Innovative, Responsible And Vibrant In California
The Press Telegram reports from California. “Home sales across California jumped nearly 18 percent during June compared with a year earlier as discounted foreclosures lured buyers back into the real-estate market, a trade association said Friday. However, the median resale price plunged in every region of the state from year-ago levels, falling 38 percent statewide and 32 percent in Los Angeles, said the California Association of Realtors.”
“Sales surged in areas hit hard by foreclosures, soaring 71 percent in the High Desert, which includes the Antelope Valley, 75 percent in the Inland Empire and 96 percent in Sacramento. Those areas have also seen big price drops and more are expected because foreclosures continue to mount.”
“For example, DataQuick said that foreclosures accounted for 41 percent of Los Angeles County sales in June. In Los Angeles County, the median price sank to $396,560, the same level as in the first quarter of 2004 and 35 percent under the record high of $605,300 set last August.”
“The median price of an existing, single-family detached home in California during June 2008 was $368,250, a level not seen since 2003, the association said.”
The Daily Breeze. “Even with rising statewide sales, the South Bay’s housing market continued its pricing slump in June. The median price of all South Bay homes sold in June dropped 10.2 percent to $617,500, compared with the same month a year ago, CAR says.”
“The drop in South Bay home prices was nearly across the board and mostly in double digits. Torrance was an exception, since its median home price fell only 5 percent to $570,000.”
“San Pedro was more representative of the local communities hit by the housing slump. The port area saw its median price drop 17.8 percent to $411,000.”
“Carson, Hawthorne, Inglewood and Gardena all saw respective percentage drops in the 20s as those cities continued to struggle with fallout from subprime loans.”
“June was busier in part because the summer months usually see more real estate activity, said Adolph James of Shorewood Realtors in Manhattan Beach. The other major component that usually drives sales is optimism, ‘which we don’t have,’ James said.”
The Ventura County Star. “The county’s median price for an existing, single-family detached home sold in June was $480,430, a 1.5 percent decline from $487,790 in May and a 30.6 percent drop from $692,730 in June 2007, the California Association of Realtors reported Friday.”
“Peppy accounts from Realtors who say buyers are returning to the market, paired with hope that the housing bill could provide help for distressed homeowners, have been overshadowed by news of rising foreclosures. In Ventura County, there were 3,177 total properties with foreclosure filings, according to RealtyTrac’s second-quarter numbers.”
“‘A year ago, there was no hope in sight - we didn’t know what it would take to recover,’ said Kay Wilson-Bolton, owner- broker of Century 21 Buena Vista in Santa Paula. Now, ‘I don’t see anybody depressed. Realtors are able to exercise their craft again.’”
The Mercury News. “This month, nearing $1 million in debt, the veteran real estate agent and San Jose father of three filed for Chapter 13 bankruptcy. ‘I have taken upward of 25 phone calls a day from creditors,’ he said. ‘When you have 25 people grinding on you day after day, it takes a toll.’”
“Arthur can add himself to the list of 5,941 people who filed for bankruptcy in the San Jose division of U.S. Bankruptcy Court from July 2007 through June 2008. Of the four Bay Area bankruptcy courts, San Jose’s - which oversees Santa Clara, Santa Cruz, San Benito and Monterey counties - posted the highest increase in bankruptcies - 69.7 percent - over the 12 previous months.”
“For people like Arthur, who asked not to be fully identified, it started with a home he bought 10 years ago for about $450,000. As its value rose to $900,000, he used the equity to start his own business. Along the way, the home’s value dropped to $600,000, and business expenses rose. To make his mortgage payments, Arthur began relying on credit cards - at least 20 - for living expenses.”
“‘What’s different about this new wave is the number of people who are simply walking away from their houses,’ said the Northern District of California’s Chief Bankruptcy Judge Randall Newsome, who has overseen bankruptcy filings for two decades. ‘It’s unlike anything I’ve ever seen in my career.’”
“‘People know there’s no hope’ of holding onto their homes, said San Jose bankruptcy Judge Marilyn Morgan. In fact, 90 percent of today’s debtors facing foreclosure don’t even contest it, she said.”
The Recordnet. “Pablo Flores has been unemployed since being laid off from a construction cleanup company in January. The Stockton man has turned in applications since but hasn’t received a response from any potential employers. ‘Unfortunately, right now there is no work,’ said Flores, who has been doing side jobs to earn money since January.”
“‘Right now, there is only work in the fields, but those contractors already have their people. The fields are already full of workers,’ Flores said.”
“Stockton is in a familiar position - No. 1 in foreclosure activity nationally, according to second-quarter data released Friday by Realty-Trac.”
“In the April through June period of this year, there were 9,066 foreclosure filings in the Stockton metro area, up nearly 20 percent from the first quarter and up 171 percent from 3,350 filings in the second quarter of last year, the report said.”
“There were foreclosure filings last quarter on 202,599 California properties, the highest total among states and a rate of one in every 65 households, which was the nation’s second-highest foreclosure activity rate among states.”
“That was up from 169,831 foreclosure filings in California during the first quarter.”
“A year ago, houses priced less than $500,000 accounted for 40 percent of sales, said Leslie Appleton-Young, chief economist of the Realtors association, but as of last month, that segment of the market accounted to 67 percent of all sales.”
The LA Daily News. “Foreclosures across the San Fernando Valley shattered records for the second quarter, soaring 230 percent from a year earlier as the housing crisis intensified, a research center said.”
“A total of 2,084 Valley families lost their homes from April to June after defaulting on their loans, up from 632 households a year earlier, according to the San Fernando Valley Economic Research Center at California State University, Northridge.”
“The previous second-quarter record of 1,818 foreclosures was set in 1996, amid another real-estate market collapse.
“The dismal housing situation was reflected throughout Los Angeles County, where 3,676 homes were lost - nearly 260 percent higher than in the second quarter of 2007.”
“Center Director Daniel Blake said he expects the bad news to continue into 2009. ‘This quarter’s record number of foreclosures could be surpassed next quarter, given the current trend in foreclosures and the still-high numbers of notices of default,’ said Blake, an economics professor at CSUN.”
“Jack Kyser, chief economist at the Los Angeles County Economic Development Corp., concurred that the real estate market will worsen before getting better. ‘Get used to it,’ he said. ‘You will see bad news for the rest of this year and into 2009.’”
“The median home price in the Valley in June 2007 was $654,750. It had plummeted last month to $472,500, a drop of $182,250. A total of 1,155 transactions closed in June, the lowest number for the month since the start of record-keeping in 1988. Only the 1,444 transactions recorded in June 1993 come close.”
The Merced Sun Star. “The signs dotting Montage Drive in North Merced promise contemporary living amidst agriculture. Innovative, one reads. Responsible, says another. Vibrant.”
“Surrounding these signs are 136 vacant lots with weeds and electrical wires sprouting from the ground. Dusty black mailboxes, home to wasp nests, are cemented next to the street. Six model homes with lamps in the windows are protected by chain-link fence. A jackrabbit prances about as if it’s the prairie.”
“Welcome to Paseo, just one of the subdivisions stalled mid-development since the housing market began tanking in late 2005. It’s a familiar scene for anyone who’s driven across the county. Now this project, launched by Summerton Homes in early 2007, is in danger of going belly-up.”
“Merced County had a record 449 foreclosures last month, bringing 2008’s total to 2,185. In other words, one out of 20.5 Merced homes has been lost to the housing market’s crash. In the second quarter, another 1,900 Merced County homes neared foreclosure, based on the number of loan default notices sent out by lenders.”
“Filing a case is one of the ways to get stubborn developers to rework and pay down a loan, bank spokesman Thomas Smith said.”
“Only two years ago, he said, some of them were making millions and have sheltered their assets that only the court’s pry-bar can access. ‘You can only feel sorry for them so long,’ Smith said. ‘Pity only goes so far.’”
“Coldwell Banker Gonella Realty, where Kielty works, sold 168 homes in May and 163 more in June. Of homes sold, 75 percent of them were foreclosures.”
“One 1,368-square-foot home off West Highway 140, sold in 2005 for about $300,000, agent Roselin Charitar said. Citi Mortgage took it back when it was worth $240,000 and now lists it for sale at $109,000. ‘It’s an extra nice deal,’ she said.”
“The possible collapse of Paseo, along with recently released data, suggest the county may not have hit rock-bottom with the foreclosure crisis. One house sold three years ago for $300,000, for example, was just listed for roughly one-third that price. Incredibly, some houses are going for five-digit tags.”
“Someday, homes will fill the vacant lots in Paseo, and the long-promised community near UC Merced will become a reality. Until then, the signs along Montage Drive — Innovative, Responsible, Vibrant — loom as testaments to failed promises.”
The Orange County Register. “A year ago, the house at 920 W. Camile St. in Santa Ana was bank-owned, deserted and tagged with gang graffiti, a symbol of how the subprime lending bonanza had blighted a city block.”
“In October, the house sold at auction for $304,500, little more than half what a buyer using 100-percent subprime financing paid in 2006.”
‘Today, 920 W. Camile has been renovated, repainted and floored with faux marble. It resold in January for $625,000, according to county records - a $125,000 down payment and a $500,000 mortgage from Wells Fargo Bank. The owners and residents are Mario and Paula Gomez, both garment workers in Irvine and parents of three sons.”
“But why would the price of a troubled property on a blighted street double between October and January? In November, Wells Fargo issued a $289,275 mortgage for 920 W. Camile to an investor who had purchased the home at a foreclosure auction. In January, after the house was spruced up, Wells Fargo issued a $500,000 mortgage to the new owners.”
“A year ago, Angelita Albarran, owner of 919 W. Camile, said people on her street were endrogados - Spanish slang for ‘addicted’ - to debt. Now the garden where she nursed jasmine and roses has gone to weeds. Albarran has vanished and could not be reached for this story.”
“In April, the bank repossessed her house, because she was unable to pay or refinance the $600,000 subprime loan. It’s now on the market for $295,000.”
“The bungalow at 937, which was purchased by another person for $591,000 in early 2006, foreclosed in October. This month, it was listed as ’sale pending’ with a price of $314,900. The house at 1033 sold at auction in June for $270,000, less than half its value in a late 2006 refinance deal.”
“Ray Braun took his house at 1011 W. Camile off the market after steadily dropping the asking price from $560,000 to $425,000. ‘I’m afraid I still don’t know where the bottom is,’ Braun said. A renter pays him $1,600 a month to live in the house - $200 less than Braun’s mortgage payments.”
“Jose Ramos, a real estate agent who lives at 1052 W. Camile, said he wants to unload his second home at 1042 W. Camile in a ’short sale,’ because he can’t make money on rent and can’t sell it for more than the $417,000 loan he arranged in November.”
“Ramos got his mortgage from IndyMac Bank. ‘I tried a loan modification, but they didn’t agree,’ Ramos said.”
“What makes the Gomezes’ house such a red flag…how could a property in such a distressed neighborhood, at a time of tight credit and falling real estate prices, double in value in a few months?”
“Orange County property records show that on Oct. 29, Jose Castro bought 920 W. Camile from the Bank of New York, which took title to the home after it was foreclosed last year. On Nov. 16, Wells Fargo lent Castro $289,275 for the property.”
“On Dec. 3, Castro transferred title of the house to Asset Disposition Venture Capital LLC, a West Covina company managed by Sergio Praslin, who signed documents on behalf of the company. Praslin did not return calls requesting comment that were left on his answering machine daily for the past two weeks.”
“On Jan. 15, Praslin signed the deed selling the property to the Gomezes. Mario Gomez said he was surprised when it came time to sign the papers. ‘They lied to us,’ he said of the sellers. ‘They said the house was really $500,000, but when I bought it, the papers said $625,000.’”
“Gomez said someone else - he’s not sure exactly who - paid the $125,000 down payment. Documents examined by the Register, including papers in the Gomezes’ loan packet, did not show who paid the down payment.”
“Ted Faravelli, managing director of the California Association of Real Estate Appraisers, said his profession is as much art as science. He said appraisers might not be accurate, but they need to be credible. And, given today’s market, paying $625,000 for a home on Santa Ana’s Camile Street sounds incredible.”
“‘It doesn’t pass the smell test,’ he said.”
“Emily Ralles, who served as escrow officer in the sale of 920, said she didn’t know or care who paid the down payment - as long as the check was good and the parties agreed to the terms of the deal.”
“‘It sounds to me like the seller helped out,’ she said. ‘If someone gave them $125,000, what’s the problem? That’s a beautiful thing, if you ask me.’”
I hope the buyer mentality will be as strong as that of the seller’s from the past few years. There is no way that I as a buyer will pay more for a house than what equivalent just sold for.
Sellers, mostly the banks, are getting it that they aren’t getting last year’s, last month’s or even yesterday’s price for the house! Gotta keep lowering the price to get more fools to buy.
I am about to sign another year’s contract on my rental that I have really enjoyed. My kids are doing great in school and we have some discretionary income that allows them to attend some camps and other things that other kids are not able to.
All this talk of kid’s lives being ruined living in a rental just doesn’t seem to be true in my case. My kids live better than most who live in homes “owned”.
Preach it, AZ!
Couldn’t agree more.
The discretionary income from renting allows us to travel the country at least once a year on vacation.
It also affords us the ability to let my wife stay home for the kids. BTW, they are also doing real well in a decent school district.
“All this talk of kid’s lives being ruined living in a rental just doesn’t seem to be true in my case.”
I’ve never heard anyone say that renting ruined kids’ lives. Really, people have said that to you? Didn’t it make you want to barf?
“My kids live better than most who live in homes ‘owned’.”
Definitely. Some “owners” kids are now missing a parent because of foreclosure-related suicide. American dream, my foot.
Glad to hear you and your family are thriving. It’s nice to hear some good news.
So true! Everyday I come home and see the lives of the kids who live at the apartment building being ruined in the pool. When they run around the courtyard, I constantly hear their pain and anguish as they are just mere apartment dwellers.
Oh the horrors! Won’t someone please think of the children?!
Keep on truckin’ and enjoying life, buddy!
I really appreciate this kind of mindset. Your kids will come to recognize the advantages of your approach, if they haven’t already.
As usual Ben, there is so much going on in this great (cough!) state with regards to REIC.
-Addicted to debt
-Using 20 CCs to pay for mortgage, etc.
-Housing in LA dropping like a rock.
-Homes in Santa Ana going for 600K+ (My Gawd!).
I don’t even know where to begin except that we have a long waaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaay to go before this bubble completely pops.
It’s unusual for the Orange County Register to trash OC real estate. Usually it’s the L.A. Times that does that.
The Register in turn trashes L.A. real estate.
Like a totally awesome new world record, dude…
“Foreclosures across the San Fernando Valley shattered records for the second quarter, soaring 230 percent from a year earlier as the housing crisis intensified, a research center said.”
It was also a record price drop, statewide.
Welcome to the HELOC California
Such a lovely place
Such a lovely face
Plenty of room at the HELOC California
Any time of year, you can find it here
Lad, congratulations upon an Eagle.
You can check out, but you can never leave.
I frankly don’t see how anyone paying attention to the data could claim that Fan and Fred have not wildly succeeded in achieving their affordable housing missions…
I was talking to a friend in LA last week about real estate, trying to convince him to hold off buying for a while. He said a smart friend of his had just bought a place in the valley for 550K. I said I thought that was an idiotic move, but perhaps his friend can afford it. He responded that she was an attorney. I conceded that an attorney could probably afford the monthly nut. He said, yeah, she makes about 50K/year. I told him that she would be foreclosed upon in a short time, as there’s no way she could afford that over the long haul. He replied that her business should pick up, as she works for a mortgage broker. Wow. The idiots just keep a’ comin’, don’t they?
For force of habit, nun bettor than the city of angles.
She overpaid.
I’ve seen some decent places in the Valley, above the 101 in Encino, Tarzana and the likes, going for the low 400’s - even high 300’s on busy roads like Burbank.
I live in Encino, close to Ventura Blvd and White Oak. they built a condo complex on White Oak/Ventura Blvd last year. They wanted anywhere from $699K to $899K. Not a single unit sold. They then tried to rent them out starting $2,995 up to $4,500 (some where 2 bed, some 3 bed)… not a single unit rented. They then lowered the prices 30% to 40%… still not a single
unit sold. They then tried to rent the units out and lowered the rents quite a bit.
I do see drapes in one unit but have yet to see a person. The only persons around are the 24 hour security guards. This has ben going on since last fall.
The building is ugly on the outside but the units are gorgeous inside. Anyhow, lots and lots of rentals, bank owned properties for sale south
on Ventura Blvd in Encino. Properties have been
sitting on the market forever. Nothing is selling.
I know because I walk around every week and take different streets and keep track of every single house.
Our friends were laughing at us for renting and
said there wouldn’t be a house left for us to buy, that was back in 05. They are now ALL upside down and although I don’t rub this in their face,
they avoid us. What a change.
pullet–
Try looking at the numbers in that area again–I noticed there is a house in that area with an asking price of $229k. Whoa–unheard of in the Valley for atleast 6 years. Palmdale maybe–but a few years ago 500k would buy you a crackhouse on the corner of stabwound and crackwhore in the valley.
Lol!! That was a good one.
Hmm.. if she’s an attorney in LA and only making $50k/yr, hopefully she either works for the state or public interest, otherwise she just is not a very good attorney.
“Emily Ralles, who served as escrow officer in the sale of 920, said she didn’t know or care who paid the down payment - as long as the check was good and the parties agreed to the terms of the deal.”
“‘It sounds to me like the seller helped out,’ she said. ‘If someone gave them $125,000, what’s the problem? That’s a beautiful thing, if you ask me.’”
Emily Ralles should be in JAIL. Not just because the law was broken, but because she is just plain stupid. If someone passed papers like that in front of someone with half a brain they would have said “WAIT JUST 1 FRICKING MINUTE”. That is not reasonable and it is not a beautiful thing. Something fishy is going on and it stinks like FRAUD.
FBI….YOU DUMBAZZ WASTE OF TAX PAYER MONEY..WHEN ARE YOU GOING TO DO YOUR JOB.
I don’t think escrow officers work for the state.
Not in California…They are all private business…
Shouldn’t there be a copy of the check in her escrow file… I mean, if the file was ever audited, that might be an important document.
Something definitely doesn’t smell right.
Escrow officers have a three-sided fiduciary duty that extends to the buyer,seller ,and lender .Most states and Judges have ruled that a escrow officer has a duty to communicate knowledge of a material fact that they might learn in the course of the involvement with the parties and any knowledge of fraud or possible fraud .
Where it gets tricky is that some Judges have ruled that in exposing fraud it would be taking a escrow officer out of the neutral position they are suppose to hold toward the three parties
being seller,buyer,and lender . So it depends on the State you are in or if you end up in a court with a screw-ball Judge or not .
Escrow officers are in a ideal position to spot a fraudulent transaction ,such as the example Ben gave in his post .It looks like during the boom some of the fraud that took place was not stopped or disclosed to the lenders by the escrow officers .
My own view is that this escrow officer breached a duty to be fiduciary to the lender about the fraud (or evidence of possible fraud ),especially since it violated the contract of the sales agreement that the lender based the loan agreement on .
It is really alarming to me sometimes that every check and balance system, including escrow ,closed their eyes to the hanky-panky they must of been seeing with these bogus real estate transactions .
Welcome to the slimy world of California real estate…you’ve not seen nothing yet Bubba…
Now that Fred and Fannie have raised their limits by 200k…buy stocks in Kinko’s the games will really begin when Bush signs that bill…
I know mrincomescream, why do you think I’m always harping on the corrupt system ,I know what the REIC is going to do with the new
opportunities . This is hard to watch……
“‘What’s different about this new wave is the number of people who are simply walking away from their houses,’ said the Northern District of California’s Chief Bankruptcy Judge Randall Newsome, who has overseen bankruptcy filings for two decades. ‘It’s unlike anything I’ve ever seen in my career.’”
*****
sf jack in San Francisco in 2004-2006:
“What’s different about this housing bubble is the number of people buying hugely overpriced houses, speculating on ever rising prices, with very average or smaller incomes. It reminds of, but is even more outrageous than, the dotcom bubble.”
The true real estate “crisis”, which those in power ignored or even praised, is not the recent pricing decline, but the appreciation that occured between 1998 and 2007 fueled by massive speculation.
test
sf jack
right on !
sfJack, you are more correct than you realise.
In the dark depths of the dot.com bubble, there were not many punters who could get into an IPO, in order to “guarantee” their immediate income. You had to be “connected” to even get a chance at 10% fulfillment of your tender.
The housing credit bubble simply made it easier for EVERYBODY to get on board the gravy train.
Why work for $50,000 per year net, when you could flip properties for far greater “REWARDS”.
Charles Ponzi! Charles Ponzi! Clean up on aisle 8!
The title of the first article was “State home sales up 18%.” It still bothers me that they focus on the misleading positive for the title even when the body of the article makes it clear that price declines are accelerating. There was never an issue of lack of buyers, it was an issue of buyers not willing to over pay. I used to think less than a year ago that national reversion to 2000 prices was not going to happen, and was expecting 2003 pricing to return. Now I think 2000 pricing is more probable. I really dont see anything going on in Cali or FL that would lead me believe its not going to get much worse, and they may overshoot. I wouldnt mind picking up something nice in the bay area at below historical pricing ratios.
Note that the Dataquick numbers just the other day showed a decline. Hmmm.
Thornberg sort of implied they might be fibbing in this SF Chronicle article…
“That doesn’t reflect anything else we’re seeing anywhere else in any number,” said Christopher Thornberg, principal at Los Angeles consulting firm Beacon Economics. “That just seems insane to me.”
http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2008/07/26/BU3P11VOUR.DTL
Ben, seems Chris Thornberg is very skeptical of these numbers from CAR and so is the SF Chronicle.They called it “baffling”….
http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2008/07/26/BU3P11VOUR.DTL
The SF Chronicle never publishes anything about real estate that isn’t a fluffy, feel good, Sunday magazine piece of nothing. The fact that she called the “facts” issued by the California Association of Realtors “baffling” is about as investigative as she’s ever gotten. I generally just ignore anything in the Chron about real estate and try not to feel too sorry for people who actually believe this drivel. The facts are out there for anyone who cares to take the time to uncover them. The Chronicle would do it’s readership a favor if they included anything even vaguely resembling a “fact” in one of their real estate pieces. But then again, this might upset the “arrogance bubble” that is insulating Marin and SF.
However, if you’re at all interested in which celebrities have just put their $12 million dollar Malibu homes up for sale, the Chronicle is right there with the answer!
Sigh…
we sold our house in late 2003 for almost exactly the median price in San Diego, these were the highest prices my wife and I, both long, long San Diego residents had ever seen. So now that prices have returned to almost exactly those same prices why would that now be correct? We think another 50% from here would put prices about where they should be in relation to most peoples’ income, and we would not consider that ‘overshooting’.
Last year, I thought the same. I thought about 2002 prices would be hitting around bottom. In 2003 I remember thinking prices were getting outrageous. When average homes were getting in the 250k range. Well now we’re there, for the most part. And 2003 prices seem rediculous again.
I think we could definitely see 2000 or even 1999 prices. The problem now is that a lot of sellers are still trying to get every last dollar out of their home. A few of them are getting it. And a few are more agressive with their pricing. But many are not. I think the reality we’re in now is that people CAN sell homes, but many are not willing to drop their prices fast enough. I think at some point (maybe a year from now) we may hit a really nasty point: as foreclosure losses mount WaMu will probably fail, maybe another large bank will folllow, some 2008 buyers will be foreclosing, loans will be even harder to come by, interest rates will go up, unemployment will climb up, more foreclosures will hit the market, people who were sitting on their primary or second homes waiting for a bounce will realize that it’s not coming and want to sell fast, and the sellers who were holding out for top dollar will desperately slash prices to normal levels. When things get at their ugliest sellers will have slashed prices to reasonable levels, but they’ll be so flooded with competition that they’ll still have a hard time selling.
I’m also expecting some really big scandals to come out by the end of the year. I’m not sure what. Maybe we’ll discover that some major bank was hiding billions in foreclosure losses or something.
“I’m also expecting some really big scandals to come out by the end of the year.”
End of the year, as in right after the elections?
Me too. That’s when the S will HTF.
2009 should offer Interesting Times, IMO.
Hence the overshoot to the downside. Patience will be rewarded.
Has anyone else noticed the “we’re turning the corner” crowd has been louder in recent days?
I’m hearing from those in communication with the REIC types locally that since one of those Credit Suisse charts shows peak resets later this year, that all will be well soon. And, of course, I’m sure we’ll soon hear about that Congressional bailout plan.
The funny thing is that housing markets didn’t turnaround “the last time” until about five years after foreclosures peaked. Since foreclosures may, or may not, be peaking today… I would guess we’re at least five years from any kind of real housing upturn.
I rent a beutiful 2/2 condo in downtown SD for $2600 a month, which is 14% of my gross income. . .needless to say, we have money to visit our friends in Zurich two to three times a year. We are retired, and would be paying about 30% more out of pocket to own the place where we live. . .as long as there are people who never run the numbers (rent/own), and want that American Dream at any cost, the RE meltdown will take another 5 years. . .when NO ONE EVER wants to own real estate again - that will be the time to buy.
But but but you lose the tax deduction ! It’s UnAmerican to rent if you can afford to buy ! hehehehehehehe
Are you in the Renaissance, Horizons or Grande building? I assume you have about 1300 sq.ft, so about $2 PPSF. For premium buildings that is fine, but others need to get back to the $1.2 to $1.5 PPSF for me to be comfortable with renting back in downtown.
Mark buddy, what do you do for a living?
Unlanded gentry.
“Mark buddy, what do you do for a living?”
More importantly… Do they have any openings?
Home sales across California jumped nearly 18 percent during June compared with a year earlier as discounted foreclosures lured buyers back into the real-estate market
The next round of foreclosures …
I still dont get why we are not rioting in the streets over this Fannie/Freddie thing…. even if you think we have to rescue them (I dont), why to we have to pay huge salaries, support stock prices? they should be wiped out - I am outraged at our politicians climbing into bed with Fannie/Freddie execs - these politicians should be drawn and quartered, pure and simple. (p.s. lifelong democrat who is finished with my party - not another ounce of support and switching to the dark side)
In such a pathetic society such as ours, it’s not unusual to see apathy a’plenty.
The problem is that right now we are all “fatted and content”. It will take actual hunger and pain before we are willing to do something about our situation.
Wachovia shut down residental lending this week in San Luis Obispo. A friend of mine is back walking the bricks
I agree. I did not see too many resistance. I expected riots and burning tires on the street type reaction. I guess the majority of the population are ok with this?
Maybe it’s because they really did nothing. DC trying to look busy for the public. My taxes aren’t going up. Heck, they’re sending me money. Did you burn your check?
u know better’n that though, ben.
u (we all) are paying for it when your greenback buys less and less.
there seems to be a pretty direct link between irresponsible spending and lower value of the currency
fubarrio
I wouldn’t exactly call raising the limit by 200k nothing…the problem is the masses look at Freddie/Fannie as a good thing and really have no idea how the backend works…
The majority of the public believes that the fix is in and there is nothing they can do about it.
Things will have to get _much_ tougher before there is rioting in the streets.
I keep writing my congress and senate - I think it is good to tell them that you will never vote for them again….
“Ted Faravelli, managing director of the California Association of Real Estate Appraisers, said his profession is as much art as science. He said appraisers might not be accurate, but they need to be credible. And, given today’s market, paying $625,000 for a home on Santa Ana’s Camile Street sounds incredible.”
Art and Science my A$$.
Any decent Insurance Loss/Risk Control agent could do a quick and dirty Replacement Cost House Survey with diagram and pics, run it through his Home Office Actuary/Underwriting Dept and have a pretty good replacement cost figure(and include the city land assessment) in less than a day. That’s a FRIGGING START…a beginning Point of VALUE!
Were talking about basic evaluations of land,bricks and mortor HOUSE STUFF here, NOT some silly high energy quantum physics theory or judging fakes from Rembrandt’s.
We have a divorced, single Mom, distant cousin somewhere in the family, that was a HAIR STYLIST for 20 plus years. She has a HS GED and now she’s a “Professional RE Appraiser”
Today’s…so called “experts and professionals”..Sheesh…No wonder this country IS IN so much TROUBLE
The bar for entry in most facits of the real estate business are set way to low IMO….
“Any decent Insurance Loss/Risk Control agent could do a quick and dirty Replacement Cost House Survey with diagram and pics”
Really? LOL. I ask my agent about replacement costs and always get the “well it depends…” BS. Same with builders. “Well it depends if you have granite countertops blah blah.” But between themselves you know they have a per/sf ballpark number. But just try to get it out of them.
A appraisal is a opinion or estimate of value that is derived by one of three common Appraisal methods ,
(1)Cost approach -A estimate of what it would cost to replace or
reproduce the improvement ,as of the date of the appraisal ,less any physical deterioration and functional or economic obsolescence
(2) Comparsion Approach (sometimes called market approach )make use of other properties recently sold of similar size, quality ,and location to determine value .
Generally the method used in residential real estate appraisal .
(3)Income approach . This approach provides a objective estimate of what a prudent investor would pay based on net income the property produces ,Generally not used in appraising residential real estate .
Oh, they also have the Narrative Approach Appraisal -which I wont get into that because its a long complex appraisal in which all details of the property and factors that affect it are written out in great detail ..
This could describe many hundred failed housing projects, all in the Central Valley of California, a place where a $10 an hour job is as good as it gets…
I’ve seen debt and destruction ranging from east of Bakersfield, and northwards to a 50 mile radius of Sacramento.
The financial saga is the same at every one of them, only their names are different…
________________________________________
“Surrounding these signs are 136 vacant lots with weeds and electrical wires sprouting from the ground. Dusty black mailboxes, home to wasp nests, are cemented next to the street. Six model homes with lamps in the windows are protected by chain-link fence. A jackrabbit prances about as if it’s the prairie.”
Howzabout governor Dark Vader threatening to take all California State Salaries down to around $6.66 an hour?
Bettor the devil you know, than the devil you don’t…
But he is exempting firefighters and police from that salary reduction-and their salaries are what is breaking the bank. Screw college, tell your kids to go to Cal-Fire, become a battalion chief, and make $220K a year; or be a beat cop in Vallejo and start at $120K. Not a bad salary at all for no marketable skills or education.
He’s merely following in the footsteps of last century’s arty ex-pat Austrian strongman leader, isn’t he?
Making sure the henchmen that might be needed for strong-A.R.M’ing those unfortunate enough to be foreclosed on, are well compensated…
AMEN Anthony !!! My daughter is a school teacher with a Masters…My godson is a firefighter in his third year…He makes 3 X my daughters salary…My high school buddy is a retired firefighter @ 52 with 12k a month plus benifits…
And not one of Arnie’s appointees or cronies are taking a reduction in pay…
… and the lawmakers have been spending taxpayer time regulating funnel cakes and french fries…
. . . not to mention the European-style meddling and interference in perfectly legitimate contracts of all sorts under the guise of protecting the consumer. Regulation in CA is so insidious and out of control that people can’t even recognize how fundamental it is in sapping freedom and prosperity.
And less regulation is why things are better in Florida?
IAT
“Home sales across California jumped nearly 18 percent during June compared with a year earlier as discounted foreclosures lured buyers back into the real-estate market, a trade association said Friday. However, the median resale price plunged in every region of the state from year-ago levels, falling 38 percent statewide and 32 percent in Los Angeles, said the California Association of Realtors.”
AVALANCHE!!!
Chicken Little reporting from free range?
Chicken Little had no data to back her paranoid world view.
Hows about a back-o-the-envelope estimate of the loss in CA housing values since the peak:
Current median value (after 38 pct loss) = $368,250
Drop in median value = $368,250*0.38/(1-0.38) = $225,702
Number of CA housing units (circa 2006) = 13,174,378 (not sure if this is SFRs only)
Rough estimate of loss in home equity value for CA =
13,174,378*$225,702 = $2,973,483,463,356 (let’s say $3 t).
How does that look compared to the $300 bn Congressional mortgage guarantee? About 1000 times bigger? And that’s just for CA…
huh? isn’t that 10x?
The housing bill is window dressing. The total amount of $300B is less than $1,000 per individual in the U.S. That won’t save real estate values from crashing–it will just keep foreigners buying our debt. Compare the total federal tax stimulus payments so far–$91B, They haven’t made a dent in the economy.
It is time to reduce spending and get the rich to pay their share. I believe that the more you make, the higher % tax you should pay - even Warren Buffet says he pays way too little tax.
I think revolution is closer than most suspect - it is time to take the power back, by force if necessary.
“‘People know there’s no hope’ of holding onto their homes, said San Jose bankruptcy Judge Marilyn Morgan. In fact, 90 percent of today’s debtors facing foreclosure don’t even contest it, she said.”
No hope? I have to believe a lot of those FB’s don’t WANT the house anymore now that appreciation and HELOC spending sprees are gone. How many of those folks will want the burden and responsibility of home ownership without any payout?
I know everyone on this board is spitting mad about the bailouts, but if the vast majority of FB’s aren’t doing anything to avoid foreclosure because they don’t want a financial ball & chain, maybe the “voluntary” bailout programs will just be DOA.
I am wondering what appraisers will do with the latest 38 pct drop in CA home prices relative to the appraisals needed to back up the mortgage guarantees in the bailout provisions. It appears that if the drop off the peak is reflected in the appraisals, then a very small percent of CA loanowners would qualify for a refi.
“…I am wondering…”
I am wondering how many “Millions” of “buyers” have 20% down…cash
wage inflation on a scale of 1 -10 … 1.23
medium household income: $53,000 apprx.
price of house this can afford in California =
Sargent Schwartz: “I know NOTHING!”
Oh damn — I just realized when I hit the send button that $3 t is only 10 times bigger than $300 bn. Now I see there is nothing to worry about — nothing at all.
If we just keep on parceling out losses @ $3 billion a crack, this thing will only take around 900 days longer to write down in entirety…
Not quite… Still 300 b, just inflated to seem like more…
Looks like some people might be ripping out those new granite countertops…
Be wary of granite that glows
Rice professor says countertops may be tainted with uranium
By ALLAN TURNER
Copyright 2008 Houston Chronicle
Last August, Consumer Reports magazine — ever alert to stylish trends among its affluent readers — pinpointed the growing popularity of natural stone countertops, demand for which had increased 5 percent annually for the previous five years. But for Rice University physics professor W.J. Llope, the article’s title, “Countertops: The Hottest Rocks,” carried an unsettling irony.
Some granite countertops, he says, contain high levels of uranium, which, by generating gamma radiation and radon gas, can endanger human health.
“Most stones, in terms of radioactivity, are relatively quiet,” Llope said. “But there are a couple I have found that are insanely hot.”
Using a Rice University spectrometer, Llope has examined 55 stones, representing about 25 varieties of granite purchased from Houston-area dealers. Some, he said, could expose homeowners to 100 millirems of radiation — the annual exposure limit set by the Department of Energy for visitors to nuclear labs — in just a few months.
Llope, who said he plans to publish his findings in a peer-reviewed journal, declined to name the most hazardous varieties of granite he has thus far examined. But he said dangerously radioactive varieties include striated granites from Brazil and Namibia.
As many as 1,600 varieties of granite from 64 countries are sold for household use in the United States. None of them is routinely tested for radioactivity.
Jim Martinez, spokesman for the Marble Institute of America, a trade group which also represents the granite industry, cited a University of Akron study that found granite varieties used in 85 percent of such countertops are safe.
Still, he said, his organization is assembling a panel of scientists to develop a protocol for testing granite for radioactivity. He said that panel should be in place by summer’s end.
“There’s been a lot of junk science passed off as real science,” Martinez said. “We want to establish scientific standards and protocol that would allow consistent testing in a logical way.”
The trade group said reports of granite’s radioactivity have been sensationalized by competitors who market non-granite products.
Llope hailed the group’s move to test granite as an important first step in ensuring customer safety.
“There should be some oversight in this,” Llope said. “This is something the Environmental Protection Agency or the dealers or both of them should do. This isn’t something customers should have to do, not something they should have to lay awake worrying themselves to death about. They need help.”
The EPA, although it offers the public information on radon hazards, has no authority to regulate quality of indoor air.
Llope said the radioactive substances in granite, significantly uranium, pose a double threat to homeowners: radiation and radon gas. Radiation exceeding levels an individual routinely receives just living on Earth can contribute to cancer. Radon is second only to cigarettes as a cause of lung cancer. It is especially dangerous to smokers.
“Where you have radon,” Llope said, “you have radiation.”
Llope said that slabs of stone taken from the same quarry — even different sections of the same slab — may differ in radiation levels.
In addition to his study of granite purchased in Houston, Llope studied 20 peer-reviewed journal articles reporting on the results of radiation testing of 95 granite samples. Llope found three cases where the stones generated levels of radon deemed dangerous by EPA.
“I’m not claiming that people necessarily will get very sick or die of cancer within months,” he said, “but if you spend 10 years in that kitchen there is a risk you may end up with cancer. It might or might not be attributed to granite. Who would know?”
Llope advised homeowners to test their granite countertops for radon. Inexpensive test kits can be found at hardware stores.
“‘Now, ‘I don’t see anybody depressed. Realtors are able to exercise their craft again.’”
Since when is slapping a glamour shot on a business card a “craft”?
Maybe she meant “crafty”.
j
There was a recent increase in the minimum wage to $6.55 an hour. So a couple with two minimum wage incomes earns about $27K per year. That means they can afford a house of about 68K, tops.
Look for prices on homes to keep dropping.
There are still millions of jobs to disappear in America. There are still millions of homedebtors to finally hit financial gridlock where they cannot service their credit card and/or mortgage; and must walk or file.
“Turnaround in real estate” is a freaking joke.
The NAR is a freaking joke.
Something that has annoyed me throughout this housing credit debacle is the lack of reporting anything more than the median county price reductions.
From what I can see, there are a minimum of four data necessary in order to ascertain a reduction in dwelling value. These are:
(1) First data split: SFH median as opposed to condo median - these should be easy to separate in the statistics.
(2) Each data split:
(2a) Size in square feet; and
(2b) Age of dwelling,
- equally easy to data split.
The four data processes become:
(1) Median price of
(2) A SFH
(3) of 2500 sq. ft
(4) 15 years old.
Ben’s article above quotes “median” prices from various reports, but from anecdotal observations, the “median” reported is virtually meaningless.
None of the reported “medians” consider the ‘hood factor, which adds a fifth possible data process:
(1) Median price of
(2) A SFH
(3) of 2500 sq. ft
(4) 15 years old.
(5) In a 4/5 star ‘hood.
Or, indeed, a similar, easily-ascertained process for:
(1) Median price of
(2) A condo
(3) of 1200 sq. ft
(4) 15 years old
(5) in a 2/5 star ‘hood.
The datum is readily available for such 4 or 5 step process, but NO-ONE appears ready to publish such demographically based information.
My belief is that the above is the minimum valid data that can possibly be considered, and that the “overall” median is just a statistical cop-out which conveys nothing much, apart from an alarmingly steep downwards trend.
I’ve done quite a bit of my own data analysis over the last three years for my local area (Sacramento) and have couple of quick comments:
- The problem when you start dividing home sales into such narrowly defined subsets is that the sample size decreases so that the results are statistically meaningless.
- I’ve gotten better results by tracking price-per-square-foot rather than doing price and size separately. The problem with treating size as its own variable is that the only way to get intelligible results is to subdivide into discrete intervals (ie, 800-1000, 1200-1500, etc.). The choice of interval length is problematic because of they are each too narrow, you’ll wind up with an extreme version of the sample-size problem. If they are too wide, then you’ll find yourself not comparing homes that are comparable (eg, a 1525sqft home is closer to a 1450sqft home if the intervals are 1201-1500 and 1501-1800). No matter how you delineate, you’re going to have problems.
- Age also has the interval problem. There’s minimal substantive difference between a 10 and 12 year-old home. But where do you draw the intervals? FWIW, I used to do it in terms of typical maintenance, but even that can vary within neighborhoods depending on the quality and type of the materials used.
- Neighborhood is subjective and as such subjects your proposed methodology to manipulation by whoever is running the numbers. Just use zip code (or elementary school, but that can be problematic). Also, if you try to parse it down to an area any smaller than a zip code, you’ll run into a sample size issue.
- Case-Schiller does the best job of capturing total price movements; however, it’s not available for all metro areas. Because it’s already well established, it would be more helpful if they increased their coverage than trying to introduce a whole new methodology for general consumption.
What I was doing for a while just do a simple regression analysis using price, square footage, lot size, zip, and age as variables and then track a three-month moving-average for $/sqft. I abandoned the spreadsheet about year ago when I came to the conclusion that we wouldn’t be buying in the foreseeable future. The other advantage of a multivariate regression is that it can help you identify potential bargains very quickly (just compare list price to your “expected” price). Just a tool, though.
Walt, you are indeed correct, as any decent analysis of the subsets would be difficult, and a “moving target” almost requiring 3D presentation.
The dwelling age/size ratio would be relevant, simply because the older the dwelling, the (usually) more bedrooms that are crammed in, with less “living” area. Plus, the older the dwelling, the more onerous the maintenance component, which should be reflected in the market value.
Case-Schiller AFAIK analyses movements in the market value of re-sold SFHs from 2001 to the present. However, Case-Schiller analysis may not come anywhere near the county median numbers.
Your described regression analysis sounds interesting on a 3 month moving average, and that’s precisely the sort of data I seek. Seems like you gave up when the parabolic downtown got underway
Well I couldn’t find a regularly updated csv file that had everything that I wanted, so the data had to be entered manually into Excel. A lot of tedious data entry. The results were interesting, but when it became certain that the market wasn’t going to recover I just couldn’t justify the time.
In a few years I’ll probably do it again (the spreadsheet’s pretty simple to setup, I can’t seem to find it).
“A year ago, there was no hope in sight — we didn’t know what it would take to recover,” Wilson-Bolton said. Now, “I don’t see anybody depressed. Realtors are able to exercise their craft again.”
excellent news from my Home Town nobodies depressed and they all still lie like dogs.
Me and my dog are very offended.
“For people like Arthur, who asked not to be fully identified, it started with a home he bought 10 years ago for about $450,000. As its value rose to $900,000, he used the equity to start his own business. Along the way, the home’s value dropped to $600,000, and business expenses rose. To make his mortgage payments, Arthur began relying on credit cards - at least 20 - for living expenses.”
And just why aren’t we entitled to know Arthur’s full name and business name? He probably put many a homeowner into a contract they couldn’t afford or possibly he is worried about a lawsuit or two.
Today I checked out some open houses in the South Bay (Torrance, Redondo Beach area). The realtors are all still pitching that the homes are all great deals. The prices have dropped a little bit, but are still way too high. Also there was a very wide spectrum on what you could get for the same price. There are absolute teardown disgusting dumps in the $600,000 range and some that were abandoned dreams of flippers with new cheap repairs and added moldings and new kitchens made of cheap cabinetry. But all the realtors say the same stuff. There pitch has not changed in the last five years. They all said the same thing. The market is great. Now is the time to buy. Get it now before the mortgage rates go up, and my favorite, “Are you working with Agent?”