There’s No ATM Left To Tap In California
The Pasadena Star News reports from California. “Two years ago, owning a three-bedroom craftsman home in Pasadena was a dream Arturo and Olga Avon could never hope to attain. Today, with the median home price lower than it has been for at least five years, the Pasadena couple - and many others like them - got a rare crack at owning such a home. ‘We knew we’re getting a really good deal,’ said Arturo, sitting in the living room of the Marengo Avenue craftsman the couple purchased in October for $329,000.”
“But as in many cases in this new housing market, the Avons’ story has another, less-pleasant back story: The home they purchased sold in 2006 for $549,000, leaving its former owner with an unaffordable mortgage. It had to be sold to the bank at a loss. A study of 10 homes sold in Northwest Pasadena in the past six months showed the same pattern. All the homes went for under $350,000, even though all of them had been bought by previous owners for much more just a few years earlier - more than $500,000 in many cases.”
“In April, the median sales price of a home in Pasadena was $462,500, compared to $620,000 a year ago. Since then, many of the best deals have turned up in the 91103 area code of Northwest Pasadena, said local Realtor Doug Willis. But, he added, as foreclosures continue to spread throughout the city, prices have also begun to fall elsewhere in Pasadena.”
“So is it a good time to buy? ‘Real estate people will tell you it’s always a good time to buy,’ said Willis. ‘It is competitive… but people are thinking, ‘If I don’t get in now, when am I going to be able to?’”
The Press Enterprise. “‘I think it is a good time,’ said Mayra Gomez, 24, who with her husband and two children moved a week ago into a three-bedroom house on a golf course that they bought from a bank for $254,000 in Riverside.”
“Gomez said they’re overjoyed to buy a house with a Federal Housing Administration loan that required only a 3.5 percent down payment. When they first went house-hunting 18 months ago, she said, lenders wanted 20 percent down, and houses cost a lot more.”
“Real estate agents say because the number of foreclosed properties on the market has declined substantially this year, buyers are forced to bid against one another for what is available, with successful offers frequently above list price. ‘Just about every property now has multiple offers. The market is looking more and more like a sellers’ market,’ said Mike Teer, broker-owner of Teer One Properties in Riverside.”
The County Sun. “It’s time to buy a new house, homebuilders say. They said that a year ago while home values continued plunging, but nowadays straddling the fence too long could mean the difference between getting a great bargain or losing it.”
“Welcome to home shopper’s limbo, a place from which David and Denise Espinoza just escaped. After home shopping for one year, the couple finally purchased a new house this past week in Bonita Canyon, a KB Home neighborhood in Fontana.”
“The couple’s repeated $250,000 bids on foreclosures in Riverside hadn’t attracted any bites, leaving them tired of competing with buyers who are driving up the price of foreclosures through multiple bids, David said. The smallest Bonita Canyon model seems attractive: 1,400 square feet with no frills for about $235,000. With homeowner’s insurance and other costs - assuming your credit score is good enough to secure a 5.75 percent interest rate - your monthly payment would probably come out to somewhere between $1,600 and $1,800.”
“But the Espinozas went for the big one - a 2,200 square-footer, which came out to almost $290,000 including some upgrades.’We were looking (to pay) $1,700 a month, and now we went up to $2,400 a month,’ Denise said.”
“First-time home buyers across California who meet certain requirements are qualifying for $18,000 in credits. Because of this, home sales have doubled across the state, and foot traffic in sales offices, on average, has jumped 80 percent from a year ago, said Tim Coyle, senior vice president for Sacramento-based California Building Industry Association. ‘The super good news is that (building) permits are being pulled,’ Coyle said.”
“California’s $100 million pot for home buyer tax credits is near dry, prompting the builder’s association to push for more. Even if another tax credit is passed, the Inland Empire new home market’s bottoming out could take much longer than anyone anticipates, former home builder Mark Gardner said. After 21 years in the homebuilding business, Gardner - former owner of Redlands-based Gardner Construction - got out. He’s now branch manager for Prime Lending in Redlands, a mortgage lender. Gardner doesn’t foresee new home starts in the Inland Empire picking up for a long time.”
“It’s only logical the two-county region’s new home market will be the first to recover because it was the first to get hit and the hardest, some say. Gardner isn’t buying it. ‘We’re going to be the last to recover out here,’ he said. ‘With prices coming down … people would rather be closer to the beach areas. They won’t wanna’ drive all the way out here if they don’t have to.’”
“Bruce Norris, who runs a real-estate investment company in Riverside, said the numbers are not a positive sign for the area’s housing market. ‘San Bernardino (County) has got twice as many foreclosures as they do sales,’ said Norris. ‘They’re not going to be recovering in price any day soon.’”
The Review Journal. “There’s more pain to come, said Whitney Tilson, principal of T2 Partners and publisher of a June report on the housing and credit crisis. While the majority of mortgage defaults so far have been subprime borrowers, more middle- and upper-income homeowners are starting to walk away from their mortgages, he said.”
“Tilson is now seeing the third wave of prime loans defaulting due to job losses and home price declines. Prime loan default rates have jumped from 0.5 percent to 4.5 percent in the last year, he said. In California, the average mortgage owed on homes in foreclosure is $412,000, while the average appraised value of those homes is only $235,000. That’s going to cause a lot of people to walk away from their obligation, Tilson said.”
“‘The average person in foreclosure in California is 43 percent underwater, so it’s not like these people are close to the edge and you can save them with a loan modification,’ he said. ‘These people are deep, deep underwater. Are you going to keep paying when you’re that far underwater?’”
“When both the husband and wife were working, they could afford a big mortgage, Tilson said. Now, with 10 percent unemployment and some 3.5 million job losses, they’re tightening their belts. ‘It’s not just unemployment, it’s underemployment, people taking cuts in pay and working fewer hours. So what you’re seeing is the middle and high end start to tip over,’ he said.”
The Fresno Bee. “Figures released Friday by the state Employment Development Department showed California’s unemployment in May rose to 11.5% from 11.1% in April. It’s a record for the state, according to statistics dating back to 1976.”
“The housing bust across the western U.S. sent the region’s jobless rate bolting past 10% in May — the first time in more than 25 years that an entire region of the country has suffered double-digit unemployment.”
“‘The West is where houses are being abandoned most quickly, because it has the largest percentage of the population under water — owing more on their houses than they’re worth,’ said Robert Reich, a professor at the University of California at Berkeley. ‘They lose their capacity to borrow. All of that means that they can’t buy very much.’”
The Tribune. “Luke Tilley, senior economist with IHS Global Insight, said the San Luis Obispo County community will see improvement faster because the recession was not felt as ‘deeply or severely’ as in the Central Valley, Southern California and the Bay Area.”
“‘Southern California (mostly Orange County) lost jobs directly because of the high concentration of subprime lenders, and the ports have slowed in the face of declining international consumer spending,’ he said. Communities such as Riverside were overbuilt and are still hurting badly, he said.”
“But other economists said the Global Insight analysis may be overly optimistic given the uncertainty surrounding California’s fiscal crisis, a slow turnaround in consumer spending and the housing market decline, which caused many baby boomers to lose considerable wealth. ‘Though the region has not felt the recession as much as those in the middle of the housing bubble, and some think that means the region will recover from what it has felt more rapidly, what is required for recovery is for consumers to spend at rates they were spending at before, and many economists don’t believe that they will,’ said Jerry Nickelsburg, senior economist with the UCLA Anderson Forecast.”
“He added: ‘And all bets could be off, depending on what cuts in government spending means for your region.’”
The Contra Costa Times. “The jobless rates in the East Bay and California soared to their worst levels on record, climbing to double-digit rates during May, grim reminders that the recession continues to ravage the statewide economy. California lost nearly 69,000 jobs in May.”
“‘This is not a normal recession,’ said Dan Hamilton, director of economics with the Thousand Oaks-based Center for Economic Research. ‘It is a recession that is accompanied by a financial meltdown. Unfortunately, those kinds of recessions last much longer than usual.’”
“The big problem for the economy: Consumers can no longer use big gains in stock prices or housing values as a sort of piggy bank for spending, said Jon Haveman, a partner with Beacon Economics. Those bulwarks of consumerism have toppled. ‘There is no ATM left for the consumer to tap,’ Haveman said.”
The Recordnet. “Wayne and Theresa Crawford have scoured the Stockton foreclosure market for more than six months in search of a fixer-upper starter home they can help their 20-year-old son, Waylon, buy. Waylon, a single father working as a grocery store cashier, can afford the monthly mortgage on a $75,000 home. That sum, an unthinkable price just two year’s ago, can buy a three-bedroom house in a decent neighborhood, and the handy Crawford men can work any repair projects themselves, Wayne Crawford said.”
“The outcome of the family’s search thus far: frustration. And real estate agents say the Crawfords’ experience is not unique in Stockton’s market for bank-owned homes priced at less than $300,000. San Joaquin County’s median price is $155,000, according to May statistics. ‘We’re fully qualified, have a 20 percent down payment, and we’re offering above asking,’ Theresa Crawford said. ‘We put in our bids, and we don’t hear back, or they tell us we’ve been outbid. It’s been so long now that interest rates are going back up again.’”
“The inventory of foreclosed homes has shrunk, too. A federal 90-day moratorium on foreclosures so banks can modify loans for struggling homeowners will keep the inventory low.”
“It takes patience, perseverance and a little luck to score in this market, Stockton agent Art Godi said. ‘It’s a learning process for every client,’ Godi said. ‘They make their first offer under asking and don’t get it. They make their second offer at the asking price and don’t get it. Then, they start going over asking, and it’s still hit or miss.’”
“But after more than a half-dozen offers, some well above asking, the Crawfords are beginning to lose energy. After learning last week that a three-bedroom home on Galloway Court went to another buyer despite the Crawford’s offer of $5,000 over the listed price, the family matriarch said she might be ready for a break from their search.”
“‘It’s a dream for Waylon, and he’s beginning to lose patience,’ Theresa Crawford said. ‘He lives at home now but wants a place he can fix up and have a room for his daughter. This might be the straw that breaks the camel’s back.’”
From Bloomberg. “Shirley Breitmaier’s mortgage payment started out at $98 when she refinanced her three-bedroom home in Galt in 2007. The 73-year-old widow may see it jump to $3,500 a month in two years. Breitmaier took out a payment-option adjustable rate mortgage, a loan popular during the housing boom for their initially low minimum payments.”
“More than $750 billion of option ARMs were originated in the U.S. between 2004 and 2008, according to data from First American and Inside Mortgage Finance. California accounted for 58 percent of option ARMs, according to a report by T2 Partners LLC.”
“Breitmaier, who has been in the home for 45 years and lives with her daughter, now fears she will lose the off-white stucco house that’s a hub for her family. ‘I wish the government would bail us out like the banks and the car businesses,’ she said. ‘I’d like to go from here to the grave next to my husband.’”
“Paul Financial LLC originated the loan and it was sold to GMAC, said Cameron Pannabecker, the owner of Cal-Pro Mortgage and the Mortgage Modification Center in Stockton, California, who is working with Breitmaier. ‘This loan is a perfect example front to back, bottom to top, of everything that has gone wrong over the last five to seven years,’ Pannabecker said. ‘The consumer had a product pushed on them that they had no hope of understanding.’”
“Peter Paul of Paul Financial, based in San Rafael, said he wasn’t familiar with Breitmaier’s loan agreement but disagreed with Pannabecker’s characterization. ‘The problem is, real estate values went down,’ Paul said. Paul said he’s winding down the company and hasn’t made any loans since the fall of 2007.”
“‘This is not a normal recession,’ said Dan Hamilton, director of economics with the Thousand Oaks-based Center for Economic Research. ‘It is a recession that is accompanied by a financial meltdown. Unfortunately, those kinds of recessions last much longer than usual.’”
I thought the recession was over. [sarcasm off] Just think what fools they are going to look like when this time next year those “experts” are quoted as saying a year ago that the recession was over and that “green shoots” were beginning to sprout all over!
Let’s face it, rarely is anyone held accountable for being too optimistic. Whether it’s innocent, misguided, or a whopping “white-lie,” someone can always spin it as positive and well-intentioned. That’s why it’s standard posture for politicians, Realtors, MSM pundits, etc.
I looked up this so called “Thousand Oaks-based Center for Economic Research” (since I live in T.O.) and it is the Economics Dept of Cal Luthern University.
“A recession accompanied by a financial meltdown.”
I’m sorry Mrs. Smith. Your husband has a little upset stomach, which is accompanied by a gaping exit wound caused by the AK-47. His upset stomach will last a little longer than usual.
+1
From Bloomberg. “Shirley Breitmaier’s mortgage payment started out at $98 when she refinanced her three-bedroom home in Galt in 2007.
That’s the same amount I paid for a 6′ x 10′ rental storage locker in 2007.
She has been in the home 45 years. That thing should have been paid off YEARS ago.
Sounds like she and her daughter were living off of the equity they cashed out, and now they think they deserve a bailout?
The full article says the loan she took out in 2007 was for $315K. So what the heck did she do with the MONEY?
Boob job?
“Boob job?”
LOL! Yeah, just what every 73-year-old woman needs.
Seriously, she sounds like a lot of the elderly people I know - “Hey, I’m OLD. GIMME, GIMME, GIMME!!”
A boob job is in the neighborhood of $2,500, and iirc, with a lift around $3,500. (So Ca prices - cira 2005)
But a boob job on a 73 year old woman could cost more… Maybe they are transformer boobs, more than meet the eye!
I use to work w/ someone in her 60’s that had the works done (perky boobs included). She looked like a caricature of herself. Freaky.
Great news! For less than 6 million dollars you too can own a piece of the world famous Hotel del Coronado!
Ok, so for $5,800,000 you only get to stay in it for 90 days a year and there’s some kind of pesky HOA fees, but you get some of the income for the 270 days a year you are not there and it is rented out!
I’ll buy it as soon as Donald Trump tells me it’s a great deal.
http://tinyurl.com/HotelDel
It’s gonna take a long time to get that investment back. You can’t rent that cottage out for that much money, and the Del is old.
Usually it’s not up to the individual owner how much the units are rented out for. He only gets 50 percent, or 40, of the rental income and still has to pay the HOA/taxes. Most often, he does not even have the pleasure to furnish his property, which could be a good thing since people have horrible taste. The individual owner carries the risk if there are no guests, and no one can convince me that paying guests are distributed evenly amongst all owners.
Sometimes, although the condotel is marketed under a brand name like Hilton, the condotel (e.g. Hilton “Vacations Club”) rooms & furnishings are classes below a regular Hilton room.
The management team (concierge, housekeeping etc) is often undertrained (again compared to a regular hotel) and understaffed. Plus, as an observation on the side, these days, put some undereducated folks in uniforms, and there are immediate power trips.
I am convinced there is not return on such investments. However, isn’t there a lot of money that waits to go to the laundry? So these things may not be designed to make sense.
What IS ‘this’… ( Knifecatcher Monday ) ?
“or they TELL us we’ve been outbid”
( Nothing like transparency is there? )
Bidding wars amidst “soaring” unemployment?
Yeah, DinOR I share your bewilderment. The mania is so NOT dead, and the attitudes of the bidders show it.
For the upteenth time - the very concept of a prolonged real estate/economic contraction is simply beyond the comprehension of wide swaths of this population.
the very concept of a prolonged real estate/economic contraction is simply beyond the comprehension of wide swaths of this population. I think the “bottom” of the crisis will occur when a wide swath of the population finally comprehends it.
Joe six pack stills “believes the federal reserve is not private and is working on their behalf. Wall St and the banks are there to help and service them, these poor slaves just have not figure it all out yet. When the middle class is destroyed and their money gone, they will be anger in the streets, like Iran. The 3 ‘”B” that were forcast and to avoid are here. Big cities, Big houses, Big debts. Lessons for history.
The PTB are doing a ‘great’ job with this.
Limit supply by:
Foreclosure moratoriums
Being slow at taking back houses
Simply not listing them
Leveling some housing stock
Create demand by:
Incentives
Green shoot talk, false recovery signs
Creating a sense of urgency
Economic fundamentals will eventually win out, but for now we will have a ‘recovery’ based on lies.
edgewaterjohn,
As much as I ‘think’ I comprehend about the bubble, up until -today- I really didn’t fully appreciate other posters frustration w/ all of the pre-mature “bottom feeding” ( there’s a laugh ) and built-in speculative fever?
Parents trying to help a 20 y.o grocery clerk buy a home? What’s the freakin’ hurry here? At least let him “rise” to Asst. Night Mgr. before taking the plunge?
Yet I don’t hear anything about multiple bids on high-rise condos? So at least ‘that’ is refreshing?
My father is trying to get my sister and her husband to buy a place - they barely scrape by as it is. Nothing against them - they’re very nice people - but they are not motivated to do what is necessary to own a house in the Bay Area. They’re not willing or able to save, but I think he’s willing to help with the down payment. I don’t know if it is guilt (unnecessary) or what, but from where I stand, that train will wreck. I told him there is NO hurry, and set up this site as a bookmark on his PC.
Oy. One of my stepsons, the *smart* one, is a newly minted shrink in SoCal and yesterday he told his father he’s thinking of buying a condo there. He’s renting by the beach, having a ball and paying off 50k in student loans.
He should get his head examined.
InMontana,
Right, it’s like watching a wreck at NASCAR and having fans run out on the track to pick up souvenirs before the cars come to a full stop?
True story: During the first battle of Bull Run during the Civil War, the wealthy elite of nearby Washington, including congressmen and their families, expecting an easy Union victory, had come to picnic and watch the battle. When the Union army was driven back in a running disorder, the roads back to Washington were blocked by panicked civilians attempting to flee in their carriages. Hmm, sounds familiar.
Not happening here (Maine islands). Too many FOR SALE signs. Some transactions have occurred but mostly stuff is just sitting and sitting. This stock is mostly NOT foreclosures, just “investors” who bought for cash and are now realizing that the clever idea of using your place part of the summer and renting it out the rest of the summer is not viable when all the potential tenants had the same idea.
az_lender,
I think you just explained the entire glaring and fatal flaw of the Second Home Syndrome all in one sentence! Why has it taken us ( me ) so long to figure it out?
Whether the “draw” is the desert, the ocean or the mountains, ALL your potential tenants had the -exact- same preference! Rendering of course, the entire business “plan” moot, useless and now, unworkable.
Oy is right. Psych. majors are usually the most screwed up. I’m seasoned in commercial in So Ca, started from an Acct’g background, and I say, let the kid learn the hard way. It will last a lifetime. It’s hard, but don’t rescue him.
I agree that the mania is still alive. I see it in my area. Hoping end of summer things maybe change a bit. Figure all the buying up now is in order to be settled come start of the 2009-2010 school year.
These “bidding wars” are only happening because the banks are asking WAY BELOW MARKET for the houses. Bidding wars are like auctions. They do no imply a rising market.
good point
“So is it a good time to buy? ‘Real estate people will tell you it’s always a good time to buy,’ said Willis. ‘It is competitive… but people are thinking, ‘If I don’t get in now, when am I going to be able to?
When both Main Street & Wall Street are knee deep in FB,GF, Hedgie & Flipper blood ?
Knifecatcher Monday
Hahahaha, seriously. I am constantly amazed at neverending supply of greater fools.
http://dqnews.com/Charts/Monthly-Charts/LA-Times-Charts/ZIPLAT.aspx
Dataquik socal zipcode numbers are out.
Dude-
Thank you. Are foreclosures and short sales factored in these numbers?
“Real estate agents say because the number of foreclosed properties on the market has declined substantially this year, buyers are forced to bid against one another for what is available, with successful offers frequently above list price. ‘Just about every property now has multiple offers. The market is looking more and more like a sellers’ market,’ said Mike Teer, broker-owner of Teer One Properties in Riverside.”
Seriously? 0_o
Mike Teer would love it to be a Seller’s Market. In Riverside….?
This ‘Multiple Offer” BS is really starting to chap my hide.
With the new moratorium in place, UHSes and banks simply aren’t putting stuff out there. There’s no shortage of inventory, especially in places like Riverside and the Antelope Valley, but not much of it makes it to the MLS - hence artificial ’shortage’.
I’ve seen a couple of places in my search that are obviously meant to be ‘bait’ to trigger multiple offers.
There’s a nice looking place in Tarzana that has an asking price of $300k - about half the asking price for other places in the area. It was listed in Feb with this price, and has not sold yet, nor has there been a price revision, up or down. Guess the shiny price isn’t having the desired affect…
“I’ve seen a couple of places in my search that are obviously meant to be ‘bait’ to trigger multiple offers. ”
Just another tool in the used house salesperson’s fraud arsenal. The best way to sell a house these days is to tag it with a lowball price and start a feeding frenzy amongst the “investors”. Then the REIC can wire the world that they’re getting multiple offers. What’s not to like?
I’ve seen that in the Santa Barbara area.
One place was priced at $500k, several hundred thou below comps in the neighborhood. My friend bid $580k and still missed out.
Dude, meditate on these. It will make you feel better.
They are stealing demand from the future
It won’t be long ’till the first bank cracks, as there is no honor among thieves
You are right and they are wrong
“Peter Paul of Paul Financial, based in San Rafael, said he wasn’t familiar with Breitmaier’s loan agreement but disagreed with Pannabecker’s characterization. ‘The problem is, real estate values went down,’ Paul said. Paul said he’s winding down the company and hasn’t made any loans since the fall of 2007.”
Peter Paul got Buried.
Also, how can you be ‘winding down’ a company that hasn’t made a sale in almost 2 years?
sfbubblebuyer,
Noticed that myself. Not to jump to this guy’s defense, but he may have been one of the ethical ones out there? You know, a lot of the sub-shops simply took people’s loan app’s ( complete w/ SS # ) right out to the dumpster. They were in such a hurry to fold up their tent, they didn’t even bother to shred doc’s.
Yet they ALL cling to the same defense; “The problen is, real estate values went down”
It’s such a populist appeal. “Yep, hard to argue eith ‘that’ you know?” Oh you mean the RE values that went down AFTER you clowns enabled bidding wars every step of the way? ‘Those’ values? You can’t get thru the day w/o hearing that garbage.
Paul Financial only did a-paper loans. These loans however, were extremely high LTV negative amortization option arms. These loans were given to people in high priced areas with good jobs and excellent credit. Paul now services a lot of toxic loans, these loans have not defauleted yet because their borrowers have a minimum neg-equity payment option that is easily affordable. Bad news is that these payments will triple from 09 thru 11. Because balances are rapidly rising and values have drastically dropped, these loans will set records for $$$amount of negquity. Paul financial is an excellent case-study of the option (oops) arm industry.
It means he is not stiffing the people he owes money to(landlord, etc).
What kind of American Businessman is that? He should have been in the Caymens by Christmas of 07!
What did the home buyer in Pasadena say, “If I don’t buy now, when will I ever be able to buy”.
That is just another way of saying “buy now or be locked out of the market forever”!!!
That is proof to me that the bubble mentality is still alive and well.
Pasadena has a lot of “It’s Different Here” mentality. A friend I visited in April 2009 (yes, 2009) was telling me how “prices around here aren’t declining at all.” That was then, wonder what’s happening in the South Allen Ave neighborhood now.
“A friend I visited in April 2009 (yes, 2009) was telling me how ‘prices around here aren’t declining at all.’ ”
This flat-out denial by many, many people is what frustrates me. And baffles me. Certainly these people listen to/read the news, right? I mean, even the MSM has been reporting on the economic bloodbath out there for a long while now.
It sounds like a lot of folks have the attitude that if bad stuff isn’t happening to them, personally, then it’s irrelevant. That’s pretty risky thinking.
I saw my first soon-to-be bank-owned house in Palo Alto. The single woman defaulting on the place owed $924K. I do hope, for her sake, that she didn’t put a lot of cash in.
News from Los Angeles:
Unemployment has reached new highs 11.4%
yoy sales prices rose .8%
Please focus on those two facts and please explain that to me.
11.4% unemployment and real estate prices are going up!
I guess the free market is working, thanks to the compassionate help of the the Government, $8,000 tax credit, 141 day moratoriums to stall foreclosure, Banks not needing to put inventory on market because of tarp funds and Gov. purchase of “toxic assets”, and the Federal Reserve printing money to force interest rates lower.
Take all the actions listed above and it explaines why sale prices are rising at the same time unemployment is sky rocketing and income is going south. Please take it from me, judging from the number of adult white males one sees on the street during working hours the unemplyment levels are getting very visable!
This whole down turn is getting very weird. I thought once the bubble popped I would finally be able to buy, but the government, is doing every thing possible to force prices back up. They say you can’t fight city hall, and I guess you can’t fight the Fed. Gov.
Prices rising with foreclosures at all time highs and unemployment at record levels!!!
I think I need a therapist!
YOY sale prices don’t seem to be going up according to these dataquick numbers — LA County down 32.2%:
http://dqnews.com/Charts/Monthly-Charts/LA-Times-Charts/ZIPLAT.aspx
You didn’t really think it would be that easy, did you?
To be entirely honest, intially I did think it would be that easy, both with regards to house prices and stocks, etc. I was mistaken!
edgewaterjohn,
In fairness to both of us, and I don’t want to speak for ‘you’ but would it be more accurate to say “At least I didn’t ‘think’ things would be ‘this’ damned complicated?”
The complexity w/ which this thing is unfolding is frustrating the hell out of me. I don’t know if any of you recall but in grade school, when there was a serious “whitewashing” going on at the playground, the teacher’s aide or PE teacher would amend the rules mid-game to even things up.
You were like “What do we have to DO to put this thing to rest!?”
I don’t claim to know where this will all lead either, but I do know that as our society continues to reward stupidity, greed, laziness, etc., whether it be via Wall Street, welfare, Fannie Mae, or whatever, we will only grow weaker and weaker as a whole.
“This whole down turn is getting very weird. I thought once the bubble popped I would finally be able to buy, but the government, is doing every thing possible to force prices back up. They say you can’t fight city hall, and I guess you can’t fight the Fed. Gov.”
“OK guys just hold out till 2011. I’ve got the printing presses running full out. Inflation will be salvation, but don’t tell the Chinese OK?”
Your Pal,
Ben B.
You just have to hurry up and wait, Greg.
My waiting game involves Morro Bay, where prices of small houses have fallen about 25% in 3 years. However, since a lot of this stock was being marketed on the basis that you can own it, use it for vacations, and still rent it out for other people’s vacations, it takes big-time unemployment to expose the fact that THERE ARE NO TENANTS (except me) looking for vacation rentals off season.
Sellers there are still asking like 330x monthly rent. Ha ha ha ha ha. I believe another big (slow?) downdraft is still to come.
Government, $8,000 tax credit, isn’t. It’s 10% of the home’s purchase price, with a cap of $8,000. I read Form 5405 and read the instructions/ questions and answers. I haven’t read the Ca $10,000 incentive, but I will next weekend. The misinformation is by design.
Did you see the DataQuick numbers posted above? Prices are going down, not up.
I totally agree with you! My husband and I just got an 8% pay cut. We both work for UC and it is supposed to be only for 1 year (yeah, right!) and then we will be getting another 5% cut next year when we have to chip in for retirement. How can these nuts still be buying when unemployment is so high and wages are going down? I have a co-worker who is buying a place in Walnut Creek that is 1900 sq. ft. for $750k. How nuts!! He told me they got the price down by $50k. Then they are going to build 8 Habitat for Humanity houses next door over the next year(great for values!). He said since his wife just lost twins at 23 weeks he HAS to buy her a house! Well, I just miscarried at 7 1/2 weeks and I don’t need a house!! Give me a break!! Of course I don’t have a rich doctor for a father who can give me a $300k down payment either!!
” buyers are forced to bid against one another for what is available”
The RE shills are running full force. My wife met one in the Post Office lobby on Friday and she told her “you better buy now before rates go up”. At that point I put my wife on Redfin.com for a look see of RE around Salinas and surrounding area. Might as well hung the map on the wall and shot it with a 410 shot gun.
But the foreclosure across the street has been purchased as are several other pieces of property, one in the $500K range. People without the income being set up anew.
As for me, I don’t intend to get into any bidding war, I can wait. A $245K (30yr fixed) mortgage @ 7% would equal my rent and I don’t have any property taxes, HOA’s, or maintenance costs and I can move when and where I want. I’m going to buy on availability of water, price per sq.ft., location, life-style, curb appeal, interior flow, etc and not take something just because it’s available.
Amen salinas. Water availability is going to be seriously crucial.
Guess I am going to wait also.
Hemet/San Jacinto are in the $50-60′ range. Not going there, but if they can go that low now, wellll, elsewhere it will go down pretty far also.
“Might as well hung the map on the wall and shot it with a 410 shot gun.”
Hanging the RE Agent on the wall and shooting her would do more for the greater good, though.
These agents have got to be getting desperate. Not all of them are young/hot enough to go get stripping jobs. And Starbucks stopped hiring a while back. What’s a down-and-out Realtor to do?
“California’s $100 million pot for home buyer tax credits is near dry, prompting the builder’s association to push for more.”
Good luck with that one. Lets see… shut down national parks, end all social services, increase class sizes, and while we’re at it… hope there are no fires or riots. But oh yeah… let’s keep feeding that sweet pork to the REIC.
They should retroactively pull the credits. “So sorry, you get no credit now. Pay up, chumps.”
Seriously, we need that 100 million!
its not really a net cost to the state, because the new home building will bring in lots of new revenue in property taxes, mello-roos fees, developement fees, sales tax on furnishings, jobs for the construction industry; so really its a small investment in future fee revenue.
Seriously, when i was doing my state income taxes; I go to the FTB website for help with a tax question and right on the home page is a big announcment about the tax credit for new home buyers. I have always been someone who believed in paying my fair share of taxes; but after seeing this, i really dont feel like doing it. In any case the FTB answer to my tax question was ambiguous, so I decided to interpret the code in my favor; in retaliation for this stupid credit.
Gosh, my policy is to seek ambiguity in every paragraph of tax instructions, and to decide it in my own favor. If they want to come back and tell me I was wrong, that’s fine. They never have, so far.
“California’s $100 million pot”
They legalized it?
It’d be a lot more than $100 million if they did!
Yeah, but it looks as if Congress and the Arnie went and smoked it all at lunchtime. D’oh!
California could install pay toilets on EVERY crapper in the state and triple tax the Charmin but it AIN’T gonna charge what the MAN said.
“No One Here Gets Out Alive”
That would really be some expensive sh*t.
The home they purchased sold in 2006 for $549,000, leaving its former owner with an unaffordable mortgage.
Huh? How did the home manage to do that??
The former owner had used an unaffordable mortgage to pay $549,000 in 2006 for the home.
–There, I’ve fixed it.
I love how they assign cause and effect to completely unrelated things.
Driving a car off the dealership lot drops the ‘price’ but doesn’t make the payments any less affordable.
Well the CRAZY thing is that in CA, agreeing to a series of payments that one couldn’t afford became THE NORMAL WAY OF BUYING A HOUSE. Amost everybody was relying on appreciation to to bail them out of their mortgage, if not of their credit card debts too..
Don’t I know it! I saw it when I was first looking at the housing market in early 2007. We got pre-qualified for a 30 year loan and when we did, the loan officer offered to qualify us for much more than we were requesting (We were asking for 3.5 our combined salaries with a 20% downpayment and reserves) but we turned it down. And this was a fairly sensible credit union. A mortgage broker probably would have tried to get us into a wildly unrepayable time bomb mortgage. I’m sure that’s what 70+% of the buyers in 2007 were shopping around with.
“So is it a good time to buy? ‘Real estate people will tell you it’s always a good time to buy,’ said Willis. ‘It is competitive… but people are thinking, ‘If I don’t get in now, when am I going to be able to?’”
Why not at least wait until prices stop dropping at the fastest rate in recorded history to start thinking about buying?
As someone who has witnessed previous busts/recessions etc., do you ever recall such a feverish and all consuming search for a “bottom” than the one we are currently watching?
Face it folks, huge chunks of our population are getting increasingly desperate for a “big score”.
The bubble will continue until that mania is fully stamped out.
I think it goes beyond mania for some. They left the work force to flip houses and now they have no little other choice but to keep going. They’ll gamble every penny they have until the house takes all.
Unless you are a master electrican/plumber/builder/craftsman with your own trusted crew and a hell of a lot of knowledge, flipping is only properly characterized as nothing more than an expensive hobby. Sure you may lose a few hundred thousand per house, but you are spending your time doing what you love.
The funniest thing is when ppl think they have the “GIFT” for flipping directly from God, ’cause they can walk into an outdated kitchen and think, you know, this might look better with new cabinets, stainless steel appliances and granite countertops. Those ppl are like so freaking special it blows my mind how they could have ever made less than 100k a yr.
Al,
I’m thinking along those lines myself. You have a bloated 50-something booze-hound of a realtor w/ his feet up on the desk and he’s not giving his good thang up for no 9 to 5.
He realizes there’s no way in hell anyone is going to hire him ( certainly not now ) so his/her only choice is to continue to ply the worst of the worst aspcets of their “craft”. Besides, the Mortgage Implode blog had post after post where MB’s felt like they were being blackballed, so why even bother looking for honest work?
“Those ppl are like so freaking special it blows my mind how they could have ever made less than 100k a yr.”
Tim - what makes people who make more than $100K a year any more special than those who make less than that?
A stupid purchase is a stupid purchase.
Tim: “flipping…no more than an expensive hobby”
That’s now. There was a time when persons with no construction expertise could easily do the live-in two-year renovation and at least sell for enough to make the two years’ living appear “free.” And it WAS free if you didn’t get caught with another one when the music stopped.
It was sarcasm regarding the self perceived worth of those that think they have the design/flip “gift” after watching a few home improvement shows, and the expectations of what such “gifts” are worth in the market place. Maybe I just know more crazies than most, but I know several flippers, and for years they have been talking about their special gift of being able to walk into a house and envision what a new kitchen or bath would look like, justifying in their mind a salary of at least 100k per year (i.e., price markups over cost). Perhaps it may because I too was born with the gift that makes me unable to understand why such a gift is that special or valuable. I have neved used such gift for personal gain. Is that wrong? Am I denying the world benefits it deserves? Who knows, but I doubt it.
Tim your commentary was brilliantly succinct and very funny, I don’t know how the other poster didn’t get it but I thought You summed up all the dip*hits on the “flip” tv shows perfectly!
“Gift” directly from God, that’s hilarious because it’s so freaking true! It’s not like any of those dopes ever opened a book or did any real work in their lives, but their sense of entitlement based on….their ‘uniqueness’ is so pervasive.
“The bubble will continue until that mania is fully stamped out.”
Reminds me of a sign my ex-Navy boss had hanging on his wall: “The beatings will continue until morale improves”
‘As someone who has witnessed previous busts/recessions etc., do you ever recall such a feverish and all consuming search for a “bottom” than the one we are currently watching?’
Well, yes. In the early days of this blog (circa 2005), there was a recurrent post of a link to a series of LA Times articles over the period from roughly 1990-1996 documenting that serial bottom calling is nothing new.
Well people DO worry too much about finding an exact “bottom.” Bottoms are as difficult to call as tops. The question is “what are the chances of further significant price declines?” Pretty good IMHO. And the risk that prices will start shooting up soon are pretty negligable. Even though the best combination of price and selection is probably found slightly before we hit “bottom,” there’s really no reason to hurry.
If anyone can furnish a single example of a housing market bottom that did not last for a period of months if not years, then maybe I will get a little bit excited about the search for the exact bottom. Otherwise, wake me up when the bubble is done deflating…
PB,
It’s not that I don’t get your point, but again, with the over-simplification of Bubble-Sitting, we now have the assessment that all one need do at this point is take a nap.
I agree, we’re at a point to where there really can’t be any further gov’t intervention, we’ve already reached saturation there. And it’s not like getting all worried and bent out of shape is going to aid or accelerate the process. But I think it’s a mistake to say any of us can afford to be asleep at the wheel on this one?
I thought the top was pretty easy to call. It was right about the time when DataQuick first came out with the numbers showing m-o-m declines in CA. That was June of 2005, aftetr 60 straight months of m-o-m increases.
I don’t think it’s all that hard to call tops and bottoms when you have such extreme numbers and some concept of what’s causing them.
Do You know where your bottom is?
I think it has everything to do with the real-time feedback of the Internet echo chamber. The blogs and everything today makes even the dot-bomb look downright primitive by comparison.
DebtInNation,
That’s an excellent point. Some time back we had a thread on Patrick.net to that effect and it’s playing out pretty much as we’d thought.
All kinds of false bottom signals from all the “noise” rattling around out there? I think it’s that very echo that created the “bing.com” marketing strategy. Too much information and too much disorganized information!
Also, having diff. mkts. at diff. stages hasn’t helped “build a base” exactly either. We’re going in all directions at the same time. And there’s no saying the Casey Serin’s of the world can’t jump back in and join the mix as reinvented versions of their former selves?
PB,
Got an update on stepdaughter’s condo buying in your area,ranchoB during Feb/Mar- short sale.
Well, after dropping off her offer to agent, she is driving her warrantied MBZ down the fwy and auto lost its $$$ thingamagig, uh, crankshaft or, well heck it was an expensive thingamagig. Warrantied, but AAA told her it must be outa gas.??? well she thought, silly me, and filled up. Next day, again. This time she felt the RE gods were telling her something. H can’t get a FT job, and her thingamagig fell out/off, and well, short story, offer was rescinded, Pronto.
Not engineering gifted, so guys, just go with the flow!!!
As Oly gal would say, car is lovely Opal color, and it goes. All that matters. Mine is paid off, that matters too!
Time for the return of the bumper sticker - remember? “Don’t Laugh, It’s Paid For!”
“First-time home buyers across California who meet certain requirements are qualifying for $18,000 in credits. Because of this, home sales have doubled across the state, and foot traffic in sales offices, on average, has jumped 80 percent from a year ago, said Tim Coyle, senior vice president for Sacramento-based California Building Industry Association. ‘The super good news is that (building) permits are being pulled,’ Coyle said.”
With all the recent hair-of-the-dog efforts to reflate the housing bubble, is it any wonder that CA home prices have experienced a recent debt cat bounce? My only amazement has been with how feeble the bounce has been, not that it has occurred.
At 20% down, that 18k in credits should translate to 90k price increases. I’m not seeing that. It’s slowing the price declines a little, maybe, but only until it runs out. They need permanent price subsidies to permanently prop up prices.
“They need permanent price subsidies to permanently prop up prices.”‘
Longstanding subsidies are already in place at so many levels. The bubble is suffering from a severe case of subsidy exhaustion.
True. Government subsidies lead to the need for more government subsidies.
If you apply the same logic to shipping food to starving people, you get glared at at cocktail parties.
“Government subsidies lead to the need for more government subsidies.”
They also lead to the expectation for more government subsidies. Bailouts have a similar effect. Pretty soon, everyone is expecting bailouts and subsidies and behaves as though they are certain to receive one. Once they are sufficiently inflated, such expectations are doomed to soon hit a brick wall of economic reality.
Okay, it’s Monday morning. Make that Financial Monday Morning around my place. (This is the time in which I take care of anything financial-related in my business or personal life. After all, if I’m going to start the week in a bad mood, I might as well do it right.)
Anyway, that’s the mood barometer part of this comment.
The next part comes from the blog of a former neighbor. She and her husband sold their house at the height of the bubble — August 2005. I might add that they sold the place for around $100k more than they’d paid for it five years earlier. Then they moved out of Tucson so the wife could take a job in another city.
The job didn’t work out, so they decided to hit the road and explore the highways and byways in an RV.
Seemed like that plan worked really well until last fall, when the economy fell apart, their retirement accounts went kablooey, and they found themselves sitting on a small pile of cash. So they decided that it was the right time to buy real estate in Tucson. Again.
So she and the husband found a place in dire need of work in an area north of the city. (That’s what the location looks like from the photos they posted on their blog.)
I can’t help thinking that they overpaid, but that’s just me. The purchase isn’t showing up in the county assessor records yet. But the wife (who keeps the blog) noted in the comments that Tucson now has a buyer’s market.
No it doesn’t, sweetie.
Add this couple to the ever-growing list of people that I must treat with kid gloves when the subject comes to real estate.
The people who told me I was crazy a year or two ago now get pretty quiet about real estate around me. My sister-in-law and her husband are staring an adjustable ARM on a property that dropped 50% in the face. I try not to talk about it any more around them.
Yep Knifecatchers. My sister and brother in law wanted to move far west from DC. They won the housing lottery in my opinion by selling their $800K house in Fairfax County for 99% of asking price in a couple of months. Despite better houses for sell for less. Could not wait to rush out and buy again at $450K. They WAY overpaid. WOuld not listen to me and others to rent and at least get the know the area better. If not even to save money than to find something more suitable. Already brother in law said maybe he wished they had not rushed. But sis not going to rent !!! The horror.
Not so much renting but she has the patience of a spoiled 3 year old. She has always done everthing with lighting speed urgency. No ever careful or deliberate thinking. NOW NOW NOW or Never with that one. Guess the law of averages probably works and results are half the time disaterous and half time ok.
This purchase not a disaster but saving $100K or $150K esp. given their income and age would be nice.
Hey, Anon. I’m working on a prospective client in DC. If I get this client (and it would be quite a plum), I’ll be traveling to DC sometime.
So, waddya say we commiserate over drinks in Georgetown? And this invitation goes out to all the other DC area HBB-ers.
Let, Polly, and the gang and me know if you’re in town. Good luck with client.
Slim:
Maybe you can send them a Christmas card this year that says “Merry Christmas” in a bunch of different languages, and then slip in “You are an FB” in Swahili or something. They’ll never know.
No, I’m thinking of doing something even meaner.
And that would be to remind them, once again, of the lack of attention that the buyer of their old house is paying to the yard. As in, the yard that this couple so carefully planted and nurtured while they were in this neighborhood.
They don’t like to be reminded of what’s happened to their yard.
And I could liven up my commentary with pithy remarks like, “How much effort does it take to kneel down and pull a weed?” (Apparently, such effort is way beyond the abilities of the current owner. And, yes, current owner is able bodied.)
Help !!! Bring us up to date on the plight of the famous squirrel in SF or Menlo Park ? You remember, the owner made prospective buyers promise to feed and nurture her squirrel ? hahahahahaha
Haven’t heard anything. Maybe a cat had a nice lunch or dinner
From The San Bernadino Sun story:
“If you think about what could happen, it’ll stop you from doing a lot of things,” Denise said.
This is sooooo true!
If i thought about what might happen to my toddler if I let her play in the street or drink bleach, I might close my front door — or lock up the poison in my house. No fun! If I worried about wrecking my car or killing someone else with it, it would stop me from drinking 5 margaritas before I got behind the wheel.
Don’t think about what can happen — it can stop you from doing a lot of things! Thanks, Denise! These are words of wisdom to live by. I’m sure everything will work out A-OK for you!
TheStar dot com | Business | California nightmare
California nightmare
ILLUSTRATION BY RAFFI ANDERIAN /TORONTO STAR
(Shows Ahnold’s image on CA state flag w/ hat in hand)
Jun 20, 2009 04:30 AM
David Olive
BUSINESS COLUMNIST
“Our wallet is empty, our bank is closed, and our credit is dried up,” Governor Arnold Schwarzenegger told a rare joint session of the California legislature early this month. “People are writing California off. They are talking about the end of the California dream.”
If only that was hyperbole.
California, home to 38 million people, or 13 per cent of Americans, faces a stunning $24.3 billion (U.S.) budget shortfall. The state controller, John Chiang, warned last week that California is “less than 50 days away from a meltdown in the state government.”
The Golden State will run out of cash to pay its bills by the end of July.
What?? Since when is $24B a lot of money?
C’mon California! Quitcherbitchin!
In all seriousness, does anyone expect the Feds to NOT give CA some taxpayer money? I say they cave…
RE: In all seriousness, does anyone expect the Feds to NOT give CA some taxpayer money? I say they cave…
Knustler says CA caves next month.
Terminator then meets the Narcisscist for Fed Monolopy money bail-out with 49 governors lined up right behind him.
Sounds like the perfect time for a “joint session” to me. I hear marijuana is supposed to help with anxiety.
Well this is a CA thread so here’s a story from the LA Times about celeb. house sales.
www dot latimes dot com/classified/realestate/news/la-hm-hotprop13-2009jun13,0,7101081.story
Actor Leonardo DiCaprio has sold a bluff-top contemporary in Malibu that had been listed at $7,999,000. . .
DiCaprio, 34, put the property on the market in mid-November. He purchased it for $6.35 million in 2007, according to public records.
Gee LA Times, who cares about the listing price. How about telling us the selling price?
Did Leo really think he could flip up $1.6 million from 2007 to 2009?
Drove out to the Subaru dealer on McDowel in Scottsdale AZ lots of empty car dealerships looked like the set of Omega Man the one with Charleton Heston, just empty.
It was like that at Earnhardt’s Nissan at Superstition Springs in Mesa on Saturday. I shudder to think what the guys on commish are going through. Well, actually I know, it’s called “not making any money”.
Knew someone who moved there from the Northwest for a job at one of those places… they’re back.
Next California bubble industry: Growing marijuana? It appears that taxing this sin could put a sizable dent into the budget hole.
Monday, June 22, 2009
Medical marijuana on a California high
The Los Angeles City Council has been working to close a loop-hole that has produced a medical marijuana boom. Lack of regulation and lots of demand has created a runaway refer industry in the Golden State. Jeff Tyler reports.
…
JEFF TYLER: In some Los Angeles neighborhoods, there are more medical marijuana dispensaries than there are Starbucks or McDonald’s. Most sell more varieties of weed than Baskin-Robbins has ice cream flavors.
City councilman Dennis Zine says calling it a boom is an understatement.
DENNIS Zine: It’s bigger than a boom. It’s a major explosion with these facilities opening up, and they’re opening up every single day in the city of Los Angeles.
At last count, there were 600 medical pot clinics in Los Angeles. That’s right — 600.
For many of them, the medical angle is nothing more than a pretext for selling dope. There’s a cottage industry for doctors who prescribe pot for conditions as ubiquitous as insomnia or stress. Zine says the city council is working on new regulations to crack down on these free-wheeling pot pharmacies. Many will be closed.
Zine: Oakland, for example, has four medicinal marijuana facilities. That’s easy to regulate and control. When you have 600, you can’t regulate and control. We will bring this down to a reasonable number.
While the city tries to curb the growth of pot clinics, the marijuana economy in California seemingly can’t be stopped. Nobody really knows what it’s worth. But some estimate that marijuana is a $14-billion industry in the state.
I think I am going to Oakland for that class on selling maryjane.
I need a different career. Would just love to help with rebuilding the golden state.
JK.
How’s the employment situation is Vegas?
More than 2,000 people seek work in housekeeping at Hard Rock Hotel fair
Hours before the Hard Rock Hotel’s two-day housekeeper job fair was scheduled to open Monday morning, Troy Pierre was putting the finishing touches on the outfit he would wear.
Pierre knew he was overqualified for housekeeping; he has a master’s degree from the University of New Orleans and management experience at a fuel distribution center in Iraq.
http://www.lvrj.com/business/48846067.html