What’s The Code Word For ‘The Bubble Is Popping’?
The California press is also digesting the latest numbers. “Home-buying activity across California perked up in March but sales lagged behind the record pace of a year ago and price appreciation continued softening. Inventory is still expected to outpace the levels of the past two years.”
“Realtor Mike Somers said the supply buildup is prompting some of his sellers to reduce their asking price. For example, he initially listed an 1,800-square-foot home in Winnetka for $619,950 but didn’t get too much action. The would-be seller soon dropped the price to $599,950, then on Monday reduced it to $589,950.”
“‘The inventory is up substantially. With that much more to choose from, common sense says prices will level out a bit,’ he said.”
“‘A lot of people are just kicking the tires right now,’ said Jack Kyser, chief economist with the Los Angeles County Economic Development Corp. ‘They’re trying to figure out what’s going on with the market, whether it’s still going up or whether they should wait to buy.’”
“With prices like $682,500 in Norco, $612,500 in San Dimas, $610,000 in Upland, $570,000 in Chino Hills and $567,500 in Diamond Bar, it’s pretty clear that Southern California’s ‘affordable alternative’ is no longer as affordable. ‘Affordable housing now means the High Desert, places like Victorville and Apple Valley,’ Kyser said. ‘In Los Angeles County, it means the High Desert around Lancaster and Palmdale.’”
There is a slowdown in San Diego. “San Diego County builders took out 41 percent fewer housing permits in the first three months of the year compared with the same period last year, putting the area on track to have the lowest output of new housing in 10 years.”
“Typically, the first quarter in San Diego County represents 25 percent to 32 percent of all building permits for the year. If 2006 follows that pattern, then homes permitted for the year might fall between 8,900 and 11,400 units, the lowest since 6,868 were approved in 1996, at the end of the last real estate market downturn.”
“Besides cutting production, San Diego area builders have begun offering incentives to would-be buyers. The inducements range from pitches for free homeowner association dues until next year at Verano La Jolla to $20,000 incentives to buyers at Treviso, an attached-home community in Santee.”
“Newspaper advertisements carry tell-tale code words that signal the softening market: ’spring clearance’ (there are deals to be made), ‘immediate move-ins’ (the home is finished), and ‘4 percent broker co-op on select units’ (real estate agents are welcome). The most prevalent incentives, said one analyst, are rebates of $7,500 to $10,000.”
“When sales are brisk, it’s a lot easier to make a living in real estate. But when inventory grows, part-timers and newcomers are often the first to find another career. Veteran real estate professionals expect that many newcomers to the business will seek out easier ways to make money.”
“‘When the market is hot, agents come out of the woodwork,’ says Diana Lusk, a San Diego, Calif., real estate practitioner. ‘When the market cools down they go back to what they were doing before.’”
They missed one of my favorites; ‘new price’
It’s coming…all the signs are there.
and their being twirled on the street corners
“When sales are brisk, it’s a lot easier to make a living in real estate. But when inventory grows, part-timers and newcomers are often the first to find another career. Veteran real estate professionals expect that many newcomers to the business will seek out easier ways to make money.”
Great, let all the newbies Realtors leave the business. Maybe then we can weed out some of the ones that are as honest as used car salesmen.
just an observation on the realtor situation…I heard from an escrow officer that she knows of 5 realtors going thru divorces, and the word is…”the market is killing them”.
are you being facetitous or are you serious?
No, very sadly serious. While most realtors are worthy of the scorn heaped on them (believe me, I know many of them), none deserves heartache.
Cathrine;…Wait until “D Spiral” reads your (none deserves heartache.)….HD will probibly have some choice words also…
Well, whatever….no one deserves that kind of heartache…and no one should wish it on another. There have been incredibly greedy and astonishingly stupid people thru out these past few glory years of the housing bubble, (and it will be forever thus in every cycle!) and we may mock them and denounce their business practices, but to find some kind of pleasure in people going thru divorce, bankruptcy, etc. is sick and serves no one. People arrive at heartache thru a series of choices that they usually thought were good ones. So, I expect to see so many more “heartache” stories coming out…it will be unfortunately and petty to see people rejoice about it.
I, for one, agree with you. This will all end very badly for many people. Very sad for many families with children.
Peter;…Yes but, wasn’t it Suzanne that told them they could do this ??? Was Suzanne’s prority to counsel or sell ??
SCDAVE-Yes it was Suzanne, but the parents are stupid, not the children. I have heart and I am a Republican like Abraham Lincoln.
Hard times should pull families together, though, and not tear them apart.
Peter;…Cathrine 1st post was regarding the realtors…My response was regarding them…A competent realtor will “ALWAYS” put their clients ahead of the commission…Good brokers learn to say “Don’t do This” (Un-like Suzanne)…
scdave- Gothcha, thanks for clarifying. Agree completely. All RE agents should be looking out for folks.
Maybe a microscopic twinge of sympathy…
However, think of all the overpriced homes sold by these same realtors to couples who will end up divorced as a result. They are complicit. I doubt they ever told the buyers that buying an insanely overpriced home could eventually kill their marriage. Karma’s hell.
Does anyone watch that reality show on “OC Housewives” - There is a clown on there who is in the Real Estate Biz. I wish bad on that clown. He is so f’n annoying!
That 24 year old girl with the 40 year old fiancee is also a mortgage broker. She drives a $60k Mercedes, has a yellow diamond ring with a rock the size of a baby’s fist, and acts dumber than a clump of hair. Very Orange County.
Tells me the realtionship was based on cash flow. Feel sorry for the kids, if any. Doesn’t one of the spouses have a real job?
A real job, oh please, what do you do shine a seat with your ass all day for 50k a yr. Probably something they could train a monkey to do. I would really be interested to hear what some of the folks on here do for a living. Especially the ones who have real venom towards Realtors.
I am a retired CFO and worked as an economist in the ’80s.
A RE salesperson friend called this morning hoping to sell me advertising in a new publishing venture. I couldn’t help - I am retired. But maybe I know someone…?
I offerd two words of advice - Cold calls.
I am a high school math teacher. Algebra through calculus and statistics, specifically. Realtors are the snakes, jackass.
I am the Operations Manager for an Asset Management firm for the “influential” investor.
Energy Manager
They tried training monkeys to be realtors, but they couldn’t lie convincingly enough.
CFA and CPA with very liquid (and plentiful) assets and fully paid off residence who works in Finance for a publicly traded company.
Computer game developer.
I guess I don’t have ‘venom’ towards realtors. At least the serious ones who put their client’s needs first. That said, they are probably a minority sub-set of licensed realtors.
Professional Gary Watts Harasser.
homeless guy, panhandle at 7-11 m-f 9 to 5.
my first inclination is to be like cereal…but alas:
I run a treasury dept.& investment portfolio for a billion + company, trade 30 yr bonds every few hours or so..buy to hold high quality municipal bonds, hold a sizable position in Trust Deed “hard money” loans for for a NYSE company….
On the side, I trade the S&P, Bond and coffee future contracts, buy the physical gold monthly… and don’t make any mortgage or interest payments to anyone.
In short, “I own nothing and control everything”…
while having no anamosity toward realtors or anyone except maybe our criminal US corporate government…
I’m a Civil Engineer, and I don’t have any sympathy for anyone borrowing beyond their limits.
I work in technical publishing, mainly mechanical engineering.
I know I’m late in posting, but couldn’t resist: I work in a toxicology laboratory.
eastcoaster—
you analyze Florida condo developments?
For me, IT manager. As to the comment about based on cash flow–sure doubtless some are. But money problems on top of some of the other crap that life deals out can be the final straw.
Catherine–great comments and I fully agree. Thank you for your eloquent thoughts.
Ha!
Best. Job. Ever! I am a QA project lead for a top 3 games publishing house. Not only do I play video games all day but I get to tell other people to play video games all day.
I have sympathy for the good agents but I have dealt w/my share of bad ones. I will be happy when the chaf has been blown out again.
Most relationships are based on cash flow.
Certainly more than people would care to admit, even to themselves at times. And even in a “solid” relationship based on all the good things we like to belive in, financial stress is capabile of making things rather sour. Especially if one is much more financially savvy than the other.
Gawd, how materialistic a good chunk of the current 20-something set is. Or so it seems from listening to some of the younger guys I work with.
CPA and Blog Addict
People make choices and choices make people.
Nothing I can do to change that and they did it to themselves.
A lot of these people move from one distasterous situation to the next and the only constant is themselves.
Whatever happened to “for richer or for poorer?” Or am I too old-fashioned?
The numbers reported this morning on new home sales just don’t add up… Good thing they stated there could be an error of almost 15% in the numbers…
4:51PM Centex misses by 19 cents; guides Q2 EPS below consensus, sees in-line FY06 EPS (CTX) : Reports Q4 (Mar) earnings of $2.92 per share, $0.19 worse than the Reuters Estimates consensus of $3.11; revenues rose 25.2% year/year to $4.55 bln vs the $4.45 bln consensus. Co issues downside guidance for Q1, sees EPS of $1.35-1.45 vs. $2.16 consensus. Co issues in-line guidance for FY06, sees EPS of $8.50-10.00 vs. $9.72 consensus.
Centex quarterly profit rises, orders fall
Wed Apr 26, 2006 4:35 PM ET
NEW YORK, April 26 (Reuters) - U.S. home builder Centex Corp. (CTX.N: Quote, Profile, Research) on Wednesday reported lower-than-expected fiscal fourth-quarter profit and said new orders fell 11 percent, amid rising mortgage rates and higher home prices.
For the quarter ended March 31, Centex, the No. 4 U.S. home builder said net earnings rose 6 percent to $391.8 million, or $3.04 per share, from $369.7 million, or $2.75 per share.
————————————————————————-
After hours down about ~ 7%
I guess those $100,000 rebates in January hurt their bottom line. Oh sorry, discount they aren’t car dealers yet.
BTW Centex is down big after-hours.
Wow, they’re all going down
It appears as though there was quite the “pump and dump” today in the Homebuilder stock market. Check out the CBS Marketwatch report which exclaims “What housing bubble?”. Then check the cited HB stocks and their all down AH’s.
LOL. They’re going to really take a hit tomorrow.
Criminettly — almost 7% down.
Here is a new approach to selling homes - LOL
http://www2.xpresssites.com/bakersfield/californian/apr06/productsvendor.jsp?_RND=-651044147
Most of the homebuilders going down after hours. Ouch. How many panic bought today. For the last few months, trading these has been brutal.
http://finance.yahoo.com/p?k=pf_45
PHM earnings out as well. Looks like 4% dollar volume YOY decline in new orders, and 11%+ in unit volume. Reaffirmed guidance for earnings, but this kind of news can’t really be seen as bullish, or at least, I’d assume as much. After all, orders are the lifeblood of this industry.
My favorite “Priced for quick sale”. No reduced because there are no buyers at that price level.
~1980 Time Magazine had an article on school teachers buying gold at $800/oz. Are school teachers the canaries in the shaft?
From previous posts.
fifth-grade teacher Loliette Araluce had to do without everything else. Her mortgage, taxes and association dues total about $1,300 a month, she said, and the rest of her $34,371 salary goes mainly to groceries and utilities.’
and another:
‘I’m a woman; I want to buy makeup and girl stuff, but I cannot because I decided to get property,’ said Araluce, 27. ‘I can afford it, but I cannot buy anything else but the things that are really necessary for me.’
On Tuesday Michael was showing North Side condos to Karen Cole of Glenview, who was on the first day of her house hunt. ‘She’s looking in a saturated price range, $750,000 to $999,000. There is so much in that price range right now,’ he said.”
“Cole said she hoped the inventory would work in her favor. ‘I’m hoping that because there are a lot of condos available, the prices won’t be astronomical,’ said the North Side schoolteacher, who on Tuesday was scheduled to walk through 10 of the 14,232 condominiums on the market in the city. Of those, 3,206 have been listed for sale since March 31.”
The herd loves to follow. The herd likes to keep up with Mr. Jones. The herd can’t see the cliff in front of Mr. Jones and poor Mr. Jones can’t stop the herd behind him. The feast begins at the bottom of the cliff.
I love that visual.
That’s exactly the problem, at $37K a year she can truly only afford a $100K – 120K house. Then she would have disposable income to buy make up and other desirables. If people are using all of their income to keep a roof over their heads, plus run out of credit cards to use, what happens to our economy which is mostly made up of consumer spending? I better have a one on one with my grandfather and ask him to share the joys of life during the recession. LOL
oops! I meant the depression.
Well, without makeup she’ll never get a boyfriend, so she’ll be paying that mortgage all by herself lol
If her lack of make-up doesn’t scare off the boys, her soon-to-be mountain of debt and devastated credit should do the trick.
My mother started teaching in the 80’s at around 19k a year. She bought a condo for something like 65k and still lives there. Since starting teachers’ salaries in San Diego are hovering just below 40k now, wouldn’t it be reasonable to expect her condo to now sell for about 130k? That would be right around your estimate, Mr. Drop. Too bad the comps are in the upper 300’s. I guess that’s why teachers can’t afford to live here anymore. Nor firefighters. Nor police…
Why would ANYONE want housing to increase faster than salaries? That’d be like people rooting for Toyotas to cost more and more every year (along with the yearly registration fees).
Why would ANYONE want housing to increase faster than salaries?
The only ones I see wanting that are people who already own AND who have massive debt and no savings. They see it as the only way to not be “poor”. They are also the ones who mock me for being bearish. Time will tell who’s thinking smarter (I’m betting on me!).
How can ‘ordinary’ housing be so expensive in so many areas (relative to incomes)? That’s the thing that just makes my head hurt every time I contemplate it.
Take the $750K ’starter homes’ mentioned elsewhere on this thread. For someone making $37k, that’s (approx) 20 years gross salary, or ~40 years net salary (in CA). At the old rule-of-thumb of max 1/3 income to housing, that’s 120 years (gross), or 60 years net…… JUST TO AMASS THE PRINCIPLE. Multiply by 2x to 4x+ to account for interest.
I’m a logic oriented guy. I do the math all the time. Stuff like this upsets my faith in our society’s future.
Just goes to show you how we lack a good education system in this country. You just proved how 80% of the population failed math in high school.
yup. Several mistakes in my rant. transposed terms; no accouting for inflation; etc. I was sleepy when I typed it. oh well
Hoz, are you certain about this?
—~1980 Time Magazine had an article on school teachers buying gold at $800/oz.—-
It’s my impression that the spike to that price was so brief, it would be unlikely for someone to buy at that level and have it reported in a weekly magazine. The price would have dropped before it went to press.
Below is a Kitco website, and indeed the sharp spike to $800/oz was pretty brief. Ignoring the delta-function like spike to $800, the more likely high was in the ~$600-700 region — this would be in ~1980’s dollars, so not corrected by inflation for 2006 dollars.
http://www.kitco.com/ind/Resopp/sep302003.html
ISTR (vaguely, since I was in high school) that on a percentage basis silver was even bubblier than gold, but of course wasn’t that because of the Hunt brothers?
Yup, definitely bubble in silver. And yes, the Hunts made a valiant effort to lock up the market. Cost em damned near everything. Remember reading the stories about stuff down to their rolexes being sold to cover the debts.
“[...]$20,000 incentives to buyers at Treviso, an attached-home community in Santee.”
They’d have to pay me a heck of a lot more to live in Santee! Hot hot in the summer and hicksville all year long.
When the market cools down they go back to what they were doing before.
Nice of the Amway industry to loan them to us.
“‘When the market is hot, agents come out of the woodwork,’ ‘When the market cools down they go back to what they were doing before.’”
What was Suzanne doing before ???
Stripper in Vegas.
politician in DC
boiler-room telemarketer, I just know it !
WallyWorld ??
Oolong tea - in the mouth and out the nose. Thanks.
panhandler.
she worked across the street from me at albertsons supermarket
A researcher.
No, Suzanne must have been an “intelligent design” researcher. I just saw the commercial, and it’s reprehensible that RE agents are pushing those unsuspecting victims.
Bush Administration -War in Iraq planning commitee.
Sorry guys, but I missed the Suzanne joke. Please post a link so I can at least share in the laughter.
Suzanne is the Rasputin of the real estate industry as demonstrated from a Century 21 commercial.
It’s right here.
If you need to see the video, check this out. I only know all this so quickly because…drum roll…I RESEARCHED IT!!! Today, in fact, because I had the exact same question.
Sick and wrong. Sick and wrong.
However, the blog comments were right. I’m glad they buy the house because I can then pick up their foreclosure in a couple years.
There’s a new one out now — featuring grateful single-mom type buyer, clearly on a budget, whose realter showed here 34 homes before finding just the right one (smarmy music swelling). Yay! more exploitation of low-income buyers!
The point on that particula commercial that I don’t understand is why they are acting like the agent is some kind of hero for having shown her client some houses. Isn’t that her job? I guess compared to how realtors had been acting during the bubble…buy it now or it will be gone, this new requirement of actually having to work is now seen as some sort of heroic feat. I’ve never understood lauding someone just for doing what they are paid for…now if she was rebating part of her commission to the buyer and took time to show her 34 homes…then that’s a different story.
“For example, he initially listed an 1,800-square-foot home in Winnetka for $619,950 but didn’t get too much action. The would-be seller soon dropped the price to $599,950, then on Monday reduced it to $589,950.”
That was a total price reduction of less than 5%. Around here, in central Florida, 20% off original price (albeit a “fishing” original) seems to work much of the time. 5% is laughed at.
I sold by dutch auction last year; if I were selling now, I would do the same, only I’d announce that in the listing.
Interesting article on class mobility. I still think the US is the land of opportunity though. But a lot CEO’s are overpaid.
America’s rags-to-riches dream an illusion: study
http://news.yahoo.com/news?tmpl=story&cid=2628&ncid=2628&e=13&u=/nm/20060426/us_nm/economy_mobility_dc
But we have free public education - oh wait a minute . . .
The madness! Near me there is a cute place that was updated by a master contractor who lived there. It is a cute 1br/1ba cottage with a 1br/1ba master bedroom suite addition and no garage. Asking price was above $750k and it got an offer almost immediately. It is a great little place in a nice location, but that price is insane. There is also big work scheduled on the utility corridor that intersects the back yard. How can this still be happening? That is nearly $400k/bed for a nice but nowhere near spacious place. It seems like California is setting itself up for a longer and deeper plunge than any other state.
What do we do for a living? My husband and I are Classroom Teachers in San Antonio - science and social studies. Third careers - attorney and biologist before this - nurse and church administrator before that. In our early 50s.
We were fortunate to buy our home for a reasonable price 3 years ago. It had the most wonderful views. But the jerks from wherever came in and are building their ugly houses. HMMM….need some height restrictions in our neck of the woods - too late though. Views gone.
Where do we move, we ask ourselves. To the streets with what I call provincial/territorial terrorism. The schmuck across the street is going to have a hard time with his open house doo dah with our TV blaring and the vacuum cleaner running. Oh yes, buy out here…where it is so peaceful. Folks, this blog is where it is happening. This is our town meeting. Don’t dis it just because you don’t - or don’t want to - understand economics.
What’s The Code Word For ‘The Bubble Is Popping’?
Code words to me are (in my local newspaper): “3BR, 1.5BA cape; 1200 sq. ft.; LR, formal DR, kitchen; Full finished basement; .25 acres. Nice neighborhood. $150,000″
Mind you, I haven’t seen those code words…yet
Last time I heard something like in the Boston area that was in late 1997. Adjust for inflation and you get what, $225,000?
It would help to have real inflation numbers, not what comes out of Washington.
Rah Rah! Sis boom bah!!
sigh. A cheerleader till the bitter end…