March California Home Sales Fall 15%
The Californian realtors also have March numbers out. “The median price of an existing home in California increased 13 percent in March and sales decreased 15.1 percent compared with the same period a year ago, the California Association of Realtors reported today. Existing, single-family detached homes in March 2006 was 4.8 months, compared with 2.2 months (revised) for the same period a year ago.”
“‘The inventory of homes for sale fell from a 6.6 month supply in February to 4.8 months in March,’ said C.A.R. Chief Economist Leslie Appleton-Young. ‘Unsold inventory climbed significantly in the first two months of this year as listings increased and sales declined. Although the supply of homes for sale increased again in March, this was more than offset by a seasonal increase in sales, prompting a decrease in the unsold inventory index.’”
From Inman News. “Closed escrow sales of existing, single-family detached homes in California totaled 539,170 in March. Statewide home resale activity decreased from the 634,700 sales pace recorded in March 2005, the trade group reported. Condo sales dropped 23 percent from March 2005 to March 2006, while condo prices dropped 0.4 percent from February 2006.”
“Regionally, sales dropped 27.5 percent in the Orange County area from March 2005 to March 2006, 27.2 percent in the Sacramento area, 25.4 percent in the Monterey area, and 24 percent in the Central Valley area. Prices dropped in 11 of 20 regions from February to March, and year-over-year price appreciation in March was slowest in Northern Santa Barbara County area (1.6 percent).”
“‘March is the month in which we typically see the market gear up for peak season activity, and this year is no exception,’ said C.A.R. President Vince Malta.”
The Sacramento Journal. “Existing home sales fell 12.3 percent in the West during March compared to 12 months earlier, the NAR said Tuesday.”
“Meritage Homes Corp. today announced first-quarter results. Steven J. Hilton, Meritage CEO said, ‘Certain markets have softened in recent months. The change in first quarter primarily reflects a mix shift with more sales in Texas and fewer in California. The gains in Texas helped offset declines in Northern California and Phoenix, where speculative activity and high price appreciation in 2005 has recently contributed to higher-than-average cancellation rates.’”
‘Unsold inventory climbed significantly in the first two months of this year as listings increased and sales declined. Although the supply of homes for sale increased again in March’
So the inventory is still going up. Here is the link to the Dataquick numbers.
“‘The inventory of homes for sale fell from a 6.6 month supply in February to 4.8 months in March,’
I guess if you see this statement without any knowledge of what is actually happening it sounds like inventory is going down. Basically sales are falling off a cliff and inventory on the market increases each month. I am very interested to see how this inventory story plays out. If we see continued increases through the summer and fall, the months of supply will be anywhere from 9 to 14 months by the end of this year. I guess that is the really big question right now, how much more inventory is coming on line? Exactly how much speculation occured in California? What will be the number of foreclosures here? IMO we will have solid answers to these questions in about 18 to 24 months.
We’ve had pretty significant inventory increases here in Cali over the past year, but still healthy y-o-y price data. The stickiness of prices is quite extroardinary.
Some of that “stickiness” was predicted by most RE professionals who have experienced a downturn. It’s just the nature of the product. Homes are emotional and are usually attached to ones ego. I have some very intelligent reasonable homeowner friends that I can’t talk about the housing bubble with. It’s like me telling them they don’t have nearly as much money in their bank account as they think. As pointed out today on this blog that’s exactly what is going on with sellers right now. The inventories are increasing because sellers refuse to come down in price. They are taking it very personal. In essence their stubborness is only making things worse. With each increase in inventory the less that house is worth. Econ 101.
Sellers price expectations are on autopilot. They have hardwired into their brains the idea that they are entitled to 10% appreciation over last year’s price level. The homes that have sold represent the few remaining greater fools who are still qualified to buy. The next stage of the game will truly elicit the question: “Where have all the buyers gone?”
skipintro:
I agree, however as with any over supply demand price curve.
The higher the stickiness of price the fewer buyers at that level (demand). While th ehigher prices and seasonality should develop an avalanche of inventory. The economic laws of supply demand curve may have been temporarily revoked with “fiat currency” but this can only steepen the decent!
in Europe average sales prices and inventory have been showing healthy gains for some years already …
View from Silicon Valley has the sales numbers decreasing yoy, with sales prices still slowly climbing. California is typically known to be a big boom/bust state, but this time we might really outdo ourselves.
Perhaps the media price went up again due to all the appreciation in the exburbs over the last summer?
That should be median price, not media price. Also, open houses in my area around San Francisco are not exactly crowded. My wife and I are usually the only ones visiting the entire time we are there, and the realtor looks like a hybrid of boredom and hopefulness.
We obviously could afford the places we are looking at, but less obvious is the fact that we aren’t gullible.
“and the realtor looks like a hybrid of boredom and hopefulness.”
I wouldnt be surprised if this was all “window dressing” at quarter end. They take if off the market by the 30th and put it back on the 1st of the month new quarter. This would make the days on market smaller in prior quarter compared to actual if it wasnt relisted the following quarter.
I think we all read and/or witnessed this kind of actions by realtors. Gets the MLS fowled up and spits out numbers more favorable for CAR public relations.
Maybe.
We only look at open houses which we can walk to with our baby. The last one, was obviously a flipper house, owned for exactly 2 years, halfway through a bunch of remodels, with the hillside behind the house ready to slide at any moment…
I live in Glendale, Ca-Glendale,, Burbank, La Canada homes over a million dollars sell fast-$500,00 to $800,000 tend to linger on the market a long while. LaCrescenta, Tujunga, Sunland area listings have swelled like there is no tomorrow. Interesting enough, the majority in LaCrescenta, Tujunga, Sunland are not investor owned properties.
Teaser rates may have already started adjusting.
We are looking to purchase in Glendale (we sold in June 2005). Most of the homes we have made offers on ($1,000,000 and up) seem to be having trouble making the supplemental and regular property taxes. This is public information.
One home went into foreclosure 6 months after it was purchased for $1,040,000 with a whopping 5% down.
These lenders are going to take a bath. I know I should wait, however, it is difficult to live with my parents (even though it is rent free).
I am willing to take the loss because my wife and I do not plan to ever move.
Don’t be willing to take a loss ONLY A MATTER OF TIME . You never know when you might need to move .Its not going to take that long for the better deals to come up .
If you can afford a million dollar home why are you and your wife living with your parents? After 3 days of visiting my parents or in-laws I’m ready to head to the airport.
Actually, the maximum we can afford is $1.1 million. We sold in June 2005 thinking we would be here no more than 3 months including the close of escrow of our “new purchase.” The problem is that the rental market is very tight and we wanted the kids to finish school (even though it is private.). The prices went from being $950,000 (back in June)to $1,200,000 in one neigborhood we are looking at. The $1,200,000 needs a lot of work (3 bdrm. house with 3100 sq. ft. and no view-it does have a pool-however we may fill it because of our 3 year old.) We are thinking about making a $1,100,000 offer-however, the comp across the street sold in less than two weeks for $1,200,000-it was a smaller house however it was in better shape and had a view.
The rental market is tight in this area and the minimum lease is one year for a decent apartment.
I am waiting for one of my parents apartments to vacacate-however rent is low and of course they will not require a lease from me-it would be shame to kick someone out so we could move in.
“If you can afford a million dollar home ”
Bad logic, if you had a million you would be plump target for realtors. This was the case back in 1999 with all the stock options. Once the realtors find you work for Yahoo, it was easy pickens for them to spike the price even higher.
After all … You have a million dollars to blow.
What a buyer has $$$ and value of property are two exclusive factors. Its in the buyers best interest to minimize your costs.
I am a broker-I received my sales agent license at the age of 19 (I am 36 years old)and my wife is an agent as well. By the way, we are not that greedy as well. We actually had 2 different agents make offers for us on their own listings.
For those of you who do not understand why-allow me to explain. Sometimes, and there are quite a few in this area-they will not put a well priced property in the MLS because they want to make the full commission. The going rate for a listing agent now a days is between 1 and 2 percent. Rather than split the full commission with the buying agent (usually between 2 to 3 perent)-they try to sell the property themselves through ads, open houses, web sites, etc. and keep the full commission. I did make an offer on a house and of course knew I would get no commission. It didn’t work out thought.
Now that you have told us that you are a broker I think you should buy. Don’t wait another day or you will be priced out. For $1.1M, you are looking at $220k down, $5562/mo in mortgage at 6.5% for 30 years + $1145/mo in taxes (conservatively set at 1.25%) for a total of $6707/mo. This same house would probably rent at $3000/mo. I think it’s a really wise decision to buy. You know… it’s a big TRACT home with 3000+ sf of living space and even comes with a small yard all for $1.1M. Where is this house? Glendale..wow!
OK, Now that you came clean with the “profession”, it all makes sense. I think you know best. CA isn’t making any more land. You really need to buy right now… bagholder.
Bwaahhhaaaaa I was waiting for that. Only-A-Matter-Of-Time you should have kept that tidbit to yourself. Folks round here don’t like our kind. Your going to get very little sympathy talking about buying a million dollar house. Especially when us Brokers are only high school educated hooligans making over 6 digits a yr. I guess since we didn’t attend 4 to 6 yrs of college we are only entitled to be dishwashers and retail clerks scraping by on minium wage. Bwaahaha
You guys are amazing. Just because my wife and I have licenses does not me we actually practice. As a matter of fact, I have told me exactly what I have preached, and that is unless this is going to be your absolute last and dream hom, do not buy now.
Do any of you honestly think that I would spend that much money if my income was dependant on being in real estate. Don’t get me wrong, it is a good “side” profession (with the exception of the last 4 years of course), however, assumptions as in the movie “Under Siege” is the Mother of all F#$K Ups.
You guys are assuming this about me. Does that mean I can assume that anyone who is on this blog prays every day and night for a housing disaster?
Of course not. Read the history books and find out that the Depression in the 30’s was not immune to certain industries-it hit everyone hard. I hope that is not the case so that everyone can purchase a house pennies on the $.
FWIW…it’s better to pay rent for a while in your own place then to catch a falling knife. Be patient, the discounting has just begun. If you can control your inclination to buy for at least 18 months, you’ll be amazed at what your $$$ will buy…so, if living with the parents is getting old, please consider renting and waiting. FWIW, like I said. I just hate to see people buy now…it’s stupid.
I am willing to take the loss because my wife and I do not plan to ever move.
How often do people really ever plan on moving?
I just want this to be the last house.
You’re willing to lose 3 to 500K? Or are you thinking that it will go up again in long run? Maybe so, but your career (or hers) better not take you to another city in the next 5 to ten years.
Let’s see… a 40% decline on a $1M house is a $400,000 LOSS. That’s real $$$$. Now, in a sane world, think about just how long it might take to save up $400,000 i today’s dollars. The truth is, given the inability of Americans to save even 5% for downpayments, if you’re an average person, the answer to that question is NEVER.
The financial hardships and discouragement may lead to a divorce, credit crushed and worse. This will be the very biggest mistake you’ll ever make…
The loss you’re taking is not theoretical just because you’re not going to sell. If you pay $200,000 too much for the house, you’ll wind up paying roughly $600,000 more over the life of the loan than you would have otherwise. A steep price to pay compared to ponying up some money to break a lease midway through the year.
Don’t forget about the higher property taxes…not to be taken lightly when talking these type of house prices. But hey, let him do what he wants, he may be independently wealthy and all of our typical blogger concerns regarding finances are n/a to his situation. He indicated his parents own apartments, so maybe he has a big inheiritance waiting for him him down the road.
John in VA,
Thank you. Well said. Even if he had the cash to buy it out right that is 200, 400, 500K he could have invested elsewhere. Realtors get to the point of buying their own trash and that’s how this bubble really took off! Buy now b/c rates are low! Well, I can ALWAYS re-negotiate the loan down the road. It’s a little difficult to re-negotiate the price after 4 or 5 years. Any price increases we see now (however exclusive the area) are simply dead cat bounces. Btw, I’m no expert in CA RE law but don’t you have to be at least 21 years old to get a realtors license? Or or we taking them fresh out of high school now?
Isn’t a short sale re-negotiating the price down the road?
That sounds like a bad idea. Neighborhoods can change, circumstances can change, and you may feel you have to move. We could be in for some very difficult economic times ahead, so why are you willing to put yourself at an immediate disadvantage by overpaying for a hot asset?
Deflation is not ruled out, even though just about everyone thinks this is the 1970’s all over again and we are headed for higher and higher inflation. In a deflation, your debt is going to feel like much much more than it is. In a true inflation, it would make sense to take on debt which can be paid back with inflated dollars. But that is not the case now.
Choosing to take a loss is always bad. Think about it for a bit, and you’ll understand why.
Absolutely be patient…
I have a friend living in the San Clemente area of Orange County. He is leasing a large brand new never lived home for the cost of property taxes… Prior location his back yard backed up on a Bluff above Hyway 1… If deals like this are available for his family i am sure you can do better…. Then you can bank the monthly P & I for a large better and soon to be discounted McMansion..
What ever you decide I think a delay through September will pay handsomely….Let’s see how the MAY day boycott work stopaage goes down………..Prediction, govt. is forcing a division of parties and people..intenitionally in my opinion.
When the economy rolls over the lower class will be in an up roar. Gang activity will go through the roof. I hope you speak Spanish, have a discount on house bars, and like smog. I can not imagine planning too spend a million dollars too live in Glendale for the rest of my life. LA is just going too get worse and worse. You remind me of someone that is warned about a hurricaine and yet buys a boat in the marina because all will work out. Wait until after the storm my friend.
In 1999 Lennar Homes opened a new McMansion development in the hills of Burbank called Hallston. The homes topped out around $900K. In the course of conversation, a sales agent made the statement that “Burbank would never support million dollar houses”.
Now, 7 years later, every moderately sized dump along the hills is over a mil, and the Hallston homes are now pushing 2 million.
IMHO, Burbank (and Glendale) will suffer a very mean reversion.
Thats why the median price is going up because the higher priced homes are selling for some reason .
I believe you have a valid point-in my neck of the woods anyway.
Also, maybe you don’t need to move in the next 10 years so it doesn’t matter. You could then sell on the next upswing if you had to. But what happens if you need to sell in 15 or 20 years, and the market has bottomed again? At that point you may still lose a bunch of $$$. A friend of mine bought at the peak the last time (’92 ish) in LA. He has been losing money since then but held on. (He actually does a lot of real estate, by the way, but made a mistake way back then.) Only last year could he sell and finally get his $$$ back and not have a loss. But he decided to hold on because managing the rentals gives him something to do and he’s retired now so he likes that. If he sold at this point he will finally get his money back. If the market drops, he will still lose money even after all this time. So, in other words, unless you have a great ability to predict your life 15 to 20 years out you might want to think more carefully about this. It would really be very depressing to have this hanging over your head unnecessarily.
I’ll bet you its sort-of the opposite. I’d guess that lower priced homes, which are typically purchased by less-”qualified” buyers, are selling less frequently as it gets more difficult to quality for a loan. Until something in the economy changes, credit the only variable that can crack this bubble on its own. (IMHO)
correction: …credit, or the lack thereof
I suspect that this is because there are people who have lived in their houses for 8 years or more that have significant equity gains who are trading up. Even if the house that they’re selling has come down 5% from its peak price last year, if they’re buying a more expensive home the Aveage price goes up.
I follow closely La Canada. Inventory of SFH (per Ziprealty) has gone from 35 (2/11/06) to 55 (this morning). Sales within 1 mile of a given address (I could give it if I looked my data, per LA county assesor) have gone from 10-15 per month (for the previous two years), down to 1-2-3 in December, January, Feb and March (and this big drop is not only seasonal). If this is not a cooling market …
Your point is well taken. I believe the reason Ziprealty.com shows a higher count of available properties than the MLS is because they take into count the properties that show as “back up offers.”
True, LaCanada does have more inventory today than about 3 weeks ago, however, the prices are about 25% higher than 6 months ago. I have family who live there. One person just paid about 3 million dollars for a house that he is getting ready to tear down (I believe he will put 2 houses on that lot). This is across the street from my one Uncle.
Another Uncle is considering purchasing a $6,000,000 (Thats right, six million dollar house there). This is kind of L.A. countys’ answer to Santa Barbara-extremely rich people who like to live sort of under cover.
I posted earlier that perhaps you are wealthy and not in the same frame of a “down-to-earth fiscal responsibility” mindset as the rest of us on this blog. This is somewhat confirmed by you talking about your uncle and his $6M home, etc. Cr@p, that would be a minimum $60,000 a year just in property tax, let alone upkeep maintenance costs, etc. Go ahead and buy your 1.1M house regardless of the current market. I am counting on folks like you who will be willing to walk with a 200 - 300K loss on a future home sale as if it’s nothing, next year as prices start sliding. The “regular” folks that can’t afford a loss will be stuck…house poor, and be eating rice and beans. I saw it all happen 15 years ago…and it will happen again.
What do you think about the number of houses sold per month I (actually the LA county assesor) reported? It is the same for Altadena and Pasadena (91104). I think that for whatever reason (higher rates, more comon press coverage of the bubble), people now really think twice before buying.
In the $1M range, I have seen in La Canada houses that are priced very differently: some to sell, other grossly priced. One flipper just came out trying to sell for $1.45 M after buying in Feb for $1.1M.
I also saw in Ziprealty many reduced prices.
I know this is obvious to everyone here, but these prices are truly mind-boggling…
What the heck has happened to everyone, how can they sleep at all at night with a $900,000 mortgage?
I know. It’s crazy. I really don’t get it anymore. But then again, a lot of people run around with 10, 15, 20K in revolving credit card debt and only occassionally consider the implications. I’m talking about people who make less than $50K a year too. There needs to be credit event to shake that mindset because it’s not healthy.
My wife and I make over 150k per year and have no debt. We have around 200k cash in savings with some fun money in metals and riskier investments. We rent.
I would love to buy a nice house so I can pile my crap into it and paint the walls my favorite colors but we continue to wait.
A few nights ago , I asked the wife if I might spend some cash on a new toy. Her response? ” We live paycheck to paycheck! There is no way you can go spend $xxxxx on your self.”
You’d think we were raised during the depression.
I hear stories from friends and co workers about their CC debt and mortgages and it makes my blood run cold. I guess I am a coward.
Don’t let go of that babe. She is a jewel. Tell me, how much CC debt on average are your friends carrying, how old are they and what do you suppose they make a year? Yep, doing a little study here. Thank you.
I have 1 income and end up saving more than my friends that have 2 incomes in the house.
I like to live by these words - It’s not how much you make, it’s how much you save.
I agree. Keep her!
I don’t see how these people making 100-200k/year can possibly sleep at night with a million dollar mortgage. I even hear people on this blog say “well if you make 200k/yr you can do it”, but that’s still 5 x your salary! After income taxes and all the rest, it doesn’t leave much left over for a $6500/month mortgage!
Heck, we make more than that, and there’s no question that a million dollar mortgage would make me defer my retirement and a whole lot of other goals (travel, sending future kids to college, not stressing about money, etc)
Which is why we moved to Mpls… our salary stretches a LOTTTTTTT further here, and luckily our salaries are higher here than they were in SD.
Yikes!
Clouseau
Same situation here. We make around $300K/year and most of our friends probably think we’re semi-poor. We drive 5 yr-old cars that are paid off, we have one TV in the house (ordinary type), and we don’t buy tons of consumer crap. Our one indulgence is groceries - we eat well. We could buy a big, flashy McMansion if we wanted to impress our friends and family, but it doesn’t make any sense. We save about $100K/year and I still worry about having enough retirement savings (about 20 years off). For the life of me, I can’t understand how people could be so unconcerned about their financial futures. I expect that a comfortable retirement is going to require at least $2 million in savings in today’s dollars. Couples in their 30s and 40s that have saved nothing are going to be in for 20-30 years of poverty after retirement. I think that maybe 1% of the population understands this.
To Jack, I honestly couldn’t offer any details about our friends specific situations. The stories are mostly of CC debt 6k to 20k, student loans 10k to 100k and houses bought with I/O, Arms and Option Arms. You know the rest - sleepless nights and phone calls to mom and dad for ” walking around money.”
My friends — mid 30s — make from 50K to 200K a year in a major metro area. They are either way in debt (@8K-20K total on regular credit card and store cards, plus student loans) living paycheck-to-paycheck, or frugal (no CC debt, some with mortgages paid off, cash in the bank, retirement investments).
One friend paid off her undergrad, grad, and law school loans in about three years, often tussles with her husband over the expensive toys he wants to buy (she usually wins), and gets her books at the library. Another friend, in a very glamorous & well-paying profession, owes the gov’t about 20K in back taxes, is always two months behind on the rent, and I don’t want to ask about CC debt; she always cries poor, then tells me about her summer house share.
One thing I noticed: my prudent friends came from stable family backgrounds, my imprudent friends came from really chaotic/impoverished ones.
Real estate blues: I’m single, but a married friend pointed out that even if both members of a couple are thrifty moneysavers, who want to save x amount per month, there are still differences in exactly what they want to spend their disposable income on. Just like the government, sometimes it’s easier to buy bread AND circuses than to fight about which one is more important.
Sounds like my family. We make a lot, save some, but we pay a ton on rent as well. My wife was appalled that I wanted to buy a new Mac for $2k to replace our 1999 model, even though that’s like two days’ worth of income. It really does seem like we live paycheck to paycheck.
And it’s not like we can sit around feeling superior to others either — a few of our friends are leveraged to the hilt, but many others bought houses four or five years ago and will come out way ahead of us even if the market craters. It doesn’t always pay to be cautious, but I reckon it probably will over the next 3 or 4 years.
Hehehe
LowTenant:
I think we’d be great friends.
For my birthday LAST SEPTEMBER I decided that I was going to finally cave in and get an iPod. Here we are 7 months later and I STILL haven’t gone to get the darn thing! I just can’t see paying $250 for what is essentially a fancy walkman! (*yes, I know how great they are, wife has one already… I’m now paralyzed between the iPod video-don’t care about the video but like the storage space- or the iPod nano, which is so much more portable)
Clouseau
ok… I admit. I can’t live without my ipod. First my company downloaded itunes on my work computer for me… and I found that I just stayed at work longer because I liked the music so much better than in the car on the ride home. Even my custom made cd’s couldn’t compete with the itunes on the computer. So I did break down and buy the ipod with the itrip three months and many many hours at the office later, and can’t live without it. Haven’t listened to the radio in almost a year. Don’t even remember the names of the stations.
My god I didn’t think people existed like that any more. I wash out and reuse plastic zip lok bags, does she? And I’m not from the Great Depression era, I’m the tail end of the baby boom.
“I wash out and reuse plastic zip lok bags, does she? ”
What else does one do with ziploc bags?
We have those Glad tupperware things that are supposedly disposable after one use. We’ve had them now for about 2 years. (same ones… we just wash them). Why do people throw those out? I’ve used the same plastic bag from a supermarket to bring my homemade lunch to work for about 2 months now. It’s starting to get a hole, so I’ll go get another plastic bag from the supermarket. And lastly, I reuse all my old yoghurt containers too.
I’m both saddened and also happy to know that IN THE FUTURE, the majority of Americans will revert to the “shameful and primitive” old ways of conservation. Happy, because we throw too much damn stuff away… sad, because the change will only come due to desperation and brutal economic necessity. But what does one expect when you build a society built on consumption disposability? Or one built on irresponsible extension of credit?
clouseau
Ha Ha!
I told my wife that we are frugal, and not cheap (English is her second language). We also - sometimes- rinse and reuse ziplocs. And we also have the same set of ziploc “disposable” containers for the last 2 years. We haven’t even used every one in the original container yet!
The cowards are the stupid people running with the herd. You two are the opposite.
…event to shake that mindset because it’s not healthy.
I believe those mindsets exist because of a stunning
lack of financial / math skills by the general population.
I am not even talking about basic arithmetic skills such
as how to calculate principle, interest, present value,
future value, discounts, etc.
What I am talking about is an incredible lack
of understanding of fundamental money
management concepts.
I believe that many money lenders take full advantage of this
unfortunate fact. That, in conjunction with our cultures
need for instant gratification, plus plain old greed
will force many into a life of endless financial slavery.
During the past 6 months median price for the Santa Barbara South Coast has been less than or equal to 1.2 million. The 6 months prior to that the median price was above 1.2 million with a peak in September at 1.47 million.
Sounds like it’s finally (finally…) topping out around here. Let’s hope this starts the shakeout of the speculators and brings prices back to some sense of reasonableness. Otherwise, there’ll be no middle class members under 45 years old left here.
I would like to know who are all these people making ALL this money? I am a MD and my wife is an attorney, and we are scratching our heads people are buying $2M plus homes. I guess if you make $400K-500K that is chump change these day? sheesh!
I remember a friend from NYC visiting West LA who once told me “California has no yuppies. Yuppies are people who make lots of money!” I told him I thought yuppies didn’t have to make a lot, but they had to SPEND a lot. The savings rate is negative for the first time since the Great Depression. The absurd consumer credit bubble will hurt a lot of folks, and those of us who have been responsible will end up contributing to the bail out, as angry as the thought makes me I know it will happen.
…but I thought it was all the wealthy Google employees with their stock options and rich foreigners from asia…(I’m being sarcastic)
You are in the wrong professiong Bear. All the real money is in RE! Mtg brokers and Real-Whores are making 7 figures! All of this with NO barriers to entry - I guess an 8 hour course is significant for some people.
Soon an education will matter again.
When I was younger, I was spending like crazy or so I told my parents. (What did I know then). Anyways, my father finally asked me what I was buying because he never saw me with anything new or expensive. I innocently said, “State of … General Obligation Bonds.” It was then he explained to me that I was spending but saving.
I was wondering the same thing. One of the previous posters on this blog said he and his wife have a combined income of $300K. What the heck do they do? Statistically speaking they would be in about the top 3% of wage earners in the U.S. I’m making about 120K this year after 25 years on the job (B.S., M.S.) and feel VERY fortunate. My wife is a stay and home mom and I still save about 20% of my gross income (and drive a Jag and Volvo, with NO credit debt…though the Volvo is a lease). I couldn’t imagine what it would be like with $300K a year. Our country is really splitting into the haves and have nots. I am very concerned that we will be just like Latin America in about 20 years with a small percentage of the population being very rich and the rest in poverty. If you don’t come from one of the ruling rich families, a college education and professional job will only get you what we currently call lower middle class It is a scary prospect. I’m not for a socialist system, but our system is breaking.
I agree completely!
I think that’ll be one of my next topics for research…the gap between wealthy and not and how to address it. Anyone have any title recommendations?
A major reason for the great depression was the polarization of wealth in the 1920’s. The assets of the rich are related to the debts of the poor. At some stage the poor are forced to liquidate their debt via foreclosure and bankruptcy. This destroys a large segment of even the wealthy’s percieved bottom line for they indirectly or directly hold the lien. Fear is the emotion that destroys wealth. A mistake a lot of people are making is too think that the money will shift to another asset class. A small amount may. At some stage fear destroys wealth. An example would be a stock opening down 50%. The wealth is gone. It did not go into another asset. Realestatee that finally lets an investor out 50% below current market levels accomplishes the same thing. Minority money movements cause the creation and destruction of wealth.
The economy if it slides into depression will help to level the playing field but at a terrible cost. In the aftermath, expect much higher income tax rates as the government attempts too transfer funds from the wealthy to the poor. Roosevelt and the 30’s would be the model.
Also November 2004 had a higher median price than March 2006 in Santa Barbara South Coast.
Also a co-worker just told me today that their friend is paying the same price for rent that I paid 6 years ago for a place in Santa Barbara.
Although the supply of homes for sale increased again in March, this was more than offset by a seasonal increase in sales, prompting a decrease in the unsold inventory index.’”
___________________________________
Does anyone agree with this??????
That’s crazy talk! WTF???
Seasonally adjusted sales fell, but raw sales rose quite a lot, just not as much as usual. So inventory measured in Months of Sales went down, even though the actual number of houses for sale went up about 20%.
Yes, there is a seasonal pop, but it’s much smaller than usual and the bubbly areas are imploding and rates are going up. Nationwide, the # of mortgage applications was up slightly after Easter: http://www.mortgagenewsdaily.com/452006_Mortgage_Rates.asp
The median prices increasing represent more high end stuff selling. Rich people don’t have to worry about the price of gas or rates going up as much as say the 92% of Californians who have been priced OUT of the market.
The end is near. Just be patient.
strange that rich people would hurry now to buy an expensive home just before the real decline starts; doesn’t make sense to me …
As far as I know the really rich significantly DEcreased their RE investments in the last years, both in Europe and the US.
however, it looks similar to what is happening in Europe: relatively more transactions for expensive homes are pushing up the averages. Maybe there are bigger discounts lately on expensive homes? Or maybe these people hurry to get a maximum tax deduction and/or lock in the relatively low mortgage rates? (in the Netherlands this is a factor for sure)
This ‘data’ is so mixed with YOY and MOM inserts it’s almost meaningless. My read is the 6.6 February figure is YOY; it’s also YOY for March said to be 4.8. But they are displayed side by side, as if the decrease in inventory is MOM. It’s a useless comparison, good only to blow air in a bubble.
Actually, I think the NAR underestimates inventory. The internet has become a major factor since the last bubble implosion and I think a greater percentage of owners try to sell by owner now than during the 90s. I think their inventory should be called “MLS inventory,” referring to the database that represents the ONLY reason to use a realtor.
If you were an flipper and appreciation had stopped since you bought, would you want to give up commission? I think you’re right, FSBO may be more common than we realize. Are there reliable sources of info out there?
One of these bubble blogs tracks the number of Craigs List posts in different cities. Can’t remember which.
Well, the NAR supply looks at how long it would take to burn inventory at the current pace, and the supply is growing. So, the NAR supply is, in itself a ratio that accounts for buying activity.
My view is that even though in some areas buying has gone up, inventory is coming on line even faster.
BubbleTrack.blogspot.com
If you want conspiracy, try this… NAR uses last month’s inventory with this months sales rates. Their logic being, that a buyer this month couldn’t buy a listing that doesn’t exist? Is this too paranoid?
I feel like some character in an Orwell novel when I read things such as “even though the supply of homes has gone up in the last month, the months of supply of homes has actually dropped.”
How do they come up with this “seasonal adjustment” and these “indexes?” Do they look at the month with the highest number of sales in history and quote that as the standard?
Why is there zero transparency here? I’m thinking we’ll have an SEC type government entity to govern the real estate industry after all of this shakes out and all of their shenanigans are revealed.
That will be one happy day. They fudge the numbers all over the place. Someone posted here before that the prices were off from what was reported to the mls versus the tax accessor.
Lots of scamming going on.
Agreed. Things stopped in San Diego back in the summer of 2004 (when I sold), and any sales have no doubt involved huge seller givebacks, and I believe that sales prices are bogus, along with the number of homes sold. I bought in 96 at the bottom and I thought the numbers were cooked even back then. Agents have a vested interest in lying.
I take it to mean that more houses were newly listed than last month, but sales were even higher than that, so inventory ended up slightly less as a consequence.
Months of Inventory is Inventory divided by sales.
If you have 10 houses for sale and one sale in the month, then the months supply of inventory is 10 months. Now if the inventory doubles to 20, but the sales triple to 3, then the months supply drops to 6.6, even though the inventory problem has gotten worse.
Read about Huge incentives offered by Shea
.
“In observance of its 125th anniversary in the building industry, Shea Homes is offering a celebration savings package in which buyers can save as much as $75,000 on selected homes at Bridgeway Lakes in West Sacramento.”
Why don’t they tell the truth? Since the market sucks right now, we have to move these homes. Price reduction!!!
Great one
Prices in the OC still are going up despite a 72% increase in inventories since 1/1/06 and a 27% Y/Y drop in single family home sales. The data is lagging by 2 months on the existing home sales. I wonder what sales activity and pricing of those homes that are being sold today is.
I found this on patrick, its somebody chewing out the OC Register reporting on RE, here is a portion of a letter;
“Historically, price depreciation has lagged the slowdown in sales by approximately six months (prices are already falling in my neighborhood as sales slowed down last fall). In Huntington Harbor (92649), we have seen ten times the inventory of any time over the past few years and nothing, “I repeat nothing” is selling. As far as prices still appreciating, that is very misleading as well. While prices might be up over the same period 12 months ago, the “price reduction and “reduced” signs tell a very different story over the past six months. Prices peaked last fall and are definitely on their way down. You are never going to hear that from realtors but that is the reality as you canvas the neighborhoods. Misleading the public with biased data from realtors is unfortunate for you and the consumers you report to. I have walked into several open houses where the asking price was at the last comp but the agent indicated that the seller was highly motivated and would accept offers significantly lower. In one case the agent was willing to present an offer nearly 30% below the asking price and thought it might be feasible”
A neighbor in my area was offered full price by an investor if he would sign an agreement to show the home sold for much higher on the MLS. I’m not sure about the details, but he thought it was “seedy” and turned the offer down. There must be more to the story, but we’ve seen several homes go that way…
What happens is one of two things or both.
This investor shows a higher price to the bank and the bank give a loan on that higher price. Your neighbor credits basically the entire downpayment through escrow-however, the bank is never told about this credit. Thus, the investor goes in virtually no money down.
Simple example:
Purchase price is $100,000
The investor will show the contract for $120,000 with an addemdum page of $20,000 to be credited at the end of closing by the seller.
The bank never sees the addendum page for the $20,000 credit (yes, escrow company is in on it as well). The bank gives a total loan of $100,00 thinking that the purchase price is $120,000 with $20,000.00 down.
Basically, the bank is “duped” because the investor has gone in no money down-(a.k.a. no risk).
The second reason is that this investor finds other investors and shows them that he is actually purchasing the property for $120,000 and making them un-aware of that credit. They think it must be a great deal and get involved as well. Thus, this investor has just basically resold the property (kind of a double escrow) for $20,000.00 more than what he purchased it for.
This is the oldest trick in the book. My brother almost fell for it when he just got out of high school. I almost had to beat him up before he started asking the questions that I told him to ask. As you can imagine, my brother and his “friend” who tried to screw him were no long friends.
New home sales report will be out soon. That’s the real one that will drive the markets, not the NAR report. Home sales reports from the NAR are like global warming studies by Exxon scientists.
The biggest thing I expect to differ with NAR tomorrow is higher inventory and lower sales. It looks like the pricing data will be close.
One thing we did mention in our post today is that even though NAR has revised almost all of their numbers, they do not post long-term historical data. So we went from having years of valid NAR data to only 12 months. Interesting timing, don’t you think?
BubbleTrack.blogspot.com
Similar to not reporting growth in M3 anymore by the FED. What say?
Read about California Layoffs .
WARNING PDF FILE….
So when Cabo Yachts, Inc. lay off 400 employees in San Bernardino - is that mean the glut is done? Lots of people being given their pink slips in the OC area, that’s for sure.
Yes i think that is major. If you look at the list it is highend grocers, fast cars and mortgage companies.
What troubled me is why hospitals? Don’t they have a shortage?
Hospitals may have personnel shortages, but they can’t afford the operational expenses due to being forced to treat all the illegals and other uninsured or unable to pay patients that walk in off the street. SoCal has lost a lot of trauma centers due to this reason.
Noticed the list of Mortgage, finance co’s……
Wow, what a depressing list of layoffs. 68% of these people are probably paying a mortgage…
“The IRF’s 2006 Spring Real Estate Symposium, “The Housing Bust: How Soon? How Bad?”, featuring Dr. Barton Smith is SOLD OUT.
If you would like to be put on a waiting list, please call Patsy Woods at the IRF office - 713-743-3869.”
Wow, the book is sold out….hehehehe
Read about Solid growth continues.
“There’s a remote chance that the unwinding of the housing boom will end badly with panic selling,” said Portland economist Bill Conerly. “But, right now, that looks pretty remote. The underlying economy is still growing.”
Clark County saw a decline of nearly 10 percent in home sales from January through March and a 22.5 percent drop in single-family home-building permits.
By comparison, homes sales nationally are down about 7 percent from 2005.”
“There’s a remote chance that the unwinding of the housing boom will end badly with panic selling,” said Portland economist Bill Conerly. “But, right now, that looks pretty remote. The underlying economy is still growing.”
Translation to J6P language - COVER YOUR AZZES!
Did anyone else see this today? A 72% rise in foreclosures would be a huge jump in a recession — to see something like this in an expanding economy is unheard of. The tsunami of ARM resets has officially arrived and will continue to wash FBs out to sea over the next few years.
Home Foreclosures Increase 72%
Bloomberg News
Published April 25, 2006
IRVINE, Calif. — Mortgages entering foreclosure jumped 72 percent during the first quarter from a year earlier, as higher interest rates increased monthly payments and strained the budgets of homeowners with adjustable-rate loans.
Lenders began foreclosing on 323,102 mortgages, a ratio of one in 358 U.S. households, according to a report issued Monday by RealtyTrac Inc. Banks typically start foreclosing on mortgages after payments are 90 days late.
“When you couple the higher bills that people with adjustable loans saw with the higher-than-expected energy costs, you see a lot of homeowners stretched beyond the point where they could make their payments,” said Rick Sharga, a RealtyTrac vice president.
Homeowners who would otherwise sell their houses to pay off their loans face a weaker market, he said.
Sales of existing homes fell to 6.71 million at an annualized rate in the first quarter from 6.94 million in the last three months of 2005, according to Fannie Mae, the nation’s largest mortgage buyer.
Isn’t that incredible. Did not hit the media did it
Damn media, it’s all their fault.
The only place I saw it in the mainstream press was the Chicago Tribune.
O.C. homes cost triple the U.S. median
Just how high are Orange County home prices? Well, according to the latest Realtor data, you could buy 3.3 homes at the nationwide median price for one typical home in The O.C.
For March, the Realtors pegged the median selling price of an O.C. single-family house at $717,320 — up 7.5% in a year. (REPORT HERE) Nationally, it’s only $218,000 — up 7.4% in a year. (REPORT HERE)
Do the math and you get O.C. living at 3.3 times the U.S. rate. This price ratio’s fluctuated over the years. It hit 2.7 in 1989 — our previous boom, then fell to 1.85 in 1996 — just before the current rally started.
I saw that and posted. It’s almost here
As of the 2000 census:
“The median income for a household in the county was $58,820, and the median income for a family was $64,611. ” I can’t imagine it’s much higher than that now. Even at $80K, you’d be looking at nine times the median income for the median-priced home.
Not everyting in O.C. costs that much. Here’s a nice starter home in OC for just 200k. http://overvalued.blogspot.com/2006/04/recreational-vehicle-conversions.html#links
Read about They had a plan, then reality intruded.
“The house is now listed for $629,000, and if it sells for that, each partner will pocket just $5,000.”
Do you guys remember sitting pretty? Interesting story.
O.C. affordability could be worse (another from Lansner’s blog)
No doubt it’s tough to buy a place in The O.C. But one consultant’s math suggests, on a historic basis, it’s even worse elsewhere.
A monthly analysis by John Burns of Irvine put O.C. affordability at 9.4 on his Housing Cycle Barometer that “scores each market based on its own history of affordability. A score of 0 means a market is the most affordable it has ever been in relation to incomes. A score of 5 indicates median affordability and a score of 10 indicates that the market is more expensive than ever before.”
While O.C.’s 9.4 is high, 23 other markets topped us:
California: El Centro (10), LA (9.8), Modesto (10), Napa (9.8), Inland-Empire (9.5), Salinas (10).
Delaware: Wilmington (10)
Florida: Ft. Lauderdale (10), Ft. Myers (10), Miami (10), Punta Gorda (10)
Illinois: Kankakee (9.6)
Maryland: Baltimore (10), Hagerstown (9.5)
Massachusetts: Boston (9.9)
Michigan: Bay City (9.6), Niles (10), Saginaw (10)
New Jersey: Edison (10)
New York: Nassau (10), New York (10)
Pennsylvania: Allentown (9.9)
Washington: Seattle (9.8)
By the way, according to Burns (MORE INFO HERE), the most affordable? Akron, Ohio, at 0.2!
Dice still tumbling in housing market, from OC Register
http://tinyurl.com/r4hek
When: 1926
Where: Florida
“The amount the market declined from peak to bottom: Land that could be bought for $800,000 could, within a year, be resold for $4 million before crashing back down to pre-boom levels. The prices were so inflated that to buy a condo-style property in 1926, you would’ve had to pay the same as you would now have to pay for a luxury home in the guard-gated communities in Miami ($4,500,000)–without adjusting for inflation!”
Isn’t this hard to comprehend? Mind you this is in 1926!!!
Mission Viejo home still on market after 5 months; another one from the OC Register
http://tinyurl.com/nxmy4
“We don’t know how long it will take. We’re hoping (it sells) soon.”
——————————
Lower the price you stupid twat lol. Seriously….1400 sqf for 700K. Get real !!
Question for nhz
You said that in Europe they hand out mortgages to people for the expressed purpose of buying homes in a foreign country, and you even mentioned Turkey as a case in point.
Is this true? Where can I find more about this? Here in Argentina, I have recently read that 30% of high class apartments are being bought by foreigners, especially Spanish. Real estate here is completely out of control. By my estimates, in Buenos Aires the price to income ratio is 7, and it used to be 2-3 normally.
There is a massive expatriate movement to South and Central America right now. There’s a big article in today’s Washington Post about US people moving to Buenos Aires, and the first thing they want to do is buy, buy, buy real estate. I’m told that in San Miguel, which is in central Mexico, quite modest homes are going for seven figures — in Mexico! Where who knows what the next government will do!
From the article it doesn’t appear that there’s a big influx of US people into Argentina. It said they are 23,000. Back in the go-go 90’s, there were 30,000-50,000 people from the US, and you could find almost any kind of person on the street, Russians, Nigerians, Venezuelans, Dominicans, etc. These latter groups disappeared in the blink of an eye when our country crashed in 2001.
I just bought a place in the San Telmo area for $60,000. I will also buy in Montevideo next month. I sold my property in Camarillo, California for a big profit back in June 05. I cannot afford to retire in California but I can in BA or Uruguay. Most Americans know nothing of this part of the world and think it is like Mexico. Anyone who traveled to Argentina knows what a bargain the place is. The US has a similar debt ratio to what Argentina had when it went under. I am taking most of my money out of the US$ because it will go down in spite of looking so good now. When the real estate market bottoms early-mid 07 the dollar will also devaluate. This country cannot sustain earning one $ and spending two. If we have a 3rd war going this time with Iran we are in deep sh** and it looks more likely everyday. So a move south is where I am going. And Argentina is more European than California and five times cheaper.
I’ve been visiting Argentina for 25 years. In fact, I was planning to retire there as my best friend lived in Buenos Aires (Olivos). But then she died young last year, and now I am hesitant to make such a big move although I have other friends there. I don’t really like BA — too big, too messy, too much traffic, etc. What other cities in Argentina do you think are good places to consider? I may go down there again later this year and buy some property. I’ve heard Americans are moving to Bariloche. I have not been to Montevideo and prefer to stay in Argentina since I know it better. Thanks for any advice. Can you describe the place you bought in San Telmo?
Bariloche is arguably the best place you could pick in Argentina. Very smart. In the words of Swiss tourists, it’s just like the Alps, but cleaner and less crowded. Another beautiful place is Mar del Plata. By the ocean, cool climate (gets pretty cold in winter but nothing serious). Buenos Aires is a nice place to visit but you wouldn’t want to live there. Unless maybe if you live in the exclusive parts to the north of the city, like Olivos, San Isidro and San Fernando. It was once ranked as the noisiest city in the world by the UN.
It’s a no brainer, really. Bariloche, hands down.
Thanks. I’ve only been to Bariloche once but I will try to visit again this year.
Agreed, Bs. Aires is unbelievably NOISY! I’ve stayed in a friend’s apartment near Ricoletta and day and night there is street noise PLUS constant renovation in their building, the buildings around them and stuff breaking (e.g. plumbing) all the time.
i have a friend in mar del plata. she’s the sweetest chick ever. it’s a great town
Yes, it is a loft apartment single story building 105 years old and completely renovated. New kitchen, new shower, new electric, new loft. Similar lofts in say NY would sell for $700,000. It is about 850 SF and the San Telmo area is becoming very trendy. Bariloche is very nice if you like the snow but I prefer Salta, probably the best small city in Argentina. Also, Posadas, if you like the semi-tropics. You will not see one Mexican flag anywhere in Argentina. As for Montevideo, it is quiet, almost crime free and very, very European. The streets are full of Sycamores and the buildings are exquisite. It has a similar culture as Argentina or Spain. The US is unfortunately rapidly becoming third world. I now live in Santa Barbara, CA and I might as well live in Michoecan, Mexico. Cars parked everywhere, poor schools, graffiti, shopping carts, uninsured drivers, trash, noisy weekend parties and Pit -Bulls. We are a changing nation as the jobs go east to India and China and real estate plummets in the third quarter and our debt rises, we will lose. That is why I bought in Argentina and will again in Uruguay and probably in Brazil too. I can afford to do it because of this bubble but I need to get out of the $ which WILL drop significantly in the next year or so.
NHZ, try escapeartist.com for lots of information on buying property abroad. The world is changing and places once thought of as hell holes like Nicaragua are now chick. Good luck.
Read ahttp://www.howestreet.com/articles/index.php?article_id=2213″>Imaginary Numbers.
“Here is one explanation as to why they are imaginary: The NAR existing home sales numbers are “survey numbers”. The NAR should easily be able to provide exact numbers by adding up the numbers from all the local real estate boards. Can this be difficult with today’s computers? Instead they do a quick survey of questionable accuracy.”
If this was already posted…sorry.
Fox News reporter now works for the Cheney Administration??? Little to cozy for me.
George Stephanopoulos…
* Clinton Press Secretary
* Clinton Communications Director
Today he’s “Chief Washington Correspondent for ABC News.”
http://abcnews.go.com/ThisWeek/story?id=133369
MSNBC’s Chris Matthews — worked in the Jimmy Carter White House…
Yes but the vector is opposite in the cases you cite. George S and Chris M were going from govt ot media, not the other way around.
You’re right, it’s actually worse when a political operative joins (officially) the “mainstream” media.
Sonoma Valley MLS Inventory: 305
Sonoma Valley listing progression
2/14/06 = 172
2/14/06 = 183
2/24/06 = 193
2/25/06 = 200
2/27/06 = 214
3/01/06 = 219
3/04/06 = 220
3/12/06 = 230
3/20/06 = 236
3/26/06 = 238
4/03/06 = 268
4/19/06 = 291
4/25/06 = 305 at the current rate of sales = 10 months of inventory
67 new listings in 30 days
Sonoma County MLS Inventory: 2868
Sonoma County listings progression
3/20/06 = 1742
3/26/06 = 1766
4/03/06 = 1888
4/19/06 = 2828
4/25/06 = 2868 at the current rate of sales = 6.3 months of inventory
1102 new listings in 30 days
Sonoma County March Sales Facts:
Year-over-year home sales were off 14.5%. Condo sales were up 73.8% from February, down 34.8% compared to March 2005.
Median prices rose in March gaining 3.9%
The average price rose 11%.
Year-over-year the picture is different.
The median price was up only 0.8%.
It looks like the days of double-digit appreciation are over.
The number of homes pending has slumped, down 33%.
March Sales (units sold)
Sonoma County: 454 down -14.50%
Sonoma Valley: 30 down -38.60%
I wanted to address a comment made by “Nick818″ on the San Diego thread. Nick! Bro! Thanks for the amusement today! I was in a bad mood but your pithy wisdom really cheered me up!
So, Nick, you and your homies have 5-7 mil credit lines eh? Wow, dude, that’s impressive. Gonna blow in there and hold up the entire So Cal real estate complex all by yourselves come hell or high water. You remind me of a guy I saw on one of the Yahoo stock boards after the stock blew up after earnings. He said he was going to go in there and stop the shorts himself by buying 50,000 shares on margin at the open. Well he did, and guess what? They ran him over. He was out by day’s end with a gigantic loss and the stock kept on going down.
Of course that could NEVER happen in LA RE could it Nick? Of course not! LOL
Just keep this number in your pda, Nick. Do it for me, ok? One day you’re gonna need it.
http://www.casb.uscourts.gov/
My anecdote from dot-bomb
Microstrategy - big long guy and frequent poster to Yahoo board comes back at end of crash day and asked, surprised, “when did they announce the 3-for-1 split?”
They think we are stupid.
The NAR “Survey” results which go into the existing homes sales number were very upbeat. This news isn’t supported by two of the largest home sales regions FL and CA. (The norteast was up 24% over Feb..sure) Today we get the mortgage application data which was at multiyear lows. Again I say ..something is rotten with the data presented by the NAR yesterday
Well existing-home data lags a bit, but that aside, it would be quite interesting if NAR made there gathering methods available for corroboration and review. Maybe we should all ask our local RE reporters to as NAR to do that and see what happens…
10 yr treasury where the action is: Now near 5.12%!!
inflation w/ a lag would keep showing up..I always though rate of 5.25 will NOT be the end…it has a way to go…
so who is hurting? anyone w/ variable rate loans..and there are tons of them..
OT - but interesting link
http://www.counterpunch.org/whitney04252006.html
Interesting, about Iranian oil bourse. Can they really pull it, economically speaking?