Sellers Are Frustrated In California
The Union Tribune reports from California. “Almost two-thirds of property owners who sold homes in San Diego County this summer lost money on the deal, according to an analysis by MDA DataQuick. Those who lost money were down an average of $161,000, or 35.5 percent less than the home had sold for previously. Not surprisingly, many of the properties that sold at a loss had gone through foreclosure. In some ZIP codes, foreclosures represented nearly 90 percent of all sales. Many of the other sales were short sales.”
“Many real estate agents are cautioning their clients to keep properties off the market for the time being. ‘I’m trying to counsel that if someone is not absolutely having to sell now, please hold on,’ said Barbara Brown, president of the Pacific Southwest Association of Realtors, which focuses on the South Bay market. Asked for the prospects for the next six to 12 months, she said, ‘It probably will get a little worse before it gets better.’”
“Cynthia Henry was one of those who had to sell. She bought a 1,288-square-foot house in Rancho Bernardo for $523,000, with no money down, in mid-2006. But within a year, she lost her $188,000-a-year job selling houses for a new-home builder and her marriage broke up. She feared for her future and that of the 19-year-old granddaughter she is raising.”
“‘So many Americans, not only me, are one step away from being homeless,’ Henry said. ‘That was a terrible feeling for me - that I could be homeless.’”
The North County Times. “Lenders continue to make mortgages that require little or no down payments in areas where housing prices have fallen as much as 3 percent each month. In some cases, loans issued as recently as June already exceed the market value of the home.”
“Over the last year, 30 percent of all new mortgages in Riverside and San Bernardino counties, or about 16,000 loans, carried a down payment of 10 percent or less, according to data from First American CoreLogic and DataQuick Information Systems. During that time, the median price in Riverside County has fallen 35 percent, according to DataQuick.”
“‘Banks still have to lend money to stay in business,’ said Shawn Harris, a mortgage broker based in Oceanside. ‘They’re just betting that people are not going to walk away.’”
“Further, some loans in the region were made on properties that real-estate agents said were overvalued at the time of purchase. In south Escondido, prices at one condominium complex increased by 31 percent while the median price in the area tumbled by 54 percent.”
“Units at Brookhaven Condominiums at the corner of 15th Avenue and Escondido Boulevard were the only condos to sell in 2008 for more than $300 per square foot. The average price in the area was $141 per square foot, according to Sandicor.”
“Not only did the condos sell at double the price of comparable units, but banks also approved loans that carried very little down payments. For one unit, Washington Mutual approved a no-money-down mortgage in December 2007 at the price. Seven months later, a notice of default was filed on the condo, according to county records.”
“In total, 12 units sold at prices that baffled real estate agents. All carried loans with down payments of 12 percent or less, according to county records. Four mortgages carried down payments of 5 percent or less.”
“‘The prices are not at market value, they’re just not,’ said Troy Sauvageau, a real estate agent in Escondido.”
The Mercury News. “After a three-month decline, the number of Santa Clara County homeowners who received pre-foreclosure notices from their lenders rose again in August. In May, June and July, fewer homeowners received ‘notices of default’ from their mortgage lenders with each passing month, according to ForeclosureRadar, raising hopes that the county’s foreclosure problems were tapering off.”
“But in August, 1,200 homeowners got such notices, up 5 percent from July. The number has doubled since August 2007.”
“The number of actual foreclosures rose 32 percent in Santa Clara County in August compared with July, with 853 properties foreclosed upon. That number was about 4 1/2 times the August 2007 level.”
“Santa Clara was one of few California counties to see an increase in foreclosures last month. Santa Cruz and San Francisco were two of the others, with increases of 91 percent and 26 percent, respectively.”
“And while foreclosures rose in Santa Clara County, they fell 9 percent statewide from July to August. But Sean O’Toole, founder of ForeclosureRadar, thinks that fact may need further investigation before anyone breaks out the champagne. The number of properties scheduled for foreclosure auction sales has been increasing every month since February, he said, so the number of foreclosures should still be increasing, too.”
“‘It doesn’t follow’ that foreclosures truly fell in August, he said. Clearly, lenders are postponing more foreclosures, but it’s unclear whether that is because they are modifying borrowers’ loans to keep them in their homes, or because of borrowers’ bankruptcy filings, or some other reason.”
The Press Enterprise. “A year’s worth of foreclosures and a declining job base have taken a toll on Inland Southern California’s standing in the eyes of the nation’s economic experts.”
“The metropolitan area composed of Riverside and San Bernardino counties ranked third in the Milken Institute’s 2007 study of cities considered the best at creating and sustaining jobs. This year, the metropolitan area has seen a precipitous drop, all the way to 53rd place on the group’s annual survey.”
“The Inland area’s drop came as no surprise to regional economist John Husing, who said the housing situation has caused a “regional recession.’ Unemployment rose 8.9 percent in July from 6.5 percent a year ago, according to state figures.”
“‘Obviously, others see that the unwinding housing market caused the economy to falter,’ Husing said.”
The Ventura County Star. “Deborah Williams has learned to live with uncertainty. Like many people faced with being downsized, she has had to job-hop more than she’d like. She moved to her hometown Oxnard about two years ago because she was unable to find another finance job in Colorado Springs.”
“The anxiety used to grate on Williams, but now it’s like an old companion. ‘I’ve become comfortable with the uncertainty,’ she said. ‘I’ve been in uncertain mode for a number of years. Nothing anymore is permanent.’”
“Williams has become a little more comfortable since she moved in with family. Though housing prices are falling, Williams said homeownership is out of her reach. ‘I don’t think I’ll ever have a mortgage in California,’ Williams said.”
The Sacramento Bee. “C.C. Myers’ liabilities total $309 million, according to bankruptcy documents filed this week. The celebrated Sacramento highway contractor’s assets, including several homes and the ownership stake in his namesake construction firm, come to $44.9 million, according to documents filed in U.S. Bankruptcy Court in Sacramento.”
“One debt in particular forced Myers into Chapter 7 bankruptcy last month: the $65 million borrowed from Wachovia Bank to develop the upscale Winchester Country Club golf and residential project northeast of Auburn. He still owes $40 million on that loan after Wachovia foreclosed on Winchester in May.”
“He is one of the most prominent casualties of the housing market crash. His assets include his primary residence in Arden Oaks, valued at $5 million; a second home at Lake Tahoe, worth $4.5 million; and a home he’s building at Winchester, valued at $1.8 million. His 45 percent stake in C.C. Myers Inc. is valued at $13.5 million.”
The Fresno Bee. “Traditional home sellers in the central San Joaquin Valley face stiff competition. ‘Sellers are frustrated,’ said Greg Kosareff of Realty World Strachan Gamber in Fresno. ‘They are not getting the traffic. There are so many [foreclosures], and they don’t want to compete with their pricing.’”
“The statistics are daunting — almost 50% of all sales in the metro region are bank-owned properties, according to the Fresno Association of Realtors.”
“Terance Frazier, a local foreclosure expert who works with investors, suggested that people hold off selling their houses. He said he believes bank-owned properties will be nearly 70% of the market in a year.”
“‘The average homeowner would be foolish to try and compete for a sale in this type of market unless there is absolutely no choice,’ he said.”
“In many cases, the foreclosures carry discounted prices because lenders are eager to sell them. And people are eager to buy them. Kosareff recently negotiated a deal where a two-year-old house with an original purchase price of $536,000 was sold out of foreclosure for $259,900.”
“The house in northwest Fresno had granite counter tops, upgraded appliances and received 13 offers. Kosareff’s clients got it because they put 20% down and didn’t ask the lender for any concessions.”
The Bakersfield Californian. “Firms that did work for SunCal’s McAllister Ranch managed to postpone the property’s auction Friday, asking the courts to find a way to get them payment for their services. Records show that creditors filed several involuntary petitions for Chapter 11 bankruptcy against various SunCal Cos. entities Wednesday and Thursday in U.S. Bankruptcy Court in Santa Ana. The creditors seek about $2.6 million. The auction was postponed to Oct. 14.”
“Had lender Lehman Brothers filed for foreclosure, however, creditors could have lost money they were owed, said Bakersfield attorney Steven Gibbs, who represents Masonry Plus.”
“‘My client, I believe, was in a better position by participating in this, to be one of the petitioners on this, rather than sitting by and allowing Lehman Brothers to foreclose and look for their white knight and have all of these claims potentially wiped out by the foreclosure sale,’ he said.”
“The planned 6,000-home development sits on three square miles at the city’s far southwestern tip, about 15 miles from downtown Bakersfield. The tract currently has curbs, gutters, walls and some landscaping, but no homes have been started.”
“The Greg Norman-designed golf course intended as its crown jewel has fallen into disrepair. A herd of sheep currently lives near the 18th tee.”
“Before the auction was set to begin Friday, spectators joked they would pitch in $20 apiece to buy McAllister Ranch. When the auctioneer said the sale was postponed because of bankruptcy, several men simultaneously said, ‘Bankruptcy?’”
“Attorney Darren Burge, who represents Pacific Soils, said the hope is the land is valuable enough ‘to compensate the people that are owed money for the work that they did on the property.’”
‘The planned 6,000-home development sits on three square miles at the city’s far southwestern tip, about 15 miles from downtown Bakersfield. The tract currently has curbs, gutters, walls and some landscaping, but no homes have been started.’
Unless prices fall further, some firm will pick this project up for pennies on the dollar and further saturate the market. And this is just one development.
Well, undercutting your competition and squeezing them is a time-honored capitalist tradition.
Of course, the extra supply lies in the domain of the tragedy of the commons. Massive oversupply.
However, at the end of the day, people will have cheap houses, one way or another.
It does seem like we are well on our way to solving the shortage of low-income housing. Unfortunately, it’s not all in the most optimal locations. Someone smarter than I needs to come up with a way of profitably employing people who live in the middle of nowhere, where a lot of the oversupply was built.
Is anyone else starting to smell capitulation in the articles that Ben is quoting for this thread? I think we’re now in the steep slope of the curve down.
Poor people broadly dispersed can work in a “virtual call center.” I read that such things exist (but I forget the correct name). Basically, when you call customer service, it rings in some one’s home and they answer. Or, they can become telemarketers.
I think the call centers in India are cheaper to operate than using FBs in Bakersfield, despite the RE bust.
not for long given the crazy high inflation in india. plus, a lot of customers are rebelling against the indian call centers due to the difficulty in understanding the accent.
I can’t imagine a call center over here paying much more than $12/hour. Am I mistaken?
So outsource it to Alabama!!
JetBlue’s entire customer service department is dispersed to its employees’ homes.
I think the next stage of development in California may need to be mass transit. There was an article several weeks ago about how places like Patterson, one of many Bay Area commuter boom towns, has seen really nice homes fall below $200,000 already. At the time gas prices were near there peak, which must have been that much more devistating to those sort of new commuter towns. If gas prices become an issue in years to come, we may need a better transit system, connecting all those little commuter towns to the big cities.
Much as I believe in mass transit, and that we need more of it, it’s no magic bullet either. When energy prices are high, they’re high for transit companies as well. And with even the most efficient public transit in the nation being subsidized to the tune of 40% or more, that’s a no-go with most municipal and state budgets being strapped as well. So as nice as that would be, I wouldn’t count on seeing some really slick mass transit solutions pop up out of this crisis.
No one ever counts the subsidy cost of providing roads for cars. It’s only when it’s mass transit that suddenly it is expected to pay for itself.
Funny, I distinctly remember paying gas taxes….
In California the gas tax has been hijacked and is distributed to other needs, like buying more wetlands and providing grants for the arts. I don’t know where the state finds the money for the roads, I think most roads in California get their funds from local bonds.
California is running on fumes, the liberal state congress wants more taxes. Nobody remembers that California owns 50% of the land and could easily sell some land assets and fix the mess without driving productive workers to other states.
Actually, I think that in a number of states that things like a gas tax don’t do a good job of covering the costs associated with roads and so they end up coming out of other taxpayer funds. Dani’s right in that roads frequently come subsidized. I don’t think California’s road costs are covered by gas taxes and the like either just on a sheer dollar-in vs. dollar-needed standpoint.
Of course, a disconcerting amount of public goods have some sort of mystery meat funding in one form or another. You’re not sure where the money is coming from, you don’t know the costs that make up the bill, and so on. Simple transparency would solve a lot of problems, but so many parties have a vested interest in that not happening.
“steep slope”
A 40 pct YOY drop in the state-wide CA median used sales price (7/07 - 7/08) should offer a clue as to how steep the slope is, but there is little evidence the denial stage of the bubble is over yet for many CA sellers.
This is what will eventually pass the last standing home builders through this bubble.
Material prices and labor have allready collapsed here in NorCal. When these tracts of land are offed in fire sales the builders will be able to knock out modest SFH for prices that make renting a poor option. With cheap enough land they could build $100-150k new homes, pay the bills and survive till they can again overcharge in the next bubble.
I’d turn this into a cemetary, a growth venture. All the old bone yards have curbs and streets, some with fancy granite temples. Families can by their own dream p(lot) at highly affordable rates, with room to expand.
I think there is a need to add new amendment to the Constitution, that will prevent Government to use taxpayers money to make Billionaires richer… or individual taxpayer should have a right to object to use his tax money to be used to bail out privet institutions…
You ever hear of the golden rule?
It’s called the Second Amendment. But the same people who profess to love the Second Amendment also, curiously, love ginormous Federal standing armies and navies and giant steel things that rain fire from the sky.
It’s because they like killing things more than they like liberty.
And MY political opponents like to kick little puppies.
And they have handlebar mustaches and tie fair maidens to railroad tracks.
Seriously, reading these articles in the MSM is like looking at a Moron Matrix™.
One could easily turn misanthropic (as if we aren’t already!)
I for one am no misanthrope. But I passionately hate liars, and love exposing them :-).
What does any of this have to do with warewolves?
“Had lender Lehman Brothers filed for foreclosure, however, creditors could have lost money they were owed”
Lehman. There’s that name again. BTW, it was my understanding that a lot of Florida public pension money was invested with Lehman. What happens to that money in light of recent developments?
Depending on how the money is invested, probably nothing.
The firm is just holding the assets in the name of whoever “owns” them, and the performance depends on the quality of the underlying assets not whether the holding firm is solvent or not.
That having been said, given the shenanigans, I’m sure many of these monies were invested in the same garbage that is tanking now.
Pity the fool who was taking advice from his Lehman broker recently.
Of course, the customers were probably “high net worth” individuals, which sets up the potential for an even worse distribution pass.
Well, let’s not beat around the bush:
http://tinyurl.com/58avvc
“The Greg Norman-designed golf course intended as its crown jewel has fallen into disrepair. A herd of sheep currently lives near the 18th tee.”
Sheep? @ the 18th tee…
Bakersfried,
Oil, carrots & pesticide coated wool
Sheep move in flocks, not herds. Just ask any FB.
LMAO!! Thanks, Sammy. That felt good.
rob
The Union Tribune reports from California. “Almost two-thirds of property owners who sold homes in San Diego County this summer lost money on the deal, according to an analysis by MDA DataQuick. Those who lost money were down an average of $161,000, or 35.5 percent less than the home had sold for previously. Not surprisingly, many of the properties that sold at a loss had gone through foreclosure. In some ZIP codes, foreclosures represented nearly 90 percent of all sales. Many of the other sales were short sales.”
Tentative conclusions:
1) Almost all sales in SD County are now forced sales (foreclosures, short sales, REO, etc).
2) The average “loss” due to selling at current market values is 2.6 times the median SD County household income of $61K.
3) The 35.5 percent drop in market values is much larger than the worst predictions made a couple of years ago by MSM-quoted ‘experts.’
This article, with a September 14 date, is curiously missing from the Homes section of today’s paper. I have a mind to cancel my subscription to the Sunday SD Union Trib, as they are now omitting stories written by the paper’s editor.
Bear…What time do the asian makets open ??
I think most of them are closed tomorrow (their time). Something about holidays. The Europe open is what to look for tonight.
What time does Europe open ??
scdave,
Found this on line, was answered by someone else.
Add or subtract to get your time zone:
http://www.swissquote.ch/static/help/gen...
Click “Display all opening hours” to see all the exchanges.
Looks like the average is 9:00 am their time.
Found it — actually on the front page (thanks, SD U-T!)…
“Those who lost money were down an average of $161,000, or 35.5 percent less than the home had sold for previously.”
No brainer prediction: Bigger dollar losses await as prime and Alt-A resets hammer high-end San Diego coastal housing over the next couple of years.
2) The average “loss” due to selling at current market values is 2.6 times the median SD County household income of $61K.
Holy crap. The average “loss” is almost up to what homes should be selling for?!?
I couldn’t have just read that… obviously lack of sleep must make me delusional thinking homes could be getting back to real values so quickly.
Its late on Sunday… I wonder if anyone will read this…
Got Popcorn?
Neil
Thats how I read it too. If this trend continues I will be transferring back to SD! Housing drove me out, and it could very well lure me back. The city itself is hard to beat.
I am starting a list of politicians who have whored themselves to the banks/builders/wall street. We have to sack these folks, most aggregious first - Dodd should be one of the first to go (fyi - I am a democrat)
A web site full of profiles of the people involved in the credit bubble and the fraud they committed would be awesome. CEOs, bankers, appraisers, senators, etc. Nothing like having that show up in the top rankings of google whenever your name is searched.
Wikipedia has little blurbs on people like Raines, but it isn’t as high impact.
http://rabbit-hole-journey.blogspot.com/2007/11/campaign-contributors-of-media-anointed.html
JB,
Here’s a start to your list - bankster contributions to the media-annointed. Note that Ron Paul was the sole candidate who recieved virtually no funding from the financial oligarchs.
The sad thing is, not only are these folks not going to be sacked, but one will be crowned president and leader of the free world when January rolls around.
If you are listing national politicians, you may find that you have about 535 names on that list. You might be able to omit Sanders, Kucinich, Waxman and Paul from that list, so 531 seems about right.
You will find this list rather interesting:
http://www.opensecrets.org/news/2008/09/brothers-grim-is-lehman-next.html
No wonder the Dems are trying to bail out everyone and everything (for disclosure purposes: was a dem, now an ind.)
I believe we need to sack them all.
IF they voted to ransack our constitution,
we need to clean house.
I would love for them all to start
talking ISSUES.
Not whether someone wears lipstick, or not.
Puleeze, McCain is not a maverick.
Just watched the repeat of C-Span with the
4 3rd party candidates, McKinney, Nader, Paul, and Braun.
That was inspiring that with diverse starting points, they
are all on the same page.
Hillaryness got 405k from Lehman.Hussein Obama got 395K, Schumer close behind with 181k, Dodd, Leiberman both 165k, Kerry 151k, and last senator McCain 145k. Dodd got additional 3 million from FR, FNM, and other assorted Wall Street firms. What’s wrong here commie/libs ?
I wonder if Barbara was telling prospective buyers in 2006 not to buy, unless they absolutely had to… But that would have cut into her commissions… hmm…
Perhaps if RE agents would have shown more restraint with clients, instead of feeding the RE frenzy, things might be different now..
———————————————————-
“Many real estate agents are cautioning their clients to keep properties off the market for the time being. ‘I’m trying to counsel that if someone is not absolutely having to sell now, please hold on,’ said Barbara Brown, president of the Pacific Southwest Association of Realtors,
That’s right, keep that junk off the market so you can sell for even less next year.
“‘I’m trying to counsel that if someone is not absolutely having to sell now, please hold on,’ said Barbara Brown, president of the Pacific Southwest Association of Realtors,”
This sort of advice is self-serving: it is part of the REI agenda to control inventory levels. Individual sellers should be looking after their own best interests, not making personal sacrifices for sake of market stability (even if merely controlling the inventory was likely to have that effect).
Individually, those motivated sellers who keep their houses off the market as the bubble deflates will suffer greater losses by delaying than if they took the opportunity to get out with their best price TODAY.
This is another example of Realtors having agendas which are at odds with those of the their clients, and another reason why their advice must always be viewed with great skepticism.
“Cynthia Henry was one of those who had to sell. She bought a 1,288-square-foot house in Rancho Bernardo for $523,000, with no money down, in mid-2006. But within a year, she lost her $188,000-a-year job selling houses for a new-home builder and her marriage broke up….”
“‘So many Americans, not only me, are one step away from being homeless,’ Henry said. ‘That was a terrible feeling for me - that I could be homeless.”
$188K/yr and no savings? WTF is that all about. 50% of her net could have been banked, if she had 1/2 a brain. I can’t believe what idiots get such great opportunities to build wealth.
But she was going to be a gazillionaire by investing in RE.
Like DUH!!!
What are you, a commie?!? Let the woman have her “dreams”.
ANYBODY who manages to make $188,000/year who is not a highly-skilled professional would be wise to consider every single paycheck as an unexpected windfall, and save as much as possible for the days when things return to normal and income goes back down.
That’s a very good point, although very few people do what you suggest. There’s something very wrong with our American culture. People just don’t worry enough that things can go badly for them in the future. I’m not sure why that is. Either they’re unrealistically optimistic about the future, or they just never think about the future at all.
On the way up, I’m sure she DID consider herself a highly-skilled professional and probably gave herself a lot of credit (in more ways than one).
On the way down, it was the market’s fault, the media’s fault, the gov’ts fault, global warming’s fault, whatever.
Hell yes. I’m a reasonably skilled professional - my boss the CFO doesn’t make that much - and that’s EXACTLY the way I would see that income..
“‘So many Americans, not only me, are one step away from being homeless,’ Henry said. ‘That was a terrible feeling for me - that I could be homeless.”
How does someone old enough to have a 19-year-old granddaughter end up “one step away from being homeless”? Doesn’t she have any family or friends who would take her in if it came to that? It’s truly pathetic to be that alone in the world, not to mention, so foolish with your financial choices. I’m guessing she has zero funds put away for retirement, too.
And evidently can’t even, God forbid, RENT!
My first thought too, when I read it.
Maybe - for her - there’s no middle ground between owning and homelessness.
Her granddaughter should get a job then.
I asked around, and that 188k, either was a one yr 2005 anomaly or she was getting money on the side. Normally it is 1%.
Or thereabouts.
What I dont’ get is WHy she is going to be homeless.
Can’t she spell R-E-N-T?
HALF her net could have been banked? How about 2/3?
If you can’t even live on $5K/month after taxes, you need to put a lockbox put around your credit cards, debit cards, ATM cards and wallet/purse. Even if you live in California or New York City.
Eat at home once in a while. Geez!
Homeless…sheeezz, why where would she park her leased BMW..?
Seriously, 188k/year and no down. And no savings.
This is all to often the theme with these type. No sympathy from me.
BTW, if you are experiencing delays, it is probably from my new spammers who have been bombarding the servers all weekend. It also takes me some time to page through and find errant legitimate posts, so I appreciate your patience
Ben,
Do you know where the spammers come from?
Spamalot.
From ‘infinity and beyondddd’.
“Lenders continue to make mortgages that require little or no down payments in areas where housing prices have fallen as much as 3 percent each month. In some cases, loans issued as recently as June already exceed the market value of the home.”
“Over the last year, 30 percent of all new mortgages in Riverside and San Bernardino counties, or about 16,000 loans, carried a down payment of 10 percent or less, according to data from First American CoreLogic and DataQuick Information Systems. During that time, the median price in Riverside County has fallen 35 percent, according to DataQuick.”
“‘Banks still have to lend money to stay in business,’ said Shawn Harris, a mortgage broker based in Oceanside. ‘They’re just betting that people are not going to walk away.’”
Pardon my ignorance of how banking is supposed to work, but isn’t making no- or low-down payment loans when prices are dropping 3 pct per month a good recipe for going out of business? Or are these loans to be bought by the Treasury-funded GSEs, in which case the risk of loss is instantly transferred to the taxpayer?
It sounds to me like banks are buying into the propaganda that says a bottom is at hand. I personally will withhold judgment on this question until the situation with Lehman, Merrill, AIG, Wachovia, WaMu and myriad other ailing financial sector players is sorted out. My hunch is that a bottom is nowhere near yet.
I still don’t think this will ever get sorted out. Maybe a rhyme of the Japanese experience in the 90’s with banks holding MASSIVE amounts of bad loans and pretending they don’t really exist.
If everyone agrees that there isn’t an elephant in the room then there must not be one.
‘Simple really. Hic’cup. Hey Hank, pass me s’more of that bazooka juice!
see it to Fannie/Freddie
“Its difficult to lose a job,” said Ruth Cooper, a marriage and family therapist in Ventura. “It’s difficult to lose a home. Its difficult to even contemplate those things happening to us.”
It’s difficult to buy a $500k+ home on $50k/yr!
If more people would contemplate the potential outcomes of unwise decisions, maybe they wouldn’t end up in such predicaments.
Decisions? That, to me implies that there was some actual thought or deliberation taken by the party before taking action. This was all about greedy dreams and delusions of grandeur.
It is time to awaken from your dream and see that the gorgeous brunette you went to bed with last night is a cross dressing Janet Reno impersonator.
It’s difficult to buy a $500k+ home on $50k/yr!
Now it is. Wasn’t so hard a couple of years ago.
“Its difficult to lose a job”
“Its difficult to lose a home”
Heck no, it’s really easy. For the former, show up drunk in a clown suit (unless you work at a circus, in which case you might want to try a regular suit), and I’ll bet it’s really easy to lose a job.
For the latter, we all know the answer to that one. Just buy a house with no money down, preferably at the peak, don’t make any payments, and watch what happens.
This list of signs that a bottom is at hand is totally bogus, IMO. Here is my own list of bottoming-out signs:
1) Median home sale prices are less than or equal to three times median incomes (for SD County, this is 3*$61,000 = $183,000).
2) Median home sale prices are less than or equal to 100 times monthly rents on comparable properties (for the home in which we live, this is a price of $230,000 or less, as our rent includes lawn care and gardening services, rec club membership ).
3) There is a major capitulation among investors who are holding out hope that they can hang on through the correction.
4) Many folks are heard to say that real estate is a terrible investment.
We’re not there yet, folks.
I interleaved my own thoughts below in italics.
GAIL MARKSJARVIS
Four ‘levers’ identified for economic recovery
September 14, 2008
You know the problem well.
The housing market’s a mess. So banks and brokers that were involved in mortgages are a mess. As a result, consumers and businesses are having trouble borrowing money, and economies worldwide are slowing. Analysts each day debate whether they see signs that point toward a better day.
Individual investors can become whipsawed as optimistic analysts tell them to start buying stocks while others urge caution.
That’s why I was intrigued by a simple list a new team at Standard & Poor’s has put together.
They have analyzed hundreds of factors that are tangled together to influence the economy and housing, and they came up with a list of four “levers” that investors can examine for signs the tide might be turning in housing.
…
1) The average U.S. home price stabilizes at $250,000.
Home prices have been falling sharply for more than a year. Thompson notes they dipped to an average of $246,000 early this year and recently climbed to $252,000. For investors to be comfortable that the housing market is stabilizing, he said, the average price will have to remain at roughly $250,000 for four to five months.
If home prices have recently tanked at over a 10 pct annual rate on a national level, what could suddenly cause them to freeze at or near current levels?
…
2) Sales of homes total 5.5 million on a seasonally adjusted annual basis.
Thompson said monthly National Association of Realtors figures point to only 5 million home sales on an annualized basis. To clear out the glut of homes on the market, he said, that must rise to 5.5 million annually.
…
If prices suddenly froze at current levels, what could possibly cause a sudden jump of 500,000 a year in sales?
3) Comparing Libor and the federal funds rate.
…
Libor, the London interbank offered rate, is the rate large financial institutions charge each other when they lend money. The fed funds rate is similar, but it’s the rate the Federal Reserve sets for banks.
Typically, the two rates are close, with Libor only about 0.50 percentage points higher. But recently they have been farther apart, about 0.86 points, Thompson said. That indicates banks are worried that other banks won’t be able to pay back loans.
With Lehman, Merrill, AIG, WaMu and other ginormous financial firms on the ropes, why wouldn’t we expect this gap to widen before it closes?
…
4) Oil at $100.
It is already there. What is so magical about oil at $100?
PB wrote:
“Here is my own list of bottoming-out signs:
1) Median home sale prices are less than or equal to three times median incomes (for SD County, this is 3*$61,000 = $183,000).
2) Median home sale prices are less than or equal to 100 times monthly rents on comparable properties (for the home in which we live, this is a price of $230,000 or less, as our rent includes lawn care and gardening services, rec club membership ).
3) There is a major capitulation among investors who are holding out hope that they can hang on through the correction.
4) Many folks are heard to say that real estate is a terrible investment.”
*****
# 4 will be heard when # 1 and # 2 have each reached ratios that denote an overshoot to the downside has occurred.
So houses nationally will sell for less than 3x incomes and for less than 100x rent.
In the more smug parts of the Alt-A Bay, I suppose this could mean 4.5x incomes and 250x rent, which means houses around here have a very long way to fall, yet.
Has anyone else noticed that the overpriced RE pullout in the print edition of the weekend LATimes is now section “JT”?
I kid you not.
With special lubricant to aid the offset presses…
Maybe buy wamu shares on speculation. Heck for a few hundred dollars if they rise even modestly you make some chedder.
If not a few hundred shouldn’t be a big loss. Skip a few dinners or other baubles to make it up . . .
The Fresno Bee. “Traditional home sellers in the central San Joaquin Valley face stiff competition. ‘Sellers are frustrated,’ said Greg Kosareff of Realty World Strachan Gamber in Fresno. ‘They are not getting the traffic. There are so many [foreclosures], and they don’t want to compete with their pricing.’”
“Many real estate agents are cautioning their clients to keep properties off the market for the time being. ‘I’m trying to counsel that if someone is not absolutely having to sell now, please hold on,’ said Barbara Brown, president of the Pacific Southwest Association of Realtors,”
One of the biggest delusions, right now, concerns foreclosures. People believe that once foreclosures ease, prices will pop back up to where they were. If all foreclosures and short sales disappeared, there would only be a lot of over priced homes for sale, that local incomes could not afford. The real estate market would be locked up, with almost no transactions. Without a return to the crazy lending standards of a few years ago, the foreclosure market prices are the real market prices, based on realistic income to debt ratios. The real estate agents should be great full for these transactions, otherwise they’d have no business.
Very true. When today’s buyers look to trade up into bigger digs (in 5-7 years) they will be selling the home they purchased for $120 for whatever they can get while the buyers from ‘06 (those that hold on, stupidly) will still be so far underwater that moving may NEVER (well 15-20 years) move again.
That didn’t make much sense. Guess what I’m trying to say is that I am now seeing sensible priceing on homes here in Stockton. (ie. $900 rentals for $80k.) All these FB who purchased at the top are going to either go belly up or suffer in silence for years (decades).
The market will return (IMO to a great extent has) to realistic pricing without regard for all the handwringing of those hurt by the bubble. The entire system will just roll along and just ignore the FB just as people ignore smelly bums asking for money.
The media trys to paint foreclosures as the symptom, but they are really the cure. They paint low priced (affordable) housing as a problem and ever rising prices on POS McMansions as good. There slant makes no sense at all, in reality cheap housing is good for the country as a whole, while overinflated sales prices bennefit few at the cost of many. haha, duh.. the AMERICAN way. Privatize gains publicize loses. aka fannie and freddie.
Two of my sibs purchased at the top. One is underwater and depressed. The other is at even money right now and trying to put a good face on it.
I’ve been renting.
My brother’s house in the burbs of LA (nice dig, but not Beverly Hills) topped at $1.6M. 1996 purchase at $375K. It shows on Zillow at $1M this week.We all know they aren’t accurate.
My sister’s neighborhood went nuts too by The Grove (W LA). Our ex-home hit $1.3M after we sold.
Renting has not been fun, but at least I didn’t pretend we were rich. Pretenious sibs have been hard to deal with.
Now who’s stupid now, sis and bro? We didn’t ATM ours.
I think a lot of us agree that foreclosures are a healthy cleansing enema for the market, but why would you think that realistic prices have returned yet if we still have so many foreclosures on the horizon?
The banks are now only looking back 3 months for sold comps to price the new REO. New listings in good shape are being priced the same as real crap that sold recently. What I am seeing is prices stablizing on the bottom, but the condition of the REO selling at bottom prices has risen much.
It stands to reason, and I have seen, that the real crap property has gone to the banks firstly and quickly. The shit property was more involved in kickbacks and fraud, these homes were never wanted in the first place.
Property above $150k is still in deep trouble and has some tough time ahead because the upcoming REO is nicer than the first ones to hit the market. This all comes back to affordability, when the bottom reaches levels where it is cheaper to rent than buy (as a lot now are) some sort of a bottom will be found.
With us generous taxpayers buying fannie and fredie it is obvious that the Gov will keep home financing alive at all cost. The thing is those loans will suffer much more scrutiny and be for much better priced real estate.
Don’t get me wrong, we have more huge loses in RE coming… but it will be in the McMansion real we have all decried for a long time. Those twits that bought stapled together crap for $400-600k throughout CA are the one next in line to get the shit kicked out of them. After them will be the “Rich” people watching multi million dollar RE become a huge albatross, especially with the upcoming “tax the rich” policies.
The forclosures started with shit homes that nobody wanted in the first place, next was the McMansion areas that are now collapsing, just now seeing modest mid level homes in established (pre bubble) areas coming into REO, the last stop on the REO train will be all this million $ bullshit that wasnt worth $400k in 1999.
“Kosareff recently negotiated a deal where a two-year-old house with an original purchase price of $536,000 was sold out of foreclosure for $259,900.”
“The house in northwest Fresno had granite counter tops, upgraded appliances and received 13 offers. Kosareff’s clients got it because they put 20% down and didn’t ask the lender for any concessions.”
Okay, this statement interests me. Does this suggest there might have been higher offers made on this home, but were the bank preferred the offer that required no fixes to the property and those that offered to put cash up instead of financing.
As far as financing is concerned, the only hang up for the bank, that I can see, is that the person making the offer, could not get financing during the process even though they may be preapproved. That is as long as the bank that is selling the property, is not the same bank financing for the offer. Protein is protein and money is money, so that part confuses me.
However, not asking for repair this, replace that, mentality, I can see. Banks are institutions that only want to play with numbers and not people. Anything that adds people (repairs) to the situation might be frowned upon. So perhaps they are willing to eat it, to save the hassle of trying to manage repairs.
So the question is, are the banks willing to take a much lower offer over a higher one if no concessions are added, even though the difference in price is greater than the cost of the concessions?
If that is the case, I’ll be thinking of that tactic at time of offer.
With REOs, I’ve heard of banks taking lower bids from govt. employees
and rejecting higher offers from small biz owners.
There’s a confidence builder for ya…
They take lower bids from cash buyers also .
According to the New York Times, the US taxpayer will once again come to the rescue of wall street millionaires.
“the Federal Reserve has agreed to accept lower-quality assets [from Lehman] in return for loans from the government.”
I’m a Canadian citizen myself, but if I was an American citizen, I would be furious to get the bill for multibillion dollar handouts to CFC, BSC, FNM, FRE, LEH. And next to be WM?
Personally, I think all of Wall Street oughta stampede to go bust, so they can get in line.
I am furious. F*ck the Fed. I think we oughta have tax revolts all over the place.
I have been furious for a long time / The big prize of Fannie and
Freddie was the big one that I didn’t want to see happen .It’s all over now . If the Feds aren’t into these major players for loans against junk paper they are into them by having a big piece ,or the entire piece like freddie and fannie .
Don’t know how they are ever going to get back to peak prices in real estate with no wage increases of any merit looking possible for the next decade . When prices are fake or the result of a mania ,you can’t get it back . I would not imagine that people would be willing to go on creepy teaser rate loans again to leverage something that won’t go up . I use to observe markets getting about 10% inflated
sometimes in a heated market ,but the investors would pull out right away and it couldn’t go higher ,but that was under prudent underwriting . First the investors would pull out and than the
regular buyers would pull back ,usually due to lack of affordability .
The fact that the faulty underwriting allowed the prices to be pushed 50% or more over real rental and income affordability value
was bizarre .
Anyway the falling prices means that for years there would be no equity money
either for pulling out money ,unless the government finances or backs fake value equity loans .
lehman brothers has filed for bankruptcy.
We will believe you when we see the news. Link, please?
This is all I could find.
http://dealbook.blogs.nytimes.com/2008/09/14/lehman-to-file-for-bankruptcy-protection/
Tomorrow is gonna be an interesting day to say the least.
This was all I could find. There is something here about the Fed providing loans. But it looks like RIP for Lehman. Well, let’s see if the world ends tomorrow.
http://dealbook.blogs.nytimes.com/2008/09/14/lehman-to-file-for-bankruptcy-protection/
Here is one link.. official confirmation will be available by 9 pm PT or bloomberg or bbc
http://dealbook.blogs.nytimes.com/2008/09/14/lehman-to-file-for-bankruptcy-protection/
There is quite a series of discussions on calculatedrisk about this and related topics right now.
Satan was right! Holy sh!t, everything’s falling apart tonight.
Well, maybe. They have up until 11:59 to file BK and none of this is really etched in stone YET. Sounds like some are still playing chicken, although Barclay’s already took their marbles and went home and BofA decided Merrill was a tastier meal.
Say, does this mean the RE market in NY will descend just a LEETLE further into the crapper? I mean, there must be a buncha wannabe BSDs (big swinging dicks) who will be out of a desk tomorrow. Polish off those resumes, boyz! After all, one of the former bloggers here said the traders could always get jobs elsewhere, LMAO! Maybe Mayor Bloomberg is involved in the talks. Maybe that humorless prick will call out the NYPD and force the players to do a deal, or be arrested for disorderly conduct.
CNBC has confirmed pending Lehman bankruptcy.
http://www.cnbc.com/id/26708143
11:59 pm is the witching moment. The pricks’ll take it right down to the wire, whaddya wanna bet? I’m monitoring every five minutes and no joy yet.
$hit hitting the fan, being covered live on CNBC on a Sunday night! Lotsa talking heads. Live shots of Lehman employees coming in to clear out personal items from their desks. On a Sunday night!
Lehman is BK. Merrill has been bought by BofA at a PREMIUM to its Friday closing price! That will be two for two for the idiot running BofA (Countrywide purchase was the first mistake). AIG needs a bridge loan from the FED. Dow futures down 275 below FV. S&P and NAS futures down about same percentage.
Only cool thing is the people and hedge funds who shorted Merrill at 20 and lower will take a big hit. BofA has agreed to pay $29/share.
Imagine what this is going to do to the NYC and nearby real estate markets!
“Imagine what this is going to do to the NYC and nearby real estate markets!”
I shall have sweet dreams tonight. Warms the cockles of my heart. Burn, baby, burn.
Crisis on Wall Street as Lehman Totters,
Merrill Is Sold, AIG Seeks to Raise Cash
Fed Will Expand Its Lending Arsenal in a Bid to Calm Markets;
Moves Cap a Momentous Weekend for American Finance
By CARRICK MOLLENKAMP, SUSANNE CRAIG, SERENA NG and AARON LUCCHETTI
September 15, 2008
The American financial system was shaken to its core on Sunday. Lehman Brothers Holdings Inc. faced the prospect of liquidation, and Merrill Lynch & Co. agreed to be sold to Bank of America Corp.
In Frantic Day, Wall Street Banks Teeter
By ANDREW ROSS SORKIN
Published: September 14, 2008
This article was reported by Jenny Anderson, Eric Dash and Andrew Ross Sorkin and was written by Mr. Sorkin.
(Chip East/Reuters
‘People carried boxes out of the headquarters of Lehman Brothers in New York on Sunday.’)
(Jin Lee/Bloomberg News
‘Robert Wolf, chairman for the Americas at UBS; one of the top bankers that met at Federal Reserve in Manhattan to discuss the fate of Lehman.’)
In one of the most dramatic days in Wall Street’s history, Merrill Lynch agreed to sell itself on Sunday to Bank of America for roughly $50 billion to avert a deepening financial crisis, while another prominent securities firm, Lehman Brothers, hurtled toward liquidation after it failed to find a buyer.
FOREX-U.S. dollar slides as Lehman talks falter
Sun Sep 14, 2008
11:44pm BST
SYDNEY, Sept 15 (Reuters) - The U.S. dollar slid against the yen and euro in Asian trade on Monday as talks to rescue Lehman Brothers Holdings (LEH.N: Quote, Profile, Research) faltered, fuelling concerns over the stability of the U.S. financial system and sparking talk of a possible rate cut there.
Just wait until the markets open tonight in Asia. Hold on to your seats!!
Hey, cityvibe, how’s biz? Is Spitzer’s old girlfriend working for any of your clients?
Sellers Are Frustrated In California
Awwwwww….poor little sellers….
Eat sh953t.
within a year, she lost her $188,000-a-year job selling houses for a new-home builder and her marriage broke up. She feared for her future and that of the 19-year-old granddaughter she is raising.”
$188K for at least a few years. When people come into a big “pot” they become stupid and not save. Spend, spend, spend. You also have a choice, you can become a homeless person or go to the “dark” side and become a renter. My opinion, most people would rather be homeless. stupid…. You are STILL raising a granddaughter that is 19 years old! COME ON! It like trying to keep a horrible marriage together because of the kids. Bad excuse.
Again, $188K a year. She won’t see that again the rest of her lifetime. ready for $8.50 an hour. RE’s have a bad stigma right now and it will last at least another 5 years. For me, I will never hire an RE in my company.
“Cynthia Henry was one of those who had to sell. She bought a 1,288-square-foot house in Rancho Bernardo for $523,000, with no money down, in mid-2006. But within a year, she lost her $188,000-a-year job selling houses for a new-home builder and her marriage broke up. She feared for her future and that of the 19-year-old granddaughter she is raising.”
That was quite an income stream relative to the skills required. Good luck finding another job paying anything close to that amount with that skill set.
“‘So many Americans, not only me, are one step away from being homeless,’ Henry said. ‘That was a terrible feeling for me - that I could be homeless.’”
One could always rent instead of being “homeless”. If I were her, I’d be more concerned about finding job that would pay a decent amount than being homeless. Rents are affordable if one can find a median income job.
Plenty of interesting info in this U-T article, but nothing about prices eventually needing to be in line with incomes. It had lots of the standard mostly incorrect explanations or at most secondary factors in why prices are falling and when and why they might stabilize.
So the federal reserve is now a pawnshop.
http://online.wsj.com/article/SB122143939332934501.html?mod=googlenews_wsj
The Federal Reserve is expected to expand its lending facilities in the wake of the likely demise of Lehman Brothers, taking a wider array of securities, including equities, as collateral for its loans, say people familiar with the matter.
The bazooka went off in Hank’s pocket.
Think it blew his privates off? I guess he’s not such a big swinging dick anymore, is he?
He’s all out of ammunition, anyway. Shooting blanks.
This is now officially a multi-bubble harmonic convergence with a black hole at the center. Those guys at the collider in Switzerland must have unleashed a financial black hole.
Oh, wait. I remember something about housing…
The market should be interesting tomorrow.
ot but an update from Houston. Power is out across the city and it is an eery night. The is a full moon and stars are out. The is no light polution and is seems very peaceful. That is considering there is a curfew is operation.
Last night i heard some gunfire so i hope tonight things quiet down . I saw a number of military trucks rumble in so I think it will be quiet.
Houstonstan,
Glad to hear you are doing okay.
Stay safe, Houstonian. That gunfire thing is disturbing. I read a post once somewhere about how some of the folks who were relocated from Nawleans to Houston were not the best guests to have. Sheesh. Places like Houston really take it on the chin, between weather, illegals, relocated folks, etc.
I think this guy has it about right with regard to deflation inflation
http://www.bloomberg.com/apps/news?pid=20601087&sid=aCeL0xb.ID_U&refer=home
The elite of this country should take a look at what’s going on to our south
http://news.yahoo.com/s/mcclatchy/20080914/wl_mcclatchy/3042653
To all those who think the US can survive with a small week central government, a large class of poor people and a small middle class, should take a close look at Mexico central and parts of South America. Even the elite suffer when they destroy the middle class.
PS - Time to legalize drugs
Yup, living near the border you see all the wealthy Mexicans spending thousands at Tiffanys while most of their citizens live in hovels and corrupt police and narcotrafficikers behead and bury people. The 1%ers live with constant risk of kidnapping, building fortified mansions, giving rise to a modern medievel society. A great model to emulate, for sure. Interesting article: http://www.banderasnews.com/0611/edat-ranksoftherich.htm
“A number of wealthy Mexicans have started to make plans to move to the U.S. because of the rising incidence of kidnapping and extortion.”
Wealthy, poor, it doesn’t matter. These folks bring their crap with them. Give us your drug gangs, yearning to wreak havoc. US citizens are beyond naive with these guys.
The case is In re Lehman Brothers Holdings Inc., 08-13555, U.S. Bankruptcy Court, Southern District of New York (Manhattan).
http://www.bloomberg.com/apps/news?pid=20601087&sid=awh5hRyXkvs4&refer=home
First post. OK, last post in the thread, but first to post link to Lehman bankruptcy). OK desperate HBB reader seeks tiny crumb of fame for no apparent reason;-).
“‘So many Americans, not only me, are one step away from being homeless,’ Henry said. ‘That was a terrible feeling for me - that I could be homeless.’”
You’re not homeless! It just means you have to go rent somewhere that might not have granite countertops.
“Cynthia Henry was one of those who had to sell. She bought a 1,288-square-foot house in Rancho Bernardo for $523,000, with no money down, in mid-2006. But within a year, she lost her $188,000-a-year job selling houses for a new-home builder and her marriage broke up. She feared for her future and that of the 19-year-old granddaughter she is raising.”
Uhh, I am pretty sure that you can still rent a house. You don’t need to own a house. In the less desireable parts of Oakland you can rent pretty cheap. Look into it Princess.