A Steal-Of-A-Deal In California
The Burbank Leader reports from California. “Home prices in Burbank and Glendale plummeted more than 12% in June as foreclosures soared in the second quarter this year. The average median sale price for single-family homes in Glendale, now $654,000, dropped 13% in June from the same point last year. The number of foreclosed homes shot up 418% in the second quarter this year, from the second quarter in 2007.”
“Similar housing troubles plague Burbank, where the median home sale price, $596,000, sunk 12.2% from last year, and foreclosures rose more than 127%. The figures were released by DataQuick.”
“The most severe home price drop-off in Burbank occurred in a portion of its hillside community, encompassed by the 91501 ZIP code. There, home prices dropped to $655,000 in June, a decrease of 26.1% from last year.”
“The hardest-hit region in Glendale is the Adams Square district, where the median sale price for homes in June reached $440,000, a 32.2% drop from last year. Foreclosures shot up 800%, with nine of them recorded in the second quarter this year compared with just one during the same period last year.”
“The continued drop in the local market, and the paralleled media coverage, has further entrenched people’s belief that the worst has yet to come, said Judy Graff, a broker associate who deals in Burbank, Glendale and other San Fernando Valley neighborhoods. ‘I don’t want to paint a completely rosy picture, but in our middle-class areas, I don’t think it’s as bad as our people make it out to be,’ she said.”
“‘They’re kind of entrenching themselves a little bit,’ said Michael Teahan, president of the Adams Hill Homeowners Assn. ‘People aren’t looking to bail in Adams Hill or Adams Square. It’s not really affected people. If you’re in your house now and working, then I don’t think it makes a difference.’”
“The worsening state of the housing market in the region and state has tipped the economy closer toward a recession, said Jack Kyser, chief economist for the Los Angeles County Economic Development Corp.”
“‘Los Angeles County is on the brink of a recession, and when you get to the housing sectors, we’re in a depression,’ Kyser said. ‘We should see prices bottom out in L.A. County the middle of 2009 and in the inland areas of the state - from Sacramento all the way down to Riverside County, middle of 2010.’”
The Orange County Register. “Danielle Aldrich and her fiance William Greer ignored the rule and arrived an hour early. The anxious couple got to the sale of the new Platinum Triangle condos in Anaheim at 5 p.m. on Friday, one hour before lines were supposed to form.”
“They were hoping to be among the first in line for one of 58 Stadium Lofts condos that were discounted between 24 percent and 29 percent.”
“The developer cut the condo prices because roughly 18 months after the Stadium Lofts were completed, more than half of the project’s 390 units remain unsold, the developer said at the beginning of this month.”
“‘This is a buyer’s market,’ said Linda Tawara, a Cypress resident who waited in line on Saturday to buy her second home. That’s why she didn’t fret that she was fourth to last in line. She got there at 6 a.m. on Saturday instead of the evening before.”
“Why didn’t you sleep over? ‘Uh, it’s not worth it,’ said Tawara. ‘There are other homes out there” that buyers can get for a good deal.’”
“She put a deposit down for a 1,082-square-foot two-bedroom, two-bath condo for about $350,000. That’s about a 25 percent discount or a savings of $114,300 from the original price.’
“‘It was my fourth choice. But it’s still in my budget. I’m happy,’ she said.”
The North County Times. “House prices are falling at the steepest rate on record, but for some buyers, the attraction of a home is overcoming the anxiety of buying a depreciating asset.”
“From October through April, North County homes lost about 3 percent in equity —- per month. Right in the middle of that slide, which some analysts expect to continue through the year, Steve and Shelby Nowak pooled their savings and made the biggest purchase of their lives, a $447,000 house.”
“The newlyweds bought their three-bedroom, 2,250-square foot house in an east San Marcos gated community four months ago.”
“‘”We didn’t buy the house to get rich in,’ said Steve Nowak, 28. ‘We got it to live in. It was just an ideal situation for us. The house was the right price and interest rates were low.’”
“The couple plan to have children in the near future and see the house as their home for at least five years. The Nowaks bought their home at 20 percent below the previous sale price in 2005. Because they submitted their offer in December, they were able to secure a loan with just 5 percent down, products that are tough to find now that banks have tightened lending standards.”
“While Oceanside and Escondido have seen older, subprime-plagued neighborhoods lose up to 50 percent of value, newer neighborhoods such as Nowak’s, where most homes were built after 2003, have not lost much value, based on county records and real estate Web sites.”
“Another cause for concern among home buyers is a growing number of foreclosures. Throughout North County, notices of default —- a forward-looking indicator of foreclosures —- have doubled from last year.”
“‘I don’t think (they) have a lot to be worried about in losing value,’ said Nathan Moeder, a principal with The London Group, a San Diego real estate consultant firm. ‘I think in the long run, meaning five years or more, their values should be retained at least.’”
“Moeder said that buying near Interstate 5 is a good bet because the limited real estate close to the ocean ensures better price stability. Other analysts, such as Christopher Thornberg, an economist with Beacon Economics, disagree, saying all home prices need to track incomes better.”
“For Thornberg, he suggests waiting to buy until the end of 2009. That is when he will start looking to purchase, he said. ‘Even if we are at the bottom, I don’t care,’ Thornberg said. ‘Because they (prices) are not coming up anytime soon.’”
The Tribune. “Owners of more than 12,000 homes county-wide will see their property taxes reduced - sometimes dramatically - or face no tax increase this year after the county Assessor’s Office lowered valuations a total of about $732 million.”
“All of the properties affected were those bought since January 2005. San Luis Obispo County Assessor Tom Bordonaro’s office has sent out more than 12,000 notices to property owners notifying them of the changes.”
“Bordonaro said that houses in subdivisions were down by 18 percent on average, and custom homes were down by 8 to 10 percent. He said his staff did see a few extremes of 20 to 25 percent.”
“‘Geographically, the North County and the South County were affected the most,’ he said. ‘Nipomo, Atascadero and Paso Robles, mainly the subdivisions.’”
The Mountain View Voice. “While sales of commercial real estate have slowed nationwide, Mountain View is experiencing a surge of new office development for the first time since the dot-com boom. “The city has recently managed to attract seven major new office developments, including five major high density office projects in the North Whisman Area, Google’s first-ever new building.”
“‘We’re in a unique position here in the Valley,’ said Vice Mayor Margaret Abe-Koga. ‘I was surprised to hear that the rest of the country is hurting.’”
“‘There was some concern by developers that these projects get approved in a timely manner because of the looming real estate bubble,’ Abe-Koga said, ‘but everything is working pretty well.’”
The San Francisco Chronicle. “When at a recent brunch I heard some Noe Valley residents discussing what was bolstering the value of their homes, I was particularly fascinated by a single factor they had all settled on: the proximity of the Google Shuttle stop. None of the group was employed by Google, but that didn’t seem to matter.”
“All the real estate agents who responded to my inquiries about the Google Shuttle effect offered anecdotes about Google employees who were looking for homes to buy within spitting distance of a shuttle stop.”
“‘I’m working with a couple that is specifically looking for a home/condo near the Google line. They have made several offers but were outbid every single time,’ Zephyr Real Estate’s Tanja Beck told me in typical response.”
The Marin Independent Journal. “Brittany and Climition Welch grew up in Novato and now, as new parents, they hope to buy a place of their own. As a bank clerk and a day-care worker, they can afford a mortgage of about $200,000, a limit that would normally put a home in Marin out of reach.”
“But the foreclosure crisis that’s turning some homeowners’ dreams into nightmares is opening a door for the Welches and others like them as distressed properties flood the market at fire sale prices.”
“‘We’ve been pretty optimistic about finding something,’ said Brittany, 25, who has toured five condos in Novato.”
“Condominium and townhouse prices have dropped 26 percent in the county, from $555,000 in June 2007 to $410,000 last month, according to DataQuick. ‘We have seen more people come into the market,’ said Sylvia Barry, an agent with Frank Howard Allen Realtors who recently sold a Novato townhome for $345,000 to a family who had been living in affordable housing.”
“Barry said her investor clients are keeping a close eye on the market but, for now, they’re waiting on the sidelines. They’re looking for homes they can fix up and rent out, she said, but so far they’re not convinced the market has reached rock bottom. ‘They just want to make sure,’ she said.”
“Clustered in Novato and San Rafael’s Canal area, these homes are mostly condos between 598 and 1,525 square feet and range from one-bedroom, one-bath units to a three-bedroom, three-bathroom townhouse. The Welches’ agent, Martin Sanz, describes units in the $200,000 range as in ‘fair condition.’”
“Broker Steve Schoen says a look at the number of condos for sale on the low-end of the market shows a ‘very high ratio of pending to sales,’ which, in a normal market would mean condo sales are hot. Because of the drawn-out short sale process, instead it means there’s a backlog of offers waiting for lender approval. ‘It’s a little misleading,’ Schoen said.”
“For Welch and her husband, the dream for a home where they can raise their newborn son means avoiding the traps that have caught so many others. They have a down payment, loan approval, and plan on a 30-year fixed-rate mortgage. ‘We’re just being smart about it.’”
The Sacramento Bee. “Many homeowners associations begin planning next year’s budgets in the summer. And just like the state, the groups - and their members - are getting into a financial bind because of the weakening economy and steadily rising costs of everything from fuel to swimming pool chemicals.”
“A growing numbers of foreclosures and late payments have begun biting into monthly dues that pay for supplies and labor. That’s especially true in associations created earlier this decade as new neighborhoods blossomed in rapid time.”
“‘What we’re going to see in more of our budgets is a larger line item for bad debt write-off,’ said Dan Kocal, owner of Folsom-based Kocal Management Group. Kocal and 85 employees manage 88 HOAs in Sacramento and Northern California. For 25,000 residences, Kocal is the management arm of an HOA, collecting assessments and delivering services.”
“‘Depending on the community and its size, 3 percent to 10 percent of the budget (next year) could go for bad debt,’ Kocal said. That’s triple what’s been set aside this year.”
“The biggest problem, though, for hundreds of new associations in Southern California and the Central Valley, is a dwindling of dues payments. When people lose jobs, ‘the first thing they start doing is not paying their assessment,’ said Karen Conlon, president of a trade group for HOA property managers. California’s unemployment rate reached an 11-year high in June.”
“Kocal, the Folsom management group owner, declined to talk about which associations are troubled by delinquent assessments. He said one in Sacramento has a 25 percent delinquency rate. But naming names would spur real estate agents to flag them and would-be buyers to avoid them, he said. Another large association didn’t return a phone call about the subject.”
“Years ago, before the current housing crisis, associations pursuing back dues might have put a lien on the home, foreclosed and gotten back their money. Homeowner associations are allowed to begin foreclosure proceedings when an owner falls behind by $1,800 or a year’s worth of dues. Now, banks do the foreclosing.”
“‘When they’re not paying the assessments, they’re usually not paying the mortgage,’ Kocal said.”
“Yet, when a bank steps in, there’s typically no equity left for the HOA’s unpaid dues. ‘With falling prices there is, as someone once said, no ‘there’ there,’ Haney said. ‘The bottom line is, it’s a huge problem.’”
The Modesto Bee. “You’ve heard this before, but this time it’s probably true: This is a great time to buy a house in the Northern San Joaquin Valley. Yes, people said that last summer, too, and home prices have plummeted more than 40 percent since then. Ouch.”
“But that only makes homes a steal-of-a-deal now.”
“‘Now people who earn as little as $30,000 per year can qualify to buy a house in Modesto,’ assured Rich Loudermilk, a broker with All Star Mortgage in Modesto. He checked his math twice just to make sure he was right.”
“Monthly payments on a $100,000 mortgage, including taxes, home insurance and loan insurance, are only $837 per month, Loudermilk calculated. That’s about the same as Modesto’s median apartment rent, and it’s only about one-third of the gross monthly income for someone earning $30,000 annually.”
“‘Two years ago, it took $60,000 a year to qualify for even a lower-priced home in Modesto. That was for, like, a $240,000 house, and those were hard to find,’ Loudermilk recalled.”
‘Prices have fallen so much that now more than 250 Modesto homes are for sale with list prices of $100,000 or less. Most of those houses are in the low-income parts of south and west Modesto, but there are bargains to be had elsewhere as well.”
“‘There are 360 houses for $150,000 or less within a three-mile radius of Tully and Briggsmore, which is a pretty good part of town,’ said Loudermilk.”
The Fresno Bee. “In his six years working as a repo man, Roger McKee has never been as busy as he is today. And with the economy faltering and easy lending practices of the recent past now catching up to an increasingly large number of people who borrowed beyond their means, McKee and the repossession industry are flooded with work.”
“Nationwide, auto loans at least two months overdue reached an all-time high in January, according to Fitch Ratings. And credit rating company Experian reports that 12% of consumers this year had at least one late auto payment on file.”
“Across the country, the number of vehicles repossessed grew 10% to 1.51 million in 2007, and it is expected to grow by another 10% this year, said Tom Webb, chief economist with Atlanta-based Manheim Consulting, which auctions off most of the repossessed vehicles in the United States.”
“‘It’s primarily driven by the financial squeeze that a lot of households find themselves in,’ Webb said. The collapse of the housing and credit markets leave more and more people unable to keep up with their debt load, he said.”
“McKee has seen the economic devastation up close. About half the cars he repossessed used to be reclaimed by their owners, but now that has dropped to less than one-third, he estimated. And more and more of the addresses for delinquent borrowers provided to him by banks and other lenders are foreclosed homes, he said.”
“‘We’ve been overwhelmed, and so has pretty much every other licensed agency here in California,’ said Rocky Pipkin, McKee’s boss.”
“‘I’d say the majority of people are working families, middle to lower middle class,’ Pipkin said. ‘But we have our fair share of doctors, lawyers, correctional officers, state and county employees — upper economic class people. The problem is, there are a lot of people who went in over their heads, thinking this housing boom was never going to bust.’”
Most of the CA press in these articles is in ’silver-lining’ mode, as 20 somethings line up for fixer-uppers, and other pickup that must have baseball condo. Here’s a couple of snippets from around the state:
‘The latest bad news factoid is that foreclosures in California are at a 20-year high. The scale is four times higher than peak levels in the 1990s.’
‘And it is likely to get worse. The timing of foreclosures is linked to the dates that adjustable rate mortgages (particularly the riskiest exotic loans) reset to higher monthly payments. The 2008 resets peak in the early fall, especially for subprime loans (where resets peak in October). Then we get a brief respite until another shoe drops. That will be the category of loans in between prime and sub-prime, known as the Alt-A market.’
‘A record number of California homeowners defaulted on their mortgages last quarter, more than three times as many Hesperians were in foreclosure compared to last year at the same time.’
‘In Wrightwood and parts of Victorville, defaults are up 400 percent. Even the least hard-hit areas of the Victor Valley — parts of Apple Valley and parts of Victorville — have double the rates of this time last year.
Plunging real estate values normally mean a buyer’s market, but even the entry of buyers into the marketplace isn’t slowing the decline, said Hesperia Realtor Larry Trombley. And he has no idea when the market will finally reach bottom.’
‘I wish I had a guess on that. I don’t even have a guess. It seems like the market’s picked up considerably, and we’ve got buyers, but the foreclosures keep outpacing it,” Trombley, with Century 21 Rose Realty, said Friday. “It makes sense to buy. You can get a mortgage payment for the same price as your rent, so why not?’
‘Manteca since December has been part of the hardest hit region in the nation as the greater Stockton area has been at the top of the foreclosure lists more often than anyone else in month-to-month statistics.’
‘Nearly 80 percent of the 460 existing homes for sale currently in Manteca are under duress. There are 175 homes that have been foreclosed on that are up for sale plus 180 short sales - homes that are moving toward foreclosure. Only 105 homes listed are not under duress.’
‘Nearly 90 percent of the 497 homes that have closed escrow inside the city limits since January have been the result of the foreclosure process.’
I hope these cheerleaders in the press understand what people may be getting into here. These numbers are without precedent.
The Cool-Aid they serve in the Golden State has been spiked for some time now…
From reading the California threads, I get the distinct impression that a lot of speculation is still going on. Even among people not participating, the belief appears to remain that no matter how bad things get, condos and tract houses and automobile-dependent exurbs eventually will bounce back and then some, because it’s California. We’ll see how that works out, but my opinion is that the circumstances that made the state the biggest economy in the richest country in the world may not continue for much longer.
The bit about houses on the “Google line” was interesting. I have no basis other than my occasionally-fallable intuition for this suspicion, but I have the feeling that Google and almost everything connected to it is way overvalued.
To hear the typical real estate conversation around here you would think those 3500 or so Google employees must be trying to buy everything on the peninsula & SFran. Your intuition is right….WAY, way overvalued
Okaay so I was a ‘little’ off on the amount of Bay Area Google employees..it’s more like 8400…d’oh
In California there are still a lot of flips (yes, I know) that are finding their way onto the MLS. Happily many of them are either selling for significantly less than they cost originally and many are going into foreclosure. I have also noticed since the press has been touting “a great time to buy” that many homes bought for an inflated price at the apex of the bubble are now being sold FOR EVEN MORE!!! Watching what happens to these houses is a great spectator sport and I highly recommend it.
There was one house (shack is more like it) on the MLS today in Alameda, CA that was originally purchased in ‘01 for $79,000. It was listed today for $459,000. If the owner had done any remodeling, he was doing an excellent job of hiding it.
There are many many more houses on the market for 100’s of thousands of dollars more than the sheeple paid for them several years ago. I’m a psychologist and even I can’t figure out what they could possibly be thinking.
Maybe the Kool Aid melts your brain…
“The bit about houses on the “Google line” was interesting.”
*****
Yeah, it was…
Especially since there wasn’t an actual Googler in the whole Chronicle story who actually bought anything.
Sure, they could impact rents for a block or two, but what about the house buying activity?
This reminds me of the dotcommers who were buying in certain neighborhoods in SF in the late 1990’s and choosing the shortest commute, no matter - as if job would never go away and the money would flow like water for the rest of history.
We saw how long that lasted.
snake charmer;
Your dead on this whole economy is based on cheap energy at all levels…..California especially!!! Factories have been leaving the US for years based on high Natural Gas prices. Our geniuses decided to use Natural Gas to make electricity so no Gas heating and Electricity are climbing. If gasoline is too high the suburban way of life is dead. So Cal is just a big conglomeration of suburbs!!!
“Condominium and townhouse prices have dropped 26 percent in the county, from $555,000 in June 2007 to $410,000 last month, according to DataQuick. ‘We have seen more people come into the market,’ said Sylvia Barry, an agent with Frank Howard Allen Realtors who recently sold a Novato townhome for $345,000 to a family who had been living in affordable housing.”
Those who think they are get “bargains” in California now should wait another few years for the depression to unfold. The median condo price in Marin county will be less than $300K by 2012. If you think the subprime problem hit the condo market hard in northern Marin, wait until the option ARMs start recasting in size in 2009. The entire Marin real estate market is going to implode. This county is filled with people who are all hat and no cattle.
As for a family living in affordable housing buying a $345K condo in Novato, I suppose they earn at least $115K per year to afford that beauty. This goes to the heart of the housing problem–there are huge numbers of people even today buying “bargain” homes they have no business buying given their incomes.
Most Americans would be better off renting than buying, no matter what home prices are. There is zero job security in the US labor market today outside of government entities. People need to stay mobile for their jobs.
Keep the popcorn popping,
Red Baron
Very good main point you have Red Barron about the job security being the single biggest reason for not being so quick to buy . Also, these people are thinking they can gamble and walk again if the going gets bad . With so many programs at no down to 3 to 5 % down and with the 7.5k tax rebate for first timers ,what do they have to lose .
The powers are trying by any way they can to recreated the easy money situation of the boom times . They had no business raising the loan amounts on conforming loans . The question becomes why would investors even touch non recourse loans right now ,’oh ….wait ….the taxpayers will …we are backing them , thanks to our wonderful majority holding political office. These goofs have no idea how the REIC is going to play around with the new lifeboats .
I don’t think these stupids that are calling the shots seem to take into consideration that the whole idea of creating a stable real estate market is by having the buyers having something to lose ,a a stake in the game . Without the buyers having a very big stake in the game ,and even having recourse to just walk , they are sitting the stage for more gamblers and gambling .Add to this the hanky-panky that we can expect from the still corrupt real estate industrial complex and the appraisal system ,and who knows what will happen .F&F buys loans from other people who originate the loans …..get the picture .
That’s the whole thing Wiz…the stupids that are calling the shots own real estate…raising the limit by 200k was the answer to the Calif. contingents and CA. Real estate complexes favorite wet dream…they have been trying to get that bump for years…when Bush signs off it’s back to the races again this time it’s government subsidized…no one seems to get it…
Right ,mrincomestream ,I get every little bit of it ,that’s why I’m sick about it .Maybe if I was in the business I would be jumping for joy …The bump in the loan limits was a very big mistake IMHO ,in light of the system ,as you know. Oh well .
‘In Wrightwood and parts of Victorville, defaults are up 400 percent. Even the least hard-hit areas of the Victor Valley — parts of Apple Valley and parts of Victorville — have double the rates of this time last year.
Plunging real estate values normally mean a buyer’s market, but even the entry of buyers into the marketplace isn’t slowing the decline, said Hesperia Realtor Larry Trombley. And he has no idea when the market will finally reach bottom.’
‘I wish I had a guess on that. I don’t even have a guess. It seems like the market’s picked up considerably, and we’ve got buyers, but the foreclosures keep outpacing it,” Trombley, with Century 21 Rose Realty, said Friday. “It makes sense to buy. You can get a mortgage payment for the same price as your rent, so why not?
Because nobody with more than 7-8 functioning brain neurons cares buy an over-priced, Death Valley type, POS shack in the middle of nowhere just to compete with roadrunners, snakes and poor, hungry desert rats for Food, Water and sub-Subsistence jobs ?
beep..beep )
“They were hoping to be among the first in line for one of 58 Stadium Lofts condos that were discounted between 24 percent and 29 percent.”
I wonder what the HOA fees are on those? Wonder if they know about the fees and terms before they sign? I’m wary of increasing HOA fees. Azzure (not sure of the spelling) in Marina Del Rey have HOA fees of over $900 per month.
Lofts are not for professional middle class people. They are for people with net worth in the several millions of dollars. But some of them (such as in Phoenix) are being marketed toward middle class incomes or even students.
The HOA’s are around $250 a month.
The “discounted” prices in these articles are still way too high. Extrapolating a long term trend line of “normal appreciation” (dollar devaluation) takes us to about Y2001 or maybe Y2002 prices as fair value. And that’s assuming no overshoot below the trend.
A married couple in 2000 could have bought $240,000 worth of Series I savings bonds with fixed rate above 3.%. Ditto in 2001. Variable rate on top of that is typically 3%. $480,000 purchase value would be about 45% higher now, which is close to $700,000. Backed by the full power of the US Government printing press.
Had they bought a $480,000 house in 2001, it will probably be selling for $480,000 in 2010 or 2011.
The i bond limit is about 30K per person/year. A household could by 60K. Too bad I only bought 10K in 2000, the yield now is about 9%.
Have we have yet to hear of “bargains” defined in terms of localized income levels.
MLS listings in the nicer ‘burbs of Sacramento are still burdened with loads of houses at $500+ asking prices, for which there are very few qualified buyers — even IF the banking system managed to restore a “normal” financing environment. And since these over-priced homes continue to sit unsold, I’m assuming that the qualified buyers (with cash) are waiting for further drops. We are.
Even those who might be offered some government-backed loan STILL don’t want to risk being upside-down when the house depreciates. Is anyone confident of a price floor that doesn’t look like a pre-bubble valuations?
Regarding the foreclosures in Fresno. Silly people. They should have learned the history of San Joaquin Valley cities. It’s called urban blight and gang warfare with law enforcement looking the other way. Shame. Lots of good people in the valley but they don’t have the voice to push for cleaner air in the Bay area - the source of much of the foul air in the carcinogenic valley.
I don’t what can be done to clean air even more in Bay area; but I remember reading much of SJV pollution is local and caused by agriculture. Farm equipment, decaying organic matter, livestock can all contribute mightily to pollution.
I think the thing that will shake this country to it’s very core, is the fact that most everybody in every class level is affected by goings on, and in danger of a visit from the repo man in the not too distant future…
________________________________________
“‘I’d say the majority of people are working families, middle to lower middle class,’ Pipkin said. ‘But we have our fair share of doctors, lawyers, correctional officers, state and county employees — upper economic class people. The problem is, there are a lot of people who went in over their heads, thinking this housing boom was never going to bust.’”
> correctional officers, state and county employees — upper economic class people.
Those living off the taxpayer’s dime are considered upper income. Ironic.
They are upper income (or at least in the future) because they have the best pensions and retirements. Many times they have multipe retirements: state/county pensions plus SS/military. My dad’s inlaws have teacher retirement/SS/military and a University Pension. They don’t have to touch their savings. Many of these are at 80% of last years earnings.
If you work for a private company today, you have only a 401k and SS.
Yep, they are. I know a few corrections guys and they are making in the high 5 figures/low sixes with OT. Firemen making well into 6 figures.
Not to mention the dirty little tricks when they retire. Like the payment that is supposed to go to PERS, not going to PERS but being included in the workers last year income. The employee makes the contribution. Lets say they are going to retire at 90% of last years pay of 100K. They get that last years pers contribution added on to their income, say 10K, now their retirement is 90% of their last year pay $110K. They end up getting 99K vs. the 90K they should have received. Happens all the time.
“While sales of commercial real estate have slowed nationwide, Mountain View is experiencing a surge of new office development for the first time since the dot-com boom.”
Too bad there are so many office bldgs around Mt. View that are vacant. I don’t care how many spaces are ‘developed’, they still need to be leased out. The start-up I worked for just folded and left yet another bldg without occupants in the area — there are literally over a dozen pretty large (over ~100 person) bldgs in that one area that have sat for many many months without tenants. This entire area is way overbuilt commercially, though I can’t really speak for large company space like Google’s. I seriously doubt any of this space will ever be rented. They’ll sit like the townhouses off 237 that were cancelled.
bldgs around Mt. View that are vacant ??
Not just Mt. View but the whole valley….These were all the R & D incubator buildings that were built in the run up to the Dot Com Bust….They are dysfunctional, obsolete design for todays high tech needs…Many will be torn down but it will take 5 to 10 years maybe more…
Yep… actually addition to that there is no demand for additional space. Too expensive to work in SV, if you want more and cheaper many are still hiring in India and China. Some zones are being devopled into Residential. so more supply once again….
I drove by Intel in Santa Clara recently and as I have for nearly eight years in the Valley, noticed empty office buildings.
I’m not sure who occupied them, perhaps it was never Intel, but they were too numerous to count, with empty parking lots everywhere.
scdave could be right - some are just going to be torn down someday.
Just like they are in Detroit now, eh? Few probably thought those would be torn down 50 years ago as they worked in a thriving region.
I agree. The entire Silicon Valley is rife with empty office, R&D, and commercial space, yet they still build more. I’m betting the next bailout will go to commerical RE builders and investors.
The Westside is going to be a tough wait. There are virtually no foreclosures here and price declines are nonexistent in most areas. From the MLS.com: Culver City and SM are at least showing some price declines, around 10%, but many areas, like Playa Vista, Bel Air, Cheviot Hills, Marina Del Rey and Venice are still showing price appreciation, YOY. Palms/West LA are only down 6%. The only real depreciation we’re seeing is the Hood, which is down 30-50%, depending on which part. By the time prices fall here, I think I won’t need a house anymore!
My wife and I are in the Palms (I think, just south of Pearl/Bundy) and you’re right, it’s slow to decline. But decline it will, and we’ve decided to keep renting until the price is right. The nice areas will decline last, and we’re not going to blow our once-in-a-lifetime chance to own a property in a nice area for the best price in a long, long time by choosing to settle elsewhere because it bottoms out first. I enjoy the prospect of not needing an air conditioner.
Pacific Palisades is not dropping either.Brentwood is dipping a bit.
I thought I’d wait it out, but when people are still paying $2 million for a 3 bedroom home, I give up. Can’t blame the sellers, it’s the stupid buyers who have too much money and no sense.
I have a good friend who, in the 90’s, made the mistake of buying the house next door to his in the Palisades before he sold his own house. The market turned viciously and he ended up losing 400K in a matter of months. He learned a powerful lesson and he still rents.
The first places I’d wager will show weakness are the houses that line Sunset just before the village. There was a lot of activity there in 2005-7. It’s not a particularly nice place to live, as Sunset is very busy, yet buyers jumped in just so they could live in the Palisades.
Lionel-
I completely agree. Those crappy houses on sunset sold for over a million dollars and you can’t even sit in the backyard because of the road noise.
What about Sunset Mesa? Homes start at $2million. Nice homes but only one road in/out and heaven forbid there’s an accident on PCH or a fire or a mudslide, then you can’t even get to your home. Let alone the weekend beach traffic. One Sunday it took over 45 minutes to get from Santa Monica to a friend’s home in Sunset Mesa by the Getty. No thanks. That would kill me.
Santa Monica is nice, but the year round temps at Hermosa Beach and Redondo Beach (90277) are cooler. It felt nice to be able to wear a sweat shirt in the mornings 50 weeks out of the year to take the coolness off.
Look to Hollywood Riviera, Torrance Beach, King Harbor, and Redondo Beach. That area is gold to me.
yeah - its crazy here…. maybe down 10% from fraud/speculation bubble.
It could be a really long wait (maybe the government inflate-your-way-outta-this-mess will actually beat the drop???).
I am just resigned to renting, not even looking, but you folks keep me company and it beats the work I am supposed to be doing right now….
Wouldn’t owning a house on the westside afford more opportunities @ HELOC’ing?
And which see me-dig me resident there isn’t keeping up with the Joneses, real or imagined?
I’m here alad.
I’m seeing more foreclosures in RB and have heard rumors of funny goings on in MB.
Not sure what the upper west side where Lainvestorgirl feature dances.
Plenty of foreclosures in Torrance starting to appear in zipreality and redfin.
Sitting back, renting and waiting. I’m considering a townhome purchase as I now hate my yard and grass… but it will be a while. May just save/invest and buy cash later.
“And which see me-dig me resident there isn’t keeping up with the Joneses, real or imagined?”
There was a couple whose kids were in my daughter’s preschool, who always looked as if they’d popped out of Fred Segal, just the right jeans, sunglasses, etc., wife with a pair of recently purchased zoomers, not bad people, mind you, just annoyingly perfect. One day last year (before my escape to Seattle), I’d been blathering on about the bubble to another friend, when I talked about the insanity of using an I/O loan, when the wife blurted out - “What’s wrong with an interest only?!” They’d just bought in SM Canyon, which is very, very, very, very, very pricey. I’m assuming from her reaction that they’d done so with a pretty risky loan. I predict much financial pain for them.
Whatever figure you saw for Playa Vista was an anomaly. Playa Vista is completely tanking right now and will be the first to really fall on the Westside. A couple months ago dataquick only showed one condo sale in the entire month! A quick look on ziprealty shows a bunch of foreclosures and short sales already.
Those $500+/month HOAs + mello roos are taking their toll. When Playa Vista goes down, it’s going to take condo prices for the adjacent areas down with it.
Sadly, I can only comment anecdotally on the Westside, as my sweet old Powerbook’s hard drive imploded last week, taking my historical spreadsheet of houses with it…. still inputting data into my shiny new Air. You win some, you lose some…
I’d have to agree though, about the dull, long wait for prices to come down.
Santa Monica, north of Montana especially, is still delusional. Lots of ’speculation’ there, where sellers will list tear-downs on 6000 sq ft lots for $1.5 million - in other words, for land use only.
Same further southwest near Santa Monica airport - not a bad area if you don’t mind low flying cessnas every 30 minutes - and asking prices a smidge under $1 million.
Both places have had properties coming on and coming off the MLS for months, as the listings expire and the place still hasn’t sold (at 2006 prices).
As for other less toney places - its still next to impossible to find a SFH anywhere - Valley included - that’s asking less than $500K. There are a few, but they’re normally either right next to the freeway, or tiny, or in very bad condition, or in foreclosure.
Back-of-the-envelope calculation suggests that the average price in Westside and south SFV is still around $500 - $800 per sq ft - and most price declines around the south of the SFV in Encino, Sherman Oaks and Tarzana.
I’ve seen prices around there drop from the low $1 millions to $800K - $900K.
Still waaay too expensive, but going down faster than their brethren over the mountains and nearer the beach, where over $1,000 per sq ft is common.
Guys…isn’t $654,000 for a median priced home in Glendale just a TAD too much?
What are FSHB’s supposed to do with priced like these? it’s like Ferrari saying they are selling their F430’s for $120K instead of a $170K…big WHOOP.
California is the ultimate test of seeing whether it’s true in regards to what they say about the bigger they are, the bigger the fall?
“..isn’t $654,000 for a median priced home in Glendale just a TAD too much?”
..not if you’re Armenian with a business that sells lots of garlicky chicken to the locals. Just kidding!
RIA…
Don’t be sorry about kidding about such things…I’m Armenian and frankly I’m sick of the whole lot here.
Not to say others don’t do such things (as I know Americans, Asians, etc all do it) but there is so much scamming going on you won’t believe.
It’s very sad that people are living like this. Armenians will do anything for show…they’ll submerge themselves in to so much debt just to be seen in a new car…the latest and greatest.
There are so many scam businesses here…some of them big name ones like The Condo People, bigtime scammers who at the height of it all were in bed with their Armenian contractors, over-stating square footage, etc…selling piles of crap for $599K, etc….unbelievable stuff and people were lining up out the door to get them.
The situation is akin to living amongst people (and this is not just Armenians believe me…the Asians in San Gabriel are just as underhanded and foolish) who are willing to kill themselves by jumping off a cliff…what do you do to combat that? What do you do to get ahead in such a society which such a mentality?
BLOFELD2 says that the median income is 41K….OK…so where the hec are all these losers getting their monies from to buy places today?
Why aren’t prices dropping like a rock here? What’s keeping them up? Who are these idiots who are buying?
The median income in Glendale is about 41K, so yes, 650K home prices = 16X median income are a tad bit out of line.
There’s gonna be plenty of cashless crash test dummies to choose from, in the left hand corner pocket of the country.
“… cashless crash test dummies …”
” … cashless …”
Lol. Listen to you.
You know what, I’m beginning to thing mid-to-late 2009 will in fact be a great time to buy a house. The economy will have already tanked, foreclosures will have already flooded the market, and Uncle Sam will provide a $7,500 interest-free loan in lieu of a downpayment.
Of course this will only be the case for those who know enough not to overpay — who don’t talk down from what a house “would have sold for in 2005.” But I suspect that for those prepared to be tough, there will be plenty of capitulation by this time next year.
Maybe the NYSE will bottom before then.
But there aren’t any support levels in sight, unless you use
binoculars.
The 10x kind, as in 10 years…
Foreclosures lead to foreclosures…
Mid-2009 is way too early.
I predict capitulation starts in the spring, but the price bottom… won’t be in 2009. Nor 2010. But I’ll accept end-2010 could be within 10% of the bottom. Not mid-2009. It will be the year of the steepest price drops.
Got Popcorn?
Neil
I’m telling you Neil; its going to slow burn for a long time with the bailout slowing things in the margin.
I’m looking at 2014 now or worse.
The second leg down is the alt A disaster
Third leg will be bailout FDIC bailout
Fourth lag… Finally the boomers will start to check out. And I realize that people live way past 70 but the death rate will be increasing and immigration looks like it will slow. More inventory.
Not sure how it will be for us guys past the boomers… probably a lot of opportunities as cash flows back here.
Its entirely possible that real estate will be a bad buy for the rest of our lives.
What did Thornberg say ? ‘2010 or 2011′ before he would fire a bullet?
http://www.beaconecon.com/products/Presentations/ext08.pdf
Thornberg /Beacon Economics June 2008 Presentation (pdf slide show) at UCLA
‘…who don’t talk down from what a house “would have sold for in 2005.”…’
The problem at the moment is a shortage of sellers who won’t be talked down from 2005 prices. Give this bust a couple more years and these guys will come around — the comps getting set right now will force their hands.
I completely agree for the first time buyer market, that $7500 will be a down payment for many that’s too hard to pass up. One more long, cold winter selling season should snap even the most ardent homeowners into reality, and we should see a return to somewhat sane price levels in spring 09.
That’s for the new buyer. A lot of that 700-900k Mcmansion garbage may never find its footing in a world of expensive energy. Who wants to pay 1-1,500 to heat/cool their house anymore? I think we may be in for a major downsizing of the average american house.
- Sick of hearing that Silicon Valley is uncorrelated to the Global Economy. Comeuppance will be very sweet - I think Q2 marks the beginning of the earnings slide for SV companies. The “VMware is the next wave and is immune” theory came to a crashing end in Q208. I can’t help thinking that the next test will be of the “Google is immune” theory.
- Thornburg seems more bullish than most of us, planning to buy in 2009.
He says late 2009, which might not be all that bad, though I’d think more 2010 or even 2011. The price drops have been so severe–30% in one year!–that you can make an argument prices will be somewhat reasonable in another year.
By late 2009 the alt-a resets will be in full swing, the banks will be wounded enough to instill some lending standards, and there will be widespread seller capitulations.
Here is the real scoop…and not a realtor spin
On balance, however, leasing in the South Bay has slowed to a crawl as the national economy has weakened, and skittish tenants have adopted wait-and-see postures while the economic dust settles.
http://sanjose.bizjournals.com/sanjose/stories/2008/07/28/story1.html?b=1217217600^1674037
As has been the case for decades… when the world sneezes… SV catches a bad cold… BIG TIME.. happened in 72 and 89-91.
too many times…
And 81 and 2001
–
“All the real estate agents who responded to my inquiries about the Google Shuttle effect offered anecdotes about Google employees who were looking for homes to buy within spitting distance of a shuttle stop.”
What happens to home prices near Google Shuttle stops when the Google shuttle stops?
Jas
crazy absolutly crasy… there is no Google Effect…
its all Advertising revenue. Besides how many engineers to keep
their so called website up… why keep r&d here if it can be done
in any other state? crazy stuff…
here is a great analysis of the so called Google effect.. and their impact with their so called product… at the end .. its all hype and overspending…
JULY 10, 2006
Click here to find out more!
NEWS: ANALYSIS & COMMENTARY
So Much Fanfare, So Few Hits
Rivals get the jitters when Google’s nonsearch products grab headlines. But a close look shows that so far, there’s not a market leader among them
http://www.businessweek.com/magazine/content/06_28/b3992051.htm
as strong a company as google appears to be, I STILL wouldnt put all my eggs in one basket by buying a house on any so-called “google line”.
people never learn; theoretically solid companies can and often crash, leaving debris in their wake.
GM cuts pensions, Enron folds, etc, yet the sheople still cling to outdated ideals instead of keeping backup plans ready, just in case . . .
so yeah, g’head Mr. Kotter, buy that overpriced home on the google line, then sit back to yer fate w/a smug attitude about how clever & aggresive you were, compared to the masses. and be sure ‘n cut in front of me often in yer BMW because the world needs to know how special & brilliant & deserving you are of the entire road. rules are for other people. mainly schmucks. yer car just tells everyone to fuck off in a classy way.
so typical. so hilarious!
Funny about prices in Glendale.
You could say the same thing about the Cambrian Park district of San Jose. I bailed in May 2006 for $670K. This was for a 1,040 square foot 1950’s stucco house without even central heat (wall heaters).
It’s in foreclosure now. Zillow says it’s worth $570K but I’ll bet it goes down to the $400K range before it sells.
Anybody seen a guy named “DinOR” around here lately?
Oh,so your the guy that brought Indymac down .
Me and a couple of million boomers like me. I can’t help it if knuckleheads loan out too much money to guys who can’t repay the loan.
Your a baby boomer …shocking. Were you just investing or looking to fund retirement or just getting a house to live in ,if you feel like answering ?
I lived in that house from 1981-2006. Maybe it was an investment but it was purchased as the house I would live in.
Im down the street from that… renting ro 1100.. and loving it
Yep… prices have gone up 300% in 10 years on these homes…
I bought the place in 1981 for $109K, worked hard, lived cheap, and paid it off. Now I’m retired at 55.
HELOCs are the tool of the devil.
Never mind I got the answer to my above question .
“dinOR” ?
no, never heard of that name. why do you ask?
Dennis ..Are you saying you had a paid off house and you than took all the equity out and you walked ,so that’s why it’s in foreclosure ,or did you sell it before it went into foreclosure ?
He lived in the house from 1981-2006, sold near the top, and then the new owner was foreclosed upon.
No I sold it, took the money, and moved out of state for an early retirement. They guy who bought the house from me is in foreclosure only two years later.
even in SV that kind of appeciation is unusual
http://www.dqnews.com/News/California/Bay-Area/RRBay080717.aspx?ref=patrick.net
Bay Area median price dives below $500K; sales near record low
July 17, 2008
La Jolla, CA.—-The median price paid for a Bay Area home plunged to $485,000 in June, marking the first time in more than four years that it was below the half-million mark, DataQuick Information Systems reported.
The price barometer fell an unprecedented 27 percent from its record level a year ago as more sellers settled for less, lenders unloaded more aggressively-priced foreclosures and more sales activity shifted to less- expensive areas, mainly inland. Credit remained tightest for potential high- end buyers on the coast, where sales were generally anemic and prices showed signs of increased erosion, the real estate information service reported.
June’s $485,000 median was 6.2 percent below May’s $517,000 and 27.1 percent lower than the peak $665,000 median reached in June and July of 2007. Last month’s median was the lowest since it was $469,500 in March 2004. The median first surpassed $500,000 in May 2004.
The median has fallen on a year-over-year basis for seven consecutive months, the result of both widespread depreciation, most pronounced inland, and a shift of sales towards lower-priced markets. The region’s four most expensive counties — Marin, San Francisco, San Mateo and Santa Clara — accounted for a combined 42 percent of Bay Area sales last month, down from 49 percent in June 2007.
So in, lets say, 5-10 years from now, are we going to see the same bubble appear? Or are people going to be smart enough to get the heck out of California?
Or is the effect of this burst going to finally, and definitively keep housing prices in California reasonable?
You gotta figure, people want to live here and will pay the price for it….or has everyone learned their lessons on “what they want v.s what they can afford”?
Hi All:
Go to the General Discussions board on the forum to talk about the possibility of going to an auction in Walnut Creek soon.
What do you all think about the housing market in Pleasanton, CA? Home prices there remain quite high, and foreclosures are a bit lean. As a city, it has one of the highest (if not the highest) median household incomes. I know e-Loan is located there. How are they doing?
It seems to me Pleasanton will get pounded. But it hasn’t gotten pounded much yet. Somewhat like Santa Monica, South Pasadena, Burlingame, and maybe Cupertino haven’t been pounded. Maybe those 5 places are different, or maybe they just lag other areas. Any thoughts?
I thought Pleasanton was getting reamed, right along with the rest of the far East Bay BFE cities, which are full of middle-class commuters.
I live in Burbank and look forward to the day of leaving. This area is so overpriced along with Glendale. Between the Armenians and the Koreans - they feel like they are living like kings and queens. I look forward to the time I will be able to leave California.
I also work in Burbank and there is no way I can afford a so-called starter home here. I need to double my pay to qualify with the old standard. I am just screaming inside at the top of my lungs about helping out these people in this town and Glendale to keep their homes. These cultures are not conducive to community living. It wasn’t always this bad. It appears to have gotten worse in the past 18 months. More people per unit (pretty sure management/bldg owner is not totally aware) - could it be they have been evicted from their McMansions and since they are miserable, make everyone else around them miserable. They seem to have forgotten they live much closer to their neighbors, have cook-outs and fill my apartment up with smoke (that’s my #1 favorite inconsiderate thing that they do). #2 Favorite thing - revving their yet to be repossessed bmw/lexus/audi/mb and cranking the stereo in the alley carports. Utterly inconsiderate. It was just not this way at all when we moved here 2002. Burbank was nice, then the spill over from Glendale started to creep in. I am not of these cultures, but I get to watch the tension starting to develope. Armenians don’t like anyone except other Armenians. That’s fine if you live in Armenia.
I wish I wasn’t in California when the housing bubble/bust was and still is going on. Too many people, all trying to screw each other. And to rent a house, I just don’t want to get taken before a sheriff knocks on the door to evict us because the owner has been just taking our $$ and to hell with the tenant. I personally know of no less the 6 people this has already happened to. If it is happening here, I am sure it is happening all over SoCal.
OK - stop the globe, I think I want to get off now. Thanks for allowing me to down load.
I’m Armenian and agree with you 100%.
There are so many losers here that it’s unbelievable…and I mean losers from all cultures…not just Armenians.
The quality of people in general in Southern California is truly ZERO. I feel like all the rejects of their respective countries ended up here. It’s almost as if they turned the world upside and and all the trash that fell out landed in Southern California.
You’re lucky at least that you are not Armenian…burdened with all the bullsh5t cultural “responsibilities” and pressures of constantly having to keep up with crap and feel like you are doing something wrong because you’re not as “successful” as your neighbour.
I want to get out of here even more than you do. Thankfully, my wife and I applied for Canadian residency a while back and now have it….Vancouver is definitely in the future soon…fk this place.
I know. Any area that has “gentrified” since 2001 is ungentrifying right now. I used to wonder why people would talk so much trash about immigrants from other countries, until I had to live near some. The Mexicans in my old complex would blare their music all the time and throw their trash right on the ground. If you said anything to them, they would accuse you of being a gringo, even though this is the US and not Mexico. And the guys have no problem threatening violence against you if your a female, but luckily I had a pretty tall, buff boyfriend at the time. They would never threaten him, for some reason. I think people in the US are generally more considerate and respectful of rules than people in a lot of other countries, maybe because we have more say in the rules or something. I would complain to the management about the stuff they do, but I don’t know whether or not your manager will care. You might end up having to pay more and just moving to a better area, if you can afford it.
Indeed.
I’d like to say more but for some reason, this damned site keeps filtering out what I say…I have no idea why.
People in So Cal these days are all the rejects of their respective countries. They’ve all come here in the last 15 years. They can’t put a coherent sentence together in English yet they are driving around $50K cars with what means I have no idea.
Just my luck, an Armenian bought this complex about 4 years ago. I should have paid attention to that. This is really getting out of hand. You ever get this feeling that you just want to go home, but you don’t know where home is anymore? I feel a bit lost in my own country.
Indeed…I feel lost too and I’m not originally from here. I have no real want or desire to move anywhere else in the US…not because where I am living is so great…it’s just that most other places suck too and the effort to move is not worth it.
I’d much rather just leave and start fresh somewhere else than put the effort to move somewhere else here and feel like the only place that has changed is my location.
Armenians are snapping up properties left and right in Glendale…many new complexes are built by shady Armenian contractors.
But the Koreans will push out Armenians…you watch. They are even shrewder and have much more money…from where…I don’t know…but they surely flaunt it with their Beemers and huge Benzes…hardly any of them work for someone else…they are all under the table business people.
But who do we blame? The people who do it or the country that allows it? This country encourages such ways of life and that’s why people come here…not improve their lives…just to make more money at all costs. And the degradation of the quality of life and people in the US shows this.
OMG - you are hitting the nail on the head. This great country of ours has over-encouraged such ways of life. I just never heard anyone say out aloud what I have been feeling myself these past 5-6 years living in SoCal. Coming from the east coast, I feel I have been living under a rock for the past 30+ years. Have already witnessed confrontations between the middle-high school kids and the lines have been drawn in the alley. It just was not like this just a few short years ago.
Utterly unbelievable - all of this - from the greed to the huge influx of immigrants (legal and illegal) to the financial meltdown - this just happened in such huge #’s in a very short amount of time. Wow.
The problem is that there are alot of people in this country…including white Americans…who think greed is a good thing. They have no idea what consequences it brings…no idea at all.
Another reason to favor right to carry laws. Snub 44 fits the bill, good up to 25 yards.
Mortgage crisis: Welcome to sub-prime capital, USA
Slum landlords are moving into once-pristine suburbs in the foreclosure ‘ground zero’
* Andrew Clark in Stockton, California
* The Guardian,
* Monday July 28 2008
It is easy to spot a repossessed home in Stockton, the sub-prime mortgage capital of the United States and, indeed, of the world. You just need to look at the colour of the grass.
“Whenever you see a brown lawn, it’s a foreclosure,” says Fred Sheil, a local housing activist, as he drives along a suburban street, gesturing at neglected properties. “Look, three in a row.”
A city of 260,000 people in California’s Central Valley, Stockton was once famous for its agriculture - it hosts an annual asparagus festival to celebrate its most prestigious crop and its orchards produce top-class cherries.
The city is now renowned for a less fragrant reason: it is “ground zero” in an economic crisis that has spread from Stockton’s working-class suburbs across the US and beyond. Stockton has suffered a higher rate of foreclosures than any other US city. In the three months to June, banks filed repossession papers on 9,066 Stockton homes - one in 25 residences, according to the property experts RealtyTrac. The number of filings has leapt 170% from its already elevated level a year ago.
Thanks for keeping it in perspective for me. My mom always told me, when you want to have a pity party, take a look around and I promise you will find someone worse off than yourself. Instead of living in Burbank, I could just a easily been in Stockton. There are even more families in crises there.
My frustration is living like a sardine (unfortunately), making not a bad wage and the conflict it creates in my head. Then dealing with sellers who have their backs against the wall, and everyone comes out with nothing. What great minds thought this through?
UUGGHHHH!!! I am not trying to by a beach front house. Just a house in the San Fernando Valley 2bd/1bt and about 1100 sq ft. Some think these are still worth $500K in a neighborhood where everyone earns less than $60K/year.