‘We’re Slowly Turning Into A Buyers Market’
The Orange County Register reports on that housing bubble. “Orange County home sales have fallen for a fifth month, and the number of homes on the market is rising. Multiple offers and bidding wars still occur, real estate agents say.”
“But there have been sporadic reports of sellers dropping their prices, especially for homes above $1 million. And, yes, sellers are starting to offer bigger buyer-agent commissions and buyer incentives, agents said.”
“As of mid- April, Orange County had 10,755 houses and condos listed for sale, more than double the number a year ago. Gone are the days where houses sold in a couple of days with multiple offers. Gone, too, are the days of agents inking hasty bids on the trunks of their shiny new sedans. ‘We’re slowly turning into a buyer’s market,’ Chuck Wood, an agent in Anaheim Hills, said.”
“Orange County real estate agents say the market isn’t crashing. It’s just returning to a ‘normal market’ after years of explosive growth. The phenomenon of rising prices and declining sales may be caused either by sellers not realizing that the market has changed, or by unmotivated sellers testing the market, they said. If they don’t get their price, they won’t sell.”
“(Realtor) Barbara Greenfield said that rather than pricing homes above recent sales of similar homes, she now sets prices equal to those of earlier sales. ‘There are a lot of price reductions,’ she said.”
“(Realtor) Don Palmer in Placentia said sellers no longer are agreeing to make deals contingent on the buyers selling their own homes before escrow closes. With homes staying on the market longer, he said, there’s a greater chance the deal will fall through because buyers won’t find their own buyer, he said.”
“Home shopper Richard Fleming wonders, however, if home sellers really are getting the message..in Irvine. The architect-real estate agent is looking for a bigger home, but so far discovered that most sellers are expecting top dollar for houses with minimal upgrades and lean landscaping. ‘I think sellers are being unrealistic,’ said Fleming. ‘The house I’m looking at down the street, the (recent comparable sale) is $1.5 million, and they’re asking $1.98 million.’”
“So now, he’s considering a newly built home. Some homebuilding firms, Fleming said, are offering incentives, bigger commissions for the agents and free landscaping for the buyer. Deals offered by owners of existing homes can’t compare. ‘Basically, I think people are testing the market with unrealistically priced homes,’ he said. ‘And the buyers are not interested in going into homes when they’re that high priced.’”
One of the more interesting things about blogging on this subject is watching each market go through the same gyrations, and eventually settling into a familiar psychological state. Also, every single hot market has had the median price rise into growing inventory, only to wake up one day and say, ‘this inventory is pushing prices down.’
I have more foreclosure articles this morning than I can blog on.
Please give us our daily bread (no offense) of foreclosures!
Hi Ben:
Love the blog.
Just a thought=can we go back to have comments put on the blog in the order they were put on.
That way we can go straight to the bottom to see the latest comments rather than trying to figure who inserted a comment where. The way it used to be).
Just a thought-thanks for your time.
Reply to this comment
Comment by lainvestorgirl
2006-04-22 20:55:58
My two cents — I agree.
Reply to this comment
Comment by CA renter
2006-04-22 23:17:33
Agree! It’s too difficult to go through these over and over again. Even the “most recent post” feature wasn’t very helpful, IMHO.
Let’s just copy and paste what we’re referring to again, instead of these embedded posts.
Reply to this comment
Comment by desidude
2006-04-22 23:10:00
I want it that way too!
Reply to this comment
Comment by Mozo Maz
2006-04-23 06:15:01
Yes! Just append new comments.
“Comments on the bottom for Everyone”
Reply to this comment
Comment by Housing Wizard
2006-04-23 06:21:47
No keep it the way it is .
(Comments wont nest below this level)
Reply here
Nope, I like it the way it is.
I vote “keep it the way it is.”
Nested comments are better.
I have a hard time with blogger’s chronological posts.
I saw those posts. Keep in mind that thousands of people view the comments each day that don’t post themselves. I think the current setup makes the reading more coherent.
One possible solution is for those that like that format to just post that way.
Yes Ben it’s more coherent keeping it the way it is .
I prefer it the way it is.
I prefer it the way it used to be. Which obviously I’m just saying to hear myself post because everyone else seems to like it this way!
too bad we can’t hide already viewed comments and just see the new stuff next time we log on
Isnt there like some open source blog readers that will allow yu too read as the comments come
Expell Housing Wizzard? Go back to the way it was.
I put the default articles that aren’t directly HB related in the foreclosure blog. Here’s a quote from the LA Times today:
‘Last year, when we pulled defaults in 90008 [Baldwin Hills, Leimert Park], 90056 [Ladera Heights] and 90043 [View Park, Windsor Hills], we had three pages,’ said (realtor) Patricia Penny. A recent search yielded 13 pages.’
They better run any negative stories by Scarry Gary!
Jon Lansner also felt a need to publish a mea culpa for his 2002 bearish call. I think that it was overdone but Jon probably gets a ton of hatemail from the RE industrial complex.
Ben: what has happened to the volume of hate mail that you receive? It would be interesting to see a chart of the volume.
Hopefully, Auction Heaven won’t mind me re-posting his excellent post on the OC housing market and early bearish calls.
There were a number of folks that called the Bubble early.
But, in their defense…
…Who in the world would have foreseen giant corporations
creating billions of dollars in horrible suicide loans that would put their finances at risk, as well as their own clients?
I guess that’s what’s different this time.
I have never, in my entire life, seen so many seemingly sane people make so many bad financial decisions in one five year stretch of time.
Calling the Bubble a couple of years ago was actually a correct call…
…That is, if you base your reasoning on the ‘reasoning’ of sane people.
As this thing falls apart in the next few months, we’ll understand that the Bubble SHOULD HAVE burst in the Summer of ‘03, instead of the Fall of 2006.
Bursting then, as opposed to this fall, would have been bad, but not nearly as bad as it’s going to be now.
Two more years of methamphetamine for the market- at much higher purity levels- will mean a much more devastating detox.
You can’t fault intelligent people for forecasting using rational ideas, based upon rational data, in a rational market.
But hey, it’s America.
Christ, even Elvis was a speed freak.
When he couldn’t poop anymore, due to all the drugs in his system…I think we all know how that ended…
The King of Crank, face down on the bathroom floor, pants around his ankles.
Take that picture, and put a caption under it.
“The Orange County Real Estate Market, circa 2007″
Frame it for posterity.
This market is simply EXHAUSTED.
Posted by: Auction Heaven in ‘07 at April 15, 2006 03:30 AM
inventory doubles and they say, what, me worry?
BTW - we will have an “inverted year” - Per Gary. LOL.
L.A. Times is starting to teach on how to purchase foreclosures:
Bargains forecast
http://www.latimes.com/business/la-re-foreclose23apr23,0,4708295.story?coll=la-home-business
I didn’t get to page 2, but I hope to God they talk about how to uncover any loans that aren’t recorded. Doubt they did, and that’s when knowledge is power. BTW, no great deals yet, that will take some time.
Orange County real estate agents say the market isn’t crashing. It’s just returning to a “normal market,” a “balanced market” or a “mixed market” after years of explosive growth.
Oh, yeah, right, uh-huh-this is what they call a balanced market?
Wow, obly a few months of this and they know it is not a crash, a slow down, but “balanced”.
Never mind the fact that wages have not gone high enough to justify the purchase of a house that cost $500,000 six years ago to around a $1,000,000.00 today. At least my wages did not.
Bank of America did an internal study which concluded that the average family earning $100,000 a year with a 20% downpayment can only really afford a purchase price of $300,000 with a 30 year fixed loan and live confortably.
I know were not going down that low (too much money pumped into the economy due to the war)-however, were not going any higher either.
I truly belive this will go down much worse than anyone expects. Fear (and easy money) pumped it up and fear will be it’s undoing. Just wait until the first wave of foreclosures hits market………
I agree. The foreclosures will tighten the money supply. Of the new trends being established here, falling sales, rising inventories, it’s the rising foreclosures that will be the most insidious.
Bingo. The only people buying in this market are either:
1) the last of the exotic loan suckers
2) equity-rich move-up buyers
3) “last call” investment clubs/flippers.
Sadly, all 3 types are going to lose big time.
The average Joe either already owns or he is one of the many on this board who watch the insanity from the sidelines and bide our time.
When CA falls, Seattle will not be far behind as the main spigot of “equity refugees” will be turned off. Mid-July will end the “last hurrah” here in Seattle. From then on it is years of decline.
Long ago, when we bought our first house and 30 yr. fixed loans were 7.5-7.75%, the rule of thumb was the same as B of A’s seems to be now — a maximum loan of 2.5 times gross annual income. Even at that, we did not have a lot of money left at the end of each month. How people blithly believe they will be able to handle, long-term, mtg. debt ratios of over 3 times income is sad to me because I believe it will end so badly for most of them.
“(Realtor) Don Palmer in Placentia said sellers no longer are agreeing to make deals contingent on the buyers selling their own homes before escrow closes.
All I have read about in the last 4 years is bidding wars in the front yard on the first day on the market and those bids way over asking price. No contingencies, no help with closing costs and hey, you have to feed the squirrels. So I ask you Don Palmer in Placenta, since when have sellers been doing this anyway? “No longer” implies that something actually existed.
I agree with your analysis - additionally, the sellers better get off their pedestals and start thinking about accommodating buyers’ wishes, or they’ll be sitting on those overpriced POS for years to come. I love stories where sellers have the attitude that they’ll be dictating terms to buyers in this market. That was 2001-05. Wake up idiots, you should have sold that junk last summer, the masses are beginning to come out of the ether.
Exactly rudekarl. The one way to guarantee stubbornness is to tell a seller that their house is worth less than what it was. It doesn’t go over well. The appraised value or the comps that were used as the yard stick no longer apply and that value will only get further and further away moving forward.
For better or worse, the stand-off has become a siege war of attrition, with buyers willing to starve sellers out of their castles. Hunkering down seems easy at first but just wait until desperation sets in. They will eventually have to capitulate with further loss as a result.
Sellers of the boom years become drunk on the power afforded them by the manic market, lording over the scrambling buyers fighting with each other for consideration. Forcing the writing of essays, showing the house in shoddy condition, counter offering with $20,000 over the original asking price were the manifestations of holding all the cards.
With the tides turning against desperate sellers, will it surprise anyone if buyers retaliate with their own rendition of unintentional retribution? Low-ball offers being accepted, demanding closing costs be absorbed by the seller, perhaps an essay describing why a buyer should save your ass.
Before an army would lay siege to a fortified city they would ask for surrender and would then spare the lives of the townsfolk. If they were forced into a long bitter fight to gain entry, they would lay waste to every living thing in their path.
No quarter.
Off topic but what does everyone think the stock market is going to do within the next year or two. With the housing bubble,energy prices, and Iran, I’m getting worried about the money in my 457 account. What do you guys suggest? Take my money out of mutual funds and put it into a money market account or continue investing the same amount every month into the mutual funds dollar cost averaging if prices go down? I have 20 yrs untill retirement.
thanks
You have a long time, you can afford mistakes. I suggest talking to a knowledgeable financial advisor. I’m a lawyer, not a financial advisor, but the typical advice is to invest about your age in percentage of a mixed bond fund (i.e., if you’re 30, 30% bonds, 40, 40% bonds), stay away from mortgage backed securities, get about 10% metals, and diversify your stock holdings so that you have a good percentage in the SP 500, small caps, and international stocks. If you’re concerned, investing more in money markets can be safer, but you have to be careful, some of them are mortgage-backed securities, or backed by banks who may have a lot of bad loans. Oil and metals look to be the new hot investments. Also, some people think that there is a huge bubble in the equities, but some people think that equities will increase as the bubble crash because investors will pull their money from real estate and put it into equities.
That’s sort of the typical conventional wisdom, but you should talk to a professional.
Go to short term T Bills if you are worried. You can do it direct with no fees. Go to Treasury.Gov T Bills on 13 week are at 4.7% .
Sounds like rotary13BT needs some Peter Schiff radio show intervention on his website Euro Pacific Capital. I am a client of his, and find his insights have served me well. Just one of many avenues of food for thought.
Peter does an excellent job in conveying the Macro Economic Conditions that ‘Bubblevision” isn’t exposing the sheeples too. He doesn’t give specific investment advice per se, but his take on the globalization realities make you think differently. He’s the reason I’ve read 50+ books on Peak Oil, Monetary History, The Chinese Century and other topics.
Craigslist San Diego:
http://sandiego.craigslist.org/rfs/153661408.html
If I were this individual, I’d be motivated to learn the language and how spell check works. Another shining example of how many illiterate individuals were able to grab a piece of the American nightmare.
Good luck to this sucker!
I’ll cut and paste it for posterity in case it disappears soon:
$25000 - TAKE OVER PAYMENTS
Reply to: mariananthony@hotmail.com
Date: 2006-04-22, 5:44PM PDT
BEHIND ON PAYMENTS, POSSIBLE NOTICE OF THE FAULT. NO AGENTS PLEASE CALL (619) 459-9532 PAY ME TO WALK AWAY FROM PROPRETY, TAKE OVRE PAYMENTS NOW AND THE HOUSE IS ALL YOURS, MY LOST IS YOUR GAME. VERY MOTIVATED. LETS TALK AND MAKE AN OFFER!
MARIANANTHONY@HOTMAIL.COM
* this is in or around CHULA VISTA
>PAY ME TO WALK AWAY FROM PROPRETY
AH-HAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHA! Oh boy, let me compose myself here…so you want ME to PAY YOU to get you out of a jam?
AH-HAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHA! Snortle snortle chuckle gufaw snortle giggle!
Whew, I’ll have to remember that one…perhaps a new bumper sticker:
PAY ME TO WALK AWAY FROM PROPRETY…MY LOST IS YOUR GAME.
The lender might call the note if its not a assumable loan . Often times the lender has a clause in the note that lender is entitled to a assumption fee and has right to approve new borrower /owner .
Also part of the 25k is probably going to make up back payments at least I would hope.
I heard an interview on the radio with John Talbott this weekend. Talbott is the author of “Sell Now”. He feel the bubble is beginning to unravel faster than he thought it would. If he is right about this thing it could get really bad. In his book he talks of prices falling up to 50-60% or more in some markets and at least 20-30% in most markets. If that happens, imagine how much wealth will disappear.
Read the book a few weeks back. ‘Sell Now” (Jan. 2006) by John Talbott is an excellent book. He’s associated with UCLA’s Anderson School of biz, in his “way back machine’.
Yeah, I thought is was good too, definately required reading for thie blog.
“Stock prices have reached what looks like a permanently high plateau. I do not feel there will be soon if ever a 50 or 60 point break from present levels, such as (bears) have predicted. I expect to see the stock market a good deal higher within a few months.”
- Irving Fisher, Ph.D. in economics, Oct. 17, 1929
Now for those of you who think ol’ Txchick hates all houses, here’s one I LOVE and think is worth CLOSE (not quite exactly) what the guy is asking. If I were resigned to staying in TX, I’d be all over this. Austin area
http://greenhomesforsale.com/listing.php?id=17831
Buda was a beautiful little town until the developers go ahold of it. Now the traffic is terrible and the small town feel is gone. They are even ruining Driftwood, with subdivision after subdivision. Too bad, used to be the best kept secret in Texas.
Nice house Chick….
But is there room for a plasma TV and a Hummer H2?
txchick57- Now that’s a house with character, not exactly the McMansion with the leased BMW outside, with the Stepford family. You’re a woman of taste. If those walls could talk. When we sold our McMansion in Ventura County, Ca., I swore off PUD’s for life.
I actually had to look at that house again, it’s really nice. Now that’s what a $475 thousand dollar home should look like. Not like the sorry POS houses in my “pocket” San Diego neighborhood.
Txchk-What’s in the Austin area? DELL, Golfsmith, Harvey Penick Golf Schools? What else?
Thanks for the advice guys
Your welcome rotary13BT, and btw I am a gal.
“guys” includes “gals”, as in “hey you guys!”
Or “yooz guys” if you are on The Sopranos.
Thanks arroyogrande- I guess I was being a tad formal, sorry. Tossed the TV 12 years ago, and took up piano, so I’ve never watched the Sopranos, but my office mates were addicted.
Here is your typical overpriced Seattle POS.
I would take the Austin house hands down.
“BEHIND ON PAYMENTS, POSSIBLE NOTICE OF THE FAULT. ”
This is classic. The Fault will get ya every time!
There. Now we return to our regularly scheduled font.
sigh… Or not.
sammy!! no close’m italics……..
500 wampum fine
or maybe not sammy……..
pay the fine anyways!
Here’s another major heads up for you all.
Another monstrously delightful huge new wave of inventory is about to hit the market.
Another surge, kinda like the one we saw in January.
I’ve been hearing people talking about the Bubble in Orange County.
They’ve also been talking about the dude that shot himself at the Huntington Beach Pier, who happened to be a Real Estate Agent.
Best comment I’ve heard in the last couple of days…
“Well, I wasn’t really PLANNING on selling now, but it sort of looks like if I don’t sell now, I might get SOLD HERE FOREVER.”
Yes, I really heard that at work.
I might get sold here forever.
As opposed to, ‘priced out forever.’
Now that the flippers are getting beaten into submission, the real homeowners of Orange County are seeing it, and the ‘freak out’ has begun.
Another mass exodus begins the first of May.
Just got back from Home Depot, which confirmed my suspicions.
Seeing people who used to brag about the price of their home freak out is alien to me. I’m from Michigan.
People in Michigan don’t freak out. We just work really, really hard so we don’t have to.
Kinda feel like I’m on another planet.
A very good stock play…
Invest in the companies that make anti-depressants.
I live in the OC. Ran some errands this sunday. ‘Open House’ signs spouted like weeds over the weekend. I checked out a few condos in the Lake Forest area. You could almost smell the desperation. A partner of mine whom I warned extensively is in escrow for a 2 bed, 2 BA condo for 389,000. The next door model with the exact same comps went up for sale two days ago for 359,000. She is all stressed out about it. Thanks to all on this blog who have helped me keep sane while people around me are gripped by a ‘house’ mania.
I live in HB. A house around the corner has dropped about 5% in the past three months. (It started at $1.1 million). It’s vacant and all the flowers are dying around the perimeter. The agent has put on about 3 open houses since it was put on the market, but he’s got a lot of competition. A year ago when we moved in here, there wasn’t one single house for sale in this neighborhood, (we rent). Now there are atleast 6 that have been listed for atleast one month. One has a sale pending and the people already moved out. The others , nothing so far. There is nothing about it in the news, and if there is, the statistics are all convoluted, like you all have mentioned. The real estate agents insist that if a house is priced fairly, it’ll move! I wonder if they are impressing this directive upon their clients or if they are kinda’ hoping the market will turn around. And what’s fair? I predict a crash with HUGE repercussions.