‘Buyers And Sellers Are Having A Stare Down’ In California
Some housing bubble updates from California. “Sales volumes are slowing while more homes are coming on the market. In March, 9,755 homes changed hands in L.A. County, a 10.3% decline from a year earlier, and the fifth straight month of falling sales. Prices haven’t risen more than 4% from one month to the next since last summer. In some cases, sellers are dropping their asking prices.”
“Today’s combination of prices rising more slowly, fewer sales and growing supply are typical of the first phase of a slowdown, UCLA economist Christopher Thornberg says. ‘Prices are still going up, because they always go up even when the market starts to cool,’ he says. ‘It will take six to nine months for a cooling market to start to see lower prices. It happens time after time.’”
“The housing market in California has fallen into a visible slump, and the downturn could erode economic expansion in fast-growing regions such as the East Bay, economists warned.”
“‘Things are slower than they were,’ said Ron Atkins, a realty agent in Pleasanton. ‘We have been used to a screaming hot seller’s market. But it was always unrealistic that we could have maintained that kind of blazing pace. Buyers stepped to the sidelines in the middle of 2005 and they have remained on the sidelines ever since,’ Atkins said.”
“The sizzling Central Coast housing market may finally be cooling, say some local real estate experts. David Martines, an agent in San Luis Obispo, said how quickly a home sells depends on whether it’s priced appropriately. When homes do sell, they’re going for less. ‘In not too recent times, people were getting asking (price),’ he said. ‘Now, people are making offers that are lower. They’re not paying full price. The market has to adjust to that.’”
“It’s a mixed bag elsewhere in the county, said Richard Watkins, a broker in Cayucos. ‘Los Osos has got some challenges, but that’s not a big surprise,’ Watkins said. ‘We’re seeing a fair amount of inventory build-up and price reductions.’”
“North County’s once red-hot housing market continued to chill out last month as sales fell sharply from March 2005. Inventory of unsold homes continued to swell, reaching 7,078 at the end of March, said Dennis Smith, a realtor in Carlsbad. ‘Buyers and sellers are having a stare down,’ Smith said, offering a reason for the growing supply. ‘We’ve got as many properties right now in North County as we had in the whole county at this time in 2005.’”
“March sales plunged 44 percent year over year for condos, and 20 percent for single-family houses. For the first three months of the year, single-family sales declined 19 percent and condo sales declined 33 percent.”
“Robert Campbell, an independent San Diego economist, said there is plenty of reason for concern. ‘Real estate is a highly cyclical market,’ Campbell said. ‘From this point in time, it’s only going to get worse. The good times are behind us. The money’s been made. The market only gives so much before it starts taking away.’”
“Campbell suggests the San Diego County market is out of whack because median family income is roughly half the pay it takes to buy the median-priced home, and today’s prices trigger mortgage payments generally twice what properties can command in the way of rent. ‘Eventually, all markets will come back to equilibrium,’ he said.”
BEN…Sorry OT but;
Can we do something about the length of some of these comments ??
They are painfully long..I don’t even read them which is unfortunate because they may provide valuable info…I purposely enter incomplete sentences to keep it short and to the point…
Anyone else agree ??
scdave,
Different strokes for different….
I prefer succinct as well, but have seen some lenghty commentary that was well written and very informative.
IMHO, bite size is not necessarily a virtue.
Some posts may be unnecessarily long, some posts require more length such as anecdotal stories. Sound bytes have their place, as do essays IMO. I personally can tell in the first two or three sentences whether or not to continue reading. I would rather an informal request be made to constrain excessive rambling or redundancy rather than some official spatial restriction. In short, try honing your skimming skills. And I for one don’t mind complete sentences. I just try to avoid “WeRent’s” spelling ‘lecktures’!
Agree!!!
The plus/minus controls are useful for this. But I like comments of any length if they are informative.
If you don’t like the comments lenght, there are other bubble blogs with plenty of uncommented real estate.
There’s a wonderful feature called “scrool down” that allows you to skip any post that’s too long. However, not all of us have the flashbulb-length attention span of our Generation X inferiors, and actually enjoy thoughtful and informative, albeit lengthy, posts.
Sammy,
Your comment was too long, you lost me. : (
Rainman 18,
Please elaborate…
SB,
I would but there’s a new 30 letter lim…
y
wow, looks like articles are actually dealing with reality now.
Robert Campbell gets a mention, Good for you. How out of context were your comments taken?
Now all we need is a mention of Rich Toscano of Piggington.com and we have covered the San Diego bases.
I do like the tone that you were quoted in dispassionate and factual.
I see blinking people.
Anyone see what’s going on with the bond market? This can’t be helping affordability. A lot of factors conspiring to undermine the RE market. WHo knows, we might see 8% for the fixed30 this year. If/When that happens, the sales slowdown will be met with a backlog of defaults…
Low interest rates => higher home prices
After all, every american has a duty to keep his mortgage payments the same. And every mortgage banker/realtor/etc. have a right to more income when interest rates fall.
If I remember right from my econ class - 1% rise in rates around 5% causes the price of 30yr bond to fall 14%. Since 10yr treasury has gone from 4- -> 5+ and 30yr mortgage went from 5.5% to 7%, it should cause price of 30yr bond to fall 20% or more. Since a house and 30yr bond may have similar duration, just from the pure bond theory point of view, homes should fall 20% from the peak.
From NPV point of view, the impact may be lesser, since home price == cash stream of rental income in future. You will have to take expected inflation into account, which has not changed really that much (inflation was caused by housing, if housing tanks, we will have moderate CPI. Housing ATM caused high prices, otherwise M3 increase might not have much impact on inflation, since wage inflation is dead). Same deal then, 20% fall is rational since discount rate went up from 5.5% to 7%
Much more interesting, in my opinion, if the carry trade, hedge fund exposure to credit default swap mkts, MBS mkts where they have levegared to the hilt. Fall in MBS bond prices is going to cause trades to unwind, bank to go bankrupt, and widespread pain. Treasury will have too many problems in hand to inflate away without a $ collapse & gold at $1M/ounce.
My advise - buy a house now, dig a hole in the ground, and build a bunker inside. Sure, you will lose you shirt when the value of your house falls 50% or more, at least you will be safe in your bunker. You cannot do that in a rental
My advice - Take off your tinfoil hat and stop listening for black helicopters hovering outside your window. And DO NOT under any circumstances buy a house, with or without a bunker, until fundamentals begin to make sense again.
Dont forget that some 70% of all Ca/Fl/Az loans were adjustable rate loans - most are tied to LIBOR which has gone from 1% to 5% in the last 2 years. Once these reset - OUCH! Build two bunkers (one for you and one for your banker)!
Good idea if they are a 20 year old mortgage babe.
A 30 yr bond has less duration (is less sensitive to a change in rates) than the average home because the yield on the avg. home is lower than on 30 yr bonds. Homes which have negative yields (such as those in Vegas, FL, SoCal) are much more senstive, obviously…
The yield of an asset is independant of the capital structure used to finance the asset, to calculate the yield you need to assume 100% equity financing, or your comparison will be meaningless.
I did not use the yield of the house in the NPV calculation -too hard to estimate, too many variables. Basically, trying to explain bubble prices using logic is illogical itself.
On the bond duration, I agree that houses will have higher duration. However, roughly, since I can use a 30yr mortgage to buy a house now, I equated the two. This is flawed, I know, but that’s the closest I could think of to figure out the ipmact of instantaneous change in rates - rate jump has been rather instantaneous this month.
Eventually, home prices keep rising with inflation, while 30yr bond with return exactly the borrowed money in the end, homes can get destroyed with earthquates, sliding sown the hill or earthquakes, while bonds can get destroyed if US decides the $ is too screwed up & reached end of life & replaces it with another currency dominated in gold & nukes. To hell with all this debt!!!
See, too many variables, so I simplified it all….. (30yr bond==home)
Bluto- I agree that one should assume 100% equity financing to determine the yield of a home…. Let’s use the example of a NYC apartment. One can rent a 1BR apartment for about $3,500/month or buy a comparable one for about $700,000 with common charges of ~$1000/month. The yield therefore is ((3500-1000)*12)/700,000 or 4.28%…that’s a lower yield than a 10 yr treasury. From what I can gather, severe bubble markets have negative yields…I have friends who rent a home in NoCal and their rental payments don’t cover the landlord’s taxes, insurance and maintenance. I don’t think this is exceptional in the really frothy markets.
Duration is certainly higher on a bond than a house in most areas.
And on an MBS the negative convexity (due to it’s prepayment option) becomes a more important factor for many pools.
A bank would use swap rates (since they can then hedge for your prepayment with swaptions) as the basis for mortgage rates which was the initial point of this discussion.
And this assumes that the market calculations that price the 30 year are equivalent to the pricing of housing - which seems rather dubious. A 20% drop in housing prices would be a minimum floor, with an additional ‘inflated asset drop’ of 20% more. I don’t think flippers make good bond traders.
The problem for housing as an asset is that recent buyers priced in the recent historically high rate of home price inflation over an infinite time horizon. When higher rates kill off price appreciation, the evaporation of the spec premium will result in falling prices…
Wage inflation was held at bay for many reasons, but I don’t think it’s reasonable to assume it will stay that way. The FBs, rather than rely on wage increases, took those “income” increases in the form of debt from HELOCs etc.
Now that’s drying up or dry so there will be increased demand on employers to pony up… and job hopping. We’re already seeing it. Monster confirmed that there was a huge increase in backfill employement where employees left for presumably more $$$$.
Another inflation pressure point…
Not to mention boomers retiring on its own will push toward a labor shortage in the US, not helping matters.
Or more outsourcing.
Perhaps explains why a firm like WiPro (India) just announced increased revenue due to higher outsource contracts.
It seems the things we need will get more and more expensive, while not critical items will remain flat to down. And who really needs admin, wedding planners, loan officers… and real estate agents? Many functions can be diminished or outsourced.
There is huge basis risk if you hedge 30-year mortgages against 30-year instruments: they have radically different real durations. Ten years ago, MBS hedging was against the 10-year T, but now with very little cost to refinance and low prepayment penalties, if any, nobody hedges with 10-year T’s.
“If I remember right from my econ class - 1% rise in rates around 5% causes the price of 30yr bond to fall 14%. Since 10yr treasury has gone from 4- -> 5+ and 30yr mortgage went from 5.5% to 7%, it should cause price of 30yr bond to fall 20% or more.”
It also should cause the price of a stock in a company which is expected to be around for at least 30 years to drop by more than 20%, as the 30yr’s payment stream is risk-free, while the stock’s payment stream (aka, future profits viewed as a variable annuity) is negatively correlated with interest rates (higher rates reduce demand for stuff that companies sell to generate profits). Thank God the PPT is there to make sure that stock prices don’t correct to fundamental value…
Agreed, blame hedgefundanalyst …
Everybody has herd mentality these days. Everybody keeps looking at everybody else uneasily, and then everybody jumps simultaneously. True for housing mkts (evidence 200%+ increase in inventory), true for 10yr yield (1 month ago everything was fine with $1T+ US deficits, $93T derivatives mkt) now everyone wans to dump US$ &/or get higher yields. I believe the same with happen with stock mkts.
Some PPT is there, but global mkts are too big to have even US treasury effect it in a meaningful way long term. What happens if the collateral for FNM/FRE falls 50% i.e. $4T. PPT of that size will mean treasury will let you borrow the $ printing press for one day. Bond mkts will have a selloff.
Fed/treasury try to act as if they are Gods but they are really mortal. I think that they do what they think they have to, not really trying to make US another Venezuela or iceland. They are stuck in a bad situation.
A little OT, but since the economist above mentioned prior downturns, I am curious (although I don’t know if anyone will know the answer) but in prior housing downturns, like the late ’80s/early ’90s, were economists (or others) predicting those downturns before they happened? Were real estate agents giving the “real estate only goes up” mantra in response? Or did the downturns just shock everyone?
I ask because it seems that everyday, we get new people saying something one way or the other. Is it because we’re more aware now, or is there just a rash of “predicters” out there for some reason? I’d like to know how to gauge all the commentary….
I can say for certain that the RE complex was denying the downturn was real for the first couple of years - dismissing it entirely before YoY declines. Somehow I just don’t recall that there was a lot of press early on prdicting a bubble pop… but perhaps that’s just because I wasn’t really paying close enough attention at the time.
NJ Gal - The answer is that it almost always looks exactly the same on the way up, at the top, and on the way down. The “economists” are no help, the cheerleaders are out in force, and the doubters are dimissed as irrelevant on the way up, then subjected to ridicule when prices stall and people start to get scared. Finally the doubters are hated and scorned, as prices fall. The former cheerleaders quietly fade away, and the “investors” get creamed.
Somewhere out on the web there’s a blog that posted real estate stories from the New York Times, chronologically, from 1989 to 1993. The stories are STRIKINGLY similar to what we’ve seen in the press this last year. Go find that blog. And sorry SC Dave, for being so long winded.
Thanks dc_too. I read that post - it was on nnjbubble.blogspot.com. You’d think we would learn, right?
I am just one of those tired of being told I’m ridiculous for claiming there’s a bubble:)
NJ -
Someone else also posted online the real estate article titles (and maybe first paragraph/abstract) from the LA Times that went from sometime deep in the 1980’s all the way through to 1995 or 1997 or something.
Fascinating reading if you have the time.
njGal
here what ‘they’ said in 1990, the prices fell nevertheless, how do I know?? . read the next paragraph.
Real Estate News Summary Nov 14 1990
California has experienced an unprecedented decline in real estate values
in the last year, with almost a 6% decline in median home prices since
the peak in July 1989, according to the Calif. Association of Realtors.
Bay Area home prices have fallen even further, more than 8% since August
1989. What is incredible is that there is seemingly no outside cause.
Housing prices simply rose higher than most people can pay.
Joe Arsenio, an analyst with Hambrecht & Quist Inc, says that the
fuel for further home price increases is not available. “We are not
getting the explosive growth of the past, and there will be a more
extended period of flattening in real estate prices.”
First Interstate Bank chief economist Jerry Jordan expects 3 to 5
years of flat to stable home prices in California , with actual price
declines early in the decade, especially hitting the higher-end homes
–those costing $400,000 or more.
Kenneth Rosen, chairman of UC Berkeley’s Center for Real Estate and
Urban Economics says, “There are not as many people out there trying to
buy a new home. And the absolute level of home prices is so high, it
scares people. There’s risk of more pronounced home price declines
because we are at such a high level already.” Rosen expects a 15%
decline in home prices from the peak in July 1989.
“A lot of buyers who bought just last year have lost their equity,”
said Michael Rivers, National Directory of Real Estate Advisory Services
for Ernst & Young. [SF Examiner]
Real Estate News Summary, Part 145, February 1993
Existing-home prices in Southern California will drop as much as 3.8%
annually through 1996, or a total of 15% from current levels. Already,
prices have fallen as much as 25% in the hardest-hit areas. With a
shrinking defense industry, total employment statewide won’t recover to
its 1990 peak before 1996, and Los Angeles, Anaheim, and San Jose won’t
have recovered even then. California real estate brokers dispute the
severity of projected price declines. [Wall Street Journal]
I wonder how close he was over the decade (the next sentance mentions price declines in the first few years of the decade). I’d guess he wasn’t off by much through 2000.
NJ Gal - learning is a choice, if you ask me. It’s super, stupid, simple to remember that it is never “different this time,” though. All you have to do is remember that, no matter what, and you will be just fine.
Here’s the article to which you refer:
http://www.youdovoodoo.com/80sbubble.htm
I remember reading a NY Times magazine article in the very early 1990’s about Manhattanites “stuck” in their depreciated, too-small apts they bought during the 80’s bubble. One 30-something woman was saying how she had to bring her kids out to the sidewalk and sit on the stoop if the kids wanted to play (I assume she bought the apt. when she was single). she was always buying appliances that could multi-task (”can you watch TV on that?”) so they would take up less space. she was quite trendy and right-on looking. that article made a big impression on me (i was in early 20’s and had no sense of economics at the time), and it was probably why i didn’t buy in the mid to-late-90’s. doh!
While it’s apparent there were some news articles last downturn, it’s my opinion that this time there are many more. The run-up was more frenzied and longer in duration this time around and there’s the internet that has brought a lot of attention to the subject.
The internet might contribute to the scale of the “likely” pullback?
I was actually thinking, AZ, that the internet has a lot to do with it now…I realize that I’m sitting here in NY reading articles from local papers in CA, AZ, FL - articles I wouldn’t have had access to back in 1990. So I think you’re right on about that.
I heard that Ham radio contributed to the Florida property bust in the 1920’s…
Kidding! Kidding! Who the heck knows….
And the degree of influence the RE complex has over whether a potentially “negative sentiment” article gets published is decidedly lower now… almost NO influence.
So the time frames might get compressed, faster deterioration, although there are so many factors it would be tough to say which one(s) played the greater role…
DC too;…That was not long compared to some…I new my post would piss some off but so what…I think Cote posted a similar complaint ?? Some of these are so long it seems like they got a meth lab in their office/house….
I hear ya man - but I’ve been guilty, too.
the slowdown started w 10yr at 4.8
just more pain for debtors
- finally savers will get rewarded
Unfortunately there is no “stare down” on the SF Peninsula because there is very little inventory on the SF Peninsula.
They’re next.
My fingers are crossed.
I noted a house in Burlingame sold in two weeks and no other houses for sale around the area. Still a solid market. Things will change but still a lot of money out there.
Burlingame?
That would be Genentech money.
At $ 600 + per sq. ft., it can’t be from savings. The rich area in Cal will probably be the last ones standing. The Central Valley is already buckling due to exit of investors and lack of desirabilty.
I think you’re probably correct - not all savings.
If I recall, Genentech (and its employee stock options) have done very well the last couple years.
And Google is in Mountain View which is the next city south of Menlo Park and Palo Alto. Don’t know how much their employees’ options are propping up the market.
Maybe I should go long Google as a hedge against high home prices around here……naaaa.
I have to laugh at people paying so much money for homes in Mountain View. 94043 is practically a ghetto. My mother lives in a condo in the 94043 - homeless people sneaking into the pool to take a bath all the time. 94040 is nice - small area though. I’m showing a YOY increase in MV inventory - 101 units vs. 74 at this time last year. The spreadsheet I started this time last year is starting to pay off as I can access my YOY numbers now.
I’m waiting until after Easter, and after the sun comes out of hiding. Would not be surprised to see a further surge in inventory. We shall see.
Yes, folks flush with Google stock likely are looking outside Mountain View.
“YOY increase in MV inventory - 101 units vs. 74″….is that condos, single family homes, or both?
SFH and condos combined - unfortunately when I started tracking the numbers last year I didn’t break them into two separate categories.
lunar -
Anytime you want to lay on us some stats from your spreadsheet or the South Bay - feel free.
Thanks.
sfj -
I’m planning to do that after the holiday weekend. The data is just starting to catch up with my entries from last year. I started by just tracking a couple of cities, and then a few more, and then SC County. So I should have solid YOY on all of my areas by May. I’ll keep you posted on the few areas I started with throughout April.
One thing I have found interesting - I began tracking SC County as a whole in mid-May. 5/18/05 inventory was at 3606 in Santa Clara County. As of today, we are at 3890. I don’t know what that means *exactly* but, if inventory keeps heading north we are going to be WELL over that 3606 number and that could be significant.
Ditto Here…..
That’s the silly part about this “stare-down” description. As if prices can just keep going up forever. Fortunately there is an upper limit, which is a function of wages and the human lifespan. There’s only so much debt you can take on.
party pooper
Didn’t Japan have 100year mortgages at the height of their property bubble?
Interest-only loans are far worse. Because the borrower never repays the principle, the amortization schedule stretches out to infinity. Negative-am loans are even worse: The amortization schedule is infinite with infinitely rising principle.
I’m seeing more and more price reductions–mainly people getting more realistic about what to ask. Good properties are selling quickly still. I think we’ll see SF condos slip first–lots of new condos going in, but Mid-Peninsula is going to be driven down by interest rate risk averse borrowers less willing to take out ARMs.
Crossing my fingers too–the rubber will really hit the road when first time buyers get a bit wary, and most other buyers have a hard time selling their existing house and can’t move their equity.
In the Bay Area it isn’t speculators that will drive a plunge in prices, it will be a slower decline based on more conservative loan underwriting (will this ever happen?) and people only buying with mortgages that they know they can afford for the next 5-7 years.
“… think we’ll see SF condos slip first–lots of new condos going in..”
Perhaps that will happen - condos price declining.
However, did you see where some SF city govt apparatus put a “freeze” on the building of 4900 or so already approved condo units for SOMA and environs?
Amazing. Complaints about affordability all the time, and now we get some efforts at “planning.”
As I saw somewhere else: “The NIMBY’s have won this battle.”
San Francisco, proud home and national leader of the “I’ve got mine, so f**k you!” attitude.
I did not see that information about the freeze.
I did hear an anecdote recently from a partner that one of the top condo sales agents in SF said that for the past 10-15 years, the most condo buildings working through sellout have been 3-5 in the City (at any given time, there have been 0-5 condo buildings that you could choose from). He said that he expected that number to reach 15 in the next few years.
I’m not sure if this was before or after the “freeze”.
By the way, all of CA is an “I’ve got mine, so f-you attitude”. It’s built into Prop 13 and all the cities who have legislated restrictions on new housing permits.
Thank Ben for this topic. I’ve noticed the cooling in SoCal happening from the outside (i.e. riverside, ventura, san bernardino, san diedo, OC) in toward LA (sorry to place LA at center, but economically, a fact). LA seems to be the last to fall. So much movement in other bubbly locales disccussed in Blog - Phoenix, S. FLA. I’d appreciate any insight into the rationale. I’ve seen piecemeal explanations before, but if anyone has a good overriding theory, I’d love to hear it.
Also, they mention that LA has not seen as much construction this time around . . . totally false if you include San Bernardino, Riverside, Ventura and N. LA counties in that construction boom. Any number to refute this?
The “housing shortage” is a wholesale fabrication by the regional planning agency SCAG. What it is is an attempt to exert LA control on neighboring areas so as to export LA’s problems. LA, Riverside, San Bernardino have had massive growth, Orange lots of new housing and Ventura moderate construction rates. The quote actually says; “There also has been much less home building here than 15 years ago, so vast tracts of unsold homes are hard to find.” This is somewhat true. The HB industry really did learn this lesson. Tracts are no longer built en masse, rather they are incrementally phased. What we see is the HBs rushing anything either under contract or broken ground to completion. They are scared that -any- reason to back out of aa contract will leave them stranded with inventory. This is part of the froth at the top. I’ve even identified the ghost town of the future: http://www.riverparklife.com/ Don’t let anyone tell you Ventura is a slow growth area.
Didn’t that area used to be an oil field or something? Nice location, right next to the river where the homeless encampments are
No, no oil, no homeless. You are thinking the ventura river, this is the santa clara river. Riverpark will be the Enron of the housing bust.
I was close to moving to Ventura recently and got on the interest list for RiverPark last year. Big mistake. They’ve been calling me on my cell phone regularly, emailing me, and sending me postcards every week. They sound pretty desperate.
LA;…I have wondered the same myself…Its like we are the last to feel it and the first to come out….I have speculated that its because there is so much money here (Billionairs)…Also, the consentration of some great schools..???
Billionairs explains the glut of $50million houses, but not $900k for a $hitbag 2/1 in venice. Only geniuses on 3 year Option ARMS are buying those . . . I guess I have to wait for the adjustment of mortgage rates to shake things up a bit. Also, LA schools are great??? Maybe colleges, but not LAUSD.
LA;…I was suggesting the colleges not K-12….The colleges attract some bright talent…Some stay…
LaLawyer: Have some friends who bought a few of those Venice 2/1, it is what you think it is (option ARM, Neg Am, liar loan, etc., etc.). No mystery whats gonna happen.
Although the entertainment industry is outsourcing, LA is still the entertainment capital. I was born and raised in the San Fernando Valley, and cannot impress upon people enough how much the ent. industry is tied to LA’s economy. I knew A LOT of kids whose parents worked in entertainment, and there is A LOT of money there. I’m talking about the “behind the scenes” stuff as well as the glamour jobs. My friends dad worked pushing a camera around (three people per camera: the film loader, the guy who moves the camera around and the actual videographer) for a very popular sitcom. He made over $100,000 per year. I believe there were at least 3 or 4 cameras on set. Now multiply that by all the shows and movies out there…and that’s just for the camera guys/gals.
LA & CA renter;…..Got a friend thats a Plumber…Works his butt off..5 kids…05 Net income before tax; 300K…Another friend runs a small business housing related…3 employees plus himself…05 Net income before tax; around 700K….
Another friend runs a small business housing related…3 employees plus himself…05 Net income before tax; around 700K….
_________________
Key words: “housing related”
Seriously, that is some serious cash. I know people in the mortgage business, in particular, who have made BANK these past few years. It was so much I didn’t believe them when I heard about it; then, I heard from more sources that mortgage brokers really can “earn” tens upon tens of thousands per month. Unreal, undeserved and soon to end, IMHO.
Plumbers, OTOH, deserve to make a good living for what they have to do!
“Yet they are. In March, the median hit $506,000, up 15% from a year earlier and 3% above the prior month, according to DataQuick Information Systems, a La Jolla-based research firm that analyzes property transactions”.
How many times do we hear that a house is the largest investment people make in their lives - yet why is the real estate industry allowed to get away with not having to provide better stats than median price. I’m sure the readers of this blog could come up with many.
If a frivolous obesity lawsuit can get junk food and fast food marketers to improve their menus, can’t something be done to take some of the real estate sleight of hand out of the shadows?
Perhaps a petition should be circulated to get some real estate law reform.
Median is a fine metric. IMO price per sq ft is even better. The only other way to improve the reporting is to resort to quartiling. By that I mean the price per sq ft of the 25%, 50%, and 75% home. The next step would be to adjust that quartile number to map onto a standardized theoretical quartile home. So the theoretical 25% home may have been 2025 sq ft on a 4700 sq ft lot that was $200k in 1996. Subsequent sales prices are applied proportionately to those aspects to calculate current valuations. People can then use their own estimation of their home; 110% of the 50% house because of a cul-de-sac or bonus room, etc.
Don’t worry, transparency, disintermediation and new tools are coming to the housing sector.
If I can get unit pricing on a stick of butter, I think I should be able to see it on home listings and brokers’ printouts. I don’t think median price is bad, it’s simply got limitations. I’d also like to see metrics reported within types of homes, e.g., at least in the east, a colonial may have a distinctly different inherent market value than an equally sized split.
Why doesn’t the press go the extra yard, break the data out as such and report it rather than report a general change as conveyed by the median price metric?
Are there any web based appraisal tools where one can dive into comps, cost to rent, cost to build and also make adjustments for specific features on the property? It would be nice to be able to feed in several MLS numbers and get the data analyzed as such and reported in a user friendly manner, with the homes sorted based on value.
It still ends up needing a median or averaging function. Some people prefer corner lots others don’t like the traffic. I place high value on quality of construction, others do not. Give me a cul-de-sac or no deal. How much is 2×6 framing worth? I think a premium others object that it subtracts from the useable square footage. This isn’t like pricing used cars.
mrincomestream -
Brokers will always tell you not to listen to appraisers. I would not take that advice. I would however make sure I picked a good appraiser by interviewing him for a few minutes as to his techniques. We were told our house would sell in two days for $570 by an agent. It sold almost a year later for $480 - the appraiser we had finally gotten had recommended that price. It hadn’t been getting any offers, even at $500.
We blew the opportunity to sell in the spring market of 2001 because of that thieving agent. The appraiser told us had we first priced it at $529, we likely would have gone over asking price. That nightmare of a lying agent cost us a lot of money, including haveing to carry a second mortgage and large home equity loan that bridged us over.
Yea Ok, No brokers will not always tell you not to listen to appraisers. In the interest of obtaining financing an appraiser is crucial. In the use for anything else their value is suspect. Especially in the valuation of estates and R.E.O.’s I can’t tell you how many times Trustees have to petition the court for various price adjustments because the appraiser they used was taking bong hits while he was doing the appraisal. Here’s an example during the last downturn I had a listing in the rural part of Simi Valley real piece of work next to a wolf farm and all kind of craziness bank shoved it on me told me too price it. I looked at the comps and the property I told them I had no clue maybe 250k. Bank barks get me three friggin appraisals. I go to the phone book call three appraisers. Each and every one of them came back with a different number. The appraisers weren’t even close to each other there were wide variances. You can see maybe 5-10k in either direction. But these guys had wide variances. The bank couldn’t even average them out they were so crazy. They listed at my price and we got a deal it was nowhere close to what any of them had suggested. Turns out my valuation was the closet and even I overshot it by 30k. I asked one of these guys why did he think they came to 3 obviously different conclusions. His exact words were “An appraisal is in art not a science and based on the personal opinion of what we perceive the value to be”.
If the listing didn’t sell in 2 days like the agent told you then you should have fired him and found another. But you didn’t because you were what I call the Tweedle Dum and let your greed override your common sense. If the listing sat on the market for 30 days with no movement you should have dropped the price. You let it fester on the market for a year and it never occured to you that the price might be a little off in the hottest real estate market known to the living nationwide. Don’t blame the broker pal. I’m sure there were some conversations there were even if the broker overshot the price he suggested a price decrease. And you like every other seller held on to that little piece of a dream that my house is better than everyone elses. And you let it sit their and fester overpriced untill they had to firesale it. Because all the real buyers figured if it’s been sitting there that long somethings got to be wrong with it in this market.
Don’t be fooled into thinking an appraiser is going to be your saving grace. At 400.00 a pop if no bank financing is involved they’ll go with were the wind blows.
Zillow is probably as close as you’ll ever get without an appraisers license. You’ll probably need an appraisers license to get the info to compile what your asking. And my question too you is do you really seriously think you need that kind of detailed information to buy a single family house that your going to reside in. I mean really.
The first house I bought during the final walk through I insisted on seeing the attic space. The realtor had never heard of nyone doing that before! SoCal is so weird, plopping down gobs of cash, taking on crushing debt and they don’t even check the horses’ teeth. Sometimes I feel like the one eyed man in the land of the blind.
Inspecting the house in itself is one thing. Hell if you want to check the attic the basement or in L.A. crawl underneath the house then more power to you. As long as your not asking me to don coveralls and crawl under there with you more power too you. I can’t even imagine a Realtor questioning on why you want to do it. Your the one who’s got to swing the note do what you will.
On top of that if it what was deemed a commercial property and you needed that kind of analysis for tax depreciation purposes then fine but if your in that deep hire a proffessional at least that way you have someone to sue if the I.R.S. finds a misplaced decimal.
But for a friggin tweedle dee tweedle dum SFR oh man your killing me go find a lot and build your own.
Because at that point unless the numbers show it going to appreciate by 1000% annually for the next hundred yrs your never going to find anything suitable.
If you like the house it makes sense in terms of difference of rent vs. buy, the financing is right, and it comps somparable or less than what the recent comps are buy the friggin house and use that brain power for something else.
I would never buy a house without getting a good inspection and I’d almost add good appraisal - an independent one, just for me.
More importantly, and I recommend this to everyone, I would never sell a house again without first getting an independent marketing appraisal. Way too many agents out there “buying listings”. You can’t rely on their estimates. Writing a small check to an appriaser and setting a good price is a great investment.
mrincomestream,
I’ve got to disagree with you on that one. We were about to buy a house (trade-up) in 2004 and our inspector (a friend) checked EVERYTHING, the attic, crawl space, check all around the kitchen and bathrooms looking for leaks, etc. We were able to back out of the deal because of him. Checking the house out thouroughly enables a buyer to know how much deferred maintenance there is and how much money/work will be required in the future due to poor construction or maintenance. Very important, and something I would never do without, IMHO.
I wasn’t suggesting you not inspect the house. Out here you better inspect it if you don’t want to get caught holding the bag especially as much as the ground shakes here. Robert was talking about if I read his posting right about the inspection your supposed to do which most folks blow off is the one 5 days before the close. Their are two inspections in the transaction one your supposed to do within your contingency period of typically 17 days I think it’s been awhile since I sold a house during that inspection period you get your due dilligence stuff ie: termite report, contractor walk thru, etc.. And the one 5 days before close which is a simple walk thru too make sure the seller didn’t strip the plumbing or remove all the doors. What I was referring too as nonsense was all the analytical garbage he was referring too.
Not doing an inspection is a big no no.
Chester from Westchester-
FYI an appraisal is described as an art not a science. Save yourself some money the information the appraiser will be giving for a marketing appraisal comes directly from the MLS. The appraiser calls realtors all day long to compile that information. I’ve had 2 calls like that this week. If you interview 3-5 agents before you list you’ll know who’s buying your listing and who’s not.
And as far as you little appraisal just for yourself at the end of the day it doesn’t matter what your appraiser says it’s what the banks approved appraiser and the seller says.
I do see now that Robert mentioned the final walk-through. It wouldn’t make sense to check this out last minute, IMHO. It should be done as part of the inspection.
We agree that buyers (esp end-users) should always hire an inspector. It’s also a good idea to tag along to learn about the house and make sure he/she didn’t miss anything.
Take care!!
mrincomestream said:
“If the listing didn’t sell in 2 days like the agent told you then you should have fired him and found another. But you didn’t because you were what I call the Tweedle Dum and let your greed override your common sense. If the listing sat on the market for 30 days with no movement you should have dropped the price. You let it fester on the market for a year and it never occured to you that the price might be a little off in the hottest real estate market known to the living nationwide. Don’t blame the broker pal. I’m sure there were some conversations there were even if the broker overshot the price he suggested a price decrease. And you like every other seller held on to that little piece of a dream that my house is better than everyone elses. And you let it sit their and fester overpriced untill they had to firesale it. Because all the real buyers figured if it’s been sitting there that long somethings got to be wrong with it in this market.
Don’t be fooled into thinking an appraiser is going to be your saving grace. At 400.00 a pop if no bank financing is involved they’ll go with were the wind blows”.
Mr. Income Stream - basically everything you just said about what happenned to us with this thieving agent didn’t happen to us.
We were surprised when she first told us $570 - our gut had been more like $525. We’d paid only $267 10 years prior, so we would have been fine with the $525. In fact, I’d paid down 40% of the mortgage about three years earlier and every month we were paying off a lot of principal having accelerated the retirement of debt. It was a great feeling.
So when she said $570, we were surprised, but we weren’t in real estate and she swore on her price up and down. She assured us we’d be able to match closings too. I spoke to the person who ran her office and really grilled here and she totally backed her agent. So we went with it.
After about three weeks we cut the price from $570 to $559. Not too much later we cut the price to $539, then to $519 and finally $499. We totally missed the spring market with our high prices. Had we gone with our gut, we would have avoided this debacle. But we foolishly trusted her.
Everytime we told her we wanted to reduce the price, she feigned shock and then the whore was on her computer changing the price in a nano second. She had told me that all the agents who came to the original open house all felt the price was perfect. In January, we had a discussion with another agent who was a friend at work’s mother and she told us that she was familiar with the house and it was inexcusably overpriced from the outset, and that almost certainly, most agents would have known this in a heartbeat.
BTW, the market in California may have been the hottest in history in 2001, but in northern Westchester County, NY, the market went into quite a slowdown after July 4th. Inventory was still tight, but buyers were suddenly in no rush. When the attacks of 9/11 occurred, it really slowed things down for maybe one weekend, but then all of a sudden, there were tons of new lookers up from Manhattan, wanting to get out. They were just looking for awhile, but in Spring 2002, they started buying in earnest. By 2003 it was an insane market there. Unfortunately, we didn’t have the intestinal fortitude to tough it out so we sold in March for $480. The whole town has gotten markedly more affluent since we left and it’s probably an $800,000 house today.
There are some smart agents out there who won’t cheat you. But by and large I think the only difference between the agents at a brokerage and the prostitutes at a brothel is that the prostitutes have more integrity.
—– Warning this is a long one ——-
I really tried to move on really I did but I couldn’t this needed a response. IMO this guy is as bad as a flipper.
“There are some smart agents out there who won’t cheat you. But by and large I think the only difference between the agents at a brokerage and the prostitutes at a brothel is that the prostitutes have more integrity.”
Are there bad apples in every bunch of course.
But after reading your post and trying to decipher the fuzzy timeline I determined this is exactly why I don’t partcipate with the Tweedle Dee’s and Tweedle Dum’s in buying and selling of single family homes. Your blaming the agent but at the end of the day your own greed did you in. But it’s more convient and less embarrassing to scream at the top of the mountains that the agent screwed you instead of admitting you were an idiot and lost 40 grand. This is a case of typical seller greed and negligence.
EX: “We were surprised when she first told us $570 - our gut had been more like $525. ”
How did you come at the “gut” number of 525K did you just pull a number out your ass or was it a direct result of interviewing a few agents before you made a decision . I’ll take the latter which means you drank the kool-aid. Figured you’d find a bigger fool for a few extra bucks to furnish the new house you were going on the hook for. Figured you had found the right sucker for the job cause she saw the same thing your saw in your little piece of heaven.
Secondly if your “gut” told you 525k and you liked the agent so much and wanted her for the job why didn’t you tell her no we’ll start right here and see how it goes. If your under the market the market will build it up if your not well you found out the result of that and im sure it would have beat a bridge and a second. How much in fee’s did you pay for that btw. Bet it was a lot bet it wasn’t worth chasing the 50k and winding up losing 40. But at the time those fee’s looked nominal if you were making an extra 50k didn’t they?
Thirdly
” After about three weeks we cut the price from $570 to $559.”
Ok but your gut told you $525, it’s obvious at this point the agent f***** up. What do you do instead of going with your gut you reduce your price roughly 2.5% why?? your still looking for that bigger fool hoping to wing a sucker. Full blown greed. And you yourself said you were in it right so why not cut to the chase and move-on. Nope need that new dining room set. Got too hang in there.
Fouthly- Another opportunity to reduce what happens instead of going with the infamous “gut” and it’s obvious the agent is a whack job what happens “Not too much later we cut the price to $539″ Wow a lowly 5% off the price of something that hasn’t gotten an offer in over a month after the agent told you 2 days you must not have been on the hook then for that other house. Must’ve been thinking at that point screw the dining room set. I’ll settle for a lazy boy and a dishwasher.
Then what happens you encounter another agent with some common sense probably your money maker. Probably selling Real Estate since Christ was a corporal. What happens
“In January, we had a discussion with another agent who was a friend at work’s mother and she told us that she was familiar with the house and it was inexcusably overpriced from the outset, and that almost certainly, most agents would have known this in a heartbeat.”
Amazingly 9 mo’s later your still with the whack job you didn’t sell till March of that year I wonder if the price was still 539K I bet it was. You should’ve fired the whack job and hired the old lady on the spot. But nope gotta hang in there there’s gotta be a sucker out there somewhere
Fifthly- (
Fifthly- (
Fifthly-
“She had told me that all the agents who came to the original open house all felt the price was perfect.”
And you didn’t figure out something was wrong at $539k when the offers didn’t start rolling in. Hell you should have got a couple at the three week mark at $559K if the price was so right. But you continue to be dazzled by the whack job why because you wanted to be.
“Had we gone with our gut, we would have avoided this debacle. But we foolishly trusted her.”
No you were blinded by your greed and drank the kool-aid of what HD74 calls a number hitter. Because if you just listed with the first agent that walked in the door then really what did you expect. I’m sure you did some research and interviewing agents is selling the house 101.
Can’t blame the agent for the loss on this one it’s all on you. This is where I get on the sopbox and start talking about people being responsible for their own actions. You could have stopped the BS early in the game but you choose to chase the sucker aand winded up in the red. When did it sell for 480k when you started making house payments on house #2. And that second and bridge loan started straing the nest egg.
I find it hard to believe over all that time of price reductions you didn’t get any offers on the house. What happened there?. Something stinks. Doubt it was the agents fault in entirety. And I sure as hell would bet she would tell a whole different story. She’s probably still having nightmares
I’m not buying the sob story. But I’m sure there will be a lot of the same from flippers in coming months. No personal responsibility blame the agents everybody hates them LOL
You my friens are a windbag.
And who’ll blink first: the one paying $1000 in rent for a place they’re living in, or the one paying $1000 in monthly carrying costs on an assest that ain’t going up and will soon be going down? Once people realize that YoY prices are flat, they realize that they won’t be “priced out forever.” Nobody “has to buy” and nobody cares what you paid for it.
Well said Jim…
Rainfucius say:
Both man and house capable of appreciation, difference is only one can achieve this without the other.
Oh I like that! Bravo Rainman!
Actually, it’s:
Who’ll blink first:
1) The one paying $1000 in rent?
2) Or the one paying $3200 in carrying costs for a 1200 sq ft starter in a Boyle Heights, Watts, or Compton that was built in 1951 and never rennovated?
I don’t know why they keep referring to this as a “stare down” as if its a big stand off to see who will budge first, sellers or buyers.
Its not that at all. There is no stand off. Its just the fact that speculators and investors made up 40-50% of a lot of markets in 2005 and now they are gone, therefore 40-50% of your potential buyers (and often the ones that would pay what ever asking price was) are gone. Owner occupants are more savvy, they want their dream house because they will live there. Speculators often bought homes sight unseen.
I think now that the flipping frenzy is gone from the market prices will decline. There are too few foolish buyers in the market now to justify price increases, even to justify current prices.
There is a standoff: it’s between the highly leveraged borrowers and the banks.
Renters are free to enjoy the coming summer
Realtors and industry “experts” just make it sound like there are vast armies of buyers sitting and waiting and when the prices are right they will all emerge from their trenches and buy like it was the Summer of 2005….
Good point, Orlando.
If it was possible that prices dropped 20% overnight, perhaps there might not be many buyers at that level.
They could be spooked, too. Who’s to say it wouldn’t fall farther?
“Fear” is going to be very strong.
The fact is that, like Black Monday on the stock market (Oct. 19, 1987), there is a dearth of trades between home buyers and sellers on which to properly assess comparable valuations. When nothing is selling, figuring out the market value is just about as easy as figuring out what will happen to you in the afterlife. (Fortunately for some, they claim to already have figured out the latter question…)
Agreed. It’s hard to figure the exact price. But the price MUST be lower than what the seller is asking, otherwise there would be a sale.
LinOrlando there are vast armies of buyers sitting and waiting they are called botomfeeders who do you think did all the selling the the specuvestors and the FB’s
It annoys me how every article talks about buyers as if they are just refusing to pay the higher price because they just don’t want to. The simple reason buyers aren’t buying at these prices is because they CAN’T AFFORD IT.
These articles are so cheesy…they still attempt to maintain the fiction that anyone who doesn’t currently own a home is actively looking, as if that is the end-all achievement to which we all aspire. The truth is, as is mentioned above, anyone who is NOT saddled with enormous amounts of unsustainable housing debt is probably living their life…going to the beach, hanging out with friends, going to school/work/church…NOT sitting around watching the median home price in their area to drop JUST ENOUGH that they can finally swoop in. (I know that I plan to rent for the next four years because of my life situation…NOT because I can’t afford.) But this hilarious caricature of a gunfight at high noon b/t buyer and seller will continue to convince sellers that there is an artificial floor on prices, and if they price their house JUST right (not too hot…not too cold) then the eagerly awaiting buyer will be overcome with their eagerness to finally attain the unattainable. This hubris, that the sellers somehow own an asset that is irreplaceably precious to the buyers, will lead them to price their homes on the market emotionally, not rationally, they will follow the market down, ever looking for the “sweet spot” that will attract the non-existent buyer, and ultimately make the bursting of the housing bubble even more messy than it might have been.
“It annoys me how every article talks about buyers as if they are just refusing to pay the higher price because they just don’t want to. The simple reason buyers aren’t buying at these prices is because they CAN’T AFFORD IT.”
Another excellent point.
You’re right, they’re mistaken. It’s as if the “pundits” think buyers have a choice in the matter.
Many who are being realistic (avoiding toxic loan situations, etc.) has already made their choice - they’re not buying now nor in the near future because they CANNOT afford to buy.
I’ve tried explaining this to people. There are not Americans left who understand “can’t afford”. It’s a totally foreign concept. The baby boomers and the generations who followed them don’t have the financial saavy to understand anything even remotely math-related.
My inlaws, who insist that by not buying that I am selling my soul to Beelzebub, weren’t even phased when I showed them how the total cost of ownership for the 2 bed 1 bath 700 sq ft starter home in Anaheim (across the street from our rental house) exceeded my entire takehome income. And I make above the median household income for Orange County, too. They looked at the two columns of numbers and said, “Well, we’re just afraid if you don’t buy now you’ll be priced out forever,” and “well, everyone else seems to be able to do it,” and “when we bought our first house, it was a struggle at first.” Obviously, that discussion went nowhere.
Luckily for India and China, we have become a country that responds to math with ignorant platitudes, smug rationalizations based on belief in mysticism, “blind hope” as the dominant strategy for all things finance, and glazed stares.
“Luckily for India and China, we have become a country that responds to math with ignorant platitudes, smug rationalizations based on belief in mysticism, “blind hope” as the dominant strategy for all things finance, and glazed stares.”
You just described Orange County to a T. This from a native. I am going to have to borrow that one.
It’ll be real interesting to watch the CA property tax delinquencies and how they affect the market in the coming weeks.
I’ve been playing around with my county assessors’ web site and my local newspapers sold homes section. For homes 700K to 1.8M sold in the last 12 months, 6% have not paid their December tax bills and 38% missed their 4-10-06 deadline as of yesterday. (It was updated on 4-11-06)
A little time consuming but fun:
Orange County:
http://www.ocrealestatefinder.com/re_transactions/re_transactions_index.shtml
http://tax.ocgov.com/tcweb/search_page.asp
Riverside County:
http://www.pe.com/cgi-bin/re_sales/show_search.cgi
https://riverside.ca.ezgov.com/ezproperty/review_search.jsp
I’m wondering if a borrower without an impound account becomes delinquent in property taxes, does the 1st lender pay the taxes? That could exacerbate the NOD’s since I’m guessing the lender would simply apply the mortgage payments towards the taxes?
Moqui;…There is likely a provision in the Deed of Trust that any default on the tax payment will allow benificiary to forclose on the loan…Typically now, a tax report fee is paid at closing by the borrower that notifies the lender of deliquent taxes…
Did I read this right?
“For homes 700K to 1.8M sold in the last 12 months, 6% have not paid their December tax bills and 38% missed their 4-10-06 deadline as of yesterday.”
“38% missed their 4-10-06 deadline”
“38% missed”
“38%”!?!
If true - very scary.
Not a big deal (in my opinion)…if you don’t have an impound, it’s easy to forget the “second half” payment…check back in a month or two, that will give you a more accurate picture.
articles like these aren’t going to help.
Pension Rule May Wipe Out Equity
Accounting Change Moves Costs Onto Balance Sheets
http://www.washingtonpost.com/wp-dyn/content/article/2006/04/12/AR2006041202057.html
No big deal. Just add this to the Federal deficit, unfunded future Fed liabilities (Soc. Sec. Medicare etc.), current account trade deficit, record consumer and mortgage debt, no savings, no retirement. What, a few $Trillion? What’s a balance sheet? Ehh.
A balance sheet is where lendors report unpaid interest added to principal by borrowers as if it is current income.
OT… Question: I’ve never sold a property with a renter in it. How tough is that to do in say So CA? I mean, first you need to coordinate with a renter to show it and then you need a renter to get out after a sale, which I am presuming might be a little complicated.
Can be all over the spectrum. Depends on the lease and the tenor of the tenancy. If you have a good relationship with the tenant, and the lease provides for showing the house, then no problem. Most standard leases allow owner into the apartment. But I will tell you that you cannot leave the key just dangling on a lockbox and allow anyone to tour the apartment. Big trouble.
My wife and I actually just finished selling a house in San Diego that we had rented out. We gave the tenants first dibs on the house, but they didn’t bite. Nevertheless, they were very cooperative when it came to showing the place (by appointment only, with at least 24 hr notice), and that made life a lot easier for us. I think there may be new rules on how much time you’re allowed to give/require to break a rental agreement, but I don’t know the details. Our tenants announced their departure a few weeks before we got any solid offers, which made for some uneasiness, but our mortgage wasn’t huge and we had also saved up for a rainy day, so in the end it wasn’t all that bad. So it’s definitely do-able, but there are a lot of factors that affect how easy or difficult it is.
Thats interesting, we were thinking of renting a town home. From what I understand a landlord can’t just throw you out because they want to sell, a tenant can sue over that, they just have to sell the place with tenants if they don’t want to leave as long as they are living up to their end of the contract. I think a lot of these amature investors don’t get that when they say “oh we’ll just rent the place out until we decide to sell”.
No you can’t just throw someone out you have to give them notice. Out here I think it’s 60 days. Most people let just sell the house with the tenant in it and let the new buyers get them out. In most instances you have to give a 60 day notice out here.
I think I read that it used to be 60 days but it was recently changed to 30…
Here in California, I think it’s 60 if I’m not mistaken they just changed it this year it used to be 30. I’ll look it up.
I may have flopped the numbers in my head. I would also be curious if there is a difference between leased renters and month to month’ers.
It is 30 days. The 60-day notice requirement expired in January of 2006.
Rainman18, Thomas-
You were right I had the numbers flopped in my head it’s now 30 days.
http://www.dca.ca.gov/legal/landlordbook/moving-out.htm
90 if your offering public housing
http://www.aroundthecapitol.com/code/code.html?sec=civ&codesection=1954.50-1954.535
In Colorado, anyway, occupancy laws strongly favor the renter. While the landlord can give you notice two months before the end of the lease period that he wants you out, he CANNOT sell the house out from under you (forcing you to move) two or three months into the lease just because he’s panicked about a price drop or gets a good offer. That would give you cause to take him to court, and the law would almost certainly come down on your side.
It’s going to get interesting when all these newly-minted flipper landlords start freaking out as prices start to drop precipitously, yet they can’t sell because they have a tenant on a 12- or 18-month lease.
Quote from a local real estate meeting referred to now as “The Weekly Beating” according to my room mate. This is after the boss got the latest numbers…
If you’re not prepared to work three times as hard as you are now then get the f@!* out of the real estate business!
That about sums it up
Oh Yeah….The easy money has been made by the newbee realtor….They have sold to all their friends and relatives and now they need to actualy cultivate business…Now the incompitence will shine through when they face a blood thirsty well informed buyer….
Hit the nail square on the head scdave. They are not going to know what hit them. I read a post earlier I think it was from CA Renter about some comments that some of his/her friends made who were in the business and I thought wow it’s a little early to be throwing in the towel. It reminds me of a conversation I had last week. I asked a guy who has been in loan business about 2-3 yrs what did he intend to do to keep his business coming when rates hit between 8-12% like they were when I first came in. He gave me a blank look scoffed and said rates will never go up that high. At that point all you can do is smile and wave and wonder what proffession he’ll be in next year. The sucker money is gone. Now it time to get going if your in this proffession. What is that they when the going get tough the tough get going. Now you’ll see the real proffessionals go to work and people like Gary Watts and David Lereah will go back to shining seats in the their quiet little corners. Never even heard of these guys untill the bubbe went into full blown status.
Where I work we have a saying…
“Volume hides all”
That means no matter how poor your employees are, how lazy your sales reps are and how horribly your office is run, in a market with peak demand and product selling itself then all is well. In a down market, all the mistakes and true laziness of employees is revealed.
mrincome; drum roll please….
SC County Board of Realtors Yr/2001; +-3000
Fast forward
SC County Board of Realtors Yr/2006; +-12,000
Total licensse’s in the County; +-22,000
We say here that; “If you don’t have a friend that has a Real Estate license, you don’t have any friends”….
LOL!
Or another way of saying it:
A rising tide raises all boats in the harbor.
But when the tide goes back out, you see who’s been swimming with NO shorts on.
Speaking as a Silicon Valley ex-engineer, there are three ways his life will go from here for the next four or five years:
- he will maintain his job only as long as he works himself nearly to death at the expense of family, friends, health, and emotional well-being
- he will soon lose his job and have to decide what to do next even though he works himself nearly to death at the expense of family, etc…
- he can realize that the game is already over and decide what to do next while sparing himself the working-nearly-to-death part
That is classic.
Yes, I have been there done that in non-RE industries.
Time to get out onto greener pastures, the sooner the better.
It’s Glengarry Glenn Ross time: the top salesman wins a Cadillac; second place is a set of steak knives; third place is…you’re fired!
That is a fine movie and a perfect gag gift for your local realtor.
It should be pretty cheap given its age.
Maybe at the OC housing bubble party we should have a showing.
All you would be doing is encouraging them. Most realtors look at that as a motivational video. That and that movie Boiler Room
The other great line.
Jack Lemmon goes to get a cup of coffee.
Baldwin asks him “What are you doing?” aggressively
Lemmon: “Getting a cup of coffee”
Baldwin: “NO, coffee is for closers.”
Use your tax refund to buy a home
http://yahoo.reuters.com/news/articlenews.aspx?type=topNews&storyid=urn:newsml:reuters.com:20060413:MTFH65227_2006-04-13_17-32-25_N13309714&rpc=44
Also, if you are in one of these bubble markets (Sac,Phx,FL) you may even buy a dozen - buy one, get a dozen free.
“take control of your life and become a homeowner”? What a load of old crap. Yeah, my life is so out of control that I’ve got a stable job, money in the bank, and no debt. I’m a mess. Oh save me, Mr. Mortgage Analyst, please! :p
pay the renter to close the deal- and get it on craigslist etc
save the commision
try again…
It’ll be real interesting to watch the CA property tax delinquencies and how they affect the market in the coming weeks.
I’ve been playing around with my county assessors’ web site and my local newspapers sold homes section. For homes 700K to 1.8M sold in the last 12 months, 6% have not paid their December tax bills and 38% missed their 4-10-06 deadline as of yesterday. (It was updated on 4-11-06)
A little time consuming but fun:
Orange County:
http://www.ocrealestatefinder.com/re_transactions/re_transactions_index.shtml
http://tax.ocgov.com/tcweb/search_page.asp
Riverside County:
http://www.pe.com/cgi-bin/re_sales/show_search.cgi
https://riverside.ca.ezgov.com/ezproperty/review_search.jsp
I’m wondering if a borrower without an impound account becomes delinquent in property taxes, does the 1st lender pay the taxes? That could exacerbate the NOD’s since I’m guessing the lender would simply apply the mortgage payments towards the taxes?
A few months ago, CountryWide sent me a notice that if I didn’t show them proof I had paid prop taxes, they would check, and pay them for me if I hadn’t. This was supposed to be a ‘threat’ of some kind, so I simply ignored it, since I knew the taxes were paid. I don’t know why I was sent the notice, so I suspect they are part of a large effort to keep on top of an expected surge in tax defaults.
We had a hard time with one mortgage company. We had an impound account, but they waited until it was late to pay anything. So our taxes might have shown up as delinquent even tho *we* were not late.
Wait, on top of my option ARM, I need to pay insurance, maintenance AND taxes?!?!?
Why didn’t anyone tell me owning a home was so expensive?!?!?
Answer: Because agents don’t earn my commission if they teach you rudimentary math and home finance.
the first time buyers in current market conditions have to be really ignorant. liquidity induced boom is coming to an end - falling prices and sales, peak price to rental ratios, rising interest rates, more inventory from speculators, home builders. many sellers are in the first stage of post-bubble psychology - denial. the wise ones (including Buffet) have already sold when novice were buying at peak.
You got me curious… What RE investments was Buffet involved in?
Buffet bought a second beach house in Laguna during the bust in the early ’90s. He sold it spring ‘05. He explained, in his usual manner, that it if he subracted the replacement cost of the house from the sales price, the land underneath the house sold at a $20 million per acre equivalent. Smart guy.
“Campbell suggests the San Diego County market is out of whack because median family income is roughly half the pay it takes to buy the median-priced home, and today’s prices trigger mortgage payments generally twice what properties can command in the way of rent. ‘Eventually, all markets will come back to equilibrium,’ he said.”
But what about all the rich baby boomers relocating to SD for retirement, and the rich foreigners eager to buy coastal real estate everywhere on the planet? Don’t they trump the fact that the median income is half what is needed to buy the median-priced home?
Stucco;….Yeah, I guess to some degree….Its kind of like “Robert” in Sunnyvale, Ca….He does not care what happens up or down because he will “Never Sell”…He will build his winter house in Florida and may likely never sell that one either….
I posted this one, but did not appear on refresh. Apologies if this is duplicate.
Of Bubbles Past: A Chronological Listing of News
Headlines from the Last Housing Bubble
There’s been some confusion on the blogs about just
what went on during the last housing bust in Southern
California. I was there then; I lived through it, I
owned property, and I can tell you it was no fun at
all. Then, like here, like now, people were saying
things like “housing has never gone down here before
(so it won’t ever go down)”, “housing always goes up”,
“houses aren’t like stocks”, “we’re special”, etc.,
etc., etc.
Below you will find a chronological listing of
selected Los Angeles Times articles originally
published between the years of 1985 and 1997
(inclusive) culled from their archives. The similarity
among headlines from then and now is quite
informative. But of course, the housing bubble of
today is far, far more extreme than it was then.
1985-1986: Housing is booming, inventory is low.
Housing Starts Surge 14.9% During January, Best
Gain in 20 Months
Los Angeles Times (pre-1997 Fulltext); Feb 20,
1985; pg. 1
Inventory of Housing Dips in Southland Unsold New
Homes Declined by 3.2% from End of l984
DAVID M. KINCHEN; Los Angeles Times (pre-1997
Fulltext); Mar 16, 1986; pg. 1
Housing Sales Boom Keeps Inventories Slim
DICK TURPIN; Los Angeles Times (pre-1997
Fulltext); Aug 24, 1986; pg. 1
1987: Housing still booming, prices increasing,
inventories low.
High-End Home Sales Push Up Median Price
Dick Turpin; Los Angeles Times (pre-1997
Fulltext); Mar 15, 1987; pg. 1
Inventory of Unsold Homes Sets New Low
Los Angeles Times (pre-1997 Fulltext); Mar 15,
1987; pg. 1
Fewer Homes, High Prices as Mortgage Rates Climb
TOM FURLONG; Los Angeles Times (pre-1997
Fulltext); Sep 10, 1987; pg. 1
Fixed-Mortgage Interest Rates Surge Woes Mount for
Home Buyers, Brokers
TOM FURLONG; Los Angeles Times (pre-1997
Fulltext); Sep 10, 1987; pg. 1
Unsold Homes Inventory Drops for Third Time
DAVID M. KINCHEN; Los Angeles Times (pre-1997
Fulltext); Sep 13, 1987; pg.1
1988: People start to question the boom. Realtors
assure us the boom will continue. Houses aren’t like
stocks afterall.
‘88 Outlook Bright for U. S. Real Estate
Dick Turpin; Los Angeles Times (pre-1997
Fulltext); Jan 10, 1988; pg. 1
County’s Median Resale Price of Homes Reaches
$179,999, Costliest in California
JOHN O’DELL; Los Angeles Times (pre-1997
Fulltext); Mar 23, 1988; pg. 5
Unlike Stocks, Home Prices Rarely Collapse
JAMES FLANIGAN; Los Angeles Times (pre-1997
Fulltext); Aug 28, 1988; pg. 1
Southland Inventory of Unsold New Homes Lowest in
Decade
DAVID M. KINCHEN; Los Angeles Times (pre-1997
Fulltext); Sep 11, 1988; pg. 10
J. M. Peters Reports Skyrocketing Sales for Second
Quarter
MICHAEL FLAGG; Los Angeles Times (pre-1997
Fulltext); Sep 14, 1988; pg. 5
Limit Issue Driving Up Home Prices
Dick Turpin; Los Angeles Times (pre-1997
Fulltext); Sep 18, 1988; pg. 1
Hot Housing Sales Belie Doom Forecast
Ryon, Ruth; Los Angeles Times; Sep 25, 1988; Vol.
107, Iss. 297; 8; pg. 1
1989: Prices are very expensive; affordability an
issue. Sales slow and prices drop. Mention of risky
loan types.
Housing Prices in State Climb 3% in February
Furlong, Tom; Los Angeles Times; Mar 29, 1989;
Vol. 108, Iss. 116; 4; pg. 1
Stock of Unsold Homes Drops Dramatically
DAVID M. KINCHEN; Los Angeles Times (pre-1997
Fulltext); Apr 2, 1989; pg. 9
How First-Time Buyers CAn Get Their Piece of the
Dream
Myers, David W; Los Angeles Times; May 21, 1989;
pg. VIII1
State’s Home Sales Drop 14% Median Price Tops
$200,000 for First Time
Crouch, Gregory; Los Angeles Times; May 25, 1989;
pg. IV1
Sales of Existing Homes in State Fall During May
Furlong, Tom; Los Angeles Times; Jun 23, 1989;
Vol. 108, Iss. 202; 4; pg. 1
Orange County Home Sales Drop by 22% in May
TOM FURLONG; Los Angeles Times (pre-1997
Fulltext); Jun 23, 1989; pg. 1
Realtors Tackle New Topic: How to Handle Slow
Housing Market
Myers, David W; Los Angeles Times; Oct 1, 1989;
pg. VIII1
Prices Drop, Sales Slow in State’s Housing Market
TOM FURLONG; Los Angeles Times (pre-1997
Fulltext); Nov 29, 1989; pg. 1
Housing Affordability Rises Outside L.A., Orange
County
Kristof, Kathy M.; Los Angeles Times; Dec 06,
1989; Vol. 109, Iss. 3; D; pg. 1
Survey Cites Four California Banks With Possibly
Risky Realty Loans
JAMES BATES; Los Angeles Times (pre-1997
Fulltext); Dec 30, 1989; pg. 1
1990: Prices take a serious plunge. One article claims
that housing booms are a bad thing and we should hope
prices stay low. Increasing mortgage rates are blamed
for the bust. The word “recession” is mentioned. Gloom
and doom.
Home Sales in Southland Plunge in ‘89
Samuels, Alisa; Los Angeles Times; Feb 8, 1990;
pg. D2
The Number of Homes for Sale Sets a Record Real
Estate: San Diego becomes buyer’s market, with 4,000
existing homes listed in January.
GREG JOHNSON; Los Angeles Times (pre-1997
Fulltext); Feb 13, 1990; pg. 2.A
Pray That the Housing Boom Stays Dead
Jones, Robert A; Los Angeles Times; Apr 24, 1990;
pg. A3
Climbing Mortgage Rates Hurt Existing Home Sales
Samuels, Alisa; Los Angeles Times; Apr 26, 1990;
Vol. 109, Iss. 144; D; pg. 3
California Is Nearing the Edge of Recession, UCLA
Forecast Warns
Anderson, Harry; Los Angeles Times; Jun 29, 1990;
Vol. 109, Iss. 208; D; pg. 1
California Real Estate Market Continues to Cool
TOM FURLONG; Los Angeles Times (pre-1997
Fulltext); Jul 26, 1990; pg. 1
Home Sales in July at Slowest Pace in 4 1/2 Years
Furlong, Tom; Los Angeles Times; Aug 28, 1990;
Vol. 109, Iss. 268; D; pg. 2
Realtors Hear Gloomy Price, Sales Forecasts
Myers, David W; Los Angeles Times; Oct 7, 1990;
pg. K1
O.C. Home Resales, Prices Fall Sharply Housing:
Realtors group attributes slump in county and state
figures to fears of recession.
MICHAEL FLAGG; Los Angeles Times (pre-1997
Fulltext); Oct 26, 1990; pg. 5
Housing Slump in California Seen Worsening
TOM FURLONG; Los Angeles Times (pre-1997
Fulltext); Nov 21, 1990; pg. 1
1991: A “dead cat bounce”? Some folks wondering if the
bust has bottomed out or not. Sales are abysmal (e.g.,
-42%). Other parts of the country showing some signs
of recovery.
Back to Basics
Inman, Bradley; Los Angeles Times; Jan 20, 1991;
pg. K1
Re-Assessing When Home Prices Fall
Boyer, Jeanne; Los Angeles Times; Feb 3, 1991; pg.
K1
California Still Among Lagging Areas, Fed Says
JAMES RISEN; Los Angeles Times (pre-1997
Fulltext); May 2, 1991; pg. 1
Reading Signs–Is Market at Bottom?
Inman, Bradley; Los Angeles Times; Sep 8, 1991;
pg. K1
County’s New-Home Sales Plunge 42% for Quarter *
Real estate: New figures indicate the market is
sputtering again after a brief recovery. The inventory
of unsold houses rose by 15%.
GREGORY CROUCH; Los Angeles Times (pre-1997
Fulltext); Oct 4, 1991; pg. 5
Home Sales Decline in California
Los Angeles Times; Nov 26, 1991; pg. D1
Home Sales Decline in California Housing: The drop
in mortgage rates fails to spur sales in the state,
but sales of existing homes across the country edge up
in October.
Los Angeles Times (pre-1997 Fulltext); Nov 26,
1991; pg. 1
1992: No one is buying; housing is an investment that
no one will touch. Desperate political efforts being
made to encourage house buying. Rock bottom prices and
lower mortgage rates encourage some purchasing. The
year ends with some buying. Another “dead cat bounce”?
It’s not clear.
Move-Up Home Buyers Pretty Much Left Out Real
estate: While Bush’s plan may boost first-time
purchases, it does little to dispel caution in the
other key housing sector.
JUBE SHIVER Jr.; Los Angeles Times (pre-1997
Fulltext); Jan 30, 1992; pg. 4
Home Sales in State Fell 6.2% in 1991
Shiver, Jube, Jr.; Los Angeles Times; Feb 12,
1992; D; pg. 1
Spring Thaw Real estate: The local housing market
is showing signs of recovery. More realistic selling
prices and reasonable interest rates have helped to
spur sales.
PATRICIA WARD BIEDERMAN; Los Angeles Times
(pre-1997 Fulltext); Mar 26, 1992; pg. 1
Housing Starts Increase 6.4% to 2-Year High *
Economy: A strong surge in apartment building leads
the way, providing economists with more evidence of a
sustained recovery.
JUBE SHIVER Jr.; Los Angeles Times (pre-1997
Fulltext); Apr 18, 1992; pg. 1
June Home Sales 3.5% over May but Trail 1991
Figure
Los Angeles Times; Aug 2, 1992; pg. K1
August Housing Starts Rebound 10.4%, U.S. Says
Marshall, Matt; Los Angeles Times; Sep 23, 1992;
D; pg. 1
California Home Sales Surge
Myers, David W; Los Angeles Times; Nov 25, 1992;
pg. D1
Sales of Existing Homes in California Rise Again
Myers, David W; Los Angeles Times; Dec 24, 1992;
pg. D1
1993: It’s definitely a buyer’s market. Some people
are saddened by the fact that current prices are 50%
of what they were in the 1980’s. The housing bust in
Southern California is clearly negatively impacting
the California economy and the national economy at
large. Sellers are desperate to sell (and some people
taking extreme measures like putting huge “for sale”
signs on their lawns for passing planes to see). Folks
who waited out the boom to buy at the bottom are being
handsomely rewarded for their patience. Proof-positive
of the contrarian investing style — be greedy when
everyone is fearful and fearful when everyone is
greedy. The “slump” may be ending.
Long Southland Housing Slump Finally Ending?
DAVID W. MYERS; Los Angeles Times (pre-1997
Fulltext); Feb 10, 1993; pg. 1
Housing Market Warming Up After 3-Year Slump Real
estate: Optimism returns to Southland with rising
sales. Number of homes on market is down.
DAVID W. MYERS; Los Angeles Times (pre-1997
Fulltext); Feb 10, 1993; pg. 1
A sad Westside story: Home prices have declined up
to 50% since late 1980s
Myers, David W; Los Angeles Times; May 28, 1993;
D; pg. 1
Couple Put Up a Big Sign of the Real Estate Slump
Housing: They write `For Sale’ in huge letters on
their lawn, hoping to attract attention from
passengers in planes and jets on flight path to LAX.
DICK WAGNER; Los Angeles Times (pre-1997; Apr 29,
1993; pg. 8
Home Sales in County Climb by 3% Real estate: The
market bucks the downward trend of neighboring areas.
But analysts say don’t be too optimistic.
STEPHANIE SIMON; Los Angeles Times (pre-1997
Fulltext); May 28, 1993; pg. 1
It’s a Buyer’s Market as Peninsula Home Prices
Tumble Real estate: Younger families are taking
another look at an area that was once beyond their
economic grasp. This could revitalize the school
district.
TED JOHNSON; Los Angeles Times (pre-1997; Jun 24,
1993; pg. 3
Home Sales Up 6.3% in State, 4.6% Nationwide Real
Estate: Analysts credit low interest rates and say
buyers are beginning to think that prices may have
bottomed out.
DAVID W. MYERS; Los Angeles Times (pre-1997
Fulltext); Jun 26, 1993; pg. 1
California’s real estate slump deepens
Miller, Greg; Los Angeles Times; Jul 27, 1993; pg.
D2
Southland home values lead U.S.–Downward
Myers, David W; Los Angeles Times; Aug 4, 1993;
pg. D1
Bottom Line: Housing Market May Be Mending Real
Estate: Despite a three-year slump, experts say prices
are stabilizing, especially for homes under $500,000.
PATRICIA WARD BIEDERMAN; Los Angeles Times
(pre-1997 Fulltext); Aug 22, 1993; pg. 1
Buyers Seek Bargains as Home Prices Keep Sliding
Real estate: La Canada Flintridge emerges as bright
spot with a nearly 21% increase in sales over same
period last year.
ANDREW LePAGE; Los Angeles Times (pre-1997
Fulltext); Sep 2, 1993; pg. 1
Sitting on the market: After the cash, owners
adjust to the region’s housing slump
Myers, David W; Los Angeles Times; Sep 20, 1993;
D; pg. 1
State’s bargain hunters boost new-home sales to
3-year high
Myers, David W; Los Angeles Times; Oct 1, 1993;
pg. D1
Home Sales Rise Sharply in State, Nation Real
estate: Size of increase surprises housing analysts.
Median price in California is down 4.3% from 1992
figure.
DAVID W. MYERS; Los Angeles Times (pre-1997
Fulltext); Oct 26, 1993; pg. 2
Jump in new-home sales spurs hopes of long-awaited
revival
Myers, David W; Los Angeles Times; Nov 3, 1993;
pg. D1
Drop in Southland Home Sales Slows in First 10
Months of ‘93
Los Angeles Times (pre-1997 Fulltext); Nov 28,
1993; pg. 4
U.S. home sales hit 14-year high
Myers, David W; Los Angeles Times; Nov 30, 1993;
pg. D1
Slump in O.C. Housing Market May Be Ending Real
estate: November figures show a major year-to-year
increase in the number of units sold. Median price
still sags.
JOHN O’DELL; Los Angeles Times (pre-1997
Fulltext); Dec 21, 1993; pg. 1
1994: Housing begins its comeback. People who had the
intelligence to wait for the bottom are buying now at
great values. Even rising mortgage rates are not
shaking the recovery.
Bright Spots Some Areas Showing Signs of Recovery
After Four-Year Slump in Home Prices
Los Angeles Times (pre-1997 Fulltext); Jan 16,
1994; pg. 1
Lenders scramble to keep housing comeback alive
Myers, David W; Los Angeles Times; Mar 30, 1994;
D; pg. 1
First-Time Buyers Who Waited Spark Housing Rebound
Real estate: After years of ice-cold sales, the city’s
Westside market is finally starting to heat up.
SCOTT SHIBUYA BROWN; Los Angeles Times (pre-1997
Fulltext); Jun 5, 1994; pg. 10
Home Sales Up 24% From Last Year
Los Angeles Times (pre-1997 Fulltext); Jun 26,
1994; pg. 6
June Home Sales Best in 5 Years Ventura County Is
Leader
Jack Searles; Los Angeles Times (pre-1997
Fulltext); Jul 26, 1994; pg. 8
Rising mortgage rates shake but don’t break state
housing industry
Lee, Patrick; Los Angeles Times; Oct 7, 1994; pg.
D1
1995: Some parts of the Southland are recovering
others are not. People with “negative equity” are in
despair.
Home Sales Rise 10.5% in State, Hit 5-Year High
JAMES F. PELTZ; Los Angeles Times (pre-1997
Fulltext); Feb 9, 1995; pg. 1
Southland Home Price Rebound Fails to Appear
JESUS SANCHEZ; Los Angeles Times (pre-1997
Fulltext); May 22, 1995; pg. 1
County Home Sales Slide 20.4% in May
DAVID R. BAKER; Los Angeles Times (pre-1997
Fulltext); Jun 13, 1995; pg. 1
Home sales surge 19% in May, raising doubts of
rate cut
Mowbray, Rebecca; Los Angeles Times; Jun 30, 1995;
D; pg. 1
Study of Homeowners Finds `Negative Equity’ a
Problem Real estate: Nearly 5% owe more than homes are
worth. Impact hinders the state’s economy, experts
say.
DEBORA VRANA; Los Angeles Times (pre-1997
Fulltext); Jul 6, 1995; pg. 1
O.C. Real Estate Sales Drop Property: Preliminary
figures for July suggest the county’s housing market
is still in a slump.
DEBORA VRANA; Los Angeles Times (pre-1997
Fulltext); Aug 1, 1995; pg. 1
1996: A tentative recovery is still in the making.
State’s housing market finally in turnaround
Sanchez, Jesus; Los Angeles Times; Oct 25, 1996;
pg. D1, 1
O.C. homeowners more confident
Fulmer, Melinda; Los Angeles Times; Dec 3, 1996;
pg. D.2
Ready to fly? Region’s housing prices on rise,
moderately
Sanchez, Jesus; Los Angeles Times; Dec 29, 1996;
pg. D.1
1997: Finally, housing has recovered.
Southland Home Sales Are Unseasonably Hot Real
estate: In O.C., October sales were 46.5% higher than
last year. Median price of $208,000 was highest since
1994.
E. SCOTT RECKARD; Los Angeles Times; Nov 14, 1997;
pg. 1
Median Price for O.C. Homes Surges 10.5%
E. SCOTT RECKARD; Los Angeles Times; Dec 10, 1997;
pg. 1
And the rest, as they say, is history.
Little feedback on posting size:
If I have to grab the scrollbar button and keep sliding it down until I notice a color change between comments your post might be a little long.
I’d love to hear what you have to say, but you gotta keep it brief!
I thought I was the only one using a browser to read these blogs. I guess I’ll put off the hunt for alternative blog readers.
Fantastic timeline. Thanks for the post from the speed readers on the board.
Santacruz;….maybe it could be posted as a link instead ??
Point taken.
santacruzsux -
scdave makes the point I’m alluding to for these long posts.
Hyperlinking condenses relevant information so a reader can glance at the context and decide if they want to know more.
I really like scanning to get everybody’s take on stuff and then drilling down when a certain topic (or blogger) seems relevant. I guessing these long posts get skipped by the vast majority of us.
BTW, I’m quite a speed reader myself and rarely forget stuff I’ve already seen. Desidude has already posted this information.
In case anyone wants a view of the Northeast market over that same time period:
The Collapse Of The 1980’s Real Estate Bubble Through The Eyes Of The New York Times
grim
Thanks Desidude, great post.
great timeline, even though it was long, well worth the scope of things at that time, gives u a good clue about whats going to happen now at a much, much bigger scale this time.
This was an EXCELLENT review of our recent history. I found it very informative, and one can see the parallels to this bubble, and about where we are in the scheme of things. The same things were being said at the turn. Prices continued to rise, even as sales were slowing.
Do you know how areas like Sierra Madre fared in the last correction? My fiancee says that prices held there.
OUCH! The Ten year bond, look out below!!!
Welcome to housing hell
http://www.prudentbear.com/archive_comm_article.asp?category=Guest+Commentary&content_idx=53349
“Our estimate is it will take about six months for sellers – particularly speculators who never intended to live in their properties but whose sole intention was to “flip” them for a profit – to realize they are toast.”
I think that from Phoenix point of view, this article is 6 months late - articles everywhere about toasted flippers abound all over.
Actually, I am liking this all - Hearing over & over again what a stupid moron I was to sell my home last spring, when the mantra was that houses with go up 20% /yr for the rest of our lives & renters would all have to migrate to Alaska (I could not find leareh’s famous speech about that)
The math really works against the flopper. They would have been insane to do anything other than the minimum (even no) downpayment using an adjustable with the lowest intro rates. That’s what anyone would do if the intention was to flip. Then they’d certainly arrange a HELOC to finance the improvements.
So, what do we got? People paying 7%+ on $400k of debt backed by $350k of property. It’s called a margin call. In the stock market you are required to put up 50% because of that little incident in Oct ‘29. Now we’ve got people investing in housing with NEGATIVE margins. Who is going to loan these people $50k to let them out of the deal? What happens to velocity of money when this guy goes from blowing HELOC bucks at the Walcostdepot to writing a monthly check to a faceless Real Estate bailout investor at usurious rates?
Whatever the rich BB don’t buy, the Donald and his RE legions will buy up the rest. Thus, SD will be the first major city to hit a median of $1M (LOL). (See above comment).
LA/OC highest median since last fall. WTF. It sucks that they post that crap since it really doesnt tell the whole story. Does someone have the breakdown that describes what type of homes made up the difference…
PS…who the heck is buying that crap…?
We just went into contract for our East Bay 1200 sq ft. California Bungalow. We have 3 small kids and we have decided not to remodel. There are two houses on the block sitting on the market since late ’05. Our place is in better condition and we listed at 10% under their price. We had one full price offer that we accepted after haggling over closing costs. We will now rent in a better school district and wait. Even our realtor admitted today that renting makes sense given the “transition” in the market.
Cheers!
Johnny Fever-
Don’t worry about the median price thing. Yeah, it’s skewed statistics but that’s what they watch and rah rah about.
At some point, the skewed statistics will start working in your favor. Then the rah rah-ers have nowhere to hide.
It finally happened last weekend in Seattle. 3 of the 30 sections went DOWN. Median YOY went down 30% in one section . 30%!!! The other 2 were more modest: -4.1% and -0.2%.
Now all they’ve got left is: “but it still held steady or went up in 27″. As if every single area would go over the cliff at once. LOL
For now, I’ll take my 30% decrease in median YOY and feel way good about THAT trend. More than I could have hoped for.
The next innovation will be comparing prices to 2002. Or 2000.
Gilbert expects prices in his area to rise about 10% this year, not as fast as their 25% peak rate of appreciation, but still moving up, not down.
Even UCLA economist Thornberg — among the most pessimistic of analysts — concedes that local home prices aren’t likely to fall this time around
Where do these experts pick these these numbers. OBVIOUSLY they didn’t pass economics . How can we continue with higher prices when wages are shrinking ,inflations is expanding and interest rates are climbing. JUS PLAIN STUPID!!!!
Now, if we can just get rid of the ILLEGALS, we’ll have more housing than ever. Oh, I forgot, the kool aid drinkers in the US senate won’t protect us.
ORANGE COUNTY HOME PRICES
April 13, 2006 Lanser on Real Estate
O.C. home sales to mirror region’s pace
The O.C.’s March will likely look much like L.A. and San Diego. New DataQuick numbers out Thursday suggest we’ll have a new record high price in March — but it was also the fifth straight month where O.C. homes sales couldn’t match the previous year’s sales pace. For the 22 business days ended March 29:
22 days ended 3/29 Median Change from 2005 Volume Change from 2005
Resale houses $695,000 +13.0% 2,016 -27.5%
Resale condos $466,250 +12.6% 967 -29.3%
New residences* $646,500 -12.8% 551 +3.2%
All homes $625,000 +9.5% 3,534 -24.6%
* Includes single-family homes, condos and converted apartments
Did anyone read the article from the L.A. times? Tipical bad reporting. I’m always reminded why I never buy that news paper, after I read one of their articles. Even when they are reporting the current weakness in the current market they are still cheering it on. Once again The L.A times dissapoints.