Condos For-Sale Up 85%
The realtors association reported existing home inventor was up 39% this week. The Dallas News has more detail. “The inventory data were even more revealing in Tuesday’s existing-homes report. At 2.7 million, single-family home inventories are up 33 percent since last year. Drilling down even deeper, at 494,000, the number of condos on the market is up 85 percent.”
“When you examine the local data by price, it looks as if we’ve gotten caught up in the frenzy after all. Starting with the average condo price in the country of about $250,000, our growth in unsold inventory is right up there and then some on the highest end.”
“‘The market for condos above a $250,000 price seems to be way out of balance,” said Jim Gaines, research economist at Texas A&M University. ‘I don’t know where all of these million-dollar condos are coming from, but if you own one, you’re going to have a heck of a time selling it.’”
“If there’s one thing about San Diego that does trouble Robert Kleinheinz, the deputy chief economist at the California Association of Realtors, it’s downtown. Kleinheinz doesn’t have a view over the dozens of condo towers and cranes in downtown. He agreed that the condo market troubles him.”
“The spread of condos in downtown San Diego is similar to what’s happening in his home town of Long Beach, Kleinheinz said. ‘We’ve got lots of condos, and I’m not quite sure who will be buying those,’ he said.”
“Told of the current high inventory levels in downtown San Diego and the thousands of condos that are planned for the city, Kleinheinz said what happens downtown will depend on when the properties come on the market and whether there is a sudden flood of condos coming online at the same time.”
“Just finding an affordable home in the East Bay can be a serious challenge. Liz Humphrey and her fiance, Harold Joe Smith, lined up with other homeowner hopefuls shortly after 7 a.m. on a Saturday to submit an offer at Reflections, a recent apartment-to-condo conversion in San Ramon.”
“Their names were not called until that afternoon, and they were forced to settle for their second choice. For $379,000, they are set to buy what Humphrey said amounts to a ‘two-bedroom apartment, basically.’”
“They’re not making a down payment, so the monthly mortgage will run more than $2,300. That’s quite a leap from their previous living situation: paying $650 a month to share an Antioch apartment with roommates. To make the monthly mortgage, the couple, who are set to wed in early June, plan to dramatically curtail their spending.”
“‘We won’t be able to go out to dinner every weekend or take a trip whenever we want,’ Humphrey said. ‘We’ll have to get a Costco card and buy in bulk. Anything and everything that we can reduce, we plan on doing.’”
When the numbers came out this week, a reader emailed saying that CNBC had said condo inventory was up this much. But I could never find where the NAR had broke that out. If anyone knows, please send in or post the info.
This page at the NAR web site has several different PDFs and Excel files available …
http://www.realtor.org/Research.nsf/Pages/EHSdata
You can find condo-only data there, including a place where it gives the YOY increase/decrease in sales and the increase in supply.
We’ll have to get a Costco card and buy in bulk
_______________________________________________
Yeah thats a good solution. I don’t understand why these people will mortgage their lives away for an apartment, err condo.
Right, buy in bulk and store it where??? Better hope that $379,000 apartment has a ton of cupboard, closet and pantry space. In the few apartments I’ve lived in those were all lacking.
“We’ll have to get a Costco card and buy in bulk”
——————————————————
No one ever comes out of Costco without buying more than they planned to. That’s the business model of the place.
“To make the monthly mortgage, the couple, who are set to wed in early June, plan to dramatically curtail their spending.”
————————————————————-
There are 2 kinds of people. Spenders and Savers. They did not have a down payment. They are Spenders, not Savers. They will probably not be able to “dramatically curtail their spending.” And if their apartment (er condo) value declines, I predict they will walk away……..
They will probably be divorced at that time as well. Financial problems is the greatest factor causing divorce.
People: 2
Functioning brains: 0
You forgot about Suzanne.
You forgot about Suzanne.
People: 3
Functioning Brains: -1
ROFL!
“You can do this!”
“‘We won’t be able to go out to dinner every weekend or take a trip whenever we want,’ Humphrey said. ‘We’ll have to get a Costco card and buy in bulk. Anything and everything that we can reduce, we plan on doing.’”
Guess they’re not considering having children either. Pampers and formula can really add up!
Sorry future newlyweds, but Rice a Roni is the San Francisco, not San Diego treat.
These dopes would have been better off standing in line at Border’s to buy a few cookbooks and a few of the basic financial books. Their housing costs are going to go up 25 to 30k a year.
These morons and the lenders who provide them loans are endangering all of our financial health.
bulk?
how about the free food samples. that’s gonna be the new budget
I love it at Sams those free samples and $1.5 hotdog & Drink.
Has anyone else noticed that the restaurant thingy is exactly the same at both Costco and Sam’s? The chiken bakes are delicious, too.
Free samples for everyone!
Just an opinion. The condo price drops will be greater not where many are concentrated (downtown LA and SD), but where a single project is in isolation.
Condo developers are selling an urban lifestyle, where you can walk to things and be part of a community. Unfortunately there are few economically viable places like that in the U.S. so they are trying to re-create them. But an urban neighborhood needs a certain critical mass to be worth anything. Otherwise, you are just living in a less desirable housing unit in the sprawl, not a real place.
So you have a chicken-and-egg problem, with the real estate industry trying to bridge the gap with hype. My guess is that if they get enough units up in a small area to generate critical mass, those units will sell. Not for bubble prices, but depending on the land cost, perhaps enough for a modest profit. If you have an isolated high-density condo in a low density area where the residents will need two cars and have to drive to everything anyway, you’ll get a bloodbath followed by a reversion to rental.
That’s an excellent point. (And something a lot of the people who fashion themselves “planners” and promoters of “new urbansism” and so forth, imo, don’t fully comprehend.)
“Their names were not called until that afternoon, and they were forced to settle for their second choice ”
They were FORCED? No I don’t think so! I will accept that GREED impulses overpowered any brain reasoning powers trapped between their two sets of ears.
Suzanne researched this! It is a fine time to buy. And three years from now when she is pregnant and he is out of work …
they are set to buy…..quite a leap from their previous living situation: paying $650 a month….
All I can say is that the “urge” to nest is quite a powerful force….
I agree with salinasron; what is really driving this couple is the desire for profit on the future sale. They are speculating, basically.
Hope they really LOVE that nest. Looks like they’ll be spending every free moment in it.
How is their payment so low on 379k with no DP?
IO or something?
When I was looking in that price range last year I figured closer to $2800, including taxes and fully amort. loan. Any brokers care to run the numbers?
$379,000 @ 6.5% for 30 years is $2395/month (this does not include taxes or association fees). Wonder what the whole kit-and-caboodle would be with the additional fees…
Can someone get a 30 year fixed at 6.5 with no downpayment? (I’m clueless when it comes to downpayments required on various types of loans.)
Not without mortgage insurance. Probably a 1 to 3 yr “affordable arm” with mortgage insurance would bring it up to ~6.5%.
Don’t forget to add the “renter’s insurance” costs to those numbers…. oh wait, its a condo
You can get pretty much any thing you want even with stated income if your FICO score is high enough. The only problem is a high FICO score doesn’t mean you can afford $2,395+300-400 condo fee+300-400 taxes= about $3,000 a month. OUCH! Think if they just stayed put, payed $650 a month for two more years and invested the expected difference of $2,350 a month for two years they would have $56,400 plus any ROI. Now they don’t have to go to Costco. Problem solved.
BINGO DtB!
It they were “savers” they would try the lifestyle (saving) for a couple of years and have the $56,400 as a deposit.
The truth is they would save nothing and still be renting. People are currently programmed to think renting is for suckers! The fact is, you could rent your whole life and have much more wealth and mobility then your friends and neighbors. Personal financial management should be a requirement in High School.
Longitudinal studies have shown that the #1 predictor of a young child’s overall success in life - relationships, financial success, enjoyable work, good grades in school, etc. - is whether or not the kid can delay gratification. They can do these simple tests with marshmellows and whether a little kid would rather have one now or three later, and, statistically speaking, that information has a greater bearing on the average person’s “success” in life than race, socioeconomic background, IQ, and so on.
Obviously the two folks detailed in this article clearly want that marshmellow and they want it now, DAMNIT!
People are currently programmed to think renting is for suckers!
And people in the Bay Area are programmed to think that the universe begins and ends with… the Bay Area. I used to live there and I knew many people who would sacrifice a kidney and live in a dumpster before they’d consider leaving the Bay Area. For what, I don’t know. The weather isn’t that great, traffic sucks, the schools suck, and the pay is about on par with what you’d make in Texas or anywhere else. And San Ramon???? Come on… it’s not like there’s any cultural attractions in San Ramon that you just can’t live without.
I’ve come to believe that the Bay Area Dweller is like some strange and fragile species of fish that can’t possibly survive outside it’s unique habitat.
Bay Arayans
A superior race of beings who believe the rest of the world strives to live as well as them, but knows they cannot.
An over-priced condo in the East Bay - the American Dream lives on! Skank-o-rific.
Somebody wake me when this madness is over.
And also, how the HELL did they not save any down payment at all if their rent was only $650 a month??
Whole Foods? Now they will go to Costco and save $$$. LMAO.
Did they fall in love with eachother or their lifestyle. This condo will test their love, big time! The fun times are over. Maybe an annual subcription to Netflix would be a good wedding gift.
As long as they don’t get a Weimaraner…
“They’re not making a down payment, so the monthly mortgage will run more than $2,300. That’s quite a leap from their previous living situation: paying $650 a month …”
Of course my feeble mind will never understand why they cannot just rent a place larger than where they are now? Instead of $650/mo, get a place for, say, $1,200/mo, until the prices get back to reality. Why do you have to BUY an apartment and get stretched for the next 10 years or so?
With the mortgage, ass. dues, insurance and taxes, they are likely looing at $2,800/month.
“ To make the monthly mortgage, the couple, who are set to wed in early June, plan to dramatically curtail their spending.”
Unless all the people like them suddenly get a 50% or more pay raise, overpaying for homes is going to create a great depression by itself.
There are oodles of 2BR apartments in the city of SF for under $2000, as per craigslist.
Don’t know where the ideal place for them to live is, regarding commutes, quality of life etc., but there is NO shortage of rentals with MUCH lower carrying costs.
My son in LA is moving out of his $600/month very small studio into a decent (actually, very nice) apartment for $1200. Small patio, views, close to downtown, nice neighborhood… It’s taken all my arguments and the great data from ‘Ben’s Place’ to help him see the light, but it can be done. He banked about 30k last year so he’s really starting to see the logic. As for the East Bay couple, nobody is forced into such a stupid decision.
More than that before tax but a little less after depending on their marginal tax rate. Taxes, insurance and hoa dues will almost certainly add another $800 on. That’s takes it up to over $3100 before tax. In San Ramon you can rent a reasonable two-bed apartment for about $1300 to $1500. Given the current housing market, these people are nuts, imo, but no doubt their parents told them not to “throw money away” on rent.
Or, live in the $650 apartment, BANK that 1200/month towards their downpayment, and wait for prices to become sane. It would take them a little of 2 years bo have 30k in the bank so they wouldn’t have to worry about mortgage insurance, a heloc second. Frankly, if you can’t live on Costco peanut butter if you’re renting, what makes them think that they’ll like it better if they’re owning. It’s sad really the level of fiscal stupidity out there.
“With the mortgage, ass. dues, …”
LOL!! Freudian slip?
Nikki has a sharp wit. Reminds me of the “If it flies, floats or…” joke.
Tack on $4/gallon gas and it looks like they’ll be buying bikes at Costco as well.
My wife and I pretty much don’t shop at the big wholesale places anymore. You can pretty much get what you need in your local supermarket on sale, plus you don’t have to deal with the ridiculously long lines.
-Richie
Phoenix inventory: new record 44024 this morning
Fairfax County, VA, almost 7000 up from 1000 last year. New record. I have a glass of an untried Virginia wine with every new 1000 marker.
Also, I talked with a rental agent for a rental company today. She said the rental market is very soft out here in VA suburbs and she always has to reduce prices on those, too. We’re moving to another new luxury rental home and are going to save money over this one. And get a third bath, a patio, a fence, and a finished basement. And a community pool.
wow, and N VA is 90% taxpayer financed
Imagine what bahstin and NE will be like
For all the (understandable) focus on S Cal and FL, NoVA is going to be the most spectacular crash-and-burn. Every waitress and supermarket clerk owns three spec townhouses here.
Wow flip, pretty big numbers. I think you had inventory at 10K in April 2005, if I remember right.
Hey, maybe the houses will start selling as soon as the big shiney stadium is finished. Yea, that’s the ticket, we just need to get that stadium done, an then real estate will pick up.
Yeah, because EVERYONE will want to go to Arizona Cardinals games.
Wow! Phoenix inventory over 44K! Amazing.
Heh heh, still on track for 50K inventory on 6/4/2006 (plus or minus a day or two).
Friday June 9th, 2006. I’ve been saying this since Nov/Dec?
Just in time for the Pizza Oven season….
I’ll see your Pizza Oven and raise you a Ceramic Dry Kiln.
get out of here.
44k ?
get out of here
yest that is an i/o or option arm loan,they run about 6.125 to 6.25 for an i/o,no points on a 7 year balloon.the condo developer will have a “preferred lender” on site to assist potential buyers in taking their pants down…..they may well offer lower rates(buydown) as an incentive by definition half the population has an iq of less than 100,when not impaired
That’s what I figured. So it probably looks like this, right:
- 80% first IO at 6.25% (5-7 year fixed IO/ARM)
- 20% HELOC IO 2nd at 8.25% (7-10 year fixed w/baloon or similar)
I figure because that’s the kind of deals that “friends” who sling paper for a living were offering me last year. I don’t hold it against them, though, they don’t know any better than their customers do.
That’s what people want so that’s what they give them.
Costco? /shudder I would boycott groceries if I couldn’t shop at Andronico’s or the like. The things people give up to mortgage their lives. I will never understand.
Actually, Costco is pretty fab. I shop there and get the same stuff I’d normally get. Mostly the same brands. For example, I bought an Apple Mac Mini (with DVD burner, bundled with keyboard, mouse, and 3-yr Applecare) to replace my old PC; buying it from Costco saved me $350. I bought a new tent for about half what comparable tents cost. Contacts and (attractive designer) glasses are also a good deal. Their Kirkland brand coffee is roasted by Starbucks and tastes exactly the same.
Like most people I know, when I first joined I got sucked into dropping a huge chunk of cash; on subsequent visits I’ve toned it down to just what I need for the next few weeks. The only problem this couple will have is Costco only takes cash or Amex (which, of course, has to be paid off at the end of the month). If they don’t have any money to begin with, how are they going to shop there?
I see your point when it comes to buying “stuff”, but food in bulk does not work for me. Fresh food, wine selection, and bakery - all high priorities for me. But then again they can be because we rent and save a lot of money. Spending a little extra on quality food and wine is about our only luxury.
i’m with you here, lunar.
i haven’t bought a doggone thing in 2 years except waaaaaay overspending on food.
but i hit the gym 3x a week
does anyone realize the credit bubble insanity going on here? every day I get CC offers. today I get a “check” for $5,000 and I am preapproved for something. probably just a slick way of signing me up for a CC. but anyways, how can they just give out cash like that? isn’t the credit supposed to be drying up? aren’t people are having a tough time because of rising interest rates and min. payments on CC bills?
Credit card companies giving anybody that has a pulse a credit card is a huge problem. My daughter got an offer for a credit card and she’s only six. My wife and I get two to three offers everyday in the mail. It’s out of control.
http://www.optoutprescreen.com/
Okay. Now I’ve seen everything. Credit card offers to 6 year olds?
The powers that be must be planning on an EXPLOSION in candy prices.
She was 5 when she got the offer. Maybe whe should take out a cash advance, invest the money for college and then file bankruptcy. She’ll still be too young for credit when the bankruptcy clears her credit record.
There was a dog that applied (as a joke) and a few weeks later got his card. If my dog gets a credit card, pet’smart will be out of stock and he’ll be in bankruptcy court faster than the allergic judge can sneeze.
I actually got an offer the other day for a “rewards” Visa that right away gave you a free “reward” of a notebook computer for a $5,000 balance transfer. The joke was in the fine print, there was a prepayment penalty of $800 (the price of the notebook wholesale, I assume!) if you paid it off before two full years of payments at their outrageous interest…Great Deals for All!!!
I get those from my existing cards whenever I don’t use them for a while.
I’m a sucker for the “15% off if you get a card” deals, though. That’s why I have a Mervyn’s card even though I hate the place!
What my insurance agent said to me when I needed to raise my liability coverage. She said “that sounds like an awfully lot of umbrella insurance coverage you are requesting, but then, money isn’t what it use to be”
IMHO the incredible things are for 1st time home buyers are 1) What did the Loan Officer write down to get past “sticker shock” (I remember that Fannie Mae, for a 100% loan, requires no more than 25% increase in housing payments over rental) 2) Why would they allow themselves to be written up in an article that should kill the loan (If the lending institution googles Liz Humphrey and her fiance, Harold Joe Smith (I have seen this happen) and sees the article, the institution is knowingly committing a fraudulent loan.) 3) Are they so stupid to not realize taxes and condo fees are not included in their pay structure?
I hope the LO makes a sh*tload off these mopes. She deserves it.
“Payment shock” , Sticker shock is what happened when I lokked at cars last weekend.
You’re the only one.
Have you seen “king of cars” yet?
I’ve never seen so many shockingly financially illiterate people in my life. I mean, in the back of my mind I was always telling myself that “people simply cannot be that stupid”. I was wrong.
6 YEAR LOANS for a new car!
My favorite phrase from the show “What can you do to get me this Hummer for $700 a month?”
insane.
Read somewhere that the average depreciation rate on American-made cars requires a 3.4 year pay-off w/20% down upfront. Any less and you are upside down over the term of the loan.
>What can you do to get me this Hummer for $700 a month?
We are talking cars here, right? Sorry, couldn’t resist.
Small whisper of reason here. Cars last a lot longer and newer cars are phenomenaly better than even a few years ago. Buying an Accord at 3.9%/4.9%/5.9% 3/4/5 years will probably make you money. Even going “upside down” years 2/3 or 3/4 is just a function of theoretical depreciation not return on investment. Of course a Chevy dualie gas customized powerwagon isn’t aninvestment it is a “Thelma and Louise” ending scene. AAMOF let us aadopt “Theelma and Louise” [T&L] as our code phrase for those people/decisions that represent “screw it, I’m going out in style.”
Gotta have it now society….
Robert: I hear you. I bought a 2004 Honda Element (so what, I fit, and I am 6′5″) with 2.9% financing. I have the money to pay it off right now, but it is earning around 5% in CD’s. That is a differential of 2.1% a year that Honda is paying me to drive around in my car…
Same here… last year, Honda was giving 2.9% 60 month financing on their Accords for people with good credit. I could also pay it off with cash, but predicted the rise in interest rates.
I like the “Thelma and Louise” quote. I think people that don’t have savings have a tendency to go “Thelma and Louise” when it comes to buying something on credit. They don’t know the value of a dollar.
Well I took out a 5 year loan on my BMW… only because my credit union had the same interest rate, 4.1%, whether the loan was for 36 to 60 months.
Instead of buying the car outright I’ve got the cash in CDs paying 4.5%. Seemed like a good deal… borrow at 4.1%, reinvest at 4.5%.
“‘We won’t be able to go out to dinner every weekend or take a trip whenever we want,’ Humphrey said. ‘We’ll have to get a Costco card and buy in bulk. Anything and everything that we can reduce, we plan on doing.’”
I hope their municipality has a kneeling bus for that 55 gallon drum of peanut butter!
BTW, is it just me, or are rents all around the Bay Area STILL going down? The city of SF isn’t a whole lot more expensive to rent in than the better parts of Chicago, it seems.
It seems cheap to me.
When I was going to school in Berkeley 1999-2001 I paid $850 for a crappy, tiny 1br. off Shattuck. I think you can rent the same place for about the same cost or less now.
On the other hand, when I moved to LA in 2001, I paid $850 for a better 1br. and thought I was getting a deal. Now, THAT apartment is renting for $1050…
Of course in my last year of college (1986) I remember 3 of us renting a duplex ON THE WATER for $400/mo. Of course that was in the town of California, Maryland, and that didn’t include utilities and the heating on that place was pretty ineffective.
Seriously. I’m paying $1550/month to live in a 3BR duplex with full kitchen and nice back yard in south San Jose. Instead of buying a house, I bought a hot tub, made some investments, and am paying off my credit cards. People think I’m a sucker for not buying a house, but they are shackling themselves to a 30-year fixed and I will be 100% debt free by 12/2006.
Let’s look at the facts. The guy who owns the duplex in front of mine was selling it for $900K+. Then he lowered the price to $840K. Now he’s raised the price again to $865K. Total gross rent between the two sides: $2400/mo. It has been sitting on the market for 6 weeks now! Who is going to pay a $5000/mo. mortgage to make $2400/mo.? I think reality is finally setting in. I’m perfectly content to rent, live debt-free, and make good investments elsewhere.
You are on your way kid.
Liz Humphrey and her fiance, Harold Joe Smith, lined up with other homeowner hopefuls shortly after 7 a.m. on a Saturday to submit an offer at Reflections, a recent apartment-to-condo conversion in San Ramon.”
Rule number 1 Kids: Never, never, ever line up to buy real estate. Luckly it worked out for them, they found a new place that only costs 4X what they were paying for their prior housing. I wonder at what point the numbers wouldn’t work for them? 5X? 6X? IDIOTS!!!
For the past year I’ve been renting a 2 BR/2BA condo not five minutes from “The Reflections”. Cost is a good deal at $1300/month, but like someone said above, $1500 is pretty much where it would top out for condos/townhomes unless it is very high end. This conversion project has had sign flippers out on the street corners for the past month or so. Never actually stopped to look at this place, but it clearly is nothing more than an apartment. Lipstick on a pig. At this point in the game the risk/return makes no sense for these numbskulls. Mindboggling.
It used to be Reflection Condos and then they renamed it Archstone. Now they’re going back to Reflections
Some not very positive reviews here:
It’s one of those totally minimal conversion projects, and what you get is an apartment in a complex dominated by ugly rows of cheap flat-roofed car ports.
Here are 30 condos that aren’t for sale anymore:
http://www.ksdk.com/news/news_article.aspx?storyid=95841
I suspect demand for fire investigators will surge in the coming months…
Convenient fire ????
” None of the condos had been sold, but eight had been reserved.”
I think that says it all………
I’d like to order a condo please. And make it well-done.
the compton gateway?
in my neighborhood that’s a swear word
This should take all of 5 minutes to figure out.
RE rent in SF…we’re renting a 2bdr for $1800/month. Seems like a lot, but… we’re in a great neighboorhood (haight/ashbury)…the bulding is a 1920’s deco (inlaid hdwood flrs, mouldings,etc) BUT a brand new kitchen (granite, new applainces incl. dishwasher). garage parking. The landlord loves us, and had no issue with us repainting the whole place. It is indistinguishable from a $600K apartment. The only thing we’re missing is an outside deck and/or garden (won’t get that for
Unbelieveable. They could rent a 3 br, 2.5 ba house for less than what they’ll be paying for a crappy apartment.
Reflections being converted to condos. I lived in San Ramon from 1992 to 2001. In identical apartment next to Reflections. They are OK for apartments, but would be a joke as condos. Someone paying $3000 for what they can identically rent for $1200 or so. That is a big ‘lipstick on a pig’ project. Hope the owners go bankrupt with that. San Ramon is a nice community. But it is a suburb where you have to drive to go anywhere, and is 35 miles from SF.
San Ramon “Reflections” condos for everyone.
Y’all just don’t get it. They’re not going to need to go to Costco at all! That condo’s going to be worth over $600,000 before the loan adjusts. With the equity they can by his hummer and her mini, go on vacations, eat at fancy shmancy restaurants every night, and still have enough left over to pay the mortgage. I say the whack out a 100K right after closing based on a “friendly” appraisal and go to Bali for a few weeks. While they’re there, the place will appreciate at least 10K, so the vacation will be essentially free. Don’t you get it? Suzanne researched this. Debt = wealth.