If You’re A Homeowner In California, You Lost Value
The LA Daily News reports from California. “With Los Angeles’ foreclosure rate surging by nearly 300 percent, city housing officials said Wednesday that they hope to help stabilize the market soon with millions of dollars in federal funds that would let them buy and resell homes already or likely to become abandoned.”
“Mercedes Marquez, general manager of the Los Angeles Housing Department, said the foreclosure crisis is the most serious she has seen in the housing industry, with 9,100 foreclosures in the city over the past 18 months - primarily in South Los Angeles and the San Fernando Valley - and more than 35,000 homes in default.”
“‘The trend has been pretty stark,’ Marquez said. ‘From the first quarter of 2007 through 2008, there was a 282 percent increase in foreclosures. For the first quarter of 2008, foreclosures were up 40 percent.’”
“‘The first year, it was primarily the subprime loans where we saw the most foreclosures,’ Marquez said. ‘But now we’re beginning to see it hit the middle-class loans.’”
“If there is a bright side, she said, it is that housing prices, so greatly inflated during the boom years, are now coming down and giving more middle-income people access to the housing market.”
“‘The prices were going so high that most people couldn’t afford the homes they had,’ Marquez said.”
The Daily Pilot. “After a month on the market, a new 145-unit condominium development in Costa Mesa has three residents living within its walls. The Pacifica development at the intersection of the 55 Freeway and 19th Street is not alone. In Costa Mesa, developers who had once expressed interest in building for-sale units have been stopped in their tracks and many have shifted their focus to building rentals.”
“‘We haven’t received any new applications for any major new condominium developments in at least six months,’ said Claire Flynn, the city’s principal planner.”
“City Council members have unanimously held it as a top priority to get more people to buy in the city instead of renting, but the effort has been largely unsuccessful and city officials blame the economy.”
“Not long ago, the developer of the largest project that attempted to take advantage of the city’s incentives for building for-sale homes had to approach the council and ask the city to allow it to rent its 151 units.”
“The developer, Nexus, got the approval to build its project in part because it promised to sell the units, but with the housing market in its present state the developer pleaded that it would be impossible to get financing.”
“‘Banks will lend money if [Nexus] does apartments, but if the city said, ‘You can’t build apartments,’ then that project never would have happened,’ said fellow Costa Mesa developer Bryan Coggins.”
“Coggins owns dozens of rental properties in Costa Mesa, mostly on Victoria Street. He said the rents that he is able to charge have stayed stable and that even in some cases gone up while local for-sale properties have depreciated by up to 30%.”
The San Bernadino County Sun. “In the 26 years Ceecee Guillen has been a real estate agent, she says she has never worked in conditions quite like this.”
“‘It has been a real devastating market,’ said the agent in Chino. ‘The real problem is the market is saturated with homes that are on sale, on short sale and foreclosed, and the banks are slow to respond to all the requests that are coming in.’”
“Guillen said she has been waiting for Wells Fargo to call back to accept or reject an offer on a short-sale home listed for $399,000 at 12427 Lewis Ave., Chino, since April. Guillen said if the bank doesn’t call soon, the home will be foreclosed, and then, she said, ‘I would have spent all that time working on a piece of property and not get anything out of it.’”
“This is the first and only offer the agent has received on the home, which was listed in March with an asking price of $550,000. ‘A month later we brought it down and now it’s priced to sell,’ Guillen said.”
The San Francisco Chronicle. “Homeowners are flooding City Hall with so many requests to reduce their property values that the tax assessor said Wednesday his office may not be able to meet the demands.”
“The requests come as the number of home sales and housing prices continue to fall in many San Francisco neighborhoods. The city’s median home sale price fell nearly 12 percent between May 2007 and May 2008, according to the city controller.”
“San Francisco homeowner Emily Flores, said she and her family are strongly considering leaving the city after the Outer Sunset fixer-upper home they bought in 2006 increased $90,000 in assessed value even though home values in the neighborhood dropped.”
“Flores, whose husband provides the sole income for the family of five, said their taxes are set to be $1,500 higher than what they paid in 2006.”
“‘For us, what we’re feeling now is if we’re going to pay almost all our monthly income for housing, we want it to be in a location where property taxes are actually paying for something,’ said Flores, 28. ‘To look outside and see all these potholes and the schools are iffy at best, it’s crazy to stay here. What’s happening to us is not unique. It’s probably what most families with kids are feeling.’”
“Joshua Carnes, VP of operations for the Sacramento-based Prop8.org, said anyone who bought a home in the past few years should expect the assessed value of the property to decrease. The company is named after Proposition 8, the 1978 voter initiative that allowed home values to be reduced when there is a dip in market values.”
“‘If you’re a homeowner in California, you lost value on your property this year,’ Carnes said. ‘Unless you don’t mind overpaying property taxes, there is no reason you should not file for a reduction.’”
The Milpitas Post. “Councilwoman Debbie Giordano suggested last week that City of Milpitas create a new mandatory city law to make homeowners landscape and maintain their front yards. ‘I’m doing this not as beautification, but more or less as neighborhood preservation,’ she told her council colleagues.”
“Councilwoman Althea Polanski said Milpitas’ other visible neighborhood issues included absentee landlords who let homes deteriorate, garbage cans left strewn on city streets, abandoned vehicles in front of homes, and graffiti.”
“During the public hearing, resident Isaac Hughes suggested Giordano’s profession of real estate broker was a possible motivation for her newly suggested ordinance.”
“‘And when you’re a Realtor and you want to get maximum dollar for your sale it’s real frustrating when you’ve got two houses on each side and one across the street that make the property value of your client go down,’ he said. ‘I understand that you’re trying to make a buck.’”
From ABC 7. “According to the Federal Highway Administration, Americans drove 12.2 billion fewer miles in June than last year. That is a difference of five percent, the largest monthly drop-off in driving in recent history.”
“‘The cost of gasoline has an extreme effect on our ability to make ends meet,’ says Laura Britto, a retired bridge toll collector.”
“Britto spends a lot of her time clipping coupons and checking sales. ‘We’ve cut back a lot on the things we used to do as extras. We used to go out to eat once in a while. We don’t do that nearly as often anymore. It’s a lot different. Things have changed,’ says Britto.”
“The owners of Antioch’s Spring Yard Nursery and Florist say sales have really cooled down. Business was off 30 percent for Mother’s Day which is traditionally the biggest time of year, and it has not recovered.”
“‘When people are trying to keep up a house payment and feed their children, they’re not likely to buy gifts for friends and relatives, or even special occasions,’ says Elizabeth Rimbault, a nursery and floral shop owner.”
“And homes like Britto’s are making chili beans a budget stretcher. ‘I don’t know what the answer is. I know that it is not going to come tomorrow,’ said Rimbault. ”
The Ventura County Star. “Janss Marketplace in Thousand Oaks is losing two of its largest stores - Mervyns and Linens ‘n Things - as the struggling economy continues to hammer businesses. Mervyns announced this week that it will be closing 26 of its 176 stores, including the one in Thousand Oaks.”
“Linda Coppen, who works as a cashier at Mervyns in Thousand Oaks, submitted her resignation notice Wednesday. Coppen said she was paid $8.50 an hour with no benefits. She said part-time employees were permitted to work up to 39 hours per week.”
“The employees weren’t caught completely off-guard by the news, having noticed after the bankruptcy announcement that their store began to have curiously long sales, Coppen said.”
“‘It was really like we were practically giving it away,’ she said.”
The Evening Standard. “With Humboldt State University and most area public schools getting ready for classes to begin, back-to-school shopping is well under way. Many local stores depend on this season for a sales boost. But with the struggling economy and higher cost of essentials like food and gasoline, many consumers are scaling back spending.”
“‘I’ve definitely noticed a bit of a lag,’ said Pacific Paper Company Manager Jodie Hanson. ‘The way the economy is going, people are a lot more cautious with what they spend. There’s a little less impulse shopping.’”
“Mary Lou Bertolini, co-owner of the Art Center in Arcata and Eureka, has noticed a similar trend. ‘We still sell art materials and framing, but the tchotchke stuff has fallen off,’ Bertolini said. She cited the housing market and rising food prices as potential issues among consumers, as well as the tight credit market. ‘People are more reluctant to put it on plastic,’ she said.”
“As Bertolini sees it, even when finances are tight, local residents find a way to get by. ‘Humboldt County doesn’t have an economy like the rest of the state,’ she said. ‘We know how to live on less. We’re more resourceful. We can live on pennies if we have to.’”
The Desert Sun. “Eight hundred, strong. That was the number of people Riviera Resort & Spa said turned out Saturday to apply for roughly 200 jobs. Couples in suits. Teens wearing spiffy, polka-dotted heels. Young women carrying babies. Construction workers between jobs.”
“These were among the many who came to the Expo in ‘huge waves,’ said Cheryl Magdaleno, director of Human Resources for the storied resort hotel property. ‘It’s been an incredible day,’ she said. ‘We had 150 people standing in line before the doors opened.’”
“Saturday’s job fair put the total number of applicants for the Riviera at 1,200. And it also emphasized the number of people seeking jobs in the Coachella Valley. On Friday, WinCo Foods in Indio had so many candidates at the door for 210 jobs it froze when the number of résumés collected hit 3,000.”
“Chris Wilson, a skilled construction worker, said he’s been working at a bar at night to make ends meet. ‘It’s been a tough grind,’ he said, as he applied for a janitorial post. ‘My remodeling jobs have been coming in slow for six to seven months.’”
“Darlene Mitchell of Sky Valley said she was laid off from the mortgage industry in January after 25 years.”
“‘I’ve been working at the front desk of a Desert Hot Springs hotel for six months. I’m hopeful the job skills will transfer over, because my mortgage experience sure isn’t of interest to anybody right now,’ Mitchell said.”
La Canada Valley Sun. “Assemblymember Anthony Portantino was joined Friday by Ron Bennett, CEO of School Services of California, at the Pasadena Rose Bowl conference room to discuss the state budget and proposed cuts to education.”
“Bennett spoke to the audience about the proposed cuts in education by the governor and the new proposal by the conference committee. ‘Both sides [are dealing] with one immovable object - the California economy,’ Bennett said.”
“He said the state’s economy could be summed up in one word - housing. ‘Our economy has flattened out,’ Bennett said.”
“Bennett asked the audience how many felt the state was in a recession. Most raised their hands in agreement. Bennett quoted from a friend: ‘He said recession has a lot in common with beer bellies and bald spots. It’s hard to tell when it started, but sooner or later your have irresputable evidence it happened.’”
Man, it really sounds like ALL of California is falling apart - Bay Area, LA, IE, San Diego, Sac. Sort of confirms the idea that the state as a whole was overpriced, overtaxed, overhyped, overindulged, and overdue for a serious fall.
Skipped the summer trip to San Diego this year - not interested in paying $250 a night for the same room I got for $190 last summer. Funny how that hotel has sent me FOUR mailers this summer saying “please come back” for our “special insider” rate.
I just got a mailer for Vegas.
On Expedia right now the rates are still high for the hotels I tend to stay at, on the strip.
However I had heard times are tough and they are starting to make some changes.
Well, I can stay for 2-nights free @ Monte Carlo, even on the weekend. I haven’t had one of these in a long time, and I’m not a big spender.
Vegas Troll Alert: If you want the actual actual statistics from the Las Vegas MLS, which I pay money to belong, then here it is: The closed sales for July was 2,592. You would have to go all the way back to September 2005 to get a higher total 2,985.
Let me repeat July 2008, sales in Las Vegas 2,592, the highest TOTAL closings in 2.5 years.
Median price in Sept 2005 was $310,000 Median Price July 2008 was $220,000.
Now here is why I think median price is NO longer valuable.
With $4.00 gasoline, the homes 30, 40, 50 miles from the strip,
where most of the jobs are, are not going to attract any buyers, because of the cost to get back and forth to work, and the time it requires. Remember, Location, Location, Location.
2nd, I consider Total Employment more of an indicator than the unemployment rate. If people have jobs, they will buy houses. The total employment for June was 927,000 2008 was down only 6,000 jobs from June 2007.
I am sorry if you disagree with hard info, but as Joe Friday from Dragnet said “Just the facts, mam, just the facts.
That’s funny, I had a post that included LV just today, and those people are crying in their beer. Even those cheerleaders at metrostudy said it was contracting. But please, by all means, buy as much real estate in Nevada as you can. Make that AZ, UT, CO, CA (I give up, they’re all falling apart)while your at it!
A crummy little 4.75 Billion Dollar project was given the axe yesterday, but don’t let facts get in the way of cooked statistics, from the UNLV caterers…
been wanting to spend a night (or 2) up in ft bragg but the increased price of an overnight stay at the holiday inn really annoys me.
last year it was around $99. this year its more. much more.
I know costs have gone up but geez, at least gimme a complimentary tube of KY in the nightstand drawer (with phone book) to pretend you care.
Hey my son is a general manager for hotel in San Diego affiliated with a nationwide chain of mid-price hotels. EVERYTHING is negotiable even the rack rate. Call the hotel directly and wheel & deal. Preferably during the day when the GM is around, Try after check out 11 or 12 or early around 8 to 9am.
I will do just that: thanks SuzyK
I have an idiot cousin who lives in Vegas, made a boatload renting out heavy equipment for construction. Two years ago, he asks me if he should buy his friend’s house, says it’s 2.3 million, but it’s really worth 3.2 million. I tell him he’s insane, Vegas is going to go in the toilet, plus I told him I didn’t think his friend was really going to just give him 900K. Flash forward to today, he recently sold his (mere) 700K house and downsized to a 300K house. Sold his ridiculous Armada with two TVs and bought a compact. Reality has even seeped into his blockhead.
David - you give us the median but say you dont believe it is relevant. I am not sure if you are implying that the far out homes are going down in value but the better location properties are not. Since you have access to MLCS, have you done a neighborhood comparison? I have been given numbers that the new Strip projects are selling for about 30% psf less than peak - Panorama, Allure, Sky, Trump, MGM Signature, Palms, etc. Part of this is because the lenders wont finance these anymore without more than 25% down or more - I heard some wont finance condotels at any LTV. Any insight? Also what is the new project that was nixed? Are they talking the Echelon which is weeks old news? I would have loved to see this build and then sell for 60% off. Oh well. What’s going on with the Cosmopolitan? It is rather odd looking at the listings for the towers as the REO properties seem to be $100k or more less than comparable non REO properties. Why would anyone condider the non REO at this point? June employement numbers were before 1000s lost their construction jobs at Echelon and other projects, n’est pas?
Sorry for the typos, I was on crowed public transportation. Note that I wasnt challenging your facts, just would like a better understanding what is relevant from your perspective as an insider and what is going on at the Strip. I would love to pick up a cash flow strip property in 18 months or so and believe we are headed there. Also with respect to Strip properties isnt the wealth of Californians more important than local employment numbers, I assume the majority are investment properties or second or third homes. Millions of Californians have less disposable income these days.
I say your post is short on ALL of the facts. How many of those sales are Bank REOs and how many are organic sales? One of the predictions here was that the REOs would set market price in the downturn and that’s what we are seeing now. The REOs are pulling down the median price.
cvca,
If you post here… ( we’ve already figured that out )
Well… the only problem is that prices in the Bay Area are still way too high, that is unless you want to buy a foreclosure in the ghetto or in one of the suburbs 70 miles out of town. Anything remotely decent in my East Bay hood are still sitting for sale with 600k+ asking prices. What’s more is that they sit there for months and months on end. The price declines are painfully slow.
Condos in my Fremont complex that sold for $400K at the peak are now listed at $240K, with multiples offered and not much activity. $300 hoa, 900+ sq ft. Nice condition, nice neighbors.
Argh. Jetson Boy, I know you’re heartfelt, but I hate it when people quote asking prices, like they matter. Tell ya what, go to the wharf and get yourself some fudge. Come back, look at actual sales prices, then write us back.
Big V, I get what you are saying but I think Jetson Boy is pointing out that folks still haven’t taken their heads out of their asses.
That’s definitely true in Pleasanton. Look at the wishing prices for these homes: http://www.kimberlycommons.com/files/Brochure2.pdf .
Downtown Pleasanton is nice, but not $880K nice.
Yep, the correct term is wishing prices, not asking.
I have some serious schadenfreude about the CA market, but I have to admit it breaks my heart that my 60 y/o mother in Orange County HELOCed at the peak of it. She didn’t tell me until after she did it, of course.
I doubt she would have listened, though, if she had discussed it with me beforehand. She was in the thrall of the financial gurus who told everyone that “if you aren’t using your equity, you’re throwing your money away!”
Well where did the money go???
If she still has it invested conservatively then she’s actually in an good position.
“Skipped the summer trip to San Diego this year - not interested in paying $250 a night for the same room I got for $190 last summer.”
We wanted to go to Shell Beach, CA, but we decided to avoid the smoke and traffic; Newport, OR got our money this summer. We’re headed to Lake Chelan, WA this weekend.
‘To look outside and see all these potholes and the schools are iffy at best, it’s crazy to stay here.
Excuse me, but SF never struck me as a good place to raise children, reviews in Places Rated Almanac and so on notwithstanding.
But maybe that’s just me.
SF at one time was a good place to raise children. At one time it had the highest rated education system in the U.S.
At one time Flint, MI, was a good place to raise children.
Things change.
Seems like only the elite or the insane can raise a child in Frisco now.
Back in the days before Proposition 13 … funny, when you stop funding the schools, quality seems to drop.
Oh but not to worry the lottery will save the day. It takes these things a few years to get the bugs worked out ya know.
Don’t forget that ever so effective “nochildleftbehind” program that only gives money to schools If the test scores are high. Just means they teach kids how to take tests, not learn. Got some teachers in my family in the midwest who hate this program.
Have 2 teachers in the house - 1 public & 1 private and neither believe in it and say it has ruined education.
Well the goal was to destroy PUBLIC education so we would all go along with funding private education (my kids went to both and we preferred public… not so socially isolated).
Funding is NOT the problem — public school funding has gone up higher than the rate of inflation. Give me what CA taxpayers pay out (~$10K per student per year), without the CTA, and I could do much better.
Using your logic, I could also say CA has shifted to the left politically since Prop 13 (undeniably true) — and look what has happened to its public school system!
No, CA pays about about $5500 per kid per year. We are amonst the lowest in the nation in per-student school spending, even without factoring in the high cost of living here. Once you factor that in, we’re like the total lowest.
I was just going to say that Big V. As I recall were in the bottom 5 in funding/pupil. CTA can’t be the problem because they were here before Prop 13 and we were in the top 5 nationwide before Prop 13. The difference in the facilities and resources between when I was in the LAUSD and when I attempted to send my daughter 35 years later was shocking. You get what you pay for in education.
Yes CA has one of the lowest per pupil spending rates in the country, we need to emulate those places in the country that do the highest spending per pupil,Washington D.C.
So true seattleguy.
Seattleguy,
Prop. 13 is something that every municipality should have to deal with.
It limits government spending!
It limits your annual property tax increase!
(Which was the original intent).
If you don’t think there’s waste in the system, every dollar is used efficiently, then I can’t help you.
Mike
P.S. Not a personal attack. Just one of my ‘hot buttons’.
It locks people into their homes, reducing the number of resales on the market, forcing prices up!
It encourages people, when they do sell, to relocate out of state!
It limits the ability of future generations to raise and spend the money they want to raise and spend to meet their generation’s needs!
Seriously, if you want to cap people’s prop tax bills based on their ability to pay them, why not do that? Cap the prop tax on a CA primary residence at X percent of the occupant’s income, and be done with it. No breaks for out-of-state owners and RE “investors.” No big prop. tax increases when you move within the state. If people in a particular community have the income to pay a higher prop. tax rate, and the community wants to vote that increase in place, let ‘em do it.
Prop. 13 was a shotgun approach to a scalpel problem.
Prop 13 also gives a free ride to people who own second homes in CA (especially those who don’t live in CA–and therefore don’t pay CA’s income taxes)…
Quit knocking Prop 13. Adjusted for inflation the screwels are getting MORE money than ever before. If the teachers would get their heads out of u know where and teach rather than act like a bunch of bolchevicks with their CTA and NEA politics. Any time someone knocks Prop 13 it is usually an oinker working for some form of government. Thankfully we have it otherwise my mother would have lost her home in LA. I feel better now.
Hate to break it to you, but poorly educated students is generally not the teacher’s fault, but the complete breakdown of respect for education and schools by society, specifically parents.
If you spend most of your time disciplining kids of all ages, to the point that you fear your students in middle and high school, “better teachers” aren’t going to help a whole lot.
The reason that private schools work is because those who send their kids to private school generally care, and kids who act up can get kicked out.
What happens with the vouchers? If everyone goes to private school, then does it just become another place for disinterested text-messaging talking-back gang-banging teens?
Since when has anyone stopped funding California schools? They get more constant dollars now then they did pre-Proposition 13.
There was a link to some info about that on Curbed today. It turns out there are still good schools in SF, test scores are good and rising, and lots of attention and money are going into fixing this. Stay positive and fer chrissakes get involved (meant in the best possible way)!
Has anyone considered the demographic shifts in CA since Prop 13 was passed?
As a native Californian who well knows the public school system, I’d say the schools’ decline began with “forced integration” (bussing) and continued spiraling down as more and more students from poorer countries (and no knowledge of the English language) became a greater portion of the student population.
Just saying…
“If you’re a homeowner in California, you lost value on your property this year,” Carnes said. “Unless you don’t mind overpaying property taxes, there is no reason you should not file for a reduction.”
Send that to all of your acquaintances who bought in the past 2 or 3 years, and see how they react. I’d see it as a very interesting psychological experiment. If, they go for a reduction they will be saving money from their monthly expenses. However, they will also be admitting, in writing, that the value of their “investment” has decreased… considerably.
I’m confused by this whole thing. Isn’t the point of Prop 13 that property taxes can only go UP from the purchase price, but only a fixed percentage per year? Didn’t Prop 13 prevent any claiming of “reduced value” and therefore reduced property taxes?
I thought the same thing. Prop 8 makes prop 13 seemingly contradictory with each other.
Prop 13 is good for long-term owners (like me). I have no need to ask for property tax adjustment - they would love to adjust my property taxes closer to accessed value. The people affected by price drops are recent purchasers.
I just want to write in to say that Rich is a huge troll. He says he called the bubble years before it popped, but I don’t remember him posting in 2004, 2005, or 2006. He also said that he sold his house and two rental properties in 2002 because he believed they were overpriced. However, he is currently urging us all to buy using an RE agent (such as HIM, for instance), even though prices haven’t even gotten down to 2002 levels yet. He uses the same sales tactics as all other Realtards, including but not limited to, the following:
-Laughing at people (lol, rotflmao, ahahahah)
-Calling people names
-Trying to create a sense of urgency
-Dismissing hard data and relying solely on his own anecdotal evidence, which is impossible for us to verify
-Quoting completely inaccurate rental rates
All of his arguments are based on the premise that house prices have now dropped to affordable levels, inducing a stream of investors to start bid, bid, bidding on those “smart” deals. But we all know that we haven’t gotten there yet. The price:rent ratio and price:income ratios are still too far off, and we know that money is just getting harder and harder to get. Foreclosures are still rising, inventory is still rising, and there has been no indication of a slowing down in the price declines.
Some of the very hardest hit areas are getting close to bottoming out, but haven’t done so yet. Those are the subbest of prime, and will require cash buyers only. Those cash buyers will have to be willing to slumlord it. There aren’t enough of them to “snatch up” all the housing that is/will be available. Most of the HBBers have no interest in such areas anyway.
So, in summary Mr. “Rich” (yeah, that’s rich, all right) is a manipulative sales person who has been only posing as an HBBer over the past year or so.
Yesterday, Rich told us of a 3-bedroom “deal” in Stockton that would rent for $1100/mo, thereby “cashflowing”. There are currently 100 houses in Stockton with at least 3 bedrooms advertised for rent on craigslist. Not a single one of them is asking $1100/mo or more. One of them appears to be asking $1100, but when you click the link, you find out they’re really just trying to sell the house.
The 50th percentile of asking rents for houses with at least 3 bedrooms is $950/mo, and that does not exclude 4- or 5-bedroom houses.
AH fair Big V, I happen to agree with you. And like you I called BS on him last night.
Big V …..I went somewhere last night so I didn’t have a chance to respond to his response to my post (about agents just being out for themselves ,etc.) ,but hoz and others responded to this
person . But my quick take on the stats he gave was that they
were not correct .
Hasn’t it come out time and time again that the information given by RE agents is not trustworthy ? Real Estate agents think they can say anything they want and they will be protected under the
“Sales Puff” case law on the books ,(which gives a sales person a certain amount of leeway on puffing up the positive ). I would argue that if a agent knows a material fact and than lies about that fact ,than it goes beyond “sales puff “and you are hiding real facts that might harm a buyer or seller .
But, the crimes that the REIC have committed in the last 7 years are off the charts as far as “foul play” is concerned ,and go far beyond ‘Sales Puff”.
Big V,
The way “I” understood his argument was with bond yields being as weak as they are ( and the add’l int. rate risk ) a 14% rate of return ( from rentals ) will bring institutions, public pensions and hedge funds ’streaming’ into the CA SFH market in droves.
Well, firstly many of those institutions have “fiduciary responsibilities” and can’t can’t make those kind of “sea change” decisions on a dime. In truth, if ever. They have Investment Policy Statements and a ton of other constraints as to what they can or *can’t invest in.
I’ve sat in on a ton of those meetings and presented as well and if you think you’re going to get a bunch of starched collar fogies to rubber stamp that on site you’re going to be disappointed. Hedge funds ( those that remain ) are a different story but I tend to agree with you. Yes, as advertised ( assuming 100% occupancy ) you ‘might’ be flirting w/ those numbers. But after they get bid on, it quickly evaporates.
Yup. There are no properties out there being sold for a price that would allow a 14% ROI y-o-y. Even the cheap ones are still negative once you factor in taxes and maintenance.
Not to mention it won’t be a 14% return once you factor in management fees and vacancies. Besides, there are many REIT’s, BDC’s, Oil stocks that pay from 8-20% yeilds right now and are liquid to boot.
They don’t call him Mo Money for nothin’!
Hell there’s options driven ETF’s with a yld. of 14% NOW! Why run around and reinvent the wheel here?
Institutions don’t want to own a ton of single homes–what a f’ing disaster to manage. Most institutions won’t slow down for an investment of less than $15MM or more. It’s too much of a management hassle. Do people honestly think they’re going to buy $100k homes at a time?
Not a chance in hell.
The investors who are buying for the hope of cashflow are country-club/small funds who are putting together a few million to buy a group of homes.
About the best you’ll see institutions do is buy gigantic pools of loans from distressed financial institutions at discounts and sell any REO (or underperforming loans/soon to be REO) in chunks to the investors who are putting together the few millions at a time.
All propaganda has to be popular and has to accommodate itself to the comprehension of the least intelligent of those whom it seeks to reach.
Adolf Hitler
big v = truth machine. I love the way you parse statements. no escaping online public blogging as a forever record.
sic’ em, girl. grrrr . . . grrrrrrrr !!!!!
Well, it is always a “good time to buy or sell a home and pay a Realtor lots of money in the process!”
Yep, he’s a troll. Anyone who thinks housing is “affordable” now is out of his mind.
Eh. The low end is getting close, but is not quite there yet. If you’re very careful and get a good deal on an REO some of them can cash flow. That assumes you’re in a high foreclosure area, say subdivisions that had all the houses sell in 2004-2006. Also that a recession will be avoided, which I don’t think is the case.
When negotiating for reduced rent with landlord/friend, when you’re already paying quite a bit below market, is it better to serve a 2-buck Chuck or splurge on say a Robert Mondavi or comparable? Filet or chicken?
How badly do you want the rent reduced and how well do you know your landlord/friend?
Rather well, and i don’t really care about reduced rent. Just thought it might be fun to sit him down and say Listen Bud, houses on both sides of yours I live in are losing value like crazy lately… I think I should have my rent reduced…
Just for giggles. I’m in Costa mesa, and the house next to me that sold for 805k in 2004, is now down to 760 or so according to zillow. which you all say errs high. fun times for cruel little people like myself.
Little known fact suppressed by the wine industry flacks : Two Buck Chuck won first place in a blind tasting in Napa for their Chardonnay. Don’t knock Bronco winery. They have some great blends and wine types for your pleasure. I think I’ll have another hit .
I can’t wait till housing becomes affordable again, then maybe people can actually afford to pay for schools and roads.
OK, I’ll bite, wtf does irresputable mean?
“…but sooner or later your have irresputable evidence it happened.”
undisputale, irreputalbe evidence
like “irregardless”
Big V,
Get it right! Irregardlessly!
irresputable:
1) irredeemably indisputable.
2) A misspelling of irrefutable.
More like “disresputable”
Ebonics in high gear. (man, I have a feeling I’m gonna get my sack filleted for that one.)
You are…besides, it sounds more like Valley dude/girl speak. Ebonics as a linguistic construct is much more intelligent.
I don’t know……in my minds eye, I can see Leon Spinks saying he was once the “irresputable champion of the world!” (once again, I’m in big trouble)
You can see it. But did he say it? Who’s irresputable now?
IAT
I think “irregardless” came from ebonics. It’s a pretension. Valley girls/dudes usually have a better edumacation than they’re ebonistic counterparts, indisputably and irrefutably, irrespective and regardless of race.
First of all irregardless could not be ebonistic because there are too many syllables in the word. And the word is “their” not THEY’RE in the context of how you’re using it. Hate to nitpick but that mix up bothers the hell out of me.
..“‘When people are trying to keep up a house payment and feed their children, they’re not likely to buy gifts for friends and relatives, or even special occasions,’ says Elizabeth Rimbault, a nursery and floral shop owner..”
Note to self: Short tulips.
Tulips, huh.
joey,
I would tend to view that as a positive. The whole gift-giving thing was getting out of control!
“Let them eat flowers.” - Elizabeth Antionette Rimbault
“…That was the number of people Riviera Resort & Spa said turned out Saturday to apply for roughly 200 jobs.”
Uh, I hate to say this, but what is the outlook for resorts and spas in this economic environment? If these are the types of jobs that are going to save the working people, we’re in big trouble.
I was just thinking the same thing.
Isn’t this sort of like climbing to higher ground while the forest fire marches up the slope toward you?
“we want it to be in a location where property taxes are actually paying for something”
(And don’t we all sister)
‘Humboldt County doesn’t have an economy like the rest of the state,’
Like I’ve said for the last two and a half years I’ve been commenting on this blog, people in Humboldt county will be the last to admit that housing is crashing. And even now, it has only dropped 10%, down to a median of $308,000, which is ridiculously high considering the median household income is only $40,000 in this county. Of course, that is typically supplemented by selling dope, which most people openly admit to around here. The rest are living off the equity from the houses their parents left them/bought them or their trust funds. I feel like I’m the only one in this county with a decent job and I’m supporting a bunch of lazy drug dealers and equity locusts from SoCal.
You have been here a long time…you are FINALLY getting some price reductions up there…
I think the gov is cracking down on pot growing, though. Maybe you can turnn some of them in.
“Maybe you can turnn some of them in.”
You want Anthony to be a snitch like Huggy Bear?
Terrific article in last month’s New Yorker about the new generation of artisan marijuana. Of course, Humboldt County was the epicentre of epicurean weed.
“Eight hundred, strong. That was the number of people Riviera Resort & Spa said turned out Saturday to apply for roughly 200 jobs. Couples in suits. Teens wearing spiffy, polka-dotted heels. Young women carrying babies. Construction workers between jobs.”
Congrats to the 200! Hope they do not work on commission cause with only three customers a day it could get ugly.
“‘And when you’re a Realtor and you want to get maximum dollar for your sale it’s real frustrating when you’ve got two houses on each side and one across the street that make the property value of your client go down,’ he said. ‘I understand that you’re trying to make a buck.’”
Hmmm, maybe you should knock on their doors and DEMAND to put new coat of paint, new sod, brick drive way, and throw in granite countertops in the kitchen. Unbelievable.
If the houses around the neighborhood are pieces of SH%t, then the house should be priced accordingly…waaaay…dooown. “You can put lipstick on a pig, but it’s still a pig”
FP,
Right, if there’s a steaming pile on either side and one across the street who’s really out of place here?
I do understand the frustration as I’ve actually been in that position back in the early 90’s in OR. It was then that I decided if I bought a retirement home it would be a houseboat.
Weigh Anchor!
Years ago, a friend of mine in San Ramon painted and landscaped his run down neighbor’s house before putting his house up for sale. It was a very smart $4000 investment on his part because his house sold quickly for more than his asking price.
“‘If you’re a homeowner in California, you lost value on your property this year,’ Carnes said. ‘Unless you don’t mind overpaying property taxes, there is no reason you should not file for a reduction.’”
There goes the SF Chronicle, spreading information about falling home prices that could call the condition of bank balance sheets into question. I sure hope Sheila Bair is keeping close watch on them.
——————————————————————————-
Wednesday, July 23, 2008
FDIC learns it ignores bloggers at its peril
San Francisco Business Times - by Mark Calvey
The federal agency insuring bank deposits learned that it can’t afford to ignore the blogs following its seizure this month of IndyMac Bank, the largest bank failure since the 1980s.
“The blogs were a bit out of control,” Sheila Bair, chairman of the Federal Deposit Insurance Corp., told the San Francisco Business Times after a speech in San Francisco this week.
That’s putting it mildly. Following the FDIC’s takeover of IndyMac on July 11, widely followed blogs were speculating on bank runs on some of California’s largest banks based on nothing more than people waiting for their branch to open or large deposits moving between financial institutions.
The FDIC plans to pay closer attention to the blogosphere in the future.
“We’re very mindful of the media coverage and blogs in controlling misinformation. All I can say is were (SIC) going to continue to stay on top of it,” Bair said. “The misinformation that came out over the weekend fed a lot of depositors’ fears.”
Any bets on Sheila’s IQ? Wonder who she had to do to get that job.
I don’t get it . The main stream media has already disclosed that
there will be bank failures with this loan loss problem. A major bank fails and this Sheila doesn’t think that people might start looking up the ratings on the Banks and Savings & Loans they bank with ,along with making sure they have the proper amounts in one bank .
Please be advised Shelia ,it was not normal for people to overpay for property by going on toxic loans they didn’t qualify for to get rich quick ,but it is normal for people to pull out money from weak banks
to protect themselves .
Ms. Bair’s comments remind me of song….
Mama’s gonna check out all your websites for you.
Mama wont let any dirty bloggers get through.
Mama’s gonna watch for when you log in.
Mama will find out where your browser’s been.
Mama’s gonna track all your clicks and screens.
Apologies to Mr. Waters
“(SIC)”
[sic]
Now your talking.
This is how far America has fallen, in a nutshell:
1) Thousand Oaks is an upper-middle income area, a house there would run you $700k.
2) There is no way an $8.50 an hour employee could ever hope of owning a home there.
3) If you work 40 hours or more a week, you are a full-time employee, and get benefits, albeit how slight they may be. Thus, the 39 hour max work week.
4) Where are people in Thousand Oaks going to shop for cheap consumer goods & linens now?
_________________________________________
“Janss Marketplace in Thousand Oaks is losing two of its largest stores - Mervyns and Linens ‘n Things - as the struggling economy continues to hammer businesses. Mervyns announced this week that it will be closing 26 of its 176 stores, including the one in Thousand Oaks.”
“Linda Coppen, who works as a cashier at Mervyns in Thousand Oaks, submitted her resignation notice Wednesday. Coppen said she was paid $8.50 an hour with no benefits. She said part-time employees were permitted to work up to 39 hours per week.”
I knew a law professor who moved his family from St. Louis to Thousand Oaks eight years ago, and even back then his house-owning costs grew to an unacceptably high level after leaving Missouri for a nice but unexceptional house in Ventura County. I guess that prices doubled or more after that, making the problem much worse for future transplants.
Of course, even professors with families can rent, so I guess that it is a matter of prioritizing. I doubt that these retail employees could even rent there, although I imagine that there are cheaper rentals somewhere around the county.
Santa Barbra is worse
“This is how far America has fallen, in a nutshell:
1) Thousand Oaks is an upper-middle income area, a house there would run you $700k.
2) There is no way an $8.50 an hour employee could ever hope of owning a home there.”
In Dubya’s “Born Again Virgin” oops… “Ownership Society” view, there’s no reason anyone making $8.50/hr can’t live in a $700k home; BTW in San Jose, CA a $700k home is a 50’s 3/1 starter. All y’all need is faith; if y’all have faith the fundamentals are there.
and a lot of lipstick is needed for those PIGS in Kalifornia Ahhnold LAND.
Is it now socially acceptable to call Ahhnold for the fookin’ fool that he is. I think the evidence now truly speaks for itself on the current course of Kalifornia, and close to 3 years since I left his foolish land. I think I was the only thinking he was a fool then. But now the evidence is truly really there. And all of those irresponsible HEL’s were supporting such truly great business models as pirate stores, gourmet dog biscuit stores, do it yourself make a candle, and other idiotic overpriced useless crap.
I’m one of the few non-democratic Californians who can lay claim to not voting for the terminator either time he won.
I voted for the real conservative the first time around and the libertarian the second.
What most clownifornians don’t understand is the terminator tried to bust the entitelment pensionairs and their bull$hit overbloated payments but it got voted down. Voted down because the “I am too busy and prefer to complain crowd” would not go out and vote.
Tell me how many people can pay $700K for a POS pig on an $8.50 job at 39 hrs/wk. That equals $331/wk, $17,200 per year, or over 40 yrs with every cent going to the principal only. That really adds up. No interest, no other expenses, no taxes, no gas, etc.
You need to think big; LBJ thought big.
“And homes like Britto’s are making chili beans a budget stretcher. ‘I don’t know what the answer is. I know that it is not going to come tomorrow,’ said Rimbault. ”
I can tell you what’s going to come tomorrow. Don’t invite NYCityBoy over for dinner…he is still getting over the Greenspan Stew. Many of us are still recovering from “the fart heard ’round the world.”
Greenspan is the bad smell that just won’t go away…….
“‘The prices were going so high that most people couldn’t afford the homes they had,’ Marquez said.”
Arrest that man on sedition charges!
“During times of universal deceit, telling the truth becomes a revolutionary act.” - George Orwell
(Thanks to Russ Winter for keeping that memorable quote in open view on his blog.)
–
The quote is a true reflection of what has been going on for the past several years. How is one to know who is telling the truth?
Jas
It’s not that hard, Jas. All the data we need is public and verifiable. If it weren’t, then this blog never would have existed.
–
There are data and stats and then are interpretations of the data. There is lot of room for propaganda even without distorting facts.
Jas
I know, that’s where personal responsibility comes in. Because the info is available, you are FREE to either blindly swallow what some goober feeds you, or to think critically. Your own personal success hinges on your own personal decisions. You will notice that comeupance is being had to date.
“‘The prices were going so high that most people couldn’t afford the homes they had,’ Marquez said.”
And even with the price drops so far, that hasn’t changed much. One measure of the “bottom” will be when most of those that “own” houses can actually afford them. Even after two years of sizable price declines, most “owners” in this county still couldn’t purchase their own houses at current prices.
“The employees weren’t caught completely off-guard by the news, having noticed after the bankruptcy announcement that their store began to have curiously long sales, Coppen said.”
“‘It was really like we were practically giving it away,’ she said.”
Where have I heard that before? Hmm…retail imitates housing.
–
Those of us who don’t owe any money and bought BB (BEFORE the BUBBLE) have lost nothing. Home-debtors were/are not homeowners to begin with. Rationality will return to California, one way or another.
Jas
A penny for your thoughts?
“As Bertolini sees it, even when finances are tight, local residents find a way to get by. ‘Humboldt County doesn’t have an economy like the rest of the state,’ she said. ‘We know how to live on less. We’re more resourceful. We can live on pennies if we have to.’”
No, you can only report pennies because you earn your dollars by selling drugs. What happens when everyone in town decides to become a drug dealer? How many dope fiends does it take to support an entire city of dealers? Where do the fiends get their money?
What happens when the FBI finds your pot field and arrests your stupid axe?
Generally speaking, dope growing in Humboldt county is highly accepted. The Sheriff won’t touch people who are growing, even if commercially, since he knows his bread & butter depends on it. Same with the DA…they simply won’t prosecute cases here because this IS the economy here. Day after day there are numerous articles in the paper supporting those who grow commercially, don’t pay taxes, etc. And these same growers expect firefighters to protect their stash when wildfires encroach–which they do. All without confiscation or reporting.
That will change, like, today. People are starting to get POed at the amount of $$ CA is spending on firefighting. The state is also getting hella agro about taxes. The climate is not too good for old Dumbolt.
Anthony
I know that is the case up there.
Wow, nice to hear we have yet another close comparison to Mexico there.
I thought cops were supposed to be upholding the law and letting the judges sort them out.
–
“a top priority to get more people to buy in the city instead of renting”
When would govts at various levels stop this nonsense? In Switzerland 66% rent. In small village in India where I grew up 99% owned. It is a meaningless stat in term of the quality of life or its usefullness to the economy.
Jas
“When would govts at various levels stop this nonsense?”
Maybe when the feller who invented the Ownership Society concept leaves the WH?
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You, sir (Prof), are an optimist!
Jas
Jas,
But Americans love their stats!
http://www.stuffwhitepeoplelike.com
It’s a kick!
–
And the propagandists have a field day! Nowhere is this more true than on the subject of taxes. After some twenty attempts at making taxes fairer we can be certain of a bad tax code.
Jas
It’s a government by the people for the people, Jas. Future politicians are not conceived in test tubes and groomed for their careers by current politicians. They are born into the world and decide to run for office. That’s all. Trust me, the theory that the free world is being secretly manipulated by a class of mind-control experts has no evidence to back it up. It’s paranoid.
–
“It’s a government by the people for the people, Jas.
You think so? The US govt seems to be serving the economic and corporate elite, especially the bankers and financiers, quite well. Perceptions and reality are two different things.
Jas
“Perceptions and reality are two different things.”
Propaganda and reality are two different things.
There exist two realities. One is within the skull and one is without. Either can create the other.
–
Yes, propaganda is meant to create certain perceptions.
Jas
What burns me is that our government won’t level with us about the true cost of all the services we’ve come to expect. We all want stuff that we don’t want to pay for, and politicians play games so they don’t have to deliver the bad news that we are broke. And you no-taxes-ever folks are the worst about demanding that we pay for your charred house plunked on some isolated mountain top in the fire zone. I pretty much say No to every Proposition on the ballot (flaming liberal that I am) because there’s rarely any realistic provision for paying for them. Our state budget sucks because there’s so many arcane funding guarantees for every special interest group be it the Put Everyone in Jail group, or Build Every New Interstate to Nowhere group, or Reduce Classroom Size group.
–
On Losing Value in Santa Clara County…
Median Price of Resale SFH is down from high of $815K, two years ago, to $650K and PPSF is down from $517 to $405. Few pockets are holding up value but 90% of the areas is losing it.
CA as a whole has lost more than $1500B, or more than 75% of the annual GDP, from the peak. And there is no end in sight.
Jas
Umm, the spin that the NAR reported to CNNMoney today was that the median price in San Jose is $755k. The article talked about this quarter, but that figure was from last qtr (according to their own charts). Any surprises there?
Back to Dataquick.
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“the median price in San Jose is $755k.”
It is news to me. Where in San Jose? Not for whole of City of San Jose, I am quite sure of that.
Jas
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‘I would have spent all that time working on a piece of property and not get anything out of it.’
Lady, you forgot the good old days when one could make few thousand dollars just for listing a house and a little work. How about working for per hour fee? Minimums wage never sounded this good, eh?
Jas
I love how Rich the realtor talks about the landlord business, so I talked to my brother who has been a landlord on the central Florida coast for over 20 years. You know, just checking facts.
He is looking for REOs in the good neighborhood that he lives in only.( knows the area, peak prices for 3/2= 350K) Is looking through a realtor.( The bank pays the 6%, not my brother) Know what it takes to cash flow positive.( owns about 20 units).
Just bought two trashed out homes for $28K and $34K. Each requires 20K in repair. He will personally move into one, and call the govt in for a reappraisal to get the taxes right, then will do the repairs and rent it. then repeat on the second one.
These house will cash flow positive.
Landlording is a hard full time job
My former landlady made the same point to me about, oh, once a week. And it worked. Removed any landlording desire that I might have had. (Thanks, Liz!)
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Servitude lies in the act of obedience. — Tocqueville (from Democracy In America)
“Councilwoman Debbie Giordano suggested last week that City of Milpitas create a new mandatory city law to make homeowners landscape and maintain their front yards.”
Yes, we definitely need more laws. Freedom thru obedience!
Jas
I just thought this suggestion was particulary obtuse, since it would directly impede the current efforts to convince people to conserve water. Grass is not important. Food is.
This Debbie is not too honest. She is selling a house in my neighborhood. The sign changes from “Open House” to “Pending” to “SOLD” within a few weeks, after the house is “SOLD” for about two weeks, the sign changed back to “OPEN HOUSE” again. And as of now, it is “SOLD” again. Let’s see if it will “OPEN HOUSE” or “PENDING” again.
LIAR!
A little note to the spammers; you WILL fail!
Stay the course, Ben!!!
Trolls to the left of me,
Spammers to the right, here I am,
Stuck in the middle with you.
–
“‘For us, what we’re feeling now is if we’re going to pay almost all our monthly income for housing, we want it to be in a location where property taxes are actually paying for something…”
We are definitely dealing with some greedy folks here. They bought the house with 20% annual appreciation expectations (building wealth!) and now that seems like a distant dream.
Jas
“The Milpitas Post. “Councilwoman Debbie Giordano suggested last week that City of Milpitas create a new mandatory city law to make homeowners landscape and maintain their front yards. ‘I’m doing this not as beautification, but more or less as neighborhood preservation,’ she told her council colleagues.””
This Debbie is not too honest. She is selling a house in my neighborhood. The sign changes from “Open House” to “Pending” to “SOLD” within a few weeks, after the house is “SOLD” for about two weeks, the sign changed back to “OPEN HOUSE” again. And as of now, it is “SOLD” again. Let’s see if it will “OPEN HOUSE” or “PENDING” again.
LIAR!
We drove past one of those “Sale Pending” signs in our neighborhood today, and my wife blurted out: “Yeah, it’s pending someone making an offer!”
“The requests come as the number of home sales and housing prices continue to fall in many San Francisco neighborhoods. The city’s median home sale price fell nearly 12 percent between May 2007 and May 2008, according to the city controller.”
Love it! The very same SF Chronicle published an article earlier this week that SF values are holding up just fine, citing an increase in median price over last year…. we all know what a great measure that is. LOL.
Lawrence Yun is now saying San Jose is more expensive than San Francisco….
http://www.mercurynews.com/ci_10205368
“The price decline in San Jose, relatively speaking by California standards, is more modest than in Southern California or Sacramento, because of the much stronger job growth,” said Lawrence Yun, chief economist for the Realtors trade group.
–
San Jose metro area has had higher prices than the SF metro area (includes surrounding rural counties) for a long time. Current PPSF (as per Radar Logic):
San Fran, CA $344.73
San Jose, CA $403.11
These are the highest in the nation and the only ones above $300. The next lower is LA at $295.42 (it was above $400 a year ago).
Jas
Hey Jas Jain,
IF that’s really your name… didn’t you say you are in Tehachapi? what it be like up there man? I am thinking not so bad. Rolled thru the other day. Beautiful country really. And Bakersfield adjacent. LA tele commutable. How much for a nice rental with a barn out back on half acre?
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It is nice here. I am way away from the town in a mountain enclave. Rental you are looking for $600-800 a month, I would guess.
Jas
From our wonderful Costa Mesa City Council:
“City Council members have unanimously held it as a top priority to get more people to buy in the city instead of renting…..”
So of course they roll over for the developer they granted incentives to several years ago. Now, they let the developer change to rentals.
Recall I posted about a nearly exactly similar move a few weeks ago on the Westside?
They were letting another condo developer off the hook before the project had even started. They will allow him to build and then rent, not sell.
I drove past the property. Today? It is a mobile home park!
So, incentives to build, let them skate, and leave the city with more units & denser rental housing. So much for top priorities….
just spent 3500 on plumbing…. this whole american dream thing is overrated.
jb