shasta are growing. Wonder if we’ll get the truth now that theWeather Channel has sold ???
No. But I do fondly recall a childhood trip in a humongous snow coach out onto this glacier, where I learned about blue ice.
Ah yes, the Icefields Parkway! I used to visit some customers in Calgary and Red Deer and worked a drive on the parkway into almost every trip. That’s a great place - highly reccommeded for any HBBer - stunning scenery - endless mountain peaks. Next year’s vacation will be to return to ride the rails - VIA on the CN through Jasper and the tourist specials on the CP through Banff.
Thanks for posting something to remind me why I work - and save.
Edgewater,
If you should happen to read this, could you post an itinerary for someone who annually kicks herself for not taking the TransCanadian rail route before they closed it down? I’d so love to just sit and look out a window before it all turns into condos.
(Or contact me at dvsntt at bnis dot com?)
Thanks so much.
I think next spring the bottom falls out of the mid-to-high range. It’s had all the same signs as the low range: a drop in volume, followed by increasing pressure by must-sells.
“…Flint is the third real estate agent the owners have brought on to sell the house. There have been no offers on the one-story, four bedroom home, despite it’s location in one of the most well-established neighborhoods the region….”
This is going to be the downfall of a lot of folks who in reality could get out and also a reflection of the market. If the house is trash in a trash area\location(ie: on a busy street, corner lot, city) that no one really wants then the price is dropping like a rock…however everything else is going for these crazy wishing prices…what these milkweeds don’t understand is that when the crap is listed and/or sells it affects your comps…
The folks in this article could make out like bandits and pay cash for something in Az. and be in probably a better situation, but they rather sink with the ship waiting for their payload to come in…
I’ve seen it before and it didn’t end well…
The house won’t sell, so it must be the realtors fault…
I can muster a bit of sympathy for some of the remaining realtors with integrity, that no doubt are telling their sellers to lower prices, but the sellers won’t listen. Maybe if Mr. Yun would provide some cover for the front line folks, instead of setting the expectations that happy daze are soon to return, a lot more sellers would lower prices and we’d start to see something besides stalemate.
Sadly, Mr. Yun is not the only economist who caters to the lowest common denominator.
Nope…nice thought but it won’t help…in that conversation there is always a “but my house is” the nicer the neighborhood/property the crazier the rational…
Ahh… I see you’ve been to my ‘hood, 90048. People still list at peak prices (with a few exceptions who seem to have a clue). Places just sit.
NOD’s are ticking up, and just a bit to the south, in 90019. . . well, let’s just say in the foreclosure map, you can’t even see the streets through all the NOD/TS/REO markers. It’s moving slowly into the “nice” areas. This is a mess…
Here’s a pic of the map.
http://www.geekco.com/90019.jpg
I dont know if telling the seller’s to lower their prices is a sign of integrity, although it is practical and realistic. A quick sale and collection of commission in a slow sales environment benefits them. You would think that Realtors would know that encouraging price drops would ensure career stability. Perhaps, however, you are right, and since so many fancy themselves as real estate investors as well, maybe they are leaning in the other direction to keep up the values of their own holdings.
I agree Tim, savvy realtors should see a lot to gain from getting the sales volume moving again at lower price ranges. From what I can tell, Realtor Jim is doing quite well. By integrity I meant simply owning up to market conditions and being honest with sellers about the likely trends over the next couple years.
So by being obstinate about holding prices up, the realtors are not only being dishonest but also stupid. But we know that.
It’s a pretty cheap shot for RE sales people to be getting their
new sales from borrowers who intend to walk on their current obligations on a mortgage after they get the new place . All the games that people are playing to beat the banks and comes out ahead .In the future if no lending is available anymore ,than you can ask yourselves what caused it .We are almost at that point now.
Why is it that Realtors and people in general think that the acts of other don’t end up affecting them ? Really ,when you burn a bank out of say 200k ,can’t a borrower just be happy that they don’t have to pay forgiven debt taxes on it because of the new law . No, the gambling home buyers have to push it and get another house before they walk,(which no doubt the wonderful real estate professional are telling the people to do .) Anything to get a sale ,no remorse by the commissioned sales people . You really don’t think that the borrowers are thinking of doing this on their own ,do you?
I said a long time ago that the market is still riddled with criminals and creeps and the Great Purge is needed . Since the government doesn’t want to let the dumb lenders fall , and borrowers are considered victims ,no matter how much they victimize others ,and the taxpayers have to pay for this foul play in part ,we are no longer a Nation of ” Law and Order .”
The more sh-t people pull ,the more it will take away funding for people who would really pay back the loans . Congress needs a emergency meeting immediately to bring back the tax on forgiven debt on short sales and foreclosures for parties that default on a prior primary home within a short time of buying a new house. I can’t stand it when we have people in the Senate and Congress that have no idea of the can of worms they are creating . The refusal to address the crime and fraud and Ponzi Scheme aspect of this housing crash is creating more and more incorrect actions from the people in power . And Congress can’t determine why borrowers aren’t taking advantage of re-writes and loan modifications .
“‘It’s the duck and weave,’ said Christopher Thornberg, an economist with Beacon Economics. ‘You’re looking at (a similar house) down the block listed at half of what you bought (your house) for, so obviously the best move financially is to move from your house to that one.’”
How could this kind of walk-away buyer turn around and qualify for another loan if he just walked away from one without making good on his obligation?
Probably by purchasing the second house, then walking away from the first one. You would think banks would be able to smell this coming, but apparently not.
Why should bank #2 care what happens to bank #1? Don’t worry, they’ll be sorry in another 2 years when said borrower walks away again and decides to just rent for 7 years. Dumb borrowers, dumb lenders too.
Yeah, what do they always say, don’t get involved with someone who’s cheating on their current spouse to be with you, cause, you know…
In a perfect law abiding world ,if a borrower intends on going into foreclosure on a house ,but they obtain another house before they let the first one go ,they have falsely obtained financing ,where by all rights they should of been denied financing because they intended on defaulting on a loan . It is a attempt to avoid any normal penalty for ones acts and the hit you would take on the credit rating and the higher interest rate or greater down payment you would be charged for a bad credit record .
When Congress and the Senate did away with the tax on forgiven debt ,they opened up this can of worms . If a party can figure out how to not have any penalty for their acts ,than they will do it . So, OK ,the lenders were scum , but the powers that be want us to pay for this scum while the borrowers and agents dream up new ways to game the system .
The dumb lenders are starting to look more and more like deadbeats. It seems the tables are turned on the lending industry from a couple of years back, when rumors circulated that lenders referred to folks who pay their credit card bills on time as “deadbeats.”
Just wait until the foreclosures peak which has not even happened yet. Once that occurs, our economy and banking system are going to be severely crippled and massive amount of people will be out of a job. By that time, we might be talking about deflation. It ain’t gonna be pretty, folks!!
Don’t buy yet.
“Fannie Mae instituted guidelines June 25 that limit the loans a homeonwer can secure when purchasing a second home. As home prices plummet in San Diego County, local real estate agents say more homeowners are looking to purchase similar homes for hundreds of thousands less and then let their original home fall into foreclosure.”
“‘It’s the duck and weave,’ said Christopher Thornberg, an economist with Beacon Economics. ‘You’re looking at (a similar house) down the block listed at half of what you bought (your house) for, so obviously the best move financially is to move from your house to that one.’”
These guys are pissing in the wind at this point…they have no clue on how to stem the tide and all these guidelines and other nonsense is just foolishness…
At some point someone needs to get some nads stand up and say we fucked up, there nothing we can do, we’re going to let the market work it out…
I think Mr. Paulson recently said something to that effect.
Really…then they must be having a special on snow cones in hell…
just over a mile from a Starbucks, Vons and Washington Mutual.
Now, if being close to Starbucks (as if there aren’t enough around), and Von’s isn’t worth $75K, I don’t know what is. Now about WA Mutual - that is worth knocking it down to $275K.
I will be making a trip to Utarr here in 2 wks. Gotta take our children to SLC to see grandma/grandpa. Pop can’t travel anymore and hasn’t seen our Christmas baby. We will be there in time for his birthday.
Not for long. Starbucks is closing 600 stores, and WaMu is fighting for its life.
“Foreclosures have hit Riverbank hard…
“Estimating the numbers of foreclosures within the city is difficult…
“‘We have 191 dots on this map…
“Estimating 3.5 people per household, that means 700 people or a sizeable chunk of the city’s 20,000 residents are looking for a new home, Abid-Cummings added.”
Abid, you forgot to subtract specuvestor properties.. i can do it for you.
191-191= 0
0 x 3.5= 0
0 people are looking for a new home.
Listen up you greedy, grubbin sellers.
The housing bubble has officially popped.
Wake up and smell the coffee. If you want to sell you little patch of paradise aka pos cape/ranch lower the price.
I am not funding your f$%^ing retirement. You are not a victim. You a are a moron with unrealistic expectations.
Cry me a river
Well, I just googled my old rental’s address, and it looks like my xLL is still trying to sell it for $650k. We moved out of there in February because he stuck a for-sale sign in our front yard (oh yeah, and the roof rats too). Of course, he hasn’t been shy about renting it out to a couple of suckers in the meanwhile. Seems like a rent reduction would have been in order sometime during the past 5 months.
I mean “price reduction”, although a rent reduction ought to be in order for his tenants, since they have to put up with rodents upstairs. I named them “The Ratleys”.
Didn’t they get a rent reduction given they could be bounced out on their keesters at any time?
They’re paying the same rent we were paying.
We sold a rat infested home.
Lady was furious.
Should we have put rats in the contracts?
Rats fly and walk up walls.
Ouro: LOL.
I hope you asked her to feed the little rat-family as a condition of sale!
I’m picturing one of those white outline family representational stickers that soccer moms like to put on the back windows of SUVs. You gotta get her one of those. Momma rat, Daddy rat, oldest and youngest Baby Daughter rats, and the Baby Boy rat in the middle. And their pet rat rat.
I actually admire the rats. Very tough, resourceful, smart, and resilient. Unlike the FB of the 21st century.
if the abode is a stones throw from the office, renters best be payin a premium ….otherwise……landlorderers should make sure the fixtures is bolted down real good like.
New store opened up in town called “Sh-t You Dont Need”. Town is called Squattersville where the motto is “Piss Anywhere you want, but Ya Gotta Crap in a Bucket!”
I heard real estate is a steal round those parts.
True story: I work near 3 boat manufacturing facilities in the PNW, 100’s of props stolen last night…..welcome to “If it Aint nailed down, its bettern Money!”
DId they use a crane?
oi vey, oure verde.
props are propellers, the little thingies that propel boats. Most are stainless steel….all you gotta have is a couple wrenches and set of brass balls. Oh yeah, a couple of trucks with about 4 dudes…scrambling.
ya see, when the hillbillies start stealing the kegs from behind the brewery, the price of beer goes up. When dumb river-rats steal props, the price of fish goes up.
cmon, its all ball bearings (see my Federal Mogul Post in the bits)
cmon ben, that was a funny one, and Im not even hammered yet.
He’s no doubt saving that jewel for his book. Publishing it here would put it in the public domain..
Just try and remember what you commented and, when the time comes, demand a piece of the royalties.
Senator yields the balance of his time to Mr. Gramm:
“We have sort of become a nation of whiners,” he said. “You just hear this constant whining, complaining about a loss of competitiveness, America in decline” despite a major export boom that is the primary reason that growth continues in the economy, he said.”
Headline:
Bank Exec Political Take Under
…..sources say, “Those guys running the show are screwed….Hey, is that mike on? We’re f-ckin outa here!”
voz,
Too funny.
Are you sure you haven’t had a few?
only bong-hits, I vodka-boarded myself too hard last evening.
my bad yo,
back to your your regularly shed-yuled housing crash..home of the Structural Deflationary Paradox.
Any thoughts why BAC is doing so much better than rival lenders, especially since it just swallowed Countrywide? My thought is they are still hoping for taxpayers to take some of CFC’s lingering liabilities off their shoulders.
afaik, pre-Countrywide BofA didn’t do any retail mortgage business so they were out of that loop.. that has to be seen as a huge positive.
As for acquiring CWide for $2B, it was a heck of a deal, imo. I think it’ll make BofA a rretail mortgage powerhouse as soon as things settle down.
I think BofA knew exactly what they were doing, buying CWide with all it’s apparent debts and problems.. and there’s is more to this than meets the eye.
And I don’t own any and don’t plan on buying any BofA.
Way around the globe from California, there is a parallel universe which is riding down a similar housing market death spiral.
Falling over a cliff in slow motion
By Martin Wolf
Published: July 11 2008 03:00 | Last updated: July 11 2008 03:00
What might happen to the British housing market? After a week of dire news from specialised mortgage lenders and housebuilders, this is an obvious question. It also plays directly into the darkest obsessions of the British, for whom nothing is more important than that houses become ever more ludicrously expensive.
Certainly, houses became impressively costly between the middle of 1996 and the turn of this year. Over that period, real house prices rose by close to 190 per cent, according to the Financial Times index. A trend fitted to a series on real house prices that goes back to January 1971 was 30 per cent below the peak reached at the end of last year. In the third quarter of 2007, the ratio of average earnings to house prices peaked at just under six. This was almost double the ratio at the trough of 1995 and well above the previous peak of five reached in 1989.
After the biggest house-price boom in the UK’s history, can the country avoid the biggest ever bust? Fathom Consulting began a bulletin released yesterday by remarking sardonically that “as the UK housing market downturn gathers pace, it is common for analysts and commentators to argue that this downturn will not be as bad as the early 1990s . . . They are probably right. It looks [as though] it will be worse, perhaps far worse.” Fathom goes on to argue that nominal house prices are now falling considerably faster than in the late 1980s: the Halifax price index is down by 9.6 per cent since August. This is almost as big a fall as the 13 per cent decline in the early 1990s, when inflation contributed more to the decline in real prices.
Full fathom five thy bubble lies;
Of its bones are downturns made;
Dreams of wealth replaced by sighs;
Sadness grows as prices fade . . .
OK now the guy I work with has decided to sell his house at an auction, all excited about it as auctioned homes are going full retail and if they need a little push the Realtor who gave him this hot idea can bump the price a little…. just by writing in a slightly higher shill bid.
auctions are for suckers
just outta curiosity, do you know if his RE agent is still taking the normal cut? Or, does the auction fee substitute for it.. or is he gettin boned from both sides.
What a jerk. I don’t think he’ll sell it.
I have been on this board almost from the beginning, but haven’t posted in a long time, but I have been lurking.
I have been renting for almost 6 years…sold my home in Nov. 2002.
OK, I hope I am not a knife catcher, but I pulled the trigger and purchased a real nice REO home in the Bay Area at a golf course community that sold at the peak for $1M, and I purchased it for $490K, which is probably around 2000 - 2001 prices.
The money I made from my 2002 sale more than paid for my new home. I guess it could still go down in price, but like some one said here a home is a place to live.
It is almost impossible to pick a bottom, but I really wanted my own home again.
You did good, kid.
Hey, if the monthly nut is, you know, 30% of your net income and you put 20% down and you got a 30 year fixed… You rock.
That’s a great story Housing Bear! Congratulations.
That REO win is totally in line with other recent house purchasing stories in the Bay Area. It’s true that there is so much fall-out due to the credit crisis meltdown, but there are real deals to be made due to the new inventory of bank-owned properties around here. For example, on our site: http://www.BayAreaBankREO.com
While myths abound about high bidding competition, if you don’t need to buy immediately, you can really cherry pick one of these foreclosure properties at a big discount.